Company Quick10K Filing
Quick10K
First Busey
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$26.12 56 $1,450
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-22 Shareholder Vote, Other Events
8-K 2019-05-13 Regulation FD, Exhibits
8-K 2019-04-22 Earnings, Officers, Exhibits
8-K 2019-04-09 Other Events
8-K 2019-03-14 Officers
8-K 2019-01-30 M&A, Officers, Regulation FD, Exhibits
8-K 2019-01-29 Earnings, Exhibits
8-K 2019-01-29 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-01-15 Other Events
8-K 2019-01-10 Other Events
8-K 2019-01-04 Other Events
8-K 2018-10-23 Earnings, Exhibits
8-K 2018-10-09 Other Events
8-K 2018-08-21 Enter Agreement, Regulation FD, Exhibits, Enter Agreement
8-K 2018-07-24 Earnings, Exhibits
8-K 2018-07-10 Other Events
8-K 2018-05-23 Shareholder Vote
8-K 2018-04-30 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-04-24 Earnings, Exhibits
8-K 2018-04-10 Other Events
8-K 2018-03-28 Officers
8-K 2018-01-30 Earnings, Exhibits
8-K 2018-01-16 Other Events
ADP Automatic Data Processing 69,880
QSR Restaurant Brands 17,010
TTM Tata Motors 9,070
LTXB LegacyTexas Financial 1,930
NPK National Presto Industries 757
NC Nacco Industries 339
MFNC Mackinac Financial 168
BASI Bioanalytical Systems 21
ELON Echelon 0
ULNV Porter Holding International 0
BUSE 2019-03-31
Part I - Financial Information
Item 1. Financial Statements
Note 1: Significant Accounting Policies
Note 2: Acquisition
Note 3: Securities
Note 4: Portfolio Loans
Note 5: Deposits
Note 6: Borrowings
Note 7: Junior Subordinated Debt Owed To Unconsolidated Trusts
Note 8: Earnings per Common Share
Note 9: Share-Based Compensation
Note 10: Outstanding Commitments and Contingent Liabilities
Note 11: Regulatory Capital
Note 12: Operating Segments and Related Information
Note 13: Derivative Financial Instruments
Note 14: Fair Value Measurements
Note 15: Leases
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securites
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 buse-20190331ex3119693f9.htm
EX-31.2 buse-20190331ex3123db73c.htm
EX-32.1 buse-20190331ex3210294d3.htm
EX-32.2 buse-20190331ex3224c41c1.htm

First Busey Earnings 2019-03-31

BUSE 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 buse-20190331x10q.htm 10-Q buse_Current_Folio_10Q

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

 

WASHINGTON, DC  20549

 

FORM 10-Q

 

 

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Quarterly Period Ended 3/31/2019

 

 

 

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Commission File No. 0-15950

 

FIRST BUSEY CORPORATION

 

(Exact name of registrant as specified in its charter)

 

 

 

 

Nevada

 

37-1078406

(State or other jurisdiction of incorporation
or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

100 W. University Ave.
Champaign, Illinois

 

61820

(Address of principal executive offices)

 

(Zip code)

 

Registrant’s telephone number, including area code:  (217) 365-4544

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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   No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

Large accelerated filer

Accelerated filer

 

 

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transaction period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Tittle of each class

Trading Symbol (s)

Name of each exchange on which registered

Common Stock, $.001 par value

BUSE

The Nasdaq Stock Market LLC

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 

 

 

Class

 

Outstanding at May 8, 2019

Common Stock, $.001 par value

 

55,624,627

 

 

 


 

FIRST BUSEY CORPORATION

FORM 10-Q

March 31, 2019

 

Table of Contents

 

 

 

 

Part I 

FINANCIAL INFORMATION

 

 

 

 

Item 1. 

FINANCIAL STATEMENTS

3

 

CONSOLIDATED BALANCE SHEETS

4

 

CONSOLIDATED STATEMENTS OF INCOME

5

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

6

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

7

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

8

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

10

Item 2. 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

38

Item 3. 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

53

Item 4. 

