THE POWER TO
DELIVER SOLUTIONS
2012 summary annual report
CORPORATE PROFILE
Cass Information systems, Inc. (nasDaQ: Cass)
is a leading provider of transportation, utility,
environmental and telecom expense man-
agement and related business intelligence
services, disbursing $33 billion annually
on behalf of its clients. With total assets
of $1.3 billion, Cass is a business-to-
business solutions provider focused on
invoice processing, auditing, payment
and information services. Cass is uniquely
supported by Cass Commercial Bank,
founded in 1906. today, Cass Commercial
Bank is a wholly owned subsidiary, providing
sophisticated financial exchange services to
the parent organization and its clients.
TABLE OF CONTENTS
1 2012 year in review
2-12 letter to shareholders
4-5 Client nearly Doubles in size, Cass Doesn’t miss a Beat
6-7 transportation Client leverages Data
to maintain tight Controls
8-9 Cass Helps Client manage mobile Workforce
with Bring-your-own-Device program
10-11 long-term Care Facility Cuts expenses
with Waste management services from Cass
12-13 over 100 years of service, security and satisfaction
14-15 Condensed Consolidated statements of Income and
Condensed Consolidated Balance sheets
16 report of Independent registered public accounting
Firm, Forward-looking statements
17 Board of Directors and executive officers and
shareholder Information
DILUTED EARNINGS
PER COMMON SHARE
(In Dollars)
1.67
1.43
1.78
2.01
2.02
2008
2009
2010
2011
2012
NET INCOME
(In mIllIons oF Dollars)
19.01
16.13
20.31
23.01
23.30
2008
2009
2010
2011
2012
BOOK VALUE PER SHARE
(In Dollars)
9.5
11.5
12.5
14.1
15.2
2008
2009
2010
2011
2012
Cass InformatIon systems, InC.
THE POWER TO DELIVER SOLUTIONS
2012 YEAR IN REVIEW
$23.3
mIl lIon net InCome
mIllIon total ne t re v e nu e
$111.5
107 yea rs In Bu sIn ess
For tHe year enDeD DeCemBer 31,
2012
2011
Total Net Revenues
Net Income
Basic Earnings per Common Share
Diluted Earnings per Common Share
Dividends Paid per Common Share
$
$
$
$
$
111,523,000
$
106,535,000
23,303,000
$
23,009,000
2.05
$
2.02
$
0.64
$
2.03
2.01
0.55
Total Number of Transactions Processed
47,067,000
45,426,000
Total Dollar Volume Paid
$ 33,162,412,000
$ 31,899,494,000
Return on Average Total Shareholders’ Equity
Return on Average Assets
13.88 %
1.73 %
15.17 %
1.77 %
as oF DeCemBer 31,
2012
2011
Total Assets
Total Shareholders’ Equity
Book Value per Common Share
$
$
$
1,287,387,000
$ 1,319,301,000
174,015,000 $
160,548,000
15.18
$
14.09
“As I reflect on the year’s performance, I am reminded of our commitment to focus
on the long term and our belief in maintaining a strong foundation. As we embark
upon 2013, we do so knowing we have built a strong foundation.”
PAGE 1
DEAR FELLOW
SHAREHOLDERS,
A Letter from Eric Brunngraber
president and Chief executive officer
TOTAL INVOICES PROCESSED
(In mIllIons)
40.6
2010
45.4
2011
47.1
2012
TOTAL DOLLAR VOLUME PAID
(In BIllIons oF Dollars)
27.8
2010
31.9
2011
33.2
2012
TOTAL NET REVENUES
(In mIllIons oF Dollars)
96.2
2010
106.5
111.5
2011
2012
PAGE 2
I am pleased to report that
2012 was a year of continued
progress and growth for
our Company.
We processed more invoices,
served more customers in
more markets and provided
more services than ever
before in Cass history.
and we remain focused on
our commitments to drive
innovation, develop new
business solutions and
maintain the highest levels
of customer satisfaction.
Cass InformatIon systems, InC. meanwhile, we have preserved our liquidity and further
as we embark upon 2013, we do so knowing we have built a
strengthened our balance sheet to maintain our Company’s
strong foundation:
earnings power and provide a foundation for expansion.
all these activities support and demonstrate our progress
in executing our long-term strategy.
■ the deep industry domain expertise of our people, who
are experts within the key, niche markets we serve;
■ our strong liquidity and capital position, with total
Despite a dismal operating environment with nominal
assets of $1.3 billion;
Gross Domestic product growth and interest rates near
zero percent, our total net revenue rose to $111,523,000,
a 4.7% increase over 2011. total transactions and dollars
processed also reached all-time highs of 47,067,000 and
$33,162,412,000. at the same time, and despite the
economic environment and investments made for future
growth, Cass delivered $23.3 million in net income, a
modest increase over 2011.
as I reflect on the year’s performance, I am reminded of
our commitment to focus on the long term and our belief
in maintaining a strong foundation.
