LEAWOOD, Kan., April 22, 2025 (GLOBE NEWSWIRE) -- First Busey Corporation (Nasdaq: BUSE) reports first quarter results.
Busey completed the transformative acquisition of CrossFirst Bankshares, Inc. on March 1, 2025, significantly impacting first quarter results and resetting the baseline for financial performance for future quarters in a multitude of positive ways.
| Net Income (Loss) | Diluted EPS | Net Interest Margin1 | ROAA1 | ROATCE1 |
| $(30.0) million | $(0.44) | 3.16% | (0.82)% | (7.99)% |
| $39.9 million (adj)2 | $0.57 (adj)2 | 3.08% (adj)2 | 1.09% (adj)2 | 10.64% (adj)2 |
| MESSAGE FROM OUR CHAIRMAN & CEO
The transformative partnership between Busey and CrossFirst takes our organization to new heights, combining our growing commercial bank with the power of Busey's core deposit franchise, wealth management platform, and payment technology solutions at FirsTech, Inc. As we build upon Busey's forward momentum, we are grateful for the opportunities to consistently earn the business of our customers, based on the contributions of our talented associates and the continued support of our loyal shareholders. |
| Van A. Dukeman
Chairman and Chief Executive Officer |
PARTNERSHIP WITH CROSSFIRST
Effective March 1, 2025, First Busey Corporation ("Busey,” "Company,” "we,” "us,” or "our”), the holding company for Busey Bank, completed its previously announced acquisition (the "Merger”) of CrossFirst Bankshares, Inc. ("CrossFirst”) (NASDAQ: CFB), the holding company for CrossFirst Bank, pursuant to an Agreement and Plan of Merger, dated August 26, 2024, by and between Busey and CrossFirst (the "Merger Agreement”). This partnership creates a premier commercial bank in the Midwest, Southwest, and Florida, with 78 full-service locations across 10 states-Arizona, Colorado, Florida, Illinois, Indiana, Kansas, Missouri, New Mexico, Oklahoma, and Texas. The combined holding company will continue to operate under the First Busey Corporation name. Busey common stock will continue to trade on the Nasdaq under the "BUSE” stock ticker symbol.
Upon completion of the acquisition, each share of CrossFirst common stock converted to the right to receive 0.6675 of a share of Busey's common stock, with the result that holders of Busey's common stock owned approximately 63.5% of the combined company and holders of CrossFirst's common stock owned approximately 36.5% of the combined company, on a fully-diluted basis. Further, upon completion of the acquisition, each share of CrossFirst preferred stock converted to the right to receive one share of Busey preferred stock.
CrossFirst Bank's results of operations were included in Busey's consolidated results of operations beginning March 1, 2025. Busey will operate CrossFirst Bank as a separate banking subsidiary until it is merged with and into Busey Bank, which is expected to occur on June 20, 2025. At the time of the bank merger, CrossFirst Bank locations will become banking centers of Busey Bank.
The acquisition was accretive to tangible book value, exceeding initial projections of a six-month earn back period.
Further details are included with Busey's Current Report on Form 8‑K announcing completion of the acquisition, which was filed with the U.S. Securities and Exchange Commission (the "SEC”) on March 3, 2025.
FINANCIAL RESULTS
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| (dollars in thousands, except per share amounts) | March 31,
2025 | December 31, 2024 | March 31, 2024 | |||||||||
| Net interest income | $ | 103,731 | $ | 81,578 | $ | 75,854 | ||||||
| Provision for credit losses | 42,452 | 1,273 | 5,038 | |||||||||
| Total noninterest income | 21,223 | 35,221 | 34,913 | |||||||||
| Total noninterest expense | 115,171 | 78,167 | 70,769 | |||||||||
| Income (loss) before income taxes | (32,669 | ) | 37,359 | 34,960 | ||||||||
| Income taxes | (2,679 | ) | 9,254 | 8,735 | ||||||||
| Net income (loss) | $ | (29,990 | ) | $ | 28,105 | $ | 26,225 | |||||
| Basic earnings (loss) per common share | $ | (0.44 | ) | $ | 0.49 | $ | 0.47 | |||||
| Diluted earnings (loss) per common share | $ | (0.44 | ) | $ | 0.49 | $ | 0.46 | |||||
| Effective income tax rate | 8.20 | % | 24.77 | % | 24.99 | % | ||||||
Busey views certain non-operating items, including acquisition-related expenses, restructuring charges, and one-time strategic events, as adjustments to net income reported under U.S. generally accepted accounting principles ("GAAP"). We also adjust for net securities gains and losses to align with industry and research analyst reporting. The objective of our presentation of adjusted earnings and adjusted earnings metrics is to allow investors and analysts to more clearly identify quarterly trends in core earnings performance. Non-operating pre-tax adjustments for acquisition and restructuring expenses2 in the first quarter of 2025 were $26.0 million. Further, $3.1 million other noninterest expense was recorded to establish an initial allowance for Unfunded Commitments2 and $42.4 million provision expense was recorded to establish an initial Allowance for Credit Losses for loans purchased without credit deterioration ("non-PCD” loans) immediately following the close of the acquisition in accordance with Accounting Standards Codification 326-20-30-15. Additionally, net securities losses were $15.8 million, primarily related to the execution of a strategic balance sheet repositioning. Lastly, $4.6 million in one-time deferred tax valuation expense2 was recorded in connection with the CrossFirst acquisition, which is expected to lower our effective blended state tax rate in future periods but created a negative adjustment to the carrying value of our deferred tax asset in the current period. For more information and a reconciliation of these non-GAAP measures (which are identified with the endnote labeled as 2) in tabular form, see "Non-GAAP Financial Information."
