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First Busey Corp (BUSE) SEC Filing 8-K Material Event for the period ending Tuesday, January 25, 2022

First Busey Corp

CIK: 314489 Ticker: BUSE
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January 25, 2022

First Busey Announces 2021 Fourth Quarter Earnings

CHAMPAIGN, IL – (GLOBE NEWSWIRE) – First Busey Corporation (Nasdaq: BUSE)

Message from our Chairman & CEO

Fourth Quarter 2021 Highlights:

Fourth quarter 2021 net income of $29.9 million and diluted EPS of $0.53
Fourth quarter 2021 adjusted net income1 of $34.3 million and adjusted diluted EPS1 of $0.61
Full year 2021 net income of $123.4 million and diluted EPS of $2.20
Full year 2021 adjusted net income1 of $137.1 million and adjusted diluted EPS1 of $2.45
Core loan growth, excluding Paycheck Protection Program (“PPP”) loans, of $141.6 million, or 2.0%, in the fourth quarter
Wealth management assets under care of $12.73 billion at December 31, 2021, up from $12.36 billion at September 30, 2021, and $10.23 billion at December 31, 2020, which represents 24.5% year-over-year growth
FirsTech revenue2 of $4.9 million for the fourth quarter of 2021, up from $4.3 million for the fourth quarter of 2020, representing 16.4% year-over-year growth
Noninterest income, excluding security gains, accounted for 32.9% of total revenue in the fourth quarter of 2021, compared to 28.9% in the fourth quarter of 2020, supported by continued growth in wealth management, payment technology solutions, and customer service fees
Completed previously announced service center closures in November 2021 as part of our Personal Banking Transformation Plan, which resulted in the consolidation of 17 branches across our various markets.  As a result, our average deposits per branch increased to approximately $185.7 million in the fourth quarter of 2021, compared to $144.2 million in the third quarter of 2021.
For additional information, please refer to the 4Q21 Quarterly Earnings Supplement

Fourth Quarter Financial Results

Net income for First Busey Corporation (“First Busey” or the “Company”) for the fourth quarter of 2021 was $29.9 million, or $0.53 per diluted common share, compared to $25.9 million, or $0.46 per diluted common share, for the third quarter of 2021, and $28.3 million, or $0.52 per diluted common share, for the fourth quarter of 2020.  Adjusted net income1 for the fourth quarter of 2021 was $34.3 million, or $0.61 per diluted common share, compared to $32.8 million, or $0.58 per diluted common share, for the third quarter of 2021, and $34.3 million, or $0.62 per diluted common share, for the fourth quarter of 2020.  For the fourth quarter of 2021, annualized return on average assets and annualized return on average tangible common equity1 were 0.92% and 12.49%, respectively.  Based on adjusted net income1, annualized return on average assets was 1.05% and annualized return on average tangible common equity1 was 14.30% for the fourth quarter of 2021.

Pre-provision net revenue1 for the fourth quarter of 2021 was $34.0 million, compared to $30.5 million for the third quarter of 2021 and $38.5 million for the fourth quarter of 2020.  Adjusted pre-provision net revenue1 for the fourth quarter of 2021 was $41.1 million, compared to $39.4 million for the third quarter of 2021 and $47.2 million for the fourth quarter of 2020.  Pre-provision net revenue to average assets1 for the fourth quarter of 2021 was 1.04%, compared to 0.95% for the third quarter of 2021, and 1.47% for the fourth quarter of 2020.  Adjusted pre-provision net revenue to average assets1 for the fourth quarter of 2021 was 1.27%, compared to 1.23% for the third quarter of 2021 and 1.80% for the fourth quarter of 2020.

The Company experienced its third consecutive quarter of strong core loan growth, principally in commercial lending segments.  Loan growth (excluding PPP loans) of $141.6 million in the fourth quarter of 2021 follows $177.1 million in the third quarter and $142.0 million in the second quarter.  Over the last three quarters, the Company has generated $460.7 million in core loan growth (excluding PPP loans), equating to an annualized growth rate of 9.8%.

1 See “Non-GAAP Financial Information” for reconciliation.

2 Revenue from the Company’s subsidiary, FirsTech, Inc. (“FirsTech”), excluding consolidations and eliminations.

1


The Company’s fourth quarter 2021 results include a provision release of $4.7 million for credit losses and a $0.3 million provision expense for unfunded commitments, reflecting forecasted improvements in macroeconomic conditions and asset quality, partially offset by core loan growth.  The total allowance for credit losses was $87.9 million at December 31, 2021, representing 1.22% of total portfolio loans outstanding and 1.24% of portfolio loans excluding PPP loans.  Net charge-offs remain exceptionally low at $0.2 million in the fourth quarter of 2021, representing 0.01% of average loans on an annualized basis.

