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Four Pillars Cass Commercial
One Foundation Corporation
[CASS LOGO] Annual Report 98
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"HE IS LIKE A MAN BUILDING A HOUSE,
who dug deep and laid a foundation
upon the rock; and when a flood rose,
the torrent burst against that house and
could not shake it; because it had been
well built." Luke 6:48
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Four Pillars
One Foundation
PRIVATELY HELD
BUSINESSES
BANKING SERVICES
CHURCHES AND
CHURCH-RELATED
BANKING SERVICES
FREIGHT PAYMENT
PROCESSING SERVICES
UTILITY PAYMENT
PROCESSING SERVICES
98
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Chairman's Letter to Shareholders
Financial Highlights
1998 provided another record year of profits for Cass Commercial Corporation.
Net income was $7,408,000, an increase of 5.7% over the corresponding level
in 1997. Basic earnings per share were $1.92 compared to $1.82 in 1997. We
are indeed grateful for this continued growth in income, especially
considering the decreased level of interest rates in the last quarter of the
year.
At year-end, the company's total assets exceeded $500 million for the
first time in its history. Average assets grew at a rate of 5.8% over 1997.
Additionally, the company's loan portfolio increased an average of $10.8
million, representing a 5.5% increase over corresponding levels in 1997. At
year-end total capital represented 12.2% of average assets for the year. The
company continues to experience a strong capital position, providing
additional safety and the capability to exploit future growth opportunities.
Loan quality continues to improve. The ratio of our total non-accrual loans
to total loans at year-end stood at only .2%.
These results again demonstrate excellent asset quality, outstanding
capital protection and a solid base for continued growth and profitability.
We are grateful to be able to provide these results for our shareholders.
Business Highlights
All of the company's business units contributed growth in 1998.
PRIVATELY HELD BUSINESSES
This core banking unit produced substantial new relationships with well
managed, capable companies during the past year. This growth is attributed to
the functional team structure developed in 1997 and an increase in the number
of businesses utilizing Cass' business banking services. The growth
experienced in earning assets and deposits reflects our success in attracting
a growing number of business customers.
CHURCHES AND CHURCH-RELATED INSTITUTIONS
This unit, formed in 1997, showed significant growth during the last year.
Not only were a sizable number of new relationships developed, but
outstanding loan volume to these institutions was increased during the year.
We are excited by the reception of our services from these important
institutions.
2 Cass Commercial Corporation
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FREIGHT PAYMENT PROCESSING
The number of companies utilizing our freight payment services increased
during the past year. This growth was slowed somewhat due to the high level
of Y2K remediation occurring in the marketplace. Nevertheless, new client
volume continued to increase. Cass' leadership in this core business unit is
represented by its large market share and leadership in providing high-quality
transaction processing for over 2,000 customers. No other firm can
match Cass' quality, dollar volume processed and market share. The trend to
outsourcing administrative functions is continuing and we believe over 50% of
the market is still processing their freight internally. This trend should
allow for continued future growth.
UTILITY PAYMENT PROCESSING
This new business unit also showed significant progress in 1998. This was
attributed to a new Sales and Marketing staff operating the entire year, and
the increased availability and knowledge of Cass' processing services
throughout the industry. Cass' volume grew to over $500 million annually
during 1998. We reacted quickly and decisively to market needs, developed
services to meet customer requirements and were one of the first
companies to begin providing these services. We anticipate significant growth
in this area of transaction processing as energy deregulation continues
throughout the country.
We continue to look favorably upon opportunities for growth in each of
our primary business units. We shall continue to focus our resources and
capital expenditures to improve market share, operating capabilities and
performance in each of these key areas.
The Cass Strategy
Our strategy of combining the operations of a uniquely focused transaction
processing business with the activities of a commercial banking enterprise is
working and continues to provide the basis for future growth and
profitability.
These businesses integrate at key junctions that promote the efficiency
and performance of each other. Together they generate higher levels of fee
income, greater returns on invested funds and larger levels of available
funds than could have been achieved independently. The results provide Cass
Commercial Corporation with a history of excellent performance, sustained
growth and strong capabilities.
98
Cass Commercial Corporation 3
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The New Millennium
As we enter 1999, we will be completing the last year of this century. The
Cass organization began with the formation of the Cass Avenue Bank in 1906,
shortly after the beginning of the current century. Cass Commercial
Corporation now prepares to move into the next century, anticipating new
challenges and exciting opportunities. We are determined to continue to grow
the investment of our forefathers, providing long-term benefits for
shareholders and employees by providing excellent quality and responsive
services that produce significant value to our customers.
The year 2000 provides us with a host of opportunities, although not
without some concerns. Obviously, there is great concern about the Y2K
problem, requiring the remediation of significant computer systems. This
effort has caused our nation's business enterprises to spend billions of
dollars and millions of hours to correct and prepare corporate systems for
the future. Along with the effort to make these corrections has come dire
predictions of disaster, gloom and doom for the near future.
At Cass, we prefer to view the year 2000 from the perspective of the
Old Testament model of Caleb. Caleb, along with Joshua, was sent by Moses,
with 10 other individuals, to scout the Promised Land for the nation of
Israel. After returning from their task, the other 10 felt the inhabitants of
the land were too big and too strong to conquer and Israel should not make an
attempt at claiming what God had promised them. Caleb, however, was not
overcome by fear of the inhabitants, but instead focused on the beauty and
productivity of the land and the great opportunities it would provide their
nation. He looked beyond the problems and ultimately became part of God's
chosen vehicle to claim those lands.
It is our belief that the next millennium will be filled with
tremendous opportunities for businesses in our country. Cass will listen to
the marketplace and respond to future needs with innovative services and
products. We will train and develop our staff to be more flexible and
effective. Our technology will be used to provide even better services and
higher quality. We must grasp the opportunity and utilize the God-given
abilities and resources we have been provided and accept the great challenges
before us. Cass is indeed excited about the opportunities awaiting the new
millennium.
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The Foundation
Obviously, there has been and will continue to be a great deal of change in
the years ahead. However, all things do not change. The foundation upon which
the Cass organization was built and upon which it currently rests will not
change. The four pillars, on the cover of our annual report, represent our
current four business units. However, they all rest upon the same foundation.
When the number of business units increase in the years ahead, there will
still be one foundation.
Our business foundation consists of an ongoing commitment to
maintaining a strong capital position, capable staff, effective systems and
technology, and high-quality performance that will lead to excellent results
over long-term periods. These traits have been characteristic of the Cass
organization and continue to drive our activities. Our business objectives and
goals are built on this business foundation.
Of greater importance and significance, however, is our dependence on
God for the future. No matter what we achieve or how well we perform, our
most important objective is to please God. Indeed, long-term significance,
long-term value and ultimate success are not determined by business results.
They are driven by a loving God who daily dispenses grace and mercy to an
undeserving humanity. Again, in 1998, we have tasted this grace and the
loving hand of a Creator who cares about all aspects of life. The Cass
foundation shall, indeed, be built upon a desire to conduct our affairs and
activities in a manner that upholds His righteousness and seeks to honor and
glorify Him by what we do and how it is accomplished.
/s/ L. A. Collett
Lawrence A. Collett
Chairman and Chief Executive Officer
Cass Commercial Corporation 5
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Privately Held Businesses
1998 BUSINESS RESULTS
1998 was an excellent year in this core banking unit which provides financial
services to privately held businesses. As of December 31, 1998, loans
outstanding to privately held businesses were $193,500,000, representing 86%
of our total loan portfolio of $224,900,000. Total net loan growth was 14.8%
over the prior year-end balance. This is excellent considering the overall
economy is growing at an annual rate of approximately 3.5%.
The majority of our new clients in 1998 came from large national banks
which have acquired local banks causing many customers to consider
alternatives. We believe our operating strategies are continuing to be
effective in pursuing these under-served privately held companies while
satisfying the financial needs of our existing clients.
In light of this strong growth, it is important to note that credit
quality in our overall loan portfolio has continued to strengthen from
already superior levels. As of December 31, 1998, nonperforming loans
represented just .3% of total loans outstanding. As a point of reference,
under 1% is considered to be very strong. Our levels of loan delinquencies,
loans charged off and other important credit quality factors continue to
register historic low levels as well.
Total Impaired Loans (as of Dec. 31) Total Loans (as of Dec. 31)
(In Thousands) (In Millions)
[GRAPH] [GRAPH]
BUSINESS STRATEGY
Our main strategy has been to focus on our strenghts ... providing high levels
of expertise and personal attention to our clients balanced with electronic
technology, specifically tailored for privately held companies. This
continuing dedication to focus on our specialty was reflected in our decision in
1998 to change our legal name from Cass Bank & Trust Company to Cass Commercial
Bank. We have differentiated Cass
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by listening to private business owners and making a sincere attempt to
service their banking needs.
Relationship Continuity -- We strive to provide continuity in account
management by creating teams of bankers, each having a specific role to play
on behalf of our client. This team of specialists provides better
responsiveness and multiple points of contact. Clients have immediate access
to the appropriate person to solve their problem. Further, should there be
any change in staff, our clients are assured continuity of the service
relationship. We also make it a special point to involve Cass' executive
management with our customers in the credit and relationship process.
