CHAMPAIGN, Ill., Jan. 29, 2013 (GLOBE NEWSWIRE) -- Message from our President & CEO First Busey Corporation's (Nasdaq:BUSE) net income for the fourth quarter of 2012 was $4.9 million and net income available to common shareholders was $4.0 million, or $0.05 per fully-diluted common share. These results were consistent with the third quarter in all three measures as shown in the financial tables accompanying this release. In comparison, the Company reported net income of $5.7 million and net income available to common shareholders of $4.5 million, or $0.05 per fully-diluted common share, for the fourth quarter of 2011. Fourth quarter net income was influenced by impairments and exit costs relating to previously announced branch closures totaling approximately $1.8 million, as well as securities gains of $1.0 million and private equity fund gains of $0.7 million. In addition, we continued to experience temporary elevation in data processing and other costs of approximately $0.4 million related to the conversion of our core data processing system which was executed late in the third quarter. We believe that the majority of the conversion's impacts are now behind us, and we expect the focus moving forward to be on optimizing data and reporting capabilities working alongside our new service partner. Other unusual expenses for the quarter included staff-related restructuring costs of $0.6 million designed to address the changing needs of our organization beyond our retail network, as we refine our operating model for the future and seek to balance growth with efficiency. In addition, income tax expense increased this quarter by $0.2 million relative to the third quarter of 2012, in part due to the State of Illinois enterprise zone reform which eliminated certain tax exemptions for which we previously qualified. First Busey Corporation's net income for the year ended December 31, 2012 was $22.4 million and net income available to common shareholders was $18.7 million, or $0.22 per fully-diluted common share, as compared to net income of $29.9 million and net income available to common shareholders of $24.5 million, or $0.29 per fully-diluted common share, for the year ended December 31, 2011. As net interest income margins have compressed, non-interest income sources of revenue have increased, as discussed in greater detail in the Operating Performance section of this report. The changes in net income from year to year are a reflection in large part of the previously disclosed commitment to our commercial banking and wealth management businesses, which have increased certain costs. This commitment is the centerpiece of our long term strategy to build quality asset and fee growth based upon solid capital and a careful balance of risk and return.
This growth initiative drove increases in gross loan balances for the third consecutive quarter, with loan balances of $2.07 billion at December 31, 2012, which was $37.8 million higher than at September 30, 2012. Commercial loan portfolios grew $27.5 million in the aggregate, with growth of $33.9 million in commercial and industrial loans, partially offset by a decline in commercial real estate and construction loans of $6.4 million. Residential real estate loans including loans held for sale also rose $10.9 million during the quarter. Growth occurred in targeted portfolios with positive changes in mix, as loans with the strongest risk grades increased, while loans with weaker grades declined during the quarter 1.Our non-interest-bearing deposits of $611.0 million at December 31, 2012 grew from $510.1 million at September 30, 2012 and $503.1 million at December 31, 2011. Furthermore, our core deposits of $2.8 billion at December 31, 2012 increased from $2.7 billion at September 30, 2012 and $2.5 billion at December 31, 2011. Non-interest-bearing deposit growth has a positive influence on funding costs, while increasing core deposits provide a stable platform for continued asset growth. As stated in the prior period release, the Company was pleased to announce the founding of Trevett Capital Partners ("Trevett") during the fourth quarter of 2012. Trevett is a private wealth management boutique created to serve high net worth clientele in southwest Florida through a highly tenured team of sophisticated wealth management professionals, operating as a division of Busey Bank. Trevett builds upon our established presence in Florida and the broad capabilities of our existing Wealth Management operation to provide concierge service and tailored solutions for the accumulation and preservation of capital and generational legacies.
|1A detailed description of the loan grading policy can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.|
|2Tangible Common Equity is defined as common equity less tax effected goodwill and intangibles at the end of the reporting period.|
- Non-performing loans increased very slightly by $0.2 million to $25.4 million at December 31, 2012 from $25.2 million at September 30, 2012, but decreased from $38.5 million at December 31, 2011.
- Illinois/Indiana non-performing loans slightly increased to $17.8 million at December 31, 2012 from $17.4 million at September 30, 2012, but decreased from $27.7 million at December 31, 2011.
