Dear Shareholder:
Fiscal Year 1999 was a great year for CSI. Revenues topped $50
million for the first time in our 34-year history, and we added
a record 53 net new banks to our customer base.
The year's results benefited from new bank contracts, increased
services purchased by existing bank customers, and the
acquisition of Computer Bank, Inc. (CBI).
Our results also included one-time revenues of $3.2 million
related to early contract terminations on 18 of the 23 customers
who left CSI last year. The contract terminations were offset
by 36 new bank contracts signed, including 13 signed with newly
chartered banks, and 40 acquired new customers in the CBI
acquisition.
We launched and made significant progress in a strategic plan to
grow revenues to $100 million by 2003.
This past year confirms that if technology is driving the
world - and you only have to read a magazine, turn on the
television, or log onto the Internet to realize this truth - then
it is technology companies like CSI - and their people - that
are behind the wheel.
Join us for a play-by-play account of the year, and feel the
momentum and excitement we're experiencing as a company.
We kicked off the fiscal year with the rollout of a newly developed CSI product - Check Imaging - a technological innovation that makes the physical return of canceled checks a thing of the past. Today Check Imaging provides banks and their corporate customers with time and money-saving retrieval and archival tools that replace the use of microfilm. Our first Imaging site was in St. Louis.
We opened our 14th service center - Charleston, West Virginia - in March. By year-end we were processing 17 community banks located in our West Virginia and southeast Ohio markets.
Your CSI Board held a major strategic visioning session in April that resulted in the establishment of a blueprint for our future: CSI's Five-Year Aspirational Goals, a set of long-range building blocks focused on doubling our revenues to $100 million by 2003.
The ink was hardly dry on the plan before we moved on the first point - expansion - by completing the acquisition of Computer Bank Inc. (CBI), a Mt. Pleasant, Texas, bank processor with 40 customers in Texas, Louisiana and Arkansas. Texas is a huge community banking state with more than 800 financial institutions, and the CBI acquisition affords us strategic entry into that market. The purchase extended the CSI territory to 12 states and grew CSI's network of service centers to 21 . . . overnight.
Two more firsts: our first customer bank went live with Internet Banking services, and we added an Investor Relations section to our World Wide Web site (http://www.csiweb.com). Today someone in Tokyo, London, Buenos Aires, or anywhere else on the planet, can view our annual report, quarterly reports, press releases and current trading information on CSI stock.
May was a bittersweet month. We welcomed more than 1,000 visitors to four open house celebrations at our new corporate headquarters in Paducah, Kentucky, a glass and mortar icon that reflects our confidence in the thriving community banking industry.
But we were deeply saddened by the death of CSI icon and Vice President Ann Carney. Ann's 31 years of dedicated service to CSI epitomized the heart and soul of our company.
Quarter Two
CSI's Customer Conference was the centerpiece of the Second
Quarter. While attendance at conferences nationwide is declining,
interest in CSI's conference continues to grow. Last August,
nearly 400 bankers - up 26% over the previous year - from 180
customer banks gathered in Indianapolis for the two-day event.
They attended educational sessions on banking and technology,
reviewed our showcase of new products, shared ideas with their
peers, and gave the conference a rousing approval rating: 4.6
out of a possible 5.0.
Gains on our five-year goals continued as we:
- Expanded CSI's geographic footprint into Ohio, opening a service center in Orrville, Ohio. The center is located an hour south of Cleveland and, combined with our Cincinnati center, greatly expands our coverage of Ohio.
- Added a National Accounts Executive to our Marketing staff who is devoted exclusively to securing contracts with the affiliate banks of the country's large regional banks.
Quarter Three
In September, Dr. Constantine "Deno" Curris joined our Board of
Directors. Dr. Curris is president of Clemson University,
Clemson, South Carolina, and expands our Board's depth of skills
and experience.
We reached another level in our Five-Year Aspirational Goals
with the hiring of a Vice President of Human Resources: a new
position at CSI and a critical success factor as we expand our
base of professionals to meet the demands of corporate growth.
In November, our new $1.8 million EFT (Electronic Funds Transfer)
platform was installed to accommodate the continued growth in
electronic transactions. Because the system operates
round-the-clock, seven days a week linking ATMs, VISA Debit
cards and POS terminals all over the world, going live with
minimal disruption was a challenge. We met it.
Over 480 bankers attended End-of-Year training, the largest
attendance in CSI history. The event capped a year of record
attendance: over 2,000 bankers representing more than 85% of our
client banks attended CSI training sessions.
Investments made over the years in training and Interactive
Video Teleconferencing are paying big dividends. The system
streamlines sessions, allows participants to interact with
instructors and bankers hundreds of miles away, and dramatically
minimizes travel time and cost. Positive feedback from customers
led us to add three more sites - Charleston, West Virginia; St.
Louis, Missouri; and Indianapolis, Indiana - to our network,
bringing the total number of sites to eight.
We passed the quarter century milestone at our Elizabethtown,
Kentucky, service center and marked the occasion with an open
house celebration.
Quarter Four
Twelve banks signed CSI contracts in December, making it the
best sales month in our history. Of the three dozen new banks
signed in Fiscal Year 1999, nearly a third were de novos, newly
chartered banks that are choosing the CSI products that elevate
them technologically to their mega bank rivals. They are posting
incredible success.
Two Senior Vice Presidents were named to streamline CSI's
organizational structure and accommodate future growth to a $100
million company.
Interest in Check Imaging continued to build. We made the
decision to install our new Imaging system in our Elizabethtown,
Kentucky, service center after several customers processed at the
center chose to add the new service. The Elizabethtown Imaging
system will be up and running in May 1999.
The year's product highlights included:
- Internet Banking - Eight banks contracted. We expect to add one to two banks a month next year.
- Check Imaging - grew from one to four sites in a scant 12 months.
- The CSI Passport - Platform system, which streamlines the banks' new account process, went live in our first pilot bank in January 1999.
- CSI Passport - Balancer was added to decrease daily reconciling time in bookkeeping departments from hours to minutes.
- CenterVoice Plus, with expanded telephone banking features, was rolled out during the Fourth Quarter.
- On-line Check Ordering was expanded to include two additional vendors.
- URSA - CSI's new Windows™-based report writer tool received a spectacular reception. Three hundred eight bankers attended a January 1999 training session, and 88 of the 114 banks represented - an incredible 77% - ordered the product immediately.
- CSINET provides secure Internet service to client banks. Over 70 customers signed on last year.
As momentum continues to build with new business revenues at 164% of our quota, cross-sales at 119% of our quota, and a host of innovative products and services to offer our customers, it's no wonder we're excited about our company.
And our customers confirm that CSI's performance continues to improve. In a Customer Satisfaction survey completed by 93% of our customers last year, we received a higher rating over the previous year in every operating area of the company - solid proof that we're performing, and performing well.
As we look back over the past year, we have been blessed with the dedicated efforts of our 528 employees, the strong leadership of our Corporate Staff, and our Board of Directors' vision for growth. These people have fueled the momentum that has made the results described in this annual report possible.
Our thanks to them and to you, our valued shareholders and customers, for another successful year.
Sincerely,
|
JOHN A. WILLIAMS CHAIRMAN and CEO |
STEVEN A. POWLESS PRESIDENT and COO |
