What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-05 compared with 2024-02-28 · 136 added, 121 removed, 1152 unchanged (18% of the section changed)

63 unchanged sentences

Net interest income 67,787 66,494 58,844

(Release of) provision for credit losses ( 550 ) 1,350 ( 130 )

Net interest income after (release of) provision for credit losses 67,044 57,494 44,456

Provision for (release of) credit losses 447 ( 550 ) 1,350

Net interest income after provision for (release of) credit losses 67,340 67,044 57,494

Total net revenue 199,189 197,511 182,476

Operating Expense:

Personnel 118,694 106,474 92,155

Salaries and commissions 96,356 93,474 85,489

Share-based compensation 3,167 4,139 6,732

Net periodic pension cost 4,172 878 ( 2,453 )

Other benefits 19,696 20,203 16,706

Total personnel expenses 123,391 118,694 106,474

Occupancy 3,446 3,560 3,676

Equipment 8,305 7,138 6,668

Bad debt expense 7,847 — —

Amortization of intangible assets 739 780 680

15 unchanged sentences

Other comprehensive income (loss):

Net unrealized gain (loss) on securities available-for-sale 12,605 ( 79,746 ) ( 10,447 )

Net unrealized (loss) gain on securities available-for-sale ( 1,931 ) 12,605 ( 79,746 )

Tax effect 459 ( 3,000 ) 18,981

19 unchanged sentences

Losses (gains) on sales of securities 45 173 ( 15 )

Stock-based compensation expense 4,139 6,732 2,859

(Release of) provision for credit losses ( 550 ) 1,350 ( 130 )

Share-based compensation expense 3,167 4,139 6,732

Provision for (release of) credit losses 447 ( 550 ) 1,350

Deferred income tax benefit ( 1,046 ) ( 284 ) ( 1,163 )

(Decrease) increase in current income tax liability ( 1,481 ) 724 206

Increase (decrease) in pension liability 806 ( 2,484 ) ( 1,811 )

Increase (decrease) in current income tax liability 854 ( 1,481 ) 724

FASB ASC 715 pension adjustment, net of tax 5,191 2,550 1,504

Increase in accounts receivable ( 3,336 ) ( 3,841 ) ( 2,520 )

5 unchanged sentences

Purchases of securities available-for-sale ( 119,744 ) ( 15,332 ) ( 232,083 )

Net decrease (increase) in loans 68,588 ( 122,326 ) ( 68,664 )

Net (increase) decrease in loans ( 67,671 ) 68,588 ( 122,326 )

Purchase of bank-owned life insurance — — ( 4,000 )

Decrease (increase) in payments in advance of funding 94,914 ( 2,348 ) ( 96,864 )

(Increase) decrease in payments in advance of funding ( 9,669 ) 94,914 ( 2,348 )

Purchases of premises and equipment, net ( 9,329 ) ( 14,324 ) ( 5,866 )

Asset acquisition of TouchPoint — ( 4,814 ) —

Asset acquisition ( 2,954 ) — ( 4,814 )

Net cash provided by (used in) investing activities 3,951 284,662 ( 306,390 )

1 unchanged sentence

Net (decrease) increase in noninterest-bearing demand deposits ( 273,129 ) ( 118,398 ) 60,115

Net (decrease) increase in interest-bearing demand and savings deposits ( 34,106 ) ( 17,838 ) 90,310

Net increase (decrease) in interest-bearing demand and savings deposits 95,489 ( 34,106 ) ( 17,838 )

Net increase (decrease) in time deposits 4,742 36,101 ( 6,563 )

Net (increase) decrease in accounts and drafts receivable from customers ( 14,872 ) ( 90,787 ) 6

Net decrease (increase) in accounts and drafts receivable from customers 54,746 ( 14,872 ) ( 90,787 )

Net increase in accounts and drafts payable 77,907 3,769 17,204

2 unchanged sentences

Other financing activities, net ( 1,684 ) ( 834 ) ( 594 )

