CASS INFORMATION SYSTEMS INC
For the period ended Mar 31, 2025. Filed May 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
CASS$54.18-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000708781-24-000091
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000708781-25-000063
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 111 previous paragraphs and 93 current paragraphs.
37 unchanged; 33 reworded; 21 added; 35 removed; 6 previous and 2 current paragraphs rearranged.
Tables are not compared: 10 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Recent Items of Note
Current report
Net interest income increased 2.7 million, or 16.3%. The increase in net interest income was attributable to the net interest margin improving to 3.75% as compared to 3.26% in the same period last year, in addition to an increase in average interest-earning assets of $41.4 million, or 2.0%. The Company generally benefits from a higher interest rate environment due to a large percentage of its funding sources being non-interest bearing.
Current report
On April 7, 2025, the Company signed an Asset Purchase Agreement providing for the sale of its telecom expense management and managed mobility solutions business unit (TEM Business Unit) to Asignet USA Inc. The Asset Purchase Agreement with Asignet (the "Asignet Agreement") reflects a purchase price of $18.0 million with a closing date expected in the second quarter of 2025, pending the ability to meet certain closing conditions.
Current report
Discontinued Operations
Current report
The Company has applied discontinued operations accounting in accordance with Accounting Standards Codification, or ASC, Topic 205-20, “Presentation of Financial Statements – Discontinued Operations,” to the assets and liabilities being sold related to the Company's TEM Business Unit as of March 31, 2025 and December 31, 2024, and for the three-months ended March 31, 2025, and 2024, as applicable. All financial information in this Quarterly Report on Form 10-Q is reported on a continuing operations basis, unless otherwise noted. See Note 2 and Note 16 to our consolidated financial statements for further discussion regarding discontinued operations and subsequent events associated with discontinued operations.
Current report
Includes utility and waste.
Current report
Processing fees decreased $390,000, or 2.3%, primarily attributable to decrease in transportation invoice volumes of 4.7%, partially offset by the increase in facility expense invoice volumes of 2.7%.
Current report
Financial fees decreased $637,000, or 6.0%, primarily attributable to a decline in transportation dollar volumes of 3.3% and related decline in average payments in advance of funding of 10.7%.
Current report
The average balance of interest-bearing deposits decreased $3.4 million, or 0.5%, to $628.2 million. Average non-interest-bearing demand deposits decreased $42.7 million, or 9.5%, to $405.2 million. The Company has experienced deposit attrition due to a decrease in the overall level of some larger commercial deposits due to client funding needs for acquisitions and other purposes. The average rate paid on interest-bearing deposits decreased 64 basis points to 2.66% due to the reduction in short-term interest rates in the last four months of 2024.
Current report
Average accounts and drafts payable increased $57.9 million, or 5.7%, to $1.07 billion. The increase in average accounts and drafts payable was primarily driven by the increase in facility dollar volumes of 16.1%.
Current report
Personnel expenses increased $372,000, or 1.4%. Salaries and commissions increased $194,000, or 0.9%, as a result of merit increases and the December 2024 acquisition of AcuAudit, partially offset by a decrease in average full-time equivalent employees of 3.4% due to strategic investments in various technology initiatives. Net periodic pension cost was $0 for the first quarter of 2025 as compared to $195,000 in the first quarter of 2024 due to the termination of the Company’s noncontributory defined-benefit pension plan in the fourth quarter of 2024. Other benefits increased $327,000, or 7.2%, due to higher health insurance costs, partially offset by the decline in average FTEs.
Current report
The Company recorded a bad debt recovery of $2.0 million related to partial consideration received in a litigation settlement as more fully described in Note 8 to the consolidated financial statements.
Current report
Net Income from Discontinued Operations
Current report
Net income from discontinued operations was $415,000, an increase of $327,000 over the same period in the prior year. The increase is primarily due to a decrease in operating expense in the TEM Business Unit of $372,000 due to a decline in facility transaction volumes and related staffing needs.
Current report
Payments in advance of funding decreased $33.2 million, or 15.9%, primarily due to a 3.3% decrease in transportation dollar volumes, which led to fewer dollars advanced to freight carriers, in addition to the continued consolidation of freight carriers.
Current report
Total deposits at March 31, 2025 were $1.00 billion, an increase of $32.2 million, or 3.3%, from December 31, 2024. The increase is primarily due to the increase in noninterest-bearing deposits of $112.6 million.
Current report
•An increase in other operating activities, net of $7.6 million, primarily due to changes in various other assets and liabilities related to client funding and reimbursements;
Current report
•A change in the level of the decrease in accounts receivable of $1.6 million;
Current report
•An increase in the provision for credit losses of $810,000 primarily due to the increase in the loan portfolio; and
Current report
•A change in the level of the increase in income tax liability of $596,000.
