July 26, 2011
First Busey Announces 2011 Second Quarter Earnings
Champaign, IL – (Nasdaq: BUSE)
Message from our President & CEO
First Busey Corporation’s net income was $7.4 million and net income available to common stockholders was $6.2 million, or $0.07 per fully-diluted common share, for the second quarter of 2011, as compared to net income of $5.7 million and net income available to common stockholders of $4.4 million, or $0.07 per fully diluted share, in the second quarter of 2010. The Company’s 2011 year-to-date net income was $16.6 million and net income available to common stockholders was $13.5 million, or $0.16 per fully diluted share, compared to net income of $9.9 million, net income available to common stockholders of $7.3 million and fully-diluted earnings per share of $0.11 for the comparable period in 2010.
In comparison, the Company reported net income for the first quarter of 2011 of $9.1 million and net income available to common stockholders of $7.3 million, or $0.09 per fully-diluted common share. The decline in earnings per share from the first quarter of 2011 was primarily due to a decrease in the size of the Company’s loan portfolio brought on, in part, by continuing soft loan demand, reduction in non-relationship commercial real estate loans and reduction in classified loans, lower residential mortgage sales gains, and an increase in outstanding common stock of 7.5 million shares as a result of the March 2011 conversion of preferred shares.
Balance sheet strength, profitability and growth – in that order.
Asset Quality: Our non-performing loans at June 30, 2011 continued to show improvement. We expect continued gradual improvement in our overall asset quality in 2011; however, this continues to be dependent upon market specific economic conditions. The key metrics are as follows:
| · | Non-performing loans decreased to $53.8 million at June 30, 2011 from $60.9 million at March 31, 2011 and $68.1 million at December 31, 2010. |
| o | Illinois non-performing loans decreased to $27.8 million at June 30, 2011 from $30.1 million at March 31, 2011 and $38.3 million at December 31, 2010. |
| o | Florida non-performing loans decreased to $19.5 million at June 30, 2011 from $23.4 million at March 31, 2011 and $23.8 million at December 31, 2010. |
| o | Indiana non-performing loans decreased to $6.5 million at June 30, 2011 from $7.4 million at March 31, 2011, but increased from $6.0 million at December 31, 2010. |
| · | Loans 30-89 days past due decreased to $17.1 million at June 30, 2011 from $18.4 million at March 31, 2011 and $23.5 million at December 31, 2010. |
| · | Other non-performing assets decreased to $6.9 million at June 30, 2011 from $7.2 million at March 31, 2011 and $9.2 million at December 31, 2010. |
| · | The ratio of non-performing assets to total loans plus other real estate owned at June 30, 2011 decreased to 2.79% from 3.04% at March 31, 2011 and 3.25% at December 31, 2010. |
| · | The allowance for loan losses to non-performing loans ratio increased to 128.94% at June 30, 2011 from 122.89% at March 31, 2011 and 111.64% at December 31, 2010. |
| · | The allowance for loan losses to total loans ratio decreased to 3.20% at June 30, 2011 compared to 3.35% at March 31, 2011 and 3.21% at December 31, 2010. |
| · | Net charge-offs totaled $10.5 million in the second quarter of 2011 as compared to $6.2 million in the first quarter of 2011, but were lower than the $17.4 million recorded in the fourth quarter of 2010. |
| · | Provision expense of $5.0 million recorded in the second quarter of 2011 was consistent with the amount recorded in the first quarter of 2011, and was lower than the $10.3 million recorded in the fourth quarter of 2010. |
Operating Performance: Our net income increased to $7.4 million in the second quarter of 2011, as compared to $5.7 million in the second quarter of 2010, but decreased from $9.1 million in the first quarter of 2011. The increase in the second quarter of 2011 as compared to the comparable period in 2010 relates to $0.6 million increase in pre-tax, pre-provision income and a $2.5 million decrease in provision for loan losses. As noted above, declines in loans and gains on sales of residential mortgage loans were the primary reasons for the decline in net income from the first quarter of 2011.
