CASS INFORMATION SYSTEMS INC
For the period ended Dec 31, 2025. Filed Mar 6, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 6, 2026
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-K
Period ended 2024-12-31; filed 2025-03-05.
0000708781-25-000018
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-06.
0000708781-26-000010
Item 7. 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 130 previous paragraphs and 160 current paragraphs.
60 unchanged; 42 reworded; 58 added; 27 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 14 previous and 15 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 (58)
Current report
Forward-Looking Statements and Factors that Could Affect Future Results
Current report
Certain statements contained in this Annual Report on Form 10-K that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in the Company's future filings with the SEC, in press releases, and in oral and written statements made by the Company or with the Company's approval that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of the Company or its management or Board of Directors, including those relating to products, services or operations; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may,” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Current report
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
Current report
•The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board and the implementation of tariffs and other protectionist trade policies.
Current report
•Inflation, interest rate, securities market, and monetary fluctuations.
Current report
•Changes in energy prices.
Current report
•Changes in freight rates.
Current report
•Local, regional, national, and international economic conditions and the impact they may have on the Company and its customers and its assessment of that impact.
Current report
•Changes in the financial performance and/or condition of the Company's borrowers.
Current report
•Changes in the mix of loan sectors and types or the level of non-performing assets and charge-offs.
Current report
•Changes in estimates of future allowance for credit losses requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.
Current report
•Impairment of the Company's goodwill or other intangible assets.
Current report
•Changes in consumer spending, borrowing, and saving habits.
Current report
•Technological changes, including artificial intelligence.
Current report
•The cost and effects of cyber incidents or other failures, interruptions, or security breaches of the Company's systems or those of the Company's customers or third-party providers.
Current report
•Acquisitions and integration of acquired businesses.
Current report
•Changes in the reliability of the Company's vendors, internal control systems or information systems.
Current report
•The Company's ability to increase market share and control expenses.
Current report
•The Company's ability to attract and retain qualified employees.
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•Changes in the Company's organization, compensation, and benefit plans.
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•The soundness of other financial institutions.
Current report
•Volatility and disruption in national and international financial and commodity markets.
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•Government intervention in the U.S. financial system.
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•Political or economic instability.
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•Acts of God or of war or terrorism.
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•The potential impact of climate change.
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•The impact of pandemics, epidemics, or any other health-related crisis.
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•The costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals.
Current report
•The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) and their application with which the Company must comply.
Current report
•The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.
Current report
•The Company's success at managing the risks involved in the foregoing items.
Current report
In addition, financial markets, international relations, and global supply chains have been significantly impacted by recent U.S. trade policies and practices. Due to the rapidly evolving and changing state of U.S. trade policies, the amount and duration of any tariffs and their ultimate impact on the Company, its customers, financial markets, and the overall U.S. and global economies is currently uncertain. Nonetheless, prolonged uncertainty, elevated tariff levels or their wide-spread use in U.S. trade policy could weaken economic conditions and adversely impact the ability of borrowers to repay outstanding loans or the value of collateral securing these loans or adversely affect financial markets or the values of securities. To the extent that these risks may have a negative impact on the financial condition of borrowers or financial markets, it could also have a material adverse effect on the Company's business, financial condition and results of operations.
Current report
Forward-looking statements speak only as of the date on which such statements are made.The Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.
Current report
While freight rates have recently begun gradually increasing after a number of quarters of decline since 2023, volumes continue to decline on a year-over-year basis, which continues to put pressure on transportation related processing fees. In addition, carrier consolidation with small and medium-sized trucking companies exiting the market or selling to larger carriers continues to put downward pressure on financial fees as the smaller trucking companies were larger users of our quick pay solutions.
Current report
The Company started to see increased tariff related charges on shipping invoices of its clients beginning in April 2025. The Company estimates that transportation dollar volumes were approximately $600 million higher in 2025 than 2024 due to the impact of tariffs. The Company benefits from higher dollar volumes given the related increases in accounts and drafts payable and interest income.
Current report
The Company has experienced an increase in facility dollar volumes in recent quarters due to higher energy usage and prices, in addition to onboarding new clients with high dollar volumes as compared to the related transaction count. Energy prices are rising due to a number of factors, including an aging power grid, and rising demand for electricity as a result of data center construction to power artificial intelligence and electric vehicles.
Current report
Net interest income increased $13.5 million, or 19.8%, as compared to the same period last year. The increase in net interest income was attributable to the net interest margin improving to 3.83% as compared to 3.42% in the same period last year, in addition to an increase in average interest-earning assets of $136.8 million, or 6.8%. 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
The One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025. Among other things, the new law makes permanent certain expiring business tax provisions of the Tax Cuts and Jobs Act (“TCJA”). These include provisions which allow businesses to immediately expense, for tax purposes, the cost of new investments in certain qualified depreciable assets and the cost of qualified domestic research and development. The OBBBA also imposes a floor on tax deductions taken on charitable contributions. The OBBBA also significantly changes U.S. tax law related to foreign operations and certain tax credits. The impact of the OBBBA is not expected to have a material impact on the Company's consolidated financial statements.
