• First Busey Announces 2021 Second Quarter Earnings

    المصدر: Nasdaq GlobeNewswire / 27 يوليو 2021 17:00:01   America/New_York

    CHAMPAIGN, Ill., July 27, 2021 (GLOBE NEWSWIRE) -- First Busey Corporation (Nasdaq: BUSE)

    Message from our Chairman & CEO

    Second Quarter 2021 Highlights:

    • Second quarter 2021 net income of $29.8 million and diluted EPS of $0.53, compared to $25.8 million and $0.47, respectively, in the second quarter of 2020
    • Second quarter 2021 adjusted net income1 of $31.9 million and adjusted diluted EPS1 of $0.57, compared to $26.2 million and $0.48, respectively in the second quarter of 2020
    • Finalized our acquisition of Cummins-American Corp. (“CAC”), the holding company for Glenview State Bank (“GSB”)
    • Core organic loan growth (excluding GSB loans acquired and PPP loans) of $142.0 million, or 2.3%, in the second quarter
    • Wealth management assets under care of $12.30 billion at June 30, 2021, up from $10.69 billion at March 31, 2021, and $9.02 billion at June 30, 2020.
    • Non-interest income (excluding security gains) accounted for 33.2% of total revenue
    • Tangible book value per common share1 of $17.11 at June 30, 2021, compared to $16.65 at March 31, 2021, and $15.92 at June 30, 2020, an increase of 7.5% year-over-year
    • For additional information, please refer to the 2Q21 Quarterly Earnings Supplement

    Second Quarter Financial Results
    Net income for First Busey Corporation (“First Busey” or the “Company”) for the second quarter of 2021 was $29.8 million, or $0.53 per diluted common share, as compared to $37.8 million, or $0.69 per diluted common share, for the first quarter of 2021 and $25.8 million, or $0.47 per diluted common share, for the second quarter of 2020. Adjusted net income1 for the second quarter of 2021 was $31.9 million, or $0.57 per diluted common share, as compared to $38.1 million, or $0.69 per diluted common share, for the first quarter of 2021 and $26.2 million, or $0.48 per diluted common share, for the second quarter of 2020. For the second quarter of 2021, annualized return on average assets and annualized return on average tangible common equity1 were 1.05% and 12.26%, respectively. Based on adjusted net income1, annualized return on average assets was 1.12% and annualized return on average tangible common equity1 was 13.14% for the second quarter of 2021. Second quarter results include GSB’s performance for one month of post-acquisition activity.

    Pre-provision net revenue1 for the second quarter of 2021 was $34.0 million, compared to $40.2 million for the first quarter of 2021 and $45.4 million for the second quarter of 2020. Adjusted pre-provision net revenue1 for the second quarter of 2021 was $37.5 million, as compared to $42.8 million for the first quarter of 2021 and $46.4 million for the second quarter of 2020. Pre-provision net revenue to average assets1 for the second quarter of 2021 was 1.20%, as compared to 1.54% for the first quarter of 2021 and 1.76% for the second quarter of 2020. Adjusted pre-provision net revenue to average assets1 for the second quarter of 2021 was 1.32%, as compared to 1.64% for the first quarter of 2021 and 1.80% for the second quarter of 2020.

    Our fee-based businesses continue to add dynamic revenue diversification and growing contributions. In the second quarter of 2021, wealth management fees were $13.0 million, an increase of 27.6% from the second quarter of 2020, while remittance processing revenue was $4.3 million, an increase of 17.0% from the same period last year. Fees for customer services were $8.6 million in the second quarter of 2021, a 22.6% increase from $7.0 million in the second quarter of 2020. Mortgage revenue was $1.7 million in the second quarter of 2021, compared to $2.7 million in the second quarter of 2020. Total non-interest income, excluding net security gains, accounted for 33.2% of our total revenue in the second quarter of 2021, compared to 28.1% in second quarter of 2020.

    The continued challenge of low interest rates, coupled with high levels of excess liquidity, resulted in further pressure on our net interest margin during the second quarter. The Company reported net interest income of $64.5 million in the second quarter of 2021, down from $64.9 million in the first quarter of 2021, and $70.8 million in the second quarter of 2020. A $0.5 million decrease in net fee recognition on Paycheck Protection Program (“PPP”) loans contributed to the quarter-over-quarter decline in reported net interest income. Our reported net interest margin was 2.50% in the second quarter of 2021, as compared to 2.72% in the first quarter of 2021. The impact of the GSB acquisition reflected in our results for one month of the quarter accounted for five basis points of the decline in net interest margin.

    Second quarter 2021 results reflect a provision release, as compared to a reserve build at the onset of the coronavirus disease 2019 (“COVID-19”) pandemic. Specifically, Busey Bank recorded a $5.5 million negative provision for credit losses and a $0.6 million negative provision for unfunded commitments amid improved US economic outlooks. As a result of the acquisition, GSB recorded a Day 1 allowance of $4.2 million for loans purchased with credit deterioration (“PCD”), provision for credit losses of $3.8 million, and a provision for unfunded commitments of $0.2 million. The total allowance for credit losses was $95.4 million at June 30, 2021, representing 1.33% of total portfolio loans outstanding and 1.40% of portfolio loans excluding PPP loans.

    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 second quarter of 2021 included $2.7 million of expenses related to acquisitions. The Company believes that non-GAAP measures (including adjusted pre-provision net revenue, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted net interest margin, efficiency ratio, 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” for reconciliation.


