<PAGE> 1
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
COMMISSION FILE NO. 2-80070
_________________
CASS COMMERCIAL CORPORATION
INCORPORATED UNDER THE LAWS OF MISSOURI
I.R.S. EMPLOYER IDENTIFICATION NO. 43-1265338
13001 HOLLENBERG DRIVE, BRIDGETON, MISSOURI 63044
TELEPHONE: (314) 506-5500
_________________
Indicate by check mark whether the registrant has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
The number of shares outstanding of registrant's only class of stock as
of September 30, 1999: Common stock, par value $.50 per share - 3,762,851
shares outstanding.
- - ------------------------------------------------------------------------------
This document constitutes part of a prospectus covering securities that
have been registered under the Securities Act of 1933.
- - ------------------------------------------------------------------------------
<PAGE> 2
PART I, ITEM 1
- - --------------
CASS COMMERCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE DATA)
---------------------------
SEPTEMBER 30 DECEMBER 31
1999 1998
------------ -----------
<S> <C> <C>
ASSETS
- - ------
Cash and due from banks $ 19,715 $ 22,558
Federal funds sold and other short-term investments 77,848 156,827
-------- --------
Cash and cash equivalents 97,563 179,385
-------- --------
Investment in debt and equity securities:
Held-to-maturity, fair value of $33,666
and $57,191 at September 30, 1999
and December 31, 1998, respectively 33,769 56,605
Available-for-sale, at fair value 45,662 27,369
-------- --------
Total investment in debt and equity securities 79,431 83,974
-------- --------
Loans 282,748 224,888
Less: Allowance for loan losses 4,277 4,428
-------- --------
Loans, net 278,471 220,460
-------- --------
Premises and equipment, net 9,242 9,249
Accrued interest receivable 2,840 2,764
Other assets 6,463 8,080
-------- --------
Total assets $474,010 $503,912
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Liabilities:
- - -----------
Deposits:
Noninterest-bearing $ 77,431 $ 82,911
Interest-bearing 111,518 108,071
-------- --------
Total deposits 188,949 190,982
Accounts and drafts payable 223,984 250,518
Short-term borrowings 207 323
Other liabilities 4,338 4,685
-------- --------
Total liabilities 417,478 446,508
-------- --------
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 4,918 4,796
Retained earnings 53,988 51,505
Accumulated other comprehensive income (loss) (194) 387
Common shares in treasury, at cost (237,149 shares at
September 30, 1999 and 132,123 shares at December 31, 1998) (4,011) (1,213)
Unamortized stock bonus awards (169) (71)
-------- --------
Total shareholders' equity 56,532 57,404
-------- --------
Total liabilities and shareholders' equity $474,010 $503,912
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
-1-
<PAGE> 3
CASS COMMERCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE DATA)
----------------------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------ -------------------
1999 1998 1999 1998
------ ------ ------- -------
<S> <C> <C> <C> <C>
INTEREST INCOME:
- - ----------------
Interest and fees on loans $5,468 $4,525 $14,740 $13,260
Interest and dividends on debt and equity securities:
Taxable 1,206 1,563 3,546 5,114
Exempt from federal income taxes 16 16 48 53
Interest on federal funds sold and
other short-term investments 1,222 1,367 4,256 3,932
------ ------ ------- -------
Total interest income 7,912 7,471 22,590 22,359
------ ------ ------- -------
INTEREST EXPENSE:
- - -----------------
Interest on deposits 1,173 1,043 3,288 3,168
Interest on short-term borrowings 2 2 6 8
------ ------ ------- -------
Total interest expense 1,175 1,045 3,294 3,176
------ ------ ------- -------
Net interest income 6,736 6,426 19,296 19,183
Provision for loan losses -- -- -- --
------ ------ ------- -------
Net interest income after provision
for loan losses 6,736 6,426 19,296 19,183
------ ------ ------- -------
NONINTEREST INCOME:
- - -------------------
Freight and utility payment and processing revenue 4,949 5,040 15,205 15,835
Service charges on deposit accounts 171 173 504 487
Other 199 191 431 496
------ ------ ------- -------
Total noninterest income 5,319 5,404 16,140 16,818
------ ------ ------- -------
NONINTEREST EXPENSE:
- - --------------------
Salaries and employee benefits 6,479 6,062 19,102 18,923
Occupancy expense 428 431 1,286 1,284
Equipment expense 663 627 1,970 1,916
Other 1,898 1,767 5,812 5,289
------ ------ ------- -------
Total noninterest expense 9,468 8,887 28,170 27,412
------ ------ ------- -------
Income before income tax expense 2,588 2,943 7,266 8,589
Income tax expense 940 1,052 2,612 3,055
------ ------ ------- -------
Net income $1,648 $1,891 $ 4,654 $ 5,534
====== ====== ======= =======
Earnings per share:
Basic $ .44 $ .49 $ 1.22 $ 1.43
------ ------ ------- -------
Diluted $ .43 $ .48 $ 1.20 $ 1.41
------ ------ ------- -------
See accompanying notes to consolidated financial statements.
</TABLE>
-2-
<PAGE> 4
CASS COMMERCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- - -------------------------------------
Net income $ 4,654 $ 5,534
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,752 1,728
Amortization of stock bonus awards 50 46
(Increase) decrease in accrued interest receivable (76) 304
Other operating activities, net 1,541 479
-------- --------
Net cash provided by operating activities 7,921 8,091
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
- - -------------------------------------
Proceeds from maturities of debt and equity securities:
Held-to-maturity 22,892 25,891
Available-for-sale 1,498 1,999
Purchase of debt and equity securities available-for-sale (20,986) --
Net increase in loans (58,011) (18,654)
Purchases of premises and equipment, net (1,411) (724)
-------- --------
Net cash provided (used) in investing activities (56,018) 8,512
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
- - -------------------------------------
Net increase (decrease) in noninterest-bearing demand,
interest-bearing demand and savings deposits (1,848) 20,724
Net decrease in time deposits (185) (320)
Net decrease in accounts and drafts payable (26,534) (18,844)
Net decrease in short-term borrowings (116) (195)
Cash proceeds from exercise of stock options 81 52
Cash dividends paid (2,171) (2,086)
Purchase of common shares for treasury (2,952) --
-------- --------
Net cash used in financing activities (33,725) (669)
-------- --------
Net increase (decrease) in cash and cash equivalents (81,822) 15,934
Cash and cash equivalents at beginning of period 179,385 99,124
-------- --------
Cash and cash equivalents at end of period $ 97,563 $115,058
======== ========
Supplemental information:
Cash paid for interest $ 3,290 $ 3,178
======== ========
Cash paid for income taxes $ 2,501 $ 2,775
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
-3-
<PAGE> 5
CASS COMMERCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1999
Note 1 - Basis of Presentation
Cass Commercial Corporation (the Company) provides a full range of
banking services to individual, corporate and institutional customers, with a
primary focus on privately held companies and church and church-related
ministries, through its wholly owned subsidiary bank, Cass Commercial Bank
(the Bank). 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 payment processing and 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 management reports, auditing of freight charges, rating of
freight shipments and other payment related activities. 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 payment services which are performed for customers.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation, have been included. Operating results for
the period ended September 30, 1999 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998.
