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What changed in CASS INFORMATION SYSTEMS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CASS INFORMATION SYSTEMS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+206 added−202 removedSource: 10-K (2025-03-05) vs 10-K (2024-02-28)

Top changes in CASS INFORMATION SYSTEMS INC's 2024 10-K

206 paragraphs added · 202 removed · 167 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

31 edited+3 added−4 removed123 unchanged
Biggest changeBanking organizations are also required to notify each affected customer as soon as possible in the event of an incident that results in actual or potential harm to the integrity or availability of information and systems or that violates or threatens to violate the organization’s security for four or more hours. 8 Table of Contents Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of internet banking, mobile banking and other technology-based products and services by the Company and its customers.
Biggest changeRisks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of internet banking, mobile banking and other technology-based products and services by the Company and its customers.
Notable amendments include (i) significant changes to the collection of beneficial ownership information and the establishment of a beneficial ownership registry, which requires corporate entities (generally, any corporation, limited liability company or other similar entity with 20 or fewer employees and annual gross income of $5 million or less) to report beneficial ownership information to FinCEN (which information will be maintained by FinCEN and made available upon request to financial institutions); (ii) enhanced whistleblower provisions, which provide that one or more whistleblowers who voluntarily provide original information leading to the successful enforcement of violations of the AML laws in any judicial or administrative action brought by the Secretary of the Treasury or the Attorney General resulting in monetary sanctions exceeding $1 million (including disgorgement and interest but excluding forfeiture, restitution, or compensation to victims) will receive not more than 30 percent of the monetary sanctions collected and will receive increased protections; (iii) increased penalties for violations of the BSA; (iv) improvements to existing information sharing provisions that permit financial institutions to share information relating to suspicious activity reports with foreign branches, subsidiaries, and affiliates (except those located in China, Russia, or certain other jurisdictions) for the purpose of combating illicit finance risks; and (v) expanded duties and powers of FinCEN.
Notable amendments include (i) significant changes to the collection of beneficial ownership information and the establishment of a beneficial ownership registry, which requires corporate entities (generally, any corporation, limited liability company or other similar entity with 20 or fewer employees and/or annual gross income of $5 million or less) to report beneficial ownership information to FinCEN (which information will be maintained by FinCEN and made available upon request to certain government agencies and financial institutions); (ii) enhanced whistleblower provisions, which provide that one or more whistleblowers who voluntarily provide original information leading to the successful enforcement of violations of the AML laws in any judicial or administrative action brought by the Secretary of the Treasury or the Attorney General resulting in monetary sanctions exceeding $1 million (including disgorgement and interest but excluding forfeiture, restitution, or compensation to victims) will receive not more than 30 percent of the monetary sanctions collected and will receive increased protections; (iii) increased penalties for violations of the BSA; (iv) improvements to existing information sharing provisions that permit financial institutions to share information relating to suspicious activity reports with foreign branches, subsidiaries, and affiliates (except those located in China, Russia, or certain other jurisdictions) for the purpose of combating illicit finance risks; and (v) expanded duties and powers of FinCEN.
The DEI initiatives are supported and promoted to provide all employees a place where they feel welcomed, appreciated and valued. Equal opportunities, anti-harassment, non-discrimination, the health and safety of employees and work-life balance are actively promoted as more fully described in the Company's Environmental, Social, and Governance ("ESG") report.
Initiatives are supported and promoted to provide all employees a place where they feel welcomed, appreciated and valued. Equal opportunities, anti-harassment, non-discrimination, the health and safety of employees and work-life balance are actively promoted as more fully described in the Company's Environmental, Social, and Governance ("ESG") report.
The Company holds several trademarks for the payment and rating services it provides. These include: FreightPay®, Transdata®, Ratemaker®, Best Rate®, Rate Exchange®, CassPort®, Cass Freight Index®, Cass Truckload Linehaul Index®, Cass Intermodal Price Index® Expense$mart®, ExpenseSmart®, TouchPoint®, Gyve®, Generosity Made Simple®, WasteVision™ and Direct2Carrier Payments™.
The Company holds several trademarks for the payment and rating services it provides. These include: FreightPay®, Transdata®, Ratemaker®, Best Rate®, Rate Exchange®, CassPort®, Cass Freight Index®, Cass Truckload Linehaul Index®, Cass Intermodal Price Index® Expense$mart®, ExpenseSmart®, TouchPoint®, Gyve®, Generosity Made Simple®, WasteVision™, AcuAudit™ and Direct2Carrier Payments™.
A depository institution is deemed to be (i) “well-capitalized” if the institution has a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a leverage ratio of 5% or greater, a common equity Tier 1 ratio of 6.5% or greater and is not subject to any regulatory order agreement or written directive to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of 6% or greater, a leverage ratio of 4% or greater, a common equity Tier 1 ratio of 4.5% or greater and does not meet the definition of “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8%, a Tier 1 risk-based capital ratio of less than 6%, a leverage ratio of less 6 Table of Contents than 4% or a common equity Tier 1 ratio of less than 4.5%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 4%, a leverage ratio of less than 3% or a common equity Tier 1 ratio of less than 3%; and (v) “critically undercapitalized” if the institution has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2%.
A depository institution is deemed to be (i) “well-capitalized” if the institution has a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a leverage ratio of 5% or greater, a common equity Tier 1 ratio of 6.5% or greater and is not subject to any regulatory order agreement or written directive to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of 6% or greater, a leverage ratio of 4% or greater, a common equity Tier 1 ratio of 4.5% or greater and does not meet the definition of “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8%, a Tier 1 risk-based capital ratio of less than 6%, a leverage ratio of less than 4% or a common equity Tier 1 ratio of less than 4.5%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 4%, a leverage ratio of less than 3% or a common equity Tier 1 ratio of less than 3%; and (v) “critically undercapitalized” if the institution has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2%.
The FRB has authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular risks or circumstances. As of December 31, 2023, the Company and the Bank met all capital adequacy requirements under the Basel III Capital Rules.
The FRB has authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular risks or circumstances. As of December 31, 2024, the Company and the Bank met all capital adequacy requirements under the Basel III Capital Rules.
Significantly and critically undercapitalized institutions are subject to additional mandatory and discretionary measures. As of December 31, 2023, the most recent notification from the regulatory agencies categorized the Company and the Bank as well-capitalized. For further information regarding the capital ratios and leverage ratio of the Company and the Bank, see Item 8, Note 2 of this report.
Significantly and critically undercapitalized institutions are subject to additional mandatory and discretionary measures. As of December 31, 2024, the most recent notification from the regulatory agencies categorized the Company and the Bank as well-capitalized. For further information regarding the capital ratios and leverage ratio of the Company and the Bank, see Item 8, Note 2 of this report.
An additional amount may be loaned, up to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of December 31, 2023, the Bank was in compliance with the loans-to-one-borrower limitations.
An additional amount may be loaned, up to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of December 31, 2024, the Bank was in compliance with the loans-to-one-borrower limitations.
Cass will, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC, make available free of charge 10 Table of Contents on its website each of its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, and its definitive proxy statements.
Cass will, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC, make available free of charge on its website each of its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, and its definitive proxy statements.
Capital Requirements – As a bank holding company, the Company and the Bank are subject to capital requirements pursuant to the FRB’s capital guidelines which include (i) risk-based capital guidelines, which are designed to make capital requirements more sensitive to various risk profiles and account for off-balance sheet exposure; (ii) guidelines that consider market risk, which is the risk of loss due to change in value of assets and liabilities due to changes in interest rates; and (iii) guidelines that use a leverage ratio which places a constraint on the maximum degree of risk to which a financial holding company may leverage its equity capital base.
Capital Requirements – As a bank holding company, the Company and the Bank are subject to capital requirements pursuant to the FRB’s capital guidelines which include (i) risk-based capital guidelines, which are designed to make capital 4 Table of Contents requirements more sensitive to various risk profiles and account for off-balance sheet exposure; (ii) guidelines that consider market risk, which is the risk of loss due to change in value of assets and liabilities due to changes in interest rates; and (iii) guidelines that use a leverage ratio which places a constraint on the maximum degree of risk to which a financial holding company may leverage its equity capital base.
Among other things, the Inflation Reduction Act imposes a new 1% excise tax on the fair market value of stock repurchased after December 31, 4 Table of Contents 2022 by publicly traded U.S. corporations. With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements.
Among other things, the Inflation Reduction Act imposes a new 1% excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S. corporations. With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements.
If a financial holding company ceases to meet these capital and management requirements, the FRB may impose limitations or conditions on the conduct of its activities during the non-compliance period, and the company may not commence any of the broader financial activities 3 Table of Contents permissible for financial holding companies or acquire a company engaged in such financial activities without prior approval of the FRB.
If a financial holding company ceases to meet these capital and management requirements, the FRB may impose limitations or conditions on the conduct of its activities during the non-compliance period, and the company may not commence any of the broader financial activities permissible for financial holding companies or acquire a company engaged in such financial activities without prior approval of the FRB.
See Item 1A, “Risk Factors” for a further discussion of risks related to cybersecurity. Anti-Money Laundering Regulation and the USA PATRIOT Act - A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing.
See Item 1A, “Risk Factors” for a further discussion of risks related to cybersecurity. 8 Table of Contents Anti-Money Laundering Regulation and the USA PATRIOT Act - A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing.
In order for a financial holding 7 Table of Contents company to commence any new activity permitted by the BHC Act, or to acquire any company engaged in any new activity permitted by the BHC Act, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the CRA.
In order for a financial holding company to commence any new activity permitted by the BHC Act, or to acquire any company engaged in any new activity permitted by the BHC Act, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the CRA.
Cass also provides comprehensive health, dental, and vision plans to most employees, as well as free employee assistance programs to all employees and members of their families. 2 Table of Contents The Company invests in its employees’ futures by assisting with tuition reimbursement for continued education.
Cass also provides comprehensive health, dental, and vision plans to most employees, as well as free employee assistance programs to all employees and members of their families. The Company invests in its employees’ futures by assisting with tuition reimbursement for continued education.
The impact of Basel IV on the Company will depend on the manner in which it is implemented by the federal bank regulators. Source of Strength Doctrine – FRB and other regulations require bank holding companies to act as a source of financial and managerial strength to their subsidiary banks.
The impact of Basel IV on the Company will depend on the manner in which it is implemented by the federal bank regulators. 5 Table of Contents Source of Strength Doctrine – FRB and other regulations require bank holding companies to act as a source of financial and managerial strength to their subsidiary banks.
Among other things, these standards revise the Basel Committee's standardized approach for credit risk (including by recalibrating risk weights and introducing new capital requirements for certain “unconditionally cancellable commitments,” such as unused credit card lines of credit) and 5 Table of Contents provides a new standardized approach for operational risk capital.
Among other things, these standards revise the Basel Committee's standardized approach for credit risk (including by recalibrating risk weights and introducing new capital requirements for certain “unconditionally cancellable commitments,” such as unused credit card lines of credit) and provides a new standardized approach for operational risk capital.
A bank’s capital category is determined solely for the purpose of applying prompt corrective action regulations, and the capital category may not constitute an accurate representation of the bank’s overall financial condition or prospects for other purposes.
A bank’s capital category is 6 Table of Contents determined solely for the purpose of applying prompt corrective action regulations, and the capital category may not constitute an accurate representation of the bank’s overall financial condition or prospects for other purposes.
The Bank received a rating of “satisfactory” in its most recent CRA exam. In October 2023, the OCC, together with the Federal Reserve and FDIC, issued a joint final rule to modernize the CRA regulatory framework.
The Bank received a rating of “satisfactory” in its most recent CRA exam. 7 Table of Contents In October 2023, the OCC, together with the Federal Reserve and FDIC, issued a joint final rule to modernize the CRA regulatory framework.
Furthering the philosophy to attract and retain a pool of talented and motivated employees who will continue to advance the Company’s purpose and contribute to overall success, compensation and benefits programs include: a noncontributory profit sharing program for most employees; a defined contribution 401(k) plan to provide retirement benefits to eligible employees; a performance-based equity compensation program for executive officers and key personnel; and incentive programs for loan and sales personnel.
Furthering the philosophy to attract and retain a pool of talented and motivated employees who will continue to advance the Company’s purpose and contribute to overall success, compensation and benefits programs include: a noncontributory profit sharing program for exempt employees; a defined contribution 401(k) plan to provide retirement benefits to eligible employees; a performance-based equity compensation program for executive officers and key personnel; and incentive programs for loan 2 Table of Contents and sales personnel.
Climate-Related Regulation and Guidance - In recent years the federal banking agencies have increased their focus on climate-related risks impacting the operations of banks, the communities they serve and the broader financial system. 9 Table of Contents Accordingly, the agencies have begun to enhance their supervisory expectations regarding the climate risk management practices of larger banking organizations, including by encouraging such banks to: ensure that management of climate-related risk exposures has been incorporated into existing governance structures; evaluate the potential impact of climate-related risks on the bank’s financial condition, operations and business objectives as part of its strategic planning process; account for the effects of climate change in stress testing scenarios and systemic risk assessments; revise expectations for credit portfolio concentrations based on climate-related factors; consider investments in climate-related initiatives and lending to communities disproportionately impacted by the effects of climate change; evaluate the impact of climate change on the bank’s borrowers and consider possible changes to underwriting criteria to account for climate-related risks to mortgaged properties; incorporate climate-related financial risk into the bank’s internal reporting, monitoring and escalation processes; and prepare for the transition risks to the bank associated with the adjustment to a low-carbon economy and related changes in laws, regulations, governmental policies, technology, and consumer behavior and expectations.
