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 19, 2015
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 22, 2015, Cass Information Systems, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2015. 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 19, 2015, the Company’s Board of Directors declared a third quarter dividend of $.22 per share payable December 15, 2015 to shareholders of record December 4, 2015.
Also on October 19, 2015, the Company’s Board of Directors voted to restore the capacity of the Company’s stock repurchase program to 500,000 shares. Repurchases will be made in the open market or through negotiated transactions from time to time, depending on market conditions.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit |
Description | |
| 99.1 | Press release issued by Cass Information Systems, Inc. dated October 22, 2015. | |
2
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 22, 2015
| CASS INFORMATION SYSTEMS, INC. | ||
| By: | /s/ Eric H. Brunngraber | |
| Name: | Eric H. Brunngraber | |
| Title: | Chairman of the Board, President and Chief Executive Officer | |
| By: | /s/ P. Stephen Appelbaum | |
| Name: | P. Stephen Appelbaum | |
| Title: | Chief Financial Officer | |
3
Exhibit 99.1
Contact Kenn Entringer at Casey Communications, (314)721-2828 or kentringer@caseycomm.com
October 22, 2015
Cass Information Systems, Inc. Reports 3rd Quarter 2015 Earnings
Increases Dividend by 5%; Restores Stock Buyback Program Capacity to 500,000 Shares
ST. LOUIS – Cass Information Systems, Inc. (NASDAQ: CASS), the nation’s leading provider of transportation, energy, telecom and waste invoice payment and information services, reported third quarter 2015 earnings of $.51 per diluted share versus the $.55 per diluted share it earned in the third quarter of 2014. Net income for the period was $5.9 million. Cass earned $6.4 million in the third quarter of 2014.
| 3rd Quarter | YTD | |||||||||||||||||||||||
| 2015 | 2014 | % Change |
2015 | 2014 | % Change |
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| Transportation Dollar Volume |
$ | 6.1 billion | $ | 6.7 billion | (8.7 | ) | $ | 18.7 billion | $ | 19.3 billion | (2.8 | ) | ||||||||||||
| Facility Expense Dollar Volume* |
$ | 3.2 billion | $ | 3.3 billion | (2.7 | ) | $ | 8.9 billion | $ | 9.6 billion | (7.1 | ) | ||||||||||||
| Revenue |
$ | 30.6 million | $ | 29.6 million | 3.3 | $ | 90.5 million | $ | 87.6 million | 3.3 | ||||||||||||||
| Net Income |
$ | 5.9 million | $ | 6.4 million | (8.1 | ) | $ | 17.0 million | $ | 18.2 million | (7.0 | ) | ||||||||||||
| Diluted Earnings per Share |
$ | .51 | $ | .55 | (7.3 | ) | $ | 1.47 | $ | 1.57 | (6.4 | ) | ||||||||||||
| * | Includes Energy, Telecom and Waste |
2015 3rd Quarter Recap
Despite generating revenue growth of 3.3% from new customers and services, continuing adverse economic conditions led Cass to post lower third quarter earnings. In the transportation group, transaction volume increased due to new business but the benefits of that growth were more than off-set by a decline in activity from existing customers, especially those involved in oil and gas production. In addition, transportation dollar volume declined as lower fuel prices reduced average invoice amounts. The decrease in dollar volume generated smaller investable balances that reduced net investment income and more significantly, lowered fees from carrier services. Finally, facility expense dollar volume declined as competitor consolidation in the market offset the company’s success in growing new accounts.
Internally, multiple factors contributed to a $1.4 million (6.8%) hike in operating expenses. Chief among them were strategic investment in staff and technology to win and support new business, higher health insurance costs, increased retirement plan expenses and annual merit salary increases.
“We remain firmly committed to our core strategies and are confident in the ability of our businesses to successfully compete over the long-term,” stated Eric H. Brunngraber, Cass chairman of the board and chief executive officer. “Today’s challenges notwithstanding, we will continue to expand and enhance our capabilities by investing in systems and staff capable of supporting a larger customer base.”
Nine-Month 2015 Recap
For the nine-month period ended September 30, 2015, Cass earned $1.47 per diluted share versus the $1.57 per diluted share it earned in the comparable period in 2014. Net income was $17.0 million, or $1.2 million less than the $18.2 million earned in 2014. Revenues rose 3.3% from $87.6 million in 2014 to $90.5 million in 2015.
Operating expenses were up $4.1 million (6.4%), for the reasons previously cited.