Current report
Discontinued Operations
Current report
On April 7, 2025, the Company signed an Asset Purchase Agreement providing for the sale of its Telecom Expense Management & Managed Mobility Services (“TEM”) business to Asignet USA Inc. The sale closed on June 30, 2025. We have applied discontinued operations accounting in accordance with FASB Accounting Standards Codification (“ASC”), Topic 205-20, “Presentation of Financial Statements – Discontinued Operations,” to the assets and liabilities sold related to the Company's TEM Business Unit as of and for the years ended December 31, 2025, 2024, and 2023, as applicable. All financial information in this Annual Report on Form 10-K is reported on a continuing operations basis, unless otherwise noted. See Note 2 and Note 20 to the Company's consolidated financial statements for further discussion regarding discontinued operations and subsequent events associated with discontinued operations.
Showing the first 40 of 58 passages. Open the source sections for the rest.
Removed paragraphs (27)
Previous report
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 0.6% and 5.7%, respectively during the year ended December 31, 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.
Previous report
Average interest-earning assets for December 31, 2024 declined $65.4 million, or 3.1%, as compared to 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 a CassPay 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 8.1%, leading to higher average accounts and drafts payable.
Previous report
The Company recorded bad debt expense of $7.8 million for the year ended December 31, 2024 on a funding receivable related to a facility client. See Note 15, "Commitments and Contingencies" for further information.
Previous report
During July 2024, the Company approved an Amendment providing for the termination of its noncontributory defined-benefit pension plan. The Company recorded a one-time termination expense of approximately $3.5 million through operating expense related to the plan termination during the fourth quarter of 2024 as the plan liabilities were 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
In December 2024, the Company acquired AcuAudit, a freight audit platform for ocean and international air freight, from Acuitive Solutions LLC. The Asset Purchase Agreement reflects a base purchase price of $3.0 million and an earnout based on annualized recurring revenue at the end of 24 months. Current annualized recurring revenue is approximately $2.5 million. The Company expects the impact of the acquisition to be EBITDA neutral in 2025 and a minimal negative impact to diluted earnings per share driven by intangible amortization.
Previous report
Various indicators are used by management in evaluating the Company's financial condition and operating performance. Among these indicators are net income and earnings per share, total revenue, operating expense, asset quality indicators such as nonperforming assets to assets and net charge-offs to average loans, and return on average assets and equity.
Previous report
The Company posted a 0.82% return on average assets and 8.37% return on average equity. The Company did not have any nonperforming assets at December 31, 2024 and did not have any loan charge-offs during 2024.
Previous report
(1)Includes utility, telecom and waste
Previous report
Processing fees increased $3.1 million, or 3.9%, during 2024 largely driven by a 23.7% increase in facility transaction volumes. Transportation invoice volumes decreased 0.6% over the same period. The decline in transportation volumes is primarily due to the on-going freight recession.
Previous report
Financial fees decreased $2.7 million, or 5.8%, in 2024 primarily attributable to the decline in transportation invoice dollar volumes of 5.7%. The decline in transportation invoice dollar volumes had a direct effect on the 13.6% decrease in average payments in advance of funding, which is the primary generator of financial fees.
Previous report
Other income increased $965,000, or 19.6%, in 2024 largely due to higher bank-owned life insurance revenue and TouchPoint fees.
Previous report
Average loans decreased $6.9 million, or 0.7%, to $1.05 billion. This decrease was 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 5.28% in 2024.
Previous report
Average investment securities decreased $97.5 million, or 13.3%, due to the sale and maturity of investment securities throughout 2024. The investment portfolio will expand and contract over time as the Company manages its liquidity and interest rate position. The average tax-equivalent yield on investment securities increased 19 basis points to 2.82% in 2024 as a result of purchases of new investment securities at current market interest rates, which are higher than the average interest rate in the current investment portfolio.
Previous report
The average balance of interest-bearing deposits increased $63.5 million, or 11.1%. Average non-interest-bearing demand deposits decreased $97.9 million, or 19.1%. 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 100 basis point decline in the Federal Funds rate. The average rate paid on interest-bearing deposits increased 36 basis points to 3.19% in 2024 due to higher average short-term interest rates.
Previous report
Average accounts and drafts payable decreased $50.7 million, or 4.7%. The decrease in these balances, which are non-interest bearing, are primarily reflective of a cyber event at a CassPay client during the first quarter of 2024, which decreased average balances by approximately $100.0 million, and a decrease in transportation dollar volumes of 0.6%, partially offset by an increase in facility dollar volumes of 8.1%. Accounts and drafts payable are a significant source of funding generated by payment float from transportation and facility clients.
Previous report
Performing loans subject to special monitoring increased from $5.5 million at December 31, 2023 to $51.2 million at December 31, 2024. These loans possess some credit deficiency or potential weakness which requires a higher level of management attention. The increase during 2024 is primarily due to a large franchise restaurant relationship that has experienced some level of financial weakness. However, the Company does not believe there is any concern of credit loss at December 31, 2024.
Previous report
Operating Expenses
Previous report
Total operating expenses increased 9.3% in 2024 compared to 2023.
Previous report
Share-based compensation decreased $1.0 million, reflecting the Company's financial performance and the impact on performance-based restricted stock between the periods.