■ our capabilities in payment services through our
subsidiary, Cass Commercial Bank; and
■ our client base that includes some of the world’s largest
and strongest companies, such as Dupont, emerson,
Ford motor Company, michelin, nationwide Insurance,
unilever and others.
I think you will share my enthusiasm for the future as
you read the following pages, which highlight some of
our current activities and the investments we are making
to strengthen our position for the long term. First,
however, I will summarize our operating results for 2012.
ContInueD on pa Ge 4
Trust in the Lord with all your heart and lean not on your own understanding;
in all your ways acknowledge Him, and He will make your paths straight.
Proverbs 3:5-6
CASS LEADERSHIP
(leFt to rIGHt):
JOhN PiCkEriNg
president, transportation Information services
hArry M. MurrAy
executive v ice president, Corporate Development
EriC BruNNgrABEr
president and Chief executive officer
kArEN LO wry
vice president, Human resources
rOBErT MAThiAS
president and Chief operating officer,
Cass Commercial Bank
gAry LANgFiTT
president, expense management services
STEvE APPELBA uM
executive v ice president and
Chief Financial officer
PAGE 3
The Power To Deliver SoluTionS FINANCIAL HIGHLIGHTS
During 2012, total net revenues reached $111,523,000, which
represented a 4.7% increase over 2011’s record results. Cass’
total net revenue is generated from two major sources – fees
from our payables and information processing services and
net investment income derived from both the balances produced
by payment processing as well as net interest income earned
by Cass Commercial Bank. although the historically low interest
rate environment has an enormously negative effect on the
net interest component of our revenue, the payment and
processing fee component grew significantly. these fees
grew 9.9% to a record $66,695,000 despite the sluggish
growth in the economy.
the increase in processing fees during 2012 was attributable
to the acquisition of Waste reduction Consultants early in
the year, additional services sold to new and existing clients,
and increased invoice processing volumes from both new
and existing accounts. In 2012 Cass processed 47.1 million
transactions, which represented a 3.6% increase over 2011.
It should be noted that, although fee revenue was positively
impacted by the Waste reduction Consultants acquisition,
the dollar amount of payments processed was not materially
affected since payment processing is just now being introduced
to environmental expense management clients.
CLIENT NEARLY
DOUBLES IN SIzE,
CASS DOESN’T
MISS A BEAT
Cass excels at managing high-volume transaction processing
offsetting much of the growth in fee income was a significant
for mega-location clients with high service-level expectations.
decline in the other major component of our revenue, net
While Cass clients are exceptional in many ways, some
investment income. as it has been for the past few years,
distinguish themselves by their impressive size and scope
the prolonged environment of slow economic growth and low
of operations. Consider our longtime client with 30,000
interest rates placed downward pressure on our net interest
locations that recently merged with another company with
margin. our net interest margin declined from 4.31% in 2011
30,000 sites. The combined organization now needed
to 4.00% in 2012. this is very significant because it applies to
to manage $20 million in monthly spend for electricity,
the $1,201,846,000 in average earning assets held during the
gas, water, waste hauling and other facilities expenses,
year. We offset a portion of this deficiency by selectively realizing
and process more than 70,000 facilities-related invoices
gains from our investment portfolio as part of our ongoing
each month, double the number previously being paid.
interest rate management process.
total operating expenses for 2012 were $80,333,000, which
were up $5,304,000 or 7.1% from 2011. most of this increase
When the customer decided to centralize all utility invoice
management with Cass – and requested an aggressive
90-day implementation – we accepted the challenge.
related to the acquisition of Waste reduction Consultants, along
On-boarding a client of this magnitude – and subsequently
with additional investments to this new line of business that will
managing its high transaction volume in a compressed time
allow it to grow at a faster rate in the future. other increases
frame – is a complex task. The challenges are numerous,
include expenses related to our global expansion, annual salary
including the management of on-time payment to mitigate
increases and employee benefit costs. I am pleased to report
the possibility of service disruptions. Systems are customized
that the new methods and technologies we have employed over
to ensure correct accounting for all payments. While average
the past few years to enhance productivity have produced
ContInueD on pa Ge 6
PAGE 4
Cass InformatIon systems, InC. CASS DELIVERS A TRUE UNDERSTANDING
OF CLIENT ENERGY COSTS AND THE
SYSTEMS TO MANAGE THEM EFFECTIVELY
utility invoice processing speed is less than one business day,
coming on board, data collection requirements were actually less
Cass must still design processes for late fee management. Utility
rigorous than for those that Cass was already managing. Cass
companies sometimes charge late fees in error even when the
therefore developed a unique, two-tiered process that captures
payment is received on time. Each month, the clock starts over
the correct level of data for each invoice.
and the task resumes: efficient, accurate transaction processing
with appropriate adjustments made for changes in locations and
service providers.
