First Busey Releases Second Quarter Earnings
URBANA, Ill., July 22 /PRNewswire-FirstCall/ -- First Busey Corporation's (Nasdaq: BUSE) consolidated net income for the quarter ended June 30, 2008 was $4.6 million, or $0.13 per fully-diluted share, compared to $7.9 million, or $0.37 per fully-diluted share, for the same period in 2007. Year-to-date consolidated net income was $14.6 million, or $0.41 per fully-diluted share, compared to $15.6 million, or $0.72 per fully-diluted share, in the same period of 2007. We recorded a $12.3 million provision for loan losses during the second quarter, which represents a $0.21 per fully-diluted share charge.
The loan loss provision recorded during the second quarter is the result of our efforts to continue to identify the issues within our loan portfolio. Our management team has worked diligently to identify the problem and potential problem credits in our loan portfolio and, subsequently meet with these customers to assess the current situation and future plans. Currently, we believe to have a solid understanding of the risk in our loan portfolio. The largest portion of the risk in our loan portfolio resides in the southwest Florida market, which makes up approximately 25% of our total loan portfolio. The downstate Illinois economy, while somewhat weaker than two years ago, is holding up relatively well due to its stable academic, agricultural and healthcare employment base. However, in this weak economic environment, we have unidentified risks within the portfolio that will arise if the economic downturn continues to expand its reach, both geographically and into new industries. As known risks elevate and new risks are identified within our loan portfolio, we will make the appropriate adjustments to our allowance for loan losses.
The entire financial/banking industry is facing tough times due to the economic downturn. Weakness in a bank's loan portfolio is a primary symptom of an economic downturn. The known and expected further weakness in banks' loan portfolios has led to the entire sector experiencing sharp declines in stock prices. The Busey stock price has paralleled this industry trend.
Our balance sheet and diversified business lines continue to be a source of strength. We continue to be well capitalized under regulatory standards and will pay our third $0.20 dividend of 2008 on July 25, 2008. Our investment portfolio is sound, closing June 2008 in a net unrealized gain position. Busey Wealth Management and FirsTech, our payment processing subsidiary, continue to provide a diversified earnings stream.
Our Board of Directors and management team remains confident we will emerge from this economic downturn a stronger company. Our management team is doing everything we believe necessary to address issues as they arise. The more timely we address the issues facing us during this economic downturn, the better positioned we will be to take advantage of opportunities as the economy begins to stabilize and, ultimately, turn around.
Busey's commitment to outstanding customer service, coupled with our management team's efforts to address the symptoms of this economic environment, we believe will position your company for a bright future. As always, we welcome your questions and comments.
Corporate Profile
First Busey Corporation is a $4.3 billion financial holding company headquartered in Urbana, Illinois. First Busey Corporation has two wholly-owned banks with locations in three states. Busey Bank is headquartered in Champaign, Illinois and has forty-five banking centers serving downstate Illinois. Busey Bank has a banking center in Indianapolis, Indiana, and a loan production office in Fort Myers, Florida. As of June 30, 2008, Busey Bank had total assets of $3.8 billion. Busey Bank, N.A. is headquartered in Fort Myers, Florida, with nine banking centers serving southwest Florida. Busey Bank, N.A. had total assets of $459.2 million as of June 30, 2008.
Busey Wealth Management is a wholly-owned subsidiary of First Busey Corporation. Through Busey Trust Company, Busey Wealth Management delivers trust, asset management, retail brokerage and insurance products and services. As of June 30, 2008, Busey Wealth Management had approximately $3.9 billion in assets under care.
First Busey Corporation owns a retail payment processing subsidiary, FirsTech, Inc., which processes over 27 million transactions per year through online bill payments, lockbox processing and walk-in payments through its 4,000 agent locations in 36 states.
Busey provides electronic delivery of financial services through our website, http://www.busey.com.
