SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 1O-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended 9/30/96 Commission File No. 0-15950
FIRST BUSEY CORPORATION
(Exact name of registrant as specified in its Charter)
Nevada 37-1078406
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(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
201 W. Main St.
Urbana, Illinois 61801
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (217) 365-4556
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes __X__ No _____
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the practicable date.
Class Outstanding at July 31, 1996
--------------------------------------- -----------------------------
Class A Common Stock, without par value 5,684,543
Class B Common Stock, without par value 1,125,000
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 1996 December 31, 1995
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(Dollars in thousands)
ASSETS
Cash and due from banks $41,761 $39,358
Federal funds sold 0 650
Securities held to maturity (fair value 1996 $59,281; 1995 $62,625) 58,859 61,501
Securities available for sale (amort. cost 1996 $175,775;
1995 $218,257) 179,184 223,016
Trading Securities at fair value 929 -
Loans (net of unearned interest) 562,777 481,772
Allowance for loan losses (5,619) (5,473)
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Net loans $557,158 $476,299
Premises and equipment 21,636 21,857
Other assets 22,086 21,985
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Total assets $881,613 $844,666
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $75,661 $72,386
Interest bearing 707,341 672,511
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Total deposits $783,002 $744,897
Short-term borrowings 17,187 21,674
Long-term debt 5,000 5,000
Other liabilities 6,077 5,317
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Total liabilities $811,266 $776,888
================== =================
STOCKHOLDER'S EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 20,491 20,380
Retained earnings 46,050 42,474
Unrealized gain (loss) on securities available for sale, net 2,216 3,093
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Total stockholders' equity before treasury stock, unearned ESOP $75,048 $72,238
shares and deferred compensation for stock grants
Treasury stock, at cost (3,912) (3,659)
Unearned ESOP shares and deferred compensation for stock grants (789) (801)
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Total stockholders' equity $70,347 $67,778
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Total liabilities and stockholders' equity $881,613 $844,666
================== =================
Class A Common Shares outstanding at period end 5,680,123 5,686,958
================== =================
Class B Common Shares outstanding at period end 1,125,000 1,125,000
================== =================
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 1996 September 30, 1995
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(Dollars in thousands)
ASSETS
Cash and due from banks $41,761 $30,379
Federal funds sold 0 17,450
Securities held to maturity (fair value 1996 $59,281; 1995 $64,251) 58,859 63,575
Securities available for sale (amort. cost 1996 $175,775;
1995 $170,070) 179,184 173,473
Trading Securities at fair value 929 0
Loans (net of unearned interest) 562,777 467,003
Allowance for loan losses (5,619) (5,500)
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Net loans $557,158 $461,503
Premises and equipment 21,636 21,245
Other assets 22,086 18,075
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Total assets $881,613 $785,700
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $75,661 $67,431
Interest bearing 707,341 613,657
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Total deposits $783,002 $681,088
Short-term borrowings 17,187 29,554
Long-term debt 5,000 5,000
Other liabilities 6,077 4,844
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Total liabilities $811,266 $720,486
================== =================
STOCKHOLDER'S EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 20,491 20,355
Retained earnings 46,050 41,156
Unrealized gain (loss) on securities available for sale, net 2,216 2,213
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Total stockholders' equity before treasury stock, unearned ESOP $75,048 $70,015
shares and deferred compensation for stock grants
Treasury stock, at cost (3,912) (3,726)
Unearned ESOP shares and deferred compensation for stock grants (789) (1,075)
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Total stockholders' equity $70,347 $65,214
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Total liabilities and stockholders' equity $881,613 $785,700
================== =================
Class A Common Shares outstanding at period end 5,680,123 5,679,312
================== =================
Class B Common Shares outstanding at period end 1,125,000 1,125,000
================== =================
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
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(Dollars in thousands, except per share amounts)
INTEREST INCOME:
Interest and fees on loans $33,726 $29,164
Interest and dividends on investment securities:
Taxable interest income 9,718 8,538
Non-taxable interest income 1,578 1,508
Dividends 90 99
Interest on federal funds sold 408 646
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Total interest income $45,520 $39,955
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INTEREST EXPENSE:
Deposits $21,313 $18,036
Short-term borrowings 845 1,162
Long-term debt 208 207
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Total interest expense $22,366 $19,405
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Net interest income $23,154 $20,550
Provision for loan losses 400 375
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Net interest income after provision for loan losses $22,754 $20,175
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OTHER INCOME:
Trust $1,945 $1,894
Service charges on deposit accounts 2,175 1,972
Other service charges and fees 1,287 945
Security gains (losses), net 90 169
Trading security gains (losses), net (113) 26
Gain on sales of pooled loans 197 558
Other operating income 729 892
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Total other income $6,310 $6,456
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OTHER EXPENSES:
