a. The industry’s only comprehensive credit risk benchmark, RAS metrics on commercial credit risk reveal continued deterioration in the middle market. The results reflect portfolio data for middle-market exposure provided by 17 top-tier participating institutions, estimated to represent more than half of all middle-market commercial loans in the U.S.

“Uncertainty around the economic outlook is substantial,” said Kevin Blakely, RMA president and CEO. “The rising default rate of borrowers, resulting in increasing provisions to the allowance for loan and lease losses, will continue into the foreseeable future.”

The percentage of middle-market loans on nonaccrual rose for the ninth consecutive quarter and is now 2.0% of total outstanding balances, representing a 29% increase over the prior quarter and a 135% increase from one year ago. Key industries experiencing above average default rates include Manufacturing (2.9%), particularly manufacturers of wood, paper, plastics, rubber, nonmetallic mineral products, and motor vehicle parts; and Information (2.8%), especially sub-sectors related to publishing, broadcasting, and wired telecommunications carriers. Conversely, Health Care (0.7%), Wholesale Trade (1.3%), and Finance and Insurance (1.3%) continue to outperform the market. Nonaccrual levels in the Retail Trade industry (1.9%) approximate the market average.

Geographically, default levels were highest among borrowers in the Eastern Midwest¹ states (3.3%), while borrowers in the Middle Atlantic² (1.3%) and Northeastern³ (1.4%) states showed better performance. Default rates to borrowers in the southern and western states approximated the market average.

About RAS

The RMA/AFS Risk Analysis Service serves as global banking’s only comprehensive, industry-standard credit risk benchmark. An industry-led consortium, RAS members perform actionable comparisons of their own data and that of the industry and peer banks for meaningful segments of the portfolio. Consistent with its “global reach, local markets” approach, RAS current coverage includes U.S. Commercial and Industrial, U.S. Commercial Real Estate, and European segments. Through multiple offerings, RAS allows participants to gain real-time insights into changing credit quality and portfolio concentrations, answering “How do we compare?” which is especially important in these turbulent times.

Subscribers to the U.S. Commercial & Industrial lending service can now view data along three distinct lines of business: large corporate, middle market, and business banking loans. RAS members now receive an expanded set of risk-rating metrics. In addition to borrower risk ratings, institutions are now able to segment their portfolios by measures of default probability, loss given default, and expected loss, risk parameters mandated by the international Basel II rules.

About RMA

Founded in 1914, The Risk Management Association is a not-for-profit, member-driven professional association whose sole purpose is to advance the use of sound risk principles in the financial services industry. RMA promotes an enterprise-wide approach to risk management that focuses on credit risk, market risk, and operational risk. Headquartered in Philadelphia, Pennsylvania, RMA has 3,000 institutional members that include banks of all sizes as well as nonbank financial institutions. They are represented in the Association by 18,000 risk management professionals who are chapter members in financial centers throughout North America, Europe, and Asia/Pacific. Visit RMA on the Web at www.rmahq.org.

About Automated Financial Systems, Inc.

Automated Financial Systems, Inc. (AFS) is the global leader in providing commercial lending solutions to top-tier financial institutions. AFS works with the world’s 50 largest financial institutions to build lending processes based on a straight-through model and on-demand technology and services. In doing so, AFS partners with client banks to understand their strategic goals and works proactively to achieve their business and technology objectives. AFS is headquartered in Exton, Pennsylvania, a suburb of Philadelphia; its European subsidiary, Automated Financial Systems GmbH, is based in Vienna, Austria. For further information, visit www.afsvision.com.

¹ Michigan, Wisconsin, Illinois, Indiana, Ohio, Kentucky

² Pennsylvania, New Jersey, Delaware, West Virginia, Maryland, Virginia, North Carolina, D.C.

³ Maine, New Hampshire, Vermont, New York, Rhode Island, Connecticut, Massachusetts