Adjusted net income2, which excludes the impact of non-GAAP adjustments, was $39.9 million, or $0.57 per diluted common share, for the first quarter of 2025, compared to $30.9 million, or $0.53 per diluted common share, for the fourth quarter of 2024 and $25.7 million or $0.46 per diluted common share for the first quarter of 2024. Annualized adjusted return on average assets2 and annualized adjusted return on average tangible common equity2 were 1.09% and 10.64%, respectively, for the first quarter of 2025.
Pre-Provision Net Revenue2
Pre-provision net revenue2 was $25.6 million for the first quarter of 2025, compared to $38.8 million for the fourth quarter of 2024 and $46.4 million for the first quarter of 2024. Pre-provision net revenue to average assets2 was 0.70% for the first quarter of 2025, compared to 1.28% for the fourth quarter of 2024, and 1.55% for the first quarter of 2024.
Adjusted pre-provision net revenue2 was $54.7 million for the first quarter of 2025, compared to $42.0 million for the fourth quarter of 2024 and $38.6 million for the first quarter of 2024. Adjusted pre-provision net revenue to average assets2 was 1.50% for the first quarter of 2025, compared to 1.38% for the fourth quarter of 2024 and 1.29% for the first quarter of 2024.
Net Interest Income and Net Interest Margin2
Net interest income was $103.7 million in the first quarter of 2025, compared to $81.6 million in the fourth quarter of 2024 and $75.9 million in the first quarter of 2024.
Net interest margin2 was 3.16% for the first quarter of 2025, compared to 2.95% for the fourth quarter of 2024 and 2.79% for the first quarter of 2024. Excluding purchase accounting accretion, adjusted net interest margin2 was 3.08% for the first quarter of 2025, compared to 2.92% in the fourth quarter of 2024 and 2.78% in the first quarter of 2024.
Components of the 21 basis point increase in net interest margin2 during the first quarter of 2025, which includes approximately +12 basis points contributed by CrossFirst Bank, are as follows:
- Increased loan portfolio and held for sale loan yields contributed +36 basis points
- Increased purchase accounting accretion contributed +5 basis points
- Decreased borrowing expense contributed +3 basis points
- Decreased expense on rate swaps contributed +2 basis points
- Increased non-maturity deposit funding costs contributed -17 basis points
- Decreased cash and securities portfolio yield contributed -8 basis points
Noninterest Income
| Three Months Ended | |||||||||||
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | ||||||||
| NONINTEREST INCOME | |||||||||||
| Wealth management fees | $ | 17,364 | $ | 16,786 | $ | 15,549 | |||||
| Fees for customer services | 8,128 | 7,911 | 7,056 | ||||||||
| Payment technology solutions | 5,073 | 5,094 | 5,709 | ||||||||
| Mortgage revenue | 329 | 496 | 746 | ||||||||
| Income on bank owned life insurance | 1,446 | 1,080 | 1,419 | ||||||||
| Realized net gains (losses) on the sale of mortgage servicing rights | - | - | 7,465 | ||||||||
| Net securities gains (losses) | (15,768 | ) | (196 | ) | (6,375 | ) | |||||
| Other noninterest income | 4,651 | 4,050 | 3,344 | ||||||||
| Total noninterest income | $ | 21,223 | $ | 35,221 | $ | 34,913 | |||||
Excluding the impact of net securities gains and losses and the gains on the sale of mortgage servicing rights, adjusted noninterest income2 increased by 4.4% to $37.0 million, or 26.3% of operating revenue2, during the first quarter of 2025, compared to $35.4 million, or 30.3% of operating revenue2, for the fourth quarter of 2024. Compared to the first quarter of 2024, adjusted noninterest income2 increased by 9.4% from $33.8 million, or 30.8% of operating revenue2.
Our fee-based businesses continue to add revenue diversification. Wealth management fees, wealth management referral fees included in other noninterest income, and payment technology solutions contributed 61.1% of adjusted noninterest income2 for the first quarter of 2025.
