First Busey Corporation · NASDAQ:BUSE
First Busey — Investor Presentation (February 2021)
44 slides from First Busey's investor presentation, Feb 9, 2021
Slide 1: Investor Presentation
February 9, 2021 INVESTOR PRESENTATION
Slide 2: Special Note Concerning Forward-Looking Statements
2 2 Special Note Concerning Forward - Looking Statements Statements made in this document, other than those concerning historical financial information, may be considered forward - looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the finan
Slide 3: Non-GAAP Financial Measures
3 3 Non - GAAP Financial Measures This document contains financial information determined other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management uses these “non - GAAP” measures in its analysis of the Company’s performance. Managem
Slide 4: Table of Contents
4 4 Table of Contents Investment Highlights 5 Overview of First Busey Corporation (BUSE) 6 Diversified Business Model 7 Attractive Geographic Footprint 8 Experienced Management Team 9 Protecting a Strong Balance Sheet 10 Robust Capital Foundation 11 High Quality Loan Portfolio 12 Update on COVID - R
Slide 5: Investment Highlights
5 5 Investment Highlights • Established in 1868: more than 150 years of commitment to local communities and businesses • 68 branches across four states: Illinois , Missouri, Indiana, and Florida • Experienced and proven management team • Provide premier commercial bank, wealth management, and paymen
Slide 6: Overview of First Busey Corporation (BUSE)
6 6 Overview of First Busey Corporation (BUSE) Company Overview Branch Map Primary Business Segments Financial Highlights Commercial Banking Wealth Management Retail Payment Processing • Illinois state chartered bank, organized in 1868 • Bank offers full suite of diversified financial products and s
Slide 7: Diversified Business Model
7 7 Online Banking Credit and Debit Cards Checking Services Consumer Loans Commercial Lending Business Saving Services Personal Business Mortgage Banking Mobile Banking Diversified Business Model Investment Services Investment Management Financial Goals Private Client Business Planning Business Chec
Slide 8: Attractive Geographic Footprint
8 8 Attractive Geographic Footprint Four distinct operating regions provide for attractive mix of customers and demographics, providing compelling business and market opportunities Northern Gateway Central Florida Banking Centers: 8 Deposits: $1.1B Avg. Deposits Per Branch: $137.5MM Assets Under Car
Slide 9: Experienced Management Team
9 9 Experienced Management Team Van A. Dukeman Chairman, President & Chief Executive Officer, First Busey Corporation Robin N. Elliott President & CEO, Busey Bank Jeffrey D. Jones EVP & CFO Robert F. Plecki, Jr. EVP, Chief Banking Officer John J. Powers EVP & General Counsel Monica L. Bowe EVP & Chi
Slide 10: Protecting a Strong Balance Sheet
10 10 • Capital ratios significantly in excess of well - capitalized minimums • Regulatory capital relief on CECL implementation and PPP loans • TCE/TA ratio of 9.03% at 12/31/20 (1) • Total RBC of 17.04% at 12/31/20 • TBV per share of $16.66 at 12/31/20 (1) , up 7.8% year - over - year • Diversifie
Slide 11: Robust Capital Foundation
11 11 Robust Capital Foundation (1) Non - GAAP calculation, see Appendix (2) 4Q20 Capital Ratios are preliminary estimates Leverage Ratio (2) $784 $922 $922 $941 $964 $983 10.4% 9.9% 9.9% 9.4% 9.4% 9.8% 4% 2018 Q4 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 Tier 1 Capital Leverage Ratio Min Ratio $ in m
Slide 12: High Quality Loan Portfolio
