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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended 3/31/2005 Commission File No. 0-15950
FIRST BUSEY CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 37-1078406
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
Incorporation or organization) No.)
201 W. Main St.,
Urbana, Illinois 61801
- ------------------------------- -------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (217) 365-4556
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Act)
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 1, 2005
- ----------------------------- -------------------------------
Common Stock, $.001 par value 20,568,176
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2005 AND DECEMBER 31, 2004
(UNAUDITED)
March 31, December 31,
2005 2004
------------ ------------
(Dollars in thousands)
ASSETS
Cash and due from banks $ 48,403 $ 47,991
Federal funds sold 21,300 3,100
Securities available for sale (amortized cost 2005, $306,307;
2004, $337,037) 317,867 352,256
Loans 1,507,949 1,475,900
Allowance for loan losses (19,781) (19,217)
------------ ------------
Net loans $ 1,488,168 $ 1,456,683
Premises and equipment 27,245 26,295
Cash surrender value of bank owned life insurance 17,829 17,634
Goodwill 31,785 31,785
Other intangible assets 3,657 3,852
Other assets 24,876 24,845
------------ ------------
Total assets $ 1,981,130 $ 1,964,441
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing $ 197,371 $ 213,921
Interest bearing 1,391,931 1,344,901
------------ ------------
Total deposits $ 1,589,302 $ 1,558,822
Securities sold under agreements to repurchase 43,075 41,558
Short-term borrowings 10,000 11,250
Long-term debt 147,851 165,374
Junior subordinated debt owed to unconsolidated trusts 40,000 40,000
Other liabilities 12,054 8,565
------------ ------------
Total liabilities $ 1,842,282 $ 1,825,569
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 21,767 21,696
Retained earnings 118,030 114,359
Accumulated other comprehensive income 6,965 9,170
------------ ------------
Total stockholders' equity before treasury stock, unearned ESOP
shares and deferred compensation for stock grants $ 153,053 $ 151,516
Treasury stock, at cost (11,737) (10,173)
Unearned ESOP shares and deferred compensation for stock grants (2,468) (2,471)
------------ ------------
Total stockholders' equity $ 138,848 $ 138,872
------------ ------------
Total liabilities and stockholders' equity $ 1,981,130 $ 1,964,441
============ ============
Common shares outstanding at period end 20,537,651 20,608,151
============ ============
See accompanying notes to unaudited consolidated financial statements.
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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(UNAUDITED)
2005 2004
---------- ----------
(Dollars in thousands, except per share amounts)
INTEREST INCOME:
Interest and fees on loans $ 22,862 $ 16,639
Interest and dividends on investment securities:
Taxable interest income 1,865 1,031
Non-taxable interest income 493 453
Dividends 183 132
Interest on Federal funds sold 160 1
---------- ----------
Total interest income $ 25,563 $ 18,256
---------- ----------
INTEREST EXPENSE:
Deposits $ 6,775 $ 4,247
Federal funds purchased and securities sold under agreements
to repurchase 176 56
Short-term borrowings (add separate line?) 53 12
Long-term debt 1,541 1,016
Junior subordinated debt owed to unconsolidated trusts 757 563
---------- ----------
Total interest expense $ 9,302 $ 5,894
---------- ----------
Net interest income $ 16,261 $ 12,362
Provision for loan losses 690 425
---------- ----------
Net interest income after provision for loan losses $ 15,571 $ 11,937
---------- ----------
OTHER INCOME:
Trust $ 1,440 $ 1,395
Commissions and brokers fees, net 526 592
Service charges on deposit accounts 1,824 1,728
Other service charges and fees 509 468
Security gains, net 162 191
Gain on sales of loans 423 822
Increase in cash surrender value of life insurance 195 209
Other operating income 476 289
---------- ----------
Total other income $ 5,555 $ 5,694
---------- ----------
OTHER EXPENSES:
Salaries and wages $ 5,197 $ 4,541
Employee benefits 1,204 1,023
Net occupancy expense of premises 947 884
Furniture and equipment expenses 683 535
Data processing 489 438
Stationery, supplies and printing 265 220
Amortization of intangible assets 195 105
Other operating expenses 2,269 1,721
---------- ----------
Total other expenses $ 11,249 $ 9,467
---------- ----------
Income before income taxes $ 9,877 $ 8,164
Income taxes 3,341 2,804
---------- ----------
NET INCOME $ 6,536 $ 5,360
========== ==========
BASIC EARNINGS PER SHARE* $ 0.32 $ 0.26
========== ==========
DILUTED EARNINGS PER SHARE* $ 0.32 $ 0.26
========== ==========
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK* $ 0.1400 $ 0.1267
========== ==========
* Per share data have been retroactively adjusted to effect a three-for-two
common stock split effective August 3, 2004, as if it had occurred on January 1,
2004.
See accompanying notes to unaudited consolidated financial statements.
