Banking firm loses money

Security First attributes an $11 million loss to acquisitions of two technology companies.

CNET News staff
2 min read
Security First Network Bank (SFNB) reported big losses today, which the company blamed on acquisitions of two technology companies.

The firm, which sees its chief business as helping other banks get on the Internet, reported a net loss of $11.1 million, or $1.36 a share, for the final quarter of 1996. For the same quarter in 1995, the company posted a net loss of $996,000, or 41 cents a share.

For fiscal 1996, the bank lost $22.1 million, or $3.76 cents per share, compared to a $1.5 million loss in 1995, or 62 cents a share.

The firm attributed the losses to two acquisitions of technology companies, as well as operational costs associated with opening a data center for banks that use Security First's software. The bank bought Five Paces, the technology firm that created its banking software, in May. It then acquired SecureWare in November.

"Earnings are important, but right now we are really a concept company," Chief Financial Officer Robert Stockwell said. "In 1997, we need the concept to be validated by banks. It is extremely important for us to reach our target of getting 20 of the nation's top 100 banks as customers."

The company's stock declined 8 percent today, closing at 9-7/8.

Security First reported fourth-quarter assets of $108.8 million, up from $40.5 million a year ago. The bank reported total deposits of $28.3 million from about 7,800 customers, growing at about 700 new accounts per month.

The company reported $78,000 from its banking operations and $822,000 from its software business.

The bank's wholly owned subsidiary, Security First Technologies, has signed contracts or letters of intent with 24 financial institutions that will use its technology to offer banking over the Internet. Those institutions have assets totaling more than $320 billion.

Security First's flagship software is Virtual Bank Manager, which lets banks offer deposits, bill paying, and other services over the Net. About a third of its financial institution customers also have signed up for Virtual Credit Card Manager. Later this year, the company plans to add Virtual Investment Manager, which lets customers trade securities.

The bank signed up 13 financial institutions in 1996, with 11 more on board so far this year. To date, nine of the top 100 U.S. banks have signed to use Security First's software. The company's goal is to sign up 55 to 75 banks by year's end.