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Section 1: 8-K (FORM 8K FBC)


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):  July 24, 2018
First Busey Corporation
(Exact name of registrant as specified in charter)
Nevada
0-15950
37-1078406
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
100 W. University Ave.
Champaign, Illinois  61820
(Address of principal executive offices) (Zip code)
(217) 365-4544
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b– 2 of the Securities Exchange Act of 1934 (§ 240.12b–2 of this chapter). ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 

Item 2.02. Results of Operations and Financial Condition.
On Tuesday, July 24, 2018, First Busey Corporation ("First Busey") issued a press release disclosing financial results for the quarter ended June 30, 2018.  The press release is made part of this Form 8-K and is attached as Exhibit 99.1.
The press release made a part of this Current Report on Form 8-K includes forward looking statements that are intended to be covered by the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.  These forward looking statements include but are not limited to comments with respect to the objectives and strategies, financial condition, results of operations and business of the Registrant.
These forward looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward looking statements will not be achieved.  First Busey cautions you not to place undue reliance on these forward looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1




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 hereunto duly authorized.
Date:  July 24, 2018
First Busey Corporation
By:       /s/ Robin N. Elliott
Name:  Robin N. Elliott
Title:    Chief Operating Officer and Chief Financial Officer

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Section 2: EX-99.1 (EXHIBIT 99.1)


July 24, 2018
First Busey Announces 2018 Second Quarter Earnings

Champaign, IL – (Nasdaq: BUSE)

Message from our President & CEO


Positive advances in the second quarter of 2018 from the comparable quarter of the prior year:
 
  End of quarter total assets of $7.776 billion, an increase of 40.6%
 Net income of $24.9 million, an increase of 50.9%, and adjusted net income1 of $25.6 million, an increase of 53.4%
 Earnings per share of $0.51 per diluted common share and adjusted earnings of $0.52 per diluted common share
Net interest income of $60.4 million, an increase of 42.5%
End of period portfolio loans at $5.555 billion, an increase of 41.7%
End of period non-interest bearing deposits at $1.497 billion, an increase of 35.4%

First Busey Corporation's (the "Company") net income for the second quarter of 2018 was $24.9 million, or $0.51 per diluted common share compared to net income of $21.9 million, or $0.45 per diluted common share, for the first quarter of 2018 and net income of $16.5 million, or $0.43 per diluted common share, for the second quarter of 2017.  Adjusted net income1 for the second quarter of 2018 was $25.6 million, or $0.52 per diluted common share compared to $24.9 million, or $0.51 per diluted common share, for the first quarter of 2018 and $16.7 million, or $0.43 per diluted common share, for the second quarter of 2017.

Year-to-date net income through June 30, 2018 was $46.8 million, or $0.95 per diluted common share, compared to net income of $31.6 million, or $0.82 per diluted common share, for the comparable period of 2017. Year-to-date adjusted net income1 for the first six months of 2018 was $50.5 million, or $1.03 per diluted common share, compared to $32.5 million or $0.84 per diluted common share for 2017.  The results were favorably impacted by the acquisition of First Community Financial Partners, Inc., the holding company of First Community Financial Bank ("First Community"), since the closing of the transaction on July 2, 2017, and Mid Illinois Bancorp, Inc., the holding company of South Side Trust & Savings Bank of Peoria ("South Side"), since the closing of the transaction on October 1, 2017.

For the second quarter of 2018, return on average assets and return on average tangible common equity were 1.30% and 15.59%, respectively, on a basis in accordance with accounting principles generally accepted in the United States of America ("GAAP").  Based on adjusted net income1, return on average assets was 1.34% and return on average tangible common equity was 16.04% for the same period.

For the six months ended June 30, 2018, return on average assets was 1.23%, an increase from 1.20% for the same period of 2017.  Based on adjusted net income1, return on average assets for the first six months of 2018 was 1.33% compared to 1.23% for the comparable period of 2017. Return on average tangible common equity was 14.90% for the first six months of 2018 compared to 13.30% for the same period of 2017.  Return on average tangible common equity based on adjusted net income1 was 16.08% for the first half of 2018 compared to 13.65% for the first half of 2017.

The Company views certain non-operating items including, but not limited to, acquisition-related and restructuring charges, as adjustments to net income.  Non-operating adjustments for the second quarter of 2018 were expenses related to acquisitions, including $0.8 million in fixed asset impairments and $0.1 million of data processing conversion and other acquisition-related expenses. The reconciliation of non-GAAP measures (including adjusted net income, adjusted efficiency ratio, adjusted return on average assets, return on average tangible common equity, tangible book value and tangible book value per share), which the Company believes facilitates the assessment of its banking operations and peer comparability, is included in tabular form at the end of this release.

1 Adjusted net income, a Non-GAAP financial measure. See "Non-GAAP Financial Information" below for reconciliation



Overall, we are pleased with our underlying operating performance in the second quarter. Second quarter 2018 net income of $24.9 million, driven by revenue of $83.0 million, was a 13.4% increase over net income of $21.9 million in the first quarter of 2018. We continue to generate strong non-interest revenue at 27.3% of total revenue in the second quarter of 2018. Our net interest margin, adjusted for accretion and amortization, was 3.34% in the second quarter of 2018 compared to 3.32% for the first quarter of 2018. Further, we are realizing the efficiency of our recently completed acquisitions of First Community and South Side, as our efficiency ratio in the second quarter of 2018 decreased to 54.70% compared to 59.66% in the first quarter of 2018. On an adjusted basis1, our efficiency ratio decreased to 53.56% in the second quarter of 2018 compared to 55.41% in the first quarter of 2018.