Accordingly, the agencies have begun to enhance their supervisory expectations regarding the climate risk management practices of larger banking organizations, including by encouraging such banks to: ensure that management of climate-related risk exposures has been incorporated into existing governance structures; evaluate the potential impact of climate-related risks on the bank’s financial condition, operations and business objectives as part of its strategic planning process; account for the effects of climate change in stress testing scenarios and systemic risk assessments; revise expectations for 9 Table of Contents credit portfolio concentrations based on climate-related factors; consider investments in climate-related initiatives and lending to communities disproportionately impacted by the effects of climate change; evaluate the impact of climate change on the bank’s borrowers and consider possible changes to underwriting criteria to account for climate-related risks to mortgaged properties; incorporate climate-related financial risk into the bank’s internal reporting, monitoring and escalation processes; and prepare for the transition risks to the bank associated with the adjustment to a low-carbon economy and related changes in laws, regulations, governmental policies, technology, and consumer behavior and expectations.
The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion) and will be assessed at a quarterly rate of 3.36 basis points, over eight quarterly assessment periods, beginning in the first quarter of 2024.
The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion) and is being assessed at a quarterly rate of 3.36 basis points, over eight quarterly assessment periods, beginning in the first quarter of 2024.
As a result of this final rule, the Company did not accrue expense related to this assessment based on the amount of uninsured deposits at December 31, 2022 of less than $5.0 billion.
As a result of this final rule, the Company is not accruing expense related to this assessment based on the amount of uninsured deposits at December 31, 2022 of less than $5.0 billion.
It is expected that FinCEN will issue a third rule, by January 1, 2025, to revise existing customer due diligence requirements and bring them into conformance with the Corporate Transparency Act and the Access Rule.
It is expected that FinCEN will issue a third rule to revise existing customer due diligence requirements and bring them into conformance with the Corporate Transparency Act and the Access Rule.
The extent to which any such additional future assessments will impact the Company's future deposit insurance expense is currently uncertain. FDIC insurance expense totaled $603,000, $415,700 and $300,200 for the years ended December 31, 2023, 2022 and 2021, respectively.
The extent to which any such additional future assessments will impact the Company's future deposit insurance expense is currently uncertain. FDIC insurance expense totaled $638,000, $603,000 and $415,700 for the years ended December 31, 2024, 2023 and 2022, respectively.
The Company offers paid time off for charitable endeavors. Additionally, the Company supports a number of organizations with annual financial contributions. The Company recognizes the benefits of building a corporate culture that promotes diversity, equity and inclusion ("DEI") to foster unique ideas and ways of thinking.
The Company offers paid time off for charitable endeavors. Additionally, the Company supports a number of organizations with annual financial contributions. The Company recognizes the benefits of building a corporate culture that promotes diversity and fosters unique ideas and ways of thinking.
In order for a financial holding company to commence any new activity permitted by the BHC Act or to acquire a company engaged in any new activity permitted by the BHC Act, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the Community Reinvestment Act.
If the company does not return to compliance within 180 days, the FRB may require divestiture of the holding company’s depository institutions. 3 Table of Contents In order for a financial holding company to commence any new activity permitted by the BHC Act or to acquire a company engaged in any new activity permitted by the BHC Act, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the Community Reinvestment Act.
Employees and Human Capital Resources The Company and its subsidiaries had 1,061 full-time and 255 part-time employees as of February 15, 2024. Of these employees, the Bank had 66 full-time and no part-time employees. Cass has long been committed to comprehensive and competitive compensation and benefits programs to attract and retain talent in a competitive environment.
Of these employees, the Bank had 64 full-time and no part-time employees. Cass has long been committed to comprehensive and competitive compensation and benefits programs to attract and retain talent in a competitive environment.
Statistical Disclosure by Bank Holding Companies For the statistical disclosure by bank holding companies, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The reference to the Company’s website address does not constitute incorporation by reference of the information contained on the website and should not be considered part of this report. 10 Table of Contents Statistical Disclosure by Bank Holding Companies For the statistical disclosure by bank holding companies, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The Company holds patents for methods and systems for managing employee-liable expenses and methods and systems for communicating expense management information. The Company and its subsidiaries have a varied client base and are not dependent on any one customer or group of customers for a significant portion of its business.
The Company and its subsidiaries have a varied client base and are not dependent on any one customer or group of customers for a significant portion of its business. Employees and Human Capital Resources The Company and its subsidiaries had 1,027 full-time and 221 part-time employees as of February 21, 2025.
In pursuit of the Company's overall DEI mission, Cass focuses on: a) cultivating an environment that encourages collaboration, flexibility and fairness to enable all employees to contribute to their full potential; b) promoting diversity in our talent management and succession planning processes and employee development programs; and c) ensuring leadership commitment in facilitating the Company's DEI efforts.
Among other things, Cass focuses on cultivating an environment that encourages collaboration, flexibility and fairness to enable all employees to contribute to their full potential. As of December 31, 2024, 70% of the Company's U.S. employees were female, and 22% were ethnically diverse. Within the management group, 53% were female, and 15% were ethnically diverse.
Removed
The Company's DEI Committee was formed after a thorough process of determining a charter and actively looks to expand the Company's DEI vision. The committee members are passionate about DEI efforts and represent the Company's various business divisions and corporate departments.
Added
The Company holds patents for methods and systems of the following: managing employee-liable expenses, communicating expense management information, electronic auditing, and electronically generating and analyzing shipping parameters. The Company also holds patents for computer readable media for electronic auditing.
Removed
The Company continues to promote DEI within its culture and make improvements to human resources programs to support related initiatives. As of December 31, 2023, 69% of the Company's U.S. employees were female, and 23% were ethnically diverse. Within the management group, 52% were female, and 13% were ethnically diverse.
Added
Banking organizations are also required to notify each affected customer as soon as possible in the event of an incident that results in actual or potential harm to the integrity or availability of information and systems or that violates or threatens to violate the organization’s security for four or more hours.
Removed
If the company does not return to compliance within 180 days, the FRB may require divestiture of the holding company’s depository institutions.
Added
Climate-Related Regulation and Guidance - In recent years the federal banking agencies have increased their focus on climate-related risks impacting the operations of banks, the communities they serve and the broader financial system.
Removed
The address of Cass’ website is: www.cassinfo.com. The reference to the Company’s website address does not constitute incorporation by reference of the information contained on the website and should not be considered part of this report.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

33 edited+2 added−7 removed97 unchanged
Biggest changeFinally, Cass’ ability to adopt these technologies can also be inhibited by intellectual property rights of third parties. Any of these could have a material adverse effect on its business, financial condition and results of operations.
Biggest changeFurther, if Cass fails to adopt or develop new technologies, including those supported by artificial intelligence, or to adapt its products and services to emerging industry standards, Cass may lose current and future customers. Finally, Cass’ ability to adopt these technologies can also be inhibited by intellectual property rights of third parties.
Continuing deterioration in economic conditions, including the possibility of a recession, affecting borrowers and securities issuers; inflation; rising interest rates; new information regarding existing loans, credit commitments and securities holdings; global pandemics; natural disasters and risks related to climate change; and identification of additional problem loans, ratings down-grades and other factors, both within and outside of the Company’s control, may require an increase in the allowances for credit losses on loans, securities and off-balance sheet credit exposures.
Continuing deterioration in economic conditions, including the possibility of a recession, affecting borrowers and securities issuers; inflation; rising interest rates; new information regarding existing loans, credit commitments and securities holdings; global pandemics; natural disasters and risks related to climate change; and identification of problem loans, ratings down-grades and other factors, both within and outside of the Company’s control, may require an increase in the allowances for credit losses on loans, securities and off-balance sheet credit exposures.
The Company’s stock price can fluctuate based on factors that can include actual or anticipated variations in Cass’ quarterly results; new technology or services by competitors; unanticipated losses or gains due to unexpected events, including losses or gains on securities held for investment purposes; significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors; changes in 17 Table of Contents accounting policies or practices; failure to integrate acquisitions or realize anticipated benefits from acquisitions; or changes in government regulations.
The Company’s stock price can fluctuate based on factors that can include actual or anticipated variations in Cass’ quarterly results; new technology or services by competitors; unanticipated losses or gains due to unexpected events, including losses or gains on securities held for investment purposes; significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors; changes in accounting policies or practices; failure to integrate acquisitions or realize anticipated benefits from acquisitions; or changes in government regulations.
Any failure, interruption, breach in 12 Table of Contents security or loss of data, whatever the cause, could reduce client satisfaction with the Company’s products and services and harm Cass’ financial results. These types of threats may derive from human error, fraud or malice on the part of external or internal parties, or may result from accidental technological failure.
Any failure, interruption, breach in security or loss of data, whatever the cause, could reduce client satisfaction with the Company’s products and services and harm Cass’ financial results. These types of threats may derive from human error, fraud or malice on the part of external or internal parties, or may result from accidental technological failure.
Volatility in interest rates can also result in disintermediation, which is the flow of funds away from financial institutions into direct investments, such as federal government and corporate securities and other investment vehicles, which, because of the absence of federal insurance premiums and reserve requirements, generally pay higher rates of return than financial institutions.
Volatility in interest rates can also result in disintermediation, which is the flow of funds away from financial institutions into direct investments, such as federal government and corporate securities and other investment vehicles, which, because of the absence of federal insurance premiums and reserve requirements, generally pay higher rates of return than financial 11 Table of Contents institutions.
Such events could disrupt Cass’ operations or those of its customers, affect the stability of the Bank’s deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause the Company to incur additional expenses.
Such events could disrupt Cass’ operations or those of its customers, affect the stability of the Bank’s deposit base, impair the ability of 17 Table of Contents borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause the Company to incur additional expenses.
As a result, the Company may not be able to effectively mitigate its risk exposures in particular market environments or against particular types of risk. 13 Table of Contents Customer borrowing, repayment, investment, deposit, and payable processing practices may be different than anticipated.
As a result, the Company may not be able to effectively mitigate its risk exposures in particular market environments or against particular types of risk. Customer borrowing, repayment, investment, deposit, and payable processing practices may be different than anticipated.
Please refer to Item 3, “Legal Proceedings.” The Company’s accounting policies and methods are the basis of how Cass reports its financial condition and results of operations, and they require management to make estimates about matters that are inherently uncertain.
Please refer to Item 3, “Legal Proceedings.” 16 Table of Contents The Company’s accounting policies and methods are the basis of how Cass reports its financial condition and results of operations, and they require management to make estimates about matters that are inherently uncertain.
Further, the Company may be exposed to negative publicity based on the identity and activities of those to whom it lends and with which it otherwise does business and the public’s view of the approach and performance of its customers and business partners with respect to ESG matters.
Further, the Company may be exposed to negative publicity based on the identity and activities of those to whom it lends and with which it otherwise does business and the public’s view of the approach and performance of its customers and business partners with respect to 18 Table of Contents ESG matters.
Under such circumstances, the Company could experience an increase in the level of provision for credit losses, delinquencies, nonperforming assets, net charge-offs and allowance for credit losses. 11 Table of Contents Fluctuations in interest rates could affect Cass’ net interest income and balance sheet.
Under such circumstances, the Company could experience an increase in the level of provision for credit losses, delinquencies, nonperforming assets, net charge-offs and allowance for credit losses. Fluctuations in interest rates could affect Cass’ net interest income and balance sheet.
Such a change in these practices could adversely affect Cass’ ability to anticipate business needs, including cash flow and its impact on liquidity, and to meet regulatory requirements. The Company’s allowance for credit losses (“ACL”) is subject to continuing evaluation and may be insufficient.
Such a change in these practices could adversely affect Cass’ ability to anticipate business needs, including cash flow and its impact on liquidity, and to meet regulatory requirements. 13 Table of Contents The Company’s allowance for credit losses (“ACL”) is subject to continuing evaluation and may be insufficient.
The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, has increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, has increased as the number, intensity and sophistication of attempted attacks and intrusions from 12 Table of Contents around the world have increased.
In addition to the factors discussed elsewhere or incorporated by reference in this report, the identified risks that could cause actual results to differ materially include the following: Economic and Market Conditions Risk Recent negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system.
In addition to the factors discussed elsewhere or incorporated by reference in this report, the identified risks that could cause actual results to differ materially include the following: Economic and Market Conditions Risk Negative developments affecting the banking industry, and resulting media coverage, can erode customer confidence in the banking system.
To the extent that these 18 Table of Contents initiatives lead to the adoption of new regulations or guidance applicable to the Company and the Bank, compliance costs and risks are expected to increase.
To the extent that these initiatives lead to the adoption of new regulations or guidance applicable to the Company and the Bank, compliance costs and risks are expected to increase.
The Company not only competes for business opportunities with new customers, but also competes to maintain and expand the relationships it has with its existing 14 Table of Contents customers. The Company continues to experience pressures to maintain these relationships as its competitors attempt to capture its customers.
The Company not only competes for business opportunities with new customers, but also competes to maintain and expand the relationships it has with its existing customers. The Company continues to experience pressures to maintain these relationships as its competitors attempt to capture its customers.
The recent high-profile bank failures have generated significant market volatility among publicly traded bank holding companies. These market developments have negatively impacted customer confidence in the safety and soundness of regional banks.
The high-profile bank failures during 2023 generated significant market volatility among publicly traded bank holding companies. These market developments negatively impacted customer confidence in the safety and soundness of regional banks.
While the Company does not currently intend to sell these securities, if the Company were required to sell such securities to meet liquidity needs, it may incur losses, which could impair the Company’s capital, financial condition, and results of operations and require the Company to raise additional capital on unfavorable terms, thereby negatively impacting its profitability.