Net cash (used in) provided by financing activities ( 150,072 ) ( 59,204 ) 338,370

Net increase (decrease) in cash and cash equivalents 171,526 ( 313,986 ) ( 155,600 )

Net cash used in financing activities ( 65,640 ) ( 150,072 ) ( 59,204 )

Net (decrease) increase in cash and cash equivalents ( 22,740 ) 171,526 ( 313,986 )

Cash and cash equivalents at beginning of year 372,468 200,942 514,928

Cash and cash equivalents at end of year $ 349,728 $ 372,468 $ 200,942

Supplemental information:

Supplemental cash flow information:

Cash paid for interest $ 20,227 $ 15,697 $ 3,431

Cash paid for income taxes 5,509 9,300 8,396

Supplemental noncash disclosures:

Contingent consideration for asset acquisition $ 3,500 $ — $ —

See accompanying notes to consolidated financial statements.

14 unchanged sentences

( 15,442 ) ( 15,442 )

Issuance of 85,056 common shares pursuant to stock-based compensation plan, net

Issuance of 82,172 common shares pursuant to share-based compensation plan, net

( 2,727 ) 2,414 ( 313 )

Exercise of SARs ( 859 ) 578 ( 281 )

Stock-based compensation expense 2,859 2,859

Share-based compensation expense 6,732 — 6,732

Purchase of 130,374 common shares

( 5,299 ) ( 5,299 )

Other comprehensive income 468 468

Other comprehensive loss ( 59,774 ) ( 59,774 )

Balance, December 31, 2022

3 unchanged sentences

( 15,959 ) ( 15,959 )

Issuance of 82,172 common shares pursuant to stock-based compensation plan, net

Issuance of 84,366 common shares pursuant to share-based compensation plan, net

( 3,334 ) 2,616 ( 718 )

Exercise of SARs ( 238 ) 122 ( 116 )

Stock-based compensation expense 6,732 6,732

Share-based compensation expense 4,157 ( 18 ) 4,139

Purchase of 150,541 common shares

6 unchanged sentences

( 16,463 ) ( 16,463 )

Issuance of 84,366 common shares pursuant to stock-based compensation plan, net

Issuance of 126,336 common shares pursuant to share-based compensation plan, net

( 5,613 ) 3,929 ( 1,684 )

Exercise of SARs ( 238 ) 122 ( 116 )

Stock-based compensation expense 4,157 ( 18 ) 4,139

Share-based compensation expense 3,199 ( 32 ) 3,167

Purchase of 167,455 common shares

( 7,248 ) ( 7,248 )

Other comprehensive loss 11,852 11,852

Other comprehensive income 2,281 2,281

Balance, December 31, 2024

72 unchanged sentences

The resulting annual charge off rate determined for each year in the WARM model is applied to the loan balances estimated in the attrition analysis.

Management accounts for the inherent uncertainty of the underlying economic forecast by reviewing forecast scenarios.

Additionally, the ACL calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience.

74 unchanged sentences

Diluted earnings per share is computed by dividing net income by the sum of the weighted average number of common shares outstanding and the weighted average number of potential common shares outstanding.

Stock-Based Compensation The Company follows FASB ASC 718, Accounting for Stock Options and Other Stock-based Compensation (“ASC 718”), which requires that all stock-based compensation be recognized as an expense in the financial statements and that such cost be measured at the fair value of the award.

Share-Based Compensation The Company follows FASB ASC 718, Accounting for Stock Options and Other Share-based Compensation (“ASC 718”), which requires that all share-based compensation be recognized as an expense in the financial statements and that such cost be measured at the fair value of the award.

ASC 718 also requires that excess tax benefits related to stock option exercises and restricted stock awards be reflected as financing cash inflows instead of operating cash inflows.

Pension Plans The amounts recognized in the consolidated financial statements related to pension are determined from actuarial valuations.

