First Busey Corporation Announces Third Quarter Earnings
URBANA, Ill., Oct. 23 /PRNewswire-FirstCall/ -- I am very pleased to report our quarterly earnings for the first time as your President & CEO of First Busey Corporation (Nasdaq: BUSE). Consolidated net income for the quarter was $11.5 million compared to $7.6 million for the same period in 2006. Consolidated net income per fully-diluted share for the quarter ended September 30, 2007 totaled $0.36, equaling the $0.36 per fully-diluted share for the same period in 2006.
We are pleased to report this quarter the closing of our merger of equals transaction with Main Street Trust, Inc. The merger closed following the close of business on July 31st, allowing for two full months of earnings contribution from Main Street Bank & Trust and FirsTech, our payments processing company. The next significant step in the merger process is the conversion of Main Street Bank & Trust with and into Busey Bank. The bank conversion is expected to occur in November 2007. Our bank conversion will include the launch of an updated Busey brand that we are excited to unveil for the first time publicly at our annual shareholders meeting on November 7, 2007.
As required by the United States Department of Justice, prior to the closing of our merger, we reached an agreement to sell five Main Street Bank & Trust banking centers. The divestiture of the five branches, which represents approximately 1% of consolidated loans and 3% of consolidated deposits, is expected to close in November 2007. We are working with the buyer to ensure this process runs seamlessly for our impacted customers and employees.
This quarter included the solidification of our management team of Busey Bank, N.A., as Thomas Good accepted the position of President and Chief Executive Officer, succeeding Michael Geml who will retire at the end of 2007.
As many of you know, our Chairman, Douglas C. Mills, served as CEO for over 35 years, growing Busey to a truly great Company. I would be remiss not to mention Ed Scharlau and Greg Lykins, and the positive impact they have had on our Company. All three of these individuals have made significant contributions to the organization. I look forward to continuing to work with them, seeking their guidance and counsel as we move into the next chapter of First Busey. The future is bright and strong!
Corporate Profile
First Busey Corporation is a financial holding company headquartered in Urbana, Illinois. First Busey Corporation has three wholly-owned banks with locations in three states. Busey Bank is headquartered in Urbana, Illinois and has twenty-two banking centers serving central Illinois. Busey Bank has a banking center in Indianapolis, Indiana, and a loan production office in Ft. Myers, Florida. On September 30, 2007, Busey Bank had total assets of $2.09 billion. Busey Bank, N.A. is headquartered in Ft. Myers, Florida , with nine banking centers serving southwest Florida. Busey Bank, N.A. had total assets of $477.9 million as of September 30, 2007. Main Street Bank & Trust has twenty-three locations serving central Illinois. On September 30, 2007, Main Street Bank & Trust had total assets of $1.68 billion. Main Street's Wealth Management Division had $2.17 billion in assets under care for individuals and institutional customers as of September 30, 2007.
Busey Investment Group is a wholly-owned subsidiary of First Busey Corporation. Through its trust company and insurance agency, Busey Investment Group delivers trust, asset management, retail brokerage, and insurance products and services. As of September 30, 2007, Busey Investment Group had approximately $2.70 billion in assets under care.
First Busey Corporation, through the merger with Main Street Trust, owns a retail payment processing subsidiary -- FirsTech, Inc. -- which processes over 25 million items per year.
Busey provides electronic delivery of financial services through Busey e-bank, http://www.busey.com.
