425: First Busey Corp Announces Third Quarter Earnings, Highlights Transformative Partnership with CrossFirst

First Busey Corporation reports a net income of $32.0 million for the third quarter of 2024, alongside progress on its merger with CrossFirst Bankshares.

Summary

• First Busey Corporation (BUSE) reported a net income of $32.0 million, or $0.55 per diluted common share, for the third quarter of 2024.
• Adjusted net income was $33.5 million, or $0.58 per diluted common share.
• Tangible book value per common share increased to $18.19 at September 30, 2024, a 20.7% year-over-year increase.
• The company announced a transformative partnership with CrossFirst Bankshares, expected to close in the first or second quarter of 2025.
• Noninterest income was $36.0 million, representing 30.5% of operating revenue.
• The Wealth Management segment achieved record high quarterly revenue.
• The Common Equity Tier 1 ratio was 13.78%, and the Total Capital to Risk Weighted Assets ratio was 18.19%.
• Core deposits represented 96.5% of total deposits as of September 30, 2024.
• Non-performing assets decreased to $8.3 million, representing 0.07% of total assets.

Sentiment

Score: 7

Explanation: The sentiment is positive due to solid earnings, increased tangible book value, and the transformative merger with CrossFirst. However, there are some concerns about net interest margin and deposit fluctuations.

Positives

• Tangible book value per common share increased 20.7% year-over-year.
• Wealth Management operating segment achieved record high quarterly revenue.
• Tangible common equity increased to 8.96% of tangible assets.
• Non-performing assets decreased to $8.3 million, representing 0.07% of total assets.
• The company's capital ratios are significantly above well-capitalized minimums.
• The loan portfolio is well-diversified and conservatively underwritten.
• The company has a strong core deposit franchise with a low level of uninsured and uncollateralized deposits.

Negatives

• Net interest margin decreased by 1 basis point compared to the previous quarter.
• Total deposits decreased compared to the previous quarter and the same period last year.
• Loan growth has softened in the current environment.

Risks

• The company cites risks related to the proposed transaction with CrossFirst, including regulatory approvals and integration challenges.
• The company acknowledges the potential impact of economic factors, such as inflationary pressures and supply chain constraints.
• Changes in interest rates and prepayment rates of Busey's assets could affect financial results.
• Increased competition in the financial services sector could impact the company's ability to attract new customers.
• Unexpected outcomes of existing or new litigation, investigations, or inquiries involving Busey could affect financial results.

Future Outlook

The company expects to close the merger with CrossFirst in the first or second quarter of 2025 and anticipates the bank merger in mid-2025, aiming to create a premier commercial bank in the Midwest, Southwest, and Florida.

Management Comments

• The pending CrossFirst transaction fits with our acquisition strategy and we are excited to welcome our CrossFirst colleagues into the Busey family.
• We remain confident that we are well positioned as we move into the final quarter of 2024 and into 2025.
• We are mindful of the evolving economic outlook and remain focused on balance sheet strength, profitability, and growth, in that order.

Industry Context

The announcement comes amid ongoing consolidation in the banking industry, with institutions seeking to expand their geographic footprint and service offerings to better compete in a challenging economic environment.

Comparison to Industry Standards

• Comparing First Busey's Q3 2024 ROAA of 1.06% to peers like Commerce Bancshares (ROAA of 1.20%) and Old National Bancorp (ROAA of 0.95%) suggests a performance in line with regional bank averages.
• Their efficiency ratio of 62.15% is comparable to banks like Wintrust Financial (around 60%), indicating similar operational effectiveness.
• The CET1 ratio of 13.78% places them comfortably above regulatory requirements, similar to other well-capitalized regional banks such as Huntington Bancshares.
• The tangible book value growth of 20.7% year-over-year is strong, potentially outperforming some peers who are experiencing slower growth due to balance sheet adjustments.

Stakeholder Impact

• Shareholders will benefit from the increased tangible book value and the potential synergies from the merger with CrossFirst.
• Employees will have opportunities for growth and development in the combined company.
• Customers will have access to a broader range of products and services.
• The company's commitment to community development will continue to benefit the communities it serves.

Next Steps

• The company expects to close the merger with CrossFirst in the first or second quarter of 2025.
• The company anticipates the bank merger and core system conversion with CrossFirst in mid-2025.
• The company will continue to manage expenses and realize increased rates of M&M acquisition synergies during the final quarter of 2024.

Key Dates