On a linked quarter basis our balance sheet growth was flat. While our second quarter loan production was strong, it was offset by higher than projected payoffs. Total loans as of June 30, 2018 were $5.555 billion compared to $5.531 billion as of March 31, 2018. We remain committed to our focus on quality balance sheet growth and our credit metrics remain solid. Non-performing loans decreased to 0.47% of total portfolio loans as of June 30, 2018 compared to 0.61% as of March 31, 2018.

We are pleased to announce that we received a first-of-its-kind recognition of regional banks. Forbes and Statista have named the Company among the 2018 Best-In-State Banks based solely on customer opinions. For the third consecutive year, the Company was honored to be named among the Best Places to Work in Illinois by the Daily Herald Business Ledger and Best Companies Group, and for the first time, in Missouri the Company received the 2018 Top Workplaces award by the St. Louis Post-Dispatch. In addition, the Company was named among the Best Companies to Work For in Florida by Florida Trend and Best Companies Group. Busey also received the Centennial Club award in June 2018 from the Illinois Bankers Association, which recognizes financial institutions statewide that have reached and surpassed their 100th anniversary.

Busey takes pride in its culture and its commitment to the communities we serve. As we acknowledge our continued success and the positive forward momentum of the Company, we are grateful to you for allowing us the opportunity to serve you and your community.

/s/ Van A. Dukeman
President & Chief Executive Officer
First Busey Corporation






SELECTED FINANCIAL HIGHLIGHTS1
 
(dollars in thousands, except per share data)
 
                                     
   
As of and for the
   
As of and for the
 
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
March 31,
   
December 31,
   
June 30,
   
June 30,
   
June 30,
 
 
 
2018
   
2018
   
2017
   
2017
   
2018
   
2017
 
EARNINGS & PER SHARE DATA
                                   
Net income
 
$
24,862
   
$
21,917
   
$
12,293
   
$
16,479
   
$
46,779
   
$
31,649
 
Revenue2
   
83,014
     
82,243
     
86,607
     
62,432
     
165,257
     
123,602
 
Diluted earnings per share
   
0.51
     
0.45
     
0.25
     
0.43
     
0.95
     
0.82
 
Cash dividends paid per share
   
0.20
     
0.20
     
0.18
     
0.18
     
0.40
     
0.36
 
                                                 
Net income by operating segment
                                               
   Banking
 
$
24,904
   
$
21,845
   
$
16,158
   
$
15,855
   
$
46,749
   
$
30,604
 
   Remittance Processing
   
986
     
953
     
440
     
508
     
1,939
     
1,062
 
   Wealth Management
   
2,288
     
2,764
     
1,469
     
1,675
     
5,052
     
3,523
 
                                                 
AVERAGE BALANCES
                                               
Cash and cash equivalents
 
$
218,239
   
$
227,055
   
$
256,626
   
$
258,521
   
$
222,623
   
$
215,342
 
Investment securities
   
1,308,203
     
1,310,902
     
1,223,103
     
811,264
     
1,309,545
     
810,759
 
Loans held for sale
   
27,516
     
39,294
     
109,336
     
104,420
     
33,372
     
121,546
 
Portfolio loans
   
5,533,168
     
5,507,860
     
5,457,077
     
3,892,327
     
5,520,584
     
3,877,215
 
Interest-earning assets
   
6,984,486
     
6,976,383
     
6,932,750
     
4,990,573
     
6,980,457
     
4,947,346
 
Total assets
   
7,653,541
     
7,663,899
     
7,632,019
     
5,361,074
     
7,658,691
     
5,325,723
 
                                                 
Non-interest bearing deposits
   
1,492,251
     
1,497,136
     
1,516,233
     
1,091,696
     
1,494,680
     
1,079,405
 
Interest-bearing deposits
   
4,619,710
     
4,568,160
     
4,434,492
     
3,258,334
     
4,594,078
     
3,254,576
 
Total deposits
   
6,111,961
     
6,065,296
     
5,950,725
     
4,350,030
     
6,088,758
     
4,333,981
 
Securities sold under agreements to repurchase
   
234,282
     
258,049
     
294,389
     
176,721
     
246,100
     
171,283
 
Interest-bearing liabilities
   
5,176,986
     
5,175,228
     
5,126,815
     
3,628,312
     
5,176,113
     
3,608,122
 
Total liabilities
   
6,709,410
     
6,730,137
     
6,699,840
     
4,756,186
     
6,719,716
     
4,725,547
 
Stockholders' common equity
   
944,131
     
933,762
     
932,179
     
604,888
     
938,975
     
600,176
 
Tangible stockholders' common equity3
   
639,752
     
626,794
     
622,952
     
485,244
     
633,309
     
479,927
 
 
                                               
