Cass Information Systems Inc 10-Q for FY2020 Q3

Cass Information Systems Inc (CASS)

10-Q 2020-11-05 For: 2020-09-30

Added on April 06, 2026

About this 10-Q

Cass Information Systems Inc filed this 10-Q on November 5, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $35.75M; down 11.8% from $40.54M a year earlier
Net income: $5.78M; down 29.4% from net income of $8.19M a year earlier
Diluted EPS: $0.40; down 28.6% from $0.56 a year earlier

	Amount of Commitment Expiration per Period
Time deposits	$	65,086		$	45,574		$	19,438		$	74		$	—

	Shares	Weighted- Average Exercise Price
Balance at December 31, 2019	155,292	$	32.58	2.92	$	3,908
Exercised	(10,293)		26.72	—		—
Exercisable at September 30, 2020	144,999	$	32.99	2.20	$	1,247

(In thousands)	Estimated 2020
Service cost – benefits earned during the year	$	4,329	$	3,555
Interest cost on projected benefit obligations		3,908		4,103
Expected return on plan assets		(6,049)		(4,753)
Net amortization		1,946		1,559
Net periodic pension cost	$	4,134	$	4,464

(In thousands)	Estimated 2020
Service cost – benefits earned during the year	$	121	$	97
Interest cost on projected benefit obligation		347		408
Net amortization		112		276
Net periodic pension cost	$	580	$	781

	September 30, 2020
State and political subdivisions	$	285,667	$	19,249	$	22	$	304,894
U.S. government agencies		59,294		977		—		60,271
Total	$	344,961	$	20,226	$	22	$	365,165

	December 31, 2019
State and political subdivisions	$	310,720	$	13,727	$	—	$	324,447
U.S. government agencies		97,380		507		169		97,718
Certificates of deposit		500		—		—		500
Total	$	408,600	$	14,234	$	169	$	422,665

		September 30, 2020
U.S. government agencies		$	1,793		$	22		$	—		$	—		$	1,793		$	22
Total		$	1,793			22			—			—			1,793			22

		December 31, 2019
U.S. government agencies		$	3,801		$	12		$	17,593		$	157		$	21,394		$	169
Total		$	3,801		$	12		$	17,593		$	157		$	21,394		$	169

	September 30, 2020
Due in 1 year or less	$	49,435	$	49,876
Due after 1 year through 5 years		93,433		98,084
Due after 5 years through 10 years		172,368		186,537
Due after 10 years		29,725		30,668
Total	$	344,961	$	365,165

(In thousands)	September 30, 2020
Lease payments due
Less than 1 year	$	1,819
1-2 years		1,683
2-3 years		1,062
3-4 years		502
4-5 years		512
Over 5 years		2,150
Total undiscounted cash flows		7,728
Discount on cash flows		1,175
Total lease liability	$	6,553

	Third Quarter of
Net income	$	5,781	$	8,186	(29.4)	$	18,765	$	24,033	(21.9)
Diluted earnings per share	$	.40	$	.56	(28.6)	$	1.29	$	1.64	(21.3)
Return on average assets		1.14%		1.82%	—		1.32%		1.86%	—
Return on average equity		9.25%		13.44%	—		10.25%		13.76%	—

		Third Quarter of	Nine Months Ended
Transportation invoice volume		8,660		9,236	(6.2)%		24,234		27,406	(11.6)%
Transportation invoice dollar volume	$	6,822,565	$	7,104,771	(4.0)%	$	18,987,243	$	21,211,746	(10.5)%
Facility Expense transaction volume*		7,117		7,143	(0.4)%		20,330		21,029	(3.3)%
Facility Expense dollar volume*	$	3,595,586	$	4,118,393	(12.7)%	$	10,118,270	$	11,468,896	(11.8)%
Payment and processing revenue	$	24,376	$	27,741	(12.1)%	$	72,540	$	81,050	(10.5)%

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended September 30, 2020

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from __________ to __________

Missouri	43-1265338
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
12444 Powerscourt Drive, Suite 550 St. Louis, Missouri	63131
(Address of principal executive offices)	(Zip Code)

Title of each class		Trading symbols		Name of each exchange on which registered
Common stock, par value $.50		CASS		The Nasdaq Global Select Market

