October 25, 2011
First Busey Announces 2011 Third Quarter Earnings
Champaign, IL – (Nasdaq: BUSE)
Message from our President & CEO
First Busey Corporation’s net income for the third quarter of 2011 was $7.6 million and net income available to common stockholders was $6.5 million, or $0.08 per fully-diluted common share, as compared to net income of $6.0 million and net income available to common stockholders of $4.7 million, or $0.07 per fully diluted share, for the comparable period in 2010. The Company’s 2011 year-to-date net income was $24.1 million and net income available to common stockholders was $20.0 million, or $0.24 per fully diluted share, compared to net income of $15.9 million, net income available to common stockholders of $12.1 million and fully-diluted earnings per share of $0.18 for the comparable period in 2010.
In comparison, the Company reported net income for the second quarter of 2011 of $7.4 million and net income available to common stockholders of $6.2 million, or $0.07 per fully-diluted common share. The slight increase in earnings per share from the second quarter of 2011 was attributable to the modest increase in net income available to common stockholders. A contributing factor to this increase in income was a reduction in preferred stock dividends. On August 25, 2011, the Company announced that it had exited the Troubled Asset Relief Program and issued approximately $72.6 million in preferred stock to the U.S. Department of the Treasury through the Small Business Lending Fund. These funds will be used to further enhance our business lending efforts.
Balance sheet strength, profitability and growth – in that order.
Asset Quality: Our non-performing loans at September 30, 2011 continued to show improvement. We expect continued gradual improvement in our overall asset quality during the remainder of 2011; however, this continues to be dependent upon market specific economic conditions. The key metrics are as follows:
| · | Non-performing loans decreased to $42.9 million at September 30, 2011 from $53.8 million at June 30, 2011 and $68.1 million at December 31, 2010. |
| o | Illinois non-performing loans decreased to $25.3 million at Sep 30, 2011 from $27.8 million at June 30, 2011 and $38.3 million at December 31, 2010. |
| o | Florida non-performing loans decreased to $13.2 million at September 30, 2011 from $19.5 million at June 30, 2011 and $23.8 million at December 31, 2010. |
| o | Indiana non-performing loans decreased to $4.4 million at September 30, 2011 from $6.5 million at June 30, 2011 and $6.0 million at December 31, 2010. |
| · | Loans 30-89 days past due decreased to $8.2 million at September 30, 2011 from $17.1 million at June 30, 2011 and $23.5 million at December 31, 2010. |
| · | Other non-performing assets increased to $11.6 million at September 30, 2011 from $6.9 million at June 30, 2011 and $9.2 million at December 31, 2010 due to the foreclosure of four large commercial properties during the third quarter. |
| · | The ratio of non-performing assets to total loans plus other real estate owned at September 30, 2011 decreased to 2.58% from 2.79% at June 30, 2011 and 3.25% at December 31, 2010. |
| · | The allowance for loan losses to non-performing loans ratio increased to 148.73% at September 30, 2011 from 128.94% at June 30, 2011 and 111.64% at December 31, 2010. |
| · | The allowance for loan losses to total loans ratio decreased to 3.04% at September 30, 2011 compared to 3.20% at June 30, 2011 and 3.21% at December 31, 2010. |
| · | Net charge-offs totaled $10.4 million in the third quarter of 2011 as compared to $10.5 million in the second quarter of 2011 and $18.5 million in the third quarter of 2010. |
| · | Provision expense of $5.0 million recorded in the third quarter of 2011 was consistent with the amount recorded in the second quarter of 2011 and was lower than the $9.5 million recorded in the third quarter of 2010. |
Operating Performance: Our net income increased to $7.6 million in the third quarter of 2011 as compared to $6.0 million in the third quarter of 2010, but only slightly increased
from $7.4 million in the second quarter of 2011. The primary drivers of the increase in the third quarter of 2011 as compared to the comparable period in 2010 relate to lower
provision for loan losses of $4.5 million and reduced regulatory expense of $1.7 million. The lower provision and regulatory expense was partially offset by declines in net interest
income and sales of residential mortgage loans, resulting in an overall increase in net income of $1.6 million.
