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                                                                                    Jim Herlihy

                                                                                    970-590-5885

                                                                                    Jim.Herlihy@Comcast.net

BUSINESS LOAN DELINQUENCY RATES CONTINUE TO EDGE UP

Nearly 10% rise in past year more than half of that in the past quarter;

Construction industry delinquencies a concern

            Delinquency rates on business loans rose again in the third quarter of 2006, continuing a trend that has been developing over the past year, according to research conducted by PayNet, Inc.

            The four-industry (Transportation, Construction, Office and Medical) average for 31-day loan delinquency rates is 1.93 percent for the third quarter of 2006, up 9 basis points (nearly 5 percent) from the delinquency rate of 1.84 percent in the second quarter of 2006.

            One year ago - in the third quarter of 2005 - the 31-day loan delinquency rate stood at 1.76 percent. According to William Phelan, president and co-founder of PayNet, Inc., the increase of 17 basis points (nearly 10 percent) in loan delinquencies is due to several factors, but a key is changes in the climate of the Construction industry.

Construction Industry Delinquency Rates Increase

            Phelan noted that delinquency rates in the Construction segment have risen 12 basis points from 1.73 percent a year ago to 1.85 percent this quarter, and are at the highest level in five quarters. Housing starts are down dramatically in 2006, including a drop of more than 16 percent in August versus a year ago. While most economists predict that the drop in housing starts will not spread to other sectors of the economy, Phelan says that the statistics may tell a different story.

            "Housing starts are down to a greater extent now than they were in the last recession," Phelan said. "While that’s not a guarantee that the effects will spread to other industries, it’s a definite concern, and it’s a real concern for the construction equipment finance industry."

Transportation Industry Volatility

            The Transportation industry’s loan delinquency rate has shown the most volatility of the four key sectors over the past year. It stood at 1.55 percent one year ago, dropped to 1.36 percent last quarter, and jumped 32 basis points (24 percent) to 1.68 percent this quarter.

            "The volatility in the Transportation industry is a direct reflection of the volatility in fuel prices," Phelan said. He noted that there is cause for optimism with a 47-cent drop in fuel prices from mid-August to late September, coupled with Department of Energy statements that both diesel and gasoline prices should continue to fall, at least in the short term.

Smallest Industry Shows Largest Delinquency Increase

            While the loan delinquency rates in the Medical industry - the smallest of the four segments measured - typically are the lowest of the four industries measured, they are showing the largest increase over the past year. The 31-day delinquency rate in the Medical industry jumped from 0.90 percent one year ago to 1.30 percent this quarter - a hike of 44 percent.

            While the Office sector continues to have the highest loan delinquency rate of any of the four sectors (2.17 percent in third quarter of 2006), it is down from a 2.29 percent rate in the second quarter of 2006, and virtually even with a 2.16 percent delinquency rate from a year ago.

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Founded in 1999, PayNet, Inc. is the industry’s largest repository of historical lease and loan payment information on the U.S. small-business community.  PayNet’s information is utilized on behalf of participating institutions to increase revenues, control risk and lower operating costs.  Its data covers more than $400 billion in loans on privately-held small businesses.