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MONNET, Mo. – The merger of CU Solutions, Inc. and Jack Henry & Associates is truly a merger of new beginnings, say the companies’ leaders. For Jack Henry, a name well-known in the banking arena but still finding its way on the CU scene, it’s a way to start serving small credit unions. In the banking realm, Jack Henry serves about 2,000 banks, having good success in the $2 to $5 billion range, but also serving banks as small as $75 million, as well as de novo banks. Jack Henry is already in the large CU space in a big way through its Symitar subsidiary (acquired in 2000), which serves some of the largest CUs in the nation. It also has a product for mid-sized CUs in Conductor, a product of the former Peerless Systems, the first CU DP vendor Jack Henry acquired back in 1998. But while having a quarter of the banking market, it has a fragment of the CU market, with just 375 CU clients. Jack Henry has been pleasantly surprised by the success it’s seeing in the CU industry, and makes no bones about wanting more. “Frankly the credit union portion of our business is growing at a faster rate than the banking portion of our business. We’re a public company. We have an interest in growing revenue, and we believe the credit union industry offers us some significant opportunities,” said Jack Prim, COO of Jack Henry who will be transitioning to President in January. The small CU market is vast. Approximately 6,545 CUs, or 67% of the industry, have assets less than $20 million. Prim said smaller CUs were calling the company for a solution, but until now Jack Henry didn’t have anything that made fiscal sense for them. Acquiring companies to get into a new arena has been a recipe that’s worked well for Jack Henry over the years. Fiserv of course is also well known for its acquisitive style, but Mike Henry, chairman and CEO of Jack Henry, said CUs will notice one major difference in how Jack Henry does business. Unlike Fiserv, where each of the six CU DP subsidiaries has its own sales force and actively compete against each other, Jack Henry will put all its CU solutions in one toolbox and let the Jack Henry sales staff sell whichever one fits a CU. Right now that toolbox consists of Episys (Symitar’s core product), Conductor (the former Peerless product), and coming soon the CU Solutions’ Cruise/SQL PC-based system. Some in the industry may have been surprised when CU Solutions was sold. Its founder and sole owner Kai Ravnborg has always preached about how small processors can compete with the big boys through good technology. Ravnborg himself was a bit surprised. “If you talked to me six months ago and asked if I would sell CU Solutions, I would have told you you’re crazy. When Jack Henry approached us and I talked to Jack about his company philosophy, and knowing that Symitar was part of Jack Henry it peaked my interest,” said Ravnborg. While Ravnborg says CU Solutions was having no problems staying innovative, its weakness was on the sales side. “We’ve tried to grow, try to get our name out there. We just don’t have a sales organization. Even our management, meaning me, was very weak. We’ve recognized those weaknesses this past year more than ever. We were not going to get to the marketplace without doing something different,” said Ravnborg. Ravnborg is passionate about his company’s leading edge style. “We were the first vendor in the industry to be in the Windows market. We introduced our Windows product back in 1993. We were also the first to use an SQL server,” said Ravnborg. CU Solutions generated revenues of approximately $2 million last year, of which approximately 40% was recurring revenue. It serves 140 CUs, primarily CUs under $20 million. The small 20-person staff of CU Solutions will be moving from its Fort Mill, South Carolina headquarters 12 miles across the border to Charlotte, N.C. into an existing Jack Henry facility, though there was no timeframe for the move. Ravnborg is excited about not having to deal with the operational side of running a business anymore. All of the HR, accounting and other such operational work will be handled by Jack Henry. Time-consuming tech support is also off the to-do list for Ravnborg’s staff, or as Prim put it, “they don’t’ have to fool with any of that, we have a staff of 10 people there (in Charlotte) who all they do is deal with network types of calls and questions.” Jack Henry employs 2,100 people. And of course the sales function will transfer to the Jack Henry sales team. CU Solutions has been installing about a system a month, a number Prim said should improve post-merger. Prim was adamant however about not growing the CU Solutions business too quickly. As for being newcomers with CUs, Henry said he’s learned it’s certainly a word-of-mouth industry. “There’s a little bit of that in the banking market. But in the credit union market it happens much faster. Credit unions are much more willing to talk to each other. Sometimes it’s difficult for us to talk to our banking clients in the same room,” said Henry. For Ravnborg, who founded CU Solutions back in 1982, there’s really no sadness at all about this move. “It was actually a very easy decision once I put down everything on paper and thought it out. Going forward it was the best decision.” Terms of the deal were not disclosed. As sole owner, Ravnborg also sought to reap a nice payday from the deal, however Ravnborg said money was not a factor in his decision. “I’ve had other offers before, and never had any interest in selling. This whole thing was all about what Jack Henry and Symitar brought to the table to get our product out to a bigger market, and let us focus on technology.” Despite Jack Henry’s size, ($400 million in revenue at end of the most recent fiscal year) Prim and Henry said like CUs Jack Henry has a family atmosphere. There are even stories of the company’s founder (you guessed it Jack Henry) mowing the lawn outside the company’s headquarters in Monett, Mo., a town of just 7,000. He used to but not anymore, said his son Mike. “You don’t see Jack Henry mowing at the headquarters these days. He grew up on a farm and he enjoys mowing grass,” said Henry. He said he has plenty of grass to mow on his farm, and spends a lot of time on his houseboat. Ravnborg, who did not know what his new title would be once the merger is complete, said he will become much more visible in the marketplace. “My presence will be bigger now even though we are merging into another organization. I’m not going away any time soon,” said Ravnborg. [email protected]

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