If the Company were required to sell such securities to meet liquidity needs, it may incur losses, which could impair the Company’s capital, financial condition, and results of operations and require the Company to raise additional capital on unfavorable terms, thereby negatively impacting its profitability.
Cass’ future operating results depend substantially upon the continued service of Cass’ executive officers and key personnel. Cass’ future operating results also depend in significant part upon Cass’ ability to attract and retain qualified management, financial, technical, marketing, sales, and support personnel. Competition for qualified personnel is intense, and the Company cannot ensure success in attracting or retaining qualified personnel.
Cass’ future operating results also depend in significant part upon Cass’ ability to attract and retain qualified management, financial, technical, marketing, sales, and support personnel. Competition for qualified personnel is intense, and the Company cannot ensure success in attracting or retaining qualified personnel.
The Company is subject to ESG risks that could adversely affect its reputation and the market price of its securities. The Company is subject to a variety of risks arising from ESG matters.
The Company is subject to ESG risks that could adversely affect its reputation and the market price of its securities. The Company is subject to a variety of risks arising from ESG matters. Risks arising from ESG matters may adversely affect, among other things, reputation and the market price of the Company’s securities.
The Company’s technologies, systems, networks and software, and those of other financial institutions have been, and are likely to continue to be, the target of cybersecurity threats and attacks, which may range from uncoordinated individual attempts to sophisticated and targeted measures directed at Cass.
The Company’s technologies, systems, networks and software, and those of other financial institutions have been, and are likely to continue to be, the target of cybersecurity threats and attacks, which may range from uncoordinated individual attempts to sophisticated and targeted measures directed at Cass. In addition, the rapid evolution of artificial intelligence technologies may intensify our cybersecurity risks.
The value of our goodwill and other intangible assets may decline in the future As of December 31, 2023, the Company had $20.7 million of goodwill and other intangible assets.
The value of our goodwill and other intangible assets may decline in the future As of December 31, 2024, the Company had $26.4 million of goodwill and other intangible assets.
Instruments, systems and strategies used to hedge or otherwise manage exposure to various types of credit, interest rate, market and liquidity, operational, regulatory/compliance, business risks and enterprise-wide risks could be less effective than anticipated.
These changes may be more difficult or expensive than the Company anticipates. Methods of reducing risk exposures might not be effective. Instruments, systems and strategies used to hedge or otherwise manage exposure to various types of credit, interest rate, market and liquidity, operational, regulatory/compliance, business risks and enterprise-wide risks could be less effective than anticipated.
The Company makes certain projections as a basis for developing plans and strategies for its payment processing and banking products. If the Company does not accurately determine demand for its products and services, it could result in the Company incurring significant expenses without the anticipated increases in revenue, which could result in an adverse effect on its earnings.
If the Company does not accurately determine demand for its products and services, it could result in the 14 Table of Contents Company incurring significant expenses without the anticipated increases in revenue, which could result in an adverse effect on its earnings.
Due in part to the recent increase in the Federal Funds rate, the Company's net interest margin increased to 3.25% in 2023 from 2.74% in 2022, therefore increasing net interest income.
Due in part to a higher market interest rate environment in recent periods, the Company's net interest margin has increased to 3.42% in 2024 from 3.25% in 2023, 2.74% in 2022 and 2.31% in 2021, therefore increasing net interest income.
Cass’ business, financial condition and results of operations could be materially adversely affected by the loss of any of its key employees, by the failure of any key employee to perform in his or her current position, or by Cass’ inability to attract and retain skilled employees.
Cass’ business, financial condition and results of operations could be materially adversely affected by the loss of any of its key employees, by the failure of any key employee to perform in his or her current position, or by Cass’ inability to attract and retain skilled employees. 15 Table of Contents Regulatory, Legal and Accounting Risk The Company and the Bank are subject to extensive government regulation and supervision and possible enforcement or other legal actions that could detrimentally affect Cass’ business.
Economic conditions and the loss of confidence in financial institutions may increase the cost of funding and limit access to certain customary sources of capital, including inter-bank borrowings, repurchase agreements and borrowings from the discount window of the Federal Reserve. 16 Table of Contents An inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on the Company’s business, financial condition and results of operations.
Economic conditions and the loss of confidence in financial institutions may increase the cost of funding and limit access to certain customary sources of capital, including inter-bank borrowings, repurchase agreements and borrowings from the discount window of the Federal Reserve.
If competitors introduce new products and services embodying new technologies, or if new industry standards and practices emerge, the Company’s existing product and service offerings, technology and systems may become obsolete. Further, if Cass fails to adopt or develop new technologies or to adapt its products and services to emerging industry standards, Cass may lose current and future customers.
If competitors introduce new products and services embodying new technologies, including those supported by artificial intelligence, or if new industry standards and practices emerge, the Company’s existing product and service offerings, technology and systems may become obsolete.
Local, domestic, and international economic, political and industry-specific conditions and governmental monetary and fiscal policies affect the industries in which the Company competes, directly and indirectly.
As a result, the Bank could face increased scrutiny or be viewed as higher risk. General political, economic or industry conditions may be less favorable than expected. Local, domestic, and international economic, political and industry-specific conditions and governmental monetary and fiscal policies affect the industries in which the Company competes, directly and indirectly.
Any regulatory examination scrutiny or new regulatory requirements arising from the recent events in the banking industry could increase the Company’s expenses and affect the Company’s operations.
Increased regulatory examination scrutiny or new regulatory requirements arising from the recent events in the banking industry could increase the Company’s expenses and affect the Company’s operations. Increased regulatory scrutiny and new regulations designed to address the high profile bank failures in 2023 may increase the Company’s costs of doing business and reduce its profitability.
As primarily a commercial bank, the Bank has a higher degree of uninsured deposits compared to larger national banks or smaller community banks with a stronger focus on retail deposits. As a result, the Bank could face increased scrutiny or be viewed as higher risk. General political, economic or industry conditions may be less favorable than expected.
Among other things, there may be an increased focus by regulators on deposit composition and the level of uninsured deposits. As primarily a commercial bank, the Bank has a higher degree of uninsured deposits compared to larger national banks or smaller community banks with a stronger focus on retail deposits.
The payment processing and financial services industries are changing rapidly and in order to remain competitive, Cass must continue to enhance and improve the functionality and features of its products, services and technologies. These changes may be more difficult or expensive than the Company anticipates. Methods of reducing risk exposures might not be effective.
Any of these could have a material adverse effect on its business, financial condition and results of operations. The payment processing and financial services industries are changing rapidly and in order to remain competitive, Cass must continue to enhance and improve the functionality and features of its products, services and technologies.
This, in turn, could have an adverse effect on the Company’s ability to attract and retain customers and employees and could have a negative impact on the market price for securities. Investors have begun to consider the steps taken and resources allocated by financial institutions and other commercial organizations to address ESG matters when making investment and operational decisions.
This, in turn, could have an adverse effect on the Company’s ability to attract and retain customers and employees and could have a negative impact on the market price for securities. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
While the Company has taken actions to maximize its funding sources, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs. Furthermore, while the Federal Reserve Board has announced a Bank Term Funding Program available to eligible depository institutions secured by U.S.
While the Company has taken actions to maximize its funding sources, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs. Management’s ability to retain key officers and employees may change. Cass’ future operating results depend substantially upon the continued service of Cass’ executive officers and key personnel.
Removed
While the Department of the Treasury, the Federal Reserve, and the FDIC have made statements ensuring that depositors of these recently failed banks would have access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in regional banks and the banking system more broadly.
Added
The Company makes certain projections as a basis for developing plans and strategies for its payment processing and banking products.
Removed
The Company anticipates increased regulatory scrutiny and new regulations designed to address the recent negative developments in the banking industry, all of which may increase the Company’s costs of doing business and reduce its profitability. Among other things, there may be an increased focus by regulators on deposit composition and the level of uninsured deposits.
Added
An inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on the Company’s business, financial condition and results of operations.
Removed
Treasuries, agency debt, mortgage-backed securities, and other qualifying assets as collateral at par to mitigate the risk of potential losses on 15 Table of Contents the sale of such instruments, there is no guarantee that such programs will be effective in addressing liquidity needs as they arise. Management’s ability to retain key officers and employees may change.
Removed
Regulatory, Legal and Accounting Risk The Company and the Bank are subject to extensive government regulation and supervision and possible enforcement or other legal actions that could detrimentally affect Cass’ business.
Removed
ESG matters include climate risk, hiring practices, the diversity of the work force, and racial and social justice issues involving the Company’s personnel, customers and third parties with whom it otherwise does business. Risks arising from ESG matters may adversely affect, among other things, reputation and the market price of the Company’s securities.
Removed
Certain investors are beginning to incorporate the business risks of climate change and the adequacy of companies’ responses to the risks posed by climate change and other ESG matters into their investment theses.
Removed
These shifts in investing priorities may result in adverse effects on the market price of the Company’s securities to the extent that investors determine that the Company has not made sufficient progress on ESG matters. ITEM 1B. UNRESOLVED STAFF COMMENTS None.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+2 added−1 removed18 unchanged
Biggest changeThe Audit and Risk Committee, together with the full Board of Directors, actively oversees the Company’s cybersecurity program. The Audit and Risk Committee receives reports on evolving cybersecurity standards and key metrics, including the number of incidents, response times, and effectiveness of safety controls, from the CIO on a quarterly basis, and more 20 Table of Contents frequently when necessary.
Biggest changeThe Audit and Risk Committee receives reports on evolving cybersecurity standards and key metrics, including the number of incidents, response times, and effectiveness of safety controls from the CIO on a quarterly basis, and more frequently when necessary. These reports include updates on the activities of the Executive IT Council.
This policy is reviewed at least annually by the Company’s IT Security & Risk team, with updates approved by the Board of Directors. The Information Security Policy addresses the standards, design, scope, testing, and operation of the 19 Table of Contents Company’s cybersecurity program.
This policy is reviewed at least annually by the Company’s IT Security & Risk team, with updates approved by the Board of Directors. The Information Security Policy addresses the standards, design, scope, testing, and operation of the Company’s cybersecurity program.
This information is reported to the full Board of Directors which, together with the Audit and Risk Committee, evaluates and considers the effectiveness of the Company’s risk management policies and controls relating to cybersecurity that are described in the section above.
Changes to the Company’s information security policies and programs are approved by the Audit and Risk Committee. This information is reported to the full Board of Directors which, together with the Audit and Risk Committee, evaluates and considers the effectiveness of the Company’s risk management policies and controls relating to cybersecurity that are described in the section above.
The CISO and CIO provide monthly updates to the Executive IT Council on security incidents, compliance and patching metrics, as well as security related industry updates that might affect the Company’s business. The Executive IT Council approves all security related project expenditures and all members are a part of the Company’s incident response team.
The CISO and CIO provide monthly updates to the Executive IT Council on security incidents, compliance and patching metrics, as well as security related industry updates that might affect the Company’s business. Real time updates are also provided to the Executive IT Council as needed.
Cass is dependent on third-party vendors to support operations and business objectives. Recognizing the interconnected nature of the Company’s business, Cass places emphasis on managing third-party cybersecurity risk by maintaining a Vendor Management Policy. This policy establishes guidelines for conducting due diligence on vendors’ security practices, making ongoing risk assessments and conducting extensive control reviews of identified high-risk vendors.
Cass is dependent on third-party vendors to support operations and business objectives. Recognizing the interconnected nature of the Company’s business, Cass places emphasis on managing third-party cybersecurity risk by maintaining a Vendor Management Policy.
Because the Company is a bank holding company, its information security program is regularly evaluated by banking examiners and regulators. In addition, the Company undergoes annual Service Organization Controls Type II audits to evaluate information security controls related to specific services offered by the Company.
In addition, the Company undergoes annual Service Organization Controls Type II audits to evaluate information security controls related to specific services offered by the Company.
Removed
These reports include updates on the activities of the Executive IT Council. Changes to the Company’s information security policies and programs are approved by the Audit and Risk Committee.
Added
This policy establishes guidelines for conducting due diligence on vendors’ security practices, making ongoing risk assessments and conducting extensive control reviews of identified high-risk vendors. 19 Table of Contents Because the Company is a bank holding company, its information security program is regularly evaluated by banking examiners and regulators.
Added
The Executive IT Council approves all security related project expenditures and all members are a part of the Company’s incident response team. The Audit and Risk Committee, together with the full Board of Directors, actively oversees the Company’s cybersecurity program.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeThe Company has offices in Breda, Netherlands, Basingstoke, United Kingdom, and Singapore to service its multinational customers. In addition, the Bank owns a banking facility near downtown St. Louis, Missouri, has an operating branch in the Bridgeton, Missouri location, and has an additional leased facility in Colorado Springs, Colorado.
Biggest changeAdditional facilities are located in Greenville, South Carolina, Wellington, Kansas, Jacksonville, Florida, and Brighton, Michigan. The Company has offices in Breda, Netherlands, Basingstoke, United Kingdom, and Singapore to service its multinational customers. In addition, the Bank owns a banking facility near downtown St.
The Company owns approximately 61,500 square feet of office space at 13001 Hollenberg Drive in Bridgeton, Missouri where the Company’s transportation processing activities are performed. The Company owns a production facility of approximately 48,300 square feet located at 2675 Corporate Exchange Drive, Columbus, Ohio. Additional facilities are located in Greenville, South Carolina, Wellington, Kansas, Jacksonville, Florida, and Brighton, Michigan.
