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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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:
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| 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. |
Securities registered pursuant to Section 12(b) of the Act:
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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).
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 October 22, 2020, Cass Information Systems, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 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 Matters. |
On October 22, 2020, the Company also announced that its Board of Directors declared a fourth quarter cash dividend of $0.27 per share payable on December 15, 2020 to shareholders of record on December 4, 2020. Additionally, the Board of Directors voted to restore the capacity of the Company’s common 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. As of March 16, 2020, the Company has temporarily suspended the common stock repurchase program.
A copy of the press release announcing these matters is attached hereto as Exhibit 99.1 and incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit |
Description | |
| 99.1 | Press release issued by Cass Information Systems, Inc. dated October 22, 2020. | |
| 104 | Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL). | |
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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 22, 2020
| 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: | 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
October 22, 2020
Cass Information Systems, Inc. Reports Third 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 third quarter 2020 earnings of $.40 per diluted share, a decrease of 29% from the $.56 per diluted share it earned in the third quarter of 2019. Net income for the period was $5.8 million, compared to $8.2 million in 2019.
| 3rd Quarter | % Change |
YTD | % Change |
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| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||
| Transportation Invoice Volume |
8.7 million | 9.2 million | (6.2 | ) | 24.2 million | 27.4 million | (11.6 | ) | ||||||||||||||||
| Transportation Dollar Volume |
$ | 6.8 billion | $ | 7.1 billion | (4.0 | ) | $ | 19.0 billion | $ | 21.2 billion | (10.5 | ) | ||||||||||||
| Facility Expense Transaction Volume* |
7.1 million | 7.1 million | (0.4 | ) | 20.3 million | 21.0 million | (3.3 | ) | ||||||||||||||||
| Facility Expense Dollar Volume* |
$ | 3.6 billion | $ | 4.1 billion | (12.7 | ) | $ | 10.1 billion | $ | 11.5 billion | (11.8 | ) | ||||||||||||
| Revenues |
$ | 35.7 million | $ | 40.5 million | (11.8 | ) | $ | 107.8 million | $ | 118.3 million | (8.9 | ) | ||||||||||||
| Net Income |
$ | 5.8 million | $ | 8.2 million | (29.4 | ) | $ | 18.8 million | $ | 24.0 million | (21.9 | ) | ||||||||||||
| Diluted Earnings per Share |
$ | .40 | $ | .56 | (28.6 | ) | $ | 1.29 | $ | 1.64 | (21.3 | ) | ||||||||||||
| * | Includes Energy, Telecom and Waste |
2020 3rd Quarter Recap
Third quarter revenue decreased 12% and net income was down 29% compared to 2019’s third quarter – which holds the distinction of being the most profitable quarter in the history of Cass. Contributing to the declines were the impact of COVID-19 on Cass customers and the commitment of the U.S. Federal Reserve to hold interest rates at near-zero levels. Lower energy prices also had a negative impact on results.
Transportation volumes for invoices and dollars declined 6% and 4%, respectively. Volumes are trending to pre-COVID levels led by a manufacturing sector that has been in expansion territory for the previous four months. The improvement in this sector, along with the continued addition of new customers to its roster, has created a more stable foundation for growth should the economic recovery continue.
Increased new business enabled facility-related (electricity, gas, waste and telecom expense management) invoice volumes to remain virtually unchanged despite a number of COVID-related bankruptcies and location closings. Dollar volumes dipped 13% as governmental restrictions in the restaurant, retail and hospitality sectors curtailed normal activities which were reflected in lower utility usage. As states open up, it is likely this is a temporary condition.
Consolidated operating expenses were $1.9 million (6%) lower as personnel expense decreased due to lower transportation and facility-related transaction volumes.
Summary and Outlook
“Now more than six months into this pandemic, I continue to be pleased with how our team is navigating the significant challenges it presents and that the company remains profitable and financially strong,” noted Eric H. Brunngraber, Cass chairman and chief executive officer. “Being a flexible and reliable business partner is proving to be a critical benefit to our clients during this unprecedented period. Additionally, continuing new customer wins sets the stage for a recovery in our earnings once the negative impacts of the pandemic subside.”
