First Busey Corporation (Nasdaq: BUSE)
Net Income of $25.7
millionDiluted EPS of
$0.46 |
Fourth Quarter
2023 Highlights
- Adjusted net income1 at
$29.1 million, or $0.52 per diluted common share
- Entered into a definitive agreement
to acquire Merchants & Manufacturers Bank Corporation
(“M&M”), the holding company for Merchants & Manufacturers
Bank (“M&M Bank”)
- Executed a two-part balance sheet
repositioning related to the securities portfolio, expected to be
both capital and earnings accretive
- Non-performing assets declined
34.4% during the fourth quarter of 2023, to $7.9 million, now
representing 0.06% of total assets
- Annualized quarterly net charge-off
ratio of 0.02% and full year net charge-off ratio of 0.03%
- Tangible book
value per common share1 of $16.62 at December 31, 2023,
compared to $15.07 at September 30, 2023, and $14.14 at
December 31, 2022, an increase of 17.5% year-over-year
For additional information, please refer to the
4Q23 Earnings Investor Presentation
Message from our Chairman &
CEO
Fourth Quarter
Financial ResultsNet income for First Busey Corporation
(“Busey,” “Company,” “we,” “us,” or “our”) was $25.7 million for
the fourth quarter of 2023, or $0.46 per diluted common share,
compared to $30.7 million, or $0.54 per diluted common share, for
the third quarter of 2023, and $34.4 million, or $0.61 per diluted
common share, for the fourth quarter of 2022. Adjusted net income1
was $29.1 million, or $0.52 per diluted common share, for the
fourth quarter of 2023, compared to $30.7 million, or $0.55
per diluted common share, for the third quarter of 2023, and $36.3
million, or $0.65 per diluted common share, for the fourth quarter
of 2022. Annualized return on average assets and annualized return
on average tangible common equity1 were 0.83% and 12.06%,
respectively, for the fourth quarter of 2023. Annualized adjusted
return on average assets1 and annualized adjusted return on average
tangible common equity1 were 0.94% and 13.64%, respectively, for
the fourth quarter of 2023. Fourth quarter results included
$0.8 million in net securities gains, a majority of which were
unrealized. Excluding these gains, adjusted net income1 would have
been $28.5 million, equating to adjusted diluted earnings per
common share1 of $0.51.
Pre-provision net revenue1 was $32.9 million for
the fourth quarter of 2023, compared to $38.1 million for the third
quarter of 2023 and $46.4 million for the fourth quarter of 2022.
Pre-provision net revenue to average assets1 was 1.06% for the
fourth quarter of 2023, compared to 1.24% for the third quarter of
2023, and 1.49% for the fourth quarter of 2022. The decline in
pre-provision net revenue in the fourth quarter, compared to the
third quarter, was the result of a $0.7 million decrease in
net interest income, which is primarily the result of deposits
migrating into higher cost offerings, as well as an increase of
$4.0 million in noninterest expense, resulting from
$4.2 million in non-recurring expenses related to corporate
restructuring and acquisition related activities.
Adjusted pre-provision net revenue1 was $40.2
million for the fourth quarter of 2023, compared to $40.5 million
for the third quarter of 2023 and $50.0 million for the fourth
quarter of 2022. Adjusted pre-provision net revenue to average
assets1 was 1.30% for the fourth quarter of 2023, compared to 1.32%
for the third quarter of 2023 and 1.61% for the fourth quarter of
2022.
Taking into account our fourth quarter results,
full year 2023 pre-provision net revenue1 and adjusted
pre-provision net revenue1 were $158.5 million and $172.3 million,
respectively. Net income and adjusted net income1 were $122.6
million, or $2.18 per diluted common share, and $126.0 million, or
$2.24 per diluted common share, respectively. For the full year of
2023, return on average assets and return on average tangible
common equity1 were 1.00% and 14.62%, respectively. Based on
adjusted net income1, return on average assets was 1.03% and return
on average tangible common equity1 was 15.03%. Full year 2023 net
income and adjusted net income1 include the impact of net
securities losses of $1.8 million2, which are primarily
related to unrealized losses recognized on equity securities.
Excluding the impact of these securities losses, adjusted net
income1 would have been $127.8 million, equating to adjusted
diluted earnings per common share1 of $2.27.
Our fee-based businesses continue to add revenue
diversification. Noninterest income excluding net securities gains
and losses1 was $30.8 million, or 28.5% of operating revenue3,
during the fourth quarter of 2023, compared to $31.3 million,
or 28.7% of total operating revenue, for the third quarter of 2023
and $28.9 million, or 24.1% of total operating revenue, for
the fourth quarter of 2022. For the full year 2023, noninterest
income excluding net securities gains and losses was
$124.6 million, or 28.1% of operating revenue. Busey wealth
management fees and FirsTech payment technology solutions
contributed $57.3 million and $21.2 million, respectively, to our
reported consolidated noninterest income for 2023, representing
64.1% on a combined basis. For FirsTech, both the fourth quarter
2023 and full-year 2023 represented record revenue quarterly and
annual reporting periods for the company.
Busey views certain non-operating items,
including acquisition-related and other restructuring charges, as
adjustments to net income reported under U.S. generally accepted
accounting principles ("GAAP"). Non-operating pretax adjustments
for acquisition and other restructuring charges in the fourth
quarter of 2023 were $4.2 million. Busey 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, return on average tangible common equity,
adjusted return on average tangible common equity, adjusted net
interest income, adjusted net interest margin, adjusted noninterest
expense, adjusted core expense, efficiency ratio, adjusted
efficiency ratio, adjusted core efficiency ratio, tangible book
value per common share, tangible common equity, tangible common
equity to tangible assets, core loans, core loans to portfolio
loans, core deposits, core deposits to total deposits, and core
loans to core deposits—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
(see "Non-GAAP Financial Information").
We have effectively managed our noninterest
expense during a time of decades-high inflation, and have been
purposeful in our efforts to rationalize our expense base given our
economic outlook and our view on the future of banking. In the
fourth quarter, Busey completed an executive reorganization and
executed a targeted efficiency optimization plan, expected to
generate annual salary and benefit savings of approximately
$5.6 million. Busey incurred one-time pre-tax severance and
other related restructuring costs of $4.0 million during the
fourth quarter of 2023 related to the executive reorganization and
targeted efficiency optimization plan. We expect to reinvest
approximately half of the anticipated savings to support ongoing
growth initiatives across our franchise over the next several
quarters.
Noninterest expense was $75.0 million in
the fourth quarter of 2023, compared to $70.9 million in the
third quarter of 2023 and $73.7 million in the fourth quarter
of 2022. Adjusted core expense1 decreased to $65.2 million in
the fourth quarter of 2023, compared to $66.0 million in the
third quarter of 2023 and $67.2 million in the fourth quarter
of 2022. As we enter 2024, we expect to continue to prudently
manage our expenses.
Fourth quarter 2023 results were negatively
impacted by an increase in income tax expense as a result of
adjusting our estimated annual effective tax rate ("AETR"). Busey
estimates income tax expense for the year based on amounts expected
to be owed to federal and state tax jurisdictions. An estimated
AETR is established based on this estimate and is used to calculate
our quarterly income tax provision. The fourth quarter effective
tax rate increased to 22.5% compared to 18.2% in the third quarter,
bringing our effective tax rate for the full year 2023 to
20.4%.
Acquisition of Merchants and
Manufacturers Bank Corporation Planned for The Second Quarter of
2024 On November 27, 2023, Busey announced the
signing of a definitive agreement with M&M, pursuant to which
Busey will acquire M&M and its wholly-owned subsidiary, M&M
Bank, through a merger transaction. This partnership will add
M&M’s Life Equity Loan® products to Busey’s existing suite of
services, and expand Busey’s presence in the Chicago Metropolitan
Statistical Area.
Under the terms of the merger agreement,
M&M’s stockholders will have the right to receive for each
share of M&M common stock, at the election of each stockholder
and subject to proration, either (i) $117.74 in cash,
(ii) 5.7294 shares of Busey common stock, or (iii) mixed
consideration of $34.55 in cash and 4.0481 shares of Busey common
stock, with total consideration to consist of approximately 71%
stock and 29% cash. Based upon Busey’s 20‑day volume-weighted
average closing price as of November 24, 2023, the aggregate
implied transaction value is approximately $41.6 million.
The merger is expected to be finalized in the
second quarter of 2024, subject to customary closing conditions and
required approvals, including the approval of M&M’s
stockholders. At the time of the merger, M&M Bank’s banking
centers will become banking centers of Busey Bank. It is
anticipated that M&M Bank will be merged with and into Busey
Bank at a date following the completion of the merger. Busey
incurred one-time acquisition-related expenses of $0.3 million
in the fourth quarter of 2023.
Busey executed a two-part balance sheet
repositioning strategyDuring the fourth quarter of 2023,
Busey sold all 16,878 shares of Visa Class B common stock it
previously held (the “Visa Sale”) for a pre-tax gain of
approximately $5.5 million.
Busey also executed a balance sheet
repositioning of its available-for-sale securities portfolio (the
“Repositioning”) during the fourth quarter of 2023. Busey sold
securities with a carrying value of approximately $110 million
yielding 1.56%, resulting in an approximate pre-tax loss of
$5.3 million. The proceeds were deposited into an
interest-bearing account at the Federal Reserve yielding 5.40%.
The increased net interest spread as a result of
the Visa Sale and the Repositioning is expected to increase net
interest income by approximately $4.3 million on an annualized
basis and improve our net interest margin run rate by 4 basis
points. In addition, execution of these transactions further
bolsters Busey’s liquidity position and balance sheet flexibility,
while also strengthening its capital position. Busey anticipates
reinvesting the proceeds into loan and investment security
opportunities over time.
The combined impact of the gain generated from
the Visa Sale and the loss generated from the Repositioning will
have an immediate positive impact on consolidated stockholders’
equity and book value per share. Risk-based regulatory capital
ratios will increase modestly as a result of the Repositioning
proceeds rotating into lower risk-weighted assets. Busey expects
the above transactions to be accretive to capital and earnings per
share in future periods.
Busey’s Conservative Banking
StrategyBusey’s financial strength is built on a long-term
conservative operating approach. That focus will not change now or
in the future.
The quality of our core deposit franchise is a
critical value driver of our institution. Since March 31, 2023, our
deposit base has grown by $490.0 million, allowing us to
reduce our higher cost Federal Home Loan Bank (“FHLB”) borrowings
to zero. Our granular deposit base continues to position us well,
and as of December 31, 2023, our estimated uninsured and
uncollateralized deposits4 percentage was 27%, and 96.2% of our
deposits were core deposits1. Our retail deposit base was comprised
of more than 257,000 accounts with an average balance of
$22 thousand and an average tenure of 16.5 years as of
December 31, 2023. Our commercial deposit base was comprised
of more than 33,000 accounts with an average balance of
$102 thousand and an average tenure of 12.4 years as of
December 31, 2023. 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 34.4% decline during the fourth quarter of 2023 to
$7.9 million, now representing only 0.06% of total assets.
