CASS INFORMATION SYSTEMS INC

Previous wording

Net interest income increased $3.5 million, or 22.3%. The increase in net interest income was attributable to the net interest margin improving to 3.78% as compared to 3.32% in the same period last year, in addition to an increase in average interest-earning assets of $131.9 million, or 6.7%. The Company generally benefits from a higher interest rate environment due to a large percentage of its funding sources being non-interest bearing.

Current wording

Net interest income increased $3.5 million, or 19.3%, as compared to the same period last year. The increase in net interest income was attributable to the net interest margin improving to 3.87% as compared to 3.55% in the same period last year, in addition to an increase in average interest-earning assets of $187.6 million, or 9.4%. The Company generally benefits from a higher interest rate environment due to a large percentage of its funding sources being non-interest bearing.

Previous wording

The following paragraphs more fully discuss the results of operations and changes in financial condition for the three months ended June 30, 2025 (“second quarter of 2025”) compared to the three months ended June 30, 2024 (“second quarter of 2024”) and the six months ended June 30, 2025 ("first half of 2025") compared to the six months ended June 30, 2024 ("first half 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 June 30, 2025 are not necessarily indicative of the results to be attained for any other period.

Current wording

September 30, 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 September 30, 2025 are not necessarily indicative of the results to be attained for any other period.

Previous wording

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 June 30, 2025 and December 31, 2024, and for the three and six months ended June 30, 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 to our consolidated financial statements for further discussion regarding discontinued operations and subsequent events associated with discontinued operations.

Current wording

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 September 30, 2025 and December 31, 2024, and for the three and nine months ended September 30, 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 to our consolidated financial statements for further discussion regarding discontinued operations and subsequent events associated with discontinued operations.

Previous wording

The Company recorded net revenue of $44.4 million during the second quarter of 2025, up 1.0% from the second quarter of 2024, primarily driven by an increase in net interest income, partially offset by a loss on the sale of investment securities. Operating expense decreased 0.8% primarily driven by $1.3 million of bad debt expense and an additional $1.3 million of

Current wording

The Company recorded net revenue of $50.1 million during the third quarter of 2025, an increase of 7.6% from the third quarter of 2024, primarily driven by an increase in net interest income, partially offset by lower financial fees. Operating expense decreased 10.1% primarily driven by $6.6 million of bad debt expense in the third quarter of 2024, partially offset

Previous wording

-28- expense related to late fees incurred on facility transactions in the second quarter of 2024, partially offset by an increase in personnel expenses of $1.5 million and an increase in other expenses related to technology initiatives. Income from discontinued operations was up due to the $3.6 million gain on sale of the TEM business and $1.5 million of other non-recurring fee income. Net income was $8.9 million and diluted EPS was $0.66 per share, increases of 97.5% and 106.3% from the three months period ended June 30, 2024, respectively.

Current wording

-28- by an increase in personnel expenses of $1.1 million. Net income was $9.1 million and diluted EPS was $0.68 per share, increases of 209.9% and 223.8% from the three months period ended September 30, 2024, respectively.

Previous wording

The Company posted a 1.49% return on average assets and 15.62% return on average equity.

Current wording

The Company posted a 1.44% return on average assets and 15.29% return on average equity.

Previous wording

The Company recorded net revenue of $90.8 million during the first half of 2025, up 1.9% from the first half of 2024, primarily driven by net interest income, partially offset by a loss on the sale of investment securities. Operating expense decreased 1.3% primarily driven by a bad debt recovery of $2.0 million related to partial consideration received in a litigation settlement. Net income was $17.8 million and diluted EPS was $1.31 per share, increases of 53.2% and 56.0% from the first half of June 30, 2024, respectively.

