First Busey Corporation Announces 2023 Fourth Quarter Earnings
- None.
- The net charge-off ratio increased from the previous quarter.
- There was a decrease in net interest income.
Insights
The reported net income of First Busey Corporation for the fourth quarter of 2023, at $25.7 million, reflects a sequential and year-over-year decline, which is notable considering the context of broader economic conditions. The decrease in diluted EPS from $0.61 in Q4 2022 to $0.46 in Q4 2023 indicates a reduction in profitability that could concern investors. The acquisition of Merchants & Manufacturers Bank Corporation could be a strategic move to bolster market presence, particularly in the Chicago area and potentially diversify revenue streams with the addition of Life Equity Loan® products. However, the impact on earnings will be dependent on the successful integration of the acquired entity and realization of projected synergies.
Furthermore, the balance sheet repositioning through the sale of Visa shares and repositioning of the securities portfolio is expected to be capital and earnings accretive. The anticipation of increased net interest income and improved net interest margin could signal a positive outlook for future earnings, assuming the reinvestment of proceeds aligns with the company's conservative banking strategy and yields favorable returns. It is also important to monitor the effectiveness of the cost-saving measures from the executive reorganization and efficiency optimization plan, which aim to offset non-recurring expenses and support growth initiatives.
First Busey Corporation's tangible book value per share growth of 17.5% year-over-year is a strong indicator of the company's ability to generate shareholder value, which is a critical metric for investors. The reduction in non-performing assets and the low net charge-off ratio suggest a healthy credit environment for the bank, which is reassuring for stakeholders concerned about asset quality, especially in an uncertain economic climate.
The bank's focus on fee-based businesses, such as wealth management and payment technology solutions, aligns with industry trends towards diversification of revenue sources away from traditional interest-based income. This strategy is evidenced by the reported record revenue periods for FirsTech, which could attract investor interest in the company's growth prospects. Additionally, the bank's conservative banking strategy, reflected in its robust capital ratios and liquidity management, positions it well to navigate potential market volatility and maintain financial stability.
The reported increase in income tax expense due to an adjusted annual effective tax rate and the anticipated reinvestment of cost savings into growth initiatives reflect the bank's adaptive strategies in response to macroeconomic variables. These strategies could be interpreted as a proactive approach to maintaining profitability in the face of potential economic headwinds. The bank's emphasis on a granular deposit base and the growth of core deposits demonstrate a focus on sustainable funding sources, which is particularly prudent given the current interest rate environment and the Federal Reserve's monetary policy stance.
Moreover, the bank's asset quality metrics and conservative loan portfolio composition suggest a risk-averse approach to lending, which could be favorable during periods of economic uncertainty. The impact of the bank's strategic decisions on its financial performance, including the acquisition and balance sheet repositioning, will be critical to monitor in the coming quarters, as they will influence the bank's capacity to generate returns in a potentially challenging economic landscape.
CHAMPAIGN, Ill., Jan. 23, 2024 (GLOBE NEWSWIRE) -- First Busey Corporation (Nasdaq: BUSE)
| Net Income of Diluted EPS of |
Fourth Quarter 2023 Highlights
- Adjusted net income1 at
$29.1 million , or$0.52 per diluted common share - Entered into a definitive agreement to acquire Merchants & Manufacturers Bank Corporation (“M&M”), the holding company for Merchants & Manufacturers Bank (“M&M Bank”)
- Executed a two-part balance sheet repositioning related to the securities portfolio, expected to be both capital and earnings accretive
- Non-performing assets declined
34.4% during the fourth quarter of 2023, to$7.9 million , now representing0.06% of total assets - Annualized quarterly net charge-off ratio of
0.02% and full year net charge-off ratio of0.03% - Tangible book value per common share1 of
$16.62 at December 31, 2023, compared to$15.07 at September 30, 2023, and$14.14 at December 31, 2022, an increase of17.5% year-over-year
For additional information, please refer to the 4Q23 Earnings Investor Presentation
Message from our Chairman & CEO
Fourth Quarter Financial Results
Net income for First Busey Corporation (“Busey,” “Company,” “we,” “us,” or “our”) was
Pre-provision net revenue1 was
Adjusted pre-provision net revenue1 was
Taking into account our fourth quarter results, full year 2023 pre-provision net revenue1 and adjusted pre-provision net revenue1 were
Our fee-based businesses continue to add revenue diversification. Noninterest income excluding net securities gains and losses1 was
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 fourth quarter of 2023 were
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. In the fourth quarter, Busey completed an executive reorganization and executed a targeted efficiency optimization plan, expected to generate annual salary and benefit savings of approximately
Noninterest expense was
Fourth quarter 2023 results were negatively impacted by an increase in income tax expense as a result of adjusting our estimated annual effective tax rate ("AETR"). Busey estimates income tax expense for the year based on amounts expected to be owed to federal and state tax jurisdictions. An estimated AETR is established based on this estimate and is used to calculate our quarterly income tax provision. The fourth quarter effective tax rate increased to
Acquisition of Merchants and Manufacturers Bank Corporation Planned for The Second Quarter of 2024
On November 27, 2023, Busey announced the signing of a definitive agreement with M&M, pursuant to which Busey will acquire M&M and its wholly-owned subsidiary, M&M Bank, through a merger transaction. This partnership will add M&M’s Life Equity Loan® products to Busey’s existing suite of services, and expand Busey’s presence in the Chicago Metropolitan Statistical Area.
Under the terms of the merger agreement, M&M’s stockholders will have the right to receive for each share of M&M common stock, at the election of each stockholder and subject to proration, either (i)
The merger is expected to be finalized in the second quarter of 2024, subject to customary closing conditions and required approvals, including the approval of M&M’s stockholders. At the time of the merger, M&M Bank’s banking centers will become banking centers of Busey Bank. It is anticipated that M&M Bank will be merged with and into Busey Bank at a date following the completion of the merger. Busey incurred one-time acquisition-related expenses of
Busey executed a two-part balance sheet repositioning strategy
During the fourth quarter of 2023, Busey sold all 16,878 shares of Visa Class B common stock it previously held (the “Visa Sale”) for a pre-tax gain of approximately
Busey also executed a balance sheet repositioning of its available-for-sale securities portfolio (the “Repositioning”) during the fourth quarter of 2023. Busey sold securities with a carrying value of approximately
The increased net interest spread as a result of the Visa Sale and the Repositioning is expected to increase net interest income by approximately
The combined impact of the gain generated from the Visa Sale and the loss generated from the Repositioning will have an immediate positive impact on consolidated stockholders’ equity and book value per share. Risk-based regulatory capital ratios will increase modestly as a result of the Repositioning proceeds rotating into lower risk-weighted assets. Busey expects the above transactions to be accretive to capital and earnings per share in future periods.
