First Busey Corporation (Nasdaq: BUSE)
Net Income of $27.4
millionDiluted EPS of $0.47
SECOND QUARTER 2024
HIGHLIGHTS
- Adjusted net income1 of
$29.0 million, or $0.50 per diluted common share
- Net interest margin1 increased by
24 basis points to 3.03% from 2.79% in the prior quarter
- Noninterest income of
$33.8 million, and adjusted noninterest income1 of
$33.9 million, or 29.1% of operating revenue1
- Record high quarterly revenue for
both the Wealth Management and FirsTech operating segments
- Finalized the acquisition of
Merchants & Manufacturers Bank Corporation (“M&M”) and its
wholly owned subsidiary Merchants & Manufacturers Bank
(“M&M Bank”) on April 1, 2024, and completed the
integration of M&M Bank into Busey Bank on June 21,
2024
- Tangible book value per common
share1 of $16.97 at June 30, 2024, compared to $16.84 at
March 31, 2024, and $15.25 at June 30, 2023, a
year-over-year increase of 11.3%
- Tangible common equity1 increased
to 8.36% of tangible assets at June 30, 2024, compared to
8.12% at March 31, 2024, and 7.18% at June 30, 2023
For additional information, please refer to the
2Q24 Earnings Investor Presentation.
MESSAGE FROM OUR CHAIRMAN &
CEO
Second Quarter Financial
Results
Net income for First Busey Corporation (“Busey,”
“Company,” “we,” “us,” or “our”) was $27.4 million for the second
quarter of 2024, or $0.47 per diluted common share, compared to
$26.2 million, or $0.46 per diluted common share, for the first
quarter of 2024, and $29.4 million, or $0.52 per diluted common
share, for the second quarter of 2023. Adjusted net income1, which
excludes the impact of acquisition and restructuring expenses, was
$29.0 million, or $0.50 per diluted common share, for the second
quarter of 2024, compared to $26.5 million, or $0.47 per
diluted common share, for the first quarter of 2024. Adjustments to
net income for the second quarter of 2023 were immaterial.
Annualized return on average assets and annualized return on
average tangible common equity1 were 0.91% and 11.51%,
respectively, for the second quarter of 2024. Annualized adjusted
return on average assets1 and annualized adjusted return on average
tangible common equity1 were 0.97% and 12.21%, respectively, for
the second quarter of 2024.
Second quarter results included
$0.4 million in net securities losses, nearly all of which
were unrealized, as well as an additional $0.3 million gain on
the mortgage servicing right sale previously announced in the first
quarter of 2024. In addition, second quarter results include a
one-time deferred tax valuation adjustment of $1.4 million
resulting from a change to our Illinois apportionment rate due to
recently enacted regulations. These new regulations are expected to
lower our ongoing tax obligation in future periods, but create a
negative adjustment to the carrying value of our deferred tax asset
in the current period. Excluding this one-time deferred tax
valuation adjustment, the effective tax rate for the second quarter
of 2024 would have been 25.0%, rather than the 28.8% reported, and
further adjusted net income would have been $30.5 million,
equating to further adjusted diluted earnings per share of
$0.53.
Pre-provision net revenue1 was $41.1 million for
the second quarter of 2024, compared to $46.4 million for the first
quarter of 2024 and $39.5 million for the second quarter of 2023.
Pre-provision net revenue to average assets1 was 1.37% for the
second quarter of 2024, compared to 1.55% for the first quarter of
2024, and 1.30% for the second quarter of 2023. Adjusted
pre-provision net revenue1 was $42.6 million for the second quarter
of 2024, compared to $38.6 million for the first quarter of 2024
and $42.1 million for the second quarter of 2023. Adjusted
pre-provision net revenue to average assets1 was 1.42% for the
second quarter of 2024, compared to 1.29% for the first quarter of
2024 and 1.38% for the second quarter of 2023.
Our fee-based businesses continue to add revenue
diversification. Total noninterest income was $33.8 million
for the second quarter of 2024, compared to $35.0 million for
the first quarter of 2024 and $28.0 million for the second
quarter of 2023. Adjusted noninterest income1 was
$33.9 million, or 29.1% of operating revenue1, during the
second quarter of 2024, compared to $33.9 million, or 30.9% of
total operating revenue, for the first quarter of 2024 and
$30.1 million, or 27.7% of total operating revenue, for the
second quarter of 2023. Wealth management fees and payment
technology solutions contributed $15.9 million and
$5.9 million, respectively, to our consolidated noninterest
income for the second quarter of 2024, representing 64.6% of
noninterest income on a combined basis.
Busey 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 acquisition and other restructuring charges in the second
quarter of 2024 were $2.2 million. Busey believes that its
non-GAAP measures (which are identified with the endnote labeled as
1) facilitate the assessment of its financial results and peer
comparability. For more information and a reconciliation of these
non-GAAP measures in tabular form, see "Non-GAAP Financial
Information."
We have effectively managed our noninterest
expense during a time of decades-high inflation and have been
purposeful in our efforts to rationalize our expense base given our
economic outlook and our view on the future of banking. Second
quarter expenses include the costs of operating M&M Bank as a
stand-alone bank from April 1, 2024, through June 21, 2024.
Noninterest expense was $75.5 million in the second quarter of
2024, compared to $70.8 million in the first quarter of 2024
and $69.2 million in the second quarter of 2023. Adjusted
noninterest expense1, which excludes the amortization of intangible
assets and acquisition and restructuring related expenses, was
$70.7 million in the second quarter of 2024, compared to
$68.0 million in the first quarter of 2024 and
$66.5 million in the second quarter of 2023.
Quarterly pre-tax expense synergies resulting
from the M&M acquisition are anticipated to be
$1.6 million to $1.7 million per quarter when fully
realized. Quarterly run-rate savings are projected to be achieved
by the first quarter of 2025. During the second quarter of 2024, we
achieved approximately 30% of the full quarterly savings. We expect
to continue to prudently manage our expenses and to realize
increased rates of M&M acquisition synergies during the second
half of 2024.
Acquisition of Merchants and
Manufacturers Bank Corporation Completed April 1, 2024, and
Integration of Merchants & Manufacturers Bank with and into
Busey Bank Completed June 21, 2024
Effective April 1, 2024, Busey completed
its previously announced acquisition (the "Merger") of M&M,
pursuant to an Agreement and Plan of Merger, dated
November 27, 2023, between Busey and M&M (the “Merger
Agreement”). Upon completion of the Merger, each share of M&M
common stock converted to the right to receive, at the election of
each stockholder and subject to proration and adjustment, either
(1) $117.74 in cash (“Cash Election”), (2) 5.7294 shares
of Busey common stock (“Share Election”), or (3) mixed
consideration of $34.55 in cash and 4.0481 shares of Busey common
stock (“Mixed Election”).
Most of the M&M common stockholders who
submitted an election form by the election deadline made the Share
Election to receive their Merger consideration solely in the form
of shares of Busey common stock. As a result of the elections of
M&M common stockholders, and in accordance with the proration
and adjustment provisions of the Merger Agreement, the Merger
consideration paid to M&M common stockholders was comprised of
an aggregate of 1,429,304 shares of Busey common stock and an
aggregate of $12.2 million in cash, allocated as follows for each
share of M&M stock: (1) $117.74 in cash for the Cash
Election, (2) $5.3966 in cash and 5.4668 shares of Busey
common stock for the Share Election, and (3) $34.55 in cash
and 4.0481 shares of Busey common stock for the Mixed Election.
Pursuant to the terms of the Merger Agreement, M&M common
stockholders that did not make an election or submit a properly
completed election form by the election deadline of March 29,
2024, received cash consideration of $117.74 for each share of
M&M common stock held. No fractional shares of Busey common
stock were issued in the Merger. Fractional shares were paid in
cash at the rate of $23.32 per share.
Additional Merger consideration of
$3.0 million was paid to redeem 300 shares of M&M
preferred stock.
The M&M transaction added loans with a fair
value of $418.7 million and deposits with a fair value of
$392.8 million as of the acquisition date. Busey incurred
one-time pre-tax acquisition-related expenses of $2.1 million
in the second quarter of 2024 related to M&M.
On June 21, 2024, M&M Bank was merged
with and into Busey Bank (the “Bank Merger”). At the time of the
Bank Merger, M&M Bank’s banking centers became banking centers
of Busey Bank, except for the banking center located at 990
Essington Rd., Joliet, Illinois, which was closed in connection
with the Bank Merger. Services were assumed by the existing Busey
Bank banking center located at 2801 Black Rd., Joliet, Illinois,
which is less than one mile away from where the Essington banking
center was located. This partnership adds M&M’s Life Equity
Loan® products to Busey’s existing suite of services and expands
Busey’s presence in the suburban Chicago area.
Busey’s Conservative Banking
Strategy
Busey’s financial strength is built on a
long-term conservative operating approach. That focus will not
change now or in the future.
The quality of our core deposit franchise is a
critical value driver of our institution. Our granular deposit base
continues to position us well, with core deposits1 representing
96.4% of our deposits as of June 30, 2024. Our retail deposit
base was comprised of more than 256,000 accounts with an average
balance of $22 thousand and an average tenure of 16.8 years as
of June 30, 2024. Our commercial deposit base was comprised of
more than 33,000 accounts with an average balance of
$96 thousand and an average tenure of 12.5 years as of
June 30, 2024. We estimated that 29% of our deposits were
uninsured and uncollateralized2 as of June 30, 2024, and we
have sufficient on- and off-balance sheet liquidity to manage
deposit fluctuations and the liquidity needs of our customers.
Asset quality remains strong by both Busey’s
historical and current industry trends. Non-performing assets
decreased to $9.2 million during the second quarter of 2024,
representing 0.08% of total assets. Busey’s results for the second
quarter of 2024 include a $2.3 million provision expense for
credit losses and a $0.4 million provision release for
unfunded commitments. The allowance for credit losses was $85.2
million as of June 30, 2024, representing 1.07% of total
portfolio loans outstanding, and 936.0% of non-performing loans.
Busey recorded net charge-offs of $9.9 million in the second
quarter of 2024, primarily in connection with a single commercial
and industrial credit relationship that also experienced a partial
charge-off during the first quarter of 2024. A specific reserve of
$7.2 million had previously been allocated against this credit
relationship. As of June 30, 2024, our commercial real estate
loan portfolio of investor-owned office properties within Central
Business District3 areas is minimal at $2.2 million. Our
credit performance continues to reflect our highly diversified,
conservatively underwritten loan portfolio, which has been
originated predominantly to established customers with tenured
relationships with our company.
