First Busey Corporation (Nasdaq: BUSE)
Net Income of $30.7
millionDiluted EPS of
$0.54 |
Third Quarter
2023 Highlights
- Net income excluding net securities
losses1 of $30.9 million and adjusted diluted EPS excluding
net securities gains and losses1 of $0.55
- Total deposits increased
$269.6 million, or 2.7%, quarter-over-quarter, to
$10.33 billion
- Short-term borrowings decreased to
$12.0 million, compared to $212.0 million at the end of
the second quarter of 2023 and $615.9 million at the end of
the first quarter of 2023
- Non-performing assets declined
23.6% during the third quarter of 2023, to $12.1 million, now
representing 0.10% of total assets
- Classified assets declined to
$59.6 million, compared to $81.9 million at the close of
the second quarter of 2023 and $103.9 million at the end of
the first quarter of 2023
- Annualized net charge-off ratio of
0.01% in the quarter and 0.02% over the last twelve months2
- Noninterest income excluding net
securities losses1 increased to $31.3 million, from
$30.1 million in the second quarter of 2023, representing
28.7% of total revenue
- Wealth management segment revenue
of $14.4 million in the third quarter of 2023, a 14.7%
increase over the comparable period in 2022
- Annualized return on average assets
of 1.0%, return on average tangible common equity1 of 14.3% and
adjusted core efficiency ratio1 of 60.23%
- For additional information, please
refer to the 3Q23 Earnings Investor Presentation
Message from our Chairman &
CEO
Third Quarter Financial
ResultsNet income for First Busey Corporation (“Busey,”
“Company,” “we,” “us,” or “our”) was $30.7 million for the third
quarter of 2023, or $0.54 per diluted common share, compared to
$29.4 million, or $0.52 per diluted common share, for the second
quarter of 2023, and $35.7 million, or $0.64 per diluted common
share, for the third quarter of 2022. Adjusted net income1 was
$30.7 million, or $0.55 per diluted common share, for the third
quarter of 2023. Non-operating adjustments to net income for the
second quarter of 2023 were immaterial. Adjusted net income1 was
$36.4 million, or $0.65 per diluted common share, for the third
quarter of 2022.
Net income includes net losses on securities of
$0.3 million for the third quarter of 2023, $2.1 million
for the second quarter of 2023, which are largely unrealized, and
an immaterial net gain for the third quarter of 2022. Net income
excluding net securities losses1 for the third quarter of 2023
would have been $30.9 million, resulting in adjusted diluted
EPS excluding net securities gains and losses1 of $0.55.
Annualized return on average assets and
annualized return on average tangible common equity1 were 1.00% and
14.31%, respectively, for the third quarter of 2023.
Pre-provision net revenue1 was $38.1 million for
the third quarter of 2023, compared to $39.5 million for the second
quarter of 2023 and $46.5 million for the third quarter of 2022.
Adjusted pre-provision net revenue1 was $40.5 million for the third
quarter of 2023, compared to $42.1 million for the second quarter
of 2023 and $48.8 million for the third quarter of 2022.
Pre-provision net revenue to average assets3 was 1.24% for the
third quarter of 2023, compared to 1.30% for the second quarter of
2023, and 1.47% for the third quarter of 2022. Adjusted
pre-provision net revenue to average assets3 was 1.32% for the
third quarter of 2023, compared to 1.38% for the second quarter of
2023 and 1.54% for the third quarter of 2022.
The decline in pre-provision net revenue in the
third quarter, compared to the second quarter, was largely the
result of a $0.9 million decrease in net interest income,
which is primarily the result of deposits migrating into higher
cost offerings. Net interest margin declined from 2.86% in the
second quarter of 2023 to 2.80% in the third quarter of 2023.
Our fee-based businesses continue to add revenue
diversification. Noninterest income excluding net securities gains
and losses1 was $31.3 million, or 28.7% of operating revenue3,
during the third quarter of 2023, compared to $30.1 million,
or 27.7% of total operating revenue, for the second quarter of 2023
and $30.9 million, or 26.4% of total operating revenue, for
the third quarter of 2022.
During a time of decades-high inflation, we have
effectively managed our noninterest expense, and have been
purposeful in our efforts to rationalize our expense base given our
economic outlook and our view on the future of banking. Noninterest
expense was $70.9 million in the third quarter of 2023,
compared to $69.2 million in the second quarter of 2023 and
$70.7 million in the third quarter of 2022. Adjusted core
expense1 was $66.0 million in the third quarter of 2023,
compared to $64.0 million in the second quarter of 2023 and
$65.6 million in the third quarter of 2022, reflecting a less
than 1% year-over-year increase in quarterly adjusted core
expenses. As we enter the last quarter of 2023, we expect to
continue to prudently manage our expenses.
Busey’s Conservative Banking
StrategyBusey’s financial strength is built on a long-term
conservative operating approach. That focus will not change now or
in the future.
Busey's growth trend for portfolio loans
continued during the third quarter of 2023, with loans being
originated at attractive spreads while maintaining our prudent
underwriting standards. Loan growth was $50.9 million in the
third quarter of 2023, compared to growth of $21.5 million in
the second quarter of 2023 and $172.3 million in the third
quarter of 2022. Over the last four quarters, Busey has generated
$186.0 million in portfolio loan growth, equating to a
year-over-year growth rate of 2.4%. Our reported loan growth has
been reduced by a $22.2 million reduction in classified assets
during the third quarter of 2023, largely attributable to pay-offs
from customers in the manufacturing, nursing home, and senior
housing industries, and a $47.5 million reduction in
classified assets since the beginning of the year, a positive
development and consistent with our prudent credit risk management
philosophy, particularly given our outlook for the economy. Our
loan to deposit ratio was 76.0% at the end of the third quarter of
2023, compared to 77.6% for the second quarter of 2023 and 72.4%
for the third quarter of 2022.
The quality of our core deposit franchise is a
critical value driver of our institution. Over the last two
quarters our deposit base has grown by more than $530 million,
allowing us to substantially reduce our exposure to higher cost
wholesale borrowings. Our granular deposit base continues to
position us well, and as of September 30, 2023 our estimated
uninsured and uncollateralized deposits4 percentage was 28% and
96.6% of our deposits were core deposits1. Our retail deposit base
was comprised of more than 257,000 accounts with an average balance
of $21 thousand and an average tenure of 16.4 years as of
September 30, 2023. Our commercial deposit base was comprised
of more than 33,000 accounts with an average balance of
$105 thousand and an average tenure of 12.3 years as of
September 30, 2023. Furthermore, we have sufficient on- and
off-balance sheet liquidity to manage deposit fluctuations and the
liquidity needs of our customers.
Asset quality remains strong by both Busey’s
historical and current industry trends. Non-performing assets saw a
further 23.6% decline during the third quarter of 2023 to
$12.1 million, now representing only 0.10% of total assets. We
experienced our third consecutive quarter of declines in total
classified assets. Total classified assets of $59.6 million at
the end of the third quarter of 2023 now represent a historically
low 3.9% of consolidated total capital. Busey’s results for the
third quarter of 2023 include a $0.4 million provision expense for
credit losses and an immaterial provision expense for unfunded
commitments. The allowance for credit losses was $91.7 million as
of September 30, 2023, representing 1.17% of total portfolio
loans outstanding, and 763.8% of non-performing loans. Busey
recorded net charge offs of $0.3 million in the third quarter
of 2023, which equates to 0.01% of average loans on an annualized
basis. As of September 30, 2023, our commercial real estate
loan portfolio of investor-owned office properties within Central
Business District5 areas remained low at $9.5 million. Our
credit performance continues to reflect our highly diversified,
conservatively underwritten loan portfolio, which has been
originated predominantly to established customers with tenured
relationships with our company.
The strength of our balance sheet is also
reflected in our capital foundation. In the third quarter, Common
Equity Tier 1 and Total Capital to Risk Weighted Assets
ratios6 increased to 12.52% and 16.72%, respectively. In fact, our
regulatory capital ratios continue to provide a buffer of more than
$480 million above levels required to be designated
well-capitalized. Our Tangible Common Equity ratio1 declined
modestly to 7.06% during the third quarter of 2023 as a result of
the impact of rising rates on the market value of our securities
portfolio, but remains substantially above the 6.17% reported for
the third quarter of 2022. During the third quarter of 2023, we
paid a common share dividend of $0.24 and repurchased 65,123 shares
of our common stock at a weighted average price of $19.63 per
share.
