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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 23, 2019
First Busey Corporation
(Exact name of registrant as specified in its 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))
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value
BUSE
The Nasdaq Stock Market LLC
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 23, 2019, First Busey Corporation ("First Busey") issued a press release disclosing financial results for the quarter ended June 30, 2019. 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 First Busey.

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


Signature

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 23, 2019
First Busey Corporation


By: /s/ Robin N. Elliott
Name:         Robin N. Elliott
Title:           Chief Financial Officer


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

July 23, 2019
First Busey Announces 2019 Second Quarter Earnings

Champaign, IL – (Nasdaq: BUSE)

Message from our President & CEO

Positive advances in the second quarter of 2019 from the comparable quarter of the prior year:



Total assets of $9.61 billion, an increase of 23.6%


• Net interest income of $73.4 million, an increase of 21.6%


• Portfolio loans of $6.53 billion, an increase of 17.6%


• Non-interest bearing deposits of $1.77 billion, an increase of 18.0%
• Tangible book value per common share of $14.95, as compared to $13.40



First Busey Corporation’s (“First Busey” or the “Company”) net income for the second quarter of 2019 was $24.1 million, or $0.43 per diluted common share, as compared to $25.5 million, or $0.48 per diluted common share, for the first quarter of 2019 and $24.9 million, or $0.51 per diluted common share, for the second quarter of 2018.  Adjusted net income1 for the second quarter of 2019 was $29.5 million, or $0.53 per diluted common share, as compared to $26.6 million, or $0.50 per diluted common share, for the first quarter of 2019 and $25.6 million, or $0.52 per diluted common share, for the second quarter of 2018.

Year-to-date net income through June 30, 2019 was $49.6 million, or $0.90 per diluted common share, compared to net income of $46.8 million, or $0.95 per diluted common share, for the comparable period of 2018. Year-to-date adjusted net income1 for the first six months of 2019 was $56.1 million, or $1.02 per diluted common share, compared to $50.5 million or $1.03 per diluted common share for the first six months of 2018.

The Company views certain non-operating items, including acquisition-related and restructuring charges, as adjustments to net income reported under generally accepted accounting principles (“GAAP”).  Non-operating pretax adjustments for the second quarter of 2019 were $4.1 million of expenses related to acquisitions, $1.4 million of expenses related to other restructuring costs and $1.8 million related to mortgage servicing rights impairment from TheBANK of Edwardsville (“TheBANK”) asset. The reconciliation of non-GAAP measures (including adjusted net income, adjusted return on average assets, adjusted net interest margin, adjusted efficiency ratio, tangible book value, tangible book value per share and return on average tangible common equity), which the Company believes facilitates the assessment of its financial results and peer comparability, is included in tabular form at the end of this release.

For the second quarter of 2019, annualized return on average assets and annualized return on average tangible common equity were 1.01% and 11.80%, respectively.  Based on adjusted net income1, return on average assets was 1.24% and return on average tangible common equity was 14.45% for the second quarter of 2019.

For the six months ended June 30, 2019, annualized return on average assets and annualized return on average tangible common equity were 1.09% and 12.68%, respectively.  Based on adjusted net income1, return on average assets was 1.23% and return on average tangible common equity was 14.35% for the six months ended June 30, 2019.

On January 31, 2019, the Company completed its acquisition of The Banc Ed Corp. (“Banc Ed”), the holding company for TheBANK.  TheBANK, founded in 1868, is a privately held commercial bank headquartered in Edwardsville, Illinois. It is anticipated that TheBANK will be merged with and into First Busey’s bank subsidiary, Busey Bank, in the fourth quarter of 2019.  Financial results for 2019 were impacted by the Banc Ed acquisition, resetting the baseline for financial performance in future quarters in a multitude of positive ways.


1 A Non-GAAP financial measure. See “Non-GAAP Financial Information” below for reconciliation.


On May 13, 2019, the Company announced the execution of an Agreement and Plan of Merger in connection with the proposed acquisition by Busey Bank of Investors’ Security Trust Company (“IST”), a Fort Myers, Florida wealth management firm.  While the proposed acquisition is expected to add to the Company’s wealth management offerings, it is not expected to have any immediate, material impact to the Company’s earnings or overall business.  Through this transaction, Busey Bank and IST broaden the expertise and level of service available to clients—from individuals and families to institutions and foundations—and remain committed to their founding principles of being active community stewards and providing the highest level of personal service to clients delivered by experienced, local professionals. It is anticipated that IST will be merged with and into the wealth management division of Busey Bank in 2019, subject to customary closing conditions and required approvals.

