CASS

Overview Cass Information Systems, Inc. ("Cass" or the "Company") provides payment and information processing services to large manufacturing, distribution, and retail enterprises across the United States. The Company’s services include freight invoice rating, payment processing, auditing, and the generation of accounting and transportation information. Cass also processes and pays facility-related invoices, which include electricity and gas as well as waste and telecommunications expenses. Cass solutions include integrated payments, a B2B payment platform for clients that require an agile fintech partner. Additionally, the Company offers a church management software solution and an on-line platform to provide generosity services for faith-based and non-profit organizations. The Company’s bank subsidiary, Cass Commercial Bank (the “Bank”), supports the Company’s payment operations. The Bank also provides banking services to its target markets, which include privately held businesses in the St. Louis metropolitan area and restaurant franchises and faith-based ministries within the United States. In general, Cass is compensated for its information processing services through service fees, transactional level payment services, and investment of account balances generated during the payment process. Both the number of transactions processed and the dollar volume processed are therefore key metrics followed by management. The Bank earns most of its revenue from net interest income. Various factors will influence the Company’s revenue and profitability, such as changes in the general level of interest rates, which has a significant effect on net interest income; industry-wide factors, such as the willingness of large corporations to outsource key business functions, and the general level of transportation and energy costs; and economic factors that include the general level of economic activity, the ability to hire and retain qualified staff, the growth and quality of the Bank’s loan portfolio, and the effects of tariffs or other domestic or international governmental policies. For a more detailed discussion of the Company’s revenue drivers and factors that impact the Company’s results of operation and financial condition generally, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2025 Form 10-K. Recent Industry Developments and Items of Note Contract freight rates have recently begun to increase, and, together with fuel surcharges from rising diesel prices, are contributing to higher Transportation dollars processed and paid. The increase in Transportation dollars paid is expected to increase the overall level of average accounts and drafts payable, which results in increased interest income, and average payments in advance of funding, which results in increased financial fees. Results of Operations The following paragraphs more fully discuss the results of operations and changes in financial condition for the three months ended June 30, 2026 (“second quarter of 2026”) compared to the three months ended June 30, 2025 (“second quarter of 2025”) and the six months ended June 30, 2026 ("first half of 2026") compared to the six months ended June 30, 2025 ("first half of 2025"). The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and related notes and with the statistical information and financial data appearing in this report, as well as in the Company’s 2025 Form 10-K. Results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be attained for any other period. Discontinued Operations The Company has applied discontinued operations accounting in accordance with Accounting Standards Codification, or ASC, Topic 205-20, “Presentation of Financial Statements – Discontinued Operations,” to the assets and liabilities sold related to the Company's TEM Business Unit for the three and six months ended June 30, 2026, and 2025, as applicable. All financial information in this Quarterly Report on Form 10-Q is reported on a continuing operations basis, unless otherwise noted. See Note 2 to our consolidated financial statements for further discussion regarding discontinued operations. -26- Table of Contents Summary of Results The following table summarizes the Company’s operating results: (In thousands except per share data) Second Quarter of First Half of 2026 2025 % Change 2026 2025 % Change Processing fees $ 16,086 $ 16,700 (3.7) % $ 31,814 $ 33,169 (4.1) % Financial fees 10,951 10,161 7.8 % 21,382 20,122 6.3 % Net interest income 21,547 19,475 10.6 % 42,763 38,748 10.4 % Provision for credit losses 531 25 2024.0 % 592 930 (36.3) % Gain (loss) on sale of investment securities 5 (3,558) N/M 10 (3,576) N/M Other 1,885 1,645 14.6 % 3,667 3,271 12.1 % Total net revenue 49,943 44,398 12.5 % 99,044 90,804 9.1 % Operating expense 36,769 38,119 (3.5) % 74,987 73,649 1.8 % Income before income tax expense 13,174 6,279 109.8 % 24,057 17,155 40.2 % Income tax expense 2,599 1,119 132.3 % 4,743 3,445 37.7 % Net income from continuing operations $ 10,575 $ 5,160 104.9 % $ 19,314 $ 13,710 40.9 % Income from discontinued operations, net of tax $ 12 $ 3,695 (99.7) % $ 105 $ 4,111 (97.4) % Net income $ 10,587 $ 8,855 19.6 % $ 19,419 $ 17,821 9.0 % Diluted earnings per share from continuing operations $ 0.81 $ 0.38 113.2 % $ 1.47 $ 1.01 45.5 % Diluted earnings per share from discontinued operations $ — $ 0.28 (100.0) % $ 0.01 $ 0.30 (96.7) % Diluted earnings per share $ 0.81 $ 0.66 22.7 % $ 1.48 $ 1.31 13.0 % Return on average assets 1.67 % 1.48 % 12.8 % 1.54 % 1.49 % 3.4 % Return on average equity 17.72 % 15.35 % 15.4 % 16.17 % 15.62 % 3.5 % Second quarter of 2026 compared to