SEC Filing | Cass Information Systems, Inc.

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2005 Commission File No. 2-80070 ----------------- CASS INFORMATION SYSTEMS, INC. Incorporated under the laws of MISSOURI I.R.S. Employer Identification No. 43-1265338 13001 HOLLENBERG DRIVE, BRIDGETON, MISSOURI 63044 Telephone: (314) 506-5500 ----------------- Indicate by check mark whether the registrant 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, and has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |X| No |_| The number of shares outstanding of registrant's only class of stock as of August 5, 2005: Common stock, par value $.50 per share - 3,685,594 shares outstanding. - -------------------------------------------------------------------------------- This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933. - --------------------------------------------------------------------------------

TABLE OF CONTENTS PART I - Financial Information Item 1. FINANCIAL STATEMENTS Consolidated Balance Sheets June 30, 2005 and December 31, 2004 ........................................................ 3 Consolidated Statements of Income Three and six months ended June 30, 2005 and 2004 ...................................... 4 Consolidated Statements of Cash Flows Six months ended June 30, 2005 and 2004 ........................................... 5 Notes to Consolidated Financial Statements ..................... 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................................. 11 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ... 23 Item 4. CONTROLS AND PROCEDURES ...................................... 23 PART II - Other Information - Items 1. - 6. ................................ 23 SIGNATURES ........................................................... 25 Forward-looking Statements - Factors That May Affect Future Results This report may contain or incorporate by reference forward-looking statements made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors which may cause future performance to vary from expected performance summarized in the forward-looking statements, including those set forth in this paragraph. Important factors that could cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by those statements include, but are not limited to: the failure to successfully execute our corporate plan, the loss of key personnel or inability to attract additional qualified personnel, the loss of key customers, increased competition, the inability to remain current with rapid technological change, risks related to acquisitions, risks associated with business cycles and fluctuations in interest rates, utility and system interruptions or processing errors, rules and regulations governing financial institutions and changes in such rules and regulations, credit risk related to borrowers' ability to repay loans, concentration of loans to certain segments such as commercial enterprises, churches and borrowers in the St. Louis area which creates risks associated with adverse factors that may affect these groups and volatility of the price of our common stock. We undertake no obligation to publicly update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, or changes to future results over time. -2-

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CASS INFORMATION SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in Thousands except Share and Per Share Data) June 30 December 31 2005 2004 Assets Cash and due from banks $ 25,582 $ 23,131 Federal funds sold and other short-term investments 117,950 64,412 --------- --------- Cash and cash equivalents 143,532 87,543 --------- --------- Investment in debt and equity securities available-for-sale, at fair value 64,124 77,130 Loans 514,083 500,448 Less: Allowance for loan losses 6,009 6,037 --------- --------- Loans, net 508,074 494,411 --------- --------- Premises and equipment, net 11,918 12,187 Investment in bank owned life insurance 11,312 11,090 Payments in excess of funding 8,886 6,998 Goodwill 7,357 7,360 Other intangible assets, net 2,141 2,383 Other assets 17,416 17,419 --------- --------- Total assets $ 774,760 $ 716,521 ========= ========= Liabilities and Shareholders' Equity Liabilities: Deposits: Noninterest-bearing $ 99,478 $ 96,362 Interest-bearing 195,851 179,267 Total deposits 295,329 275,629 Accounts and drafts payable 393,721 358,473 Short-term borrowings 193 127 Subordinated convertible debentures 3,700 3,700 Other liabilities 9,087 9,003 --------- --------- Total liabilities 702,030 646,932 --------- --------- Shareholders' Equity: Preferred stock, par value $.50 per share; 2,000,000 shares authorized and no shares issued -- -- Common Stock, par value $.50 per share; 20,000,000 shares authorized and 4,494,510 shares issued at June 30, 2005 and December 31, 2004, respectively 2,247 2,247 Additional paid-in capital 18,477 18,370 Retained earnings 68,491 64,685 Common shares in treasury, at cost (813,384 shares at June 30, 2005 and 807,262 shares at December 31, 2004) (16,473) (16,096) Unamortized stock bonus awards (235) (160) Accumulated other comprehensive income 223 543 --------- --------- Total shareholders' equity 72,730 69,589 --------- --------- Total liabilities and shareholders' equity $ 774,760 $ 716,521 ========= ========= See accompanying notes to unaudited consolidated financial statements. -3-

CASS INFORMATION SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands except Share and Per Share Data) Three Months Ended Six Months Ended June 30 June 30 ------------------------ ------------------------ 2005 2004 2005 2004 Fee Revenue and Other Income: Information services payment and processing revenue $ 8,737 $ 7,621 $ 17,329 $ 15,219 Software revenue 1,920 1,134 3,600 2,313 Bank service fees 387 430 745 844 Gains on sales of investment securities -- -- 547 441 Other 159 177 343 312 ---------- ---------- ---------- ---------- Total fee revenue and other income 11,203 9,362 22,564 19,129 ---------- ---------- ---------- ---------- Interest Income: Interest and fees on loans 7,936 6,432 15,362 12,886 Interest and dividends on debt and equity securities: Taxable 202 116 375 213 Exempt from federal income taxes 329 465 722 892 Interest on federal funds sold and other short-term investments 722 199 1,248 361 ---------- ---------- ---------- ---------- Total interest income 9,189 7,212 17,707 14,352 ---------- ---------- ---------- ---------- Interest Expense: Interest on deposits 1,166 738 2,108 1,305 Interest on short-term borrowings 1 -- 2 -- Interest on subordinated convertible debentures 49 -- 98 -- ---------- ---------- ---------- ---------- Total interest expense 1,216 738 2,208 1,305 ---------- ---------- ---------- ---------- Net interest income 7,973 6,474 15,499 13,047 Provision for loan losses 200 150 400 350 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 7,773 6,324 15,099 12,697 ---------- ---------- ---------- ---------- Operating Expense: Salaries and employee benefits 10,610 9,301 20,954 18,458 Occupancy 571 436 1,071 894 Equipment 830 986 1,667 2,011 Amortization of intangible assets 121 77 242 155 Other operating 2,866 2,513 5,606 5,277 ---------- ---------- ---------- ---------- Total operating expense 14,998 13,313 29,540 26,795 ---------- ---------- ---------- ---------- Income before income tax expense 3,978 2,373 8,123 5,031 Income tax expense 1,394 673 2,772 1,484 ---------- ---------- ---------- ---------- Net income $ 2,584 $ 1,700 $ 5,351 $ 3,547 ========== ========== ========== ========== Earnings per share: Basic $ .71 $ .47 $ 1.46 $ .97 Diluted $ .68 $ .45 $ 1.42 $ .95 Weighted average shares outstanding: Basic 3,670,868 3,674,409 3,672,698 3,671,401 Effect of dilutive stock options,awards and debentures 126,906 51,490 124,696 45,758 Diluted 3,797,774 3,725,899 3,797,394 3,717,159 See accompanying notes to unaudited consolidated financial statements. -4-

CASS INFORMATION SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands) Six Months Ended June 30 ----------------------- 2005 2004 Cash Flows From Operating Activities: Net income $ 5,351 $ 3,547 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,427 2,071 Gains on sales of investment securities (547) (441) Provision for loan losses 400 350 Amortization of stock bonus awards 63 45 Deferred income tax benefit (252) (1,287) Decrease in income tax liability (973) (689) Increase in pension liability 774 697 Increase in payments in excess of funding (1,888) (1,960) Change in other assets 203 896 Change in other liabilities 282 188 --------- --------- Net cash provided by operating activities 4,840 3,417 --------- --------- Cash Flows From Investing Activities: Proceeds from sales of debt securities available-for-sale 12,952 12,052 Proceeds from maturities of debt and equity securities available-for-sale 38,000 9,200 Purchase of debt and equity securities available-for-sale (37,865) (41,247) Net increase in loans (14,063) (5,894) Purchases of premises and equipment, net (936) (836) --------- --------- Net cash used in investing activities (1,912) (26,725) --------- --------- Cash Flows From Financing Activities: Net increase (decrease) in noninterest-bearing demand deposits 3,116 (11,646) Net increase in interest-bearing demand and savings deposits 7,115 24,063 Net increase in time deposits 9,469 12,855 Net increase in accounts and drafts payable 35,248 22,004 Net increase (decrease) in short-term borrowings 66 (16) Cash proceeds from exercise of stock options 134 151 Tax benefit from exercise of stock options and bonuses 44 99 Cash paid for stock dividend fractional shares -- (4) Cash dividends paid (1,545) (1,476) Purchase of common shares for treasury (586) -- --------- --------- Net cash provided by financing activities 53,061 46,030 --------- --------- Net increase in cash and cash equivalents 55,989 22,722 Cash and cash equivalents at beginning of period 87,543 62,367 --------- --------- Cash and cash equivalents at end of period $ 143,532 $ 85,089 ========= ========= Supplemental information: Cash paid for interest $ 2,036 $ 1,238 Cash paid for income taxes $ 3,396 2,658 Transfer of loans to other real estate owned -- 375 See accompanying notes to unaudited consolidated financial statements. -5-