Our fee-based businesses continue to add dynamic revenue diversification.  In the fourth quarter of 2021, wealth management fees were $13.8 million, compared to $13.7 million in the third quarter of 2021, representing a 29.3% increase from $10.6 million in the fourth quarter of 2020.  Revenue from payment technology solutions from the Company’s subsidiary FirsTech remained steady at $4.6 million, for both the third and fourth quarters of 2021, an increase of 15.7% from $4.0 million in the fourth quarter of 2020.  Fees for customer services were $9.7 million in the fourth quarter of 2021, compared to $9.3 million in the third quarter of 2021, representing a 17.8% increase from $8.2 million in the fourth quarter of 2020.

The Company views certain non-operating items, including acquisition-related and other restructuring charges, as adjustments to net income reported under U.S. generally accepted accounting principles (“GAAP”).  Non-operating pretax adjustments for the fourth quarter of 2021 included $2.2 million of expenses related to the acquisition of Cummins-American Corp. (“CAC”), the holding company for Glenview State Bank (“GSB”), and $3.4 million in restructuring expenses related to the previously announced Personal Banking Transformation Plan.  The Company believes that non-GAAP measures—including pre-provision net revenue, adjusted pre-provision net revenue, pre-provision net revenue to average assets, adjusted pre-provision net revenue to average assets, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted net interest margin, adjusted noninterest expense, efficiency ratio, adjusted efficiency ratio, tangible common equity, tangible common equity to tangible assets, tangible book value per common share, and return on average tangible common equity—facilitate the assessment of its financial results and peer comparability.  A reconciliation of these non-GAAP measures is included in tabular form at the end of this release.

Coronavirus Disease 2019 (“COVID-19”) Update

The Company continues to navigate the economic environment caused by COVID-19 effectively and prudently and remains resolute in its focus on serving its customers, communities, and associates while protecting its balance sheet.  To alleviate some of the financial hardships faced as a result of COVID-19, First Busey offered an internal Financial Relief Program to qualifying customers.  As of December 31, 2021, the Company had no loans remaining on full payment deferral and 32 commercial loans remaining on interest only payment deferrals, representing $128.7 million in loans.

First Busey served as a bridge for the PPP, actively helping existing and new business clients sign up for this important financial resource.  At December 31, 2021, First Busey had $76.9 million in total PPP loans outstanding, with an amortized cost of $75.0 million, down from $183.1 million in total PPP loans outstanding, with an amortized cost of $178.2 million, at September 30, 2021, and $451.5 million in PPP loans outstanding, with an amortized cost of $446.4 million, at December 31, 2020.

Community Banking

First Busey’s goal of being a strong community bank begins with outstanding associates.  The Company is honored to be named among the 2021 Best Banks to Work For by American Banker, the 2021 Best Places to Work in Illinois by Daily Herald Business Ledger, the 2021 Best Companies to Work For in Florida by Florida Trend magazine, the 2021 Best Place to Work in Indiana by the Indiana Chamber of Commerce, and the 2021 Best Places to Work in Money Management by Pensions and Investments.

As we reflect back on 2021 and look ahead to 2022, the Company remains steadfast in our commitment to the customers and communities we serve.  The Company reported solid fourth quarter results, which are reflective of our strategic growth plans.  Despite headwinds related to the COVID-19 Omicron variant, supply chain issues, and inflation, the economy continues to improve, and we feel confident that we are well positioned to produce growth and profitability as we move forward.

/s/ Van A. Dukeman

Chairman, President & Chief Executive Officer

First Busey Corporation

2


SELECTED FINANCIAL HIGHLIGHTS (Unaudited)

(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,

March 31,

December 31,

December 31,

December 31,

    

2021

    

2021

    

2021

    

2021

    

2020

    

2021

    

2020

    

EARNINGS & PER SHARE DATA

Net income

$

29,926

$

25,941

$

29,766

$

37,816

$

28,345

$

123,449

$

100,344

Diluted earnings per share

0.53

0.46

0.53

0.69

0.52

2.20

1.83

Cash dividends paid per share

0.23

0.23

0.23

0.23

0.22

0.92

0.88

Pre-provision net revenue 1, 2

33,954

30,470

34,030

40,198

38,507

138,652

165,672

Revenue 3

105,123

103,957

96,655

94,697

102,580

400,432

399,869

Net income by operating segments:

