SAN DIEGO – Jack Henry leaders say they knew they were getting a solid company when they acquired credit union data processor Symitar Systems in 2001, but they didn't know the credit union business would be such a revenue generator. Traditionally a bank processor, Jack Henry has learned just how profitable the credit union sector can be. "We've seen great results in the credit union business. It has grown significantly for us. In the most recent quarter, the credit union segment was 20% of revenue," said Tony Wormington, COO of Jack Henry and soon to be president of the company. To put the 20% stat in perspective, Jack Henry reported revenues of $120 million in the first quarter of this year. Wormington said 20% is solid given the company has been serving banks since 1976 and is so new to credit unions. But more so, the revenue stake has been growing steadily, especially over the last two years. "That segment of our business is growing faster. Our margins continue to get better. It will become a bigger part of our revenue and our bottom line profit." Though Symitar (merger finalized in 2001) was its first major acquisition affecting CU data processing, it did acquire Peerless Systems, which had credit union clients, back in 1998. Peerless however didn't have the same quality system and overall name recognition among credit unions said Wormington. Just last year Jack Henry acquired CU Solutions which gave it entry to the smaller CUs. Its CRUISE online system has some 169 CU clients. In total Jack Henry now serves approximately 565 CUs according to Wormington. Symitar itself added 29 new clients last year. Symitar President Bruce Cormode said Jack Henry is bringing the things to the table it hoped when Symitar decided to make the jump from the private to public sector. Symitar was originally founded by Manny Prupes, John Landis and David Held. For years it seemed the company would stay private for a very long time, but the three had apparently been seriously discussing merger options in 1999. Prupes, who was often known as the face of the company, died at the age of 53 in early 2000. The deal to merge with Jack Henry was inked in May of 2000. "The main reason for partnering with Jack Henry was to ensure we had the capital backing. Every time we talked to a prospect, they'd say `you're privately held, what are you doing tomorrow'. We removed that entire issue off the table," said Cormode. Wormington said Jack Henry's approach is more of a one company, one single source provider approach. "If you look at the majority of our competitors they have more of a silo environment. They have a number of core products all competing with each other with different sales people. We believe in wrapping all of our solutions in one model, so we're not out there competing with each other," said Wormington. Of course Jack Henry does have a few systems for its CUs and banks to choose from, but they are geared to different types and sizes of institutions and ancillary products are shared among them all, said Wormington. Jack Henry does try to acquire best of breed products, said Wormington. For example it recently acquired Yellow Hammer Software for its fraud solutions. The company is in the process of integrating those products company wide. It has also made acquisitions for CRM products, ACH, regulatory reporting, and others. Symitar has always been geared for large credit unions. It now has 23 of the top 100 credit unions as clients. At press time it announced that the $4.3 billion Alliant CU (formerly United Airlines Employees CU) is converting from AFTECH to Symitar. Though it is very successful in the top 100 CUs, Symitar has worked to move down the asset ladder a bit. "We've drawn a line at the $100 million mark based on the complexity and flexibility of the system," said Symitar President Bruce Cormode. The $100 million mark likely wouldn't have even been possible even a year ago because Symitar has always been an in-house system shop. It launched an online product in mid-2003 that is feasible for some $100 million range CUs. So far Symitar has seven credit unions on the system, with 12 more in the pipeline. But even with the online system, it is seeing success with larger CUs, namely corporate credit unions. It has a deal with the $40 million U.S. Central for its new network system (U.S. Central was on an EDS system for over 20 years) that will bring in a number of corporate credit unions as Symitar clients. There are 29 total corporate credit unions. (Though a number of corporates have also decided to move to Open Solutions' credit union system.) Cormode said the advantages of an online system have always revolved around cost in the minds of many credit union leaders. Not having to maintain an in-house DP staff means the CU doesn't have to pay what are often pricey IT salaries. But there is another factor for going online these days. "In this world of security, credit unions are looking for alternatives to an in-house system where there a lot of security issues you really have to be aware of," said Cormode. He said more and more CU leaders are throwing security into the system buying discussion, indicating they like the idea of security being handled by a company that has gone through intense security audits, which most processors do. Cormode said to meet the needs of larger and even mid-sized CUs, processors are going to have to show how their system can help CUs serve businesses. This is another area where Jack Henry's girth helped Symitar, said Cormode. "The talent was in-house at Jacke Henry to work with our developers and technicians to come up with the design necessary to now offer a very well accepted members business offering. We've addressed the deposit side, the lending, and the participation," said Cormode. Cormode said though the days of being private are over, it's good to be an important cog of a bigger company. "We are a very major player in the Jack Henry family." [email protected]