Large Accelerated Filer ☒	Accelerated Filer ☐

Non-Accelerated Filer ☐	Smaller Reporting Company ☐	Emerging Growth Company ☐

PART I – Financial Information
Item 1.FINANCIAL STATEMENTS
Consolidated Balance Sheets September 30, 2020 (unaudited) and December 31, 2019	3
Consolidated Statements of Income Three and nine months ended September 30, 2020 and 2019 (unaudited)	4
Consolidated Statements of Comprehensive Income Three and nine months ended September 30, 2020 and 2019 (unaudited)	5
Consolidated Statements of Cash Flows Nine months ended September 30, 2020 and 2019 (unaudited)	6
Consolidated Statements of Shareholders’ Equity Three and nine months ended September 30, 2020 and 2019 (unaudited)	7
Notes to Consolidated Financial Statements (unaudited)	8
Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	31
Item 4.CONTROLS AND PROCEDURES	31
PART II – Other Information – Items 1. – 6.	31
SIGNATURES	34

	September 30, 2020 (Unaudited)		December 31, 2019
Assets
Cash and due from banks	$	15,950	$	18,076
Interest-bearing deposits in other financial institutions		208,783		172,422
Federal funds sold and other short-term investments		214,718		13,456
Cash and cash equivalents		439,451		203,954
Securities available-for-sale, at fair value		365,165		422,665

Loans		944,557		772,638
Less: Allowance for loan losses		11,298		10,556
Loans, net		933,259		762,082
Payments in excess of funding		161,392		206,158
Premises and equipment, net		18,890		20,527
Investment in bank-owned life insurance		17,942		17,599
Goodwill		14,262		14,262
Other intangible assets, net		3,637		4,281
Other assets		46,465		112,715
Total assets	$	2,000,463	$	1,764,243

Liabilities and Shareholders’ Equity
Liabilities:
Deposits:
Noninterest-bearing	$	374,382	$	351,091
Interest-bearing		536,803		406,045
Total deposits		911,185		757,136
Accounts and drafts payable		771,607		684,295
Short-term borrowings		─		18,000
Other liabilities		66,180		60,622
Total liabilities		1,748,972		1,520,053

Shareholders’ Equity:
Preferred stock, par value $.50 per share; 2,000,000 shares authorized and no shares issued		—		—
Common stock, par value $.50 per share; 40,000,000 shares authorized and 15,505,772 shares issued at September 30, 2020 and December 31, 2019		7,753		7,753
Additional paid-in capital		205,053		205,397
Retained earnings		97,402		90,341
Common shares in treasury, at cost (1,083,639 shares at September 30, 2020 and 991,406 shares at December 31, 2019)		(49,410)		(45,381)
Accumulated other comprehensive loss		(9,307)		(13,920)
Total shareholders’ equity		251,491		244,190
Total liabilities and shareholders’ equity	$	2,000,463	$	1,764,243

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Fee Revenue and Other Income:
Information services payment and processing revenue	$	24,376	$	27,741	$	72,540	$	81,050
Bank service fees		441		307		1,249		984
Gains on sales of securities		—		—		1,069		19
Other		115		214		343		594
Total fee revenue and other income		24,932		28,262		75,201		82,647

Interest Income:
Interest and fees on loans		9,067		9,548		27,366		27,564
Interest and dividends on securities:
Taxable		373		612		1,406		1,893
Exempt from federal income taxes		1,753		1,925		5,357		5,956
Interest on federal funds sold and other short-term investments		86		1,581		1,130		4,477
Total interest income		11,279		13,666		35,259		39,890

Interest Expense:
Interest on deposits		465		1,392		1,909		3,987
Interest on short-term borrowings		—		—		2		—
Total interest expense		465		1,392		1,911		3,987
Net interest income		10,814		12,274		33,348		35,903
Provision for loan losses		—		—		725		250
Net interest income after provision for loan losses		10,814		12,274		32,623		35,653
Total net revenue		35,746		40,536		107,824		118,300

Operating Expense:
Personnel		22,521		23,514		65,839		68,594
Occupancy		930		973		2,809		2,930
Equipment		1,648		1,554		4,900		4,575
Amortization of intangible assets		215		150		644		359
Other operating expense		3,366		4,372		10,774		12,538
Total operating expense		28,680		30,563		84,966		88,996
Income before income tax expense		7,066		9,973		22,858		29,304
Income tax expense		1,285		1,787		4,093		5,271
Net income	$	5,781	$	8,186	$	18,765	$	24,033