The strength of our balance sheet is also
reflected in our capital foundation. In the second quarter of 2024,
our Common Equity Tier 1 ratio4 was 13.19% and our Total
Capital to Risk Weighted Assets ratio4 was 17.49%. Our regulatory
capital ratios continue to provide a buffer of more than
$540 million above levels required to be designated
well-capitalized. Our Tangible Common Equity ratio1 increased to
8.36% during the second quarter of 2024, compared to 8.12% for the
first quarter of 2024 and 7.18% for the second quarter of 2023.
Busey’s tangible book value per common share1 increased to $16.97
at June 30, 2024, from $16.84 at March 31, 2024, and
$15.25 at June 30, 2023, reflecting an 11.3% year-over-year
increase. During the second quarter of 2024, we paid a common share
dividend of $0.24.
Community Banking
Busey’s commitment to bettering the communities
we serve includes providing our Pillars with wide-ranging access to
financial education tools. We’re pleased to offer Financial
Pathways, a complimentary educational platform that provides an
engaging learning experience through a series of interactive
modules that deliver actionable financial education. Through the
Financial Pathways Engage program, community members of all ages
can learn how to manage their finances and plan for the future
through educational workshops. The Engage program is led by Busey
associates who are certified facilitators trained to lead the
in-person and virtual sessions. After April’s training, we now have
more than 70 Busey associates certified as Financial Pathways
facilitators to offer valuable financial education to fellow
associates, customers, and community members.
As we build upon Busey’s forward momentum and
our strategic growth plans, we are grateful for the opportunities
to consistently earn the business of our customers, based on the
contributions of our talented associates and the continued support
of our loyal shareholders.
|
|
Van A. Dukeman |
|
Chairman and Chief Executive Officer |
|
First Busey Corporation |
SELECTED FINANCIAL
HIGHLIGHTS(unaudited) |
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
EARNINGS & PER SHARE AMOUNTS |
|
|
|
|
|
|
|
|
|
Net income |
$ |
27,357 |
|
|
$ |
26,225 |
|
|
$ |
29,364 |
|
|
$ |
53,582 |
|
|
$ |
66,150 |
|
Diluted earnings per common share |
|
0.47 |
|
|
|
0.46 |
|
|
|
0.52 |
|
|
|
0.94 |
|
|
|
1.18 |
|
Cash dividends paid per share |
|
0.24 |
|
|
|
0.24 |
|
|
|
0.24 |
|
|
|
0.48 |
|
|
|
0.48 |
|
Pre-provision net revenue1, 2 |
|
41,051 |
|
|
|
46,373 |
|
|
|
39,536 |
|
|
|
87,424 |
|
|
|
87,454 |
|
Operating revenue2 |
|
116,311 |
|
|
|
109,677 |
|
|
|
108,741 |
|
|
|
225,988 |
|
|
|
227,062 |
|
|
|
|
|
|
|
|
|
|
|
Net income by operating segments: |
|
|
|
|
|
|
|
|
|
Banking |
|
26,697 |
|
|
|
26,492 |
|
|
|
30,665 |
|
|
|
53,189 |
|
|
|
67,500 |
|
FirsTech |
|
28 |
|
|
|
86 |
|
|
|
226 |
|
|
|
114 |
|
|
|
188 |
|
Wealth Management |
|
5,561 |
|
|
|
4,998 |
|
|
|
4,932 |
|
|
|
10,559 |
|
|
|
9,790 |
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
346,381 |
|
|
$ |
594,193 |
|
|
$ |
235,858 |
|
|
$ |
470,287 |
|
|
$ |
229,563 |
|
Investment securities |
|
2,737,313 |
|
|
|
2,907,144 |
|
|
|
3,255,741 |
|
|
|
2,822,228 |
|
|
|
3,307,575 |
|
Loans held for sale |
|
9,353 |
|
|
|
4,833 |
|
|
|
1,941 |
|
|
|
7,093 |
|
|
|
1,796 |
|
Portfolio loans |
|
8,010,636 |
|
|
|
7,599,316 |
|
|
|
7,755,618 |
|
|
|
7,804,976 |
|
|
|
7,733,370 |
|
Interest-earning assets |
|
10,993,907 |
|
|
|
10,999,903 |
|
|
|
11,130,298 |
|
|
|
10,996,905 |
|
|
|
11,155,291 |
|
Total assets |
|
12,089,692 |
|
|
|
12,024,208 |
|
|
|
12,209,865 |
|
|
|
12,056,950 |
|
|
|
12,236,643 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
|
2,816,293 |
|
|
|
2,708,586 |
|
|
|
3,054,483 |
|
|
|
2,762,439 |
|
|
|
3,163,011 |
|
Interest-bearing deposits |
|
7,251,582 |
|
|
|
7,330,105 |
|
|
|
6,797,588 |
|
|
|
7,290,844 |
|
|
|
6,717,939 |
|
Total deposits |
|
10,067,875 |
|
|
|
10,038,691 |
|
|
|
9,852,071 |
|
|
|
10,053,283 |
|
|
|
9,880,950 |
|
|
|
|
|
|
|
|
|
|
|
Federal funds purchased and securities sold under agreements to
repurchase |
|
144,370 |
|
|
|
178,659 |
|
|
|
201,020 |
|
|
|
161,514 |
|
|
|
215,604 |
|
Interest-bearing liabilities |
|
7,725,832 |
|
|
|
7,831,655 |
|
|
|
7,762,628 |
|
|
|
7,778,744 |
|
|
|
7,689,187 |
|
Total liabilities |
|
10,757,877 |
|
|
|
10,748,484 |
|
|
|
11,001,930 |
|
|
|
10,753,180 |
|
|
|
11,047,164 |
|
Stockholders' equity - common |
|
1,331,815 |
|
|
|
1,275,724 |
|
|
|
1,207,935 |
|
|
|
1,303,770 |
|
|
|
1,189,479 |
|
Tangible common equity2 |
|
955,591 |
|
|
|
922,710 |
|
|
|
847,294 |
|
|
|
939,150 |
|
|
|
827,489 |
|
|
|
|
|
|
|
|
|
|
|
PERFORMANCE RATIOS |
|
|
|
|
|
|
|
|
|
Pre-provision net revenue to average assets1, 2, 3 |
|
1.37 |
% |
|
|
1.55 |
% |
|
|
1.30 |
% |
|
|
1.46 |
% |
|
|
1.44 |
% |
Return on average assets3 |
|
0.91 |
% |
|
|
0.88 |
% |
|
|
0.96 |
% |
|
|
0.89 |
% |
|
|
1.09 |
% |
Return on average common equity3 |
|
8.26 |
% |
|
|
8.27 |
% |
|
|
9.75 |
% |
|
|
8.26 |
% |
|
|
11.21 |
% |
Return on average tangible common equity2, 3 |
|
11.51 |
% |
|
|
11.43 |
% |
|
|
13.90 |
% |
|
|
11.47 |
% |
|
|
16.12 |
% |
Net interest margin2, 4 |
|
3.03 |
% |
|
|
2.79 |
% |
|
|
2.86 |
% |
|
|
2.91 |
% |
|
|
2.99 |
% |
Efficiency ratio2 |
|
62.32 |
% |
|
|
58.13 |
% |
|
|
60.87 |
% |
|
|
60.22 |
% |
|
|
58.82 |
% |
Adjusted noninterest income to operating revenue2 |
|
29.13 |
% |
|
|
30.92 |
% |
|
|
27.65 |
% |
|
|
30.00 |
% |
|
|
27.54 |
% |
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
Adjusted pre-provision net revenue1, 2 |
$ |
42,617 |
|
|
$ |
38,638 |
|
|
$ |
42,072 |
|
|
$ |
81,255 |
|
|
$ |
91,576 |
|
Adjusted net income2 |
|
29,016 |
|
|
|
26,531 |
|
|
|
29,373 |
|
|
|
55,547 |
|
|
|
66,159 |
|
Adjusted diluted earnings per share2 |
|
0.50 |
|
|
|
0.47 |
|
|
|
0.52 |
|
|
|
0.97 |
|
|
|
1.18 |
|
Adjusted pre-provision net revenue to average assets2, 3 |
|
1.42 |
% |
|
|
1.29 |
% |
|
|
1.38 |
% |
|
|
1.36 |
% |
|
|
1.51 |
% |
Adjusted return on average assets2, 3 |
|
0.97 |
% |
|
|
0.89 |
% |
|
|
0.96 |
% |
|
|
0.93 |
% |
|
|
1.09 |
% |
Adjusted return on average tangible common equity2, 3 |
|
12.21 |
% |
|
|
11.56 |
% |
|
|
13.90 |
% |
|
|
11.89 |
% |
|
|
16.12 |
% |
Adjusted net interest margin2, 4 |
|
3.00 |
% |
|
|
2.78 |
% |
|
|
2.84 |
% |
|
|
2.89 |
% |
|
|
2.98 |
% |
Adjusted efficiency ratio2 |
|
60.57 |
% |
|
|
61.70 |
% |
|
|
60.86 |
% |
|
|
61.12 |
% |
|
|
58.81 |
% |
___________________________________________
- Net interest income plus
noninterest income, excluding securities gains and losses, less
noninterest expense.
- See “Non-GAAP Financial
Information” for reconciliation.
- For quarterly periods, measures are
annualized.
- On a tax-equivalent basis, assuming
a federal income tax rate of 21%.