Community BankingBusey’s goal
of being a strong community bank begins with outstanding
associates. Busey is humbled to be named among the 2023 Best Banks
to Work For by American Banker, the 2022 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 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. We remain cognizant of the evolving economic outlook
and extremely focused on balance sheet strength, profitability, and
growth, in that order. With our strong capital position, an
attractive core funding base, and a sound credit foundation, we
feel confident that we are well positioned to continue producing
quality growth and profitability as we move into the final quarter
of 2023 and into 2024.
|
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 |
|
Nine Months Ended |
|
September 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
|
September 30,2023 |
|
September 30,2022 |
EARNINGS & PER SHARE AMOUNTS |
|
|
|
|
|
|
|
|
|
Net income |
$ |
30,666 |
|
|
$ |
29,364 |
|
|
$ |
35,661 |
|
|
$ |
96,816 |
|
|
$ |
93,924 |
|
Diluted earnings per common share |
|
0.54 |
|
|
|
0.52 |
|
|
|
0.64 |
|
|
|
1.72 |
|
|
|
1.67 |
|
Cash dividends paid per share |
|
0.24 |
|
|
|
0.24 |
|
|
|
0.23 |
|
|
|
0.72 |
|
|
|
0.69 |
|
Pre-provision net revenue1, 2 |
|
38,139 |
|
|
|
39,536 |
|
|
|
46,498 |
|
|
|
125,593 |
|
|
|
122,133 |
|
Revenue3 |
|
109,084 |
|
|
|
108,741 |
|
|
|
117,234 |
|
|
|
336,146 |
|
|
|
332,337 |
|
|
|
|
|
|
|
|
|
|
|
Net income by operating segments: |
|
|
|
|
|
|
|
|
|
Banking |
|
31,189 |
|
|
|
30,665 |
|
|
|
37,082 |
|
|
|
98,689 |
|
|
|
94,032 |
|
FirsTech |
|
317 |
|
|
|
226 |
|
|
|
353 |
|
|
|
505 |
|
|
|
1,300 |
|
Wealth Management |
|
4,781 |
|
|
|
4,932 |
|
|
|
3,756 |
|
|
|
14,571 |
|
|
|
14,688 |
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
252,730 |
|
|
$ |
235,858 |
|
|
$ |
331,397 |
|
|
$ |
237,370 |
|
|
$ |
455,545 |
|
Investment securities |
|
3,148,759 |
|
|
|
3,255,741 |
|
|
|
3,667,753 |
|
|
|
3,254,054 |
|
|
|
3,825,265 |
|
Loans held for sale |
|
2,267 |
|
|
|
1,941 |
|
|
|
4,195 |
|
|
|
1,955 |
|
|
|
6,376 |
|
Portfolio loans |
|
7,834,285 |
|
|
|
7,755,618 |
|
|
|
7,617,918 |
|
|
|
7,767,378 |
|
|
|
7,387,582 |
|
Interest-earning assets |
|
11,118,167 |
|
|
|
11,130,298 |
|
|
|
11,497,783 |
|
|
|
11,142,780 |
|
|
|
11,550,887 |
|
Total assets |
|
12,202,783 |
|
|
|
12,209,865 |
|
|
|
12,531,856 |
|
|
|
12,225,232 |
|
|
|
12,547,816 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest bearing deposits |
|
2,925,244 |
|
|
|
3,054,483 |
|
|
|
3,583,693 |
|
|
|
3,082,884 |
|
|
|
3,569,562 |
|
Interest-bearing deposits |
|
7,217,463 |
|
|
|
6,797,588 |
|
|
|
6,993,125 |
|
|
|
6,886,277 |
|
|
|
6,997,106 |
|
Total deposits |
|
10,142,707 |
|
|
|
9,852,071 |
|
|
|
10,576,818 |
|
|
|
9,969,161 |
|
|
|
10,566,668 |
|
|
|
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase and federal funds
purchased |
|
190,112 |
|
|
|
201,020 |
|
|
|
233,032 |
|
|
|
207,014 |
|
|
|
246,481 |
|
Interest-bearing liabilities |
|
7,864,355 |
|
|
|
7,762,628 |
|
|
|
7,605,148 |
|
|
|
7,748,218 |
|
|
|
7,611,314 |
|
Total liabilities |
|
10,994,376 |
|
|
|
11,001,930 |
|
|
|
11,350,408 |
|
|
|
11,029,374 |
|
|
|
11,328,171 |
|
Stockholders' equity - common |
|
1,208,407 |
|
|
|
1,207,935 |
|
|
|
1,181,448 |
|
|
|
1,195,858 |
|
|
|
1,219,645 |
|
Tangible common equity2 |
|
850,382 |
|
|
|
847,294 |
|
|
|
812,467 |
|
|
|
835,204 |
|
|
|
847,772 |
|
|
|
|
|
|
|
|
|
|
|
PERFORMANCE RATIOS |
|
|
|
|
|
|
|
|
|
Pre-provision net revenue to average assets1, 2 |
|
1.24 |
% |
|
|
1.30 |
% |
|
|
1.47 |
% |
|
|
1.37 |
% |
|
|
1.30 |
% |
Return on average assets |
|
1.00 |
% |
|
|
0.96 |
% |
|
|
1.13 |
% |
|
|
1.06 |
% |
|
|
1.00 |
% |
Return on average common equity |
|
10.07 |
% |
|
|
9.75 |
% |
|
|
11.98 |
% |
|
|
10.82 |
% |
|
|
10.30 |
% |
Return on average tangible common equity2 |
|
14.31 |
% |
|
|
13.90 |
% |
|
|
17.41 |
% |
|
|
15.50 |
% |
|
|
14.81 |
% |
Net interest margin2, 4 |
|
2.80 |
% |
|
|
2.86 |
% |
|
|
3.00 |
% |
|
|
2.93 |
% |
|
|
2.71 |
% |
Efficiency ratio2 |
|
62.38 |
% |
|
|
60.87 |
% |
|
|
57.62 |
% |
|
|
59.97 |
% |
|
|
60.30 |
% |
Noninterest revenue as a % of total revenues3 |
|
28.69 |
% |
|
|
27.65 |
% |
|
|
26.38 |
% |
|
|
27.91 |
% |
|
|
30.10 |
% |
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
Adjusted pre-provision net revenue1, 2 |
$ |
40,491 |
|
|
$ |
42,072 |
|
|
$ |
48,800 |
|
|
$ |
132,067 |
|
|
$ |
129,421 |
|
Adjusted net income2 |
|
30,730 |
|
|
|
29,373 |
|
|
|
36,435 |
|
|
|
96,889 |
|
|
|
95,620 |
|
Adjusted diluted earnings per share2 |
|
0.55 |
|
|
|
0.52 |
|
|
|
0.65 |
|
|
|
1.72 |
|
|
|
1.70 |
|
Adjusted pre-provision net revenue to average assets2 |
|
1.32 |
% |
|
|
1.38 |
% |
|
|
1.54 |
% |
|
|
1.44 |
% |
|
|
1.38 |
% |
Adjusted return on average assets2 |
|
1.00 |
% |
|
|
0.96 |
% |
|
|
1.15 |
% |
|
|
1.06 |
% |
|
|
1.02 |
% |
Adjusted return on average tangible common equity2 |
|
14.34 |
% |
|
|
13.90 |
% |
|
|
17.79 |
% |
|
|
15.51 |
% |
|
|
15.08 |
% |
Adjusted net interest margin2, 4 |
|
2.79 |
% |
|
|
2.84 |
% |
|
|
2.97 |
% |
|
|
2.91 |
% |
|
|
2.68 |
% |
Adjusted efficiency ratio2 |
|
62.31 |
% |
|
|
60.86 |
% |
|
|
56.81 |
% |
|
|
59.95 |
% |
|
|
59.67 |
% |
___________________________________________
- 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.
