First Busey(BUSE) - 2022 Q3 - Quarterly Report

Financial Performance - First Busey reported net income of $35.661 million for the three months ended September 30, 2022, compared to $25.941 million for the same period in 2021, representing a 37% increase [242]. - Adjusted diluted earnings per share for the three months ended September 30, 2022, was $0.65, up from $0.58 in the same period of 2021, reflecting a 12% increase [242]. - Return on average assets for the three months ended September 30, 2022, was 1.13%, compared to 0.81% for the same period in 2021, indicating a significant improvement [242]. - Adjusted net income for the three months ended September 30, 2022, was $36,435,000, compared to $32,845,000 for the same period in 2021, representing a 4.8% increase [336]. - Reported diluted earnings per share for the three months ended September 30, 2022, was $0.64, up from $0.46 in the same period of 2021, reflecting a 39.1% increase [336]. - Net interest income for the three months ended September 30, 2022, was $86,305,000, an increase from $70,755,000 in the same period of 2021, representing a 22.0% growth [341]. - Adjusted net interest income for the three months ended September 30, 2022, was $86,018,000, compared to $69,554,000 for the same period in 2021, showing a 23.6% increase [341]. Efficiency and Cost Management - The company implemented a restructuring and efficiency optimization plan expected to generate annual savings of $4.0 million to $4.4 million, with one-time costs estimated at $1.1 million to $1.3 million [240]. - Total noninterest expense for the three months ended September 30, 2022, was $70.7 million, a 3.7% decrease from the same period in 2021, while for the nine months ended September 30, 2022, it was $210.2 million, a 10.3% increase from the comparable period in 2021 [280]. - The efficiency ratio for the three and nine months ended September 30, 2022, was 57.6% and 60.3%, respectively, compared to 67.3% and 61.4% for the same periods in 2021 [289]. - Adjusted noninterest expense for the three months ended September 30, 2022, was $66,908, compared to $61,661 in the same period last year, an increase of 8.1% [343]. Asset and Liability Management - Total assets increased to $12,547,816, up from $11,571,270 in the previous year [256]. - Total liabilities and stockholders' equity reached $12,547,816, reflecting growth from $11,571,270 [256]. - Total deposits decreased by $167,180, or 1.6%, to $10,601,397 as of September 30, 2022, compared to $10,768,577 as of December 31, 2021 [292]. - The company maintains a well-diversified loan portfolio and limits concentration exposure in any particular loan segment [295]. - As of September 30, 2022, additional borrowing capacity available from FHLB was $1.82 billion, from the Federal Reserve was $752.73 million, and total additional borrowing capacity was $2.62 billion [324]. Loan and Deposit Growth - Portfolio loans totaled $7,617,918 million with a yield of 3.98% [254]. - Core loans as of September 30, 2022, were $7,668,688, up from $7,114,040 as of December 31, 2021, reflecting a growth of 7.8% [348]. - Total average deposits grew by 10.2% to $10,566,668 from $9,588,530 year-over-year [258]. - Non-performing loans decreased by 1.2% to $16,654 thousand as of September 30, 2022, from $16,852 thousand as of December 31, 2021, resulting in a non-performing loans to portfolio loans ratio of 0.22% [317]. Interest Income and Margin - Net interest margin stood at 3.00% [254]. - Net interest spread was reported at 2.83% for the three months ended September 30, 2022, compared to 2.29% for the same period in 2021, reflecting a significant increase [263]. - Interest income from earning assets was $11,497,783 million, reflecting a yield of 3.31% [254]. - The annualized net interest margin for the third quarter of 2022 was 3.00%, up from 2.41% in the same quarter of 2021 [264]. Noninterest Income - Total noninterest income was $30.9 million for the three months ended September 30, 2022, a 7.0% decrease from $33.3 million in the comparable period in 2021 [269]. - Wealth management fees decreased by 9.0% to $12.5 million for the three months ended September 30, 2022, while increasing by 7.8% to $42.4 million for the nine months ended September 30, 2022 [270]. - Payment technology solutions revenue increased by 10.0% to $5.1 million for the three months ended September 30, 2022, and by 9.3% to $15.0 million for the nine months ended September 30, 2022 [271]. - Mortgage revenue plummeted by 74.8% to $0.4 million for the three months ended September 30, 2022, reflecting declines in sold-loan mortgage volume [274]. Credit Quality and Risk Management - The allowance for credit losses (ACL) increased by $2.4 million for the three months ended September 30, 2022, compared to a release of $1.9 million for the same period in 2021 [304]. - The ACL to non-accrual loans ratio was 588.15% as of September 30, 2022, compared to 551.15% on September 30, 2021, showing an improvement in coverage [314]. - Potential problem loans increased to $83,700 thousand as of September 30, 2022, compared to $70,500 thousand as of December 31, 2021, indicating a rise of approximately 18.5% [319]. - The company anticipates that restructurings and additional collateral will result in full repayment of potential problem loans identified as of September 30, 2022 [319]. Market and Economic Factors - The company anticipates potential impacts from economic factors such as inflation, supply chain constraints, and changes in interest rates, which could affect future performance [350]. - Interest rate risk is the most significant market risk affecting the company, with minimal impact from foreign currency exchange rate risk and commodity price risk [366]. - As of September 30, 2022, a 300 basis point decrease in interest rates would result in a net interest income change of -22.39% [369].