CASS INFORMATION SYSTEMS INC

Previous wording

Cass Information Systems, Inc. ("Cass" or the "Company") provides payment and information processing services to large manufacturing, distribution, and retail enterprises across the United States. The Company’s services include freight invoice rating, payment processing, auditing, and the generation of accounting and transportation information. Cass also processes and pays facility-related invoices, which include electricity and gas as well as waste and telecommunications expenses. Cass solutions include integrated payments, a B2B payment platform for clients that require an agile fintech partner. Additionally, the Company offers a church management software solution and an on-line platform to provide generosity services for faith-based and non-profit organizations. The Company’s bank subsidiary, Cass Commercial Bank (the “Bank”), supports the Company’s payment operations. The Bank also provides banking services to its target markets, which include privately held businesses in the St. Louis metropolitan area and restaurant franchises and faith-based ministries within the United States.

Current wording

Cass Information Systems, Inc. ("Cass" or the "Company") provides payment and information processing services to large manufacturing, distribution, and retail enterprises across the United States. The Company’s services include freight invoice rating, payment processing, auditing, and the generation of accounting and transportation information. Cass also processes and pays facility-related invoices, which include electricity and gas as well as waste and telecommunications expenses. Cass solutions include CassPay, a B2B payment platform for clients that require an agile fintech partner. Additionally, the Company offers a church management software solution and an on-line platform to provide generosity services for faith-based and non-profit organizations. The Company’s bank subsidiary, Cass Commercial Bank (the “Bank”), supports the Company’s payment operations. The Bank also provides banking services to its target markets, which include privately held businesses in the St. Louis metropolitan area and restaurant franchises and faith-based ministries within the United States.

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, and the general level of transportation and energy costs; 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 2025 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, and the general level of transportation and energy costs; 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 operations and financial condition generally, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2025 Form 10-K.

Previous wording

Contract freight rates have recently begun to increase, and, together with fuel surcharges from rising diesel prices, are contributing to higher Transportation dollars processed and paid. The increase in Transportation dollars paid is expected to increase the overall level of average accounts and drafts payable, which results in increased interest income, and average payments in advance of funding, which results in increased financial fees.

Current wording

Contract freight rates have been increasing throughout 2026, and, together with fuel surcharges from rising diesel prices, are contributing to higher Transportation dollars processed and paid. The increase in Transportation dollars paid has increased the overall level of average accounts and drafts payable, which results in increased interest income, and average payments in advance of funding, which results in increased financial fees. A summary of transportation transactions and dollars processed is illustrated in the following table.

Previous wording

The following paragraphs more fully discuss the results of operations and changes in financial condition for the three months ended June 30, 2026 (“second quarter of 2026”) compared to the three months ended June 30, 2025 (“second quarter of 2025”) and the six months ended June 30, 2026 ("first half of 2026") compared to the six months ended June 30, 2025 ("first half of 2025"). 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 2025 Form 10-K. Results of operations for the three and six months ended June 30, 2026 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 September 30, 2026 (“third quarter of 2026”) compared to the three months ended September 30, 2025 (“third quarter of 2025”) and the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. 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 2025 Form 10-K. Results of operations for the three and nine months ended September 30, 2026 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 sold related to the Company's TEM Business Unit for the three and six months ended June 30, 2026, and 2025, 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.

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 sold related to the Company's TEM Business Unit for the three and nine months ended September 30, 2026, and 2025, 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.

Previous wording

The Company recorded net revenue of $49.9 million during the second quarter of 2026, an increase of 12.5% from the second quarter of 2025, primarily driven by an increase in net interest income and financial fees, partially offset by lower processing fees. Operating expense decreased 3.5% compared to the second quarter of 2025 primarily due to $1.8 million bad debt recovery. Net income was $10.6 million, an increase of 19.6% and diluted EPS was $0.81 per share, an increase of 22.7% from the second quarter of 2025.

Current wording

The Company recorded net revenue of $52.7 million during the third quarter of 2026, an increase of 5.3% from the third quarter of 2025, primarily driven by an increase in net interest income and financial fees, partially offset by lower processing fees. Operating expense increased 3.5% compared to the third quarter of 2025 primarily due to higher business development costs, professional fees, and equipment expense related to technology initiatives. Net income was $10.6 million, an increase of 16.1% and diluted EPS was $0.81, an increase of 19.1% from the third quarter of 2025.

Previous wording

The Company posted a 1.67% return on average assets and 17.72% return on average equity.

