Cass Information Systems (CASS) Q4 2006 earnings summary

Executive summary

• FY06 results exceeded management expectations: processing revenue and net interest income grew on higher transaction and dollar volumes, rising rates, and expense control.

• Net income was $15.066M, up 37.6% YoY; diluted EPS was $1.77, up from $1.29.

Financial highlights

• Total net revenues reached $82.105M, up 14.9% YoY; payment and processing fees were $40.343M, up 12.4%.

• Net interest income after loan-loss provision rose 19.8% to $39.284M; operating expenses increased 6% to $58.277M.

• Continuing-operations net income rose 37.5% to $15.461M; diluted continuing-operations EPS increased 36.8% to $1.82.

• 2005 included a $3.1M impairment charge on a private imaging investment; 2006 had no securities-sale gains versus $547K in 2005.

• Discontinued operations generated a $395K net loss in 2006, compared with a $298K net loss in 2005.

Outlook and guidance

• Management plans to expand payment and information-processing offerings and the customer base, leveraging applied technology and bank processing controls.

• Cash, cash equivalents, maturing investments, and operating cash flows were expected to fund 2007 operations and capital expenditures.