Significant operating performance items were:
| · | Net interest income declined to $27.7 million in the third quarter of 2011, compared to $27.8 million in the second quarter of 2011 and $29.6 million in the third quarter of 2010. Net interest income for the first nine months of 2011 was $83.9 million compared to $87.7 million for the same period of 2010. The decline in net interest income for these periods was primarily related to a decline in loans, which has been partially offset by reduced funding costs. |
| · | Pre-provision, pre-tax (PPPT) income increased to $16.7 million in the third quarter of 2011, compared to $16.4 million in the second quarter of 2011, but declined from $17.4 million in the third quarter of 2010. PPPT income for the first nine months of 2011 was $51.3 million compared to $53.4 million for the same period of 2010. The decline in PPPT income year over year was primarily related to a decline in net interest income partially offset by expense efficiencies including decreased regulatory expenses. |
| · | Net interest margin increased to 3.57% for the third quarter of 2011 as compared to 3.54% for the second quarter of 2011, but decreased from 3.64% for the third quarter of 2010. The net interest margin of 3.55% for the first nine months of 2011 was consistent with the same period of 2010. |
| · | Gains on sales of residential mortgage loans increased to $3.0 million in the third quarter of 2011 compared to $1.8 million in the second quarter of 2011, but decreased from $4.1 million in the third quarter of 2010. The increase in the third quarter versus the second quarter of 2011 was primarily due to refinancing as mortgage rates have declined to record lows during the third quarter of 2011. |
| · | Total non-interest expense of $25.7 million for the third quarter of 2011 was consistent with $25.2 million recorded for the second quarter of 2011, but decreased from $27.0 million for the third quarter of 2010. The decrease in the third quarter of 2011 as compared to the comparable period in 2010 primarily related to a decline in regulatory expense of $1.7 million as a result of the change in FDIC assessment methodology, partially offset by an increase in salary and wages and other operating expense. |
| · | The efficiency ratio increased to 57.87% for the third quarter of 2011 from 57.80% for the second quarter of 2011, but improved from 58.21% for the third quarter of 2010. The efficiency ratio for the first nine months of 2011 was 57.16%, a slight improvement from 57.46% for the same period of 2010. |
| · | Total revenue, net of interest expense and security gains, for the third quarter of 2011 was $42.4 million, compared to $41.6 million for the second quarter of 2011 and $44.2 million for the third quarter of 2010. Total revenue for the first nine months of 2011 was $127.9 million as compared to $132.3 million in the same period of 2010. |
| · | FirsTech’s net income of $0.4 million for the third quarter of 2011 remained consistent with the second quarter of 2011 and the third quarter of 2010. FirsTech’s net income for the first nine months of 2011 was $1.3 million as compared to $1.5 million in the same period of 2010. |
| · | Busey Wealth Management’s net income of $0.7 million for the third quarter of 2011 decreased from $1.0 million for the second quarter of 2011, but was consistent with net income of $0.7 million for the third quarter of 2010. Busey Wealth Management’s net income for the first nine months of 2011 was $2.4 million as compared to $2.6 million for the first nine months of 2010. |
Growth: As noted in prior releases, in January 2011 we embarked upon an initiative (which we call B5th) to spur organic growth by providing new tools to our front line associates. We continue to experience modest success in our retail channel from this growth initiative. We are now beginning to invest further in the growth of our business banking segment. The primary investment will be in people, both our current associates and new associates who we are actively recruiting. We are emphasizing our growth through the increased business expectations from our existing associates and hiring experienced bankers with proven track records in our markets. While maintaining our priorities of balance sheet strength and profitability, achieving meaningful organic growth is a significant focus for 2012.
The economy continues to be a headwind and we expect competition for new business banking opportunities will continue to be strong in our markets. We will continue our
practice of not sacrificing the quality of our loan portfolio for the sake of growth. However, we will not allow our quality standards to be an excuse. We believe we have the best
people in our markets and plan to add more. We are well positioned in our markets to grow our customer base. We are confident that we are up to this challenge and expect to
see gradual improvement in loan volume in 2012. We will continue to base our efforts for organic growth on service, listening to our customers and providing appropriate
solutions to their financial needs.
