First Quarter Results (All comparisons refer to the first
quarter of 2023, except as noted)
- Net income of $7.2 million, or $0.52 per diluted common
share.
- Return on average equity and assets of 12.66% and 1.20%,
respectively.
- Increase in facility expense transaction volumes of 23.0%.
- Processing fee growth of 8.9%.
- Limited operating expense growth to 0.7% despite facility
expense transaction volume increase.
- Maintained exceptional credit quality, with no non-performing
loans or charge-offs.
Cass Information Systems, Inc. (Nasdaq:
CASS), (the Company or Cass) reported first quarter 2024
earnings of $0.52 per diluted share, as compared to $0.51 in the
first quarter of 2023 and $0.61 in the fourth quarter of 2023. Net
income for the period was $7.2 million, an increase of 0.5% from
$7.1 million in the same period in 2023 and a decrease of $1.3
million, or 15.0%, as compared to the fourth quarter of 2023.
Martin Resch, the Company’s President and Chief Executive
Officer, noted, “We successfully onboarded a significant number of
new facility clients during the first quarter which we could not
have accomplished as effectively without the technology platform
upgrades we have completed over the last several quarters. Facility
transaction volumes increasing 23.0% and operating expenses
increasing only 0.7% show that we are becoming more scalable.”
Resch added, “While current revenue and profitability levels are
certainly not where we would like them to be due to the ongoing
freight recession and other external events, we have robust new
business pipelines throughout our lines of business which should
place us in a good position to grow clients and transactions.”
First Quarter 2024 Highlights
Transportation Dollar Volumes – Transportation dollar
volumes were $8.9 billion during the first quarter of 2024,
decreases of 12.9% as compared to the first quarter of 2023 and
1.2% as compared to the fourth quarter of 2023. The average dollars
per transaction declined to $1,019 during the first quarter of 2024
as compared to $1,036 in the fourth quarter of 2023 and $1,129 in
the first quarter of 2023 as a result of lower fuel costs and
overall freight rates. Transportation dollar volumes are key to the
Company’s revenue as higher volumes generally lead to an increase
in payment float, which generates interest income, as well as an
increase in payments in advance of funding, which generates
financial fees.
Facility Expense Dollar Volumes – Facility expense dollar
volumes totaled $5.3 billion during the first quarter of 2024,
increases of 0.3% as compared to the first quarter of 2023 and 9.9%
as compared to the fourth quarter of 2023. The slight increase as
compared to the first quarter of 2023 is largely reflective of new
client volume, partially offset by lower energy prices. The
increase as compared to the fourth quarter of 2023 is reflective of
new client onboarding and related transaction growth.
Processing Fees – Processing fees increased $1.7 million,
or 8.9%, over the same period in the prior year. The increase in
processing fees was largely driven by an increase in facility
transaction volumes of 23.0%. The Company has experienced recent
success in winning facility clients with high transaction volumes.
Transportation invoice volumes decreased 3.6% over the same period.
The decline in transportation volumes is largely due to the
on-going freight recession.
Financial Fees – Financial fees, earned on a
transactional level basis for invoice payment services when making
customer payments, decreased $482,000, or 4.3%. The decrease in
financial fee income was primarily due to a decline in
transportation dollar volumes of 12.9% in addition to changes in
the manner certain vendors receive payments, partially offset by
the increase in short-term interest rates between the periods.
Net Interest Income – Net interest income decreased
$422,000, or 2.5%. The decrease in net interest income was
attributable to a decline in average interest-earning assets of
$99.5 million, or 4.6%. The Company’s net interest margin improved
to 3.26% as compared to 3.23% in the same period last year.
The Company’s net interest margin declined 4 basis points as
compared to 3.30% in the fourth quarter of 2023 primarily driven by
a $91.6 million decrease in average non-interest bearing funding,
consisting of $17.0 million in average non-interest bearing
deposits and $74.6 million in average accounts and drafts payable.
A cyber event at a CassPay client reduced payment volumes and
related accounts and drafts payable during the first quarter of
2024.
Provision for Credit Losses - The Company recorded a
provision of credit losses of $95,000 during the first quarter of
2024 as compared to a release of credit losses of $340,000 in the
first quarter of 2023. The provision for credit losses for the
first quarter of 2024 was largely driven by the increase in total
loans of $22.7 million, or 2.2%, as compared to December 31,
2023.
Personnel Expenses - Personnel expenses increased
$581,000, or 1.9%. Salaries and commissions increased $1.4 million,
or 6.1%, as a result of merit increases and an increase in average
full-time equivalent employees (“FTEs”) of 5.2% due to strategic
investments in various technology initiatives. Share-based
compensation decreased $724,000 reflecting the Company’s financial
performance and the impact on performance-based restricted stock
between the periods.
Non-Personnel Expenses - Non-personnel expenses declined
$282,000, or 2.7%. Certain expense categories related to technology
declined as the Company transitioned to new technology platforms
for data entry.