second quarter of 2025: The Company recorded net revenue of $49.9 million during the second quarter of 2026, an increase of 12.5% from the second quarter of 2025, primarily driven by an increase in net interest income and financial fees, partially offset by lower processing fees. Operating expense decreased 3.5% compared to the second quarter of 2025 primarily due to $1.8 million bad debt recovery. Net income was $10.6 million, an increase of 19.6% and diluted EPS was $0.81 per share, an increase of 22.7% from the second quarter of 2025. The Company posted a 1.67% return on average assets and 17.72% return on average equity. First half of 2026 compared to first half of 2025: The Company recorded net revenue of $99.0 million during the first half of 2026, an increase of 9.1% from the first half of 2025, primarily driven by an increase in net interest income and financial fees, partially offset by lower processing fees. Operating expense increased 1.8% compared to the first half of 2025. Net income was $19.4 million, an increase of 9.0% and diluted EPS was $1.48 per share, an increase of 13.0% from the first half of 2025. The Company posted a 1.54% return on average assets and 16.17% return on average equity. Fee Revenue and Other Income The Company’s fee revenue is derived mainly from transportation and facility processing and financial fees. As the Company provides its processing and payment services, it is compensated by service fees which are typically calculated on a per-item basis, discounts received for services provided to carriers and by the accounts and drafts payable balances -27- Table of Contents generated in the payment process which can be used to generate interest income. Processing volumes, average payments in advance of funding, and fee revenue were as follows: (In thousands) Second Quarter of First Half of 2026 2025 % Change 2026 2025 % Change Transportation invoice volume 8,670 8,837 (1.9) % 16,768 17,192 (2.5) % Transportation invoice dollar volume $ 10,062,357 $ 9,370,535 7.4 % $ 19,094,872 $ 18,013,673 6.0 % Facility-related transaction volume 4,018 4,141 (3.0) % 8,056 8,366 (3.7) % Facility-related dollar volume $ 5,656,647 $ 5,513,143 2.6 % $ 11,909,855 $ 11,336,078 5.1 % Average payments in advance of funding $ 210,387 $ 176,191 19.4 % $ 193,779 $ 174,898 10.8 % Processing fees $ 16,086 $ 16,700 (3.7) % $ 31,814 $ 33,169 (4.1) % Financial fees $ 10,951 $ 10,161 7.8 % $ 21,382 $ 20,122 6.3 % Other fees $ 1,885 $ 1,645 14.6 % $ 3,667 $ 3,271 12.1 % Gain (loss) on sale of investment securities $ 5 $ (3,558) N/M $ 10 $ (3,576) N/M Second quarter of 2026 compared to second quarter of 2025: Processing fees decreased $614,000, or 3.7% over the same period in the prior year reflecting lower transportation and facility invoice volumes. Financial fees increased $790,000, or 7.8%, primarily attributable to an increase in average payments in advance of funding of 19.4% compared to the prior period. The Company sold $34.0 million of corporate investment securities with a weighted-average yield of 2.29% at a loss of $3.6 million during the second quarter of 2025. First half of 2026 compared to first half of 2025: Processing fees decreased $1.4 million, or 4.1%, reflecting lower transportation and facility invoice volumes. Financial fees increased $1.3 million, or 6.3%, primarily attributable to an increase in average payments in advance of funding of 10.8% compared to the prior period. Net Interest Income Net interest income is the difference between interest earned on loans, investments, and other earning assets and interest expense on deposits and other interest-bearing liabilities. Net interest income is a significant source of the Company’s revenues. The following table summarizes the changes in tax-equivalent net interest income and related factors: (In thousands) Second Quarter of First Half of 2026 2025 2026 2025 Average earning assets $ 2,199,091 $ 2,090,366 $ 2,206,922 $ 2,097,445 Average interest-bearing liabilities 652,859 615,932 652,595 622,045 Net interest income* 21,907 19,690 43,496 39,132 Net interest margin* 4.00 % 3.78 % 3.97 % 3.76 % Yield on earning assets* 4.74 % 4.58 % 4.70 % 4.56 % Cost of interest-bearing liabilities 2.49 % 2.71 % 2.46 % 2.68 % *Presented on a tax-equivalent basis assuming a tax rate of 21% for both 2026 and 2025. -28- Table of Contents Second quarter of 2026 compared to second quarter of 2025: The increase in net interest income is primarily attributable to the net interest margin improving to 4.00% as compared to 3.78% in the same period last year, in addition to an increase in average earning assets of $108.7 million, or 5.2%. The yield on interest-earning assets increased 16 basis points from 4.58% to 4.74% while the cost of interest-bearing liabilities decreased 22 basis points from 2.71% to 2.49%. Average loans decreased $35.1 million, or 3.1%, to $1.09 billion. The average yield on loans increased 23 basis points to 5.87%, primarily due to the continued maturity and subsequent re-pricing of fixed rate loans originated in the years 2021 and 2022 to current market interest rates. Average investment securities increased $136.9 million, or 20.6%, to $802.5 million. The increase was primarily driven by the partial repositioning of the portfolio at the end of the second quarter of 2025 as well as purchases of investments at current market rates. The average yield on taxable investment securities increased 58 basis points to 3.63% and the average yield on tax-exempt investment securities increased 113 basis points to 4.04%. Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, increased $6.9 million, or 2.3%, to $305.8 million. The average yield on short-term investments decreased 66 basis points to 3.37%, primarily due to the decrease in the Federal Funds rate. The majority of these short-term investments are held at the Federal Reserve Bank. The average balance of interest-bearing deposits increased $27.0 million, or 4.4%, to $642.9 million. Average non-interest-bearing demand deposits increased $39.1 million, or 10.0%, to $432.2 million. The increase in average non-interest bearing deposits is primarily due to growth within CassPay. The average rate paid on interest-bearing deposits decreased 27 basis points to 2.44% due to the reduction in short-term interest rates. Average accounts and drafts payable increased $56.0 million, or 5.0%, to $1.18 billion. The increase in average accounts and drafts payable was primarily driven by the increase in transportation dollar volumes of 7.4% as well as the increase in facility dollar volumes of 2.6%. First half of 2026 compared to first half of 2025: The increase in net interest income is primarily attributable to the net interest margin improving to 3.97% as compared to 3.76% in the same period last year, in addition to an increase in average earning assets of $109.5 million, or 5.2%. The yield on interest-earning assets increased 14 basis points from 4.56% to 4.70% while the cost of interest-bearing liabilities decreased 22 basis points from 2.68% to 2.46%. Average loans decreased $39.1 million, or 3.5%, to $1.08 billion. The average yield on loans increased 21 basis points to 5.84%, primarily due to the continued maturity and subsequent re-pricing of fixed rate loans originated in the years 2021 and 2022 to current market interest rates. Average investment securities increased $167.1 million, or 26.2%, to $805.7 million due to the utilization of available liquidity to purchase investment securities. The average yield on taxable investment securities increased 63 basis points to 3.63% and the average yield on tax-exempt investment securities increased 123 basis points to 3.97%. The increase in yield was primarily driven by the partial repositioning of the portfolio at the end of the second quarter of 2025 as well as purchases of investments at current market rates. Average short-term investments, consisting of interest-bearing deposits in other financial institutions and federal funds sold, decreased $18.5 million, or 5.4%, to $322.6 million. The average yield on short-term investments decreased 70 basis points to 3.38%, primarily due to the decrease in the Federal Funds rate. The majority of these short-term investments are held at the Federal Reserve Bank. The average balance of interest-bearing deposits increased $23.5 million, or 3.8%, to $645.6 million. Average non-interest-bearing demand deposits increased $27.9 million, or 7.0%, to $427.0 million. The increase in non-interest bearing demand deposits is primarily due to the growth in average CassPay deposits compared to the first half of 2025. The average rate paid on interest-bearing deposits decreased 26 basis points to 2.42% due to the reduction in short-term interest rates. Average accounts and drafts payable increased $68.4 million, or 6.2%, to $1.18 billion. The increase in average accounts and drafts payable was primarily driven by the increase in facility dollar volumes of 5.1% as well as the increase in transportation dollar volumes of 6.0%. -29- Table of Contents Distribution of Assets, Liabilities and Shareholders' Equity; Interest Rate and Interest Differential The following tables show the condensed average balance sheets for each of the periods reported, the tax-equivalent interest income and expense for each category of interest-earning assets and interest-bearing liabilities, and the average yield on such categories of interest-earning assets and the average rates paid on such categories of interest-bearing liabilities for each of the periods reported. (In thousands) Second Quarter of 2026 Second Quarter of 2025 Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Assets1 Interest-earning assets Loans2: $ 1,090,796 $ 15,956 5.87 % $ 1,125,899 $ 15,837 5.64 % Investment securities3: Taxable 632,032 5,724 3.63 % 524,666 3,991 3.05 % Tax-exempt4 170,504 1,716 4.04 % 140,926 1,023 2.91 % Short-term investments 305,759 2,569 3.37 % 298,875 3,002 4.03 % Total interest-earning assets 2,199,091 25,965 4.74 % 2,090,366 23,853 4.58 % Non-interest-earning assets Cash and due from banks 25,799 19,735 Premises and equipment, net 30,618 31,891 Bank-owned life insurance 52,839 50,924 Goodwill and other intangibles 19,446 20,634 Payments in advance of funding 210,387 176,191 Unrealized loss on investment securities (40,829) (51,810) Other assets 63,109 64,833 Allowance for credit losses (13,867) (14,287) Assets of discontinued operations — 14,031 Total assets $ 2,546,593 $ 2,402,508 Liabilities and Shareholders’ Equity1 Interest-bearing liabilities Interest-bearing demand deposits $ 521,616 $ 2,916 2.24 % $ 523,604 $ 3,394 2.60 % Savings deposits 6,070 18 1.19 % 6,816 23 1.35 % Time deposits >= $100 36,996 319 3.46 % 25,446 208 3.28 % Other time deposits 78,210 663 3.40 % 60,055 538 3.59 % Total interest-bearing deposits 642,892 3,916 2.44 % 615,921 4,163 2.71 % Short-term borrowings 9,967 142 5.71 % 11 — — % Total interest-bearing liabilities 652,859 4,058 2.49 % 615,932 4,163 2.71 % Non-interest bearing liabilities Demand deposits 432,183 393,054 Accounts and drafts payable 1,178,774 1,122,739 Other liabilities 43,164 36,940 Liabilities of discontinued operations — 2,429 Total liabilities 2,306,980 2,171,094 Shareholders’ equity 239,613 231,414 Total liabilities and shareholders’ equity $ 2,546,593 $ 2,402,508 Net interest income $ 21,907 $ 19,690 Net interest margin 4.00 % 3.78 % Interest spread 2.25 % 1.87 % 1.Balances shown are daily averages. 