26 unchanged sentences
As the price of fuel goes up or down, the Company’s earnings increase or decrease with the dollar amount of transportation invoices.
−Removed: The Company recorded revenue of $197.5 million in 2023, up 8.2% from the prior year.
−Removed: Net income was $30.1 million and diluted EPS was $2.18 per share, decreases of 13.9% and 13.8% from the prior year, respectively.
The Company continues to operate profitably, posting a 0.82% return on average assets and 8.37% return on average equity.
2 unchanged sentences
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.
−Removed: The Company delivered $21.7 million in dividend payments and share repurchases during 2023.
+Added: The Company delivered $16.5 million in dividend payments and $7.2 million in share repurchases during 2024.
The Company continues to invest in the technology, processes, and people required to support its multi-national customer base.
1 unchanged sentence
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.
−Removed: Critical Accounting Policies
−Removed: The Company has prepared the consolidated financial statements in this report in accordance with the FASB Accounting Standards Codification (“ASC”).
−Removed: In preparing the consolidated financial statements, management makes estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.
−Removed: These estimates have been generally accurate in the past, have been consistent and have not required any material changes.
−Removed: There can be no assurances that actual results will not differ from those estimates.
−Removed: 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.”
−Removed: 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.
−Removed: Allowance for Credit Losses .
−Removed: The Company performs periodic and systematic detailed reviews of its loan portfolio to determine management’s estimate of the lifetime expected credit losses.
−Removed: The process combines many factors:
−Removed: economic factors, historical credit loss experience, of both the Company and similar peer banks, loan portfolio growth and concentrations, asset quality, risk tolerance, and other qualitative and quantitative factors which could affect future credit loss.
−Removed: Given the Company's recent historical loss experience, the impact of the qualitative risk factors related to the collective ACL is a substantial percentage of the overall ACL.
−Removed: Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses, and therefore the appropriateness of the ACL, could change significantly.
−Removed: It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the ACL and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all loan types.
−Removed: Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others.
−Removed: Various regulatory agencies, as an integral part of the examination process, periodically review the ACL.
−Removed: Such agencies may require the Company to recognize additions to the ACL or reserve increases to adversely graded classified loans based on information available to them at the time of their examinations.
−Removed: The Company believes the level of ACL is appropriate.
−Removed: These policies affect both segments of the Company.
−Removed: The impact and associated risks related to these policies on the Company’s business operations are discussed in the Note 1 "Summary of Significant Accounting Policies" and Note 4 "Loans," as well as the “Provision and Allowance for Credit Losses and Allowance for Unfunded Commitments” section of this report.
+Added: Recent Industry Developments
+Added: The transportation industry continues to experience a decline in overall freight rates caused by an ongoing freight recession.
+Added: The freight recession adversely affects the number of freight transactions and dollar amount of invoices processed.
+Added: Partially as a result, the Company's transportation invoice and dollar volumes declined 0.6% and 5.7%, respectively during the year ended December 31, 2024 as compared to the same period in 2023.
+Added: Transportation dollar volumes are key to the Company’s revenue as higher volumes generally lead to an increase in payment float, which generates interest income, as well as an increase in payments in advance of funding, which generates financial fees.
+Added: Recent Items of Note
+Added: Average interest-earning assets for December 31, 2024 declined $65.4 million, or 3.1%, as compared to 2023.
+Added: The Company had fewer funds to invest due to the loss of approximately $100.0 million of balances in February 2024 as a result of a cyber attack experienced by a CassPay client.
+Added: CassPay offers solutions such as integrated payments, a B2B payment platform for clients.
+Added: The loss of CassPay balances was partially offset by an increase in facility dollar volumes of 8.1%, leading to higher average accounts and drafts payable.
+Added: Despite the decline in average interest-earning assets during the year, the Company’s liquidity position and balance sheet remains strong.
+Added: The Company maintained average short-term investments of $326.2 million during 2024.
+Added: In addition, all of the Company's investment securities are classified as available-for-sale and there were no outstanding borrowings at December 31, 2024.