- Florida non-performing loans decreased to $7.6 million at December 31, 2012 from $7.8 million at September 30, 2012 and $10.8 million at December 31, 2011.
- Loans 30-89 days past due decreased to $2.3 million at December 31, 2012 from $7.9 million at September 30, 2012 and $4.7 million at December 31, 2011.
- Other non-performing assets, primarily consisting of other real estate owned, decreased to $3.5 million at December 31, 2012 from $8.5 million at both September 30, 2012 and December 31, 2011.
- The ratio of non-performing assets to total loans plus other non-performing assets at December 31, 2012 decreased to 1.39% from 1.65% at September 30, 2012 and 2.28% at December 31, 2011.
- The allowance for loan losses to non-performing loans ratio decreased to 189.32% at December 31, 2012 from 195.38% at September 30, 2012, but increased from 151.91% at December 31, 2011.
- The allowance for loan losses to total loans ratio decreased to 2.32% at December 31, 2012 from 2.42% at September 30, 2012 and 2.85% at December 31, 2011.
- Net charge-offs of $4.7 million recorded in the fourth quarter of 2012 were lower than the $5.2 million recorded in the third quarter of 2012 and the $10.4 million recorded in the fourth quarter of 2011.
- Provision expense of $3.5 million remained consistent with the amount recorded for the third quarter of 2012, and decreased from the $5.0 million recorded in the fourth quarter of 2011.
Total revenue (net of interest expense and security gains) for the year ended December 31, 2012 was $167.4 million as compared to $169.2 million for the year ended December 31, 2011. Non-interest income revenue sources helped offset declines in net interest income arising from slow asset growth and continued margin pressure. Total non-interest income (net of security gains) represented 39% of total revenue for the year ended December 31, 2012 and 34.8% for the year ended December 31, 2011. Revenues from trust, brokerage and commissions, and remittance processing activities - which are primarily generated through Busey Wealth Management and FirsTech - represented 42% of non-interest income, providing a balance to traditional banking activities in a slow growth economy. We believe the recent addition of Trevett Capital Partners to our family of financial services will broaden our business base and enhance ongoing development of revenue sources.Busey Wealth Management's net income of $0.7 million for the fourth quarter of 2012 fell slightly from $0.8 million for the third quarter of 2012, but was comparable to the $0.7 million earned in the fourth quarter of 2011. Busey Wealth Management's net income for the year ended December 31, 2012 was $3.4 million as compared to $3.1 million for the year ended December 31, 2011. FirsTech's net income of $0.2 million for the fourth quarter of 2012 remained generally consistent with the amount earned in the third quarter of 2012 and the fourth quarter of 2011. FirsTech's net income for the year ended December 31, 2012 was $0.9 million as compared to $1.4 million for the year ended December 31, 2011 due to decreased volume of online bill payments. Other specific areas of operating performance are detailed as follows:
- Net interest income slightly increased to $25.6 million in the fourth quarter of 2012 from $25.5 million in the third quarter of 2012, but decreased from $26.5 million for the fourth quarter of 2011. Net interest income for the year ended December 31, 2012 was $102.1 million compared to $110.4 million for the same period of 2011. Year-over-year net interest income declines were driven by decreases in average loan volumes, which have prompted initiatives to foster quality asset growth. Additional liquidity generated by our growing deposit base has primarily been deployed into our investment portfolio over the past year.
- Net interest margin fell slightly to 3.20% for the fourth quarter of 2012 as compared to 3.25% for the third quarter of 2012 and 3.44% for the fourth quarter of 2011. The net interest margin for the year ended December 31, 2012 decreased to 3.24% compared to 3.52% for the same period of 2011. The Company continued to experience downward pressure on its yield on interest-earning assets resulting from a protracted period of historically low rates and heightened competition for assets, which has been experienced throughout the banking industry.
- Residential mortgage loans posted another strong quarter of gains from sales totaling $3.6 million in the fourth quarter of 2012 compared to $3.3 million in the third quarter of 2012 and $3.5 million in the fourth quarter of 2011. During 2012, gains on sales of mortgage loans increased to $12.5 million compared to $10.9 million for the year ended December 31, 2011 resulting from an active market for refinancing.