    Acquisition of Cummins-American Corp.
    Effective May 31, 2021, the Company completed its acquisition of CAC, the holding company for GSB. The partnership will enhance the Company’s existing deposit, commercial banking, and wealth management presence in the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area. First Busey will operate GSB as a separate banking subsidiary until it is merged with Busey Bank, which is expected to occur in the third quarter of 2021. At the time of the bank merger, GSB banking centers will become branches of Busey Bank. It is anticipated that two of GSB’s seven banking centers will be closed and consolidated in the fourth quarter of 2021.

    Under the terms of the merger agreement, each share of CAC common stock issued and outstanding as of the effective date was converted into the right to receive 444.4783 shares of First Busey’s common stock and $14,173.96 in cash. As additional consideration provided to CAC’s shareholders in the merger, CAC paid a special dividend to its shareholders in the amount of $60 million, or $12,087.58 per share of CAC common stock, on May 28, 2021.

    At the date of the merger, the estimated fair value of CAC’s total assets was $1.48 billion, the fair value of total loans was $434.7 million, and the fair value of total deposits was $1.32 billion, which included $347.8 million of noninterest-bearing deposits. In addition, GSB had $1.26 billion in assets under care at May 31, 2021. Fair values are considered provisional until finalized. Reviews of third-party valuations are still being performed by management; therefore, amounts are subject to change.

    Personal Banking Transformation Plan
    Based on thoughtful consideration and analysis, in July 2021 the Company approved a plan to close and consolidate 15 Busey Bank banking centers to ensure a balance between the Company’s physical banking center network and its robust digital banking services. An efficient banking center footprint is necessary to keep First Busey competitive, responsive, and independent. The banking centers are expected to close in the fourth quarter of 2021. When fully realized, annualized expense savings net of expected associated revenue impacts are anticipated to be approximately $3.5 million, with the impact of these cost savings beginning to be realized in the fourth quarter of 2021. One-time expenses expected in relation to the banking center closures are estimated to be in the range of $4.3 to $5.0 million and are anticipated to be incurred during the third and fourth quarters of 2021.

    COVID-19 Update
    The Company continues to navigate the economic environment caused by COVID-19 effectively and prudently 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 faced as a result of COVID-19, First Busey offered an internal Financial Relief Program to qualifying customers. As of June 30, 2021, the Company had 49 commercial loans remaining on payment deferrals representing $143.5 million in loans. Importantly, only $10.4 million of these balances remain on full payment deferral with the remaining $133.1 million on interest only deferral. Commercial loans on full payment deferral now represent less than 0.2% of commercial loans outstanding. In addition, as of June 30, 2021, the Company had eight retail loans remaining on payment deferrals representing $0.8 million in loans.

    First Busey served as a bridge for the PPP, actively helping existing and new business clients sign up for this important financial resource. The Company originated a total of $749.4 million of first round PPP loans and acquired an additional $15.8 million of GSB first round PPP loans, representing 4,595 new and existing customers. Net fee income accretion recognized on these loans in the second quarter of 2021 was $1.4 million, compared to $3.3 million in the first quarter of 2021.

    The Company originated a total of $296.3 million of second round PPP loans and acquired an additional $27.7 million of GSB second round PPP loans, representing 2,740 new and existing customers. Net fee income accretion recognized on these loans in the second quarter of 2021 was $1.6 million, compared to $0.3 million in the first quarter of 2021.

    As of June 30, 2021, the Company had received approximately $685.6 million in loan forgiveness from the SBA and had submitted forgiveness applications to the SBA for another $20.9 million, including $4.3 million for GSB loans. At June 30, 2021, First Busey had $399.7 million in total PPP loans outstanding, with an amortized cost of $390.4 million, representing 3,104 customers.

    Community Banking
    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, the 2021 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 2021 Best Place to Work in Indiana by the Indiana Chamber of Commerce, and the 2020 Best Places to Work in Money Management by Pensions and Investments.

    Our second quarter results reflect our strategic growth plans and improving economic conditions. As we enter into the second half of 2021, we are working towards a successful integration of GSB and excited about the opportunities for efficiency enhancements and growth as we move ahead as a combined Company. In today’s fluid, ever-evolving landscape, 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



    SELECTED FINANCIAL HIGHLIGHTS (Unaudited) 
    (dollars in thousands, except per share data) 
                           
      As of and for the  As of and for the 
      Three Months Ended   Six Months Ended  
      June 30, March 31, December 31, September 30, June 30, June 30, June 30, 
         2021    2021    2020    2020    2020    2021    2020    
    EARNINGS & PER SHARE DATA                      
    Net income $29,766 $37,816 $28,345 $30,829 $25,806 $67,582 $41,170 
    Diluted earnings per share  0.53  0.69  0.52  0.56  0.47  1.22  0.75 
    Cash dividends paid per share  0.23  0.23  0.22  0.22  0.22  0.46  0.44 
    Pre-provision net revenue1,2  34,030  40,198  38,507  45,922  45,394  74,228  81,243 
    Revenue3  96,655  94,697  102,580  102,464  98,462  191,352  194,825 
                           
    Net income by operating segments:                      
    Banking  29,237  35,528  28,573  31,744  25,985  64,765  40,909 
    Remittance Processing  401  429  406  578  528  830  1,388 
    Wealth Management  4,885  4,682  3,334  3,166  3,082  9,567  6,681 
                           
    AVERAGE BALANCES                      
    Cash and cash equivalents $647,465 $536,457 $551,844 $836,097 $563,022 $592,267 $520,132 
    Investment securities  3,031,250  2,561,680  2,077,284  1,824,327  1,717,790  2,797,762  1,728,177 
    Loans held for sale  22,393  31,373  52,745  104,965  108,821  26,858  85,392 
    Portfolio loans  6,889,551  6,736,664  6,990,414  7,160,757  7,216,825  6,813,530  6,937,551 
    Interest-earning assets  10,448,417  9,752,294  9,557,265  9,805,948  9,485,200  10,102,278  9,151,372 
    Total assets  11,398,655  10,594,245  10,419,364  10,680,995  10,374,820  10,998,672  10,031,499 
                           
