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).
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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 22, 2021, Cass Information Systems, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter of fiscal 2021. 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 22, 2021, the Company announced that its Board of Directors declared a third quarter dividend of $0.27 per share payable on September 15, 2021 to shareholders of record on September 3, 2021.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit Number |
Description | |
| 99.1 | Press release issued by Cass Information Systems, Inc. dated July 22, 2021. | |
| 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 22, 2021
| CASS INFORMATION SYSTEMS, INC. | ||
| By: | /s/ Eric H. Brunngraber | |
| Name: | Eric H. Brunngraber | |
| Title: | Chairman, President and Chief Executive Officer | |
| By: | /s/ Michael J. Normile | |
| Name: | Michael J. Normile | |
| 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 22, 2021
Cass Information Systems, Inc. Reports
30% Increase in Second Quarter Diluted EPS
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 2021 earnings of $.48 per diluted share, an increase of 30% from the $.37 per diluted share it earned in the second quarter of 2020. Net income for the period was $7.0 million, an increase of 29% from the $5.4 million earned in the same period in 2020.
| 2nd Quarter | % Change |
YTD | % Change | |||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Transportation Invoice Volume |
9.5 million | 7.3 million | 29.7 | 18.2 million | 15.6 million | 17.2 | ||||||
| Transportation Dollar Volume |
$8.9 billion | $5.7 billion | 56.9 | $16.8 billion | $12.2 billion | 38.5 | ||||||
| Facility-related Transaction Volume* |
6.8 million | 6.7 million | 1.8 | 13.8 million | 13.2 million | 4.6 | ||||||
| Facility-related Dollar Volume* |
$3.7 billion | $3.1 billion | 19.4 | $7.4 billion | $6.5 billion | 13.1 | ||||||
| Revenues |
$38.4 million | $33.9 million | 13.2 | $75.5 million | $72.1 million | 4.8 | ||||||
| Net Income |
$7.0 million | $5.4 million | 29.2 | $14.1 million | $13.0 million | 8.6 | ||||||
| Diluted Earnings per Share |
$.48 | $.37 | 29.7 | $.97 | $.89 | 9.0 | ||||||
| * | Includes Energy, Telecom and Waste |
2021 2nd Quarter Recap
Second quarter revenue and net income increased 13% and 29%, respectively, compared to the second quarter of 2020 when the negative economic impact of the pandemic was most pronounced on Cass and its customers.
Transportation volumes for invoices and dollars rose 30% and 57%, respectively. The increases were driven by the stronger performance of the manufacturing sector plus new customer wins. A factor contributing to the dramatic increase in dollar volume was scarcity in carrier supply, which drove prices higher.
Facility-related (electricity, gas, waste and telecom expense management) invoice and dollar volume grew 2% and 19%, respectively, with the increases attributable in part to new business wins in the telecom division. Dollar volumes also improved due to significantly fewer pandemic-related restrictions in the restaurant, retail and hospitality sectors, creating higher utility usage.
Revenues increased 13% due to the aforementioned increase in invoice and dollar volumes and a positive change in the provision for credit losses of $1.0 million reflecting excellent credit quality and improved economic conditions, partially offset by the negative impact of the prevailing market interest rate environment which has led to the decline in our net interest margin from 2.88% to 2.30%.
Consolidated operating expenses were $2.4 million (9%) higher as personnel expense increased due to the increases in transportation and facility-related transaction volumes.
“While we continue to contend with historically low interest rates which suppress our ability to earn interest income on record dollar volumes in transportation, it is exciting to see transaction and dollar volumes rise throughout our business,” noted Eric H. Brunngraber, Cass chairman and chief executive officer. “While the volume increases are somewhat tied to a recovering economy, they also reflect our ability to generate new customer wins and expand our revenue base through strategic investments in payment platforms.”
2021 First Half Recap
For the six-month period ended June 30, 2021, Cass earned $.97 per diluted share, an increase of 9% from the $.89 per diluted share it earned in the same period in 2020. Net income also increased 9% to $14.1 million, compared to $13.0 million in 2020. Revenues rose to $75.5 million, 5% higher than the $72.1 million produced in 2020.
