Second Quarter Results
(All comparisons refer to the second quarter of 2021, except as
noted)
- Earned record quarterly net income and diluted earnings per
share.
- Increase in diluted earnings per share of 29.2%, to $.62 from
$.48.
- Increase in net income of 21.9%, to $8.6 million from $7.0
million.
- Increase in return on average equity to 16.53% from
10.83%.
- Processed record quarterly transportation dollar volumes of
$11.4 billion, a 27.7% increase.
- Increase in financial fees of $3.1 million, or 41.6%.
- Increase in average payments in advance of funding of $95.3
million, or 48.2%.
- Increase in average loans, excluding PPP loans, of $174.4
million, or 21.8%.
- Maintained exceptional credit quality.
Cass Information Systems, Inc. (Nasdaq:
CASS), (the Company or Cass) reported second quarter
2022 earnings of $.62 per diluted share, an increase of 29.2% from
the $.48 per diluted share it earned in the second quarter of 2021.
Net income for the period was $8.6 million, an increase of 21.9%
from the $7.0 million earned in the same period in 2021. Diluted
earnings per share and net income also increased 3.3% and 3.7%,
respectively as compared to the first quarter of 2022.
Eric Brunngraber, the Company’s chairman and chief executive
officer, noted, “It is exciting to see such strong financial
results from the strategic initiatives undertaken during the past
few years. Further initiatives are well underway, which will expand
our service portfolio as well as increase our operational
efficiency. The recent and anticipated future increase in
short-term interest rates should also enhance revenue going
forward.”
Second Quarter 2022 Highlights
Financial Fees – Financial fee income, earned on a
transactional level basis for invoice payment services when making
customer payments, increased $3.1 million, or 41.6%, over the same
period in the prior year. The increase in financial fee income was
largely driven by the 48.2% increase in average payments in advance
of funding.
Net Interest Income – Net interest income increased $2.8
million, or 26.2%. The Company’s net interest margin increased to
2.54% as compared to 2.30% in the same period last year. The
increase in net interest income was largely driven by a 12.9%
increase in average interest-earning assets, specifically an
increase in average loans, excluding PPP loans, of 21.8%. The
increase in the net interest margin was driven by an improved mix
of interest-earning assets with an increase in average loans,
combined with a rise in market interest rates which are favorable
for the Company over the long-term as average interest-earning
assets for the second quarter of 2022 of $2.22 billion greatly
exceeded average interest-bearing liabilities of $605.8
million.
Provision for Credit Losses - The provision for credit
losses was $70,000 during the second quarter of 2022 as compared to
a release of credit losses of $610,000 in the second quarter of
2021. The provision for the second quarter of 2022 was primarily
driven by external economic factors, including the reduction in the
forecast of Gross Domestic Product (GDP). Credit quality remains
strong with no charge-offs or non-performing loans.
Operating Expenses - Consolidated operating expenses rose
$3.8 million, or 12.9%. Personnel expense increased $3.2 million,
or 13.8%, due to an increase in base salaries, an increase in stock
compensation and profit sharing of $1.0 million and $346,000,
respectively, due to improved Company earnings, and strategic
investment in various technology initiatives, including improved
rating engine capabilities and investment in optical character
recognition, artificial intelligence, machine learning and other
processes to consume images and produce data.
Loans - Average loans increased $72.3 million, or 8.0%.
Excluding the reduction in average PPP loans of $102.2 million,
average loans increased $174.4 million, or 21.8%. The Company has
been successful in achieving organic growth in its franchise,
faith-based and other commercial and industrial loans. When
compared to December 31, 2021, ending loans, excluding PPP loans,
increased $4.2 million, or 0.4%, during the first six months of
2022.
Payments in Advance of Funding – Average payments in
advance of funding increased $95.3 million, or 48.2%, primarily due
to an increase in transportation dollar volumes.
Deposits – Average deposits increased $212.9 million, or
20.9%. The Company continues to experience robust deposit
growth.
Accounts and Drafts Payable - Average accounts and drafts
payable increased $187.5 million, or 19.8%. The increase in these
balances, which are non-interest bearing, are primarily reflective
of the increase in transportation and facility expense dollar
volumes.