Current wording

The Company posted a 1.60% return on average assets and 17.46% return on average equity.

Previous wording

The Company recorded net revenue of $99.0 million during the first half of 2026, an increase of 9.1% from the first half of 2025, primarily driven by an increase in net interest income and financial fees, partially offset by lower processing fees. Operating expense increased 1.8% compared to the first half of 2025. Net income was $19.4 million, an increase of 9.0% and diluted EPS was $1.48 per share, an increase of 13.0% from the first half of 2025.

Current wording

The Company recorded net revenue of $151.7 million during the nine months ended September 30, 2026, an increase of 7.7% from the nine months ended September 30, 2025, primarily driven by an increase in net interest income and financial fees, partially offset by lower processing fees. Operating expense increased 2.4% compared to the nine months ended September 30, 2025. Net income was $30.0 million, an increase of 11.4% and diluted EPS was $2.29 per share, an increase of 15.1% from the nine months ended September 30, 2025.

Previous wording

The Company posted a 1.54% return on average assets and 16.17% return on average equity.

Current wording

The Company posted a 1.56% return on average assets and 16.60% 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

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 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:

Previous wording

Processing fees decreased $614,000, or 3.7% over the same period in the prior year reflecting lower transportation and facility invoice volumes.

Current wording

Processing fees decreased $763,000, or 4.6%, reflecting lower transportation and facility invoice volumes.

Previous wording

Financial fees increased $1.3 million, or 6.3%, primarily attributable to an increase in average payments in advance of funding of 10.8% compared to the prior period.

Current wording

Financial fees increased $1.2 million, or 11.8%, primarily attributable to an increase in average payments in advance of funding of 15.8%, in addition to rising financial interchange fees within CassPay.

Previous wording

Processing fees decreased $1.4 million, or 4.1%, reflecting lower transportation and facility invoice volumes.

Current wording

Processing fees decreased $2.1 million, or 4.3%, reflecting lower transportation and facility invoice volumes.

Previous wording

Financial fees increased $790,000, or 7.8%, primarily attributable to an increase in average payments in advance of funding of 19.4% compared to the prior period.

Current wording

Financial fees increased $2.5 million, or 8.1%, primarily attributable to an increase in average payments in advance of funding of 12.5%, in addition to rising financial interchange fees within CassPay.

Previous wording

Net interest income is the difference between interest earned on loans, investments, and other earning assets and interest expense on deposits and other interest-bearing liabilities. Net interest income is a significant source of the Company’s revenues. The following table summarizes the changes in tax-equivalent net interest income and related factors:

Current wording

Net interest income is the difference between interest earned on loans, investments, and other interest-earning assets and interest expense on deposits and other interest bearing liabilities. Net interest income is a significant source of the Company’s revenues. The following table summarizes the changes in tax-equivalent net interest income and related factors:

Previous wording

The increase in net interest income is primarily attributable to the net interest margin improving to 3.97% as compared to 3.76% in the same period last year, in addition to an increase in average earning assets of $109.5 million, or 5.2%. The yield on interest-earning assets increased 14 basis points from 4.56% to 4.70% while the cost of interest-bearing liabilities decreased 22 basis points from 2.68% to 2.46%.

Current wording

The increase in net interest income is primarily attributable to the net interest margin improving to 4.02% as compared to 3.87% in the same period last year, in addition to an increase in average earning assets of $105.4 million, or 4.8%. The yield on interest earning assets increased 6 basis points from 4.62% to 4.68% while the cost of interest bearing liabilities decreased 28 basis points from 2.70% to 2.42%.

Previous wording

Average loans decreased $39.1 million, or 3.5%, to $1.08 billion. The average yield on loans increased 21 basis points to 5.84%, primarily due to the continued maturity and subsequent re-pricing of fixed rate loans originated in the years 2021 and 2022 to current market interest rates.

Current wording

Average loans decreased $19.8 million, or 1.8%, to $1.08 billion. The Company experienced several pay-offs within its faith-based portfolio during the third quarter of 2026, some due to intentional exits of potential problem credits and others due to refinancing at other financial institutions. The average yield on loans increased 24 basis points to 5.90%, primarily due to the continued maturity and subsequent re-pricing of fixed rate loans originated in the years 2021 and 2022 to current market interest rates.