    Non-interest bearing deposits  2,970,890  2,688,845  2,545,830  2,592,130  2,472,568  2,830,646  2,157,656 
    Interest-bearing deposits  6,432,336  6,033,613  5,985,020  6,169,377  6,073,795  6,234,076  6,077,884 
    Total deposits  9,403,226  8,722,458  8,530,850  8,761,507  8,546,363  9,064,722  8,235,540 
                           
    Securities sold under agreements to repurchase  204,417  184,694  194,610  190,046  184,208  194,610  183,244 
    Interest-bearing liabilities  6,966,046  6,521,195  6,482,475  6,694,561  6,527,709  6,744,850  6,519,964 
    Total liabilities  10,055,884  9,318,551  9,158,066  9,432,547  9,141,550  9,689,254  8,805,784 
    Stockholders' equity - common  1,342,771  1,275,694  1,261,298  1,248,448  1,233,270  1,309,418  1,225,715 
    Tangible stockholders' equity - common2  974,062  913,001  896,178  880,958  863,571  943,700  854,746 
                           
    PERFORMANCE RATIOS                      
    Pre-provision net revenue to average assets1,2  1.20% 1.54% 1.47% 1.71% 1.76% 1.36% 1.63%
    Return on average assets  1.05% 1.45% 1.08% 1.15% 1.00% 1.24% 0.83%
    Return on average common equity  8.89% 12.02% 8.94% 9.82% 8.42% 10.41% 6.75%
    Return on average tangible common equity2  12.26% 16.80% 12.58% 13.92% 12.02% 14.44% 9.69%
    Net interest margin2,4  2.50% 2.72% 3.06% 2.86% 3.03% 2.61% 3.11%
    Efficiency ratio2  61.68% 54.67% 59.70% 52.42% 50.97% 58.21% 55.28%
    Non-interest revenue as a % of total revenues3  33.22% 31.47% 28.90% 31.92% 28.08% 32.36% 28.01%
                           
    NON-GAAP FINANCIAL INFORMATION                      
    Adjusted pre-provision net revenue1,2 $37,486 $42,753 $47,156 $48,701 $46,448 $80,239 $84,659 
    Adjusted net income2  31,921  38,065  34,255  32,803  26,191  69,986  41,670 
    Adjusted diluted earnings per share2  0.57  0.69  0.62  0.60  0.48  1.26  0.76 
    Adjusted pre-provision net revenue to average assets2  1.32% 1.64% 1.80% 1.81% 1.80% 1.47% 1.70%
    Adjusted return on average assets2  1.12% 1.46% 1.31% 1.22% 1.02% 1.28% 0.84%
    Adjusted return on average tangible common equity2  13.14% 16.91% 15.21% 14.81% 12.20% 14.96% 9.80%
    Adjusted net interest margin2,4  2.43% 2.63% 2.96% 2.75% 2.93% 2.53% 3.00%
    Adjusted efficiency ratio2  58.89% 54.33% 52.39% 49.97% 50.48% 56.63% 54.96%
                           
    1 Net interest income plus non-interest income, excluding security gains and losses, less non-interest expense. 
    2 See “Non-GAAP Financial Information” for reconciliation. 
    3 Revenue consists of net interest income plus non-interest income, excluding security gains and losses. 
    4 On a tax-equivalent basis, assuming a federal income tax rate of 21%. 



    CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
    (dollars in thousands, except per share data)
                    
      June 30, March 31, December 31, September 30, June 30,
         2021    2021    2020    2020    2020
    ASSETS               
    Cash and cash equivalents $920,810  $404,802  $688,537  $479,721  $1,050,072 
    Investment securities  3,478,467   2,804,101   2,266,717   2,098,657   1,701,992 
                    
    Loans held for sale  17,834   38,272   42,813   87,772   108,140 
                    
    Commercial loans  5,475,461   5,402,970   5,368,897   5,600,705   5,637,999 
    Retail real estate and retail other loans  1,710,189   1,376,330   1,445,280   1,520,606   1,591,021 
    Portfolio loans  7,185,650   6,779,300   6,814,177   7,121,311   7,229,020 
                    
    Allowance for credit losses  (95,410)  (93,943)  (101,048)  (98,841)  (96,046)
    Premises and equipment  145,437   132,669   135,191   144,001   146,951 
    Goodwill and other intangibles  381,795   361,120   363,521   365,960   368,053 
    Right of use asset  8,228   7,333   7,714   7,251   8,511 
    Other assets  372,638   325,909   326,425   333,796   319,272 
    Total assets $12,415,449  $10,759,563  $10,544,047  $10,539,628  $10,835,965 
                    
    LIABILITIES & STOCKHOLDERS' EQUITY               
    Non-interest bearing deposits $3,186,650  $2,859,492  $2,552,039  $2,595,075  $2,764,408 
    Interest checking, savings, and money market deposits  6,034,871   4,991,887   5,006,462   4,819,859   4,781,761 
    Time deposits  1,115,596   1,022,468   1,119,348   1,227,767   1,363,497 
    Total deposits $10,337,117  $8,873,847  $8,677,849  $8,642,701  $8,909,666 
                    