We are also well positioned to explore external growth opportunities while simultaneously focusing on organic growth. Organic growth is a significant focus; however, we believe external growth opportunities will play an important role in our future.
On October 28, 2011, we will pay a cash dividend of $0.04 per common share to stockholders of record as of October 21, 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 | | Nine Months Ended |
| | | September 30, | June 30, | September 30, | | September 30, | September 30, |
| | | | 2011 | 2011 | 2010 | | 2011 | 2010 |
EARNINGS & PER SHARE DATA | | | | | | | |
| | Net income | | $ 7,570 | $ 7,447 | $ 6,022 | | $ 24,127 | $ 15,924 |
| | Income available to common stockholders1 | | 6,521 | 6,164 | 4,739 | | 20,019 | 12,076 |
| | Revenue2 | | 42,445 | 41,587 | 44,202 | | 127,920 | 132,263 |
| | Fully-diluted earnings per share | | 0.08 | 0.07 | 0.07 | | 0.24 | 0.18 |
| | Cash dividends paid per share | | 0.04 | 0.04 | 0.04 | | 0.12 | 0.12 |
| | | | | | | | | |
| | Net income by operating segment | | | | | | | |
| | Busey Bank | | $ 7,068 | $ 7,096 | $ 5,449 | | $ 22,984 | $ 14,221 |
| | Busey Wealth Management | | 749 | 974 | 716 | | 2,417 | 2,574 |
| | FirsTech | | 381 | 422 | 425 | | 1,253 | 1,522 |
| | | | | | | | | |
| AVERAGE BALANCES | | | | | | | |
| | Assets | | $ 3,420,878 | $ 3,491,237 | $ 3,598,237 | | $ 3,500,121 | $ 3,682,753 |
| | Earning assets | | 3,138,274 | 3,209,961 | 3,280,987 | | 3,213,540 | 3,361,535 |
| | Deposits | | 2,769,255 | 2,823,136 | 2,982,590 | | 2,829,830 | 3,059,186 |
| | Interest-bearing liabilities | | 2,505,838 | 2,569,520 | 2,778,286 | | 2,576,049 | 2,868,213 |
| | Stockholders’ equity – common | | 331,387 | 325,608 | 234,916 | | 315,643 | 231,692 |
| | Tangible stockholders’ equity – common | | 293,243 | 286,586 | 193,058 | | 276,624 | 188,766 |
| | | | | | | | | |
| PERFORMANCE RATIOS | | | | | | | |
| | Return on average assets3 | | 0.76% | 0.71% | 0.52% | | 0.76% | 0.44% |
| | Return on average common equity3 | | 7.81% | 7.59% | 8.00% | | 8.48% | 6.97% |
| | Return on average tangible common equity3 | | 8.82% | 8.63% | 9.74% | | 9.68% | 8.55% |
| | Net interest margin3 | | 3.57% | 3.54% | 3.64% | | 3.55% | 3.55% |
| | Efficiency ratio4 | | 57.87% | 57.80% | 58.21% | | 57.16% | 57.46% |
| | Non-interest revenue as a % of total revenues2 | | 34.68% | 33.05% | 32.96% | | 34.40% | 33.66% |
| | | | | | | | | |
| ASSET QUALITY | | | | | | | |
| | Gross loans | | $ 2,099,314 | $ 2,168,240 | $ 2,518,209 | | | |
| | Allowance for loan losses | | 63,915 | 69,329 | 83,098 | | | |
| | Net charge-offs | | 10,414 | 10,520 | 18,531 | | 27,123 | 48,781 |
| | Allowance for loan losses to loans | | 3.04% | 3.20% | 3.30% | | | |
| | Allowance as a percentage of non-performing loans | | 148.73% | 128.94% | 104.29% | | | |
| | Non-performing loans | | | | | | | |
| | Non-accrual loans | | 41,987 | 52,456 | 78,223 | | | |
| | Loans 90+ days past due | | 986 | 1,314 | 1,457 | | | |
| | Geographically | | | | | | | |
| | Downstate Illinois/ Indiana | | 29,733 | 34,260 | 56,831 | | | |
| | Florida | | 13,240 | 19,510 | 22,849 | | | |
