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What changed in CASS INFORMATION SYSTEMS INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CASS INFORMATION SYSTEMS INC's 2024 and 2025 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 2025 report.

+298 added−299 removedSource: 10-K (2026-03-06) vs 10-K (2025-03-05)

Top changes in CASS INFORMATION SYSTEMS INC's 2025 10-K

298 paragraphs added · 299 removed · 195 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

34 edited+18 added−29 removed94 unchanged
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.
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.
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.
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) 4 Table of Contents 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.
Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets and, for non-advanced approaches institutions like Cass that have exercised a one-time opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.
Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets and, for non-advanced approaches institutions like Cass that have exercised a one-time opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity investment securities with readily determinable fair market values.
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.
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 2 Table of Contents 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 sales personnel.
Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027. Financial Privacy – Banks and other financial institutions are subject to regulations that limit their ability to disclose non-public information about consumers to nonaffiliated third parties.
Most provisions of the final rule became effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027. Financial Privacy – Banks and other financial institutions are subject to regulations that limit their ability to disclose non-public information about consumers to nonaffiliated third parties.
The Company, through its Utility Expense Management business unit, also competes with other companies located throughout the United States that pay utility bills and provide management reporting. Available data indicates that the Company is one of the largest providers of utility information processing and payment services.
The Company, through its Facilities Expense Management business unit, also competes with other companies located throughout the United States that pay utility bills and provide management reporting. Available data indicates that the Company is one of the largest providers of utility information processing and payment services.
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%.
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 6 Table of Contents 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, 2024, 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, 2025, the Company and the Bank met all capital adequacy requirements under the Basel III Capital Rules.
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.
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, 2025, the Bank was in compliance with the loans-to-one-borrower limitations.
Recently, the federal banking agencies adopted a final rule requiring banking organizations to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States.
In November 2021, the federal banking agencies adopted a final rule requiring banking organizations to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States.
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.
Of these employees, the Bank had 68 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.
Under the FDIC’s risk-based assessment system, insured institutions with less than $10 billion in assets, such as the Bank, are assigned to one of four risk categories based on supervisory evaluations, regulatory capital level, and certain other factors, with less risky institutions paying lower assessments.
Under the FDIC’s risk-based assessment system, insured institutions with less than $10 billion in assets, such as the Bank, are assigned to one of 5 Table of Contents four risk categories based on supervisory evaluations, regulatory capital level, and certain other factors, with less risky institutions paying lower assessments.
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.
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 7 Table of Contents have received a rating of at least “satisfactory” in its most recent examination under the CRA.
Failure to comply with consumer protection requirements may also result in the Company’s inability to pursue merger or acquisition transactions. Website Availability of SEC Reports Cass files annual, quarterly and current reports with the Securities and Exchange Commission (the “SEC”).
Failure to comply with consumer protection requirements may also result in the Company’s inability to pursue merger or acquisition transactions. 9 Table of Contents Website Availability of SEC Reports Cass files annual, quarterly and current reports with the Securities and Exchange Commission (the “SEC”).
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.
Significantly and critically undercapitalized institutions are subject to additional mandatory and discretionary measures. As of December 31, 2025, 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 3 of this report.
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.
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.
Through its numerous methods of obtaining streams and pieces of raw data, Cass is able to assemble vital data into centralized data management systems and warehouses, thus producing an engine to create the power of information for managing critical corporate functions and processing systems.
Through its numerous methods of obtaining streams and pieces of raw data, including those supported by artificial intelligence ("AI"), Cass is able to assemble vital data into centralized data management systems and warehouses, thus producing an engine to create the power of information for managing critical corporate functions and processing systems.
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.
The Bank received a rating of “satisfactory” in its most recent CRA exam. In October 2023, the Office of the Comptroller of the Currency ("OCC"), together with the Federal Reserve and FDIC, issued a joint final rule to modernize the CRA regulatory framework.
Louis metropolitan area and restaurant franchises and faith-based ministries within the United States. Company Strategy and Core Competencies Cass is an information services company with a primary focus on processing payables and payables-related transactions for large corporations located in the United States. Cass possesses four core competencies that encompass most of its processing services.
Company Strategy and Core Competencies Cass is an information services company with a primary focus on processing payables and payables-related transactions for large corporations located in the United States. Cass possesses four core competencies that encompass most of its processing services.
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.
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 3 Table of Contents holding company must have received a rating of at least “satisfactory” in its most recent examination under the Community Reinvestment Act.
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.
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 860 full-time and 156 part-time employees as of February 27, 2026, exclusive of discontinued operations.
This is a distinguishing factor, which clearly requires the processing capability, operating systems and financial integrity of a banking organization. Cass provides immediate, accurate, controlled and protected funds management and transfer system capabilities for all of its customers. Old and costly check processing and delivery mechanisms are replaced with more efficient electronic cash management and funds transfer systems.
This is a distinguishing factor, which clearly requires the processing capability, operating systems and financial integrity of a banking organization. Cass provides immediate, accurate, controlled and protected funds management and transfer system capabilities for all of its customers.
Under this requirement, the Company is expected to commit resources to support the Bank. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to depositors and to certain other indebtedness of such subsidiary banks.
Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to depositors and to certain other indebtedness of such subsidiary banks.
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™.
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™.
The Company continues to support and provide diversity training to all employees. The Company also continues its commitment to providing a workplace that is free of harassment and discrimination by taking proactive measures and providing all employees with non-discrimination and sexual harassment prevention training on an annual basis.
The Company offers paid time off for charitable endeavors. Additionally, the Company supports a number of organizations with annual financial contributions. The Company also continues its commitment to providing a workplace that is free of harassment and discrimination by taking proactive measures and providing all employees with non-discrimination and sexual harassment prevention training on an annual basis.
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 extent to which any such future offsets or a future one-time shortfall special assessment will impact the Company's future deposit insurance expense is currently uncertain. FDIC insurance expense totaled $628,000, $638,000 and $603,000 for the years ended December 31, 2025, 2024 and 2023, respectively.
Building upon these foundations, Cass continues to explore new business opportunities that leverage these competencies and processes. 1 Table of Contents Marketing, Customers and Competition The Company, through its Transportation Information Services business unit, is one of the largest firms in the transportation bill processing and payment industry in the United States based on the total dollars of transportation bills paid and items processed.
Marketing, Customers and Competition The Company, through its Transportation Information Services business unit, is one of the largest firms in the transportation bill processing and payment industry in the United States based on the total dollars of transportation bills paid and items processed.
Cass also processes and pays facility-related invoices, which include electricity and gas as well as waste and telecommunications expenses, and is a provider of telecom expense management solutions. Cass solutions include integrated payments, a B2B payment platform for clients that require an agile fintech partner.
Cass also processes and pays facility-related invoices, which include electricity and gas as well as waste and telecommunications expenses. Cass solutions include integrated payments, a B2B payment platform for clients that require an agile fintech partner. Additionally, the Company offers a church management software solution and an on-line platform to provide generosity services for faith-based and non-profit organizations.
An institution’s assessment rate depends upon the category to which it is assigned and certain other factors. In October 2022, the FDIC adopted a final rule to increase the initial base deposit insurance assessment rate schedules uniformly by 2 basis points beginning with the first quarterly assessment period of 2023.
In October 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning on January 1, 2023.
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.”
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.”
Additionally, the Company offers a church management software solution and an on-line platform to provide generosity services for faith-based and non-profit organizations. The Company’s bank subsidiary, Cass Commercial Bank (the “Bank”), supports the Company’s payment operations. The Bank also provides banking services to its target markets, which include privately held businesses in the St.
The Company’s bank subsidiary, Cass Commercial Bank (the “Bank”), supports the Company’s payment operations. The Bank also provides banking services to its target markets, which include privately held businesses in the St. Louis metropolitan area and restaurant franchises and faith-based ministries within the United States.
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.
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. Under this requirement, the Company is expected to commit resources to support the Bank.
Cass’ core competencies allow it to perform the highest volumes of transaction processing in an integrated, efficient and systematic approach. Not only is Cass able to process the transaction, it is also able to collect the data defining the transaction and effect the financial payment governing its terms.
Not only is Cass able to process the transaction, it is also able to collect the data defining the transaction and effect the financial payment governing its terms. These core competencies, enhanced through shared business processes, drive Cass’ strategic business units. Building upon these foundations, Cass continues to explore new business opportunities that leverage these competencies and processes.
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.
See Item 1A, “Risk Factors” for a further discussion of risks related to cybersecurity. Anti-Money Laundering - The Bank Secrecy Act, as amended by the Patriot Act and Anti-Money Laundering Act of 2020, contains anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities.
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These core competencies, enhanced through shared business processes, drive Cass’ strategic business units.
Added
On April 7, 2025, the Company signed an Asset Purchase Agreement providing for the sale of its telecom expense management and managed mobility solutions business unit ("TEM Business Unit") to Asignet USA Inc ("Asignet") for a purchase price of $18.0 million. The sale closed on June 30, 2025.
