January 25, 2011
First Busey Announces 2010 Fourth Quarter and Full Year Results
Champaign, IL – (Nasdaq: BUSE)
Message from our President & CEO
First Busey Corporation’s net income was $7.3 million and net income available to common stockholders was $6.0 million, or $0.09 per fully-diluted common share, for the fourth quarter of 2010. In comparison, the company reported a net loss for the fourth quarter of 2009 of $27.6 million and a net loss available to common stockholders of $29.2 million, or $0.49 per fully-diluted common share.
Net income for the year ended December 31, 2010 was $23.2 million and net income available to common stockholders was $18.1 million, or $0.27 per fully-diluted common share, compared to a net loss in 2009 of $323.1 million and a net loss available to common stockholders of $327.9 million, or $7.85 per fully-diluted common share. The 2009 net loss was primarily due to total provision expense of $252.0 million, of which $54.0 million was in the fourth quarter and $208.2 million of goodwill impairment in the third quarter.
Our priorities remain balance sheet strength, profitability and growth – in that order. Since the first quarter of 2010, we have demonstrated improvement in non-performing loans, capital ratios and profitability in each quarter. We expect to continue to see gradual improvement in non-performing loans and profitability while maintaining high capital ratios.
As noted in our prior quarter’s release, we have turned much of our attention toward growth and raising capital to support our future growth plans. In December 2010, we completed offerings of our common stock and a series of convertible preferred stock, together yielding net proceeds of $84.3 million, pushing our total regulatory capital ratio in excess of 16% and our regulatory tier 1 capital and leverage ratios in excess of 15% and 11%, respectively. In January 2011, we delivered an initiative and the tools to our front line associates in an effort to spur organic growth. We also believe that the recent capital raise allows us to contemplate external growth opportunities as they become available.
Asset Quality: Our non-performing loans at December 31, 2010 showed improvement as compared to September 30, 2010 and December 31, 2009 levels. While our past due categories were slightly higher than the prior quarter, they remained within our range of expectations. We expect continued gradual improvement in our overall asset quality in 2011; however, this is dependent on market specific economic conditions. The key metrics are as follows:
| · | Non-performing loans decreased to $68.1 million at December 31, 2010 from $79.7 million at September 30, 2010 and $86.3 million at December 31, 2009. |
| o | Illinois non-performing loans decreased to $38.3 million at December 31, 2010 from $41.8 million at September 30, 2010 and increased from $28 million at December 31, 2009. |
| o | Florida non-performing loans increased slightly to $23.8 million at December 31, 2010 from $22.8 million at September 30, 2010 and decreased from $40.2 million at December 31, 2009. |
| o | Indiana non-performing loans decreased to $6.0 million at December 31, 2010 from $15.1 million at September 30, 2010 and $18.1 million at December 31, 2009. |
| · | Loans 30-89 days past due increased to $23.5 million at December 31, 2010 from $19.3 million at September 30, 2010 and $12.5 million at December 31, 2009. The primary reason for the increase in past dues related to single family residential mortgages, primarily in Illinois. Although we generally experience an increase in single family residential past dues in the fourth quarter, the spike in the fourth quarter of 2010 was higher than fourth quarter of 2009. We believe our loss exposure in single family residential mortgages is limited. |
| · | Other real estate owned decreased to $9.2 million at December 31, 2010 from $11.5 million at September 30, 2010 and $17.2 million at December 31, 2009. |
| · | The ratio of non-performing assets to total loans plus other real estate owned decreased to 3.25% from 3.60% at September 30, 2010 and 3.68% at December 31, 2009. |
| · | The ratio of construction and land development loans to total loans decreased to 7.6% at December 31, 2010 from 8.3% at September 30, 2010 and 11.7% at December 31, 2009. |
| · | The allowance for loan losses to non-performing loans ratio increased to 111.6% at December 31, 2010 from 104.3% at September 30, 2010, and was below the 116.1% ratio at December 31, 2009. |
| · | The allowance for loan losses to total loans ratio declined slightly to 3.21% at December 31, 2010 compared to 3.30% at September 30, 2010, and was down from 3.59% at December 31, 2009. |
| · | Net charge-offs were $17.4 million for the fourth quarter of 2010, which were lower than the $18.5 million recorded during the third quarter of 2010 and the $73.8 million recorded for the fourth quarter of 2009. |
| · | Provision expense in the fourth quarter of 2010 was $10.3 million compared to $9.5 million in the third quarter of 2010 and $54.0 million in the fourth quarter of 2009. |
We continue to believe the peak of our non-performing assets occurred in the quarter ended September 30, 2009. Improving our asset quality metrics will continue to be a high priority until we experience sustained improvement in our market specific economic conditions.