Cash Dividend Declared
On October 19, 2015, the company’s board of directors declared a third quarter dividend of $.22 per share payable December 15, 2015 to shareholders of record December 4, 2015. The new quarterly dividend is one cent or 5% higher than the previous pay-out of 21 cents per share. Cass has continuously paid regularly scheduled cash dividends since 1934.
Additionally, after repurchasing more than 220,000 common shares in the past 12 months, the board voted to restore the capacity of the firm’s stock repurchase program to 500,000 shares.
“These actions reflect our strong capital base, continuing revenue growth and the confidence of our directors in the company’s future,” said Brunngraber.
About Cass Information Systems
Cass Information Systems, Inc. is a leading provider of integrated information and payment management solutions. Cass enables enterprises to achieve visibility, control and efficiency in their supply chains, communications networks, facilities and other operations. Disbursing $38 billion annually on behalf of clients, and with total assets of $1.5 billion, Cass is uniquely supported by Cass Commercial Bank. Founded in 1906 and a wholly owned subsidiary, Cass Bank provides sophisticated financial exchange services to the parent organization and its clients. Cass is part of the Russell 2000®. More information is available at www.cassinfo.com.
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, 2014.
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, 2015 and 2014:
| Quarter Ended September 30, 2015 |
Quarter Ended September 30, 2014 |
Nine Months Ended September 30, 2015 |
Nine Months Ended September 30, 2014 |
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| Transportation Invoice Volume |
8,626 | 8,856 | 25,720 | 25,489 | ||||||||||||
| Transportation Dollar Volume |
$ | 6,140,747 | $ | 6,725,524 | $ | 18,739,375 | $ | 19,283,017 | ||||||||
| Facility Expense Transaction Volume |
5,202 | 5,188 | 15,264 | 15,464 | ||||||||||||
| Facility Expense Dollar Volume |
$ | 3,162,787 | $ | 3,250,130 | $ | 8,901,907 | $ | 9,585,101 | ||||||||
| Payment and Processing Fees |
$ | 19,781 | $ | 19,743 | $ | 58,898 | $ | 57,694 | ||||||||
| Net Investment Income |
9,083 | 9,387 | 27,326 | 27,881 | ||||||||||||
| Gain on Sales of Securities |
1,271 | 23 | 2,910 | 23 | ||||||||||||
| Other |
462 | 457 | 1,376 | 2,033 | ||||||||||||
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| Total Revenues |
$ | 30,597 | $ | 29,610 | $ | 90,510 | $ | 87,631 | ||||||||
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| Salaries and Benefits |
$ | 17,761 | $ | 16,515 | $ | 52,630 | $ | 49,166 | ||||||||
| Occupancy |
872 | 783 | 2,565 | 2,345 | ||||||||||||
| Equipment |
1,067 | 945 | 3,208 | 3,092 | ||||||||||||
| Other |
2,934 | 2,953 | 9,179 | 8,924 | ||||||||||||
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| Total Operating Expenses |
$ | 22,634 | $ | 21,196 | $ | 67,582 | $ | 63,527 | ||||||||
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| Income from Operations before Income Taxes |
$ | 7,963 | $ | 8,414 | $ | 22,928 | $ | 24,104 | ||||||||
| Income Tax Expense |
2,083 | 2,013 | 5,961 | 5,857 | ||||||||||||
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| Net Income |
$ | 5,880 | $ | 6,401 | $ | 16,967 | $ | 18,247 | ||||||||
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| Basic Earnings per Share |
$ | .52 | $ | .56 | $ | 1.49 | $ | 1.59 | ||||||||
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| Diluted Earnings per Share |
$ | .51 | $ | .55 | $ | 1.47 | $ | 1.57 | ||||||||
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| Average Earning Assets |
$ | 1,234,469 | $ | 1,243,375 | $ | 1,235,403 | $ | 1,233,136 | ||||||||
| Net Interest Margin |
3.36 | % | 3.43 | % | 3.39 | % | 3.45 | % | ||||||||
| Allowance for Loan Losses to Loans |
1.77 | % | 1.75 | % | 1.77 | % | 1.75 | % | ||||||||
| Non-performing Loans to Total Loans |
.47 | % | .22 | % | .47 | % | .22 | % | ||||||||
| Net Loan (Recoveries) Charge-offs to Loans |
— | — | — | (.03 | %) | |||||||||||
| Provision for Loan Losses |
$ | — | $ | — | $ | — | $ | — | ||||||||