Current report
December 15, 2024. The adoption of ASU 2023-07 did not have a significant impact on the Company's financial statements. See Note 6 to our financial statements.
Removed paragraphs (35)
Previous report
2024 Items of Note
Previous report
Average interest-earning assets for the third quarter of 2024 declined $58.1 million, or 2.8%, as compared to the third quarter of 2023. The Company had fewer funds to invest due to the loss of approximately $100.0 million of balances in February 2024 as a result of a cyber attack experienced by large client. CassPay offers solutions such as integrated payments, a B2B payment platform for clients. The loss of CassPay balances was partially offset by an increase in facility dollar volumes of 13.4%, leading to higher average accounts and drafts payable.
Previous report
Despite the decline in average interest-earning assets during the quarter, the Company’s liquidity position and balance sheet remains strong. The Company maintained average short-term investments of $338.5 million during the third quarter of 2024. In addition, all of the Company's investment securities are classified as available-for-sale and there were no outstanding borrowings at September 30, 2024.
Previous report
The Company recorded bad debt expense of $6.6 million and $7.8 million for the three and nine months ended September 30, 2024, respectively on a funding receivable related to a facility client. See Note 7, "Commitments and Contingencies" for further information.
Previous report
Also, on July 16, 2024, the Company approved an Amendment providing for the termination of its noncontributory defined-benefit pension plan. The Company expects to record one-time termination expenses of approximately $4.0 million to $6.0 million through operating expense related to the plan termination during the fourth quarter of 2024 as the plan
Previous report
-22- liabilities are settled. The successful termination of the plan is expected to reduce run rate operating expense by approximately $1.0 million on an annual basis.
Previous report
The Company recorded net revenue of $148.8 million during the nine months ended September 30, 2024, up 1.4% from the nine months ended September 30, 2023, primarily driven by higher processing fees. Operating expense increased 8.8% largely driven by $7.9 million of bad debt expense experienced during the first nine months of 2024 on a funding receivable related to a facility client. Net income was $14.6 million and diluted EPS was $1.06 per share, decreases of 32.7% and 32.1% from the nine months ended September 30, 2023, respectively.
Previous report
Includes energy, telecom and environmental.
Previous report
Processing fees increased $114,000, or 0.6%, primarily attributable to an increase in facility-related invoice volumes of 26.3%, partially offset by a decrease in ancillary processing fees unrelated to transaction volumes, such as implementation fees. The Company has experienced recent success in adding facility clients with high transaction volumes.
Previous report
Financial fees decreased $420,000, or 3.6%, primarily attributable to a decline in transportation dollar volumes of 1.8%, in addition to changes in the manner certain vendors receive payments.
Previous report
Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023:
Previous report
Processing fees increased $3.6 million, or 6.1%, primarily attributable to an increase in facility-related invoice volumes of 24.8%. Transportation invoice volumes decreased 1.5% over the same period.
Previous report
Financial fees decreased $1.9 million, or 5.6%, primarily attributable to a decline in transportation dollar volumes of 7.3%, in addition to changes in the manner certain vendors receive payments.
Previous report
Average investment securities decreased $112.6 million, or 16.0%, to $590.5 million. The average yield on taxable investment securities increased 26 basis points to 2.88% and the average yield on tax-exempt investment securities increased 18 basis points to 2.81% driven by purchases of investment securities at current market interest rates and maturities and sales of securities at below market interest rates.
Previous report
The average balance of interest-bearing deposits increased $38.6 million, or 6.5%, to $630.2 million. Average non-interest-bearing demand deposits decreased $76.1 million, or 15.8%, to $404.4 million. The Company has experienced a migration of client funds from non-interest bearing to interest-bearing driven by the higher interest rate environment prior to the recent 50 basis point decline in the Federal Funds rate. The average rate paid on interest-bearing deposits increased 14 basis points to 3.25%.
Previous report
Average accounts and drafts payable decreased $37.0 million, or 3.5%, to $1.03 billion. The decrease in average accounts and drafts payable was primarily reflective of a cyber event at a client during the first quarter of 2024, which decreased average balances by approximately $100.0 million as well as the decrease in transportation dollar volumes of 1.8%, partially offset by an increase in facility dollar volume of 13.4%.
Previous report
The increase in net interest income is primarily due to the increase in the net interest margin to 3.38%, as compared to 3.24% in the prior year, partially offset by the decrease in average earning assets of $69.6 million, or 3.4%. The yield on
Previous report
-25- interest-earning assets increased 44 basis points from 3.98% to 4.42% while the cost of interest-bearing liabilities increased 57 basis points from 2.73% to 3.30%.
