Jack Henry & Associates Presented November 11, 2008 Yan Huang Shuang Cheng Guang Lu Chien-Lung Chiang

Part 1: Company Overview Company Overview Business Model and Revenue Model Industry Analyst and Main Competitors SWOT Analysis RCMP Position

Company Overview Founded in 1976 John W. “Jack” Henry visualized and wrote the company's first core banking software package Provides integrated computer systems and data processing solution for commercial banks Publicly traded in 1985 (NASDAQ:JKHY) Headquarters in Monett, Missouri 1.53 Billion market capital

Three divisions

Jack Henry Banking Provider of the integrated automation banks need to process business information and financial transactions Supports approximately 1,700 banks Two key markets: chartered de novo banks Continued expansion mid-tier banks supporting approximately 20 percent of mid-tier banks with assets ranging from $1 billion to $50 billion

Jack Henry Banking Jack Henry banking solutions encompass : Three functionally distinct core systems More than 100 integrated complementary products and services In-house and outsourced operating alternatives Contemporary technology and the infrastructure

Jack Henry Banking A highly customizable, IBM® System and i™-based solution for commercial banks SilverLake System® A parameter-driven, IBM System i-based solution CIF 20/20® A Windows®-based, client/server solution Core Director Three functionally distinct core banking platforms

SYMITAR Founded in 1985 Acquired in 2000 Provide core information and transaction procession solutions for credit unions More than 700 credit unions approximately 50 integrated complementary products and services

SYMITAR A highly customizable, IBM System p™-based solution Episys® A Windows-based, client/server solution for smaller credit unions Cruise® Functionally distinct core processing solutions are:

PROFITSTARS Launched in 2006 Two Functional segments: Control costs check and document imaging enterprise content management identity management and control regulatory reporting ATM channel management solutions Mitigate and control operational risks business intelligence sales automation enterprise profitability enterprise payments insurance distribution net interest margin improvement insurance distribution

Business Model by Section banking platforms SilverLakeCIF 20/20 Core Director credit union platforms EpisysCruise solutions security and mitigating operational risks operating costs

Business Model by Function Software systems process deposit loan general ledger transactio ns maintain centralized customer/ member informatio n hardware systems IBM power systems Lenovo workstatio ns Dell servers and workstatio ns UnisysRDMUnisys NCR check scanners BancTec electronic funds transfer software implement ation data conversion training ongoing support services

Business Model by Diverse Clients 1,600 banks 3 systems >100 products Commercial banks 700 credit unions 50 products Credit unions >8,200 diverse customers Top 15 domestic banks Financial institutions

Revenue Model

Growth by Acquisitions (1) DateCompanyCapital SizeService /1 Banc Insurance (bank) $6.7Mn in cash + earn-out payment Turnkey outsourced insurance agency solution for FIs /1 Select Payment Processing $12Mn in cash Innovative electronic payment processing solution for FIs /1 Verinex Technologies(bank) $35Mn in cash Leading developer and integrator of biometric security solutions /23 Optinfo (bank) $12.93Mn in cash + $2.2Mn vested options Leading provider of enterprise exception management software and services /1 TWS System and three affiliated corp (Credit Union) $10.89Mn in cash Leading provider of image-based item processing solution for CU /17 SERSynergy (bank)$34.47Mn in cash Market leader for intelligent document management

Growth by Acquisitions (2) DateCompanyCapital SizeService /1 RPM Intelligence (bank) $6.24Mn in cash, earn-out payments $0.25Mn in 06 Customer and product profitability solutions for FIs(Stratika) /2 Tangent Analytics (bank) $4Mn in cash, 5.01 Mn earn-out payments business intelligence software systems /1 Profitstar (Bank)$19.32Mn in cash Leading provider of software to banks and CUs /1 Margin Maximizer Group (bank) $34Mn in cash Leading provider of Loan and deposit pricing software and services to banks and CUs (USBA) /1 Gladiator Technology Services (bank) $17.43Mn in cash Technology security services for FIs Enterprise Security Monitoring /1 AudioTel Corporation (bank) $32.09Mn Remittance, merchant capture, check imaging, doc imaging and management, and telephone and internet banking solution

Industry Analysis Financial Software Service Sustainable competitive advantage: Leading technology in security and operation High quality maintaining service License and renewed contracts Industry Composite 631 Jack Henry ranks 9 th

Main competitors

S Good history of dividends payment Sustainable growth rate Wide products and services, risk diversi fied well W Jack Henry’s capital size and revenue ranked 9th among its competitors Less resources to invest in upgrading systems Margins in Jack Henry's service and support segment are relatively low O Banks and Credit Unions relies on core processing systems provided by Jack &Henry High liquidity, low debt, ability to catch acquisition opportunities Leading research team to maintain sustainable competitive advantages Regulatory changes2 T Downward trend banking industry is shrinking Jack Henry's customer base Ongoing declines in the price of computer hardware Huge Switching cost makes Jack Henry difficult to compete for new business

