• First Busey Announces 2022 Third Quarter Earnings

    Источник: Nasdaq GlobeNewswire / 25 окт 2022 17:00:01   America/New_York

    CHAMPAIGN, Ill., Oct. 25, 2022 (GLOBE NEWSWIRE) -- First Busey Corporation (Nasdaq: BUSE)

    Message from our Chairman & CEO

    Third Quarter 2022 Highlights:

    • Adjusted quarterly net income1 of $36.4 million and adjusted diluted EPS1 of $0.65
    • Net interest margin1 of 3.00% reflects a 32-basis point increase over prior quarter
    • Total deposit growth of $204.2 million, representing a 7.8% annualized growth rate; cycle-to-date non-maturity interest bearing deposit beta is 4.9%
    • Core loan1 growth of $178.5 million, representing a 9.50% annualized growth rate
    • Non-performing assets of 0.14% of total assets and annualized net charge-off ratio of 0.02%
    • FirsTech revenue2 of $5.6 million, representing 10.8% year-over-year growth
    • Adjusted core efficiency ratio1 of 55.7%, compared to 58.7% in the third quarter of 2021
    • Redeemed $60.0 million of outstanding callable subordinated notes
    • For additional information, please refer to the 3Q22 Quarterly Earnings Supplement

    Third Quarter Financial Results
    Net income for First Busey Corporation (“First Busey” or the “Company”) for the third quarter of 2022 was $35.7 million, or $0.64 per diluted common share, compared to $29.8 million, or $0.53 per diluted common share, for the second quarter of 2022, and $25.9 million, or $0.46 per diluted common share, for the third quarter of 2021. Adjusted net income1 for the third quarter of 2022 was $36.4 million, or $0.65 per diluted common share, compared to $30.1 million, or $0.54 per diluted common share, for the second quarter of 2022, and $32.8 million, or $0.58 per diluted common share, for the third quarter of 2021. For the third quarter of 2022, annualized return on average assets and annualized return on average tangible common equity1 were 1.13% and 17.41%, respectively. Based on adjusted net income1, annualized return on average assets was 1.15% and annualized return on average tangible common equity1 was 17.79% for the third quarter of 2022.

    Pre-provision net revenue1 for the third quarter of 2022 was $46.5 million, compared to $39.6 million for the second quarter of 2022 and $30.5 million for the third quarter of 2021. Adjusted pre-provision net revenue1 for the third quarter of 2022 was $48.8 million, compared to $41.3 million for the second quarter of 2022 and $39.4 million for the third quarter of 2021. Pre-provision net revenue to average assets1 for the third quarter of 2022 was 1.47%, compared to 1.27% for the second quarter of 2022, and 0.95% for the third quarter of 2021. Adjusted pre-provision net revenue to average assets1 for the third quarter of 2022 was 1.54%, compared to 1.33% for the second quarter of 2022 and 1.23% for the third quarter of 2021.

    The Company experienced its sixth consecutive quarter of strong core loan1 growth. Core loan1 growth was $178.5 million in the third quarter of 2022, compared to $249.1 million in the second quarter of 2022 and $177.1 million in the third quarter of 2021. Over the last four quarters, the Company has generated $696.3 million in core loan1 growth, equating to a year-over-year growth rate of 10.0%. Meanwhile, we experienced deposit growth of $204.2 million during the third quarter of 2022. As a result our loan to deposit ratio ended the quarter at 72.4%.

    In addition, our fee-based businesses continue to add revenue diversification. Total non-interest income of $30.9 million accounted for 26.4% of total operating revenue. 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 third quarter impact of these rules was a $2.4 million reduction in fee income.

    Asset quality remains strong by both historical as well as present-day industry standards. In the third quarter of 2022, non-performing assets declined to 0.14% of total assets, from 0.15% in the second quarter of 2022 and 0.23% in the third quarter of 2021. The Company’s results for the third quarter of 2022 include a provision expense of $2.4 million for credit losses and a provision release of $0.3 million for unfunded commitments. The total allowance for credit losses was $90.7 million at September 30, 2022, representing 1.18% of total portfolio loans outstanding. The Company recorded net charge-offs of $0.4 million in the third quarter of 2022, equating to an annualized net charge-off ratio of 0.02%.

    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 third quarter of 2022 included $0.1 million of expenses related to non-operating professional fees and $0.9 million of loss on leases and fixed asset impairment. 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").

    Debt Redemption
    On August 25, 2022, the Company redeemed $60.0 million of outstanding callable subordinated notes originally issued in 2017, using proceeds obtained from our successful public offering of $100.0 million subordinated debt in the second quarter of 2022. At the time of redemption, the redeemed subordinated notes carried interest at a floating rate of 3-month LIBOR plus 2.919%.

    Hurricane Ian
    On September 28, 2022, Hurricane Ian made landfall in southwest Florida impacting our operations in the region. We are 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, while services are expected to be restored imminently via a temporary facility at 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 customers. These are but a few of the initiatives and efforts implemented to date in response to Hurricane Ian.

    Efficiency Initiative
    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 $4.0 million to $4.4 million. We also expect to incur one-time severance-related costs associated with this initiative of $1.1 million to $1.3 million, most of which are expected to be realized in the fourth quarter. We expect to largely reinvest the anticipated savings to support ongoing growth initiatives across our franchise over the next several quarters.

    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 2021 Best Banks to Work For by American Banker, the 2021 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.

    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. We feel confident that we are well positioned to navigate these uncertain times while continuing to produce quality growth and profitability as we move into the final quarter of 2022 and into 2023.