SELECTED FINANCIAL HIGHLIGHTS
(amounts in thousands, except ratios and per share data)
Three Months Ended
June 30, March 31, June 30,
2008 2008 2007
EARNINGS & PER SHARE DATA
Net income $4,591 $10,004 $7,864
Basic earnings per share $0.13 $0.28 $0.37
Weighted average shares of common
stock outstanding 35,824 35,949 21,470
Fully-diluted earnings per share $0.13 $0.28 $0.37
Weighted average shares of common
stock and dilutive
potential common shares
outstanding 35,931 36,130 21,510
Market price per share at period
end $13.22 $21.12 $19.99
Price to book ratio 92.13% 144.96% 223.85%
Price to earnings ratio(1) 25.42 18.69 13.51
Cash dividends paid per share $0.20 $0.20 $0.18
Book value per share $14.35 $14.57 $8.93
Tangible book value per share $6.56 $6.77 $6.25
Common shares outstanding 35,787 35,858 21,467
AVERAGE BALANCES
Assets $4,235,000 $4,196,079 $2,471,750
Investment securities 590,737 625,479 330,730
Gross loans 3,141,541 3,056,701 1,957,427
Earning assets 3,733,761 3,693,418 2,297,944
Deposits 3,200,098 3,230,782 1,993,273
Interest-bearing liabilities 3,289,370 3,253,477 2,035,871
Stockholders' equity 517,936 521,701 189,061
PERIODIC FINANCIAL DATA
Tax equivalized net interest income $32,133 $31,858 $20,113
Gross loans 3,166,705 3,131,878 1,982,802
Allowance for loan losses 48,579 42,924 24,135
PERFORMANCE RATIOS
Return on average assets(1) 0.44% 0.96% 1.28%
Return on average equity(1) 3.57% 7.71% 16.68%
Net interest margin(1) 3.46% 3.47% 3.51%
Net interest spread 3.13% 3.07% 3.05%
Efficiency ratio(2) 56.46% 59.17% 52.68%
Non-interest revenue as a % of
total revenues(3) 30.68% 30.49% 26.17%
Allowance for loan losses to loans 1.53% 1.37% 1.22%
Allowance as a percentage of
non-performing loans 82.84% 134.29% 232.25%
Ratio of average loan to average
deposits 98.17% 94.61% 98.20%
Ratio of tangible capital to
tangible assets 5.88% 6.11% 5.49%
ASSET QUALITY
Net charge-offs $6,645 $1,786 $203
Non-performing loans 58,641 31,964 10,392
Other non-performing assets 3,096 2,476 1,817
1 Quarterly ratios annualized
2 Net of security gains and amortization
3 Net of interest expense, excludes security gains
SELECTED FINANCIAL HIGHLIGHTS
(amounts in thousands, except ratios and per share data)
Six Months Ended
June 30, June 30,
2008 2007
EARNINGS & PER SHARE DATA
Net income $14,595 $15,600
Basic earnings per share $0.41 $0.73
Weighted average shares of common
stock outstanding 35,887 21,464
Fully-diluted earnings per share $0.41 $0.72
Weighted average shares of common
stock and dilutive
potential common shares
outstanding 36,031 21,526
Market price per share at period
end
Price to book ratio
Price to earnings ratio(1) 16.12 13.79
Cash dividends paid per share $0.40 $0.41
Book value per share
Tangible book value per share
Common shares outstanding
AVERAGE BALANCES
Assets $4,214,780 $2,472,547
Investment securities 608,041 332,834
Gross loans 3,099,121 1,953,355
Earning assets 3,713,522 2,297,342
Deposits 3,215,248 1,994,556
Interest-bearing liabilities 3,271,299 2,034,576
Stockholders' equity 519,418 187,201
PERIODIC FINANCIAL DATA
Tax equivalized net interest income $63,991 $39,887
Gross loans
Allowance for loan losses
PERFORMANCE RATIOS
Return on average assets(1) 0.70% 1.27%
Return on average equity(1) 5.65% 16.80%
Net interest margin(1) 3.47% 3.50%
Net interest spread 3.10% 3.04%
Efficiency ratio(2) 57.81% 53.88%
Non-interest revenue as a % of
total revenues(3) 30.59% 25.61%
Allowance for loan losses to loans
Allowance as a percentage of
non-performing loans
Ratio of average loan to average
deposits 96.39% 97.93%
Ratio of tangible capital to
tangible assets
ASSET QUALITY
Net charge-offs $8,431 $433
Non-performing loans
Other non-performing assets
1 Quarterly ratios annualized
2 Net of security gains and amortization
3 Net of interest expense, excludes security gains
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 June 30, 2008. Such amounts are subject to adjustment in the near term as additional analysis is performed or obtained from third party sources.
