Cass Information Systems Reports First Quarter 2025 Results

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Apr 17, 2025

Cass Information Systems, Inc. (Nasdaq: CASS), (the Company or Cass)reported first quarter 2025 earnings of $0.66 per diluted share, as compared to $0.52 in the first quarter of 2024 and $0.33 in the fourth quarter of 2024. Net income for the period was $9.0 million, an increase of 25.4% from $7.2 million in the same period in 2024 and an increase of $4.4 million, or 95.2%, as compared to the fourth quarter of 2024.

First Quarter Results

All comparisons refer to the first quarter of 2024, except as noted. On April 7, 2025, the Company signed an Asset Purchase Agreement providing for the sale of its Telecom Expense Management & Managed Mobility Services (“TEM”) business to Asignet USA Inc. The Company has applied discontinued operations accounting in accordance with FASB Accounting Standards Codification (“ASC”), Topic 205-20, “Presentation of Financial Statements – Discontinued Operations,” to the assets and liabilities being sold related to the Company's TEM Business Unit as of March 31, 2025 and December 31, 2024, and for the three-months ended March 31, 2025, December 31, 2024 and March 31, 2024, as applicable. All financial information in this earnings release is reported on a continuing operations basis, unless otherwise noted.

  • Net income of $9.0 million, or $0.66 per diluted common share.
  • Return on average equity and assets of 15.91% and 1.51%, respectively.
  • Increase in net interest margin to 3.75% from 3.26%.
  • Increase in net interest income of $2.8 million, or 17.0%.
  • Announced signing of an Asset Purchase Agreement providing for the sale of the TEM business.
  • Limited personnel expense growth to 1.4% despite AcuAudit acquisition and facility expense transaction volume increase.
  • Maintained exceptional credit quality, with no non-performing loans or charge-offs.
  • Received $2.0 million as partial consideration in a litigation settlement.
  • Repurchased 116,109 shares of Company stock at weighted average price of $42.86.

Martin Resch, the Company’s President and Chief Executive Officer, noted, “Our quality financial results for the first quarter show progress toward our strategic plan and I am proud of the team’s execution. The positive results reflect our ongoing successful implementation of efficiency initiatives powered by technology, combined with an increase in our revenue driven by net interest income.” Resch added, “The combination of continued efficiencies via technology, improvement in our net interest margin and the closure of pipeline opportunities in our Transportation and Facility lines of business should result in meaningful profitability improvement over recent quarters. In addition, the successful sale of our TEM business will enable us to concentrate on our strengths in financial exchange and information processing.”

First Quarter 2025 Highlights

Transportation Invoice and Dollar Volumes – Transportation invoice volumes of 8.36 million declined 4.7% as compared to the first quarter of 2024 and 6.3% as compared to the fourth quarter of 2024. The decline in invoice volumes is reflective of an overall decline in shipments as well as severe weather in January 2025. Transportation dollar volumes were $8.6 billion during the first quarter of 2025, decreases of 3.3% as compared to the first quarter of 2024 and 3.9% as compared to the fourth quarter of 2024. The decline in dollar volumes was primarily due to the decline in invoice volume, partially offset by a slight increase in average dollars per invoice.

Facility Expense Invoice and Dollar Volumes – Facility expense invoice volumes of 4.2 million increased 2.7%. as compared to the first quarter of 2024 and 3.4% as compared to the fourth quarter of 2024. Facility expense dollar volumes totaled $5.8 billion during the first quarter of 2025, increases of 16.1% as compared to the first quarter of 2024 and 15.7% as compared to the fourth quarter of 2024. The increases are largely reflective of new client volume.

Processing Fees – Processing fees decreased $390,000, or 2.3%, over the same period in the prior year. The decrease in processing fees was largely driven by the decrease in transportation invoice volumes of 4.7%, partially offset by the increase in facility expense invoice volumes of 2.7%.

Financial Fees – Financial fees, earned on a transactional level basis for invoice payment services when making customer payments, decreased $637,000, or 6.0%. The decrease in financial fees was primarily due to a decline in transportation dollar volumes of 3.3% and related decline in average payments in advance of funding of 10.7%.