CASS ExCELS AT MANAGING
HIGH-VOLUME TRANSACTION PROCESSING
FOR MEGA-LOCATION CLIENTS WITH
HIGH SERVICE-LEVEL ExPECTATIONS.
Because organizations often achieve percentage savings in the
double-digits through proactive energy management, clients value
accurate visibility to energy costs. Data extraction and reporting
to enable the strategic monitoring of energy consumption was an
important project deliverable. For some of the 30,000 locations
The solutions we provide customers must be able to scale rapidly
to meet their growing demands. Because of the advanced and
highly scalable methods we use – from EDI, to automated data
capture techniques, to systems configuration – we are able to
increase processing volumes for clients quickly.
Perhaps the most impressive aspect of this successful post-
acquisition integration was the extraordinary timetable in which
Cass delivered: the entire assimilation of the newly acquired
locations – including process redesign, programming changes
and new reporting – was achieved in about 90 days. The
customer’s accounts payable and facilities teams were thrilled
with the smooth transition. And for this newly combined company
with many goals, Cass delivered a true understanding of its
energy costs and a system to manage them effectively. ■
PAGE 5
The Power To Deliver SoluTionS positive and measureable results as our headcount decreased,
outside the acquisition, despite the increases in volumes across
all business lines.
In sum, net income for 2012 was $23,303,000, a modest
increase over 2011’s record earnings of $23,009,000. on a
diluted earnings per share basis, 2012 net income was $2.02
compared to $2.01 last year. I am also very pleased that during
this low interest rate environment, our profit margins remained
strong with a return on average assets of 1.73% and return
on average shareholders’ equity of 13.88%. these results
are very impressive in the context of our strong liquidity and
capital positions. For example, our year-end tier 1 capital to
average assets ratio of 12.26% is more than double the amount
regulators use to define institutions as “well capitalized.” this
strong capital position, combined with the significant generation
of cash from our operations, not only allows us the flexibility to
take advantage of investment opportunities as they arise, but
allows the Board of Directors to increase our dividends. For the
second year in a row, the Board increased dividends 16% by
raising the cash dividend and declaring a 10% stock dividend.
ExPANDING INTO ENVIRONMENTAL SERVICES
throughout 2012, Cass continued its post-acquisition integration
of Waste reduction Consultants, which was acquired in January.
TRANSPORTATION
CLIENT LEVERAGES
DATA TO MAINTAIN
TIGHT CONTROLS
the acquisition, which expands the Cass portfolio of facilities-
Clients engage Cass to achieve explicit business results
related expense management services, supports our long-term
measured in cost savings and other efficiencies. We help
vision of extending payment processing services into new
them produce these results by enabling stringent operating
markets. Based in Jacksonville, Florida, the waste team recently
controls. In addition, Cass delivers transparency -- which
moved to a new office location, more than doubling its space to
reinforces the strategic value of the Cass relationship.
accommodate our growth plans.
Cass possesses in-depth understanding of the waste industry,
including knowledge of market rates both regionally and through
Management gains greater visibility into complex areas
of its operations – a perspective they can trust, given the
reliability of the Cass-furnished data.
national buying programs. Clients that transition from their own
Deeper understanding of logistical costs is the value driver
in-house management of waste and recycling to outsourced
in many of our relationships with global manufacturers and
management through Cass typically realize hard-dollar savings
other shippers. Cass automates most aspects of invoice
within 60 days. We help clients obtain the best rates in every
management, and through the entire process, large amounts
market, employ service-level optimization strategies, and
of expense data are collected, managed and developed into
produce savings from invoice audits. now that this group is
business intelligence.
a part of Cass, it is able to leverage corporate infrastructure
services, such as human capital management, It services
and marketing.