| | Loans 30-89 days past due | | 8,247 | 17,057 | 19,322 | | | |
| | Other non-performing assets | | 11,577 | 6,855 | 11,470 | | | |
| | | | | | | | | |
| | | | | | | |
| 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) | | September 30, | | | December 31, | | | September 30, | |
| | | 2011 | | | 2010 | | | 2010 | |
| Assets | | | | | | | | | |
| Cash and due from banks | | $ | 289,144 | | | $ | 418,965 | | | $ | 222,226 | |
| Investment securities | | | 795,403 | | | | 599,459 | | | | 551,720 | |
| Net loans, including loans held for sale | | | 2,035,399 | | | | 2,292,739 | | | | 2,435,110 | |
| Premises and equipment | | | 70,179 | | | | 73,218 | | | | 74,362 | |
| Goodwill and other intangibles | | | 37,589 | | | | 40,242 | | | | 41,263 | |
| Other assets | | | 165,171 | | | | 180,380 | | | | 208,532 | |
| Total assets | | $ | 3,392,885 | | | $ | 3,605,003 | | | $ | 3,533,213 | |
| | | | | | | | | | | | | |
| Liabilities & Stockholders' Equity | | | | | | | | | | | | |
| Non-interest bearing deposits | | $ | 467,775 | | | $ | 460,661 | | | $ | 449,702 | |
| Interest-bearing deposits | | | 2,288,686 | | | | 2,455,705 | | | | 2,474,503 | |
| Total deposits | | $ | 2,756,461 | | | $ | 2,916,366 | | | $ | 2,924,205 | |
| | | | | | | | | | | | | |
| Securities sold under agreements to repurchase | | | 129,905 | | | | 138,982 | | | | 130,419 | |
| Short-term borrowings | | | - | | | | - | | | | 4,000 | |
| Long-term debt | | | 19,834 | | | | 43,159 | | | | 52,576 | |
| Junior subordinated debt owed to unconsolidated trusts | | | 55,000 | | | | 55,000 | | | | 55,000 | |
| Other liabilities | | | 24,219 | | | | 30,991 | | | | 30,446 | |
| Total liabilities | | $ | 2,985,419 | | | $ | 3,184,498 | | | $ | 3,196,646 | |
| Total stockholders' equity | | $ | 407,466 | | | $ | 420,505 | | | $ | 336,567 | |
| Total liabilities & stockholders' equity | | $ | 3,392,885 | | | $ | 3,605,003 | | | $ | 3,533,213 | |
| | | | | | | | | | | | | |
| Per Share Data | | | | | | | | | | | | |
| Book value per common share | | $ | 3.87 | | | $ | 3.65 | | | $ | 3.56 | |
| Tangible book value per common share | | $ | 3.43 | | | $ | 3.14 | | | | 2.94 | |
| 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 September 30, | | | Nine Months Ended September 30, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| | | | | | | | | | | | | |
| Interest and fees on loans | | $ | 28,243 | | | $ | 34,326 | | | $ | 87,924 | | | $ | 105,906 | |
| Interest on investment securities | | | 4,568 | | | | 4,141 | | | | 13,666 | | | | 13,238 | |
| Total interest income | | $ | 32,811 | | | $ | 38,467 | | | $ | 101,590 | | | $ | 119,144 | |
| | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 4,457 | | | | 7,334 | | | | 14,536 | | | | 26,544 | |
| Interest on short-term borrowings | | | 96 | | | | 170 | | | | 327 | | | | 484 | |
| Interest on long-term debt | | | 230 | | | | 629 | | | | 1,212 | | | | 2,313 | |
| Junior subordinated debt owed to unconsolidated trusts | | | 301 | | | | 699 | | | | 1,600 | | | | 2,063 | |
| Total interest expense | | $ | 5,084 | | | $ | 8,832 | | | $ | 17,675 | | | $ | 31,404 | |
