UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
On July 23, 2020, Cass Information Systems, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter of fiscal 2020. 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 Events. |
Also on July 23, 2020, the Company announced that its Board of Directors declared a third quarter dividend of $0.27 per share payable on September 15, 2020 to shareholders of record on September 4, 2020.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit |
Description | |
| 99.1 | Press release issued by Cass Information Systems, Inc. dated July 23, 2020. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
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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: July 23, 2020
| CASS INFORMATION SYSTEMS, INC. | ||
| By: | /s/ Eric H. Brunngraber | |
| Name: | Eric H. Brunngraber | |
| Title: | Chairman, President and Chief Executive Officer | |
| By: | /s/ P. Stephen Appelbaum | |
| Name: | P. Stephen Appelbaum | |
| Title: | Executive Vice President and Chief Financial Officer | |
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Exhibit 99.1
Contact: Contact Kenn Entringer at Casey Communications, Inc., (314) 721-2828.
kentringer@caseycomm.com
July 23, 2020
Cass Information Systems, Inc. Reports Second Quarter Earnings
ST. LOUIS – Cass Information Systems, Inc. (Nasdaq: CASS), the leading provider of transportation, energy, telecom and waste invoice payment and information services, reported second quarter 2020 earnings of $.37 per diluted share, a decrease of 29% from the $.52 per diluted share it earned in the second quarter of 2019. Net income for the period was $5.4 million, compared to $7.7million in 2019.
| 2nd Quarter | YTD | |||||||||||||||||||||||
| 2020 | 2019 | % Change |
2020 | 2019 | % Change |
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| Transportation Invoice Volume |
7.3 million | 9.2 million | (20.9 | ) | 15.6 million | 18.2 million | (14.3 | ) | ||||||||||||||||
| Transportation Dollar Volume |
$ | 5.7 billion | $ | 7.1 billion | (20.0 | ) | $ | 12.2 billion | $ | 14.1 billion | (13.8 | ) | ||||||||||||
| Facility Expense Transaction Volume* |
6.7 million | 6.9 million | (2.7 | ) | 13.2 million | 13.9 million | (4.8 | ) | ||||||||||||||||
| Facility Expense Dollar Volume* |
$ | 3.1 billion | $ | 3.7 billion | (17.9 | ) | $ | 6.5 billion | $ | 7.4 billion | (11.3 | ) | ||||||||||||
| Revenues |
$ | 33.9 million | $ | 39.4 million | (13.9 | ) | $ | 72.1 million | $ | 77.8 million | (7.3 | ) | ||||||||||||
| Net Income |
$ | 5.4 million | $ | 7.7 million | (29.2 | ) | $ | 13.0 million | $ | 15.8 million | (18.1 | ) | ||||||||||||
| Diluted Earnings per Share |
$ | .37 | $ | .52 | (28.8 | ) | $ | .89 | $ | 1.08 | (17.6 | ) | ||||||||||||
| * | Includes Energy, Telecom and Waste |
2020 2nd Quarter Recap
Second quarter revenue decreased 14% with net income down 29%. The dramatic impact of COVID-19 on the company’s customers led to the declines, compounded by the decision of the U.S. Federal Reserve to lower interest rates to near-zero levels. The general economic slowdown and lower energy prices also hurt results.
Transportation volumes for invoices and dollars declined 21% and 20%, respectively. With manufacturing companies representing an important component of the transportation customer base, the previously reported contraction in the sector, combined with the effects of COVID-19, created significant challenges. Nevertheless, the division continues to grow its customer roster, which should provide a solid foundation for recovery.
Facility-related (electricity, gas, waste and telecom expense management) invoice and dollar volume declined 3% and 18%, respectively, as the impact of COVID-19 spawned customer bankruptcies or significant losses in dollar volume in the restaurant, retail and hospitality sectors as customers either temporarily closed locations or operated with minimal services. Otherwise, the company’s facility-related customer lineup remains stable, offering optimism about rebound prospects.
Consolidated operating expenses were $2.6 million (9%) lower as personnel expense decreased due to the decline in transportation and facility-related transaction volumes.
Remote Workforce Success
Cass continues to successfully operate its remote workforce program with most employees around the globe now working and conducting business remotely. The company will continue operating in this fashion until the risks related to the pandemic subside and the safety and health of its employees can be assured.
Cass Bank CARES Act Participation
In support of the Coronavirus Aid, Relief, and Economic Security Act, Cass Bank processed nearly 350 applications for Paycheck Protection Program loans of approximately $170 million to provide cash to small business and self-employed taxpayers during the COVID-19 crisis. The loans were primarily made to bank customers and are 100% guaranteed by the Small Business Administration.