THE POWER TO DELIVER SOLUTIONS
With our strong balance sheet, experienced workforce and deep
Our transportation clients make valuable use of the
process metrics to validate the strength of their invoice
processing controls. Other strategic uses of the data include:
1 Cost Analysis; 2 Forecasting, Modeling and Planning;
3 Sourcing Decision Analysis; and 4 Continuous Process
domain expertise, Cass has the power to deliver solutions that
Improvement.
are scalable – enough to meet the needs of even our largest,
ContInueD on pa Ge 8
PAGE 6
Cass InformatIon systems, InC. THROUGH PARTNERSHIPS WITH CASS,
CLIENTS ARE ASSURED THEY HAVE
THE RIGHT PROCESSES AND ACCURATE
VISIBILITY TO CONTROL
TRANSPORTATION COSTS
CONTINUOUS IMPROVEMENT
PROjECT ACHIEVES SAVINGS
Rather than analyze the core costs of moving goods, such as line-
haul rates, the team analyzed costs related to surcharges. They
CassPort® is the Web portal that provides our transportation
looked at which locations and routes had higher surcharges than
clients with vast amounts of information. A project team at one
others. The data provided by Cass empowered them.
of our large manufacturing clients decided to focus on these
data assets to produce measurable logistics savings.
DEEPER UNDERSTANDING OF LOGISTICAL
COSTS IS THE VALUE DRIVER IN MANY
OF OUR RELATIONSHIPS WITH GLOBAL
MANUFACTURERS AND OTHER SHIPPERS.
The team’s goal was to research the current process, look for
potential improvement, recommend business changes and
measure the results. The team had been trained to identify
process waste, but in the enormous complex system of its
global logistics operations, where would they find new savings
opportunities? The team decided to dive into the details.
The team set a goal of saving a targeted percentage of the total
amount spent on surcharges. They then challenged themselves:
“Where can we reduce unloading charges?” “Why are this plant’s
costs the lowest for these charges?” “Why are this location’s costs
the highest?” Overall, they used the data to create further process
efficiencies and managed to hit their goal. Without visibility to
these detailed charges, such continuous process improvement
would not have been possible.
In the case of this client, tight process controls produced regularly
measured savings. Additionally, Cass provided the framework for
the customer’s own additional process improvement initiatives.
Through its partnership with Cass, the client can be assured that
it has the right processes and accurate visibility to control its
transportation costs. ■
PAGE 7
The Power To Deliver SoluTionS global clients. among the business highlights of 2012 was the
market’s enthusiastic adoption of Cass solutions for managing
workforce mobility. one such solution is our innovative Bring your
own Device (ByoD) offering.
THE POWER TO DELIVER MOBILITY MANAGEMENT
the Cass ByoD solution eases the burden that corporate It
managers encounter in their efforts to secure corporate assets
while accommodating employees who want to access corporate
networks from mobile devices. traditionally, our telecom
expense management services addressed the management
of corporate-owned equipment and services. today, however,
our clients must manage a mixed environment – where some
employees are issued employer-owned devices and others use
their own. In the case of employee-owned devices, employers
may offer some level of expense reimbursement. managing the
company’s policies, reimbursements and related security is a
challenge. leveraging its expertise in communications lifecycle
management as well as its relationships with all major telecom
providers, Cass delivers a turnkey platform that can handle
these complexities of modern mobility deployment. using Cass
solutions, our clients are rolling out ByoD programs that are not
only cost-effective, but that also negate the employees’ need to
fill out expense reports.
CASS HELPS CLIENT
MANAGE MOBILE
WORKFORCE WITH
BRING-YOUR-OWN-
DEVICE PROGRAM
to further support and enable our clients’ adoption of next-
The Cass solution for Communications Lifecycle
generation mobility, Cass provided users of our communications
Management (CLM) gives organizations the ability to cost-
lifecycle management services with a universal ios application
effectively manage both fixed and mobile communications.
for iphones, ipods and ipads. this mobile app provides access
The constant evolution of mobile technology in particular,
to functionality and data stored in the Cass telecom application,
combined with high levels of adoption by consumers,
so, for example, designated users can approve invoices from
continues to create new challenges for employers. One
their mobile devices. other useful features include a corporate
of these is the increasing number of employees that want
directory of employee email addresses and cell phone numbers
to use their personal devices for business. This movement
to make it easy to text, email or call colleagues.
has become widely known as “Bring Your Own Device”
THE POWER TO DELIVER PAPERLESS SOLUTIONS
more than a decade into the new millennium, the age-old topic
of eliminating paper still resonates with our customers. most
clients must balance the advantages of electronic transactions
with the disadvantages – primarily the associated upfront
investment in programming and other costs. a formidable
obstacle is the unwillingness or lack of readiness of some
suppliers to produce electronic documents. across all business
lines, we help clients seek scalable and cost-effective solutions
to reduce paper invoices and related documents without costly
impact to the rest of their systems.
(BYOD). While organizations welcome the improvements
in productivity, BYOD also creates particular challenges in
terms of security, cost and administration.
Stemming from these challenges is one of the newest
innovations from Cass: a managed service offering that
provides device security and usage management while
greatly reducing the administrative burdens of BYOD. A
particularly unique feature of the Cass solution is the way in
which employees are reimbursed for their mobile expenses.
