Cass Information Systems, Inc · NASDAQ:CASS
Cass Information Systems — Q4 2022 Earnings Presentation
26 slides from Cass Information Systems's earnings presentation, 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. Q4 2022 INVESTOR PRESE
Slide 2: Table of Contents
TABLE OF CONTENTS 3 Forward-Looking Statements 4 Cass at a Glance 6 Financial Performance 10 Revenue & Expenses 16 Balance Sheet 20 Capital 21 ESG Highlights 22 Leadership and Shareholder Information www.cassinfo.com / © 2022 Cass Information Systems 2
Slide 3: Forward Looking Statements
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,” “poten
Slide 4: Cass at a Glance
CASS AT A GLANCE www.cassinfo.com / © 2022 Cass Information Systems 4
Slide 5: Overview
OVERVIEW INFORMATION SYSTEMS / PAYMENTS + Cass is an information services company that + Transportation information systems provides freight invoice audit and payment services in the contract market processes freight and facility payments for some of + Facilities expense management provides payments
Slide 6: Financial Performance
FINANCIAL PERFORMANCE www.cassinfo.com / © 2022 Cass Information Systems 6
Slide 7: Q4 2022 Financial Highlights
Q4 2022 FINANCIAL HIGHLIGHTS NET INCOME DILUTED EPS RETURN ON EQUITY $9.29M $0.67 18.96% $7.7M $0.55 12.70% + Record net income of $9.3 million + Record diluted EPS of $0.67 + Return on average equity of 18.96% Q4 '21 Q4 '22 Q4 '21 Q4 '22 Q4 '21 Q4 '22 + Record quarterly financial fees of $11.4 TRAN
Slide 8: 2022 Financial Highlights
2022 FINANCIAL HIGHLIGHTS NET INCOME DILUTED EPS RETURN ON EQUITY $34.90M $2.53 16.53% $28.6M $2.00 11.29% + Record net income of $34.9 million + Record diluted EPS of $2.53 + Return on average equity of 16.53% 2021 2022 2021 2022 2021 2022 + Record transportation dollar TRANSPORTATION FINANCIAL FEE
Slide 9: Quarterly Financial Performance
QUARTERLY FINANCIAL PERFORMANCE TOTAL REVENUE NET INCOME $8.80M $9.29M $8.56M $47.2M $48.9M $8.26M $42.1M $44.2M $40.0M $7.70M + Cass has continued to convert revenue growth into bottom line net income growth over the past 5 quarters Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4
Slide 10: Revenue & Expenses
REVENUE & EXPENSES www.cassinfo.com / © 2022 Cass Information Systems 10
Slide 11: Financial Fees
FINANCIAL FEES FINANCIAL FEES + The change quarter to quarter is highly correlated to transportation and facility dollar $11.3M $11.4M volumes. However, during the fourth quarter, rising interest rates offset the decline in $10.5M $10.6M dollar volumes compared to the third quarter $9.6M + Transport
Slide 12: Processing Fees
PROCESSING FEES + 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. + Processing fees increased as compared to 3Q 2022 as revenue driven by ancillary processin
Slide 13: Net Interest Income
NET INTEREST INCOME + 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 3.15% + An increase in average loans is also positively contributing to net interest income and net interest margin expansion
Slide 14: Impact of Interest Rates
IMPACT OF INTEREST RATES + Cass earns net interest income off the float generated by its payment business in addition to Cass Commercial Bank + Cass is well positioned for rising interest rates as 73.6% of funding is non-interest bearing + As interest-earnings assets reprice to current market intere
Slide 15: Operating Expense
OPERATING EXPENSE EXPENSE AS A % OF REVENUE 78.40% 76.90% 77.20% 75.60% 76.10% + Personnel expense increased during the third quarter of 2022 as compared to the same quarter last year as a result of merit increases, wage pressures and a 11.4% increase in average FTEs Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '
Slide 16: Balance Sheet
BALANCE SHEET www.cassinfo.com / © 2022 Cass Information Systems 16
Slide 17: Loans
LOANS + Cass has experienced good organic loan growth in recent quarters, in particular its specialty franchise, faith-based and investment grade lease niches + Cass has not incurred a loan charge-off since 2015 ($$ in millions) PORTFOLIO COMPOSITION 12/31/22 Portfolio Composition 12/31/21 3/31/22 6
Slide 18: Investments
INVESTMENTS + Cass has a high quality investment portfolio, consisting primarily of municipal securities, U.S. treasuries, investment grade corporate bonds, and mortgage and asset-backed securities issued or guaranteed by U.S. government agencies or sponsored enterprises + The portfolio yield is exp
Slide 19: Funding
FUNDING + For 4Q 2022, 73.7% of average funding was non-interest bearing + Accounts and drafts payable and deposits have held steady in recent quarters AVERAGE DEPOSITS AND ACCOUNTS & FUNDING COMPOSITION DRAFT PAYABLE $2.37B $2.36B $2.34B $2.21B $2.26B Accts & Drafts Payable $1.23B $1.18B $1.18B $1,
Slide 20: Capital
CAPITAL + $110.5 million in excess of capital over Tier 1 leverage ratio at 12/31/22 9.52% 7.0% common equity tier 1 risk-based regulatory requirement Common equity tier 1 risk- + Maintain excess capital to support 12.80% based ratio at 12/31/22 organic balance sheet growth and opportunistic acquisi
Slide 21: Environmental, Social and Governance (ESG) Highlights
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 www.cassinfo.com / © 2022 Cass Information Systems 21
Slide 22: Leadership and Shareholder Information
LEADERSHIP AND SHAREHOLDER INFORMATION www.cassinfo.com / © 2022 Cass Information Systems 22
Slide 23: Board of Directors
BOARD OF DIRECTORS Eric H. Brunngraber Wendy J. Henry Sally H. Roth Chairman and Retired Managing Partner, Retired Area President — Chief Executive Officer BKD, LLP Upper Midwest, Regions Bank Ralph W. Clermont James J. Lindemann Joseph D. Rupp Retired Managing Partner, Retired Executive Lead Direct
Slide 24: Leadership Council
LEADERSHIP COUNCIL Cory J. Bricker Carl N. Friedholm Michael J. Normile Anthony G. Urban Vice President - CassPay Vice President and General Manager - Executive Vice President and Executive Vice President - Telecom Expense Management Chief Financial Officer Transportation Information Services Eric H
Slide 25: Shareholder Information
SHAREHOLDER INFORMATION CORPORATE HEADQUARTERS SHAREHOLDER WEBSITE TRANSFER AGENT Cass Information Systems, Inc. www.computershare.com/investor Shareholder correspondence 12444 Powerscourt Drive, Suite 550 should be mailed to: Saint Louis, Missouri 63131 INDEPENDENT AUDITORS Computershare 314.506.55
Slide 26: Thank You for Your Time
Thank You for Your Time Cass Information Systems, Inc.
Cass Information Systems — Q4 2022 Earnings Presentation on 6ix