Previous report
Average loans decreased $23.0 million, or 2.2%, to $1.04 billion. The decrease in average loans was primarily due to the Company opting to be more selective in booking new loans as a result of a decline in average deposits. The average yield on loans increased 47 basis points to 5.24%.
Previous report
The average balance of interest-bearing deposits increased $69.4 million, or 12.3%, to $633.4 million. Average non-interest-bearing demand deposits decreased $109.0 million, or 20.6%, to $419.7 million. The Company has experienced a migration of client funds from non-interest bearing to interest-bearing driven by the higher interest rate environment prior to the recent 50 basis point decline in the Federal Funds rate. The average rate paid on interest-bearing deposits increased 58 basis points to 3.30% due to higher average short-term interest rates when comparing the periods.
Previous report
Average accounts and drafts payable decreased $49.4 million, or 4.6%, to $1.02 billion. The decrease in average accounts and drafts payable was primarily reflective of a cyber event experienced by a client during the first quarter of 2024, which decreased average balances approximately $100.0 million as well as the decrease in transportation dollar volumes of 7.3%, partially offset by an increase in facility dollar volumes of 7.7%.
Previous report
Balances shown are daily averages.
Previous report
Interest income on loans includes net loan fees of $383,000 and $609,000 for the nine months ended September 30, 2024 and 2023, respectively.
Previous report
Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for both the nine months ended September 30, 2024 and 2023. The tax-equivalent adjustment was approximately $720,000 and $840,000 for the nine months ended September 30, 2024 and 2023, respectively.
Previous report
Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for the nine months ended September 30, 2024 and 2023.
Previous report
Personnel expense increased $231,000, or 0.8%. Salaries and commissions increased $459,000, or 2.0%, primarily as a result of merit increases and $280,000 severance recorded during the third quarter of 2024, partially offset by a decrease in employee profit sharing due to the decline in net income. Share-based compensation decreased $40,000, reflecting the Company's financial performance and the impact on performance-based restricted stock between the periods.
Previous report
The Company recorded bad debt expense of $6.6 million on a funding receivable related to a facility client. While the Company is in the process of litigation to collect the receivable, a full write-off to bad debt expense was recorded as a result of a credit analysis.
Previous report
Personnel expense increased $1.2 million, or 1.4%. Salaries and commissions increased $2.5 million, or 3.6%, primarily as a result of merit increases. Share-based compensation decreased $1.2 million, reflecting the Company's financial performance and the impact on performance-based restricted stock between the periods.
Previous report
Equipment expense increased $788,000, or 15.2%, primarily due to an increase in depreciation expense related to technology initiatives throughout the Company's lines of business.
Previous report
The Company recorded bad debt expense of $7.8 million on a funding receivable related to a facility client. While the Company is in the process of litigation to collect the receivable, a full write-off to bad debt expense was recorded as a result of a credit analysis.
Previous report
Payments in advance of funding increased $8.3 million, or 4.2%. from December 31, 2023 due to timing of funding.
Previous report
Total deposits at September 30, 2024 were $1.05 billion, a decrease of $93.5 million, or 8.2%, from December 31, 2023. The decrease is primarily due to timing as well as a migration of non-interest bearing deposits into interest-bearing deposits within the Bank and other alternatives outside the banking system.
Previous report
•An increase in accounts receivable of $4.0 million; and
Previous report
•A decrease in stock compensation expense of $1.2 million
Previous report
These factors were partially offset by a decrease in income tax liability $1.6 million.
Reworded paragraphs (33)
Previous wording
Various factors will influence the Company’s revenue and profitability, such as changes in the general level of interest rates, which has a significant effect on net interest income; industry-wide factors, such as the willingness of large corporations to outsource key business functions, the general level of transportation costs, deregulation of energy costs, and consolidation of telecommunication providers; and economic factors that include the general level of economic activity, the ability to hire and retain qualified staff, and the growth and quality of the Bank’s loan portfolio. For a more detailed discussion of the Company’s revenue drivers and factors that impact the Company’s results of operation and financial condition generally, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2023 Form 10-K.
Current wording
Various factors will influence the Company’s revenue and profitability, such as changes in the general level of interest rates, which has a significant effect on net interest income; industry-wide factors, such as the willingness of large corporations to outsource key business functions, the general level of transportation costs, deregulation of energy costs, and consolidation of telecommunication providers; and economic factors that include the general level of economic activity, the ability to hire and retain qualified staff, the growth and quality of the Bank’s loan portfolio, and the effects of tariffs or other domestic or international governmental policies. For a more detailed discussion of the Company’s revenue drivers and factors that impact the Company’s results of operation and financial condition generally, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2024 Form 10-K.