Removed
The Company, through its Telecom Information Services business unit, is a leader in the growing telecom expense management market and competes with other companies located throughout the United States in this market.
Added
The Company also signed a Transition Services Agreement with Asignet to provide certain information technology, data ingestion, and payment processing services for a period of time not to exceed 18 months after closing.
Removed
The Company, through its Waste Expense Management business, is one of the largest providers of waste invoice management solutions and competes against small expense management companies along with large national account programs of major haulers.
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Old and costly check processing and delivery mechanisms are replaced with more efficient electronic cash management and funds transfer systems. 1 Table of Contents Cass’ core competencies allow it to perform the highest volumes of transaction processing in an integrated, efficient and systematic approach.
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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.
Added
The Company holds several trademarks for the payment and rating services it provides.
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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.
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If the company does not return to compliance within 180 days, the FRB may require divestiture of the holding company’s depository institutions.
Removed
In December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms (commonly referred to as “Basel IV”).
Added
An institution’s assessment rate depends upon the category to which it is assigned and certain other factors. The FDIC established a plan on September 15, 2020 to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35% within eight years. This plan did not include an increase in the deposit insurance assessment rate.
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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.
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Based on the FDIC’s recent projections, however, the FDIC determined that the DIF reserve ratio is at risk of not reaching the statutory minimum by the statutory deadline of September 30, 2028 without increasing the deposit insurance assessment rates.
Removed
Under the Basel framework, these standards went into effect on January 1, 2023, with an aggregate output floor phasing in through January 1, 2027. Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Company or the Bank.
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In December 2025, based upon the first six quarterly collections of the special assessment and anticipated collections for the seventh quarterly special assessment, the FDIC issued an interim final rule to amend the collection of the special assessment to reduce the eighth quarterly assessment rate from 3.36 basis points to 2.97 basis points.
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The increased assessment is expected to improve the likelihood that the DIF reserve ratio would reach the statutory minimum of 1.35% by the statutory deadline prescribed under the FDIC's amended restoration plan.
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Because the cumulative amount collected through the initial eight quarter special assessment period is projected to equal the FDIC’s loss estimate, the additional two quarter extension of the assessment period was removed.
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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.
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The interim final rule also requires the FDIC to provide an offset to regular quarterly deposit insurance assessments for institutions subject to the special assessment if the aggregate amount collected exceeds estimated losses following the resolution of pending litigation, and again following the termination of any receiverships.
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The Bank Secrecy Act (“BSA”), the USA PATRIOT Act of 2021 (the “USA PATRIOT Act”) and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective Anti-Money Laundering (“AML”) program and to file timely reports such as suspicious activity reports and currency transaction reports that assist government agencies in detecting and preventing money laundering.
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As provided in the special assessment rule, if losses at the termination of any receiverships exceed the amount collected, the FDIC will implement a one-time final shortfall special assessment to ensure the full amount of actual losses is recovered as required by law.
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The USA PATRIOT Act prohibits financial institutions from entering into specified financial transactions and account relationships and requires that the institutions implement customer identification programs and enhance due diligence procedures for certain high-risk customers. Regulatory authorities routinely examine financial institutions for compliance with these obligations.
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The Bank Secrecy Act requires financial institutions such as depository institutions to undertake activities, including maintaining an AML program, verifying the identity of customers, verifying the identity of certain beneficial owners for legal entity customers, monitoring for and reporting suspicious transactions, reporting on cash transactions exceeding specified thresholds, and responding to requests for information by regulatory authorities and law enforcement agencies.
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The federal banking agencies and the Financial Crimes Enforcement Network (“FinCEN”) are authorized to impose significant civil money penalties for violations of those requirements and have recently engaged in coordinated enforcement efforts against banks and other financial services providers with the Department of Justice, Drug Enforcement Administration and Internal Revenue Service.
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The Company is subject to the Bank Secrecy Act and, therefore, is required to implement compliance policies, procedures, and internal controls, provide its employees with AML training, designate an AML compliance officer, and undergo periodic independent auditing and testing to assess the effectiveness of its AML program, among other requirements.
Removed
The Company is also subject to increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control. The Anti-Money Laundering Act of 2020 (“AMLA”) amended the BSA and was intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws.
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The Company has implemented an AML compliance program, including policies, procedures, and internal controls that are designed to comply with these AML requirements. Bank regulators continue to focus their examinations on AML compliance, and the Company will continue to monitor and augment, where necessary, its AML compliance programs.
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Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the U.S.
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The federal banking agencies are required, when reviewing bank and BHC acquisition or merger applications, to take into account the effectiveness of the AML activities of the applicant. The Anti-Money Laundering Act of 2020, enacted as part of the National Defense Authorization Act, requires the U.S.
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Department of the Treasury to promulgate priorities for anti-money laundering and countering the financing of terrorism policy; requires the development of standards for testing technology and internal processes for BSA compliance; expands enforcement- and investigation-related authority, including increasing available sanctions for certain BSA violations; and expands BSA whistleblower incentives and protections.
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Treasury to issue National Anti-Money Laundering and Countering the Financing of Terrorism Priorities, and conduct studies and issue regulations that may, over the next few years, significantly alter some of the due diligence, recordkeeping, and reporting requirements that the Bank Secrecy Act imposes on banks.
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Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance.
Added
The Anti-Money Laundering Act of 2020 also contains provisions that promote increased information-sharing and use of technology and increases penalties for violations of the Bank Secrecy Act and includes whistleblower incentives, both of which could increase the prospect of regulatory enforcement.
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In 2021, Congress passed the Corporate Transparency Act as part of the National Defense Authorization Act, which enacted the most significant overhaul of the BSA and related AML laws since the USA PATRIOT Act.
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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.
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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.
Removed
Many of the requirements included in the AML amendments will require additional rulemakings, reports and other measures, and the impact of these rules will depend on, among other things, rulemaking and implementation guidance. FinCEN proposed three rules to implement changes to the beneficial ownership requirements and related amendments set forth in the Corporate Transparency Act.
Removed
As of the date of this Form 10-K, two of the three have been finalized. The Beneficial Ownership Reporting Rule took effect on January 1, 2024 and requires certain domestic and foreign companies created, or registered to conduct business, in the United States to report beneficial ownership information to FinCEN.
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The Access Rule, effective as of February 20, 2024, sets forth the circumstances under which FinCEN can disclose beneficial ownership information to authorized recipients and how FinCEN and recipients of the data will protect that information.
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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.
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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
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.
Removed
In 2021, the OCC issued proposed principles for climate-related financial risk management for national banks with more than $100 billion in total assets. In 2022, the FDIC and FRB issued their own proposed principles for climate risk management by larger banking organizations.
Removed
Although these risk management principles, if adopted as proposed, would not apply to the Bank directly based upon its current size, the regulators have indicated that all banks, regardless of their size, may have material exposures to climate-related financial and other risks that require prudent management.
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The federal banking agencies are expected to adopt a more formal climate risk management framework for larger banking organizations in the coming months.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA decline in the cost of oil worldwide can have a negative effect on both the number of freight transactions processed and the dollar amount of invoices processed. For example, lower oil prices can cause a significant drop in drilling supplies being transported to fracking operations by domestic railroads and trucks.
Biggest changeFor example, lower oil prices can cause a significant drop in drilling supplies being transported to fracking operations by domestic railroads and trucks. Lower oil prices can also result in lower gas and fuel prices, negatively affecting the dollar amounts of the invoices that Cass processes for its freight and facility customers.
A significant decline in the Company's expected future cash flows, a significant adverse change in the business climate, slower growth rates or a significant and sustained decline in the price of the Company's common stock may necessitate taking charges in the future related to the impairment of goodwill and other intangible assets which could have a material adverse effect on the Company's business, financial condition and results of operations.
A significant decline in the Company's expected future cash flows, a significant adverse change in the business climate, slower growth rates or a significant and sustained decline in the price of the Company's common stock may necessitate taking charges in the future related to the impairment of goodwill and other intangible assets which could have a material adverse effect on the Company's financial condition and results of operations.
Management estimated the allowance balance using relevant available information from internal and external factors, relating to past events, current conditions and reasonable and supportable forecasts based on economic sources, such as Gross Domestic Product (“GDP”). Historical credit loss experience, of both the Company and similar peer banks, provides the basis for the estimation of expected credit losses.
Management estimated the allowance balance using relevant available information relating to internal and external factors, past events, current conditions and reasonable and supportable forecasts based on economic sources, such as Gross Domestic Product (“GDP”). Historical credit loss experience, of both the Company and similar peer banks, provides the basis for the estimation of expected credit losses.
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 investment 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.
In the normal course of business, Cass and its affiliates are routinely subject to examinations and challenges from federal and state tax authorities regarding the amount of taxes due in connection with investments it has made and the businesses in which it is engaged.
In the normal course of business, Cass and its affiliates are routinely subject to examinations and challenges from federal, state, and foreign tax authorities regarding the amount of taxes due in connection with investments it has made and the businesses in which it is engaged.
