The stock price and revenues of Intercept Group Inc. -- which is expanding its Internet banking services operation through acquisitions and a pricing format aimed at small banks -- are up dramatically.

Intercept's main businesses are providing core data processing and electronic funds transfer and ATM processing services. Shares of the Norcross, Ga.-based company closed Friday at $24.125, up 7% for the week and 233% for the year. Second-quarter revenues of $10.1 million were up 52% from a year earlier. Net income of $1.1 million was up 126%.

Charles Wittmann, an analyst at First Union Capital Markets, rates the stock a "strong buy" and says the company is well positioned to capitalize on the Internet banking trend.

On Aug. 6, Intercept announced a $20 million cash deal to buy SBS Corp. SBS, an Intercept competitor, has 1,000 community bank customers. Of those, 135 use SBS' Internet banking service.

A week earlier Intercept said it would Bankers Bank of Atlanta and Independent Bankers Bank of Dallas. Bankers Bank is a wholesale lending cooperative owned by 244 community financial institutions and doing business with 665 customers. Independent Bankers Bank has 423 bank owners and deals with 650 financial institutions.

And back in March, Intercept bought Direct Access Interactive Inc., a Memphis-based provider of Internet banking services to 130 banks. Terms were not disclosed

Once Intercept buys Bankers Bank and Independent Bankers Bank, Mr. Wittmann said, it will have relationships with 2,000 of the 8,500 community banks in the United States. In addition, 667 of those banks would become partial owners of Intercept.

"Intercept basically has the ability to quickly access about 20% of all banks interested in Internet banking," Mr. Wittmann said. "Those that have an equity interest in Intercept have an incentive to use it."

Intercept waives up-front software and service implementation fees to banks. The smallest bank's monthly charges start at $795 for basic Internet services.

Intercept does charge banks that want to buy its co-marketing and salesperson training services. Additional bill payment service charges, starting at $425 a month, are assessed by Elizabethtown, Ky.-based Call Me Bill LLC.

Mr. Wittmann said the company could afford to fund the growth of its Internet service using revenues from its core data processing business.

Intercept's pricing structure helps community banks overcome a big hurdle: getting large sums allocated for unproven services. A free installation is a strong incentive for smaller banks, and contrasts with the implementation fees of $20,000 to $50,000 from competitors, Mr. Wittmann said.

Community banks "don't have to risk putting money into something that might not work," he said. "The vendor is essentially assuming the risk."

Scott Meyerhoff, chief financial officer at Intercept, said, "We don't believe that a $25,000-to-$50,000 up-front fee is the answer."

Intercept claims that 270 bank customers use its Internet banking services. Its competitors include:

Online Resources and Communications. The McLean, Va.-based company has sold its service to 383 customers, of which 190 are up and running, said Matthew Lawlor, chairman and chief executive officer. The company's patented system includes front-end Internet banking services, ATM-based bill payment, and call center services.

Q-Up Systems Inc. of Austin, Tex. Q-Up has sold its front-end Internet service to 220 banks, said Dan Martin, president.

nFront Inc. of Atlanta. This company has sold its service to about 150 banks, according to Raymond James & Associates Inc.

Other front-end Internet software and services vendors include Concentrex Inc., Corillian Corp., First Data Direct Banking, Fiserv Inc., FundsXpress Inc., Digital Insight Corp., and M&I Data Services.

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