Net Interest Income – Net interest income increased $2.8 million, or 17.0%. The increase in net interest income was attributable to the net interest margin improving to 3.75% as compared to 3.26% in the same period last year, in addition to an increase in average interest-earning assets of $41.4 million, or 2.0%.

The Company’s net interest margin improvement was driven by increases in the average yield on loans and investment securities of 55 and 15 basis points, respectively, combined with a decline in the average cost of total deposits of 31 basis points. The increase in loan yield was driven by loan growth at current market interest rates and continued maturing and re-pricing of existing fixed rate loans to current market interest rates. The decline in the cost of total deposits was driven by the reduction in short-term interest rates in the last four months of 2024. The Company generally benefits from a higher interest rate environment due to a large percentage of its funding sources being non-interest bearing.

Provision for Credit Losses - The Company recorded a provision of credit losses of $905,000 during the first quarter of 2025 as compared to $95,000 in the first quarter of 2024. The provision for credit losses for the first quarter of 2025 was largely driven by the increase in total loans of $59.9 million, or 5.5%, as compared to December 31, 2024.

Personnel Expenses -Personnel expenses increased $372,000, or 1.4%. Salaries and commissions increased 0.9%, as a result of merit increases and the December 2024 acquisition of AcuAudit, partially offset by a decrease in average full-time equivalent employees (“FTEs”) of 3.4% due to strategic investments in various technology initiatives. Net periodic pension cost was $0 for the first quarter of 2025 as compared to $195,000 in the first quarter of 2024 and $3.6 million in the fourth quarter of 2024 due to the termination of the Company’s noncontributory defined-benefit pension plan in the fourth quarter of 2024. Other benefits increased $327,000, or 7.2%, due to higher health insurance costs, partially offset by the decline in average FTEs.

Equipment Expense - Equipment expense increased $463,000 primarily due to an increase in depreciation expense on software related to recently completed technology initiatives.

Bad Debt Recovery - The Company recorded a bad debt recovery of $2.0 million related to partial consideration received in a litigation settlement.

Loans -When compared to December 31, 2024, ending loans increased $59.9 million, or 5.5%. The Company experienced growth in its commercial and industrial and faith-based loan portfolios during the first quarter of 2025.

Payments in Advance of Funding -Average payments in advance of funding decreased $20.7 million, or 10.7%, primarily due to a 3.3% decrease in transportation dollar volumes, which led to fewer dollars advanced to freight carriers, in addition to the continued consolidation of freight carriers.

Deposits – Average deposits decreased $46.1 million, or 4.3%, when compared to the first quarter of 2024. The Company has experienced deposit attrition due to a decrease in the overall level of some larger commercial deposits due to client funding needs for acquisitions and other purposes.

Accounts and Drafts Payable - Average accounts and drafts payable increased $57.9 million, or 5.7%. The increase in these balances, which are non-interest bearing, are primarily reflective of the increase in facility dollar volumes of 16.1%. Accounts and drafts payable are a significant source of funding generated by payment float from transportation and facility clients.

Shareholders’ Equity - Total shareholders’ equity increased $5.2 million since December 31, 2024 as a result of net income of $9.0 million and a decrease in accumulated other comprehensive loss of $5.7 million primarily related to the fair value of available-for-sale investment securities, partially offset by the repurchase of Company stock of $5.0 million and dividends of $4.2 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, 2025

Quarter
Ended
December 31, 2024

Quarter
Ended
March 31, 2024

Processing fees

$

16,469

$

15,680

$

16,859

Financial fees

9,961

10,509

10,598

Total fee revenue

$

26,430

$

26,189

$

27,457

Interest and fees on loans

15,350

14,428

12,776

Interest and dividends on securities

4,147

4,104

4,437

Interest on short-term investments

3,893

3,844

4,441

Total interest income

$

23,390

$

22,376

$

21,654

Interest expense

4,116

4,612

5,178

Net interest income

$

19,274

$

17,764

$

16,476

Provision for credit losses

(905

)

(93

)

