UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Current Report
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| Item 2.02 | Results of Operations and Financial Condition. |
On October 27, 2020, First Busey Corporation (“First Busey”) issued a press release disclosing financial results for the quarter ended September 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by First Busey for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
| Item 7.01 | Regulation FD Disclosure. |
On October 27, 2020, First Busey published supplemental slides discussing First Busey’s financial results for the quarter ended September 30, 2020 and coronavirus disease 2019 response. A copy is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
The information in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.2 attached hereto is being “furnished” and will not, except to the extent required by applicable law or regulation, be deemed “filed” by First Busey for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| 99.1 | Press Release issued by First Busey Corporation, dated October 27, 2020. |
| 99.2 | Supplemental slides issued by First Busey Corporation, dated October 27, 2020. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). |
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: October 27, 2020 | First Busey Corporation | |
| By: | /s/ Jeffrey D. Jones | |
| Name: | Jeffrey D. Jones | |
| Title: | Chief Financial Officer | |
Exhibit 99.1
October 27, 2020
First Busey Announces 2020 Third Quarter Earnings Champaign, IL – (Nasdaq: BUSE)
Message from our Chairman & CEO |
 |
Positive advances in the third quarter of 2020 compared to the second quarter of 2020 and third quarter of 2019
• Third quarter 2020 net income and adjusted net income1 increased to $30.8 million and $32.8 million, respectively
| • | Third quarter 2020 diluted earnings per share of $0.56 and adjusted earnings per share1 of $0.60 compared to $0.47 and $0.48, respectively, in the second quarter of 2020 |
| • | Non-interest income of $32.3 million increased in third quarter 2020 compared to $28.0 million in second quarter 2020, non- interest income represents 32% of revenue in the third quarter of 2020 |
| • | Non-interest expense of $56.5 million and non-interest expense excluding non-operating adjustments1 of $54.0 million in third quarter 2020 decreased compared to third quarter of 2019 of $68.1 million and $60.5 million, respectively |
| • | Total assets decreased from $10.84 billion at June 30 ,2020, to $10.54 billion at September 30, 2020 | |
| • | Tangible book value per common share1 of $16.32 at September 30, 2020 as compared to $15.92 at June 30, 2020 and $15.12 at September 30, 2019, an increase of 7.9% over September 30, 2019 |
| • | Wealth assets under care of $9.50 billion for the third quarter are within 2% of December 31, 2019 $9.70 billion high water mark |
• For additional information, please refer to the 3Q20 Quarterly Earnings Supplement
Third Quarter Financial Results
The net income for First Busey Corporation (“First Busey” or the “Company”) for the third quarter of 2020 was $30.8 million, or $0.56 per diluted common share, as compared to $25.8 million, or $0.47 per diluted common share, for the second quarter of 2020 and $24.8 million, or $0.45 per diluted common share, for the third quarter of 2019. Adjusted net income1 for the third quarter of 2020 was $32.8 million, or $0.60 per diluted common share, as compared to $26.2 million, or $0.48 per diluted common share, for the second quarter of 2020 and $30.5 million, or $0.55 per diluted common share, for the third quarter of 2019. For the third quarter of 2020, annualized return on average assets and annualized return on average tangible common equity1 were 1.15% and 13.92%, respectively. Based on adjusted net income1, annualized return on average assets was 1.22% and annualized return on average tangible common equity1 was 14.81% for the third quarter of 2020.
Pre-provision net revenue1 for the third quarter of 2020 was $45.9 million as compared to $45.4 million for the second quarter of 2020 and $35.9 million for the third quarter of 2019. Adjusted pre-provision net revenue1 for the third quarter of 2020 was $48.7 million as compared to $46.4 million for the second quarter of 2020 and $43.6 million for the third quarter of 2019. Pre-provision net revenue to average assets1 for the third quarter of 2020 was 1.71% as compared to 1.76% for the second quarter of 2020 and 1.48% for the third quarter of 2019. Adjusted pre-provision net revenue to average assets1 for the third quarter of 2020 was 1.81% as compared to 1.80% for the second quarter of 2020 and 1.79% for the third quarter of 2019.
The Company views certain non-operating items, including acquisition-related and other restructuring charges, as adjustments to net income reported under U.S. generally accepted accounting principles (“GAAP”). Non-operating pretax adjustments for the third quarter of 2020 included $0.3 million of expenses related to prior acquisitions and $2.2 million of other restructuring costs. The Company believes that non-GAAP measures (including adjusted pre-provision net revenue, adjusted net income, adjusted earnings per share, adjusted return on average assets, adjusted net interest margin, adjusted efficiency ratio, tangible common equity, tangible common equity to tangible assets, tangible book value per share and return on average tangible common equity), facilitate the assessment of its financial results and peer comparability. A reconciliation of these non-GAAP measures is included in tabular form at the end of this release.
1 A Non-GAAP financial measure. See “Non-GAAP Financial Information” below for reconciliation.
1
After careful consideration and analysis, the Company decided in July 2020 to consolidate 12 branches to ensure a balance between the Company’s physical banking center network and robust digital banking services. An efficient banking center footprint and strategic service models are necessary to keep First Busey competitive and responsive. These 12 banking centers closed on October 23, 2020. When fully realized, annualized expense savings net of expected associated revenue impacts are anticipated to be approximately $3.3 million with the impact of these cost savings beginning to be realized in the fourth quarter of 2020. Non-operating pretax expenses in salaries, wages and employee benefits in relation to the branch closings were $0.6 million during the third quarter of 2020, with an additional $0.1 million expected in the fourth quarter of 2020. The Company anticipates additional one-time expenses related to the banking center consolidation plan in the fourth quarter of 2020 as we finalize the fair value estimates related to the disposition of these banking centers. We currently estimate those remaining non-operating pretax expenses related to the consolidation to be in the range of $7.0 million to $7.5 million.
The operating model reorganization is consistent with the Company’s continued efforts to transition to a regional operating model that enhances sales organization alignment across our key business lines and improves efficiencies. Non-operating pretax expenses in salaries, wages and employee benefits related to the reorganization were $1.4 million during the third quarter of 2020. These efforts are currently anticipated to provide approximately $3.6 million in annual pre-tax noninterest expense savings when fully realized.
The Company continues to navigate the economic environment caused by the coronavirus disease 2019 (“COVID-19”) pandemic effectively and prudently. Our balance sheet strength remains robust with sound and stable asset quality, strong capital levels and substantial liquidity. Nevertheless, we remain vigilant, given that the negative impacts of COVID-19 are expected to continue in future quarters as the course of the economic recovery remains unclear and further fiscal stimulus is uncertain. These negative impacts may include further margin compression, increased provision expense, lower customer service fees and a deterioration in asset quality. As of the quarter ended September 30, 2020, the Company’s total assets exceeded $10 billion due to Paycheck Protection Program (“PPP”) loans and other factors. If the Company remains over $10 billion in assets at year-end, it will begin to face limitations on interchange fees and heightened supervision and regulation in 2021.
On January 1, 2020, the Company adopted ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the Current Expected Credit Loss (“CECL”) model. Upon adoption of CECL, the Company recognized a $16.8 million increase in its allowance for credit losses, substantially attributable to the remaining loan fair value marks on prior acquisitions, and a $5.5 million increase in its reserve for unfunded commitments. Under accounting rules, the reserve for unfunded commitments is carried on the balance sheet in other liabilities rather than as a component of the allowance for credit losses. These one-time increases, net of tax, were $15.9 million and recorded as an adjustment to beginning retained earnings. Ongoing impacts of the CECL methodology will be dependent upon changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors. During the third quarter of 2020, the Company recorded provision for credit losses of $5.5 million and provision for unfunded commitments of $0.3 million primarily as a result of economic factors and uncertainty due to COVID-19. The allowance for credit losses increased from $53.7 million at December 31, 2019, to $84.4 million at March 31, 2020, to $96.0 million at June 30, 2020, to $98.8 million at September 30, 2020, representing 1.39% of portfolio loans outstanding, 1.55% of portfolio loans excluding PPP loans, and 408.82% of non-performing loans at September 30, 2020.
COVID-19 Update
The Company entered this crisis from a position of strength and remains resolute in its focus on serving its customers, communities and associates while protecting its balance sheet.
To alleviate some of the financial hardships qualifying customers faced as a result of COVID-19, First Busey offered an internal Financial Relief Program. The program included options for short-term loan payment deferrals and certain fee waivers. As of September 30, 2020, the Company had 301 commercial loans on payment deferrals representing $426.4 million in loans, 565 mortgage/personal loans on payment deferrals representing $82.4 million in loans and an additional 520 deferrals for $63.7 million of mortgage loans in the serviced portfolio. As of October 21, 2020 commercial modifications decreased to 155 commercial loans on payment deferrals representing $189.3 million in loans, or 3.7% of total commercial loans.
As part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), Congress appropriated approximately $349 billion for the creation of the PPP and then authorized a second phase for another $310 billion in PPP loans. The program provided payroll assistance for the nation’s nearly 30 million small businesses—and select nonprofits—in the form of 100% government-guaranteed low-interest loans from the U.S. Small Business Administration. First Busey served as a bridge for the program, actively helping existing and new business clients sign up for this important financial resource. At September 30, 2020, First Busey had $749.4 million in PPP loans outstanding, with an amortized cost of $736.4 million, representing 4,569 new and existing customers. The Company is actively assisting these customers in submitting applications to the SBA for loan forgiveness.
2
First Busey’s goal of being a strong community bank for the communities it serves begins with outstanding associates. The Company is honored to be named among the 2020 Best Banks to Work For by American Banker, 2020 Best Places to Work in Illinois by Daily Herald Business Ledger, the 2020 Best Companies to Work For in Florida by Florida Trend magazine, the 2020 Best Place to Work in Indiana by the Indiana Chamber of Commerce, the 2019 Best-In-State Banks for Illinois by Forbes and Statista, the 2019 Best Places to Work in St. Louis by the St. Louis Business Journal and the 2019 Best Places to Work in Money Management by Pensions and Investments.
In today’s fluid, ever-evolving landscape, First Busey takes pride in its culture and is thankful for the tireless work carried out by its associates. Despite significant uncertainties in the current environment, the Company remains steadfast in its commitment to the customers and communities it serves.