| | | | | | | | | | | | | | | | | |
| Net interest income | | $ | 27,727 | | | $ | 29,635 | | | $ | 83,915 | | | $ | 87,740 | |
| Provision for loan losses | | | 5,000 | | | | 9,500 | | | | 15,000 | | | | 31,700 | |
| Net interest income after provision for loan losses | | $ | 22,727 | | | $ | 20,135 | | | $ | 68,915 | | | $ | 56,040 | |
| | | | | | | | | | | | | | | | | |
| Trust fees | | | 3,460 | | | | 3,113 | | | | 11,765 | | | | 10,758 | |
| Commissions and brokers' fees | | | 495 | | | | 398 | | | | 1,415 | | | | 1,309 | |
| Fees for customer services | | | 4,624 | | | | 4,162 | | | | 13,476 | | | | 12,126 | |
| Remittance processing | | | 2,335 | | | | 2,263 | | | | 7,119 | | | | 7,116 | |
| Gain on sales of loans | | | 2,977 | | | | 4,104 | | | | 7,444 | | | | 9,984 | |
| Net security gains (losses) | | | - | | | | 283 | | | | (2 | ) | | | 1,025 | |
| Other | | | 827 | | | | 527 | | | | 2,786 | | | | 3,230 | |
| Total non-interest income | | $ | 14,718 | | | $ | 14,850 | | | $ | 44,003 | | | $ | 45,548 | |
| | | | | | | | | | | | | | | | | |
| Salaries and wages | | | 11,090 | | | | 10,537 | | | | 30,678 | | | | 30,271 | |
| Employee benefits | | | 2,494 | | | | 2,487 | | | | 7,759 | | | | 7,669 | |
| Net occupancy expense | | | 2,211 | | | | 2,374 | | | | 6,762 | | | | 6,947 | |
| Furniture and equipment expense | | | 1,294 | | | | 1,493 | | | | 3,958 | | | | 4,602 | |
| Data processing expense | | | 2,145 | | | | 2,008 | | | | 6,425 | | | | 5,855 | |
| Amortization expense | | | 885 | | | | 1,022 | | | | 2,653 | | | | 3,067 | |
| Regulatory expense | | | 497 | | | | 2,155 | | | | 3,652 | | | | 5,302 | |
| OREO expense | | | 112 | | | | 380 | | | | 459 | | | | 1,443 | |
| Other operating expenses | | | 4,996 | | | | 4,586 | | | | 14,228 | | | | 14,766 | |
| Total non-interest expense | | $ | 25,724 | | | $ | 27,042 | | | $ | 76,574 | | | $ | 79,922 | |
| | | | | | | | | | | | | | | | | |
| Income before income taxes | | $ | 11,721 | | | $ | 7,943 | | | $ | 36,344 | | | $ | 21,666 | |
| Income taxes | | | 4,151 | | | | 1,921 | | | | 12,217 | | | | 5,742 | |
| Net income | | $ | 7,570 | | | $ | 6,022 | | | $ | 24,127 | | | $ | 15,924 | |
| Preferred stock dividends and discount accretion | | | 1,049 | | | $ | 1,283 | | | $ | 4,108 | | | $ | 3,848 | |
| Income available for common stockholders | | $ | 6,521 | | | $ | 4,739 | | | $ | 20,019 | | | $ | 12,076 | |
| | | | | | | | | | | | | | | | | |
| Per Share Data | | | | | | | | | | | | | | | | |
| Basic earnings per common share | | $ | 0.08 | | | $ | 0.07 | | | $ | 0.24 | | | $ | 0.18 | |
| Fully-diluted earnings per common share | | $ | 0.08 | | | $ | 0.07 | | | $ | 0.24 | | | $ | 0.18 | |
| Diluted average common shares outstanding | | | 86,608 | | | $ | 66,361 | | | | 84,880 | | | $ | 66,361 | |
Corporate Profile
First Busey Corporation is a $3.4 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 $3.3 billion as of September 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 September 30, 2011, Busey Wealth Management had approximately $3.6 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.
