Treasury Services Corp., a leading developer of profitability software, expects to complete today the acquisition of Worth Information Inc., which markets customer information data base products.

Terms were not disclosed. The companies plan to integrate Treasury Services' and Worth's primary software products to provide improved tools for customer profitability analysis, the companies said.

In recent years, determining the profitability of customer relationships has become a popular endeavor for retail bankers. As measurement tools have improved, bankers have found that many of their basic assumptions about customer profitability were flawed.

"With the addition of Worth, Treasury Services will be the only financial systems developer capable of offering robust and fully reconciled data for both profitability analysis and customer relationship management," said John Dorman, president of Treasury Services, based in Santa Monica, Calif.

Worth, based in Minneapolis, expects to earn $2 million in revenue this year. Its primary product, called Harvest, is a customer information data base system that runs on the Unix operating system. The system ties multiple accounts to a single entity.

Its customers include Mellon Bank Corp. in Pittsburgh, Canadian Imperial Bank of Commerce in Toronto, and about 30 community banks.

Treasury Services' main product is known as TSER, for Treasury Services Evaluation and Reporting. The software system is designed to let banks allocate costs to specific business or product lines.

Based on its work with Chemical Banking Corp., Treasury Services recognized the need for better retail customer profitability tools, said Steve Reich, a spokesman for the company.

In many cases, the mere fact that a customer had multiple accounts did not guarantee that the customer was profitable.

In fact, only about half the customers with more than one account proved to be profitable, Mr. Reich said.

"We're now reaching the point in technology where you can actually deliver a measure of customer profitability that is precise enough that it ties back to the bank's general ledger," Mr. Reich said.

Today, "You can get excellent householding software, and excellent profitability software, but no one vendor can do both."

The deal will give Worth "significant capital to pursue greater product and distribution channels," said Peter Alworth, president and chief executive officer of Worth.

Bankers have been struggling to understand customer profitability better.

"Much of our product design is based on assumptions about cross-sell ratios and about what a profitable relationship entailed. But the research is continuing to prove many of these long-held assumptions are invalid," said Ross Ronnenberg, senior vice president of systems and technology at Marquette Bank, a $1 billion-asset company in Minneapolis. His bank is a customer of both companies.

He said recently he had seen research indicating that the most profitable relationships had an average cross-sell ratio of four, and the least profitable relationships had even higher ratios.

Marquette, which competes with Norwest and First Bank System, needs to "know where we can be profitable, so we can focus our efforts," Mr. Ronnenberg said.

Bankers also would like to look at customer profitability over time - something that is difficult to do with current systems, said Deb Gustafson, vice president of marketing at Dubuque Bank and Trust, in Dubuque, Iowa.

The bank has installed Worth's Harvest data base system. "Hopefully Treasury Services will be able to provide that."

She added, "My biggest question is how it will handle interest rates."

She said that year-to-year interest rate fluctuations make it difficult for profitability systems to reflect the true profitability of loans offered in prior years. A loan that was offered at a low interest rate a few years ago was profitable then, but might look unprofitable now, she said.

One factor that attracted Treasury Services to Worth was the similarity of their technologies, the companies said.

Both Treasury Services and Worth are designed for use in client/server environments using a relational data base from Orcale. In addition, both run on computers from Sun Microsystems Inc., AT&T Co., and Hewlett-Packard.

Over the next 18 to 24 months, the companies intend to completely integrate the two software systems, said Mr. Reich.

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