    /s/ Van A. Dukeman
    Chairman, President & Chief Executive Officer
    First Busey Corporation


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

     Three Months EndedNine Months Ended
     September 30,June 30,September 30,September 30,September 30,
     2022  2022  2021  2022  2021 
    EARNINGS & PER SHARE AMOUNTS     
    Net income$35,661 $29,824 $25,941 $93,924 $93,523 
    Diluted earnings per common share 0.64  0.53  0.46  1.67  1.67 
    Cash dividends paid per share 0.23  0.23  0.23  0.69  0.69 
    Pre-provision net revenue1, 2 46,498  39,569  30,470  122,133  104,698 
    Revenue3 117,234  108,661  103,957  332,337  295,309 
          
    Net income by operating segments:     
    Banking 37,082  30,499  25,124  94,032  89,889 
    FirsTech 353  397  384  1,300  1,214 
    Wealth Management 3,756  5,092  4,718  14,688  14,285 

    AVERAGE BALANCES    		     
    Cash and cash equivalents 331,397  351,697  1,009,750  455,545  732,958 
    Investment securities 3,667,753  3,841,011  3,721,740  3,825,265  3,109,140 
    Loans held for sale 4,195  3,089  15,589  6,376  23,060 
    Portfolio loans 7,617,918  7,378,969  7,133,108  7,387,582  6,921,226 
    Interest-earning assets 11,497,783  11,453,198  11,730,637  11,550,887  10,651,386 
    Total assets 12,531,856  12,452,070  12,697,795  12,547,816  11,571,270 
          
    Noninterest bearing deposits 3,583,693  3,535,110  3,365,823  3,569,562  3,010,999 
    Interest-bearing deposits 6,993,125  6,971,083  7,253,242  6,997,106  6,577,531 
    Total deposits 10,576,818  10,506,193  10,619,065  10,566,668  9,588,530 
          
    Securities sold under agreements to repurchase and federal funds purchased 233,032  235,733  221,813  246,481  203,777 
    Interest-bearing liabilities 7,605,148  7,574,677  7,842,805  7,611,314  7,114,856 
    Total liabilities 11,350,408  11,255,018  11,346,379  11,328,171  10,247,699 
    Stockholders' equity - common 1,181,448  1,197,052  1,351,416  1,219,645  1,323,571 
    Average tangible common equity2 812,467  825,162  970,531  847,772  952,742 

    PERFORMANCE RATIOS    		     
    Pre-provision net revenue to average assets1, 2 1.47% 1.27% 0.95% 1.30% 1.21%
    Return on average assets 1.13% 0.96% 0.81% 1.00% 1.08%
    Return on average common equity 11.98% 9.99% 7.62% 10.30% 9.45%
    Return on average tangible common equity2 17.41% 14.50% 10.60% 14.81% 13.12%
    Net interest margin2, 4 3.00% 2.68% 2.41% 2.71% 2.54%
    Efficiency ratio2 57.62% 60.56% 67.27% 60.30% 61.40%
    Noninterest revenue as a % of total revenues3 26.38% 30.12% 31.94% 30.10% 32.21%

    NON-GAAP FINANCIAL INFORMATION    		     
    Adjusted pre-provision net revenue1, 2$48,800 $41,267 $39,409 $129,421 $119,648 
    Adjusted net income2 36,435  30,081  32,845  95,620  102,831 
    Adjusted diluted earnings per share2 0.65  0.54  0.58  1.70  1.84 
    Adjusted pre-provision net revenue to average assets2 1.54% 1.33% 1.23% 1.38% 1.38%
    Adjusted return on average assets2 1.15% 0.97% 1.03% 1.02% 1.19%
    Adjusted return on average tangible common equity2 17.79% 14.62% 13.43% 15.08% 14.43%
    Adjusted net interest margin2, 4 2.97% 2.66% 2.35% 2.68% 2.46%
    Adjusted efficiency ratio2 56.81% 60.29% 58.97% 59.67% 57.46%

    ________________
    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)

       As of  
     September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021
    ASSETS     
    Cash and cash equivalents$347,149 $230,852 $479,228 $836,095 $883,845 
    Investment securities 3,494,710  3,708,922  3,941,656  3,994,822  4,010,256 
    Loans held for sale 4,546  4,813  6,765  23,875  20,225 
          
    Commercial loans 5,724,137  5,613,955  5,486,817  5,449,689  5,431,342 
    Retail real estate and retail other loans 1,945,977  1,883,823  1,786,056  1,739,309  1,719,293 
    Portfolio loans 7,670,114  7,497,778  7,272,873  7,188,998  7,150,635 
          
    Allowance for credit losses (90,722) (88,757) (88,213) (87,887) (92,802)
    Premises and equipment 128,175  130,892  133,658  136,147  142,031 
    Goodwill and other intangible assets, net 367,091  369,962  372,913  375,924  378,891 
    Right of use asset 10,202  8,615  9,014  10,533  11,068 
    Other assets 566,123  493,356  439,615  381,182  395,181 
    Total assets$12,497,388 $12,356,433 $12,567,509 $12,859,689 $12,899,330 


    LIABILITIES & STOCKHOLDERS' EQUITY    		     
    Noninterest bearing deposits$3,628,169 $3,505,299 $3,568,651 $3,670,267 $3,453,906 
    Interest checking, savings, and money market deposits 6,173,041  6,074,108  6,132,355  6,162,661  6,337,026 
    Time deposits 800,187  817,821  890,830  935,649  1,026,935 
    Total deposits$10,601,397 $10,397,228 $10,591,836 $10,768,577 $10,817,867 
          
    Securities sold under agreements to repurchase$234,597 $228,383 $255,668 $270,139 $241,242 
    Short-term borrowings 16,225  16,396  17,683  17,678  17,673 
    Long-term debt 254,835  317,304  265,769  268,773  271,780 
    Junior subordinated debt owed to unconsolidated trusts 71,765  71,721  71,678  71,635  71,593 
    Lease liability 10,311  8,655  9,067  10,591  11,120 
    Other liabilities 201,670  154,789  137,783  133,184  134,979 
    Total liabilities 11,390,800  11,194,476  11,349,484  11,540,577  11,566,254 
    Total stockholders' equity 1,106,588  1,161,957  1,218,025  1,319,112  1,333,076 
    Total liabilities & stockholders' equity$12,497,388 $12,356,433 $12,567,509 $12,859,689 $12,899,330 


    SHARE AND PER SHARE AMOUNTS    		     
    Book value per common share$20.04 $21.00 $22.03 $23.80 $23.88 
    Tangible book value per common share1$13.39 $14.31 $15.29 $17.01 $17.09 
    Ending number of common shares outstanding 55,232,434  55,335,703  55,278,785  55,434,910  55,826,984 
          
    1. See "Non-GAAP Financial Information" for reconciliation.     


    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
    (dollars in thousands, except per share amounts)

     Three Months EndedNine Months Ended
     September 30,
    2022    		June 30,
    2022    		September 30,
    2021    		September 30,
    2022    		September 30,
    2021
    INTEREST INCOME     
    Interest and fees on loans held for sale and portfolio$76,081 $65,567 $65,163 $202,530 $189,132 
    Interest on investment securities 18,249  16,671  12,239  49,852  31,894 
    Other interest income 1,085  358  462  1,720  857 
    Total interest income$95,415 $82,596 $77,864 $254,102 $221,883 