Banking

27,955

25,124

29,237

35,528

28,573

117,844

101,226

FirsTech

313

384

401

429

406

1,527

2,372

Wealth Management

4,285

4,718

4,885

4,682

3,334

18,570

13,181

AVERAGE BALANCES

Cash and cash equivalents

$

857,694

$

1,009,750

$

647,465

$

536,457

$

551,844

$

764,398

$

607,525

Investment securities

4,087,813

3,721,740

3,031,250

2,561,680

2,077,284

3,355,819

1,840,100

Loans held for sale

18,073

15,589

22,393

31,373

52,745

21,803

82,106

Portfolio loans

7,113,963

7,133,108

6,889,551

6,736,664

6,990,414

6,969,807

7,006,946

Interest-earning assets

11,947,653

11,730,637

10,448,417

9,752,294

9,557,265

10,978,116

9,417,938

Total assets

12,895,049

12,697,795

11,398,655

10,594,245

10,419,364

11,904,935

10,292,256

Noninterest bearing deposits

3,531,345

3,365,823

2,970,890

2,688,845

2,545,830

3,142,155

2,364,442

Interest-bearing deposits

7,276,237

7,253,242

6,432,336

6,033,613

5,985,020

6,753,643

6,077,539

Total deposits

10,807,582

10,619,065

9,403,226

8,722,458

8,530,850

9,895,798

8,441,981

Securities sold under agreements to repurchase

262,004

221,813

204,417

184,694

194,610

218,454

187,811

Interest-bearing liabilities

7,898,627

7,842,805

6,966,046

6,521,195

6,482,475

7,312,409

6,554,428

Total liabilities

11,566,357

11,346,379

10,055,884

9,318,551

9,158,066

10,580,073

9,051,882

Stockholders' equity - common

1,328,692

1,351,416

1,342,771

1,275,694

1,261,298

1,324,862

1,240,374

Average tangible common equity 2

950,867

970,531

974,062

913,001

896,178

952,269

871,750

PERFORMANCE RATIOS

Pre-provision net revenue to average assets 1, 2

1.04

%

0.95

%

1.20

%

1.54

%

1.47

%

1.16

%

1.61

%

Return on average assets

0.92

%

0.81

%

1.05

%

1.45

%

1.08

%

1.04

%

0.97

%

Return on average common equity

8.94

%

7.62

%

8.89

%

12.02

%

8.94

%

9.32

%

8.09

%

Return on average tangible common equity 2

12.49

%

10.60

%

12.26

%

16.80

%

12.58

%

12.96

%

11.51

%

Net interest margin 2, 4

2.36

%

2.41

%

2.50

%

2.72

%

3.06

%

2.49

%

3.03

%

Efficiency ratio 2

64.42

%

67.27

%

61.68

%

54.67

%

59.70

%

62.19

%

55.68

%

Noninterest revenue as a % of total revenues 3

32.93

%

31.94

%

33.22

%

31.47

%

28.90

%

32.40

%

29.24

%

NON-GAAP FINANCIAL INFORMATION

Adjusted pre-provision net revenue 1, 2

$

41,144

$

39,409

$

37,486

$

42,753

$

47,156

$

160,792

$

180,516

Adjusted net income 2

34,277

32,845

31,921

38,065

34,255

137,108

108,728

Adjusted diluted earnings per share 2

0.61

0.58

0.57

0.69

0.62

2.45

1.98

Adjusted pre-provision net revenue to average assets 2

1.27

%

1.23

%

1.32

%

1.64

%

1.80

%

1.35

%

1.75

%

Adjusted return on average assets 2

1.05

%

1.03

%

1.12

%

1.46

%

1.31

%

1.15

%

1.06

%

Adjusted return on average tangible common equity 2

14.30

%

13.43

%

13.14

%

16.91

%

15.21

%

14.40

%

12.47

%

Adjusted net interest margin 2, 4

2.31

%

2.35

%

2.43

%

2.63

%

2.96

%

2.42

%

2.92

%

Adjusted efficiency ratio 2

59.09

%

58.97

%

58.89

%

54.33

%

52.39

%

57.89

%

53.02

%

1 Net interest income plus noninterest income, excluding security gains and losses, less noninterest expense.

See “Non-GAAP Financial Information” for reconciliation.

Revenue consists of net interest income plus noninterest income, excluding security gains and losses.

On a tax-equivalent basis, assuming a federal income tax rate of 21%.

3


CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(dollars in thousands, except per share data)

December 31,

September 30,

June 30,

March 31,

December 31,

    

2021

    

2021

    

2021

    

2021

    

2020

ASSETS

Cash and cash equivalents

$

836,095

$

883,845

$

920,810

$

404,802

$

688,537

Investment securities

3,994,822

4,010,256

3,478,467

2,804,101

2,266,717

Loans held for sale

23,875

20,225

17,834

38,272

42,813

Commercial loans

5,449,689

5,431,342

5,475,461

5,402,970

5,368,897

Retail real estate and retail other loans

1,739,309

1,719,293

1,710,189

1,376,330

1,445,280

Portfolio loans

7,188,998

7,150,635

7,185,650

6,779,300

6,814,177

Allowance for credit losses

(87,887)

(92,802)

(95,410)

(93,943)

(101,048)

