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CST: 21/08/2019 10:24:36   

First Busey Corporation Records Fourth Quarter 2018 Net Income of $25.3 Million

203 Days ago

CHAMPAIGN, Ill., Jan. 29, 2019 (GLOBE NEWSWIRE) -- (Nasdaq: BUSE)

Message from our President & CEO

             

Fourth quarter 2018 results compared to the fourth quarter of the prior year:             

  • Adjusted net income1 of $26.0 million, as compared to $22.5 million
  • Earnings per diluted common share of $0.51, as compared to $0.25
  • Tangible book value per common share of $14.21, as compared to $12.88
  • Net income for wealth management division of $2.0 million, as compared to $1.5 million
  • Net income for FirsTech Inc. (“FirsTech”) of $0.8 million, as compared to $0.4 million
  • Return on average assets of 1.28%, as compared to 0.64%
  • Based on adjusted net income1, return on average assets of 1.31%, as compared to 1.17%


First Busey Corporation’s (“First Busey” or the “Company”) net income for the fourth quarter of 2018 was $25.3 million, or $0.51 per diluted common share, as compared to $26.9 million, or $0.55 per diluted common share, for the third quarter of 2018 and $12.3 million, or $0.25 per diluted common share, for the fourth quarter of 2017. Adjusted net income1 for the fourth quarter of 2018 was $26.0 million, or $0.53 per diluted common share, as compared to $27.0 million, or $0.55 per diluted common share, for the third quarter of 2018 and $22.5 million, or $0.46 per diluted common share, for the fourth quarter of 2017. Net income for the fourth quarter of 2017 was impacted by a non-recurring, non-cash charge of $8.1 million, or $0.16 per diluted common share, due to the revaluation of the Company’s net deferred tax position following the enactment of the Tax Cuts and Jobs Act (the “TCJA”).

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 fourth quarter of 2018 were $0.3 million of expenses related to acquisitions and $0.6 million of expenses related to restructuring costs. 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 year ended December 31, 2018, net income was $98.9 million, an increase of $36.2 million compared to $62.7 million for the year ended 2017. Earnings per diluted common share were $2.01 for the year ended December 31, 2018 as compared to $1.45 for the year ended December 31, 2017. Adjusted net income1 for the year ended December 31, 2018 was $103.5 million, or $2.10 per diluted common share, as compared to $75.7 million, or $1.75 per diluted common share for 2017. The 2018 annual results were favorably impacted by the prior year acquisitions of First Community Financial Partners Inc., the holding company of First Community Financial Bank (“First Community”), and Mid Illinois Bancorp, Inc., the holding company of South Side Trust & Savings Bank of Peoria (“South Side”).

For the fourth quarter of 2018, annualized return on average assets and annualized return on average tangible common equity were 1.28% and 14.80%, respectively. Based on adjusted net income1, return on average assets was 1.31% and return on average tangible common equity was 15.19% for the fourth quarter of 2018.

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

For the year ended December 31, 2018, return on average assets was 1.28%, an increase from 1.00% for the year ended 2017. Based on adjusted net income1, return on average assets for the year ended December 31, 2018 was 1.34% compared to 1.20% for the year ended 2017. Return on average tangible common equity was 15.20% for the year ended December 31, 2018 compared to 11.61% for the same period of 2017. Return on average tangible common equity based on adjusted net income1 was 15.89% for the year ended December 31, 2018, compared to 14.00% for the same period of 2017.

Additional fourth quarter 2018 highlights include:

  • Non-interest income increased to $22.9 million as compared to $21.9 million for the third quarter 2018.  The increase in non-interest income was driven, in part, by the wealth management division and FirsTech. which generated $7.5 million and $3.8 million of revenue in the fourth quarter 2018, respectively.
  • Total deposits at December 31, 2018 grew to $6.25 billion driven by a linked quarter increase of $26.6 million in non-interest bearing deposits.
  • Continued disciplined credit management resulted in a decline in non-accrual loans to $35.0 million at December 31, 2018, as compared to $40.4 million as of September 30, 2018.  Non-performing assets as a percentage of total loans plus non-performing assets was 0.66% at December 31, 2018 as compared to 0.74% at September 30, 2018.

