Founded in 1997, CNLBancshares, Inc’s (CNLBank) mission is to be the largest independent bank headquartered in Florida, while being recognized as a bank of choice for middle market businesses, commercial real estate, developers, home builders and high-net-worth individuals. By partnering with Harland Financial Solutions, the bank has leveraged its core processing technology to not only differentiate itself from its competitors, but also to turn its mission into reality.

Chirag Bhavsar, CFO and EVP, CNLBank

Back in 2003, CNLBank was the 46th largest commercial bank headquartered in Florida with $100 million in assets. By the end of 2006, it had risen in the ranks to #11 and had organically grown to about $1.3 billion in assets. In fact, the bank has grown at a CAGR of 60 percent for the last five years, and its earnings have grown at a CAGR of more than 100 percent. CNLBank now has separately chartered banks in some of Florida’s major metropolitan markets, including Jacksonville, Orlando and Southwest Florida. CNLBank plans to enter additional markets as opportunities become available.

This exponential growth is attributable to solid decision-making, and that would not have been possible without support from Harland Financial Solutions’ Phoenix™ System for core processing. The Phoenix System’s .NET-based architecture and true relational database provides banks with the tools necessary to customize their core environment. It is fully integrated with the Microsoft Office Suite, and its middleware engine, dubbed PhoenixXM, allows banks to integrate third-party solutions with the core system via Web services.

“The Phoenix System makes it easy for us to access data that is difficult to obtain in other core processing systems,” says Chirag Bhavsar, CFO and EVP of CNLBank. “The automated tools are incredibly helpful in managing our day-to-day business.”

CNLBank’s philosophy is that its employees are what differentiate the bank from its competitors. At the same time, it recognizes that people are only as good as the systems behind them. To this end, the institution wanted to leverage technology to drill down to granular levels of profitability and then use that information to reward employees based on their performance and their overall contribution to the organization.

As Bhavsar points out, this approach is unique in the banking industry. “Most community banks reward their employees based on their ability to achieve loan and deposit targets,” he says. “Those things are all well and good, but they never get to the bottom line, which should reflect a comparison of their performance to the true profitability of the company.”

CNLBank considered buying a profitability system, but on close examination, it decided a more suitable solution would be to build an employee profitability matrix within the Phoenix System and utilize the tools within Microsoft Excel for analysis. That solution has proven to be a great one. The institution constructed a model that allows it to view net interest income (interest minus expenses) per individual relationship manager over a given time period. The model then attributes additional funding, as well as the amortized costs and transaction fees associated with real estate lending, to the net interest income figure to determine a net interest margin for each relationship manager. It also calculates other key metrics, such as the weighted average life of each loan portfolio.

“By extracting data from the tables within the Phoenix System and feeding it into the Excel macros, we can stack every one of our employees and show them how much income they delivered to the company,” says Bhavsar. “Our goal for next year is to use the model to provide appropriate incentives to our employees and improve our profitability at the same time.”

In the near future, CNLBank plans to apply the employee profitability model to products and customers. Like most banks, CNLBank would prefer to generate more business from its existing customer base because it is less expensive than acquiring new accounts. The model will allow the bank to drill down into the database and customer portfolios to identify the most profitable customers, create a profile of them and then mine the data within the system to identify other customers who should be targeted in marketing campaigns.

Bhavsar adds that the Phoenix System has proven to be extremely flexible time and time again. Deploying a core processing system in a multi-bank holding company can be a challenge, but CNLBank has pushed the complexity to its limits. In Southwest Florida, CNLBank operated as a branch of the Orlando subsidiary for nine months before establishing a separately chartered bank in its own right. In July 2007, it went through a mini conversion. “This was a relatively straightforward process thanks to the Harland Financial Solutions team and the Phoenix System,” he says.


www.harlandfinancialsolutions.com