SEC Filing | First Busey Corporation

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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 23, 2019

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

Nevada	0-15950	37-1078406
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

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)
	☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	BUSE	The Nasdaq Stock Market LLC

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. ☐

Item 2.02. Results of Operations and Financial Condition.

On Tuesday, July 23, 2019, First Busey Corporation ("First Busey") issued a press release disclosing financial results for the quarter ended June 30, 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 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.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1

Press Release issued by First Busey Corporation, dated July 23, 2019.

Signature

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 23, 2019

First Busey Corporation

By: /s/ Robin N. Elliott

Name: Robin N. Elliott

Title: Chief Financial Officer

July 23, 2019

First Busey Announces 2019 Second Quarter Earnings

Champaign, IL – (Nasdaq: BUSE)

Message from our President & CEO

Positive advances in the second quarter of 2019 from the comparable quarter of the prior year:

• Total assets of $9.61 billion, an increase of 23.6%

• Net interest income of $73.4 million, an increase of 21.6%

• Portfolio loans of $6.53 billion, an increase of 17.6%

• Non-interest bearing deposits of $1.77 billion, an increase of 18.0%

• Tangible book value per common share of $14.95, as compared to $13.40

First Busey Corporation’s (“First Busey” or the “Company”) net income for the second quarter of 2019 was $24.1 million, or $0.43 per diluted common share, as compared to $25.5 million, or $0.48 per diluted common share, for the first quarter of 2019 and $24.9 million, or $0.51 per diluted common share, for the second quarter of 2018. Adjusted net income¹ for the second quarter of 2019 was $29.5 million, or $0.53 per diluted common share, as compared to $26.6 million, or $0.50 per diluted common share, for the first quarter of 2019 and $25.6 million, or $0.52 per diluted common share, for the second quarter of 2018.

Year-to-date net income through June 30, 2019 was $49.6 million, or $0.90 per diluted common share, compared to net income of $46.8 million, or $0.95 per diluted common share, for the comparable period of 2018. Year-to-date adjusted net income¹ for the first six months of 2019 was $56.1 million, or $1.02 per diluted common share, compared to $50.5 million or $1.03 per diluted common share for the first six months 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 second quarter of 2019 were $4.1 million of expenses related to acquisitions, $1.4 million of expenses related to other restructuring costs and $1.8 million related to mortgage servicing rights impairment from TheBANK of Edwardsville (“TheBANK”) asset. 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 second quarter of 2019, annualized return on average assets and annualized return on average tangible common equity were 1.01% and 11.80%, respectively. Based on adjusted net income¹, return on average assets was 1.24% and return on average tangible common equity was 14.45% for the second quarter of 2019.

For the six months ended June 30, 2019, annualized return on average assets and annualized return on average tangible common equity were 1.09% and 12.68%, respectively. Based on adjusted net income¹, return on average assets was 1.23% and return on average tangible common equity was 14.35% for the six months ended June 30, 2019.

On January 31, 2019, the Company completed its acquisition of The Banc Ed Corp. (“Banc Ed”), the holding company for 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. Financial results for 2019 were impacted by the Banc Ed acquisition, resetting the baseline for financial performance in future quarters in a multitude of positive ways.

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

On May 13, 2019, the Company announced the execution of an Agreement and Plan of Merger in connection with the proposed acquisition by Busey Bank of Investors’ Security Trust Company (“IST”), a Fort Myers, Florida wealth management firm. While the proposed acquisition is expected to add to the Company’s wealth management offerings, it is not expected to have any immediate, material impact to the Company’s earnings or overall business. Through this transaction, Busey Bank and IST broaden the expertise and level of service available to clients—from individuals and families to institutions and foundations—and remain committed to their founding principles of being active community stewards and providing the highest level of personal service to clients delivered by experienced, local professionals. It is anticipated that IST will be merged with and into the wealth management division of Busey Bank in 2019, subject to customary closing conditions and required approvals.

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. Further, Busey was named among the 2019 Best-In-State Banks for Illinois by Forbes and Statista and recognized with the 2019 BEST Award in talent development for the third year by the Association for Talent Development.

Busey takes pride in its culture and its commitment to the communities we serve. As we acknowledge our accomplishments and the positive forward momentum of the Company, we are grateful to you for allowing us the opportunity to serve you and your community.

