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|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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): April 22, 2019
First Busey Corporation
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)
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Nevada
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0-15950
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37-1078406
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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100 W.
University Ave.
Champaign, Illinois 61820
(Address of principal executive offices) (Zip code)
Champaign, Illinois 61820
(Address of principal executive offices) (Zip code)
(217) 365-4544
(Registrant’s telephone number, including area code)
(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):
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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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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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of
the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b– 2 of the Securities Exchange Act of 1934 (§ 240.12b–2 of this chapter). ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Item 2.02. Results of Operations and Financial Condition.
On Tuesday, April 23, 2019, First Busey Corporation ("First Busey") issued a press release disclosing financial results
for the quarter ended March 31, 2019. 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 First Busey.
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.
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Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
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On April 23, 2019, First Busey announced several modifications to assigned positions on its management team. Robin N. Elliott, who has served as First Busey’s Chief Operating
Officer since 2016 and Chief Financial Officer since 2014, will now serve as the President and Chief Executive Officer of Busey Bank, First Busey’s wholly-owned subsidiary. First Busey will continue its national search for a new Chief Financial
Officer and First Busey will not have a Chief Operating Officer at this time. Mr. Elliott will continue to serve as Chief Financial Officer (including principal financial officer) of First Busey until a new Chief Financial Officer is named.
Christopher M. Shroyer, who has served as Busey Bank’s President and Chief Executive Officer since March 2010, will now serve as Executive Vice President and Market Chairman for the Central Region, which includes certain markets in Illinois and
Indiana, for Busey Bank. Additionally, effective April 22, 2019, Jennifer L. Simons, First Busey’s principal accounting officer, is no longer employed by First Busey. Mr. Elliott will serve as First Busey’s principal accounting officer.
Mr. Elliott entered into a letter agreement with First Busey amending his current employment
agreement. Mr. Shroyer entered into an addendum to his employment agreement with First Busey effecting the change in his position with Busey Bank. The letter agreement and addendum are filed as exhibits to this Form 8-K and are incorporated into
this Item 5.02 by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
.
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.
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Date: April 23, 2019
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First Busey Corporation
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By: /s/ Van A.
Dukeman
Name: Van A. Dukeman
Title: President and Chief Executive Officer
April 23, 2019
First Busey Announces 2019 First Quarter Earnings
Champaign, IL – (Nasdaq: BUSE)
Message from our President & CEO
The Banc Ed Corp. merger leads to positive advances in the first quarter of 2019 from
the comparable quarter of the prior year:
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● Net income of $25.5 million, as compared to $21.9 million
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● Net interest income of $68.4 million, as compared to $59.8 million
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● Portfolio loans of $6.52 billion, as compared to $5.53 billion
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● Tangible book value per common share of $14.53, as compared to $13.08
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First Busey Corporation’s (“First Busey” or the “Company”) net income for the first quarter of 2019 was $25.5 million, or $0.48 per diluted
common share, as compared to $25.3 million, or $0.51 per diluted common share, for the fourth quarter of 2018 and $21.9 million, or $0.45 per diluted common share, for the first quarter of 2018. Adjusted net income1 for the first
quarter of 2019 was $26.6 million, or $0.50 per diluted common share, as compared to $26.0 million, or $0.53 per diluted common share, for the fourth quarter of 2018 and $24.9 million, or $0.51 per diluted common share, for the first quarter 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 first quarter of 2019 were $1.2 million of expenses related to acquisitions and $0.3 million of expenses related to restructuring costs. 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 first quarter of 2019, annualized return on average assets and annualized return on average tangible common equity were 1.17% and
13.64%, respectively. Based on adjusted net income1, return on average assets was 1.22% and return on average tangible common equity was 14.25% for the first quarter of 2019.
Additional first quarter 2019 highlights include:
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● Non-interest income increased to $25.9 million as
compared to $22.9 million for the fourth quarter 2018.
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● Busey Bank organic commercial loan growth of $60.4
million in first quarter of 2019.
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● Total deposits at March 31, 2019 grew to $7.76 billion
driven by a linked-quarter increase of $326.6 million in non-interest bearing deposits.
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● Continued disciplined credit management resulted in
non-performing loans as a percentage of total loans of 0.56% at March 31, 2019 as compared to 0.66% at December 31, 2018.
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1 A Non-GAAP financial measure. See “Non-GAAP Financial Information” below for reconciliation.
On January 31, 2019, the Company completed its acquisition of The Banc Ed Corp. (“Banc Ed”), the holding company for TheBANK of Edwardsville
(“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.
Under the terms of the merger agreement with Banc Ed, at the effective time of the acquisition, each share of Banc Ed common stock issued and
outstanding was converted into the right to receive 8.2067 shares of the Company’s common stock and $111.53 in cash for each share of common stock of Banc Ed. The market value of the 6.7 million shares of First Busey common stock issued at the
effective time of the acquisition was approximately $166.5 million based on First Busey’s closing stock price of $24.76 on January 31, 2019.