Previous wording

Average investment securities increased $136.9 million, or 20.6%, to $802.5 million. The increase was primarily driven by the partial repositioning of the portfolio at the end of the second quarter of 2025 as well as purchases of investments at current market rates. The average yield on taxable investment securities increased 58 basis points to 3.63% and the average yield on tax-exempt investment securities increased 113 basis points to 4.04%.

Current wording

Average investment securities increased $104.4 million, or 14.7%, to $816.1 million. The increase was driven by the utilization of an increase in funding from deposits and accounts and drafts payable to purchase investment securities. The average yield on taxable investment securities increased 26 basis points to 3.58% and the average yield on tax-exempt investment securities increased 66 basis points to 4.06%. The increase in average yield was primarily driven by purchases of investments at current market rates.

Previous wording

Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $6.9 million, or 2.3%, to $305.8 million. The average yield on short-term investments decreased 66 basis points to 3.37%, primarily due to the decrease in the Federal Funds rate. 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 $20.8 million, or 5.4%, to $403.1 million. The average yield on short-term investments decreased 55 basis points to 3.46%. The majority of these short-term investments are held at the Federal Reserve Bank.

Previous wording

The average balance of interest-bearing deposits increased $23.5 million, or 3.8%, to $645.6 million. Average non-interest-bearing demand deposits increased $27.9 million, or 7.0%, to $427.0 million. The increase in non-interest bearing demand deposits is primarily due to the growth in average CassPay deposits compared to the first half of 2025. The average rate paid on interest-bearing deposits decreased 26 basis points to 2.42% due to the reduction in short-term interest rates.

Current wording

The average balance of interest bearing deposits increased $17.0 million, or 2.8%, to $627.4 million. The average rate paid on interest bearing deposits decreased 28 basis points to 2.42%. Average noninterest bearing demand deposits increased $62.2 million, or 15.3%, to $468.4 million. The increase in average noninterest bearing deposits is primarily due to an increase in CassPay noninterest bearing deposits of $76.1 million, or 39.6%.

Previous wording

Average accounts and drafts payable increased $56.0 million, or 5.0%, to $1.18 billion. The increase in average accounts and drafts payable was primarily driven by the increase in transportation dollar volumes of 7.4% as well as the increase in facility dollar volumes of 2.6%.

Current wording

Average accounts and drafts payable increased $37.0 million, or 3.1%, to $1.25 billion. The increase in average accounts and drafts payable was primarily driven by the increase in transportation dollar volumes of 14.5% as well as the increase in facility dollar volumes of 5.5%.

Previous wording

The increase in net interest income is primarily attributable to the net interest margin improving to 4.00% as compared to 3.78% in the same period last year, in addition to an increase in average earning assets of $108.7 million, or 5.2%. The yield on interest-earning assets increased 16 basis points from 4.58% to 4.74% while the cost of interest-bearing liabilities decreased 22 basis points from 2.71% to 2.49%.

Current wording

The increase in net interest income is primarily attributable to the net interest margin improving to 3.99% as compared to 3.80% in the same period last year, in addition to an increase in average earning assets of $108.1 million, or 5.1%. The yield on interest earning assets increased 11 basis points from 4.58% to 4.69% while the cost of interest bearing liabilities decreased 25 basis points from 2.69% to 2.44%.

Previous wording

Average loans decreased $35.1 million, or 3.1%, to $1.09 billion. The average yield on loans increased 23 basis points to 5.87%, primarily due to the continued maturity and subsequent re-pricing of fixed rate loans originated in the years 2021 and 2022 to current market interest rates.

Current wording

-31- financial institutions. The average yield on loans increased 22 basis points to 5.86%, primarily due to the continued maturity and subsequent re-pricing of fixed rate loans originated in the years 2021 and 2022 to current market interest rates.

Previous wording

Average investment securities increased $167.1 million, or 26.2%, to $805.7 million due to the utilization of available liquidity to purchase investment securities. The average yield on taxable investment securities increased 63 basis points to 3.63% and the average yield on tax-exempt investment securities increased 123 basis points to 3.97%. The increase in yield was primarily driven by the partial repositioning of the portfolio at the end of the second quarter of 2025 as well as purchases of investments at current market rates.

Current wording

Average investment securities increased $146.0 million, or 22.0%, to $809.2 million due to the utilization of available liquidity to purchase investment securities. The average yield on taxable investment securities increased 50 basis points to 3.61% and the average yield on tax-exempt investment securities increased 100 basis points to 4.00%. The increase in average yield was primarily driven by purchases of investments at current market rates.