Operating Performance: Our profit increased to $7.3 million in the fourth quarter of 2010 as compared to $6.0 million in the third quarter of 2010 and significantly higher than the
fourth quarter of 2009 loss of $27.6 million. The primary reason for the increase over the third quarter of 2010 was $2.0 million in additional gains on sale of mortgage loans and
$1.9 million of gains on sales of OREO, partially offset by $0.8 million of additional provision expense and increased compensation expense related to mortgage production.
Pre-provision, pre-tax income was $21.3 million for the fourth quarter of 2010 compared to $17.4 million for the quarter ended September 30, 2010 and $12.0 million for the quarter
ended December 31, 2009. Our normalized pre-provision, pre-tax income was $20.1 million in the fourth quarter of 2010 compared to $18.0 million in the third quarter of 2010 and
$17.0 million in the fourth quarter of 2009. The normalized pre-provision, pre-tax income non-GAAP reconciling items in the fourth quarter of 2010 were gains on sales of OREO of
$1.9 million, partially offset by OREO costs of $0.4 million and non-accrual interest reversals of $0.2 million.
Significant operating performance items were:
| · | Net income available to common stockholders (net of TARP dividends) for the quarter ended December 31, 2010 was $6.0 million, or $0.09 per fully-diluted share, compared to a loss of $29.2 million, or $0.49 per fully-diluted common share, for the quarter ended December 31, 2009. |
| · | Net income available to common stockholders (net of TARP dividends) for the year ended December 31, 2010 was $18.1 million, or $0.27 per fully-diluted share, compared to a loss of $327.9 million, or $7.85 per fully-diluted common share, for the year ended December 31, 2009. |
| · | Net interest margin increased to 3.68% for the fourth quarter of 2010 as compared to 3.64% for the third quarter of 2010, and increased from 3.36% for the fourth quarter of 2009. The net interest margin for the year ended December 31, 2010 was 3.58% as compared to 3.05% for the year ended December 31, 2009. |
| · | The efficiency ratio decreased to 51.51% for the fourth quarter of 2010 as compared to 58.21% for the third quarter of 2010, and decreased from 70.71% for the fourth quarter of 2009. The efficiency ratio for the year ended December 31, 2010 was 55.91%, an improvement from 63.12% in 2009. |
| · | Total revenue, net of interest expense and security gains, was $178.9 million in 2010 as compared to $180.3 million in 2009. |
| · | FirsTech’s net income decreased to $1.8 million in 2010 from $2.9 million in 2009. As previously noted, this decrease was expected. |
| · | Busey Wealth Management’s net income increased to $3.3 million in 2010 as compared to $2.6 million in 2009. |
On January 28, 2011, we will pay a cash dividend of $0.04 per common share to stockholders of record on January 21, 2011.
We have come a long way in 2010. While we are not proud of where we were in 2009 as a result of the unprecedented economic challenges, we have accomplished a significant amount in 2010. We believe only better things are ahead in the future. We will not rest on our modest accomplishments. Rather, we will focus a greater amount of our time on growth, which combined with a strong balance sheet and strong profits make a great company.
We thank our associates for their efforts, our customers for their business and you, our stockholders, for your continued support of Busey.