Transportation Dollar Volumes – Transportation dollar
volumes hit a record level of $11.4 billion during the second
quarter of 2022. The 27.7% increase in dollar volumes was largely
due to inflationary pressures, supply chain disruptions and fuel
surcharges, among other factors. The increase in dollar volumes is
positively impacting the balance of our interest-earning assets
which is helping generate interest income. In addition, higher
dollar volumes are having a positive impact on financial fees.
Facility Expense Dollar Volumes – Facility dollar volumes
totaled $4.6 billion during the second quarter of 2022. The 24.9%
increase in dollar volumes was largely due to an increase in energy
prices.
Liquidity - The Company continues to maintain significant
liquidity, with average short-term investments of $450.9 million
during the second quarter of 2022.
Capital - The Company’s common equity tier 1, total
risk-based capital and leverage ratios were 13.47%, 14.21% and
8.85% at June 30, 2022, respectively. Total shareholders’ equity
has declined $40.2 million since December 31, 2021 primarily as a
result of an increase in accumulated other comprehensive loss due
to the rise in market interest rates and resulting negative impact
on the fair value of available-for-sale investment securities.
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 $80 billion annually on behalf of
clients, and with total assets in excess of $2.4 billion, Cass is
uniquely supported by Cass Commercial Bank. Founded in 1906 and a
wholly owned subsidiary, Cass Commercial Bank provides
sophisticated financial exchange services to the parent
organization and its clients. Cass is part of the Russell 2000®.
More information is available at www.cassinfo.com.
Note to Investors
Certain matters set forth in this news release may contain
forward-looking statements that are provided to assist in the
understanding of anticipated future financial performance. However,
such performance involves risks and uncertainties that may cause
actual results to differ materially from those in such statements.
These risks and uncertainties include the impact of the COVID-19
pandemic as well as economic and market conditions, inflationary
pressures, risks of credit deterioration, interest rate changes,
governmental actions, market volatility, security breaches and
technology interruptions, energy prices and competitive factors,
among others, as set forth in the Company’s most recent Annual
Report on Form 10-K and subsequent reports filed with the
Securities and Exchange Commission. The Company has used, and
intends to continue using, the Investors portion of its website to
disclose material non-public information and to comply with its
disclosure obligations under Regulation FD. Accordingly, investors
are encouraged to monitor Cass’s website in addition to following
press releases, SEC filings, and public conference calls and
webcasts.
Consolidated Statements of
Income (unaudited)
($ and numbers in thousands,
except per share data)
Quarter Ended
June 30, 2022
Quarter Ended
March 31, 2022
Quarter Ended
June 30, 2021
Six-Months Ended
June 30, 2022
Six-Months Ended
June 30, 2021
Processing fees
$
19,326
$
19,036
$
19,048
$
38,362
$
37,423
Financial fees
10,623
10,532
7,500
21,155
14,497
Net interest income
13,641
11,903
10,811
25,544
21,156
(Provision for) release of credit
losses
(70
)
(230
)
610
(300
)
1,210
Other
702
862
439
1,564
1,242
Total revenues
$
44,222
$
42,103
$
38,408
$
86,325
$
75,528
Personnel
$
26,033
$
24,718
$
22,880
$
50,751
$
45,406
Occupancy
916
915
959
1,831
1,906
Equipment
1,660
1,711
1,653
3,371
3,328
Other
5,030
4,484
4,311
9,514
7,688
Total operating expenses
$
33,639
$
31,828
$
29,803
$
65,467
$
58,328