Know How -- The experience level of our bankers is also a key attribute
and a major factor in our success. Private business owners want more than
just access to funds. They want helpful direction and advice when it comes to
financing decisions. With low turnover in our banking staff and many years of
experience in this particular niche, our bankers have the opportunity to
share firsthand experience and to add valuable insight. It is important that
our clients never feel they have to train their Cass banker.
Independence -- Now in our 93rd year of operations, Cass possesses a
long history and a strong commitment to remaining independent. The
dislocation caused by the recent banking consolidations will continue over
the next several years. Our clients place a premium on doing business with a
bank that has a long history of independence and clearly desires to remain
independent.
Operating Competence -- The high quality of our back room operations is
a strength and a key commitment to our valued clients. As banks have grown
and cut staff to achieve cost reductions, we hear many business owners
concerned about the quality of banking operations. Fundamentals such as
accurate check and statement processing or timely response to inquiries can
no longer be taken for granted. Further, we know that errors waste valuable
time and should be unnecessary. Business owners expect and deserve more from
their bank. Cass' operations staff focuses solely on commercial accounts
which allows us to minimize operating errors and to offer superior response
delivered through our service teams.
Tailored and Affordable Products -- Having products that work well is
very important, but clients also want these products at moderate cost.
Whether it is flexible loan structures, customized to fit the specific needs
of each borrower, or treasury management products (such as wholesale lockbox
services, controlled disbursement accounts, online information reporting,
money fund sweeps, and electronic commerce), we deliver banking services with
high technical functionality. Our fees are moderate because our clients do
not pay for large capacity enhancements or overhead requirements. Finally,
our products and services are specifically designed to meet the needs of our
business customers.
Attitude -- Being responsive, helpful and friendly is more than just a
good business strategy to us ... it is simply the right way to treat people.
This attitude is an outgrowth of our corporate culture. In the final
analysis, it is persistence and effort in serving our customers that
represents the difference between Cass and other banks.
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Cass Commercial Corporation 7
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Churches and Church-Related Institutions
1998 was another outstanding year for Cass Commercial Bank's Church and
Ministries' Division. And, in many ways, it was a continuation of the
positive trends that have been experienced in our church and ministries'
business.
In 1998, we more than doubled our loan outstandings, once again
exceeding the previous year's growth in new church and ministry
relationships, and our pipeline of new church and ministries' business is
stronger than ever.
Our church relationships continue to increase and diversify among
small, medium and large-size churches, representing a wide variety of
denominations and ministries.
One distinctive feature of Cass Commercial Bank is the way we work with
churches. We invest time to get to know each church and its unique needs,
building a relationship with each of our church customers. We help assess
total project sizes and affordable loan levels. We then partner in building a
financial game plan to address the immediate project, as well as the future
needs of the church.
Lending alternatives include the financing of a church's current
mortgage loan, the expansion of existing facilities and the building of an
entirely new church facility. We also offer a variety of term loans for
various other church and ministries' needs.
Another feature of our service is our approach to a church's
depository, savings and investment needs, both short and longer term. We work
closely with each church in understanding its fiscal philosophy and operating
approach. We then conduct a comprehensive analysis comparing various
operating, savings and investment alternatives to determine the best fit for
our customer.
We also provide a "team" approach to building a banking relationship.
Each of our customers is provided a team that includes a marketing officer, a
lending officer, a depository/cash management officer, and a customer service
officer, as well as executive management. This provides relationship
continuity and consistency for our church customers.
At Cass, we believe lending to churches and ministries is not just good
business; we also believe these ministries are excellent avenues to help
address the critical issues facing our communities. The focus on outreach
services provided by these organizations addresses society's deepest needs.
By providing financial support to churches and ministries, Cass plays a
small part in helping to renew and to restore our city and suburban
communities.
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[PHOTO]
In 1999, the St. Louis community will be the recipient of two
significant events. The visit of Pope John Paul II was an exciting occasion
that brought spiritual focus and renewed attention on our need for God's
sustenance and support. The Billy Graham Crusade in the fall will continue that
focus by bringing together thousands of churches to proclaim the New Testament
gospel message and the love of God to hundreds of thousands in this region. Both
of these events remind us of the importance of our church and spiritual
community to the health and vitality of our nation.
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Cass Commercial Corporation 9
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Freight Payment Processing
Cass Information Systems provides audit, payment, cost accounting and
financial control of transportation and warehousing transactions for many of
the nation's largest manufacturing, chemical, food and personal products
companies. Our rating software helps businesses manage carrier rates and
integrate them with their decision support systems. The information we
provide enables our customers to focus their attention on controlling costs
and improving service levels to their customers. In 1998 Cass processed 25
million transactions with a value of $7.0 billion. With processing centers in
St. Louis, Missouri; Columbus, Ohio; and Boston, Massachusetts; and a
software development group in Chicago, Illinois; we are well-positioned to
meet the growth opportunities in the markets we serve.
In today's business climate we are adapting and taking advantage of
technology developments to leverage our unique financial strength to create a
transaction processing company that is distinctively identified as the market
leader. Our business model has been redefined and constructed entirely on an
electronic commerce platform.
ELECTRONIC DATA INTERCHANGE (EDI)
For many years Cass has focused on EDI as a very important strategic
initiative to reduce costs, improve data integrity and eliminate the
inefficiencies inherent in paper processing. Working with our customer base
and carrier partners, Cass has converted 50% of the 25 million freight bills
processed annually from paper to electronic transactions. And as part of a
bank holding company, Cass supports complete financial EDI services for
carriers, including Automated Clearing House (ACH) payments and more than 10
million electronic remittance advice transactions. Cass views the conversion
to EDI as a major initiative as we seek to reach our next EDI processing
milestone of 75% of freight bills processed.
IMAGING
Until Cass fully converts to EDI processing, access to paper transactions by
our customers will continue to be a requirement. Archiving and retrieving
individual freight bills is expensive and time consuming. Historically, image
scanning and storage costs were not competitive with microfilming. But
scanning and image storage costs have decreased dramatically allowing Cass to
offer our customers the convenience of CD-ROM storage of historical files, as
well as easy access to paper and EDI freight bill images via the Internet.
10 Cass Commercial Corporation
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[PHOTO]
INTERNET INFORMATION DELIVERY
Cass provides multiple methods of information delivery to our customers,
including file transfers, e-mail and traditional paper reports. Without
internal information systems that respond to the unique requirements of
supply chain management, our customers rely on Cass to present information in
formats that allow them to manage transportation costs and company
distribution channels. Much of this information is displayed in paper report
formats that are more costly, inefficient and less timely.
The Internet offers ubiquitous, instantaneous access to information.
Cass' Internet plan has five phases of development. In addition to payment
records and carrier rates, a transportation data base will be included that
will accommodate virtually all of the current reporting needs of our
customers. Our information delivery system provides flexible query and
sorting of data, displays data in report formats, multiple charting options,
data export capability and new e-mail delivery services. The integration of
imaging will also allow our customers to view freight bill images from report
displays and, if necessary, approve transactions without paper copies.
Cass is the only company in the industry committing to the Internet on
this scale. The result will be a dramatic distinction of our services to
companies seeking to outsource freight bill payment and information delivery
services. As companies continue to seek the expertise of third-party service
providers to manage activities that are not directly related to their core
strengths, Cass is the only provider with the resources to meet the changing
demands in the marketplace.
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Cass Commercial Corporation 11
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Utilities Payment Processing
Cass Information Systems starts the new year with the creation of a new
Utility Payments Division. Since its inception, the utility payment business
has grown dramatically. In recognition of significant market opportunities,
we are now focused on this emerging business with dedicated resources and a
long-term capital commitment.
We process and pay utility invoices, including electricity, gas, water,
telephone and refuse collection. We also extract key energy information from
invoices, assisting our customers' energy managers in making decisions that
will reduce their companies' energy costs and prepare them for significant
opportunities becoming available with the deregulation of the utility
industry.
The utility payments unit of our business provides many of the same
benefits for our customers that are achieved through our freight payment
services. Our experience in payables outsourcing dates back to the beginning
of the industry. The relationship we have with our Bank assures our customers
that high levels of internal control and financial accountability are
maintained. We have developed a payables processing system that enabled us to
pay more than 25 million invoices in 1998. No other company in the utility
payment business can match our size and commitment to the payables business.
The economies of scale that we apply to the processing of utility invoices
allow us to provide our services to the market at a price that is lower than
a company's internal cost or any external alternative.
Annualized Utility Dollars Paid
(In Millions)
[GRAPH]
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In 1997 we announced our plan to continue the development of our
utility payment unit by expanding our sales resources and marketing efforts.
Since implementing these steps, our sales growth has exceeded our
expectations. We began 1998 with a processing volume of $255 million and
294,000 invoices. The year ended with a 29% increase in dollars and 71%
increase in invoices paid on an annual basis. We believe that a great
opportunity exists for further growth in this marketplace. We have also made
a significant commitment to providing energy management information to our
customers via the Internet. We will continue to devote resources to the
refinement of our information delivery system to ensure that our customers
can take advantage of opportunities to reduce their energy costs.