+Added: The Company recorded bad debt expense of $7.8 million for the year ended December 31, 2024 on a funding receivable related to a facility client.
+Added: See Note 15, "Commitments and Contingencies" for further information.
+Added: During July 2024, the Company approved an Amendment providing for the termination of its noncontributory defined-benefit pension plan.
+Added: The Company recorded a one-time termination expense of approximately $3.5 million through operating expense related to the plan termination during the fourth quarter of 2024 as the plan liabilities were settled.
+Added: The successful termination of the plan is expected to reduce run rate operating expense by approximately $1.0 million on an annual basis.
+Added: In December 2024, the Company acquired AcuAudit, a freight audit platform for ocean and international air freight, from Acuitive Solutions LLC.
+Added: The Asset Purchase Agreement reflects a base purchase price of $3.0 million and an earnout based on annualized recurring revenue at the end of 24 months.
+Added: Current annualized recurring revenue is approximately $2.5 million.
+Added: The Company expects the impact of the acquisition to be EBITDA neutral in 2025 and a minimal negative impact to diluted earnings per share driven by intangible amortization.
Summary of Results
+Added: Various indicators are used by management in evaluating the Company's financial condition and operating performance.
+Added: Among these indicators are net income and earnings per share, total revenue, operating expense, asset quality indicators such as nonperforming assets to assets and net charge-offs to average loans, and return on average assets and equity.
(In thousands except per share data) For the Years Ended December 31, % Change
3 unchanged sentences
Net interest income 67,787 66,494 58,844 1.9 % 13.0 %
−Removed: (Release of) provision for credit losses (550) 1,350 (130) (140.7) % (1138.5) %
+Added: 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 %
7 unchanged sentences
Return on average equity 8.37 % 14.24 % 16.53 % — —
−Removed: The Company recorded revenue of $197.5 million in 2023, up 8.2% from the prior year, due to increases in processing fees, financial fees, net interest income and a positive variance in the (release of) provision for credit losses.
−Removed: Operating expenses increased 14.7% as a result of increases in personnel and other expenses as the Company invests in, and transitions to, improved technology.
−Removed: Net income was $30.1 million and diluted EPS was $2.18 per share, decreases of 13.9% and 13.8% from the prior year, respectively.
+Added: 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.
+Added: Operating expenses increased 9.3% largely driven by $7.8 million of bad debt expense experienced on a funding receivable related to a facility client as well as 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.
+Added: Net income was $19.2 million and diluted EPS was $1.39 per share, decreases of 36.2% for both from the prior year.
The Company posted a 0.82% return on average assets and 8.37% return on average equity.
+Added: The Company did not have any nonperforming assets at December 31, 2024 and did not have any loan charge-offs during 2024.
Further detail about the components of revenue and expenses are explained in the sections following.
16 unchanged sentences
(1) Includes utility, telecom and waste
−Removed: Processing fees increased $3.1 million, or 4.0%, during 2023 largely driven by a 6.7% increase in facility transaction volumes as well as an increase in fees received for ancillary processing services.
+Added: Processing fees increased $3.1 million, or 3.9%, during 2024 largely driven by a 23.7% increase in facility transaction volumes.
Transportation invoice volumes decreased 0.6% over the same period.
The decline in transportation volumes is primarily due to the on-going freight recession.
−Removed: Financial fees increased $2.2 million, or 5.1%, in 2023 primarily attributable to the increase in short-term interest rates throughout 2023, partially offset by a decline in transportation dollar volumes of 14.4%.
−Removed: The decline in transportation dollar volumes had a direct effect on the 15.6% decrease in average payments in advance of funding, which is the primary generator of financial fees.
+Added: Financial fees decreased $2.7 million, or 5.8%, in 2024 primarily attributable to the decline in transportation invoice dollar volumes of 5.7%.
+Added: The decline in transportation invoice dollar volumes had a direct effect on the 13.6% decrease in average payments in advance of funding, which is the primary generator of financial fees.