/s/ Van A. Dukeman
Chairman, President & Chief Executive Officer
First Busey Corporation
3
SELECTED FINANCIAL HIGHLIGHTS1
(dollars in thousands, except per share data)
| As of and for the Three Months Ended | As of and for the Nine Months Ended | |||||||||||||||||||||||
| September 30, | June 30, | December 31, | September 30, | September 30, | September 30, | |||||||||||||||||||
| 2020 | 2020 | 2019 | 2019 | 2020 | 2019 | |||||||||||||||||||
| EARNINGS & PER SHARE DATA | ||||||||||||||||||||||||
| Pre-provision net revenue2,3 | $ | 45,922 | $ | 45,394 | $ | 37,479 | $ | 35,930 | $ | 127,165 | $ | 107,383 | ||||||||||||
| Revenue4 | 102,464 | 98,462 | 102,969 | 104,051 | 297,289 | 300,687 | ||||||||||||||||||
| Net income | 30,829 | 25,806 | 28,571 | 24,828 | 71,999 | 74,382 | ||||||||||||||||||
| Diluted earnings per share | 0.56 | 0.47 | 0.52 | 0.45 | 1.31 | 1.35 | ||||||||||||||||||
| Cash dividends paid per share | 0.22 | 0.22 | 0.21 | 0.21 | 0.66 | 0.63 | ||||||||||||||||||
| Net income by operating segment | ||||||||||||||||||||||||
| Banking | $ | 31,744 | $ | 25,985 | $ | 29,573 | $ | 25,731 | $ | 72,653 | $ | 76,837 | ||||||||||||
| Remittance Processing | 578 | 528 | 958 | 972 | 1,966 | 3,102 | ||||||||||||||||||
| Wealth Management | 3,166 | 3,082 | 3,465 | 2,184 | 9,847 | 7,670 | ||||||||||||||||||
| AVERAGE BALANCES | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 836,097 | $ | 563,022 | $ | 533,519 | $ | 515,965 | $ | 626,222 | $ | 391,029 | ||||||||||||
| Investment securities | 1,824,327 | 1,717,790 | 1,677,962 | 1,780,066 | 1,760,461 | 1,800,069 | ||||||||||||||||||
| Loans held for sale | 104,965 | 108,821 | 68,480 | 42,418 | 91,964 | 28,326 | ||||||||||||||||||
| Portfolio loans | 7,160,757 | 7,216,825 | 6,657,283 | 6,558,519 | 7,012,497 | 6,406,779 | ||||||||||||||||||
| Interest-earning assets | 9,805,948 | 9,485,200 | 8,810,505 | 8,781,590 | 9,371,157 | 8,514,580 | ||||||||||||||||||
| Total assets | 10,680,995 | 10,374,820 | 9,713,858 | 9,659,769 | 10,249,578 | 9,352,272 | ||||||||||||||||||
| Non-interest bearing deposits | 2,592,130 | 2,472,568 | 1,838,523 | 1,780,645 | 2,303,538 | 1,715,701 | ||||||||||||||||||
| Interest-bearing deposits | 6,169,377 | 6,073,795 | 6,052,529 | 6,086,378 | 6,108,605 | 5,884,904 | ||||||||||||||||||
| Total deposits | 8,761,507 | 8,546,363 | 7,891,052 | 7,867,023 | 8,412,143 | 7,600,605 | ||||||||||||||||||
| Securities sold under agreements to repurchase | 190,046 | 184,208 | 204,076 | 184,637 | 185,528 | 194,189 | ||||||||||||||||||
| Interest-bearing liabilities | 6,694,561 | 6,527,709 | 6,537,611 | 6,557,518 | 6,578,587 | 6,373,639 | ||||||||||||||||||
| Total liabilities | 9,432,547 | 9,141,550 | 8,489,411 | 8,446,936 | 9,016,230 | 8,179,059 | ||||||||||||||||||
| Stockholders' common equity | 1,248,448 | 1,233,270 | 1,224,447 | 1,212,833 | 1,233,348 | 1,173,213 | ||||||||||||||||||
| Tangible stockholders' common Equity3 | 880,958 | 863,571 | 845,179 | 835,232 | 863,547 | 804,109 | ||||||||||||||||||
| PERFORMANCE RATIOS | ||||||||||||||||||||||||
| Pre-provision net revenue to average assets2,3 | 1.71 | % | 1.76 | % | 1.53 | % | 1.48 | % | 1.66 | % | 1.54 | % | ||||||||||||
| Return on average assets3 | 1.15 | % | 1.00 | % | 1.17 | % | 1.02 | % | 0.94 | % | 1.06 | % | ||||||||||||
| Return on average common equity | 9.82 | % | 8.42 | % | 9.26 | % | 8.12 | % | 7.80 | % | 8.48 | % | ||||||||||||
| Return on average tangible common equity3 | 13.92 | % | 12.02 | % | 13.41 | % | 11.79 | % | 11.14 | % | 12.37 | % | ||||||||||||
| Net interest margin3,5 | 2.86 | % | 3.03 | % | 3.27 | % | 3.35 | % | 3.02 | % | 3.42 | % | ||||||||||||
| Efficiency ratio3 | 52.42 | % | 50.97 | % | 60.54 | % | 62.73 | % | 54.30 | % | 61.55 | % | ||||||||||||
| Non-interest revenue as a % of total revenue4 | 31.92 | % | 28.08 | % | 30.14 | % | 29.38 | % | 29.36 | % | 28.40 | % | ||||||||||||
| NON-GAAP INFORMATION | ||||||||||||||||||||||||
| Adjusted pre-provision net revenue2,3 | $ | 48,701 | $ | 46,448 | $ | 41,131 | $ | 43,600 | $ | 133,360 | $ | 125,025 | ||||||||||||
| Adjusted net income3 | 32,803 | 26,191 | 31,782 | 30,535 | 74,473 | 86,647 | ||||||||||||||||||
| Adjusted diluted earnings per share3 | 0.60 | 0.48 | 0.57 | 0.55 | 1.36 | 1.57 | ||||||||||||||||||
| Adjusted pre-provision net revenue to average assets3 | 1.81 | % | 1.80 | % | 1.68 | % | 1.79 | % | 1.74 | % | 1.79 | % | ||||||||||||
| Adjusted return on average assets3 | 1.22 | % | 1.02 | % | 1.30 | % | 1.25 | % | 0.97 | % | 1.24 | % | ||||||||||||
| Adjusted return on average tangible common equity3 | 14.81 | % | 12.20 | % | 14.92 | % | 14.50 | % | 11.52 | % | 14.41 | % | ||||||||||||
| Adjusted net interest margin3,5 | 2.75 | % | 2.93 | % | 3.14 | % | 3.22 | % | 2.91 | % | 3.27 | % | ||||||||||||
| Adjusted efficiency ratio3 | 49.97 | % | 50.48 | % | 57.02 | % | 55.42 | % | 53.24 | % | 56.12 | % | ||||||||||||
| 1 Results are unaudited. |
| 2 Net interest income plus non-interest income, excluding security gains and losses, less non-interest expense. |
| 3 See “Non-GAAP Financial Information” below for reconciliation. |
| 4 Revenue consist of net interest income plus non-interest income, excluding security gains and losses. |
| 5 On a tax-equivalent basis, assuming a federal income tax rate of 21%. |
4
| Condensed Consolidated Balance Sheets1 | ||||||||||||||||||||
| (dollars in thousands, except per share data) | As of | |||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 479,721 | $ | 1,050,072 | $ | 342,848 | $ | 529,288 | $ | 525,457 | ||||||||||
| Investment securities | 2,098,657 | 1,701,992 | 1,770,881 | 1,654,209 | 1,721,865 | |||||||||||||||
| Loans held for sale | 87,772 | 108,140 | 89,943 | 68,699 | 70,345 | |||||||||||||||
| Commercial loans | 5,600,705 | 5,637,999 | 5,040,507 | 4,943,646 | 4,900,430 | |||||||||||||||
| Retail real estate and retail other loans | 1,520,606 | 1,591,021 | 1,704,992 | 1,743,603 | 1,768,985 | |||||||||||||||
| Portfolio loans | $ | 7,121,311 | $ | 7,229,020 | $ | 6,745,499 | $ | 6,687,249 | $ | 6,669,415 | ||||||||||
| Allowance | (98,841 | ) | (96,046 | ) | (84,384 | ) | (53,748 | ) | (52,965 | ) | ||||||||||
| Premises and equipment | 144,001 | 146,951 | 149,772 | 151,267 | 153,641 | |||||||||||||||
| Goodwill and other intangibles | 365,960 | 368,053 | 370,572 | 373,129 | 381,323 | |||||||||||||||
| Right of use asset | 7,251 | 8,511 | 9,074 | 9,490 | 9,979 | |||||||||||||||
| Other assets | 333,796 | 319,272 | 327,200 | 276,146 | 274,700 | |||||||||||||||
| Total assets | $ | 10,539,628 | $ | 10,835,965 | $ | 9,721,405 | $ | 9,695,729 | $ | 9,753,760 | ||||||||||
| Liabilities & Stockholders' Equity | ||||||||||||||||||||
| Non-interest bearing deposits | $ | 2,595,075 | $ | 2,764,408 | $ | 1,910,673 | $ | 1,832,619 | $ | 1,779,490 | ||||||||||
| Interest-bearing checking, savings, and money market deposits | 4,819,859 | 4,781,761 | 4,580,547 | 4,534,927 | 4,498,005 | |||||||||||||||
| Time deposits | 1,227,767 | 1,363,497 | 1,482,013 | 1,534,850 | 1,652,971 | |||||||||||||||
| Total deposits | $ | 8,642,701 | $ | 8,909,666 | $ | 7,973,233 | $ | 7,902,396 | $ | 7,930,466 | ||||||||||
| Securities sold under agreements to repurchase | 201,641 | 194,249 | 167,250 | 205,491 | 202,500 | |||||||||||||||
| Short-term borrowings | 4,651 | 24,648 | 21,358 | 8,551 | 29,739 | |||||||||||||||
| Long-term debt | 226,801 | 256,837 | 134,576 | 182,522 | 183,968 | |||||||||||||||
| Junior subordinated debt owed to unconsolidated trusts | 71,427 | 71,387 | 71,347 | 71,308 | 71,269 | |||||||||||||||
| Lease liability | 7,342 | 8,601 | 9,150 | 9,552 | 10,101 | |||||||||||||||
| Other liabilities | 129,360 | 134,493 | 126,906 | 95,475 | 109,736 | |||||||||||||||
| Total liabilities | $ | 9,283,923 | $ | 9,599,881 | $ | 8,503,820 | $ | 8,475,295 | $ | 8,537,779 | ||||||||||
| Total stockholders' equity | $ | 1,255,705 | $ | 1,236,084 | $ | 1,217,585 | $ | 1,220,434 | $ | 1,215,981 | ||||||||||
| Total liabilities & stockholders' equity | $ | 10,539,628 | $ | 10,835,965 | $ | 9,721,405 | $ | 9,695,729 | $ | 9,753,760 | ||||||||||
| Share Data | ||||||||||||||||||||
| Book value per common share | $ | 23.03 | $ | 22.67 | $ | 22.38 | $ | 22.28 | $ | 22.03 | ||||||||||
| Tangible book value per common share2 | $ | 16.32 | $ | 15.92 | $ | 15.57 | $ | 15.46 | $ | 15.12 | ||||||||||
| Ending number of common shares outstanding | 54,522,231 | 54,516,000 | 54,401,208 | 54,788,772 | 55,197,277 | |||||||||||||||
| 1 Results are unaudited except for amounts reported as of December 31, 2019. |
| 2 See “Non-GAAP Financial Information” below for reconciliation, excludes tax effect of other intangible assets. |
5
Condensed Consolidated Statements of Income1 | ||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||
| For the | For the | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Interest and fees on loans | $ | 69,809 | $ | 78,083 | $ | 213,434 | $ | 227,903 | ||||||||
| Interest on investment securities | 9,607 | 11,427 | 30,265 | 35,039 | ||||||||||||
| Other interest income | 213 | 2,181 | 1,596 | 4,496 | ||||||||||||
| Total interest income | $ | 79,629 | $ | 91,691 | $ | 245,295 | $ | 267,438 | ||||||||
| Interest on deposits | 6,105 | 14,753 | 26,053 | 41,407 | ||||||||||||
| Interest on securities sold under agreements to repurchase | 88 | 579 | 596 | 1,789 | ||||||||||||
| Interest on short-term borrowings | 30 | 200 | 215 | 885 | ||||||||||||
| Interest on long-term debt | 2,913 | 1,831 | 6,212 | 5,412 | ||||||||||||
| Interest on junior subordinated debt owed to unconsolidated trusts | 740 | 852 | 2,220 | 2,658 | ||||||||||||
| Total interest expense | $ | 9,876 | $ | 18,215 | $ | 35,296 | $ | 52,151 | ||||||||
| Net interest income | $ | 69,753 | $ | 73,476 | $ | 209,999 | $ | 215,287 | ||||||||
| Provision for credit losses | 5,549 | 3,411 | 35,656 | 8,039 | ||||||||||||
| Net interest income after provision for credit losses | $ | 64,204 | $ | 70,065 | $ | 174,343 | $ | 207,248 | ||||||||
| Wealth management fees | 10,548 | 8,821 | 32,296 | 27,338 | ||||||||||||
| Fees for customer services | 8,014 | 9,842 | 23,400 | 27,635 | ||||||||||||
| Remittance processing | 3,995 | 3,780 | 11,466 | 11,277 | ||||||||||||
| Mortgage revenue | 5,793 | 3,331 | 9,879 | 8,127 | ||||||||||||
| Income on bank owned life insurance | 1,022 | 1,573 | 4,361 | 4,653 | ||||||||||||
| Security gains (losses), net | (426 | ) | 361 | 476 | (623 | ) | ||||||||||
| Other | 3,339 | 3,228 | 5,888 | 6,370 | ||||||||||||
| Total non-interest income | $ | 32,285 | $ | 30,936 | $ | 87,766 | $ | 84,777 | ||||||||
| Salaries, wages and employee benefits | 32,839 | 38,747 | 95,397 | 105,356 | ||||||||||||
| Data processing | 3,937 | 5,032 | 12,383 | 15,049 | ||||||||||||
| Net occupancy expense of premises | 4,256 | 4,652 | 13,419 | 13,365 | ||||||||||||
| Furniture and equipment expense | 2,325 | 2,489 | 7,311 | 6,936 | ||||||||||||
| Professional fees | 1,698 | 2,622 | 5,508 | 9,001 | ||||||||||||
| Amortization of intangible assets | 2,493 | 2,360 | 7,569 | 6,866 | ||||||||||||
| Other | 8,994 | 12,219 | 28,537 | 36,731 | ||||||||||||
| Total non-interest expense | $ | 56,542 | $ | 68,121 | $ | 170,124 | $ | 193,304 | ||||||||
| Income before income taxes | $ | 39,947 | $ | 32,880 | $ | 91,985 | $ | 98,721 | ||||||||
| Income taxes | 9,118 | 8,052 | 19,986 | 24,339 | ||||||||||||
| Net income | $ | 30,829 | $ | 24,828 | $ | 71,999 | $ | 74,382 | ||||||||
| Per Share Data | ||||||||||||||||
| Basic earnings per common share | $ | 0.56 | $ | 0.45 | $ | 1.32 | $ | 1.36 | ||||||||
| Diluted earnings per common share | $ | 0.56 | $ | 0.45 | $ | 1.31 | $ | 1.35 | ||||||||
| Average common shares outstanding | 54,585,998 | 55,410,109 | 54,579,088 | 54,782,946 | ||||||||||||
| Diluted average common shares outstanding | 54,737,920 | 55,646,104 | 54,796,354 | 55,057,518 | ||||||||||||