CONTROLS AND PROCEDURES

54

 

 

 

Part II 

OTHER INFORMATION

 

 

 

 

Item 1. 

LEGAL PROCEEDINGS

55

Item 1A. 

RISK FACTORS

55

Item 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

55

Item 3. 

DEFAULTS UPON SENIOR SECURITES

55

Item 4. 

MINE SAFETY DISCLOSURES

55

Item 5. 

OTHER INFORMATION

55

Item 6. 

EXHIBITS

56

 

SIGNATURES

57

 

 

2


 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

3


 

FIRST BUSEY CORPORATION and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

    

March 31, 2019

    

December 31, 2018

 

 

(dollars in thousands)

Assets

 

 

 

 

 

 

Cash and due from banks

 

$

112,775

 

$

128,838

Interest-bearing deposits

 

 

217,632

 

 

111,135

  Total cash and cash equivalents

 

 

330,407

 

 

239,973

 

 

 

 

 

 

 

Securities available for sale

 

 

1,918,295

 

 

697,685

Securities held to maturity (fair value 2019 $15,975; 2018 $603,360)

 

 

15,846

 

 

608,660

Securities equity investments

 

 

6,378

 

 

6,169

Loans held for sale, at fair value

 

 

20,291

 

 

25,895

Portfolio loans (net of allowance for loan losses 2019 $50,915; 2018 $50,648)

 

 

6,464,166

 

 

5,517,780

Premises and equipment, net

 

 

147,958

 

 

117,672

Right of use asset

 

 

10,898

 

 

 —

Goodwill

 

 

314,343

 

 

267,685

Other intangible assets, net

 

 

63,396

 

 

32,873

Cash surrender value of bank owned life insurance

 

 

172,934

 

 

128,491

Other assets

 

 

72,422

 

 

59,474

Total assets

 

$

9,537,334

 

$

7,702,357

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing

 

$

1,791,339

 

$

1,464,700

Interest-bearing

 

 

5,971,887

 

 

4,784,621

Total deposits

 

 

7,763,226

 

 

6,249,321

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

 

217,077

 

 

185,796

Short-term borrowings

 

 

30,739

 

 

 —

Long-term debt

 

 

89,476

 

 

50,000

Senior notes, net of unamortized issuance costs

 

 

39,573

 

 

39,539

Subordinated notes, net of unamortized issuance costs

 

 

59,172

 

 

59,147

Junior subordinated debt owed to unconsolidated trusts

 

 

71,192

 

 

71,155

Lease liability

 

 

10,982

 

 

 —

Other liabilities

 

 

69,756

 

 

52,435

Total liabilities

 

 

8,351,193

 

 

6,707,393

 

 

 

 

 

 

 

Commitments and contingencies (see Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

Common stock, $.001 par value, authorized 66,666,667 shares;  55,910,674 shares issued 2019 and 49,185,581 shares issued 2018

 

 

56

 

 

49

Additional paid-in capital

 

 

1,247,340

 

 

1,080,084

Accumulated deficit

 

 

(57,125)

 

 

(72,167)

Accumulated other comprehensive income (loss)

 

 

1,595

 

 

(6,812)

Total stockholders’ equity before treasury stock

 

 

1,191,866

 

 

1,001,154

 

 

 

 

 

 

 

Treasury stock, at cost (2019 286,106 shares; 2018 310,745 shares)

 

 

(5,725)

 

 

(6,190)

Total stockholders’ equity

 

 

1,186,141

 

 

994,964

Total liabilities and stockholders’ equity

 

$

9,537,334

 

$

7,702,357

 

 

 

 

 

 

 

Common shares outstanding at period end

 

 

55,624,627

 

 

48,874,836

 

See accompanying notes to unaudited consolidated financial statements.