Current wording

The Company recorded net revenue of $140.9 million during the nine months ended September 30, 2025, an increase of 3.9% from the nine months ended September 30, 2024, primarily driven by an increase in net interest income, partially offset by a loss on the sale of investment securities and lower financial fees. Operating expense decreased 4.5% primarily driven by a $9.8 million change in bad debt expense (recovery), partially offset by an increase in personnel expenses of $3.0 million. Net income was $26.9 million and diluted EPS was $1.99 per share, increases of 84.8% and 87.7% from the nine months ended September 30, 2024, respectively.

Previous wording

The Company posted a 1.48% return on average assets and 15.35% return on average equity.

Current wording

The Company posted a 1.48% return on average assets and 15.51% return on average equity.

Previous wording

Processing fees decreased $124,000, or 0.4% over the same period in the prior year reflecting flat transportation and facility transaction volumes when comparing the periods.

Current wording

Processing fees decreased $31,000, or 0.2% over the same period in the prior year reflecting lower transportation and facility transaction volumes.

Previous wording

Financial fees decreased $299,000, or 2.9%, primarily attributable to a decline in average payments in advance of funding of 17.4%.

Current wording

Financial fees decreased $601,000, or 5.5%, primarily attributable to a decline in average payments in advance of funding of 13.4%, in addition to changes in the manner whereby facility vendors receive payments.

Previous wording

Processing fees increased $266,000, or 1.6% over the same period in the prior year reflecting flat transportation and facility transaction volumes when comparing the periods.

Current wording

Processing fees decreased $155,000, or 0.3% over the same period in the prior year reflecting lower transportation and facility transaction volumes.

Previous wording

Financial fees decreased $936,000, or 4.4%, primarily attributable to a decline in average payments in advance of funding of 14.2%.

Current wording

Financial fees decreased $1.5 million, or 4.8%, primarily attributable to a decline in average payments in advance of funding of 13.9%, in addition to changes in the manner whereby facility vendors receive payments.

Previous wording

The Company sold $34.0 million of corporate investment securities with a weighted-average yield of 2.29% at a loss of $3.6 million. These sales occurred at the end of June 2025. The proceeds from these sales will be redeployed into higher yielding interest-earning assets.

Current wording

The Company sold $34.0 million of corporate investment securities with a weighted-average yield of 2.29% at a loss of $3.6 million during June 2025. The proceeds from these sales were redeployed into higher yielding interest-earning assets during the third quarter of 2025.

Previous wording

The increase in net interest income is primarily attributable to the net interest margin improving to 3.76% as compared to 3.29% in the same period last year, in addition to an increase in average earning assets of $86.6 million, or 4.3%. The yield on interest-earning assets increased 22 basis points from 4.34% to 4.56% while the cost of interest-bearing liabilities decreased 64 basis points from 3.32% to 2.68%.

Current wording

The increase in net interest income is primarily attributable to the net interest margin improving to 3.87% as compared to 3.55% in the same period last year, in addition to an increase in average earning assets of $187.6 million, or 9.4%. The yield on interest-earning assets increased 5 basis points from 4.57% to 4.62% while the cost of interest-bearing liabilities decreased 55 basis points from 3.25% to 2.70%.

Previous wording

Average loans increased $89.9 million, or 8.7%, to $1.12 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 47 basis points to 5.63%, 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.

Current wording

Average loans increased $22.6 million, or 2.1%, to $1.10 billion. The average yield on loans increased 26 basis points to 5.66%, 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 short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $33.6 million, or 12.7%, to $298.9 million. The increase is primarily a result of the increase in average funding sources, partially offset by the increase in average loans and average investment securities. The average yield on short-term investments decreased 92 basis points to 4.03%, primarily due to the decrease in the Federal Funds rate that

Current wording

Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $43.8 million, or 12.9%, to $382.3 million. The increase is primarily a result of the increase in average funding sources, partially offset by the increase in average loans and average investment securities. The average yield on short-term investments decreased 93 basis points to 4.01%, primarily due to the decrease in the Federal Funds rate that

Previous wording

-30- occurred in the last four months of 2024. The majority of these short-term investments are held at the Federal Reserve Bank.

