Magazine article American Banker

Core Processor Has Record Quarter

Magazine article American Banker

Core Processor Has Record Quarter

Article excerpt

Jack Henry & Associates Inc. is among a handful of technology vendors profiting from unusually high demand for new core processing systems.

Year-2000 concerns "have forced a lot of banks to make a decision for immediate action," said Michael Henry, chairman and chief executive officer. "We are hearing it from our customers and feeling it from the regulators," he said.

This demand is reflected in Jack Henry's record financial results for the quarter that ended June 30, the fourth of its fiscal year. The Monett, Mo., software vendor said last week that its revenues rose 86% from a year earlier, to $37.8 million.

Earnings were up 66%, to $7.3 million. That was 37 cents a share, up from 23 cents and beating First Call's consensus estimate by 6 cents.

Fiscal-year revenues were up 37%, at $113.4 million. Net income grew 41%, to $22 million.

The favorable earnings have fueled the company's stock price, which increased $4.75 last week, to close Friday at $42.50. Since Jan. 1 the stock has risen 56%.

Jack Henry has sold its software to 1,550 community banks, or about 30% of the market, said Kevin Dyches, an analyst at Prudential Securities. Most of Jack Henry's customers run its software in-house.

The firm, which has 650 employees in nine states, has been cultivating a business in outsourcing since acquiring Liberty Banking Services from Broadway & Seymour Inc. in 1995.

Since then it has expanded that customer base from 40 to 85 and has a backlog of new outsourcing business worth $20. …

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