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. Since March 31, 2023, our deposit base has grown by
Asset quality remains strong by both Busey’s historical and current industry trends. Non-performing assets saw a further
The strength of our balance sheet is also reflected in our capital foundation. In the fourth quarter, Common Equity Tier 1 and Total Capital to Risk Weighted Assets ratios6 increased to
Community Banking
Busey’s Community Banking team now offers new, second chance checking and savings products—which are proudly BankON certified—offering hassle-free, affordable options with digital banking access designed to provide peace of mind. With a suite of online tools that make it easy to track and manage money, these products offer qualified customers tools to build financial strength, improve banking history, and avoid monthly maintenance fees.
As we reflect back on 2023 and look ahead to 2024, we remain cognizant of the evolving economic outlook and extremely focused on balance sheet strength, profitability, and growth, in that order. The pending M&M transaction fits with our acquisition strategy and we are excited to welcome our M&M colleagues into the Busey family. We are grateful for the opportunities to 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, President & Chief Executive Officer | ||
| First Busey Corporation |
SELECTED FINANCIAL HIGHLIGHTS (unaudited)
(dollars in thousands, except per share amounts)
| Three Months Ended | Years Ended | ||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||
| EARNINGS & PER SHARE AMOUNTS | |||||||||||||||||||
| Net income | $ | 25,749 | $ | 30,666 | $ | 34,387 | $ | 122,565 | $ | 128,311 | |||||||||
| Diluted earnings per common share | 0.46 | 0.54 | 0.61 | 2.18 | 2.29 | ||||||||||||||
| Cash dividends paid per share | 0.24 | 0.24 | 0.23 | 0.96 | 0.92 | ||||||||||||||
| Pre-provision net revenue1, 2 | 32,909 | 38,139 | 46,360 | 158,502 | 168,493 | ||||||||||||||
| Revenue3 | 107,888 | 109,084 | 120,037 | 444,034 | 452,374 | ||||||||||||||
| Net income by operating segments: | |||||||||||||||||||
| Banking | 25,164 | 31,189 | 37,564 | 123,853 | 131,596 | ||||||||||||||
| FirsTech | 325 | 317 | (453 | ) | 830 | 847 | |||||||||||||
| Wealth Management | 4,233 | 4,781 | 3,855 | 18,804 | 18,543 | ||||||||||||||
| AVERAGE BALANCES | |||||||||||||||||||
| Cash and cash equivalents | $ | 608,647 | $ | 252,730 | $ | 281,926 | $ | 330,952 | $ | 411,785 | |||||||||
| Investment securities | 2,995,223 | 3,148,759 | 3,451,471 | 3,188,815 | 3,731,048 | ||||||||||||||
| Loans held for sale | 1,679 | 2,267 | 1,623 | 1,885 | 5,178 | ||||||||||||||
| Portfolio loans | 7,736,010 | 7,834,285 | 7,619,199 | 7,759,472 | 7,445,962 | ||||||||||||||
| Interest-earning assets | 11,229,326 | 11,118,167 | 11,242,126 | 11,164,594 | 11,473,063 | ||||||||||||||
| Total assets | 12,308,491 | 12,202,783 | 12,330,132 | 12,246,218 | 12,492,948 | ||||||||||||||
| Noninterest bearing deposits | 2,827,696 | 2,925,244 | 3,494,001 | 3,018,563 | 3,550,517 | ||||||||||||||
| Interest-bearing deposits | 7,545,234 | 7,217,463 | 6,843,688 | 7,052,370 | 6,958,436 | ||||||||||||||
| Total deposits | 10,372,930 | 10,142,707 | 10,337,689 | 10,070,933 | 10,508,953 | ||||||||||||||
| Securities sold under agreements to repurchase and federal funds purchased | 182,735 | 190,112 | 236,656 | 200,894 | 244,004 | ||||||||||||||
| Interest-bearing liabilities | 8,054,663 | 7,864,355 | 7,500,294 | 7,825,459 | 7,583,331 | ||||||||||||||
| Total liabilities | 11,106,074 | 10,994,376 | 11,207,585 | 11,048,707 | 11,297,777 | ||||||||||||||
| Stockholders' equity - common | 1,202,417 | 1,208,407 | 1,122,547 | 1,197,511 | 1,195,171 | ||||||||||||||
| Tangible common equity2 | 846,948 | 850,382 | 756,420 | 838,164 | 824,747 | ||||||||||||||
| PERFORMANCE RATIOS | |||||||||||||||||||
| Pre-provision net revenue to average assets1, 2,4 | 1.06 | % | 1.24 | % | 1.49 | % | 1.29 | % | 1.35 | % | |||||||||
| Return on average assets4 | 0.83 | % | 1.00 | % | 1.11 | % | 1.00 | % | 1.03 | % | |||||||||
| Return on average common equity4 | 8.50 | % | 10.07 | % | 12.15 | % | 10.23 | % | 10.74 | % | |||||||||
| Return on average tangible common equity2,4 | 12.06 | % | 14.31 | % | 18.04 | % | 14.62 | % | 15.56 | % | |||||||||
| Net interest margin2, 5 | 2.74 | % | 2.80 | % | 3.24 | % | 2.88 | % | 2.84 | % | |||||||||
| Efficiency ratio2 | 66.89 | % | 62.38 | % | 58.77 | % | 61.65 | % | 59.89 | % | |||||||||
| Noninterest revenue as a % of total revenues3 | 28.51 | % | 28.69 | % | 24.07 | % | 28.06 | % | 28.50 | % | |||||||||
| NON-GAAP FINANCIAL INFORMATION | |||||||||||||||||||
| Adjusted pre-provision net revenue1, 2 | $ | 40,223 | $ | 40,491 | $ | 50,003 | $ | 172,290 | $ | 179,424 | |||||||||
| Adjusted net income2 | 29,123 | 30,730 | 36,290 | 126,012 | 131,910 | ||||||||||||||
| Adjusted diluted earnings per share2 | 0.52 | 0.55 | 0.65 | 2.24 | 2.35 | ||||||||||||||
| Adjusted pre-provision net revenue to average assets2,4 | 1.30 | % | 1.32 | % | 1.61 | % | 1.41 | % | 1.44 | % | |||||||||
| Adjusted return on average assets2,4 | 0.94 | % | 1.00 | % | 1.17 | % | 1.03 | % | 1.06 | % | |||||||||
| Adjusted return on average tangible common equity2,4 | 13.64 | % | 14.34 | % | 19.03 | % | 15.03 | % | 15.99 | % | |||||||||
| Adjusted net interest margin2, 5 | 2.73 | % | 2.79 | % | 3.22 | % | 2.87 | % | 2.81 | % | |||||||||
| Adjusted efficiency ratio2 | 62.98 | % | 62.31 | % | 56.75 | % | 60.68 | % | 58.89 | % | |||||||||
___________________________________________
- Net interest income plus noninterest income, excluding securities gains and losses, less noninterest expense.