Leveraging the sophistication of the Cass payment network,
reimbursement payments are made directly to employee
accounts with their wireless carriers. Eligible employees
ContInueD on pa Ge 10
PAGE 8
Cass InformatIon systems, InC. CASS DELIVERS END-TO-END SOLUTIONS
TO REDUCE THE COSTS, RISKS AND BURDEN
OF MANAGING THE GROWING COMPLExITY
OF FIxED AND MOBILE COMMUNICATIONS
simply go to a Web portal to enter some information and
own personal devices for business purposes and wanted
agree to accept their employer’s policies. The rest is automatic:
access to corporate systems. The company looked to Cass
When their monthly service bill arrives, the amount of their
for a turnkey solution.
employer’s reimbursement is already credited to their account.
Managers from human resources, information technology, finance
The security management capabilities include the ability
and legal collaborated with each other and Cass to develop a
to partition a device (ensuring personal use doesn’t impact
policy and execute a program that would extend mobile access
business use) and to remotely remove any private company
broadly and fairly, protect corporate network security and control
information that may have been stored on the device in the
associated costs. The Cass CLM solution delivers tight controls
event that the device is lost or stolen. All in all, Cass offers an
and oversight with little administrative effort. Integration with the
end-to-end solution to reduce the costs, risks and administrative
client’s human resource system further increases efficiency, so
burden of managing the growing complexity of fixed and
that new employees and terminations can be easily managed.
mobile communications.
Today, thousands of employees at this company are using their
A leading North American manufacturer adopted several
own mobile devices for business purposes, and some receive
components of this solution with great success. It knew its
employer reimbursement payments credited directly to their
mobility program was in need of a major overhaul: All devices
wireless bill. What’s more, the company has added up the
were company-issued and antiquated, so its workforce was
savings and factored in the benefits of extending mobile access
unable to access the latest technology in mobile applications.
to a greater number of employees. For both the employer and
In fact, fewer than 100 employees in North America had
its employees, the results are exceedingly positive. Cass has
mobile access to corporate email. In the meantime, many
delivered another solution to a complex problem. ■
of its 20,000+ employees were clamoring to use their
PAGE 9
The Power To Deliver SoluTionS In the world of transportation, we continue to succeed in
increasing automation despite a traditionally paper-intensive
environment, where many documents are created by over-the-
road carriers. While most invoices are processed electronically
in the form of Xml, eDI and images, our customers also rely on
supporting paper documents such as proof of delivery receipts,
packing slips, custom forms and re-weigh certificates (that
document weight discrepancies). planned costs of a shipment
can differ significantly from actual charges, and these supporting
documents provide the data required to analyze and understand
unanticipated costs.
to provide complete visibility, we developed the Cass epaper
process – a sophisticated workflow solution that combines eDI
invoice files with additional back-up data received as electronic
images. the back-up data is requested via an automated,
system-to-system request, whereby the Cass system accesses
the carriers’ online Web application to request all available
back-up data, which quite often originated as paper, but has
been converted to an image by the carrier. the epaper solution
gives our clients what they want -- an integrated, “touchless”
process with full transparency.
THE POWER TO DELIVER BEST PRACTICES
We are a company of experts. Cass employs some of the world’s
LONG-TERM CARE
FACILITY CUTS
ExPENSES WITH
WASTE MANAGE-
MENT SERVICES
FROM CASS
most experienced authorities on freight audit and payment,
One of the fastest-growing client segments for our waste
energy expense management, communications lifecycle
expense management team is the long-term care industry,
management and waste expense management. How did we
which relies on government-funded Medicare and Medicaid
acquire such knowledge? For decades, we have helped clients –
payments for more than half of its revenue and is reeling
including some of the world’s largest companies -- achieve best
from spending cuts. Proactive expense management
practices for invoice management in these discrete areas.
has become an operational imperative as these organ-
izations remain committed to providing quality care for
as our clients face new situations and challenges, we work with
them to develop new solutions. In doing so, we innovate, grow
our aging population.
our deep domain expertise and hone our problem-solving skills.
One such client – an innovator in long-term care with
We’ve highlighted some of these customer stories in this year’s
nearly 4,000 employees – operates 40 skilled nursing and
annual report to provide you with a deeper understanding of the
rehabilitation facilities across three states. The company
markets we serve and the problems we solve.
prides itself on a culture dedicated to improving its residents’
LOOKING TO THE FUTURE
as we look to the future, we can’t be sure what new tech-
nologies we’ll adopt to serve our clients. However, we do know
that the solutions we deliver will always be inspired by our clients’
business needs – which grow in complexity. our clients look
to us to deliver value beyond a completed transaction – such
as an invoice paid on time. today we deliver the added values
our clients demand, such as visibility into their operational
processes, access to benchmark data and advisory services.
