Online Resources and Communications Corp. has raised $20 million in a private placement.

The company, based in McLean, Va., is a growing force in electronic banking and commerce systems. It said no other company in the field has received a single private infusion that big. This could be a precursor to an initial public offering of stock.

"An IPO is always an option we're looking at, but at this stage it's better to keep us private," said Matthew P. Lawlor, Online chairman and chief executive officer.

Piper Jaffray Inc. and Keefe, Bruyette & Woods Inc., a previous backer, organized the private placement but declined to name the investors. However, due to strong investor interest, the offering was expanded from $10 million to $20 million, and an additional $5 million may be sought.

The $20 million of convertible preferred stock doubles the cumulative investment in Online since its formation as a provider of interactive financial services in 1989.

"Candidly, it's been a struggle for an entrepreneurial company when you've got the likes of MasterCard, AT&T, and Visa out there," Mr. Lawlor said. "But people have always respected our management team and product.

"Now we're saying we'll be here for the long run. Our business is growing dramatically, and we've got access to the capital we were expecting."

Online will use the funding to expand its processing capacity and improve scalability, enabling its software to operate on systems of varying size and scope. It is also planning to open a West Coast operations center in the first quarter of 1998.

In the past 18 months, Online has seen the number of its bank clients grow from seven to 96, its payroll increase from 35 people to 140, and the number of on-line customers grow by 20%. Though it serves all types of financial institutions, its primary customers are banks with assets of $500 million to $10 billion and credit unions. Four banks with assets exceeding $10 billion will soon be rolling out products that were in pilot.

Online's banking, bill payment, securities trading, loan approval, and electronic commerce products can be branded by banks for resale to customers. "We're a one-stop shop for remote banking," said Mr. Lawlor.

Bill Burnham, senior research analyst at Piper Jaffray, said home banking is "exploding," growing by 100% during the past year, to more than two million customers. Because it is increasingly difficult for smaller banks to do it alone, he said, they will turn to outsourcers.

"Online Resources is not a Microsoft nor Intuit nor Integrion, and it can offer a total solution in a nice neat package," Mr. Burnham said. "In terms of independent parties, it has the field to itself."

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