Financial results for the first quarter of 2019 were significantly impacted by the Banc Ed acquisition, resetting the baseline for financial
performance in future quarters in a multitude of positive ways. At the date of the merger, the fair value of TheBANK’s total assets was $1.79 billion, the fair value of total loans was $873.3 million, and the fair value of total deposits was $1.44
billion, which included $245.7 million of non-interest bearing deposits. Since the acquisition date, TheBANK’s net income of $3.6 million had a positive impact on the first quarter of 2019.
The Banc Ed transaction fits with our acquisition strategy as the addition of TheBANK will grow the Company’s current geographic footprint,
allowing the Company to serve customers across a broader portion of the St. Louis Missouri-Illinois Metropolitan Statistical Area and will significantly add to the Company’s wealth management business. We are pleased to welcome our Banc Ed
colleagues into the Busey family and feel confident that we are well positioned for growth and profitability in 2019.
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.
As we acknowledge our accomplishments and continue growing forward, we are grateful for the opportunity to consistently earn the business of
our customers, based on the contributions of our talented associates and the loyal support of our shareholders.
/s/ Van A. Dukeman
President & Chief Executive Officer
First Busey Corporation
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SELECTED FINANCIAL HIGHLIGHTS1
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As of and for the
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|||||||||||||||
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(dollars in thousands, except per share data)
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Three Months Ended
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|||||||||||||||
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March 31,
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December 31,
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September 30,
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March 31,
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|||||||||||||
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2019
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2018
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2018
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2018
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|||||||||||||
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EARNINGS & PER SHARE DATA
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||||||||||||||||
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Net income
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$
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25,469
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$
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25,290
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$
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26,859
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$
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21,917
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||||||||
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Revenue2
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94,286
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83,184
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82,627
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82,243
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||||||||||||
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Diluted earnings per share
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0.48
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0.51
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0.55
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0.45
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||||||||||||
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Cash dividends paid per share
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0.21
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0.20
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0.20
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0.20
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||||||||||||
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Net income by operating segment
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||||||||||||||||
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Banking
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$
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26,665
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$
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24,134
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$
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26,486
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$
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21,845
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||||||||
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Remittance Processing
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1,025
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814
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957
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953
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||||||||||||
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Wealth Management
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2,641
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2,040
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2,280
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2,764
|
||||||||||||
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AVERAGE BALANCES
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||||||||||||||||
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Cash and cash equivalents
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$
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220,471
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$
|
272,811
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$
|
238,000
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$
|
227,055
|
||||||||
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Investment securities
|
1,722,015
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1,443,054
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1,417,708
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1,310,902
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||||||||||||
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Loans held for sale
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17,249
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23,380
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28,661
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39,294
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||||||||||||
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Portfolio loans
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6,128,661
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5,540,852
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5,551,753
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5,507,860
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||||||||||||
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Interest-earning assets
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8,088,396
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7,174,755
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7,132,324
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6,976,383
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||||||||||||
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Total assets
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8,865,642
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7,846,154
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7,802,308
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7,663,899
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||||||||||||
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Non-interest bearing deposits
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1,616,913
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1,486,977
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1,492,709
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1,497,136
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||||||||||||
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Interest-bearing deposits
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5,592,495
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4,852,649
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4,784,657
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4,568,160
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||||||||||||
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Total deposits
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7,209,408
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6,339,626
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6,277,366
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6,065,296
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||||||||||||
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Securities sold under agreements to repurchase
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204,529
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210,416
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234,729
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258,049
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||||||||||||
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Interest-bearing liabilities
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6,064,091
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5,329,898
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5,303,632
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5,175,228
|
||||||||||||
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Total liabilities
|
7,755,770
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6,866,652
|
6,840,484
|
6,730,137
|
||||||||||||
|
Stockholders' common equity
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1,109,872
|
979,502
|
961,824
|
933,762
|
||||||||||||
|
Tangible stockholders' common equity3
|
757,285
|
678,023
|
658,910
|
626,794
|
||||||||||||
|
|
||||||||||||||||
|
PERFORMANCE RATIOS
|
||||||||||||||||
|
Return on average assets4
|
1.17
|
%
|
1.28
|
%
|
1.37
|
%
|
1.16
|
%
|
||||||||
|
Return on average common equity4
|
9.31
|
%
|
10.24
|
%
|
11.08
|
%
|
9.52
|
%
|
||||||||
|
Return on average tangible common equity3,6
|
13.64
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%
|
14.80
|
%
|
16.17
|
%
|
14.18
|
%
|
||||||||
|
Net interest margin5,6
|
3.46
|
%
|
3.38
|
%
|
3.41
|
%
|
3.51
|
%
|
||||||||
|
Efficiency ratio6
|
57.99
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%
|
56.57
|
%
|
53.47
|
%
|
59.80
|
%
|
||||||||
|
Non-interest revenue as a % of total revenues2
|
27.47
|
%
|
27.27
|
%
|
26.45
|
%
|
27.34
|
%
|
||||||||
|
1 Results are unaudited.
|
||||||||||||||||
|
2 Revenues consist of net interest income plus non-interest income, net of 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 an income tax rate of 21%.
