Small Business Lending Trends

1. 2013 Small Business Credit TrendsPatricia Hines, CTPDirector, Financial Services Industry MarketingGXS

2. Slide 2 © 2013 GXS, Inc.Small businesses confidencedips in early 2013 after 2012 gains80.085.090.095.0100.0105.01/06 1/07 1/08 1/09 1/10 1/11 1/12 1/13February 2013: 90.8January 2006: 101.6NFIB Optimism IndexSources: NFIB Small Business Economic Trends Quarterly report

3. Slide 3 © 2013 GXS, Inc.Sources: Federal Reserve System H.8 ReleaseCommercial and industrial loans up almost14% over the past year$17 $17 $16 $16 $15 $14 $14 $14 $14 $14$16 $15$13 $12 $12 $13 $13 $14 $15 $15$33$32$30$28 $27 $27 $28 $28 $29 $30$0$5$10$15$20$25$30$35$40$4512/08 12/09 12/10 12/11 12/12Commercial real estate Commercial and industrial

4. Slide 4 © 2013 GXS, Inc.Small business loans outstanding flat with acontinued increase in volumeSources: FDIC Quarterly Banking Profile, Loans to Small BusinessesAmount outstanding(USD in billions)Number of loans outstanding(in thousands)120.3 120.246.8 46.9115.7 116.705010015020025030012/31/2011 12/31/2012282.7 283.7+0.4%19.6 20.80.50.50.40.40.05.010.015.020.025.012/31/2011 12/31/201220.421.7+6.3%> $100K $100k to $250K $250K to $1M

5. Slide 5 © 2013 GXS, Inc.Delinquency rates continue to improve for allloan types except residential real estate11.2%10.6%9.1%4.6%3.6%6.7%2.8%2.4% 3.8%2.6%1.2%4.4%1.2%0%2%4%6%8%10%12%1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12Residential real estate loansCommercial real estate loansCredit card loansConsumer loansCommercial & industrial loansSources: Federal Reserve Statistical Release

6. Slide 6 © 2013 GXS, Inc.$46$51$55$60$67$71$75$79 $82 $85$92$95 $96$0.3$0.4 $0.5$0.3 $0.3$1.0$0.5$1.3$1.3$2.3$2.1$2.1$1.9$0.0$0.5$1.0$1.5$2.0$2.5$3.0$0$25$50$75$1002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Unpaid principal balance Charge off amountCharge-offs (USD billions)Principal balance (USD billions)In 2012, Small Business Administration lendingjumped up with charge-offs leveling offEst.Sources: Small Business Administration budget and performance reports

7. Slide 7 © 2013 GXS, Inc.-70%-50%-30%-10%10%30%50%70%90%3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13Small C&I loan demand Small C&I loan standardsLarge and medium C&I loan demand Large and medium C&I loan standardsLoan demandLoan standardsCommercial and industrial (C&I) loan demandreflects economic uncertaintyQuarterly percentage changeSources: Federal Reserve Board senior loan officer opinion survey

8. Slide 8 © 2013 GXS, Inc.2.4%3.6%4.0%1%2%3%4%5%3Q04 2Q05 1Q06 4Q06 3Q07 2Q08 1Q09 4Q09 3Q10 2Q11 1Q12 4Q12More than $1,000,000 $100,000–$1,000,000 Less than $100,000Spreads narrowing, especiallyfor large C&I loans3.3%1.4%2.1%3.2%4.0%2.0%1.6%Sources: Federal Reserve survey of terms of business lendingSpread percentage

9. Slide 9 © 2013 GXS, Inc.46810121416180%2%4%6%8%10%1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13Business bankruptcy filings Unemployment percentageUnemployment percentage Number of filings (000s)EsBusiness bankruptcy filings a bright spot inthe picture for small business risk4.7%10.0%7.7%Sources: American Bankruptcy Institute, U.S. Bureau of Labor StatisticsEst.

10. Slide 10 © 2013 GXS, Inc.0%1%2%3%4%Up to $300M $300M to $1B $1B to $10B $10B to $20B Over $20B2009 2010 2011 2012Smaller banks continue to struggle with non-performing commercial loans3.9%Ratio of non-performing commercial loans to totalcommercial loans (%)Sources: Federal Reserve Bank of St. Louis0.7%

11. Slide 11 © 2013 GXS, Inc.-8%-6%-4%-2%0%2%4%6%8%10%2009 Actual 2010 Actual 2011 Actual2012Projection 2013 ForecastDevelopingAsiaLATAMCIS*United StatesJapanEuro Area2012 did not meet expectations, recoverystalls for 20133.8%0.8%3.9%7.8%2.2%*CIS = Commonwealth of Independent States (former Soviet Republics)1.6%Sources: International Monetary Fund World Economic Update January 2013Percent change in GDP

12. Slide 12 © 2013 GXS, Inc.Trade payables and receivablesat 12-year lows11.7%14.1%10%12%14%16%18%20%22%2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Trade Payables Trade ReceivablesRecessionary PeriodsPercent of company net worthSources: Federal Reserve Bank of St. Louis

13. Slide 13 © 2013 GXS, Inc.• Risk metrics continue to show a mixed bag, but underlying improvementseems to be taking hold• Small Business Credit Index points to improving environment for smallbusinesses by end of 2013, and continuing into the next couple of years• Small business lenders continue to lend to borrowers who meet theirdesired risk/reward profile• Close monitoring needed to identify emerging adverse trends andminimize loan losses• Investments in credit analytics andmonitoring tools continue to pay off,reflected in decreases in non-performing busi nessloansParting thoughts