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SAN DIEGO – Symitar President Bruce Cormode is on extended leave due to health problems, and it is unclear whether he will return to his position. Symitar is a Jack Henry & Associates subsidiary and one of the most successful core processors in the industry. Cormode has been with Symitar since way back from the days of Symitar CEO and co-founder Manny Prupes. Symitar’s success made it a popular target of acquisition, but Prupes and the other two co-founders for years were adamant about keeping the company independent. Back in 1999, however, the three co-founders started to seriously consider a merger deal to keep the company growing. Symitar was eventually sold to Jack Henry in 2000, just a few months after Prupes death. He was 53. Under Cormode, Symitar has been on an unbelievable run of success. According to Callahan & Associates’ 2005 Technology Survey, of the 100 credit unions over $25 million in assets that converted core systems last year, 57 selected Symitar’s Episys. Symitar also won the contract with U.S. Central to convert the system corporate CUs use to do business with U.S. Central. Cormode has credit union roots. Before joining Symitar in 1988, he was SVP of Information Systems at Mission FCU for 10 years. Jack Henry CEO Jack Prim said the company did not want to hide this situation, and decided to let Symitar’s credit union clients know via a letter mailed on June 23. “We don’t know at this point and time if Bruce will be back or not. We wish him a full and speedy recovery and certainly think about him. This is a situation where he needed to take some time away to address these issues,” said Prim. Jack Henry has not named an interim president as Prim said the other Symitar management members in place are more than capable to fill in during Cormode’s absence. Symitar’s management team will be reporting directly to Prim. “If Bruce is not able to come back, we will decide whether we have some candidates internally or look outside for a seasoned manager. We certainly can afford to wait to see if Bruce’s situation improves,” said Prim. Symitar has been a jewel for Jack Henry. Prim said at the time of acquisition Jack Henry didn’t realize just how fertile the CU market would be for new business. “We knew there would be a number of prospects, knew there were a lot of targets, but quite frankly didn’t know we’d hit this many,” said Prim. Jack Henry has traditionally been a banking processor until the Symitar deal. Today it has approximately 7,400 financial institution clients. Jack Henry has invested in Symitar, adding about 60 to 70 new employees a year. It also moved the company into two new larger buildings (spending $30 million on them) in San Diego to accommodate growth. Revenue from the credit union side is surging. According to is fiscal year 2005 data as of March 31, 2005, its credit union business brought in roughly $79 million in revenue, up from $59 million in 2004. Banking revenue is still much larger, with about $315 million in revenue as of March 31, 2005. Jack Henry as a company has been on a bit of an acquisition tear, acquiring approximately 12 companies over the last 18 months. Prim said Jack Henry has so far stayed away from acquiring other CU processors because it feels it has the best system in Symitar and already has a complete core processing arsenal. Instead it is searching out best of breed providers for add on products, such as it did with its acquisition of ATM management firm e-ClassicSystems. That deal has already paid dividends in the credit union space. At press time, Jack Henry announced that the $5.6 billion The Golden 1 CU selected e-ClassicSystems’ ATM Manager Pro to manage its network of 270 ATMs. Prim said the Golden 1 signing is a good example of how Jack Henry’s strategy has changed. “Typically we only sold products to customers that were users of one of our core systems. We’re now selling products to customers that use other core processing vendors,” said Prim. The Golden 1 is on a core system from USERS. Continuing on the add-on product path, last year Jack Henry acquired Yellow Hammer, a software company which specializes in fraud and money laundering solutions. “At the time we acquired them a year ago February, they had 30 installations of their product either installed or pending, one year later we have 200,” said Prim. Prim said Jack Henry recently finished integration to roll out Yellow Hammer’s solutions to Symitar clients. Jack Henry also recently acquired Verinex Technology a provider of biometric security products, which Prim thinks can become a big seller in credit union land with all of the focus on protecting systems and members. He cited Callahan survey stats that indicate 95% of CUs are interested in biometric authentication products, yet only 3% have such products installed. Interestingly, many of Jack Henry’s acquired companies have been very small. It’s acquired a few companies for under $100,000. These are often companies that need resources to get their products further developed. One of the companies, involved in customer profitability, had just two employees. He noted that Jack Henry competitors Metavante and Fidelity have been making major acquisitions in large areas like core processing, trying to fill out their product lines, while Jack Henry and Fiserv have more complete product lines already in place. Prim said add-on products are going to be crucial to keep Jack Henry’s bottomline growing. “Historically we have been and will continue to provide core application software to banks and credit unions. When you look at the market out there, at the consolidation going on in the financial institution marketplace as well as consolidation among our competitors, in order to grow the company we need some additional channels,” said Prim. [email protected]

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