The Company owns approximately 61,500 square feet of office space at 13001 Hollenberg Drive in Bridgeton, Missouri where the Company’s transportation processing activities are performed. 20 Table of Contents The Company owns a production facility of approximately 48,300 square feet located at 2675 Corporate Exchange Drive, Columbus, Ohio.
Management believes that these facilities are suitable and adequate for the Company’s operations.
Louis, Missouri, has an operating branch in the Bridgeton, Missouri location, and has an additional leased facility in Colorado Springs, Colorado. Management believes that these facilities are suitable and adequate for the Company’s operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed5 unchanged
Biggest changeThe pace of repurchase activity will depend on factors such as levels of regulatory capital, cash generation from operations, cash requirements for investments, repayment of debt, current stock price, business and market conditions, and other factors. The Company may repurchase shares from time to time on the open market or in private transactions, including structured transactions.
Biggest changeThe pace of repurchase activity will depend on factors such as levels of regulatory capital, net income, dividends, acquisition and divestiture activity, cash generation from operations, cash requirements for investments, repayment of debt, current stock price, business and market conditions, and other factors.
The graph assumes $100 was invested on December 31, 2018, with dividends reinvested. Returns are based on period end prices. ITEM 6. RESERVED
The graph assumes $100 was invested on December 31, 2019, with dividends reinvested. Returns are based on period end prices. ITEM 6. RESERVED
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is quoted on The Nasdaq Global Select Market® under the symbol “CASS.” As of February 15, 2024, there were approximately 5,717 holders of record of the Company’s common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is quoted on The Nasdaq Global Select Market® under the symbol “CASS.” As of February 21, 2025, there were approximately 6,000 holders of record of the Company’s common stock.
The Company has repurchased 13,964 shares under this treasury stock buyback program and therefore has 486,036 shares remaining for repurchase. The Company repurchased a total of 150,541 shares at an aggregate cost of $5.8 million during the year ended December 31, 2023 and 130,374 shares at an aggregate cost of $5.3 million during the year ended December 31, 2022.
The Company has repurchased 181,419 shares under this treasury stock buyback program and therefore has 318,581 shares remaining for repurchase. The Company repurchased a total of 167,455 shares at an aggregate cost of $7.2 million during the year ended December 31, 2024 and 150,541 shares at an aggregate cost of $5.8 million during the year ended December 31, 2023.
During the three months ended December 31, 2023, the Company repurchased shares of its common stock as follows: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2023 – October 31, 2023 1,650 $ 37.68 1,650 498,350 November 1, 2023 – November 30, 2023 13,295 40.28 11,714 486,636 December 1, 2023 – December 31, 2023 600 41.83 600 486,036 Total 15,545 $ 40.06 13,964 486,036 (1) During the quarter ended December 31, 2023, there were 13,964 shares repurchased pursuant to the Company's publicly announced treasury stock buyback program and 1,581 shares transferred from employees in satisfaction of tax withholding obligations upon the vesting of restricted stock.
During the three months ended December 31, 2024, the Company repurchased shares of its common stock as follows: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2024 – October 31, 2024 8,787 $ 41.40 8,787 389,507 November 1, 2024 – November 30, 2024 28,514 44.56 28,514 360,993 December 1, 2024 – December 31, 2024 42,412 45.02 42,412 318,581 Total 79,713 $ 44.46 79,713 318,581 (1) During the quarter ended December 31, 2024, there were 79,713 shares repurchased pursuant to the Company's publicly announced treasury stock buyback program and no shares transferred from employees in satisfaction of tax withholding obligations upon the vesting of restricted stock.
The stock repurchase program may be modified or discontinued at any time.
The Company may repurchase shares from time to time on the open market or in private transactions, including structured transactions. The stock repurchase program may be modified or discontinued at any time.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+31 added−21 removed49 unchanged
Biggest changeSummary of Credit Loss Experience (In thousands) December 31, 2023 2022 2021 2020 2019 Allowance at beginning of year $ 13,539 $ 12,041 $ 11,944 $ 11,279 $ 10,225 Loans charged-off: Commercial and industrial — — — — — Real estate (commercial and faith-based): Mortgage — — — — — Construction — — — — — Other — — — — — Total loans charged-off — — — — — Recoveries of loans previously charged-off: Commercial and industrial — 13 12 19 81 Real estate (commercial and faith-based): Mortgage — — 15 1 — Construction — — — — — Other — — — — — Total recoveries of loans previously charged-off — 13 27 20 81 Net loans recovered — (13) (27) (20) (81) (Release of) provision for credit losses (450) 1,485 70 645 250 Allowance at end of year $ 13,089 $ 13,539 $ 12,041 $ 11,944 $ 10,556 Cumulative effect of accounting change (ASU 2016-13) — — — — 723 Allowance at beginning of next year $ 13,089 $ 13,539 $ 12,041 $ 11,944 $ 11,279 Allowance for unfunded commitments at beginning of year $ 232 $ 367 $ 567 $ 402 $ — (Release of) provision for credit losses (100) (135) (200) 165 — Allowance for unfunded commitments at end of year 132 232 367 567 — Cumulative effect of accounting change (ASU 2016-13) — — — — 402 Allowance for unfunded commitments at beginning of next year $ 132 $ 232 $ 367 $ 567 $ 402 Loans outstanding: Average $ 1,055,668 $ 992,004 $ 887,662 $ 906,631 $ 760,153 December 31 1,014,318 1,082,906 960,567 891,676 772,638 Ratio of allowance for credit losses to loans outstanding at December 31 1.29 % 1.25 % 1.25 % 1.34 % 1.37 % Ratio of net recoveries to average loans outstanding — % — % — % — % (0.01) % Allocation of allowance for credit losses (1) : Commercial and industrial $ 5,412 $ 5,977 $ 5,035 $ 4,635 $ 4,874 Real estate (commercial and faith-based): Mortgage 7,569 7,378 6,714 6,892 5,370 Construction 108 184 292 417 312 Other — — — — — Total $ 13,089 $ 13,539 $ 12,041 $ 11,944 $ 10,556 Percentage of categories to total loans: Commercial and industrial 49.1 % 51.9 % 46.9 % 33.5 % 41.9 % Real estate (commercial and faith-based): Mortgage 49.3 45.7 48.3 48.7 52.8 Construction 1.6 2.4 4.1 5.5 5.3 PPP — — 0.7 12.3 — Other — — — — — Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % (1) Although specific allocations exist, the entire allowance is available to absorb losses in any particular loan category.
Biggest changeSummary of Credit Loss Experience (In thousands) December 31, 2024 2023 2022 2021 2020 Allowance at beginning of year $ 13,089 $ 13,539 $ 12,041 $ 11,944 $ 11,279 Loans charged-off: Commercial and industrial — — — — — Real estate (commercial and faith-based): Mortgage — — — — — Construction — — — — — Other — — — — — Total loans charged-off — — — — — Recoveries of loans previously charged-off: Commercial and industrial — — 13 12 19 Real estate (commercial and faith-based): Mortgage — — — 15 1 Construction — — — — — Other — — — — — Total recoveries of loans previously charged-off — — 13 27 20 Net loans recovered — — (13) (27) (20) Provision for (release of) credit losses 306 (450) 1,485 70 645 Allowance at end of year $ 13,395 $ 13,089 $ 13,539 $ 12,041 $ 11,944 Allowance for unfunded commitments at beginning of year $ 132 $ 232 $ 367 $ 567 $ 402 Provision for (release of) credit losses 141 (100) (135) (200) 165 Allowance for unfunded commitments at end of year 273 132 232 367 567 Loans outstanding: Average $ 1,048,732 $ 1,055,668 $ 992,004 $ 887,662 $ 906,631 December 31 1,081,989 1,014,318 1,082,906 960,567 891,676 Ratio of allowance for credit losses to loans outstanding at December 31 1.24 % 1.29 % 1.25 % 1.25 % 1.34 % Ratio of net recoveries to average loans outstanding — % — % — % — % — % Allocation of allowance for credit losses (1) : Commercial and industrial $ 5,897 $ 5,412 $ 5,977 $ 5,035 $ 4,635 Real estate (commercial and faith-based): Mortgage 7,281 7,569 7,378 6,714 6,892 Construction 217 108 184 292 417 Total $ 13,395 $ 13,089 $ 13,539 $ 12,041 $ 11,944 Percentage of categories to total loans: Commercial and industrial 51.7 % 49.1 % 51.9 % 46.9 % 33.5 % Real estate (commercial and faith-based): Mortgage 45.1 49.3 45.7 48.3 48.7 Construction 3.2 1.6 2.4 4.1 5.5 PPP — — — 0.7 12.3 Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % (1) Although specific allocations exist, the entire allowance is available to absorb losses in any particular loan category. 31 Table of Contents Nonperforming Assets Nonperforming loans are defined as loans on non-accrual status and loans 90 days or more past due but still accruing.
The impact and associated risks related to these policies on the Company’s business operations are discussed in the Note 1 "Summary of Significant Accounting Policies" and Note 4 "Loans," as well as the “Provision and Allowance for Credit Losses and Allowance for Unfunded Commitments” section of this report.
The impact and associated risks related to these policies on the Company’s business operations are discussed in Note 1 "Summary of Significant Accounting Policies" and Note 4 "Loans," as well as the “Provision and Allowance for Credit Losses and Allowance for Unfunded Commitments” section of this report.
Those that could significantly impact the Company include the general levels of interest rates, business activity, inflation, and energy costs as well as new business opportunities available to the Company. 35 Table of Contents As a financial institution, a significant source of the Company’s earnings is generated from net interest income.
Those that could 36 Table of Contents significantly impact the Company include the general levels of interest rates, business activity, inflation, and energy costs as well as new business opportunities available to the Company. As a financial institution, a significant source of the Company’s earnings is generated from net interest income.
Generating new customers allows the Company to leverage existing systems and facilities and grow revenues faster than expenses. During 2023, new business was added in both the transportation and facility expense management operations, driven by both successful marketing efforts and the solid market leadership position held by Cass.
Generating new customers allows the Company to leverage existing systems and facilities and grow revenues faster than expenses. During 2024, new business was added in both the transportation and facility expense management operations, driven by both successful marketing efforts and the solid market leadership position held by Cass.
MD&A is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and the accompanying Notes to Financial Statements (Part II, Item 8 of this Form 10-K). This section generally discusses the results of operations for 2023 compared to 2022.
MD&A is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and the accompanying Notes to Financial Statements (Part II, Item 8 of this Form 10-K). This section generally discusses the results of operations for 2024 compared to 2023.
For discussion related to the results of operations and changes in financial condition for 2022 compared to 2021 refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2022 Annual Report on Form 10-K filed with the SEC on February 28, 2023.
For discussion related to the results of operations and changes in financial condition for 2023 compared to 2022 refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2023 Annual Report on Form 10-K filed with the SEC on February 28, 2024.
The process combines many factors: economic factors, historical credit loss experience, of both the Company and similar peer banks, loan portfolio growth and concentrations, asset quality, risk tolerance, and other qualitative and quantitative factors which could affect future credit loss.
The process combines many factors: economic factors, historical credit loss experience, of both the Company and similar peer banks, loan portfolio growth and concentrations, asset quality, and other qualitative and quantitative factors which could affect future credit loss.
Commitments, Contractual Obligations and Off-Balance Sheet Arrangements In the normal course of business, the Company is party to activities that involve credit, market and operational risk that are not reflected in whole or in part in the Company’s consolidated financial statements. Such activities include traditional off-balance sheet credit-related financial instruments.
Commitments, Contractual Obligations and Off-Balance Sheet Arrangements In the normal course of business, the Company is party to activities that involve credit, market and operational risk that are not reflected in whole or in part in the Company’s consolidated financial statements. Such activities include traditional off- 38 Table of Contents balance sheet credit-related financial instruments.
The Company performs periodic and systematic detailed reviews of its loan portfolio to determine management’s estimate of the lifetime expected credit losses.
Allowance for Credit Losses . The Company performs periodic and systematic detailed reviews of its loan portfolio to determine management’s estimate of the lifetime expected credit losses.
Capital expenditures in 2024 are expected to primarily consist of purchases of equipment and software related to the payment and information processing services business.
Capital expenditures in 2025 are expected to primarily consist of purchases of equipment and software related to the payment and information processing services business.
The Company’s maximum potential exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, commercial letters of credit and standby letters of credit is represented by the contractual amounts of those instruments. At December 31, 2023, an allowance for unfunded commitments of $132,000 had been recorded.
The Company’s maximum potential exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, commercial letters of credit and standby letters of credit is represented by the contractual amounts of those instruments. At December 31, 2024, an allowance for unfunded commitments of $273,000 had been recorded.
There were not any amounts outstanding at December 31, 2023 and 2022 under any of the lines of credit. The deposits of the Company's banking subsidiary have historically been stable, consisting of a sizable volume of core deposits related to customers that utilize many other commercial products of the Bank.
There were no amounts outstanding at December 31, 2024 and 2023 under any of the lines of credit. The deposits of the Company's banking subsidiary have historically been stable, consisting of a sizable volume of core deposits related to customers that utilize many other commercial products of the Bank.
The accounts and drafts payable generated by the Company have also historically been a stable source of funds. Net cash flows provided by operating activities for the years 2023, 2022 and 2021 were $36.9 million, $51.6 million, and $34.5 million, respectively. Net income plus depreciation and amortization accounts for most of the operating cash provided.
The accounts and drafts payable generated by the Company have also historically been a stable source of funds. Net cash flows provided by operating activities for the years 2024, 2023 and 2022 were $38.9 million, $36.9 million, and $51.6 million, respectively. Net income plus depreciation and amortization accounts for most of the operating cash provided.