2.Interest income on loans includes net loan fees of $121,000 and $118,000 for the second quarter of 2026 and 2025, respectively. 3.Yields on investment securities are computed as interest income divided by the average amortized cost of the investments. 4.Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for both 2026 and 2025. The tax-equivalent adjustment was approximately $360,000 and $215,000 for the second quarter of 2026 and 2025, respectively. -30- Table of Contents (In thousands) First Half of 2026 First Half of 2025 Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Assets1 Interest-earning assets Loans2: $ 1,078,651 $ 31,233 5.84 % $ 1,117,758 $ 31,187 5.63 % Investment securities3: Taxable 628,361 11,318 3.63 % 504,215 7,505 3.00 % Tax-exempt4 177,291 3,488 3.97 % 134,352 1,824 2.74 % Short-term investments 322,619 5,402 3.38 % 341,120 6,895 4.08 % Total interest-earning assets 2,206,922 51,441 4.70 % 2,097,445 47,411 4.56 % Non-interest-earning assets Cash and due from banks 24,080 20,170 Premises and equipment, net 30,121 31,395 Bank-owned life insurance 52,604 50,712 Goodwill and other intangibles 19,592 20,846 Payments in advance of funding 193,779 174,898 Unrealized loss on investment securities (35,954) (54,061) Other assets 57,879 63,673 Allowance for credit losses (13,734) (13,848) Assets of discontinued operations — 14,211 Total assets $ 2,535,289 $ 2,405,441 Liabilities and Shareholders’ Equity1 Interest-bearing liabilities: Interest-bearing demand deposits $ 526,153 $ 5,781 2.22 % $ 530,731 $ 6,767 2.57 % Savings deposits 6,282 37 1.19 % 7,323 47 1.29 % Time deposits >= $100 35,701 616 3.48 % 25,592 420 3.31 % Other time deposits 77,426 1,310 3.41 % 58,388 1,045 3.61 % Total interest-bearing deposits 645,562 7,744 2.42 % 622,034 8,279 2.68 % Short-term borrowings 7,033 201 5.76 % 11 — — % Total interest-bearing liabilities 652,595 7,945 2.46 % 622,045 8,279 2.68 % Non-interest bearing liabilities: Demand deposits 426,971 399,085 Accounts and drafts payable 1,175,456 1,107,031 Other liabilities 38,050 44,784 Liabilities of discontinued operations — 2,474 Total liabilities 2,293,072 2,175,419 Shareholders’ equity 242,217 230,022 Total liabilities and shareholders’ equity $ 2,535,289 $ 2,405,441 Net interest income $ 43,496 $ 39,132 Net interest margin 3.97 % 3.76 % Interest spread 2.24 % 1.88 % 1.Balances shown are daily averages. 2.Interest income on loans includes net loan fees of $223,000 and $485,000 for the six months ended June 30, 2026 and 2025, respectively. 3.Yields on investment securities are computed as interest income divided by the average amortized cost of the investments. 4.Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for both the six months ended June 30, 2026 and 2025. The tax-equivalent adjustment was approximately $732,000 and $383,000 for the six months ended June 30, 2026 and 2025, respectively. -31- Table of Contents Analysis of Net Interest Income Changes The following tables present the changes in interest income and expense between periods due to changes in volume and interest rates. That portion of the change in interest attributable to the combined rate/volume variance has been allocated to rate and volume changes in proportion to the absolute dollar amounts of the change in each. (In thousands) Second Quarter of 2026 Compared to Second Quarter of 2025 Volume Rate Total Increase (decrease) in interest income: Loans1: $ (508) $ 627 $ 119 Investment securities: Taxable 898 835 1,733 Tax-exempt2 243 450 693 Short-term investments 68 (501) (433) Total interest income 701 1,411 2,112 Increase (decrease) in interest expense: Interest-bearing demand deposits (13) (465) (478) Savings deposits (2) (3) (5) Time deposits >=$100 99 12 111 Other time deposits 155 (30) 125 Short-term borrowings — 142 142 Total interest expense 239 (344) (105) Net interest income $ 462 $ 1,755 $ 2,217 1.Interest income includes net loan fees. 2.Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for the three months ended June 30, 2026 and 2025. (In thousands) First Half of 2026 Compared to First Half of 2025 Volume Rate Total Increase (decrease) in interest income: Loans1: $ (1,104) $ 1,150 $ 46 Investment securities: Taxable 2,058 1,755 3,813 Tax-exempt2 692 972 1,664 Short-term investments (359) (1,134) (1,493) Total interest income 1,287 2,743 4,030 Interest expense on: Interest-bearing demand deposits (59) (927) (986) Savings deposits (6) (4) (10) Time deposits >=$100 173 23 196 Other time deposits 326 (61) 265 Short-term borrowings — 201 201 Total interest expense 434 (768) (334) Net interest income $ 853 $ 3,511 $ 4,364 1.Interest income includes net loan fees. 2.Interest income is presented on a tax-equivalent basis assuming a tax rate of 21% for the six months ended June 30, 2026 and 2025. -32- Table of Contents Provision and Allowance for Credit Losses and Allowance for Unfunded Commitments The Company recorded a provision for credit losses and off-balance sheet credit exposures of $531,000 and $25,000 for the second quarter of 2026 and 2025, respectively. The Company recorded a provision for credit losses and off-balance sheet credit exposures of $592,000 and $930,000 for the first half of 2026 and 2025, respectively. The amount of the provision for (release of) credit losses is derived from the Company’s quarterly Current Expected Credit Loss (“CECL”) model. The amount of the provision for (release of) credit