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                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D. C.  20549
                                      FORM 10-K

    [X]       ANNUAL REPORT PURSUANT  TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
                    For the Fiscal Year Ended:  December 31, 1996

                                          OR

    [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER:  000 - 21980

                                CFI PROSERVICES, INC.
                (Exact name of registrant as specified in its charter)

            OREGON                                         93-0704365
(State or other jurisdiction                          (I.R.S. Employer
of incorporation or organization)                      Identification No.)

                     400 SW SIXTH AVENUE, PORTLAND, OREGON  97204
                       (Address of principal executive offices)
         Registrant's telephone number, including area code:   (503)-274-7280

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:  NONE
             SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                              COMMON STOCK, NO PAR VALUE
                                   (Title of Class)

                                   ---------------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:    Yes [X]     No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K.   [ X ]

The aggregate market value of the voting stock held by non-affiliates of the
Registrant is $77,236,920 as of  February 28, 1997 based upon the last closing
price as reported by the Nasdaq National Market System ($18.25).

The number of shares outstanding of the Registrant's Common Stock as of February
28, 1997 was 4,832,816 shares.

The index to exhibits appears on page 38 of this document.

                                   ---------------

                         DOCUMENTS INCORPORATED BY REFERENCE
The Registrant has incorporated into Part III of Form 10-K by reference portions
of its Proxy Statement for its 1997 Annual Meeting to be filed on or about April
11, 1997.

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<PAGE>

                                CFI PROSERVICES, INC.
                             1996 FORM 10-K ANNUAL REPORT
                                  TABLE OF CONTENTS

                                                                           Page
                                                                           ----
                                        PART I

Item 1.  Business                                                             2

Item 2.  Properties                                                          13

Item 3.  Legal Proceedings                                                   14

Item 4.  Submission of Matters to a Vote of Security Holders                 14

                                       PART II

Item 5.  Market for Registrant's Common Equity and Related
         Stockholder Matters                                                 14

Item 6.  Selected Financial Data                                             15

Item 7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                 16

Item 8.  Financial Statements and Supplementary Data                         35

Item 9.  Changes in and Disagreements With Accountants
         on Accounting and Financial Disclosure                              35

                                       PART III

Item 10. Directors and Executive Officers of the Registrant                  36

Item 11. Executive Compensation                                              36

Item 12. Security Ownership of Certain Beneficial Owners and Management      36

Item 13  Certain Relationships and Related Transactions                      36

                                       PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K     37

Signatures                                                                   46


                                          1
<PAGE>

                                        PART I

ITEM 1.  BUSINESS

OVERVIEW
CFI is a leading provider of software solutions that automate customer service
and support functions within the financial services industry.  The Company
integrates extensive knowledge of banking, technology and regulatory compliance
requirements into a broad suite of software solutions.  These products enable
financial institutions to automate the delivery of financial products and
services to their customers through multiple channels, including branch offices,
in telephone call centers, and through electronic-based banking (such as home
banking).  CFI's solutions help banks, thrifts and credit unions reduce
operating costs, enhance revenue and remain in compliance with both internal
business policies and external government regulations.  During the last five
years, CFI has significantly expanded its product offerings and more than
doubled its customer base.  To date, over 4,700 financial institutions have
licensed the Company's products.

THE FINANCIAL SERVICES INDUSTRY
The financial services industry is undergoing a period of rapid change
characterized by increased competition.  In response to this rapidly changing
and increasingly competitive market, commercial banks are consolidating in order
to achieve operational efficiencies and increased revenues.  Financial
institutions are embracing technological solutions that enable them to automate
operations, redirect routine transactions to more cost-effective solutions such
as electronic banking, and develop new service and sales delivery channels.

CONSOLIDATION.  Consolidation continues at a rapid pace within the financial
services industry, particularly among larger banks.  At the current pace of
consolidation, some banking analysts believe that by the year 2000 there will be
fewer than 100 major U.S. banks.  The Company believes that this trend is
leading to an increasingly two-tiered market consisting of larger, multibank
holding companies and smaller community banks.  Both types of organizations face
unique challenges.

Large banks that have grown through acquisition often must integrate disparate
host processing systems, which often lack the flexibility needed to easily
utilize and deliver information across different systems.  Bank customer service
representatives often are limited in their ability to access comprehensive
customer information on one screen, which limits their ability to cross-sell
products and services.  Banks must also be able to support customer transactions
in a number of channels, such as electronic banking and telephone call centers.
Accordingly, large banks increasingly find it necessary to centralize data from
several disparate host processing systems. Interstate banking presents these
institutions with additional and costly administrative and legal complexities
relating to compliance with complex and changing regulatory requirements across
states.

Smaller community institutions face similar operational difficulties.  Lacking
the economies of scale of larger banks, smaller institutions find it
increasingly necessary to exploit technological solutions that enable them to
reduce operating costs, generate additional revenues from existing customers and
focus on specific market niches.  In addition,


                                          2
<PAGE>

compliance with regulatory requirements can be more burdensome to these smaller
institutions given their resource limitations.

NEW DELIVERY CHANNELS.  Banks of all sizes are increasingly recognizing that the
value-added role of branch offices lies not in their traditional capacity as a
transaction processor, but as a new sales channel for financial products and
services.  A recent study by a financial services consulting firm estimates that
the average cost of a call center transaction is 61% of a branch transaction, an
ATM transaction is 36% of a branch transaction, and a home banking transaction
is 30% of a branch transaction.  In order to make these new delivery channels
attractive and user-friendly, the Company believes that consumers require access
to consolidated information and services that are consistent across all delivery
channels.

CHANGING REGULATIONS.  Financial institutions in the United States remain highly
regulated and in recent years have been subjected to heightened scrutiny by
regulatory agencies for compliance and other matters.  To understand and remain
in compliance with the numerous complex and changing interstate banking
regulations, a regulated financial institution must invest significant resources
in developing a compliance infrastructure.

Because regulatory requirements are often triggered simply by the interaction
between a financial institution and its customer, institutions are increasingly
subject to compliance issues as they migrate their sales efforts to new forms of
delivery channels, such as telephone and online banking.  Increasingly, these
regulations extend beyond simple disclosure or form content requirements, and
financial institutions must also focus on customer data collection and analysis
as well as internal business procedures.  This collection and analysis must be
obtained from, and available to, multiple delivery channels.  Data collection
and analysis is complicated by the emergence of new channels for interacting
with customers and potential customers.

EVOLVING NETWORK TECHNOLOGY.  Personal computer network technology is becoming
increasingly integrated into all facets of the financial services business.
Financial institutions are transitioning from mainframe-based systems to
client/server computing for customer service applications, with continued
reliance on mainframe technology for back-office functions.  The growth of the
Internet is expected to have a substantial impact on the banking industry.  Not
only are institutions themselves connected through local and wide area networks,
but their customers are increasingly using the Internet to gain access to these
institutions and financial data.  The Company believes the rapidly growing
network banking environment is demanding compatible software applications and
connectivity.

THE CFI SOLUTION
The Company relies on a variety of knowledge-based and technical core
competencies.  The Company's vertical market focus on the financial services
industry has enabled it to develop specialized knowledge and expertise
pertaining to business processes and regulations affecting the industry.  The
Company incorporates this knowledge into its software solutions to automate
lending, operations, electronic delivery and connectivity.  CFI's products and
services are designed to meet the evolving needs of financial institutions by
addressing a broad range of these banking, technology and regulatory
requirements.


                                          3
<PAGE>

CFI's products provide a number of benefits to financial institutions by
addressing regulatory requirements, system connectivity issues and internal
business processes faced by institutions in the increasingly competitive
financial services industry.  Using CFI's solutions, these institutions are able
to simplify sales and service processes and improve productivity through reduced
operating costs and expanded capacity.  The ability to view an entire customer
account relationship on-screen enables financial institutions to strengthen
relationships with their customers at each point of contact and across multiple
delivery channels.  CFI's products also enable institutions to comply with both
internal business processes and external government regulations.

The Company's products provide support and service solutions to both large and
small financial institutions.  CFI's products enable larger financial
institutions to utilize data among disparate and often incompatible host
processor platforms.  The Company's suite of products also addresses the
preference of larger institutions to work with fewer vendors that provide
comprehensive software solutions. Smaller institutions benefit through
streamlined operations and enhanced cross-selling abilities, while ensuring
cost-effective regulatory compliance.

The Company has also developed substantial technological capabilities necessary
to meet the evolving requirements of financial institutions.  The Company has
established substantial knowledge of host processing systems commonly used in
the financial services industry.  Through its StarGate connectivity software and
other applications, the Company has developed the capability to retrieve, view
and update data stored on these systems.  To date, the Company has established
relationships with numerous service bureaus and turnkey host vendors such as
IBM, NCR Corporation ("NCR"), FIserv and The BISYS Group, Inc.  The Company
intends to establish additional relationships with other leading service bureaus
and turnkey host vendors.

THE CFI STRATEGY
The Company's strategic objective is to be the leading provider of customer
service software solutions to financial institutions at key points of customer
contact. The Company intends to achieve this objective by combining its
expertise in regulatory issues, banking, and technology.  Primary elements of
the Company's strategy include:

OFFERING A BROAD SUITE OF DELIVERY CHANNEL SOLUTIONS.  The Company believes it
is unique in its ability to offer solutions enabling financial institutions to
perform transactions across multiple delivery channels, including branches, call
centers, and electronic banking.  By providing a broad suite of solutions, the
Company believes it can address the need for consistent processes across
delivery channels for an institution's products (such as loans and new accounts)
and services (such as account inquiries or transfers).  The Company's strategy
is to establish long-term relationships with its customers and cross-sell
multiple products throughout its customer base.  The Company believes this
ability provides an important market advantage over competitors who are able to
address only a limited number of delivery channels or provide a limited number
of products and services.

ADDRESSING EXPANDING HOME BANKING MARKET.  The Company is currently a leading
provider of personal computer banking solutions in the United States, with
approximately 150 institutions offering private-dial or Internet banking
services using the Company's solutions.  The Company offers its home banking
solutions on a private label basis, running


                                          4
<PAGE>

on a server controlled by the financial institution.  This approach permits the
financial institution to retain its proprietary customer relationship and brand
name identity.  The Company's home banking solution also supports the financial
institution's customers who use personal finance software such as
Microsoft-Registered Trademark- Money.  The Company believes it was the first to
support a consumer banking transaction through the Internet and to connect a
home banking solution to Microsoft Money through Microsoft's Open Financial
Connectivity specification. The Company has also sold its home banking product
to an Internet service provider, Mesa Internet Systems, which intends to make
the product more economically accessible to community banks in Texas. The
Company, together with Microsoft, CompUSA, Mesa Internet Systems, Visa
Interactive, Southwestern Bell, PRIMEVEST Financial Services and PULSE EFT
Association, have announced plans to offer Internet banking, bill payment and
brokerage services to several hundred Texas community banks.

EXPANDING CUSTOMER BASE.  Over 40% of U.S. commercial banks have licensed at
least one of the Company's solutions.  The Company believes its brand name and
reputation as a provider of high-quality solutions are widely recognized in the
financial institution community.  The Company intends to expand its customer
base through its direct sales force of 37 professionals.  CFI seeks to enter
into formal and informal arrangements whereby it makes its solutions compatible
with the software and hardware solutions offered by leading technology vendors
to the financial institutions, enabling those vendors to act as joint marketers
of the Company's solutions.  The Company has entered into such arrangements with
more than 60 technology vendors, including IBM.  In particular, the Company will
continue its focus on expanding its market share with large banks through its
own major account sales force and through formal and informal partnerships such
as the Company's relationship with NCR.  The Company has launched an initiative
in the credit union market through a strategic alliance with the CUNA Mutual
Insurance Group, a key marketer and supplier of technology in that market.  The
Company intends to increase its marketing and sales efforts to further penetrate
the mortgage banking and thrift markets.

LEVERAGING CUSTOMER RELATIONSHIPS.  The Company builds long-term customer
relationships by employing relationship selling techniques and through long-term
service and support agreements.  These techniques and such service and support
relationships keep the Company in frequent contact with the customer, enabling
the Company to sell additional products to its customers as they grow,
cross-sell additional products and sell product upgrades. Substantially all of
the Company's customers enter into long-term service and support agreements.

MAINTAINING LEADING KNOWLEDGE-BASED SOFTWARE TECHNOLOGY.  The Company believes
its proprietary software and service solutions are competitive strengths.
Therefore, the Company intends to continue to invest in product development in
order to maintain and strengthen its technology position and to improve its
compatibility with other major applications.  For example, the Company is moving
forward with the migration of its software solutions to the Windows and Windows
NT platforms.  The Company anticipates that it will have migrated most of its
software solutions to the Windows or Windows NT platforms by the end of the
first quarter of 1997, with the principal exception of Laser Pro Closing, which
is scheduled to be completed later in 1997.

PROVIDING CONNECTIVITY SOLUTIONS.  Financial institutions increasingly seek to
integrate technology systems through networks and other connectivity solutions,
so that operations


                                          5
<PAGE>

at multiple locations and through multiple distribution channels can access
common customer account and transaction data and processes.  CFI entered the
connectivity solutions market through its April 1995 acquisition of Texas
Southwest Technology Group and is increasingly offering integrated connectivity
solutions to its customer base.

GROWING THROUGH STRATEGIC ACQUISITIONS.  The Company has acquired ten businesses
or companies since June 1994. These transactions have enabled the Company to
expand its product suite and customer base, leverage product cross-selling
opportunities and add engineering expertise.  The Company intends to continue to
selectively pursue acquisitions of businesses, products or technologies that
enhance its competitive position.

PRODUCTS
LENDING PRODUCTS.  CFI's lending products automate processes at nearly every
step in the lending process for consumer, commercial, indirect, and real estate
lending lines of business. General business functions automated by CFI lending
solutions include loan application and analysis, loan closing, portfolio
analysis, and risk management, as well as connectivity for interfaces to credit
scoring and reporting systems and remote printing of loan documents. In the
fourth quarter of 1996, CFI released a Windows version of its Laser Pro
Application product, and it is scheduled to release a Windows version of Laser
Pro Closing in 1997. The Company is engineering its lending products to operate
with common user interfaces and databases. CFI is also developing and expects to
offer a shrink-wrapped version of its mortgage origination software, which
currently is available only on a customized basis.

