Bisys Group Inc. has agreed to buy Greenway Corp., an up-and-coming vendor of check imaging to community banks, for $47.5 million in stock.

Little Falls, N.J.-based Bisys would combine Greenway with Document Solutions Inc., a similar business it acquired three years ago.

By marrying two of the industry's premier check imaging developers, Bisys said, it would cash in on community banks' growing willingness to adopt such imaging systems.

Tower Group, a Newton, Mass.-based research and consulting firm, said fewer than a fifth of banks with less than $2 billion of assets have installed check imaging systems. Tower president Diogo Teixeira said he expects the number of bank users to grow by 25% a year.

"We agree with (Tower's) view of the market," said Dennis R. Sheehan, executive vice president and chief financial officer of Bisys. "We think this is a very hot and exciting opportunity for us. It makes a lot of sense to join forces with Greenway."

Bisys paid dearly for a company that had $12.5 million in revenues last year, but the investment may be worth it, said Arthur Gillis, a Dallas- based bank technology consultant.

Greenway, whose software has been installed at 100 bank and thrift companies, had predicted revenues of $20 million this year, 53% more than last year.

To avoid further growing pains, the time was ripe for a public stock offering or a merger, Mr. Gillis said. "Frankly, Greenway was a hidden gem."

The company's owner, W. Thomas Green, "put his blood, sweat, and tears into building the company," Mr. Gillis said.

Bisys' move parallels its $38 million purchase of Document Solutions Inc., an innovative developer of check imaging software that started in 1991 and has since sold its product to 600 banks.

The Greenway acquisition is expected to close within 30 days.

Document Solutions and Greenway "coupled with the resources of Bisys Group represent an awesome check processing solution for banks," said Mr. Green in an interview.

Document Solutions can help deal with Greenway's mounting backlog of installations, which already stretches into January 1999.

"We really needed some expertise in organizing larger installations," Mr. Green said. "We were putting undue strain and hardship on our banks."

Bisys officials said with Greenway it would have 75% of the community bank check imaging market, processing 35 million check images daily.

Allen Lipis, president of Global Concepts Inc., Atlanta, a payments system consultant who views checks as an important bank profit center, said community banks in particular are turning to image technology to reduce costs and create new revenue opportunities.

Imaging can help several functions, including proof-of-deposit and value-added services such as searchable CD-ROM storage for corporate customers or images on demand via the Internet.

"The real strength and power of imaging is when you move it across the entire operation," Mr. Lipis said.

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Like Bisys and many of its customers, the outsourcing vendor Fiserv Inc. sees profit in check processing.

Fiserv gets a steady stream of revenue from processing checks-more than 4.1 billion a year at the current rate-at 60 facilities in North America.

The Brookfield, Wis.-based company said it plans to buy four more item- processing sites from the Federal Home Loan Bank of Topeka, Kan. Terms of the deal were not disclosed.

The sites-in Denver, Oklahoma City, Omaha, and Topeka-are processing at an annual rate of 200 million checks for 200 financial institutions.

Fiserv's simple belief, consultant Arthur Gillis said, is that "volume is good."

In recent years Fiserv made similar purchases from the Federal Home Loan banks of Atlanta, Chicago, Dallas, New York, San Francisco, and Seattle.

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