Inherent in these valuations are assumptions including expected return on plan assets, discount rates at which the liabilities could be settled at December 31, 2023, rate of increase in mortality rates.

Pension Plans The amounts recognized in the consolidated financial statements related to the pension plans are determined from actuarial valuations.

Inherent in these valuations are assumptions including expected return on plan assets, discount rates at which the liabilities could be settled and mortality rates.

These assumptions are updated annually and are disclosed in Note 10.

12 unchanged sentences

Impact of New and Not Yet Adopted Accounting Pronouncements

In March 2022, the FASB issued 2022-02, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02").

This ASU eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL methodology for estimating allowances for credit losses and enhances the disclosure requirements for loan restructurings made with borrowers experiencing financial difficulty.

Instead, entities are required to evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or continuation of an existing loan.

In addition, the amendments require a public business entity to disclose current period gross charge-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures.

ASU 2022-02 was effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The implementation of this ASU effective January 1, 2023 did not have a material impact on the consolidated financial statements.

In October 2023, the FASB issued 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06").

7 unchanged sentences

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

ASU 2023-07 is not expected to have a significant impact on the Company's financial statements.

The adoption of ASU 2023-07 did not have a significant impact on the Company's financial statements.

See Note 17 to our financial statements.

In December 2023, the FASB issued 2023-09, Income Taxes (Topic 740):

76 unchanged sentences

Corporate bonds 95,841 3 ( 8,058 ) 87,786

Treasury securities 109,836 — ( 1,115 ) 108,721

Asset backed securities issued or guaranteed by U.S.

25 unchanged sentences

Corporate bonds 7,901 99 66,860 7,960 74,761 8,059

Treasury securities — — 108,721 1,115 108,721 1,115

Asset backed securities issued or guaranteed by U.S.

63 unchanged sentences

Construction 25,518 — — — — 25,518

PPP — — — — — —

Other 54 — — — — 54

Total $ 1,081,989 $ — $ — $ — $ — $ 1,081,989

8 unchanged sentences

Construction 7,790 — — — — 7,790

PPP — — — — — —

Other 54 — — — — 54

13 unchanged sentences

Construction 25,518 — — 25,518

Other 54 — — 54

Total $ 1,030,761 $ 51,228 $ — $ 1,081,989

18 unchanged sentences

(2) Loans subject to special monitoring possess some credit deficiency or potential weakness which requires a higher level of management attention.

The Company adopted Accounting Standards Update ASU 2022-02, effective January 1, 2023.

The amendments in ASU 2022-02 eliminated the recognition and measure of troubled debt restructurings and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty.

In some cases, these modifications may result in new loans.

Loan modifications to borrowers experiencing financial difficulty may be in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, a term extension, or a combination thereof, among other things.

The following table shows the amortized cost of loans at December 31, 2023 that were both experiencing financial difficulty and modified during the year ended December 31, 2023, segregated by category and type of modification.

(In thousands) Payment Delay Term Extension Interest Rate Reduction Combination Term Extension and Interest Rate Reduction Percentage of Total Loans Held for Investment

Commercial and industrial $ — $ 22,354 $ — $ — 4.48 %

Total $ — $ 22,354 $ — $ — 2.20 %

There were no loans modified during the year ended December 31, 2024.

There were three loans modified during the year ended December 31, 2023.

The terms were extended by periods of two to four years, and there was not an interest rate reduction associated with the modifications.

There were no commitments to lend additional funds to these borrowers at December 31, 2023.

The following table shows the performance of loans that have been modified to borrowers experiencing financial difficulty during the year ended December 31, 2023.

(In thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due

There were no commitments to lend additional funds to these borrowers at December 31, 2024 or December 31, 2023.