Significant operating performance items were:
| · | Net interest income declined to $27.8 million in the second quarter of 2011, compared to $28.3 million in the first quarter of 2011 and $29.1 million in the second quarter of 2010. Net interest income for the first six months of 2011 was $56.2 million compared to $58.1 million for the same period of 2010. The decline is primarily related to a decline in loans, which has been partially offset by reduced funding costs. |
| · | Net interest margin remained flat at 3.54% for the second quarter of 2011 as compared to 3.55% for the first quarter of 2011, but increased from 3.49% for the second quarter of 2010. The net interest margin for the first six months of 2011 increased to 3.54% compared to 3.50% for the same period of 2010. |
| · | Gains on sales of residential mortgage loans declined to $1.8 million in the second quarter of 2011 compared to $2.6 million in the first quarter of 2011 and $3.4 million in the second quarter of 2010. The decline in the second quarter was primarily due to a decline in volume brought on by increasing residential mortgage rates. |
| · | Total non-interest expenses have held steady as the second quarter of 2011 was $25.2 million compared to $25.7 million in the first quarter of 2011 and $27.7 million in the second quarter of 2010. |
| · | The efficiency ratio increased to 57.80% for the second quarter of 2011 from 55.87% for the first quarter of 2011 and 60.56% for the second quarter of 2010. The efficiency ratio for the first six months of 2011 was 56.81%, an improvement from 57.08% for the same period of 2010. |
| · | Total revenue, net of interest expense and security gains, for the second quarter of 2011 was $41.6 million, compared to $43.9 million for the first quarter of 2011 and $43.5 million for the second quarter of 2010. Total revenue for the first six months of 2011 was $85.5 million as compared to $88.1 million in the same period of 2010. |
| · | FirsTech’s net income decreased slightly to $0.4 million for the second quarter of 2011, compared to $0.5 million for the first quarter of 2011 and $0.5 million for the second quarter of 2010. FirsTech’s net income for the first six months of 2011 was $0.9 million as compared to $1.1 million in the same period of 2010. |
| · | Busey Wealth Management’s net income of $1.0 million for the second quarter of 2011 increased from $0.7 million for the first quarter of 2011, but was consistent with net income of $1.0 million for the second quarter of 2010. Busey Wealth Management’s net income for the first six months of 2011 was of $1.7 million as compared to $1.9 million for the first six months of 2010. |
Growth: As noted in prior releases, we began an initiative to spur organic growth in January 2011. We provided certain tools to our front line associates to foster this initiative. These tools facilitated the growth during the first six months of 2011 in non-time deposits of $37.6 million, or 2.0%, over December 31, 2010 levels. The growth in core accounts resulted in increased fees for customer services to $4.5 million in the second quarter of 2011 as compared to $4.3 million in the first quarter of 2011 and $4.0 million in the second quarter in 2010. The increase from new accounts has more than offset the loss of fees as a result of changes to overdraft program regulations.
Loans, net of allowance for loan losses, declined $193.8 million from December 31, 2010 due to continuing soft loan demand and our reduction of non-relationship commercial real estate exposure. However, we are beginning to see net strength in our loan pipeline as a result of the January 2011 initiative. The economy continues to be a headwind and competition for new business banking opportunities is strong. We believe we are up to the challenge and expect to see gradual improvement in loan volume in the following quarters. We should be able to put on additional loans at a net profit based upon our current liquidity levels and the very low earnings attributable to excess liquidity. We will continue our practice of not sacrificing the quality of our loan portfolio for the sake of growth.
We are well positioned to explore external growth opportunities while simultaneously focusing on internal growth. We will continue to base our efforts for internal growth on service, listening to our customers and fulfilling our promise to help them accomplish their goals.
On July 29, 2011, we will pay a cash dividend of $0.04 per common share to stockholders of record as of July 22, 2011.