    Securities sold under agreements to repurchase $207,266  $210,132  $175,614  $201,641  $194,249 
    Short-term borrowings  30,168   4,663   4,658   4,651   24,648 
    Long-term debt  274,788   226,797   226,792   226,801   256,837 
    Junior subordinated debt owed to unconsolidated trusts  71,551   71,509   71,468   71,427   71,387 
    Lease liability  8,280   7,380   7,757   7,342   8,601 
    Other liabilities  140,588   99,413   109,840   129,360   134,493 
    Total liabilities $11,069,758  $9,493,741  $9,273,978  $9,283,923  $9,599,881 
    Total stockholders' equity $1,345,691  $1,265,822  $1,270,069  $1,255,705  $1,236,084 
    Total liabilities & stockholders' equity $12,415,449  $10,759,563  $10,544,047  $10,539,628  $10,835,965 
                    
    SHARE DATA               
    Book value per common share $23.89  $23.29  $23.34  $23.03  $22.67 
    Tangible book value per common share1 $17.11  $16.65  $16.66  $16.32  $15.92 
    Ending number of common shares outstanding  56,330,616   54,345,379   54,404,379   54,522,231   54,516,000 
                    
    1 See "Non-GAAP Financial Information" for reconciliation, excludes tax effect of other intangible assets.



    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
    (dollars in thousands, except per share data)
                   
      Three Months Ended June 30,  Six Months Ended June 30, 
         2021
    		 2020 2021
    		 2020
    INTEREST INCOME              
    Interest and fees on loans held for sale and portfolio $61,404  $71,089  $123,969  $143,625 
    Interest on investment securities  10,039   9,999   19,655   20,658 
    Other interest income  245   145   395   1,383 
    Total interest income $71,688  $81,233  $144,019  $165,666 
                   
    INTEREST EXPENSE              
    Interest on deposits $3,295  $7,721  $7,027  $19,948 
    Interest on securities sold under agreements to repurchase  60   100   117   508 
    Interest on short-term borrowings  64   118   83   185 
    Interest on long-term debt  2,995   1,745   5,900   3,299 
    Junior subordinated debt owed to unconsolidated trusts  732   736   1,457   1,480 
    Total interest expense $7,146  $10,420  $14,584  $25,420 
                   
    Net interest income $64,542  $70,813  $129,435  $140,246 
    Provision for loan losses  (1,700)  12,891   (8,496)  30,107 
    Net interest income after provision for loan losses $66,242  $57,922  $137,931  $110,139 
                   
    NON-INTEREST INCOME              
    Wealth management fees $13,002  $10,193  $25,586  $21,748 
    Fees for customer services  8,611   7,025   16,648   15,386 
    Remittance processing  4,349   3,718   8,767   7,471 
    Mortgage revenue  1,747   2,705   4,413   4,086 
    Income on bank owned life insurance  1,476   2,282   2,440   3,339 
    Net security gains (losses)  898   315   2,539   902 
    Other  2,928   1,726   4,063   2,549 
    Total non-interest income $33,011  $27,964  $64,456  $55,481 
                   
    NON-INTEREST EXPENSE              
    Salaries, wages, and employee benefits $34,889  $28,555  $65,273  $62,558 
    Data processing expense  4,819   4,051   9,099   8,446 
    Net occupancy expense  4,246   4,448   8,809   9,163 
    Furniture and equipment expense  2,066   2,537   4,092   4,986 
    Professional fees  2,311   1,986   4,256   3,810 
    Amortization expense  2,650   2,519   5,051   5,076 
    Interchange expense  1,442   1,198   2,926   2,367 
    Other operating expenses  10,202   7,774   17,618   17,176 
    Total non-interest expense $62,625  $53,068  $117,124  $113,582 
                   
    Income before income taxes $36,628  $32,818  $85,263  $52,038 
    Income taxes  6,862   7,012   17,681   10,868 
    Net income $29,766  $25,806  $67,582  $41,170 
                   
    SHARE DATA              
    Basic earnings per common share $0.54  $0.47  $1.23  $0.75 
    Fully-diluted earnings per common share $0.53  $0.47  $1.22  $0.75 
    Average common shares outstanding  55,050,071   54,489,403   54,762,563   54,575,595 
    Diluted average common shares outstanding  55,730,883   54,705,273   55,384,942   54,807,170 


    Balance Sheet Growth

    The balance sheet remains a source of strength. Total assets were $12.42 billion at June 30, 2021, $10.76 billion at March 31, 2021, and $10.84 billion at June 30, 2020. At June 30, 2021, portfolio loans were $7.19 billion, compared to $6.78 billion as of March 31, 2021, and $7.23 billion as of June 30, 2020. Amortized costs of PPP loans of $390.4 million, $522.1 million, and $729.3 million are included in the June 30, 2021, March 31, 2021, and June 30, 2020, portfolio loan balances, respectively. During the second quarter of 2021, Busey Bank experienced organic loan growth of $142.0 million, consisting of $94.2 million commercial growth and $47.8 million retail real estate and retail other growth. With the inclusion of GSB and organic growth, commercial balances (consisting of commercial, commercial real estate and real estate construction loans), excluding PPP loans, increased $204.2 million from March 31, 2021, and retail real estate and retail other loans increased $333.9 million from March 31, 2021.

    Average portfolio loans were $6.89 billion for the second quarter of 2021, compared to $6.74 billion for the first quarter of 2021 and $7.22 billion for the second quarter of 2020. The average balance of PPP loans for the second quarter of 2021 was $496.2 million, compared to $482.5 million for the first quarter of 2021 and $579.5 for the second quarter of 2020. Average interest-earning assets for the second quarter of 2021 were $10.45 billion, compared to $9.75 billion for the first quarter of 2021 and $9.49 billion for the second quarter of 2020.