 

4


 

FIRST BUSEY CORPORATION and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

 

 

 

 

    

Three Months Ended March 31,

 

    

2019

    

2018

 

 

(dollars in thousands, except per share amounts)

Interest income:

 

 

 

 

 

 

Interest and fees on loans

 

$

71,789

 

$

60,960

Interest and dividends on investment securities:

 

 

 

 

 

 

Taxable interest income

 

 

10,184

 

 

5,990

Non-taxable interest income

 

 

1,076

 

 

1,260

Other interest income

 

 

1,232

 

 

423

Total interest income

 

 

84,281

 

 

68,633

Interest expense:

 

 

 

 

 

 

Deposits

 

 

12,500

 

 

5,987

Federal funds purchased and securities sold under agreements to repurchase

 

 

583

 

 

341

Short-term borrowings

 

 

191

 

 

476

Long-term debt

 

 

579

 

 

164

Senior notes

 

 

400

 

 

400

Subordinated notes

 

 

731

 

 

793

Junior subordinated debt owed to unconsolidated trusts

 

 

914

 

 

715

Total interest expense

 

 

15,898

 

 

8,876

Net interest income

 

 

68,383

 

 

59,757

Provision for loan losses

 

 

2,111

 

 

1,008

Net interest income after provision for loan losses

 

 

66,272

 

 

58,749

Non-interest income:

 

 

 

 

 

 

Trust fees

 

 

8,115

 

 

7,514

Commissions and brokers’ fees, net

 

 

914

 

 

1,096

Remittance processing

 

 

3,780

 

 

3,392

Fees for customer services

 

 

8,097

 

 

6,946

Mortgage revenue

 

 

1,945

 

 

1,643

Security gains, net

 

 

42

 

 

 —

Other income

 

 

3,052

 

 

1,895

Total non-interest income

 

 

25,945

 

 

22,486

Non-interest expense:

 

 

 

 

 

 

Salaries, wages and employee benefits

 

 

32,341

 

 

28,819

Net occupancy expense of premises

 

 

4,202

 

 

3,821

Furniture and equipment expenses

 

 

2,095

 

 

1,913

Data processing

 

 

4,401

 

 

4,345

Amortization of intangible assets

 

 

2,094

 

 

1,515

Other expense

 

 

12,030

 

 

10,627

Total non-interest expense

 

 

57,163

 

 

51,040

Income before income taxes

 

 

35,054

 

 

30,195

Income taxes

 

 

9,585

 

 

8,278

Net income

 

$

25,469

 

$

21,917

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.48

 

$

0.45

Diluted earnings per common share

 

$

0.48

 

$

0.45

Dividends declared per share of common stock

 

$

0.21

 

$

0.20

 

See accompanying notes to unaudited consolidated financial statements.

 

5


 

FIRST BUSEY CORPORATION and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

March 31, 

 

2019

    

2018

 

(dollars in thousands)

Net income

$

25,469

 

$

21,917

Other comprehensive income (loss), before tax:

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

Unrealized net gains/(losses) on securities:

 

 

 

 

 

Unrealized net holding gains (losses) arising during period

 

6,799

 

 

(8,754)

Unrealized gains on investment securities transferred from held to maturity to available for sale

 

4,780

 

 

 —

Reclassification adjustment for losses included in net income

 

184

 

 

 —

Other comprehensive income (loss), before tax

 

11,763

 

 

(8,754)

Income tax expense (benefit) related to items of other comprehensive income

 

3,356

 

 

(2,495)

Other comprehensive income (loss), net of tax

 

8,407

 

 

(6,259)

Comprehensive income

$

33,876

 

$

15,658

 

See accompanying notes to unaudited consolidated financial statements.

