TCF Retail Lending SMART Data Case Study

May 12, 2015

2

Opportunity

Rising. Contents

• TCF & Retail Lending Overview

• Historical Timeline

• Current State

• Proposed New Approach

• Overall Business Case

• Q&A

3

Opportunity

Rising. TCF Overview & Retail Lending

TCF Corporate Profile • $20 billion national bank holding company headquartered in Minnesota

• 45th largest publicly traded US based bank holding company by asset size

• 379 branches in 8 states

• 85% of total assets are loans and leases

Retail Lending Overview • $5.6 billion of residential mortgage loans-$3.0 billion first mortgages and $2.6 billion

junior lien loans • Primary strategy is to originate high credit quality secured loans for investment and for

sale

• Significant focus in 2015 in improving Finance systems, processes and controls

4

Opportunity

Rising. Historical Timeline

RLBI Started Sept ‘13

RLBI Release 1 Complete

July ‘14

RLBI Release 2 Complete

May ’15 MERF File

Automated

RLBI Release 3 Was

Slated for Dec ‘15

RLBI Releases 4+ Were Slated Through 2016

RLBI

EVOLV CRA Portfolio

Launch Oct ‘14

Move Away from RLBI to EVOLV Concluded Feb ’15

Enterprise View Obtained

-Corporate Leadership -IT Leadership Included

-K2 and Rueben Creative

CRA Portfolio on EVOLV Apr ‘15

K19 Being Presented for Full EVOLV Implementation,

Today

All Loans in EVOLV Dec ‘15

EVOLV Fully Implemented

Mar ‘17

Participation Capability

Mar ‘16

EVOLV

5

Opportunity

Rising. Summary of Current State

Servicing Systems

Recon

Credit Quality Reports FAS 65

HFS

REO

Non-Accrual / Re-accrual

F91

Charge-off System

SBO Loans Run-off

Programs (Command

Protect)

REIT Acctg

F114

ALLL / ERM

TDR

Recon

Cash and Operational Entries from

Shaw

Shaw Servicing System

SBO Portfolio - OCWEN

SBO Portfolio – PNC and Future

Loan

Dat

a Fl

ow

R

isk

and

Fin

ance

Man

ual

P

roce

sse

s

GL / Reporting

GL

Essbase

Future Processes --- PCI Accounting?

CECL?

M-E Financial Reporting

File

3 Reports (Remittance, DQ,

Summary)

TBD CQDB LDB RLDM

Fiserv Claims

CRA Purchase Program

~70% data movement

and 30% data

creation

Roll-forward Reports

6

Opportunity

Rising.

Architectural / Data Perspective -- Industry Best Practices

6

Source 1

Source 2

Source 3

Source 4

Source 1

Source 2

Source 3

Source 4

Historical Model: Distributed Ownership Enterprise Centric

Warehouse Distributed

Applications

Distributed responsibility for sourcing, staging and end user reporting

Centralized responsibility for enterprise data, MDM assets and LOB control and

dictate their specific needs

Industry Trending Model:

7

Opportunity

Rising. Proposed New Approach – Enterprise Business Intelligence & Operational Storage

RL Data Stage / Extract / Cleanse / Transform

Application Hard Coded / Infer/ Calculate

RL Data Mart

Original RLBI Scope

Blended all three

elements

Focus on Finance Reports only as

output

Non-Finance reports some day

Retail Lending focus

“If you build it they

will come”

Release 2, to be done in Q2, automates

Month End Reporting File

Maintain Releases 1

and 2

Shaw Harland RL Other

RL Finance Reports

Enterprise Data Stage & Operational Storage

Evolv Infer / Calculate

Enterprise Database

Shaw Harland RL Other

Accounting (FAS 91, Non Accrual, etc)

Finance Reports

Reserving (TDR, guideline, etc.)

Forecasting & Stress Testing

Evolv Proposed

Solve RL Finance Needs

Data layer includes

inference, enrichment and

identification

Application layer includes

calculations, model execution, and

automating manual processes

Scalable / Flexible

Much more than

just reporting

Enterprise BI

Refocus on data staging &

operational storage

Enterprise

project

Operations

Credit

Risk

Unanticipated Needs

RLBI Original Scope Proposed Scope

Other BU’s

8

Opportunity

Rising.

GL / Reporting

Source Systems

Shaw Cash and Operational

Entries

Shaw Servicing System

LSBO Portfolio – OCWEN, Education

Lending

SBO Portfolio – CRA Loans

Loan

Dat

a Fl

ow

GL

Enterprise

Data

Warehouse

RLBI Integrated Risk and Finance Solution for Loans

Adaptor Adaptor

Credit and Reserving

FAS114 / TDRs FAS 5

Loan Accounting and Forecasting

Originated Loan Accounting Acquired Loan Accounting

Loan Risk Analytics and Model Execution

Analytics Model Execution Cash Flows Stress

Credit Review GAAP and Adjusting

Entries; Loan Level

Extracts

Ris

k an

d F

inan

ce A

uto

mat

ed

P

roce

sse

s

Common Data Layer for Risk and Finance

Loan Level Risk and Finance

Reporting

Implemented Current Implementation

RLDS

Risk,

Finance &

Reporting

Users

Data Enrichment & Management

EVOLV Solution

9

Opportunity

Rising.

Architectural / Data Perspective -- Scalability Comparison

Financial Management Functions

Forecasting ALLL & Credit

DFAST & Risk

Accounting Reporting Loan Sales

Forecasting ALLL & Credit

DFAST & Risk

Accounting Reporting Loan Sales

Enterprise View

Winthrop Equip

Finance Inventory Finance

Gateway Retail

Lending Commercial

EVOLV Applicability

RLBI Applicability

Winthrop Equip

Finance Inventory Finance

Gateway Retail

Lending Commercial EVOLV Applicability

RLBI Applicability

10

Opportunity

Rising. Business Case for EVOLV

EVOLV vs. RLBI Business Case for

EVOLV EVOLV RLBI

Development External Internal

Maintenance External Internal

Scalable Across TCF

Yes No

Uses Reporting, Accounting, ALLL, DFAST, Forecasting, Loan Sales

Reporting

Vendor Primatics N/A

• Data Integrity and Controls ­ Clear RCS Unsatisfactory rating ­ Reduce financial reporting risk,

protect shareholder value

• Efficiency Gains ­ Reduce compliance cycle time and

increase analytical capacity ­ Primatics better positioned to

maintain system

• Enterprise Scalability ­ Applicable across all lending units

• Loan Sale Structure Flexibility ­ Participations and other structures

11

Opportunity

Rising. Q&A