Previous wording

Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, decreased $18.5 million, or 5.4%, to $322.6 million. The average yield on short-term investments decreased 70 basis points to 3.38%, primarily due to the decrease in the Federal Funds rate. 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, decreased $5.3 million, or 1.5%, to $349.7 million. The average yield on short-term investments decreased 64 basis points to 3.41%. The majority of these short-term investments are held at the Federal Reserve Bank.

Previous wording

The average balance of interest-bearing deposits increased $27.0 million, or 4.4%, to $642.9 million. Average non-interest-bearing demand deposits increased $39.1 million, or 10.0%, to $432.2 million. The increase in average non-interest bearing deposits is primarily due to growth within CassPay. The average rate paid on interest-bearing deposits decreased 27 basis points to 2.44% due to the reduction in short-term interest rates.

Current wording

The average balance of interest bearing deposits increased $21.3 million, or 3.5%, to $639.5 million. The average rate paid on interest bearing deposits decreased 27 basis points to 2.42%. Average noninterest bearing demand deposits increased $39.4 million, or 9.8%, to $440.9 million. The increase in average noninterest bearing deposits is primarily due to an increase in CassPay noninterest bearing deposits of $40.3 million, or 20.9%.

Previous wording

Average accounts and drafts payable increased $68.4 million, or 6.2%, to $1.18 billion. The increase in average accounts and drafts payable was primarily driven by the increase in facility dollar volumes of 5.1% as well as the increase in transportation dollar volumes of 6.0%.

Current wording

Average accounts and drafts payable increased $57.8 million, or 5.1%, to $1.20 billion. The increase in average accounts and drafts payable was primarily driven by the increase in facility dollar volumes of 5.2% as well as the increase in transportation dollar volumes of 8.9%.

Previous wording

The following tables show the condensed average balance sheets for each of the periods reported, the tax-equivalent interest income and expense for each category of interest-earning assets and interest-bearing liabilities, and the average yield on such categories of interest-earning assets and the average rates paid on such categories of interest-bearing liabilities for each of the periods reported.

Current wording

The following tables show the condensed average balance sheets for each of the periods reported, the tax-equivalent interest income and expense for each category of interest earning assets and interest bearing liabilities, and the average

Previous wording

Interest income on loans includes net loan fees of $121,000 and $118,000 for the second quarter of 2026 and 2025, respectively.

Current wording

Interest income on loans includes net loan fees of $251,000 and $114,000 for the third quarter of 2026 and 2025, respectively.

Previous wording

Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for both 2026 and 2025. The tax-equivalent adjustment was approximately $360,000 and $215,000 for the second quarter of 2026 and 2025, respectively.

Current wording

Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for both 2026 and 2025. The tax-equivalent adjustment was approximately $343,000 and $316,000 for the third quarter of 2026 and 2025, respectively.

Previous wording

Interest income on loans includes net loan fees of $223,000 and $485,000 for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Interest income on loans includes net loan fees of $475,000 and $599,000 for the nine months ended September 30, 2026 and 2025, 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, 2026 and 2025. The tax-equivalent adjustment was approximately $732,000 and $383,000 for the six months ended June 30, 2026 and 2025, 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, 2026 and 2025. The tax-equivalent adjustment was approximately $1.1 million and $699,000 for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

The Company recorded a provision for credit losses and off-balance sheet credit exposures of $531,000 and $25,000 for the second quarter of 2026 and 2025, respectively. The Company recorded a provision for credit losses and off-balance sheet credit exposures of $592,000 and $930,000 for the first half of 2026 and 2025, 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 provision for credit losses in the second quarter of 2026 was driven by a specific reserve on a nonperforming commercial real estate loan and an increase in total loans of $41.8 million, or 3.9%, as compared to December 31, 2025.

Current wording

The Company recorded a release of credit losses and off-balance sheet credit exposures of $211,000 and $193,000 for the third quarter of 2026 and 2025, respectively. The Company recorded a provision for credit losses and off-balance sheet credit exposures of $381,000 and $737,000 for the nine months ended September 30, 2026 and 2025, 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 2026 was driven by the decrease in loans compared to June 30, 2026 of $38.3 million, or 3.5%, partially offset by the net impact to the allowance for credit losses related to a $508,000 partial charge-off of a nonperforming commercial real estate loan.