Loans - When compared to December 31, 2023, ending loans
increased $22.7 million, or 2.2%. The Company experienced growth in
its commercial and industrial loan portfolio during the first
quarter of 2024.
Payments in Advance of Funding – Average payments in
advance of funding decreased $46.6 million, or 19.3%, primarily due
to a 12.9% decrease in transportation dollar volumes, which led to
fewer dollars advanced to freight carriers.
Deposits – Average deposits decreased $65.2 million, or
5.7%, when compared to the first quarter of 2023 and increased
$22.5 million, or 2.1%, as compared to the fourth quarter of 2023.
Total deposits at March 31, 2024 decreased $61.7 million, or 5.4%
as compared to December 31, 2023. The Company experienced deposit
attrition subsequent to the first quarter of 2023 as larger
commercial depository clients moved their funds to higher interest
rate alternatives outside of the banking system. However, the
Company has experienced recent growth in its average deposit
balances as a result of higher deposit rates and increased
depositor confidence across the banking industry.
Accounts and Drafts Payable - Average accounts and drafts
payable decreased $59.3 million, or 5.4%. The decrease in these
balances, which are non-interest bearing, are primarily reflective
of the decrease in transportation dollar volumes of 12.9%. In
addition, a cyber event at a CassPay client reduced payment volumes
and related average accounts and drafts payable. Accounts and
drafts payable are a significant source of funding generated by
payment float from transportation, facility and CassPay
clients.
Shareholders’ Equity - Total shareholders’ equity has
decreased $322,000 since December 31, 2023 as a result of an
increase in accumulated other comprehensive loss of $1.7 million
primarily related to the fair value of available-for-sale
investment securities, dividends of $4.0 million and the repurchase
of Company stock of $1.0 million, partially offset by net income of
$7.2 million.
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 $90 billion annually on behalf of
clients, and with total assets of $2.3 billion, Cass is uniquely
supported by Cass Commercial Bank. Founded in 1906 and a wholly
owned subsidiary, Cass Commercial Bank provides sophisticated
financial exchange services to the parent organization and its
clients. Cass is part of the Russell
2000®. More information is
available at www.cassinfo.com.
Forward Looking Information
This information contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements include future financial and operating results,
expectations, intentions, and other statements that are not
historical facts. Such statements are based on current beliefs and
expectations of the Company’s management and are subject to
significant risks and uncertainties. These risks and uncertainties
include the impact of economic and market conditions, inflationary
pressures, risks of credit deterioration, interest rate changes,
governmental actions, market volatility, security breaches and
technology interruptions, energy prices and competitive factors,
among others, as set forth in the Company’s most recent Annual
Report on Form 10-K and subsequent reports filed with the
Securities and Exchange Commission. Actual results may differ
materially from those set forth in the forward-looking
statements.
Note to Investors
The Company has used, and intends to continue using, the
Investors portion of its website to disclose material non-public
information and to comply with its disclosure obligations under
Regulation FD. Accordingly, investors are encouraged to monitor
Cass’s website in addition to following press releases, SEC
filings, and public conference calls and webcasts.
Consolidated Statements of
Income (unaudited)
($ and numbers in thousands, except per
share data)
Quarter Ended
March 31, 2024
Quarter Ended
December 31, 2023
Quarter Ended
March 31, 2023
Processing fees
$
21,253
$
20,728
$
19,513
Financial fees
10,777
11,467
11,259
Total fee revenue
$
32,030
$
32,195
$
30,772
Interest and fees on loans
12,776
12,796
12,235
Interest and dividends on securities
4,437
4,352
4,794
Interest on federal funds sold and other
short-term investments
4,441
4,573
3,113
Total interest income
$
21,654
$
21,721
$
20,142
Interest expense
5,178
4,687
3,244
Net interest income
$
16,476
$
17,034
$
16,898
(Provision for) release of credit
losses
(95
)
215
340
(Loss) gain on sale of investment
securities
—
(13
)
39
Other
1,267
1,305
1,296
Total revenues
$
49,678
$
50,736
$
49,345
Salaries and commissions
23,976
23,861
22,605
Share-based compensation
