FIRST BUSEY CORP /NV/ [BUSE] Filings

10-Q 1 buse-20220331x10q.htm 10-Q

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 March 31, 2022


☐	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)

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


Title 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 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 þ 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 þ 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 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 ☐ No ☑

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		55,276,920

Table of Contents

FIRST BUSEY CORPORATION

FORM 10-Q

March 31, 2022

Table of Contents


GLOSSARY				3

Part I	FINANCIAL INFORMATION			5

Item 1.	FINANCIAL STATEMENTS (UNAUDITED)			5
		CONSOLIDATED BALANCE SHEETS		6
		CONSOLIDATED STATEMENTS OF INCOME (LOSS)		7
		CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME		8
		CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY		9
		CONSOLIDATED STATEMENTS OF CASH FLOWS		10
	NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS			12
		Note 1:	Significant Accounting Policies	12
		Note 2:	Acquisitions	14
		Note 3:	Securities	16
		Note 4:	Portfolio Loans	19
		Note 5:	Deposits	28
		Note 6:	Borrowings	28
		Note 7:	Regulatory Capital	30
		Note 8:	Stock-Based Compensation	32
		Note 9:	Outstanding Commitments and Contingent Liabilities	35
		Note 10:	Derivative Financial Instruments	35
		Note 11:	Fair Value Measurements	39
		Note 12:	Earnings per Common Share	43
		Note 13:	Accumulated Other Comprehensive Income (Loss)	45
		Note 14:	Operating Segments and Related Information	45
		Note 15:	Leases	47
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			49
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			72
Item 4.	CONTROLS AND PROCEDURES			73

Part II	OTHER INFORMATION			73

Item 1.	LEGAL PROCEEDINGS			73
Item 1A	RISK FACTORS			73
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			74
Item 3.	DEFAULTS UPON SENIOR SECURITIES			74
Item 4.	MINE SAFETY DISCLOSURES			74
Item 5.	OTHER INFORMATION			74
Item 6.	EXHIBITS			75

SIGNATURES				76

Table of Contents

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

Table of Contents


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

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Table of Contents

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	$	119,891	$	102,983
Interest-bearing deposits		359,337		733,112
Total cash and cash equivalents		479,228		836,095

Debt securities available for sale		2,946,055		3,981,251
Debt securities held to maturity		976,081		—
Equity securities		19,520		13,571
Loans held for sale (2022 at LOCOM, 2021 at fair value)		6,765		23,875
Portfolio loans (net of ACL of $88,213 at March 31, 2022, and $87,887 at December 31, 2021)		7,184,660		7,101,111
Premises and equipment, net		133,658		136,147
Right of use assets		9,014		10,533
Goodwill		317,873		317,873
Other intangible assets, net		55,040		58,051
Cash surrender value of bank owned life insurance		177,703		176,940
Other assets		261,912		204,242
Total assets	$	12,567,509	$	12,859,689

Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Noninterest-bearing	$	3,568,651	$	3,670,267
Interest-bearing		7,023,185		7,098,310
Total deposits		10,591,836		10,768,577

Securities sold under agreements to repurchase		255,668		270,139
Short-term borrowings		17,683		17,678
Long-term debt		42,881		46,056
Senior notes, net of unamortized issuance costs		39,978		39,944
Subordinated notes, net of unamortized issuance costs		182,910		182,773
Junior subordinated debt owed to unconsolidated trusts		71,678		71,635
Lease liabilities		9,067		10,591
Other liabilities		137,783		133,184
Total liabilities		11,349,484		11,540,577

Outstanding commitments and contingent liabilities (see Notes 9 and 15)

Stockholders’ Equity
Common stock, ($.001 par value; 100,000,000 shares authorized)		58		58
Additional paid-in capital		1,318,701		1,316,984
Retained earnings		107,890		92,463
AOCI		(137,605)		(23,758)
Total stockholders’ equity before treasury stock		1,289,044		1,385,747

Treasury stock at cost		(71,019)		(66,635)
Total stockholders’ equity		1,218,025		1,319,112
Total liabilities and stockholders’ equity	$	12,567,509	$	12,859,689

Shares
Common shares issued		58,116,970		58,116,970
Less treasury shares		(2,838,185)		(2,682,060)
Common shares outstanding		55,278,785		55,434,910

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

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	$	60,882	$	62,565
Interest and dividends on investment securities:
Taxable interest income		14,094		8,611
Non-taxable interest income		838		1,005
Other interest income		277		150
Total interest income		76,091		72,331

Interest expense
Deposits		2,124		3,732
Federal funds purchased and securities sold under agreements to repurchase		59		57
Short-term borrowings		89		19
Long-term debt		226		29
Senior notes		400		400
Subordinated notes		2,483		2,476
Junior subordinated debt owed to unconsolidated trusts		654		725
Total interest expense		6,035		7,438

Net interest income		70,056		64,893
Provision for credit losses		(253)		(6,796)
Net interest income after provision for credit losses		70,309		71,689

Noninterest income
Wealth management fees		15,779		12,584
Fees for customer services		8,907		8,037
Payment technology solutions		5,077		4,621
Mortgage revenue		975		2,666
Income on bank owned life insurance		884		964
Realized net gains (losses) on securities		106		25
Unrealized net gains (losses) recognized on equity securities		(720)		1,616
Other income		4,764		932
Total noninterest income		35,772		31,445

Noninterest expense
Salaries, wages, and employee benefits		39,354		30,384
Data processing		4,978		4,280
Net occupancy expense of premises		5,067		4,563
Furniture and equipment expenses		2,030		2,026
Professional fees		1,507		1,945
Amortization of intangible assets		3,011		2,401
Interchange expense		1,545		1,484
Other expense		12,884		7,416
Total noninterest expense		70,376		54,499