Note 2 - Impact Of New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities (SFAS 133) which establishes
standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It
requires an entity to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. In June 1999, the FASB issued Statement of
Financial Accounting Standards No. 137, Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB No. 133, an
amendment of FASB Statement No. 133, which defers the effective date of SFAS
from fiscal years beginning after June 15, 1999 to fiscal years beginning
after June 15, 2000. Earlier application of SFAS 133, as amended, is
encouraged but should not be applied retroactively to financial statements of
prior periods. The Company is currently evaluating the requirements and
impact of SFAS 133, as amended.
-4-
<PAGE> 6
Note 3 - Comprehensive Income
For the three- and nine-month periods ended September 30, 1999 and 1998,
unrealized gain (loss) on debt and equity securities available-for-sale is
the Company's only other comprehensive income component. Comprehensive
income for the periods ended September 1999 and 1998 is summarized as
follows:
<TABLE>
<CAPTION>
(In Thousands) (In Thousands)
Three Months Ended Nine Months Ended
September 30 September 30
------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $1,648 $1,891 $4,654 $5,534
Other comprehensive income:
Net unrealized gain (loss) on debt and
equity securities available-for-sale, net of tax (111) 298 (581) 298
------ ------ ------ ------
$1,537 $2,189 $4,073 $5,832
====== ====== ====== ======
</TABLE>
Note 4 - Earnings Per Share
Average common shares outstanding for the three-month periods ended
September 30, 1999 and 1998 were 3,753,951 and 3,862,811, respectively.
Average common shares outstanding for the nine-month periods ended September
30, 1999 and 1998 were 3,805,610 and 3,861,903, respectively. The only
dilutive instruments are stock options and unvested stock awards with an
aggregate dilutive effect of 59,000 and 65,032 shares for the three-month
periods ended September 30, 1999 and 1998, respectively and 58,104 and 69,524
shares for the nine-month periods ended September 30, 1999 and 1998,
respectively.
Note 5 - Industry Segment Information
The services provided by the Company are classified into two industry
segments: Banking Services and Information Services which are more fully
discussed in Note 1. Total net revenue is comprised of total interest income
and total noninterest income, less provision for loan losses. There have
been no material changes in assets, changes in the basis of segmentation or
changes in the basis of measurement of segment profits from the amounts
disclosed in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
Summarized information about the Company's operations in each industry
segment for the periods ended September 30, 1999 and 1998, is as follows:
<TABLE>
<CAPTION>
(In Thousands) (In Thousands)
Three Months Ended Nine Months Ended
September 30 September 30
------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total Net Revenue:
Banking Services $ 4,378 $ 3,977 $12,292 $12,005
Information Services 8,947 9,005 26,673 27,547
Eliminations (94) (107) (235) (375)
------- ------- ------- -------
Total $13,231 $12,875 $38,730 $39,177
------- ------- ------- -------
Income (Loss) Before Income Tax:
Banking Services $ 1,431 $ 1,247 $ 3,751 $ 3,779
Information Services 1,182 1,718 3,613 4,915
Corporate Items (25) (22) (98) (105)
------- ------- ------- -------
Total $ 2,588 $ 2,943 $ 7,266 $ 8,589
------- ------- ------- -------
Income Tax Expense (Benefit):
Banking Services $ 544 $ 443 $ 1,398 $ 1,334
Information Services 404 616 1,247 1,757
Corporate Items (8) (7) (33) (36)
------- ------- ------- -------
Total $ 940 $ 1,052 $ 2,612 $ 3,055
------- ------- ------- -------
Net Income (Loss):
Banking Services $ 887 $ 804 $ 2,353 $ 2,445
Information Services 778 1,102 2,366 3,158
Corporate Items (17) (15) (65) (69)
------- ------- ------- -------
Total $ 1,648 $ 1,891 $ 4,654 $ 5,534
======= ======= ======= =======
</TABLE>
-5-
<PAGE> 7
Note 6 - Reclassifications
Certain amounts in the 1998 consolidated financial statements have been
reclassified to conform with the 1999 presentation. Such reclassifications
have no effect on previously reported net income.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Cass Commercial Corporation (the Company) operates in two primary
business segments through two wholly owned subsidiaries, Cass Commercial Bank
(the Bank), a commercial bank, and Cass Information Systems, Inc. (CIS), a
payment processing company. The Bank provides specialized banking services
to privately held businesses and church and church-related entities located
primarily in the St. Louis, Missouri metropolitan area. CIS is a payment
processing and information services company, whose operations include the
processing and payment of freight and utility charges, preparation of
transportation management reports, auditing of freight charges, rating of
freight shipments and other payment related activities for customers located
throughout the United States.
The following paragraphs more fully discuss the results of operations and
changes in financial condition for the three-month period ended September 30,
1999 (the Third Quarter of 1999) compared to the three-month period ended
September 30, 1998 (the Third Quarter of 1998) and the nine-month period
ended September 30, 1999 (the First Nine Months of 1999) compared to the
nine-month period ended September 30, 1998 (the First Nine Months of 1998).
Most information is provided on a consolidated basis for the Company, the
Bank and CIS, with expanded disclosures for the specific effects CIS's
operations have on particular account captions.
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and related notes and with the
statistical information and financial data appearing in this report as well
as the Company's 1998 Annual Report on Form 10-K. Results of operations for
the three and nine month periods ended September 30, 1999 are not necessarily
indicative of results to be attained for any other period.
