Cass Information Systems Reports Third Quarter 2024 Results
Cass Information Systems reported third quarter 2024 earnings of $0.21 per diluted share, down from $0.54 in Q3 2023. Net income was $2.9 million, compared to $7.4 million in Q3 2023. Results were impacted by $6.6 million of bad debt expense on a facility client's funding receivable. Despite this, the company saw positive trends:
- Net interest margin increased to 3.55% from 3.24% in Q3 2023
- Facility expense transaction volumes up 26.3% year-over-year
- Transportation transaction volumes up 2.6% year-over-year
- Quarterly dividend increased to $0.31 per share
- 64,471 shares of company stock repurchased
The company maintained its employee count while processing higher volumes, demonstrating improved efficiency. Cass also received a Multiple Award Schedule contract for Freight Audit and Payment with the General Services Administration, opening new opportunities in Transportation.
- Net interest margin increased to 3.55% from 3.24% in Q3 2023
- Facility expense transaction volumes up 26.3% year-over-year
- Transportation transaction volumes up 2.6% year-over-year
- Quarterly dividend increased to $0.31 per share
- Improved operational efficiency with higher volumes and stable employee count
- Received Multiple Award Schedule contract for Freight Audit and Payment with GSA
- Loan growth in franchise restaurant and faith-based portfolios
- Earnings per diluted share decreased to $0.21 from $0.54 in Q3 2023
- Net income declined to $2.9 million from $7.4 million in Q3 2023
- $6.6 million bad debt expense on a facility client's funding receivable
- Transportation dollar volumes decreased 1.8% year-over-year
- Financial fees decreased by $420,000 or 3.6% year-over-year
- Average deposits decreased $37.5 million or 3.5% compared to Q3 2023
- Expected one-time termination expenses of $4-6 million in Q4 2024 for pension plan termination
Insights
Cass Information Systems' Q3 2024 results present a mixed picture. The earnings per share of
- Net interest margin increased to
3.55% , up from3.24% in Q3 2023 - Facility expense transaction volumes up by
26.3% year-over-year - Transportation transaction volumes up
2.6% year-over-year - Loan growth and asset re-pricing contributing to improved interest income
The company's ability to process increased volumes without adding staff demonstrates improved operational efficiency. The quarterly dividend increase to
Cass Information Systems' Q3 results reveal both challenges and opportunities in its market positioning. The
However, the
The new Multiple Award Schedule contract with the General Services Administration for Freight Audit and Payment opens up potential government sector opportunities, diversifying the company's client base. This could be a significant growth driver if leveraged effectively.
The market should closely watch how Cass navigates the changing interest rate environment and its impact on net interest income, which has been a bright spot in these results.
Third Quarter Results
(All comparisons refer to the third quarter of 2023, except as noted)
-
Net income of
, or$2.9 million per diluted common share (includes$0.21 of bad debt expense on a funding receivable related to a facility client).$6.6 million -
Increase in net interest margin to
3.55% . -
Increase in facility expense transaction volumes of
26.3% . -
Increased quarterly dividend to
per share.$0.31 - Repurchased 64,471 shares of Company stock.
Martin Resch, the Company’s President and Chief Executive Officer, noted, “Despite having to take bad debt expense on a funding receivable, I am pleased with our third quarter results. Our net interest margin increased to
Third Quarter 2024 Highlights
Transportation Dollar Volumes – Transportation dollar volumes were
Facility Expense Dollar Volumes – Facility expense dollar volumes totaled
Processing Fees – Processing fees increased
Financial Fees – Financial fees, earned on a transactional level basis for invoice payment services when making customer payments, decreased
Net Interest Income – Net interest income increased
Provision for Credit Losses on Loans - The Company recorded a release of credit losses on loans of
Personnel Expenses - Personnel expenses increased
During the fourth quarter of 2024, the Company expects to record one-time termination expenses of between approximately
Non-Personnel Expenses - Non-personnel expenses increased
Loans - When compared to June 30, 2024, ending loans increased
Payments in Advance of Funding – Average payments in advance of funding decreased
Deposits – Average deposits decreased
Accounts and Drafts Payable - Average accounts and drafts payable decreased
Shareholders’ Equity - Total shareholders’ equity has increased
Dividend - The Board of Directors approved an increase in the quarterly dividend from
About Cass Information Systems
Cass Information Systems, Inc. is a leading provider of integrated information and payment management solutions. Cass enables enterprises to achieve visibility, control and efficiency in their supply chains, communications networks, facilities and other operations. Disbursing over
Forward Looking Information
This information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions, and other statements that are not historical facts. Such statements are based on current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. These risks and uncertainties include the impact of economic and market conditions, inflationary pressures, risks of credit deterioration, interest rate changes, governmental actions, market volatility, security breaches and technology interruptions, energy prices and competitive factors, among others, as set forth in the Company’s most recent Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission. Actual results may differ materially from those set forth in the forward-looking statements.