1 Results are unaudited.
6
Balance Sheet Growth
Total assets were $10.54 billion at September 30, 2020, down from $10.84 billion at June 30, 2020, and up from $9.75 billion at September 30, 2019. At September 30, 2020, portfolio loans were $7.12 billion, as compared to $7.23 billion as of June 30, 2020 and $6.67 billion as of September 30, 2019. The amortized cost of PPP loans of $736.4 million are included in the September 30, 2020 balance. When excluding the PPP loans, total commercial loans declined by $44.4 million and retail real estate and retail other loans declined by $70.4 million during the quarter. A change in the commercial unfunded commitments accounted for approximately $13.9 million of the commercial decline.
Average portfolio loans were $7.16 billion for the third quarter of 2020 as compared to $7.22 billion in the second quarter of 2020 and $6.56 billion in the third quarter of 2019. The average balance of PPP loans in the third quarter of 2020 were $734.2 million. Average interest-earning assets for the third quarter of 2020 increased to $9.81 billion compared to $9.49 billion for the second quarter of 2020 and $8.78 billion for the third quarter of 2019.
Total deposits were $8.64 billion at September 30, 2020, compared to $8.91 billion at June 30, 2020 and $7.93 billion at September 30, 2019. Recent fluctuations in deposit balances can be attributed to the retention of PPP loan funding in customer deposit accounts, the impacts of economic stimulus, other core deposit growth and the seasonality of public funds, as well as the Company’s efforts to efficiently manage the size of its balance sheet. The Company remains funded substantially through core deposits with significant market share in its primary markets.
Net Interest Margin and Net Interest Income
Net interest margin for the third quarter of 2020 was 2.86%, compared to 3.03% for the second quarter of 2020 and 3.35% for the third quarter of 2019. Net interest income was $69.8 million in the third quarter of 2020 compared to $70.8 million in the second quarter of 2020 and $73.5 million in the third quarter of 2019.
The Federal Open Market Committee (“FOMC”) lowered Federal Funds Target Rates for the first time in 11 years on July 31, 2019 and then again on September 18, 2019 and October 30, 2019, for a combined decrease of 75 basis points during 2019. In response to the potential economic risks posed by COVID-19, the FOMC took further action during the first quarter of 2020, lowering the Federal Funds Target Rate by 50 basis points on March 3, 2020, followed by an additional 100 basis point reduction on March 15, 2020. These rate cuts contributed to the decline in net interest margin as assets, in particular commercial loans, repriced more quickly and to a greater extent than liabilities.
Other factors contributing to the reported decline in net interest margin during the third quarter of 2020 include the sizeable balance of lower-yielding PPP loans, the Company’s significant liquidity position and the issuance of subordinated debt completed during the second quarter, with those impacts partially offset by the Company’s efforts to lower deposit funding costs. The cost of total deposits declined to 0.28% in the third quarter of 2020 from 0.36% in the second quarter of 2020, while the cost of non-time deposits declined to 0.09% in the third quarter of 2020 from 0.12% in the second quarter of 2020.
Asset Quality
Loans 30-89 days past due were $6.7 million as of September 30, 2020, compared to $5.2 million as of June 30, 2020 and $12.4 million as of September 30, 2019. Non-performing loans totaled $24.2 million as of September 30, 2020, a decrease from $25.4 million as of June 30, 2020, and $33.1 million as of September 30, 2019. Continued disciplined credit management resulted in non-performing loans as a percentage of total loans of 0.34% at September 30, 2020, as compared to 0.35% at June 30, 2020 and 0.50% at September 30, 2019. Non-performing loans as a percentage of total loans, excluding the amortized cost of PPP loans, was 0.38% at September 30, 2020.
Net charge-offs totaled $2.8 million for the quarter ended September 30, 2020 compared to $1.2 million and $1.8 million for the quarters ended June 30, 2020 and September 30, 2019, respectively. The allowance as a percentage of portfolio loans increased to 1.39% at September 30, 2020, as compared to 1.33% at June 30, 2020 and 0.79% at September 30, 2019. The allowance as a percentage of portfolio loans, excluding the amortized cost of PPP loans, was 1.55% at September 30, 2020, up from 0.79% in the comparative quarter of 2019. The allowance as a percentage of non-performing loans increased to 408.82% at September 30, 2020 compared to 378.43% at June 30, 2020 and 160.00% at September 30, 2019.
As a matter of policy and practice, the Company limits the level of concentration exposure in any particular loan segment and maintains a well-diversified loan portfolio.
7
| Asset Quality1 | ||||||||||||||||||||
| (dollars in thousands) | As of and for the Three Months Ended | |||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||
| Portfolio loans | $ | 7,121,311 | $ | 7,229,020 | $ | 6,745,499 | $ | 6,687,249 | $ | 6,669,415 | ||||||||||
| Portfolio loans excluding amortized cost of PPP loans | 6,384,916 | 6,499,734 | 6,745,499 | 6,687,249 | 6,669,415 | |||||||||||||||
| Loans 30-89 days past due | 6,708 | 5,166 | 10,150 | 14,271 | 12,434 | |||||||||||||||
| Non-performing loans: | ||||||||||||||||||||
| Non-accrual loans | 23,898 | 25,095 | 25,672 | 27,896 | 31,827 | |||||||||||||||
| Loans 90+ days past due | 279 | 285 | 1,540 | 1,611 | 1,276 | |||||||||||||||
| Total non-performing loans | $ | 24,177 | $ | 25,380 | $ | 27,212 | $ | 29,507 | $ | 33,103 | ||||||||||
| Total non-performing loans, segregated by geography | ||||||||||||||||||||
| Illinois/ Indiana | 15,097 | 16,285 | 17,761 | 20,428 | 24,296 | |||||||||||||||
| Missouri | 6,867 | 5,327 | 5,711 | 5,227 | 8,202 | |||||||||||||||
| Florida | 2,213 | 3,768 | 3,740 | 3,852 | 605 | |||||||||||||||
| Other non-performing assets | 4,978 | 3,755 | 3,553 | 3,057 | 926 | |||||||||||||||
| Total non-performing assets | $ | 29,155 | $ | 29,135 | $ | 30,765 | $ | 32,564 | $ | 34,029 | ||||||||||
| Total non-performing assets to total assets | 0.28 | % | 0.27 | % | 0.32 | % | 0.34 | % | 0.35 | % | ||||||||||
| Total non-performing assets to portfolio loans and non-performing assets | 0.41 | % | 0.40 | % | 0.46 | % | 0.49 | % | 0.51 | % | ||||||||||
| Allowance to portfolio loans | 1.39 | % | 1.33 | % | 1.25 | % | 0.80 | % | 0.79 | % | ||||||||||
| Allowance to portfolio loans, excluding PPP | 1.55 | % | 1.48 | % | 1.25 | % | 0.80 | % | 0.79 | % | ||||||||||
| Allowance as a percentage of non-performing loans | 408.82 | % | 378.43 | % | 310.10 | % | 182.15 | % | 160.00 | % | ||||||||||
| Net charge-offs | 2,754 | 1,229 | 3,413 | 1,584 | 1,821 | |||||||||||||||
| Provision | 5,549 | 12,891 | 17,216 | 2,367 | 3,411 | |||||||||||||||
1 Results are unaudited.
Non-Interest Income
Total non-interest income of $32.3 million for the third quarter of 2020 increased as compared to $28.0 million for the second quarter of 2020 and $30.9 million in the third quarter of 2019. Revenues from wealth management fees and remittance processing activities represented 45.0% of the Company’s non-interest income for the quarter ended September 30, 2020, providing a balance to spread-based revenue from traditional banking activities.
Wealth management fees were $10.5 million for the third quarter of 2020, an increase from $10.2 million for the second quarter of 2020 and $8.8 million for the third quarter of 2019. Net income from the Wealth Management segment was $3.2 million for the third quarter of 2020, an increase from $3.1 million for the second quarter of 2020 and $2.2 million in the third quarter of 2019. First Busey’s Wealth Management division ended the third quarter of 2020 with $9.50 billion in assets under care as compared to $9.02 billion at the end of the second quarter of 2020 and $9.70 billion at December 31, 2019.
Fees for customer services were $8.0 million for the third quarter of 2020, an increase from $7.0 million for the second quarter of 2020, but decreased from $9.8 million for the third quarter of 2019. Fees for customer services in the second quarter of 2020 were significantly impacted by changing customer behaviors resulting from COVID-19 and to a lesser extent by deposit account fee waivers related to the Financial Relief Program. An increase in customer activity and a decline in customer fee waivers contributed to the increase in fees for customer services in the third quarter of 2020.
8
Remittance processing revenue from the Company’s subsidiary, FirsTech, of $4.0 million for the third quarter of 2020 increased from $3.7 million in the second quarter of 2020 and $3.8 million in the third quarter of 2019. The Remittance Processing operating segment generated net income of $0.6 million for the third quarter of 2020 compared to $0.5 million for the second quarter of 2020 and $1.0 million in the third quarter of 2019. The net income decline in the third and second quarters of 2020 are attributable to strategic planning initiatives and related severance expense.
Mortgage revenue of $5.8 million in the third quarter of 2020 increased compared to $2.7 million in the second quarter of 2020 and $3.3 million in the third quarter of 2019. The increase in the third quarter of 2020 over second quarter of 2020 was due to stronger gain on sale margins.
Operating Efficiency
Total non-interest expense was $56.5 million in the third quarter of 2020 as compared to $53.1 million in the second quarter of 2020 and $68.1 million in the third quarter of 2019. Non-interest expense excluding non-operating adjustment items1 was $54.0 million in the third quarter of 2020 as compared to $52.6 million in the second quarter of 2020 and $60.5 million in the third quarter of 2019. Total deferred PPP loan origination costs reduced reported non-interest expense in the second quarter of 2020 by $4.9 million.
The efficiency ratio was 52.42% for the quarter ended September 30, 2020 compared to 50.97% for the quarter ended June 30, 2020 and 62.73% for the quarter ended September 30, 2019. The adjusted efficiency ratio1 was 49.97% for the quarter ended September 30, 2020, 50.48% for the quarter ended June 30, 2020, and 55.42% for the quarter ended September 30, 2019. The Company remains focused on expense discipline.
