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:
| 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. |
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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 January 28, 2021, Cass Information Systems, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year ended December 31, 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. |
On January 28, 2021, the Company also announced that its Board of Directors declared a first quarter cash dividend of $0.27 per share payable on March 15, 2021 to shareholders of record on March 5, 2021. A copy of the press release 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 January 28, 2021. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
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: January 28, 2021
| 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 | |
Exhibit 99.1
Contact: Kenn Entringer at Casey Communications, Inc., (314) 721-2828. kentringer@caseycomm.com
January 28, 2021
Cass Information Systems, Inc. Reports
Fourth Quarter Diluted Earnings Up 2%
ST. LOUIS – Cass Information Systems, Inc. (Nasdaq: CASS), the leading provider of transportation, energy, telecom and waste invoice payment and information services, reported fourth quarter 2020 earnings of $.44 per diluted share, an increase of 2% from the $.43 per diluted share it earned in the fourth quarter of 2019. While revenue was 5% lower, net income was 1% higher compared to 2019’s fourth quarter.
| 4th Quarter | YTD | |||||||||||
| 2020 | 2019 | % Change |
2020 | 2019 | % Change | |||||||
| Transportation Invoice Volume |
9.0 million | 8.6 million | 3.6 | 33.2 million | 36.0 million | (7.9) | ||||||
| Transportation Dollar Volume |
$7.5 billion | $6.9 billion | 9.5 | $26.5 billion | $28.1 billion | (5.6) | ||||||
| Facility Expense Transaction Volume* |
7.0 million | 6.5 million | 7.2 | 27.3 million | 27.5 million | (0.8) | ||||||
| Facility Expense Dollar Volume* |
$3.3 billion | $3.4 billion | (2.2) | $13.5 billion | $14.9 billion | (9.6) | ||||||
| Revenues |
$37.1 million | $38.9 million | (4.6) | $145.0 million | $157.2 million | (7.8) | ||||||
| Net Income |
$6.4 million | $6.4 million | 0.6 | $25.2 million | $30.4 million | (17.2) | ||||||
| Diluted EPS |
$.44 | $.43 | 2.3 | $1.73 | $2.07 | (16.4) | ||||||
| * | Includes Energy, Telecom and Waste |
2020 4th Quarter Recap
Higher net investment income, lower operating and income tax expenses and a notable strengthening in the transportation sector fueled the improvement in net income. The regression in revenue stemmed from historically low interest rates and the ongoing impact of the COVID-19 pandemic on Cass customers. However, the year-over-year quarterly decline was significantly less than what Cass experienced in the second and third quarters given the strengthening in the transportation sector.
Transportation volumes for invoices and dollars increased 4% and 10% respectively. With strong performance from the manufacturing sector, this was the first quarter in 2020 where volumes surpassed 2019 levels. The consistent addition of new business throughout 2020 and a more stable foundation of current customer volumes are encouraging factors for growth in 2021.
Growth in new business enabled facility-related (electricity, gas, waste and telecom expense management) invoice volumes to increase 7%, overcoming a number of COVID-related bankruptcies and location closings. Telecom showed continued strength in global engagements, both in new business and pipelines. Facility dollar volumes dipped 2% as governmental restrictions in the restaurant, retail and hospitality sectors curtailed business hours and consumers continued to be cautious about travel and entertainment, both creating lower utility usage. As states continue to re-open their economies, it is anticipated that usage will gradually return to normal.
Consolidated operating expenses decreased $1,124,000 (4%) due to lower personnel expense and a COVID-associated decline in travel and other business development activities.
Summary and Outlook
“It is a testament to the efforts of our team that the company achieved year-over-year growth in fourth quarter net income despite the headwinds presented by COVID-19,” noted Eric H. Brunngraber, Cass chairman and chief executive officer. “While challenges remain, being a flexible and reliable business partner is proving to be a critical benefit to our clients. In addition, the continued expansion of our customer base sets the stage for further recovery in our financial results once the negative forces of the pandemic subside.”