|
||||||||||||||||
|
6 See “Non-GAAP Financial Information” below for reconciliation.
|
||||||||||||||||
|
Condensed Consolidated Balance Sheets1
|
As of
|
|||||||||||||||||||
|
(dollars in thousands, except per share data)
|
March 31,
|
December 31,
|
September 30,
|
June 30,
|
March 31,
|
|||||||||||||||
|
2019
|
2018
|
2018
|
2018
|
2018
|
||||||||||||||||
|
Assets
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$
|
330,407
|
$
|
239,973
|
$
|
160,652
|
$
|
230,730
|
$
|
367,525
|
||||||||||
|
Investment securities
|
1,940,519
|
1,312,514
|
1,496,948
|
1,384,807
|
1,286,136
|
|||||||||||||||
|
Loans held for sale
|
20,291
|
25,895
|
32,617
|
33,974
|
29,034
|
|||||||||||||||
|
Commercial loans
|
4,744,136
|
4,060,126
|
4,141,816
|
4,076,253
|
4,061,181
|
|||||||||||||||
|
Retail real estate and retail other loans
|
1,770,945
|
1,508,302
|
1,481,925
|
1,479,034
|
1,470,272
|
|||||||||||||||
|
Portfolio loans
|
$
|
6,515,081
|
$
|
5,568,428
|
$
|
5,623,741
|
$
|
5,555,287
|
$
|
5,531,453
|
||||||||||
|
Allowance for loan losses
|
(50,915
|
)
|
(50,648
|
)
|
(52,743
|
)
|
(53,305
|
)
|
(52,649
|
)
|
||||||||||
|
Premises and equipment
|
147,958
|
117,672
|
119,162
|
119,835
|
118,985
|
|||||||||||||||
|
Goodwill and other intangibles
|
377,739
|
300,558
|
301,963
|
303,407
|
304,897
|
|||||||||||||||
|
Right of use asset
|
10,898
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Other assets
|
245,356
|
187,965
|
207,045
|
200,809
|
193,365
|
|||||||||||||||
|
Total assets
|
$
|
9,537,334
|
$
|
7,702,357
|
$
|
7,889,385
|
$
|
7,775,544
|
$
|
7,778,746
|
||||||||||
|
Liabilities & Stockholders' Equity
|
||||||||||||||||||||
|
Non-interest bearing deposits
|
$
|
1,791,339
|
$
|
1,464,700
|
$
|
1,438,054
|
$
|
1,496,671
|
$
|
1,651,333
|
||||||||||
|
Interest-bearing checking, savings, and money market deposits
|
4,214,809
|
3,287,618
|
3,205,232
|
3,192,735
|
3,270,963
|
|||||||||||||||
|
Time deposits
|
1,757,078
|
1,497,003
|
1,552,283
|
1,474,506
|
1,408,878
|
|||||||||||||||
|
Total deposits
|
$
|
7,763,226
|
$
|
6,249,321
|
$
|
6,195,569
|
$
|
6,163,912
|
$
|
6,331,174
|
||||||||||
|
Securities sold under agreements to repurchase
|
217,077
|
185,796
|
255,906
|
240,109
|
235,311
|
|||||||||||||||
|
Short-term borrowings
|
30,739
|
-
|
200,000
|
150,000
|
-
|
|||||||||||||||
|
Long-term debt
|
188,221
|
148,686
|
148,626
|
154,125
|
154,122
|
|||||||||||||||
|
Junior subordinated debt owed to unconsolidated trusts
|
71,192
|
71,155
|
71,118
|
71,081
|
71,044
|
|||||||||||||||
|
Lease liability
|
10,982
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Other liabilities
|
69,756
|
52,435
|
46,026
|
39,135
|
44,949
|
|||||||||||||||
|
Total liabilities
|
$
|
8,351,193
|
$
|
6,707,393
|
$
|
6,917,245
|
$
|
6,818,362
|
$
|
6,836,600
|
||||||||||
|
Total stockholders' equity
|
$
|
1,186,141
|
$
|
994,964
|
$
|
972,140
|
$
|
957,182
|
$
|
942,146
|
||||||||||
|
Total liabilities & stockholders' equity
|
$
|
9,537,334
|
$
|
7,702,357
|
$
|
7,889,385
|
$
|
7,775,544
|
$
|
7,778,746
|
||||||||||
|
Share Data
|
||||||||||||||||||||
|
Book value per common share
|
$
|
21.32
|
$
|
20.36
|
$
|
19.90
|
$
|
19.62
|
$
|
19.34
|
||||||||||
|
Tangible book value per common share2
|
$
|
14.53
|
$
|
14.21
|
$
|
13.72
|
$
|
13.40
|
$
|
13.08
|
||||||||||
|
Ending number of common shares outstanding
|
55,624,627
|
48,874,836
|
48,860,309
|
48,776,404
|
48,717,239
|
|||||||||||||||
|
1 Results are unaudited except for
amounts reported as of December 31, 2018.
