First Busey(US:BUSE)2025-05-09 20:42Part I Financial Information Financial Statements First Busey Corporation reported a net loss in Q1 2025, driven by acquisition expenses, alongside significant balance sheet growth | (dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $ 19,464,252 | $ 12,046,722 | | Portfolio loans, net | $ 13,673,147 | $ 7,613,683 | | Goodwill | $ 385,139 | $ 333,695 | | Total deposits | $ 16,459,470 | $ 9,982,490 | | Total liabilities | $ 17,284,646 | $ 10,663,453 | | Total stockholders' equity | $ 2,179,606 | $ 1,383,269 | | (dollars in thousands, except per share) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net interest income | $ 103,731 | $ 75,854 | | Provision for credit losses | $ 42,452 | $ 5,038 | | Total noninterest income | $ 21,223 | $ 34,913 | | Total noninterest expense | $ 115,171 | $ 70,769 | | Net income (loss) | $ (29,990) | $ 26,225 | | Diluted earnings (loss) per common share | $ (0.44) | $ 0.46 | Note 1. Significant Accounting Policies First Busey Corporation prepares financial statements under U.S. GAAP, operating through Banking, Wealth Management, and FirsTech segments - First Busey Corporation operates and reports its business in three segments: - Banking: Provides a full range of banking services across Arizona, Colorado, Florida, Illinois, Indiana, Kansas, Missouri, New Mexico, Oklahoma, and Texas through Busey Bank and CrossFirst Bank - Wealth Management: Offers asset management, investment, brokerage, and fiduciary services - FirsTech: Provides payment technology solutions including online, mobile, and voice-recognition bill payments2631 - On April 30, 2025, Busey issued a conditional notice to redeem its 5.25% fixed-to-floating rate subordinated notes, with an aggregate principal and interest amount of $128.3 million, on June 1, 202545 Note 2. Mergers and Acquisitions Busey completed the CrossFirst Bankshares acquisition on March 1, 2025, significantly expanding its operations and recording goodwill - Effective March 1, 2025, Busey acquired CrossFirst Bankshares, Inc. (CrossFirst), expanding its presence to 10 states; CrossFirst Bank will operate as a separate subsidiary until its planned merger into Busey Bank on June 20, 20254648 Acquisition Date Fair Values (in thousands) | | March 1, 2025 CrossFirst (provisional) | April 1, 2024 M&M (final) | |:---|:---:|:---:| | Total assets acquired | $ 7,497,526 | $ 477,745 | | Total liabilities assumed | $ 6,739,915 | $ 444,067 | | Net assets acquired | $ 757,611 | $ 33,678 | | Total consideration paid | $ 808,980 | $ 49,575 | | Goodwill | $ 51,369 | $ 15,897 | - Busey incurred pre-tax acquisition expenses of $71.6 million in Q1 2025, primarily related to the CrossFirst deal, including a $42.4 million initial provision for credit losses on non-PCD loans and $7.1 million in legal and professional fees7071 Unaudited Pro Forma Results (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:---|:---:|:---:| | Revenue (Net Interest Income + Noninterest Income) | $ 179,594 | $ 197,213 | | Net income | $ 20,164 | $ 11,054 | Note 3. Debt Securities Busey's debt securities portfolio totaled $3.09 billion, with $330.2 million in unrealized losses, primarily from interest rate changes Debt Securities Summary (As of March 31, 2025, in thousands) | Category | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :--- | :--- | :--- | :--- | :--- | | Available for Sale | $ 2,464,241 | $ 2,930 | $ (193,297) | $ 2,273,874 | | Held to Maturity | $ 815,402 | $ — | $ (136,932) | $ 678,470 | - In Q1 2025, Busey sold available-for-sale debt securities with a book value of approximately $205.6 million, realizing a pre-tax loss of $15.5 million as part of a balance sheet repositioning strategy, compared to a $6.8 million loss on sales of $108.2 million in securities in Q1 202480 - As of March 31, 2025, the company had 591 debt securities in a continuous unrealized loss position, with total unrealized losses of $330.2 million; management does not believe these losses are credit-related and expects full collection of contractual amounts88 Note 4. Portfolio Loans The loan portfolio grew to $13.87 billion due to the CrossFirst acquisition, with the Allowance for Credit Losses increasing to $195.2 million Portfolio Loans Composition (in thousands) | Loan Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial loans | $ 11,138,488 | $ 5,552,288 | | Retail loans | $ 2,729,869 | $ 2,144,799 | | Total portfolio loans | $ 13,868,357 | $ 7,697,087 | | ACL | $ (195,210) | $ (83,404) | | Portfolio loans, net | $ 13,673,147 | $ 7,613,683 | Allowance for Credit Losses (ACL) Activity - Q1 2025 (in thousands) | | Amount | | :--- | :--- | | Balance, December 31, 2024 | $ 83,404 | | Day 1 PCD (CrossFirst) | $ 100,783 | | Day 2 Provision (CrossFirst non-PCD) | $ 42,433 | | Other Provision | $ 19 | | Charged-off | $ (31,835) | | Recoveries | $ 406 | | Balance, March 31, 2025 | $ 195,210 | - Net charge-offs in Q1 2025 included $29.6 million related to PCD loans acquired from CrossFirst, which were fully reserved at acquisition and did not require additional provision expense120 - Non-accrual loans increased to $48.6 million at March 31, 2025, from $22.1 million at December 31, 2024; total non-performing loans stood at $54.7 million, or 0.39% of portfolio loans105343 Note 6. Deposits Total deposits significantly increased to $16.46 billion due to the CrossFirst acquisition, with uninsured deposits at $5.26 billion Deposit Composition (in thousands) | Deposit Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Noninterest-bearing