PERFORMANCE RATIOS
                                               
Return on average assets4
   
1.30
%
   
1.16
%
   
0.64
%
   
1.23
%
   
1.23
%
   
1.20
%
Return on average common equity4
   
10.56
%
   
9.52
%
   
5.23
%
   
10.93
%
   
10.05
%
   
10.63
%
Return on average tangible common equity3,4
   
15.59
%
   
14.18
%
   
7.83
%
   
13.62
%
   
14.90
%
   
13.30
%
Net interest margin4,5
   
3.51
%
   
3.52
%
   
3.68
%
   
3.47
%
   
3.51
%
   
3.50
%
Efficiency ratio6
   
54.70
%
   
59.66
%
   
58.69
%
   
56.31
%
   
57.17
%
   
57.56
%
Non-interest revenue as a % of total revenues2
   
27.27
%
   
27.34
%
   
27.20
%
   
32.14
%
   
27.31
%
   
31.73
%
                                                 
1Results are unaudited
 
2Revenues consist of net interest income plus non-interest income, net of security gains and losses
 
3Average tangible stockholders' common equity is defined as average common equity less average goodwill and intangibles, see "Non-GAAP Financial Information" below for reconciliation
 
4Annualized, see "Non-GAAP Financial Information" below for reconciliation
 
5On a tax-equivalent basis, assuming an income tax rate of 26% for 2018 and 35% for 2017
 
6 Net of security gains and losses and intangible expenses, see "Non-GAAP Financial Information" below for reconciliation
 

Condensed Consolidated Balance Sheets1
 
As of
 
(dollars in thousands, except per share data)
 
June 30,
   
March 31,
   
December 31,
   
June 30,
 
   
2018
   
2018
   
2017
   
2017
 
Assets
                       
Cash and cash equivalents
 
$
230,730
   
$
367,525
   
$
353,272
   
$
294,100
 
Investment securities
   
1,384,807
     
1,286,136
     
1,321,610
     
854,983
 
                                 
Loans held for sale
   
33,974
     
29,034
     
94,848
     
168,415
 
                                 
Commercial loans
   
4,076,253
     
4,061,181
     
4,030,821
     
2,828,261
 
Retail real estate and retail other loans
   
1,479,034
     
1,470,272
     
1,488,679
     
1,092,203
 
Portfolio loans
 
$
5,555,287
   
$
5,531,453
   
$
5,519,500
   
$
3,920,464
 
                                 
Allowance for loan losses
   
(53,305
)
   
(52,649
)
   
(53,582
)
   
(49,201
)
Premises and equipment
   
119,835
     
118,985
     
116,913
     
79,498
 
Goodwill and other intangibles
   
303,407
     
304,897
     
308,073
     
118,887
 
Other assets
   
200,809
     
193,365
     
200,006
     
144,221
 
Total assets
 
$
7,775,544
   
$
7,778,746
   
$
7,860,640
   
$
5,531,367
 
                                 
Liabilities & Stockholders' Equity
                               
Non-interest bearing deposits
 
$
1,496,671
   
$
1,651,333
   
$
1,597,421
   
$
1,105,041
 
Interest-bearing checking, savings, and money market deposits
   
3,192,735
     
3,270,963
     
3,192,382
     
2,567,525
 
Time deposits
   
1,474,506
     
1,408,878
     
1,336,162
     
721,646
 
Total deposits
 
$
6,163,912
   
$
6,331,174
   
$
6,125,965
   
$
4,394,212
 
                                 
Securities sold under agreements to repurchase
   
240,109
     
235,311
     
304,566
     
178,597
 
Short-term borrowings
   
150,000
     
-
     
220,000
     
50,000
 
Long-term debt
   
154,125
     
154,122
     
154,119
     
178,373
 
Junior subordinated debt owed to unconsolidated trusts
   
71,081
     
71,044
     
71,008
     
70,938
 
Other liabilities
   
39,135
     
44,949
     
49,979
     
46,132
 
Total liabilities
 
$
6,818,362
   
$
6,836,600
   
$
6,925,637
   
$
4,918,252
 
Total stockholders' equity
 
$
957,182
   
$
942,146
   
$
935,003
   
$
613,115
 
Total liabilities & stockholders' equity
 
$
7,775,544
   
$
7,778,746
   
$
7,860,640
   
$
5,531,367
 
                                 
Share Data
                               
Book value per common share
 
$
19.62
   
$
19.34
   
$
19.21
   
$
16.03
 
Tangible book value per common share2
 
$
13.40
   
$
13.09
   
$
12.88
   
$
12.92
 
Ending number of common shares outstanding
   
48,776
     
48,717
     
48,685
     
38,248
 
   
1 Results are unaudited except for amounts reported as of December 31, 2017
 
2 Total common equity less goodwill and intangibles divided by shares outstanding as of period end, see "Non-GAAP Financial Information" below for reconciliation
 
   
 
 
 

 


Condensed Consolidated Statements of Operations1
                   
(dollars in thousands, except per share data)
             