|
||||||||||||||||||||
|
2 See “Non-GAAP Financial Information” below for reconciliation.
|
||||||||||||||||||||
|
Condensed Consolidated Statements of
Income1
|
||||||||
|
(dollars in thousands, except per share data)
|
||||||||
|
For the
|
||||||||
|
Three Months Ended March 31,
|
||||||||
|
2019
|
2018
|
|||||||
|
Interest and fees on loans
|
$
|
71,789
|
$
|
60,960
|
||||
|
Interest on investment securities
|
11,260
|
7,250
|
||||||
|
Other interest income
|
1,232
|
423
|
||||||
|
Total interest income
|
$
|
84,281
|
$
|
68,633
|
||||
|
Interest on deposits
|
12,500
|
5,987
|
||||||
|
Interest on securities sold under agreements to repurchase
|
583
|
341
|
||||||
|
Interest on short-term borrowings
|
191
|
476
|
||||||
|
Interest on long-term debt
|
1,710
|
1,357
|
||||||
|
Interest on junior subordinated debt owed to unconsolidated trusts
|
914
|
715
|
||||||
|
Total interest expense
|
$
|
15,898
|
$
|
8,876
|
||||
|
Net interest income
|
$
|
68,383
|
$
|
59,757
|
||||
|
Provision for loan losses
|
2,111
|
1,008
|
||||||
|
Net interest income after provision for loan losses
|
$
|
66,272
|
$
|
58,749
|
||||
|
Trust fees
|
8,115
|
7,514
|
||||||
|
Commissions and brokers' fees, net
|
914
|
1,096
|
||||||
|
Fees for customer services
|
8,097
|
6,946
|
||||||
|
Remittance processing
|
3,780
|
3,392
|
||||||
|
Mortgage revenue
|
1,945
|
1,643
|
||||||
|
Security gains, net
|
42
|
-
|
||||||
|
Other
|
3,052
|
1,895
|
||||||
|
Total non-interest income
|
$
|
25,945
|
$
|
22,486
|
||||
|
Salaries, wages and employee benefits
|
32,341
|
28,819
|
||||||
|
Net occupancy expense of premises
|
4,202
|
3,821
|
||||||
|
Furniture and equipment expense
|
2,095
|
1,913
|
||||||
|
Data processing
|
4,401
|
4,345
|
||||||
|
Amortization of intangible assets
|
2,094
|
1,515
|
||||||
|
Other
|
12,030
|
10,627
|
||||||
|
Total non-interest expense
|
$
|
57,163
|
$
|
51,040
|
||||
|
Income before income taxes
|
$
|
35,054
|
$
|
30,195
|
||||
|
Income taxes
|
9,585
|
8,278
|
||||||
|
Net income
|
$
|
25,469
|
$
|
21,917
|
||||
|
Per Share Data
|
||||||||
|
Basic earnings per common share
|
$
|
0.48
|
$
|
0.45
|
||||
|
Diluted earnings per common share
|
$
|
0.48
|
$
|
0.45
|
||||
|
Average common shares outstanding
|
53,277,102
|
48,775,416
|
||||||
|
Diluted average common shares outstanding
|
53,577,935
|
49,178,939
|
||||||
|
1 Results are unaudited.
|
||||||||
Balance Sheet Growth
At March 31, 2019, portfolio loans were $6.52 billion, as compared to $5.57 billion as of December 31, 2018 and $5.53 billion as of March 31,
2018. The March 31, 2019 increase in portfolio loans includes $874.1 million of TheBANK loans combined with organic Busey Bank loan growth, primarily in Missouri. Average portfolio loans increased 11.3% to $6.13 billion for the first quarter of
2019 compared to $5.51 billion for the first quarter of 2018.
Average interest-earning assets for the first quarter of 2019 increased to $8.09 billion compared to $7.17 billion for the fourth quarter of
2018 and $6.98 billion for the first quarter of 2018.
Total deposits were $7.76 billion at March 31, 2019, an increase from $6.25 billion at December 31, 2018 and $6.33 billion at March 31,
2018. TheBANK’s total deposits were $1.47 billion at March 31, 2019, which included $253.9 million of non-interest bearing deposits. 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 $68.4 million in the first quarter of 2019 compared to $60.5 million in the fourth quarter of 2018 and $59.8 million
in the first quarter of 2018. Higher 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 $3.0 million for the first quarter of 2019, an increase from $1.9 million for the fourth quarter of
2018 and decrease from $3.4 million for the first quarter of 2018.
