Problem: The process of documenting and calculating the allowance for loan and lease losses became too cumbersome to do in Excel spreadsheets for a Tennessee community bank.

Solution: MidSouth Bank deployed Sageworks's Surety, software that automates the reserve process as well as produces reports to show to examiners, auditors and board members. The Federal Reserve Bank of Atlanta conducts the examinations at MidSouth.

Like many community banks, MidSouth Bank of Murfreesboro, Tenn., was relying on various Excel spreadsheets to model and document its calculation for allowance for loan and lease losses.

That required much manual data entry for the $250 million-asset bank. Its Excel process demanded someone to input data such as principal and interest balances on impaired loans and changes made to accrual status, interest rates, maturity dates and loan numbers as well as to input portfolio balance numbers used to calculate historical loss percentages for the remainder of the portfolio. MidSouth, which runs monthly reports, estimates its Excel spreadsheet modeling process took about two weeks to complete a calculation.

"The system that was born internally became, for lack of a better word, somewhat of a little monster of its own," Leath Ann Pomeroy, senior vice president of credit administration, tells BTN.

When Pomeroy attended last year's Fiserv Forum, she was made aware of Sageworks' Surety software, which promised to speed up the process and improve the accuracy of the estimates. Surety connects to banks' core systems, FDIC call reports, and to the Fed's economic database, among other data sources.

The promise of time savings was certainly appealing to MidSouth. "Like a lot of community banks, we face many challenges with increased regulation because there are numerous new compliance initiatives that we are required to keep up with," Pomeroy says.

Still, its examiners were pleased with what the bank had in place, which is why Pomeroy remembers feeling that "if we were making any change, it had better be good. I really grilled the users of the service and vendor at the forum to find out all about the product." Some of those inquiries included questions about the integration with the core, if the rollout took place the way the bank expected it to and the strength of the vendor's customer service. "The feedback that I received from other users of Surety, coupled with the expertise of the vendor, really gave us a high comfort level with the product and minimized our need to pursue other options."

Further firming up her decision to ink a contract was that Sageworks was a preferred partner of MidSouth's core provider, signaling an easier integration process.

As of autumn, MidSouth started running Surety along with its old module. "We wanted some time to run both modules as we transitioned over," Pomeroy says. "Our existing model was almost like a security blanket. …With the examiners praising our existing model and documentation, it was a difficult decision to make a change."

What the bank found from using both methods? The new methodology was less susceptible to error. "It gave us a greater comfort level that a lot of possibility of human error is just taken away," she says. "You do get data wrong from time to time when you're relying on your fingers."

The bank made the complete switch to Surety in January. MidSouth has yet to complete an examination running Surety, but Pomeroy says time savings has already been a huge benefit to the bank: What took weeks now takes days.

Another advantage from the technology deployment is less reliance on one individual. "We were really dependent on a certain person being here," Pomeroy says. "If something would have happened to that person, we would have been in the rough spot. … With Sageworks, the module does so much of the work itself. It's a peace of mind thing."