RESULTS OF OPERATIONS
The Company had net income of $1,648,000 for the Third Quarter of 1999, a
$243,000 or 12.9% decrease compared to net income of $1,891,000 for the Third
Quarter of 1998. The Company had net income of $4,654,000 for the First Nine
Months of 1999, a $880,000 or 15.9% decrease compared to net income of
$5,534,000 for the First Nine Months of 1998. Diluted earnings per share was
$.43 for the Third Quarter of 1999, a 10.4% decrease compared to $.48 for the
Third Quarter of 1998. Diluted earnings per share was $1.20 for the First
Nine Months of 1999, a 14.9% decrease compared to $1.41 for the First Nine
Months of 1998.
Net Interest Income
- - -------------------
The Company's tax-equivalent net interest income increased 5.2% or
$336,000 from $6,453,000 in the Third Quarter of 1998 to $6,789,000 in the
Third Quarter of 1999. The tax-equivalent net interest margin decreased from
6.07% in the Third Quarter of 1998 to 5.90% in the Third Quarter of 1999.
The average tax-equivalent yield on earning assets decreased from 7.06% in
the Third Quarter of 1998 to 6.92% in the Third Quarter of 1999. The average
rate paid on interest-bearing liabilities decreased from 4.11% in the Third
Quarter of 1998 to 3.85% in the Third Quarter of 1999.
The average balance of loans increased $59,761,000 from $218,057,000 to
$277,818,000, investment in debt and equity securities decreased $21,963,000
from $103,481,000 to $81,518,000, and federal funds sold and other short-term
investments decreased $2,890,000 from $99,995,000 to $97,105,000 from the
Third Quarter of 1998 to the Third Quarter of 1999. The average balance of
noninterest bearing demand deposit accounts increased $9,639,000 from
$72,568,000 to $82,207,000, accounts and drafts payable increased $6,556,000
from $222,173,000 to $228,729,000, and interest bearing liabilities increased
$20,249,000 from $100,774,000 to $121,023,000 from the Third Quarter of 1998
to the Third Quarter of 1999.
-6-
<PAGE> 8
The decrease experienced during the Third Quarter in net interest margin
was caused primarily by decreases in the general level of interest rates,
specifically, the federal fund, short term government, and prime rates. The
Company is adversely affected by decreases in the level of interest rates due
to the fact that its rate sensitive assets significantly exceed its rate
sensitive liabilities. Conversely, the Company is positively affected by
increases in the level of interest rates. This is primarily due to the
noninterest-bearing liabilities generated by CIS in the form of accounts and
drafts payable. The impact from this decrease in rates on net interest
income was offset by increases in interest-earning assets and a shift in the
composition of earning assets from investments and federal funds sold and
other short-term investments to higher yielding loans.
The increases experienced during the Third Quarter in noninterest bearing
demand deposits and interest bearing deposits were attributable to the
addition of new business at the Bank. The increase in accounts and drafts
payable was attributable mainly to an increase in the dollar value of items
processed at CIS. These increases, along with decreases in investments and
federal funds sold and other short term investments were used to fund the
increased investment in loans. Please refer to Table I on Page 8.
The Company's tax-equivalent net interest income increased .93% or
$179,000 from $19,268,000 in the First Nine Months of 1998 to $19,447,000 in
the First Nine Months of 1999. The tax-equivalent net interest margin
decreased from 6.09% in the First Nine Months of 1998 to 5.79% in the First
Nine Months of 1999. The average tax-equivalent yield on earning assets
decreased from 7.09% in the First Nine Months of 1998 to 6.77% in the First
Nine Months of 1999. The average rate paid on interest-bearing liabilities
decreased from 4.13% in the First Nine Months of 1998 to 3.84% in the First
Nine Months of 1999.
The average balance of loans increased $38,286,000 from $212,833,000 to
$251,119,000, investment in debt and equity securities decreased $33,646,000
from $113,490,000 to $79,844,000, and federal funds sold and other short-term
investments increased $21,307,000 from $96,896,000 to $118,203,000 from the
First Nine Months of 1998 to the First Nine Months of 1999. The average
balance of noninterest bearing demand deposit accounts increased $6,279,000
from $69,673,000 to $75,952,000, accounts and drafts payable increased
$5,763,000 from $226,397,000 to $232,160,000, and interest bearing
liabilities increased $11,868,000 from $102,930,000 to $114,798,000 from the
First Nine Months of 1998 to the First Nine Months of 1999.
The decrease experienced during the First Nine Months of 1999 in net
interest margin was caused primarily by decreases in the general level of
interest rates, specifically, the federal fund, short term government, and
prime rates. The Company is adversely affected by decreases in the level of
interest rates due to the fact that its rate sensitive assets significantly
exceed its rate sensitive liabilities. Conversely, the Company is positively
affected by increases in the level of interest rates. This is primarily due
to the noninterest-bearing liabilities generated by CIS in the form of
accounts and drafts payable. The impact from this decrease in rates on net
interest income was offset by increases in interest-earning assets and a
shift in the composition of earning assets from investments to higher
yielding loans.
The increases experienced during the First Nine Months of 1999 in
noninterest bearing demand deposits and interest bearing deposits were
attributable to the addition of new business at the Bank. The increase in
accounts and drafts payable was attributable mainly to an increase in the
dollar value of items processed at CIS. These increases were used to fund
the increased investment in loans and federal funds and other short-term
investments. In addition, the decrease in investment in debt and equity
securities was used to fund the increase in federal funds and other short
term investments and was caused by management's desire to increase liquidity
to meet expected future loan demand. Please refer to Table 2 on Page 10.