Busey recently received its fourth consecutive honor as one of the 2019 Best Places to Work in Illinois. This awards program—voted by associates and hosted by Best Companies Group and Daily Herald Business Ledger—identifies and recognizes the best places of employment in Illinois, benefiting the state’s economy, workforce and businesses. In addition, for the first time Busey was honored as a 2019 Best Place to Work in Indiana by Best Companies Group and the Indiana Chamber of Commerce and in Missouri as one of the 2019 Best Places to Work in St. Louis by Quantum Workplace and St. Louis Business Journal.  Further, Busey was named among the 2019 Best-In-State Banks for Illinois by Forbes and Statista and recognized with the 2019 BEST Award in talent development for the third year by the Association for Talent Development.

Busey takes pride in its culture and its commitment to the communities we serve. As we acknowledge our accomplishments 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,
 
 
 
2019
   
2019
   
2018
   
2018
   
2019
   
2018
 
EARNINGS & PER SHARE DATA
                                   
Net income
 
$
24,085
   
$
25,469
   
$
25,290
   
$
24,862
   
$
49,554
   
$
46,779
 
Revenue2
   
102,350
     
94,286
     
83,184
     
83,014
     
196,636
     
165,257
 
Diluted earnings per share
   
0.43
     
0.48
     
0.51
     
0.51
     
0.90
     
0.95
 
Cash dividends paid per share
   
0.21
     
0.21
     
0.20
     
0.20
     
0.42
     
0.40
 
                                                 
Net income by operating segment
                                               
   Banking
 
$
24,441
   
$
26,665
   
$
24,134
   
$
24,904
   
$
51,106
   
$
46,749
 
   Remittance Processing
   
1,105
     
1,025
     
814
     
986
     
2,130
     
1,939
 
   Wealth Management
   
2,845
     
2,641
     
2,040
     
2,288
     
5,486
     
5,052
 
                                                 
AVERAGE BALANCES
                                               
Cash and cash equivalents
 
$
328,414
   
$
220,471
   
$
272,811
   
$
218,239
   
$
327,525
   
$
222,623
 
Investment securities
   
1,897,486
     
1,722,015
     
1,443,054
     
1,308,203
     
1,810,237
     
1,309,545
 
Loans held for sale
   
25,143
     
17,249
     
23,380
     
27,516
     
21,218
     
33,372
 
Portfolio loans
   
6,528,326
     
6,128,661
     
5,540,852
     
5,533,168
     
6,329,596
     
5,520,584
 
Interest-earning assets
   
8,666,136
     
8,088,396
     
7,174,755
     
6,984,486
     
8,378,862
     
6,980,457
 
Total assets
   
9,522,678
     
8,865,642
     
7,846,154
     
7,653,541
     
9,198,975
     
7,658,691
 
                                                 
Non-interest bearing deposits
   
1,747,746
     
1,616,913
     
1,486,977
     
1,492,251
     
1,682,691
     
1,494,680
 
Interest-bearing deposits
   
5,970,408
     
5,592,495
     
4,852,649
     
4,619,710
     
5,782,495
     
4,594,078
 
Total deposits
   
7,718,154
     
7,209,408
     
6,339,626
     
6,111,961
     
7,465,186
     
6,088,758
 
Securities sold under agreements to repurchase
   
193,621
     
204,529
     
210,416
     
234,282
     
199,045
     
246,100
 
Interest-bearing liabilities
   
6,493,885
     
6,064,091
     
5,329,898
     
5,176,986
     
6,280,175
     
5,176,113
 
Total liabilities
   
8,326,876
     
7,755,770
     
6,866,652
     
6,709,410
     
8,042,900
     
6,719,716
 
Stockholders' common equity
   
1,195,802
     
1,109,872
     
979,502
     
944,131
     
1,153,075
     
938,975
 
Tangible stockholders' common equity3
   
818,951
     
757,285
     
678,023
     
639,752
     
788,289
     
633,309
 
 
                                               
PERFORMANCE RATIOS
                                               
Return on average assets4
   
1.01
%
   
1.17
%
   
1.28
%
   
1.30
%
   
1.09
%
   
1.23
%
Return on average common equity4
   
8.08
%
   
9.31
%
   
10.24
%
   
10.56
%
   
8.67
%
   
10.05
%
Return on average tangible common equity3,4
   
11.80
%
   
13.64
%
   
14.80
%
   
15.59
%
   
12.68
%
   
14.90
%
Net interest margin4,5
   
3.43
%
   
3.46
%
   
3.38
%
   
3.50
%
   
3.45
%
   
3.50
%
Efficiency ratio6
   
63.62
%
   
57.99
%
   
56.57
%
   
54.82
%
   
60.92
%
   
57.30
%
Non-interest revenue as a % of total revenues2
   
28.26
%
   
27.47
%
   
27.27
%
   
27.27
%
   
27.88
%
   
27.31
%
                                                 
1 Results are unaudited.
 
2 Revenues consist of net interest income plus non-interest income, excluding security gains and losses.
 
3 Average tangible stockholders’ common equity is defined as average common equity less average goodwill and intangibles. See “Non-GAAP
    Financial Information” below for reconciliation.
 