   
For the
   
For the
 
   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2018
   
2017
   
2018
   
2017
 
                         
Interest and fees on loans held for sale and portfolio loans
 
$
62,290
   
$
41,236
   
$
123,250
   
$
81,833
 
Interest on investment securities
   
8,035
     
4,773
     
15,708
     
9,103
 
Total interest income
 
$
70,325
   
$
46,009
   
$
138,958
   
$
90,936
 
                                 
Interest on deposits
   
6,904
     
2,163
     
12,891
     
4,207
 
Interest on short-term borrowings
   
829
     
231
     
1,646
     
401
 
Interest on long-term debt
   
1,406
     
628
     
2,763
     
741
 
Interest on junior subordinated debt owed to unconsolidated trusts
   
814
     
621
     
1,529
     
1,208
 
Total interest expense
 
$
9,953
   
$
3,643
   
$
18,829
   
$
6,557
 
                                 
Net interest income
 
$
60,372
   
$
42,366
   
$
120,129
   
$
84,379
 
Provision for loan losses
   
2,258
     
500
     
3,266
     
1,000
 
Net interest income after provision for loan losses
 
$
58,114
   
$
41,866
   
$
116,863
   
$
83,379
 
                                 
Trust fees
   
6,735
     
5,827
     
14,249
     
12,017
 
Commissions and brokers' fees, net
   
883
     
751
     
1,979
     
1,473
 
Fees for customer services
   
7,290
     
6,095
     
14,236
     
12,081
 
Remittance processing
   
3,566
     
2,859
     
6,958
     
5,704
 
Mortgage revenue
   
1,573
     
2,770
     
3,216
     
4,904
 
Security gains (losses), net
   
160
     
(4
)
   
160
     
853
 
Other
   
2,595
     
1,764
     
4,490
     
3,044
 
Total non-interest income
 
$
22,802
   
$
20,062
   
$
45,288
   
$
40,076
 
                                 
Salaries, wages and employee benefits
   
25,472
     
20,061
     
54,291
     
41,951
 
Net occupancy expense of premises
   
3,689
     
3,126
     
7,510
     
6,311
 
Furniture and equipment expense
   
1,790
     
1,719
     
3,703
     
3,338
 
Data processing
   
4,030
     
3,306
     
8,375
     
6,235
 
Amortization of intangible assets
   
1,490
     
1,182
     
3,005
     
2,389
 
Other
   
10,834
     
7,374
     
21,461
     
14,163
 
Total non-interest expense
 
$
47,305
   
$
36,768
   
$
98,345
   
$
74,387
 
                                 
Income before income taxes
 
$
33,611
   
$
25,160
   
$
63,806
   
$
49,068
 
Income taxes
   
8,749
     
8,681
     
17,027
     
17,419
 
Net income
 
$
24,862
   
$
16,479
   
$
46,779
   
$
31,649
 
                                 
Per Share Data
                               
Basic earnings per common share
 
$
0.51
   
$
0.43
   
$
0.96
   
$
0.83
 
Diluted earnings per common share
 
$
0.51
   
$
0.43
   
$
0.95
   
$
0.82
 
Diluted average common shares outstanding
   
49,224
     
38,752
     
49,203
     
38,746
 
                                 
 1 Results are unaudited                                
                                 

 


Balance Sheet Growth:  At June 30, 2018, portfolio loans were $5.555 billion, an increase of $23.8 million from $5.531 billion as of March 31, 2018 and an increase of $1.635 billion from the $3.920 billion as of June 30, 2017.  Second quarter 2018 commercial loan growth was $15.1 million and retail growth was $8.7 million over the first quarter of 2018. The balance of loans held for sale at June 30, 2018 was $34.0 million compared to $29.0 million at March 31, 2018 and $168.4 million at June 30, 2017, reflecting the realignment of mortgage origination resources discussed below. Average portfolio loans increased 42.2% to $5.533 billion for the second quarter of 2018 compared to $3.892 billion for the second quarter of 2017, and increased 0.5% from the $5.508 billion for the first quarter of 2017.
Average interest-earning assets for the three months ended June 30, 2018 increased to $6.984 billion compared to $6.976 billion for the three months ended March 31, 2018 and $4.991 billion for the three months ended June 30, 2017.  Average interest-earning assets for the first six months of 2018 increased to $6.980 billion from $4.947 billion in the same period of 2017, a 41.1% increase.

Total deposits were $6.164 billion at June 30, 2018, a decrease from $6.331 billion at March 31, 2018 but an increase of 40.3% from $4.394 billion at June 30, 2017.  The Company remains funded primarily through core deposits with significant market share in core Illinois markets.

Net Interest Margin and Net Interest Income: Net interest income of $60.4 million in the second quarter of 2018 increased from $59.8 million in the first quarter of 2018 and $42.4 million in the second quarter of 2017.  Net interest income for the first half of 2018 was $120.1 million compared to $84.4 million in the same period of 2017, a 42.4% increase.  Net purchase accounting accretion and amortization included in interest income and interest expense was $3.0 million for the second quarter of 2018, a decrease from $3.4 million for the first quarter of 2018 and an increase from $1.6 million for the second quarter of 2017.  Net purchase accounting accretion and amortization included in interest income and interest expense for the first six months of 2018 was $6.4 million and $3.5 million for the same period of 2017.