+Added: Other income increased $965,000, or 19.6%, in 2024 largely due to higher bank-owned life insurance revenue and TouchPoint fees.
Net Interest Income
14 unchanged sentences
(1) Presented on a tax-equivalent basis using a tax rate of 21%.
−Removed: The increase in net interest income in 2023 compared to 2022 is primarily due to an increase in the Federal Funds rate throughout 2022 and into 2023, positively affecting the net interest rate margin which increased to 3.25% as compared to 2.74% in the prior year.
−Removed: This was partially offset by a decrease in average earning assets of $128.8 million, or 5.8%.
−Removed: The yield on interest-earning assets increased 114 basis points from 2.90% in 2022 to 4.04% in 2023 while the cost of interest-bearing liabilities increased 226 basis points from 0.58% in 2022 to 2.84% in 2023.
−Removed: Average loans increased $63.7 million, or 6.4%, to $1.06 billion.
−Removed: This increase was due to loan growth during the second half of 2022, specifically in the Company's franchise restaurants, faith-based and lease financing receivables portfolios.
+Added: 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.
+Added: The increase in the net interest margin was partially offset by a decrease in average earning assets of $65.4 million, or 3.1%.
+Added: The yield on interest-earning assets increased 39 basis points from 4.04%
+Added: 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.
+Added: Average loans decreased $6.9 million, or 0.7%, to $1.05 billion.
+Added: This decrease was due to the Company opting to be more selective in booking new loans as a result of a decline in average deposits.
The average yield on loans increased 47 basis points to 5.28% in 2024.
1 unchanged sentence
The investment portfolio will expand and contract over time as the Company manages its liquidity and interest rate position.
−Removed: The average tax-equivalent yield on investment securities increased 33 basis point to 2.63% in 2023 as a result of the increase in short and long-term interest rates.
−Removed: The average yield on tax-exempt investment securities declined 19 basis points to 2.69% driven by maturities of higher rate securities.
−Removed: These securities have longer term fixed rates and the Company has not purchased any such securities since interest rates began increasing.
−Removed: Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, decreased $137.8 million, or 32.4%.
−Removed: The decrease is primarily a result of the increase in the average balance of loans, coupled with the decrease in average funding sources, partially offset by the decrease in average investment securities.
−Removed: The average yield on short-term investments increased 327 basis points to 4.78% in 2023 primarily due to the increase in short-term market interest rates that began in March 2022.
+Added: The average tax-equivalent yield on investment securities increased 19 basis points to 2.82% in 2024 as a result of purchases of new investment securities at current market interest rates, which are higher than the average interest rate in the current investment portfolio.
+Added: Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $39.0 million, or 13.6%.
+Added: The increase is primarily a result of the decline in average investment securities and loans, partially offset by a decrease in average funding sources.
+Added: 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.
−Removed: The average balance of interest-bearing deposits decreased $32.2 million, or 5.3%.
+Added: 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%.
−Removed: The Company experienced deposit attrition during the first six months of 2023 as larger commercial depository clients moved their funds to higher interest rate alternatives outside of the banking system.
−Removed: The Company also incurred a shift from non-interest bearing to interest-bearing deposits driven by the customer base.
−Removed: The average rate paid on interest-bearing deposits increased 225 basis points to 2.83% in 2023 due to the increase in short-term interest rates.
+Added: The Company has experienced a migration of client funds from non-interest bearing to interest-bearing driven by the higher interest rate environment prior to the recent 100 basis point decline in the Federal Funds rate.
+Added: The average rate paid on interest-bearing deposits increased 36 basis points to 3.19% in 2024 due to higher average short-term interest rates.
Average accounts and drafts payable decreased $50.7 million, or 4.7%.
−Removed: The decrease in average accounts and drafts payable was primarily driven by the decrease in transportation dollar volumes of 14.4% due to the ongoing freight recession.
+Added: 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%.
+Added: Accounts and drafts payable are a significant source of funding generated by payment float from transportation and facility clients.
