Fourth Quarter Results (All comparisons refer to the
fourth quarter of 2023, except as noted)
- Net income of $4.6 million, or $0.33 per diluted common
share.
- Successfully terminated defined benefit pension plan resulting
in one-time expense of $3.5 million.
- Increase in net interest margin to 3.55% from 3.30%.
- Increase in facility expense transaction volumes of 20.3%.
- Completed acquisition of AcuAudit from Acuitive Solutions
LLC.
- Maintained exceptional credit quality, with no non-performing
loans or charge-offs.
- Repurchased 79,713 shares of Company stock at weighted average
price of $44.02.
Cass Information Systems, Inc. (Nasdaq:
CASS), (the Company or Cass) reported fourth quarter
2024 earnings of $0.33 per diluted share, as compared to $0.61 in
the fourth quarter of 2023 and $0.21 in the third quarter of 2024.
Net income for the period was $4.6 million, a decrease of 45.4%
from $8.4 million in the same period in 2023 and an increase of
$2.9 million, or 56.4%, as compared to the third quarter of 2024.
For the year ended December 31, 2024, the Company reported net
income and earnings per diluted share of $19.2 million and $1.39,
respectively, as compared to $30.1 million and $2.18, respectively,
for the year ended December 31, 2023.
Martin Resch, the Company’s President and Chief Executive
Officer, noted, “We closed 2024 operationally on a strong note and
have significant momentum for enhanced profitability as we enter
2025. We expect our net interest margin to continue to increase
given the current interest rate environment. We see average earning
assets returning to the level we had prior to the cyber event at
our CassPay client, which resulted in a $100 million balance
decrease early in 2024. We have leveraged our new AI enabled
technology platforms to gain operating efficiencies in our payments
business, and will continue to do so throughout 2025, resulting in
lower headcount even as our transaction volumes continue to
increase. The launch of Amplify, our partnership with Lupeon and
our acquisition of AcuAudit provides us with a unique opportunity
to market a best-in-class transportation payments solution,
covering all geographies and transportation modes. The termination
of the defined benefit pension plan will remove close to $1 million
of annual operating costs. Finally, and most importantly, we
continue to win new business reflecting our market leadership
position and trust that our clients have in our ability to deliver
value.”
Resch continued, “Net income during 2024 was negatively impacted
by a combination of $7.8 million of bad debt expense on a funding
receivable related to a facility client, a pension termination loss
of $3.5 million and the cyber event at a CassPay client. These
events and their related financial impact are now behind us and we
have significant tailwinds as described above. These tailwinds,
combined with indications that freight indices are approaching
positive territory for the first time since 2022 (Cass
Transportation Index Report), set up for a positive revenue and
profitability environment for Cass in coming quarters.”
Fourth Quarter 2024 Highlights
Transportation Dollar Volumes – Transportation dollar
volumes were $9.0 billion during the fourth quarter of 2024, a
decrease of 0.6% as compared to the fourth quarter of 2023 and a
decrease of 1.1% as compared to the third quarter of 2024. The
decrease in dollar volumes was due to a decrease in the average
dollars per transaction to $1,008 during the fourth quarter of 2024
as compared to $1,036 in the fourth quarter of 2023 and $993 in the
third quarter of 2024. 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 fourth quarter of 2024, an
increase of 9.1% as compared to the fourth quarter of 2023 and a
decrease of 8.4% as compared to the third quarter of 2024. The
increase as compared to the fourth quarter of 2023 is largely
reflective of new client volume. The decrease as compared to the
third quarter of 2024 is largely due to seasonality in client
energy usage.
Processing Fees – Processing fees decreased $466,000, or
2.2%, over the same period in the prior year. The decrease in
processing fees was largely driven by an decrease in fees in the
Company’s Waste division and a decrease in ancillary fees,
partially offset by increases in facility and transportation
transaction volumes of 20.3% and 2.1%, respectively.
Financial Fees – Financial fees, earned on a
transactional level basis for invoice payment services when making
customer payments, decreased $753,000, or 6.6%. The decrease in
financial fee income was primarily due to the decline in
transportation dollar volumes of 0.6% in addition to changes in the
manner certain vendors receive payments. The Company has had recent
success signing clients for the Amplify by Cass working capital
solution which is expected to begin to have a positive impact on
financial fees during the second half of 2025.
