Exhibit 99.1
July 17, 2003
Cass Information Systems Reports
2nd Quarter 2003 Earnings
ST. LOUIS - Cass Information Systems, Inc. (NASDAQ: CASS), the nation's
leading provider of freight and utility invoice payment, rating, auditing and
information services, reported second quarter earnings of 66 cents per fully
diluted share matching the results of the same period last year. Total net
income for the quarter was $2,239,000, compared to $2,231,000 in 2002.
For the six-month period ended June 30, 2003, the company generated $1.11
fully diluted earnings per share, a 5% increase over the $1.06 fully diluted
earnings per share reported for the first half of 2002. Net income was
$3,757,000, compared to $3,577,000 in 2002.
The results for the second quarter included a 15%, or $2,211,000, increase
in revenue. Despite a lethargic economy, the addition of new customers enabled
Cass to boost utility transaction volume by 32% and transportation transaction
volume by 9% in the quarter. On a year-to-date basis, these levels have
increased 34% and 12% respectively.
Revenues also increased as a result of Cass consolidating the operating
results of a software subsidiary, Government e-Management Solutions (GEMS). The
subsidiary, which markets integrated financial, property and human resource
management systems to the public sector, generated second quarter revenues of
$1,829,000.
Offsetting the boost in information revenue was a $949,000 decrease in net
investment income. The continuing effects of a low interest rate environment
caused the decrease. Partially offsetting the decrease in interest income were
additional gains of $418,000 on the sales of securities compared to the second
quarter of 2002.
Operating expenses rose 18% in the quarter, attributable mainly to the
GEMS' consolidation. Prior to Dec. 31, 2002, GEMS was accounted for as an asset
held for sale and its operating results were not consolidated with those of the
company. Statement of Financial Accounting Standards No.144, adopted by the
company in 2002, now requires that GEMS be reclassified as an asset held and
used. Consequently, Cass reclassified the entity's net assets and consolidated
its operations with the parent company on Jan.1, 2003.
5
Excluding the effect of the consolidation, second quarter operating
expenses were 3% higher than those reported in the same period of 2002. The
increase is mainly attributable to increased salaries and benefits expenses
related to higher processing volume.
"The prevailing low interest rate environment continues to adversely
affect revenue," commented Lawrence A. Collett, chief executive officer and
chairman of the board. "To date, we have successfully mitigated some of the
effect by capitalizing on gains in our securities portfolio and by increasing
processing volumes and associated revenues. We remain confident in our ability
to grow our information processing businesses. If current interest rate levels
linger it could negatively affect the results of such growth."
Selected Consolidated Financial Data
The following table presents selected unaudited consolidated financial data (in
thousands, except share and per share data) for the periods ended June 30, 2003
and 2002.
Six Six
Quarter Quarter Months Months
Ended Ended Ended Ended
6/30/03 6/30/02 6/30/03 6/30/02
Transportation Invoice Volume 5,810 5,316 11,476 10,275
Transportation Dollar Volume $2,154,256 $1,886,067 $4,208,168 $3,727,704
Utility Transaction Volume 1,116 845 2,149 1,607
Utility Dollar Volume $ 788,714 $ 589,295 $1,614,075 $1,193,662
Payment and Processing Fees $ 6,870 $ 6,122 $ 13,839 $ 11,673
Software Revenue 1,829 -- 3,607 --
Net Investment Income 6,485 7,434 13,074 14,712
Gain on Sale of Debt Securities 1,362 944 1,362 944
Other 601 436 1,156 889
---------- ---------- ---------- ----------
Total Revenues $ 17,147 $ 14,936 $ 33,038 $ 28,218
Salaries and Benefits $ 9,400 $ 7,897 $ 18,752 $ 15,503
Occupancy 457 384 893 748
Equipment 1,121 1,115 2,282 2,204
Other 2,893 2,317 5,721 4,582
---------- ---------- ---------- ----------
Total Operating Expenses $ 13,871 $ 11,713 $ 27,648 $ 23,037
Income before Income Taxes $ 3,276 $ 3,223 $ 5,390 $ 5,181
Provision for Income Taxes $ 1,037 $ 992 $ 1,633 $ 1,604
Net Income $ 2,239 $ 2,231 $ 3,757 $ 3,577
Average Earning Assets $ 534,810 $ 543,006 $ 534,564 $ 539,930
Net Interest Margin 5.02% 5.84% 5.15% 5.78%
Allowance for Loan Losses to Loans 1.22% 1.24% 1.22% 1.24%
Non-performing Loans to Total Loans .39% .16% .39% .16%
Net Loan Charge-offs to Loans -- .02% -- .02%
Provision for Loan Losses $ -- $ 180 $ 90 $ 270
Non-performing Loans $ 1,728 $ 650 $ 1,728 $ 650
Basic Earnings per Share $ .67 $ .67 $ 1.12 $ 1.07
Diluted Earnings per Share $ .66 $ .66 $ 1.11 $ 1.06
6
About Cass Information Systems
Cass has been a leading provider of payables services and information
support systems to companies throughout North America since 1956. The company
pays over $10 billion annually in freight and utility invoices on behalf of its
customers from processing centers in St. Louis, Mo., Columbus, Ohio and Boston,
Mass. The support of its bank subsidiary, Cass Commercial Bank, founded in 1906,
makes Cass Information Systems unique in the industry.
Note to Investors
Certain matters set forth in this news release may contain forward-looking
statements that are provided to assist in the understanding of anticipated
future financial performance. However, such performance involves risks and
uncertainties that may cause actual results to differ materially from those in
such statements. For a discussion of certain factors that may cause such
forward-looking statements to differ materially from the company's actual
results, see the company's annual report on Form 10-K for the year ended
December 31, 2002.
7