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| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Nevada | 37-1078406 | |||||
(State or other jurisdiction of incorporation of organization) |
| (I.R.S. Employer Identification No.) |
Ave.
Title of each class | Trading Symbol | Name of each exchange | ||||||||||||
Common Stock ($0.001 par value) | BUSE | The Nasdaq Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Act: None
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Non-accelerated filer | Smaller reporting company ☐ | ||||
Emerging growth company ☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Term | Definition | ||||||||||
2020 Equity Plan |
| First Busey's 2020 Equity Incentive Plan | |||||||||
| Allowance for credit losses | ||||||||||
Annual Report |
| Annual report filed with the SEC on Form 10-K pursuant to Section 13 or 15(d) of the Exchange Act | |||||||||
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| Accumulated other comprehensive income (loss) | |||||||||
API |
| Application programming interface | |||||||||
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| Alternative Reference Rates Committee | |||||||||
ASC | Accounting Standards Codification | ||||||||||
ASU |
| Accounting Standards Update | |||||||||
BaaS |
| Banking as a Service | |||||||||
Basel III |
| 2010 capital accord adopted by the international Basel Committee on Banking Supervision | |||||||||
Basel III Rule |
| Regulations promulgated by U.S. federal banking agencies – the OCC, the Federal Reserve, and the FDIC – to both enforce implementation of certain aspects of the Basel III capital reforms and effect certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act | |||||||||
BHCA |
| Bank Holding Company Act of 1956, as amended | |||||||||
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CAC | Cummins-American Corp. | ||||||||||
CARES Act |
| Coronavirus Aid, Relief, and Economic Security Act | |||||||||
CECL |
| ASU 2016-13, codified as ASC Topic 326 “Financial Instruments-Credit Losses,” which established the Current Expected Credit Losses methodology for measuring credit losses on financial instruments | |||||||||
CFPB |
| Consumer Financial Protection Bureau | |||||||||
COSO |
| Committee of Sponsoring Organizations of the Treadway Commission | |||||||||
COVID-19 |
| Coronavirus disease 2019 | |||||||||
CRA |
| Community Reinvestment Act | |||||||||
CRE |
| Commercial real estate | |||||||||
CRE Guidance |
| Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices guidance issued jointly by the OCC, the Federal Reserve, and the FDIC | |||||||||
Current Report |
| Current report filed with the SEC on Form 8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||||||
DFPR |
| Illinois Department of Financial and Professional Regulation | |||||||||
DIF |
| Deposit Insurance Fund of the FDIC | |||||||||
Dodd-Frank Act |
| Dodd-Frank Wall Street Reform and Consumer Protection Act | |||||||||
DSU |
| Deferred stock unit | |||||||||
Durbin |
| The Durbin Amendment to the Dodd-Frank Act, requiring the Federal Reserve to establish a maximum permissible interchange fee for many types of debit transactions | |||||||||
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| Employee Stock Purchase Plan | |||||||||
Exchange Act |
| Securities Exchange Act of 1934, as amended | |||||||||
Fair value |
| The price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date, as defined in ASC Topic 820“Fair Value Measurement” | |||||||||
FASB |
| Financial Accounting Standards Board | |||||||||
FDIC |
| Federal Deposit Insurance Corporation |
Term | Definition | |||||||
Federal Reserve |
| Board of Governors of the Federal Reserve System | ||||||
FHLB |
| Federal Home Loan Bank | ||||||
First Busey |
| First Busey Corporation, | ||||||
First Busey Risk Management |
| First Busey Risk Management, Inc. | ||||||
First Community |
| First Community Financial Partners, Inc. |
4
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| FirsTech, Inc. | ||||||
FOMC | Federal Open Market Committee | |||||||
GAAP |
| U.S. Generally Accepted Accounting Principles | ||||||
GSB |
| Glenview State Bank | ||||||
Illinois CRA | Illinois Community Reinvestment Act | |||||||
Interagency Statement |
| Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus, issued on March 22, 2020, and revised on April 7, 2020 | ||||||
LCR |
| Liquidity coverage ratio | ||||||
LIBOR |
| London Interbank Offered Rate | ||||||
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| Lower of Cost or Market, an accounting approach under which assets are carried at amortized historical cost less write-offs and downward fair value adjustments, as may be applicable | ||||||
Nasdaq | National Association of Securities Dealers Automated Quotations | |||||||
NM |
| Not meaningful | ||||||
NMTC |
| New Markets Tax Credit | ||||||
NSFR |
| Net stable funding ratio | ||||||
OCC |
| Office of the Comptroller of the Currency | ||||||
OCI |
| Other comprehensive income (loss) | ||||||
OREO |
| Other real estate owned | ||||||
PCD |
| Purchased credit deteriorated | ||||||
PCI |
| Purchased credit impaired | ||||||
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| Paycheck Protection Program | ||||||
PSU | Performance-based restricted stock unit | |||||||
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| Pulaski Financial Corp. | ||||||
Quarterly Report |
| Quarterly report filed with the SEC on Form 10-Q pursuant to Section 13 or 15(d) of the Exchange Act | ||||||
Regulatory Relief Act |
| Economic Growth, Regulatory Relief, and Consumer Protection Act | ||||||
RSU |
| Restricted stock unit | ||||||
SBA |
| U.S. Small Business Administration | ||||||
SEC |
| U.S. Securities and Exchange Commission | ||||||
Securities Act |
| Securities Act of 1933, as amended | ||||||
SOFR |
| Secured Overnight Financing Rate published by the Federal Reserve | ||||||
TDR |
| Troubled debt restructuring | ||||||
Term loan |
| $60 million term loan provided for in the Second Amended and Restated Credit Agreement, dated May 28, 2021 | ||||||
U.S. |
| United States of America | ||||||
U.S. Treasury |
| U.S. Department of the Treasury | ||||||
USA PATRIOT Act |
| Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 |
Introduction
Acquisitions
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Acquisition Date | Companies Acquired | |||||||
January 8, 2015 |
| Herget Financial Corp. and its wholly-owned bank subsidiary, Herget Bank, National Association | ||||||
April 30, 2016 |
| Pulaski Financial Corp. and its wholly-owned subsidiary, Pulaski Bank, National Association | ||||||
July 2, 2017 |
| First Community Financial Partners, Inc. and its wholly-owned subsidiary, First Community Financial Bank | ||||||
October 1, 2017 |
| Mid Illinois Bancorp, Inc. and its wholly-owned subsidiary, South Side Trust & Savings Bank of Peoria | ||||||
January 31, 2019 |
| The Bank Ed Corp. and its wholly-owned subsidiary, TheBANK of Edwardsville | ||||||
August 31, 2019 |
| Investors' Security Trust Company | ||||||
May 31, 2021 |
| Cummins-American Corp. and its wholly-owned subsidiary, Glenview State Bank |
See “Note 2. Acquisitions” in the Notes to the Consolidated Financial Statements for further information relating to acquisitions.
this acquisition.
Subsidiaries of First Busey
FirsTech, and captive insurance through First Busey Risk Management. First Busey also has various other subsidiaries that are not significant to the consolidated entity.
6
Busey Bank offers a range of diversified financial products and services for consumers and businesses, including online and mobile banking capabilities to conveniently serve our customers’ needs. Commercial services include commercial, commercial real estate, real estate construction, and agricultural loans, as well as commercial depository services such as cash management. Retail banking services include residential real estate, home equity lines of credit and consumer loans, customary types of demand and savings deposits, money transfers, safe deposit services, and IRAindividual retirement accounts and other fiduciary services through our banking center, ATM,automated teller machines, and technology-based networks.
Risk Management
First Busey also has various other subsidiaries that are not significant to the consolidated entity.
First Busey’s operations are managed through three operating segments consisting of Banking, FirsTech, and Wealth Management. See “Note 21. Operating Segments and Related Information” in the Notes to the Consolidated Financial Statements for an analysis of segment operations.
7
Banking Center Markets
Busey Bank hasserves the Illinois banking market with 46 banking centers in Illinois.centers. Our Illinois markets feature several Fortune 1000 companies. Those organizations, coupled with large healthcare and higher education sectors, anchor the communities in which they are located and have provided a comparatively stable foundation for housing, employment, and small business. Historically,Ten of our banking centers in Illinois are located within the financial conditionChicago Metropolitan Statistical Area, and 12 of our banking centers in Illinois are located within the state of Illinois, in which the largest portion of Busey Bank’s customer base resides, has been characterized by low credit ratings and budget deficits. However, with the recent improvement in the state’s financial outlook, during the second half of 2021 Illinois received improved ratings from Moody’s Investor Service, S&P Global Ratings, and Fitch.
St. Louis Metropolitan Statistical Area.
Area, including branches in both Illinois and Missouri.
benefits of a tourism and winter resort economy.
In November 2021, First Busey completed its previously announced service center closures as partTable of our Personal Banking Transformation Plan, which resulted in the consolidation of 17 branches across our various markets.
Contents
Competition
8
Based on information obtained from the FDIC Summary of Deposits dated June 30, 2021,2022, the most recent report available, Busey Bank ranked in the top 10 in total deposits in 12nine Illinois counties:
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Supervision, Regulation and Other Factors
9
The supervisory framework for U.S. banking organizations subjects banks and bank holding companies to regular examination by their respective regulatory agencies, which results in examination reports and ratings that are not publicly available and that can impact the conduct and growth of their businesses. These examinations consider not only compliance with applicable laws and regulations, but also capital levels, asset quality and risk, management ability and performance, earnings, liquidity, and various other factors. The regulatory agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law, or are otherwise inconsistent with laws and regulations.
COVID-19 Pandemic
Federal bank regulatory agencies, along with their state counterparts, issued a steady stream of guidance responding to the COVID-19 pandemic and they took a number of unprecedented steps to help banks navigate the pandemic and mitigate its impact. These included, without limitation: requiring banks to focus on business continuity and pandemic planning; adding pandemic scenarios to stress testing; encouraging bank use of capital buffers and reserves in lending programs; permitting certain regulatory reporting extensions; reducing margin requirements on swaps; permitting certain otherwise prohibited investments in investment funds; issuing guidance to encourage banks to work with customers affected by the pandemic; and providing credit under the CRA for certain pandemic-related loans, investments, and public service. Because of the need for social distancing measures, the agencies revamped the manner in which they conducted periodic examinations of their regulated institutions, including making greater use of off-site reviews, and they have continued virtual examinations in 2022.
Reference is made to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of COVID-19” below for further information on the impact of the COVID-19 pandemic. In addition, information as to selected topics is contained in the relevant sections of this Supervision and Regulation discussion provided below.
The material consequences to the Company of crossing the $10.0 billion threshold are as follows:
10
Interchange Fees
The
oversight.
11
Capital Levels
The Basel III Rule requires minimum capital ratios as follows:
12
•A leverage ratio of Tier 1 Capital to total quarterly average assets equal to 4% in all circumstances.
The ratios described above are minimum standards for banking organizations to be considered “adequately capitalized.” Bank regulatory agencies uniformly encourage banks to hold more capital and be “well-capitalized” and, to that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements. For example, a banking organization that is well-capitalized may: (i) qualify for exemptions from prior notice or application requirements otherwise applicable to certain types of activities; (ii) qualify for expedited processing of other required notices or applications; and (iii) accept, roll-over or renew brokered deposits. Higher capital levels also could be required if warranted by the particular circumstances or risk profiles of individual banking organizations. For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, the risks posed by concentrations of credit, nontraditional activities, or securities trading activities. Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions (i.e., Tier 1 Capital less all intangible assets), well above the minimum levels.
A Common Equity Tier 1 Capital ratio to risk-weighted assets of 6.5% or more;
13
Prompt Corrective Action
The concept of an institution being “well-capitalized” is part of a regulatory enforcement regime that provides the federal banking regulators with broad power to take “prompt corrective action” to resolve the problems of depository institutions based on the capital level of each particular institution.The extent of the regulators’ powers depends on whether the institution in question is “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” in each case as defined by regulation. Depending upon the capital category to which an institution is assigned, the regulators’ corrective powers include: (i) requiring the institution to submit a capital restoration plan; (ii) limiting the institution’s asset growth and restricting its activities; (iii) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (iv) restricting transactions between the institution and its affiliates; (v) restricting the interest rate that the institution may pay on deposits; (vi) ordering a new election of directors of the institution; (vii) requiring that senior executive officers or directors be dismissed; (viii) prohibiting the institution from accepting deposits from correspondent banks; (ix) requiring the institution to divest certain subsidiaries; (x) prohibiting the payment of principal or interest on subordinated debt; and (xi) ultimately, appointing a receiver for the institution.
First Busey Corporation
The Company,
The primary purpose of a bank holding company is to control and manage banks. The BHCA generally requires the prior approval of the Federal Reserve for any merger involving a bank holding company or any acquisition by a bank holding company of another bank or bank holding company. Subject to certain conditions (including deposit concentration limits established by the BHCA), the Federal Reserve may allow a bank holding company to acquire banks located in any state of the U.S. In approving interstate acquisitions, the Federal Reserve is required to give effect to applicable state law limitations on the aggregate amount of deposits that may be held by the acquiring bank holding company and its FDIC-insured institution affiliates in the state in which the target bank is located (provided that those limits do not discriminate against out-of-state institutions or their holding companies) and state laws that require that the target bank have been in existence for a minimum period of time (not to exceed five years) before being acquired by an out-of-state bank holding company. Furthermore, in accordance with the Dodd-Frank Act, bank holding companies must be well-capitalized and well-managed in order to effect interstate mergers or acquisitions. For a discussion of the capital requirements, see “Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital” above.
14
Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity, or that the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally. The CompanyFirst Busey Corporation has elected to operate as a financial holding company. In order to maintain its status as a financial holding company, the CompanyFirst Busey Corporation and Busey Bank must be well-capitalized, well-managed, and Busey Bank must have a least a satisfactory CRA rating. If the Federal Reserve determines that a financial holding company is not well-capitalized or well-managed, the company has a period of time in which to achieve compliance, but during the period of noncompliance, the Federal Reserve may place any limitations on the company it believes to be appropriate. Furthermore, if the Federal Reserve determines that a financial holding company’s subsidiary bank has not received a satisfactory CRA rating, that company will not be able to commence any new financial activities or acquire a company that engages in such activities.
Bank holding companies are required to maintain capital in accordance with Federal Reserve capital adequacy requirements. For a discussion of capital requirements, see “Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital” above.
As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to stockholders if: (i) the company’s net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention is inconsistent with the company’s capital needs and overall current and prospective financial condition; or (iii) the company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. The Federal Reserve also possesses enforcement powers over bank holding companies and their nonbank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies. In addition, under the Basel III Rule, institutions that seek the freedom to pay dividends have to maintain 2.5% in Common Equity Tier 1 Capital attributable to the capital conservation buffer. See “Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital” above.
15
Incentive Compensation
The Company’s
16
Deposit Insurance
rate will increase beginning in 2023.
Banks are generally required to maintain capital levels in excess of other businesses. For a discussion of capital requirements, see “Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital” above.
17
In addition to liquidity guidelines already in place, federal bank regulatory agencies implemented the Basel III LCR in September 2014, which requires large financial firms to hold levels of liquid assets sufficient to protect against constraints on their funding during times of financial turmoil, and in 2016 proposed implementation of the NSFR. While these rules do not, and will not, apply to Busey Bank, it continues to review its liquidity risk management policies in light of developments.
18
In general, the safety and soundness standards prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals. While regulatory standards do not have the force of law, if an institution operates in an unsafe and unsound manner, the FDIC-insured institution’s primary federal regulator may require the institution to submit a plan for achieving and maintaining compliance. If an FDIC-insured institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the regulator is required to issue an order directing the institution to cure the deficiency. Until the deficiency cited in the regulator’s order is cured, the regulator may restrict the FDIC-insured institution’s rate of growth, require the FDIC-insured institution to increase its capital, restrict the rates the institution pays on deposits, or require the institution to take any action the regulator deems appropriate under the circumstances. Noncompliance with safety and soundness may also constitute grounds for other enforcement action by the federal bank regulatory agencies, including cease and desist orders and civil money penalty assessments.
During the past decade, bank regulatory agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the FDIC-insured institutions they supervise. Properly managing risk has been identified as critical to the conduct of safe and sound banking activities, and has become even more important as new technologies, product innovation, and the size and speed of financial transactions have changed the nature of banking markets. The agencies have identified a spectrum of risks facing a banking institution including, but not limited to, credit, market, liquidity, operational, legal, and reputational risk. The key risk themes identified by the Company for 20222023 are discussed under “Item 1A. Risk Factors” below. Busey Bank is expected to have active board and senior management oversight; adequate policies, procedures, and limits; adequate risk measurement, monitoring, and management information systems; and comprehensive internal controls.
19
requirements.
20
Consumer Financial Services
Bank.
Executive Officers
21
Amy L. Randolph. Mrs. Randolph, age 47,48, was appointed Chief of Staff in April 2017. Prior to that appointment she served as Executive Vice President and Chief Brand Officer since March 2014. Prior to March 2014, she served as Senior Vice President of Growth Strategies since 2008.
Human Capital
First Busey wasis built upon a strong commitment to associate, customer, stockholder, and community experiences. Our associates are the cornerstone of this unwavering commitment. Busey’s vision, Service Excellence in Everything We Do, starts with dedication to our associates. We are deeply humbled to be consistently recognized nationally and locally throughout our footprint for this steadfastness. Busey Bank has beenNationally, the organization is named among America’s Best Banks by Forbes magazine. Ranked 52nd overall on Forbes; the 2022 list, Busey was the top-ranked bank headquartered in Illinois, and only three other Illinois-based banks were included. The organization has also been named among American Banker’s Best Banks to Work For by American Bankersince 2016; the Best Places to Work in Money Management by Pension and Investments since 2018; and a Leading Disability Employer by the National Organization on Disability. Locally, Busey has been voted as one of the Best Places to Work in Illinois since 2016; recognized as one of the 2018 & 2019 Top Workplaces in St. Louis; recognized as2016 and a Best Company to Work For in Florida since 2017; recognized among the Best Places to Work in Money Management since 2018 by Pensions & Investments; and recognized as a Best Place to Work in Indiana by the Indiana Chamber of Commerce since 2019 – all in addition to various wellness, training and development, philanthropic and other workplace awards.2017. From exceeding the needs of customers and colleagues to serving our communities selflessly, our associates show unmatched dedication to Busey. Their shared experiences are what make these and other awards possible. Since we opened our doors over 150155 years ago, we have maintained our core values, creating a strong foundation and shaping our inclusive culture.
First
22
As of December 31, 2021,2022, First Busey and our subsidiaries had a total of 1,4631,497 full-time equivalents.
Geographic distribution of our associates is as follows:
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| | As of December 31, 2021 | | |||||||||||||
| | | | | Associates | | ||||||||||
| | Locations | | Full-time | | Part-time | | Total | | % | | |||||
Banking center associates by location | | | | | | | | | | | | | | | | |
Illinois | | | 46 | | | 776 | | | 48 | | | 824 | | | 55.0 | % |
Missouri | | | 8 | | | 143 | | | 3 | | | 146 | | | 9.7 | % |
Florida | | | 3 | | | 62 | | | — | | | 62 | | | 4.1 | % |
Indiana | | | 1 | | | 17 | | | 1 | | | 18 | | | 1.2 | % |
Banking center associates | | | 58 | | | 998 | | | 52 | | | 1,050 | | | 70.0 | % |
Corporate office associates (1) | | | | | | 429 | | | 20 | | | 449 | | | 30.0 | % |
Total number of associates | | | | | | 1,427 | | | 72 | | | 1,499 | | | 100.0 | % |
Percentage of associates | | | | | | 95.2 | % | | 4.8 | % | | | | | | |
As of December 31, 2022 | |||||||||||||||||
Full-time | Part-time | Total | |||||||||||||||
Busey associates by state | |||||||||||||||||
Illinois | 1,008 | 86 | 1,094 | ||||||||||||||
Missouri | 163 | 6 | 169 | ||||||||||||||
Florida | 73 | 1 | 74 | ||||||||||||||
Indiana | 20 | 1 | 21 | ||||||||||||||
Remote | 186 | — | 186 | ||||||||||||||
Total number of associates | 1,450 | 94 | 1,544 |
Securities and Exchange Commission Reporting and Other Information
Non-GAAP Financial Information
A reconciliation to what management believes to be the most direct compared GAAP financial measures, specifically total net interest income 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, and adjusted return on average assets; total net interest income in the case of adjusted net interest margin; total noninterest income and total noninterest expense in the case of adjusted noninterest expense, efficiency ratio, and adjusted efficiency ratio; and total stockholders’ equity in the case of tangible common equity, tangible common equity to tangible assets, tangible book value per common share, and return on average tangible common equity, appears below.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 as well as comparison to the Company’s peers.
These non-GAAPtime.
23
GAAP Financial Measures | Related Non-GAAP Financial Measures | Related Non-GAAP Ratios | ||||||||||||
Net interest income Total noninterest income Net security gains and losses Total noninterest expense | Pre-provision net revenue | Pre-provision net revenue to average assets | ||||||||||||
Adjusted pre-provision net revenue | Adjusted pre-provision net revenue to average assets | |||||||||||||
Net income | Adjusted net income | Adjusted diluted earnings per share | ||||||||||||
Adjusted return on average assets | ||||||||||||||
Adjusted return on average tangible common equity | ||||||||||||||
Average common equity | Average tangible common equity | Return on average tangible common equity | ||||||||||||
Adjusted return on average tangible common equity | ||||||||||||||
Net interest income | Tax-equivalent net interest income | Net interest margin | ||||||||||||
Adjusted net interest income | Adjusted net interest margin | |||||||||||||
Net interest income Total noninterest income Net security gains and losses | Tax-equivalent revenue | Efficiency ratio | ||||||||||||
Adjusted efficiency ratio | ||||||||||||||
Adjusted core efficiency ratio | ||||||||||||||
Total noninterest expense Amortization of intangible assets | Non-interest expense excluding amortization of intangible assets | Efficiency ratio | ||||||||||||
Adjusted noninterest expense | Adjusted efficiency ratio | |||||||||||||
Adjusted core expense | Adjusted core efficiency ratio | |||||||||||||
Total noninterest expense | Noninterest expense, excluding non-operating adjustments | |||||||||||||
Total assets Goodwill and other intangible assets, net | Tangible assets | Tangible common equity to tangible assets | ||||||||||||
Total stockholders’ equity Goodwill and other intangible assets, net | Tangible common equity | Tangible common equity to tangible assets | ||||||||||||
Tangible book value | Tangible book value per common share | |||||||||||||
Portfolio loans | Core loans | Core loans to portfolio loans | ||||||||||||
Core loans to core deposits | ||||||||||||||
Total deposits | Core deposits | Core deposits to total deposits | ||||||||||||
Core loans to core deposits |
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)
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| |||
Pre-provision net revenue | | | | | | | | | | |
Net interest income | | $ | 270,698 | | $ | 282,935 | | $ | 287,223 | |
Noninterest income | | | 132,804 | | | 118,265 | | | 116,415 | |
Less net (gains) losses on sales of securities and unrealized (gains) losses recognized on equity securities | |
| (3,070) | |
| (1,331) | |
| 18 | |
Noninterest expense | |
| (261,780) | |
| (234,197) | |
| (258,794) | |
Total pre-provision net revenue | | $ | 138,652 | | $ | 165,672 | | $ | 144,862 | |
| | | | | | | | | | |
Adjustments to pre-provision net revenue | | | | | | | | |||
Acquisition and other restructuring expenses | | | 17,351 | | | 10,711 | | | 20,094 | |
Provision for unfunded commitments | | | (774) | | | 1,822 | | | — | |
Amortization of NMTC | | | 5,563 | | | 2,311 | | | 1,200 | |
Adjusted pre-provision net revenue | | $ | 160,792 | | $ | 180,516 | | $ | 166,156 | |
| | | | | | | | | | |
Average total assets | | $ | 11,904,935 | | $ | 10,292,256 | | $ | 9,443,690 | |
| | | | | | | | | | |
Reported: Pre-provision net revenue to average asset | |
| 1.16 | % |
| 1.61 | % |
| 1.53 | % |
Adjusted: Pre-provision net revenue to average assets | | | 1.35 | % | | 1.75 | % | | 1.76 | % |
24
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) | ||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||
PRE-PROVISION NET REVENUE | ||||||||||||||||||||||||||||||||||||||
Net interest income | $ | 323,438 | $ | 270,698 | $ | 282,935 | ||||||||||||||||||||||||||||||||
Total noninterest income | 126,803 | 132,804 | 118,265 | |||||||||||||||||||||||||||||||||||
Net security (gains) losses | 2,133 | (3,070) | (1,331) | |||||||||||||||||||||||||||||||||||
Total noninterest expense | (283,881) | (261,780) | (234,197) | |||||||||||||||||||||||||||||||||||
Pre-provision net revenue | [a] | $ | 168,493 | $ | 138,652 | $ | 165,672 | |||||||||||||||||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||
Acquisition and other restructuring expenses | 4,537 | 17,351 | 10,711 | |||||||||||||||||||||||||||||||||||
Provision for unfunded commitments | 61 | (774) | 1,822 | |||||||||||||||||||||||||||||||||||
Amortization of New Markets Tax Credits | 6,333 | 5,563 | 2,311 | |||||||||||||||||||||||||||||||||||
Adjusted pre-provision net revenue | [b] | $ | 179,424 | $ | 160,792 | $ | 180,516 | |||||||||||||||||||||||||||||||
Average total assets | [c] | $ | 12,492,948 | $ | 11,904,935 | $ | 10,292,256 | |||||||||||||||||||||||||||||||
Reported: Pre-provision net revenue to average assets | [a÷c] | 1.35% | 1.16% | 1.61% | ||||||||||||||||||||||||||||||||||
Adjusted: Pre-provision net revenue to average assets | [b÷c] | 1.44% | 1.35% | 1.75% |
Adjusted Net Income, Adjusted Diluted Earnings Per Share, and
Adjusted Return on Average Assets
(dollars in thousands, except per share amounts)
| | | | | | | | | | |
| | | | | | | | | | |
| | Years Ended December 31, |
| |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 | |
| | | | | | | | | | |
Adjustments to net income | | | | | | | | | | |
Acquisition expenses: | |
|
| |
|
| |
|
| |
Salaries, wages, and employee benefits | |
| 7,347 | |
| — | |
| 4,083 | |
Data processing | |
| 3,700 | |
| 56 | |
| 1,523 | |
Lease or fixed asset impairment | |
| — | |
| 479 | |
| 580 | |
Professional fees, occupancy, and other | | | 2,599 | | | 864 | | | 8,477 | |
Other restructuring costs: | |
|
| |
|
| |
|
| |
Salaries, wages, and employee benefits | |
| 472 | |
| 2,470 | |
| 495 | |
Data processing | | | — | | | — | | | 827 | |
Lease or fixed asset impairment | | | 3,227 | | | 6,657 | | | 1,861 | |
Professional fees, occupancy, and other | |
| 6 | |
| 185 | |
| 2,248 | |
Related tax benefit | | | (3,692) | | | (2,327) | | | (4,618) | |
Adjusted net income | | $ | 137,108 | | $ | 108,728 | | $ | 118,429 | |
| | | | | | | | | | |
Dilutive average common shares outstanding | | | 56,008,805 | | | 54,826,939 | | | 55,132,494 | |
| | | | | | | | | | |
Reported: Diluted earnings per share | | $ | 2.20 | | $ | 1.83 | | $ | 1.87 | |
Adjusted: Diluted earnings per share | | | 2.45 | | | 1.98 | | | 2.15 | |
| | | | | | | | | | |
Average total assets | | $ | 11,904,935 | | $ | 10,292,256 | | $ | 9,443,690 | |
| | | | | | | | | | |
Reported: Return on average assets | |
| 1.04 | % |
| 0.97 | % |
| 1.09 | % |
Adjusted: Return on average assets | |
| 1.15 | % |
| 1.06 | % |
| 1.25 | % |
25
Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Return on Average Assets, Average Tangible Common Equity, Return on Average Tangible Common Equity, and Adjusted Return on Average Tangible Common Equity | ||||||||||||||||||||||||||||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||
NET INCOME ADJUSTED FOR NON-OPERATING ITEMS | ||||||||||||||||||||||||||||||||||||||
Net income | [a] | $ | 128,311 | $ | 123,449 | $ | 100,344 | |||||||||||||||||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||
Acquisition expenses: | ||||||||||||||||||||||||||||||||||||||
Salaries, wages, and employee benefits | 587 | 7,347 | — | |||||||||||||||||||||||||||||||||||
Data processing | 214 | 3,700 | 56 | |||||||||||||||||||||||||||||||||||
Loss on leases or fixed asset impairment | — | — | 479 | |||||||||||||||||||||||||||||||||||
Professional fees, occupancy, and other | 258 | 2,599 | 864 | |||||||||||||||||||||||||||||||||||
Other restructuring expenses: | ||||||||||||||||||||||||||||||||||||||
Salaries, wages, and employee benefits | 2,409 | 472 | 2,470 | |||||||||||||||||||||||||||||||||||
Loss on leases or fixed asset impairment | 986 | 3,227 | 6,657 | |||||||||||||||||||||||||||||||||||
Professional fees, occupancy, and other | 83 | 6 | 185 | |||||||||||||||||||||||||||||||||||
Related tax benefit | (938) | (3,692) | (2,327) | |||||||||||||||||||||||||||||||||||
Adjusted net income | [b] | $ | 131,910 | $ | 137,108 | $ | 108,728 | |||||||||||||||||||||||||||||||
DILUTED EARNINGS PER SHARE | ||||||||||||||||||||||||||||||||||||||
Diluted average common shares outstanding | [c] | 56,137,164 | 56,008,805 | 54,826,939 | ||||||||||||||||||||||||||||||||||
Reported: Diluted earnings per share | [a÷c] | $ | 2.29 | $ | 2.20 | $ | 1.83 | |||||||||||||||||||||||||||||||
Adjusted: Diluted earnings per share | [b÷c] | 2.35 | 2.45 | 1.98 | ||||||||||||||||||||||||||||||||||
RETURN ON AVERAGE ASSETS | ||||||||||||||||||||||||||||||||||||||
Average total assets | [d] | 12,492,948 | 11,904,935 | 10,292,256 | ||||||||||||||||||||||||||||||||||
Reported: Return on average assets | [a÷d] | 1.03% | 1.04% | 0.97% | ||||||||||||||||||||||||||||||||||
Adjusted: Return on average assets | [b÷d] | 1.06% | 1.15% | 1.06% | ||||||||||||||||||||||||||||||||||
RETURN ON AVERAGE TANGIBLE COMMON EQUITY | ||||||||||||||||||||||||||||||||||||||
Average common equity | $ | 1,195,171 | $ | 1,324,862 | $ | 1,240,374 | ||||||||||||||||||||||||||||||||
Average goodwill and other intangible assets, net | (370,424) | (372,593) | (368,624) | |||||||||||||||||||||||||||||||||||
Average tangible common equity | [e] | $ | 824,747 | $ | 952,269 | $ | 871,750 | |||||||||||||||||||||||||||||||
Reported: Return on average tangible common equity | [a÷e] | 15.56% | 12.96% | 11.51% | ||||||||||||||||||||||||||||||||||
Adjusted: Return on average tangible common equity | [b÷e] | 15.99% | 14.40% | 12.47% |
Adjusted Net Interest Margin
(dollars in thousands)
| | | | | | | | | | |
| | | | | | | | | | |
|
| Years Ended December 31, |
| |||||||
| | 2021 |
| 2020 |
| 2019 |
| |||
Net interest income | | $ | 270,698 | | $ | 282,935 | | $ | 287,223 | |
| | | | | | | | | | |
Adjustments to net interest income | | | | | | | | | | |
Tax-equivalent adjustment | |
| 2,355 | |
| 2,740 | |
| 3,013 | |
Acquisition-related purchase accounting accretion | |
| (7,151) | |
| (10,391) | |
| (12,422) | |
Adjusted net interest income | | $ | 265,902 | | $ | 275,284 | | $ | 277,814 | |
| | | | | | | | | | |
Average interest-earning assets | | $ | 10,978,116 | | $ | 9,417,938 | | $ | 8,590,262 | |
| | | | | | | | | | |
Reported: Net interest margin | |
| 2.49 | % |
| 3.03 | % |
| 3.38 | % |
Adjusted: Net Interest margin | | | 2.42 | % | | 2.92 | % | | 3.23 | % |
26
Adjusted Net Interest Income and Adjusted Net Interest Margin | ||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||
Net interest income | $ | 323,438 | $ | 270,698 | $ | 282,935 | ||||||||||||||||||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||
Tax-equivalent adjustment | 2,199 | 2,355 | 2,740 | |||||||||||||||||||||||||||||||||||
Tax-equivalent net interest income | [a] | 325,637 | 273,053 | 285,675 | ||||||||||||||||||||||||||||||||||
Purchase accounting accretion related to business combinations | (3,134) | (7,151) | (10,391) | |||||||||||||||||||||||||||||||||||
Adjusted net interest income | [b] | $ | 322,503 | $ | 265,902 | $ | 275,284 | |||||||||||||||||||||||||||||||
Average interest-earning assets | [c] | $ | 11,473,063 | $ | 10,978,116 | $ | 9,417,938 | |||||||||||||||||||||||||||||||
Reported: Net interest margin | [a÷c] | 2.84% | 2.49% | 3.03% | ||||||||||||||||||||||||||||||||||
Adjusted: Net interest margin | [b÷c] | 2.81% | 2.42% | 2.92% |
Adjusted Noninterest Expense, Efficiency Ratio, and Adjusted Efficiency Ratio
(dollars in thousands)
| | | | | | | | | | |
| | | | | | | | | | |
| | Years Ended December 31, |
| |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Net interest income | | $ | 270,698 | | $ | 282,935 | | $ | 287,223 | |
Tax-equivalent adjustment | | | 2,355 | | | 2,740 | | | 3,013 | |
Tax-equivalent interest income | | $ | 273,053 | | $ | 285,675 | | $ | 290,236 | |
| | | | | | | | | | |
Noninterest income | |
| 132,804 | |
| 118,265 | |
| 116,415 | |
Less net (gains) losses on sales of securities and unrealized (gains) losses recognized on equity securities | |
| (3,070) | |
| (1,331) | |
| 18 | |
Adjusted noninterest income | | $ | 129,734 | | $ | 116,934 | | $ | 116,433 | |
| | | | | | | | | | |
Noninterest expense | |
| 261,780 | |
| 234,197 | |
| 258,794 | |
Amortization of intangible assets | |
| (11,274) | |
| (10,008) | |
| (9,547) | |
Non-operating adjustments: | |
|
| |
|
| |
|
| |
Salaries, wages, and employee benefits | |
| (7,819) | |
| (2,470) | |
| (4,578) | |
Data processing | |
| (3,700) | |
| (56) | |
| (2,350) | |
Lease or fixed asset impairment | | | (3,227) | | | (7,136) | | | (2,441) | |
Professional fees and other | |
| (2,605) | |
| (1,049) | |
| (10,725) | |
Adjusted noninterest expense | | $ | 233,155 | | $ | 213,478 | | $ | 229,153 | |
| | | | | | | | | | |
Reported: Efficiency ratio (1) | |
| 62.19 | % |
| 55.68 | % |
| 61.29 | % |
Adjusted: Efficiency ratio (2) | |
| 57.89 | % |
| 53.02 | % |
| 56.35 | % |
27
Noninterest Expense Excluding Amortization of Intangible Assets, Adjusted Noninterest Expense, Adjusted Core Expense, Noninterest Expense Excluding Non-operating Adjustments, Efficiency Ratio, Adjusted Efficiency Ratio, and Adjusted Core Efficiency Ratio | ||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||
Net interest income | $ | 323,438 | $ | 270,698 | $ | 282,935 | ||||||||||||||||||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||
Tax-equivalent adjustment | 2,199 | 2,355 | 2,740 | |||||||||||||||||||||||||||||||||||
Tax-equivalent net interest income | 325,637 | 273,053 | 285,675 | |||||||||||||||||||||||||||||||||||
Total noninterest income | 126,803 | 132,804 | 118,265 | |||||||||||||||||||||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||
Net security (gains) losses | 2,133 | (3,070) | (1,331) | |||||||||||||||||||||||||||||||||||
Noninterest income excluding net securities gains and losses | 128,936 | 129,734 | 116,934 | |||||||||||||||||||||||||||||||||||
Tax-equivalent revenue | [a] | $ | 454,573 | $ | 402,787 | $ | 402,609 | |||||||||||||||||||||||||||||||
Total noninterest expense | $ | 283,881 | $ | 261,780 | $ | 234,197 | ||||||||||||||||||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | [b] | (11,628) | (11,274) | (10,008) | ||||||||||||||||||||||||||||||||||
Non-interest expense excluding amortization of intangible assets | [c] | 272,253 | 250,506 | 224,189 | ||||||||||||||||||||||||||||||||||
Non-operating adjustments: | ||||||||||||||||||||||||||||||||||||||
Salaries, wages, and employee benefits | (2,996) | (7,819) | (2,470) | |||||||||||||||||||||||||||||||||||
Data processing | (214) | (3,700) | (56) | |||||||||||||||||||||||||||||||||||
Lease or fixed asset impairment | (986) | (3,227) | (7,136) | |||||||||||||||||||||||||||||||||||
Professional fees and other | (341) | (2,605) | (1,049) | |||||||||||||||||||||||||||||||||||
Adjusted noninterest expense | [f] | 267,716 | 233,155 | 213,478 | ||||||||||||||||||||||||||||||||||
Provision for unfunded commitments | (61) | 774 | (1,822) | |||||||||||||||||||||||||||||||||||
Amortization of New Markets Tax Credits | (6,333) | (5,563) | (2,311) | |||||||||||||||||||||||||||||||||||
Adjusted core expense | [g] | $ | 261,322 | $ | 228,366 | $ | 209,345 | |||||||||||||||||||||||||||||||
Noninterest expense, excluding non-operating adjustments | [f-b] | $ | 279,344 | $ | 244,429 | $ | 223,486 | |||||||||||||||||||||||||||||||
Reported: Efficiency ratio | [c÷a] | 59.89% | 62.19% | 55.68% | ||||||||||||||||||||||||||||||||||
Adjusted: Efficiency ratio | [f÷a] | 58.89% | 57.89% | 53.02% | ||||||||||||||||||||||||||||||||||
Adjusted: Core efficiency ratio | [g÷a] | 57.49% | 56.70% | 52.00% |
Tangible Common Equity, Tangible Common Equity to Tangible Assets,
Tangible Book Value Per Common Share, Return on Average Tangible Common Equity
(dollars in thousands, except per share amounts)
| | | | | | | |
| | | | | | | |
|
| As of December 31, |
| ||||
|
| 2021 |
| 2020 |
| ||
Total assets | | $ | 12,859,689 | | $ | 10,544,047 | |
Goodwill and other intangible assets, net | |
| (375,924) | |
| (363,521) | |
Tax effect of other intangible assets, net | |
| 16,254 | |
| 14,556 | |
Tangible assets | | $ | 12,500,019 | | $ | 10,195,082 | |
| | | | | | | |
Total stockholders’ equity | |
| 1,319,112 | |
| 1,270,069 | |
Goodwill and other intangible assets, net | |
| (375,924) | |
| (363,521) | |
Tax effect of other intangible assets, net | |
| 16,254 | |
| 14,556 | |
Tangible common equity | | $ | 959,442 | | $ | 921,104 | |
| | | | | | | |
Ending number of common shares outstanding | | | 55,434,910 | | | 54,404,379 | |
| | | | | | | |
Tangible common equity to tangible assets (1) | |
| 7.68 | % |
| 9.03 | % |
Tangible book value per share | | $ | 17.01 | | $ | 16.66 | |
| | | | | | | |
Average common equity | | $ | 1,324,862 | | $ | 1,240,374 | |
Average goodwill and other intangible assets, net | |
| (372,593) | |
| (368,624) | |
Average tangible common equity | | $ | 952,269 | | $ | 871,750 | |
| | | | | | | |
Reported: Return on average tangible common equity | |
| 12.96 | % |
| 11.51 | % |
Adjusted: Return on average tangible common equity (2) | |
| 14.40 | % |
| 12.47 | % |
28
Tangible Book Value and Tangible Book Value Per Common Share | ||||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||
As of December 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Total stockholders' equity | $ | 1,145,977 | $ | 1,319,112 | ||||||||||
Goodwill and other intangible assets, net | (364,296) | (375,924) | ||||||||||||
Tangible book value | [a] | $ | 781,681 | $ | 943,188 | |||||||||
Ending number of common shares outstanding | [b] | 55,279,124 | 55,434,910 | |||||||||||
Tangible book value per common share | [a÷b] | $ | 14.14 | $ | 17.01 |
Tangible Common Equity and Tangible Common Equity to Tangible Assets | ||||||||||||||
(dollars in thousands) | ||||||||||||||
As of December 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Total assets | $ | 12,336,677 | $ | 12,859,689 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Goodwill and other intangible assets, net | (364,296) | (375,924) | ||||||||||||
Tax effect of other intangible assets1 | 8,847 | 16,254 | ||||||||||||
Tangible assets | [a] | $ | 11,981,228 | $ | 12,500,019 | |||||||||
Total stockholders' equity | $ | 1,145,977 | $ | 1,319,112 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Goodwill and other intangible assets, net | (364,296) | (375,924) | ||||||||||||
Tax effect of other intangible assets1 | 8,847 | 16,254 | ||||||||||||
Tangible common equity | [b] | $ | 790,528 | $ | 959,442 | |||||||||
Tangible common equity to tangible assets2 | [b÷a] | 6.60 | % | 7.68 | % |
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 December 31, | ||||||||||||||
2022 | 2021 | |||||||||||||
Portfolio loans | [a] | $ | 7,725,702 | $ | 7,188,998 | |||||||||
Non-GAAP adjustments: | ||||||||||||||
PPP loans amortized cost | (845) | (74,958) | ||||||||||||
Core loans | [b] | $ | 7,724,857 | $ | 7,114,040 | |||||||||
Total deposits | [c] | $ | 10,071,280 | $ | 10,768,577 | |||||||||
Non-GAAP adjustments: | ||||||||||||||
Brokered transaction accounts | (1,303) | (2,248) | ||||||||||||
Time deposits of $250,000 or more | (120,377) | (137,449) | ||||||||||||
Core deposits | [d] | $ | 9,949,600 | $ | 10,628,880 | |||||||||
RATIOS | ||||||||||||||
Core loans to portfolio loans | [b÷a] | 99.99 | % | 98.96 | % | |||||||||
Core deposits to total deposits | [d÷c] | 98.79 | % | 98.70 | % | |||||||||
Core loans to core deposits | [b÷d] | 77.64 | % | 66.93 | % |
Special Cautionary Note Regarding Forward-Looking Statements
These forward-looking statements are subject to significant risks, assumptions, and uncertainties, and could be affected by many factors. Factors that could have a material adverse effect on our financial condition, results of operations, and future prospects can be found under “Item1A. Risk Factors” in this Annual Report and elsewhere in our periodic and current reports filed with the SEC. These factors include, but are not limited to, the following:
the strength of the local, state, national, and international economy (including effects of inflationary pressures and supply chain constraints);
29
Economic and Market Risks
The COVID-19 pandemic continues to create disruptions that affect our business, financial condition, liquidity, and results of operations.
The extent to which COVID-19 will continue to affect business operations, financial condition, credit quality, and results of operations will depend on future developments that cannot be predicted, including the duration and scope of the pandemic. The direct or indirect impact on employees, customers, counterparties, and service providers, as well as other market participants, is likely to continue through 2022 as the world attempts to gain control over the virus and emerging variants. The impact that the virus continues to have on global markets, the economy, business restrictions, and employment is ongoing as a projected return to pre-pandemic operating conditions is unknown.
In the past year, the U.S. economy began to rebound from severe disruptions caused by the onset of the pandemic in March 2020. Economic conditions have begun to normalize with the availability of vaccines and treatments, increasing workforce employment and participation, the lessening of business and education restrictions, and demand for services beginning to return. The financial conditions of households and businesses was bolstered significantly by government stimulus, which contributed to the economic recovery but also brought about growing pains as evidenced by supply chain problems and rising prices. Although current economic conditions are more favorable than the prior year, the outlook for continued growth is characterized by elevated uncertainty with potential for unevenness across markets and sectors. Although household and business credit and liquidity is strong currently, further pandemic-related disruptions could result in increased risk of delinquencies, defaults, foreclosures, and losses on our loans; declines in assets under management, affecting wealth management revenues; negative impacts on regional economic conditions resulting in declines in local loan demand, liquidity of loan guarantors, loan collateral (particularly in real estate), loan originations, and deposit availability; and impacts on the implementation of our growth strategy. While the recovery this past year has been strong, the pace of growth in the U.S. and globally could decline as a result of rising inflation, higher interest rates, the pervasiveness of supply chain challenges across industries, and the persistence of the virus in variant forms.
Overall, we believe that the economic impact from COVID-19 will continue for some time and could have a material and adverse impact on our business and result in significant losses in our loan portfolio, all of which would adversely and materially impact our earnings and capital. Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts to our business as a result of the global economic impact of the COVID-19 pandemic, including the availability of credit, adverse impacts on liquidity, and any recession that has occurred or may occur in the future. There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, nor are there historical indicators to rely on in terms of how markets will react, and as a result, the ultimate impact of the pandemic is highly uncertain and subject to change.
30
The Company currently conducts its banking operations in downstate Illinois;central and suburban Chicago, Illinois; the St. Louis, Missouri metropolitan area; central Indiana; and southwest Florida. Economic conditions within Busey’s markets were adversely impacted by the COVID-19 pandemic, and although conditions have improved this past year, elevated unemployment, economic decline, on-going business restrictions and operational uncertainty continue to impact the markets overall, and in particular, certain industry sectors. The financial condition of the State of Illinois, in which the largest portion of the Company’s customer base resides, is characterized with low credit ratings pension under-funding, budget deficits, and lower job growth rates than most of the country; furthermore, Illinois was one of three statesdeclines in the country to lose population in the last decade. Notably, with the recent improvement in the state’s financial outlook, during the second half of 2021 Illinois received improved ratings from Moody’s Investor Service, S&P Global Ratings, and Fitch.population. The Company operates in markets with significant university and healthcare presence, which rely heavily on state and federal funding and contracts. Payment delaysTimely payments by the State of Illinois to its vendors and government-sponsored entities, as well as potential federal changes to healthcare laws, could affect the Company’s primary market areas, which could in turn adversely affect its financial condition and results of operations. A small part of the company’s business resides in Florida, which is frequently affected by inclement weather. On September 28, 2022, Hurricane Ian, a large and destructive Category 4 Atlantic hurricane made landfall in southwest Florida and surrounding areas which resulted in the temporary closure of our banking centers. The partial shutdownCompany’s business continuity practices allowed for rapid restoration of collegesservice and universities across the state may also impact businesses heavily reliant on the colleges and universities for revenue generation. Recent downturns in local operating markets where banking operations occur could result in a decrease in demand for the Company’s products and services, an increase in loan delinquencies and defaults, high or increased levelsstrong support of problem assets and foreclosures, and reduced wealth management fees resulting from lower asset values.
Florida associates.
In March 2020, the Federal Reserve reduced the target federal funds rate and announced a $700.0 billion quantitative easing program in response to the expected economic downturn caused by the COVID-19 pandemic and reduced the interest it pays on excess reserves. The prolonged reduction in interest rates is likely to continue to have an adverse effect on our net interest income and margins and our profitability. The impact of the prolonged low rates will also continue to affect rate spreads and return on earning assets.
31
The Federal Reserve has signaledIt is currently expected that itduring 2023, and perhaps beyond, the FOMC will begincontinue to increase interest rates taper its quantitative easing program,to reduce the rate of inflation. In 2022, the FOMC increased, at various dates throughout the year, the target range for the federal funds rate from 0.00% to 0.25% to a range of 4.25% to 4.50%. All of these increases were expressly made in response to inflationary pressures, which are currently expected to continue in 2023. If the FOMC further increases the targeted federal funds rates, overall interest rates likely will rise, which may negatively impact the entire national economy. In addition, our net interest income could be adversely affected if the rates we pay on deposits and reduce its balance sheet of bondsborrowings increase more rapidly than the rates we earn on loans and other assetsassets. Rising interest rates also may reduce the demand for loans and the value of fixed-rate investment securities. These effects from interest rate changes or from other sustained economic stress or a recession, among other matters, could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
results of operations.
use and remain free to choose an alternative reference rate other than SOFR that best suits their clients’ needs.
LIBOR and, in accordance with regulatory guidance, ceased new LIBOR issuances as of December 31, 2021. The Company continues to actively work to transition all remaining LIBOR contracts prior to the June 30, 2023, end date.
32
Labor shortages and failure to attract and retain qualified employees could negatively impact our business, results of operations, and financial condition.
Regulatory
depositors, and the national economy generally. These effects have diminished in the past year, but future developments and uncertainties will be difficult to predict, such as the potential emergence of a new variant, the course of the pandemic in China and other major economies, the persistence of pandemic-related work and lifestyle changes, changes in consumer preferences associated with the emergence of the pandemic, and other market disruptions. Any such developments could have a complex and negative effect on our business, including with respect to the prevailing economic environment, our lending and investment activities, and our business operations.
shift.
33
As the Company continues to grow in asset size and complexity, regulatory expectations and scrutiny will likely increase and could have a potential impact on the Company’s operations and business.
On November 20, 2020,August 2022, the federal bank regulatory agencies announced an Interim Final Rule, providing temporary relief for certain community banking organizations related to certain regulations and reporting requirements as a result of growth in size fromCompany came under the COVID-19 response. The Company has been provided temporary relief under this rule with respect to the interchange revenue impactsoversight of the Durbin Amendment. The Company did not reduce its asset size back below the $10.0 billion threshold and has instead increased assets to $12.9 billion as of December 31, 2021. The relief expired December 31, 2021, and as a result,CFPB. As regulatory expectations, scrutiny, and reporting requirements are expected to continue to increase, and may affect the Company’s operations and strategies.
strategies may be affected.
Credit
proceedings by governmental and self-regulatory agencies that may lead to adverse consequences.
34
The Company estimates and establishes reserves for credit losses and maintains them at a level considered adequate by management to absorb probable credit losses based on a continual analysis of the Company’s portfolio and market environment. These reserves represent the Company’s estimate of probable losses in the portfolio at each balance sheet date and are based upon other relevant information available.
Federal regulatory agencies, in consultation with FASB, issued updated guidance on March 22, 2020, for classifying loans as TDRs, which allowed banks to modify loans of customers stressed by COVID-19 without having to classify the loan as a TDR. While this updated guidance provided temporary relief for both borrowers and banks, these loan modifications may not be sufficient to keep the assets the Company holds from deteriorating if the duration of the pandemic is prolonged.
rapid interest rate increases.
worsen.