OPERATIONS PRODUCTS.  CFI's operations products automate the customer service,
sales, and account opening functions for the branch office platform, teller
station, and telephone call center. These products provide a common view of the
entire customer relationship, enabling service personnel to leverage selling
opportunities. In 1997, CFI plans to introduce a re-engineered call center
product that will integrate more effectively with its branch sales and service
products. The Company has released Deposit Pro for Windows, its account opening
product.

ELECTRONIC DELIVERY PRODUCTS.  CFI's electronic delivery products provide
personal computer private-dial and Internet access to account inquiry and
transaction capabilities, as well as ACH transaction management and remittance
processing. The Company's home banking products provide over a dozen functions,
including account balance, account history, bill payment, and online loan
applications. In the first half of calendar 1997, CFI plans to complete its
latest version of Personal Branch home banking software, its client/server-based
system that allows financial institutions to provide personal computer-based
home banking services via private-dial or the Internet. The latest version of
this software will be designed to improve performance and provide additional
functionality and connectivity capabilities.

CONNECTIVITY PRODUCTS.  Connectivity products and services enable institutions
to transfer or exchange data between CFI software and host systems and across
incompatible host systems. The Company's software connects back-office systems
to front-end delivery systems, such as the home personal computer, branch office
platform or telephone call center.


                                          6
<PAGE>

REVENUE BY PRODUCT GROUP

<TABLE>
<CAPTION>

Years Ended December 31,                   1996                    1995                   1994
-----------------------------      ----------------------  ----------------------  ----------------------
(Dollars in thousands)               Amount      Percent     Amount      Percent    Amount       Percent
                                   ---------    ---------  ----------   ---------  ---------    ---------
<S>                                <C>          <C>        <C>          <C>        <C>          <C>
Lending Products                   $  31,034        51.8%  $  23,893        65.0%  $  22,122        67.8%
Operations Products                   19,761        33.0       7,564        20.6       7,051        21.6
Electronic Delivery Products           4,653         7.8       2,099         5.7         383         1.2
Connectivity Products                    823         1.3         423         1.1           0         0.0
Other (1)                              3,676         6.1       2,797         7.6       3,060         9.4
                                    ---------    ---------  ----------   ---------  ---------    ---------
 Total Revenue                     $  59,947       100.0   $  36,776       100.0%  $  32,616       100.0%
                                    ---------    ---------  ----------   ---------  ---------    ---------
                                    ---------    ---------  ----------   ---------  ---------    ---------
</TABLE>
(1) Other products include bill payment systems processing fees, sales of
    preprinted forms and supplies and certain consulting revenues.

PRODUCTS BY PRODUCT GROUP

LENDING PRODUCTS

<TABLE>
<CAPTION>
                   DATE
                INTRODUCED/
  PRODUCT         ACQUIRED                     DESCRIPTION                                   BENEFITS TO CUSTOMER
  -------       -----------                    ------------                                  --------------------
<S>             <C>               <C>                                                    <C>
Laser Pro       Released          Integrated, modular loan processing system for         Standardizes lending policies
                1986              consumer, commercial, SBA, real estate home            and products, streamlines
                                  equity and agricultural loans                          processing, incorporates a
                                                                                         national database of regulations
Application     Acquired          Processes applications for indirect consumer           Speeds the loan application and
 Manager        1996              lending                                                approval process for indirect
                                                                                         lenders
LOANscape       Acquired          Provides mortgage origination, processing and          Improves consistency of loan
                1996              servicing capabilities                                 processes, speeds origination,
                                                                                         increases capacity
TriScore        Acquired          Commercial loan scoring and underwriting               Reduces underwriting risks
                1996              system
fisCAL          Acquired          Analyzes commercial loan applicants and                Standardizes and streamlines
                1996              evaluates underwriting criteria and performance        underwriting policies and
                                  over time                                              practices
fisCAL Plus     Released          Combines spreadsheet analysis, credit scoring,         Increases the quality of credit
                1996              and portfolio management technologies to               decisions, improves the
                                  provide comprehensive commercial loan                  consistency of lending
                                  underwriting capabilities for small-to-medium          practices, enhances portfolio
                                  sized lenders                                          management, and reduces
                                                                                         underwriting risk
LoansPlus       Acquired          Portfolio and credit risk analysis system that         Balances acceptable credit risk
                1996              uses neural network technology and case-based          and lending opportunities to
                                  reasoning                                              recommend credit decisions
                                                                                         and manage portfolios
Pro Active      Released          Collects, analyzes, reports and maps HDMA              Simplifies the process of
                1994              loan application information, non-real estate          meeting fair lending and
                                  loan data, and community demographic data              community reinvestment
                                                                                         requirements
</TABLE>

                                        7
<PAGE>

OPERATIONS PRODUCTS

<TABLE>
<CAPTION>
                   DATE
                INTRODUCED/
PRODUCT          ACQUIRED                     DESCRIPTION                                  BENEFITS TO CUSTOMER
-------         ----------                    -----------                                  --------------------
<S>             <C>               <C>                                                    <C>
Encore!         Acquired          Automates the teller station by providing              Improves productivity and
Teller          1995              comprehensive transaction automation, electronic       facilitates sales referrals
                                  journaling, store-and-forward capabilities,
                                  simplified balancing, and access to the customer
                                  database
               
Encore!         Acquired          Provides sales and service capabilities, including     Opens accounts,enables
Platform        1995              account opening screens, customer/product              cross-selling and fulfillment
Sales &                           matching, customer contact histories, letter and       of customer information
Service                           fulfillment generation, and institution and product    requests
                                  information
               
Encore!         Acquired          Integrates in a common and consistent format           Enables cross-selling and
Call Center     1994              customer, product and internal procedure               improves service
Sales &                           information
Service        
               
Deposit Pro     Acquired          Automates and ensures regulatory compliance in         Speeds account opening,
                1990              the account opening and cross-selling processes        ensures compliance with
                                  for checking, savings, certificates of deposit, and    regulations, improves the
                                  IRA accounts. A Windows-based version of this          consistency of new account
                                  production, Deposit Pro for Windows, was               policies and practices
                                  introduced in 1996
               
Encore!         Released          Windows-based system that graphically links            Allows customized
Desktop         1996              each user to CFI software and other business           arrangements of modules
                                  applications                                           and access
               
ProForms        Released          Generates laser printed forms used daily               Eliminates the need for
 Laser          1994              by financial institutions                              costly inventories of
                                                                                         preprinted forms, speeds
                                                                                         form processing
</TABLE>

ELECTRONIC DELIVERY PRODUCTS

<TABLE>
<CAPTION>
                   DATE
                INTRODUCED/
PRODUCT          ACQUIRED                    DESCRIPTION                                   BENEFITS TO CUSTOMER
-------          --------                    -----------                                   ---------------------
<S>             <C>               <C>                                                    <C>
Personal        Released          Server-based system that allows institutions to        Provides low-cost service
Branch          1993              provide personal computer-based home banking           delivery channel, strengthens
                                  services via private-dial or Internet channels         customer relationships,
                                                                                         extends institution branding,
                                                                                         increases customer
                                                                                         convenience
              
RPxpress!       Acquired          Remittance processing system for financial             Streamlines processing,
                1995              institutions to provide retail lockbox services        improves the quality of
                                                                                         encoding, reduces errors
              
ACH             Acquired          Originates and receives ACH electronic                 Cost-effective processes ACH
Manager         1995              payments and collections                               business, monitors business
                                                                                         for risk
              
ACH Remote      Acquired          System licensed by financial institutions to its       Generates new fee income
                1995              corporate customers for transmitting data files        and simplifies automated
                                  from the customer personal computer to the             procedures
                                  financial institution's ACH system
              
Vendor          Acquired 1996     Bill payment processing for the Company's              Required component of home
Payment                           Personal Branch customers                              banking services; generates
Systems                                                                                  new fee income
</TABLE>

                                        8
<PAGE>

CONNECTIVITY PRODUCTS

<TABLE>
<CAPTION>
                  DATE
                INTRODUCED/
PRODUCT          ACQUIRED                     DESCRIPTION                                  BENEFITS TO CUSTOMER
--------         --------                     -----------                                  --------------------
<S>             <C>               <C>                                                    <C>
StarGate        Acquired          Connectivity software system which transfers or        Allows institutions to integrate
                1995              exchanges data between CFI products and other          data from multiple host
                                  host or client/server systems                          systems and present that data
                                                                                         through networks to multiple
                                                                                         front-end systems
               
StarGate F/X    Acquired          Connectivity software which enables institutions       Reduces costs, increases
                1995              to print Laser Pro documents remotely through          transaction speed and
                                  the institution's mainframe network                    productivity; enables
                                                                                         institutions to centralize loan
                                                                                         document preparation

</TABLE>
 
PRODUCT DEVELOPMENT AND NEW PRODUCTS
The Company's products enable institutions to increase sales capabilities,
improve productivity, and remain in compliance with internal policies and
government regulations. CFI ensures that its products meet customer requirements
by conducting primary research and holding product user and focus group
meetings.  The Company also incorporates knowledge learned during the sales and
installation process into development of new and enhanced products.  CFI
continues to invest significantly in its product development efforts.  The
Company intends to increase the ability of its products to operate in networked
environments throughout the entire banking enterprise. Its integration strategy
addresses the movement in the industry toward common user interfaces and
databases driving consistent information to all points of customer contact. In
addition to offering products that operate in the growing network-centric
banking environment, CFI will continue developing the Internet capabilities of
its product suite where appropriate.

The Company believes that market acceptance of its products is based in
significant part on the ability of the products to share information with a
financial institution's host processor system or with the vendor providing
processing services to such institution. The Company has developed significant
expertise with most available host processor systems and the methods necessary
to transfer data to and from such systems. Although the Company generally is
able to develop interfaces that allow its products to operate effectively with
its customers' host systems, integration is optimized where the Company and the
host processor provider cooperatively share information regarding the respective
products' technologies, development schedules and enhancements. There can be no
assurance that the Company will be able to establish and maintain adequate
relationships with important host processor providers in the future.

The Company is in the process of migrating its Laser Pro lending products to
Windows and Windows NT operating environments. In the fourth quarter of 1996,
CFI released a Windows version of its Laser Pro Application product, and it is
scheduled to release a Windows version of Laser Pro Closing in 1997. Many of its
other lending products and most of its operations, electronic delivery and
connectivity products already run on the Windows platform. The Company supports
both DOS and Windows-based versions of several products, enabling its customers
to upgrade easily and at a reasonable pace.


                                          9
<PAGE>

SERVICE AND SUPPORT
The Company licenses substantially all its products with mandatory annual
maintenance agreements under which CFI provides periodic product updates
reflecting evolving regulations, product enhancements and toll-free telephone
support. Annual support fees consist of per-item or per-user charges or are
calculated based on a percentage of the current product list price.
Furthermore, CFI provides training to its customers.  Software service and
support fees have grown significantly over the last three years.  For the year
ended December 31, 1996, such fees represented 37% of the Company's total
revenue.  The Company accounts for this revenue as service and support fees.

The Company installs, implements and customizes its software solutions at
certain customer sites, particularly at larger institutions.  As the Company's
sales to larger institutions increase, the Company anticipates demand for these
services to increase.  Revenue from these services is accounted for as software
license fees.

CUSTOMERS
CFI has licensed its software to over 4,700 commercial banks, thrifts and credit
unions in the United States. In addition, the Company's acquisitions have opened
limited opportunities in non-financial service industries and have added a small
number of international institutions to CFI's customer base. CFI's target
customer base includes commercial banks, thrifts and credit unions.  No customer
accounted for 10% or more of the Company's total revenues in 1994, 1995 or 1996.

The Company's largest accounts include the following: First Union National Bank,
Star Banc Corporation, Banc One Services Corporation, The BISYS Group Inc.,
Chase Manhattan Bank, First Citizens Bank & Trust Co., Barnett Banks, Inc.,
Banco Santander Puerto Rico, Union Planters Corporation and Regions Financial
Corp.

SALES AND MARKETING
CFI sells its products through two experienced, national direct field sales
teams; one team is devoted exclusively to large financial institutions, and the
other team focuses on all other accounts.  Both teams are supported by a
marketing group, product specialists and a telemarketing team. Telemarketing
personnel contact institutions for lead generation and qualification, and sales
support personnel are responsible for direct sales campaigns, trade media
support and advertisements. As of December 31, 1996, the Company's field sales
force consisted of 37 persons. Sales of the Company's products, particularly to
large institutions, generally require a lengthy sales and implementation
process.

The Company has a number of third-party reseller and co-marketing alliances,
including agreements with some of the largest host processors and hardware
vendors. For example, the Company has relationships with IBM and NCR whereby
such companies' sales teams resell a large portion of the Company's product
line.  These third-party reseller and co-marketing alliances provide access to
institutions with which the Company would otherwise have no relationship.

The Company, together with Microsoft, CompUSA, Mesa Internet Systems, Visa
Interactive, Southwestern Bell, PRIMEVEST Financial Services and PULSE EFT
Association have announced plans to offer Internet banking, bill payment and
brokerage services to several hundred Texas community banks.


                                          10
<PAGE>

LEGAL NETWORK
The Company maintains a network of independent legal counsel in all 50 states
and the District of Columbia.  This network, as well as the Company's internal
legal staff, keeps the Company informed of changes in state and federal laws,
changes in state and local documentation requirements, pending legislation and
court actions affecting financial institution practices, as well as other
information required to maintain regulatory compliance.  The Company's
management believes that the quality of this information, the Company's ability
to effectively manage the continuous information flow provided by the network
participants, and the capability of the Company to integrate this information
into its software products provide the Company with a significant competitive
advantage.