    Total deposits were $10.34 billion at June 30, 2021, compared to $8.87 billion at March 31, 2021, and $8.91 billion at June 30, 2020. GSB deposits accounted for $1.29 billion of the second quarter increase. 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. The Company remains funded substantially through core deposits with significant market share in its primary markets. Core deposits now account for 98.7% of total deposits. Cost of deposits in the second quarter are down to 0.14%.

    Net Interest Margin and Net Interest Income

    Net interest margin for the second quarter of 2021 was 2.50%, compared to 2.72% for the first quarter of 2021 and 3.03% for the second quarter of 2020. Excluding purchase accretion, core net interest margin was 2.43% for the second quarter of 2021, compared to 2.63% in the first quarter of 2021. Net interest income was $64.5 million in the second quarter of 2021 compared to $64.9 million in the first quarter of 2021 and $70.8 million in the second quarter of 2020.

    The Federal Open Market Committee rate cuts during the first quarter of 2020 have contributed to the decline in net interest margin over the past year, as assets, in particular commercial loans, repriced more quickly and to a greater extent than liabilities. The net interest margin has also been negatively impacted by the sizeable balance of lower-yielding PPP loans, significant growth in the Company’s liquidity position, and the issuance of debt. Those impacts were partially offset by the Company’s efforts to lower deposit funding costs as well as the fees recognized related to PPP loans. Factors contributing to the 22 basis point decline in net interest margin during the second quarter of 2021 include:

    • Reduced recognition of purchase accounting accretion contributed -2 basis points
    • Reduction in PPP fee recognition contributed -3 basis points
    • Inclusion of GSB for one month contributed -5 basis points
    • Asset rate volume mix contributed -15 basis points
    • Funding costs improved +3 basis points, partially offsetting the declines

    Asset Quality

    Credit quality continues to be exceptionally strong. Loans 30-89 days past due were $3.9 million as of June 30, 2021, compared to $9.9 million as of March 31, 2021, and $5.2 million as of June 30, 2020. Non-performing loans totaled $28.3 million as of June 30, 2021, compared to $22.9 million as of March 31, 2021, and $25.4 million as of June 30, 2020. The increase in non-performing loans in the second quarter of 2021 was primarily the result of $4.4 million of acquired GSB non-performing loans. Continued disciplined credit management resulted in non-performing loans as a percentage of total loans of 0.39% at June 30, 2021, compared to 0.34% at March 31, 2021, and 0.35% at June 30, 2020. Excluding the amortized cost of PPP loans, non-performing loans as a percentage of total loans was 0.42% at June 30, 2021, compared to 0.37% at March 31, 2021, and 0.39% at June 30, 2020.

    Net charge-offs totaled $1.0 million for the quarter ended June 30, 2021, compared to $0.3 million and $1.2 million for the quarters ended March 31, 2021, and June 30, 2020, respectively. The annualized ratio of second quarter net charge-offs to average loans was 0.06%. The allowance as a percentage of portfolio loans was 1.33% at June 30, 2021, compared to 1.39% at March 31, 2021, and 1.33% at June 30, 2020. Excluding the amortized cost of PPP loans, the allowance as a percentage of portfolio loans was 1.40% at June 30, 2021. The allowance as a percentage of non-performing loans was 336.96% at June 30, 2021, compared to 411.04% at March 31, 2021, and 378.43% at June 30, 2020.

    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.

    ASSET QUALITY (Unaudited)
    (dollars in thousands)
                        
      As of and for the Three Months Ended 
      June 30, March 31, December 31, September 30, June 30, 
         2021    2021    2020    2020    2020    
                        
    ASSET QUALITY                   
    Portfolio loans $7,185,650  $6,779,300  $6,814,177  $7,121,311  $7,229,020  
    Portfolio loans excluding amortized cost of PPP loans  6,795,255   6,257,196   6,367,774   6,384,916   6,499,734  
    Loans 30-89 days past due  3,888   9,929   7,578   6,708   5,166  
    Non-performing loans:                   
    Non-accrual loans  27,725   21,706   22,930   23,898   25,095  
    Loans 90+ days past due  590   1,149   1,371   279   285  
    Total non-performing loans $28,315  $22,855  $24,301  $24,177  $25,380  
    Total non-performing loans, segregated by geography:                   
    Illinois / Indiana $21,398  $15,457  $16,234  $15,097  $16,285  
    Missouri  5,645   6,170   6,764   6,867   5,327  
    Florida  1,272   1,228   1,303   2,213   3,768  
    Other non-performing assets  3,137   4,292   4,571   4,978   3,755  
    Total non-performing assets $31,452  $27,147  $28,872  $29,155  $29,135  
                        
    Total non-performing assets to total assets  0.25 % 0.25 % 0.27 % 0.28 % 0.27 %
    Total non-performing assets to portfolio loans and non-performing assets  0.44 % 0.40 % 0.42 % 0.41 % 0.40 %
    Allowance for credit losses to portfolio loans  1.33 % 1.39 % 1.48 % 1.39 % 1.33 %
    Allowance for credit losses to portfolio loans, excluding PPP  1.40 % 1.50 % 1.59 % 1.55 % 1.48 %
    Allowance for credit losses as a percentage of non-performing loans  336.96 % 411.04 % 415.82 % 408.82 % 378.43 %
    Net charge-offs (recoveries) $1,011  $309  $934  $2,754  $1,229  
    Provision $(1,700) $(6,796) $3,141  $5,549  $12,891  

    Non-Interest Income

    Total non-interest income increased to $33.0 million for the second quarter of 2021, compared to $31.4 million for the first quarter of 2021 and $28.0 million for the second quarter of 2020. Revenues from wealth management fees and remittance processing activities represented 52.6% of the Company’s non-interest income for the quarter ended June 30, 2021, providing a balance to spread-based revenue from traditional banking activities. On a combined basis, revenue from these two critical operating areas increased to $17.4 million in the second quarter of 2021, as compared to $13.9 million in the second quarter of 2020, a 24.7% increase.