“While these are not the financial results we prefer to report, I am pleased that the company has remained financially strong and profitable during these unprecedented times,” noted Eric H. Brunngraber, Cass chairman and chief executive officer. “The pandemic’s dramatic impact on the economy has shown the value of being a strong and reliable business partner. We are encouraged by the fact that we continue to sign new business. It bodes well for the future, especially when base business activity returns.”
2020 First Half Recap
For the six-month period ended June 30, 2020, Cass earned $.89 per diluted share, a decrease of 18% from the $1.08 per diluted share it earned in the same period in 2019. Net income was $13.0 million, compared to $15.8 million in 2019. Revenues declined 7%, from $77.8 million in 2019 to $72.1 million in 2020.
Consolidated operating expenses were down 4%, or $2.1 million, due to the lower transaction volumes previously cited.
Cash Dividend Declared
On July 21, 2020, the company’s board of directors declared a third quarter dividend of $.27 per share payable September 15, 2020 to shareholders of record September 4, 2020. Cass has continuously paid regularly scheduled cash dividends since 1934.
“The on-going dividend payments reflect the board’s confidence in the company’s long-term prospects, underpinned by its strong capital base,” Brunngraber noted.
About Cass Information Systems
Cass Information Systems, Inc. is a leading provider of integrated information and payment management solutions. Cass enables enterprises to achieve visibility, control and efficiency in their supply chains, communications networks, facilities and other operations. Disbursing over $60 billion annually on behalf of clients, and with total assets of $1.7 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, 2019.
Selected Consolidated Financial Data
The following table presents selected unaudited consolidated financial data (in thousands, except per share data) for the periods ended June 30, 2020 and 2019:
| Quarter Ended June 30, 2020 |
Quarter Ended June 30, 2019 |
Six Months Ended June 30, 2020 |
Six Months Ended June 30, 2019 |
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| Transportation Invoice Volume |
7,294 | 9,222 | 15,574 | 18,170 | ||||||||||||
| Transportation Dollar Volume |
$ | 5,697,627 | $ | 7,121,202 | $ | 12,164,678 | $ | 14,106,975 | ||||||||
| Facility Expense Transaction Volume |
6,704 | 6,892 | 13,213 | 13,886 | ||||||||||||
| Facility Expense Dollar Volume |
$ | 3,064,038 | $ | 3,733,075 | $ | 6,522,684 | $ | 7,350,503 | ||||||||
| Payment and Processing Fees |
$ | 22,661 | $ | 26,852 | $ | 48,164 | $ | 53,309 | ||||||||
| Net Investment Income |
10,761 | 12,022 | 21,809 | 23,379 | ||||||||||||
| Gain on Sales of Securities |
— | 8 | 1,069 | 19 | ||||||||||||
| Other |
513 | 512 | 1,036 | 1,057 | ||||||||||||
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| Total Revenues |
$ | 33,935 | $ | 39,394 | $ | 72,078 | $ | 77,764 | ||||||||
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| Personnel |
$ | 20,891 | $ | 22,803 | $ | 43,318 | $ | 45,080 | ||||||||
| Occupancy |
938 | 998 | 1,879 | 1,957 | ||||||||||||
| Equipment |
1,617 | 1,552 | 3,252 | 3,021 | ||||||||||||
| Other |
3,911 | 4,618 | 7,837 | 8,375 | ||||||||||||
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| Total Operating Expenses |
$ | 27,357 | $ | 29,971 | $ | 56,286 | $ | 58,433 | ||||||||
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| Income from Operations before Income Taxes |
$ | 6,578 | $ | 9,423 | $ | 15,792 | $ | 19,331 | ||||||||
| Income Tax Expense |
1,139 | 1,739 | 2,808 | 3,484 | ||||||||||||
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| Net Income |
$ | 5,439 | $ | 7,684 | $ | 12,984 | $ | 15,847 | ||||||||
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| Basic Earnings per Share |
$ | .38 | $ | .53 | $ | .90 | $ | 1.10 | ||||||||
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| Diluted Earnings per Share |
$ | .37 | $ | .52 | $ | .89 | $ | 1.08 | ||||||||
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| Average Earning Assets |
$ | 1,624,415 | $ | 1,430,983 | $ | 1,556,143 | $ | 1,434,777 | ||||||||
| Net Interest Margin |
2.88 | % | 3.52 | % | 3.04 | % | 3.47 | % | ||||||||
| Allowance for Loan Losses to Loans |
1.17 | % | 1.33 | % | 1.17 | % | 1.33 | % | ||||||||
| Non-performing Loans to Total Loans |
— | — | — | — | ||||||||||||
| Net Loan (Recoveries) / Charge-offs to Loans |
— | — | — | — | ||||||||||||
| Provision for Loan Losses |
$ | 400 | $ | — | $ | 725 | $ | 250 | ||||||||