First Busey(BUSE) - 2025 Q2 - Quarterly Results

Financial Results Overall Performance Summary First Busey Corporation reported a net income of $47.4 million ($0.52 per diluted share) for Q2 2025, a significant turnaround from a net loss of $30.0 million in Q1 2025 and an increase from $27.4 million in Q2 2024, reflecting the first full quarter contribution from the CrossFirst acquisition - The second quarter of 2025 was the first full quarter where financial results included the contribution from the acquisition of CrossFirst Bankshares, Inc[8] - Adjustments to GAAP earnings include $16.6 million in acquisition/restructuring expenses, a $4.0 million CECL model adjustment, and $6.0 million in net securities gains[8] Q2 2025 Key Performance Indicators | Metric | GAAP | Adjusted | | :--- | :--- | :--- | | Net Income | $47.4 million | $57.4 million | | Diluted EPS | $0.52 | $0.63 | | Net Interest Margin | 3.49% | 3.33% | | ROAA | 1.00% | 1.21% | | ROATCE | 11.24% | 13.61% | Net Income (Loss) Comparison (in thousands) | Period | Net Income (Loss) | Diluted EPS | | :--- | :--- | :--- | | Q2 2025 | $47,404 | $0.52 | | Q1 2025 | $(29,990) | $(0.44) | | Q2 2024 | $27,357 | $0.47 | Pre-Provision Net Revenue Pre-provision net revenue (PPNR) significantly increased to $64.2 million in Q2 2025 from $28.7 million in Q1 2025, with adjusted PPNR reaching $80.8 million, reflecting improved core operating profitability before credit loss provisions Pre-Provision Net Revenue (PPNR) Comparison (in millions) | Period | PPNR (GAAP) | PPNR to Avg Assets | Adjusted PPNR | Adjusted PPNR to Avg Assets | | :--- | :--- | :--- | :--- | :--- | | Q2 2025 | $64.2 | 1.35% | $80.8 | 1.70% | | Q1 2025 | $28.7 | 0.78% | $54.7 | 1.50% | | Q2 2024 | $40.7 | 1.35% | $42.6 | 1.42% | Net Interest Income and Net Interest Margin Net interest income rose to $153.2 million in Q2 2025, up from $103.7 million in the prior quarter, with the net interest margin (NIM) expanding by 33 basis points to 3.49% (3.33% adjusted), primarily driven by higher loan yields and purchase accounting accretion from the CrossFirst acquisition - Key drivers for the 33 basis point increase in NIM in Q2 2025 included: - +54 bps from increased loan portfolio and held for sale loan yields - +8 bps from increased purchase accounting accretion - -25 bps from increased non-maturity deposit funding costs[15] - The company is actively managing its funding mix by reducing brokered deposits (down $368.6 million in Q2) and anticipates the deposit beta will normalize between 45% and 50%[12] Net Interest Margin Comparison | Period | Net Interest Margin (GAAP) | Adjusted Net Interest Margin | | :--- | :--- | :--- | | Q2 2025 | 3.49% | 3.33% | | Q1 2025 | 3.16% | 3.08% | | Q2 2024 | 3.03% | 3.00% | Noninterest Income Total noninterest income for Q2 2025 was $44.9 million, a 111.4% increase from Q1 2025, largely due to $6.0 million in net securities gains and the full-quarter impact of the CrossFirst acquisition, with adjusted noninterest income at $38.9 million - Wealth Management assets under care grew to $14.10 billion at the end of Q2 2025, up from $13.68 billion in Q1 2025[17] - Treasury management services income grew 132.2% YoY, and card services fees grew 42.3% YoY, primarily due to the addition of CrossFirst commercial and corporate card services[17] Noninterest Income Breakdown (in thousands) | Category | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Wealth management fees | $16,777 | $17,364 | $15,917 | | Payment technology solutions | $4,956 | $5,073 | $5,915 | | Treasury management services | $4,981 | $3,017 | $2,145 | | Card services and ATM fees | $4,880 | $3,709 | $3,430 | | Net securities gains (losses) | $5,997 | $(15,768) | $(353) | | Total noninterest income | $44,863 | $21,223 | $33,703 | Operating Efficiency Total noninterest expense was $127.8 million in Q2 2025, an increase of 14.1% from Q1 2025, driven by nonrecurring acquisition expenses and the full-quarter operating costs of the combined organization, with the adjusted efficiency ratio improving to 55.3% from 58.7% - Noninterest expense growth was primarily due to the CrossFirst acquisition, including nonrecurring expenses and added operational costs, with the company expecting to realize 50% of the estimated $25.0 million in annual expense synergies in 2025 and 100% in 2026[18] - Salaries, wages, and