    Wealth management fees were $13.0 million for the second quarter of 2021, an increase from $12.6 million for the first quarter of 2021 and $10.2 million for the second quarter of 2020, a 27.6% increase from the comparable period in 2020. Net income from the Wealth Management segment was $4.9 million for the second quarter of 2021, an increase from $4.7 million for the first quarter of 2021 and $3.1 million in the second quarter of 2020, a 58.5% increase from the comparable period in 2020. First Busey’s Wealth Management division ended the second quarter of 2021 with $12.30 billion in assets under care, compared to $10.69 billion at the end of the first quarter of 2021 and $9.02 billion at the end of the second quarter of 2020, a 36.4% increase from the comparable period in 2020. The increase in assets under care compared to the second quarter of 2020 was comprised of $2.00 billion in organic and market related growth with an additional $1.28 billion obtained in the GSB acquisition.

    Remittance processing revenue from the Company’s subsidiary, FirsTech, Inc., was $4.3 million for the second quarter of 2021, compared to $4.4 million for the first quarter of 2021 and $3.7 million for the second quarter of 2020, a 17.0% increase from the comparable period in 2020. The Remittance Processing operating segment generated net income of $0.4 million in the second quarter of 2021, consistent with last quarter, and down from $0.5 million in the second quarter of 2020. The Company is currently making strategic investments in FirsTech to further enhance future growth.

    Fees for customer services increased to $8.6 million for the second quarter of 2021, compared to $8.0 million in the first quarter of 2021 and $7.0 million in the second quarter of 2020, a 22.6% increase from the comparable period in 2020. Fees for customer services have been impacted over the past year by changing customer behaviors resulting from COVID-19 and related government stimulus programs, and continue to rebound with improving economic conditions and customer activity levels.

    Mortgage revenue decreased to $1.7 million in the second quarter of 2021, compared to $2.7 million in both the first quarter of 2021 and the second quarter of 2020, as a result of declines in sold-loan mortgage volume.

    Operating Efficiency

    Total non-interest expense was $62.6 million in the second quarter of 2021 compared to $54.5 million in the first quarter of 2021 and $53.1 million in the second quarter of 2020. Non-interest expense including amortization of intangibles but excluding non-operating adjustment items1 was $59.9 million in the second quarter of 2021 compared to $54.2 million in the first quarter of 2021 and $52.6 million in the second quarter of 2020. Second quarter 2021 results include one month of operating expenses for GSB totaling $2.5 million, excluding non-operating items, and the Company expects efficiencies associated with the acquisition to be realized after the banks merge. As a result, the efficiency ratio1 was 61.68% for the quarter ended June 30, 2021, compared to 54.67% for the quarter ended March 31, 2021, and 50.97% for the quarter ended June 30, 2020. The adjusted efficiency ratio1 was 58.89% for the quarter ended June 30, 2021, 54.33% for the quarter ended March 31, 2021, and 50.48% for the quarter ended June 30, 2020. The Company remains focused on expense discipline.

    Noteworthy components of non-interest expense are as follows:

    • Salaries, wages, and employee benefits were $34.9 million in the second quarter of 2021, an increase from $30.4 million in the first quarter of 2021 and $28.6 million from the second quarter of 2020. Total full-time equivalents at June 30, 2021, numbered 1,503 compared to 1,332 at March 31, 2021, and 1,480 at June 30, 2020. The GSB acquisition added 137 full-time equivalents at June 30, 2021. Second quarter 2021 results include $2.4 million of GSB expenses for the one month since acquisition, which included $1.1 million of non-operating salaries, wages, and employee benefits expenses. Further, the deferral of PPP loan origination costs of $1.8 million contributed to the lower salaries, wages, and benefits expense in the first quarter of 2021, compared to only $0.3 million in the second quarter of 2021.

    • Data processing expense increased to $4.8 million in the second quarter of 2021, compared to $4.3 million in the first quarter of 2021 and $4.1 million in the second quarter of 2020. Second quarter 2021 results include $0.2 million of GSB operating data processing expenses for the one month since acquisition. Further, the Company recorded an additional $0.4 million of non-operating data processing expenses related to the acquisition.

    • Professional fees increased to $2.3 million in the second quarter of 2021, compared to $1.9 million in the first quarter of 2021 and $2.0 million in the second quarter of 2020. Second quarter 2021 results include $0.9 million of non-operating professional fee expenses related to the acquisition.

    • Amortization expense increased to $2.7 million in the second quarter of 2021, compared to $2.4 million in the first quarter of 2021 and $2.5 million in the second quarter of 2020. Second quarter 2021 results include $0.3 million of amortization related to GSB.

    • Other operating expense increased to $10.2 million for the second quarter of 2021, compared to $7.4 million in the first quarter of 2021 and $7.8 million in the second quarter of 2020. The second quarter 2021 increase was across multiple expense categories, including a $0.6 million increase in new market tax credit amortization and $0.9 million increase in business development expenses, which includes $0.2 million of non-operating expenses related to the acquisition. Additionally, second quarter 2021 results included $0.5 million of GSB other operating expenses.