CASS INFORMATION SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Certain amounts in the 2004 consolidated financial statements have been reclassified to conform to the 2005 presentation. Such reclassifications have no effect on previously reported net income or shareholders' equity. For further information, refer to the audited consolidated financial statements and related footnotes included in Cass Information System, Inc.'s ("the Company" or "Cass") Annual Report on Form 10-K for the year ended December 31, 2004. Note 2 - Intangible Assets The Company accounts for intangible assets in accordance with SFAS 142, "Goodwill and Other Intangible Assets," which requires that intangibles with indefinite useful lives be tested annually for impairment and those with finite useful lives be amortized over their useful lives. Intangible assets for the periods ended June 30, 2005 and December 31, 2004 are as follows: June 30, 2005 December 31, 2004 =========================================================================================================== Gross Carrying Accumulated Gross Carrying Accumulated (In Thousands) Amount Amortization Amount Amortization =========================================================================================================== Amortized intangible assets: Customer list $ 823 $ (137) $ 823 $ (110) Acquired software 1,886 (784) 1,886 (569) - ----------------------------------------------------------------------------------------------------------- Total amortized intangibles 2,709 (921) 2,709 (679) - ----------------------------------------------------------------------------------------------------------- Unamortized intangible assets: Goodwill 7,584 (227)* 7,587 (227)* Minimum pension liability 353 -- 353 -- - ----------------------------------------------------------------------------------------------------------- Total unamortized intangibles 7,937 (227) 7,940 (227) - ----------------------------------------------------------------------------------------------------------- Total intangible assets $10,646 $(1,148) $10,649 $ (906) - ----------------------------------------------------------------------------------------------------------- *Amortization through December 31, 2001 prior to adoption of SFAS 142. Customer list and software are amortized over 15 years and 4-5 years, respectively. The minimum pension liability was recorded in accordance with SFAS 87, "Employers' Accounting for Pensions", which requires the Company to record an additional minimum pension liability by the amount of which the accumulated benefit obligation exceeds the sum of the fair value of plan assets and accrued amount previously recorded and offset this liability by an intangible asset to the extent of previously unrecognized prior service costs. The liability and corresponding intangible asset are adjusted annually. Amortization of intangible assets amounted to $121,000 and $77,000 for the three-month periods and $242,000, and $155,000 for the six-month periods ended June 30, 2005 and 2004, respectively. Estimated amortization of intangibles over the next five years is as follows: $483,000 in 2005 and 2006, $227,000 for 2007 and 2008 and $170,000 in 2009. Note 3 - Equity Investments in Non-Marketable Securities The Company has invested $3,100,000 in a private imaging company in return for a 19.99% ownership interest. The remaining 80.01% ownership interest is owned by another investor. In addition, the Company has extended a $4,000,000 secured line of credit for working capital purposes to this entity. A 50% interest in any borrowings under this line of credit has been sold to the other investor. As of June 30, 2005 the Company's interest in borrowings under this line amounted to $1,602,000 and all payments are current. This business has performed poorly during the past few years and the majority owner is currently in the process of improving its marketing focus and financial performance. However, should this business fail to meet its objectives, the Company's investment could be subject to future impairment. -6-

This investment, along with $493,000 of other investments in non-marketable securities, is included in other assets on the Company's consolidated balance sheets. Note 4 - Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income, adjusted for the net income effect of the interest expense on the outstanding convertible debentures, by the sum of the weighted-average number of common shares outstanding and the weighted-average number of potential common shares outstanding. The calculations of basic and diluted earnings per share for the periods ended June 30, 2005 and 2004 are as follows: Three Months Ended Six Months Ended June 30 June 30 ------------------------ ------------------------ (Dollars In Thousands) 2005 2004 2005 2004 =============================================================================================================== Calculation of basic earnings per share: Net income $ 2,584 $ 1,700 $ 5,351 $ 3,547 Weighted-average number of common shares outstanding 3,670,868 3,674,409 3,672,698 3,671,401 - --------------------------------------------------------------------------------------------------------------- Basic earnings per share $ .71 $ .47 $ 1.46 $ .97 =============================================================================================================== Calculation of diluted earnings per share: Net income $ 2,584 $ 1,700 $ 5,351 $ 3,547 Net income effect of 5.33% convertible debentures 27 -- 54 -- - --------------------------------------------------------------------------------------------------------------- Net income assuming dilution $ 2,611 $ 1,700 $ 5,405 $ 3,547 - --------------------------------------------------------------------------------------------------------------- Weighted-average number of common shares outstanding 3,670,868 3,674,409 3,672,698 3,671,401 Effect of dilutive stock options and awards 50,143 51,490 47,933 45,758 Effect of 5.33% convertible debentures 76,763 -- 76,763 -- - --------------------------------------------------------------------------------------------------------------- Weighted-average number of common shares assuming dilution 3,797,774 3,725,899 3,797,394 3,717,159 - --------------------------------------------------------------------------------------------------------------- Diluted earning per share $ .68 $ .45 $ 1.42 $ .95 =============================================================================================================== Note 5 - Stock Repurchases The following table sets forth information about the Company's purchases of its $.50 par value Common Stock, its only class of stock registered pursuant to Section 12 of the Exchange Act. Total Number of Maximum Shares Purchased Number that Total Number Average As part of Publicly May Yet Be of Shares Price Paid Announced Purchased Under Period Purchased per Share Program the Program - ------------------------------------------------------------------------------------------------ January 1-31, 2005 1,545 $34.98 1,545 98,455 February 1 -28, 2005 15,000 35.49 15,000 83,455 March 1-31, 2005 -- -- -- 83,455 April 1-30, 2005 -- -- -- 83,455 May 1-31, 2005 -- -- -- 83,455 June 1-30, 2005 -- -- -- 83,455 - ------------------------------------------------------------------------------------------------ Total 16,545 $35.44 16,545 83,455 - ------------------------------------------------------------------------------------------------ The Company maintains a treasury stock buyback program and repurchases are made in the open market or through negotiated transactions from time to time depending on market conditions. The Company did not repurchase any stock during the six months ended June 30, 2004. Note 6 - Comprehensive Income For the three and six month periods ended June 30, 2005 and 2004, unrealized gains and losses on debt and equity securities available-for-sale were the Company's only other comprehensive income component. Comprehensive income for the three and six month periods ended June 30, 2005 and 2004 is summarized as follows: -7-

Three Months Ended Six Months Ended June 30 June 30 ------------------ ------------------- (In Thousands) 2005 2004 2005 2004 - ----------------------------------------------------------------------------------------------------------- Net Income $ 2,584 $ 1,700 $ 5,351 $ 3,547 Other comprehensive income: Net unrealized gain (loss) on debt and equity securities available-for-sale, net of tax 185 (1,579) 41 (1,027) Less: reclassification adjustment for realized gains on sales of debt and equity securities, available-for-sale, included in net income, net of tax -- -- (361) (291) - ----------------------------------------------------------------------------------------------------------- Total other comprehensive income (loss) 185 (1,579) (320) (1,318) - ----------------------------------------------------------------------------------------------------------- Total comprehensive income $ 2,769 $ 121 $ 5,031 $ 2,229 - ----------------------------------------------------------------------------------------------------------- Note 7 - Industry Segment Information The services provided by the Company are classified into three reportable segments: Information Services, Banking Services and Government Software Services. Each of these segments provides distinct services that are marketed through different channels. They are managed separately due to their unique service, processing and capital requirements. The Information Services segment provides freight, utility and telecommunication invoice processing and payment services to large corporations. The Banking Services segment provides banking services primarily to privately-held businesses and churches. The Government Software Services segment provides integrated financial, property and human resource management systems to cities, counties, and other public entities. The Company's accounting policies for segments are the same as those described in the summary of significant accounting policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2004. Management evaluates segment performance based on net income after allocations for corporate expenses and income taxes. Transactions between segments are accounted for at what management believes to be market value. Information for prior periods has been restated to reflect changes in the composition of the Company's segments. All revenue originates from and all long-lived assets are located within the United States and no revenue from any customer of any segment exceeds 10% of the Company's consolidated revenue. Summarized information about the Company's operations in each industry segment for the three and six month periods ended June 30, 2005 and 2004, is as follows: -8-

Government Corporate Information Banking Software And In Thousands) Services Services Services Eliminations Total - ------------------------------------------------------------------------------------------------------------------------ Quarter Ended June 30, 2005 Total Revenues: Revenue from customers $ 13,486 $ 3,570 $ 1,920 $ -- $ 18,976 Intersegment revenue 14 429 -- (443) -- Net Income (Loss) 1,564 1,046 (26) -- 2,584 Total Assets 437,570 338,698 5,203 (6,711) 774,760 Goodwill 4,262 168 2,927 -- 7,357 Other intangibles, net 718 -- 1,070 353 2,141 Quarter Ended June 30, 2004 Total Revenues: Revenue from customers $ 11,459 $ 3,093 $ 1,134 $ -- 15,686 Intersegment revenue 9 355 -- (364) -- Net Income (Loss) 1,489 862 (651) -- 1,700 Total Assets 359,983 334,260 5,980 (3,881) 696,342 Goodwill 223 -- 2,927 -- 3,150 Other intangibles, net -- -- 1,380 404 1,784 - ------------------------------------------------------------------------------------------------------------------------ Six Months Ended June 30, 2005 Total Revenues: Revenue from customers $ 26,974 $ 7,089 $ 3,600 $ -- $ 37,663 Intersegment revenue 40 780 -- (820) -- Net Income (Loss) 3,522 2,039 (210) -- 5,351 Total Assets 437,570 338,698 5,203 (6,711) 774,760 Goodwill 4,262 168 2,927 -- 7,357 Other intangible assets, net 718 -- 1,070 353 2,141 Six Months Ended June 30, 2004 Total Revenues: Revenue from customers $ 23,250 $ 6,263 $ 2,313 $ -- $ 31,826 Intersegment revenue 28 710 -- (738) -- Net Income (Loss) 2,903 1,721 (1,077) -- 3,547 Total Assets 359,983 334,260 5,980 (3,881) 696,342 Goodwill 223 -- 2,927 -- 3,150 Other intangible assets, net -- -- 1,380 404 1,784 - ------------------------------------------------------------------------------------------------------------------------ Note 8 - Loans by Type (In Thousands) June 30, 2005 December 31, 2004 - -------------------------------------------------------------------------------- Commercial and industrial $127,105 $117,777 Real estate: Mortgage 178,232 182,476 Mortgage - churches & related 175,893 164,235 Construction 10,291 16,694 Construction - churches & related 13,365 9,144 Industrial revenue bonds 4,860 4,955 Installment 1,408 1,741 Other 2,929 3,426 - -------------------------------------------------------------------------------- Total loans $514,083 $500,448 - -------------------------------------------------------------------------------- Note 9 - Commitments and Contingencies In the normal course of business, the Company is party to activities that contain credit, market and operational risks that are not reflected in whole or in part in the Company's consolidated financial statements. Such activities include traditional off-balance sheet credit-related financial instruments and commitments under operating and capital leases. These financial instruments include commitments to extend credit, commercial letters of credit and standby letters of credit. The Company's maximum potential exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, commercial letters of credit and standby letters of credit is represented by the contractual amounts of those instruments. At June 30, 2005, no amounts have been accrued for any estimated losses for these instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commercial and standby letters of credit are conditional commitments issued by the Company or its subsidiaries to guarantee the performance of a customer to a third party. These off-balance sheet financial instruments generally have fixed expiration dates or other termination clauses and may require payment of a fee. At June 30, 2005 the balance of unused loan commitments, standby and commercial letters of credit were $26,064,000, $6,466,000, and $1,479,000, respectively. Since some of the financial instruments may expire without being drawn upon, the total amounts do not necessarily represent future cash requirements. Commitments to extend credit and letters of credit are subject to the same underwriting standards as those financial instruments included on the consolidated balance sheets. The Company evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of the credit, is based on management's credit evaluation of the borrower. Collateral held varies, but is generally accounts receivable, inventory, residential or income-producing commercial property or equipment. In the event of nonperformance, the Company or its subsidiaries may obtain and liquidate the collateral to recover amounts paid under its guarantees on these financial instruments. -9-

The following table summarizes contractual cash obligations of the Company related to operating and capital lease commitments and convertible subordinated debentures at June 30, 2005: Amount of Commitment Expiration per Period ------------------------------------------ Less than 1-3 3-5 Over 5 (Dollars in thousands) Total 1 Year Years Years Years - ------------------------------------------------------------------------------------------- Operating lease commitments $3,991 $682 $1,002 $667 $1,640 Capital lease commitments 16 14 2 -- -- Convertible subordinated debentures* 3,700 -- -- 3,700 - ------------------------------------------------------------------------------------------- Total $7,707 $696 $1,004 $667 $5,340 - ------------------------------------------------------------------------------------------- * Includes principal payments only. The Company and its subsidiaries are involved in various pending legal actions and proceedings in which claims for damages are asserted. Management, after discussion with legal counsel, believes the ultimate resolution of these legal actions and proceedings will not have a material effect upon the Company's consolidated financial position or results of operations. Note 10 - Stock-Based Compensation The Company maintains stock bonus and stock option plans. Upon issuance of shares in the stock bonus plan a contra shareholders' equity amount is recorded for the fair value of the shares at the time of issuance and this amount is amortized to expense over the three-year vesting period. The stock option plan is accounted for under APB 25, "Accounting for Stock Issued to Employees", and accordingly the Company recognizes no compensation expense as the price of the Company's employee stock options equals the market price of the underlying stock on the date of grant. The Company elected not to adopt the recognition provisions of SFAS 123, "Accounting for Stock-Based Compensation", as amended. An entity that continues to apply APB 25 must disclose certain pro forma information as if the fair value-based accounting method in SFAS 123 had been used to account for all stock-based compensation costs. The required disclosure provisions of SFAS 123 are provided in the table below. The Company uses the Black-Scholes option-pricing model to determine the fair value of the stock options at the date of grant. There were no options granted in the Second Quarter of 2005 and 2,759 options granted in the Second Quarter of 2004. There were 5,885 options granted in the First Half of 2005 and 8,630 options granted in the First Half of 2004. The following table represents the effect on basic and diluted earnings per share and weighted average assumptions used for the periods ended June 30, 2005 and 2004: Three Months Ended Six Months Ended June 30 June 30 ---------------------------- ----------------------------- (In Thousands, except per share data) 2005 2004 2005 2004 - -------------------------------------------------------------------------------------------------------------------------------- Net income: As reported $ 2,584 $ 1,700 $ 5,351 $ 3,547 Add: Stock based compensation expense included in reported net income, net of tax 23 16 41 29 Less: Stock based compensation expense determined under the fair value based method for all awards, net of tax (28) (23) (52) (43) - -------------------------------------------------------------------------------------------------------------------------------- Pro forma net income $ 2,579 $ 1,693 $ 5,340 $ 3,533 - -------------------------------------------------------------------------------------------------------------------------------- Net income per common share: Basic, as reported $ .71 $ .47 $ 1.46 $ .97 Basic, proforma .70 .46 1.45 .96 Diluted, as reported .68 .45 1.42 .95 Diluted, proforma .68 .45 1.42 .95 - -------------------------------------------------------------------------------------------------------------------------------- Weighted average assumptions: Risk-free interest rate -- 4.11% 3.97% 3.58% Expected life -- 7 yrs. 7 yrs. 7 yrs. Expected volatility -- 15% 15% 15% Dividend yield -- 2.34% 2.32% 2.46% - -------------------------------------------------------------------------------------------------------------------------------- -10-

Note 11 - Defined Pension Plans The Company has a noncontributory defined benefit pension plan, which covers most of its employees. The Company accrues and makes contributions designed to fund normal service costs on a current basis using the projected unit credit with service proration method to amortize prior service costs arising from improvements in pension benefits and qualifying service prior to the establishment of the plan over a period of approximately 30 years. Disclosure information is based on a measurement date of December 31 of the corresponding year. The following table represents the components of the net periodic pension costs for 2004 and an estimate for 2005: Estimated Actual (In Thousands) 2005 2004 ------------------------------------------------------------------------- Service cost - benefits earned during the year $ 1,292 $ 1,186 Interest cost on projected benefit obligation 1,384 1,237 Expected return on plan assets (1,399) (1,233) Net amortization 109 60 ------------------------------------------------------------------------- Net periodic pension cost $ 1,386 $ 1,250 ------------------------------------------------------------------------- Pension costs recorded to expense were $381,000 and $365,000 for the Second Quarter of 2005 and 2004, respectively. Pension costs recorded to expense were $693,000 and $625,000 for the First Half of 2005 and 2004, respectively. The Company has not made any contribution to the plan during the six-month period ended June 30, 2005, but expects to contribute approximately $1,360,000 in 2005. In addition to the above funded benefit plan, the Company has an unfunded supplemental executive retirement plan which covers key executives of the Company. This is a noncontributory plan in which the Company and its subsidiaries make accruals designed to fund normal service costs on a current basis using the same method and criteria as its defined benefit plan. The following table represents the components of the net periodic pension costs for 2004 and an estimate for 2005: Estimated Actual (In Thousands) 2005 2004 ------------------------------------------------------------------------- Service cost - benefits earned during the year $ (34) $ (57) Interest cost on projected benefit obligation 161 117 Net amortization 62 50 ------------------------------------------------------------------------- Net periodic pension cost $ 189 $ 110 ------------------------------------------------------------------------- Pension costs recorded to expense were $65,000 and $37,000 for the Second Quarter of 2005 and 2004, respectively and were $95,000 and $73,000 for the First Half of 2005 and 2004, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Cass Information Systems, Inc. (the "Company" or "Cass") provides payment and information processing services to national manufacturing, distribution and retail enterprises from its processing centers in St. Louis, Missouri, Columbus, Ohio, Boston, Massachusetts and Greenville, South Carolina. The Company's services include freight invoice rating, payment processing, auditing, and the generation of cost accounting and transportation information. Cass also processes and pays utility invoices, including electricity, gas and telecommunications. The Company significantly enhanced its telecommunication payment processing and audit capabilities with the acquisition of its Telecom Information Services division located in Greenville, South Carolina in August 2004. Cass extracts, stores and presents information from freight, utility and telecommunication invoices, assisting our customers' transportation, energy and information technology managers in making decisions that will enable them to improve operating performance. The Company receives data from multiple sources, electronic and otherwise, and processes the data to accomplish the specific operating requirements of its customers. It then provides the data in a central repository for access and archiving. The data is finally transformed into information through the Company's databases that allow client interaction as required and provide Internet-based tools for analytical processing. The Company also, through its St Louis, Missouri based bank subsidiary, Cass Commercial Bank (the "Bank"), provides banking services in the St Louis metropolitan area and other selected cities in the United States. The Company acquired Franklin Bancorp located in Orange County, California in November 2004 and merged its subsidiary bank, Franklin Bank of California into the Bank. This acquisition will allow the company to establish branches in California to better serve existing customers and expand the Bank's customer base. In addition to supporting the Company's payment operations, the Bank also provides banking services to its target markets, which include privately owned businesses and churches and church-related ministries. The Company, through the Bank's subsidiary, Government e-Management Solutions, Inc. ("GEMS"), also develops and licenses integrated financial, property and human resource management systems to the public sector. -11-

The specific payment and information processing services provided to each customer are developed individually to meet each customer's specific requirements. These requirements can vary greatly from customer to customer. In addition, the degree of automation such as electronic data interchange ("EDI"), imaging, and web-enhanced solutions varies greatly among customers and industries. These factors combine so that pricing varies greatly among the customer base. In general however, Cass is compensated for its processing services through service fees and account balances that are generated during the payment process. The amount, type and calculation of service fees vary greatly by service offering, but generally follow the volume of transactions processed. Interest income from the balances generated during the payment processing cycle is affected by the amount of time Cass holds the funds prior to payment and the dollar volume processed. Both the number of transactions processed and the dollar volume processed are therefore key metrics followed by management. Other factors will also influence revenue and profitability, such as changes in the general level of interest rates which have a significant effect on net interest income. The funds generated by these processing activities are invested in overnight investments, investment grade securities and loans generated by the Bank. The Bank earns most of its revenue from net interest income, or the difference between the interest earned on its loans and investments and the interest expense on its deposits. The Bank also assesses fees on other services such as cash management services. GEMS earns most of its revenue from the license of its enterprise software solutions and its installation and maintenance services. Industry-wide factors that impact the Company include the acceptance by large corporations of the outsourcing of key business functions such as freight, utility and telecommunication payment and audit. The benefits that can be achieved by outsourcing transaction processing and the management information generated by Cass' systems can be influenced by factors such as the competitive pressures within industries to improve profitability, the general level of transportation costs, deregulation of energy costs and consolidation of telecommunication providers. Economic factors that impact the Company include the general level of economic activity that can affect the volume and size of invoices processed, the ability to hire and retain qualified staff and the growth and quality of our loan portfolio. The general level of interest rates has a significant effect on the revenue of the Company. Finally, the general fiscal condition of the counties and municipalities that can benefit from GEMS' enterprise software can impact licenses sold and related revenue. Currently, management views Cass' most significant opportunity as the continued expansion of its payment and information processing service offerings and customer base. Management intends to accomplish this by maintaining the Company's lead in applied technology, which, when combined with the security and processing controls of the Bank, makes Cass unique in the industry. This trend has been positive over the past years and management anticipates that this should continue through 2005. The low level of interest rates has had a significant negative impact on net income over the past few years. The general level of interest rates, particularly short term interest rates, began to increase during 2004 and this has had a positive effect on net interest income. If these rates continue to rise, this positive impact on net interest income and net earnings should continue. Management had been pleased prior to 2004 with the growth in revenue generated by GEMS. However, during 2004 the sales of new systems declined sharply due mainly to a sluggish marketplace. In the Second Quarter and First Half of 2005, revenues for GEMS increased 69% or $786,000 and 56% or $1,287,000, respectively. The Company continues to invest in GEMS through system improvements and product enhancements and anticipates that the remainder of 2005 should continue to reflect improved results. Critical Accounting Policies The Company has prepared all of the consolidated financial information in this report in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). In preparing the consolidated financial statements in accordance with U.S. GAAP, management makes estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. These estimates have been generally accurate and consistent in the past and have not required any material changes. There can be no assurances that actual results will not differ from those estimates. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position have been discussed with the Audit Committee of the Board of Directors and are described below. -12-

Allowance for Loan Losses. The Company performs periodic and systematic detailed reviews of its loan portfolio to assess overall collectability. The level of the allowance for loan losses reflects management's estimate of the collectability of the loan portfolio. Although these estimates are based on established methodologies for determining allowance requirements, actual results can differ significantly from estimated results. These policies affect all segments of the Company with the exception of governmental software services. The impact and associated risks related to these policies on our business operations are discussed in the "Allowance and Provision for Loan Losses" section of this report. Impairment of Assets. Management periodically evaluates certain long-term assets such as intangible assets including goodwill, foreclosed assets, internally developed software and investments in private equity securities for impairment. Generally, these assets are initially recorded at cost, and recognition of impairment is required when events and circumstances indicate that the carrying amounts of these assets will not be recoverable in the future. If impairment occurs, various methods of measuring impairment may be called for depending on the circumstances and type of asset, including quoted market prices, estimates based on similar assets, and estimates based on valuation techniques such as discounted projected cash flows. Assets held for sale are carried at the lower of cost or fair value less costs to sell. These policies affect all segments of the Company and require significant management assumptions and estimates that could result in materially different results if conditions or underlying circumstances change. Results of Operations The following paragraphs more fully discuss the results of operations and changes in financial condition for the three-month period ended June 30, 2005 (the "Second Quarter of 2005") compared to the three-month period ended June 30, 2004 (the "Second Quarter of 2004") and the six-month period ended June 30, 2005 (the "First Half of 2005") compared to the six-month period ended June 30, 2004 (the "First Half of 2004"). The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes and with the statistical information and financial data appearing in this report as well as the Company's 2004 Annual Report on Form 10-K. Results of operations for the Second Quarter of 2005 are not necessarily indicative of the results to be attained for any other period. Net Income The following table summarizes the Company's operating results: Three Months Ended Six Months Ended June 30 June 30 ------------------------------------------ --------------------------------------------- % % 2005 2004 Change 2005 2004 Change - ----------------------------------------------------------------------------- --------------------------------------------- Net income (In thousands) $ 2,584 $ 1,700 52.0% $ 5,351 $ 3,547 50.9% Diluted earnings per share $ .68 $ .45 51.1% $ 1.42 $ .95 49.5% Return on average assets 1.37% .99% -- 1.44% 1.06% -- Return on average equity 14.65% 10.60% -- 15.39% 11.06% -- Fee Revenue and Other Income The Company's fee revenue is derived mainly from payment and processing fees. As the Company provides its processing and payment services, it is compensated by service fees which are typically calculated on a per-item basis and by the accounts and drafts payable balances generated in the payment process which can be used to generate interest income. Processing volumes related to fees and accounts and drafts payable for the three and six-month periods ended June 30, 2005 and 2004 are as follows: Three Months Ended Six Months Ended June 30 June 30 ------------------------------------------ --------------------------------------------- % % 2005 2004 Change 2005 2004 Change - ----------------------------------------------------------------------------- --------------------------------------------- Freight Transaction Volume 7,503 5,921 26.7% 14,635 11,350 28.9% Freight Dollar Volume $2,869,289 $2,416,168 18.8% $5,437,379 $4,637,814 17.2% Utility Transaction Volume 1,401 1,286 8.9% 2,804 2,570 9.1% Utility Dollar Volume $ 989,180 $ 895,730 10.4% $2,018,415 $1,830,091 10.3% Payment and processing fees $ 8,737 $ 7,621 14.6% $ 17,329 $ 15,219 13.9% -13-

Second Quarter of 2005 compared to Second Quarter of 2004: Freight transaction volume and total dollar volume processed increased for the Second Quarter of 2005 mainly due to increased activity from existing clients and new accounts. The increase in volume and processing dollars from the Utility Information Services division increased primarily due to new customers as the growth of this segment continues. Fees for the period grew due to the increased volume and additional services provided in both segments. Revenues from the Telecom Information Services division, acquired in August 2004, were $504,000. Software revenue from GEMS was up $786,000 or 69% primarily due to additional licenses sold. Bank service fees decreased $43,000 or 10% primarily due to a reduction in bank account analysis fees. This decrease was due primarily to the fact that service fees decrease as the credit allowance for non-interest bearing deposits increases with the general level of interest rates. First Half of 2005 compared to First Half of 2004: Freight and Utility transaction volume and dollar volume were up and fee revenue increased for the First Half of 2005 compared to 2004 due to the same factors discussed above for the Second Quarter. Revenues from the Telecom Information Services division were $990,000. Software revenue from GEMS was up $1,287,000 or 56% during the First Half of 2005 primarily due to additional licenses sold. Bank service fees decreased $99,000 or 12% primarily due to a reduction in bank account analysis fees. Net Interest Income Net interest income is the difference between interest earned on loans, investments, and other earning assets and interest expense on deposits and other interest-bearing liabilities. Net interest income is a significant source of the Company's revenues. The following table summarizes the changes in net interest income and related factors for the three and six month periods ended June 30, 2005 compared with June 30, 2004: Three Months Ended Six Months Ended June 30 June 30 ------------------------------------------ --------------------------------------------- % % 2005 2004 Change 2005 2004 Change - ----------------------------------------------------------------------------- --------------------------------------------- Average earning assets $680,850 $ 627,453 8.5% $ 672,765 $ 613,338 9.7% Net interest income* $8,185 $ 6,749 21.3% 15,940 $ 13,575 17.4% Net interest margin 4.82% 4.33% -- 4.78% 4.45% -- Yield on earning assets 5.54% 4.80% -- 5.44% 4.88% -- Rate on interest bearing liabilities 2.43% 1.59% -- 2.26% 1.47% -- *Net interest income is presented on a tax-equivalent basis assuming a tax rate of 35%. Second Quarter of 2005 compared to Second Quarter of 2004: The increase in net interest income was primarily due to a significant increase in earning assets and an increase in yields on earning assets that exceeded the counteracting effect of increases in rates paid on deposit accounts. The increase in earning assets was funded by both an increase in accounts and drafts payable due to the increase in dollar volume processed and an increase in bank deposits due to the expansion of the Bank's customer base. Yields on earning assets and rates paid on deposit accounts both increased as the general level of interest rates increased. However, as the balances of earning assets greatly exceed the balances of interest-bearing deposits, the net effect on net interest margin was positive. Total average loans increased $47,228,000 or 10% to $514,520,000. This increase was attributable to new business relationships and was funded by the increase in accounts and drafts payable and growth in bank deposits. Total average investment in debt and equity securities decreased $9,511,000 or 13% to $63,659,000. Total average federal funds sold and other short-term investments increased $15,680,000 or 18% to $102,671,000. This increase provides additional liquidity to the Company for future loan growth or investment activity. For more information on the changes in net interest income please refer to the tables on the pages that follow. -14-

First Half of 2005 compared to First Half of 2004: The increase in net interest income was primarily due to a significant increase in earning assets and an increase in yields on earning assets that exceeded the counteracting effect of increases in rates paid on deposit accounts. The increase in earning assets was funded by both an increase in accounts and drafts payable due to the increase in dollar volume processed and an increase in bank deposits due to the expansion of the Bank's customer base. Yields on earning assets and rates paid on deposit accounts both increased as the general level of interest rates increased. However, as the balances of earning assets greatly exceed the balances of interest-bearing deposits, the net effect on net interest margin was positive. Total average loans increased $42,980,000 or 9% to $508,355,000. As discussed above this increase was attributable to new business relationships and was funded by the increase in accounts and drafts payable and growth in bank deposits. Total average investment in debt and equity securities decreased $2,135,000 or 3% to $66,769,000. Total average federal funds sold and other short-term investments increased $18,582,000 or 24% to $97,641,000. For more information on the changes in net interest income please refer to the tables on the pages that follow. The Company is positively affected by increases in the level of interest rates due to the fact that its rate sensitive assets significantly exceed its rate sensitive liabilities. This is primarily due to the noninterest-bearing liabilities generated by the Company in the form of accounts and drafts payable. Changes in interest rates will affect some earning assets such as federal funds sold and floating rate loans immediately and some earning assets, such as fixed rate loans and municipal bonds, over time. Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rate and Interest Differential The following table shows the condensed average balance sheets for each of the periods reported, the tax-equivalent interest income and expense on each category of interest-earning assets and interest-bearing liabilities, and the average yield on such categories of interest-earning assets and the average rates paid on such categories of interest-bearing liabilities for each of the periods reported. Second Quarter 2005 Second Quarter 2004 --------------------------------- ----------------------------------- Interest Interest Average Income/ Yield/ Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate Balance Expense Rate - --------------------------------------------------------------------------------------------------------------------- Assets (1) Earning assets: Loans (2),(3): Taxable $ 509,637 $ 7,884 6.20% $ 461,990 $ 6,366 5.54% Tax-exempt (4) 4,883 80 6.57 5,302 100 7.59 Debt and equity securities (5): Taxable 28,749 203 2.83 26,621 116 1.75 Tax-exempt (4) 34,910 512 5.88 46,549 705 6.09 Federal funds sold and other short-term investments 102,671 722 2.82 86,991 200 .92 - --------------------------------------------------------------------------------------------------------------------- Total earning assets 680,850 9,401 5.54 627,453 7,487 4.80 Nonearning assets: Cash and due from banks 26,922 25,601 Premises and equipment, net 11,902 13,108 Bank owned life insurance 11,239 10,829 Goodwill and other intangibles 9,573 4,985 Other assets 23,238 21,487 Allowance for loan losses (5,860) (5,764) - --------------------------------------------------------------------------------------------------------------------- Total assets $ 757,864 $ 697,699 - --------------------------------------------------------------------------------------------------------------------- Liabilities And Shareholders' Equity (1) Interest-bearing liabilities: Interest-bearing demand deposits $ 85,141 $ 385 1.81% $ 64,755 $ 165 1.02% Savings deposits 24,468 101 1.66 29,507 77 1.05 Time deposits of $100 or more 46,259 360 3.12 55,083 304 2.22 Other time deposits 41,412 320 3.10 37,231 192 2.07 - --------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 197,280 1,166 2.37 186,576 738 1.59 Short-term borrowings 143 1 2.80 94 -- -- Subordinated debentures 3,700 49 5.31 -- -- -- - --------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities 201,123 1,216 2.43 186,670 738 1.59 Noninterest-bearing liabilities: Demand deposits 98,729 104,913 Accounts and drafts payable 378,199 333,185 Other liabilities 9,040 8,422 - --------------------------------------------------------------------------------------------------------------------- Total liabilities 687,091 633,190 Shareholders' equity 70,773 64,509 Total liabilities and shareholders' equity $ 757,864 $ 697,699 - --------------------------------------------------------------------------------------------------------------------- Net interest income $ 8,185 $ 6,749 Interest spread 3.11% 3.21% Net interest margin 4.82% 4.33% - --------------------------------------------------------------------------------------------------------------------- 1. Balances shown are daily averages. 2. For purposes of these computations, nonaccrual loans are included in the average loan amounts outstanding. Interest on nonaccrual loans is recorded when received as discussed further in Note 1 to the Company's 2004 Consolidated Financial Statements, filed with the Company's 2004 Annual Report on Form 10-K. 3. Interest income on loans includes net loan fees of $32,000 and $49,000 for the Second Quarter of 2005 and 2004, respectively. 4. Interest income is presented on a tax-equivalent basis assuming a tax rate of 35%. The tax-equivalent adjustment was approximately $212,000 and $275,000 for the Second Quarter of 2005 and 2004, respectively. 5. For purposes of these computations, yields on investment securities are computed as interest income divided by the average amortized cost of the investments. -15-

First Half of 2005 First Half of 2004 --------------------------------- ----------------------------------- Interest Interest Average Income/ Yield/ Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate Balance Expense Rate - --------------------------------------------------------------------------------------------------------------------- Assets (1) Earning assets: Loans (2),(3): Taxable $ 503,450 $ 15,259 6.11% $ 460,052 $ 12,753 5.57% Tax-exempt (4) 4,905 158 6.50 5,323 201 7.59 Debt and equity securities (5): Taxable 28,659 375 2.64 25,203 213 1.70 Tax-exempt (4) 38,110 1,108 5.86 43,701 1,351 6.22 Federal funds sold and other short-term investments 97,641 1,248 2.58 79,059 362 .92 - --------------------------------------------------------------------------------------------------------------------- Total earning assets 672,765 18,148 5.44 613,338 14,880 4.88 Nonearning assets: Cash and due from banks 25,496 22,229 Premises and equipment, net 11,994 13,291 Bank owned life insurance 11,184 10,790 Goodwill and other intangibles 9,635 5,024 Other assets 23,387 21,237 Allowance for loan losses (5,963) (5,662) - --------------------------------------------------------------------------------------------------------------------- Total assets 748,498 $ 680,247 - --------------------------------------------------------------------------------------------------------------------- Liabilities And Shareholders' Equity (1) Interest-bearing liabilities: Interest-bearing demand deposits $ 84,601 $ 716 1.71% $ 60,683 $ 244 .81% Savings deposits 24,091 185 1.55 29,947 128 .86 Time deposits of $100 or more 47,415 684 2.91 51,768 571 2.22 Other time deposits 36,819 523 2.86 35,951 362 2.02 - --------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 192,926 2,108 2.20 178,349 1,305 1.47 Short-term borrowings 182 2 2.22 106 Subordinated debentures 3,700 98 5.34 -- -- -- - --------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities 196,808 2,208 2.26 178,455 1,305 1.47 Noninterest-bearing liabilities: Demand deposits 98,043 102,675 Accounts and drafts payable 374,447 326,248 Other liabilities 9,089 8,383 - --------------------------------------------------------------------------------------------------------------------- Total liabilities 678,387 615,761 Shareholders' equity 70,111 64,486 Total liabilities and shareholders' equity 748,498 $ 680,247 - --------------------------------------------------------------------------------------------------------------------- Net interest income $ 15,940 $ 13,575 Interest spread 3.18% 3.41% Net interest margin 4.78% 4.45% - --------------------------------------------------------------------------------------------------------------------- 1. Balances shown are daily averages. 2. For purposes of these computations, nonaccrual loans are included in the average loan amounts outstanding. Interest on nonaccrual loans is recorded when received as discussed further in Note 1 to the Company's 2004 Consolidated Financial Statements, filed with the Company's 2004 Annual Report on Form 10-K. 3. Interest income on loans includes net loan fees of $68,000 and $90,000 for the First Half of 2005 and 2004, respectively. 4. Interest income is presented on a tax-equivalent basis assuming a tax rate of 35%. The tax-equivalent adjustment was approximately $441,000 and $528,000 for the First Half of 2005 and 2004, respectively. 6. For purposes of these computations, yields on investment securities are computed as interest income divided by the average amortized cost of the investments. -16-

Analysis of Net Interest Income Changes The following table presents the changes in interest income and expense between periods due to changes in volume and interest rates. That portion of the change in interest attributable to the combined rate/volume variance has been allocated to rate and volume changes in proportion to the absolute dollar amounts of the change in each. Second Quarter 2005 Over 2004 -------------------------------- (In Thousands) Volume Rate Total - ------------------------------------------------------------------------------- Increase (decrease) in interest income: Loans (1), (2): Taxable $ 703 $ 815 $ 1,518 Tax-exempt (3) (7) (13) (20) Debt and equity securities: Taxable 10 77 87 Tax-exempt (3) (170) (23) (193) Federal funds sold and other short-term investments 42 480 522 - ------------------------------------------------------------------------------- Total interest income 578 1,336 1,914 - ------------------------------------------------------------------------------- Interest expense on: Interest-bearing demand deposits 64 155 219 Savings deposits (15) 39 24 Time deposits of $100 or more (54) 110 56 Other time deposits 24 104 128 Short-term borrowings 0 1 1 Subordinated debentures 25 24 49 - ------------------------------------------------------------------------------- Total interest expense 44 433 477 - ------------------------------------------------------------------------------- Net interest income $ 534 $ 903 $ 1,437 - ------------------------------------------------------------------------------- 1. Average balances include nonaccrual loans. 2. Interest income includes net loan fees. 3. Interest income is presented on a tax-equivalent basis assuming a tax rate of 35%. -17-

First Half 2005 Over 2004 -------------------------------- (In Thousands) Volume Rate Total - ------------------------------------------------------------------------------- Increase (decrease) in interest income: Loans (1), (2): Taxable $ 1,239 $ 1,267 $ 2,506 Tax-exempt (3) (15) (28) (43) Debt and equity securities: Taxable 32 130 162 Tax-exempt (3) (168) (75) (243) Federal funds sold and other short-term investments 102 784 886 - ------------------------------------------------------------------------------- Total interest income 1,190 2,078 3,268 - ------------------------------------------------------------------------------- Interest expense on: Interest-bearing demand deposits 124 348 472 Savings deposits (29) 86 57 Time deposits of $100 or more (51) 164 113 Other time deposits 9 152 161 Short-term borrowings 0 2 2 Subordinated debentures 49 49 98 - ------------------------------------------------------------------------------- Total interest expense 102 801 903 - ------------------------------------------------------------------------------- Net interest income $ 1,088 $ 1,277 $ 2,365 - ------------------------------------------------------------------------------- 1. Average balances include nonaccrual loans. 2. Interest income includes net loan fees. 3. Interest income is presented on a tax-equivalent basis assuming a tax rate of 35%. Allowance and Provision for Loan Losses A significant determinant of the Company's operating results is the provision for loan losses and the level of loans charged off. There was a $200,000 provision made for loan losses during the Second Quarter of 2005 and $150,000 provision made in the Second Quarter of 2004. There was a $400,000 provision made for the First Half of 2005 compared with a $350,000 provision for the First Half of 2004. Net loans recovered for the Second Quarter of 2005 and 2004 were $3,000 and $6,000 respectively. Net loans charged off for the First Half of 2005 were $428,000 compared to net loans recovered of $9,000 for the First Half of 2004. Of the amount charged off in 2005, $425,000 was related to one commercial borrower that ceased operations. The provision for loan losses can vary over time based on an ongoing assessment of the adequacy of the allowance for loan losses. The allowance for loan losses at June 30, 2005 was $6,009,000 and at December 31, 2004 was $6,037,000. The ratio of allowance for loan losses to total loans outstanding at June 30, 2005 was 1.17% compared to 1.21% at December 31, 2004. Nonperforming loans were $658,000 or .13% of total loans at June 30, 2005 compared to $538,000 or .11% of total loans at December 31, 2004. At June 30, 2005, impaired loans totaled $2,798,000, which included $658,000 of nonperforming loans and one other loan with a balance of $2,140,000 that was renegotiated in 2003. Although current under the new terms of the agreement, due to the financial condition of the borrower there still remains risk as to the collectability of all amounts due under the renegotiated agreement. Impaired loans at December 31, 2004 were $2,718,000, which included $538,000 of nonperforming loans and $2,180,000 related to the loan renegotiated in 2003 mentioned above. The allowance for loan losses on impaired loans was $1,115,000 as of June 30, 2005 and there were no impaired loans without an allowance for loan losses. Total impaired loans decreased $829,000 from June 30, 2004 to June 30, 2005. This decrease was primarily due to one loan that had a balance of $713,000 last year that is now current under the terms of the loan agreement. The remaining decrease is due primarily to reductions in principal balance of various impaired loans. These reductions were partially offset by two loans on nonaccrual and in the process of liquidation at June 30, 2005. The first loan, with a balance of $285,000, is expected to be collected once the company is fully liquidated. The second loan, with a balance of $150,000, has a specific reserve set up for the amount of the expected shortfall. -18-

The allowance for loan losses has been established and is maintained to absorb losses inherent in the loan portfolio. An ongoing assessment of risk of loss is performed to determine if the current balance of the allowance is adequate to cover probable losses in the portfolio. A charge or credit is made to expense to cover any deficiency or reduce any excess. The current methodology employed to determine the appropriate allowance consists of two components, specific and general. The Company develops specific valuation allowances on commercial, commercial real estate, and construction loans based on individual review of these loans and our estimate of the borrower's ability to repay the loan given the availability of collateral, other sources of cash flow and collection options available to us. The general component relates to all other loans, which are evaluated based on loan grade. The loan grade assigned to each loan is typically evaluated on an annual basis, unless circumstances require interim evaluation. The Company assigns a reserve amount consistent with each loan's rating category. The reserve amount is based on derived loss experience over prescribed periods. In addition to the amounts derived from the loan grades, a portion is added to the general reserve to take into account other factors including national and local economic conditions, downturns in specific industries including loss in collateral value, trends in credit quality at the Company and the banking industry, and trends in risk rating changes. As part of their examination process, federal and state agencies review the Company's methodology for maintaining the allowance for loan losses and the balance in the account. These agencies may require the Company to increase the allowance for loan losses based on their judgments and interpretations about information available to them at the time of their examination. Summary of Asset Quality The following table presents information as of and for the three and six-month periods ended June 30, 2005 and 2004 pertaining to the Company's provision for loan losses and analysis of the allowance for loan losses. Three Months Ended Six Months Ended June 30 June 30 (Dollars in Thousands) 2005 2004 2005 2004 - ----------------------------------------------------------------------------------------------------------------- Allowance at beginning of period $ 5,806 $ 5,709 $ 6,037 $ 5,506 Provision charged to expense 200 150 400 350 Loans charged off -- -- 448 1 Recoveries on loans previously charged off 3 6 20 10 - ----------------------------------------------------------------------------------------------------------------- Net loans (recovered) charged-off (3) (6) 428 (9) Allowance at end of period $ 6,009 $ 5,865 $ 6,009 $ 5,865 - ----------------------------------------------------------------------------------------------------------------- Loans outstanding: Average $ 514,520 $ 467,292 $ 508,355 $ 463,375 June 30 514,083 474,560 514,083 474,560 Ratio of allowance for loan losses to loans outstanding: Average 1.17% 1.26% 1.18% 1.26% June 30 1.17 1.24 1.17 1.24 Nonperforming loans: Nonaccrual loans $ 658 $ 1,057 $ 658 $ 1,057 Loans past due 90 days or more -- -- -- -- Renegotiated loans 0 2,410 0 2,410 - ----------------------------------------------------------------------------------------------------------------- Total non performing loans $ 658 $ 3,467 $ 658 $ 3,467 Other impaired loans 2,140 $ 160 $ 2,140 $ 160 Foreclosed assets -- $ 1,234 $ -- $ 1,234 - ----------------------------------------------------------------------------------------------------------------- Nonperforming loans as percentage of average loans .13% .74% .13% .74% - ----------------------------------------------------------------------------------------------------------------- The Bank sold the two properties it had been carrying as other real estate owned as of June 30, 2004. One property with a balance of $859,000 was sold in December 2004 at a net loss of $59,000. The second property with a balance of $375,000 was sold during the First Quarter of 2005 at a net gain of $38,000. Operating Expense Total operating expense for the Second Quarter of 2005 increased $1,685,000 or 13% to $14,998,000 compared to the Second Quarter of 2004. Total operating expense for the First Half of 2005 increased $2,745,000 or 10% to $29,540,000 from the First Half of 2004. The increases were due primarily to operating expenses of the Telecom Information Services division which was acquired in August 2004 and expenses related to the growth in processing activity. Operating expenses of the Telecom division were $681,000 and $1,403,000 for the Second Quarter of 2005 and the First Half of 2005, respectively. -19-

Salaries and benefits expense increased $1,309,000 or 14% to $10,610,000 in the Second Quarter of 2005 compared with the Second Quarter of 2004 and increased $2,496,000 or 14% for the First Half of 2005 compared with the First Half of 2004. Salaries and benefits expense related to the Telecom division were $482,000 and $929,000 for the Second Quarter of 2005 and the First Half of 2005, respectively. The balance of the increase was primarily due to increases in profit-sharing expense and additional salaries and benefits necessary to support the increase in processing volume. Occupancy expense for the Second Quarter of 2005 increased $135,000 or 31% to $571,000 from the Second Quarter of 2004 and increased $177,000 or 20% in the First Half of 2005 compared with the First Half of 2004. Occupancy expense related to the Telecom division was $22,000 and $42,000 for the Second Quarter of 2005 and the First Half of 2005, respectively. The remaining increase is due primarily to an increase in rent expense from the Bank expansion into Southern California and moving of two of its existing bank branches to new locations in Missouri. Equipment expense for the Second Quarter of 2005 decreased $156,000 or 16% compared to the Second Quarter of 2004 and decreased $344,000 or 17% for the First Half of 2005 compared with the First Half of 2004. Equipment expense related to Telecom division was $17,000 and $38,000 for the Second Quarter of 2005 and the First Half of 2005, respectively. The decreases relate primarily to software that was capitalized in 2000 and 2001 that is now fully amortized. Amortization of intangible assets increased $44,000 or 57% to $121,000 for the Second Quarter of 2005 and increased $87,000 or 56% to $242,000 for the First Half of 2005. This increase related to the software acquired from the acquisition of the Telecom division. Other operating expense for the Second Quarter of 2005 increased $353,000 or 14% compared to the Second Quarter of 2004 and increased $329,000 or 6% for the First Half of 2005 compared with the First Half of 2004. Other operating expenses of the Telecom division were $193,000 for the Second Quarter of 2005 and $394,000 for the First Half of 2005. Outside services and supplies increased during the Second Quarter of 2005 offsetting reductions in postage and promotional expense for the First Half of 2005. Income tax expense for the Second Quarter of 2005 increased $721,000 or 107% compared to the Second Quarter of 2004 and increased $1,288,000 or 87% for the First Half of 2005 compared with the First Half of 2004. The effective tax rate for the Second Quarter of 2005 was 35% compared with 28% in the Second Quarter of 2004 and was 34% for the First Half of 2005 compared with 29% in 2004. The increase in the effective tax rate was primarily due to the lower relative effect of tax-exempt investment income to total income. Financial Condition Total assets at June 30, 2005 increased $58,239,000 or 8% from December 31, 2004. The most significant changes in asset balances during this period were federal funds sold and other short-term investments that increased $53,538,000 or 83%, investments in debt and equity securities that decreased $13,006,000 or 17% and loans, net of the allowance for loan losses, that increased $13,663,000 or 3%. Loans increased as the Bank continues to expand its customer base. Investments in debt and equity securities decreased as the Company sold $12,952,000 in securities as part of the Company's ongoing asset/liability program to manage liquidity and interest rate risk. Changes in federal funds sold and other short-term investments reflect the Company's daily liquidity position and is affected by the changes in the asset balances listed above and also changes in deposit and accounts and drafts payable balances detailed below. Total liabilities were $702,030,000, an increase of $55,098,000 or 9% from December 31, 2004. Total deposits at June 30, 2005 were $295,329,000, an increase of $19,700,000 or 7%. Accounts and drafts payable were $393,721,000, an increase of $35,248,000 or 10%. Total shareholders' equity at June 30, 2005 was $72,730,000 a $3,141,000 or 5% increase from December 31, 2004. The increase in deposits reflects the Bank's ongoing marketing efforts to attract deposits. Accounts and drafts payable will fluctuate from period-end to period-end due to the payment processing cycle, which results in lower balances on days when checks clear and higher balances on days when checks are issued. For this reason, average balances are a more meaningful measure of accounts and drafts payable (for average balances refer to the tables under the "Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rate and Interest Differential" section of this report). -20-

The increase in total shareholders' equity resulted from net income of $5,351,000; cash received on the exercise of stock options of $134,000; a $44,000 tax benefit on stock awards, $63,000 from the amortization of stock bonus awards offset by dividends paid of $1,545,000 ($.42 per share), the repurchase of 16,545 shares of treasury stock for $586,000 and a decrease in other comprehensive income of $320,000. Liquidity and Capital Resources The balance of liquid assets, or cash and cash equivalents, which include cash and due from banks, federal funds sold and money market funds, was $143,532,000 at June 30, 2005, an increase of $55,989,000 or 64% from December 31, 2004. At June 30, 2005 these assets represented 19% of total assets. These funds are the Company's and its subsidiaries' primary source of liquidity to meet future expected and unexpected loan demand, depositor withdrawals or reductions in accounts and drafts payable. Secondary sources of liquidity include the investment portfolio and borrowing lines. Total investment in debt and equity securities was $64,124,000 at June 30, 2005, a decrease of $13,006,000 or 17% from December 31, 2004. These assets represented 8% of total assets at June 30, 2005. Of this total, 56% were state and political subdivision securities, 34% were U.S. Treasury securities and 10% were U.S. government agencies. Of the total portfolio, 38% matures in one year, 29% matures in one to five years and 33% matures in five or more years. During the First Half of 2005 the Company sold securities with a market value of $12,952,000 and a portion of these funds were reinvested in U.S. Treasury and agency securities. The Bank has unsecured lines at correspondent banks to purchase federal funds up to a maximum of $29,000,000. Additionally, the Bank maintains a line of credit at an unaffiliated financial institution in the maximum amount of $84,535,000 collateralized by securities sold under repurchase agreements. The deposits of the Company's banking subsidiary have historically been stable, consisting of a sizable volume of core deposits related to customers that utilize many other commercial products of the Bank. The accounts and drafts payable generated by the Company has also historically been a stable source of funds. Net cash flows provided by operating activities were $4,840,000 for the First Half of 2005 compared with $3,417,000 for the First Half of 2004. This increase is primarily attributable to $1,804,000 additional net income and other normal fluctuations in other asset and liability accounts. Net cash flows from investing and financing activities fluctuate greatly as the Company actively manages its investment and loan portfolios and customer activity influences changes in deposit and accounts and drafts payable balances. Further analysis of the changes in these account balances is discussed earlier in this report. Due to the daily fluctuations in these account balances, the analysis of changes in average balances, also discussed earlier in this report, can be more indicative of underlying activity than the period-end balances used in the statements of cash flows. Management anticipates that cash and cash equivalents, maturing investments and cash from operations will continue to be sufficient to fund the Company's operations and capital expenditures in 2005. The Company faces market risk to the extent that its net interest income and fair market value of equity are affected by changes in market interest rates. For information regarding the market risk of the Company's financial instruments, see Item 3. "QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK". Risk-based capital guidelines require the Company and the Bank to meet a minimum total capital ratio of 8.0% of which at least 4.0% must consist of Tier 1 capital. Tier 1 capital generally consists of (a) common shareholders' equity (excluding the unrealized market value adjustments on the available-for-sale securities), (b) qualifying perpetual preferred stock and related surplus subject to certain limitations specified by the FDIC, (c) minority interests in the equity accounts of consolidated subsidiaries less (d) goodwill, (e) mortgage servicing rights within certain limits, and (f) any other intangible assets and investments in subsidiaries that the FDIC determines should be deducted from Tier 1 capital. The FDIC also requires a minimum leverage ratio of 3.0%, defined as the ratio of Tier 1 capital less purchased mortgage servicing rights to total assets, for banking organizations deemed the strongest and most highly rated by banking regulators. A higher minimum leverage ratio is required of less highly rated banking organizations. Total capital, a measure of capital adequacy, includes Tier 1 capital, allowance for loan losses, and debt considered equity for regulatory capital purposes. The Company and the Bank continue to exceed all regulatory capital requirements, as evidenced by the following capital amounts and ratios at June 30, 2005 and December 31, 2004: -21-

June 30, 2005 (In Thousands) Amount Ratio - ------------------------------------------------------------------------------- Total capital (to risk-weighted assets) Cass Information Systems, Inc. $ 72,912 11.94% Cass Commercial Bank 37,363 12.46 Tier I capital (to risk-weighted assets) Cass Information Systems, Inc. $ 63,203 10.35% Cass Commercial Bank 33,217 11.08 Tier I capital (to average assets) Cass Information Systems, Inc. $ 63,203 8.44% Cass Commercial Bank 33,217 9.83 - ------------------------------------------------------------------------------- December 31, 2004 (In Thousands) Amount Ratio - ------------------------------------------------------------------------------- Total capital (to risk-weighted assets) Cass Information Systems, Inc. $ 69,238 11.86% Cass Commercial Bank 36,634 12.01 Tier I capital (to risk-weighted assets) Cass Information Systems, Inc. $ 59,501 10.19% Cass Commercial Bank 32,817 10.76 Tier I capital (to average assets) Cass Information Systems, Inc. $ 59,501 7.91% Cass Commercial Bank 32,817 9.46 - ------------------------------------------------------------------------------- Inflation The Company's assets and liabilities are primarily monetary, consisting of cash, cash equivalents, securities, loans, payables and deposits. Monetary assets and liabilities are those that can be converted into a fixed number of dollars. The Company's consolidated balance sheet reflects a net positive monetary position (monetary assets exceed monetary liabilities). During periods of inflation, the holding of a net positive monetary position will result in an overall decline in the purchasing power of a company. Management believes that replacement costs of equipment, furniture, and leasehold improvements will not materially affect operations. The rate of inflation does affect certain expenses, such as those for employee compensation, which may not be readily recoverable in the price of the Company's services. Impact of New Accounting Pronouncements In 2003, the Emerging Issues Task Force ("EITF") reached a consensus on, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" ("EITF 03-1"), which provides guidance to assess whether there have been any events or economic circumstances to indicate that a security is impaired on an other-than-temporary basis. Factors to consider include the length of time the security has had a market value less than the cost basis, the intent and ability of the company to hold the security for a period of time sufficient for a recovery in value, recent events specific to the issuer or industry and for debt securities, external credit rating and recent downgrades. Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value with the write-down recorded as a realized loss. In December 2004, the Financial Accounting Standards Board ("FASB") announced that it will reconsider in its entirety all guidance on disclosing, measuring and recognizing other-than-temporary impairments of debt and equity securities. In June 2005, the FASB decided not to provide additional guidance on the meaning of other than temporary impairment and to issue proposed FSP EITF 03-1-a as final. Until new guidance is issued, companies must continue to comply with the disclosure requirements of EITF 03-1 and all relevant measurement and recognition requirements in other accounting literature. In December 2004, the FASB issued SFAS 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"), which replaced, "Accounting for Stock-Based Compensation" ("SFAS 123") and supersedes Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). SFAS 123R requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in our consolidated statements of income. The accounting provisions of SFAS 123R are effective for fiscal years beginning after June 15, 2005. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. See Note 10 of this report for the pro forma net income and net income per share amounts, for Second Quarter 2005 and 2004, as if we had used a fair-value-based method similar to the methods required under SFAS 123R to measure compensation expense for employee stock incentive awards. Although we have not yet determined whether the adoption of SFAS 123R will result in amounts that are similar to the current pro forma disclosures under SFAS 123, we are evaluating the requirements under SFAS 123R and do not expect the adoption to have a significant adverse impact on our consolidated statements of income and net income per share. -22-

In May 2005, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 154 "Accounting Changes and Error Corrections" as a replacement of APB Opinion No. 20 and FASB Statement No 3. This Statement applies to all voluntary changes in accounting principle and changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. This Statement carries forward without change the guidance contained in APB Opinion No. 20 for reporting the correction of an error in previously issued financial statements and a change in accounting estimate. This Statement also carries forward the guidance in APB Opinion No. 20 requiring justification of a change in accounting principle on the basis of preferability. This Statement shall be effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company is not currently aware of any accounting changes or errors to which the provisions of this Statement will apply. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As described in the Company's Annual Report on Form 10-K for the year ended December 31, 2004, the Company manages its interest rate risk through measurement techniques that include gap analysis and a simulation model. As part of the risk management process, asset/liability management policies are established and monitored by management. The policy objective is to limit the change in annualized net interest income to 15% from an immediate and sustained parallel change in interest rates of 200 basis points. Based on the Company's most recent evaluation, management does not believe the Company's risk position at June 30, 2005 has changed materially from that at December 31, 2004. ITEM 4. CONTROLS AND PROCEDURES The Company maintains disclosure controls and procedures designed to provide reasonable assurance that the information it is required to disclose in the reports it files with the Securities and Exchange Commission ("SEC") is fairly recorded, processed, summarized and reported to management, including the Chief Executive Officer and Principal Financial Officer, within the time periods specified in the rules of the SEC. The Company's Chief Executive and Principal Financial Officers have reviewed and evaluated the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2005 and based on their evaluation, believe that these procedures are adequate and effective to ensure that the Company is able to collect, process and disclose the information it is required to disclose in the reports it files with the SEC within the required time periods. There were no changes in the Second Quarter of 2005 in the Company's internal controls identified by the Chief Executive and Principal Financial Officers in connection with their evaluation that materially affected or are reasonably likely to materially affect the Company's internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company and its subsidiaries are not involved in any pending proceedings other than ordinary routine litigation incidental to its businesses. Management believes none of these proceedings, if determined adversely, would have a material effect on the business or financial condition of the Company or its subsidiaries. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The Company maintains a treasury stock buyback program and as of June 30, 2005 was authorized by the Board of Directors to repurchase up to 83,455 shares of its Common Stock. No shares of the Company's common stock were repurchased in the Second Quarter of 2005. -23-

ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the annual meeting of the shareholders of Cass Information Systems, Inc. held on April 18, 2005, the following proposal was voted on and approved: The following is a summary of votes cast. No broker non-votes were received. Proposal to elect four Directors for a term of three years ending 2008; Withheld For Authority --------- --------- K. Dane Brooksher 2,608,676 51,087 Eric H. Brunngraber 2,611,839 47,924 Bryan S. Chapell 2,599,736 60,027 Benjamin F. Edwards, IV 2,593,486 66,277 ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS Exhibit 31.1 Certification Pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2 Certification Pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. -24-

SIGNATURES Pursuant to the requirements 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. CASS INFORMATION SYSTEMS, INC. DATE: August 5, 2005 By /s/ Lawrence A. Collett --------------------------------- Lawrence A. Collett Chairman and Chief Executive Officer DATE: August 5, 2005 By /s/ Eric H. Brunngraber --------------------------------- Eric H. Brunngraber Vice President-Secretary (Principal Financial and Accounting Officer) -25-

                                                                    Exhibit 31.1

                                  CERTIFICATION

I, Lawrence A. Collett, Chairman and Chief Executive Officer of Cass Information
Systems, Inc., certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Cass Information
      Systems, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13(a)-15(f) and 15d-15(f)) for the registrant and have:

      a)    designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      b)    designed such internal control over financial reporting, or caused
            such internal control over financial reporting to be designed under
            our supervision, to provide reasonable assurance regarding the
            reliability of financial reporting and the preparation of financial
            statements for external purposes in accordance with generally
            accepted accounting principles;

      c)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      d)    disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of registrant's board
      of directors (or persons performing the equivalent functions):

      a)    all significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.


/s/ Lawrence A. Collett
- -----------------------
Lawrence A. Collett
Chairman and Chief Executive Officer
August 5, 2005


                                      -26-

                                                                    Exhibit 31.2

                                  CERTIFICATION

I, Eric H. Brunngraber, Principal Financial and Accounting Officer of Cass
Information Systems, Inc., certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Cass Information
      Systems, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13a-15(f) and 15d-15(f)) for the registrant and have:

      a)    designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      b)    designed such internal control over financial reporting, or caused
            such internal control over financial reporting to be designed under
            our supervision, to provide reasonable assurance regarding the
            reliability of financial reporting and the preparation of financial
            statements for external purposes in accordance with generally
            accepted accounting principles;

      c)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures, as of
            the end of the period covered by this report based on such
            evaluation; and

      d)    disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of registrant's board
      of directors (or persons performing the equivalent functions):

      a)    all significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.


/s/ Eric H. Brunngraber
- -----------------------
Eric H. Brunngraber
Vice President - Secretary
(Principal Financial and Accounting Officer)
August 5, 2005


                                      -27-

                                                                    Exhibit 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cass Information Systems, Inc. ("the
Company") on Form 10-Q for the period ended June 30, 2005 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
Lawrence A. Collett, Chairman and Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

      (1)   The Report fully complies with the requirements of section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The information contained in the Report fairly presents, in all
            material respects, the financial condition and results of operations
            of the Company.


     /s/ Lawrence A. Collett
- ------------------------------------
         Lawrence A. Collett
Chairman and Chief Executive Officer
           August 5, 2005

A signed original of this written statement required by Section 906 has been
provided to Cass Information Systems, Inc. and will be retained by Cass
Information Systems, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.


                                      -28-

                                                                    Exhibit 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cass Information Systems, Inc. ("the
Company") on Form 10-Q for the period ended June 30, 2005 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Eric H.
Brunngraber, Principal Financial and Accounting Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

      (3)   The Report fully complies with the requirements of section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (4)   The information contained in the Report fairly presents, in all
            material respects, the financial condition and results of operations
            of the Company.

       /s/ Eric H. Brunngraber
- ------------------------------------------
           Eric H. Brunngraber
Principal Financial and Accounting Officer
             August 5, 2005

A signed original of this written statement required by Section 906 has been
provided to Cass Information Systems, Inc. and will be retained by Cass
Information Systems, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.


                                      -29-