Stock Performance

RCMP Position November 11, 1999 entered position ▫200 shares at $36 per share March 3, 2000 ▫Stock split 2:1 March 5, 2001 ▫Stock split 2:1 January 15, 2007 ▫Sold 400 shares at $22.53 Current position ▫Own 400 shares ▫Stock price $18.03 as of November 10th, 2008

Part 2: Accounting Analysis Balance Sheet Income Statement Cash Flow DuPont Analysis st Quarter Earning Review

Asset

Liability

Equity

Revenue 66% 68% 72% 75%78% 13% 15% 14% 11% 10% 21%17%14% 12%

Growth Rate over past 5 years

Growth Profit Margin over past 5 years

Income Statement

Financial Health

DuPont Analysis ROE 17.33% 17.49% 15.63% ROA 10.21% 10.47% 9.92% Equity Multiplier X = Profit Margin 14% 16% 15% Asset Turnover X = ROA % % 9.92 %

Cash Flow Period Ending Net Income104,222104,68189,923 Total Cash Flow From Operating Activities181,001174,247169,438 Total Cash Flows From Investing Activities(102,148)(92,911)(77,190) Total Cash Flows From Financing Activities(101,905)(66,858)(29,717) Change In Cash and Cash Equivalents(23,052)14,47862,531 Cash flow at the beginning of the year88,61774,13911,608 Cash flow at the end of the year65,56588,61774,139

1 st Quarter Earning Review 5% increase in revenue Strong growth in support and services revenue ▫grows at 10% ▫One time implementation revenues decreased ▫Electronic payments revenue increased 16% Other revenue ▫License revenue decreased 2 % ▫Hardware sales decreased 24%

Part 3: Valuation Assumptions Discounted Cash Flow Model Relative Valuation Model

Assumptions on Growth Rate Growth Estimation Sustainable Growth Rate: 3.2%

Assumptions on Margin GPM (License) 90.9% GPM (Support and Services) 37% GPM (Hardware) % Operating Expense/Sales 20.2% Interest Expense/Debt %

Other Assumptions CAPEX/Sales 5.7% Depreciation Rate 8.3% Acquisition 10,000 10,988 60,419 69,192 79,533 91,713 84,354 69,536 49,460 27, E2010E2011E2012E2013E2014E2015E2016E2017E2018E In USD Thousands

WACC Capital StructureMarket Value (USD Mn)Weight Equity1, % Debt201.3% Cost of CapitalValueSource Risk Free Rate4.74% average of 10-y treasury bond yield Risk Premium6% Historical data Beta1.058 Calculation of data from Yahoo Finance (5-y weekly return) Cost of Debt3.11% 2008 Annual report Effective Tax36.2% Annual report WACC10.97%

DCF Valuation Discounted Operating Cash Flow1,576 Add: Non-Operating Assets26 Firm Value1,602 Value of Debt20 Value of Equity1,582 Outstanding Shares86.05 Value per Share$18.39 (In USD Mn)

Sensitivity Analysis Sustainable Growth Rate 1%2%3%4%5% WACC 9% % % % % %

Relative Valuation

Multiples Calculation

Triangulation

Part 4: Recommendation

Holdings Position

Correlation CORR JKHYCPRTAEEAEODOFRKMBWFRSRCLWAG JKHY1.00 CPRT AEE AEO DO FR KMB WFR SRCL WAG

Recommendation DCF model price: $18.39 Price range from sensitivity analysis: Min=$14.52, Max=$23.74 Triangulation: $17.01 Current price: $18.03 as of 11/10/08 Recommendation: HOLD 400 shares with a limit sell at $20.40 before 12/19/08.

Recap Current Market Price VS Fair Value $17.75 $17.01 Our goal: ▫Hold the 400 shares at current market price ▫Sell the 400 shares when overvalued by 20%

Three Options 1.Buy Put Option 2.Sell Call Option 3.Limit Sell

1. Buy Put Option Option TypeExpiration DateAsk Price Put (20.00)Dec 19,083 Put (22.50)Dec 19,085.1 Put (25.00)Dec 19,087.7 Put (20.00)Nov 21, Put (22.50)Nov 21,085 Disadvantage: Option Premium is too high.

2. Sell Call Option Option TypeExpiration DateBid Price Call (20.00)Dec 19,080.4 Benefit Earn $160 (0.4*400) option premium Cost Administration cost Account maintenance fee Margin requirements Risks (potential margin call) Only share price on Dec 19,08 matters

3. Limit Sell at $20.40 good thru 12/19/08

Final Recommendation Limit Sale at $20.40 good thru 12/19/08

The End Thank You!