Busey’s results for the fourth quarter of 2023 include a $0.5
million provision expense for credit losses and a $0.8 million
provision expense for unfunded commitments. The allowance for
credit losses was $91.7 million as of December 31, 2023,
representing 1.20% of total portfolio loans outstanding, and
1,173.7% of non-performing loans. Busey recorded net charge offs of
$0.4 million in the fourth quarter of 2023, which equates to
0.02% of average loans on an annualized basis. As of
December 31, 2023, our commercial real estate loan portfolio
of investor-owned office properties within Central Business
District5 areas remained low at $9.4 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 fourth quarter, Common
Equity Tier 1 and Total Capital to Risk Weighted Assets
ratios6 increased to 13.09% and 17.44%, respectively. In fact, our
regulatory capital ratios continue to provide a buffer of more than
$520 million above levels required to be designated
well-capitalized. Our Tangible Common Equity ratio1 increased to
7.75% during the fourth quarter of 2023, compared to 7.06% for the
third quarter of 2023 and 6.60% for the fourth quarter of 2022.
Busey’s tangible book value per common share1 increased to $16.62
at December 31, 2023, from $15.07 at September 30, 2023
and $14.14 at December 31, 2022, reflecting a 17.5%
year-over-year increase. During the fourth quarter of 2023, we paid
a common share dividend of $0.24 and repurchased 117,812 shares of
our common stock at a weighted average price of $19.30 per
share.
Community BankingBusey’s
Community Banking team now offers new, second chance checking and
savings products—which are proudly BankON certified—offering
hassle-free, affordable options with digital banking access
designed to provide peace of mind. With a suite of online tools
that make it easy to track and manage money, these products offer
qualified customers tools to build financial strength, improve
banking history, and avoid monthly maintenance fees.
As we reflect back on 2023 and look ahead to
2024, we remain cognizant of the evolving economic outlook and
extremely focused on balance sheet strength, profitability, and
growth, in that order. The pending M&M transaction fits with
our acquisition strategy and we are excited to welcome our M&M
colleagues into the Busey family. We are grateful for the
opportunities to earn the business of our customers, based on the
contributions of our talented associates and the continued support
of our loyal shareholders.
|
|
Van A. Dukeman |
|
Chairman, President & Chief Executive Officer |
|
First Busey Corporation |
SELECTED FINANCIAL HIGHLIGHTS
(unaudited)(dollars in thousands, except per share
amounts)
|
Three Months Ended |
|
Years Ended |
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
EARNINGS & PER SHARE AMOUNTS |
|
|
|
|
|
|
|
|
|
Net income |
$ |
25,749 |
|
|
$ |
30,666 |
|
|
$ |
34,387 |
|
|
$ |
122,565 |
|
|
$ |
128,311 |
|
Diluted earnings per common share |
|
0.46 |
|
|
|
0.54 |
|
|
|
0.61 |
|
|
|
2.18 |
|
|
|
2.29 |
|
Cash dividends paid per share |
|
0.24 |
|
|
|
0.24 |
|
|
|
0.23 |
|
|
|
0.96 |
|
|
|
0.92 |
|
Pre-provision net revenue1, 2 |
|
32,909 |
|
|
|
38,139 |
|
|
|
46,360 |
|
|
|
158,502 |
|
|
|
168,493 |
|
Revenue3 |
|
107,888 |
|
|
|
109,084 |
|
|
|
120,037 |
|
|
|
444,034 |
|
|
|
452,374 |
|
|
|
|
|
|
|
|
|
|
|
Net income by operating segments: |
|
|
|
|
|
|
|
|
|
Banking |
|
25,164 |
|
|
|
31,189 |
|
|
|
37,564 |
|
|
|
123,853 |
|
|
|
131,596 |
|
FirsTech |
|
325 |
|
|
|
317 |
|
|
|
(453 |
) |
|
|
830 |
|
|
|
847 |
|
Wealth Management |
|
4,233 |
|
|
|
4,781 |
|
|
|
3,855 |
|
|
|
18,804 |
|
|
|
18,543 |
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
608,647 |
|
|
$ |
252,730 |
|
|
$ |
281,926 |
|
|
$ |
330,952 |
|
|
$ |
411,785 |
|
Investment securities |
|
2,995,223 |
|
|
|
3,148,759 |
|
|
|
3,451,471 |
|
|
|
3,188,815 |
|
|
|
3,731,048 |
|
Loans held for sale |
|
1,679 |
|
|
|
2,267 |
|
|
|
1,623 |
|
|
|
1,885 |
|
|
|
5,178 |
|
Portfolio loans |
|
7,736,010 |
|
|
|
7,834,285 |
|
|
|
7,619,199 |
|
|
|
7,759,472 |
|
|
|
7,445,962 |
|
Interest-earning assets |
|
11,229,326 |
|
|
|
11,118,167 |
|
|
|
11,242,126 |
|
|
|
11,164,594 |
|
|
|
11,473,063 |
|
Total assets |
|
12,308,491 |
|
|
|
12,202,783 |
|
|
|
12,330,132 |
|
|
|
12,246,218 |
|
|
|
12,492,948 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest bearing deposits |
|
2,827,696 |
|
|
|
2,925,244 |
|
|
|
3,494,001 |
|
|
|
3,018,563 |
|
|
|
3,550,517 |
|
Interest-bearing deposits |
|
7,545,234 |
|
|
|
7,217,463 |
|
|
|
6,843,688 |
|
|
|
7,052,370 |
|
|
|
6,958,436 |
|
Total deposits |
|
10,372,930 |
|
|
|
10,142,707 |
|
|
|
10,337,689 |
|
|
|
10,070,933 |
|
|
|
10,508,953 |
|
|
|
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase and federal funds
purchased |
|
182,735 |
|
|
|
190,112 |
|
|
|
236,656 |
|
|
|
200,894 |
|
|
|
244,004 |
|
Interest-bearing liabilities |
|
8,054,663 |
|
|
|
7,864,355 |
|
|
|
7,500,294 |
|
|
|
7,825,459 |
|
|
|
7,583,331 |
|
Total liabilities |
|
11,106,074 |
|
|
|
10,994,376 |
|
|
|
11,207,585 |
|
|
|
11,048,707 |
|
|
|
11,297,777 |
|
Stockholders' equity - common |
|
1,202,417 |
|
|
|
1,208,407 |
|
|
|
1,122,547 |
|
|
|
1,197,511 |
|
|
|
1,195,171 |
|
Tangible common equity2 |
|
846,948 |
|
|
|
850,382 |
|
|
|
756,420 |
|
|
|
838,164 |
|
|
|
824,747 |
|
|
|
|
|
|
|
|
|
|
|
PERFORMANCE RATIOS |
|
|
|
|
|
|
|
|
|
Pre-provision net revenue to average assets1, 2,4 |
|
1.06 |
% |
|
|
1.24 |
% |
|
|
1.49 |
% |
|
|
1.29 |
% |
|
|
1.35 |
% |
Return on average assets4 |
|
0.83 |
% |
|
|
1.00 |
% |
|
|
1.11 |
% |
|
|
1.00 |
% |
|
|
1.03 |
% |
Return on average common equity4 |
|
8.50 |
% |
|
|
10.07 |
% |
|
|
12.15 |
% |
|
|
10.23 |
% |
|
|
10.74 |
% |
Return on average tangible common equity2,4 |
|
12.06 |
% |
|
|
14.31 |
% |
|
|
18.04 |
% |
|
|
14.62 |
% |
|
|
15.56 |
% |
Net interest margin2, 5 |
|
2.74 |
% |
|
|
2.80 |
% |
|
|
3.24 |
% |
|
|
2.88 |
% |
|
|
2.84 |
% |
Efficiency ratio2 |
|
66.89 |
% |
|
|
62.38 |
% |
|
|
58.77 |
% |
|
|
61.65 |
% |
|
|
59.89 |
% |
Noninterest revenue as a % of total revenues3 |
|
28.51 |
% |
|
|
28.69 |
% |
|
|
24.07 |
% |
|
|
28.06 |
% |
|
|
28.50 |
% |
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
Adjusted pre-provision net revenue1, 2 |
$ |
40,223 |
|
|
$ |
40,491 |
|
|
$ |
50,003 |
|
|
$ |
172,290 |
|
|
$ |
179,424 |
|
Adjusted net income2 |
|
29,123 |
|
|
|
30,730 |
|
|
|
36,290 |
|
|
|
126,012 |
|
|
|
131,910 |
|
Adjusted diluted earnings per share2 |
|
0.52 |
|
|
|
0.55 |
|
|
|
0.65 |
|
|
|
2.24 |
|
|
|
2.35 |
|
Adjusted pre-provision net revenue to average assets2,4 |
|
1.30 |
% |
|
|
1.32 |
% |
|
|
1.61 |
% |
|
|
1.41 |
% |
|
|
1.44 |
% |
Adjusted return on average assets2,4 |
|
0.94 |
% |
|
|
1.00 |
% |
|
|
1.17 |
% |
|
|
1.03 |
% |
|
|
1.06 |
% |
Adjusted return on average tangible common equity2,4 |
|
13.64 |
% |
|
|
14.34 |
% |
|
|
19.03 |
% |
|
|
15.03 |
% |
|
|
15.99 |
% |
Adjusted net interest margin2, 5 |
|
2.73 |
% |
|
|
2.79 |
% |
|
|
3.22 |
% |
|
|
2.87 |
% |
|
|
2.81 |
% |
Adjusted efficiency ratio2 |
|
62.98 |
% |
|
|
62.31 |
% |
|
|
56.75 |
% |
|
|
60.68 |
% |
|
|
58.89 |
% |
___________________________________________
- Net interest income plus
noninterest income, excluding securities gains and losses, less
noninterest expense.
- See “Non-GAAP Financial
Information” for reconciliation.
- Revenue consists of net interest
income plus noninterest income, excluding securities gains and
losses.
- For quarterly periods, measures are
annualized.
- On a tax-equivalent basis, assuming
a federal income tax rate of 21%.