SELECTED FINANCIAL HIGHLIGHTS
(amounts in thousands, except ratios and per share data)
Three Months Ended Nine Months Ended
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2007 2007 2006 2007 2006
Earnings &
Per Share Data
Net income $11,510 $7,864 $7,642 $27,110 $21,544
Basic
earnings
per share $0.37 $0.37 $0.36 $1.09 $1.01
Weighted
average
shares of
common
stock
outstanding 31,464 21,470 21,322 24,834 21,346
Fully-diluted
earnings per
share $0.36 $0.37 $0.36 $1.09 $1.00
Weighted
average
shares of
common stock
and dilutive
potential
common shares
outstanding 31,655 21,510 21,441 24,939 21,445
Market price
per share at
period end $21.91 $19.99 $22.71
Price to book
ratio 161.70% 223.85% 271.00%
Price to
earnings
ratio(1) 15.34 13.47 15.90 15.03 16.99
Cash dividends
paid per
share $0.18 $0.18 $0.16 $0.59 $0.48
Book value per
share $13.55 $8.93 $8.38
Tangible book
value per
share $7.20 $6.25 $5.65
Common shares
outstanding 36,585 21,467 21,445
Average
Balances
Assets $3,610,918 $2,471,750 $2,357,134 $2,860,335 $2,303,594
Investment
securities 556,842 330,730 318,725 407,422 325,112
Gross
loans 2,689,472 1,957,427 1,855,980 2,199,011 1,799,137
Earning
assets 3,304,265 2,297,944 2,180,101 2,631,312 2,129,932
Deposits 2,909,176 1,993,273 1,874,521 2,299,752 1,831,061
Interest-
bearing
liabilities 2,873,767 2,035,871 1,923,532 2,312,805 1,869,814
Stockholders'
equity 342,659 189,061 175,795 248,932 172,689
END OF PERIOD
FINANCIAL DATA
Tax
equivalized
net interest
income $30,556 $20,113 $19,931 $70,443 $58,725
Gross
loans 3,040,881 1,982,802 1,905,228
Allowance
for loan
losses 38,198 24,135 23,552
PERFORMANCE
RATIOS
Return on
average
assets(1) 1.26% 1.28% 1.29% 1.27% 1.25%
Return on
average
equity(1) 13.33% 16.68% 17.25% 14.56% 16.68%
Net interest
margin(1) 3.67% 3.51% 3.63% 3.58% 3.69%
Net interest
spread 3.16% 3.05% 3.18% 3.09% 3.25%
Efficiency
ratio(2) 56.67% 52.69% 53.83% 55.10% 54.98%
Non-interest
revenue as
a % of total
revenues(3) 26.73% 26.17% 24.83% 26.10% 24.35%
Allowance for
loan losses
to loans 1.26% 1.22% 1.24%
Allowance as
a percentage of
non-performing
loans 159.74% 232.25% 372.66%
Ratio of
average loan
to average
deposits 92.45% 98.20% 99.01% 95.62% 98.26%
Dividend
payout ratio(1) 50.41% 48.52% 44.81% 49.41% 47.87%
ASSET QUALITY
Net charge-offs $ 630 $ 203 $ 140 $1,063 $ 638
Non-performing
loans 23,912 10,392 6,320
Other
non-performing
assets 2,138 1,817 823
(1) Annualized
(2) Net of security gains and amortization
(3) Net of interest expense
Special Note Concerning Forward-Looking Statements
This document may contain, 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 ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local and national economy; (ii) the economic impact of any future terrorist threats or attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company's general business; (iv) changes in interest rates and prepayment rates of the Company's assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the loss of key executives or employees; (viii) changes in consumer spending; (ix) unexpected results of acquisitions; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. 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 the Company's financial results, is included in the Company's filings with the Securities and Exchange Commission.
Special Note Concerning Goodwill and Identifiable Intangibles
The excess purchase price resulting from the merger with Main Street Trust, Inc. has been allocated to goodwill and identifiable intangibles assets in accordance with current accounting guidance, to the extent that supportable documentation was available at September 30, 2007. Such amounts are subject to adjustment in the near term as additional analysis is performed or obtained from third party sources.
Net income was $11.5 million for the quarter ended September 30, 2007, as compared to $7.6 million for the comparable period in 2006. For the quarter ended September 30, 2007, earnings per share on a fully-diluted basis were $0.36, equaling the $0.36 for the comparable period in 2006. On a year-to-date basis, net income was $27.1 million as compared to $21.5 million for the comparable period in 2006. For the nine-month period ended September 30, 2007, earnings per share on a fully-diluted basis were $1.09, an increase of $0.09 or 9.0% from $1.00 for the comparable period in 2006. Two months of Main Street Bank & Trust and FirsTech net earnings are reflected in the results for the periods ended September 30, 2007.
