Hogan Systems Inc. said First Empire State Corp. has agreed to install Hogan's software for branch, product, and customer profitability measurement.

Bank officials said they had not yet signed a contract.

Hogan officials said this week that the Buffalo-based banking company, which has $9.2 billion in assets, has agreed to license the software from International Business machines Corp. to replace seven other programs.

Hogan, based in Dallas, developed the earnings analysis software that IBM markets.

Decision-Making Aid

Banks are looking to profitability software to help make pricing decisions, identify desirable customers, and, in some cases, decide which branches to close. It can also help a bank determine how well a potential acquisition would fit its strategy.

Five banks have installed the systems, including PNC Financial Corp., First Bank System Inc., and KeyCorp.

First Empire's deal includes new software from Hogan called a data staging warehouse. It is designed to translate data drawn from core systems, such as deposits, loans, and credit scoring, into a formal that bank executives, financial analysts, and branch managers can use.

This "warehouse" would eliminate much of the customization ordinarily required when software is installed to measure profitability or credit risk.

Cost Is Under $1 Million

Observers estimated the cost of the First Empire installation at just under $1 million. Hogan officials said the bank expects to have the system operating for all 115 branches by December.

First Empire plans to use the system for commercial customers before adding retail customers, according to Hogan.

"For a smaller bank, this is an aggressive stance," said Urey W. Alexander Jr. of Hogan. "They'll be able to see which retail customers break even for them and decide how to handle their relationships."

Hogan siad it is close to signing a bank partner to codevelop software for managing credit risk by customer, product, country, and instrument.

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