Basic earnings per share	$	.40	$	.57	$	1.31	$	1.66
Diluted earnings per share		.40		.56		1.29		1.64

	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive (Loss) Income		Total
Balance, June 30, 2019	$	7,753	$	205,463	$	83,470	$	(46,333)	$	(9,932)	$	240,421

Net income						8,186						8,186
Cash dividends ($.26 per share)						(3,769)						(3,769)
Issuance of 795 common shares pursuant to stock-based compensation plan, net				(5)				48				43
Exercise of SARs				(552)				300				(252)
Stock-based compensation expense				869								869
Other comprehensive income										1,119		1,119
Balance, September 30, 2019	$	7,753	$	205,775	$	87,887	$	(45,985)	$	(8,813)	$	246,617

Balance, June 30, 2020	$	7,753	$	204,258	$	95,514	$	(49,457)	$	(9,541)	$	248,527

Net income						5,781						5,781
Cash dividends ($.27 per share)						(3,893)						(3,893)
Issuance of 1,165 common shares pursuant to stock-based compensation plan, net				(4)				47				43
Stock-based compensation expense				799								799
Other comprehensive income										234		234
Balance, September 30, 2020	$	7,753	$	205,053	$	97,402	$	(49,410)	$	(9,307)	$	251,491

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands except share and per share data)	2020		2019		2020		2019
Basic:
Net income	$	5,781	$	8,186	$	18,765	$	24,033
Weighted-average common shares outstanding		14,348,151		14,417,725		14,373,243		14,435,670
Basic earnings per share	$	.40	$	.57	$	1.31	$	1.66

Diluted:
Net income	$	5,781	$	8,186	$	18,765	$	24,033
Weighted-average common shares outstanding		14,348,151		14,417,725		14,373,243		14,435,670
Effect of dilutive restricted stock and stock appreciation rights		198,336		262,917		200,723		258,123
Weighted-average common shares outstanding assuming dilution		14,546,487		14,680,642		14,573,966		14,693,793
Diluted earnings per share	$	.40	$	.56	$	1.29	$	1.64

(In thousands)	Information Services		Banking Services		Corporate, Eliminations and Other		Total
Three Months Ended September 30, 2020
Fee income	$	24,198	$	651	$	83	$	24,932
Interest income*		6,306		7,212		(1,773)		11,745
Interest expense		─		465		─		465
Intersegment income (expense)		─		593		(593)		─
Tax-equivalized pre-tax income*		5,718		3,506		(1,692)		7,532
Goodwill		12,433		1,829		─		14,262
Other intangible assets, net		837		2,800		─		3,637
Total assets		905,158		1,105,845		(10,540)		2,000,463
Average funding sources		751,010		780,217		─		1,531,227
Three Months Ended September 30, 2019
Fee income	$	28,026	$	257	$	(21)	$	28,262
Interest income*		6,760		7,930		(513)		14,177
Interest expense		—		1,392		—		1,392
Intersegment income (expense)		—		533		(533)		—
Tax-equivalized pre-tax income*		7,619		3,399		(534)		10,484
Goodwill		15,758		136		—		15,894
Other intangible assets, net		3,170		—		—		3,170
Total assets		908,946		862,142		9,922		1,781,010
Average funding sources		704,772		588,226		—		1,292,998
Nine Months Ended September 30, 2020:
Fee income	$	72,098	$	1,906	$	1,197	$	75,201
Interest income*		18,153		21,097		(2,567)		36,683
Interest expense		─		1,911		─		1,911
Intersegment income (expense)		─		1,674		(1,674)		─
Tax-equivalized pre-tax income*		16,462		9,190		(1,370)		24,282
Goodwill		12,433		1,829		─		14,262
Other intangible assets, net		837		2,800		─		3,637
Total assets		905,158		1,105,845		(10,540)		2,000,463
Average funding sources		703,142		712,903		─		1,416,045
Nine Months Ended September 30, 2019
Fee income	$	82,049	$	1,040	$	(442)	$	82,647
Interest income*		19,273		23,082		(883)		41,472
Interest expense		—		3,987		—		3,987
Intersegment income (expense)		—		1,587		(1,587)		—
Tax-equivalized pre-tax income*		21,997		10,214		(1,324)		30,887
Goodwill		15,758		136		—		15,894
Other intangible assets, net		3,170		—		—		3,170
Total assets		908,946		862,142		9,922		1,781,010
Average funding sources		667,741		583,458		—		1,251,199