-7-
<PAGE> 9
<TABLE>
TABLE 1: CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST
INCOME ANALYSIS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(TAX-EQUIVALENT BASIS, DOLLARS IN THOUSANDS)
<CAPTION>
AVERAGE INTEREST INCREASE (DECREASE)
AVERAGE BALANCE YIELD/RATE INCOME/EXPENSE DUE TO CHANGE IN
--------------- ---------- -------------- NET ------------------
1999 1998 1999 1998 1999 1998 CHANGE VOLUME RATE
---- ---- ---- ---- ---- ---- ------ ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
- - ------
Interest-earning assets:
Loans $277,818 $218,057 7.87% 8.27% $5,513 $4,543 $ 970 $1,195 $(225)
Investment in debt and equity
securities 81,518 103,481 5.98 6.09 1,229 1,588 (359) (332) (27)
Federal funds sold and other
short-term investments 97,105 99,995 4.99 5.42 1,222 1,367 (145) (39) (106)
-------- -------- ------ ------ ----- ------ -----
Total interest-earning assets 456,441 421,533 6.92 7.06 7,964 7,498 466 824 (358)
-------- -------- ------ ------ ----- ------ -----
Nonearning assets:
Cash and due from banks 23,311 20,753
Premises and equipment, net 9,390 9,324
Other assets 8,769 9,465
Allowance for loan losses (4,382) (4,491)
-------- --------
Total assets 493,529 456,584
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Interest-bearing liabilities:
Interest-bearing demand deposits 43,679 32,293 3.42 3.54 376 288 88 98 (10)
Savings deposits 67,613 59,714 4.04 4.27 688 643 45 82 (37)
Time deposits of $100,000
or more 3,631 3,997 5.14 5.56 47 56 (9) (5) (4)
Other time deposits 5,783 4,507 4.25 4.93 62 56 6 14 (8)
-------- -------- ------ ------ ----- ------ -----
Total interest-bearing deposits 120,706 100,511 3.86 4.12 1,173 1,043 130 189 (59)
Short-term borrowings 317 263 2.50 3.02 2 2 -- -- --
-------- -------- ------ ------ ----- ------ -----
Total interest-bearing
liabilities 121,023 100,774 3.85 4.11 1,175 1,045 130 189 (59)
-------- -------- ------ ------ ----- ------ -----
Noninterest-bearing liabilities:
Demand deposits 82,207 72,568
Accounts and drafts payable 228,729 222,173
Other liabilities 5,022 5,152
-------- --------
Total liabilities 436,981 400,667
Shareholders' equity 56,548 55,917
-------- --------
Total liabilities and
shareholders' equity $493,529 $456,584
======== ========
Net interest income $6,789 $6,453 $ 336 $ 635 $(299)
====== ====== ===== ====== =====
Net interest margin 5.90% 6.07%
==== ====
Interest spread 3.07% 2.95%
==== ====
-8-
<PAGE> 10
AVERAGE BALANCES, INTEREST AND RATES, Continued
NOTES:
(1) For purposes of these computations, nonaccrual loans are included in
the average loan amounts outstanding.
(2) Interest income on loans includes net fees of $1,000 and $2,000 for the
Third Quarter of 1999 and 1998, respectively.
(3) Income is presented on a tax-equivalent basis assuming a tax rate of
34%. The tax-equivalent adjustment was approximately $53,000 and
$27,000 for the Third Quarter of 1999 and 1998, respectively.
</TABLE>
-9-
<PAGE> 11
<TABLE>
TABLE 2: CONSOLIDATED AVERAGE BALANCE SHEETS AND NET INTEREST
INCOME ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(TAX-EQUIVALENT BASIS, DOLLARS IN THOUSANDS)
<CAPTION>
AVERAGE INTEREST INCREASE (DECREASE)
AVERAGE BALANCE YIELD/RATE INCOME/EXPENSE DUE TO CHANGE IN
------------------ ----------- ------------------ NET -------------------
1999 1998 1999 1998 1999 1998 CHANGE VOLUME RATE
-------- -------- ---- ---- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
- - ------
Interest-earning assets:
Loans $251,119 $212,833 7.92% 8.37% $14,867 $13,318 $ 1,549 $ 2,296 $ (747)
Investment in debt and equity
securities 79,844 113,490 6.06 6.12 3,618 5,194 (1,576) (1,525) (51)
Federal funds sold and other
short-term investments 118,203 96,896 4.81 5.43 4,256 3,932 324 800 (476)
-------- -------- ------- ------- ------- ------- -------
Total interest-earning assets 449,166 423,219 6.77 7.09 22,741 22,444 297 1,571 (1,274)
-------- -------- ------- ------- ------- ------- -------
Nonearning assets:
Cash and due from banks 22,304 19,588
Premises and equipment 9,261 9,576
Other assets 9,278 11,188
Allowance for loan losses (4,426) (4,512)
-------- --------
Total assets 485,583 459,059
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Interest-bearing liabilities:
Interest-bearing demand deposits 41,032 33,478 3.36 3.55 1,031 888 143 192 (49)
Savings deposits 65,031 60,448 4.02 4.28 1,955 1,933 22 142 (120)
Time deposits of $100,000
or more 3,617 3,982 5.21 5.71 141 170 (29) (15) (14)
Other time deposits 4,827 4,733 4.46 5.00 161 177 (16) 3 (19)
-------- -------- ------- ------- ------- ------- -------
Total interest-bearing
deposits 114,507 102,641 3.84 4.13 3,288 3,168 120 322 (202)
Short-term borrowings 291 289 2.76 3.70 6 8 (2) -- (2)
-------- -------- ------- ------- ------- ------- -------
Total interest-bearing
liabilities 114,798 102,930 3.84 4.13 3,294 3,176 118 322 (204)
-------- -------- ------- ------- ------- ------- -------
Noninterest-bearing liabilities:
Demand deposits 75,952 69,673
Accounts and drafts payable 232,160 226,397
Other liabilities 5,426 5,631
-------- --------
Total liabilities 428,336 404,631
Shareholders' equity 57,247 54,428
-------- --------
Total liabilities and
shareholders' equity $485,583 $459,059
======== ========
Net interest income $19,447 $19,268 $ 179 $ 1,249 $(1,070)
======= ======= ======= ======= =======
Net yield on interest-earning
assets 5.79% 6.09%
==== ====
Interest spread 2.93% 2.96%
==== ====
-10-
<PAGE> 12
NOTES:
(1) For purposes of these computations, nonaccrual loans are included in the average loan
amounts outstanding.
(2) Interest income on loans includes net fees of $88,000 and $15,000 for the First Nine
Months of 1999 and 1998, respectively.
(3) Income is presented on a tax-equivalent basis assuming a tax rate of 34%. The
tax-equivalent adjustment was approximately $151,000 and $85,000 for the First Nine
Months of 1999 and 1998, respectively.
