January 28, 2020
First Busey Announces 2019 Fourth Quarter Earnings

Champaign, IL – (Nasdaq: BUSE)

Message from our President & CEO

Positive advances in the fourth quarter of 2019 compared to the third quarter of 2019 and for the full year 2019 compared to the full year 2018

Fourth quarter net income and adjusted net income1 increased to $28.6 million and $31.8 million, respectively
Fourth quarter diluted earnings per share of $0.52 and adjusted earnings per share1 of $0.57 compared to $0.45 and $0.55, respectively
Fourth quarter wealth management segment revenue increased 26.2% to $11.4 million compared to $9.0 million
Full year net income and adjusted net income1 increased to $103.0 million and $118.4 million, respectively
Full year diluted earnings per share of $1.87 and adjusted earnings per share1 of $2.15 compared to $2.01 and $2.10, respectively
Portfolio loans of $6.69 billion at December 31, 2019 as compared to $6.67 billion at September 30, 2019 and $5.57 billion at December 31, 2018
Tangible book value per common share of $15.46 at December 31, 2019 as compared to $15.12 at September 30, 2019 and $14.21 at December 31, 2018

First Busey Corporation’s (“First Busey” or the “Company”) net income for the fourth quarter of 2019 was $28.6 million, or $0.52 per diluted common share, as compared to $24.8 million, or $0.45 per diluted common share, for the third quarter of 2019 and $25.3 million, or $0.51 per diluted common share, for the fourth quarter of 2018.  Adjusted net income1 for the fourth quarter of 2019 was $31.8 million, or $0.57 per diluted common share, as compared to $30.5 million, or $0.55 per diluted common share, for the third quarter of 2019 and $26.0 million, or $0.53 per diluted common share, for the fourth quarter of 2018.

The Company views certain non-operating items, including acquisition-related and restructuring charges, as adjustments to net income reported under generally accepted accounting principles (“GAAP”).  Non-operating pretax adjustments for the fourth quarter of 2019 were $2.4 million of expenses related to acquisitions and $3.1 million of expenses related to other restructuring costs, offset by a $1.8 million reversal of mortgage servicing rights impairment from TheBANK of Edwardsville (“TheBANK”).  The reconciliation of non-GAAP measures (including adjusted net income, adjusted earnings per share, adjusted return on average assets, adjusted net interest margin, adjusted efficiency ratio, tangible book value, tangible book value per share and return on average tangible common equity), which the Company believes facilitates the assessment of its financial results and peer comparability, is included in tabular form at the end of this release.

Net income for the full year 2019 was $103.0 million, or $1.87 per diluted common share, compared to net income of $98.9 million, or $2.01 per diluted common share, for the full year 2018. Adjusted net income1 for the full year 2019 was $118.4 million, or $2.15 per diluted common share, compared to $103.5 million or $2.10 per diluted common share for the full year 2018.  The effective tax rate for the year end December 31, 2019 was 23.43%, a decrease from 26.13% for the year ended December 31, 2018. The decrease in the effective tax rate was primarily driven by an increase in tax exempt income combined with the benefits received from tax credit investments.

For the fourth quarter of 2019, annualized return on average assets and annualized return on average tangible common equity were 1.17% and 13.41%, respectively.  Based on adjusted net income1, annualized return on average assets was 1.30% and annualized return on average tangible common equity was 14.92% for the fourth quarter of 2019.  For the year ended December 31, 2019, return on average assets and return on average tangible common equity were 1.09% and 12.64%, respectively.  Based on adjusted net income1, return on average assets was 1.25% and return on average tangible common equity was 14.54% for the year ended December 31, 2019.

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

On January 31, 2019, the Company completed its acquisition of The Banc Ed Corp. (“Banc Ed”), the holding company for TheBANK.  First Busey operated TheBANK as a separate subsidiary from the completion of the acquisition until October 4, 2019, when it was merged with and into Busey Bank.  At that time, TheBANK’s banking centers became banking centers of Busey Bank.   When we completed the Banc Ed acquisition, we reset the baseline for the future financial performance of First Busey.  With TheBANK now merged and integrated, we expect to see the full contribution and synergies of TheBANK reflected in the Company’s financial performance in the years ahead.

On August 31, 2019, the Company completed the previously announced merger of Busey Bank with Investors’ Security Trust Company (“IST”), a Fort Myers, Florida wealth management firm, with $471.1 million assets under care.  Through this transaction, Busey Bank and IST broaden the expertise and raise the level of service available to clients—from individuals and families to institutions and foundations—and remain committed to their founding principles of being active community stewards and providing the highest level of personal service to clients delivered by experienced, local professionals.

On October 4, 2019, in addition to the merger of TheBANK into Busey Bank, the Company partnered with a new core operating system provider.  The core conversion positioned the combined organization for future growth, and will allow the Company to serve customers more efficiently and effectively for years to come.

Our goal of being a strong community bank for the communities we serve begins with outstanding associates. The Company is honored to be named among the 2019 Best Banks to Work For by American Banker, the 2019 Best-In-State Banks for Illinois by Forbes and Statista, the 2019 Best Places to Work in Illinois by Daily Herald Business Ledger, the 2019 Best Companies to Work For in Florida by Florida Trend magazine, the 2019 Best Place to Work in Indiana by the Indiana Chamber of Commerce, the 2019 Best Places to Work in St. Louis by the St. Louis Business Journal and the 2019 Best Places to Work in Money Management by Pensions and Investments.