	Performing						Nonperforming
(In thousands)	Current		30-59 Days		60-89 Days		90 Days and Over		Non- accrual		Total Loans
September 30, 2020
Commercial and industrial	$	301,886	$	—	$	—	$	—	$	—	$	301,886
PPP		172,211		—		—		—		—		172,211
Real estate:
Commercial:
Mortgage		94,792		—		—		—		—		94,792
Construction		23,795		—		—		—		—		23,795
Faith-based:
Mortgage		331,419		—		—		—		—		331,419
Construction		20,452		—		—		—		—		20,452
Other		2		—		—		—		—		2
Total	$	944,557	$	—	$	—	$	—	$	—	$	944,557
December 31, 2019
Commercial and industrial	$	323,857	$	—	$	—	$	—	$	—	$	323,857
Real estate:
Commercial:
Mortgage		101,654		—		—		—		—		101,654
Construction		25,299		—		—		—		—		25,299
Faith-based:
Mortgage		305,826		—		—		—		—		305,826
Construction		15,945		—		—		—		—		15,945
Other		57		—		—		—		—		57
Total	$	772,638	$	—	$	—	$	—	$	—	$	772,638

(In thousands)	Loans Subject to Normal Monitoring¹		Performing Loans Subject to Special Monitoring²		Nonperforming Loans Subject to Special Monitoring²		Total Loans
September 30, 2020
Commercial and industrial	$	288,060	$	13,826	$	—	$	301,886
PPP		172,211		—		—		172,211
Real estate:
Commercial:
Mortgage		93,370		1,422		—		94,792
Construction		23,795		—		—		23,795
Faith-based:
Mortgage		328,285		3,134		—		331,419
Construction		20,452		—		—		20,452
Other		2		—		—		2
Total	$	926,175	$	18,382	$	—	$	944,557
December 31, 2019
Commercial and industrial	$	321,554	$	2,303	$	—	$	323,857
Real estate:
Commercial:
Mortgage		100,346		1,308		—		101,654
Construction		25,299		—		—		25,299
Faith-based:
Mortgage		304,513		1,313		—		305,826
Construction		15,945		—		—		15,945
Other		57		—		—		57
Total	$	767,714	$	4,924	$	—	$	772,638

(In thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance for Loan Losses
Commercial and industrial:	$	11,782	$	11,782	$	500
Real estate:
Faith-based:
Mortgage		1,038		1,038		—
Total impaired loans	$	12,820	$	12,820	$	500

(In thousands)	December 31, 2019		Charge- Offs		Recoveries		Provision		September 30, 2020
Commercial and industrial	$	4,874	$	—	$	16	$	211	$	5,101
Real estate:
Commercial:
Mortgage		1,528		—		—		(34)		1,494
Construction		191		—		—		(2)		189
Faith-based:
Mortgage		3,842		—		1		510		4,353
Construction		121		—		—		40		161
Total	$	10,556	$	—	$	17	$	725	$	11,298

(In thousands)	December 31, 2018		Charge- Offs		Recoveries		Provision		September 30, 2019
Commercial and industrial	$	4,179	$	—	$	34	$	672	$	4,885
Real estate:
Commercial:
Mortgage		1,417		—		—		(161)		1,256
Construction		89		—		—		91		180
Faith-based:
Mortgage		3,961		—		—		32		3,993
Construction		155		—		—		(38)		117
Other		424		—		—		(346)		78
Total	$	10,225	$	—	$	34	$	250	$	10,509

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Comprehensive income:
Net income	$	5,781	$	8,186	$	18,765	$	24,033
Other comprehensive income:
Net unrealized gain on securities available-for-sale		224		1,571		7,209		13,317
Tax effect		(53)		(374)		(1,716)		(3,170)
Reclassification adjustments for gains included in net income		—		—		(1,069)		(19)
Tax effect		—		—		254		5
Foreign currency translation adjustments		63		(78)		(65)		(74)
Total comprehensive income	$	6,015	$	9,305	$	23,378	$	34,092