Premises and equipment

136,147

142,031

145,437

132,669

135,191

Goodwill and other intangibles

375,924

378,891

381,795

361,120

363,521

Right of use asset

10,533

11,068

8,228

7,333

7,714

Other assets

381,182

395,181

372,638

325,909

326,425

Total assets

$

12,859,689

$

12,899,330

$

12,415,449

$

10,759,563

$

10,544,047

LIABILITIES & STOCKHOLDERS' EQUITY

Noninterest bearing deposits

$

3,670,267

$

3,453,906

$

3,186,650

$

2,859,492

$

2,552,039

Interest checking, savings, and money market deposits

6,162,661

6,337,026

6,034,871

4,991,887

5,006,462

Time deposits

935,649

1,026,935

1,115,596

1,022,468

1,119,348

Total deposits

$

10,768,577

$

10,817,867

$

10,337,117

$

8,873,847

$

8,677,849

Securities sold under agreements to repurchase

$

270,139

$

241,242

$

207,266

$

210,132

$

175,614

Short-term borrowings

17,678

17,673

30,168

4,663

4,658

Long-term debt

268,773

271,780

274,788

226,797

226,792

Junior subordinated debt owed to unconsolidated trusts

71,635

71,593

71,551

71,509

71,468

Lease liability

10,591

11,120

8,280

7,380

7,757

Other liabilities

133,184

134,979

140,588

99,413

109,840

Total liabilities

$

11,540,577

$

11,566,254

$

11,069,758

$

9,493,741

$

9,273,978

Total stockholders' equity

$

1,319,112

$

1,333,076

$

1,345,691

$

1,265,822

$

1,270,069

Total liabilities & stockholders' equity

$

12,859,689

$

12,899,330

$

12,415,449

$

10,759,563

$

10,544,047

SHARE DATA

Book value per common share

$

23.80

$

23.88

$

23.89

$

23.29

$

23.34

Tangible book value per common share 1

$

17.01

$

17.09

$

17.11

$

16.65

$

16.66

Ending number of common shares outstanding

55,434,910

55,826,984

56,330,616

54,345,379

54,404,379

1 See "Non-GAAP Financial Information" for reconciliation. Excludes tax effect of other intangible assets.

4


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(dollars in thousands, except per share data)

Three Months Ended

Years Ended

December 31,

September 30,

December 31,

December 31,

December 31,

    

2021

    

2021

    

2020

2021

2020

INTEREST INCOME

Interest and fees on loans held for sale and portfolio

$

62,965

$

65,163

$

71,525

$

252,097

$

284,959

Interest on investment securities

13,658

12,239

9,651

45,552

39,916

Other interest income

294

462

127

1,151

1,723

Total interest income

$

76,917

$

77,864

$

81,303

$

298,800

$

326,598

INTEREST EXPENSE

Interest on deposits

$

2,497

$

3,059

$

4,638

$

12,583

$

30,691

Interest on securities sold under agreements to repurchase

50

60

64

227

660

Interest on short-term borrowings

84

112

19

279

234

Interest on long-term debt

3,123

3,150

2,906

12,173

9,118

Junior subordinated debt owed to unconsolidated trusts

655

728

740

2,840

2,960

Total interest expense

$

6,409

$

7,109

$

8,367

$

28,102

$

43,663

Net interest income

$

70,508

$

70,755

$

72,936

$

270,698

$

282,935

Provision for loan losses

(4,736)

(1,869)

3,141

(15,101)

38,797

Net interest income after provision for loan losses

$

75,244

$

72,624

$

69,795

$

285,799

$

244,138

NONINTEREST INCOME

Wealth management fees

$

13,751

$

13,749

$

10,632

$

53,086

$

42,928

Fees for customer services

9,668

9,288

8,204

35,604

31,604

Payment technology solutions

4,576

4,620

3,954

18,347

15,628

Mortgage revenue

1,086

1,740

3,159

7,239

13,038

Income on bank owned life insurance

1,727

999

1,019

5,166

5,380

Net security gains (losses)