As we reflect back on 2019, we are pleased with our accomplishments and feel confident that we are well positioned moving into the new year.  We are grateful for the opportunity to continually earn the business of our customers, based on the contributions of our talented associates and the loyal support of our stockholders.


/s/ Van A. Dukeman
President & Chief Executive Officer
First Busey Corporation



SELECTED FINANCIAL HIGHLIGHTS1
 
(dollars in thousands, except per share data)
 
As of and for the
   
As of and for the
 
   
Three Months Ended
   
Year Ended
 
   
December 31,
   
September 30,
   
June 30,
   
December 31,
   
December 31,
   
December 31,
 
 
 
2019
   
2019
   
2019
   
2018
   
2019
   
2018
 
EARNINGS & PER SHARE DATA
                                   
Revenue2
 
$
102,969
   
$
104,051
   
$
102,350
   
$
83,184
   
$
403,656
   
$
331,068
 
Net income
   
28,571
     
24,828
     
24,085
     
25,290
     
102,953
     
98,928
 
Diluted earnings per share
   
0.52
     
0.45
     
0.43
     
0.51
     
1.87
     
2.01
 
Cash dividends paid per share
   
0.21
     
0.21
     
0.21
     
0.20
     
0.84
     
0.80
 
Net income by operating segment
                                               
   Banking
 
$
29,573
   
$
25,731
   
$
24,441
   
$
24,134
   
$
106,409
     
97,369
 
   Remittance Processing
   
958
     
972
     
1,105
     
814
     
4,060
     
3,710
 
   Wealth Management
   
3,465
     
2,184
     
2,845
     
2,040
     
11,135
     
9,372
 
                                                 
AVERAGE BALANCES
                                               
Cash and cash equivalents
 
$
533,519
   
$
515,965
   
$
328,414
   
$
272,811
   
$
427,223
   
$
239,149
 
Investment securities
   
1,677,962
     
1,780,066
     
1,897,486
     
1,443,054
     
1,769,291
     
1,370,460
 
Loans held for sale
   
68,480
     
42,418
     
25,143
     
23,380
     
37,447
     
29,666
 
Portfolio loans
   
6,657,283
     
6,558,519
     
6,528,326
     
5,540,852
     
6,469,920
     
5,533,549
 
Interest-earning assets
   
8,810,505
     
8,781,590
     
8,666,136
     
7,174,755
     
8,590,262
     
7,067,710
 
Total assets
   
9,713,858
     
9,659,769
     
9,522,678
     
7,846,154
     
9,443,690
     
7,742,142
 
                                                 
Non-interest bearing deposits
   
1,838,523
     
1,780,645
     
1,747,746
     
1,486,977
     
1,746,938
     
1,492,242
 
Interest-bearing deposits
   
6,052,529
     
6,086,378
     
5,970,408
     
4,852,649
     
5,927,154
     
4,707,289
 
Total deposits
   
7,891,052
     
7,867,023
     
7,718,154
     
6,339,626
     
7,674,092
     
6,199,531
 
Securities sold under agreements to repurchase
   
204,076
     
184,637
     
193,621
     
210,416
     
196,681
     
234,239
 
Interest-bearing liabilities
   
6,537,611
     
6,557,518
     
6,493,885
     
5,329,898
     
6,414,969
     
5,247,017
 
Total liabilities
   
8,489,411
     
8,446,936
     
8,326,876
     
6,866,652
     
8,257,563
     
6,787,193
 
Stockholders' common equity
   
1,224,447
     
1,212,833
     
1,195,802
     
979,502
     
1,186,127
     
954,949
 
Tangible stockholders' common equity3
   
845,179
     
835,232
     
818,951
     
678,023
     
814,461
     
651,032
 
 
                                               
PERFORMANCE RATIOS
                                               
Return on average assets3
   
1.17
%
   
1.02
%
   
1.01
%
   
1.28
%
   
1.09
%
   
1.28
%
Return on average common equity3
   
9.26
%
   
8.12
%
   
8.08
%
   
10.24
%
   
8.68
%
   
10.36
%
Return on average tangible common equity3
   
13.41
%
   
11.79
%
   
11.80
%
   
14.80
%
   
12.64
%
   
15.20
%
Net interest margin3,4
   
3.27
%
   
3.35
%
   
3.43
%
   
3.38
%
   
3.38
%
   
3.45
%
Efficiency ratio3
   
60.54
%
   
62.73
%
   
63.62
%
   
56.57
%
   
61.29
%
   
56.16
%
Non-interest revenue as a % of total revenues2
   
30.14
%
   
29.38
%
   
28.26
%
   
27.27
%
   
28.84
%
   
27.08
%
 
                                               
NON-GAAP INFORMATION
                                               
Adjusted net income3
 
$
31,782
   
$
30,535
   
$
29,498
   
$
25,958
   
$
118,429
   
$
103,477
 
Adjusted diluted earnings per share3
   
0.57
     
0.55
     
0.53
     
0.53
     
2.15
     
2.10
 
Adjusted return on average assets3
   
1.30
%
   
1.25
%
   
1.24
%
   
1.31
%
   
1.25
%
   
1.34
%
Adjusted return on average tangible common equity3
   
14.92
%
   
14.50
%
   
14.45
%
   
15.19
%
   
14.54
%
   
15.89
%
Adjusted net interest margin3,4
   
3.14
%
   
3.22
%
   
3.27
%
   
3.27
%
   
3.23
%
   
3.30
%
Adjusted efficiency ratio3
   
57.02
%
   
55.42
%
   
56.55
%
   
55.49
%
   
56.35
%
   
54.49
%
   
1 Results are unaudited.
 
2 Revenues consist of net interest income plus non-interest income, excluding security gains and losses.
 
3 See “Non-GAAP Financial Information” below for reconciliation.
 
4 On a tax-equivalent basis, assuming a federal income tax rate of 21%.
 
   
   