</TABLE>
-11-
<PAGE> 13
Provision for Loan Losses
- - -------------------------
A significant determinant of the Company's operating results is the
provision for loan losses and the level of loans charged off. There was no
provision made for loan losses during the Third Quarter of 1999 or 1998 and
no provision made during the First Nine Months of 1999 or 1998. Net loans
charged off for the Third Quarter of 1999 were $194,000 compared to $96,000
for the Third Quarter of 1998. Net loans charged off for the First Nine
Months of 1999 were $151,000 compared to $11,000 for the First Nine Months of
1998.
The ratio of allowance for loan losses as of September 30 to average
loans outstanding during the Third Quarter was 1.54% in 1999 compared to
2.05% in 1998. The ratio of nonperforming loans as of September 30 to
average loans during the Third Quarter was .12% in 1999 compared to .38% in
1998.
At September 30, 1999, impaired loans totalled $351,000 which includes
$173,000 of nonaccrual loans. The allowance for loan losses on impaired
loans was $183,000 at September 30, 1999. The average balance of impaired
loans during the First Nine Months of 1999 and the First Nine Months of 1998
was $563,000 and $1,061,000, respectively.
The allowance for loan losses at September 30, 1999 was $4,277,000 and
at December 31, 1998 was $4,428,000. The allowance for loan losses at
September 30, 1999 represented 1.51% of total loans outstanding compared to
1.97% at December 31, 1998.
Factors which influence management's determination of the adequacy of
the allowance for loan losses, among other things, include: evaluation of each
nonperforming and/or classified loan to determine the estimated loss exposure
under existing circumstances known to management; evaluation of all potential
problem loans identified in light of possible loss exposure based upon
existing circumstances known to management; analysis of the loan portfolio
with regard to potential future loss exposure on loans to specific customers
and/or industries; current economic conditions; and, an overall review of
the loan portfolio in light of past loan loss experience. In management's
judgment, the allowance for loan losses is considered adequate to absorb
potential losses in the loan portfolio.
The following table presents information as of and for the three- and
six-month periods ended September 30, 1999 and 1998 pertaining to the
Company's provision for loan losses and analysis of the allowance for loan
losses.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------- -----------------------
1999 1998 1999 1998
-------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Allowance at beginning of period $ 4,471 $ 4,569 $ 4,428 $ 4,484
Loans charged off (198) (105) (256) (105)
Recoveries on loans previously charged off 4 9 105 94
-------- -------- -------- --------
Net loans charged off (194) (96) (151) (11)
-------- -------- -------- --------
Allowance at end of period $ 4,277 $ 4,473 $ 4,277 $ 4,473
======== ======== ======== ========
Loans outstanding:
Average $277,818 $218,057 $251,119 $212,833
September 30 282,748 215,121 282,748 215,121
Ratio of allowance for loan losses to
loans outstanding:
Average 1.54% 2.05% 1.70% 2.10%
September 30 1.51% 2.08% 1.51% 2.08%
Nonperforming loans:
Nonaccrual loans $ 173 $ 547 $ 173 $ 547
Loans past due 90 days or more 163 274 163 274
-------- -------- -------- --------
Total $ 336 $ 821 $ 336 $ 821
-------- -------- -------- --------
Nonperforming loans as a percent of
average loans .12% .38% .13% .39%
</TABLE>
-12-
<PAGE> 14
Noninterest Income
- - ------------------
Noninterest income is principally derived from service fees generated
by CIS. Total noninterest income for the Third Quarter of 1999 was
$5,319,000, a $85,000 or 1.6% decrease compared to the Third Quarter of 1998.
Total noninterest income for the First Nine Months of 1999 was $16,140,000, a
$678,000 or 4.0% decrease compared to the First Nine Months of 1998.
CIS experienced a decrease in payment and processing revenues of
$91,000 or 1.8% in the Third Quarter of 1999 compared to the Third Quarter of
1998 and a decrease of $630,000 or 4.0% in the First Nine Months of 1999
compared to the First Nine Months of 1998. These decreases were due primarily
to a decrease in the number of freight invoices processed. Some of these
decreases were offset by an increase in the number of utility invoices
processed.
Noninterest Expense
- - -------------------
Total noninterest expense for the Third Quarter of 1999 was $9,468,000,
a $581,000 or 6.5% increase compared to the Third Quarter of 1998. Total
noninterest expense for the First Nine Months of 1999 was $28,170,000, a
$758,000 or 2.8% increase compared to the First Nine Months of 1998.
Salaries and benefits expense for the Third Quarter of 1999 was
$6,479,000, a $417,000 or 6.9% increase compared to the Third Quarter of
1998. Salary and benefits expense for the First Nine Months of 1999 was
$19,102,000, a $179,000 or 1.0% increase compared to the First Nine Months of
1998. The increase in expense for the Third Quarter relates primarily to
annual pay increases, expenses related to an increased investment at CIS to
support expanded utility operations and an increase in employee benefits
expense, primarily related to an increase in health insurance and the
Company's two pension plans.
Equipment expense for the Third Quarter of 1999 was $663,000, an
increase of $36,000 or 5.7% compared to the Third Quarter of 1998. Equipment
expense for the First Nine Months of 1999 was $1,970,000, a $54,000 or 2.8%
increase compared to the First Nine Months of 1998. These increases were due
primarily to increased investments in information technology and incresed
rent expense.
Other noninterest expense for the Third Quarter of 1999 was $1,898,000,
an increase of $131,000 or 7.4% compared to the Third Quarter of 1998.
Other noninterest expense for the First Nine Months of 1999 was $5,812,000, a
$523,000 or 9.9% increase compared to the First Nine Months of 1998. These
increases were attributable to several items including correspondent bank
service charges, consulting fees and other outside service fees.
FINANCIAL CONDITION
Total assets at September 30, 1999 were $474,010,000, a decrease of
$29,902,000 or 5.9% from December 31, 1998. Loans, net of the allowance for
loan losses, at September 30, 1999 were $278,471,000, an increase of
$58,011,000 or 26.3% from December 31, 1998. Total investments in debt and
equity securities at September 30, 1999 were $79,431,000, a $4,543,000 or
5.4% decrease from December 31, 1998. Federal Funds sold and other
short-term investments at September 30, 1999 were $77,848,000, a $78,979,000
or 50.4% decrease from December 31, 1998.
Total deposits at September 30, 1999 were $188,949,000, a $2,033,000 or
1.1% decrease from December 31, 1998. Accounts and drafts payable were
$223,984,000, a $26,534,000 or 10.6% decrease from December 31, 1998. Total
shareholders' equity at September 30, 1998 was $56,532,000, a $872,000 or
1.5% decrease from December 31, 1998.
