Cass Information Systems Reports Second Quarter 2025 Results

Cass Information Systems, Inc. (NASDAQ:CASS) (the Company or Cass) today reported its second quarter 2025 earnings as follows:

In announcing these results, Martin Resch, the Company's President and Chief Executive Officer, noted, "We continue to see year over year improvement in our quarterly results. The growth in interest-earning assets, combined with the continued improvement in net interest margin, is driving significant net interest income gains. This revenue improvement, combined with ongoing efficiency initiatives, led to the profitability growth reported." Resch added, "The upward momentum in freight rates, the addition of enhanced freight product offerings and onboarding of new clients should provide support to fees. In addition, the successful closing of our TEM business sale will enable us to concentrate on our strengths in financial exchange and information processing and provide capital for other purposes."

Second Quarter Financial Highlights

(All comparisons refer to the second quarter of 2024, except as noted)

• Net income of $8.9 million, or $0.66 per diluted common share.
• Return on average equity and assets of 15.35% and 1.48%, respectively.
• Increase in net interest margin to 3.78% from 3.32%.
• Increase in net interest income of $3.5 million, or 22.3%.
• Closed on sale of the TEM business resulting in a gain on sale of $3.6 million, combined with a reduction of goodwill and other intangible assets of $5.1 million.
• Sold $34.0 million of corporate investment securities yielding 2.29% at a pretax loss of $3.6 million in an effort to reposition the investment portfolio and improve the net interest margin in future periods.
• Repurchased 140,269 shares of Company stock at weighted average price of $41.79.

Second Quarter 2025 Financial Commentary

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. The Company has 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 being sold related to the Company's TEM Business Unit as of June 30, 2025 and December 31, 2024, and for the periods ended June 30, 2025, March 31, 2025 and June 30, 2024, as applicable. All financial information in this earnings release is reported on a continuing operations basis, unless otherwise noted.

Transportation Invoice and Dollar Volumes – Transportation invoice volumes of 8.84 million declined 0.5% as compared to the second quarter of 2024 and increased 5.7% as compared to the first quarter of 2025. Transportation dollar volumes were $9.4 billion during the second quarter of 2025, increases of 3.2% as compared to the second quarter of 2024 and 8.4% as compared to the first quarter of 2025. The average dollars per invoice increased to $1,060 in the second quarter of 2025, compared to $1,034 in the first quarter of 2025 and $1,023 in the second quarter of 2024.

Facility Expense Invoice and Dollar Volumes – Facility expense invoice volumes of 4.1 million decreased 1.4% as compared to the second quarter of 2024. Facility expense dollar volumes totaled $5.5 billion during the second quarter of 2025, an increase of 16.1% as compared to the second quarter of 2024. The increase in dollar volumes was due to a combination of higher energy prices and onboarding new clients with high dollar volumes as compared to the related transaction count.

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

Financial Fees – Financial fees, earned on a transactional level basis for invoice payment services when making customer payments, decreased $299,000, or 2.9%. The decrease in financial fees was primarily due to a decline in average payments in advance of funding of 17.4%.

Net Interest Income – Net interest income increased $3.5 million, or 22.3%. The increase in net interest income was attributable to the net interest margin improving to 3.78% as compared to 3.32% in the same period last year, in addition to an increase in average interest-earning assets of $131.9 million, or 6.7%.

The Company's net interest margin improvement was driven by increases in the average yield on loans and investment securities of 38 and 18 basis points, respectively, combined with a decline in the average cost of total deposits of 38 basis points. The increase in loan yield was driven by loan growth at current market interest rates and continued maturing and re-pricing of existing fixed rate loans to current market interest rates. The decline in the cost of total deposits was driven by the reduction in short-term interest rates in the last four months of 2024. The Company generally benefits from a higher interest rate environment due to a large percentage of its funding sources being non-interest bearing.

Provision for Credit Losses - The Company recorded a provision of credit losses of $25,000 during the second quarter of 2025 as compared to $400,000 in the second quarter of 2024. The provision for credit losses for the second quarter of 2025 was largely driven by a $3.4 million increase in nonaccrual loans, partially offset by the decrease in total loans of $24.9 million, or 2.2%, as compared to March 31, 2025.