 

 

6


 

FIRST BUSEY CORPORATION and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

Common

 

Paid-in

 

Accumulated

 

Comprehensive

 

Treasury

 

 

 

 

    

Shares

 

Stock

    

Capital

    

(Deficit)

    

Income (loss)

    

Stock

    

Total

Balance, December 31, 2017

 

48,684,943

 

$

49

 

$

1,084,889

 

$

(132,122)

 

$

(2,810)

 

$

(15,003)

 

$

935,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 —

 

 

 —

 

 

 —

 

 

21,917

 

 

 —

 

 

 —

 

 

21,917

Other comprehensive loss

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(6,259)

 

 

 —

 

 

(6,259)

Tax Cuts and Jobs Act of 2017 reclassification

 

 —

 

 

 —

 

 

 —

 

 

605

 

 

(605)

 

 

 —

 

 

 —

Issuance of treasury stock for employee stock purchase plan

 

8,718

 

 

 —

 

 

(248)

 

 

 —

 

 

 —

 

 

494

 

 

246

Net issuance of treasury stock for stock options exercised, net of shares redeemed and related tax

 

23,578

 

 

 —

 

 

(1,206)

 

 

 —

 

 

 —

 

 

1,336

 

 

130

Cash dividends common stock at $0.20 per share

 

 —

 

 

 —

 

 

 —

 

 

(9,739)

 

 

 —

 

 

 —

 

 

(9,739)

Stock dividend equivalents restricted stock units at $0.20 per share

 

 —

 

 

 —

 

 

128

 

 

(128)

 

 

 —

 

 

 —

 

 

 —

Stock-based compensation

 

 —

 

 

 —

 

 

848

 

 

 —

 

 

 —

 

 

 —

 

 

848

Balance, March 31, 2018

 

48,717,239

 

$

49

 

$

1,084,411

 

$

(119,467)

 

$

(9,674)

 

$

(13,173)

 

$

942,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

48,874,836

 

$

49

 

$

1,080,084

 

$

(72,167)

 

$

(6,812)

 

$

(6,190)

 

$

994,964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 —

 

 

 —

 

 

 —

 

 

25,469

 

 

 —

 

 

 —

 

 

25,469

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

8,407

 

 

 —

 

 

8,407

Stock issued in acquisition of Banc Ed, net of stock issuance costs

 

6,725,152

 

 

 7

 

 

166,274

 

 

 —

 

 

 —

 

 

 —

 

 

166,281

Issuance of treasury stock for employee stock purchase plan

 

11,731

 

 

 —

 

 

50

 

 

 —

 

 

 —

 

 

222

 

 

272

Net issuance of treasury stock for restricted/deferred stock unit vesting and related tax

 

9,070

 

 

 —

 

 

(171)

 

 

 —

 

 

 —

 

 

171

 

 

 —

Net issuance of treasury stock for stock options exercised, net of shares redeemed and related tax

 

3,838

 

 

 —

 

 

(72)

 

 

 —

 

 

 —

 

 

72

 

 

 —

Cash dividends common stock at $0.21 per share

 

 —

 

 

 —

 

 

 —

 

 

(10,266)

 

 

 —

 

 

 —

 

 

(10,266)

Stock dividend equivalents restricted stock units at $0.21 per share

 

 —

 

 

 —

 

 

161

 

 

(161)

 

 

 —

 

 

 —

 

 

 —

Stock-based compensation

 

 —

 

 

 —

 

 

1,014

 

 

 —

 

 

 —

 

 

 —

 

 

1,014

Balance, March 31, 2019

 

55,624,627

 

$

56

 

$

1,247,340

 

$

(57,125)

 

$

1,595

 

$

(5,725)

 

$

1,186,141

 

See accompanying notes to unaudited consolidated financial statements.