Net Interest Income – Net interest income increased
$730,000, or 4.3%. The increase in net interest income was
attributable to an increase in the net interest margin to 3.55% in
the fourth quarter of 2024 from 3.30% in the fourth quarter of
2023, partially offset by a decline in average interest-earning
assets of $52.8 million, or 2.5%. The expansion in the net interest
margin is largely due to an increase in the weighted-average yield
on loans to 5.38% from 4.95% in the same quarter last year due to
loan growth and fixed rate loans maturing and being re-priced in a
higher interest rate environment.
Provision for Credit Losses - The Company recorded a
provision for credit losses of $93,000 during the fourth quarter of
2024 as compared to a release of credit losses of $215,000 in the
fourth quarter of 2023. The provision for credit losses for the
fourth quarter of 2024 was largely driven by an increase in total
loans of $3.6 million, or 0.3%, as compared to September 30, 2024
as well as an increase in unfunded commitments on new faith-based
construction loans.
Personnel Expenses - Personnel expenses increased $3.5
million, or 11.7%. Salaries and commissions increased $410,000, or
1.7%, as compared to the fourth quarter of 2023 primarily as a
result of merit increases. The Company has reduced its FTE count to
1,147 at December 31, 2024 as compared to 1,170 at September 30,
2024 and 1,202 at June 30, 2024. The December 31, 2024 FTE count
includes 14 from AcuAudit. Salaries and commissions increased
$421,000 as compared to the third quarter of 2024 due to an
increase in employee profit sharing of $1.0 million, partially
offset by the decline in FTEs.
Net periodic pension cost increased $3.5 million. The Company
recorded a one-time non-cash expense of $3.5 million in the fourth
quarter of 2024 related to the termination of its noncontributory
defined-benefit pension plan. The termination of the plan is
expected to reduce run rate operating expense by approximately $1.0
million on an annual basis. Excluding the impact of the one-time
pension termination expense, personnel expenses were flat with the
same quarter in the prior year.
Non-Personnel Expenses - Non-personnel expenses increased
$765,000, or 7.1%. Equipment expense increased $378,000 due to an
increase in depreciation expense on software related to recently
completed technology initiatives.
Loans - When compared to December 31, 2023, ending loans
increased $67.7 million, or 6.7%.
Payments in Advance of Funding – Average payments in
advance of funding decreased $8.4 million, or 4.0%, primarily due
to a 0.6% decrease in transportation dollar volumes, which led to
fewer dollars advanced to freight carriers, as well as the
continued consolidation of freight carriers.
Goodwill and Other Intangible Assets - When compared to
September 30, 2024, goodwill and other intangible assets increased
$6.3 million. In December 2024, the Company acquired AcuAudit, a
premier freight audit platform for ocean and international air
freight, from Acuitive Solutions LLC. The Asset Purchase Agreement
reflects a base purchase price of $3.0 million and an earnout based
on annualized recurring revenue at the end of 24 months. Current
annualized recurring revenue is approximately $2.5 million. The
Company expects the impact of the acquisition to be EBITDA neutral
in 2025 and a minimal negative impact to diluted earnings per share
driven by intangible amortization.
Deposits – Average deposits decreased $19.0 million, or
1.8%, when compared to the fourth quarter of 2023. The Company has
experienced a migration of client funds from non-interest bearing
to interest-bearing driven by the higher interest rate environment
prior to the recent 100 basis point cumulative decline in the
Federal Funds rate from September 2024 to December 2024.
Accounts and Drafts Payable - Average accounts and drafts
payable decreased $54.5 million, or 4.9%. The decrease in these
balances, which are non-interest bearing, are primarily reflective
of a cyber event at a CassPay client during the first quarter of
2024, which decreased average balances by approximately $100.0
million, and a decrease in transportation dollar volumes of 0.6%,
partially offset by an increase in facility dollar volumes of 9.1%.
Accounts and drafts payable are a significant source of funding
generated by payment float from transportation and facility
clients.
Shareholders’ Equity - Total shareholders’ equity has
decreased $779,000 since December 31, 2023 primarily as a result of
dividends of $16.5 million and the repurchase of Company stock of
$7.2 million, partially offset by net income of $19.2 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 $2.4 billion, Cass is uniquely
supported by Cass Commercial Bank. Founded in 1906 and a wholly
owned subsidiary, Cass Commercial Bank provides sophisticated
financial exchange services to the parent organization and its
clients. Cass is part of the Russell
2000®. More information is
available at www.cassinfo.com.