12 12 High Quality Loan Portfolio (1) Based on loan origination (2) Excludes Credit Card and Overdraft Protection Loan Portfolio Composition as of 12/31/2020 MRQ Yield on Loans (ex-PPP) = 3.87% Total Loan Portfolio (ex-PPP) = $6.4 billion MRQ Yield on Loans = 4.07% Total Loan Portfolio = $6.8 billio
Slide 13: High Quality Loan Portfolio: C&I
13 13 High Quality Loan Portfolio: C&I C&I Portfolio Overview ▪ 25% of total loan portfolio (ex - PPP loans) ▪ Diversified portfolio results in low levels of concentrated exposure ▪ Top concentration in one industry (manufacturing) is 16%, or 4% of total loans ▪ Only 2.3% of C&I loans are classified
Slide 14: Loan Portfolio: Low Levels of Concentrated Exposure (Manufacturing)
14 14 Loan Portfolio: Low Levels of Concentrated Exposure Manufacturing Loans Total Manufacturing Loans: $259 Million or 4.1 % of Loan Portfolio (ex - PPP loans) 4.6% Classified Loans Diversified exposure across 21 industry subsectors results in no single level of high concentration No subsector acc
Slide 15: High Quality Loan Portfolio: CRE
15 15 High Quality Loan Portfolio: CRE CRE Portfolio Overview ▪ 52% of total loan portfolio ▪ 27% of CRE loans are owner - occupied ▪ Only 1.3% of total CRE loans and 0.8% of non - owner occupied CRE loans are classified ▪ Low Levels of Concentrated Exposure ▪ Retail CRE top concentration at 17% of
Slide 16: Loan Portfolio: Retail and Traveler Accommodation
16 16 Loan Portfolio: Low Levels of Concentrated Exposure Total Retail Loans: $632 million or 9.9% of Lo an Portfolio Total Traveler Accommodation Loans: $179 Million or 2.8 % of Loan Portfolio $ in thousands Retail Trade & Retail CRE Loans Retail Flag 12/31/20 Balances (ex-PPP) % of Total Loans (ex
Slide 17: Loan Portfolio: Food Services and Agriculture
17 17 Loan Portfolio: Low Levels of Concentrated Exposure Total Food Services Loans: $145 Million or 2 .3% of Loan Portfolio $ in thousands Total Agriculture Loans: $130 Million or 2 .0% of Loan Portfolio Food Services 12/31/20 Balances (ex-PPP) % of Total Loans (ex-PPP) 1/15/21 Active Deferral Bala
Slide 18: Update on COVID-Related Deferral & Modification Trends
18 18 Update on COVID – Related Deferral & Modification Trends Commercial and Small Business Clients ▪ Busey announced on March 26 a six - month modification program, including up to two 90 - day deferrals of payments or interest only payment options. This program expired on September 30 and all def
Slide 19: COVID-Related Deferral Trends by Property/Industry
19 19 Update on COVID – Related Deferral & Modification Trends $ in thousands Property/Industry 12/31/20 Balances (ex-PPP) % of Total Loans (ex-PPP) Classified Loan Balances 1/15/21 Active Deferral Balances % of Segment in Active Deferral Hotel CRE $171,928 2.7% $0 $64,344 37.4% Specialty CRE $350,9
Slide 20: COVID Deferrals: Personal Loan and Mortgage Customers
20 20 Update on COVID – Related Deferral & Modification Trends Personal Loan and Mortgage Customers Retail Payment Relief Program $ in thousands 1/15/21 # of Loans 1/15/21 $ Balances % of All Deferral Balances % of Total Balances Total Consumer Portfolio Loans (1) 20,801 $1,162,108 ATotal Active Def
Slide 21: Participating in the CARES Act Paycheck Protection Program
21 21 ▪ As part of the CARES Act, Congress appropriated approximately $349 billion for the creation of the Paycheck Protection Program (PPP) as well as approving on April 24, 2020 an additional $310 billion for the PPP ▪ Busey was a bridge for this program and actively helped its customers sign up f
Slide 22: Navigating Credit Cycle from Position of Strength
22 22 Navigating Credit Cycle from Position of Strength Overview ▪ C onservative underwriting and strong asset quality allowed t he Company to enter the economic downturn well - prepared ▪ Non - performing asset and classified asset ratios have declined to multi - year lows ▪ Net charge - off experi