2020 Full Year Recap
For the year ended December 31, 2020, Cass earned $1.73 per diluted share, a decrease of 16% over the $2.07 per diluted share it earned in 2019. Net income was $25.2 million, compared to $30.4 million in 2019. Revenues dropped 8%, from $157.2 million in 2019 to $145.0 million in 2020.
Consolidated operating expenses were down 4%, or $5.2 million, due to lower transaction volumes for the full year.
Remote Workforce Continuing
Cass also reported that it continues to operate its remote workforce program with most of its employees around the globe.
Cash Dividend Declared
On January 26, 2021, the company’s board of directors declared a first quarter dividend of $.27 per share payable March 15, 2021 to shareholders of record March 5, 2021. Cass has continuously paid regularly scheduled cash dividends since 1934.
“Our history of uninterrupted dividend payments combined with share repurchase activity that has returned over $35 million to shareholders during the last five years reflect the company’s commitment to rewarding shareholders,” Brunngraber stated.
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 $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 December 31, 2020 and 2019:
| Quarter Ended December 31, 2020 |
Quarter Ended December 31, 2019 |
Year Ended December 31, 2020 |
Year Ended December 31, 2019 |
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| Transportation Invoice Volume |
8,950 | 8,636 | 33,184 | 36,042 | ||||||||||||
| Transportation Dollar Volume |
$ | 7,529,560 | $ | 6,878,768 | $ | 26,516,803 | $ | 28,090,514 | ||||||||
| Facility Expense Transaction Volume |
6,962 | 6,496 | 27,292 | 27,525 | ||||||||||||
| Facility Expense Dollar Volume |
$ | 3,339,960 | $ | 3,413,832 | $ | 13,458,230 | $ | 14,882,728 | ||||||||
| Payment and Processing Fees |
$ | 24,664 | $ | 26,903 | $ | 97,204 | $ | 107,953 | ||||||||
| Net Investment Income |
11,892 | 11,513 | 44,515 | 47,166 | ||||||||||||
| Gain on Sales of Securities |
6 | — | 1,075 | 19 | ||||||||||||
| Other |
570 | 519 | 2,162 | 2,097 | ||||||||||||
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| Total Revenues |
$ | 37,132 | $ | 38,935 | $ | 144,956 | $ | 157,235 | ||||||||
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| Personnel |
$ | 22,223 | $ | 22,489 | $ | 88,062 | $ | 91,083 | ||||||||
| Occupancy |
930 | 988 | 3,739 | 3,918 | ||||||||||||
| Equipment |
1,668 | 1,565 | 6,568 | 6,140 | ||||||||||||
| Other |
4,828 | 5,731 | 16,246 | 18,628 | ||||||||||||
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| Total Operating Expenses |
$ | 29,649 | $ | 30,773 | $ | 114,615 | $ | 119,769 | ||||||||
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| Income from Operations before Income Taxes |
$ | 7,483 | $ | 8,162 | $ | 30,341 | $ | 37,466 | ||||||||
| Income Tax Expense |
1,072 | 1,791 | 5,165 | 7,062 | ||||||||||||
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| Net Income |
$ | 6,411 | $ | 6,371 | $ | 25,176 | $ | 30,404 | ||||||||
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| Basic Earnings per Share |
$ | .45 | $ | .44 | $ | 1.75 | $ | 2.11 | ||||||||
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| Diluted Earnings per Share |
$ | .44 | $ | .43 | $ | 1.73 | $ | 2.07 | ||||||||
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| Average Earning Assets |
$ | 1,847,652 | $ | 1,520,342 | $ | 1,674,297 | $ | 1,472,399 | ||||||||
| Net Interest Margin |
2.68 | % | 3.14 | % | 2.82 | % | 3.36 | % | ||||||||
| Allowance for Credit Losses to Loans |
1.34 | % | 1.37 | % | 1.34 | % | 1.37 | % | ||||||||
| Non-performing Loans to Total Loans |
— | — | — | — | ||||||||||||
| Net Loan (Recoveries) / Charge-offs to Loans |
— | (.01 | ) | — | (.01 | ) | ||||||||||
| Provision for Credit Losses |
$ | 85 | $ | — | $ | 810 | $ | 250 | ||||||||