Previous wording
The transportation industry continues to experience a decline in overall freight rates caused by an ongoing freight recession. The freight recession adversely affects the number of freight transactions and dollar amount of invoices processed. Partially as a result, the Company's transportation invoice and dollar volumes declined 1.5% and 7.3%, respectively during the nine months ended September 30, 2024 as compared to the same period in 2023. Transportation dollar volumes are key to the Company’s revenue as higher volumes generally lead to an increase in payment float, which generates interest income, as well as an increase in payments in advance of funding, which generates financial fees.
Current wording
The transportation industry continues to experience a decline in overall freight rates caused by an ongoing freight recession. The freight recession adversely affects the number of freight transactions and dollar amount of invoices processed. Partially as a result, the Company's transportation invoice and dollar volumes declined 4.7% and 3.3%, respectively during the quarter ended March 31, 2025 as compared to the same period in 2024. Transportation dollar volumes are key to the Company’s revenue as higher volumes generally lead to an increase in payment float, which generates interest income, as well as an increase in payments in advance of funding, which generates financial fees.
Previous wording
The following paragraphs more fully discuss the results of operations and changes in financial condition for the three month period ended September 30, 2024 (“third quarter of 2024”) compared to the three month period ended September 30, 2023 (“third quarter of 2023”) and the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and related notes and with the statistical information and financial data appearing in this report, as well as in the Company’s 2023 Form 10-K. Results of operations for the three month period ended September 30, 2024 are not necessarily indicative of the results to be attained for any other period.
Current wording
The following paragraphs more fully discuss the results of operations and changes in financial condition for the three months ended March 31, 2025 (“first quarter of 2025”) compared to the three months ended March 31, 2024 (“first quarter of 2024”). The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and related notes and with the statistical information and financial data appearing in this report, as well as in the Company’s 2024 Form 10-K. Results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be attained for any other period.
Previous wording
The Company recorded net revenue of $50.6 million during the three month period ended September 30, 2024, up 2.7% from the three month period ended September 30, 2023, primarily driven by higher net interest income. Operating expense increased 17.1% primarily driven by $6.6 million of bad debt expense on a funding receivable related to a facility client. Net income was $2.9 million and diluted EPS was $0.21 per share, decreases of 60.3% and 61.1% from the three month period ended September 30, 2023, respectively.
Current wording
The Company recorded net revenue of $46.4 million during the first quarter of 2025, up 2.9% from the first quarter of 2024, primarily driven by net interest income. Operating expense decreased 1.9% primarily driven by a bad debt recovery of $2.0 million related to partial consideration received in a litigation settlement. Net income was $9.0 million and diluted EPS was $0.66 per share, increases of 25.4% and 26.9% from the three months period ended March 31, 2024, respectively.
Previous wording
The Company posted a 0.50% return on average assets and 5.04% return on average equity.
Current wording
The Company posted a 1.51% return on average assets and 15.91% return on average equity.
Previous wording
The Company’s fee revenue is derived mainly from transportation and facility processing and financial fees. As the Company provides its processing and payment services, it is compensated by service fees which are typically calculated on a per-item basis, discounts received for services provided to carriers and by the accounts and drafts payable balances generated in the payment process which can be used to generate interest income. Processing volumes, average payments in advance of funding, and fee revenue were as follows:
Current wording
The Company’s fee revenue is derived mainly from transportation and facility processing and financial fees. As the Company provides its processing and payment services, it is compensated by service fees which are typically calculated on a per-item basis, discounts received for services provided to carriers and by the accounts and drafts payable balances
Previous wording
The increase in net interest income is primarily due to the increase in the net interest margin to 3.55%, as compared to 3.24% in the same quarter last year, partially offset by the decrease in average earning assets of $58.1 million, or 2.8%. The yield on interest-earning assets increased 44 basis points from 4.13% to 4.57% while the cost of interest-bearing liabilities increased 14 basis points from 3.11% to 3.25%.
Current wording
The increase in net interest income is primarily attributable to the net interest margin improving to 3.75% as compared to 3.26% in the same period last year, in addition to an increase in average earning assets of $41.4 million, or 2.0%. The yield on interest-earning assets increased 27 basis points from 4.27% to 4.54% while the cost of interest-bearing liabilities decreased 64 basis points from 3.30% to 2.66%.
Previous wording
Average loans increased $26.9 million, or 2.6%, to $1.07 billion. The increase in average loans was primarily due to growth in the Company's franchise restaurant and faith-based portfolios. The average yield on loans increased 52 basis points to 5.40%.
Current wording
Average loans increased $93.3 million, or 9.2%, to $1.11 billion. The increase in average loans was primarily due to growth in the Company's commercial and industrial and faith-based loan portfolios. The average yield on loans increased 55 basis points to 5.61%, primarily due to loan growth at current market interest rates and continued maturing and re-pricing of existing fixed rate loans to current market interest rates.
Previous wording
Average investment securities decreased $101.6 million, or 13.6%, to $646.1 million. The average yield on taxable investment securities increased 22 basis points to 2.82% and the average yield on tax-exempt investment securities increased 3 basis points to 2.75%. The increase in the average yield on taxable investment securities was driven by purchases of investment securities at current market interest rates and maturities and sales of securities at below market interest rates.
Current wording
Average investment securities decreased $83.6 million, or 12.0%, to $611.2 million due to the sale and maturity of investment securities throughout 2024 and the first quarter of 2025 exceeding new purchases. The average yield on taxable investment securities increased 23 basis points to 2.95% as a result of purchases of new investment securities at current market interest rates, which were higher than the average interest rate in the current investment portfolio. The average yield on tax-exempt investment securities declined 15 basis points to 2.54% driven by maturities of higher rate securities.
Previous wording
Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $27.7 million, or 8.9%, to $338.5 million. The increase is primarily a result of the decline in average investment securities, partially offset by a decrease in average funding sources. The average yield on short-term investments decreased 8 basis points to 4.94%, primarily due to the recent decline in the Federal Funds rate of 50 basis points. The majority of these short-term investments are held at the Federal Reserve Bank.
Current wording
Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $31.7 million, or 9.0%, to $383.8 million. The increase is primarily a result of the decrease in average investment securities and the increase in average funding sources, partially offset by the increase in average loans. The average yield on short-term investments decreased 96 basis points to 4.11%, primarily due to the decrease in the Federal Funds rate that occurred in the last four months of 2024. The majority of these short-term investments are held at the Federal Reserve Bank.
Previous wording
Interest income on loans includes net loan fees of $154,000 and $98,000 for the third quarter of 2024 and 2023, respectively.
Current wording
Interest income on loans includes net loan fees of $367,000 and $83,000 for the first quarter of 2025 and 2024, respectively.
Previous wording
Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for both 2024 and 2023. The tax-equivalent adjustment was approximately $237,000 and $256,000 for the third quarter of 2024 and 2023, respectively.
Current wording
Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for both 2025 and 2024. The tax-equivalent adjustment was approximately $168,000 and $244,000 for the first quarter of 2025 and 2024, respectively.
Previous wording
The Company recorded a release of credit losses and off-balance sheet credit exposures of $140,000 for the third quarter of 2024 and a provision for credit losses of $125,000 in third quarter of 2023. The Company recorded a provision for credit losses and off-balance sheet credit exposures of $355,000 for the nine months ended of September 30, 2024 and a release of credit losses of $335,000 for the nine months ended September 30, 2023. The amount of the (release of) provision for credit losses is derived from the Company’s quarterly Current Expected Credit Loss (“CECL”) model. The amount of the (release of) provision for credit losses will fluctuate as determined by these quarterly analyses. The provision for credit losses for the nine months ended September 30, 2024 was driven by an increase in total loans of $64.1 million, or 6.3%, as compared to December 31, 2023.
Current wording
The Company recorded a provision for credit losses and off-balance sheet credit exposures of $905,000 and $95,000 for the first quarter of 2025 and 2024, respectively. The amount of the provision for credit losses is derived from the Company’s quarterly Current Expected Credit Loss (“CECL”) model. The amount of the provision for credit losses will fluctuate as determined by these quarterly analyses. The provision for credit losses in the first quarter of 2025 was driven by an increase in total loans of $59.9 million, or 5.5%, as compared to December 31, 2024.
Previous wording
The Company experienced no loan charge-offs in the third quarters of 2024 and 2023. The ACL was $13.4 million at September 30, 2024 and $13.1 million at December 31, 2023. The ACL represented 1.25% of outstanding loans at September 30, 2024 and 1.29% of outstanding loans at December 31, 2023. The allowance for unfunded commitments was $129,000 at September 30, 2024 and $132,000 at December 31, 2023. There were no nonperforming loans outstanding at September 30, 2024 and December 31, 2023.
Current wording
The Company experienced no loan charge-offs in the first quarter of 2025 and 2024. The ACL was $14.3 million at March 31, 2025 and $13.4 million at December 31, 2024. The ACL represented 1.25% of outstanding loans at March 31, 2025 and 1.24% of outstanding loans at December 31, 2024. The allowance for unfunded commitments was $287,000 at March 31, 2025 and $273,000 at December 31, 2024. There were no nonperforming loans outstanding at March 31, 2025 and December 31, 2024.
Previous wording
Total operating expenses for the third quarter of 2024 increased $6.8 million, or 17.1%, compared to the third quarter of 2023. Total operating expenses for the nine months ended September 30, 2024 increased $10.6 million, or 8.8%, compared to the nine months ended September 30, 2023. The following table details the components of operating expenses:
Current wording
Total operating expenses for the first quarter of 2025 decreased $678,000, or 1.9%, compared to the first quarter of 2024. The following table details the components of operating expenses:
Previous wording
Equipment expense increased $318,000, or 17.8%, primarily due to an increase in depreciation expense related to technology initiatives throughout the Company's lines of business.
Current wording
Equipment expense increased $463,000 primarily due to an increase in depreciation expense on software related to recently completed technology initiatives.
Previous wording
Total assets at September 30, 2024 were $2.26 billion, a decrease of $217.9 million, or 8.8%, from December 31, 2023.
Current wording
Total assets at March 31, 2025 were $2.32 billion, a decrease of $76.6 million, or 3.2%, from December 31, 2024.
Previous wording
The Company experienced a decrease in cash and cash equivalents of $141.9 million, or 38.1%, during the nine months ended September 30, 2024. The change in cash and cash equivalents reflects the Company’s daily liquidity position and is primarily affected by changes in funding sources, mainly accounts and drafts payable and deposits, cash flows in and out of loans, investments securities and payments in advance of funding.
Current wording
The Company experienced a decrease in cash and cash equivalents of $129.1 million, or 36.9%, during the first quarter of 2025. The change in cash and cash equivalents reflects the Company’s daily liquidity position and is primarily affected by changes in funding sources, mainly accounts and drafts payable and deposits, cash flows in and out of loans, investments securities and payments in advance of funding.
Previous wording
The investment securities portfolio decreased $76.4 million, or 12.2%, during the nine months ended September 30, 2024. The decrease is due to sales of $25.0 million and maturities of $130.5 million, partially offset by purchases of $71.1 million.
Current wording
The investment securities portfolio increased $48.5 million, or 9.2%, during the first quarter of 2025. The increase is due to purchases of $80.5 million and a decrease in unrealized losses of $7.3 million, partially offset by sales of $23.0 million and maturities of $15.8 million.
Previous wording
Loans increased $64.1 million, or 6.3%, from December 31, 2023. The Company experienced growth in its franchise restaurant, faith-based and commercial and industrial loan portfolios during the nine months ended September 30, 2024.
Current wording
Loans increased $59.9 million, or 5.5%, from December 31, 2024. The Company experienced growth in its commercial and industrial and faith-based loan portfolios during the first quarter of 2025.
Previous wording
Accounts and drafts receivable from customers decreased $79.8 million, or 72.1%, from December 31, 2023. The decrease is solely due to timing of customer funding.
Current wording
Accounts and drafts receivable from customers decreased $15.4 million, or 27.6%, from December 31, 2024. The decrease is solely due to timing of customer funding.
Previous wording
Accounts and drafts payable at September 30, 2024 were $936.5 million, a decrease of $134.9 million, or 12.6%, from December 31, 2023. The decrease in accounts and drafts payable was primarily reflective of a cyber event at a client during the first quarter of 2024 which decreased average balances approximately $100.0 million. Accounts and drafts payable will fluctuate from period-end to period-end due to the payment processing cycle, which results in lower balances on days when payments clear and higher balances on days when payments are issued. For this reason, average balances are generally a more meaningful measure of accounts and drafts payable.
Current wording
Accounts and drafts payable at March 31, 2025 were $1.02 billion, a decrease of $113.3 million, or 10.0%, from December 31, 2024. Accounts and drafts payable are a stable source of funding generated by payment float from transportation and facility clients. Accounts and drafts payable will fluctuate from period-end to period-end due to the payment processing cycle, which results in lower balances on days when payments clear and higher balances on days when payments are issued. For this reason, average balances are generally a more meaningful measure of accounts and drafts payable.
Previous wording
Total liabilities at September 30, 2024 were $2.02 billion, a decrease of $225.7 million, or 10.0%, from December 31, 2023, reflective of the decrease in deposits and accounts and drafts payable.
Current wording
Total liabilities at March 31, 2025 were $2.08 billion, a decrease of $81.8 million, or 3.8%, from December 31, 2024, reflective of the decrease in accounts and drafts payable, partially offset by the increase in deposits.
Previous wording
Total shareholders’ equity at September 30, 2024 was $237.6 million, a $7.8 million increase from December 31, 2023. The increase in shareholders’ equity is a result of net income for the nine months ended September 30, 2024 of $14.6 million, and a decrease in accumulated other comprehensive loss of $8.4 million primarily related to the fair value of available-for-sale investment securities, partially offset by dividends paid of $12.3 million and the repurchase of Company stock of $3.7 million.
Current wording
Total shareholders’ equity at March 31, 2025 was $234.2 million, a $5.2 million increase from December 31, 2024. The increase in shareholders’ equity is a result of first quarter of 2025 earnings of $9.0 million, and a decrease in accumulated
Previous wording
The balance of liquid assets consists of cash and cash equivalents, which include cash and due from banks, interest-bearing deposits in other financial institutions, federal funds sold and money market funds. Cash and cash equivalents totaled $230.6 million at September 30, 2024, a decrease of $141.9 million, or 38.1%, from December 31, 2023. At September 30, 2024, these assets represented 10.2% of total assets and are the Company’s and its subsidiaries’ primary source of liquidity to meet future expected and unexpected loan demand, depositor withdrawals or reductions in accounts and drafts payable.
Current wording
The balance of liquid assets consists of cash and cash equivalents, which include cash and due from banks, interest-bearing deposits in other financial institutions, federal funds sold and money market funds. Cash and cash equivalents totaled $220.7 million at March 31, 2025, a decrease of $129.1 million, or 36.9%, from December 31, 2024. At March 31, 2025, these assets represented 9.5% of total assets and are the Company’s and its subsidiaries’ primary source of liquidity to meet future expected and unexpected loan demand, depositor withdrawals or reductions in accounts and drafts payable.
Previous wording
Secondary sources of liquidity include the investment portfolio and borrowing lines. Total investment securities were $550.8 million at September 30, 2024, a decrease of $76.4 million from December 31, 2023. These assets represented 24.4% of total assets at September 30, 2024. Of the total portfolio, 6.5% mature in one year, 22.5% mature in one to five years, and 71.0% mature in five or more years.
Current wording
Secondary sources of liquidity include the investment portfolio and borrowing lines. Total investment securities were $576.5 million at March 31, 2025, an increase of $48.5 million from December 31, 2024. These assets represented 24.9% of total assets at March 31, 2025. Of the total portfolio, 1.2% mature in one year, 15.7% mature in one to five years, and 83.1% mature in five or more years.
Previous wording
The Bank has unsecured lines of credit at six correspondent banks to purchase federal funds up to a maximum of $83.0 million in aggregate. As of September 30, 2024, the Bank also has secured lines of credit with the Federal Home Loan Bank of $191.0 million collateralized by mortgage loans. The Company also has secured lines of credit from three banks up to a maximum of $250.0 million in aggregate collateralized by investment securities. There were no amounts outstanding under any line of credit as of September 30, 2024 or December 31, 2023.
Current wording
The Bank has unsecured lines of credit at six correspondent banks to purchase federal funds up to a maximum of $83.0 million in aggregate. As of March 31, 2025, the Bank also has secured lines of credit with the Federal Home Loan Bank of $219.8 million collateralized by mortgage loans. The Company also has secured lines of credit from three banks up to a maximum of $250.0 million in aggregate collateralized by investment securities. There were no amounts outstanding under any line of credit as of March 31, 2025 or December 31, 2024.
Previous wording
The deposits of the Company's banking subsidiary have historically been stable, consisting of a sizable volume of core deposits related to customers that utilize other commercial products of the Bank, including CassPay and faith-based customers. The accounts and drafts payable generated by the Company has also historically been a stable source of funds. The Company is part of the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) deposit placement programs. Time deposits include $52.8 million of CDARS deposits and interest-bearing demand deposits include $150.5 million of ICS deposits. These programs offer the Bank’s customers the ability to maximize Federal Deposit Insurance Corporation (“FDIC”) insurance coverage. The Company uses these programs to retain or attract deposits from existing customers.
Current wording
The deposits of the Company's banking subsidiary have historically been stable, consisting of a sizable volume of core deposits related to customers that utilize other commercial products of the Bank, including CassPay and faith-based customers. The accounts and drafts payable generated by the Company has also historically been a stable source of funds. The Company is part of the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) deposit placement programs. Time deposits include $55.7 million of CDARS deposits and interest-bearing demand deposits include $175.5 million of ICS deposits. These programs offer the Bank’s customers the ability to maximize Federal Deposit Insurance Corporation (“FDIC”) insurance coverage. The Company uses these programs to retain or attract deposits from existing customers.