Noteworthy components of non-interest expense are as follows:
· Salaries, wages and employee benefits were $32.8 million in the third quarter of 2020, an increase from $28.6 million in the second quarter of 2020 and a decrease from $38.7 million from the third quarter of 2019. The third quarter of 2020 included $2.0 million in non-operating severance expense. The deferral of PPP loan origination costs of $3.8 million lowered salaries, wages and benefits expense in the second quarter of 2020. Total full-time equivalents at September 30, 2020 numbered 1,371 compared to 1,480 at June 30, 2020 and 1,595 at September 30, 2019, a decline of 14% year-over-year.
· Combined net occupancy expense of premises and furniture and equipment expenses totaled $6.6 million in the third quarter of 2020, a decline from $7.0 million in the second quarter of 2020 and $7.1 million in the third quarter of 2019.
· Data processing expenses were $3.9 million in the third quarter of 2020 as compared to $4.1 million in the second quarter of 2020 and $5.0 million in the third quarter of 2019.
· Other expense in the third quarter of 2020 of $9.0 million was steady with the second quarter of 2020 and decreased from $12.2 million in the third quarter of 2019. Provision for unfunded commitments of $0.3 million and $0.6 million were recorded in the third and second quarters of 2020, respectively. Non-operating pretax acquisition expenses and other restructuring costs of $0.5 million were recorded in the third quarter of 2020, compared to $0.1 million in the second quarter of 2020 and $3.6 million in the third quarter of 2019.
Capital Strength
The Company's strong capital levels, coupled with its earnings, have allowed First Busey to provide a steady return to its stockholders through dividends. The Company will pay a cash dividend on October 30, 2020 of $0.22 per common share to stockholders of record as of October 23, 2020. The Company has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.
As of September 30, 2020, the Company continued to exceed the capital adequacy requirements necessary to be considered “well-capitalized” under applicable regulatory guidelines. The Company’s tangible common equity1 (“TCE”) was $905.0 million at September 30, 2020, compared to $883.9 million at June 30, 2020 and $851.1 million at September 30, 2019. TCE represented 8.88% of tangible assets at September 30, 2020, compared to 8.43% at June 30, 2020 and 9.06% at September 30, 2019.1
1 A Non-GAAP financial measure. See “Non-GAAP Financial Information” below for reconciliation.
9
3Q20 Quarterly Earnings Supplement
For additional information on the Company’s response to COVID-19, financial condition and operating results, please refer to the 3Q20 Quarterly Earnings Supplement presentation furnished via Form 8-K on October 27, 2020, in conjunction with this earnings release.
Corporate Profile
As of September 30, 2020, First Busey Corporation (Nasdaq: BUSE) was a $10.54 billion financial holding company headquartered in Champaign, Illinois.
Busey Bank, the wholly-owned bank subsidiary of First Busey Corporation, had total assets of $10.51 billion as of September 30, 2020 and is headquartered in Champaign, Illinois. Busey Bank currently has 53 banking centers serving Illinois, ten banking centers serving Missouri, four banking centers serving southwest Florida and a banking center in Indianapolis, Indiana. Through Busey Bank’s Wealth Management division, the Company provides asset management, investment and fiduciary services to individuals, businesses and foundations. As of September 30, 2020, assets under care were approximately $9.50 billion. Busey Bank owns a retail payment processing subsidiary, FirsTech, Inc., which processes approximately 27 million transactions per year using online bill payment, lockbox processing and walk-in payments at its 4,220 agent locations in 46 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 U.S. 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.
For more information about us, visit busey.com.
Contacts:
Jeffrey D. Jones, Chief Financial Officer
217-365-4130
10
Non-GAAP Financial Information
This earnings release contains certain financial information determined by methods other than GAAP. These measures include adjusted pre-provision net revenue, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted net interest margin, adjusted efficiency ratio, tangible common equity, tangible common equity to tangible assets, tangible book value per share and 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 direct compared GAAP financial measures, specifically total net interest income in the case of pre-provision net revenue, net income in the case of adjusted net income, adjusted earnings per share and adjusted return on average assets, total net interest income in the case of adjusted net interest margin, total non-interest income and total non-interest expense in the case of adjusted efficiency ratio and total stockholders’ equity in the case of tangible common equity, tangible common equity to tangible assets, tangible book value per share and return on average tangible common equity, 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 or effective rates as appropriate.
| Reconciliation of Non-GAAP Financial Measures – Adjusted Pre-Provision Net Revenue | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, 2020 | June 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | ||||||||||||||||
| Net interest income | $ | 69,753 | $ | 70,813 | $ | 73,476 | $ | 209,999 | $ | 215,287 | ||||||||||
| Non-interest income | 32,285 | 27,964 | 30,936 | 87,766 | 84,777 | |||||||||||||||
| Less securities (gains) and losses, net | 426 | (315 | ) | (361 | ) | (476 | ) | 623 | ||||||||||||
| Non-interest expense | (56,542 | ) | (53,068 | ) | (68,121 | ) | (170,124 | ) | (193,304 | ) | ||||||||||
| Pre-provision net revenue | $ | 45,922 | $ | 45,394 | $ | 35,930 | $ | 127,165 | $ | 107,383 | ||||||||||
| Acquisition and other restructuring expenses | 2,529 | 487 | 7,670 | 3,161 | 16,442 | |||||||||||||||
| Provision for unfunded commitments | 250 | 567 | - | 1,834 | - | |||||||||||||||
| New Market Tax Credit amortization | - | - | - | 1,200 | 1,200 | |||||||||||||||
| Adjusted pre-provision net revenue | $ | 48,701 | $ | 46,448 | $ | 43,600 | $ | 133,360 | $ | 125,025 | ||||||||||
| Average total assets | $ | 10,680,995 | $ | 10,374,820 | $ | 9,659,769 | $ | 10,249,578 | $ | 9,352,272 | ||||||||||
Reported: Pre-provision net revenue to average assets1 | 1.71 | % | 1.76 | % | 1.48 | % | 1.66 | % | 1.54 | % | ||||||||||
Adjusted: Pre-provision net revenue to average assets1 | 1.81 | % | 1.80 | % | 1.79 | % | 1.74 | % | 1.79 | % | ||||||||||
1 Annualized measure.
11
| Reconciliation of Non-GAAP Financial Measures – Adjusted Net Income, Adjusted Earnings Per Share and Adjusted Return on Average Assets | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, 2020 | June 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | ||||||||||||||||
| Net income | $ | 30,829 | $ | 25,806 | $ | 24,828 | $ | 71,999 | $ | 74,382 | ||||||||||
| Acquisition expenses | ||||||||||||||||||||
| Salaries, wages and employee benefits | - | - | 3,673 | - | 3,716 | |||||||||||||||
| Data processing | - | - | 172 | - | 506 | |||||||||||||||
| Lease or fixed asset impairment | 234 | - | - | 234 | 415 | |||||||||||||||
| Other (includes professional and legal) | 99 | 141 | 3,100 | 385 | 7,598 | |||||||||||||||
| Other restructuring costs | ||||||||||||||||||||
| Salaries, wages and employee benefits | 2,011 | 346 | 182 | 2,357 | 457 | |||||||||||||||
| Data processing | - | - | 84 | - | 476 | |||||||||||||||
| Other (includes professional and legal) | 185 | - | 459 | 185 | 1,452 | |||||||||||||||
| MSR valuation impairment | - | - | - | - | 1,822 | |||||||||||||||
| Related tax benefit | (555 | ) | (102 | ) | (1,963 | ) | (687 | ) | (4,177 | ) | ||||||||||
| Adjusted net income | $ | 32,803 | $ | 26,191 | $ | 30,535 | $ | 74,473 | $ | 86,647 | ||||||||||
| Diluted average common shares outstanding | 54,737,920 | 54,705,273 | 55,646,104 | 54,796,354 | 55,057,518 | |||||||||||||||
| Reported: Diluted earnings per share | $ | 0.56 | $ | 0.47 | $ | 0.45 | $ | 1.31 | $ | 1.35 | ||||||||||
| Adjusted: Diluted earnings per share | $ | 0.60 | $ | 0.48 | $ | 0.55 | $ | 1.36 | $ | 1.57 | ||||||||||
| Average total assets | $ | 10,680,995 | $ | 10,374,820 | $ | 9,659,769 | $ | 10,249,578 | $ | 9,352,272 | ||||||||||
| Reported: Return on average assets1 | 1.15 | % | 1.00 | % | 1.02 | % | 0.94 | % | 1.06 | % | ||||||||||
| Adjusted: Return on average assets 1 | 1.22 | % | 1.02 | % | 1.25 | % | 0.97 | % | 1.24 | % | ||||||||||
1 Annualized measure.
12
| Reconciliation of Non-GAAP Financial Measures – Adjusted Net Interest Margin | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, 2020 |
June 30, 2020 |
September 30, 2019 |
September 30, 2020 |
September 30, 2019 |
||||||||||||||||
| Reported: Net interest income | $ | 69,753 | $ | 70,813 | $ | 73,476 | $ | 209,999 | $ | 215,287 | ||||||||||
| Tax-equivalent adjustment | 638 | 717 | 778 | 2,085 | 2,232 | |||||||||||||||
| Purchase accounting accretion related to business combinations | (2,618 | ) | (2,477 | ) | (2,974 | ) | (7,922 | ) | (9,439 | ) | ||||||||||
| Adjusted: Net interest income | $ | 67,773 | $ | 69,053 | $ | 71,280 | $ | 204,162 | $ | 208,080 | ||||||||||
| Average interest-earning assets | $ | 9,805,948 | $ | 9,485,200 | $ | 8,781,590 | $ | 9,371,157 | $ | 8,514,580 | ||||||||||
| Reported: Net interest margin1 | 2.86 | % | 3.03 | % | 3.35 | % | 3.02 | % | 3.42 | % | ||||||||||
| Adjusted: Net Interest margin1 | 2.75 | % | 2.93 | % | 3.22 | % | 2.91 | % | 3.27 | % | ||||||||||