    INTEREST EXPENSE    		     
    Interest on deposits$3,565 $2,146 $3,059 $7,835 $10,086 
    Interest on securities sold under agreements to repurchase and federal funds purchased 459  147  60  665  177 
    Interest on short-term borrowings 190  147  112  426  195 
    Interest on long-term debt 4,110  3,520  3,150  10,739  9,050 
    Junior subordinated debt owed to unconsolidated trusts 786  708  728  2,148  2,185 
    Total interest expense$9,110 $6,668 $7,109 $21,813 $21,693 
          
    Net interest income$86,305 $75,928 $70,755 $232,289 $200,190 
    Provision for credit losses 2,364  1,653  (1,869) 3,764  (10,365)
    Net interest income after provision for credit losses$83,941 $74,275 $72,624 $228,525 $210,555 

    NONINTEREST INCOME    		     
    Wealth management fees$12,508 $14,135 $13,749 $42,422 $39,335 
    Fees for customer services 7,627  9,588  9,288  26,122  25,936 
    Payment technology solutions 5,080  4,888  4,620  15,045  13,771 
    Mortgage revenue 438  284  1,740  1,697  6,153 
    Income on bank owned life insurance 958  874  999  2,716  3,439 
    Net securities gains (losses) 4  (1,714) 57  (2,324) 2,596 
    Other noninterest income 4,318  2,964  2,806  12,046  6,485 
    Total noninterest income$30,933 $31,019 $33,259 $97,724 $97,715 

    NONINTEREST EXPENSE    		     
    Salaries, wages, and employee benefits$39,762 $38,110 $41,949 $117,226 $107,222 
    Data processing expense 5,447  5,375  7,782  15,800  16,881 
    Net occupancy expense 4,705  4,720  4,797  14,492  13,606 
    Furniture and equipment expense 1,799  2,045  2,208  5,874  6,300 
    Professional fees 1,579  1,607  1,361  4,693  5,617 
    Amortization of intangible assets 2,871  2,951  3,149  8,833  8,200 
    Interchange expense 1,574  1,487  1,434  4,606  4,360 
    Other operating expenses 12,999  12,797  10,807  38,680  28,425 
    Total noninterest expense$70,736 $69,092 $73,487 $210,204 $190,611 
          
    Income before income taxes$44,138 $36,202 $32,396 $116,045 $117,659 
    Income taxes 8,477  6,378  6,455  22,121  24,136 
    Net income$35,661 $29,824 $25,941 $93,924 $93,523 

    SHARE AND PER SHARE AMOUNTS    		     
    Basic earnings per common share$0.64 $0.54 $0.46 $1.70 $1.69 
    Diluted earnings per common share$0.64 $0.53 $0.46 $1.67 $1.67 
    Average common shares outstanding 55,349,547  55,421,887  56,227,816  55,399,424  55,256,348 
    Diluted average common shares outstanding 56,073,164  56,104,017  56,832,518  56,123,756  55,872,835 


    Balance     Sheet Growth

    Our balance sheet remains a source of strength. Total assets were $12.50 billion at September 30, 2022, compared to $12.36 billion at June 30, 2022, and $12.90 billion at September 30, 2021. At September 30, 2022, portfolio loans were $7.67 billion, compared to $7.50 billion as of June 30, 2022, and $7.15 billion as of September 30, 2021. Amortized costs of Paycheck Protection Program (PPP) loans of $1.4 million, $7.6 million, and $178.2 million are included in the September 30, 2022, June 30, 2022, and September 30, 2021, portfolio loan balances, respectively. During the third quarter of 2022, Busey Bank experienced another strong quarter of core loan1 growth of $178.5 million, consisting of growth in commercial balances3 of $116.4 million and growth in retail real estate and retail other balances of $62.1 million. Growth was principally driven by our Northern Illinois, Gateway, and Indiana service centers. As has been our practice, we remain steadfast in our disciplined underwriting.

    Average portfolio loans were $7.62 billion for the third quarter of 2022, compared to $7.38 billion for the second quarter of 2022 and $7.13 billion for the third quarter of 2021. The average balance of PPP loans for the third quarter of 2022 was $4.2 million, compared to $19.3 million for the second quarter of 2022 and $291.8 million for the third quarter of 2021. Average interest-earning assets for the third quarter of 2022 were $11.50 billion, compared to $11.45 billion for the second quarter of 2022, and $11.73 billion for the third quarter of 2021.

    Total deposits were $10.60 billion at September 30, 2022, compared to $10.40 billion at June 30, 2022, and $10.82 billion at September 30, 2021. Fluctuations in deposit balances can be attributed to the retention of PPP loan funding in customer deposit accounts, the impacts of fiscal stimulus, inflation and related economic effects on our customers, as well as typical seasonality aspects within our portfolio, and other core deposit1 growth. The Company remains funded substantially through core deposits1 with significant market share in its primary markets. Core deposits1 accounted for 99.0% of total deposits as of September 30, 2022. Cost of deposits was 0.13% in the third quarter of 2022, which represents a 5 basis points increase from the second quarter of 2022. Excluding time deposits, the Company’s cost of deposits was 0.11% in the third quarter of 2022, an increase of 0.06% from June 30, 2022.

    Asset Quality

    Credit quality continues to be exceptionally strong. Loans 30-89 days past due totaled $6.3 million as of September 30, 2022, compared to $5.2 million as of June 30, 2022, and $6.4 million as of September 30, 2021. Non-performing loans decreased to $16.7 million as of September 30, 2022, compared to $17.5 million as of June 30, 2022, and $25.9 million as of September 30, 2021. Continued disciplined credit management resulted in non-performing loans as a percentage of portfolio loans of 0.22% at September 30, 2022, compared to 0.23% as of June 30, 2022, and 0.36% as of September 30, 2021. Non-performing assets were 0.14% of total assets at the end of the third quarter of 2022, compared to 0.15% at June 30, 2022 and 0.23% at September 30, 2021.

    Net charge-offs totaled $0.4 million for the third quarter of 2022, compared to $1.1 million for the second quarter of 2022 and $0.7 million for the third quarter of 2021. The allowance as a percentage of portfolio loans was 1.18% at both September 30, 2022, and June 30, 2022, compared to 1.30% at September 30, 2021. The allowance as a percentage of non-performing loans was 544.75% at September 30, 2022, compared to 507.36% at June 30, 2022, and 358.86% at September 30, 2021.