The Company utilizes legal counsel in all jurisdictions, other than Louisiana,
under agreements that are terminable at will by either party and that provide
for compensation based on an hourly rate.  The Company has entered into a
long-term legal services agreement with a Louisiana law firm pursuant to which
it pays legal fees based upon sales of the Company's products in Louisiana.

ACQUISITIONS
To remain competitive and to meet the changing needs of its customers, CFI
pursues acquisitions of products, technologies and businesses as one part of its
growth strategy.  The Company continuously evaluates acquisition candidates that
provide opportunities to expand its customer base, cross-sell products, and
broaden its product offerings with proven solutions in a timely and
cost-effective manner.  Since 1994, the Company has made ten acquisitions and
believes that to date it has achieved its objectives of growth and broadening
its product offerings through this acquisition program and intends to continue
such activity in the future.  However, the Company currently has no
understandings, commitments or agreements with respect to any material
acquisition of other businesses, products or technologies. Acquisitions of
businesses or companies require the dedication of management resources in order
to achieve the strategic objectives of the acquisitions.

COMPETITION
The market for the Company's products is intensely competitive and rapidly
changing.  A number of companies offer competitive products addressing certain
of the Company's target markets.  With respect to the Company's lending
products, the principal competitors include Bankers Systems, Inc., FormAtion
Technologies Inc., Interlinq Software Corporation, Fair, Isaac & Company, Inc.,
Affinity Technology Group, Inc., Great Lakes Forms, Inc., APPRO Systems, Inc.
and JetForm Corp.  With respect to the Company's operations products, the
principal competitors include Olivetti North America, Broadway & Seymour, Inc.,
Early, Cloud & Company and Footprint Software, Inc. (both subsidiaries of IBM),
Electronic Data Systems Corporation, Argo & Company, FIserv, Edify Corporation,
and Software Dynamics, Inc. With respect to the Company's electronic delivery
products, the principal competitors include CheckFree Incorporated, Visa
Interactive, Edify Corporation, Online Resources & Communications Corporation,
GOLDPAC Products, and Politzer & Haney.  In addition, a number of prospective
and existing customers of the Company have the internal capability to provide
alternative solutions to the Company's products and may, therefore, be viewed as
competing with the Company.  These alternatives may include internally developed
software and hardware solutions, or methods of process management that do not
involve software solutions.  Some of the Company's competitors have
significantly greater financial, technical, sales and marketing resources


                                          11
<PAGE>

than the Company.  The Company believes that the primary competitive factors in
this market include product quality, reliability, performance, price, vendor and
product reputation, financial stability, features and functions, ease of use and
quality of support.  There can be no assurance that competitors will not develop
products that are superior to the Company's products or that achieve greater
market acceptance. Further, because of the rapidly evolving nature of the
industry, many of the Company's collaborative partners are current or potential
competitors.  In addition, a number of current or potential competitors have
established or may establish cooperative relationships among themselves and with
third parties that may present additional competition with products offered by
the Company.  The Company's competitors may also be able to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies, utilize
more extensive distribution channels, and bundle competing products.

The Company's future success will depend significantly upon its ability to
increase its share of the large bank market and to license additional products
and product enhancements to existing customers.  As the Company develops new
products or enters new markets, it expects to encounter additional competitors,
some of which may have significantly greater financial, technical, sales and
marketing resources than the Company.  There can be no assurance that the
Company will be able to compete successfully in the future, or that competition
will not have a material adverse effect on the Company's results of operations.

INTELLECTUAL PROPERTY
The Company's success and ability to compete are dependent in part upon its
proprietary technology, including its software.  The Company relies primarily on
a combination of copyright, trade secret, and trademark laws, confidentiality
procedures and contractual provisions to protect its proprietary rights.  The
Company also believes that factors such as know-how concerning the financial
services industry and the kinds of software products that the Company licenses
as well as the technological and creative skills of its personnel, new product
developments, frequent product enhancements, name recognition and reliable
product service are essential to establishing and maintaining a technology
leadership position.  The Company may from time to time seek patent protection
for innovations related to certain of its software products, but has not
generally sought patent protections for its software.  There has been an
increase in the number of patents related to software that have been issued or
applied for in the United States and, accordingly, the risk of patent
infringement for software companies can be expected to increase.  There can be
no assurance that others will not develop technologies that are similar or
superior to the Company's technology.  The Company has, with a small number of
customers, provided limited access and restricted rights to the source code of
certain products.  Despite the Company's efforts to protect its proprietary
rights, other parties may attempt to reverse engineer, copy or otherwise engage
in unauthorized use of the Company's proprietary information. There can be no
assurance that the Company's means of protecting its proprietary rights will be
adequate.

Certain technology or proprietary information incorporated in the Company's
products is licensed from third parties, generally on a non-exclusive basis.
The termination of any such licenses, or the failure of the third-party
licensors to adequately maintain or update their products, could result in delay
in the Company's ability to ship certain of its products while it seeks to
implement technology offered by alternative sources, and any required
replacement licenses could prove costly.  In addition, the integration of the
Company's


                                          12
<PAGE>

products with financial institutions' host systems is optimized if the Company
has access to the host system technology.  The parties controlling the host
processor technologies may also be current or future competitors of the Company
and as such may restrict access to such technologies.  In some instances, the
Company has not been able to obtain sufficient access to host system technology
necessary for developing optimal system interfaces.  While it may be necessary
or desirable in the future to obtain rights to third party technology, there can
be no assurance that the Company will be able to do so on commercially
reasonable terms, or at all.

In the future, the Company may receive notices claiming that it is infringing
the proprietary rights of third parties, and there can be no assurance that the
Company will not become the subject of infringement claims or legal proceedings
by third parties.  The Company expects that software product developers will
increasingly be subject to infringement claims as the number of products and
competition in the Company's industry grows and the functionality and scope of
products overlap. Furthermore, there can be no assurance that employees or third
parties have not improperly disclosed confidential or proprietary information to
the Company.  Any such claims, with or without merit, could be time consuming
and expensive to defend, divert management's attention and resources, cause
product shipment delays or require the Company to pay money damages or enter
into royalty or licensing agreements.  Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the Company, or at all.
In the event of a successful claim of product infringement against the Company
and failure of the Company or its licensors to license the infringing or similar
technology on reasonable terms, the Company's business, operating results and
financial condition could be adversely affected.  In addition, the Company may
initiate claims against third parties for infringement of the Company's
proprietary rights or to establish the validity of the Company's proprietary
rights.  Any such claim could be time consuming, result in costly litigation,
and have a material adverse effect on the Company's business, operating results
and financial condition.

EMPLOYEES
As of December 31, 1996, the Company had 489 full-time employees.  Of this
number, 172 were engaged in product groups (primarily product development), 106
in customer service and support, 78 in sales and marketing, 81 in implementation
and training, and 52 in general and administrative functions.

ITEM 2.  PROPERTIES

The Company's corporate headquarters are located in Portland, Oregon in a leased
facility consisting of approximately 72,000 square feet of office space occupied
under leases that expire in 2001.  Annual lease payments for the Company's
current corporate headquarters are approximately $1.1 million, with provisions
for inflationary increases.  The Company also leases office space in Dayton,
Ohio (15,151 square feet),  in Huntington, New York (5,740 square feet), in
Denver, Colorado (3,357 square feet),  in Houston, Texas (3,260 square feet), in
Louisville, Kentucky (1,388 square feet), in Atlanta, Georgia (52,678 square
feet), in New Jersey (2,686 square feet) and in Charleston, South Carolina
(6,000 square feet).  These leases expire in 2006, 1999, 1999, 1997, 1996, 2000,
1999, and 1999, respectively.  Annual lease payments for these facilities, in
aggregate, are approximately $1.3 million.  The Company does not intend to renew
its lease of the Louisville, Kentucky


                                          13
<PAGE>

office space as operations currently conducted at that location are expected to
be moved to the Company's corporate headquarters.  The Company believes the
office space currently under lease is adequate to meet its needs for the next
year.

ITEM 3.  LEGAL PROCEEDINGS

The Company and its subsidiaries are from time to time involved in routine legal
matters incidental to their respective businesses. In the opinion of the
Company, the resolution of any such matters that are currently outstanding will
not have a material effect on its financial condition or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company did not submit any matters to a vote of security holders during the
quarter ended December 31, 1996.

                                       PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock trades on The Nasdaq National Market System under the
symbol PROI.  The high and low selling prices for the two years in the period
ended December 31, 1996 were as follows:

         1996                          High                Low
         ------------------------   --------            --------
         Quarter 4                  $  20.00            $  13.50
         Quarter 3                     25.63               15.25
         Quarter 2                     28.25               15.13
         Quarter 1                     15.75                9.25

         1995                          High                Low
         ------------------------   --------            --------
         Quarter 4                  $  16.25            $  11.25
         Quarter 3                     17.50               12.63
         Quarter 2                     14.75                9.25
         Quarter 1                     17.75               11.75

The number of shareholders of record on February 28, 1997 was 229.

There were no cash dividends declared or paid on the Company's Common Stock in
1996 or 1995.  The Company does not anticipate declaring cash dividends in the
foreseeable future.  During 1996, the Company issued 34,026 unregistered shares
of its Common Stock in conjunction with the acquisition of Halcyon, Inc.


                                          14
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

IN THOUSANDS:
EXCEPT PER SHARE AMOUNTS
(reclassified (1))                    1996(2)     1995(3)     1994        1993        1992
---------------------------------  ---------   ---------   ---------   ---------    --------
<S>                                <C>         <C>         <C>         <C>         <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA
Revenue:
  Software license fees            $  33,935   $  18,918    $ 16,781   $  14,686    $  8,307
  Service and support fees            22,336      15,060      12,775       9,748       6,626
  Other revenue                        3,676       2,798       3,060       2,720       2,045
                                   ---------   ---------   ---------   ---------    --------
     Total revenue                    59,947      36,776      32,616      27,154      16,978
Cost of revenue                       20,844      11,672       9,646       8,047       4,493
                                   ---------   ---------   ---------   ---------    --------
Gross profit                          39,103      25,104      22,970      19,107      12,485
Operating expenses                    29,810      20,552      17,859      15,670      10,389
Acquired in-process research and
  development and restructuring        8,030       4,549          --          --          --
                                   ---------   ---------   ---------   ---------    --------
Income from operations                 1,263           3       5,111       3,437       2,096
Net income                               114         323       3,514       2,264       1,744
Preferred Stock dividend                  97          97          97         733         908
                                   ---------   ---------   ---------   ---------    --------
Net income applicable to common
  shareholders                     $      17   $     226    $  3,417   $   1,531    $    836
                                   ---------   ---------   ---------   ---------    --------
                                   ---------   ---------   ---------   ---------    --------
Net income per share               $      --   $    0.05    $   0.71   $    0.41    $   0.25
                                   ---------   ---------   ---------   ---------    --------
                                   ---------   ---------   ---------   ---------    --------
Shares used in per share
  calculations                         5,112       4,877       4,806       3,775       3,321

CONSOLIDATED BALANCE SHEET DATA
Cash and short-term investments    $      --    $  7,670    $  7,958   $  10,509    $  1,844
Working capital                        2,722       8,759      10,336      10,583       1,343
Property and equipment, net            4,805       2,968       2,579       1,516         924
Total assets                          46,845      36,587      27,487      23,165      10,041
Short-term debt                        2,896       3,951          --         120         301
Long-term debt, less current
  portion                              2,810         423          --          17         103
Mandatory Redeemable Class A
  Preferred Stock                        754         761         764         757         742
Class C Preferred Stock                   --          --          --          --       5,324
Shareholders' equity (deficit)        20,238      18,169      16,591      13,071      (1,998)

</TABLE>
 
(1) Certain amounts for all periods prior to 1996 have been reclassified to
    conform to the current presentation.

(2) Results for the year ended December 31, 1996 include a pretax charge of
    $8.0 million for the value of in-process research and development efforts
    at the date of acquisition pertaining to five companies acquired in April
    1996.  Excluding the impact of the acquired in-process research and
    development charges, net income and net income per share would have been
    $5.2 million and $1.02, respectively.  The results of operations for the
    year ended December 31, 1996 include the results of these companies'
    operations since the date of acquisition in April 1996.  See Note 2 of
    Notes to Consolidated Financial Statements.
(3) Results for the year ended December 31, 1995 include a pretax charge of
    $4.5 million.  The charge consists of $3.7 million for the value of
    Culverin Corporation's ("Culverin") in-process research and development
    efforts at the date of acquisition and $0.8 million for restructuring.
    Excluding the impact of the acquired in-process research and development
    and restructuring charges, net income and net income per share would have
    been $3.1 million and $0.64, respectively.  The year ended December 31,
    1995 statement of income includes the results of Culverin's operations
    since the date of acquisition in November 1995.  See Note 2 of Notes to
    Consolidated Financial Statements.

                                          15
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

OVERVIEW
CFI is a leading provider of customer service software products and services to
financial institutions. The Company combines its technology, banking, and legal
expertise to deliver knowledge-based software solutions that enable institutions
to simplify key business processes such as sales and service, improve
productivity, strengthen customer relationships, and maintain compliance with
both internal business policies and external government regulations. Over 4,700
financial institutions have licensed one or more of the Company's products. In
addition, approximately 150 institutions are offering private-dial personal
computer-based home banking services to their customers using CFI's Personal
Branch products.

During 1993, substantially all of the Company's revenue was derived from the
Company's Laser Pro lending products and Deposit Pro operations products. Today,
the Company licenses more than 20 products organized into four product groups:
lending, operations, electronic delivery, and connectivity software. Due to its
product diversification efforts, the Company is now less reliant on the Laser
Pro and Deposit Pro product lines. For the year ended December 31, 1996 revenue
from these product lines decreased to 51% of the Company's total revenue.