35
A significant portion of the Company’s loans are collateralized by real estate. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the area in which the real estate is located. Adverse changes in the economy affecting real estate values and liquidity generally, and in markets in which the Company has banking operations, could significantly impair the value of property pledged as collateral on loans and affect the Company’s ability to sell the collateral upon foreclosure without a loss or additional losses. Collateral may have to be sold for less than the outstanding balance of the loan which would result in losses.
Capital and Liquidity Risks
36
The Company’s failure to continue to maintain capital ratios in excess of the amounts necessary to be considered “well-capitalized” for bank regulatory purposes could affect customer confidence, its ability to grow, its costs of funds and FDIC insurance costs, its ability to pay dividends to its stockholders on outstanding stock, its ability to make acquisitions, and its business, results of operations, and financial condition. Furthermore, under FDIC rules, if the Company ceases to meet the requirements to be considered a “well-capitalized” institution for bank regulatory purposes, the interest rates it pays on deposits and its ability to accept, renew, or rollover deposits, particularly brokered deposits, may be restricted.
During periods of economic turmoil, In addition, increased competition with the financial services industrylargest banks and the credit markets generallyFintechs for retail deposits may be materially and adversely affected by significant declines in asset values and depressed levels of liquidity. These and other factors could negatively affect the Company’simpact our ability to engage in routine fundingraise funds through deposits and other transactions with other financial institutions and lead to market-wide liquidity problems, loss of depositor, creditor, and counterparty confidence, which could lead to losses or defaults by the Company or by other institutions. Although the Company is not currently experiencing liquidity stress, pandemic-related market conditions remain uncertain.have a negative effect on our liquidity. Any decline in available funding and/or capital could adversely impact the Company’s ability to originate loans, invest in securities, meet its expenses, pay dividends to its stockholders, or meet deposit withdrawal demands, any of which could have a material adverse impact on its liquidity, business, financial condition, and results of operations.
As indicated in the “Item 1A. Risk Factors—Economic and Market Risks” section above, the
Competitive and Strategic Risks
37
The Company faces strong competition from financial service companies and other companies that offer banking and wealth management services, which could harm its business.
We are exposed to potential asset and credit quality risks and unknown or contingent liabilities of the banks or businesses we acquire. If these issues or liabilities exceed our estimates, our earnings and financial condition may be materially and adversely affected. |
38
•
Prices at which acquisitions can be made fluctuate with market conditions. We have experienced times during which acquisitions could not be made in specific markets at prices our management considered acceptable, and we expect that we will experience this condition in the future in one or more markets.
The acquisition of other entities generally requires integration of systems, procedures, and personnel of the acquired entity in order to make the transaction economically feasible. This integration process is complicated and time consuming and can also be disruptive to the customers of the acquired business. If the integration process is not conducted successfully and with minimal effect on the acquired business and its customers, we may not realize the anticipated economic benefits of particular acquisitions within the expected time frame, and we may lose customers or employees of the acquired business. Furthermore, the integration of personnel can be challenging and the likelihood of turnover of personnel from acquired institutions presents potential risks to both operational efficiency as well as customer retention. The Company may also experience greater than anticipated customer losses even if the integration process is successful.
Accounting and Tax Risks
39
The Company is subject to changes in accounting principles, policies, or guidelines.
Operational Risks
40
The Company relies on the integrity of its operating systems and employees, and those of third-parties, and certain failures of such systems or error by employees or customers could materially and adversely affect the Company’s operations.
41
or adequately mitigate, breaches of security could result in a number of negative events, including losses to us or our clients, loss of business or clients, damage to our reputation, the incurrence of additional expenses, additional regulatory scrutiny or penalties, or exposure to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations, and growth prospects.
42
Damage resulting from negative publicity could harm the Company’s reputation and adversely impact its business and financial condition.
43
Common Stock
The Company’s board of directors and management are currently committed to continue paying regular cash dividends; however, no guarantee can be given with respect to future dividends, as they are dependent on certain regulatory restrictions, future earnings, capital requirements, and financial condition of the Company and its subsidiaries. See “Item 1. Business—Supervision, Regulation, and Other Factors—Supervision and Regulation of the Company—Dividend Payments”and “Item 1. Business—Supervision, Regulation, and Other Factors—Supervision and Regulation of Busey Bank—Dividend Payments”for further discussion of these matters.
Stock Repurchases
| | | | | | | | | |
Period | | Total Number of Shares Purchased | | Weighted Average Price Paid per Common Share | | Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs | |
October 1-31, 2021 | | 158,000 | | $ | 25.62 | | 158,000 | | 795,824 |
November 1-30, 2021 | | 124,000 | | $ | 27.00 | | 124,000 | | 671,824 |
December 1-31, 2021 | | 136,000 | | $ | 26.55 | | 136,000 | | 535,824 |
Three Months Ended December 31, 2021 | | 418,000 | | $ | 26.33 | | 418,000 | | |
| | | | | | | | | |
Year Ended December 31, 2021 | | 1,323,000 | | $ | 24.98 | | 1,323,000 | | |
44
Period | Total Number of Shares Purchased | Weighted Average Price Paid per Common Share | Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
October 1-31, 2022 | — | $ | — | — | 147,210 | |||||||||||||||||||||
November 1-30, 2022 | — | $ | — | — | 147,210 | |||||||||||||||||||||
December 1-31, 2022 | — | $ | — | — | 147,210 | |||||||||||||||||||||
Three months ended December 31, 2022 | — | $ | — | — | ||||||||||||||||||||||
Year ended December 31, 2022 | 388,614 | $ | 25.50 | 388,614 |
Performance Graph
PERFORMANCE GRAPH
| | | | | | | | | | | | | | | | | | |
Index |
| 12/31/16 |
| 12/31/17 |
| 12/31/18 |
| 12/31/19 |
| 12/31/20 |
| 12/31/21 | ||||||
First Busey Corporation | | $ | 100.00 | | $ | 99.63 | | $ | 83.80 | | $ | 97.03 | | $ | 79.59 | | $ | 104.07 |
S&P U.S. BMI Banks – Midwest Region | |
| 100.00 | |
| 107.46 | |
| 91.76 | |
| 119.38 | |
| 102.64 | |
| 135.60 |
Nasdaq Composite | |
| 100.00 | |
| 129.64 | |
| 125.96 | |
| 172.17 | |
| 249.51 | |
| 304.85 |
In prior years, the Company used the SNL Midwest Bank Index, which was retired as of August 7, 2021. The S&P U.S. BMI Banks – Midwest Region is deemed the closest replacement currently available.
2022.
Index | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | 12/31/21 | 12/31/22 | ||||||||||||||||||||||||||||||||
First Busey Corporation | $ | 100.00 | $ | 84.11 | $ | 97.39 | $ | 79.89 | $ | 104.46 | $ | 98.80 | ||||||||||||||||||||||||||
S&P U.S. BMI Banks – Midwest Region | 100.00 | 85.39 | 97.39 | 95.52 | 126.19 | 108.91 | ||||||||||||||||||||||||||||||||
Nasdaq Composite | 100.00 | 97.16 | 132.81 | 192.47 | 235.15 | 158.64 |
Detailed discussion and analysis of the financial condition and results of operation for 20212022 as compared to 20202021 can be found below. Comparison of 20202021 to 20192020 can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 20202021 Annual Report.
45
Although2022, we implemented a targeted restructuring and efficiency optimization plan that is expected to generate annual salary and benefits savings of approximately $4.0 million. Approximately 33% of the progressionquarterly run-rate for savings was reflected in our results for the fourth quarter of 2022, and we anticipate our savings to be at a 100% run-rate by the first quarter of 2023. We expect to largely reinvest the anticipated savings to support ongoing growth initiatives across our franchise over the next several quarters.
Effects on Our Market Areas
Our commercial and consumer banking products and services are delivered in Illinois, Missouri, Florida, and Indiana. Each state has taken different steps to reopen after COVID-19 thrust the country into lockdown starting in March 2020, and these efforts are subject to changes and delays based on case monitoring in each state.
Policy and Regulatory Developments
Federal, state, and local governments, and regulatory authorities have enacted and issued a range of policy responses to the COVID-19 pandemic. Regulatory actions taken during 2021 include the following:
Our Response
We have taken, and continue to take, numerous steps in response to the COVID-19 pandemic, including the following:
46
| | | | | | | | | |
| | CARES | | Economic Aid | | PPP Loan | |||
|
| Act |
| Act |
| Totals | |||
Customers with PPP loans processed/acquired | | | 4,595 | | | 2,753 | | | 7,348 |
PPP loans originated/acquired | | $ | 765,212 | | $ | 324,593 | | $ | 1,089,805 |
| | | | | | | | | |
Customers with PPP loans outstanding | | | 51 | | | 741 | | | 792 |
PPP loans outstanding | | $ | 5,738 | | $ | 71,152 | | $ | 76,890 |
PPP loans outstanding, amortized cost | | | 5,731 | | | 69,227 | | | 74,958 |
| | | | | | | | | |
PPP loan balance forgiveness: | | | | | | | | | |
Received | | $ | 746,899 | | $ | 252,131 | | $ | 999,030 |
Balances submitted to the SBA for forgiveness | | | 1,952 | | | 5,144 | | | 7,096 |
Critical Accounting Estimates
First Busey has established various accounting policies that govern the application of GAAP in the preparation of its Consolidated Financial Statements. Significant accounting policies are described in “Note 1. Significant Accounting Policies” in the Notes to the Consolidated Financial Statements.
47
We consider the following factors in assessing whether the decline is due to a credit loss:
Extent to which the fair value is less than the amortized cost basis;
Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method of accounting, assets acquired and liabilities assumed are recorded at their estimated fair value on the date of acquisition. Fair values are determined based on the definition of “fair value” defined in ASC Topic 820“Fair Value Measurement” as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”
The fair value of a loan portfolio acquired in a business combination generally requires greater levels of management estimates and judgment than other assets acquired or liabilities assumed. Acquired loans are in the scope of ASC 326.Topic 326 “Financial Instruments-Credit Losses.” However, the offset to record the allowance at the date of acquisition on acquired loans depends on whether or not the loan is classified as PCD. The allowance for PCD loans is recorded through a gross-up effect, while the allowance for acquired non-PCD loans is recorded through provision expense, consistent with originated loans. Thus, the determination of which loans are PCD and non-PCD can have a significant effect on the accounting for these loans.
48
In determining the allowance, management relies predominantly on a disciplined credit review and approval process that extends to the full range of First Busey’s credit exposure. The ACL must be determined on a collective (pool) basis when similar risk characteristics exists.exist. On a case-by-case basis, we may conclude a loan should be evaluated on an individual basis based on the disparate risk characteristics.
Executive Summary
Results of our operations are presented below, segregated by operating segment (dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Net income by operating segment | |||||||||||||||||
Banking | $ | 131,596 | $ | 117,844 | $ | 101,226 | |||||||||||
FirsTech | 847 | 1,527 | 2,372 | ||||||||||||||
Wealth Management | 18,543 | 18,570 | 13,181 | ||||||||||||||
Other | (22,675) | (14,492) | (16,435) | ||||||||||||||
Net income | $ | 128,311 | $ | 123,449 | $ | 100,344 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Net income by operating segment |
| |
|
| |
|
| |
|
Banking | | $ | 117,844 | | $ | 101,226 | | $ | 106,409 |
FirsTech | |
| 1,527 | |
| 2,372 | |
| 4,060 |
Wealth Management | |
| 18,570 | |
| 13,181 | |
| 11,135 |
Other | |
| (14,492) | |
| (16,435) | |
| (18,651) |
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
Operating performance metrics presented in the table below have been derived from information used by management to monitor and manage our financial performance (dollars in thousands, except per share amounts):
| | | | | | | | | | | |
| | | Years Ended December 31, |
| |||||||
| |
| 2021 |
| 2020 |
| 2019 |
| |||
Reported: | Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 | |
Adjusted: | Net income (1) | |
| 137,108 | |
| 108,728 | |
| 118,429 | |
| | | | | | | | | | | |
Reported: | Diluted earnings per common share | | $ | 2.20 | | $ | 1.83 | | $ | 1.87 | |
Adjusted: | Diluted earnings per common share (1) | | | 2.45 | | | 1.98 | | | 2.15 | |
| | | | | | | | | | | |
Reported: | Pre-provision net revenue (1) | | $ | 138,652 | | $ | 165,672 | | $ | 144,862 | |
Adjusted: | Pre-provision net revenue (1) | | | 160,792 | | | 180,516 | | | 166,156 | |
| | | | | | | | | | | |
Reported: | Pre-provision net revenue to average assets (1) | |
| 1.16 | % |
| 1.61 | % |
| 1.53 | % |
Adjusted: | Pre-provision net revenue to average assets (1) | |
| 1.35 | % |
| 1.75 | % |
| 1.76 | % |
On May 31, 2021, First Busey completed its acquisition of CAC, the holding company for GSB. GSB was operated as a separate banking subsidiary from June 1, 2021, until August 14, 2021, when it was merged with and into Busey Bank. At that time GSB’s seven banking centers became banking centers of Busey Bank. When we completed the GSB acquisition, we reset the baseline for the future financial performance of First Busey in a multitude of positive ways. With GSB now merged and integrated, we expect to see the full contribution of synergies of GSB reflected in our financial performance in the years ahead.
Years Ended December 31, | ||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||
Reported: | Net income | $ | 128,311 | $ | 123,449 | $ | 100,344 | |||||||||||||||||||||||||
Adjusted: | Net income1 | 131,910 | 137,108 | 108,728 | ||||||||||||||||||||||||||||
Reported: | Diluted earnings per common share | $ | 2.29 | $ | 2.20 | $ | 1.83 | |||||||||||||||||||||||||
Adjusted: | Diluted earnings per common share1 | 2.35 | 2.45 | 1.98 | ||||||||||||||||||||||||||||
Reported: | Return on average assets | 1.03 | % | 1.04 | % | 0.97 | % | |||||||||||||||||||||||||
Adjusted: | Return on average assets1 | 1.06 | % | 1.15 | % | 1.06 | % | |||||||||||||||||||||||||
Reported: | Return on average tangible common equity1 | 15.56 | % | 12.96 | % | 11.51 | % | |||||||||||||||||||||||||
Adjusted: | Return on average tangible common equity1 | 15.99 | % | 14.40 | % | 12.47 | % | |||||||||||||||||||||||||
Reported: | Pre-provision net revenue1 | $ | 168,493 | $ | 138,652 | $ | 165,672 | |||||||||||||||||||||||||
Adjusted: | Pre-provision net revenue1 | 179,424 | 160,792 | 180,516 | ||||||||||||||||||||||||||||
Reported: | Pre-provision net revenue to average assets1 | 1.35 | % | 1.16 | % | 1.61 | % | |||||||||||||||||||||||||
Adjusted: | Pre-provision net revenue to average assets1 | 1.44 | % | 1.35 | % | 1.75 | % |
49
On November 19, 2021, 17 banking centers, two of which were previously GSB banking centers, were closed and consolidated, as part of the Company’s efforts to ensure a balance between its physical banking center network and robust digital banking services while also optimizing operating efficiency. Following the completion of these banking center closures and consolidations, the Company continues to operate a total of 58 banking centers across its markets.
First Busey views certain non-operating items, including acquisition-related and restructuring charges, as adjustments to net income reported under GAAP. Non-operating pretax adjustments were as follows for 2021 included $13.6 million ofthe periods presented (dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Non-operating costs | |||||||||||||||||
Acquisition related expenses1 | $ | 1,059 | $ | 13,646 | $ | 1,399 | |||||||||||
Restructuring charges2 | 3,478 | 3,705 | 9,312 | ||||||||||||||
Total non-operating costs | $ | 4,537 | $ | 17,351 | $ | 10,711 |
Results of Operation2022.
2022
The following tables (dollars in thousands) show our Consolidated Average Balance Sheets, detailing the major categories of assets and liabilities, the interest income earned on interest-earning assets, the interest expense paid for the interest-bearing liabilities, and the related interest rates for the periods shown. The tables also show, for the periods indicated, a summary of the changes in interest earned and interest expense resulting from changes in volume and rates for the major components of interest-earning assets and interest-bearing liabilities. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on changes due to rate and changes due to volume. All average information is provided on a daily average basis.
Average balances, income and expense, and yield rates are presented below for the periods indicated (dollars in thousands):
Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | |||||||||||||||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing bank deposits and federal funds sold | $ | 290,875 | $ | 3,097 | 1.06 | % | $ | 630,687 | $ | 1,151 | 0.18 | % | $ | 488,786 | $ | 1,723 | 0.35 | % | |||||||||||||||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Government obligations | 179,557 | 1,079 | 0.60 | % | 180,041 | 1,692 | 0.94 | % | 135,204 | 2,915 | 2.16 | % | |||||||||||||||||||||||||||||||||||||||||
Obligations of states and political subdivisions1 | 286,220 | 7,611 | 2.66 | % | 299,064 | 7,694 | 2.57 | % | 293,070 | 8,353 | 2.85 | % | |||||||||||||||||||||||||||||||||||||||||
Other securities | 3,265,271 | 61,591 | 1.89 | % | 2,876,714 | 37,166 | 1.29 | % | 1,411,826 | 29,857 | 2.11 | % | |||||||||||||||||||||||||||||||||||||||||
Loans held for sale | 5,178 | 192 | 3.71 | % | 21,803 | 506 | 2.32 | % | 82,106 | 2,184 | 2.66 | % | |||||||||||||||||||||||||||||||||||||||||
Portfolio loans1, 2 | 7,445,962 | 288,615 | 3.88 | % | 6,969,807 | 252,946 | 3.63 | % | 7,006,946 | 284,306 | 4.06 | % | |||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets1, 3 | $ | 11,473,063 | $ | 362,185 | 3.16 | % | $ | 10,978,116 | $ | 301,155 | 2.74 | % | $ | 9,417,938 | $ | 329,338 | 3.50 | % | |||||||||||||||||||||||||||||||||||
Cash and due from banks | 120,910 | 133,711 | 118,739 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Premises and equipment | 131,657 | 138,731 | 146,144 | ||||||||||||||||||||||||||||||||||||||||||||||||||
ACL | (89,387) | (97,397) | (88,248) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 856,705 | 751,774 | 697,683 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 12,492,948 | $ | 11,904,935 | $ | 10,292,256 | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing transaction deposits | $ | 2,785,439 | $ | 7,150 | 0.26 | % | $ | 2,619,942 | $ | 1,922 | 0.07 | % | $ | 2,153,230 | $ | 4,718 | 0.22 | % | |||||||||||||||||||||||||||||||||||
Savings and money market deposits | 3,326,259 | 4,237 | 0.13 | % | 3,092,992 | 2,817 | 0.09 | % | 2,567,962 | 5,960 | 0.23 | % | |||||||||||||||||||||||||||||||||||||||||
Time deposits | 846,738 | 4,725 | 0.56 | % | 1,040,709 | 7,844 | 0.75 | % | 1,356,347 | 20,013 | 1.48 | % | |||||||||||||||||||||||||||||||||||||||||
Federal funds purchased and repurchase agreements | 244,004 | 1,475 | 0.60 | % | 218,454 | 227 | 0.10 | % | 187,811 | 660 | 0.35 | % | |||||||||||||||||||||||||||||||||||||||||
Borrowings4 | 309,175 | 15,932 | 5.15 | % | 268,767 | 12,452 | 4.63 | % | 217,702 | 9,352 | 4.30 | % | |||||||||||||||||||||||||||||||||||||||||
Junior subordinated debt issued to unconsolidated trusts | 71,716 | 3,029 | 4.22 | % | 71,545 | 2,840 | 3.97 | % | 71,376 | 2,960 | 4.15 | % | |||||||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 7,583,331 | $ | 36,548 | 0.48 | % | $ | 7,312,409 | $ | 28,102 | 0.38 | % | $ | 6,554,428 | $ | 43,663 | 0.67 | % | |||||||||||||||||||||||||||||||||||
Net interest spread1 | 2.68 | % | 2.36 | % | 2.83 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | 3,550,517 | 3,142,155 | 2,364,442 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 163,929 | 125,509 | 133,012 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 1,195,171 | 1,324,862 | 1,240,374 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 12,492,948 | $ | 11,904,935 | $ | 10,292,256 | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income / earning assets1, 3 | $ | 11,473,063 | $ | 362,185 | 3.16 | % | $ | 10,978,116 | $ | 301,155 | 2.74 | % | $ | 9,417,938 | $ | 329,338 | 3.50 | % | |||||||||||||||||||||||||||||||||||
Interest expense / earning assets | 11,473,063 | 36,548 | 0.32 | % | $ | 10,978,116 | 28,102 | 0.25 | % | $ | 9,417,938 | 43,663 | 0.47 | % | |||||||||||||||||||||||||||||||||||||||
Net interest margin1 | $ | 325,637 | 2.84 | % | $ | 273,053 | 2.49 | % | $ | 285,675 | 3.03 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, | | ||||||||||||||||||||||||
| | 2021 | | | 2020 | | | 2019 | | ||||||||||||||||||
|
| Average |
| Income/ |
| Yield/ | | | Average |
| Income/ |
| Yield/ | | | Average |
| Income/ |
| Yield/ | | ||||||
| | Balance |
| Expense |
| Rate | |
| Balance |
| Expense |
| Rate | |
| Balance |
| Expense |
| Rate | | ||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing bank deposits and federal funds sold | | $ | 630,687 | | $ | 1,151 |
| 0.18 | % | | $ | 488,786 | | $ | 1,723 |
| 0.35 | % | | $ | 312,604 | | | 6,320 |
| 2.02 | % |
Investment securities: | |
|
| |
|
|
|
| | |
| | |
|
|
|
| | |
|
| |
|
|
|
| |
U.S. Government obligations | |
| 180,041 | |
| 1,692 |
| 0.94 | % | |
| 135,204 | |
| 2,915 |
| 2.16 | % | |
| 300,805 | |
| 7,323 |
| 2.43 | % |
Obligations of states and political subdivisions (1) | |
| 299,064 | |
| 7,694 | | 2.57 | % | |
| 293,070 | |
| 8,353 |
| 2.85 | % | |
| 281,460 | |
| 8,294 |
| 2.95 | % |
Other securities | |
| 2,876,714 | |
| 37,166 |
| 1.29 | % | |
| 1,411,826 | |
| 29,857 |
| 2.11 | % | |
| 1,187,026 | |
| 31,335 |
| 2.64 | % |
Loans held for sale | |
| 21,803 | |
| 506 |
| 2.32 | % | |
| 82,106 | |
| 2,184 |
| 2.66 | % | |
| 38,447 | |
| 1,275 |
| 3.32 | % |
Portfolio loans (1), (2) | |
| 6,969,807 | |
| 252,946 |
| 3.63 | % | |
| 7,006,946 | |
| 284,306 |
| 4.06 | % | |
| 6,469,920 | |
| 304,700 |
| 4.71 | % |
Total interest-earning assets (1), (3) | | $ | 10,978,116 | | $ | 301,155 |
| 2.74 | % | | $ | 9,417,938 | | $ | 329,338 |
| 3.50 | % | | $ | 8,590,262 | | $ | 359,247 |
| 4.18 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | |
| 133,711 | |
|
|
|
| | |
| 118,739 | |
|
|
|
| | |
| 114,619 | |
|
|
|
| |
Premises and equipment | |
| 138,731 | |
| |
|
| | |
| 146,144 | |
| |
|
| | |
| 148,063 | |
| |
|
| |
ACL | |
| (97,397) | |
| |
|
| | |
| (88,248) | |
| |
|
| | |
| (52,284) | |
| |
|
| |
Other assets | |
| 751,774 | |
|
|
|
| | |
| 697,683 | |
|
|
|
| | |
| 643,030 | |
|
|
|
| |
Total assets | | $ | 11,904,935 | |
|
|
|
| | | $ | 10,292,256 | |
|
|
|
| | | $ | 9,443,690 | |
|
|
|
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | |
|
|
|
| | |
|
| |
|
|
|
| | |
|
| |
|
|
|
| | |||
Interest-bearing transaction deposits | | $ | 2,619,942 | | $ | 1,922 |
| 0.07 | % | | $ | 2,153,230 | | $ | 4,718 |
| 0.22 | % | | $ | 1,865,506 | | $ | 10,638 |
| 0.57 | % |
Savings and money market deposits | |
| 3,092,992 | |
| 2,817 |
| 0.09 | % | |
| 2,567,962 | |
| 5,960 |
| 0.23 | % | |
| 2,386,171 | |
| 13,767 |
| 0.58 | % |
Time deposits | |
| 1,040,709 | |
| 7,844 |
| 0.75 | % | |
| 1,356,347 | |
| 20,013 |
| 1.48 | % | |
| 1,675,477 | |
| 30,672 |
| 1.83 | % |
Federal funds purchased and repurchase agreements | |
| 218,454 | | | 227 |
| 0.10 | % | |
| 187,811 | |
| 660 |
| 0.35 | % | |
| 196,681 | |
| 2,348 |
| 1.19 | % |
Borrowings (4) | |
| 268,767 | | | 12,452 |
| 4.63 | % | |
| 217,702 | |
| 9,352 |
| 4.30 | % | |
| 219,920 | |
| 8,172 |
| 3.72 | % |
Junior subordinated debt issued to unconsolidated trusts | |
| 71,545 | | | 2,840 |
| 3.97 | % | |
| 71,376 | |
| 2,960 |
| 4.15 | % | |
| 71,214 | |
| 3,414 |
| 4.79 | % |
Total interest-bearing liabilities | | $ | 7,312,409 | | $ | 28,102 |
| 0.38 | % | | $ | 6,554,428 | | $ | 43,663 |
| 0.67 | % | | $ | 6,414,969 | | $ | 69,011 |
| 1.08 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest spread (1) | |
|
| |
| |
| 2.36 | % | |
|
| |
| |
| 2.83 | % | |
|
| |
| |
| 3.10 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | |
| 3,142,155 | |
|
|
|
| | |
| 2,364,442 | |
|
|
|
| | |
| 1,746,938 | |
|
|
|
| |
Other liabilities | |
| 125,509 | |
|
|
|
| | |
| 133,012 | |
|
|
|
| | |
| 95,656 | |
|
|
|
| |
Stockholders’ equity | |
| 1,324,862 | |
|
|
|
| | |
| 1,240,374 | |
|
|
|
| | |
| 1,186,127 | |
|
|
|
| |
Total liabilities and stockholders’ equity | | $ | 11,904,935 | |
|
|
|
| | | $ | 10,292,256 | |
|
|
|
| | | $ | 9,443,690 | |
|
|
|
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest income / earning assets (1), (3) | | $ | 10,978,116 | | $ | 301,155 |
| 2.74 | % | | $ | 9,417,938 | | $ | 329,338 |
| 3.50 | % | | $ | 8,590,262 | | $ | 359,247 |
| 4.18 | % |
Interest expense / earning assets | | $ | 10,978,116 | | $ | 28,102 |
| 0.25 | % | | $ | 9,417,938 | | $ | 43,663 |
| 0.47 | % | | $ | 8,590,262 | | $ | 69,011 |
| 0.80 | % |
Net interest margin (1) | |
|
| | $ | 273,053 |
| 2.49 | % | |
|
| | $ | 285,675 |
| 3.03 | % | |
|
| | $ | 290,236 |
| 3.38 | % |
4. |
Includes short-term borrowings, long-term debt, senior notes, and subordinated notes. Interest expense includes a non-usage fee on our revolving credit facility. |
51
Average Balance SheetsThe following table presents a breakout of changes in net interest income attributable to changes in average volume and Interest Rates (continued)
changes in average yield (dollars in thousands)
:
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
2022 vs. 2021 Change Due To | 2021 vs. 2020 Change Due To | ||||||||||||||||||||||||||||||||||
Average Volume | Average Yield/Rate | Total Change | Average Volume | Average Yield/Rate | Total Change | ||||||||||||||||||||||||||||||
Increase (decrease) in interest income | |||||||||||||||||||||||||||||||||||
Interest-bearing bank deposits and federal funds sold | $ | (921) | $ | 2,867 | $ | 1,946 | $ | 410 | $ | (982) | $ | (572) | |||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||||||||||||||
U.S. Government obligations | (5) | (608) | (613) | 765 | (1,988) | (1,223) | |||||||||||||||||||||||||||||
Obligations of state and political subdivisions | (337) | 254 | (83) | 168 | (827) | (659) | |||||||||||||||||||||||||||||
Other securities | 5,544 | 18,881 | 24,425 | 22,213 | (14,904) | 7,309 | |||||||||||||||||||||||||||||
Loans held for sale | (515) | 201 | (314) | (1,430) | (248) | (1,678) | |||||||||||||||||||||||||||||
Portfolio loans | 17,870 | 17,799 | 35,669 | (1,499) | (29,861) | (31,360) | |||||||||||||||||||||||||||||
Change in interest income | $ | 21,636 | $ | 39,394 | $ | 61,030 | $ | 20,627 | $ | (48,810) | $ | (28,183) | |||||||||||||||||||||||
Increase (decrease) in interest expense | |||||||||||||||||||||||||||||||||||
Interest-bearing transaction deposits | $ | 129 | $ | 5,099 | $ | 5,228 | $ | 855 | $ | (3,651) | $ | (2,796) | |||||||||||||||||||||||
Savings and money market deposits | 151 | 1,269 | 1,420 | 931 | (4,074) | (3,143) | |||||||||||||||||||||||||||||
Time deposits | (1,303) | (1,816) | (3,119) | (3,923) | (8,246) | (12,169) | |||||||||||||||||||||||||||||
Federal funds purchased and repurchase agreements | 30 | 1,218 | 1,248 | 95 | (528) | (433) | |||||||||||||||||||||||||||||
Borrowings | 1,611 | 1,869 | 3,480 | 2,289 | 811 | 3,100 | |||||||||||||||||||||||||||||
Junior subordinated debt owed to unconsolidated trusts | 7 | 182 | 189 | 7 | (127) | (120) | |||||||||||||||||||||||||||||
Change in interest expense | $ | 625 | $ | 7,821 | $ | 8,446 | $ | 254 | $ | (15,815) | $ | (15,561) | |||||||||||||||||||||||
Increase (decrease) in net interest income | $ | 21,011 | $ | 31,573 | $ | 52,584 | $ | 20,373 | $ | (32,995) | $ | (12,622) | |||||||||||||||||||||||
Percentage increase (decrease) in net interest income over prior period | 19.3 | % | (4.4) | % |
Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Average interest-earning assets | $ | 11,473,063 | $ | 10,978,116 | $ | 494,947 | 4.5 | % | |||||||||||||||
Average interest-bearing liabilities | 7,583,331 | 7,312,409 | 270,922 | 3.7 | % | ||||||||||||||||||
Average noninterest-bearing deposits | 3,550,517 | 3,142,155 | 408,362 | 13.0 | % | ||||||||||||||||||
Total average deposits | 10,508,953 | 9,895,798 | 613,155 | 6.2 | % | ||||||||||||||||||
Total average liabilities | 11,297,777 | 10,580,073 | 717,704 | 6.8 | % | ||||||||||||||||||
Average noninterest-bearing deposits as a percent of total average deposits | 33.8 | % | 31.8 | % | 200 bps | ||||||||||||||||||
Total average deposits as a percent of total average liabilities | 93.0 | % | 93.5 | % | (50) bps |
| | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| ||||||||||||||||
| | 2021 vs. 2020 Change Due To | | 2020 vs. 2019 Change Due To |
| ||||||||||||||
|
| Average |
| Average |
| Total |
| Average |
| Average |
| Total |
| ||||||
| | Volume |
| Yield/Rate |
| Change | | Volume |
| Yield/Rate |
| Change |
| ||||||
Increase (decrease) in interest income | | | | | | | | | | | | | | | | | | | |
Interest-bearing bank deposits and federal funds sold | | $ | 410 | | $ | (982) | | $ | (572) | | $ | 2,369 | | $ | (6,966) | | $ | (4,597) | |
Investment securities: | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
U.S. Government obligations | |
| 765 | |
| (1,988) | |
| (1,223) | |
| (3,650) | |
| (758) | |
| (4,408) | |
Obligations of state and political subdivisions | |
| 168 | |
| (827) | |
| (659) | |
| 336 | |
| (277) | |
| 59 | |
Other securities | |
| 22,213 | |
| (14,904) | |
| 7,309 | |
| 5,359 | |
| (6,837) | |
| (1,478) | |
Loans held for sale | |
| (1,430) | |
| (248) | |
| (1,678) | |
| 1,204 | |
| (295) | |
| 909 | |
Portfolio loans | |
| (1,499) | |
| (29,861) | |
| (31,360) | |
| 23,979 | |
| (44,373) | |
| (20,394) | |
Change in interest income | | $ | 20,627 | | $ | (48,810) | | $ | (28,183) | | $ | 29,597 | | $ | (59,506) | | $ | (29,909) | |
| | | | | | | | | | | | | | | | | | | |
Increase (decrease) in interest expense | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Interest-bearing transaction deposits | | $ | 855 | | $ | (3,651) | | $ | (2,796) | | $ | 1,438 | | $ | (7,358) | | $ | (5,920) | |
Savings and money market deposits | |
| 931 | |
| (4,074) | | | (3,143) | |
| 769 | |
| (8,576) | |
| (7,807) | |
Time deposits | |
| (3,923) | |
| (8,246) | |
| (12,169) | |
| (5,281) | |
| (5,378) | |
| (10,659) | |
Federal funds purchased and repurchase agreements | |
| 95 | |
| (528) | |
| (433) | |
| (109) | |
| (1,579) | |
| (1,688) | |
Borrowings | |
| 2,289 | |
| 811 | |
| 3,100 | |
| 260 | |
| 920 | |
| 1,180 | |
Junior subordinated debt owed to unconsolidated trusts | |
| 7 | |
| (127) | |
| (120) | |
| 8 | |
| (462) | |
| (454) | |
Change in interest expense | | $ | 254 | | $ | (15,815) | | $ | (15,561) | | $ | (2,915) | | $ | (22,433) | | $ | (25,348) | |
Increase (decrease) in net interest income | | $ | 20,373 | | $ | (32,995) | | $ | (12,622) | | $ | 32,512 | | $ | (37,073) | | $ | (4,561) | |
| | | | | | | | | | | | | | | | | | | |
Percentage (decrease) increase in net interest income over prior period | |
|
| |
|
| |
| (4.4) | % |
|
| |
|
| |
| (1.6) | % |
Earning Assets, Sources of Funds, and Net Interest Margin
Changes in average earning assets, sources of funds,net interest income and net interest margin are summarized as follows for the periods presented in the tables below
| | | | | | | | | | | | | |
| | Years Ended December 31, | | | | | | | | ||||
|
| 2021 |
| 2020 |
| Change |
| % Change |
| ||||
Average interest-earning assets | | $ | 10,978,116 | | $ | 9,417,938 | | $ | 1,560,178 | | | 16.6 | % |
Average interest-bearing liabilities | | | 7,312,409 | | | 6,554,428 | | | 757,981 | | | 11.6 | % |
Average noninterest-bearing deposits | | | 3,142,155 | | | 2,364,442 | | | 777,713 | | | 32.9 | % |
| | | | | | | | | | | | | |
Total average deposits | | | 9,895,798 | | | 8,441,981 | | | 1,453,817 | | | 17.2 | % |
Total average liabilities | | | 10,580,073 | | | 9,051,882 | | | 1,528,191 | | | 16.9 | % |
| | | | | | | | | | | | | |
Average noninterest-bearing deposits as a percent of total average deposits | | | 31.8 | % | | 28.0 | % | | | | | | |
Total average deposits as a percent of total average liabilities | | | 93.5 | % | | 93.3 | % | | | | | | |
Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Net interest income | |||||||||||||||||||||||
Interest income, on a tax-equivalent basis1 | $ | 362,185 | $ | 301,155 | $ | 61,030 | 20.3 | % | |||||||||||||||
Interest expense | (36,548) | (28,102) | (8,446) | 30.1 | % | ||||||||||||||||||
Net interest income, on a tax-equivalent basis1 | $ | 325,637 | $ | 273,053 | $ | 52,584 | 19.3 | % | |||||||||||||||
Net interest margin1, 2 | 2.84 | % | 2.49 | % | 35 bps |
52
| | | | | | | | | | | | | |
| | Years Ended December 31, | | | | | | | | ||||
|
| 2021 |
| 2020 |
| Change |
| % Change |
| ||||
Net interest income | | | | | | | | | | | | | |
Interest income, on a tax-equivalent basis (1) | | $ | 301,155 | | $ | 329,338 | | $ | (28,183) | | | (8.6) | % |
Interest expense | | | 28,102 | | | 43,663 | | | (15,561) | | | (35.6) | % |
Net interest income, on a tax equivalent basis (1) | | $ | 273,053 | | $ | 285,675 | | $ | (12,622) | | | (4.4) | % |
| | | | | | | | | | | | | |
Net interest margin (1), (2) | | | 2.49 | % | | 3.03 | % | | | | | | |
The Consolidated Average Balance Sheets and interest rates were impacted in 2021 and 2020 by numerous factors surrounding COVID-19. Further, the 2021 Consolidated Average Balance Sheet was impacted by the CAC acquisition. The FOMC rate cutsraised rates by a total of 425 basis points during the first quarter of 20202022. Rising rates have contributed to the decline ina positive impact on net interest margin, as assets, in particular commercial loans, repricedreprice more quickly and to a greater extent than liabilities. NetIn general, net interest margin has alsomargins have been negatively impacted by existing loan amortization and paydowns at higher rates than new loan production,over the sizeable balance of lower-yieldinglast three years by PPP loans, significant growth in the Company’s liquidity position, organic portfolio loan growth over the past seven quarters, and the issuance of debt. Thosedebt, with more recent impacts were partially offset by the Company’s efforts to lower deposit funding costs as well as the fees recognized on PPP loans.
resulting from rate increases.
First Busey remains substantially funded by core deposit funded,deposits1, with robust liquidity and significant market share in the communities we serve. As of December 31, 2021,2022, our loan to deposit ratio was 66.8%76.7% and core deposits represented 98.7%98.8% of total deposits outstanding (excluding time deposits with balances greater than $250,000).
deposits.
| | | | | | | | |
| 2021 |
| | 2020 |
| | 2019 | |
First Quarter | 2.72 | % |
| 3.20 | % |
| 3.46 | % |
Second Quarter | 2.50 | % |
| 3.03 | % |
| 3.43 | % |
Third Quarter | 2.41 | % |
| 2.86 | % |
| 3.35 | % |
Fourth Quarter | 2.36 | % |
| 3.06 | % |
| 3.27 | % |
2022 | 2021 | 2020 | |||||||||||||||
First Quarter | 2.45 | % | 2.72 | % | 3.20 | % | |||||||||||
Second Quarter | 2.68 | % | 2.50 | % | 3.03 | % | |||||||||||
Third Quarter | 3.00 | % | 2.41 | % | 2.86 | % | |||||||||||
Fourth Quarter | 3.24 | % | 2.36 | % | 3.06 | % |
Noninterest Income
Changes in noninterest income are summarized in the tables below for the periods presented (dollars in thousands):
Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||
Wealth management and payment technology solutions income: | |||||||||||||||||||||||
Wealth management fees | $ | 55,378 | $ | 53,086 | $ | 2,292 | 4.3 | % | |||||||||||||||
Payment technology solutions | 20,067 | 18,347 | 1,720 | 9.4 | % | ||||||||||||||||||
Combined, wealth management fees and payment technology solutions | 75,445 | 71,433 | 4,012 | 5.6 | % | ||||||||||||||||||
Fees for customer services | 33,111 | 35,604 | (2,493) | (7.0) | % | ||||||||||||||||||
Mortgage revenue | 1,895 | 7,239 | (5,344) | (73.8) | % | ||||||||||||||||||
Income on bank owned life insurance | 3,663 | 5,166 | (1,503) | (29.1) | % | ||||||||||||||||||
Securities income: | |||||||||||||||||||||||
Realized net gains (losses) on securities | 50 | 29 | 21 | 72.4 | % | ||||||||||||||||||
Unrealized net gains (losses) recognized on equity securities | (2,183) | 3,041 | (5,224) | (171.8) | % | ||||||||||||||||||
Net securities gains (losses) | (2,133) | 3,070 | (5,203) | (169.5) | % | ||||||||||||||||||
Other income | 14,822 | 10,292 | 4,530 | 44.0 | % | ||||||||||||||||||
Total noninterest income | $ | 126,803 | $ | 132,804 | $ | (6,001) | (4.5) | % |
Years Ended December 31, | |||||||||||||||||||||||
2021 | 2020 | Change | % Change | ||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||
Wealth management and payment technology solutions income: | |||||||||||||||||||||||
Wealth management fees | $ | 53,086 | $ | 42,928 | $ | 10,158 | 23.7 | % | |||||||||||||||
Payment technology solutions | 18,347 | 15,628 | 2,719 | 17.4 | % | ||||||||||||||||||
Combined, wealth management fees and payment technology solutions | 71,433 | 58,556 | 12,877 | 22.0 | % | ||||||||||||||||||
Fees for customer services | 35,604 | 31,604 | 4,000 | 12.7 | % | ||||||||||||||||||
Mortgage revenue | 7,239 | 13,038 | (5,799) | (44.5) | % | ||||||||||||||||||
Income on bank owned life insurance | 5,166 | 5,380 | (214) | (4.0) | % | ||||||||||||||||||
Securities income: | |||||||||||||||||||||||
Realized net gains (losses) on securities | 29 | 1,724 | (1,695) | (98.3) | % | ||||||||||||||||||
Unrealized net gains (losses) recognized on equity securities | 3,041 | (393) | 3,434 | 873.8 | % | ||||||||||||||||||
Net securities gains (losses) | 3,070 | 1,331 | 1,739 | 130.7 | % | ||||||||||||||||||
Other income | 10,292 | 8,356 | 1,936 | 23.2 | % | ||||||||||||||||||
Total noninterest income | $ | 132,804 | $ | 118,265 | $ | 14,539 | 12.3 | % |
| | | | | | | | | | | | | |
| | Year Ended December 31, | | | | | | | | ||||
|
| 2021 |
| 2020 |
| Change |
| % Change |
| ||||
Noninterest income | | | | | | | | | | | | | |
Wealth management fees | | $ | 53,086 | | $ | 42,928 | | $ | 10,158 | | | 23.7 | % |
Fees for customer services | | | 35,604 | | | 31,604 | | | 4,000 | | | 12.7 | % |
Payment technology solutions | |
| 18,347 | | | 15,628 | |
| 2,719 | | | 17.4 | % |
Mortgage revenue | |
| 7,239 | | | 13,038 | |
| (5,799) | | | (44.5) | % |
Income on bank owned life insurance | |
| 5,166 | | | 5,380 | |
| (214) | | | (4.0) | % |
Net gains (losses) on sales of securities | |
| 29 | | | 1,724 | |
| (1,695) | | | (98.3) | % |
Unrealized gains (losses) recognized on equity securities | | | 3,041 | | | (393) | | | 3,434 | | | 873.8 | % |
Other income | | | 10,292 | | | 8,356 | | | 1,936 | | | 23.2 | % |
Total noninterest income | | $ | 132,804 | | $ | 118,265 | | $ | 14,539 | | | 12.3 | % |
| | | | | | | | | | | | | |
| | Years Ended December 31, | | | | | | | | ||||
|
| 2020 |
| 2019 |
| Change |
| % Change |
| ||||
Noninterest income | | | | | | | | | | | | | |
Wealth management fees | | $ | 42,928 | | $ | 38,561 | | $ | 4,367 | | | 11.3 | % |
Fees for customer services | | | 31,604 | | | 36,683 | | | (5,079) | | | (13.8) | % |
Payment technology solutions | |
| 15,628 | | | 15,643 | |
| (15) | | | (0.1) | % |
Mortgage revenue | |
| 13,038 | | | 11,703 | |
| 1,335 | | | 11.4 | % |
Income on bank owned life insurance | |
| 5,380 | | | 5,795 | |
| (415) | | | (7.2) | % |
Net gains (losses) on sales of securities | |
| 1,724 | | | 741 | |
| 983 | | | NM | |
Unrealized gains (losses) recognized on equity securities | | | (393) | | | (759) | | | 366 | | | 48.2 | % |
Other income | | | 8,356 | | | 8,048 | | | 308 | | | 3.8 | % |
Total noninterest income | | $ | 118,265 | | $ | 116,415 | | $ | 1,850 | | | 1.6 | % |
Wealth management fees increased 23.7% to $53.1 million in 2021, compared to $42.9 million in 2020. Assets under care increased 24.5% to $12.7 billion as of December 31, 2021, compared to $10.2 billion at December 31, 2020. The increase in assets under care includes $1.2 billion related to assets obtained in the acquisition of CAC, with the remaining $1.3 million related to organic and market related growth.
Fees for customer services increased 12.7% to $35.6 million in 2021, compared to $31.6 million in 2020. Fees for customer services have been impacted since early 2020 by changing customer behaviors resulting from COVID-19, and government stimulus programs, and continue to rebound with improving economic conditions and customer activity levels.
Payment technology solutions revenue increased 17.4%by 9.4% to $20.1 million in 2022, compared to $18.3 million in 2021, compared to $15.6 million in 2020. Fluctuations2021. Increases in payment technology solutions revenue were primarily the result of increased payment and volume activity as well as growth in customers served by FirsTech. FirsTech operations add important diversity to our revenue stream while widening our array of service offerings to larger commercial clients both within our footprint and nationally. We are currently making strategic investments in FirsTech to further enhance future growth, including further upgrades to the product and engineering teams to build an API first cloud-based platform to provide for fully integrated payment capabilities, as well as the continued development of our BaaS platform.
54
Income on bank owned life insurance decreased 4.0%by 29.1% to $3.7 million in 2022, compared to $5.2 million in 2021, compared to $5.4 million in 2020,primarily as a result of a decrease in earnings on the cash surrender value of the policies.
life insurance proceeds.
sales.
Changes in noninterest expense are summarized in the tables below for the periods presented (dollars in thousands):
| | | | | | | | | | | | | |
| | Year Ended December 31, | | | | | | | | ||||
|
| 2021 |
| 2020 |
| Change |
| % Change |
| ||||
Noninterest expense | | | | | | | | | | | | | |
Salaries, wages, and employee benefits | | $ | 145,312 | | $ | 126,719 | | $ | 18,593 | | | 14.7 | % |
Data processing | | | 21,862 | | | 16,426 | | | 5,436 | | | 33.1 | % |
Net occupancy expense of premises | |
| 18,346 | |
| 17,607 | |
| 739 | | | 4.2 | % |
Furniture and equipment expenses | |
| 8,301 | |
| 9,550 | |
| (1,249) | | | (13.1) | % |
Professional fees | |
| 7,549 | |
| 8,396 | |
| (847) | | | (10.1) | % |
Amortization of intangible assets | |
| 11,274 | |
| 10,008 | |
| 1,266 | | | 12.6 | % |
Interchange expense | | | 5,792 | | | 4,810 | | | 982 | | | 20.4 | % |
Other expense | |
| 43,344 | |
| 40,681 | |
| 2,663 | | | 6.5 | % |
Total noninterest expense | | $ | 261,780 | | $ | 234,197 | | $ | 27,583 | | | 11.8 | % |
| | | | | | | | | | | | | |
Income taxes | | $ | 33,374 | | $ | 27,862 | | $ | 5,512 | | | 19.8 | % |
Effective income tax rate | |
| 21.3 | % |
| 21.7 | % |
| | | | | |
| | | | | | | | | | | | | |
Efficiency ratio (1) | |
| 62.2 | % |
| 55.7 | % |
| | | | | |
Adjusted efficiency ratio (1) | | | 57.9 | % | | 53.0 | % | | | | | | |
| | | | | | | | | | | | | |
Full-time equivalent employees as of period-end | |
| 1,463 | | | 1,346 | |
| 117 | | | 8.7 | % |
Years Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||
Salaries, wages, and employee benefits | $ | 159,016 | $ | 145,312 | $ | 13,704 | 9.4 | % | |||||||||||||||
Data processing | 21,648 | 21,862 | (214) | (1.0) | % | ||||||||||||||||||
Premises expenses: | |||||||||||||||||||||||
Net occupancy expense of premises | 19,130 | 18,346 | 784 | 4.3 | % | ||||||||||||||||||
Furniture and equipment expenses | 7,645 | 8,301 | (656) | (7.9) | % | ||||||||||||||||||
Combined, net occupancy expense of premises and furniture and equipment expenses | 26,775 | 26,647 | 128 | 0.5 | % | ||||||||||||||||||
Professional fees | 6,125 | 7,549 | (1,424) | (18.9) | % | ||||||||||||||||||
Amortization of intangible assets | 11,628 | 11,274 | 354 | 3.1 | % | ||||||||||||||||||
Interchange expense | 6,298 | 5,792 | 506 | 8.7 | % | ||||||||||||||||||
Other expense | 52,391 | 43,344 | 9,047 | 20.9 | % | ||||||||||||||||||
Total noninterest expense | $ | 283,881 | $ | 261,780 | $ | 22,101 | 8.4 | % | |||||||||||||||
Income taxes | $ | 33,426 | $ | 33,374 | $ | 52 | 0.2 | % | |||||||||||||||
Effective income tax rate | 20.7 | % | 21.3 | % | (60) bps | ||||||||||||||||||
Efficiency ratio1 | 59.9 | % | 62.2 | % | (230) bps | ||||||||||||||||||
Adjusted efficiency ratio1 | 58.9 | % | 57.9 | % | 100 bps | ||||||||||||||||||
Full-time equivalent employees as of period-end | 1,497 | 1,463 | 34 | 2.3 | % |
55
| | | | | | | | | | | | | | |||||||||||||||||||||||
| | Years Ended December 31, | | | | | | | | |||||||||||||||||||||||||||
|
| 2020 |
| 2019 |
| Change |
| % Change |
| |||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||
2021 | 2020 | Change | % Change | |||||||||||||||||||||||||||||||||
Noninterest expense | | | | | | | | | | | | | | Noninterest expense | ||||||||||||||||||||||
Salaries, wages, and employee benefits | | $ | 126,719 | | $ | 140,473 | | $ | (13,754) | | | (9.8) | % | Salaries, wages, and employee benefits | $ | 145,312 | $ | 126,719 | $ | 18,593 | 14.7 | % | ||||||||||||||
Data processing | | | 16,426 | | | 21,511 | | | (5,085) | | | (23.6) | % | Data processing | 21,862 | 16,426 | 5,436 | 33.1 | % | |||||||||||||||||
Premises expenses: | Premises expenses: | |||||||||||||||||||||||||||||||||||
Net occupancy expense of premises | |
| 17,607 | |
| 18,176 | |
| (569) | | | (3.1) | % | Net occupancy expense of premises | 18,346 | 17,607 | 739 | 4.2 | % | |||||||||||||||||
Furniture and equipment expenses | |
| 9,550 | |
| 9,506 | |
| 44 | | | 0.5 | % | Furniture and equipment expenses | 8,301 | 9,550 | (1,249) | (13.1) | % | |||||||||||||||||
Combined, net occupancy expense of premises and furniture and equipment expenses | Combined, net occupancy expense of premises and furniture and equipment expenses | 26,647 | 27,157 | (510) | (1.9) | % | ||||||||||||||||||||||||||||||
Professional fees | |
| 8,396 | |
| 11,104 | |
| (2,708) | | | (24.4) | % | Professional fees | 7,549 | 8,396 | (847) | (10.1) | % | |||||||||||||||||
Amortization of intangible assets | |
| 10,008 | |
| 9,547 | |
| 461 | | | 4.8 | % | Amortization of intangible assets | 11,274 | 10,008 | 1,266 | 12.6 | % | |||||||||||||||||
Interchange expense | | | 4,810 | | | 4,141 | | | 669 | | | 16.2 | % | Interchange expense | 5,792 | 4,810 | 982 | 20.4 | % | |||||||||||||||||
Other expense | |
| 40,681 | |
| 44,336 | |
| (3,655) | | | (8.2) | % | Other expense | 43,344 | 40,681 | 2,663 | 6.5 | % | |||||||||||||||||
Total noninterest expense | | $ | 234,197 | | $ | 258,794 | | $ | (24,597) | | | (9.5) | % | Total noninterest expense | $ | 261,780 | $ | 234,197 | $ | 27,583 | 11.8 | % | ||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||||||
Income taxes | | $ | 27,862 | | $ | 31,485 | | $ | (3,623) | | | (11.5) | % | Income taxes | $ | 33,374 | $ | 27,862 | $ | 5,512 | 19.8 | % | ||||||||||||||
Effective income tax rate | |
| 21.7 | % |
| 23.4 | % |
|
| | |
| | Effective income tax rate | 21.3 | % | 21.7 | % | (40) bps | |||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||||||
Efficiency ratio (1) | |
| 55.7 | % |
| 61.3 | % |
|
| | |
| | |||||||||||||||||||||||
Adjusted efficiency ratio (1) | | | 53.0 | % |
| 56.3 | % | | | | | | | |||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||||||
Efficiency ratio1 | Efficiency ratio1 | 62.2 | % | 55.7 | % | 650 bps | ||||||||||||||||||||||||||||||
Adjusted efficiency ratio1 | Adjusted efficiency ratio1 | 57.9 | % | 53.0 | % | 490 bps | ||||||||||||||||||||||||||||||
Full-time equivalent employees as of period-end | |
| 1,346 | | | 1,531 | |
| (185) | | | (12.1) | % | Full-time equivalent employees as of period-end | 1,463 | 1,346 | 117 | 8.7 | % |
Total noninterest expense increased to $283.9 million for the year ended December 31, 2022, compared to $261.8 million in 2021, compared to $234.2 million in 2020.for the year ended December 31, 2021. Non-operating acquisition and other restructuring increasedexpenses decreased to $4.5 million in 2022, compared to $17.4 million in 2021, compared to $10.7 million in 2020, contributing $6.7 million of the total $27.6 million increase in noninterest expense. In addition, GSB’s results of operations were included in First Busey’s consolidated results of operations beginning June 1, 2021. We remain focused on expense discipline, and have begunmade necessary investments during the past two years to realize synergies fromsupport the GSB mergercontinued organic growth of our key business lines and Personal Banking Transformation Plan, which resulted in the consolidation of 17 branches across our various markets.
related support and risk management functions.
acquisition, offset by increased expenses for FirsTech related to transaction volume and continued Company-wide investments in technology enhancements, as well as inflation-driven price increases.
