First NH Bank has installed a sophisticated funds transfer pricing program that has improved the bank's profitability measurements, said officials.

The $3.3 billion-asset institution, based in Manchester, N.H., is using Sendero FTP software, made by Sendero Corp., Scottsdale, Ariz.

The PC-based system. which runs in Windows, makes it possible to gauge the profitability of the bank's lines of business and products.

The bank, which went live with the system in July, uses it in its profitability measurement department, which is responsible for measuring business unit, product, and customer profitability.

Sendero FTP results are integrated with noninterest income and expense measurements for a total profitability picture.

"With Sendero FTP, we're able to track profitability to the instrument level," said Susan McNiff, vice president and director of profitability measurement at the bank.

Each loan, certificate of deposit, or other product is transfer-priced individually, so the bank gets a more accurate measure of profitability, said Ms. McNiff.

"Previously, we were using a spreadsheet program that was too rigid," she said, The bank was using maturity pools, which involved gathering similar instruments into the same pools to be priced as a group.

This method "didn't always reflect an accurate interest margin on specific instruments," said Ms. McNiff. "Now we're getting more realistic measurements."

"Not so long ago, a sophisticated application like this would have run on a mini or mainframe," said Ken Clemens, product manager for Sendero FTP. "PC technology has advanced to the point where decision-support systems like this can be desktop tools."

Sendero customized the software for the bank, and helped them download data from their application systems.

"We're getting good support from Sendero, which is one reason we chose their software," said Ms. McNiff. "Also, we use a Sendero asset/liability management simulation model."

First NH has more than 70 banking offices and 146 automated teller machines.

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