Rising interest rates have decreased the value of the Company’s available-for-sale securities portfolio, and the Company would realize losses if it were required to sell such securities to meet liquidity needs.
Rising interest rates have decreased the value of the Company’s available-for-sale investment securities portfolio, and the Company would realize losses if it were required to sell such investment securities to meet liquidity needs.
A change in statutes, regulations or regulatory policies applicable to the Company or any of its subsidiaries could have a material, adverse effect on the Company’s business, financial condition and results of operations. See Item 1, “Business—Supervision and Regulation,” and Item 8, Note 2 to the consolidated financial statements included elsewhere in this report for additional information.
A change in statutes, regulations or regulatory policies applicable to the Company or any of its subsidiaries could have a material, adverse effect on the Company’s business, financial condition and results of operations. See Item 1, “Business—Supervision and Regulation,” and Item 8, Note 3 to the consolidated financial statements included elsewhere in this report for additional information.
Although the Company makes significant efforts to maintain the security and integrity of Cass’ information systems and have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that Cass’ security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.
Although the Company makes significant efforts to maintain the security and integrity of Cass’ information systems and has implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that Cass’ security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.
Failure to comply with applicable laws, regulations, policies or guidance could result in enforcement and other legal actions by federal and state authorities, including criminal and civil penalties, the loss of FDIC insurance, revocation of a banking charter, and other regulatory sanctions, as well as reputational damage, any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.
Failure to comply with applicable laws, regulations, policies or guidance could result in enforcement and other legal actions by federal and state authorities, including criminal and civil penalties, the loss of FDIC insurance, revocation of a banking 16 Table of Contents charter, and other regulatory sanctions, as well as reputational damage, any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.
The Company and the Bank are subject to extensive federal and state regulation and supervision, the primary focus of which is to protect customers, depositors, the deposit insurance fund and the safety and soundness of the banking system as a whole, and not shareholders.
The Company is subject to extensive federal and state regulation and supervision, the primary focus of which is to protect customers, depositors, the deposit insurance fund and the safety and soundness of the banking system as a whole, and not shareholders.
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.
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.
More information on Cass’ critical accounting policies is contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” From time to time, the regulatory agencies, the Financial Accounting Standards Board (“FASB”), and other authoritative bodies change the financial accounting and reporting standards that govern the preparation of the Company’s financial statements.
More 17 Table of Contents information on Cass’ critical accounting policies is contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” From time to time, the regulatory agencies, the Financial Accounting Standards Board (“FASB”), and other authoritative bodies change the financial accounting and reporting standards that govern the preparation of the Company’s financial statements.
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.
A deterioration in economic conditions, including any recession, affecting borrowers and securities issuers; inflation; rising interest rates; new information regarding existing loans, credit commitments and securities holdings; global pandemics; geopolitical and economic conditions; 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, investment securities and off-balance sheet credit exposures.
The occurrence of any of the foregoing could have a material adverse effect on Cass’ business, financial condition and results of operations. Cass must respond to rapid technological changes and these changes may be more difficult or expensive than anticipated.
The occurrence of any of the foregoing could have a material adverse effect on Cass’ business, financial condition and results of operations. 14 Table of Contents Cass must respond to rapid technological changes and these changes may be more difficult or expensive than anticipated.
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.
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.
General Risk Factors Cass’ stock price can become volatile and fluctuate widely in response to a variety of factors.
Cass’ stock price can become volatile and fluctuate widely in response to a variety of factors.
Cass has identified one accounting policy as being “critical” to the presentation of its financial condition and results of operations because it requires management to make particularly subjective and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions.
Cass has identified one accounting policy around the calculation of the allowance for credit losses as being “critical” to the presentation of its financial condition and results of operations because it requires management to make particularly subjective and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions.
Further, 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.
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. Finally, Cass’ ability to adopt these technologies can also be inhibited by intellectual property rights of third parties.
Complying with these more stringent capital requirements could result in management modifying its business strategy and could limit the Company’s ability to make distributions, including paying dividends, or buying back shares. The Company may also need to raise additional capital in the future to provide it with sufficient capital resources and liquidity to meet commitments and business needs.
Compliance with regulatory capital requirements could result in management modifying its business strategy and could limit the Company’s ability to make distributions, including paying dividends, or buying back shares. The Company may also need to raise additional capital in the future to provide it with sufficient capital resources and liquidity to meet commitments and business needs.
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.
Such events could disrupt the Company's operations or those of its customers, affect the stability of the Company’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.
This regulatory structure and heightened focus gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to capital levels, the timing and amount of dividend payments, the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes.
Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to capital levels, the timing and amount of dividend payments, the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes.
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.
Due in part to a higher market interest rate environment in recent years, the Company's net interest margin has increased to 3.83% in 2025 from 3.42% in 2024, 3.25% in 2023 and 2.74% in 2022, therefore increasing net interest income.
The Company seeks to ensure funding needs are met by maintaining a level of liquidity through asset and liability management. If the Company becomes unable to obtain funds when needed, it could have a material adverse effect on its business, financial condition, and results of operations.
The Company seeks to ensure funding needs are met by maintaining a level of liquidity through asset and liability management. If the Company becomes unable to obtain funds when needed, it could have a material adverse effect on its business, financial condition, and results of operations. Management’s ability to retain key officers and employees may change.
Failure to successfully manage these risks in the development and implementation of new products or services, and failure to integrate such new products and services into our existing system of internal controls, could have a material adverse effect on our business, financial condition and results of operations. The Company and the Bank are subject to liquidity risk.
Failure to successfully manage these risks in the development and implementation of new products or services, and failure to integrate such new products and services into 15 Table of Contents the Company's existing system of internal controls, could have a material adverse effect on its business, financial condition and results of operations. The Company is subject to liquidity risk.
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 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.
As a result of inflationary pressures and the resulting rapid increases in interest rates over the last year, the fair value of previously issued government and other fixed income securities has declined significantly, resulting in unrealized losses.
As a result of inflationary pressures and resulting higher interest rates, the fair value of previously issued government and other fixed income investment securities has declined significantly, resulting in unrealized losses.
The introduction, withdrawal, success and timing of business initiatives and strategies, including, but not limited to, the expansion of payment and processing activities to new markets, the expansion of products and services to existing markets and opening of new bank branches, may be less successful or may be different than anticipated. Such a result could adversely affect Cass’ business.
The introduction, withdrawal, success and timing of business initiatives and strategies, including, but not limited to, the expansion of payment and processing activities to new markets, and the expansion of products and services to existing markets, may be less successful or may be different than anticipated.
There may be only a limited number of persons with the requisite skills to serve in these positions, and it may be increasingly difficult for the Company to hire personnel over time.
Competition for qualified personnel is intense, and the Company cannot ensure success in attracting or retaining qualified personnel. There may be only a limited number of persons with the requisite skills to serve in these positions, and it may be increasingly difficult for the Company to hire personnel over time.
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.
If competitors introduce new products and services embodying new technologies, such as those related to artificial intelligence, more quickly or more successfully than the Company, or if new industry standards and practices emerge, the Company’s existing product and service offerings, technology and systems may become obsolete.
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.
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.
As discussed in greater detail in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” a decline in market interest rates would be expected to have a negative impact on the Company’s net interest income.
Notwithstanding these recent increases, as discussed in greater detail in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” a decline in market interest rates would be expected to have a negative impact on the Company’s net interest income. In certain circumstances, Cass remits payment of invoices prior to receiving funds from its customers.
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.
General Risks The value of the Company's goodwill and other intangible assets may decline in the future. As of December 31, 2025, the Company had $19.9 million of goodwill and other intangible assets.
Unfavorable developments concerning customer credit quality could affect Cass’ financial results. Although the Company regularly reviews credit exposure related to its customers and various industry sectors in which it has business relationships, default risk may arise from events or circumstances that are difficult to detect or foresee.
As such, Cass could experience losses if such funds are not received from customers after payment is remitted. Although the Company regularly reviews credit exposure related to its customers and various industry sectors in which it has business relationships, default risk may arise from events or circumstances that are difficult to detect or foresee.
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.
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.
Any failure, interruption, or breach in security of these systems would cause Cass to be unable to process transactions for its clients, resulting in decreased revenues. The Company also relies on electronic communications and information systems to store sensitive customer data.
In the ordinary course of business, the Company depends on the reliable operation of its computer operations and network connections from its clients to its systems. Any failure, interruption, or breach in security of these systems would cause Cass to be unable to process transactions for its clients, resulting in decreased revenues.
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.
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. The Company’s allowance for credit losses (“ACL”) is subject to continuing evaluation and may be insufficient.
The occurrence of any such event in the future could have a material adverse effect on the Company’s business, which, in turn, could have a material adverse effect on the Company’s financial condition and results of operations. Climate change could have a material negative impact on the Company and its clients.
The occurrence of any such event in the future could have a material adverse effect on the Company’s business, which, in turn, could have a material adverse effect on the Company’s financial condition and results of operations. Credit and Interest Rate Risks Unfavorable developments concerning customer credit quality could affect Cass’ financial results.