Professional fees decreased2022, compared to $7.5 million in 2021, compared to $8.4 million in 2020, as a result of decreases in legal fees, audit and accounting fees, payroll service costs, and consulting fees. Excluding non-operating expenses, professional fees decreased from $7.8 million in 2020 to $5.9 million in 2021.
56
Interchange expense increased to $6.3 million in 2022, compared to $5.8 million in 2021, compared to $4.8 million2021. Fluctuations in 2020, as ainterchange expense were primarily the result of increased payment and volume activity at FirsTech.
impairment.
2021.
Balance Sheet
Changes in significant items included inauthority; however, we have received an inquiry from the State of Illinois regarding our Consolidated Balance Sheets are summarized inprior franchise tax filings. In the table below (dollars in thousands):
| | | | | | | | | | | | | |
|
| As of December 31, | | | | | | |
| ||||
|
| 2021 |
| 2020 |
| Change |
| % Change |
| ||||
Assets |
| |
|
| |
|
| |
|
| |
| |
Debt securities available for sale | | $ | 3,981,251 | | $ | 2,261,187 | | $ | 1,720,064 |
| | 76.1 | % |
Portfolio loans, net | |
| 7,101,111 | |
| 6,713,129 | |
| 387,982 |
| | 5.8 | % |
| | | | | | | | | | | | | |
Total assets | | $ | 12,859,689 | | $ | 10,544,047 | | $ | 2,315,642 |
| | 22.0 | % |
| | | | | | | | | | | | | |
Liabilities | |
|
| |
|
| |
|
|
| |
| |
Deposits: | |
|
| |
|
| |
|
|
| |
| |
Noninterest-bearing | | $ | 3,670,267 | | $ | 2,552,039 | | $ | 1,118,228 |
| | 43.8 | % |
Interest-bearing | |
| 7,098,310 | |
| 6,125,810 | |
| 972,500 |
| | 15.9 | % |
Total deposits | | $ | 10,768,577 | | $ | 8,677,849 | | $ | 2,090,728 |
| | 24.1 | % |
| | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | $ | 270,139 | | $ | 175,614 | | $ | 94,525 |
| | 53.8 | % |
Subordinated notes, net of unamortized issuance costs | |
| 182,773 | |
| 182,226 | |
| 547 |
| | 0.3 | % |
Junior subordinated debt owed to unconsolidated trusts | |
| 71,635 | |
| 71,468 | |
| 167 |
| | 0.2 | % |
| | | | | | | | | | | | | |
Total liabilities | | $ | 11,540,577 | | $ | 9,273,978 | | $ | 2,266,599 |
| | 24.4 | % |
| | | | | | | | | | | | | |
Stockholders’ equity | | $ | 1,319,112 | | $ | 1,270,069 | | $ | 49,043 |
| | 3.9 | % |
(1)
57
Investment Securities
FINANCIAL CONDITION
Debt securities available for saleChanges in significant items included in our Consolidated Balance Sheets are carried at fair value. As of December 31, 2021,summarized in the fair value of debt securities available for sale was $4.0 billion, and the amortized cost was also $4.0 billion. There were $22.4 million of gross unrealized gains and $54.7 million of gross unrealized losses for a net unrealized loss of $32.3 million. The net unrealized loss, net of tax, is recorded in stockholders’ equity. Equity securities are carried at fair value. As of December 31, 2021, the fair value of equity securities was $13.6 million.
table below
The composition of debt securities available for sale was as follows (dollars in thousands):
| | | | | | | | | | |
| | As of December 31, | | |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Debt securities available for sale | | | | | | | | | | |
U.S. Treasury securities | | $ | 165,762 | | $ | 27,837 | | $ | 51,737 | |
Obligations of U.S. government corporations and agencies | |
| 38,470 | |
| 69,519 | |
| 163,000 | |
Obligations of states and political subdivisions | |
| 306,869 | |
| 304,711 | |
| 268,291 | |
Asset-backed securities | | | 492,186 | | | — | | | — | |
Commercial mortgage-backed securities | | | 614,998 | | | 418,616 | | | 139,287 | |
Residential mortgage-backed securities | |
| 2,069,313 | |
| 1,368,315 | |
| 921,966 | |
Corporate debt securities | |
| 293,653 | |
| 72,189 | |
| 103,976 | |
Debt securities available for sale, fair value | | $ | 3,981,251 | | $ | 2,261,187 | | $ | 1,648,257 | |
| | | | | | | | | | |
Debt securities available for sale, amortized cost | | $ | 4,013,523 | | $ | 2,211,543 | | $ | 1,627,065 | |
Fair value as a percentage of amortized cost | |
| 99.20 | % |
| 102.24 | % |
| 101.30 | % |
The primary
As of December 31, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Assets | |||||||||||||||||||||||
Debt securities available for sale | $ | 2,461,393 | $ | 3,981,251 | $ | (1,519,858) | (38.2) | % | |||||||||||||||
Debt securities held to maturity | 918,312 | — | 918,312 | NM | |||||||||||||||||||
Portfolio loans, net of ACL | 7,634,094 | 7,101,111 | 532,983 | 7.5 | % | ||||||||||||||||||
Total assets | 12,336,677 | 12,859,689 | (523,012) | (4.1) | % | ||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||
Noninterest-bearing | 3,393,666 | 3,670,267 | (276,601) | (7.5) | % | ||||||||||||||||||
Interest-bearing | 6,677,614 | 7,098,310 | (420,696) | (5.9) | % | ||||||||||||||||||
Total deposits | 10,071,280 | 10,768,577 | (697,297) | (6.5) | % | ||||||||||||||||||
Securities sold under agreements to repurchase | 229,806 | 270,139 | (40,333) | (14.9) | % | ||||||||||||||||||
Short-term borrowings | 351,054 | 17,678 | 333,376 | 1,885.8 | % | ||||||||||||||||||
Subordinated notes, net of unamortized issuance costs | 222,038 | 182,773 | 39,265 | 21.5 | % | ||||||||||||||||||
Total liabilities | 11,190,700 | 11,540,577 | (349,877) | (3.0) | % | ||||||||||||||||||
Stockholders’ Equity | 1,145,977 | 1,319,112 | (173,135) | (13.1) | % |
58
By maturity date, fair values, and weighted average yields of debt securities available for sale as of December 31, 2021, were (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Due after 1 year | | Due after 5 years | | Due after |
| |||||||||
| | Due in 1 year or less | | through 5 years | | through 10 years | | 10 years |
| ||||||||||||
| | | | | Weighted | | | | | Weighted | | | | | Weighted | | | | | Weighted |
|
| | Fair | | Average | | Fair | | Average | | Fair | | Average | | Fair | | Average |
| ||||
|
| Value |
| Yield |
| Value |
| Yield |
| Value |
| Yield |
| Value |
| Yield |
| ||||
Debt securities available for sale (1) | | | | | | | | | | | | | | | | | |||||
U.S. Treasury securities |
| $ | 47,546 | | 0.19 | % | $ | 118,216 | | 0.21 | % | $ | — | | — | % | $ | — | | — | % |
Obligations of U.S. government corporations and agencies | |
| 16,566 | | 2.55 | % |
| 17,906 | | 2.52 | % |
| 3,998 | | 0.66 | % |
| — | | — | % |
Obligations of states and political subdivisions (2) | |
| 29,926 | | 2.73 | % |
| 108,227 | | 2.60 | % |
| 100,442 | | 2.32 | % |
| 68,274 | | 2.68 | % |
Asset-backed securities | | | — | | — | % | | — | | — | % | | 29,498 | | 1.27 | % | | 462,688 | | 1.26 | % |
Commercial mortgage-backed securities | | | 13,522 | | 1.99 | % | | 71,509 | | 1.37 | % | | 54,104 | | 1.56 | % | | 475,863 | | 1.53 | % |
Residential mortgage-backed securities | |
| 54 |
| 2.60 | % |
| 23,008 |
| 2.45 | % |
| 128,597 |
| 1.82 | % |
| 1,917,654 |
| 1.31 | % |
Corporate debt securities | |
| 22,234 |
| 1.15 | % |
| 224,607 |
| 1.03 | % |
| 45,418 |
| 2.92 | % |
| 1,394 |
| 3.00 | % |
Debt securities available for sale | | $ | 129,848 |
| 1.43 | % | $ | 563,473 |
| 1.31 | % | $ | 362,057 |
| 2.00 | % | $ | 2,925,873 |
| 1.37 | % |
We consider many factors in determining the composition of our investment portfolio including, but not limited to, credit quality, duration, interest rate risk, liquidity, tax-equivalent yield, regulatory considerations, and overall portfolio allocation. As of December 31, 2021,2022, we did not havehold general obligation bonds of any non-U.S. Treasury securities or obligationssingle issuer, the aggregate of U.S. government corporations and agencies issued securities thatwhich exceeded 10% of our totalthe Company’s stockholders’ equity.
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Debt securities available for sale | |||||||||||
U.S. Treasury securities | $ | 114,061 | $ | 165,762 | |||||||
Obligations of U.S. government corporations and agencies | 19,779 | 38,470 | |||||||||
Obligations of states and political subdivisions | 257,512 | 306,869 | |||||||||
Asset-backed securities | 469,875 | 492,186 | |||||||||
Commercial mortgage-backed securities | 108,394 | 614,998 | |||||||||
Residential mortgage-backed securities | 1,243,256 | 2,069,313 | |||||||||
Corporate debt securities | 248,516 | 293,653 | |||||||||
Debt securities available for sale, fair value | $ | 2,461,393 | $ | 3,981,251 | |||||||
Debt securities available for sale, amortized cost | $ | 2,772,453 | $ | 4,013,523 | |||||||
Fair value as a percentage of amortized cost | 88.78 | % | 99.20 | % |
Due in 1 year or less | Due after 1 year through 5 years | Due after 5 years through 10 years | Due after 10 years | ||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | ||||||||||||||||||||||||||||||||||||||||
Debt securities available for sale1 | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | 69,480 | 0.15 | % | $ | 44,581 | 0.34 | % | $ | — | — | % | $ | — | — | % | |||||||||||||||||||||||||||||||
Obligations of U.S. government corporations and agencies | 8,947 | 2.31 | % | 7,733 | 2.75 | % | 3,099 | 3.48 | % | — | — | % | |||||||||||||||||||||||||||||||||||
Obligations of states and political subdivisions2 | 27,473 | 2.02 | % | 92,449 | 2.23 | % | 93,704 | 2.16 | % | 43,886 | 2.50 | % | |||||||||||||||||||||||||||||||||||
Asset-backed securities | — | — | % | — | — | % | 72,729 | 5.53 | % | 397,146 | 5.19 | % | |||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | % | 23,643 | 2.24 | % | 18,584 | 2.19 | % | 66,167 | 2.15 | % | |||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | 223 | 2.48 | % | 15,532 | 2.67 | % | 106,308 | 1.85 | % | 1,121,193 | 1.68 | % | |||||||||||||||||||||||||||||||||||
Corporate debt securities | 27,844 | 0.62 | % | 184,816 | 1.21 | % | 35,856 | 3.55 | % | — | — | % | |||||||||||||||||||||||||||||||||||
Debt securities available for sale | $ | 133,967 | 0.78 | % | $ | 368,754 | 1.51 | % | $ | 330,280 | 2.92 | % | $ | 1,628,392 | 2.50 | % |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Debt securities held to maturity | |||||||||||
Commercial mortgage-backed securities | $ | 474,820 | $ | — | |||||||
Residential mortgage-backed securities | 443,492 | — | |||||||||
Debt securities held to maturity, amortized cost | $ | 918,312 | $ | — | |||||||
Debt securities held to maturity, fair value | $ | 785,295 | $ | — | |||||||
Fair value as a percentage of amortized cost | 85.52 | % | N/A |
Due in 1 year or less | Due after 1 year through 5 years | Due after 5 years through 10 years | Due after 10 years | ||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | ||||||||||||||||||||||||||||||||||||||||
Debt securities held to maturity1 | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | $ | — | — | % | $ | 41,483 | 2.25 | % | $ | 57,955 | 2.20 | % | $ | 311,644 | 2.31 | % | |||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | % | — | — | % | — | — | % | 374,213 | 2.25 | % | |||||||||||||||||||||||||||||||||||
Debt securities held to maturity | $ | — | — | % | $ | 41,483 | 2.25 | % | $ | 57,955 | 2.20 | % | $ | 685,857 | 2.28 | % |
Securities are presented based upon final contractual maturity or pre-refunded date.
59
Management reviews and approves Busey Bank’s lending policies and procedures on a regular basis. Management routinely (at least quarterly) reviews the ACL in conjunction with reports related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans. Our underwriting standards are designed to encourage relationship banking rather than transactional banking. Relationship banking implies a primary banking relationship with the borrower that includes, at a minimum, an active deposit banking relationship in addition to the lending relationship. Significant underwriting factors in addition to location, duration, a sound and profitable cash flow basis, and the borrower’s character, include the quality of the borrower’s financial history, the liquidity of the underlying collateral, and the reliability of the valuation of the underlying collateral.
60
Real Estate Construction Loans
The composition of our portfolio loans as of the dates indicated was as follows (dollars in thousands):
| | | | | | | | | | | | | | | |
| | As of December 31, | |||||||||||||
|
| 2021 |
| 2020 |
| 2019 |
| 2018 |
| 2017 | |||||
Portfolio loans | | | | | | | | | | | | | | | |
Commercial | | $ | 1,943,886 | | $ | 2,014,576 | | $ | 1,748,368 | | $ | 1,405,106 | | $ | 1,414,631 |
Commercial real estate | |
| 3,119,807 | |
| 2,892,535 | |
| 2,793,417 | |
| 2,366,823 | |
| 2,354,684 |
Real estate construction | |
| 385,996 | |
| 461,786 | |
| 401,861 | |
| 288,197 | |
| 261,506 |
Retail real estate | |
| 1,512,976 | |
| 1,407,852 | |
| 1,693,769 | |
| 1,480,133 | |
| 1,460,801 |
Retail other | |
| 226,333 | |
| 37,428 | |
| 49,834 | |
| 28,169 | |
| 27,878 |
Portfolio loans | | $ | 7,188,998 | | $ | 6,814,177 | | $ | 6,687,249 | | $ | 5,568,428 | | $ | 5,519,500 |
| | | | | | | | | | | | | | | |
ACL | | | (87,887) | | | (101,048) | | | (53,748) | | | (50,648) | | | (53,582) |
Portfolio loans, net | | $ | 7,101,111 | | $ | 6,713,129 | | $ | 6,633,501 | | $ | 5,517,780 | | $ | 5,465,918 |
61
As of December 31, | |||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||||||||||||||||||||
Portfolio loans | |||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 1,974,154 | $ | 1,943,886 | $ | 30,268 | 1.6 | % | |||||||||||||||||||||||||||||||||
Commercial real estate | 3,261,873 | 3,119,807 | 142,066 | 4.6 | % | ||||||||||||||||||||||||||||||||||||
Real estate construction | 530,469 | 385,996 | 144,473 | 37.4 | % | ||||||||||||||||||||||||||||||||||||
Retail real estate | 1,657,082 | 1,512,976 | 144,106 | 9.5 | % | ||||||||||||||||||||||||||||||||||||
Retail other | 302,124 | 226,333 | 75,791 | 33.5 | % | ||||||||||||||||||||||||||||||||||||
Total portfolio loans | $ | 7,725,702 | $ | 7,188,998 | $ | 536,704 | 7.5 | % | |||||||||||||||||||||||||||||||||
ACL | (91,608) | (87,887) | (3,721) | 4.2 | % | ||||||||||||||||||||||||||||||||||||
Portfolio loans, net | $ | 7,634,094 | $ | 7,101,111 | $ | 532,983 | 7.5 | % |
Geographic distributions of portfolio loans, based on origination, by category were as follows (dollars in thousands):
December 31, 2022 | |||||||||||||||||||||||||||||
Illinois | Missouri | Florida | Indiana | Total | |||||||||||||||||||||||||
Portfolio loans | |||||||||||||||||||||||||||||
Commercial | $ | 1,401,165 | $ | 466,904 | $ | 52,925 | $ | 53,160 | $ | 1,974,154 | |||||||||||||||||||
Commercial real estate | 2,180,767 | 680,532 | 220,939 | 179,635 | 3,261,873 | ||||||||||||||||||||||||
Real estate construction | 326,154 | 131,782 | 31,212 | 41,321 | 530,469 | ||||||||||||||||||||||||
Retail real estate | 1,253,069 | 210,048 | 122,397 | 71,568 | 1,657,082 | ||||||||||||||||||||||||
Retail other | 296,719 | 2,565 | 1,788 | 1,052 | 302,124 | ||||||||||||||||||||||||
Total portfolio loans | $ | 5,457,874 | $ | 1,491,831 | $ | 429,261 | $ | 346,736 | $ | 7,725,702 | |||||||||||||||||||
ACL | (91,608) | ||||||||||||||||||||||||||||
Portfolio loans, net of ACL | $ | 7,634,094 |
December 31, 2021 | |||||||||||||||||||||||||||||
Illinois | Missouri | Florida | Indiana | Total | |||||||||||||||||||||||||
Portfolio loans | |||||||||||||||||||||||||||||
Commercial | $ | 1,372,584 | $ | 463,085 | $ | 55,180 | $ | 53,037 | $ | 1,943,886 | |||||||||||||||||||
Commercial real estate | 2,063,681 | 691,969 | 191,303 | 172,854 | 3,119,807 | ||||||||||||||||||||||||
Real estate construction | 199,471 | 120,785 | 31,265 | 34,475 | 385,996 | ||||||||||||||||||||||||
Retail real estate | 1,124,486 | 235,083 | 96,563 | 56,844 | 1,512,976 | ||||||||||||||||||||||||
Retail other | 219,000 | 3,684 | 2,181 | 1,468 | 226,333 | ||||||||||||||||||||||||
Total portfolio loans | $ | 4,979,222 | $ | 1,514,606 | $ | 376,492 | $ | 318,678 | $ | 7,188,998 | |||||||||||||||||||
ACL | (87,887) | ||||||||||||||||||||||||||||
Portfolio loans, net of ACL | $ | 7,101,111 |
| | | | | | | | | | | | | | | |
| | December 31, 2021 | |||||||||||||
|
| Illinois |
| Missouri |
| Florida |
| Indiana |
| Total | |||||
Portfolio loans | | | | | | | | | | | | | | | |
Commercial | | $ | 1,372,584 | | $ | 463,085 | | $ | 55,180 | | $ | 53,037 | | $ | 1,943,886 |
Commercial real estate | | | 2,063,681 | | | 691,969 | | | 191,303 | | | 172,854 | | | 3,119,807 |
Real estate construction | |
| 199,471 | |
| 120,785 | |
| 31,265 | |
| 34,475 | |
| 385,996 |
Retail real estate | | | 1,124,486 | | | 235,083 | | | 96,563 | | | 56,844 | | | 1,512,976 |
Retail other | |
| 219,000 | |
| 3,684 | |
| 2,181 | |
| 1,468 | |
| 226,333 |
Total portfolio loans | | $ | 4,979,222 | | $ | 1,514,606 | | $ | 376,492 | | $ | 318,678 | | $ | 7,188,998 |
| | | | | | | | | | | | | | | |
ACL | |
|
| |
|
| |
|
| |
|
| |
| (87,887) |
Portfolio loans, net | |
|
| |
|
| |
|
| |
|
| | $ | 7,101,111 |
| | | | | | | | | | | | | | | |
| | December 31, 2020 | |||||||||||||
|
| Illinois |
| Missouri |
| Florida |
| Indiana |
| Total | |||||
Portfolio loans | | | | | | | | | | | | | | | |
Commercial | | $ | 1,386,587 | | $ | 529,281 | | $ | 50,878 | | $ | 47,830 | | $ | 2,014,576 |
Commercial real estate | |
| 1,880,437 | | | 715,680 | | | 154,234 | | | 142,184 | |
| 2,892,535 |
Real estate construction | |
| 192,971 | |
| 115,227 | |
| 57,381 | |
| 96,207 | |
| 461,786 |
Retail real estate | |
| 963,538 | | | 295,352 | | | 94,748 | | | 54,214 | |
| 1,407,852 |
Retail other | |
| 32,678 | |
| 2,415 | |
| 1,188 | |
| 1,147 | |
| 37,428 |
Total portfolio loans | | $ | 4,456,211 | | $ | 1,657,955 | | $ | 358,429 | | $ | 341,582 | | $ | 6,814,177 |
| | | | | | | | | | | | | | | |
ACL | |
|
| |
|
| |
|
| |
|
| |
| (101,048) |
Portfolio loans, net | |
|
| |
|
| |
|
| |
|
| | $ | 6,713,129 |
As of December 31, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Portfolio loans | |||||||||||||||||||||||
Commercial loans: | |||||||||||||||||||||||
Commercial | $ | 1,974,154 | $ | 1,943,886 | $ | 30,268 | 1.6 | % | |||||||||||||||
Commercial real estate | 3,261,873 | 3,119,807 | 142,066 | 4.6 | % | ||||||||||||||||||
Real estate construction | 530,469 | 385,996 | 144,473 | 37.4 | % | ||||||||||||||||||
Commercial loan balances | 5,766,496 | 5,449,689 | 316,807 | 5.8 | % | ||||||||||||||||||
Retail loans: | |||||||||||||||||||||||
Retail real estate | 1,657,082 | 1,512,976 | 144,106 | 9.5 | % | ||||||||||||||||||
Retail other | 302,124 | 226,333 | 75,791 | 33.5 | % | ||||||||||||||||||
Retail loan balances | 1,959,206 | 1,739,309 | 219,897 | 12.6 | % | ||||||||||||||||||
Total portfolio loans | 7,725,702 | 7,188,998 | 536,704 | 7.5 | % | ||||||||||||||||||
ACL | (91,608) | (87,887) | (3,721) | 4.2 | % | ||||||||||||||||||
Portfolio loans, net of ACL | $ | 7,634,094 | $ | 7,101,111 | $ | 532,983 | 7.5 | % |
As of December 31, | |||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Commercial loan balances | $ | 5,766,496 | $ | 5,449,689 | $ | 316,807 | 5.8 | % | |||||||||||||||
Less: PPP loans amortized cost | (845) | (74,958) | 74,113 | (98.9) | % | ||||||||||||||||||
Commercial loan balances, excluding PPP loans | $ | 5,765,651 | $ | 5,374,731 | $ | 390,920 | 7.3 | % |
The following table sets forth remaining maturities of selected loans (excluding deferred loan fees and costs, purchase premiums and discounts, and certain real estate-mortgage loans and installment loans to individuals) at December 31, 20212022, (dollars in thousands). The determination of loan maturities is based on contractual loan terms. For the purposes of categorization within the table below, demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are considered to mature within one year. Maturities for non-contractual rollovers or extensions are determined based on the rate review date.
| | | | | | | | | | | | | | | |
|
| |
| After 1 Year |
| After 5 Years |
| |
| | |||||
|
| Within 1 Year |
| Through 5 Years |
| Through 15 Years |
| After 15 Years |
| Total | |||||
Selected Loans | | | | | | | | | | | | | | | |
Commercial | | $ | 1,043,137 | | $ | 659,421 | | $ | 222,780 | | $ | 20,719 | | $ | 1,946,057 |
Commercial real estate | |
| 994,593 | |
| 1,499,314 | |
| 627,520 | |
| 815 | |
| 3,122,242 |
Real estate construction | |
| 214,680 | |
| 121,293 | |
| 53,877 | |
| 506 | |
| 390,356 |
Total selected loans | | $ | 2,252,410 | | $ | 2,280,028 | | $ | 904,177 | | $ | 22,040 | | $ | 5,458,655 |
62
Within 1 Year | After 1 Year Through 5 Years | After 5 Years Through 15 Years | After 15 Years | Total | |||||||||||||||||||||||||
Selected Loans | |||||||||||||||||||||||||||||
Commercial | $ | 1,037,306 | $ | 628,431 | $ | 288,086 | $ | 20,412 | $ | 1,974,235 | |||||||||||||||||||
Commercial real estate | 956,694 | 1,492,092 | 814,381 | 35 | 3,263,202 | ||||||||||||||||||||||||
Real estate construction | 342,924 | 138,112 | 48,730 | 2,820 | 532,586 | ||||||||||||||||||||||||
Total selected loans | $ | 2,336,924 | $ | 2,258,635 | $ | 1,151,197 | $ | 23,267 | $ | 5,770,023 |
Selected loans maturing after one year are summarized below by interest rate sensitivitystructure and loan category, as of December 31, 2022, (dollars in thousands):
Fixed Rate | Adjustable Rate | Total | |||||||||||||||
Selected loans maturing after 1 year | |||||||||||||||||
Commercial | $ | 896,637 | $ | 40,292 | $ | 936,929 | |||||||||||
Commercial real estate | 2,198,122 | 108,386 | 2,306,508 | ||||||||||||||
Real estate construction | 170,692 | 18,970 | 189,662 | ||||||||||||||
Total selected loans maturing after 1 year | $ | 3,265,451 | $ | 167,648 | $ | 3,433,099 |
| | | | | | | | | |
| | Interest Rate Sensitivity of Selected Loans | |||||||
| | Fixed | | Adjustable | | | | ||
| | Rate | | Rate | | Total | |||
Selected loans maturing after 1 year | | | | | | | | | |
Commercial | | $ | 862,688 | | $ | 40,232 | | $ | 902,920 |
Commercial real estate | |
| 1,967,626 | |
| 160,023 | |
| 2,127,649 |
Real estate construction | |
| 161,388 | |
| 14,288 | |
| 175,676 |
Total selected loans maturing after 1 year | | $ | 2,991,702 | | $ | 214,543 | | $ | 3,206,245 |
The following table summarizes, by loan category, activity affecting the ACL and average portfolio loans outstanding for the year ended December 31, 2021,2022, as well as the related ratios of net charge-offs (recoveries) to average portfolio loans (dollars in thousands):
| | | | | | | | | | |
|
| |
| | | | Ratio of | | ||
| | | | | | Net Charge-offs | | |||
| | | | | Average | | (Recoveries) | | ||
| | | | Portfolio Loans | | To Average | | |||
| | ACL | | Outstanding | | Portfolio Loans | | |||
ACL Balance, January 1, 2021 | �� | $ | 101,048 | | | | | | | |
Day 1 PCD (1) | | | 4,178 | | | | | | | |
Net (charge-offs) recoveries and average portfolio loans by loan category: | | | | | | | | |||
Commercial | | | (1,397) | | $ | 1,985,511 | | | 0.07 | % |
Commercial real estate | |
| (666) | | | 2,953,944 | | | 0.02 | % |
Real estate construction | |
| 89 | | | 450,713 | | | (0.02) | % |
Retail real estate | |
| (76) | | | 1,446,673 | | | 0.01 | % |
Retail other | |
| (188) | | | 132,966 | | | 0.14 | % |
Net (charge-offs) recoveries and average portfolio loans | | | (2,238) | | $ | 6,969,807 | | | 0.03 | % |
Provision for credit losses | | | (15,101) | | | | | | | |
ACL Balance, December 31, 2021 | | $ | 87,887 | | | | | | | |
ACL | Average Portfolio Loans Outstanding | Ratio of Net Charge-offs (Recoveries) To Average Portfolio Loans | |||||||||||||||
ACL balance, December 31, 2019 | $ | 53,748 | |||||||||||||||
Adoption of ASC 326-30 | 16,833 | ||||||||||||||||
Net (charge-offs) recoveries and average portfolio loans by loan category: | |||||||||||||||||
Commercial | (5,972) | $ | 2,123,550 | 0.28 | % | ||||||||||||
Commercial real estate | (1,777) | 2,840,592 | 0.06 | % | |||||||||||||
Real estate construction | 583 | 447,503 | (0.13) | % | |||||||||||||
Retail real estate | (845) | 1,552,297 | 0.05 | % | |||||||||||||
Retail other | (319) | 43,004 | 0.74 | % | |||||||||||||
Net (charge-offs) recoveries and average portfolio loans | (8,330) | $ | 7,006,946 | 0.12 | % | ||||||||||||
Provision for credit losses | 38,797 | ||||||||||||||||
ACL balance, December 31, 2020 | 101,048 | ||||||||||||||||
Day 1 PCD1 | 4,178 | ||||||||||||||||
Net (charge-offs) recoveries and average portfolio loans by loan category: | |||||||||||||||||
Commercial | (1,397) | $ | 1,985,511 | 0.07 | % | ||||||||||||
Commercial real estate | (666) | 2,953,944 | 0.02 | % | |||||||||||||
Real estate construction | 89 | 450,713 | (0.02) | % | |||||||||||||
Retail real estate | (76) | 1,446,673 | 0.01 | % | |||||||||||||
Retail other | (188) | 132,966 | 0.14 | % | |||||||||||||
Net (charge-offs) recoveries and average portfolio loans | (2,238) | $ | 6,969,807 | 0.03 | % | ||||||||||||
Provision for credit losses | (15,101) | ||||||||||||||||
ACL balance, December 31, 2021 | 87,887 | ||||||||||||||||
Net (charge-offs) recoveries and average portfolio loans by loan category: | |||||||||||||||||
Commercial | (492) | $ | 1,919,227 | 0.03 | % | ||||||||||||
Commercial real estate | (842) | 3,200,166 | 0.03 | % | |||||||||||||
Real estate construction | 213 | 466,045 | (0.05) | % | |||||||||||||
Retail real estate | 385 | 1,584,859 | (0.02) | % | |||||||||||||
Retail other | (166) | 275,665 | 0.06 | % | |||||||||||||
Net (charge-offs) recoveries and average portfolio loans | (902) | $ | 7,445,962 | 0.01 | % | ||||||||||||
Provision for credit losses | 4,623 | ||||||||||||||||
ACL balance, December 31, 2022 | $ | 91,608 |
The following table summarizes the relationship between thepresents ACL and totalto portfolio loans,loan ratios, as of the periods indicated (dollars in thousands):
| | | | | | | | | | |
| | As of December 31, | | |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Portfolio loans | | | | | | | | | | |
Portfolio loans, excluding PPP loans | | $ | 7,114,040 | | $ | 6,367,774 | | $ | 6,687,249 | |
PPP loans, amortized cost | | | 74,958 | | | 446,403 | | | — | |
Total portfolio loans | | $ | 7,188,998 | | $ | 6,814,177 | | $ | 6,687,249 | |
| | | | | | | | | | |
ACL | | $ | 87,887 | | $ | 101,048 | | $ | 53,748 | |
| | | | | | | | | | |
Ratios | | | | | | | | | | |
ACL to portfolio loans | | | 1.22 | % | | 1.48 | % | | 0.80 | % |
ACL to portfolio loans, excluding PPP loans | | | 1.24 | % | | 1.59 | % | | 0.80 | % |
As of December 31, | |||||||||||||||||
2022 | 2021 | ||||||||||||||||
Portfolio loans | $ | 7,725,702 | $ | 7,188,998 | |||||||||||||
PPP loans amortized cost | (845) | (74,958) | |||||||||||||||
Core loans1 | $ | 7,724,857 | $ | 7,114,040 | |||||||||||||
ACL | $ | 91,608 | $ | 87,887 | |||||||||||||
Ratios | |||||||||||||||||
ACL to portfolio loans | 1.19 | % | 1.22 | % | |||||||||||||
ACL to core loans1 | 1.19 | % | 1.24 | % |
63
The following table sets forth the ACL by loan categories and percentage of loans to total loans as of December 31 for each of the years indicated (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2021 | | 2020 | | 2019 | | 2018 | | 2017 |
| |||||||||||||||
|
| | |
| % of |
| | |
| % of |
| | |
| % of |
| | |
| % of |
| | |
| % of |
|
| | | | | Loans | | | | | Loans | | | | | Loans | | | | | Loans | | | | | Loans |
|
| | | | | to Total | | | | | to Total | | | | | to Total | | | | | to Total | | | | | to Total |
|
|
| Amount |
| Loans |
| Amount |
| Loans |
| Amount |
| Loans |
| Amount |
| Loans |
| Amount |
| Loans |
| |||||
ACL | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 23,855 |
| 27.0 | % | $ | 23,866 |
| 29.6 | % | $ | 18,291 |
| 26.2 | % | $ | 17,829 |
| 25.2 | % | $ | 14,779 |
| 25.6 | % |
Commercial real estate | |
| 38,249 |
| 43.4 | % |
| 46,230 |
| 42.4 | % |
| 21,190 |
| 41.8 | % |
| 21,137 |
| 42.5 | % |
| 21,813 |
| 42.7 | % |
Real estate construction | |
| 5,102 |
| 5.4 | % |
| 8,193 |
| 6.8 | % |
| 3,204 |
| 6.0 | % |
| 2,723 |
| 5.2 | % |
| 2,861 |
| 4.7 | % |
Retail real estate | |
| 17,589 |
| 21.0 | % |
| 21,992 |
| 20.7 | % |
| 10,495 |
| 25.3 | % |
| 8,471 |
| 26.6 | % |
| 13,783 |
| 26.5 | % |
Retail other | |
| 3,092 |
| 3.2 | % |
| 767 |
| 0.5 | % |
| 568 |
| 0.7 | % |
| 488 |
| 0.5 | % |
| 346 |
| 0.5 | % |
Total ACL | | $ | 87,887 |
| 100.0 | % | $ | 101,048 |
| 100.0 | % | $ | 53,748 |
| 100.0 | % | $ | 50,648 |
| 100.0 | % | $ | 53,582 |
| 100.0 | % |
As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACL | % of Loans to Total Loans | ACL | % of Loans to Total Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan Category | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 23,860 | 25.6 | % | $ | 23,855 | 27.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | 38,299 | 42.2 | % | 38,249 | 43.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate construction | 6,457 | 6.9 | % | 5,102 | 5.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Retail real estate | 18,193 | 21.4 | % | 17,589 | 21.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Retail other | 4,799 | 3.9 | % | 3,092 | 3.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 91,608 | 100.0 | % | $ | 87,887 | 100.0 | % |
The ACL is a significant estimate in our Consolidated Balance Sheet, affecting both earnings and capital. The methodology adopted influences, and is influenced by, Busey Bank’s overall credit risk management processes. The ACL is recorded in accordance with GAAP to provide an adequate reserve for expected credit losses that is reflective of management’s best estimate of what is expected to be collected. All estimates of credit losses should be based on a careful consideration of all significant factors affecting the collectability as of the evaluation date. The ACL is established through the provision for credit loss expense charged to income. WeProvision expenses (releases) were recorded as follows for each of the years indicated (dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Provision for credit losses | $ | 4,623 | $ | (15,101) | $ | 38,797 |
64
The following table sets forth information concerning non-performing loans and performing restructured loans (dollars in thousands):
As of December 31, | ||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||
Portfolio loans | $ | 7,725,702 | $ | 7,188,998 | ||||||||||||||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||
PPP loans amortized cost | (845) | (74,958) | ||||||||||||||||||||||||||||||
Core loans1 | $ | 7,724,857 | $ | 7,114,040 | ||||||||||||||||||||||||||||
Loans 30 – 89 days past due | $ | 6,548 | $ | 6,261 | ||||||||||||||||||||||||||||
Total assets | 12,336,677 | 12,859,689 | ||||||||||||||||||||||||||||||
Non-performing assets | ||||||||||||||||||||||||||||||||
Non-performing loans: | ||||||||||||||||||||||||||||||||
Non-accrual loans | $ | 15,067 | $ | 15,946 | ||||||||||||||||||||||||||||
Loans 90+ days past due and still accruing | 673 | 906 | ||||||||||||||||||||||||||||||
Total non-performing loans | 15,740 | 16,852 | ||||||||||||||||||||||||||||||
OREO and other repossessed assets | 850 | 4,416 | ||||||||||||||||||||||||||||||
Total non-performing assets | 16,590 | 21,268 | ||||||||||||||||||||||||||||||
Substandard (excludes 90+ days past due) | 90,489 | 70,565 | ||||||||||||||||||||||||||||||
Classified assets | $ | 107,079 | $ | 91,833 | ||||||||||||||||||||||||||||
Performing TDRs (includes 30 – 89 days past due) | $ | 3,032 | $ | 1,801 | ||||||||||||||||||||||||||||
ACL | 91,608 | 87,887 | ||||||||||||||||||||||||||||||
Bank Tier 1 Capital | 1,306,716 | 1,241,303 | ||||||||||||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||||||
ACL to non-accrual loans | 608.00 | % | 551.15 | % | ||||||||||||||||||||||||||||
ACL to non-performing loans | 582.01 | % | 521.52 | % | ||||||||||||||||||||||||||||
ACL to non-performing assets | 552.19 | % | 413.24 | % | ||||||||||||||||||||||||||||
Non-accrual loans to portfolio loans | 0.20 | % | 0.22 | % | ||||||||||||||||||||||||||||
Non-performing loans to portfolio loans | 0.20 | % | 0.23 | % | ||||||||||||||||||||||||||||
Non-performing loans to core loans1 | 0.20 | % | 0.24 | % | ||||||||||||||||||||||||||||
Non-performing assets to total assets | 0.13 | % | 0.17 | % | ||||||||||||||||||||||||||||
Non-performing assets to portfolio loans and OREO | 0.21 | % | 0.30 | % | ||||||||||||||||||||||||||||
Classified assets to Bank Tier 1 Capital and ACL | 7.66 | % | 6.91 | % |
| | | | | | | | | | | | | | | | |
| | As of December 31, | | |||||||||||||
|
| 2021 |
| 2020 |
| 2019 |
| 2018 |
| 2017 |
| |||||
Loans 30 – 89 days past due | | $ | 6,261 | | $ | 7,578 | | $ | 14,271 | | $ | 7,121 | | $ | 12,897 | |
| | | | | | | | | | | | | | | | |
Non-performing assets | | | | | | | | | | | | | | | | |
Non-performing loans: | | | | | | | | | | | | | | | | |
Non-accrual loans | | | 15,946 | | | 22,930 | | | 27,896 | | | 34,997 | | | 24,624 | |
Loans 90+ days past due and still accruing | |
| 906 | |
| 1,371 | |
| 1,611 | |
| 1,601 | |
| 2,741 | |
Total non-performing loans | | | 16,852 | | | 24,301 | | | 29,507 | | | 36,598 | | | 27,365 | |
OREO and other repossessed assets | | | 4,416 | | | 4,571 | | | 3,057 | | | 376 | | | 1,283 | |
Total non-performing assets | | $ | 21,268 | | $ | 28,872 | | $ | 32,564 | | $ | 36,974 | | $ | 28,648 | |
| | | | | | | | | | | | | | | | |
Substandard (excludes 90+ days past due) | | | 70,565 | | | 68,924 | | | 74,315 | | | 85,062 | | | 87,372 | |
Classified assets | | $ | 91,833 | | $ | 97,796 | | $ | 106,879 | | $ | 122,036 | | $ | 116,020 | |
| | | | | | | | | | | | | | | | |
Performing TDRs (includes 30 – 89 days past due) | | $ | 1,801 | | $ | 3,829 | | $ | 5,005 | | $ | 8,446 | | $ | 9,981 | |
ACL | | | 87,887 | | | 101,048 | | | 53,748 | | | 50,648 | | | 53,582 | |
| | | | | | | | | | | | | | | | |
Ratios | | | | | | | | | | | | | | | | |
ACL to non-accrual loans | | | 551.15 | % | | 440.68 | % | | 192.67 | % | | 144.72 | % | | 217.60 | % |
ACL to non-performing loans | | | 521.52 | % | | 415.82 | % | | 182.15 | % | | 138.39 | % | | 195.80 | % |
ACL to non-performing assets | | | 413.24 | % | | 349.99 | % | | 165.05 | % | | 136.98 | % | | 187.04 | % |
Non-accrual loans to portfolio loans | | | 0.22 | % | | 0.34 | % | | 0.42 | % | | 0.63 | % | | 0.45 | % |
Non-performing assets to total assets | | | 0.17 | % | | 0.27 | % | | 0.34 | % | | 0.48 | % | | 0.41 | % |
Non-performing loans to portfolio loans | | | 0.23 | % | | 0.36 | % | | 0.44 | % | | 0.66 | % | | 0.50 | % |
Non-performing loans to portfolio loans, excluding PPP loans | | | 0.24 | % | | 0.38 | % | | 0.44 | % | | 0.66 | % | | 0.50 | % |
Non-performing assets to portfolio loans and OREO | | | 0.30 | % | | 0.42 | % | | 0.49 | % | | 0.66 | % | | 0.52 | % |
Classified assets to Busey Bank Tier 1 Capital and ACL | | | 6.91 | % | | 8.47 | % | | 9.72 | % | | 14.28 | % | | 14.69 | % |
Core loans is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see
2021.
65
Potential Problem Loans
Deposits
The following table shows the deposit mix for each of the periods presented (dollars in thousands):
As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Balance | % Total | Balance | % Total | Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||||||||||||||||||||
Non-maturity deposits: | |||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | $ | 3,393,666 | 33.7 | % | $ | 3,670,267 | 34.1 | % | $ | (276,601) | (7.5) | % | |||||||||||||||||||||||||||||||||||
Interest-bearing transaction deposits | 2,857,818 | 28.4 | % | 2,720,417 | 25.2 | % | 137,401 | 5.1 | % | ||||||||||||||||||||||||||||||||||||||
Saving deposits and money market deposits | 2,964,421 | 29.4 | % | 3,442,244 | 32.0 | % | (477,823) | (13.9) | % | ||||||||||||||||||||||||||||||||||||||
Total non-maturity deposits | 9,215,905 | 91.5 | % | 9,832,928 | 91.3 | % | (617,023) | (6.3) | % | ||||||||||||||||||||||||||||||||||||||
Time deposits | 855,375 | 8.5 | % | 935,649 | 8.7 | % | (80,274) | (8.6) | % | ||||||||||||||||||||||||||||||||||||||
Total deposits | $ | 10,071,280 | 100.0 | % | $ | 10,768,577 | 100.0 | % | $ | (697,297) | (6.5) | % | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
| | As of December 31, | | ||||||||||||||||
| | 2021 | | 2020 | | 2019 | | ||||||||||||
|
| Balance |
| % Total | | Balance |
| % Total | | Balance |
| % Total | | ||||||
Deposits | | | | | | | | | | | | | | | | | | | |
Non-maturity deposits: | | | | | | | | | | | | | | | | | | | |
Demand deposits, noninterest-bearing | | $ | 3,670,267 |
| | 34.1 | % | $ | 2,552,039 |
| | 29.4 | % | $ | 1,832,619 |
| | 23.2 | % |
Interest-bearing transaction deposits | |
| 2,720,417 |
| | 25.2 | % |
| 2,263,093 |
| | 26.1 | % |
| 1,989,854 |
| | 25.2 | % |
Saving deposits and money market deposits | |
| 3,442,244 |
| | 32.0 | % |
| 2,743,369 |
| | 31.6 | % |
| 2,545,073 |
| | 32.2 | % |
Total non-maturity deposits | | | 9,832,928 | | | 91.3 | | | 7,558,501 | | | 87.1 | | | 6,367,546 | | | 80.6 | |
| | | | | | | | | | | | | | | | | | | |
Time deposits | |
| 935,649 |
| | 8.7 | % |
| 1,119,348 |
| | 12.9 | % |
| 1,534,850 |
| | 19.4 | % |
Total deposits | | $ | 10,768,577 |
| | 100.0 | % | $ | 8,677,849 |
| | 100.0 | % | $ | 7,902,396 |
| | 100.0 | % |
| | | | | | | | | | | | | | | | | | | |
Change in non-maturity deposits | | | 2,274,427 | | | | | | 1,190,955 | | | | | | | | | | |
Percent change in non-maturity deposits | | | 30.1 | % | | | | | 18.7 | % | | | | | | | | | |
We focus on deepening our relationship with customers to foster core deposit4 growth, allowing us to reduce our reliance on wholesale funding. Our 20212022 deposit balances were impacted by the declining retention of PPP loan funding in customer deposit accounts and the residual impacts of economic stimulus and other core deposit growth.measures, along with the movement of deposits by certain non-relationship customers to competitors based on rate offerings. Core deposits include non-brokered transaction accounts, money market deposit accounts, and time deposits of $250,000 or less. Core deposits represented 98.8% of total deposits as of December 31, 2022, compared to 98.7% as of December 31, 2021. Time deposits as a percentage of total deposits decreaseddeclined to 8.5% as of December 31, 2022, compared to 8.7% as of December 31, 2021, compared to 12.9% as of December 31, 2020.2021. As time deposits mature, we are actively engaging our customers to renew at current market rates.
Core deposits is a non-GAAP financial measure. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “Item 1. Business—Non-GAAP Financial Information” included in this Annual Report.
| | | |
|
| As of | |
| | December 31, 2021 | |
Uninsured time deposits by schedule of maturities | | | |
3 months or less |
| $ | 24,946 |
Over 3 months through 6 months | |
| 23,108 |
Over 6 months through 12 months | |
| 34,362 |
Thereafter | |
| 47,396 |
Uninsured time deposits | | $ | 129,812 |
66
As of December 31, 2022 | |||||
Uninsured time deposits by schedule of maturities | |||||
3 months or less | $ | 21,908 | |||
Over 3 months through 6 months | 16,926 | ||||
Over 6 months through 12 months | 31,888 | ||||
Thereafter | 49,929 | ||||
Uninsured time deposits | $ | 120,651 |
Proceeds of the term loan were used to fund a part of the cash portion of the merger consideration related to the acquisition of CAC in the second quarter of 2021, and for general corporate purposes. As of December 31, 2022, there was no balance outstanding on the revolving credit facility and a total of $42.0 million outstanding on the term loan, of which $12.0 million was short-term and $30.0 million was long-term. The revolving credit facility incurs a non-usage fee based on any undrawn amounts.
On May 28, 2021, First Busey entered into a Second Amended and Restated Credit Agreement, pursuant to which we have access to (i) a $40.0 million revolving lineTable of credit with a termination date of April 30, 2022, and (ii) a $60.0 million term loan with a maturity date of May 31, 2026. The loans have an annual interest rate of 1.75% plus the 1-month LIBOR rate. Proceeds of the term loan were used to fund a part of the cash portion of the merger consideration related to the acquisition of CAC and for general corporate purposes. The revolving credit facility incurs a non-usage fee based on any undrawn amounts. As of December 31, 2021, there was no balance outstanding on the revolving credit facility and a total of $54.0 million outstanding on the term loan, of which $12.0 million is short-term and $42.0 million is long-term.