Salaries and wages $8,725 $7,875
Employee benefits 1,653 1,480
Net occupancy expense of bank premises 1,452 1,376
Furniture and equipment expenses 1,231 1,148
Data processing 1,050 1,076
Stationery, supplies and printing 539 516
Foreclosed property write-downs and expenses 89 110
Amortization expense 991 645
Other operating expenses 3,627 3,224
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Total other expenses $19,357 $17,450
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Income before income taxes $9,707 $9,181
Income taxes 2,825 2,707
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Net income $6,882 $6,474
================== =================
NET INCOME PER SHARE OF COMMON STOCK AND STOCK EQUIVALENTS: $0.99 $0.94
DIVIDENDS DECLARED PER SHARE:
Class A Common Stock $0.4933 $0.4400
================== =================
Class B Common Stock $0.4485 $0.4000
================== =================
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Quarters Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
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(Dollars in thousands, except per share amounts)
INTEREST INCOME:
Interest and fees on loans $11,952 $10,256
Interest and dividends on investment securities:
Taxable interest income 2,950 2,955
Non-taxable interest income 542 522
Dividends 29 32
Interest on federal funds sold 16 285
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Total interest income $15,489 $14,050
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INTEREST EXPENSE:
Deposits $7,241 $6,356
Short-term borrowings 222 522
Long-term debt 70 70
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Total interest expense $7,533 $6,948
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Net interest income $7,956 $7,102
Provision for loan losses 150 275
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Net interest income after provision for loan losses $7,806 $6,827
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OTHER INCOME:
Trust $659 $583
Service charges on deposit accounts 743 676
Other service charges and fees 425 303
Security gains (losses), net 85 121
Trading security gains (losses), net 19 (2)
Gain on sales of pooled loans 81 145
Other operating income 244 266
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Total other income $2,256 $2,092
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OTHER EXPENSES:
Salaries and wages $2,966 $2,674
Employee benefits 529 475
Net occupancy expense of bank premises 504 536
Furniture and equipment expenses 438 408
Data processing 366 371
Stationery, supplies and printing 195 164
Foreclosed property write-downs and expenses 14 21
Amortization expense 331 215
Other operating expenses 1,536 869
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Total other expenses $6,879 $5,733
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Income before income taxes $3,183 $3,186
Income taxes 920 937
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Net income $2,263 $2,249
================== =================
NET INCOME PER SHARE OF COMMON STOCK AND STOCK EQUIVALENTS: $0.32 $0.33
DIVIDENDS DECLARED PER SHARE:
Class A Common Stock $0.1600 $0.1467
================== =================
Class B Common Stock $0.1455 $0.1333
================== =================
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
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(Dollars in thousands, except per share amounts)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $6,882 $6,474
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,494 2,078
Provision for loan losses 400 375
Increase in deferred income taxes (374) (635)
Amortization of investment security discounts (947) (462)
Gain on sales of investment securities, net (90) (169)
Proceeds from sales of pooled loans 26,763 26,584
Loans originated for sale (27,006) (19,648)
Gain on sale of pooled loans (197) (558)
Loss on sales and dispositions of premises and equipment 17 0
Change in assets and liabilities:
Increase (decrease) in other assets 151 (273)
Increase (decrease) in accrued expenses 614 817
Increase (decrease) in interest payable (190) 501
Increase in income taxes payable 336 337
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Net cash provided by operating activities $8,853 $15,421
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities classified available for sale $10,431 $41,675
Proceeds from maturities of securities classified available for sale 365,373 67,662
Proceeds from maturities of securities classified held to maturity 22,097 10,571
Purchase of securities classified available for sale (333,113) (133,766)
Purchase of securities classified held to maturity (19,556) (7,314)
(Increase) decrease in federal funds sold 650 (17,450)
Increase in loans (81,215) (23,009)
Purchases of premises and equipment (1,254) (684)
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Net cash (used in) investing activities ($36,587) ($62,355)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in certificates of deposit $13,976 $34,317
Net increase in demand, money market and saving deposits 24,129 11,077
Cash dividends paid (3,306) (2,957)
Purchase of treasury stock (461) (681)
Proceeds from sale of treasury stock 136 237
Proceeds from short-term borrowings 0 5,750
Principal payments on short-term borrowings (2,000) (750)
Net increase (decrease) in federal funds purchased,
repurchase agreements and Federal Reserve discount borrowings (2,337) (1,006)
------------------ -----------------
Net cash provided by (used in) financing activities $30,137 $45,987
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Net increase (decrease) in cash and cash equivalents $2,403 ($947)
Cash and due from banks, beginning 39,358 31,326
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Cash and due from banks, ending $41,761 $30,379
================== =================
FIRST BUSEY CORPORATION and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: INTERIM FINANCIAL STATEMENTS
The consolidated interim financial statements of First Busey Corporation and
Subsidiaries are unaudited, but in the opinion of management reflect all
necessary adjustments, consisting only of normal recurring accruals, for a
fair presentation of results as of the dates and for the periods covered by
the financial statements. The results for the interim periods are not
necessarily indicative of the results of operations that may be expected for
the fiscal year.
