Release Details

CHAMPAIGN, Ill., April 28, 2020 (GLOBE NEWSWIRE) -- (Nasdaq: BUSE)

Message from our President & CEO

COVID-19 Response
First Busey Corporation (“First Busey” or the “Company”) is positioned to execute its mission as an essential community resource during these challenging times.  The coronavirus disease 2019 (“COVID-19”) is not only impacting health and safety around the world, it is causing significant economic disruption for both individuals and businesses, making the Company’s promise of support even more important to customers.  First Busey is offering a Financial Relief Program to customers designed to alleviate some of the hardships qualifying customers may face as a result of COVID-19 and the resulting economic impacts, offering solutions for all types of customers—including retail, personal loan and mortgage—as well as commercial clients and small businesses.  The program includes options for loan payment deferrals as well as certain fee waivers.

As part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), Congress appropriated approximately $349 billion for the creation of the Paycheck Protection Program (“PPP”) and then authorized a second phase for another $310 billion in PPP loans. This program provides payroll assistance for the nation’s nearly 30 million small businesses—and select nonprofits—in the form of 100% government-guaranteed low-interest loans from the U.S. Small Business Administration (“SBA”). First Busey has served as a bridge for the program, actively helping existing and new business clients sign up for this important financial resource. First Busey has funded $657.3 million in loans under this program for 2,508 customers as of April 24, 2020.

In early March, to support the efforts of public health authorities and help curtail the spread of COVID-19 and ensure the safety of its associates, the Company initiated its pandemic response plan, expanding social-distancing practices and providing remote work capabilities.  On March 19, 2020, the Company suspended lobby services and began servicing in-person customers exclusively from its drive-up windows out of an abundance of caution.

In the face of the challenges and risks posed by COVID-19, the Company remains resolute in its focus on protecting the strength and flexibility of its balance sheet.  As a matter of policy and practice, the Company limits the level of concentration exposure in any particular loan segment and maintains a well-diversified loan portfolio. In anticipation of the potential risks associated with COVID-19, the Company took actions in early March to increase the vigilance and escalate the monitoring of susceptible industry sectors and exposures within its portfolio. Furthermore, the Company maintains strong capital and liquidity positions.  The progression of the COVID-19 pandemic in the United States began to negatively impact the Company’s results of operations during the quarter ended March 31, 2020. Going forward, COVID-19 can be expected to have a complex and significant adverse impact on the economy, the banking industry and First Busey in future fiscal periods, all subject to a high degree of uncertainty as it relates to both timing and severity. Primary areas of potential impact to the Company include margin compression, provision expense, wealth management fees, fees for customer services and asset quality.

First Quarter Financial Results and Adoption of CECL Methodology
First Busey’s net income for the first quarter of 2020 was $15.4 million, or $0.28 per diluted common share, as compared to $28.6 million, or $0.52 per diluted common share, for the fourth quarter of 2019 and $25.5 million, or $0.48 per diluted common share, for the first quarter of 2019.  Adjusted net income¹ for the first quarter of 2020 was $15.5 million, or $0.28 per diluted common share, as compared to $31.8 million, or $0.57 per diluted common share, for the fourth quarter of 2019 and $26.6 million, or $0.50 per diluted common share, for the first quarter of 2019. Pre-provision net revenue¹ for the first quarter of 2020 was $35.8 million as compared to $37.5 million for the fourth quarter of 2019 and $37.1 million for the first quarter of 2019.  Adjusted pre-provision net revenue¹ for the first quarter of 2020 was $38.2 million as compared to $41.1 million for the fourth quarter of 2019 and $38.6 million for the first quarter of 2019.  For the first quarter of 2020, annualized return on average assets and annualized return on average tangible common equity¹ were 0.64% and 7.30%, respectively.  Based on adjusted net income¹, annualized return on average assets was 0.64% and annualized return on average tangible common equity¹ was 7.36% for the first quarter of 2020.