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited)(dollars in thousands,
except per share amounts)
|
As of |
|
December 31,2023 |
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
ASSETS |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
719,581 |
|
|
$ |
337,919 |
|
|
$ |
232,703 |
|
|
$ |
275,569 |
|
|
$ |
227,164 |
|
Investment securities |
|
2,970,011 |
|
|
|
3,074,237 |
|
|
|
3,186,984 |
|
|
|
3,302,024 |
|
|
|
3,391,240 |
|
Loans held for sale |
|
2,379 |
|
|
|
3,051 |
|
|
|
1,545 |
|
|
|
2,714 |
|
|
|
1,253 |
|
|
|
|
|
|
|
|
|
|
|
Commercial loans |
|
5,635,048 |
|
|
|
5,824,800 |
|
|
|
5,793,426 |
|
|
|
5,815,703 |
|
|
|
5,766,496 |
|
Retail real estate and retail other loans |
|
2,015,986 |
|
|
|
2,031,360 |
|
|
|
2,011,858 |
|
|
|
1,968,105 |
|
|
|
1,959,206 |
|
Portfolio loans |
|
7,651,034 |
|
|
|
7,856,160 |
|
|
|
7,805,284 |
|
|
|
7,783,808 |
|
|
|
7,725,702 |
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
(91,740 |
) |
|
|
(91,710 |
) |
|
|
(91,639 |
) |
|
|
(91,727 |
) |
|
|
(91,608 |
) |
Premises and equipment |
|
122,594 |
|
|
|
122,538 |
|
|
|
122,669 |
|
|
|
126,515 |
|
|
|
126,524 |
|
Goodwill and other intangible assets, net |
|
353,864 |
|
|
|
356,343 |
|
|
|
358,898 |
|
|
|
361,567 |
|
|
|
364,296 |
|
Right of use asset |
|
11,027 |
|
|
|
11,500 |
|
|
|
11,806 |
|
|
|
12,291 |
|
|
|
12,829 |
|
Other assets |
|
544,665 |
|
|
|
588,212 |
|
|
|
580,779 |
|
|
|
571,794 |
|
|
|
579,277 |
|
Total assets |
$ |
12,283,415 |
|
|
$ |
12,258,250 |
|
|
$ |
12,209,029 |
|
|
$ |
12,344,555 |
|
|
$ |
12,336,677 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Noninterest bearing deposits |
$ |
2,834,655 |
|
|
$ |
2,918,574 |
|
|
$ |
3,086,885 |
|
|
$ |
3,173,783 |
|
|
$ |
3,393,666 |
|
Interest checking, savings, and money market deposits |
|
5,637,227 |
|
|
|
5,747,136 |
|
|
|
5,504,255 |
|
|
|
5,478,715 |
|
|
|
5,822,239 |
|
Time deposits |
|
1,819,274 |
|
|
|
1,666,652 |
|
|
|
1,471,615 |
|
|
|
1,148,671 |
|
|
|
855,375 |
|
Total deposits |
$ |
10,291,156 |
|
|
$ |
10,332,362 |
|
|
$ |
10,062,755 |
|
|
$ |
9,801,169 |
|
|
$ |
10,071,280 |
|
|
|
|
|
|
|
|
|
|
|
Securities sold under agreements to repurchase |
$ |
187,396 |
|
|
$ |
183,702 |
|
|
$ |
202,953 |
|
|
$ |
210,977 |
|
|
$ |
229,806 |
|
Short-term borrowings |
|
12,000 |
|
|
|
12,000 |
|
|
|
212,000 |
|
|
|
615,881 |
|
|
|
351,054 |
|
Long-term debt |
|
240,882 |
|
|
|
243,666 |
|
|
|
246,454 |
|
|
|
249,245 |
|
|
|
252,038 |
|
Junior subordinated debt owed to unconsolidated trusts |
|
71,993 |
|
|
|
71,946 |
|
|
|
71,900 |
|
|
|
71,855 |
|
|
|
71,810 |
|
Lease liability |
|
11,308 |
|
|
|
11,783 |
|
|
|
12,059 |
|
|
|
12,515 |
|
|
|
12,995 |
|
Other liabilities |
|
196,699 |
|
|
|
212,633 |
|
|
|
198,960 |
|
|
|
184,355 |
|
|
|
201,717 |
|
Total liabilities |
|
11,011,434 |
|
|
|
11,068,092 |
|
|
|
11,007,081 |
|
|
|
11,145,997 |
|
|
|
11,190,700 |
|
Total stockholders' equity |
|
1,271,981 |
|
|
|
1,190,158 |
|
|
|
1,201,948 |
|
|
|
1,198,558 |
|
|
|
1,145,977 |
|
Total liabilities & stockholders' equity |
$ |
12,283,415 |
|
|
$ |
12,258,250 |
|
|
$ |
12,209,029 |
|
|
$ |
12,344,555 |
|
|
$ |
12,336,677 |
|
|
|
|
|
|
|
|
|
|
|
SHARE AND PER SHARE AMOUNTS |
|
|
|
|
|
|
|
|
|
Book value per common share |
$ |
23.02 |
|
|
$ |
21.51 |
|
|
$ |
21.74 |
|
|
$ |
21.68 |
|
|
$ |
20.73 |
|
Tangible book value per common share1 |
$ |
16.62 |
|
|
$ |
15.07 |
|
|
$ |
15.25 |
|
|
$ |
15.14 |
|
|
$ |
14.14 |
|
Ending number of common shares outstanding |
|
55,244,119 |
|
|
|
55,342,017 |
|
|
|
55,290,847 |
|
|
|
55,294,455 |
|
|
|
55,279,124 |
|
___________________________________________
- See “Non-GAAP Financial
Information” for reconciliation.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited)(dollars in
thousands, except per share amounts)
|
Three Months Ended |
|
Years Ended |
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
Interest and fees on loans held for sale and portfolio |
$ |
101,425 |
|
$ |
99,844 |
|
|
$ |
84,947 |
|
$ |
385,848 |
|
|
$ |
287,477 |
|
Interest on investment securities |
|
20,634 |
|
|
21,234 |
|
|
|
19,560 |
|
|
82,994 |
|
|
|
69,412 |
|
Other interest income |
|
6,641 |
|
|
1,591 |
|
|
|
1,377 |
|
|
10,531 |
|
|
|
3,097 |
|
Total interest income |
$ |
128,700 |
|
$ |
122,669 |
|
|
$ |
105,884 |
|
$ |
479,373 |
|
|
$ |
359,986 |
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
Interest on deposits |
$ |
45,409 |
|
$ |
37,068 |
|
|
$ |
8,277 |
|
$ |
123,985 |
|
|
$ |
16,112 |
|
Interest on securities sold under agreements to repurchase and
federal funds purchased |
|
1,431 |
|
|
1,327 |
|
|
|
810 |
|
|
5,203 |
|
|
|
1,475 |
|
Interest on short-term borrowings |
|
248 |
|
|
1,964 |
|
|
|
1,221 |
|
|
12,775 |
|
|
|
1,647 |
|
Interest on long-term debt |
|
3,475 |
|
|
3,528 |
|
|
|
3,546 |
|
|
14,106 |
|
|
|
14,285 |
|
Junior subordinated debt owed to unconsolidated trusts |
|
1,004 |
|
|
991 |
|
|
|
881 |
|
|
3,853 |
|
|
|
3,029 |
|
Total interest expense |
$ |
51,567 |
|
$ |
44,878 |
|
|
$ |
14,735 |
|
$ |
159,922 |
|
|
$ |
36,548 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
77,133 |
|
$ |
77,791 |
|
|
$ |
91,149 |
|
$ |
319,451 |
|
|
$ |
323,438 |
|
Provision for credit losses |
|
455 |
|
|
364 |
|
|
|
859 |
|
|
2,399 |
|
|
|
4,623 |
|
Net interest income after provision for credit
losses |
$ |
76,678 |
|
$ |
77,427 |
|
|
$ |
90,290 |
|
$ |
317,052 |
|
|
$ |
318,815 |
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
Wealth management fees |
$ |
13,715 |
|
$ |
14,235 |
|
|
$ |
12,956 |
|
$ |
57,309 |
|
|
$ |
55,378 |
|
Fees for customer services |
|
7,484 |
|
|
7,502 |
|
|
|
6,989 |
|
|
29,044 |
|
|
|
33,111 |
|
Payment technology solutions |
|
5,420 |
|
|
5,226 |
|
|
|
5,022 |
|
|
21,192 |
|
|
|
20,067 |
|
Mortgage revenue |
|
218 |
|
|
311 |
|
|
|
198 |
|
|
1,089 |
|
|
|
1,895 |
|
Income on bank owned life insurance |
|
1,019 |
|
|
1,001 |
|
|
|
947 |
|
|
4,701 |
|
|
|
3,663 |
|
Net securities gains (losses) |
|
761 |
|
|
(285 |
) |
|
|
191 |
|
|
(2,199 |
) |
|
|
(2,133 |
) |
Other noninterest income |
|
2,899 |
|
|
3,018 |
|
|
|
2,776 |
|
|
11,248 |
|
|
|
14,822 |
|
Total noninterest income |
$ |
31,516 |
|
$ |
31,008 |
|
|
$ |
29,079 |
|
$ |
122,384 |
|
|
$ |
126,803 |
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
$ |
42,730 |
|
$ |
39,677 |
|
|
$ |
41,790 |
|
$ |
162,597 |
|
|
$ |
159,016 |
|
Data processing expense |
|
6,236 |
|
|
5,930 |
|
|
|
5,848 |
|
|
23,708 |
|
|
|
21,648 |
|
Net occupancy expense |
|
4,318 |
|
|
4,594 |
|
|
|
4,638 |
|
|
18,214 |
|
|
|
19,130 |
|
Furniture and equipment expense |
|
1,694 |
|
|
1,638 |
|
|
|
1,771 |
|
|
6,759 |
|
|
|
7,645 |
|
Professional fees |
|
2,574 |
|
|
1,542 |
|
|
|
1,432 |
|
|
7,147 |
|
|
|
6,125 |
|
Amortization of intangible assets |
|
2,479 |
|
|
2,555 |
|
|
|
2,795 |
|
|
10,432 |
|
|
|
11,628 |
|
Interchange expense |
|
1,355 |
|
|
1,786 |
|
|
|
1,692 |
|
|
6,864 |
|
|
|
6,298 |
|
FDIC insurance |
|
1,167 |
|
|
1,475 |
|
|
|
950 |
|
|
5,650 |
|
|
|
4,058 |
|
Other operating expenses |
|
12,426 |
|
|
11,748 |
|
|
|
12,761 |
|
|
44,161 |
|
|
|
48,333 |
|
Total noninterest expense |
$ |
74,979 |
|
$ |
70,945 |
|
|
$ |
73,677 |
|
$ |
285,532 |
|
|
$ |
283,881 |
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
$ |
33,215 |
|
$ |
37,490 |
|
|
$ |
45,692 |
|
$ |
153,904 |
|
|
$ |
161,737 |
|
Income taxes |
|
7,466 |
|
|
6,824 |
|
|
|
11,305 |
|
|
31,339 |
|
|
|
33,426 |
|
Net income |
$ |
25,749 |
|
$ |
30,666 |
|
|
$ |
34,387 |
|
$ |
122,565 |
|
|
$ |
128,311 |
|
|
|
|
|
|
|
|
|
|
|
SHARE AND PER SHARE AMOUNTS |
|
|
|
|
|
|
|
|
|
Basic earnings per common share |
$ |
0.46 |
|
$ |
0.55 |
|
|
$ |
0.62 |
|
$ |
2.21 |
|
|
$ |
2.32 |
|
Diluted earnings per common share |
$ |
0.46 |
|
$ |
0.54 |
|
|
$ |
0.61 |
|
$ |
2.18 |
|
|
$ |
2.29 |
|
Average common shares outstanding |
|
55,403,662 |
|
|
55,486,700 |
|
|
|
55,350,423 |
|
|
55,432,322 |
|
|
|
55,387,073 |
|
Diluted average common shares outstanding |
|
56,333,033 |
|
|
56,315,492 |
|
|
|
56,177,790 |
|
|
56,256,148 |
|
|
|
56,137,164 |
|
Balance Sheet Strength
Our balance sheet remains a source of strength.