1 Annualized measure.
| Reconciliation of Non-GAAP Financial Measures – Adjusted Efficiency Ratio | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, 2020 | June 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | ||||||||||||||||
| Reported: Net Interest income | $ | 69,753 | $ | 70,813 | $ | 73,476 | $ | 209,999 | $ | 215,287 | ||||||||||
| Tax- equivalent adjustment | 638 | 717 | 778 | 2,085 | 2,232 | |||||||||||||||
| Tax-equivalent interest income | $ | 70,391 | $ | 71,530 | $ | 74,254 | $ | 212,084 | $ | 217,519 | ||||||||||
| Reported: Non-interest income | 32,285 | 27,964 | 30,936 | 87,766 | 84,777 | |||||||||||||||
| Less securities (gains) and losses, net | 426 | (315 | ) | (361 | ) | (476 | ) | 623 | ||||||||||||
| Adjusted: Non-interest income | $ | 32,711 | $ | 27,649 | $ | 30,575 | $ | 87,290 | $ | 85,400 | ||||||||||
| Reported: Non-interest expense | 56,542 | 53,068 | 68,121 | 170,124 | 193,304 | |||||||||||||||
| Amortization of intangible assets | (2,493 | ) | (2,519 | ) | (2,360 | ) | (7,569 | ) | (6,866 | ) | ||||||||||
| Non-operating adjustments: | ||||||||||||||||||||
| Salaries, wages and employee benefits | (2,011 | ) | (346 | ) | (3,855 | ) | (2,357 | ) | (4,173 | ) | ||||||||||
| Data processing | - | - | (256 | ) | - | (982 | ) | |||||||||||||
| Other | (518 | ) | (141 | ) | (3,559 | ) | (804 | ) | (11,287 | ) | ||||||||||
| Adjusted: Non-interest expense | $ | 51,520 | $ | 50,062 | $ | 58,091 | $ | 159,394 | $ | 169,996 | ||||||||||
| Reported: Efficiency ratio | 52.42 | % | 50.97 | % | 62.73 | % | 54.30 | % | 61.55 | % | ||||||||||
| Adjusted: Efficiency ratio | 49.97 | % | 50.48 | % | 55.42 | % | 53.24 | % | 56.12 | % | ||||||||||
13
| Reconciliation of Non-GAAP Financial Measures – Tangible Common Equity, Tangible Common Equity to Tangible Assets, Tangible Book Value per Share and Return on Average Tangible Common Equity | ||||||||||||
| (dollars in thousands) | ||||||||||||
| As of and for the Three Months Ended | ||||||||||||
| September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||
| Total assets | $ | 10,539,628 | $ | 10,835,965 | $ | 9,753,760 | ||||||
| Goodwill and other intangible assets, net | (365,960 | ) | (368,053 | ) | (381,323 | ) | ||||||
| Tax effect of other intangible assets, net | 15,239 | 15,825 | 16,415 | |||||||||
| Tangible assets | $ | 10,188,907 | $ | 10,483,737 | $ | 9,388,852 | ||||||
| Total stockholders’ equity | 1,255,705 | 1,236,084 | 1,215,981 | |||||||||
| Goodwill and other intangible assets, net | (365,960 | ) | (368,053 | ) | (381,323 | ) | ||||||
| Tax effect of other intangible assets, net | 15,239 | 15,825 | 16,415 | |||||||||
| Tangible common equity | $ | 904,984 | $ | 883,856 | $ | 851,073 | ||||||
| Ending number of common shares outstanding | 54,522,231 | 54,516,000 | 55,197,277 | |||||||||
| Tangible common equity to tangible assets1 | 8.88 | % | 8.43 | % | 9.06 | % | ||||||
| Tangible book value per share | $ | 16.32 | $ | 15.92 | $ | 15.12 | ||||||
| Average common equity | $ | 1,248,448 | $ | 1,233,270 | $ | 1,212,833 | ||||||
| Average goodwill and intangibles, net | (367,490 | ) | (369,699 | ) | (377,601 | ) | ||||||
| Average tangible common equity | $ | 880,958 | $ | 863,571 | $ | 835,232 | ||||||
| Reported: Return on average tangible common equity2 | 13.92 | % | 12.02 | % | 11.79 | % | ||||||
| Adjusted: Return on average tangible common equity2,3 | 14.81 | % | 12.20 | % | 14.50 | % | ||||||
| Nine Months Ended | ||||||||||||
| September 30, 2020 | September 30, 2019 | |||||||||||
| Average stockholders' common equity | $ | 1,233,348 | $ | 1,173,213 | ||||||||
| Average goodwill and intangibles, net | (369,801 | ) | (369,104 | ) | ||||||||
| Average tangible stockholders' common equity | $ | 863,547 | $ | 804,109 | ||||||||
| Reported: Return on average tangible common equity2 | 11.14 | % | 12.37 | % | ||||||||
| Adjusted: Return on average tangible common equity2,3 | 11.52 | % | 14.41 | % | ||||||||
1 Tax-effected measure, 28% estimated deferred tax rate.
2 Annualized measure.
3 Calculated using adjusted net income.
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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 the Company undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond the Company’s ability to control or predict, could cause actual results to differ materially from those in the Company’s 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 the 2020 presidential election and 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, widespread disease or pandemics (including the COVID-19 pandemic in the United States), or other adverse external events that could cause economic deterioration or instability in credit markets; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in accounting policies and practices, including CECL, which changed how the Company estimates credit losses; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of The London Inter-bank Offered Rate phase-out); (vi) increased competition in the financial services sector and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) the loss of key executives or associates; (ix) changes in consumer spending; (x) unexpected results of current and/or future acquisitions, which may include failure to realize the anticipated benefits of any acquisition and the possibility that the transaction costs may be greater than anticipated; (xi) unexpected outcomes of existing or new litigation involving the Company; 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.
15
Exhibit 99.2
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3Q20QUARTERLY EARNINGS SUPPLEMENT October 27th, 2020 |
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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 the Company undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond the Company’s ability to control or predict, could cause actual results to differ materially from those in the Company’s 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 the 2020 presidential election and 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, widespread disease or pandemics (including the COVID-19 pandemic in the United States), or other adverse external events that could cause economic deterioration or instability in credit markets; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in accounting policies and practices, including CECL, which changed how the Company estimates credit losses; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of The London Inter-bank Offered Rate phase-out); (vi) increased competition in the financial services sector and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) the loss of key executives or associates; (ix) changes in consumer spending; (x) unexpected results of current and/or future acquisitions, which may include failure to realize the anticipated benefits of any acquisition and the possibility that the transaction costs may be greater than anticipated; (xi) unexpected outcomes of existing or new litigation involving the Company; 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. |
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This document contains financial information determined other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management uses these “non-GAAP” measures in its analysis of the Company’s performance. Management also believes that these non-GAAP financial measures allow for better comparability of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition, and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation of the non-GAAP measures used in this document to the most directly comparable GAAP measures is provided beginning on page 32 of this document. For more details on the Company’s non-GAAP measures, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020. |
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Appendix: Use of Non-GAAP Financial Measures32 |
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Company OverviewBranch Map •150+ year old bank headquartered in Champaign, IL •Full service community bank serving Illinois, St. Louis, Indianapolis, and Southwest Florida markets •Diversified lending portfolio across real estate, commercial, and retail products •Named among Forbes’ 2019 Best-In-State Banks—one of five in Illinois •Numerous, repeat “Best Places to Work” awards in all states in which it operates •First Busey’s vision is focused around 4 pillars: 1. Associates3. Communities 2. Customers4. Shareholders •First Busey works to preserve the Busey legacy – a legacy of associate excellence, customer service, community involvement and expanding shareholder value Primary Business SegmentsFinancial Highlights Commercial Banking • Illinois state chartered bank, organized in 1868 • Bank offers full suite of diversified financial products and services for consumers and businesses • 68 branch locations, serving four state footprint Wealth Management • Provides premier wealth and asset management services for individuals and businesses • $9.50bn Assets Under Care Retail Payment Processing • Provides comprehensive and innovative payment processing capabilities • Solutions tailored for online, mobile, walk-in, CSR, direct debit, lockbox, auto phone pay, VerID • 27 million transactions per year $ in millions 201 8 201 9 9/30/20 YT D Total Assets $7,702 $9,696 $10,540 Total Loans (Exc. HFS) 5,568 6,687 7,121 Total Deposits 6,249 7,902 8,643 Total Equity 995 1,220 1,256 NPA/Assets 0.48% 0.34% 0.28% NIM 3.45% 3.38% 3.02% Core PPNR ROAA(1 ) 1.86% 1.76% 1.74% Core ROAA(1 ) 1.34% 1.25% 0.97% Core ROATCE(1 ) 15.9% 14.5% 11.5% |
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Banking the intersection of commercial and wealth Business Investment Advisory Business Solutions Commercial Lending Business Saving Services Business Checking Services Merchant Services Solutions Personal Online Banking Credit and Debit Cards Checking Services Consumer Loans Mortgage Banking Investment Services Investment Management Financial Goals Private Client Business Planning Custom Consulting Lockbox Processing Payment Concentrator Processing Verid Payment Solutions Walk-In Payments Online Bill Payments Mobile Payments Mobile Banking Direct Debit 6 |
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v'c:Oiu: Previousannounced brandl autiolidation was completed on Odober 23, 2020. Exhibits abDYe depia the First Bus eyfrandlis e subsequent to the completion ofthase branch das ures. |
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Experienced Management Team Van A. Dukeman Chairman, President & Chief Executive Officer, First Busey Corporation Has served as President & CEO of First Busey since 2007. Mr. Dukeman was President & CEO of Main Street Trust from 1998 until its merger with First Busey in 2007. In addition to his role as President & CEO, Mr. Dukeman became Chairman of the Holding Company Board effective July 22. Mr. Dukeman’s 40 years of diverse financial services experience and extensive board involvement throughout his career brings a conservative operating philosophy and a management style that focus on Busey’s associates, customers, communities and shareholders. Highly experienced board with nearly 150 years of combined director experience Management aligned with shareholders (insider ownership of 8.3%) Amy L. Randolph Chief of Staff & EVP of Pillar Relations Robin N. Elliott President & CEO, Busey Bank Joined Busey in 2006 and led various finance functions prior to serving as CFO/COO and now Bank President/CEO. Mr. Elliott has played instrumental roles in executing various strategic and growth initiatives. Before joining Busey, Mr. Elliott worked for various national public accounting firms, including Ernst & Young. Jeffrey D. Jones EVP & CFO Joined Busey in August 2019, bringing his nearly 20 years of investment banking and financial services experience to Busey. Mr. Jones previously served as Managing Director and Co-Head of Financial Institutions at Stephens Inc. Mr. Jones began his career in the Banking Supervision and Regulation division of the Federal Reserve. Robert F. Plecki, Jr. EVP, Chief Credit Officer Joined Busey in 1984 and has served as Chief Credit Officer of First Busey since March 2010. Mr. Plecki previously served as President & CEO of Busey Wealth Management, COO, and EVP of the Florida and Champaign market. Prior to the 2007 merger with First Busey, Bob served in various management roles at Main Street Trust. John J. Powers EVP & General Counsel Monica L. Bowe EVP & Chief Risk Officer |