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited) |
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
As of |
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
ASSETS |
|
|
|
|
|
Cash and cash equivalents |
$ |
285,269 |
|
|
$ |
591,071 |
|
|
$ |
232,703 |
|
Debt securities available for sale |
|
1,829,896 |
|
|
|
1,898,072 |
|
|
|
2,283,848 |
|
Debt securities held to maturity |
|
851,261 |
|
|
|
862,218 |
|
|
|
894,102 |
|
Equity securities |
|
9,618 |
|
|
|
9,790 |
|
|
|
9,034 |
|
Loans held for sale |
|
11,286 |
|
|
|
6,827 |
|
|
|
1,545 |
|
|
|
|
|
|
|
Commercial loans |
|
5,799,214 |
|
|
|
5,606,241 |
|
|
|
5,793,426 |
|
Retail real estate and retail other loans |
|
2,199,698 |
|
|
|
1,981,836 |
|
|
|
2,011,858 |
|
Portfolio loans |
|
7,998,912 |
|
|
|
7,588,077 |
|
|
|
7,805,284 |
|
|
|
|
|
|
|
Allowance for credit losses |
|
(85,226 |
) |
|
|
(91,562 |
) |
|
|
(91,639 |
) |
Premises and equipment |
|
121,647 |
|
|
|
121,506 |
|
|
|
122,669 |
|
Goodwill and other intangible assets, net |
|
370,580 |
|
|
|
351,455 |
|
|
|
358,898 |
|
Right of use asset |
|
11,137 |
|
|
|
10,590 |
|
|
|
11,806 |
|
Other assets |
|
567,036 |
|
|
|
539,414 |
|
|
|
580,779 |
|
Total assets |
$ |
11,971,416 |
|
|
$ |
11,887,458 |
|
|
$ |
12,209,029 |
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
|
|
|
Liabilities |
|
|
|
|
|
Deposits: |
|
|
|
|
|
Noninterest-bearing deposits |
$ |
2,832,776 |
|
|
$ |
2,784,338 |
|
|
$ |
3,086,885 |
|
Interest-bearing checking, savings, and money market deposits |
|
5,619,470 |
|
|
|
5,598,675 |
|
|
|
5,504,255 |
|
Time deposits |
|
1,523,889 |
|
|
|
1,577,178 |
|
|
|
1,471,615 |
|
Total deposits |
|
9,976,135 |
|
|
|
9,960,191 |
|
|
|
10,062,755 |
|
|
|
|
|
|
|
Securities sold under agreements to repurchase |
|
140,283 |
|
|
|
147,175 |
|
|
|
202,953 |
|
Short-term borrowings |
|
— |
|
|
|
— |
|
|
|
212,000 |
|
Long-term debt |
|
227,245 |
|
|
|
223,100 |
|
|
|
246,454 |
|
Junior subordinated debt owed to unconsolidated trusts |
|
74,693 |
|
|
|
72,040 |
|
|
|
71,900 |
|
Lease liability |
|
11,469 |
|
|
|
10,896 |
|
|
|
12,059 |
|
Other liabilities |
|
207,781 |
|
|
|
191,405 |
|
|
|
198,960 |
|
Total liabilities |
|
10,637,606 |
|
|
|
10,604,807 |
|
|
|
11,007,081 |
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
Retained earnings |
|
261,820 |
|
|
|
248,412 |
|
|
|
207,660 |
|
Accumulated other comprehensive income (loss) |
|
(220,326 |
) |
|
|
(222,190 |
) |
|
|
(260,921 |
) |
Other1 |
|
1,292,316 |
|
|
|
1,256,429 |
|
|
|
1,255,209 |
|
Total stockholders' equity |
|
1,333,810 |
|
|
|
1,282,651 |
|
|
|
1,201,948 |
|
Total liabilities & stockholders' equity |
$ |
11,971,416 |
|
|
$ |
11,887,458 |
|
|
$ |
12,209,029 |
|
|
|
|
|
|
|
SHARE AND PER SHARE AMOUNTS |
|
|
|
|
|
Book value per common share |
$ |
23.50 |
|
|
$ |
23.19 |
|
|
$ |
21.74 |
|
Tangible book value per common share2 |
$ |
16.97 |
|
|
$ |
16.84 |
|
|
$ |
15.25 |
|
Ending number of common shares outstanding |
|
56,746,937 |
|
|
|
55,300,008 |
|
|
|
55,290,847 |
|
___________________________________________
- Net balance of common stock ($0.001
par value), additional paid-in capital, and treasury stock.
- See “Non-GAAP Financial
Information” for reconciliation.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME(unaudited) |
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
$ |
109,641 |
|
|
$ |
99,325 |
|
|
$ |
94,804 |
|
|
$ |
208,966 |
|
|
$ |
184,579 |
|
Interest and dividends on investment securities |
|
19,173 |
|
|
|
19,937 |
|
|
|
20,784 |
|
|
|
39,110 |
|
|
|
41,126 |
|
Other interest income |
|
3,027 |
|
|
|
6,471 |
|
|
|
1,311 |
|
|
|
9,498 |
|
|
|
2,299 |
|
Total interest income |
$ |
131,841 |
|
|
$ |
125,733 |
|
|
$ |
116,899 |
|
|
$ |
257,574 |
|
|
$ |
228,004 |
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
Deposits |
$ |
43,709 |
|
|
$ |
43,968 |
|
|
$ |
26,768 |
|
|
$ |
87,677 |
|
|
$ |
41,508 |
|
Federal funds purchased and securities sold under agreements to
repurchase |
|
1,040 |
|
|
|
1,372 |
|
|
|
1,223 |
|
|
|
2,412 |
|
|
|
2,445 |
|
Short-term borrowings |
|
418 |
|
|
|
232 |
|
|
|
5,741 |
|
|
|
650 |
|
|
|
10,563 |
|
Long-term debt |
|
3,181 |
|
|
|
3,405 |
|
|
|
3,552 |
|
|
|
6,586 |
|
|
|
7,103 |
|
Junior subordinated debt owed to unconsolidated trusts |
|
1,059 |
|
|
|
989 |
|
|
|
945 |
|
|
|
2,048 |
|
|
|
1,858 |
|
Total interest expense |
$ |
49,407 |
|
|
$ |
49,966 |
|
|
$ |
38,229 |
|
|
$ |
99,373 |
|
|
$ |
63,477 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
82,434 |
|
|
$ |
75,767 |
|
|
$ |
78,670 |
|
|
$ |
158,201 |
|
|
$ |
164,527 |
|
Provision for credit losses |
|
2,277 |
|
|
|
5,038 |
|
|
|
627 |
|
|
|
7,315 |
|
|
|
1,580 |
|
Net interest income after provision for credit losses |
$ |
80,157 |
|
|
$ |
70,729 |
|
|
$ |
78,043 |
|
|
$ |
150,886 |
|
|
$ |
162,947 |
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
Wealth management fees |
$ |
15,917 |
|
|
$ |
15,549 |
|
|
$ |
14,562 |
|
|
$ |
31,466 |
|
|
$ |
29,359 |
|
Fees for customer services |
|
7,798 |
|
|
|
7,056 |
|
|
|
7,239 |
|
|
|
14,854 |
|
|
|
14,058 |
|
Payment technology solutions |
|
5,915 |
|
|
|
5,709 |
|
|
|
5,231 |
|
|
|
11,624 |
|
|
|
10,546 |
|
Mortgage revenue |
|
478 |
|
|
|
746 |
|
|
|
272 |
|
|
|
1,224 |
|
|
|
560 |
|
Income on bank owned life insurance |
|
1,442 |
|
|
|
1,419 |
|
|
|
1,029 |
|
|
|
2,861 |
|
|
|
2,681 |
|
Realized gain on the sale of mortgage servicing rights |
|
277 |
|
|
|
7,465 |
|
|
|
— |
|
|
|
7,742 |
|
|
|
— |
|
Net securities gains (losses) |
|
(353 |
) |
|
|
(6,375 |
) |
|
|
(2,059 |
) |
|
|
(6,728 |
) |
|
|
(2,675 |
) |
Other noninterest income |
|
2,327 |
|
|
|
3,431 |
|
|
|
1,738 |
|
|
|
5,758 |
|
|
|
5,331 |
|
Total noninterest income |
$ |
33,801 |
|
|
$ |
35,000 |
|
|
$ |
28,012 |
|
|
$ |
68,801 |
|
|
$ |
59,860 |
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
$ |
43,478 |
|
|
$ |
42,090 |
|
|
$ |
39,859 |
|
|
$ |
85,568 |
|
|
$ |
80,190 |
|
Data processing expense |
|
7,100 |
|
|
|
6,550 |
|
|
|
5,902 |
|
|
|
13,650 |
|
|
|
11,542 |
|
Net occupancy expense of premises |
|
4,590 |
|
|
|
4,720 |
|
|
|
4,540 |
|
|
|
9,310 |
|
|
|
9,302 |
|
Furniture and equipment expense |
|
1,695 |
|
|
|
1,813 |
|
|
|
1,681 |
|
|
|
3,508 |
|
|
|
3,427 |
|
Professional fees |
|
2,495 |
|
|
|
2,253 |
|
|
|
973 |
|
|
|
4,748 |
|
|
|
3,031 |
|
Amortization of intangible assets |
|
2,629 |
|
|
|
2,409 |
|
|
|
2,669 |
|
|
|
5,038 |
|
|
|
5,398 |
|
Interchange expense |
|
1,733 |
|
|
|
1,611 |
|
|
|
1,870 |
|
|
|
3,344 |
|
|
|
3,723 |
|
FDIC insurance |
|
1,460 |
|
|
|
1,400 |
|
|
|
1,506 |
|
|
|
2,860 |
|
|
|
3,008 |
|
Other noninterest expense |
|
10,357 |
|
|
|
7,923 |
|
|
|
10,205 |
|
|
|
18,280 |
|
|
|
19,987 |
|
Total noninterest expense |
$ |
75,537 |
|
|
$ |
70,769 |
|
|
$ |
69,205 |
|
|
$ |
146,306 |
|
|
$ |
139,608 |
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
$ |
38,421 |
|
|
$ |
34,960 |
|
|
$ |
36,850 |
|
|
$ |
73,381 |
|
|
$ |
83,199 |
|
Income taxes |
|
11,064 |
|
|
|
8,735 |
|
|
|
7,486 |
|
|
|
19,799 |
|
|
|
17,049 |
|
Net income |
$ |
27,357 |
|
|
$ |
26,225 |
|
|
$ |
29,364 |
|
|
$ |
53,582 |
|
|
$ |
66,150 |
|
|
|
|
|
|
|
|
|
|
|
SHARE AND PER SHARE AMOUNTS |
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
$ |
0.48 |
|
|
$ |
0.47 |
|
|
$ |
0.53 |
|
|
$ |
0.95 |
|
|
$ |
1.19 |
|
Diluted earnings per common share |
$ |
0.47 |
|
|
$ |
0.46 |
|
|
$ |
0.52 |
|
|
$ |
0.94 |
|
|
$ |
1.18 |
|
Average common shares outstanding |
|
56,919,025 |
|
|
|
55,416,589 |
|
|
|
55,440,277 |
|
|
|
56,167,807 |
|
|
|
55,419,250 |
|
Diluted average common shares outstanding |
|
57,853,231 |
|
|
|
56,406,500 |
|
|
|
56,195,801 |
|
|
|
57,129,865 |
|
|
|
56,187,820 |
|
BALANCE SHEET STRENGTH
Our balance sheet remains a source of strength.
Total assets were $11.97 billion as of June 30, 2024,
compared to $11.89 billion as of March 31, 2024, and
$12.21 billion as of June 30, 2023.
As has been our practice, we remain steadfast in
our conservative approach to underwriting and disciplined approach
to pricing, particularly given our outlook for the economy in the
coming quarters, and this approach has impacted loan growth as
predicted. Portfolio loans totaled $8.00 billion at
June 30, 2024, compared to $7.59 billion at
March 31, 2024, and $7.81 billion at June 30, 2023.