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

On January 1, 2020, the Company adopted ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the Current Expected Credit Loss (“CECL”) model.  Upon adoption of CECL, the Company recognized a $16.8 million increase in its allowance for credit losses, substantially attributable to the remaining loan fair value marks on prior acquisitions, and a $5.5 million increase in its reserve for unfunded commitments.  Under accounting rules, the reserve for unfunded commitments is carried on the balance sheet in other liabilities rather than as a component of the allowance for credit losses.  These one-time increases, net of tax, were $15.9 million and recorded as an adjustment to beginning retained earnings. Ongoing impacts of the CECL methodology will be dependent upon changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors.  During the first quarter of 2020, the Company recorded provision for credit losses of $17.2 million and provision for unfunded commitments of $1.0 million primarily as a result of economic factors around COVID-19.  As a result of these additions, the allowance increased from $53.7 million at December 31, 2019, to $84.4 million at March 31, 2020, representing 1.25% of portfolio loans outstanding and 310.10% of non-performing loans.

The Company views certain non-operating items, including acquisition-related and restructuring charges, as adjustments to net income reported under U.S. generally accepted accounting principles (“GAAP”).  Non-operating pretax adjustments for the first quarter of 2020 were $0.1 million of expenses related to acquisitions.  The Company believes that non-GAAP measures (including adjusted pre-provision net revenue, adjusted net income, adjusted earnings per share, 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), facilitate the assessment of its financial results and peer comparability.  A reconciliation of these non-GAAP measures is included in tabular form at the end of this release.

First Busey’s goal of being a strong community bank for the communities it serves begins with outstanding associates. The Company is honored to be named among the 2019 Best Banks to Work For by American Banker, the 2019 Best-In-State Banks for Illinois by Forbes and Statista, the 2019 Best Places to Work in Illinoisby Daily Herald Business Ledger, the 2019 Best Companies to Work For in Florida by Florida Trend magazine, the 2019 Best Place to Work in Indiana by the Indiana Chamber of Commerce, the 2019 Best Places to Work in St. Louisby theSt. Louis Business Journal and the 2019Best Places to Work in Money Management by Pensions and Investments.

For more than 150 years, First Busey has delivered on a promise of trusted customer relationships and community support. First Busey’s storied history of supporting associates, customers and communities continues in today’s fluid, ever-evolving landscape.

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

Balance Sheet Growth

At March 31, 2020, portfolio loans were $6.75 billion, as compared to $6.69 billion as of December 31, 2019 and $6.52 billion as of March 31, 2019.  The increase as of March 31, 2020 from December 31, 2019 related to organic commercial loan growth of $96.9 million partially offset by a decline in retail real estate and retail other loans of $38.6 million.  Average portfolio loans were steady at $6.66 billion for the first quarter of 2020 and fourth quarter of 2019 compared to $6.13 billion in the first quarter of 2019.  Average interest-earning assets for the first quarter of 2020 increased to $8.82 billion compared to $8.81 billion for the fourth quarter of 2019 and $8.09 billion for the first quarter of 2019. 

Total deposits were $7.97 billion at March 31, 2020, compared to $7.90 billion at December 31, 2019 and $7.76 billion at March 31, 2019.  The Company remains funded primarily through core deposits with significant market share in its primary markets.

Net Interest Margin and Net Interest Income

Net interest margin for the first quarter of 2020 was 3.20%, compared to 3.27% for the fourth quarter of 2019 and 3.46% for the first quarter of 2019. Net interest income was $69.4 million in the first quarter of 2020 compared to $71.9 million in the fourth quarter of 2019 and $68.4 million in the first quarter of 2019. 

The Federal Open Market Committee (“FOMC”) lowered Federal Funds Target Rates for the first time in 11 years on July 31, 2019 and then again on September 18, 2019 and October 30, 2019, for a combined decrease of 75 basis points during 2019.  In response to the potential economic risks posed by COVID-19, the FOMC took further action during the quarter, lowering the Federal Funds Target Rate by 50 basis points on March 3, 2020, followed by an additional 100 basis point reduction on March 15, 2020.  These rate cuts contributed to the decline in net interest margin, as assets, in particular commercial loans, repriced more quickly and to a greater extent than liabilities.