- 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 |
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
ASSETS |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
337,919 |
|
|
$ |
232,703 |
|
|
$ |
275,569 |
|
|
$ |
227,164 |
|
|
$ |
347,149 |
|
Investment securities |
|
3,074,237 |
|
|
|
3,186,984 |
|
|
|
3,302,024 |
|
|
|
3,391,240 |
|
|
|
3,494,710 |
|
Loans held for sale |
|
3,051 |
|
|
|
1,545 |
|
|
|
2,714 |
|
|
|
1,253 |
|
|
|
4,546 |
|
|
|
|
|
|
|
|
|
|
|
Commercial loans |
|
5,824,800 |
|
|
|
5,793,426 |
|
|
|
5,815,703 |
|
|
|
5,766,496 |
|
|
|
5,724,137 |
|
Retail real estate and retail other loans |
|
2,031,360 |
|
|
|
2,011,858 |
|
|
|
1,968,105 |
|
|
|
1,959,206 |
|
|
|
1,945,977 |
|
Portfolio loans |
|
7,856,160 |
|
|
|
7,805,284 |
|
|
|
7,783,808 |
|
|
|
7,725,702 |
|
|
|
7,670,114 |
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
(91,710 |
) |
|
|
(91,639 |
) |
|
|
(91,727 |
) |
|
|
(91,608 |
) |
|
|
(90,722 |
) |
Premises and equipment |
|
122,538 |
|
|
|
122,669 |
|
|
|
126,515 |
|
|
|
126,524 |
|
|
|
128,175 |
|
Goodwill and other intangible assets, net |
|
356,343 |
|
|
|
358,898 |
|
|
|
361,567 |
|
|
|
364,296 |
|
|
|
367,091 |
|
Right of use asset |
|
11,500 |
|
|
|
11,806 |
|
|
|
12,291 |
|
|
|
12,829 |
|
|
|
10,202 |
|
Other assets |
|
588,212 |
|
|
|
580,779 |
|
|
|
571,794 |
|
|
|
579,277 |
|
|
|
566,123 |
|
Total assets |
$ |
12,258,250 |
|
|
$ |
12,209,029 |
|
|
$ |
12,344,555 |
|
|
$ |
12,336,677 |
|
|
$ |
12,497,388 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Noninterest bearing deposits |
$ |
2,918,574 |
|
|
$ |
3,086,885 |
|
|
$ |
3,173,783 |
|
|
$ |
3,393,666 |
|
|
$ |
3,628,169 |
|
Interest checking, savings, and money market deposits |
|
5,747,136 |
|
|
|
5,504,255 |
|
|
|
5,478,715 |
|
|
|
5,822,239 |
|
|
|
6,173,041 |
|
Time deposits |
|
1,666,652 |
|
|
|
1,471,615 |
|
|
|
1,148,671 |
|
|
|
855,375 |
|
|
|
800,187 |
|
Total deposits |
$ |
10,332,362 |
|
|
$ |
10,062,755 |
|
|
$ |
9,801,169 |
|
|
$ |
10,071,280 |
|
|
$ |
10,601,397 |
|
|
|
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase |
$ |
183,702 |
|
|
$ |
202,953 |
|
|
$ |
210,977 |
|
|
$ |
229,806 |
|
|
$ |
234,597 |
|
Short-term borrowings |
|
12,000 |
|
|
|
212,000 |
|
|
|
615,881 |
|
|
|
351,054 |
|
|
|
16,225 |
|
Long-term debt |
|
243,666 |
|
|
|
246,454 |
|
|
|
249,245 |
|
|
|
252,038 |
|
|
|
254,835 |
|
Junior subordinated debt owed to unconsolidated trusts |
|
71,946 |
|
|
|
71,900 |
|
|
|
71,855 |
|
|
|
71,810 |
|
|
|
71,765 |
|
Lease liability |
|
11,783 |
|
|
|
12,059 |
|
|
|
12,515 |
|
|
|
12,995 |
|
|
|
10,311 |
|
Other liabilities |
|
212,633 |
|
|
|
198,960 |
|
|
|
184,355 |
|
|
|
201,717 |
|
|
|
201,670 |
|
Total liabilities |
|
11,068,092 |
|
|
|
11,007,081 |
|
|
|
11,145,997 |
|
|
|
11,190,700 |
|
|
|
11,390,800 |
|
Total stockholders' equity |
|
1,190,158 |
|
|
|
1,201,948 |
|
|
|
1,198,558 |
|
|
|
1,145,977 |
|
|
|
1,106,588 |
|
Total liabilities & stockholders' equity |
$ |
12,258,250 |
|
|
$ |
12,209,029 |
|
|
$ |
12,344,555 |
|
|
$ |
12,336,677 |
|
|
$ |
12,497,388 |
|
|
|
|
|
|
|
|
|
|
|
SHARE AND PER SHARE AMOUNTS |
|
|
|
|
|
|
|
|
|
Book value per common share |
$ |
21.51 |
|
|
$ |
21.74 |
|
|
$ |
21.68 |
|
|
$ |
20.73 |
|
|
$ |
20.04 |
|
Tangible book value per common share1 |
$ |
15.07 |
|
|
$ |
15.25 |
|
|
$ |
15.14 |
|
|
$ |
14.14 |
|
|
$ |
13.39 |
|
Ending number of common shares outstanding |
|
55,342,017 |
|
|
|
55,290,847 |
|
|
|
55,294,455 |
|
|
|
55,279,124 |
|
|
|
55,232,434 |
|
___________________________________________
- See “Non-GAAP Financial
Information” for reconciliation.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited)(dollars in
thousands, except per share amounts)
|
Three Months Ended |
|
Nine Months Ended |
|
September 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
|
September 30,2023 |
|
September 30,2022 |
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
Interest and fees on loans held for sale and portfolio |
$ |
99,844 |
|
|
$ |
94,804 |
|
|
$ |
76,081 |
|
|
$ |
284,423 |
|
|
$ |
202,530 |
|
Interest on investment securities |
|
21,234 |
|
|
|
20,784 |
|
|
|
18,249 |
|
|
|
62,360 |
|
|
|
49,852 |
|
Other interest income |
|
1,591 |
|
|
|
1,311 |
|
|
|
1,085 |
|
|
|
3,890 |
|
|
|
1,720 |
|
Total interest income |
$ |
122,669 |
|
|
$ |
116,899 |
|
|
$ |
95,415 |
|
|
$ |
350,673 |
|
|
$ |
254,102 |
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
Interest on deposits |
$ |
37,068 |
|
|
$ |
26,768 |
|
|
$ |
3,565 |
|
|
$ |
78,576 |
|
|
$ |
7,835 |
|
Interest on securities sold under agreements to repurchase and
federal funds purchased |
|
1,327 |
|
|
|
1,223 |
|
|
|
459 |
|
|
|
3,772 |
|
|
|
665 |
|
Interest on short-term borrowings |
|
1,964 |
|
|
|
5,741 |
|
|
|
190 |
|
|
|
12,527 |
|
|
|
426 |
|
Interest on long-term debt |
|
3,528 |
|
|
|
3,552 |
|
|
|
4,110 |
|
|
|
10,631 |
|
|
|
10,739 |
|
Junior subordinated debt owed to unconsolidated trusts |
|
991 |
|
|
|
945 |
|
|
|
786 |
|
|
|
2,849 |
|
|
|
2,148 |
|
Total interest expense |
$ |
44,878 |
|
|
$ |
38,229 |
|
|
$ |
9,110 |
|
|
$ |
108,355 |
|
|
$ |
21,813 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
77,791 |
|
|
$ |
78,670 |
|
|
$ |
86,305 |
|
|
$ |
242,318 |
|
|
$ |
232,289 |
|
Provision for credit losses |
|
364 |
|
|
|
627 |
|
|
|
2,364 |
|
|
|
1,944 |
|
|
|
3,764 |
|
Net interest income after provision for credit
losses |
$ |
77,427 |
|
|
$ |
78,043 |
|
|
$ |
83,941 |
|
|
$ |
240,374 |
|
|
$ |
228,525 |
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
Wealth management fees |
$ |
14,235 |
|
|
$ |
14,562 |
|
|
$ |
12,508 |
|
|
$ |
43,594 |
|
|
$ |
42,422 |
|
Fees for customer services |
|
7,502 |
|
|
|
7,239 |
|
|
|
7,627 |
|
|
|
21,560 |
|
|
|
26,122 |
|
Payment technology solutions |
|
5,226 |
|
|
|
5,231 |
|
|
|
5,080 |
|
|
|
15,772 |
|
|
|
15,045 |
|
Mortgage revenue |
|
311 |
|
|
|
272 |
|
|
|
438 |
|
|
|
871 |
|
|
|
1,697 |
|
Income on bank owned life insurance |
|
1,001 |
|
|
|
1,029 |
|
|
|
958 |
|
|
|
3,682 |
|
|
|
2,716 |
|
Net securities gains (losses) |
|
(285 |
) |
|
|
(2,059 |
) |
|
|
4 |
|
|
|
(2,960 |
) |
|
|
(2,324 |
) |
Other noninterest income |
|
3,018 |
|
|
|
1,738 |
|
|
|
4,318 |
|
|
|
8,349 |
|
|
|
12,046 |
|
Total noninterest income |
$ |
31,008 |
|
|
$ |
28,012 |
|
|
$ |
30,933 |
|
|
$ |
90,868 |
|
|
$ |
97,724 |
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
$ |
39,677 |
|
|
$ |
39,859 |
|
|
$ |
39,762 |
|
|
$ |
119,867 |
|
|
$ |
117,226 |
|
Data processing expense |
|
5,930 |
|
|
|
5,902 |
|
|
|
5,447 |
|
|
|
17,472 |
|
|
|
15,800 |
|
Net occupancy expense |
|
4,594 |
|
|
|
4,540 |
|
|
|
4,705 |
|
|
|
13,896 |
|
|
|
14,492 |
|
Furniture and equipment expense |
|
1,638 |
|
|
|
1,681 |
|
|
|
1,799 |
|
|
|
5,065 |
|
|
|
5,874 |
|
Professional fees |
|
1,542 |
|
|
|
973 |
|
|
|
1,579 |
|
|
|
4,573 |
|
|
|
4,693 |
|
Amortization of intangible assets |
|
2,555 |
|
|
|
2,669 |
|
|
|
2,871 |
|
|
|
7,953 |
|
|
|
8,833 |
|
Interchange expense |
|
1,786 |
|
|
|
1,870 |
|
|
|
1,574 |
|
|
|
5,509 |
|
|
|
4,606 |
|
FDIC insurance |
|
1,475 |
|
|
|
1,506 |
|
|
|
882 |
|
|
|
4,483 |
|
|
|
3,108 |
|
Other operating expenses |
|
11,748 |
|
|
|
10,205 |
|
|
|
12,117 |
|
|
|
31,735 |
|
|
|
35,572 |
|
Total noninterest expense |
$ |
70,945 |
|
|
$ |
69,205 |
|
|
$ |
70,736 |
|
|
$ |
210,553 |
|
|
$ |
210,204 |
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
$ |
37,490 |
|
|
$ |
36,850 |
|
|
$ |
44,138 |
|
|
$ |
120,689 |
|
|
$ |
116,045 |
|
Income taxes |
|
6,824 |
|
|
|
7,486 |
|
|
|
8,477 |
|
|
|
23,873 |
|
|
|
22,121 |
|
Net income |
$ |
30,666 |
|
|
$ |
29,364 |
|
|
$ |
35,661 |
|
|
$ |
96,816 |
|
|
$ |
93,924 |
|
|
|
|
|
|
|
|
|
|
|
SHARE AND PER SHARE AMOUNTS |
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
$ |
0.55 |
|
|
$ |
0.53 |
|
|
$ |
0.64 |
|
|
$ |
1.75 |
|
|
$ |
1.70 |
|
Diluted earnings per common share |
$ |
0.54 |
|
|
$ |
0.52 |
|
|
$ |
0.64 |
|
|
$ |
1.72 |
|
|
$ |
1.67 |
|
Average common shares outstanding |
|
55,486,700 |
|
|
|
55,440,277 |
|
|
|
55,349,547 |
|
|
|
55,441,980 |
|
|
|
55,399,424 |
|
Diluted average common shares outstanding |
|
56,315,492 |
|
|
|
56,195,801 |
|
|
|
56,073,164 |
|
|
|
56,230,624 |
|
|
|
56,123,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Strength
Our balance sheet remains a source of strength.