Total assets were $12.28 billion as of December 31, 2023,
compared to $12.26 billion as of September 30, 2023, and
$12.34 billion as of December 31, 2022.
As has been our practice, we remain steadfast in
our conservative approach to underwriting and disciplined approach
to pricing, particularly given our outlook for the economy in the
coming quarters, and this approach has impacted loan growth as
predicted. Portfolio loans totaled $7.65 billion at
December 31, 2023, compared to $7.86 billion at
September 30, 2023, and $7.73 billion at
December 31, 2022. The $205.1 million decline in
portfolio loans during the fourth quarter of 2023 resulted from
customer payoffs, reduced customer line utilization, and lower new
origination volume.
Average portfolio loans were $7.74 billion
for the fourth quarter of 2023, compared to $7.83 billion for
the third quarter of 2023 and $7.62 billion for the fourth
quarter of 2022. Average interest-earning assets were
$11.23 billion for the fourth quarter of 2023, compared to
$11.12 billion for the third quarter of 2023, and
$11.24 billion for the fourth quarter of 2022.
Total deposits were $10.29 billion at
December 31, 2023, compared to $10.33 billion at
September 30, 2023, and $10.07 billion at
December 31, 2022. Average deposits were $10.37 billion
for the fourth quarter of 2023, compared to $10.14 billion for
the third quarter of 2023 and $10.34 billion for the fourth
quarter of 2022. 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 96.2% of total deposits as of December 31, 2023. Cost of
deposits was 1.74% in the fourth quarter of 2023, which represents
a 29 basis point increase from the third quarter of 2023.
Excluding time deposits, Busey’s cost of deposits was 1.31% in the
fourth quarter of 2023, a 22 basis point increase from the
third quarter of 2023.
Short term borrowings were $12.0 million at
both December 31, 2023, and September 30, 2023, compared
to $351.1 million at December 31, 2022. We had no
borrowings from the FHLB at the end of the third or fourth quarter
of 2023, compared to $339.1 million at the end of the fourth
quarter of 2022. We have sufficient on- and off-balance sheet
liquidity7 to manage deposit fluctuations and the liquidity needs
of our customers. As of December 31, 2023, our available
sources of on- and off-balance sheet liquidity totaled
$6.77 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 beginning in the second quarter and we
expect to continue to implement prudent and measured strategies to
generate deposit growth. New certificate of deposit production in
the fourth quarter of 2023 had a weighted average term of
9.3 months at a rate of 4.34%, 101 basis points below our
average marginal wholesale funding cost during the quarter. In
total, our deposit initiatives contributed $192 million of
retail deposit growth in the fourth quarter of 2023 and
$289 million for the full year 2023. 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 $83.4 million in the fourth quarter of
2023. For 2024, cash flows from our securities portfolio are
expected to be approximately $342.0 million with a yield of
1.57%.
Asset Quality
Credit quality continues to be exceptionally
strong. Loans 30-89 days past due totaled $5.8 million as of
December 31, 2023, compared to $5.9 million as of
September 30, 2023, and $6.5 million as of
December 31, 2022. Non-performing loans were $7.8 million
as of December 31, 2023, compared to $12.0 million as of
September 30, 2023, and $15.7 million as of
December 31, 2022. Continued disciplined credit management
resulted in non-performing loans as a percentage of portfolio loans
of 0.10% as of December 31, 2023, 0.15% as of
September 30, 2023, and 0.20% as of December 31, 2022.
Non-performing assets were 0.06% of total assets for fourth quarter
of 2023, compared to 0.10% for the third quarter of 2023 and 0.13%
for the fourth quarter of 2022. Our total classified assets
increased to $72.3 million at December 31, 2023, from
$59.6 million at September 30, 2023, while remaining
significantly below the level of $107.1 million reported at
December 31, 2022.
Net charge-offs were $0.4 million for the
fourth quarter of 2023, compared to $0.3 million for the third
quarter of 2023, and net recoveries of an immaterial amount for the
fourth quarter of 2022. Our ratio of net charge-offs to average
loans was 0.02% during the fourth quarter of 2023 and 0.03% for the
full year. The allowance as a percentage of portfolio loans was
1.20% as of December 31, 2023, compared to 1.17% as of
September 30, 2023, and 1.19% as of December 31, 2022.
The allowance as a percentage of non-performing loans was 1,173.7%
as of December 31, 2023, compared to 763.8% as of
September 30, 2023, and 582.0% as of December 31,
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 |
|
December 31,2023 |
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
Total assets |
$ |
12,283,415 |
|
|
$ |
12,258,250 |
|
|
$ |
12,209,029 |
|
|
$ |
12,344,555 |
|
|
$ |
12,336,677 |
|
Portfolio loans |
|
7,651,034 |
|
|
|
7,856,160 |
|
|
|
7,805,284 |
|
|
|
7,783,808 |
|
|
|
7,725,702 |
|
Loans 30 – 89 days past due |
|
5,779 |
|
|
|
5,934 |
|
|
|
5,169 |
|
|
|
5,472 |
|
|
|
6,548 |
|
Non-performing loans: |
|
|
|
|
|
|
|
|
|
Non-accrual loans |
|
7,441 |
|
|
|
11,298 |
|
|
|
15,209 |
|
|
|
14,714 |
|
|
|
15,067 |
|
Loans 90+ days past due and still accruing |
|
375 |
|
|
|
709 |
|
|
|
569 |
|
|
|
500 |
|
|
|
673 |
|
Non-performing loans |
$ |
7,816 |
|
|
$ |
12,007 |
|
|
$ |
15,778 |
|
|
$ |
15,214 |
|
|
$ |
15,740 |
|
Non-performing loans, segregated by geography: |
|
|
|
|
|
|
|
|
|
Illinois / Indiana |
$ |
3,715 |
|
|
$ |
7,951 |
|
|
$ |
11,681 |
|
|
$ |
10,416 |
|
|
$ |
10,347 |
|
Missouri |
|
3,836 |
|
|
|
3,747 |
|
|
|
3,928 |
|
|
|
4,103 |
|
|
|
4,676 |
|
Florida |
|
265 |
|
|
|
309 |
|
|
|
169 |
|
|
|
695 |
|
|
|
717 |
|
Other non-performing assets |
|
125 |
|
|
|
96 |
|
|
|
68 |
|
|
|
759 |
|
|
|
850 |
|
Non-performing assets |
$ |
7,941 |
|
|
$ |
12,103 |
|
|
$ |
15,846 |
|
|
$ |
15,973 |
|
|
$ |
16,590 |
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
$ |
91,740 |
|
|
$ |
91,710 |
|
|
$ |
91,639 |
|
|
$ |
91,727 |
|
|
$ |
91,608 |
|
|
|
|
|
|
|
|
|
|
|
RATIOS |
|
|
|
|
|
|
|
|
|
Non-performing loans to portfolio loans |
|
0.10 |
% |
|
|
0.15 |
% |
|
|
0.20 |
% |
|
|
0.20 |
% |
|
|
0.20 |
% |
Non-performing assets to total assets |
|
0.06 |
% |
|
|
0.10 |
% |
|
|
0.13 |
% |
|
|
0.13 |
% |
|
|
0.13 |
% |
Non-performing assets to portfolio loans and other non-performing
assets |
|
0.10 |
% |
|
|
0.15 |
% |
|
|
0.20 |
% |
|
|
0.21 |
% |
|
|
0.21 |
% |
Allowance for credit losses to portfolio loans |
|
1.20 |
% |
|
|
1.17 |
% |
|
|
1.17 |
% |
|
|
1.18 |
% |
|
|
1.19 |
% |
Allowance for credit losses as a percentage of non-performing
loans |
|
1,173.75 |
% |
|
|
763.80 |
% |
|
|
580.80 |
% |
|
|
602.91 |
% |
|
|
582.01 |
% |
NET CHARGE-OFFS (RECOVERIES) AND
PROVISION EXPENSE (RELEASE)
(unaudited)(dollars in thousands)
|
Three Months Ended |
|
Years Ended |
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
Net charge-offs (recoveries) |
$ |
425 |
|
|
$ |
293 |
|
|
$ |
(27 |
) |
|
$ |
2,267 |
|
|
$ |
902 |
|
Provision expense (release) |
|
455 |
|
|
|
364 |
|
|
|
859 |
|
|
|
2,399 |
|
|
|
4,623 |
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs, annualized |
|
1,686 |
|
|
|
1,162 |
|
|
NM |
|
|
2,267 |
|
|
|
902 |
|
Average portfolio loans |
|
7,736,010 |
|
|
|
7,834,285 |
|
|
|
7,619,199 |
|
|
|
7,759,472 |
|
|
|
7,445,962 |
|
Net charge-off ratio |
|
0.02 |
% |
|
|
0.01 |
% |
|
NM |
|
|
0.03 |
% |
|
|
0.01 |
% |
Net Interest Margin1
and Net Interest Income
Net interest margin was 2.74% for the fourth
quarter of 2023, compared to 2.80% for the third quarter of 2023
and 3.24% for the fourth quarter of 2022. Excluding purchase
accounting accretion, adjusted net interest margin1 was 2.73% for
the fourth quarter of 2023, compared to 2.79% in the third quarter
of 2023 and 3.22% in the fourth quarter of 2022. Net interest
income was $77.1 million in the fourth quarter of 2023,
compared to $77.8 million in the third quarter of 2023 and
$91.1 million in the fourth quarter of 2022.