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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(UNAUDITED)
2005 2004
---------- ---------
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6,536 $ 5,360
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation 3 7
Depreciation and amortization 997 779
Provision for loan losses 690 425
Provision for deferred income taxes (326) (221)
Stock dividends (116) (99)
Amortization of investment security discounts (215) (11)
Gain on sales of investment securities, net (162) (191)
Gain on sales of loans (423) (822)
Gain on sale of ORE properties (5) -
Gain on sale and disposition of premises and equipment (24) -
Increase (decrease) in deferred compensation 34 (7)
Change in assets and liabilities:
Decrease (increase) in other assets 633 (314)
Increase in accrued expenses 955 719
Decrease in interest payable (12) (114)
Decrease in income taxes receivable 550 593
Increase in income taxes payable 3,078 2,369
---------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES BEFORE
LOAN ORIGINATIONS AND SALES $ 12,193 $ 8,473
---------- ---------
Loans originated for sale (29,700) (37,038)
Proceeds from sales of loans 31,457 44,504
---------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 13,950 $ 15,939
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities classified available for sale 1,421 4,667
Proceeds from maturities of securities classified available for sale 44,497 19,749
Purchase of securities classified available for sale (14,696) (7,884)
Increase in Federal funds sold (18,200) (5,100)
Increase in loans (33,578) (39,078)
Proceeds from sale of premises and equipment 25 -
Proceeds from sale of ORE properties 75 -
Purchases of premises and equipment (1,753) (839)
Increase in cash surrender value of bank owned life insurance (195) (209)
---------- ---------
NET CASH USED IN INVESTING ACTIVITIES $ (22,404) $ (28,694)
---------- ---------
(continued on next page)
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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(UNAUDITED)
2005 2004
-------- --------
(Dollars in thousands)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in certificates of deposit $ (3,584) $ 1,100
Net increase in demand, money market and savings deposits 34,064 314
Cash dividends paid (2,865) (2,578)
Net increase (decrease) in Federal funds purchased and securities sold
Under agreement to repurchase 1,517 (7,474)
Proceeds from short-term borrowings 1,000 3,250
Principal payments on short-term borrowings (2,250) -
Proceeds from issuance of long-term debt 1,000 7,750
Principal payments on long-term borrowings (18,523) -
Purchase of treasury stock (1,769) (610)
Proceeds from sale of treasury stock 276 548
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 8,866 $ 2,300
-------- --------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS $ 412 $(10,455)
Cash and due from banks, beginning 47,991 $ 52,397
-------- --------
Cash and due from banks, ending $ 48,403 $ 41,942
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
OTHER REAL ESTATE ACQUIRED IN SETTLEMENT OF LOANS $ 69 $ -
======== ========
See accompanying notes to unaudited consolidated financial statements
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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(UNAUDITED)
2005 2004
------- -------
(Dollars in thousands)
Net income $ 6,536 $ 5,360
------- -------
Other comprehensive income, before tax:
Unrealized gains on securities:
Unrealized holding (losses) gains arising during period $(3,498) $ 1,288
Less reclassification adjustment for gains included in net
Income (162) (191)
------- -------
Other comprehensive (loss) income, before tax $(3,660) $ 1,097
Income tax (benefit) expense related to items of other
comprehensive (loss) income (1,455) 436
------- -------
Other comprehensive (loss) income, net of tax $(2,205) $ 661
------- -------
Comprehensive income $ 4,331 $ 6,021
======= =======
See accompanying notes to unaudited consolidated financial statements
FIRST BUSEY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: INTERIM FINANCIAL STATEMENTS
The consolidated interim financial statements of First Busey Corporation and
Subsidiaries are unaudited, but in the opinion of management reflect all
necessary adjustments, consisting only of normal recurring accruals, for a fair
presentation of results as of the dates and for the periods covered by the
financial statements. The consolidated financial statements have been prepared
in accordance with accounting principles generally accepted within the United
States of America for interim financial data and with the instructions to Form
10-Q and Article 10 of Regulation S-X. The results for the interim periods are
not necessarily indicative of the results of operations that may be expected for
the fiscal year.
In preparing the consolidated financial statements, the Corporation's management
is required to make estimates and assumptions that affect the reported amounts
of assets and liabilities as of the date of the financial statements and the
reported amounts of revenues and expenses for the reporting period. Actual
results could differ from those estimates.
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NOTE 2: UNREALIZED LOSSES ON INVESTMENT SECURITIES
Information pertaining to securities with gross unrealized losses as of March
31, 2005, aggregated by investment category and length of time that individual
securities have been in continuous loss position follows:
Continuous unrealized Continuous unrealized
losses existing for less losses existing for greater
than 12 months than 12 months Total
------------------------ --------------------------- ----------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
---------- ---------- -------- ---------- ---------- ----------
(Dollars in thousands)
March 31, 2005:
U.S. Treasury securities and
obligations of U.S.
government corporations
and agencies $ 197,910 $ 2,250 $ 7,923 $ 203 $ 205,833 $ 2,453
Obligations of states and
political subdivisions 14,748 285 419 1 15,167 286
Mortgage-backed securities 11,704 440 - - 11,704 440
Corporate securities 1,081 26 - - 1,081 26
---------- ---------- -------- ---------- ---------- ----------
Subtotal, debt securities $ 225,443 $ 3,001 $ 8,342 $ 204 $ 233,785 $ 3,205
Mutual funds and other equity
Securities 149 15 - - 149 15
---------- ---------- -------- ---------- ---------- ----------
Total temporarily impaired
securities $ 225,592 $ 3,016 $ 8,342 $ 204 $ 233,934 $ 3,220
========== ========== ======== ========== ========== ==========
Management evaluates securities for other-than-temporary impairment at least on
a quarterly basis, and more frequently when economic or market concerns warrant
such evaluation. Consideration is given to the length of time and extent to
which the fair value has been less than cost, the financial condition and
near-term prospects of the issuer, and the intent and ability of the Corporation
to retain its investment in the issuer for a period of time sufficient to allow
for any anticipated recovery in fair value.
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NOTE 3: LOANS
The major classifications of loans as of March 31, 2005 and December 31, 2004
were as follows:
March 31, 2005 December 31, 2004
-------------- -----------------
(Dollars in thousands)
Commercial $ 212,336 $ 216,290
Real estate construction 274,432 235,547
Real estate - farmland 11,105 11,750
Real estate - 1-4 family residential mortgage 463,816 452,894
Real estate - multifamily mortgage 103,656 106,163
Real estate - non-farm nonresidential mortgage 361,040 363,993
Installment 61,572 63,315
Agricultural 19,347 25,224
-------------- -----------------
$ 1,507,304 $ 1,475,176
Plus net deferred loan costs 645 724
-------------- -----------------
1,507,949 1,475,900
Less:
Allowance for loan losses 19,781 19,217
-------------- -----------------
Net loans $ 1,488,168 $ 1,456,683
============== =================
The real estate - 1-4 family residential mortgage category includes loans held
for sale with carrying values of $8,240,000 at March 31, 2005 and $9,574,000 at
December 31, 2004; these loans had fair market values of $8,316,000 and
$9,717,000 respectively.
Changes in the allowance for loan losses were as follows:
2005 2004
-------- --------
(Dollars in thousands)
Balance, beginning of year $ 19,217 $ 16,228
Provision of loan losses 690 425
Recoveries applicable to loan balances previously
Charged off 96 52
Loan balances charged off (222) (51)
-------- --------
Balance, March 31 $ 19,781 $ 16,654
======== ========
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NOTE 4: EARNINGS PER SHARE*
Net income per common share has been computed as follows:
Three Months Ended March 31,
2005 2004
----------- -----------
Net income $ 6,536,000 $ 5,360,000
Shares:
Weighted average common shares outstanding 20,436,057 20,357,739
Dilutive effect of outstanding options as determined by the
application of the treasury stock method 148,778 145,038
----------- -----------
Weighted average common shares outstanding, as
adjusted for diluted earnings per share calculation 20,584,835 20,502,777
=========== ===========
Basic earnings per share $ 0,32 $ 0.26
=========== ===========
Diluted earnings per share $ 0.32 $ 0.26
=========== ===========
* Share and per share data have been retroactively adjusted to effect a
three-for-two common stock split effective August 3, 2004, as if it had occurred
on January 1, 2004.