Current wording

-30- occurred in the last four months of 2024 and then again in September 2025. The majority of these short-term investments are held at the Federal Reserve Bank.

Previous wording

The average balance of interest-bearing deposits decreased $12.9 million, or 2.0%, to $622.0 million. Average non-interest-bearing demand deposits decreased $28.4 million, or 6.6%, to $399.1 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 2.68% due to the reduction in short-term interest rates in the last four months of 2024.

Current wording

The average balance of interest-bearing deposits decreased $19.8 million, or 3.1%, to $610.4 million. Average non-interest-bearing demand deposits increased $1.9 million, or 0.5%, to $406.2 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 55 basis points to 2.70% due to the reduction in short-term interest rates in the last four months of 2024 and then again in September 2025.

Previous wording

Average accounts and drafts payable increased $94.0 million, or 9.4%, to $1.09 billion. The increase in average accounts and drafts payable was primarily driven by the increase in facility dollar volumes of 16.1%.

Current wording

Average accounts and drafts payable increased $196.5 million, or 19.4%, to $1.21 billion. The increase in average accounts and drafts payable was primarily driven by the increase in facility dollar volumes of 13.9% as well as the increase in transportation dollar volumes of 2.0%.

Previous wording

The increase in net interest income is primarily attributable to the net interest margin improving to 3.78% as compared to 3.32% in the same period last year, in addition to an increase in average earning assets of $131.9 million, or 6.7%. The yield on interest-earning assets increased 17 basis points from 4.41% to 4.58% while the cost of interest-bearing liabilities decreased 64 basis points from 3.35% to 2.71%.

Current wording

The increase in net interest income is primarily attributable to the net interest margin improving to 3.80% as compared to 3.38% in the same period last year, in addition to an increase in average earning assets of $120.6 million, or 6.0%. The yield on interest-earning assets increased 16 basis points from 4.42% to 4.58% while the cost of interest-bearing liabilities decreased 61 basis points from 3.30% to 2.69%.

Previous wording

Average loans increased $86.4 million, or 8.3%, to $1.13 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 38 basis points to 5.64%, 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.

Current wording

Average loans increased $67.3 million, or 6.5%, to $1.11 billion. The average yield on loans increased 40 basis points to 5.64%, 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 short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $32.4 million, or 10.5%, to $341.1 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 94 basis points to 4.08%, 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.

Current wording

Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $36.3 million, or 11.4%, to $355.0 million. The increase is primarily a result of the increase in average funding sources, partially offset by the increase in average loans and average investment securities. The average yield on short-term investments decreased 94 basis points to 4.05%, primarily due to the decrease in the Federal Funds rate that occurred in the last four months of 2024 and again in September 2025. The majority of these short-term investments are held at the Federal Reserve Bank.

Previous wording

The average balance of interest-bearing deposits decreased $22.4 million, or 3.5%, to $615.9 million. Average non-interest-bearing demand deposits decreased $14.0 million, or 3.4%, to $393.1 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 2.71% due to the reduction in short-term interest rates in the last four months of 2024.

Current wording

The average balance of interest-bearing deposits decreased $15.3 million, or 2.4%, to $618.1 million. Average non-interest-bearing demand deposits decreased $18.2 million, or 4.3%, to $401.5 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 61 basis points to 2.69% due to the reduction in short-term interest rates in the last four months of 2024 and again in September 2025.

Previous wording

Average accounts and drafts payable increased $129.7 million, or 13.3%, to $1.11 billion. The increase in average accounts and drafts payable was primarily driven by the increase in facility dollar volumes of 16.1%.

Current wording

Average accounts and drafts payable increased $140.7 million, or 14.1%, to $1.14 billion. The increase in average accounts and drafts payable was primarily driven by the increase in facility dollar volumes of 15.3%.

Previous wording

Interest income on loans includes net loan fees of $118,000 and $146,000 for the second quarter of 2025 and 2024, respectively.

