UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the Quarterly Period Ended
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission File No.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (
N/A
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol (s) | Name of each exchange on which registered |
The |
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.
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).
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.
☑ | 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 transition 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
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 5, 2022 | |
Common Stock, $.001 par value |
FIRST BUSEY CORPORATION
FORM 10-Q
March 31, 2022
Table of Contents
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 49 | |||
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2
GLOSSARY
We use acronyms, abbreviations, and other terms throughout this Quarterly Report, as defined in the glossary below:
Term |
| Definition |
---|---|---|
2020 Equity Plan | First Busey's 2020 Equity Incentive Plan | |
ACL | Allowance for credit losses | |
Annual Report | Annual report filed with the SEC on Form 10-K pursuant to Section 13 or 15(d) of the Exchange Act | |
AOCI | Accumulated other comprehensive income (loss) | |
ASC | Accounting Standards Codification | |
ASU | Accounting Standards Update | |
Basel III | 2010 capital accord adopted by the international Basel Committee on Banking Supervision | |
Basel III Rule | Regulations promulgated by U.S. federal banking agencies – the OCC, the Federal Reserve, and the FDIC – to both enforce implementation of certain aspects of the Basel III capital reforms and effect certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act | |
CAC | Cummins-American Corp. | |
CARES Act | Coronavirus Aid, Relief, and Economic Security Act | |
CECL | Current Expected Credit Losses | |
COVID-19 | Coronavirus disease 2019 | |
DSU | Deferred stock unit | |
ESPP | Employee Stock Purchase Plan | |
Exchange Act | Securities Exchange Act of 1934, as amended | |
Fair value | The price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date, as defined in ASC Topic 820 “Fair Value Measurement” | |
FDIC | Federal Deposit Insurance Corporation | |
Federal Reserve | Board of Governors of the Federal Reserve System | |
FHLB | Federal Home Loan Bank | |
First Busey | First Busey Corporation and its wholly-owned consolidated subsidiaries; also, “Busey,” the “Company,” “we,” “us,” and “our” | |
First Busey Risk Management | First Busey Risk Management, Inc. | |
FirsTech | FirsTech, Inc. | |
FOMC | Federal Open Market Committee | |
GAAP | U.S. Generally Accepted Accounting Principles | |
GSB | Glenview State Bank | |
Interagency Statement | Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus, issued on March 22, 2020, and revised on April 7, 2020 | |
LIBOR | London Interbank Offered Rate | |
LOCOM | Lower of Cost or Market, an accounting approach under which loans are carried at amortized historical cost less loan write-offs and downward market value adjustments, as may be applicable | |
NMTC | New Markets Tax Credit | |
OCI | Other comprehensive income (loss) | |
OREO | Other real estate owned | |
PCD | Purchased credit deteriorated | |
PPP | Paycheck Protection Program | |
PSU | Performance-based restricted stock unit | |
Quarterly Report | Quarterly report filed with the SEC on Form 10-Q pursuant to Section 13 or 15(d) of the Exchange Act | |
RSU | Restricted stock unit |
3
Term |
| Definition |
---|---|---|
SBA | U.S. Small Business Administration | |
SEC | U.S. Securities and Exchange Commission | |
SOFR | Secured Overnight Financing Rate published by the Federal Reserve | |
TDR | Troubled debt restructuring | |
U.S. | United States of America | |
U.S. Treasury | U.S. Department of the Treasury |
4
FIRST BUSEY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(dollars in thousands)
As of | ||||||
March 31, | December 31, | |||||
2022 |
| 2021 | ||||
Assets | ||||||
Cash and cash equivalents: | ||||||
Cash and due from banks | $ | | $ | | ||
Interest-bearing deposits | | | ||||
Total cash and cash equivalents | | | ||||
Debt securities available for sale |
| |
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Debt securities held to maturity | | — | ||||
Equity securities | | | ||||
Loans held for sale (2022 at LOCOM, 2021 at fair value) |
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Portfolio loans (net of ACL of $ |
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Premises and equipment, net |
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Right of use assets | | | ||||
Goodwill |
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Other intangible assets, net |
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Cash surrender value of bank owned life insurance |
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Other assets |
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Total assets | $ | | $ | | ||
Liabilities and Stockholders’ Equity | ||||||
Liabilities | ||||||
Deposits: | ||||||
Noninterest-bearing | $ | | $ | | ||
Interest-bearing |
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Total deposits | | | ||||
Securities sold under agreements to repurchase |
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Short-term borrowings | | | ||||
Long-term debt |
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Senior notes, net of unamortized issuance costs | | | ||||
Subordinated notes, net of unamortized issuance costs | | | ||||
Junior subordinated debt owed to unconsolidated trusts | | | ||||
Lease liabilities | | | ||||
Other liabilities |
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Total liabilities | | | ||||
Outstanding commitments and contingent liabilities (see Notes 9 and 15) | ||||||
Stockholders’ Equity | ||||||
Common stock, ($ |
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Additional paid-in capital |
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Retained earnings |
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AOCI |
| ( |
| ( | ||
Total stockholders’ equity before treasury stock | | | ||||
Treasury stock at cost |
| ( |
| ( | ||
Total stockholders’ equity | | | ||||
Total liabilities and stockholders’ equity | $ | | $ | | ||
Shares | ||||||
Common shares issued | | | ||||
Less treasury shares | ( | ( | ||||
Common shares outstanding | | |
See accompanying notes to unaudited consolidated financial statements.
