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MONNETT, Mo. – Jack Henry & Associates, parent company of popular credit union data processor Symitar Systems, continues to bolster its add-on product menu, this time through acquiring Omaha, Nebraska-based ProfitStar. ProfitStar provides asset/ liability management, profitability management, and budget and reporting solutions. It serves approximately 2,100 bank and credit union clients, 700 of which are credit unions. ProfitStar President and Founder Bill Goedken said while credit unions make up less than half of the company’s current base, they make up more than half of its new business, indicative of CUs waking up to the importance of profitability analysis. “Now that margins are starting to be compressed, more credit unions are starting to use it. They want to know where they can get more out of delivery channels, products, ALM and risk positions. Because things are tighter, they need to look more in-depth at all of this,” said Goedken. Earlier this year, ProfitStar was named as CUNA Mutual’s preferred provider of ALM and profitability solutions. “Our clients have a higher margin than non-clients. That has been the case since we started doing a study in 1999. It goes back to analyzing the credit union as a business, and saying we need to give value back to the members, let’s use tools to really understand the product line, to market to the membership,” said Goedken. When ProfitStar signs on a new profitability client, they can look back at 10 years of data, and look ahead 10 years. “That’s 20 years of trends and projections,” said Goedken. Goedken, a CPA, founded the firm 22 years ago. He used to work for Deloitte and Touche and purchased an ALM product from the firm, which was the backbone of his new business. “It was a natural progression to move to the profitability line,” he said. “The goal is if you can segment your membership and spot trends such as we do for profitability, you can segment and say OK, there’s a combination of share accounts, share drafts, credit cards and auto loans that is a very hot combination and can potentially be marketed to other members. You can find out things like HELOCs are more profitable than auto loans and why. This helps the marketing folks know where to target,” said Goedken. Its ALM solutions also come into play here as they help the CU determine an appropriate amount of penetration with any given product, which could affect marketing strategies. After founding the company and leading it for 22 years, Goedken said he doesn’t feel any sense of loss having sold it to Symitar, because it will operate as an independent subsidiary with everything staying in place. “I would say we’re a mature company, but this transaction is more of a rebirth,” said Goedken. He noted that all 76 employees will stay on board, its Omaha headquarters will remain, and he even plans on adding some new employees. “We’re an independent strategic subsidiary, so business is as usual in Omaha, but we’re able to gain technical expertise on data warehouses and interfaces of different processors that is more readily available through Jack Henry,” said Goedken. For Symitar, this continues its strategy of buying companies that fill product gaps, and adding products it can market across platforms to both banks and credit unions. “They bring a solid set of ALM tools we really didn’t have, so it brings an ALM product and it brings some very good contact with the C level people in banks and credit unions. A lot of our folks tend to be good at calling on the operational level of banks and credit unions, but not the C level,” said Jack Henry CEO Jack Prim. ProfitStar does have some overlap with one of Jack Henry’s recent acquisitions. Earlier this year, Jack Henry acquired Stratika, a Minnesota-based profitability management firm. The Stratika profitability solution will be altered to work for credit unions and be offered by ProfitStar, replacing its existing profitability solution, though that solution will still be supported. Jack Henry has actually had a reseller agreement with ProfitStar for about six months. Prim said ProfitStar is another example of a company that brings products it can market outside of its core clients. A number of its acquisitions have resulted in new add-on products for CUs, such as biometrics from its Verinex acquisition, check processing from its TWS acquisition, fraud solutions from its Yellow Hammer acquisition, to name a few. Prim said Jack Henry is working on offering CUs business intelligence solutions from its Tangent acquisition. This is a new strategy for Jack Henry. Prior to 2004, the company mainly acquired firms for products it could market exclusively to its existing client base. Prim noted that in terms of overlap, roughly 500 Jack Henry clients use ProfitStar solutions. The ProfitStar acquisition is expected to add $6 to $8 million in gross revenue for Jack Henry in the remainder of fiscal year 2006. [email protected]

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