In 1999 we will focus on continuing to build our leadership position in
this market. Our plans for the coming year include providing enhanced energy
information capabilities, expanded EDI processing, electronic payments and
remittances, Internet invoice retrieval, CD-ROM archival, and expanded energy
and payables reporting services via the Internet.
Our goal, since we entered the utility payment business, was to respond
to an emerging market for payment processing and energy information with a
speed that distances us from companies that are entering the business with
little or no experience. We have been fortunate to have leveraged our
experience in freight payment while adapting to the unique demands of the
energy market.
We expect, by the end of 1998, to be processing more than $1 billion in
energy payables on an annualized basis. Our commitment to grow this business
and further penetrate the energy processing marketplace is unwavering. By
leveraging our freight payment technology and staff resources, while
investing in new capabilities, we hope that this business volume will one day
rival that achieved by our other transaction processing activities.
Annualized Utility Bills Paid
(In Millions)
[GRAPH]
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Cass Commercial Corporation 13
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Consolidated Balance Sheets
December 31
(In Thousands of Dollars, Except per Share Data) 1998 1997
ASSETS
Cash and due from banks $ 22,558 $ 10,849
Federal funds sold and other short-term investments 156,827 88,275
-------- --------
Cash and cash equivalents 179,385 99,124
-------- --------
Investment in debt and equity securities:
Held-to-maturity, fair value of $57,191 and $90,389
at December 31, 1998 and 1997, respectively 56,605 90,139
Available-for-sale, at fair value 27,369 36,112
-------- --------
Total investment in debt and equity securities 83,974 126,251
-------- --------
Loans 224,888 196,478
Less: Allowance for loan losses 4,428 4,484
-------- --------
Loans, net 220,460 191,994
-------- --------
Premises and equipment, net 9,249 9,957
Accrued interest receivable 2,764 3,137
Other assets 8,080 7,864
-------- --------
Total assets $503,912 $438,327
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LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing $ 82,911 $ 61,958
Interest-bearing 108,071 103,899
-------- --------
Total deposits 190,982 165,857
Accounts and drafts payable 250,518 213,755
Short-term borrowings 323 406
Other liabilities 4,685 5,656
-------- --------
Total liabilities 446,508 385,674
-------- --------
SHAREHOLDERS' EQUITY:
Preferred stock, par value $.50 per share; 2,000,000 shares
authorized and no shares issued -- --
Common stock, par value $.50 per share; 20,000,000 shares
authorized and 4,000,000 shares issued 2,000 2,000
Surplus 4,796 4,740
Retained earnings 51,505 46,879
Accumulated other comprehensive income 387 364
Common shares in treasury, at cost (132,123 and 141,452 shares
at December 31, 1998 and 1997, respectively) (1,213) (1,284)
Unamortized stock bonus awards (71) (46)
-------- --------
Total shareholders' equity 57,404 52,653
-------- --------
Total liabilities and shareholders' equity $503,912 $438,327
======== ========
See accompanying notes to consolidated financial statements.
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Consolidated Statements of Income
Year Ended December 31
(In Thousands of Dollars, Except per Share Data) 1998 1997 1996
INTEREST INCOME:
Interest and fees on loans $17,579 $16,951 $16,193
Interest and dividends on debt and equity securities:
Taxable 6,538 9,074 9,729
Exempt from federal income taxes 69 77 72
Interest on federal funds sold and other short-term investments 5,858 3,181 2,132
------- ------- -------
Total interest income 30,044 29,283 28,126
------- ------- -------
INTEREST EXPENSE:
Interest on deposits 4,271 4,181 4,503
Interest on short-term borrowings 10 67 139
------- ------- -------
Total interest expense 4,281 4,248 4,642
------- ------- -------
Net interest income 25,763 25,035 23,484
Provision for loan losses -- 300 --
------- ------- -------
Net interest income after provision for loan losses 25,763 24,735 23,484
------- ------- -------
NONINTEREST INCOME:
Information services revenue:
Freight and utility payment and processing revenue 18,809 17,863 17,698
Freight rating services income 2,426 2,564 3,297
Service charges on deposit accounts 642 524 532
Gain on sale of debt securities 285 216 --
Other 285 646 564
------- ------- -------
Total noninterest income 22,447 21,813 22,091
------- ------- -------
NONINTEREST EXPENSE:
Salaries and employee benefits 24,995 24,093 23,997
Occupancy expense 1,698 1,619 2,115
Equipment expense 2,649 2,654 2,611
Other 7,283 7,545 7,088
------- ------- -------
Total noninterest expense 36,625 35,911 35,811
------- ------- -------
Income before income tax expense 11,585 10,637 9,764
Income tax expense 4,177 3,626 3,245
------- ------- -------
Net income $ 7,408 $ 7,011 $ 6,519
======= ======= =======
EARNINGS PER SHARE:
Basic $ 1.92 $ 1.82 $ 1.69
------- ------- -------
Diluted $ 1.89 $ 1.79 $ 1.66
======= ======= =======
See accompanying notes to consolidated financial statements.
Cass Commercial Corporation 15
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Consolidated Statements of Cash Flows
Year Ended December 31
(In Thousands of Dollars) 1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,408 $ 7,011 $ 6,519
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,359 2,470 2,583
Amortization of stock bonus awards 50 110 110
Provision for loan losses -- 300 --
Deferred income tax expense 131 271 854
Decrease (increase) in accrued interest receivable 373 229 (422)
Gain on sale of debt securities (285) (216) --
Other operating activities, net (1,422) (1,884) (82)
-------- -------- --------
Net cash provided by operating activities 8,614 8,291 9,562
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of debt securities available-for-sale 6,409 14,235 --
Proceeds from prepayments and maturities of debt securities:
Held-to-maturity 32,974 28,076 20,192
Available-for-sale 2,905 1,178 6,918
Purchases of debt and equity securities:
Held-to-maturity -- -- (8,608)
Available-for-sale -- (9,835) (30,632)
Net decrease (increase) in loans (28,466) 1,085 (25,544)
Purchases of premises and equipment, net (1,250) (3,901) (1,747)
-------- -------- --------
Net cash provided by (used in) investing activities 12,572 30,838 (39,421)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in noninterest-bearing demand,
interest-bearing demand and savings deposits 25,945 (10,878) 16,277
Net decrease in time deposits (820) (770) (498)
Net increase (decrease) in accounts and drafts payable, net 36,763 9,065 (4,339)
Net decrease in short-term borrowings (83) (2,070) (2,471)
Proceeds from exercise of stock options 52 -- --
Cash dividends paid (2,782) (2,508) (2,296)
-------- -------- --------
Net cash provided by (used in) financing activities 59,075 (7,161) 6,673
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 80,261 31,968 (23,186)
Cash and cash equivalents at beginning of year 99,124 67,156 90,342
-------- -------- --------
Cash and cash equivalents at end of year $179,385 $ 99,124 $ 67,156
======== ======== ========
SUPPLEMENTAL INFORMATION:
Interest paid $ 4,314 $ 4,301 $ 4,669
Income taxes paid 3,712 2,785 2,295
See accompanying notes to consolidated financial statements.
16 Cass Commercial Corporation
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Statements of Shareholders' Equity and
Comprehensive Income
Accumulated
Other Unamortized
(In Thousands of Dollars, Common Retained Comprehensive Treasury Stock Bonus Comprehensive
Except per Share Data) Stock Surplus Earnings Income Stock Awards Total Income
Balance, December 31, 1995 $10,000 $(3,260) $38,153 $(30) $(1,284) $(266) $43,313
Net income -- -- 6,519 -- -- -- 6,519 $6,519
Cash dividends ($.60 per share) -- -- (2,296) -- -- -- (2,296)
Other comprehensive income:
Net unrealized gain on debt
and equity securities
available-for-sale,
net of tax -- -- -- 135 -- -- 135 135
Reduction in par value of
common stock (8,000) 8,000 -- -- -- -- --
Amortization of Stock Bonus
Plan awards -- -- -- -- -- 110 110
------- ------- ------- ---- ------- ----- ------- ------
Balance, December 31, 1996 2,000 4,740 42,376 105 (1,284) (156) 47,781
Comprehensive income 6,654
======
Net income -- -- 7,011 -- -- -- 7,011 7,011
Cash dividends ($.65 per share) -- -- (2,508) -- -- -- (2,508)
Other comprehensive income:
Net unrealized gain on debt
and equity securities
available-for-sale,
net of tax 402
Adjustment for gain on sale
of debt and equity
securities, available-
for-sale, net of tax (143)
------
Total other
comprehensive income -- -- -- 259 -- -- 259 259
Amortization of Stock Bonus
Plan awards -- -- -- -- -- 110 110
------- ------- ------- ---- ------- ----- ------- ------
Balance, December 31, 1997 2,000 4,740 46,879 364 (1,284) (46) 52,653
Comprehensive income 7,270
======
Net income -- -- 7,408 -- -- -- 7,408 7,408
Cash dividends ($.72 per share) -- -- (2,782) -- -- -- (2,782)
Other comprehensive income:
Net unrealized gain on debt
and equity securities
available-for-sale,
net of tax 211
Adjustment for gain on sale
of debt and equity
securities, available-
for-sale, net of tax (188)
------
Total other
comprehensive income -- -- -- 23 -- -- 23 23
Issuance of 3,000 common shares
pursuant to Stock Bonus Plan -- 48 -- -- 27 (75) --
Amortization of Stock Bonus
Plan awards -- -- -- -- -- 50 50
Exercise of Stock Options -- 8 -- -- 44 -- 52
------- ------- ------- ---- ------- ----- ------- ------
Balance, December 31, 1998 $ 2,000 $ 4,796 $51,505 $387 $(1,213) $ (71) $57,404
======= ======= ======= ==== ======= ===== =======
Comprehensive income $7,431
======
See accompanying notes to consolidated financial statements.