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NOTE 5: STOCK-BASED COMPENSATION*
First Busey Corporation applies Accounting Principles Board Opinion No. 25 in
accounting for stock options and discloses the fair value of options granted as
permitted by SFAS No. 123. The Corporation has recorded no compensation expense
associated with stock options as all options granted under its plan had an
exercise price equal to the market value of the common stock when granted.
The following summarizes the pro-forma effects assuming compensation expense had
been recorded based upon the estimated fair value:
Three months ended March 31
2005 2004
--------- ---------
(dollars in thousands,
except per share amounts)
Net income as reported $ 6,536 $ 5,360
Less compensation expense determined under fair value method for
all options granted, net of related tax effects 51 57
--------- ---------
Pro-forma net income 6,485 5,303
========= =========
BASIC EARNINGS PER SHARE
Reported net income $ 0.32 $ 0.26
Less compensation expense - -
--------- ---------
Pro-forma net income $ 0.32 $ 0.26
========= =========
DILUTED EARNINGS PER SHARE
Reported net income $ 0.32 $ 0.26
Less compensation expense - -
--------- ---------
Pro-forma net income $ 0.32 $ 0.26
========= =========
The Corporation issued no stock options during the three months ended March 31,
2005.
* Share and per share data have been retroactively adjusted to effect a
three-for-two common stock split effective August 3, 2004, as if it had occurred
on January 1, 2004.
NOTE 6: JUNIOR SUBORDINATED DEBT OWED TO UNCONSOLIDATED TRUSTS
In June 2001, First Busey Corporation issued $25 million in cumulative trust
preferred securities through a newly formed Delaware business trust, First Busey
Capital Trust I. The proceeds of the offering were invested by First Busey
Capital Trust I in junior subordinated deferrable interest debentures of the
Corporation. The trust is a wholly-owned subsidiary of the Corporation, and its
sole assets are the junior subordinated deferrable interest debentures.
Distributions are cumulative and are payable quarterly at a rate of 9.00% per
annum. Interest expense on the trust preferred securities was $562,500 for the
three-month periods ended March 31, 2005 and March 31, 2004. Prior redemption is
permitted under certain circumstances such as changes in tax and investment
company regulations. The obligations of the trust are fully and unconditionally
guaranteed, on a subordinated basis, by the Corporation. The trust preferred
securities qualify as Tier 1 capital for regulatory purposes.
The trust preferred securities are mandatorily redeemable upon the maturity of
the debentures on June 18, 2031, and are callable beginning June 18, 2006.
Issuance costs of $1,340,000 related to the trust preferred debentures were
deferred and are being amortized over the period until mandatory redemption of
the debentures in June, 2031.
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Prior to the implementation of a new accounting standard in the first quarter of
2004, the financial statements of the Trust were included in the consolidated
financial statements of the Corporation because First Busey owns all of the
outstanding common equity securities of the Trust. However, because First Busey
is not the primary beneficiary of the Trust, in accordance with the new
accounting standard, the financial statements of the Trust are no longer
included in the consolidated financial statements of the Corporation. The
Corporation's prior financial statements have been reclassified to
de-consolidate the Corporation's investment in the Trust. There was no
cumulative effect on stockholders'equity as a result of this adoption.
In April, 2004, First Busey Corporation, through First Busey Statutory Trust II,
issued $15 million of trust preferred securities ("Securities") in a private
placement. The Securities were issued at an initial coupon rate of 3.82875%, pay
cumulative cash distributions quarterly, and are subject to repricing on a
quarterly basis (3-month LIBOR plus 2.65%). Effective March 17, 2005, the rate
on these securities increased from 5.15125% to 5.68%. The proceeds of the
offering were invested by First Busey Statutory Trust II in junior subordinated
deferrable interest debentures of First Busey Corporation which represents all
of the assets of the Trust. The Securities are subject to mandatory redemption,
in whole or in part, upon repayment of the junior subordinated debentures at the
stated maturity or their earlier redemption, in each case at a redemption price
equal to the aggregate liquidation preference of the Securities plus any
accumulated and unpaid distributions thereon to the date of redemption. Interest
expense on these trust preferred securities was $194,000 for the three-month
period ended March 31, 2005. Prior redemption is permitted under certain
circumstances, such as changes in tax and investment company regulations, and is
subject to payment of premium above par value if made within five years of
issuance. The obligations of the trust are fully and unconditionally guaranteed,
on a subordinated basis, by the Corporation. The trust preferred securities
qualify as Tier 1 capital for regulatory purposes.
NOTE 7: RECENT ACCOUNTING PRONOUNCEMENTS
In December, 2004, the Financial Accounting Standards Board ("FASB") issued
Statement 123 (Revised 2004), "Share-Based Payment" ("SFAS 123(R)"). SFAS 123(R)
requires that the cost resulting from all share-based payment transactions be
recognized in the financial statements over the period during which an employee
is required to provide service in exchange for the award. SFAS 123(R)
establishes fair value as the measurement objective in accounting for
share-based payment arrangements and requires all entities to apply a fair-value
based method in accounting for share-based transactions with employees. SFAS
123(R) also amends FASB Statement No. 95, "Statement of Cash Flows", to require
that excess tax benefits be reported as a financial cash inflow rather than as a
reduction of taxes paid. SFAS 123(R) is effective as of the beginning of the
first interim reporting period that begins after June 15, 2005. On April 14,
2005, the Securities and Exchange Commission amended the effective date of this
statement. As a result, SFAS 123(R) is now effective for most public companies
for annual (rather than interim) periods that begin after June 15, 2005. SFAS
123(R) is not expected to have a material effect on the Corporation's
consolidated financial position or results of operations.
NOTE 8: OUTSTANDING COMMITMENTS
The Corporation and its subsidiaries are parties to legal actions which arise in
the normal course of their business activities. In the opinion of management,
the ultimate resolution of these matters is not expected to have a material
effect on the financial position or the results of operations of the Corporation
and its subsidiaries.
As of March 31, 2005, Busey Bank had entered into a contractual commitment for
the remodel of one of its branch locations in Champaign, Illinois. It had also
entered into a separate contractual commitment for the construction of a new
branch location in Normal, Illinois. Total commitment for these two projects is
approximately $2,112,000. These projects are expected to be completed during
2005.
The Corporation and its subsidiaries are parties to credit related financial
instruments with off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers. These financial instruments include
commitments to extend credit and standby letters of credit. Those instruments
involve, to varying
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degrees, elements of credit and interest rate risk in excess of the amount
recognized in the consolidated balance sheets.
The Corporation and its subsidiaries' exposure to credit loss is represented by
the contractual amount of those commitments. The Corporation and its
subsidiaries use the same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments.