The FOMC raised rates by a total of
525 basis points since the onset of the current FOMC
tightening cycle that began in the first quarter of 2022, with no
further increases during the fourth quarter of 2023. Rising rates
initially have a positive impact on net interest margin, as assets,
in particular commercial loans, reprice more quickly and to a
greater extent than liabilities. As deposit and funding costs
increase in response to the tightening rate cycle, and we
experience deposit migration into higher cost offerings and funding
alternatives, some of the net interest margin expansion is
reversed, which we began to experience in the first quarter of
2023. Components of the 6 basis point decrease in net
interest margin during the fourth quarter of 2023 include:
- Increases in the cash and
securities portfolio yield contributed +15 basis points
- Reduced borrowing costs contributed
+6 basis points
- Increased income from our held for
sale and portfolio loans contributed +2 basis points
- Increased non-maturity deposit
funding costs contributed -17 basis points
- Increased time deposit funding
costs contributed -12 basis points
Based on our most recent Asset Liability
Management Committee (“ALCO”) model, a 100 basis point
parallel rate shock is expected to increase net interest income by
1.8% over the subsequent twelve-month period. Market competition
for deposits continues and deposit betas are likely to rise
marginally during the first half of 2024, which is factored into
our ALCO model and margin forecast. Busey continues to evaluate
off-balance sheet hedging and balance sheet restructuring
strategies as well as embedding rate protection in our asset
originations to provide stabilization to net interest income in
lower rate environments. Time deposit specials and retail incentive
campaigns continue to provide sufficient funding flows and we
maintained excess earning cash levels throughout the quarter. Since
the onset of the current FOMC tightening cycle that began in the
first quarter of 2022, our cumulative interest-bearing non-maturity
deposit beta has been 36%. Our cycle-to-date total deposit beta has
been 31% through December 31, 2023. Deposit betas are
calculated based on an average federal funds rate of 5.50% during
the fourth quarter of 2023, which is a 7 basis point increase
over the third quarter of 2023 average federal funds rate of
5.43%.
Noninterest Income
Noninterest income was $31.5 million for
the fourth quarter of 2023, as compared to $31.0 million for the
third quarter of 2023 and $29.1 million for the fourth quarter of
2022. Revenues from wealth management fees and payment technology
solutions activities represented 60.7% of Busey’s noninterest
income for the quarter ended December 31, 2023, providing a
balance to spread-based revenue from traditional banking
activities.
Consolidated wealth management fees were
$13.7 million for the fourth quarter of 2023, compared to
$14.2 million for the third quarter of 2023 and $13.0 million for
the fourth quarter of 2022. On a segment basis, Wealth Management
generated $13.8 million in revenue during the fourth quarter
of 2023, a 6.6% increase over the $13.0 million reported in
the fourth quarter of 2022. The Wealth Management operating segment
generated net income of $4.2 million in fourth quarter of
2023, compared to $4.8 million in the third quarter of 2023
and $3.9 million in the fourth quarter of 2022. Busey’s Wealth
Management division ended the fourth quarter of 2023 with
$12.1 billion in assets under care, compared to $11.5 billion
at the end of the third quarter of 2023 and $11.1 billion at the
end of the fourth quarter of 2022. Our portfolio management team
continues to focus on long-term returns and managing risk in the
face of volatile markets, and has outperformed its blended
benchmark8 over the last three and five years.
Payment technology solutions revenue was
$5.4 million for the fourth quarter of 2023, compared to
$5.2 million for the third quarter of 2023 and
$5.0 million for the fourth quarter of 2022. Excluding
intracompany eliminations, the FirsTech operating segment generated
revenue of $5.8 million during the fourth quarter of 2023,
compared to $5.7 million in the third quarter of 2023 and
$5.4 million in the fourth quarter of 2022. Fourth quarter of
2023 results marked a new record high reported quarterly revenue
for FirsTech. The FirsTech operating segment generated net income
of $0.3 million in both the third and fourth quarters of 2023
and net losses of $0.5 million in the fourth quarter of
2022.
Fees for customer services were
$7.5 million for both the third and fourth quarters of 2023
and $7.0 million in the fourth quarter of 2022.
Net securities gains were $0.8 million for
the fourth quarter of 2023, which were comprised of
$0.2 million in realized net gains and a $0.6 million
unrealized gain on equity securities.
Other noninterest income was $2.9 million
in the fourth quarter of 2023, compared to $3.0 million in the
third quarter of 2023 and $2.8 million in the fourth quarter
of 2022. Primary contributors to other noninterest income include
swap origination fees, gains on commercial loans sales, and changes
in venture capital investment valuations.
Operating Efficiency
Noninterest expense was $75.0 million in
the fourth quarter of 2023, compared to $70.9 million in the
third quarter of 2023 and $73.7 million for the fourth quarter
of 2022. The efficiency ratio1 was 66.9% for the fourth quarter of
2023, compared to 62.4% for the third quarter of 2023, and 58.8%
for the fourth quarter of 2022. The adjusted core efficiency ratio1
was 60.1% for the fourth quarter of 2023, compared to 60.2% for the
third quarter of 2023 and 55.8% for the fourth quarter of 2022.
Busey remains focused on expense discipline.
Noteworthy components of noninterest expense are
as follows:
- Salaries,
wages, and employee benefits expenses were $42.7 million in
the fourth quarter of 2023, compared to $39.7 million in the
third quarter of 2023 and $41.8 million in the fourth quarter
of 2022. Busey recorded $3.8 million of non-operating
salaries, wages, and employee benefit expenses in the fourth
quarter of 2023, as compared to none in the third quarter of 2023
and $2.4 million in the fourth quarter of 2022. Excluding
these items, salaries, wages, and employee benefits expenses were
$38.9 million in the fourth quarter of 2023, compared to
$39.4 million in the fourth quarter of 2022. Our
associate-base consisted of 1,479 full-time equivalents as of
December 31, 2023, compared to 1,484 as of September 30,
2023, and 1,497 as of December 31, 2022.
- Data processing
expense was $6.2 million in the fourth quarter of 2023,
compared to $5.9 million in the third quarter of 2023 and
$5.8 million in the fourth quarter of 2022. The year-over-year
increase was related to Company-wide investments in technology
enhancements, as well as inflation-driven price increases.
- Professional
fees were $2.6 million in the fourth quarter of 2023, compared
to $1.5 million in the third quarter of 2023 and
$1.4 million in the fourth quarter of 2022. Busey recorded
$0.4 million of non-operating Professional fees in the fourth
quarter of 2023, as compared to $0.1 million in the third
quarter of 2023 and an immaterial amount in the fourth quarter of
2022. The quarter-over-quarter increase was driven by seasonally
higher audit and accounting fees and increased consulting
expenses.
- Amortization of
intangible assets was $2.5 million in the fourth quarter of
2023, compared to $2.6 million in the third quarter of 2023 and
$2.8 million in the fourth quarter of 2022.
- FDIC insurance
expense was $1.2 million in the fourth quarter of 2023,
compared to $1.5 million in the third quarter of 2023 and
$1.0 million in the fourth quarter of 2022. Increases in 2023
were a result of an FDIC final rule to increase the initial base
deposit insurance assessment rate applicable to all FDIC-insured
depository institutions by two basis points.
- Other operating
expenses were $12.4 million for the fourth quarter of 2023,
compared to $11.7 million in the third quarter of 2023 and
$12.8 million in the fourth quarter of 2022. The
quarter-over-quarter increase is attributable to multiple items,
including increases in the provision for unfunded commitments,
marketing, and business development expenses.
Busey's effective tax rate for the fourth
quarter of 2023 was 22.5%, bringing the full year effective tax
rate for 2023 to 20.4%, 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.
In January 2024, Busey adopted ASU 2023-02,
which allows entities to elect to account for equity investments
made primarily for the purpose of receiving income tax credits
using the proportional amortization method, regardless of the tax
credit program through which the investment earns income tax
credits, if certain conditions are met. The proportional
amortization method results in the cost of the investment being
amortized in proportion to the income tax credits and other income
tax benefits received, with the amortization of the investment and
the income tax credits being presented net in the income statement
as a component of income tax expense as opposed to being presented
on a gross basis on the income statement as a component of
noninterest expense and income tax expense.
Capital Strength
Busey's strong capital levels, coupled with its
earnings, have allowed the Company to provide a steady return to
its stockholders through dividends. On January 26, 2024, Busey
will pay a cash dividend of $0.24 per common share to stockholders
of record as of January 19, 2024. Busey has consistently paid
dividends to its common stockholders since the bank holding company
was organized in 1980.
As of December 31, 2023, Busey continued to
exceed the capital adequacy requirements necessary to be considered
“well-capitalized” under applicable regulatory guidelines. Busey’s
Common Equity Tier 1 ratio is estimated6 to be 13.09% at
December 31, 2023, compared to 12.52% at September 30,
2023, and 11.96% at December 31, 2022. Our Total Capital to
Risk Weighted Assets ratio is estimated6 to be 17.44% at
December 31, 2023, compared to 16.72% at September 30,
2023, and 16.12% at December 31, 2022.
Busey’s tangible common equity1 was
$925.0 million at December 31, 2023, compared to $841.2
million at September 30, 2023, and $790.5 million at
December 31, 2022. Tangible common equity1 represented 7.75%
of tangible assets at December 31, 2023, compared to 7.06% at
September 30, 2023, and 6.60% at December 31, 2022.
Busey’s tangible book value per common share1 increased to $16.62
at December 31, 2023, from $15.07 at September 30, 2023
and $14.14 at December 31, 2022, reflecting a 17.5%
year-over-year increase. The ratios of tangible common equity to
tangible assets1 and tangible book value per common share have been
impacted by the fair market valuation adjustment of Busey’s
securities portfolio as a result of the current rate environment,
which is reflected in the accumulated other comprehensive income
(loss) component of shareholder’s equity.
During the fourth quarter of 2023, Busey
purchased 117,812 shares of its common stock at a weighted average
price of $19.30 per share for a total of $2.3 million under
the Company’s stock repurchase plan. Repurchases were executed due
to favorable pricing of Busey’s shares during the fourth quarter of
2023. As of December 31, 2023, Busey had 1,919,275 shares
remaining on its stock repurchase plan available for
repurchase.
4Q23 Earnings Investor
Presentation
For additional information on Busey’s
financial condition and operating results, please refer to
the 4Q23 Earnings Investor
Presentation furnished via Form 8-K on
January 23, 2024, in connection with
this earnings release.
Corporate Profile
As of December 31, 2023, First Busey
Corporation (Nasdaq: BUSE) was a $12.28 billion financial holding
company headquartered in Champaign, Illinois.
Busey Bank, a wholly-owned bank subsidiary of
First Busey Corporation, had total assets of $12.25 billion as of
December 31, 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. More information about Busey Bank can be
found at busey.com.
Through Busey’s Wealth Management division, the
Company provides a full range of asset management, investment,
brokerage, fiduciary, philanthropic advisory, tax preparation, and
farm management services to individuals, businesses, and
foundations. Assets under care totaled $12.14 billion as of
December 31, 2023. More information about Busey’s Wealth
Management services can be found at
busey.com/wealth-management.