(In thousands) Payment Delay Term Extension Interest Rate Reduction Combination Term Extension and Interest Rate Reduction Percentage of Total Loans Held for Investment

Commercial and industrial $ — $ 22,354 $ — $ — 4.48 %

Total $ — $ 22,354 $ — $ — 2.20 %

There were no modified loans that had a payment default during the year ended December 31, 2023 and that had been modified due to the borrower experiencing financial difficulty within the 12 previous months preceding the default.

There were no modified loans that had a payment default during the years ended December 31, 2024 or December 31, 2023 and that had been modified due to the borrower experiencing financial difficulty within the 12 previous months preceding the default.

Upon the Company's determination that a modified loan has subsequently been deemed uncollectible, the loan is written off.

There were no loans written off during the year ended December 31, 2023.

Prior to the adoption of ASU 2022-02, there were no loans considered troubled debt restructurings as of December 31, 2022.

The Company had no loans evaluated for expected credit losses on an individual basis as of December 31, 2023.

The Company had one loan that was considered an individually evaluated credit at December 31, 2022, with no specific allowance.

This loan was paid off in full in January 2023.

There were no loans written off during the years ended December 31, 2024 or December 31, 2023.

The Company had no loans evaluated for expected credit losses on an individual basis as of December 31, 2024 or December 31, 2023.

There were no foreclosed loans recorded as other real estate owned as of December 31, 2024 or December 31, 2023.

2 unchanged sentences

Allowance for credit losses on loans:

Balance at December 31, 2022

Balance at January 1, 2024

$ 5,412 $ 1,093 $ 6,476 $ 108 $ 13,089

(Release of) provision for credit losses (1)

Provision for (release of) credit losses (1)

485 ( 70 ) ( 218 ) 109 306

1 unchanged sentence

$ 5,897 $ 1,023 $ 6,258 $ 217 $ 13,395

(1) For the period ended December 31, 2023, there was a release of credit losses of $ 100,000 for unfunded commitments.

(1) For the period ended December 31, 2024, there was a provision for credit losses of $ 141,000 for unfunded commitments.

A summary of the ACL by category for the period ended December 31, 2023 is as follows:

2 unchanged sentences

Balance at January 1,2023

Provision for (release of) credit losses (1)

$ 5,978 $ 940 $ 6,437 $ 184 $ 13,539

Recoveries 13 — — — 13

(Release of) provision for credit losses (1)

( 566 ) 153 39 ( 76 ) ( 450 )

Balance at December 31, 2023

16 unchanged sentences

The Company accounts for intangible assets in accordance with FASB ASC 350, Goodwill and Other Intangible Assets , which requires that intangibles with indefinite useful lives be tested annually for impairment, or when management deems there is a triggering event, and those with finite useful lives be amortized over their useful lives.

In December 2024, the Company acquired the assets of AcuAudit, a freight audit platform for ocean and international air freight, from Acuitive Solutions LLC.

The Company recorded intangible assets of $ 6.4 million at December 31, 2024, including goodwill of $ 4.0 million, software of $ 2.2 million, and a customer list of $ 200,000 .

The amounts for these

intangible assets have been recorded on a provisional basis and will be adjusted upon the completion of a third party valuation during the first quarter of 2025.

The goodwill is deductible for tax purposes over 15 years, starting in 2024.

The intangible assets and results of AcuAudit are included in the Information Services operating segment.

The purchase price of the acquisition consisted of a cash payment of $ 3.0 million and potential contingent consideration in the form of an earn out based on annualized recurring subscription and transactional revenues from the AcuAudit software (ARR) at the end of 24 months.

The earn out is to be paid out in two installments, with the first payment made on January 1, 2026 based on ARR multiplied by 110%, multiplied by 80%.

The second earn out payment on January 1, 2027 is based on ARR times 110% minus the first earn out payment.

The Company valued the contingent earn out component at $3.5 million.

The fair value of the contingent consideration was estimated on the acquisition date as the present value of the expected future contingent payments, which were determined using a Monte Carlo simulation.