NOTE 2: LOANS
The major classifications of loans at September 30, 1996 and
December 31, 1995 were as follows:
September 30, 1996 December 31, 1995
------------------------------------------
(Dollars in thousands)
Commercial $60,976 $55,687
Real estate construction 28,517 25,566
Real estate - farmland 12,229 11,162
Real estate - 1-4 family residential mortgage 204,421 179,047
Real estate - multifamily mortgage 76,530 57,364
Real estate - non-farm nonresidential mortgage 122,976 98,006
Installment 41,056 42,353
Agricultural 16,075 12,594
------------------------------------------
$562,780 $481,779
Less:
Unearned interest 3 7
------------------------------------------
$562,777 $481,772
------------------------------------------
Less:
Allowance for loan losses 5,619 5,473
------------------------------------------
Net loans $557,158 $476,299
==========================================
The real estate-mortgage category includes loans held for sale with carrying
values of $2,243,000 at September 30, 1996 and $1,803,000 at December 31, 1995;
these loans had fair market values of $2,259,000 and $1,840,000, respectively.
FIRST BUSEY CORPORATION and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: INCOME PER SHARE
Net income per common share has been computed as follows:
Three Months Ended Six Months Ended
September 30, September 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Net income $2,263,000 $2,249,000 $6,882,000 $6,474,000
Shares:
Weighted average common shares outstanding 6,797,680 6,806,487 6,799,579 6,819,248
Dilutive effect of outstanding options, as determined
by the application of the treasury stock method 147,081 97,385 129,480 94,581
---------- ---------- ---------- ----------
Weighted average common shares outstanding,
as adjusted 6,944,760 6,903,872 6,929,059 6,913,829
========== ========== ========== ==========
Net income per share of common stock and stock equivalents: $0.32 $0.33 $0.99 $0.94
========== ========== ========== ==========
NOTE 4: SUPPLEMENTAL CASH FLOW DISCLOSURES FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND 1995.
1996 1995
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $22,556 $18,904
========== ==========
Income taxes $2,810 $2,927
========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Other real estate acquired in settlement of loans $396 $569
========== ==========
Change in unrealized gain (loss) on securities available for sale $1,350 $4,680
========== ==========
(Decrease) increase in deferred income taxes attributable to the
unrealized (gain) loss on investment securities available for sale ($473) ($1,625)
========== ==========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the
financial condition of First Busey Corporation and Subsidiaries
("Corporation") at September 30, 1996 (unaudited) when compared
with December 31, 1995 and the results of operations for the
nine months ended September 30, 1996 and 1995 (unaudited) and
the results of operations for the three months ended September
30, 1996 and 1995 (unaudited). This discussion and analysis
should be read in conjunction with the Corporation's
consolidated financial statements and notes thereto appearing
elsewhere in this quarterly report.
FINANCIAL CONDITION AT SEPTEMBER 30, 1996 AS COMPARED TO
DECEMBER 31, 1995
Total assets increased $36,947,000, or 4.4%, to $881,613,000 at
September 30, 1996 from $844,666,000 at December 31, 1995.
Securities held to maturity decreased $2,642,000, or 4.3%, to
$58,859,000 at September 30, 1996 from $61,501,000 at December
31, 1995. Securities available for sale decreased $53,832,000,
or 23.1%, to $179,184,000 at September 30, 1996 from
$233,016,000 at December 31, 1995, as security maturities were
used to finance loan growth.
Loans increased $81,005,000 or 16.8%, to $562,777,000 at
September 30, 1996 from $481,772,000 at December 31, 1995,
primarily due to increases in commercial and mortgage loans.
Total deposits increased $38,105,000, or 5.1%, to $783,002,000
at September 30, 1996 from $744,897,000 at December 31, 1995.
Non-interest bearing deposits increased 4.5% to $75,661,000 at
September 30, 1996 from $72,386,000 at December 31, 1995.
Interest bearing deposits increased 5.2% to $707,341,000 at
September 30, 1996 from $672,511,000 at December 31, 1995.
Short-term borrowings decreased $4,487,000, or 20.7%, to
$17,187,000 at September 30, 1996, as compared to $21,674,000 at
December 31, 1995. This was due primarily to a decrease in
repurchase agreements.
In the first nine months of 1996, the Corporation repurchased
24,510 shares of its Class A stock at an aggregate cost of
$462,000. The Corporation is purchasing shares for the treasury
as they become available in order to meet future issuance
requirements of previously granted non-qualified stock options.
As of September 30, 1996, 11,250 of the 96,750 options which
became exercisable on January 1, 1993 (and expire December 31,
1996) have not yet been exercised and 40,500 of the 58,500
options which became exercisable on January 1, 1995 (and expire
December 31, 1997) have not yet been exercised. The
Corporation's Board of Directors has extended the Stock
Repurchase Plan to June 30, 1997. It is anticipated that the
Corporation may from time to time continue to make purchases of
its common stock in order to meet future issuance requirements.
The following table sets forth the components of non-performing assets and
past due loans.