4 Annualized, see “Non-GAAP Financial Information” below for reconciliation.
 
5 On a tax-equivalent basis, assuming a federal income tax rate of 21%.
 
6 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,
   
September 30,
   
June 30,
 
   
2019
   
2019
   
2018
   
2018
   
2018
 
Assets
                             
Cash and cash equivalents
 
$
420,207
   
$
330,407
   
$
239,973
   
$
160,652
   
$
230,730
 
Investment securities
   
1,869,143
     
1,940,519
     
1,312,514
     
1,496,948
     
1,384,807
 
                                         
Loans held for sale
   
39,607
     
20,291
     
25,895
     
32,617
     
33,974
 
                                         
Commercial loans
   
4,759,329
     
4,744,136
     
4,060,126
     
4,141,816
     
4,076,253
 
Retail real estate and retail other loans
   
1,772,797
     
1,770,945
     
1,508,302
     
1,481,925
     
1,479,034
 
Portfolio loans
 
$
6,532,126
   
$
6,515,081
   
$
5,568,428
   
$
5,623,741
   
$
5,555,287
 
                                         
Allowance for loan losses
   
(51,375
)
   
(50,915
)
   
(50,648
)
   
(52,743
)
   
(53,305
)
Premises and equipment
   
149,726
     
147,958
     
117,672
     
119,162
     
119,835
 
Goodwill and other intangibles
   
375,327
     
377,739
     
300,558
     
301,963
     
303,407
 
Right of use asset
   
10,426
     
10,898
     
-
     
-
     
-
 
Other assets
   
267,480
     
245,356
     
187,965
     
207,045
     
200,809
 
Total assets
 
$
9,612,667
   
$
9,537,334
   
$
7,702,357
   
$
7,889,385
   
$
7,775,544
 
                                         
Liabilities & Stockholders' Equity
                                       
Non-interest bearing deposits
 
$
1,766,681
   
$
1,791,339
   
$
1,464,700
   
$
1,438,054
   
$
1,496,671
 
Interest-bearing checking, savings, and money market deposits
   
4,316,730
     
4,214,809
     
3,287,618
     
3,205,232
     
3,192,735
 
Time deposits
   
1,749,811
     
1,757,078
     
1,497,003
     
1,552,283
     
1,474,506
 
Total deposits
 
$
7,833,222
   
$
7,763,226
   
$
6,249,321
   
$
6,195,569
   
$
6,163,912
 
                                         
Securities sold under agreements to repurchase
   
190,846
     
217,077
     
185,796
     
255,906
     
240,109
 
Short-term borrowings
   
30,761
     
30,739
     
-
     
200,000
     
150,000
 
Long-term debt
   
185,576
     
188,221
     
148,686
     
148,626
     
154,125
 
Junior subordinated debt owed to unconsolidated trusts
   
71,230
     
71,192
     
71,155
     
71,118
     
71,081
 
Lease liability
   
10,531
     
10,982
     
-
     
-
     
-
 
Other liabilities
   
86,893
     
69,756
     
52,435
     
46,026
     
39,135
 
Total liabilities
 
$
8,409,059
   
$
8,351,193
   
$
6,707,393
   
$
6,917,245
   
$
6,818,362
 
Total stockholders' equity
 
$
1,203,608
   
$
1,186,141
   
$
994,964
   
$
972,140
   
$
957,182
 
Total liabilities & stockholders' equity
 
$
9,612,667
   
$
9,537,334
   
$
7,702,357
   
$
7,889,385
   
$
7,775,544
 
                                         
Share Data
                                       
Book value per common share
 
$
21.73
   
$
21.32
   
$
20.36
   
$
19.90
   
$
19.62
 
Tangible book value per common share2
 
$
14.95
   
$
14.53
   
$
14.21
   
$
13.72
   
$
13.40
 
Ending number of common shares outstanding
   
55,386,636
     
55,624,627
     
48,874,836
     
48,860,309
     
48,776,404
 
       
1 Results are unaudited except for amounts reported as of December 31, 2018.
 
2 See “Non-GAAP Financial Information” below for reconciliation, excludes tax effect of other intangible assets.
 


Condensed Consolidated Statements of Income1
                   
(dollars in thousands, except per share data)
             