Any changes in the estimated fair value of the contingent earn out consideration, up to the contracted amount, will be reflected in the results of operations in future periods as they are identified.

Details of the Company’s intangible assets are as follows:

50 unchanged sentences

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.

As of December 31, 2023, the Bank had secured lines of credit with the Federal Home Loan Bank of $ 228.3 million collateralized by commercial mortgage loans.

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.

As of 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.

7 unchanged sentences

Performance-based stock vested 40,213

Employee SARs exercised 2,974

Directors’ stock grants 22,030

20 unchanged sentences

Effective December 31, 2016, the Plan was closed to all new participants.

Additionally, the Company froze the benefits of the Plan as of February 28, 2021.

Additionally, the Company froze the benefits of the Plan

as of February 28, 2021.

As such, subsequent to February 28, 2021, there is no service cost associated with the Plan.

During 2024, the Company terminated the Plan.

A summary of the activity in the Plan’s projected benefit obligation, assets, funded status and amounts recognized in the Company’s consolidated balance sheets is as follows:

3 unchanged sentences

Interest cost 4,280 4,314

Actuarial gain 865 ( 31,982 )

Actuarial (gain) loss ( 6,047 ) 865

Benefits paid ( 84,576 ) ( 3,485 )

8 unchanged sentences

Funded status:

Accrued pension liability $ ( 373 ) $ ( 2,039 )

Accrued pension asset (liability) $ 1,345 $ ( 373 )

The following represent the major assumptions used to determine the projected benefit obligation of the Plan.

For 2024, the projected benefit obligation represents actual benefit payments to be made during the first quarter of 2025.

During the fourth quarter of 2024, the plan liabilities were settled with lump sum payments and the purchase of annuity contracts.

The remaining projected benefit obligation at December 31, 2024 represents benefit payments to be made to retirees prior to the administration of the Plan being taken over by the insurance company that assumed the annuity contracts from the Plan.

For 2024, 2023 and 2022, the Plan’s expected benefit cash flows were discounted using the FTSE Above Median Double-A Curve.

For 2023 and 2022 the Pri-2012 Mortality Table and MP-2022 Mortality Improvement Scale were used.

For 2021, the Pri-2012 Mortality Table and MP-2021 Mortality Improvement Scale were used.

2024 2023 2022

Weighted average discount rate 5.60 % 5.05 % 5.25 %

Rate of increase in compensation levels N/A N/A (a)

(a) 6.0 % graded down to 3.25 % over the first seven years of service.

The accumulated benefit obligation was $ 87.1 million and $ 85.4 million as of December 31, 2023 and 2022, respectively.

Rate of increase in compensation levels N/A N/A N/A

The accumulated benefit obligation was $ 784,000 and $ 87.1 million as of December 31, 2024 and 2023, respectively.

The Company made no contributions during 2024 or 2023 to the Plan.

The Company has not determined if it will make a contribution to the Plan in 2024.

The following pension benefit payments, as appropriate, are expected to be paid by the Plan:

2025 $ 784,000

2025 4,532,000

2026 4,758,000

2027 4,968,000

2028 5,161,000

2029-2033 28,280,000

2026 and thereafter —

The Plan’s net periodic pension cost (benefit) included the following components:

9 unchanged sentences

Weighted average discount rate 5.05 % 5.25 % 2.85 %

Rate of increase in compensation levels N/A N/A (a )

Rate of increase in compensation levels N/A N/A N/A

Expected long-term rate of return on assets 5.00 % 6.00 % 6.00 %

(a) 6.0 % graded down to 3.25 % over the first seven years of service.

For 2023 and 2022, the Pri-2012 Mortality Table and the MP-2021 Mortality Improvement Table were used.

For 2021, the Pri-2012 Mortality Table and the MP-2020 Mortality Improvement Table were used.

The investment objective for the Plan is to maximize total return with a tolerance for average risk.