2020 Nine-Month Recap
For the nine-month period ended September 30, 2020, Cass earned $1.29 per diluted share, a decrease of 21% from the $1.64 per diluted share it earned in the same period in 2019. Net income was $18.8 million, compared to $24.0 million in 2019. Revenues declined 9%, from $118.3 million in 2019 to $107.8 million in 2020.
Consolidated operating expenses were down 5%, or $4.0 million, due to the lower transaction volumes previously cited.
Remote Workforce Continuing
Cass also reported that it continues to operate its remote workforce program with most of its employees around the globe.
Cass Bank CARES Act Recap
In conjunction with the Coronavirus Aid, Relief, and Economic Security Act, Cass Bank processed nearly 350 applications for Paycheck Protection Program loans totaling approximately $170 million, primarily to existing bank customers.
Cash Dividend Declared
On October 20, 2020, the company’s board of directors declared a fourth quarter dividend of $.27 per share payable December 15, 2020 to shareholders of record December 4, 2020. Cass has continuously paid regularly scheduled cash dividends since 1934.
“The on-going quarterly payouts demonstrate 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 more than $60 billion annually on behalf of clients, and with total assets of $2 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 September 30, 2020 and 2019:
| Quarter Ended September 30, 2020 |
Quarter Ended September 30, 2019 |
Nine Months Ended September 30, 2020 |
Nine Months Ended September 30, 2019 |
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| Transportation Invoice Volume |
8,660 | 9,236 | 24,234 | 27,406 | ||||||||||||
| Transportation Dollar Volume |
$ | 6,822,565 | $ | 7,104,771 | $ | 18,987,243 | $ | 21,211,746 | ||||||||
| Facility Expense Transaction Volume |
7,117 | 7,143 | 20,330 | 21,029 | ||||||||||||
| Facility Expense Dollar Volume |
$ | 3,595,586 | $ | 4,118,393 | $ | 10,118,270 | $ | 11,468,896 | ||||||||
| Payment and Processing Fees |
$ | 24,376 | $ | 27,741 | $ | 72,540 | $ | 81,050 | ||||||||
| Net Investment Income |
10,814 | 12,274 | 32,623 | 35,653 | ||||||||||||
| Gain (Loss) on Sales of Securities |
— | — | 1,069 | 19 | ||||||||||||
| Other |
556 | 521 | 1,592 | 1,578 | ||||||||||||
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| Total Revenues |
$ | 35,746 | $ | 40,536 | $ | 107,824 | $ | 118,300 | ||||||||
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| Personnel |
$ | 22,521 | $ | 23,514 | $ | 65,839 | $ | 68,594 | ||||||||
| Occupancy |
930 | 973 | 2,809 | 2,930 | ||||||||||||
| Equipment |
1,648 | 1,554 | 4,900 | 4,575 | ||||||||||||
| Other |
3,581 | 4,522 | 11,418 | 12,897 | ||||||||||||
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| Total Operating Expenses |
$ | 28,680 | $ | 30,563 | $ | 84,966 | $ | 88,996 | ||||||||
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| Income from Operations before Income Taxes |
$ | 7,066 | $ | 9,973 | $ | 22,858 | $ | 29,304 | ||||||||
| Income Tax Expense |
1,285 | 1,787 | 4,093 | 5,271 | ||||||||||||
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| Net Income |
$ | 5,781 | $ | 8,186 | $ | 18,765 | $ | 24,033 | ||||||||
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| Basic Earnings per Share |
$ | .40 | $ | .57 | $ | 1.31 | $ | 1.66 | ||||||||
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| Diluted Earnings per Share |
$ | .40 | $ | .56 | $ | 1.29 | $ | 1.64 | ||||||||
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| Average Earning Assets |
$ | 1,734,679 | $ | 1,498,470 | $ | 1,616,090 | $ | 1,456,242 | ||||||||
| Net Interest Margin |
2.59 | % | 3.38 | % | 2.87 | % | 3.44 | % | ||||||||
| Allowance for Loan Losses to Loans |
1.20 | % | 1.37 | % | 1.20 | % | 1.37 | % | ||||||||
| Non-performing Loans to Total Loans |
— | — | — | — | ||||||||||||
| Net Loan (Recoveries) / Charge-offs to Loans |
— | — | — | — | ||||||||||||
| Provision for Loan Losses |
$ | — | $ | — | $ | 725 | $ | 250 | ||||||||