474

57

855

3,070

1,331

Other

3,807

2,806

2,676

10,292

8,356

Total noninterest income

$

35,089

$

33,259

$

30,499

$

132,804

$

118,265

NONINTEREST EXPENSE

Salaries, wages, and employee benefits

$

38,090

$

41,949

$

31,322

$

145,312

$

126,719

Data processing expense

4,981

7,782

4,043

21,862

16,426

Net occupancy expense

4,740

4,797

4,188

18,346

17,607

Furniture and equipment expense

2,001

2,208

2,239

8,301

9,550

Professional fees

1,932

1,361

2,888

7,549

8,396

Amortization expense

3,074

3,149

2,439

11,274

10,008

Interchange expense

1,432

1,434

1,220

5,792

4,810

Other operating expenses

14,919

10,807

15,734

43,344

40,681

Total noninterest expense

$

71,169

$

73,487

$

64,073

$

261,780

$

234,197

Income before income taxes

$

39,164

$

32,396

$

36,221

$

156,823

$

128,206

Income taxes

9,238

6,455

7,876

33,374

27,862

Net income

$

29,926

$

25,941

$

28,345

$

123,449

$

100,344

SHARE DATA

Basic earnings per common share

$

0.54

$

0.46

$

0.52

$

2.23

$

1.84

Fully-diluted earnings per common share

$

0.53

$

0.46

$

0.52

$

2.20

$

1.83

Average common shares outstanding

55,705,169

56,227,816

54,532,705

55,369,476

54,567,429

Diluted average common shares outstanding

56,413,026

56,832,518

54,911,458

56,008,805

54,826,939

5


Balance Sheet Growth

Our balance sheet remains a source of strength.  Total assets were $12.86 billion at December 31, 2021, $12.90 billion at September 30, 2021, and $10.54 billion at December 31, 2020.  At December 31, 2021, portfolio loans were $7.19 billion, compared to $7.15 billion as of September 30, 2021, and $6.81 billion as of December 31, 2020.  Amortized costs of PPP loans of $75.0 million, $178.2 million, and $446.4 million are included in the December 31, 2021, September 30, 2021, and December 31, 2020, portfolio loan balances, respectively.  During the fourth quarter of 2021, Busey Bank experienced another strong quarter of core loan growth of $141.6 million, consisting of growth in commercial balances1 (excluding PPP loans) of $121.6 million and growth in retail real estate and retail other balances of $20.0 million.  Growth was principally driven by our Northern, Central, and Gateway regions.  Loan growth (excluding PPP loans) of $141.6 million in the fourth quarter of 2021 follows $177.1 million in the third quarter and $142.0 million in the second quarter.  Over the last three quarters, the Company has generated $460.7 million in core loan growth (excluding PPP loans), equating to an annualized growth rate of 9.8%.

Average portfolio loans were $7.11 billion for the fourth quarter of 2021, compared to $7.13 billion for the third quarter of 2021 and $6.99 billion for the fourth quarter of 2020.  The average balance of PPP loans for the fourth quarter of 2021 was $123.5 million, compared to $291.8 million for the third quarter of 2021 and $608.9 million for the fourth quarter of 2020.  Average interest-earning assets for the fourth quarter of 2021 were $11.95 billion, compared to $11.73 billion for the third quarter of 2021, and $9.56 billion for the fourth quarter of 2020.

Total deposits were $10.77 billion at December 31, 2021, compared to $10.82 billion at September 30, 2021, and $8.68 billion at December 31, 2020.  Fluctuations in deposit balances can be attributed to the retention of PPP loan funding in customer deposit accounts, the impacts of economic stimulus, other core deposit2 growth, and the seasonality of public funds.  The Company remains funded substantially through core deposits with significant market share in its primary markets.  Core deposits now account for 98.7% of total deposits.  Cost of deposits declined to 0.09% in the fourth quarter, a 2 basis point reduction compared to September 30, 2021.

Net Interest Margin3 and Net Interest Income

Net interest margin for the fourth quarter of 2021 was 2.36%, compared to 2.41% for the third quarter of 2021, and 3.06% for the fourth quarter of 2020.  Excluding purchase accretion, adjusted net interest margin3 was 2.31% for the fourth quarter of 2021, compared to 2.35% in the third quarter of 2021, and 2.96% in the fourth quarter of 2020.   Net interest income was $70.5 million in the fourth quarter of 2021 compared to $70.8 million in the third quarter of 2021, and $72.9 million in the fourth quarter of 2020.  Net interest income excluding PPP net fee contribution was $67.8 million in the fourth quarter of 2021 compared to $66.2 million in the third quarter of 2021, and $64.1 in the fourth quarter of 2020.

The Federal Open Market Committee rate cuts during the first quarter of 2020 have contributed to the decline in net interest margin over the past year, as assets, in particular commercial loans, repriced more quickly and to a greater extent than liabilities.  The net interest margin has also been negatively impacted by the sizeable balance of lower-yielding PPP loans, significant growth in the Company’s liquidity position, and the issuance of debt.  Those impacts were partially offset by the Company’s efforts to lower deposit funding costs as well as the fees recognized related to PPP loans.  Factors contributing to the 5 basis point decline in net interest margin during the fourth quarter of 2021 include:

Reduced volume of PPP loan forgiveness which contributed -7 basis points
Reduced recognition of purchase accounting accretion which contributed -1 basis points
Funding cost improvements which contributed +3 basis points

The deceleration of PPP loan forgiveness was the largest driver of net interest margin dilution during the fourth quarter.  SBA loan forgiveness and customer paydowns of $106.2 million resulted in deferred net fee recognition of $2.9 million versus SBA loan forgiveness and customer paydowns of $216.6 million during the third quarter resulting in deferred net fee recognition of $4.4 million.  As of December 31, 2021, the PPP loan portfolio was down to $76.9 million of principal balances and net deferred fees remaining of $1.9 million.

1 Commercial balances include commercial, commercial real estate, and real estate construction loans.

2 Core deposits include non-brokered transaction accounts, money market deposit accounts, and time deposits of $250,000 or less.

3 See “Non-GAAP Financial Information” for reconciliation.

6


Net interest margin excluding purchase accretion and the contribution from PPP loans was stable from the third quarter to the fourth quarter of 2021.  The contribution of core loan portfolio growth and the further reduction of funding costs helped to offset loan yield compression that results from the natural repricing dynamics of our asset sensitive balance sheet in this persistent low-rate environment.  Based on a static balance sheet, a +100 basis point parallel shift in rates would improve net interest income by 8.8%.