Asset allocation is a balance between fixed income and equity investments, with a target allocation of approximately 86 % fixed income, and 14 % equity.

Due to volatility in the market, this target allocation is not always desirable and asset allocations can fluctuate between acceptable ranges.

The fixed income component is invested in pooled investment grade securities.

components are invested in pooled large cap, small/mid cap and non-U.S.

The expected one-year nominal returns and annual standard deviations are shown by asset class below:

Asset Class % of Total Portfolio One-Year Nominal

Return Annual Standard

Core Fixed Income 86.0 % 4.52 % 4.30 %

Global Equity 14.0 % 8.54 % 18.12 %

Applying appropriate correlation factors between each of the asset classes the long-term rate of return on assets is estimated to be 5.00 %.

Prior to the Plan termination, the investment objective for the Plan was to maximize total return with a tolerance for average risk.

As of December 31, 2024, the remaining Plan assets of $2.1 million are fully invested in cash.

A summary of the fair value measurements by type of asset is as follows:

30 unchanged sentences

Weighted average discount rate 5.50 % 4.95 % 5.15 %

Rate of increase in compensation levels N/A N/A (a)

(a) 6.00 % graded down to 3.25 % over the first seven years of service.

Rate of increase in compensation levels N/A N/A N/A

The accumulated benefit obligation was $ 8.8 million and $ 9.5 million as of December 31, 2024 and 2023, respectively.

4 unchanged sentences

2030-2034 $ 3,711,000

Net periodic pension cost related to the SERP included the following components:

Net periodic benefit cost related to the SERP included the following components:

For the Year Ended December 31,

16 unchanged sentences

Contributions under the 401(k) plan for 2024, 2023 and 2022 were $ 4.1 million, $ 5.1 million, and $ 4.6 million, respectively.

Stock-based Compensation

Stock-based compensation awards prior to April 17, 2023 were issued under the Company's Amended and Restated Omnibus Stock and Performance Compensation Plan (the "Prior Plan").

Share-based Compensation

Share-based compensation awards prior to April 17, 2023 were issued under the Company's Amended and Restated Omnibus Stock and Performance Compensation Plan (the "Prior Plan").

On April 18, 2023, shareholders approved the 2023 Omnibus Stock and Performance Compensation Plan (the "2023 Omnibus Plan") to replace the Prior Plan.

30 unchanged sentences

The PBRS that vested during the year ended December 31, 2024 achieved weighted average financial goals of 135.4 % of target, resulting in the issuance of 68,834 shares of common stock.

The PBRS that vested during the year ended December 31, 2022 achieved weighted average financial goals of 52.9 % of target, resulting in the issuance of 18,021

shares of common stock.

The PBRS that vested during the year ended December 31, 2023 achieved weighted average financial goals of 86.7 % of target, resulting in the issuance of 26,499 shares of common stock.

The outstanding PBRS at December 31, 2024 will vest at scheduled vesting dates and the actual number of shares of common stock issued will range from 0 % to 150 % of the target opportunity based on the actual achievement of financial goals for the respective three-year performance period.

5 unchanged sentences

30,409 $ 46.70

Exercised ( 15,916 ) 31.92

Expired ( 30,409 ) 46.70

Balance at December 31, 2024

Exercisable at December 31, 2024

30,409 $ 46.70

The total intrinsic value of SARs exercised during 2023 and 2022 was $ 508,000 and $ 2.2 million, respectively.

The average remaining contractual term for SARs outstanding as of December 31, 2023 was 0.08 years, and the aggregate intrinsic value was $ 0 .

The total intrinsic value of SARs exercised during 2024 and 2023 was $ 0 and $ 508,000 , respectively.

The average remaining contractual term for SARs outstanding as of December 31, 2023 was 0.08 years, and the aggregate intrinsic value was $ 0 .