Contents
The following table sets forth the distribution of securities sold under agreements to repurchase and short-term borrowings, andas well as the weighted average interest rates thereon (dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Securities sold under agreements to repurchase | |||||||||||||||||
Balance at end of period | $ | 229,806 | $ | 270,139 | $ | 175,614 | |||||||||||
Weighted average interest rate at end of period | 1.91 | % | 0.08 | % | 0.13 | % | |||||||||||
Maximum outstanding at any month end in year-to-date period | $ | 283,664 | $ | 270,139 | $ | 210,529 | |||||||||||
Average daily balance for the year-to-date period | $ | 243,690 | $ | 218,454 | $ | 187,032 | |||||||||||
Weighted average interest rate during period (1) | 0.60 | % | 0.10 | % | 0.35 | % | |||||||||||
FHLB advances, current portion due within 12 months | |||||||||||||||||
Balance at end of period | $ | 339,054 | $ | 5,678 | $ | 4,658 | |||||||||||
Weighted average interest rate at end of period | 4.28 | % | 0.36 | % | 0.43 | % | |||||||||||
Maximum outstanding at any month end in year-to-date period | $ | 339,054 | $ | 5,678 | $ | 4,658 | |||||||||||
Average daily balance for the year-to-date period | $ | 25,845 | $ | 4,934 | $ | 3,556 | |||||||||||
Weighted average interest rate during period (1) | 4.28 | % | 0.41 | % | 0.53 | % | |||||||||||
Term loan, current portion due within 12 months | |||||||||||||||||
Balance at end of period | $ | 12,000 | $ | 12,000 | $ | — | |||||||||||
Weighted average interest rate at end of period | 5.92 | % | 1.88 | % | — | % | |||||||||||
Maximum outstanding at any month end in year-to-date period | $ | 12,000 | $ | 12,000 | $ | — | |||||||||||
Average daily balance for the year-to-date period | $ | 12,000 | $ | 7,167 | $ | — | |||||||||||
Weighted average interest rate during period (1) | 3.55 | % | 1.79 | % | — | % |
| | | | | | | | | | |
|
| Years Ended December 31, | | |||||||
|
| 2021 |
| 2020 |
| 2019 | | |||
Securities sold under agreements to repurchase |
| |
|
| |
|
| |
| |
Balance at end of period | | $ | 270,139 | | $ | 175,614 | | $ | 205,491 | |
Weighted average interest rate at end of period | |
| 0.08 | % |
| 0.13 | % |
| 1.05 | % |
Maximum outstanding at any month end in year-to-date period | | $ | 270,139 | | $ | 210,529 | | $ | 225,531 | |
Average daily balance for the year-to-date period | | $ | 218,454 | | $ | 187,032 | | $ | 196,681 | |
Weighted average interest rate during period (1) | |
| 0.10 | % |
| 0.35 | % |
| 1.19 | % |
| | | | | | | | | | |
Short-term borrowings, FHLB advances | |
|
| |
|
| |
|
| |
Balance at end of period | | $ | 5,678 | | $ | 4,658 | | $ | 2,551 | |
Weighted average interest rate at end of period | |
| 0.36 | % |
| 0.43 | % |
| 1.90 | % |
Maximum outstanding at any month end in year-to-date period | | $ | 5,678 | | $ | 4,658 | | $ | 99,739 | |
Average daily balance for the year-to-date period | | $ | 4,934 | | $ | 3,556 | | $ | 27,495 | |
Weighted average interest rate during period (1) | |
| 0.41 | % |
| 0.53 | % |
| 2.81 | % |
| | | | | | | | | | |
Term loan, current portion due within 12 months | |
|
| |
|
| |
|
| |
Balance at end of period | | $ | 12,000 | | $ | — | | $ | — | |
Weighted average interest rate at end of period | |
| 1.88 | % |
| — | % |
| — | % |
Maximum outstanding at any month end in year-to-date period | | $ | 12,000 | | $ | — | | $ | — | |
Average daily balance for the year-to-date period | | $ | 7,167 | | $ | — | | $ | — | |
Weighted average interest rate during period (1) | |
| 1.79 | % |
| — | % |
| — | % |
In addition to the term loan, long-term debt includes funds borrowed from the FHLB which totaled $4.1 million and $4.8 million at December 31, 2021,2021. We did not have any funds borrowed from the FHLB included in long-term debt as of December 31, 2022.
Subordinated Notes
On May 25, 2017, we issued $40.0 million of 3.75% senior notes that maturematured and were redeemed on May 25, 2022. The senior notes are payable semi-annually on each May 25 and November 25, commencing on November 25, 2017. The senior notes are not subject to optional redemption by the Company. Additionally, on May 25, 2017, we issued $60.0 million of fixed-to-floating rate subordinated notes that were scheduled to mature on May 25, 2027. The subordinated notes, which qualify as Tier 2 capital for First Busey, bear interest at an annual rate of 4.75% for the first five years after issuance and thereafter bear interest at a floating rate equal to 3-month LIBOR plus a spread of 2.919%, as calculated on each applicable determination date. The subordinated notes are payable semi-annually on each May 25 and November 25, commencing on November 25, 2017, during the five year fixed-term and thereafter on February 25, May 25, August 25, and November 25 of each year, commencing on August 25, 2022. The subordinated notes have2027,with an optional redemption in whole or in part on any interest payment date on or after May 25, 2022. The senior notes andWe redeemed all $60.0 million of the outstanding fixed-to-floating rate subordinated notes are unsecured obligationsduring the third quarter of First Busey.
2022. At the time of redemption, the redeemed subordinated notes carried interest at a floating rate of 3-month LIBOR plus 2.919%.
67
On June 1, 2020, we issued $125.0 million of fixed-to-floating rate subordinated notes that mature on June 1, 2030. The subordinated notes, which qualify as Tier 2 capital for First Busey, bear interest at an annual rate of 5.25% for the first five years after issuance and thereafter bear interest at a floating rate equal to a three-month benchmark rate plus a spread of 5.11%, as calculated on each applicable determination date. The subordinated notes are payable semi-annually on each June 1 and December 1 during the five-year fixed-term, and thereafter on March 1, June 1, September 1, and December 1 of each year, commencing on September 1, 2025. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after June 1, 2025. The subordinated notes are unsecured obligations of First Busey.
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Unamortized debt issuance costs | | | | | | |
Senior notes issued in 2017 | | $ | 56 | | $ | 191 |
Subordinated notes issued in 2017 | | | 549 | | | 651 |
Subordinated notes issued in 2020 | | | 1,678 | | | 2,123 |
Total unamortized debt issuance costs | | $ | 2,283 | | $ | 2,965 |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Unamortized debt issuance costs | |||||||||||
Senior notes issued in 2017 | $ | — | $ | 56 | |||||||
Subordinated notes issued in 2017 | — | 549 | |||||||||
Subordinated notes issued in 2020 | 1,220 | 1,678 | |||||||||
Subordinated notes issued in 2022 | 1,742 | — | |||||||||
Total unamortized debt issuance costs | $ | 2,962 | $ | 2,283 |
| | | | | | | | | | |
| | Years Ended December 31, |
| |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Average liquid assets | | | | | | | | | | |
Cash and due from banks | | $ | 133,711 | | $ | 118,739 | | $ | 114,619 | |
Interest-bearing bank deposits | |
| 630,687 | |
| 488,786 | |
| 312,580 | |
Federal funds sold | |
| — | |
| — | |
| 24 | |
Total average liquid assets | | $ | 764,398 | | $ | 607,525 | | $ | 427,223 | |
| | | | | | | | | | |
Average liquid assets as a percent of average total assets | |
| 6.4 | % |
| 5.9 | % |
| 4.5 | % |
68
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Average liquid assets | |||||||||||||||||
Cash and due from banks | $ | 120,910 | $ | 133,711 | $ | 118,739 | |||||||||||
Interest-bearing bank deposits | 290,875 | 630,687 | 488,786 | ||||||||||||||
Federal funds sold | — | — | — | ||||||||||||||
Total average liquid assets | $ | 411,785 | $ | 764,398 | $ | 607,525 | |||||||||||
Average liquid assets as a percent of average total assets | 3.3 | % | 6.4 | % | 5.9 | % |
First Busey’s primary sources of funds consist of deposits, investment maturities and sales, loan principal repayments, and capital funds. At December 31, 2021, cashCash and unencumbered securities on our Consolidated Balance Sheets totaled $4.1 billion. are summarized as follows for the periods presented (dollars in thousands):
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Cash and unencumbered securities | |||||||||||
Total cash and cash equivalents | $ | 227,164 | $ | 836,095 | |||||||
Debt securities available for sale | 2,461,393 | 3,981,251 | |||||||||
Debt securities pledged as collateral | (746,675) | (708,939) | |||||||||
Cash and unencumbered securities | $ | 1,941,882 | $ | 4,108,407 |
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Additional borrowing capacity available from: | | | | | | |
FHLB | |
| 1,536,019 | |
| 1,336,655 |
Federal Reserve | | | 624,627 | | | 507,813 |
Revolving credit facility | |
| 40,000 | |
| 20,000 |
Additional borrowing capacity | | $ | 2,200,646 | | $ | 1,864,468 |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Additional borrowing capacity available from: | |||||||||||
FHLB | $ | 1,765,388 | $ | 1,536,019 | |||||||
Federal Reserve Bank | 659,680 | 624,627 | |||||||||
Revolving credit facility | 40,000 | 40,000 | |||||||||
Additional borrowing capacity | $ | 2,465,068 | $ | 2,200,646 |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Outstanding loan commitments and standby letters of credit | 2,024,777 | 2,016,207 | |||||||||
Reserve for unfunded commitments | 6,601 | 6,540 |
Years Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Provision for unfunded commitments expense (release) | $ | 61 | $ | (774) | $ | 1,822 |
The following table summarizes significant contractual obligations and other commitments, excluding short-term borrowings and the current portion of long-term debt, as of December 31, 2021, 2022, (dollars in thousands):
| | | | | | | | | | | | | | | | | | |
|
|
| |
|
| |
| Junior |
| |
|
| |
|
| | ||
| | | | | | | | Subordinated | | | | Senior and | | | | |||
| | | | | | | | Debt Owed to | | | | Subordinated Notes, | | | | |||
| | Certificates of | | Operating | | Unconsolidated | | Long-term | | Net of Unamortized | | | | |||||
|
| Deposit |
| Leases |
| Trusts |
| Debt |
| Issuance Costs |
| Total | ||||||
Contractual obligations by schedule of maturities | | | | | | | | | | | | | ||||||
2022 | | $ | 643,826 | | $ | 2,271 | | $ | — | | $ | — | | $ | 39,944 | | $ | 686,041 |
2023 | |
| 191,995 | |
| 2,098 | |
| — | |
| 16,056 | |
| — | |
| 210,149 |
2024 | |
| 70,111 | |
| 1,650 | |
| — | |
| 12,000 | |
| — | |
| 83,761 |
2025 | |
| 16,149 | |
| 1,413 | |
| — | |
| 12,000 | |
| — | |
| 29,562 |
2026 | |
| 12,834 | |
| 1,164 | |
| — | |
| 6,000 | |
| — | |
| 19,998 |
Thereafter | |
| 734 | |
| 2,766 | |
| 71,635 | |
| — | |
| 182,773 | |
| 257,908 |
Contractual obligations | | $ | 935,649 | | $ | 11,362 | | $ | 71,635 | | $ | 46,056 | | $ | 222,717 | | $ | 1,287,419 |
| | | | | | | | | | | | | | | | | | |
Commitments to extend credit and standby letters of credit | | $ | 2,016,207 |
69
Certificates of Deposit | Operating Leases | Junior Subordinated Debt Owed to Unconsolidated Trusts | Long-term Debt | Subordinated Notes, Net of Unamortized Issuance Costs | Total | ||||||||||||||||||||||||||||||
Contractual obligations by schedule of maturities | |||||||||||||||||||||||||||||||||||
2023 | $ | 560,147 | $ | 2,254 | $ | — | $ | — | $ | — | $ | 562,401 | |||||||||||||||||||||||
2024 | 229,263 | 1,942 | — | 12,000 | — | 243,205 | |||||||||||||||||||||||||||||
2025 | 34,307 | 1,719 | — | 12,000 | — | 48,026 | |||||||||||||||||||||||||||||
2026 | 16,637 | 1,442 | — | 6,000 | — | 24,079 | |||||||||||||||||||||||||||||
2027 | 14,301 | 1,277 | — | — | — | 15,578 | |||||||||||||||||||||||||||||
Thereafter | 720 | 6,699 | 71,810 | — | 222,038 | 301,267 | |||||||||||||||||||||||||||||
Contractual obligations | $ | 855,375 | $ | 15,333 | $ | 71,810 | $ | 30,000 | $ | 222,038 | $ | 1,194,556 | |||||||||||||||||||||||
Commitments to extend credit and standby letters of credit | $ | 2,024,777 |
Cash Flows
2021.
Net cashfinancing activities totaled $483.9 million in 2022, compared to $814.7 million provided by financing activities totaled $814.7 million in 2021, compared to $725.6 million in 2020.2021. Significant items affecting cash flows from financing activities are debt issuance, deposits, short-term borrowings, long-term debt, payment of dividends, and proceeds and redemption from stock issuances. Deposits, which represent First Busey’s primary funding source, increaseddecreased by $767.5$696.9 million in 2021,2022, compared to an increase of $776.4$767.5 million in 2020,2021, excluding acquired deposits.
Proceeds from FHLB advances totaled $335.0 million in 2022, compared to $5.0 million in 2021.
| | | | | | | | | | |
| | Minimum Capital | | As of December 31, 2021 | | |||||
| | Requirements with | | First Busey | | Busey | | |||
|
| Capital Buffer |
| Corporation |
| Bank | | |||
Common Equity Tier 1 Capital to Risk Weighted Assets | | | 7.00 | % | | 11.85 | % | | 14.81 | % |
Tier 1 Capital to Risk Weighted Assets | | | 8.50 | % | | 12.73 | % | | 14.81 | % |
Total Capital to Risk Weighted Assets | | | 10.50 | % | | 15.70 | % | | 15.59 | % |
Leverage Ratio of Tier 1 Capital to Average Assets | | | 6.50 | | | 8.52 | % | | 9.91 | % |
Bank as of December 31, 2022.
Minimum Capital Requirements with Capital Buffer | As of December 31, 2022 | ||||||||||||||||
First Busey Corporation | Busey Bank | ||||||||||||||||
Common Equity Tier 1 Capital to Risk Weighted Assets | 7.00 | % | 11.96 | % | 14.49 | % | |||||||||||
Tier 1 Capital to Risk Weighted Assets | 8.50 | % | 12.78 | % | 14.49 | % | |||||||||||
Total Capital to Risk Weighted Assets | 10.50 | % | 16.12 | % | 15.35 | % | |||||||||||
Leverage Ratio of Tier 1 Capital to Average Assets | 6.50 | % | 9.45 | % | 10.72 | % |
New Accounting Pronouncements
We review new accounting standards as issued. Information relating to accounting pronouncements issued in 2021 and applicable to First Busey appears in “Note 1. Significant Accounting Policies” in the Notes to the Consolidated Financial Statements.
70
Effects of Inflation
The effect of inflation on a financial institution differs significantly from the effect on an industrial company. While a financial institution’s operating expenses, particularly salaries, wages, and employee benefits, are affected by general inflation, the asset and liability structure of a financial institution consists largely of monetary items. Monetary items, such as cash, loans, and deposits, are those assets and liabilities which are or will be converted into a fixed number of dollars regardless of changes in prices. As a result, changes in interest rates have a more significant impact on a financial institution’s performance than does general inflation. For additional information regarding interest rates and changes in net interest income see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Operations—Results of Operation — Three Years Ended December 31, 2021—2022—Consolidated Average Balance Sheets and Interest Rates” and “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.”
71
| | | | | | | |
| | Year-One: Basis Point Changes | | ||||
|
| +100 |
| +200 |
| +300 |
|
December 31, 2021 |
| 8.77 | % | 17.19 | % | 25.64 | % |
December 31, 2020 |
| 7.40 | % | 14.16 | % | 20.20 | % |
| | | | | | | |
|
| Year-Two: Basis Point Changes | | ||||
|
| +100 |
| +200 |
| +300 |
|
December 31, 2021 |
| 9.51 | % | 18.22 | % | 26.84 | % |
December 31, 2020 |
| 9.59 | % | 17.95 | % | 25.40 | % |
Year-One: Basis Point Changes | |||||||||||||||||||||||||||||||||||||||||||||||
-400 | -300 | -200 | - 100 | +100 | +200 | +300 | +400 | ||||||||||||||||||||||||||||||||||||||||
December 31, 2022 | (21.24) | % | (14.74) | % | (8.08) | % | (3.95)% | 3.05% | 6.11% | 9.18% | 12.27% | ||||||||||||||||||||||||||||||||||||
December 31, 2021 | NM | NM | NM | NM | 8.77% | 17.19% | 25.64% | 33.87% |
Year-Two: Basis Point Changes | |||||||||||||||||||||||||||||||||||||||||||||||
-400 | -300 | -200 | - 100 | +100 | +200 | +300 | +400 | ||||||||||||||||||||||||||||||||||||||||
December 31, 2022 | (27.82) | % | (19.56) | % | (10.76) | % | (5.27)% | 3.94% | 7.91% | 11.94% | 16.02% | ||||||||||||||||||||||||||||||||||||
December 31, 2021 | NM | NM | NM | NM | 9.51% | 18.22% | 26.84% | 35.35% |
72
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| |||||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM(PCAOB ID |
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Note 5 – Other Real Estate Owned and Other Repossessed Assets |
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Note 10 – Junior Subordinated Debt Owed to Unconsolidated Trusts |
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Note 16 – Outstanding Commitments and Contingent Liabilities |
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73
Historical Loss Factors
74
The calculation also contemplates that the Company may not be able to make or obtain such forecasts for the entire life of the financial assets and requires a reversion to historical credit loss information.
Business Combination - Fair Value of Acquired Loans
As described in Notes 1 and 2 to the consolidated financial statements, on May 31, 2021, the Company completed its acquisition of Cummins-American Corp. (CAC). The Company recorded $6.3 million of goodwill as a result of the acquisition, which represents the excess of the purchase price over the fair value of net assets acquired using the acquisition method of accounting. The fair value determination of a loan portfolio requires greater levels of estimates and assumptions than the other assets acquired or liabilities assumed. Acquired loans are initially recorded at their acquisition-date fair values using Level 3 inputs. The Company prepared loan fair value adjustments that it believed a market participant might employ in estimating the fair value for the acquired loan portfolio. This analysis was performed for loans without signs of credit deterioration as well as those identified as purchase credit deteriorated (PCD). The acquired loan portfolio was recorded at an estimated fair value of $430.5 million at the acquisition date, of which $60.5 million was for PCD loans, without carryover of CAC’s previously established allowance for loan losses.
We identified the fair value of acquired loans as a critical audit matter, because of the judgments necessary to determine the fair value of the loan portfolio acquired, the high degree of auditor judgment involved and the extensive audit effort involved in testing management estimates and assumptions.
Our audit procedures related to the valuation of the acquired loan portfolio included the following, among others:
We obtained an understanding of the relevant controls related to the business combination, includingadjustments to historical factors in the valuationcalculation of the acquired loan portfolio and management’s development of significant assumptions,allowance for credit losses and tested such controls for design and operating effectiveness.
effectiveness, including management’s review of the allowance memo and calculation in support of adjustments.
75
We or our predecessor firms have served as the Company'sCompany’s auditor since at least 1980,1980; however, an earlier year could not be established.
76
| | | | | | |
| | As of | ||||
| | December 31, | | December 31, | ||
| | 2021 | | 2020 | ||
Assets | | | | | | |
Cash and cash equivalents: | | | | | | |
Cash and due from banks | | $ | 102,983 | | $ | 118,824 |
Interest-bearing deposits | | | 733,112 | | | 569,713 |
Total cash and cash equivalents | | | 836,095 | | | 688,537 |
| | | | | | |
Debt securities available for sale | |
| 3,981,251 | |
| 2,261,187 |
Equity securities | | | 13,571 | | | 5,530 |
Loans held for sale, at fair value | |
| 23,875 | |
| 42,813 |
Portfolio loans (net of ACL of $87,887 at December 31, 2021; $101,048 at December 31, 2020) | |
| 7,101,111 | |
| 6,713,129 |
Premises and equipment, net | |
| 136,147 | |
| 135,191 |
Right of use assets | | | 10,533 | | | 7,714 |
Goodwill | |
| 317,873 | |
| 311,536 |
Other intangible assets, net | |
| 58,051 | |
| 51,985 |
Cash surrender value of bank owned life insurance | |
| 176,940 | |
| 176,405 |
Other assets | |
| 204,242 | |
| 150,020 |
Total assets | | $ | 12,859,689 | | $ | 10,544,047 |
| | | | | | |
Liabilities and Stockholders’ Equity | | | | | | |
Liabilities | | | | | | |
Deposits: | | | | | | |
Noninterest-bearing | | $ | 3,670,267 | | $ | 2,552,039 |
Interest-bearing | |
| 7,098,310 | |
| 6,125,810 |
Total deposits | | | 10,768,577 | | | 8,677,849 |
| | | | | | |
Securities sold under agreements to repurchase | |
| 270,139 | |
| 175,614 |
Short-term borrowings | | | 17,678 | | | 4,658 |
Long-term debt | |
| 46,056 | |
| 4,757 |
Senior notes, net of unamortized issuance costs | | | 39,944 | | | 39,809 |
Subordinated notes, net of unamortized issuance costs | | | 182,773 | | | 182,226 |
Junior subordinated debt owed to unconsolidated trusts | | | 71,635 | | | 71,468 |
Lease liabilities | | | 10,591 | | | 7,757 |
Other liabilities | |
| 133,184 | |
| 109,840 |
Total liabilities | | | 11,540,577 | | | 9,273,978 |
| | | | | | |
Outstanding commitments and contingent liabilities (see Notes 16 and 22) | | | | | | |
| | | | | | |
Stockholders’ Equity | | | | | | |
Common stock, ($.001 par value; 100,000,000 shares authorized) | |
| 58 | |
| 56 |
Additional paid-in capital | |
| 1,316,984 | |
| 1,253,360 |
Retained earnings | |
| 92,463 | |
| 20,830 |
AOCI | |
| (23,758) | |
| 33,309 |
Total stockholders’ equity before treasury stock | | | 1,385,747 | | | 1,307,555 |
| | | | | | |
Treasury stock at cost | |
| (66,635) | |
| (37,486) |
Total stockholders’ equity | | | 1,319,112 | | | 1,270,069 |
Total liabilities and stockholders’ equity | | $ | 12,859,689 | | $ | 10,544,047 |
| | | | | | |
Shares | | | | | | |
Common shares issued | | | 58,116,970 | | | 55,910,733 |
Less treasury shares | | | (2,682,060) | | | (1,506,354) |
Common shares outstanding | | | 55,434,910 | | | 54,404,379 |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents: | |||||||||||
Cash and due from banks | $ | 117,513 | $ | 102,983 | |||||||
Interest-bearing deposits | 109,651 | 733,112 | |||||||||
Total cash and cash equivalents | 227,164 | 836,095 | |||||||||
Debt securities available for sale | 2,461,393 | 3,981,251 | |||||||||
Debt securities held to maturity | 918,312 | — | |||||||||
Equity securities | 11,535 | 13,571 | |||||||||
Loans held for sale (2022 at LOCOM, 2021 at fair value) | 1,253 | 23,875 | |||||||||
Portfolio loans (net of ACL of $91,608 at December 31, 2022; $87,887 at December 31, 2021) | 7,634,094 | 7,101,111 | |||||||||
Premises and equipment, net | 126,524 | 136,147 | |||||||||
Right of use assets | 12,829 | 10,533 | |||||||||
Goodwill | 317,873 | 317,873 | |||||||||
Other intangible assets, net | 46,423 | 58,051 | |||||||||
Cash surrender value of bank owned life insurance | 180,485 | 176,940 | |||||||||
Other assets | 398,792 | 204,242 | |||||||||
Total assets | $ | 12,336,677 | $ | 12,859,689 | |||||||
Liabilities and Stockholders’ Equity | |||||||||||
Liabilities | |||||||||||
Deposits: | |||||||||||
Noninterest-bearing | $ | 3,393,666 | $ | 3,670,267 | |||||||
Interest-bearing | 6,677,614 | 7,098,310 | |||||||||
Total deposits | 10,071,280 | 10,768,577 | |||||||||
Securities sold under agreements to repurchase | 229,806 | 270,139 | |||||||||
Short-term borrowings | 351,054 | 17,678 | |||||||||
Long-term debt | 30,000 | 46,056 | |||||||||
Senior notes, net of unamortized issuance costs | — | 39,944 | |||||||||
Subordinated notes, net of unamortized issuance costs | 222,038 | 182,773 | |||||||||
Junior subordinated debt owed to unconsolidated trusts | 71,810 | 71,635 | |||||||||
Lease liabilities | 12,995 | 10,591 | |||||||||
Other liabilities | 201,717 | 133,184 | |||||||||
Total liabilities | 11,190,700 | 11,540,577 | |||||||||
Stockholders’ Equity | |||||||||||
Common stock, ($0.001 par value; 100,000,000 shares authorized) | 58 | 58 | |||||||||
Additional paid-in capital | 1,320,980 | 1,316,984 | |||||||||
Retained earnings | 168,769 | 92,463 | |||||||||
AOCI | (273,278) | (23,758) | |||||||||
Total stockholders’ equity before treasury stock | 1,216,529 | 1,385,747 | |||||||||
Treasury stock at cost | (70,552) | (66,635) | |||||||||
Total stockholders’ equity | 1,145,977 | 1,319,112 | |||||||||
Total liabilities and stockholders’ equity | $ | 12,336,677 | $ | 12,859,689 | |||||||
Shares | |||||||||||
Common shares issued | 58,116,970 | 58,116,970 | |||||||||
Less treasury shares | (2,837,846) | (2,682,060) | |||||||||
Common shares outstanding | 55,279,124 | 55,434,910 |
77
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Interest income | | | | | | | | | |
Interest and fees on loans | | $ | 252,097 | | $ | 284,959 | | $ | 304,193 |
Interest and dividends on investment securities: | | | | | | | | | |
Taxable interest income | | | 41,787 | | | 35,364 | | | 41,090 |
Non-taxable interest income | | | 3,765 | | | 4,552 | | | 4,631 |
Other interest income | | | 1,151 | | | 1,723 | | | 6,320 |
Total interest income | | | 298,800 | | | 326,598 | | | 356,234 |
| | | | | | | | | |
Interest expense | | | | | | | | | |
Deposits | | | 12,583 | | | 30,691 | | | 55,077 |
Federal funds purchased and securities sold under agreements to repurchase | | | 227 | | | 660 | | | 2,348 |
Short-term borrowings | | | 279 | | | 234 | | | 1,041 |
Long-term debt | | | 657 | | | 525 | | | 2,608 |
Senior notes | | | 1,598 | | | 1,598 | | | 1,599 |
Subordinated notes | | | 9,918 | | | 6,995 | | | 2,924 |
Junior subordinated debt owed to unconsolidated trusts | | | 2,840 | | | 2,960 | | | 3,414 |
Total interest expense | | | 28,102 | | | 43,663 | | | 69,011 |
| | | | | | | | | |
Net interest income | | | 270,698 | | | 282,935 | | | 287,223 |
Provision for credit losses | | | (15,101) | | | 38,797 | | | 10,406 |
Net interest income after provision for credit losses | | | 285,799 | | | 244,138 | | | 276,817 |
| | | | | | | | | |
Noninterest income | | | | | | | | | |
Wealth management fees | | | 53,086 | | | 42,928 | | | 38,561 |
Fees for customer services | | | 35,604 | | | 31,604 | | | 36,683 |
Payment technology solutions | | | 18,347 | | | 15,628 | | | 15,643 |
Mortgage revenue | | | 7,239 | | | 13,038 | | | 11,703 |
Income on bank owned life insurance | | | 5,166 | | | 5,380 | | | 5,795 |
Net gains (losses) on sales of securities | | | 29 | | | 1,724 | | | 741 |
Unrealized gains (losses) recognized on equity securities | | | 3,041 | | | (393) | | | (759) |
Other income | | | 10,292 | | | 8,356 | | | 8,048 |
Total noninterest income | | | 132,804 | | | 118,265 | | | 116,415 |
| | | | | | | | | |
Noninterest expense | | | | | | | | | |
Salaries, wages, and employee benefits | | | 145,312 | | | 126,719 | | | 140,473 |
Data processing | | | 21,862 | | | 16,426 | | | 21,511 |
Net occupancy expense of premises | | | 18,346 | | | 17,607 | | | 18,176 |
Furniture and equipment expenses | | | 8,301 | | | 9,550 | | | 9,506 |
Professional fees | | | 7,549 | | | 8,396 | | | 11,104 |
Amortization of intangible assets | | | 11,274 | | | 10,008 | | | 9,547 |
Interchange expense | | | 5,792 | | | 4,810 | | | 4,141 |
Other expense | | | 43,344 | | | 40,681 | | | 44,336 |
Total noninterest expense | | | 261,780 | | | 234,197 | | | 258,794 |
| | | | | | | | | |
Income before income taxes | | | 156,823 | | | 128,206 | | | 134,438 |
Income taxes | | | 33,374 | | | 27,862 | | | 31,485 |
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
| | | | | | | | | |
Basic earnings per common share | | $ | 2.23 | | $ | 1.84 | | $ | 1.88 |
Diluted earnings per common share | | $ | 2.20 | | $ | 1.83 | | $ | 1.87 |
Dividends declared per share of common stock | | $ | 0.92 | | $ | 0.88 | | $ | 0.84 |
Year Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Interest income | |||||||||||||||||||||||||||||
Interest and fees on loans | $ | 287,477 | $ | 252,097 | $ | 284,959 | |||||||||||||||||||||||
Interest and dividends on investment securities: | |||||||||||||||||||||||||||||
Taxable interest income | 66,140 | 41,787 | 35,364 | ||||||||||||||||||||||||||
Non-taxable interest income | 3,272 | 3,765 | 4,552 | ||||||||||||||||||||||||||
Other interest income | 3,097 | 1,151 | 1,723 | ||||||||||||||||||||||||||
Total interest income | 359,986 | 298,800 | 326,598 | ||||||||||||||||||||||||||
Interest expense | |||||||||||||||||||||||||||||
Deposits | 16,112 | 12,583 | 30,691 | ||||||||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 1,475 | 227 | 660 | ||||||||||||||||||||||||||
Short-term borrowings | 1,647 | 279 | 234 | ||||||||||||||||||||||||||
Long-term debt | 1,310 | 657 | 525 | ||||||||||||||||||||||||||
Senior notes | 637 | 1,598 | 1,598 | ||||||||||||||||||||||||||
Subordinated notes | 12,338 | 9,918 | 6,995 | ||||||||||||||||||||||||||
Junior subordinated debt owed to unconsolidated trusts | 3,029 | 2,840 | 2,960 | ||||||||||||||||||||||||||
Total interest expense | 36,548 | 28,102 | 43,663 | ||||||||||||||||||||||||||
Net interest income | 323,438 | 270,698 | 282,935 | ||||||||||||||||||||||||||
Provision for credit losses | 4,623 | (15,101) | 38,797 | ||||||||||||||||||||||||||
Net interest income after provision for credit losses | 318,815 | 285,799 | 244,138 | ||||||||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||||||||
Wealth management fees | 55,378 | 53,086 | 42,928 | ||||||||||||||||||||||||||
Fees for customer services | 33,111 | 35,604 | 31,604 | ||||||||||||||||||||||||||
Payment technology solutions | 20,067 | 18,347 | 15,628 | ||||||||||||||||||||||||||
Mortgage revenue | 1,895 | 7,239 | 13,038 | ||||||||||||||||||||||||||
Income on bank owned life insurance | 3,663 | 5,166 | 5,380 | ||||||||||||||||||||||||||
Realized net gains (losses) on securities | 50 | 29 | 1,724 | ||||||||||||||||||||||||||
Unrealized net gains (losses) recognized on equity securities | (2,183) | 3,041 | (393) | ||||||||||||||||||||||||||
Other income | 14,822 | 10,292 | 8,356 | ||||||||||||||||||||||||||
Total noninterest income | 126,803 | 132,804 | 118,265 | ||||||||||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||||||||
Salaries, wages, and employee benefits | 159,016 | 145,312 | 126,719 | ||||||||||||||||||||||||||
Data processing | 21,648 | 21,862 | 16,426 | ||||||||||||||||||||||||||
Net occupancy expense of premises | 19,130 | 18,346 | 17,607 | ||||||||||||||||||||||||||
Furniture and equipment expenses | 7,645 | 8,301 | 9,550 | ||||||||||||||||||||||||||
Professional fees | 6,125 | 7,549 | 8,396 | ||||||||||||||||||||||||||
Amortization of intangible assets | 11,628 | 11,274 | 10,008 | ||||||||||||||||||||||||||
Interchange expense | 6,298 | 5,792 | 4,810 | ||||||||||||||||||||||||||
Other expense | 52,391 | 43,344 | 40,681 | ||||||||||||||||||||||||||
Total noninterest expense | 283,881 | 261,780 | 234,197 | ||||||||||||||||||||||||||
Income before income taxes | 161,737 | 156,823 | 128,206 | ||||||||||||||||||||||||||
Income taxes | 33,426 | 33,374 | 27,862 | ||||||||||||||||||||||||||
Net income | $ | 128,311 | $ | 123,449 | $ | 100,344 | |||||||||||||||||||||||
Basic earnings per common share | $ | 2.32 | $ | 2.23 | $ | 1.84 | |||||||||||||||||||||||
Diluted earnings per common share | 2.29 | 2.20 | 1.83 | ||||||||||||||||||||||||||
Dividends declared per share of common stock | 0.92 | 0.92 | 0.88 |
78
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
| | | | | | | | | |
OCI: | | | | | | | | | |
Unrealized gains (losses) on debt securities available for sale: | | | | | | | | | |
Net unrealized holding gains (losses) on debt securities available for sale, net of taxes of $23,367, ($8,615), and ($7,525), respectively | | | (58,610) | | | 21,561 | | | 18,905 |
Net unrealized (gains) losses on debt securities transferred from held to maturity to available for sale, net of taxes of $—, $—, and ($1,433), respectively | | | — | | | — | | | 3,590 |
Reclassification adjustment for realized (gains) losses on debt securities available for sale included in net income, net of taxes of ($17), $496, and $210, respectively | |
| 44 | | | (1,228) | | | (523) |
Net change in unrealized gains (losses) on debt securities available for sale | | | (58,566) | | | 20,333 | | | 21,972 |
| | | | | | | | | |
Unrealized gains (losses) on cash flow hedges: | | | | | | | | | |
Net unrealized holding gains (losses) on cash flow hedges, net of taxes of ($294), $1,007, and $81, respectively | |
| 736 | | | (2,526) | | | (202) |
Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of ($304), ($216), and ($1), respectively | | | 763 | | | 542 | | | 2 |
Net change in unrealized gains (losses) on cash flow hedges | | | 1,499 | | | (1,984) | | | (200) |
| | | | | | | | | |
Net change in AOCI | | | (57,067) | | | 18,349 | | | 21,772 |
| | | | | | | | | |
Total comprehensive income | | $ | 66,382 | | $ | 118,693 | | $ | 124,725 |
Years Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Net income | $ | 128,311 | $ | 123,449 | $ | 100,344 | |||||||||||||||||||||||
OCI: | |||||||||||||||||||||||||||||
Unrealized/Unrecognized gains (losses) on debt securities: | |||||||||||||||||||||||||||||
Net unrealized holding gains (losses) on debt securities available for sale, net of taxes of $79,460, $23,367, and $(8,615) | (199,302) | (58,610) | 21,561 | ||||||||||||||||||||||||||
Net unrecognized gains (losses) on debt securities transferred to held to maturity from available for sale, net of taxes of $13,812, $—, and $—, respectively | (34,644) | — | — | ||||||||||||||||||||||||||
Reclassification adjustment for realized (gains) losses on debt securities available for sale included in net income, net of taxes of $7, $(17), and $496, respectively | (19) | 44 | (1,228) | ||||||||||||||||||||||||||
Amortization of unrecognized losses on securities transferred to held to maturity, net of taxes of $(1,893), $—, and $—, respectively | 4,745 | — | — | ||||||||||||||||||||||||||
Net change in unrealized/unrecognized gains (losses) on debt securities | (229,220) | (58,566) | 20,333 | ||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedges: | |||||||||||||||||||||||||||||
Net unrealized holding gains (losses) on cash flow hedges, net of taxes of $8,258, $(294), and $1,007, respectively | (20,717) | 736 | (2,526) | ||||||||||||||||||||||||||
Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of $(166), $(304), and $(216), respectively | 417 | 763 | 542 | ||||||||||||||||||||||||||
Net change in unrealized gains (losses) on cash flow hedges | (20,300) | 1,499 | (1,984) | ||||||||||||||||||||||||||
Net change in AOCI | (249,520) | (57,067) | 18,349 | ||||||||||||||||||||||||||
Total comprehensive income (loss) | $ | (121,209) | $ | 66,382 | $ | 118,693 |
79
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Retained | | | | | | | | | ||
| | | | | | | Additional | | Earnings | | | | | | | Total | ||||
| | | | Common | | Paid-in | | (Accumulated | | | | Treasury | | Stockholders' | ||||||
| | Shares |
| Stock |
| Capital |
| Deficit) |
| AOCI |
| Stock |
| Equity | ||||||
Balance, December 31, 2018 | | 48,874,836 | | $ | 49 | | $ | 1,080,084 | | $ | (72,167) | | $ | (6,812) | | $ | (6,190) | | $ | 994,964 |
Net income | | — | |
| — | |
| — | |
| 102,953 | |
| — | |
| — | |
| 102,953 |
OCI, net of tax | | — | |
| — | |
| — | |
| — | |
| 21,772 | |
| — | |
| 21,772 |
Stock issued for acquisition of Banc Ed, net of stock issuance costs | | 6,725,152 | | | 7 | | | 166,274 | | | — | | | — | | | — | | | 166,281 |
Repurchase of stock | | (943,396) | | | — | | | — | | | — | | | — | | | (24,292) | | | (24,292) |
Issuance of treasury stock for ESPP | | 25,698 | |
| — | |
| 137 | |
| — | |
| — | |
| 487 | |
| 624 |
Net issuance of treasury stock for restricted/deferred stock unit vesting and related tax | | 92,996 | |
| — | |
| (2,600) | | | — | | | — | | | 382 | |
| (2,218) |
Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax | | 13,486 | | | — | | | (104) | | | — | | | — | | | 1,628 | | | 1,524 |
Cash dividends common stock at $0.84 per share | | — | |
| — | |
| — | |
| (45,171) | |
| — | |
| — | |
| (45,171) |
Stock dividend equivalents RSUs at $0.84 per share | | — | |
| — | |
| 428 | |
| (428) | |
| — | |
| — | |
| — |
Stock-based compensation | | — | | | — | |
| 3,997 | |
| — | |
| — | |
| — | | | 3,997 |
Balance, December 31, 2019 | | 54,788,772 | | $ | 56 | | $ | 1,248,216 | | $ | (14,813) | | $ | 14,960 | | $ | (27,985) | | $ | 1,220,434 |
Cumulative effect of change in accounting principle (ASU 2016-13) | | — | | | — | | | — | | | (15,922) | | | — | | | — | | | (15,922) |
Net income | | — | | | — | | | �� | | | 100,344 | | | — | | | — | |
| 100,344 |
OCI, net of tax | | — | | | — | | | — | | | — | | | 18,349 | | | — | |
| 18,349 |
Repurchase of stock | | (531,114) | | | — | | | — | | | — | | | — | | | (12,272) | |
| (12,272) |
Issuance of treasury stock for ESPP | | 32,063 | | | — | | | (59) | | | — | | | — | | | 606 | | | 547 |
Net issuance of treasury stock for restricted/deferred stock unit vesting and related tax | | 106,589 | | | — | | | (2,648) | | | — | | | — | | | 2,013 | | | (635) |
Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax | | 8,069 | | | — | | | (51) | | | — | | | — | | | 152 | | | 101 |
Cash dividends common stock at $0.88 per share | | — | | | — | | | — | | | (48,012) | | | — | | | — | |
| (48,012) |
Stock dividend equivalents RSUs at $0.88 per share | | — | | | — | | | 767 | | | (767) | | | — | | | — | |
| — |
Stock-based compensation | | — | | | — | | | 7,135 | | | — | | | — | | | — | |
| 7,135 |
Balance, December 31, 2020 | | 54,404,379 | | $ | 56 | | $ | 1,253,360 | | $ | 20,830 | | $ | 33,309 | | $ | (37,486) | | $ | 1,270,069 |
Net income | | — | | | — | | | — | | | 123,449 | | | — | | | — | | | 123,449 |
OCI, net of tax | | — | | | — | | | — | | | — | | | (57,067) | | | — | | | (57,067) |
Stock issued in acquisition, net of stock issuance costs | | 2,206,237 | | | 2 | | | 58,953 | | | — | | | — | | | — | | | 58,955 |
Repurchase of stock | | (1,323,000) | | | — | | | — | | | — | | | — | | | (33,043) | | | (33,043) |
Issuance of treasury stock for ESPP | | 30,390 | | | — | | | (136) | | | — | | | — | | | 782 | | | 646 |
Net issuance of treasury stock for restricted/deferred stock unit vesting and related tax | | 116,904 | | | — | | | (4,109) | | | — | | | — | | | 3,112 | | | (997) |
Cash dividends common stock at $0.92 per share | | — | | | — | | | — | | | (50,764) | | | — | | | — | | | (50,764) |
Stock dividend equivalents RSUs at $0.92 per share | | — | | | — | | | 1,052 | | | (1,052) | | | — | | | — | | | — |
Stock-based compensation | | — | | | — | | | 7,864 | | | — | | | — | | | — | | | 7,864 |
Balance, December 31, 2021 | | 55,434,910 | | $ | 58 | | $ | 1,316,984 | | $ | 92,463 | | $ | (23,758) | | $ | (66,635) | | $ | 1,319,112 |
Shares | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | AOCI | Treasury Stock | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | 54,788,772 | $ | 56 | $ | 1,248,216 | $ | (14,813) | $ | 14,960 | $ | (27,985) | $ | 1,220,434 | ||||||||||||||||||||||||||||
Cumulative effect of change in accounting principle (ASU 2016-13) | — | — | — | (15,922) | — | — | (15,922) | ||||||||||||||||||||||||||||||||||
Net income | — | — | — | 100,344 | — | — | 100,344 | ||||||||||||||||||||||||||||||||||
OCI, net of tax | — | — | — | — | 18,349 | — | 18,349 | ||||||||||||||||||||||||||||||||||
Repurchase of stock | (531,114) | — | — | — | — | (12,272) | (12,272) | ||||||||||||||||||||||||||||||||||
Issuance of treasury stock for ESPP | 32,063 | — | (59) | — | — | 606 | 547 | ||||||||||||||||||||||||||||||||||
Net issuance of treasury stock for RSU/DSU vesting and related tax | 106,589 | — | (2,648) | — | — | 2,013 | (635) | ||||||||||||||||||||||||||||||||||
Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax | 8,069 | — | (51) | — | — | 152 | 101 | ||||||||||||||||||||||||||||||||||
Cash dividends common stock at $0.88 per share | — | — | — | (48,012) | — | — | (48,012) | ||||||||||||||||||||||||||||||||||
Stock dividend equivalents RSUs at $0.88 per share | — | — | 767 | (767) | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 7,135 | — | — | — | 7,135 | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 54,404,379 | $ | 56 | $ | 1,253,360 | $ | 20,830 | $ | 33,309 | $ | (37,486) | $ | 1,270,069 | ||||||||||||||||||||||||||||
Net income | — | — | — | 123,449 | — | — | 123,449 | ||||||||||||||||||||||||||||||||||
OCI, net of tax | — | — | — | — | (57,067) | — | (57,067) | ||||||||||||||||||||||||||||||||||
Stock issued in acquisition, net of stock issuance costs | 2,206,237 | 2 | 58,953 | — | — | — | 58,955 | ||||||||||||||||||||||||||||||||||
Repurchase of stock | (1,323,000) | — | — | — | — | (33,043) | (33,043) | ||||||||||||||||||||||||||||||||||
Issuance of treasury stock for ESPP | 30,390 | — | (136) | — | — | 782 | 646 | ||||||||||||||||||||||||||||||||||
Net issuance of treasury stock for RSU/DSU vesting and related tax | 116,904 | — | (4,109) | — | — | 3,112 | (997) | ||||||||||||||||||||||||||||||||||
Cash dividends common stock at $0.92 per share | — | — | — | (50,764) | — | — | (50,764) | ||||||||||||||||||||||||||||||||||
Stock dividend equivalents RSUs at $0.92 per share | — | — | 1,052 | (1,052) | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 7,864 | — | — | — | 7,864 | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | 55,434,910 | $ | 58 | $ | 1,316,984 | $ | 92,463 | $ | (23,758) | $ | (66,635) | $ | 1,319,112 | ||||||||||||||||||||||||||||
Net income | — | — | — | 128,311 | — | — | 128,311 | ||||||||||||||||||||||||||||||||||
OCI, net of tax | — | — | — | — | (249,520) | — | (249,520) | ||||||||||||||||||||||||||||||||||
Repurchase of stock | (388,614) | — | — | — | — | (9,912) | (9,912) | ||||||||||||||||||||||||||||||||||
Issuance of treasury stock for ESPP | 57,385 | — | (320) | — | — | 1,477 | 1,157 | ||||||||||||||||||||||||||||||||||
Net issuance of treasury stock for RSU/DSU vesting and related tax | 175,225 | — | (5,789) | — | — | 4,513 | (1,276) | ||||||||||||||||||||||||||||||||||
Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax | 218 | — | (5) | — | — | 5 | — | ||||||||||||||||||||||||||||||||||
Cash dividends common stock at $0.92 per share | — | — | — | (50,863) | — | — | (50,863) | ||||||||||||||||||||||||||||||||||
Stock dividend equivalents RSUs at $0.92 per share | — | — | 1,142 | (1,142) | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 8,968 | — | — | — | 8,968 | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | 55,279,124 | $ | 58 | $ | 1,320,980 | $ | 168,769 | $ | (273,278) | $ | (70,552) | $ | 1,145,977 |
80
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Cash Flows Provided by (Used in) Operating Activities | | | | | | | | | |
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | | | | | |
Provision for credit losses | |
| (15,101) | |
| 38,797 | |
| 10,406 |
Amortization of intangible assets | | | 11,274 | | | 10,008 | | | 9,547 |
Amortization of mortgage servicing rights | | | 5,292 | | | 5,667 | | | 2,710 |
Amortization of NMTC | | | 5,563 | | | 2,311 | | | 1,200 |
Depreciation and amortization of premises and equipment | |
| 11,610 | |
| 12,273 | |
| 11,879 |
Net amortization (accretion) on portfolio loans | | | (11,545) | | | (15,372) | | | (3,383) |
Net amortization (accretion) of premium (discount) on investment securities | |
| 24,251 | |
| 9,716 | |
| 6,106 |
Net amortization (accretion) of premium (discount) on time deposits | | | (1,142) | | | (933) | | | (1,648) |
Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings | | | 826 | | | 586 | | | 309 |
Impairment of OREO and other repossessed assets | | | 1 | | | 68 | | | 62 |
Impairment of fixed assets held for sale | |
| 3,227 | |
| 6,901 | |
| 2,026 |
Impairment of mortgage servicing rights | | | (639) | | | 648 | | | — |
Impairment of leases | | | — | | | — | | | 348 |
Unrealized (gains) losses recognized on equity securities | | | (3,041) | | | 393 | | | 759 |
(Gain) loss on sales of equity securities, net | | | — | | | — | | | (8) |
(Gain) loss on sales of debt securities, net | | | (29) | | | (1,724) | | | (733) |
(Gain) loss on sales of loans, net | |
| (9,323) | |
| (26,999) | |
| (16,819) |
(Gain) loss on sales of OREO | | | 174 | | | (133) | | | (102) |
(Gain) loss on sales of premises and equipment | | | (1,023) | | | 286 | | | 113 |
(Gain) loss on life insurance proceeds | | | (1,257) | | | (1,270) | | | (1,604) |
(Increase) decrease in cash surrender value of bank owned life insurance | |
| (3,909) | |
| (4,110) | |
| (4,191) |
Provision for deferred income taxes | |
| 4,665 | |
| (5,309) | |
| 96 |
Stock-based compensation | |
| 7,864 | |
| 7,135 | |
| 3,997 |
Increase (decrease) in deferred compensation | | | — | | | — | | | (6,781) |
Mortgage loans originated for sale | | | (274,356) | | | (881,398) | | | (667,515) |
Proceeds from sales of mortgage loans | | | 306,074 | | | 920,050 | | | 641,778 |
Net change in operating assets and liabilities: | | | | | | | | | |
(Increase) decrease in other assets | |
| 7,203 | |
| (8,210) | |
| 4,197 |
Increase (decrease) in other liabilities | |
| (28,096) | |
| (6,551) | |
| (7,380) |
Net cash provided by (used in) operating activities | | $ | 162,012 | | $ | 163,174 | | $ | 88,322 |
| | | | | | | | | |
Cash Flows Provided by (Used in) Investing Activities | | | | | | | | | |
Purchases of equity securities | | $ | (11,017) | | $ | (13,123) | | $ | (550) |
Purchases of debt securities available for sale | | | (2,298,055) | | | (1,282,199) | | | (408,941) |
Purchases of FHLB stock | | | — | | | — | | | (3,700) |
Proceeds from sales of equity securities | | | 7,254 | | | 13,152 | | | 1,474 |
Proceeds from sales of debt securities available for sale | |
| 290,955 | |
| — | |
| 227,371 |
Proceeds from paydowns and maturities of debt securities held to maturity | | | — | | | — | | | 14,422 |
Proceeds from paydowns and maturities of debt securities available for sale | |
| 868,083 | |
| 665,744 | |
| 541,753 |
Proceeds from the redemption of FHLB stock | | | — | | | — | | | 5,369 |
Net cash received in (paid for) acquisitions (see Note 2) | | | 228,279 | | | — | | | (61,481) |
Net (increase) decrease in loans | |
| 76,826 | |
| (113,744) | |
| (251,855) |
Cash paid for premiums on bank-owned life insurance | | | (124) | | | (120) | | | (6) |
Proceeds from life insurance | | | 4,755 | | | 2,696 | | | 3,915 |
Purchases of premises and equipment | | | (5,042) | | | (4,198) | | | (13,238) |
Proceeds from disposition of premises and equipment | |
| 7,306 | |
| 814 | |
| 424 |
Capitalized expenditures on OREO | | | — | | | — | | | (2) |
Proceeds from sales of OREO | |
| 1,590 | |
| 1,439 | |
| 2,481 |
Net cash provided by (used in) investing activities | | $ | (829,190) | | $ | (729,539) | | $ | 57,436 |
(continued)
81
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Cash Flows Provided by (Used in) Operating Activities | |||||||||||||||||
Net income | $ | 128,311 | $ | 123,449 | $ | 100,344 | |||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||||||
Provision for credit losses | 4,623 | (15,101) | 38,797 | ||||||||||||||
Amortization of intangible assets | 11,628 | 11,274 | 10,008 | ||||||||||||||
Amortization of mortgage servicing rights | 3,540 | 5,292 | 5,667 | ||||||||||||||
Amortization of NMTC | 6,333 | 5,563 | 2,311 | ||||||||||||||
Depreciation and amortization of premises and equipment | 10,482 | 11,610 | 12,273 | ||||||||||||||
Net amortization (accretion) on portfolio loans | 3,932 | (11,545) | (15,372) | ||||||||||||||
Net amortization (accretion) of premium (discount) on investment securities | 20,799 | 24,251 | 9,716 | ||||||||||||||
Net amortization (accretion) of premium (discount) on time deposits | (403) | (1,142) | (933) | ||||||||||||||
Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings | 1,400 | 826 | 586 | ||||||||||||||
Impairment of OREO and other repossessed assets | 611 | 1 | 68 | ||||||||||||||
Impairment of fixed assets held for sale | 427 | 3,227 | 6,901 | ||||||||||||||
Impairment of mortgage servicing rights | (8) | (639) | 648 | ||||||||||||||
Impairment of leases | 84 | — | — | ||||||||||||||
Unrealized (gains) losses recognized on equity securities, net | 2,183 | (3,041) | 393 | ||||||||||||||
(Gain) loss on sales of equity securities, net | (24) | — | — | ||||||||||||||
(Gain) loss on sales of debt securities, net | (26) | (29) | (1,724) | ||||||||||||||
(Gain) loss on sales of loans, net | (1,944) | (9,323) | (26,999) | ||||||||||||||
(Gain) loss on sales of OREO | (54) | 174 | (133) | ||||||||||||||
(Gain) loss on sales of premises and equipment | (825) | (1,023) | 286 | ||||||||||||||
(Gain) loss on life insurance proceeds | — | (1,257) | (1,270) | ||||||||||||||
(Increase) decrease in cash surrender value of bank owned life insurance | (3,663) | (3,909) | (4,110) | ||||||||||||||
Provision for deferred income taxes | (1,272) | 4,665 | (5,309) | ||||||||||||||
Stock-based compensation | 8,968 | 7,864 | 7,135 | ||||||||||||||
Mortgage loans originated for sale | (70,953) | (274,356) | (881,398) | ||||||||||||||
Proceeds from sales of mortgage loans | 95,289 | 306,074 | 920,050 | ||||||||||||||
(Increase) decrease in other assets | (56,284) | 7,203 | (8,210) | ||||||||||||||
Increase (decrease) in other liabilities | 2,633 | (28,096) | (6,551) | ||||||||||||||
Net cash provided by (used in) operating activities | $ | 165,787 | $ | 162,012 | $ | 163,174 | |||||||||||
Cash Flows Provided by (Used in) Investing Activities | |||||||||||||||||
Purchases of equity securities | $ | (14,820) | $ | (11,017) | $ | (13,123) | |||||||||||
Purchases of debt securities available for sale | (280,083) | (2,298,055) | (1,282,199) | ||||||||||||||
Proceeds from sales of equity securities | 15,418 | 7,254 | 13,152 | ||||||||||||||
Proceeds from sales of debt securities available for sale | — | 290,955 | — | ||||||||||||||
Proceeds from paydowns and maturities of debt securities held to maturity | 70,116 | — | — | ||||||||||||||
Proceeds from paydowns and maturities of debt securities available for sale | 470,134 | 868,083 | 665,744 | ||||||||||||||
Purchases of FHLB and other bank stock | (12,969) | — | — | ||||||||||||||
Proceeds from the redemption of FHLB and other bank stock | 225 | — | — | ||||||||||||||
Net cash received in (paid for) acquisitions (see Note 2) | — | 228,279 | — | ||||||||||||||
Net (increase) decrease in loans | (541,713) | 76,826 | (113,744) | ||||||||||||||
Cash paid for premiums on bank-owned life insurance | (106) | (124) | (120) | ||||||||||||||
Proceeds from life insurance | 219 | 4,755 | 2,696 | ||||||||||||||
Purchases of premises and equipment | (4,989) | (5,042) | (4,198) | ||||||||||||||
Proceeds from disposition of premises and equipment | 4,528 | 7,306 | 814 | ||||||||||||||
Proceeds from sales of OREO | 3,184 | 1,590 | 1,439 | ||||||||||||||
Net cash provided by (used in) investing activities | $ | (290,856) | $ | (829,190) | $ | (729,539) |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
| | | | | | | | | |
| | Years Ended December 31, | |||||||
| | 2021 | | 2020 | | 2019 | |||
Cash Flows Provided by (Used in) Financing Activities | | | | | | | | | |
Net increase (decrease) in deposits | | $ | 767,474 | | $ | 776,386 | | $ | 215,519 |
Net change in federal funds purchased and securities sold under agreements to repurchase | |
| 77,874 | |
| (29,877) | |
| (30,904) |
Proceeds from FHLB advances | | | 5,000 | | | 4,000 | | | — |
Repayment of FHLB advances | | | (4,658) | | | (32,711) | | | (24,667) |
Proceeds from other borrowings | | | 72,500 | | | 142,634 | | | 60,000 |
Repayment of other borrowings | | | (18,500) | | | (74,000) | | | (6,000) |
Cash dividends paid | | | (50,764) | | | (48,012) | | | (45,171) |
Purchase of treasury stock | | | (33,043) | | | (12,272) | | | (24,292) |
Cash paid for withholding taxes on stock-based payments | | | (997) | | | (635) | | | (863) |
Proceeds from stock options exercised | | | — | | | 101 | | | 169 |
Common stock issuance costs | | | (150) | | | — | | | (234) |
Net cash provided by (used in) financing activities | | $ | 814,736 | | $ | 725,614 | | $ | 143,557 |
| | | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | 147,558 | | | 159,249 | | | 289,315 |
Cash and cash equivalents, beginning of period | | | 688,537 | | | 529,288 | | | 239,973 |
| | | | | | | | | |
Cash and cash equivalents, ending of period | | $ | 836,095 | | $ | 688,537 | | $ | 529,288 |
| | | | | | | | | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | | | | | | | | | |
| | | | | | | | | |
Cash payments for: | | | | | | | | | |
Interest | | $ | 25,374 | | $ | 53,601 | | $ | 70,577 |
Income taxes | |
| 12,542 | |
| 22,195 | |
| 24,725 |
| | | | | | | | | |
Non-cash investing and financing activities: | | | | | | | | | |
OREO acquired in settlement of loans | |
| 1,610 | |
| 2,867 | |
| 4,872 |
Transfer of loans held for sale to portfolio loans | | | (4,808) | | | — | | | — |
Transfer of debt securities held to maturity to available for sale | | | — | | | — | | | 593,548 |
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Cash Flows Provided by (Used in) Financing Activities | |||||||||||||||||
Net increase (decrease) in deposits | $ | (696,894) | $ | 767,474 | $ | 776,386 | |||||||||||
Net change in federal funds purchased and securities sold under agreements to repurchase | (40,333) | 77,874 | (29,877) | ||||||||||||||
Proceeds from FHLB advances | 335,000 | 5,000 | 4,000 | ||||||||||||||
Repayment of FHLB advances | (5,678) | (4,658) | (32,711) | ||||||||||||||
Proceeds from other borrowings, net of debt issuance costs | 98,094 | 72,500 | 142,634 | ||||||||||||||
Repayment of other borrowings | (112,000) | (18,500) | (74,000) | ||||||||||||||
Cash dividends paid | (50,863) | (50,764) | (48,012) | ||||||||||||||
Purchase of treasury stock | (9,912) | (33,043) | (12,272) | ||||||||||||||
Cash paid for withholding taxes on stock-based payments | (1,276) | (997) | (635) | ||||||||||||||
Proceeds from stock options exercised | — | — | 101 | ||||||||||||||
Common stock issuance costs | — | (150) | — | ||||||||||||||
Net cash provided by (used in) financing activities | $ | (483,862) | $ | 814,736 | $ | 725,614 | |||||||||||
Net increase (decrease) in cash and cash equivalents | (608,931) | 147,558 | 159,249 | ||||||||||||||
Cash and cash equivalents, beginning of period | 836,095 | 688,537 | 529,288 | ||||||||||||||
Cash and cash equivalents, ending of period | $ | 227,164 | $ | 836,095 | $ | 688,537 | |||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||||||||||||
Cash payments for: | |||||||||||||||||
Interest | $ | 35,297 | $ | 25,374 | $ | 53,601 | |||||||||||
Income taxes | 30,676 | 22,487 | 22,195 | ||||||||||||||
Non-cash investing and financing activities: | |||||||||||||||||
OREO acquired in settlement of loans | 175 | 1,610 | 2,867 | ||||||||||||||
Transfer of loans held for sale to portfolio loans | — | (4,808) | — | ||||||||||||||
Transfer of debt securities available for sale to held to maturity | 985,199 | — | — |
82
SIGNIFICANT ACCOUNTING POLICIES
Operations
Consolidation
Estimates
Income (Loss)
Assets
$12.7 billion at December 31, 2021.
