People's Heritage Financial Group, Inc., has been on an acquisition tear. Since 1994, the $5.4 billion holding company, based in Portland, ME, bought five banks plus two branch networks, totalling $2.217 billion plus $217 million in deposits. The holding company operates under four subsidiary names.

Just keeping a finger on cash flows in that environment is tough enough, so trying to understand your portfolio and client relationships does nothing to simplify matters. But People's Heritage had hopes of doing so and began looking for the right software solution in early 1995.

The finalist: OnePoint from Carmel, IN-based Baker Hill Corp. The software package integrates six modules, including business development, profitability, risk management, credit memo and portfolio management features plus a host interface. Implementation began in January, 1996. "Baker Hill was the only one that had the integrative functionality we were looking for," says Janice Reardon, vp of commercial operations at People's Heritage.

A major point favoring Baker Hill: The bank wanted to better understand what was actually going on in their loan portfolio, in terms of Modern Portfolio Theory, especially in its industry exposures and portfolio weightings, says avp Jennifer Hamilton. "That's somewhere we really want to go," she says. "It was one of the reasons we wanted to buy software like this." Baker-Hill's portfolio management module, called PRICE, allows the creation of alphas and betas and can compare specific customer profitability figures against the portfolio, as well as track deteriorating trends.

"But that wasn't why we bought (the Baker-Hill) package," says Reardon. "We had some business problems we needed to solve," including tracking financial statements, creating a decentralized input capacity for financial statement information, centralized reporting and measuring profitability both at the customer and the portfolio levels. We had tried several other solutions, (but) they weren't flexible enough to do an effective job," she adds.

Reardon's group was the first to roll out the risk management program, called STAN. It wasn't easy; three acquisitions in 1996 required pauses in the conversion to accommodate three major mainframe conversions. One of those, the acquisition of the Bank of New Hampshire (BNH), rolled $1.5 billion in assets into what had been a $250 million subsidiary, the First National Bank of Portsmouth. BNH also had the Baker Hill product, but operated it in a DOS environment. "The biggest challenge has been moving the wide area networks around, and getting the communication links in place," says Reardon. "We had some real challenges downloading information from the mainframes into Baker Hill, but it was a conversion challenge" because it involved adding a second bank and more capacity to the download process.

People's uses the STAN module for all of its commercial loans, which can be less than $100,000; large portfolio relationships at People's are no greater than $12 million. Portfolio's can include lines of credit, term loans, commercial real estate loans, inventory finance and even a very small amount of factoring.

"We've had a lot of customization of STAN to better tailor the output to our customer base, which tends to be smaller customers," adds Reardon. "I would say that has been very helpful in analyzing financial statements. The savings there has been significant, just in terms of time spent, and quality of information gathered. We no longer have credit analysts at each desk interpreting data and massaging it to match their own formulas, because we've been able to put in company standard formulas, which allowed us to customize the financial spreading to match exactly what we wanted.

"We're making information more accessible to the lenders; a lender can now pull up the most recent information available to the bank on any customer. That information was previously buried in paper files, and this makes it accessible and gives them the summary information that the credit department determined at the time it was received."

Since the Baker Hill package is so new to the bank, says Reardon, "we don't have enough data to reach any conclusions (about how useful it's been for the bank's bottom line). We've (only) introduced it to about half our (85 member) lender base." The total user base is over 200 people.

On the other hand, Reardon adds, she's delighted with her solution provider. "They really know how to listen to their customer."


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