\s\ Van A. Dukeman
President & Chief Executive Officer
First Busey Corporation
| SELECTED FINANCIAL HIGHLIGHTS | |||||||||||||||||||||
(dollars in thousands, except per share data) | |||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||||
| 2010 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||
| Net income (loss) | $ | 7,306 | $ | 6,022 | $ | (27,558 | ) | $ | 23,230 | $ | (323,113 | ) | |||||||||
Income (loss) available to common stockholders1 | 5,984 | 4,739 | $ | (29,239 | ) | 18,060 | $ | (327,880 | ) | ||||||||||||
Revenue2 | 46,623 | 44,202 | 45,953 | 178,886 | 180,285 | ||||||||||||||||
| Fully-diluted earnings (loss) per share | 0.09 | 0.07 | (0.49 | ) | 0.27 | (7.85 | ) | ||||||||||||||
| Cash dividends paid per share | 0.04 | 0.04 | 0.04 | 0.16 | 0.40 | ||||||||||||||||
| Net income (loss) by operating segment | |||||||||||||||||||||
| Busey Bank | $ | 7,008 | $ | 5,449 | $ | (25,865 | ) | $ | 21,230 | $ | (320,807 | ) | |||||||||
| Busey Wealth Management | 710 | 716 | 649 | 3,283 | 2,557 | ||||||||||||||||
| FirsTech | 299 | 425 | 472 | 1,821 | 2,869 | ||||||||||||||||
| AVERAGE BALANCES | |||||||||||||||||||||
| Assets | $ | 3,548,171 | $ | 3,598,237 | $ | 3,894,489 | $ | 3,648,831 | $ | 4,230,791 | |||||||||||
| Earning assets | 3,227,207 | 3,280,987 | 3,628,623 | 3,327,677 | 3,819,996 | ||||||||||||||||
| Deposits | 2,930,644 | 2,982,590 | 3,208,901 | 3,026,786 | 3,363,345 | ||||||||||||||||
| Interest-bearing liabilities | 2,723,625 | 2,778,286 | 3,064,451 | 2,831,769 | 3,282,648 | ||||||||||||||||
| Stockholders' equity - common | 237,485 | 234,916 | 244,143 | 233,152 | 360,024 | ||||||||||||||||
| PERFORMANCE RATIOS | |||||||||||||||||||||
Return on average assets3 | 0.67 | % | 0.52 | % | (2.98 | %) | 0.49 | % | (7.75 | %) | |||||||||||
Return on average common equity3 | 10.00 | % | 8.00 | % | (47.51 | %) | 7.75 | % | (91.07 | %) | |||||||||||
Net interest margin3 | 3.68 | % | 3.64 | % | 3.36 | % | 3.58 | % | 3.05 | % | |||||||||||
Efficiency ratio4 | 51.51 | % | 58.21 | % | 70.71 | % | 55.91 | % | 63.12 | % | |||||||||||
Non-interest revenue as a % of total revenues2 | 36.92 | % | 32.96 | % | 34.67 | % | 34.51 | % | 36.54 | % | |||||||||||
| ASSET QUALITY | |||||||||||||||||||||
| Gross loans | $ | 2,368,777 | $ | 2,518,209 | $ | 2,792,823 | |||||||||||||||
| Allowance for loan losses | 76,038 | 83,098 | 100,179 | ||||||||||||||||||
| Net charge-offs | 17,361 | 18,531 | 73,842 | 66,142 | 249,992 | ||||||||||||||||
| Allowance for loan losses to loans | 3.21 | % | 3.30 | % | 3.59 | % | |||||||||||||||
| Allowance as a percentage of non-performing loans | 111.64 | % | 104.29 | % | 116.08 | % | |||||||||||||||
| Non-performing loans | |||||||||||||||||||||
| Non-accrual loans | 65,486 | 78,223 | 82,133 | ||||||||||||||||||
| Loans 90+ days past due | 2,618 | 1,457 | 4,166 | ||||||||||||||||||
| Geographically | |||||||||||||||||||||
| Downstate Illinois/ Indiana | 44,281 | 56,831 | 46,120 | ||||||||||||||||||
| Florida | 23,823 | 22,849 | 40,179 | ||||||||||||||||||
| Loans 30 -89 days past due | 23,477 | 19,322 | 12,493 | ||||||||||||||||||
| Other non-performing assets | 9,154 | 11,463 | 17,241 | ||||||||||||||||||
1 Available to common stockholders, net of preferred dividend and discount accretion | |||||||||||||||||||||
2 Net of interest expense, excludes security gains | |||||||||||||||||||||
3 Quarterly ratios annualized and calculated on net income (loss) available to common stockholders | |||||||||||||||||||||