employee benefits increased by $10.8 million compared to Q1 2025, reflecting a full quarter of expenses for the expanded workforce from the CrossFirst acquisition[20] Efficiency Ratio Comparison | Period | Efficiency Ratio (GAAP) | Adjusted Efficiency Ratio | | :--- | :--- | :--- | | Q2 2025 | 63.9% | 55.3% | | Q1 2025 | 77.1% | 58.7% | | Q2 2024 | 62.6% | 60.9% | Balance Sheet Strength Balance Sheet Overview As of June 30, 2025, total assets stood at $18.92 billion, a slight decrease from $19.46 billion at the end of Q1 2025, primarily due to a reduction in deposits, while portfolio loans remained relatively stable at $13.81 billion Key Balance Sheet Items (in billions) | Item | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $18.92 | $19.46 | $11.97 | | Portfolio Loans | $13.81 | $13.87 | $8.00 | | Total Deposits | $15.80 | $16.46 | $9.98 | | Total Stockholders' Equity | $2.41 | $2.18 | $1.33 | Asset Quality Asset quality remains strong and well-diversified, with non-performing loans stable at 0.40% of portfolio loans as of Q2 2025, and the allowance for credit losses at $183.3 million, providing robust coverage of 3.36 times non-performing loans - The increase in non-performing loans and assets compared to the prior year is mainly due to purchased credit deteriorated (PCD) loans assumed in the CrossFirst acquisition[33][34] - Net charge-offs were $12.9 million in Q2 2025, a decrease from $31.4 million in Q1 2025, with the Q1 figure including $29.6 million related to PCD loans from CrossFirst that were fully reserved at acquisition[36][39] Asset Quality Ratios | Ratio | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Non-performing loans to portfolio loans | 0.40% | 0.39% | 0.11% | | Non-performing assets to total assets | 0.31% | 0.31% | 0.08% | | Allowance for credit losses to portfolio loans | 1.33% | 1.41% | 1.07% | | ACL to non-performing loans coverage | 3.36x | 3.57x | 9.36x | Deposits and Borrowings Total deposits decreased to $15.80 billion at quarter-end, down from $16.46 billion in Q1 2025, a deliberate decline driven by a $386.8 million reduction in higher-cost brokered deposits and listing service CDs, while core deposits remain strong at 92.5% of total deposits - The decrease in total deposits was a deliberate strategy, with a $386.8 million reduction in higher-cost brokered deposits and listing service CDs[41] - Core deposits represented 92.5% of total deposits as of June 30, 2025, with an estimated 33% of total deposits uninsured and uncollateralized[42] - On June 1, 2025, Busey redeemed the entire $125.0 million outstanding principal amount of its 5.25% Subordinated Notes due 2030[43] Liquidity and Capital Strength The company maintains a robust liquidity and capital position, with available liquidity sources totaling $7.95 billion as of June 30, 2025, and strong capital ratios including an estimated Common Equity Tier 1 (CET1) ratio of 12.22% and a Total Capital ratio of 15.75% - Total available sources of on- and off-balance sheet liquidity were $7.95 billion as of June 30, 2025[44] Regulatory Capital Ratios (Estimated) | Ratio | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 | 12.22% | 12.00% | 13.20% | | Total Capital to RWA | 15.75% | 14.88% | 17.50% | Tangible Common Equity Metrics | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Tangible Common Equity / Tangible Assets | 9.27% | 8.83% | 8.30% | | Tangible Book Value per Share | $19.18 | $18.62 | $16.97 | Shareholder Returns Busey continued its commitment to shareholder returns by paying a common stock dividend of $0.25 per share in Q2 2025 and repurchasing 1,012,000 shares of its common stock for $21.7 million during the quarter - Paid a quarterly dividend of $0.25 per common share, continuing a consistent dividend history since 1980[46] - Repurchased 1,012,000 shares for $21.7 million in Q2 2025, with 2,687,275 shares remaining available for repurchase under the current plan as of June 30, 2025[48] Corporate Profile First Busey Corporation is an $18.92 billion financial holding company headquartered in Leawood, Kansas, with its subsidiary Busey Bank operating 78 banking centers across 10 states, offering comprehensive wealth management services with $14.10 billion in assets under care and innovative payment technology solutions through FirsTech - As of June 30, 2025, First Busey