/s/ Van A. Dukeman

President & Chief Executive Officer

First Busey Corporation

SELECTED FINANCIAL HIGHLIGHTS¹
(dollars in thousands, except per share data)
	As of and for the												As of and for the
	Three Months Ended												Six Months Ended
	June 30,			March 31,			December 31,			June 30,			June 30,			June 30,
	2019			2019			2018			2018			2019			2018
EARNINGS & PER SHARE DATA
Net income	$	24,085		$	25,469		$	25,290		$	24,862		$	49,554		$	46,779
Revenue²		102,350			94,286			83,184			83,014			196,636			165,257
Diluted earnings per share		0.43			0.48			0.51			0.51			0.90			0.95
Cash dividends paid per share		0.21			0.21			0.20			0.20			0.42			0.40

Net income by operating segment
Banking	$	24,441		$	26,665		$	24,134		$	24,904		$	51,106		$	46,749
Remittance Processing		1,105			1,025			814			986			2,130			1,939
Wealth Management		2,845			2,641			2,040			2,288			5,486			5,052

AVERAGE BALANCES
Cash and cash equivalents	$	328,414		$	220,471		$	272,811		$	218,239		$	327,525		$	222,623
Investment securities		1,897,486			1,722,015			1,443,054			1,308,203			1,810,237			1,309,545
Loans held for sale		25,143			17,249			23,380			27,516			21,218			33,372
Portfolio loans		6,528,326			6,128,661			5,540,852			5,533,168			6,329,596			5,520,584
Interest-earning assets		8,666,136			8,088,396			7,174,755			6,984,486			8,378,862			6,980,457
Total assets		9,522,678			8,865,642			7,846,154			7,653,541			9,198,975			7,658,691

Non-interest bearing deposits		1,747,746			1,616,913			1,486,977			1,492,251			1,682,691			1,494,680
Interest-bearing deposits		5,970,408			5,592,495			4,852,649			4,619,710			5,782,495			4,594,078
Total deposits		7,718,154			7,209,408			6,339,626			6,111,961			7,465,186			6,088,758
Securities sold under agreements to repurchase		193,621			204,529			210,416			234,282			199,045			246,100
Interest-bearing liabilities		6,493,885			6,064,091			5,329,898			5,176,986			6,280,175			5,176,113
Total liabilities		8,326,876			7,755,770			6,866,652			6,709,410			8,042,900			6,719,716
Stockholders' common equity		1,195,802			1,109,872			979,502			944,131			1,153,075			938,975
Tangible stockholders' common equity³		818,951			757,285			678,023			639,752			788,289			633,309

PERFORMANCE RATIOS
Return on average assets⁴		1.01	%		1.17	%		1.28	%		1.30	%		1.09	%		1.23	%
Return on average common equity⁴		8.08	%		9.31	%		10.24	%		10.56	%		8.67	%		10.05	%
Return on average tangible common equity^3,4		11.80	%		13.64	%		14.80	%		15.59	%		12.68	%		14.90	%
Net interest margin^4,5		3.43	%		3.46	%		3.38	%		3.50	%		3.45	%		3.50	%
Efficiency ratio⁶		63.62	%		57.99	%		56.57	%		54.82	%		60.92	%		57.30	%
Non-interest revenue as a % of total revenues²		28.26	%		27.47	%		27.27	%		27.27	%		27.88	%		27.31	%

¹Results are unaudited.
²Revenues consist of net interest income plus non-interest income, excluding security gains and losses.
³Average tangible stockholders’ common equity is defined as average common equity less average goodwill and intangibles. See “Non-GAAP Financial Information” below for reconciliation.
⁴Annualized, see “Non-GAAP Financial Information” below for reconciliation.
⁵On a tax-equivalent basis, assuming a federal income tax rate of 21%.
⁶See “Non-GAAP Financial Information” below for reconciliation.

