First Busey Reports Fourth Quarter Net Income of $34.4 million and diluted EPS of $0.61

CHAMPAIGN, Ill., Jan. 24, 2023 (GLOBE NEWSWIRE) -- First Busey Corporation (Nasdaq: BUSE)

Message from our Chairman & CEO

Fourth Quarter 2022 Highlights:

• Adjusted quarterly net income¹ of $36.3 million and adjusted diluted EPS¹ of $0.65

• Net interest margin¹ of 3.24% reflects a 24-basis point increase over prior quarter

• Core loan growth¹ of $56.2 million, representing a 2.90% annualized growth rate

• Non-performing assets of 0.13% of total assets and allowance for credit losses of 582.01% of nonperforming loans

• FirsTech revenue² of $5.4 million, representing 9.2% year-over-year growth

• Adjusted core efficiency ratio¹ of 55.8%, compared to 57.6% in the fourth quarter of 2021, and 57.5% for the full year 2022

• For additional information, please refer to the 4Q22 Quarterly Earnings Supplement
  

Fourth Quarter Financial Results
Net income for First Busey Corporation (“First Busey” or the “Company”) for the fourth quarter of 2022 was $34.4 million, or $0.61 per diluted common share, compared to $35.7 million, or $0.64 per diluted common share, for the third quarter of 2022, and $29.9 million, or $0.53 per diluted common share, for the fourth quarter of 2021. Adjusted net income¹ for the fourth quarter of 2022 was $36.3 million, or $0.65 per diluted common share, compared to $36.4 million, or $0.65 per diluted common share, for the third quarter of 2022, and $34.3 million, or $0.61 per diluted common share, for the fourth quarter of 2021. For the fourth quarter of 2022, annualized return on average assets and annualized return on average tangible common equity¹ were 1.11% and 18.04%, respectively. Based on adjusted net income¹, annualized return on average assets was 1.17% and annualized return on average tangible common equity¹ was 19.03% for the fourth quarter of 2022.

Fourth quarter 2022 results were negatively impacted by an increase in income tax expense as a result of adjusting our estimated annual effective tax rate ("AETR"). First Busey estimates income tax expense for the year based on amounts expected to be owed to federal and state tax jurisdictions. An estimated AETR is established based on this estimate and is used to calculate our quarterly income tax provision. Our pre-tax income significantly exceeded our initial estimates, primarily driven by our rapidly expanding net interest margin, and as a result we revised our AETR. Due to this revision in our AETR, our fourth quarter effective tax rate increased to 24.7% compared to 19.2% in the third quarter. The Company’s effective tax rate was 20.7% for the full year 2022.

Pre-provision net revenue¹ for the fourth quarter of 2022 was $46.4 million, compared to $46.5 million for the third quarter of 2022 and $34.0 million for the fourth quarter of 2021. Adjusted pre-provision net revenue¹ for the fourth quarter of 2022 was $50.0 million, compared to $48.8 million for the third quarter of 2022 and $41.1 million for the fourth quarter of 2021. Pre-provision net revenue to average assets¹ for the fourth quarter of 2022 was 1.49%, compared to 1.47% for the third quarter of 2022, and 1.04% for the fourth quarter of 2021. Adjusted pre-provision net revenue to average assets¹ for the fourth quarter of 2022 was 1.61%, compared to 1.54% for the third quarter of 2022 and 1.27% for the fourth quarter of 2021.

Taking into account these fourth quarter results, full year 2022 pre-provision net revenue¹ and adjusted pre-provision net revenue¹ were $168.5 million and $179.4 million, respectively. Net income and adjusted net income¹ were $128.3 million, or $2.29 per diluted common share, and $131.9 million, or $2.35 per diluted common share, respectively. For the full year of 2022, return on average assets and return on average tangible common equity¹ were 1.03% and 15.56%, respectively. Based on adjusted net income¹, return on average assets was 1.06% and return on average tangible common equity¹ was 15.99%. Full year 2022 net income and adjusted net income include the impact of net security losses of $2.1 million, which are primarily related to unrealized losses recognized on equity securities.

The Company’s fourth quarter has historically been a seasonally light quarter for loan growth; however, during the fourth quarter of 2022 the Company experienced its seventh consecutive quarter of core loan¹ growth. Loans are being originated at attractive spreads while not sacrificing our prudent underwriting standards. Core loan¹ growth was $56.2 million in the fourth quarter of 2022, compared to growth of $178.5 million in the third quarter of 2022 and $141.6 million in the fourth quarter of 2021. Over the last four quarters, the Company has generated $610.8 million in core loan¹ growth, equating to a year-over-year growth rate of 8.6%. Our loan to deposit ratio ended the quarter at 76.7%.

In addition, our fee-based businesses continue to add revenue diversification. Excluding net securities gains and losses, non-interest income of $28.9 million accounted for 24.1% of total operating revenue during the fourth quarter of 2022. Beginning on July 1, 2022, we became subject to the Durbin Amendment of the Dodd-Frank Act. The Durbin Amendment requires the Federal Reserve to establish a maximum permissible interchange fee for many types of debit transactions. The impact of these rules for the third and fourth quarters were a $2.4 million reduction in fee income for each quarter.