Busey Bank’s wholly-owned subsidiary, FirsTech,
specializes in the evolving financial technology needs of small and
medium-sized businesses, highly regulated enterprise industries,
and financial institutions. FirsTech provides comprehensive and
innovative payment technology solutions including online, mobile,
and voice-recognition bill payments; money and data movement;
merchant services; direct debit services; lockbox remittance
processing for payments made by mail; and walk-in payments at
retail agents. Additionally, FirsTech simplifies client workflows
through integrations enabling support with billing, reconciliation,
bill reminders, and treasury services. More information about
FirsTech can be found at firstechpayments.com.
Busey Bank is honored to be named among
America’s Best Banks by Forbes magazine for the second consecutive
year. Ranked 26th overall in 2023, compared to 52nd in 2022, Busey
was once again the top-ranked bank headquartered in Illinois. Busey
is humbled to be named among the 2023 Best Banks to Work For by
American Banker, the 2023 Best Places to Work in Money Management
by Pensions and Investments, the 2023 Best Places to Work in
Illinois by Daily Herald Business Ledger, and the 2023 Best
Companies to Work For in Florida by Florida Trend magazine. We are
honored to be consistently recognized nationally and locally for
our engaged culture of integrity and commitment to community
development.
For more information about us, visit
busey.com.
Category: FinancialSource: First Busey
Corporation
Contacts:
Jeffrey D. Jones, Chief Financial
Officer217-365-4130
Non-GAAP Financial
Information
This earnings release contains certain financial
information determined by methods other than U.S. Generally
Accepted Accounting Principles (“GAAP”). Management uses these
non-GAAP measures, together with the related GAAP measures, in
analysis of Busey’s performance and in making business decisions,
as well as for comparison to the Company’s peers. Busey believes
the adjusted measures are useful for investors and management to
understand the effects of certain non-core and non-recurring
noninterest items and provide additional perspective on the
Company’s performance over time.
A reconciliation to what management believes to
be the most directly comparable GAAP financial
measures—specifically, net interest income, total noninterest
income, net security gains and losses, and total noninterest
expense in the case of pre-provision net revenue, adjusted
pre-provision net revenue, pre-provision net revenue to average
assets, and adjusted pre-provision net revenue to average assets;
net income in the case of adjusted net income, adjusted diluted
earnings per share, adjusted return on average assets, average
tangible common equity, return on average tangible common equity,
and adjusted return on average tangible common equity; net income
and net security gains and losses in the case of net income
excluding net securities gains and losses and diluted earnings per
share excluding net securities gains and losses; net interest
income in the case of adjusted net interest income and adjusted net
interest margin; net interest income, total noninterest income, and
total noninterest expense in the case of adjusted noninterest
expense, noninterest expense excluding non-operating adjustments,
adjusted core expense, efficiency ratio, adjusted efficiency ratio,
and adjusted core efficiency ratio; total assets and goodwill and
other intangible assets in the case of tangible assets; total
stockholders’ equity in the case of tangible book value per common
share; total assets and total stockholders’ equity in the case of
tangible common equity and tangible common equity to tangible
assets; portfolio loans in the case of core loans and core loans to
portfolio loans; total deposits in the case of core deposits and
core deposits to total deposits; and portfolio loans and total
deposits in the case of core loans to core deposits—appears
below.
These non-GAAP disclosures have inherent
limitations and are not audited. They should not be considered in
isolation or as a substitute for operating results reported in
accordance with GAAP, nor are they necessarily comparable to
non-GAAP performance measures that may be presented by other
companies. Tax effected numbers included in these non-GAAP
disclosures are based on estimated statutory rates or effective
rates as appropriate.
Reconciliation Of Non-GAAP Financial
Measures (unaudited)
Pre-Provision Net Revenue,
Adjusted Pre-Provision Net Revenue,Pre-Provision Net Revenue to Average Assets, and
Adjusted Pre-Provision Net Revenue to Average Assets |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
PRE-PROVISION NET REVENUE |
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
77,133 |
|
|
$ |
77,791 |
|
|
$ |
91,149 |
|
|
$ |
319,451 |
|
|
$ |
323,438 |
|
Total noninterest income |
|
|
31,516 |
|
|
|
31,008 |
|
|
|
29,079 |
|
|
|
122,384 |
|
|
|
126,803 |
|
Net security (gains) losses |
|
|
(761 |
) |
|
|
285 |
|
|
|
(191 |
) |
|
|
2,199 |
|
|
|
2,133 |
|
Total noninterest expense |
|
|
(74,979 |
) |
|
|
(70,945 |
) |
|
|
(73,677 |
) |
|
|
(285,532 |
) |
|
|
(283,881 |
) |
Pre-provision net revenue |
|
|
32,909 |
|
|
|
38,139 |
|
|
|
46,360 |
|
|
|
158,502 |
|
|
|
168,493 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Acquisition and other restructuring expenses |
|
|
4,237 |
|
|
|
79 |
|
|
|
2,442 |
|
|
|
4,328 |
|
|
|
4,537 |
|
Provision for unfunded commitments |
|
|
818 |
|
|
|
13 |
|
|
|
(464 |
) |
|
|
461 |
|
|
|
61 |
|
Amortization of New Markets Tax Credits |
|
|
2,259 |
|
|
|
2,260 |
|
|
|
1,665 |
|
|
|
8,999 |
|
|
|
6,333 |
|
Adjusted pre-provision net revenue |
|
$ |
40,223 |
|
|
$ |
40,491 |
|
|
$ |
50,003 |
|
|
$ |
172,290 |
|
|
$ |
179,424 |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-provision net revenue, annualized |
[a] |
$ |
130,563 |
|
|
$ |
151,312 |
|
|
$ |
183,928 |
|
|
$ |
158,502 |
|
|
$ |
168,493 |
|
Adjusted pre-provision net revenue, annualized |
[b] |
|
159,580 |
|
|
|
160,644 |
|
|
|
198,381 |
|
|
|
172,290 |
|
|
|
179,424 |
|
Average total assets |
[c] |
|
12,308,491 |
|
|
|
12,202,783 |
|
|
|
12,330,132 |
|
|
|
12,246,218 |
|
|
|
12,492,948 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Pre-provision net revenue to average
assets1 |
[a÷c] |
|
1.06 |
% |
|
|
1.24 |
% |
|
|
1.49 |
% |
|
|
1.29 |
% |
|
|
1.35 |
% |
Adjusted: Pre-provision net revenue to average
assets1 |
[b÷c] |
|
1.30 |
% |
|
|
1.32 |
% |
|
|
1.61 |
% |
|
|
1.41 |
% |
|
|
1.44 |
% |
___________________________________________
- For quarterly periods, measures are
annualized.
Adjusted Net Income,
Adjusted Diluted Earnings Per Share,
Adjusted Return on Average Assets,
Average Tangible Common Equity,
Return on Average Tangible Common Equity, and
Adjusted Return on Average Tangible Common Equity |
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
NET INCOME ADJUSTED FOR NON-OPERATING ITEMS |
|
|
|
|
|
|
|
|
|
|
Net income |
[a] |
$ |
25,749 |
|
|
$ |
30,666 |
|
|
$ |
34,387 |
|
|
$ |
122,565 |
|
|
$ |
128,311 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Acquisition expenses: |
|
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
587 |
|
Data processing |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
214 |
|
Professional fees, occupancy, and other |
|
|
266 |
|
|
|
79 |
|
|
|
16 |
|
|
|
357 |
|
|
|
258 |
|
Other restructuring expenses: |
|
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
|
|
3,760 |
|
|
|
— |
|
|
|
2,409 |
|
|
|
3,760 |
|
|
|
2,409 |
|
Loss on leases or fixed asset impairment |
|
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
|
|
986 |
|
Professional fees, occupancy, and other |
|
|
211 |
|
|
|
— |
|
|
|
7 |
|
|
|
211 |
|
|
|
83 |
|
Related tax benefit1 |
|
|
(863 |
) |
|
|
(15 |
) |
|
|
(539 |
) |
|
|
(881 |
) |
|
|
(938 |
) |
Adjusted net income |
[b] |
$ |
29,123 |
|
|
$ |
30,730 |
|
|
$ |
36,290 |
|
|
$ |
126,012 |
|
|
$ |
131,910 |
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
|
Diluted average common shares outstanding |
[c] |
|
56,333,033 |
|
|
|
56,315,492 |
|
|
|
56,177,790 |
|
|
|
56,256,148 |
|
|
|
56,137,164 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Diluted earnings per share |
[a÷c] |
$ |
0.46 |
|
|
$ |
0.54 |
|
|
$ |
0.61 |
|
|
$ |
2.18 |
|
|
$ |
2.29 |
|
Adjusted: Diluted earnings per share |
[b÷c] |
$ |
0.52 |
|
|
$ |
0.55 |
|
|
$ |
0.65 |
|
|
$ |
2.24 |
|
|
$ |
2.35 |
|
|
|
|
|
|
|
|
|
|
|
|
RETURN ON AVERAGE ASSETS |
|
|
|
|
|
|
|
|
|
|
Net income, annualized |
[d] |
$ |
102,156 |
|
|
$ |
121,664 |
|
|
$ |
136,427 |
|
|
$ |
122,565 |
|
|
$ |
128,311 |
|
Adjusted net income, annualized |
[e] |
|
115,542 |
|
|
|
121,918 |
|
|
|
143,977 |
|
|
|
126,012 |
|
|
|
131,910 |
|
Average total assets |
[f] |
|
12,308,491 |
|
|
|
12,202,783 |
|
|
|
12,330,132 |
|
|
|
12,246,218 |
|
|
|
12,492,948 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Return on average assets2 |
[d÷f] |
|
0.83 |
% |
|
|
1.00 |
% |
|
|
1.11 |
% |
|
|
1.00 |
% |
|
|
1.03 |
% |
Adjusted: Return on average assets2 |
[e÷f] |
|
0.94 |
% |
|
|
1.00 |
% |
|
|
1.17 |
% |
|
|
1.03 |
% |
|
|
1.06 |
% |
|
|
|
|
|
|
|
|
|
|
|
RETURN ON AVERAGE TANGIBLE COMMON EQUITY |
|
|
|
|
|
|
|
|
|
|
Average common equity |
|
$ |
1,202,417 |
|
|
$ |
1,208,407 |
|
|
$ |
1,122,547 |
|
|
$ |
1,197,511 |
|
|
$ |
1,195,171 |
|
Average goodwill and other intangible assets, net |
|
|
(355,469 |
) |
|
|
(358,025 |
) |
|
|
(366,127 |
) |
|
|
(359,347 |
) |
|
|
(370,424 |
) |
Average tangible common equity |
[g] |
$ |
846,948 |
|
|
$ |
850,382 |
|
|
$ |
756,420 |
|
|
$ |
838,164 |
|
|
$ |
824,747 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Return on average tangible common
equity2 |
[d÷g] |
|
12.06 |
% |
|
|
14.31 |
% |
|
|
18.04 |
% |
|
|
14.62 |
% |
|
|
15.56 |
% |
Adjusted: Return on average tangible common
equity2 |
[e÷g] |
|
13.64 |
% |
|
|
14.34 |
% |
|
|
19.03 |
% |
|
|
15.03 |
% |
|
|
15.99 |
% |
___________________________________________
- Full year tax benefits were
calculated by multiplying full year acquisition expenses and other
restructuring expenses by the annual effective tax rates for the
full year periods. The annual effective tax rates used in these
calculations were 20.4% for the year ended December 31, 2023,
and 20.7% for the year ended December 31, 2022. Quarterly tax
benefits were calculated as the full year amounts less the sum of
amounts applied to previous quarters within the year.