September 30, 1996 December 31,1995
------------------ ----------------
(Dollars in thousands)
Non-accrual loans $0 $532
Loans 90 days past due, still accruing 1,460 897
Restructured loans 0 0
Other real estate owned 865 1,380
Non-performing other assets 54 1
-------------- ----------------
Total non-performing assets $2,379 $2,810
============== ================
Total non-performing assets as a percentage of total assets 0.27% 0.33%
============== ================
Total non-performing assets as a percentage of loans plus non-performing assets 0.42% 0.58%
============== ================
The ratio of non-performing assets to loans plus non-performing
assets decreased to 0.42% at September 30, 1996 from 0.58% at
December 31, 1995. This was due to decreases in the balance of
non-accrual loans and other real estate owned, offset partially
by an increase in the balance of loans 90 days past due and
still accruing. The balance of loans outstanding increased
during the period, while the balance of non-performing assets
decreased thereby causing a further decrease in the percentage
of non-performing assets.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO SEPTEMBER
30, 1995
SUMMARY
Net income for the nine months ended September 30, 1996
increased 6.3% to $6,882,000 as compared to $6,474,000 for the
comparable period in 1995. Earnings per share increased 5.3% to
$.99 at September 30, 1996 as compared to $.94 for the same
period in 1995.
Operating earnings, which exclude security gains and the related
tax expense, were $6,823,000, or $.98 per share for the nine
months ended September 30, 1996, as compared to $6,364,000, or
$.92 per share for the same period in 1995.
The Corporation's return on average assets was 1.07% for the
nine months ended September 30, 1996, as compared to 1.15% for
the comparable period in 1995. The return on average assets
from operations of 1.06% for the nine months ended September 30,
1996 was 7 basis points lower that the 1.13% level achieved in
the comparable period of 1995.
Net interest margin, the Corporation's net interest income
expressed as a percentage of average earning assets stated on a
fully taxable equivalent basis, was 4.12% for the nine months
ended September 30, 1996, as compared to 4.20% for the same
period in 1995. The net interest margin expressed as a
percentage of average total assets, also on a fully taxable
equivalent basis, was 3.78% for the nine months ended September
30, 1996, compared to 3.84% for the same period in 1995. The
decrease in the net interest margin reflects the increase in
interest expense the Corporation experienced due to the $78
million in deposit liabilities assumed in December 1995. The
Corporation has been reinvesting investment security maturities
and sales proceeds in higher yielding loans in order to increase
the net interest margin.
During the nine months ended September 30, 1996, the Corporation
recognized security gains of approximately $59,000, after income
taxes, representing 0.9% of net income. During the same period
in 1995, security gains of $110,000, after income taxes, were
recognized, representing 1.7% of net income.
INTEREST INCOME
Interest income, on a tax equivalent basis, for the nine months
ended September 30, 1996 increased 13.7% to $46,573,000 from
$40,974,000 for the comparable period in 1995. The increase in
interest income resulted from an increase in average earning
assets of $97,672,000 for the period ended September 30, 1996,
as compared to the same period of 1995, offset in part by a 4
basis point decrease in the average yield on interest earning
assets to 7.93% in the current period when compared to the same
period in 1995.
INTEREST EXPENSE
Total interest expense increased 15.3% for the nine months ended
September 30, 1996 as compared to the prior year period. This
increase resulted in large part from a $57,923,000 increase in
average time deposit balances and a $25,378,000 increase in
average savings deposit balances for the nine months ended
September 30, 1996, as compared to the same period in 1995.
PROVISION FOR LOAN LOSSES
The provision for loan losses of $400,000 for the nine months
ended September 30, 1996 is $25,000 more than the provision for
the comparable period in 1995. The provision and the net
charge-offs of $254,000 for the period resulted in the reserve
representing 1.00% of total loans and 385% of non-performing
loans at September 30, 1996, as compared to the reserve
representing 1.14% of total loans and 383% of non-performing
loans at December 31, 1995. The adequacy of the reserve for
loan losses is consistent with management's consideration of the
composition of the portfolio, recent credit quality experience,
and prevailing economic conditions.
Within the last three years, the Corporation has grown its
installment loan portfolio through bank -approved dealer paper,
installment car loans originated by dealers at the time of sale.
It is possible that a weakening in the economic cycle could
adversely affect the quality of these loans and resultant
charge-offs may necessitate larger loan loss provisions.
OTHER INCOME, OTHER EXPENSE AND INCOME TAXES
Total other income, excluding security gains, decreased 1.1% for
the nine months ended September 30, 1996 as compared to the same
period in 1995. This was a combination of decreases in gains on
sales of pooled loans and trading security losses, offset
partially by increased service charges on deposit accounts and
other service charges and fees, for the nine months ended
September 30, 1996 as compared to the same period in 1995.
Gains of $197,000 were recognized on the sale of $26,566,000 of
pooled loans for the nine months ended September 30, 1996 as
compared to gains of $558,000 on the sale of $26,026,000 of
pooled loans in the prior year period.
Management anticipates continued sales from the current mortgage
loan production of the Corporation if mortgage loan originations
are high relative to historic norms and the sales of the loans
are necessary to maintain the asset/liability structure that the
Corporation is trying to effect. The Corporation may realize
gains and/or losses on these sales dependent upon interest rate
movements and upon how receptive the debt markets are to
mortgage backed securities.
