"Our competition worked twice as fast." (re-engineering a loan division)

Here's how one financial institution solved a productivity problem by re-engineering its loan division.

When we first realized that our competitors were advertising turnaround times of less than 30 days for loan applications, when ours were running 45 to 60 days, we knew we had to do something,"

says Larry Rinehart, president and CEO of Pomona First Federal Savings & Loan Association. "Pomona has served the southern California 'Inland Empire' for more than 100 years, and we've built up long-term relationships that stretch across generations. But we have to stay competitive to survive, especially in this fierce economic climate. And our long turnaround time was just one indication that we weren't making the grade.

"We knew inefficiencies had crept in over the years, and we were ready to take strong measures. But in the process of streamlining, we had to make sure we didn't damage customer service. And we wanted to make the transition as easy as possible for our employees, who are, after all, the ones who provide that service."

Analyzing the Situation

Pomona First Federal Savings & Loan Association was founded in 1892 to serve an agricultural community, primarily citrus growers. Since then, the community has evolved into a mix of agriculture, light industry and housing just east of Los Angeles. Pomona has grown along with the community to become one of the largest retail mortgage lenders in southern California, with $1.65 billion in assets, 21 branches, 470 employees and a loan portfolio of 17,500 mortgages.

"The growth actually contributed to a lot of our problems," says Kevin McCarthy, senior vice president. "As we expanded over the years, we added branches and office space on an ad hoc basis. As a result, the loan function was spread among five separate locations in three cities, which created enormous overlaps and redundancies. This meant delays in communication, duplication of effort and even mislaid documents. We knew there must be a better way to operate, and we had to find it."

The pressures on management were also increasing. First, the economy in southern California was generally regarded as one of the hardest-hit in the country, with no sign of improvement. On top of that, competition was growing, not just from other lenders in the state, but from huge national mortgage-lending institutions. And the respite provided by the surge of refinancing at lower interest rates was coming to an end.