CFI generates recurring revenue from software maintenance agreements. For the
year ended December 31, 1996, service and support fees revenue, primarily for
Laser Pro and Deposit Pro, accounted for approximately 37% of consolidated
revenue. Substantially all software customers subscribe to the Company's service
and support programs, which provide ongoing product enhancements and, where
applicable, updates to facilitate compliance with changing banking regulations.

The Company's cost structure is relatively fixed and cost of revenue, in
aggregate, does not vary significantly with changes in revenue. As a result, the
Company typically generates greater profit margins from incremental sales once
fixed costs are covered. In addition, any failure to achieve revenue targets in
a particular period would adversely affect profits for that period.

Sales to larger banks are expected to constitute a higher percentage of total
revenue in future periods. Transactions with these larger banks are typically of
greater scope, usually involve a greater sales effort over a longer period of
time, and require more customization and prolonged acceptance testing.
Accordingly, the predictability of revenue for any particular period may be
diminished to the extent the Company increases sales to larger banks.

The Company's backlog as of December 31, 1996 was approximately $10.0 million,
as compared to approximately $6.1 million and $2.0 million at the end of 1995
and 1994, respectively.  CFI's backlog consists of orders taken but not yet
booked as revenue and is not indicative of future operating results. Orders
constituting the Company's backlog are subject to changes in delivery schedules
or to cancellation at the option of the purchaser without significant penalty.
The timing of the Company's orders and revenue has become less predictable
during 1995 and 1996 as CFI has increased its focus on generating


                                          16
<PAGE>

business from large accounts and multiple product sales. In light of its
increased emphasis on large accounts and multiple product sales, the Company has
taken steps to increase and maintain its backlog. The stated backlog is not
necessarily indicative of the Company's revenue for any future period.

ACQUISITIONS AND NEW BUSINESS VENTURES
The Company continues to pursue opportunities to expand its market presence by
acquiring products, technologies and companies that complement the Company's
product suite or increase its market share. The Company has completed ten
acquisitions since June 1994.  See Note 2 of Notes to Consolidated Financial
Statements.

<TABLE>
<CAPTION>
                                         DATE
COMPANY                                 ACQUIRED           PRINCIPAL PRODUCTS/MARKETS ACQUIRED
-------                                 --------           ------------------------------------
<S>                                    <C>                 <C>
Assets of the Products Division of     June 1994           Access to certain midwestern states
Professional Bank Systems, Inc.                            for the Company's compliance products

The Genesys Solutions Group, Inc.      September           Call center software
                                       1994

Texas Southwest Technology Group       April 1995          StarGate connectivity products and ACH products

Culverin Corporation                   November            Encore! Platform and teller branch
                                       1995                automation products and Rpxpress!
                                                           remittance processing product

OnLine Financial Communications        April 1996          Over 1,000 branch automation
Systems, Inc.                                              customers employing DOS-based
                                                           technology

COIN Banking Systems, Inc.             April 1996          Application Manager indirect lending product

Assets of Input Creations, Inc.        April 1996          LOANscape mortgage lending product

Assets of Halcyon Group, Inc.          April 1996          fisCAL loan decision support product and TriScore

Assets of Pathways Software, Inc.      April 1996          LoansPlus neural net loan decision
                                                           support and portfolio management product

Vendor Payment Systems, Inc.           April 1996          Bill payment services company

</TABLE>
 
There can be no assurance that any of these or future acquisitions will have a
favorable impact on the performance of the Company. The Company believes that it
has achieved its objectives of growth and broadening its product offerings
through this acquisition program and intends to continue to pursue acquisitions
in the future; however, the Company's ability to pursue acquisitions in the
future may depend, to a large extent, on the availability of additional
financing.  See "Liquidity and Capital Resources" and "Risk Factors."  The
Company currently has no understandings, commitments or agreements with respect
to any material acquisition of other businesses, products or technologies.

The aggregate purchase price for these ten acquisitions was $20.2 million and
380,967 shares of Common Stock, plus contingent royalties. In connection with
such acquisitions, the Company incurred non-cash charges primarily relating to
the write-off of acquired in-process research and development efforts totaling
$8.0 million in April 1996 and $4.5 million in November 1995. The terms of
certain of the acquisitions provide that, based on


                                          17
<PAGE>

various factors including the passage of time, certain product revenue or
product development, the Company will be required to pay contingent royalties,
some of which obligations the Company may satisfy through the issuance of shares
of its Common Stock. See "Cost of Revenue."  Because amortization of certain
intangible assets arising from the Company's acquisition activity is not
deductible for federal income tax purposes, certain amortization expense
incurred by the Company has the effect of increasing the Company's effective tax
rate for financial reporting purposes.

The Company may also evaluate from time to time establishing new business
operations or making minority investments in new business ventures, including
joint ventures.

RESULTS OF OPERATIONS
The following table sets forth statements of income data of the Company
expressed as a percentage of total revenue for the periods indicated:

                                                     YEAR ENDED DECEMBER 31,
                                                  ----------------------------
                                                   1996       1995      1994
                                                  ------     ------     ------
Revenue
  Software license fees                             56.6%      51.4%      51.5%
  Service and support                               37.3       41.0       39.2
  Other                                              6.1        7.6        9.3
                                                  ------     ------     ------
     Total revenue                                 100.0      100.0      100.0
Gross profit                                        65.2       68.3       70.4
Operating expenses
  Sales and marketing                               21.2       26.0       25.1
  Product development                               17.7       17.3       15.8
  General and administrative                         9.1       11.7       13.3
  Amortization of intangibles                        1.7        0.9        0.6
  Acquired in-process research and
    development and restructuring                   13.4       12.4         --
                                                  ------     ------     ------
     Total operating expenses                       63.1       68.3       54.8
                                                  ------     ------     ------
Income from operations                               2.1(1)      -- (1)   15.6
                                                  ------     ------     ------
Non-operating income                                  --        1.4        1.2
Income before income taxes                           2.1        1.4       16.8
Provision for income taxes                           1.9        0.5        6.0
Preferred stock dividend                             0.2        0.3        0.3
                                                  ------     ------     ------
Net income applicable to common shareholders          --%(1)    0.6%(1)   10.5%
                                                  ------     ------     ------
                                                  ------     ------     ------

(1) Excluding the impact of the acquired in-process research and development
    and restructuring charges, income from operations as a percentage of
    revenue in 1996 and 1995 would have been 15.5% and 12.4%, respectively, and
    net income applicable to common shareholders in 1996 and 1995 would have
    been 8.5% and 8.2%, respectively.


                                          18
<PAGE>

The following table sets forth percentage changes period over period in the
statements of income data of the Company:

                                                FISCAL YEAR    FISCAL YEAR
                                                  1996 OVER      1995 OVER
                                                FISCAL YEAR    FISCAL YEAR
                                                    1995           1994
                                                -----------    -----------
 Revenue
   Software license fees                                79 %          13 %
   Service and support                                  48            18
   Other                                                31            (9)
 Total revenue                                          63            13
 Gross profit                                           56             9
 Operating expenses
   Sales and marketing                                  33            17
   Product development                                  67            23
   General and administrative                           26            (1)
 Total operating expenses                           (2) 51       (2)  40
 Income from operations                         (1) (2) NM       (2) (99)
 Non-operating income                                  (96)           29
 Income before income taxes                            162           (91)
 Provision for income taxes                            599           (92)
 Net income applicable to common shareholders      (2) (92)%     (2) (93)%

(1) Not meaningful.
(2) Excluding the impact of the acquired in-process research and development
    and restructuring charges, income from operations would have increased 104%
    in 1996 over 1995 and decreased 11% in 1995 over 1994, and net income
    applicable to common shareholders would have increased 70% in 1996 over
    1995 and decreased 12% in 1995 over 1994.

REVENUE
Total revenue increased 63% to $59.9 million for the year ended December 31,
1996 compared to $36.8 million for the comparable period in 1995. Revenue
attributable to the companies acquired in April 1996 accounted for $12.5 million
of the $23.1 million increase, and the Culverin products acquired in
November 1995 accounted for an additional $5.8 million. Total revenue increased
13% to $36.8 million and 20% to $32.6 million for the years ended December 31,
1995 and 1994, respectively. Revenue attributable to Culverin products accounted
for $1.1 million of the increase in 1995.

SOFTWARE LICENSE FEES.  Software license fees include sales of software to
customers, fees for software customization, and fees related to implementing
software and systems at customer sites.

Software license fees increased $15.0 million, or 79%, to $33.9 million for the
year ended December 31, 1996 from $18.9 million for the comparable period in
1995. Of the increase, $7.0 million was contributed by the companies acquired in
April 1996, $5.1 million was attributable to the Culverin products acquired in
November 1995 and $1.8 million was from internal growth, principally from
Deposit Pro and Personal Branch. Of the $7.0 million


                                          19
<PAGE>

increased revenue attributable to the April 1996 acquisitions, sales of the COIN
Banking Systems, Inc. ("COIN") indirect lending and OnLine Financial
Communications Systems, Inc. ("OnLine") branch automation products acquired from
MicroBilt Corporation accounted for $5.1 million. The Company expects sales of
the OnLine and COIN products to decrease in future quarters because the Company
is not actively selling the OnLine DOS-based branch automation products and is
only in the initial phases of converting the DOS-based COIN indirect lending
product to the Windows platform.

PERCENTAGE OF SOFTWARE LICENSE FEES

                                            FOR THE YEAR ENDED DECEMBER 31,
                                            -------------------------------
                                            1996         1995        1994
                                            -----        -----       -----
Lending Products                              48 %         66 %        72 %
Operations Products                           37           22          26
Electronic Delivery Products                  12           10           2
Connectivity Products                          3            2          --
                                            -----        -----       -----
Total                                        100 %        100 %       100 %
                                            -----        -----       -----
                                            -----        -----       -----

Lending products license revenue grew $4.1 million, or 34%, for the year ended
December 31, 1996 over the comparable period in 1995. Substantially all of the
increase came from sales of Application Manager, fisCAL, and LOANscape, all
products from April 1996 acquisitions. As a percentage of total license revenue,
lending products declined from 66% in 1995 to 48% in 1996, reflecting the
Company's successful efforts to broaden its product offerings.

Operations products increased $8.4 million, or 197%, for the year ended
December 31, 1996, over the comparable period in 1995. As a percentage of total
license revenue, operations products revenue increased from 22% in 1995 to 37%
in 1996. Sales of the Encore! products acquired in November 1995 and OnLine
branch automation products acquired in April 1996, accounted for nearly $7.4
million of the increase. Increased Deposit Pro sales, attributable to the
release of the Windows version of that product, accounted for most of the
remainder of the increase.

License fees from the sale of electronic delivery products increased $2.1
million, or 103%, for the year ended December 31, 1996 compared to the same
period a year ago. The Personal Branch home banking products license revenue,
which grew 71% in 1996 over 1995, accounted for $1.2 million of the increase for
the year, and the remainder of the increase is attributable to sales of the
Culverin remittance processing products. As a percentage of license revenue,
electronic delivery products revenue grew from 10% in 1995 to 12% in 1996.
Personal Branch has been licensed to approximately 150 financial institutions.

The StarGate connectivity products grew 110% to $0.8 million in the year ended
1996, compared to the same period a year ago. Volumes for these products are
tied closely to the Company's sales of its various products to larger
institutions and through third party host software providers. To the extent
sales to larger institutions increase, license revenue for StarGate connectivity
products would be expected to increase.


                                          20
<PAGE>

Software license revenue increased $2.1 million, or 13%, in 1995 over 1994.
Higher sales of Personal Branch, along with revenue from the newly acquired
Culverin products, were the primary causes of the increase. Sales of Laser Pro
and Deposit Pro, the Company's core historical product lines, were essentially
flat for 1995 compared to 1994. Consequently, with increased sales of Personal
Branch and the Culverin products, revenue for Laser Pro and Deposit Pro declined
as a percentage of total software fees from 85% in 1994 to 76% in 1995.

During 1995, pricing for Personal Branch was restructured to make the product
more appealing to the market. The initial sale price is now generally fixed
(where previously it varied with the size of the institution), but annual
support fees are now based on the number of end-users utilizing the customer's
system. Management believes this pricing structure addresses the concerns of
many prospective customers about making significant investments in the
electronic banking arena, thereby improving the marketability of Personal
Branch. No significant price changes for other product lines occurred during the
periods presented.

SERVICE AND SUPPORT FEES.  Service and support fees consist primarily of
recurring software support charges and revenue from training customers in the
use of the Company's products. Substantially all of the Company's software
customers subscribe to its support services, which provide for the payment of
annual or quarterly maintenance fees. Service and support fees increased $7.3
million, or 48%, for the year ended December 31, 1996 over the comparable period
in 1995. Service and support fees for products acquired in April 1996 accounted
for $4.8 million of this increase. Service and support fees grew 18%, or $2.3
million, in 1995 over 1994. The increases resulted primarily from increases in
the installed base of the Company's products, in part driven by the 1993 Truth
in Savings legislation and in part by the Company's acquisition of new products.
Aside from changes to Personal Branch pricing in 1995, no other significant
changes in service and support pricing have occurred during the periods
presented.

OTHER REVENUE.  Other revenue includes Vendor Payment Systems' processing fees,
sales of preprinted forms and supplies, and certain consulting revenue. This
revenue increased $0.9 million, or 31%, for the year ended December 31, 1996,
over the comparable period in 1995. Other revenue declined to 6% of total
revenue in 1996, compared to 8% for the comparable period in 1995. The
acquisition of Vendor Payment Systems in April 1996 was the primary cause for
the increase in absolute dollars in this revenue category during 1996. The
Company does not expect other revenue to grow significantly in the future.

COST OF REVENUE
Cost of revenue primarily consists of amortization of internally developed and
purchased software, royalty payments, compliance warranty insurance premiums,
software production costs, costs of product support, training and
implementation, costs of software customization, materials costs for forms and
supplies, and bill payment processing costs.