The Company and its banking subsidiary continue to exceed all regulatory capital requirements, as evidenced by the capital ratios at December 31, 2023 as shown in Item 8, Note 2 of this report. Cash dividends paid were $16.0 million and $15.4 million in 2023 and 2022, respectively.
The Company and its banking subsidiary continue to exceed all regulatory capital requirements, as evidenced by the capital ratios at December 31, 2024 as shown in Item 8, Note 2 of this report. Cash dividends paid were $16.5 million and $16.0 million in 2024 and 2023, respectively.
The Company maintains a treasury stock buyback program approved by the Board of Directors in October 2023 pursuant to which the Board of Directors has authorized the repurchase of up to 500,000 shares of the Company’s common stock and has no expiration date. A total of 486,036 shares remain under the buyback program at December 31, 2023.
The Company maintains a treasury stock buyback program approved by the Board of Directors in October 2023 pursuant to which the Board of Directors has authorized the repurchase of up to 500,000 shares of the Company’s common stock and has no expiration date. A total of 318,581 shares remain under the buyback program at December 31, 2024.
A portion of the repurchased shares may be used for the Company’s employee benefit plans and the balance will be available for other general corporate purposes.
A portion of the repurchased shares may be used for the Company’s employee benefit plans and the balance will be available 37 Table of Contents for other general corporate purposes.
A summary of significant accounting policies and a summary of recent accounting pronouncements applicable to the Company's Consolidated Financial Statements are included in Item 8, "Financial Statements and Supplementary Data—Note 1.” The accounting policy that requires significant management estimates and is deemed critical to the Company’s results of operations or financial position has been discussed with the Audit and Risk Committee of the Board of Directors and is described below. 24 Table of Contents Allowance for Credit Losses .
A summary of significant accounting policies and a summary of recent accounting pronouncements applicable to the Company's Consolidated Financial Statements are included in Item 8, "Financial Statements and Supplementary Data—Note 1.” The accounting policy that requires significant management estimates and is deemed critical to the Company’s results of operations or financial position has been discussed with the Audit and Risk Committee of the Board of Directors and is described below.
The Company’s solid capital and liquidity positions, combined with ongoing earnings, are expected to continue to allow for investment in strategic opportunities when they become available, in addition to return of capital to shareholders. The Company delivered $21.7 million in dividend payments and share repurchases during 2023.
The Company’s solid capital and liquidity positions, combined with ongoing earnings, are expected to continue to allow for investment in strategic opportunities when they become available, in addition to return of capital to shareholders. The Company delivered $16.5 million in dividend payments and $7.2 million in share repurchases during 2024.
As of December 31, 2023, the Bank had secured lines of credit with the Federal Home Loan Bank of $228.3 million collateralized by commercial mortgage loans. At December 31, 2023, the Company had lines of credit from three banks up to a maximum of $250.0 million in aggregate collateralized by state and political subdivision securities.
As of December 31, 2024, the Bank had secured lines of credit with the Federal Home Loan Bank of $183.6 million collateralized by commercial mortgage loans. At December 31, 2024, the Company had lines of credit from three banks up to a maximum of $250.0 million in aggregate collateralized by state and political subdivision securities.
Dividends from the Bank are a source of funds for payment of dividends by the Company to its shareholders. The only restrictions on dividends are those dictated by regulatory capital requirements, state corporate laws and prudent and sound banking principles. During 2023, the Bank paid dividends of $7.5 million to the Company.
Dividends from the Bank are a source of funds for payment of dividends by the Company to its shareholders. The only restrictions on dividends are those dictated by regulatory capital requirements, state corporate laws and prudent and sound banking principles. During 2024, the Bank paid dividends of $20.0 million to the Company.
Nonperforming Assets Nonperforming loans are defined as loans on non-accrual status and loans 90 days or more past due but still accruing. Nonperforming assets include nonperforming loans plus foreclosed real estate. Loans with modifications to borrowers experiencing financial difficulty are not included in nonperforming loans unless they are on non-accrual status or past due 90 days or more.
Nonperforming assets include nonperforming loans plus foreclosed real estate. Loans with modifications to borrowers experiencing financial difficulty are not included in nonperforming loans unless they are on non-accrual status or past due 90 days or more.
As of December 31, 2023, unappropriated retained earnings of $30.8 million were available at the Bank for the declaration of dividends to the Company without prior approval from regulatory authorities.
As of December 31, 2024, unappropriated retained earnings of $31.4 million were available at the Bank for the declaration of dividends to the Company without prior approval from regulatory authorities.
Company management monitors the local economy in an attempt to determine whether it has had a significant deteriorating effect on such real estate loans. When problems are identified, appraised values are updated on a continual basis, either internally or through an updated external appraisal. Loans decreased $68.6 million, or 6.3%, to $1.01 billion at December 31, 2023.
Company management monitors the local economy in an attempt to determine whether it has had a significant deteriorating effect on such real estate loans. When problems are identified, appraised values are updated on a continual basis, either internally or through an updated external appraisal. Loans increased $67.7 million, or 6.7%, to $1.08 billion at December 31, 2024.
Due to the Company’s payment processing cycle, average balances are much more indicative of the underlying activity than period-end balances since point-in-time comparisons can be misleading if the comparison dates fall on different days of the week. Average accounts and drafts payable decreased $60.1 million, or 5.3%, to $1.08 billion during 2023.
Due to the Company’s payment processing cycle, average balances are much more indicative of the underlying activity than period-end balances since point-in-time comparisons can be misleading if the comparison dates fall on different days of the week. Average accounts and drafts payable decreased $50.7 million, or 4.7%, to $1.03 billion during 2024.
At December 31, 2023, cash and cash equivalents represented 15.0% of total assets and are the Company’s and its subsidiaries’ primary source of liquidity to meet future expected and unexpected loan demand, depositor withdrawals or reductions in accounts and drafts payable. 34 Table of Contents Secondary sources of liquidity include the investment portfolio and borrowing lines.
At December 31, 2024, cash and cash equivalents represented 14.6% of total assets and are the Company’s and its subsidiaries’ primary source of liquidity to meet future expected and unexpected loan demand, depositor withdrawals or reductions in accounts and drafts payable. Secondary sources of liquidity include the investment portfolio and borrowing lines.
Therefore, the size, asset allocation and maturity distribution of the investment portfolio will vary over time depending on management’s assessment of current and future interest rates, changes in loan demand, changes in the Company’s sources of funds and the economic outlook. During 2023, the Company purchased investment securities totaling $15.3 million.
Therefore, the size, asset allocation and maturity distribution of the investment portfolio will vary over time depending on management’s assessment of current and future interest rates, changes in loan demand, changes in the Company’s sources of funds and the economic outlook. During 2024, the Company purchased investment securities totaling $119.7 million and sold investment securities totaling $60.1 million.
(2) Interest income on loans includes net loan fees of $686,000, $684,000, and $3.4 million for 2023, 2022 and 2021, respectively. Loan fees include $0, $167,000, and $2.6 million of PPP loan fees for 2023, 2022 and 2021, respectively. (3) Interest income is presented on a tax-equivalent basis assuming a tax rate of 21%.
(2) Interest income on loans includes net loan fees of $477,000, $686,000, and $684,000 for 2024, 2023 and 2022, respectively. Loan fees include $0, $0, and $167,000 of Paycheck Protection Program ("PPP") loan fees for 2024, 2023 and 2022, respectively. (3) Interest income is presented on a tax-equivalent basis assuming a tax rate of 21%.
The tax-equivalent adjustment was approximately $1.1 million, $1.7 million and $1.9 million for 2023, 2022, and 2021, respectively.
The tax-equivalent adjustment was approximately $1.0 million, $1.1 million, and $1.7 million for 2024, 2023, and 2022, respectively.
Management anticipates that cash and cash equivalents, maturing investments, cash from operations, and borrowing lines will continue to be sufficient to fund the Company’s operations and capital expenditures in 2024. The Company anticipates the annual capital expenditures for 2024 should range from $10 million to $12 million.
Management anticipates that cash and cash equivalents, maturing investments, cash from operations, and borrowing lines will continue to be sufficient to fund the Company’s operations and capital expenditures in 2025. The Company estimates that capital expenditures for 2025 should range from $6 million to $8 million.
The following table summarizes the changes in tax-equivalent net interest income and related factors: (In thousands) December 31, % Change 2023 2022 2021 2023 v. 2022 2022 v. 2021 Average earning assets $ 2,076,951 $ 2,205,792 $ 1,999,609 (5.8) % 10.3 % Average interest-bearing liabilities $ 573,308 $ 603,262 $ 592,069 (5.0) % 1.9 % Net interest income (1) $ 67,583 $ 60,533 $ 46,199 11.6 % 31.0 % Net interest margin (1) 3.25 % 2.74 % 2.31 % — — Yield on earning assets (1) 4.04 % 2.90 % 2.37 % — — Rate on interest bearing liabilities 2.84 % 0.58 % 0.20 % — — (1) Presented on a tax-equivalent basis using a tax rate of 21%.
The following table summarizes the changes in tax-equivalent net interest income and related factors: (In thousands) December 31, % Change 2024 2023 2022 2024 v. 2023 2023 v. 2022 Average earning assets $ 2,011,554 $ 2,076,951 $ 2,205,792 (3.1) % (5.8) % Average interest-bearing liabilities $ 634,592 $ 573,308 $ 603,262 10.7 % (5.0) % Net interest income (1) $ 68,798 $ 67,583 $ 60,533 1.8 % 11.6 % Net interest margin (1) 3.42 % 3.25 % 2.74 % — — Yield on earning assets (1) 4.43 % 4.04 % 2.90 % — — Rate on interest bearing liabilities 3.19 % 2.84 % 0.58 % — — (1) Presented on a tax-equivalent basis using a tax rate of 21%.
Of the total portfolio, 20.6% mature in one year or less, 21.5% mature after one year through five years and 57.9% mature after five years. As of December 31, 2023, the Bank had unsecured lines of credit at six correspondent banks to purchase federal funds up to a maximum of $83.0 million in aggregate.
Of the total portfolio, 1.7% mature in one year or less, 19.4% mature after one year through five years and 78.9% mature after five years. As of December 31, 2024, the Bank had unsecured lines of credit at six correspondent banks to purchase federal funds up to a maximum of $83.0 million in aggregate.
Net income plus amortization of intangible assets, net amortization of premium/discount on investment securities and depreciation of premises and equipment was $39.5 million and $45.9 million for the years ended December 31, 2023 and December 31, 2022, respectively, a decrease of $6.4 million year over year.
Net income plus amortization of intangible assets, net amortization of premium/discount on investment securities and depreciation of premises and equipment was $28.7 million and $39.5 million for the years ended December 31, 2024 and December 31, 2023, respectively, a decrease of $10.8 million year over year.
Salaries and commissions increased $8.0 million, or 9.3%, as a result of merit increases and an increase in average full-time equivalent employees ("FTEs") of 10.8% due to strategic investments in various technology initiatives. Share-based compensation decreased $2.6 million, reflecting the Company's financial performance and the impact on performance-based restricted stock between the periods. Pension expense increased $3.3 million.
Salaries and commissions increased $2.9 million, or 3.1%, as a result of merit increases and an increase in average full-time equivalent employees ("FTEs") of 1.6%. Share-based compensation decreased $1.0 million, reflecting the Company's financial performance and the impact on performance-based restricted stock between the periods. Net periodic pension cost increased $3.3 million.
At December 31, 2023, the balance of loan commitments, standby and commercial letters of credit were $196.1 million, $13.6 million and $353,000, respectively. Since some of the financial instruments may expire without being drawn upon, the total amounts do not necessarily represent future cash requirements.
At December 31, 2024, the balance of loan commitments, standby and commercial letters of credit were $247.4 million, $12.0 million and $400,000, respectively. Since some of the financial instruments may expire without being drawn upon, the total amounts do not necessarily represent future cash requirements.
There was no interest income recognized on nonaccrual loans for the years ended 2023 and 2022. There were no nonaccrual loans at December 31, 2023 and one nonaccrual loan of $1.2 million at December 31, 2022. There were no foreclosed assets at December 31, 2023 or December 31, 2022.
There was no interest income recognized on nonaccrual loans for the years ended 2024 and 2023. There were no nonaccrual loans at December 31, 2024 and December 31, 2023. There were no foreclosed assets at December 31, 2024 or December 31, 2023.
The Company posted a 1.24% return on average assets and 14.24% return on average equity. Further detail about the components of revenue and expenses are explained in the sections following. 25 Table of Contents Fee Revenue and Other Income The Company’s fee revenue is derived mainly from transportation and facility payment and processing fees.
Further detail about the components of revenue and expenses are explained in the sections following. 25 Table of Contents Fee Revenue and Other Income The Company’s fee revenue is derived mainly from transportation and facility payment and processing fees.
The loan portfolio was $1.01 billion, representing 40.9% of the Company's total assets as of December 31, 2023 and generated $50.8 million in interest income during the year then ended. The following tables show the composition of the loan portfolio at the end of the periods indicated and remaining maturities for loans as of December 31, 2023.
The loan portfolio was $1.08 billion, representing 45.2% of the Company's total assets as of December 31, 2024 and generated $55.4 million in interest income during the year ended December 31, 2024. The following tables show the composition of the loan portfolio at the end of the periods indicated and remaining maturities for loans as of December 31, 2024.
The pace of future repurchase activity will depend on factors such as levels of regulatory capital, cash generation from operations, cash requirements for investments, repayment of debt, current stock price, business and market conditions, and other factors.