The $410.8 million increase in portfolio loans during the
second quarter of 2024 was due to the M&M acquisition.
Average portfolio loans were $8.01 billion
for the second quarter of 2024, compared to $7.60 billion for
the first quarter of 2024 and $7.76 billion for the second
quarter of 2023. Average interest-earning assets were
$10.99 billion for the second quarter of 2024, compared to
$11.00 billion for the first quarter of 2024, and
$11.13 billion for the second quarter of 2023.
Total deposits were $9.98 billion at
June 30, 2024, compared to $9.96 billion at
March 31, 2024, and $10.06 billion at June 30, 2023.
Average deposits were $10.07 billion for the second quarter of
2024, compared to $10.04 billion for the first quarter of 2024
and $9.85 billion for the second quarter of 2023. Deposit
fluctuations over the last several quarters were driven by a number
of elements, including (1) seasonal factors, including
ordinary course public fund flows and fluctuations in the normal
course of business operations of certain core commercial customers,
(2) the macroeconomic environment, including prevailing
interest rates and anticipated future Federal Open Market Committee
(“FOMC”) rate moves, as well as inflationary pressures,
(3) depositors moving some funds to accounts at competitors
offering above-market rates, including state-sponsored investment
programs that provide rates in excess of where we can borrow in the
wholesale marketplace, and (4) deposits moving within the
Busey ecosystem between deposit accounts and our wealth management
group. Core deposits1 accounted for 96.4% of total deposits as of
June 30, 2024. Cost of deposits was 1.75% in the second
quarter of 2024, which represents a decrease of 1 basis point
from the first quarter of 2024. Excluding time deposits, Busey’s
cost of deposits was 1.36% in the second quarter of 2024, an
increase of 4 basis points from the first quarter of 2024.
Non-maturity deposit cost of funds has increased as Busey Bank
continues to offer savings account specials to customers with
larger account balances, with the intention of migrating maturing
CDs to these managed rate products. Spot rates on total deposit
costs, including noninterest bearing deposits, increased by
8 basis points from 1.67% at March 31, 2024, to 1.75% at
June 30, 2024. Spot rates on interest bearing deposits
increased by 13 basis points from 2.32% at March 31, 2024
to 2.45% at June 30, 2024.
There were no short term borrowings as of
June 30 or March 31, 2024, compared to
$212.0 million at June 30, 2023. We had no borrowings
from the Federal Home Loan Bank (“FHLB”) at the end of either the
second quarter of 2024 or the first quarter of 2024, compared to
$200.0 million at the end of the second quarter of 2023. We
have sufficient on- and off-balance sheet liquidity5 to manage
deposit fluctuations and the liquidity needs of our customers. As
of June 30, 2024, our available sources of on- and off-balance
sheet liquidity totaled $6.16 billion. We have executed
various deposit campaigns to attract term funding and savings
accounts at a lower rate than our marginal cost of funds. New
certificate of deposit production in the second quarter of 2024 had
a weighted average term of 8.4 months at a rate of 3.93%,
127 basis points below our average marginal wholesale funding
cost during the quarter. Furthermore, our balance sheet liquidity
profile continues to be aided by the cash flows we expect from our
relatively short-duration securities portfolio. Those cash flows
were approximately $115.2 million in the second quarter of
2024. For the remainder of 2024, cash flows from our securities
portfolio are expected to be approximately $162.8 million with
a current book yield of 2.62%.
ASSET QUALITY
Credit quality continues to be strong. Loans
30-89 days past due totaled $23.5 million as of June 30,
2024, compared to $7.4 million as of March 31, 2024, and
$5.2 million as of June 30, 2023. The increase in loans
that were 30-89 days past due can be primarily attributed to a
single commercial real estate loan. Non-performing loans were
$9.1 million as of June 30, 2024, compared to
$17.6 million as of March 31, 2024, and
$15.8 million as of June 30, 2023. Continued disciplined
credit management resulted in non-performing loans as a percentage
of portfolio loans of 0.11% as of June 30, 2024, 0.23% as of
March 31, 2024, and 0.20% as of June 30, 2023.
Non-performing assets were 0.08% of total assets for the second
quarter of 2024, compared to 0.15% for the first quarter of 2024
and 0.13% for the second quarter of 2023. Our total classified
assets were $95.8 million at June 30, 2024, compared to
$105.4 million at March 31, 2024, and $81.9 million
at June 30, 2023. Our ratio of classified assets to estimated
bank Tier 1 capital4 and reserves remains low by historical
standards, at 6.4% as of June 30, 2024, compared to 7.2% as of
March 31, 2024, and 5.7% as of June 30, 2023.
Net charge-offs were $9.9 million for the
second quarter of 2024, compared to $5.2 million for the first
quarter of 2024, and $0.7 million for the second quarter of
2023. The increase in the first and second quarter of 2024 was
limited to a single commercial and industrial credit relationship.
The allowance as a percentage of portfolio loans was 1.07% as of
June 30, 2024, compared to 1.21% as of March 31, 2024,
and 1.17% as of June 30, 2023. The ratio was impacted in the
second quarter of 2024 by the acquisition of M&M’s Life Equity
Loan® portfolio, as Busey did not record an allowance for credit
loss for these loans due to the probability of loss at default as
permitted under the practical expedient provided within the
Accounting Standards Codification 326-20-35-6. The allowance as a
percentage of non-performing loans was 936.0% as of June 30,
2024, compared to 521.6% as of March 31, 2024, and 580.8% as
of June 30, 2023.
Busey maintains a well-diversified loan
portfolio and, as a matter of policy and practice, limits
concentration exposure in any particular loan segment.
ASSET QUALITY(unaudited) |
(dollars in thousands) |
|
|
|
|
|
|
|
As of |
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
Total assets |
$ |
11,971,416 |
|
|
$ |
11,887,458 |
|
|
$ |
12,209,029 |
|
Portfolio loans |
|
7,998,912 |
|
|
|
7,588,077 |
|
|
|
7,805,284 |
|
Loans 30 – 89 days past due |
|
23,463 |
|
|
|
7,441 |
|
|
|
5,169 |
|
Non-performing loans: |
|
|
|
|
|
Non-accrual loans |
|
8,393 |
|
|
|
17,465 |
|
|
|
15,209 |
|
Loans 90+ days past due and still accruing |
|
712 |
|
|
|
88 |
|
|
|
569 |
|
Non-performing loans |
$ |
9,105 |
|
|
$ |
17,553 |
|
|
$ |
15,778 |
|
Non-performing loans, segregated by geography: |
|
|
|
|
|
Illinois / Indiana |
$ |
5,793 |
|
|
$ |
13,553 |
|
|
$ |
11,681 |
|
Missouri |
|
3,089 |
|
|
|
3,746 |
|
|
|
3,928 |
|
Florida |
|
222 |
|
|
|
254 |
|
|
|
169 |
|
Other non-performing assets |
|
90 |
|
|
|
65 |
|
|
|
68 |
|
Non-performing assets |
$ |
9,195 |
|
|
$ |
17,618 |
|
|
$ |
15,846 |
|
|
|
|
|
|
|
Allowance for credit losses |
$ |
85,226 |
|
|
$ |
91,562 |
|
|
$ |
91,639 |
|
|
|
|
|
|
|
RATIOS |
|
|
|
|
|
Non-performing loans to portfolio loans |
|
0.11 |
% |
|
|
0.23 |
% |
|
|
0.20 |
% |
Non-performing assets to total assets |
|
0.08 |
% |
|
|
0.15 |
% |
|
|
0.13 |
% |
Non-performing assets to portfolio loans and other non-performing
assets |
|
0.11 |
% |
|
|
0.23 |
% |
|
|
0.20 |
% |
Allowance for credit losses to portfolio loans |
|
1.07 |
% |
|
|
1.21 |
% |
|
|
1.17 |
% |
Allowance for credit losses as a percentage of non-performing
loans |
|
936.04 |
% |
|
|
521.63 |
% |
|
|
580.80 |
% |
NET CHARGE-OFFS (RECOVERIES) AND PROVISION EXPENSE
(RELEASE)(unaudited) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
Net charge-offs (recoveries) |
$ |
9,856 |
|
$ |
5,216 |
|
$ |
715 |
|
$ |
15,072 |
|
$ |
1,549 |
Provision expense (release) |
|
2,277 |
|
|
5,038 |
|
|
627 |
|
|
7,315 |
|
|
1,580 |
NET INTEREST MARGIN AND NET INTEREST
INCOME
Net interest margin1 was 3.03% for the second
quarter of 2024, compared to 2.79% for the first quarter of 2024
and 2.86% for the second quarter of 2023. Excluding purchase
accounting accretion, adjusted net interest margin1 was 3.00% for
the second quarter of 2024, compared to 2.78% in the first quarter
of 2024 and 2.84% in the second quarter of 2023. Net interest
income was $82.4 million in the second quarter of 2024,
compared to $75.8 million in the first quarter of 2024 and
$78.7 million in the second quarter of 2023.
The FOMC raised rates by a total of
525 basis points since the onset of the current FOMC
tightening cycle that began in the first quarter of 2022, with no
further increases during 2024. Rising rates initially have a
positive impact on net interest margin, as assets, in particular
commercial loans, reprice more quickly and to a greater extent than
liabilities. As deposit and funding costs increase in response to
the tightening rate cycle, and we experience deposit migration into
higher cost offerings and funding alternatives, some of the net
interest margin expansion is reversed, which we began to experience
in the first quarter of 2023. As lower yielding securities and
loans continue to mature or renew at higher current market rates,
expansion in asset yields has outpaced any remaining lagged
pressure on funding costs. Our deposit cost of funds peaked in the
beginning of the first quarter of 2024, and we have been able to
remain below that peak funding cost each month during the second
quarter. We continue to offer CD specials with shorter
term structures as well as offering attractive premium savings
rates to encourage rotation of maturing CD deposits into nimble
pricing products as the expected easing cycle begins. The
acquisition of M&M Bank provided higher yielding assets to our
loan book, and we leveraged the consolidated Company liquidity
strength to unwind higher cost funding of $95.9 million, which
had an average rate of 5.49%. During the second quarter we also saw
the full benefit of the March 2024 targeted balance sheet
repositioning in our net interest margin. Components of the
24 basis point increase in net interest margin1 during
the second quarter of 2024 include:
- Increased loan portfolio yield
contributed +35 basis points
- Reduced time deposit funding costs
contributed +7 basis points
- Balance Sheet repositioning
contributed +3 basis points
- Increased purchase accounting
contributed +2 basis points
- Reduced borrowing expense
+1 basis point
- Decreased cash and securities
portfolio yield contributed -18 basis points
- Increased non-maturity deposit
funding costs contributed -6 basis points
Based on our most recent Asset Liability
Management Committee (“ALCO”) model, a +100 basis point
parallel rate shock is expected to increase net interest income by
1.8% over the subsequent twelve-month period. Market competition
for deposits continues and lower cost deposits continue to rotate
into higher beta products, which is factored into our ALCO model
and margin forecast. Busey continues to evaluate off-balance sheet
hedging and balance sheet restructuring strategies as well as
embedding rate protection in our asset originations to provide
stabilization to net interest income in lower rate environments.