Forward Looking Information
This information contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements include future financial and operating results,
expectations, intentions, and other statements that are not
historical facts. Such statements are based on current beliefs and
expectations of the Company’s management and are subject to
significant risks and uncertainties. These risks and uncertainties
include the impact of economic and market conditions, inflationary
pressures, risks of credit deterioration, interest rate changes,
governmental actions, market volatility, security breaches and
technology interruptions, energy prices and competitive factors,
among others, as set forth in the Company’s most recent Annual
Report on Form 10-K and subsequent reports filed with the
Securities and Exchange Commission. Actual results may differ
materially from those set forth in the forward-looking
statements.
Note to Investors
The Company has used, and intends to continue using, the
Investors portion of its website to disclose material non-public
information and to comply with its disclosure obligations under
Regulation FD. Accordingly, investors are encouraged to monitor
Cass’s website in addition to following press releases, SEC
filings, and public conference calls and webcasts.
Consolidated Statements of Income
(unaudited)
($ and numbers in thousands, except per
share data)
Quarter Ended
December 31, 2024
Quarter Ended
September 30, 2024
Quarter Ended
December 31, 2023
Year Ended December
31,
2024
Year Ended December
31,
2023
Processing fees
$
20,262
$
20,053
$
20,728
$
82,671
$
79,566
Financial fees
10,714
11,177
11,467
43,297
45,985
Total fee revenue
$
30,976
$
31,230
$
32,195
$
125,968
$
125,551
Interest and fees on loans
14,428
14,567
12,796
55,362
50,825
Interest and dividends on securities
4,104
4,007
4,352
16,931
18,215
Interest on federal funds sold and
other short-term investments
3,844
4,200
4,573
15,752
13,720
Total interest income
$
22,376
$
22,774
$
21,721
$
88,045
$
82,760
Interest expense
4,612
5,156
4,687
20,258
16,266
Net interest income
$
17,764
$
17,618
$
17,034
$
67,787
$
66,494
(Provision for) release of credit
losses
(93
)
140
215
(447
)
550
Loss on sale of investment
securities
(33
)
--
(13
)
(46
)
(173
)
Other
1,757
1,562
1,305
5,927
5,089
Total revenues
$
50,371
$
50,550
$
50,736
$
199,189
$
197,511
Salaries and commissions
24,271
23,850
23,861
96,356
93,474
Share-based compensation
570
898
342
3,168
4,139
Net periodic pension cost
3,588
195
476
4,172
878
Other benefits
4,632
4,924
4,921
19,695
20,203
Total personnel expenses
$
33,061
$
29,867
$
29,600
$
123,391
$
118,694
Occupancy
868
890
890
3,446
3,560
Equipment
2,328
2,107
1,950
8,305
7,138
Bad debt expense
--
6,559
--
7,847
--
Other
8,350
7,475
7,941
31,981
30,763
Total operating expenses
$
44,607
$
46,898
$
40,381
$
174,970
$
160,155
Income from operations before
income taxes
$
5,764
$
3,652
$
10,355
$
24,219
$
37,356
Income tax expense
1,170
714
1,945
5,051
7,297
Net income
$
4,594
$
2,938
$
8,410
$
19,168
$
30,059
Basic earnings per share
$
.34
$
.22
$
.62
$
1.42
$
2.22
Diluted earnings per share
$
.33
$
.21
$
.61
$
1.39
$
2.18
Share data:
Weighted-average common
shares outstanding
13,436
13,504
13,467
13,502
13,530
Weighted-average common
shares outstanding assuming
dilution
13,718
13,786
13,755
13,778
13,816
Consolidated Balance Sheets
($ in thousands)
(unaudited) December 31,
2024
(unaudited) September 30,
2024
December 31, 2023
Assets:
Cash and cash equivalents
$
349,728
$
230,556
$
372,468
Securities available-for-sale, at fair
value
528,021
550,756
627,117
Loans
1,081,989
1,078,387
1,014,318
Less: Allowance for credit losses
(13,395
)
(13,447
)
(13,089
)
Loans, net
$
1,068,594
$
1,064,940
$
1,001,229
Payments in advance of funding
208,530
207,202
198,861
Premises and equipment, net
34,174
34,295
30,093
Investments in bank-owned life
insurance