	Nine Months Ended September 30,
	2020		2019
Cash Flows From Operating Activities:
Net income	$	18,765	$	24,033
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,391		8,103
Gains on sales of securities		(1,069)		(19)
Stock-based compensation expense		2,277		2,286
Provision for loan losses		725		250
Decrease (increase) in income tax liability		527		(1,384)
Increase in pension liability		3,315		3,888
Decrease (increase) in accounts receivable		1,339		(399)
Other operating activities, net		5,791		3,016
Net cash provided by operating activities		40,061		39,774

Cash Flows From Investing Activities:
Proceeds from sales of securities available-for-sale		19,629		4,648
Proceeds from maturities of securities available-for-sale		43,605		18,001
Purchase of securities available-for-sale		(2,931)		─
Net increase in loans		(171,902)		(45,763)
Decrease (increase) in payments in excess of funding		44,766		(47,448)
Purchases of premises and equipment, net		(1,705)		(1,877)
Acquisition of Gateway Giving, LLC		─		(3,000)
Net cash used in investing activities		(68,538)		(75,439)

Cash Flows From Financing Activities:
Net increase (decrease) in noninterest-bearing demand deposits		23,290		(2,563)
Net increase (decrease) in interest-bearing demand and savings deposits		136,639		(10,485)
Net (decrease) increase in time deposits		(5,881)		2,355
Net increase in accounts and drafts payable		146,280		57,772
Net decrease in short-term borrowings		(18,000)		—
Cash dividends paid		(11,704)		(11,317)
Purchase of common shares for treasury		(5,508)		(7,799)
Other financing activities, net		(1,142)		(493)
Net cash provided by financing activities		263,974		27,470
Net increase (decrease) in cash and cash equivalents		235,497		(8,195)
Cash and cash equivalents at beginning of period		203,954		230,933
Cash and cash equivalents at end of period	$	439,451	$	222,738

Supplemental information:

	September 30, 2020				December 31, 2019
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Assets eligible for amortization:
Customer lists	$	4,778	$	(3,793)	$	4,778	$	(3,463)
Patents		72		(23)		72		(20)
Non-compete agreements		332		(332)		332		(332)
Software		2,844		(638)		2,844		(358)
Trade Name		190		(10)		190		(3)
Other		500		(283)		500		(259)
Unamortized intangible assets:
Goodwill¹		14,489		(227)		14,489		(227)
Total intangible assets	$	23,205	$	(5,306)	$	23,205	$	(4,662)

	Nine Months Ended September 30, 2020
	Shares		Fair Value
Balance at December 31, 2019		123,272	$	47.24
Granted		33,568		47.83
Vested		(20,369)		49.32
Forfeited		(4,962)		50.08
Balance at September 30, 2020		131,509	$	46.96

	September 30, 2020
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State and political subdivisions	$	285,667	$	19,249	$	22	$	304,894
U.S. government agencies		59,294		977		—		60,271
Total	$	344,961	$	20,226	$	22	$	365,165

	September 30, 2020
	Less than 12 months				12 months or more				Total
(In thousands)	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
U.S. government agencies	$	1,793	$	22	$	—	$	—	$	1,793	$	22
Total	$	1,793		22		—		—		1,793		22

	September 30, 2020
(In thousands)	Amortized Cost		Fair Value
Due in 1 year or less	$	49,435	$	49,876
Due after 1 year through 5 years		93,433		98,084
Due after 5 years through 10 years		172,368		186,537
Due after 10 years		29,725		30,668
Total	$	344,961	$	365,165

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(In thousands)	2020		2019		2020		2019
Fee revenue and other income
In-scope of FASB ASC 606
Invoice processing fees	$	18,650	$	20,408	$	55,697	$	61,397
Invoice payment fees		5,726		7,333		16,843		19,653
Information services payment and processing revenue		24,376		27,741		72,540		81,050
Bank service fees		441		307		1,249		984
Fee revenue (in-scope of FASB ASC 606)		24,817		28,048		73,789		82,034
Other income (out-of-scope of FASB ASC 606)		115		214		1,412		613
Total fee revenue and other income		24,932		28,262		75,201		82,647

Net interest income after provision for loan losses (out-of-scope of FASB ASC 606)¹		10,814		12,274		32,623		35,653
Total net revenue	$	35,746	$	40,536	$	107,824	$	118,300