Cash Equivalents
83
The Company maintains its cash in deposit accounts, the balance of which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. Management believes the Company is not exposed to any significant credit risk on cash and cash equivalents.
Debt securities available for sale are not within the scope of CECL,the current expected credit losses methodology, however, the accounting for credit losses on these securities is affected by ASC 326-30.Subtopic 326-30 “Financial Instruments-Credit Losses—Available-for-Sale Debt Securities.” A debt security available for sale is impaired if the fair value of the security declines below its amortized cost basis. To determine the appropriate accounting, the Company must first determine if it intends to sell the security or if it is more likely than not that it will be required to sell the security before the fair value increases to at least the amortized cost basis. If either of those selling events is expected, the Company will write down the amortized cost basis of the security to its fair value. This is achieved by writing off any previously recorded allowance, if applicable, and recognizing any incremental impairment through earnings. If the Company neither intends to sell the security, nor believes it more likely than not will be required to sell the security, before the fair value recovers to the amortized cost basis, the Company must determine whether any of the decline in fair value has resulted from a credit loss, or if it is entirely the result of noncredit factors.
Extent to which the fair value is less than the amortized cost basis
2020.
Debt securities classified as held to maturity were those debt securities that the Company had the intent and ability to hold to maturity and were carried at amortized cost. The Company no longer carries debt securities classified as held to maturity.
84
Loans heldHeld for sale
Sale
Servicing
2021.
Loans
85
PPP Loans
Debt Restructurings
Credit Deterioration
On January 1, 2020, First Busey adopted ASC Topic 326“Financial Instruments-Credit Losses” using the prospective transition approach for financial assets PCD that were previously classified as PCI and accounted for under ASC 310-30.Subtopic 310-30 “Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality.” In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. In accordance with ASC Topic 326, the amortized cost basis of PCD assets were adjusted to reflect an ACL for any remaining credit discount. Subsequent changes in expected cash flows will be adjusted through the ACL. The noncredit discount will be accreted into interest income at the effective interest rate as of January 1, 2020.
86
Allowance for credit losses
Credit Losses
A loan’s amortized cost basis is comprised of the unpaid principal balance of the loan, accrued interest receivable, purchase premiums or discounts, and net deferred origination fees or costs. The Company has estimated its allowance on the amortized cost basis, exclusive of government guaranteed loans and accrued interest receivable. The Company writes-off uncollectible accrued interest receivable in a timely manner and has elected to not measure an allowance for accrued interest receivable. The Company presents the aggregate amount of accrued interest receivable for all financial instruments in other assets on the Consolidated Balance Sheets and the balance of accrued interest receivable is disclosed in “Note 18. Fair Value MeasurementsMeasurements..”
Equipment
|
|
|
| ||||||
Asset Description | Estimated Useful Life | ||||||||
Buildings and improvements | 3 — 40 | years | |||||||
Furniture and equipment | 3 — 10 | years |
87
ASC Topic 842“Leases” requires the use of the rate implicit in the lease whenever this rate is readily determinable. If not readily determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the Company used a borrowing rate that corresponded to the remaining lease term.
Long-lived assets
Other Repossessed Assets
Other Intangibles
The Company estimates the fair value of its reporting units as of the measurement date utilizing valuation methodologies including comparable company analysis and precedent transaction analysis. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. There was 0no impairment as of December 31, 2021,2022, or 2020.2021. See “Note 7. Goodwill and Other Intangible Assets” for further discussion.
Bank Owned Life Insurance
88
The Company maintains a liability for post-employment benefits promised to an employee based on an arrangement between the Company and an employee. In an endorsement split-dollar life insurance arrangement, the employer owns and controls the policy, and the employer and employee split the life insurance policy’s cash surrender value and/or death benefits. If the employer agrees to maintain a life insurance policy during the employee’s retirement, the present value of the cost of maintaining the insurance policy would be accrued over the employee’s active service period. Similarly, if the employer agrees to provide the employee with a death benefit, the present value of the death benefit would be accrued over the employee’s active service period. The Company has an accrued liability of $5.5$5.6 million as of December 31, 2021,2022, included in other liabilities, for these arrangements, compared with $5.6$5.5 million as of December 31, 2020.
2021.
Asset Investments
The following table summarizes the impact of the Company’s other asset investments on our Consolidated Balance Sheets for the periods indicated (dollars in thousands):
| | | | | | | | | |
| | | | | As of December 31, | ||||
|
| Location |
| 2021 |
| 2020 | |||
Other asset investments | | | | | | | | | |
Funded investments | | Other assets | | $ | 37,417 | | | 20,368 | |
Unfunded investments | | Other assets | | | 52,765 | | | 16,776 | |
Other asset investments | | | | | $ | 90,182 | | | 37,144 |
| | | | | | | | | |
Unfunded investment obligations | | Other liabilities | | $ | (52,765) | | $ | (16,776) |
As of December 31, | ||||||||||||||||||||
Location | 2022 | 2021 | ||||||||||||||||||
Other asset investments | ||||||||||||||||||||
Funded investments | Other assets | $ | 58,912 | $ | 37,417 | |||||||||||||||
Unfunded investments | Other assets | 67,437 | 52,765 | |||||||||||||||||
Other asset investments | $ | 126,349 | $ | 90,182 | ||||||||||||||||
Unfunded investment obligations | Other liabilities | $ | (67,437) | $ | (52,765) |
Financial Assets
Taxes
89
Under GAAP, a valuation allowance is required to be recognized if it is more likely than not that the deferred tax assets will not be realized. The determination of the recoverability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions.
2021.
2021.
authority; however, we have received an inquiry from the State of Illinois regarding our prior franchise tax filings. In the event the Company is required to amend our prior franchise tax filings, we could incur additional expenses.
Stock-based employee compensation
90
The Company has outstanding stock options assumed from acquisitions.
Disclosure
Operating segments are components of a business that (i) engage in business activities from which the component may earn revenues and incur expenses; (ii) have operating results that are reviewed regularly by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance; and (iii) for which discrete financial information is available. The Company’s operations are managed along 3three operating segments consisting of Banking, FirsTech, and Wealth Management. See “Note 21. Operating Segments and Related Information” for further discussion.
Business combinations are accounted for under ASC Topic 805 “BusinessCombinations, Combinations” using the acquisition method of accounting. The acquisition method of accounting requires an acquirer to recognize the assets acquired and the liabilities assumed at the acquisition date measured at their estimated fair values as of that date. To determine the fair values, the Company may utilize third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques. Under the acquisition method of accounting, the Company will identify the acquirer and the closing date and apply applicable recognition principles.
91
Interest rate lock commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging,Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Financial Statements, with changes in the fair values of the corresponding derivative financial assets or liabilities recorded as either a charge or credit to current earnings during the period in which the changes occurred.
The Company economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding best-efforts forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers. Forward sales commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging,Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Financial Statements. While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, the Company did not designate them for hedge accounting treatment. Changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.
Off-balance-sheet arrangements
92
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer’s obligation to a third-party. Those guarantees are primarily issued to support public and private borrowing arrangements, including bond financing and similar transactions, and primarily have terms of one yeartwo years or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds collateral, which may include accounts receivable, inventory, property and equipment, and income producing properties, supporting those commitments if deemed necessary. In the event the customer does not perform in accordance with the terms of the agreement with the third-party, the Company would be required to fund the commitment. If the commitment is funded, the Company would be entitled to seek recovery from the customer.
Financial Instruments
Fair value of financial instruments
Fair value of financial instruments is estimated using relevant market information and other assumptions, as more fully disclosed in “Note 18. Fair Value Measurements.” Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates.
Revenue
ASC Topic 606“Revenue from Contracts with Customers” outlines a single model for companies to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance, including industry-specific guidance. ASC Topic 606 requires that companies recognize revenue based on the value of transferred goods or services as they occur in the contract and establishes additional disclosures. The Company’s revenue is comprised of net interest income, which is explicitly excluded from the scope of ASC Topic 606, and noninterest income. The Company has evaluated its noninterest income and the nature of its contracts with customers and determined that further disaggregation of revenue beyond what is presented in the accompanying Consolidated Financial Statements is not necessary. The Company satisfies its performance obligations on its contracts with customers as services are rendered so there is limited judgment involved in applying ASC Topic 606 that affects the determination of the timing and amount of revenue from contracts with customers.
93
Payment Technology Solutions
2022.
Events
Recently Adopted Accounting Standards
ASU 2020-01, “Investments – Equity Securities2022-06 “Reference Rate Reform (Topic 321), Investments – Equity Method and Joint Ventures848): Deferral of the Sunset Date of Topic 848” deferred the sunset date of ASC Topic 848 from December 31, 2022, to December 31, 2024, extending the time during which entities may apply certain practical expedients for contract modifications that replace a reference to LIBOR or another reference rate that is expected to be discontinued as a result of reference rate reform. This update was effective upon issuance on December 21, 2022. Adoption of this standard did not have a material impact on First Busey’s financial position or results of operations.
ASU 2021-06 “Presentation of Financial Statements (Topic 205), Financial Services—Depository and Lending (Topic 942), and Financial Services—Investment Companies (Topic 946): Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, and No. 33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants” amends certain disclosure requirements for banks and bank holding companies, as well as savings and loan organizations, by 1) simplifying loan category disclosure requirements, 2) requiring separate disclosure of the amounts of total loans, related allowance for losses, and unearned income, and 3) when a threshold is met, requires disclosure of the aggregate amount of loans to directors, executive officers,financial position or principal holders of equity securities, or to any associate of such persons, including an explanation of changes in the amount of such loans, as well as disclosure of such loans that are past due, nonaccrual, or TDRs. This update was effective upon issuance on August 9, 2021, and applies prospectively. Adoption of this standard did not have a material impact on our results of operations or our consolidated financial statements.
operations.
94
Recently issued accounting standards
ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options”clarifies how an issuer should account for modifications or exchanges of equity-classified written call options (i.e. a warrant to purchase the issuer’s common stock). This accounting standard requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant. This guidance iswas effective for First Busey beginning January 1, 2022, and will bewas applied on a prospective basis. Adoption of this standard did not have a material impact on the Company’s financial position or results of operations.
ASU 2021-05 2022-01 “LeasesDerivatives and Hedging (Topic 842)815): Lessors—Certain LeasesFair Value Hedging—Portfolio Layer Method” replaces the current last-of-layer hedge accounting method with Variable Lease Payments” amends the lessor’s classification of certain leases under ASC 842. Under this updated guidance, leasesan expanded portfolio layer method that would otherwise be classified as a sales-type or direct financing lease must be classified by a lessor as an operating lease when the following conditions are met: 1) the contract includes variable lease payments that do not depend on an index or rate and 2) classification as a sales-type or direct financing lease would result in recognitionpermits multiple hedged layers of a selling loss at lease commencement.single closed portfolio. The scope of the portfolio layer method is also expanded to include non-prepayable financial assets. This update also provides additional guidance is effective beginning January 1, 2022,on the accounting for and willdisclosure of hedge basis adjustments that are applicable to the portfolio layer method, and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. Amendments related to hedge basis adjustments which are included in this standard apply on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. Amendments related to disclosure which are included in this standard may be applied on a prospective basis.basis from the initial application date, or on a retrospective basis to each prior period presented after the date of adoption of the amendments in ASU 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This standard became effective for First Busey beginning January 1, 2023. Adoption of this standard willis not expected to have a material impact on our financial position or results of operations.
ASU 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” requires measurement and recognition in accordance with ASC Topic 606“Revenue from Contracts with Customers” for contract assets and contract liabilities acquired in a business combination. This update isbecame effective for First Busey beginning January 1, 2023, and may be adopted early.2023. This standard applies prospectively to all business combinations that occur on or after the date it is adopted and, if applicable, retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application. We have not yet selected an adoption date and we are currently evaluating the effect on our financial position and results of operations.
ASU 2021-10 “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” establishes disclosure requirements for transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model. Disclosures required under this standard include 1) the types of transactions, 2) the accounting for those transactions, and 3) the effect of those transactions on the consolidated financial statements. This update is effective for annual periods beginning January 1, 2022, and applies prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application.adopted. Adoption of this standard willis not expected to have a material impact on our financial position or results of operations.
Note
ACQUISITIONS
95
Under the terms of the definitive agreement, each share of CAC common stock issued and outstanding as of the effective date was converted into the right to receive 444.4783 shares of First Busey common stock and $14,173.96 in cash, which reflects adjustments made to the cash consideration in accordance with the terms of the definitive agreement. The fair value of the common stock of First Busey issued as part of the consideration paid to the holders of CAC common stock was determined on the basis of the closing price of First Busey’s common shares on May 28, 2021, the last trading day immediately preceding the acquisition date of May 31, 2021. As additional consideration provided to CAC’s shareholdersstockholders in the merger, CAC paid a special dividend to its shareholdersstockholders in the amount of $60.0 million, or $12,087.58 per share of CAC common stock, on May 28, 2021.
during 2022.
96
Estimated fair values of the assets acquired and liabilities assumed, as well as the fair value of consideration transferred, were as follows (dollars in thousands):
CAC | |||||
May 31, 2021 | |||||
Assets acquired | |||||
Cash and cash equivalents | $ | 298,637 | |||
Securities | 702,367 | ||||
Portfolio loans, net of ACL | 430,470 | ||||
Premises and equipment | 17,034 | ||||
Other intangible assets | 17,340 | ||||
Mortgage servicing rights | 629 | ||||
Other assets | 8,176 | ||||
Total assets acquired | 1,474,653 | ||||
Liabilities assumed | |||||
Deposits | 1,315,671 | ||||
Other borrowings | 16,651 | ||||
Other liabilities | 19,205 | ||||
Total liabilities assumed | 1,351,527 | ||||
Net assets acquired | $ | 123,126 | |||
Consideration paid: | |||||
Cash | $ | 70,358 | |||
Common stock | 59,105 | ||||
Total consideration paid | $ | 129,463 | |||
Goodwill | $ | 6,337 |
| | | |
|
| CAC | |
|
| May 31, 2021 | |
Assets acquired | |
| |
Cash and cash equivalents | | $ | 298,637 |
Securities | |
| 702,367 |
Portfolio loans, net of ACL | |
| 430,470 |
Premises and equipment | |
| 17,034 |
Other intangible assets | | | 17,340 |
Mortgage servicing rights | |
| 629 |
Other assets | |
| 8,176 |
Total assets acquired | |
| 1,474,653 |
| | | |
Liabilities assumed | | | |
Deposits | |
| 1,315,671 |
Other borrowings | |
| 16,651 |
Other liabilities | |
| 19,205 |
Total liabilities assumed | |
| 1,351,527 |
| | | |
Net assets acquired | | $ | 123,126 |
| | | |
Consideration paid: | | | |
Cash | | $ | 70,358 |
Common stock | |
| 59,105 |
Total consideration paid | | $ | 129,463 |
| | | |
Goodwill | | $ | 6,337 |
Note
DEBT SECURITIES
The table below provides the amortized cost, unrealized and unrecognized gains and losses, and fair values of debt securities, summarized by major category (dollars in thousands):
| | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||
| | Amortized | | Unrealized | | Fair | ||||||
|
| Cost |
| Gross Gains |
| Gross Losses |
| Value | ||||
Debt securities available for sale | | | | | | | | | | | | |
U.S. Treasury securities | | $ | 166,768 | | $ | 41 | | $ | (1,047) | | $ | 165,762 |
Obligations of U.S. government corporations and agencies | |
| 37,579 | |
| 891 | |
| — | |
| 38,470 |
Obligations of states and political subdivisions | |
| 300,602 | |
| 7,760 | |
| (1,493) | |
| 306,869 |
Asset-backed securities | | | 492,055 | | | 295 | | | (164) | | | 492,186 |
Commercial mortgage-backed securities | | | 625,339 | | | 3,425 | | | (13,766) | | | 614,998 |
Residential mortgage-backed securities | |
| 2,095,104 | |
| 8,889 | |
| (34,680) | |
| 2,069,313 |
Corporate debt securities | |
| 296,076 | |
| 1,081 | |
| (3,504) | |
| 293,653 |
Total debt securities available for sale | | $ | 4,013,523 | | $ | 22,382 | | $ | (54,654) | | $ | 3,981,251 |
97
As of December 31, 2022 | |||||||||||||||||||||||
Amortized Cost | Unrealized | Fair Value | |||||||||||||||||||||
Gross Gains | Gross Losses | ||||||||||||||||||||||
Debt securities available for sale | |||||||||||||||||||||||
U.S. Treasury securities | $ | 117,805 | $ | — | $ | (3,744) | $ | 114,061 | |||||||||||||||
Obligations of U.S. government corporations and agencies | 20,097 | 3 | (321) | 19,779 | |||||||||||||||||||
Obligations of states and political subdivisions | 283,481 | 106 | (26,075) | 257,512 | |||||||||||||||||||
Asset-backed securities | 489,558 | — | (19,683) | 469,875 | |||||||||||||||||||
Commercial mortgage-backed securities | 124,423 | — | (16,029) | 108,394 | |||||||||||||||||||
Residential mortgage-backed securities | 1,463,971 | 2 | (220,717) | 1,243,256 | |||||||||||||||||||
Corporate debt securities | 273,118 | 33 | (24,635) | 248,516 | |||||||||||||||||||
Total debt securities available for sale | $ | 2,772,453 | $ | 144 | $ | (311,204) | $ | 2,461,393 | |||||||||||||||
Amortized Cost | Unrecognized | Fair Value | |||||||||||||||||||||
Gross Gains | Gross Losses | ||||||||||||||||||||||
Debt securities held to maturity | |||||||||||||||||||||||
Commercial mortgage-backed securities | $ | 474,820 | $ | — | $ | (63,738) | $ | 411,082 | |||||||||||||||
Residential mortgage-backed securities | 443,492 | — | (69,279) | 374,213 | |||||||||||||||||||
Total debt securities held to maturity | $ | 918,312 | $ | — | $ | (133,017) | $ | 785,295 |
As of December 31, 2021 | |||||||||||||||||||||||
Amortized Cost | Unrealized | Fair Value | |||||||||||||||||||||
Gross Gains | Gross Losses | ||||||||||||||||||||||
Debt securities available for sale | |||||||||||||||||||||||
U.S. Treasury securities | $ | 166,768 | $ | 41 | $ | (1,047) | $ | 165,762 | |||||||||||||||
Obligations of U.S. government corporations and agencies | 37,579 | 891 | — | 38,470 | |||||||||||||||||||
Obligations of states and political subdivisions | 300,602 | 7,760 | (1,493) | 306,869 | |||||||||||||||||||
Asset-backed securities | 492,055 | 295 | (164) | 492,186 | |||||||||||||||||||
Commercial mortgage-backed securities | 625,339 | 3,425 | (13,766) | 614,998 | |||||||||||||||||||
Residential mortgage-backed securities | 2,095,104 | 8,889 | (34,680) | 2,069,313 | |||||||||||||||||||
Corporate debt securities | 296,076 | 1,081 | (3,504) | 293,653 | |||||||||||||||||||
Total debt securities available for sale | $ | 4,013,523 | $ | 22,382 | $ | (54,654) | $ | 3,981,251 |
| | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||
| | Amortized | | Unrealized | | Fair | ||||||
|
| Cost |
| Gross Gains |
| Gross Losses |
| Value | ||||
Debt securities available for sale | | | | | | | | | | | | |
U.S. Treasury securities | | $ | 27,481 | | $ | 356 | | $ | — | | $ | 27,837 |
Obligations of U.S. government corporations and agencies | |
| 67,406 | |
| 2,162 | |
| (49) | |
| 69,519 |
Obligations of states and political subdivisions | |
| 292,940 | |
| 11,779 | |
| (8) | |
| 304,711 |
Commercial mortgage-backed securities | | | 408,716 | | | 10,212 | | | (312) | | | 418,616 |
Residential mortgage-backed securities | |
| 1,344,047 | |
| 24,571 | |
| (303) | |
| 1,368,315 |
Corporate debt securities | |
| 70,953 | |
| 1,237 | |
| (1) | |
| 72,189 |
Total debt securities available for sale | | $ | 2,211,543 | | $ | 50,317 | | $ | (673) | | $ | 2,261,187 |
Amortized cost and fair value of debt securities, by contractual maturity or pre-refunded date, are shown below. Mortgages underlying mortgage-backed securities and asset-backed securities may be called or prepaid; therefore, actual maturities could differ from the contractual maturities. All mortgage-backed securities were issued by U.S. government corporations and agencies (dollars in thousands):
As of December 31, 2022 | |||||||||||
Amortized Cost | Fair Value | ||||||||||
Debt securities available for sale | |||||||||||
Due in one year or less | $ | 135,698 | $ | 133,967 | |||||||
Due after one year through five years | 395,914 | 368,754 | |||||||||
Due after five years through ten years | 364,065 | 330,280 | |||||||||
Due after ten years | 1,876,776 | 1,628,392 | |||||||||
Debt securities available for sale | $ | 2,772,453 | $ | 2,461,393 | |||||||
Debt securities held to maturity | |||||||||||
Due after one year through five years | $ | 44,392 | $ | 41,483 | |||||||
Due after five years through ten years | 64,593 | 57,955 | |||||||||
Due after ten years | 809,327 | 685,857 | |||||||||
Debt securities held to maturity | $ | 918,312 | $ | 785,295 |
| | | | | | |
| | As of December 31, 2021 | ||||
|
| Amortized |
| Fair | ||
|
| Cost |
| Value | ||
Debt securities available for sale | | | | | | |
Due in one year or less | | $ | 129,260 | | $ | 129,848 |
Due after one year through five years | |
| 564,284 | |
| 563,473 |
Due after five years through ten years | |
| 356,782 | |
| 362,057 |
Due after ten years | |
| 2,963,197 | |
| 2,925,873 |
Total debt securities available for sale | | $ | 4,013,523 | | $ | 3,981,251 |
Realized gains and losses related to sales and calls of debt securities available for sale are summarized as follows (dollars in thousands):
Years Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Realized gains and losses on debt securities | |||||||||||||||||||||||||||||
Gross gains on debt securities | $ | 115 | $ | 543 | $ | 1,732 | |||||||||||||||||||||||
Gross (losses) on debt securities | (89) | (514) | (8) | ||||||||||||||||||||||||||
Realized net gains (losses) on debt securities1 | $ | 26 | $ | 29 | $ | 1,724 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Realized gains and losses on sales of debt securities | | | | | | | | | |
Gross security gains | | $ | 543 | | $ | 1,732 | | $ | 1,318 |
Gross security (losses) | | | (514) |
| | (8) |
| | (585) |
Net gains (losses) on sales of debt securities (1) | | $ | 29 | | $ | 1,724 | | $ | 733 |
Debt securities with carrying amounts of $746.7 million on December 31, 2022, and $708.9 million on December 31, 2021, and $628.0 million on December 31, 2020, were pledged as collateral for public deposits, securities sold under agreements to repurchase, and for other purposes as required.
98
The following information pertains to debt securities with gross unrealized and unrecognized losses, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (dollars in thousands):
As of December 31, 2022 | |||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||
Debt securities available for sale | |||||||||||||||||||||||||||||||||||
U.S. Treasury securities1 | $ | 74 | $ | — | $ | 113,987 | $ | (3,744) | $ | 114,061 | $ | (3,744) | |||||||||||||||||||||||
Obligations of U.S. government corporations and agencies | 19,603 | (321) | — | — | 19,603 | (321) | |||||||||||||||||||||||||||||
Obligations of states and political subdivisions | 166,147 | (10,059) | 75,217 | (16,016) | 241,364 | (26,075) | |||||||||||||||||||||||||||||
Asset-backed securities | 390,164 | (15,648) | 79,711 | (4,035) | 469,875 | (19,683) | |||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 89,428 | (12,623) | 18,966 | (3,406) | 108,394 | (16,029) | |||||||||||||||||||||||||||||
Residential mortgage-backed securities | 366,221 | (38,111) | 876,668 | (182,606) | 1,242,889 | (220,717) | |||||||||||||||||||||||||||||
Corporate debt securities | 39,037 | (5,079) | 204,310 | (19,556) | 243,347 | (24,635) | |||||||||||||||||||||||||||||
Debt securities available for sale with gross unrealized losses | $ | 1,070,674 | $ | (81,841) | $ | 1,368,859 | $ | (229,363) | $ | 2,439,533 | $ | (311,204) | |||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
Fair Value | Unrecognized Losses | Fair Value | Unrecognized Losses | Fair Value | Unrecognized Losses | ||||||||||||||||||||||||||||||
Debt securities held to maturity | |||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | $ | 58,065 | $ | (8,009) | $ | 353,017 | $ | (55,729) | $ | 411,082 | $ | (63,738) | |||||||||||||||||||||||
Residential mortgage-backed securities | — | — | 374,213 | (69,279) | 374,213 | (69,279) | |||||||||||||||||||||||||||||
Debt securities held to maturity with gross unrecognized losses | $ | 58,065 | $ | (8,009) | $ | 727,230 | $ | (125,008) | $ | 785,295 | $ | (133,017) |
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||||||||
| | Less than 12 months | | 12 months or more | | Total | ||||||||||||
| | Fair |
| Unrealized |
| Fair |
| Unrealized |
| Fair |
| Unrealized | ||||||
|
| Value |
| Losses |
| Value |
| Losses |
| Value |
| Losses | ||||||
Debt securities available for sale | | | | | | | | | | | | | | | | | | |
U.S. Treasury securities | | $ | 163,653 | | $ | (1,047) | | $ | — | | $ | — | | $ | 163,653 | | $ | (1,047) |
Obligations of states and political subdivisions | | | 92,680 | | | (1,493) | | | — | | | — | | | 92,680 | | | (1,493) |
Asset-backed securities | | | 89,983 | | | (164) | | | — | | | — | | | 89,983 | | | (164) |
Commercial mortgage-backed securities | | | 389,078 | | | (10,186) | | | 85,905 | | | (3,580) | | | 474,983 | | | (13,766) |
Residential mortgage-backed securities | |
| 1,700,187 | |
| (33,453) | |
| 20,538 | |
| (1,227) | |
| 1,720,725 | |
| (34,680) |
Corporate debt securities | |
| 241,153 | |
| (3,504) | |
| — | |
| — | |
| 241,153 | |
| (3,504) |
Total temporarily impaired securities | | $ | 2,676,734 | | $ | (49,847) | | $ | 106,443 | | $ | (4,807) | | $ | 2,783,177 | | $ | (54,654) |
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||||||||
| | Less than 12 months | | 12 months or more | | Total | ||||||||||||
| | Fair |
| Unrealized |
| Fair |
| Unrealized |
| Fair |
| Unrealized | ||||||
|
| Value |
| Losses |
| Value |
| Losses |
| Value |
| Losses | ||||||
Debt securities available for sale | | | | | | | | | | | | | | | | | | |
Obligations of U.S. government corporations and agencies | | $ | — | | $ | — | | $ | 4,957 | | $ | (49) | | $ | 4,957 | | $ | (49) |
Obligations of states and political subdivisions | | | 762 | | | (8) | | | — | | | — | | | 762 | | | (8) |
Commercial mortgage-backed securities | | | 129,655 | | | (312) | | | — | | | — | | | 129,655 | | | (312) |
Residential mortgage-backed securities | |
| 89,997 | |
| (300) | |
| 139 | |
| (3) | |
| 90,136 | |
| (303) |
Corporate debt securities | |
| 1,499 | |
| (1) | |
| — | |
| — | |
| 1,499 | |
| (1) |
Total temporarily impaired securities | | $ | 221,913 | | $ | (621) | | $ | 5,096 | | $ | (52) | | $ | 227,009 | | $ | (673) |
No ACL was recordedUnrealized losses for U.S. Treasury securities that have been in relationa continuous loss position for less than 12 months were insignificant, rounding to the Company’s debt securities. The Company’s debt security portfolio consistedzero thousand.
As of December 31, 2021 | |||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||
Debt securities available for sale | |||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | 163,653 | $ | (1,047) | $ | — | $ | — | $ | 163,653 | $ | (1,047) | |||||||||||||||||||||||
Obligations of states and political subdivisions | 92,680 | (1,493) | — | — | 92,680 | (1,493) | |||||||||||||||||||||||||||||
Asset-backed securities | 89,983 | (164) | — | — | 89,983 | (164) | |||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 389,078 | (10,186) | 85,905 | (3,580) | 474,983 | (13,766) | |||||||||||||||||||||||||||||
Residential mortgage-backed securities | 1,700,187 | (33,453) | 20,538 | (1,227) | 1,720,725 | (34,680) | |||||||||||||||||||||||||||||
Corporate debt securities | 241,153 | (3,504) | — | — | 241,153 | (3,504) | |||||||||||||||||||||||||||||
Debt securities available for sale with gross unrealized losses | $ | 2,676,734 | $ | (49,847) | $ | 106,443 | $ | (4,807) | $ | 2,783,177 | $ | (54,654) | |||||||||||||||||||||||
As of December 31, 2022 | |||||||||||||||||
Available for Sale | Held to Maturity | Total | |||||||||||||||
Debt securities with gross unrealized or unrecognized losses, fair value | $ | 2,439,533 | $ | 785,295 | $ | 3,224,828 | |||||||||||
Gross unrealized or unrecognized losses on debt securities | 311,204 | 133,017 | 444,221 | ||||||||||||||
Ratio of gross unrealized or unrecognized losses to debt securities with gross unrealized or unrecognized losses | 12.8 | % | 16.9 | % | 13.8 | % | |||||||||||
Count of debt securities | 1,091 | 55 | 1,146 | ||||||||||||||
Count of debt securities in an unrealized or unrecognized loss position | 1,032 | 55 | 1,087 |
As of December 31, 2021 | |||||||||||||||||
Available for Sale | Held to Maturity | Total | |||||||||||||||
Debt securities with gross unrealized losses, fair value | $ | 2,783,177 | $ | — | $ | 2,783,177 | |||||||||||
Gross unrealized losses on debt securities | 54,654 | — | 54,654 | ||||||||||||||
Ratio of gross unrealized losses to debt securities with gross unrealized losses | 2.0 | % | — | % | 2.0 | % | |||||||||||
Count of debt securities | 1,252 | — | 1,252 | ||||||||||||||
Count of debt securities in an unrealized loss position | 373 | — | 373 |
99
The Company’s lending can be summarized into five primary categories: commercial loans, commercial real estate loans, real estate construction loans, retail real estate loans, and retail other loans. Distributions of the loan portfolio loansby loan category were as follows (dollars in thousands):
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Portfolio loans | | | | | | |
Commercial | | $ | 1,943,886 | | $ | 2,014,576 |
Commercial real estate | | | 3,119,807 | | | 2,892,535 |
Real estate construction | | | 385,996 | | | 461,786 |
Retail real estate | | | 1,512,976 | | | 1,407,852 |
Retail other | | | 226,333 | | | 37,428 |
Total portfolio loans | | $ | 7,188,998 | | $ | 6,814,177 |
| | | | | | |
ACL | | | (87,887) | | | (101,048) |
Portfolio loans, net | | $ | 7,101,111 | | $ | 6,713,129 |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Portfolio loans | |||||||||||
Commercial | $ | 1,974,154 | $ | 1,943,886 | |||||||
Commercial real estate | 3,261,873 | 3,119,807 | |||||||||
Real estate construction | 530,469 | 385,996 | |||||||||
Retail real estate | 1,657,082 | 1,512,976 | |||||||||
Retail other | 302,124 | 226,333 | |||||||||
Total portfolio loans | $ | 7,725,702 | $ | 7,188,998 | |||||||
ACL | (91,608) | (87,887) | |||||||||
Portfolio loans, net | $ | 7,634,094 | $ | 7,101,111 |
2021.
2021.
(dollars in thousands):
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Pledged loans | |||||||||||
FHLB | $ | 5,095,448 | $ | 4,656,331 | |||||||
Federal Reserve Bank | 804,718 | 808,254 | |||||||||
Total pledged loans | $ | 5,900,166 | $ | 5,464,585 |
•Watch |
100
•Special mention – This category is for “Other Assets Specially Mentioned” loans that have potential weaknesses, which may, if not checked or corrected, weaken the asset, or inadequately protect the Company’s credit position at some future date.