Cost of revenue increased $9.2 million, or 79%, to $20.8 million for the year
ended December 31, 1996 over the comparable period in 1995.  Of this increase,
$1.9 million resulted from the November 1995 acquisition of Culverin and
$5.6 million resulted from the companies acquired in April 1996. The remainder
of the increase is attributable to higher implementation costs associated with
the growing number of large financial institution


                                          21
<PAGE>

projects, additional personnel required to support the increased installed base
of customers, and increased software amortization.  As the breadth of the
Company's product line has expanded, the complexity and cost of providing high
quality customer service and support has increased both in absolute dollars and
as a percentage of revenue. Software amortization was $1.9 million for the year
ended December 31, 1996 as compared to $1.4 million and $0.6 million for 1995
and 1994, respectively.

Cost of revenue increased by 21% in 1995 over 1994, and was 32% of total revenue
in 1995 compared to 30% in 1994.  The increase in 1995 over 1994 was largely a
result of increased amortization of internally developed and purchased software,
along with increased implementation cost necessary to support the Company's
entry into the market of larger financial institutions. In addition, increased
staffing in the Customer Service department, which occurred mostly in the middle
of 1994 to meet the greater support and training needs of a larger customer
base, contributed to the increase.

As a result of recent acquisitions and product development efforts, costs
resulting from royalty payments and amortization of internally developed and
purchased software will increase in future periods.  The Company is obligated to
pay royalties ranging from 3% to 18% of revenue related to certain products
acquired in the various acquisitions since June 1994.  In addition, the Company
is obligated to pay MicroBilt Corporation a fixed amount per OnLine customer
converted to the Company's products.  The royalty obligations generally extend
three to five years from the acquisition date.

The Company's gross margin in 1996 declined to 65% from 68% in 1995. This
decline was primarily attributable to three factors: increased software
amortization, a shift in product mix and increased royalty expenses for products
acquired through acquisitions.

During 1996, several software development projects reached commercial
feasibility. As a result, the Company began to amortize certain product
development costs which had been capitalized in prior periods. In addition, the
Company recorded amortization as a result of software acquired in connection
with the 1996 acquisitions. In 1996 the Company amortized $1.2 million and $0.7
million of internally developed and purchased software development costs,
respectively. This represented an increase from the prior period of $0.4 million
of amortized internally developed software costs, and $0.1 million in amortized
purchased software costs. The Company anticipates that the amount of software
amortization in 1997 could materially exceed the amount amortized in 1996.

The Company capitalized $5.2 million in software development costs in 1996.
Capitalized software development costs net of accumulated amortization were $8.3
million as of December 31, 1996, up from $4.3 million as of December 31, 1995.
The Company anticipates that the amount of software development costs it will
capitalize in 1997 will be less than in 1996.

Finally, the Company's product mix was comprised of an increased portion of
products with higher implementation costs and of acquired products with
associated royalty expenses. The Company expects this shift in product mix to
continue in future periods, which may continue to adversely affect the Company's
gross margin.

                                          22
<PAGE>

OPERATING EXPENSES
SALES AND MARKETING.  Sales and marketing expenses increased to $12.7 million,
or 21% of revenue, for the year ended December 31, 1996, compared to
$9.6 million, or 26% of revenue in 1995. A total of $1.4 million of the increase
for the year ended December 31, 1996, was attributable to the companies acquired
in April 1996, and an additional $0.4 million of the increase was attributable
to the November 1995 acquisition of Culverin.  None of these acquired
organizations had significant sales and marketing operations prior to such
acquisition.  The remainder of the increase resulted from increased commissions
on higher sales, continued growth in the major accounts sales force and an
increase of more than twofold in the size of the Personal Branch sales force.
The decrease in expenses as a percentage of revenue is primarily a result of
revenue from acquired companies and new products sold through the Company's
existing national direct sales and telemarketing operations.

Sales and marketing expenses increased $1.4 million in 1995 compared to
$0.4 million in 1994, and were 26% of total revenue in 1995 compared to 25% in
1994.  The increase in expenses resulted largely from higher commissions and
bonuses associated with increased revenue, along with additional costs
associated with the development of a major accounts group targeted exclusively
at larger financial institutions.  The increase in expenses as a percentage of
revenue was primarily a consequence of lower than expected new product sales and
sales to larger banks, particularly in the first quarter of 1995.

PRODUCT DEVELOPMENT.  Product development expenses include costs of maintaining
and enhancing existing products and developing new products. Product development
expenses increased to $10.6 million, or 18% of revenue, for the year ended
December 31, 1996 compared to $6.4 million, or 17% of revenue, and to
$5.2 million, or 16% of revenue, in 1995 and 1994, respectively.  The companies
acquired in April 1996 accounted for $1.7 million of the increase for the year
ended December 31, 1996, and the Culverin acquisition in November 1995 accounted
for an additional $2.2 million of the increase.  In addition to the
acquisitions, increases in product development expenses were largely the result
of increased staffing in the development areas of the Company, and additional
costs for integrating acquired products, migrating the Company's DOS-based
products to Windows-based products and accelerating development of the Company's
electronic delivery products.  The expenses associated with these activities
were partially offset by increased capitalization of software development
efforts.  Software development costs capitalized were $5.2 million, $2.7 million
and $1.1 million for 1996, 1995 and 1994, respectively.  The Company will
continue to commit significant resources to product development efforts,
although such expenses are not expected to vary significantly as a percentage of
revenue.

GENERAL AND ADMINISTRATIVE.  General and administrative expenses were
$5.4 million for the year ended December 31, 1996 compared to $4.3 million and
$4.4 million for 1995 and 1994, respectively.  The growth in these expenses was
directly attributable to the growth of the Company. Consolidation of the general
and administrative functions of the acquired companies was the principal reason
for the decrease of these expenses as a percentage of revenue.

General and administrative expenses decreased 1% to $4.3 million, from
$4.4 million between 1995 and 1994, partially due to reduced incentive
compensation resulting from


                                          23
<PAGE>

operating income that was below incentive compensation plan targets.  As a
percentage of total revenue, general and administrative expenses were 9%, 12%
and 13% in 1996, 1995 and 1994, respectively.

AMORTIZATION OF INTANGIBLES
Intangibles include acquisition payments assigned to goodwill, noncompetition
agreements, and customer lists. These costs are amortized over lives ranging
from five to seven years. The increase to $1.0 million for the year ended
December 31, 1996 from $0.3 million for 1995 was directly attributable to the
November 1995 acquisition of Culverin and the April 1996 acquisitions of five
companies. Amortization amounts increased in 1995 to $0.3 million from
$0.2 million in 1994 because of the 1995 acquisitions of Texas Southwest
Technology Group and Culverin.

ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT AND RESTRUCTURING CHARGES
In connection with its acquisitions of Culverin in November 1995 and of five
companies in April 1996, the Company recorded non-cash, pretax charges of
$3.7 million in the fourth quarter of 1995 and $8.0 million in the second
quarter of 1996 for in-process research and development efforts in process at
the date of acquisition.  In addition, in the fourth quarter of 1995 the Company
also recorded a restructuring charge of $0.8 million consisting primarily of
severance costs.  The values assigned to the in-process research and development
efforts were determined by independent appraisal and represent those efforts in
process at the date of acquisition that had not reached the point where
technological feasibility had been established and that had no alternative
future uses. Accounting rules require that these costs be expensed as incurred.
The Company believes that these research and development efforts will result in
commercially viable products within the next two years, at an additional cost of
approximately $10.0 million.

INCOME FROM OPERATIONS
Income from operations for the year ended December 31, 1996, was $1.3 million,
or 2% of revenue, compared to $3,000, or 0% of revenue, for the year ended
December 31, 1995 due to higher revenue levels and improved efficiencies in
operating costs. Excluding the impact of the $8.0 million non-cash charge for
acquired in-process research and development efforts for the April 1996
acquisitions, and a similar $4.5 million charge for the November 1995 Culverin
acquisition, operating income would have been $9.3 million, or 16% of revenue,
for the year ended December 31, 1996, compared with $4.5 million, or 12% of
revenue, for the comparable period in 1995.

NON-OPERATING INCOME
Non-operating income, which consists primarily of interest income and expense,
declined 96% to $18,000 for the year ended December 31, 1996 from the comparable
period in 1995. Cash paid for acquisitions combined with interest on
acquisition-related debt caused the decline.  Non-operating income for the years
ended December 31, 1995 and 1994 was $0.5 million and $0.4 million,
respectively.

PROVISION FOR INCOME TAXES
The effective tax rate for 1996, excluding the impact of the $8 million acquired
in-process research and development write-off, was 43% compared with 34% in
1995, excluding the impact of a $3.7 million acquired in-process research and
development write-off, and compared with 36% in 1994.  The increase over 1995 is
primarily a result of increased


                                          24
<PAGE>

amortization of nondeductible intangibles related to acquisitions and a
substantial reduction in tax-free interest income. The impact of tax-free
interest income and other favorable permanent differences on a much lower income
before taxes caused the decline between 1994 and 1995.

QUARTERLY RESULTS
The Company has experienced, and expects in the future to experience,
significant quarterly fluctuations in its results of operations.  These
fluctuations may be caused by various factors, including, among others: the size
and timing of product orders and shipments; the timing and market acceptance of
new products and product enhancements introduced by the Company and its
competitors; the Company's product mix, including expenses of implementation and
royalties related to certain products; the timing of the Company's completion of
work under contracts accounted for under the percentage of completion method;
customer order deferrals in anticipation of new products; aspects of the
customers' purchasing process, including the evaluation, decision-making and
acceptance of products within the customers' organizations; factors affecting
the sales process for the Company's products, including the complexity of
customer implementation of the Company's products; the number of working days in
a quarter; federal and state regulatory events; competitive pricing pressures;
technological changes in hardware platform, networking or communication
technology; changes in Company personnel; the timing of the Company's operating
expenditures; specific economic conditions in the financial services industry
and general economic conditions.

The Company's business has experienced, and is expected to continue to
experience, some degree of seasonality due to its customers' budgeting and
buying cycles.  The Company's strongest revenue quarter in any year is typically
its fourth quarter and its weakest revenue quarter is typically its first
quarter.  Customer purchases are tied closely to their internal budget
processes.  For some of the Company's customers, budgets are approved at the
beginning of the year and budgeted amounts often must be utilized by the end of
the year.  In addition, the Company's incentive sales compensation plan provides
for increases in commission percentages as sales people approach or exceed their
annual sales quotas.  As a result of these two factors, the Company usually
experiences increased sales orders in the last quarter.

LIQUIDITY AND CAPITAL RESOURCES
Payments for the companies acquired in April 1996 substantially reduced working
capital and cash from December 31, 1995.  Of the $13.6 million paid for those
acquisitions, including expenses, $5.2 million was paid on closing, $4.3 million
was paid subsequently and at December 31, 1996 $1.2 million was carried in
current liabilities. Primarily because of these acquisition payments, working
capital decreased from December 31, 1995 by $6.1 million to $2.7 million at
December 31, 1996.

Operations provided $10.1 million in cash for the year ended December 31, 1996,
compared to $3.5 million in 1995.  The increase in cash from operations compared
to 1995 was primarily due to improved earnings, excluding the non-cash charges
for acquired in-process research and development efforts and for depreciation
and amortization.

Net cash used in investing activities of $10.1 million for the year ended
December 31, 1996 represented an increase over the year ended December 31, 1995
of $9.2 million.  Net cash


                                          25
<PAGE>

payments of  $5.2 million for acquisitions made in April 1996 comprised the
largest portion of these investments.  Additionally, software development costs
of $5.2 million were capitalized in the year ended December 31, 1996, as
compared to $2.7 million in 1995. This increase was a result of ongoing work
related to the Company's migration of Laser Pro and Deposit Pro products to the
Windows platform, conversion of its call center product to be more compatible
with the Company's branch platform product, and enhancements to its electronic
banking product. Spending on property and equipment of $2.7 million in the year
ended December 31, 1996, was primarily attributable to expansion of the
Company's wide area network to accommodate the recent acquisitions, computing
infrastructure for the Company's electronic delivery group and other information
systems upgrades to facilitate greater productivity and expansion of office
space to accommodate higher staffing levels.  Proceeds from the sale of
short-term investments in the amount of $3.0 million was used to make the
acquisition-related payments.

Cash used in financing activities of $4.9 million during the year ended
December 31, 1996, primarily resulted from $7.6 million of payments on
acquisition-related notes payable and long-term debt, less net borrowings of
$1.6 million from its line of credit, and less proceeds of $1.2  million from
the exercise of stock options and stock issuances under the Company's employee
stock purchase plan.

Future cash requirements could include, among other things, purchases of
companies, products or technologies, expenditures for internal software
development, capital expenditures necessary to the expansion of the business,
and installment payments on debt related to acquisitions.  Available cash
resources include cash generated by the Company's operations and a revolving
line of credit with the Company's principal bank, of which $1.6 million had been
used at December 31, 1996.  The revolving line of credit is limited to the
lesser of $7.5 million or 60% of the Company's accounts (as defined in the
revolving bank line of credit agreement) and expires on December 1, 1997.

In February 1997, the Company withdrew its follow on public offering of
1,550,000 shares of its Common Stock.  The Company had incurred offering costs
of approximately $500,000.  These costs will be expensed in the first quarter of
1997.

The Company believes that the funds expected to be generated from operations and
borrowings under its revolving line of credit will provide the Company with
sufficient funds to finance its operations for at least the next 12 months.  The
Company may require additional funds to support its working capital
requirements, future acquisitions or for other purposes and may seek to raise
such additional funds through one or more public or private financings of equity
or debt, or from other sources.  No assurance can be given that additional
financing will be available or that, if available, such financing will be
obtainable on terms favorable to the Company or its shareholders.   See "Risk
Factors - Possible Need for Additional Financing."


                                          26
<PAGE>

RISK FACTORS
THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO SHOULD BE READ IN
CONJUNCTION WITH THE FOLLOWING DISCUSSION. THE DISCUSSION IN THIS FORM 10-K
CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, SUCH AS STATEMENTS OF THE COMPANY'S PLANS, OBJECTIVES,
EXPECTATIONS AND INTENTIONS.  THE CAUTIONARY STATEMENTS MADE IN THIS FORM 10-K
SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING STATEMENTS
WHEREVER THEY APPEAR IN THIS FORM 10-K. THE COMPANY'S ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE DISCUSSED HERE.  FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED IN "RISK FACTORS," AS
WELL AS THOSE DISCUSSED ELSEWHERE IN THIS FORM 10-K.

POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS.  The Company has experienced, and
expects in the future to experience, significant quarterly fluctuations in its
results of operations.  These fluctuations may be caused by various factors,
including, among others: the size and timing of product orders and shipments;
the timing and market acceptance of new products and product enhancements
introduced by the Company and its competitors; the Company's product mix,
including expenses of implementation and royalties related to certain products;
the timing of the Company's completion of work under contracts accounted for
under the percentage of completion method; customer order deferrals in
anticipation of new products; aspects of the customers' purchasing processes,
including the evaluation, decision-making and acceptance of products within the
customers' organizations; factors affecting the sales process for the Company's
products, including the complexity of customer implementation of the Company's
products; the number of working days in a quarter; federal and state regulatory
events; competitive pricing pressures; technological changes in hardware
platform, networking or communication technology; changes in Company personnel;
the timing of the Company's operating expenditures; specific economic conditions
in the financial services industry and general economic conditions.

The Company typically ships or installs many of its products within three months
of receipt of an order.  As a result, software license fees in any quarter are
substantially dependent on orders booked in that quarter or the previous
quarter.  In addition, the Company has generally recognized a substantial
portion of its revenue in the last month of each quarter, with this revenue
concentrated in the last weeks of the quarter.  The Company's results of
operations may also be affected by seasonal trends, including the tendency of
some customers to complete purchases of products in the quarter ended
December 31 or not to implement new orders in the quarter ended March 31.
Furthermore, during typical vacation periods, key decision-making personnel at
prospect financial institutions may not be available, which can adversely affect
revenue for such periods.  Because the Company's operating expenses are based on
anticipated revenue levels and a high percentage of these expenses are
relatively fixed, a small variation in the timing of recognition of specific
revenue items can cause significant variations in operating results from quarter
to quarter.  Due to all of the foregoing factors, it is possible that in some
future quarter the Company's operating results may be below the expectations of
public market analysts and investors.  In such event, the price of the Company's
Common Stock would likely be adversely affected.  Accordingly, the Company
believes that quarter-to-quarter comparisons of its results of operations should
not be relied upon as an indication of future performance.


                                          27
<PAGE>

UNCERTAINTY OF MARKET; PRODUCT ACCEPTANCE.  The market for software products and
services to financial institutions is evolving and the Company's success is, in
large part, dependent on the continuing development of this market.  Although
the Company believes that its existing products compete effectively with
competitors' products, some of the Company's products have been licensed to a
limited number of customers or, as to any specific customer, may only be used in
a part of that customer's organization.  A significant part of the Company's
business strategy depends on financial institutions' adoption of new
technologies in handling functions that previously may have been performed
without the use of computers or with more rudimentary software applications.
There can be no assurance that banks and other financial institutions will adopt
new technologies required for, or that the Company's products will otherwise
achieve, broad acceptance in this evolving market.  In some instances, banks and
other financial institutions may be reluctant to consider transitioning to some
of the Company's products without first making significant decisions regarding
the procurement or upgrade of computer systems or operating systems.  In the
event that the market for software solutions being offered by the Company should
fail to develop, or that the Company's products should fail to succeed in this
market, the Company's business, operating results and financial condition would
be materially adversely affected.  For example, one of the Company's competitors
has introduced a Windows-based loan documentation product. Although this
competing product has only recently been released and the Company believes that
its Windows-based Laser Pro products will compete effectively against this
product introduction, there can be no assurance that sales of the Company's
Laser Pro products will not be adversely affected by its competitor's
introduction of this product.  Furthermore, market acceptance of the Company's
products will also depend on the Company's ability to ensure that its products
operate together and, when appropriate, are integrated across the Company's
product lines and with the products of other major service providers and vendors
of hardware and software used in the financial services industry.  In addition,
a significant part of the Company's revenues are derived from continued support
of the software after the initial sale and are in some cases based on
per-transaction or per-user pricing.  There can be no assurance that such
pricing structures will continue to be accepted by customers of the Company.

EARLY STAGE MARKET FOR ELECTRONIC DELIVERY PRODUCTS.  The electronic banking
market, and in particular the home banking portion of the market, is at a very
early stage of development, is rapidly evolving, and is characterized by an
increasing number of market entrants who have introduced or are developing
competing products and services.  As is typical for a new and evolving industry,
demand and market acceptance for recently introduced products and services are
subject to a high level of uncertainty. In particular, while the number of
customers utilizing the Internet or private-dial connection as a vehicle for
banking has grown rapidly, it remains limited and it is not known whether these
markets will continue to develop such that a sufficient demand for the Company's
software will emerge and be sustainable.  The use of such electronic delivery
channels by the banking community and its customers will require broad
acceptance of new methods of conducting business and exchanging information.  In
particular, bankers and financial institutions with established methods of
handling funds may be reluctant to accept commercial transactions over the
Internet.  Moreover, concerns regarding the security and confidentiality of
Internet transactions may inhibit the growth of Internet commerce generally and
as a result impact market acceptance of the Company's products.  The Company's
business will include procedures and services that have only recently been
developed in the emerging electronic


                                          28
<PAGE>

delivery market.  The use of the Company's products is dependent, in part, upon
the continued development of an industry and infrastructure for providing secure
Internet access and carrying Internet traffic.  In addition, the Internet may
not prove to be a viable commercial marketplace, because of inadequate
development of the necessary infrastructure, such as undercapacity, a reliable
network backbone or timely development of complementary products, including high
speed modems.  There can be no assurance that commerce over the Internet will
become generally adopted.  If the market fails to develop or develops more
slowly than expected, the infrastructure for the Internet is not adequately
developed, or the Company's home banking products and services do not achieve
market acceptance by a significant number of individuals, businesses and
financial institutions, the Company's business, financial condition and
operating results could be materially and adversely affected.

EVOLVING MARKET FOR CALL CENTER PRODUCTS.  While the Company anticipates that
the market for its call center products will expand rapidly over the next two
years and the Company has expended substantial resources in the development and
improvement of its call center products, including the Company's current efforts
toward reengineering its call center products for an anticipated release of an
upgraded product in 1997, there can be no assurance that the Company's upgraded
call center products will be released on a timely basis or will achieve market
acceptance upon release.  If the market fails to grow or grows more slowly than
expected, the Company's business, results of operations and financial condition
could be adversely affected.

DEPENDENCE ON HOST PROCESSOR RELATIONSHIPS.  The Company believes that market
acceptance of its products is based in significant part on the ability of the
products to share information with a financial institution's host processor
system, or with the host processor systems of vendors providing processing
services to such institution. The Company has developed significant expertise
with most available host processor systems and the methods necessary to transfer
data to and from such systems.  Although the Company generally is able to
develop interfaces that allow its products to operate effectively with host
processor systems, integration is optimized where the Company and the provider
of a host processor system cooperatively share information regarding the
respective products' technologies, development schedules and enhancements.  CFI
has had varying degrees of success in establishing such relationships with host
providers.  In some cases, providers of host processor systems or processing
services are or may become competitors of the Company with respect to one or
more of the Company's products.  As such, the Company is not always able to
obtain access to host system technology necessary for developing optimal
third-party system integration.  There can be no assurance that the Company will
be able to establish and maintain adequate relationships with important
providers of host processor systems or processing services in the future.
Failure to do so could have a material adverse effect on the business, results
of operations and financial condition of the Company.

UNCERTAINTIES ASSOCIATED WITH THE INTEGRATION OF ACQUISITIONS AND RISKS OF NEW
BUSINESS VENTURES.  One of the Company's strategies is to continue to acquire
complementary businesses, products and technologies, as well as to enter into
new business ventures, including minority equity investments and joint ventures.
Since 1994, the Company has acquired ten businesses or companies.  Acquisitions
of companies, businesses, products, or technologies, as well as entry into new
business ventures, require the dedication of


                                          29
<PAGE>

management resources in order to achieve the strategic objectives of the
acquisitions and ventures.  No assurance can be given that difficulties
encountered in integrating the operations of businesses previously acquired or
in the future acquired or entered into by the Company will be overcome, or that
the specific benefits expected from integration of any particular acquisition or
any new business venture, including the addition of new products and
technologies, or increased sales and growth of the Company's customer base, will
be achieved or that any anticipated cost savings will be realized.  The
difficulties of combining acquired operations into the Company have been, and,
along with any entry into new business ventures in the future, can be expected
to be exacerbated by the necessity of coordinating geographically separated
organizations.  The process of integrating operations could cause an
interruption of, or loss of momentum in, the activities of the Company's
business and operations, including those of the businesses acquired or new
business ventures.  Difficulties encountered in connection with the Company's
acquisition of businesses, products or technologies, and new business ventures,
including those previously acquired, could have an adverse effect on the
business, results of operations and financial condition of the Company.  There
can be no assurance that integration of businesses, products or technologies
previously acquired by the Company, or acquired or entered into in the future,
will be accomplished without having an adverse impact on the business, results
of operations and financial condition of the Company or that the benefits or
strategic objectives expected from any such integration or new business venture
will be realized.

POSSIBLE NEED FOR ADDITIONAL FINANCING.  In the first quarter of 1997, the
Company withdrew a registration statement on file with the U.S. Securities and
Exchange Commission which proposed to generate, through the sale of Common
Stock, net proceeds in excess of $28 million.  The net proceeds were to be used
for general corporate purposes, working capital and possible acquisitions.  The
Company believes that the funds expected to be generated by the Company's
operations and a $7.5 million (maximum) revolving line of credit will provide
the Company with sufficient funds to finance its operations for at least the
next twelve moths.  However, if additional funds were needed to support working
capital requirements, the Company would seek to raise such additional funds
through one or more public or private financings of equity or debt, or from
other sources.  No assurance can be given that additional financing will be
available or that, if available, such financing will be obtainable on terms
favorable to the Company or its shareholders.

MANAGEMENT OF GROWTH.  The growth in the size and complexity of the Company's
business and the expansion of its product lines and its customer base have
placed and are expected to continue to place a significant strain on all aspects
of the Company's business.  In particular, the Company's emphasis on selling to
large institutions has placed significant additional demands on its installation
and implementation operations, and the growing installed base has placed
additional demands on the customer support operation.  The Company has grown
from approximately 330 employees as of December 31, 1995 to approximately 489
employees as of December 31, 1996, and currently plans to continue to expand its
staff. To accommodate growth, the Company will be required to upgrade or
implement a variety of operational and financial systems, procedures and
controls, including the improvement of its accounting and other internal
management systems.  There can be no assurance that the Company will be able to
do so successfully.  The Company's future operating results will depend on its
ability to expand its support organization and infrastructure commensurate with
its expanding base of installed products


                                          30
<PAGE>

and on its ability to attract, hire and retain skilled personnel.  There can be
no assurance that the Company's personnel, systems, procedures and controls will
be adequate to support the Company's operations.  Any failure to implement and
improve the Company's operational, financial and management systems or to
expand, train, motivate or manage personnel could have a material adverse effect
on the Company's business, operating results and financial condition.  There can
be no assurance that the Company will be able to effectively manage any future
growth and any failure to do so would have a material adverse effect on the
Company's business, operating results and financial condition.  To the extent
the anticipated growth fails to materialize, the Company's operating results
could be adversely affected.

DEPENDENCE ON KEY EMPLOYEES AND CONTRACT ENGINEERS.  The Company believes that
its future success will depend to a significant extent upon the contributions of
its executive officers and key sales, engineering, marketing and technical
personnel, including independent contractors used by the Company primarily in
product development.  The Company does not have "key person" life insurance on
any of its employees.  The loss of the services of one or more of the Company's
key personnel could have a material adverse effect on the Company's business,
operating results and financial condition.  The Company also believes its future
success will depend in large part upon its ability to attract and retain
additional highly skilled personnel, particularly sales personnel and software
engineers.  Because of the sophistication of the Company's products and the
technology environments in which they operate, the Company's sales, engineering
and other personnel generally require advanced technical knowledge and
significant training to perform competently.  Competition for such personnel,
particularly qualified software development engineers, is intense and the
Company has, at times, experienced difficulty in locating personnel with the
requisite level of expertise and experience.  There can be no assurance that the
Company will be successful in retaining its existing key personnel or in
attracting and retaining the personnel it requires in the future.

DELAYS IN INTRODUCTION OF NEW PRODUCTS AND PRODUCT ENHANCEMENTS.  The Company's
future success will depend upon its ability, on a timely basis, to develop or
acquire and successfully introduce new products and to maintain and enhance its
current products to meet customers' expanding needs.  In addition, the Company
must identify emerging trends and technological changes in its target markets,
develop and maintain competitive products, enhance its products by adding
innovative features that differentiate its products from those of its
competitors, and develop and bring products to market quickly at cost-effective
prices.  In particular, the Company believes its software-based products must
respond quickly to users' needs for broad functionality and multi-platform
support and to advances in hardware and operating systems.  As a result of these
requirements, the Company will need to make substantial investments in design
and product development.  Any failure by the Company to anticipate or respond
adequately to technological and regulatory developments and customer
requirements, or any significant delays in product development or introductions,
could result in a loss of competitiveness and could materially adversely affect
the Company's business, operating results and financial condition.  There can be
no assurance that the Company will be successful in developing and marketing new
products or product enhancements that respond to technological or regulatory
changes, evolving standards or changing customer requirements.


                                          31
<PAGE>

In the past, the Company has experienced delays in the introduction of new
products and product enhancements, including the Windows versions of its Deposit
Pro and Laser Pro products, and in achieving market acceptance for certain of
its products, including its Pro Active product.  There can be no assurance that
the Company will successfully complete on a timely basis products currently
under development, including the Windows version of its Laser Pro Closing
product, or that current or future products will achieve market acceptance.  If
the Company is not successful in developing new products and providing product
enhancements in a timely manner, including those that incorporate regulatory
changes into its products, it could have a material adverse impact on the
Company's business, results of operations and financial condition.