    The Company maintains a well-diversified loan portfolio and, as a matter of policy and practice, limits concentration exposure in any particular loan segment.


    ASSET     QUALITY (unaudited)
    (dollars in thousands)

     As of 
     September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021
    Total assets$12,497,388 $12,356,433 $12,567,509 $12,859,689 $12,899,330 
    Portfolio loans 7,670,114  7,497,778  7,272,873  7,188,998  7,150,635 
    Portfolio loans excluding amortized cost of PPP loans 7,668,688  7,490,162  7,241,104  7,114,040  6,972,404 
    Loans 30 – 89 days past due 6,307  5,157  3,916  6,261  6,446 
    Non-performing loans:     
    Non-accrual loans 15,425  15,840  12,488  15,946  25,369 
    Loans 90+ days past due and still accruing 1,229  1,654  197  906  491 
    Non-performing loans$         16,654 $         17,494 $         12,685 $         16,852 $25,860 
    Non-performing loans, segregated by geography:
    Illinois / Indiana$10,531 $11,261 $6,467 $10,450 $17,824 
    Missouri 5,008  5,259  5,263  5,349  6,736 
    Florida 1,115  974  955  1,053  1,300 
    Other non-performing assets 1,219  1,429  3,606  4,416  3,184 
    Non-performing assets$17,873 $18,923 $16,291 $21,268 $29,044 
          
    Allowance for credit losses$90,722 $88,757 $88,213 $87,887 $92,802 
               
    RATIOS     
    Non-performing loans to portfolio loans 0.22% 0.23% 0.17% 0.23% 0.36%
    Non-performing loans to portfolio loans, excluding PPP loans 0.22% 0.23% 0.18% 0.24% 0.37%
    Non-performing assets to total assets 0.14% 0.15% 0.13% 0.17% 0.23%
    Non-performing assets to portfolio loans and other non-performing assets 0.23% 0.25% 0.22% 0.30% 0.41%
    Allowance for credit losses to portfolio loans 1.18% 1.18% 1.21% 1.22% 1.30%
    Allowance for credit losses to portfolio loans, excluding PPP 1.18% 1.18% 1.22% 1.24% 1.33%
    Allowance for credit losses as a percentage of non-performing loans 544.75% 507.36% 695.41% 521.52% 358.86%


    NET CHARGE-OFFS (RECOVERIES) AND PROVISION EXPENSE (RELEASE) (unaudited)
    (dollars in thousands)

     Three Months EndedNine Months Ended
     September 30,June 30,September 30,September 30,September 30,
     2022  2022  2021  2022  2021 
    Net charge-offs (recoveries)$399 $1,109 $739 $929 $2,059 
    Provision expense (release) 2,364  1,653  (1,869) 3,764  (10,365)
          
    Net charge-offs (recoveries), annualized 1,583  4,448  2,932  1,242  2,753 
    Average portfolio loans 7,617,918  7,378,969  7,133,108  7,387,582  6,921,226 
    Net charge-off ratio 0.02% 0.06% 0.04% 0.02% 0.04%


    Net     Interest Margin1 and Net Interest Income

    Net interest margin1 for the third quarter of 2022 was 3.00%, compared to 2.68% for the second quarter of 2022 and 2.41% for the third quarter of 2021. Excluding purchase accretion, adjusted net interest margin1 was 2.97% for the third quarter of 2022, compared to 2.66% in the second quarter of 2022 and 2.35% in the third quarter of 2021. Net interest income was $86.3 million in the third quarter of 2022, compared to $75.9 million in the second quarter of 2022 and $70.8 million in the third quarter of 2021.

    The Federal Open Market Committee (FOMC) raised rates by 150 basis points during the third quarter of 2022, and by a total of 300 basis points during the first three quarters of 2022. Rising rates have a positive impact on net interest margin1, as assets, in particular commercial loans, reprice more quickly and to a greater extent than liabilities. Given the timing of the FOMC meetings in September, the full benefit of the associated movement in rates to our net interest margin will be realized in subsequent quarters. In general, net interest margins1 have been impacted over the last two years by PPP loans, significant growth in the Company’s liquidity position, and the issuance of debt, with more recent impacts resulting from rate increases. Factors contributing to the 32-basis point increase in net interest margin during the third quarter of 2022 include:

    • Increased loan portfolio income contributed +38 basis points
    • Increases in the cash and securities portfolio yield contributed +7 basis points
    • Increased recognition of purchase accounting accretion contributed +1 basis points
    • Increased deposit funding costs contributed -5 basis points
    • Increased borrowing costs contributed -4 basis points, of which -2 basis points is attributable to the carrying cost of our 2017 subordinated debt that was redeemed on August 25, 2022
    • Increased net interest expense on cash flow hedges contributed -3 basis points
    • Reduced volume of PPP loan forgiveness contributed -2 basis points

    Future FOMC rate decisions are expected to continue to be a net positive to net interest margin1. Based on our most recent Asset Liability Management Committee (ALCO) model, a 100 basis point parallel rate shock is expected to increase net interest income by 4.6% over the subsequent twelve-month period. Market competition for deposits has started to increase and deposits betas are likely to increase going forward, which is factored into our ALCO model. We are committed to protecting our quality core deposit franchise and are in regular contact with our customers to proactively address their needs and concerns. In the third quarter of 2022, our incremental interest-bearing non-maturity deposit beta was 6.4%. Since the onset of the Fed tightening cycle, our cumulative interest bearing non- maturity deposit beta has been 4.9%. Deposit betas are calculated based on an average Fed funds rate of 2.35% during the third quarter of 2022.

    Noninterest Income

    Noninterest income was $30.9 million for the third quarter of 2022, as compared to $31.0 million for the second quarter of 2022 and $33.3 million for the third quarter of 2021. Excluding the impact of net securities gains and losses, noninterest income was $30.9 million for the third quarter of 2022, compared to $32.7 million for the second quarter of 2022 and $33.2 million for the third quarter of 2021. 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 third quarter impact of these rules was a $2.4 million reduction in fee income. Revenues from wealth management fees and payment technology solutions activities represented 56.9% of the Company’s noninterest income for the quarter ended September 30, 2022, providing a balance to spread-based revenue from traditional banking activities.