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Attractive Franchise • Established in 1868, with more than 150 years of commitment to local communities and businesses • Operating with 68 branches across four states: Illinois, Missouri, Indiana, and Florida (1) • Experienced and proven management team • Attractive and diverse business strategy with premier commercial bank, wealth management, and payment processing solutions for individuals and businesses Sound Growth Strategy • Drive organic growth through regional operating model with highly aligned commercial and wealth relationship focused strategies in key markets of operation • Leverage track record as proven successful acquirer to expand through disciplined M&A High Quality Loan Portfolio • Strengths in commercial & industrial, commercial real estate, and residential real estate lending • Highly diversified loan portfolio without material loan concentrations • Strong asset quality and continued firm-wide commitment to upholding high standards of credit quality • NPL/Loans of 0.38% and Reserves/NPLs of 409% (excludes PPP loans; as of 9/30/20) Strong Core Deposits • Attractive core deposit to total deposit ratio (97%) (2) • Low cost of total deposits (28 bps) and cost of non-time deposits (9 bps) in Q3 2020 Strong Capital and Liquidity Position • GAAP and regulatory capital levels significantly in excess of well-capitalized requirements • Remains substantially core deposit funded, with a low loan-to-deposit ratio • High quality, short duration securities portfolio and asset sensitive balance sheet Diversified Revenue Attractive Profitability and Returns • Significant revenue derived from diverse and complimentary fee income sources • Noninterest income/operating revenue of 32% MRQ and 30% LTM • Core Pre-Provision Net Revenue ROAA 1.74% YTD and 1.81% Q3 2020(3) • Core ROAA & ROATCE 0.97% and 11.52% YTD and 1.22% and 14.81% Q3 2020(3) • Core Adjusted Efficiency Ratio 49.97% Q3 2020(3) • 3Q20 Core EPS $0.60(3) and quarterly dividend of $0.22 (4.86% yield)(4) (1) Branch count includes branch closures completed on October 23, 2020 (2) Core Deposits include non-brokered transaction accounts, money market deposit accounts, and time deposits of $250,000 or less |
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Robust Capital Foundation Resilient Loan Portfolio Strong Core Deposit Franchise & Ample Liquidity • Capital ratios significantly in excess of well-capitalized minimums • Regulatory capital relief on CECL implementation and PPP loans • TCE/TA ratio of 8.88% at 9/30/20(1) • Total RBC of 16.59% at 9/30/20 • TBV per share of $16.32 at 9/30/20, up 7.9% year-over-year • Diversified portfolio, conservatively underwritten with low levels of concentration • NPAs/Assets: 0.28%Classified Assets/Capital: 9.6% • Substantial reserve build under CECL → ACL/Loans: 1.55%(2) ACL/NPLs: 408.82% • Significant decline in commercial loans in active deferral/modification from 23.1% of total ex-PPP commercial loan portfolio at June 30, 2020 to 3.7% at October 21, 2020 • 100 / 300 Test: 38% C&D224% CRE • Robust holding company and bank-level liquidity • Strong core deposit franchise –82.4% loan-to-deposit ratio, 97.1% core deposits (3) • Borrowings accounted for less than 3.3% of total funding at 9/30/20 • $2.6 billion in cash & securities (72% of securities portfolio unpledged) • Substantial sources of off-balance sheet contingent funding ($3.4 billion) (1) Non-GAAP calculation, see Appendix (2) Excluding amortized cost of PPP loans |
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Tangible Common Equity Ratio (1) Leverage Ratio (2) $ in m illion s $ in m illion s 8.4% 9.5%9.3%9.2% 8.4% 8.9% 9.8% 10.4%9.9%9.9% 9.4%9.4% $638$703 $865$864$905 $718$784 $922$922$941$964 4% 2017 Q42018 Q42019 Q42020 Q12020 Q22020 Q3 2017 Q42018 Q42019 Q42020 Q12020 Q22020 Q3 $ in m illion s TCETCE Ratio $ in m illion s 16.2%16.6% Tier 1 CapitalLeverage RatioMin Ratio Consolidated Capital as of 9/30/2020 (2) $ in millions 14.2% 14.8% 14.0%13.9% $298$291 $461$487 Total Capital Ratio Tier 1 Capital Ratio Common Equity Tier 1 Ratio $246$291 $592$603 $739$756$739$739 Current Ratio16.6%13.1%12.1% Minimum Well Capitalized Ratio10.0%8.0%6.5% Amount of Capital1,226964890 Well Capitalized Minimum739591480 Excess Amount over Well-Capitalized487373410 2017 Q42018 Q42019 Q42020 Q12020 Q22020 Q3 Well Cap MinExcess over M inTotal Capital Ra tio (1)Non-GAAP calculation, see Appendix |
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Loan Portfolio Composition as of 09/30/2020 Loan Portfolio Geographic Segmentation (1) HELO ther 0% Florida 5% 5% 1-4 Family Resident 16% Construction Development 6% Commercial & Industrial 32% Illinois 65% Missouri 25% Indiana 5% Non-Owner Occupied CRE 28% Owner Occupied CRE 13% Funded Draws & Line Utilization Rate (2) Total Loan Portfolio = $7.1 billion MRQ Yield on Loans = 3.86% Total Loan Portfolio (ex-PPP) = $6.4 billion MRQ Yield on Loans (ex-PPP) = 3.93% $2,084 58% $2,044 57% $2,020 56% $1,945 $1,924 $1,855 54% 54% $1 1 52% 53% 3/31/20 4/30/20 5/29/20 6/30/20 7/31/20 8/31/20 9/30/20 (1)Based on loan origination (2)Excludes Credit Card and Overdraft Protection Funded Draws % Utilized 12 |
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C&I Portfolio Overview ▪24% of total loan portfolio (ex-PPP loans) $ in thousands C&I Loans by Sector (ex-PPP) ▪Diversified portfolio results in low levels of concentrated exposure NAICS Sector 9/30/20 Balances (ex-PPP) % of Total Loans (ex-PPP) 9/30/20 Classified Loans ▪Top concentration in one industry (manufacturing) is 16%, or 4% of total loans ▪Only 3% of loans are classified ▪No material exposure to oil & gas ▪Decline in C&I loans outstanding Q2 to Q3 largely driven by decreased line utilization Total C&I Loans (1) $ in m illion s $1,748 $1,767 $1,668 $1,680 $1,629 $1,545 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 Manufacturing$244,5073.8%$12,942 Finance and Insurance$183,5592.9%$0 Educational Services$157,5362.5%$927 Wholesale Trade$150,3032.4%$983 Real Estate Rental & Leasing$147,9972.3%$1,034 Construction$115,5801.8%$3,446 Agriculture, Forestry, Fishing and Hunting$107,1271.7%$2,199 Health Care and Social Assistance$99,0401.6%$165 Public Administration$70,7281.1%$0 Retail Trade$66,1851.0%$1,053 Transportation$38,5490.6%$2,867 Professional, Scientific, and Technical Services$36,7040.6%$8,825 Food Services and Drinking Places$36,2400.6%$766 Other Services (except Public Administration)$29,3790.5%$84 Administrative and Support Services$20,0300.3%$3,763 Information$10,8830.2%$0 Arts, Entertainment, and Recreation$10,8100.2%$2,106 Accommodation$7,5730.1%$0 Management of Companies and Enterprises$7,0610.1%$0 Waste Management Services$3,5310.1%$0 Mining, Quarrying, and Oil and Gas Extraction$1,7180.0%$0 Warehousing and Storage$2890.0%$0 Utilities$1880.0%$0 Grand Total$1,545,51724.2%$41,159 (1) (ex-PPP) loan totals include purchase accounting, FASB, overdrafts, etc. 13 |
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Loan Portfolio: Low Levels of Concentrated Exposure $ in thousands Manufacturing Loans Subsector 9/30/20 Balances (ex-PPP) % of Total Loans (ex-PPP) 10/21/20 Active Deferral Balances 9/30/20 Classified Balances % of Category Classified 9/30/20 PPP Balances Transportation Equipment Manufacturing $55,135 0.9% $0 $1,395 2.5% $2,310 Machinery Manufacturing $54,300 0.9% $0 $224 0.4% $13,492 Food Manufacturing $49,803 0.8% $33 $1,599 3.2% $11,013 Miscellaneous Manufacturing $18,565 0.3% $491 $0 0.0% $7,678 Fabricated Metal Product Manufacturing $14,137 0.2% $0 $112 0.8% $8,148 Printing and Related Support Activities $9,329 0.1% $285 $0 0.0% $5,007 Primary Metal Manufacturing $9,113 0.1% $7,035 $0 0.0% $4,173 Chemical Manufacturing $7,202 0.1% $0 $0 0.0% $2,460 Textile Product Mills $5,899 0.1% $0 $3,560 60.3% $6,384 Electrical Equipment, Appliance, and Component $4,651 0.1% $0 $0 0.0% $3,357 Beverage and Tobacco Product Manufacturing $4,520 0.1% $0 $3,086 68.3% $1,769 Plastics and Rubber Products Manufacturing $3,782 0.1% $0 $626 16.6% $1,344 Computer and Electronic Product Manufacturing $2,916 0.0% $0 $2,287 78.4% $3,000 Nonmetallic Mineral Product Manufacturing $2,143 0.0% $0 $0 0.0% $968 Furniture and Related Product Manufacturing $1,068 0.0% $0 $53 5.0% $723 Leather and Allied Product Manufacturing $755 0.0% $0 $0 0.0% $71 Paper Manufacturing $573 0.0% $0 $0 0.0% $1,373 Wood Product Manufacturing $348 0.0% $0 $0 0.0% $2,329 Apparel Manufacturing $258 0.0% $0 $0 0.0% $519 Textile Mills $12 0.0% $0 $0 0.0% $0 Petroleum and Coal Products Manufacturing $0 0.0% $0 $0 0.0% $349 Grand Total $244,507 3.8% $7,845 $12,942 5.3% $76,467 Million or 3.8% of Loan Portfolio (ex-PPP loans) 5.3% Classified Loans Diversified exposure across 21 industry subsectors results in no single level of high concentration No subsector accounts for more than 1% of the total portfolio 14 |
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High Quality Loan Portfolio: CRE $ in thousands Owner Occupied CRE Loans by Industry Investor Owned CRE Loans by Industry (1) Property Type 9/30/20 Balances (ex-PPP) % of Total Loans (ex-PPP) 9/30/20 Classified Loan Balances Property Type 9/30/20 Balances (ex-PPP) % of Total Loans (ex-PPP) 9/30/20 Classified Loan Balances Retail CRE $476,689 7.5% $651 Apartments $470,917 7.4% $1,247 Student Housing $320,646 5.0% $4,470 Office CRE $276,831 4.3% $2,532 Industrial/Warehouse $221,160 3.5% $9 Hotel $168,762 2.6% $1,879 Senior Housing $130,353 2.0% $0 Specialty CRE $81,951 1.3% $57 Land Acquisition & Dev. $80,702 1.3% $2,603 Nursing Homes $67,353 1.1% $5,626 Restaurant CRE $33,404 0.5% $1,926 1-4 Family $19,012 0.3% $305 Continuing Care Facilities $14,685 0.2% $0 Other CRE $25,539 0.4% $236 Grand Total $2,388,005 37.4% $21,541 Specialty CRE $244,579 3.8% $7,099 Office CRE $196,126 3.1% $1,019 Retail CRE $81,113 1.3% $1,830 Restaurant CRE $70,101 1.1% $3,959 Continuing Care $3,856 0.1% $0 Nursing Homes $2,112 0.0% $0 Hotel $1,393 0.0% $0 Apartments $361 0.0% $0 Student Housing $113 0.0% $0 Other CRE $25,723 0.4% $964 Grand Total $921,067 14.4% $25,706 Multifamily - Apartments & Student Housing by State •61.6% Weighted Avg. LTV •$47.1MM as of 10/21/20 in Active Deferral •60.3% are long-term Busey customers (4+ yrs) •0.7% Classified Loans in Segment (1) Investor owned CRE includes C&D, Multi-family and non-owner occupied CRE CRE Portfolio Overview ▪52% of total loan portfolio ▪28% of CRE loans are owner-occupied ▪Only 1.4% of total CRE loans and 0.9% of non-owner occupied CRE loans are classified ▪Low Levels of Concentrated Exposure ▪Retail CRE top concentration at 17% of total CRE portfolio 15 |