Net interest margin for the first quarter of 2019 was 3.46%, compared to 3.38% for the fourth quarter of 2018 and 3.51% for the first quarter
of 2018. Adjusted net interest margin1 for the first quarter of 2019 was 3.31%, compared to 3.27% for the fourth quarter of 2018 but steady with the first quarter of 2018.
Asset Quality
Non-performing loans totaled $36.6 million as of March 31, 2019 and December 31, 2018 compared to $33.6 million as of March 31, 2018.
Non-performing loans were 0.56% of total portfolio loans as of March 31, 2019, compared to 0.66% as of December 31, 2018 and 0.61% as of March 31, 2018.
The Company recorded net charge-offs of $1.8 million for the first quarter of 2019. The allowance for loan loss as a percentage of portfolio
loans was 0.78% at March 31, 2019 as compared to 0.91% at December 31, 2018 and 0.95% at March 31, 2018. The decline in the allowance coverage ratio in the first quarter of 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 $2.1 million in the first quarter of 2019, compared to $0.4 million in the fourth quarter of 2018 and $1.0 million in the first quarter 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
|
|||||||||||||||||||
|
March 31,
|
December 31,
|
September 30,
|
June 30,
|
March 31,
|
||||||||||||||||
|
2019
|
2018
|
2018
|
2018
|
2018
|
||||||||||||||||
|
Portfolio loans
|
$
|
6,515,081
|
$
|
5,568,428
|
$
|
5,623,741
|
$
|
5,555,287
|
$
|
5,531,453
|
||||||||||
|
Non-performing loans
|
||||||||||||||||||||
|
Non-accrual loans
|
36,230
|
34,997
|
40,395
|
25,215
|
32,588
|
|||||||||||||||
|
Loans 90+ days past due
|
356
|
1,601
|
364
|
1,142
|
995
|
|||||||||||||||
|
Non-performing loans, segregated by geography
|
||||||||||||||||||||
|
Illinois/ Indiana
|
28,847
|
28,319
|
33,699
|
21,534
|
28,743
|
|||||||||||||||
|
Missouri
|
6,593
|
7,242
|
6,222
|
3,338
|
3,641
|
|||||||||||||||
|
Florida
|
1,146
|
1,037
|
838
|
1,485
|
1,199
|
|||||||||||||||
|
Loans 30-89 days past due
|
10,780
|
7,121
|
8,189
|
10,017
|
9,506
|
|||||||||||||||
|
Other non-performing assets
|
921
|
376
|
1,093
|
3,694
|
1,001
|
|||||||||||||||
|
Non-performing assets to portfolio loans and non- performing assets
|
0.58
|
%
|
0.66
|
%
|
0.74
|
%
|
0.54
|
%
|
0.63
|
%
|
||||||||||
|
Allowance as a percentage of non-performing loans
|
139.17
|
%
|
138.39
|
%
|
129.40
|
%
|
202.24
|
%
|
156.77
|
%
|
||||||||||
|
Allowance for loan losses to portfolio loans
|
0.78
|
%
|
0.91
|
%
|
0.94
|
%
|
0.96
|
%
|
0.95
|
%
|
||||||||||
|
Net charge-offs
|
1,844
|
2,500
|
1,320
|
1,602
|
1,941
|
|||||||||||||||
|
Provision for loan losses
|
2,111
|
405
|
758
|
2,258
|
1,008
|
|||||||||||||||
|
1 Results are unaudited.
|
||||||||||||||||||||
Fee-based Businesses
Revenues from trust fees, commissions and brokers’ fees, and remittance processing activities represented 49.4% of the Company’s non-interest
income for the quarter ended March 31, 2019, providing a balance to revenue from traditional banking activities.
Trust fees and commissions and brokers’ fees were positively impacted as we built upon recent acquisitions and expanded market share,
partially offset by a decline in farm management brokerage income due to timing of land sales. Trust fees and commissions and brokers’ fees were $9.0 million for the first quarter of 2019, an increase from $7.5 million for the fourth quarter 2018
and from $8.6 million for the first quarter of 2018. Net income from the wealth management segment was $2.6 million for the first quarter of 2019 compared to $2.0 million in the fourth quarter of 2018 and $2.8 million in the first quarter of 2018.
First Busey’s wealth management division ended the first quarter of 2019 with $8.89 billion in assets under care.
Remittance processing revenue from the Company’s subsidiary, FirsTech, of $3.8 million for the first quarter of 2019 was steady compared to
the fourth quarter of 2018 and increased from $3.4 million for the first quarter of 2018. The FirsTech operating segment generated net income of $1.0 million for the first quarter of 2019.