Total other expense increased 10.9% or $1,907,000 for the nine
months ended September 30, 1996 as compared to the same period
in 1995.
Salaries and wages expense increased $850,000 or 10.8% and
employee benefits expense increased $173,000 or 11.7% for the
nine months ended September 30, 1996, as compared to the same
period last year as a result of new staffing at the banking
centers added in December 1995. The Corporation had 384 full
time equivalent employees as of September 30, 1996 as compared
to 361 as of September 30, 1995. Occupancy and furniture and
equipment expenses increased 6.3% to $2,683,000 for the nine
months ended September 30, 1996 from $2,524,000 in the prior
year period. Data processing expense decreased $26,000 or 2.4%
to $1,050,000 for the nine months ended September 30, 1996 from
the prior year period. Foreclosed property write-downs and
expenses decreased $21,000 to $89,000 for the nine months ended
September 30, 1996 from the prior year period. Other operating
expenses increased $403,000 or 12.5% to $3,627,000 for the nine
months ended September 30, 1996 due to a $441,000 one time
assessment for the Savings Association Insurance Fund on
deposits the Corporation had previously assumed from savings and
loans.
The Corporation's net overhead expense, total non-interest
expense less non-interest income divided by average assets,
increased to 2.05% for the nine months ended September 30, 1996
from 1.99% in the prior year period as a result of the income
and expense items described above.
The Corporation's efficiency ratio is defined as operating
expenses divided by net revenue. (More specifically it is
defined as non interest expense expressed as a percentage of the
sum of tax equivalent net interest income and non interest
income, excluding security gains). The consolidated efficiency
ratio for the nine months ended
September 30, 1996 was 63.6% as compared to 62.7% for the prior
year period. When the gains on the sales of pooled loans are
excluded, these ratios are identically 64.0%. The change in the
current year efficiency ratio is due to the income and expense
items noted above.
Income taxes for the nine months ended September 30, 1996
increased to $2,825,000 as compared to $2,707,000 for the
comparable period in 1995. As a percent of income before taxes,
the provision for income taxes decreased to 29.1% for the nine
months ended September 30, 1996 from 29.5% for the same period
in 1995.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO SEPTEMBER
30, 1995
SUMMARY
Net income for the three months ended September 30, 1996
increased 0.6% to $2,263,000 as compared to $2,249,000 for the
comparable period in 1995. Earnings per share decreased 3.0% to
$.32 at September 30, 1996 as compared to $.33 for the same
period in 1995.
Operating earnings, which exclude security gains and the related
tax expense, were $2,207,000, or $.31 per share for the three
months ended September 30, 1996, as compared to $2,171,000, or
$.31 per share for the same period in 1995.
The Corporation's return on average assets was 1.05% for the
three months ended September 30, 1996, as compared to 1.14%
achieved for the comparable period in 1995. The return on
average assets from operations of 1.03% for the three months
ended September 30, 1996 was less than the 1.10% level achieved
in the comparable period of 1995.
The net interest margin expressed as a percentage of average
earning assets was 4.21% for the three months ended September
30, 1996, 8 basis points higher than the level achieved for the
like period in 1995. The net interest margin expressed as a
percentage of average total assets was 3.87% for the three
months ended September 30, 1996, as compared to 3.79% for the
same period in 1995.
During the three months ended September 30, 1996, the
Corporation recognized security gains of approximately $56,000,
after income taxes, representing 2.5% of net income. During the
same period in 1995, security gains of approximately $78,000,
after income taxes, were recognized, representing 3.5% of net
income.
INTEREST INCOME
Interest income on a fully taxable equivalent basis increased
$1,443,000, or 10.0% for the three months ended September 30,
1996 from the same period in 1995. The increase resulted from a
higher level of interest income on greater average volumes of
loans outstanding for the three months ended September 30, 1996
as compared to the same period of 1995. The yield on interest
earning assets increased 6 basis points for the three months
ended September 30, 1996 as compared to the same period in 1995.
INTEREST EXPENSE
Total interest expense increased 8.4% for the three months ended
September 30, 1996 as compared to the prior year period. This
increase resulted in large part from a $51,534,000 increase in
average time deposit balances and from a $25,780,000 increase in
average savings deposit balances for the three months ended
September 30, 1996, as compared to the same period in 1995.
OTHER INCOME, OTHER EXPENSE AND INCOME TAXES
Total other income, excluding security transactions, increased
10.1% for the three months ended September 30, 1996 as compared
to the same period in 1995. This was a combination of increased
trust revenue, service charges on deposit accounts, and other
service charges and fees. Gains of $81,000 were recognized on
the sale of $13,687,000 of pooled loans for the three months
ended September 30, 1996 as compared to gains of $145,000 on the
sale of $11,941,000 of pooled loans in the prior year period.
Total other expense increased 20.0% or $1,146,000 for the three
months ended September 30, 1996 as compared to the same period
in 1995.