Total assets were $12.26 billion as of September 30,
2023, compared to $12.21 billion as of June 30, 2023, and
$12.50 billion as of September 30, 2022. Portfolio loans
totaled $7.86 billion at September 30, 2023, compared to
$7.81 billion at June 30, 2023, and $7.67 billion at
September 30, 2022. During the third quarter of 2023, Busey
Bank experienced its tenth consecutive quarter of core loan1
growth. Growth of $50.9 million in core loans was driven
primarily by our northern and central regions. Overall, growth was
tempered by a $22.2 million reduction of classified assets,
largely attributable to pay-offs from customers in the
manufacturing, nursing home, and senior housing industries. 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. This
posture will impact loan growth in subsequent quarters.
Average portfolio loans were $7.83 billion
for the third quarter of 2023, compared to $7.76 billion for
the second quarter of 2023 and $7.62 billion for the third
quarter of 2022. Average interest-earning assets were
$11.12 billion for the third quarter of 2023, compared to
$11.13 billion for the second quarter of 2023, and
$11.50 billion for the third quarter of 2022.
Total deposits were $10.33 billion at
September 30, 2023, compared to $10.06 billion at
June 30, 2023, and $10.60 billion at September 30,
2022. Average deposits were $10.14 billion for the third
quarter of 2023, compared to $9.85 billion for the second
quarter of 2023 and $10.58 billion for the third quarter of
2022. Deposit growth in the third quarter of 2023 over the second
quarter of 2023 was primarily driven by retail and business
customers, and to a smaller extent public funds. Deposit
fluctuations over the last several quarters were driven by a number
of elements, including (1) seasonal factors, including
ordinary course public fund flows and fluctuations in the normal
course of business operations of certain core commercial customers,
(2) the macroeconomic environment, including prevailing
interest rates and anticipated future Federal Open Market Committee
(“FOMC”) rate moves, as well as inflationary pressures,
(3) depositors moving some funds to accounts at competitors
offering above-market rates, including state-sponsored investment
programs that provide rates in excess of where we can borrow in the
wholesale marketplace, and (4) deposits moving within the
Busey ecosystem from deposit accounts to our wealth management
group. Core deposits1 accounted for 96.6% of total deposits as of
September 30, 2023. Cost of deposits was 1.45% in the third
quarter of 2023, which represents a 36 basis point increase
from the second quarter of 2023. Excluding time deposits, Busey’s
cost of deposits was 1.09% in the third quarter of 2023, a
28 basis point increase from June 30, 2023.
Short term borrowings decreased to
$12.0 million as of September 30, 2023, compared to
$212.0 million as of June 30, 2023 and
$615.9 million as of March 31, 2023. We had no borrowings
from the Federal Home Loan Bank (“FHLB”) at the end of the third
quarter of 2023, compared to $200.0 million at the end of the
second quarter and $603.9 million at the end of the first quarter.
Average short-term borrowings decreased to $139.2 million in the
third quarter of 2023, compared to $443.8 million in the second
quarter of 2023. We have sufficient on- and off-balance sheet
liquidity7 to manage deposit fluctuations and the liquidity needs
of our customers. As of September 30, 2023, our available
sources of on- and off-balance sheet liquidity totaled
$6.49 billion. We increased deposit campaigns starting in the
first quarter of 2023 to attract term funding and savings accounts
at a lower rate than our marginal cost of funds. In addition, we
instituted a company-wide incentive campaign to drive new customer
account openings. Our time deposit campaigns generated increased
traction and production throughout the second and third quarters
and we expect to continue to implement prudent and measured
strategies to generate deposit growth. New certificate of deposit
production in the third quarter of 2023 had a weighted average term
of 9.2 months at a rate of 4.45%, 82 basis points below
our average marginal wholesale funding cost during the quarter.
Furthermore, our balance sheet liquidity profile continues to be
aided by the cash flows we expect from our relatively
short-duration securities portfolio. Those cash flows were
$72.9 million in the third quarter of 2023 and are expected to
be approximately $82.6 million over the remainder of 2023 with
a yield of 1.56%. For 2024, cash flows from our securities
portfolio are expected to be approximately $355.9 million with
a yield of 1.67%.
Asset Quality
Credit quality continues to be exceptionally
strong. Loans 30-89 days past due totaled $5.9 million as of
September 30, 2023, compared to $5.2 million as of
June 30, 2023, and $6.3 million as of September 30,
2022. Non-performing loans were $12.0 million as of
September 30, 2023, compared to $15.8 million as of
June 30, 2023, and $16.7 million as of September 30,
2022. Continued disciplined credit management resulted in
non-performing loans as a percentage of portfolio loans of 0.15% as
of September 30, 2023, 0.20% as of June 30, 2023, and
0.22% as of September 30, 2022. Non-performing assets were
0.10% of total assets for third quarter of 2023, compared to 0.13%
for the second quarter of 2023 and 0.14% for the third quarter of
2022. Our total classified assets declined from $81.9 million
at June 30, 2023, to $59.6 million at September 30,
2023. The quarter-over-quarter decline in classified assets is
largely attributable to pay-offs from customers in the
manufacturing, nursing home, and senior housing industries. This
$22.2 million reduction in classified assets during the third
quarter of 2023 follows a reduction of $22.0 million during
the second quarter of 2023. During the first three quarters of
2023, classified asset balances have declined by a total of
$47.5 million, and total classified assets now represent only
3.9% of consolidated total capital.
Net charge-offs were $0.3 million for the
third quarter of 2023, $0.7 million for the second quarter of
2023, and $0.4 million for the third quarter of 2022. Our
ratio of net charge-offs to average loans was 0.01% during the
third quarter of 2023 and 0.02% over the last twelve months2. The
allowance as a percentage of portfolio loans was 1.17% as of both
September 30, 2023 and June 30, 2023, compared to 1.18%
as of September 30, 2022. The allowance as a percentage of
non-performing loans was 763.8% as of September 30, 2023,
compared to 580.8% as of June 30, 2023, and 544.7% as of
September 30, 2022.