Note to Investors
The Company has used, and intends to continue using, the Investors portion of its website to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, investors are encouraged to monitor Cass’s website in addition to following press releases, SEC filings, and public conference calls and webcasts.
Consolidated Statements of Income (unaudited) |
|||||||||||||||||||
($ and numbers in thousands, except per share data) |
|||||||||||||||||||
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Nine-Months
|
|
Nine-Months
|
||||||||||
Processing fees |
$ |
20,053 |
|
$ |
21,103 |
|
|
$ |
19,939 |
|
|
$ |
62,409 |
|
|
$ |
58,838 |
|
|
Financial fees |
|
11,177 |
|
|
|
10,628 |
|
|
|
11,597 |
|
|
|
32,582 |
|
|
|
34,518 |
|
Total fee revenue |
$ |
31,230 |
|
|
$ |
31,731 |
|
|
$ |
31,536 |
|
|
$ |
94,991 |
|
|
$ |
93,356 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest and fees on loans |
|
14,567 |
|
|
|
13,592 |
|
|
|
12,863 |
|
|
|
40,935 |
|
|
|
38,029 |
|
Interest and dividends on securities |
|
4,007 |
|
|
|
4,383 |
|
|
|
4,392 |
|
|
|
12,827 |
|
|
|
13,863 |
|
Interest on federal funds sold and other short-term investments |
|
4,200 |
|
|
|
3,267 |
|
|
|
3,934 |
|
|
|
11,908 |
|
|
|
9,147 |
|
Total interest income |
$ |
22,774 |
|
|
$ |
21,242 |
|
|
$ |
21,189 |
|
|
$ |
65,670 |
|
|
$ |
61,039 |
|
Interest expense |
|
5,156 |
|
|
|
5,312 |
|
|
|
4,641 |
|
|
|
15,646 |
|
|
|
11,579 |
|
Net interest income |
$ |
17,618 |
|
|
$ |
15,930 |
|
|
$ |
16,548 |
|
|
$ |
50,024 |
|
|
$ |
49,460 |
|
Release of (provision for) credit losses on loans |
|
140 |
|
|
|
(400 |
) |
|
|
(125 |
) |
|
|
(355 |
) |
|
|
335 |
|
Loss on sale of investment securities |
|
-- |
|
|
|
(13 |
) |
|
|
-- |
|
|
|
(13 |
) |
|
|
(160 |
) |
Other |
|
1,562 |
|
|
|
1,342 |
|
|
|
1,264 |
|
|
|
4,171 |
|
|
|
3,784 |
|
Total revenues |
$ |
50,550 |
|
|
$ |
48,590 |
|
|
$ |
49,223 |
|
|
$ |
148,818 |
|
|
$ |
146,775 |
|
Salaries and commissions |
|
23,850 |
|
|
|
24,259 |
|
|
|
23,391 |
|
|
|
72,085 |
|
|
|
69,613 |
|
Share-based compensation |
|
898 |
|
|
|
474 |
|
|
|
938 |
|
|
|
2,598 |
|
|
|
3,796 |
|
Other benefits |
|
5,119 |
|
|
|
5,124 |
|
|
|
5,307 |
|
|
|
15,648 |
|
|
|
15,685 |
|
Total personnel expenses |
$ |
29,867 |
|
|
$ |
29,857 |
|
|
$ |
29,636 |
|
|
$ |
90,331 |
|
|
$ |
89,094 |
|
Occupancy |
|
890 |
|
|
|
826 |
|
|
|
908 |
|
|
|
2,577 |
|
|
|
2,670 |
|
Equipment |
|
2,107 |
|
|
|
1,988 |
|
|
|
1,789 |
|
|
|
5,976 |
|
|
|
5,188 |
|
Bad debt expense |
|
6,559 |
|
|
|
1,288 |
|
|
|
-- |
|
|
|