 

7


 

FIRST BUSEY CORPORATION and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2019

    

2018

 

(dollars in thousands)

Cash Flows from Operating Activities

 

 

 

 

 

Net income

$

25,469

 

$

21,917

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Stock-based and non-cash compensation

 

1,014

 

 

848

Depreciation

 

2,671

 

 

2,384

Amortization of intangible assets

 

2,094

 

 

1,515

Provision for loan losses

 

2,111

 

 

1,008

Provision for deferred income taxes

 

1,751

 

 

3,172

Amortization of security premiums and discounts, net

 

1,355

 

 

2,324

Accretion of premiums and discounts on time deposits and trust preferred securities, net

 

(263)

 

 

(12)

Accretion of premiums and discounts on portfolio loans, net

 

(2,694)

 

 

(3,398)

Amortization of discount on FHLB advances

 

(4)

 

 

 —

Security loss (gain), net

 

175

 

 

 —

Unrealized (gain) on equity securities

 

(216)

 

 

 —

Change in equity securities, net

 

 —

 

 

350

Gain on sales of mortgage loans, net of origination costs

 

(2,141)

 

 

(2,093)

Mortgage loans originated for sale

 

(83,950)

 

 

(97,138)

Proceeds from sales of mortgage loans

 

93,463

 

 

165,045

Net losses on disposition of premises and equipment

 

24

 

 

52

Decrease in deferred compensation

 

(3,339)

 

 

 —

Increase in cash surrender value of bank owned life insurance

 

(884)

 

 

(726)

Change in assets and liabilities:

 

 

 

 

 

(Increase) decrease  in other assets

 

(3,121)

 

 

2,845

(Decrease) in other liabilities

 

(3,427)

 

 

(10,401)

Increase in interest payable

 

357

 

 

1,550

Increase in income taxes receivable

 

5,824

 

 

4,421

Net cash provided by operating activities

$

36,269

 

$

93,663

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

Proceeds from sales of securities classified available for sale

 

141,798

 

 

 —

Proceeds from sales of securities classified equity

 

958

 

 

 —

Proceeds from maturities of securities classified available for sale

 

43,435

 

 

43,066

Proceeds from sales of securities classified held to maturity

 

 —

 

 

 —

Proceeds from maturities of securities classified held to maturity

 

13,822

 

 

8,012

Purchases of securities classified available for sale

 

(125,464)

 

 

(2,164)

Purchases of securities classified held to maturity

 

 —

 

 

(24,868)

Net increase in loans

 

(72,655)

 

 

(10,844)

Proceeds from sale of OREO properties

 

147

 

 

639

Purchases of premises and equipment

 

(1,052)

 

 

(4,508)

Proceeds from the redemption of FHLB stock, net

 

 —

 

 

4,864

Net cash paid in acquisitions

 

(49,387)

 

 

 —

Net cash (used in) provided by investing activities

$

(48,398)

 

$

14,197

8


 

FIRST BUSEY CORPORATION and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

 

 

 

 

 

 

 

 

    

Three Months Ended March 31,

 

 

2019

    

2018

 

 

(dollars in thousands)

Cash Flows from Financing Activities

 

 

 

 

 

 

Net increase (decrease) in certificates of deposit

 

$

(25,958)

 

$

72,764

Net (decrease) increase in demand deposits, money market and savings accounts

 

 

100,960

 

 

132,493

Net (decrease) increase in federal funds purchased and securities sold under agreements to repurchase

 

 

(19,318)

 

 

(69,255)

     Repayment of FHLB advances, net

 

 

(1,121)

 

 

 —

Repayment of short-term borrowings

 

 

 —

 

 

(220,000)

Net proceeds from short-term and long-term debt

 

 

60,000

 

 

 —

Cash dividends paid

 

 

(10,266)

 

 

(9,739)

Repayment of long-term debt

 

 

(1,500)

 

 

 —

Proceeds from stock options exercised

 

 

 —

 

 

130

Common stock issuance costs

 

 

(234)

 

 

 —

Net cash provided by (used in) financing activities

 

$

102,563

 

$

(93,607)

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

90,434

 

 

14,253

Cash and cash equivalents, beginning of period

 

 

239,973

 

 

353,272

 

 

 

 

 

 

 

Cash and cash equivalents, ending of period

 

$

330,407

 

$

367,525

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Payments for:

 

 

 

 

 

 

Interest

 

$

14,876

 

$

7,325

Income taxes

 

 

690

 

 

 —

 

 

 

 

 

 

 

Non-cash Investing and Financing Activities:

 

 

 

 

 

 

Other real estate acquired in settlement of loans

 

 

577

 

 

348

Transfer of investment securities held to maturity to available for sale

 

 

573,639

 

 

 —

 

See accompanying notes to unaudited consolidated financial statements.

