News

Online Resources to Acquire Incurrent Solutions, Inc.

Marks Baughan & Co. Advises Online Resources on the Announced Purchase of Incurrent Solutions, Inc.

October 18, 2004
Online Resources Corp. (Nasdaq: ORCC), a leading outsourcer of Internet banking and payment services, today announced that it has entered into a definitive agreement to acquire Incurrent Solutions, Inc., for $15 million in cash and stock. Located in Parsippany, New Jersey, Incurrent is the foremost Internet application service provider (ASP) to the credit card issuer industry.

Incurrent, which was recently recognized as one of the nation's top 25 fastest-growing privately held technology companies by Forbes magazine, provides a web-based suite of cardmember care services, which are branded to its credit card issuer clients. Clients include bank card issuers such as National City Bank, co-branded bank card issuers such as Target and business card issuers such as MBNA. Clients also include card processors such as Fiserv, a leading provider of private label card processing services, and Certegy, a leading provider of issuer processing services to community banks and credit unions. Incurrent's continuing clients serve approximately 30 million cardholders, of which 1.7 million are enrolled to use Incurrent's service to access their accounts online.

Online Resources intends to bring its patented real-time payments and consumer marketing capabilities together with Incurrent's wide distribution and vertical market expertise in card-based financial services. The combined company also expects to invest in expanding sales of Incurrent's new collections and transaction inquiry products enhanced with Online Resources' payments technology.

"Incurrent presents an appealing consolidation opportunity for Online Resources, with attractive upside at reasonable risk, in a complementary vertical market," stated Matthew P. Lawlor, chairman and chief executive officer of Online Resources.

Lawlor elaborated, "Incurrent is effectively Internet banking to credit card issuers, just as we are to depository banks and credit unions. Understanding this market, we believe there is an excellent opportunity to tightly integrate our payments and marketing capabilities. We have great confidence in Incurrent's leadership. Together, over time, we look forward to achieving powerful product synergies and distribution."

David J. Hickey, Incurrent's chief executive officer, added, "Online Resources' exceptional payments and relationship marketing capabilities, its strong financial standing, and our similar cultures and ASP business models make for an excellent business combination. We are very excited to join Online Resources and look forward to taking our products and services to new markets and higher levels of success."

Financial Highlights and Business Outlook
The $15 million purchase price for Incurrent includes $8 million in cash and 1,000,000 shares of Online Resources common stock. The stock has been valued at $7.00 per share for purposes of the transaction. Based on the $7.30 closing price of Online Resources stock on Friday, October 15, 2004, these shares would be valued at $7.3 million. These shares represent 5.2% dilution based on the Company's 18,186,357 shares currently outstanding. The acquisition is subject to approval by Incurrent's shareholders and is expected to close by early December.

Incurrent has approximately $7 million in annual revenue from continuing clients. It currently operates at approximately EBITDA breakeven, defined as earnings before taxes, interest, depreciation and amortization. Online Resources expects that the Incurrent business will continue to operate at EBITDA breakeven for full year 2005 and that it will become accretive during that year. Online Resources will provide 2005 guidance that includes the acquisition of Incurrent after the closing of the transaction.

Founded in 1997, Incurrent (www.incurrent.com) is among the most widely adopted credit card banking systems in use today. Incurrent develops and operates advanced online products for financial institutions in the global payment card industry, including issuers of consumer, small business, purchasing card, corporate T&E, and private label cards. These products are used directly by cardmembers, commercial clients, and issuer employees. Incurrent's products enhance all aspects of the relationship with the cardholder: from account development and servicing to loss prevention.

Online Resources powers Internet financial services for 700 firms nationwide. The Company's account presentation, payment and relationship marketing services are branded to its client banks, credit unions and payment acquirers. The Company annually processes over 100 million transactions and $10 billion in payments for one million consumer end-users. Founded in 1989, Online Resources (Nasdaq: ORCC, Website: www.orcc.com) has been widely recognized as one of the nation's fastest growing technology firms.

This transaction extends Marks Baughan & Co.'s leadership position as the premier Financial Advisor in the Financial Technology sector.

For more information on this transaction, please contact:

Jim Marks
Managing Member
610.616.3295
jmarks@marbau.com

Nick Baughan
Managing Member
610.616.3294
nbaughan@marbau.com

About Marks Baughan & Co.
Marks Baughan & Co. provides investment banking services to growth companies in the Financial Technology and Information Management sectors. Our narrow focus and deep expertise and relationships in these two verticals provide our clients with top-quality results driven by an efficient process. Started in 2004 by two former senior members of the Credit Suisse First Boston Technology Group, Marks Baughan & Co. has established itself as one of the most successful of the new boutique investment banks by combining bulge-bracket expertise with boutique service. Our clients range from public companies with multi-billion dollar market caps to private companies with $10 million in revenues. We deliver results for clients: advising on sales of entire companies and divisions, acquisitions, private placements of equity and debt securities, or strategic advisory services for CEOs and CFOs on public offerings, M&A plans, or investor positioning.

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