In the first quarter of 2019, the Company expects to close its acquisition of The Banc Ed Corp. (“Banc Ed”), the holding company for TheBANK of Edwardsville (“TheBANK”). TheBANK, founded in 1868, is a privately held commercial bank headquartered in Edwardsville, Illinois. As of December 31, 20182, Banc Ed held total consolidated assets of $1.76 billion, total loans of $902.1 million and total deposits of $1.47 billion.

Under the terms of the merger agreement, Banc Ed’s stockholders will have the right to receive 8.2067 shares of common stock of the Company and $111.53 in cash for each share of common stock of Banc Ed, with total consideration to consist of approximately 70% stock and 30% cash. It is anticipated that TheBANK will be merged with and into the Company’s bank subsidiary, Busey Bank, at a date following the completion of the holding company merger. At the time of the bank merger, TheBANK’s banking centers will become branches of Busey Bank. Please reference the Company’s Form 8-K, filed on August 22, 2018, for additional information regarding our pending acquisition of Banc Ed.

The pending Banc Ed transaction fits with our acquisition strategy as the addition of TheBANK will grow the Company’s current geographic footprint, allowing the Company to serve customers by expanding in the St. Louis Missouri-Illinois Metropolitan Statistical Area and significantly adding to the Company’s wealth management business. We are pleased to welcome our Banc Ed colleagues into the Busey family and feel confident that this transaction and our continued efforts will lead to growth and profitability in 2019.

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

2 Results are unaudited.

SELECTED FINANCIAL HIGHLIGHTS 1        
(dollars in thousands, except per share data)        
  As of and for the As of and for the
  Three Months Ended Year Ended
  December 31, September 30, December 31, December 31, December 31,
  2018 2018 2017 2018 2017
EARNINGS & PER SHARE DATA          
Net income $   25,290   $   26,859   $   12,293   $   98,928   $   62,726  
Revenue2   83,184     82,627     86,607     331,068     286,697  
Diluted earnings per share   0.51     0.55     0.25     2.01     1.45  
Cash dividends paid per share   0.20     0.20     0.18     0.80     0.72  
           
Net income by operating segment          
  Banking $   24,134   $   26,486   $   16,158   $   97,369   $     65,704  
  Remittance Processing   814     957     440     3,710     2,007  
  Wealth Management   2,040     2,280     1,469     9,372     6,229  
           
AVERAGE BALANCES          
Cash and cash equivalents $   272,811   $   238,000   $   256,626   $   239,149   $   224,648  
Investment securities   1,443,054     1,417,708     1,223,103     1,370,460     964,749  
Loans held for sale   23,380     28,661     109,336     29,666     119,936  
Portfolio loans   5,540,852     5,551,753     5,457,077     5,533,549     4,567,259  
Interest-earning assets   7,174,755     7,132,324     6,932,750     7,067,710     5,784,408  
Total assets   7,846,154     7,802,308     7,632,019     7,742,142     6,294,105  
           
Non-interest bearing deposits   1,486,977     1,492,709     1,516,233     1,492,242     1,252,363  
Interest-bearing deposits   4,852,649     4,784,657     4,434,492     4,707,289     3,760,473  
Total deposits   6,339,626     6,277,366     5,950,725     6,199,531     5,012,836  
Securities sold under agreements to repurchase   210,416     234,729     294,389     234,239     213,527  
Interest-bearing liabilities   5,329,898     5,303,632     5,126,815     5,247,017     4,257,544  
Total liabilities   6,866,652     6,840,484     6,699,840     6,787,193     5,554,280  
Stockholders' common equity   979,502     961,824     932,179     954,949     739,825  
Tangible stockholders' common equity3   678,023     658,910     622,952     651,032     540,406  
           
PERFORMANCE RATIOS          
Return on average assets4   1.28 %   1.37 %   0.64 %   1.28 %   1.00 %
Return on average common equity4   10.24 %   11.08 %   5.23 %   10.36 %   8.48 %
Return on average tangible common equity3,6   14.80 %   16.17 %   7.83 %   15.20 %   11.61 %
Net interest margin5,6   3.38 %   3.41 %   3.68 %   3.45 %   3.58 %
Efficiency ratio6   56.57 %   53.47 %   58.69 %   56.16 %   58.27 %
Non-interest revenue as a % of total revenues2   27.27 %   26.45 %   27.20 %   27.08 %   29.07 %
           
1 Results are unaudited.
2 Revenues consist of net interest income plus non-interest income, net of 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 Quarterly data is annualized.
5 On a tax-equivalent basis, assuming an income tax rate of 21% for 2018 and 35% for 2017.
6  See “Non-GAAP Financial Information” below for reconciliation.