Net interest margin decreased to 3.51% for the second quarter of 2018, compared to 3.52% for the first quarter of 2018 and an increase from 3.47% for the second quarter of 2017.  Net of purchase accounting accretion and amortization, net interest margin for the second quarter of 2018 was 3.34%, an increase from 3.32% for the first quarter of 2018 and steady with the second quarter of 2017. Net interest margin for the first six months of 2018 was 3.51% compared to 3.50% for the first six months of 2017.  Net of purchase accounting accretion and amortization, net interest margin for the first six months of 2018 was 3.33%, a decrease from 3.36% for the same period of 2017.




Asset Quality:  As of June 30, 2018, non-performing loans decreased to $26.4 million, compared to $33.6 million as of March 31, 2018, and increased from $20.1 million as of June 30, 2017. Non-performing loans were 0.47% of total portfolio loans as of June 30, 2018, compared to 0.61% as of March 31, 2018 and 0.51% as of June 30, 2017.

The Company recorded net charge-offs of $1.6 million for the second quarter of 2018, a decrease compared to $1.9 million for the first quarter of 2018, and an increase compared to net recoveries of $0.3 million for the second quarter of 2017.  The allowance for loan loss as a percentage of portfolio loans was 0.96% at June 30, 2018 as compared to 0.95% at March 31, 2018 and 1.25% at June 30, 2017. As a result of acquisitions, the Company is holding acquired loans that are carried net of a fair value adjustment for credit and interest rate marks and are only included in the allowance calculation to the extent that the reserve requirement exceeds the fair value adjustment.  The Company recorded provision for loan losses of $2.3 million in the second quarter of 2018, compared to $1.0 million in the first quarter of 2018 and $0.5 million in the second quarter of 2017. The Company recorded provision for loan losses of $3.3 million in the first six months of 2018 and $1.0 million in the first six months of 2017.


Asset Quality1
 
As of and for the Three Months Ended
 
(dollars in thousands)
 
June 30,
   
March 31,
   
December 31,
   
June 30,
 
   
2018
   
2018
   
2017
   
2017
 
                         
Portfolio loans
 
$
5,555,287
   
$
5,531,453
   
$
5,519,500
   
$
3,920,464
 
Non-performing loans
                               
     Non-accrual loans
   
25,215
     
32,588
     
24,624
     
18,935
 
     Loans 90+ days past due
   
1,142
     
995
     
2,741
     
1,123
 
Non-performing loans, segregated by geography
                               
     Illinois/ Indiana
   
21,534
     
28,743
     
23,093
     
16,655
 
     Missouri
   
3,338
     
3,641
     
2,964
     
2,614
 
     Florida
   
1,485
     
1,199
     
1,308
     
789
 
Loans 30-89 days past due
   
10,017
     
9,506
     
12,897
     
6,953
 
Other non-performing assets
   
3,694
     
1,001
     
1,283
     
480
 
Non-performing assets to portfolio loans and non-performing assets
   
0.54
%
   
0.63
%
   
0.52
%
   
0.52
%
Allowance as a percentage of non-performing loans
   
202.24
%
   
156.77
%
   
195.80
%
   
245.29
%
Allowance for loan losses to portfolio loans
   
0.96
%
   
0.95
%
   
0.97
%
   
1.25
%
Net charge-offs (recoveries)
 
$
1,602
   
$
1,941
   
$
262
   
$
(259
)
Provision for loan losses
   
2,258
     
1,008
     
2,809
     
500
 
                                 
1 Results are unaudited except for amounts reported as of December 31, 2017
                 
           

 
Fee-based Businesses:  Revenues from trust fees, commissions and brokers' fees, and remittance processing activities represented 49.0% of the Company's non-interest income for the quarter ended June 30, 2018, providing a balance to revenue from traditional banking activities. Two of the Company's acquisitions, Pulaski Financial Corp. and First Community, had no legacy fee income in these businesses; therefore, the addition of these fee-based service offerings in these acquired bank markets is expected to continue providing attractive growth opportunities in future periods.

 

Trust fees and commissions and brokers' fees of $7.6 million for the second quarter of 2018 decreased from $8.6 million for the first quarter of 2018 and increased from $6.6 million for the second quarter of 2017. Trust fees and commissions and brokers' fees increased to $16.2 million for the first six months of 2018 compared to $13.5 million for the first six months of 2017.  Net income from the wealth management segment decreased to $2.3 million for the second quarter of 2018 compared to $2.8 million for the first quarter of 2018 and increased from $1.7 million from the first quarter of 2017.  Net income from the wealth management segment for the six months ended June 30, 2018 was $5.1 million compared to $3.5 million for the same period of 2017, a 43.4% increase. Market expansion resulting from the South Side acquisition and strong performance from Busey Ag Services, a wealth management division of Busey Bank, contributed to the year-to-date positive results.  Busey Wealth Management ended the second quarter of 2018 with $7.014 billion in assets under care, an increase from $6.910 billion as of March 31, 2018 and $5.600 billion as of June 30, 2017.

