Sanchez Computer Associates Inc., a provider of Internet banking software and outsourcing services, said it is working with a large brokerage firm and three large credit card companies that are building Internet banks.

Chief executive officer Frank A. Sanchez said he could not identify the new customers, nor the other institutions - all banks - that also have begun working with Sanchez to develop branchless banking operations.

Sanchez's Internet banking products already are being used by Citigroup Inc., to support its Citi f/i Internet-only bank; First USA for its Internet-only; and, a Silicon Valley Internet bank.

All of the unnamed new customers except one are using the outsourcing service of Sanchez's e-Profile subsidiary, Mr. Sanchez said. The remaining one has licensed Sanchez's software for use in-house to support Internet banking.

Sanchez's evolving customer base demonstrates the ease with which nonbanks can begin offering banking services.

The secrecy surrounding the identity of the new customers has caused Sanchez's stock to languish in recent weeks. It was trading at $34.375 up 18% for the week, but down 16% in 2000. It reached a high of $51.625 on Jan. 3.

"It won't be until [Sanchez] starts reeling off a bunch of customer announcements before investors get excited," said Charles Wittmann, an analyst at First Union Capital Markets.

Sanchez is in the same situation that S1 Corp. was in 18 months ago, when its stock was trading in the $12 range. At the time, S1, also a provider of Internet banking software to large banks, had a blue-chip client list that included Citigroup Inc., Huntington Bancshares, and Royal Bank of Canada but had to keep much of its progress confidential.

"What concerns our analysts and shareholders is the lack of new customer announcements," Mr. Sanchez said. Apart from the seven projects mentioned above, Sanchez has "16 additional institutions in the pipeline that we will close this year," he said.

An analyst who is familiar with Sanchez, but asked not to be named, said word on the Street is that Sanchez is working with Merrill Lynch & Co. to develop an Internet bank.

Mr. Wittmann said his guess would be that Sanchez is working with Morgan Stanley Dean Witter. Merrill Lynch and Morgan did not respond to requests for comment.

Mr. Wittman also indicated that American Express is a possibility since it is rumored to be backing out of its contract with Fiserv Inc. for outsourcing services to the Membership Banking Internet service launched last year. Fiserv officials said there is no truth to that rumor.

Malvern, Pa.-based Sanchez on Thursday reported fourth-quarter revenues of $15.4 million, up 25% from the same period a year earlier. Net income was $302,000, down 87%. Sanchez earned a penny a share, missing Mr. Wittmann's estimate by two cents. For the year Sanchez's revenues were up 28%, at $56.4 million. Net income was down 26%, to $5.2 million.

The big decline in earnings was the result of a significant increase in expenses related to building Sanchez's e-Profile outsourcing platform to handle growth associated with the six large projects. Expenses in 1999 totaled $50 million, compared with $34 million the year before.

Another factor affecting earnings was that Sanchez stopped charging customers up-front licensing and implementation fees, charging instead on a pay-as-you-go basis, which reduced revenue by about $6 million.

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