   
For the
   
For the
 
   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2019
   
2018
   
2019
   
2018
 
                         
Interest and fees on loans
 
$
78,031
   
$
62,290
   
$
149,820
   
$
123,250
 
Interest on investment securities
   
12,352
     
7,527
     
23,612
     
14,777
 
Other interest income
   
1,083
     
508
     
2,315
     
931
 
Total interest income
 
$
91,466
   
$
70,325
   
$
175,747
   
$
138,958
 
                                 
Interest on deposits
   
14,154
     
6,904
     
26,654
     
12,891
 
Interest on securities sold under agreements to repurchase
   
627
     
364
     
1,210
     
705
 
Interest on short-term borrowings
   
494
     
465
     
685
     
941
 
Interest on long-term debt
   
1,871
     
1,406
     
3,581
     
2,763
 
Interest on junior subordinated debt owed to unconsolidated trusts
   
892
     
814
     
1,806
     
1,529
 
Total interest expense
 
$
18,038
   
$
9,953
   
$
33,936
   
$
18,829
 
                                 
Net interest income
 
$
73,428
   
$
60,372
   
$
141,811
   
$
120,129
 
Provision for loan losses
   
2,517
     
2,258
     
4,628
     
3,266
 
Net interest income after provision for loan losses
 
$
70,911
   
$
58,114
   
$
137,183
   
$
116,863
 
                                 
Trust fees
   
8,318
     
6,735
     
16,433
     
14,249
 
Commissions and brokers' fees, net
   
1,170
     
883
     
2,084
     
1,979
 
Fees for customer services
   
9,696
     
7,290
     
17,793
     
14,236
 
Remittance processing
   
3,717
     
3,566
     
7,497
     
6,958
 
Mortgage revenue
   
2,851
     
1,573
     
4,796
     
3,216
 
Security gains (losses), net
   
(1,026
)
   
160
     
(984
)
   
160
 
Other
   
3,170
     
2,595
     
6,222
     
4,490
 
Total non-interest income
 
$
27,896
   
$
22,802
   
$
53,841
   
$
45,288
 
                                 
Salaries, wages and employee benefits
   
34,268
     
25,472
     
66,609
     
54,291
 
Net occupancy expense of premises
   
4,511
     
3,689
     
8,713
     
7,510
 
Furniture and equipment expense
   
2,352
     
1,790
     
4,447
     
3,703
 
Data processing
   
5,616
     
4,030
     
10,017
     
8,375
 
Amortization of intangible assets
   
2,412
     
1,490
     
4,506
     
3,005
 
Other
   
18,861
     
10,834
     
30,891
     
21,461
 
Total non-interest expense
 
$
68,020
   
$
47,305
   
$
125,183
   
$
98,345
 
                                 
Income before income taxes
 
$
30,787
   
$
33,611
   
$
65,841
   
$
63,806
 
Income taxes
   
6,702
     
8,749
     
16,287
     
17,027
 
Net income
 
$
24,085
   
$
24,862
   
$
49,554
   
$
46,779
 
                                 
Per Share Data
                               
Basic earnings per common share
 
$
0.43
   
$
0.51
   
$
0.91
   
$
0.96
 
Diluted earnings per common share
 
$
0.43
   
$
0.51
   
$
0.90
   
$
0.95
 
Average common shares outstanding
   
55,638,187
     
48,815,395
     
54,464,167
     
48,795,516
 
Diluted average common shares outstanding
   
55,941,117
     
49,223,821
     
54,764,129
     
49,203,052
 
                                 
1 Results are unaudited.
                               



Balance Sheet Growth

At June 30, 2019, portfolio loans were $6.53 billion, as compared to $6.52 billion as of March 31, 2019 and $5.56 billion as of June 30, 2018.  The June 30, 2019 increase over first quarter 2019 related to organic loan growth at Busey Bank.  Average portfolio loans increased 6.5% to $6.53 billion for the second quarter of 2019 compared to $6.13 billion in the first quarter of 2019 and increased 18.0% compared to $5.53 billion for the second of 2018.

Average interest-earning assets for the second quarter of 2019 increased to $8.67 billion compared to $8.09 billion for the first quarter of 2019 and $6.98 billion for the second quarter of 2018.  Average interest-earning assets for the first six months of 2019 increased to $8.38 billion from $6.98 billion in the same period of 2018, a 20.0% increase.

Total deposits were $7.83 billion at June 30, 2019, an increase from $7.76 billion at March 31, 2019 and $6.16 billion at June 30, 2018.  The Company remains funded primarily through core deposits with significant market share in its core markets.