Remittance processing revenue, from the Company's subsidiary FirsTech, Inc., of $3.6 million for the second quarter of 2018 increased 5.1%, from $3.4 million for the first quarter of 2018 and 24.7% from $2.9 million in the second quarter of 2017.  Remittance processing revenue for the six months ended June 30, 2018 was $7.0 million, an increase of 22.0%, compared to $5.7 million during the same period of 2017.  FirsTech's, the remittance processing segment's, net income was $1.0 million for the second and first quarter of 2018, an increase from $0.5 million for the second quarter of 2017. The positive 2018 results are a reflection of new customer activity and volume increases from existing customers.

Mortgage revenue of $1.6 million in the second and first quarter of 2018 decreased from $2.8 million for the second quarter of 2017, reflecting the realignment of mortgage origination resources to the Company's current markets through the sale of certain mortgage locations in the fourth quarter of 2017.  Mortgage revenue for the first six months of 2018 was $3.2 million, a decrease from $4.9 million in the same period of 2017.

Operating Efficiency:  The efficiency ratio, inclusive of acquisition and restructuring costs, of 54.70% for the quarter ended June 30, 2018 decreased from 59.66% for the quarter ended March 31, 2018 and 56.31% for the quarter ended June 30, 2017, as the company sees greater operating efficiencies from the recent integrations.  The efficiency ratio for the first six months of 2018 was 57.17% compared to 57.56% for the first six months of 2017. The adjusted efficiency ratio2 was 53.56% for the quarter ended June 30, 2018, 55.41% for the quarter ended March 31, 2018, and 55.76% for the quarter ended June 30, 2017.  The Company remains consistently focused on expense discipline.

Specific areas of operating performance are as follows:

· Salaries, wages and employee benefits decreased to $25.5 million in the second quarter of 2018, compared to $28.8 million in the first quarter of 2018, but increased compared to $20.1 million in the second quarter of 2017.  In the first six months of 2018, salaries, wages and employee benefits increased to $54.3 million compared to $42.0 million for the same period of 2017. The recent acquisitions added to the Company's headcount and the Company recorded total restructuring costs of $1.7 million in the first quarter of 2018.

· Data processing expense in the second quarter of 2018 decreased to $4.0 million, compared to $4.3 million in the first quarter of 2018, but increased compared to $3.3 million in the second quarter of 2017. In the first six months of 2018, data processing expense increased to $8.4 million compared to $6.2 million for the same period of 2017.  Variances are largely related to deconversion expenses related to acquisitions.

· Other operating expenses increased to $10.8 million in the second quarter of 2018, compared to $10.6 million in the first quarter of 2018 and $7.4 million in the second quarter of 2017 across multiple categories. In the first six months of 2018, other operating expenses increased to $21.5 million compared to $14.2 million for the same period of 2017.




Capital Strength:  The Company's strong capital levels, coupled with its earnings, have allowed it to provide a steady return to its stockholders through dividends.  The Company will pay a cash dividend on July 27, 2018 of $0.20 per common share to stockholders of record as of July 20, 2018.  The Company has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

As of June 30, 2018, First Busey continued to exceed the capital adequacy requirements necessary to be considered "well-capitalized" under applicable regulatory guidelines.  The Company's tangible stockholders' common equity3 ("TCE") increased to $663.1 million at June 30, 2018, compared to $646.9 million at March 31, 2018 and $500.7 million at June 30, 2017. TCE represented 8.86% of tangible assets at June 30, 2018 compared to 8.64% at March 31, 2018 and 9.24% at June 30, 2017.4



2Adjusted efficiency ratio, a Non-GAAP financial measure, see "Non-GAAP Financial Information" below for reconciliation
3Tangible stockholders' common equity, see "Non-GAAP Financial Information" below for reconciliation
4Tangible assets, see "Non-GAAP Financial Information" below for reconciliation


Corporate Profile

As of June 30, 2018, First Busey Corporation (Nasdaq: BUSE) was a $7.8 billion financial holding company headquartered in Champaign, Illinois. Busey Bank, the wholly-owned bank subsidiary with total assets of $7.8 billion as of June 30, 2018, is headquartered in Champaign, Illinois and has forty-four banking centers serving Illinois, thirteen banking centers in the St. Louis, Missouri metropolitan area, five banking centers serving southwest Florida and a banking center in Indianapolis, Indiana.  Trevett Capital Partners, a wealth management division of Busey Bank, provides asset management, investment and fiduciary services to high net worth clients in southwest Florida. The wealth management professionals of Trevett Capital Partners can be reached through trevettcapitalpartners.com.

Busey Bank was named among Forbes' 2018 Best-In-State Banks—one of five in Illinois and 124 from across the country, equaling 2.2% of all banks, recognized solely by customers. Best-In-State Banks are awarded for exceptional customer experiences as determined by a survey sample of 25,000+ people across the U.S. who rated banks on trust, terms and conditions, branch services, digital services and financial advice.

Busey Bank owns a retail payment processing subsidiary, FirsTech, Inc., which processes approximately 28 million transactions per year using online bill payment, lockbox processing and walk-in payments at its 4,000 agent locations in 43 states.  More information about FirsTech, Inc. can be found at firstechpayments.com.

Busey Wealth Management is a wholly-owned subsidiary of First Busey Corporation.  Through Busey Trust Company, Busey Wealth Management provides asset management, investment and fiduciary services to individuals, businesses and foundations.  As of June 30, 2018, Busey Wealth Management's assets under care were approximately $7.0 billion.