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Provision and Allowance for Credit Losses and Unfunded Commitments” and Item 8, “Financial Statements and Supplementary Data—Note 1” for additional information. Competitive product and pricing pressure within Cass’ markets may change.
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Provision and Allowance for Credit Losses on Loans and Allowance for Unfunded Commitments” and Item 8, “Financial Statements and Supplementary Data—Note 1” for additional information. 11 Table of Contents Fluctuations in interest rates could affect Cass’ net interest income and balance sheet.
New risks may emerge at any time, and Cass cannot predict such risks or estimate the extent to which they may affect the Company’s financial performance.
New risks may emerge at any time, and Cass cannot predict such risks or estimate the extent to which they may affect the Company’s financial performance. This section describes the Company’s beliefs regarding the factors that could materially and adversely affect the Company and its business, financial condition and results of operations in the future.
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.
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. Criminals continuously adapt their methods to circumvent existing safeguards, and emerging technologies such as artificial intelligence may further enhance their ability to perpetrate fraud.
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.
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. Competitive product and pricing pressure within Cass’ markets may change.
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 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 (including with AI experience), marketing, sales, and support personnel.
Further, to access the Company’s products and services, Cass’ customers may use computers and mobile devices that are beyond the Company’s security control systems.
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. Further, to access the Company’s products and services, Cass’ customers may use computers and mobile devices that are beyond the Company’s security control systems.
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.
The Company also relies on electronic communications and information systems to store sensitive customer data. Any failure, interruption, breach in security or loss of data, whatever the cause, could reduce client satisfaction with the Company’s products and services, cause reputational harm, and harm Cass’ financial results.
Lower oil prices can also result in lower gas and fuel prices, negatively affecting the dollar amounts of the invoices that Cass processes for its freight and shipping customers. A decline in oil prices could have an adverse effect on the Company’s revenues and could significantly impact its results of operations.
In addition, a decline in the price of electricity would also result in lower dollars processed for facility customers. As such, a decline in oil and overall energy prices could have an adverse effect on the Company’s revenues in the form of net interest income and financial fees, and significantly impact its results of operations.
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.
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. Business Operations and Strategic Risk Cass uses AI in connection with its business and operations, which exposes the Company to inherent risks that may expose it to material harm.
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.
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 Risks from fluctuating conditions in the financial markets and economic and political conditions generally affect the Company The Company's success depends, to a certain extent, upon local, national and global economic and political conditions, as well as governmental monetary policies.
Climate change exposes Cass to physical risk as its effects may lead to more frequent and more extreme weather events, such as prolonged droughts or flooding, tornados, hurricanes, wildfires and extreme seasonal weather; and longer-term shifts, such as increasing average temperatures, ozone depletion and rising sea levels.
The physical risks of climate change include discrete events, such as flooding, hurricanes, and wildfires, and longer-term shifts in climate patterns, such as extreme heat, sea level rise, and more frequent and prolonged drought.
Removed
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.
Added
All references to past events are intended to be examples only rather than a complete listing or a representation regarding whether such events have occurred in the past or whether they are likely to occur in the future.
Removed
As a result, customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations.
Added
A favorable business environment is generally characterized by, among other factors, economic growth, efficient capital markets, low inflation, low unemployment, high business and investor confidence, and strong business earnings.
Removed
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.
Added
Unfavorable or uncertain economic and market conditions can be caused by a decline in economic growth both in the U.S. and internationally; declines in business activity or investor or business confidence; limitations on the availability of or increases in the cost of credit and capital; increases in inflation or interest rates; high unemployment; oil price volatility; natural disasters; trade policies and tariffs; or a combination of these or other factors.
Removed
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.
Added
In addition, financial markets and global supply chains may be adversely affected by the current or anticipated impact of global wars/military conflicts, terrorism or other geopolitical events. Current economic conditions are being heavily impacted by recent inflationary conditions and higher interest rates, the effects of which may impact the Company's profitability by negatively impacting its fixed costs and expenses.
Removed
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.
Added
Economic and inflationary pressure on consumers and uncertainty regarding economic improvement could result in changes in consumer and business spending, borrowing and savings habits. Such conditions could have a material adverse effect on the credit quality of the Company's loans and its business, financial condition and results of operations.
Removed
Conditions such as inflation, recession, unemployment, volatile interest rates, tight money supply, real estate values, international conflicts, global pandemics, natural disasters, risks related to climate change, and other factors outside of Cass’ control may adversely affect the Company. Economic downturns could result in the delinquency of outstanding loans, which could have a material adverse impact on Cass’ earnings.
Added
Federal budget deficit concerns and the potential for political conflict over legislation to fund U.S. government operations and raise the U.S. government's debt limit may increase the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession in the United States.
Removed
In certain circumstances, Cass remits payment of invoices prior to receiving funds from its customers. As such, Cass could experience losses if such funds are not received from customers after payment is remitted.
Added
Many of the Company's investment securities are issued by the U.S. government and government agencies and sponsored entities.
Removed
Operations of the Company’s customer base are impacted by macro-economic factors such as a strong dollar and/or volatility in commodity prices. A reduction in its customers’ operations could have a material adverse effect on Cass’ results of operations.
Added
As a result of uncertain domestic political conditions, including potential future federal government shutdowns, the possibility of the federal government defaulting on its obligations for a period of time due to debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government pose liquidity risks.
Removed
Business Operations and Strategic Risk Operational difficulties or cybersecurity problems could damage Cass’ reputation and business. In the ordinary course of business, the Company depends on the reliable operation of its computer operations and network connections from its clients to its systems.
Added
Most recently, in connection with successive failures by the U.S. government to reverse the trend of large annual fiscal deficits and growing interest costs, Moody's lowered its long-term issuer credit rating on the U.S. from Aaa to Aa1.
Removed
The Company makes certain projections as a basis for developing plans and strategies for its payment processing and banking products.
Added
A further downgrade, or downgrades by other rating agencies, as well as sovereign debt issues facing the governments of 10 Table of Contents other countries, could have a material adverse impact on financial markets and economic conditions in the U.S. and worldwide.
Removed
The Company could experience an unexpected inability to obtain needed liquidity which could adversely affect the Company's business, profitability, and viability as a going concern. Liquidity measures the ability to meet current and future cash flow needs as they become due.
Added
The Company uses AI in connection with its business and operations, including through the models it employs.
Removed
The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits, and to take advantage of interest rate market opportunities and is essential to a financial institution’s business.
Added
AI is complex and rapidly evolving, and the introduction of AI, a relatively new and emerging technology in the early stages of commercial use, into the Company's business and operations may subject it to new or heightened legal, regulatory, ethical, operational, reputational, or other risks.
Removed
The ability of a financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets, and its access to alternative sources of funds.
Added
The models underlying AI may be incorrectly or inadequately designed or implemented and trained on, or otherwise use, data or algorithms that are, and output that may be, incomplete, inadequate, misleading, biased, poor-quality or otherwise flawed, any of which may not be easily detectable.
Removed
In addition, since the global financial crisis, financial institutions generally have been subject to increased scrutiny from regulatory authorities, with an increased focus on risk management and consumer compliance.
Added
Further, inappropriate or controversial data practices by developers and end-users or other factors adversely affecting public opinion of AI could impair the acceptance of AI, including those incorporated in the Company's business and operations.
Removed
Fully phased in, the Basel III Capital rules implemented stricter capital requirements and leverage limits and methods for calculating risk-weighted assets, meaning the Company is required to hold more capital against such assets.
Added
If the AI that Cass uses is deficient, inaccurate or controversial, the Company could incur operational inefficiencies, competitive harm, legal and regulatory action, brand or reputational harm, or other adverse impacts on its business and financial results.
Removed
Recently, federal and state taxing authorities have become increasingly aggressive in challenging tax positions taken by financial institutions. These tax positions may relate to tax compliance, sales and use, franchise, gross receipts, payroll, property and income tax issues, including tax base, apportionment and tax credit planning.
Added
Further, there can be no assurance that the Company's use of AI will be successful in enhancing its business or operations, be 12 Table of Contents successfully adopted and deployed by its colleague base, or otherwise result in its intended outcomes, and the Company's competitors may incorporate AI into their businesses or operations more quickly or more successfully than Cass.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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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.
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 frequently when necessary.
The IT audit and compliance analyst tracks remediation efforts, manages the Company’s third party risk program and works with internal and external auditors on all IT compliance activities. Members of the information security team hold cybersecurity certifications, such as a Certified Information Systems Security Professional ("CISSP") or Certified Information Security Manager certifications.
The IT audit and compliance analyst tracks remediation efforts, manages the Company’s third party risk program and works with internal and external auditors on all IT compliance activities. Members of the information security team hold cybersecurity certifications, such as the Certified Information Systems Security Professional ("CISSP") or Certified Information Security Manager certifications.
The CISO is supported by an information security team, made up of two security analysts and one IT audit and compliance analyst. The security analysts monitor the Company’s security solutions and security event logs and responds to incidents and events when they occur.