The increase in loans is related to the successful expansion of the
church and church-related ministries unit, along with increases in loans to
privately held businesses from the Bank's ongoing marketing efforts. The
decrease in federal funds sold and other short-term investments relates
primarily to this increase in loans and a decrease in accounts and drafts
payable. The ending balances of accounts and drafts payable will fluctuate
from month to month due to the payment processing cycle, which results in
lower balances on days when checks are issued. As noted above, the average
balances of accounts and drafts payable have increased from the Third Quarter
of 1998 to the Third Quarter of 1999 and the First Nine Months of 1998 to the
First Nine Months of 1999. The decrease in total shareholders' equity
resulted from the purchase of treasury shares for $2,952,000 (120,000
shares); dividends paid of $2,171,000 ($.57 per share); decrease in other
comprehensive income of $581,000 offset by net income of $4,654,000; cash
received from the exercise of stock options of $81,000, a tax benefit of
$47,000 on stock options exercised and the amortization of the stock bonus
plan of $50,000.
-13-
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
The liquidity of the Company is primarily represented federal funds
sold and other short-term investments of $77,848,000 and cash and due from
banks of $19,715,000 at September 30, 1999. Included in this total is
$45,000,000 invested in money market funds consisting of short-term U.S.
Government and agency issues.
Investment in debt and equity securities represented approximately 17%
of total assets at September 30, 1999. Of the U.S. Government securities in
the Company's investment portfolio, which represented 51% of the total, 60%
have maturities of less than one year. U.S. Government Agencies represented
26% of the total. Mortgage-backed securities represented approximately 21%
of the total. Obligations of state and political subdivisions constituted 2%
of the investment portfolio at September 30, 1999. There were no sales of
debt securities in the First Nine Months of 1999. Of the total portfolio,
approximately 87% of the securities have maturities of five years or less.
These securities provide the Company with longer term liquidity than its
primary sources.
The funds provided by the Bank consist of a sizable volume of core
deposits. Historically, the Bank has been a net provider of federal funds.
During the First Nine Months of 1999, the Bank was a net provider of federal
funds, averaging over $27,260,000 in net funds sold. Additionally, the
Company averaged approximately $90,942,000 in short-term money market funds
during the First Nine Months of 1999. The Company was able to meet its
liquidity requirements in the First Nine Months of 1999 through the growth of
deposit accounts, accounts and drafts payable and the liquid nature of
federal funds sold and other short-term investments.
The Company faces market risk to the extent that its net interest
income and fair market value of equity are affected by changes in market
interest rates. For information regarding the market risk of the Company's
financial instruments, see Item 3. "QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK".
Risk-based capital guidelines for financial institutions were adopted
by regulatory authorities effective January 1, 1991. These guidelines were
designed to relate regulatory capital requirements to the risk profile of the
specific institution and to provide for uniform requirements among the
various regulators. Currently, the risk-based capital guidelines require the
Company to meet a minimum total capital ratio of 8.0% of which at least 4.0%
must consist of Tier 1 capital. Tier 1 capital generally consists of (a)
common shareholders' equity (excluding the unrealized market value
adjustments on the available-for-sale securities), (b) qualifying perpetual
preferred stock and related surplus subject to certain limitations specified
by the FDIC, (c) minority interests in the equity accounts of consolidated
subsidiaries less (d) goodwill, (e) mortgage servicing rights within certain
limits, and (f) any other intangible assets and investments in subsidiaries
that the FDIC determines should be deducted from Tier 1 capital. The FDIC
also requires a minimum leverage ratio of 3.0%, defined as the ratio of Tier
1 capital less purchased mortgage servicing rights to total assets, for
banking organizations deemed the strongest and most highly rated by banking
regulators. A higher minimum leverage ratio is required of less highly rated
banking organizations. Total capital, a measure of capital adequacy,
includes Tier 1 capital, allowance for possible loan losses, and debt
considered equity for regulatory capital purposes.
The Company and the Bank continue to significantly exceed all
regulatory capital requirements, as evidenced by the following capital
amounts and ratios at September 30, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
September 30, 1999
------------------ Amount Ratio
------ -----
<S> <C> <C>
Total capital (to risk-weighted assets)
Cass Commercial Corporation $60,380,000 18.47%
Cass Commercial Bank 27,855,000 15.17
Tier I capital (to risk-weighted assets)
Cass Commercial Corporation $56,291,000 17.22%
Cass Commercial Bank 25,558,000 13.92
Tier I capital (to average assets)
Cass Commercial Corporation $56,291,000 11.61%
Cass Commercial Bank 25,558,000 11.43
-14-
<PAGE> 16
<CAPTION>
December 31, 1998
----------------- Amount Ratio
------ -----
<S> <C> <C>
Total capital (to risk-weighted assets)
Cass Commercial Corporation $60,073,000 21.14%
Cass Commercial Bank 27,526,000 15.12
Tier I capital (to risk-weighted assets)
Cass Commercial Corporation $56,510,000 19.89%
Cass Commercial Bank 25,246,000 13.86
Tier I capital (to average assets)
Cass Commercial Corporation $56,510,000 12.05%
Cass Commercial Bank 25,246,000 12.04
</TABLE>
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Year 2000 Issue
- - -------------------
The Year 2000 issue centers around the inability of some computer
systems to properly read and interpret dates because many existing computers
and computer programs have been developed to use two digits rather than four to
refer to a year. The risk of system failure and data processing errors may
be the result of this issue.
The Company's operations are heavily dependent on the use of computer
systems. For this reason, the Company implemented a Year 2000 project in
1997. The project was segmented into five phases: Awareness, Assessment,
Renovation, Testing and Implementation. The Company has focused its efforts
on addressing those systems it deems to be critical to ongoing operations.
The Company has completed all phases of the plan for its internal, mission
critical systems during the first quarter of 1999.
The Company continues to assess the readiness of its major vendors,
suppliers, customers and business partners. This process has been
accomplished through such avenues as user acceptance testing, interface
testing, risk analysis and periodic correspondence. Although our efforts
have been diligent and assessment results have been positive, there can be no
guarantee that the systems of these outside parties will be fully functional
in the Year 2000. Such failures could have a material adverse effect on the
Company.
The Company has developed business resumption contingency plans for the
purpose of assuring that core business processes will continue to operate
into the Year 2000. The plans will address failures such as payment system
failures, data processing system failures, increased cash withdrawals,
telecommunication failures, disruption in services provided by outside
parties and customer failures. The contingency plans provide for reasonable
alternatives to potential failures and the establishment of an implementation
strategy, including timelines and responsibility assignments.
The Company estimates it will incur costs of approximately $2.4 million
to prepare for the century date change. This includes internal and external
costs that will be expensed as well as capital expenditures that will be
capitalized. Costs include, but are not limited to salary expenses, outside
service fees (i.e., legal, audit, consulting), hardware and software
expenditures, and equipment costs. As of September 30, 1999 direct and
indirect expenditures have been approximately $2.3 million. Funding for Year
2000 costs have been, and will continue to be, derived from normal operating
cash flow and deployment of internal resources. Year 2000 expenses are not
expected to have a material impact on the Company's net income.
The foregoing discussion of Year 2000 issues is based on management's
most current assessment and estimates. The information utilizes multiple
assumptions of future events, including, but not limited to, the continued
availability of certain resources, third party efforts, and other factors.
There can be no guarantee that the estimates included herein will be
achieved, and actual costs and results could differ materially from the
estimates currently anticipated by the Company.
-15-
<PAGE> 17
Inflation
- - ---------
Inflation can impact the financial position and results of the
operations of financial institutions because financial institutions hold
monetary assets and monetary liabilities. Monetary assets and liabilities
are those which can be converted into a fixed number of dollars, and include
cash, investments, loans and deposits. The Company's consolidated balance
sheets, as is typical of financial institutions, reflect a net positive
monetary position (monetary assets exceeding monetary liabilities). During
periods of inflation, the holding of a net positive monetary position will
result in an overall decline in the purchasing power of a financial
institution.
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
- - ----------------------------------------------------------------------
Securities Litigation Reform Act of 1995
- - ----------------------------------------
Statements in Management's Discussion and Analysis of Financial
Condition and Results of Operations and the other sections of this Report
that are not statements of historical fact are "forward-looking statements".
Such statements are subject to important risks and uncertainties which could
cause the Company's actual results to differ materially from those expressed
in any such forward-looking statements made herein. The aforesaid
uncertainties include, but are not limited to: burdens imposed by federal
and state regulators, credit risk related to borrowers' ability to repay
loans, concentration of loans in the St. Louis Metropolitan area which
subjects the Company to risks associated with changes in the local economy,
risks associated with fluctuations in interest rates, competition from other
banks and other financial institutions, some of which are not as heavily
regulated as the Company and, particularly in the case of CIS, risks
associated with breakdowns in data processing systems and competition from
other providers of similar services.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
The Company faces market risk to the extent that its net interest
income and its fair market value of equity are affected by changes in market
interest rates. The asset/liability management discipline as applied at the
Company seeks to limit the volatility, to the extent possible, of both net
interest income and the fair market value of equity that can result from
changes in market interest rates. This is accomplished by limiting the
maturities of fixed rate investments, loans, and deposits; matching fixed
rate assets and liabilities to the extent possible; and optimizing the mix of
non-interest fee and net interest income. However, as discussed below, the
Company's asset/liability position differs significantly from most other bank
holding companies with positive "gaps" shown for each time horizon presented.
This asset sensitive position is caused primarily by the operations of CIS,
which generates large balances of accounts and drafts payable. These
balances, which are noninterest bearing, contributes to the Company's high
net interest margin but causes the Company to become susceptible to changes
in interest rates, with a decreasing net interest margin and fair market
value of equity in periods of declining interest rates and an increasing net
interest margin and fair market value of equity in periods of rising interest
rates.
The Company's Asset/Liability Management Committee (ALCO) measures the
Company's interest rate risk sensitivity on a Quarterly basis to monitor and
manage the variability of earnings and fair market value of equity in various
interest rate environments. The ALCO evaluates the Company's risk position to
determine whether the level of exposure is significant enough to hedge a
potential decline in earnings and value or whether the Company can safely
increase risk to enhance returns. The ALCO uses gap reports, twelve-month net
interest income simulations, and fair market value of equity analyses as its
main analytical tools to provide management with insight into the Company's
exposure to changing interest rates.
A gap report is used by management to review any significant mismatch
between the repricing points of the Company's rate sensitive assets and
liabilities in certain time horizons. A negative gap indicates that more
liabilities reprice in that particular time frame and, if rates rise, these
liabilities will reprice faster than the assets. A positive gap would
indicate the opposite. Management has set policy limits specifying acceptable
levels of interest rate risk as measured by the gap report. Gap reports can
be misleading in that they capture only the repricing timing within the
balance sheet, and fail to capture other significant risks such as basis risk
and embedded options risk. Basis risk involves the potential for the spread
relationship between rates to change under different rate environments and
embedded options risk relates to the potential for the alteration of the
level and/or timing of cash flows given changes in rates.
-16-
<PAGE> 18
Another measurement tool used by management is net interest income
simulation, which forecasts net interest income during the coming twelve
months under different interest rate scenarios in order to quantify potential
changes in short term accounting income. Management has set policy limits
specifying acceptable levels of interest rate risk given multiple simulated
rate movements. These simulations are more informative than gap reports
because they are able to capture more of the dynamics within the balance
sheet, such as basis risk and embedded options risk. Simulation results
illustrate that the Company's net interest income over the next twelve months
is more vulnerable to declining rates than rising rates.
While net interest income simulations do a good job of capturing
interest rate risk to short term earnings, they do not capture risk within
the current balance sheet beyond twelve months. The Company uses fair market
value of equity analyses to help identify longer-term risk that may reside on
the current balance sheet. The fair market value of equity is represented by
the present value of all future income streams generated by the current
balance sheet. The Company measures the fair market value of equity as the
net present value of all asset and liability cash flows discounted at forward
rates suggested by the current Treasury curve plus appropriate credit
spreads. This representation of the change in the fair market value of
equity under different rate scenarios gives insight into the magnitude of
risk to future earnings due to rate changes. Management has set policy limits
relating to declines in the market value of equity. The results of these
analyses indicate that the Company's fair market value of equity declines as
rates decline and increases as rates increase.
-17-
<PAGE> 19
Interest Rate Sensitivity Gap Table
- - -----------------------------------
The following table presents the Company's gap or interest rate position
at September 30, 1999 for the various time frames indicated.
<TABLE>
<CAPTION>
OVER OVER
THREE SIX OVER ONE
THREE THROUGH THROUGH THROUGH OVER
VARIABLE MONTHS SIX TWELVE FIVE FIVE
RATE OR LESS MONTHS MONTHS YEARS YEARS TOTAL
-------- ------- -------- -------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $100,403 $10,256 $ 7,468 $ 14,178 $139,177 $ 11,266 $282,748
Investment in debt and
equity securities -- 11,424 6,307 16,692 39,545 5,463 79,431
Federal funds sold and other
short-term investments 77,848 -- -- -- -- -- 77,848
-------- ------- -------- -------- -------- -------- --------
Total interest-earning assets $178,251 $21,680 $ 13,775 $ 30,870 $178,722 $ 16,729 $440,027
======== ======= ======== ======== ======== ======== ========
Interest-bearing liabilities:
Interest-bearing
transaction accounts $103,901 $ -- $ -- $ -- $ -- $ -- $103,901
Time deposits-$100,000
or more -- 1,541 705 1,053 128 -- 3,427
Other time deposits -- 899 1,029 1,161 963 138 4,190
Short-term borrowings 207 -- -- -- -- -- 207
-------- ------- -------- -------- -------- -------- --------
Total interest-bearing
liabilities $104,108 $ 2,440 $ 1,734 $ 2,214 $ 1,091 $ 138 $111,725
======== ======= ======== ======== ======== ======== ========
Interest sensitivity gap:
Periodic $ 74,143 $19,240 $ 12,041 $ 28,656 $177,631 $ 16,591 $328,302
Cumulative 74,143 93,383 105,424 134,080 311,711 328,302 328,302
Ratio of interest-sensitive
assets to interest-sensitive
liabilities:
Periodic 1.71x 8.89x 7.94x 13.94x 163.81x 121.22 3.94x
Cumulative 1.71x 1.88x 1.97x 2.21x 3.79x 3.94x 3.94x
</TABLE>
Balances shown reflect earliest repricing date.
-18-
<PAGE> 20
PART II
- - -------
Item 1. LEGAL PROCEEDINGS
-----------------
None
Item 2. CHANGES IN SECURITIES
---------------------
None
Item 3. DEFAULTS IN SENIOR SECURITIES
-----------------------------
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None
Item 5. OTHER INFORMATION
-----------------
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) None
(b) Cass Commercial Corporation did not file any reports on Form
8-K during the three-months ended September 30, 1999.
-19-
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CASS COMMERCIAL CORPORATION
DATE: November 5, 1999 By /s/ Lawrence A. Collett
-------------------------------
Lawrence A. Collett
Chairman and
Chief Executive Officer
DATE: November 5, 1999 By /s/ Eric H. Brunngraber
-------------------------------
Eric H. Brunngraber
Vice President-Secretary
(Chief Financial and
Accounting Officer)
-20-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 19,715
<INT-BEARING-DEPOSITS> 45,000
<FED-FUNDS-SOLD> 32,848
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 45,662
<INVESTMENTS-CARRYING> 33,769
<INVESTMENTS-MARKET> 33,666
<LOANS> 282,748
<ALLOWANCE> 4,277
<TOTAL-ASSETS> 474,010
<DEPOSITS> 188,949
<SHORT-TERM> 207
<LIABILITIES-OTHER> 228,322
<LONG-TERM> 0
0
0
<COMMON> 2,000
<OTHER-SE> 54,532
<TOTAL-LIABILITIES-AND-EQUITY> 474,010
<INTEREST-LOAN> 5,468
<INTEREST-INVEST> 1,222
<INTEREST-OTHER> 1,222
<INTEREST-TOTAL> 7,912
<INTEREST-DEPOSIT> 1,173
<INTEREST-EXPENSE> 1,175
<INTEREST-INCOME-NET> 6,736
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 9,468
<INCOME-PRETAX> 2,588
<INCOME-PRE-EXTRAORDINARY> 2,588
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,648
<EPS-BASIC> .44
<EPS-DILUTED> .43
<YIELD-ACTUAL> 5.90
<LOANS-NON> 173
<LOANS-PAST> 163
<LOANS-TROUBLED> 85
<LOANS-PROBLEM> 351
<ALLOWANCE-OPEN> 4,471
<CHARGE-OFFS> 198
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 4,277
<ALLOWANCE-DOMESTIC> 0<F1>
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>TO BE DOCUMENTED IN THE DEC-31-1999 STATEMENTS.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 19,715
<INT-BEARING-DEPOSITS> 45,000
<FED-FUNDS-SOLD> 32,848
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 45,662
<INVESTMENTS-CARRYING> 33,769
<INVESTMENTS-MARKET> 33,666
<LOANS> 282,748
<ALLOWANCE> 4,277
<TOTAL-ASSETS> 474,010
<DEPOSITS> 188,949
<SHORT-TERM> 207
<LIABILITIES-OTHER> 228,322
<LONG-TERM> 0
0
0
<COMMON> 2,000
<OTHER-SE> 54,532
<TOTAL-LIABILITIES-AND-EQUITY> 474,010
<INTEREST-LOAN> 14,740
<INTEREST-INVEST> 3,594
<INTEREST-OTHER> 4,256
<INTEREST-TOTAL> 22,590
<INTEREST-DEPOSIT> 3,288
<INTEREST-EXPENSE> 3,294
<INTEREST-INCOME-NET> 19,296
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 28,170
<INCOME-PRETAX> 7,266
<INCOME-PRE-EXTRAORDINARY> 7,266
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,654
<EPS-BASIC> 1.22
<EPS-DILUTED> 1.20
<YIELD-ACTUAL> 5.79
<LOANS-NON> 173
<LOANS-PAST> 163
<LOANS-TROUBLED> 85
<LOANS-PROBLEM> 351
<ALLOWANCE-OPEN> 4,428
<CHARGE-OFFS> 256
<RECOVERIES> 105
<ALLOWANCE-CLOSE> 4,277
<ALLOWANCE-DOMESTIC> 0<F1>
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>TO BE DOCUMENTED IN THE DEC-31-1999 STATEMENTS.
</TABLE>