Income before income taxes		35,705		48,635
Income taxes		7,266		10,819
Net income	$	28,439	$	37,816

Basic earnings per common share	$	0.51	$	0.69
Diluted earnings per common share	$	0.51	$	0.69
Dividends declared per share of common stock	$	0.23	$	0.23

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(dollars in thousands)


	Three Months Ended March 31,
	2022		2021
Net income	$	28,439	$	37,816
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 $29,726 and $11,993, respectively		(74,556)		(30,079)
Unrealized gains (losses) on debt securities transferred to held to maturity from available for sale, net of taxes of $13,812 and $—, respectively		(34,644)		—
Reclassification adjustment for realized (gains) losses on debt securities available for sale included in net income, net of taxes of $30 and $7, respectively		(76)		(18)
Amortization of unrealized losses on securities transferred to held to maturity, net of taxes of ($252) and $—, respectively		631		—
Net change in unrealized gains (losses) on debt securities available for sale		(108,645)		(30,097)
Unrealized gains (losses) on cash flow hedges:
Net unrealized holding gains (losses) on cash flow hedges, net of taxes of $1,931 and ($164), respectively		(4,845)		410
Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of $143 and ($79), respectively		(357)		199
Net change in unrealized gains (losses) on cash flow hedges		(5,202)		609
Net change in AOCI		(113,847)		(29,488)
Total comprehensive income (loss)	$	(85,408)	$	8,328

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

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	55,434,910	$	58	$	1,316,984	$	92,463	$	(23,758)	$	(66,635)	$	1,319,112
Net income	—		—		—		28,439		—		—		28,439
OCI, net of tax	—		—		—		—		(113,847)		—		(113,847)
Repurchase of stock	(188,614)		—		—		—		—		(5,220)		(5,220)
Issuance of treasury stock for ESPP	25,140		—		(106)		—		—		647		541
Net issuance of treasury stock for RSU/DSU vesting and related tax	7,349		—		(359)		—		—		189		(170)
Cash dividends common stock at $0.23 per share	—		—		—		(12,739)		—		—		(12,739)
Stock dividend equivalents RSUs at $0.23 per share	—		—		273		(273)		—		—		—
Stock-based compensation	—		—		1,909		—		—		—		1,909
Balance, March 31, 2022	55,278,785	$	58	$	1,318,701	$	107,890	$	(137,605)	$	(71,019)	$	1,218,025


	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	54,404,379	$	56	$	1,253,360	$	20,830	$	33,309	$	(37,486)	$	1,270,069
Net income	—		—		—		37,816		—		—		37,816
OCI, net of tax	—		—		—		—		(29,488)		—		(29,488)
Repurchase of stock	(59,000)		—		—		—		—		(1,510)		(1,510)
Cash dividends common stock at $0.23 per share	—		—		—		(12,513)		—		—		(12,513)
Stock dividend equivalents RSUs at $0.23 per share	—		—		236		(236)		—		—		—
Stock-based compensation	—		—		1,448		—		—		—		1,448
Balance, March 31, 2021	54,345,379	$	56	$	1,255,044	$	45,897	$	3,821	$	(38,996)	$	1,265,822

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

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	$	28,439	$	37,816
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses		(253)		(6,796)
Amortization of intangible assets		3,011		2,401
Amortization of mortgage servicing rights		980		1,616
Amortization of NMTC		1,341		1,829
Depreciation and amortization of premises and equipment		2,756		2,808
Net amortization (accretion) on portfolio loans		(36)		(3,375)
Net amortization (accretion) of premium (discount) on investment securities		5,930		4,554
Net amortization (accretion) of premium (discount) on time deposits		(124)		(246)
Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings		212		214
Impairment of OREO and other repossessed assets		611		—
Impairment of mortgage servicing rights		(9)		(508)
Unrealized (gains) losses recognized on equity securities		720		(1,616)
(Gain) loss on sales of debt securities, net		(106)		(25)
(Gain) loss on sales of loans, net		(1,089)		(3,369)
(Gain) loss on sales of OREO		—		(1)
(Gain) loss on sales of premises and equipment		(838)		(134)
(Gain) loss on life insurance proceeds		1		—
(Increase) decrease in cash surrender value of bank owned life insurance		(885)		(964)
Provision for deferred income taxes		(157)		2,448
Stock-based compensation		1,909		1,448
Mortgage loans originated for sale		(33,506)		(91,479)
Proceeds from sales of mortgage loans		51,350		98,307
Net change in operating assets and liabilities:
(Increase) decrease in other assets		(16,429)		(1,569)
Increase (decrease) in other liabilities		(1,323)		750
Net cash provided by (used in) operating activities	$	42,505	$	44,109

Cash Flows Provided by (Used in) Investing Activities
Purchases of equity securities	$	(5,948)	$	(998)
Purchases of debt securities available for sale		(274,964)		(789,884)
Proceeds from sales of equity securities		—		998
Proceeds from paydowns and maturities of debt securities held to maturity		9,585		—
Proceeds from paydowns and maturities of debt securities available for sale		166,709		207,490
Net (increase) decrease in loans		(83,392)		37,929
Cash paid for premiums on bank-owned life insurance		(96)		(97)
Proceeds from life insurance		217		—
Purchases of premises and equipment		(734)		(1,911)
Proceeds from disposition of premises and equipment		1,305		1,759
Proceeds from sales of OREO		331		294
Net cash provided by (used in) investing activities