7,847 |
|
|
|
-- |
|
Other |
|
7,475 |
|
|
|
8,834 |
|
|
|
7,730 |
|
|
|
23,631 |
|
|
|
22,822 |
|
Total operating expenses |
$ |
46,898 |
|
|
$ |
42,793 |
|
|
$ |
40,063 |
|
|
$ |
130,362 |
|
|
$ |
119,774 |
|
Income from operations before income taxes |
$ |
3,652 |
|
|
$ |
5,797 |
|
|
$ |
9,160 |
|
|
$ |
18,456 |
|
|
$ |
27,001 |
|
Income tax expense |
|
714 |
|
|
|
1,313 |
|
|
|
1,766 |
|
|
|
3,882 |
|
|
|
5,352 |
|
Net income |
$ |
2,938 |
|
|
$ |
4,484 |
|
|
$ |
7,394 |
|
|
$ |
14,574 |
|
|
$ |
21,649 |
|
Basic earnings per share |
$ |
.22 |
|
|
$ |
.33 |
|
|
$ |
.55 |
|
|
$ |
1.08 |
|
|
$ |
1.60 |
|
Diluted earnings per share |
$ |
.21 |
|
|
$ |
.32 |
|
|
$ |
.54 |
|
|
$ |
1.06 |
|
|
$ |
1.56 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Share data: |
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average common shares outstanding |
|
13,504 |
|
|
|
13,538 |
|
|
|
13,501 |
|
|
|
13,524 |
|
|
|
13,551 |
|
Weighted-average common shares outstanding assuming dilution |
|
13,786 |
|
|
|
13,822 |
|
|
|
13,793 |
|
|
|
13,798 |
|
|
|
13,836 |
|
Consolidated Balance Sheets |
|||||||||||
($ in thousands) |
|||||||||||
|
(unaudited)
|
|
(unaudited)
|
|
December 31, 2023 |
||||||
Assets: |
|
|
|
|
|
||||||
Cash and cash equivalents |
$ |
230,556 |
|
|
$ |
223,727 |
|
|
$ |
372,468 |
|
Securities available-for-sale, at fair value |
|
550,756 |
|
|
|
540,802 |
|
|
|
627,117 |
|
Loans |
|
1,078,387 |
|
|
|
1,061,991 |
|
|
|
1,014,318 |
|
Less: Allowance for credit losses |
|
(13,447 |
) |
|
|
(13,633 |
) |
|
|
(13,089 |
) |
Loans, net |
$ |
1,064,940 |
|
|
$ |
1,048,358 |
|
|
$ |
1,001,229 |
|
Payments in advance of funding |
|
207,202 |
|
|
|
214,581 |
|
|
|
198,861 |
|
Premises and equipment, net |
|
34,295 |
|
|
|
33,469 |
|
|
|
30,093 |
|
Investments in bank-owned life insurance |
|
49,885 |
|
|
|
49,840 |
|
|
|
49,159 |
|
Goodwill and other intangible assets |
|
20,098 |
|
|
|
20,281 |
|
|
|
20,654 |
|
Accounts and drafts receivable from customers |
|
30,892 |
|
|
|
78,407 |
|
|
|
110,651 |
|
Other assets |
|
72,136 |
|
|
|
73,131 |
|
|
|
68,390 |
|
Total assets |
$ |
2,260,760 |
|
|
$ |
2,282,596 |
|
|
$ |
2,478,622 |
|
|
|
|
|
|
|
||||||
Liabilities and shareholders’ equity: |
|
|
|
|
|
||||||
Deposits |
|
|
|
|
|
||||||
Non-interest bearing |
$ |
392,573 |
|
|
$ |
372,031 |
|
|
$ |
524,359 |
|
Interest-bearing |
|
654,750 |
|
|
|
640,315 |
|
|
|
616,455 |
|
Total deposits |
$ |
1,047,323 |
|
|
$ |
1,012,346 |
|
|
$ |
1,140,814 |
|
Accounts and drafts payable |
|
936,463 |
|
|
|