Distribution of Assets, Liabilities and Shareholders' Equity;
46 unchanged sentences
(1) Balances shown are daily averages.
−Removed: (2) Interest income on loans includes net loan fees of $686,000, $684,000, and $3.4 million for 2023, 2022 and 2021, respectively.
−Removed: Loan fees include $0, $167,000, and $2.6 million of PPP loan fees for 2023, 2022 and 2021, respectively.
+Added: (2) Interest income on loans includes net loan fees of $477,000, $686,000, and $684,000 for 2024, 2023 and 2022, respectively.
+Added: 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%.
25 unchanged sentences
Interest earned on the loan portfolio is a primary source of income for the Company.
−Removed: The loan portfolio was $1.01 billion, representing 40.9% of the Company's total assets as of December 31, 2023 and generated $50.8 million in interest income during the year then ended.
+Added: 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.
5 unchanged sentences
Construction 34,652 16,023 25,968
−Removed: PPP — — 6,299
Other — 54 42
Total loans $ 1,081,989 $ 1,014,318 $ 1,082,906
+Added: The Company does not have any foreign loans.
+Added: The Company's loan portfolio includes $110,000 of single family real estate mortgages, as the Company does not market its services to retail customers.
+Added: Also, the Company had no sub-prime mortgage loans or residential development loans in its portfolio in any of the years presented.
Loans by Maturity as of December 31, 2024
9 unchanged sentences
Construction 12,638 27 13,654 8,333 — — 34,652
−Removed: Other — 54 — — — — 54
Total loans $ 133,234 $ 84,243 $ 522,762 $ 47,070 $ 277,711 $ 16,969 $ 1,081,989
9 unchanged sentences
When problems are identified, appraised values are updated on a continual basis, either internally or through an updated external appraisal.
−Removed: Loans decreased $68.6 million, or 6.3%, to $1.01 billion at December 31, 2023.
−Removed: Lease finance receivables and franchise restaurant loans, which are both included in commercial and industrial loans, decreased $39.4 million, or 24.5%, and $8.6 million, or 3.9%, respectively, during 2023.
−Removed: Commercial and industrial loans decreased $14.5 million, or 8.0%, during 2023.
−Removed: These decreases were due to being more selective in booking new loans as a result of the decline in deposits during the year.
+Added: Loans increased $67.7 million, or 6.7%, to $1.08 billion at December 31, 2024.
+Added: Franchise restaurant loans, which are included in commercial and industrial loans, increased $43.1 million during 2024.
+Added: Faith-based loans increased $5.2 million, during 2024.
Additional details regarding the types and maturities of loans in the loan portfolio are contained in the tables above and in Item 8, Note 4.
+Added: Performing loans subject to special monitoring increased from $5.5 million at December 31, 2023 to $51.2 million at December 31, 2024.
+Added: These loans possess some credit deficiency or potential weakness which requires a higher level of management attention.
+Added: The increase during 2024 is primarily due to a large franchise restaurant relationship that has experienced some level of financial weakness.
+Added: 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
−Removed: The Company recorded a release of credit losses and off-balance sheet credit exposures of $550,000 in 2023 and a provision for credit losses of $1.4 million in 2022.
−Removed: The amount of the (release of) provision for credit losses was derived from the Company’s CECL model.
+Added: 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.
+Added: 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.
−Removed: The Company had net loan recoveries of $0 and $13,000 in 2023 and 2022, respectively.
+Added: 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.
1 unchanged sentence
The allowance for unfunded commitments was $273,000 at December 31, 2024 and $132,000 at December 31, 2023.
−Removed: There were no nonperforming loans outstanding at December 31, 2023 and one nonperforming loan outstanding with an outstanding balance of $1.2 million, or 0.11% of total loans at December 31, 2022.
−Removed: The single nonperforming loan at December 31, 2022 paid off in full during January 2023.
+Added: There were no nonperforming loans outstanding at December 31, 2024 or December 31, 2023.