In addition, the introduction or announcement of products embodying new
technologies, changes in industry standards, applicable regulations, or customer
requirements, either by the Company or one or more of its competitors, could
render the Company's existing products obsolete or unmarketable.  For example,
one of the Company's competitors has introduced a Windows-based loan
documentation product.  Although this competing product has only recently been
released and the Company believes that its Windows products will compete
effectively against this product introduction, there can be no assurance that
sales of the Company's Laser Pro Windows products will not be adversely affected
by its competitor's introduction of this product.  There also can be no
assurance that the introduction or announcement of new product offerings by the
Company or one or more of its competitors will not cause customers to defer
purchases of existing Company products.  Such deferment of purchases could have
a material adverse effect on the Company's business, operating results and
financial condition.

LENGTHY SALES AND IMPLEMENTATION CYCLES.  The license of the Company's software
products generally requires the Company to educate prospective customers
regarding the use and benefits of the Company's products.  In addition, the
implementation of the Company's products involves a significant commitment of
resources by prospective customers and can be associated with substantial
changes in workflow, processing or the configuration of hardware and other
software.  The product license and other fees charged by the Company are
typically only a portion of the customer's related hardware, software,
development, training and integration costs in implementing a system containing
the Company's products. The license of the Company's software products can often
require a board-level or executive decision by prospective customers.  For these
and other reasons, the period between initial indications of interest by a
customer in the Company's product and the ultimate sale and implementation of
the Company's product to the customer can often be lengthy (often ranging from
three months to in excess of one year) and is subject to a number of significant
delays over which the Company has little or no control.  The Company's sales and
implementation cycle could be lengthened by increases in the size and complexity
of its license transactions and by delays in its customers' implementation or
upgrade of the necessary computing environments.

In addition, as the Company increases its emphasis on obtaining orders from
larger financial institutions, particularly very large multistate institutions,
the Company's overall mix of product licenses may involve an increased reliance
on orders that have a longer sales and implementation cycle.  Reliance on sales
with a lengthy lead time for completion of the order and implementation of the
product can result in delays in completion of


                                          32
<PAGE>

expected sales and fluctuations in the recognition of sales revenue which may
adversely affect the Company's business, results of operations and financial
condition.

COMPETITION.  The market for the Company's products is intensely competitive and
rapidly changing.  A number of companies offer competitive products addressing
certain of the Company's target markets.  With respect to the Company's lending
products, the principal competitors include Bankers Systems, Inc., FormAtion
Technologies, Inc. (a subsidiary of John H. Harland Company), Interlinq Software
Corporation, Fair Isaac & Company, Inc., Affinity Technology Group, Inc., Great
Lakes Forms, Inc., APPRO Systems, Inc., and JetForm Corp.  With respect to the
Company's operations products, the principal competitors include Olivetti North
America, Broadway & Seymour, Inc., Early, Cloud & Company and Footprint
Software, Inc. (both subsidiaries of International Business Machines Corporation
("IBM")), Electronic Data Systems Corporation, Argo & Company, FIserv, Inc.
("FIserv"), Edify Corporation, and Software Dynamics, Inc.  With respect to the
Company's electronic delivery products, the principal competitors include
CheckFree Incorporated, Visa Interactive, Edify Corporation, Online Resources &
Communications Corporation, GOLDPAC Products, and Politzer & Haney.  In
addition, a number of prospective and existing customers of the Company have the
internal capability to provide alternative solutions to the Company's lending,
operations, or electronic delivery products and may, therefore, be viewed as
competing with the Company.  These alternatives may include internally developed
software and hardware solutions, or methods of process management that do not
involve software solutions.  Some of the Company's competitors have
significantly greater financial, technical, sales and marketing resources than
the Company.  The Company believes that the primary competitive factors in this
market include product quality, reliability, performance, price, vendor and
product reputation, financial stability, features and functions, ease of use and
quality of support.  There can be no assurance that competitors will not develop
products that are superior to the Company's products or that achieve greater
market acceptance.  Further, because of the rapidly evolving nature of the
industry, many of the Company's collaborative partners are current or potential
competitors.  In addition, a number of current or potential competitors have
established or may establish cooperative relationships among themselves and with
third parties that may present additional competition with products offered by
the Company.  The Company's competitors may also be able to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies, utilize
more extensive distribution channels, and bundle competing products.

The Company's future success will depend significantly upon its ability to
increase its share of the large bank market and to license additional products
and product enhancements to existing customers.  As the Company develops new
products or enters new markets, it expects to encounter additional competitors,
some of which may have significantly greater financial, technical, sales and
marketing resources than the Company.  There can be no assurance that the
Company will be able to compete successfully in the future, or that competition
will not have a material adverse effect on the Company's results of operations.

PRODUCT CONCENTRATION.  A significant portion of the Company's revenue is
derived from a limited number of products.  Revenue from the Company's Laser Pro
products and Deposit Pro products represented over 51% of the Company's total
revenue for the year ended December 31, 1996, and over 91%, 82% and 79% for the
years ended December 31, 1993, 1994 and 1995, respectively.  Although the
Company believes that these products


                                          33
<PAGE>

will continue to represent a significant percentage of the Company's revenue for
the near term, an important part of the Company's business strategy depends upon
the ability of the Company to continue to develop and market its call center,
branch automation, electronic banking and other new products.  A decline in
demand or prices for the Company's Laser Pro products or Deposit Pro products,
whether as a result of new product introductions by the Company or its
competitors, price competition, technological change, or failure of the
Company's products to address customer requirements, could have a material
adverse effect on the Company's business, results of operations and financial
condition.  The failure of the financial services industry in general to adopt
new or modified technologies to improve and simplify business processes (in
particular the products developed by the Company), or the failure of the Company
to support this industry transition with products that effectively address
customer requirements, would have a material adverse effect on the Company's
business, results of operations and financial condition.

DEPENDENCE ON FINANCIAL SERVICES INDUSTRY.  Substantially all of the Company's
revenue is derived from licenses and services to banks and other financial
institutions, and its future growth is dependent on increased sales to the
financial services industry.  The success of the Company's customers is
intrinsically linked to economic conditions in the financial services industry,
which in turn are subject to intense competitive pressures and are affected by
overall economic conditions.  In addition, the Company believes that the license
of its products is relatively discretionary and often requires a significant
commitment of capital if accompanied by large-scale hardware purchases or
commitments.  As a result, although the Company believes that its products can
be of substantial assistance to financial institutions in a competitive
environment, demand for the Company's products and services could be
disproportionately affected by instability or downturns in the financial
services industry, which may cause existing or potential customers to exit the
industry or delay, cancel or reduce any planned expenditures for technology
solutions, including those offered by the Company.  The financial services
industry is currently experiencing consolidation that may affect demand for the
Company's products.  The financial services industry is highly regulated and
changes in regulations affecting the financial services industry or the
Company's products could have a significant effect on the Company.  These and
other factors adversely affecting the financial services industry and its
purchasing capabilities could have a material adverse effect on the Company's
business, results of operations and financial condition.

PRODUCT LIABILITY RISKS; SOFTWARE DEFECTS.  The Company's software products are
highly complex and sophisticated and could, from time to time, contain design
defects or software errors that could be difficult to detect and correct.  In
addition, implementation of the Company's products may involve a significant
amount of customer-specific customization and may involve integration with
systems developed by third parties.  Software products offered by the Company
are highly complex and normally contain undetected errors or failures that,
despite significant testing by the Company, are discovered only after a product
has been installed and used by customers.  Although the Company's business has
not been adversely affected by any such errors to date, there can be no
assurance that significant errors will not be found in the Company's products in
the future.  Such errors could give rise to warranty or other liability of the
Company, cause delays in product introduction and shipments, require design
modifications, result in loss of or delay in market acceptance of the Company's
products or loss of existing customers, any of which could adversely affect the
Company's business, operating results and financial condition.


                                          34
<PAGE>

The Company's products enable its customers to comply with a variety of complex
and changing federal and state laws and regulations.  Should documentation
generated by the Company's products result in a customer's violation of such
requirements due to a product defect, the customer, or possibly the governmental
authority whose requirements were not met, could claim that the Company is
responsible.  The Company provides a compliance warranty on certain of its
products that limits its liability to $1.0 million per customer per year and
further limits the Company's liability for all of its customers to an aggregate
of $2.5 million per year per occurrence of a common defect.  There can be no
assurance that these contract limits would be enforceable, or that claims would
be covered by or would not exceed the limits of the Company's indemnity
insurance policy issued by Lloyds of London.  Further, there can be no assurance
that this indemnity policy will be renewed or will remain priced within the
Company's capacity to pay the premiums.  In the event that the Company's
contract limits are found to be unenforceable or that its insurance policy does
not adequately cover claims, the Company's results of operations may be
materially and adversely affected.  In addition, there can be no assurance that
the Company will be able to correct claimed or actual product defects in a
timely manner, or at all.

DEPENDENCE UPON PROPRIETARY TECHNOLOGY; INTELLECTUAL PROPERTY RIGHTS.  See
"Business - Intellectual Property."

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements, notes thereto and supplementary data required by this
item are included on pages F-1 through F-18 as listed in Item 14 of Part IV of
this document.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.


                                          35
<PAGE>

                                       PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required by this item is included under the captions Item (1)
ELECTION OF DIRECTORS, NOMINEES FOR ELECTION TO BOARD OF DIRECTORS, MEMBERS OF
THE BOARD OF DIRECTORS CONTINUING IN OFFICE, NON-DIRECTOR EXECUTIVE OFFICERS AND
SIGNIFICANT EMPLOYEES AND SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE, respectively, in the Company's Proxy Statement for its 1997 Annual
Meeting of Shareholders and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this item is included under the caption EXECUTIVE
COMPENSATION, EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF
CONTROL ARRANGEMENTS AND BOARD COMPENSATION in the Company's Proxy Statement for
its 1997 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is included under the caption SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT in the Company's Proxy
Statement for its 1997 Annual Meeting of Shareholders and is incorporated herein
by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is included under the caption CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS in the Company's Proxy Statement for its
1997 Annual Meeting of Shareholders and is incorporated herein by reference.


                                          36
<PAGE>

                                       PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1)  FINANCIAL STATEMENTS

The Financial Statements, together with the report thereon of Arthur Andersen
LLP, are included on the pages indicated below :

                                                                           Page
                                                                           ----
Report of Independent Public Accountants                                    F-1

Consolidated Balance Sheets - December 31, 1996 and 1995                    F-2

Consolidated Statements of Income for the years ended
    December 31, 1996,1995 and 1994                                         F-3

Consolidated Statements of Shareholders' Equity for the years
    ended December 31, 1996, 1995 and 1994                                  F-4

Consolidated Statements of Cash Flows for the years ended
    December 31, 1996, 1995 and 1994                                        F-5

Notes to Consolidated Financial Statements                                  F-6

FINANCIAL STATEMENT SCHEDULES

The following schedule and report thereon is filed herewith:

                                                                           Page
                                                                           ----
Report of Independent Public Accountants on Financial
Statement Schedule                                                         F-19

Schedule I    Valuation and Qualifying Accounts                            F-20


                                          37
<PAGE>
(a) (3)  EXHIBITS INCLUDED HEREIN:

Number   Description
------   ---------------------------------------------------------------
2.1      Stock Purchase and Sale Agreement dated November 21, 1995,
         among CFI ProServices, Inc., Culverin Corporation, Eric T.
         Wagner, John M. Loveless, David Steffens and Douglas Teets -
         previously filed as Exhibit 2.1 to the Current Report on
         Form 8-K dated November 21, 1995 and as filed with the
         Securities and Exchange Commission on December 6, 1995 and
         incorporated herein by reference.                                   --

2.2      Stock Purchase and Sale Agreement effective April 1, 1996, by
         and among MicroBilt Corporation, First Financial Management
         Corporation and CFI ProServices, Inc. - previously filed as
         Exhibit 2.1 with the Company's Form 8-K dated April 1, 1996 and
         as filed with the Securities and Exchange Commission on April 16,
         1996 and incorporated herein by reference.                          --

2.3      Asset Purchase and Sale Agreement, effective April 1, 1996,
         by and among Input Creations, Inc., its shareholders and CFI
         ProServices, Inc. - previously filed as Exhibit 2.1 with the
         Company's Form 8-K dated April 17, 1996 and as filed with the
         Securities and Exchange Commission on May 2, 1996 and
         incorporated herein by reference.                                   --

3.1      Registrant's Amended and Restated Articles of Incorporation -
         previously filed as Exhibit 3(i)(a) to the Registration
         Statement of Form S-1, Registration Statement No. 33-64894,
         as filed with the Securities and Exchange Commission on June 23,
         1993 and incorporated herein by reference.                          --

3.2      Amendments to Registrant's Amended and Restated Articles of
         Incorporation (effective June 28, 1993) - previously filed as
         Exhibit 3(i)(b) to the Registration Statement of Form S-1
         Registration Statement No. 33-64894, as filed with the Securities
         and Exchange Commission on July 26, 1993 and incorporated herein
         by reference.                                                       --


                                          38
<PAGE>

Number   Description
------   ---------------------------------------------------------------
3.3      Amendments to Registrant's Amended and Restated Articles of
         Incorporation (effective July 26, 1993) - previously filed
         as Exhibit 3(i)(c) to the Registration Statement of Form S-1
         Registration Statement No. 33-64894, as filed with the
         Securities and Exchange Commission on August 10, 1993 and
         incorporated herein by reference.                                   --

3.4      Registrant's Amended and Restated Bylaws - previously filed as
         Exhibit 3(ii) to the Registration Statement of Form S-1
         Registration Statement No. 33-64894, as filed with the Securities
         and Exchange Commission on August 10, 1993 and incorporated
         herein by reference.                                                --