The pace of future repurchase activity will depend on factors such as levels of regulatory capital, cash generation from operations, cash requirements for investments, repayment of debt, current stock price, business and market conditions, and other factors. The Company may repurchase shares from time to time on the open market or in private transactions, including structured transactions.
The Company repurchased a total of 150,541 shares at an aggregate cost of $5.8 million during the year ended December 31, 2023 and 130,374 shares at an aggregate cost of $5.3 million during the year ended December 31, 2022.
The Company repurchased a total of 167,455 shares at an aggregate cost of $7.2 million during the year ended December 31, 2024 and 150,541 shares at an aggregate cost of $5.8 million during the year ended December 31, 2023.
Processing volumes, average payments in advance of funding, fee revenue and other income were as follows: (In thousands) December 31, % Change 2023 2022 2021 2023 v. 2022 2022 v. 2021 Transportation invoice transaction volume 35,949 36,807 36,783 (2.3) % 0.1 % Transportation invoice dollar volume $ 38,288,478 $ 44,749,359 $ 36,829,841 (14.4) % 21.5 % Facility transaction volume (1) 13,857 12,990 12,499 6.7 % 3.9 % Facility dollar volume (1) $ 19,836,821 $ 19,514,049 $ 15,867,556 1.7 % 23.0 % Average payments in advance of funding $ 234,865 $ 278,185 $ 211,809 (15.6) % 31.3 % Processing fees $ 79,566 $ 76,470 $ 74,589 4.0 % 2.5 % Financial fees $ 45,985 $ 43,757 $ 32,733 5.1 % 33.7 % Other income $ 4,916 $ 4,755 $ 2,369 3.4 % 100.7 % (1) Includes utility, telecom and waste Processing fees increased $3.1 million, or 4.0%, during 2023 largely driven by a 6.7% increase in facility transaction volumes as well as an increase in fees received for ancillary processing services.
Processing volumes, average payments in advance of funding, fee revenue and other income were as follows: (In thousands) December 31, % Change 2024 2023 2022 2024 v. 2023 2023 v. 2022 Transportation invoice transaction volume 35,729 35,949 36,807 (0.6) % (2.3) % Transportation invoice dollar volume $ 36,113,169 $ 38,288,478 $ 44,749,359 (5.7) % (14.4) % Facility transaction volume (1) 17,135 13,857 12,990 23.7 % 6.7 % Facility dollar volume (1) $ 21,438,282 $ 19,836,821 $ 19,514,049 8.1 % 1.7 % Average payments in advance of funding $ 202,860 $ 234,865 $ 278,185 (13.6) % (15.6) % Processing fees $ 82,671 $ 79,566 $ 76,470 3.9 % 4.0 % Financial fees $ 43,297 $ 45,985 $ 43,757 (5.8) % 5.1 % Other income $ 5,881 $ 4,916 $ 4,755 19.6 % 3.4 % (1) Includes utility, telecom and waste Processing fees increased $3.1 million, or 3.9%, during 2024 largely driven by a 23.7% increase in facility transaction volumes.
Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, decreased $137.8 million, or 32.4%. The decrease is primarily a result of the increase in the average balance of loans, coupled with the decrease in average funding sources, partially offset by the decrease in average investment securities.
Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $39.0 million, or 13.6%. The increase is primarily a result of the decline in average investment securities and loans, partially offset by a decrease in average funding sources.
The decrease was due to the decrease in net income of $4.8 million and lower net amortization of premium/discount on investment securities of $1.8 million. The net amortization of premium/discount on investment securities is dependent on the type of securities purchased and changes in the prevailing market interest rate environment.
The decrease was due to the decrease in net income of $10.9 million and lower net amortization of premium/discount on investment securities of $882,000, partially offset by an increase in depreciation of $1.1 million. The net amortization of premium/discount on investment securities is dependent on the type of securities purchased and changes in the prevailing market interest rate environment.
The yield on interest-earning assets increased 114 basis points from 2.90% in 2022 to 4.04% in 2023 while the cost of interest-bearing liabilities increased 226 basis points from 0.58% in 2022 to 2.84% in 2023. 26 Table of Contents Average loans increased $63.7 million, or 6.4%, to $1.06 billion.
The yield on interest-earning assets increased 39 basis points from 4.04% 26 Table of Contents in 2023 to 4.43% in 2024 while the cost of interest-bearing liabilities increased 35 basis points from 2.84% in 2023 to 3.19% in 2024. Average loans decreased $6.9 million, or 0.7%, to $1.05 billion.
Other factors impacting the $14.7 million decrease in net cash provided by operating activities include: • A decrease in other operating activities, net of $4.6 million, primarily due to changes in various accounts receivable and payable; • A decrease in stock-based compensation expense of $2.6 million due to lower Company earnings and the impact on performance based stock; • A decrease in current income tax liability of $2.2 million; and • A change in the (release of) provision for credit losses of $1.9 million primarily due to changes in loans outstanding during the respective periods.
Other factors impacting the $2.0 million increase in net cash provided by operating activities include: • A decrease in share-based compensation expense of $1.0 million; • An increase in other operating activities, net of $8.2 million, primarily due to changes in various accounts receivable and payable; • An increase in current income tax liability of $2.3 million; • A change in the FASB ASC 715 pension adjustment of $2.6 million; and • A change in the provision for (release of) credit losses of $1.0 million primarily due to changes in loans outstanding during the respective periods.
Distribution of Assets, Liabilities and Shareholders' Equity; Interest Rate and Interest Differential The following table contains condensed average balance sheets for each of the periods reported, the tax-equivalent interest income and expense on each category of interest-earning assets and interest-bearing liabilities, and the average yield on such categories of interest-earning assets and the average rates paid on such categories of interest-bearing liabilities for each of the periods reported: 27 Table of Contents (In thousands) 2023 2022 2021 Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Assets (1) Interest-earning assets Loans (2) : $ 1,055,668 $ 50,825 4.81 % $ 992,004 $ 39,460 3.98 % $ 887,662 $ 35,178 3.96 % Securities (4) : Taxable 541,159 14,118 2.61 509,537 10,083 1.98 192,885 2,547 1.32 Tax-exempt (3) 192,881 5,186 2.69 279,247 8,043 2.88 304,672 8,919 2.93 Short-term investments 287,243 13,720 4.78 425,004 6,429 1.51 614,390 726 0.12 Total interest-earning assets 2,076,951 83,849 4.04 % 2,205,792 64,015 2.90 % 1,999,609 47,370 2.37 % Non-interest-earning assets Cash and due from banks 24,914 20,772 21,220 Premises and equipment, net 24,445 19,291 17,846 Payments in advance of funding 234,865 278,185 211,809 Bank-owned life insurance 48,540 46,468 26,766 Goodwill and other intangibles 21,060 19,558 17,273 Unrealized (loss) gain on investment securities (68,893) (43,147) 15,833 Other assets 71,050 51,686 35,231 Allowance for credit losses (13,324) (12,527) (11,595) Total assets $ 2,419,608 $ 2,586,078 $ 2,333,992 Liabilities and Shareholders’ Equity (1) Interest-bearing liabilities Interest-bearing demand deposits $ 496,154 $ 14,056 2.83 % $ 549,054 $ 3,118 0.57 % $ 521,409 $ 582 0.11 % Savings deposits 7,162 113 1.58 13,288 38 0.29 18,398 9 0.05 Time deposits >=$250 23,912 705 2.95 18,272 181 0.99 14,576 139 0.95 Other time deposits 43,839 1,276 2.91 22,637 145 0.64 37,676 441 1.17 Total interest-bearing deposits 571,067 16,150 2.83 603,251 3,482 0.58 592,059 1,171 0.20 Short-term borrowings 2,241 116 5.18 11 — — 10 — — Total interest-bearing liabilities 573,308 16,266 2.84 % 603,262 3,482 0.58 % 592,069 1,171 0.20 % Noninterest-bearing liabilities Demand deposits 512,608 588,121 447,880 Accounts and drafts payable 1,081,245 1,141,329 986,572 Other liabilities 41,378 42,224 54,035 Total liabilities 2,208,539 2,374,936 2,080,556 Shareholders’ equity 211,069 211,142 253,436 Total liabilities and shareholders’ equity $ 2,419,608 $ 2,586,078 $ 2,333,992 Net interest income (3) $ 67,583 $ 60,533 $ 46,199 Net interest margin (3) 3.25 % 2.74 % 2.31 % Interest spread 1.20 % 2.32 % 2.17 % (1) Balances shown are daily averages.
Distribution of Assets, Liabilities and Shareholders' Equity; Interest Rate and Interest Differential The following table contains condensed average balance sheets for each of the periods reported, the tax-equivalent interest income and expense on each category of interest-earning assets and interest-bearing liabilities, and the average yield on such categories of interest-earning assets and the average rates paid on such categories of interest-bearing liabilities for each of the periods reported: 27 Table of Contents (In thousands) 2024 2023 2022 Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Assets (1) Interest-earning assets Loans (2) : $ 1,048,732 $ 55,362 5.28 % $ 1,055,668 $ 50,825 4.81 % $ 992,004 $ 39,460 3.98 % Securities (4) : Taxable 474,753 13,423 2.83 541,159 14,118 2.61 509,537 10,083 1.98 Tax-exempt (3) 161,836 4,519 2.79 192,881 5,186 2.69 279,247 8,043 2.88 Short-term investments 326,233 15,752 4.83 287,243 13,720 4.78 425,004 6,429 1.51 Total interest-earning assets 2,011,554 89,056 4.43 % 2,076,951 83,849 4.04 % 2,205,792 64,015 2.90 % Non-interest-earning assets Cash and due from banks 23,695 24,914 20,772 Premises and equipment, net 33,309 24,445 19,291 Payments in advance of funding 202,860 234,865 278,185 Bank-owned life insurance 49,715 48,540 46,468 Goodwill and other intangibles 20,314 21,060 19,558 Unrealized (loss) gain on investment securities (57,772) (68,893) (43,147) Other assets 79,091 71,050 51,686 Allowance for credit losses (13,369) (13,324) (12,527) Total assets $ 2,349,397 $ 2,419,608 $ 2,586,078 Liabilities and Shareholders’ Equity (1) Interest-bearing liabilities Interest-bearing demand deposits $ 549,164 $ 17,028 3.10 % $ 496,154 $ 14,056 2.83 % $ 549,054 $ 3,118 0.57 % Savings deposits 7,148 116 1.62 7,162 113 1.58 13,288 38 0.29 Time deposits >=$250 27,211 597 2.19 23,912 417 1.74 18,272 102 0.56 Other time deposits 51,058 2,516 4.93 43,839 1,564 3.57 22,637 224 0.99 Total interest-bearing deposits 634,581 20,257 3.19 571,067 16,150 2.83 603,251 3,482 0.58 Short-term borrowings 11 1 9.09 2,241 116 5.18 11 — — Total interest-bearing liabilities 634,592 20,258 3.19 % 573,308 16,266 2.84 % 603,262 3,482 0.58 % Noninterest-bearing liabilities Demand deposits 414,711 512,608 588,121 Accounts and drafts payable 1,030,520 1,081,245 1,141,329 Other liabilities 40,630 41,378 42,224 Total liabilities 2,120,453 2,208,539 2,374,936 Shareholders’ equity 228,944 211,069 211,142 Total liabilities and shareholders’ equity $ 2,349,397 $ 2,419,608 $ 2,586,078 Net interest income (3) $ 68,798 $ 67,583 $ 60,533 Net interest margin (3) 3.42 % 3.25 % 2.74 % Interest spread 1.23 % 1.20 % 2.32 % (1) Balances shown are daily averages.
Summary of Results (In thousands except per share data) For the Years Ended December 31, % Change 2023 2022 2021 2023 v. 2022 2022 v. 2021 Processing fees $ 79,566 $ 76,470 $ 74,589 4.0 % 2.5 % Financial fees 45,985 43,757 32,733 5.1 % 33.7 % Net interest income 66,494 58,844 44,326 13.0 % 32.8 % (Release of) provision for credit losses (550) 1,350 (130) (140.7) % (1138.5) % Other 4,916 4,755 2,369 3.4 % 100.7 % Total revenues 197,511 182,476 154,147 8.2 % 18.4 % Operating expense 160,155 139,576 120,326 14.7 % 16.0 % Income before income tax expense 37,356 42,900 33,821 (12.9) % 26.8 % Income tax expense 7,297 7,996 5,217 (8.7) % 53.3 % Net income $ 30,059 $ 34,904 $ 28,604 (13.9) % 22.0 % Diluted earnings per share $ 2.18 $ 2.53 $ 2.00 (13.8) % 26.5 % Return on average assets 1.24 % 1.35 % 1.23 % — — Return on average equity 14.24 % 16.53 % 11.29 % — — The Company recorded revenue of $197.5 million in 2023, up 8.2% from the prior year, due to increases in processing fees, financial fees, net interest income and a positive variance in the (release of) provision for credit losses.
(In thousands except per share data) For the Years Ended December 31, % Change 2024 2023 2022 2024 v. 2023 2023 v. 2022 Processing fees $ 82,671 $ 79,566 $ 76,470 3.9 % 4.0 % Financial fees 43,297 45,985 43,757 (5.8) % 5.1 % Net interest income 67,787 66,494 58,844 1.9 % 13.0 % Provision for (release of) credit losses 447 (550) 1,350 (181.3) % (140.7) % Other 5,881 4,916 4,755 19.6 % 3.4 % Total revenues 199,189 197,511 182,476 0.8 % 8.2 % Operating expense 174,970 160,155 139,576 9.3 % 14.7 % Income before income tax expense 24,219 37,356 42,900 (35.2) % (12.9) % Income tax expense 5,051 7,297 7,996 (30.8) % (8.7) % Net income $ 19,168 $ 30,059 $ 34,904 (36.2) % (13.9) % Diluted earnings per share $ 1.39 $ 2.18 $ 2.53 (36.2) % (13.8) % Return on average assets 0.82 % 1.24 % 1.35 % — — Return on average equity 8.37 % 14.24 % 16.53 % — — The Company recorded revenue of $199.2 million in December 31, 2024, up 0.8% from the prior year, due to increases in processing fees and net interest income, partially offset by a decrease in financial fees and the negative variance in the provision for (release of) credit losses.