Slide 23: Adoption of CECL Fortifies Loan Loss Reserves
23 23 Adoption of CECL Fortifies Loan Loss Reserves (1) 4Q17 provision expense was $5.303 million and net recoveries were $0.484 million Allowance / NPLs $27,365 $36,598 $29,507 $24,301 196% 138% 182% 416% 2017 Q4 2018 Q4 2019 Q4 2020 Q4 NPLs Allowance/NPLs $ in thousands Provision Coverage / Net Ch
Slide 24: Ample Sources of Liquidity
24 24 Ample Sources of Liquidity (1) Core Deposits include non - brokered transaction accounts, money market deposit accounts, and time deposits of $250,000 or les s Unpledged Securities $1,606 Available FHLB $1,337 FRB Discount $505 Fed Funds Lines $467 Brokered Availability (10% deposits) $860 Tot
Slide 25: Quarterly Earnings Review
25 25 • Net Interest Income increased 4.6% from $69.8 million in Q3 to $72.9 million in Q4 • Loan interest income and fees (net of deferred costs) attributable to PPP increased to $9.5 million in 4Q20 from $6.1 million in 3Q20 • NIM increased 20 bps from 2.86% in Q3 to 3.06% in Q4; core NIM (ex - PP
Slide 26: Core Earnings Power
26 26 Core Earnings Power (1) Non - GAAP calculation, see Appendix ($ in millions) Core Pre-Provision Net Revenue / Avg. Assets (1) $43,600 $41,131 $38,211 $46,448 $48,701 $47,156 1.79% 1.68% 1.59% 1.80% 1.81% 1.80% 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 Core PPNR Core PPNR / Avg Assets $ i
Slide 27: Net Interest Margin
27 27 Net Interest Margin • PPP contribution driven by $288 million of SBA forgiveness resulting in acceleration of net fee accretion recognition • Leveraging our core deposit dominated funding base to drive down funding costs further in the 4Q Historical Key Rates 5.50% 5.00% 4.75% 3.25% 3.25% 3.25
Slide 28: Diversified and Significant Sources of Fee Income
28 28 Overview ▪ Resilient, varied and complimentary sources of fee income provide revenue diversification with heightened value amidst cycle of margin compression ▪ Fee income represented 29.5% of operating revenue in 4Q20 and 29.5% FY 2020 ▪ Key businesses of wealth management and payment processi
Slide 29: Resilient Wealth Management Platform
29 29 Resilient Wealth Management Platform Overview ▪ Provides a full range of asset management, investment and fiduciary services to individuals, businesses and foundations, tax preparation, philanthropic advisory services and farm and brokerage services Q4 2020 Summary ▪ Assets under care (AUC) ec
Slide 30: Focused Control on Expenses Driving Efficiency Gains
30 30 Focused Control on Expenses Driving Efficiency Gains (1) Non - GAAP calculation, see Appendix (2) Core Efficiency Ratio (ex - CECL) Non - GAAP less provision for unfunded commitments ▪ The Company’s efforts to reduce core expenses have driven efficiency gains despite the margin compression exp
Slide 31: Focused Control on Expenses Driving Efficiency Gains
31 31 Focused Control on Expenses Driving Efficiency Gains ▪ Fixed asset impairment of $6.7 million was recorded during the fourth quarter of 2020 related to these banking centers ▪ Operating model reorganization executed in Q3 2020 anticipated annualized pre - tax non - interest expense savings of
Slide 32: Experienced and Successful Acquirer
32 32 Experienced and Successful Acquirer Source: S&P Global Market Intelligence. Note: Cummins - American financials based on wholly - owned bank subsidiary, Glenview State Bank, bank - level regulatory data as of 9 /30/2020. Note: Financial data for previously closed transactions are as of the clo
Slide 33: Acquisition of Cummins-American Corp. (Glenview State Bank)