The mortgage line of business generated $1.9 million of revenue in the first quarter of 2019, an increase compared to $1.1 million of revenue
in the fourth quarter of 2018 and $1.6 million of revenue in the first quarter of 2018, following a long period of restructuring and additional revenue from TheBANK.
Operating Efficiency
The efficiency ratio was 57.99% for the quarter ended March 31, 2019 compared to 56.57% for the quarter ended December 31, 2018 and 59.80%
for the quarter ended March 31, 2018. The adjusted efficiency ratio3 was 56.43% for the quarter ended March 31, 2019, 55.49% for the quarter ended December 31, 2018, and 55.54% for the quarter ended March 31, 2018.
Specific areas of non-interest expense are as follows:
● Salaries, wages and employee benefits were $32.3 million in the first quarter of 2019, an increase from $27.5
million in the fourth quarter of 2018 and $28.8 million from the first quarter of 2018. Banc Ed added 318 full time equivalents (“FTE”) at March 31, 2019, increasing the March 31, 2019 FTE to 1,589 compared to 1,270 at December 31, 2018 and 1,278
at March 31, 2018.
● Data processing expense in the first quarter of 2019 of $4.4 million increased compared to $4.0 million in the
fourth quarter of 2018 and $4.3 million in the first quarter of 2018. Variances are related to payment of deconversion 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 April 26, 2019 of $0.21 per common share to stockholders of record as of April 19, 2019. The Company has consistently paid dividends to its common stockholders since the bank holding
company was organized in 1980.
As of March 31, 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 equity3 (“TCE”) increased to $826.2 million at March 31, 2019, compared to $703.0 million at December 31, 2018 and $646.9 million at March 31, 2018. TCE
represented 9.00% of tangible assets at March 31, 2019, compared to 9.49% at December 31, 2018 and 8.64% at March 31, 2018.3
3 Non-GAAP financial measures. See “Non-GAAP Financial Information” below for
reconciliation.
Corporate Profile
As of March 31, 2019, First Busey Corporation (Nasdaq: BUSE) was a $9.54 billion financial holding company headquartered in Champaign,
Illinois.
Busey Bank, a wholly-owned bank subsidiary with total assets of $7.73 billion as of March 31, 2019, is headquartered in Champaign, Illinois
and has forty-four banking centers serving Illinois, thirteen 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 March 31, 2019, assets under care were approximately $7.30 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’ 2018 Best-In-State Banks—one of five in Illinois and 124 from across the country, equivalent to 2.2% 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 $1.81 billion as of March 31, 2019, is
headquartered in Edwardsville, Illinois and has nineteen banking centers and one loan production office in the greater St. Louis, MO-IL MSA. Through TheBANK of Edwardsville Wealth Management division, the Company provides asset management,
investment and fiduciary services to individuals, businesses and foundations. As of March 31, 2019, assets under care were approximately $1.59 billion.
For more information about us, visit busey.com and 4thbank.com.
Contacts:
Robin N. Elliott, Chief Financial Officer
217-365-4120
Non-GAAP Financial Information
This press 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, and tangible common equity to tangible assets. 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 – 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
|
||||||||||||
|
March 31,
2019
|
December 31, 2018
|
March 31, 2018
|
||||||||||
|
Net income
|
$
|
25,469
|
$
|
25,290
|
$
|
21,917
|
||||||
|
Acquisition expenses
|
||||||||||||
|
Salaries, wages and employee benefits
|
-
|
-
|
1,233
|
|||||||||
|
Data processing
|
7
|
-
|
372
|
|||||||||
|
Other (includes professional and legal)
|
1,205
|
262
|
1,950
|
|||||||||
|
Other restructuring costs
|
||||||||||||
|
Salaries, wages and employee benefits
|
-
|
640
|
417
|
|||||||||
|
Data processing
|
100
|
-
|
-
|
|||||||||
|
Other (includes professional and legal)
|
167
|
-
|
-
|
|||||||||
|
Related tax benefit
|
(334
|
)
|
(234
|
)
|
(967
|
)