4 Net of security gains and intangible charges | |||||||||||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||
| (Unaudited, in thousands, except per share data) | December 31, | September 30, | December 31, | |||||||||
| 2010 | 2010 | 2009 | ||||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 418,965 | $ | 222,226 | $ | 207,071 | ||||||
| Investment securities | 599,459 | 551,720 | 569,640 | |||||||||
| Net loans | 2,292,739 | 2,435,110 | 2,692,644 | |||||||||
| Premises and equipment | 73,218 | 74,362 | 77,528 | |||||||||
| Goodwill and other intangibles | 40,242 | 41,263 | 44,330 | |||||||||
| Other assets | 180,380 | 208,532 | 223,639 | |||||||||
| Total assets | $ | 3,605,003 | $ | 3,533,213 | $ | 3,814,852 | ||||||
| Liabilities & Stockholders' Equity | ||||||||||||
| Non-interest bearing deposits | $ | 460,661 | $ | 449,702 | $ | 468,230 | ||||||
| Interest-bearing deposits | 2,455,705 | 2,474,503 | 2,702,850 | |||||||||
| Total deposits | $ | 2,916,366 | $ | 2,924,205 | $ | 3,171,080 | ||||||
| Federal funds purchased & securities | ||||||||||||
| sold under agreements to repurchase | 138,982 | 130,419 | 142,325 | |||||||||
| Short-term borrowings | - | 4,000 | - | |||||||||
| Long-term debt | 43,159 | 52,576 | 82,076 | |||||||||
| Junior subordinated debt owed to unconsolidated trusts | 55,000 | 55,000 | 55,000 | |||||||||
| Other liabilities | 30,991 | 30,446 | 36,243 | |||||||||
| Total liabilities | $ | 3,184,498 | $ | 3,196,646 | $ | 3,486,724 | ||||||
| Total stockholders' equity | $ | 420,505 | $ | 336,567 | $ | 328,128 | ||||||
| Total liabilities & stockholders' equity | $ | 3,605,003 | $ | 3,533,213 | $ | 3,814,852 | ||||||
| Per Share Data | ||||||||||||
| Book value per common share | $ | 3.65 | $ | 3.56 | $ | 3.45 | ||||||
| Tangible book value per common share | $ | 3.14 | $ | 2.94 | $ | 2.78 | ||||||
| Ending number of common shares outstanding | 79,100 | 66,361 | 66,361 | |||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (Unaudited, in thousands, except per share data) | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Interest and fees on loans | $ | 32,954 | $ | 39,026 | $ | 138,860 | $ | 161,971 | ||||||||
| Interest on investment securities | 4,085 | 5,003 | 17,323 | 22,539 | ||||||||||||
| Total interest income | $ | 37,039 | $ | 44,029 | $ | 156,183 | $ | 184,510 | ||||||||
| Interest on deposits | 6,170 | 12,032 | 32,714 | 60,079 | ||||||||||||
| Interest on short-term borrowings | 156 | 193 | 640 | 2,229 | ||||||||||||
| Interest on long-term debt | 617 | 1,100 | 2,930 | 4,900 | ||||||||||||
| Junior subordinated debt owed to unconsolidated trusts | 685 | 685 | 2,748 | 2,901 | ||||||||||||
| Total interest expense | $ | 7,628 | $ | 14,010 | $ | 39,032 | $ | 70,109 | ||||||||
| Net interest income | $ | 29,411 | $ | 30,019 | $ | 117,151 | $ | 114,401 | ||||||||
| Provision for loan losses | 10,300 | 54,000 | 42,000 | 251,500 | ||||||||||||
| Net interest income (loss) after provision for loan losses | $ | 19,111 | $ | (23,981 | ) | $ | 75,151 | $ | (137,099 | ) | ||||||
| Fees for customer services | 4,466 | 4,384 | 16,592 | 17,086 | ||||||||||||
| Trust fees | 3,473 | 3,197 | 14,231 | 12,817 | ||||||||||||
| Commissions and brokers' fees | 447 | 465 | 1,756 | 1,843 | ||||||||||||
| Remittance processing | 2,233 | 3,146 | 9,349 | 13,032 | ||||||||||||
| Gain on sales of loans | 6,146 | 2,437 | 16,130 | 12,379 | ||||||||||||
| Net security gains (losses) | (7 | ) | (10 | ) | 1,018 | 130 | ||||||||||
| Other | 447 | 2,305 | 3,677 | 8,727 | ||||||||||||
| Total non-interest income | $ | 17,205 | $ | 15,924 | $ | 62,753 | $ | 66,014 | ||||||||