Condensed Consolidated Balance Sheets¹	As of
(dollars in thousands, except per share data)	June 30,			March 31,			December 31,			September 30,			June 30,
	2019			2019			2018			2018			2018
Assets
Cash and cash equivalents	$	420,207		$	330,407		$	239,973		$	160,652		$	230,730
Investment securities		1,869,143			1,940,519			1,312,514			1,496,948			1,384,807

Loans held for sale		39,607			20,291			25,895			32,617			33,974

Commercial loans		4,759,329			4,744,136			4,060,126			4,141,816			4,076,253
Retail real estate and retail other loans		1,772,797			1,770,945			1,508,302			1,481,925			1,479,034
Portfolio loans	$	6,532,126		$	6,515,081		$	5,568,428		$	5,623,741		$	5,555,287

Allowance for loan losses		(51,375	)		(50,915	)		(50,648	)		(52,743	)		(53,305	)
Premises and equipment		149,726			147,958			117,672			119,162			119,835
Goodwill and other intangibles		375,327			377,739			300,558			301,963			303,407
Right of use asset		10,426			10,898			-			-			-
Other assets		267,480			245,356			187,965			207,045			200,809
Total assets	$	9,612,667		$	9,537,334		$	7,702,357		$	7,889,385		$	7,775,544

Liabilities & Stockholders' Equity
Non-interest bearing deposits	$	1,766,681		$	1,791,339		$	1,464,700		$	1,438,054		$	1,496,671
Interest-bearing checking, savings, and money market deposits		4,316,730			4,214,809			3,287,618			3,205,232			3,192,735
Time deposits		1,749,811			1,757,078			1,497,003			1,552,283			1,474,506
Total deposits	$	7,833,222		$	7,763,226		$	6,249,321		$	6,195,569		$	6,163,912

Securities sold under agreements to repurchase		190,846			217,077			185,796			255,906			240,109
Short-term borrowings		30,761			30,739			-			200,000			150,000
Long-term debt		185,576			188,221			148,686			148,626			154,125
Junior subordinated debt owed to unconsolidated trusts		71,230			71,192			71,155			71,118			71,081
Lease liability		10,531			10,982			-			-			-
Other liabilities		86,893			69,756			52,435			46,026			39,135
Total liabilities	$	8,409,059		$	8,351,193		$	6,707,393		$	6,917,245		$	6,818,362
Total stockholders' equity	$	1,203,608		$	1,186,141		$	994,964		$	972,140		$	957,182
Total liabilities & stockholders' equity	$	9,612,667		$	9,537,334		$	7,702,357		$	7,889,385		$	7,775,544

Share Data
Book value per common share	$	21.73		$	21.32		$	20.36		$	19.90		$	19.62
Tangible book value per common share²	$	14.95		$	14.53		$	14.21		$	13.72		$	13.40
Ending number of common shares outstanding		55,386,636			55,624,627			48,874,836			48,860,309			48,776,404

¹ Results are unaudited except for amounts reported as of December 31, 2018.
²See “Non-GAAP Financial Information” below for reconciliation, excludes tax effect of other intangible assets.

Condensed Consolidated Statements of Income¹
(dollars in thousands, except per share data)
	For the					For the
	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018

Interest and fees on loans	$	78,031		$	62,290	$	149,820		$	123,250
Interest on investment securities		12,352			7,527		23,612			14,777
Other interest income		1,083			508		2,315			931
Total interest income	$	91,466		$	70,325	$	175,747		$	138,958

Interest on deposits		14,154			6,904		26,654			12,891
Interest on securities sold under agreements to repurchase		627			364		1,210			705
Interest on short-term borrowings		494			465		685			941
Interest on long-term debt		1,871			1,406		3,581			2,763
Interest on junior subordinated debt owed to unconsolidated trusts		892			814		1,806			1,529
Total interest expense	$	18,038		$	9,953	$	33,936		$	18,829

Net interest income	$	73,428		$	60,372	$	141,811		$	120,129
Provision for loan losses		2,517			2,258		4,628			3,266
Net interest income after provision for loan losses	$	70,911		$	58,114	$	137,183		$	116,863

Trust fees		8,318			6,735		16,433			14,249
Commissions and brokers' fees, net		1,170			883		2,084			1,979
Fees for customer services		9,696			7,290		17,793			14,236
Remittance processing		3,717			3,566		7,497			6,958
Mortgage revenue		2,851			1,573		4,796			3,216
Security gains (losses), net		(1,026	)		160		(984	)		160
Other		3,170			2,595		6,222			4,490
Total non-interest income	$	27,896		$	22,802	$	53,841		$	45,288

Salaries, wages and employee benefits		34,268			25,472		66,609			54,291
Net occupancy expense of premises		4,511			3,689		8,713			7,510
Furniture and equipment expense		2,352			1,790		4,447			3,703
Data processing		5,616			4,030		10,017			8,375
Amortization of intangible assets		2,412			1,490		4,506			3,005
Other		18,861			10,834		30,891			21,461
Total non-interest expense	$	68,020		$	47,305	$	125,183		$	98,345