|
||||||
|
Adjusted net income
|
$
|
26,614
|
$
|
25,958
|
$
|
24,922
|
||||||
|
Average total assets
|
$
|
8,865,642
|
$
|
7,846,154
|
$
|
7,663,899
|
||||||
|
Reported: Return on average
assets1
|
1.17
|
%
|
1.28
|
%
|
1.16
|
%
|
||||||
|
Adjusted: Return on average
assets 1
|
1.22
|
%
|
1.31
|
%
|
1.32
|
%
|
||||||
|
1 Annualized measure.
|
||||||||||||
|
Reconciliation of Non-GAAP Financial Measures – Adjusted Net Interest Margin
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||
|
Three Months Ended
|
||||||||||||
|
March 31,
2019
|
December 31, 2018
|
March 31,
2018
|
||||||||||
|
Reported: Net interest income
|
$
|
68,383
|
$
|
60,503
|
$
|
59,757
|
||||||
|
Tax-equivalent adjustment
|
677
|
545
|
578
|
|||||||||
|
Purchase accounting accretion
|
(2,994
|
)
|
(1,852
|
)
|
(3,410
|
)
|
||||||
|
Adjusted: Net interest income
|
$
|
66,066
|
$
|
59,196
|
$
|
56,925
|
||||||
|
Average interest-earning assets
|
$
|
8,088,396
|
$
|
7,174,755
|
$
|
6,976,383
|
||||||
|
Reported: Net interest margin1
|
3.46
|
%
|
3.38
|
%
|
3.51
|
%
|
||||||
|
Adjusted: Net Interest margin1
|
3.31
|
%
|
3.27
|
%
|
3.31
|
%
|
||||||
|
1 Annualized measure.
|
||||||||||||
|
Reconciliation of Non-GAAP Financial Measures – Adjusted Efficiency Ratio
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||
|
Three Months Ended
|
||||||||||||
|
March 31,
2019
|
December 31,
2018
|
March 31,
2018
|
||||||||||
|
Reported: Net Interest income
|
$
|
68,383
|
$
|
60,503
|
$
|
59,757
|
||||||
|
Tax- equivalent adjustment
|
677
|
545
|
578
|
|||||||||
|
Tax equivalent interest income
|
$
|
69,060
|
$
|
61,048
|
$
|
60,335
|
||||||
|
Reported: Non-interest income
|
25,945
|
22,852
|
22,486
|
|||||||||
|
Security gain net
|
(42
|
)
|
(171
|
)
|
-
|
|||||||
|
Adjusted: Non-interest income
|
$
|
25,903
|
$
|
22,681
|
$
|
22,486
|
||||||
|
Reported: Non-interest expense
|
57,163
|
48,769
|
51,040
|
|||||||||
|
Amortization of intangible assets
|
(2,094
|
)
|
(1,404
|
)
|
(1,515
|
)
|
||||||
|
Non-operating adjustments:
|
||||||||||||
|
Salaries, wages and employee benefits
|
-
|
(640
|
)
|
(1,650
|
)
|
|||||||
|
Data processing
|
(107
|
)
|
-
|
(372
|
)
|
|||||||
|
Other
|
(1,372
|
)
|
(262
|
)
|
(1,505
|
)
|
||||||
|
Adjusted: Non-interest expense
|
$
|
53,590
|
$
|
46,463
|
$
|
45,998
|
||||||
|
Reported: Efficiency ratio
|
57.99
|
%
|
56.57
|
%
|
59.80
|
%
|
||||||
|
Adjusted: Efficiency ratio
|
56.43
|
%
|
55.49
|
%
|
55.54
|
%
|
||||||
|
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
|
||||||||||||
|
March 31,
2019
|
December 31,
2018
|
March 31,
2018
|
||||||||||
|
Total assets
|
$
|
9,537,334
|
$
|
7,702,357
|
$
|
7,778,746
|
||||||
|
Goodwill and other intangible assets, net
|
(377,739
|
)
|
(300,558
|
)
|
(304,897
|
)
|
||||||
|
Tax effect of other intangible assets, net
|
17,751
|
8,547
|
9,675
|
|||||||||
|
Tangible assets
|
$
|
9,177,346
|
$
|
7,410,346
|
$
|
7,483,524
|
||||||
|
Total stockholders’ equity
|
1,186,141
|
994,964
|
942,146
|
|||||||||
|
Goodwill and other intangible assets, net
|
(377,739
|
)
|
(300,558
|
)
|
(304,897
|
)
|
||||||
|
Tax effect of other intangible assets, net
|
17,751
|
8,547
|
9,675
|
|||||||||
|
Tangible common equity
|
$
|
826,153
|
$
|
702,953
|
$
|
646,924
|
||||||
|
Ending number of common shares outstanding
|
55,624,627
|
48,874,836
|
48,717,239
|
|||||||||
|
Tangible common equity to tangible assets1
|
9.00
|
%
|
9.49
|
%
|
8.64
|
%
|
||||||
|
Tangible book value per share
|
$
|
14.53
|
$
|
14.21
|
$
|
13.08
|
||||||
|
Average common equity
|
$
|
1,109,872
|
$
|
979,502
|
$
|
933,762
|
||||||
|
Average goodwill and intangibles, net
|
(352,587
|
)
|
(301,479
|
)
|
(306,968
|
)
|
||||||
|
Average tangible common equity
|
$
|
757,285
|
$
|
678,023
|
$
|
626,794
|
||||||
|
Reported: Return on average
tangible common equity2
|
13.64
|
%
|
14.80
|
%
|
14.18
|
%
|
||||||
|
Adjusted: Return on average
tangible common equity2,3
|
14.25
|
%
|
15.19
|
%
|
16.13
|
%
|
||||||
|
1 Tax-effected measure.
|
||||||||||||
|
2 Annualized measure.
|
||||||||||||
|
3 Calculated using adjusted net income.
|
||||||||||||
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 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.