    Wealth management fees were $12.5 million for the third quarter of 2022, compared to $14.1 million for the second quarter of 2022 and $13.7 million for the third quarter of 2021, representing a 9.0% decrease from the comparable period in 2021. The quarter over quarter decline in wealth management fees is primarily attributable to declines in market valuations. The Wealth Management operating segment generated net income of $3.8 million in the third quarter of 2022, compared to $5.1 million in the second quarter of 2022, and $4.7 million in the third quarter of 2021, a 20.4% decrease from the comparable period in 2021. First Busey’s Wealth Management division ended the third quarter of 2022 with $10.75 billion in assets under care, a decrease from $11.45 billion at the end of the second quarter of 2022 and $12.36 billion at the end of the third quarter of 2021, principally due to a reduction in market valuations. Our portfolio management team continues to produce solid results in the face of very volatile markets. In the third quarter, the Busey core investment strategy outperformed its benchmark.

    Payment technology solutions revenue from FirsTech was $5.1 million for the third quarter of 2022, compared to $4.9 million for the second quarter of 2022 and $4.6 million for the third quarter of 2021. Excluding intracompany eliminations, FirsTech generated revenue of $5.6 million during the third quarter of 2022, an increase from $5.4 million in the second quarter of 2022 and $5.0 million during the third quarter of 2021. The FirsTech operating segment generated net income of $0.4 million in the third quarter of 2022, consistent with both the second quarter of 2022 and the third quarter of 2021. The Company is currently making strategic investments in FirsTech to enhance future growth, including further upgrades to the product and engineering teams to build an application programming interface (API) cloud-based platform to provide for fully integrated payment capabilities as well as the continued development of our BaaS platform.

    Fees for customer services were $7.6 million for the third quarter of 2022, compared to $9.6 million in the second quarter of 2022 and $9.3 million in the third quarter of 2021. Excluding the Durbin Amendment's impact, discussed above, fees for customer services increased $0.4 million quarter-over-quarter, and $0.7 million year-over-year.

    Mortgage revenue was $0.4 million in the third quarter of 2022, an increase from $0.3 million in the second quarter of 2022 and a decrease from $1.7 million in the third quarter of 2021, due to declines in sold-loan volume and gain on sale premiums.

    Other noninterest income was $4.3 million in the third quarter of 2022, an increase from $3.0 million in the second quarter of 2022 and $2.8 million in the third quarter of 2021. Fluctuations between the second quarter of 2022 and the third quarter of 2022 were primarily the result of increases in swap origination fee income, increased gains on commercial loan sales, and decreased losses on fixed asset disposal.

    Operating Efficiency

    Noninterest expense was $70.7 million in the third quarter of 2022, compared to $69.1 million in the second quarter of 2022 and $73.5 million in the third quarter of 2021. Excluding non-operating adjustments1, noninterest expense was $69.8 million in the third quarter of 2022, compared to $68.8 million in the second quarter of 2022 and $64.8 million in the third quarter of 2021. As a result, the efficiency ratio1 was 57.62% for the quarter ended September 30, 2022, compared to 60.56% for the quarter ended June 30, 2022, and 67.27% for the quarter ended September 30, 2021. The adjusted core efficiency ratio1 was 55.67% for the quarter ended September 30, 2022, compared to 59.01% for the quarter ended June 30, 2022 and 58.72% for the quarter ended September 30, 2021. The Company remains focused on expense discipline, while making necessary investments to support the organic growth of our key business lines and related support and risk management functions.

    Noteworthy components of noninterest expense are as follows:

    • Salaries, wages, and employee benefits were $39.8 million in the third quarter of 2022, compared to $38.1 million in the second quarter of 2022, and $41.9 million in the third quarter of 2021. Total full-time equivalents numbered 1,513 at September 30, 2022, compared to 1,493 at June 30, 2022, and 1,462 at September 30, 2021. The Company did not record any non-operating expense for salaries, wages, and employee benefit expenses in the second or third quarter of 2022, compared to $4.7 million in the third quarter of 2021.
    • Data processing expense was $5.4 million in the third quarter of 2022, consistent with the second quarter of 2022 and a decrease from $7.8 million in the third quarter of 2021. The Company did not record any non-operating data processing expenses in the second or third quarter of 2022, compared to $3.2 million in the third quarter of 2021.
    • Professional fees were $1.6 million in the third quarter of 2022, consistent with the second quarter of 2022 and an increase from $1.4 million in the third quarter of 2021. The Company recorded $0.1 million of non-operating professional fees in the third quarter of 2022, compared to $0.2 million in the second quarter of 2022 and $0.1 million in the third quarter of 2021.
    • Amortization expense was $2.9 million in the third quarter of 2022, compared to $3.0 million in the second quarter of 2022 and $3.1 million in the third quarter of 2021.
    • Other operating expenses were $13.0 million for the third quarter of 2022, compared to $12.8 million in the second quarter of 2022 and $10.8 million in the third quarter of 2021. The Company recorded $0.9 million of non-operating expenses within the other operating expense line in the third quarter of 2022, compared to $0.1 million in the second quarter of 2022 and $0.6 million in the third quarter of 2021.

    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 $4.0 million to $4.4 million. We also expect to incur one-time severance-related costs associated with this initiative of $1.1 million to $1.3 million, most of which will be realized in fourth quarter. We expect to largely reinvest the anticipated savings to support ongoing growth initiatives across our franchise over the next several quarters.

    Capital Strength

    The Company's strong capital levels, coupled with its earnings, have allowed First Busey to provide a steady return to its stockholders through dividends. On October 28, 2022, the Company will pay a cash dividend of $0.23 per common share to stockholders of record as of October 21, 2022. The Company has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

    As of September 30, 2022, the Company continued to exceed the capital adequacy requirements necessary to be considered “well- capitalized” under applicable regulatory guidelines. The Company’s Common Equity Tier 1 ratio is estimated4 to be 11.79% at September 30, 2022, compared to 11.77% at June 30, 2022, and 11.95% at September 30, 2021. Our Total Capital to Risk Weighted Assets ratio is estimated4 to be 15.98% at September 30, 2022, compared to 16.58% at June 30, 2022, and 15.91% at September 30, 2021. During the third quarter of 2022, we redeemed $60.0 million of callable, fixed-to-floating rate subordinated notes that were originally issued in 2017, and scheduled to mature on May 25, 2027. The full balance of these subordinated notes qualified as Tier 2 Capital for First Busey for the first five years, with a phase out that began in the second quarter of 2022 until redemption. At the time of redemption, the redeemed subordinated notes carried interest at a floating rate of 3-month LIBOR plus 2.919%.

