Web-based product offers new opportunities for Goldleaf

Judy Sarles
Nashville Business Journal, --

Paul McCulloch's company sees 2004 offering new opportunities to grow.
McCulloch is president and CEO of Goldleaf Technologies Inc., a Brentwood-base company that designs Automated Clearing House (ACH) software used by banks, operates a Web design and hosting business for banks, and runs Web design and hosting division MusicCityNet, used by recording artists and small businesses.

Following a massive redesign of its ACH software from a PC-based system to a Web-based system, Goldleaf has turned the corner on profitability and expects revenues to grow by more than a third in 2004 to $8 million.

More than 1,000 community banks across the country use ACH software provided by Goldleaf, making the company the market leader for that segment of the industry. ACH software is used by banks and other financial institutions to process a variety of electronic transactions, such as direct deposit payroll.

It took a year and well over $1 million for Goldleaf to convert its ACH program to a Web-based system.

"It was a big decision for us to spend as much money as we spent," says McCulloch.

Goldleaf, established in 1990, was purchased in 2001 by Banc Internet Group, which changed its name to the acquired company. Banc Internet Group was formed in 1999. David Peterson, senior vice president over Goldleaf's ACH operations, is the original founder of Goldleaf.

In late 2002, the company launched Goldleaf Client, which enables businesses to transmit their electronic instructions via a secure Internet connection to run their payroll or any other ACH transaction. Companies can sign up at their banks to get on the new system, which is faster and less cumbersome to use than the old PC-based system.

Transactions go through a Reston, Va.-based service bureau, a secure, regulatory compliant facility. About 10,000 businesses in the United States and in Central and South America use Goldleaf software to transmit ACH transactions. Roughly 1,200 of those have converted to the Web-based system.

"We expect most all will convert and all new transactions will be done that way," says McCulloch.

The system also allows banks to perform electronic check conversions, where an electronic image is created at a point of sale to send directly to the Fed.

More than 9 billion ACH transactions totaling $24.4 trillion were made in 2002, says Donna Ashworth, executive director of the Tennessee Automated Clearing House Association. The number of transactions increased 12 percent over the number of transactions in 2001. About a year or so ago, it was predicted that the overall ACH network would double every five years.

"Goldleaf is perfectly positioned as a company to take advantage of that growth because we've been in the business so long," says McCulloch.

Franklin-based holding company Civitas BankGroup just bought the new Goldleaf ACH Web-based system and is going through a conversion that will permit Cumberland Bank South and Cumberland Bank, two of its banks, to use the new system. Currently Goldleaf is hosting Civitas' Web site.

"Their founder is recognized in the industry as an ACH expert. There's just not anybody out there that's more knowledgeable about ACH than Goldleaf," says Richard Herrington, Civitas president and CEO. "

Goldleaf has raised about $14 million in venture capital. Revenue in 2002 was $4.5 million. In 2003, it will hit $6 million and is expected to climb to at least $8 million in 2004. This year Goldleaf turned the corner and became profitable.

"We're excited because we've done that even though the transaction business is in its infancy right now," says McCulloch.

Goldleaf employs 60 people, including those at a customer support department with 15 accredited ACH professionals in Hahira, Ga., where Goldleaf originated. The company recently hired three programmers for the Brentwood office and several more work in the Georgia location. Salespeople are also located throughout the country, and they bring in business through telephone and Internet sales. The company expects to hire five to 10 more people in the coming year.

DreamWorks Records was the first client of MusicCityNet, Goldleaf's wholly owned Web design and hosting division headed by musician Lang Scott. The division, launched about two years ago, focuses on the country music industry. Artists such as Toby Keith, Kenny Chesney, Darryl Worley and Rascal Flatts are among its clients. MusicCityNet also designs and hosts about 400 small-business Web sites.

"We love the team and love working with the company," says John Rose, senior executive, sales and marketing, at DreamWorks Records in Nashville. "They are almost part of our operation in an indirect way. They are part of our whole effort on the Web."

Goldleaf's Web design and hosting business for banks serves about 400 banks in 40 states, the majority of them community banks with $1 billion and under in assets. The division's entire focus is on Web design and hosting, so it isn't involved at all in Internet banking. Among the services that Goldleaf offers is the ability to manage content on a bank's Web site.

"We've been very successful in developing a lot of programs that go with the Web site to help the bank market itself in the community," says McCulloch. "It's become more and more important to regulators that banks have a compliant Web site."

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