Highlights

  • Cass shows 25.25% one-year basic EPS growth, a P/E of 18.91 and PEG of 0.00.
  • Third quarter net income was $10.6 million and diluted EPS was $0.81.
  • Net interest margin was 4.02% against 3.87%; net interest income rose 8.9%.
  • The Board raised the quarterly dividend by $0.02 to $0.34 per share.

Cass Information Systems (NASDAQ:CASS) reported third quarter 2026 net income of $10.6 million on October 22, and the undervalued growth stock figures read 25.25% one-year growth in basic earnings per share, a trailing twelve-month P/E ratio of 18.91 and a PEG ratio, on an expected basis, of 0.00, with shares trading at USD 53.69 on October 28, 2026, down 1.40%. On the company's side, the payment and information management provider closed the sale of its Telecom Expense Management business on June 30, 2025, reported a loan charge-off of $508,000 in the third quarter, and raised its fourth quarter dividend to $0.34 per share on October 20.

Based in St. Louis, Missouri, and incorporated in Missouri, Cass Information Systems is a provider of integrated information and payment management solutions. It serves enterprises in supply chains, communications networks and facilities, and disburses over $94 billion annually on behalf of clients. Cass Commercial Bank, founded in 1906 and a wholly owned subsidiary, provides financial exchange services to the parent and its clients. Total assets are $2.6 billion.

Growth: Third Quarter Earnings, Fees and Net Interest Income

Net income was $10.6 million in the third quarter of 2026, up 16.1%, and diluted earnings per share were $0.81, up 19.1%. Net income from continuing operations was $10,568 thousand against $9,212 thousand a year earlier, and $29,882 thousand for the nine months against $22,922 thousand. Non-GAAP adjusted diluted earnings per share from continuing operations were $0.81 against $0.69.

Total revenues were $52,696 thousand against $50,056 thousand, up 5.3%. Net interest income increased $1.9 million, or 8.9%, as net interest margin reached 4.02% against 3.87% and average interest-earning assets rose $105.4 million. Financial fees increased $1.2 million, or 11.8%, while processing fees decreased $763,000, or 4.6%, on lower transportation and facility invoice volumes.

Transportation dollar volumes increased 14.5%, and facility expense dollar volumes of $6.6 billion increased 5.5%. Average deposits increased $79.2 million, or 7.8%, including average CassPay deposits up $74.5 million, or 29.2%.

Valuation: P/E of 18.91, PEG of 0.00 and Return on Equity

The P/E ratio of 18.91 is measured on trailing twelve-month earnings, and the PEG ratio of 0.00 on an expected basis. Return on average equity was 17.46% for the third quarter against 15.29% a year earlier. For the nine months, it was 16.60% against 15.51%.

Chief Executive Officer Martin Resch said the company was pleased with the quarter and pointed to recent CassPay and Facilities client wins. He said those wins and higher dollar volumes point to continued growth in assets, net interest income and financial fees.

Capital Returns and Balance Sheet: Dividend, Buybacks and Capital Ratios

The Board approved a quarterly dividend of $0.34 per share on October 20, 2026, payable December 14, 2026. The company said the $0.02 increase, or 6.3%, reflects the Board's confidence in earnings growth, and that it has paid regular cash dividends since 1934.

Cass did not repurchase shares in the quarter, citing an increase in average assets of $80.8 million and the need to support asset growth with retained earnings. It manages capital to a leverage ratio of approximately 10.00%.

At September 30, 2026, total assets were $2,555,962 thousand and total shareholders' equity was $226,039 thousand against $244,664 thousand at June 30, 2026. The common equity tier 1 ratio was 15.45%, the total risk-based capital ratio was 16.26%, the leverage ratio was 10.11% and the tangible common equity ratio was 8.16% against 9.03%.

Disclosed Risks and Outlook

Shareholders' equity decreased $18.6 million from June 30, 2026, as accumulated other comprehensive loss rose $26.2 million on higher long-term bond yields. The unrealized loss on investment securities increased $34.4 million to $75.3 million, and the company said it is weighing opportunities to deploy liquidity against the effect of falling bond prices on its tangible common equity ratio.

Loans decreased $38.3 million, or 3.5%, from June 30, 2026, after payoffs in the faith-based portfolio. The quarter included a $508,000 charge-off of a nonperforming commercial real estate loan, the company's first loan charge-off in over a decade. Non-performing loans totaled $1.1 million.

The company expects loans at December 31, 2026 to be flat with September 30, 2026, and forecasts loan growth of 6-8% for 2027 and longer term. It expects higher operating expense growth into the fourth quarter of 2026 and 2027, citing onboarding of two large new CassPay clients, depreciation and licensing for AI-enabled systems, profit sharing and rising health insurance costs. Its risk disclosures cover customer credit quality, lending concentrations in faith-based ministries and franchise restaurants, interest rate changes, cyber-attacks and regulation.