Time deposit and savings specials have provided funding flows, and
we had excess earning cash levels at the end of the second quarter.
Since the onset of the current FOMC tightening cycle that began in
the first quarter of 2022, our cumulative interest-bearing
non-maturity deposit beta has been 38%. Our cycle-to-date total
deposit beta has been 32% through June 30, 2024. Deposit betas
were calculated based on an average federal funds rate of 5.50%
during the second quarter of 2024. The average federal funds rate
has remained unchanged since the fourth quarter of 2023.
NONINTEREST INCOME
Noninterest income was $33.8 million for
the second quarter of 2024, as compared to $35.0 million for the
first quarter of 2024 and $28.0 million for the second quarter of
2023. Excluding the impact of the mortgage servicing rights sale
and net securities gains and losses, adjusted noninterest income1
was $33.9 million, or 29.1% of operating revenue1, during the
second quarter of 2024, $33.9 million, or 30.9% of operating
revenue, for the first quarter of 2024, and $30.1 million, or
27.7% of operating revenue, for the second quarter of 2023.
Consolidated wealth management fees were
$15.9 million for the second quarter of 2024, compared to
$15.5 million for the first quarter of 2024 and $14.6 million for
the second quarter of 2023. On a segment basis, Wealth Management
generated $16.1 million in revenue during the second quarter
of 2024, a 9.5% increase over revenue of $14.7 million for the
second quarter of 2023. Second quarter of 2024 results marked a new
record high reported quarterly revenue for the Wealth Management
operating segment. The Wealth Management operating segment
generated net income of $5.6 million in the second quarter of
2024, compared to $5.0 million in the first quarter of 2024
and $4.9 million in the second quarter of 2023. Busey’s Wealth
Management division ended the second quarter of 2024 with
$13.02 billion in assets under care, compared to $12.76
billion at the end of the first quarter of 2024 and $11.48 billion
at the end of the second quarter of 2023. Our portfolio management
team continues to focus on long-term returns and managing risk in
the face of volatile markets and has outperformed its blended
benchmark6 over the last three and five years.
Payment technology solutions revenue was
$5.9 million for the second quarter of 2024, compared to
$5.7 million for the first quarter of 2024 and
$5.2 million for the second quarter of 2023. Excluding
intracompany eliminations, the FirsTech operating segment generated
revenue of $6.2 million during the second quarter of 2024,
compared to $6.0 million in the first quarter of 2024 and
$5.6 million in the second quarter of 2023. Second quarter of
2024 results marked a new record high reported quarterly revenue
for the FirsTech operating segment for the third consecutive
quarter. The FirsTech operating segment generated an insignificant
amount of net income for the second quarter of 2024, compared to
$0.1 million for the first quarter of 2024 and
$0.2 million for the second quarter of 2023.
Revenues from wealth management fees and payment
technology solutions activities represented 64.4% of Busey’s
adjusted noninterest income1 for the quarter ended June 30,
2024, providing a balance to spread-based revenue from traditional
banking activities.
Fees for customer services were
$7.8 million for the second quarter of 2024, compared to
$7.1 million in the first quarter of 2024 and
$7.2 million in the second quarter of 2023.
Net securities losses were $0.4 million for
the second quarter of 2024, comprised primarily of unrealized
losses on equity securities.
Other noninterest income was $2.3 million
in the second quarter of 2024, compared to $3.4 million in the
first quarter of 2024 and $1.7 million in the second quarter
of 2023. Fluctuations in other noninterest income are primarily
attributable to decreases in venture capital investments, and
increases in swap origination fees and commercial loan sales gains,
as well as the addition of Life Equity Loan® servicing income.
OPERATING EFFICIENCY
Second quarter expenses include the costs of
operating M&M Bank as a stand-alone bank from April 1, 2024,
through June 21, 2024. Noninterest expense was $75.5 million
in the second quarter of 2024, compared to $70.8 million in
the first quarter of 2024 and $69.2 million for the second
quarter of 2023. The efficiency ratio1 was 62.3% for the second
quarter of 2024, compared to 58.1% for the first quarter of 2024,
and 60.9% for the second quarter of 2023. Adjusted core expense was
$71.1 million in the second quarter of 2024, compared to
$68.6 million in the first quarter of 2024 and
$64.0 million in the second quarter of 2023. The adjusted core
efficiency ratio1 was 60.9% for the second quarter of 2024,
compared to 62.3% for the first quarter of 2024, and 58.6% for the
second quarter of 2023. Busey remains focused on expense discipline
and expects to realize increased rates of M&M acquisition
synergies in the second half of 2024.
Noteworthy components of noninterest expense are
as follows:
-
Salaries, wages, and employee benefits expenses were
$43.5 million in the second quarter of 2024, compared to
$42.1 million in the first quarter of 2024 and
$39.9 million in the second quarter of 2023. Busey recorded
$1.1 million of non-operating salaries, wages, and employee
benefit expenses in the second quarter of 2024, compared to
$0.1 million in the first quarter of 2024 and none in the
second quarter of 2023. Our associate-base consisted of 1,520
full-time equivalents as of June 30, 2024, compared to 1,464
as of March 31, 2024, and 1,477 as of June 30, 2023. The
increase in our associate-base in the second quarter of 2024 was
largely due to the M&M acquisition.
- Data
processing expense was $7.1 million in the second quarter of
2024, compared to $6.6 million in the first quarter of 2024
and $5.9 million in the second quarter of 2023. Busey recorded
$0.3 million of non-operating data processing expenses in the
second quarter of 2024, compared to $0.1 million in the first
quarter of 2024 and none in the second quarter of 2023. Busey has
continued to make investments in technology enhancements and has
also experienced inflation-driven price increases.
-
Professional fees were $2.5 million in the second quarter of
2024, compared to $2.3 million in the first quarter of 2024
and $1.0 million in the second quarter of 2023. Busey recorded
$0.4 million of non-operating professional fees in the second
quarter of 2024, as compared to $0.1 million in the first
quarter of 2024 and none in the second quarter of 2023.
-
Amortization of intangible assets was $2.6 million in the
second quarter of 2024, compared to $2.4 million in the first
quarter of 2024 and $2.7 million in the second quarter of
2023.
- Other
noninterest expense was $10.4 million for the second quarter
of 2024, compared to $7.9 million in the first quarter of 2024
and $10.2 million in the second quarter of 2023. Busey recorded
$0.3 million of non-operating costs in other noninterest
expense in the second quarter of 2024, compared to immaterial
amounts in the first quarter of 2024 and the second quarter of
2023. In connection with Busey’s adoption of ASU 2023-02 on
January 1, 2024, Busey began recording amortization of New
Markets Tax Credits as income tax expense instead of other
operating expense, which resulted in a decrease to other operating
expenses of $2.3 million compared to the second quarter of
2023. Other items contributing to the fluctuations in other
noninterest expense included the provision for unfunded
commitments, sales of other real estate owned, fixed asset
impairment, marketing, and business development expenses.
Busey's effective tax rate for the second
quarter of 2024 was 28.8%, which includes a one-time deferred tax
valuation adjustment of $1.4 million resulting from a change
to our Illinois apportionment rate due to recently enacted
regulations. These new regulations are expected to lower our
ongoing tax obligation in future periods, but create a negative
adjustment to the carrying value of our deferred tax asset in the
current period. Without this one-time adjustment, the effective tax
rate for the second quarter of 2024 would have been 25.0%, lower
than the combined federal and state statutory rate of approximately
28.0% due to the impact of tax exempt interest income, such as
municipal bond interest, bank owned life insurance income, and
investments in various federal and state tax credits. Further, the
effective tax rate is higher in 2024, compared to 2023, due to the
adoption of ASU 2023-02 in January 2024. Upon adoption of
ASU 2023-02 Busey elected to use the proportional amortization
method of accounting for equity investments made primarily for the
purpose of receiving income tax credits. The proportional
amortization method results in the cost of the investment being
amortized in proportion to the income tax credits and other income
tax benefits received, with the amortization of the investment and
the income tax credits being presented net in the income statement
as a component of income tax expense as opposed to being presented
on a gross basis on the income statement as a component of
noninterest expense and income tax expense.
CAPITAL STRENGTH
Busey's strong capital levels, coupled with its
earnings, have allowed the Company to provide a steady return to
its stockholders through dividends. On July 26, 2024, Busey
will pay a cash dividend of $0.24 per common share to stockholders
of record as of July 19, 2024. Busey has consistently paid
dividends to its common stockholders since the bank holding company
was organized in 1980.
As of June 30, 2024, Busey continued to
exceed the capital adequacy requirements necessary to be considered
“well-capitalized” under applicable regulatory guidelines. Busey’s
Common Equity Tier 1 ratio is estimated4 to be 13.19% at
June 30, 2024, compared to 13.45% at March 31, 2024, and
12.35% at June 30, 2023. Our Total Capital to Risk Weighted
Assets ratio is estimated4 to be 17.49% at June 30, 2024,
compared to 17.95% at March 31, 2024, and 16.56% at
June 30, 2023.
Busey’s tangible common equity1 was
$970.9 million at June 30, 2024, compared to $937.6
million at March 31, 2024, and $850.9 million at June 30,
2023. Tangible common equity1 represented 8.36% of tangible assets
at June 30, 2024, compared to 8.12% at March 31, 2024,
and 7.18% at June 30, 2023. Busey’s tangible book value per
common share1 increased to $16.97 at June 30, 2024, from
$16.84 at March 31, 2024, and $15.25 at June 30, 2023,
reflecting an 11.3% year-over-year increase. The ratios of tangible
common equity to tangible assets1 and tangible book value per
common share have been impacted by the fair market valuation
adjustment of Busey’s securities portfolio as a result of the
current rate environment, which is reflected in the accumulated
other comprehensive income (loss) component of shareholder’s
equity.
2Q24 EARNINGS INVESTOR
PRESENTATION
For additional information on Busey’s
financial condition and operating results, please refer to
the 2Q24 Earnings Investor
Presentation furnished via Form 8-K on
July 23, 2024, in connection with
this earnings release.