A summary of the contractual amount of the Corporation's exposure to
off-balance-sheet risk follows:
March 31, 2005 December 31, 2004
-------------- -----------------
(Dollars in thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit $ 449,175 $ 413,679
Standby letters of credit 13,962 12,507
Commitments to extend credit are agreements to lend to a customer as long as no
condition established in the contract has been violated. These commitments are
generally at variable interest rates and generally have fixed expiration dates
or other termination clauses and may require payment of a fee. The commitments
for equity lines of credit may expire without being drawn upon. Therefore, the
total commitment amounts do not necessarily represent future cash requirements.
The amount of collateral obtained, if it is deemed necessary by the Corporation
upon extension of credit, is based on management's credit evaluation of the
customer.
Standby letters of credit are conditional commitments issued by the Corporation
to guarantee the performance of a customer 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 year 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 Corporation holds collateral, which may include accounts receivable,
inventory, property and equipment, 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 corporation
would be required to fund the commitment.
The maximum potential amount of future payments the Corporation could be
required to make is represented by the contractual amount shown in the summary
above. If the commitment is funded, the Corporation would be entitled to seek
recovery from the customer. At December 31, 2004 and 2003, no amounts have been
recorded as liabilities for the corporation's potential obligations under these
guarantees.
As of March 31, 2005, the Corporation has no futures, forwards, swaps or option
contracts, or other financial instruments with similar characteristics with the
exception of rate lock commitments on mortgage loans to be held for sale.
NOTE 9: BUSINESS COMBINATION
On June 1, 2004, First Busey Corporation acquired all the outstanding common
stock of First Capital Bankshares, Inc. and its subsidiary First Capital Bank, a
$239,000,000 bank headquartered in Peoria, Illinois. This acquisition expands
the Corporation's banking presence in central Illinois into Peoria and
surrounding communities. The transaction has been accounted for as a purchase
and the results of operations of both entities since the acquisition date have
been included in the consolidated financial statements. The purchase price of
$42,072,000 was allocated based upon the fair value of the assets acquired and
the liabilities assumed. The excess of the total acquisition cost over the fair
value of the net assets acquired has been allocated to core deposit intangibles
and
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goodwill. The core deposit intangibles of $2,383,000 are being amortized over
periods of three to ten years. The Corporation does not expect to make further
adjustments to these allocations.
Unaudited operating results for the three months ended March 31, 2005, and pro
forma unaudited operating results for the three months ended March 31, 2004,
giving effect to the First Capital Bankshares acquisition as if it had occurred
as of January 1, 2004, are as follows:
Three months ended
March 31,
2005 2004
------------- -------------
(dollars in thousands,
except per share data)
Interest income $ 25,563 $ 20,978
Interest expense 9,302 6,918
Provision for loan losses 690 515
Noninterest income 5,555 5,927
Noninterest expense 11,249 10,637
------------- -------------
Income before income taxes $ 9,877 $ 8,835
Income taxes 3,341 3,041
------------- -------------
Net income $ 6,536 $ 5,794
============= =============
Earnings per share - basic* $ 0.32 $ 0.28
============= =============
Earnings per share - diluted* $ 0.32 $ 0.28
============= =============
* Per share data have been retroactively adjusted to effect a three-for-two
common stock split effective August 3, 2004, as if it had occurred on January 1,
2004.
NOTE 10: PENDING ACQUISITION
On February 24, 2005, the Board of Directors of First Busey Corporation entered
into an agreement with the Board of Directors of Tarpon Coast Bancorp, Inc. to
acquire all of the issued and outstanding stock of Tarpon Coast for
approximately $35.6 million or $27.00 per share. Tarpon shareholders will
receive $27.00 per share in a combination of First Busey common shares and cash.
The agreement is subject to approval by the shareholders of Tarpon Coast and the
receipt of the required regulatory approvals. The acquisition is expected to
close on or before August 30, 2005.
FORWARD LOOKING STATEMENTS
This presentation includes forward looking statements that are intended to be
covered by the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward looking statements include but are not limited
to comments with respect to the objectives and strategies, financial condition,
results of operations and business of First Busey Corporation.
These forward looking statements involve numerous assumptions, inherent risks
and uncertainties, both general and specific, and the risk that predictions and
other forward looking statements will not be achieved. The Corporation cautions
you not to place undue reliance on these forward looking statements as a number
of important factors could cause actual future results to differ materially from
the plans, objectives, expectations, estimates and intentions expressed in such
forward looking statements.
These risks, uncertainties and other factors include the general state of the
economy, both on a local and national level, the ability of the Corporation to
successfully complete acquisitions, the continued growth of geographic regions
served by the Corporation, and the retention of key individuals in the
Corporation's management structure.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the financial condition
of First Busey Corporation and Subsidiaries ("Corporation") at March 31, 2005
(unaudited), as compared with December 31, 2004, and the results of operations
for the three months ended March 31, 2005 and 2004 (unaudited). This discussion
and analysis should be read in conjunction with the Corporation's consolidated
financial statements and notes thereto appearing elsewhere in this quarterly
report.
Certain reclassifications have been made to the balances, with no effect on net
income, as of and for the three months ending March 31, 2004, to be consistent
with the classifications adopted as of and for the three months ending March 31,
2005. Share and per share data have been retroactively adjusted to effect a
three-for-two common stock split effective August 3, 2004, as if it had occurred
on January 1, 2004.
CRITICAL ACCOUNTING ESTIMATES
Critical accounting estimates are those that are critical to the portrayal and
understanding of the Corporation's financial condition and results of operations
and require management to make assumptions that are difficult, subjective or
complex. These estimates involve judgments, estimates and uncertainties that are
susceptible to change. In the event that different assumptions or conditions
were to prevail, and depending on the severity of such changes, the possibility
of materially different financial condition or results of operations is a
reasonable likelihood.
ALLOWANCE FOR LOAN LOSSES
First Busey Corporation has established an allowance for loan losses which
represents the Corporation's estimate of the probable losses that have occurred
as of the date of the consolidated financial statements.
Management has established an allowance for loan losses which reduces the total
loans outstanding by an estimate of uncollectible loans. Loans deemed
uncollectible are charged against and reduce the allowance. Periodically, a
provision for loan losses is charged to current expense. This provision acts to
replenish the allowance for loan losses and to maintain the allowance at a level
that management deems adequate.