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

Personnel Expenses - Personnel expenses increased $1.5 million, or 5.7%. Salaries and commissions increased 1.2% as a result of merit increases and the December 2024 acquisition of AcuAudit, partially offset by a decrease in average full-time equivalent employees ("FTEs") of 5.9% due to strategic investments in various technology initiatives. Share-based compensation and employee profit sharing increased $468,000 and $678,000, respectively, due to the improvement in earnings. Other benefits increased $304,000, or 7.1%, due to higher health insurance costs, partially offset by the decline in average FTEs.

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

Income from Discontinued Operations - Income from discontinued operations includes a $3.6 million gain on the sale of the TEM business. In addition, the TEM business recognized $1.5 million of other non-recurring fee income during the second quarter of 2025. The Company expects that ongoing consolidated earnings will be neutral from a profitability perspective as the projected net income of the TEM business is expected to be offset by increased interest income from the deployment of the purchase price of $18.0 million into interest-earning assets and the sale of below market yield corporate investment securities

Loans - When compared to March 31, 2025, ending loans decreased $24.9 million, or 2.2%. The Company elected not to replace runoff in its lease financing portfolio during the second quarter of 2025 to generate liquidity for other purposes. Ending loans have increased $35.0 million, or 3.2%, as compared to December 31, 2024.

Payments in Advance of Funding – Average payments in advance of funding decreased $37.0 million, or 17.4%, primarily due to the continued consolidation of freight carriers, partially offset by a 3.2% increase in transportation dollar volumes.

Deposits – Average deposits decreased $36.4 million, or 3.5%, when compared to the second quarter of 2024. The Company has experienced deposit attrition due to a decrease in the overall level of some larger commercial deposits due to client funding needs for acquisitions and other purposes.

Accounts and Drafts Payable - Average accounts and drafts payable increased $147.3 million, or 15.1%. The increase in these balances, which are non-interest bearing, are primarily reflective of the increase in facility and transportation dollar volumes of 16.1% and 3.2%, respectively. Accounts and drafts payable are a significant source of funding generated by payment float from transportation and facility clients.

Shareholders' Equity - Total shareholders' equity increased $6.6 million since March 31, 2025 as a result of net income of $8.9 million and a decrease in accumulated other comprehensive loss of $6.8 million primarily related to the fair value of available-for-sale investment securities, partially offset by the repurchase of Company stock of $5.9 million and dividends of $4.1 million.

On July 15, 2025, the Company's Board of Directors approved a quarterly dividend of $0.31 per share with the dividend payable on September 15, 2025 to shareholders of record on September 5, 2025. The Company's Board of Directors also authorized the repurchase of up to 500,000 shares of common stock in future periods.

About Cass Information Systems

Cass Information Systems, Inc. is a leading provider of integrated information and payment management solutions. Cass enables enterprises to achieve visibility, control and efficiency in their supply chains, communications networks, facilities and other operations. Disbursing over $90 billion annually on behalf of clients, and with total assets of $2.3 billion, Cass is uniquely supported by Cass Commercial Bank. Founded in 1906 and a wholly owned subsidiary, Cass Commercial Bank provides sophisticated financial exchange services to the parent organization and its clients. Cass is part of the Russell 2000^®. More information is available at www.cassinfo.com.

Forward Looking Information

This information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions, and other statements that are not historical facts. Such statements are based on current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. These risks and uncertainties include the impact of economic and market conditions, inflationary pressures, risks of credit deterioration, interest rate changes, governmental actions, market volatility, security breaches and technology interruptions, energy prices and competitive factors, among others, as set forth in the Company's most recent Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission. Actual results may differ materially from those set forth in the forward-looking statements.

Note to Investors

The Company has used, and intends to continue using, the Investors portion of its website to disclose material non-public information and to comply with its disclosure obligations under Regulation FD. Accordingly, investors are encouraged to monitor Cass's website in addition to following press releases, SEC filings, and public conference calls and webcasts.

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Cass Investor Relations

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