Jack Henry & Associates' purchase of Goldleaf Financial Solutions will help fill gaps in the company's product line, particularly in some areas of prime concern for credit unions right now, the technology provider and industry observers said.The Missouri-based provider of core processing, CRM, cash management and related solutions to more than 8,800 financial institutions announced on Aug. 17 that it plans to buy Atlanta-based Goldleaf for about $19.4 million in stock and $42 million in assumed Goldleaf debt.Jack Henry-best known in the credit union industry for its Symitar core processing and ProfitStar CRM solutions-also would assume access to the 3,500 financial institutions that currently use Goldleaf products, including what the company said are "many mutual customers."Of particular interest to Jack Henry was Goldleaf's remote-deposit capture business, especially its in-house solution, the company said. Jack Henry currently offers that staple of Check 21 technology only as an ASP (remote) service."They also have some nice ACH and wire products that will be a very good fit for our Symitar customers, along with a Web hosting business and a true accounts receivable software solution that might help credit unions attract some small business members," said Kevin Williams, Jack Henry's chief financial officer."We will now be able to better leverage that technology in this high-demand area to our credit union customers," Williams said.That makes strategic sense to Christine Barry, a research director who focuses on banking technology for the Aite Group LLC in Boston."We just completed a survey of about 100 credit unions," she said, "and about a third of them identified branch capture as either a top priority or something they are strongly considering deploying over the next two years."Jack Henry said it would operate Goldleaf-which currently employs about 500 people in six locations-as a wholly owned subsidiary.Jack Henry is a company known for growth through acquisitions: 50 in the past 20 years and 18 in the past decade, Williams said, adding that the Goldleaf purchase "is a bit different, because of the product overlap. In the past, new products were basically bolted on."We've got a pretty good idea of what we're going to do with them. Some data center consolidation, some facility consolidation," he said. "Eliminating duplicate costs will leave us with more money for development of new products, which will help our credit unions and their end users."Barry at Aite Group, however, said, "Anytime there is an acquisition, it tends to have an impact on new development because of the vendors' tendency to have to focus on internally integrating their new acquisitions' products."That can sometimes have an effect on customer satisfaction, but Jack Henry & Associates is used to integrating a lot of products with existing solutions, so I don't anticipate it being a problem for them, but it will have to be something the company will be focusing on in coming months."As for competition in the credit union market, Williams at Jack Henry said he's unsure of the impact the Goldleaf acquisition will have as his firm vies for deals with the other major players in the space, such as Fiserv."We have no issue competing with them now and I'm not sure this changes that much," he said. "When we compete with Fiserv, we're generally competing for the core business, and this deal doesn't bring us any more core solutions. But it does allow us to expand our complementary solutions and add a few new ones."Barry at Aite Group believes that growth in and of itself has its own impact when it comes time to wooing clients."We're seeing in the competitive landscape for core processing vendors the perception that bigger is better," she said. "I would guess that Goldleaf's strong penetration in the marketplace, coupled with Jack Henry's already strong presence, will help strengthen relationships with their existing customers and make the company that much stronger."The deal is expected to close later this year pending shareholder approval.Goldleaf was formed as Captiva Solutions in 2005 by members of the current management team, which acquired Total Bank Technology, a core and item processor. After a series of acquisitions, it became Goldleaf Financial Solutions in 2006. Further acquisitions of deposit automation solutions followed and the core and teller processing business was divested last December.Goldleaf stock was trading at about 70 cents a share when the deal was announced, and the company reported a second-quarter loss of $1.5 million on revenue of $16.3 million, down 20.5% from last year's second quarter. It reported a loss of $38.8 million on $81.6 million in revenue in its latest fiscal year.Jack Henry stock has been trading recently at about $22 a share. It reported earnings of $104.2 million on $743 million in revenue in the latest fiscal year."In addition to providing a substantial premium for our shareholders over the current trading price, the scale of this agreement will have a positive effect on the entire industry by providing thousands of financial institutions with access to more efficient, profitable and effective solutions," said Lynn Boggs, Goldleaf's CEO."This transaction also provides our employees with an opportunity to continue with an organization committed to growth and excellence," Boggs said.–[email protected]