Busey Bank's net income was $23.8 million for the nine months ended September 30, 2007, as compared to $21.8 for the comparable period in 2006, an increase of 9.2%. Main Street Bank & Trust contributed $3.4 million in net income for the two months following the merger. Busey Bank, N.A.'s net income was $1.3 million for the nine months ended September 30, 2007, as compared to $2.9 million for the comparable period in 2006. The decrease in net income at Busey Bank N.A. is primarily related to the significant decline in the southwest Florida residential market. The decrease is due to the end of a high-margin, short-term construction lending program, decline in residential construction originations and loan loss charges related to the market decline. Busey Bank, N.A.'s income was supplemented by FirsTech income of $0.3 million for the two months following the merger.
Included in Main Street Bank & Trust's and FirsTech's earnings for the third quarter of 2007 were amortization charges of approximately $0.2 million per month, net of tax. The amortization represented a moderately accelerated amortization rate over a 10 year life on $32.8 million of identifiable intangibles. In addition to the identifiable intangibles, $142.8 million of goodwill was recorded related to the merger transaction. The intangible items are subject to revision for a period of up to one year from the date of the merger as new information becomes available to us.
Significant non-operating items during the third quarter included $1.5 million in contractual severance payments to certain executives, largely offset by a security gain of $1.5 million from the Company's holdings in Main Street Trust, Inc.
Loan Portfolio Quality: First Busey Corporation experienced deterioration in its loan portfolio during the third quarter. Total non-performing assets were $26.0 million at September 30, 2007, compared to $12.2 million at June 30, 2007 and $7.1 million at September 30, 2006. The $26.0 million reflected $6.6 million of non-performing assets on the books of Main Street Bank & Trust. The remainder of the increase is primarily attributable to southwest Florida loans.
Non-accrual loans totaled $17.8 million, or 0.6% of gross loans, at September 30, 2007. Non-accrual loans primarily consist of commercial non-accruals of $12.0 million and personal real estate loans of $5.6 million.
In total, First Busey Corporation 90+ days past due loans totaled $6.1 million, or 0.2% of gross loans, at September 30, 2007. Commercial accruing loans 90+ days past due was $3.8 million at September 30, 2007. The portion of 90+ days past due loans related to personal residential real estate loans was $2.0 million at September 30, 2007.
Other real estate owned totaled $2.1 million at September 30, 2007.
Provision for loan losses was $1.8 million during the third quarter of 2007 compared to $300,000 in the comparable period of 2006. The provision was $2.8 million for the nine months ended September 30, 2007, versus $1.0 million in the comparable period of 2006. As a percentage of total outstanding loans, the allowance for loan losses was 1.26% as of September 30, 2007, and 1.24% as of September 30, 2006. Total allowance for loan losses was $38.2 million at September 30, 2007, representing 159.7% coverage of non-performing loans.
The Company continues to attempt to identify problem loan situations on a proactive basis. Once problem loans are identified, adjustments to the provision are made based upon all information available at that time. The increase in provision reflects managements' analysis of amounts necessary to cover potential losses in our loan portfolios. However, additional losses may be identified in our loan portfolio as new information is obtained. The Company may need to provide for additional loan losses in the future as management continues to identify potential problem loans and gain further information concerning existing problem loans.