CORPORATE PROFILE
As of June 30, 2024, First Busey
Corporation (Nasdaq: BUSE) was an $11.97 billion financial holding
company headquartered in Champaign, Illinois.
Busey Bank, a wholly-owned bank subsidiary of
First Busey Corporation, had total assets of $11.94 billion as of
June 30, 2024, and is headquartered in Champaign, Illinois.
Busey Bank currently has 62 banking centers, with 21 in
Central Illinois markets, 17 in suburban Chicago markets, 20 in the
St. Louis Metropolitan Statistical Area, three in Southwest
Florida, and one in Indianapolis. More information about Busey Bank
can be found at busey.com.
Through Busey’s Wealth Management division, the
Company provides a full range of asset management, investment,
brokerage, fiduciary, philanthropic advisory, tax preparation, and
farm management services to individuals, businesses, and
foundations. Assets under care totaled $13.02 billion as of
June 30, 2024. More information about Busey’s Wealth
Management services can be found at
busey.com/wealth-management.
Busey Bank’s wholly-owned subsidiary, FirsTech,
specializes in the evolving financial technology needs of small and
medium-sized businesses, highly regulated enterprise industries,
and financial institutions. FirsTech provides comprehensive and
innovative payment technology solutions, including online, mobile,
and voice-recognition bill payments; money and data movement;
merchant services; direct debit services; lockbox remittance
processing for payments made by mail; and walk-in payments at
retail agents. Additionally, FirsTech simplifies client workflows
through integrations enabling support with billing, reconciliation,
bill reminders, and treasury services. More information about
FirsTech can be found at firstechpayments.com.
For the first time, Busey was named among the
World’s Best Banks for 2024 by Forbes, earning a spot on the list
among 68 U.S. banks and 403 worldwide. Additionally, Busey Bank was
honored to be named among America’s Best Banks by Forbes magazine
for the third consecutive year. Ranked 40th overall in 2024, Busey
was the second-ranked bank headquartered in Illinois of the six
that made this year’s list and the highest-ranked of those with
more than $10 billion in assets. Busey is humbled to be named among
the 2023 Best Banks to Work For by American Banker, the 2023 Best
Places to Work in Money Management by Pensions and Investments, the
2024 Best Places to Work in Illinois by Daily Herald Business
Ledger, and the 2024 Best Companies to Work For in Florida by
Florida Trend magazine. We are honored to be consistently
recognized globally, nationally and locally for our engaged culture
of integrity and commitment to community development.
For more information about us, visit
busey.com.
Category: FinancialSource: First Busey
Corporation
Contacts:
Jeffrey D. Jones, Chief Financial
Officer217-365-4130
NON-GAAP FINANCIAL
INFORMATION
This earnings release contains certain financial
information determined by methods other than GAAP. Management uses
these non-GAAP measures, together with the related GAAP measures,
in analysis of Busey’s performance and in making business
decisions, as well as for comparison to Busey’s peers. Busey
believes the adjusted measures are useful for investors and
management to understand the effects of certain non-core and
non-recurring noninterest items and provide additional perspective
on Busey’s performance over time.
Below is a reconciliation to what management
believes to be the most directly comparable GAAP financial
measures—specifically, net interest income, total noninterest
income, net security gains and losses, and total noninterest
expense in the case of pre-provision net revenue, adjusted
pre-provision net revenue, pre-provision net revenue to average
assets, and adjusted pre-provision net revenue to average assets;
net income in the case of adjusted net income, adjusted diluted
earnings per share, adjusted return on average assets, average
tangible common equity, return on average tangible common equity,
adjusted return on average tangible common equity; net income and
net security gains and losses in the case of further adjusted net
income and further adjusted diluted earnings per share; net
interest income in the case of adjusted net interest income and
adjusted net interest margin; net interest income, total
noninterest income, and total noninterest expense in the case of
adjusted noninterest income, adjusted noninterest expense,
noninterest expense excluding non-operating adjustments, adjusted
core expense, efficiency ratio, adjusted efficiency ratio, and
adjusted core efficiency ratio; net interest income, total
noninterest income, net securities gains and losses, and gain on
sale of mortgage servicing rights in the case of operating revenue
and adjusted noninterest income to operating revenue; total assets
and goodwill and other intangible assets in the case of tangible
assets; total stockholders’ equity in the case of tangible book
value per common share; total assets and total stockholders’ equity
in the case of tangible common equity and tangible common equity to
tangible assets; and total deposits in the case of core deposits
and core deposits to total deposits.
These non-GAAP disclosures have inherent
limitations and are not audited. They should not be considered in
isolation or as a substitute for operating 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, estimated
federal income tax rates, or effective tax rates, as noted with the
tables below.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES(Unaudited)Pre-Provision Net Revenue,
Adjusted Pre-Provision Net Revenue,Pre-Provision Net Revenue to Average Assets, andAdjusted Pre-Provision Net Revenue to Average Assets |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
PRE-PROVISION NET REVENUE |
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
82,434 |
|
|
$ |
75,767 |
|
|
$ |
78,670 |
|
|
$ |
158,201 |
|
|
$ |
164,527 |
|
Total noninterest income |
|
|
33,801 |
|
|
|
35,000 |
|
|
|
28,012 |
|
|
|
68,801 |
|
|
|
59,860 |
|
Net security (gains) losses |
|
|
353 |
|
|
|
6,375 |
|
|
|
2,059 |
|
|
|
6,728 |
|
|
|
2,675 |
|
Total noninterest expense |
|
|
(75,537 |
) |
|
|
(70,769 |
) |
|
|
(69,205 |
) |
|
|
(146,306 |
) |
|
|
(139,608 |
) |
Pre-provision net revenue |
|
|
41,051 |
|
|
|
46,373 |
|
|
|
39,536 |
|
|
|
87,424 |
|
|
|
87,454 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Acquisition and other restructuring expenses |
|
|
2,212 |
|
|
|
408 |
|
|
|
12 |
|
|
|
2,620 |
|
|
|
12 |
|
Provision for unfunded commitments |
|
|
(369 |
) |
|
|
(678 |
) |
|
|
265 |
|
|
|
(1,047 |
) |
|
|
(370 |
) |
Amortization of New Markets Tax Credits |
|
|
— |
|
|
|
— |
|
|
|
2,259 |
|
|
|
— |
|
|
|
4,480 |
|
Gain on sale of mortgage service rights |
|
|
(277 |
) |
|
|
(7,465 |
) |
|
|
— |
|
|
|
(7,742 |
) |
|
|
— |
|
Adjusted pre-provision net revenue |
|
$ |
42,617 |
|
|
$ |
38,638 |
|
|
$ |
42,072 |
|
|
$ |
81,255 |
|
|
$ |
91,576 |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-provision net revenue, annualized |
[a] |
$ |
165,106 |
|
|
$ |
186,511 |
|
|
$ |
158,578 |
|
|
$ |
175,809 |
|
|
$ |
176,358 |
|
Adjusted pre-provision net revenue, annualized |
[b] |
|
171,405 |
|
|
|
155,401 |
|
|
|
168,750 |
|
|
|
163,403 |
|
|
|
184,670 |
|
Average total assets |
[c] |
|
12,089,692 |
|
|
|
12,024,208 |
|
|
|
12,209,865 |
|
|
|
12,056,950 |
|
|
|
12,236,643 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported:Pre-provision net revenue to average
assets1 |
[a÷c] |
|
1.37 |
% |
|
|
1.55 |
% |
|
|
1.30 |
% |
|
|
1.46 |
% |
|
|
1.44 |
% |
Adjusted:Pre-provision net revenue to average
assets1 |
[b÷c] |
|
1.42 |
% |
|
|
1.29 |
% |
|
|
1.38 |
% |
|
|
1.36 |
% |
|
|
1.51 |
% |
___________________________________________
- Annualized measure.
Adjusted Net Income,
Adjusted Diluted Earnings Per Share,
Adjusted Return on Average Assets,
Average Tangible Common Equity,
Return on Average Tangible Common Equity, and
Adjusted Return on Average Tangible Common Equity |
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
NET INCOME ADJUSTED FOR NON-OPERATING ITEMS |
|
|
|
|
|
|
|
|
|
|
Net income |
[a] |
$ |
27,357 |
|
|
$ |
26,225 |
|
|
$ |
29,364 |
|
|
$ |
53,582 |
|
|
$ |
66,150 |
|
Non-GAAP adjustments for non-operating items: |
|
|
|
|
|
|
|
|
|
|
Acquisition expenses: |
|
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
|
|
1,137 |
|
|
|
— |
|
|
|
— |
|
|
|
1,137 |
|
|
|
— |
|
Data processing |
|
|
344 |
|
|
|
100 |
|
|
|
— |
|
|
|
444 |
|
|
|
— |
|
Professional fees, occupancy, furniture and fixtures, and
other |
|
|
731 |
|
|
|
185 |
|
|
|
12 |
|
|
|
916 |
|
|
|
12 |
|
Other restructuring expenses: |
|
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
|
|
— |
|
|
|
123 |
|
|
|
— |
|
|
|
123 |
|
|
|
— |
|
Related tax benefit1 |
|
|
(553 |
) |
|
|
(102 |
) |
|
|
(3 |
) |
|
|
(655 |
) |
|
|
(3 |
) |
Adjusted net income |
[b] |
$ |
29,016 |
|
|
$ |
26,531 |
|
|
$ |
29,373 |
|
|
$ |
55,547 |
|
|
$ |
66,159 |
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
|
Diluted average common shares outstanding |
[c] |
|
57,853,231 |
|
|
|
56,406,500 |
|
|
|
56,195,801 |
|
|
|
57,129,865 |
|
|
|
56,187,820 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported:Diluted earnings per share |
[a÷c] |
$ |
0.47 |
|
|
$ |
0.46 |
|
|
$ |
0.52 |
|
|
$ |
0.94 |
|
|
$ |
1.18 |
|
Adjusted:Diluted earnings per share |
[b÷c] |
$ |
0.50 |
|
|
$ |
0.47 |
|
|
$ |
0.52 |
|
|
$ |
0.97 |
|
|
$ |
1.18 |
|
|
|
|
|
|
|
|
|
|
|
|
RETURN ON AVERAGE ASSETS |
|
|
|
|
|
|
|
|
|
|
Net income, annualized |
[d] |
$ |
110,029 |
|
|
$ |
105,476 |
|
|
$ |
117,779 |
|
|
$ |
107,753 |
|
|
$ |
133,396 |
|
Adjusted net income, annualized |
[e] |
|
116,702 |
|
|
|
106,707 |
|
|
|
117,815 |
|
|
|
111,704 |
|
|
|
133,415 |
|
Average total assets |
[f] |
|
12,089,692 |
|
|
|
12,024,208 |
|
|
|
12,209,865 |
|
|
|
12,056,950 |
|
|
|
12,236,643 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported:Return on average assets2 |
[d÷f] |
|
0.91 |
% |
|
|
0.88 |
% |
|
|
0.96 |
% |
|
|
0.89 |
% |
|
|
1.09 |
% |
Adjusted:Return on average assets2 |
[e÷f] |
|
0.97 |
% |
|
|
0.89 |
% |
|
|
0.96 |
% |
|
|
0.93 |
% |
|
|
1.09 |
% |
|
|
|
|
|
|
|
|
|
|
|
RETURN ON AVERAGE TANGIBLE COMMON EQUITY |
|
|
|
|
|
|
|
|
|
|
Average common equity |
|
$ |
1,331,815 |
|
|
$ |
1,275,724 |
|
|
$ |
1,207,935 |
|
|
$ |
1,303,770 |
|
|
$ |
1,189,479 |
|
Average goodwill and other intangible assets, net |
|
|
(376,224 |
) |
|
|
(353,014 |
) |
|
|
(360,641 |
) |
|
|
(364,620 |
) |
|
|
(361,990 |
) |
Average tangible common equity |
[g] |
$ |
955,591 |
|
|
$ |
922,710 |
|
|
$ |
847,294 |
|
|
$ |
939,150 |
|
|
$ |
827,489 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported:Return on average tangible common
equity2 |
[d÷g] |
|
11.51 |
% |
|
|
11.43 |
% |
|
|
13.90 |
% |
|
|
11.47 |
% |
|
|
16.12 |
% |
Adjusted:Return on average tangible common
equity2 |
[e÷g] |
|
12.21 |
% |
|
|
11.56 |
% |
|
|
13.90 |
% |
|
|
11.89 |
% |
|
|
16.12 |
% |
___________________________________________
- Year-to-date tax benefits were
calculated by multiplying year-to-date acquisition expenses and
other restructuring expenses by the effective income tax rate for
each year-to-date period, which for 2024 excludes a one-time
deferred tax valuation adjustment resulting from a change in
Illinois apportionment rate due to recently enacted regulations.