Cass Commercial Corporation 17
20
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
Note 1
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Cass Commercial Corporation (the Company) provides a full range of banking
services to individual, corporate and institutional customers through its
wholly owned subsidiary bank, Cass Commercial Bank (the Bank), formerly known
as Cass Bank & Trust Company. The Bank is subject to competition from other
financial and nonfinancial institutions throughout the metropolitan St.
Louis, Missouri, area. Additionally, the Company and the Bank are subject to
the regulations of certain federal and state agencies and undergo periodic
examinations by those regulatory agencies.
The Company also provides information services through its wholly owned
subsidiary, Cass Information Systems, Inc. (CIS). These services include
processing and payment of freight and utility charges, preparation of
transportation management reports, auditing of freight charges and rating of
freight shipments. CIS is subject to competition from other commercial
concerns providing similar services to companies throughout the United States
and Canada. The consolidated balance sheet caption, "Accounts and Drafts
Payable," consists of obligations related to bill payment services which are
performed for customers.
The accounting and reporting policies of the Company and its
subsidiaries conform to generally accepted accounting principles. The
following is a description of the more significant of those policies:
Basis of Presentation The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries after elimination
of intercompany transactions.
In preparing the consolidated financial statements, Company management
is required to make estimates and assumptions which significantly affect the
reported amounts in the consolidated financial statements. A significant
estimate which is particularly susceptible to change in a short period of
time is the determination of the allowance for loan losses.
Stock Split The Company announced a two-for-one stock split in the
form of a 100% stock dividend payable March 15, 1997, to shareholders of record
as of March 5, 1997. All per share data for prior years has been restated to
give effect to the stock split. As a result of the restatement, surplus in
the years prior to 1996 reflected a negative balance.
Investment in Debt and Equity Securities At the time or purchase, debt
securities are classified into one of two categories: available-for-sale or
held-to-maturity. Held-to-maturity securities are those securities which the
Company has the ability and intent to hold until maturity. All equity
securities, and debt securities not classified as held-to-maturity, are
classified as available-for-sale.
Available-for-sale securities are recorded at fair value. Held-to-
maturity securities are recorded at amortized cost, adjusted for the
amortization of premiums or discounts. Unrealized gains and losses, net of
the related tax effect, on available-for-sale securities are excluded from
earnings and reported as accumulated other comprehensive income. Gains and
losses on the sale of available-for-sale securities are determined using the
specific identification method.
A decline in the market value of any available-for-sale or held-to-
maturity security below cost that is deemed other than temporary is charged
to earnings and results in the establishment of a new cost basis for the
security.
The Bank is required to maintain an investment in the capital stock of
the Federal Reserve Bank. The stock is recorded at cost, which represents
redemption value.
Interest on Loans Interest on loans is recognized based upon the
principal amounts outstanding. It is the Company's policy to discontinue the
accrual of interest when there is reasonable doubt as to the collectibility
of principal or interest. Subsequent payments received on such loans are
applied to principal if there is any doubt as to the collectibility of such
principal; otherwise, these receipts are
18 Cass Commercial Corporation
21
recorded as interest income. The accrual of interest on a loan is resumed
when the loan is current as to payment of both principal and interest and/or
the borrower demonstrates the ability to pay and remain current.
Allowance for Loan Losses The allowance for loan losses is increased
by provisions charged to expense and reduced by net charge-offs. The provisions
charged to expense are based on economic conditions, past losses, collection
experience, risk characteristics of the portfolio and such other factors
which, in management's judgment, deserve current recognition.
Management believes the allowance for loan losses is adequate to absorb
losses in the loan portfolio. While management uses all available information
to recognize losses on loans, future additions to the allowance may be
necessary based on changes in economic conditions. Additionally, various
regulatory agencies, as an integral part of their examination process,
periodically review the Company's allowance for loan losses. Such agencies
may require the Company to increase the allowance for loan losses based on
their judgments and interpretations about information available to them at
the time of their examination.
Information Services Revenue Revenue from freight and utility related
services is recognized when fees are billed to customers, generally monthly.
Premises and Equipment Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation is computed over the
estimated useful lives of the assets, or the respective lease terms for
leasehold improvements, using straight-line and accelerated methods.
Estimated useful lives are 31-1/2 to 39 years for buildings, 8 to 10 years for
leasehold improvements and 3 to 10 years for furniture, fixtures and
equipment. Maintenance and repairs are charged to expense as incurred.
Intangible Assets Cost in excess of fair value of net assets acquired
and fair value in excess of cost of net assets acquired have resulted from
business acquisitions which were accounted for using the purchase method.
Cost in excess of fair value of net assets acquired and fair value in
excess of cost of net assets acquired are amortized on a straight-line basis
over 3 to 15 years.
Assets and liabilities acquired in business acquisitions accounted for
by the purchase method were recorded at their fair value at the date of
acquisition. The premiums and discounts related to the fair value adjustments
are amortized using the level-yield method.
Lines of Credit At December 31, 1998, the Bank has $14,200,000 of
unsecured federal funds lines of credit in place with unaffiliated financial
institutions. Additionally, at December 31, 1998, the Bank has a line of
credit of $50,000,000 under securities sold under repurchase agreements with
an unaffiliated financial institution.
Income Taxes Deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Earnings Per Share Earnings per share is computed based upon the
weighted average number of shares of common stock outstanding during each
year. The weighted average number of shares was 3,862,393, 3,858,548 and
3,858,548 in 1998, 1997 and 1996, respectively.
The only dilutive instruments are stock options and unvested stock
awards with an aggregate dilutive effect of 67,281, 59,000 and 46,938 shares
in 1998, 1997 and 1996, respectively, which result in weighted average shares
and dilutive potential common shares of 3,929,674, 3,917,548 and 3,905,486 in
1998, 1997 and 1996, respectively.
Cash Flows For purposes of the consolidated statements of cash flows,
the Company considers due from banks, federal funds sold and other short-term
investments to be cash equivalents.
Comprehensive Income On January 1, 1998, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS 130), which established standards for reporting
and display of comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general purpose financial statements. The
Company
Cass Commercial Corporation 19
22
reports comprehensive income in the consolidated statements of shareholders'
equity and comprehensive income.
Reclassifications Certain amounts in the 1997 and 1996 consolidated
financial statements have been reclassified to conform with the 1998
presentation. Such reclassifications have no effect on previously reported
net income.
Note 2
CAPITAL REQUIREMENTS AND
REGULATORY RESTRICTIONS
The Company and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can result in certain mandatory, and possibly
additional discretionary, actions by regulators that, if undertaken, could
have a direct material effect on the Company's consolidated financial
statements. Under capital adequacy guidelines, the Company and the Bank must
meet specific capital guidelines that involve quantitative measures of
assets, liabilities and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Company and the Bank's capital amounts
and classifications are also subject to qualitative judgments by the
regulators about components, risk weightings and other factors.
Quantitative measures established by regulators to ensure capital
adequacy require the Company and the Bank to maintain minimum amounts and
ratios of total and Tier I capital to risk-weighted assets, and of Tier I
capital to average assets. Management believes as of December 31, 1998, the
Company and the Bank meet all capital adequacy requirements to which they are
subject.
The Bank is also subject to the regulatory framework for prompt
corrective action. The most recent notification from the regulatory agencies,
dated May 30, 1998, categorized the Bank as well capitalized. To be
categorized as well capitalized, the Bank must maintain minimum total risk-
based, Tier I risk-based, and Tier I leverage ratios as set forth in the
table. There are no conditions or events since that notification that
management believes have changed the Bank's category.
Subsidiary dividends are the principal source of funds for payment of
dividends by the Company to its shareholders. The Bank is subject to
regulations which require the maintenance of minimum capital levels. At
December 31, 1998, unappropriated retained earnings of $13,352,000 were
available at the Bank for the declaration of dividends to the Company without
prior approval from regulatory authorities.
Restricted funds on deposit used to meet regulatory reserve
requirements amounted to approximately $3,763,000 and $3,504,000 at December
31, 1998 and 1997, respectively.