Condensed Consolidated Balance Sheets1
 

As of
(dollars in thousands, except per share data ) December 31, September 30, June 30, March 31, December 31,
    2018     2018     2018     2018     2017  
Assets          
Cash and cash equivalents $   239,973   $   160,652   $   230,730   $   367,525   $   353,272  
Investment securities   1,312,514     1,496,948     1,384,807       1,286,136     1,321,610  
           
Loans held for sale   25,895     32,617     33,974     29,034     94,848  
           
Commercial loans   4,060,126     4,141,816     4,076,253     4,061,181     4,030,821  
Retail real estate and retail other loans    1,508,302     1,481,925     1,479,034     1,470,272     1,488,679  
Portfolio loans $   5,568,428   $   5,623,741   $   5,555,287   $  5,531,453   $   5,519,500  
           
Allowance for loan losses   (50,648 )   (52,743 )   (53,305 )    (52,649 )   (53,582 )
Premises and equipment   117,672     119,162     119,835     118,985     116,913  
Goodwill and other intangibles   300,558     301,963     303,407     304,897     308,073  
Other assets   187,965     207,045     200,809     193,365     200,006  
Total assets $   7,702,357   $   7,889,385   $   7,775,544   $   7,778,746   $   7,860,640  
           
Liabilities & Stockholders' Equity          
Non-interest bearing deposits $   1,464,700   $   1,438,054   $   1,496,671   $   1,651,333   $   1,597,421  
Interest-bearing checking, savings, and money market deposits   3,287,618     3,205,232     3,192,735     3,270,963     3,192,382  
Time deposits   1,497,003     1,552,283     1,474,506     1,408,878     1,336,162  
Total deposits $   6,249,321   $   6,195,569   $   6,163,912   $   6,331,174   $   6,125,965  
           
Securities sold under agreements to repurchase   185,796     255,906     240,109     235,311     304,566  
Short-term borrowings   -     200,000     150,000     -     220,000  
Long-term debt   148,686     148,626     154,125     154,122     154,119  
Junior subordinated debt owed to unconsolidated trusts   71,155     71,118     71,081     71,044     71,008  
Other liabilities   52,435     46,026     39,135     44,949     49,979  
Total liabilities $   6,707,393   $   6,917,245   $   6,818,362   $   6,836,600   $   6,925,637  
Total stockholders' equity $   994,964   $   972,140   $   957,182   $   942,146   $   935,003  
Total liabilities & stockholders' equity $   7,702,357   $   7,889,385   $   7,775,544   $   7,778,746   $   7,860,640  
           
Share Data          
Book value per common share $   20.36   $   19.90   $   19.62   $   19.34   $   19.21  
Tangible book value per common share2 $   14.21   $   13.72   $   13.40   $  13.08   $   12.88  
Ending number of common shares outstanding   48,874,836     48,860,309     48,776,404     48,717,239     48,684,943  
   
1 Results are unaudited except for amounts reported as of December 31, 2017.
See “Non-GAAP Financial Information” below for reconciliation.




Condensed Consolidated Statements of Income 1
       
(dollars in thousands, except per share data)      
  For the   For the
  Three Months Ended December 31,   Year Ended December 31,
    2018   2017     2018   2017
           
Interest and fees on loans held for sale and portfolio loans $   64,410 $   64,048   $   251,249 $   202,643
Interest on investment securities   9,904   6,799     34,784   21,659
Total interest income $   74,314 $   70,847   $   286,033 $   224,302
           
Interest on deposits   10,764   4,874     32,601   12,932
Interest on short-term borrowings   766   935     3,162   2,074
Interest on long-term debt   1,414   1,323     5,614   3,404
Interest on junior subordinated debt owed to unconsolidated trusts   867   669     3,250   2,526
Total interest expense $   13,811 $   7,801   $   44,627 $   20,936
           
Net interest income $   60,503 $   63,046   $   241,406 $   203,366
Provision for loan losses   405   2,809     4,429   5,303
Net interest income after provision for loan losses $   60,098 $   60,237   $   236,977 $   198,063
           