 

 

9


 

FIRST BUSEY CORPORATION and Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1:  Significant Accounting Policies

 

Basis of Financial Statement Presentation

 

When preparing these unaudited consolidated financial statements of First Busey Corporation and its subsidiaries (“First Busey,” “Company,” “we,” or “our”), a Nevada corporation, we have assumed that you have read the audited consolidated financial statements included in our 2018 Form 10-K.  These interim unaudited consolidated financial statements serve to update our 2018 Form 10-K and may not include all information and notes necessary to constitute a complete set of financial statements. 

 

We prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We have eliminated intercompany accounts and transactions. We have also reclassified certain prior year amounts to conform to the current period presentation.  These reclassifications did not have a material impact on our consolidated financial condition or results of operations.

 

In our opinion, the unaudited consolidated financial statements reflect all normal, recurring adjustments needed to present fairly our results for the interim periods. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.

 

The Company has evaluated subsequent events for potential recognition and/or disclosure through the date the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q were issued.  There were no significant subsequent events for the quarter ended March 31, 2019 through the issuance date of these unaudited consolidated financial statements that warranted adjustment to or disclosure in the unaudited consolidated financial statements.

 

Use of Estimates

 

In preparing the accompanying unaudited consolidated financial statements in conformity with GAAP, the Company’s management is required to make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures provided.  Actual results could differ from those estimates. Material estimates which are particularly susceptible to significant change in the near term relate to the fair value of investment securities, fair value of assets acquired and liabilities assumed in business combinations, goodwill, and the determination of the allowance for loan losses.

 

Leases

A determination is made at inception if an arrangement contains a lease. For arrangements that contain a lease, the Company recognizes the lease on the balance sheet as a right of use asset and corresponding lease liability. Lease-related assets, or right of use assets, are recognized on the lease commencement date at amounts equal to the respective lease liabilities, adjusted for prepaid lease payments, initial direct costs, and lease incentives received. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rate. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

 

Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. If not readily determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the Company used a borrowing rate that corresponded to the remaining lease term.

 

10


 

The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the right-of-use asset and lease liability.

 

Impact of recently adopted accounting standards

 

Accounting Standards Update (“ASU”) 2016-02, "Leases (Topic 842)." ASU 2016-02 intends to increase transparency and comparability among organizations by recognizing all lease transactions (with original terms in excess of 12 months) on the Consolidated Balance Sheet as a lease liability and a right-of-use asset. The guidance also requires qualitative and quantitative disclosures of the amount, timing and uncertainty of cash flows arising from leases. In July 2018, ASU 2018-11, "Leases (Topic 842): Targeted Improvements" was issued to allow companies to choose to recognize the cumulative effect of applying the new standard to leased assets and liabilities as an adjustment to the opening balance of retained earnings rather than recasting prior year results upon adoption of the standard.

 

ASU 2019-01, "Leases (Topic 842): Codification Improvements." In 2016, The FASB issued ASU 2016- 02, “Leases (Topic 842)”, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing essential information about leasing transactions. ASU 2019-01 clarifies the guidance in ASU 2016-02 and/or corrects unintended application of the guidance. For public business entities, this guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted and the Company adopted this guidance during the first quarter of 2019. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

 

On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases (Topic 842) and all subsequent ASUs that modified Topic 842. The Company made the following elections for all leases in connection with the adoption of this guidance:

·

The Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs;

·

The Company did not elect the hindsight practical expedient;

·

The Company elected the optional transition method that allows companies to use the effective date as the date of initial application on transition. As a result, the Company did not adjust comparative period financial information or make the newly required lease disclosures for periods before the effective date;

·

The Company elected not to apply the above guidance to short-term leases;

·

The Company elected to separate the lease components from the nonlease components and exclude the nonlease components from the right-of-use asset and lease liability; and

·

The Company did not elect the land easement practical expedient.