Previous wording
Net cash flows provided by operating activities were $20.3 million for the nine months ended September 30, 2024, compared to $29.4 million for the nine months ended September 30, 2023, an decrease of $9.0 million. Net cash flows from investing and financing activities fluctuate greatly as the Company actively manages its investment and loan portfolios and customer activity influences changes in deposit and accounts and drafts payable balances. Other causes for the changes in these account balances are discussed earlier in this report. Due to the daily fluctuations in these account balances, the analysis of changes in average balances, also discussed earlier in this report, can be more indicative of underlying activity than the period-end balances used in the statements of cash flows. Management anticipates that cash and cash equivalents, maturing investments and cash from operations will continue to be sufficient to fund the Company’s operations and capital expenditures in 2024, which are estimated to range from $10 million to $12 million.
Current wording
Net cash flows provided by operating activities were $21.6 million for the three months ended March 31, 2025, compared to $9.8 million for the three months ended March 31, 2024, an increase of $11.7 million. Net cash flows from investing and financing activities fluctuate greatly as the Company actively manages its investment and loan portfolios and customer activity influences changes in deposit and accounts and drafts payable balances. Other causes for the changes in these account balances are discussed earlier in this report. Due to the daily fluctuations in these account balances, the analysis of changes in average balances, also discussed earlier in this report, can be more indicative of underlying activity than the period-end balances used in the statements of cash flows. Management anticipates that cash and cash equivalents, maturing investments and cash from operations will continue to be sufficient to fund the Company’s operations and capital expenditures in 2025, which are estimated to range from $6 million to $8 million.
Previous wording
Net income plus amortization of intangible assets, net amortization of premium/discount on investment securities and depreciation of premises and equipment was $21.7 million and $28.7 million for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $7.0 million. The nine months ended September 30, 2024 reflected lower net income of $7.1 million and a decrease in net amortization of premium/discount on investment securities of $462,000, partially offset by higher depreciation of $585,000. The net amortization of premium/discount on investment securities is dependent on the type of securities purchased and changes in the prevailing market interest rate environment. Depreciation expense has increased as a result of capital expenditures related to technology initiatives.
Current wording
Net income plus amortization of intangible assets, net amortization of premium/discount on investment securities and depreciation of premises and equipment was $11.1 million and $9.5 million for the three months ended March 31, 2025 and 2024. The first quarter of 2025 reflected higher net income of $1.8 million and higher depreciation of $313,000, partially offset by a decrease in net amortization of premium/discount on investment securities of $572,000. The net amortization of premium/discount on investment securities is dependent on the type of securities purchased and changes in the prevailing market interest rate environment.
Previous wording
Other factors impacting the $9.0 million decrease in net cash provided by operating activities include:
Current wording
Other factors impacting the $11.7 million increase in net cash provided by operating activities include:
Previous wording
Impact of New and Not Yet Adopted Accounting Pronouncements
Current wording
Impact of New or Not Yet Adopted Accounting Pronouncements
Previous wording
The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. ASU 2023-06 is not expected to have a significant impact on the Company's financial statements.
Current wording
In October 2023, the FASB issued 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06"). This ASU amends the ASC to incorporate certain disclosure requirements from SEC Release No. 33-10532 - Disclosure Update and Simplification that was issued in 2018. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. ASU 2023-06 is not expected to have a significant impact on the Company's financial statements.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
-24- generated in the payment process which can be used to generate interest income. Processing volumes, average payments in advance of funding, and fee revenue were as follows:
Current report — wording carried from elsewhere
-30- other comprehensive loss of $5.7 million primarily related to the fair value of available-for-sale investment securities, partially offset by the repurchase of Company stock of $5.1 million, and dividends paid of $4.2 million.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
The Company posted a 0.83% return on average assets and 8.54% return on average equity.
Previous report — wording carried elsewhere
Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $54.9 million, or 20.8%, to $318.7 million. The increase is primarily a result of the decline in average investment securities and loans, partially offset by a decrease in average funding sources. The average yield on short-term investments increased 35 basis points to 4.99%, primarily due to higher average short-term interest rates when comparing the periods. The majority of these short-term investments are held at the Federal Reserve Bank.
Previous report — wording carried elsewhere
For purposes of these computations, yields on investment securities are computed as interest income divided by the average amortized cost of the investments.
Previous report — wording carried elsewhere
Interest income includes net loan fees.
Previous report — wording carried elsewhere
In October 2023, the FASB issued 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06"). This ASU amends the ASC to incorporate certain disclosure requirements from SEC Release No. 33-10532 - Disclosure Update and Simplification that was issued in 2018.
Previous report — wording carried elsewhere
December 15, 2024. Early adoption is permitted. ASU 2023-07 is not expected to have a significant impact on the Company's financial statements.