losses will fluctuate as determined by these quarterly analyses. The provision for credit losses in the second quarter of 2026 was driven by a specific reserve on a nonperforming commercial real estate loan and an increase in total loans of $41.8 million, or 3.9%, as compared to December 31, 2025. The Company experienced no loan charge-offs in the first half of 2026 or 2025. The ACL was $14.4 million at June 30, 2026 and $13.6 million at December 31, 2025. The ACL represented 1.30% of outstanding loans at June 30, 2026 and 1.28% of outstanding loans at December 31, 2025. The allowance for unfunded commitments was $234,000 at June 30, 2026 and $419,000 at December 31, 2025. There were $1.6 million of nonperforming loans outstanding at June 30, 2026 and $7.0 million at December 31, 2025. The Company has a specific allowance for credit losses of $288,000 allocated to its non-accrual loans at June 30, 2026. The ACL has been established and is maintained to estimate the lifetime expected credit losses in the loan portfolio. An ongoing assessment is performed to determine if the balance is adequate. Charges or credits are made to expense based on changes in the economic forecast, qualitative risk factors, loan volume, and individual loans. For loans that are individually evaluated, the Company uses two impairment measurement methods: 1) the present value of expected future cash flows and 2) collateral value. The Company also utilizes ratio analyses to evaluate the overall reasonableness of the ACL compared to its peers and required levels of regulatory capital. Federal and state regulatory agencies review the Company’s methodology for maintaining the ACL. These agencies may require the Company to adjust the ACL based on their judgments and interpretations about information available to them at the time of their examinations. Summary of Credit Loss Experience The following table presents information on the Company's provision for (release of) credit losses and analysis of the ACL: Second Quarter of First Half of (In thousands) 2026 2025 2026 2025 Allowance for credit losses at beginning of period $ 13,861 $ 14,286 $ 13,597 $ 13,395 Provision for credit losses 513 10 777 901 Allowance for credit losses at end of period $ 14,374 $ 14,296 $ 14,374 $ 14,296 Allowance for unfunded commitments at beginning of period $ 216 $ 287 $ 419 $ 273 Provision for (release of) credit losses 18 15 (185) 29 Allowance for unfunded commitments at end of period $ 234 $ 302 $ 234 $ 302 Loans outstanding: Average $ 1,090,796 $ 1,125,899 $ 1,078,651 $ 1,117,758 June 30 $ 1,103,039 $ 1,117,004 $ 1,103,039 $ 1,117,004 Ratio of allowance for credit losses to loans outstanding at June 30 1.30 % 1.28 % 1.30 % 1.28 % Operating Expenses Total operating expenses for the second quarter of 2026 decreased $1.4 million, or 3.5%, as compared to the second quarter of 2025. Total operating expenses for the first half of 2026 increased $1.3 million, or 1.8%, as compared to the first half of 2025. The following table details the components of operating expenses: -33- Table of Contents (In thousands) Second Quarter of First Half of 2026 2025 2026 2025 Salaries and commissions $ 20,241 $ 20,638 $ 39,509 $ 40,301 Share-based compensation 1,130 918 2,569 2,159 Employee profit sharing 1,959 1,583 3,593 3,085 Other benefits 3,755 4,613 8,693 9,486 Personnel $ 27,085 $ 27,752 $ 54,364 $ 55,031 Occupancy 703 669 1,384 1,390 Equipment 2,776 2,562 5,208 4,856 Bad debt recovery (1,759) — (1,759) (2,000) Amortization of intangible assets 293 293 586 586 Other operating expense 7,671 6,843 15,204 13,786 Total operating expense $ 36,769 $ 38,119 $ 74,987 $ 73,649 Second quarter of 2026 compared to second quarter of 2025: Salaries and commissions decreased $397,000, or 1.9%, as a result of a decrease in average full-time equivalent employees ("FTEs") of 9.0% due to automation and the ongoing consolidation within the Company's Facilities division, partially offset by merit increases. Share-based compensation and employee profit sharing increased $212,000 and $376,000, respectively, due to the improvement in net income from continuing operations. Other benefits decreased $858,000, or 18.6%, due to the decrease in FTEs in addition to lower health insurance claims and related expenses as compared to the second quarter of 2025. Equipment expense increased $214,000, primarily due to an increase in depreciation and licensing and maintenance expense on software related to technology initiatives. The Company recorded a bad debt recovery of $1.8 million related to the second annual payment in a litigation settlement. Three annual payments remaining of $1.25 million each, plus interest, remain under the settlement agreement. Other operating expense increased $828,000, or 12.1%. The increase is primarily due to higher business development costs and professional fees. First half of 2026 compared to first half of 2025: Salaries and commissions decreased $792,000, or 2.0%, as a result of a decrease in average full-time equivalent employees ("FTEs") of 8.4% due to automation and the ongoing consolidation within the Company's Facilities division, partially offset by merit increases. Share-based compensation and employee profit sharing increased $410,000 and $508,000, respectively, due to the improvement in net income from continuing operations. Other benefits decreased $793,000, or 8.4%, due to the decrease in FTEs in addition to lower health insurance claims and related expenses. Equipment expense increased $352,000, primarily due to an increase in depreciation and licensing and maintenance expense on software related to technology