Condensed Consolidated Balance Sheets1
 
As of
 
(dollars in thousands, except per share data)
 
December 31,
   
September 30,
   
June 30,
   
March 31,
   
December 31,
 
   
2019
   
2019
   
2019
   
2019
   
2018
 
Assets
                             
Cash and cash equivalents
 
$
529,288
   
$
525,457
   
$
420,207
   
$
330,407
   
$
239,973
 
Investment securities
   
1,654,209
     
1,721,865
     
1,869,143
     
1,940,519
     
1,312,514
 
                                         
Loans held for sale
   
68,699
     
70,345
     
39,607
     
20,291
     
25,895
 
                                         
Commercial loans
   
4,943,646
     
4,900,430
     
4,759,329
     
4,744,136
     
4,060,126
 
Retail real estate and retail other loans
   
1,743,603
     
1,768,985
     
1,772,797
     
1,770,945
     
1,508,302
 
Portfolio loans
 
$
6,687,249
   
$
6,669,415
   
$
6,532,126
   
$
6,515,081
   
$
5,568,428
 
                                         
Allowance for loan losses
   
(53,748
)
   
(52,965
)
   
(51,375
)
   
(50,915
)
   
(50,648
)
Premises and equipment
   
151,267
     
153,641
     
149,726
     
147,958
     
117,672
 
Goodwill and other intangibles
   
373,129
     
381,323
     
375,327
     
377,739
     
300,558
 
Right of use asset
   
9,490
     
9,979
     
10,426
     
10,898
     
-
 
Other assets
   
276,146
     
274,700
     
267,480
     
245,356
     
187,965
 
Total assets
 
$
9,695,729
   
$
9,753,760
   
$
9,612,667
   
$
9,537,334
   
$
7,702,357
 
                                         
Liabilities & Stockholders' Equity
                                       
Non-interest bearing deposits
 
$
1,832,619
   
$
1,779,490
   
$
1,766,681
   
$
1,791,339
   
$
1,464,700
 
Interest-bearing checking, savings, and money market deposits
   
4,534,927
     
4,498,005
     
4,316,730
     
4,214,809
     
3,287,618
 
Time deposits
   
1,534,850
     
1,652,971
     
1,749,811
     
1,757,078
     
1,497,003
 
Total deposits
 
$
7,902,396
   
$
7,930,466
   
$
7,833,222
   
$
7,763,226
   
$
6,249,321
 
                                         
Securities sold under agreements to repurchase
   
205,491
     
202,500
     
190,846
     
217,077
     
185,796
 
Short-term borrowings
   
8,551
     
29,739
     
30,761
     
30,739
     
-
 
Long-term debt
   
182,522
     
183,968
     
185,576
     
188,221
     
148,686
 
Junior subordinated debt owed to unconsolidated trusts
   
71,308
     
71,269
     
71,230
     
71,192
     
71,155
 
Lease liability
   
9,552
     
10,101
     
10,531
     
10,982
     
-
 
Other liabilities
   
95,475
     
109,736
     
86,893
     
69,756
     
52,435
 
Total liabilities
 
$
8,475,295
   
$
8,537,779
   
$
8,409,059
   
$
8,351,193
   
$
6,707,393
 
Total stockholders' equity
 
$
1,220,434
   
$
1,215,981
   
$
1,203,608
   
$
1,186,141
   
$
994,964
 
Total liabilities & stockholders' equity
 
$
9,695,729
   
$
9,753,760
   
$
9,612,667
   
$
9,537,334
   
$
7,702,357
 
                                         
Share Data
                                       
Book value per common share
 
$
22.28
   
$
22.03
   
$
21.73
   
$
21.32
   
$
20.36
 
Tangible book value per common share2
 
$
15.46
   
$
15.12
   
$
14.95
   
$
14.53
   
$
14.21
 
Ending number of common shares outstanding
   
54,788,772
     
55,197,277
     
55,386,636
     
55,624,627
     
48,874,836
 
       
1 Results are unaudited except for amounts reported as of December 31, 2018.
 
2 See “Non-GAAP Financial Information” below for reconciliation, excludes tax effect of other intangible assets.
 

Condensed Consolidated Statements of Income1
                   
(dollars in thousands, except per share data)
             
   
For the
   
For the
 
   
Three Months Ended December 31,
   
Year Ended December 31,
 
   
2019
   
2018
   
2019
   
2018
 
                         
Interest and fees on loans
 
$
76,290
   
$
64,410
   
$
304,193
   
$
251,249
 
Interest on investment securities
   
10,682
     
8,993
     
45,721
     
32,293
 
Other interest income
   
1,824
     
911
     
6,320
     
2,491
 
Total interest income
 
$
88,796
   
$
74,314
   
$
356,234
   
$
286,033
 
                                 
Interest on deposits
   
13,670
     
10,764
     
55,077
     
32,601
 
Interest on securities sold under agreements to repurchase
   
559
     
487
     
2,348
     
1,618
 
Interest on short-term borrowings
   
156
     
279
     
1,041
     
1,544
 
Interest on long-term debt
   
1,719
     
1,414
     
7,131
     
5,614
 
Interest on junior subordinated debt owed to unconsolidated trusts
   
756
     
867
     
3,414
     
3,250
 
Total interest expense
 
$
16,860
   
$
13,811
   
$
69,011
   
$
44,627
 
                                 
Net interest income
 
$
71,936
   
$
60,503
   
$
287,223
   
$
241,406
 
Provision for loan losses
   
2,367
     
405
     
10,406
     
4,429
 
Net interest income after provision for loan losses
 
$
69,569
   
$
60,098
   
$
276,817
   
$
236,977
 
                                 
Trust fees
   
10,141
     
6,611
     
34,263
     
27,184
 
Commissions and brokers' fees, net
   
1,082
     
930
     
4,298
     
3,790
 
Fees for customer services
   
9,048
     
7,303
     
36,683
     
28,879
 
Remittance processing
   
3,765
     
3,757
     
15,042
     
14,345
 
Mortgage revenue
   
3,576
     
1,057
     
11,703
     
5,545
 
Security gains (losses), net
   
605
     
171
     
(18
)
   
331
 
Other
   
3,421
     
3,023
     
14,444
     
9,919
 
Total non-interest income
 
$
31,638
   
$
22,852
   
$
116,415
   
$
89,993
 
                                 
Salaries, wages and employee benefits
   
35,117
     
27,529
     
140,473
     
107,844
 
Net occupancy expense of premises
   
4,811
     
3,532
     
18,176
     
14,803
 
Furniture and equipment expense
   
2,570
     
1,815
     
9,506
     
7,233
 
Data processing
   
6,462
     
3,992
     
21,511
     
16,383
 
Amortization of intangible assets
   
2,681
     
1,404
     
9,547
     
5,854
 
Other
   
13,849
     
10,497
     
59,581
     
40,926
 
Total non-interest expense
 
$
65,490
   
$
48,769
   
$
258,794
   
$
193,043
 
                                 
Income before income taxes
 
$
35,717
   
$
34,181
   
$
134,438
   
$
133,927
 
Income taxes
   
7,146
     
8,891
     
31,485
     
34,999
 
Net income
 
$
28,571
   
$
25,290
   
$
102,953
   
$
98,928
 
                                 
Per Share Data
                               
Basic earnings per common share
 
$
0.52
   
$
0.52
   
$
1.88
   
$
2.02
 
Diluted earnings per common share
 
$
0.52
   
$
0.51
   
$
1.87
   
$
2.01
 
Average common shares outstanding
   
55,055,530
     
48,932,874
     
54,851,652
     
48,854,330
 
Diluted average common shares outstanding
   
55,363,258
     
49,225,480
     
55,132,494
     
49,215,455
 
                                 
1 Results are unaudited except for amounts reported for the year ended December 31, 2018.
                 

Balance Sheet Growth

At December 31, 2019, portfolio loans were $6.69 billion, as compared to $6.67 billion as of September 30, 2019 and $5.57 billion as of December 31, 2018.  The increase as of December 31, 2019 from September 30, 2019 related to organic commercial loan growth of $43.2 million partially offset by a decline in retail real estate and retail other loans of $25.4 million.  Average portfolio loans increased to $6.66 billion for the fourth quarter of 2019 compared to $6.56 billion in the third quarter of 2019 and increased 20.1% compared to $5.54 billion for the fourth quarter of 2018.

Average interest-earning assets for the fourth quarter of 2019 increased to $8.81 billion compared to $8.78 billion for the third quarter of 2019 and $7.17 billion for the fourth quarter of 2018.  Average interest-earning assets for the year ended December 31, 2019 increased 21.5% to $8.59 billion from $7.07 billion in the same period of 2018.

Total deposits were $7.90 billion at December 31, 2019, compared to $7.93 billion at September 30, 2019 and $6.25 billion at December 31, 2018.  During the quarter we deliberately decreased our higher-cost brokered, wholesale and non-relationship deposits by $65.0 million while growing our core deposits by $35.0 million.  Non-core deposits over total deposits decreased to 3.9% at December 31, 2019 as compared to 4.7% at September 30, 2019 and 8.4% at December 31, 2018.  The Company remains funded primarily through core deposits with significant market share in its primary markets.

Net Interest Margin and Net Interest Income

Net interest margin for the fourth quarter of 2019 was 3.27%, compared to 3.35% for the third quarter of 2019 and 3.38% for the fourth quarter of 2018.  Net interest margin for the year ended December 31, 2019 was 3.38% compared to 3.45% for the comparable period of 2018.

Higher aggregate yields from loan production partially offset increases in funding costs in 2019 as compared to 2018. Funding costs in 2019 increased from 2018, primarily due to resetting of time deposit rates to reflect market rates and additional borrowings in conjunction with the Banc Ed acquisition.  The Federal Open Market Committee lowered Federal Funds Target Rates for the first time in 11 years on July 31, 2019 and then again on September 18, 2019 and October 30, 2019, for a combined decrease of 75 basis points during 2019.  This contributed to the decline in net interest margin for the fourth quarter as compared to the third quarter of 2019, as assets, in particular commercial loans, repriced more quickly and to a greater extent than liabilities.

Net interest income was $71.9 million in the fourth quarter of 2019 compared to $73.5 million in the third quarter of 2019 and $60.5 million in the fourth quarter of 2018.  Net interest income was $287.2 million for the year ended December 31, 2019 compared to $241.4 million for the same period of 2018.

Asset Quality

Non-performing loans totaled $29.5 million as of December 31, 2019, a decrease compared to $33.1 million as of September 30, 2019 and $36.6 million as of December 31, 2018. Continued disciplined credit management resulted in non-performing loans as a percentage of total loans of 0.44% at December 31, 2019 as compared to 0.50% at September 30, 2019 and 0.66% at December 31, 2018.

The allowance for loan loss as a percentage of portfolio loans was 0.80% at December 31, 2019 as compared to 0.79% at September 30, 2019 and 0.91% at December 31, 2018. The decline in the allowance coverage ratio in 2019 is primarily attributed to the Banc Ed acquisition.  Acquired loans are initially recorded at their acquisition date fair value so a separate allowance is not initially recognized.  An allowance is recorded subsequent to acquisition to the extent the reserve requirement exceeds the recorded fair value adjustment.  The allowance as a percentage of non-performing loans increased to 182.2% at December 31, 2019 compared to 160.0% at September 30, 2019 and 138.4% at December 31, 2018.


On January 1, 2020, the Company adopted ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the Current Expected Credit Loss (“CECL”) model.  Management is finalizing macroeconomic conditions and forecast assumptions to be used in our CECL model; however, we expect an initial increase to the allowance for credit losses, including the increase in reserve for unfunded commitments, of approximately 25% to 45% above the existing allowance for loan loss levels. When finalized, this one-time increase will be recorded, net of tax, as an adjustment to beginning retained earnings. Ongoing impacts of the CECL methodology will be dependent upon changes in economic conditions and forecasts, originated and acquired loan portfolio composition, portfolio duration, and other factors.

Asset Quality1
 
(dollars in thousands)
 
As of and for the Three Months Ended
 
   
December 31,
   
September 30,
   
June 30,
   
March 31,
   
December 31,
 
   
2019
   
2019
   
2019
   
2019
   
2018
 
                               
Portfolio loans
 
$
6,687,249
   
$
6,669,415
   
$
6,532,126
   
$
6,515,081
   
$
5,568,428
 
Loans 30-89 days past due
   
14,271
     
12,434
     
18,040
     
10,780
     
7,121
 
Non-performing loans:
                                       
     Non-accrual loans
   
27,896
     
31,827
     
32,816
     
36,230
     
34,997
 
     Loans 90+ days past due
   
1,611
     
1,276
     
258
     
356
     
1,601
 
Total non-performing loans
   
29,507
     
33,103
     
33,074
     
36,586
     
36,598
 
Total non-performing loans,segregated by geography
                                       
     Illinois/ Indiana
   
20,428
     
24,296
     
24,509
     
28,847
     
28,319
 
     Missouri
   
5,227
     
8,202
     
7,778
     
6,593
     
7,242
 
     Florida
   
3,852
     
605
     
787
     
1,146
     
1,037
 
Other non-performing assets
   
3,057
     
926
     
936
     
921
     
376
 
Total non-performing assets
   
32,564
     
34,029
     
34,010
     
37,507
     
36,974
 
Total non-performing assets to portfolio loans and non-performing assets
   
0.49
%
   
0.51
%
   
0.52
%
   
0.58
%
   
0.66
%
Allowance for loan losses to portfolio loans
   
0.80
%
   
0.79
%
   
0.79
%
   
0.78
%
   
0.91
%
Allowance as a percentage of non-performing loans
   
182.15
%
   
160.00
%
   
155.33
%
   
139.17
%
   
138.39
%
Net charge-offs
   
1,584
     
1,821
     
2,057
     
1,844
     
2,500
 
Provision for loan losses
   
2,367
     
3,411
     
2,517
     
2,111
     
405
 
                   
1 Results are unaudited.
                 

Non-Interest Income

Total non-interest income of $31.6 million for the fourth quarter of 2019 increased as compared to $30.9 million in the third quarter of 2019 and $22.9 million in the fourth quarter of 2018.  Revenues from trust fees, commissions and brokers’ fees, and remittance processing activities represented 47.4% of the Company’s non-interest income for the quarter ended December 31, 2019, providing a balance to spread-based revenue from traditional banking activities.

Trust fees and commissions and brokers’ fees were $11.2 million for the fourth quarter of 2019 as a result of seasonal increases and the addition of IST, an increase from $8.8 million for the third quarter of 2019 and $7.5 million for the fourth quarter of 2018. Trust fees and commissions and brokers’ fees increased to $38.6 million for the year ended December 31, 2019 compared to $31.0 million for the comparable period of 2018.  Wealth management segment revenue, inclusive of the trust fees and commissions and brokers’ fees, was $11.4 million for the fourth quarter of 2019, an increase from $9.0 million for the third quarter of 2019 and $7.6 million for the fourth quarter of 2018.  Wealth management segment revenue was $39.1 million for the year ended December 31, 2019 compared to $31.6 million for the comparable period of 2018.

Net income from the wealth management segment was $3.5 million for the fourth quarter of 2019 compared to $2.2 million in the third quarter of 2019 and $2.0 million in the fourth quarter of 2018.  Net income from the wealth management segment for the year ended December 31, 2019 was $11.1 million compared to $9.4 million for the same period of 2018, an 18.8% increase. First Busey’s wealth management division ended the fourth quarter of 2019 with $9.70 billion in assets under care, an increase from $9.41 billion at September 30, 2019 and $7.12 billion at December 31, 2018.

Remittance processing revenue from the Company’s subsidiary, FirsTech, of $3.8 million for the fourth quarter of 2019 was steady with the third quarter of 2019 and fourth quarter of 2018.  Remittance processing revenue for the year ended December 31, 2019 was $15.0 million, an increase of 4.9%, compared to $14.3 million during the same period of 2018. The FirsTech operating segment generated net income of $1.0 million for the fourth and third quarters of 2019 compared to $0.8 million for the fourth quarter of 2018.

Mortgage revenue was $3.6 million in the fourth quarter of 2019, an increase compared to $3.3 million in the third quarter of 2019 and $1.1 million in the fourth quarter of 2018.  Mortgage revenue for the year ended December 31, 2019 was $11.7 million, an increase over the comparable period of 2018 of $5.5 million, following a long period of restructuring and additional revenue from TheBANK. A decline in prevailing market rates for mortgages also contributed to increased production in recent periods.

Operating Efficiency

The efficiency ratio was 60.54% for the quarter ended December 31, 2019 compared to 62.73% for the quarter ended September 30, 2019 and 56.57% for the quarter ended December 31, 2018. The adjusted efficiency ratio1 was 57.02% for the quarter ended December 31, 2019, 55.42% for the quarter ended September 30, 2019, and 55.49% for the quarter ended December 31, 2018.  The efficiency ratio for the full year 2019 was 61.29% compared to 56.16% for the full year 2018. The adjusted efficiency ratio1 was 56.35% for the full year 2019 compared to 54.49% for the full year 2018.  Total non-interest expenses have been influenced by acquisition expenses and other restructuring costs.  The Company remains focused on expense discipline and expects additional expense savings from the integration of prior acquisitions and recent core operating system conversion efforts to be realized over the next several quarters.

Specific areas of non-interest expense are as follows:

 Salaries, wages and employee benefits were $35.1 million in the fourth quarter of 2019, a decrease from $38.7 million in the third quarter of 2019 but an increase from $27.5 million from the fourth quarter of 2018.  For the full year 2019, salaries, wages and employee benefits increased to $140.5 million compared to $107.8 million for the same period of 2018.  For the three and twelve months ended December 31, 2019, salaries, wages and employee benefits included $0.4 million and $4.6 million, respectively, of non-operating expenses. Total full time equivalents at December 31, 2019 was 1,531 compared to 1,595 at September 30, 2019 and 1,270 at December 31, 2018.

 Data processing expense in the fourth quarter of 2019 of $6.5 million increased compared to $5.0 million in the third quarter of 2019 and $4.0 million in the fourth quarter of 2018.  For the year ended December 31, 2019, data processing expense increased to $21.5 million compared to $16.4 million for the same period of 2018.  For the three and twelve months ended December 31, 2019, data processing included $1.4 million and $2.4 million, respectively, of non-operating expenses, related to payment of merger and conversion expenses.  Data processing for 2019 also includes data processing related to TheBANK from January 31, 2019 until merged with Busey Bank on October 4, 2019.

 Other expense in the fourth quarter of 2019 of $13.8 million decreased compared to $14.8 million in the third quarter of 2019 and increased compared to $10.5 million in the fourth quarter of 2018. For the full year 2019, other expense increased to $59.6 million compared to $40.9 million for the same period of 2018. For the three and twelve months ended December 31, 2019, other expenses included $3.7 million and $13.2 million, respectively, of non-operating expenses which primarily includes professional and legal expenses, lease and fixed asset impairments and check card conversion expenses.


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

Capital Strength

The Company's strong capital levels, coupled with its earnings, has allowed First Busey to provide a steady return to its stockholders through dividends.  The Company will pay a cash dividend on January 31, 2020 of $0.22 per common share, which represents an increase of 4.8% from the previous quarterly dividend of $0.21 per share, to stockholders of record as of January 24, 2020.  The Company has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

As of December 31, 2019, the Company continued to exceed the capital adequacy requirements necessary to be considered “well-capitalized” under applicable regulatory guidelines. The Company’s tangible common equity1 (“TCE”) increased to $864.6 million at December 31, 2019, compared to $851.1 million at September 30, 2019 and $703.0 million at December 31, 2018. TCE represented 9.26% of tangible assets at December 31, 2019, compared to 9.06% at September 30, 2019 and 9.49% at December 31, 2018.1

During the fourth quarter of 2019, the Company purchased 416,000 shares of its common stock at an average price of $26.37 per share for a total of $11.0 million under the Company’s stock repurchase plan.  At December 31, 2019, the Company held 1,121,961 shares in treasury and had 389,938 shares available to be purchased under the plan. The Company grants share-based compensation awards to its employees and members of its board of directors as provided for under the Company’s 2010 Equity Incentive Plan.  The Company may source stock option exercises and grants of restricted stock units and deferred stock units from its inventory of treasury stock as an alternative to using newly issued shares.  Repurchases were executed in contemplation of maintaining levels of treasury stock appropriate to satisfy compensation awards, in addition to favorable pricing of our shares during the fourth quarter of 2019.

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

Corporate Profile

As of December 31, 2019, First Busey Corporation (Nasdaq: BUSE) was a $9.70 billion financial holding company headquartered in Champaign, Illinois.

Busey Bank, a wholly-owned bank subsidiary of First Busey Corporation, had total assets of $9.68 billion as of December 31, 2019 and is headquartered in Champaign, Illinois, with 61 banking centers serving Illinois, 13 banking centers in the St. Louis, Missouri metropolitan area, five banking centers serving southwest Florida and a banking center in Indianapolis, Indiana.  Through the Busey Wealth Management division, the Company provides asset management, investment and fiduciary services to individuals, businesses and foundations.  As of December 31, 2019, assets under care were approximately $9.70 billion. Busey Bank owns a retail payment processing subsidiary, FirsTech, Inc., which processes approximately 28 million transactions per year using online bill payment, lockbox processing and walk-in payments at its 4,000 agent locations in 43 states.  More information about FirsTech, Inc. can be found at firstechpayments.com.

Busey Bank was named among Forbes2019 Best-In-State Banks—one of five in Illinois and 173 from across the country, equivalent to 2.8% of all banks. Best-In-State Banks are awarded for exceptional customer experiences as determined by a survey sample of 25,000+ banking customers who rated banks on trust, terms and conditions, branch services, digital services and financial advice.

For more information about us, visit busey.com.

Contacts:

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

Non-GAAP Financial Information

This earnings release contains certain financial information determined by methods other than GAAP. These measures include adjusted net income, adjusted earnings per share, adjusted return on average assets, adjusted net interest margin, adjusted efficiency ratio, tangible common equity, tangible common equity to tangible assets and adjusted return on average tangible common equity. Management uses these non-GAAP measures, together with the related GAAP measures, in analysis of the Company’s performance and in making business decisions. Management also uses these measures for peer comparisons.

A reconciliation to what management believes to be the most directly comparable GAAP financial measures, for example, – net income in the case of adjusted net income and adjusted return on average assets, total net interest income, total non-interest income and total non-interest expense in the case of adjusted efficiency ratio, total stockholders’ equity in the case of the tangible book value per share – appears below.  The Company believes the adjusted measures are useful for investors and management to understand the effects of certain non-recurring non-interest items and provide additional perspective on the Company’s performance over time as well as comparison to the Company’s peers.

These non-GAAP disclosures have inherent limitations and are not audited.  They should not be considered in isolation or as a substitute for the results reported in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Tax effected numbers included in these non-GAAP disclosures are based on estimated statutory rates and effective rates as appropriate.

Reconciliation of Non-GAAP Financial Measures – Adjusted Net Income, Adjusted Earnings Per Share and Return on Average Assets
 
(dollars in thousands)
 
                               
   
Three Months Ended
   
Year Ended
 
   
December 31,
2019
   
September 30, 2019
   
December 31,
2018
   
December 31,
2019
   
December 31,
2018
 
Net income
 
$
28,571
   
$
24,828
   
$
25,290
   
$
102,953
   
$
98,928
 
Acquisition expenses
                                       
     Salaries, wages and employee benefits
   
367
     
3,673
     
-
     
4,083
     
1,233
 
     Data processing
   
1,017
     
172
     
-
     
1,523
     
406
 
     Lease or fixed asset impairment
   
165
     
-
     
-
     
580
     
-
 
     Other (includes professional and legal)
   
879
     
3,100
     
262
     
8,477
     
2,486
 
Other restructuring costs
                                       
     Salaries, wages and employee benefits
   
38
     
182
     
640
     
495
     
1,058
 
     Fixed asset impairment
   
1,861
     
-
     
-
     
1,861
     
817
 
     Data processing
   
351
     
84
     
-
     
827
     
-
 
     Other (includes professional and legal)
   
796
     
459
     
-
     
2,248
     
-
 
MSR valuation impairment
   
(1,822
)
   
-
     
-
     
-
     
-
 
Related tax benefit
   
(441
)
   
(1,963
)
   
(234
)
   
(4,618
)
   
(1,451
)
Adjusted net income
 
$
31,782
   
$
30,535
   
$
25,958
   
$
118,429
   
$
103,477
 
                                         
Diluted average common shares outstanding
   
55,363,258
     
55,646,104
     
49,225,480
     
55,132,494
     
49,215,455
 
Reported: Earnings per share
 
$
0.52
   
$
0.45
   
$
0.51
   
$
1.87
   
$
2.01
 
Adjusted: Earnings per share
 
$
0.57
   
$
0.55
   
$
0.53
   
$
2.15
   
$
2.10
 
                                         
Average total assets
 
$
9,713,858
   
$
9,659,769
   
$
7,846,154
   
$
9,443,690
   
$
7,742,142
 
                                         
Reported: Return on average assets1
   
1.17
%
   
1.02
%
   
1.28
%
   
1.09
%
   
1.28
%
Adjusted: Return on average assets 1
   
1.30
%
   
1.25
%
   
1.31
%
   
1.25
%
   
1.34
%
1 Annualized measure.
 
Reconciliation of Non-GAAP Financial Measures – Adjusted Net Interest Margin
 
(dollars in thousands)
 
                   
   
Three Months Ended
   
Year Ended
 
   
December 31,
2019
   
September 30, 2019
   
December 31,
2018
   
December 31,
2019
   
December 31,
2018
 
                                         
Reported: Net interest income
 
$
71,936
   
$
73,476
   
$
60,503
   
$
287,223
   
$
241,406
 
        Tax-equivalent adjustment
   
781
     
778
     
545
     
3,013
     
2,258
 
         Purchase accounting accretion
   
(2,983
)
   
(2,974
)
   
(1,852
)
   
(12,422
)
   
(10,550
)
Adjusted: Net interest income
 
$
69,734
   
$
71,280
   
$
59,196
   
$
277,814
   
$
233,114
 
                                         
Average interest-earning assets
 
$
8,810,505
   
$
8,781,590
   
$
7,174,755
   
$
8,590,262
   
$
7,067,710
 
                                         
Reported: Net interest margin1
   
3.27
%
   
3.35
%
   
3.38
%
   
3.38
%
   
3.45
%
Adjusted: Net Interest margin1
   
3.14
%
   
3.22
%
   
3.27
%
   
3.23
%
   
3.30
%
                                         
1 Annualized measure.
                                       


Reconciliation of Non-GAAP Financial Measures – Adjusted Efficiency Ratio
 
(dollars in thousands)
 
                               
   
Three Months Ended
   
Year Ended
 
   
December 31,
2019
   
September 30, 2019
   
December 31,
2018
   
December 31,
2019
   
December 31,
2018
 
Reported: Net Interest income
 
$
71,936
   
$
73,476
   
$
60,503
   
$
287,223
   
$
241,406
 
   Tax- equivalent adjustment
   
781
     
778
     
545
     
3,013
     
2,258
 
Tax-equivalent interest income
 
$
72,717
   
$
74,254
   
$
61,048
   
$
290,236
   
$
243,664
 
                                         
Reported: Non-interest income
 
$
31,638
   
$
30,936
   
$
22,852
   
$
116,415
   
$
89,993
 
   Net (losses) gains on sales of
     securities and unrealized (losses)
     gains recognized on equity securities
   
605
     
361
     
171
     
(18
)
   
331
 
Adjusted: Non-interest income
 
$
31,033
   
$
30,575
   
$
22,681
   
$
116,433
   
$
89,662
 
                                         
Reported: Non-interest expense
 
$
65,490
   
$
68,121
   
$
48,769
   
$
258,794
   
$
193,043
 
   Amortization of intangible assets
   
(2,681
)
   
(2,360
)
   
(1,404
)
   
(9,547
)
   
(5,854
)
   Non-operating adjustments:
                                       
       Salaries, wages and employee benefits
   
(405
)
   
(3,855
)
   
(640
)
   
(4,578
)
   
(2,290
)
       Data processing
   
(1,368
)
   
(256
)
   
-
     
(2,350
)
   
(406
)
       Other
   
(1,879
)
   
(3,559
)
   
(262
)
   
(13,166
)
   
(2,858
)
Adjusted: Non-interest expense
 
$
59,157
   
$
58,091
   
$
46,463
   
$
229,153
   
$
181,635
 
                                         
Reported: Efficiency ratio
   
60.54
%
   
62.73
%
   
56.57
%
   
61.29
%
   
56.16
%
Adjusted: Efficiency ratio
   
57.02
%
   
55.42
%
   
55.49
%
   
56.35
%
   
54.49
%


Reconciliation of Non-GAAP Financial Measures – Tangible common equity to tangible assets, Tangible book value per share, Return on average tangible common equity
 
(dollars in thousands)
 
                   
   
As of and for the Three Months Ended
 
   
December 31,
2019
   
September 30,
2019
   
December 31,
2018
 
                   
Total assets
 
$
9,695,729
   
$
9,753,760
   
$
7,702,357
 
   Goodwill and other intangible assets, net
   
(373,129
)
   
(381,323
)
   
(300,558
)
   Tax effect of other intangible assets, net
   
17,247
     
16,415
     
8,547
 
Tangible assets
 
$
9,339,847
   
$
9,388,852
   
$
7,410,346
 
                         
Total stockholders’ equity
   
1,220,434
     
1,215,981
     
994,964
 
   Goodwill and other intangible assets, net
   
(373,129
)
   
(381,323
)
   
(300,558
)
   Tax effect of other intangible assets, net
   
17,247
     
16,415
     
8,547
 
Tangible common equity
 
$
864,552
   
$
851,073
   
$
702,953
 
                         
Ending number of common shares outstanding
   
54,788,772
     
55,197,277
     
48,874,836
 
                         
Tangible common equity to tangible assets1
   
9.26
%
   
9.06
%
   
9.49
%
Tangible book value per share
 
$
15.46
   
$
15.12
   
$
14.21
 
                         
Average common equity
 
$
1,224,447
   
$
1,212,833
   
$
979,502
 
Average goodwill and intangibles, net
   
(379,268
)
   
(377,601
)
   
(301,479
)
Average tangible common equity
 
$
845,179
   
$
835,232
   
$
678,023
 
                         
Reported: Return on average tangible common equity2
   
13.41
%
   
11.79
%
   
14.80
%
Adjusted: Return on average tangible common equity2,3
   
14.92
%
   
14.50
%
   
15.19
%
                         
   
Year Ended
         
   
December 31,
2019
   
December 31,
2018
         
Average stockholders' common equity
 
$
1,186,127
   
$
954,949
         
Average goodwill and intangibles, net
   
(371,666
)
   
(303,917
)
       
Average tangible stockholders' common equity
 
$
814,461
   
$
651,032
         
                         
Reported: Return on average tangible common equity
   
12.64
%
   
15.20
%
       
Adjusted: Return on average tangible common equity3
   
14.54
%
   
15.89
%
       
                         
1 Tax-effected measure.
                       
2 Annualized measure.
                       
3 Calculated using adjusted net income.
                       

Special Note Concerning Forward-Looking Statements
Statements made in this document, other than those concerning historical financial information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond our ability to control or predict, could cause actual results to differ materially from those in our forward-looking statements. These factors include, among others, the following: (i) the strength of the local, state, national and international economy (including the impact of tariffs, a U.S. withdrawal from or significant negotiation of trade agreements, trade wars and other changes in trade regulations); (ii) the economic impact of any future terrorist threats or attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the loss of key executives or employees; (viii) changes in consumer spending; (ix) unexpected results of current and/or future acquisitions, which may include failure to realize the anticipated benefits of the acquisition and the possibility that the transaction costs may be greater than anticipated; (x) unexpected outcomes of existing or new litigation involving the Company; (xi) changes in accounting policies and practices, including CECL, that will change how the Company estimates credit losses; and (xii) the economic impact of exceptional weather occurrences such as tornadoes, hurricanes, floods, and blizzards. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect its financial results, is included in the Company’s filings with the Securities and Exchange Commission.


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