ST. CLOUD, Minn. - This small town, about 60 miles north of Minneapolis and home to St. Cloud State University, is hardly a high-tech mecca.

But one compliance company that built a lucrative franchise here selling paper forms to banks is now finding success in the software market.

Bankers Systems Inc. has grown from its original work force of five in 1952 to 900 employees, including a president who began as a shipping clerk 41 years ago.

The privately held company has designed and printed billions of forms used by banks all over the country and its presses still run all day long.

But over the past decade, it has also kept pace with the revolution brought about by desktop computers. Last year, about 30% of its revenue came from software sales.

Forms on Disk

Bankers Systems now produces forms on 650,000 disks each year for 14,000 users at 5,000 financial institutions.

Customers save money by manufacturing the forms as they need them on their own laser printers.

"We recognized early on that compliance can be delivered through all sorts of channels," said John P. Weitzel, president and chief executive of the company.

Bankers Systems began producing personal-computer-based compliance software in 1983.

Its first software product, Loan Processor Plus, which creates consumer banking loan forms designed to help bankers with documentation, is still the best seller, with 6,000 units in place.

|Strong Competitor'

Bankers Systems is one of the largest compliance software companies in the country, along with CFI Proservices in Portland, Ore., and Formation Technologies in Denver.

"They're a strong competitor," said Dick Williamson, marketing manager of CPI. "We are always going head to head with them," he said.

Bankers Systems had orders totaling more than $82 million in 1992. Delivered and invoiced sales for the year were $71 million.

A sign that the software division of the company is gaining in importance is a new, 32,000-square-foot home for the department.

Ties to Washington

Though Bankers Systems is nestled in the nation's heartland, there is a direct correlation between the company's success and events in Washington, D.C.

Bankers Systems is a creature of the banking industry's regulatory culture. Revenues increase when there is regulatory change, even if the change is a simplification of a law.

"One of the biggest boons to us was the simplification of Truth-in-Lending," said Jack Lockner, senior vice president of sales and marketing.

The Truth-in-Savings Act, which was signed into law in 1991 and went into effect in June, was another positive development for the company. Truth-in-Savings compliance products earned Bankers Systems $7.5 million in 1992, as bankers worked to implement the changes.

Keeping Customers Current

Software sales don't include only products, but involve sending customers updates when the regulation changes or new information is needed.

For example, when the Adjustable Rate Mortgage Disclosure rules came out in 1988, Bankers Systems sent customized program disclosures in paper and software formats; when the Bank Secrecy Act was amended in 1990, the company sent log sheets and application forms, and when the Truth-in-Savings Act came out in 1991, they sent a legal-technical bulletin and articles published about the law from industry publications.

Legal Aspect

In-house lawyers are the regulatory watchdogs at Bankers Systems. The company has 50 lawyers on staff.

David J. Peat, vice president for legal services, said that the lawyers walk a fine line between legal information and legal advice.

His department is responsible for letting customers know about regulatory change and for answering any questions bankers have.

But they can't give counsel. He said when a customer starts talking about a hypothetical case or begins a sentence with "What if," he knows to stop the conversation.

Nonetheless, the company be lieves its legal staff legitimizes its sales force in the marketplace.

Multistate Challenge

Because Bankers Systems keeps up with regional as well as federal laws, updates can become complicated. One of the new challenges for the company involves supplying software and forms for multistate banks and the appropriate regulations for each of the institution's jursidictions.

But one of their selling points is also that a bank only needs one vendor to provide original software and program maintenance.

The company computerized about the same time its products did. The accounting department, which once typed 500 payroll checks twice a month, acquired the first personal computer in the company in 1982. In 1992, Bankers Systems owned 366 personal computers.

Mr. Weitzel said he thinks technology is going to increase at a more rapid pace than ever.

Mr. Weitzel said he is unconcerned about recent attempts in Washington to reduce bank regulation.

"Compliance will always be a part of the banking scene, because right around the corner will always be something new," he said.

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