Current wording

Interest income on loans includes net loan fees of $114,000 and $154,000 for the third 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 2025 and 2024. The tax-equivalent adjustment was approximately $215,000 and $239,000 for the second quarter of 2025 and 2024, 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 $316,000 and $237,000 for the third quarter of 2025 and 2024, respectively.

Previous wording

Interest income on loans includes net loan fees of $485,000 and $229,000 for the six months ended June 30, 2025 and 2024, respectively.

Current wording

Interest income on loans includes net loan fees of $599,000 and $383,000 for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for both the six months ended June 30, 2025 and 2024. The tax-equivalent adjustment was approximately $383,000 and $483,000 for the six months ended June 30, 2025 and 2024, respectively.

Current wording

Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for both the nine months ended September 30, 2025 and 2024. The tax-equivalent adjustment was approximately $699,000 and $720,000 for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

The Company recorded a provision for credit losses and off-balance sheet credit exposures of $25,000 and $400,000 for the second quarter of 2025 and 2024, respectively. The Company recorded a provision for credit losses and off-balance sheet credit exposures of $930,000 and $495,000 for the first half 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 second quarter of 2025 was driven by an increase in nonaccrual loans of $3.4 million, partially offset by the decrease in total loans of $24.9 million, or 2.2%, as compared to March, 31, 2025.

Current wording

The Company recorded a release of credit losses and off-balance sheet credit exposures of $193,000 and $140,000 for the third quarter of 2025 and 2024, respectively. The Company recorded a provision for credit losses and off-balance sheet credit exposures of $737,000 and $355,000 for the nine months ended September 30, 2025 and 2024, respectively. The amount of the provision for (release of) credit losses is derived from the Company’s quarterly Current Expected Credit Loss (“CECL”) model. The amount of the provision for (release of) credit losses will fluctuate as determined by these quarterly analyses. The release of credit losses in the third quarter of 2025 was driven by the decrease in total loans of $28.7 million, or 2.6%, partially offset by the increase in nonaccrual loans of $3.7 million as compared to June 30, 2025.

Previous wording

The Company experienced no loan charge-offs in the second quarter of 2025 and 2024. The ACL was $14.3 million at June 30, 2025 and $13.4 million at December 31, 2024. The ACL represented 1.28% of outstanding loans at June 30, 2025 and 1.24% of outstanding loans at December 31, 2024. The allowance for unfunded commitments was $302,000 at June 30, 2025 and $273,000 at December 31, 2024. There were $3.4 million of nonperforming loans outstanding at June 30, 2025 and $0 at December 31, 2024. The Company has a specific allowance for credit losses of $160,000 allocated to its nonaccrual loans at June 30, 2025.

Current wording

The Company experienced no loan charge-offs in the third quarter of 2025 and 2024. The ACL was $14.1 million at September 30, 2025 and $13.4 million at December 31, 2024. The ACL represented 1.29% of outstanding loans at September 30, 2025 and 1.24% of outstanding loans at December 31, 2024. The allowance for unfunded commitments was $339,000 at September 30, 2025 and $273,000 at December 31, 2024. There were $7.1 million of nonperforming loans outstanding at September 30, 2025 and $0 at December 31, 2024. The Company has a specific allowance for credit losses of $141,000 allocated to its nonaccrual loans at September 30, 2025.

Previous wording

Total operating expenses for the second quarter of 2025 decreased $290,000, or 0.8%, as compared to the second quarter of 2024. Total operating expenses for the first half of 2025 decreased $968,000, or 1.3%, as compared to the first half of 2024. The following table details the components of operating expenses:

Current wording

Total operating expenses for the third quarter of 2025 decreased $4.3 million, or 10.1%, as compared to the third quarter of 2024. Total operating expenses for the nine months ended 2025 decreased $5.3 million, or 4.5%, as compared to the nine months ended 2024. The following table details the components of operating expenses:

Previous wording

Personnel expenses increased $1.5 million, or 5.7%. Salaries and commissions increased $245,000, or 1.2%, 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 5.9% due to strategic investments in various technology initiatives. Share-based compensation and employee profit sharing increased $468,000 and $682,000, respectively, due to the improvement in earnings. Other benefits increased $304,000, or 7.1%, due to higher health insurance costs, partially offset by the decline in average FTEs.