Asset Quality

Credit quality continues to be exceptionally strong.  Loans 30-89 days past due were $6.3 million as of December 31, 2021, compared to $6.4 million as of September 30, 2021, and $7.6 million as of December 31, 2020.  Non-performing loans totaled $16.9 million as of December 31, 2021, compared to $25.9 million as of September 30, 2021, and $24.3 million as of December 31, 2020. The fourth quarter decrease includes a $4.9 million sale of non-performing retail real estate loans.  Continued disciplined credit management resulted in non-performing loans as a percentage of total loans of 0.23% at December 31, 2021, compared to 0.36% at both September 30, 2021, and December 31, 2020.  Excluding the amortized cost of PPP loans, non-performing loans as a percentage of total loans was 0.24% at December 31, 2021, compared to 0.37% at September 30, 2021, and 0.38% at December 31, 2020.  Meanwhile, non-performing assets finished the year at 0.17% of total assets.

Net charge-offs totaled $0.2 million for the quarter ended December 31, 2021, compared to $0.7 million and $0.9 million for the quarters ended September 30, 2021, and December 31, 2020, respectively.  The annualized ratio of fourth quarter net charge-offs to average loans was 0.01%.  The allowance as a percentage of portfolio loans was 1.22% at December 31, 2021, compared to 1.30% at September 30, 2021, and 1.48% at December 31, 2020.  Excluding the amortized cost of PPP loans, the allowance as a percentage of portfolio loans was 1.24% at December 31, 2021.  The allowance as a percentage of non-performing loans was 521.52% at December 31, 2021, compared to 358.86% at September 30, 2021, and 415.82% at December 31, 2020.

The Company 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 and for the Three Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

    

2021

    

2021

    

2021

    

2021

    

2020

    

ASSET QUALITY

Portfolio loans

$

7,188,998

$

7,150,635

$

7,185,650

$

6,779,300

$

6,814,177

Portfolio loans excluding amortized cost of PPP loans

7,114,040

6,972,404

6,795,255

6,257,196

6,367,774

Loans 30-89 days past due

6,261

6,446

3,888

9,929

7,578

Non-performing loans:

Non-accrual loans

15,946

25,369

27,725

21,706

22,930

Loans 90+ days past due and still accruing

906

491

590

1,149

1,371

Total non-performing loans

$

16,852

$

25,860

$

28,315

$

22,855

$

24,301

Total non-performing loans, segregated by geography:

Illinois / Indiana

$

10,450

$

17,824

$

21,398

$

15,457

$

16,234

Missouri

5,349

6,736

5,645

6,170

6,764

Florida

1,053

1,300

1,272

1,228

1,303

Other non-performing assets

4,416

3,184

3,137

4,292

4,571

Total non-performing assets

$

21,268

$

29,044

$

31,452

$

27,147

$

28,872

Total non-performing assets to total assets

0.17

%

0.23

%

0.25

%

0.25

%

0.27

%

Total non-performing assets to portfolio loans and non-performing assets

0.30

%

0.41

%

0.44

%

0.40

%

0.42

%

Allowance for credit losses to portfolio loans

1.22

%

1.30

%

1.33

%

1.39

%

1.48

%

Allowance for credit losses to portfolio loans, excluding PPP

1.24

%

1.33

%

1.40

%

1.50

%

1.59

%

Allowance for credit losses as a percentage of non-performing loans

521.52

%

358.86

%

336.96

%

411.04

%

415.82

%

Net charge-offs (recoveries)

$

179

$

739

$

1,011

$

309

$

934

Provision

(4,736)

(1,869)

(1,700)

(6,796)

3,141

7


Noninterest Income

Total noninterest income increased to $35.1 million for the fourth quarter of 2021, compared to $33.3 million for the third quarter of 2021 and $30.5 million for the fourth quarter of 2020.  Revenues from wealth management fees and payment technology solutions activities represented 52.2% of the Company’s noninterest income for the quarter ended December 31, 2021, providing a balance to spread-based revenue from traditional banking activities.  On a combined basis, revenue from these two critical operating areas increased by 25.6% compared to the fourth quarter of 2020.

Wealth management fees were $13.8 million for the fourth quarter of 2021, compared to $13.7 million for the third quarter of 2021 and $10.6 million for the fourth quarter of 2020, a 29.3% increase from the comparable period in 2020.  Net income from the Wealth Management segment was $4.3 million for the fourth quarter of 2021, compared to $4.7 million for the third quarter of 2021, and $3.3 million in the fourth quarter of 2020, a 28.5% increase from the comparable period in 2020.  First Busey’s Wealth Management division ended the fourth quarter of 2021 with $12.73 billion in assets under care, compared to $12.36 billion at the end of the third quarter of 2021, and $10.23 billion at the end of the fourth quarter of 2020, a 24.5% increase from the comparable period in 2020.