For more information about us, visit www.busey.com.

Contacts:

Robin N. Elliott, Chief Operating Officer & Chief Financial Officer, 217-365-4120

Jennifer L. Simons, Chief Accounting Officer, 217-365-4309



Non-GAAP Financial Information

This press release contains certain financial information determined by methods other than GAAP. These measures include adjusted net income, adjusted return on average assets, adjusted net interest margin, adjusted efficiency ratio, tangible common equity, tangible common equity to tangible assets and return on average common equity. Management uses these non-GAAP measures, together with the related GAAP measures, in analysis of the Company's performance and in making business decisions. Management also uses these measures for peer comparisons.
A reconciliation to what management believes to be the most direct compared GAAP financial measures – net income in the case of adjusted net income and adjusted return on average assets, total net interest income, total non-interest income and total non-interest expense in the case of adjusted efficiency ratio, total stockholders' equity in the case of the tangible book value per share – appears below.  The Company believes the adjusted measures are useful for investors and management to understand the effects of certain non-interest items and provides additional perspective on the Company's performance over time as well as comparison to the Company's peers.
These non-GAAP disclosures have inherent limitations and are not audited.  They should not be considered in isolation or as a substitute for the results reported in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Tax effected numbers included in these non-GAAP disclosures are based on estimated statutory rates.

Reconciliation of Non-GAAP Financial Measures – Adjusted Net Income and Return on Average Assets
 
(dollars in thousands)
 
                               
   
Three Months Ended
   
Six Months Ended
 
   
June 30, 2018
   
March 31, 2018
   
June 30, 2017
   
June 30, 2018
   
June 30, 2017
 
Net income
 
$
24,862
   
$
21,917
   
$
16,479
   
$
46,779
   
$
31,649
 
Acquisition expenses
                                       
     Salaries, wages and employee benefits
   
-
     
1,233
     
-
     
1,233
     
-
 
     Data processing
   
34
     
372
     
81
     
406
     
86
 
     Other (includes professional and legal)
   
107
     
1,950
     
266
     
2,057
     
1,017
 
Other restructuring costs
                                       
     Salaries, wages and employee benefits
   
-
     
417
     
-
     
417
     
215
 
     Fixed asset impairments
   
817
     
-
     
-
     
817
     
-
 
Related tax benefit
   
(230
)
   
(967
)
   
(139
)
   
(1,197
)
   
(486
)
Adjusted net income
 
$
25,590
   
$
24,922
   
$
16,687
   
$
50,512
   
$
32,481
 
                                         
Average total assets
 
$
7,653,541
   
$
7,663,899
   
$
5,361,074
   
$
7,658,691
   
$
5,325,723
 
                                         
Reported: Return on average assets1
   
1.30
%
   
1.16
%
   
1.23
%
   
1.23
%
   
1.20
%
Adjusted: Return on average assets 1
   
1.34
%
   
1.32
%
   
1.25
%
   
1.33
%
   
1.23
%
                                         
1 Annualized measure
 


Reconciliation of Non-GAAP Financial Measures – Adjusted Net Interest Margin
 
(dollars in thousands)
 
               
   
Three Months Ended
   
Six Months Ended
 
   
June 30, 2018
   
March 31, 2018
   
June 30, 2017
   
June 30, 2018
   
June 30, 2017
 
                               
Reported: Net interest income
 
$
60,372
   
$
59,757
   
$
42,366
   
$
120,129
   
$
84,379
 
    Tax-equivalency adjustment
   
742
     
764
     
762
     
1,506
     
1,475
 
    Less: Purchase accounting amortization
   
(3,015
)
   
(3,410
)
   
(1,630
)
   
(6,425
)
   
(3,481
)
Adjusted: Net interest income
 
$
58,099
   
$
57,111
   
$
41,498
   
$
115,210
   
$
82,373
 
                                         
Average interest-earning assets
 
$
6,984,486
   
$
6,976,383
   
$
4,990,573
   
$
6,980,457
   
$
4,947,346
 
                                         
Reported: Net interest margin1
   
3.51
%
   
3.52
%
   
3.47
%
   
3.51
%
   
3.50
%
Adjusted: Net Interest margin1
   
3.34
%
   
3.32
%
   
3.34
%
   
3.33
%
   
3.36
%
                                         
1 Annualized measure
                                       

Reconciliation of Non-GAAP Financial Measures – Adjusted Efficiency Ratio
 
(dollars in thousands)
 
                               
   
Three Months Ended
   
Six Months Ended
 
   
June 30, 2018
   
March 31, 2018
   
June 30, 2017
   
June 30, 2018
   
June 30, 2017
 
Reported: Net Interest income
 
$
60,372
   
$
59,757
   
$
42,366
   
$
120,129
   
$
84,379
 
     Tax-equivalency adjustment
   
742
     
764
     
762
     
1,506
     
1,475
 
Tax equivalent interest income
 
$
61,114
   
$
60,521
   
$
43,128
   
$
121,635
   
$
85,854
 
                                         
Reported: Non-interest income
   
22,802
     
22,486
     
20,062
     
45,288
     
40,076
 
    Less: Security gain (loss), net
   
160
     
-
     
(4
)
   