ContInueD on pa Ge 12
PAGE 10
quality of life. Although the company had been spending
about $700,000 annually on waste removal services, it had
very little buying power and negotiating leverage with its
vendors. It had no dedicated waste invoice auditing system
and very little visibility to service component details.
Complex rate structures made it difficult to understand
the exact terms of its contracts. Without dedicated waste-
specific expertise and business systems to monitor changing
waste regulations, service and pricing details, the company
lacked control over this growing operational expense.
Cass InformatIon systems, InC. CASS DELIVERS COMPLETE SOLUTIONS –
ENCOMPASSING STRATEGIC SOURCING,
INFORMATION-DRIVEN SERVICE
MANAGEMENT AND INVOICE MANAGEMENT
As a result, the company tended to experience steep, unpre-
representing close to 4,000 service locations, Cass leveraged its
dictable increases in pricing.
buying power to deliver more than $16,000 in monthly expense
Management recognized the need for specialized expertise
and information management systems to gain visibility and
control of their medical and solid waste services, contracts
and spend. After evaluating several providers, the company
savings. Additionally, a historical billing audit for each facility
resulted in more than $20,000 in error recoveries. The client
was able to gain clarity on services, contracts, spend details and
ongoing savings through reporting from Cass.
chose Cass as its partner.
In total, the initial implementation delivered more than
To transition its waste expense management to Cass, the
company needed only to provide Cass with high-level infor-
mation, such as a list of its locations, copies of its contracts
$300,000 in total savings: about $200,000 in annualized fee
reduction savings, $20,000 in historical error recoveries and
$100,000 in error prevention over the coming 12-month period.
and some additional information from sample invoices. After
Our client was thrilled with the hard-dollar savings, and secure
loading the data into our WasteVision™ technology platform,
in the knowledge that it had implemented tight controls to
Cass immediately went to work identifying opportunities for
protect its financial interests. With Cass as its partner, the client
cost and service level optimization.
could now focus its resources on core business capabilities.
Using our geographically specific understanding of service
costs and aggregate buying power, Cass was able to identify
service efficiency and rate reduction opportunities. Next, the
Cass team managed negotiations with qualified vendors to
renegotiate contracts (most of which were not near expiration).
As a procurement agent for hundreds of organizations
Cass demonstrated its power to deliver a complete solution,
encompassing strategic sourcing, information-driven service
management and invoice management. ■
PAGE 11
The Power To Deliver SoluTionS visibility is key in achieving tight controls. many of our clients
attest that they have never really been able to fully understand
their true costs of shipping or their expenses for facilities
management, energy, environmental services or communications
until they became a Cass client. Clients of our freight payment
service make excellent use of our benchmark data, which gives
them insight into market costs for the routes they use.
Cass benchmark data also informs our Cass advisory services
teams and enables them to assist our freight, telecom and
waste clients in negotiating with their suppliers to attain the
best market rates.
as I look to the future, I do so with optimism, along with a keen
awareness of the difficult economic forecast of low GDp growth
and interest rates in the intermediate future. although Cass is
certainly poised for a significant acceleration of earnings when
conditions improve, in the meantime we will continue to focus on
long-term value creation. We will accomplish this by continually
investing in our service lines, seeking out new markets where
we can obtain a competitive advantage and by maintaining a
strong liquidity and financial position.
THANKS AND GRATITUDE
We are of course indebted to our shareholders. your loyalty
and support over the years has been a key component of
OVER 100 YEARS
OF SERVICE,
SECURITY AND
SATISFACTION
our success. It is gratifying to see the number of long-term
Cass Commercial Bank provides a dual role in the
shareholders that have benefited from holding Cass stock.
organization. Cass Bank serves its traditional banking
We thank our Board of Directors for their continued support,
clients as well as provides the financial exchange
commitment and counsel. We thank our customers for their
infrastructure and investment management capabilities
willingness to involve us in the complexities of their businesses,
to our payment processing businesses.
and their invitation to work with them to develop new innovative
solutions. of course, we are also thankful for and proud of
our employees for their performance, dedication and desire
to serve our clients.
Founded in 1906, the Bank has provided financial services
for privately held businesses in the St. Louis area and has
become an industry leader in providing loans and banking
services for faith-based organizations throughout the country.
above all, we recognize and express our gratitude to God for our
More recently, Cass has capitalized on another market niche
inspiration to be industrious and creative, as well as forthright
through its services to McDonald’s franchise owners. We
and ethical in our business practices. In His grace, He rewards
have a long history of providing top-flight cash management
us with more than we deserve.
services while achieving “trusted advisor” status with our
commercial and faith-based clients.