Payment technology solutions revenue from FirsTech was $4.6 million for the fourth quarter of 2021, consistent with the third quarter of 2021, and a 15.7% increase from $4.0 million for the fourth quarter of 2020.  The FirsTech operating segment generated net income of $0.3 million in the fourth quarter of 2021, a decrease from $0.4 million in both the third quarter of 2021 and the fourth quarter of 2020.  FirsTech generated revenue of $19.7 million1 during 2021, compared to $16.6 million1 during 2020, representing an increase of 18.5%.  The Company is currently making strategic investments in FirsTech to further enhance future growth including further upgrades to the product and engineering teams to build an application programming interface (“API”) first cloud-based platform to provide for fully integrated payment capabilities as well as the continued development of our Banking as a Service (“BaaS”) platform.

Fees for customer services increased to $9.7 million for the fourth quarter of 2021, compared to $9.3 million in the third quarter of 2021 and $8.2 million in the fourth quarter of 2020, a 17.8% increase from the comparable period in 2020.  Fees for customer services have been impacted since early 2020 by changing customer behaviors resulting from COVID-19 and government stimulus programs, and continue to rebound with improving economic conditions and customer activity levels.

Mortgage revenue was $1.1 million in the fourth quarter of 2021, a decrease from $1.7 million in the third quarter of 2021, and $3.2 million in the fourth quarter of 2020. Sold-loan mortgage volume declined in the fourth quarter of 2021 compared to the same quarter in 2020 due to a higher share of portfolio loan production in 2021. Further, net gain on sale spreads declined from historically high levels seen earlier in 2021.

Operating Efficiency

Total noninterest expense was $71.2 million in the fourth quarter of 2021, compared to $73.5 million in the third quarter of 2021, and $64.1 million in the fourth quarter of 2020.  Noninterest expense including amortization of intangibles but excluding non-operating adjustment items2 was $65.5 million in the fourth quarter of 2021, compared to $64.8 million in the third quarter of 2021, and $56.5 million in the fourth quarter of 2020.  As a result, the efficiency ratio2 was 64.42% for the quarter ended December 31, 2021, compared to 67.27% for the quarter ended September 30, 2021, and 59.70% for the quarter ended December 31, 2020.  The adjusted efficiency ratio2 was 59.09% for the quarter ended December 31, 2021, 58.97% for the quarter ended September 30, 2021, and 52.39% for the quarter ended December 31, 2020.  The Company remains focused on expense discipline and realized synergies in the fourth quarter of 2021 from the GSB merger and Personal Banking Transformation Plan.

Noteworthy components of noninterest expense are as follows:

Salaries, wages, and employee benefits were $38.1 million in the fourth quarter of 2021, a decrease from $41.9 million in the third quarter of 2021, and an increase from $31.3 million in the fourth quarter of 2020.  Total full-time equivalents numbered 1,463 at December 31, 2021, compared to 1,462 at September 30, 2021, and 1,346 at December 31, 2020.  The Company recorded $2.0 million of non-operating salaries, wages, and employee benefit expenses in the fourth quarter of 2021 largely related to the GSB merger, compared to $4.7 million in the third quarter of 2021, and $0.1 million in the fourth quarter of 2020.

Data processing expense was $5.0 million in the fourth quarter of 2021, a decrease from $7.8 million in the third quarter of 2021, and an increase from $4.0 million in the fourth quarter of 2020.  The Company recorded $0.1 million of non-operating data

1 Revenue equates to all revenue sources tied to FirsTech, excluding intracompany eliminations and consolidations.

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

8


processing expenses in the fourth quarter of 2021, compared to $3.2 million in the third quarter of 2021 and $0.1 million in the fourth quarter of 2020.  Non-operating data processing costs related to the acquisition of GSB, and were higher in the third quarter of 2021 due to the integration of GSB into Busey Bank.

Professional fees were $1.9 million in the fourth quarter of 2021, an increase from $1.4 million in the third quarter of 2021, and a decrease from $2.9 million in the fourth quarter of 2020.  The Company recorded $0.2 million of non-operating professional fees in the fourth quarter of 2021, compared to $0.1 million in the third quarter of 2021 and $0.5 million in the fourth quarter of 2020.

Amortization expense was $3.1 million in the fourth quarter of 2021, consistent with the third quarter of 2021, and an increase from $2.4 million in the fourth quarter of 2020.  The year-over-year increase is attributable to the acquisition of GSB, completed in the second quarter of 2021.

Other operating expenses were $14.9 million for the fourth quarter of 2021, an increase from $10.8 million in the third quarter of 2021, and a decrease from $15.7 million in the fourth quarter of 2020.  The Company recorded $3.3 million of non-operating expenses within the other operating expense line in the fourth quarter of 2021, which included $3.2 million of fixed asset impairment related to the 2021 service center closures, compared to $0.6 million non-operating expenses recorded in the third quarter of 2021 and $6.9 million in the fourth quarter of 2020.  Higher business development and marketing expenses accounted for $0.6 million of the quarter-over-quarter increase in other operating expenses, excluding non-operating expenses.