Income before income taxes	$	30,787		$	33,611	$	65,841		$	63,806
Income taxes		6,702			8,749		16,287			17,027
Net income	$	24,085		$	24,862	$	49,554		$	46,779

Per Share Data
Basic earnings per common share	$	0.43		$	0.51	$	0.91		$	0.96
Diluted earnings per common share	$	0.43		$	0.51	$	0.90		$	0.95
Average common shares outstanding		55,638,187			48,815,395		54,464,167			48,795,516
Diluted average common shares outstanding		55,941,117			49,223,821		54,764,129			49,203,052

¹ Results are unaudited.

Balance Sheet Growth

At June 30, 2019, portfolio loans were $6.53 billion, as compared to $6.52 billion as of March 31, 2019 and $5.56 billion as of June 30, 2018. The June 30, 2019 increase over first quarter 2019 related to organic loan growth at Busey Bank. Average portfolio loans increased 6.5% to $6.53 billion for the second quarter of 2019 compared to $6.13 billion in the first quarter of 2019 and increased 18.0% compared to $5.53 billion for the second of 2018.

Average interest-earning assets for the second quarter of 2019 increased to $8.67 billion compared to $8.09 billion for the first quarter of 2019 and $6.98 billion for the second quarter of 2018. Average interest-earning assets for the first six months of 2019 increased to $8.38 billion from $6.98 billion in the same period of 2018, a 20.0% increase.

Total deposits were $7.83 billion at June 30, 2019, an increase from $7.76 billion at March 31, 2019 and $6.16 billion at June 30, 2018. 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 $73.4 million in the second quarter of 2019 compared to $68.4 million in the first quarter of 2019 and $60.4 million in the second quarter of 2018. Net interest income was $141.8 million for the first six months of 2019 compared to $120.1 million for the same period of 2018. Higher aggregate 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 $3.5 million for the second quarter of 2019, an increase from $3.0 million for the first quarter of 2019 and second quarter of 2018. Net purchase accounting accretion and amortization included in interest income and interest expense for the first six months of 2019 was $6.5 million compared to $6.4 million for the same period of 2018.

Net interest margin for the second quarter of 2019 was 3.43%, compared to 3.46% for the first quarter of 2019 and 3.50% for the second quarter of 2018. Adjusted net interest margin¹ for the second quarter of 2019 was 3.27%, compared to 3.31% for the first quarter of 2019 and 3.33% in the second quarter of 2018. Net interest margin for the first six months of 2019 was 3.45% compared to 3.50% for the first six months of 2018. Adjusted net interest margin¹ for the first six months of 2019 was 3.29%, a decrease from 3.32% for the same period of 2018.

Asset Quality

Non-performing loans totaled $33.1 million as of June 30, 2019 compared to $36.6 million as of March 31, 2019 and $26.4 million as of June 30, 2018. Continued disciplined credit management resulted in non-performing loans as a percentage of total loans of 0.51% at June 30, 2019 as compared to 0.56% at March 31, 2019 and 0.66% at December 31, 2018.

The Company recorded net charge-offs of $2.1 million for the second quarter of 2019. The allowance for loan loss as a percentage of portfolio loans was 0.79% at June 30, 2019 as compared to 0.78% at March 31, 2019 and 0.96% at June 30, 2018. The decline in the allowance coverage ratio in 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 $2.5 million in the second quarter of 2019, compared to $2.1 million in the first quarter of 2019 and $2.3 million in the second quarter of 2018. The Company recorded provision for loan losses of $4.6 million in the first six months of 2019 and $3.3 million in the first six months 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
	June 30,			March 31,			December 31,			September 30,			June 30,
	2019			2019			2018			2018			2018