Previous report
Other benefits, such as 401(k) match, health insurance and payroll taxes decreased $507,000, or 2.5%.
Previous report
The Company recorded bad debt expense during 2024 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
Other operating expense increased $1.3 million, or 4.2%, to $31.2 million. The Company incurred $1.3 million of late fees on facility transactions during 2024 driven by a check processing delay with a third-party vendor, the same CassPay client which incurred the cyber attack.
Previous report
Investment securities decreased $99.1 million, or 15.8%, during 2024 to $528.0 million at December 31, 2024. U.S. Treasury securities decreased $108.7 million to $0 at December 31, 2024 compared to $108.7 million at December 31,
Previous report
•A decrease in share-based compensation expense of $1.0 million;
Previous report
•A change in the FASB ASC 715 pension adjustment of $2.6 million; and
Previous report
•A change in the provision for (release of) credit losses of $1.0 million primarily due to changes in loans outstanding during the respective periods.
Previous report
On an overall basis, the Company's $2.0 million increase in net cash provided by operating activities was primarily due to changes in cash flows from fluctuations in tax and other accounts offset by the decline in net income.
Reworded paragraphs (42)
Previous wording
Despite the decline in average interest-earning assets during the year, the Company’s liquidity position and balance sheet remains strong. The Company maintained average short-term investments of $326.2 million during 2024. In addition, all of the Company's investment securities are classified as available-for-sale and there were no outstanding borrowings at December 31, 2024.
Current wording
•Changes in the Company's liquidity position.
Previous wording
Industry-wide factors that impact the Company include the willingness of large corporations to outsource key business functions such as freight, energy, telecommunication and environmental payment and audit. The benefits that can be achieved by outsourcing transaction processing, and the management information generated by Cass’ systems can be influenced by factors such as the competitive pressures within industries to improve profitability, the general level of transportation costs, deregulation of energy costs, and consolidation of telecommunication providers. Economic factors that impact the Company include the general level of economic activity that can affect the volume and size of invoices processed, the ability to hire and retain qualified staff, and the growth and quality of the loan portfolio. The general level of interest rates also has a significant effect on the revenue of the Company. As discussed in greater detail in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” a decline in the general level of interest rates can have a negative impact on net interest income and conversely, a rise in the general level of interest rates can have a positive impact on net interest income. The cost of fuel is another factor that has a significant impact on the transportation sector. As the price of fuel goes up or down, the Company’s earnings increase or decrease with the dollar amount of transportation invoices.
Current wording
Industry-wide factors that impact the Company include the willingness of large corporations to outsource key business functions such as freight, energy, and environmental payment and audit. The benefits that can be achieved by outsourcing transaction processing, and the management information generated by Cass’ systems can be influenced by factors such as the competitive pressures within industries to improve profitability, the general level of transportation costs and deregulation of energy costs. Economic factors that impact the Company include the general level of economic activity that can affect the volume and size of invoices processed, the ability to hire and retain qualified staff, and the growth and quality of the loan portfolio. The general level of interest rates also has a significant effect on the revenue of the Company. As discussed in greater detail in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” a decline in the general level of interest rates can have a negative impact on net interest income and conversely, a rise in the general level of interest rates can have a positive impact on net interest income. The cost of energy is another factor that has a significant impact on the transportation and facility sectors. As the price of energy goes up or down, the Company’s earnings increase or decrease with the dollar amount of transportation and facility expense invoices.
Previous wording
The Company continues to operate profitably, posting a 0.82% return on average assets and 8.37% return on average equity. The Company’s common equity Tier 1 capital ratio was 13.84% at December 31, 2024, significantly exceeding regulatory requirements. In addition, the Company has maintained exceptional credit quality with no non-performing loans at December 31, 2024, and no loan charge-offs during the year ended December 31, 2024.
Current wording
The Company continues to operate profitably, posting a 1.43% return on average assets and 14.98% return on average equity. The Company’s common equity Tier 1 capital ratio was 15.10% at December 31, 2025, significantly exceeding regulatory requirements. In addition, the Company has maintained exceptional credit quality with no loan charge-offs during the year ended December 31, 2025.
Previous wording
The Company’s solid capital and liquidity positions, combined with ongoing earnings, are expected to continue to allow for investment in strategic opportunities when they become available, in addition to return of capital to shareholders. The Company delivered $16.5 million in dividend payments and $7.2 million in share repurchases during 2024. The Company continues to invest in the technology, processes, and people required to support its multi-national customer base.
Current wording
The Company’s solid capital and liquidity positions, combined with ongoing earnings, are expected to continue to allow for investment in strategic opportunities when they become available, in addition to return of capital to shareholders. The Company delivered $16.5 million in dividend payments and $26.0 million in share repurchases during 2025. The Company continues to invest in the technology, processes, and people required to support its multi-national customer base.
Previous wording
The Company recorded revenue of $199.2 million in December 31, 2024, up 0.8% from the prior year, due to increases in processing fees and net interest income, partially offset by a decrease in financial fees and the negative variance in the provision for (release of) credit losses. Operating expenses increased 9.3% largely driven by $7.8 million of bad debt expense experienced on a funding receivable related to a facility client as well as a one-time non-cash expense of $3.5 million in the fourth quarter of 2024 related to the termination of its noncontributory defined-benefit pension plan. Net income was $19.2 million and diluted EPS was $1.39 per share, decreases of 36.2% for both from the prior year.