Net Interest Margin and Net Interest Income

Net interest income was $73.4 million in the second quarter of 2019 compared to $68.4 million in the first quarter of 2019 and $60.4 million in the second quarter of 2018.  Net interest income was $141.8 million for the first six months of 2019 compared to $120.1 million for the same period of 2018.  Higher aggregate yields from loan production partially offset increases in funding costs. Funding costs have increased primarily due to resetting of time deposit rates to reflect market increases and additional borrowings in conjunction with the Banc Ed acquisition. Net purchase accounting accretion and amortization included in interest income and interest expense was $3.5 million for the second quarter of 2019, an increase from $3.0 million for the first quarter of 2019 and second quarter of 2018.  Net purchase accounting accretion and amortization included in interest income and interest expense for the first six months of 2019 was $6.5 million compared to $6.4 million for the same period of 2018.

Net interest margin for the second quarter of 2019 was 3.43%, compared to 3.46% for the first quarter of 2019 and 3.50% for the second quarter of 2018.  Adjusted net interest margin1 for the second quarter of 2019 was 3.27%, compared to 3.31% for the first quarter of 2019 and 3.33% in the second quarter of 2018.  Net interest margin for the first six months of 2019 was 3.45% compared to 3.50% for the first six months of 2018.  Adjusted net interest margin1 for the first six months of 2019 was 3.29%, a decrease from 3.32% for the same period of 2018.

Asset Quality

Non-performing loans totaled $33.1 million as of June 30, 2019 compared to $36.6 million as of March 31, 2019 and $26.4 million as of June 30, 2018. Continued disciplined credit management resulted in non-performing loans as a percentage of total loans of 0.51% at June 30, 2019 as compared to 0.56% at March 31, 2019 and 0.66% at December 31, 2018.
The Company recorded net charge-offs of $2.1 million for the second quarter of 2019. The allowance for loan loss as a percentage of portfolio loans was 0.79% at June 30, 2019 as compared to 0.78% at March 31, 2019 and 0.96% at June 30, 2018. The decline in the allowance coverage ratio in 2019 is primarily attributed to the Banc Ed acquisition.  Acquired loans are initially recorded at their acquisition date fair value so a separate allowance is not initially recognized.  An allowance is recorded subsequent to acquisition to the extent the reserve requirement exceeds the recorded fair value adjustment. The Company recorded provision for loan losses of $2.5 million in the second quarter of 2019, compared to $2.1 million in the first quarter of 2019 and $2.3 million in the second quarter of 2018.  The Company recorded provision for loan losses of $4.6 million in the first six months of 2019 and $3.3 million in the first six months of 2018.





1 A Non-GAAP financial measure. See “Non-GAAP Financial Information” below for reconciliation.


Asset Quality1
 
(dollars in thousands)
 
As of and for the Three Months Ended
 
   
June 30,
   
March 31,
   
December 31,
   
September 30,
   
June 30,
 
   
2019
   
2019
   
2018
   
2018
   
2018
 
                               
Portfolio loans
 
$
6,532,126
   
$
6,515,081
   
$
5,568,428
   
$
5,623,741
   
$
5,555,287
 
Non-performing loans
                                       
     Non-accrual loans
   
32,816
     
36,230
     
34,997
     
40,395
     
25,215
 
     Loans 90+ days past due
   
258
     
356
     
1,601
     
364
     
1,142
 
Non-performing loans, segregated by geography
                                       
     Illinois/ Indiana
   
24,509
     
28,847
     
28,319
     
33,699
     
21,534
 
     Missouri
   
7,778
     
6,593
     
7,242
     
6,222
     
3,338
 
     Florida
   
787
     
1,146
     
1,037
     
838
     
1,485
 
Loans 30-89 days past due
   
18,040
     
10,780
     
7,121
     
8,189
     
10,017
 
Other non-performing assets
   
936
     
921
     
376
     
1,093
     
3,694
 
Non-performing assets to portfolio loans and non-performing assets
   
0.52
%
   
0.58
%
   
0.66
%
   
0.74
%
   
0.54
%
Allowance as a percentage of non-performing loans
   
155.33
%
   
139.17
%
   
138.39
%
   
129.40
%
   
202.24
%
Allowance for loan losses to portfolio loans
   
0.79
%
   
0.78
%
   
0.91
%
   
0.94
%
   
0.96
%
Net charge-offs
   
2,057
     
1,844
     
2,500
     
1,320
     
1,602
 
Provision for loan losses
   
2,517
     
2,111
     
405
     
758
     
2,258
 
                                         
1 Results are unaudited.
                 

Non-Interest Income

Total non-interest income of $27.9 million for the second quarter of 2019 increased as compared to $25.9 million in the first quarter of 2019 and $22.8 million in the second quarter of 2018. Second quarter of 2019 included $1.0 million of net security losses, primarily related to unrealized losses on an equity security.

Revenues from trust fees, commissions and brokers’ fees, and remittance processing activities represented 47.3% of the Company’s non-interest income for the quarter ended June 30, 2019, providing a balance to revenue from traditional banking activities.

