Consolidation of multibank operations has proved critical to getting New Dartmouth Bank of New Hampshire off the ground.

The Hooksett, N.H., bank, with 41.6 billion in assets, was formed nine months ago when the FDIC approved a plan to combine selected holdings of Dartmouth Bank, New Hampshire Savings Bank, Seabrook Bank and Trust, and Numerica Savings Bank, under the New Dartmouth banner.

New Dartmouth officials said the FDIC's approval of the deal was based largely on the bank's contention that it could complete a consolidation in less than 90 days. New Dartmouth delivered on the promise.

"I've seen consolidations of this size go on for more than a year," said Scott Lahti, senior vice president and regional manager for Systematics Financial Services Inc. "The speed with which this consolidation was done is certainly unusual."

Speed Equals Savings

Most consolidations of New Dartmouth's size take at least four months, and experts say any speeding up of the process can dramatically improve the savings in staff and equipment.

Under Systematics' supervision, New Dartmouth completed it's consolidation in January. It merged the four failed institutions' data centers into one, closed 19 branches, and eliminated more than half of the 1,176 total jobs.

The immediate result has been a dramatic reduction in noninterest expenses.

In 1990, the four institutions from which New Dartmouth was formed had combined annual expenses of about $149 million. For the current fiscal year, New Dartmouth expects only about $43 million dollars in noninterest costs.

New Dartmouth officials concede that expenses of the failed banks may have been somewhat inflated by legal bills and other costs related to the bad loans that brought about the institutions' demise. However, even without those extra expenses, New Dartmouth estimates it cut costs by at least 50%.

While cost savings are an important component of any consolidation, New Dartmouth officials said there are other reasons to quickly resolve the back-office morass.

In trying to hold on to customers from four different institutions, "it is important to promptly present the image of a unified bank," said Robert P. Keller, president and chief executive of New Dartmouth Bank. "This cannot be accomplished without first taking care of the data centers."

Mr. Keller is not new to the consolidation game. In the late 1980s, he played a key role in the restructuring of American Federal Bank, Dallas, which was an amalgam of 12 troubled southwestern financial institutions.

Measures of Success

Since the New Hampshire bank has been in operation only nine months, little profitability data is available. However, Mr. Keller said, the bank has a high customer retention rate, which is a good measure of its success. Systematics will manage New Dartmouth's data processing and check processing operations through 1996.

"With all the recent merger activity, you could probably operate a pretty successfully business just doing consolidation work," said Systematics' Mr. Lahti. "But you're not likely to see any that go as smoothly as this one."

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