URBANA, Ill., Oct. 23 /PRNewswire-FirstCall/ -- I am very pleased to report our quarterly earnings for the first time as your President & CEO of First Busey Corporation . Consolidated net income for the quarter was $11.5 million compared to $7.6 million for the same period in 2006. Consolidated net income per fully-diluted share for the quarter ended September 30, 2007 totaled $0.36, equaling the $0.36 per fully-diluted share for the same period in 2006.
We are pleased to report this quarter the closing of our merger of equals transaction with Main Street Trust, Inc. The merger closed following the close of business on July 31st, allowing for two full months of earnings contribution from Main Street Bank & Trust and FirsTech, our payments processing company. The next significant step in the merger process is the conversion of Main Street Bank & Trust with and into Busey Bank. The bank conversion is expected to occur in November 2007. Our bank conversion will include the launch of an updated Busey brand that we are excited to unveil for the first time publicly at our annual shareholders meeting on November 7, 2007.
As required by the United States Department of Justice, prior to the closing of our merger, we reached an agreement to sell five Main Street Bank & Trust banking centers. The divestiture of the five branches, which represents approximately 1% of consolidated loans and 3% of consolidated deposits, is expected to close in November 2007. We are working with the buyer to ensure this process runs seamlessly for our impacted customers and employees.
This quarter included the solidification of our management team of Busey Bank, N.A., as Thomas Good accepted the position of President and Chief Executive Officer, succeeding Michael Geml who will retire at the end of 2007.
As many of you know, our Chairman, Douglas C. Mills, served as CEO for over 35 years, growing Busey to a truly great Company. I would be remiss not to mention Ed Scharlau and Greg Lykins, and the positive impact they have had on our Company. All three of these individuals have made significant contributions to the organization. I look forward to continuing to work with them, seeking their guidance and counsel as we move into the next chapter of First Busey. The future is bright and strong!
Corporate Profile
First Busey Corporation is a financial holding company headquartered in Urbana, Illinois. First Busey Corporation has three wholly-owned banks with locations in three states. Busey Bank is headquartered in Urbana, Illinois and has twenty-two banking centers serving central Illinois. Busey Bank has a banking center in Indianapolis, Indiana, and a loan production office in Ft. Myers, Florida. On September 30, 2007, Busey Bank had total assets of $2.09 billion. Busey Bank, N.A. is headquartered in Ft. Myers, Florida , with nine banking centers serving southwest Florida. Busey Bank, N.A. had total assets of $477.9 million as of September 30, 2007. Main Street Bank & Trust has twenty-three locations serving central Illinois. On September 30, 2007, Main Street Bank & Trust had total assets of $1.68 billion. Main Street's Wealth Management Division had $2.17 billion in assets under care for individuals and institutional customers as of September 30, 2007.
Busey Investment Group is a wholly-owned subsidiary of First Busey Corporation. Through its trust company and insurance agency, Busey Investment Group delivers trust, asset management, retail brokerage, and insurance products and services. As of September 30, 2007, Busey Investment Group had approximately $2.70 billion in assets under care.
First Busey Corporation, through the merger with Main Street Trust, owns a retail payment processing subsidiary -- FirsTech, Inc. -- which processes over 25 million items per year.
Busey provides electronic delivery of financial services through Busey e-bank, http://www.busey.com/.
SELECTED FINANCIAL HIGHLIGHTS (amounts in thousands, except ratios and per share data) Three Months Ended Nine Months Ended Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30, 2007 2007 2006 2007 2006 Earnings & Per Share Data Net income $11,510 $7,864 $7,642 $27,110 $21,544 Basic earnings per share $0.37 $0.37 $0.36 $1.09 $1.01 Weighted average shares of common stock outstanding 31,464 21,470 21,322 24,834 21,346 Fully-diluted earnings per share $0.36 $0.37 $0.36 $1.09 $1.00 Weighted average shares of common stock and dilutive potential common shares outstanding 31,655 21,510 21,441 24,939 21,445 Market price per share at period end $21.91 $19.99 $22.71 Price to book ratio 161.70% 223.85% 271.00% Price to earnings ratio(1) 15.34 13.47 15.90 15.03 16.99 Cash dividends paid per share $0.18 $0.18 $0.16 $0.59 $0.48 Book value per share $13.55 $8.93 $8.38 Tangible book value per share $7.20 $6.25 $5.65 Common shares outstanding 36,585 21,467 21,445 Average Balances Assets $3,610,918 $2,471,750 $2,357,134 $2,860,335 $2,303,594 Investment securities 556,842 330,730 318,725 407,422 325,112 Gross loans 2,689,472 1,957,427 1,855,980 2,199,011 1,799,137 Earning assets 3,304,265 2,297,944 2,180,101 2,631,312 2,129,932 Deposits 2,909,176 1,993,273 1,874,521 2,299,752 1,831,061 Interest- bearing liabilities 