    The Company’s tangible common equity1 was $748.9 million at September 30, 2022, compared to $801.9 million at June 30, 2022, and $971.3 million at September 30, 2021. Tangible common equity1 represented 6.17% of tangible assets at September 30, 2022, compared to 6.68% at June 30, 2022, and 7.75% at September 30, 2021. The Company’s tangible book value per common share1 declined from $14.31 at June 30, 2022, to $13.39 at September 30, 2022. The decline in both the ratio of tangible common equity to tangible assets1 and tangible book value per common share1 is primarily attributable to the fair market valuation adjustment of the Company’s securities portfolio as a result of the rapidly rising rate environment as reflected in the accumulated other comprehensive income (loss) (AOCI) component of shareholder’s equity, net of retained earnings and amortization of intangible assets over the same period.

    During the third quarter of 2022, the Company purchased 130,000 shares of its common stock at a weighted average price of $23.75 per share for a total of $3.1 million under the Company’s stock repurchase plan. As of September 30, 2022, the Company had 147,210 shares remaining on its stock repurchase plan available for repurchase.

    3Q22 Quarterly Earnings Supplement

    For additional information on the Company’s financial condition and operating results, please refer to the 3Q22 Quarterly Earnings Supplement presentation furnished via Form 8-K on October 25, 2022, in connection with this earnings release.


    Corporate     Profile

    As of September 30, 2022, First Busey Corporation (Nasdaq: BUSE) was a $12.50 billion financial holding company headquartered in Champaign, Illinois.

    Busey Bank, a wholly-owned bank subsidiary of First Busey Corporation, had total assets of $12.45 billion as of September 30, 2022, and is headquartered in Champaign, Illinois. Busey Bank currently has 46 banking centers serving Illinois, eight banking centers serving Missouri, three banking centers serving southwest Florida, and one banking center in Indianapolis, Indiana.

    Busey Bank’s wholly-owned subsidiary, FirsTech, is a payments platform specializing in the evolving financial technology needs of small and medium-sized businesses, highly regulated enterprise industries, and financial institutions. With associates across the United States, FirsTech provides 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. Fast, secure payment modes include, but are not limited to, text-based payments; electronic payments concentration delivered to Automated Clearing House networks; internet voice recognition (IVR); credit cards; in-store payments for customers at retail pay agents; direct debit services; and lockbox remittance processing for customers to make payments by mail. Once these payments are processed through integration with our customers’ financial systems, FirsTech provides its customers with reconciliation and settlement services to ensure payment confirmation. Additionally, FirsTech provides consulting and technology services through its Professional Services Division, assisting clients in identifying and implementing payment technologies to meet their evolving needs. FirsTech launched its innovative BaaS platform at the beginning of 2022, helping community banks and their commercial customers build modernized payment solutions, which include online payment technologies and automated file transfers. More information about FirsTech can be found at firstechpayments.com.

    Through the Company’s Wealth Management division, the Company provides asset management, investment, and fiduciary services to individuals, businesses, and foundations. As of September 30, 2022, assets under care were $10.75 billion.

    Busey Bank has been named among America’s Best Banks for 2022, a first-ever recognition by Forbes magazine. Ranked 52nd overall, Busey was the top-ranked bank headquartered in Illinois; only three other Illinois-based banks were included on the list. Additionally, for the first time in 2022, Busey was named a Leading Disability Employer by the National Organization on Disability--this highly selective award is presented only to top performing companies demonstrating positive outcomes in recruiting, hiring, retaining and advancing people with disabilities in their workforce. We are honored to be consistently recognized nationally and locally for our engaged culture of integrity and commitment to community development.

    For more information about us, visit busey.com.

    Category: Financial
    Source: First Busey Corporation

    Contacts:

    Jeffrey D. Jones, Chief Financial Officer
    217-365-4130

    Ted Rosinus, EVP Investor Relations & Corporate Development
    847-832-0392

    Non-GAAP Financial Information

    This earnings release contains certain financial information determined by methods other than GAAP. Management uses these non- GAAP measures, together with the related GAAP measures, in analysis of the Company’s performance and in making business decisions, as well as for comparison to the Company’s peers. The Company believes the adjusted measures are useful for investors and management to understand the effects of certain non-recurring noninterest items and provide additional perspective on the Company’s performance over time.

    A reconciliation to what management believes to be the most directly comparable GAAP financial measures—specifically, net interest income, total noninterest income, net security gains and losses, and total noninterest expense in the case of pre-provision net revenue, adjusted pre-provision net revenue, pre-provision net revenue to average assets, and adjusted pre-provision net revenue to average assets; net income in the case of adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, return on average tangible common equity, and adjusted return on average tangible common equity; net interest income in the case of adjusted net interest income and adjusted net interest margin; net interest income, total noninterest income, and total noninterest expense in the case of adjusted noninterest expense, adjusted core expense, efficiency ratio, adjusted efficiency ratio, and adjusted core efficiency ratio; total stockholders’ equity in the case of tangible book value per common share; total assets and total stockholders’ equity in the case of tangible common equity and tangible common equity to tangible assets; portfolio loans in the case of core loans and core loans to portfolio loans; total deposits in the case of core deposits and core deposits to total deposits; and portfolio loans and total deposits in the case of core loans to core deposits—appears below.

    These non-GAAP disclosures have inherent limitations and are not audited. They should not be considered in isolation or as a substitute for operating results reported in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Tax effected numbers included in these non-GAAP disclosures are based on estimated statutory rates or effective rates as appropriate.


    Reconciliation Of Non-GAAP Financial Measures (unaudited)

    Pre-Provision Net Revenue, Adjusted Pre-Provision Net Revenue,
    Pre-Provision Net Revenue to Average Assets, and Adjusted Pre-Provision Net Revenue to Average Assets

    (dollars in thousands)

      Three Months Ended
    		Nine Months Ended
       September 30, June 30,September 30,September 30,September 30,
      2022  2022  2021  2022  2021 
    PRE-PROVISION NET REVENUE        
    Net interest income $86,305 $75,928 $70,755 $232,289 $200,190 
    Total noninterest income  30,933  31,019  33,259  97,724  97,715 
    Net security (gains) losses  (4) 1,714  (57) 2,324  (2,596)
    Total noninterest expense  (70,736) (69,092) (73,487) (210,204) (190,611)
    Pre-provision net revenue  46,498  39,569  30,470  122,133  104,698 
    Non-GAAP adjustments:     
    Acquisition and other restructuring expenses  957  303  8,677  2,095  11,710 
    Provision for unfunded commitments  (320) (267) (978) 525  (1,068)
    Amortization of New Markets Tax Credits  1,665  1,662  1,240  4,668  4,308 
    Adjusted pre-provision net revenue $48,800 $41,267 $39,409 $129,421 $119,648 
             