The ACL has been established and is maintained to estimate the lifetime credit losses expected in the loan portfolio.
26 unchanged sentences
Net loans recovered — — (13) (27) (20)
−Removed: (Release of) provision for credit losses (450) 1,485 70 645 250
+Added: 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
−Removed: Cumulative effect of accounting change (ASU 2016-13) — — — — 723
−Removed: Allowance at beginning of next year $ 13,089 $ 13,539 $ 12,041 $ 11,944 $ 11,279
Allowance for unfunded commitments at beginning of year $ 132 $ 232 $ 367 $ 567 $ 402
−Removed: (Release of) provision for credit losses (100) (135) (200) 165 —
+Added: Provision for (release of) credit losses 141 (100) (135) (200) 165
Allowance for unfunded commitments at end of year 273 132 232 367 567
−Removed: Cumulative effect of accounting change (ASU 2016-13) — — — — 402
−Removed: Allowance for unfunded commitments at beginning of next year $ 132 $ 232 $ 367 $ 567 $ 402
Loans outstanding:
8 unchanged sentences
Construction 217 108 184 292 417
−Removed: Other — — — — —
Total $ 13,395 $ 13,089 $ 13,539 $ 12,041 $ 11,944
5 unchanged sentences
PPP — — — 0.7 12.3
−Removed: Other — — — — —
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
8 unchanged sentences
There was no interest income recognized on nonaccrual loans for the years ended 2024 and 2023.
−Removed: There were no nonaccrual loans at December 31, 2023 and one nonaccrual loan of $1.2 million at December 31, 2022.
+Added: 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.
−Removed: The single nonperforming loan at December 31, 2022 paid off in full during January 2023.
−Removed: The Company does not have any foreign loans.
−Removed: The Company's loan portfolio includes $157,000 of single family real estate mortgages, as the Company does not market its services to retail customers.
−Removed: Also, the Company had no sub-prime mortgage loans or residential development loans in its portfolio in any of the years presented.
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.
4 unchanged sentences
Nonaccrual $ — $ — $ 1,150 $ — $ —
−Removed: Contractually past due 90 days or more and still accruing — — — — —
−Removed: Real estate – mortgage:
−Removed: Nonaccrual — — — — —
−Removed: Contractually past due 90 days or more and still accruing — — — — —
Total nonperforming loans $ — $ — $ 1,150 $ — $ —
12 unchanged sentences
Equipment 8,305 7,138 6,668
+Added: Bad debt expense 7,847 — —
Amortization of intangible assets 739 780 680
2 unchanged sentences
Total operating expenses increased 9.3% in 2024 compared to 2023.
−Removed: Salaries and commissions increased $8.0 million, or 9.3%, as a result of merit increases and an increase in average full-time equivalent employees ("FTEs") of 10.8% due to strategic investments in various technology initiatives.
+Added: Salaries and commissions increased $2.9 million, or 3.1%, as a result of merit increases and an increase in average full-time equivalent employees ("FTEs") of 1.6%.
Share-based compensation decreased $1.0 million, reflecting the Company's financial performance and the impact on performance-based restricted stock between the periods.
−Removed: Pension expense increased $3.3 million.
−Removed: Despite the Company's defined benefit pension plan being frozen in the first quarter of 2021 resulting in no service cost in subsequent periods, expense increased as a result of the accounting impact of the decline in plan assets during 2022 and corresponding decline in expected return on plan assets for 2023.
−Removed: Other benefits, such as 401(k) match, health insurance and payroll taxes, increased $3.5 million, or 21.0%, primarily due to the 10.8% increase in average FTEs as well as a significant increase in employer health insurance costs over prior year levels.
+Added: Net periodic pension cost increased $3.3 million.
+Added: 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.
+Added: The termination of the plan is expected to reduce run rate operating expense by approximately $1.0 million on an annual basis.
+Added: Other benefits, such as 401(k) match, health insurance and payroll taxes decreased $507,000, or 2.5%.