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 |
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
Total assets |
$ |
12,258,250 |
|
|
$ |
12,209,029 |
|
|
$ |
12,344,555 |
|
|
$ |
12,336,677 |
|
|
$ |
12,497,388 |
|
Portfolio loans |
|
7,856,160 |
|
|
|
7,805,284 |
|
|
|
7,783,808 |
|
|
|
7,725,702 |
|
|
|
7,670,114 |
|
Loans 30 – 89 days past due |
|
5,934 |
|
|
|
5,169 |
|
|
|
5,472 |
|
|
|
6,548 |
|
|
|
6,307 |
|
Non-performing loans: |
|
|
|
|
|
|
|
|
|
Non-accrual loans |
|
11,298 |
|
|
|
15,209 |
|
|
|
14,714 |
|
|
|
15,067 |
|
|
|
15,425 |
|
Loans 90+ days past due and still accruing |
|
709 |
|
|
|
569 |
|
|
|
500 |
|
|
|
673 |
|
|
|
1,229 |
|
Non-performing loans |
$ |
12,007 |
|
|
$ |
15,778 |
|
|
$ |
15,214 |
|
|
$ |
15,740 |
|
|
$ |
16,654 |
|
Non-performing loans, segregated by geography: |
|
|
|
|
|
|
|
|
|
Illinois / Indiana |
$ |
7,951 |
|
|
$ |
11,681 |
|
|
$ |
10,416 |
|
|
$ |
10,347 |
|
|
$ |
10,531 |
|
Missouri |
|
3,747 |
|
|
|
3,928 |
|
|
|
4,103 |
|
|
|
4,676 |
|
|
|
5,008 |
|
Florida |
|
309 |
|
|
|
169 |
|
|
|
695 |
|
|
|
717 |
|
|
|
1,115 |
|
Other non-performing assets |
|
96 |
|
|
|
68 |
|
|
|
759 |
|
|
|
850 |
|
|
|
1,219 |
|
Non-performing assets |
$ |
12,103 |
|
|
$ |
15,846 |
|
|
$ |
15,973 |
|
|
$ |
16,590 |
|
|
$ |
17,873 |
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
$ |
91,710 |
|
|
$ |
91,639 |
|
|
$ |
91,727 |
|
|
$ |
91,608 |
|
|
$ |
90,722 |
|
|
|
|
|
|
|
|
|
|
|
RATIOS |
|
|
|
|
|
|
|
|
|
Non-performing loans to portfolio loans |
|
0.15 |
% |
|
|
0.20 |
% |
|
|
0.20 |
% |
|
|
0.20 |
% |
|
|
0.22 |
% |
Non-performing assets to total assets |
|
0.10 |
% |
|
|
0.13 |
% |
|
|
0.13 |
% |
|
|
0.13 |
% |
|
|
0.14 |
% |
Non-performing assets to portfolio loans and other non-performing
assets |
|
0.15 |
% |
|
|
0.20 |
% |
|
|
0.21 |
% |
|
|
0.21 |
% |
|
|
0.23 |
% |
Allowance for credit losses to portfolio loans |
|
1.17 |
% |
|
|
1.17 |
% |
|
|
1.18 |
% |
|
|
1.19 |
% |
|
|
1.18 |
% |
Allowance for credit losses as a percentage of non-performing
loans |
|
763.80 |
% |
|
|
580.80 |
% |
|
|
602.91 |
% |
|
|
582.01 |
% |
|
|
544.75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHARGE-OFFS (RECOVERIES) AND
PROVISION EXPENSE (RELEASE)
(unaudited)(dollars in thousands)
|
Three Months Ended |
|
Nine Months Ended |
|
September 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
|
September 30,2023 |
|
September 30,2022 |
Net charge-offs (recoveries) |
$ |
293 |
|
|
$ |
715 |
|
|
$ |
399 |
|
|
$ |
1,842 |
|
|
$ |
929 |
|
Provision expense (release) |
|
364 |
|
|
|
627 |
|
|
|
2,364 |
|
|
|
1,944 |
|
|
|
3,764 |
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs, annualized |
|
1,162 |
|
|
|
2,868 |
|
|
|
1,583 |
|
|
|
2,463 |
|
|
|
1,242 |
|
Average portfolio loans |
|
7,834,285 |
|
|
|
7,755,618 |
|
|
|
7,617,918 |
|
|
|
7,767,378 |
|
|
|
7,387,582 |
|
Net charge-off ratio |
|
0.01 |
% |
|
|
0.04 |
% |
|
|
0.02 |
% |
|
|
0.03 |
% |
|
|
0.02 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Margin1
and Net Interest Income
Net interest margin was 2.80% for the third
quarter of 2023, compared to 2.86% for the second quarter of 2023
and 3.00% for the third quarter of 2022. Excluding purchase
accounting accretion, adjusted net interest margin1 was 2.79% for
the third quarter of 2023, compared to 2.84% in the second quarter
of 2023 and 2.97% in the third quarter of 2022. Net interest income
was $77.8 million in the third quarter of 2023, compared to
$78.7 million in the second quarter of 2023 and
$86.3 million in the third quarter of 2022.
The FOMC raised rates by 25 basis points
during the third quarter of 2023, and by a total of 525 basis
points since the onset of the current FOMC tightening cycle that
began in the first quarter of 2022. 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 third quarter
of 2023 include:
- Increased loan portfolio income
contributed +16 basis points
- Reduced borrowing costs contributed
+13 basis points
- Increases in the cash and
securities portfolio yield contributed +2 basis points
- Increased non-maturity deposit
funding costs contributed -22 basis points
- Increased time deposit funding
costs contributed -14 basis points
- Reduced
recognition of purchase accounting accretion contributed -1 basis
points
Based on our most recent Asset Liability
Management Committee (“ALCO”) model, a 100 basis point
parallel rate shock is expected to increase net interest income by
1.6% over the subsequent twelve-month period. Market competition
for deposits remains significant and deposit betas are likely to
rise further, which is factored into our ALCO model. Busey
continues to evaluate off-balance sheet hedging and balance sheet
restructuring strategies as well as embedding rate protection in
our asset originations to provide stabilization to net interest
income in lower rate environments. We are committed to protecting
our quality core deposit franchise and are in regular contact with
our customers to proactively address their needs and concerns. Time
deposit specials and retail incentive campaigns continue to provide
sufficient funding flows and we maintained excess earning cash
levels the majority of the quarter. As the tightening cycle
advances and rotation into these higher cost of fund products has
accelerated, deposit beta expectations have increased marginally.
Since the onset of the current FOMC tightening cycle that began in
the first quarter of 2022, our cumulative interest-bearing
non-maturity deposit beta has been 31%. Our cycle-to-date total
deposit beta has been 26% through September 30, 2023. Deposit
betas are calculated based on an average federal funds rate of
5.43% during the third quarter of 2023, which is a 27 basis
point increase over the second quarter of 2023 average federal
funds rate of 5.16%.
Noninterest Income
Noninterest income was $31.0 million for
the third quarter of 2023, as compared to $28.0 million for the
second quarter of 2023 and $30.9 million for the third quarter of
2022. Revenues from wealth management fees and payment technology
solutions activities represented 62.8% of Busey’s noninterest
income for the quarter ended September 30, 2023, providing a
balance to spread-based revenue from traditional banking
activities.
Consolidated wealth management fees were
$14.2 million for the third quarter of 2023, compared to $14.6
million for the second quarter of 2023 and $12.5 million for the
third quarter of 2022. On a segment basis, Wealth Management
generated $14.4 million in revenue during the third quarter of
2023, a 14.7% increase over the $12.5 million reported in the
third quarter of 2022. The Wealth Management operating segment
generated net income of $4.8 million in third quarter of 2023,
compared to $4.9 million in the second quarter of 2023 and
$3.8 million in the third quarter of 2022. Busey’s Wealth
Management division ended the third quarter of 2023 with
$11.55 billion in assets under care, compared to $11.48
billion at the end of the second quarter of 2023 and $10.75 billion
at the end of the third quarter of 2022. Our portfolio management
team continues to produce solid results in the face of volatile
markets, and has outperformed its blended benchmark8 over the last
twelve months, as well as over the last three years and the last
five years.
Payment technology solutions revenue from
FirsTech was $5.2 million for both the second and third
quarters of 2023, compared to $5.1 million for the third
quarter of 2022. Excluding intracompany eliminations, FirsTech
generated revenue of $5.7 million during the third quarter of
2023, compared to $5.6 million in both the second quarter of
2023 and the third quarter of 2022. The FirsTech operating segment
generated net income of $0.3 million in the third quarter of
2023, compared to $0.2 million in the second quarter of 2023
and $0.4 million in the third quarter of 2022.
Fees for customer services were
$7.5 million for the third quarter of 2023, compared to
$7.2 million in the second quarter of 2023 and
$7.6 million in the third quarter of 2022.
Net securities losses were $0.3 million for
the third quarter of 2023, which were comprised of an immaterial
amount of realized net losses and $0.3 million of unrealized
net losses on equity securities.
Other noninterest income was $3.0 million
in the third quarter of 2023, compared to $1.7 million in the
second quarter of 2023 and $4.3 million in the third quarter
of 2022. Fluctuations between the second quarter of 2023 and the
third quarter of 2023 were primarily the result of increases in
venture capital investment values and gains on commercial loans
sales.
Operating Efficiency
Noninterest expense was $70.9 million in
the third quarter of 2023, compared to $69.2 million in the
second quarter of 2023 and $70.7 million for the third quarter
of 2022. The efficiency ratio1 was 62.38% for the third quarter of
2023, compared to 60.87% for the second quarter of 2023, and 57.62%
for the third quarter of 2022. The adjusted core efficiency ratio1
was 60.23% for the third quarter of 2023, compared to 58.55% for
the second quarter of 2023 and 55.67% for the third quarter of
2022. Busey remains focused on expense discipline.
Noteworthy components of noninterest expense are
as follows:
- Salaries, wages, and employee
benefits expenses were $39.7 million in the third quarter of
2023, compared to $39.9 million in the second quarter of 2023
and $39.8 million in the third quarter of 2022. Our
associate-base consisted of 1,484 full-time equivalents as of
September 30, 2023, compared to 1,477 as of June 30,
2023, and 1,513 as of September 30, 2022.
- Data processing expense was
$5.9 million in the both the second and third quarters of
2023, compared to $5.4 million in the third 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
$1.5 million in the third quarter of 2023, compared to
$1.0 million in the second quarter of 2023 and
$1.6 million in the third quarter of 2022. The
quarter-over-quarter increase resulted primarily from a second
quarter recapture of legal expenses related to the pay-off of a
large classified asset, partially offset by declines in consulting
fees.
- Amortization of intangible assets
was $2.6 million in the third quarter of 2023, compared to
$2.7 million in the second quarter of 2023 and $2.9 million in
the third quarter of 2022.
- FDIC insurance
expense was $1.5 million in both the second and third quarter
of 2023, compared to $0.9 million in the third quarter of
2022, as 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 beginning
in 2023.