Salaries and wages expense increased $292,000 or 10.9% and
employee benefits expense increased $54,000 or 11.4% for the
three months ended September 30, 1996, as compared to the same
period last year as a result of new staffing at the banking
centers added in December 1995. Occupancy and furniture and
equipment expenses decreased 0.2% to $942,000 for the three
months ended September 30, 1996 from $944,000 in the prior year
period. Data processing expense decreased $5,000 or 1.3% to
$366,000 for the three months ended September 30, 1996 from the
prior year period. Foreclosed property write-downs and
expenses decreased $7,000 to $14,000 for the three months ended
September 30, 1996 from the prior year period. Other operating
expenses increased $667,000 to $1,536,000 for the three months
ended September 30, 1996 from the prior year period. Of this
increase, $441,000 was due to a one time assessment for the
Savings Association Insurance Fund for deposits the Corporation
had previously assumed from savings and loans.
The consolidated efficiency ratio for the three months ended
September 30, 1996 was 65.6% as compared to 60.8% for the prior
year period. When the gains on the sales of pooled loans are
excluded, these ratios are 66.1% and 61.8%, respectively. The
change in the current year efficiency ratio is due to the income
and expense items noted above.
Income taxes for the three months ended September 30, 1996
decreased to $920,000 as compared to $937,000 for the comparable
period in 1995. As a percent of income before taxes, the
provision for income taxes decreased to 28.9% for the three
months ended September 30, 1996 from 29.4% for the same period
in 1995.
LIQUIDITY
Liquidity is the availability of funds to meet all present and
future financial obligations arising in the daily operations of
the business at a minimal cost. These financial obligations
consist of needs for funds to meet extensions of credit, deposit
withdrawals and debt servicing.
The sources of short-term liquidity utilized by the Corporation
consist of non-reinvested asset maturities, deposits and capital
funds. Long-term liquidity needs will be satisfied primarily
through retention of capital funds. The Corporation does not
deal in or use brokered deposits as a source of liquidity. The
Corporation purchases federal funds as a service to its
respondent banks, but generally does not rely upon these
purchases for liquidity needs. Additional liquidity is provided
by bank lines of credit, repurchase agreements and the ability
to borrow from the Federal Reserve Bank. The Corporation has an
operating line with American National Bank and Trust Company of
Chicago in the amount of $10,000,000 with $3,500,000 available
as of September 30, 1996.
The Corporation's dependence on large liabilities (defined as
time deposits over $100,000 and short-term borrowings) increased
to 12.2% at September 30, 1996 from 9.6% at December 31, 1995.
This is the ratio of total large liabilities to total
liabilities, and is low in comparison to the Corporation's
peers. This increase was due largely to a $34,587,000 increase
in time deposits over $100,000 and a $12,014,000 decrease in
repurchase agreements which resulted in a higher ratio of large
liabilities to total liabilities.
CAPITAL RESOURCES
Other than from the issuance of common stock, the Corporation's
primary source of capital is retained net income. During the
nine months ended September 30, 1996, the Corporation earned
$6,882,000 and paid dividends of $3,306,000 to stockholders,
resulting in a retention of current earnings of $3,576,000. The
Corporation's dividend payout for the nine months ended
September 30, 1996 was 48.0%. The Corporation's risk-based
capital ratio was 12.02% and the leverage ratio was 6.98% as of
September 30, 1996, as compared to 12.36% and 6.92% respectively
as of December 31, 1995. The Corporation and its bank
subsidiary were well above all minimum required capital ratios
as of September 30, 1996.
RATE SENSITIVE ASSETS AND LIABILITIES
Interest rate sensitivity is a measure of the volatility of the
net interest margin as a consequence of changes in market rates.
The rate-sensitivity chart shows the interval of time in which
given volumes of rate-sensitive, earning assets and
rate-sensitive, interest bearing liabilities would be responsive
to changes in market interest rates based on their contractual
maturities or terms for repricing. It is however, only a
static, single-day depiction of the Corporation's rate
sensitivity structure, which can be adjusted in response to
changes in forecasted interest rates.
The following table sets forth the static rate-sensitivity
analysis of the Corporation as of September 30, 1996.