Current wording
The Company recorded revenue of $190.8 million in 2025, up 5.3% from the prior year, largely due to an increase in net interest income, partially offset by a decrease in financial fees and a loss on sale of investment securities. Operating expense decreased 3.6% in 2025, largely driven by $7.8 million of bad debt expense in 2024 and $2.0 million of bad debt recovery experienced in 2025. Net income was $35.1 million and diluted EPS was $2.61 per share in 2025, increases of 83.2% and 87.8%, respectively, from the prior year.
Previous wording
The increase in net interest income in 2024 as compared to 2023 is primarily due to an increase in the net interest margin to 3.42% as compared to 3.25% in the prior year. The increase in the net interest margin was partially offset by a decrease in average earning assets of $65.4 million, or 3.1%. The yield on interest-earning assets increased 39 basis points from 4.04% in 2023 to 4.43% in 2024 while the cost of interest-bearing liabilities increased 35 basis points from 2.84% in 2023 to 3.19% in 2024.
Current wording
The $13.5 million increase in net interest income in 2025 as compared to 2024 was primarily due to an increase in net interest margin to 3.83% as compared to 3.42% in the prior year, in addition to the increase in average earning assets of $136.8 million, or 6.8%. The yield on interest-earning assets increased 16 basis points from 4.43% in 2024 to 4.59% in 2025 while the cost of interest-bearing liabilities decreased 55 basis points from 3.19% in 2024 to 2.64% in 2025.
Previous wording
Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $39.0 million, or 13.6%. 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 5 basis points to 4.83% in 2024 primarily due to the higher short-term market interest rates when comparing the periods. 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 $23.7 million, or 7.3% in 2025 compared to 2024. 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 88 basis points to 3.95% primarily due to the decrease in the Federal Funds rate. The majority of these short-term investments are held at the Federal Reserve Bank.
Previous wording
(2)Interest income on loans includes net loan fees of $477,000, $686,000, and $684,000 for 2024, 2023 and 2022, respectively. Loan fees include $0, $0, and $167,000 of Paycheck Protection Program ("PPP") loan fees for 2024, 2023 and 2022, respectively.
Current wording
(2)Interest income on loans includes net loan fees of $744,000, $477,000, and $686,000 for 2025, 2024 and 2023, respectively.
Previous wording
(3)Interest income is presented on a tax-equivalent basis assuming a tax rate of 21%. The tax-equivalent adjustment was approximately $1.0 million, $1.1 million, and $1.7 million for 2024, 2023, and 2022, respectively.
Current wording
(3)Interest income is presented on a tax-equivalent basis assuming a tax rate of 21%. The tax-equivalent adjustment was approximately $1.1 million, $1.0 million, and $1.1 million for 2025, 2024, and 2023, respectively.
Previous wording
Interest earned on the loan portfolio is a primary source of income for the Company. The loan portfolio was $1.08 billion, representing 45.2% of the Company's total assets as of December 31, 2024 and generated $55.4 million in interest income during the year ended December 31, 2024. The following tables show the composition of the loan portfolio at the end of the periods indicated and remaining maturities for loans as of December 31, 2024.
Current wording
Interest earned on the loan portfolio is a primary source of income for the Company. The loan portfolio was $1.06 billion, representing 40.7% of the Company's total assets as of December 31, 2025 and generated $62.3 million in interest income during the year ended December 31, 2025. The following tables show the composition of the loan portfolio at the end of the periods indicated and remaining maturities for loans as of December 31, 2025.
Previous wording
The Company does not have any foreign loans. The Company's loan portfolio includes $110,000 of single family real estate mortgages, as the Company does not market its services to retail customers. Also, the Company had no sub-prime mortgage loans or residential development loans in its portfolio in any of the years presented.
Current wording
At December 31, 2025, the Company did not have any foreign loans or single family real estate mortgages, as the Company does not market its services to retail customers. Also, the Company had no sub-prime mortgage loans or residential development loans in its portfolio in any of the years presented.
Previous wording
Loans increased $67.7 million, or 6.7%, to $1.08 billion at December 31, 2024. Franchise restaurant loans, which are included in commercial and industrial loans, increased $43.1 million during 2024. Faith-based loans increased $5.2 million, during 2024. Additional details regarding the types and maturities of loans in the loan portfolio are contained in the tables above and in Item 8, Note 4.
Current wording
Loans decreased $20.8 million, or 1.9%, to $1.06 billion at December 31, 2025 as compared to December 31, 2024. Franchise restaurant loans, which are included in commercial and industrial loans, decreased $22.1 million during 2025. Faith-based loans increased $3.2 million during 2025. Additional details regarding the types and maturities of loans in the loan portfolio are contained in the tables above and in Item 8, Note 5.
