A 2-for-1 stock split by Security First Technologies Corp. last week appears to validate the company's strategy of selling off the Internet bank that it used to launch its software business.
The Atlanta-based provider of Internet banking software said the split would be effective April 26 for shareholders of record as of the close of business on that date. The split will increase the number of shares outstanding to about 25.1 million.
The stock traded at $131 on April 13, the day before the announcement of the split, more than triple its closing price of $41 on the day it went public in May 1996. The news initially boosted the stock on April 14, but after a volatile day it settled at $113.
It closed at $114.625 on Friday, up from the previous week's close of $95.
Chip Mahan, president and chief executive officer of Security First Technologies, said, "From the start we wanted to focus on a revenue model that would rent software to big institutions."
The company showcased its software in Security First Network Bank, formed by Mr. Mahan and Michael McChesney in 1995. On Oct. 1 the Internet bank was sold to Royal Bank of Canada.
The bank, having "proved that our technology worked," became "a distraction," Mr. Mahan said.
Software from Security First Technologies is now used by 125 U.S. banks.
Fourteen of the top 100 banks have licensed Security First software, for use in-house or through a service bureau.
Mr. Mahan said he plans to expand the company internationally in 2000. It is in negotiations with companies such as Reuters, the news service, and Inktomy, a search engine provider, to add "content value," he said.
"The idea is to offer an e-commerce platform to customers of data centers that provide financial services," said Mr. Mahan. Such an offering would put Security First Technologies up against portals like Yahoo Finance.
Mr. McChesney, the technology expert behind the founding of Security First and a relative of Mr. Mahan, has moved on to explore other opportunities in the Internet banking marketplace. He has founded WebTone, a company that offers software for customer service over the Internet, a critical component of Internet banking. Security First Network Bank uses WebTone technology in its call center.
Separated from the cash-hungry operations of Security First Technologies, Security First Network Bank is poised to grow. It has only 15,000 accounts compared to the 25,000 held by NetBank of Atlanta and the more than 50,000 held by TeleBanc Financial Corp., a holding company of Telebank, Arlington, Va.
NetBank, which closed Friday at $174.6875, last week announced a 3-for-1 stock split after opening a record 8,000 accounts during the first quarter. TeleBanc said last week it would offer an additional 3.8 million shares at $105 a share. It closed Friday at $90.50.