There is no precise method of predicting specific loan losses or amounts which
ultimately may be charged off on segments of the loan portfolio. The
determination that a loan may become uncollectible, in whole or in part, is a
matter of judgment. Similarly, the adequacy of the allowance for loan losses can
be determined only on a judgmental basis, after full review, including (a)
consideration of economic conditions and their effect on particular industries
and specific borrowers; (b) a review of borrowers' financial data, together with
industry data, the competitive situation, the borrowers' management capabilities
and other factors; (c) a continuing evaluation of the loan portfolio, including
monitoring by lending officers and staff credit personnel of all loans which are
identified as being of less than acceptable quality; (d) an in-depth evaluation,
on a monthly basis, of all impaired loans (loans are considered to be impaired
when based on current information and events, it is probable the Corporation
will not be able to collect all amounts due); and (e) an evaluation of the
underlying collateral for secured lending, including the use of independent
appraisals of real estate properties securing loans.
Periodic provisions for loan losses are determined by management based upon the
size and the quality of the loan portfolio measured against prevailing economic
conditions and historical loan loss experience and also based on specific
exposures in the portfolio. Management has instituted a formal loan review
system supported by an effective credit analysis and control process. The
Corporation will maintain the allowance for loan losses at a level sufficient to
absorb estimated uncollectible loans and, therefore, expects to make periodic
additions to the allowance for loan losses.
15 of 37
REVENUE RECOGNITION
Income on interest-earning assets is accrued based on the effective yield of the
underlying financial instruments. A loan is considered to be impaired when,
based on current information and events, it is probable the Corporation will not
be able to collect all amounts due. The accrual of interest income on impaired
loans is discontinued when there is reasonable doubt as to the borrower's
ability to meet contractual payments of interest or principal.
FINANCIAL CONDITION AT MARCH 31, 2005 AS COMPARED TO DECEMBER 31, 2004
Total assets increased $16,689,000 or 0.85%, to $1,981,130,000 at March 31, 2005
from $1,964,441,000 at December 31, 2004. Securities available for sale
decreased $34,389,000, or 9.8%, to $317,867,000 at March 31, 2005 from
$352,256,000 at December 31, 2004. Loans increased $32,049,000, or 2.2%, to
$1,507,949,000 at March 31, 2005, from $1,475,900,000 at December 31, 2004
primarily due to increases in real estate construction and 1-4 family
residential mortgage loans.
Total deposits increased $30,480,000, or 2.0%, to $1,589,302,000 at March 31,
2005, from $1,558,822,000 at December 31, 2004. Noninterest-bearing deposits
decreased $16,550,000 or 7.7% to $197,371,000 at March 31, 2005, from
$213,921,000 at December 31, 2004. Interest-bearing deposits increased
$47,030,000 or 3.5% to $1,391,931,000 at March 31, 2005, from $1,344,901,000 at
December 31, 2004.
Securities sold under agreements to repurchase increased $1,517,000 or 3.7% to
$43,075,000 as of March 31, 2005, from $41,558,000 as of December 31, 2004.
Other short-term borrowings decreased to $10,000,000 with the repayment of
short-term advances from the Federal Home Loan Bank of Chicago. The balance of
long-term debt decreased $17,523,000 to $147,851,000 as of March 31, 2005,
compared to $165,374,000 as of December 31, 2004.
During the first three months of 2005, the Corporation repurchased 85,000 shares
of its common stock at an aggregate cost of $1,769,000. Following these
transactions, the Corporation has repurchased all 750,000 shares originally
authorized under its 2001 Stock Repurchase Plan. On February 17, 2004, First
Busey's Board of Directors approved a new stock repurchase plan for the
repurchase of up to 750,000 shares of common stock. Of the shares repurchased
during the first three months of 2005, 10,889 were repurchased under the 2001
Stock Repurchase Plan, and the remaining 74,111 were repurchased under the 2004
Plan. The Corporation is purchasing shares for the treasury as they become
available in order to meet future issuance requirements of previously granted
non-qualified stock options. As of March 31, 2005, there were 131,625 options
currently exercisable. There were an additional 632,650 stock options
outstanding but not currently exercisable.
ASSET QUALITY
The following table sets forth the components of non-performing assets and past
due loans.
March 31, 2005 December 31, 2004
-------------- -----------------
(Dollars in thousands)
Non-accrual loans $ 1,974 $ 1,523
Loans 90 days past due, still accruing 1,830 2,141
Restructured loans - -
Other real estate owned 4,172 4,212
Non-performing other assets 19 23
-------------- -----------------
Total non-performing assets $ 7,995 $ 7,899
============== =================
Total non-performing assets as a percentage of total assets 0.40% 0.40%
============== =================
Total non-performing assets as a percentage of loans plus
non-performing assets 0.53% 0.53%
============== =================
16 of 37
Total non-performing assets increased $96,000 or 1.2% to $7,995,000 as of March
31, 2005 from $7,899,000 due to an increase in non-accrual loans which was
partially offset by a decline in loans 90 days past due, still accruing.
Non-performing loans as a percentage of total assets remained at 0.40% as of
March 31, 2005 as compared to December 31 2004. The balance in nonaccrual loans
increased $451,000 to $1,974,000 or 0.13% of total loans as of March 31, 2005,
compared to $1,523,000 or 0.10% of total loans as of December 31, 2004. The
balance of loans 90 days past due, still accruing declined to $1,830,000 as of
March 31, 2005, from $2,141,000 as of December 31, 2004. The balance of other
real estate owned decreased $40,000 to $4,172,000 as of March 31, 2005, compared
to $4,212,000 as of December 31, 2004 as depreciation expense was recognized on
a hotel property which has been held in the Corporation's inventory of other
real estate owned for more than one year.
In September, 2003, upon completion of foreclosure proceedings, Busey Bank
became owner of a hotel property in Bloomington, Illinois. In December, 2003,
ownership of this property was transferred to First Busey Resources, Inc., a
nonbank subsidiary of First Busey Corporation. Although the Corporation
continues to market this property for sale, after holding title for one year, in
September, 2004, the Corporation began to depreciate the property and its
contents for book purposes. Depreciation expense of $50,000 for the three months
ended March 31, 2005, was included in other operating expenses as were all other
expenses associated with holding and maintaining properties held in other real
estate owned. The carrying value of this hotel property, included in other real
estate owned, was $3,197,000 as of March 31, 2005, and $3,247,000 as of December
31, 2004.
POTENTIAL PROBLEM LOANS
Potential problem loans are those loans which are not categorized as impaired,
non-accrual, past due or restructured, but where current information indicates
that the borrower may not be able to comply with present loan repayment terms.