Condensed Consolidated Balance Sheets
(Unaudited, in
thousands, except
per share data) September 30, June 30, December 31, September 30,
2007 2007 2006 2006
Assets
Cash and due from
banks $108,037 $56,104 $63,316 $ 52,341
Federal funds sold 43,000 14,100 - 14,329
Investment securities 697,802 323,201 365,608 324,887
Net loans 3,002,683 1,958,667 1,933,339 1,881,676
Premises and
equipment 70,128 41,328 41,001 41,304
Goodwill and other
intangibles 232,323 57,623 58,132 58,451
Other assets 91,812 49,173 48,118 46,233
Total assets $4,245,785 $2,500,196 $2,509,514 $2,419,221
Liabilities &
Stockholders' Equity
Non-interest bearing
deposits $454,875 $230,595 $ 246,440 $235,416
Interest-bearing
deposits 2,912,933 1,813,142 1,768,399 1,713,403
Total deposits $3,367,808 $2,043,737 $2,014,839 $1,948,819
Federal funds
purchased &
securities
sold under
agreements to
repurchase 137,463 52,697 54,770 57,147
Short-term borrowings 21,023 - 25,000 1,000
Long-term debt 135,825 139,825 156,650 161,708
Junior subordinated
debt owed to
unconsolidated
trusts 55,000 55,000 55,000 55,000
Other liabilities 32,757 17,210 17,981 15,870
Total liabilities $3,749,876 $2,308,469 $2,324,240 $2,239,544
Total stockholders'
equity $495,909 $191,727 $185,274 $179,677
Total liabilities
& stockholders
equity $4,245,785 $2,500,196 $2,509,514 $2,419,221
Per Share Data
Book value per share $13.55 $ 8.93 $8.64 $8.38
Tangible book value
per share $ 7.20 $ 6.25 $5.93 $5.65
Ending number of
shares outstanding 36,585,196 21,467,366 21,455,916 21,444,766
Condensed Consolidated Statements of Income
(Unaudited, in
thousands, except
per share data) Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Interest and fees
on loans $51,190 $34,554 $ 122,937 $ 97,001
Interest on investment
securities 6,909 3,197 14,490 9,479
Other interest income 703 66 990 188
Total interest income $58,802 $37,817 $ 138,417 $106,668
Interest on deposits 24,521 14,553 58,028 38,597
Interest on short-term
borrowings 1,508 860 3,018 2,165
Interest on long-term
debt 1,748 1,993 5,420 5,707
Junior subordinated
debt owed to
unconsolidated trusts 1,013 1,010 3,015 3,049
Total interest expense $28,790 $18,416 $69,481 $49,518
Net interest income $30,012 $19,401 $68,936 $57,150
Provision for loan
losses 1,795 300 2,775 1,000
Net interest income
after provision for
loan losses $28,217 $19,101 $66,161 $ 56,150
Fees for customer
services 3,433 2,860 9,022 8,198
Trust fees 2,691 1,312 6,090 4,470
Retail payment
processing 1,746 - 1,746 -
Commissions and brokers'
fees 707 608 1,949 1,987
Gain on sales of loans 994 786 2,414 1,858
Net security gains 2,065 794 2,995 1,880
Other 1,376 841 3,125 1,885
Total non-interest
income $13,012 $7,201 $27,341 $ 20,278
Salaries and wages 11,698 6,609 25,397 19,878
Employee benefits 2,058 1,509 4,995 4,457
Net occupancy expense 1,988 1,310 4,814 3,814
Furniture and equipment
expense 1,370 929 3,049 2,677
Data processing expense 1,715 450 2,731 1,344
Amortization expense 876 353 1,385 1,057
Other operating
expenses 4,690 3,371 11,244 10,234
Total non-interest
expense $24,395 $14,531 $53,615 $43,461
Income before income
taxes $16,834 $11,771 $39,887 $32,967
Income taxes 5,324 4,129 12,777 11,423
Net income $11,510 $7,642 $27,110 $21,544
Per Share Data
Basic earnings per
share $ 0.37 $ 0.36 $1.09 $1.01
Fully-diluted earnings
per share $ 0.36 $ 0.36 $1.09 $1.00
Diluted average
shares
outstanding 31,655,291 21,441,315 24,939,237 21,444,888
SOURCE First Busey Corporation
Contact: Barbara Harrington, EVP & CFO of First Busey Corporation, +1-217-365-4528