2,873,767 2,035,871 1,923,532 2,312,805 1,869,814 Stockholders' equity 342,659 189,061 175,795 248,932 172,689 END OF PERIOD FINANCIAL DATA Tax equivalized net interest income $30,556 $20,113 $19,931 $70,443 $58,725 Gross loans 3,040,881 1,982,802 1,905,228 Allowance for loan losses 38,198 24,135 23,552 PERFORMANCE RATIOS Return on average assets(1) 1.26% 1.28% 1.29% 1.27% 1.25% Return on average equity(1) 13.33% 16.68% 17.25% 14.56% 16.68% Net interest margin(1) 3.67% 3.51% 3.63% 3.58% 3.69% Net interest spread 3.16% 3.05% 3.18% 3.09% 3.25% Efficiency ratio(2) 56.67% 52.69% 53.83% 55.10% 54.98% Non-interest revenue as a % of total revenues(3) 26.73% 26.17% 24.83% 26.10% 24.35% Allowance for loan losses to loans 1.26% 1.22% 1.24% Allowance as a percentage of non-performing loans 159.74% 232.25% 372.66% Ratio of average loan to average deposits 92.45% 98.20% 99.01% 95.62% 98.26% Dividend payout ratio(1) 50.41% 48.52% 44.81% 49.41% 47.87% ASSET QUALITY Net charge-offs $ 630 $ 203 $ 140 $1,063 $ 638 Non-performing loans 23,912 10,392 6,320 Other non-performing assets 2,138 1,817 823 (1) Annualized (2) Net of security gains and amortization (3) Net of interest expense 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.
Special Note Concerning Goodwill and Identifiable Intangibles
The excess purchase price resulting from the merger with Main Street Trust, Inc. has been allocated to goodwill and identifiable intangibles assets in accordance with current accounting guidance, to the extent that supportable documentation was available at September 30, 2007. Such amounts are subject to adjustment in the near term as additional analysis is performed or obtained from third party sources.
Net income was $11.5 million for the quarter ended September 30, 2007, as compared to $7.6 million for the comparable period in 2006. For the quarter ended September 30, 2007, earnings per share on a fully-diluted basis were $0.36, equaling the $0.36 for the comparable period in 2006. On a year-to-date basis, net income was $27.1 million as compared to $21.5 million for the comparable period in 2006. For the nine-month period ended September 30, 2007, earnings per share on a fully-diluted basis were $1.09, an increase of $0.09 or 9.0% from $1.00 for the comparable period in 2006. Two months of Main Street Bank & Trust and FirsTech net earnings are reflected in the results for the periods ended September 30, 2007.
Busey Bank's net income was $23.8 million for the nine months ended September 30, 2007, as compared to $21.8 for the comparable period in 2006, an increase of 9.2%. Main Street Bank & Trust contributed $3.4 million in net income for the two months following the merger. Busey Bank, N.A.'s net income was $1.3 million for the nine months ended September 30, 2007, as compared to $2.9 million for the comparable period in 2006. The decrease in net income at Busey Bank N.A. is primarily related to the significant decline in the southwest Florida residential market. The decrease is due to the end of a high-margin, short-term construction lending program, decline in residential construction originations and loan loss charges related to the market decline. Busey Bank, N.A.'s income was supplemented by FirsTech income of $0.3 million for the two months following the merger.
Included in Main Street Bank & Trust's and FirsTech's earnings for the third quarter of 2007 were amortization charges of approximately $0.2 million per month, net of tax. The amortization represented a moderately accelerated amortization rate over a 10 year life on $32.8 million of identifiable intangibles. In addition to the identifiable intangibles, $142.8 million of goodwill was recorded related to the merger transaction. The intangible items are subject to revision for a period of up to one year from the date of the merger as new information becomes available to us.
Significant non-operating items during the third quarter included $1.5 million in contractual severance payments to certain executives, largely offset by a security gain of $1.5 million from the Company's holdings in Main Street Trust, Inc.
Loan Portfolio Quality: First Busey Corporation experienced deterioration in its loan portfolio during the third quarter. Total non-performing assets were $26.0 million at September 30, 2007, compared to $12.2 million at June 30, 2007 and $7.1 million at September 30, 2006. The $26.0 million reflected $6.6 million of non-performing assets on the books of Main Street Bank & Trust. The remainder of the increase is primarily attributable to southwest Florida loans.
Non-accrual loans totaled $17.8 million, or 0.6% of gross loans, at September 30, 2007. Non-accrual loans primarily consist of commercial non-accruals of $12.0 million and personal real estate loans of $5.6 million.
In total, First Busey Corporation 90+ days past due loans totaled $6.1 million, or 0.2% of gross loans, at September 30, 2007. Commercial accruing loans 90+ days past due was $3.8 million at September 30, 2007. The portion of 90+ days past due loans related to personal residential real estate loans was $2.0 million at September 30, 2007.
Other real estate owned totaled $2.1 million at September 30, 2007.