25 unchanged sentences

Share-based compensation adjustment 316 298 258

Early surrender of bank-owned life insurance 279 — —

Federal tax credits ( 397 ) ( 643 ) ( 473 )

18 unchanged sentences

Premises and equipment $ ( 986 ) $ ( 1,144 )

ASC 715 supplemental executive retirement plan asset ( 249 ) —

Pension — ( 967 )

18 unchanged sentences

$ 1,257 $ 1,397 $ 1,252

At December 31, 2023, 2022 and 2021, the balances of the Company’s unrecognized tax benefits which would, if recognized, affect the Company’s effective tax rate were $ 1,285,000 , $ 1,129,000 and $ 1,134,000 , respectively.

At December 31, 2024, 2023 and 2022, the balances of the Company’s unrecognized tax benefits which would, if recognized, affect the Company’s effective tax rate were $ 1.1 million, $ 1.3 million and $ 1.1 million, respectively.

These amounts are net of the offsetting expense from other taxing jurisdictions.

61 unchanged sentences

The Company believes such commitments have been made at terms which are competitive in the markets in which it operates.

however, no premium or discount is offered thereon.

The Company and its subsidiaries are not involved in any pending proceedings other than ordinary routine litigation incidental to their businesses.

Management believes none of these proceedings, if determined adversely, would have a material effect on the business or financial condition of the Company or its subsidiaries.

On March 19, 2024, the Company filed a claim against Rubicon Technologies, Inc.

("Rubicon") for failed reimbursement of invoices that were processed and paid by the Company on Rubicon's behalf and unpaid fees for Company services that were due for invoice management services and bill pay services, together with interest and penalties related to the foregoing amounts.

The Company recorded a write-off to bad debt expense of $7.8 million for the year ended December 31, 2024 related to this matter.

The Company strongly believes in the merits of its claim against Rubicon.

On April 22, 2024, Rubicon filed a counterclaim against the Company for failure to perform its obligations under the Master Services Agreement between the Company and Rubicon.

The Company believes these claims to be without merit and intends to vigorously defend itself against such claims.

Revenue from Contracts with Customers

28 unchanged sentences

Information Services and Banking Services.

Each of these segments provides distinct services that are marketed through different channels.

Each of these segments provides distinct services that are marketed through different channels and are consistent with the presentation of financial information to the chief operating decision maker to evaluate segment performance, develop strategy, and allocate resources.

They are managed separately due to their unique service and processing requirements.

The Company's chief operating decision maker is the President and Chief Executive Officer of Cass Information Systems' Inc.

The Information Services segment provides transportation, energy, telecommunication, and environmental invoice processing and payment services to large corporations.

2 unchanged sentences

The Company’s accounting policies for segments are the same as those described in Note 1 of this report.

Management evaluates segment performance based on pre-tax income after allocations for corporate expenses.

Management and the chief operating decision maker evaluates segment performance based on pre-tax income after allocations for corporate expenses.

Transactions between segments are accounted for at what management believes to be fair value.

12 unchanged sentences

Interest expense 1,540 33,496 ( 14,778 ) 20,258

Provision for credit losses — 447 — 447

Total net revenue 166,557 28,268 4,364 199,189

Personnel expenses 108,173 15,218 — 123,391

Occupancy 2,780 666 — 3,446

Equipment 7,666 639 — 8,305

Bad debt expense 7,847 — — 7,847

Intersegment (income) expense 3,896 ( 3,896 ) — —

Other operating expense 23,078 8,903 — 31,981

Total operating expense 153,440 21,530 — 174,970

Pre-tax income $ 13,117 $ 6,738 $ 4,364 $ 24,219

3 unchanged sentences

Average funding sources $ 1,297,099 $ 782,714 $ — $ 2,079,813

(In thousands) Information

Services Banking

Services Corporate,

and Other Total

Fee income $ 126,766 $ 2,713 $ 988 $ 130,467

1 unchanged sentence

Interest expense 1,191 28,029 ( 12,954 ) 16,266

Release of credit losses — ( 550 ) — ( 550 )