Trust fees and commissions and brokers’ fees were $9.5 million for the second quarter of 2019, an increase from $9.0 million for the first quarter 2019 and from $7.6 million for the second quarter of 2018. Trust fees and commissions and brokers’ fees increased to $18.5 million for the first six months of 2019 compared to $16.2 million for the first six months of 2018. Net income from the wealth management segment was $2.8 million for the second quarter of 2019 compared to $2.6 million in the first quarter of 2019 and $2.3 million in the second quarter of 2018.  Net income from the wealth management segment for the six months ended June 30, 2019 was $5.5 million compared to $5.1 million for the same period of 2018, an 8.6% increase. First Busey’s wealth management division ended the second quarter of 2019 with $8.97 billion in assets under care.

Remittance processing revenue from the Company’s subsidiary, FirsTech, of $3.7 million for the second quarter of 2019 was down slightly compared to $3.8 million in the first quarter of 2019 but increased from $3.6 million for the second quarter of 2018.  Remittance processing revenue for the six months ended June 30, 2019 was $7.5 million, an increase of 7.7%, compared to $7.0 million during the same period of 2018. The FirsTech operating segment generated net income of $1.1 million for the second quarter of 2019 and $2.1 million for the first six months of 2019.

The mortgage line of business generated $2.9 million of revenue in the second quarter of 2019, an increase compared to $1.9 million of revenue in the first quarter of 2019 and $1.6 million of revenue in the second quarter of 2018, following a long period of restructuring and additional revenue from TheBANK.  Mortgage revenue for the first six months of 2019 was $4.8 million, an increase over the comparable period of 2018 of $3.2 million.


Operating Efficiency

The efficiency ratio was 63.62% for the quarter ended June 30, 2019 compared to 57.99% for the quarter ended March 31, 2019 and 54.82% for the quarter ended June 30, 2018. The adjusted efficiency ratio1 was 56.55% for the quarter ended June 30, 2019, 56.43% for the quarter ended March 31, 2019, and 53.67% for the quarter ended June 30, 2018.  The efficiency ratio for the first six months of 2019 was 60.92% compared to 57.30% for the first six months of 2018. The adjusted efficiency ratio1 was 56.49% for the first six months of 2019 compared to 54.60% for the first six months of June 30, 2018.  The Company remains focused on expense discipline.

Specific areas of non-interest expense are as follows:

 Salaries, wages and employee benefits were $34.3 million in the second quarter of 2019, an increase from $32.3 million in the first quarter of 2019 and $25.5 million from the second quarter of 2018.  The increase from prior quarter is primarily related to the inclusion of a full quarter of salaries, wages and employee benefit expenses related to TheBANK.  In the first six months of 2019, salaries, wages and employee benefits increased to $66.6 million compared to $54.3 million for the same period of 2018.  Total full time equivalents (“FTE”) at June 30, 2019 was 1,579 compared to 1,589 at March 31, 2019 and 1,288 at June 30, 2018. Included in the June 30, 2019 FTE is 316 FTE of TheBANK.

 Data processing expense in the second quarter of 2019 of $5.6 million increased compared to $4.4 million in the first quarter of 2019 and $4.0 million in the second quarter of 2018.  In the first six months of 2019, data processing expense increased to $10.0 million compared to $8.4 million for the same period of 2018.  Variances are related to payment of conversion expenses and data processing related to TheBANK.

Capital Strength

The Company's strong capital levels, coupled with its earnings, has allowed First Busey to provide a steady return to its stockholders through dividends.  The Company will pay a cash dividend on July 26, 2019 of $0.21 per common share to stockholders of record as of July 19, 2019.  The Company has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

As of June 30, 2019, the Company continued to exceed the capital adequacy requirements necessary to be considered “well-capitalized” under applicable regulatory guidelines. The Company’s tangible stockholders’ common equity1 (“TCE”) increased to $845.4 million at June 30, 2019, compared to $826.2 million at March 31, 2019 and $663.1 million at June 30, 2018. TCE represented 9.13% of tangible assets at June 30, 2019, compared to 9.00% at March 31, 2019 and 8.86% at June 30, 2018.3

In addition, during the second quarter of 2019, the Company purchased 333,334 shares of its common stock at $25.30 per share for a total of $8.4 million under the Company’s stock repurchase plan.  At June 30, 2019, the Company held 524,097 shares in treasury and had 1,000,000 shares available to be purchased under the plan. The Company grants share-based compensation awards to its employees and members of its board of directors as provided for under the Company’s 2010 Equity Incentive Plan, under which, the Company may source stock option exercises and grants of restricted stock units and deferred stock units from its inventory of treasury stock.  Repurchases were executed in contemplation of maintaining levels of treasury stock appropriate to satisfy compensation awards, in addition to favorable pricing during the second quarter of 2019.