Portfolio loans	$	6,532,126		$	6,515,081		$	5,568,428		$	5,623,741		$	5,555,287
Non-performing loans
Non-accrual loans		32,816			36,230			34,997			40,395			25,215
Loans 90+ days past due		258			356			1,601			364			1,142
Non-performing loans, segregated by geography
Illinois/ Indiana		24,509			28,847			28,319			33,699			21,534
Missouri		7,778			6,593			7,242			6,222			3,338
Florida		787			1,146			1,037			838			1,485
Loans 30-89 days past due		18,040			10,780			7,121			8,189			10,017
Other non-performing assets		936			921			376			1,093			3,694
Non-performing assets to portfolio loans and non-performing assets		0.52	%		0.58	%		0.66	%		0.74	%		0.54	%
Allowance as a percentage of non-performing loans		155.33	%		139.17	%		138.39	%		129.40	%		202.24	%
Allowance for loan losses to portfolio loans		0.79	%		0.78	%		0.91	%		0.94	%		0.96	%
Net charge-offs		2,057			1,844			2,500			1,320			1,602
Provision for loan losses		2,517			2,111			405			758			2,258

¹ Results are unaudited.

Non-Interest Income

Total non-interest income of $27.9 million for the second quarter of 2019 increased as compared to $25.9 million in the first quarter of 2019 and $22.8 million in the second quarter of 2018. Second quarter of 2019 included $1.0 million of net security losses, primarily related to unrealized losses on an equity security.

Revenues from trust fees, commissions and brokers’ fees, and remittance processing activities represented 47.3% of the Company’s non-interest income for the quarter ended June 30, 2019, providing a balance to revenue from traditional banking activities.

Trust fees and commissions and brokers’ fees were $9.5 million for the second quarter of 2019, an increase from $9.0 million for the first quarter 2019 and from $7.6 million for the second quarter of 2018. Trust fees and commissions and brokers’ fees increased to $18.5 million for the first six months of 2019 compared to $16.2 million for the first six months of 2018. Net income from the wealth management segment was $2.8 million for the second quarter of 2019 compared to $2.6 million in the first quarter of 2019 and $2.3 million in the second quarter of 2018. Net income from the wealth management segment for the six months ended June 30, 2019 was $5.5 million compared to $5.1 million for the same period of 2018, an 8.6% increase. First Busey’s wealth management division ended the second quarter of 2019 with $8.97 billion in assets under care.

Remittance processing revenue from the Company’s subsidiary, FirsTech, of $3.7 million for the second quarter of 2019 was down slightly compared to $3.8 million in the first quarter of 2019 but increased from $3.6 million for the second quarter of 2018. Remittance processing revenue for the six months ended June 30, 2019 was $7.5 million, an increase of 7.7%, compared to $7.0 million during the same period of 2018. The FirsTech operating segment generated net income of $1.1 million for the second quarter of 2019 and $2.1 million for the first six months of 2019.

The mortgage line of business generated $2.9 million of revenue in the second quarter of 2019, an increase compared to $1.9 million of revenue in the first quarter of 2019 and $1.6 million of revenue in the second quarter of 2018, following a long period of restructuring and additional revenue from TheBANK. Mortgage revenue for the first six months of 2019 was $4.8 million, an increase over the comparable period of 2018 of $3.2 million.

Operating Efficiency

The efficiency ratio was 63.62% for the quarter ended June 30, 2019 compared to 57.99% for the quarter ended March 31, 2019 and 54.82% for the quarter ended June 30, 2018. The adjusted efficiency ratio¹ was 56.55% for the quarter ended June 30, 2019, 56.43% for the quarter ended March 31, 2019, and 53.67% for the quarter ended June 30, 2018. The efficiency ratio for the first six months of 2019 was 60.92% compared to 57.30% for the first six months of 2018. The adjusted efficiency ratio¹ was 56.49% for the first six months of 2019 compared to 54.60% for the first six months of June 30, 2018. The Company remains focused on expense discipline.

Specific areas of non-interest expense are as follows:

• Salaries, wages and employee benefits were $34.3 million in the second quarter of 2019, an increase from $32.3 million in the first quarter of 2019 and $25.5 million from the second quarter of 2018. The increase from prior quarter is primarily related to the inclusion of a full quarter of salaries, wages and employee benefit expenses related to TheBANK. In the first six months of 2019, salaries, wages and employee benefits increased to $66.6 million compared to $54.3 million for the same period of 2018. Total full time equivalents (“FTE”) at June 30, 2019 was 1,579 compared to 1,589 at March 31, 2019 and 1,288 at June 30, 2018. Included in the June 30, 2019 FTE is 316 FTE of TheBANK.

