SANTA FE, New Mexico, May 1 /PRNewswire/ --

Strategic Analytics Inc., the leading provider of stress testing and
forecasting solutions for retail lenders, today disclosed that its
LookAhead(TM) software was used successfully by U.S. banks to complete stress
tests for federal regulators. Strategic Analytics software and services are
used by 8 of the top 10 banks with the largest U.S. consumer loan portfolios,
according to American Banker.

Several major banks told Strategic Analytics that using LookAhead(TM)
software to estimate losses under the government-mandated Supervisory Capital
Assessment Program scenarios yielded valuable insights in an efficient and
robust analytical process. "LookAhead enabled us to predict the impact of
SCAP macroeconomic scenarios on losses in our retail credit portfolios with
high efficiency," a credit risk executive said. "Moreover, we could easily
incorporate into the stress tests useful measures of originations quality and
other key factors that traditional methodologies can't handle effectively."

"Customers' success in using LookAhead to complete SCAP stress tests
demonstrates the unique value of Strategic Analytics software," said Joseph
L. Breeden, President and Chief Operating Officer. "LookAhead was
specifically designed to improve retail lenders' stress testing and
forecasting capabilities. It has had proven success analyzing mortgage and
consumer credit portfolios for customers around the globe."

In published research, Breeden has observed that traditional approaches
to stress testing fail to accurately quantify the dynamics that drive
portfolio performance and that both macroeconomic and quality factors are
critical to explaining the current crisis and its future evolution. In 2005,
LookAhead analysis of industry-wide U.S. mortgage data showed that the
quality of new originations was deteriorating even though the economy was
relatively unchanged. By 2006 and 2007, the new loans being originated were
of dramatically worse quality than previous originations, and Strategic
Analytics' analysis indicated that the mortgage market was heading for an
enormous collapse.

The fall in house prices beginning in 2007 meant that distressed loans
could no longer be rescued by refinancing. While other modeling methods
showed no visible stress until 2007, when housing price depreciation was
evident, Strategic Analytics' approach provided correct predictions of loan
losses two years earlier. Similar patterns of deteriorating origination
quality have also been observed in all categories of home equity, auto loans,
credit cards, and other consumer loans.

Breeden commented: "The global recession that began in 2008 exacerbated
stresses on the poor originations of 2005-2007. The problems actually began
years earlier in the quality of loan originations, and are now affecting all
outstanding loans in every category. Strategic Analytics' analysis showed
that dramatic increases in delinquency and default rates were baked into
lenders' portfolios and pools of securitized loans, and were amplified - with
severe consequences - by the deteriorating economic environment over the last
24 months. Had these lenders been relying on Strategic Analytics for their
stress testing and portfolio forecasting instead of the traditional models,
these problems would have been uncovered sooner."

For more information on Strategic Analytics, please visit
www.strategicanalytics.com. The research paper mentioned above can be found
at: http://www.journalofriskmodelvalidation.com (Breeden et al., Volume 2
Number 2, Summer 2008).

For more information:
    Harlan Flint, Marketing Director, Strategic Analytics Inc.
    +1-505-995-4754, hflint@strategicanalytics.com.

    Eric Christensen, Senior Vice President, Sales and Marketing, Strategic
    Analytics Inc.
    +1-505-995-4736, echristensen@strategicanalytics.com



About Strategic Analytics Inc.: Strategic Analytics provides analytical
and forecasting solutions that enable banks, consumer finance companies and
mortgage lenders to build and manage more profitable and less volatile loan
portfolios. Our software and services are used to analyze over US$2 trillion
in retail loans worldwide. www.strategicanalytics.com