The CISO is supported by an information security team, made up of two security analysts and one IT audit and compliance analyst. The security analysts monitor the Company’s security solutions and security event logs and respond to incidents and events when they occur.
The CIO oversees all IT departments within the Company, including security and risk, and is the primary liaison between IT and the Board of Directors. Both the CISO and CIO have extensive experience assessing and managing cybersecurity programs and cybersecurity risk.
The CIO oversees all IT departments within the Company, including security and risk, and is the primary liaison between IT and the Board of Directors. 19 Table of Contents Both the CISO and CIO have extensive experience assessing and managing cybersecurity programs and cybersecurity risk.
As part of this function and at the direction of the CISO, the Executive IT Council is charged with approving and providing oversight of the IT solutions that enhance the Company’s security posture.
As part of this function and at the direction of the CISO, the ERMC is charged with approving and providing oversight of the IT solutions that enhance the Company’s security posture.
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.
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.
ITEM 1C. CYBERSECURITY Managing cybersecurity risk within Cass is an ongoing, multifaceted process aimed at safeguarding digital assets and sensitive information. Led by the Company’s Chief Information Security Officer (“CISO”) and overseen by the Executive IT Council, the Company has a dedicated team of security professionals to implement the Company’s information security processes.
ITEM 1C. CYBERSECURITY Managing cybersecurity risk within Cass is an ongoing, multifaceted process aimed at safeguarding digital assets and sensitive information. Led by the Company’s Chief Information Security Officer (“CISO”) and overseen by the Enterprise Risk Management Committee ("ERMC"), the Company has a dedicated team of security professionals to implement the Company’s information security processes.
As more fully described in “Governance” below, the CISO and CIO regularly report the Executive IT Council’s findings to the Audit and Risk Committee of the Board, and to the full Board, in an effort to provide a collaborative and multi-point cybersecurity program.
As more fully described in “Governance” 18 Table of Contents below, the CISO and CIO regularly report the ERMC's findings to the Audit and Risk Committee of the Board, and to the full Board, in an effort to provide a collaborative and multi-point cybersecurity program.
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.
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.
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.
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.
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.
The CISO and CIO provide monthly updates to the ERMC on security incidents, compliance and patching metrics, and security and AI related industry updates that might affect the Company’s business. The ERMC approves all security related project expenditures, and all members are a part of the Company’s incident response team.
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The Executive IT Council is comprised of the CEO, CFO, Chief information Officer (“CIO”), CISO, and all heads of business units that serve together to manage and oversee the Company’s IT program as a whole.
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The ERMC is comprised of the CEO, CFO, Chief Information Officer (“CIO”), CISO, President and Chief Operating Officer of Cass Commercial Bank, Vice President and Chief Operational Risk Officer, Chief HR Officer and General Counsel.
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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.
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AI related risks are considered as part of the overall cybersecurity program. The Company maintains an AI governance framework designed to support the responsible development, deployment, and use of AI technologies and to manage associated cybersecurity and operational risks.
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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.
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The AI Governance Committee, which is comprised of the CIO, CISO, General Counsel, Chief HR Officer, Vice President and Chief Operational Risk Officer, Vice President of Internal Audit and line of business representatives, oversees the policies, standards, and risk assessment processes designed to manage these risks.
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These reports include updates on the activities of the ERMC. Changes to the Company’s information security policies and programs are approved by the Audit and Risk Committee.

Item 2. Properties

Properties — owned and leased real estate

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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.
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.
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.
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 Wellington, Kansas, Jacksonville, Florida, and Brighton, Michigan.
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.
Management believes that these facilities are suitable and adequate for the Company’s operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAFETY DISCLOSURES Not applicable. 21 Table of Contents PART II
Biggest changeMINE SAFETY DISCLOSURES Not applicable. 20 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring 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.
Biggest changeDuring the three months ended December 31, 2025, 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, 2025 – October 31, 2025 36,039 $ 40.20 36,039 304,374 November 1, 2025 – November 30, 2025 128,911 40.81 128,911 911,470 December 1, 2025 – December 31, 2025 36,500 43.27 36,500 874,970 Total 201,450 $ 41.15 201,450 874,970 (1) During the quarter ended December 31, 2025, there were 201,450 shares repurchased pursuant to the Company's publicly announced treasury stock buyback programs and no shares transferred from employees in satisfaction of tax withholding obligations upon the vesting of restricted stock.
The graph assumes $100 was invested on December 31, 2019, with dividends reinvested. Returns are based on period end prices. ITEM 6. RESERVED
The graph assumes $100 was invested on December 31, 2020, with dividends reinvested. Returns are based on period end prices. ITEM 6. RESERVED
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.
The Company maintains a treasury stock buyback program approved by the Board of Directors in November 2025 pursuant to which, the Board of Directors has authorized the repurchase of up to 1,000,000 shares of the Company’s common stock and has no expiration date.
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.
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 27, 2026, there were approximately 3,833 holders of record of the Company’s common stock.
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.
The Company has repurchased 125,030 shares under this treasury stock buyback program and therefore has 874,970 shares remaining for repurchase. The Company repurchased a total of 617,415 shares at an aggregate cost of $26.0 million during the year ended December 31, 2025 and 167,455 shares at an aggregate cost of $7.2 million during the year ended December 31, 2024.
The program provides that the Company may repurchase up to an aggregate of 500,000 shares of common stock and has no expiration date. 22 Table of Contents Performance Quoted on The Nasdaq Stock Market for the Last Five Fiscal Years The following graph compares the cumulative total returns over the last five fiscal years of a hypothetical investment of $100 in shares of common stock of the Company with a hypothetical investment of $100 in The Nasdaq Stock Market (“Nasdaq”), the index of Nasdaq computer and data processing stocks, and the index of Nasdaq bank stocks.
During the quarter ended December 31, 2025, the Company repurchased 125,030 shares under the November 6, 2025 authorization and 76,420 shares under the July 15, 2025 authorization. 21 Table of Contents Performance Quoted on The Nasdaq Stock Market for the Last Five Fiscal Years The following graph compares the cumulative total returns over the last five fiscal years of a hypothetical investment of $100 in shares of common stock of the Company with a hypothetical investment of $100 in The Nasdaq Stock Market (“Nasdaq”), the index of Nasdaq computer and data processing stocks, and the index of Nasdaq bank stocks.
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(2) The Board of Directors authorized the treasury stock buyback program on October 17, 2023, announced by the Company on October 19, 2023.
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Repurchases may be made through a variety of methods, which could include open market purchases, privately negotiated transactions, or otherwise in accordance with applicable federal securities laws, including repurchase plans that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.
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(2) On July 15, 2025, the Board of Directors authorized the repurchase of up to 500,000 shares of the Company's common stock with no expiration date. On November 6, 2025, the Board of Directors authorized the repurchase of up to 1,000,000 shares of the Company’s common stock with no expiration date, replacing the July 15, 2025 authorization.

Item 7. Management's Discussion & Analysis

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

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Biggest change(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.
Biggest changeSee Note 2 and Note 20 to the Company's consolidated financial statements for further discussion regarding discontinued operations and subsequent events associated with discontinued operations. 25 Table of Contents Summary of Results (In thousands except per share data) For the Years Ended December 31, % Change 2025 2024 2023 2025 v. 2024 2024 v. 2023 Processing fees $ 66,129 $ 66,061 $ 59,670 0.1 % 10.7 % Financial fees 40,398 42,584 45,339 (5.1) % (6.1) % Net interest income 81,240 67,787 66,494 19.8 % 1.9 % Provision for (release of) credit losses 348 447 (550) (22.1) % (181.3) % Loss on sale of investment securities (3,534) (45) (173) N/M (74.0) % Other 6,865 5,247 5,089 30.8 % 3.1 % Total revenues 190,750 181,187 176,969 5.3 % 2.4 % Operating expense 151,991 157,742 142,505 (3.6) % 10.7 % Income before income tax expense 38,759 23,445 34,464 65.3 % (32.0) % Income tax expense 7,647 4,887 6,574 56.5 % (25.7) % Net income from continuing operations $ 31,112 $ 18,558 $ 27,890 67.6 % (33.5) % Income from discontinued operations, net of tax $ 4,004 $ 610 $ 2,169 556.4 % (71.9) % Net income $ 35,116 $ 19,168 $ 30,059 83.2 % (36.2) % Diluted earnings per share from continuing operations $ 2.31 $ 1.35 $ 2.02 71.1 % (33.2) % Diluted earnings per share from discontinued operations $ 0.30 $ 0.04 $ 0.16 650.0 % (75.0) % Diluted earnings per share $ 2.61 $ 1.39 $ 2.18 87.8 % (36.2) % Return on average assets 1.43 % 0.82 % 1.24 % — — Return on average equity 14.98 % 8.37 % 14.24 % — — The Company recorded revenue of $190.8 million in 2025, up 5.3% from the prior year, largely due to an increase in net interest income, partially offset by a decrease in financial fees and a loss on sale of investment securities.
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.