Management assesses the potential for loss on such loans as it would with other
problem loans and has considered the effect of any potential loss in determining
its provision for loan losses. Potential problem loans totaled $5,650,000 at
March 31, 2005, as compared to $3,245,000 as of December 31, 2004. Of the
increase in problem loans, $1,939,000 is related to a First Capital Bank
commercial customer that experiences seasonal cash flow deficiencies. First
Capital repurchased an outstanding participation on this account for $576,000
during the first quarter of this year, and the customer has drawn an additional
$1,363,000 on their line of credit to meet seasonal cash flow needs. Management
has established additional covenants in the loan agreement with this customer
in order to improve the strength of this credit.
There are no other loans identified which management believes represent or
result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources.
There are no other credits identified about which management is aware of any
information which causes management to have serious doubts as to the ability
of such borrower(s) to comply with the loan repayment terms.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2005, AS COMPARED TO MARCH 31, 2004
SUMMARY
Net income for the three months ended March 31, 2005, was $6,536,000 which
represents an increase of $1,176,000 or 21.9% as compared to net income of
$5,360,000 for the comparable period in 2004. Year-to-date diluted earnings per
share increased 23.1% to $0.32 for the three months ending March 31, 2005, as
compared to $0.26 for the same period in 2004. As a result of the common stock
split effective on August 3, 2004, all share and per share data have been
retroactively adjusted to effect a three-for-two stock split as if it had
occurred on January 1, 2004.
The Corporation's return on average assets was 1.34% for the three months ended
March 31, 2005, a decline of 8 basis points from 1.42% for the comparable period
in 2004. The Corporation's return on average shareholders' equity was 19.17% for
the three months ended March 31, 2005, representing an increase of 216 basis
points compared to 17.01% for the same period in 2004.
17 of 37
FIRST BUSEY CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND INTEREST RATES
QUARTERS ENDED MARCH 31, 2005 AND 2004
2005 2004
-------------------------------- ---------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------ ---------- ------ ------------ ---------- ------
(Dollars in thousands)
ASSETS
Interest-bearing bank deposits $ 1,035 $ 6 2.35% $ 1,278 $ 3 0.94%
Federal funds sold 26,551 160 2.44% 609 1 0.66%
Investment securities
U.S. Government obligations 226,384 1,554 2.78% 141,841 956 2.71%
Obligations of states and political
subdivisions (1) 51,422 758 5.98% 46,782 697 5.99%
Other securities 50,398 488 3.93% 26,180 205 3.15%
Loans (net of unearned interest) (1) (2) 1,491,894 22,937 6.24% 1,205,928 16,683 5.56%
------------ ---------- ------------ ----------
Total interest earning assets $ 1,847,684 $ 25,903 5.69% $ 1,422,618 $ 18,545 5.24%
========== ==========
Cash and due from banks 48,436 40,591
Premises and equipment 26,869 22,445
Allowance for loan losses (19,494) (16,385)
Other assets 78,915 46,239
------------ ------------
Total Assets $ 1,982,410 $ 1,515,508
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing transaction deposits $ 35,544 $ 86 0.98% $ 21,002 $ 20 0.38%
Savings deposits 114,343 185 0.66% 109,921 158 0.58%
Money market deposits 563,164 1,637 1.18% 459,987 714 0.62%
Time deposits 659,955 4,867 2.99% 477,975 3,355 2.82%
Short-term borrowings:
Federal funds purchased - - - 12,793 39 1.23%
Repurchase agreements 46,846 176 1.52% 10,329 17 0.66%
Other 10,189 53 2.11% 3,747 12 1.29%
Long-term debt 157,982 1,541 3.96% 97,392 1,016 4.20%
Junior subordinated debt owed
to unconsolidated trust 40,000 757 7.68% 25,000 563 9.06%
------------ ---------- ------------ ----------
Total interest-bearing liabilities $ 1,628,023 $ 9,302 2.32% $ 1,218,146 $ 5,894 1.95%
========== ==========
Net interest spread 3.37% 3.29%
==== ====
Demand deposits 204,829 162,333
Other liabilities 11,253 8,287
Stockholders' equity 138,305 126,742
------------ ------------
Total Liabilities and Stockholders' Equity $ 1,982,410 $ 1,515,508
============ ============
Interest income/earning assets (1) $ 1,847,684 $ 25,903 5.69% $ 1,422,618 $ 18,545 5.24%
Interest expense/earning assets $ 1,847,684 $ 9,302 2.05% $ 1,422,618 5,894 1.66%
---------- ---- ---------- ----
Net interest margin (1) $ 16,601 3.64% $ 12,651 3.58%
========== ==== ========== ====
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35% for
2005 and 2004.
(2) Non-accrual loans have been included in average loans, net of unearned
interest.
18 of 37
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CHANGES IN NET INTEREST INCOME
THREE MONTHS ENDED MARCH 31, 2005 AND 2004
Change due to(1)
Average
Average Yield/ Total
Volume Rate Change
------- ------- -------
(Dollars in thousands)
Increase (decrease) in interest income:
Interest-bearing bank deposits $ (1) $ 4 $ 3
Federal funds sold 131 28 159
Investment securities:
U.S. Government obligations 571 27 598
Obligations of states and political
subdivisions (2) 64 (3) 61
Other securities 223 60 283
Loans (2) 4,185 2,069 6,254
------- ------- -------
Change in interest income (2) $ 5,173 $ 2,185 $ 7,358
------- ------- -------
Increase (decrease) in interest expense:
Interest-bearing transaction deposits $ 21 $ 45 $ 66
Savings deposits 6 21 27
Money market deposits 186 737 923
Time deposits 1,308 204 1,512
Short-term borrowings:
Federal funds purchased (19) (20) (39)
Repurchase agreements 115 44 159
Other 30 11 41
Long-term debt 587 (62) 525
Junior subordinated debt owed to unconsolidated trust 290 (96) 194
------- ------- -------
Change in interest expense $ 2,524 $ 884 $ 3,408
------- ------- -------
Increase in net interest income (2) $ 2,649 $ 1,301 $ 3,950
======= ======= =======
(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35% for
2005 and 2004.
19 of 37
EARNING ASSETS, SOURCES OF FUNDS, AND NET INTEREST MARGIN
Average earning assets increased $425,066,000 or 29.9% to $1,847,684,000 for the
three months ending March 31, 2005, as compared to $1,422,618,000 for the same
period last year. First Busey Corporation closed on the acquisition of First
Capital Bank of Peoria, Illinois, on June 1, 2004. During the first quarter of
2005, First Capital contributed average earning assets of $214,843,000,
$65,072,000 in the average balance of investment securities and $148,868,000 in
average loans outstanding. Busey Bank Florida also contributed to the growth in
average earning assets, with its average loan balances increasing from
$92,551,000 during the first quarter of 2004 to $173,180,000 during the first
quarter of 2005. Busey Bank's average loan balances also grew during this
period, with average loan balances increasing from $1,110,934,000 during the
first quarter of 2004 to $1,167,351,000 during the first quarter of 2005.