The following table is a summary of risk grades segregated by category of portfolio loans (dollars in thousands):
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||||||||
|
| |
| |
| Special |
| |
| Substandard |
| | ||||||
|
| Pass |
| Watch |
| Mention |
| Substandard |
| Non-accrual |
| Total | ||||||
Portfolio loans | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,747,756 | | $ | 93,582 | | $ | 69,427 | | $ | 26,117 | | $ | 7,004 | | $ | 1,943,886 |
Commercial real estate | |
| 2,682,441 | |
| 343,304 | |
| 49,695 | |
| 38,394 | |
| 5,973 | |
| 3,119,807 |
Real estate construction | |
| 369,797 | |
| 13,793 | |
| 6 | |
| 2,400 | |
| — | |
| 385,996 |
Retail real estate | |
| 1,491,845 | |
| 12,374 | |
| 1,992 | |
| 3,867 | |
| 2,898 | |
| 1,512,976 |
Retail other | |
| 226,262 | |
| — | |
| — | |
| — | |
| 71 | |
| 226,333 |
Total portfolio loans | | $ | 6,518,101 | | $ | 463,053 | | $ | 121,120 | | $ | 70,778 | | $ | 15,946 | | $ | 7,188,998 |
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||||||||
|
| |
| |
| Special |
| |
| Substandard |
| | ||||||
|
| Pass |
| Watch |
| Mention |
| Substandard |
| Non-accrual |
| Total | ||||||
Portfolio loans | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,768,755 | | $ | 136,948 | | $ | 72,447 | | $ | 27,903 | | $ | 8,523 | | $ | 2,014,576 |
Commercial real estate | |
| 2,393,372 | |
| 383,277 | |
| 75,486 | |
| 34,897 | |
| 5,503 | |
| 2,892,535 |
Real estate construction | |
| 434,681 | |
| 24,481 | |
| 77 | |
| 2,546 | |
| 1 | |
| 461,786 |
Retail real estate | |
| 1,382,616 | |
| 10,264 | |
| 2,471 | |
| 3,702 | |
| 8,799 | |
| 1,407,852 |
Retail other | |
| 37,324 | |
| — | |
| — | |
| — | |
| 104 | |
| 37,428 |
Total portfolio loans | | $ | 6,016,748 | | $ | 554,970 | | $ | 150,481 | | $ | 69,048 | | $ | 22,930 | | $ | 6,814,177 |
101
As of December 31, 2022 | |||||||||||||||||||||||||||||||||||
Pass | Watch | Special Mention | Substandard | Substandard Non-accrual | Total | ||||||||||||||||||||||||||||||
Portfolio loans | |||||||||||||||||||||||||||||||||||
Commercial | $ | 1,668,495 | $ | 201,758 | $ | 46,540 | $ | 51,187 | $ | 6,174 | $ | 1,974,154 | |||||||||||||||||||||||
Commercial real estate | 2,851,709 | 326,455 | 43,526 | 34,539 | 5,644 | 3,261,873 | |||||||||||||||||||||||||||||
Real estate construction | 502,904 | 25,164 | 1 | 2,400 | — | 530,469 | |||||||||||||||||||||||||||||
Retail real estate | 1,639,599 | 10,520 | 1,338 | 2,529 | 3,096 | 1,657,082 | |||||||||||||||||||||||||||||
Retail other | 301,971 | — | — | — | 153 | 302,124 | |||||||||||||||||||||||||||||
Total portfolio loans | $ | 6,964,678 | $ | 563,897 | $ | 91,405 | $ | 90,655 | $ | 15,067 | $ | 7,725,702 |
As of December 31, 2021 | |||||||||||||||||||||||||||||||||||
Pass | Watch | Special Mention | Substandard | Substandard Non-accrual | Total | ||||||||||||||||||||||||||||||
Portfolio loans | |||||||||||||||||||||||||||||||||||
Commercial | $ | 1,747,756 | $ | 93,582 | $ | 69,427 | $ | 26,117 | $ | 7,004 | $ | 1,943,886 | |||||||||||||||||||||||
Commercial real estate | 2,682,441 | 343,304 | 49,695 | 38,394 | 5,973 | 3,119,807 | |||||||||||||||||||||||||||||
Real estate construction | 369,797 | 13,793 | 6 | 2,400 | — | 385,996 | |||||||||||||||||||||||||||||
Retail real estate | 1,491,845 | 12,374 | 1,992 | 3,867 | 2,898 | 1,512,976 | |||||||||||||||||||||||||||||
Retail other | 226,262 | — | — | — | 71 | 226,333 | |||||||||||||||||||||||||||||
Total portfolio loans | $ | 6,518,101 | $ | 463,053 | $ | 121,120 | $ | 70,778 | $ | 15,946 | $ | 7,188,998 |
Risk grades of portfolio loans, further sorted by origination year, are as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| As of December 31, 2021 | ||||||||||||||||||||||
|
| Term Loans Amortized Cost Basis by Origination Year | | | Revolving | | | | ||||||||||||||||
Risk Grade Ratings |
| 2021 |
| 2020 |
| 2019 |
| 2018 |
| 2017 |
| | Prior |
| | loans |
| | Total | |||||
Commercial |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 512,729 | | $ | 228,811 | | $ | 107,877 | | $ | 84,873 | | $ | 74,351 | | $ | 122,418 | | $ | 616,697 | | $ | 1,747,756 |
Watch | | | 13,847 | | | 5,913 | | | 14,274 | | | 5,060 | | | 1,361 | | | 2,866 | | | 50,261 | | | 93,582 |
Special Mention | | | 7,062 | | | 898 | | | 5,961 | | | 4,025 | | | 6,790 | | | 11,845 | | | 32,846 | | | 69,427 |
Substandard | | | 3,595 | | | 3,362 | | | 3,136 | | | 1,855 | | | 1,125 | | | 5,459 | | | 7,585 | | | 26,117 |
Substandard non-accrual | | | 4,126 | | | 364 | | | 142 | | | — | | | 320 | | | 52 | | | 2,000 | | | 7,004 |
Total commercial | | | 541,359 | | | 239,348 | | | 131,390 | | | 95,813 | | | 83,947 | | | 142,640 | | | 709,389 | | | 1,943,886 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | |||
Pass | | | 969,548 | | | 637,550 | | | 425,850 | | | 235,928 | | | 200,373 | | | 198,002 | | | 15,190 | | | 2,682,441 |
Watch | | | 51,560 | | | 38,820 | | | 123,324 | | | 48,088 | | | 46,761 | | | 32,608 | | | 2,143 | | | 343,304 |
Special Mention | | | 9,542 | | | 7,060 | | | 6,585 | | | 10,098 | | | 6,357 | | | 9,870 | | | 183 | | | 49,695 |
Substandard | | | 21,002 | | | 3,781 | | | 1,218 | | | 11,451 | | | 521 | | | 421 | | | — | | | 38,394 |
Substandard non-accrual | | | 112 | | | 181 | | | 359 | | | 1,893 | | | 3,407 | | | 21 | | | — | | | 5,973 |
Total commercial real estate | | | 1,051,764 | | | 687,392 | | | 557,336 | | | 307,458 | | | 257,419 | | | 240,922 | | | 17,516 | | | 3,119,807 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Real estate construction | | | | | | | | | | | | | | | | | | | | | | |||
Pass | | | 202,082 | | | 123,491 | | | 31,927 | | | 3,155 | | | 738 | | | 1,223 | | | 7,181 | | | 369,797 |
Watch | | | 7,886 | | | 4,159 | | | 54 | | | — | | | 1,574 | | | 120 | | | — | | | 13,793 |
Special Mention | | | — | | | — | | | 6 | | | — | | | — | | | — | | | — | | | 6 |
Substandard | | | — | | | 2,400 | | | — | | | — | | | — | | | — | | | — | | | 2,400 |
Substandard non-accrual | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Total real estate construction | | | 209,968 | | | 130,050 | | | 31,987 | | | 3,155 | | | 2,312 | | | 1,343 | | | 7,181 | | | 385,996 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Retail real estate |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | | 523,541 | | | 215,068 | | | 96,617 | | | 79,158 | | | 82,478 | | | 281,737 | | | 213,246 | | | 1,491,845 |
Watch | | | 4,100 | | | 2,460 | | | 1,780 | | | 1,312 | | | 343 | | | 150 | | | 2,229 | | | 12,374 |
Special Mention | | | 1,965 | | | 27 | | | — | | | — | | | — | | | — | | | — | | | 1,992 |
Substandard | | | 1,369 | | | 232 | | | 12 | | | 71 | | | 165 | | | 1,687 | | | 331 | | | 3,867 |
Substandard non-accrual | | | 235 | | | 63 | | | — | | | 16 | | | 227 | | | 1,705 | | | 652 | | | 2,898 |
Total retail real estate | | | 531,210 | | | 217,850 | | | 98,409 | | | 80,557 | | | 83,213 | | | 285,279 | | | 216,458 | | | 1,512,976 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Retail other |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | | 59,366 | | | 22,305 | | | 26,126 | | | 16,189 | | | 7,180 | | | 1,326 | | | 93,770 | | | 226,262 |
Watch | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Special Mention | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Substandard non-accrual | | | 34 | | | 10 | | | — | | | 14 | | | 13 | | | — | | | — | | | 71 |
Total retail other | | | 59,400 | | | 22,315 | | | 26,126 | | | 16,203 | | | 7,193 | | | 1,326 | | | 93,770 | | | 226,333 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total portfolio loans | | $ | 2,393,701 | | $ | 1,296,955 | | $ | 845,248 | | $ | 503,186 | | $ | 434,084 | | $ | 671,510 | | $ | 1,044,314 | | $ | 7,188,998 |
102
As of December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | Revolving Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Risk Grade Ratings | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | ||||||||||||||||||||||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 479,893 | $ | 266,122 | $ | 136,445 | $ | 52,046 | $ | 50,764 | $ | 135,000 | $ | 548,225 | $ | 1,668,495 | ||||||||||||||||||||||||||||||||||
Watch | 54,195 | 49,382 | 3,288 | 7,201 | 1,258 | 2,160 | 84,274 | 201,758 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 1,958 | 937 | 1,642 | 974 | 1,000 | 17,024 | 23,005 | 46,540 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 8,926 | 1,165 | 570 | 6,671 | 2,382 | 5,191 | 26,282 | 51,187 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 21 | 3,292 | 226 | 135 | — | 100 | 2,400 | 6,174 | ||||||||||||||||||||||||||||||||||||||||||
Total commercial | 544,993 | 320,898 | 142,171 | 67,027 | 55,404 | 159,475 | 684,186 | 1,974,154 | ||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 883,688 | 819,133 | 478,452 | 297,525 | 161,409 | 198,419 | 13,083 | 2,851,709 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 77,346 | 56,113 | 64,282 | 96,664 | 21,592 | 5,758 | 4,700 | 326,455 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 11,943 | 5,389 | 12,386 | 1,420 | 6,917 | 5,471 | — | 43,526 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 5,340 | 13,528 | 3,454 | 1,907 | 10,248 | 62 | — | 34,539 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | — | 3,959 | 33 | — | 1,647 | 5 | — | 5,644 | ||||||||||||||||||||||||||||||||||||||||||
Total commercial real estate | 978,317 | 898,122 | 558,607 | 397,516 | 201,813 | 209,715 | 17,783 | 3,261,873 | ||||||||||||||||||||||||||||||||||||||||||
Real estate construction | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 219,112 | 191,724 | 68,015 | 1,490 | 1,901 | 1,751 | 18,911 | 502,904 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 8,530 | 12,019 | 3,169 | 48 | — | 1,398 | — | 25,164 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 2,400 | — | — | — | — | — | — | 2,400 | ||||||||||||||||||||||||||||||||||||||||||
Total real estate construction | 230,042 | 203,743 | 71,184 | 1,539 | 1,901 | 3,149 | 18,911 | 530,469 | ||||||||||||||||||||||||||||||||||||||||||
Retail real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 396,547 | 456,158 | 175,148 | 77,569 | 56,887 | 267,387 | 209,903 | 1,639,599 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 2,928 | 2,991 | 1,846 | 1,444 | 1,063 | 27 | 221 | 10,520 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 945 | — | — | — | — | 393 | — | 1,338 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 77 | 732 | 198 | 81 | 141 | 1,293 | 7 | 2,529 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 10 | 191 | 107 | 32 | 390 | 1,708 | 658 | 3,096 | ||||||||||||||||||||||||||||||||||||||||||
Total retail real estate | 400,507 | 460,072 | 177,299 | 79,126 | 58,481 | 270,808 | 210,789 | 1,657,082 | ||||||||||||||||||||||||||||||||||||||||||
Retail other | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 134,567 | 43,512 | 13,141 | 13,086 | 5,646 | 991 | 91,028 | 301,971 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 14 | 134 | 3 | — | — | 2 | — | 153 | ||||||||||||||||||||||||||||||||||||||||||
Total retail other | 134,581 | 43,646 | 13,144 | 13,086 | 5,646 | 993 | 91,028 | 302,124 | ||||||||||||||||||||||||||||||||||||||||||
Total portfolio loans | $ | 2,288,440 | $ | 1,926,481 | $ | 962,405 | $ | 558,294 | $ | 323,245 | $ | 644,140 | $ | 1,022,697 | $ | 7,725,702 |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| As of December 31, 2020 | ||||||||||||||||||||||
|
| Term Loans Amortized Cost Basis by Origination Year | | | Revolving | | | | ||||||||||||||||
Risk Grade Ratings |
| 2020 |
| 2019 |
| 2018 |
| 2017 |
| 2016 |
| | Prior |
| | loans |
| | Total | |||||
Commercial |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 812,536 | | $ | 158,307 | | $ | 107,565 | | $ | 93,190 | | $ | 61,847 | | $ | 79,970 | | $ | 455,340 | | $ | 1,768,755 |
Watch | | | 16,544 | | | 22,247 | | | 14,954 | | | 13,724 | | | 2,577 | | | 10,943 | | | 55,959 | | | 136,948 |
Special Mention | | | 6,402 | | | 2,671 | | | 2,069 | | | 7,164 | | | 6,763 | | | 13,733 | | | 33,645 | | | 72,447 |
Substandard | | | 7,772 | | | 3,791 | | | 2,371 | | | 1,939 | | | 819 | | | 1,233 | | | 9,978 | | | 27,903 |
Substandard non-accrual | | | 150 | | | 3,045 | | | 451 | | | 2,168 | | | 641 | | | 68 | | | 2,000 | | | 8,523 |
Total commercial | | | 843,404 | | | 190,061 | | | 127,410 | | | 118,185 | | | 72,647 | | | 105,947 | | | 556,922 | | | 2,014,576 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | |||
Pass | | | 717,559 | | | 503,977 | | | 360,573 | | | 384,843 | | | 180,555 | | | 227,068 | | | 18,797 | | | 2,393,372 |
Watch | | | 88,297 | | | 110,526 | | | 90,412 | | | 33,734 | | | 32,887 | | | 27,023 | | | 398 | | | 383,277 |
Special Mention | | | 16,490 | | | 8,858 | | | 10,490 | | | 10,505 | | | 7,102 | | | 21,808 | | | 233 | | | 75,486 |
Substandard | | | 17,445 | | | 4,166 | | | 1,491 | | | 7,812 | | | 2,111 | | | 1,377 | | | 495 | | | 34,897 |
Substandard non-accrual | | | 1,091 | | | 776 | | | 821 | | | 882 | | | 286 | | | 1,647 | | | — | | | 5,503 |
Total commercial real estate | | | 840,882 | | | 628,303 | | | 463,787 | | | 437,776 | | | 222,941 | | | 278,923 | | | 19,923 | | | 2,892,535 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Real estate construction | | | | | | | | | | | | | | | | | | | | | | |||
Pass | | | 179,232 | | | 171,663 | | | 64,025 | | | 1,468 | | | 761 | | | 1,444 | | | 16,088 | | | 434,681 |
Watch | | | 18,485 | | | 3,657 | | | 337 | | | 1,838 | | | 164 | | | | | | | | | 24,481 |
Special Mention | | | 67 | | | 10 | | | — | | | — | | | — | | | — | | | — | | | 77 |
Substandard | | | 2,400 | | | — | | | — | | | — | | | 146 | | | — | | | — | | | 2,546 |
Substandard non-accrual | | | — | | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 |
Total real estate construction | | | 200,184 | | | 175,330 | | | 64,362 | | | 3,306 | | | 1,071 | | | 1,445 | | | 16,088 | | | 461,786 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Retail real estate |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | | 319,302 | | | 162,711 | | | 135,065 | | | 136,427 | | | 140,600 | | | 257,147 | | | 231,364 | | | 1,382,616 |
Watch | | | 2,715 | | | 2,053 | | | 1,396 | | | 349 | | | 579 | | | 233 | | | 2,939 | | | 10,264 |
Special Mention | | | 509 | | | — | | | — | | | — | | | 1,962 | | | — | | | — | | | 2,471 |
Substandard | | | 899 | | | 96 | | | 56 | | | 26 | | | 727 | | | 1,631 | | | 267 | | | 3,702 |
Substandard non-accrual | | | 687 | | | 78 | | | 646 | | | 1,147 | | | 233 | | | 4,815 | | | 1,193 | | | 8,799 |
Total retail real estate | | | 324,112 | | | 164,938 | | | 137,163 | | | 137,949 | | | 144,101 | | | 263,826 | | | 235,763 | | | 1,407,852 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Retail other |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | | 8,357 | | | 9,430 | | | 5,600 | | | 2,516 | | | 691 | | | 440 | | | 10,290 | | | 37,324 |
Watch | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Special Mention | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Substandard non-accrual | | | 14 | | | 7 | | | 5 | | | 15 | | | 5 | | | 57 | | | 1 | | | 104 |
Total retail other | | | 8,371 | | | 9,437 | | | 5,605 | | | 2,531 | | | 696 | | | 497 | | | 10,291 | | | 37,428 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total portfolio loans | | $ | 2,216,953 | | $ | 1,168,069 | | $ | 798,327 | | $ | 699,747 | | $ | 441,456 | | $ | 650,638 | | $ | 838,987 | | $ | 6,814,177 |
103
As of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | Revolving Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Risk Grade Ratings | 2021 | 2020 | 2019 | 2018 | 2017 | Prior | ||||||||||||||||||||||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 512,729 | $ | 228,811 | $ | 107,877 | $ | 84,873 | $ | 74,351 | $ | 122,418 | $ | 616,697 | $ | 1,747,756 | ||||||||||||||||||||||||||||||||||
Watch | 13,847 | 5,913 | 14,274 | 5,060 | 1,361 | 2,866 | 50,261 | 93,582 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 7,062 | 898 | 5,961 | 4,025 | 6,790 | 11,845 | 32,846 | 69,427 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 3,595 | 3,362 | 3,136 | 1,855 | 1,125 | 5,459 | 7,585 | 26,117 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 4,126 | 364 | 142 | — | 320 | 52 | 2,000 | 7,004 | ||||||||||||||||||||||||||||||||||||||||||
Total commercial | 541,359 | 239,348 | 131,390 | 95,813 | 83,947 | 142,640 | 709,389 | 1,943,886 | ||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 969,548 | 637,550 | 425,850 | 235,928 | 200,373 | 198,002 | 15,190 | 2,682,441 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 51,560 | 38,820 | 123,324 | 48,088 | 46,761 | 32,608 | 2,143 | 343,304 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 9,542 | 7,060 | 6,585 | 10,098 | 6,357 | 9,870 | 183 | 49,695 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 21,002 | 3,781 | 1,218 | 11,451 | 521 | 421 | — | 38,394 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 112 | 181 | 359 | 1,893 | 3,407 | 21 | — | 5,973 | ||||||||||||||||||||||||||||||||||||||||||
Total commercial real estate | 1,051,764 | 687,392 | 557,336 | 307,458 | 257,419 | 240,922 | 17,516 | 3,119,807 | ||||||||||||||||||||||||||||||||||||||||||
Real estate construction | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 202,082 | 123,491 | 31,927 | 3,155 | 738 | 1,223 | 7,181 | 369,797 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 7,886 | 4,159 | 54 | — | 1,574 | 120 | — | 13,793 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | — | — | 6 | — | — | — | — | 6 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | — | 2,400 | — | — | — | — | — | 2,400 | ||||||||||||||||||||||||||||||||||||||||||
Total real estate construction | 209,968 | 130,050 | 31,987 | 3,155 | 2,312 | 1,343 | 7,181 | 385,996 | ||||||||||||||||||||||||||||||||||||||||||
Retail real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 523,541 | 215,068 | 96,617 | 79,158 | 82,478 | 281,737 | 213,246 | 1,491,845 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 4,100 | 2,460 | 1,780 | 1,312 | 343 | 150 | 2,229 | 12,374 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 1,965 | 27 | — | — | — | — | — | 1,992 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 1,369 | 232 | 12 | 71 | 165 | 1,687 | 331 | 3,867 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 235 | 63 | — | 16 | 227 | 1,705 | 652 | 2,898 | ||||||||||||||||||||||||||||||||||||||||||
Total retail real estate | 531,210 | 217,850 | 98,409 | 80,557 | 83,213 | 285,279 | 216,458 | 1,512,976 | ||||||||||||||||||||||||||||||||||||||||||
Retail other | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 59,366 | 22,305 | 26,126 | 16,189 | 7,180 | 1,326 | 93,770 | 226,262 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 34 | 10 | — | 14 | 13 | — | — | 71 | ||||||||||||||||||||||||||||||||||||||||||
Total retail other | 59,400 | 22,315 | 26,126 | 16,203 | 7,193 | 1,326 | 93,770 | 226,333 | ||||||||||||||||||||||||||||||||||||||||||
Total portfolio loans | $ | 2,393,701 | $ | 1,296,955 | $ | 845,248 | $ | 503,186 | $ | 434,084 | $ | 671,510 | $ | 1,044,314 | $ | 7,188,998 |
An analysis of the amortized cost basis of portfolio loans that are past due and still accruing, or on a non-accrual status, is as follows (dollars in thousands):
| | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||
| | Loans past due, still accruing | | Non-accrual | ||||||||
|
| 30-59 Days |
| 60-89 Days |
| 90+Days |
| Loans | ||||
Past due and non-accrual loans | | | | | | | | | | | | |
Commercial | | $ | 363 | | $ | 10 | | $ | 213 | | $ | 7,004 |
Commercial real estate | | | 151 | | | 441 | | | — | | | 5,973 |
Real estate construction | |
| 56 | |
| — | |
| — | |
| — |
Retail real estate | | | 3,312 | | | 1,830 | | | 693 | | | 2,898 |
Retail other | |
| 82 | |
| 16 | |
| — | |
| 71 |
Total past due and non-accrual loans | | $ | 3,964 | | $ | 2,297 | | $ | 906 | | $ | 15,946 |
| | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||
| | Loans past due, still accruing | | Non-accrual | ||||||||
|
| 30-59 Days |
| 60-89 Days |
| 90+Days |
| Loans | ||||
Past due and non-accrual loans | | | | | | | | | | | | |
Commercial | | $ | 243 | | $ | — | | $ | — | | $ | 8,523 |
Commercial real estate | |
| — | | | — | | | — | | | 5,503 |
Real estate construction | |
| 237 | |
| 235 | |
| — | |
| 1 |
Retail real estate | |
| 6,248 | | | 400 | | | 1,305 | | | 8,799 |
Retail other | |
| 66 | |
| 149 | |
| 66 | |
| 104 |
Total past due and non-accrual loans | | $ | 6,794 | | $ | 784 | | $ | 1,371 | | $ | 22,930 |
As of December 31, 2022 | |||||||||||||||||||||||
Loans past due, still accruing | Non-accrual Loans | ||||||||||||||||||||||
30-59 Days | 60-89 Days | 90+Days | |||||||||||||||||||||
Past due and non-accrual loans | |||||||||||||||||||||||
Commercial | $ | 2 | $ | — | $ | — | $ | 6,174 | |||||||||||||||
Commercial real estate | 124 | — | — | 5,644 | |||||||||||||||||||
Retail real estate | 4,709 | 1,239 | 673 | 3,096 | |||||||||||||||||||
Retail other | 414 | 60 | — | 153 | |||||||||||||||||||
Total past due and non-accrual loans | $ | 5,249 | $ | 1,299 | $ | 673 | $ | 15,067 |
As of December 31, 2021 | |||||||||||||||||||||||
Loans past due, still accruing | Non-accrual Loans | ||||||||||||||||||||||
30-59 Days | 60-89 Days | 90+Days | |||||||||||||||||||||
Past due and non-accrual loans | |||||||||||||||||||||||
Commercial | $ | 363 | $ | 10 | $ | 213 | $ | 7,004 | |||||||||||||||
Commercial real estate | 151 | 441 | — | 5,973 | |||||||||||||||||||
Real estate construction | 56 | — | — | — | |||||||||||||||||||
Retail real estate | 3,312 | 1,830 | 693 | 2,898 | |||||||||||||||||||
Retail other | 82 | 16 | — | 71 | |||||||||||||||||||
Total past due and non-accrual loans | $ | 3,964 | $ | 2,297 | $ | 906 | $ | 15,946 |
2020.
TDR loan balances are summarized as follows (dollars in thousands):
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
TDRs | | | | | | |
In compliance with modified terms | | $ | 1,801 | | $ | 3,814 |
30 – 89 days past due | | | — | | | 15 |
Non-performing TDRs | | | 551 | | | 1,249 |
Total TDRs | | $ | 2,352 | | $ | 5,078 |
104
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
TDRs | |||||||||||
In compliance with modified terms | $ | 3,032 | $ | 1,801 | |||||||
Non-performing TDRs | 537 | 551 | |||||||||
Total TDRs | $ | 3,569 | $ | 2,352 |
Loans that were designated as TDRs during the periods presentedyears ended as of the dates indicated are summarized as follows (dollars in thousands):
Newly Designated TDRs | |||||||||||||||||
Recorded Investment1 | |||||||||||||||||
Number of Contracts | Rate Modification2 | Payment Modification2 | |||||||||||||||
December 31, 2022 | |||||||||||||||||
Commercial | 3 | $ | 136 | $ | 996 | ||||||||||||
Retail real estate | 1 | — | 517 | ||||||||||||||
Total | 4 | $ | 136 | $ | 1,513 | ||||||||||||
December 31, 2021 | |||||||||||||||||
Commercial | 1 | $ | 364 | $ | — | ||||||||||||
December 31, 2020 | |||||||||||||||||
Commercial | 3 | $ | 130 | $ | — | ||||||||||||
Commercial real estate | 1 | 651 | — | ||||||||||||||
Real estate construction | 4 | — | 986 | ||||||||||||||
Total | 8 | $ | 781 | $ | 986 |
| | | | | ��� | | | | |
| | Newly Designated TDRs | |||||||
| | | | | Recorded Investment (2) | ||||
| | Number of | | Rate | | Payment | |||
|
| Contracts (1) |
| Modification (3) | | Modification (3) | |||
December 31, 2021 | | | | | | | | | |
Commercial | | | 1 | | $ | 364 | | $ | — |
| | | | | | | | | |
December 31, 2020 | | | | | | | | | |
Commercial | | | 3 | | $ | 130 | | $ | — |
Commercial real estate | |
| 1 | | | 651 | | | — |
Retail real estate | |
| 4 | | | — | | | 986 |
Total | | | 8 | | $ | 781 | | $ | 986 |
| | | | | | | | | |
December 31, 2019 | | | | | | | | | |
Commercial | | | 2 | | $ | 342 | | $ | — |
Commercial real estate (4) | | | 1 | | | — | | | — |
Real estate construction | | | 1 | | | 185 | | | — |
Total | | | 4 | | $ | 527 | | $ | — |
Recorded investment for newly designated TDR’s |
Loans that were designatedstill outstanding as of the dates indicated.
| | | | | | | | | |
| | Year Ended December 31, | |||||||
| | 2021 | | 2020 | | 2019 | |||
Defaults on loans designated as TDRs within the last 12 months | | | | | | | | | |
Commercial | | $ | — | | $ | — | | $ | — |
Commercial real estate | |
| — | |
| — | |
| 3,277 |
Loans Modified Under the CARES Act or Interagency Statement
The CARES Act provided financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. Federal regulatory agencies, in consultation with FASB, also issued an Interagency Statement to encourage financial institutions to work with borrowers affected by COVID-19, and updating guidance which allowed banks to modify loans of customers stressed by COVID-19 without having to classify the loan as a TDR. The Company’s TDR loan totals do not include the following modified loans with payment deferrals that fall under the CARES Act or Interagency Statement that suspended requirements under GAAP related to TDR classification (dollars in thousands):
105
| | | | | | | | | | | | |
| | As of December 31, 2021 | | As of December 31, 2020 | ||||||||
| | Number of | | Recorded | | Number of | | Recorded | ||||
|
| Contracts |
| Investment |
| Contracts |
| Investment | ||||
COVID-19 loan modifications | | | | | | | | | | | | |
Commercial loans: | | | | | | | | | | | | |
Full payment deferral (1) | | | — | | $ | — | | | 46 | | $ | 37,150 |
Interest-only deferrals | | | 32 | | | 128,730 | | | 23 | | | 85,270 |
Blended principal and interest and interest-only deferrals | | | — | | | — | | | 29 | | | 86,204 |
Total commercial loans | | | 32 | | | 128,730 | | | 98 | | | 208,624 |
| | | | | | | | | | | | |
Retail loans: | |
| | | | | | | | | | |
Mortgage and personal loan deferrals | | | 2 | | | 137 | | | 351 | | | 47,671 |
Purchased home equity line of credit pool deferrals | | | — | | | — | | | 1 | | | 119 |
Total retail loans | | | 2 | | | 137 | | | 352 | | | 47,790 |
| | | | | | | | | | | | |
Total COVID-19 loans modifications | | | 34 | | $ | 128,867 | | | 450 | | $ | 256,414 |
Loans Evaluated Individually
The Company evaluates loans with disparate risk characteristics on an individual basis. The following tables provide details of loans evaluated individually, segregated by category. The unpaid principal balance represents the customer outstanding contractual principal balance excluding any partial charge-offs. Recorded investment represents the amortized cost of customer balances net of any partial charge-offs recognized on the loan. Average recorded investment is calculated using the most recent four quarters (dollars in thousands):
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2021 | ||||||||||||||||
| | Unpaid | | Recorded Investment | | | | | Average | |||||||||
| | Principal | | With No | | With | | | | Related | | Recorded | ||||||
|
| Balance |
| Allowance |
| Allowance |
| Total |
| Allowance |
| Investment | ||||||
Loans evaluated individually | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 10,247 | | $ | 498 | | $ | 6,490 | | $ | 6,988 | | $ | 3,564 | | $ | 8,791 |
Commercial real estate | |
| 6,456 | | | 5,750 | | | — | |
| 5,750 | |
| — | |
| 6,390 |
Real estate construction | |
| 272 | |
| 272 | |
| — | |
| 272 | |
| — | |
| 282 |
Retail real estate | |
| 2,514 | |
| 2,345 | |
| 25 | |
| 2,370 | |
| 25 | |
| 4,093 |
Retail other | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total loans evaluated individually | | $ | 19,489 | | $ | 8,865 | | $ | 6,515 | | $ | 15,380 | | $ | 3,589 | | $ | 19,556 |
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2020 | ||||||||||||||||
| | Unpaid | | Recorded Investment | | | | | Average | |||||||||
| | Principal | | With No | | With | | | | Related | | Recorded | ||||||
|
| Balance |
| Allowance |
| Allowance |
| Total |
| Allowance |
| Investment | ||||||
Loans evaluated individually | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 16,771 | | $ | 4,001 | | $ | 4,371 | | $ | 8,372 | | $ | 1,600 | | $ | 7,920 |
Commercial real estate | |
| 7,406 | | | 6,067 | | | — | |
| 6,067 | |
| — | |
| 9,349 |
Real estate construction | |
| 292 | |
| 292 | |
| — | |
| 292 | |
| — | |
| 581 |
Retail real estate | |
| 5,873 | |
| 5,490 | |
| 25 | |
| 5,515 | |
| 25 | |
| 7,439 |
Retail other | |
| — | |
| — | |
| — | |
| — | |
| — | |
| 10 |
Total loans evaluated individually | | $ | 30,342 | | $ | 15,850 | | $ | 4,396 | | $ | 20,246 | | $ | 1,625 | | $ | 25,299 |
106
Management's evaluation as to the ultimate collectability of loans includes estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers. Collateral dependent loans are loans in which repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment. Loans are written down to the lower of cost or fair value of underlying collateral, less estimated costs to sell. The Company had $7.9$14.0 million and $14.8$7.9 million of collateral dependent loans secured by real estate or business assets as of December 31, 2021,2022, and December 31, 2020,2021, respectively.
As of December 31, 2022 | As of December 31, 2021 | ||||||||||||||||||||||
Number of Contracts | Recorded Investment | Number of Contracts | Recorded Investment | ||||||||||||||||||||
COVID-19 loan modifications | |||||||||||||||||||||||
Commercial loans: Interest-only deferrals | 8 | $ | 20,556 | 32 | $ | 128,730 | |||||||||||||||||
Retail loans: Mortgage and personal loan deferrals | 1 | 99 | 2 | 137 | |||||||||||||||||||
Total COVID-19 loans modifications | 9 | $ | 20,655 | 34 | $ | 128,867 |
As of December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Average Recorded Investment | |||||||||||||||||||||||||||||||||||||||||||||
With No Allowance | With Allowance | Total | Related Allowance | ||||||||||||||||||||||||||||||||||||||||||||
Loans evaluated individually | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 9,589 | $ | 656 | $ | 5,918 | $ | 6,574 | $ | 2,476 | $ | 6,761 | |||||||||||||||||||||||||||||||||||
Commercial real estate | 8,039 | 2,334 | 3,903 | 6,237 | 2,000 | 5,219 | |||||||||||||||||||||||||||||||||||||||||
Real estate construction | 247 | 247 | — | 247 | — | 260 | |||||||||||||||||||||||||||||||||||||||||
Retail real estate | 2,733 | 2,564 | 25 | 2,589 | 25 | 2,311 | |||||||||||||||||||||||||||||||||||||||||
Total loans evaluated individually | $ | 20,608 | $ | 5,801 | $ | 9,846 | $ | 15,647 | $ | 4,501 | $ | 14,551 |
As of December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Average Recorded Investment | |||||||||||||||||||||||||||||||||||||||||||||
With No Allowance | With Allowance | Total | Related Allowance | ||||||||||||||||||||||||||||||||||||||||||||
Loans evaluated individually | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 10,247 | $ | 498 | $ | 6,490 | $ | 6,988 | $ | 3,564 | $ | 8,791 | |||||||||||||||||||||||||||||||||||
Commercial real estate | 6,456 | 5,750 | — | 5,750 | — | 6,390 | |||||||||||||||||||||||||||||||||||||||||
Real estate construction | 272 | 272 | — | 272 | — | 282 | |||||||||||||||||||||||||||||||||||||||||
Retail real estate | 2,514 | 2,345 | 25 | 2,370 | 25 | 4,093 | |||||||||||||||||||||||||||||||||||||||||
Total loans evaluated individually | $ | 19,489 | $ | 8,865 | $ | 6,515 | $ | 15,380 | $ | 3,589 | $ | 19,556 |
The following tables summarize activity in the ACL.ACL attributable to each loan category. Allocation of a portion of the ACL to one category does not preclude its availability to absorb losses in other categories (dollars in thousands):
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2021 | ||||||||||||||||
| | | |
| Commercial |
| Real Estate |
| Retail | | | | | | | |||
|
| Commercial |
| Real Estate |
| Construction |
| Real Estate |
| Retail Other |
| Total | ||||||
ACL beginning balance | | $ | 23,866 | | $ | 46,230 | | $ | 8,193 | | $ | 21,992 | | $ | 767 | | $ | 101,048 |
Day 1 PCD (1) | | | 3,546 | | | 336 | | | — | | | 129 | | | 167 | | | 4,178 |
Provision for credit losses | |
| (2,160) | |
| (7,651) | |
| (3,180) | |
| (4,456) | |
| 2,346 | |
| (15,101) |
Charged-off | |
| (2,026) | |
| (925) | |
| (209) | | | (1,145) | |
| (478) | |
| (4,783) |
Recoveries | |
| 629 | |
| 259 | |
| 298 | |
| 1,069 | |
| 290 | |
| 2,545 |
ACL ending balance | | $ | 23,855 | | $ | 38,249 | | $ | 5,102 | | $ | 17,589 | | $ | 3,092 | | $ | 87,887 |
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2020 | ||||||||||||||||
| | | |
| Commercial |
| Real Estate |
| Retail Real | | | | | | | |||
|
| Commercial |
| Real Estate |
| Construction |
| Estate |
| Retail Other |
| Total | ||||||
Beginning balance, prior to adoption of ASC 326-30 | | $ | 18,291 | | $ | 21,190 | | $ | 3,204 | | $ | 10,495 | | $ | 568 | | $ | 53,748 |
Adoption of ASC 326-30 | | | 715 | | | 9,306 | | | 2,954 | | | 3,292 | | | 566 | | | 16,833 |
Provision for credit losses | |
| 10,832 | |
| 17,511 | |
| 1,452 | |
| 9,050 | |
| (48) | |
| 38,797 |
Charged-off | |
| (6,376) | |
| (1,972) | |
| (18) | | | (2,057) | |
| (665) | |
| (11,088) |
Recoveries | |
| 404 | |
| 195 | |
| 601 | |
| 1,212 | |
| 346 | |
| 2,758 |
ACL ending balance | | $ | 23,866 | | $ | 46,230 | | $ | 8,193 | | $ | 21,992 | | $ | 767 | | $ | 101,048 |
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2019 | ||||||||||||||||
| | | |
| Commercial |
| Real Estate |
| Retail Real | | | | | | | |||
|
| Commercial |
| Real Estate |
| Construction |
| Estate |
| Retail Other |
| Total | ||||||
Beginning balance | | $ | 17,829 | | $ | 21,137 | | $ | 2,723 | | $ | 8,471 | | $ | 488 | | $ | 50,648 |
Provision for credit losses | |
| 4,893 | |
| 3,002 | |
| (70) | |
| 2,102 | |
| 479 | |
| 10,406 |
Charged-off | |
| (6,478) | |
| (3,257) | |
| — | | | (1,162) | |
| (863) | |
| (11,760) |
Recoveries | |
| 2,047 | |
| 308 | |
| 551 | |
| 1,084 | |
| 464 | |
| 4,454 |
Ending balance | | $ | 18,291 | | $ | 21,190 | | $ | 3,204 | | $ | 10,495 | | $ | 568 | | $ | 53,748 |
107
Commercial | Commercial Real Estate | Real Estate Construction | Retail Real Estate | Retail Other | Total | ||||||||||||||||||||||||||||||
ACL Balance, December 31, 2019 | $ | 18,291 | $ | 21,190 | $ | 3,204 | $ | 10,495 | $ | 568 | $ | 53,748 | |||||||||||||||||||||||
Adoption of ASC 326-30 | 715 | 9,306 | 2,954 | 3,292 | 566 | 16,833 | |||||||||||||||||||||||||||||
Provision for credit losses | 10,832 | 17,511 | 1,452 | 9,050 | (48) | 38,797 | |||||||||||||||||||||||||||||
Charged-off | (6,376) | (1,972) | (18) | (2,057) | (665) | (11,088) | |||||||||||||||||||||||||||||
Recoveries | 404 | 195 | 601 | 1,212 | 346 | 2,758 | |||||||||||||||||||||||||||||
ACL balance, December 31, 2020 | 23,866 | 46,230 | 8,193 | 21,992 | 767 | 101,048 | |||||||||||||||||||||||||||||
Day 1 PCD1 | 3,546 | 336 | — | 129 | 167 | 4,178 | |||||||||||||||||||||||||||||
Provision for credit losses | (2,160) | (7,651) | (3,180) | (4,456) | 2,346 | (15,101) | |||||||||||||||||||||||||||||
Charged-off | (2,026) | (925) | (209) | (1,145) | (478) | (4,783) | |||||||||||||||||||||||||||||
Recoveries | 629 | 259 | 298 | 1,069 | 290 | 2,545 | |||||||||||||||||||||||||||||
ACL balance, December 31, 2021 | 23,855 | 38,249 | 5,102 | 17,589 | 3,092 | 87,887 | |||||||||||||||||||||||||||||
Provision for credit losses | 497 | 892 | 1,142 | 219 | 1,873 | 4,623 | |||||||||||||||||||||||||||||
Charged-off | (1,069) | (1,375) | (23) | (251) | (461) | (3,179) | |||||||||||||||||||||||||||||
Recoveries | 577 | 533 | 236 | 636 | 295 | 2,277 | |||||||||||||||||||||||||||||
ACL balance, December 31, 2022 | $ | 23,860 | $ | 38,299 | $ | 6,457 | $ | 18,193 | $ | 4,799 | $ | 91,608 |
The following tables present the ACL and amortized cost of portfolio loans by category (dollars in thousands):
As of December 31, 2022 | |||||||||||||||||||||||||||||||||||
Portfolio Loans | ACL Attributed to Portfolio Loans | ||||||||||||||||||||||||||||||||||
Collectively Evaluated for Impairment | Individually Evaluated for Impairment | Total | Collectively Evaluated for Impairment | Individually Evaluated for Impairment | Total | ||||||||||||||||||||||||||||||
Portfolio loan category | |||||||||||||||||||||||||||||||||||
Commercial | $ | 1,967,580 | $ | 6,574 | $ | 1,974,154 | $ | 21,384 | $ | 2,476 | $ | 23,860 | |||||||||||||||||||||||
Commercial real estate | 3,255,636 | 6,237 | 3,261,873 | 36,299 | 2,000 | 38,299 | |||||||||||||||||||||||||||||
Real estate construction | 530,222 | 247 | 530,469 | 6,457 | — | 6,457 | |||||||||||||||||||||||||||||
Retail real estate | 1,654,493 | 2,589 | 1,657,082 | 18,168 | 25 | 18,193 | |||||||||||||||||||||||||||||
Retail other | 302,124 | — | 302,124 | 4,799 | — | 4,799 | |||||||||||||||||||||||||||||
Portfolio loans and related ACL | $ | 7,710,055 | $ | 15,647 | $ | 7,725,702 | $ | 87,107 | $ | 4,501 | $ | 91,608 |
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||||||||
| | Portfolio Loans | | ACL Attributed to Portfolio Loans | ||||||||||||||
| | Collectively | | Individually | | | | Collectively | | Individually | | | | |||||
| | Evaluated for | | Evaluated for | | | | Evaluated for | | Evaluated for | | | ||||||
|
| Impairment |
| Impairment |
| Total |
| Impairment |
| Impairment |
| Total | ||||||
Portfolio loan category | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,936,898 | | $ | 6,988 | | $ | 1,943,886 | | $ | 20,291 | | $ | 3,564 | | $ | 23,855 |
Commercial real estate | | | 3,114,057 | | | 5,750 | | | 3,119,807 | | | 38,249 | | | — | | | 38,249 |
Real estate construction | | | 385,724 | | | 272 | | | 385,996 | | | 5,102 | | | — | | | 5,102 |
Retail real estate | | | 1,510,606 | | | 2,370 | | | 1,512,976 | | | 17,564 | | | 25 | | | 17,589 |
Retail other | | | 226,333 | | | — | | | 226,333 | | | 3,092 | | | — | | | 3,092 |
Total portfolio loans and related ACL | | $ | 7,173,618 | | $ | 15,380 | | $ | 7,188,998 | | $ | 84,298 | | $ | 3,589 | | $ | 87,887 |
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||||||||
| | Portfolio Loans | | ACL Attributed to Portfolio Loans | ||||||||||||||
| | Collectively | | Individually | | | | Collectively | | Individually | | | | |||||
| | Evaluated for | | Evaluated for | | | | Evaluated for | | Evaluated for | | | ||||||
|
| Impairment |
| Impairment |
| Total |
| Impairment |
| Impairment |
| Total | ||||||
Portfolio loan category | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 2,006,204 | | $ | 8,372 | | $ | 2,014,576 | | $ | 22,266 | | $ | 1,600 | | $ | 23,866 |
Commercial real estate | | | 2,886,468 | | | 6,067 | | | 2,892,535 | | | 46,230 | | | — | | | 46,230 |
Real estate construction | | | 461,494 | | | 292 | | | 461,786 | | | 8,193 | | | — | | | 8,193 |
Retail real estate | | | 1,402,337 | | | 5,515 | | | 1,407,852 | | | 21,967 | | | 25 | | | 21,992 |
Retail other | | | 37,428 | | | — | | | 37,428 | | | 767 | | | — | | | 767 |
Total portfolio loans and related ACL | | $ | 6,793,931 | | $ | 20,246 | | $ | 6,814,177 | | $ | 99,423 | | $ | 1,625 | | $ | 101,048 |
Note
As of December 31, 2021 | |||||||||||||||||||||||||||||||||||
Portfolio Loans | ACL Attributed to Portfolio Loans | ||||||||||||||||||||||||||||||||||
Collectively Evaluated for Impairment | Individually Evaluated for Impairment | Total | Collectively Evaluated for Impairment | Individually Evaluated for Impairment | Total | ||||||||||||||||||||||||||||||
Portfolio loan category | |||||||||||||||||||||||||||||||||||
Commercial | $ | 1,936,898 | $ | 6,988 | $ | 1,943,886 | $ | 20,291 | $ | 3,564 | $ | 23,855 | |||||||||||||||||||||||
Commercial real estate | 3,114,057 | 5,750 | 3,119,807 | 38,249 | — | 38,249 | |||||||||||||||||||||||||||||
Real estate construction | 385,724 | 272 | 385,996 | 5,102 | — | 5,102 | |||||||||||||||||||||||||||||
Retail real estate | 1,510,606 | 2,370 | 1,512,976 | 17,564 | 25 | 17,589 | |||||||||||||||||||||||||||||
Retail other | 226,333 | — | 226,333 | 3,092 | — | 3,092 | |||||||||||||||||||||||||||||
Portfolio loans and related ACL | $ | 7,173,618 | $ | 15,380 | $ | 7,188,998 | $ | 84,298 | $ | 3,589 | $ | 87,887 |
OTHER REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS
OREO and other repossessed assets represent properties and other assets acquired through foreclosure or other proceedings in settlement of loans and is included in other assets in the accompanying Consolidated Balance Sheets. The following table summarizes the composition of the Company’s OREO and other repossessed asset balances as of the periods presented (dollars in thousands):
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
OREO | |||||||||||
Commercial | $ | — | $ | 2,839 | |||||||
Residential | 70 | 235 | |||||||||
Total OREO | 70 | 3,074 | |||||||||
Other repossessed assets | 780 | 1,342 | |||||||||
OREO and other repossessed assets | $ | 850 | $ | 4,416 |
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
OREO | | | | | | |
Commercial |
| $ | 2,839 |
| $ | 4,206 |
Residential |
| | 235 |
| | 364 |
Total OREO | | | 3,074 | | | 4,570 |
Other repossessed assets | |
| 1,342 | |
| 1 |
OREO and other repossessed assets | | $ | 4,416 | | $ | 4,571 |
The following table summarizes activity related to OREO and other repossessed assets (dollars in thousands):
| | | | | | |
|
| As of and for the Years Ended December 31, | ||||
|
| 2021 |
| 2020 | ||
Changes in OREO and other repossessed assets |
| | | | | |
OREO and other repossessed assets beginning balance |
| $ | 4,571 |
| $ | 3,057 |
Additions, transfers from loans | |
| 1,610 | |
| 2,867 |
Sales | |
| (1,721) | |
| (1,282) |
Cash payments collected | |
| (43) | |
| (3) |
Impairment of OREO and other repossessed assets | | | (1) | | | (68) |
OREO and other repossessed assets ending balance | | $ | 4,416 | | $ | 4,571 |
108
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Changes in OREO and other repossessed assets | |||||||||||||||||
OREO and other repossessed assets beginning balance | $ | 4,416 | $ | 4,571 | $ | 3,057 | |||||||||||
Additions, transfers from loans | 175 | 1,610 | 2,867 | ||||||||||||||
Sales | (2,565) | (1,721) | (1,282) | ||||||||||||||
Cash payments collected | (565) | (43) | (3) | ||||||||||||||
Impairment of OREO and other repossessed assets | (611) | (1) | (68) | ||||||||||||||
OREO and other repossessed assets ending balance | $ | 850 | $ | 4,416 | $ | 4,571 |
At December 31, 2021, theThe Company had $0.2 million of residential real estate in the process of foreclosure.foreclosure totaling $1.1 million as of December 31, 2022, and $0.2 million as of December 31, 2021. The Company has elected to follow Federal Housing Finance Agency guidelines on single-family foreclosures and real estate owned evictions on portfolio loans, as well as all COVID-19loans.
other repossessed assets included the following
Note:
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Activity for OREO and other repossessed assets | |||||||||||||||||
Net loss (gain) on sales | 665 | 173 | (90) | ||||||||||||||
Operating expenses, net of income | 248 | 468 | 538 | ||||||||||||||
Activity for OREO and other repossessed assets | $ | 913 | $ | 641 | $ | 448 |
PREMISES AND EQUIPMENT
Premises and equipment net are summarized as follows (dollars in thousands):
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Premises and equipment | | | | | | |
Land and improvements | | $ | 45,595 | | $ | 40,762 |
Buildings and improvements | |
| 132,011 | |
| 130,610 |
Furniture and equipment | |
| 54,473 | |
| 53,766 |
Premises and equipment, gross | |
| 232,079 | |
| 225,138 |
Accumulated depreciation | |
| 95,932 | |
| 89,947 |
Premises and equipment, net | | $ | 136,147 | | $ | 135,191 |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Premises and equipment | |||||||||||
Land and improvements | $ | 44,193 | $ | 45,595 | |||||||
Buildings and improvements | 128,669 | 132,011 | |||||||||
Furniture and equipment | 52,991 | 54,473 | |||||||||
Premises and equipment, gross | 225,853 | 232,079 | |||||||||
Accumulated depreciation | 99,329 | 95,932 | |||||||||
Premises and equipment, net | $ | 126,524 | $ | 136,147 |
Note
Other than goodwill, the Company does not have any other intangible assets that are not amortized.
The carrying amount of goodwill by operating segment is as follows (dollars in thousands):
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Goodwill | | | | | | |
Banking | | $ | 294,773 | | $ | 288,436 |
FirsTech | | | 8,992 | | | 8,992 |
Wealth Management | |
| 14,108 | |
| 14,108 |
Total goodwill | | $ | 317,873 | | $ | 311,536 |
109
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Goodwill | |||||||||||
Banking | $ | 294,773 | $ | 294,773 | |||||||
FirsTech | 8,992 | 8,992 | |||||||||
Wealth Management | 14,108 | 14,108 | |||||||||
Total goodwill | $ | 317,873 | $ | 317,873 |
As of December 31, | |||||||||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||||||||
Core deposit intangible | Customer relationship intangible | Total | Core deposit intangible | Customer relationship intangible | Total | ||||||||||||||||||||||||||||||
Intangible Assets | |||||||||||||||||||||||||||||||||||
Intangible assets, gross | $ | 99,065 | $ | 33,138 | $ | 132,203 | $ | 99,065 | $ | 33,138 | $ | 132,203 | |||||||||||||||||||||||
Accumulated amortization | 63,476 | 22,304 | 85,780 | 55,161 | 18,991 | 74,152 | |||||||||||||||||||||||||||||
Intangible assets, net | $ | 35,589 | $ | 10,834 | $ | 46,423 | $ | 43,904 | $ | 14,147 | $ | 58,051 |
| | | | | | | | | | | | | | | | | | |
| | As of and for the Years Ended December 31, | ||||||||||||||||
| | 2021 | | 2020 | ||||||||||||||
| | | | | Customer | | | | | | | | Customer | | | | ||
| | Core deposit | | relationship | | | | Core deposit | | relationship | | | | |||||
|
| intangible |
| intangible |
| Total |
| intangible |
| intangible |
| Total | ||||||
Intangibles | | | | | | | | | | | | | | | | | | |
Intangible assets, gross | | $ | 99,065 | | $ | 33,138 | | $ | 132,203 | | $ | 90,256 | | $ | 24,608 | | $ | 114,864 |
Accumulated amortization | | | 55,161 | | | 18,991 | | | 74,152 | | | 46,909 | | | 15,970 | | | 62,879 |
Intangible assets, net | | $ | 43,904 | | $ | 14,147 | | $ | 58,051 | | $ | 43,347 | | $ | 8,638 | | $ | 51,985 |
| | | | | | | | | | | | | | | | | | |
Amortization expense | | $ | 8,253 | | $ | 3,021 | | $ | 11,274 | | $ | 7,753 | | $ | 2,255 | | $ | 10,008 |
(dollars in thousands)
:
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Amortization Expense | |||||||||||||||||
Core deposit intangible | $ | 8,315 | $ | 8,253 | $ | 7,753 | |||||||||||
Customer relationship intangible | 3,313 | 3,021 | 2,255 | ||||||||||||||
Amortization of intangible assets | $ | 11,628 | $ | 11,274 | $ | 10,008 |
As of December 31, 2022 | |||||||||||||||||
Core deposit intangible | Customer relationship intangible | Total | |||||||||||||||
Estimated amortization expense | |||||||||||||||||
2023 | $ | 7,616 | $ | 2,816 | $ | 10,432 | |||||||||||
2024 | 6,902 | 2,318 | 9,220 | ||||||||||||||
2025 | 5,956 | 1,887 | 7,843 | ||||||||||||||
2026 | 5,227 | 1,479 | 6,706 | ||||||||||||||
2027 | 4,490 | 1,091 | 5,581 | ||||||||||||||
Thereafter | 5,398 | 1,243 | 6,641 | ||||||||||||||
Total estimated amortization expense | $ | 35,589 | $ | 10,834 | $ | 46,423 |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | As of December 31, 2021 | |||||||
| | | | | | | | | | | | | | Customer | | | | |
| | | | | | | | | | | Core deposit | | relationship | | | |||
| | | | | | | | | | | intangible | | intangible | | Total | |||
Estimated amortization expense | | | | | | | | | | | | | | | | |||
2022 | | | | | | | | | | | $ | 8,315 | | $ | 3,313 | | $ | 11,628 |
2023 | | | | | | | | | | | | 7,616 | |
| 2,816 | |
| 10,432 |
2024 | | | | | | | | | | | | 6,902 | |
| 2,318 | |
| 9,220 |
2025 | | | | | | | | | | | | 5,956 | |
| 1,887 | |
| 7,843 |
2026 | | | | | | | | | | | | 5,227 | | | 1,479 | | | 6,706 |
Thereafter | | | | | | | | | | | | 9,888 | | | 2,334 | | | 12,222 |
Total estimated amortization expense | | | | | | | | $ | 43,904 | | $ | 14,147 | | $ | 58,051 |
Note
DEPOSITS
The composition of deposits is as follows (dollars in thousands):
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Deposits | |||||||||||
Noninterest-bearing demand deposits | $ | 3,393,666 | $ | 3,670,267 | |||||||
Interest-bearing transaction deposits | 2,857,818 | 2,720,417 | |||||||||
Saving deposits and money market deposits | 2,964,421 | 3,442,244 | |||||||||
Time deposits | 855,375 | 935,649 | |||||||||
Total deposits | $ | 10,071,280 | $ | 10,768,577 |
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Deposits | | | | | | |
Demand deposits, noninterest-bearing | | $ | 3,670,267 | | $ | 2,552,039 |
Interest-bearing transaction deposits | |
| 2,720,417 | |
| 2,263,093 |
Saving deposits and money market deposits | |
| 3,442,244 | | | 2,743,369 |
Time deposits | |
| 935,649 | |
| 1,119,348 |
Total deposits | | $ | 10,768,577 | | $ | 8,677,849 |
Additional information about our deposits is as follows (dollars in thousands):
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Brokered savings deposits and money market deposits | | $ | 2,248 | | $ | 2,251 |
Brokered time deposits | | | 266 | | | 5,257 |
Aggregate amount of time deposits with a minimum denomination of $100,000 | | | 454,649 | | | 568,735 |
Aggregate amount of time deposits with a minimum denomination that meets or exceeds the FDIC insurance limit of $250,000 | | | 137,449 | | | 192,563 |
110
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Brokered savings deposits and money market deposits | $ | 1,303 | $ | 2,248 | |||||||
Brokered time deposits | 275 | 266 | |||||||||
Total time deposits with a minimum denomination of $100,000 | 416,445 | 454,649 | |||||||||
Total time deposits with a minimum denomination that meets or exceeds the FDIC insurance limit of $250,000 | 120,377 | 137,449 |
Scheduled maturities of time deposits are as follows (dollars in thousands):
| | | |
|
| As of | |
| | December 31, 2021 | |
Time deposits by schedule of maturities | | | |
2022 |
| $ | 643,826 |
2023 | |
| 191,995 |
2024 | |
| 70,111 |
2025 | |
| 16,149 |
2026 | |
| 12,834 |
Thereafter | |
| 734 |
Time deposits | | $ | 935,649 |
Note
As of December 31, 2022 | |||||
Time deposits by schedule of maturities | |||||
2023 | $ | 560,147 | |||
2024 | 229,263 | ||||
2025 | 34,307 | ||||
2026 | 16,637 | ||||
2027 | 14,301 | ||||
Thereafter | 720 | ||||
Time deposits | $ | 855,375 |
BORROWINGS
Repurchase
Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature daily. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The underlying securities are held by the Company’s safekeeping agent. The Company may be required to provide additional collateral based on fluctuations in the fair value of the underlying securities. Securities sold under agreements to repurchase were as follows (dollars in thousands):
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Securities sold under agreements to repurchase | $ | 229,806 | $ | 270,139 | |||||||
Weighted average rate for securities sold under agreements to repurchase | 1.91 | % | 0.08 | % |
| | | | | | | |
|
| As of December 31, | | ||||
|
| 2021 |
| 2020 |
| ||
Securities sold under agreements to repurchase | | $ | 270,139 | | $ | 175,614 | |
Weighted average rate for securities sold under agreements to repurchase | | | 0.08 | % | | 0.13 | % |
Short-term Borrowings
Short-term borrowings are summarized as follows (dollars in thousands):
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Short-term borrowings | |||||||||||
FHLB advances maturing in less than one year from date of origination, and the current portion of long-term FHLB advances due within 12 months | $ | 339,054 | $ | 5,678 | |||||||
Term Loan, current portion due within 12 months | 12,000 | 12,000 | |||||||||
Total short-term debt | $ | 351,054 | $ | 17,678 |
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Short-term borrowings | | | | | | |
FHLB advances maturing in less than one year from date of origination, and the current portion of long-term FHLB advances due within 12 months | | $ | 5,678 | | $ | 4,658 |
Term Loan, current portion due within 12 months | | | 12,000 | | | — |
Total short-term debt | | $ | 17,678 | | $ | 4,658 |
Federal funds purchased are short-term borrowings that generally mature between one and 90 days. The Company had 0no federal funds purchased as of December 31, 2021,2022, or 2020.
December 31, 2021.
111
TableFirst Busey’s long-term debt consists of Contents
FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Long-term Debt
loans maturing more than one year from the loan origination date, excluding the current portion that is due within 12 months. Long-term debt is summarized as follows (dollars in thousands):
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Long-term debt | | | | | | |
Notes payable, FHLB, original maturity of 5 years, collateralized by FHLB deposits, residential and commercial real estate loans and FHLB stock | | $ | 4,056 | | $ | 4,757 |
Term Loan | | | 42,000 | | | — |
Total long-term debt | | $ | 46,056 | | $ | 4,757 |
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Long-term debt | |||||||||||
Notes payable, FHLB, original maturity of 5 years, collateralized by FHLB deposits, residential and commercial real estate loans and FHLB stock | $ | — | $ | 4,056 | |||||||
Term Loan | 30,000 | 42,000 | |||||||||
Total long-term debt | $ | 30,000 | $ | 46,056 |
During the second quarter of 2022, this note became due within 12 months and the balance is now fully reflected in short-term borrowings.
Subordinated Notes
time of redemption, the redeemed subordinated notes carried interest at a floating rate of 3-month LIBOR plus 2.919%.
Unamortized debt issuance costs related to senior notes and subordinated notes are presented in the following table (dollars in thousands):
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Unamortized debt issuance costs | | | | | | |
Senior notes issued in 2017 | | $ | 56 | | $ | 191 |
Subordinated notes issued in 2017 | | | 549 | | | 651 |
Subordinated notes issued in 2020 | | | 1,678 | | | 2,123 |
Total unamortized debt issuance costs | | $ | 2,283 | | $ | 2,965 |
112
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Unamortized debt issuance costs | |||||||||||
Senior notes issued in 2017 | $ | — | $ | 56 | |||||||
Subordinated notes issued in 2017 | — | 549 | |||||||||
Subordinated notes issued in 2020 | 1,220 | 1,678 | |||||||||
Subordinated notes issued in 2022 | 1,742 | — | |||||||||
Total unamortized debt issuance costs | $ | 2,962 | $ | 2,283 |
FIRST BUSEY CORPORATION
NOTESNOTE 10. JUNIOR SUBORDINATED DEBT OWED TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Junior Subordinated Debt Owed to Unconsolidated Trusts
First Busey maintains statutory trusts for the sole purpose of issuing and servicing trust preferred securities and related trust common securities. Proceeds from such issuances were used by the trusts to purchase junior subordinated notes of the Company, which are the sole assets of each trust. Concurrent with the issuance of the trust preferred securities, the Company issued guarantees for the benefit of the holders of the trust preferred securities. The trust preferred securities are instruments that qualify, and are treated by the Company, as Tier 1 regulatory capital. The Company owns all of the common securities of each trust. The trust preferred securities issued by each trust rank equally with the common securities in right of payment, except that if an event of default under the indenture governing the notes has occurred and is continuing, the preferred securities will rank senior to the common securities in right of payment. In connection with the Pulaski acquisition in 2016, the Company acquired similar statutory trusts previously maintained by Pulaski and the fair value adjustment is being accreted over their weighted average remaining life, with a balance of $3.0$2.8 million remaining to be accreted. The Company had $71.6$71.8 million and $71.5$71.6 million of junior subordinated debt owed to unconsolidated trusts at December 31, 2021,2022, and 2020,2021, respectively, maturing in 2034 through 2036.
