Credit Centralization Project

1. Credit Centralization Project Team Discussion: Revised 2/6/08 based on input from 2/4/08 meeting. Facilitated by: Chris Columbia SCI Manager

2. Today’s Discussion • Review the Objective • Identify what functions are “in/out of scope” • Review the high level action plan • Appendix – Centralized team profiles

3. Objective Objective: To improve efficiencies by reducing redundancies in risk focused processes and procedures that exist across business units, while increasing the consistency and reliability of reporting. Phase I = Modeling and Basel work: Q2 In scope for CML, CRS, HFCA, TFS (Auto pending) Phase II = HBUS, (HBCA?) Q3/Q4 Phase III = Loss Forecasting and Quarterly Reserving TBD

4. Keep in RCM – Right size given changes in number of BU and volumes Keep in RCM – Right size given changes in number of BU and volumes Objective: To improve reporting. Objective: To improve reporting. Some aspects currently in RCM today - Expand and centralize from BU Some aspects currently in RCM today - Expand and centralize from BU Objective: To improve reporting. Objective: To improve reporting. Move to RCM – Currently in the BU Move to RCM – Currently in the BU Keep in the BU – Right size given current volumes Keep in the BU – Right size given current volumes Objective: To improve reporting. Objective: To improve reporting. Objective: To improve reporting. Functionality divided into four areas:

5. North American Policy Credit Level BU Policy Review & Approval Corporate Reporting Risk Review Global Credit Training Basel II Model Review Credit Model Review SMG3 /Credit Systems Support Basel II / EC Credit Models / Data / Process Keep in RCM – Right size given current product / channel complexity Keep in the RCM – Right size given changes in number of BU and volumes Objective: To improve reporting. Some aspects currently in RCM today - Expand and centralize from BU Move to RCM – Currently in the BU Keep in the BU – Right size given current volumes Functionality detail within RCM

6. Group / HBUS Comm. Liaison Corporate Reporting Trend Analytics / Loss Forecasting* Quarterly Reserving* Bureau Reporting / Attributes Functionality detail expanding within RCM Some aspects currently in RCM today - Expand and centralize from BU Keep in the RCM – Right size given changes in number of BU and volumes Objective: To improve reporting. Some aspects currently in RCM today - Expand and centralize from BU Keep in the BU – Right size given current volumes Move to RCM – Currently in the BU * For consideration in future phases.

7. Model Building All aspects of Basel II including Models / Data (except IT support) Basel / EC Stress testing Loss Forecast Stress testing* Quarterly Reserving* Functionality detail moving to RCM Keep in RCM – Right size given changes in number of BU and volumes Some aspects currently in RCM today - Expand and centralize from BU Move to RCM – Currently in the BU Move to RCM – Currently in the BU Keep in the BU – Right size given current volumes Objective: To improve reporting. * For consideration in future phases.

8. Originations Analytics Acct. Mgmt. Analytics Collections Analytics Data /CIM New Product Development Pricing Models Ops Collections Ops Originations Credit system Implementation Detailed Reporting Functionality detail remaining within the BU’s Keep in RCM – Right size given changes in number of BU and volumes Some aspects currently in RCM today - Expand and centralize from BU Keep in the BU – Right size given current product / channel complexity Keep in the BU – Right size given current volumes Objective: To improve reporting. Move to RCM – Currently in the BU

9. High Level Project Plan

10. Appendix A: Team Functional Definitions • Bureau team • Job function/roles • Same as current, including budget contacts, vendor relationship, bureau tool management, etc. (management of bureau data requirement not the data flow), with additional centralization • Coordination of all credit bureau reporting to the bureaus • Manage production (coding) credit bureau attributes • Executes data strategy for management credit bureau attributes allowing for significant reduction in total attributes • Supports RCM modeling team in attribute creation, value and usage • Manages attribute databases used in underwriting decisioning • Support (project management) RCM modeling team in the implementation of models within the BU systems • Process • Propose ideas to the BUs for process changes and improvement: review BU current practice, provide recommendation, define and design process improvement, and implementation • Answer questions from BUs regarding bureau data • Disseminate credit bureau information to the BUs • Data and relationship management by working with business units, legal, compliance, risk, credit bureaus and Fair Isaac.

11. Appendix A: Team Functional Definitions (continued) • ModelBuilding • Job function/roles • Centralize model development efforts to RCM • Work with BU on model prioritization and model needs • Include scorecard development for all parts of the credit cycle for HNAH (underwriting, account management, response models, collections scores, Basel II, EC) • Work with BU to insure proper implementation (BU responsible for implementation) • Monitor model performance • Perform revalidations • Process • Identify user requirement • Conduct data extraction and Conduct data validation • Develop models – univariate analysis (outlier detector, missing value and default value), bivariate analysis (correlation between dependent and independent variables, weight of evidence), multivariate analysis (collinearity check and significance of variables), and model finalization. • Validate models on hold-out and out of time samples and refinement if necessary • Develop adverse action reasons/code for application models • Work with BU’s to Implement, Monitor and review model performance • Redevelop models if necessary

12. Appendix A: Team Functional Definitions (continued) • EC/Basel/Stress Testing • Job function/roles • Combine into EC/Basel/Stress testing • Establish Basel and EC requirement, approach, user test, standard and control. • Establish risk appetite • Develop pillar I stress testing in conjunction with loss forecasting and Basel • Interpret Basel Accord and set up framework • Develop document and enhance Basel II modeling and analytical requirements, business unit collaboration, control and oversight of the Basel Analytics model development and analytical process, model review and approval/certification. • Assist in development and integration of Policy, Procedures, Standards and Best Practices with respect to Basel II Models. ICAAP interface • Process - EC • Collect and clean data from Risk MI or BU • Develop and execute Pillar I and Pillar II stress testing • Produce quarterly EC refresh Update annual simulation model • Develop P&L impact Basel Gather group and regulatory requirements • Create business specific requirements from group and regulatory requirements • Develop and test statistical models • Identify, anticipate and resolve data and process control issues • Conduct Basel regulatory review and obtain certification

13. Appendix A: Team Functional Definitions (continued) Risk Data (CLDR’s) Database Mgmt function Job function/roles Establish a single data source within RCM for all data request Manage data for business, analytical and functional requirements Supply data for all internal parts within RCM Develop/enhance business data reporting and architecture framework Ensure data quality and definitional accuracy Leverage/integrate best data, process and control practices Change management – business unit process/data architecture Change management – corporate data & systems architecture Ensure information security (BIRO) Run and oversee Basel II and EC data submissions Process Obtain data from multiple sources from BUs and overtime to develop a long-term plan for corporate data management Drive analytical/functional requirements into data architecture, design, development alternatives and implementation Develop/forecast time, resources and costs Provide access to credit database, verify data quality and provide data for Risk MI and other analytic use