Months of searching finally led Hibernia National Bank to nearby Baton Rouge, La., and a software company that could develop the automated underwriting system for small business the bank was looking for.

So in 1992, the New Orleans-based subsidiary of Hibernia Corp. joined forces with Appro Systems Inc. to produce the software company's 20/20 Small Business Lending System. Designed to speed up the underwriting process, the software was intended to do for Hibernia's newly emphasized small business division what Appro's retail software had done for the bank's consumer business.

Within a year, the system was generating benefits to the $6.3 billion asset bank.

"It costs us about 33% as much to underwrite a loan today as it did two years ago," said Bob Kottler, a senior vice president with Hibernia and manager of its small business product and lending group. "A good chunk of that (savings) came from having the automation in place."

The benefits come from automating a number of functions that were previously handled by people. Once data is entered manually, the system automatically consolidates the information, calculates the ratios, and conducts credit searches on the business and its principals.

"What we've tried to do is provide a factory that allows them to manage their workflow from the origination of the loan all the way to the booking of the loan," said Craig Uffman, a founder and vice president of Appro Systems.

Appro designed the system to adopt each bank's internal credit policy, allowing it to automatically accept or reject applications based upon the bank's own criteria. These policies can be easily modified when credit conditions change.

Mr. Uffman said the program was also designed to eliminate redundant effort. Where a loan officer once spent four hours preparing memorandums and rewriting credit information used to justify each loan decision, the system now prepares the documents automatically, incorporating the financial information in the letter.

The loan officer doesn't enter the process again until all the information has been analyzed and processed, Mr. Uffman said. "Then it arrives in the officer's electronic queue and all they have to do is make a decision."

The system is helping Hibernia achieve its No. 1 goal: to get the approval time for small business loans down to a few hours. Whereas it took two weeks to process a loan application when the bank started its make over in 1992, today it takes less than 24 hours.

The system is beginning to catch the eye of bankers outside the Bayou State. CoreStates Financial Corp. and Chase Manhattan Corp. have already announced they are buying the system, and another five banks are said to have signed purchase contracts.

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