The Company and the Bank's actual and required capital amounts and
ratios as of December 31, 1998, are as follows:
Requirement
to Be Well
Capitalized Under
Capital Prompt Corrective
Actual Requirements Action Provisions
-------------------- -------------------- -------------------
(Dollars In Thousands) Amount Ratio Amount Ratio Amount Ratio
Total capital (to risk-weighted assets):
Cass Commercial Corporation $60,073 21.14% $22,732 8.00% $ N/A N/A%
Cass Commercial Bank 27,526 15.12 14,568 8.00 18,211 10.00
Tier I capital (to risk-weighted assets):
Cass Commercial Corporation $56,510 19.89% $11,366 4.00% $ N/A N/A%
Cass Commercial Bank 25,246 13.86 7,284 4.00 10,926 6.00
Tier I capital (to average assets):
Cass Commercial Corporation $56,510 12.05% $14,073 3.00% $ N/A N/A%
Cass Commercial Bank 25,246 12.04 6,291 3.00 10,485 5.00
20 Cass Commercial Corporation
23
Note 3
INVESTMENT IN DEBT AND
EQUITY SECURITIES
Debt and equity securities have been classified in the consolidated balance
sheets according to management's intent.
The amortized cost and fair values of debt securities classified as
held-to-maturity at December 31, 1998 and 1997, are as follows:
1998
Gross Gross
Amortized Unrealized Unrealized Fair
(In Thousands) Cost Gains Losses Value
U.S. Government
Treasury securities $38,369 $484 $ -- $38,853
Obligations of
U.S. Government
corporations
and agencies 16,958 72 (28) 17,002
States and political
subdivisions 1,278 60 (2) 1,336
------- ---- ----- -------
$56,605 $616 $ (30) $57,191
======= ==== ===== =======
1997
Gross Gross
Amortized Unrealized Unrealized Fair
(In Thousands) Cost Gains Losses Value
U.S. Government
Treasury securities $66,473 $443 $ (32) $66,884
Obligations of
U.S. Government
corporations
and agencies 22,174 17 (221) 21,970
States and political
subdivisions 1,492 46 (3) 1,535
------- ---- ----- -------
$90,139 $506 $(256) $90,389
======= ==== ===== =======
The amortized cost and fair value of debt securities classified as
held-to-maturity at December 31, 1998, by contractual maturity, are as
follows. Expected maturities may differ from contractual maturities because
borrowers have the right to prepay obligations with or without prepayment
penalties.
1998
Amortized Fair
(In Thousands) Cost Value
Due in 1 year or less $25,747 $25,945
Due after 1 year through 5 years 25,141 25,405
Due after 5 years through 10 years 5,517 5,630
Due after 10 years 200 211
------- -------
$56,605 $57,191
======= =======
The amortized cost and fair values of debt and equity securities
classified as available-for-sale at December 31, 1998 and 1997, are
summarized as follows:
1998
Gross Gross
Amortized Unrealized Unrealized Fair
(In Thousands) Cost Gains Losses Value
U.S. Government
Treasury securities $20,055 $552 $ -- $20,607
Obligations of
U.S. Government
corporations
and agencies 6,527 51 (17) 6,561
------- ---- ---- -------
Total debt securities 26,582 603 (17) 27,168
Stock of the Federal
Reserve Bank 201 -- -- 201
------- ---- ---- -------
$26,783 $603 $(17) $27,369
======= ==== ==== =======
1997
Gross Gross
Amortized Unrealized Unrealized Fair
(In Thousands) Cost Gains Losses Value
U.S. Government
Treasury securities $26,271 $404 $ -- $26,675
Obligations of
U.S. Government
corporations
and agencies 9,089 178 (31) 9,236
------- ---- ---- -------
Total debt securities 35,360 582 (31) 35,911
Stock of the Federal
Reserve Bank 201 -- -- 201
------- ---- ---- -------
$35,561 $582 $(31) $36,112
======= ==== ==== =======
The amortized cost and fair value of debt securities classified as
available-for-sale at December 31, 1998, by contractual maturity, are shown
in the following table. Expected maturities may differ from contractual
maturities because borrowers have the right to prepay obligations with or
without prepayment penalties.
Cass Commercial Corporation 21
24
1998
Amortized Fair
(In Thousands) Cost Value
Due in 1 year or less $ 79 $ 79
Due after 1 year through 5 years 20,055 20,607
Due after 5 years through 10 years 1,983 2,010
Due after 10 years 4,465 4,472
------- -------
$26,582 $27,168
======= =======
The amortized cost of debt securities pledged to secure public
deposits, securities sold under agreements to repurchase and for other
purposes was approximately $49,813,000 and $13,048,000 at December 31, 1998
and 1997, respectively.
Proceeds from the sales of debt securities classified as available-for-
sale were $6,409,000 and $14,235,000 for 1998 and 1997, respectively. Gross
gains were realized on those sales of $285,000 and $216,000 for 1998 and
1997, respectively. No debt or equity securities were sold in 1996.
Note 4
LOANS
A summary of loan categories at December 31, 1998 and 1997, is as follows:
(In Thousands) 1998 1997
Commercial and industrial $ 95,663 $ 93,633
Real estate:
Mortgage 101,468 87,573
Construction 16,547 7,893
Industrial revenue bonds 5,951 2,520
Installment 2,458 3,066
Other 2,801 1,793
-------- --------
$224,888 $196,478
======== ========
The Company grants commercial, industrial, residential and consumer
loans to customers throughout the metropolitan St. Louis area. The Company
does not have any particular concentration of credit in any one economic
sector; however, a substantial portion of the commercial and industrial loans
are extended to privately held commercial companies in this market area, and
are generally secured by the assets of the business. Such loans are subject
to the economic changes inherent in the St. Louis marketplace.
Aggregate loan transactions involving executive officers and directors
of the Company and its subsidiaries and loans to associates of executive
officers and directors for the year ended December 31, 1998, are summarized
below. Such loans were made in the normal course of business on
substantially the same terms, including interest rates and collateral, as
those prevailing at the same time for comparable transactions with other
persons, and did not involve more than the normal risk of collectibility.
(In Thousands)
Aggregate balance, January 1, 1998 $ 2,213
New loans 2,372
Payments (1,167)
-------
Aggregate balance, December 31, 1998 $ 3,418
=======
A summary of the activity in the allowance for loan losses for 1998,
1997 and 1996 is as follows:
(In Thousands) 1998 1997 1996
Balance, January 1 $4,484 $4,396 $ 6,358
Provision charged to expense -- 300 --
Loans charged off (365) (412) (2,121)
Recoveries of loans previously
charged off 309 200 159
------ ------ -------
Net loan charge offs (56) (212) (1,962)
------ ------ -------
Balance, December 31 $4,428 $4,484 $ 4,396
====== ====== =======
A summary of impaired loans at December 31, 1998 and 1997, is as
follows:
(In Thousands) 1998 1997
Nonaccrual loans $ 477 $ 285
Impaired loans continuing
to accrue interest 273 1,046
------ ------
Total impaired loans $ 750 $1,331
====== ======
The allowance for loan losses on impaired loans was $397,000 and
$643,000 at December 31, 1998 and 1997, respectively. Impaired loans with no
related allowance for loan losses totaled $309,000 and $71,000 at December
31, 1998 and 1997, respectively. The average balance of impaired loans during
1998 and 1997 was $972,000 and $1,362,000, respectively.
22 Cass Commercial Corporation
25
A summary of interest income on impaired loans for 1998, 1997 and 1996
is as follows:
1998
Impaired
Loans
Continuing
Nonaccrual to Accrue
(In Thousands) Loans Interest Total
Income recognized $ 17 $ 25 $ 42
Interest income if interest
had accrued 78 26 104
1997
Impaired
Loans
Continuing
Nonaccrual to Accrue
(In Thousands) Loans Interest Total
Income recognized $ 1 $ 45 $ 46
Interest income if
interest had accrued 27 53 80
1996
Impaired
Loans
Continuing
Nonaccrual to Accrue
(In Thousands) Loans Interest Total
Income recognized $221 $260 $481
Interest income if
interest had accrued 299 279 578
Note 5
PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31, 1998 and 1997, is as
follows:
(In Thousands) 1998 1997
Land $ 367 $ 367
Buildings 6,250 6,264
Leasehold improvements 1,268 1,278
Furniture, fixtures
and equipment 17,558 16,591
------- -------
25,443 24,500
Less accumulated depreciation
and amortization 16,194 14,543
------- -------
$ 9,249 $ 9,957
======= =======
Depreciation charged to expense in 1998, 1997 and 1996 amounted to
$1,953,000, $1,932,000 and $1,913,000, respectively.
The Company's subsidiaries lease various premises and equipment under
operating lease agreements which expire at various dates through 2007. The
following is a schedule, by year, of future minimum rental payments required
under operating leases that have initial or remaining noncancelable lease
terms in excess of one year as of December 31, 1998:
(In Thousands)
1999 $ 670
2000 670
2001 378
2002 343
2003 345
2004 and thereafter 517
------
$2,923
======
Rental expense for 1998, 1997 and 1996 was $1,161,000, $1,205,000 and
$1,712,000, respectively.
