With Alogent, Goldleaf Steps onto the Remote-Deposit Escalator

Brentwood, Tenn.-based Goldleaf Financial Solutions Inc., a technology-services provider for 2,800 community financial institutions, on Thursday took a big leap into the fast-growing niche of remote deposit capture by announcing its $42.5 million acquisition of Alogent Corp., a prominent purveyor of remote-deposit software. Until now, Goldleaf's core business has been its BusinessManager application for handling accounts receivable. About 40% of the company's revenues come from software licenses, fees, and other revenues related to that product, according to its third-quarter report. Goldleaf gets another 15% of its revenues from its retail inventory-management services, and the rest come from various teller-automation systems, automated clearing house processing, document imaging, and other services, a good many of which came to Goldleaf through various acquisitions in the past two years. Most of Goldleaf's revenue increases lately have also come from the acquired companies, and the Alogent acquisition will further that. Alogent had $16 million in revenues in 2006, $22 million in 2007, and expects up to $27 million this year, with $5 million or $5.5 million in operating profits, according to G. Lynn Boggs, Goldleaf's chief executive. Alogent's client base includes 50 large financial institutions globally, including four of the top 25 U.S. banks?HSBC USA Inc., JPMorgan Chase & Co., KeyCorp, and SunTrust Banks Inc. Alogent also squarely places Goldleaf in the increasingly crowded but profitable payments business. Boggs said in a conference call late Thursday that about two-thirds of Goldleaf's revenues will now come from payment processing. “The opportunities are endless right now,” he said. Founded in 1995, Atlanta-based Alogent produces applications to automate teller functions and other banking processes, including imaging of checks under the Check 21 law. Its Sierra suite of software, including Sierra Xpedite Remote Deposit Automation, is for banks to deploy at their merchant clients' sites for converting paper checks into electronic payments without visiting a branch. The application works with hardware from major vendors and supports ACH electronic-check codes such as back-office conversion (BOC) and ARC, or accounts receivable conversion for converting checks sent to lockboxes. Alogent claims its applications process payments from 75,000 desktop points of presentment. “This transaction provides a natural extension to our business and the additional scale enables us to take our products into virtually every corner of the marketplace,” Alogent chief executive Brian Geisel said in a statement. With Alogent, Goldleaf says it will have more than 25,000 ACH endpoints, in addition to more than 81,000 so-called deposit-automation touch points. Goldleaf now expects $87 million in 2008 revenues and operating earnings of $15 million. Goldleaf funded the acquisition with $32.9 million in cash from the company's line of credit, $7 million in a convertible note and $2.6 million in stock. Alogent will become a Goldleaf division, with its top management staying with the company, according to Boggs.