- Other operating
expenses were $11.7 million for the third quarter of 2023,
compared to $10.2 million in the second quarter of 2023 and
$12.1 million in the third quarter of 2022. The
quarter-over-quarter increase is attributable to multiple items,
including fraud losses and card service expenses.
Busey's effective tax rate for the third quarter
of 2023 was 18.2%, which was lower than the combined federal and
state statutory rate of approximately 28.0% due to tax exempt
interest income, such as municipal bond interest, bank owned life
insurance income, and investments in various federal and state tax
credits.
Beginning in 2024, Busey intends to adopt
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 October 27, 2023, Busey
will pay a cash dividend of $0.24 per common share to stockholders
of record as of October 20, 2023. Busey has consistently paid
dividends to its common stockholders since the bank holding company
was organized in 1980.
As of September 30, 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 12.52% at September 30, 2023, compared to 12.35% at
June 30, 2023, and 11.79% at September 30, 2022. Our
Total Capital to Risk Weighted Assets ratio is estimated6 to be
16.72% at September 30, 2023, compared to 16.56% at
June 30, 2023, and 15.98% at September 30, 2022.
Busey’s tangible common equity1 was
$841.2 million at September 30, 2023, compared to $850.9
million at June 30, 2023, and $748.9 million at
September 30, 2022. Tangible common equity1 represented 7.06%
of tangible assets at September 30, 2023, compared to 7.18% at
June 30, 2023, and 6.17% at September 30, 2022. Busey’s
tangible book value per common share1 decreased from $15.25 at
June 30, 2023, to $15.07 at September 30, 2023. The
ratios of tangible common equity to tangible assets1 and tangible
book value per common share have been impacted by the fair market
valuation adjustment of Busey’s securities portfolio as a result of
the current rate environment, which is reflected in the accumulated
other comprehensive income (loss) component of shareholder’s
equity.
During the third quarter of 2023, Busey
purchased 65,123 shares of its common stock at a weighted average
price of $19.63 per share for a total of $1.3 million under
the Company’s stock repurchase plan. Repurchases were executed due
to favorable pricing of Busey’s shares during the third quarter of
2023. As of September 30, 2023, Busey had 2,037,087 shares
remaining on its stock repurchase plan available for
repurchase.
3Q23 Earnings Investor
Presentation
For additional information on Busey’s
financial condition and operating results, please refer to
the 3Q23 Earnings Investor
Presentation furnished via Form 8-K on
October 24, 2023, in connection with
this earnings release.
Corporate Profile
As of September 30, 2023, First Busey
Corporation (Nasdaq: BUSE) was a $12.26 billion financial holding
company headquartered in Champaign, Illinois.
Busey Bank, a wholly-owned bank subsidiary of
First Busey Corporation, had total assets of $12.23 billion as of
September 30, 2023, 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.
Through Busey’s Wealth Management division, the
Company provides asset management, investment, and fiduciary
services to individuals, businesses, and foundations. Assets under
care totaled $11.55 billion as of September 30, 2023.
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 last year's
rankings, Busey was once again the top-ranked bank headquartered in
Illinois. Additionally, for the first time in 2023, Busey was named
among DiversityInc’s Top Regional Companies. The DiversityInc Top
50 survey is the external validator for large U.S. employers that
model fairness in their talent strategy, workplace and supplier
diversity practices, and philanthropic engagement. 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: FinancialSource: First Busey
Corporation
Contacts:
Jeffrey D. Jones, Chief Financial
Officer217-365-4130
Ted Rosinus, EVP Investor Relations &
Corporate Development847-832-0392
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 |
|
Nine Months Ended |
|
|
September 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
|
September 30,2023 |
|
September 30,2022 |
PRE-PROVISION NET REVENUE |
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
77,791 |
|
|
$ |
78,670 |
|
|
$ |
86,305 |
|
|
$ |
242,318 |
|
|
$ |
232,289 |
|
Total noninterest income |
|
|
31,008 |
|
|
|
28,012 |
|
|
|
30,933 |
|
|
|
90,868 |
|
|
|
97,724 |
|
Net security (gains) losses |
|
|
285 |
|
|
|
2,059 |
|
|
|
(4 |
) |
|
|
2,960 |
|
|
|
2,324 |
|
Total noninterest expense |
|
|
(70,945 |
) |
|
|
(69,205 |
) |
|
|
(70,736 |
) |
|
|
(210,553 |
) |
|
|
(210,204 |
) |
Pre-provision net revenue |
|
|
38,139 |
|
|
|
39,536 |
|
|
|
46,498 |
|
|
|
125,593 |
|
|
|
122,133 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Acquisition and other restructuring expenses |
|
|
79 |
|
|
|
12 |
|
|
|
957 |
|
|
|
91 |
|
|
|
2,095 |
|
Provision for unfunded commitments |
|
|
13 |
|
|
|
265 |
|
|
|
(320 |
) |
|
|
(357 |
) |
|
|
525 |
|
Amortization of New Markets Tax Credits |
|
|
2,260 |
|
|
|
2,259 |
|
|
|
1,665 |
|
|
|
6,740 |
|
|
|
4,668 |
|
Adjusted pre-provision net revenue |
|
$ |
40,491 |
|
|
$ |
42,072 |
|
|
$ |
48,800 |
|
|
$ |
132,067 |
|
|
$ |
129,421 |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-provision net revenue, annualized |
[a] |
$ |
151,312 |
|
|
$ |
158,578 |
|
|
$ |
184,476 |
|
|
$ |
167,917 |
|
|
$ |
163,291 |
|
Adjusted pre-provision net revenue, annualized |
[b] |
|
160,644 |
|
|
|
168,750 |
|
|
|
193,609 |
|
|
|
176,573 |
|
|
|
173,035 |
|
Average total assets |
[c] |
|
12,202,783 |
|
|
|
12,209,865 |
|
|
|
12,531,856 |
|
|
|
12,225,232 |
|
|
|
12,547,816 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Pre-provision net revenue to average
assets1 |
[a÷c] |
|
1.24 |
% |
|
|
1.30 |
% |
|
|
1.47 |
% |
|
|
1.37 |
% |
|
|
1.30 |
% |
Adjusted: Pre-provision net revenue to average
assets1 |
[b÷c] |
|
1.32 |
% |
|
|
1.38 |
% |
|
|
1.54 |
% |
|
|
1.44 |
% |
|
|
1.38 |
% |
___________________________________________
- Annualized measure.
Adjusted Net Income,
Adjusted Diluted Earnings Per Share,
Adjusted Return on Average Assets,
Average Tangible Common Equity,
Return on Average Tangible Common Equity, and
Adjusted Return on Average Tangible Common Equity |
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
|
September 30,2023 |
|
September 30,2022 |
NET INCOME ADJUSTED FOR NON-OPERATING ITEMS |
|
|
|
|
|
|
|
|
|
|
Net income |
[a] |
$ |
30,666 |
|
|
$ |
29,364 |
|
|
$ |
35,661 |
|
|
$ |
96,816 |
|
|
$ |
93,924 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Acquisition expenses: |
|
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
587 |
|
Data processing |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
214 |
|
Professional fees, occupancy, and other |
|
|
79 |
|
|
|
12 |
|
|
|
4 |
|
|
|
91 |
|
|
|
242 |
|
Other restructuring expenses: |
|
|
|
|
|
|
|
|
|
|
Loss on leases or fixed asset impairment |
|
|
— |
|
|
|
— |
|
|
|
877 |
|
|
|
— |
|
|
|
976 |
|
Professional fees, occupancy, and other |
|
|
— |
|
|
|
— |
|
|
|
76 |
|
|
|
— |
|
|
|
76 |
|
Related tax benefit1 |
|
|
(15 |
) |
|
|
(3 |
) |
|
|
(183 |
) |
|
|
(18 |
) |
|
|
(399 |
) |
Adjusted net income |
[b] |
$ |
30,730 |
|
|
$ |
29,373 |
|
|
$ |
36,435 |
|
|
$ |
96,889 |
|
|
$ |
95,620 |
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
|
Diluted average common shares outstanding |
[c] |
|
56,315,492 |
|
|
|
56,195,801 |
|
|
|
56,073,164 |
|
|
|
56,230,624 |
|
|
|
56,123,756 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Diluted earnings per share |
[a÷c] |
$ |
0.54 |
|
|
$ |
0.52 |
|
|
$ |
0.64 |
|
|
$ |
1.72 |
|
|
$ |
1.67 |
|
Adjusted: Diluted earnings per share |
[b÷c] |
$ |
0.55 |
|
|
$ |
0.52 |
|
|
$ |
0.65 |
|
|
$ |
1.72 |
|
|
$ |
1.70 |
|
|
|
|
|
|
|
|
|
|
|
|
RETURN ON AVERAGE ASSETS |
|
|
|
|
|
|
|
|
|
|
Net income, annualized |
[d] |
$ |
121,664 |
|
|
$ |
117,779 |
|
|
$ |
141,481 |
|
|
$ |
129,443 |
|
|
$ |
125,576 |
|
Adjusted net income, annualized |
[e] |
|
121,918 |
|
|
|
117,815 |
|
|
|
144,552 |
|
|
|
129,540 |
|
|
|
127,844 |
|
Average total assets |
[f] |
|
12,202,783 |
|
|
|
12,209,865 |
|
|
|
12,531,856 |
|
|
|
12,225,232 |
|
|
|
12,547,816 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Return on average assets2 |
[d÷f] |
|
1.00 |
% |
|
|
0.96 |
% |
|
|
1.13 |
% |
|
|
1.06 |
% |
|
|
1.00 |
% |
Adjusted: Return on average assets2 |
[e÷f] |
|
1.00 |
% |
|
|
0.96 |
% |
|
|
1.15 |
% |
|
|
1.06 |
% |
|
|
1.02 |
% |
|
|
|
|
|
|
|
|
|
|
|
RETURN ON AVERAGE TANGIBLE COMMON EQUITY |
|
|
|
|
|
|
|
|
|
|
Average common equity |
|
$ |
1,208,407 |
|
|
$ |
1,207,935 |
|
|
$ |
1,181,448 |
|
|
$ |
1,195,858 |
|
|
$ |
1,219,645 |
|
Average goodwill and other intangible assets, net |
|
|
(358,025 |
) |
|
|
(360,641 |
) |
|
|
(368,981 |
) |
|
|
(360,654 |
) |
|
|
(371,873 |
) |
Average tangible common equity |
[g] |
$ |
850,382 |
|
|
$ |
847,294 |
|
|
$ |
812,467 |
|
|
$ |
835,204 |
|
|
$ |
847,772 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Return on average tangible common
equity2 |
[d÷g] |
|
14.31 |
% |
|
|
13.90 |
% |
|
|
17.41 |
% |
|
|
15.50 |
% |
|
|
14.81 |
% |
Adjusted: Return on average tangible common
equity2 |
[e÷g] |
|
14.34 |
% |
|
|
13.90 |
% |
|
|
17.79 |
% |
|
|
15.51 |
% |
|
|
15.08 |
% |
___________________________________________
- The year-to-date tax benefits were
calculated by multiplying year-to-date acquisition expenses and
other restructuring expenses by the effective tax rates for the
year-to-date periods. The annual effective tax rates used in this
calculation were 19.8% for the nine months ended September 30,
2023, and 19.1% for the nine months ended September 30, 2022.