Asset Quality

Loans 30-89 days past due were $10.2 million as of March 31, 2020, a decrease from $14.3 million as of December 31, 2019, and $10.8 million as of March 31, 2019.  Non-performing loans totaled $27.2 million as of March 31, 2020, a decrease from $29.5 million as of December 31, 2019, and $36.6 million as of March 31, 2019. Continued disciplined credit management resulted in non-performing loans as a percentage of total loans of 0.40% at March 31, 2020 as compared to 0.44% at December 31, 2019 and 0.56% at March 31, 2019.

Net charge-offs totaled $3.4 million for the quarter ended March 31, 2020 compared to $1.6 million and $1.8 million for the quarters ended December 31, 2019 and March 31, 2019, respectively.  The increase for the quarter ended March 31, 2020 was largely attributable to the charge-off of one credit relationship that had been on non-accrual with a specific reserve of $2.7 million at December 31, 2019.

With the adoption of CECL, the allowance as a percentage of portfolio loans increased to 1.25% at March 31, 2020, as compared to 0.80% at December 31, 2019 and 0.78% at March 31, 2019. The allowance as a percentage of non-performing loans increased to 310.10% at March 31, 2020 compared to 182.15% at December 31, 2019 and 139.17% at March 31, 2019.

Non-Interest Income

Total non-interest income of $27.5 million for the first quarter of 2020 decreased as compared to $31.6 million in the fourth quarter of 2019 and increased as compared to $25.9 million in the first quarter of 2019.  Revenues from wealth management fees and remittance processing activities represented 55.6% of the Company’s non-interest income for the quarter ended March 31, 2020, providing a balance to spread-based revenue from traditional banking activities. 

Wealth management fees were $11.6 million for the first quarter of 2020, an increase from $11.2 million for the fourth quarter of 2019 and $9.0 million for the first quarter of 2019.  Net income from the Wealth Management segment was $3.6 million for the first quarter of 2020, an increase from $3.5 million for the fourth quarter of 2019 and $2.6 million in the first quarter of 2019.  First Busey’s Wealth Management division ended the first quarter of 2020 with $8.93 billion in assets under care, a 7.9% decrease from $9.70 billion at December 31, 2019 as a result of market volatility.  The Wealth Management division experienced new customer inflows, net of redemptions, of $18.8 million during the first quarter of 2020.

Remittance processing revenue from the Company’s subsidiary, FirsTech, of $3.8 million for the first quarter of 2020 was steady with the fourth and first quarters of 2019.  The Remittance Processing operating segment generated net income of $0.9 million for the first quarter of 2020 as compared to $1.0 million for the fourth and first quarters of 2019. 

The decrease in other non-interest income in the first quarter of 2020 as compared to the first and fourth quarters of 2019 primarily relates to amortization for a New Market Tax Credit of $1.2 million, which is offset in tax expense.

Operating Efficiency

The efficiency ratio was 59.69% for the quarter ended March 31, 2020 compared to 60.54% for the quarter ended December 31, 2019 and 57.99% for the quarter ended March 31, 2019. The adjusted efficiency ratio¹ was 59.54% for the quarter ended March 31, 2020, 57.02% for the quarter ended December 31, 2019, and 56.43% for the quarter ended March 31, 2019. The Company remains focused on expense discipline.

Specific areas of non-interest expense are as follows:

• Salaries, wages and employee benefits were $34.0 million in the first quarter of 2020, a decrease from $35.1 million in the fourth quarter of 2019 but an increase from $32.3 million from the first quarter of 2019. Total full-time equivalents at March 31, 2020 numbered 1,507 compared to 1,531 at December 31, 2019 and 1,589 at March 31, 2019.
   
• Data processing expense in the first quarter of 2020 of $4.4 million decreased compared to $6.5 million in the fourth quarter of 2019 and was steady with the first quarter of 2019.  
   