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$ in thousands Retail Trade & Retail CRE Loans Retail Type 9/30/20 Balances (ex-PPP) % of Total Loans (ex-PPP) 10/21/20 Active Deferral Balances Weighted Avg LTV % of Classified Loans in Segment 9/30/20 PPP Balances Strip Center $286,536 4.5% $25,173 67.5% 0.1% $0 Single Tenant $97,009 1.5% $2,238 54.2% 1.9% $0 Mixed Use - Retail $78,211 1.2% $5,414 61.2% 0.3% $0 Retail Trade (C&I) $66,185 1.0% $0 1.6% $47,829 Shopping Center $55,851 0.9% $0 45.8% 0.0% $0 Community Retail Center $40,195 0.6% $0 50.7% 0.0% $0 Grand Total $623,987 9.8% $32,825 60.7% 0.6% $47,829 Total Retail Loans: $624 million or 9.8% of Loan Portfolio Traveler Accommodation Loans Hotel - Large Chain 66% Other 2% Hotel - Boutique 28% Hotel Ops. (C&I) 4% Hotel - Full Service Large Chain $59,382 0.9% $932 61.8% 0.0% $0 Hotel - Limited Service Large Chain $57,448 0.9% $1,566 60.1% 0.0% $0 Hotel - Full Service Boutique $40,113 0.6% $0 66.4% 0.0% $0 Hotel - Limited Service Boutique $10,279 0.2% $8,755 54.7% 0.0% $0 Hotel Operations (C&I) $7,512 0.1% $0 0.0% $4,994 Mixed Use - Hotel/Motel $2,247 0.0% $0 49.0% 83.6% $0 Motel CRE $686 0.0% $0 37.7% 0.0% $0 RV Parks and Campgrounds (C&I) $61 0.0% $0 0.0% $47 Bed-and-Breakfast Inns $0 0.0% $0 0.0% $18 Rooming and Boarding Houses $0 0.0% $0 0.0% $21 9/30/20 Balances (ex-PPP) % of Total Loans (ex-PPP) 10/21/20 Active Deferral Balances Weighted Avg LTV % of Classified Loans in Segment 9/30/20 PPP Balances Grand Total $177,728 2.8% $11,253 61.6% 1.1% $5,079 Total Traveler Accommodation Loans: $178 Million or 2.8% of Loan Portfolio |
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$ in thousands Food Services Loans Food Services 9/30/20 Balances (ex-PPP) % of Total Loans (ex-PPP) 10/21/20 Active Deferral Balances Weighted Avg LTV % of Classified Loans in Segment 9/30/20 PPP Balances Full-Service Restaurant CRE $68,316 1.1% $11,886 60.0% 8.6% $0 Limited-Service Restaurant CRE $35,189 0.6% $4,417 73.4% 0.0% $0 Limited-Service Restaurant Operations $21,755 0.3% $640 0.1% $9,252 Full-Service Restaurant Operations $13,163 0.2% $0 5.7% $25,385 Drinking Place Operations $1,011 0.0% $0 0.0% $1,668 Snack and Nonalcoholic Beverage Bars $138 0.0% $0 0.0% $464 Caterer Operations $112 0.0% $0 0.0% $517 Mobile Food Services $62 0.0% $0 0.0% $22 Cafeterias, Grill Buffets, and Buffets $0 0.0% $0 0.0% $14 Food Service Contractors $0 0.0% $0 0.0% $414 Grand Total $139,745 2.2% $16,942 64.4% 4.8% $37,736 Total Food Services Loans: $140 Million or 2.2% of Loan Portfolio Agriculture Loans Other Indiana 1% 6% Geographic Collateral Location by State 9/30/20 Balances (ex-PPP) % of Total Loans (ex-PPP) 10/21/20 Active Deferral Balances Weighted Avg LTV % of Classified Loans in Segment % of L-Term Customers (4+ Y ears) Illinois 93% Illinois $81,061 1.3% $0 42.5% 0.8% 85.9% Indiana $2,183 0.0% $0 46.3% 0.0% 100.0% Other State $755 0.0% $0 36.7% 0.0% 100.0% Missouri $474 0.0% $0 43.4% 0.0% 50.0% Total Farmland $84,473 1.3% $0 42.6% 0.8% 86.0% Illinois $41,253 0.6% $0 42.5% 3.8% 91.0% Indiana $5,349 0.1% $0 46.3% 0.0% 100.0% Total Farm Operating Line $46,601 0.7% $0 42.6% 3.4% 91.0% Grand Total $131,074 2.1% $0 42.6% 1.7% 87.5% Total Agriculture Loans: $131 Million or 2.1% of Loan Portfolio |
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Commercial and Small Business Clients ▪Busey offered several options to Busey’s qualifying business customers to help them through this period of economic disruption. Various six-month modification programs with opt-ins from the customer in 90-day intervals were available, including a 90-day deferral of principal & interest or interest only payment options Commercial Payment Relief Program ($ in thousands) 10/21/20 10/21/20 % of All Deferral % of 6/30/20 6/30/20 % of # of Loans $ Balanc es Balanc es T otal # of Loans $ Balanc es T otal Total Commercial Loans: 7,937 $5,055,713 8,305 $5,096,211 All Loans that took a deferral: Full Payment Deferrals 746$812,238 70.56% 16.07% 769$822,595 Interest-Only Deferrals 367$338,917 29.44% 6.70% 355$355,981 Total Loans that took a Deferral Option 1,113 $1,151,155 22.77% 1,124 $1,178,577 23.13% Loans that opted into a deferral extension: 90-Day Full Pmt Deferrals that opted into 180-Days 279$365,603 45.01% 90-Day I/O Deferrals that opted into 180-Days 55$87,980 25.96% Total Loans that opted into a deferral extension 334 $453,583 39.40% 8.97% Loans currently in the Payment Relief Program: Ac tive Full Pmt Deferrals 102$96,361 Ac tive I/O Deferrals 53$92,939 A Total Active Deferral Loans 155 $189,300 16.44% 3.74% B Expired Payment Relief, regular pmt not yet received 53 $78,995 6.86% 1.56% C Exited Payment Relief Program 905 $882,860 76.69% 17.46% Loans c urrently in the Payment Relief Program (A) 155 $189,300 Loans no longer in deferral (B + C) 958 $961,855 1,113 $1,151,155 |
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Personal Loan and Mortgage Customers Retail Payment Relief Program ($ in thousands) Mortgage & Retail portfolio loans (1) 10/15/20 # of Loans 10/15/20 $ Balanc es Total Portfolio Loans21,534$1,215,144 All Loans that took a deferral (A + B)980$132,601 4/1/20 $ Balanc es A Deferred Loans that Paid Off68$8,549 % of 10/15/20 % of T otal $ Balanc es T otal (1) Table above does not include loans serviced by third parties. As of September 30, 2020, there were $110.8 million of total outstanding balance in such loans, of which $5.7 million had received a deferral with only $0.5 million remaining under active deferral. |
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Small Business Applications & Loan Funding ▪As part of the CARES Act, Congress appropriated approximately $349 billion for the creation of the Paycheck Protection Program (PPP) as well as approving on April 24, 2020 an additional $310 billion for the PPP. This program provides payroll assistance for the nation’s nearly 30 million small businesses - and select nonprofits - in the form of 100% guaranteed loans from the U.S. Small Business Administration (SBA) ▪Busey was a bridge for this program and actively helped its customers sign up for this important financial resource Summary Impact I ndustry PPP Balances # of PPP Loans Average Loan Size % of Total PPP Loans Construction $140,425 504 $279 18.7% ▪ $749.4 million PPP loans Health Care and Social Assistance $103,594 522 $198 13.8% outstanding as of 9/30/2020Manufacturing $76,467 284 $269 10.2% Professional, Scientific, and Technical Services $74,416 514 $145 9.9% ▪ 4,569 total loans processed Wholesale Trade $51,346 184 $279 6.9% ▪Over 85,000 jobs impactedRetail Trade $47,829 354 Other Services (except Public Administration) $47,119 537 ▪Generated fees of approximatelyReal Estate Rental & Leasing $39,133 335 $25.4 millionFood Services and Drinking Places $37,736 335 $135 6.4% $88 6.3% $117 5.2% $113 5.0% |
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Overview ▪Conservative underwriting and strong asset quality allowed the Company to enter the economic downturn well-prepared ▪Non-performing assets have decreased over time while total assets have increased significantly $ in m illion s NPAs / Assets 9,696 10,540 ▪Strong reserve levels as provisioning under CECL reflects deteriorating economic conditions and expectations for credit stress to emerge in future periods 7,8617,702 0.48% 0.36% 0.34%0.28% ▪Significant decline in loan deferral/modification from 23.1% of total ex-PPP commercial loan portfolio at June 30, 2020 to 3.7% at October 21, 2020 2017 Q42018 Q42019 Q42020 Q3 Assets%NPAs /Ass et s Classifieds / Capital (1) NCOs / Average Loans(2) $ in m illion s $ in m illion s $790 $854 $1,099 $1,119 $4,567 $5,534 $6,470 $7,012 14.7% 14.3% 9.7% 9.6% -0.01% 0.13%0.11%0.14% 2017 Q4 2018 Q4 2019 Q4 2020 Q3 Capital Class ified/Capital (1) Capital calculated as Busey Bank Tier 1 Capital + Allowance for loan losses (2) 9/30/2020 NCOs/Average Loans is annualized (quarterly NCO ratio is 0.04%) 2017201820192020 Q3 YTD Avg LoansNCOs/Avg Loan s |
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Current Expected Credit Loss (CECL) Model ▪On January 1, 2020, the Company adopted ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the CECL model. Upon adoption of CECL, we recognized: -$16.8 million increase in our allowance for credit losses, substantially attributable to the remaining loan fair value marks on prior acquisitions -$5.5 million increase in our reserve for unfunded commitments (carried in other liabilities) -Total Day 1 increase of 41.54% over 12/31/19 reserve balance -These one-time increases, net of tax, were $15.9 million and recorded as an adjustment to beginning retained earnings ▪During the first quarter of 2020, the Company recorded provision for credit losses of $17.2 million and provision for unfunded commitments of $1.0 million primarily as a result of economic factors around COVID-19 ▪During the second quarter of 2020, the Company recorded provision for credit losses of $12.9 million and provision for unfunded commitments of $0.6 million ▪During the third quarter of 2020, the Company recorded provision for loan losses of $5.5 million and provision for unfunded commitments of $0.3 million. -While our portfolio has not yet demonstrated material indications of weakness, provisioning under CECL reflects deteriorating economic conditions and expectations for credit stress to emerge in future periods -Cumulative increase through 9/30/20 of 97.53% over 12/31/19 reserve balance -Ongoing impacts of the CECL methodology will be dependent upon changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors ▪Increase in allowance for credit losses moves allowance for credit losses as a percentage of total loans to 1.55% at 9/30/20 (excludes PPP loans) and allowance for credit losses as a percentage of non-performing loans to 408.82% |
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Allowance / Loans (ex-PPP) Allowance / NPLs $ in m illion s 1.55% $ in t h ou sa nds $36,598 $5,520$5,568 $6,687 $6,385 $27,365 $29,507 409% $24,177 0.97% 0.91% 0.80% 196% 182% 2017 Q42018 Q42019 Q42020 Q3 Ex-PPP Loans (EOM )Ex-PPP Allowa nce/L oans 138% 2017 Q42018 Q42019 Q42020 Q3 NPL sAllowance/NPLs Allowance / NPAs Provision Coverage / Net Charge-offs $ in t h ou sa nds $28,648 $36,974 $32,564 339% $29,155 187% 137% 165% N/A(1) 0.6x 1.4x 4.8x 2017 Q42018 Q42019 Q42020 Q3 FY 2017FY 2018FY 20192020 Q3 YTD NPAsAllowance/NPAs Provision Multiple (1) 4Q17 provision expense was $5.303 million and net recoveries were $0.484 million |
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2020 Q3 Average Deposit Composition Total Deposits & Loan to Deposit Ratio $ in m illion s C > 250k CD < 250k 12% $ in m illion s 90.8%88.7% $72$7,973 $8,910$8,643 MMDA 29% Non-Int DDA 30% Int DDA 26% $6,126$6,249 84.8%84.6%81.1%82.4% 2020 Q3 Average Cost of Deposits = 0.28% 2020 Q3 Average Cost of Non-Time Deposits = 0.09% Contingency Liquidity as of 9/30/20 $ in m illion s Unpledged Securities $1,507 Av ailable FHLB $1,545 2017 Q42018 Q42019 Q42020 Q12020 Q22020 Q3 Total Depos itsLoan to Depos it Ra tio Core Deposits(1) / Total Deposits $ in m illion s $8,595 $8,392 $7,587 $7,624 FRB Discount $477 Fed Funds Lines $467 Brokered Av ailability (1 0% deposits) $862 T otal $4,858 $5,600 $5,705 91.4% 91.3% 96.0% 95.6% 96.5% 97.1% 2017 Q4 2018 Q4 2019 Q4 2020 Q1 2020 Q2 2020 Q3 Core Deposit sCore/Total Deposits (1) Core Deposits include non-brokered transaction accounts, money market deposit accounts, and time deposits of $250,000 or less 24 |