Trust fees   6,611   6,577     27,184   23,665
Commissions and brokers' fees, net   930   1,133     3,790   3,372
Fees for customer services   7,303   7,183     28,879   25,841
Remittance processing   3,757   2,846     14,345   11,427
Mortgage revenue   1,057   2,710     5,545   11,140
Security gains, net   171   -     331   1,143
Other   3,023   3,112     9,919   7,886
Total non-interest income $   22,852 $   23,561   $   89,993 $   84,474
           
Salaries, wages and employee benefits   27,529   28,185     107,844   95,633
Net occupancy expense of premises   3,532   3,805     14,803   13,830
Furniture and equipment expense   1,815   1,966     7,233   7,089
Data processing   3,992   5,368     16,383   16,716
Amortization of intangible assets   1,404   1,570     5,854   5,245
Other   10,497   12,206     40,926   35,913
Total non-interest expense $   48,769 $   53,100   $   193,043 $   174,426
           
Income before income taxes $   34,181 $   30,698   $   133,927 $   108,111
Income taxes   8,891   18,405     34,999   45,385
Net income $   25,290 $   12,293   $   98,928 $   62,726
           
Per Share Data          
Basic earnings per common share $   0.52 $   0.25   $   2.02 $   1.47
Diluted earnings per common share $   0.51 $   0.25   $   2.01 $   1.45
Diluted average common shares outstanding   49,225,480   49,085,648     49,215,455   43,126,245
           
1 Results are unaudited except for amounts reported as of December 31, 2017.



Balance Sheet Growth

At December 31, 2018, portfolio loans were $5.57 billion, as compared to $5.62 billion as of September 30, 2018 and $5.52 billion as of December 31, 2017. The change in portfolio loan balance was driven by continued high level of payoffs. Average portfolio loans increased 21.2% to $5.53 billion for the year ended December 31, 2018 compared to $4.57 billion for the year ended December 31, 2017.

Average interest-earning assets for the three months ended December 31, 2018 increased to $7.18 billion compared to $7.13 billion for the three months ended September 30, 2018 and $6.93 billion for the three months ended December 31, 2017. Average interest-earning assets for the year ended December 31, 2018 increased to $7.07 billion from $5.78 billion for the year ended 2017, a 22.2% increase.

Total deposits were $6.25 billion at December 31, 2018, an increase from $6.20 billion at September 30, 2018 and $6.13 billion at December 31, 2017. 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 $60.5 million in the fourth quarter of 2018 compared to $60.8 million in the third quarter of 2018 and $63.0 million in the fourth quarter of 2017. Higher yields on fourth quarter loan production partially offset the increase in funding costs. Net interest income for the year ended December 31, 2018 was $241.4 million compared to $203.4 million for the year ended 2017, an 18.7% increase. Net purchase accounting accretion and amortization included in interest income and interest expense was $1.9 million for the fourth quarter of 2018, a decrease from $2.3 million for the third quarter of 2018 and $5.8 million for the fourth quarter of 2017.  Net purchase accounting accretion and amortization included in interest income and interest expense for the year ended December 31, 2018 was $10.6 million compared to $12.5 million for the year ended 2017.

Net interest margin for the fourth quarter of 2018 was 3.38%, compared to 3.41% for the third quarter of 2018 and 3.68% for the fourth quarter of 2017.  Net of purchase accounting accretion and amortization, net interest margin for the fourth quarter of 2018 was 3.27%, compared to 3.29% for the third quarter of 2018 and 3.34% for the fourth quarter of 2017. Net interest margin for the year ended December 31, 2018 was 3.45% compared to 3.58% for the year ended December 31, 2017. Net of purchase accounting accretion and amortization, net interest margin for the year ended December 31, 2018 was 3.30%, compared to 3.36% for the same period of 2017.

Asset Quality

As of December 31, 2018, non-performing loans totaled $36.6 million, compared to $40.8 million as of September 30, 2018, and $27.4 million as of December 31, 2017. Non-performing loans were 0.66% of total portfolio loans as of December 31, 2018, compared to 0.72% as of September 30, 2018 and 0.50% as of December 31, 2017.

