Goldleaf Financial Solutions Inc., known mainly as a provider of automated clearing house software, says acquiring the Dallas imaging specialist Community Banking Systems strengthened its position as a provider of payments technology to small banks.
"We have a chance to touch every piece of that business now," Lynn Boggs, Goldleaf's president and chief executive, said in an interview.
Goldleaf, of Brentwood, Tenn., announced the purchase last week but did not say how much it paid.
Since joining what was then called Private Business Inc., Mr. Boggs has engineered several acquisitions aimed at making his company a full-service payments technology vendor to community banks.
In the December 2005 deal that brought Mr. Boggs to the company, Private Business acquired Captiva Solutions LLC, an Atlanta core data and item processor that Mr. Boggs had founded in April 2005.
A month later, Private Business bought the assets of PTC Banking Systems Inc., a Bradenton, Fla., teller-automation software developer that had 80 financial customers in the United States.
The most notable purchase was also in January 2006, when Private Business bought Goldleaf Technologies Inc. Through that purchase, Private Business got both its new name and a client list of 2,500 financial institutions, correspondents, and clearing house organizations in the United States and Latin America.
Charles Potts, Goldleaf's senior vice president of business development, said that by acquiring CBS, his company gained both a new product and a new way to deliver its own products to banks.
CBS primarily sold licensed software, while Goldleaf functions primarily as an outsourcer. The combination provides "an alternate touch point when banks don't want to outsource a lot of this capability," Mr. Potts said. "This gives us another way to leverage the end-to-end payments capability that we have within Goldleaf."
Mr. Boggs said CBS had about 120 imaging clients, including 100 that are new to Goldleaf. The acquisition is his company's first since completing a recapitalization in October.
Goldleaf said that it will retain the CBS management team, including Sean Pennock, its president, and Jeremy Cockrill, its chief software architect, and that the unit will remain in Dallas.
Mr. Boggs particularly cited CBS' inroads with the nation's bankers' banks as a business opportunity. "The bankers' banks are often the first line of offense for us."
Goldleaf now has relationships with five bankers' banks, he said.
Since last year CBS had been working with Bankers' Bancorp. Inc. of Madison, Wis., to develop a low-cost "on-we" type of clearing network for image exchange. In an interview last month, Mr. Pennock said Bankers' Bancorp. had 20 clients live and more than 100 signed up to begin exchanging images among themselves by June 1 on the network, Own.It, which stands for "On-We Network for Image Transfer."
"There are a lot of banks just getting started with imaging, and they're going straight to Bankers' Bank," he said at the time.
Mr. Boggs said that the Madison company also uses Goldleaf's ACH services, and that the rapid adoption of image exchange is forcing the hand of community banks that might have preferred to delay a switch from paper-based check clearing.
"Over the next 24 months we're going to see a lot of banks finally converting," he said.
Bob Meara, a senior analyst at the Boston research and consulting firm Celent LLC, said the acquisition should position Goldleaf well in the converging worlds of check imaging and ACH.
"They both are pretty aggressive players in the community bank space," Mr. Meara said. "This gives them end-to-end imaging capability with ACH and least-cost routing. I'm thinking Goldleaf is hoping there's gold in them thar hills."
Both Mr. Boggs and Mr. Meara pointed out that CBS had licensed the technology patents of DataTreasury Corp., a small processor that claims broad patent rights over the process of creating and storing check images and has sued scores of banks.
Because CBS has a license to use the technology, "that's going to remove an adoption barrier for a lot of institutions," Mr. Meara said.
