UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 28, 2016

First Busey Corporation
(Exact name of registrant as specified in charter)

100 W. University Ave.
Champaign, Illinois  61820
(Address of principal executive offices) (Zip code)

(217) 365-4544
(Registrant's telephone number, including area code)

N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

On Thursday, July 28, 2016, First Busey Corporation ("First Busey") issued a press release disclosing financial results for the quarter ended June 30, 2016.  The press release is made part of this Form 8-K and is attached as Exhibit 99.1.

The press release made a part of this Current Report on Form 8-K includes forward looking statements that are intended to be covered by the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.  These forward looking statements include but are not limited to comments with respect to the objectives and strategies, financial condition, results of operations and business of the Registrant.

These forward looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward looking statements will not be achieved.  First Busey cautions you not to place undue reliance on these forward looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements.

99.1

Press Release issued by the Company, dated July 28, 2016.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  July 28, 2016

First Busey Corporation

Name:  Robin N. Elliott

Title:    Chief Operating Officer and Chief Financial Officer

July 28, 2016

First Busey Announces 2016 Second Quarter Earnings

Champaign, IL – (Nasdaq: BUSE)

Message from our President & CEO

Significant progress from the quarter ended June 30, 2015 with positive impacts from the Pulaski merger:

First Busey Corporation's (the "Company") net income and net income available to common stockholders for the second quarter of 2016 was $12.4 million, or $0.35 per fully diluted common share, which was inclusive of the acquisition and operations of Pulaski Financial Corp. ("Pulaski"), and its banking subsidiary Pulaski Bank, since the transaction closed on April 30, 2016.  The Company reported net income and net income available to common stockholders of $10.4 million, or $0.36 per fully-diluted common share, for the first quarter of 2016 and net income of $9.9 million and net income available to common stockholders of $9.8 million, or $0.33 per fully-diluted common share for the second quarter of 2015.

The Company's year-to-date net income and net income available to common stockholders through June 30, 2016 was $22.8 million, or $0.71 per fully-diluted common share, compared to net income of $17.7 million and net income available to common stockholders of $17.3 million, or $0.59 per fully-diluted common share, for the comparable period of 2015.  Year-to-date net income available for common stockholders through June 30, 2016 increased 31.6% over the comparable period of 2015.

During the second quarter of 2016, the Company incurred $2.0 million of expenses related to the acquisition, comprised primarily of data processing, legal and consulting costs.  During the six months ended June 30, 2016, acquisition related expenses totaled $2.3 million.  Additional non-recurring activity during the quarter included $0.6 million in losses in private equity investments.  Excluding these acquisition and non-recurring expenses, the Company's net income available to common stockholders for the second quarter of 2016 would have been $14.0 million or $0.40 per fully-diluted common share.

On April 30, 2016, the Company completed its acquisition of Pulaski, a Missouri corporation headquartered in St. Louis, under which each share of Pulaski common stock issued and outstanding was converted into 0.79 shares of the Company's common stock.  The market value of the 9.4 million shares of the Company's common stock issued at the effective time of the merger was approximately $193.0 million based on the closing stock price of $20.44 on April 29, 2016. The purchase price also included cash paid in lieu of fractional shares and the fair value of outstanding Pulaski stock options that were converted into options to purchase common shares of First Busey.

Financial results for the second quarter of 2016 were significantly impacted by the Pulaski acquisition, resetting the baseline for financial performance in future quarters in a multiple of positive ways.  At the date of the merger, the fair value of Pulaski's total assets was $1.6 billion, including $1.4 billion in loans and $1.2 billion in deposits.    Net income before taxes was positively impacted by $1.3 million due to Pulaski purchase accounting amortization for the second quarter of 2016, including amortization expense of intangibles.  Additionally, provision expense of $0.6 million was recorded on new and renewed Pulaski loan production for the second quarter of 2016, with further details provided under the Asset Quality discussion below.  A table provided below summarizes the assets acquired and liabilities assumed of Pulaski as of April 30, 2016.

 

Strong residential loan demand drove an increase in loans held for sale at June 30, 2016 to $278.1 million from $12.9 million on March 31, 2016 and $23.8 million on June 30, 2015, with Pulaski contributing $261.3 million of the change.  The increased loans held for sale balance adds positive momentum going into the third quarter by generating net interest income until loans are delivered to investors, at which point gains on sale of loans are recognized.

Capital Strength:  Due to continued strong financial performance, the Company will pay a cash dividend on July 29, 2016 of $0.17 per common share to stockholders of record as of July 22, 2016.  The Company has an uninterrupted history of paying dividends to its common stockholders since the bank holding company was organized in 1980.