Net Income by
Segment
(dollars in QTD QTD % YTD YTD %
thousands) 6/30/2008 3/31/2008 Change 6/30/2008 6/30/2007 Change
Consolidated $4,591 $10,004 (54.11) $14,595 $15,600 (6.44)
Busey Bank 6,395 11,602 (44.88) 17,997 16,018 12.35
Busey Bank, N.A. (2,002) (1,047) (91.21) (3,049) 642 (574.92)
Busey Wealth
Management 871 446 95.29 1,317 1,164 13.14
FirsTech 703 629 11.76 1,332 - -
Net income information reflects reported earnings for prior periods. The pro forma effects of the merger with Main Street are not reflected in the June 30, 2007 net income data. The provision for loan losses is the primary reason net income is down at Busey Bank and Busey Bank, N.A. quarter over quarter. YTD June 30, 2008 for Busey Bank and Busey Wealth Management net income reflects the increase from the merger with Main Street. Busey Bank's increase YTD June 30, 2008 over the same period in the prior year is due to the merger with Main Street Bank & Trust, offset by the $9.2 million, pre-tax, of provision for loan losses recorded during 2008.
Loan Portfolio Quality
(dollars in thousands)
Allowance for Balance YTD YTD Balance Balance
Loan Losses 12/31/2007 Provision Charge Offs, Net 6/30/2008 3/31/2008
Busey Bank $35,796 $9,150 $(4,226) $40,720 $35,791
Busey Bank,
N.A. 6,764 5,300 (4,205) 7,859 7,133
$42,560 $14,450 $(8,431) $48,579 $42,924
Balance IL / IN FL Commercial Retail Balance
6/30/2008 6/30/2008 6/30/2008 6/30/2008 6/30/2008 3/31/2008
Non-Accrual Loans
Busey
Bank $39,032 $13,607 $25,425 $37,098 $1,934 $12,704
Busey
Bank,
N.A. 14,123 - 14,123 6,329 7,794 13,947
$53,155 $13,607 $39,548 $43,427 $9,728 $26,651
2008 Charge-offs on Non-Accrual Loans
Busey
Bank $10,520 $5,520 $5,000 $10,053 $467 $7,592
Busey
Bank,
N.A. 5,482 - 5,482 1,943 3,539 2,917
$16,002 $5,520 $10,482 $11,996 $4,006 $10,509
Specific Allocation of ALL
Busey
Bank $7,283 $2,833 $4,450 $7,233 $50 $1,040
Busey
Bank,
N.A. 1,112 - 1,112 100 1,012 690
$8,395 $2,833 $5,562 $7,333 $50 $1,040
90+ Days Past Due
Busey
Bank $5,032 $5,032 $- $2,588 $2,444 $5,087
Busey
Bank,
N.A. 454 - 454 149 305 227
$5,486 $5,032 $454 $2,737 $2,749 $5,314
Non-performing loans increased $26.7 million primarily related to increased non-accrual loans. Busey Bank's non-accrual loans increased $26.3 million due primarily to loans to two different customers in its Florida loan production office that totaled $23.8 million at June 30, 2008. We have charged off $2.0 million and have $4.2 million of specific allowance allocated to these loans.
Overall, Busey Bank has charged off $10.5 million of its non-accrual loans during 2008. Charge offs reduce the reported principal of the balance of the loan, whereas, a specific allocation of allowance for loan losses (ALL) does not reduce the reported principal balance of the loan. Non-accrual loans are reported net of charge-offs, but gross of related specific allocations of ALL.