Previous wording
The Company recorded a provision for credit losses and off-balance sheet credit exposures of $447,000 in 2024 and a release of credit losses of $550,000 in 2023. The amount of the provision for (release of) credit losses was derived from the Company’s CECL model. The amount of the provision will fluctuate as determined by these analyses. The Company had no loan charge-offs or recoveries in 2024 and 2023. The ACL was $13.4 million at December 31, 2024 compared to $13.1 million at December 31, 2023. The ACL represented 1.24% and 1.29% of outstanding loans at December 31, 2024 and December 31, 2023, respectively. The allowance for unfunded commitments was $273,000 at December 31, 2024 and $132,000 at December 31, 2023. There were no nonperforming loans outstanding at December 31, 2024 or December 31, 2023.
Current wording
The Company recorded a provision for credit losses and off-balance sheet credit exposures of $348,000 and $447,000 in 2025 and 2024, respectively. The amount of the provision for credit losses was derived from the Company’s CECL model. The amount of the provision will fluctuate as determined by these analyses. The Company had no loan charge-offs or recoveries in 2025 and 2024. The ACL was $13.6 million at December 31, 2025 compared to $13.4 million at December 31, 2024. The ACL represented 1.28% and 1.24% of outstanding loans at December 31, 2025 and December 31, 2024, respectively. The allowance for unfunded commitments was $419,000 at December 31, 2025 and $273,000 at December 31, 2024. The balance of nonperforming loans outstanding was $7.0 million at December 31, 2025 and $0 at December 31, 2024.
Previous wording
There were no nonaccrual loans at December 31, 2024 and December 31, 2023. There were no foreclosed assets at December 31, 2024 or December 31, 2023.
Current wording
There were three nonaccrual loans with a balance of $7.0 million at December 31, 2025 and none at December 31, 2024. There were no foreclosed assets at December 31, 2025 or December 31, 2024.
Previous wording
The Company does not have any other interest-earning assets which would have been included in nonaccrual, past due or restructured loans if such assets were loans.
Current wording
The Company did not have any other interest-earning assets which would have been included in nonaccrual, past due or restructured loans if such assets were loans.
Previous wording
Operating expenses in 2024 compared to 2023 and 2022 include the following significant pre-tax components:
Current wording
Operating expense in 2025 compared to 2024 and 2023 include the following significant pre-tax components:
Previous wording
Salaries and commissions increased $2.9 million, or 3.1%, as a result of merit increases and an increase in average full-time equivalent employees ("FTEs") of 1.6%.
Current wording
Personnel expenses increased $729,000, or 0.7% in 2025 compared to 2024. Salaries and commissions increased $339,000, or 0.4%, as a result of the AcuAudit acquisition and merit increases, partially offset by a decrease in average full-time equivalent employees ("FTEs") of 5.4% due to strategic investments in various technology initiatives. Share-based compensation increased $1.1 million due to the improvement in earnings. Other benefits increased $1.6 million, or 9.2%, due to higher health insurance costs, partially offset by the decline in average FTEs.
Previous wording
Net periodic pension cost increased $3.3 million. The Company recorded a one-time non-cash expense of $3.5 million in the fourth quarter of 2024 related to the termination of its noncontributory defined-benefit pension plan. The termination of the plan is expected to reduce run rate operating expense by approximately $1.0 million on an annual basis.
Current wording
Net periodic pension cost decreased $4.2 million in 2025 compared to 2024. The Company recorded a one-time non-cash expense of $3.5 million in the fourth quarter of 2024 related to the termination of its noncontributory defined-benefit pension plan.
Previous wording
Equipment expense increased $1.2 million, or 16.3%, primarily due to an increase in depreciation expense on software related to recently completed technology initiatives.
Current wording
Equipment expense increased $1.8 million, or 22.4%, in 2025 compared to 2024, primarily due to an increase in depreciation expense on software related to recently completed technology initiatives.
Previous wording
Income tax expense in 2024 totaled $5.1 million, compared to $7.3 million in 2023. When measured as a percent of pre-tax income, the Company’s effective tax rate was 20.9% and 19.5% in 2024 and 2023, respectively. The increase in the effective tax rate in 2024 compared to 2023 was primarily due to a lower level of tax-free interest income on municipal securities in the current year, in addition to $304,000 of tax penalties incurred in 2024 on the surrender and redeployment of bank-owned life insurance policies to increase future noninterest income.
Current wording
Income tax expense in 2025 totaled $7.6 million, compared to $4.9 million in 2024. When measured as a percent of pre-tax income, the Company’s effective tax rate was 19.70% and 20.80% in 2025 and 2024, respectively. The decrease in the effective tax rate in 2025 compared to 2024 is reflective of purchases of tax-exempt municipal investment securities during 2025 and the impact of certain tax credits.
Previous wording
State and political securities decreased $47.1 million, or 21.5%, to $172.0 million at December 31, 2024. Mortgage-backed securities increased $75.5 million, or 47.8%, to $233.3 million at December 31, 2024. The investment portfolio provides the Company with a significant source of earnings, secondary source of liquidity, and mechanisms to manage the effects of changes in loan demand and interest rates. Therefore, the size, asset allocation and maturity distribution of the investment portfolio will vary over time depending on management’s assessment of current and future interest rates, changes in loan demand, changes in the Company’s sources of funds and the economic outlook. During 2024, the Company purchased investment securities totaling $119.7 million and sold investment securities totaling $60.1 million. The Company generally utilized funds from maturities and sales of U.S. Treasury securities and state and political securities to increase short-term investments and fund purchases of mortgage-backed securities.
