Richard Ferranti, executive vice president and chief operating officer of Alma Bank, a five-year old, $900 million-assets institution based in the bustling diversity of food and people that is Astoria in Queens, New York, had just taken the bank's new president downstairs to a space adjacent to the network room.
Since the de novo bank opened its doors in September 2007 in a former diner on 31st Street, Ferranti had been able to run almost all the bank's functions without paper, thanks to the lack of legacy systems and modern technology he could tap.
Ferranti was in an enviable position. He was COO of a new, well-capitalized bank - started with $50 million - whose principals were willing to spend on IT to gain efficiencies needed for the rapid growth they desired. Branches and deposits were virtually paperless. Nearly all was great. Except, that is, in lending, the bank's biggest business. Ferranti couldn't persuade a former Alma executive that digitizing the lending department was in the bank's best interests. A senior loan official was similarly "old school."
"Everything had to be paper," Ferranti recalled. "It was frustrating. I couldn't convince them for love or money to use Synergy," which is Jack Henry & Associate's enterprise content management (ECM) system. Ferranti had deployed Synergy and an outsourced version of Jack Henry's SilverLake core banking platform for testing in the fall of 2006 prior to Alma obtaining its charter, which it received in May 2007.
By then the bank had grown. It has 800 loans on its books, Ferranti says. And most of them are in commercial real estate, which is notorious for thick paperwork: A 12-inch file is not unusual for a commercial real estate deal.
Alma was founded by a bevy of local property developers looking for a central point of liquidity they could tap and trust, including its largest shareholder, Efstathios "Steve" Valiotis, who founded Alma Realty and amassed a nearly $1 billion real estate empire by discerning value before his competitors do in otherwise ignored neighborhoods and properties.
But in February 2011, back at a filing room in the bank's headquarters in the former diner's basement, Ferranti was pointing at cabinets stacked against each of the four walls. "You see all those cabinets?" he asked the new president. "They went all the way around the room," Ferranti recalls. "I said to him, 'This doesn't make any sense.'"
The president agreed. That was fortuitous, because just months after converting the loans to Synergy, in April 2012, Alma Bank agreed to take on $50.7 million of deposits and purchase $15.7 million of Fort Lee Federal Savings and Loan's assets, after the FDIC shuttered the failing New Jersey bank. The deal didn't include the failed bank's toxic loans, Ferranti says. But it did involve converting to Alma's Synergy system the data of Fort Lee Federal's documents, which the failed bank had imaged using Treve. Alma also performed an automated conversion of the deposits on Fort Lee's FIS core to Jack Henry's SilverLake.
A Synergy tool allowed Alma to flag and track any missing documents or data, and thus keep in compliance, which became an issue during the conversion because the failed bank lacked documentation to support certain customer accounts, Ferranti says.
"When they did have documentation it was inappropriate, incorrect or incomplete," he adds. "They didn't even have signature cards for all the DDA accounts. But Synergy has a way to build in the database a document checklist, so that if you open up a particular kind of an account, the system recognizes that you need certain documents," he explains. "If you don't have them, you can pull a report that says that you don't have them. We actually brought that feature on after we converted our loans to Synergy, because there was more of a need for it: It wasn't required for deposits, but it was absolutely a necessity for the loans. So that helped."
Of course, whether commercial real estate documents become electronic often "depends on who's doing the closing," Ferranti says. "Sometimes it's electronic, which is what we prefer of course. But if it's not, we just have to scan the documents into the system, which is not a great deal of a problem because Synergy has some applications that help you with that, like smart indexing, which can look at documents and recognize, for instance, a promissory note. The biggest issue was to catch up with the paper documents that were already in-house."
As far as latest deals, Alma has been providing capital to businesses in Sunset Park, Brooklyn after receiving $19 million last year from the Treasury Department's Small Business Lending Fund.
BANK: Alma Bank
PROBLEM: Paper was piling up in the commercial loan department.
SOLUTION: Digitize with use of enterprise content management technology.