The Company recorded net charge-offs of $2.5 million for the fourth quarter of 2018. The $2.5 million net charge-off in the fourth quarter was predominately related to a single note which was resolved via the sale of the note in the fourth quarter of 2018. The allowance for loan loss as a percentage of portfolio loans was 0.91% at December 31, 2018 as compared to 0.94% at September 30, 2018 and 0.97% at December 31, 2017. The Company recorded provision for loan losses of $0.4 million in the fourth quarter of 2018, compared to $0.8 million in the third quarter of 2018 and $2.8 million in the fourth quarter of 2017. The Company recorded provision for loan losses of $4.4 million for the year ended December 31, 2018 and $5.3 million for the year ended December 31, 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.

Asset Quality1
(dollars in thousands) As of and for the Three Months Ended
  December 31, September 30, June 30, March 31, December 31,
    2018     2018     2018     2018     2017  
           
Portfolio loans $   5,568,428   $   5,623,741   $   5,555,287   $   5,531,453   $   5,519,500  
Non-performing loans          
   Non-accrual loans   34,997     40,395     25,215     32,588     24,624  
   Loans 90+ days past due   1,601     364     1,142     995     2,741  
Non-performing loans, segregated by geography          
   Illinois/ Indiana    28,319     33,699     21,534     28,743     23,093  
   Missouri   7,242     6,222     3,338     3,641     2,964  
   Florida   1,037     838     1,485     1,199     1,308  
Loans 30-89 days past due   7,121     8,189     10,017     9,506     12,897  
Other non-performing assets   376     1,093     3,694     1,001     1,283  
Non-performing assets to portfolio loans and non-performing assets   0.66 %   0.74 %   0.54 %   0.63 %   0.52 %
Allowance as a percentage of non-performing loans   138.39 %   129.40 %   202.24 %   156.77 %   195.80 %
Allowance for loan losses to portfolio loans   0.91 %   0.94 %   0.96 %   0.95 %   0.97 %
Net charge-offs   2,500     1,320     1,602     1,941     262  
Provision for loan losses   405     758     2,258     1,008     2,809  
           
1 Results are unaudited.    


Fee-based Businesses

Revenues from trust fees, commissions and brokers’ fees, and remittance processing activities represented 49.5% of the Company’s non-interest income for the quarter ended December 31, 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 $7.5 million for the fourth quarter of 2018 increased from $7.2 million for the third quarter 2018 and decreased slightly from $7.7 million for the fourth quarter of 2017. Trust fees and commissions and brokers’ fees increased to $31.0 million for the year ended December 31, 2018 compared to $27.0 million for the year ended December 31, 2017. Net income from the wealth management segment was $2.0 million for the fourth quarter of 2018 a decrease from $2.3 million in the third quarter of 2018 but an increase from $1.5 million from the fourth quarter of 2017. Net income from the wealth management segment for the year ended December 31, 2018 was $9.4 million compared to $6.2 million for the same period of 2017, a 50.5% increase. The wealth management line of business continues to build upon recent acquisitions, expanding market share. First Busey’s wealth management division ended the fourth quarter of 2018 with $7.12 billion in assets under care.

Remittance processing revenue from the Company’s subsidiary, FirsTech, of $3.8 million for the fourth quarter of 2018 increased from $3.6 million for the third quarter of 2018 and $2.8 million for the fourth quarter of 2017. Remittance processing revenue for the year ended December 31, 2018 was $14.3 million, an increase of 25.5%, compared to $11.4 million during the same period of 2017. The FirsTech operating segment generated net income of $0.8 million for the fourth quarter of 2018. The positive 2018 results are a reflection of new customer activity and volume increases from existing customers.

The mortgage line of business generated $1.1 million of revenue in the fourth quarter of 2018. Mortgage revenue for the year ended December 31, 2018 was $5.5 million compared to $11.1 million in the same period of 2017. In the fourth quarter 2017, mortgage origination offices obtained in connection with the acquisition of Pulaski Financial Corp. which were outside the Company’s footprint were sold, reducing year over year mortgage revenue.   

Operating Efficiency

The efficiency ratio was 56.57% for the quarter ended December 31, 2018 compared to 53.47% for the quarter ended September 30, 2018 and 58.69% for the quarter ended December 31, 2017. The efficiency ratio for the year ended December 31, 2018 was 56.16% compared to 58.27% for the year ended December 31, 2017. The adjusted efficiency ratio3 was 55.49% for the quarter ended December 31, 2018, 53.26% for the quarter ended September 30, 2018, and 54.74% for the quarter ended December 31, 2017.