The stock repurchase program may be modified or discontinued at any time. Impact of Inflation Inflation could have the impact of increasing the Company's 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.
Industry-wide factors that impact the Company include the willingness of large corporations to outsource key business functions such as freight, energy, telecommunication and environmental payment and audit.
Industry-wide factors that impact the Company include the willingness of large corporations to outsource key business functions such as freight, energy, and environmental payment and audit.
Collateral held varies, but is generally accounts receivable, inventory, residential or income-producing commercial property or equipment. In the event of nonperformance, the Company or its subsidiaries may obtain and liquidate the collateral to recover amounts paid under its guarantees on these financial instruments. See Note 14 "Disclosures about Fair Value of Financial Instruments" for more information.
Collateral held varies, but is generally accounts receivable, inventory, residential or income-producing commercial property or equipment. In the event of nonperformance, the Company or its subsidiaries may obtain and liquidate the collateral to recover amounts paid under its guarantees on these financial instruments. See Note 15 "Disclosures about Fair Value of Financial Instruments" for more information.
The Company has no concentrations of loans exceeding 10% of total loans, which are not otherwise disclosed in the loan portfolio composition table and as are discussed in Item 8, Note 4, of this report. The Company's primary market niche for banking services is privately held businesses, franchise restaurants, and faith-based ministries.
The Company has no concentrations of loans exceeding 10% of total loans, which are not otherwise disclosed in the loan portfolio composition table and as are discussed in Item 8, Note 5, of this report. The Company's primary market niche for banking services is privately held businesses, franchise restaurants, and faith-based ministries.
Lower levels of energy costs will tend to decrease transportation and energy invoice amounts resulting in a corresponding decrease in accounts and drafts payable. Decreases in accounts and drafts payable generate lower interest income and reduce liquidity. New business opportunities are an important component of the Company’s strategy to grow earnings and improve performance.
Lower levels of energy costs will tend to decrease transportation and facility expense invoice amounts resulting in a corresponding decrease in accounts and drafts payable. Decreases in accounts and drafts payable generate lower interest income and reduce liquidity. New business opportunities are an important component of the Company’s strategy to grow earnings and improve performance.
Further decreases in the Federal Funds rate resulting from softening inflation or other reasons could negatively impact the Company's net interest margin and income in 2025. Critical Accounting Policies The Company has prepared the consolidated financial statements in this report in accordance with the FASB Accounting Standards Codification (“ASC”).
Further decreases in the Federal Funds rate resulting from softening inflation or other reasons could negatively impact the Company's net interest margin and income in 2026. Critical Accounting Policies The Company has prepared the consolidated financial statements in this report in accordance with the FASB Accounting Standards Codification (“ASC”).
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.
There were no amounts outstanding at December 31, 2025 and 2024 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.
(4) For purposes of these computations, yields on investment securities are computed as interest income divided by the average amortized cost of the investments. 28 Table of Contents Analysis of Net Interest Income Changes The following table presents the changes in interest income and expense between years due to changes in volume and interest rates.
(4) For purposes of these computations, yields on investment securities are computed as interest income divided by the average amortized cost of the investments. 29 Table of Contents Analysis of Net Interest Income Changes The following table presents the changes in interest income and expense between years due to changes in volume and interest rates.
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.
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 2025 compared to 2024.
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.
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 2025, the Bank paid dividends of $20.0 million to the Company.
For loans that are individually 30 Table of Contents evaluated, the Company uses two impairment measurement methods: 1) the present value of expected future cash flows and 2) collateral values. Federal and state regulatory agencies review the Company’s methodology for maintaining the ACL.
For loans that are individually evaluated, the Company uses two impairment measurement methods: 1) the present value of expected future cash flows and 2) collateral values. 31 Table of Contents Federal and state regulatory agencies review the Company’s methodology for maintaining the ACL.
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.
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 5 "Loans," as well as the “Provision and Allowance for Credit Losses and Allowance for Unfunded Commitments” section of this report.
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.
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 2023 and 2024.
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.
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.” 39 Table of Contents 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.
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.
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.
Net cash flows from investing and financing activities fluctuate greatly as the Company actively manages its investment and loan portfolios and customer activity influences changes in deposit and accounts and drafts payable balances. Further analysis of the changes in these account balances is discussed earlier in this report.
Net cash flows from investing and financing activities fluctuate greatly as the Company actively manages its 37 Table of Contents investment and loan portfolios and customer activity influences changes in deposit and accounts and drafts payable balances. Further analysis of the changes in these account balances is discussed earlier in this report.
It is the policy of the Company to continually monitor its loan portfolio and to discontinue the accrual of interest on any loan for which collection is not probable. Subsequent payments received on such loans are applied to principal if collection of principal is not probable; otherwise, these receipts are recorded as interest income.
It is the policy of the Company to continually monitor its loan portfolio and to discontinue the accrual of interest on any loan for which collection is not probable. Subsequent payments received on such loans are applied to principal if collection 33 Table of Contents of principal is not probable; otherwise, these receipts are recorded as interest income.
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.
The Company did not have any other interest-earning assets which would have been included in nonaccrual, past due or restructured loans if such assets were loans.
The benefits that can be achieved by outsourcing transaction processing, and the management information generated by Cass’ systems can be influenced by factors such as the competitive pressures within industries to improve profitability, the general level of transportation costs, deregulation of energy costs, and consolidation of telecommunication providers.
The benefits that can be achieved by outsourcing transaction processing, and the management information generated by Cass’ systems can be influenced by factors such as the competitive pressures within industries to improve profitability, the general level of transportation costs and deregulation of energy costs.
Capital expenditures in 2025 are expected to primarily consist of purchases of equipment and software related to the payment and information processing services business.
Capital expenditures in 2026 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, 2024, an allowance for unfunded commitments of $273,000 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, 2025, an allowance for unfunded commitments of $419,000 had been recorded.
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.
Those that could significantly impact the Company include the general levels of interest rates, business activity, freight rates, 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.
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 amount of the provision for 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 2025 and 2024. The ACL was $13.6 million at December 31, 2025 compared to $13.4 million at December 31, 2024.
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.
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 2026 should range from $4.0 million to $6.0 million.
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 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.
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.
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 $26.0 million in share repurchases during 2025.
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 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 2025, 2024 and 2023 were $37.4 million, $38.9 million, and $36.9 million, respectively. Net income plus depreciation and amortization accounts for most of the operating cash provided.
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.
As of December 31, 2025, unappropriated retained earnings of $31.1 million were available at the Bank for the declaration of dividends to the Company without prior approval from regulatory authorities.
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.
For discussion related to the results of operations and changes in financial condition for 2024 compared to 2023 refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2024 Annual Report on Form 10-K filed with the SEC on March 5, 2025.
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 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.
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.
At December 31, 2025, cash and cash equivalents represented 15.1% of total assets and were 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.
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.
As of December 31, 2025, the Bank had secured lines of credit with the Federal Home Loan Bank of $239.9 million collateralized by commercial mortgage loans. At December 31, 2025, the Company had lines of credit from three banks up to a maximum of $225.0 million in aggregate collateralized by state and political subdivision securities.
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.
Of the total portfolio, 0.9% mature in one year or less, 9.2% mature after one year through five years and 89.9% mature after five years. As of December 31, 2025, 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.
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.
At December 31, 2025, the balance of loan commitments, standby and commercial letters of credit were $172.7 million, $12.8 million and $782,000, respectively. Since some of the financial instruments may expire without being drawn upon, the total amounts do not necessarily represent future cash requirements.
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.
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.
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.
The Company maintains a treasury stock buyback program approved by the Board of Directors in November 2025 pursuant to which the Board of Directors has authorized the repurchase of up to 1,000,000 shares of the Company’s common stock and has no expiration date. A total of 874,970 shares remain under the buyback program at December 31, 2025.
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 loan portfolio was $1.06 billion, representing 40.7% of the Company's total assets as of December 31, 2025 and generated $62.3 million in interest income during the year ended December 31, 2025. 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, 2025.
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.
Due to the Company’s payment processing cycle, 36 Table of Contents 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 increased $150.3 million, or 14.9%, to $1.16 billion during 2025.
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.
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.
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.
Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $23.7 million, or 7.3% in 2025 compared to 2024. The increase is primarily a result of the increase in average funding sources, partially offset by the increase in average loans and average investment securities.
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.
Net income plus amortization of intangible assets, net amortization of premium/discount on investment securities and depreciation of premises and equipment was $43.3 million and $28.5 million for the years ended December 31, 2025 and December 31, 2024, respectively, an increase of $14.8 million year over year.
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.
The increase was primarily a result of net income of $35.1 million and the decrease in accumulated other comprehensive loss of $18.4 million, partially offset by the payment of cash dividends of $16.5 million, and the repurchase of treasury shares of $26.0 million.
These agencies may require the Company to adjust the ACL based on their judgments and interpretations about information available to them at the time of their examinations. The following schedule summarizes activity in the ACL and the allocation of the allowance to the Company’s loan categories.