Quarterly tax benefits were calculated as the year-to-date amounts
less the sum of amounts applied to previous quarters.
- Annualized measure.
Net Income Excluding Net
Securities Gains and Losses and
Diluted Earnings Per Share Excluding Net Securities Gains and Losses |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
|
September 30,2023 |
|
September 30,2022 |
Net income |
[a] |
$ |
30,666 |
|
|
$ |
29,364 |
|
|
$ |
35,661 |
|
|
$ |
96,816 |
|
|
$ |
93,924 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Net securities (gains) losses |
|
|
285 |
|
|
|
2,059 |
|
|
|
(4 |
) |
|
|
2,960 |
|
|
|
2,324 |
|
Tax effect for net securities (gains) losses1 |
|
|
(52 |
) |
|
|
(418 |
) |
|
|
1 |
|
|
|
(585 |
) |
|
|
(443 |
) |
Net income excluding net securities (gains) losses2 |
[b] |
$ |
30,899 |
|
|
$ |
31,005 |
|
|
$ |
35,658 |
|
|
$ |
99,191 |
|
|
$ |
95,805 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average common shares outstanding |
[c] |
|
56,315,492 |
|
|
|
56,195,801 |
|
|
|
56,073,164 |
|
|
|
56,230,624 |
|
|
|
56,123,756 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Diluted earnings per share |
[a÷c] |
$ |
0.54 |
|
|
$ |
0.52 |
|
|
$ |
0.64 |
|
|
$ |
1.72 |
|
|
$ |
1.67 |
|
Adjusted: Diluted earnings per share, excluding
net securities (gains) losses2 |
[b÷c] |
$ |
0.55 |
|
|
$ |
0.55 |
|
|
$ |
0.64 |
|
|
$ |
1.76 |
|
|
$ |
1.71 |
|
___________________________________________
- The 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 18.2%, 20.3%, and 19.2% for the
three months ended September 30, 2023, June 30, 2023, and
September 30, 2022, respectively, and were 19.8% and 19.1% for
the nine months ended September 30, 2023, and
September 30, 2022, respectively.
- Tax-effected measure.
Adjusted Net Interest Income and
Adjusted Net Interest Margin |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
|
September 30,2023 |
|
September 30,2022 |
Net interest income |
|
$ |
77,791 |
|
|
$ |
78,670 |
|
|
$ |
86,305 |
|
|
$ |
242,318 |
|
|
$ |
232,289 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Tax-equivalent adjustment1 |
|
|
553 |
|
|
|
561 |
|
|
|
543 |
|
|
|
1,672 |
|
|
|
1,635 |
|
Tax-equivalent net interest income |
|
|
78,344 |
|
|
|
79,231 |
|
|
|
86,848 |
|
|
|
243,990 |
|
|
|
233,924 |
|
Purchase accounting accretion related to business combinations |
|
|
(277 |
) |
|
|
(413 |
) |
|
|
(830 |
) |
|
|
(1,093 |
) |
|
|
(2,588 |
) |
Adjusted net interest income |
|
$ |
78,067 |
|
|
$ |
78,818 |
|
|
$ |
86,018 |
|
|
$ |
242,897 |
|
|
$ |
231,336 |
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent net interest income, annualized |
[a] |
$ |
310,821 |
|
|
$ |
317,795 |
|
|
$ |
344,560 |
|
|
$ |
326,214 |
|
|
$ |
312,756 |
|
Adjusted net interest income, annualized |
[b] |
|
309,722 |
|
|
|
316,138 |
|
|
|
341,267 |
|
|
|
324,752 |
|
|
|
309,295 |
|
Average interest-earning assets |
[c] |
|
11,118,167 |
|
|
|
11,130,298 |
|
|
|
11,497,783 |
|
|
|
11,142,780 |
|
|
|
11,550,887 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Net interest margin2 |
[a÷c] |
|
2.80 |
% |
|
|
2.86 |
% |
|
|
3.00 |
% |
|
|
2.93 |
% |
|
|
2.71 |
% |
Adjusted: Net interest margin2 |
[b÷c] |
|
2.79 |
% |
|
|
2.84 |
% |
|
|
2.97 |
% |
|
|
2.91 |
% |
|
|
2.68 |
% |
___________________________________________
- The tax-equivalent adjustments were
calculated using an estimated federal income tax rate of 21%,
applied to non-taxable interest income on investments and
loans.
- Annualized measure.