Tax rates used in these calculations were 25.0% and 20.5% for the
six months ended June 30, 2024 and 2023, respectively.
Quarterly tax benefits were calculated as the year-to-date tax
benefit amounts less the sum of amounts applied to previous
quarters during the year, equating to tax rates of 25.0%, 25.0%,
and 20.5% for the three months ended June 30, 2024,
March 31, 2024, and June 30, 2023, respectively.
- Annualized
measure.
Further Adjusted Net Income and Further Adjusted
Diluted Earnings Per Share |
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
Adjusted net income1 |
[a] |
$ |
29,016 |
|
|
$ |
26,531 |
|
|
$ |
29,373 |
|
|
$ |
55,547 |
|
|
$ |
66,159 |
|
Further non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Net securities (gains) losses |
|
|
353 |
|
|
|
6,375 |
|
|
|
2,059 |
|
|
|
6,728 |
|
|
|
2,675 |
|
Gain on sale of mortgage servicing rights |
|
|
(277 |
) |
|
|
(7,465 |
) |
|
|
— |
|
|
|
(7,742 |
) |
|
|
— |
|
Tax effect for further non-GAAP adjustments2 |
|
|
(19 |
) |
|
|
272 |
|
|
|
(418 |
) |
|
|
254 |
|
|
|
(548 |
) |
Tax effected further non-GAAP adjustments3 |
|
|
57 |
|
|
|
(818 |
) |
|
|
1,641 |
|
|
|
(760 |
) |
|
|
2,127 |
|
Further adjusted net income3 |
[b] |
$ |
29,073 |
|
|
$ |
25,713 |
|
|
$ |
31,014 |
|
|
$ |
54,787 |
|
|
$ |
68,286 |
|
One-time deferred tax valuation adjustment4 |
|
|
1,446 |
|
|
|
— |
|
|
|
— |
|
|
|
1,446 |
|
|
|
— |
|
Further adjusted net income, excluding one-time deferred tax
valuation adjustment3 |
[c] |
$ |
30,519 |
|
|
$ |
25,713 |
|
|
$ |
31,014 |
|
|
$ |
56,233 |
|
|
$ |
68,286 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average common shares outstanding |
[d] |
|
57,853,231 |
|
|
|
56,406,500 |
|
|
|
56,195,801 |
|
|
|
57,129,865 |
|
|
|
56,187,820 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted:Diluted earnings per share |
[a÷d] |
$ |
0.50 |
|
|
$ |
0.47 |
|
|
$ |
0.52 |
|
|
$ |
0.97 |
|
|
$ |
1.18 |
|
Further Adjusted:Diluted earnings per share3 |
[b÷d] |
$ |
0.50 |
|
|
$ |
0.46 |
|
|
$ |
0.55 |
|
|
$ |
0.96 |
|
|
$ |
1.22 |
|
Further Adjusted, excluding one-time deferred tax valuation
adjustment:Diluted earnings per share3 |
[c÷d] |
$ |
0.53 |
|
|
$ |
0.46 |
|
|
$ |
0.55 |
|
|
$ |
0.98 |
|
|
$ |
1.22 |
|
___________________________________________
- Adjusted net income is a non-GAAP
measure. See the table on the previous page for a reconciliation to
the nearest GAAP measure.
- Tax effects for further non-GAAP
adjustments were calculated by multiplying further non-GAAP
adjustments by the effective income tax rate for each period, which
for 2024 excludes a one-time deferred tax valuation adjustment
resulting from a change in Illinois apportionment rate due to
recently enacted regulations. Effective income tax rates were
25.0%, 25.0%, and 20.3% for the three months ended June 30,
2024, March 31, 2024, and June 30, 2023, respectively,
and were 25.0% and 20.5% for the six months ended June 30,
2024 and 2023, respectively.
- Tax-effected measure.
- A one-time
deferred tax valuation adjustment of $1.4 million resulted
from a change to our Illinois apportionment rate due to recently
enacted regulations.
Adjusted Net Interest Income and
Adjusted Net Interest Margin |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
Net interest income |
|
$ |
82,434 |
|
|
$ |
75,767 |
|
|
$ |
78,670 |
|
|
$ |
158,201 |
|
|
$ |
164,527 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Tax-equivalent adjustment1 |
|
|
402 |
|
|
|
449 |
|
|
|
561 |
|
|
|
851 |
|
|
|
1,119 |
|
Tax-equivalent net interest income |
|
|
82,836 |
|
|
|
76,216 |
|
|
|
79,231 |
|
|
|
159,052 |
|
|
|
165,646 |
|
Purchase accounting accretion related to business combinations |
|
|
(812 |
) |
|
|
(204 |
) |
|
|
(413 |
) |
|
|
(1,016 |
) |
|
|
(816 |
) |
Adjusted net interest income |
|
$ |
82,024 |
|
|
$ |
76,012 |
|
|
$ |
78,818 |
|
|
$ |
158,036 |
|
|
$ |
164,830 |
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent net interest income, annualized |
[a] |
$ |
333,165 |
|
|
$ |
306,539 |
|
|
$ |
317,795 |
|
|
$ |
319,852 |
|
|
$ |
334,038 |
|
Adjusted net interest income, annualized |
[b] |
|
329,899 |
|
|
|
305,719 |
|
|
|
316,138 |
|
|
|
317,809 |
|
|
|
332,392 |
|
Average interest-earning assets |
[c] |
|
10,993,907 |
|
|
|
10,999,903 |
|
|
|
11,130,298 |
|
|
|
10,996,905 |
|
|
|
11,155,291 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported:Net interest margin2 |
[a÷c] |
|
3.03 |
% |
|
|
2.79 |
% |
|
|
2.86 |
% |
|
|
2.91 |
% |
|
|
2.99 |
% |
Adjusted:Net interest margin2 |
[b÷c] |
|
3.00 |
% |
|
|
2.78 |
% |
|
|
2.84 |
% |
|
|
2.89 |
% |
|
|
2.98 |
% |
___________________________________________
- Tax-equivalent adjustments were
calculated using an estimated federal income tax rate of 21%,
applied to non-taxable interest income on investments and
loans.
- Annualized measure.