- See “Non-GAAP Financial Information” for reconciliation.
- Revenue consists of net interest income plus noninterest income, excluding securities gains and losses.
- 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 | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and cash equivalents | $ | 719,581 | $ | 337,919 | $ | 232,703 | $ | 275,569 | $ | 227,164 | |||||||||
| Investment securities | 2,970,011 | 3,074,237 | 3,186,984 | 3,302,024 | 3,391,240 | ||||||||||||||
| Loans held for sale | 2,379 | 3,051 | 1,545 | 2,714 | 1,253 | ||||||||||||||
| Commercial loans | 5,635,048 | 5,824,800 | 5,793,426 | 5,815,703 | 5,766,496 | ||||||||||||||
| Retail real estate and retail other loans | 2,015,986 | 2,031,360 | 2,011,858 | 1,968,105 | 1,959,206 | ||||||||||||||
| Portfolio loans | 7,651,034 | 7,856,160 | 7,805,284 | 7,783,808 | 7,725,702 | ||||||||||||||
| Allowance for credit losses | (91,740 | ) | (91,710 | ) | (91,639 | ) | (91,727 | ) | (91,608 | ) | |||||||||
| Premises and equipment | 122,594 | 122,538 | 122,669 | 126,515 | 126,524 | ||||||||||||||
| Goodwill and other intangible assets, net | 353,864 | 356,343 | 358,898 | 361,567 | 364,296 | ||||||||||||||
| Right of use asset | 11,027 | 11,500 | 11,806 | 12,291 | 12,829 | ||||||||||||||
| Other assets | 544,665 | 588,212 | 580,779 | 571,794 | 579,277 | ||||||||||||||
| Total assets | $ | 12,283,415 | $ | 12,258,250 | $ | 12,209,029 | $ | 12,344,555 | $ | 12,336,677 | |||||||||
| LIABILITIES & STOCKHOLDERS' EQUITY | |||||||||||||||||||
| Noninterest bearing deposits | $ | 2,834,655 | $ | 2,918,574 | $ | 3,086,885 | $ | 3,173,783 | $ | 3,393,666 | |||||||||
| Interest checking, savings, and money market deposits | 5,637,227 | 5,747,136 | 5,504,255 | 5,478,715 | 5,822,239 | ||||||||||||||
| Time deposits | 1,819,274 | 1,666,652 | 1,471,615 | 1,148,671 | 855,375 | ||||||||||||||
| Total deposits | $ | 10,291,156 | $ | 10,332,362 | $ | 10,062,755 | $ | 9,801,169 | $ | 10,071,280 | |||||||||
| Securities sold under agreements to repurchase | $ | 187,396 | $ | 183,702 | $ | 202,953 | $ | 210,977 | $ | 229,806 | |||||||||
| Short-term borrowings | 12,000 | 12,000 | 212,000 | 615,881 | 351,054 | ||||||||||||||
| Long-term debt | 240,882 | 243,666 | 246,454 | 249,245 | 252,038 | ||||||||||||||
| Junior subordinated debt owed to unconsolidated trusts | 71,993 | 71,946 | 71,900 | 71,855 | 71,810 | ||||||||||||||
| Lease liability | 11,308 | 11,783 | 12,059 | 12,515 | 12,995 | ||||||||||||||
| Other liabilities | 196,699 | 212,633 | 198,960 | 184,355 | 201,717 | ||||||||||||||
| Total liabilities | 11,011,434 | 11,068,092 | 11,007,081 | 11,145,997 | 11,190,700 | ||||||||||||||
| Total stockholders' equity | 1,271,981 | 1,190,158 | 1,201,948 | 1,198,558 | 1,145,977 | ||||||||||||||
| Total liabilities & stockholders' equity | $ | 12,283,415 | $ | 12,258,250 | $ | 12,209,029 | $ | 12,344,555 | $ | 12,336,677 | |||||||||
| SHARE AND PER SHARE AMOUNTS | |||||||||||||||||||
| Book value per common share | $ | 23.02 | $ | 21.51 | $ | 21.74 | $ | 21.68 | $ | 20.73 | |||||||||
| Tangible book value per common share1 | $ | 16.62 | $ | 15.07 | $ | 15.25 | $ | 15.14 | $ | 14.14 | |||||||||
| Ending number of common shares outstanding | 55,244,119 | 55,342,017 | 55,290,847 | 55,294,455 | 55,279,124 | ||||||||||||||
___________________________________________
- See “Non-GAAP Financial Information” for reconciliation.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(dollars in thousands, except per share amounts)
| Three Months Ended | Years Ended | ||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| INTEREST INCOME | |||||||||||||||||
| Interest and fees on loans held for sale and portfolio | $ | 101,425 | $ | 99,844 | $ | 84,947 | $ | 385,848 | $ | 287,477 | |||||||
| Interest on investment securities | 20,634 | 21,234 | 19,560 | 82,994 | 69,412 | ||||||||||||
| Other interest income | 6,641 | 1,591 | 1,377 | 10,531 | 3,097 | ||||||||||||
| Total interest income | $ | 128,700 | $ | 122,669 | $ | 105,884 | $ | 479,373 | $ | 359,986 | |||||||
| INTEREST EXPENSE | |||||||||||||||||
| Interest on deposits | $ | 45,409 | $ | 37,068 | $ | 8,277 | $ | 123,985 | $ | 16,112 | |||||||
| Interest on securities sold under agreements to repurchase and federal funds purchased | 1,431 | 1,327 | 810 | 5,203 | 1,475 | ||||||||||||
| Interest on short-term borrowings | 248 | 1,964 | 1,221 | 12,775 | 1,647 | ||||||||||||
| Interest on long-term debt | 3,475 | 3,528 | 3,546 | 14,106 | 14,285 | ||||||||||||
| Junior subordinated debt owed to unconsolidated trusts | 1,004 | 991 | 881 | 3,853 | 3,029 | ||||||||||||
| Total interest expense | $ | 51,567 | $ | 44,878 | $ | 14,735 | $ | 159,922 | $ | 36,548 | |||||||
| Net interest income | $ | 77,133 | $ | 77,791 | $ | 91,149 | $ | 319,451 | $ | 323,438 | |||||||
| Provision for credit losses | 455 | 364 | 859 | 2,399 | 4,623 | ||||||||||||
| Net interest income after provision for credit losses | $ | 76,678 | $ | 77,427 | $ | 90,290 | $ | 317,052 | $ | 318,815 | |||||||
| NONINTEREST INCOME | |||||||||||||||||
| Wealth management fees | $ | 13,715 | $ | 14,235 | $ | 12,956 | $ | 57,309 | $ | 55,378 | |||||||
| Fees for customer services | 7,484 | 7,502 | 6,989 | 29,044 | 33,111 | ||||||||||||
| Payment technology solutions | 5,420 | 5,226 | 5,022 | 21,192 | 20,067 | ||||||||||||
| Mortgage revenue | 218 | 311 | 198 | 1,089 | 1,895 | ||||||||||||
| Income on bank owned life insurance | 1,019 | 1,001 | 947 | 4,701 | 3,663 | ||||||||||||
| Net securities gains (losses) | 761 | (285 | ) | 191 | (2,199 | ) | (2,133 | ) | |||||||||
| Other noninterest income | 2,899 | 3,018 | 2,776 | 11,248 | 14,822 | ||||||||||||
| Total noninterest income | $ | 31,516 | $ | 31,008 | $ | 29,079 | $ | 122,384 | $ | 126,803 | |||||||
| NONINTEREST EXPENSE | |||||||||||||||||
| Salaries, wages, and employee benefits | $ | 42,730 | $ | 39,677 | $ | 41,790 | $ | 162,597 | $ | 159,016 | |||||||
| Data processing expense | 6,236 | 5,930 | 5,848 | 23,708 | 21,648 | ||||||||||||
| Net occupancy expense | 4,318 | 4,594 | 4,638 | 18,214 | 19,130 | ||||||||||||
| Furniture and equipment expense | 1,694 | 1,638 | 1,771 | 6,759 | 7,645 | ||||||||||||
| Professional fees | 2,574 | 1,542 | 1,432 | 7,147 | 6,125 | ||||||||||||