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


    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 July 30, 2021, of $0.23 per common share to stockholders of record as of July 23, 2021. The Company has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

    As of June 30, 2021, 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 $981.9 million at June 30, 2021, compared to $918.6 million at March 31, 2021, and $883.9 million at June 30, 2020. TCE represented 8.15% of tangible assets at June 30, 2021, compared to 8.82% at March 31, 2021, and 8.43% at June 30, 2020.1

    During the second quarter of 2021, the Company purchased 221,000 shares of its common stock at an average price of $25.97 per share for a total of $5.7 million under the Company’s stock repurchase plan.

    2Q21 Quarterly Earnings Supplement
    For additional information on the Company’s response to COVID-19, financial condition, and operating results, please refer to the 2Q21 Quarterly Earnings Supplement presentation furnished via Form 8-K on July 27, 2021, in connection with this earnings release.

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


    Corporate Profile

    As of June 30, 2021, First Busey Corporation (Nasdaq: BUSE) was a $12.42 billion financial holding company headquartered in Champaign, Illinois.

    Busey Bank, a wholly-owned bank subsidiary of First Busey Corporation, had total assets of $10.94 billion as of June 30, 2021, and is headquartered in Champaign, Illinois. Busey Bank currently has 53 banking centers serving Illinois, 10 banking centers serving Missouri, four banking centers serving southwest Florida, and one banking center in Indianapolis, Indiana.  

    Busey Bank owns a retail payment processing subsidiary, FirsTech, Inc., which processes approximately 30 million transactions for a total of $9.0 billion on an annual basis. FirsTech, Inc. operates across the United States and Canada, providing payment solutions that include, but are not limited to, electronic payments, mobile payments, phone payments, remittance processing, in person payments, and merchant services. FirsTech, Inc. partners with 5,800+ agents across the U.S. More information about FirsTech, Inc. can be found at firstechpayments.com.

    Glenview State Bank, a wholly-owned bank subsidiary of First Busey Corporation acquired in the second quarter of 2021, had total assets of $1.44 billion as of June 30, 2021, and is headquartered in Glenview, Illinois. Glenview State Bank currently has seven banking centers serving the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area.

    Through Busey Bank’s and GSB’s Wealth Management divisions, the Company provides asset management, investment, and fiduciary services to individuals, businesses, and foundations. As of June 30, 2021, Busey Bank’s assets under care were $11.02 billion, and GSB’s assets under care were $1.28 billion.

    First Busey has been named a Best Place to Work across the company footprint since 2016 by Best Companies Group. We are honored to be consistently recognized by national and local organizations for our engaged culture of integrity and commitment to community development.

    For more information about us, visit busey.com.

    Category: Financial
    Source: First Busey Corporation

    Contacts:

    Jeffrey D. Jones, Chief Financial Officer
    217-365-4130


    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, efficiency ratio, 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 adjusted pre-provision net revenue; net income in the case of adjusted net income, adjusted diluted 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 efficiency ratio and 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 (Unaudited) 
    (dollars in thousands, except per share data) 
                     
      Three Months Ended Six Months Ended  
      June 30, March 31, June 30, June 30, June 30, 
         2021    2021    2020 2021    2020    
    Net interest income $64,542  $64,893  $70,813  $129,435  $140,246  
    Non-interest income  33,011   31,445   27,964   64,456   55,481  
    Less securities (gains) and losses, net  (898)  (1,641)  (315)  (2,539)  (902) 
    Non-interest expense  (62,625)  (54,499)  (53,068)  (117,124)  (113,582) 
    Pre-provision net revenue  34,030   40,198   45,394   74,228   81,243  
                     
    Adjustments to pre-provision net revenue:                
    Acquisition and other restructuring expenses  2,713   320   487   3,033   632  
    Provision for unfunded commitments  (496)  406   567   (90)  1,584  
    New Market Tax Credit amortization  1,239   1,829   —   3,068   1,200  
    Adjusted pre-provision net revenue $37,486  $42,753  $46,448  $80,239  $84,659  
                     
    Average total assets  11,398,655   10,594,245   10,374,820   10,998,672   10,031,499  
                     
    Reported: Pre-provision net revenue to average assets1  1.20 % 1.54 % 1.76 % 1.36 % 1.63 %
    Adjusted: Pre-provision net revenue to average assets1  1.32 % 1.64 % 1.80 % 1.47 % 1.70 %
                     
    1 Annualized measure.                



    Reconciliation of Non-GAAP Financial Measures – Adjusted Net Income, Adjusted Diluted Earnings Per Share, and Adjusted Return on Average Assets (Unaudited) 
    (dollars in thousands, except per share data) 
                     
      Three Months Ended Six Months Ended  
      June 30, March 31, June 30, June 30, June 30, 
         2021    2021    2020 2021    2020    
    Net income $29,766  $37,816  $25,806  $67,582  $41,170  
                     
    Adjustments to net income:                
    Acquisition expenses:                
    Salaries, wages, and employee benefits  1,125   —   —   1,125   —  
    Data processing  368   7   —   375   —  
    Lease or fixed asset impairment  —   —   —   —   —  
    Professional fees, occupancy, and other  1,220   313   141   1,533   286  
    Other restructuring costs:                
    Salaries, wages, and employee benefits  —   —   346   —   346  
    Data processing  —   —   —   —   —  
    Lease or fixed asset impairment  —   —   —   —   —  
    Professional fees, occupancy, and other  —   —   —   —   —  
    Related tax benefit  (558)  (71)  (102)  (629)  (132) 
    Adjusted net income $31,921  $38,065  $26,191  $69,986  $41,670  
                     
