Cass Information Systems, Inc · NASDAQ:CASS
Cass Information Systems — Investor Presentation (September 2022)
33 slides from Cass Information Systems's investor presentation, Sep 2, 2022
Slide 1: The Power to Deliver Solutions
The Power to Deliver Solutions Around the world, leading enterprises rely on Cass for our vertical expertise, processing power, and global payment network to execute critical financial transactions while driving greater control and efficiency across critical business expenses.
Slide 2: Table of Contents
Forward-Looking Statements Cass at a Glance Revenue & Expenses Balance Sheet Capital Financial Performance ESG Highlights Leadership and Shareholder Information TABLE OF CONTENTS 2 3 4 12 19 23 24 28 29 www.cassinfo.com / © 2022 Cass Information Systems
Slide 3: Forward-Looking Statements
This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements contain words such as “anticipate,” “believe,” “can,” “would,” “should,” “could,” “may,” “predict,” “seek,” “potential,” “will,” “estimate,”
Slide 4: Cass at a Glance
4www.cassinfo.com / © 2022 Cass Information Systems CASS AT A GLANCE
Slide 5: Cass at a Glance
+ Cass is an information services company that processes freight and facility payments for some of the largest global companies + The information systems business has a 70-year legacy + As a result of its $80B of payments, Cass generates $1B+ of average non-interest bearing float + Cass continues to
Slide 6: Q2 2022 Financial Highlights
Q2 2022 FINANCIAL HIGHLIGHTS 6www.cassinfo.com / © 2022 Cass Information Systems $7.03M $8.56M Q2 '21 Q2 '22 $0.48 $0.62 Q2 '21 Q2 '22 10.83% 16.53% Q2 '21 Q2 '22 NET INCOME DILUTED EPS RETURN ON EQUITY + Record net income of $8.6 million + Record diluted EPS of $0.62 + Return on average equity of 1
Slide 7: Executive leadership profiles
+ 40+ years of banking experience + Joined Cass in 1979 and worked his way through multiple executive positions in the company + Has been active in the St. Louis metropolitan area through engagement in various civic, charitable, and professional organizations + Received a Bachelor's degree in Financ
Slide 8: Company history timeline
Cass Avenue Bank is founded 1906 Designed the “The Freight Payment Plan” to simplify the payment for freight for people in the community 1956 Cass Information Systems Inc. was created as a holding company for both Cass Bank and Freight Payment Services 1983 Cass Information Systems becomes public on
Slide 9: Helping the Best Businesses Become Better
HELPING THE BEST BUSINESSES BECOME BETTER 9www.cassinfo.com / © 2022 Cass Information Systems TOP TIER CLIENTELECOMMENTARY + We turn unstructured inputs into structured and actionable information, typically around financial transactions but also including supporting data elements for auditing purpos
Slide 10: Case Studies – Helping Companies Access Efficiencies & Improvements
CASE STUDIES – HELPING COMPANIES ACCESS EFFICIENCIES & IMPROVEMENTS 10www.cassinfo.com / © 2022 Cass Information Systems GAINING CLEAR VISIBILITY ON FREIGHT COSTS CLIENT GOALS RESULTS SUMMARY Reduce invoice complexity Modernize freight payments Improve reporting Optimize accounts payable resource 28
Slide 11: Cass Freight Index
-20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 CASS FREIGHT INDEX© 11www.cassinfo.com / © 2022 Cass Information Systems -35.0% -25.0% -15.0% -5.0% 5.0% 15.0% 25.0% 35.0% 45.0% 55.0% 0 0.2 0.4 0.6 0.8 1 1.2 1.4 Jan-10 May-11 Sep-12 Jan-14 May-15 Sep-16 Jan-1
Slide 12: Revenue & Expenses
12www.cassinfo.com / © 2022 Cass Information Systems REVENUE & EXPENSES
Slide 13: Revenue Composition
Net Interest Income 31% Processing Fees 44% Financial Fees 25% REVENUE Processing Fees + Processing fees are earned on a per-item or monthly basis generally for invoice processing services, this can include turning unstructured inputs into structured and actionable information 13www.cassinfo.com / ©
Slide 14: Financial Fees
FINANCIAL FEES 14www.cassinfo.com / © 2022 Cass Information Systems + The change quarter to quarter is highly correlated to transportation and facility dollar volumes which have been trending higher due to higher energy prices and inflationary pressures + As transportation and facility volumes has i
Slide 15: Processing Fees
PROCESSING FEES 15www.cassinfo.com / © 2022 Cass Information Systems + The change quarter to quarter is generally correlated to transportation and facility invoice volumes, although Cass has other processing fee revenue tied to CassPay and Cass Commercial Bank. + The amount of revenue generated from
Slide 16: Net Interest Income
NET INTEREST INCOME 16www.cassinfo.com / © 2022 Cass Information Systems + The recent increase in short and long-term interest rates has had a positive impact on net interest income and margin, jumping from a low of 2.30% up to 2.54% + The combination of increasing interest earning assets and rising
Slide 17: Impact of Interest Rates