	Third Quarter of					Nine Months Ended
(In thousands except per share data)	2020		2019		% Change	2020		2019		% Change
Net income	$	5,781	$	8,186	(29.4)	$	18,765	$	24,033	(21.9)
Diluted earnings per share	$	.40	$	.56	(28.6)	$	1.29	$	1.64	(21.3)
Return on average assets		1.14%		1.82%	—		1.32%		1.86%	—
Return on average equity		9.25%		13.44%	—		10.25%		13.76%	—

	Third Quarter of 2020							Third Quarter of 2019
(In thousands)	Average Balance			Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate
Assets¹
Interest-earning assets
Loans²:
Taxable	$	949,836		$	9,067	3.80	%	$	774,489	$	9,549	4.89	%
Investment securities⁴:
Taxable		69,158			372	2.14			102,507		603	2.33
Tax-exempt³		284,826			2,219	3.10			315,381		2,436	3.06
Certificates of deposit		209			1	1.90			1,644		8	1.93
Interest-bearing deposits in other financial institutions		189,975			36	0.08			102,386		502	1.95
Federal funds sold and other short-term investments		240,676			50	0.08			202,063		1,079	2.12
Total interest-earning assets		1,734,680			11,745	2.69			1,498,470		14,177	3.75
Non-interest-earning assets:
Cash and due from banks		16,993							16,307
Premises and equipment, net		19,507							20,981
Bank-owned life insurance		17,875							17,456
Goodwill and other intangibles		18,027							14,669
Other assets		215,633							222,449
Allowance for loan losses		(11,295	)						(10,507)
Total assets	$	2,011,420						$	1,779,825
Liabilities and Shareholders’ Equity¹
Interest-bearing liabilities:
Interest-bearing demand Deposits	$	425,192		$	227	0.21	%	$	315,341	$	996	1.25	%
Savings deposits		14,675			3	0.08			9,612		24	0.99
Time deposits >= $100		26,335			104	1.57			25,978		133	2.03
Other time deposits		40,959			131	1.27			48,051		239	1.97
Total interest-bearing deposits		507,161			465	0.36			398,982		1,392	1.38
Short-term borrowings		11			—	—			10		—	—
Total interest-bearing liabilities		507,172			465	0.36			398,992		1,392	1.38
Non-interest bearing liabilities:
Demand deposits		371,862							272,551
Accounts and drafts payable		816,032							809,078
Other liabilities		67,829							57,636
Total liabilities		1,762,895							1,538,257
Shareholders’ equity		248,525							241,568
Total liabilities and shareholders’ equity	$	2,011,420						$	1,779,825
Net interest income				$	11,280					$	12,785
Net interest margin						2.59	%					3.38	%
Interest spread						2.33						2.37

1.	Balances shown are daily averages.
2.	Interest income on loans includes net loan fees of $678,000 and $127,000 for the Third Quarter of 2020 and 2019, respectively due to higher PPP loan fees.
3.	Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for both 2020 and 2019. The tax-equivalent adjustment was approximately $466,000 and $511,000 for the Third Quarter of 2020 and 2019, respectively.
4.	For purposes of these computations, yields on investment securities are computed as interest income divided by the average amortized cost of the investments.

	Nine Months Ended 2020							Nine Months Ended 2019
(In thousands)	Average Balance			Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate
Assets¹
Interest-earning assets
Loans²:
Taxable	$	904,632		$	27,366	4.04	%	$	755,331	$	27,564	4.88	%
Investment securities⁴:
Taxable		82,271			1,400	2.27			104,614		1,865	2.38
Tax-exempt³		289,964			6,781	3.12			322,682		7,538	3.12
Certificates of deposit		340			6	2.36			1,877		28	1.99
Interest-bearing deposits in other financial institutions		197,929			492	0.33			110,294		1,789	2.17
Federal funds sold and other short-term investments		140,955			638	0.60			161,444		2,688	2.23
Total interest-earning assets		1,616,091			36,683	3.03			1,456,242		41,472	3.81
Non-interest-earning assets:
Cash and due from banks		16,765							14,292
Premises and equipment, net		19,955							21,522
Bank-owned life insurance		17,761							17,475
Goodwill and other intangibles		18,240							14,243
Other assets		214,331							210,200
Allowance for loan losses		(10,919	)						(10,413)
Total assets	$	1,892,224						$	1,723,561
Liabilities and Shareholders’ Equity¹
Interest-bearing liabilities:
Interest-bearing demand deposits	$	382,424		$	1,062	0.37	%	$	305,454	$	2,841	1.24	%
Savings deposits		12,010			19	0.21			10,487		83	1.06
Time deposits >= $100		28,134			383	1.82			24,728		364	1.97
Other time deposits		42,483			445	1.40			48,774		699	1.92
Total interest-bearing deposits		465,051			1,909	0.55			389,443		3,987	1.37
Short-term borrowings		77			2	3.47			12		—	—
Total interest-bearing liabilities		465,128			1,911	0.55			389,455		3,987	1.37
Non-interest bearing liabilities:
Demand deposits		342,386							267,374
Accounts and drafts payable		775,341							778,141
Other liabilities		64,859							54,995
Total liabilities		1,647,714							1,489,965
Shareholders’ equity		244,510							233,596
Total liabilities and shareholders’ equity	$	1,892,224						$	1,723,561
Net interest income				$	34,772					$	37,485
Net interest margin						2.87	%					3.44	%
Interest spread						2.48						2.44