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 |
|
Nine Months Ended |
|
|
September 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
|
September 30,2023 |
|
September 30,2022 |
Net interest income |
|
$ |
77,791 |
|
|
$ |
78,670 |
|
|
$ |
86,305 |
|
|
$ |
242,318 |
|
|
$ |
232,289 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Tax-equivalent adjustment1 |
|
|
553 |
|
|
|
561 |
|
|
|
543 |
|
|
|
1,672 |
|
|
|
1,635 |
|
Tax-equivalent net interest income |
|
|
78,344 |
|
|
|
79,231 |
|
|
|
86,848 |
|
|
|
243,990 |
|
|
|
233,924 |
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest income |
|
|
31,008 |
|
|
|
28,012 |
|
|
|
30,933 |
|
|
|
90,868 |
|
|
|
97,724 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Net security (gains) losses |
|
|
285 |
|
|
|
2,059 |
|
|
|
(4 |
) |
|
|
2,960 |
|
|
|
2,324 |
|
Noninterest income excluding net securities gains and losses |
|
|
31,293 |
|
|
|
30,071 |
|
|
|
30,929 |
|
|
|
93,828 |
|
|
|
100,048 |
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent revenue |
[a] |
$ |
109,637 |
|
|
$ |
109,302 |
|
|
$ |
117,777 |
|
|
$ |
337,818 |
|
|
$ |
333,972 |
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense |
|
$ |
70,945 |
|
|
$ |
69,205 |
|
|
$ |
70,736 |
|
|
$ |
210,553 |
|
|
$ |
210,204 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
[b] |
|
(2,555 |
) |
|
|
(2,669 |
) |
|
|
(2,871 |
) |
|
|
(7,953 |
) |
|
|
(8,833 |
) |
Non-interest expense excluding amortization of intangible
assets |
[c] |
|
68,390 |
|
|
|
66,536 |
|
|
|
67,865 |
|
|
|
202,600 |
|
|
|
201,371 |
|
Non-operating adjustments: |
|
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(587 |
) |
Data processing |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(214 |
) |
Impairment, professional fees, occupancy, and other |
|
|
(79 |
) |
|
|
(12 |
) |
|
|
(957 |
) |
|
|
(91 |
) |
|
|
(1,294 |
) |
Adjusted noninterest expense |
[f] |
|
68,311 |
|
|
|
66,524 |
|
|
|
66,908 |
|
|
|
202,509 |
|
|
|
199,276 |
|
Provision for unfunded commitments |
|
|
(13 |
) |
|
|
(265 |
) |
|
|
320 |
|
|
|
357 |
|
|
|
(525 |
) |
Amortization of New Markets Tax Credits |
|
|
(2,260 |
) |
|
|
(2,259 |
) |
|
|
(1,665 |
) |
|
|
(6,740 |
) |
|
|
(4,668 |
) |
Adjusted core expense |
[g] |
$ |
66,038 |
|
|
$ |
64,000 |
|
|
$ |
65,563 |
|
|
$ |
196,126 |
|
|
$ |
194,083 |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense, excluding non-operating adjustments |
[f-b] |
$ |
70,866 |
|
|
$ |
69,193 |
|
|
$ |
69,779 |
|
|
$ |
210,462 |
|
|
$ |
208,109 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Efficiency ratio |
[c÷a] |
|
62.38 |
% |
|
|
60.87 |
% |
|
|
57.62 |
% |
|
|
59.97 |
% |
|
|
60.30 |
% |
Adjusted: Efficiency ratio |
[f÷a] |
|
62.31 |
% |
|
|
60.86 |
% |
|
|
56.81 |
% |
|
|
59.95 |
% |
|
|
59.67 |
% |
Adjusted: Core efficiency ratio |
[g÷a] |
|
60.23 |
% |
|
|
58.55 |
% |
|
|
55.67 |
% |
|
|
58.06 |
% |
|
|
58.11 |
% |
___________________________________________
- The 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 |
|
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
Total stockholders' equity |
|
$ |
1,190,158 |
|
|
$ |
1,201,948 |
|
|
$ |
1,198,558 |
|
|
$ |
1,145,977 |
|
|
$ |
1,106,588 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Goodwill and other intangible assets, net |
|
|
(356,343 |
) |
|
|
(358,898 |
) |
|
|
(361,567 |
) |
|
|
(364,296 |
) |
|
|
(367,091 |
) |
Tangible book value |
[a] |
$ |
833,815 |
|
|
$ |
843,050 |
|
|
$ |
836,991 |
|
|
$ |
781,681 |
|
|
$ |
739,497 |
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of common shares outstanding |
[b] |
|
55,342,017 |
|
|
|
55,290,847 |
|
|
|
55,294,455 |
|
|
|
55,279,124 |
|
|
|
55,232,434 |
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value per common share |
[a÷b] |
$ |
15.07 |
|
|
$ |
15.25 |
|
|
$ |
15.14 |
|
|
$ |
14.14 |
|
|
$ |
13.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Assets, Tangible Common Equity, and
Tangible Common Equity to Tangible Assets |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
Total assets |
|
$ |
12,258,250 |
|
|
$ |
12,209,029 |
|
|
$ |
12,344,555 |
|
|
$ |
12,336,677 |
|
|
$ |
12,497,388 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Goodwill and other intangible assets, net |
|
|
(356,343 |
) |
|
|
(358,898 |
) |
|
|
(361,567 |
) |
|
|
(364,296 |
) |
|
|
(367,091 |
) |
Tax effect of other intangible assets1 |
|
|
7,354 |
|
|
|
7,833 |
|
|
|
8,335 |
|
|
|
8,847 |
|
|
|
9,369 |
|
Tangible assets2 |
[a] |
$ |
11,909,261 |
|
|
$ |
11,857,964 |
|
|
$ |
11,991,323 |
|
|
$ |
11,981,228 |
|
|
$ |
12,139,666 |
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity |
|
$ |
1,190,158 |
|
|
$ |
1,201,948 |
|
|
$ |
1,198,558 |
|
|
$ |
1,145,977 |
|
|
$ |
1,106,588 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Goodwill and other intangible assets, net |
|
|
(356,343 |
) |
|
|
(358,898 |
) |
|
|
(361,567 |
) |
|
|
(364,296 |
) |
|
|
(367,091 |
) |
Tax effect of other intangible assets1 |
|
|
7,354 |
|
|
|
7,833 |
|
|
|
8,335 |
|
|
|
8,847 |
|
|
|
9,369 |
|
Tangible common equity2 |
[b] |
$ |
841,169 |
|
|
$ |
850,883 |
|
|
$ |
845,326 |
|
|
$ |
790,528 |
|
|
$ |
748,866 |
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets2 |
[b÷a] |
|
7.06 |
% |
|
|
7.18 |
% |
|
|
7.05 |
% |
|
|
6.60 |
% |
|
|
6.17 |
% |
___________________________________________
- 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 |
|
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
Portfolio loans |
[a] |
$ |
7,856,160 |
|
|
$ |
7,805,284 |
|
|
$ |
7,783,808 |
|
|
$ |
7,725,702 |
|
|
$ |
7,670,114 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
PPP loans amortized cost |
|
|
(598 |
) |
|
|
(667 |
) |
|
|
(750 |
) |
|
|
(845 |
) |
|
|
(1,426 |
) |
Core loans |
[b] |
$ |
7,855,562 |
|
|
$ |
7,804,617 |
|
|
$ |
7,783,058 |
|
|
$ |
7,724,857 |
|
|
$ |
7,668,688 |
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
[c] |
$ |
10,332,362 |
|
|
$ |
10,062,755 |
|
|
$ |
9,801,169 |
|
|
$ |
10,071,280 |
|
|
$ |
10,601,397 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Brokered transaction accounts |
|
|
(6,055 |
) |
|
|
(6,055 |
) |
|
|
(6,005 |
) |
|
|
(1,303 |
) |
|
|
(2,006 |
) |
Time deposits of $250,000 or more |
|
|
(350,276 |
) |
|
|
(297,967 |
) |
|
|
(200,898 |
) |
|
|
(120,377 |
) |
|
|
(103,534 |
) |
Core deposits |
[d] |
$ |
9,976,031 |
|
|
$ |
9,758,733 |
|
|
$ |
9,594,266 |
|
|
$ |
9,949,600 |
|
|
$ |
10,495,857 |
|
|
|
|
|
|
|
|
|
|
|
|
RATIOS |
|
|
|
|
|
|
|
|
|
|
Core loans to portfolio loans |
[b÷a] |
|
99.99 |
% |
|
|
99.99 |
% |
|
|
99.99 |
% |
|
|
99.99 |
% |
|
|
99.98 |
% |
Core deposits to total deposits |
[d÷c] |
|
96.55 |
% |
|
|
96.98 |
% |
|
|
97.89 |
% |
|
|
98.79 |
% |
|
|
99.00 |
% |
Core loans to core deposits |
[b÷d] |
|
78.74 |
% |
|
|
79.98 |
% |
|
|
81.12 |
% |
|
|
77.64 |
% |
|
|
73.06 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Busey’s financial condition, results of operations, plans,
objectives, future performance, and business. Forward-looking
statements, which may be based upon beliefs, expectations, and
assumptions of Busey’s management, and on information currently
available to management, are generally identifiable by the use of
words such as “believe,” “expect,” “anticipate,” “plan,” “intend,”
“estimate,” “may,” “will,” “would,” “could,” “should,” or other
similar expressions. Additionally, all statements in this document,
including forward-looking statements, speak only as of the date
they are made, and Busey undertakes no obligation to update any
statement in light of new information or future events. A number of
factors, many of which are beyond Busey’s ability to control or
predict, could cause actual results to differ materially from those
in Busey’s forward-looking statements. These factors include, among
others, the following: (i) the strength of the local, state,
national, and international economy (including effects of
inflationary pressures and supply chain constraints); (ii) 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);
(iii) changes in state and federal laws, regulations, and
governmental policies concerning Busey's general business
(including changes in response to the recent failures of other
banks); (iv) changes in accounting policies and practices;
(v) changes in interest rates and prepayment rates of Busey’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); (vi) 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; (vii) changes in technology and the
ability to develop and maintain secure and reliable electronic
systems; (viii) the loss of key executives or associates;
(ix) changes in consumer spending; (x) unexpected results
of current and/or future acquisitions, which may include failure to
realize the anticipated benefits of any acquisition and the
possibility that transaction costs may be greater than anticipated;
(xi) unexpected outcomes of existing or new litigation
involving Busey; (xii) fluctuations in the value of securities
held in our securities portfolio; (xiii) concentrations within
our loan portfolio, large loans to certain borrowers, and large
deposits from certain clients; (xiv) the concentration of
large deposits from certain clients who have balances above current
FDIC insurance limits and may withdraw deposits to diversify their
exposure; (xv) the level of non-performing assets on our
balance sheets; (xvi) interruptions involving our information
technology and communications systems or third-party servicers;
(xvii) breaches or failures of our information security
controls or cybersecurity-related incidents; and (xviii) 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
its financial results, is included in Busey’s filings with the
Securities and Exchange Commission.
End Notes
1 |
See “Non-GAAP Financial Information” for a reconciliation. |
2 |
For the quarterly period, average portfolio loans, the denominator
in the net charge off ratio, is calculated on a daily average
basis. For the last twelve-month period, average portfolio loans is
calculated as the quarterly average of the average portfolio loans
balances over the most recent four quarters. |
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 $250 thousand FDIC insurance
limit, less intercompany accounts and collateralized accounts
(including preferred deposits). |
5 |
Central Business District areas within Busey’s footprint include
downtown St. Louis, downtown Indianapolis, and downtown
Chicago. |
6 |
Capital ratios for the third 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 60% MSCI All Country World Index
and 40% Bloomberg Intermediate US Government/Credit Total Return
Index. |
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