Current wording
Investment securities available-for-sale increased $242.8 million, or 46.0%, during 2025 to $770.8 million at December 31, 2025. State and political securities increased $68.2 million, or 39.7%, to $240.2 million at December 31, 2025. Mortgage-backed securities increased $245.4 million to $478.7 million at December 31, 2025. Corporate bonds decreased $58.9 million to $28.9 million at December 31, 2025. The investment portfolio provides the Company with a significant source of earnings, secondary source of liquidity, and mechanisms to manage the effects of changes in loan demand and interest rates. Therefore, the size, asset allocation and maturity distribution of the investment portfolio will vary over time depending on management’s assessment of current and future interest rates, changes in loan demand, changes in the Company’s sources of funds and the economic outlook. During 2025, the Company purchased investment securities totaling $435.2 million and sold investment securities totaling $129.9 million, including the sale of $34.0 million of corporate bonds in June 2025 to reposition the investment portfolio. The growth in the investment portfolio was primarily due to utilization of cash proceeds from an increase in funding sources.
Previous wording
Total deposits decreased $172.9 million, or 15.2% during 2024. Noninterest-bearing demand deposits decreased $273.1 million, or 52.1%, to $251.2 million at December 31, 2024 and interest-bearing deposits increased $100.2 million, or 16.3%, to $716.7 million at December 31, 2024. 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 100 basis point cumulative decline in the Federal Funds rate in the fourth quarter of 2024. The decrease in total deposits between the periods was also driven by timing of customer funds. The average balance of deposits is more indicative of trends period to period.
Current wording
Total deposits increased $232.1 million, or 24.0% during 2025 compared to 2024. Noninterest-bearing demand deposits increased $262.2 million, or 104.4%, to $513.4 million at December 31, 2025 and interest-bearing deposits decreased $30.1 million, or 4.2%, to $686.6 million at December 31, 2025. The increase in total deposits between the periods was driven by timing of customer funds. The average balance of deposits is more indicative of trends period to period.
Previous wording
Accounts and drafts payable generated by the Company in its payment processing operations increased $77.9 million, or 7.3%, to $1.15 billion, at December 31, 2024. Due to the Company’s payment processing cycle, average balances are much more indicative of the underlying activity than period-end balances since point-in-time comparisons can be misleading if the comparison dates fall on different days of the week. Average accounts and drafts payable decreased $50.7 million, or 4.7%, to $1.03 billion during 2024. The decrease in these balances, which are non-interest bearing, are primarily reflective of a cyber event at a CassPay client during the first quarter of 2024, which decreased average balances by approximately $100.0 million, and a decrease in transportation dollar volumes of 0.6%, partially offset by an increase in facility dollar volumes of 8.1%.
Current wording
Accounts and drafts payable generated by the Company in its payment processing operations decreased $4.8 million, or 0.4%, from the prior year to $1.12 billion, at December 31, 2025. Due to the Company’s payment processing cycle, average balances are much more indicative of the underlying activity than period-end balances since point-in-time comparisons can be misleading if the comparison dates fall on different days of the week. Average accounts and drafts payable increased $150.3 million, or 14.9%, to $1.16 billion during 2025. The increase in these balances, which are non-interest bearing, are primarily reflective of the increase in transportation and facility dollar volumes of 0.9%, and 14.7%, respectively.
Previous wording
2024 is primarily attributed to a decrease in deposits and an increase in loans, partially offset by decreases in securities available-for-sale and accounts and drafts receivable from customers and an increase in accounts and drafts payable. At December 31, 2024, cash and cash equivalents represented 14.6% 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 includes cash and due from banks, interest-bearing deposits in other financial institutions, federal funds sold, and money market funds. These balances totaled $392.3 million at December 31, 2025, an increase of $42.5 million, or 12.2%, from December 31, 2024. The increase during 2025 is primarily attributed to an increase in deposits and a decrease in loans, partially offset by increases in securities available-for-sale and accounts and drafts receivable from customers. At December 31, 2025, cash and cash equivalents represented 15.1% of total assets and were 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 available-for-sale at fair value were $528.0 million at December 31, 2024, a decrease of $99.1 million, or 15.8%, from December 31, 2023. Investment securities represented 22.0% of total assets at December 31, 2024. Of the total portfolio, 1.7% mature in one year or less, 19.4% mature after one year through five years and 78.9% mature after five years.
Current wording
Secondary sources of liquidity include the investment portfolio and borrowing lines. Total investment securities available-for-sale at fair value were $770.8 million at December 31, 2025, an increase of $242.8 million, or 46.0%, from December 31, 2024. Investment securities represented 29.6% of total assets at December 31, 2025. Of the total portfolio, 0.9% mature in one year or less, 9.2% mature after one year through five years and 89.9% mature after five years.
Previous wording
As of December 31, 2024, the Bank had unsecured lines of credit at six correspondent banks to purchase federal funds up to a maximum of $83.0 million in aggregate. As of December 31, 2024, the Bank had secured lines of credit with the Federal Home Loan Bank of $183.6 million collateralized by commercial mortgage loans. At December 31, 2024, the Company had lines of credit from three banks up to a maximum of $250.0 million in aggregate collateralized by state and political subdivision securities. There were no amounts outstanding at December 31, 2024 and 2023 under any of the lines of credit.
