First Busey Corporation — 2021 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2021. This is an annual report; standalone fourth-quarter results are not clearly provided in the supplied filing text. First Busey is a financial holding company with banking operations in Illinois, Missouri, Florida and Indiana, plus payment technology and wealth management businesses.
Business context and notable developments
- Reported year-end assets of $12.86 billion, up 22.0% from 2020.
- Acquired Cummins-American Corp., parent of Glenview State Bank, on May 31, 2021. The acquired bank’s results were included from June 1 and it merged into Busey Bank on August 14. Consideration was approximately $129.5 million; goodwill recorded was $6.3 million.
- Consolidated 17 banking centers in November 2021, leaving 58 centers. Management expects further GSB integration and branch-optimization synergies.
Key financial metrics
| Metric | 2021 | 2020 | Change / context |
|---|---|---|---|
| Total revenue (net interest income plus noninterest income) | $403.5 million | $401.2 million | Up about 0.6% |
| Net interest income | $270.7 million | $282.9 million | Down 4.3% |
| Net interest margin | 2.49% | 3.03% | Down 54 basis points |
| Noninterest income | $132.8 million | $118.3 million | Up 12.3% |
| Noninterest expense | $261.8 million | $234.2 million | Up 11.8% |
| Net income | $123.4 million | $100.3 million | Up 23.0% |
| Diluted earnings per share | $2.20 | $1.83 | Up 20.2% |
| Adjusted net income (non-GAAP) | $137.1 million | $108.7 million | Adjusted diluted EPS: $2.45 vs. $1.98 |
| Operating cash flow | $162.0 million | $163.2 million | Nearly unchanged |
Profit improvement included a $15.1 million provision release in 2021, versus $38.8 million of provision expense in 2020. Management attributed the release to improved economic forecasts and asset quality, partly offset by loan growth. Pre-provision net revenue was $138.7 million, down from $165.7 million; adjusted pre-provision net revenue was $160.8 million, versus $180.5 million.
Balance sheet, funding, capital and credit
- Loans, net of allowance, were $7.10 billion, up 5.8%; deposits were $10.77 billion, up 24.1%. Noninterest-bearing deposits rose 43.8% to $3.67 billion. The loan-to-deposit ratio was 66.8%; core deposits were 98.7% of deposits under the company’s stated definition.
- Cash and cash equivalents were $836.1 million. Cash and unencumbered securities totaled $4.1 billion, with $2.20 billion of additional borrowing capacity. Management said liquidity was adequate for projected obligations.
- Debt included $39.9 million of senior notes, $182.8 million of subordinated notes, $71.6 million of junior subordinated debt, and $46.1 million of long-term debt. A $60 million term loan used partly for the acquisition had $54 million outstanding at year-end; the $40 million revolver had no balance outstanding. The $39.9 million senior notes mature in May 2022.
- Company and bank regulatory capital ratios exceeded well-capitalized thresholds. Company ratios included 11.85% common equity Tier 1, 12.73% Tier 1 and 15.70% total capital to risk-weighted assets; the bank’s respective ratios were 14.81%, 14.81% and 15.59%.
- Allowance for credit losses was $87.9 million, or 1.22% of loans (1.24% excluding PPP loans), down from $101.0 million. Nonperforming assets were $21.3 million versus $28.9 million; nonperforming loans were 0.23% of loans versus 0.36%. Remaining COVID-related interest-only deferrals covered 32 commercial loans totaling $128.7 million.
- Available-for-sale debt securities had a fair value of $3.98 billion and net unrealized losses of $32.3 million at year-end, recorded in equity. The filing attributes losses to market rates and conditions, not credit impairment.
Material changes, outlook and risks
- Margin pressure remained material: management cited low rates, faster repricing of assets than liabilities, loan paydowns, lower-yielding PPP loans and elevated liquidity. Funding-cost reductions and PPP fees partly offset these effects.
- Fee income partly diversified revenue. Wealth management fees increased 23.7% to $53.1 million, and payment technology revenue rose 17.4% to $18.3 million. Mortgage revenue declined 44.5% to $7.2 million. Assets under care reached $12.7 billion.
- Expense growth reflected the acquisition, restructuring, staffing and technology costs. Acquisition and restructuring expenses totaled $17.4 million. The reported efficiency ratio increased to 62.2% from 55.7%; adjusted efficiency ratio rose to 57.9% from 53.0%.
- No numerical earnings or margin guidance is provided in the supplied filing text. Management expects GSB integration benefits and branch-consolidation savings in future periods, while continuing investment in FirsTech’s payments and Banking-as-a-Service platform.
- Key risks include pandemic-related credit deterioration; inflation and rising interest rates, including possible securities-value and funding-cost effects; concentrated commercial and real-estate lending; competition and technology disruption; acquisition integration; cybersecurity and third-party operational exposures; staffing costs; regulatory changes; and the transition from LIBOR to alternative benchmarks. The company crossed the $10 billion asset threshold; temporary regulatory relief expired at year-end 2021, and management expected added requirements, including potential Durbin Amendment interchange-fee effects.
- Credit commitments and standby letters of credit totaled $2.02 billion. Management reported no material pending litigation and no significant subsequent events through issuance. The independent auditor gave unqualified opinions on the financial statements and internal control; management also concluded controls were effective, with the acquired bank excluded from the specified interim-period assessment.
Important facts for investors to verify
- How quickly GSB integration and branch closures deliver savings, and whether those savings offset wage, technology and regulatory costs.
- Whether net interest margin stabilizes as rates change, and how deposit pricing and the investment portfolio respond.
- Loan growth and credit performance, particularly commercial real estate, remaining deferrals, potential problem loans and allowance assumptions.
- The effect of the $32.3 million securities unrealized loss and interest-rate changes on equity and future earnings.
- Upcoming debt maturities and refinancing plans, including the May 2022 senior notes and LIBOR-linked borrowings or instruments.
- Capital return plans: 2021 dividends were $0.92 per share; the company repurchased 1.323 million shares during the year. Future dividends remain subject to earnings, capital and regulatory limits.
Adjusted results and other non-GAAP measures are management-defined and should be considered alongside, not instead of, GAAP results.