At the end of the second quarter of 2016, Busey Bank and Pulaski Bank continued to exceed the capital adequacy requirements necessary to be considered "well-capitalized" under applicable regulatory guidelines.  Further, the Company's Tangible Common Equity ("TCE") increased to $473.3 million at June 30, 2016 compared to $353.8 million at March 31, 2016 and $339.0 million at June 30, 2015.  TCE represented 8.77% of tangible assets at June 30, 2016, compared to 9.16% at March 31, 2016 and 8.79% at June 30, 2015.¹

Asset Quality:  While much internal focus has been directed toward growth, the Company's commitment to credit quality remains strong.  The June 30, 2016 asset metrics reflect the post combination results of acquiring Pulaski.  As of June 30, 2016, the Company reported non-performing loans of $22.8 million, of which $10.9 million were Pulaski Bank loans, compared to $17.8 million as of March 31, 2016 and $8.4 million as of June 30, 2015.

The Company recorded net charge-offs of $0.9 million for the second quarter of 2016, a decrease from $3.3 million for first quarter of 2016 and an increase from net recoveries of $0.1 million for the second quarter of 2015.  The Company recorded a provision for loan loss of $1.1 million in the second quarter of 2016, compared to a provision of $1.0 million in the first quarter of 2016 and zero in the second quarter of 2015.  For the first six months of 2016, the provision for loan loss was $2.1 million, compared to $0.5 million for the same period of 2015.

The allowance for loan losses as a percentage of loans decreased to 1.12% at June 30, 2016, compared to 1.75% at March 31, 2016 and 1.90% at June 30, 2015.  The decrease was primarily driven by the Pulaski acquisition and accompanying acquisition accounting which does not allow for the carryover of an allowance for loan losses.  Instead, these loans are carried net of a fair value adjustment for credit and interest rate and are only included in the allowance calculation to the extent that the reserve requirement exceeds their credit fair value adjustment.  However, as the acquired loans renew and as Pulaski Bank originates new loan production, it is necessary to establish an allowance which represents an amount that, in management's opinion, will be adequate to absorb additional credit losses.  Pulaski Bank recorded $0.6 million in provision expense in the second quarter of 2016 related to new and renewed production.

With a continued commitment to the quality of assets and the strength of our balance sheet, near-term loan losses are expected to remain generally low.  While these results are encouraging, asset quality metrics can be generally influenced by market-specific economic conditions, and specific measures may fluctuate from quarter to quarter.

Fee-based Businesses:  Revenues from trust fees, commissions and brokers' fees, and remittance processing activities represented 46.1% of the Company's non-interest income for the quarter ended June 30, 2016, providing a balance to revenue from traditional banking activities.  As Pulaski had no legacy fee income in these businesses, the addition of these service offerings in their markets should provide attractive growth opportunities.

Trust fees and commissions and brokers' fees decreased seasonally to $5.7 million for the second quarter of 2016 compared to $6.2 million for the first quarter of 2016, but were also down from $6.0 million for the second quarter of 2015 due in part to market influences.  Trust fees and commission and brokers' fees decreased to $11.9 million for the six months ended June 30, 2016 compared to $12.4 million for the six months ended June 30, 2015.  Net income from the wealth management segment was stable at $1.3 million for both the second and first quarters of 2016 compared to $1.1 million for the second quarter of 2015.  Net income was $2.6 million for the six months ended June 30, 2016 compared to $2.7 million for the six months ended June 30, 2015.

¹Tangible Common Equity, a non-GAAP metric, is defined as common equity less tax-effected goodwill and intangibles at the end of the reporting period.   Tangible assets, a non-GAAP metric, is defined as total assets less tax-effected goodwill and intangibles at the end of the reporting period.

 

Remittance processing revenue decreased slightly to $2.8 million for the second quarter of 2016, compared to $2.9 million for the first quarter of 2016, and $3.0 million for the second quarter of 2015.  Remittance processing revenue increased to $5.8 million, up 5.1%, for the six months ended June 30, 2016 compared to $5.5 million for the six months ended June 30, 2015.  Net income from the remittance processing segment was $0.5 million for the second quarter of 2016, unchanged from the first quarter of 2016 and the second quarter of 2015.  Net income was $0.9 million for the six months ended June 30, 2016, which represented an increase of 6.8% from the six months ended June 30, 2015.