1 A Non-GAAP financial measure. See “Non-GAAP Financial Information” below for reconciliation.


Corporate Profile

As of June 30, 2019, First Busey Corporation (Nasdaq: BUSE) was a $9.61 billion financial holding company headquartered in Champaign, Illinois.

Busey Bank, a wholly-owned bank subsidiary with total assets of $7.66 billion as of June 30, 2019, is headquartered in Champaign, Illinois and has 44 banking centers serving Illinois, 13 banking centers in the St. Louis, Missouri metropolitan area, five banking centers serving southwest Florida and a banking center in Indianapolis, Indiana.  Through the Busey Wealth Management division, the Company provides asset management, investment and fiduciary services to individuals, businesses and foundations.  As of June 30, 2019, assets under care were approximately $7.47 billion. 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 Bank was named among Forbes’ 2019 Best-In-State Banks—one of five in Illinois and 173 from across the country, equivalent to 2.8% of all banks. Best-In-State Banks are awarded for exceptional customer experiences as determined by a survey sample of 25,000+ banking customers who rated banks on trust, terms and conditions, branch services, digital services and financial advice.

TheBANK of Edwardsville, a wholly-owned bank subsidiary of the Company with total assets of $1.95 billion as of June 30, 2019, is headquartered in Edwardsville, Illinois and has 19 banking centers.  Through TheBANK of Edwardsville Wealth Management division, the Company provides asset management, investment and fiduciary services to individuals, businesses and foundations.  As of June 30, 2019, assets under care were approximately $1.50 billion.

For more information about us, visit busey.com and 4thebank.com.

Contacts:

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




Non-GAAP Financial Information

This earnings 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 adjusted return on average tangible 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 directly comparable GAAP financial measures, for example, – 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-recurring non-interest items and provide 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,
2019
   
March 31,
2019
   
June 30,
2018
   
June 30,
2019
   
June 30,
2018
 
Net income
 
$
24,085
   
$
25,469
   
$
24,862
   
$
49,554
   
$
46,779
 
Acquisition expenses
                                       
     Salaries, wages and employee benefits
   
43
     
-
     
-
     
43
     
1,233
 
     Data processing
   
327
     
7
     
34
     
334
     
406
 
     Lease impairment
   
415
     
-
     
-
     
415
     
-
 
     Other (includes professional and legal)
   
3,293
     
1,205
     
107
     
4,498
     
2,057
 
Other restructuring costs
                                       
     Salaries, wages and employee benefits
   
275
     
-
     
-
     
275
     
417
 
     Fixed asset impairment
   
-
     
-
     
817
     
-
     
817
 
     Data processing
   
292
     
100
     
-
     
392
     
-
 
     Other (includes professional and legal)
   
826
     
167
     
-
     
993
     
-
 
MSR Valuation
   
1,822
     
-
     
-
     
1,822
     
-
 
Related tax benefit
   
(1,880
)
   
(334
)
   
(230
)
   
(2,214
)
   
(1,197
)
Adjusted net income
 
$
29,498
   
$
26,614
   
$
25,590
   
$
56,112
   
$
50,512
 
                                         
Average total assets
 
$
9,522,678
   
$
8,865,642
   
$
7,653,541
   
$
9,198,975
   
$
7,658,691
 
                                         
Reported: Return on average assets1
   
1.01
%
   
1.17
%
   
1.30
%
   
1.09
%
   
1.23
%
Adjusted: Return on average assets 1
   
1.24
%
   
1.22
%
   
1.34
%
   
1.23
%
   
1.33
%
                                         
1 Annualized measure.
 



Reconciliation of Non-GAAP Financial Measures – Adjusted Net Interest Margin
 
(dollars in thousands)
 
               
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
2019
   
March 31,
2019
   
June 30,
2018
   
June 30,
2019
   
June 30,
2018
 
                               
Reported: Net interest income
 
$
73,428
   
$
68,383
   
$
60,372
   
$
141,811
   
$
120,129
 
        Tax-equivalent adjustment
   
777
     
677
     
561
     
1,454
     
1,139
 
         Purchase accounting accretion
   
(3,471
)
   
(2,994
)
   
(3,015
)
   
(6,465
)
   
(6,425
)
Adjusted: Net interest income
 
$
70,734
   
$
66,066
   
$
57,918
   
$
136,800
   
$
114,843
 
                                         
Average interest-earning assets
 
$
8,666,136
   
$
8,088,396
   
$
6,984,486
   
$
8,378,862
   
$
6,980,457
 
                                         
Reported: Net interest margin1
   
3.43
%
   
3.46
%
   
3.50
%
   
3.45
%
   
3.50
%
Adjusted: Net Interest margin1
   
3.27
%
   
3.31
%
   
3.33
%
   
3.29
%
   
3.32
%
                                         
1 Annualized measure.
                                       


Reconciliation of Non-GAAP Financial Measures – Adjusted Efficiency Ratio
 
(dollars in thousands)
 
