The Risk Management Association (RMA), in alliance with Automated Financial Systems, Inc. (AFS), today released second-quarter 2009 Risk Analysis Service (RAS) data. 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.
“The rising level of non-accruing assets in the commercial loan portfolios is consistent with where we are in the credit cycle. These levels may rise through the end of the year, given the current state of the economy,” said Ken Chalk, interim RMA president and CEO. “On a more positive note, short-term delinquencies have eased from the first quarter levels. We will need another quarter’s data to determine if we have reversed the trend of rising delinquencies.”
The percentage of middle market loans on nonaccrual rose for the tenth consecutive quarter and is now 2.3% of total outstanding balances, representing a 23% increase over the prior quarter and a 136% increase from one year ago. Key industries continuing to reflect above-average default rates include Manufacturing (3.7%), particularly manufacturers of wood, paper, plastics, rubber, nonmetallic mineral products, and motor vehicle parts; Agriculture (3.3%), and Information (2.7%), especially sub-sectors related to publishing, broadcasting, and wired telecommunications carriers. Short-term delinquencies in the middle market eased to .94% from 1.20% at the end of the first quarter.
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