- Other non-interest income increased to $1.6 million for the fourth quarter of 2012 from $0.9 million for the third quarter of 2012 and $0.5 million for the fourth quarter of 2011. The increase over the prior quarter was due to $0.7 million of income earned on two of the Company's private equity funds. Other non-interest income for the year ended December 31, 2012 increased to $7.2 million from $3.3 million for the comparable period of 2011. The Company recorded a total of $3.1 million from income earned on private equity funds in 2012. We have successfully invested in various private equity funds for more than ten years.
- Salaries and wages and employee benefits increased to $17.0 million in the fourth quarter of 2012 as compared to $16.5 million in the third quarter of 2012 and $14.8 million in the fourth quarter of 2011. For the year ended December 31, 2012, salaries and wages and employee benefits totaled $64.8 million as compared to $53.2 million for the same period of 2011. The planned increase in 2012 represents our investment in additional talent to drive future business expansion, which includes our addition of Trevett Capital Partners. Temporary exit costs also added to fourth quarter expense, but these costs were partially offset by cost savings derived in other areas.
- Data processing expense decreased to $2.7 million in the fourth quarter of 2012 from $3.6 million in the third quarter of 2012, but increased from $2.2 million for the fourth quarter of 2011. As discussed in the prior period release, we incurred various costs to implement our new core system in mid-September of 2012. Thus, the decline in data processing expense from the third quarter was anticipated due to a significantly lower level of conversion related expenses in the fourth quarter. For the year ended December 31, 2012, data processing expense totaled $11.1 million as compared to $8.6 million for the comparable period of 2011. The majority of the year-over-year increase also resulted from the costs of our core system conversion. These costs consisted of conversion fees of $0.4 million, deconversion and licensing fees to our prior provider of $0.7 million, and $0.3 million to enhance/upgrade certain non-core systems for compatibility with the new core system. The remaining increase was attributable to additional vendor fees related to the growth in online and mobile banking as well as enhancements to our internet banking service.
- Other operating expense for the fourth quarter of 2012 increased to $6.9 million as compared to $5.1 million recorded for the third quarter of 2012 and $5.4 million recorded for the fourth quarter of 2011. The majority of the increase over the prior quarter was due to impairment charges related to previously announced branch closings scheduled for April 2013. The remaining increase was due to various conversion related expenses totaling $0.2 million. For the year ended December 31, 2012, other operating expense increased to $22.6 million as compared to $19.7 million for the comparable period of 2011. In addition to the recorded impairment charge and conversion costs, the remaining increase was due primarily to additional marketing and business development costs. These costs support our previously announced growth strategy initiatives.
- Our quarterly efficiency ratio increased to 73.39% for the fourth quarter of 2012 from 71.71% for the third quarter of 2012 and 64.83% for the fourth quarter of 2011 due to the planned expense increases discussed in the preceding paragraphs including some non-recurring events. The efficiency ratio for the year ended December 31, 2012 was 68.54%, as compared to 59.03% for the same period of 2011. Efficiency ratios have been influenced throughout the year by a number of events (such as our core conversion and branch closures), which have been discussed either above or in previous earnings releases. Peer data from Federal Reserve system sources suggests that the Company has historically compared favorably to similarly-sized companies in terms of efficiency ratios, with averages for peers ranging between 65% and 67% during 2011 and the third quarter of 2012.
In the latter part of the year, we engaged in a renewed focus to carefully reexamine the structure of our franchise, asking ourselves the tough questions that ultimately drive healthy change; tactically growing in some areas while contracting in others. We committed to reduce our workforce in select areas of the Company based on our collective vision of the strongest path for broad-based future strength, profitability and growth, while renewing our strong commitment to superior customer service. To support a steady earnings flow to our shareholders, we elected to offset some of the related exit costs with securities gains.Busey customers are increasingly seeking mobile channels to flexibly manage their finances. Following an extensive analysis of both customer needs and shareholder value, we closed two limited service branches and one full service branch at the end of the fourth quarter. We also finalized plans to close four more branches in strategic markets spread across Illinois during the second quarter of 2013. Our research indicated customer usage patterns at those facilities were duplicated by other nearby branches, enabling us to deploy our resources more efficiently through consolidation of our network. In addition, the Company is expanding its toll-free customer support hours, and continually monitors avenues of development for innovative mobile channels of delivery. The process of understanding and optimizing best avenues for service distribution will be an ongoing exercise. Our streamlined retail network will continue as a dynamic funding source for the Company with a relationship-driven focus to help our clients and communities flourish. As we enter a new year, we will be monitoring our investments and revenue growth with the greatest of care as we strive to deliver optimal value to our Pillars. With a healthy capital foundation, consistent earnings and dividend history, strong credit quality, and a reinforced sales model, we believe we remain well positioned to explore potential external growth opportunities to enhance and complement our mission to achieve positive organic growth. We take pride in our past and look confidently towards our future, gratefully acknowledging the efforts of our associates, the business of our customers, and the continued support of Busey by you, our shareholders.