The ACL represented 1.29% and 1.25% of outstanding loans at December 31, 2023 and December 31, 2022, respectively. The allowance for unfunded commitments was $132,000 at December 31, 2023 and $232,000 at December 31, 2022.
The ACL represented 1.24% and 1.29% of outstanding loans at December 31, 2024 and December 31, 2023, respectively. The allowance for unfunded commitments was $273,000 at December 31, 2024 and $132,000 at December 31, 2023. There were no nonperforming loans outstanding at December 31, 2024 or December 31, 2023.
Government agencies or sponsored enterprises 39,222 45,023 49,341 Treasury securities 108,721 155,283 — Total investments $ 627,117 $ 754,468 $ 673,453 Investment Securities by Maturity (At December 31, 2023) (In thousands) Within 1 Year Over 1 to 5 Years Over 5 to 10 Years Over 10 Years Yield State and political subdivisions $ 20,492 $ 78,179 $ 91,789 $ 28,575 2.49 % (1) Mortgage-backed securities issued or guaranteed by U.S.
Government agencies or sponsored enterprises 34,996 39,222 45,023 Treasury securities — 108,721 155,283 Total investments $ 528,021 $ 627,117 $ 754,468 Investment Securities by Maturity (At December 31, 2024) (In thousands) Within 1 Year Over 1 to 5 Years Over 5 to 10 Years Over 10 Years Yield (1) State and political subdivisions $ 8,820 $ 57,494 $ 92,565 $ 13,085 2.34 % Mortgage-backed securities issued or guaranteed by U.S.
In addition, the Company has maintained exceptional credit quality with no non-performing loans at December 31, 2023, and no loan charge-offs during the year ended December 31, 2023.
The Company’s common equity Tier 1 capital ratio was 13.84% at December 31, 2024, significantly exceeding regulatory requirements. In addition, the Company has maintained exceptional credit quality with no non-performing loans at December 31, 2024, and no loan charge-offs during the year ended December 31, 2024.
As a result of rising inflation, the Federal Reserve increased the Federal Funds rate throughout 2022 and 2023. The increase in the Federal Funds rate has contributed to the increase in the Company's net interest margin to 3.25% in 2023 from 2.74% in 2022, therefore positively impacting net interest income.
The increase in the Federal Funds rate has contributed to the increase in the Company's net interest margin to 3.42% in 2024 from 3.25% in 2023 and 2.74% in 2022, therefore positively impacting net interest income. The Federal Reserve began to decrease the Federal Funds rate during the last four months of 2024 by a cumulative 100 basis points.
Total investment securities available-for-sale at fair value were $627.1 million at December 31, 2023, a decrease of $127.4 million, or 16.9%, from December 31, 2022. Investment securities represented 25.3% of total assets at December 31, 2023.
Total investment securities available-for-sale at fair value were $528.0 million at December 31, 2024, a decrease of $99.1 million, or 15.8%, from December 31, 2023. Investment securities represented 22.0% of total assets at December 31, 2024.
The increase was primarily a result of net income of $30.1 million and the decrease in accumulated other comprehensive loss of $11.9 million due to the change in market values on investment securities, partially offset by the payment of cash dividends of $16.0 million, and the repurchase of treasury shares of $5.8 million.
The decrease was primarily a result of the payment of cash dividends of $16.5 million, and the repurchase of treasury shares of $7.2 million, partially offset by net income of $19.2 million and the decrease in accumulated other comprehensive loss of $2.3 million.
State and political securities decreased $76.1 million, or 25.8%, to $219.0 million at December 31, 2023 as a result of maturities and sales. The investment portfolio provides the Company with a significant source of earnings, secondary source of liquidity, and mechanisms to manage the effects of changes in loan demand and interest rates.
Mortgage-backed securities increased $75.5 million, or 47.8%, to $233.3 million at December 31, 2024. The investment portfolio provides the Company with a significant source of earnings, secondary source of liquidity, and mechanisms to manage the effects of changes in loan demand and interest rates.
The average yield on short-term investments increased 327 basis points to 4.78% in 2023 primarily due to the increase in short-term market interest rates that began in March 2022. The majority of these short-term investments are held at the Federal Reserve Bank. The average balance of interest-bearing deposits decreased $32.2 million, or 5.3%.
The average yield on short-term investments increased 5 basis points to 4.83% in 2024 primarily due to the higher short-term market interest rates when comparing the periods. The majority of these short-term investments are held at the Federal Reserve Bank. The average balance of interest-bearing deposits increased $63.5 million, or 11.1%. Average non-interest-bearing demand deposits decreased $97.9 million, or 19.1%.
The amount of the provision will fluctuate as determined by these analyses. The Company had net loan recoveries of $0 and $13,000 in 2023 and 2022, respectively. The ACL was $13.1 million at December 31, 2023 compared to $13.5 million at December 31, 2022.
The amount of the provision for (release of) credit losses was derived from the Company’s CECL model. The amount of the provision will fluctuate as determined by these analyses. The Company had no loan charge-offs or recoveries in 2024 and 2023. The ACL was $13.4 million at December 31, 2024 compared to $13.1 million at December 31, 2023.
The cost of fuel is another factor that has a significant impact on the transportation sector. As the price of fuel goes up or down, the Company’s earnings increase or decrease with the dollar amount of transportation invoices. The Company recorded revenue of $197.5 million in 2023, up 8.2% from the prior year.
The cost of fuel is another factor that has a significant impact on the transportation sector. As the price of fuel goes up or down, the Company’s earnings increase or decrease with the dollar amount of transportation invoices. The Company continues to operate profitably, posting a 0.82% return on average assets and 8.37% return on average equity.
Transportation invoice volumes decreased 2.3% over the same period. The decline in transportation volumes is primarily due to the on-going freight recession. Financial fees increased $2.2 million, or 5.1%, in 2023 primarily attributable to the increase in short-term interest rates throughout 2023, partially offset by a decline in transportation dollar volumes of 14.4%.
Transportation invoice volumes decreased 0.6% over the same period. The decline in transportation volumes is primarily due to the on-going freight recession. Financial fees decreased $2.7 million, or 5.8%, in 2024 primarily attributable to the decline in transportation invoice dollar volumes of 5.7%.
The single nonperforming loan at December 31, 2022 paid off in full during January 2023. The Company does not have any foreign loans. The Company's loan portfolio includes $157,000 of single family real estate mortgages, as the Company does not market its services to retail customers.
The Company's loan portfolio includes $110,000 of single family real estate mortgages, as the Company does not market its services to retail customers.
Shareholders’ equity was $229.8 million, or 9.3% of total assets, at December 31, 2023, an increase of $23.5 million as compared to December 31, 2022.
Shareholders’ equity was $229.0 million, or 9.6% of total assets, at December 31, 2024, a decrease of $779,000 as compared to December 31, 2023.
The Company does not have any other interest-earning assets which would have been included in nonaccrual, past due or restructured loans if such assets were loans. 31 Table of Contents Summary of Nonperforming Assets (In thousands) December 31, 2023 2022 2021 2020 2019 Commercial and industrial: Nonaccrual $ — $ 1,150 $ — $ — $ — Contractually past due 90 days or more and still accruing — — — — — Real estate – mortgage: Nonaccrual — — — — — Contractually past due 90 days or more and still accruing — — — — — Total nonperforming loans $ — $ 1,150 $ — $ — $ — Total foreclosed assets — — — — — Total nonperforming assets $ — $ 1,150 $ — $ — $ — Operating Expenses Operating expenses in 2023 compared to 2022 and 2021 include the following significant pre-tax components: (In thousands) December 31, 2023 2022 2021 Salaries and commissions $ 93,474 $ 85,489 $ 75,641 Share-based compensation 4,139 6,732 2,859 Net periodic pension cost (benefit) 733 (2,564) (1,839) Other benefits 20,348 16,817 15,494 Total personnel expense $ 118,694 $ 106,474 $ 92,155 Occupancy 3,560 3,676 3,824 Equipment 7,138 6,668 6,745 Amortization of intangible assets 780 680 859 Other operating 29,983 22,078 16,743 Total operating expense $ 160,155 $ 139,576 $ 120,326 Total operating expenses increased 14.7% in 2023 compared to 2022.
Summary of Nonperforming Assets (In thousands) December 31, 2024 2023 2022 2021 2020 Commercial and industrial: Nonaccrual $ — $ — $ 1,150 $ — $ — Total nonperforming loans $ — $ — $ 1,150 $ — $ — Total foreclosed assets — — — — — Total nonperforming assets $ — $ — $ 1,150 $ — $ — 32 Table of Contents Operating Expenses Operating expenses in 2024 compared to 2023 and 2022 include the following significant pre-tax components: (In thousands) December 31, 2024 2023 2022 Salaries and commissions $ 96,356 $ 93,474 $ 85,489 Share-based compensation 3,167 4,139 6,732 Net periodic pension cost (benefit) 4,172 878 (2,453) Other benefits 19,696 20,203 16,706 Total personnel expense $ 123,391 $ 118,694 $ 106,474 Occupancy 3,446 3,560 3,676 Equipment 8,305 7,138 6,668 Bad debt expense 7,847 — — Amortization of intangible assets 739 780 680 Other operating 31,242 29,983 22,078 Total operating expense $ 174,970 $ 160,155 $ 139,576 Total operating expenses increased 9.3% in 2024 compared to 2023.
Government agencies or sponsored enterprises — — — 39,222 5.44 % Treasury securities 108,721 — — — 2.47 % Total investments $ 129,213 $ 134,663 $ 178,754 $ 184,487 2.64 % Weighted average yield (1) 2.55 % 4.08 % 1.98 % 2.48 % 2.64 % (1) Yields are presented on a tax-equivalent basis assuming a tax rate of 21%. 33 Table of Contents Deposits and Accounts and Drafts Payable (In thousands) December 31, 2023 2022 2021 Noninterest-bearing demand deposits $ 524,359 $ 642,757 $ 582,642 Interest-bearing demand deposits 616,455 614,460 638,861 Total deposits $ 1,140,814 $ 1,257,217 $ 1,221,503 Accounts and drafts payable $ 1,071,369 $ 1,067,600 $ 1,050,396 Total deposits decreased $116.4 million, or 9.3% during 2023.
Government agencies or sponsored enterprises — — 1,727 33,268 5.58 % Total investments $ 8,820 $ 102,227 $ 183,452 $ 233,522 2.78 % Weighted average yield (1) 3.38 % 3.60 % 2.13 % 3.01 % 2.78 % (1) Yields are presented on a tax-equivalent basis assuming a tax rate of 21%. 34 Table of Contents Deposits and Accounts and Drafts Payable (In thousands) December 31, 2024 2023 2022 Noninterest-bearing demand deposits $ 251,230 $ 524,359 $ 642,757 Interest-bearing deposits 716,686 616,455 614,460 Total deposits $ 967,916 $ 1,140,814 $ 1,257,217 Accounts and drafts payable $ 1,149,276 $ 1,071,369 $ 1,067,600 Total deposits decreased $172.9 million, or 15.2% during 2024.
Maturities of Certificates of Deposit as of December 31, 2023 (In thousands) $100 or Less $100 to Less Than $250 $250 or More Total Three months or less $ 3,466 $ 34,607 $ 7,576 $ 45,649 Three to six months 349 2,233 4,276 6,858 Six to twelve months 923 9,175 10,011 20,109 Over twelve months 528 2,525 1,053 4,106 Total $ 5,266 $ 48,540 $ 22,916 $ 76,722 Liquidity The discipline of liquidity management as practiced by the Company seeks to ensure that funds are available to fulfill all payment obligations relating to invoices processed as they become due and meet depositor withdrawal requests and borrower credit demands while at the same time maximizing profitability.
Maturities of Certificates of Deposit as of December 31, 2024 (In thousands) $100 or Less $100 to Less Than $250 $250 or More Total Three months or less $ 3,384 $ 38,468 $ 8,047 $ 49,899 Three to six months 731 8,062 4,526 13,319 Six to twelve months 871 6,806 4,733 12,410 Over twelve months 390 1,075 4,371 5,836 Total $ 5,376 $ 54,411 $ 21,677 $ 81,464 Liquidity The discipline of liquidity management as practiced by the Company seeks to ensure that funds are available to fulfill all payment obligations relating to invoices processed as they become due and meet depositor withdrawal requests and borrower credit demands while at the same time maximizing profitability.
The Company may repurchase shares from time to time on the 36 Table of Contents open market or in private transactions, including structured transactions. The stock repurchase program may be modified or discontinued at any time. Impact of Inflation Inflation could have the impact of increasing our operating expenses, such as compensation expense.
The stock repurchase program may be modified or discontinued at any time. Impact of Inflation Inflation could have the impact of increasing our operating expenses, such as compensation expense. Inflationary pressures may also have an impact on total assets, earnings and capital, which could impact the Company's ability to grow.