Income from operations before income
taxes
$
10,583
$
10,275
$
8,605
$
20,858
$
17,200
Income tax expense
2,021
2,017
1,579
4,038
3,103
Net income
$
8,562
$
8,258
$
7,026
$
16,820
$
14,097
Basic earnings per share
$
.63
$
.61
$
.49
$
1.24
$
.99
Diluted earnings per share
$
.62
$
.60
$
.48
$
1.22
$
.97
Share data:
Weighted-average common shares
outstanding
13,543
13,578
14,267
13,560
14,286
Weighted-average common shares outstanding
assuming dilution
13,802
13,814
14,510
13,808
14,526
Consolidated Balance
Sheets
($ in thousands)
(unaudited) June 30,
2022
(unaudited) March 31,
2022
December 31, 2021
Assets:
Cash and cash equivalents
$
261,234
$
191,449
$
514,928
Investment securities
740,074
774,610
673,453
Loans, excluding PPP loans
958,491
975,829
954,268
PPP loans
996
1,373
6,299
Allowance for credit losses
(12,573
)
(12,406
)
(12,041
)
Payments in advance of funding
313,172
329,622
291,427
Premises and equipment, net
19,470
19,086
18,113
Investments in bank-owned life
insurance
47,435
47,163
43,176
Goodwill and other intangible assets
21,825
16,691
16,826
Other assets
93,864
78,626
48,452
Total assets
$
2,443,988
$
2,422,043
$
2,554,901
Liabilities and shareholders’ equity:
Deposits
Non-interest bearing
$
604,492
$
621,819
$
582,642
Interest bearing
585,083
555,116
638,861
Total deposits
1,189,575
1,176,935
1,221,503
Accounts and drafts payable
998,870
989,733
1,050,396
Other liabilities
49,929
38,297
37,204
Total liabilities
$
2,238,374
$
2,204,965
$
2,309,103
Shareholders’ equity:
Common stock
$
7,753
$
7,753
$
7,753
Additional paid-in capital
204,482
203,149
204,276
Retained earnings
121,386
116,646
112,220
Common shares in treasury, at cost
(81,742
)
(82,348
)
(78,904
)
Accumulated other comprehensive (loss)
income
(46,265
)
(28,122
)
453
Total shareholders’ equity
$
205,614
$
217,078
$
245,798
Total liabilities and shareholders’
equity
$
2,443,988
$
2,422,043
$
2,554,901
Average Balances
(unaudited)
($ in thousands)
Quarter Ended
June 30, 2022
Quarter Ended
March 31, 2022
Quarter Ended
June 30, 2021
Six-Months Ended
June 30, 2022
Six-Months Ended
June 30, 2021
Average interest-earning assets
$
2,222,655
$
2,122,915
$
1,968,646
$
2,173,060
$
1,930,235
Average loans, excluding PPP loans
972,756
956,913
798,329
964,879
783,181
Average PPP loans
1,115
2,938
103,290
2,021
108,296
Average payments in advance of funding
293,150
279,479
197,855
286,352
187,632
Average assets
2,616,220
2,528,263
2,278,402
2,572,485
2,231,744
Average deposits
1,229,744
1,167,121
1,016,806
1,198,606
993,950
Average accounts and drafts payable
1,135,504
1,088,105
947,987
1,111,935
923,320
Average shareholders’ equity
$
207,828
$
235,720
$
260,117
$
221,697
$
259,410
Consolidated Financial
Highlights (unaudited)
($ and numbers in thousands, except
ratios)
Quarter Ended
June 30, 2022
Quarter Ended
March 31, 2022
Quarter Ended
June 30, 2021
Six-Months Ended
June 30, 2022
Six-Months Ended
June 30, 2021
Return on average equity
16.53
%
14.21
%
10.83
%
15.30
%
10.96
%
Net interest margin
2.54
%
2.36
%
2.30
%
2.45
%
2.31
%
Allowance for credit losses to loans
1.31
%
1.27
%
1.28
%
1.31
%
1.28
%
Non-performing loans to total loans
—
%
—
%
—
%
—
%
—
%
Net loan charge-offs (recoveries) to
loans
—
%
—
%
—
%
—
%
—
%
Transportation invoice volume
9,289
8,958
9,461
18,247
18,248
Transportation dollar volume
$
11,413,414
$
10,855,180
$
8,940,889
$
22,268,594
$
16,845,528
Facility expense transaction volume
6,557
6,641
6,827
13,198
13,823
Facility expense dollar volume
$
4,570,178
$
4,643,942
$
3,657,965
$
9,214,120
$
7,375,393
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220714005138/en/
Kenn Entringer Casey Communications, Inc. (314) 721-2828
kentringer@caseycomm.com
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