Our ALL as a percentage of non-performing loans has decreased below 100% due to the $16.0 million of charge-offs taken during 2008. As loan balances are charged off to reflect the loss we expect upon final resolution of the loan collection process, no additional allowance is necessary to cover the expected loss related to that loan. Certain loans will have amounts charged off and a specific allocation of ALL assigned to the loan. In this case, we expect a loss, but a reasonable possibility exists the loss will not be as large as we estimate. Therefore, the known loss is charged off and the remaining potential loss is assigned a specific allocation of ALL.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands,
except per share data) June 30, March 31, December 31, June 30,
2008 2008 2007 2007
Assets
Cash and due from banks $124,639 $123,068 $125,228 $56,104
Federal funds sold - - 459 14,100
Investment securities 580,891 600,953 610,422 323,201
Net loans 3,118,126 3,088,954 3,010,665 1,958,667
Premises and equipment 82,198 81,269 80,400 41,328
Goodwill and other
intangibles 278,835 279,982 280,487 57,623
Other assets 80,742 77,596 85,264 49,173
Total assets $4,265,431 $4,251,822 $4,192,925 $2,500,196
Liabilities &
Stockholders' Equity
Non-interest bearing
deposits $376,452 $395,115 $389,672 $230,595
Interest-bearing deposits 2,797,511 2,853,193 2,817,526 1,813,142
Total deposits $3,173,963 $3,248,308 $3,207,198 $2,043,737
Federal funds purchased &
securities sold under
agreements to repurchase 217,734 142,496 203,119 52,697
Short-term borrowings 117,000 116,000 10,523 -
Long-term debt 151,910 127,910 150,910 139,825
Junior subordinated debt
owed to unconsolidated
trusts 55,000 55,000 55,000 55,000
Other liabilities 36,301 39,487 36,478 17,210
Total liabilities $3,751,908 $3,729,201 $3,663,228 $2,308,469
Total stockholders' equity $513,523 $522,621 $529,697 $191,727
Total liabilities &
stockholders' equity $4,265,431 $4,251,822 $4,192,925 $2,500,196
Per Share Data
Book value per share $14.35 $14.57 $14.58 $8.93
Tangible book value per
share $6.56 $6.77 $6.86 $6.25
Ending number of shares
outstanding 35,787 35,858 36,332 21,467
Condensed Consolidated
Statements of Income
(Unaudited, in thousands, Three Months Ended Six Months Ended
except per share data) June 30, June 30,
2008 2007 2008 2007
Interest and fees on loans $48,611 $36,232 $100,262 $71,747
Interest on investment
securities 6,079 3,820 12,880 7,581
Other interest income 3 128 108 287
Total interest income $54,693 $40,180 $113,250 $79,615
Interest on deposits 19,174 16,921 42,021 33,507
Interest on short-term
borrowings 1,756 805 3,515 1,510
Interest on long-term debt 1,391 1,788 3,121 3,672
Junior subordinated debt
owed to unconsolidated
trusts 846 1,003 1,805 2,002
Total interest expense $23,167 $20,517 $50,462 $40,691
Net interest income $31,526 $19,663 $62,788 $38,924
Provision for loan losses 12,300 680 14,450 980
Net interest income after
provision for loan losses $19,226 $18,983 $48,338 $37,944
Fees for customer services 3,994 2,923 7,845 5,589
Trust fees 3,698 1,689 6,771 3,399
Remittance processing 3,028 - 5,975 -
Commissions and brokers'
fees 686 657 1,388 1,242
Gain on sales of loans 1,206 764 2,366 1,420
Net security gains 30 427 502 930
Other 1,343 937 3,322 1,749
Total non-interest income $13,985 $7,397 $28,169 $14,329
Salaries and wages 11,851 6,955 23,363 13,699
Employee benefits 2,586 1,384 5,722 2,937
Net occupancy expense 2,325 1,363 4,789 2,826
Furniture and equipment
expense 2,350 855 4,267 1,679
Data processing expense 1,628 482 3,316 1,016
Amortization expense 1,130 254 2,259 509
Other operating expenses 5,282 3,229 11,529 6,554
Total non-interest expense $27,152 $14,522 $55,245 $29,220
Income before income taxes $6,059 $11,858 $21,262 $23,053
Income taxes 1,468 3,994 6,667 7,453
Net income $4,591 $7,864 $14,595 $15,600
Per Share Data
Basic earnings per share $0.13 $0.37 $0.41 $0.73
Fully-diluted earnings per
share $0.13 $0.37 $0.41 $0.72
Diluted average shares
outstanding 35,931 21,510 36,031 21,526
SOURCE First Busey Corporation
Contact: Barbara Harrington, EVP & CFO of First Busey Corporation, +1-217-365-4516