Provision for loan losses was $1.8 million during the third quarter of 2007 compared to $300,000 in the comparable period of 2006. The provision was $2.8 million for the nine months ended September 30, 2007, versus $1.0 million in the comparable period of 2006. As a percentage of total outstanding loans, the allowance for loan losses was 1.26% as of September 30, 2007, and 1.24% as of September 30, 2006. Total allowance for loan losses was $38.2 million at September 30, 2007, representing 159.7% coverage of non-performing loans.
The Company continues to attempt to identify problem loan situations on a proactive basis. Once problem loans are identified, adjustments to the provision are made based upon all information available at that time. The increase in provision reflects managements' analysis of amounts necessary to cover potential losses in our loan portfolios. However, additional losses may be identified in our loan portfolio as new information is obtained. The Company may need to provide for additional loan losses in the future as management continues to identify potential problem loans and gain further information concerning existing problem loans.
Condensed Consolidated Balance Sheets (Unaudited, in thousands, except per share data) September 30, June 30, December 31, September 30, 2007 2007 2006 2006 Assets Cash and due from banks $108,037 $56,104 $63,316 $ 52,341 Federal funds sold 43,000 14,100 - 14,329 Investment securities 697,802 323,201 365,608 324,887 Net loans 3,002,683 1,958,667 1,933,339 1,881,676 Premises and equipment 70,128 41,328 41,001 41,304 Goodwill and other intangibles 232,323 57,623 58,132 58,451 Other assets 91,812 49,173 48,118 46,233 Total assets $4,245,785 $2,500,196 $2,509,514 $2,419,221 Liabilities & Stockholders' Equity Non-interest bearing deposits $454,875 $230,595 $ 246,440 $235,416 Interest-bearing deposits 2,912,933 1,813,142 1,768,399 1,713,403 Total deposits $3,367,808 $2,043,737 $2,014,839 $1,948,819 Federal funds purchased & securities sold under agreements to repurchase 137,463 52,697 54,770 57,147 Short-term borrowings 21,023 - 25,000 1,000 Long-term debt 135,825 139,825 156,650 161,708 Junior subordinated debt owed to unconsolidated trusts 55,000 55,000 55,000 55,000 Other liabilities 32,757 17,210 17,981 15,870 Total liabilities $3,749,876 $2,308,469 $2,324,240 $2,239,544 Total stockholders' equity $495,909 $191,727 $185,274 $179,677 Total liabilities & stockholders equity $4,245,785 $2,500,196 $2,509,514 $2,419,221 Per Share Data Book value per share $13.55 $ 8.93 $8.64 $8.38 Tangible book value per share $ 7.20 $ 6.25 $5.93 $5.65 Ending number of shares outstanding 36,585,196 21,467,366 21,455,916 21,444,766 Condensed Consolidated Statements of Income (Unaudited, in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Interest and fees on loans $51,190 $34,554 $ 122,937 $ 97,001 Interest on investment securities 6,909 3,197 14,490 9,479 Other interest income 703 66 990 188 Total interest income $58,802 $37,817 $ 138,417 $106,668 Interest on deposits 24,521 14,553 58,028 38,597 Interest on short-term borrowings 1,508 860 3,018 2,165 Interest on long-term debt 1,748 1,993 5,420 5,707 Junior subordinated debt owed to unconsolidated trusts 1,013 1,010 3,015 3,049 Total interest expense $28,790 $18,416 $69,481 $49,518 Net interest income $30,012 $19,401 $68,936 $57,150 Provision for loan losses 1,795 300 2,775 1,000 Net interest income after provision for loan losses $28,217 $19,101 $66,161 $ 56,150 Fees for customer services 3,433 2,860 9,022 8,198 Trust fees 2,691 1,312 6,090 4,470 Retail payment processing 1,746 - 1,746 - Commissions and brokers' fees 707 608 1,949 1,987 Gain on sales of loans 994 786 2,414 1,858 Net security gains 2,065 794 2,995 1,880 Other 1,376 841 3,125 1,885 Total non-interest income $13,012 $7,201 $27,341 $ 20,278 Salaries and wages 11,698 6,609 25,397 19,878 Employee benefits 2,058 1,509 4,995 4,457 Net occupancy expense 1,988 1,310 4,814 3,814 Furniture and equipment expense 1,370 929 3,049 2,677 Data processing expense 1,715 450 2,731 1,344 Amortization expense 876 353 1,385 1,057 Other operating expenses 4,690 3,371 11,244 10,234 Total non-interest expense $24,395 $14,531 $53,615 $43,461 Income before income taxes $16,834 $11,771 $39,887 $32,967 Income taxes 5,324 4,129 12,777 11,423 Net income $11,510 $7,642 $27,110 $21,544 Per Share Data Basic earnings per share $ 0.37 $ 0.36 $1.09 $1.01 Fully-diluted earnings per share $ 0.36 $ 0.36 $1.09 $1.00 Diluted average shares outstanding 31,655,291 21,441,315 24,939,237 21,444,888
