Fiserv Inc. has acquired a company that provides interest-rate risk analysis
to small and medium-size banks and thrifts.
Milwaukee-based Fiserv's acquisition of Performance Analysis Inc., which has been renamed Performance Analysis by Sendero, will provide asset-and-liability management reports to institutions with assets of $150 million to $750 million, said William J. McGuire, senior vice president. The company's purchase price was not disclosed.
The new unit has used software from Sendero Corp. -- also owned by Fiserv -- to generate interest-rate risk reports for thrifts as a service bureau for several years.
The company expects to expand its business with commercial banks, as bankers are increasingly interested in the ability to forecast the impact of different interest rate shifts on the market value of a bank's portfolio, Mr. McGuire said.
Bankers are facing new regulatory requirements that require institutions to include their exposure to interest rate risk in computing capital requirements.
New accounting requirements also are pushing bankers to understand their exposure better. FAS 107, the new rule from the Financial Accounting Standards Board, requires that institutions report the market value of their portfolios.
"As proposed regulations catch hold and interest rate sensitivity increases, it won't be a matter of who wants to do this -- banks will have to be able to do this," said Mr. McGuire.
The unit has about 500 customers, Mr. McGuire said.
Several commercial banks already are using the service. First Tennessee Bank has been a customer of Performance Analysis for three months, offering the service to its own clients in its bond division.
"We're better serving our customers by providing [the Performance Analysis] product," said Rick Ruffin, vice president of the financial services group at First Tennessee's bond division. "Our customers need the rate shock analysis."
The acquisition by Fiserv will give the unit a national marketing force, which it has lacked, Mr. McGuire said.
"The affiliation with Fiserv is good," Mr. Ruffin said, "The drawback with the Performance Analysis group has been that it was small and not adequately capitalized."
Mr. McGuire began offering the Sendero software on a service-bureau basis when he was at the Federal Home Loan Bank of Cincinnati. Several Federal Home Loan Banks offered similar services, Mr. McGuire said, but most of the programs were ended in 1991. "When the Federal Housing and Finance Board came down with mandatory cuts [in 1991], we got the axe," said Mr. McGuire.
He then set up Performance Analysis Inc., which continued to offer rate risk analysis, and other services including Community Reinvestment Act mapping and business planning.
Although the unit now reports to Sendero management, Performance Analysis will compete with its apparent for the medium-size institutions. But some banks will want to run the pricier in-house software, and others will want to take the less-expensive service bureau route.
Performance Analysis offers several levels of service. A comprehensive rate risk report costs $3,000 a year and includes gap analysis, rate shock analysis, rate cycle analysis, and rate forecast reports.
The rate shock analysis alone costs $1,350 per year.
A peer group comparison by exposure to interest rate risk costs $750 a year.
The prices of Sendero's asset-and-liability management software range from $4,995 to about $75,000.