10.1     Nonqualified Stock Option Plan dated October 15, 1993 -
         previously filed as Exhibit 99.10 to the Registration
         Statement of Form S-8 (Registration No. 33-70506), as filed
         with the Securities and Exchange Commission on October 19,
         1993 and incorporated herein by reference.                          --

10.2     Registrant's Amended and Restated Outside Director Restricted
         Stock Plan - previously filed as Exhibit 99.5 to the Registration
         Statement of Form S-8 (Registration No. 33-70506), as filed with
         the Securities and Exchange Commission on October 19, 1993 and
         incorporated herein by reference.                                   --

10.3     Registrant's Outside Director Compensation and Stock Option
         Plan - previously filed as Exhibit 10.3 to the Company's Form
         10-Q for the quarter ended March 31, 1994 and incorporated
         herein by reference.                                                --

10.4     Registrant's Standardized Regional Prototype 401(k) Cash or
         Deferred Savings Plan and Trust, adopted December 1, 1994 -
         previously filed as Exhibit 10.12 to the Company's Form 10-K
         for the year ended December 31, 1995 and as filed with the
         Securities and Exchange Commission on April 1, 1996 and
         incorporated herein by reference.                                   --


                                          39
<PAGE>

Number   Description
------   ---------------------------------------------------------------
10.5     Registration Agreement dated February 4, 1991 by and among
         Registrant and certain named investors - previously filed as
         Exhibit 10.11 to the Registration Statement of Form S-1,
         Registration Statement No. 33-64894, as filed with the
         Securities and Exchange Commission on June 23, 1993 and
         incorporated herein by reference.                                   --

10.6     Form of Software License Agreement relating to Deposit Pro -
         previously filed as Exhibit 10.20(a) to the Registration
         Statement on Form S-1 (Registration No. 33-64894) filed with
         the Securities and Exchange Commission on June 23, 1993 and
         incorporated herein by reference.                                   --

10.7     Form of Compliance Warranty relating to Deposit Pro -
         previously filed as Exhibit 10.20(b) to the Registration
         Statement on Form S-1 (Registration No. 33-64894) filed with
         the Securities and Exchange Commission on June 23, 1993 and
         incorporated herein by reference.                                   --

10.8     Form of Maintenance and Service Agreement relating to Deposit
         Pro - previously filed as Exhibit 10.20(c) to the Registration
         Statement on Form S-1 (Registration No. 33-64894) filed with the
         Securities and Exchange Commission on June 23, 1994 and
         incorporated herein by reference.                                   --

10.9     Form of Software License Agreement relating to Laser Pro -
         previously filed as Exhibit 10.21(a) to the Registration
         Statement on Form S-1 (Registration No. 33-64894) filed with the
         Securities and Exchange Commission on June 23, 1993 and
         incorporated herein by reference.                                   --

10.10    Form of Compliance Warranty relating to Laser Pro - previously
         filed as Exhibit 10.21(b) to the Registration Statement on Form
         S-1 (Registration No. 33-64894) filed with the Securities and
         Exchange Commission on June 23, 1993 and incorporated herein by
         reference.                                                          --


                                          40
<PAGE>

Number   Description
------   ---------------------------------------------------------------
10.11    Form of Maintenance and Service Agreement relating to Laser
         Pro - previously filed as Exhibit 10.21(c) to the Registration
         Statement on Form S-1 (Registration No. 33-64894) filed with
         the Securities and Exchange Commission on June 23, 1993 and
         incorporated herein by reference.                                   --

10.12    Legal Services Agreement for the State of Louisiana effective
         March 13, 1986 between the Company and McGlinchey, Stafford,
         Mintz, Cellini & Lang, a Louisiana professional law corporation
         (confidential treatment requested) - previously filed as Exhibit
         10.25 to the Registration Statement on Form S-1 (Registration No.
         33-64894) filed with the Securities and Exchange Commission on
         July 26, 1993 and incorporated herein by reference.                 --

10.13    1994 Employee Stock Purchase Plan - previously filed as Exhibit
         10.2 to the Company's Form 10-Q for the quarter ended June 30,
         1994 and incorporated herein by  reference.                         --

10.14    1995 Consolidated and Restated Stock Option Plan - previously
         filed as Exhibit 99.13 to the Registration Statement on Form
         S-8 filed with the Securities and Exchange Commission on
         March 1, 1995 and incorporated herein by  reference.                --

10.15    First Amendment to 1995 Consolidated and Restated Stock Option
          Plan - previously filed as Exhibit 9.2 to the Company's
         Registration Statement on Form S-8 filed with the Securities
         and Exchange Commission on or about September 4, 1996 and
         incorporated herein by  reference.                                  --

10.16    Office Lease dated March 18, 1994 between the Company and John
         Hancock Mutual Life Insurance Company - previously filed as
         Exhibit 10.1 to the Company's Form 10-Q for the quarter ended
         March 31, 1994 and incorporated herein by  reference.               --

10.17    First amendment, dated July 8, 1996, to office lease dated
         March 18, 1994 between the Company and John Hancock Mutual
         Life Insurance Company


                                          41
<PAGE>
Number   Description
------   ---------------------------------------------------------------
10.18    Employment Agreement and Release dated April 14, 1994
         between the Company and George L. Harrison - previously
         filed as Exhibit 10.2 to the Company's Form 10-Q for the
         quarter ended March 31, 1994 and incorporated herein by
         reference.                                                          --

10.19    Employment Agreement with James Montague - previously filed
         as Exhibit 10.2 to the Company's Current Report on Form 8-K
         filed with the Securities and Exchange Commission on October
         13, 1994 and incorporated herein by  reference.                     --

10.20    Employment Agreement with Michael Loewenberg - previously
         filed as Exhibit 10.3 to the Company's Current Report on
         Form 8-K filed with the Securities and Exchange Commission
         on October 13, 1994 and incorporated herein by  reference.          --

10.21    Registration Rights Agreement between the Company and Former
         Genesys Shareholders - previously filed as Exhibit 10.4 to
         the Company's Current Report on Form 8-K filed with the
         Securities and Exchange Commission on October 13, 1994 and
         incorporated herein by  reference.                                  --

10.22    Form of Executive Retention Agreement - previously filed as
         Exhibit 10.1 to the Company's Current Report on Form 8-K filed
         with the Securities and Exchange Commission on August 22, 1994
         and incorporated herein by  reference.                              --

10.23    Employee Transition Agreement and Release entered into on
         July 17, 1995 between CFI ProServices, Inc. and Kenneth M.
         Olsen - previously filed as Exhibit 10.1 to the Company's
         Quarterly Report on Form 10-Q for the fiscal quarter ended
         September 30, 1995 and incorporated herein by reference.            --

10.24    Employment Transition Agreement and Release entered into
         effective October 31, 1995 between CFI ProServices, Inc. and
         Clifford W. Potenza - previously filed as Exhibit 10.2 to the
         Company's Quarterly Report on Form 10-Q for the fiscal quarter
         ended September 30, 1995 and incorporated herein by reference.      --


                                          42
<PAGE>

Number   Description
------   ---------------------------------------------------------------
10.25    Employment and Noncompetition Agreement dated
         November 21, 1995 between CFI ProServices, Inc. and
         Eric T. Wagner - previously filed as Exhibit 10.1 to
         the Company's Current Report on Form 8-K filed with the
         Securities and Exchange Commission on December 6, 1995.             --

10.26    Employment and Noncompetition Agreement dated November 21,
         1995 between CFI ProServices, Inc. and John M. Loveless -
         previously filed as Exhibit 10.2 to the Company's Current
         Report on Form 8-K filed with the Securities and Exchange
         Commission on December 6, 1995.                                     --

10.27    Employment and Noncompetition Agreement dated November 21,
         1995 between CFI ProServices, Inc. and David A. Steffens  -
         previously filed as Exhibit 10.3 to the Company's Current
         Report on Form 8-K filed with the Securities and Exchange
         Commission on December 6, 1995.                                     --

10.28    Office Lease dated March 2, 1994, as amended on November
         14, 1994 and on September 7, 1995, between the Company and
         Huntington Atrium Development - previously filed as Exhibit
         10.33 to the Company's Annual Report on Form 10-K for the
         year ended December 31, 1995 as filed with the Securities
         and Exchange Commission on April 1, 1996 and incorporated
         herein by reference.                                                --

10.29    Office Lease dated April 18, 1995, as amended on June 9,
         1995, between the Company and Danis Properties Co., Inc. -
         previously filed as Exhibit 10.34 to the Company's Annual
         Report on Form 10-K for the year ended December 31, 1995 as
         filed with the Securities and Exchange Commission on April 1,
         1996 and incorporated herein by reference.                          --


                                          43
<PAGE>

Number   Description
------   ---------------------------------------------------------------
10.30    Business Loan Agreement (Revolving Line of Credit) dated
         November 8, 1995 between CFI ProServices, Inc. and Bank
         of America, Oregon - previously filed as Exhibit 10.35 to
         the Company's Annual Report on Form 10-K for the year ended
         December 31, 1995 as filed with the Securities and Exchange
         Commission on April 1, 1996 and incorporated herein by
         reference.                                                          --

10.31    Amendment No. 1, dated May 17, 1996, to Business Loan Agreement
         dated November 8, 1995 - previously filed as Exhibit 10.7 to the
         Company's quarterly report of Form 10-Q for the quarter ended
         June 30, 1996 as filed with the Securities and Exchange Commission
         on  August 13, 1996 and incorporated herein by reference.           --

10.32    Amendment No. 2, dated July 1, 1996, to Business Loan Agreement
         dated November 8, 1995 - previously filed as Exhibit 10.8 to the
         Company's quarterly report of Form 10-Q for the quarter ended
         June 30, 1996 as filed with the Securities and Exchange Commission
         on  August 13, 1996 and incorporated herein by reference.           --

10.33    Amendment No. 3, dated September 24, 1996, to Business
         Loan Agreement dated November 8, 1995 - previously filed as
         Exhibit 10 to the Company's quarterly report of Form 10-Q for the
         quarter ended September 30, 1996 as filed with the Securities and
         Exchange Commission on  November 14, 1996 and incorporated herein
         by reference.                                                       --

10.34    Amendment No. 4, dated November 21, 1996, to Business Loan
         Agreement dated November 8, 1995 - previously filed as Exhibit
         10.1 to the Company's Registration Statement No. 333-15505 on
         Form S-3 as filed with the Securities and Exchange Commission on
         January 27, 1997 and incorporated herein by reference.              --

10.35    Amendment No. 5, dated December 31, 1996, to Business Loan
         Agreement dated November 8, 1995 - previously filed as Exhibit
         10.2 to the Company's Registration Statement No. 333-15505 on
         Form S-3 as filed with the Securities and Exchange Commission on
         January 27, 1997 and incorporated herein by reference.              --


                                          44
<PAGE>

Number   Description
------   ---------------------------------------------------------------
10.36    Promissory Note, dated April 1, 1996, in favor of MicroBilt,
         Inc. - previously filed as Exhibit 10.1 with the Company's
         Form 8-K dated April 1, 1996 and as filed with the Securities
         and Exchange Commission on April 16, 1996 and incorporated
         herein by reference.                                                --

10.37    Promissory Note, dated April 1, 1996, in favor of First
         Financial Management Corporation - previously filed as
         Exhibit 10.2 with the Company's Form 8-K dated April 1,
         1996 and as filed with the Securities and Exchange Commission
          on April 16, 1996 and incorporated herein by reference.            --

10.38    Pledge Agreement, dated April 1, 1996, by and between CFI
         ProServices, Inc. And MicroBilt Corporation and First
         Financial Management - previously filed as Exhibit 10.3
         with the Company's Form 8-K dated April 1, 1996 and as
         filed with the Securities and Exchange Commission on
         April 16, 1996 and incorporated herein by reference.                --

10.39    Form of Employment Agreement entered into with former
         employees of Input Creations, Inc. - previously filed
         as Exhibit 10.1 with the Company's Form 8-K dated April 17,
         1996 and as filed with the Securities and Exchange Commission
         on May 2, 1996 and incorporated herein by reference.                --

10.40    Sublease by and among Input Creations, Inc. and CFI
         ProServices, Inc. - previously filed as Exhibit 10.2
         with the Company's Form 8-K dated April 17, 1996 and
         as filed with the Securities and Exchange Commission
         on May 2, 1996 and incorporated herein by reference.                --

10.41    Amendment No. 6, dated March 1, 1997, to Business Loan
         Agreement dated November 8, 1995 - filed herewith.

11       Statement re computation of per share earnings.

21       Subsidiaries of the Registrant

23       Consent of Arthur Andersen LLP

(b) REPORTS ON FORM 8-K.

    No reports on Form 8-K were filed during the quarter ended December 31,
    1996.


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<PAGE>

SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Date: March 11, 1997
      ---------------                  CFI PROSERVICES, INC.

                                       By: /s/ MATTHEW W. CHAPMAN
                                           ------------------------------------
                                           Matthew W. Chapman
                                           Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities on March 11, 1997.

Signature                              Title
---------                              -----

/s/ MATTHEW W. CHAPMAN       Chairman and Chief Executive Officer
----------------------       (Principal Executive Officer)
Matthew W. Chapman    


/s/ FRED HALL                Vice President and Chief Financial Officer
----------------------       (Principal Financial and Accounting Officer)
Fred Hall             


/s/ ROBERT P. CHAMNESS       Director, President and Chief Operating Officer
----------------------
Robert P. Chamness


/s/ ROBERT T. JETT           Director, Executive Vice President and Secretary
----------------------
Robert T. Jett


/s/ J. KENNETH BRODY         Director
-----------------------
J. Kenneth Brody


/s/ BRIAN P. MURPHY          Director
-----------------------
Brian P. Murphy


/s/ LORRAINE O. LEGG         Director
-----------------------
Lorraine O. Legg


/s/ DAVID G. GOLDEN          Director
-----------------------
David G. Golden


/s/ ERAN S. ASHANY           Director
-----------------------
Eran S. Ashany


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