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CST: 10/12/2019 10:36:26   

First Busey Announces 2019 Second Quarter Earnings

139 Days ago

CHAMPAIGN, Ill., July 23, 2019 (GLOBE NEWSWIRE) -- (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 HIGHLIGHTS 1
(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%.
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.
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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