(In thousands) 2023 Over 2022 2022 Over 2021 Volume (1) Rate (1) Total Volume (1) Rate (1) Total Increase (decrease) in interest income: Loans (2) : $ 2,657 $ 8,708 $ 11,365 $ 4,150 $ 132 $ 4,282 Securities: Taxable 658 3,377 4,035 5,780 1,756 7,536 Tax-exempt (3) (2,351) (506) (2,857) (734) (142) (876) Short-term investments (2,671) 9,962 7,291 (291) 5,994 5,703 Total interest income $ (1,707) $ 21,541 $ 19,834 $ 8,905 $ 7,740 $ 16,645 Interest expense on: Interest-bearing demand deposits $ (329) $ 11,267 $ 10,938 $ 32 $ 2,504 $ 2,536 Savings deposits (25) 100 75 (3) 32 29 Time deposits >=$250 71 453 524 36 6 42 Other time deposits 236 895 1,131 (139) (157) (296) Short-term borrowings — 116 116 — — — Total interest expense (47) 12,831 12,784 (74) 2,385 2,311 Net interest income $ (1,660) $ 8,710 $ 7,050 $ 8,979 $ 5,355 $ 14,334 (1) The change in interest due to the combined rate/volume variance has been allocated in proportion to the absolute dollar amounts of the change in each.
(In thousands) 2024 Over 2023 2023 Over 2022 Volume (1) Rate (1) Total Volume (1) Rate (1) Total Increase (decrease) in interest income: Loans (2) : $ (338) $ 4,875 $ 4,537 $ 2,657 $ 8,708 $ 11,365 Securities: Taxable (1,823) 1,128 (695) 658 3,377 4,035 Tax-exempt (3) (862) 195 (667) (2,351) (506) (2,857) Short-term investments 1,881 151 2,032 (2,671) 9,962 7,291 Total interest income $ (1,142) $ 6,349 $ 5,207 $ (1,707) $ 21,541 $ 19,834 Interest expense on: Interest-bearing demand deposits $ 1,577 $ 1,395 $ 2,972 $ (329) $ 11,267 $ 10,938 Savings deposits — 3 3 (25) 100 75 Time deposits >=$250 63 117 180 40 275 315 Other time deposits 287 665 952 354 986 1,340 Short-term borrowings (165) 50 (115) — 116 116 Total interest expense 1,762 2,230 3,992 40 12,744 12,784 Net interest income $ (2,904) $ 4,119 $ 1,215 $ (1,747) $ 8,797 $ 7,050 (1) The change in interest due to the combined rate/volume variance has been allocated in proportion to the absolute dollar amounts of the change in each.
There was no single issuer of securities in the investment portfolio at December 31, 2023 for which the aggregate amortized cost exceeded 10% of total shareholders' equity. Investments by Type (In thousands) December 31, 2023 2022 2021 State and political subdivisions $ 219,035 $ 295,126 $ 371,128 Mortgage-backed securities issued or guaranteed by U.S.
The Company generally utilized funds from maturities and sales of U.S. Treasury securities and state and political securities to increase short-term investments and fund purchases of mortgage-backed securities. There was no single issuer of securities in the investment portfolio at December 31, 2024 for which the aggregate amortized cost exceeded 10% of total shareholders' equity.
When measured as a percent of pre-tax income, the Company’s effective tax rate was 19.5% and 18.6% in 2023 and 2022, respectively. The increase in the effective tax rate in 2023 compared to 2022 was primarily due to a lower level of tax-free interest income on municipal securities in the current year.
When measured as a percent of pre-tax income, the Company’s effective tax rate was 20.9% and 19.5% in 2024 and 2023, respectively.
The increase during 2023 is primarily attributed to decreases in investment securities, loans and payments in advance of funding, partially offset by a decrease in deposits.
The decrease during 35 Table of Contents 2024 is primarily attributed to a decrease in deposits and an increase in loans, partially offset by decreases in securities available-for-sale and accounts and drafts receivable from customers and an increase in accounts and drafts payable.
Inflationary pressures may also have an impact on total assets, earnings and capital, which could impact the Company's ability to grow. An increase in total assets could have the impact of decreasing regulatory capital ratios if earnings and total regulatory capital do not increase at the same rate.
An increase in total assets could have the impact of decreasing regulatory capital ratios if earnings and total regulatory capital do not increase at the same rate. As a result of rising inflation, the Federal Reserve increased the Federal Funds rate throughout 2022 and 2023.
Management intends to accomplish this by maintaining the Company’s leadership position in applied technology, which when combined with the security and processing controls of the Bank, makes Cass unique in the industry. Critical Accounting Policies The Company has prepared the consolidated financial statements in this report in accordance with the FASB Accounting Standards Codification (“ASC”).
Management intends to accomplish this by maintaining the Company’s leadership position in applied technology, which when combined with the security and processing controls of the Bank, makes Cass unique in the industry. Recent Industry Developments The transportation industry continues to experience a decline in overall freight rates caused by an ongoing freight recession.
Provision and Allowance for Credit Losses on Loans and Allowance for Unfunded Commitments The Company recorded a release of credit losses and off-balance sheet credit exposures of $550,000 in 2023 and a provision for credit losses of $1.4 million in 2022. The amount of the (release of) provision for credit losses was derived from the Company’s CECL model.
However, the Company does not believe there is any concern of credit loss at December 31, 2024. Provision and Allowance for Credit Losses on Loans and Allowance for Unfunded Commitments The Company recorded a provision for credit losses and off-balance sheet credit exposures of $447,000 in 2024 and a release of credit losses of $550,000 in 2023.
The decline in transportation dollar volumes had a direct effect on the 15.6% decrease in average payments in advance of funding, which is the primary generator of financial fees. Net Interest Income Net interest income is the difference between interest earned on loans, investments, and other earning assets and interest expense on deposits and other interest-bearing liabilities.
Net Interest Income Net interest income is the difference between interest earned on loans, investments, and other earning assets and interest expense on deposits and other interest-bearing liabilities. Net interest income is a significant source of the Company’s revenues.
The Company also incurred a shift from non-interest bearing to interest-bearing deposits from current customers. Accounts and drafts payable generated by the Company in its payment processing operations increased $3.8 million, or 0.4%, to $1.07 billion, at December 31, 2023.
The average balance of deposits is more indicative of trends period to period. Accounts and drafts payable generated by the Company in its payment processing operations increased $77.9 million, or 7.3%, to $1.15 billion, at December 31, 2024.
Government agencies or sponsored enterprises 157,799 173,939 168,646 Corporate bonds 102,340 85,097 84,338 Asset-backed securities issued or guaranteed by U.S.
Investments by Type (In thousands) December 31, 2024 2023 2022 State and political subdivisions $ 171,964 $ 219,035 $ 295,126 Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored enterprises 233,275 157,799 173,939 Corporate bonds 87,786 102,340 85,097 Asset-backed securities issued or guaranteed by U.S.
The balances of liquid assets consist of cash and cash equivalents, which include cash and due from banks, interest-bearing deposits in other financial institutions, federal funds sold, and money market funds, totaled $372.5 million at December 31, 2023, an increase of $171.5 million, or 85.4%, from December 31, 2022.
Management considers both on-balance sheet and off-balance sheet items in its evaluation of liquidity. The balance of liquid assets consists of cash and cash equivalents, which includes cash and due from banks, interest-bearing deposits in other financial institutions, federal funds sold, and money market funds.
The investment portfolio will expand and contract over time as the Company manages its liquidity and interest rate position. The average tax-equivalent yield on investment securities increased 33 basis point to 2.63% in 2023 as a result of the increase in short and long-term interest rates.
The investment portfolio will expand and contract over time as the Company manages its liquidity and interest rate position.
Investment Portfolio Investment securities decreased $127.4 million, or 16.9%, during 2023 to $627.1 million at December 31, 2023. U.S. Treasury securities decreased $46.6 million to $108.7 million at December 31, 2023 compared to $155.3 million at December 31, 2022.
Investment Portfolio Investment securities decreased $99.1 million, or 15.8%, during 2024 to $528.0 million at December 31, 2024. U.S. Treasury securities decreased $108.7 million to $0 at December 31, 2024 compared to $108.7 million at December 31, 33 Table of Contents 2023. State and political securities decreased $47.1 million, or 21.5%, to $172.0 million at December 31, 2024.
Government agencies or sponsored enterprises — 713 40,396 116,690 1.69 % Corporate bonds — 55,771 46,569 — 3.69 % Asset-backed securities issued or guaranteed by U.S.
Government agencies or sponsored enterprises — 466 45,641 187,169 2.62 % Corporate bonds — 44,267 43,519 — 3.12 % Asset-backed securities issued or guaranteed by U.S.
These decreases were due to being more selective in booking new loans as a result of the decline in deposits during the year. Additional details regarding the types and maturities of loans in the loan portfolio are contained in the tables above and in Item 8, Note 4.
Franchise restaurant loans, which are included in commercial and industrial loans, increased $43.1 million during 2024. Faith-based loans increased $5.2 million, during 2024. Additional details regarding the types and maturities of loans in the loan portfolio are contained in the tables above and in Item 8, Note 4.
Net income was $30.1 million and diluted EPS was $2.18 per share, decreases of 13.9% and 13.8% from the prior year, respectively. The Company continues to operate profitably, posting a 1.24% return on average assets and 14.24% return on average equity. The Company’s common equity Tier 1 capital ratio was 14.73% at December 31, 2023, significantly exceeding regulatory requirements.
Net income was $19.2 million and diluted EPS was $1.39 per share, decreases of 36.2% for both from the prior year. The Company posted a 0.82% return on average assets and 8.37% return on average equity. The Company did not have any nonperforming assets at December 31, 2024 and did not have any loan charge-offs during 2024.
The increase in net interest income in 2023 compared to 2022 is primarily due to an increase in the Federal Funds rate throughout 2022 and into 2023, positively affecting the net interest rate margin which increased to 3.25% as compared to 2.74% in the prior year.
The increase in net interest income in 2024 as compared to 2023 is primarily due to an increase in the net interest margin to 3.42% as compared to 3.25% in the prior year. The increase in the net interest margin was partially offset by a decrease in average earning assets of $65.4 million, or 3.1%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−2 removed11 unchanged
Biggest changeWhile net interest income simulations do an adequate job of capturing interest rate risk to short term earnings, they do not capture risk within the current balance sheet beyond 12 months. The Company uses fair market value of equity analyses to help identify longer-term risk that may reside on the current balance sheet.
Biggest changeThe Company uses fair market value of equity analyses to help identify longer-term risk that may reside on the current balance sheet. The fair market value of equity is represented by the present value of all future income streams generated by the current balance sheet.
The fair market value of equity is represented by the present value of all future income streams generated by the current balance sheet. The Company measures the fair market value of equity as the net present value of all asset and liability cash flows discounted at forward rates suggested by the current U.S. Treasury curve plus appropriate credit spreads.
The Company measures the fair market value of equity as the net present value of all asset and liability cash flows discounted at forward rates suggested by the current U.S. Treasury curve plus appropriate credit spreads.
These balances, which are noninterest bearing, can cause the Company to become susceptible to changes in interest rates, with a decreasing net interest margin in periods of declining interest rates and an increasing net interest margin in periods of rising interest rates, like the Company experienced in 2023.
These balances, which are noninterest-bearing, can cause the Company to become susceptible to changes in interest rates, with a decreasing net interest margin in periods of declining interest rates and an increasing net interest margin in periods of rising interest rates, like the Company experienced in 2024 before the fourth quarter cumulative 100 basis point decline.
The table below illustrates the projected impact of interest rate shocks on net interest income as of December 31, 2023: Change in Interest Rates % Change in Net Interest Income +200 basis points 14.7% +100 basis points 6.5 Flat rates — -100 basis points (3.2) -200 basis points (6.0)% 38 Table of Contents The Company is generally asset sensitive as average interest-earning assets of $2.08 billion for 2023 greatly exceeded average interest-bearing liabilities of $573.3 million.
The table below illustrates the projected impact of interest rate shocks on net interest income as of December 31, 2024: Change in Interest Rates % Change in Net Interest Income +200 basis points 9.0% +100 basis points 4.4 Flat rates — -100 basis points 0.2 -200 basis points (1.3)% The Company is generally asset sensitive as average interest-earning assets of $2.01 billion for 2024 greatly exceeded average interest-bearing liabilities of $634.6 million.
These simulations are more informative than gap reports because they are able to capture more of the dynamics within the balance sheet, such as basis risk and embedded options risk. A table containing simulation results as of December 31, 2023, from an immediate and sustained parallel change in interest rates in three varying scenarios is shown below.
These simulations are more informative than gap reports because they are able to capture more of the dynamics within the balance sheet, such as basis risk and 39 Table of Contents embedded options risk.
The table above on the projected impact of interest rate shocks results from a static balance sheet at December 31, 2023. On an average balance basis, the percent change in net interest income generally is higher to the positive for a rising interest rate environment and more negative for a declining interest rate environment.
The table above on the projected impact of interest rate shocks results from a static balance sheet at December 31, 2024. 40 Table of Contents
Removed
Since the Company held more short-term investments ($351.6 million) on its ending balance sheet at December 31, 2023 than its average balance for full year 2023 of $287.2 million, the percent changes in net interest income are not necessarily representative of what would occur in a changing interest rate environment as these short-term investments are floating rate assets.
Added
A table containing simulation results as of December 31, 2024, from an immediate and sustained parallel change in interest rates in three varying scenarios is shown below. While net interest income simulations do an adequate job of capturing interest rate risk to short term earnings, they do not capture risk within the current balance sheet beyond 12 months.
Removed
The Company's cash position can vary significantly on a day to day basis. 39 Table of Contents

Other CASS 10-K year-over-year comparisons