Note 6
INTEREST-BEARING DEPOSITS
Interest-bearing deposits consist of the following at December 31, 1998 and
1997:
(In Thousands) 1998 1997
NOW and Money Market
Demand Accounts $ 37,699 $ 32,616
Savings deposits 62,569 62,660
Time deposits:
Less than $100 4,369 5,112
$100 and more 3,434 3,511
-------- --------
$108,071 $103,899
======== ========
Interest on deposits consists of the following for 1998, 1997 and 1996:
(In Thousands) 1998 1997 1996
NOW and Money Market
Demand Accounts $1,198 $1,130 $ 826
Savings deposits 2,624 2,562 3,139
Time deposits:
Less than $100 227 267 296
$100 and more 222 222 242
------ ------ ------
$4,271 $4,181 $4,503
====== ====== ======
Cass Commercial Corporation 23
26
The scheduled maturities of certificates of deposit at December 31,
1998 and 1997, are summarized as follows:
1998 1997
Percent Percent
(Dollars In Thousands) Amount of Total Amount of Total
Due within:
One year $6,863 88.0% $7,043 81.7%
Two years 921 11.8% 1,320 15.3%
Three years 19 0.2% 242 2.8%
Four years -- -- 14 0.1%
Five years -- -- 4 0.1%
------ ----- ------ -----
$7,803 100.0% $8,623 100.0%
====== ===== ====== =====
Note 7
EMPLOYEE BENEFITS
The Company has a noncontributory defined benefit pension plan which covers
substantially all of its employees. The Company's subsidiaries accrue and
make contributions designed to fund normal service costs on a current basis
using the projected unit credit with service proration method to amortize
prior service costs arising from improvements in pension benefits and
qualifying service prior to the establishment of the plan over a period of
approximately 30 years.
The pension cost for 1998, 1997 and 1996 was $517,000, $538,000 and
$478,000, respectively, and included the following components:
(In Thousands) 1998 1997 1996
Service cost -- benefits earned
during the year $ 763 $ 706 $ 682
Interest cost on projected
benefit obligations 617 544 492
Expected return on plan assets (765) (622) (495)
Amortization of transition asset -- -- (99)
Net amortization and deferral (98) (90) (102)
----- ----- -----
Net periodic pension cost $ 517 $ 538 $ 478
===== ===== =====
A summary of the activity in the defined benefit pension plan's benefit
obligation, assets, funded status and amounts recognized in the Company's
consolidated balance sheets at December 31, 1998, 1997 and 1996, are as
follows:
(In Thousands) 1998 1997 1996
Benefit obligation:
Balance, January 1 $ 8,561 $ 7,322 $ 6,199
Service cost 763 706 682
Interest cost 617 544 492
Actuarial loss 963 503 740
Benefits paid (133) (105) (137)
------- ------- -------
Balance, December 31 $10,771 $ 8,970 $ 7,976
======= ======= =======
Plan assets:
Fair value, January 1 $ 9,232 $ 7,487 $ 6,241
Actual return 953 1,076 656
Employer contribution 834 774 727
Benefits paid (133) (105) (137)
------- ------- -------
Fair value, December 31 $10,886 $ 9,232 $ 7,487
======= ======= =======
Funded Status:
Unfunded projected
benefits obligation $ 115 $ 262 $ (489)
Unrecognized prior service cost 141 148 155
Unrecognized net gains (1,390) (1,861) (1,354)
------- ------- -------
Accrued pension cost $(1,134) $(1,451) $(1,688)
======= ======= =======
The weighted average discount rate and the rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 6.75% and 4.00% in 1998, 7.25% and 4.00% in
1997 and 7.50% and 5.00% in 1996. The expected long-term rate of return on
assets was 8.00% in 1998, 1997 and 1996.
In addition to the above funded benefit plan, in 1998 the Company
developed an unfunded supplemental executive retirement plan which covers key
executive employees of the Company. This is a noncontributory plan in which
the Company's subsidiaries make accruals designed to fund normal service
costs on a current basis using the same method and criteria as its defined
benefit plan.
24 Cass Commercial Corporation
27
The pension cost related to this plan for 1998 was $143,000 and
included the following components:
(In Thousands)
Service cost -- benefits earned during the year $ 25
Interest cost on projected benefit obligation 59
Net amortization and deferral 59
-----
Net periodic pension cost $ 143
=====
A summary of the activity in the supplemental executive retirement
plan's benefit obligation, funded status and amounts recognized in the
Company's consolidated balance sheets at December 31, 1998, is as follows:
(In Thousands)
Benefit obligation:
Balance, January 1 $ 822
Service cost 25
Interest cost 59
Actuarial loss 66
-----
Balance, December 31 $ 972
=====
Funded Status:
Unfunded projected benefits obligation $(972)
Unrecognized prior service cost 763
Unrecognized actuarial loss 66
-----
Accrued pension cost $(143)
Minimum liability
adjustment (451)
-----
Adjusted pension cost $(594)
=====
The weighted average discount rate and the rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 6.75% and 5.00%, respectively, in 1998.
The Company maintains a noncontributory profit sharing plan which
covers substantially all of its employees. Employer contributions are
calculated based upon formulas which relate to current operating results and
other factors. Profit sharing expense recognized in the consolidated
statements of income in 1998, 1997 and 1996 was $1,679,000, $1,564,000 and
$1,433,000, respectively.
The Company sponsors a defined contribution 401(k) plan to provide
additional retirement benefits to substantially all employees. Contributions
under the 401(k) plan for 1998, 1997 and 1996 were $199,000, $220,000 and
$227,000, respectively.
The Company maintains a restricted stock bonus plan which provides for
the issuance of up to 100,000 shares of the Company's common stock. During
1998 and 1995, the Company awarded 3,000 and 32,000 shares of common stock,
respectively, to six officers of the Company. The fair value of such shares
has been recorded in the consolidated statements through the establishment of
a contra shareholders' equity account which is amortized over the three-year
vesting period. Amortization of the restricted stock bonus awards totaled
$50,000, $110,000 and $110,000 for 1998, 1997 and 1996, respectively.
The Company also maintains a performance-based stock option plan which
provides for the granting of options to acquire up to 400,000 shares of
Company common stock. Options vest over a period not to exceed seven years,
but the vesting period can be less based on the Company's attainment of
certain financial operating performance criteria. The Company's original
grant of stock options occurred during May 1995. At that time, options to
purchase 120,000 shares were granted at an exercise price of $10.32. The
table below summarizes all subsequent activity.
Weighted
Average
Exercise
Shares Price
Balance at December 31, 1995 and 1996 120,000 $10.32
Granted 14,500 23.34
Forfeited (16,000) 10.32
-------
Balance at December 31, 1997 118,500 11.91
Exercised (7,200) 10.32
Forfeited (1,400) 10.32
-------
Balance at December 31, 1998 109,900 12.04
=======
At December 31, 1998, 95,400, 6,000 and 8,500 options were outstanding
at exercise prices of $10.32, $20.36 and $25.45, respectively, with weighted
average remaining contractual lives of 3.9 years, 5.0 years and 5.0 years,
respectively. At December 31, 1998, 25,960 shares were exercisable with a
weighted average exercise price of $10.32.
The Company accounts for stock-based compensation under the stock
option plan in accordance with Accounting
Cass Commercial Corporation 25
28
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) and, accordingly, recognizes no compensation expense as the exercise
price of the Company's employee stock options equals the market price of the
underlying stock on the date of grant. The Company elected not to adopt the
recognition provisions of the Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). An entity that continues to apply APB 25 shall
disclose certain pro forma information as if the fair value-based accounting
method in SFAS 123 had been used to account for stock-based compensation
costs. The pro forma effects were calculated and are immaterial to the
results of operations of the Company.
Note 8
OTHER NONINTEREST EXPENSE
Details of other noninterest expense for 1998, 1997 and 1996 are as follows:
(In Thousands) 1998 1997 1996
Postage, printing and supplies $2,161 $2,129 $2,114
Advertising and business
development 1,392 1,437 1,441
Professional fees 1,056 1,320 903
Data processing services 590 652 655
Telecommunications 531 518 488
Other 1,553 1,489 1,487
------ ------ ------
Total other noninterest expense $7,283 $7,545 $7,088
====== ====== ======
Note 9
INCOME TAXES
The components of income tax expense for 1998, 1997 and 1996 are as follows:
(In Thousands) 1998 1997 1996
Current:
Federal $3,654 $3,114 $2,238
State 392 241 153
Deferred 131 271 854
------ ------ ------
$4,177 $3,626 $3,245
====== ====== ======
A reconciliation of expected income tax expense, computed by applying
the effective federal statutory rate of 34% for 1998, 1997 and 1996 to income
before income tax expense, to reported income tax expense, is as follows:
(In Thousands) 1998 1997 1996
Expected income tax expense $3,939 $3,617 $3,320
(Reductions) increases
resulting from:
Tax-exempt interest (79) (78) (53)
State taxes, net of federal benefit 259 159 101
Amortization of intangibles -- (98) (98)
Other, net 58 26 (25)
------ ------ ------
Income tax expense $4,177 $3,626 $3,245
====== ====== ======
The tax effects of temporary differences which give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1998 and 1997, are presented below:
(In Thousands) 1998 1997
Deferred tax assets:
Allowance for loan losses $ 920 $ 993
Accrued pension cost 390 500
Premises and equipment 13 51
Other 188 206
------ ------
Total deferred tax assets 1,511 1,750
------ ------
Deferred tax liabilities:
Unrealized gain on investment in debt
and equity securities available-for-sale (199) (187)
Discount accretion (165) (355)
Other (219) (137)
------ ------
Total deferred tax liabilities (583) (679)
------ ------
Net deferred tax asset $ 928 $1,071
====== ======
A valuation allowance would be provided on deferred tax assets when it
is more likely than not that some portion of the assets will not be realized.