(95

)

Loss on sale of investment securities

(18

)

(33

)

--

Other

1,626

1,757

1,267

Total revenues

$

46,407

$

45,584

$

45,105

Salaries and commissions

21,165

21,400

20,971

Share-based compensation

1,241

545

1,195

Net periodic pension cost

3,588

195

Other benefits

4,873

4,128

4,546

Total personnel expenses

$

27,279

$

29,661

$

26,907

Occupancy

721

679

676

Equipment

2,294

2,275

1,831

Amortization of intangible assets

293

174

173

Bad debt (recovery) expense

(2,000

)

--

--

Other

6,943

7,575

6,621

Total operating expenses

$

35,530

$

40,364

$

36,208

Income from continuing operations, before income tax expense

$

10,877

$

5,220

$

8,897

Income tax expense

2,326

1,060

1,833

Net income from continuing operations

$

8,551

$

4,160

$

7,064

Income from discontinued operations, net of tax

415

434

88

Net income

$

8,966

$

4,594

$

7,152

Basic earnings per share from continuing operations

$

.64

$

.31

$

.52

Basic earnings per share from discontinued operations

.03

.03

.01

Basic earnings per share

$

.67

$

.34

$

.53

Diluted earnings per share from continuing operations

$

.63

$

.30

$

.51

Diluted earnings per share from discontinued operations

.03

.03

.01

Diluted earnings per share

$

.66

$

.33

$

.52

Share data:

Weighted-average common shares outstanding

13,398

13,436

13,530

Weighted-average common shares outstanding assuming dilution

13,643

13,718

13,785

Consolidated Balance Sheets (unaudited)

($ in thousands)

March 31, 2025

December 31, 2024

March 31, 2024

Assets:

Cash and cash equivalents

$

220,674

$

349,728

$

192,802

Securities available-for-sale, at fair value

576,510

528,021

621,929

Loans

1,141,874

1,081,989

1,036,997

Less: Allowance for credit losses

(14,286

)

(13,395

)

(13,299

)

Loans, net

$

1,127,588

$

1,068,594

$

1,023,698

Payments in advance of funding

175,326

208,530

221,552

Premises and equipment, net

31,748

30,576

29,496

Investments in bank-owned life insurance

50,767

50,325

49,496

Goodwill and other intangible assets

20,786

21,247

15,323

Accounts and drafts receivable from customers

40,465

55,906

32,856

Other assets

60,536

67,741

91,700

Assets of discontinued operations

14,057

14,413

14,727

Total assets

$

2,318,457

$

2,395,081

$

2,293,579

Liabilities and shareholders’ equity:

Deposits

Non-interest bearing

$

363,798

$

251,230

$

412,879

Interest-bearing

636,277

716,686

666,213

Total deposits

$

1,000,075

$

967,916

$

1,079,092

Accounts and drafts payable

1,016,324

1,129,610

923,276

Other liabilities

48,823

46,211

37,303

Liabilities of discontinued operations

18,988

22,314

24,421

Total liabilities

$

2,084,210

$

2,166,051

$

2,064,092

Shareholders’ equity:

Common stock

$

7,753

$

7,753

$

7,753

Additional paid-in capital

203,755

205,593

204,361

Retained earnings

153,278

148,487

148,845

Common shares in treasury, at cost

(91,025

)

(87,615

)

(82,316

)

Accumulated other comprehensive loss

(39,514

)

(45,188

)

(49,156

)

Total shareholders’ equity

$

234,247

$

229,030

$

229,487

Total liabilities and shareholders’ equity

$

2,318,457

$

2,395,081

$

2,293,579

Average Balances (unaudited)

($ in thousands)