Current wording
As of December 31, 2025, the Bank had unsecured lines of credit at six correspondent banks to purchase federal funds up to a maximum of $83.0 million in aggregate. As of December 31, 2025, the Bank had secured lines of credit with the Federal Home Loan Bank of $239.9 million collateralized by commercial mortgage loans. At December 31, 2025, the Company had lines of credit from three banks up to a maximum of $225.0 million in aggregate collateralized by state and political subdivision securities. There were no amounts outstanding at December 31, 2025 and 2024 under any of the lines of credit.
Previous wording
Net cash flows provided by operating activities for the years 2024, 2023 and 2022 were $38.9 million, $36.9 million, and $51.6 million, respectively. Net income plus depreciation and amortization accounts for most of the operating cash provided. 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. Further analysis of the changes in these account balances is discussed earlier in this report. Due to the daily fluctuations in these account balances, management believes that 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, cash from operations, and borrowing lines will continue to be sufficient to fund the Company’s operations and capital expenditures in 2025. The Company estimates that capital expenditures for 2025 should range from $6 million to $8 million. Capital expenditures in 2025 are expected to primarily consist of purchases of equipment and software related to the payment and information processing services business.
Current wording
Net cash flows provided by operating activities for the years 2025, 2024 and 2023 were $37.4 million, $38.9 million, and $36.9 million, respectively. Net income plus depreciation and amortization accounts for most of the operating cash provided. 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. Further analysis of the changes in these account balances is discussed earlier in this report. Due to the daily fluctuations in these account balances, management believes that 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, cash from operations, and borrowing lines will continue to be sufficient to fund the Company’s operations and capital expenditures in 2025. The Company estimates that capital expenditures for 2026 should range from $4.0 million to $6.0 million. Capital expenditures in 2026 are expected to primarily consist of purchases of equipment and software related to the payment and information processing services business.
Previous wording
Net income plus amortization of intangible assets, net amortization of premium/discount on investment securities and depreciation of premises and equipment was $28.7 million and $39.5 million for the years ended December 31, 2024 and December 31, 2023, respectively, a decrease of $10.8 million year over year. The decrease was due to the decrease in net income of $10.9 million and lower net amortization of premium/discount on investment securities of $882,000, partially offset by an increase in depreciation of $1.1 million. 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.
Current wording
Net income plus amortization of intangible assets, net amortization of premium/discount on investment securities and depreciation of premises and equipment was $43.3 million and $28.5 million for the years ended December 31, 2025 and December 31, 2024, respectively, an increase of $14.8 million year over year. The increase was due to the increase in net income of $15.9 million, an increase in amortization of intangible assets of $480,000, and an increase in depreciation of $1.0 million, partially offset by lower net amortization of premium/discount on investment securities of $2.6 million. 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 $2.0 million increase in net cash provided by operating activities include:
Current wording
Other factors impacting the $1.5 million decrease in net cash provided by operating activities include:
Previous wording
•An increase in other operating activities, net of $8.2 million, primarily due to changes in various accounts receivable and payable;
Current wording
•A decrease in other operating activities, net of $15.9 million, primarily due to changes in various accounts receivable and payable;
Previous wording
•An increase in current income tax liability of $2.3 million;
Current wording
•An increase in the current income tax liability of $4.4 million.
Previous wording
There are several trends and uncertainties that may impact the Company’s ability to generate revenues and income at the levels that it has in the past. In addition, these trends and uncertainties may impact available liquidity. Those that could significantly impact the Company include the general levels of interest rates, business activity, inflation, and energy costs as well as new business opportunities available to the Company.
Current wording
There are several trends and uncertainties that may impact the Company’s ability to generate revenues and income at the levels that it has in the past. In addition, these trends and uncertainties may impact available liquidity. Those that could significantly impact the Company include the general levels of interest rates, business activity, freight rates, inflation, and energy costs as well as new business opportunities available to the Company.
Previous wording
The relative level of energy costs can impact the Company’s earnings and available liquidity. Lower levels of energy costs will tend to decrease transportation and energy invoice amounts resulting in a corresponding decrease in accounts and drafts payable. Decreases in accounts and drafts payable generate lower interest income and reduce liquidity.
Current wording
The relative level of energy costs can impact the Company’s earnings and available liquidity. Lower levels of energy costs will tend to decrease transportation and facility expense invoice amounts resulting in a corresponding decrease in accounts and drafts payable. Decreases in accounts and drafts payable generate lower interest income and reduce liquidity.
Previous wording
Cash dividends paid were $16.5 million and $16.0 million in 2024 and 2023, respectively.
Current wording
Cash dividends paid were $16.5 million for both 2025 and 2024.
Previous wording
Shareholders’ equity was $229.0 million, or 9.6% of total assets, at December 31, 2024, a decrease of $779,000 as compared to December 31, 2023. The decrease was primarily a result of the payment of cash dividends of $16.5 million, and the repurchase of treasury shares of $7.2 million, partially offset by net income of $19.2 million and the decrease in accumulated other comprehensive loss of $2.3 million.