+Added: Equipment expense increased $1.2 million, or 16.3%, primarily due to an increase in depreciation expense on software related to recently completed technology initiatives.
+Added: The Company recorded bad debt expense during 2024 of $7.8 million on a funding receivable related to a facility client.
+Added: While the Company is in the process of litigation to collect the receivable, a full write-off to bad debt expense was recorded as a result of a credit analysis.
Other operating expense increased $1.3 million, or 4.2%, to $31.2 million.
−Removed: Certain expense categories such as outside service fees and data processing have increased as the Company invests in, and transitions to, improved technology.
+Added: The Company incurred $1.3 million of late fees on facility transactions during 2024 driven by a check processing delay with a third-party vendor, the same CassPay client which incurred the cyber attack.
Income Tax Expense
1 unchanged sentence
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.
−Removed: The increase in the effective tax rate in 2023 compared to 2022 was primarily due to a lower level of tax-free interest income on municipal securities in the current year.
+Added: The increase in the effective tax rate in 2024 compared to 2023 was primarily due to a lower level of tax-free interest income on municipal securities in the current year, in addition to $304,000 of tax penalties incurred in 2024 on the surrender and redeployment of bank-owned life insurance policies to increase future noninterest income.
Investment Portfolio
Investment securities decreased $99.1 million, or 15.8%, during 2024 to $528.0 million at December 31, 2024.
−Removed: Treasury securities decreased $46.6 million to $108.7 million at December 31, 2023 compared to $155.3 million at December 31, 2022.
−Removed: State and political securities decreased $76.1 million, or 25.8%, to $219.0 million at December 31, 2023 as a result of maturities and sales.
+Added: Treasury securities decreased $108.7 million to $0 at December 31, 2024 compared to $108.7 million at December 31,
+Added: State and political securities decreased $47.1 million, or 21.5%, to $172.0 million at December 31, 2024.
+Added: 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.
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.
−Removed: During 2023, the Company purchased investment securities totaling $15.3 million.
+Added: During 2024, the Company purchased investment securities totaling $119.7 million and sold investment securities totaling $60.1 million.
+Added: The Company generally utilized funds from maturities and sales of U.S.
+Added: 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.
23 unchanged sentences
Government agencies or sponsored enterprises — — 1,727 33,268 5.58 %
−Removed: Treasury securities 108,721 — — — 2.47 %
Total investments $ 8,820 $ 102,227 $ 183,452 $ 233,522 2.78 %
6 unchanged sentences
Noninterest-bearing demand deposits $ 251,230 $ 524,359 $ 642,757
−Removed: Interest-bearing demand deposits 616,455 614,460 638,861
+Added: Interest-bearing deposits 716,686 616,455 614,460
Total deposits $ 967,916 $ 1,140,814 $ 1,257,217
2 unchanged sentences
Noninterest-bearing demand deposits decreased $273.1 million, or 52.1%, to $251.2 million at December 31, 2024 and interest-bearing deposits increased $100.2 million, or 16.3%, to $716.7 million at December 31, 2024.
−Removed: The Company experienced deposit attrition during the first six months of 2023 as larger commercial depository clients moved their funds to higher interest rate alternatives outside of the banking system.
−Removed: The Company also incurred a shift from non-interest bearing to interest-bearing deposits from current customers.
+Added: The Company has experienced a migration of client funds from non-interest bearing to interest-bearing driven by the higher interest rate environment prior to the recent 100 basis point cumulative decline in the Federal Funds rate in the fourth quarter of 2024.
+Added: The decrease in total deposits between the periods was also driven by timing of customer funds.
+Added: 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.
1 unchanged sentence
Average accounts and drafts payable decreased $50.7 million, or 4.7%, to $1.03 billion during 2024.
−Removed: The decrease in average accounts and drafts payable was primarily driven by the decrease in transportation dollar volumes due to the ongoing freight recession.
+Added: 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 composition of average deposits and the average rates paid on those deposits is represented in the table entitled “Distribution of Assets, Liabilities and Shareholders' Equity;
14 unchanged sentences
Management considers both on-balance sheet and off-balance sheet items in its evaluation of liquidity.