                               
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
2019
   
March 31,
2019
   
June 30,
2018
   
June 30,
2019
   
June 30,
2018
 
Reported: Net Interest income
 
$
73,428
   
$
68,383
   
$
60,372
   
$
141,811
   
$
120,129
 
   Tax- equivalent adjustment
   
777
     
677
     
561
     
1,454
     
1,139
 
Tax equivalent interest income
 
$
74,205
   
$
69,060
   
$
60,933
   
$
143,265
   
$
121,268
 
                                         
Reported: Non-interest income
   
27,896
     
25,945
     
22,802
     
53,841
     
45,288
 
   Security (losses) gains, net
   
(1,026
)
   
42
     
160
     
(984
)
   
160
 
Adjusted: Non-interest income
 
$
28,922
   
$
25,903
   
$
22,642
   
$
54,825
   
$
45,128
 
                                         
Reported: Non-interest expense
   
68,020
     
57,163
     
47,305
     
125,183
     
98,345
 
   Amortization of intangible assets
   
(2,412
)
   
(2,094
)
   
(1,490
)
   
(4,506
)
   
(3,005
)
   Non-operating adjustments:
                                       
       Salaries, wages and employee benefits
   
(318
)
   
-
     
-
     
(318
)
   
(1,650
)
       Data processing
   
(619
)
   
(107
)
   
(34
)
   
(726
)
   
(406
)
       Other
   
(6,356
)
   
(1,372
)
   
(924
)
   
(7,728
)
   
(2,429
)
Adjusted: Non-interest expense
 
$
58,315
   
$
53,590
   
$
44,857
   
$
111,905
   
$
90,855
 
                                         
Reported: Efficiency ratio
   
63.62
%
   
57.99
%
   
54.82
%
   
60.92
%
   
57.30
%
Adjusted: Efficiency ratio
   
56.55
%
   
56.43
%
   
53.67
%
   
56.49
%
   
54.60
%


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)
 
                   
   
As of and for the Three Months Ended
 
   
June 30,
2019
   
March 31,
2019
   
June 30,
2018
 
                   
Total assets
 
$
9,612,667
   
$
9,537,334
   
$
7,775,544
 
   Goodwill and other intangible assets, net
   
(375,327
)
   
(377,739
)
   
(303,407
)
   Tax effect of other intangible assets, net
   
17,075
     
17,751
     
9,288
 
Tangible assets
 
$
9,254,415
   
$
9,177,346
   
$
7,481,425
 
                         
Total stockholders’ equity
   
1,203,608
     
1,186,141
     
957,182
 
   Goodwill and other intangible assets, net
   
(375,327
)
   
(377,739
)
   
(303,407
)
   Tax effect of other intangible assets, net
   
17,075
     
17,751
     
9,288
 
Tangible common equity
 
$
845,356
   
$
826,153
   
$
663,063
 
                         
Ending number of common shares outstanding
   
55,386,636
     
55,624,627
     
48,776,404
 
                         
Tangible common equity to tangible assets1
   
9.13
%
   
9.00
%
   
8.86
%
Tangible book value per share
 
$
14.95
   
$
14.53
   
$
13.40
 
                         
Average common equity
 
$
1,195,802
   
$
1,109,872
   
$
944,131
 
   Average goodwill and intangibles, net
   
(376,851
)
   
(352,587
)
   
(304,379
)
Average tangible common equity
 
$
818,951
   
$
757,285
   
$
639,752
 
                         
Reported: Return on average tangible common equity2
   
11.80
%
   
13.64
%
   
15.59
%
Adjusted: Return on average tangible common equity2,3
   
14.45
%
   
14.25
%
   
16.04
%
                         
   
Six Months Ended
         
   
June 30,
2019
   
June 30,
2018
         
Average stockholders' common equity
 
$
1,153,075
   
$
938,975
         
   Average goodwill and intangibles, net
   
(364,786
)
   
(305,666
)
       
Average tangible stockholders' common equity
 
$
788,289
   
$
633,309
         
                         
Reported: Return on average tangible common equity2
   
12.68
%
   
14.90
%
       
Adjusted: Return on average tangible common equity2,3
   
14.35
%
   
16.08
%
       
                         
1 Tax-effected measure.
                       
2 Annualized measure.
                       
3 Calculated using adjusted net income.
                       

Special Note Concerning Forward-Looking Statements
Statements made in this document, 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, state, national and international economy (including the impact of tariffs, a U.S. withdrawal from or significant negotiation of trade agreements, trade wars and other changes in trade regulations); (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 the acquisition and the possibility that the 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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