996,832 |
|
|
|
1,071,369 |
|
Other liabilities |
|
39,327 |
|
|
|
43,493 |
|
|
|
36,630 |
|
Total liabilities |
$ |
2,023,113 |
|
|
$ |
2,052,671 |
|
|
$ |
2,248,813 |
|
|
|
|
|
|
|
||||||
Shareholders’ equity: |
|
|
|
|
|
||||||
Common stock |
$ |
7,753 |
|
|
$ |
7,753 |
|
|
$ |
7,753 |
|
Additional paid-in capital |
|
205,026 |
|
|
|
204,128 |
|
|
|
208,007 |
|
Retained earnings |
|
148,092 |
|
|
|
149,236 |
|
|
|
145,782 |
|
Common shares in treasury, at cost |
|
(84,139 |
) |
|
|
(81,554 |
) |
|
|
(84,264 |
) |
Accumulated other comprehensive loss |
|
(39,085 |
) |
|
|
(49,638 |
) |
|
|
(47,469 |
) |
Total shareholders’ equity |
$ |
237,647 |
|
|
$ |
229,925 |
|
|
$ |
229,809 |
|
Total liabilities and shareholders’ equity |
$ |
2,260,760 |
|
|
$ |
2,282,596 |
|
|
$ |
2,478,622 |
|
Average Balances (unaudited) |
|||||||||||||||||||
($ in thousands) |
|||||||||||||||||||
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Nine-Months
|
|
Nine-Months
|
||||||||||
Average interest-earning assets |
$ |
2,001,740 |
|
$ |
1,958,427 |
|
$ |
2,059,801 |
|
$ |
2,007,781 |
|
$ |
2,077,392 |
|||||
Average loans |
|
1,072,824 |
|
|
|
1,039,461 |
|
|
|
1,045,967 |
|
|
|
1,042,953 |
|
|
|
1,065,915 |
|
Average securities available-for-sale |
|
535,423 |
|
|
|
589,480 |
|
|
|
634,835 |
|
|
|
586,588 |
|
|
|
681,820 |
|
Average short-term investments |
|
338,464 |
|
|
|
265,291 |
|
|
|
310,770 |
|
|
|
318,712 |
|
|
|
263,774 |
|
Average payments in advance of funding |
|
202,976 |
|
|
|
213,185 |
|
|
|
234,684 |
|
|
|
203,498 |
|
|
|
243,458 |
|
Average assets |
|
2,340,870 |
|
|
|
2,308,045 |
|
|
|
2,395,264 |
|
|
|
2,343,489 |
|
|
|
2,421,274 |
|
Average non-interest bearing deposits |
|
404,364 |
|
|
|
407,079 |
|
|
|
480,472 |
|
|
|
419,724 |
|
|
|
528,677 |
|
Average interest-bearing deposits |
|
630,204 |
|
|
|
638,328 |
|
|
|
591,556 |
|
|
|
633,373 |
|
|
|
563,994 |
|
Average borrowings |
|
11 |
|
|
|
11 |
|
|
|
11 |
|
|
|
11 |
|
|
|
2,993 |
|
Average interest-bearing liabilities |
|
630,215 |
|
|
|
638,339 |
|
|
|
591,567 |
|
|
|
633,384 |
|
|
|
566,987 |
|
Average accounts and drafts payable |
|
1,033,070 |
|
|
|
996,944 |
|
|
|
1,070,057 |
|
|
|
1,021,988 |
|
|
|
1,071,414 |
|
Average shareholders’ equity |
$ |
231,785 |
|
|
$ |
225,265 |
|
|
$ |
212,591 |
|
|
$ |
227,920 |
|
|
$ |
212,159 |
|
Consolidated Financial Highlights (unaudited) |
|||||||||||||||||||
($ and numbers in thousands, except ratios) |
|||||||||||||||||||
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Nine-Months
|
|