Specific areas of non-interest expense are as follows:

  • Salaries, wages and employee benefits were $27.5 million in the fourth quarter of 2018, an increase from $26.0 million in the third quarter of 2018 but a decrease from $28.2 million from the fourth quarter of 2017.In the fourth quarter 2018, the Company recorded specific amounts for severance and other employee related benefit expenses. For the year ended December 31, 2018, salaries, wages and employee benefits were $107.8 million compared to $95.6 million for the same period of 2017, reflecting additions to headcount as a result of recent acquisitions. The company recorded total restructuring costs of $2.3 million in 2018.
     
  • Data processing expense in the fourth quarter of 2018 of $4.0 million remained flat compared to the third quarter of 2018 and reflects a decrease as compared to $5.4 million in the fourth quarter of 2017. For the year ended December 31, 2018, data processing expense decreased to $16.4 million compared to $16.7 million for the same period of 2017.  The decline in data processing expense reflect efficiencies realized as the Company has integrated recent acquisitions.

3 A Non-GAAP financial measure, see “Non-GAAP Financial Information” below for reconciliation.

Capital Strength

The Company's strong capital levels, coupled with its earnings, have allowed First Busey to provide a steady return to its stockholders through dividends.  The Company will pay a cash dividend on February 1, 2019 of $0.21 per common share to stockholders of record as of January 25, 2019, which represents a 5% increase from the previous quarterly dividend. The Company has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

As of December 31, 2018, 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 equity4 (“TCE”) increased to $703.0 million at December 31, 2018, compared to $679.1 million at September 30, 2018 and $638.0 million at December 31, 2017. TCE represented 9.49% of tangible assets at December 31, 2018, compared to 8.94% at September 30, 2018 and 8.43% at December 31, 2017.5

4 Tangible stockholders’ common equity, see “Non-GAAP Financial Information” below for reconciliation.
5 Tangible assets, see “Non-GAAP Financial Information” below for reconciliation.

Corporate Profile

As of December 31, 2018, First Busey Corporation (Nasdaq: BUSE) was a $7.70 billion financial holding company headquartered in Champaign, Illinois. Busey Bank, the wholly-owned bank subsidiary with total assets of $7.69 billion as of December 31, 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. Through the Busey Wealth Management division, the Company provides asset management, investment and fiduciary services to individuals, businesses and foundations. As of December 31, 2018, assets under care were approximately $7.12 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’ 2018 Best-In-State Banks—one of five in Illinois and 124 from across the country, equivalent to 2.2% 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.

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, and tangible common equity to tangible assets. 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 – 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   Year Ended
  December 31,
2018
September 30,
2018
December 31,
2017
  December 31,
2018
December 31,
2017
Net income $   25,290   $   26,859   $   12,293     $   98,928   $   62,726  
Acquisition expenses            
   Salaries, wages and employee benefits   -     -       120       1,233     840  
   Data processing   -     -     1,268       406     2,616  
   Other (includes professional and legal)   262     167     1,569       2,486     3,617  
Other restructuring costs            
   Salaries, wages and employee benefits   640     -     496       1,058     711  
   Fixed asset impairments   -     -       -       817     -  
   Other   -     -     20       -     66  
TCJA related adjustment       8,098       -     8,098  
Related tax benefit   (234 )   (20 )     (1,330 )     (1,451 )   (3,012 )
Adjusted net income $   25,958   $   27,006   $   22,534     $   103,477   $   75,662  
             
Average total assets $   7,846,154   $   7,802,308   $   7,632,019     $   7,742,142   $   6,294,105  
             
Reported: Return on average assets1   1.28 %   1.37 %   0.64 %     1.28 %   1.00 %
Adjusted: Return on average assets 1   1.31 %   1.37 %   1.17 %     1.34 %   1.20 %
             
1 Quarterly measures are annualized.



Reconciliation of Non-GAAP Financial Measures – Adjusted Net Interest Margin
(dollars in thousands)
       
  Three Months Ended   Year Ended
  December 31,
2018
September 30,
2018
December 31,
2017
  December 31,
2018
December 31,
2017
             