Additionally, the bank manages all corporate assets –
including Cass loan, investment and liquidity portfolios – on
a daily basis. As a member of the Federal Reserve System,
the bank securely moved over $33 billion on behalf of Cass
Information Systems’ payment processing clients to third
parties in 2012. These third parties include utilities, telecom
EriC h. BruNNgrABEr
president and Chief executive officer
Cass Information systems, Inc
PAGE 12
Cass InformatIon systems, InC. PROVIDING CREDIT FOR BUSINESSES
AND PROjECT FINANCING FOR RELIGIOUS
MINISTRIES, CASS HAS BROUGHT
ExPERTISE AND ExPERIENCE TO
ITS CUSTOMER RELATIONSHIPS FOR
MORE THAN 100 YEARS.
carriers, freight carriers and other supply chain partners. The
key role of the bank within the Cass organization gives us a
competitive advantage over other payment processors.
AS A MEMBER OF THE FEDERAL
RESERVE SYSTEM, THE BANK SECURELY
MOVED OVER $33 BILLION ON BEHALF
OF CASS INFORMATION SYSTEMS’
PAYMENT PROCESSING CLIENTS TO
THIRD PARTIES IN 2012
Cass Commercial Bank strives for a particularly high level of
asset quality and financial strength as we are the custodian and
payment processor of our clients’ funds. Cass Commercial Bank
exceeds all measures used by regulators to designate a bank
as “well capitalized.” For over 100 years, we have succeeded in
serving our customers and the business services divisions of Cass
with financial strength and secure financial payment services. ■
107 years In BusIness
$33.2
$1.3 BIllIon total assets
BIllIon paID In 2012
PAGE 13
The Power To Deliver SoluTionS
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In tHousanDs oF Dollars, eXCept sHare anD per sHare InFormatIon)
For tHe year enDeD DeCemBer 31,
2012
2011
2010
$
66,695
$
60,688
$
54,183
40,385
2,635
1,808
111,523
62,563
2,157
3,516
12,097
80,333
31,190
7,887
43,711
43
2,093
106,535
56,573
2,318
3,525
12,613
75,029
31,506
8,497
40,071
—
1,963
96,217
51,368
2,485
3,561
10,870
68,284
27,933
7,623
$
23,303
$
23,009
$
20,310
$
2.05
2.02
$
2.03
2.01
$
1.80
1.78
11,378,216
11,557,214
11,326,968
11,295,693
11,475,620
11,431,566
rEvENuES
Payment and Processing
Net Investment Income
Gains on Sales of Securities
Other
Total Net revenues
ExPENSES
Salaries and Employee Benefits
Occupancy
Equipment
Other
Total Expenses
Income Before Income Tax Expense
Income Tax Expense
Net income
EArNiNgS PEr ShArE
Basic
Diluted
wEighTEd AvErAgE ShArES OuTSTANdiNg
Basic
Diluted
PAGE 14
Cass InformatIon systems, InC.
CONDENSED CONSOLIDATED
BALANCE SHEETS
(In tHousanDs oF Dollars, eXCept sHare anD per sHare InFormatIon)
as oF DeCemBer 31,
ASSETS
Cash and Cash Equivalents
Loans and Investments, Net
Premises and Equipment, Net
Other Assets
Total Assets
LiABiLiTiES
Deposits
Accounts and Drafts Payable
Other Liabilities
Total Liabilities
ShArEhOLdErS’ EquiTy
2012
2011
$ 141,088
$ 235,962
1,017,311
10,735
118,253
969,223
9,587
104,529
$ 1,287,387
$ 1,319,301
$ 563,708
$ 548,368
522,761
26,903
595,201
15,184
$ 1,113,372
$ 1,158,753
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; 11,931,147
and 10,890,163 shares issued at December 31, 2012 and 2011, respectively
Additional Paid in Capital
Retained Earnings
Common Shares in Treasury, at cost (467,316 and 532,233 shares
at December 31, 2012 and 2011, respectively)
Accumulated Other Comprehensive Loss
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
5,966
125,086
60,952
(11,896)
(6,093)
174,015
5,445
80,971
89,853
(12,968)
(2,753)
160,548
$ 1,287,387
$ 1,319,301
PAGE 15
The Power To Deliver SoluTionS REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF CASS INFORMATION SYSTEMS, INC.
dated march 8, 2013, we expressed an unqualified opinion
on those consolidated financial statements.