Operating Performance:  The Company continues to prioritize a strong balance sheet, diversified revenue streams and developing appropriate platforms to sustain profitable growth.  An active business outreach across the Company's footprint continues to support ongoing business expansion and will facilitate the full integration of Pulaski's operations with First Busey's.  Specific areas of operating performance are detailed as follows:

The net interest margin increased to 3.32% for the second quarter of 2016, compared to 3.10% for the first quarter of 2016, and 3.05% for the second quarter of 2015.  Average earning assets for the three months ended June 30, 2016 grew $987.2 million compared to the three months ended March 31, 2016, and $1.01 billion compared to the three months ended June 30, 2015.  The net interest margin for the first six months of 2016 increased to 3.23% compared to 3.04% for the same period of 2015.  Net of purchase accounting accretion and amortization, the net interest margin for the second quarter of 2016 was 3.18% and 3.15% for the first six months of 2016.

In the first six months of 2016, gain on sales of loans increased to $3.6 million from $3.3 million in the comparable period of 2015.  Beginning on January 1, 2016, the Company adopted a conforming approach to the accounting for loan fees and costs for mortgage loans held for sale, which reclassifies related compensation expense from salary and wages to gain on sales of loans.  On a comparative basis to prior year, this reduced gains by $0.9 million for the first six months of 2016 with a related reduction in non-interest expense, primarily in salaries and wages and employee benefits.

Overview and Strategy:

We are pleased to have completed the acquisition of Pulaski during the second quarter of 2016 as this transaction was strategically compelling and financially attractive.  This acquisition creates a Midwest community bank with greater scale and operating efficiency, along with geographic and balance sheet diversification.  Pulaski has an experienced and deep management team to assist in post-merger integration and market expansion, and a similar culture to the Company which has facilitated a successful, ongoing integration process.  It is anticipated that Pulaski Bank will be merged with and into Busey Bank in the fourth quarter of 2016, as approved by the bank's primary regulator.

We expect an immediate and significant accretion to core earnings as a result of this transaction.  During the second quarter of 2016, the addition of Pulaski rapidly accelerated growth in nearly every financial measure.  At the same time, our financial performance was strong in the first six months of 2016, as we grew our balance sheet and multiple revenue streams through organic means.  The significant mortgage business under Pulaski produced origination activity in the second quarter at the highest levels in over five years, while new system implementation and recently undertaken pricing improvements will continue to elevate performance in this area of the Company.

In 2015, we effected meaningful change in our capital, through the redemption of preferred stock and the execution of the reverse stock split.  These events will continue to provide benefits to our common stockholders in 2016, while supporting the continued strength of our Company.  As we better align our services to meet customer needs and deliver optimal value to our Pillars, the Company continues to evaluate its branch network and exercise active expense discipline.

Our priorities continue around balance sheet strength, profitability and growth, in that order.  Our balance sheet is grounded in a strong capital position, an attractive core funding base and a sound credit foundation, while our commitment to our Pillars – customers, associates, communities and stockholders – lights the path to profitable growth.  We feel confident that we are well positioned for the future and gratefully acknowledge the loyal support of our stockholders.

/s/ Van A. Dukeman

President & Chief Executive Officer

First Busey Corporation

 

	As Recorded by Pulaski				Initial Fair Value Adjustments1				As Recorded by First Busey
Assets acquired
Cash and due from banks	$	25,580			$	-			$	25,580
Securities		47,895				105				48,000
Loans held for sale		184,856				-				184,856
Loans 2		1,243,913				(14,452	)			1,229,461
Premises and equipment		17,236				95				17,331
OREO		5,000				(2,512	)			2,488
Goodwill		3,939				(3,939	)			-
Other intangible assets		-				15,468				15,468
Other assets		70,387				(414	)			69,973
Total assets acquired		1,598,806				(5,649	)			1,593,157
Liabilities assumed
Deposits		1,226,906				1,102				1,228,008
Other borrowings		205,840				906				206,746
Trust preferred securities		19,589				(3,805	)			15,784
Other liabilities		24,594				(753	)			23,841
Total liabilities assumed		1,476,929				(2,550	)			1,474,379
Net assets acquired	$	121,877			$	(3,099	)		$	118,778
Consideration paid:
Cash									$	5
Common stock										192,990
Fair value of stock options assumed										2,454
Total consideration paid										195,449
Goodwill									$	76,671

 

 