    Dilutive average common shares outstanding  55,730,883   55,035,806   54,705,273   55,384,942   54,807,170  
    Reported: Diluted earnings per share $0.53  $0.69  $0.47  $1.22  $0.75  
    Adjusted: Diluted earnings per share $0.57  $0.69  $0.48  $1.26  $0.76  
                     
    Average total assets $11,398,655  $10,594,245  $10,374,820  $10,998,672  $10,031,499  
                     
    Reported: Return on average assets1  1.05 % 1.45 % 1.00 % 1.24 % 0.83 %
    Adjusted: Return on average assets1  1.12 % 1.46 % 1.02 % 1.28 % 0.84 %
                     
    1 Annualized measure.                



    Reconciliation of Non-GAAP Financial Measures – Adjusted Net Interest Margin (Unaudited)
    (dollars in thousands)
                     
      Three Months Ended Six Months Ended  
      June 30, March 31, June 30, June 30, June 30, 
         2021    2021    2020 2021    2020    
    Net interest income $64,542  $64,893  $70,813  $129,435  $140,246  
                     
    Adjustments to net interest income:                
    Tax-equivalent adjustment  579   601   717   1,180   1,447  
    Purchase accounting accretion related to business combinations  (1,726)  (2,157)  (2,477)  (3,883)  (5,304) 
    Adjusted net interest income $63,395  $63,337  $69,053  $126,732  $136,389  
                     
    Average interest-earning assets  10,448,417   9,752,294   9,485,200   10,102,278   9,151,372  
                     
    Reported: Net interest margin1  2.50 % 2.72 % 3.03 % 2.61 % 3.11 %
    Adjusted: Net interest margin1  2.43 % 2.63 % 2.93 % 2.53 % 3.00 %
                     
    1 Annualized measure.                



    Reconciliation of Non-GAAP Financial Measures – Efficiency Ratio and Adjusted Efficiency Ratio (Unaudited)
    (dollars in thousands)
                     
      Three Months Ended Six Months Ended  
      June 30, March 31, June 30, June 30, June 30, 
         2021    2021    2020 2021    2020 
    Net interest income $64,542  $64,893  $70,813  $129,435  $140,246  
    Tax-equivalent adjustment  579   601   717   1,180   1,447  
    Tax equivalent interest income $65,121  $65,494  $71,530  $130,615  $141,693  
                     
    Non-interest income $33,011  $31,445  $27,964  $64,456  $55,481  
    Less security (gains) and losses, net  (898)  (1,641)  (315)  (2,539)  (902) 
    Adjusted non-interest income $32,113  $29,804  $27,649  $61,917  $54,579  
                     
    Non-interest expense $62,625  $54,499  $53,068  $117,124  $113,582  
    Amortization of intangible assets  (2,650)  (2,401)  (2,519)  (5,051)  (5,076) 
    Non-operating adjustments:                
    Salaries, wages, and employee benefits  (1,125)  —   (346)  (1,125)  (346) 
    Data processing  (368)  (7)  —   (375)  —  
    Impairment, professional fees, occupancy, and other  (1,220)  (313)  (141)  (1,533)  (286) 
    Adjusted non-interest expense $57,262  $51,778  $50,062  $109,040  $107,874  
                     
    Reported: Efficiency ratio  61.68 % 54.67 % 50.97 % 58.21 % 55.28 %
    Adjusted: Efficiency ratio  58.89 % 54.33 % 50.48 % 56.63 % 54.96 %



    Reconciliation of Non-GAAP Financial Measures – Tangible common equity, Tangible common equity to tangible assets, Tangible book value per share, Return on average tangible common equity (Unaudited)
    (dollars in thousands)
                     
      Three Months Ended Six Months Ended  
      June 30, March 31, June 30, June 30, June 30, 
         2021    2021    2020 2021    2020    
    Total assets $12,415,449  $10,759,563  $10,835,965        
    Goodwill and other intangible assets, net  (381,795)  (361,120)  (368,053)       
    Tax effect of other intangible assets, net  17,997   13,883   15,825        
    Tangible assets $12,051,651  $10,412,326  $10,483,737        
                     
    Total stockholders’ equity $1,345,691  $1,265,822  $1,236,084        
    Goodwill and other intangible assets, net  (381,795)  (361,120)  (368,053)       
    Tax effect of other intangible assets, net  17,997   13,883   15,825        
    Tangible common equity $981,893  $918,585  $883,856        
                     
    Ending number of common shares outstanding  56,330,616   54,345,379   54,516,000        
                     
    Tangible common equity to tangible assets1  8.15 % 8.82 % 8.43 %      
    Tangible book value per share $17.11  $16.65  $15.92        
                     
    Average common equity $1,342,771  $1,275,694  $1,233,270  $1,309,418  $1,225,715  
    Average goodwill and other intangible assets, net  (368,709)  (362,693)  (369,699)  (365,718)  (370,969) 
    Average tangible common equity $974,062  $913,001  $863,571  $943,700  $854,746  
                     
    Reported: Return on average tangible common equity2  12.26 % 16.80 % 12.02 % 14.44 % 9.69 %
    Adjusted: Return on average tangible common equity2,3  13.14 % 16.91 % 12.20 % 14.96 % 9.80 %
                     
    1 Tax-effected measure, 28% estimated deferred tax rate.  
    2 Annualized measure.                
    3 Calculated using adjusted net income.                


    Special Note Concerning Forward-Looking Statements

    Statements made in this document, other than those concerning historical financial information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance, and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations, and assumptions of the Company’s management, and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should,” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and 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 current presidential administration); (ii) the economic impact of any future terrorist threats or attacks, widespread disease or pandemics (including the COVID-19 pandemic), 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 FASB’s CECL impairment standards; (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 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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