Exhibit 99.2
ADDENDUM
This Employment
Agreement Addendum (this "Addendum") is
entered into by and between First Busey Corporation (the "Company") and Christopher
M. Shroyer ("Executive," and
together with the Company, the "Parties") for
the purposes and reasons stated below.
RECITALS
A. Executive is currently a party to that certain Employment Agreement by and between Executive and the Company, dated July 31, 2007, as amended (the "Agreement");
B. The Company is the sole shareholder of Busey Bank.
C. This Addendum is made a part of the Agreement, incorporates all defined terms therein unless otherwise defined herein, and in the event of any conflict between the terms
contained in this Addendum and the terms contained in the Agreement, the terms contained in this Addendum shall supersede and control the obligations and liabilities of the Parties; and
D. The Parties desire to modify the Agreement to reflect agreed upon changes to Executive's job duties and compensation structure.
AGREEMENT
In consideration of the foregoing and the mutual promises and covenants of the Parties set forth in
this Addendum, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby expressly covenant and agree as follows:
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1.
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Position
and Responsibilities. Effective as of April 23, 2019 (the "Addendum Date"), Executive's position shall be Executive Vice President and Market Chairman
— Central Region for Busey Bank. In this position, Executive shall report to the President and Chief Executive Officer of Busey Bank.
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2.
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Base Salary. As of the Addendum Date, Executive's Base Salary shall be $250,000.
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3.
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Incentive
Bonus. Executive shall continue to be eligible for participation in the Company's annual incentive plan; provided however, that (A) for the calendar year 2019 bonus, to be paid in the spring of 2020, Executive's bonus shall be not less than
$200,000, and (B) for the calendar year 2020 bonus, to be paid in the spring of 2021, Executive's bonus shall be not less than $200,000; provided
further, that Executive must remain continuously employed by the Company through the date on which each such bonus is earned pursuant to the
terms of the Company's annual incentive plan, as may be in effect from time to time, in order be eligible to receive each such bonus.
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4.
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Equity
Incentive Awards. Executive shall continue to be eligible for participation in the Company's equity incentive plan,
subject to approval and action by the Company's Board of Directors; provided, Executive shall be recommended for grant of restricted
stock units, when such awards are granted to other senior executives of the Company in 2019, with a grant date value of not less than $250,000.
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5.
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Severance
and Change in Control Benefits. In the event of Executive's termination of employment pursuant to Section 4(a) or 4(c)
of the Agreement, the defined term "Severance Payment," as used under Sections 4(g)(i) and 4(g)(ii) of the Agreement, shall be calculated using a $325,000 Base Salary and a $250,000 bonus.
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6.
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Executive
Acknowledgement. Executive expressly acknowledges and agrees that the change in position, title and duties, and the
compensation structure, each as set forth herein, does not, individually or collectively, constitute Constructive Discharge under Section 4(c) of the Agreement.
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7.
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Entire
Agreement. This Addendum, in addition to the Agreement, constitutes the entire agreement between the Parties concerning
the subject matter hereof, and supersedes all prior negotiations, undertakings, agreements, and arrangements with respect thereto, whether written or oral.
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*****************************
IN
WITNESS WHEREOF, the Company and Executive have duly executed this Addendum as of the Addendum Date.
First Busey Corporation Executive
By: /s/ Van A. Dukeman /s/ Christopher M. Shroyer
Its: President & CEO
Exhibit 99.3
April 23, 2019
Mr. Robin Elliott
c/o First Busey Corporation
100 W. University Avenue
Champaign, IL 61820
c/o First Busey Corporation
100 W. University Avenue
Champaign, IL 61820
Re: Employment Agreement
Dear Robin:
Dear Robin:
As you are aware, First Busey Corporation has implemented several changes in the executive
management of the company, effective on or about April 23, 2019. As part of such initiatives, with your consent and acknowledgement, we are making the following changes to your job titles and duties:
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1.
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You will become the President and Chief Executive Officer of Busey Bank and report to the board of directors
of Busey Bank and the President and Chief Executive Officer of First Busey.
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2.
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The company will initiate a search for a replacement Chief Financial Officer and when that position is filled,
you will no longer serve as the Chief Financial Officer.
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Please confirm your agreement to the changes noted above as though such changes were reflected in
your Employment Agreement by signing below and returning a copy of this letter to John Powers. This letter will act as an addendum to your Employment Agreement.
Thank you for your continued efforts.
Kindest regards,
/s/ Van A. Dukeman
Van A. Dukeman
Chief Executive Officer
First Busey Corporation
First Busey Corporation
I understand and agree to the foregoing changes
to my employment agreement.
to my employment agreement.
/s/ Robin Elliott
Robin Elliott
April 15, 2019