Current wording

Personnel expenses increased $1.1 million, or 4.1%. Salaries and commissions decreased $425,000, or 2.1%, as a result of a decrease in average full-time equivalent employees ("FTEs") of 6.9% due to strategic investments in various technology initiatives. Share-based compensation and employee profit sharing increased $155,000 and $1.1 million, respectively, due to the improvement in earnings. Other benefits increased $491,000, or 11.4%, due to higher health insurance costs, partially offset by the decline in average FTEs.

Previous wording

Equipment expense increased $626,000, primarily due to an increase in depreciation expense on software related to recently completed technology initiatives.

Current wording

Equipment expense increased $455,000, primarily due to an increase in depreciation expense on software related to recently completed technology initiatives.

Previous wording

The Company incurred bad debt expense of $1.3 million during the second quarter of 2024 and $0 in the second quarter of 2025.

Current wording

The Company incurred bad debt expense of $6.6 million during the third quarter of 2024 and $0 in the third quarter of 2025.

Previous wording

Personnel expenses increased $1.9 million, or 3.5%. Salaries and commissions increased $386,000, or 1.0%, 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 4.7% due to strategic investments in various technology initiatives. Share-based compensation and employee profit sharing increased $514,000 and $734,000, respectively, due to the improvement in earnings. Other benefits increased $632,000, or 7.1%, due to higher health insurance costs, partially offset by the decline in average FTEs.

Current wording

Personnel expenses increased $3.0 million, or 3.7%. Salaries and commissions decreased $39,000, or 0.1%, as a result of a decrease in average full-time equivalent employees ("FTEs") of 5.1% due to strategic investments in various technology initiatives Share-based compensation and employee profit sharing increased $669,000 and $1.8 million, respectively, due to the improvement in earnings. Other benefits increased $1.1 million, or 8.5%, due to higher health insurance costs, partially offset by the decline in average FTEs.

Previous wording

Equipment expense increased $1.1 million primarily due to an increase in depreciation expense on software related to recently completed technology initiatives.

Current wording

Equipment expense increased $1.5 million primarily due to an increase in depreciation expense on software related to recently completed technology initiatives.

Previous wording

The Company recorded a bad debt recovery during the first half of 2025 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. The Company incurred $1.3 million of bad debt expense in the first half of 2024 related to the same matter.

Current wording

The Company recorded a bad debt recovery during the nine months ended 2025 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. The Company incurred $7.8 million of bad debt expense in the nine months ended 2024 related to the same matter.

Previous wording

Net income from discontinued operations was $4.1 million, an increase of $3.8 million over the same period in the prior year. The increase is primarily due to the gain on sale of the TEM Business Unit of $3.6 million in the second quarter of 2025 in addition to $1.8 million of other non-recurring fee income during the first half of 2025 as compared to $660,000 in the same period in 2024.

Current wording

Net income from discontinued operations was $4.0 million, an increase of $3.8 million over the same period in the prior year. The increase is primarily due to the gain on sale of the TEM Business Unit of $3.6 million in the second quarter of 2025.

Previous wording

Total assets at June 30, 2025 were $2.32 billion, a decrease of $79.1 million, or 3.3%, from December 31, 2024.

Current wording

Total assets at September 30, 2025 were $2.45 billion, an increase of $58.5 million, or 2.4%, from December 31, 2024.

Previous wording

The Company experienced a decrease in cash and cash equivalents of $131.6 million, or 37.6%, during the first half 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, investment securities and payments in advance of funding.

Current wording

The Company experienced a decrease in cash and cash equivalents of $91.1 million, or 26.0%, during the nine months ended 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, investment securities and payments in advance of funding.