• Other expense in the first quarter of 2020 of $10.6 million decreased compared to $11.7 million in the fourth quarter of 2019 and increased compared to $8.8 million in the first quarter of 2019. The first quarter of 2020 other expense includes a $1.0 million provision for unfunded commitments.

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 May 1, 2020 of $0.22 per common share to stockholders of record as of April 24, 2020.  The Company has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

As of March 31, 2020, the Company continued to exceed the capital adequacy requirements necessary to be considered “well-capitalized” under applicable regulatory guidelines. The Company’s tangible common equity¹ (“TCE”) was $863.5 million at March 31, 2020, compared to $864.6 million at December 31, 2019 and $826.2 million at March 31, 2019. TCE in the quarter was impacted by the negative adjustment to beginning retained earnings of $15.9 million recorded upon the adoption of CECL. TCE represented 9.22% of tangible assets at March 31, 2020, compared to 9.26% at December 31, 2019 and 9.00% at March 31, 2019.¹

During the first quarter of 2020, the Company purchased 407,850 shares of its common stock at an average price of $23.71 per share for a total of $9.7 million under the Company’s stock repurchase plan.  On February 5, 2020, First Busey’s board of directors approved an amendment to increase the authorized shares under the repurchase program by 2,000,000 shares. Repurchases were executed in contemplation of maintaining levels of treasury stock appropriate to satisfy compensation awards, in addition to favorable pricing of the Company’s shares during the first quarter of 2020.  On March 16, 2020, due to uncertainties relating to COVID-19, the Company suspended share repurchases.  At March 31, 2020, the Company held 1,509,525 shares in treasury and had 1,982,088 shares available to be purchased under the plan.

1Q20 Quarterly Supplement

For additional information on the Company’s response to COVID-19, financial condition and operating results, please refer to the 1Q20 Quarterly Supplement presentation furnished via Form 8-K on April 28, 2020, in conjunction with this earnings release.

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

Corporate Profile

As of March 31, 2020, First Busey Corporation (Nasdaq: BUSE) was a $9.72 billion financial holding company headquartered in Champaign, Illinois.

Busey Bank, the wholly-owned bank subsidiary of First Busey Corporation, had total assets of $9.70 billion as of March 31, 2020 and is headquartered in Champaign, Illinois, with 61 banking centers serving Illinois, 13 banking centers serving Missouri, 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 March 31, 2020, assets under care were approximately $8.93 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 U.S. 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 busey.com.

Contacts:

Jeffrey D. Jones, Chief Financial Officer
217-365-4130

Non-GAAP Financial Information

This earnings release contains certain financial information determined by methods other than GAAP. These measures include adjusted pre-provision net revenue, adjusted net income, adjusted earnings per share, adjusted return on average assets, adjusted net interest margin, adjusted efficiency ratio, tangible common equity, tangible common equity to tangible assets, tangible book value per share and 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 direct compared GAAP financial measures, specifically total net interest income in the case of pre-provision net revenue, net income in the case of adjusted net income, adjusted earnings per share and adjusted return on average assets, total net interest income in the case of adjusted net interest margin, total non-interest income and total non-interest expense in the case of adjusted efficiency ratio and total stockholders’ equity in the case of tangible common equity, tangible common equity to tangible assets, tangible book value per share and return on average tangible common equity, 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 and effective rates as appropriate.

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 the Company undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond the Company’s ability to control or predict, could cause actual results to differ materially from those in the Company’s 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 the 2020 presidential election and 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, widespread disease or pandemics (including the COVID-19 pandemic in the United States), or other adverse external events that could cause economic deterioration or instability in credit markets; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in accounting policies and practices, including CECL, that will change how the Company estimates credit losses; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of The London Inter-bank Offered Rate phase-out); (vi) increased competition in the financial services sector and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) the loss of key executives or associates; (ix) changes in consumer spending; (x) 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; (xi) unexpected outcomes of existing or new litigation involving the Company; 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.