    Pre-provision net revenue, annualized[a]$184,476 $158,711 $120,886 $163,291 $139,981 
    Adjusted pre-provision net revenue, annualized[b] 193,609  165,521  156,351  173,035  159,969 
    Average total assets [c] 12,531,856  12,452,070  12,697,795  12,547,816  11,571,270 
          
    Reported: Pre-provision net revenue to average assets1[a÷c] 1.47% 1.27% 0.95% 1.30% 1.21%
    Adjusted: Pre-provision net revenue to average assets1[b÷c] 1.54% 1.33% 1.23% 1.38% 1.38%

    ________________
    1.     Annualized measure.


    Reconciliation Of Non-GAAP Financial Measures (unaudited)

    Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Return on Average Assets,
    Return on Average Tangible Common Equity, and Adjusted Return on Average Tangible Common Equity

    (dollars in thousands, except per share amounts)

       Three Months Ended  Nine Months Ended 
       September 30,  June 30,  September 30,  September 30,  September 30, 
       2022  2022  2021  2022  2021 
    NET INCOME ADJUSTED FOR NON-OPERATING ITEMS                
                     
    Net income[a]$35,661 $29,824 $25,941 $93,924 $93,523 
    Non-GAAP adjustments: 
    Acquisition expenses:
    Salaries, wages, and employee benefits—  —  4,462  587  5,587 
    Data processing—  —  3,182  214  3,557 
    Professional fees, occupancy, and other4  204  776  242  2,309 
    Other restructuring expenses:
    Salaries, wages, and employee benefits—  —  257  —  257 
    Loss on leases or fixed asset impairment877  99  —  976  — 
    Professional fees, occupancy, and other76  —  —  76  — 
    Related tax benefit(183) (46) (1,773) (399) (2,402)
    Adjusted net income[b]$36,435 $30,081 $32,845 $95,620 $102,831 


    DILUTED EARNINGS PER SHARE    		      
    Diluted average common shares outstanding[c] 56,073,164  56,104,017  56,832,518  56,123,756  55,872,835 
           
    Reported: Diluted earnings per share[a÷c]$0.64 $0.53 $0.46 $1.67 $1.67 
    Adjusted: Diluted earnings per share[b÷c]$0.65 $0.54 $0.58 $1.70 $1.84 


    RETURN ON AVERAGE ASSETS    		      
    Net income, annualized[d]$141,481 $119,624 $102,918 $125,576 $125,040 
    Adjusted net income, annualized[e] 144,552  120,655  130,309  127,844  137,485 
    Average total assets[f] 12,531,856  12,452,070  12,697,795  12,547,816  11,571,270 
           
    Reported: Return on average assets1[d÷f] 1.13% 0.96% 0.81% 1.00% 1.08%
    Adjusted: Return on average assets1[e÷f] 1.15% 0.97% 1.03% 1.02% 1.19%
    RETURN ON AVERAGE TANGIBLE COMMON EQUITY      
    Average common equity $1,181,448 $1,197,052 $1,351,416 $1,219,645 $1,323,571 
    Average goodwill and other intangible assets, net  (368,981) (371,890) (380,885) (371,873) (370,829)
    Average tangible common equity[g]$812,467 $825,162 $970,531 $847,772 $952,742 


    Reported: Return on average tangible common equity1[d÷g] 17.41% 14.50% 10.60% 14.81% 13.12%
    Adjusted: Return on average tangible common equity1[e÷g] 17.79% 14.62% 13.43% 15.08% 14.43%

    ________________
    1.     Annualized measure.


    Reconciliation Of Non-GAAP Financial Measures (unaudited)

    Adjusted Net Interest Income and Adjusted Net Interest Margin

    (dollars in thousands)

     Three Months EndedNine Months Ended
     September 30,
    2022    		June 30,
    2022    		September 30,
    2021    		September 30,
    2022    		September 30,
    2021
    Net interest income$86,305 $75,928 $70,755 $232,289 $200,190 
    Non-GAAP adjustments:     
    Tax-equivalent adjustment 543  546  598  1,635  1,778 
    Tax-equivalent net interest income 86,848  76,474  71,353  233,924  201,968 
    Purchase accounting accretion related to business combinations (830) (599) (1,799) (2,588) (5,682)
    Adjusted net interest income$86,018 $75,875 $69,554 $231,336 $196,286 
        
    Tax-equivalent net interest income, annualized[a]$344,560 $306,736 $283,085 $312,756 $270,030 
    Adjusted net interest income, annualized[b] 341,267  304,334  275,948  309,295  262,434 
    Average interest-earning assets[c] 11,497,783  11,453,198  11,730,637  11,550,887  10,651,386 
           
    Reported: Net interest margin1[a÷c] 3.00% 2.68% 2.41% 2.71% 2.54%
    Adjusted: Net interest margin1[b÷c] 2.97% 2.66% 2.35% 2.68% 2.46%

    ________________
    1.       Annualized measure.


    Reconciliation Of Non-GAAP Financial Measures (unaudited)

    Adjusted Noninterest Expense, Adjusted Core Expense,
    Efficiency Ratio, Adjusted Efficiency Ratio, and Adjusted Core Efficiency Ratio

    (dollars in thousands)

     Three Months EndedNine Months Ended
     September 30,
    2022    		June 30,
    2022    		September 30,
    2021    		September 30,
    2022    		September 30,
    2021
    Net interest income $86,305 $75,928 $70,755 $232,289 $200,190 
    Non-GAAP adjustments:      
    Tax-equivalent adjustment  543  546  598  1,635  1,778 
    Tax-equivalent net interest income  86,848  76,474  71,353  233,924  201,968 
           
    Total noninterest income  30,933  31,019  33,259  97,724  97,715 
    Non-GAAP adjustments:      
    Net security (gains) losses  (4) 1,714  (57) 2,324  (2,596)
    Noninterest income excluding net securities gains and losses  30,929  32,733  33,202  100,048  95,119 
           
    Tax-equivalent net interest income plus noninterest income excluding net securities gains and losses[a]$117,777 $109,207 $104,555 $333,972 $297,087 
           