−Removed: The balances of liquid assets consist of cash and cash equivalents, which include cash and due from banks, interest-bearing deposits in other financial institutions, federal funds sold, and money market funds, totaled $372.5 million at December 31, 2023, an increase of $171.5 million, or 85.4%, from December 31, 2022.
−Removed: The increase during 2023 is primarily attributed to decreases in investment securities, loans and payments in advance of funding, partially offset by a decrease in deposits.
+Added: The balance of liquid assets consists of cash and cash equivalents, which includes cash and due from banks, interest-bearing deposits in other financial institutions, federal funds sold, and money market funds.
+Added: These balances totaled $349.7 million at December 31, 2024, a decrease of $22.7 million, or 6.1%, from December 31, 2023.
+Added: The decrease during
+Added: 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.
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.
6 unchanged sentences
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.
−Removed: There were not any amounts outstanding at December 31, 2023 and 2022 under any of the lines of credit.
+Added: 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.
6 unchanged sentences
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.
−Removed: The Company anticipates the annual capital expenditures for 2024 should range from $10 million to $12 million.
+Added: The Company estimates that capital expenditures for 2025 should range from $6 million to $8 million.
Capital expenditures in 2025 are expected to primarily consist of purchases of equipment and software related to the payment and information processing services business.
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.
−Removed: The decrease was due to the decrease in net income of $4.8 million and lower net amortization of premium/discount on investment securities of $1.8 million.
+Added: 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.
−Removed: Other factors impacting the $14.7 million decrease in net cash provided by operating activities include:
−Removed: • A decrease in other operating activities, net of $4.6 million, primarily due to changes in various accounts receivable and payable;
−Removed: • A decrease in stock-based compensation expense of $2.6 million due to lower Company earnings and the impact on performance based stock;
−Removed: • A decrease in current income tax liability of $2.2 million;
−Removed: • A change in the (release of) provision for credit losses of $1.9 million primarily due to changes in loans outstanding during the respective periods.
−Removed: These factors were partially offset by an increase in the pension liability of $3.3 million.
−Removed: On an overall basis, the Company's $14.7 million decrease in net cash provided by operating activities was due to higher operating expenses driven by strategic investments in technology initiatives.
−Removed: Higher expense levels were partially offset by improved revenue driven by higher levels of net interest income, processing fees and financial fees.
−Removed: The increase in net interest income in 2023 compared to 2022 is primarily due to the Federal Reserve’s actions to increase the Federal Funds rate throughout 2022 and into 2023, positively affecting the net interest rate margin which increased to 3.25% as compared to 2.74% in the prior year.
+Added: Other factors impacting the $2.0 million increase in net cash provided by operating activities include:
+Added: • A decrease in share-based compensation expense of $1.0 million;
+Added: • An increase in other operating activities, net of $8.2 million, primarily due to changes in various accounts receivable and payable;
+Added: • An increase in current income tax liability of $2.3 million;
+Added: • A change in the FASB ASC 715 pension adjustment of $2.6 million;
+Added: • 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.
+Added: On an overall basis, the Company's $2.0 million increase in net cash provided by operating activities was primarily due to changes in cash flows from fluctuations in tax and other accounts offset by the decline in net income.
There are several trends and uncertainties that may impact the Company’s ability to generate revenues and income at the levels that it has in the past.
In addition, these trends and uncertainties may impact available liquidity.
−Removed: Those that could significantly impact the Company include the general levels of interest rates, business activity, inflation, and energy costs as well as new business opportunities available to the Company.
+Added: Those that could
+Added: 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.
20 unchanged sentences
Cash dividends paid were $16.5 million and $16.0 million in 2024 and 2023, respectively.
−Removed: Shareholders’ equity was $229.8 million, or 9.3% of total assets, at December 31, 2023, an increase of $23.5 million as compared to December 31, 2022.