Noteworthy components of noninterest income are as follows:
- Wealth management fees increased by 3.4% compared to the fourth quarter of 2024. Compared to the first quarter of 2024 wealth management fees increased by 11.7%. Busey's Wealth Management division ended the first quarter of 2025 with $13.68 billion in assets under care, compared to $13.83 billion at the end of the fourth quarter of 2024 and $12.76 billion at the end of the first quarter of 2024. Our portfolio management team continues to focus on long-term returns and managing risk in the face of volatile markets and has outperformed its blended benchmark3 over the last three and five years. The Wealth Management segment reported another quarter of record high revenue for the first quarter of 2025.
- Payment technology solutions revenue decreased slightly compared the fourth quarter of 2024. Compared to the first quarter of 2024, payment technology solutions revenue decreased by 11.1% primarily due to decreases in income from electronic, online, and interactive voice response payments, partially offset by increases in lockbox and merchant services income.
- Fees for customer services increased by 2.7% compared to the fourth quarter of 2024 primarily due to increases in income from analysis charges and interchange fees, offset by lower non-sufficient funds charges. Compared to the first quarter of 2024, fees for customer services increased by 15.2% primarily due to increases in analysis charges, automated teller machine fees, and interchange fees, offset by lower non-sufficient funds charges. Increases in fees for customer services are primarily attributable to the inclusion of one month of CrossFirst's income in our first quarter results.
- Other noninterest income increased by 14.8% compared to the fourth quarter of 2024 and by 39.1% compared to the first quarter of 2024. The increase for both periods was driven by increases in swap origination fee income, commercial loan sales gains, letter of credit fee income, and other real estate owned income, offset by decreases in venture capital income.
| Three Months Ended | ||||||||
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | |||||
| NONINTEREST EXPENSE | ||||||||
| Salaries, wages, and employee benefits | $ | 67,563 | $ | 45,458 | $ | 42,090 | ||
| Data processing expense | 9,575 | 6,564 | 6,550 | |||||
| Net occupancy expense of premises | 5,799 | 4,794 | 4,720 | |||||
| Furniture and equipment expense | 1,744 | 1,650 | 1,813 | |||||
| Professional fees | 9,511 | 4,938 | 2,253 | |||||
| Amortization of intangible assets | 3,083 | 2,471 | 2,409 | |||||
| Interchange expense | 1,343 | 1,305 | 1,611 | |||||
| FDIC insurance | 2,167 | 1,330 | 1,400 | |||||
| Other noninterest expense | 14,386 | 9,657 | 7,923 | |||||
| Total noninterest expense | $ | 115,171 | $ | 78,167 | $ | 70,769 | ||
Adjusted noninterest expense2, which excludes acquisition and restructuring expenses, amortization of intangible assets, and the provision for unfunded commitments, was $82.9 million in the first quarter of 2025, compared to $72.6 million in the fourth quarter of 2024 and $68.6 million in the first quarter of 2024. As our business grows, Busey remains focused on prudently managing our expense base and operating efficiency.
Noteworthy components of noninterest expense are as follows:
- Salaries, wages, and employee benefits expenses increased by $22.1 million compared to the fourth quarter of 2024, and by $25.5 million compared to the first quarter of 2024, of which $15.6 million and $15.8 million, respectively, was attributable to increases in non-operating expenses, with additional severance, retention, and stock-based compensation. Busey has added 501 full time equivalent associates ("FTEs”) over the past year, mostly as a result of acquisitions, including 437 CrossFirst Bank FTEs added in March 2025 and 46 Merchants & Manufacturers Bank FTEs added in April 2024.
- Data processing expense increased by $3.0 million compared to both the fourth quarter of 2024 and the first quarter of 2024, of which $2.3 million and $2.2 million, respectively, was attributable to increases in non-operating expenses. Busey has continued to make investments in technology enhancements and has also experienced inflation-driven price increases.
- Professional fees increased by $4.6 million compared to the fourth quarter of 2024, of which $4.3 million was attributable to increases in non-operating expenses. Compared to the first quarter of 2024, professional fees increased by $7.3 million, of which $7.2 million was attributable to increases in non-operating expenses.
- Amortization of intangible assets increased by $0.6 million compared to the fourth quarter of 2024, and by $0.7 million compared to the first quarter of 2024. The CrossFirst acquisition added an estimated $81.8 million of finite-lived intangible assets, which will be amortized using an accelerated amortization methodology.
- Other noninterest expense increased by $4.7 million compared to the fourth quarter of 2024, and increased by $6.5 million compared to the first quarter of 2024, of which $0.3 million and $0.5 million, respectively, resulted from increases in non-operating expenses related to acquisition and restructuring expenses. Further, $3.1 million of non-operating expenses was recorded for the Day 2 provision for unfunded commitments. Multiple expense items contributed to the remaining fluctuations in this expense category, including marketing, business development, regulatory expenses, mortgage servicing rights valuation expenses, and other real estate owned.
Busey's annualized ratio of adjusted noninterest ex