The document discusses tactics for managing credit risk and surviving an economic downturn. It outlines key topics like recognizing signs of a downturn and mitigating risk. Various reports and metrics are presented for tracking portfolio performance, monitoring for risk, and making adjustments to credit policies in response to changing economic conditions. Maintaining close observation of portfolio trends is presented as important for navigating a potential economic slowdown.

1. Janice Horan Crash or Soft Landing? Account Management Tactics for Surviving an Economic Downturn ACS USERS EXCHANGE 2 0 0 1 G E N E R A L S E S S I O N

7. Whether slow-down or recession or not, the economy can impact your portfolio INFRASTRUCTURE CONSUMERS LENDERS ECONOMY Technology that makes the economy efficient also makes it more volatile. -Alan Greenspan, 14 February 2001

19. Population Stability Report Measures Change in Score Distribution Over Time SCORE INTERVAL DEVELOPMENT % CURRENT % SHIFT IN % Below 200 200 - 249 250 & Up 33.3% 44.1% 22.6% 39.5% 41.6% 18.9% 2.5% 3.7% Population stability index: 0.02 0 - .1 .1 - .25 Over .25 - No change from development - Monitor for subsequent increases - Change occurred, perform characteristic analysis Stability index guidelines: + 6.2% - -

20. Characteristic analysis report Measures change in attribute distribution over time See how newer accounts differ from the base within key characteristics Corporation Partnership Sole Proprietorship None Given Total BASELINE NUMBER 301 162 100 50 613 BASELINE PERCENTAGE CURRENT NUMBER CURRENT PERCENTAGE CHANGE 49.1% 26.4% 16.3% 8.2% 100.0% 132 85 68 15 300 44.0% 28.3% 22.7% 5.0% 151 – 5.1% 1.9% 6.4% – 3.2% 149 TYPE OF BUSINESS Baseline Date: 01 / 98 - 06 / 98 Applications Received: 07 / 98 - 09 / 98

21. Applicant Distribution Final Score Report SCORE RANGE Below 170 170 - 179 180 - 189 190 -199 200 - 209 210 - 219 220 - 229 230 - 239 240 - 249 250 & up Below Cutoff Above Cutoff Total Acceptance Rate # APPLICANTS 211 422 397 213 242 295 337 276 441 213 1,243 1,804 3,047 # ACCEPTED 6 11 14 12 201 255 301 255 423 207 43 1,642 1,685 # REJECTED 205 411 383 201 41 40 36 21 18 6 1,200 162 1,362 # OVERRIDES 6 11 14 12 41 40 36 21 18 6 43 162 OVERRIDE % 3% 3% 4% 6% 17% 14% 11% 8% 4% 3% 3% 9% POTENTIAL ACC RATE 100% 93% 79% 66% 59% 51% 42% 31% 21% 7% 55% Compare with similar accounts from prior periods Look at override incidence Observe sub-population distribution Applications Received: Specific Time Period (April - June XXXX)

22. Override Tracking Report Major derogatory trades Debt ratio too high Savings accts. with >$10,000 Bank customer for >6 years Miscellaneous TOTAL OVERRIDES 121 52 2 44 67 286 0 0 2 44 56 102 121 52 0 0 11 184 APPLICANTS ACCEPTS REJECTS REASONS FOR OVERRIDE Compare with policy standards Compare against prior periods Look for performance impact Track High Side and Low Side Overrides for a specific time period (April - June)

23. Detailed delinquency report: Maximum delinquency 10.6 13.5 17.7 20.4 19.8 18.0 100.0 SCORE % ACCEPTED 200 - 209 210 - 219 220 - 229 230 - 239 240 - 249 250 & Up Total 93.0 84.0 72.0 68.0 64.0 59.0 71.1 % ACTIVE 17.2 15.4 9.8 5.6 4.1 2.3 9.1 % EVER 30+ DAYS 9.4 7.1 4.8 3.1 2.3 1.5 4.5 % EVER 60+ DAYS 4.6 3.7 2.8 1.4 1.1 0.4 2.3 % EVER 90+ DAYS 2.8 2.0 1.4 0.8 0.3 0.1 1.2 % CHARGED OFF Watch for continued risk ranking Look for operating strategy break-points Compare to prior periods Examine Accounts on Books in Score Ranges for Specific Time Period (01/00-03/00)

24. Detailed delinquency report: Current delinquency 1,843 2,116 2,372 2,587 2,368 1,976 13,262 SCORE # ACTIVE 200 - 209 210 - 219 220 - 229 230 - 239 240 - 249 250 & Up Total 173 151 113 81 55 29 602 # NOW 60+ DAYS 9.4% 7.1% 4.8% 3.1% 2.3% 1.5% 4.5% % NOW 60+ DAYS 9.7 13.0 20.0 30.9 42.1 67.1 21.0 OBSERVED ODDS Watch for continued risk ranking Compare to prior periods Observe both accounts & amounts Examine Accounts on Books in Score Ranges for Specific Time Period (01/00-03/00)

25. Vintage Analysis Table Explores current delinquency trends 1.7 1.1 0.9 0.0 3.0 1.7 1.8 1.5 0.1 1.7 1.7 1.4 2.5 1.6 1.8 1.5 0.5 2.2 1.9 1.9 1.9 1.5 2.2 2.0 1.7 0.3 2.5 2.1 2.5 2.4 1.4 2.8 2.3 2.3 1.1 0.1 DATE OPENS (% of scored accounts currently 60+ days delinquent) 2.9 1.5 2.4 1.9 1.4 0.3 3.5 2.9 2.6 2.4 2.5 1.9 0.4 Oct-Dec 96 Jan-Mar 97 Apr-June 97 July-Sept 97 Oct-Dec 97 Jan-Mar 98 Apr-June 98 July-Sept 98 Oct-Dec 98 Jan-Mar 99 SEP-97 DEC-97 MAR-98 JUN-98 SEP-98 DEC-98 MAR-99

27. Portfolio chronology log Records significant events relevant to credit in company DATE EVENT Scorecard installed with cutoff of 200 3 / 00 Eliminated miscellaneous override and clarified criteria for highside BK override 6 / 00 New teaser rate program rolled out in Fall acquisition campaign. Also testing high credit line cells in B group accts. 8 / 00 Serious drop in tech stocks 12 / 00

31. Target marketing risky, non-responsive, low revenue potential consumers compensate for losses on riskier consumers drive good consumers toward your business NO OFFER OFFER Design offers that… Eliminate… YES! OK

37. Collect with care. . . . Almost half (49.8%) of the individuals surveyed said aggressive collection tactics made them file bankruptcy Other evidence suggests that consumers are changing their payment hierarchy OTHER FACTORS: Unemployment Medical Expense Divorce Taxes / Litigation 12% 11% 7% 6%