−Removed: The increase was primarily a result of net income of $30.1 million and the decrease in accumulated other comprehensive loss of $11.9 million due to the change in market values on investment securities, partially offset by the payment of cash dividends of $16.0 million, and the repurchase of treasury shares of $5.8 million.
+Added: 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.
+Added: 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.
Dividends from the Bank are a source of funds for payment of dividends by the Company to its shareholders.
5 unchanged sentences
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.
−Removed: 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.
+Added: A portion of the repurchased shares may be used for the Company’s employee benefit plans and the balance will be available
+Added: for other general corporate purposes.
The pace of future repurchase activity will depend on factors such as levels of regulatory capital, cash generation from operations, cash requirements for investments, repayment of debt, current stock price, business and market conditions, and other factors.
−Removed: The Company may repurchase shares from time to time on the
−Removed: open market or in private transactions, including structured transactions.
+Added: The Company may repurchase shares from time to time on the open market or in private transactions, including structured transactions.
The stock repurchase program may be modified or discontinued at any time.
4 unchanged sentences
As a result of rising inflation, the Federal Reserve increased the Federal Funds rate throughout 2022 and 2023.
−Removed: The increase in the Federal Funds rate has contributed to the increase in the Company's net interest margin to 3.25% in 2023 from 2.74% in 2022, therefore positively impacting net interest income.
−Removed: Partially as a result of declining inflation, the market is forecasting a decline in the Federal Funds rate beginning in 2024.
−Removed: A decrease in the Federal Funds rate could negatively impact the Company's net interest margin and income.
+Added: 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.
+Added: The Federal Reserve began to decrease the Federal Funds rate during the last four months of 2024 by a cumulative 100 basis points.
+Added: 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.
+Added: Critical Accounting Policies
+Added: The Company has prepared the consolidated financial statements in this report in accordance with the FASB Accounting Standards Codification (“ASC”).
+Added: In preparing the consolidated financial statements, management makes estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.
+Added: These estimates have been generally accurate in the past, have been consistent and have not required any material changes.
+Added: There can be no assurances that actual results will not differ from those estimates.
+Added: 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.”
+Added: 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.
+Added: Allowance for Credit Losses .
+Added: The Company performs periodic and systematic detailed reviews of its loan portfolio to determine management’s estimate of the lifetime expected credit losses.
+Added: The process combines many factors:
+Added: economic factors, historical credit loss experience, of both the Company and similar peer banks, loan portfolio growth and concentrations, asset quality, and other qualitative and quantitative factors which could affect future credit loss.
+Added: Given the Company's recent historical loss experience, the impact of the qualitative risk factors related to the collective ACL is a substantial percentage of the overall ACL.
+Added: Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses, and therefore the appropriateness of the ACL, could change significantly.
+Added: It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the ACL and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all loan types.
+Added: Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others.
+Added: Various regulatory agencies, as an integral part of the examination process, periodically review the ACL.
+Added: Such agencies may require the Company to recognize additions to the ACL or reserve increases to adversely graded classified loans based on information available to them at the time of their examinations.
+Added: The Company believes the level of ACL is appropriate.
+Added: These policies affect both segments of the Company.
+Added: 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.
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.
−Removed: Such activities include traditional off-balance sheet credit-related financial instruments.
+Added: Such activities include traditional off-
+Added: balance sheet credit-related financial instruments.
These financial instruments include commitments to extend credit, commercial letters of credit and standby letters of credit.
13 unchanged sentences
See Note 14 "Disclosures about Fair Value of Financial Instruments" for more information.
−Removed: During 2023, the Company did not make a contribution to its noncontributory defined benefit pension plan.
−Removed: In determining pension expense, the Company makes several assumptions, including the discount rate and long-term rate of return on assets.
−Removed: These assumptions are determined at the beginning of the plan year based on interest rate levels and financial market performance.
−Removed: For 2023, these assumptions were as follows:
−Removed: Assumption Rate
−Removed: Weighted average discount rate 5.25 %
−Removed: Expected long-term rate of return on assets 6.00 %
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.