These agencies may require the Company to adjust the ACL based on their judgments and interpretations about information available to them at the time of their examinations.
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.
The Company repurchased a total of 617,415 shares at an aggregate cost of $26.0 million during the year ended December 31, 2025 and 167,455 shares at an aggregate cost of $7.2 million during the year ended December 31, 2024.
Summary 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 following schedule summarizes activity in the ACL and the allocation of the allowance to the Company’s loan categories. 32 Table of Contents Summary of Credit Loss Experience (In thousands) December 31, 2025 2024 2023 2022 2021 Allowance at beginning of year $ 13,395 $ 13,089 $ 13,539 $ 12,041 $ 11,944 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 Real estate (commercial and faith-based): Mortgage — — — — 15 Construction — — — — — Other — — — — — Total recoveries of loans previously charged-off — — — 13 27 Net loans recovered — — — (13) (27) Provision for (release of) credit losses 202 306 (450) 1,485 70 Allowance at end of year $ 13,597 $ 13,395 $ 13,089 $ 13,539 $ 12,041 Allowance for unfunded commitments at beginning of year $ 273 $ 132 $ 232 $ 367 $ 567 Provision for (release of) credit losses 146 141 (100) (135) (200) Allowance for unfunded commitments at end of year 419 273 132 232 367 Loans outstanding: Average $ 1,103,067 $ 1,048,732 $ 1,055,668 $ 992,004 $ 887,662 December 31 1,061,217 1,081,989 1,014,318 1,082,906 960,567 Ratio of allowance for credit losses to loans outstanding at December 31 1.28 % 1.24 % 1.29 % 1.25 % 1.25 % Ratio of net recoveries to average loans outstanding — % — % — % — % — % Allocation of allowance for credit losses (1) : Commercial and industrial $ 5,833 $ 5,897 $ 5,412 $ 5,977 $ 5,035 Real estate (commercial and faith-based): Mortgage 7,435 7,281 7,569 7,378 6,714 Construction 329 217 108 184 292 Total $ 13,597 $ 13,395 $ 13,089 $ 13,539 $ 12,041 Percentage of categories to total loans: Commercial and industrial 52.1 % 51.7 % 49.1 % 51.9 % 47.6 % Real estate (commercial and faith-based): Mortgage 43.3 45.1 49.3 45.7 48.3 Construction 4.6 3.2 1.6 2.4 4.1 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.
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.
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.
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.
There was no interest income recognized on nonaccrual loans for the years ended 2025 and 2024. There were three nonaccrual loans with a balance of $7.0 million at December 31, 2025 and none at December 31, 2024. There were no foreclosed assets at December 31, 2025 or December 31, 2024.
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 Company posted a 1.43% return on average assets and 14.98% return on average equity in 2025. Further detail about the components of revenue and expenses are explained in the sections following. 26 Table of Contents Fee Revenue and Other Income The Company’s fee revenue is derived mainly from transportation and facility payment and processing fees.
(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%.
(2) Interest income on loans includes net loan fees of $744,000, $477,000, and $686,000 for 2025, 2024 and 2023, 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, $1.0 million, and $1.1 million for 2025, 2024, and 2023, respectively.
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.
Government agencies or sponsored enterprises 22,969 34,996 39,222 Treasury securities — — 108,721 Total investments $ 770,772 $ 528,021 $ 627,117 Investment Securities by Maturity (At December 31, 2025) (In thousands) Within 1 Year Over 1 to 5 Years Over 5 to 10 Years Over 10 Years Yield (1) State and political subdivisions $ 5,753 $ 48,402 $ 90,494 $ 95,562 3.37 % Mortgage-backed securities issued or guaranteed by U.S.
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%.
The following table summarizes the changes in tax-equivalent net interest income and related factors: (In thousands) December 31, % Change 2025 2024 2023 2025 v. 2024 2024 v. 2023 Average earning assets $ 2,148,402 $ 2,011,554 $ 2,076,951 6.8 % (3.1) % Average interest-bearing liabilities $ 617,281 $ 634,592 $ 573,308 (2.7) % 10.7 % Net interest income (1) $ 82,320 $ 68,798 $ 67,583 19.7 % 1.8 % Net interest margin (1) 3.83 % 3.42 % 3.25 % — — Yield on earning assets (1) 4.59 % 4.43 % 4.04 % — — Rate on interest bearing liabilities 2.64 % 3.19 % 2.84 % — — (1) Presented on a tax-equivalent basis using a tax rate of 21%. 27 Table of Contents The $13.5 million increase in net interest income in 2025 as compared to 2024 was primarily due to an increase in net interest margin to 3.83% as compared to 3.42% in the prior year, in addition to the increase in average earning assets of $136.8 million, or 6.8%.
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.
Income Tax Expense Income tax expense in 2025 totaled $7.6 million, compared to $4.9 million in 2024. When measured as a percent of pre-tax income, the Company’s effective tax rate was 19.70% and 20.80% in 2025 and 2024, respectively.
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.
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: 28 Table of Contents (In thousands) 2025 2024 2023 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) : $ 1,103,067 $ 62,340 5.65 % $ 1,048,732 $ 55,362 5.28 % $ 1,055,668 $ 50,825 4.81 % Investment securities (4) : Taxable 535,416 17,328 3.24 474,753 13,423 2.83 541,159 14,118 2.61 Tax-exempt (3) 160,019 5,145 3.22 161,836 4,519 2.79 192,881 5,186 2.69 Short-term investments 349,900 13,834 3.95 326,233 15,752 4.83 287,243 13,720 4.78 Total interest-earning assets 2,148,402 98,647 4.59 % 2,011,554 89,056 4.43 % 2,076,951 83,849 4.04 % Non-interest-earning assets Cash and due from banks 21,741 23,695 24,914 Premises and equipment, net 30,917 31,125 23,141 Payments in advance of funding 175,129 202,860 234,865 Bank-owned life insurance 51,183 49,715 48,540 Goodwill and other intangibles 20,515 15,182 15,856 Unrealized loss on investment securities (47,093) (57,772) (68,893) Other assets 66,116 72,358 63,777 Allowance for credit losses (14,014) (13,369) (13,324) Assets of discontinued operations 7,518 14,049 13,781 Total assets $ 2,460,414 $ 2,349,397 $ 2,419,608 Liabilities and Shareholders’ Equity (1) Interest-bearing liabilities Interest-bearing demand deposits $ 522,010 $ 13,153 2.52 % $ 549,164 $ 17,029 3.10 % $ 496,154 $ 14,056 2.83 % Savings deposits 7,032 92 1.31 7,148 116 1.62 7,162 113 1.58 Time deposits >=$250 23,294 813 1.96 27,211 597 2.19 23,912 417 1.74 Other time deposits 64,783 2,260 4.17 51,058 2,516 4.93 43,839 1,564 3.57 Total interest-bearing deposits 617,119 16,318 2.64 634,581 20,258 3.19 571,067 16,150 2.83 Short-term borrowings 162 9 5.56 11 — 9.09 2,241 116 5.18 Total interest-bearing liabilities 617,281 16,327 2.64 % 634,592 20,258 3.19 % 573,308 16,266 2.84 % Non-interest bearing liabilities Demand deposits 406,551 414,711 512,608 Accounts and drafts payable 1,160,018 1,009,757 1,059,286 Other liabilities 40,782 37,933 38,501 Liabilities of discontinued operations 1,301 23,460 24,836 Total liabilities 2,225,933 2,120,453 2,208,539 Shareholders’ equity 234,481 228,944 211,069 Total liabilities and shareholders’ equity $ 2,460,414 $ 2,349,397 $ 2,419,608 Net interest income (3) $ 82,320 $ 68,798 $ 67,583 Net interest margin (3) 3.83 % 3.42 % 3.25 % Interest spread 1.95 % 1.23 % 1.20 % (1) Balances shown are daily averages.
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.
The ACL represented 1.28% and 1.24% of outstanding loans at December 31, 2025 and December 31, 2024, respectively. The allowance for unfunded commitments was $419,000 at December 31, 2025 and $273,000 at December 31, 2024. The balance of nonperforming loans outstanding was $7.0 million at December 31, 2025 and $0 at December 31, 2024.
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.
The Company continues to operate profitably, posting a 1.43% return on average assets and 14.98% return on average equity. The Company’s common equity Tier 1 capital ratio was 15.10% at December 31, 2025, significantly exceeding regulatory requirements. In addition, the Company has maintained exceptional credit quality with no loan charge-offs during the year ended December 31, 2025.
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 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.
In addition, the degree of automation such as electronic data interchange, imaging, work flow, and web-based solutions varies greatly among customers and industries. These factors 23 Table of Contents combine so that pricing varies greatly among the customer base.
Executive Overview The specific payment and information processing services provided to each customer are developed individually to meet each customer’s requirements, which can vary greatly. In addition, the degree of automation such as electronic data interchange, imaging, work flow, and web-based solutions varies greatly among customers and industries. These factors combine so that pricing varies greatly among the customer base.
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.