• Data processing expense in the second quarter of 2019 of $5.6 million increased compared to $4.4 million in the first quarter of 2019 and $4.0 million in the second quarter of 2018. In the first six months of 2019, data processing expense increased to $10.0 million compared to $8.4 million for the same period of 2018. Variances are related to payment of conversion 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 July 26, 2019 of $0.21 per common share to stockholders of record as of July 19, 2019. The Company has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

As of June 30, 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 equity¹ (“TCE”) increased to $845.4 million at June 30, 2019, compared to $826.2 million at March 31, 2019 and $663.1 million at June 30, 2018. TCE represented 9.13% of tangible assets at June 30, 2019, compared to 9.00% at March 31, 2019 and 8.86% at June 30, 2018.³

In addition, during the second quarter of 2019, the Company purchased 333,334 shares of its common stock at $25.30 per share for a total of $8.4 million under the Company’s stock repurchase plan. At June 30, 2019, the Company held 524,097 shares in treasury and had 1,000,000 shares available to be purchased under the plan. The Company grants share-based compensation awards to its employees and members of its board of directors as provided for under the Company’s 2010 Equity Incentive Plan, under which, the Company may source stock option exercises and grants of restricted stock units and deferred stock units from its inventory of treasury stock. Repurchases were executed in contemplation of maintaining levels of treasury stock appropriate to satisfy compensation awards, in addition to favorable pricing during the second quarter of 2019.

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

Corporate Profile

As of June 30, 2019, First Busey Corporation (Nasdaq: BUSE) was a $9.61 billion financial holding company headquartered in Champaign, Illinois.

Busey Bank, a wholly-owned bank subsidiary with total assets of $7.66 billion as of June 30, 2019, is headquartered in Champaign, Illinois and has 44 banking centers serving Illinois, 13 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 June 30, 2019, assets under care were approximately $7.47 billion. Busey Bank owns a retail payment processing subsidiary, FirsTech, Inc., which processes approximately 28 million transactions per year using online bill payment, lockbox processing and walk-in payments at its 4,000 agent locations in 43 states. More information about FirsTech, Inc. can be found at firstechpayments.com.

Busey Bank was named among Forbes’ 2019 Best-In-State Banks—one of five in Illinois and 173 from across the country, equivalent to 2.8% of all 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 $1.95 billion as of June 30, 2019, is headquartered in Edwardsville, Illinois and has 19 banking centers. Through TheBANK of Edwardsville Wealth Management division, the Company provides asset management, investment and fiduciary services to individuals, businesses and foundations. As of June 30, 2019, assets under care were approximately $1.50 billion.

For more information about us, visit busey.com and 4thebank.com.

Contacts:

Robin N. Elliott, Chief Financial Officer

217-365-4120

Non-GAAP Financial Information

This earnings 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, tangible common equity to tangible assets and adjusted return on average tangible common equity. Management uses these non-GAAP measures, together with the related GAAP measures, in analysis of the Company’s performance and in making business decisions. Management also uses these measures for peer comparisons.

A reconciliation to what management believes to be the most directly comparable GAAP financial measures, for example, – 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									Six Months Ended
	June 30, 2019			March 31, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Net income	$	24,085		$	25,469		$	24,862		$	49,554		$	46,779
Acquisition expenses
Salaries, wages and employee benefits		43			-			-			43			1,233
Data processing		327			7			34			334			406
Lease impairment		415			-			-			415			-
Other (includes professional and legal)		3,293			1,205			107			4,498			2,057
Other restructuring costs
Salaries, wages and employee benefits		275			-			-			275			417
Fixed asset impairment		-			-			817			-			817
Data processing		292			100			-			392			-
Other (includes professional and legal)		826			167			-			993			-
MSR Valuation		1,822			-			-			1,822			-
Related tax benefit		(1,880	)		(334	)		(230	)		(2,214	)		(1,197	)
Adjusted net income	$	29,498		$	26,614		$	25,590		$	56,112		$	50,512

Average total assets	$	9,522,678		$	8,865,642		$	7,653,541		$	9,198,975		$	7,658,691

Reported: Return on average assets¹		1.01	%		1.17	%		1.30	%		1.09	%		1.23	%
Adjusted: Return on average assets¹		1.24	%		1.22	%		1.34	%		1.23	%		1.33	%

¹Annualized measure.