The Company has not established a valuation allowance at December 31, 1998 or
1997, due to management's belief that all criteria for recognition have been
met, including the existence of a history of taxes paid sufficient to support
the realization of deferred tax assets.
26 Cass Commercial Corporation
29
Note 10
CONTINGENCIES
The Company's subsidiaries are involved in various pending legal actions and
proceedings in which claims for damages are asserted. Management, after
discussion with legal counsel, believes the ultimate resolution of these
legal actions and proceedings will not have a material effect upon the
Company's consolidated financial position or results of operations.
Note 11
DISCLOSURES ABOUT
FINANCIAL INSTRUMENTS
The Company is party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit, commercial
letters of credit and standby letters of credit. The Company's exposure to
credit loss in the event of nonperformance by the other party to the
financial instrument for commitments to extend credit, commercial letters of
credit and standby letters of credit is represented by the contractual
amounts of those instruments.
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commercial and standby letters of credit are conditional commitments issued
by the Company to guarantee the performance of a customer to a third party.
These off-balance-sheet financial instruments generally have fixed expiration
dates or other termination clauses and may require payment of a fee. Since
some of the financial instruments may expire without being drawn upon, the
total amounts do not necessarily represent future cash requirements.
Commitments to extend credit and letters of credit are subject to the same
underwriting standards as those financial instruments included on the
consolidated balance sheets. The Company evaluates each customer's credit-
worthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary upon extension of the credit, is based on management's
credit evaluation of the borrower. Collateral held varies, but is generally
accounts receivable, inventory, residential or income-producing commercial
property or equipment.
Conditional commitments to extend credit, commercial letters of credit
and standby letters of credit totaled approximately $17,921,000, $108,000 and
$4,733,000, respectively, at December 31, 1998.
Following is a summary of the carrying amounts and fair values of the
Company's financial instruments at December 31, 1998 and 1997:
1998
Carrying Fair
(In Thousands) Amount Value
Balance sheet assets:
Cash and cash equivalents $179,385 $179,385
Investment in debt and equity securities 83,974 84,560
Loans, net 220,460 222,877
Accrued interest receivable 2,764 2,764
-------- --------
$486,583 $489,586
======== ========
Balance sheet liabilities:
Deposits $190,982 $191,035
Accounts and drafts payable 250,518 250,518
Short-term borrowings 323 323
Accrued interest payable 60 60
-------- --------
$441,883 $441,936
======== ========
1997
Carrying Fair
(In Thousands) Amount Value
Balance sheet assets:
Cash and cash equivalents $ 99,124 $ 99,124
Investment in debt and equity securities 126,251 126,501
Loans, net 191,994 192,531
Accrued interest receivable 3,137 3,137
-------- --------
$420,506 $421,293
======== ========
Balance sheet liabilities:
Deposits $165,857 $165,880
Accounts and drafts payable 213,755 213,755
Short-term borrowings 406 406
Accrued interest payable 93 93
-------- --------
$380,111 $380,134
======== ========
Cass Commercial Corporation 27
30
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument for which it is practicable to
estimate that value:
Cash and Other Short-term Instruments For cash and cash equivalents,
accrued interest receivable, accounts and drafts payable, short-term
borrowings and accrued interest payable, the carrying amount is a reasonable
estimate of fair value because of the demand nature or short maturities of
these instruments.
Investment in Debt and Equity Securities Fair values are based on
quoted market prices or dealer quotes.
Loans The fair value of loans is estimated by discounting the future
cash flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining maturities.
Deposits The fair value of demand deposits, savings deposits and
certain money market deposits is the amount payable on demand at the
reporting date. The fair value of fixed-maturity certificates of deposit is
estimated using the rates currently offered for deposits of similar remaining
maturities. The fair value estimates above do not include the benefit that
results from the low-cost funding provided by the deposit liabilities
compared to the cost of borrowing funds in the market nor the benefit derived
from the customer relationship inherent in existing deposits.
Commitments to Extend Credit and Standby Letters of Credit The fair
value of commitments to extend credit and standby letters of credit are
estimated using the fees currently charged to enter into similar agreements,
taking into account the remaining terms of the agreements, the likelihood of
the counterparties drawing on such financial instruments and the present
credit-worthiness of such counterparties. 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 and,
accordingly, the Company has not assigned a value to such instruments for
purposes of this disclosure.
Limitations Fair value estimates are based on existing on- and off-
balance-sheet financial instruments without attempting to estimate the value
of anticipated future business and the value of assets and liabilities that
are not considered financial instruments. Other significant assets or
liabilities that are not considered financial assets or liabilities include
premises and equipment and the benefit that results from the low-cost funding
provided by the deposit liabilities compared to the cost of borrowing funds
in the market (core deposit intangible). In addition, tax ramifications
related to the realization of the unrealized gains and losses can have a
significant effect on fair value estimates and have not been considered in
any of the estimates.
Because no market exists for a significant portion of the Company's
financial instruments, fair value estimates are based on management's
judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments and other
factors. These estimates are subjective in nature and involve uncertainties
and matters of significant judgment and, therefore, cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.
28 Cass Commercial Corporation
31
Note 12
INDUSTRY SEGMENT INFORMATION
In 1998 the Company adopted Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information"
(SFAS 131), which established standards for the way that public enterprises
report information about operating segments in annual financial statements.
The services provided by the Company are classified into two industry
segments: Information Services and Banking Services which are more fully
discussed in Note One.
The Company maintains separate financial statements for each of these
segments which identify each segment's assets and net income. Revenue from
the Banking Services segment is derived primarily from net interest revenue,
which includes both interest income and interest expense, and revenue from
the Information Services segment is derived primarily from interest income
and fees from its freight and utility payment, rating and processing
services. Total net revenue is comprised of total interest income and total
noninterest income, less provision for loan losses.
Summarized information about the Company's operations in each industry
as of and for the years ended December 31, 1998, 1997 and 1996, is as
follows:
Total Interest Income
(In Thousands) 1998 1997 1996
Information Services $ 15,306 $ 15,353 $ 14,211
Banking Services 14,910 14,087 14,022
Eliminations (172) (157) (107)
-------- -------- --------
Total $ 30,044 $ 29,283 $ 28,126
======== ======== ========
Total Net Revenue
(In Thousands) 1998 1997 1996
Information Services $ 36,878 $ 35,918 $ 35,501
Banking Services 16,060 15,235 15,019
Eliminations (447) (357) (303)
-------- -------- --------
Total $ 52,491 $ 50,796 $ 50,217
======== ======== ========
Income (Loss) Before
Income Tax
(In Thousands) 1998 1997 1996
Information Services $ 6,694 $ 6,352 $ 6,069
Banking Services 5,014 4,464 3,868
Corporate Items (123) (179) (173)
-------- -------- --------
Total $ 11,585 $ 10,637 $ 9,764
======== ======== ========
Total Income Tax
Expense (Benefit)
(In Thousands) 1998 1997 1996
Information Services $ 2,403 $ 2,157 $ 1,939
Banking Services 1,815 1,530 1,365
Corporate Items (41) (61) (59)
-------- -------- --------
Total $ 4,177 $ 3,626 $ 3,245
======== ======== ========
Identifiable Assets
(In Thousands) 1998 1997 1996
Information Services $285,397 $246,488 $237,963
Banking Services 228,032 209,485 212,776
Corporate Items 57,809 52,882 47,909
Eliminations (67,326) (70,528) (60,326)
-------- -------- --------
Total $503,912 $438,327 $438,322
======== ======== ========
Depreciation and
Amortization Expense
(In Thousands) 1998 1997 1996
Information Services $ 2,056 $ 2,024 $ 2,057
Banking Services 283 420 494
Corporate Items 20 26 32
-------- -------- --------
Total $ 2,359 $ 2,470 $ 2,583
======== ======== ========
Capital Expenditures
(In Thousands) 1998 1997 1996
Information Services $ 907 $ 3,427 $ 1,509
Banking Services 294 468 249
Corporate Items 49 6 21
-------- -------- --------
Total $ 1,250 $ 3,901 $ 1,779
======== ======== ========
Cass Commercial Corporation 29
32
Note 13
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
Following are the condensed balance sheets of the Company (parent company
only) as of December 31, 1998 and 1997, and the related condensed schedules
of income and cash flows for each of the years in the three-year period ended
December 31, 1998.