6
FIRST BUSEY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(dollars in thousands, except per share amounts)
Three Months Ended March 31, | ||||||
| 2022 |
| 2021 | |||
Interest income | ||||||
Interest and fees on loans | $ | | $ | | ||
Interest and dividends on investment securities: | ||||||
Taxable interest income | |
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Non-taxable interest income | |
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Other interest income | | | ||||
Total interest income | |
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Interest expense | ||||||
Deposits | |
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Federal funds purchased and securities sold under agreements to repurchase | |
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Short-term borrowings | |
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Long-term debt | |
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Senior notes | | | ||||
Subordinated notes | | | ||||
Junior subordinated debt owed to unconsolidated trusts | |
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Total interest expense | |
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Net interest income | |
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Provision for credit losses | ( |
| ( | |||
Net interest income after provision for credit losses | |
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Noninterest income | ||||||
Wealth management fees | |
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Fees for customer services | |
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Payment technology solutions | |
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Mortgage revenue | |
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Income on bank owned life insurance | | | ||||
Realized net gains (losses) on securities | |
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Unrealized net gains (losses) recognized on equity securities | ( | | ||||
Other income | |
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Total noninterest income | |
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Noninterest expense | ||||||
Salaries, wages, and employee benefits | |
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Data processing | |
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Net occupancy expense of premises | |
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Furniture and equipment expenses | |
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Professional fees | | | ||||
Amortization of intangible assets | |
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Interchange expense | | | ||||
Other expense | |
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Total noninterest expense | |
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Income before income taxes | |
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Income taxes | |
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Net income | $ | | $ | | ||
Basic earnings per common share | $ | | $ | | ||
Diluted earnings per common share | $ | | $ | | ||
Dividends declared per share of common stock | $ | | $ | |
See accompanying notes to unaudited consolidated financial statements.
7
FIRST BUSEY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(dollars in thousands)
Three Months Ended March 31, | ||||||
| 2022 |
| 2021 | |||
Net income | $ | | $ | | ||
OCI: | ||||||
Unrealized gains (losses) on debt securities available for sale: | ||||||
Net unrealized holding gains (losses) on debt securities available for sale, net of taxes of $ | ( | ( | ||||
Unrealized gains (losses) on debt securities transferred to held to maturity from available for sale, net of taxes of $ | ( | — | ||||
Reclassification adjustment for realized (gains) losses on debt securities available for sale included in net income, net of taxes of $ | ( | ( | ||||
Amortization of unrealized losses on securities transferred to held to maturity, net of taxes of ($ | | — | ||||
Net change in unrealized gains (losses) on debt securities available for sale | ( | ( | ||||
Unrealized gains (losses) on cash flow hedges: | ||||||
Net unrealized holding gains (losses) on cash flow hedges, net of taxes of $ |
| ( |
| | ||
Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of $ | ( | | ||||
Net change in unrealized gains (losses) on cash flow hedges | ( | | ||||
Net change in AOCI | ( | ( | ||||
Total comprehensive income (loss) | $ | ( | $ | |
See accompanying notes to unaudited consolidated financial statements.