- For quarterly periods, measures are
annualized.
Adjusted Net Income Excluding Net
Securities Gains and Losses and Adjusted
Diluted Earnings Per Share Excluding Net Securities Gains and Losses |
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
Adjusted net income1 |
[a] |
$ |
29,123 |
|
|
$ |
30,730 |
|
|
$ |
36,290 |
|
|
$ |
126,012 |
|
|
$ |
131,910 |
|
Further non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Net securities (gains) losses |
|
|
(761 |
) |
|
|
285 |
|
|
|
(191 |
) |
|
|
2,199 |
|
|
|
2,133 |
|
Tax effect for net securities (gains) losses2 |
|
|
171 |
|
|
|
(52 |
) |
|
|
47 |
|
|
|
(448 |
) |
|
|
(441 |
) |
Tax effected net securities (gains) losses3 |
|
|
(590 |
) |
|
|
233 |
|
|
|
(144 |
) |
|
|
1,751 |
|
|
|
1,692 |
|
Net income excluding net securities (gains) losses3 |
[b] |
$ |
28,533 |
|
|
$ |
30,963 |
|
|
$ |
36,146 |
|
|
$ |
127,763 |
|
|
$ |
133,602 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average common shares outstanding |
[c] |
|
56,333,033 |
|
|
|
56,315,492 |
|
|
|
56,177,790 |
|
|
|
56,256,148 |
|
|
|
56,137,164 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted: Diluted earnings per share |
[a÷c] |
$ |
0.52 |
|
|
$ |
0.55 |
|
|
$ |
0.65 |
|
|
$ |
2.24 |
|
|
$ |
2.35 |
|
Adjusted: Diluted earnings per share, excluding
net securities (gains) losses3 |
[b÷c] |
$ |
0.51 |
|
|
$ |
0.55 |
|
|
$ |
0.64 |
|
|
$ |
2.27 |
|
|
$ |
2.38 |
|
___________________________________________
- Adjusted net income is a non-GAAP
measure. See the table on the previous page for a reconciliation to
the nearest GAAP measure.
- Tax effects for net securities
gains and losses were calculated by multiplying net securities
gains and losses by the effective income tax rates for the periods
indicated. Effective tax rates were 22.5%, 18.2%, and 24.7% for the
three months ended December 31, 2023, September 30, 2023,
and December 31, 2022, respectively, and were 20.4% and 20.7%
for the years ended December 31, 2023, and December 31,
2022, respectively.
- Tax-effected measure.
Adjusted Net Interest Income and
Adjusted Net Interest Margin |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
Net interest income |
|
$ |
77,133 |
|
|
$ |
77,791 |
|
|
$ |
91,149 |
|
|
$ |
319,451 |
|
|
$ |
323,438 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Tax-equivalent adjustment1 |
|
|
501 |
|
|
|
553 |
|
|
|
564 |
|
|
|
2,173 |
|
|
|
2,199 |
|
Tax-equivalent net interest income |
|
|
77,634 |
|
|
|
78,344 |
|
|
|
91,713 |
|
|
|
321,624 |
|
|
|
325,637 |
|
Purchase accounting accretion related to business combinations |
|
|
(384 |
) |
|
|
(277 |
) |
|
|
(546 |
) |
|
|
(1,477 |
) |
|
|
(3,134 |
) |
Adjusted net interest income |
|
$ |
77,250 |
|
|
$ |
78,067 |
|
|
$ |
91,167 |
|
|
$ |
320,147 |
|
|
$ |
322,503 |
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent net interest income, annualized |
[a] |
$ |
308,004 |
|
|
$ |
310,821 |
|
|
$ |
363,861 |
|
|
$ |
321,624 |
|
|
$ |
325,637 |
|
Adjusted net interest income, annualized |
[b] |
|
306,481 |
|
|
|
309,722 |
|
|
|
361,695 |
|
|
|
320,147 |
|
|
|
322,503 |
|
Average interest-earning assets |
[c] |
|
11,229,326 |
|
|
|
11,118,167 |
|
|
|
11,242,126 |
|
|
|
11,164,594 |
|
|
|
11,473,063 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Net interest margin2 |
[a÷c] |
|
2.74 |
% |
|
|
2.80 |
% |
|
|
3.24 |
% |
|
|
2.88 |
% |
|
|
2.84 |
% |
Adjusted: Net interest margin2 |
[b÷c] |
|
2.73 |
% |
|
|
2.79 |
% |
|
|
3.22 |
% |
|
|
2.87 |
% |
|
|
2.81 |
% |
___________________________________________
- Tax-equivalent adjustments were
calculated using an estimated federal income tax rate of 21%,
applied to non-taxable interest income on investments and
loans.
- For quarterly periods, measures are
annualized.
Noninterest Expense Excluding Amortization of Intangible Assets,
Adjusted Noninterest Expense,Adjusted Core Expense,
Noninterest Expense Excluding Non-operating Adjustments,
Efficiency Ratio,
Adjusted Efficiency Ratio, and
Adjusted Core Efficiency Ratio |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31,2023 |
|
September 30,2023 |
|
December 31,2022 |
|
December 31,2023 |
|
December 31,2022 |
Net interest income |
|
$ |
77,133 |
|
|
$ |
77,791 |
|
|
$ |
91,149 |
|
|
$ |
319,451 |
|
|
$ |
323,438 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Tax-equivalent adjustment1 |
|
|
501 |
|
|
|
553 |
|
|
|
564 |
|
|
|
2,173 |
|
|
|
2,199 |
|
Tax-equivalent net interest income |
|
|
77,634 |
|
|
|
78,344 |
|
|
|
91,713 |
|
|
|
321,624 |
|
|
|
325,637 |
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest income |
|
|
31,516 |
|
|
|
31,008 |
|
|
|
29,079 |
|
|
|
122,384 |
|
|
|
126,803 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Net security (gains) losses |
|
|
(761 |
) |
|
|
285 |
|
|
|
(191 |
) |
|
|
2,199 |
|
|
|
2,133 |
|
Noninterest income excluding net securities gains and losses |
|
|
30,755 |
|
|
|
31,293 |
|
|
|
28,888 |
|
|
|
124,583 |
|
|
|
128,936 |
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent revenue |
[a] |
$ |
108,389 |
|
|
$ |
109,637 |
|
|
$ |
120,601 |
|
|
$ |
446,207 |
|
|
$ |
454,573 |
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest expense |
|
$ |
74,979 |
|
|
$ |
70,945 |
|
|
$ |
73,677 |
|
|
$ |
285,532 |
|
|
$ |
283,881 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
[b] |
|
(2,479 |
) |
|
|
(2,555 |
) |
|
|
(2,795 |
) |
|
|
(10,432 |
) |
|
|
(11,628 |
) |
Noninterest expense excluding amortization of intangible
assets |
[c] |
|
72,500 |
|
|
|
68,390 |
|
|
|
70,882 |
|
|
|
275,100 |
|
|
|
272,253 |
|
Non-operating adjustments: |
|
|
|
|
|
|
|
|
|
|
Salaries, wages, and employee benefits |
|
|
(3,760 |
) |
|
|
— |
|
|
|
(2,409 |
) |
|
|
(3,760 |
) |
|
|
(2,996 |
) |
Data processing |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(214 |
) |
Impairment, professional fees, occupancy, and other |
|
|
(477 |
) |
|
|
(79 |
) |
|
|
(33 |
) |
|
|
(568 |
) |
|
|
(1,327 |
) |
Adjusted noninterest expense |
[f] |
|
68,263 |
|
|
|
68,311 |
|
|
|
68,440 |
|
|
|
270,772 |
|
|
|
267,716 |
|
Provision for unfunded commitments |
|
|
(818 |
) |
|
|
(13 |
) |
|
|
464 |
|
|
|
(461 |
) |
|
|
(61 |
) |
Amortization of New Markets Tax Credits |
|
|
(2,259 |
) |
|
|
(2,260 |
) |
|
|
(1,665 |
) |
|
|
(8,999 |
) |
|
|
(6,333 |
) |
Adjusted core expense |
[g] |
$ |
65,186 |
|
|
$ |
66,038 |
|
|
$ |
67,239 |
|
|
$ |
261,312 |
|
|
$ |
261,322 |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense, excluding non-operating adjustments |
[f-b] |
$ |
70,742 |
|
|
$ |
70,866 |
|
|
$ |
71,235 |
|
|
$ |
281,204 |
|
|
$ |
279,344 |
|
|
|
|
|
|
|
|
|
|
|
|
Reported: Efficiency ratio |
[c÷a] |
|
66.89 |
% |
|
|
62.38 |
% |
|
|
58.77 |
% |
|
|
61.65 |
% |
|
|
59.89 |
% |
Adjusted: Efficiency ratio |
[f÷a] |
|
62.98 |
% |
|
|
62.31 |
% |
|
|
56.75 |
% |
|
|
60.68 |
% |
|
|
58.89 |
% |
Adjusted: Core efficiency ratio |
[g÷a] |
|
60.14 |
% |
|
|
60.23 |
% |
|
|
55.75 |
% |
|
|
58.56 |
% |
|
|
57.49 |
% |
___________________________________________
- Tax-equivalent adjustments were
calculated using an estimated federal income tax rate of 21%,
applied to non-taxable interest income on investments and
loans.