Nine-Months
|
||||||||||
Return on average equity |
|
5.04 |
% |
|
|
8.01 |
% |
|
|
13.80 |
% |
|
|
8.54 |
% |
|
|
13.64 |
% |
Return on average assets |
|
0.50 |
% |
|
|
0.78 |
% |
|
|
1.22 |
% |
|
|
0.83 |
% |
|
|
1.20 |
% |
Net interest margin (1) |
|
3.55 |
% |
|
|
3.32 |
% |
|
|
3.24 |
% |
|
|
3.38 |
% |
|
|
3.24 |
% |
Average interest-earning assets yield (1) |
|
4.57 |
% |
|
|
4.41 |
% |
|
|
4.13 |
% |
|
|
4.42 |
% |
|
|
3.98 |
% |
Average loan yield |
|
5.40 |
% |
|
|
5.26 |
% |
|
|
4.88 |
% |
|
|
5.24 |
% |
|
|
4.77 |
% |
Average investment securities yield (1) |
|
2.86 |
% |
|
|
2.84 |
% |
|
|
2.62 |
% |
|
2.80 |
% |
|
|
2.63 |
% |
|
Average short-term investment yield |
|
4.94 |
% |
|
|
4.95 |
% |
|
|
5.02 |
% |
|
|
4.99 |
% |
|
|
4.64 |
% |
Average cost of total deposits |
|
1.98 |
% |
|
|
2.04 |
% |
|
|
1.72 |
% |
|
|
1.98 |
% |
|
|
1.42 |
% |
Average cost of interest-bearing deposits |
|
3.25 |
% |
|
|
3.35 |
% |
|
|
3.11 |
% |
|
|
3.30 |
% |
|
|
2.72 |
% |
Average cost of interest-bearing liabilities |
|
3.25 |
% |
|
|
3.35 |
% |
|
|
3.11 |
% |
|
|
3.30 |
% |
|
|
2.73 |
% |
Allowance for credit losses to loans |
|
1.25 |
% |
|
|
1.28 |
% |
|
|
1.28 |
% |
|
|
1.25 |
% |
|
|
1.28 |
% |
Non-performing loans to total loans |
|
-- |
% |
|
|
-- |
% |
|
|
-- |
% |
|
|
-- |
% |
|
|
-- |
% |
Net loan charge-offs (recoveries) to loans |
|
-- |
% |
|
|
-- |
% |
|
|
-- |
% |
|
|
-- |
% |
|
|
-- |
% |
Common equity tier 1 ratio |
|
14.54 |
% |
|
|
14.32 |
% |
|
|
14.53 |
% |
|
|
14.54 |
% |
|
|
14.53 |
% |
Total risk-based capital ratio |
|
15.31 |
% |
|
|
15.08 |
% |
|
|
15.30 |
% |
|
|
15.31 |
% |
|
|
15.30 |
% |
Leverage ratio |
|
11.05 |
% |
|
|
11.32 |
% |
|
|
10.61 |
% |
|
|
11.05 |
% |
|
|
10.61 |
% |
(1) Yields are presented on tax-equivalent basis assuming a tax rate of |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Transportation invoice volume |
|
9,160 |
|
|
|
8,879 |
|
|
|
8,925 |
|
|
|
26,810 |
|
|
|
27,216 |
|
Transportation dollar volume |
$ |
9,097,739 |
|
|
$ |
9,081,343 |
|
|
$ |
9,263,453 |
|
|
$ |
27,118,728 |
|
|
$ |
29,243,706 |
|
Facility expense transaction volume |
|
4,316 |
|
|
|
4,337 |
|
|
|
3,417 |
|
|
|
12,917 |
|
|
|
10,352 |
|
Facility expense dollar volume |
$ |
5,778,291 |
|
|
$ |
5,039,283 |
|
|
$ |
5,096,882 |
|
|
$ |
16,147,139 |
|
|
$ |
14,988,757 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20241017462927/en/
Cass Investor Relations
ir@cassinfo.com
Source: Cass Information Systems, Inc.
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