Interest-bearing liabilities averaged $1,628,023,000 during the first three
months of 2005, an increase of $409,877,000 or 33.6% from the average balance of
$1,218,146,000 for the comparable period in 2004. The addition of First Capital
contributed $189,753,000 of this growth during the first quarter of 2005 with
average interest-bearing deposit balances of $134,802,000, average balance in
repurchase agreements of $31,032,000, and average debt of $20,448,000. The
average balance of Busey Bank Florida's interest-bearing deposits increased
$63,172,000 from $85,726,000 during the first quarter of 2004 to $148,898,000
during the first quarter of 2005. Busey Bank also experienced growth in the
average balance of interest-bearing deposits with balances averaging
$1,089,306,000 during the first quarter of 2005, compared to $983,157,000 during
the first quarter of 2004. The average balances of long-term debt and junior
subordinated debt owed to unconsolidated trusts during the first quarter of 2005
when compared to the comparable period in 2004 are due primarily to First
Busey's purchase of First Capital Bank.
Income on interest-earning assets is accrued on the effective yield of the
underlying financial instruments. A loan is considered to be impaired when,
based on current information and events, it is probable the Corporation will not
be able to collect all amounts due. The accrual of interest income on impaired
loans is discontinued when there is reasonable doubt as to the borrower's
ability to meet contractual payments of interest or principal.
Net interest income, on a fully taxable equivalent basis, increased $3,950,000
or 31.2% to $16,601,000 for the three months ended March 31, 2005, compared to
$12,651,000 for the comparable period in 2004. Net interest margin, the
Corporation's net interest income, expressed as a percentage of average earning
assets stated on a fully taxable equivalent basis, was 3.64% for the three
months ended March 31, 2005, as compared to 3.58% for the comparable period in
2004. The net interest margin expressed as a percentage of average total assets,
also on a fully taxable equivalent basis, was 3.40% for the three months ended
March 31, 2005, compared to 3.36% for the comparable period in 2004.
Interest income, on a tax equivalent basis, for the three months ended March 31,
2005, was $25,903,000, which is $7,358,000 or 39.7% higher than the $18,545,000
earned during the comparable period in 2004. The average yield on
interest-earning assets increased 45 basis points to 5.69% for the three months
ended March 31, 2005, compared to 5.24% for the comparable period in 2004. This
increase is due primarily to growth in the average balances and higher yield on
outstanding loans.
Interest expense for the three months ended March 31, 2005, was $9,302,000,
which is $3,408,000 or 57.8% higher than the $5,894,000 for the comparable
period in 2004. The average rate paid on interest-bearing liabilities increased
37 basis points to 2.32% for the three months ended March 31, 2005, compared to
1.95% for the comparable period in 2004. The increase in interest expense is due
primarily to growth in the average balance of deposits and debt, combined with
an increase in the yields on deposits.
20 of 37
PROVISION FOR LOAN LOSSES
The Corporation's provision for loan losses of $690,000 during the three months
ended March 31, 2005, is $265,000 more than the $425,000 recorded during the
comparable period in 2004. The provision and net charge-offs of $126,000 for the
three-month period ending March 31, 2005, resulted in the allowance representing
1.31% of total loans and 520% of non-performing loans as of March 31, 2005, as
compared to the allowance representing 1.30% of outstanding loans and 524% of
non-performing loans as of December 31, 2004. Net charge-offs for the first
three months of 2005 were $126,000 compared to a net recover of $1,000 for the
comparable period in 2004. The net chargeoff ratio (net charge-offs as a
percentage of average loans) was 0.07% for the three-month period ending March
31, 2005. The adequacy of the allowance for loan losses is consistent with
management's consideration of the composition of the portfolio, non-performing
asset levels, recent credit quality experience, historic charge-off trends, and
prevailing economic conditions among other factors.
OTHER INCOME, OTHER EXPENSE, AND INCOME TAXES
Total other income, excluding security gains, decreased $110,000 or 2.00% to
$5,393,000 for the three months ended March 31, 2005, a net decrease of $110,000
compared to $5,503,000 for the same period in 2004. The decline in gains on the
sale of mortgage loans was partially offset by the addition of First Capital
Bank, which contributed $134,000 in other income during the first quarter of
2005, combined with growth in trust fees, service charges, and loan servicing
income.
During the first three months of 2005 the Corporation recognized gains of
$423,000 on the sale of $31,034,000 in mortgage loans compared to gains of
$822,000 on the sale of $43,682,000 of loans during the prior year period. The
interest-rate and debt markets have strong influence on the level of mortgage
loan origination and sales volumes. As interest rates have risen, origination
and sales activity related to home purchases has remained strong while
refinancing activity has slowed considerably. While mortgage loan originations
and sales volumes have declined since 2003, management anticipates continued
sales from current production. The Corporation may realize gains and/or losses
on these sales dependent upon interest-rate movements and upon how receptive the
debt markets are to mortgage-backed securities.
Income recognized on service charges, trust fees, commissions, and loan gains is
recognized based on contractual terms and are accrued based on estimates, or are
recognized as transactions occur or services are provided. Income from the
servicing of sold loans is recognized based on estimated asset valuations and
transaction volumes. While these estimates and assumptions may be considered
complex, First Busey has implemented controls and processes to ensure the
accuracy of these accruals.
During the three months ending March 31, 2005, the Corporation recognized
security gains of approximately $98,000 after income taxes, representing 1.5% of
net income. During the comparable period in 2004, security gains of
approximately $115,000 after income taxes were recognized, representing 2.1% of
net income. The Corporation owns a position in a marketable equity security with
substantial appreciated value. First Busey's Board of Directors has authorized
an orderly liquidation of this asset.
Total other expenses increased $1,782,000 or 18.8% to $11,249,000 for the three
months ending March 31, 2005, compared to $9,467,000 for the comparable period
in 2004. Salaries and wage expense increased $656,000 or 14.4% to $5,197,000 for
the three months ended March 31, 2005, as compared to $4,541,000 during the same
period last year. The addition of First Capital contributed $502,000 to this
increase, and Busey Bank Florida salary and wage expense was $97,000 higher
during the first quarter of 2005 compared to the same period in 2004. Employee
benefits $181,000 higher during the three months ending March 31, 2005, compared
to the same period in 2004, again due to the addition of First Capital and
growth in Busey Bank Florida, combined with higher health benefit costs
experienced in all markets.
Occupancy and furniture and equipment expenses were $132,000higher during the
first quarter of 2005 compared
21 of 37
to the same period in 2004, again due primarily to the addition of First Capital
Bank.