1,226
342
1,950
Net periodic pension cost
195
434
100
Other benefits
5,210
4,963
5,371
Total personnel expenses
$
30,607
$
29,600
$
30,026
Occupancy
861
890
855
Equipment
1,881
1,950
1,650
Other
7,322
7,941
7,841
Total operating expenses
$
40,671
$
40,381
$
40,372
Income from operations before income
taxes
$
9,007
$
10,355
$
8,973
Income tax expense
1,855
1,945
1,856
Net income
$
7,152
$
8,410
$
7,117
Basic earnings per share
$
.53
$
.62
$
.52
Diluted earnings per share
$
.52
$
.61
$
.51
Share data:
Weighted-average common shares
outstanding
13,530
13,467
13,599
Weighted-average common shares outstanding
assuming dilution
13,785
13,755
13,863
Consolidated Balance
Sheets
($ in thousands)
(unaudited) March 31,
2024
December 31, 2023
(unaudited) March 31,
2023
Assets:
Cash and cash equivalents
$
192,803
$
372,468
$
210,478
Securities available-for-sale, at fair
value
621,929
627,117
703,037
Loans
1,036,997
1,014,318
1,070,373
Less: Allowance for credit losses
(13,299
)
(13,089
)
(13,254
)
Loans, net
$
1,023,698
$
1,001,229
$
1,057,119
Payments in advance of funding
221,552
198,861
259,819
Premises and equipment, net
32,613
30,093
20,967
Investments in bank-owned life
insurance
49,496
49,159
48,278
Goodwill and other intangible assets
20,463
20,654
21,240
Accounts and drafts receivable from
customers
32,856
110,651
37,288
Other assets
98,169
68,390
69,163
Total assets
$
2,293,579
$
2,478,622
$
2,427,389
Liabilities and shareholders’ equity:
Deposits
Non-interest bearing
$
412,879
$
524,359
$
585,323
Interest-bearing
666,213
616,455
530,827
Total deposits
$
1,079,092
$
1,140,814
$
1,116,150
Accounts and drafts payable
944,793
1,071,369
1,051,435
Other liabilities
40,207
36,630
42,304
Total liabilities
$
2,064,092
$
2,248,813
$
2,209,889
Shareholders’ equity:
Common stock
$
7,753
$
7,753
$
7,753
Additional paid-in capital
204,361
208,007
206,614
Retained earnings
148,845
145,782
134,822
Common shares in treasury, at cost
(82,316
)
(84,264
)
(79,419
)
Accumulated other comprehensive loss
(49,156
)
(47,469
)
(52,270
)
Total shareholders’ equity
$
229,487
$
229,809
$
217,500
Total liabilities and shareholders’
equity
$
2,293,579
$
2,478,622
$
2,427,389
Average Balances
(unaudited)
($ in thousands)
Quarter Ended
March 31, 2024
Quarter Ended
December 31, 2023
Quarter Ended
March 31, 2023
Average interest-earning assets
$
2,063,239
$
2,075,651
$
2,162,734
Average loans
1,016,246
1,025,259
1,076,221
Average securities available-for-sale
635,422
615,666
724,839
Average short-term investments
352,163
356,887
295,150
Average payments in advance of funding
194,338
209,364
240,890
Average assets
2,381,582
2,414,665
2,499,341
Average non-interest bearing deposits
447,900
464,924
553,644
Average interest-bearing deposits
631,622
592,055
591,102
Average borrowings
11
11
5,834
Average interest-bearing liabilities
631,633
592,066
596,936
Average accounts and drafts payable
1,035,833
1,110,415
1,095,182
Average shareholders’ equity
$
226,669
$
207,834
$
209,791
Consolidated Financial
Highlights (unaudited)
($ and numbers in thousands, except
ratios)
Quarter Ended
March 31, 2024
Quarter Ended
December 31, 2023
Quarter Ended
March 31, 2023
Return on average equity
12.66 %
16.06 %
13.76 %
Return on average assets
1.20 %
1.38 %
1.15 %
Net interest margin (1)
3.26 %
3.30 %
3.23 %
Average interest-earning assets yield
(1)
4.27 %
4.20 %
3.84 %
Average loan yield
5.06 %
4.95 %
4.61 %
Average investment securities yield
(1)
2.71 %
2.63 %
2.62 %
Average short-term investment yield
5.07 %
5.08 %
4.28 %
Average cost of total deposits
1.93 %
1.76 %
1.15 %
Average cost of interest-bearing
deposits
3.30 %
3.14 %
2.18 %
Average cost of interest-bearing
liabilities
3.30 %
3.14 %
2.20 %
Allowance for credit losses to loans
1.28 %
1.29 %
1.24 %
Non-performing loans to total loans
-- %
-- %
-- %
Net loan charge-offs (recoveries) to
loans
-- %
-- %
-- %
Common equity tier 1 ratio
14.84 %
14.73 %
13.76 %
Total risk-based capital ratio
15.60 %
15.49 %
14.49 %
Leverage ratio
11.34 %
10.71 %
10.01 %
(1) Yields are presented on
tax-equivalent basis assuming a tax rate of 21%.
Transportation invoice volume
8,771
8,733
9,098
Transportation dollar volume
$ 8,939,646
$ 9,044,772
$ 10,268,451
Facility expense transaction volume
4,264
3,505
3,468
Facility expense dollar volume
$ 5,329,566
$ 4,848,064
$ 5,313,385
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240418079671/en/
Cass Investor Relations ir@cassinfo.com
Cass Information Systems (NASDAQ:CASS)
Historical Stock Chart
From Jul 2024 to Aug 2024
Cass Information Systems (NASDAQ:CASS)
Historical Stock Chart
From Aug 2023 to Aug 2024