Note
REGULATORY CAPITAL
113
On June 1, 2020,May 25, 2017, the Company issued $125.0$60.0 million of fixed-to-floating rate subordinated notes that were scheduled to mature on May 25, 2027. The full balance of the subordinated note qualified as Tier 2 Capital for First Busey for the first five years, with a phase out beginning in the second quarter of 2022. The subordinated notes had an optional redemption in whole or in part on any interest payment date on or after May 25, 2022, and the Company redeemed them in full during the third quarter of 2022.
| | | | | | | | | | | | | | | | |
| | As of December 31, 2021 | | |||||||||||||
| | | | | | | | | | | | Minimum | | |||
| | | | | | | Minimum | | To Be Well |
| ||||||
| | Actual | | Capital Requirement | | Capitalized |
| |||||||||
|
| Amount |
| Ratio |
| Amount |
| Ratio |
| Amount |
| Ratio |
| |||
Common Equity Tier 1 Capital to Risk Weighted Assets | | | | | | | | | | | | |||||
Consolidated | | $ | 995,874 |
| 11.85 | % | $ | 378,334 |
| 4.50 | % | $ | 546,482 |
| 6.50 | % |
Busey Bank | | $ | 1,241,303 |
| 14.81 | % | $ | 377,096 |
| 4.50 | % | $ | 544,695 |
| 6.50 | % |
| | | | | | | | | | | | | | | | |
Tier 1 Capital to Risk Weighted Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 1,069,874 |
| 12.73 | % | $ | 504,445 |
| 6.00 | % | $ | 672,594 |
| 8.00 | % |
Busey Bank | | $ | 1,241,303 |
| 14.81 | % | $ | 502,795 |
| 6.00 | % | $ | 670,394 |
| 8.00 | % |
| | | | | | | | | | | | | | | | |
Total Capital to Risk Weighted Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 1,320,187 |
| 15.70 | % | $ | 672,594 |
| 8.00 | % | $ | 840,742 |
| 10.00 | % |
Busey Bank | | $ | 1,306,616 |
| 15.59 | % | $ | 670,394 |
| 8.00 | % | $ | 837,992 |
| 10.00 | % |
| | | | | | | | | | | | | | | | |
Leverage Ratio of Tier 1 Capital to Average Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 1,069,874 |
| 8.52 | % | $ | 502,336 |
| 4.00 | % |
| N/A |
| N/A | |
Busey Bank | | $ | 1,241,303 |
| 9.91 | % | $ | 501,104 |
| 4.00 | % | $ | 626,379 |
| 5.00 | % |
| | | | | | | | | | | | | | | | |
| | As of December 31, 2020 | | |||||||||||||
| | | | | | | | | | | | Minimum | | |||
| | | | | | | Minimum | | To Be Well | | ||||||
| | Actual | | Capital Requirement | | Capitalized | | |||||||||
|
| Amount |
| Ratio |
| Amount |
| Ratio |
| Amount |
| Ratio |
| |||
Common Equity Tier 1 Capital to Risk Weighted Assets | | | | | | | | | | | | |||||
Consolidated | | $ | 909,033 |
| 12.43 | % | $ | 329,071 |
| 4.50 | % | $ | 475,325 |
| 6.50 | % |
Busey Bank | | $ | 1,053,910 |
| 14.44 | % | $ | 328,546 |
| 4.50 | % | $ | 474,567 |
| 6.50 | % |
| | | | | | | | | | | | | | | | |
Tier 1 Capital to Risk Weighted Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 983,033 |
| 13.44 | % | $ | 438,761 |
| 6.00 | % | $ | 585,015 |
| 8.00 | % |
Busey Bank | | $ | 1,053,910 |
| 14.44 | % | $ | 438,062 |
| 6.00 | % | $ | 584,082 |
| 8.00 | % |
| | | | | | | | | | | | | | | | |
Total Capital to Risk Weighted Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 1,245,997 |
| 17.04 | % | $ | 585,015 |
| 8.00 | % | $ | 731,269 |
| 10.00 | % |
Busey Bank | | $ | 1,131,875 |
| 15.50 | % | $ | 584,082 |
| 8.00 | % | $ | 730,103 |
| 10.00 | % |
| | | | | | | | | | | | | | | | |
Leverage Ratio of Tier 1 Capital to Average Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 983,033 |
| 9.79 | % | $ | 401,717 |
| 4.00 | % |
| N/A |
| N/A | |
Busey Bank | | $ | 1,053,910 |
| 10.52 | % | $ | 400,581 |
| 4.00 | % | $ | 500,727 |
| 5.00 | % |
114
As of December 31, 2022 | |||||||||||||||||||||||||||||||||||
Actual | Minimum Capital Requirement | Minimum To Be Well Capitalized | |||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||
Common Equity Tier 1 Capital to Risk Weighted Assets | |||||||||||||||||||||||||||||||||||
Consolidated | $ | 1,081,686 | 11.96 | % | $ | 406,980 | 4.50 | % | $ | 587,861 | 6.50 | % | |||||||||||||||||||||||
Busey Bank | 1,306,716 | 14.49 | % | 405,736 | 4.50 | % | 586,063 | 6.50 | % | ||||||||||||||||||||||||||
Tier 1 Capital to Risk Weighted Assets | |||||||||||||||||||||||||||||||||||
Consolidated | $ | 1,155,686 | 12.78 | % | $ | 542,640 | 6.00 | % | $ | 723,521 | 8.00 | % | |||||||||||||||||||||||
Busey Bank | 1,306,716 | 14.49 | % | 540,981 | 6.00 | % | 721,308 | 8.00 | % | ||||||||||||||||||||||||||
Total Capital to Risk Weighted Assets | |||||||||||||||||||||||||||||||||||
Consolidated | $ | 1,457,994 | 16.12 | % | $ | 723,521 | 8.00 | % | $ | 904,401 | 10.00 | % | |||||||||||||||||||||||
Busey Bank | 1,384,024 | 15.35 | % | 721,308 | 8.00 | % | 901,635 | 10.00 | % | ||||||||||||||||||||||||||
Leverage Ratio of Tier 1 Capital to Average Assets | |||||||||||||||||||||||||||||||||||
Consolidated | $ | 1,155,686 | 9.45 | % | $ | 489,124 | 4.00 | % | N/A | N/A | |||||||||||||||||||||||||
Busey Bank | 1,306,716 | 10.72 | % | 487,541 | 4.00 | % | $ | 609,426 | 5.00 | % |
As of December 31, 2021 Actual Minimum
Capital RequirementMinimum
To Be Well
CapitalizedAmount Ratio Amount Ratio Amount Ratio Common Equity Tier 1 Capital to Risk Weighted Assets Consolidated $ 995,874 11.85 % $ 378,334 4.50 % $ 546,482 6.50 % Busey Bank 1,241,303 14.81 % 377,096 4.50 % 544,695 6.50 % Tier 1 Capital to Risk Weighted Assets Consolidated $ 1,069,874 12.73 % $ 504,445 6.00 % $ 672,594 8.00 % Busey Bank 1,241,303 14.81 % 502,795 6.00 % 670,394 8.00 % Total Capital to Risk Weighted Assets Consolidated $ 1,320,187 15.70 % $ 672,594 8.00 % $ 840,742 10.00 % Busey Bank 1,306,616 15.59 % 670,394 8.00 % 837,992 10.00 % Leverage Ratio of Tier 1 Capital to Average Assets Consolidated $ 1,069,874 8.52 % $ 502,336 4.00 % N/A N/A Busey Bank 1,241,303 9.91 % 501,104 4.00 % $ 626,379 5.00 %
2022, 2021, and 2020, respectively.
INCOME TAXES
The components of income taxes consist of (dollars in thousands):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Income tax expense | | | | | | | | | |
Current expense: | | | | | | | | | |
Federal | | $ | 20,261 | | $ | 21,027 | | $ | 22,479 |
State | | | 8,448 | | | 12,144 | | | 8,910 |
Deferred expense: | |
| | | | | | | |
Federal | | | 3,644 | | | (3,657) | | | (380) |
State | | | 1,021 | | | (1,652) | | | 476 |
Total income tax expense | | $ | 33,374 | | $ | 27,862 | | $ | 31,485 |
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Income tax expense | |||||||||||||||||
Current expense: | |||||||||||||||||
Federal | $ | 20,815 | $ | 20,261 | $ | 21,027 | |||||||||||
State | 13,883 | 8,448 | 12,144 | ||||||||||||||
Deferred expense: | |||||||||||||||||
Federal | (700) | 3,644 | (3,657) | ||||||||||||||
State | (572) | 1,021 | (1,652) | ||||||||||||||
Total income tax expense | $ | 33,426 | $ | 33,374 | $ | 27,862 |
| | | | | | | | | | |
| | | Years Ended December 31, |
| ||||||
|
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
Percent of pretax income | | | | | | | | | | |
Income tax at federal statutory rate |
|
| 21.0 | % |
| 21.0 | % |
| 21.0 | % |
Effect of: | | | | | | | | | | |
Tax-exempt interest, net |
|
| (1.1) | % |
| (1.6) | % |
| (1.7) | % |
Stock incentive | | | — | % | | 0.2 | % | | (0.1) | % |
State income taxes, net |
|
| 4.5 | % |
| 6.5 | % |
| 5.5 | % |
Income on bank owned life insurance |
|
| (0.7) | % |
| (0.9) | % |
| (0.9) | % |
Tax credit investments | | | (3.6) | % | | (3.2) | % | | (1.3) | % |
Other, net |
|
| 1.2 | % |
| (0.3) | % |
| 0.9 | % |
Effective income tax rate |
|
| 21.3 | % |
| 21.7 | % |
| 23.4 | % |
115
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Percent of pretax income | |||||||||||||||||
Income tax at federal statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
Effect of: | |||||||||||||||||
Tax-exempt interest, net | (1.1) | % | (1.1) | % | (1.6) | % | |||||||||||
Stock incentive | 0.1 | % | — | % | 0.2 | % | |||||||||||
State income taxes, net | 6.5 | % | 4.5 | % | 6.5 | % | |||||||||||
Income on bank owned life insurance | (0.5) | % | (0.7) | % | (0.9) | % | |||||||||||
Tax credit investments | (5.6) | % | (3.6) | % | (3.2) | % | |||||||||||
Other, net | 0.3 | % | 1.2 | % | (0.3) | % | |||||||||||
Effective income tax rate | 20.7 | % | 21.3 | % | 21.7 | % |
Net deferred taxes, reported in other assets or other liabilities in the accompanying Consolidated Balance Sheets, include the following amounts of deferred tax assets and liabilities (dollars in thousands):
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Deferred taxes | | | | | | |
Deferred tax assets: | | | | | | |
ACL | | $ | 25,884 | | $ | 30,332 |
Unrealized loss on cash flow hedge | | | 273 | | | 871 |
Unrealized losses on securities available for sale | | | 9,199 | | | — |
Stock-based compensation | |
| 4,204 | |
| 2,975 |
Deferred compensation | |
| 55 | |
| 66 |
Purchase accounting adjustments | | | 1,213 | | | 4,470 |
Accrued vacation | |
| 398 | |
| 610 |
Lease liabilities | | | 2,893 | | | 2,142 |
Employee costs | |
| 2,847 | |
| 1,598 |
Other | |
| 390 | |
| 431 |
Total deferred tax assets | | | 47,356 | | | 43,495 |
| | | | | | |
Deferred tax liabilities: | | | | | | |
Unrealized gain on securities available for sale | | | — | | | (14,151) |
Basis in premises and equipment | |
| (1,347) | |
| (348) |
Affordable housing partnerships and other investments | | | (3,696) | | | (1,995) |
Purchase accounting adjustments | | | (1,362) | | | (1,835) |
Mortgage servicing assets | |
| (2,853) | |
| (3,418) |
Basis in core deposit, customer intangible assets, and asset purchase goodwill | |
| (9,485) | |
| (12,714) |
Deferred loan origination costs | |
| (2,454) | |
| (2,654) |
Right of use assets | | | (2,877) | | | (2,130) |
Unrealized gain on equity securities | | | (1,099) | | | (276) |
Other | |
| (560) | |
| (405) |
Total deferred tax liabilities | | | (25,733) | | | (39,926) |
| | | | | | |
Net deferred tax asset | | $ | 21,623 | | $ | 3,569 |
At December 31, 2021, the Company had state net operating loss carryforwards for Wisconsin and California, both of which were an insignificant amount and will begin to expire in the year 2041.
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Deferred taxes | |||||||||||
Deferred tax assets: | |||||||||||
ACL | $ | 26,979 | $ | 25,884 | |||||||
Unrealized loss on cash flow hedge | 8,365 | 273 | |||||||||
Unrealized losses on securities available for sale | 88,666 | 9,199 | |||||||||
Unrealized losses on securities held to maturity | 11,919 | — | |||||||||
Stock-based compensation | 5,504 | 4,204 | |||||||||
Deferred compensation | 53 | 55 | |||||||||
Purchase accounting adjustments | 656 | 1,213 | |||||||||
Accrued vacation | 411 | 398 | |||||||||
Lease liabilities | 3,564 | 2,893 | |||||||||
Employee costs | 3,298 | 2,847 | |||||||||
Other | 376 | 390 | |||||||||
Total deferred tax assets | 149,791 | 47,356 | |||||||||
Deferred tax liabilities: | |||||||||||
Basis in premises and equipment | (1,541) | (1,347) | |||||||||
Affordable housing partnerships and other investments | (6,669) | (3,696) | |||||||||
Purchase accounting adjustments | (1,207) | (1,362) | |||||||||
Mortgage servicing assets | (2,132) | (2,853) | |||||||||
Basis in core deposit, customer intangible assets, and asset purchase goodwill | (6,956) | (9,485) | |||||||||
Deferred loan origination costs | (3,845) | (2,454) | |||||||||
Right of use assets | (3,518) | (2,877) | |||||||||
Unrealized gain on equity securities | (512) | (1,099) | |||||||||
Other | (586) | (560) | |||||||||
Total deferred tax liabilities | (26,966) | (25,733) | |||||||||
Net deferred tax asset | $ | 122,825 | $ | 21,623 |
Note2021.
EMPLOYEE BENEFIT PLANS
Active Benefit Plans
“
Profit-Sharingthe 401(k) Plan
”
)
The rights of participants in the profit-sharing plancontributions vest ratably over a five-year period, except for the 401(k) Safe Harbor match component of the profit-sharing plan, which vests immediately.
116
Terminated Benefit Plans
Employees’ Stock Ownership Plan
Prior to 2014, the First Busey ESOP was available to all associates who met certain age and service requirements. Effective March 20, 2014, the ESOP was frozen, all shares were fully vested, and there were no new contributions under the ESOP. On October 31, 2019, First Busey’s board of directors elected to terminate the ESOP. First Busey filed a determination letter with the Internal Revenue Service on February 10, 2020. During 2020, First Busey received a favorable determination ruling from the Internal Revenue Service, and all plan assets were distributed by the end of the year.
Deferred Compensation Plan
The Company previously sponsored deferred compensation plans for executive officers for deferral of compensation. Effective March 28, 2018, the deferred compensation plans were terminated, and account balances were distributed in April 2019. There was 0 deferred compensation liability balance as of December 31, 2021, or 2020.
Benefit401(k) Plan Expenses
Expenses related to our employee benefit plans, reported in salaries, wages, and employee benefits in the accompanying Consolidated Statements of Income, are summarized in the table below (dollars in thousands):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Employee benefit plan expenses | | | | | | | | | |
Profit-sharing plan | | $ | 6,531 | | $ | 5,982 | | $ | 5,777 |
Deferred compensation plan | | | — | | | — | | | 80 |
Total employee benefit plan expenses | | $ | 6,531 | | $ | 5,982 | | $ | 5,857 |
Note
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
401(k) Plan expenses | |||||||||||||||||
Profit-sharing expenses | $ | 2,960 | $ | 2,823 | $ | 2,551 | |||||||||||
Safe Harbor match expenses | $ | 4,094 | $ | 3,708 | $ | 3,431 | |||||||||||
Total 401(k) Plan expenses | $ | 7,054 | $ | 6,531 | $ | 5,982 |
STOCK-BASED COMPENSATION
The Company has outstanding stock options that were issued under the First Community 2016 Equity Incentive Plan and assumed from acquisitions. A summary of the status of, and changes in, the Company's stock option awards follows (dollars in thousands, except weighted-average exercise price):
| | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2021 | ||||||||||
| | | | | | | | Weighted- | | | | |
| | |
|
| Weighted- | | Average | | | | ||
| | | | | Average | | Remaining | | | | ||
| | | | | Exercise | | Contractual | | Intrinsic | |||
|
| Shares |
| Price |
| Life |
| Value | ||||
Outstanding at beginning of year | | | 39,085 | | $ | 23.53 | | | 5.88 | | $ | — |
Exercised | | | — | | | — | | | | | | |
Forfeited | | | — | | | — | | | | | | |
Expired | | | (7,699) | |
| 23.53 | | | | | | |
Outstanding at end of year | | | 31,386 | | $ | 23.53 | | | 4.88 | | $ | 113 |
| | | | | | | | | | | | |
Exercisable at end of year | | | 31,386 | | $ | 23.53 | | | 4.88 | | $ | 113 |
117
Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life | Intrinsic Value | ||||||||||||||||||||
Options outstanding at December 31, 2021 | 31,386 | $ | 23.53 | 4.88 | $ | 113 | |||||||||||||||||
Exercised | (4,840) | 23.53 | |||||||||||||||||||||
Expired | (440) | 23.53 | |||||||||||||||||||||
Options outstanding at December 31, 2022 | 26,106 | $ | 23.53 | 3.88 | $ | 31 | |||||||||||||||||
Options exercisable at December 31, 2022 | 26,106 | $ | 23.53 | 3.88 | $ | 31 |
RSU Awards | |||||||||||||||||||||||||||||||||||
Shares | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||||||||||||||
Nonvested at December 31, 2021 | 1,147,927 | $ | 23.97 | ||||||||||||||||||||||||||||||||
Granted | 156,483 | 25.79 | |||||||||||||||||||||||||||||||||
Dividend equivalents earned | 43,916 | 24.83 | |||||||||||||||||||||||||||||||||
Vested | (203,230) | 27.66 | |||||||||||||||||||||||||||||||||
Forfeited | (48,165) | 23.46 | |||||||||||||||||||||||||||||||||
Nonvested at December 31, 2022 | 1,096,931 | 23.61 | |||||||||||||||||||||||||||||||||
PSU Awards | |||||||||||
Shares1 | Weighted- Average Grant Date Fair Value | ||||||||||
Nonvested at December 31, 2021 | 113,915 | $ | 22.86 | ||||||||
Granted | 195,240 | 26.14 | |||||||||
Dividend equivalents earned2 | 832 | 22.63 | |||||||||
Vested2 | (8,694) | 16.86 | |||||||||
Forfeited2 | (8,080) | 25.21 | |||||||||
Adjustment for performance conditions2,3 | (7,862) | 16.25 | |||||||||
Nonvested at December 31, 2022 | 285,351 | 25.40 | |||||||||
Vested and outstanding at December 31, 2022 | 8,694 | 16.86 |
Shares for PSU awards represent target shares at grant date.
Upon exercise or vesting/delivery, shares are expected (though not required) to be issued from treasury.
Restricted Stock Unit, Performance-Based Restricted Stock Unit, and Deferred Stock Unit Awards
Changes in the Company’s RSU, PSU, and DSU awards are summarized as follows:
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2021 | ||||||||||||||||
| | RSU Awards | | PSU Awards | | DSU Awards | ||||||||||||
| | | | | Weighted- | | | | | Weighted- | | | | | Weighted- | |||
| | | | Average | | | | Average | | | | Average | ||||||
| | | | Grant Date | | | | Grant Date | | | | Grant Date | ||||||
|
| Shares |
| Fair Value |
| Shares (1) |
| Fair Value |
| Shares |
| Fair Value | ||||||
Nonvested at beginning of period |
| | 1,017,038 |
| $ | 23.87 |
| | 15,724 |
| $ | 16.25 |
| | 34,263 |
| $ | 17.18 |
Granted |
| | 260,231 | |
| 24.26 |
| | 99,159 | |
| 23.91 |
| | 35,664 | |
| 24.59 |
Dividend equivalents earned |
| | 43,783 | |
| 23.65 |
| | — | |
| — |
| | 4,891 | |
| 23.72 |
Vested |
| | (143,242) | |
| 23.50 |
| | — | |
| — |
| | (40,683) | |
| 18.24 |
Forfeited |
| | (29,883) | |
| 24.88 |
| | (968) | |
| 23.48 |
| | — | |
| — |
Nonvested at end of period |
| | 1,147,927 |
| $ | 23.97 |
| | 113,915 |
| $ | 22.86 |
| | 34,135 |
| $ | 24.59 |
| | | | | | | | | | | | | | | | | | |
Vested and outstanding at end of period |
| | | | | | | | | | | |
| | 97,297 |
| $ | 22.02 |
On March 24, 2021, under the terms of the 2020 Equity Plan,23, 2022, the Company granted 212,426 RSUs to members of management. The grant date fair value of the award totaled $5.2 million and will be recognized as compensation expense over the requisite service period ranging from one year to five years. The terms of these awards included an accelerated vesting provision upon eligible retirement from the Company, after a one-year minimum requisite service period. Subsequent to the requisite service period, the awards will become 100% vested. Further, the Company granted 33,28832,658 DSUs to directors and advisory directors. The grant date fair value of the award totaled $0.8 million and will be recognized as compensation expense over the requisite service period of one year. Subsequent to the requisite service period, the awards will become 100% vested.
During
118
DSU Awards | |||||||||||||||||||||||||||||||||||
Shares | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||||||||||||||
Nonvested at December 31, 2021 | 34,135 | $ | 24.59 | ||||||||||||||||||||||||||||||||
Granted | 32,658 | 25.79 | |||||||||||||||||||||||||||||||||
Dividend equivalents earned | 5,473 | 24.47 | |||||||||||||||||||||||||||||||||
Vested | (41,181) | 24.67 | |||||||||||||||||||||||||||||||||
Nonvested at December 31, 2022 | 31,085 | 25.75 | |||||||||||||||||||||||||||||||||
Vested and outstanding at December 31, 2022 | 112,434 | 23.10 |
Further, during the first quarter of 2021, the Company granted a target of 28,344 PSUs with a maximum award of 39,682 units. The actual number of units issued at the vesting date could range from 0% to 140% of the initial grant, depending on attaining a performance goal based upon FirsTech’s compounded annual revenue growth rate. The grant date fair value of the award is $0.7 million and will be recognized in compensation expense over the performance period ending August 31, 2023, subject to achievement of the performance goal.
On May 19, 2021, under the terms of the 2020 Equity Plan, the Company granted 2,376 DSUs to directors. The grant date fair value of the award totaled $0.1 million and will be recognized as compensation expense over the requisite service period of one year. Subsequent to the requisite service period, the awards will become 100% vested.
On September 22, 2021, under the terms of the 2020 Equity Plan, the Company granted 47,805 RSUs to members of management. The grant date fair value of the award totaled $1.1 million and will be recognized as compensation expense over the requisite service period ranging from three year to five years. Subsequent to the requisite service period, the awards will become 100% vested.
A description of RSU, PSU and DSU awards granted in 2020 and 2019 under the terms of the 2020 Equity Plan, 2010 Equity Plan, or the First Community 2016 Equity Incentive Plan can be found in the Company’s Annual Reports for the years ended December 31, 2020, and 2019.
The Company issued 116,904 treasury shares in conjunction with the vesting of RSUs and settlement of DSUs in 2021. The difference between the number of shares issued and the number of vested units is due to shares issued under a net share settlement option.
2021 Employee Stock Purchase Plan
Stock-based2022.
The Company recognized compensation expense related to non-vested RSU, PSU, and DSU awards, as well as the 2021 ESPP, as presented in the table below (dollars in thousands):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Stock-based compensation expense | | | | | | | | | |
Stock options (1) | | $ | — | | $ | — | | $ | 146 |
RSU awards | | | 5,809 | | | 6,493 | | | 3,249 |
PSU awards | | | 979 | | | 77 | | | — |
DSU awards | | | 962 | | | 565 | | | 602 |
2021 ESPP | | | 114 | | | — | | | — |
Total stock-based compensation expense | | $ | 7,864 | | $ | 7,135 | | $ | 3,997 |
Years Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||
RSU awards | $ | 4,648 | $ | 5,809 | $ | 6,493 | |||||||||||||||||||||||
PSU awards1 | 3,240 | 979 | 77 | ||||||||||||||||||||||||||
DSU awards | 876 | 962 | 565 | ||||||||||||||||||||||||||
2021 ESPP | 204 | 114 | — | ||||||||||||||||||||||||||
Total stock-based compensation expense | $ | 8,968 | $ | 7,864 | $ | 7,135 |
119
Unamortized stock-based compensation expense is presented in the table below (dollars in thousands):
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Unamortized stock-based compensation | |||||||||||
RSU awards | $ | 8,570 | $ | 10,204 | |||||||
PSU awards1 | 4,279 | 1,547 | |||||||||
DSU awards | 175 | 209 | |||||||||
Total unamortized stock-based compensation | $ | 13,024 | $ | 11,960 | |||||||
Weighted average period over which expense is to be recognized | 2.5 yrs | 2.9 yrs |
| | | | | | | |
| | As of December 31, | | ||||
|
| 2021 |
| 2020 |
| ||
Unamortized stock-based compensation | | | | | | | |
RSU awards | | $ | 10,204 | | $ | 10,411 | |
PSU awards | | | 1,547 | | | 179 | |
DSU awards | | | 209 | | | 294 | |
Total unamortized stock-based compensation | | $ | 11,960 | | $ | 10,884 | |
| | | | | | | |
Weighted average period over which expense is to be recognized | | | 2.9 | yrs | | 3.0 | yrs |
Unamortized expense for market-based PSU awards represents amounts based on target shares at grant date. Unamortized expense for performance-based PSU awards represents amounts based on target shares at grant date, adjusted for performance expectations as of the date indicated.
TRANSACTIONS WITH RELATED PARTIES
The following is an analysis of the changes in loans to related parties, as a group (dollars in thousands):
| | | |
|
| As of and for the Year Ended | |
| | December 31, 2021 | |
Loans to related parties | | | |
Balance at beginning of year |
| $ | 41,921 |
Change in relationship | |
| (2,033) |
New loans/advances | |
| 31,761 |
Repayments | | | (29,092) |
Balance at end of year | | $ | 42,557 |
As of and for the Year Ended December 31, 2022 | |||||
Balance of loans to related parties, December 31, 2021 | $ | 42,557 | |||
Change in relationship | (11,254) | ||||
New loans/advances | 39,545 | ||||
Repayments | (15,507) | ||||
Balance of loans to related parties, December 31, 2022 | $ | 55,341 | |||
Unused commitments to directors and executive officers | $ | 12,722 |
Additionally, total unused commitments to directors and executive officers were $8.6 million at December 31, 2021.
Note
OUTSTANDING COMMITMENTS AND CONTINGENT LIABILITIES
A summary of the contractual amount of the Company’s exposure to off-balance-sheet risk relating to the Company’s commitments to extend credit and standby letters of credit follows (dollars in thousands):
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Financial instruments whose contract amounts represent credit risk | | | | | | |
Commitments to extend credit | | $ | 1,983,655 | | $ | 1,754,370 |
Standby letters of credit | |
| 32,552 | |
| 38,937 |
Total commitments | | $ | 2,016,207 | | $ | 1,793,307 |
120
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Financial instruments whose contract amounts represent credit risk | |||||||||||
Commitments to extend credit | $ | 1,991,769 | $ | 1,983,655 | |||||||
Standby letters of credit | 33,008 | 32,552 | |||||||||
Total commitments | $ | 2,024,777 | $ | 2,016,207 |
FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATEDNOTE 17. DERIVATIVE FINANCIAL STATEMENTS
Note 17. Derivative Financial Instruments
The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. Additionally, the Company enters into derivative financial instruments, including interest rate lock commitments issued to residential loan customers for loans that will be held for sale, forward sales commitments to sell residential mortgage loans to investors, and interest rate swaps with customers and other third parties. See “Note 18. Fair Value Measurements” for further discussion of the fair value measurement of such derivatives.
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Cash pledged to secure obligations under derivative contracts | $ | 38,609 | $ | 27,300 | |||||||
Collateral held to secure obligations under derivative contracts | 29,830 | — |
Interest Rate Swaps Designated as Cash Flow Hedges
swaps. Changes in fair value were recorded net of tax in OCI.
A summary of the interest-rate swaps designated as cash flow hedges is presented below (dollars in thousands):
As of December 31, | |||||||||||||||||
Location | 2022 | 2021 | |||||||||||||||
Debt Swap | |||||||||||||||||
Notional amount | $ | 50,000 | $ | 50,000 | |||||||||||||
Weighted average fixed pay rates | 1.79 | % | 1.79 | % | |||||||||||||
Weighted average variable 3-month LIBOR receive rates | 4.77 | % | 0.20 | % | |||||||||||||
Weighted average maturity, in years | 1.71 yrs | 2.71 yrs | |||||||||||||||
Loan Swap | |||||||||||||||||
Notional amount | $ | 300,000 | N/A | ||||||||||||||
Weighted average fixed receive rates | 4.81 | % | N/A | ||||||||||||||
Weighted average variable Prime pay rates | 7.32 | % | N/A | ||||||||||||||
Weighted average maturity, in years | 6.10 yrs | N/A | |||||||||||||||
Gross aggregate fair value of the swaps | |||||||||||||||||
Gross aggregate fair value of swap assets | Other assets | $ | 2,535 | $ | — | ||||||||||||
Gross aggregate fair value of swap liabilities | Other liabilities | $ | 32,367 | $ | 958 | ||||||||||||
Balances carried in AOCI | |||||||||||||||||
Unrealized gains (losses) on cash flow hedges, net of tax | AOCI | $ | (20,985) | $ | (685) |
| | | | | | | |
| | As of December 31, | | ||||
|
| 2021 |
| 2020 |
| ||
Notional amount | | $ | 50,000 | | $ | 70,000 | |
Weighted average fixed pay rates | |
| 1.79 | % |
| 1.80 | % |
Weighted average variable 3-month LIBOR receive rates | | | 0.20 | % | | 0.22 | % |
Weighted average maturity, in years | | | 2.71 | yrs | | 2.85 | yrs |
Unrealized gains (losses), net of tax | | $ | (685) | | $ | (2,184) | |
The Company expects $0.2 million of theto reclassify unrealized gain (loss) to be reclassifiedgains and losses from OCI to interest income and interest expense as shown in the following table, during the next three months. This reclassified amount12 months (dollars in thousands). Amounts actually recognized could differ from amounts actually recognizedthese expectations due to changes in interest rates, hedge de-designations, and the addition of other hedges subsequent to December 31, 2021.
2022.
As of December 31, 2022 | |||||
Unrealized gains (losses) in OCI expected to be recognized in income | |||||
Unrealized gains expected to be reclassified from OCI to interest income | $ | 372 | |||
Unrealized losses expected to be reclassified from OCI to interest expense | (648) | ||||
Net unrealized gains (losses) in OCI expected to be recognized in net interest income | $ | (276) |
Interest income (expense) recorded on swap transactions was as follows for the periods presented (dollars in thousands):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Interest income (expense) on swap transactions | | $ | (1,067) | | $ | (758) | | $ | 60 |
121
Years Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Interest income (expense) on swap transactions | $ | (583) | $ | (1,067) | $ | (758) |
The following table reflects the net gains (losses) recorded in AOCI and the Consolidated Statements of Comprehensive Income relating to cash flow derivative instruments for the periods presented (dollars in thousands):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Unrealized gains (losses) on cash flow hedges | | | | | | | | | |
Gain (loss) recognized in OCI, net of tax | | $ | 736 | | $ | (2,526) | | $ | (202) |
(Gain) loss reclassified from OCI to interest expense, net of tax | | | 763 | | | 542 | | | 2 |
Net change in unrealized gains (losses) on cash flow hedges | | $ | 1,499 | | $ | (1,984) | | $ | (200) |
The Company pledged $1.0 million and $3.2 million in cash to secure its obligation under these contracts at December 31, 2021, and 2020, respectively.
Years Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedges | |||||||||||||||||||||||||||||
Net gain (loss) recognized in OCI, net of tax | $ | (20,717) | $ | 736 | $ | (2,526) | |||||||||||||||||||||||
(Gain) loss reclassified from OCI to interest income | 395 | — | — | ||||||||||||||||||||||||||
(Gain) loss reclassified from OCI to interest expense | 22 | 763 | 542 | ||||||||||||||||||||||||||
Net change in unrealized gains (losses) on cash flow hedges, net of tax | $ | (20,300) | $ | 1,499 | $ | (1,984) |
As of December 31, 2022 | |||||||||||||||||||||||
Derivative Asset | Derivative Liability | ||||||||||||||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||||||
Interest rate swaps – pay floating, receive fixed | $ | 48,728 | $ | 370 | $ | 528,183 | $ | 39,685 | |||||||||||||||
Interest rate swaps – pay fixed, receive floating | 528,183 | 39,685 | 48,728 | 370 | |||||||||||||||||||
Total derivatives not designated as hedging instruments | $ | 576,911 | $ | 40,055 | $ | 576,911 | $ | 40,055 |
As of December 31, 2021 | |||||||||||||||||||||||
Derivative Asset | Derivative Liability | ||||||||||||||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||||||
Interest rate swaps – pay floating, receive fixed | $ | 404,572 | $ | 17,839 | $ | 86,784 | $ | 2,259 | |||||||||||||||
Interest rate swaps – pay fixed, receive floating | 86,784 | 2,259 | 404,572 | 17,839 | |||||||||||||||||||
Total derivatives not designated as hedging instruments | $ | 491,356 | $ | 20,098 | $ | 491,356 | $ | 20,098 |
| | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||
| | Derivative Asset | | Derivative Liability | ||||||||
| | Notional | | Fair | | Notional | | Fair | ||||
|
| Amount |
| Value |
| Amount |
| Value | ||||
Derivatives not designated as hedging instruments | | | | | | | | | | | | |
Interest rate swaps – pay floating, receive fixed | | $ | 404,572 | | $ | 17,839 | | $ | 86,784 | | $ | 2,259 |
Interest rate swaps – pay fixed, receive floating | | | 86,784 | | | 2,259 | | | 404,572 | | | 17,839 |
Total derivatives not designated as hedging instruments | | $ | 491,356 | | $ | 20,098 | | $ | 491,356 | | $ | 20,098 |
| | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||
| | Derivative Asset | | Derivative Liability | ||||||||
| | Notional | | Fair | | Notional | | Fair | ||||
|
| Amount |
| Value |
| Amount |
| Value | ||||
Derivatives not designated as hedging instruments | | | | | | | | | | | | |
Interest rate swaps – pay floating, receive fixed | | $ | 394,954 | | $ | 32,685 | | $ | — | | $ | — |
Interest rate swaps – pay fixed, receive floating | | | — | | | — | | | 394,954 | | | 32,685 |
Total derivatives not designated as hedging instruments | | $ | 394,954 | | $ | 32,685 | | $ | 394,954 | | $ | 32,685 |
Changes in fair value of these derivative assets and liabilities are recorded in noninterest expense in the Consolidated Statements of Income and summarized as follows (dollars in thousands):
| | | | | | | | | | | | |
| | | | | Years Ended December 31, | |||||||
|
| Location |
| 2021 |
| 2020 |
| 2019 | ||||
Interest rate swaps | | | | | | | | | | | | |
Pay floating, receive fixed | | Noninterest expense | | $ | (12,587) | | $ | 20,331 | | $ | 10,915 | |
Pay fixed, receive floating | | Noninterest expense | | | 12,587 | | | (20,331) | | | (10,915) | |
Net change in fair value of interest rate swaps | | | | | $ | — | | $ | — | | $ | — |
122
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
Location | 2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||||
Interest rate swaps | |||||||||||||||||||||||||||||||||||
Pay floating, receive fixed | Noninterest expense | $ | 19,308 | $ | (12,587) | $ | 20,331 | ||||||||||||||||||||||||||||
Pay fixed, receive floating | Noninterest expense | (19,308) | 12,587 | (20,331) | |||||||||||||||||||||||||||||||
Net change in fair value of interest rate swaps | $ | — | $ | — | $ | — |
The Company pledged $26.3 million and $36.0 million in cash to secure its obligation under these contracts at December 31, 2021, and 2020, respectively.
Risk Participation Agreement
Agreements
In addition, the Company has entered into 1 risk participation agreement in conjunction with a loan participation with another financial institution toTo manage the credit risk exposure related to a customer-facing swap. The notional amount ofswap, the Company entered into two risk participation agreement was $4.0 million, and it had an insignificant fair value as of December 31, 2021. Thisagreements in conjunction with loan participation arrangements with other financial institutions. The risk participation agreement maturesagreements mature in 2028.
2026 and 2028, and are summarized as follows (dollars in thousands)
:
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Risk participation agreements | |||||||||||
Notional amount | $ | 18,899 | $ | 3,990 | |||||||
Fair value | 5 | — |
Interest rate lock commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging,Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Balance Sheets, with changes in the fair values of the corresponding derivative financial assets or liabilities recorded as either a charge or credit to current earnings during the period in which the changes occurred.
The Company economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding best-efforts forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers. Forward sales commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging,Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Balance Sheets. While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, the Company did not designate them for hedge accounting treatment. Changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.
Amounts and fair values of mortgage banking derivatives included in the Consolidated Balance Sheets are summarized as follows (dollars in thousands):
| | | | | | | | | | | | | | | |
| | | | | As of December 31, 2021 | | As of December 31, 2020 | ||||||||
| | | | | Notional | | Fair | | Notional | | Fair | ||||
|
| Location |
| Amount |
| Value |
| Amount |
| Value | |||||
Derivatives with positive fair value | | | | | | | | | | | | | | | |
Interest rate lock commitments | | Other assets | | $ | 19,384 | | $ | 206 | | $ | 45,004 | | $ | 1,201 | |
Forward sales commitments | | Other assets | | | 1,884 | | | 10 | | | 978 | | | 32 | |
Mortgage banking derivatives recorded in other assets | | $ | 21,268 | | $ | 216 | | $ | 45,982 | | $ | 1,233 | |||
| | | | | | | | | | | | | | | |
Derivatives with negative fair value | | | | | | | | | | | | | | | |
Interest rate lock commitments | | Other liabilities | | $ | 499 | | $ | 6 | | $ | 118 | | $ | 1 | |
Forward sales commitments | | Other liabilities | | | 41,002 | | | 439 | | | 84,964 | | | 2,662 | |
Mortgage banking derivatives recorded in other liabilities | | $ | 41,501 | | $ | 445 | | $ | 85,082 | | $ | 2,663 |
123
As of December 31, 2022 | As of December 31, 2021 | ||||||||||||||||||||||||||||
Location | Notional Amount | Fair Value | Notional Amount | Fair Value | |||||||||||||||||||||||||
Derivatives with positive fair value | |||||||||||||||||||||||||||||
Interest rate lock commitments | Other assets | $ | 1,517 | $ | 16 | $ | 19,384 | $ | 206 | ||||||||||||||||||||
Forward sales commitments | Other assets | 83 | 1 | 1,884 | 10 | ||||||||||||||||||||||||
Mortgage banking derivatives recorded in other assets | $ | 1,600 | $ | 17 | $ | 21,268 | $ | 216 | |||||||||||||||||||||
Derivatives with negative fair value | |||||||||||||||||||||||||||||
Interest rate lock commitments | Other liabilities | $ | 83 | $ | 1 | $ | 499 | $ | 6 | ||||||||||||||||||||
Forward sales commitments | Other liabilities | 2,757 | 39 | 41,002 | 439 | ||||||||||||||||||||||||
Mortgage banking derivatives recorded in other liabilities | $ | 2,840 | $ | 40 | $ | 41,501 | $ | 445 |
Net gains (losses) relating to these derivative instruments are summarized as follows for the periods presented (dollars in thousands):
| | | | | | | | | | | | |
| | | | | Years Ended December 31, | |||||||
|
| Location |
| 2021 |
| 2020 |
| 2019 | ||||
Net gains (losses) | | | | | | | | | | | | |
Interest rate lock commitments | | Mortgage revenue | | $ | 1,702 | | $ | 9,667 | | $ | 3,988 | |
Forward sales commitments | | Mortgage revenue | |
| (4,045) | | | (18,329) | | | (6,751) | |
Net gains (losses) | | | | | $ | (2,343) | | $ | (8,662) | | $ | (2,763) |
The
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
Location | 2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||||
Net gains (losses) | |||||||||||||||||||||||||||||||||||
Interest rate lock commitments | Mortgage revenue | $ | 15 | $ | 1,702 | $ | 9,667 | ||||||||||||||||||||||||||||
Forward sales commitments | Mortgage revenue | (38) | (4,045) | (18,329) | |||||||||||||||||||||||||||||||
Net gains (losses) | $ | (23) | $ | (2,343) | $ | (8,662) |
In 2022, the Company began carrying loans held for sale at LOCOM, so while the Company will continue to recognize gains or losses on these mortgage banking derivative instruments in earnings, any corresponding increase in the fair value of loans held for sale will not be recognized in earnings until the loans are sold, at which time the increase is factored into the calculated gain on sale. Decreases in the market value of loans held for sale will continue to be recognized in earnings at each measurement period.
FAIR VALUE MEASUREMENTS
The fair value of an asset or liability is the price that would be received by selling that asset or paid in transferring that liability (exit price) in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. ASC Topic 820 “Fair Value Measurement,Measurement” establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
Level 1 Inputs
– Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
124
Derivative Assets and Derivative Liabilities
Derivative assets and derivative liabilities are reported at estimated fair value utilizing Level 2 inputs andbalances are included in other assets or other liabilities on the Consolidated Balance Sheets. Derivative balancesSheets, and consist of interest rate swaps and a risk participation agreementagreements where there is no significant deterioration in the counterparties (loan customers) credit risk since origination of the interest rate swap or risk participation agreement, as well as mortgage banking derivatives, including interest rate lock commitments and forward sales commitments.
The Company
125
The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2021,2022, and 2020,2021, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):
As of December 31, 2022 | |||||||||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||||||||||
Debt securities available for sale: | |||||||||||||||||||||||
U.S. Treasury securities | $ | — | $ | 114,061 | $ | — | $ | 114,061 | |||||||||||||||
Obligations of U.S. government corporations and agencies | — | 19,779 | — | 19,779 | |||||||||||||||||||
Obligations of states and political subdivisions | — | 257,512 | — | 257,512 | |||||||||||||||||||
Asset-backed securities | — | 469,875 | — | 469,875 | |||||||||||||||||||
Commercial mortgage-backed securities | — | 108,394 | — | 108,394 | |||||||||||||||||||
Residential mortgage-backed securities | — | 1,243,256 | — | 1,243,256 | |||||||||||||||||||
Corporate debt securities | — | 248,516 | — | 248,516 | |||||||||||||||||||
Equity securities | — | 11,535 | — | 11,535 | |||||||||||||||||||
Derivative assets | — | 42,607 | 5 | 42,612 | |||||||||||||||||||
Derivative liabilities | — | 72,462 | — | 72,462 |
| | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
|
| Inputs |
| Inputs |
| Inputs |
| Fair Value | ||||
Debt securities available for sale: | | | | | | | | | | | | |
U.S. Treasury securities | | $ | — | | $ | 165,762 | | $ | — | | $ | 165,762 |
Obligations of U.S. government corporations and agencies | | | — | | | 38,470 | | | — | | | 38,470 |
Obligations of states and political subdivisions | | | — | | | 306,869 | | | — | | | 306,869 |
Asset-backed securities | | | — | | | 492,186 | | | — | | | 492,186 |
Commercial mortgage-backed securities | | | — | | | 614,998 | | | — | | | 614,998 |
Residential mortgage-backed securities | | | — | | | 2,069,313 | | | — | | | 2,069,313 |
Corporate debt securities | | | — | | | 293,653 | | | — | | | 293,653 |
Equity securities | | | — | | | 13,571 | | | — | | | 13,571 |
Loans held for sale | | | — | | | 23,875 | | | — | | | 23,875 |
Derivative assets | | | — | | | 20,314 | | | — | | | 20,314 |
Derivative liabilities | | | — | | | 21,501 | | | — | | | 21,501 |
| | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
|
| Inputs |
| Inputs |
| Inputs |
| Fair Value | ||||
Debt securities available for sale: | | | | | | | | | | | | |
U.S. Treasury securities | | $ | — | | $ | 27,837 | | $ | — | | $ | 27,837 |
Obligations of U.S. government corporations and agencies | | | — | | | 69,519 | | | — | | | 69,519 |
Obligations of states and political subdivisions | | | — | | | 304,711 | | | — | | | 304,711 |
Commercial mortgage-backed securities | | | — | | | 418,616 | | | — | | | 418,616 |
Residential mortgage-backed securities | | | — | | | 1,368,315 | | | — | | | 1,368,315 |
Corporate debt securities | | | — | | | 72,189 | | | — | | | 72,189 |
Equity securities | | | — | | | 5,530 | | | — | | | 5,530 |
Loans held for sale | | | — | | | 42,813 | | | — | | | 42,813 |
Derivative assets | | | — | | | 33,918 | | | — | | | 33,918 |
Derivative liabilities | | | — | | | 38,403 | | | — | | | 38,403 |
As of December 31, 2021 | |||||||||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||||||||||
Debt securities available for sale: | |||||||||||||||||||||||
U.S. Treasury securities | $ | — | $ | 165,762 | $ | — | $ | 165,762 | |||||||||||||||
Obligations of U.S. government corporations and agencies | — | 38,470 | — | 38,470 | |||||||||||||||||||
Obligations of states and political subdivisions | — | 306,869 | — | 306,869 | |||||||||||||||||||
Asset-backed securities | — | 492,186 | — | 492,186 | |||||||||||||||||||
Commercial mortgage-backed securities | — | 614,998 | — | 614,998 | |||||||||||||||||||
Residential mortgage-backed securities | — | 2,069,313 | — | 2,069,313 | |||||||||||||||||||
Corporate debt securities | — | 293,653 | — | 293,653 | |||||||||||||||||||
Equity securities | — | 13,571 | — | 13,571 | |||||||||||||||||||
Loans held for sale | — | 23,875 | — | 23,875 | |||||||||||||||||||
Derivative assets | — | 20,314 | — | 20,314 | |||||||||||||||||||
Derivative liabilities | — | 21,501 | — | 21,501 |
126
As of December 31, 2022 | |||||||||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||||||||||
Loans evaluated individually, net of related allowance | $ | — | $ | — | $ | 5,345 | $ | 5,345 | |||||||||||||||
Bank property held for sale with impairment | — | — | 7,923 | 7,923 |
As of December 31, 2021 | |||||||||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||||||||||
Loans evaluated individually, net of related allowance | $ | — | $ | — | $ | 2,926 | $ | 2,926 | |||||||||||||||
OREO with subsequent impairment | — | — | 51 | 51 | |||||||||||||||||||
Bank property held for sale with impairment | — | — | 10,103 | 10,103 |
| | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
|
| Inputs |
| Inputs |
| Inputs |
| Fair Value | ||||
Loans evaluated individually, net of related allowance | | $ | — | | $ | — | | $ | 2,926 | | $ | 2,926 |
OREO with subsequent impairment | |
| — | |
| — | |
| 51 | |
| 51 |
Bank property held for sale with impairment | |
| — | |
| — | |
| 10,103 | |
| 10,103 |
| | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
|
| Inputs | �� | Inputs |
| Inputs |
| Fair Value | ||||
Loans evaluated individually, net of related allowance | | $ | — | | $ | — | | $ | 2,771 | | $ | 2,771 |
OREO with subsequent impairment | |
| — | |
| — | |
| 106 | |
| 106 |
Bank property held for sale with impairment | | | — | |
| — | |
| 10,676 | |
| 10,676 |
The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis for which the Company has utilized Level 3 inputs to determine fair value (dollars in thousands):
| | | | | | | | | | | | | | | |
| | Quantitative Information about Level 3 Fair Value Measurements | |||||||||||||
| | Fair Value | | Valuation | | Unobservable | | Range | |||||||
December 31, 2021: |
| Estimate |
| Techniques |
| Input |
| (Weighted Average) | |||||||
Loans evaluated individually, net of related allowance | | $ | 2,926 | | Appraisal of collateral | | Appraisal adjustments | | -50.0 | % | to | -100.0 | % | (-55.1) | % |
OREO with subsequent impairment | | | 51 | | Appraisal of collateral | | Appraisal adjustments | | -33.0 | % | to | -100.0 | % | (-67.9) | % |
Bank property held for sale with impairment | | | 10,103 | | Appraisal of collateral or real estate listing price | | Appraisal adjustments | | -0.7 | % | to | -70.1 | % | (-41.3) | % |
| | | | | | | | | | | | | | | |
December 31, 2020: | | | | | | | | | | | | | | | |
Loans evaluated individually, net of related allowance | | $ | 2,771 | | Appraisal of collateral | | Appraisal adjustments | | -30.0 | % | to | -100.0 | % | (-37.0) | % |
OREO with subsequent impairment | | | 106 | | Appraisal of collateral | | Appraisal adjustments | | -25.0 | % | to | -100.0 | % | (-54.5) | % |
Bank property held for sale with impairment | | | 10,676 | | Appraisal of collateral or real estate listing price | | Appraisal adjustments | | -6.2 | % | to | -64.9 | % | (-42.8) | % |
127
As of December 31, 2022 | |||||||||||||||||||||||
Fair Value | Valuation Techniques | Unobservable Input | Range (Weighted Average) | ||||||||||||||||||||
Loans evaluated individually, net of related allowance | $ | 5,345 | Appraisal of collateral | Appraisal adjustments | -22.7% to -100.0% (-45.7)% | ||||||||||||||||||
Bank property held for sale with impairment | 7,923 | Appraisal of collateral or real estate listing price | Appraisal adjustments | -0.7% to -70.1% (-35.1)% |
As of December 31, 2021 | |||||||||||||||||||||||
Fair Value | Valuation Techniques | Unobservable Input | Range (Weighted Average) | ||||||||||||||||||||
Loans evaluated individually, net of related allowance | $ | 2,926 | Appraisal of collateral | Appraisal adjustments | -50.0% to -100.0% (-55.1)% | ||||||||||||||||||
OREO with subsequent impairment | 51 | Appraisal of collateral | Appraisal adjustments | -33.0% to -100.0% (-67.9)% | |||||||||||||||||||
Bank property held for sale with impairment | 10,103 | Appraisal of collateral or real estate listing price | Appraisal adjustments | -0.7% to -70.1% (-41.3)% |
As of December 31, 2022 | As of December 31, 2021 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Financial assets | |||||||||||||||||||||||
Level 1 inputs: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 227,164 | $ | 227,164 | $ | 836,095 | $ | 836,095 | |||||||||||||||
Level 2 inputs: | |||||||||||||||||||||||
Debt securities held to maturity | 918,312 | 785,295 | — | — | |||||||||||||||||||
Loans held for sale1 | 1,253 | 1,276 | — | — | |||||||||||||||||||
Accrued interest receivable | 43,372 | 43,372 | 31,064 | 31,064 | |||||||||||||||||||
Level 3 inputs: | |||||||||||||||||||||||
Portfolio loans, net | 7,634,094 | 7,320,422 | 7,101,111 | 7,161,466 | |||||||||||||||||||
Mortgage servicing rights | 5,861 | 18,284 | 8,608 | 12,133 | |||||||||||||||||||
Other servicing rights | 1,914 | 2,331 | 1,830 | 2,268 | |||||||||||||||||||
Financial liabilities | |||||||||||||||||||||||
Level 2 inputs: | |||||||||||||||||||||||
Time deposits | $ | 855,375 | $ | 830,596 | $ | 935,649 | $ | 935,778 | |||||||||||||||
Securities sold under agreements to repurchase | 229,806 | 229,806 | 270,139 | 270,139 | |||||||||||||||||||
Short-term borrowings | 351,054 | 351,085 | 17,678 | 17,673 | |||||||||||||||||||
Long-term debt | 30,000 | 30,052 | 46,056 | 46,164 | |||||||||||||||||||
Junior subordinated debt owed to unconsolidated trusts | 71,810 | 59,111 | 71,635 | 63,586 | |||||||||||||||||||
Accrued interest payable | 3,978 | 3,978 | 2,728 | 2,728 | |||||||||||||||||||
Level 3 inputs: | |||||||||||||||||||||||
Senior notes, net of unamortized issuance costs | — | — | 39,944 | 40,400 | |||||||||||||||||||
Subordinated notes, net of unamortized issuance costs | 222,038 | 208,562 | 182,773 | 195,600 |
| | | | | | | | | | | | |
| | As of December 31, 2021 | | As of December 31, 2020 | ||||||||
| | Carrying |
| Fair |
| Carrying |
| Fair | ||||
| | Amount |
| Value |
| Amount |
| Value | ||||
Financial assets | | | | | | | | | | | | |
Level 1 inputs: | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 836,095 | | $ | 836,095 | | $ | 688,537 | | $ | 688,537 |
Level 2 inputs: | | | | | | | | | | | | |
Accrued interest receivable | |
| 31,064 | |
| 31,064 | |
| 33,240 | |
| 33,240 |
Level 3 inputs: | | | | | | | | | | | | |
Portfolio loans, net | |
| 7,101,111 | |
| 7,161,466 | |
| 6,713,129 | |
| 6,755,425 |
Mortgage servicing rights | | | 8,608 | | | 12,133 | | | 10,912 | | | 11,107 |
Other servicing rights | | | 1,830 | | | 2,268 | | | 1,434 | | | 1,966 |
| | | | | | | | | | | | |
Financial liabilities | | | | | | | | | ||||
Level 2 inputs: | | | | | | | | | | | | |
Time deposits | | $ | 935,649 | | $ | 935,778 | | $ | 1,119,348 | | $ | 1,132,107 |
Securities sold under agreements to repurchase | |
| 270,139 | |
| 270,139 | |
| 175,614 | |
| 175,614 |
Short-term borrowings | | | 17,678 | | | 17,673 | | | 4,658 | | | 4,661 |
Long-term debt | |
| 46,056 | |
| 46,164 | | | 4,757 | |
| 5,014 |
Junior subordinated debt owed to unconsolidated trusts | |
| 71,635 | |
| 63,586 | |
| 71,468 | |
| 59,943 |
Accrued interest payable | |
| 2,728 | |
| 2,728 | |
| 3,401 | |
| 3,401 |
Level 3 inputs: | | | | | | | | | | | | |
Senior notes, net of unamortized issuance costs | | | 39,944 | | | 40,400 | | | 39,809 | | | 40,104 |
Subordinated notes, net of unamortized issuance costs | | | 182,773 | | | 195,600 | | | 182,226 | | | 187,697 |
Effective January 1, 2022, recorded at LOCOM.