Reported: Net interest income $   60,503   $   60,774   $   63,046     $   241,406   $   203,366  
   Tax-equivalent adjustment   545     574     1,192       2,258     3,656  
   Less: Purchase accounting
     amortization
  (1,852 )   (2,273 )   (5,848 )     (10,550 )   (12,458 )
Adjusted: Net interest income $   59,196   $   59,075   $   58,390     $   233,114   $   194,564  
             
Average interest-earning assets $   7,174,755   $   7,132,324   $   6,932,750     $   7,067,710   $   5,784,408  
             
Reported: Net interest margin1   3.38 %   3.41 %   3.68 %     3.45 %   3.58 %
Adjusted: Net Interest margin1   3.27 %   3.29 %   3.34 %     3.30 %   3.36 %
             
1 Quarterly measures are annualized.            


Reconciliation of Non-GAAP Financial Measures – Adjusted Efficiency Ratio  
(dollars in thousands)  
               
  Three Months Ended   Year Ended  
  December 31,
2018
September 30,
2018
December 31,
2017
  December 31,
2018
December 31
 2017
 
Reported: Net Interest income $   60,503   $   60,774   $   63,046     $   241,406   $   203,366    
   Tax- equivalent adjustment   545     574     1,192       2,258     3,656    
Tax equivalent interest income $   61,048   $   61,348   $   64,238     $   243,664   $   207,022    
               
Reported: Non-interest income   22,852     21,853     23,561       89,993     84,474    
   Less: Security gain net   171     -     -       331     1,143    
Adjusted: Non-interest income $   22,681   $   21,853   $   23,561     $   89,662   $   83,331    
               
Reported: Non-interest expense   48,769     45,929     53,100       193,043     174,426    
   Less:              
   Amortization of intangible assets   (1,404 )   (1,445 )   (1,570 )     (5,854 )   (5,245 )  
   Non-operating adjustments:              
   Salaries, wages and employee benefits   (640 )   -       (616 )     (2,290 )    (1,551 )  
   Data processing   -     -     (1,268 )     (406 )   (2,616 )  
   Other   (262 )   (167 )   (1,589 )     (2,858 )   (3,683 )  
Adjusted: Non-interest expense $   46,463   $   44,317   $   48,057     $   181,635   $   161,331    
               
Reported: Efficiency ratio   56.57 %   53.47 %   58.69 %     56.16 %   58.27 %  
Adjusted: Efficiency ratio   55.49 %   53.26 %   54.74 %     54.49 %   55.56 %  



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
    December 31, 2018 September 30, 2018 December 31, 2017
         
Total assets   $   7,702,357   $   7,889,385   $   7,860,640  
Less:        
   Goodwill and other intangible assets, net     (300,558 )   (301,963 )   (308,073 )
   Tax effect of other intangible assets, net     8,547     8,912     11,039  
Tangible assets   $   7,410,346   $   7,596,334   $   7,563,606  
         
Total stockholders’ equity     994,964     972,140     935,003  
Less:        
   Goodwill and other intangible assets, net     (300,558 )   (301,963 )   (308,073 )
   Tax effect of other intangible assets, net     8,547     8,912     11,039  
Tangible stockholders’ equity   $   702,953   $   679,089   $   637,969  
         
Tangible common equity to tangible assets1     9.49 %   8.94 %   8.43 %
Tangible book value per share   $   14.21   $   13.72   $   12.88  
         
    Three Months Ended
    December 31, 2018 September 30, 2018 December 31, 2017
Average stockholders' common equity   $   979,502   $   961,824   $   932,179  
  Less: Average goodwill and intangibles, net     (301,479 )   (302,914 )   (309,227 )
Average tangible stockholders' common equity   $   678,023   $   658,910   $   622,952  
         
Reported: Return on average tangible common equity2     14.80 %   16.17 %   7.83 %
Adjusted: Return on average tangible common equity2,3     15.19 %   16.26 %   14.35 %
         
    Year Ended  
    December 31, 2018 December 31, 2017  
Average stockholders' common equity   $   954,949   $   739,825    
  Less: Average goodwill and intangibles, net     (303,917 )   (199,419 )  
Average tangible stockholders' common equity   $   651,032   $   540,406    
         
Reported: Return on average tangible common equity     15.20 %   11.61 %  
Adjusted: Return on average tangible common equity3     15.89 %   14.00 %  
         
1 Tax-effected measure.        
2 Quarterly measures are annualized.        
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, 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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