Magazine article American Banker

Hogan and Jack Henry Gained in 2Q as Demand for Software Took Off

Magazine article American Banker

Hogan and Jack Henry Gained in 2Q as Demand for Software Took Off

Article excerpt

Two industry leaders in banking software, Hogan Systems Inc. and Jack Henry & Associates Inc., announced higher quarterly earnings last week, both exceeding Wall Street's expectations.

The two firms provide core accounting systems to financial institutions, albeit to different segments of the market - Dallas-based Hogan focuses mainly on mainframe software used by some the nation's biggest banks, and Monett, Mo.-based Jack Henry develops systems that run on midrange computers used mostly by community banks with assets under $2 billion.

The upbeat earnings reports signaled a greater interest by banks of all sizes in purchasing packaged software to run their institutions, as opposed to developing these systems by themselves or outsourcing their data processing activities, analysts said.

"There's something great happening for both these companies," said M. Arthur Gillis, a New Orleans-based bank technology consultant. He noted that Hogan is profiting from growing maintenance and professional-services fees from its blue-chip client list, while Jack Henry has "nearly limitless" opportunities licensing its software to the 5,000 community banks that so far have been largely unaffected by the merger trend hitting larger institutions.

Hogan reported that it had net income of $2.3 million, or 15 cents a share, in its first quarter of fiscal 1996 that ended June 30. This compares with earnings of only $80,000, or a penny per share, a year earlier.

The software firm's profits also exceeded an analysts' consensus of 9 cents per share for the period, according to First Call Corp. …

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