Note
EARNINGS PER SHARE
| | | | | | | | | |
| | Years Ended December 31, | |||||||
| | 2021 |
| 2020 |
| 2019 | |||
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
Shares: | | | | | | | | | |
Weighted average common shares outstanding | |
| 55,369,476 | |
| 54,567,429 | |
| 54,851,652 |
Dilutive effect of outstanding options, warrants, and stock units as determined by the application of the treasury stock method | |
| 635,221 | |
| 259,510 | |
| 280,842 |
Dilutive effect of ESPP shares | | | 4,108 | | | — | | | — |
Weighted average common shares outstanding, as adjusted for diluted earnings per share calculation | | | 56,008,805 | | | 54,826,939 | | | 55,132,494 |
| | | | | | | | | |
Basic earnings per common share | | $ | 2.23 | | $ | 1.84 | | $ | 1.88 |
| | | | | | | | | |
Diluted earnings per common share | | $ | 2.20 | | $ | 1.83 | | $ | 1.87 |
128
Years Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Net income | $ | 128,311 | $ | 123,449 | $ | 100,344 | |||||||||||||||||||||||
Weighted average number of common shares outstanding, basic | 55,387,073 | 55,369,476 | 54,567,429 | ||||||||||||||||||||||||||
Dilutive effect of common stock equivalents: | |||||||||||||||||||||||||||||
Options | 1,632 | 1,639 | 900 | ||||||||||||||||||||||||||
Warrants | 1,753 | 1,753 | 1,469 | ||||||||||||||||||||||||||
RSU awards | 665,998 | 615,759 | 252,153 | ||||||||||||||||||||||||||
PSU awards | 58,206 | 5,429 | — | ||||||||||||||||||||||||||
DSU awards | 15,532 | 10,641 | 4,988 | ||||||||||||||||||||||||||
ESPP | 6,970 | 4,108 | — | ||||||||||||||||||||||||||
Weighted average number of common shares outstanding, diluted | 56,137,164 | 56,008,805 | 54,826,939 | ||||||||||||||||||||||||||
Basic earnings per common share | $ | 2.32 | $ | 2.23 | $ | 1.84 | |||||||||||||||||||||||
Diluted earnings per common share | 2.29 | 2.20 | 1.83 |
SharesAverage shares that were excluded from the computation of diluted earnings per common share because their effect would have been anti-dilutive are summarized in the table below for the periods presented:
Years Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Anti-dilutive common stock equivalents | |||||||||||||||||||||||||||||
Options | 7,792 | — | 39,085 | ||||||||||||||||||||||||||
RSU awards | 38,912 | 65,058 | 159,408 | ||||||||||||||||||||||||||
PSU awards | 189,000 | 93,026 | 7,862 | ||||||||||||||||||||||||||
DSU awards | — | 7,742 | — | ||||||||||||||||||||||||||
Total anti-dilutive common stock equivalents | 235,704 | 165,826 | 206,355 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
| | 2021 |
| 2020 |
| 2019 | |||
Anti-dilutive common stock equivalents | | | | | | | | | |
Options | | | — | | | 39,085 | | | — |
RSU and DSU awards | | | 72,800 | | | 159,408 | | | 201,029 |
PSU awards | | | 93,026 | | | 7,862 | | | — |
Total anti-dilutive common stock equivalents | | | 165,826 | | | 206,355 | | | 201,029 |
Note
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table representstables present changes in AOCI by component, net of tax, for the periods below (dollars in thousands):
| | | | | | | | | |
|
| Year Ended December 31, 2021 | |||||||
| | | Before Tax | | | Tax Effect | | | Net of Tax |
Unrealized gains (losses) on debt securities available for sale | | | | | | | | | |
Balance at beginning of period | | $ | 49,644 | | $ | (14,151) | | $ | 35,493 |
Unrealized holding gains (losses) on debt securities available for sale, net | | | (81,977) | | | 23,367 | | | (58,610) |
Amounts reclassified from AOCI, net | | | 61 | | | (17) | | | 44 |
Balance at end of period | | | (32,272) | | | 9,199 | | | (23,073) |
| | | | | | | | | |
Unrealized gains (losses) on cash flow hedges | | | | | | | | | |
Balance at beginning of period | | | (3,055) | | | 871 | | | (2,184) |
Unrealized holding gains (losses) on cash flow hedges, net | | | 1,030 | | | (294) | | | 736 |
Amounts reclassified from AOCI, net | | | 1,067 | | | (304) | | | 763 |
Balance at end of period | | | (958) | | | 273 | | | (685) |
| | | | | | | | | |
Total AOCI | | $ | (33,230) | | $ | 9,472 | | $ | (23,758) |
| | | | | | | | | |
|
| Year Ended December 31, 2020 | |||||||
| | | Before Tax | | | Tax Effect | | | Net of Tax |
Unrealized gains (losses) on debt securities available for sale | | | | | | | | | |
Balance at beginning of period | | $ | 21,192 | | $ | (6,032) | | $ | 15,160 |
Unrealized holding gains (losses) on debt securities available for sale, net | | | 30,176 | | | (8,615) | | | 21,561 |
Amounts reclassified from AOCI, net | | | (1,724) | | | 496 | | | (1,228) |
Balance at end of period | | | 49,644 | | | (14,151) | | | 35,493 |
| | | | | | | | | |
Unrealized gains (losses) on cash flow hedges | | | | | | | | | |
Balance at beginning of period | | | (280) | | | 80 | | | (200) |
Unrealized holding gains (losses) on cash flow hedges, net | | | (3,533) | | | 1,007 | | | (2,526) |
Amounts reclassified from AOCI, net | | | 758 | | | (216) | | | 542 |
Balance at end of period | | | (3,055) | | | 871 | | | (2,184) |
| | | | | | | | | |
Total AOCI | | $ | 46,589 | | $ | (13,280) | | $ | 33,309 |
129
Year Ended December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Before Tax | Tax Effect | Net of Tax | |||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized/Unrecognized gains (losses) on debt securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | (32,272) | $ | 9,199 | $ | (23,073) | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on debt securities available for sale, net | (278,762) | 79,460 | (199,302) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Unrecognized losses on debt securities transferred to held to maturity from available for sale | (48,456) | 13,812 | (34,644) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI, net | (26) | 7 | (19) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of unrecognized losses on securities transferred to held to maturity | 6,638 | (1,893) | 4,745 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | (352,878) | 100,585 | (252,293) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedges | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | (958) | 273 | (685) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on cash flow hedges, net | (28,975) | 8,258 | (20,717) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI, net | 583 | (166) | 417 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | (29,350) | 8,365 | (20,985) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total AOCI | $ | (382,228) | $ | 108,950 | $ | (273,278) |
Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Before Tax | Tax Effect | Net of Tax | |||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on debt securities available for sale | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 49,644 | $ | (14,151) | $ | 35,493 | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on debt securities available for sale, net | (81,977) | 23,367 | (58,610) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI, net | 61 | (17) | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | (32,272) | 9,199 | (23,073) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedges | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | (3,055) | 871 | (2,184) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on cash flow hedges, net | 1,030 | (294) | 736 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI, net | 1,067 | (304) | 763 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | (958) | 273 | (685) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total AOCI | $ | (33,230) | $ | 9,472 | $ | (23,758) |
| | | | | | | | | |
|
| Year Ended December 31, 2019 | |||||||
| | | Before Tax | | | Tax Effect | | | Net of Tax |
Unrealized gains (losses) on debt securities available for sale | | | | | | | | | |
Balance at beginning of period | | $ | (9,528) | | $ | 2,716 | | $ | (6,812) |
Unrealized holding gains (losses) on debt securities available for sale, net | | | 26,430 | | | (7,525) | | | 18,905 |
Unrealized losses on debt securities transferred from held to maturity to available for sale | | | 5,023 | | | (1,433) | | | 3,590 |
Amounts reclassified from AOCI, net | | | (733) | | | 210 | | | (523) |
Balance at end of period | | | 21,192 | | | (6,032) | | | 15,160 |
| | | | | | | | | |
Unrealized gains (losses) on cash flow hedges | | | | | | | | | |
Balance at beginning of period | | | — | | | — | | | — |
Unrealized holding gains (losses) on cash flow hedges, net | | | (283) | | | 81 | | | (202) |
Amounts reclassified from AOCI, net | | | 3 | | | (1) | | | 2 |
Balance at end of period | | | (280) | | | 80 | | | (200) |
| | | | | | | | | |
Total AOCI | | $ | 20,912 | | $ | (5,952) | | $ | 14,960 |
NoteYear Ended December 31, 2020 Before Tax Tax Effect Net of Tax Unrealized gains (losses) on debt securities available for sale Balance at beginning of period $ 21,192 $ (6,032) $ 15,160 Unrealized holding gains (losses) on debt securities available for sale, net 30,176 (8,615) 21,561 Amounts reclassified from AOCI, net (1,724) 496 (1,228) Balance at end of period 49,644 (14,151) 35,493 Unrealized gains (losses) on cash flow hedges Balance at beginning of period (280) 80 (200) Unrealized holding gains (losses) on cash flow hedges, net (3,533) 1,007 (2,526) Amounts reclassified from AOCI, net 758 (216) 542 Balance at end of period (3,055) 871 (2,184) Total AOCI $ 46,589 $ (13,280) $ 33,309
OPERATING SEGMENTS AND RELATED INFORMATION
prices.
Following is a summary of selected financial information for the Company’s operating segments. The “other” category included in the tables below consists of the Parent Company,parent company, First Busey Risk Management, and the elimination of intercompany transactions (dollars in thousands):
| | | | | | | | | | | | |
| | Goodwill | | Total Assets | ||||||||
| | As of December 31, | | As of December 31, | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Operating segment | | | | | | | | | | | | |
Banking | | $ | 294,773 | | $ | 288,436 | | $ | 12,746,833 | | $ | 10,462,673 |
FirsTech | |
| 8,992 | |
| 8,992 | |
| 47,481 | |
| 46,553 |
Wealth Management | |
| 14,108 | |
| 14,108 | |
| 65,587 | |
| 46,504 |
Other | |
| — | |
| — | |
| (212) | |
| (11,683) |
Consolidated total | | $ | 317,873 | | $ | 311,536 | | $ | 12,859,689 | | $ | 10,544,047 |
130
Goodwill | Total Assets | ||||||||||||||||||||||
As of December 31, | As of December 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Operating segment | |||||||||||||||||||||||
Banking | $ | 294,773 | $ | 294,773 | $ | 12,199,960 | $ | 12,746,833 | |||||||||||||||
FirsTech | 8,992 | 8,992 | 48,715 | 47,481 | |||||||||||||||||||
Wealth Management | 14,108 | 14,108 | 84,082 | 65,587 | |||||||||||||||||||
Other | — | — | 3,920 | (212) | |||||||||||||||||||
Consolidated total | $ | 317,873 | $ | 317,873 | $ | 12,336,677 | $ | 12,859,689 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
| | | | | | | | | |
|
| 2021 |
| 2020 |
| 2019 | |||
Net interest income | | | | | | | | | |
Banking | | $ | 285,678 | | $ | 294,728 | | $ | 296,754 |
FirsTech | | | 79 | | | 79 | | | 76 |
Wealth Management | |
| — | |
| — | |
| — |
Other | |
| (15,059) | |
| (11,872) | |
| (9,607) |
Total net interest income | | $ | 270,698 | | $ | 282,935 | | $ | 287,223 |
| | | | | | | | | |
Noninterest income | | | | | | | | | |
Banking | | $ | 59,393 | | $ | 61,043 | | $ | 63,613 |
FirsTech | |
| 19,629 | |
| 16,548 | |
| 16,450 |
Wealth Management | |
| 53,082 | |
| 43,429 | |
| 39,075 |
Other | |
| 700 | |
| (2,755) | |
| (2,723) |
Total noninterest income | | $ | 132,804 | | $ | 118,265 | | $ | 116,415 |
| | | | | | | | | |
Noninterest expense | | | | | | | | | |
Banking | | $ | 205,905 | | $ | 185,445 | | $ | 211,559 |
FirsTech | | | 17,574 | | | 13,279 | | | 10,990 |
Wealth Management | | | 29,198 | | | 26,086 | | | 24,534 |
Other | | | 9,103 | | | 9,387 | | | 11,711 |
Total noninterest expense | | $ | 261,780 | | $ | 234,197 | | $ | 258,794 |
| | | | | | | | | |
Income before income taxes | | | | | | | | | |
Banking | | $ | 154,267 | | $ | 131,529 | | $ | 138,401 |
FirsTech | | | 2,134 | | | 3,348 | | | 5,536 |
Wealth Management | | | 23,884 | | | 17,343 | | | 14,541 |
Other | | | (23,462) | | | (24,014) | | | (24,040) |
Total income before income taxes | | $ | 156,823 | | $ | 128,206 | | $ | 134,438 |
| | | | | | | | | |
Net income | | | | | | | | | |
Banking | | $ | 117,844 | | $ | 101,226 | | $ | 106,409 |
FirsTech | |
| 1,527 | |
| 2,372 | |
| 4,060 |
Wealth Management | |
| 18,570 | |
| 13,181 | |
| 11,135 |
Other | |
| (14,492) | |
| (16,435) | |
| (18,651) |
Total net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
Years Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Net interest income | |||||||||||||||||||||||||||||
Banking | $ | 340,083 | $ | 285,678 | $ | 294,728 | |||||||||||||||||||||||
FirsTech | 65 | 79 | 79 | ||||||||||||||||||||||||||
Wealth Management | — | — | — | ||||||||||||||||||||||||||
Other | (16,710) | (15,059) | (11,872) | ||||||||||||||||||||||||||
Total net interest income | $ | 323,438 | $ | 270,698 | $ | 282,935 | |||||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||||||||
Banking | $ | 54,154 | $ | 59,393 | $ | 61,043 | |||||||||||||||||||||||
FirsTech | 21,720 | 19,629 | 16,548 | ||||||||||||||||||||||||||
Wealth Management | 55,394 | 53,082 | 43,429 | ||||||||||||||||||||||||||
Other | (4,465) | 700 | (2,755) | ||||||||||||||||||||||||||
Total noninterest income | $ | 126,803 | $ | 132,804 | $ | 118,265 | |||||||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||||||||
Banking | $ | 221,997 | $ | 205,905 | $ | 185,445 | |||||||||||||||||||||||
FirsTech | 20,619 | 17,574 | 13,279 | ||||||||||||||||||||||||||
Wealth Management | 31,545 | 29,198 | 26,086 | ||||||||||||||||||||||||||
Other | 9,720 | 9,103 | 9,387 | ||||||||||||||||||||||||||
Total noninterest expense | $ | 283,881 | $ | 261,780 | $ | 234,197 | |||||||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||||||||
Banking | $ | 167,617 | $ | 154,267 | $ | 131,529 | |||||||||||||||||||||||
FirsTech | 1,166 | 2,134 | 3,348 | ||||||||||||||||||||||||||
Wealth Management | 23,849 | 23,884 | 17,343 | ||||||||||||||||||||||||||
Other | (30,895) | (23,462) | (24,014) | ||||||||||||||||||||||||||
Total income before income taxes | $ | 161,737 | $ | 156,823 | $ | 128,206 | |||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||
Banking | $ | 131,596 | $ | 117,844 | $ | 101,226 | |||||||||||||||||||||||
FirsTech | 847 | 1,527 | 2,372 | ||||||||||||||||||||||||||
Wealth Management | 18,543 | 18,570 | 13,181 | ||||||||||||||||||||||||||
Other | (22,675) | (14,492) | (16,435) | ||||||||||||||||||||||||||
Total net income | $ | 128,311 | $ | 123,449 | $ | 100,344 |
131
The Company has operating leases consisting primarily of equipment leases and real estate leases for banking centers, ATM locations, and office space. The following table summarizes lease related information and balances the Company reported in its Consolidated Balance Sheets for the periods presented (dollars in thousands):
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Lease balances | |||||||||||
Right of use assets | $ | 12,829 | $ | 10,533 | |||||||
Lease liabilities | 12,995 | 10,591 | |||||||||
Supplemental information | |||||||||||
Year through which lease terms extend | 2037 | 2031 | |||||||||
Weighted average remaining lease term (in years) | 8.90 | 6.47 | |||||||||
Weighted average discount rate | 3.45 | % | 2.16 | % |
| | | | | | |
| As of December 31, | | ||||
| 2021 |
| 2020 |
| ||
Lease balances | | | | | | |
Right of use assets | $ | 10,533 | | $ | 7,714 | |
Lease liabilities | | 10,591 | | | 7,757 | |
| | | | | | |
Supplemental information | | | | | | |
Year through which lease terms extend | | 2031 | | | 2032 | |
Weighted average remaining lease term (in years) | | 6.47 | | | 5.93 | |
Weighted average discount rate | | 2.16 | % | | 2.82 | % |
The following table represents lease costs and cash flows related to leases for the periods presented (dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Lease costs | |||||||||||||||||
Operating lease costs | $ | 2,495 | $ | 2,464 | $ | 2,524 | |||||||||||
Variable lease costs | 365 | 540 | 416 | ||||||||||||||
Short-term lease costs | 22 | 49 | 35 | ||||||||||||||
Total lease cost1 | $ | 2,882 | $ | 3,053 | $ | 2,975 | |||||||||||
Cash flows related to leases | |||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
Operating lease cash flows – Fixed payments | $ | 3,080 | $ | 2,417 | $ | 2,526 | |||||||||||
Operating lease cash flows – Liability reduction | 2,285 | 2,217 | 2,289 | ||||||||||||||
Right of use assets obtained during the period in exchange for operating lease liabilities2 | 6,206 | 5,818 | 743 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 | | 2019 | |||
Lease costs | | | | | | | | | |
Operating lease costs | | $ | 2,464 | | $ | 2,524 | | $ | 2,364 |
Variable lease costs | | | 540 | |
| 416 | |
| 432 |
Short-term lease costs | | | 49 | | | 35 | | | 84 |
Total lease cost (1) | | $ | 3,053 | | $ | 2,975 | | $ | 2,880 |
| | | | | | | | | |
Cash flows related to leases | | | | | | | | | |
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | | | |
Operating lease cash flows – Fixed payments | | $ | 2,417 | | $ | 2,526 | | $ | 2,296 |
Operating lease cash flows – Liability reduction | | | 2,217 | |
| 2,289 | |
| 2,010 |
Right of use assets obtained during the period in exchange for operating lease liabilities (2) | | | 5,818 | | | 743 | | | 923 |
At December 31, 2021,2022, the Company was obligated under noncancelable operating leases for office space and other commitments.
132
Future undiscounted lease payments with initial terms of one year or more, are as follows (dollars in thousands):
| | | |
| | As of | |
|
| December 31, 2021 | |
Rent commitments | | | |
2022 | | $ | 2,271 |
2023 | |
| 2,098 |
2024 | | | 1,650 |
2025 | | | 1,413 |
2026 | | | 1,164 |
Thereafter | | | 2,766 |
Total undiscounted cash flows | | | 11,362 |
Less: Amounts representing interest | | | 771 |
Present value of net future minimum lease payments | | $ | 10,591 |
As of December 31, 2022 | |||||
Rent commitments | |||||
2023 | $ | 2,254 | |||
2024 | 1,942 | ||||
2025 | 1,719 | ||||
2026 | 1,442 | ||||
2027 | 1,277 | ||||
Thereafter | 6,699 | ||||
Total undiscounted cash flows | 15,333 | ||||
Less: Amounts representing interest | 2,338 | ||||
Present value of net future minimum lease payments | $ | 12,995 |
Busey occasionally leases parking lots and office space to outside parties. Further, in connection with the acquisition of CAC in the second quarter of 2021, the Company acquired 2 office buildings in Glenview IL and 1 office building in Northbrook, IL,Illinois, along with operating leases for space within these buildings that is rented to outsidethird parties. Revenues recorded in connection with these leases and reported in other income on our Consolidated Statements of Income are summarized as follows (dollars in thousands):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 | | 2019 | |||
Rental income | | $ | 566 | | $ | 228 | | $ | 263 |
133
Years Ended December 31, | |||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||
Rental income | $ | 707 | $ | 566 | $ | 228 |
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Assets | | | | | | |
Cash and cash equivalents | | $ | 78,217 | | $ | 129,183 |
Equity securities | | | 13,571 | | | 5,530 |
Investments in subsidiaries: | | | | | | |
Bank | |
| 1,565,226 | |
| 1,417,130 |
Non-bank | |
| 2,812 | |
| 2,746 |
Premises and equipment, net | |
| 30 | |
| 51 |
Other assets | |
| 22,444 | |
| 21,664 |
Total assets | | $ | 1,682,300 | | $ | 1,576,304 |
| | | | | | |
Liabilities and Stockholders' Equity | | | | | | |
Liabilities: | | | | | | |
Short-term borrowings | | $ | 12,000 | | $ | — |
Long-term debt | | | 42,000 | | | — |
Senior notes, net of unamortized issuance costs | | | 39,944 | | | 39,809 |
Subordinated notes, net of unamortized issuance costs | | | 182,773 | | | 182,226 |
Junior subordinated debentures owed to unconsolidated trusts | | | 71,635 | | | 71,468 |
Other liabilities | |
| 14,836 | |
| 12,732 |
Total liabilities | |
| 363,188 | |
| 306,235 |
| | | | | | |
Total stockholders' equity | |
| 1,319,112 | |
| 1,270,069 |
Total liabilities and stockholders' equity | | $ | 1,682,300 | | $ | 1,576,304 |
134
As of December 31, | |||||||||||
2022 | 2021 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 91,812 | $ | 78,217 | |||||||
Equity securities | 11,535 | 13,571 | |||||||||
Investments in subsidiaries: | |||||||||||
Bank | 1,369,261 | 1,565,226 | |||||||||
Non-bank | 2,181 | 2,812 | |||||||||
Premises and equipment, net | 18 | 30 | |||||||||
Other assets | 22,316 | 22,444 | |||||||||
Total assets | $ | 1,497,123 | $ | 1,682,300 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Liabilities: | |||||||||||
Short-term borrowings | $ | 12,000 | $ | 12,000 | |||||||
Long-term debt | 30,000 | 42,000 | |||||||||
Senior notes, net of unamortized issuance costs | — | 39,944 | |||||||||
Subordinated notes, net of unamortized issuance costs | 222,038 | 182,773 | |||||||||
Junior subordinated debentures owed to unconsolidated trusts | 71,810 | 71,635 | |||||||||
Other liabilities | 15,298 | 14,836 | |||||||||
Total liabilities | 351,146 | 363,188 | |||||||||
Total stockholders' equity | 1,145,977 | 1,319,112 | |||||||||
Total liabilities and stockholders' equity | $ | 1,497,123 | $ | 1,682,300 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Operating income: | | | | | | | | | |
Dividends from subsidiaries: | | | | | | | | | |
Bank | | $ | 60,000 | | $ | 122,000 | | $ | 70,000 |
Non-bank | |
| 1,745 | |
| — | |
| — |
Interest income | |
| 79 | |
| 154 | |
| 441 |
Unrealized gains (losses) recognized on equity securities | | | 3,041 | | | (393) | | | (759) |
Other income | |
| 12,109 | |
| 10,083 | |
| 10,224 |
Total operating income | |
| 76,974 | |
| 131,844 | |
| 79,906 |
| | | | | | | | | |
Expense: | | | | | | | | | |
Salaries, wages, and employee benefits | |
| 17,914 | |
| 16,205 | |
| 15,288 |
Interest expense | |
| 15,163 | |
| 12,056 | |
| 10,054 |
Operating expense | |
| 7,429 | |
| 7,685 | |
| 8,960 |
Total expense | |
| 40,506 | |
| 35,946 | |
| 34,302 |
| | | | | | | | | |
Income (loss) before income tax benefit and equity in undistributed (in excess of) net income of subsidiaries | | | 36,468 | |
| 95,898 | |
| 45,604 |
Income tax benefit | |
| 8,974 | |
| 7,727 | |
| 5,389 |
Income (loss) before equity in undistributed (in excess of) net income of subsidiaries | |
| 45,442 | |
| 103,625 | |
| 50,993 |
| | | | | | | | | |
Equity in undistributed (in excess of) net income of subsidiaries: | | | | | | | | | |
Bank | |
| 77,941 | |
| (5,221) | |
| 51,604 |
Non-bank | |
| 66 | |
| 1,940 | |
| 356 |
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
135
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Operating income: | |||||||||||||||||
Dividends from subsidiaries: | |||||||||||||||||
Bank | $ | 95,000 | $ | 60,000 | $ | 122,000 | |||||||||||
Non-bank | 1,630 | 1,745 | — | ||||||||||||||
Interest income | 1,094 | 79 | 154 | ||||||||||||||
Gains (losses) recognized on equity securities, net | (2,159) | 3,041 | (393) | ||||||||||||||
Other income | 15,195 | 12,109 | 10,083 | ||||||||||||||
Total operating income | 110,760 | 76,974 | 131,844 | ||||||||||||||
Expense: | |||||||||||||||||
Salaries, wages, and employee benefits | 20,964 | 17,914 | 16,205 | ||||||||||||||
Interest expense | 17,854 | 15,163 | 12,056 | ||||||||||||||
Operating expense | 7,294 | 7,429 | 7,685 | ||||||||||||||
Total expense | 46,112 | 40,506 | 35,946 | ||||||||||||||
Income (loss) before income tax benefit and equity in undistributed (in excess of) net income of subsidiaries | 64,648 | 36,468 | 95,898 | ||||||||||||||
Income tax benefit | 8,286 | 8,974 | 7,727 | ||||||||||||||
Income (loss) before equity in undistributed (in excess of) net income of subsidiaries | 72,934 | 45,442 | 103,625 | ||||||||||||||
Equity in undistributed (in excess of) net income of subsidiaries: | |||||||||||||||||
Bank | 55,986 | 77,941 | (5,221) | ||||||||||||||
Non-bank | (609) | 66 | 1,940 | ||||||||||||||
Net income | $ | 128,311 | $ | 123,449 | $ | 100,344 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Cash Flows Provided by (Used in) Operating Activities | | | | | | | | | |
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | | | | | |
Depreciation and amortization | |
| 882 | |
| 648 | |
| 420 |
Distributions more (less) than net income of subsidiaries | |
| (78,007) | |
| 3,281 | |
| (51,961) |
Unrealized (gains) losses recognized on equity securities | | | (3,041) | | | 393 | | | 759 |
Stock-based compensation | |
| 7,864 | |
| 7,135 | |
| 3,997 |
Changes in assets and liabilities: | | | | | | | | | |
(Increase) decrease in other assets | |
| (1,186) | |
| 405 | |
| (4,279) |
Increase (decrease) in other liabilities | |
| (3,302) | |
| (5,772) | |
| (1,280) |
Net cash provided by (used in) operating activities | |
| 46,659 | |
| 106,434 | |
| 50,609 |
| | | | | | | | | |
Cash Flows Provided by (Used in) Investing Activities | | | | | | | | | |
Purchases of equity securities | | | (5,000) | | | — | | | (520) |
Net cash paid for acquisitions | | | (61,656) | | | — | | | (90,722) |
Purchases of premises and equipment | |
| (15) | |
| (19) | |
| (31) |
Net cash provided by (used in) investing activities | |
| (66,671) | |
| (19) | |
| (91,273) |
| | | | | | | | | |
Cash Flows Provided by (Used in) Financing Activities | | | | | | | | | |
Cash paid for withholding taxes on stock-based payments | |
| (997) | |
| (635) | |
| (863) |
Cash dividends paid | |
| (50,764) | |
| (48,012) | |
| (45,171) |
Repayments of borrowings | | | (18,500) | | | (74,000) | | | (6,000) |
Proceeds from issuance of debt | | | 72,500 | | | 142,634 | | | 60,000 |
Proceeds from stock options exercised | | | — | | | 101 | | | 169 |
Purchase of treasury stock | | | (33,043) | | | (12,272) | | | (24,292) |
Common stock issuance costs | | | (150) | | | — | | | (234) |
Net cash provided (used in) by financing activities | |
| (30,954) | |
| 7,816 | |
| (16,391) |
| | | | | | | | | |
Net increase (decrease) in cash and cash equivalents | |
| (50,966) | |
| 114,231 | |
| (57,055) |
Cash and cash equivalents, beginning of period | |
| 129,183 | |
| 14,952 | |
| 72,007 |
| | | | | | | | | |
Cash and cash equivalents, ending of period | | $ | 78,217 | | $ | 129,183 | | $ | 14,952 |
136
Years Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Cash Flows Provided by (Used in) Operating Activities | |||||||||||||||||
Net income | $ | 128,311 | $ | 123,449 | $ | 100,344 | |||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||||||
Depreciation and amortization | 1,423 | 882 | 648 | ||||||||||||||
Distributions more (less) than net income of subsidiaries | (55,377) | (78,007) | 3,281 | ||||||||||||||
(Gains) losses recognized on equity securities, net | 2,159 | (3,041) | 393 | ||||||||||||||
Stock-based compensation | 8,968 | 7,864 | 7,135 | ||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||
(Increase) decrease in other assets | (17,754) | (1,186) | 405 | ||||||||||||||
Increase (decrease) in other liabilities | 21,233 | (3,302) | (5,772) | ||||||||||||||
Net cash provided by (used in) operating activities | 88,963 | 46,659 | 106,434 | ||||||||||||||
Cash Flows Provided by (Used in) Investing Activities | |||||||||||||||||
Sales (purchases) of equity securities, net | 598 | (5,000) | — | ||||||||||||||
Net cash paid for acquisitions | — | (61,656) | — | ||||||||||||||
Purchases of premises and equipment | (9) | (15) | (19) | ||||||||||||||
Net cash provided by (used in) investing activities | 589 | (66,671) | (19) | ||||||||||||||
Cash Flows Provided by (Used in) Financing Activities | |||||||||||||||||
Cash paid for withholding taxes on stock-based payments | (1,276) | (997) | (635) | ||||||||||||||
Cash dividends paid | (50,863) | (50,764) | (48,012) | ||||||||||||||
Repayments of borrowings | (112,000) | (18,500) | (74,000) | ||||||||||||||
Proceeds from issuance of debt | 98,094 | 72,500 | 142,634 | ||||||||||||||
Proceeds from stock options exercised | — | — | 101 | ||||||||||||||
Purchase of treasury stock | (9,912) | (33,043) | (12,272) | ||||||||||||||
Common stock issuance costs | — | (150) | — | ||||||||||||||
Net cash provided (used in) by financing activities | (75,957) | (30,954) | 7,816 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | 13,595 | (50,966) | 114,231 | ||||||||||||||
Cash and cash equivalents, beginning of period | 78,217 | 129,183 | 14,952 | ||||||||||||||
Cash and cash equivalents, ending of period | $ | 91,812 | $ | 78,217 | $ | 129,183 |
Changes in Internal Control Over Financial Reporting
During the three months ended December 31, 2021, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
As of December 31, 2021,2022, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control—Integrated Framework,” issued by the COSO in 2013. As permitted, management excluded from its assessment of internal control over financial reporting GSB from June 1, 2021, through August 14, 2021. This interim period from the acquisition date until GSB was merged into Busey Bank consisted of 74 days and GSB did not represent a material percentage of the Company’s net income, and GSB’s balance sheet accounted for 11.9% of the Company’s consolidated total assets as of the acquisition date. Based on this assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2021,2022, based on the COSO criteria.
RSM US LLP, an independent registered public accounting firm that audited the Consolidated Financial Statements of the Company included in this Annual Report, has issued an audit opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021.2022. The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021,2022, is included in this Item under the heading “Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting.”
137
As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Glenview State Bank from its assessment of internal control over financial reporting from June 1, 2021 through August 14, 2021 because it was acquired by the Company in a purchase business combination on May 31, 2021 and merged into Busey Bank on August 14, 2021. We have also excluded Glenview State Bank from our audit of internal control over financial reporting for the period from June 1, 2021 through August 14, 2021. Glenview State Bank was a wholly owned subsidiary whose net income did not represent a material percentage of the Company’s net income, and whose balance sheet accounted for 11.9% of the Company’s consolidated total assets as of the acquisition date.
138
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
139
(a) Directors of the Registrant and Corporate Governance. Information required by this Item is incorporated herein by reference to First Busey’s Proxy Statement for its 20222023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of First Busey’s fiscal year-end under the captions “Proposal 1: Election of Directors,”“Delinquent Section 16(a) Reports,” and “Corporate Governance and Board of Directors Matters.”
(b) Executive Officers of the Registrant. The information required by this Item is incorporated herein by reference to Part I, Item I of this Form 10-K under the caption “Executive Officers.Officers.”
The information required by this Item is incorporated herein by reference to First Busey’s Proxy Statement for its 20222023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of First Busey’s fiscal year-end under the captions “Director Compensation,” “Compensation Discussion and Analysis,” “Executive Management Compensation and Succession Committee Report,” “Compensation of Named Executive Officers,” “CEO Pay Ratio,” and “Executive Management Compensation and Succession Committee Interlocks and Insider Participation.”
140
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table discloses the number of outstanding options, warrants and rights granted by First Busey to participants in equity compensation plans, as well as the number of securities remaining available for future issuance under these plans, as of December 31, 2021.2022. The table provides this information separately for equity compensation plans that have and have not been approved by security holders. Additional information regarding stock incentive plans is presented in “Note 14. Stock-based Compensation” in the Notes to the Consolidated Financial Statements included pursuant to Item 8.
(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights1 | (b) Weighted- average exercise price of outstanding options, warrants and rights2 | (c) Number of securities remaining for future issuance under equity compensation plans (excluding securities reflected in column (a))3 | |||||||||||||||||||||
Equity compensation plans | |||||||||||||||||||||||
Approved by stockholders4 | 1,563,363 | $ | 23.53 | 1,169,795 | |||||||||||||||||||
Not approved by stockholders | — | — | — | ||||||||||||||||||||
Total as of December 31, 2022 | 1,563,363 | $ | 23.53 | 1,169,795 |
| | | | | | | | |
|
| |
| | |
| (c) |
|
| | | | | | | Number of |
|
| | | | | | | securities |
|
| | (a) | | (b) | | remaining for |
| |
| | Number of | | Weighted- | | future issuance |
| |
| | securities to be | | average | | under equity |
| |
| | issued upon | | exercise price of | | compensation |
| |
| | exercise of | | outstanding | | plans (excluding |
| |
| | outstanding | | options, | | securities |
| |
| | options, warrants | | warrants and | | reflected in |
| |
|
| and rights |
| rights (1) |
| column (a)) |
| |
Equity compensation plans | | | | | | | | |
Approved by stockholders (2) |
| 1,427,421 | (3) | $ | 23.53 |
| 1,597,235 | (4) |
Not approved by stockholders |
| — | |
| — |
| — | |
Total as of December 31, 2021 |
| 1,427,421 | | $ | 23.53 |
| 1,597,235 | |
Other information required by Item 12 is incorporated herein by reference to First Busey’s Proxy Statement for its 20222023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of First Busey’s fiscal year-end under the caption “Stock Ownership of Certain Beneficial Owners and Management.”
The information required by this Item is incorporated herein by reference to First Busey’s Proxy Statement for its 20222023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of First Busey’s fiscal year-end under the captions “Certain Relationships and Related-Person Transactions” and “Corporate Governance and Board of Directors Matters.”
The information required by this Item is incorporated herein by reference to First Busey’s Proxy Statement for its 20222023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of First Busey’s fiscal year-end under the caption “Audit and Related Fees.”
141
Financial Statement Schedules
Our Consolidated Financial Statements are included as part of this Annual Report in “Part II, Item 8. Financial Statements and Supplementary Data,” as follows:
|
|
|
|
| |
|
| |
| ||
| ||
| ||
| ||
| ||
|
Reports on Internal Control Over Financial Reporting are included as part of this Annual Report in “Part II, Item 9A. Controls and Procedures,” as follows:
|
|
|
|
| |
|
| |
|
|
Exhibits
A list of exhibits to this Annual Report is set forth on the Exhibit Index beginning on page 143,154, and is incorporated into this Annual Report by reference.
,” as follows:
Management’s Report on Internal Control Over Financial Reporting | |||||
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting (PCAOB ID 49) |
142
EXHIBIT INDEX
| | | | | | | | | | | | |
---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Incorporated herein by reference | | | ||||||
Exhibit |
| Description of Exhibit |
| Filing Entity (1) |
| Form |
| Exhibit |
| Filing Date |
| Filed |
2.1* | | | BUSE | | 8-K | | 2.1 | | 1/19/2021 | | | |
| | | | | | | | | | | | |
3.1 | | | BUSE | | 10-Q | | 3.1 | | 11/6/2015 | | | |
| | | | | | | | | | | | |
3.2 | | Certificate of Amendment to Articles of Incorporation, dated May 22, 2020 | | BUSE | | S-8 | | 4.2 | | 5/29/2020 | | |
| | | | | | | | | | | | |
3.3 | | | BUSE | | 8-K | | 3.1 | | 11/24/2008 | | | |
| | | | | | | | | | | | |
4.1 | | Certain instruments defining the rights of holders of long-term debt of the First Busey, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the First Busey and its subsidiaries on a consolidated basis, have not been filed as exhibits. First Busey hereby agrees to furnish a copy of any of these agreements to the SEC upon request. | | | | | | | | | | |
| | | | | | | | | | | | |
4.2 | | | BUSE | | 10-K | | 4.2 | | 2/25/2021 | | | |
| | | | | | | | | | | | |
10.1† | | | BUSE | | 10-K | | 10.1 | | 2/28/2018 | | | |
| | | | | | | | | | | | |
10.2† | | | MSTI | | 10-K | | 10.2 | | 3/29/2002 | | | |
| | | | | | | | | | | | |
10.3† | | Letter Agreement between Main Street Trust, Inc., and Van A. Dukeman, dated September 20, 2006 | | MSTI | | 8-K | | 99.2 | | 9/21/2006 | | |
| | | | | | | | | | | | |
10.4† | | | BUSE | | 10-Q | | 10.1 | | 5/13/2010 | | | |
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143
Incorporated herein by reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Description of Exhibit | Filing Entity (1) (File No.) | Form | Exhibit | Filing Date | Filed Herewith | ||||||||||||||||||||||||||||||||
3.1 | BUSE (0-15950) | 10-Q | 3.1 | 11/06/2015 | ||||||||||||||||||||||||||||||||||
3.2 | BUSE (333-238782) | S-8 | 4.2 | 05/29/2020 | ||||||||||||||||||||||||||||||||||
3.3 | BUSE (0-15950) | 8-K | 3.1 | 11/24/2008 | ||||||||||||||||||||||||||||||||||
4.1 | Certain instruments defining the rights of holders of long-term debt of First Busey, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the First Busey and its subsidiaries on a consolidated basis, have not been filed as exhibits. First Busey hereby agrees to furnish a copy of any of these agreements to the SEC upon request. | |||||||||||||||||||||||||||||||||||||
4.2 | BUSE (0-15950) | 10-K | 4.2 | 02/25/2021 | ||||||||||||||||||||||||||||||||||
10.1† | MSTI (000-30031) | 10-K | 10.2 | 03/29/2002 | ||||||||||||||||||||||||||||||||||
10.2† | MSTI (000-30031) | 8-K | 99.2 | 09/21/2006 | ||||||||||||||||||||||||||||||||||
10.3† | BUSE (0-15950) | 10-Q | 10.1 | 05/13/2010 | ||||||||||||||||||||||||||||||||||
10.4† | BUSE (0-15950) | 10-Q | 10.1 | 05/08/2012 |
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Exhibit Number | Description of Exhibit | FilingEntity(1) (FileNo.)
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FilingDate |
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Filed Herewith | ||||||||||||||||||||||||||||||||||||||||
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| First Busey Corporation 2010 Equity Incentive Plan, as amended |
| BUSE (0-15950) |
| DEF 14A |
| Appendix C |
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| BUSE (0-15950) |
| 10-K |
| 10.27 |
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| FCFP (333-185041) |
| S-4 |
| 10.11 |
| 11/19/2012 |
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| FCFP (333-185041) |
| S-4 |
| 10.12 |
| 11/19/2012 |
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| FCFP (001-37505) |
| 10-K |
| 10.8 |
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| 10-K |
| 10.36 |
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| FCFP (333-211811) |
| S-8 |
| 4.4 |
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| 10-K |
| 10.38 |
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| S-8 |
| 4.7 |
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| 10-K |
| 10.41 |
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| Incorporated herein by reference | ||||||||||||||||||||||||||||||||||||
Exhibit Number | Description of Exhibit | FilingEntity(1) (FileNo.) | Form | Exhibit | FilingDate | Filed Herewith | ||||||||||||||||||||||||||||||||
10.16† |
| BUSE (0-15950) |
| 10-Q |
| 10.1 |
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| 10-Q |
| 10.2 |
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| 10.1 |
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| 8-K |
| 10.1 |
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| 8-K |
| 10.2 |
| 12/10/2019 |
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| 8-K |
| 10.3 |
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| 8-K |
| 10.4 |
| 12/10/2019 |
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| 14A |
| Appendix A |
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| DEF 14A |
| Appendix A |
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BUSE (0-15950) | 10-Q | 10.33 | 05/06/2021 | |||||||||||||||||||||||||||||||||||
145
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---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Incorporated herein by reference | | | ||||||
Exhibit |
| Description of Exhibit |
| Filing Entity (1) |
| Form |
| Exhibit |
| Filing Date |
| Filed |
10.32† | | Gregory B. Lykins Letter of Understanding, dated April 1, 2021 | | BUSE | | 10-Q | | 10.33 | | 5/6/2021 | | |
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10.33 | | | BUSE | | 8-K | | 10.34 | | 6/2/2021 | | | |
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21.1 | | | | | | | | | | | X | |
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23.1 | | Consent of Independent Registered Public Accounting Firm, RSM US LLP | | | | | | | | | | X |
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31.1 | | Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) | | | | | | | | | | X |
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31.2 | | Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) | | | | | | | | | | X |
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32.1 | | | | | | | | | | | X | |
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32.2 | | | | | | | | | | | X | |
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101.INS | | iXBRL Instance Document | | | | | | | | | | |
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101.SCH | | iXBRL Taxonomy Extension Schema | | | | | | | | | | |
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101.CAL | | iXBRL Taxonomy Extension Calculation Linkbase | | | | | | | | | | |
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101.LAB | | iXBRL Taxonomy Extension Label Linkbase | | | | | | | | | | |
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101.PRE | | iXBRL Taxonomy Extension Presentation Linkbase | | | | | | | | | | |
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101.DEF | | iXBRL Taxonomy Extension Definition Linkbase | | | | | | | | | | |
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104 | | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101) | | | | | | | | | | |
Incorporated herein by reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Description of Exhibit | Filing Entity (1) (File No.) | Form | Exhibit | Filing Date | Filed Herewith | ||||||||||||||||||||||||||||||||
10.29 | BUSE (0-15950) | 8-K | 10.34 | 06/02/2021 | ||||||||||||||||||||||||||||||||||
10.30† | X | |||||||||||||||||||||||||||||||||||||
21.1 | X | |||||||||||||||||||||||||||||||||||||
23.1 | X | |||||||||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||||||||
32.2 | X | |||||||||||||||||||||||||||||||||||||
101.INS | iXBRL Instance Document | |||||||||||||||||||||||||||||||||||||
101.SCH | iXBRL Taxonomy Extension Schema | |||||||||||||||||||||||||||||||||||||
101.CAL | iXBRL Taxonomy Extension Calculation Linkbase | |||||||||||||||||||||||||||||||||||||
101.LAB | iXBRL Taxonomy Extension Label Linkbase | |||||||||||||||||||||||||||||||||||||
101.PRE | iXBRL Taxonomy Extension Presentation Linkbase | |||||||||||||||||||||||||||||||||||||
Exhibit Number | Description of | FilingEntity(1) (FileNo.) | Form | Exhibit | FilingDate | Filed Herewith |
101.DEF | iXBRL Taxonomy Extension Definition Linkbase | |||||||||||||||||||||||||||||||||||||
104 |
BUSE is First Busey Corporation. MSTI is Main Street Trust, Inc. FCFP is First Community Financial Partners, Inc.
146
†
Date: February |
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| FIRST BUSEY CORPORATION | |||||||||
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| BY | /s/ VAN A. DUKEMAN | ||||||||
| Van A. Dukeman | |||||||||
| Chairman, President and Chief Executive Officer | |||||||||
| (Principal Executive Officer) | |||||||||
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| BY | /s/ JEFFREY D. JONES | ||||||||
| Jeffrey D. Jones | |||||||||
| Chief Financial Officer | |||||||||
| (Principal Financial Officer) | |||||||||
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| BY | /s/ LYNETTE M. STRODE | ||||||||
| Lynette M. Strode | |||||||||
| Principal Accounting Officer | |||||||||
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Signature | Title | Date | ||||||||||
/s/ VAN A. DUKEMAN |
| Chairman, President and Chief Executive Officer |
| February | ||||||||
Van A. Dukeman |
| (Principal Executive Officer) |
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/s/ JEFFREY D. JONES |
| Chief Financial Officer |
| February | ||||||||
Jeffrey D. Jones |
| (Principal Financial Officer) |
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/s/ LYNETTE M. STRODE |
| Principal Accounting Officer |
| February | ||||||||
Lynette M. Strode |
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/s/ GREGORY B. LYKINS |
| Vice-Chairman |
| February | ||||||||
Gregory B. Lykins |
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/s/ SAMUEL P. BANKS |
| Director |
| February | ||||||||
Samuel P. Banks |
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/s/ GEORGE BARR |
| Director |
| February | ||||||||
George Barr |
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/s/ STANLEY J. BRADSHAW |
| Director |
| February | ||||||||
Stanley J. Bradshaw |
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/s/ MICHAEL D. CASSENS |
| Director |
| February | ||||||||
Michael D. Cassens |
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/s/ KAREN M. JENSEN |
| Director |
| February | ||||||||
Karen M. Jensen |
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/s/ FREDERIC L. KENNEY |
| Director |
| February | ||||||||
Frederic L. Kenney |
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/s/ STEPHEN V. KING |
| Director |
| February | ||||||||
Stephen V. King |
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February 23, 2023 | ||||||||||||
Cassandra R. Sanford |
148