UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): October 25, 2018
CASS INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
| Missouri | 000-20827 | 43-1265338 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| 12444 Powerscourt Drive, Suite 550 St. Louis, Missouri |
63131 | |
| (Address of principal executive offices) | (Zip Code) |
(314) 506-5500
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act. |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act. |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| ☐ | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
On October 25, 2018, Cass Information Systems, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2018. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information reported under this Item 2.02 of Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 8.01. | Other Matters. |
On October 25, 2018, the Company also announced that its Board of Directors declared a 20% stock dividend payable on December 14, 2018 to shareholders of record on December 4, 2018 and a fourth quarter cash dividend of $0.26 per share payable on December 14, 2018 to shareholders of record on December 4, 2018, applicable to all shares held after the 20% stock dividend has been effected. Additionally, the Board of Directors voted to restore the capacity of the Company’s common stock repurchase program to 500,000 shares. Repurchases will be made in the open market or through negotiated transactions from time to time, depending on market conditions. A copy of the press release announcing these matters is attached hereto as Exhibit 99.1 and incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit Number |
Description | |
| 99.1 | Press release issued by Cass Information Systems, Inc. dated October 25, 2018. | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 25, 2018
| CASS INFORMATION SYSTEMS, INC. | ||||||
| By: | /s/ Eric H. Brunngraber | |||||
| Name: | Eric H. Brunngraber | |||||
| Title: | Chairman of the Board, President and Chief Executive Officer | |||||
| By: | /s/ P. Stephen Appelbaum | |||||
| Name: | P. Stephen Appelbaum | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
3
Exhibit 99.1
| Contact: | Contact Kenn Entringer at Casey Communications, Inc., (314) 721-2828. |
| kentringer@caseycomm.com |
October 25, 2018
3rd Quarter 2018 Earnings Up 11% at Cass Information Systems, Inc.
Declares 20% Stock Dividend
ST. LOUIS – Cass Information Systems, Inc. (NASDAQ: CASS), the nation’s leading provider of transportation, energy, telecom and waste invoice payment and information services, reported third quarter 2018 earnings of $.61 per diluted share, an increase of 11% from the $.55 per diluted share it earned in the third quarter of 2017. Net income for the period was $7.6 million, compared to $6.9 million in 2017.
| 3rd Quarter | YTD | |||||||||||
| 2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||
| Transportation Invoice Volume |
9.5 million | 9.0 million | 6.3 | 28.3 million | 26.6 million | 6.6 | ||||||
| Transportation Dollar Volume |
$7.3 billion | $6.2 billion | 17.9 | $21.2 billion | $18.3 billion | 16.2 | ||||||
| Facility Expense Transaction Volume* |
7.1 million | 6.9 million | 2.7 | 21.4 million | 20.5 million | 4.6 | ||||||
| Facility Expense Dollar Volume* |
$3.7 billion | $3.4 billion | 8.1 | $10.3 billion | $9.6 billion | 7.2 | ||||||
| Revenues |
$37.6 million | $34.3 million | 9.7 | $110.0 million | $100.3 million | 9.7 | ||||||
| Net Income |
$7.6 million | $6.9 million | 10.9 | $23.2 million | $19.7 million | 17.9 | ||||||
| Diluted Earnings per Share |
$.61 | $.55 | 10.9 | $1.87 | $1.58 | 18.4 | ||||||
| * | Includes Energy, Telecom and Waste |
2018 3rd Quarter Recap
The increases in revenue and net income of 10% and 11%, respectively, were driven by new customer wins; the development and deployment of new revenue generating services; and higher interest rates. The double-digit bottom-line advances were achieved even as Cass continued to make significant investments in personnel, technology and infrastructure to support future service growth.
Highlighting third quarter performance was an 18% increase in transportation dollar volume. Higher carrier and fuel prices, in concert with higher volume from current accounts, produced the positive result. Transportation invoice volume for the period was up 6%.
Facility-related (electricity, gas, waste and telecom expense management) dollar volume was up 8% with facility expense transaction volume up 3%. Again, new customer wins plus increased volume from current accounts generated the favorable outcome.
Consolidated operating expenses increased $3.5 million (14%) due mainly to on-going strategic investment in the technology and staff required to win new business and support service growth with existing clients.
“Third quarter results were healthy and marked the 3rd consecutive quarter in which the efforts of our team produced a double-digit earnings gain,” stated Eric H. Brunngraber, Cass chairman and chief executive officer. “We are taking advantage of recent tax reform and continue to make the internal investments that will position the company to capitalize on growth opportunities we see emerging over the longer term.”
2018 Earnings Up 18% at Nine-Month Mark
For the nine-month period ended September 30, 2018, the company earned $1.87 per diluted share, an increase of 18% from the $1.58 per diluted share it earned in the same period in 2017. Net income was $23.2 million, compared to $19.7 million in 2017. Revenues rose 10%, from $100.3 million in 2017 to $110.0 million in 2018.
Consolidated operating expenses were up 11%, or $7.9 million, due to increased business and the strategic investments previously cited.
