Cass Information Systems(CASS) - 2025 Q1 - Quarterly Report

Financial Performance - Cass reported net revenue of $46.4 million for Q1 2025, a 2.9% increase from Q1 2024, primarily driven by net interest income[89]. - Net interest income increased by $2.8 million, or 16.3%, with a net interest margin improvement to 3.75% from 3.26% year-over-year[85][95]. - Net income from continuing operations was $8.55 million, a 21.1% increase from the previous year, with diluted EPS rising to $0.63[89]. - Net interest income for Q1 2025 was $19.44 million, compared to $16.72 million in Q1 2024, representing an increase of 16.3%[1]. - Total operating expenses decreased by $678,000, or 1.9%, to $35.53 million in Q1 2025 from $36.21 million in Q1 2024[1][13]. - Net income from discontinued operations increased to $415,000 in Q1 2025, up 371.6% from $88,000 in Q1 2024[1][15]. - Net cash flows provided by operating activities were $21.6 million for Q1 2025, an increase of $11.7 million compared to $9.8 million for Q1 2024[129]. Loan and Asset Management - Average loans increased by $93.3 million, or 9.2%, reaching $1.11 billion, primarily due to growth in commercial and industrial loans[96]. - The average yield on loans rose by 55 basis points to 5.61%, reflecting current market interest rates[96]. - Average loans outstanding increased to $1.11 billion in Q1 2025 from $1.02 billion in Q1 2024, marking a growth of 9.2%[1][12]. - Loans increased by $59.9 million, or 5.5%, from December 31, 2024, with growth in commercial and industrial and faith-based loan portfolios[118]. - Total interest-earning assets increased to $2.10 billion in Q1 2025, up from $2.06 billion in Q1 2024, reflecting a growth of 2.0%[1]. Credit Quality and Provisions - The provision for credit loss increased significantly by 852.6% to $905,000, indicating potential concerns in credit quality[89]. - The provision for credit losses rose to $905,000 in Q1 2025 from $95,000 in Q1 2024, driven by a 5.5% increase in total loans[1][8]. - The Company experienced an increase in the provision for credit losses of $810,000 primarily due to the growth in the loan portfolio[134]. - The allowance for credit losses (ACL) was $14.3 million at March 31, 2025, representing 1.25% of outstanding loans[1][9]. Capital and Regulatory Compliance - The Company continues to exceed all regulatory capital requirements, with total capital to risk-weighted assets at 14.94% as of March 31, 2025[135]. - The Company reported total capital of $262,084,000, representing a capital ratio of 14.94% as of March 31, 2025, exceeding the regulatory requirement of 8.00%[135]. - The Company’s Common Equity Tier I Capital was $247,510,000, with a ratio of 14.11%, significantly above the required 4.50%[135]. - The Company continues to exceed all regulatory capital requirements, with Cass Commercial Bank reporting a Tier I capital ratio of 16.71% as of March 31, 2025, well above the 6.00% requirement[135]. - The Company is subject to capital requirements administered by state and federal banking agencies, with capital amounts and classifications influenced by qualitative judgments by regulators[133]. Asset and Liability Management - Total assets as of March 31, 2025, were $2.32 billion, a decrease of $76.6 million, or 3.2%, from December 31, 2024[1][16]. - Cash and cash equivalents decreased by $129.1 million, or 36.9%, during Q1 2025, reflecting changes in funding sources[1][17]. - Total deposits at March 31, 2025, were $1.00 billion, an increase of $32.2 million, or 3.3%, primarily due to a rise in noninterest-bearing deposits of $112.6 million[120]. - Accounts and drafts payable decreased by $113.3 million, or 10.0%, from December 31, 2024, reflecting fluctuations due to the payment processing cycle[121]. - Total liabilities at March 31, 2025, were $2.08 billion, a decrease of $81.8 million, or 3.8%, influenced by the decrease in accounts and drafts payable[122]. Market and Regulatory Environment - The Company’s financial performance may be impacted by market risks, including changes in interest rates, inflation, and energy costs[132]. - The Company’s financial statements are prepared in accordance with the Financial Accounting Standards Board Accounting Standards Codification, with management making estimates that may differ from actual results[140]. - The Company’s loan portfolio is subject to periodic reviews to estimate lifetime expected credit losses, which can significantly differ from actual results[141]. - The Company adopted ASU 2023-06, which is not expected to have a significant impact on its financial statements[136]. - The Company is preparing for the adoption of ASU 2023-09, effective for annual periods beginning after December 15, 2024, which will require additional disclosures about income taxes[139]. Business Operations - The Company signed an Asset Purchase Agreement to sell its telecom expense management business for $18.0 million, expected to close in Q2 2025[86]. - The Company experienced a decrease in average non-interest-bearing demand deposits by $42.7 million, or 9.5%, to $405.2 million[99]. - Average accounts and drafts payable increased by $57.9 million, or 5.7%, to $1.07 billion, driven by a 16.1% rise in facility dollar volumes[100].