We have audited, in accordance with the standards of the
In our opinion, the information set forth in the accompanying
public Company accounting oversight Board (united states),
condensed consolidated financial statements is fairly stated,
the consolidated balance sheets of Cass Information systems,
in all material respects, in relation to the consolidated financial
Inc. and subsidiaries (the Company) as of December 31, 2012
statements from which it has been derived.
and 2011, and the related consolidated statements of income,
comprehensive income, cash flows and shareholders’
equity for each of the years in the three-year period ended
December 31, 2012 (not presented herein); and in our report
Saint Louis, Missouri
march 8, 2013
FORWARD-LOOKING STATEMENTS
FACTORS THAT MAY AFFECT FUTURE RESULTS
may cause future performance to be materially different
this report may contain or incorporate by reference forward-
looking statements made pursuant to the safe harbor
provisions of section 27a of the securities act of 1933,
as amended, and section 21e of the securities exchange
act of 1934, as amended. although we believe that, in
making any such statements, our expectations are based
on reasonable assumptions, forward-looking statements
are not guarantees of future performance and involve risks,
uncertainties and other factors beyond our control, which
from expected performance summarized in the forward-
looking statements. these risks, uncertainties and other
factors are discussed in part I, Item 1a, “risk Factors”
section of the Company’s annual report on Form 10-K,
filed with the securities and exchange Commission. We
undertake no obligation to publicly update or revise any
forward-looking statements to reflect changed assumptions,
the occurrence of anticipated or unanticipated events, or
changes to future results over time.
PAGE 16
Cass InformatIon systems, InC. SHAREHOLDER INFORMATION
COrPOrATE hEAdqu ArTErS
Cass Information systems, Inc.
12444 powerscourt Drive, suite 550
saint louis, missouri 63131
314-506-5500
cass@cassinfo.com
www.cassinfo.com
COMMON STOCk
the company’s common stock trades
on the nasDaQ stock market under
the symbol Cass.
ANNuAL MEETiNg
the annual meeting of shareholders will be
held monday, april 15, 2013 at 11 a.m. at
the Charles F. Knight executive education and
Conference Center, olin Business school at
Washington university, saint louis, missouri.
iNvESTOr rELATiONS
security analysts, investment managers
and others seeking financial information
about the Company should contact:
Investor relations Department
Cass Information systems, Inc.
12444 powerscourt Drive, suite 550
saint louis, missouri 63131
314-506-5500
10-k ANd OThEr PuBLiCATiONS
a copy of the company’s Form 10-K,
as filed with the securities and exchange
Commission, will be furnished without
charge upon written request to the
address above or from the Company’s
website at: www.cassinfo.com
iNdEPENdENT AudiTOrS
KpmG llp
10 south Broadway, suite 900
saint louis, missouri 63102
TrANSFEr AgENT
shareholder correspondence should be mailed to:
Computershare
p.o. Box 43006
providence, rI 02940-3006
overnight correspondence should be mailed to:
Computershare
250 royall street
Canton, ma 02021
shareholder website:
www.computershare.com/investor
shareholder online inquiries:
https://www-us.computershare.com/
investor/Contact
toll-Free phone:
866-323-8170
BOARD OF DIRECTORS
LAwrENCE A. COLLETT
Chairman of the Board
k. dANE Br OOkShEr
retired Chairman and Chief
executive officer, prologis
EriC h. BruNNgrABEr
president and Chief executive officer
BryAN S. ChAPELL
Chancellor, Covenant theological
seminary
rOBErT A. EBEL
Chief executive officer, universal
printing Company
BENJAMiN F. EdwArdS , iv
Chairman, Chief executive
officer and p resident,
Benjamin F. edwards & Company
JOhN L. giLLiS , Jr.
retired, armstrong teasdale llp
wAyNE J. grACE
retired managing Director,
uHy advisors mo , Inc.
JAMES J. LiNdEMANN
executive v ice president,
emerson electric Co.
rANdALL L. SChiLLiNg
president and Chief executive
officer, Candlestiq
ANdrEw J. SigNOrELLi
Chairman, Hope educational
& research Center
FrANkLiN d . wiCkS , Jr., Ph. d.
executive v ice president and president,
research s.B.u., sigma-aldrich
ExECUTIVE OFFICERS
EriC h. BruNNgrABEr
president and Chief executive officer
P. STEPhEN APPELBA uM
executive v ice president and
Chief Financial officer
hArry M. MurrAy
executive v ice president,
Corporate Development
JOhN F. PiCkEriNg
president, transportation
Information services
gAry B. LANgFiTT
president, expense
management services
rOBErT J. MAThiAS
president and Chief operating
officer, Cass Commercial Bank
PAGE 17
The Power To Deliver SoluTionS
12444 po WersCourt DrIve, suIte 550
saInt louIs, mIssourI 63131
314-506-5500
WWW.CassInFo.Com