    Total noninterest expense $70,736 $69,092 $73,487 $210,204 $190,611 
    Non-GAAP adjustments:      
    Amortization of intangible assets[b] (2,871) (2,951) (3,149) (8,833) (8,200)
    Non-interest expense excluding amortization of intangible assets[c] 67,865  66,141  70,338  201,371  182,411 
    Non-operating adjustments:      
    Salaries, wages, and employee benefits  —  —  (4,719) (587) (5,844)
    Data processing  —  —  (3,182) (214) (3,557)
    Impairment, professional fees, occupancy, and other  (957) (303) (776) (1,294) (2,309)
    Adjusted noninterest expense[f] 66,908  65,838  61,661  199,276  170,701 
    Provision for unfunded commitments  320  267  978  (525) 1,068 
    Amortization of New Markets Tax Credits  (1,665) (1,662) (1,240) (4,668) (4,308)
    Adjusted core expense[g]$65,563 $64,443 $61,399 $194,083 $167,461 
           
    Noninterest expense, excluding non-operating adjustments[f-b]$69,779 $68,789 $64,810 $208,109 $178,901 
           
    Reported: Efficiency ratio[c÷a] 57.62% 60.56% 67.27% 60.30% 61.40%
    Adjusted: Efficiency ratio[f÷a] 56.81% 60.29% 58.97% 59.67% 57.46%
    Adjusted: Core efficiency ratio[g÷a] 55.67% 59.01% 58.72% 58.11% 56.37%


    Reconciliation Of Non-GAAP Financial Measures (unaudited)

    Tangible Book Value Per Common Share

    (dollars in thousands, except per share amounts)

     As of 
     September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021
    Total stockholders' equity$1,106,588 $1,161,957 $1,218,025 $1,319,112 $1,333,076 
    Goodwill and other intangible assets, net (367,091) (369,962) (372,913) (375,924) (378,891)
    Tangible book value[a]$739,497 $791,995 $845,112 $943,188 $954,185 


    Ending number of common shares outstanding[b] 55,232,434  55,335,703  55,278,785  55,434,910  55,826,984 
                 
    Tangible book value per common share[a÷b]$13.39 $14.31 $15.29 $17.01 $17.09 


    Tangible Common Equity and Tangible Common Equity to Tangible Assets

    (dollars in thousands)

       As of 
    September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021
    Total assets $12,497,388 $12,356,433 $12,567,509 $12,859,689 $12,899,330 
    Non-GAAP adjustments:      
    Goodwill and other intangible assets, net  (367,091) (369,962) (372,913) (375,924) (378,891)
    Tax effect of other intangible assets1  9,369  9,905  10,456  16,254  17,115 
    Tangible assets[a]$12,139,666 $11,996,376 $12,205,052 $12,500,019 $12,537,554 
           
    Total stockholders' equity $1,106,588 $1,161,957 $1,218,025 $1,319,112 $1,333,076 
    Non-GAAP adjustments:      
    Goodwill and other intangible assets, net  (367,091) (369,962) (372,913) (375,924) (378,891)
    Tax effect of other intangible assets1  9,369  9,905  10,456  16,254  17,115 
    Tangible common equity[b]$748,866 $801,900 $855,568 $959,442 $971,300 
           
    Tangible common equity to tangible assets2[b÷a] 6.17% 6.68% 7.01% 7.68% 7.75%

    ________________
    1.     Net of estimated deferred tax liability.
    2. Tax-effected measure.


    Reconciliation Of Non-GAAP Financial Measures (unaudited)

    Core Loans, Core Loans to Portfolio Loans,
    Core Deposits, Core Deposits to Total Deposits, and Core Loans to Core Deposits

    (dollars in thousands)

       As of 
    September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021
    Portfolio loans[a]$7,670,114 $7,497,778 $7,272,873 $7,188,998 $7,150,635 
    Non-GAAP adjustments:      
    PPP loans amortized cost  (1,426) (7,616) (31,769) (74,958) (178,231)
    Core loans[b]$7,668,688  $        7,490,162  $        7,241,104  $        7,114,040   $        6,972,404 
       
    Total deposits[c]$10,601,397 $10,397,228 $10,591,836 $10,768,577 $10,817,867 
    Non-GAAP adjustments:      
    Brokered transaction accounts  (2,006) (2,002) (2,002) (2,248) (2,002)
    Time deposits of $250,000 or more  (103,534) (117,957) (139,245) (137,449) (156,419)
    Core deposits[d]$10,495,857  $ 10,277,269  $ 10,450,589  $ 10,628,880 $10,659,446 
         
    RATIOS      
    Core loans to portfolio loans[b÷a] 99.98% 99.90% 99.56% 98.96% 97.51%
    Core deposits to total deposits[d÷c] 99.00% 98.85% 98.67% 98.70% 98.54%
    Core loans to core deposits[b÷d] 73.06% 72.88% 69.29% 66.93% 65.41%


    Special     Note Concerning Forward-Looking Statements

    Statements made in this document, other than those concerning historical financial information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance, and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations, and assumptions of the Company’s management, and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should,” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond the Company’s ability to control or predict, could cause actual results to differ materially from those in the Company’s forward-looking statements. These factors include, among others, the following: (i) the strength of the local, state, national, and international economy (including effects of inflationary pressures and supply chain constraints); (ii) the economic impact of any future terrorist threats or attacks, widespread disease or pandemics (including the Coronavirus Disease 2019 pandemic), or other adverse external events that could cause economic deterioration or instability in credit markets (including Russia’s invasion of Ukraine); (iii) changes in state and federal laws, regulations, and governmental policies concerning the Company’s general business; (iv) changes in accounting policies and practices; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of The London Inter-bank Offered Rate phase-out); (vi) increased competition in the financial services sector and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) the loss of key executives or associates; (ix) changes in consumer spending; (x) unexpected results of current and/or future acquisitions, which may include failure to realize the anticipated benefits of any acquisition and the possibility that transaction costs may be greater than anticipated; (xi) unexpected outcomes of existing or new litigation involving the Company; and (xii) the economic impact of exceptional weather occurrences such as tornadoes, hurricanes, floods, and blizzards. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including additional factors that could materially affect its financial results, is included in the Company’s filings with the Securities and Exchange Commission.

    ________________
    1 See "Non-GAAP Financial Information" for a reconciliation.
    2 Revenue from the Company’s subsidiary, FirsTech, Inc. (FirsTech), excluding intracompany eliminations.
    3 Commercial balances include commercial, commercial real estate, and real estate construction loans.
    4 Capital ratios for the third quarter of 2022 are not yet finalized, and are subject to change.


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