Condensed
Balance Sheets
December 31
(In Thousands) 1998 1997
Assets:
Cash $ 694 $ 471
Investment in Cass Commercial Bank 25,364 23,271
Investment in Cass Information
Systems, Inc. 31,207 28,666
Other assets 544 474
------- -------
Total assets $57,809 $52,882
------- -------
Liabilities and Shareholders' Equity:
Total liabilities $ 405 $ 229
Total shareholders' equity 57,404 52,653
------- -------
Total liabilities and shareholders' equity $57,809 $52,882
======= =======
Condensed Schedules
of Income
December 31
(In Thousands) 1998 1997 1996
Income:
Dividends received from
subsidiaries $2,880 $2,680 $2,380
Management fees from
subsidiaries 1,328 1,282 954
------ ------ ------
Total income 4,208 3,962 3,334
------ ------ ------
Expenses:
Salaries and employee benefits 1,092 1,130 835
Other expenses 359 331 292
------ ------ ------
Total expenses 1,451 1,461 1,127
------ ------ ------
Income before income taxes and
equity in undistributed income
of subsidiaries 2,757 2,501 2,207
Income tax benefit (41) (61) (59)
------ ------ ------
2,798 2,562 2,266
Equity in undistributed
income of subsidiaries 4,610 4,449 4,253
------ ------ ------
Net income $7,408 $7,011 $6,519
====== ====== ======
Condensed Schedules
of Cash Flows
December 31
(In Thousands) 1998 1997 1996
Cash flows from operating
activities:
Net income $ 7,408 $ 7,011 $ 6,519
Adjustments to reconcile net
income to net cash provided
by operating activities:
Net income of subsidiaries
exclusive of management
fees (8,818) (8,411) (7,587)
Dividends from subsidiaries 2,880 2,680 2,380
Management fees from
subsidiaries 1,328 1,282 954
Amortization of stock
bonus plan 50 110 110
Other, net 157 177 (200)
------- ------- -------
Net cash provided by
operating activities 3,005 2,849 2,176
------- ------- -------
Cash flows from financing
activities -- cash dividends paid (2,782) (2,508) (2,296)
------- ------- -------
Net increase (decrease) in
cash and cash equivalents 223 341 (120)
Cash and cash equivalents
at beginning of year 471 130 250
------- ------- -------
Cash and cash equivalents
at end of year $ 694 $ 471 $ 130
======= ======= =======
30 Cass Commercial Corporation
33
Independent Auditors' Report
THE BOARD OF DIRECTORS
AND SHAREHOLDERS
CASS COMMERCIAL CORPORATION:
We have audited the accompanying consolidated balance sheets of Cass
Commercial Corporation and subsidiaries (the Company) as of December 31, 1998
and 1997, and the related consolidated statements of income, cash flows and
shareholders' equity and comprehensive income for each of the years in the
three-year period ended December 31, 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Cass
Commercial Corporation and subsidiaries as of December 31, 1998 and 1997, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
St. Louis, Missouri
February 8, 1999
Cass Commercial Corporation 31
34
Board of Directors and Shareholder Information
DIRECTORS
Cass Commercial
Corporation, Cass
Commercial Bank
and Cass Information
Systems, Inc.
Lawrence A. Collett
Chairman of the Board,
Chief Executive Officer,
Cass Commercial Corporation
John J. Vallina
President, Cass Commercial Bank
Robert J. Bodine
Chairman Emeritus,
Bodine Aluminum, Inc.
Bryan S. Chapell
President, Covenant
Theological Seminary
Thomas J. Fucoloro
Consultant
Harry J. Krieg
Chairman Emeritus
Howard A. Kuehner
Investor
Jake Nania
Investor
Irving A. Shepard
President, Venture
Consultants, Inc.
A.J. Signorelli
Founder, Andrews Educational &
Research Center and Hope
Educational & Research Center
Bruce E. Woodruff
Attorney; of counsel to
Armstrong Teasdale LLP
OFFICERS
Cass Commercial
Corporation
Lawrence A. Collett
Chairman of the Board,
Chief Executive Officer
Eric H. Brunngraber
Vice President, Secretary,
and Chief Financial Officer
William C. Bouchein
Vice President, Treasurer
Wayne D. Muskopf
Vice President, Human Resources
Barbara J. Netherton
Controller
CORPORATE HEADQUARTERS
Cass Commercial
Corporation
13001 Hollenberg Drive
Bridgeton, Missouri 63044
(314) 506-5500
COMMON STOCK
The common stock of Cass
Commercial Corporation is
listed on the over-the-
counter market and quoted
on the NASDAQ National
Market System under
the symbol "CASS." The
stock generally appears
as "CassCo" or
"CassCommrcl" in the
newspaper stock tables.
ANNUAL MEETING
The annual meeting
of shareholders of Cass
Commercial Corporation
will be held at the corporate
headquarters on April 19,
1999, at 11:00 a.m.
TRANSFER AGENT
Shareholders with inquiries
regarding stock accounts,
dividends, change of ownership
or address, lost certificates
or consolidation of
accounts should contact:
ChaseMellon Shareholder
Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park,
New Jersey 07660
(888) 213-0965
www.chasemellon.com
INDEPENDENT AUDITORS
KPMG LLP
10 South Broadway
Suite 900
St. Louis, Missouri 63102
INVESTOR RELATIONS
Analysts and others seeking
financial information about
Cass Commercial
Corporation should contact:
Cass Commercial
Corporation
Investor Relations
Department
13001 Hollenberg Drive
Bridgeton, Missouri 63044
(314) 506-5500
10K AND OTHER PUBLICATIONS
For additional copies of
this annual report and
Form 10K and other
financial information,
please contact the Investor
Relations Department at
the address and phone
number above.
32 Cass Commercial Corporation
35
Business Unit Officers
Cass Commercial Bank
Lawrence A. Collett
Chairman of the Board,
Chief Executive Officer
John J. Vallina
President
BANKING SERVICES
Ray E. McCormick
Vice President
Albert R. Buck
Vice President
Douglas J. Hoffman
Vice President, Treasurer
Patsy J. Moffitt
Assistant Vice President
Dana L. Pannett
Assistant Vice President,
Compliance
Dorothy M. Smith
Assistant Vice President
Nancy Elliott
Operations Officer
Sandra L. Hatchett
Operations Officer
LOAN ADMINISTRATION
Emory A. Jackson
Vice President, Secretary
Roberta L. Harrington
Assistant Vice President
BUSINESS DIVISION
Kenneth A. Witbrodt, Jr.
Executive Vice President
Mark A. Benten
Vice President, Team Leader
Edward L. Campbell, Jr.
Vice President
David A. Lucks
Vice President
Jeanne M. Scannell
Vice President
Robert J. Garagiola
Vice President, Team Leader
H. Ely Britton
Senior Vice President
Chris R. Dimond
Vice President
Donald P. Doherty
Vice President
John J. Scherer
Vice President, Team Leader
Robert C. Hockney
Vice President
Rebeckah L. Kenney
Vice President
Francis J. Sommer
Vice President
Alex D. Fennoy
Assistant Vice President
CHURCH DIVISION
Theodore F. Winters
Senior Vice President
Kirk D. Briden
Vice President
Thomas A. Dickson
Vice President
Dorothy M. Jones
Assistant Vice President
Cass Information Systems, Inc.
Lawrence A. Collett
Chairman of the Board,
Chief Executive Officer
Freight Payment Services
OFFICERS
John F. Pickering
President, Chief Operating
Officer
Gus A. Nelson
Senior Vice President,
Secretary
Terrence J. Cowee
Senior Vice President,
Marketing & Sales
Robert V. Delaney
Vice President
Mark A. Campbell
Vice President, General
Manager, St. Louis Facility
Kathleen A. Kehlmeier
Vice President, General
Manager, Columbus Facility
Anthony J. Rubico
Vice President, General
Manager, Boston Facility
OPERATIONS
Steven W. Aylward
Donna W. Bartley
Gunars A. Dunskis
James M. Dwyer
Sheila D. Foston
Ronald S. Franklin
Diane S. Galliers
Gail M. Hart
Barry L. Kitson
Vickie L. Maloney
Susan P. Millman
Nancy L. Moon
Carol A. Reynolds
James B. Rymer
Thomas G. Schaper
Kevin B. Weston
Jerry A. Young
David L. Zike
MARKETING
AND SALES
Richard E. Dekostic
Kim A. Deniszczuk
Stephen W. Johnson
Gregg R. Klein
Louis V. Nowak
Thomas M. Zygmunt
Utility Payment Services
OFFICERS
Harry M. Murray
Executive Vice President
Michael W. Birely
Vice President, General
Manager, Chicago Facility
OPERATIONS
James P. Crowley
Joe A. Getz
John D. McKissack
JoAnn Ross
MARKETING
AND SALES
Phyllis J. Higgins
Mary A. Shaw
Mark R. Summers
Brian D. Thornsberry
36
Cass Commercial Corporation
13001 Hollenberg Drive
Bridgeton, Missouri 63044
[CASS LOGO]