Quarter
Ended
March 31, 2025

Quarter
Ended
December 31, 2024

Quarter
Ended
March 31, 2024

Average interest-earning assets

$

2,104,603

$

2,022,794

$

2,063,239

Average loans

1,109,526

1,065,944

1,016,246

Average securities available-for-sale

554,905

555,674

635,422

Average short-term investments

383,836

348,632

352,163

Average payments in advance of funding

173,590

200,963

194,338

Average assets

2,394,013

2,353,770

2,367,212

Average non-interest bearing deposits

405,183

399,778

447,900

Average interest-bearing deposits

628,214

638,180

631,622

Average interest-bearing liabilities

628,225

638,191

631,633

Average accounts and drafts payable

1,072,013

1,036,212

1,014,067

Average shareholders’ equity

$

228,615

$

231,993

$

226,669

Consolidated Financial Highlights (unaudited)

($ and numbers in thousands, except ratios and average full-time equivalent employees)

Quarter
Ended
March 31, 2025

Quarter
Ended
December 31, 2024

Quarter
Ended
March 31, 2024

Return on average equity

15.91

%

7.88

%

12.66

%

Return on average assets

1.51

%

0.77

%

1.20

%

Net interest margin (1)

3.75

%

3.55

%

3.26

%

Average interest-earning assets yield (1)

4.54

%

4.46

%

4.27

%

Average loan yield

5.61

%

5.38

%

5.06

%

Average investment securities yield (1)

2.86

%

2.87

%

2.71

%

Average short-term investment yield

4.11

%

4.39

%

5.07

%

Average cost of total deposits

1.62

%

1.77

%

1.93

%

Average cost of interest-bearing deposits

2.66

%

2.88

%

3.30

%

Average cost of interest-bearing liabilities

2.66

%

2.87

%

3.30

%

Allowance for credit losses to loans

1.25

%

1.24

%

1.28

%

Non-performing loans to total loans

--

%

--

%

--

%

Net loan charge-offs (recoveries) to loans

--

%

--

%

--

%

Common equity tier 1 ratio

14.11

%

13.84

%

14.84

%

Total risk-based capital ratio

14.94

%

14.61

%

15.60

%

Leverage ratio

10.39

%

10.57

%

11.34

%

(1) Yields are presented on tax-equivalent basis assuming a tax rate of 21%.

Transportation invoice volume

8,355

8,919

8,771

Transportation dollar volume

$

8,643,138

$

8,994,440

$

8,939,646

Facility expense transaction volume

4,225

4,085

4,114

Facility expense dollar volume

$

5,822,935

$

5,032,620

$

5,016,208

Average full-time equivalent employees

1,008

1,008

1,044

Assets and Liabilities of Discontinued Operations (unaudited)

($ in thousands)

March 31,
2025

December 31,
2024

March 31,
2024

Assets:

Premises and equipment, net

$

3,605

$

3,598

$

3,117

Goodwill and other intangible assets, net

5,102

5,112

5,140

Other assets

5,350

5,703

6,470

Assets of discontinued operations

$

14,057

$

14,413

$

14,727

Liabilities:

Accounts and drafts payable

16,465

19,665

21,517

Other liabilities

2,523

2,649

2,904

Liabilities of discontinued operations

$

18,988

$

22,314

$

24,421

Income from Discontinued Operations (unaudited)

($ in thousands)

March 31,
2025

December 31,
2024

March 31,
2024

Fee revenue:

Processing fees

$

4,205

$

4,582

$

4,394

Financial fees

413

205

179

Total fee revenue

4,618

4,787

4,573

Operating expense:

Salaries and commissions

2,756

2,871

3,005

Share-based compensation

43

25

31

Other benefits

616

504

664

Total personnel expenses

3,415

3,400

3,700

Occupancy

180

189

185

Equipment

51

53

51

Amortization of intangible assets

9

9

18

Other

435

592

508

Total operating expense

4,090

4,243

4,462

Income from discontinued operations, before income tax expense

528

544

111

Income tax expense

113

110

23

Net income from discontinued operations

$

415

$

434

$

88

Other Information from Discontinued Operations (unaudited)

($ and numbers in thousands, except average full-time equivalent employees)

Quarter
Ended
March 31, 2025

Quarter
Ended
December 31, 2024

Quarter
Ended
March 31, 2024

Facility expense transaction volume

133

133

150

Facility expense dollar volume

$

256,844

$

258,523

$

313,358

Average full-time equivalent employees

129

135

150

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