 

At the date of adoption, the Company recorded approximately $11.6 million on its Consolidated Balance Sheets to reflect the right of use asset and associated lease liability. The Company utilized its incremental borrowing rate, on a collateralized basis, for the remaining contractual lease term. 

 

ASU 2017-08, "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities." ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium, requiring the premium to be amortized to the earliest call date. ASU 2017-08 does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. This guidance was effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

 

ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." ASU 2017-12 amends Topic 815 to reduce the cost and complexity of applying hedge accounting and expands the types of relationships that qualify for hedge accounting. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness, requires all items that affect earnings to be presented in the same income statement line as the hedged item, provides for applying hedge accounting to additional hedging strategies,

11


 

provides for new approaches to measuring the hedged item in fair value hedges of interest rate risk, and eases the requirements for effective testing and hedge documentation. This guidance was effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. During the first quarter of 2019, when the Company adopted this guidance and reassessed classification of certain investments and transferred $573.6 million of securities from held to maturity to available for sale.

 

ASU 2018-07, "Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting." ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. This guidance was effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

 

ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 implements a change from the current impaired loss model to an expected credit loss model over the life of an instrument, including loans and securities held to maturity. The expected credit loss model is expected to result in earlier recognition of losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 including interim periods with those years. The Company has developed and is executing a project plan to implement this guidance. The project plan includes an assessment of data, development of CECL methodologies, model validation, and parallel runs to assess the impact of CECL calculations on its consolidated financial statements and evaluation of related disclosures.

 

 

Note 2:  Acquisition

 

The Banc Ed Corp.

 

On January 31, 2019, the Company completed its acquisition of The Banc Ed Corp. (“Banc Ed”).  TheBANK of Edwardsville (“TheBANK”), Banc Ed’s wholly-owned bank subsidiary, will be merged with and into First Busey’s bank subsidiary, Busey Bank, which is expected to occur in the fourth quarter of 2019. At the time of the bank merger, TheBANK’s banking offices will become branches of Busey Bank.

Under the terms of the Merger Agreement with Banc Ed, at the effective time of the acquisition, each share of Banc Ed common stock issued and outstanding was converted into the right to receive 8.2067 shares of the Company’s common stock, cash in lieu of fractional shares and $111.53 cash consideration per share. The market value of the 6.7 million shares of First Busey common stock issued at the effective time of the acquisition was approximately $166.5 million based on First Busey’s closing stock price of $24.76 on January 31, 2019. 

This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged was recorded at estimated fair values on the date of acquisition.  Fair values are considered provisional until final fair values are determined or the measurement period has passed, but no later than one year from the acquisition date.  Reviews of third party valuations are still being performed by management.  Therefore amounts are subject to change and could change materially from the provisional amounts disclosed below. 

First Busey incurred $1.0 million in pre-tax expenses related to the acquisition of Banc Ed for the three months ended March 31, 2019, primarily for professional and legal fees, all of which are reported as a component of non-interest expense in the accompanying unaudited Consolidated Statement of Income.

12


 

The following table presents the estimated fair value of Banc Ed’s assets acquired and liabilities assumed as of January 31, 2019 (dollars in thousands):

 

 

 

 

 

 

Estimated by

 

 

First Busey

Assets acquired:

 

  

 

Cash and cash equivalents

 

$

42,013

Securities

 

 

692,684

Loans held for sale

 

 

2,157

Portfolio loans

 

 

873,336

Premises and equipment

 

 

31,929

Other intangible assets

 

 

32,617

Mortgage servicing rights

 

 

6,946

Other assets

 

 

57,296

Total assets acquired

 

 

1,738,978

 

 

 

 

Liabilities assumed:

 

 

 

Deposits

 

 

1,439,203

Other borrowings

 

 

63,439

Other liabilities

 

 

25,079

Total liabilities assumed

 

 

1,527,721

 

 

 

 

Net assets acquired

 

$

211,257

 

 

 

 

Consideration paid:

 

 

 

Cash

 

$

91,400

Common stock

 

 

166,515

Total consideration paid

 

$

257,915

 

 

 

 

Goodwill

 

$

46,658

 

The loans acquired in this transaction were recorded at fair value with no carryover of any existing allowance for loan losses.  Loans that were not deemed to be credit-impaired at the acquisition date were accounted for under FASB ASC 310-20, Receivables-Nonrefundable Fees and Other Costs, and were subsequently considered as part of the Company’s determination of the adequacy of the allowance for loan losses.  Purchased credit impaired (“PCI”) loans were accounted for under ASC 310-30, Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality.  As of the acquisition date, the aggregate principal balance outstanding and aggregate fair value of the acquired performing loans, including loans held for sale, were $889.3 and $871.0 million, respectively.  The difference between the carrying value and aggregate fair value of $17.0 million will be accreted over the estimated remaining life of the respective loans in a manner that approximates the level yield method.  As of the acquisition date, the aggregate principal balance outstanding of PCI loans totaled $3.9 million and the aggregate fair value of PCI loans totaled $2.3 million.  The accretable discount of $0.2 million on PCI loans represents the amount by which the undiscounted expected cash flows on such loans exceed their carrying value.  The amount by which the contractual payments exceeds the undiscounted expected cash flows represents the non-accretable difference. The difference between contractually required payments at the acquisition date and the cash flow expected to be collected is referred to as the non-accretable difference.  Further, the excess of cash flows expected at acquisition over the fair value is referred to as the accretable yield. At March 31, 2019, the carrying value of PCI loans acquired from Banc Ed was $2.3 million. 

 

13


 

Since the acquisition date, Banc Ed earned total revenues of $12.3 million and net income of $3.6 million, which are included in the Company’s Consolidated Statements of Income for the three months ended March 31, 2019.  The following table provides the unaudited pro forma information for the results of operations for the three months ended March 31, 2019 and 2018, as if the acquisition had occurred January 1, 2018.  The pro forma results combine the historical results of Banc Ed into the Company’s Consolidated Statements of Income, including the impact of purchase accounting adjustments including loan discount accretion, intangible assets amortization, deposit accretion and premises accretion, net of taxes.  The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2018.  No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, expense efficiencies or asset dispositions. Only the merger related expenses that have been recognized are included in net income in the table below (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

Pro Forma

 

 

Three Months Ended March 31,

 

 

2019

 

2018

Total revenues (net interest income plus non-interest income)

 

$

100,652

 

$

101,119

Net income

 

 

27,390

 

 

25,813

Diluted earnings per common share

 

 

0.49

 

 

0.47

 

 

Note 3:  Securities

 

The table below provides the amortized cost, unrealized gains and losses and fair values of securities summarized by major category (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

    

 

    

Gross

    

Gross

    

    

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

March 31, 2019:

    

Cost

    

Gains

    

Losses

    

Value

Available for sale

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

64,506

 

$

76

 

$

(273)

 

$

64,309

Obligations of U.S. government corporations and agencies

 

 

323,686

 

 

2,122

 

 

(388)

 

 

325,420

Obligations of states and political subdivisions

 

 

281,473

 

 

2,357

 

 

(352)

 

 

283,478

Commercial mortgage-backed securities

 

 

55,926

 

 

29

 

 

(393)

 

 

55,562

Residential mortgage-backed securities

 

 

1,051,556

 

 

4,512

 

 

(6,307)

 

 

1,049,761

Corporate debt securities

 

 

138,913

 

 

933

 

 

(81)

 

 

139,765

Total

 

$

1,916,060

 

$

10,029

 

$

(7,794)

 

$

1,918,295