\s\ Van A. Dukeman President & Chief Executive Officer First Busey Corporation
|SELECTED FINANCIAL HIGHLIGHTS|
|( dollars in thousands, except per share data)|
|As of and for the||As of and for the|
|Three Months Ended||Year Ended|
|December 31,||September 30,||December 31,||December 31,||December 31,|
|EARNINGS & PER SHARE DATA|
|Net income||$ 4,917||$ 4,909||$ 5,746||$ 22,357||$ 29,873|
|Income available to common shareholders 1||4,009||4,000||4,512||18,724||24,531|
|Fully-diluted earnings per share||0.05||0.05||0.05||0.22||0.29|
|Cash dividends paid per share||0.12||0.04||0.04||0.24||0.16|
|Net income by operating segment|
|Busey Bank||$ 4,303||$ 4,642||$ 5,520||$ 19,162||$ 28,504|
|Busey Wealth Management||716||780||678||3,363||3,095|
|Assets||$ 3,538,860||$ 3,488,429||$ 3,394,410||$ 3,503,676||$ 3,473,411|
|Shareholders' equity - common||343,624||342,833||334,179||341,185||320,315|
|Tangible shareholders' equity - common||309,719||308,095||296,924||306,040||281,740|
|Return on average assets 3||0.45%||0.46%||0.53%||0.53%||0.71%|
|Return on average common equity 3||4.64%||4.64%||5.36%||5.49%||7.66%|
|Return on average tangible common equity 3||5.15%||5.16%||6.03%||6.12%||8.71%|
|Net interest margin 3,5||3.20%||3.25%||3.44%||3.24%||3.52%|
|Efficiency ratio 4||73.39%||71.71%||64.83%||68.54%||59.03%|
|Non-interest revenue as a % of total revenues 2||39.30%||37.12%||35.92%||38.98%||34.77%|
|Gross loans||$ 2,073,110||$ 2,035,319||$ 2,051,344|
|Allowance for loan losses||48,012||49,213||58,506|
|Allowance for loan losses to loans||2.32%||2.42%||2.85%|
|Allowance as a percentage of non-performing loans||189.32%||195.38%||151.91%|
|Loans 90+ days past due||256||59||173|
|Loans 30-89 days past due||2,285||7,895||4,712|
|Other non-performing assets||3,450||8,486||8,452|
|1 Net income available to common shareholders, net of preferred dividend and 2011 TARP discount accretion|
|2 Total revenue, net of interest expense and security gains|
|3 Quarterly ratios annualized and calculated on net income available to common shareholders|
|4 Net of security gains and intangible charges|
|5 On a tax-equivalent basis, assuming a federal income tax rate of 35%|
|Condensed Consolidated Balance Sheets|
|(In thousands, except per share data 2 )||December 31,||September 30,||December 31,|
|Cash and due from banks||$ 351,255||$ 328,308||$ 315,053|
|Net loans, including loans held for sale||2,025,098||1,986,106||1,992,838|
|Premises and equipment||71,067||72,214||69,398|
|Goodwill and other intangibles||33,389||34,223||36,704|
|Total assets||$ 3,618,056||$ 3,529,664||$ 3,402,122|
|Liabilities & Shareholders' Equity|
|Non-interest bearing deposits||$ 611,043||$ 510,146||$ 503,118|
|Total deposits||$ 2,980,292||$ 2,892,524||$ 2,763,454|
|Securities sold under agreements to repurchase||139,024||131,753||127,867|
|Junior subordinated debt owed to unconsolidated trusts||55,000||55,000||55,000|
|Total liabilities||$ 3,209,259||$ 3,112,343||$ 2,992,855|
|Total shareholders' equity||$ 408,797||$ 417,321||$ 409,267|
|Total liabilities & shareholders' equity||$ 3,618,056||$ 3,529,664||$ 3,402,122|
|Per Share Data|
|Book value per common share||$ 3.88||$ 3.98||$ 3.89|
|Tangible book value per common share 1||$ 3.49||$ 3.58||$ 3.46|
|Ending number of common shares outstanding||86,671||86,644||86,617|