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 | Six Months Ended | |||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||
| 2011 | 2011 | 2010 | 2011 | 2010 | ||||||||||
| Net income | $ 7,447 | $ 9,110 | $ 5,685 | $ 16,557 | $ 9,902 | |||||||||
Income available to common stockholders1 | 6,164 | 7,334 | 4,402 | 13,498 | 7,337 | |||||||||
Revenue2 | 41,587 | 43,888 | 43,504 | 85,475 | 88,061 | |||||||||
| Fully-diluted earnings per share | 0.07 | 0.09 | 0.07 | 0.16 | 0.11 | |||||||||
| Cash dividends paid per share | 0.04 | 0.04 | 0.04 | 0.08 | 0.08 | |||||||||
| Net income by operating segment | ||||||||||||||
| Busey Bank | $ 7,096 | $ 8,820 | $ 5,302 | $ 15,916 | $ 8,772 | |||||||||
| Busey Wealth Management | 974 | 694 | 959 | 1,668 | 1,858 | |||||||||
| FirsTech | 422 | 450 | 456 | 872 | 1,097 | |||||||||
| AVERAGE BALANCES | ||||||||||||||
| Assets | $ 3,491,237 | $ 3,590,108 | $ 3,727,110 | $ 3,540,399 | $ 3,725,661 | |||||||||
| Earning assets | 3,209,961 | 3,294,097 | 3,402,562 | 3,251,797 | 3,402,477 | |||||||||
| Deposits | 2,823,136 | 2,898,517 | 3,107,596 | 2,860,618 | 3,098,069 | |||||||||
| Interest-bearing liabilities | 2,569,520 | 2,654,425 | 2,918,587 | 2,611,737 | 2,913,922 | |||||||||
| Stockholders’ equity – common | 325,608 | 289,475 | 229,411 | 307,641 | 230,054 | |||||||||
| Tangible stockholders’ equity – common | 286,586 | 249,563 | 186,445 | 268,176 | 186,611 | |||||||||
| PERFORMANCE RATIOS | ||||||||||||||
Return on average assets3 | 0.71% | 0.83% | 0.47% | 0.77% | 0.40% | |||||||||
Return on average common equity3 | 7.59% | 10.27% | 7.70% | 8.85% | 6.43% | |||||||||
Return on average tangible common equity3 | 8.63% | 11.92% | 9.47% | 10.15% | 7.93% | |||||||||
Net interest margin3 | 3.54% | 3.55% | 3.49% | 3.54% | 3.50% | |||||||||
Efficiency ratio4 | 57.80% | 55.87% | 60.56% | 56.81% | 57.08% | |||||||||
Non-interest revenue as a % of total revenues2 | 33.05% | 35.41% | 33.11% | 34.26% | 34.02% | |||||||||
| ASSET QUALITY | ||||||||||||||
| Gross loans | $ 2,168,240 | $ 2,232,849 | $ 2,619,530 | |||||||||||
| Allowance for loan losses | 69,329 | 74,849 | 92,129 | |||||||||||
| Net charge-offs | 10,520 | 6,189 | 10,300 | 16,709 | 30,250 | |||||||||
| Allowance for loan losses to loans | 3.20% | 3.35% | 3.52% | |||||||||||
| Allowance as a percentage of non-performing loans | 128.94% | 122.89% | 104.93% | |||||||||||
| Non-performing loans | ||||||||||||||
| Non-accrual loans | 52,456 | 56,829 | 85,969 | |||||||||||
| Loans 90+ days past due | 1,314 | 4,078 | 1,831 | |||||||||||
| Geographically | ||||||||||||||
| Downstate Illinois/ Indiana | 34,260 | 37,527 | 56,030 | |||||||||||
| Florida | 19,510 | 23,380 | 31,770 | |||||||||||
| Loans 30-89 days past due | 17,057 | 18,419 | 14,593 | |||||||||||
| Other non-performing assets | 6,855 | 7,193 | 14,299 | |||||||||||
| 1 | Net income available to common stockholders, net of preferred dividend and TARP discount accretion | |||||||||||||
| 2 | Net of interest expense, excludes security gains | |||||||||||||
| 3 | Quarterly ratios annualized and calculated on net income available to common stockholders | |||||||||||||
| 4 | Net of security gains and intangible charges | |||||||||||||
| Condensed Consolidated Balance Sheets | |||
| (Unaudited, in thousands, except per share data) | June 30, | December 31, | June 30, |
| 2011 | 2010 | 2010 | |
| Assets | |||
| Cash and due from banks | $ 357,193 | $ 418,965 | $ 279,021 |
| Investment securities | 742,793 | 599,459 | 562,978 |
| Net loans, including loans held for sale | 2,098,911 | 2,292,739 | 2,527,401 |
| Premises and equipment | 71,162 | 73,218 | 75,300 |
| Goodwill and other intangibles | 38,474 | 40,242 | 42,285 |
| Other assets | 162,355 | 180,380 | 212,231 |
| Total assets | $ 3,470,888 | $ 3,605,003 | $ 3,699,216 |
| Liabilities & Stockholders' Equity | |||
| Non-interest bearing deposits | $ 447,650 | $ 460,661 | $ 438,421 |