Previous wording

The Company experienced no loan charge-offs in the first half of 2026 or 2025. The ACL was $14.4 million at June 30, 2026 and $13.6 million at December 31, 2025. The ACL represented 1.30% of outstanding loans at June 30, 2026 and 1.28% of outstanding loans at December 31, 2025. The allowance for unfunded commitments was $234,000 at June 30, 2026 and $419,000 at December 31, 2025. There were $1.6 million of nonperforming loans outstanding at June 30, 2026 and $7.0 million at December 31, 2025. The Company has a specific allowance for credit losses of $288,000 allocated to its non-accrual loans at June 30, 2026.

Current wording

The Company experienced loan charge-offs of $508,000 for the nine months ended September 30, 2026. The Company did not have any loan charge-offs for the nine months ended September 30, 2025. The ACL was $13.6 million at both September 30, 2026 and December 31, 2025. The ACL represented 1.28% of outstanding loans at both September 30, 2026 and December 31, 2025. The allowance for unfunded commitments was $287,000 at September 30, 2026 and $419,000 at December 31, 2025. There were $1.1 million of nonperforming loans outstanding at September 30, 2026 and $7.0 million at December 31, 2025. The Company has no specific allowance for credit losses allocated to its non-accrual loans at September 30, 2026 compared to $121,000 at December 31, 2025.

Previous wording

Total operating expenses for the second quarter of 2026 decreased $1.4 million, or 3.5%, as compared to the second quarter of 2025. Total operating expenses for the first half of 2026 increased $1.3 million, or 1.8%, as compared to the first half of 2025. The following table details the components of operating expenses:

Current wording

Total operating expenses for the third quarter of 2026 increased $1.3 million, or 3.5%, as compared to the third quarter of 2025. Total operating expenses for the nine months ended September 30, 2026 increased $2.7 million, or 2.4%, as

Previous wording

Salaries and commissions decreased $397,000, or 1.9%, as a result of a decrease in average full-time equivalent employees ("FTEs") of 9.0% due to automation and the ongoing consolidation within the Company's Facilities division, partially offset by merit increases. Share-based compensation and employee profit sharing increased $212,000 and $376,000, respectively, due to the improvement in net income from continuing operations. Other benefits decreased $858,000, or 18.6%, due to the decrease in FTEs in addition to lower health insurance claims and related expenses as compared to the second quarter of 2025.

Current wording

Salaries and commissions increased $582,000, or 2.9%, as a result of merit increases and higher commission payments related to sales activities, partially offset by the decrease in average full-time equivalent employees (“FTEs”) of 6.6%. Employee profit sharing increased $271,000 due to the improvement in net income from continuing operations. Other benefits decreased $806,000, or 16.8%, due to the decrease in FTEs in addition to lower health insurance claims and related expenses as compared to the third quarter of 2025.

Previous wording

Equipment expense increased $214,000, primarily due to an increase in depreciation and licensing and maintenance expense on software related to technology initiatives.

Current wording

Equipment expense increased $424,000, primarily due to an increase in depreciation and licensing and maintenance expense on software related to technology initiatives.

Previous wording

Other operating expense increased $828,000, or 12.1%. The increase is primarily due to higher business development costs and professional fees.

Current wording

Other operating expense increased $880,000, or 12.1%. The increase is primarily due to higher business development costs and professional fees related to technology initiatives.

Previous wording

Salaries and commissions decreased $792,000, or 2.0%, as a result of a decrease in average full-time equivalent employees ("FTEs") of 8.4% due to automation and the ongoing consolidation within the Company's Facilities division, partially offset by merit increases. Share-based compensation and employee profit sharing increased $410,000 and $508,000, respectively, due to the improvement in net income from continuing operations. Other benefits decreased $793,000, or 8.4%, due to the decrease in FTEs in addition to lower health insurance claims and related expenses.

Current wording

Salaries and commissions decreased $210,000, or 0.3%, as a result of a decrease in average full-time equivalent employees ("FTEs") of 7.8%, partially offset by merit increases and higher commission payments related to sales activities. Share-based compensation and employee profit sharing increased $404,000 and $779,000, respectively, due to the improvement in net income from continuing operations. Other benefits decreased $1.6 million, or 11.2%, due to the decrease in FTEs in addition to lower health insurance claims and related expenses.

Previous wording

Equipment expense increased $352,000, primarily due to an increase in depreciation and licensing and maintenance expense on software related to technology initiatives.

Current wording

Equipment expense increased $776,000, primarily due to an increase in depreciation and licensing and maintenance expense on software related to technology initiatives.