demand | $ 3,693,070 | $ 2,719,907 | | Interest-bearing transaction | $ 3,200,137 | $ 2,423,237 | | Savings and money market | $ 6,475,187 | $ 3,348,711 | | Time deposits | $ 3,091,076 | $ 1,490,635 | | Total deposits | $ 16,459,470 | $ 9,982,490 | - Estimated uninsured and not otherwise collateralized deposits were $5.26 billion, or 32.0% of total deposits, as of March 31, 2025, an increase from $2.96 billion, or 29.6% of total deposits, at December 31, 2024351 Note 8. Regulatory Capital First Busey and its subsidiary banks remained well-capitalized as of March 31, 2025, with all capital ratios exceeding regulatory minimums First Busey Corporation Capital Ratios (As of March 31, 2025) | Ratio | Actual | Minimum Requirement | To Be Well Capitalized | | :--- | :--- | :--- | :--- | | Common equity Tier 1 capital | 12.00 % | 4.50 % | 6.50 % | | Tier 1 capital | 12.05 % | 6.00 % | 8.00 % | | Total capital | 14.88 % | 8.00 % | 10.00 % | | Leverage ratio | 12.95 % | 4.00 % | N/A | - The company exceeded the capital conservation buffer requirements, with its Common Equity Tier 1 ratio of 12.00% being 500 bps above the 7.0% minimum required to avoid restrictions on dividends and buybacks151 Note 16. Operating Segments and Related Information Busey operates through Banking, Wealth Management, and FirsTech segments, with Banking reporting a net loss in Q1 2025 due to acquisition expenses Segment Financial Results - Q1 2025 (in thousands) | Segment | Revenue (Net Interest Income + Noninterest Income) | Income (Loss) Before Taxes | Net Income (Loss) | | :--- | :--- | :--- | :--- | | Banking | $ 107,036 | $ (20,563) | $ (19,693) | | Wealth Management | $ 17,566 | $ 8,183 | $ 6,219 | | FirsTech | $ 5,429 | $ (318) | $ (239) | | Other/Eliminations | $ (5,077) | $ (19,971) | $ (16,277) | | Total | $ 124,954 | $ (32,669) | $ (29,990) | - The Banking segment's results for Q1 2025 include one month of operations from the newly acquired CrossFirst Bank255 Management's Discussion and Analysis of Financial Condition and Results of Operations Management highlights the transformative CrossFirst acquisition, which impacted Q1 2025 results, while noting strong underlying performance and robust capital - The acquisition of CrossFirst on March 1, 2025, is described as transformative, significantly impacting Q1 2025 results and resetting the baseline for future performance284 GAAP vs. Non-GAAP Performance Metrics - Q1 2025 | Metric | GAAP | Adjusted (Non-GAAP) | | :--- | :--- | :--- | | Net Income (Loss) | ($29.99 M) | $39.90 M | | Diluted EPS | ($0.44) | $0.57 | | Return on Average Assets | (0.82)% | 1.09% | | Return on Average Tangible Common Equity | (7.99)% | 10.64% | | Efficiency Ratio | 79.4% | 58.7% | - Net interest margin (tax-equivalent) increased to 3.16% in Q1 2025 from 2.79% in Q1 2024, driven by higher yields on earning assets295299 - Noninterest expense increased 62.7% to $115.2 million, but excluding $29.2 million in non-operating acquisition and restructuring costs, the increase was 22.2% year-over-year310 - The company maintains a strong liquidity position with $2.86 billion in cash and unencumbered securities and an additional $4.19 billion in available borrowing capacity as of March 31, 2025354 Quantitative and Qualitative Disclosures About Market Risk The company's most significant market risk is interest rate risk, managed by an asset-liability committee, with simulation analysis indicating balance sheet benefits from rising rates Interest Rate Sensitivity Analysis (% Change in Net Interest Income) | Basis Point Change | Year-One (March 31, 2025) | Year-Two (March 31, 2025) | | :--- | :--- | :--- | | +400 | 7.47 % | 10.57 % | | +200 | 3.58 % | 5.16 % | | +100 | 1.77 % | 2.58 % | | -100 | (1.70)% | (3.20)% | | -200 | (2.92)% | (6.24)% | | -400 | (3.87)% | (10.87)% | - The asset-liability committee meets at least quarterly to review market conditions and structure the balance sheet to optimize stability in net interest income399 Controls and Procedures Management concluded that Busey's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The Chief Executive Officer and Interim Chief Financial Officer concluded that as of March 31, 2025, Busey's disclosure controls and procedures were effective404 - No changes occurred in Busey's internal control over financial reporting during Q1 2025 that materially affected, or are reasonably likely to materially affect, these controls405 Part II Other Information Legal Proceedings The company is involved in ordinary, routine litigation incidental to its business, with no material impact expected on financial position - There is no material pending litigation, other than ordinary routine litigation incidental to its business, in which First Busey Corporation or any of its subsidiaries is involved409 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There have been no material changes to the factors discussed in Part II—Item 1A of Busey's 2024 Annual Report411 Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities During Q1 2025, Busey repurchased 220,000 shares of common stock at a weighted average price of $21.98 per share Issuer Purchases of Equity Securities - Q1 2025 | Period | Total Shares Purchased | Weighted Average Price Paid per Share | Shares Remaining Under Plan | | :--- | :--- | :--- | :--- | | January 2025 | — | $ — | 1,919,275 | | February 2025 | — | $ — | 1,919,275 | | March 2025 | 220,000 | $ 21.98 | 1,699,275 | | Total Q1 2025 | 220,000 | $ 21.98 | 1,699,275 |