Cash Dividend Declared
On July 20, 2021, the company’s board of directors declared a third quarter dividend of $.27 per share payable September 15, 2021 to shareholders of record September 3, 2021. Cass has continuously paid regularly scheduled cash dividends since 1934.
“Our history of dividend payments combined with the return of more than $5 million to shareholders through share repurchase activity this year reflects our solid operating performance, strong capital base and the board’s continued optimism about the company’s long-term prospects,” 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 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. These risks and uncertainties include the scope, duration and ultimate impact of the COVID-19 pandemic as well as economic and market conditions, risks of credit deterioration, interest rate changes, governmental actions, market volatility, security breaches and technology interruptions, energy prices and competitive factors, among others, as set forth in the Company’s most recent Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission. The Company has used, and intends to continue using, the Investors portion of its website to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, investors are encouraged to monitor Cass’s website in addition to following press releases, SEC filings, and public conference calls and webcasts.
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, 2021 and 2020:
| Quarter Ended June 30, 2021 |
Quarter Ended June 30, 2020 |
Six Months Ended June 30, 2021 |
Six Months Ended June 30, 2020 |
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| Transportation Invoice Volume |
9,461 | 7,294 | 18,248 | 15,574 | ||||||||||||
| Transportation Dollar Volume |
$ | 8,940,889 | $ | 5,697,627 | $ | 16,845,528 | $ | 12,164,678 | ||||||||
| Facility Expense Transaction Volume |
6,827 | 6,704 | 13,823 | 13,213 | ||||||||||||
| Facility Expense Dollar Volume |
$ | 3,657,965 | $ | 3,064,038 | $ | 7,375,393 | $ | 6,522,684 | ||||||||
| Payment and Processing Fees |
$ | 26,348 | $ | 22,661 | $ | 51,564 | $ | 48,164 | ||||||||
| Net Interest Income |
10,811 | 11,161 | 21,156 | 22,534 | ||||||||||||
| (Release of) Provision for Credit / Loan Losses |
(610 | ) | 400 | (1,210 | ) | 725 | ||||||||||
| (Loss) Gain on Sales of Securities |
(3 | ) | — | 45 | 1,069 | |||||||||||
| Other |
642 | 513 | 1,553 | 1,036 | ||||||||||||
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| Total Revenues |
$ | 38,408 | $ | 33,935 | $ | 75,528 | $ | 72,078 | ||||||||
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| Personnel |
$ | 22,880 | $ | 20,891 | $ | 45,406 | $ | 43,318 | ||||||||
| Occupancy |
959 | 938 | 1,906 | 1,879 | ||||||||||||
| Equipment |
1,653 | 1,617 | 3,328 | 3,252 | ||||||||||||
| Other |
4,311 | 3,911 | 7,688 | 7,837 | ||||||||||||
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| Total Operating Expenses |
$ | 29,803 | $ | 27,357 | $ | 58,328 | $ | 56,286 | ||||||||
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| Income from Operations before Income Taxes |
$ | 8,605 | $ | 6,578 | $ | 17,200 | $ | 15,792 | ||||||||
| Income Tax Expense |
1,579 | 1,139 | 3,103 | 2,808 | ||||||||||||
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| Net Income |
$ | 7,026 | $ | 5,439 | $ | 14,097 | $ | 12,984 | ||||||||
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| Basic Earnings per Share |
$ | .49 | $ | .38 | $ | .99 | $ | .90 | ||||||||
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| Diluted Earnings per Share |
$ | .48 | $ | .37 | $ | .97 | $ | .89 | ||||||||
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| Average Earning Assets |
$ | 1,968,646 | $ | 1,624,415 | $ | 1,930,235 | $ | 1,556,144 | ||||||||
| Net Interest Margin |
2.30 | % | 2.88 | % | 2.31 | % | 3.04 | % | ||||||||
| Allowance for Credit Losses /Allowance for Loan Losses to Loans |
1.28 | % | 1.17 | % | 1.28 | % | 1.17 | % | ||||||||
| Non-performing Loans to Total Loans |
— | — | — | — | ||||||||||||
| Net Loan (Recoveries) / Charge-offs to Loans |
— | — | — | — | ||||||||||||