Risk Analysis Service to Offer Commercial Credit Risk Benchmarking for Community Banks

19 January 2009

The Risk Management Association (RMA) and Automated Financial Systems (AFS) announced the launch of a Web-based commercial credit risk-benchmarking product for community banks. Using eRAS, community banks will be able to compare their portfolio mix and risk profile to a market-based composite. The product is similar to Risk Analysis Service for large institutions, which was launched by RMA and AFS in 2003.

“eRAS data will provide a meaningful basis for self-assessment under ever-changing market conditions,” said Kevin Blakely, RMA president and CEO. “Our community bank members face increasing pressure to effectively manage the institution in a recessionary period. eRAS should provide excellent value to banks with several hundred million dollars in commercial loan exposure and an asset size of somewhere between $500 million and $1.5 billion.”

eRAS reports are available on a quarterly basis. The product enables banks to compare their data to the overall market. Data is available by industry, geography, and collateral, enabling the identification and better management of industry concentrations, risk rating distributions and weighted average borrower risk ratings, delinquency and non-accrual levels, and net charge-off experience for the overall market.

Using eRAS, community banks are able to compare their commercial credit portfolio mix and risk profile to a market-based composite at a level of detail and quality not previously available in the market. Community banks are using eRAS reports in the following ways:

• Gauging their bank's performance versus the marketplace

• Correlating risk with loan characteristics

• Conducting trend analysis

• Assisting in setting loan loss reserve levels

• Providing an ongoing source of highly relevant credit risk conditions and trends

• Preparing presentations to management that include an independent view of market performance

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