initiatives. The Company recorded a bad debt recovery of $1.8 million during the first half of 2026 compared to $2.0 million during the first half of 2025. Other operating expense increased $1.4 million, or 10.3%. The increase is primarily due to higher business development costs and professional fees. -34- Table of Contents Net Income from Discontinued Operations (In thousands except per share data) Second Quarter of First Half of 2026 2025 % Change 2026 2025 % Change Processing fees $ — $ 3,807 N/M $ — $ 7,630 N/M Financial fees — 475 N/M — 888 N/M Other fees 736 1,454 (49.4) % 1,469 1,836 (20.0) % Gain on sale of TEM business — 3,550 N/M — 3,550 N/M Total revenues 736 9,286 (92.1) % 1,469 13,904 (89.4) % Operating expense 720 4,359 (83.5) % 1,329 8,448 (84.3) % Income before income tax expense 16 4,927 (99.7) % 140 5,456 (97.4) % Income tax expense 4 1,232 (99.7) % 35 1,345 (97.4) % Net income from discontinued operations $ 12 $ 3,695 (99.7) % $ 105 $ 4,111 (97.4) % Second quarter of 2026 compared to second quarter of 2025: Net income from discontinued operations was $12,000, a decrease of $3.7 million, or 99.7% over the same period in the prior year. The decrease is primarily due to the gain on sale of the TEM Business Unit of $3.6 million in the second quarter of 2025. First half of 2026 compared to first half of 2025: Net income from discontinued operations was $105,000, a decrease of $4.0 million, or 97.4% over the same period in the prior year. The decrease is primarily due to the gain on sale of the TEM Business Unit of $3.6 million in the first half of 2025. Financial Condition Total assets at June 30, 2026 were $2.52 billion, a decrease of $89.8 million, or 3.4%, from December 31, 2025. The Company experienced a decrease in cash and cash equivalents of $163.8 million, or 41.8%, during the first half of 2026. The change in cash and cash equivalents reflects the Company’s daily liquidity position and is primarily impacted by changes in funding sources, mainly accounts and drafts payable, deposits and short-term borrowings, cash flows in and out of loans, investment securities, accounts and drafts receivable, and payments in advance of funding. The investment securities portfolio decreased $34.0 million, or 4.4%, during the first half of 2026. The decrease is primarily due to sales of $31.6 million, and maturities of $39.0 million, partially offset by purchases of $42.3 million. Loans increased $41.8 million, or 3.9%, from December 31, 2025. The Company experienced growth in its commercial and industrial loan portfolio during the first half of 2026. Payments in advance of funding increased $85.1 million, or 51.7%, primarily due to a higher level of demand for the Company's early payment solutions as well as timing of quarter end advances. Accounts and drafts receivable from customers decreased $24.7 million, or 35.6%, from December 31, 2025. The decrease is solely due to timing of customer funding. Total deposits at June 30, 2026 were $1.12 billion, a decrease of $83.5 million, or 7.0%, from December 31, 2025. Given the nature of the Company's deposit base being larger commercial clients, the ending balance of deposits will fluctuate from period end to period end due to liquidity needs of these clients. Average balances are generally a more meaningful measure of deposits. Accounts and drafts payable at June 30, 2026 were $1.03 billion, a decrease of $96.8 million, or 8.6%, from December 31, 2025. Accounts and drafts payable are a stable source of funding generated by payment float from transportation and facility clients. The ending balance of accounts and drafts payable will fluctuate from period to period due to the payment processing cycle, which results in lower balances on days when payments clear and higher balances on days when -35- Table of Contents payments are issued. For this reason, average balances are generally a more meaningful measure of accounts and drafts payable. Short-term borrowings were $80.0 million at June 30, 2026. The Company borrowed on its lines of credit primarily to fund the $85.1 million increase in payments as compared to December 31, 2025. Total liabilities at June 30, 2026 were $2.27 billion, a decrease of $91.5 million, or 3.9%, from December 31, 2025, reflective of the decrease in accounts and drafts payable and total deposits, partially offset by the increase in short-term borrowings. Total shareholders’ equity at June 30, 2026 was $244.7 million, a $1.7 million increase from December 31, 2025. The increase in shareholders’ equity is a result of net income of $19.4 million, partially offset by dividends paid of $8.2 million, the repurchase of Company stock of $6.0 million, and an increase in accumulated other comprehensive loss of $4.2 million. Liquidity and Capital Resources The Company's liquidity management discipline seeks to ensure funds are available to meet all obligations as they come due. These obligations include processing invoice payments, satisfying depositor withdrawal requests, and funding borrower credit demands. A primary goal of this practice is to achieve these objectives while maximizing profitability. This is accomplished by balancing changes in demand for funds with changes in supply of funds. Primary liquidity to meet demand is provided by short-term liquid assets that can be converted to cash, maturing investment securities and the ability to obtain funds from external sources. The Company's Asset/Liability Committee has direct oversight responsibility for the Company's liquidity position and profile. Management considers both on-balance sheet and off-balance sheet items in its