Asset quality remains pristine by both historical as well as present-day industry standards. In the fourth quarter of 2022, non-performing assets declined to 0.13% of total assets, from 0.14% in the third quarter of 2022 and 0.17% in the fourth quarter of 2021. The Company’s results for the fourth quarter of 2022 include a provision expense of $0.9 million for credit losses and a provision release of $0.5 million for unfunded commitments. The total allowance for credit losses was $91.6 million at December 31, 2022, representing 1.19% of total portfolio loans outstanding. The Company recorded an insignificant amount of net recoveries in the fourth quarter of 2022.

The Company views certain non-operating items, including acquisition-related and other restructuring charges, as adjustments to net income reported under U.S. generally accepted accounting principles ("GAAP"). Non-operating pretax adjustments for other restructuring charges in the fourth quarter of 2022 were $2.4 million. The Company believes that non-GAAP measures—including pre-provision net revenue, adjusted pre-provision net revenue, pre-provision net revenue to average assets, adjusted pre-provision net revenue to average assets, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, return on average tangible common equity, adjusted return on average tangible common equity, adjusted net interest income, adjusted net interest margin, adjusted noninterest expense, adjusted core expense, efficiency ratio, adjusted efficiency ratio, adjusted core efficiency ratio, tangible book value per common share, tangible common equity, tangible common equity to tangible assets, core loans, core loans to portfolio loans, core deposits, core deposits to total deposits, and core loans to core deposits—facilitate the assessment of its financial results and peer comparability. A reconciliation of these non-GAAP measures is included in tabular form at the end of this release (see "Non-GAAP Financial Information").

Hurricane Ian
On September 28, 2022, Hurricane Ian made landfall in southwest Florida and impacted our operations in the region. We remain focused on assisting our clients and employees as they navigate the challenges from this historic storm. As of today, two of our three branches are fully operational, and services have been restored at a temporary facility for our third location. Efforts undertaken to date include: 1) financial assistance for associates impacted by the storm; 2) creation of a relief center for associates to access much needed supplies; 3) staffing resource reallocation to support our southwest Florida operations; 4) fee waivers for impacted customers; and 5) loan modification program for impacted commercial and retail real estate customers. During the fourth quarter of 2022 we recognized $0.2 million in noninterest income resulting from a gain on hurricane related disposal of fixed assets, offset by waived service charges, and $0.4 million in noninterest expense in connection with these initiatives.

Efficiency Optimization Plan & FirsTech Leadership Change
Early in the fourth quarter of 2022, we implemented a targeted restructuring and efficiency optimization plan that is expected to generate annual salary and benefits savings of approximately $4.0 million to $4.1 million. Approximately 33% of the quarterly run-rate for savings was reflected in our results for the fourth quarter of 2022, and we anticipate our savings to be at a 100% run-rate by the first quarter of 2023. We expect to largely reinvest the anticipated savings to support ongoing growth initiatives across our franchise over the next several quarters.

Late in the fourth quarter of 2022, we instituted a leadership change at our wholly-owned payments subsidiary, FirsTech, that reflects our continued commitment to scaling and growing this business. Robin Elliott replaces Farhan Yasin as President & CEO of FirsTech and all other leadership remains unchanged. In less than two years, FirsTech has been re-energized, revenue has increased, talent has been upgraded across the enterprise, and the technology stack has been redesigned and modernized, positioning the Company for scalable growth. Going forward we are squarely focused on executing on our growth strategy to provide comprehensive and innovative payment technology solutions that enable businesses to connect with their customers in a multitude of ways on a single, highly-configurable, secure platform.

The Company incurred one-time severance-related costs of $2.4 million during the fourth quarter of 2022, primarily related to the efficiency optimization plan and FirsTech leadership change.

Community Banking

First Busey’s goal of being a strong community bank begins with outstanding associates. The Company is humbled to be named among the 2022 Best Banks to Work For by American Banker, the 2022 Best Places to Work in Money Management by Pensions and Investments, the 2022 Best Places to Work in Illinois by Daily Herald Business Ledger, and the 2022 Best Companies to Work For in Florida by Florida Trend magazine.

As we reflect back on 2022 and look ahead to 2023, the Company feels confident that we are well positioned to navigate these uncertain times while continuing to produce quality growth and profitability. We are grateful for the opportunities to earn the business of our customers, based on the contributions of our talented associates and the continued support of our loyal shareholders.

/s/ Van A. Dukeman

Chairman, President & Chief Executive Officer

First Busey Corporation

SELECTED FINANCIAL HIGHLIGHTS (unaudited)
(dollars in thousands, except per share amounts)

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1. Net interest income plus noninterest income, excluding securities gains and losses, less noninterest expense.

2. See “Non-GAAP Financial Information” for reconciliation.

3. Revenue consists of net interest income plus noninterest income, excluding securities gains and losses.

4. On a tax-equivalent basis, assuming a federal income tax rate of 21%.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(dollars in thousands, except per share amounts)