| Interest-bearing deposits | 2,366,191 | 2,455,705 | 2,642,060 |
| Total deposits | $ 2,813,841 | $ 2,916,366 | $ 3,080,481 |
| Securities sold under agreements to repurchase | 126,796 | 138,982 | 135,554 |
| Short-term borrowings | - | - | 4,000 |
| Long-term debt | 19,834 | 43,159 | 58,076 |
| Junior subordinated debt owed to unconsolidated trusts | 55,000 | 55,000 | 55,000 |
| Other liabilities | 25,641 | 30,991 | 32,849 |
| Total liabilities | $ 3,041,112 | $ 3,184,498 | $ 3,365,960 |
| Total stockholders' equity | $ 429,776 | $ 420,505 | $ 333,256 |
| Total liabilities & stockholders' equity | $ 3,470,888 | $ 3,605,003 | $ 3,699,216 |
| Per Share Data | |||
| Book value per common share | $ 3.81 | $ 3.65 | $ 3.51 |
| Tangible book value per common share | $ 3.36 | $ 3.14 | $ 2.88 |
| Ending number of common shares outstanding | 86,597 | 79,100 | 66,361 |
| Condensed Consolidated Statements of Operations | ||||
| (Unaudited, in thousands, except per share data) | Three Months Ended June 30, | Six Months Ended June 30, | ||
| 2011 | 2010 | 2011 | 2010 | |
| Interest and fees on loans | $ 29,173 | $ 35,544 | $ 59,681 | $ 71,580 |
| Interest on investment securities | 4,700 | 4,440 | 9,098 | 9,097 |
| Total interest income | $ 33,873 | $ 39,984 | $ 68,779 | $ 80,677 |
| Interest on deposits | 4,820 | 9,259 | 10,079 | 19,210 |
| Interest on short-term borrowings | 110 | 151 | 231 | 314 |
| Interest on long-term debt | 486 | 790 | 982 | 1,684 |
| Junior subordinated debt owed to unconsolidated trusts | 616 | 684 | 1,299 | 1,364 |
| Total interest expense | $ 6,032 | $ 10,884 | $ 12,591 | $ 22,572 |
| Net interest income | $ 27,841 | $ 29,100 | $ 56,188 | $ 58,105 |
| Provision for loan losses | 5,000 | 7,500 | 10,000 | 22,200 |
| Net interest income after provision for loan losses | $ 22,841 | $ 21,600 | $ 46,188 | $ 35,905 |
| Trust fees | 3,757 | 3,435 | 8,305 | 7,645 |
| Commissions and brokers' fees | 479 | 471 | 920 | 911 |
| Fees for customer services | 4,523 | 4,021 | 8,852 | 7,964 |
| Remittance processing | 2,403 | 2,233 | 4,784 | 4,853 |
| Gain on sales of loans | 1,835 | 3,442 | 4,467 | 5,880 |
| Net security gains (losses) | - | - | (2) | 742 |
| Other | 749 | 802 | 1,959 | 2,703 |
| Total non-interest income | $ 13,746 | $ 14,404 | $ 29,285 | $ 30,698 |
| Salaries and wages | 10,028 | 10,068 | 19,588 | 19,734 |
| Employee benefits | 2,506 | 2,543 | 5,265 | 5,182 |
| Net occupancy expense | 2,136 | 2,231 | 4,551 | 4,573 |
| Furniture and equipment expense | 1,340 | 1,578 | 2,664 | 3,109 |
| Data processing expense | 2,170 | 1,951 | 4,280 | 3,847 |
| Amortization expense | 884 | 1,022 | 1,768 | 2,045 |
| Regulatory expense | 1,308 | 2,040 | 3,155 | 3,503 |
| OREO expense | 135 | 670 | 347 | 1,063 |
| Other operating expenses | 4,678 | 5,564 | 9,232 | 9,824 |
| Total non-interest expense | $ 25,185 | $ 27,667 | $ 50,850 | $ 52,880 |
| Income before income taxes | $ 11,402 | $ 8,337 | $ 24,623 | $ 13,723 |
| Income taxes | 3,955 | 2,652 | 8,066 | 3,821 |
| Net income | $ 7,447 | $ 5,685 | $ 16,557 | $ 9,902 |
| Preferred stock dividends and discount accretion | 1,283 | $ 1,283 | $ 3,059 | $ 2,565 |
| Income available for common stockholders | $ 6,164 | $ 4,402 | $ 13,498 | $ 7,337 |
| Per Share Data | ||||
| Basic earnings per common share | $ 0.07 | $ 0.07 | $ 0.16 | $ 0.11 |
| Fully-diluted earnings per common share | $ 0.07 | $ 0.07 | $ 0.16 | $ 0.11 |
| Diluted average common shares outstanding | 86,617 | $ 66,361 | 84,001 | $ 66,361 |
Corporate Profile
First Busey Corporation is a $3.5 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 $3.4 billion as of June 30, 2011.
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 June 30, 2011, Busey Wealth Management had approximately $3.8 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 forward-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 executives 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.