33 33 Overview Acquisition of Cummins - American Corp. (Glenview State Bank) Source: S&P Global Market Intelligence, 2020 FDIC Summary of Deposits, DatabaseUSA. Financial data based on bank - level regulatory data as of 9/30/2020. (1) Adjusted for C - Corp status and tax effected at 25.00%. • Cummin
Slide 34: Illinois Deposit Market Share Ranking
34 34 Illinois Rank Institution # of Branches Total Deposits ($000) Market Share (%) 1 JPMorgan Chase & Co. (NY) 315 111,379,734 18.58 2 Bank of Montreal 196 83,192,008 13.88 3 Bank of America Corporation (NC) 142 46,817,770 7.81 4 Northern Trust Corp. (IL) 5 34,446,777 5.75 5 Wintrust Financial Cor
Slide 35: Transaction Rationale
35 35 Transaction Rationale Strategically Compelling • Bolsters presence in attractive collar suburbs of Chicago MSA, with pro forma deposits of more than $2.2 billion and top 20 deposit market share • Enhances wealth management capabilities, adding over $1.1 billion in assets under care • Excess li
Slide 36: Transaction Terms
36 36 Transaction Terms (1) Based on Busey’s closing price of $23.54 on 1/15/2021. (2) Inclusive of anticipated special dividend. (3) LTM 9/30/2020 consolidated net income adjusted for realized gains on securities and one - time, non - core expenses. (4) Tax affected at 25.00%. (5) Core deposits def
Slide 37: Transaction Details
37 37 Transaction Details Tax Structure • Cummins - American operates as an S - Corp • Cummins - American shareholders will make a 338(h)(10) election – Allows First Busey to treat transaction as an asset purchase Cost Savings • 51% of Cummins - American’s non - interest expense phased in over two y
Slide 38: Due Diligence Review
38 38 Due Diligence Review Due Diligence Overview Estimated Purchase Accounting Marks & CECL Crossing $10B Threshold • Thorough due diligence process to evaluate Cummins - American’s credit portfolio – Comprehensive credit review completed by First Busey’s internal team – 90% of outstanding core com
Slide 39: Transaction Meets M&A Disciplines
39 39 Transaction Meets M&A Disciplines Key Attributes Cummins - American Rationale Franchise : • High - density metro market with growth opportunities in commercial & wealth management x Significant expansion in the attractive northern suburbs of Chicago, the Midwest’s largest MSA • Mature franchis
Slide 40: Pro Forma Deposit and Loan Composition
40 40 BUSE Cummins-American Pro Forma 30.0% 55.8% 6.8% 7.4% Noninterest-bearing Deposits IB Demand, Savings & MMDA Retail Time Deposits (<100k) Jumbo Time Deposits (>100k) 24.3% 61.9% 5.6% 8.3% Noninterest-bearing Deposits IB Demand, Savings & MMDA Retail Time Deposits (<100k) Jumbo Time Deposits (>
Slide 41: Appendix
41 41 APPENDIX 41
Slide 42: Use of Non-GAAP Financial Measures
42 42 Use of Non - GAAP Financial Measures (1) Annualized measure ($ in thousands) (Unaudited results) Net interest income $ 72,936 $ 69,753 $ 70,813 $ 69,433 $ 71,936 Non-interest income 30,499 32,285 27,964 27,517 31,638 Less securities (gains) and losses, net (855) 426 (315) (587) (605) Non-inter
Slide 43: Use of Non-GAAP Financial Measures
43 43 Use of Non - GAAP Financial Measures (1) Tax - effected measure (2) Annualized measure (3) Calculated using adjusted net income ($ in thousands) (Unaudited results) Reported: Net Interest income $ 72,936 $ 69,753 $ 70,813 $ 69,433 $ 71,936 Tax-equivalent adjustment 655 638 717 730 781 Tax-equi
Slide 44: Use of Non-GAAP Financial Measures
44 44 Use of Non - GAAP Financial Measures (1) Tax - effected measure (2) Calculated using adjusted net income ($ in thousands) (Unaudited results) Net income $ 98,928 $ 102,953 $ 100,344 Acquisition expenses Salaries, wages, and employee benefits 1,233 4,083 — Data processing 406 1,523 56 Lease or