	Third Quarter of 2020 Over Third Quarter of 2019
(In thousands)	Volume			Rate			Total
Increase (decrease) in interest income:
Loans¹:
Taxable	$	1,906		$	(2,388	)	$	(482	)
Investment securities:
Taxable		(184	)		(47	)		(231	)
Tax-exempt²		(244	)		27			(217	)
Certificates of deposit		(7	)		—			(7	)
Interest-bearing deposits in other financial institutions		235			(701	)		(466	)
Federal funds sold and other short-term investments		173			(1,202	)		(1,029	)
Total interest income		1,879			(4,311	)		(2,432	)
Interest expense on:
Interest-bearing demand deposits		262			(1,031	)		(769	)
Savings deposits		8			(29	)		(21	)
Time deposits >=$100		2			(31	)		(29	)
Other time deposits		(32	)		(76	)		(108	)
Total interest expense		240			(1,167	)		(927	)
Net interest income	$	1,639		$	(3,144	)	$	(1,505	)

1.	Interest income includes net loan fees.
2.	Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for the Third Quarter of 2020 and 2019.

	Nine Months Ended 2020 Over Nine Months Ended 2019
(In thousands)	Volume			Rate			Total
Increase (decrease) in interest income:
Loans¹:
Taxable	$	4,980		$	(5,178	)	$	(198	)
Investment securities:
Taxable		(382	)		(83	)		(465	)
Tax-exempt²		(758	)		1			(757	)
Certificates of deposit		(26	)		4			(22	)
Interest-bearing deposits in other financial institutions		844			(2,141	)		(1,297	)
Federal funds sold and other short-term investments		(304	)		(1,746	)		(2,050	)
Total interest income		4,354			(9,143	)		(4,789	)
Interest expense on:
Interest-bearing demand deposits		587			(2,366	)		(1,779	)
Savings deposits		11			(75	)		(64	)
Time deposits >=$100		48			(29	)		19
Other time deposits		(82	)		(172	)		(254	)
Short-term borrowings		—			2			2
Total interest expense		564			(2,640	)		(2,076	)
Net interest income	$	3,790		$	(6,503	)	$	(2,713	)

	September 30, 2020				December 31, 2019
(Dollars in thousands)	Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets):
Cass Information Systems, Inc.	$	253,964		22.09%	$	249,954		19.70%
Cass Commercial Bank		167,005		21.17%		154,011		19.32%
Common Equity Tier I Capital (to risk-weighted assets):
Cass Information Systems, Inc.	$	242,666		21.11%	$	239,398		18.86%
Cass Commercial Bank		157,925		20.02%		145,673		18.27%
Tier I capital (to risk-weighted assets):
Cass Information Systems, Inc.	$	242,666		21.11%	$	239,398		18.86%
Cass Commercial Bank		157,925		20.02%		145,673		18.27%
Tier I capital (to average assets):
Cass Information Systems, Inc.	$	242,666		12.17%	$	239,398		13.24%
Cass Commercial Bank		157,925		14.51%		145,673		16.64%

	CASS INFORMATION SYSTEMS, INC.


DATE: November 5, 2020	By	/s/ Eric H. Brunngraber
		Eric H. Brunngraber
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)


DATE: November 5, 2020	By	/s/ P. Stephen Appelbaum
		P. Stephen Appelbaum
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)