The cost of energy is another factor that has a significant impact on the transportation and facility sectors. As the price of energy goes up or down, the Company’s earnings increase or decrease with the dollar amount of transportation and facility expense invoices.
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.
The yield on interest-earning assets increased 16 basis points from 4.43% in 2024 to 4.59% in 2025 while the cost of interest-bearing liabilities decreased 55 basis points from 3.19% in 2024 to 2.64% in 2025. Average loans increased $54.3 million, or 5.2%, in 2025 compared to 2024, to $1.10 billion.
Loans by Type December 31, (In thousands) 2024 2023 2022 Commercial and industrial $ 559,262 $ 498,502 $ 561,616 Real estate (commercial and faith-based): Mortgage 488,075 499,739 495,280 Construction 34,652 16,023 25,968 Other — 54 42 Total loans $ 1,081,989 $ 1,014,318 $ 1,082,906 The Company does not have any foreign loans.
Loans by Type December 31, (In thousands) 2025 2024 2023 Commercial and industrial $ 553,080 $ 559,262 $ 498,502 Real estate (commercial and faith-based): Mortgage 459,879 488,075 499,739 Construction 48,231 34,652 16,023 Other 27 — 54 Total loans $ 1,061,217 $ 1,081,989 $ 1,014,318 At December 31, 2025, the Company did not have any foreign loans or single family real estate mortgages, as the Company does not market its services to retail customers.
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.
These balances totaled $392.3 million at December 31, 2025, an increase of $42.5 million, or 12.2%, from December 31, 2024. The increase during 2025 is primarily attributed to an increase in deposits and a decrease in loans, partially offset by increases in securities available-for-sale and accounts and drafts receivable from customers.
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.
Total investment securities available-for-sale at fair value were $770.8 million at December 31, 2025, an increase of $242.8 million, or 46.0%, from December 31, 2024. Investment securities represented 29.6% of total assets at December 31, 2025.
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 increase was due to the increase in net income of $15.9 million, an increase in amortization of intangible assets of $480,000, and an increase in depreciation of $1.0 million, partially offset by lower net amortization of premium/discount on investment securities of $2.6 million.
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 average yield on short-term investments decreased 88 basis points to 3.95% primarily due to the decrease in the Federal Funds rate. The majority of these short-term investments are held at the Federal Reserve Bank. The average balance of interest-bearing deposits decreased $17.5 million, or 2.8% in 2025 compared to 2024. Average non-interest-bearing demand deposits decreased $8.2 million, or 2.0%.
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.
The increase in the Federal Funds rate contributed to the increase in the Company's net interest margin to 3.83% in 2025 from 3.42% in 2024 and 3.25% in 2023, therefore positively impacting net interest income.
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.
There was no single issuer of securities in the investment portfolio at December 31, 2025 for which the aggregate amortized cost exceeded 10% of total shareholders' equity. Investments by Type (In thousands) December 31, 2025 2024 2023 State and political subdivisions $ 240,211 $ 171,964 $ 219,035 Mortgage-backed securities issued or guaranteed by U.S.
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.
Other factors impacting the $1.5 million decrease in net cash provided by operating activities include: • A decrease in other operating activities, net of $15.9 million, primarily due to changes in various accounts receivable and payable; • A decrease in the ASC 718 pension adjustment of $5.2 million; and • A decrease in net cash used from discontinued operations of $3.6 million; partially offset by • A smaller increase in accounts receivable, representing a positive variance of $3.5 million; and • An increase in the current income tax liability of $4.4 million.
This discussion should be read in conjunction the Consolidated Financial Statements and the related notes that appear in Part II, Item 8 of this document. Executive Overview The specific payment and information processing services provided to each customer are developed individually to meet each customer’s requirements, which can vary greatly.
This discussion should be read in conjunction the Consolidated Financial Statements and the related notes that appear in Part II, Item 8 of this document.
The Company recorded a one-time non-cash expense of $3.5 million in the fourth quarter of 2024 related to the termination of its noncontributory defined-benefit pension plan. The termination of the plan is expected to reduce run rate operating expense by approximately $1.0 million on an annual basis.
The Company recorded a one-time non-cash expense of $3.5 million in the fourth quarter of 2024 related to the termination of its noncontributory defined-benefit pension plan. Equipment expense increased $1.8 million, or 22.4%, in 2025 compared to 2024, primarily due to an increase in depreciation expense on software related to recently completed technology initiatives.
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.
Maturities of Certificates of Deposit as of December 31, 2025 (In thousands) $100 or Less $100 to Less Than $250 $250 or More Total Three months or less $ 1,539 $ 59,672 $ 12,305 $ 73,516 Three to six months 636 6,128 9,084 15,848 Six to twelve months 423 2,992 2,999 6,414 Over twelve months 104 742 778 1,624 Total $ 2,702 $ 69,534 $ 25,166 $ 97,402 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 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.
A strong capital base is needed to take advantage of profitable growth opportunities that arise and to provide assurance to depositors and creditors. The Company and its banking subsidiary continue to exceed all regulatory capital requirements, as evidenced by the capital ratios at December 31, 2025 as shown in Item 8, Note 3 of this report.
(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.
(In thousands) 2025 Over 2024 2024 Over 2023 Volume (1) Rate (1) Total Volume (1) Rate (1) Total Increase (decrease) in interest income: Loans (2) : $ 2,954 $ 4,024 $ 6,978 $ (338) $ 4,875 $ 4,537 Investment securities: Taxable 1,832 2,073 3,905 (1,823) 1,128 (695) Tax-exempt (3) (51) 677 626 (862) 195 (667) Short-term investments 1,079 (2,997) (1,918) 1,881 151 2,032 Total interest income $ 5,814 $ 3,777 $ 9,591 $ (1,142) $ 6,349 $ 5,207 Interest expense on: Interest-bearing demand deposits $ (809) $ (3,067) $ (3,876) $ 1,577 $ 1,396 $ 2,973 Savings deposits (2) (22) (24) — 3 3 Time deposits >=$250 (96) 312 216 63 117 180 Other time deposits 580 (836) (256) 287 665 952 Short-term borrowings — 9 9 (58) (58) (116) Total interest expense (327) (3,604) (3,931) 1,869 2,123 3,992 Net interest income $ 6,141 $ 7,381 $ 13,522 $ (3,011) $ 4,226 $ 1,215 (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.
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%.
The increase in net interest income was attributable to the net interest margin improving to 3.83% as compared to 3.42% in the same period last year, in addition to an increase in average interest-earning assets of $136.8 million, or 6.8%.
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.
Accounts and drafts payable generated by the Company in its payment processing operations decreased $4.8 million, or 0.4%, from the prior year to $1.12 billion, at December 31, 2025.
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.
Government agencies or sponsored enterprises 478,696 233,275 157,799 Corporate bonds 28,896 87,786 102,340 Asset-backed securities issued or guaranteed by U.S.
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.
Cash dividends paid were $16.5 million for both 2025 and 2024. Shareholders’ equity was $243.0 million, or 9.3% of total assets, at December 31, 2025, an increase of $14.0 million as compared to December 31, 2024.
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.
During 2025, 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. 38 Table of Contents Capital Resources One of management’s primary objectives is to maintain a strong capital base to warrant the confidence of customers, shareholders, and bank regulatory agencies.
The decrease in these balances, which are non-interest bearing, are primarily reflective of a cyber event at a CassPay client during the first quarter of 2024, which decreased average balances by approximately $100.0 million, and a decrease in transportation dollar volumes of 0.6%, partially offset by an increase in facility dollar volumes of 8.1%.
The increase in these balances, which are non-interest bearing, are primarily reflective of the increase in transportation and facility dollar volumes of 0.9%, and 14.7%, respectively.
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.
Additional details regarding the types and maturities of loans in the loan portfolio are contained in the tables above and in Item 8, Note 5. 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 $348,000 and $447,000 in 2025 and 2024, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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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.
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.
This is accomplished by limiting the concentration of maturities of fixed rate investments, loans, and deposits; matching fixed rate assets and liabilities to the extent possible; and optimizing the mix of fees and net interest income.
This is accomplished by limiting the concentration of maturities of fixed rate 40 Table of Contents investments, loans, and deposits; matching fixed rate assets and liabilities to the extent possible; and optimizing the mix of fees and net interest income.
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
The table above on the projected impact of interest rate shocks results from a static balance sheet at December 31, 2025. 41 Table of Contents
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 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 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.
The table below illustrates the projected impact of interest rate shocks on net interest income as of December 31, 2025: Change in Interest Rates % Change in Net Interest Income +300 basis points 10.7% +200 basis points 7.6 +100 basis points 3.7 Flat rates — -100 basis points (2.5) -200 basis points (6.1) -300 basis points (10.6)% The Company is generally asset sensitive as average interest-earning assets of $2.15 billion for 2025 greatly exceeded average interest-bearing liabilities of $617.3 million.
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.
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.
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.
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, 2025, from an immediate and sustained parallel change in interest rates in three varying scenarios is shown below.
Removed
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.

Other CASS 10-K year-over-year comparisons