evaluation of liquidity. The balance of liquid assets consists of cash and cash equivalents, which include cash and due from banks, interest-bearing deposits in other financial institutions, federal funds sold and money market funds. Cash and cash equivalents totaled $228.5 million at June 30, 2026, a decrease of $163.8 million, or 41.8%, from December 31, 2025. At June 30, 2026, these assets represented 9.1% of total assets and are the Company’s and its subsidiaries’ primary source of liquidity to meet future expected and unexpected loan demand, depositor withdrawals or reductions in accounts and drafts payable. Secondary sources of liquidity include the investment portfolio and borrowing lines. Total investment securities were $736.8 million at June 30, 2026, a decrease of $34.0 million from December 31, 2025. These assets represented 29.3% of total assets at June 30, 2026. Of the total portfolio, 1.2% mature in one year, 8.3% mature in one to five years, and 90.5% mature in five or more years. The Company maintains a weighted average duration of its investment securities portfolio of approximately five years given the Company's asset sensitivity with approximately 70% of its funding sources being non-interest bearing. The Bank has unsecured lines of credit at six correspondent banks to purchase federal funds up to a maximum of $83.0 million in aggregate. As of June 30, 2026, the Bank also has secured lines of credit with the Federal Home Loan Bank of $224.1 million collateralized by mortgage loans. The Bank had no amounts outstanding under any line of credit as of December 31, 2025. The Company also has secured lines of credit from three banks up to a maximum of $250.0 million in aggregate collateralized by investment securities. There was $80.0 million total outstanding on the Company's lines of credit as of June 30, 2026. The deposits of the Company's banking subsidiary have historically been stable, consisting of a sizable volume of core deposits related to customers that utilize other commercial products of the Bank, including CassPay and faith-based customers. The accounts and drafts payable generated by the Company has also historically been a stable source of funds. The Company is part of the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) deposit placement programs. Time deposits include $75.7 million of CDARS deposits and interest-bearing demand deposits include $176.1 million of ICS deposits. These programs offer the Bank’s customers the ability to maximize Federal Deposit Insurance Corporation (“FDIC”) insurance coverage. The Company uses these programs to retain or attract deposits from existing customers. Net cash flows provided by operating activities were $31.5 million for the first half of 2026, compared to $20.3 million for the first half of 2025, an increase of $11.2 million. Net cash flows from investing and financing activities fluctuate greatly as the Company actively manages its investment and loan portfolios and customer activity influences changes in deposit and accounts and drafts payable balances. Other causes for the changes in these account balances are discussed earlier in -36- Table of Contents this report. Due to the daily fluctuations in these account balances, the analysis of changes in average balances, also discussed earlier in this report, can be more indicative of underlying activity than the period-end balances used in the statements of cash flows. Management anticipates that cash and cash equivalents, maturing investments and cash from operations will continue to be sufficient to fund the Company’s operations and capital expenditures in 2026, which are estimated to be approximately $6.0 million. Capital expenditures in 2026 are expected to primarily consist of purchases of equipment and software related to the payment and information processing services business. Net income plus amortization of intangible assets, net amortization of premium/discount on investment securities and depreciation of premises and equipment was $22.5 million and $22.2 million for the first half of 2026 and 2025, respectively. The increase was primarily due to higher net income of $1.6 million, partially offset by lower net amortization of premiums/discounts on investment securities of $1.3 million and lower depreciation of $32,000. The net amortization of premium/discount on investment securities is dependent on the type of securities purchased and changes in the prevailing market interest rate environment. Other factors impacting the $11.2 million increase in net cash provided by operating activities include: •A change in the current income tax liability of $5.7 million; •A change in other operating activities of $3.3 million; and •An increase in stock-based compensation of $410,000. 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.” There are several trends and uncertainties that may impact the Company’s ability to generate revenues and income at the levels that it has in the past. Those that could significantly impact the Company include the general levels of interest rates, business activity, inflation, and energy costs as well as new business opportunities available to the Company. For more detailed information on these trends and uncertainties and how they can generally affect the Company’s available liquidity, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity” in the Company’s 2025 Form 10-K. As a bank holding company, the Company and the Bank are subject to capital requirements administered by state and federal banking agencies. Capital adequacy guidelines, and, for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are