Portfolio's Risk Data Strategy Kevin Bodie Agenda Background The - PowerPoint PPT Presentation

A Revolution of a Large Commercial Portfolio's Risk Data Strategy Kevin Bodie

Agenda  Background  The Problem  The Solution  The Benefits 2

Comerica Bank Background Comerica Incorporated (NYSE: CMA) is a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: The Business Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico. Comerica reported total assets of $62.9 billion at June 30, 2013 3

How Did We Get Here?  Comerica Bank first started submitting the FR Y-14 schedules in 2012  We were able to get some of the data that we had in our accounting systems  In addition, we built a website for data collection for any missing data in the C & I schedule, and had spreadsheets that the field filled out for missing data in the CRE schedule  Execution  Quarterly process (Monthly for Retail Schedules)  Huge effort from field personnel to collect and input the required data  Huge IS effort to prepare the submission  No error checking prior to submission  Schedule maintenance 4

Challenges With How We Do It Today  Manual input fraught with potential for keying issues or incorrect values raising concerns around data integrity  Some data sources use old technology hampering our ability to leverage them  Systems not accessible or linked forced to rekey many data items already stored in a data source  Frequent FRB requirement changes will require us to go through the traditional IS support model  Inefficient, costly, time to market concerns  These challenges are linked to other challenges we face with  Validating Retail and Commercial PD and LGD models  Ad-hoc reporting  Audit Issues around data reconciliation  Enabling complete view of customer 5

Challenges with How we do it today  Current Environment (Loan Origination and Regulatory Reporting Processes) Financial Statement Risk Rating Loan Spreading Creation Origination Loan Boarding Loan Accounting Systems Regulatory Reporting 6

A Strategy Emerged  Our largest inefficiency to be remedied was the issue of not being to access financial statement data in an automated fashion  Undertook a due diligence exercise to find a suitable replacement for our spreading system  During this process we learned that there were solutions that could not only replace spreading as well as  Provide a central repository for not only regulatory data, but all data used in credit processes  Allow for system configuration enabling faster implementations with fewer customizations to maintain But We Still Had a Problem! No good way to link data sources to create the complete view we needed 7

What are we doing  First phase: Implementing RiskOrigins for Financial Statement Spreading  Establish a key that can be used across our systems by integrating RiskOrigins to our Customer Information System at the time of an initial spread Risk Rating Loan Creation Origination Loan Boarding Financial Statement Spreading Customer Loan Accounting Risk Information Systems System Origins Regulatory Reporting 8

What are we doing  Second phase: Implement FR Y-14 Regulatory Reporting via RiskOrigins  M and Q schedules in scope. All provide data for creation of FR Y-9C (Call Report)  Automate and consolidate manual data collection processes  Load data from accounting systems to RiskFoundation to create a single source of truth Risk Rating Loan Creation Origination Loan Boarding Financial Statement Spreading Customer Risk Loan Accounting Information System Origins Systems Regulatory Reporting

How it will help  Reduce manual entry by leveraging the RiskFoundation database populated from our source systems  Reduce effort to track and update regulatory reporting templates by leveraging Moody’s Analytics RiskAuthority Regulatory Reporting Tool subscription service for regulatory schedules  Leverage edit reports provided and maintained by Moody’s Analytics to assess issues in schedules prior to submission to the data aggregator and / or the FRB  Simplify the reconciliation process between submission files for FR Y-14 and FR Y-9C (Call Report)  Enable strategic aggregation of key Credit data to create other efficiencies 10

Future Plans  List of other projects we want to implement in RiskOrigins   Risk Rating Creation Policy Exception Tracking   Retail Regulatory Reporting Stress Testing   Loan Origination Integration Limits tracking  Other Commercial Regulatory Schedules Loan Origination Loan Boarding Financial Statement Spreading Risk Rating Creation Customer Risk Loan Accounting Information System Origins Systems Regulatory Reporting 11