IMPACT OF INTEREST RATES 17www.cassinfo.com / © 2022 Cass Information Systems ANNUAL NET INTEREST MARGIN + Cass earns net interest income off the float generated by its payment business in addition to Cass Commercial Bank + As interest rates have decreased to historically low levels, the net interes
Slide 18: Operating Expense
OPERATING EXPENSE 18www.cassinfo.com / © 2022 Cass Information Systems $22.9M $23.3M $23.5M $24.7M $26.0M $6.9M $7.4M $7.8M $7.1M $7.6M Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 $29.8M $30.7M $31.3M $33.6M $31.8M OPERATING EXPENSE Personnel Expense All Other Operating Expense 77.60% 79.40% 78.40% 75.60% 76
Slide 19: Balance Sheet
19www.cassinfo.com / © 2022 Cass Information Systems BALANCE SHEET
Slide 20: Loans
LOANS 20www.cassinfo.com / © 2022 Cass Information Systems + Cass has experienced good organic loan growth in recent quarters, in particular its specialty franchise and faith-based niches + Cass has not incurred a loan charge-off since 2015 Portfolio Composition 6/30/21 9/30/21 12/31/21 3/31/22 6/30
Slide 21: Investments
INVESTMENTS 21www.cassinfo.com / © 2022 Cass Information Systems + Cass has a high quality investment portfolio which increased throughout 2021 due to significant increases in accounts and drafts payable and deposits at Cass Commercial Bank + The portfolio yield is expected to rise gradually in a ri
Slide 22: Funding
FUNDING 22www.cassinfo.com / © 2022 Cass Information Systems + For 2Q 2022, 74.4% of average funding was non-interest bearing + Deposits have increased in recent quarters due to organic deposit growth fueled by an abundance of liquidity in the economy + Accounts and drafts payable have increased due
Slide 23: Capital
CAPITAL 23www.cassinfo.com / © 2022 Cass Information Systems + $110.2 million in excess of capital over 7.0% common equity tier 1 risk-based regulatory requirement + Maintain excess capital to support organic balance sheet growth and opportunistic acquisitions + Annual dividend of $1.12 per share an
Slide 24: Financial Performance & Investment Considerations
24www.cassinfo.com / © 2022 Cass Information Systems FINANCIAL PERFORMANCE & INVESTMENT CONSIDERATIONS
Slide 25: Financial Performance
FINANCIAL PERFORMANCE 25www.cassinfo.com / © 2022 Cass Information Systems $38.4M $38.7M $40.0M $42.1M $44.2M Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 $7.03M $6.80M $7.70M $8.26M $8.56M Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 10.83% 10.61% 12.70% 14.21% 16.53% Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 1.24% 1.14% 1.2
Slide 26: Shareholder Return
SHAREHOLDER RETURN 26www.cassinfo.com / © 2022 Cass Information Systems $17.00 $16.46 $16.67 $14.66 $13.46 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 $0.27 $0.27 $0.28 $0.28 $0.28 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 TANGIBLE BOOK VALUE PER SHARE DIVIDENDS PER SHARE $0.48 $0.48 $0.55 $0.60 $0.62 Q2 '21 Q3 '21
Slide 27: Key Investment Highlights
5 Low cost funding base – mostly non-interest bearing 1 Process over $80 billion of payments annually 2 Clients include some of the largest companies operating in the U.S. 3 Increasing transportation and facility dollar volumes are driving higher financial fee revenue 4 Stable technology platform in
Slide 28: Environmental, Social and Governance (ESG) Highlights
In 2022, we published our inaugural ESG report, a copy of which is available on our Investor Relations site. To read more from the Cass ESG report, please follow this link to cassinfo.com ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) HIGHLIGHTS 28www.cassinfo.com / © 2022 Cass Information Systems
Slide 29: Leadership and Shareholder Information
LEADERSHIP AND SHAREHOLDER INFORMATION 29www.cassinfo.com / © 2022 Cass Information Systems
Slide 30: Board of Directors
BOARD OF DIRECTORS 30 Eric H. Brunngraber Chairman and Chief Executive Officer Ralph W. Clermont Retired Managing Partner, KPMG LLP, Saint Louis, Missouri Robert A. Ebel Retired Chief Executive Officer, Universal Printing Company Wendy J. Henry Retired Managing Partner, BKD, LLP James J. Lindemann R
Slide 31: Leadership Council
LEADERSHIP COUNCIL 31 Cory J. Bricker Vice President, Integrated Financial Solutions Carl N. Friedholm Vice President and General Manager, Telecom Expense Management Christi A. Reiter Vice President, Human Resources Eric H. Brunngraber Chairman and Chief Executive Officer Nicole M. Jennings Vice Pre
Slide 32: Shareholder Information
SHAREHOLDER INFORMATION 32www.cassinfo.com / © 2022 Cass Information Systems CORPORATE HEADQUARTERS Cass Information Systems, Inc. 12444 Powerscourt Drive, Suite 550 Saint Louis, Missouri 63131 314.506.5500 cass@cassinfo.com www.cassinfo.com COMMON STOCK The company’s common stock trades on the NASD
Slide 33: Thank You for Your Time
Thank You for Your Time Cass Information Systems, Inc:
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