Current wording
Shareholders’ equity was $243.0 million, or 9.3% of total assets, at December 31, 2025, an increase of $14.0 million as compared to December 31, 2024. The increase was primarily a result of net income of $35.1 million and the decrease in accumulated other comprehensive loss of $18.4 million, partially offset by the payment of cash dividends of $16.5 million, and the repurchase of treasury shares of $26.0 million.
Previous wording
Dividends from the Bank are a source of funds for payment of dividends by the Company to its shareholders. The only restrictions on dividends are those dictated by regulatory capital requirements, state corporate laws and prudent and sound banking principles. During 2024, the Bank paid dividends of $20.0 million to the Company. As of December 31, 2024, unappropriated retained earnings of $31.4 million were available at the Bank for the declaration of dividends to the Company without prior approval from regulatory authorities.
Current wording
Dividends from the Bank are a source of funds for payment of dividends by the Company to its shareholders. The only restrictions on dividends are those dictated by regulatory capital requirements, state corporate laws and prudent and sound banking principles. During 2025, the Bank paid dividends of $20.0 million to the Company. As of December 31, 2025, unappropriated retained earnings of $31.1 million were available at the Bank for the declaration of dividends to the Company without prior approval from regulatory authorities.
Previous wording
The Company maintains a treasury stock buyback program approved by the Board of Directors in October 2023 pursuant to which the Board of Directors has authorized the repurchase of up to 500,000 shares of the Company’s common stock and has no expiration date. A total of 318,581 shares remain under the buyback program at December 31, 2024.
Current wording
The Company maintains a treasury stock buyback program approved by the Board of Directors in November 2025 pursuant to which the Board of Directors has authorized the repurchase of up to 1,000,000 shares of the Company’s common stock and has no expiration date. A total of 874,970 shares remain under the buyback program at December 31, 2025.
Previous wording
The Company repurchased a total of 167,455 shares at an aggregate cost of $7.2 million during the year ended December 31, 2024 and 150,541 shares at an aggregate cost of $5.8 million during the year ended December 31, 2023. A portion of the repurchased shares may be used for the Company’s employee benefit plans and the balance will be available for other general corporate purposes. The pace of future repurchase activity will depend on factors such as levels of regulatory capital, cash generation from operations, cash requirements for investments, repayment of debt, current stock price, business and market conditions, and other factors. The Company may repurchase shares from time to time on the open market or in private transactions, including structured transactions. The stock repurchase program may be modified or discontinued at any time.
Current wording
The Company repurchased a total of 617,415 shares at an aggregate cost of $26.0 million during the year ended December 31, 2025 and 167,455 shares at an aggregate cost of $7.2 million during the year ended December 31, 2024. A portion of the repurchased shares may be used for the Company’s employee benefit plans and the balance will be available for other general corporate purposes. The pace of future repurchase activity will depend on factors such as levels of regulatory capital, cash generation from operations, cash requirements for investments, repayment of debt, current stock price, business and market conditions, and other factors. The Company may repurchase shares from time to time on the open market or in private transactions, including structured transactions. The stock repurchase program may be modified or discontinued at any time.
Previous wording
Inflation could have the impact of increasing our operating expenses, such as compensation expense. Inflationary pressures may also have an impact on total assets, earnings and capital, which could impact the Company's ability to grow. An increase in total assets could have the impact of decreasing regulatory capital ratios if earnings and total regulatory capital do not increase at the same rate.
Current wording
Inflation could have the impact of increasing the Company's operating expenses, such as compensation expense. Inflationary pressures may also have an impact on total assets, earnings and capital, which could impact the Company's ability to grow. An increase in total assets could have the impact of decreasing regulatory capital ratios if earnings and total regulatory capital do not increase at the same rate.
Previous wording
As a result of rising inflation, the Federal Reserve increased the Federal Funds rate throughout 2022 and 2023. The increase in the Federal Funds rate has contributed to the increase in the Company's net interest margin to 3.42% in 2024 from 3.25% in 2023 and 2.74% in 2022, therefore positively impacting net interest income. The Federal Reserve began to decrease the Federal Funds rate during the last four months of 2024 by a cumulative 100 basis points. Further decreases in the Federal Funds rate resulting from softening inflation or other reasons could negatively impact the Company's net interest margin and income in 2025.
Current wording
As a result of rising inflation, the Federal Reserve increased the Federal Funds rate throughout 2023 and 2024. The increase in the Federal Funds rate contributed to the increase in the Company's net interest margin to 3.83% in 2025 from 3.42% in 2024 and 3.25% in 2023, therefore positively impacting net interest income. The Federal Reserve began to decrease the Federal Funds rate during the last four months of 2024 by a cumulative 100 basis points and by another 75 basis points during the last four months of 2025. Further decreases in the Federal Funds rate resulting from softening inflation or other reasons could negatively impact the Company's net interest margin and income in 2026.
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Previous report — wording carried elsewhere
The balance of liquid assets consists of cash and cash equivalents, which includes cash and due from banks, interest-bearing deposits in other financial institutions, federal funds sold, and money market funds. These balances totaled $349.7 million at December 31, 2024, a decrease of $22.7 million, or 6.1%, from December 31, 2023. The decrease during