|1 Total common equity less goodwill and intangibles divided by shares outstanding as of period end|
|2 Results are unaudited except for amounts reported as of December 31, 2011|
|Condensed Consolidated Statements of Operations|
|(In thousands, except per share data 1 )||Three Months Ended December 31,||Year Ended December 31,|
|Interest and fees on loans||$ 24,164||$ 26,867||$ 98,614||$ 114,791|
|Interest on investment securities||4,420||4,362||18,302||18,028|
|Total interest income||$ 28,584||$ 31,229||$ 116,916||$ 132,819|
|Interest on deposits||2,470||4,124||12,496||18,660|
|Interest on short-term borrowings||71||78||314||405|
|Interest on long-term debt||96||230||648||1,442|
|Junior subordinated debt owed to unconsolidated trusts||318||319||1,312||1,919|
|Total interest expense||$ 2,955||$ 4,751||$ 14,770||$ 22,426|
|Net interest income||$ 25,629||$ 26,478||$ 102,146||$ 110,393|
|Provision for loan losses||3,500||5,000||16,500||20,000|
|Net interest income after provision for loan losses||$ 22,129||$ 21,478||$ 85,646||$ 90,393|
|Commissions and brokers' fees||524||443||2,102||1,858|
|Fees for customer services||4,471||4,438||17,363||17,914|
|Gain on sales of loans||3,611||3,501||12,535||10,945|
|Net security gains||1,022||172||1,597||170|
|Total non-interest income||$ 17,613||$ 15,012||$ 66,852||$ 59,015|
|Salaries and wages||14,702||12,666||53,668||43,344|
|Net occupancy expense||2,301||2,135||8,899||8,897|
|Furniture and equipment expense||1,288||1,319||5,146||5,277|
|Data processing expense||2,695||2,210||11,061||8,635|
|Other operating expenses||6,927||5,449||22,585||19,677|
|Total non-interest expense||$ 32,269||$ 27,991||$ 119,644||$ 104,565|
|Income before income taxes||$ 7,473||$ 8,499||$ 32,854||$ 44,843|
|Net income||$ 4,917||$ 5,746||$ 22,357||$ 29,873|
|Preferred stock dividends and discount accretion||$ 908||$ 1,234||$ 3,633||$ 5,342|
|Income available to common shareholders||$ 4,009||$ 4,512||$ 18,724||$ 24,531|
|Per Share Data|
|Basic earnings per common share||$ 0.05||$ 0.05||$ 0.22||$ 0.29|
|Fully-diluted earnings per common share||$ 0.05||$ 0.05||$ 0.22||$ 0.29|
|Diluted average common shares outstanding||86,679||86,610||86,652||85,312|
|1 Results are unaudited except for amounts reported for the year ended December 31, 2011|
Busey Wealth Management is a wholly-owned subsidiary of First Busey Corporation. Through Busey Trust Company, Busey Wealth Management provides asset management, investment and fiduciary services to individuals, businesses and foundations. As of December 31, 2012, Busey Wealth Management managed approximately $4.2 billion in assets.Through Busey Bank, First Busey Corporation owns a retail payment processing subsidiary, FirsTech, Inc., which processes over 22 million transactions per year through online bill payments, lockbox processing and walk-in payments through its 3,100 agent locations in 38 states. Busey Bank also provides electronic delivery of financial services through its website, www.busey.com . 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 (including the impact of Basel III and the Dodd-Frank Wall Street Reform and Consumer Protection Act and the extensive regulations to be promulgated thereunder); (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.
CONTACT: David B. White, CFO 217-365-4047