Corporation was an $18.92 billion financial holding company[50] - Busey Bank operates 78 banking centers across 10 states, including Illinois, Missouri, Texas, Florida, and Kansas[51] - The Wealth Management division had $14.10 billion in assets under care as of June 30, 2025[52] - FirsTech, a wholly-owned subsidiary, specializes in financial technology and payment solutions for businesses[53] Non-GAAP Financial Information This section provides detailed reconciliations of non-GAAP financial measures to their most directly comparable GAAP counterparts, which management uses to analyze core performance trends and for peer comparison, excluding items like acquisition expenses, restructuring charges, and net securities gains/losses Reconciliation of Pre-Provision Net Revenue This table reconciles GAAP net interest income and noninterest income to the non-GAAP measures of Pre-Provision Net Revenue (PPNR) and Adjusted PPNR, showing GAAP PPNR of $64.2 million and Adjusted PPNR of $80.8 million for Q2 2025 Q2 2025 PPNR Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | Net interest income (GAAP) | $153,183 | | Total noninterest income (GAAP) | $44,863 | | Net security (gains) losses | $(5,997) | | Total noninterest expense (GAAP) | $(127,833) | | Pre-provision net revenue (Non-GAAP) | $64,216 | | Acquisition and restructuring expenses | $16,600 | | Adjusted pre-provision net revenue (Non-GAAP) | $80,816 | Reconciliation of Adjusted Net Income and Related Ratios This reconciliation adjusts GAAP net income for several items, including the Day 2 provision for credit losses from the CrossFirst acquisition, other acquisition expenses, and net securities gains/losses, resulting in a non-GAAP net income of $57.4 million for Q2 2025 from a GAAP net income of $47.4 million Q2 2025 Adjusted Net Income Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | Net income (GAAP) | $47,404 | | Adjustment of initial provision for unfunded commitments | $4,030 | | Other acquisition expenses | $16,600 | | Net securities (gains) losses | $(5,997) | | Related tax (benefit) expense | $(4,971) | | Adjusted net income (Non-GAAP) | $57,394 | Reconciliation of Net Interest Margin The table adjusts GAAP net interest income for the tax-equivalent impact of non-taxable income and for purchase accounting accretion to derive adjusted net interest income and the corresponding adjusted net interest margin, with the 3.49% tax-equivalent NIM adjusted down to 3.33% for Q2 2025 Q2 2025 Net Interest Margin Reconciliation (dollars in thousands) | Description | Amount / Ratio | | :--- | :--- | | Net interest income (GAAP) | $153,183 | | Tax-equivalent adjustment | $791 | | Tax-equivalent net interest income (Non-GAAP) | $153,974 | | Purchase accounting accretion | $(7,119) | | Adjusted net interest income (Non-GAAP) | $146,855 | | Average interest-earning assets | $17,700,356 | | Net interest margin (Non-GAAP) | 3.49% | | Adjusted net interest margin (Non-GAAP) | 3.33% | Reconciliation of Tangible Common Equity This section details the calculation of tangible common equity by subtracting goodwill, other intangible assets, and preferred stock from total stockholders' equity, resulting in tangible common equity of $1.71 billion and a tangible book value per common share of $19.18 as of June 30, 2025 Tangible Common Equity Calculation as of June 30, 2025 (in thousands) | Description | Amount | | :--- | :--- | | Total stockholders' equity (GAAP) | $2,412,546 | | Less: Preferred stock | $(215,197) | | Less: Goodwill and other intangible assets, net | $(488,181) | | Tangible common equity (Non-GAAP) | $1,709,168 | | Ending common shares outstanding | 89,104,678 | | Tangible book value per common share (Non-GAAP) | $19.18 | Forward-Looking Statements This section contains standard cautionary language regarding forward-looking statements, warning that actual results could differ materially from expectations due to various factors, including economic conditions, regulatory changes, interest rate fluctuations, competition, and risks associated with acquisitions like the recent CrossFirst transaction - The document contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[76] - Key risk factors include economic strength, regulatory changes, interest rate movements, competition, and the successful integration of acquisitions such as CrossFirst[77]