| Salaries and wages | 10,948 | 12,143 | 41,219 | 44,519 | ||||||||||||
| Employee benefits | 2,024 | 900 | 9,693 | 9,086 | ||||||||||||
| Net occupancy expense | 2,188 | 2,501 | 9,135 | 9,886 | ||||||||||||
| Furniture and equipment expense | 1,360 | 1,712 | 5,962 | 7,288 | ||||||||||||
| Data processing expense | 2,122 | 2,271 | 7,977 | 7,922 | ||||||||||||
| Amortization expense | 1,021 | 1,090 | 4,088 | 4,361 | ||||||||||||
| Regulatory expense | 1,676 | 1,463 | 6,978 | 8,580 | ||||||||||||
| Goodwill impairment | - | - | - | 208,164 | ||||||||||||
| OREO expense | 429 | 1,525 | 1,872 | 2,761 | ||||||||||||
| Other operating expenses | 3,520 | 10,353 | 18,286 | 25,128 | ||||||||||||
| Total non-interest expense | $ | 25,288 | $ | 33,958 | $ | 105,210 | $ | 327,695 | ||||||||
| Income (loss) before income taxes | $ | 11,028 | $ | (42,015 | ) | $ | 32,694 | $ | (398,780 | ) | ||||||
| Income taxes | 3,722 | (14,457 | ) | 9,464 | (75,667 | ) | ||||||||||
| Net income (loss) | $ | 7,306 | $ | (27,558 | ) | $ | 23,230 | $ | (323,113 | ) | ||||||
| Preferred stock dividends and discount accretion | $ | 1,322 | $ | 1,681 | $ | 5,170 | $ | 4,767 | ||||||||
| Income (loss) available for common stockholders | $ | 5,984 | $ | (29,239 | ) | $ | 18,060 | $ | (327,880 | ) | ||||||
| Per Share Data | ||||||||||||||||
| Basic earnings (loss) per common share | $ | 0.09 | $ | (0.49 | ) | $ | 0.27 | $ | (7.85 | ) | ||||||
| Fully-diluted earnings (loss) per common share | $ | 0.09 | $ | (0.49 | ) | $ | 0.27 | $ | (7.85 | ) | ||||||
| Diluted average common shares outstanding | 66,503 | 59,509 | 66,397 | 41,788 | ||||||||||||
Corporate Profile
First Busey Corporation is a $3.6 billion financial holding company headquartered in Champaign, Illinois. Busey Bank, First Busey Corporation’s wholly-owned bank subsidiary, is headquartered in Champaign, Illinois and has thirty-three banking centers serving downstate Illinois, a banking center in Indianapolis, Indiana, and seven banking centers serving southwest Florida. Busey Bank had total assets of $3.6 billion as of December 31, 2010.
Busey Wealth Management is a wholly-owned subsidiary of First Busey Corporation. Through Busey Trust Company, Busey Wealth Management delivers trust, asset management, retail brokerage and insurance products and services. As of December 31, 2010, Busey Wealth Management had approximately $3.5 billion in assets under care.
First Busey Corporation owns a retail payment processing subsidiary, FirsTech, Inc., which processes over 28 million transactions per year through online bill payments, lockbox processing and walk-in payments through its 3,100 agent locations in 38 states.
Busey provides electronic delivery of financial services through our website, www.busey.com.
Contact:
David B. White, CFO
217-365-4047
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 the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forwar d-looking statements, speak only as of the date they are made, and the Company undertakes no 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 the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include, among others, the following: (i) the strength of the local and national economy; (ii) the economic impact of any future terrorist threats or attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the loss of key ex ecutives or employees; (viii) changes in consumer spending; (ix) unexpected results of acquisitions; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.