160
     
853
 
Adjusted: Non-interest income
 
$
22,642
   
$
22,486
   
$
20,066
   
$
45,128
   
$
39,223
 
                                         
Reported: Non-interest expense
   
47,305
     
51,040
     
36,768
     
98,345
     
74,387
 
   Less:
                                       
     Amortization
   
(1,490
)
   
(1,515
)
   
(1,182
)
   
(3,005
)
   
(2,389
)
     Non-operating adjustments:
                                       
       Salaries, wages and employee benefits
   
-
     
(1,650
)
   
-
     
(1,650
)
   
-
 
       Data processing
   
(34
)
   
(372
)
   
(81
)
   
(406
)
   
(86
)
       Other
   
(924
)
   
(1,505
)
   
(266
)
   
(2,429
)
   
(1,232
)
Adjusted: Non-interest expense
 
$
44,857
   
$
45,998
   
$
35,239
   
$
90,855
   
$
70,680
 
                                         
Reported: Efficiency ratio
   
54.70
%
   
59.66
%
   
56.31
%
   
57.17
%
   
57.56
%
Adjusted: Efficiency ratio
   
53.56
%
   
55.41
%
   
55.76
%
   
54.48
%
   
56.51
%


Reconciliation of Non-GAAP Financial Measures – Tangible common equity to tangible assets, Tangible book value per share, Return on average tangible common equity
 
(dollars in thousands, except per share data)
 
                   
   
As of
 
   
June 30, 2018
   
March 31, 2018
   
June 30, 2017
 
                   
Total assets
 
$
7,775,544
   
$
7,778,746
   
$
5,531,367
 
Less:
                       
   Goodwill and other intangible assets, net
   
(303,407
)
   
(304,897
)
   
(118,887
)
   Tax effect of goodwill and other intangible assets, net
   
9,288
     
9,675
     
6,435
 
Tangible assets
 
$
7,481,425
   
$
7,483,524
   
$
5,418,915
 
                         
Total stockholders' equity
   
957,182
     
942,146
     
613,115
 
Less:
                       
   Goodwill and other intangible assets, net
   
(303,407
)
   
(304,897
)
   
(118,887
)
   Tax effect of goodwill and other intangible assets, net
   
9,288
     
9,675
     
6,435
 
Tangible stockholders' equity
 
$
663,063
   
$
646,924
   
$
500,663
 
                         
Tangible common equity to tangible assets1
   
8.86
%
   
8.64
%
   
9.24
%
Tangible book value per share
 
$
13.40
   
$
13.08
   
$
12.92
 
                         
   
Three Months Ended
 
   
June 30, 2018
   
March 31, 2018
   
June 30, 2017
 
Average stockholders' common equity
 
$
944,131
   
$
933,762
   
$
604,888
 
   Less: Average goodwill and intangibles, net
   
(304,379
)
   
(306,968
)
   
(119,644
)
Average tangible stockholders' common equity
 
$
639,752
   
$
626,794
   
$
485,244
 
                         
Reported: Return on average tangible common equity2
   
15.59
%
   
14.18
%
   
13.62
%
Adjusted: Return on average tangible common equity2,3
   
16.04
%
   
16.13
%
   
13.79
%
                         
Return on average common equity2
   
10.56
%
   
9.52
%
   
10.93
%
                         
   
Six Months Ended
         
   
June 30, 2018
   
June 30, 2017
         
Average stockholders' common equity
 
$
938,975
   
$
600,176
         
   Less: Average goodwill and intangibles, net
   
(305,666
)
   
(120,249
)
       
Average tangible stockholders' common equity
 
$
633,309
   
$
479,927
         
                         
Reported: Return on average tangible common equity2
   
14.90
%
   
13.30
%
       
Adjusted: Return on average tangible common equity2,3
   
16.08
%
   
13.65
%
       
                         
Return on average common equity2
   
10.05
%
   
10.63
%
       
                         
1 Tax-effected measure
                       
2 Annualized measure
                       
3 Calculated using adjusted net income
                       

Special Note Concerning Forward-Looking Statements

Statements made in this report, other than those concerning historical financial information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company.  Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company's management and on information currently available to management, are generally identifiable by the use of words such as "believe," "expect," "anticipate," "plan," "intend," "estimate," "may," "will," "would," "could," "should" or other similar expressions.  Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events.  A number of factors, many of which are beyond our ability to control or predict, could cause actual results to differ materially from those in our forward-looking statements.  These factors include, among others, the following: (i) the strength of the local, national and international economy; (ii) the economic impact of any future terrorist threats or attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company's general business; (iv) changes in interest rates and prepayment rates of the Company's assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the loss of key executives or employees; (viii) changes in consumer spending; (ix) unexpected results of current and/or future acquisitions, which may include, failure to realize the anticipated benefits of any acquisition and the possibility that transaction costs may be greater than anticipated; (x) unexpected outcomes of existing or new litigation involving the Company;  (xi) changes in accounting policies and practices; and (xii) the economic impact of exceptional weather occurrences such as tornadoes, hurricanes, floods, and blizzards.  These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  Additional information concerning the Company and its business, including additional factors that could materially affect its financial results, is included in the Company's filings with the Securities and Exchange Commission.
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