Adjusted Noninterest Income,
Operating Revenue,
Adjusted Noninterest Income to Operating Revenue,
Noninterest Expense Excluding Amortization of Intangible Assets,
Adjusted Noninterest Expense,Adjusted Core Expense,
Noninterest Expense Excluding Non-Operating Adjustments,Efficiency Ratio,
Adjusted Efficiency Ratio, and
Adjusted Core Efficiency Ratio |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
|
June 30,2024 |
|
June 30,2023 |
Net interest income |
[a] |
$ |
82,434 |
|
|
$ |
75,767 |
|
|
$ |
78,670 |
|
|
$ |
158,201 |
|
|
$ |
164,527 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Tax-equivalent adjustment1 |
|
|
402 |
|
|
|
449 |
|
|
|
561 |
|
|
|
851 |
|
|
|
1,119 |
|
Tax-equivalent net interest income |
[b] |
|
82,836 |
|
|
|
76,216 |
|
|
|
79,231 |
|
|
|
159,052 |
|
|
|
165,646 |
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest income |
|
|
33,801 |
|
|
|
35,000 |
|
|
|
28,012 |
|
|
|
68,801 |
|
|
|
59,860 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Net security (gains) losses |
|
|
353 |
|
|
|
6,375 |
|
|
|
2,059 |
|
|
|
6,728 |
|
|
|
2,675 |
|
Noninterest income excluding net securities gains and losses |
[c] |
|
34,154 |
|
|
|
41,375 |
|
|
|
30,071 |
|
|
|
75,529 |
|
|
|
62,535 |
|
Further adjustments: |
|
|
|
|
|
|
|
|
|
|
Gain on sale of mortgage servicing rights |
|
|
(277 |
) |
|
|
(7,465 |
) |
|
|
— |
|
|
|
(7,742 |
) |
|
|
— |
|
Adjusted noninterest income |
[d] |
$ |
33,877 |
|
|
$ |
33,910 |
|
|
$ |
30,071 |
|
|
$ |
67,787 |
|
|
$ |
62,535 |
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent revenue |
[e = b+c] |
$ |
116,990 |
|
|
$ |
117,591 |
|
|
$ |
109,302 |
|
|
$ |
234,581 |
|
|
$ |
228,181 |
|
Adjusted tax-equivalent revenue |
[f = b+d] |
$ |
116,713 |
|
|
$ |
110,126 |
|
|
$ |
109,302 |
|
|
$ |
226,839 |
|
|
$ |
228,181 |
|
Operating revenue |
[g = a+d] |
$ |
116,311 |
|
|
$ |
109,677 |
|
|
$ |
108,741 |
|
|
$ |
225,988 |
|
|
$ |
227,062 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted noninterest income to operating revenue |
[d÷g] |
|
29.13 |
% |
|
|
30.92 |
% |
|
|
27.65 |
% |
|
|
30.00 |
% |
|
|
27.54 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense |
|
$ |
75,537 |
|
|
$ |
70,769 |
|
|
$ |
69,205 |
|
|
$ |
146,306 |
|
|
$ |
139,608 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
[h] |
|
(2,629 |
) |
|
|
(2,409 |
) |
|
|
(2,669 |
) |
|
|
(5,038 |
) |
|
|
(5,398 |
) |
Noninterest expense excluding amortization of intangible
assets |
[i] |
|
72,908 |
|
|
|
68,360 |
|
|
|
66,536 |
|
|
|
141,268 |
|
|
|
134,210 |
|
Non-operating adjustments: |
|
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
|
|
(1,137 |
) |
|
|
(123 |
) |
|
|
— |
|
|
|
(1,260 |
) |
|
|
— |
|
Data processing |
|
|
(344 |
) |
|
|
(100 |
) |
|
|
— |
|
|
|
(444 |
) |
|
|
— |
|
Professional fees, occupancy, furniture and fixtures, and
other |
|
|
(731 |
) |
|
|
(185 |
) |
|
|
(12 |
) |
|
|
(916 |
) |
|
|
(12 |
) |
Adjusted noninterest expense |
[j] |
|
70,696 |
|
|
|
67,952 |
|
|
|
66,524 |
|
|
|
138,648 |
|
|
|
134,198 |
|
Provision for unfunded commitments |
|
|
369 |
|
|
|
678 |
|
|
|
(265 |
) |
|
|
1,047 |
|
|
|
370 |
|
Amortization of New Markets Tax Credits |
|
|
— |
|
|
|
— |
|
|
|
(2,259 |
) |
|
|
— |
|
|
|
(4,480 |
) |
Adjusted core expense |
[k] |
$ |
71,065 |
|
|
$ |
68,630 |
|
|
$ |
64,000 |
|
|
$ |
139,695 |
|
|
$ |
130,088 |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense, excluding non-operating adjustments |
[j-h] |
$ |
73,325 |
|
|
$ |
70,361 |
|
|
$ |
69,193 |
|
|
$ |
143,686 |
|
|
$ |
139,596 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported:Efficiency ratio |
[i÷e] |
|
62.32 |
% |
|
|
58.13 |
% |
|
|
60.87 |
% |
|
|
60.22 |
% |
|
|
58.82 |
% |
Adjusted:Efficiency ratio |
[j÷f] |
|
60.57 |
% |
|
|
61.70 |
% |
|
|
60.86 |
% |
|
|
61.12 |
% |
|
|
58.81 |
% |
Adjusted:Core efficiency ratio |
[k÷f] |
|
60.89 |
% |
|
|
62.32 |
% |
|
|
58.55 |
% |
|
|
61.58 |
% |
|
|
57.01 |
% |
___________________________________________
- Tax-equivalent adjustments were
calculated using an estimated federal income tax rate of 21%,
applied to non-taxable interest income on investments and
loans.
Tangible Book Value and Tangible Book Value
Per Common Share |
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
As of |
|
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
Total stockholders' equity |
|
$ |
1,333,810 |
|
|
$ |
1,282,651 |
|
|
$ |
1,201,948 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
Goodwill and other intangible assets, net |
|
|
(370,580 |
) |
|
|
(351,455 |
) |
|
|
(358,898 |
) |
Tangible book value |
[a] |
$ |
963,230 |
|
|
$ |
931,196 |
|
|
$ |
843,050 |
|
|
|
|
|
|
|
|
Ending number of common shares outstanding |
[b] |
|
56,746,937 |
|
|
|
55,300,008 |
|
|
|
55,290,847 |
|
|
|
|
|
|
|
|
Tangible book value per common share |
[a÷b] |
$ |
16.97 |
|
|
$ |
16.84 |
|
|
$ |
15.25 |
|
Tangible Assets, Tangible Common Equity, and
Tangible Common Equity to Tangible Assets |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
As of |
|
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
Total assets |
|
$ |
11,971,416 |
|
|
$ |
11,887,458 |
|
|
$ |
12,209,029 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
Goodwill and other intangible assets, net |
|
|
(370,580 |
) |
|
|
(351,455 |
) |
|
|
(358,898 |
) |
Tax effect of other intangible assets1 |
|
|
7,687 |
|
|
|
6,434 |
|
|
|
7,833 |
|
Tangible assets2 |
[a] |
$ |
11,608,523 |
|
|
$ |
11,542,437 |
|
|
$ |
11,857,964 |
|
|
|
|
|
|
|
|
Total stockholders' equity |
|
$ |
1,333,810 |
|
|
$ |
1,282,651 |
|
|
$ |
1,201,948 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
Goodwill and other intangible assets, net |
|
|
(370,580 |
) |
|
|
(351,455 |
) |
|
|
(358,898 |
) |
Tax effect of other intangible assets1 |
|
|
7,687 |
|
|
|
6,434 |
|
|
|
7,833 |
|
Tangible common equity2 |
[b] |
$ |
970,917 |
|
|
$ |
937,630 |
|
|
$ |
850,883 |
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets2 |
[b÷a] |
|
8.36 |
% |
|
|
8.12 |
% |
|
|
7.18 |
% |
___________________________________________
- Net of estimated deferred tax
liability, calculated using the estimated statutory tax rate of
28%.
- Tax-effected
measure.
Core Deposits,
Core Deposits to Total Deposits, and
Portfolio Loans to Core Deposits |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
As of |
|
|
June 30,2024 |
|
March 31,2024 |
|
June 30,2023 |
Portfolio loans |
[a] |
$ |
7,998,912 |
|
|
$ |
7,588,077 |
|
|
$ |
7,805,284 |
|
|
|
|
|
|
|
|
Total deposits |
[b] |
$ |
9,976,135 |
|
|
$ |
9,960,191 |
|
|
$ |
10,062,755 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
Brokered deposits, excluding brokered time deposits of $250,000 or
more |
|
|
(43,089 |
) |
|
|
(6,001 |
) |
|
|
(6,055 |
) |
Time deposits of $250,000 or more |
|
|
(314,461 |
) |
|
|
(326,795 |
) |
|
|
(297,967 |
) |
Core deposits |
[c] |
$ |
9,618,585 |
|
|
$ |
9,627,395 |
|
|
$ |
9,758,733 |
|
|
|
|
|
|
|
|
RATIOS |
|
|
|
|
|
|
Core deposits to total deposits |
[c÷b] |
|
96.42 |
% |
|
|
96.66 |
% |
|
|
96.98 |
% |
Portfolio loans to core deposits |
[a÷c] |
|
83.16 |
% |
|
|
78.82 |
% |
|
|
79.98 |
% |
SPECIAL NOTE CONCERNING FORWARD-LOOKING
STATEMENTS
This document may contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 with respect to Busey’s financial condition,
results of operations, plans, objectives, future performance, and
business. Forward-looking statements, which may be based upon
beliefs, expectations and assumptions of Busey’s management and on
information currently available to management, are generally
identifiable by the use of words such as “believe,” “expect,”
“anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,”
“could,” “should” or other similar expressions. Additionally, all
statements in this document, including forward-looking statements,
speak only as of the date they are made, and Busey undertakes no
obligation to update any statement in light of new information or
future events. A number of factors, many of which are beyond
Busey’s ability to control or predict, could cause actual results
to differ materially from those in any forward-looking statements.
These factors include, among others, the following: (1) the
strength of the local, state, national, and international economy
(including effects of inflationary pressures and supply chain
constraints); (2) the economic impact of any future terrorist
threats or attacks, widespread disease or pandemics, or other
adverse external events that could cause economic deterioration or
instability in credit markets (including Russia’s invasion of
Ukraine and the Israeli-Palestinian conflict); (3) changes in
state and federal laws, regulations, and governmental policies
concerning Busey's general business (including changes in response
to the failures of other banks or as a result of the upcoming 2024
presidential election); (4) changes in accounting policies and
practices; (5) changes in interest rates and prepayment rates
of Busey’s assets (including the impact of sustained elevated
interest rates); (6) increased competition in the financial
services sector (including from non-bank competitors such as credit
unions and fintech companies) and the inability to attract new
customers; (7) changes in technology and the ability to
develop and maintain secure and reliable electronic systems;
(8) the loss of key executives or associates; (9) changes
in consumer spending; (10) unexpected results of acquisitions
(including the acquisition of M&M); (11) unexpected
outcomes of existing or new litigation, investigations, or
inquiries involving Busey (including with respect to Busey’s
Illinois franchise taxes); (12) fluctuations in the value of
securities held in Busey’s securities portfolio;
(13) concentrations within Busey’s loan portfolio (including
commercial real estate loans), large loans to certain borrowers,
and large deposits from certain clients; (14) the
concentration of large deposits from certain clients who have
balances above current FDIC insurance limits and may withdraw
deposits to diversify their exposure; (15) the level of
non-performing assets on Busey’s balance sheets;
(16) interruptions involving information technology and
communications systems or third-party servicers; (17) breaches
or failures of information security controls or
cybersecurity-related incidents; and (18) the economic impact
of exceptional weather occurrences such as tornadoes, hurricanes,
floods, blizzards, and droughts. 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 Busey and its
business, including additional factors that could materially affect
Busey’s financial results, is included in Busey’s filings with the
Securities and Exchange Commission.
END NOTES
1 |
See "Non-GAAP Financial Information" for a reconciliation. |
2 |
Estimated uninsured and uncollateralized deposits consist of
account balances in excess of the $250 thousand FDIC insurance
limit, less intercompany accounts and collateralized accounts
(including preferred deposits). |
3 |
Central Business District areas within Busey’s footprint include
downtown St. Louis, downtown Indianapolis, and downtown
Chicago. |
4 |
Capital amounts and ratios for the second quarter of 2024 are not
yet finalized and are subject to change. |
5 |
On- and off-balance sheet liquidity is comprised of cash and cash
equivalents, debt securities excluding those pledged as collateral,
brokered deposits, and Busey’s borrowing capacity through its
revolving credit facility, the FHLB, the Federal Reserve Bank, and
federal funds purchased lines. |
6 |
The blended benchmark consists of 60% MSCI All Country World Index
and 40% Bloomberg Intermediate US Government/Credit Total Return
Index. |
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