Rate Sensitive Within
----------------------------------------------------------------------
1-30 31-90 91-180 181 Days- Over
Days Days Days 1 Year 1 Year Total
----------------------------------------------------------------------
(Dollars in thousands)
Investment securities
U.S. Governments $5,530 $42,765 $34,264 $18,167 $80,318 $181,044
Obligations of states and
political subdivisions 1,000 2,619 1,055 361 34,961 39,996
Other securities 3,515 1,025 125 0 13,267 17,932
Loans (net of unearned int.) 153,635 27,494 44,894 69,857 266,897 562,777
----------------------------------------------------------------------
Total rate-sensitive assets $163,680 $73,903 $80,338 $88,385 $395,443 $801,749
----------------------------------------------------------------------
Interest bearing transactions
deposits $125,874 $0 $0 $0 $0 $125,874
Savings deposits 82,205 0 0 0 0 82,205
Money market deposits 139,528 0 0 0 0 139,528
Time deposits 41,536 61,327 77,397 85,647 93,827 359,734
Short-term borrowings:
Federal funds purchased &
repurchase agreements 10,087 0 0 0 0 10,087
Other 0 0 7,100 0 0 7,100
Long-term debt 0 0 0 0 5,000 5,000
----------------------------------------------------------------------
Total rate-sensitive liabilities $399,230 $61,327 $84,497 $85,647 $98,827 $729,528
----------------------------------------------------------------------
Rate-sensitive assets less
rate-sensitive liabilities ($235,550) $12,576 ($4,159) $2,738 $296,616 $72,221
----------------------------------------------------------------------
----------------------------------------------------------------------
Cumulative Gap ($235,550) ($222,974) ($227,133) ($224,395) $72,221 ---
======================================================================
Cumulative amounts as
percentage of total
rate-sensitive assets -29.38% -27.81% -28.33% -27.99% 9.01% ---
======================================================================
Cumulative ratio
(cumulative RSA/RSL) 0.41X 0.52X 0.58X 0.64X 1.10X 1.10X
======================================================================
The foregoing table shows a negative (liability sensitive)
rate-sensitivity gap of $235.6 million in the 1-30 day repricing
category. The gap beyond 30 days, through 90 days, becomes
slightly less liability sensitive as rate-sensitive assets that
reprice in those time periods are slightly more in volume than
rate-sensitive liabilities that are subject to repricing in the
same respective time periods. The gap beyond 90 days through
180 days becomes slightly more liability sensitive as
rate-sensitive assets that reprice after 90 days are less in
volume than rate- sensitive liabilities that are subject to
repricing in the same respective time periods. The composition
of the gap structure at September 30, 1996, will benefit the
Corporation more if interest rates fall during the next 30 days
by allowing the net interest margin to grow as liability rates
would reprice more quickly than rates on interest rate-sensitive
assets. After 30 days through one year, a rate change would
have little effect on the Corporation because the volume of
rate-sensitive assets repricing would be similar to the volume
of rate-sensitive liabilities that would be repricing.
FIRST BUSEY CORPORATION and Subsidiaries
AVERAGE BALANCE SHEETS AND INTEREST RATES
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
---------------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
---------------------------------------------------------------
(Dollars in thousands)
ASSETS
Federal funds sold $10,066 $408 5.41% $14,659 $646 5.89%
Investment securities
U.S. Government obligations 199,893 8,821 5.89% 167,798 7,633 6.08%
Obligations of states and political
subdivisions (1) 38,597 2,428 8.40% 36,189 2,321 8.57%
Other securities 23,213 987 5.68% 21,167 1,004 6.34%
Loans (net of unearned interest) (1) (2) 513,113 33,929 8.83% 447,397 29,370 8.78%
------------------ ------------------
Total interest earning assets $784,882 $46,573 7.93% $687,210 $40,974 7.97%
======= =======
Cash and due from banks 34,777 30,963
Premises and equipment 21,510 21,421
Reserve for possible loan losses (5,592) (5,392)
Other assets 20,239 17,655
-------- --------
Total Assets $855,816 $751,857
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing transaction deposits $130,456 $1,588 1.63% $123,109 $1,704 1.85%
Savings deposits 80,190 1,889 3.15% 54,812 1,158 2.82%
Money market deposits 136,420 3,884 3.80% 133,730 3,674 3.67%
Time deposits 342,134 13,952 5.45% 284,211 11,500 5.41%
Short-term borrowings:
Federal funds purchased and
repurchase agreements 10,329 404 5.22% 13,530 637 6.30%
Other 8,120 441 7.26% 8,078 525 8.69%
Long-term debt 5,000 208 5.55% 5,000 207 5.54%
------------------ ------------------
Total interest bearing liabilities $712,649 $22,366 4.19% $622,470 $19,405 4.17%
======= =======
Net interest spread 3.73% 3.80%
======= =======
Demand deposits 68,920 62,685
Other liabilities 5,687 4,454
Stockholders' equity 68,560 62,248
-------- --------
Total Liabilities and Stockholders' Equity $855,816 $751,857
======== ========
Interest income / earning assets (1) $784,882 $46,573 7.93% $687,210 $40,974 7.97%
Interest expense / earning assets 784,882 22,366 3.81% 687,210 19,405 3.77%
----------------- -----------------
Net interest margin (1) $24,207 4.12% $21,569 4.20%
================= =================
<FN>
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35%
for 1996 and 1995.
(2) Non-accrual loans have been included in average loans, net of
unearned interest.