Total net revenue 165,474 29,930 2,107 197,511

Personnel expenses 106,213 12,481 — 118,694

Occupancy 2,833 727 — 3,560

Equipment 6,566 572 — 7,138

Intersegment (income) expense 4,270 ( 4,270 ) — —

Other operating expense 21,930 8,833 — 30,763

Total operating expense 141,812 18,343 — 160,155

Pre-tax income $ 23,662 $ 11,587 $ 2,107 $ 37,356

3 unchanged sentences

Average funding sources $ 1,353,499 $ 810,903 $ — $ 2,164,402

(In thousands) Information

Services Banking

Services Corporate,

and Other Total

Fee income $ 120,234 $ 3,606 $ 1,142 $ 124,982

1 unchanged sentence

Interest expense 166 4,143 ( 827 ) 3,482

Provision for credit losses — 1,350 — 1,350

Total net revenue 148,596 39,026 ( 5,146 ) 182,476

Personnel expenses 94,537 11,937 — 106,474

Occupancy 2,965 711 — 3,676

Equipment 6,082 586 — 6,668

Intersegment (income) expense 3,350 ( 3,350 ) — —

Other operating expense 15,182 7,576 — 22,758

Total operating expense 122,116 17,460 — 139,576

Pre-tax income $ 26,480 $ 21,566 $ ( 5,146 ) $ 42,900

3 unchanged sentences

Average funding sources $ 1,379,355 $ 953,346 $ — $ 2,332,701

Intersegment (income) expense primarily relates to payment processing fees paid by the Information Services segment to the Banking services segment.

The Corporate elimination for total assets and interest income and interest expense primarily relates to allocated funds and related interest depending on funding needs of the operating segments.

The Company leases certain premises under operating leases.

61 unchanged sentences

Income before income tax expense 16,648 30,203 36,146

Income tax expense 144 1,242 635

Income tax (benefit) expense ( 2,520 ) 144 1,242

Net income $ 19,168 $ 30,059 $ 34,904

8 unchanged sentences

Net change in other liabilities 1,737 ( 2,870 ) 6,462

Stock-based compensation expense 4,139 6,732 2,859

Share-based compensation expense 3,199 4,139 6,732

Other, net 12,612 10,149 10,412

5 unchanged sentences

Net decrease (increase) in loans 16,992 3,977 ( 34,295 )

Net decrease (increase) in payments in advance of funding 94,914 ( 2,347 ) ( 96,864 )

Net (increase) decrease in payments in advance of funding ( 9,669 ) 94,914 ( 2,347 )

Purchase of bank-owned life insurance — — ( 4,000 )

Purchases of premises and equipment, net ( 9,286 ) ( 14,262 ) ( 5,851 )

Asset acquisition of TouchPoint — ( 4,814 ) —

Net cash provided by (used in) investing activities 179,051 ( 48,243 ) ( 341,507 )

Asset acquisition ( 2,954 ) — ( 4,814 )

Net cash (used in) provided by investing activities ( 41,819 ) 179,051 ( 48,243 )

Cash flows from financing activities:

Net (increase) decrease in accounts and drafts receivable from customers ( 14,872 ) ( 90,787 ) 6

Net decrease (increase) in accounts and drafts receivable from customers 54,746 ( 14,872 ) ( 90,787 )

Net increase in accounts and drafts payable 74,323 11,875 16,393

2 unchanged sentences

Other financing activities, net ( 1,716 ) ( 834 ) ( 594 )

Net cash (used in) provided by financing activities ( 25,563 ) ( 95,729 ) 161,363

Net cash provided by (used in) financing activities 103,642 ( 25,563 ) ( 95,729 )

Net increase (decrease) in cash and cash equivalents 89,931 171,257 ( 100,720 )

9 unchanged sentences

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 5, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

40 unchanged sentences

Louis, Missouri

February 28, 2024

March 5, 2025

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data