Overall, it was a very good year for publicly held bank technology companies, as most firms tracked by the American Banker had double-digit percentage increases in their stock prices.
While the Standard & Poor's 500 index declined 2% in 1994, over a dozen financial systems vendors gained ground by significant and sometimes eye- popping margins.
Wall Street analysts said 1994 was a positive year for the technology sector in general, and banking systems providers in particular. They said record-breaking financial institution profits caused a loosening of budgetary purse strings for capital investments and reengineering projects.
Also an increase in merger and acquisition activity among payment systems and outsourcing companies has raised investor interest, market observers said.
Software and payment systems firms were particularly popular with Wall Street last year. Consumer credit-scoring software developer Fair, Isaac & Co. led the pack: Its common stock has risen a whopping 138% since the end of the 1993.
San Rafael, Calif.-based Fair Isaac has been boosting its consulting and services business in the past year, as well as moving its predictive scoring methodology into new business lines beyond credit cards, such as so-called data base marketing, where computers dig into consumer demographic and account data for optimum sales prospects.
Investors in software and systems integration firm Broadway & Seymour Inc. were also been handsomely rewarded in 1993. The Charlotte, N.C.-based firm's stock has risen 118% over the past 12 months.
After taking multimillion-dollar restructuring charge late in 1992, Broadway & Seymour has restructured its management and has continued making selected acquisitions to maintain its earnings growth.
The most recent deal was announced late last month, when Broadway & Seymour officials said they intend to buy BancCorp Systems, an Amarillo, Tex.-based developer of trust software for community banks. Financial terms were not disclosed.
Other firms' shares that posted big increases were payment processors Concord EFS Inc., up 69%; and National Data Corp., gaining 55% for the year. Another big advance came from trust software maker National Computer Systems Inc. - its common stock rose 41% for the year.
Not every bank systems company can look back fondly at 1993, however. Interlinq Software Corp., a developer of mortgage origination systems - saw its stock plummet 46% since Dec. 31, 1993, a period that saw its revenues drop off after the Federal Reserve's interest rate increases hurt the mortgage refinance market.
Other firms that experienced declines included trust and investment systems vendor SEI Corp., down 34%; and check printer Deluxe Corp., dropping 27% in 1994.