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Net-Interest Income • Net Interest Income declined 1.4% from $70.8 million in Q2 to $69.8 million in Q3 • Net Interest Margin decreased 17 bps vs Q2 from 3.03% to 2.86% • Core NIM ex-accretion income declined 18 bps from 2.93% to 2.75% • Accretion income accounted for 11 bps of NIM, up from 10bps in Q2 • NIM impacted by repricing dynamics in the low rate environment, excess liquidity resulting from stimulus, PPP related funding and seasonal peak in public funds in 3Q20, as well as a full quarter impact of the $125mm sub-debt issuance on June 1, 2020 • 21 bps decline in asset yields offset by 5 bps improvement in funding costs Non-Interest Income Non-Interest Expense Earnings • Non-interest income of $32.3 million in Q3, equated to 32% of operating revenue • Wealth Management revenue up 3.4% linked quarter with assets under management up 5.3% to $9.5 billion • Mortgage revenue of $5.8 million in Q3 increased from $2.7 million Q2. The increase in Q3 was due to stronger gain on sale margin • Fees for customer services were $8.0 million in Q3, an increase from $7.0 million in Q2 • Core non-interest expenses (excluding one-time acquisition and restructuring related items) of $54.0 million in 3Q20 • Core adjusted non-interest expenses (excluding intangible amortization, one-time and unfunded provision expense) of $51.3 million in 3Q20, equating to 49.7% core adjusted efficiency ratio(1) • $6.8 million decrease in quarterly run rate of core adjusted expenses(1) since 3Q19 implies 11.7% reduction in core expense base, including $5.5 million or 9.7% since 1Q20 • Core, adjusted pre-provision net revenue of $48.7 million (1.81% PPNR ROAA) (1) • Core net income of $32.8 million or $0.60 per share (1) • 1.22% Core ROAA and 14.8% Core ROATCE (1) |
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Core Net Income & Earnings Per Share (1) Core ROAA & ROATCE (1) $ in thousands $29,498 $30,535 $31,782 $26,191 $32,803 14.5%14.5%14.9% 1.30% 1.24%1.25% 12.2% 14.8% 1.22% $0.53 $0.55 $0.57 $15,479 $0.48 $0.60 7.4% 1.02% $0.28 0.64% 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 Core Net Income Earnings Per Share 2019 Q22019 Q32019 Q42020 Q12020 Q22020 Q3 Core ROATCECore ROAA Core Pre-Provision Net Revenue / Avg. Assets (1) Net Interest Margin $ in thousands $42,823 $43,600 $41,131 $38,211 $46,448 $48,701 4.27%4.18% Earning Assets Yield 3.88% 3.43% 3.35%3.20% 3.47% 3.03% 3.26% 1.80% 1.79% 1.80% 1.81% Net Interest Margin 2.86% 1.68% 1.59% 0.88%0.87% 0.16% Cost of Funds 0.72% 0.47%0.42% 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 0.14% Accretion 0.13%0.10%0.11% Core PPN R Core PPN R / Avg As sets 2019 Q22019 Q32019 Q42020 Q12020 Q22020 Q3 Earning A ssetsCost of FundsNIMAccretion (1) Non-GAAP calculation, see Appendix |
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Net Interest Income & Net Interest Margin 74.3 • Net impact of PPP loans and corresponding excess liquidity drove down NIM 4 bps linked quarter 3.0 3.35% 72.7 3.0 3.27% 70.2 2.8 3.20% 71.5 2.5 3.03% 70.4 2.6 2.86% • Subordinated debt issuance of $125mm on June 1, 2020 impacted NIM linked quarter by 7 bps Net Interest Margin Components (ex-PPP) & Sub-debt 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 Earning Assets * 3.38% TE Net Interest Income Accretion TE NIM Historical Key Rates Cost of Liabilities * -0.39% 5.50% 2.39% 5.00% 2.02% 4.75% 1.92% 3.25% 3.25% 3.25% PPP & Excess Liquidity Sub Debt -0.04% -0.07% Dilutive linked quarter effect of PPP loan funding & deposit retention Dilutive linked quarter effect of June 1st Sub-debt Issuance 2.00% 1.68% 1.76% 0.99% 0.70% 0.67% 0.72% 0.17% 0.15% Net Interest Margin 2.86% 6/30/19 9/30/19 12/31/19 3/31/20 6/30/20 9/30/20 -1.00%0.00%1.00%2.00%3.00%4.00% Prime 1m LIBOR 10-Yr Treasury * Earning Assets and Cost of Liabilities (ex-PPP) and Sub-debt issuance |
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Diversified and Significant Sources of Fee Income Overview ▪Resilient, varied and complimentary sources $ in m illion s Non-Interest Income / Total Revenue of fee income provide revenue diversification with heightened value amidst cycle of margin compression ▪Fee income represented 32% of operating revenue in 3Q20 up from 28% in 2Q20 and $101.3 $104.4 $103.6 $97.0 $98.8 $102.0 32% 30% over the last 12 months ▪Key businesses of wealth management and payment processing contributed 45% of fee income in 3Q20 ▪Mortgage revenue increased from $2.7 million in 2Q20 to $5.8 million in 3Q20 28% 30% 31% 28% 28% $27.9 $30.9 $31.6 $27.5 $28.0 $32.3 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 Non-Interest Income Net Interest Income Non-Int Inc / Total Income $ in thousands Sources of Non-Interest Income Net Security Non-Interest Income Details 2020 Q3 (Losses) -1% Other Non-Wealth Management Fees $10,548 Fees for Customer Services $8,014 Remittance Processing $3,995 Mortgage Revenue $5,793 Income on Bank Owned Life Insurance $1,022 Net Security (Losses) ($426) Other Non-Interest Income $3,339 Income on Bank Owned Life Insurance 3% Mortgage Revenue 18% Interest Income 10% Wealth Management Fees 32% Fees for Total Non-Interest Income $32,285 Processing 12% Customer Services 24% 28 |
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$ in millions $9,409 Wealth - Assets Under Care $9,696 $8,925$9,021 $9,503 Overview ▪Provides a full range of asset management, investment and fiduciary services to individuals, businesses and foundations, tax preparation, philanthropic advisory services and farm and brokerage services 2019 Q32019 Q42020 Q12020 Q22020 Q3 Wealth - Revenue & Pre-tax Income Q3 2020 Summary ▪Wealth revenue of $10.7 million in 3Q20, an 18.5% increase over 3Q19 ▪Wealth pre-tax net income of $4.2 million in 3Q20, a 41% increase over 3Q19 ▪Assets under care increased to $9.5 billion $ in thousands $8,994 $11,354 $11,709 $10,310 $10,662 in 3Q20, within 2% of the high-water mark at 4Q19 32.8% $2,951 36.8% $4,176 40.4% 39.3%39.1% $4,735 $4,056$4,165 ▪Strong quarter for new assets funded, with $194 million up from $52 million in 2Q20 ▪YTD Pre-tax profit margin of approximately 40% in the Wealth Management segment 2019 Q32019 Q42020 Q12020 Q22020 Q3 RevenuePre-Tax Net IncomePre-Tax Profit Margin |
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$68,121 $2,360 Non-Interest Expense $65,490 $2,681 Overview ▪The Company continues to drive significant expense reductions to offset the current no growth, low rate environment $7,670 $3,652 $58,091 $59,157 $60,514 $2,557 $145 $1,017 $56,795 $53,068 $2,519 $487 $567 $49,495 $56,542 $2,493 $2,529 $250 $51,270 ▪Delivering substantial efficiency ratio improvement in spite of margin compression Q3 2020 Summary ▪Core adjusted expenses(1) of $51.3 million in 3Q20 excluding amortization, acquisition / restructuring related charges and $0.3 million 62.7% One-time Non-Recurring Expenses Intangible Amortiza tion 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 Core Adjusted Expen ses Unfunded Provision 60.5% provision for unfunded commitments (ex-CECL) ▪$6.8 million decrease in quarterly run rate of core adjusted expenses(1) since 3Q19 implies 11.7% reduction in core expense base, including $5.5 million or 9.7% since 1Q20 55.4% 57.0% 59.7%59.5% 58.5% 51.0% 50.5% 49.9% 52.4% 50.0%49.7% ▪Total deferred PPP loan origination costs reduced reported non-interest expense in the second quarter of 2020 by $4.9 million ▪The anticipated impact of incremental initiatives are discussed on the following page (1)Non-GAAP calculation, see Appendix |
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Overview of Bank Initiatives ▪After careful consideration and analysis, the Company decided in July 2020 to consolidate 12 branches to ensure a balance between the Company’s physical banking center network and robust digital banking services. These 12 banking centers closed on October 23, 2020 ▪Operating model reorganization aligns with the Company’s continued efforts to transition to a regional operating model that enhances sales organization alignment across key business lines and improves efficiencies 1,595 Full-Time Equivalents (FTE) 1,5311,5071,480 (1) Financial Impact Summary ▪Anticipate annualized pre-tax non-interest expense savings of approximately $3.6 million resulting from the operating model reorganization 1,371 1,316 ▪Non-operating pretax expenses in relation 2020 Q4* ▪Proforma 2020 Q4 FTE count based on remaining reductions in force expected to occur during 4Q20 ▪Headcount is expected to have been reduced 17.5% from 3Q19 to 4Q20 ▪Non-operating pretax expenses in relation to branch closings were $0.6 million during Q3 2020 with an additional $0.1 million expected in Q4 2020 ▪Additional one-time expenses related to disposition of banking centers estimated to be in the range of $7 million to $7.5 million |
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32 APPENDIX 32 |
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($ in thousands) Three Months Ended Adjuste d: p re-p rovision net revenue $ 48,701 $ 46,448 $ 38,211 $ 41,131 $ 43,600 Ave rage total asse ts $ 10,680,995$ 10,374,820$ 9,688,177$ 9,713,858$ 9,659,769 |
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($ in thousands) Thre e Months Ende d (Unaudited results) S e pte mbe r 30, June 30, March 31, De ce mbe r 31, S e pte mbe r 30, 20202020 2020 2019 2019 Re porte d: Net Int erest income $69,753$70,813$69,433$71,936$73,476 T ax-equivalent adjust ment 638717730781778 T ax-equivalent int erest income $70,391$71,530$70,163$72,717$74,254 Re porte d: Non-int erest income 32,28527,96427,51731,63830,936 Less net losses/gains on sales of securit ies and unrealiz ed losses/gains recogniz ed on equit y securit ies 426(315)(587)(605)(361) Adjuste d: Non-int erest income $32,711$27,649$26,930$31,033$30,575 Re porte d: Non-int erest exp ense 56,54253,06860,51465,49068,121 Amort iz at ion of int angible asset s(2,493) (2,519) (2,557) (2,681) (2,360) Non-op erat ing adjust ment s: Salaries, wages, and emp loy ee benefit s (2,011) (346) — (405) (3,855) Dat a p rocessing — — — (1,368) (256) Ot her (518) (141) (145) (1,879) (3,559) Adjuste d: Non-int erest exp ense $51,520$50,062$57,812$59,157$58,091 Re porte d: Efficiency rat io 52.42 %50.97 %59.69 %60.54 %62.73 % Adjuste d: Efficiency rat io 49.97 %50.48 %59.54 %57.02 %55.42 % As of and for the Thre e Months Ende d S eptember 30, June 30, 20202020 March 31, 2020 December 31, 2019 S eptember 30, 2019 Total Assets $ 10,539,628 $ 10,835,965 $ 9,721,405 $ 9,695,729 $ 9,753,760 Goodwill and other intangible assets, net (365,960) (368,053) (370,572) (373,129) (381,323) Tax effect of other intangible assets, net 15,239 15,825 16,530 17,247 16,415 Tangible assets $ 10,188,907 $ 10,483,737 $ 9,367,363 $ 9,339,847 $ 9,388,852 Total stockholders’ equity 1,255,705 1,236,084 1,217,585 1,220,434 1,215,981 Goodwill and other intangible assets, net (365,960) (368,053) (370,572) (373,129) (381,323) Tax effect of other intangible assets, net 15,239 15,825 16,530 17,247 16,415 Tangible common equity $ 904,984 $ 883,856 $ 863,543 $ 864,552 $ 851,073 Ending number of common shares outstanding 54,522,231 54,516,000 54,401,208 54,788,772 55,197,277 Tangible common equity to tangible assets(1) 8.88 % 8.43 % 9.22 % 9.26 % 9.06 % Tangible book value per share $ 16.32 $ 15.92 $ 15.57 $ 15.46 $ 15.12 Average stockholders’ common equity $ 1,248,448 $ 1,233,270 $ 1,218,160 $ 1,224,447 $ 1,212,833 Average goodwill and other intangible assets, net (367,490) (369,699) (372,240) (379,268) (377,601) Average tangible stockholders’ common equity $ 880,958 $ 863,571 $ 845,920 $ 845,179 $ 835,232 Reported: Return on average tangible common equity (2)13.92 % 12.02 % 7.30 % 13.41 % 11.79 % Adjusted: Return on average tangible common equity (2)(3)14.81 % 12.20 % 7.36 % 14.92 % 14.50 % (1) Tax-effected measure (2) Annualized measure |