Reconciliation of Non-GAAP Financial Measures – Adjusted Net Interest Margin
(dollars in thousands)

	Three Months Ended									Six Months Ended
	June 30, 2019			March 31, 2019			June 30, 2018			June 30, 2019			June 30, 2018

Reported: Net interest income	$	73,428		$	68,383		$	60,372		$	141,811		$	120,129
Tax-equivalent adjustment		777			677			561			1,454			1,139
Purchase accounting accretion		(3,471	)		(2,994	)		(3,015	)		(6,465	)		(6,425	)
Adjusted: Net interest income	$	70,734		$	66,066		$	57,918		$	136,800		$	114,843

Average interest-earning assets	$	8,666,136		$	8,088,396		$	6,984,486		$	8,378,862		$	6,980,457

Reported: Net interest margin¹		3.43	%		3.46	%		3.50	%		3.45	%		3.50	%
Adjusted: Net Interest margin¹		3.27	%		3.31	%		3.33	%		3.29	%		3.32	%

¹Annualized measure.

Reconciliation of Non-GAAP Financial Measures – Adjusted Efficiency Ratio
(dollars in thousands)

	Three Months Ended									Six Months Ended
	June 30, 2019			March 31, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Reported: Net Interest income	$	73,428		$	68,383		$	60,372		$	141,811		$	120,129
Tax- equivalent adjustment		777			677			561			1,454			1,139
Tax equivalent interest income	$	74,205		$	69,060		$	60,933		$	143,265		$	121,268

Reported: Non-interest income		27,896			25,945			22,802			53,841			45,288
Security (losses) gains, net		(1,026	)		42			160			(984	)		160
Adjusted: Non-interest income	$	28,922		$	25,903		$	22,642		$	54,825		$	45,128

Reported: Non-interest expense		68,020			57,163			47,305			125,183			98,345
Amortization of intangible assets		(2,412	)		(2,094	)		(1,490	)		(4,506	)		(3,005	)
Non-operating adjustments:
Salaries, wages and employee benefits		(318	)		-			-			(318	)		(1,650	)
Data processing		(619	)		(107	)		(34	)		(726	)		(406	)
Other		(6,356	)		(1,372	)		(924	)		(7,728	)		(2,429	)
Adjusted: Non-interest expense	$	58,315		$	53,590		$	44,857		$	111,905		$	90,855

Reported: Efficiency ratio		63.62	%		57.99	%		54.82	%		60.92	%		57.30	%
Adjusted: Efficiency ratio		56.55	%		56.43	%		53.67	%		56.49	%		54.60	%

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
	June 30, 2019			March 31, 2019			June 30, 2018

Total assets	$	9,612,667		$	9,537,334		$	7,775,544
Goodwill and other intangible assets, net		(375,327	)		(377,739	)		(303,407	)
Tax effect of other intangible assets, net		17,075			17,751			9,288
Tangible assets	$	9,254,415		$	9,177,346		$	7,481,425

Total stockholders’ equity		1,203,608			1,186,141			957,182
Goodwill and other intangible assets, net		(375,327	)		(377,739	)		(303,407	)
Tax effect of other intangible assets, net		17,075			17,751			9,288
Tangible common equity	$	845,356		$	826,153		$	663,063

Ending number of common shares outstanding		55,386,636			55,624,627			48,776,404

Tangible common equity to tangible assets¹		9.13	%		9.00	%		8.86	%
Tangible book value per share	$	14.95		$	14.53		$	13.40

Average common equity	$	1,195,802		$	1,109,872		$	944,131
Average goodwill and intangibles, net		(376,851	)		(352,587	)		(304,379	)
Average tangible common equity	$	818,951		$	757,285		$	639,752

Reported: Return on average tangible common equity²		11.80	%		13.64	%		15.59	%
Adjusted: Return on average tangible common equity^2,3		14.45	%		14.25	%		16.04	%

	Six Months Ended
	June 30, 2019			June 30, 2018
Average stockholders' common equity	$	1,153,075		$	938,975
Average goodwill and intangibles, net		(364,786	)		(305,666	)
Average tangible stockholders' common equity	$	788,289		$	633,309

Reported: Return on average tangible common equity²		12.68	%		14.90	%
Adjusted: Return on average tangible common equity^2,3		14.35	%		16.08	%

¹Tax-effected measure.
²Annualized measure.
³Calculated using adjusted net income.

Special Note Concerning Forward-Looking Statements

Statements made in this document, other than those concerning historical financial information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and 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.