Condensed Consolidated Balance Sheets1				As of
(in thousands, except per share data)				June 30,				March 31,				December 31,				June 30,
				2016				2016				2015				2015
Assets
Cash and due from banks				$	264,841			$	320,960			$	319,280			$	289,385
Federal funds sold					2,231				-				-				-
Investment securities					852,380				827,852				884,670				924,207
Commercial loans					2,685,933				1,920,953				1,961,573				1,847,521
Held for sale loans					278,125				12,943				9,351				23,816
Retail real estate and retail other loans					1,095,033				651,616				666,166				643,239
Gross loans				$	4,059,091			$	2,585,512			$	2,637,090			$	2,514,576
Allowance for loan losses					(45,358	)			(45,171	)			(47,487	)			(47,720
Premises and equipment					81,009				62,911				63,088				64,834
Goodwill and other intangibles					123,206				32,177				32,942				34,558
Other assets					172,799				106,389				109,393				105,434
Total assets				$	5,510,199			$	3,890,630			$	3,998,976			$	3,885,274
Liabilities & Stockholders' Equity
Non-interest bearing deposits				$	1,045,180			$	759,752			$	881,685			$	705,231
Interest checking, savings, and money market deposits					2,450,316				1,980,642				1,949,370				1,930,185
Time deposits					889,013				441,334				458,051				500,324
Total deposits				$	4,384,509			$	3,181,728			$	3,289,106			$	3,135,740
Securities sold under agreements to repurchase					173,726				166,141				172,972				174,352
Short-term borrowings					166,200				-				-				-
Long-term debt					80,000				80,000				80,000				50,000
Junior subordinated debt owed to unconsolidated trusts					70,801				55,000				55,000				55,000
Other liabilities					46,846				24,497				28,712				27,594
Total liabilities				$	4,922,082			$	3,507,366			$	3,625,790			$	3,442,686
Total stockholders' equity				$	588,117			$	383,264			$	373,186			$	442,588
Total liabilities & stockholders' equity				$	5,510,199			$	3,890,630			$	3,998,976			$	3,885,274
Share Data
Book value per common share				$	15.41			$	13.35			$	13.01			$	12.77
Tangible book value per common share2				$	12.18			$	12.23			$	11.86			$	11.58
Ending number of common shares outstanding					38,162				28,704				28,695				28,968

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Corporate Profile

As of June 30, 2016, First Busey Corporation (Nasdaq: BUSE) was a $5.5 billion financial holding company headquartered in Champaign, Illinois. Busey Bank, a wholly-owned bank subsidiary, is headquartered in Champaign, Illinois and has twenty-eight banking centers serving Illinois, a banking center in Indianapolis, Indiana, and six banking centers serving southwest Florida.  Trevett Capital Partners, a wealth management division of Busey Bank, provides asset management, investment and fiduciary services to high net worth clients in southwest Florida.  The wealth management professionals of Trevett Capital Partners can be reached through trevettcapitalpartners.com.  Busey Bank had total assets of $3.9 billion as of June 30, 2016.

Pulaski Bank, National Association, First Busey Corporation's other wholly-owned bank subsidiary, offers a full line of quality retail and commercial banking products through thirteen full-service banking centers in the St. Louis metropolitan area.  The Bank also offers mortgage loan products through loan production offices in the St. Louis, Kansas City, Chicago and Omaha-Council Bluffs metropolitan areas and other locations across the Midwest.  Pulaski Bank had total assets of $1.6 billion as of June 30, 2016.

In addition, First Busey Corporation owns a retail payment processing subsidiary, FirsTech, Inc., through Busey Bank, which processes over 27 million transactions per year using online bill payment, lockbox processing and walk-in payments at its 3,000 agent locations in 36 states.  More information about FirsTech, Inc. can be found at firstechpayments.com.

Busey Wealth Management is a wholly-owned subsidiary of First Busey Corporation.  Through Busey Trust Company, Busey Wealth Management provides asset management, investment and fiduciary services to individuals, businesses and foundations.  As of June 30, 2016, Busey Wealth Management's assets under care were approximately $5.0 billion.

For more information about us, visit www.busey.com and www.pulaskibank.com.

Contacts:

Robin N. Elliott, Chief Operating Officer & Chief Financial Officer

217-365-4120

Susan K. Miller, Chief Accounting Officer & Deputy Chief Financial Officer

217-365-4578

Special Note Concerning Forward-Looking Statements

Statements made in this report, other than those concerning historical financial information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of First Busey.  Forward-looking statements, which may be based upon beliefs, expectations and assumptions of First Busey'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, national, and international economy; (ii) the economic impact of any future terrorist threats or attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning First Busey's general business (including the impact of the Dodd-Frank Act and the extensive regulations to be promulgated thereunder, as well as the Basel III Rules); (iv) changes in interest rates and prepayment rates of First Busey'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 (including the acquisition of Pulaski), 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 First Busey;  (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 First Busey and its business, including additional factors that could materially affect its financial results, is included in First Busey's filings with the Securities and Exchange Commission.