</FN>
FIRST BUSEY CORPORATION and Subsidiaries
CHANGES IN NET INTEREST INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Change due to (1)
Average Average Total
Volume Yield/Rate Change
-----------------------------------
(Dollars in thousands)
Increase (decrease) in interest income:
Federal funds sold ($189) ($49) ($238)
Investment securities:
U.S. Government obligations 1,413 (225) 1,188
Obligations of states and political
subdivisions (2) 151 (44) 107
Other securities 224 (241) (17)
Loans (2) 4,368 191 4,559
-----------------------------------
Change in interest income (2) $5,967 ($368) $5,599
-----------------------------------
Increase (decrease) in interest expense:
Interest bearing transaction deposits $114 ($230) ($116)
Savings deposits 586 145 731
Money market deposits 76 134 210
Time deposits 2,371 81 2,452
Short-term borrowings:
Federal funds purchased and
repurchase agreements (135) (98) (233)
Other 3 (87) (84)
Long-term debt 0 1 1
-----------------------------------
Change in interest expense $3,015 ($54) $2,961
-----------------------------------
Increase in net interest income (2) $2,952 ($314) $2,638
===================================
<FN>
(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35%
for 1996 and 1995.
</FN>
FIRST BUSEY CORPORATION and Subsidiaries
AVERAGE BALANCE SHEETS AND INTEREST RATES
QUARTERS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
---------------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
---------------------------------------------------------------
(Dollars in thousands)
ASSETS
Federal funds sold $1,207 $16 5.25% $19,709 $285 5.73%
Investment securities
U.S. Government obligations 178,293 2,675 5.97% 177,022 2,666 5.98%
Obligations of states and political
subdivisions (1) 39,844 834 8.33% 37,957 803 8.39%
Other securities 21,467 304 5.64% 20,939 321 6.08%
Loans (net of unearned interest) (1) (2) 543,975 12,017 8.79% 460,987 10,328 8.89%
------------------ ------------------
Total interest earning assets $784,786 $15,846 8.03% $716,614 $14,403 7.97%
======= =======
Cash and due from banks 33,522 30,145
Premises and equipment 21,591 21,184
Reserve for possible loan losses (5,611) (5,327)
Other assets 20,581 17,499
-------- --------
Total Assets $854,869 $780,115
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing transaction deposits $127,569 $529 1.65% $122,255 $546 1.77%
Savings deposits 82,465 664 3.21% 56,685 417 2.92%
Money market deposits 139,686 1,346 3.83% 142,388 1,323 3.68%
Time deposits 342,660 4,702 5.46% 291,126 4,071 5.55%
Short-term borrowings:
Federal funds purchased and
repurchase agreements 6,342 86 5.41% 19,095 301 6.26%
Other 7,312 136 7.41% 9,895 220 8.85%
Long-term debt 5,000 70 5.55% 5,000 70 5.54%
------------------ ------------------
Total interest bearing liabilities $711,034 $7,533 4.22% $646,444 $6,948 4.26%
======= =======
Net interest spread 3.82% 3.71%
======= =======
Demand deposits 68,521 64,349
Other liabilities 5,991 5,041
Stockholders' equity 69,323 64,281
-------- --------
Total Liabilities and Stockholders' Equity $854,869 $780,115
======== ========
Interest income / earning assets (1) $784,786 $15,846 8.03% $716,614 $14,403 7.97%
Interest expense / earning assets 784,786 7,533 3.82% 716,614 6,948 3.84%
----------------- -----------------
Net interest margin (1) $8,313 4.21% $7,455 4.13%
================= =================
<FN>
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35%
for 1996 and 1995.
(2) Non-accrual loans have been included in average loans, net of
unearned interest.
</FN>
FIRST BUSEY CORPORATION and Subsidiaries
CHANGES IN NET INTEREST INCOME
QUARTERS ENDED SEPTEMBER 30, 1996 AND 1995
Change due to (1)
Average Average Total
Volume Yield/Rate Change
-----------------------------------
(Dollars in thousands)
Increase (decrease) in interest income:
Federal funds sold ($247) ($22) ($269)
Investment securities:
U.S. Government obligations 16 (7) 9
Obligations of states and political
subdivisions (2) 39 (8) 31
Other securities 8 (25) (17)
Loans (2) 1,807 (118) 1,689
-----------------------------------
Change in interest income (2) $1,623 ($180) $1,443
-----------------------------------
Increase (decrease) in interest expense:
Interest bearing transaction deposits $26 ($43) ($17)
Savings deposits 204 43 247
Money market deposits (26) 49 23
Time deposits 702 (71) 631
Short-term borrowings:
Federal funds purchased and
repurchase agreements (178) (37) (215)
Other (52) (32) (84)
Long-term debt 0 0 0
-----------------------------------
Change in interest expense $676 ($91) $585
-----------------------------------
Increase in net interest income (2) $947 ($89) $858
===================================
<FN>
(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35%
for 1996 and 1995.
</FN>
ITEM 6: Exhibits and Reports on Form 8-K
(a) There were no reports on Form 8-K filed during the three
months ending September 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused the report to be signed on
its behalf by the undersigned thereunto duly authorized.
FIRST BUSEY CORPORATION
(Registrant)
By: //Scott L. Hendrie//
---------------------------
Scott L. Hendrie
Senior Vice President and
Chief Financial Officer
(Principal financial and accounting officer)
Date: November 13, 1996