subject to qualitative judgments by regulators about components, risk weighting, and other factors. In addition, the calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. For example, as allowed under the Basel III Capital Rules, the Company has elected to opt-out of the requirement to include most components of accumulated other comprehensive income in common equity Tier 1 capital. For more information on these regulatory requirements, including the Basel III Capital Rules and capital classifications, see Item 1, "Business-Supervision and Regulation" and Item 8, Note 2, "Financial Statements and Supplementary Data" of the Company's 2025 Form 10-K. -37- Table of Contents The Company and the Bank continue to exceed all regulatory capital requirements, as evidenced by the following capital amounts and ratios: Actual Capital Requirements Requirement to be Well-Capitalized (In thousands) Amount Ratio Amount Ratio Amount Ratio At June 30, 2026 Total capital (to risk-weighted assets) Cass Information Systems, Inc. $ 270,537 15.52 % $ 139,483 8.00 % $ N/A N/A % Cass Commercial Bank 210,792 18.40 91,657 8.00 114,572 10.00 Common Equity Tier I Capital (to risk-weighted assets) Cass Information Systems, Inc. 255,929 14.68 78,459 4.50 N/A N/A Cass Commercial Bank 196,654 17.16 51,557 4.50 74,472 6.50 Tier I capital (to risk-weighted assets) Cass Information Systems, Inc. 255,929 14.68 104,612 6.00 N/A N/A Cass Commercial Bank 196,654 17.16 68,743 6.00 91,657 8.00 Tier I capital (to average assets) Cass Information Systems, Inc. 255,929 10.13 101,091 4.00 N/A N/A Cass Commercial Bank 196,654 14.10 55,790 4.00 69,738 5.00 At December 31, 2025 Total capital (to risk-weighted assets) Cass Information Systems, Inc. $ 262,792 15.95 % $ 131,837 8.00 % $ N/A N/A % Cass Commercial Bank 217,409 19.61 88,677 8.00 110,847 10.00 Common Equity Tier I Capital (to risk-weighted assets) Cass Information Systems, Inc. 248,776 15.10 74,158 4.50 N/A N/A Cass Commercial Bank 203,943 18.40 49,881 4.50 72,050 6.50 Tier I capital (to risk-weighted assets) Cass Information Systems, Inc. 248,776 15.10 98,878 6.00 N/A N/A Cass Commercial Bank 203,943 18.40 66,508 6.00 88,677 8.00 Tier I capital (to average assets) Cass Information Systems, Inc. 248,776 9.91 100,367 4.00 N/A N/A Cass Commercial Bank 203,943 14.48 56,357 4.00 70,446 5.00 -38- Table of Contents Impact of New or Not Yet Adopted Accounting Pronouncements In July 2025, the FASB issued Accounting Standards Update 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"). ASU 2025-05 provides the option to elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets. ASU 2025-05 was effective for the Company on January 1, 2026 and did not have a material impact on its consolidated financial statements. In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"). ASU 2025-06 clarified and modernizes the accounting for costs related to internal-use software. The amendments in ASU 2025-06 remove all references to project stages throughout Subtopic 350-40 and clarify the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for the Company for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of ASU 2025-06 on its consolidated financial statements. In December 2025, the FASB issued Accounting Standards Update 2025-11, Interim Reporting (Topic 720): Narrow-Scope Improvements ("ASU 2025-11"). ASU 2025-11 clarifies and enhances guidance under ASC 720 on interim financial reporting by (i) clarifying the scope of ASC 270 such that it now explicitly applies only to entities that issue complete interim financial statements and related notes under U.S. GAAP, (ii) establishing clear guidance on the form of interim statements and notes, incorporating a comprehensive list of required interim disclosures drawn from across the ASC, and (iii) introducing a requirement to disclose material events and changes occurring after the end of the last annual period that could impact interim results. ASU 2025-11 will be effective for the Company for interim periods beginning in 2028, though early adoption is permitted. The Company does not expect the adoption of 2025-11 to have a material impact on its consolidated financial statements. Critical Accounting Policies The Company has prepared the consolidated financial statements in this report in accordance with the Financial Accounting Standards Board Accounting Standards Codification. In preparing the consolidated financial statements, management makes estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. These estimates have been generally accurate in the past, have been consistent and have not required any material changes. There can be no assurances that actual results will not differ from those estimates. The accounting policy that requires significant management estimates and is deemed critical to the Company’s results of operations or financial position has been discussed with the Audit and Risk Committee of the Board of Directors and is described below. Allowance for Credit Losses. The Company performs periodic and systematic detailed reviews of its loan portfolio to determine management’s estimate of the lifetime expected credit losses. Although these estimates are based on established methodologies for determining allowance requirements, actual results can differ significantly from estimated results. These policies affect both segments of the Company. The impact and associated risks related to these policies on the Company’s business operations are discussed in the “Provision and Allowance for Credit Losses and Allowance for Unfunded Commitments” section of this report. -39- Table of Contents