20% Stock Dividend Declared
On October 23, 2018, the company’s board of directors declared a 20% stock dividend payable December 14, 2018 to shareholders of record December 4, 2018. Shareholders will receive one additional share of Cass stock for each five shares owned. No fractional shares will be issued. Shareholders will receive cash for any fractional shares owned based on the share price reported by NASDAQ at the close of trading December 4, 2018.
Additionally, the company’s board of directors declared a fourth quarter dividend of $.26 per share payable December 14, 2018 to shareholders of record December 4, 2018. The upcoming cash payout will apply to all shares held after the 20% stock dividend is completed, effectively increasing the total fourth quarter dividend by 20%. Cass has continuously paid regularly scheduled cash dividends since 1934.
Also, the board voted to restore the capacity of the company’s stock repurchase program to 500,000 shares.
“By authorizing this 20% stock dividend, combined with the actions taken over the last twelve months, our board has effectively increased the dividend payout by nearly 50%. This clearly demonstrates the board’s commitment to rewarding shareholders and confidence in the company’s future growth prospects,” said Brunngraber. “Additionally, replenishing the stock repurchase program gives us the flexibility to continue an initiative that has returned nearly $13 million to shareholders over the past 36 months.”
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 more than $50 billion annually on behalf of clients, and with total assets of $1.5 billion, Cass is uniquely supported by Cass Commercial Bank. Founded in 1906 and a wholly owned subsidiary, Cass 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. For a discussion of certain factors that may cause such forward-looking statements to differ materially from the company’s actual results, see the company’s reports filed from time to time with the Securities and Exchange Commission including the company’s annual report on Form 10-K for the year ended December 31, 2017.
Selected Consolidated Financial Data
The following table presents selected unaudited consolidated financial data (in thousands, except per share data) for the periods ended September 30, 2018 and 2017:
| Quarter Ended September 30, 2018 |
Quarter Ended September 30, 2017 |
Nine Months Ended September 30, 2018 |
Nine Months Ended September 30, 2017 |
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| Transportation Invoice Volume |
9,530 | 8,962 | 28,349 | 26,585 | ||||||||||||
| Transportation Dollar Volume |
$ | 7,264,898 | $ | 6,162,957 | $ | 21,227,816 | $ | 18,271,178 | ||||||||
| Facility Expense Transaction Volume |
7,124 | 6,935 | 21,414 | 20,477 | ||||||||||||
| Facility Expense Dollar Volume |
$ | 3,667,007 | $ | 3,391,672 | $ | 10,338,979 | $ | 9,647,573 | ||||||||
| Payment and Processing Fees |
$ | 26,020 | $ | 23,761 | $ | 76,068 | $ | 69,332 | ||||||||
| Net Investment Income |
11,186 | 10,094 | 32,514 | 29,475 | ||||||||||||
| Loss on Sales of Securities |
— | — | (42 | ) | — | |||||||||||
| Other |
415 | 446 | 1,423 | 1,446 | ||||||||||||
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| Total Revenues |
$ | 37,621 | $ | 34,301 | $ | 109,963 | $ | 100,253 | ||||||||
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| Personnel |
$ | 21,747 | $ | 19,423 | $ | 63,718 | $ | 57,384 | ||||||||
| Occupancy |
975 | 903 | 2,754 | 2,634 | ||||||||||||
| Equipment |
1,434 | 1,242 | 4,150 | 3,746 | ||||||||||||
| Other |
4,374 | 3,474 | 11,553 | 10,497 | ||||||||||||
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| Total Operating Expenses |
$ | 28,530 | $ | 25,042 | $ | 82,175 | $ | 74,261 | ||||||||
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| Income from Operations before Income Taxes |
$ | 9,091 | $ | 9,259 | $ | 27,788 | $ | 25,992 | ||||||||
| Income Tax Expense |
1,481 | 2,396 | 4,577 | 6,309 | ||||||||||||
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| Net Income |
$ | 7,610 | $ | 6,863 | $ | 23,211 | $ | 19,683 | ||||||||
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| Basic Earnings per Share |
$ | .62 | $ | .56 | $ | 1.90 | $ | 1.61 | ||||||||
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| Diluted Earnings per Share |
$ | .61 | $ | .55 | $ | 1.87 | $ | 1.58 | ||||||||
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| Average Earning Assets |
$ | 1,397,477 | $ | 1,395,025 | $ | 1,385,488 | $ | 1,348,253 | ||||||||
| Net Interest Margin |
3.34 | % | 3.27 | % | 3.32 | % | 3.35 | % | ||||||||
| Allowance for Loan Losses to Loans |
1.41 | % | 1.55 | % | 1.41 | % | 1.55 | % | ||||||||
| Non-performing Loans to Total Loans |
— | .03 | % | — | .03 | % | ||||||||||
| Net Loan (Recoveries) / Charge-offs to Loans |
— | — | — | — | ||||||||||||
| Provision for Loan Losses |
$ | — | $ | — | $ | — | $ | — | ||||||||