| Amortization of intangible assets | 2,479 | 2,555 | 2,795 | 10,432 | 11,628 | ||||||||||||
| Interchange expense | 1,355 | 1,786 | 1,692 | 6,864 | 6,298 | ||||||||||||
| FDIC insurance | 1,167 | 1,475 | 950 | 5,650 | 4,058 | ||||||||||||
| Other operating expenses | 12,426 | 11,748 | 12,761 | 44,161 | 48,333 | ||||||||||||
| Total noninterest expense | $ | 74,979 | $ | 70,945 | $ | 73,677 | $ | 285,532 | $ | 283,881 | |||||||
| Income before income taxes | $ | 33,215 | $ | 37,490 | $ | 45,692 | $ | 153,904 | $ | 161,737 | |||||||
| Income taxes | 7,466 | 6,824 | 11,305 | 31,339 | 33,426 | ||||||||||||
| Net income | $ | 25,749 | $ | 30,666 | $ | 34,387 | $ | 122,565 | $ | 128,311 | |||||||
| SHARE AND PER SHARE AMOUNTS | |||||||||||||||||
| Basic earnings per common share | $ | 0.46 | $ | 0.55 | $ | 0.62 | $ | 2.21 | $ | 2.32 | |||||||
| Diluted earnings per common share | $ | 0.46 | $ | 0.54 | $ | 0.61 | $ | 2.18 | $ | 2.29 | |||||||
| Average common shares outstanding | 55,403,662 | 55,486,700 | 55,350,423 | 55,432,322 | 55,387,073 | ||||||||||||
| Diluted average common shares outstanding | 56,333,033 | 56,315,492 | 56,177,790 | 56,256,148 | 56,137,164 | ||||||||||||
Balance Sheet Strength
Our balance sheet remains a source of strength. Total assets were
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
Average portfolio loans were
Total deposits were
Short term borrowings were
Asset Quality
Credit quality continues to be exceptionally strong. Loans 30-89 days past due totaled
Net charge-offs were
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 | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||||||
| Total assets | $ | 12,283,415 | $ | 12,258,250 | $ | 12,209,029 | $ | 12,344,555 | $ | 12,336,677 | |||||||||
| Portfolio loans | 7,651,034 | 7,856,160 | 7,805,284 | 7,783,808 | 7,725,702 | ||||||||||||||
| Loans 30 – 89 days past due | 5,779 | 5,934 | 5,169 | 5,472 | 6,548 | ||||||||||||||
| Non-performing loans: | |||||||||||||||||||
| Non-accrual loans | 7,441 | 11,298 | 15,209 | 14,714 | 15,067 | ||||||||||||||
| Loans 90+ days past due and still accruing | 375 | 709 | 569 | 500 | 673 | ||||||||||||||
| Non-performing loans | $ | 7,816 | $ | 12,007 | $ | 15,778 | $ | 15,214 | $ | 15,740 | |||||||||
| Non-performing loans, segregated by geography: | |||||||||||||||||||
| Illinois / Indiana | $ | 3,715 | $ | 7,951 | $ | 11,681 | $ | 10,416 | $ | 10,347 | |||||||||
| Missouri | 3,836 | 3,747 | 3,928 | 4,103 | 4,676 | ||||||||||||||
| Florida | 265 | 309 | 169 | 695 | 717 | ||||||||||||||
| Other non-performing assets | 125 | 96 | 68 | 759 | 850 | ||||||||||||||
| Non-performing assets | $ | 7,941 | $ | 12,103 | $ | 15,846 | $ | 15,973 | $ | 16,590 | |||||||||
| Allowance for credit losses | $ | 91,740 | $ | 91,710 | $ | 91,639 | $ | 91,727 | $ | 91,608 | |||||||||
| RATIOS | |||||||||||||||||||
| Non-performing loans to portfolio loans | 0.10 | % | 0.15 | % | 0.20 | % | 0.20 | % | 0.20 | % | |||||||||
| Non-performing assets to total assets | 0.06 | % | 0.10 | % | 0.13 | % | 0.13 | % | 0.13 | % | |||||||||
| Non-performing assets to portfolio loans and other non-performing assets | 0.10 | % | 0.15 | % | 0.20 | % | 0.21 | % | 0.21 | % | |||||||||
| Allowance for credit losses to portfolio loans | 1.20 | % | 1.17 | % | 1.17 | % | 1.18 | % | 1.19 | % | |||||||||
| Allowance for credit losses as a percentage of non-performing loans | 1,173.75 | % | 763.80 | % | 580.80 | % | 602.91 | % | 582.01 | % | |||||||||
NET CHARGE-OFFS (RECOVERIES) AND PROVISION EXPENSE (RELEASE) (unaudited)
(dollars in thousands)
| Three Months Ended | Years Ended | ||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||
| Net charge-offs (recoveries) | $ | 425 | $ | 293 | $ | (27 | ) | $ | 2,267 | $ | 902 | ||||||||
| Provision expense (release) | 455 | 364 | 859 | 2,399 | 4,623 | ||||||||||||||
| Net charge-offs, annualized | 1,686 | 1,162 | NM | 2,267 | 902 | ||||||||||||||
| Average portfolio loans | 7,736,010 | 7,834,285 | 7,619,199 | 7,759,472 | 7,445,962 | ||||||||||||||
| Net charge-off ratio | 0.02 | % | 0.01 | % | NM | 0.03 | % | 0.01 | % | ||||||||||
Net Interest Margin1 and Net Interest Income
Net interest margin was
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 the fourth quarter of 2023. 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. Components of the 6 basis point decrease in net interest margin during the fourth quarter of 2023 include:
- Increases in the cash and securities portfolio yield contributed +15 basis points
- Reduced borrowing costs contributed +6 basis points
- Increased income from our held for sale and portfolio loans contributed +2 basis points
- Increased non-maturity deposit funding costs contributed -17 basis points
- Increased time deposit funding costs contributed -12 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
Noninterest Income
Noninterest income was
Consolidated wealth management fees were
Payment technology solutions revenue was
Fees for customer services were
Net securities gains were
Other noninterest income was
Operating Efficiency
Noninterest expense was
Noteworthy components of noninterest expense are as follows:
- Salaries, wages, and employee benefits expenses were
$42.7 million in the fourth quarter of 2023, compared to$39.7 million in the third quarter of 2023 and$41.8 million in the fourth quarter of 2022. Busey recorded$3.8 million of non-operating salaries, wages, and employee benefit expenses in the fourth quarter of 2023, as compared to none in the third quarter of 2023 and$2.4 million in the fourth quarter of 2022. Excluding these items, salaries, wages, and employee benefits expenses were$38.9 million in the fourth quarter of 2023, compared to$39.4 million in the fourth quarter of 2022. Our associate-base consisted of 1,479 full-time equivalents as of December 31, 2023, compared to 1,484 as of September 30, 2023, and 1,497 as of December 31, 2022. - Data processing expense was
$6.2 million in the fourth quarter of 2023, compared to$5.9 million in the third quarter of 2023 and$5.8 million in the fourth quarter of 2022. The year-over-year increase was related to Company-wide investments in technology enhancements, as well as inflation-driven price increases. - Professional fees were