50,325
49,885
49,159
Goodwill and other intangible assets
26,359
20,098
20,654
Accounts and drafts receivable from
customers
66,281
30,892
110,651
Other assets
63,069
72,136
68,390
Total assets
$
2,395,081
$
2,260,760
$
2,478,622
Liabilities and shareholders’ equity:
Deposits
Non-interest bearing
$
251,230
$
392,573
$
524,359
Interest-bearing
716,686
654,750
616,455
Total deposits
$
967,916
$
1,047,323
$
1,140,814
Accounts and drafts payable
1,149,276
936,463
1,071,369
Other liabilities
48,859
39,327
36,630
Total liabilities
$
2,166,051
$
2,023,113
$
2,248,813
Shareholders’ equity:
Common stock
$
7,753
$
7,753
$
7,753
Additional paid-in capital
205,593
205,026
208,007
Retained earnings
148,487
148,092
145,782
Common shares in treasury, at cost
(87,615
)
(84,139
)
(84,264
)
Accumulated other comprehensive loss
(45,188
)
(39,085
)
(47,469
)
Total shareholders’ equity
$
229,030
$
237,647
$
229,809
Total liabilities and shareholders’
equity
$
2,395,081
$
2,260,760
$
2,478,622
Average Balances (unaudited)
($ in thousands)
Quarter Ended
December 31, 2024
Quarter Ended
September 30, 2024
Quarter Ended
December 31, 2023
Year Ended December 31,
2024
Year Ended December 31,
2023
Average interest-earning assets
$
2,022,794
$
2,001,740
$
2,075,641
$
2,011,554
$
2,076,950
Average loans
1,065,944
1,072,824
1,025,259
1,048,732
1,055,668
Average securities available-for-sale
555,674
535,423
615,666
578,817
665,146
Average short-term investments
348,632
338,464
356,887
326,233
287,243
Average payments in advance of funding
200,963
202,976
209,364
202,860
234,865
Average assets
2,366,992
2,340,870
2,414,665
2,349,397
2,419,608
Average non-interest bearing deposits
399,778
404,364
464,924
414,711
512,608
Average interest-bearing deposits
638,180
630,204
592,055
634,581
571,067
Average interest-bearing liabilities
638,191
630,215
592,066
634,592
573,308
Average accounts and drafts payable
1,055,928
1,033,070
1,110,415
1,030,520
1,081,245
Average shareholders’ equity
$
231,993
$
231,785
$
207,834
$
228,944
$
211,069
Consolidated Financial Highlights
(unaudited)
($ and numbers in thousands, except
ratios)
Quarter Ended
December 31, 2024
Quarter Ended
September 30, 2024
Quarter Ended
December 31, 2023
Year Ended December 31,
2024
Year Ended December 31,
2023
Return on average equity
7.88
%
5.04
%
16.06
%
8.37
%
14.24
%
Return on average assets
0.77
%
0.50
%
1.38
%
0.82
%
1.24
%
Net interest margin (1)
3.55
%
3.55
%
3.30
%
3.42
%
3.25
%
Average interest-earning assets yield
(1)
4.46
%
4.57
%
4.20
%
4.43
%
4.04
%
Average loan yield
5.38
%
5.40
%
4.95
%
5.28
%
4.81
%
Average investment securities yield
(1)
2.87
%
2.86
%
2.63
%
2.82
%
2.63
%
Average short-term investment yield
4.39
%
4.94
%
5.08
%
4.83
%
4.78
%
Average cost of total deposits
1.77
%
1.98
%
1.76
%
1.93
%
1.50
%
Average cost of interest-bearing
deposits
2.88
%
3.25
%
3.14
%
3.19
%
2.85
%
Average cost of interest-bearing
liabilities
2.87
%
3.25
%
3.14
%
3.19
%
2.84
%
Allowance for credit losses to loans
1.24
%
1.25
%
1.29
%
1.24
%
1.29
%
Non-performing loans to total loans
--
%
--
%
--
%
--
%
--
%
Net loan charge-offs (recoveries) to
loans
--
%
--
%
--
%
--
%
--
%
Common equity tier 1 ratio
13.84
%
14.54
%
14.73
%
13.84
%
14.73
%
Total risk-based capital ratio
14.61
%
15.31
%
15.49
%
14.61
%
15.49
%
Leverage ratio
10.57
%
11.05
%
10.71
%
10.57
%
10.71
%
Transportation invoice volume
8,919
9,160
8,733
35,729
35,949
Transportation dollar volume
$
8,994,440
$
9,097,739
$
9,044,772
$
36,113,169
$
38,288,478
Facility expense transaction volume
4,218
4,316
3,505
17,135
13,857
Facility expense dollar volume
$
5,291,143
$
5,778,291
$
4,848,064
$
21,438,282
$
19,836,821
(1) Yields are presented on
tax-equivalent basis assuming a tax rate of 21%.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250123487493/en/
Cass Investor Relations ir@cassinfo.com
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