8
FIRST BUSEY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(dollars in thousands, except per share amounts)
Three Months Ended March 31, 2022 | ||||||||||||||||||||
Accumulated | ||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||
Common | Paid-in | Retained | Comprehensive | Treasury | Stockholders' | |||||||||||||||
| Shares |
| Stock |
| Capital |
| Earnings |
| Income (Loss) |
| Stock |
| Equity | |||||||
Balance, December 31, 2021 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Net income | — | — | — | | — | — | | |||||||||||||
OCI, net of tax | — | — | — | — | ( | — | ( | |||||||||||||
Repurchase of stock | ( | — | — | — | — | ( | ( | |||||||||||||
Issuance of treasury stock for ESPP | | — | ( | — | — | | | |||||||||||||
Net issuance of treasury stock for RSU/DSU vesting and related tax | | — | ( | — | — | | ( | |||||||||||||
Cash dividends common stock at $ | — | — | — | ( | — | — | ( | |||||||||||||
Stock dividend equivalents RSUs at $ | — | — | | ( | — | — | — | |||||||||||||
Stock-based compensation | — | — | | — | — | — | | |||||||||||||
Balance, March 31, 2022 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | |
Three Months Ended March 31, 2021 | ||||||||||||||||||||
Retained | Accumulated | |||||||||||||||||||
Additional | Earnings | Other | Total | |||||||||||||||||
Common | Paid-in | (Accumulated | Comprehensive | Treasury | Stockholders' | |||||||||||||||
| Shares |
| Stock |
| Capital |
| Deficit) |
| Income (Loss) |
| Stock |
| Equity | |||||||
Balance, December 31, 2020 | | $ | | $ | | $ | | $ | | $ | ( | $ | | |||||||
Net income | — | — | — | | — | — |
| | ||||||||||||
OCI, net of tax | — | — | — | — | ( | — |
| ( | ||||||||||||
Repurchase of stock | ( | — | — | — | — | ( |
| ( | ||||||||||||
Cash dividends common stock at $ | — | — | — | ( | — | — |
| ( | ||||||||||||
Stock dividend equivalents RSUs at $ | — | — | | ( | — | — |
| — | ||||||||||||
Stock-based compensation | — | — | | — | — | — |
| | ||||||||||||
Balance, March 31, 2021 | | $ | | $ | | $ | | $ | | $ | ( | $ | |
See accompanying notes to unaudited consolidated financial statements.
9
FIRST BUSEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(dollars in thousands)
Three Months Ended March 31, | ||||||
| 2022 |
| 2021 | |||
Cash Flows Provided by (Used in) Operating Activities | ||||||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||
Provision for credit losses |
| ( |
| ( | ||
Amortization of intangible assets | | | ||||
Amortization of mortgage servicing rights | | | ||||
Amortization of NMTC | | | ||||
Depreciation and amortization of premises and equipment |
| |
| | ||
Net amortization (accretion) on portfolio loans | ( | ( | ||||
Net amortization (accretion) of premium (discount) on investment securities |
| |
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Net amortization (accretion) of premium (discount) on time deposits | ( | ( | ||||
Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings | | | ||||
Impairment of OREO and other repossessed assets | | — | ||||
Impairment of mortgage servicing rights | ( | ( | ||||
Unrealized (gains) losses recognized on equity securities | | ( | ||||
(Gain) loss on sales of debt securities, net |
| ( |
| ( | ||
(Gain) loss on sales of loans, net |
| ( |
| ( | ||
(Gain) loss on sales of OREO | — | ( | ||||
(Gain) loss on sales of premises and equipment | ( | ( | ||||
(Gain) loss on life insurance proceeds | | — | ||||
(Increase) decrease in cash surrender value of bank owned life insurance |
| ( |
| ( | ||
Provision for deferred income taxes |
| ( |
| | ||
Stock-based compensation |
| |
| | ||
Mortgage loans originated for sale | ( | ( | ||||
Proceeds from sales of mortgage loans | | | ||||
Net change in operating assets and liabilities: | ||||||
(Increase) decrease in other assets |
| ( |
| ( | ||
Increase (decrease) in other liabilities |
| ( |
| | ||
Net cash provided by (used in) operating activities | $ | | $ | | ||
Cash Flows Provided by (Used in) Investing Activities | ||||||
Purchases of equity securities | $ | ( | $ | ( | ||
Purchases of debt securities available for sale | ( | ( | ||||
Proceeds from sales of equity securities | — | | ||||
Proceeds from paydowns and maturities of debt securities held to maturity | | — | ||||
Proceeds from paydowns and maturities of debt securities available for sale |
| |
| | ||
Net (increase) decrease in loans |
| ( |
| | ||
Cash paid for premiums on bank-owned life insurance | ( | ( | ||||
Proceeds from life insurance | | — | ||||
Purchases of premises and equipment | ( | ( | ||||
Proceeds from disposition of premises and equipment |
| |
| | ||
Proceeds from sales of OREO |
| |
| | ||
Net cash provided by (used in) investing activities |