$2.6 million in the fourth quarter of 2023, compared to$1.5 million in the third quarter of 2023 and$1.4 million in the fourth quarter of 2022. Busey recorded$0.4 million of non-operating Professional fees in the fourth quarter of 2023, as compared to$0.1 million in the third quarter of 2023 and an immaterial amount in the fourth quarter of 2022. The quarter-over-quarter increase was driven by seasonally higher audit and accounting fees and increased consulting expenses. - Amortization of intangible assets was
$2.5 million in the fourth quarter of 2023, compared to$2.6 million in the third quarter of 2023 and$2.8 million in the fourth quarter of 2022. - FDIC insurance expense was
$1.2 million in the fourth quarter of 2023, compared to$1.5 million in the third quarter of 2023 and$1.0 million in the fourth quarter of 2022. Increases in 2023 were a result of an FDIC final rule to increase the initial base deposit insurance assessment rate applicable to all FDIC-insured depository institutions by two basis points. - Other operating expenses were
$12.4 million for the fourth quarter of 2023, compared to$11.7 million in the third quarter of 2023 and$12.8 million in the fourth quarter of 2022. The quarter-over-quarter increase is attributable to multiple items, including increases in the provision for unfunded commitments, marketing, and business development expenses.
Busey's effective tax rate for the fourth quarter of 2023 was
In January 2024, Busey adopted ASU 2023-02, which allows entities to elect to account for equity investments made primarily for the purpose of receiving income tax credits using the proportional amortization method, regardless of the tax credit program through which the investment earns income tax credits, if certain conditions are met. 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 January 26, 2024, Busey will pay a cash dividend of
As of December 31, 2023, 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 estimated6 to be
Busey’s tangible common equity1 was
During the fourth quarter of 2023, Busey purchased 117,812 shares of its common stock at a weighted average price of
4Q23 Earnings Investor Presentation
For additional information on Busey’s financial condition and operating results, please refer to the 4Q23 Earnings Investor Presentation furnished via Form 8-K on January 23, 2024, in connection with this earnings release.
Corporate Profile
As of December 31, 2023, First Busey Corporation (Nasdaq: BUSE) was a
Busey Bank, a wholly-owned bank subsidiary of First Busey Corporation, had total assets of
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
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.
Busey Bank is honored to be named among America’s Best Banks by Forbes magazine for the second consecutive year. Ranked 26th overall in 2023, compared to 52nd in 2022, Busey was once again the top-ranked bank headquartered in Illinois. 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 2023 Best Places to Work in Illinois by Daily Herald Business Ledger, and the 2023 Best Companies to Work For in Florida by Florida Trend magazine. We are honored to be consistently recognized nationally and locally 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 U.S. Generally Accepted Accounting Principles (“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 the Company’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 the Company’s performance over time.
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, and adjusted return on average tangible common equity; net income and net security gains and losses in the case of net income excluding net securities gains and losses and diluted earnings per share excluding net securities gains and losses; 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 expense, noninterest expense excluding non-operating adjustments, adjusted core expense, efficiency ratio, adjusted efficiency ratio, and adjusted core efficiency ratio; 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; portfolio loans in the case of core loans and core loans to portfolio loans; total deposits in the case of core deposits and core deposits to total deposits; and portfolio loans and total deposits in the case of core loans to core deposits—appears below.
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 or effective rates as appropriate.
Reconciliation Of Non-GAAP Financial Measures (unaudited)
| 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 | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| PRE-PROVISION NET REVENUE | ||||||||||||||||||||
| Net interest income | $ | 77,133 | $ | 77,791 | $ | 91,149 | $ | 319,451 | $ | 323,438 | ||||||||||
| Total noninterest income | 31,516 | 31,008 | 29,079 | 122,384 | 126,803 | |||||||||||||||
| Net security (gains) losses | (761 | ) | 285 | (191 | ) | 2,199 | 2,133 | |||||||||||||
| Total noninterest expense | (74,979 | ) | (70,945 | ) | (73,677 | ) | (285,532 | ) | (283,881 | ) | ||||||||||
| Pre-provision net revenue | 32,909 | 38,139 | 46,360 | 158,502 | 168,493 | |||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Acquisition and other restructuring expenses | 4,237 | 79 | 2,442 | 4,328 | 4,537 | |||||||||||||||
| Provision for unfunded commitments | 818 | 13 | (464 | ) | 461 | 61 | ||||||||||||||
| Amortization of New Markets Tax Credits | 2,259 | 2,260 | 1,665 | 8,999 | 6,333 | |||||||||||||||
| Adjusted pre-provision net revenue | $ | 40,223 | $ | 40,491 | $ | 50,003 | $ | 172,290 | $ | 179,424 | ||||||||||
| Pre-provision net revenue, annualized | [a] | $ | 130,563 | $ | 151,312 | $ | 183,928 | $ | 158,502 | $ | 168,493 | |||||||||
| Adjusted pre-provision net revenue, annualized | [b] | 159,580 | 160,644 | 198,381 | 172,290 | 179,424 | ||||||||||||||
| Average total assets | [c] | 12,308,491 | 12,202,783 | 12,330,132 | 12,246,218 | 12,492,948 | ||||||||||||||
| Reported: Pre-provision net revenue to average assets1 | [a÷c] | 1.06 | % | 1.24 | % | 1.49 | % | 1.29 | % | 1.35 | % | |||||||||
| Adjusted: Pre-provision net revenue to average assets1 | [b÷c] | 1.30 | % | 1.32 | % | 1.61 | % | 1.41 | % | 1.44 | % | |||||||||
___________________________________________
- For quarterly periods, measures are annualized.
| 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 | Years Ended | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| NET INCOME ADJUSTED FOR NON-OPERATING ITEMS | ||||||||||||||||||||
| Net income | [a] | $ | 25,749 | $ | 30,666 | $ | 34,387 | $ | 122,565 | $ | 128,311 | |||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Acquisition expenses: | ||||||||||||||||||||
| Salaries, wages, and employee benefits | — | — | — | — | 587 | |||||||||||||||
| Data processing | — | — | — | — | 214 | |||||||||||||||
| Professional fees, occupancy, and other | 266 | 79 | 16 | 357 | 258 | |||||||||||||||
| Other restructuring expenses: | ||||||||||||||||||||
| Salaries, wages, and employee benefits | 3,760 | — | 2,409 | 3,760 | 2,409 | |||||||||||||||
| Loss on leases or fixed asset impairment | — | — | 10 | — | 986 | |||||||||||||||
| Professional fees, occupancy, and other | 211 | — | 7 | 211 | 83 | |||||||||||||||
| Related tax benefit1 | (863 | ) | (15 | ) | (539 | ) | (881 | ) | (938 | ) | ||||||||||
| Adjusted net income | [b] | $ | 29,123 | $ | 30,730 | $ | 36,290 | $ | 126,012 | $ | 131,910 | |||||||||
| DILUTED EARNINGS PER SHARE | ||||||||||||||||||||
| Diluted average common shares outstanding | [c] | 56,333,033 | 56,315,492 | 56,177,790 | 56,256,148 | 56,137,164 | ||||||||||||||
| Reported: Diluted earnings per share | [a÷c] | $ | 0.46 | $ | 0.54 | $ | 0.61 | $ | 2.18 | $ | 2.29 | |||||||||
| Adjusted: Diluted earnings per share | [b÷c] | $ | 0.52 | $ | 0.55 | $ | 0.65 | $ | 2.24 | $ | 2.35 | |||||||||
| RETURN ON AVERAGE ASSETS | ||||||||||||||||||||
| Net income, annualized | [d] | $ | 102,156 | $ | 121,664 | $ | 136,427 | $ | 122,565 | $ | 128,311 | |||||||||
| Adjusted net income, annualized | [e] | 115,542 | 121,918 | 143,977 | 126,012 | 131,910 | ||||||||||||||
| Average total assets | [f] | 12,308,491 | 12,202,783 | 12,330,132 | 12,246,218 | 12,492,948 | ||||||||||||||
| Reported: Return on average assets2 | [d÷f] | 0.83 | % | 1.00 | % | 1.11 | % | 1.00 | % | 1.03 | % | |||||||||
| Adjusted: Return on average assets2 | [e÷f] | 0.94 | % | 1.00 | % | 1.17 | % | 1.03 | % | 1.06 | % | |||||||||
| RETURN ON AVERAGE TANGIBLE COMMON EQUITY | ||||||||||||||||||||
| Average common equity | $ | 1,202,417 | $ | 1,208,407 | $ | 1,122,547 | $ | 1,197,511 | $ | 1,195,171 | ||||||||||
| Average goodwill and other intangible assets, net | (355,469 | ) | (358,025 | ) | (366,127 | ) | (359,347 | ) | (370,424 | ) | ||||||||||
| Average tangible common equity | [g] | $ | 846,948 | $ | 850,382 | $ | 756,420 | $ | 838,164 | $ | 824,747 | |||||||||
| Reported: Return on average tangible common equity2 | [d÷g] | 12.06 | % | 14.31 | % | 18.04 | % | 14.62 | % | 15.56 | % | |||||||||
| Adjusted: Return on average tangible common equity2 | [e÷g] | 13.64 | % | 14.34 | % | 19.03 | % | 15.03 | % | 15.99 | % | |||||||||
___________________________________________
- Full year tax benefits were calculated by multiplying full year acquisition expenses and other restructuring expenses by the annual effective tax rates for the full year periods. The annual effective tax rates used in these calculations were
20.4% for the year ended December 31, 2023, and20.7% for the year ended December 31, 2022. Quarterly tax benefits were calculated as the full year amounts less the sum of amounts applied to previous quarters within the year. - For quarterly periods, measures are annualized.
| Adjusted Net Income Excluding Net Securities Gains and Losses and Adjusted Diluted Earnings Per Share Excluding Net Securities Gains and Losses | ||||||||||||||||||||
| (dollars in thousands, except per share amounts) | ||||||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| Adjusted net income1 | [a] | $ | 29,123 | $ | 30,730 | $ | 36,290 | $ | 126,012 | $ | 131,910 | |||||||||
| Further non-GAAP adjustments: | ||||||||||||||||||||
| Net securities (gains) losses | (761 | ) | 285 | (191 | ) | 2,199 | 2,133 | |||||||||||||
| Tax effect for net securities (gains) losses2 | 171 | (52 | ) | 47 | (448 | ) | (441 | ) | ||||||||||||
| Tax effected net securities (gains) losses3 | (590 | ) | 233 | (144 | ) | 1,751 | 1,692 | |||||||||||||
| Net income excluding net securities (gains) losses3 | [b] | $ | 28,533 | $ | 30,963 | $ | 36,146 | $ | 127,763 | $ | 133,602 | |||||||||
| Diluted average common shares outstanding | [c] | 56,333,033 | 56,315,492 | 56,177,790 | 56,256,148 | 56,137,164 | ||||||||||||||
| Adjusted: Diluted earnings per share | [a÷c] | $ | 0.52 | $ | 0.55 | $ | 0.65 | $ | 2.24 | $ | 2.35 | |||||||||
| Adjusted: Diluted earnings per share, excluding net securities (gains) losses3 | [b÷c] | $ | 0.51 | $ | 0.55 | $ | 0.64 | $ | 2.27 | $ | 2.38 | |||||||||
___________________________________________
- 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 net securities gains and losses were calculated by multiplying net securities gains and losses by the effective income tax rates for the periods indicated. Effective tax rates were
22.5% ,18.2% , and24.7% for the three months ended December 31, 2023, September 30, 2023, and December 31, 2022, respectively, and were20.4% and20.7% for the years ended December 31, 2023, and December 31, 2022, respectively. - Tax-effected measure.
| Adjusted Net Interest Income and Adjusted Net Interest Margin | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| Net interest income | $ | 77,133 | $ | 77,791 | $ | 91,149 | $ | 319,451 | $ | 323,438 | ||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Tax-equivalent adjustment1 | 501 | 553 | 564 | 2,173 | 2,199 | |||||||||||||||
| Tax-equivalent net interest income | 77,634 | 78,344 | 91,713 | 321,624 | 325,637 | |||||||||||||||
| Purchase accounting accretion related to business combinations | (384 | ) | (277 | ) | (546 | ) | (1,477 | ) | (3,134 | ) | ||||||||||
| Adjusted net interest income | $ | 77,250 | $ | 78,067 | $ | 91,167 | $ | 320,147 | $ | 322,503 | ||||||||||
| Tax-equivalent net interest income, annualized | [a] | $ | 308,004 | $ | 310,821 | $ | 363,861 | $ | 321,624 | $ | 325,637 | |||||||||
| Adjusted net interest income, annualized | [b] | 306,481 | 309,722 | 361,695 | 320,147 | 322,503 | ||||||||||||||
| Average interest-earning assets | [c] | 11,229,326 | 11,118,167 | 11,242,126 | 11,164,594 | 11,473,063 | ||||||||||||||
| Reported: Net interest margin2 | [a÷c] | 2.74 | % | 2.80 | % | 3.24 | % | 2.88 | % | 2.84 | % | |||||||||
| Adjusted: Net interest margin2 | [b÷c] | 2.73 | % | 2.79 | % | 3.22 | % | 2.87 | % | 2.81 | % | |||||||||
___________________________________________
- Tax-equivalent adjustments were calculated using an estimated federal income tax rate of
21% , applied to non-taxable interest income on investments and loans. - For quarterly periods, measures are annualized.
| 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 | Years Ended | |||||||||||||||||||
| December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| Net interest income | $ | 77,133 | $ | 77,791 | $ | 91,149 | $ | 319,451 | $ | 323,438 | ||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Tax-equivalent adjustment1 | 501 | 553 | 564 | 2,173 | 2,199 | |||||||||||||||
| Tax-equivalent net interest income | 77,634 | 78,344 | 91,713 | 321,624 | 325,637 | |||||||||||||||
| Total noninterest income | 31,516 | 31,008 | 29,079 | 122,384 | 126,803 | |||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Net security (gains) losses | (761 | ) | 285 | (191 | ) | 2,199 | 2,133 | |||||||||||||
| Noninterest income excluding net securities gains and losses | 30,755 | 31,293 | 28,888 | 124,583 | 128,936 | |||||||||||||||
| Tax-equivalent revenue | [a] | $ | 108,389 | $ | 109,637 | $ | 120,601 | $ | 446,207 | $ | 454,573 | |||||||||
| Total noninterest expense | $ | 74,979 | $ | 70,945 | $ | 73,677 | $ | 285,532 | $ | 283,881 | ||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Amortization of intangible assets | [b] | (2,479 | ) | (2,555 | ) | (2,795 | ) | (10,432 | ) | (11,628 | ) | |||||||||
| Noninterest expense excluding amortization of intangible assets | [c] | 72,500 | 68,390 | 70,882 | 275,100 | 272,253 | ||||||||||||||
| Non-operating adjustments: | ||||||||||||||||||||
| Salaries, wages, and employee benefits | (3,760 | ) | — | (2,409 | ) | (3,760 | ) | (2,996 | ) | |||||||||||
| Data processing | — | — | — | — | (214 | ) | ||||||||||||||
| Impairment, professional fees, occupancy, and other | (477 | ) | (79 | ) | (33 | ) | (568 | ) | (1,327 | ) | ||||||||||
| Adjusted noninterest expense | [f] | 68,263 | 68,311 | 68,440 | 270,772 | 267,716 | ||||||||||||||
| Provision for unfunded commitments | (818 | ) | (13 | ) | 464 | (461 | ) | (61 | ) | |||||||||||
| Amortization of New Markets Tax Credits | (2,259 | ) | (2,260 | ) | (1,665 | ) | (8,999 | ) | (6,333 | ) | ||||||||||
| Adjusted core expense | [g] | $ | 65,186 | $ | 66,038 | $ | 67,239 | $ | 261,312 | $ | 261,322 | |||||||||
| Noninterest expense, excluding non-operating adjustments | [f-b] | $ | 70,742 | $ | 70,866 | $ | 71,235 | $ | 281,204 | $ | 279,344 | |||||||||
| Reported: Efficiency ratio | [c÷a] | 66.89 | % | 62.38 | % | 58.77 | % | 61.65 | % | 59.89 | % | |||||||||
| Adjusted: Efficiency ratio | [f÷a] | 62.98 | % | 62.31 | % | 56.75 | % | 60.68 | % | 58.89 | % | |||||||||
| Adjusted: Core efficiency ratio | [g÷a] | 60.14 | % | 60.23 | % | 55.75 | % | 58.56 | % | 57.49 | % | |||||||||
___________________________________________
- 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 | ||||||||||||||||||||
| December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | ||||||||||||||||
| Total stockholders' equity | $ | 1,271,981 | $ | 1,190,158 | $ | 1,201,948 | $ | 1,198,558 | $ | 1,145,977 | ||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Goodwill and other intangible assets, net | (353,864 | ) | (356,343 | ) | (358,898 | ) | (361,567 | ) | (364,296 | ) | ||||||||||
| Tangible book value | [a] | $ | 918,117 | $ | 833,815 | $ | 843,050 | $ | 836,991 | $ | 781,681 | |||||||||
| Ending number of common shares outstanding | [b] | 55,244,119 | 55,342,017 | 55,290,847 | 55,294,455 | 55,279,124 | ||||||||||||||
| Tangible book value per common share | [a÷b] | $ | 16.62 | $ | 15.07 | $ | 15.25 | $ | 15.14 | $ | 14.14 | |||||||||
| Tangible Assets, Tangible Common Equity, and Tangible Common Equity to Tangible Assets | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | ||||||||||||||||
| Total assets | $ | 12,283,415 | $ | 12,258,250 | $ | 12,209,029 | $ | 12,344,555 | $ | 12,336,677 | ||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Goodwill and other intangible assets, net | (353,864 | ) | (356,343 | ) | (358,898 | ) | (361,567 | ) | (364,296 | ) | ||||||||||
| Tax effect of other intangible assets1 | 6,888 | 7,354 | 7,833 | 8,335 | 8,847 | |||||||||||||||
| Tangible assets2 | [a] | $ | 11,936,439 | $ | 11,909,261 | $ | 11,857,964 | $ | 11,991,323 | $ | 11,981,228 | |||||||||
| Total stockholders' equity | $ | 1,271,981 | $ | 1,190,158 | $ | 1,201,948 | $ | 1,198,558 | $ | 1,145,977 | ||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Goodwill and other intangible assets, net | (353,864 | ) | (356,343 | ) | (358,898 | ) | (361,567 | ) | (364,296 | ) | ||||||||||
| Tax effect of other intangible assets1 | 6,888 | 7,354 | 7,833 | 8,335 | 8,847 | |||||||||||||||
| Tangible common equity2 | [b] | $ | 925,005 | $ | 841,169 | $ | 850,883 | $ | 845,326 | $ | 790,528 | |||||||||
| Tangible common equity to tangible assets2 | [b÷a] | 7.75 | % | 7.06 | % | 7.18 | % | 7.05 | % | 6.60 | % | |||||||||
___________________________________________
- Net of estimated deferred tax liability, calculated using the estimated statutory tax rate of
28% . - Tax-effected measure.
| Core Loans, Core Loans to Portfolio Loans, Core Deposits, Core Deposits to Total Deposits, and Core Loans to Core Deposits | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | ||||||||||||||||
| Portfolio loans | [a] | $ | 7,651,034 | $ | 7,856,160 | $ | 7,805,284 | $ | 7,783,808 | $ | 7,725,702 | |||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| PPP loans amortized cost | (313 | ) | (598 | ) | (667 | ) | (750 | ) | (845 | ) | ||||||||||
| Core loans | [b] | $ | 7,650,721 | $ | 7,855,562 | $ | 7,804,617 | $ | 7,783,058 | $ | 7,724,857 | |||||||||
| Total deposits | [c] | $ | 10,291,156 | $ | 10,332,362 | $ | 10,062,755 | $ | 9,801,169 | $ | 10,071,280 | |||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Brokered transaction accounts | (6,001 | ) | (6,055 | ) | (6,055 | ) | (6,005 | ) | (1,303 | ) | ||||||||||
| Time deposits of | (386,286 | ) | (350,276 | ) | (297,967 | ) | (200,898 | ) | (120,377 | ) | ||||||||||
| Core deposits | [d] | $ | 9,898,869 | $ | 9,976,031 | $ | 9,758,733 | $ | 9,594,266 | $ | 9,949,600 | |||||||||
| RATIOS | ||||||||||||||||||||
| Core loans to portfolio loans | [b÷a] | 100.00 | % | 99.99 | % | 99.99 | % | 99.99 | % | 99.99 | % | |||||||||
| Core deposits to total deposits | [d÷c] | 96.19 | % | 96.55 | % | 96.98 | % | 97.89 | % | 98.79 | % | |||||||||
| Core loans to core deposits | [b÷d] | 77.29 | % | 78.74 | % | 79.98 | % | 81.12 | % | 77.64 | % | |||||||||
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 the financial condition, results of operations, plans, objectives, future performance and business of Busey and M&M. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of Busey’s and M&M’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 neither Busey nor M&M undertakes any obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond the ability of Busey and M&M 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 possibility that any of the anticipated benefits of the proposed transaction between Busey and M&M will not be realized or will not be realized within the expected time period; (2) the risk that integration of operations of M&M with those of Busey will be materially delayed or will be more costly or difficult than expected; (3) the inability to complete the proposed transaction due to the failure of the required approval of M&M’s stockholders; (4) the failure to satisfy other conditions to completion of the proposed transaction, including receipt of required regulatory and other approvals; (5) the failure of the proposed transaction to close for any other reason; (6) the effect of the announcement of the transaction on customer relationships and operating results; (7) the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (8) the strength of the local, state, national, and international economy (including effects of inflationary pressures and supply chain constraints); (9) the economic impact of any future terrorist threats or attacks, widespread disease or pandemics (including the Coronavirus Disease 2019 pandemic), 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); (10) changes in state and federal laws, regulations, and governmental policies concerning Busey's or M&M's general business (including changes in response to the recent failures of other banks); (11) changes in accounting policies and practices; (12) changes in interest rates and prepayment rates of Busey’s or M&M's assets (including the impact of the London Interbank Offered Rate phase-out and the recent and potential additional rate increases by the Federal Reserve); (13) 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; (14) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (15) the loss of key executives or associates; (16) changes in consumer spending; (17) unexpected results of acquisitions, including the acquisition of M&M and the performance of M&M’s life equity loan business; (18) unexpected outcomes of existing or new litigation involving Busey or M&M; (19) fluctuations in the value of securities held in Busey’s or M&M’s securities portfolio; (20) concentrations within Busey’s or M&M’s loan portfolio, large loans to certain borrowers, and large deposits from certain clients; (21) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; (22) the level of non-performing assets on Busey’s or M&M’s balance sheets; (23) interruptions involving information technology and communications systems or third-party servicers; (24) breaches or failures of information security controls or cybersecurity-related incidents; and (25) 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 (“SEC”).
Additional Information
Busey filed a registration statement on Form S-4 with the SEC on January 12, 2024, in connection with the proposed transaction. The registration statement includes a proxy statement of M&M that also constitutes a prospectus of Busey, which will be sent to the stockholders of M&M. M&M’s stockholders are advised to read the proxy statement/prospectus because it contains important information about Busey, M&M, and the proposed transaction. This document and other documents relating to the proposed transaction filed by Busey and M&M can be obtained free of charge from the SEC’s website at sec.gov.
These documents also can be obtained free of charge by accessing the Investor Relations page on Busey’s website at ir.busey.com, then under the tab “SEC Filings.” Alternatively, these documents, when available, can be obtained free of charge from Busey upon written request to First Busey Corporation, Attention: Corporate Secretary, 100 W. University Avenue, Champaign, Illinois 61820 or by calling (217) 365‑4630, or from M&M, upon written request to M&M and Manufacturers Bank Corporation, Attention: Brad Butler, 25140 W. Channon Dr., P.O. Box 200, Channahon, Illinois 60410 or by calling (630) 575‑9700.
This document shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in this Transaction
Busey, M&M, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from stockholders in connection with the proposed transaction under the rules of the SEC. Information about these participants may be found in Busey’s definitive proxy statement relating to its 2023 Annual Meeting of Stockholders filed with the SEC on April 14, 2023. This definitive proxy statement can be obtained free of charge from the sources indicated above. Additional information regarding the interests of these participants are included in the proxy statement/prospectus regarding the proposed transaction.
End Notes
| 1 | See "Non-GAAP Financial Information" for a reconciliation. |
| 2 | Tax effected measure. See “Non-GAAP Financial Information” for a reconciliation. |
| 3 | Operating revenue consists of net interest income plus noninterest income, net of securities gains and losses. |
| 4 | Estimated uninsured and uncollateralized deposits consist of account balances in excess of the |
| 5 | Central Business District areas within Busey’s footprint include downtown St. Louis, downtown Indianapolis, and downtown Chicago. |
| 6 | Capital ratios for the fourth quarter of 2023 are not yet finalized, and are subject to change. |
| 7 | 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. |
| 8 | The blended benchmark consists of |
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