Tangible Book Value and Tangible Book Value
Per Common Share |
(dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
December 31,2023 |
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
Total stockholders' equity |
|
$ |
1,271,981 |
|
|
$ |
1,190,158 |
|
|
$ |
1,201,948 |
|
|
$ |
1,198,558 |
|
|
$ |
1,145,977 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Goodwill and other intangible assets, net |
|
|
(353,864 |
) |
|
|
(356,343 |
) |
|
|
(358,898 |
) |
|
|
(361,567 |
) |
|
|
(364,296 |
) |
Tangible book value |
[a] |
$ |
918,117 |
|
|
$ |
833,815 |
|
|
$ |
843,050 |
|
|
$ |
836,991 |
|
|
$ |
781,681 |
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of common shares outstanding |
[b] |
|
55,244,119 |
|
|
|
55,342,017 |
|
|
|
55,290,847 |
|
|
|
55,294,455 |
|
|
|
55,279,124 |
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value per common share |
[a÷b] |
$ |
16.62 |
|
|
$ |
15.07 |
|
|
$ |
15.25 |
|
|
$ |
15.14 |
|
|
$ |
14.14 |
|
Tangible Assets, Tangible Common Equity, and
Tangible Common Equity to Tangible Assets |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
December 31,2023 |
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
Total assets |
|
$ |
12,283,415 |
|
|
$ |
12,258,250 |
|
|
$ |
12,209,029 |
|
|
$ |
12,344,555 |
|
|
$ |
12,336,677 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Goodwill and other intangible assets, net |
|
|
(353,864 |
) |
|
|
(356,343 |
) |
|
|
(358,898 |
) |
|
|
(361,567 |
) |
|
|
(364,296 |
) |
Tax effect of other intangible assets1 |
|
|
6,888 |
|
|
|
7,354 |
|
|
|
7,833 |
|
|
|
8,335 |
|
|
|
8,847 |
|
Tangible assets2 |
[a] |
$ |
11,936,439 |
|
|
$ |
11,909,261 |
|
|
$ |
11,857,964 |
|
|
$ |
11,991,323 |
|
|
$ |
11,981,228 |
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity |
|
$ |
1,271,981 |
|
|
$ |
1,190,158 |
|
|
$ |
1,201,948 |
|
|
$ |
1,198,558 |
|
|
$ |
1,145,977 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Goodwill and other intangible assets, net |
|
|
(353,864 |
) |
|
|
(356,343 |
) |
|
|
(358,898 |
) |
|
|
(361,567 |
) |
|
|
(364,296 |
) |
Tax effect of other intangible assets1 |
|
|
6,888 |
|
|
|
7,354 |
|
|
|
7,833 |
|
|
|
8,335 |
|
|
|
8,847 |
|
Tangible common equity2 |
[b] |
$ |
925,005 |
|
|
$ |
841,169 |
|
|
$ |
850,883 |
|
|
$ |
845,326 |
|
|
$ |
790,528 |
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets2 |
[b÷a] |
|
7.75 |
% |
|
|
7.06 |
% |
|
|
7.18 |
% |
|
|
7.05 |
% |
|
|
6.60 |
% |
___________________________________________
- Net of estimated deferred tax
liability, calculated using the estimated statutory tax rate of
28%.
- Tax-effected measure.
Core Loans,
Core Loans to Portfolio Loans,
Core Deposits,
Core Deposits to Total Deposits, and
Core Loans to Core Deposits |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
December 31,2023 |
|
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
Portfolio loans |
[a] |
$ |
7,651,034 |
|
|
$ |
7,856,160 |
|
|
$ |
7,805,284 |
|
|
$ |
7,783,808 |
|
|
$ |
7,725,702 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
PPP loans amortized cost |
|
|
(313 |
) |
|
|
(598 |
) |
|
|
(667 |
) |
|
|
(750 |
) |
|
|
(845 |
) |
Core loans |
[b] |
$ |
7,650,721 |
|
|
$ |
7,855,562 |
|
|
$ |
7,804,617 |
|
|
$ |
7,783,058 |
|
|
$ |
7,724,857 |
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
[c] |
$ |
10,291,156 |
|
|
$ |
10,332,362 |
|
|
$ |
10,062,755 |
|
|
$ |
9,801,169 |
|
|
$ |
10,071,280 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
Brokered transaction accounts |
|
|
(6,001 |
) |
|
|
(6,055 |
) |
|
|
(6,055 |
) |
|
|
(6,005 |
) |
|
|
(1,303 |
) |
Time deposits of $250,000 or more |
|
|
(386,286 |
) |
|
|
(350,276 |
) |
|
|
(297,967 |
) |
|
|
(200,898 |
) |
|
|
(120,377 |
) |
Core deposits |
[d] |
$ |
9,898,869 |
|
|
$ |
9,976,031 |
|
|
$ |
9,758,733 |
|
|
$ |
9,594,266 |
|
|
$ |
9,949,600 |
|
|
|
|
|
|
|
|
|
|
|
|
RATIOS |
|
|
|
|
|
|
|
|
|
|
Core loans to portfolio loans |
[b÷a] |
|
100.00 |
% |
|
|
99.99 |
% |
|
|
99.99 |
% |
|
|
99.99 |
% |
|
|
99.99 |
% |
Core deposits to total deposits |
[d÷c] |
|
96.19 |
% |
|
|
96.55 |
% |
|
|
96.98 |
% |
|
|
97.89 |
% |
|
|
98.79 |
% |
Core loans to core deposits |
[b÷d] |
|
77.29 |
% |
|
|
78.74 |
% |
|
|
79.98 |
% |
|
|
81.12 |
% |
|
|
77.64 |
% |
Special Note Concerning Forward-Looking
Statements
This document may contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 with respect to the financial condition, results
of operations, plans, objectives, future performance and business
of Busey and M&M. Forward-looking statements, which may be
based upon beliefs, expectations and assumptions of Busey’s and
M&M’s management and on information currently available to
management, are generally identifiable by the use of words such as
“believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,”
“may,” “will,” “would,” “could,” “should” or other similar
expressions. Additionally, all statements in this document,
including forward-looking statements, speak only as of the date
they are made, and neither Busey nor M&M undertakes any
obligation to update any statement in light of new information or
future events. A number of factors, many of which are beyond the
ability of Busey and M&M to control or predict, could cause
actual results to differ materially from those in any
forward-looking statements. These factors include, among others,
the following: (1) the possibility that any of the anticipated
benefits of the proposed transaction between Busey and M&M will
not be realized or will not be realized within the expected time
period; (2) the risk that integration of operations of M&M
with those of Busey will be materially delayed or will be more
costly or difficult than expected; (3) the inability to
complete the proposed transaction due to the failure of the
required approval of M&M’s stockholders; (4) the failure
to satisfy other conditions to completion of the proposed
transaction, including receipt of required regulatory and other
approvals; (5) the failure of the proposed transaction to
close for any other reason; (6) the effect of the announcement
of the transaction on customer relationships and operating results;
(7) the possibility that the transaction may be more expensive
to complete than anticipated, including as a result of unexpected
factors or events; (8) the strength of the local, state,
national, and international economy (including effects of
inflationary pressures and supply chain constraints); (9) the
economic impact of any future terrorist threats or attacks,
widespread disease or pandemics (including the Coronavirus Disease
2019 pandemic), or other adverse external events that could cause
economic deterioration or instability in credit markets (including
Russia’s invasion of Ukraine and the Israeli-Palestinian conflict);
(10) changes in state and federal laws, regulations, and
governmental policies concerning Busey's or M&M's general
business (including changes in response to the recent failures of
other banks); (11) changes in accounting policies and
practices; (12) changes in interest rates and prepayment rates
of Busey’s or M&M's assets (including the impact of the London
Interbank Offered Rate phase-out and the recent and potential
additional rate increases by the Federal Reserve);
(13) increased competition in the financial services sector
(including from non-bank competitors such as credit unions and
fintech companies) and the inability to attract new customers;
(14) changes in technology and the ability to develop and
maintain secure and reliable electronic systems; (15) the loss
of key executives or associates; (16) changes in consumer
spending; (17) unexpected results of acquisitions, including
the acquisition of M&M and the performance of M&M’s life
equity loan business; (18) unexpected outcomes of existing or
new litigation involving Busey or M&M; (19) fluctuations
in the value of securities held in Busey’s or M&M’s securities
portfolio; (20) concentrations within Busey’s or M&M’s
loan portfolio, large loans to certain borrowers, and large
deposits from certain clients; (21) the concentration of large
deposits from certain clients who have balances above current FDIC
insurance limits and may withdraw deposits to diversify their
exposure; (22) the level of non-performing assets on Busey’s
or M&M’s balance sheets; (23) interruptions involving
information technology and communications systems or third-party
servicers; (24) breaches or failures of information security
controls or cybersecurity-related incidents; and (25) the
economic impact of exceptional weather occurrences such as
tornadoes, hurricanes, floods, blizzards, and droughts. These risks
and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed
on such statements. Additional information concerning Busey and its
business, including additional factors that could materially affect
Busey’s financial results, is included in Busey’s filings with the
Securities and Exchange Commission (“SEC”).
Additional InformationBusey
filed a registration statement on Form S-4 with the SEC on
January 12, 2024, in connection with the proposed transaction.
The registration statement includes a proxy statement of M&M
that also constitutes a prospectus of Busey, which will be sent to
the stockholders of M&M. M&M’s stockholders are advised to
read the proxy statement/prospectus because it contains important
information about Busey, M&M, and the proposed transaction.
This document and other documents relating to the proposed
transaction filed by Busey and M&M can be obtained free of
charge from the SEC’s website at sec.gov.
These documents also can be obtained free of
charge by accessing the Investor Relations page on Busey’s website
at ir.busey.com, then under the tab “SEC Filings.” Alternatively,
these documents, when available, can be obtained free of charge
from Busey upon written request to First Busey Corporation,
Attention: Corporate Secretary, 100 W. University Avenue,
Champaign, Illinois 61820 or by calling (217) 365‑4630, or
from M&M, upon written request to M&M and Manufacturers
Bank Corporation, Attention: Brad Butler, 25140 W. Channon Dr.,
P.O. Box 200, Channahon, Illinois 60410 or by calling
(630) 575‑9700.
This document shall not constitute an offer to
sell or the solicitation of an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation,
or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933,
as amended.
Participants in this
TransactionBusey, M&M, and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from stockholders in connection with
the proposed transaction under the rules of the SEC. Information
about these participants may be found in Busey’s definitive proxy
statement relating to its 2023 Annual Meeting of Stockholders filed
with the SEC on April 14, 2023. This definitive proxy
statement can be obtained free of charge from the sources indicated
above. Additional information regarding the interests of these
participants are included in the proxy statement/prospectus
regarding the proposed transaction.
End Notes
1 |
See "Non-GAAP Financial Information" for a reconciliation. |
2 |
Tax effected measure. See “Non-GAAP Financial Information” for a
reconciliation. |
3 |
Operating revenue consists of net interest income plus noninterest
income, net of securities gains and losses. |
4 |
Estimated uninsured and uncollateralized deposits consist of
account balances in excess of the $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 fourth quarter of 2023 are not yet
finalized, and are subject to change. |
7 |
On- and off-balance sheet liquidity is comprised of cash and cash
equivalents, debt securities excluding those pledged as collateral,
brokered deposits, and Busey’s borrowing capacity through its
revolving credit facility, the FHLB, the Federal Reserve Bank, and
federal funds purchased lines. |
8 |
The blended benchmark consists of 60% MSCI All Country World Index
and 40% Bloomberg Intermediate US Government/Credit Total Return
Index. |
First Busey (NASDAQ:BUSE)
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부터 4월(4) 2024 으로 5월(5) 2024
First Busey (NASDAQ:BUSE)
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