Capital Strength

The Company's strong capital levels, coupled with its earnings, have allowed First Busey to provide a steady return to its stockholders through dividends.  The Company will pay a cash dividend on January 28, 2022, of $0.23 per common share to stockholders of record as of January 21, 2022.  The Company has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

As of December 31, 2021, the Company continued to exceed the capital adequacy requirements necessary to be considered “well-capitalized” under applicable regulatory guidelines.  The Company’s tangible common equity1 was $959.4 million at December 31, 2021, compared to $971.3 million at September 30, 2021, and $921.1 million at December 31, 2020.  Tangible common equity represented 7.68% of tangible assets at December 31, 2021, compared to 7.75% at September 30, 2021, and 9.03% at December 31, 2020.1

During the fourth quarter of 2021, the Company purchased 418,000 shares of its common stock at a weighted average price of $26.33 per share for a total of $11.0 million under the Company’s stock repurchase plan.  Total share repurchases in 2021 were 1,323,000 shares at a weighted average price of $24.98 per share.  As of December 31, 2021, the Company had 535,824 shares remaining on its stock repurchase plan available for repurchase.

4Q21 Quarterly Earnings Supplement

For additional information on the Company’s financial condition, operating results, and response to COVID-19, please refer to the 4Q21 Quarterly Earnings Supplement presentation furnished via Form 8-K on January 25, 2022, in connection with this earnings release.

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

9


Corporate Profile

As of December 31, 2021, First Busey Corporation (Nasdaq: BUSE) was a $12.86 billion financial holding company headquartered in Champaign, Illinois.

Busey Bank, a wholly-owned bank subsidiary of First Busey Corporation, had total assets of $12.83 billion as of December 31, 2021, and is headquartered in Champaign, Illinois.  Busey Bank currently has 46 banking centers serving Illinois, eight banking centers serving Missouri, three banking centers serving southwest Florida, and one banking center in Indianapolis, Indiana.  

Busey Bank owns a retail payment processing subsidiary, FirsTech, which processes approximately 30 million transactions for a total of $9.5 billion on an annual basis.  FirsTech operates across the United States and Canada, providing payment solutions that include, but are not limited to, electronic payments, mobile payments, phone payments, remittance processing, in person payments, and merchant services.  In addition, FirsTech continues to grow its new BaaS platform.  More information about FirsTech can be found at firstechpayments.com.

Through the Company’s Wealth Management division, the Company provides asset management, investment, and fiduciary services to individuals, businesses, and foundations.  As of December 31, 2021, assets under care were $12.73 billion.

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

For more information about us, visit busey.com.

Category: Financial

Source: First Busey Corporation

Contacts:

Jeffrey D. Jones, Chief Financial Officer

217-365-4130

10


Non-GAAP Financial Information

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

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

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

Reconciliation of Non-GAAP Financial Measures – 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 (Unaudited)

(dollars in thousands)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

    

2021

    

2021

    

2020

    

2021

    

2020

    

Net interest income

$

70,508

$

70,755

$

72,936

$

270,698

$

282,935

Noninterest income

35,089

33,259

30,499

132,804

118,265

Less securities (gains) and losses, net

(474)

(57)

(855)

(3,070)

(1,331)

Noninterest expense

(71,169)

(73,487)

(64,073)

(261,780)

(234,197)

Pre-provision net revenue

33,954

30,470

38,507

138,652

165,672

Adjustments to pre-provision net revenue:

Acquisition and other restructuring expenses

5,641

8,677

7,550

17,351

10,711

Provision for unfunded commitments

294

(978)

(12)

(774)

1,822

New Market Tax Credit amortization

1,255

1,240

1,111

5,563

2,311

Adjusted pre-provision net revenue

$

41,144

$

39,409

$

47,156

$

160,792

$

180,516

Average total assets

$

12,895,049

$

12,697,795

$

10,419,364

$

11,904,935

$

10,292,256

Reported: Pre-provision net revenue to average assets 1

1.04

%

0.95

%

1.47

%

1.16

%

1.61

%

Adjusted: Pre-provision net revenue to average assets 1

1.27

%

1.23

%

1.80

%

1.35

%

1.75

%

1 For quarterly periods, measures are annualized.

11


Reconciliation of Non-GAAP Financial Measures – Adjusted Net Income, Adjusted Diluted Earnings Per Share, and
Adjusted Return on Average Assets (Unaudited)

(dollars in thousands, except per share data)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

    

2021

    

2021

    

2020

    

2021

    

2020

    

Net income

$

29,926

$

25,941

$

28,345

$

123,449

$

100,344

Adjustments to net income:

Acquisition expenses:

Salaries, wages, and employee benefits

1,760

4,462

7,347

Data processing

143

3,182

56

3,700

56

Lease or fixed asset impairment

245

479

Professional fees, occupancy, and other

290

776

479

2,599

864

Other restructuring costs: