UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): October 24, 2013
CASS INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
| Missouri | 000-20827 | 43-1265338 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| 12444 Powerscourt Drive, Suite 550 St. Louis, Missouri |
63131 | |
| (Address of principal executive offices) | (Zip Code) |
(314) 506-5500
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act. |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act. |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. |
| Item 2.02. | Results of Operations and Financial Condition. |
On October 24, 2013, Cass Information Systems, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2013. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information reported under this Item 2.02 of Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 8.01. | Other Matters. |
On October 22, 2013, the Company’s board of directors declared a fourth quarter cash dividend of $0.20 per share payable on December 16, 2013 to shareholders of record on December 5, 2013.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit Number |
Description | |
| 99.1 | Press release issued by Cass Information Systems, Inc. dated October 24, 2013. | |
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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 hereunto duly authorized.
Dated: October 24, 2013
| CASS INFORMATION SYSTEMS, INC. | ||
| By: | /s/ Eric H. Brunngraber | |
| Name: | Eric H. Brunngraber | |
| Title: | President and Chief Executive Officer | |
| By: | /s/ P. Stephen Appelbaum | |
| Name: | P. Stephen Appelbaum | |
| Title: | Chief Financial Officer | |
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Exhibit 99.1
Contact: Contact Kenn Entringer at Casey Communications, Inc., (314) 721-2828
kentringer@caseycomm.com
October 24, 2013
Cass Information Systems, Inc. Reports 3rd Quarter 2013 Earnings
Boosts Cash Dividend by More Than 11%
ST. LOUIS – Cass Information Systems, Inc. (NASDAQ: CASS), the nation’s leading provider of transportation, energy, telecom and environmental invoice payment and information services reported third quarter 2013 earnings of $.53 per diluted share equaling the earnings it reported in the third quarter of 2012. Net income for the period was $6.1 million, the same as reported in 2012.
| 3rd Quarter | % |
YTD | % |
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||
| Transportation Dollar |
$ | 6.1 billion | $ | 5.6 billion | 9.2 | % | $ | 17.4 billion | $ | 16.6 billion | 4.5 | % | ||||||||||||
| Facility Expense Dollar |
$ | 3.2 billion | $ | 3.0 billion | 8.8 | % | $ | 8.6 billion | $ | 8.3 billion | 3.7 | % | ||||||||||||
| Revenues |
$ | 29.1 million | $ | 27.9 million | 4.1 | % | $ | 86.7 million | $ | 84.8 million | 2.3 | % | ||||||||||||
| Net Income |
$ | 6.1 million | $ | 6.1 million | .8 | % | $ | 18.2 million | $ | 18.0 million | 1.6 | % | ||||||||||||
| Diluted Earnings per Share |
$ | .53 | $ | .53 | — | $ | 1.57 | $ | 1.56 | .6 | % | |||||||||||||
| * | Includes Energy, Telecom and Environmental |
2013 3rd Quarter Recap
Transaction volume, which generates fee income, increased in the transportation, telecom and environmental sectors despite a tepid economy. In the energy sector, even as new sales remain strong, recent competitor consolidation is affecting customer retention resulting in flat transaction volumes.
The detrimental effects of a historically low interest rate environment that continues to erode the company’s net interest margin and undermine earnings growth were evident in the period as Cass net investment income declined $1.3 million, or 12%.
Operating expenses were up for the quarter due to increases in processing volumes plus additional new business which resulted in higher payroll expenses. Occupancy expenses increased due to the expansion of the company’s processing facilities and new headquarters for Cass Commercial Bank and corporate offices.
“As previously noted, while interest rates have been historically low for five years, the impact on Cass is becoming more pronounced as longer-term, higher-yielding assets re-price, mature or are sold,” said Eric Brunngraber, Cass president and chief executive officer. “In the current economic context, our ability to produce earnings equal to a year ago reflects the hard work and dedication of our staff. We will continue to position ourselves to fully benefit from improvements in the economy and interest rate environment.”
Nine-Month 2013 Recap
For the nine-month period ended September 30, 2013, the company earned $1.57 per diluted share, a 1% increase over the $1.56 per diluted share earned in the comparable period of 2012. Net income was $18.2 million, 2% higher than the $18.0 million earned in 2012. Revenues rose 2%, from $84.8 million in 2012 to $86.7 million in 2013.
Operating expenses were up 4%, or $2.3 million, for the reasons previously cited.
Increases Cash Dividend by 11%
On October 22, 2013, the company’s board of directors declared a fourth quarter cash dividend of $.20 per share payable December 16, 2013 to shareholders of record December 5, 2013. The new quarterly dividend is two cents or more than 11% higher than the previous pay-out of 18 cents per share.
“This action of the board reflects the company’s strong capital base and solid performance,” said Brunngraber. Cass has continuously paid regularly scheduled cash dividends since 1934.
About Cass Information Systems
Cass Information Systems is the leading provider of transportation, energy, telecom and environmental invoice payment and information services. The company, which has been involved in the payables services and information support business since 1956, disburses $33 billion annually on behalf of customers from locations in St. Louis, Mo., Columbus, Ohio, Boston, Mass., Greenville, S.C., Wellington, Kansas and Jacksonville, Fla. The support of Cass Commercial Bank, founded in 1906, makes Cass Information Systems unique in the industry. Cass is part of the Russell 2000® Index.
Note to Investors
Certain matters set forth in this news release may contain forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. For a discussion of certain factors that may cause such forward-looking statements to differ materially from the company’s actual results, see the company’s reports filed from time to time with the Securities and Exchange Commission including the company’s annual report on Form 10-K for the year ended December 31, 2012.
Selected Consolidated Financial Data
The following table presents selected unaudited consolidated financial data (in thousands, except per share data) for the periods ended September 30, 2013 and 2012:
| Quarter Ended September 30, 2013 |
Quarter Ended September 30, 2012 |
Nine Months Ended September 30, 2013 |
Nine Months Ended September 30, 2012 |
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| Transportation Invoice Volume |
8,389 | 7,302 | 23,668 | 21,470 | ||||||||||||
| Transportation Dollar Volume |
$ | 6,113,332 | $ | 5,599,551 | $ | 17,398,391 | $ | 16,647,242 | ||||||||
| Facility Expense Transaction Volume |
4,978 | 4,533 | 14,396 | 13,666 | ||||||||||||
| Facility Expense Dollar Volume |
$ | 3,213,889 | $ | 2,954,816 | $ | 8,616,645 | $ | 8,311,803 | ||||||||
| Payment and Processing Fees |
$ | 18,398 | $ | 16,600 | $ | 52,422 | $ | 49,712 | ||||||||
| Net Investment Income |
9,360 | 10,610 | 28,958 | 31,331 | ||||||||||||
| Gain on Sales of Securities |
866 | 267 | 4,003 | 2,401 | ||||||||||||
| Other |
431 | 434 | 1,302 | 1,308 | ||||||||||||
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| Total Revenues |
$ | 29,055 | $ | 27,911 | $ | 86,685 | $ | 84,752 | ||||||||
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| Salaries and Benefits |
$ | 16,460 | $ | 15,919 | $ | 48,998 | $ | 46,978 | ||||||||
| Occupancy |
765 | 497 | 2,109 | 1,588 | ||||||||||||
| Equipment |
970 | 879 | 2,801 | 2,626 | ||||||||||||
| Other |
3,189 | 2,634 | 8,882 | 9,318 | ||||||||||||
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| Total Operating Expenses |
$ | 21,384 | $ | 19,929 | $ | 62,790 | $ | 60,510 | ||||||||
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| Income from Operations before Income Taxes |
$ | 7,671 | $ | 7,982 | $ | 23,895 | $ | 24,242 | ||||||||
| Income Tax Expense |
1,533 | 1,890 | 5,652 | 6,280 | ||||||||||||
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| Net Income |
$ | 6,138 | $ | 6,092 | $ | 18,243 | $ | 17,962 | ||||||||
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| Basic Earnings per Share |
$ | .54 | $ | .53 | $ | 1.60 | $ | 1.58 | ||||||||
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| Diluted Earnings per Share |
$ | .53 | $ | .53 | $ | 1.57 | $ | 1.56 | ||||||||
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| Average Earning Assets |
$ | 1,210,560 | $ | 1,229,687 | $ | 1,184,662 | $ | 1,199,950 | ||||||||
| Net Interest Margin |
3.45 | % | 3.86 | % | 3.72 | % | 4.02 | % | ||||||||
| Allowance for Loan Losses to Loans |
1.84 | % | 1.81 | % | 1.84 | % | 1.81 | % | ||||||||
| Non-performing Loans to Total Loans |
.30 | % | .72 | % | .30 | % | .72 | % | ||||||||
| Net Loan (Recoveries) Charge-offs to Loans |
(.05 | %) | .04 | % | .19 | % | .21 | % | ||||||||
| Provision for Loan Losses |
$ | — | $ | — | $ | 500 | $ | 800 | ||||||||