Other operating expenses increased $734,000 or 29.5% to $3,218,000 for the three
months ending March 31, 2005, as compared to $2,484,000 for the comparable
period in 2004. Of this increase, $419,000 is attributable to the addition of
First Capital Bank, and $94,000 is due to growth in Busey Bank Florida.
Income taxes for the three months ended March 31, 2005, increased to $3,341,000
as compared to $2,804,000 for the comparable period in 2004. As a percentage of
income before taxes, the provision for income taxes decreased slightly to 33.8%
for the three months ended March 31, 2005, from 34.3% for the comparable period
in 2004.
REPORTABLE SEGMENTS AND RELATED INFORMATION
First Busey Corporation has four reportable segments, Busey Bank, Busey Bank
Florida, First Capital Bank, and Busey Investment Group. Busey Bank provides a
full range of banking services to individual and corporate customers through its
branch network in Champaign, McLean and Ford Counties in Illinois, through its
branch in Indianapolis, Indiana, and through its loan production offices in Fort
Myers, Florida and Naples, Florida. Busey Bank Florida provides a full range of
banking services to individual and corporate customers in Fort Myers and Cape
Coral, Florida. First Capital Bank, acquired June 1, 2004, provides a full range
of banking services to individual and corporate customers in Peoria and Pekin,
Illinois. Busey Investment Group is a wholly-owned subsidiary of First Busey
Corporation and owns three subsidiaries: First Busey Trust & Investment Co.
which provides trust and asset management services to individual and corporate
customers throughout Central Illinois; First Busey Securities, Inc., a
full-service broker/dealer subsidiary; and Busey Insurance Services, Inc., an
insurance agency which provides personal insurance products and specializes in
long-term healthcare insurance.
The Corporation's four reportable segments are strategic business units that are
separately managed as they offer different products and services and have
different marketing strategies.
The segment financial information provided below has been derived from the
internal profitability reporting system used by management to monitor and manage
the financial performance of the Corporation. The accounting policies of the
four segments are the same as those described in the summary of significant
accounting policies in the annual report. The Corporation accounts for
intersegment revenue and transfers at current market value.
22 of 37
Following is a summary of selected financial information for the Corporation's
business segments for the three month periods ended March 31, 2005, and March
31, 2004:
Three Months Ended March 31
2005 2004
---- ----
(Dollars in thousands)
Interest Income:
Busey Bank $ 19,418 $ 16,617
Busey Bank Florida 3,266 1,567
First Capital Bank 2,840 -
Busey Investment Group, Inc. 38 39
All Other 1 33
-------- --------
Total Interest Income $ 25,563 $ 18,256
-------- --------
Interest Expense:
Busey Bank $ 6,235 $ 4,767
Busey Bank Florida 1,043 550
First Capital Bank 1,020 -
Busey Investment Group, Inc. - -
All Other 1,004 577
-------- --------
Total Interest Expense $ 9,302 $ 5,894
-------- --------
Other Income:
Busey Bank $ 3,631 $ 3,861
Busey Bank Florida 110 126
First Capital Bank 134 -
Busey Investment Group, Inc. 1,809 1,830
All Other (129) (123)
-------- --------
Total Other Income $ 5,555 $ 5,694
-------- --------
Net Income:
Busey Bank $ 5,709 $ 5,098
Busey Bank Florida 696 237
First Capital Bank 512 -
Busey Investment Group, Inc. 488 534
All Other (869) (509)
-------- --------
Total Net Income $ 6,536 $ 5,360
-------- --------
Goodwill:
Busey Bank $ 5,832 $ 5,832
Busey Bank Florida - -
First Capital Bank 24,405 -
Busey Investment Group, Inc. - -
All Other 1,548 1,548
-------- --------
Total Goodwill $ 31,785 $ 7,380
-------- --------
23 of 37
Three Months Ended March 31
2005 2004
---- ----
(Dollars in thousands)
Net Assets:
Busey Bank $ 1,524,417 $ 1,399,841
Busey Bank Florida 201,746 116,793
First Capital Bank 248,578 -
Busey Investment Group, Inc. 6,478 5,962
All Other (89) 10,998
----------- -----------
Total Assets $ 1,981,130 $ 1,533,594
----------- -----------
LIQUIDITY
Liquidity management is the process by which the Corporation ensures that
adequate liquid funds are available to meet the present and future cash flow
obligations arising in the daily operations of the business. These financial
obligations consist of needs for funds to meet commitments to borrowers for
extensions of credit, funding capital expenditures, withdrawals by customers,
maintaining deposit reserve requirements, servicing debt, paying dividends to
shareholders, and paying operating expenses.
The Corporation's most liquid assets are cash and due from banks,
interest-bearing bank deposits, and Federal funds sold. The balances of these
assets are dependent on the Corporation's operating, investing, lending and
financing activities during any given period.
The Corporation's primary sources of funds, consists of deposits, investment
maturities and sales, loan principal repayments, deposits, and capital funds.
Additional liquidity is provided by brokered deposits, bank lines of credit,
repurchase agreements and the ability to borrow from the Federal Reserve Bank
and the Federal Home Loan Bank. The Corporation has an operating line in the
amount of $10,000,000, all of which was available as of March 31, 2005.
Long-term liquidity needs will be satisfied primarily through retention of
capital funds.
An additional source of liquidity that can be managed for short-term and
long-term needs is the Corporation's ability to securitize or package loans
(primarily mortgage loans) for sale. During the first three months of 2005 the
Corporation originated $29,700,000 and sold $31,034,000 in mortgage loans for
sale compared to originations of $37,038,000 and sales of $43,682,000 during the
first three months of 2004. As of March 31, 2005, the Corporation held
$8,240,000 in loans held for sale. Management intends to sell these loans during
the second quarter of 2005.
On June 1, 2004, First Busey Corporation completed the acquisition of First
Capital Bankshares, Inc. of Peoria, Illinois, the holding company of First
Capital Bank. In order to partially fund this transaction First Busey issued
$15,000,000 in trust preferred securities through First Busey Statutory Trust
II. These securities were issued in April, 2004. The balance of the purchase
price was financed by borrowed funds in the form of a note payable which
requires annual principal reductions of $4,000,000 beginning in January, 2006,
and matures in June, 2011.
The objective of liquidity management by the Corporation is to ensure that funds
will be available to meet demand in a timely and efficient manner. Based upon
the level of investment securities that reprice within 30 days and 90 days,
management currently believes that adequate liquidity exists to meet all
projected cash flow obligations. The Corporation achieves a satisfactory degree
of liquidity through actively managing both assets and liabilities. Asset
management guides the proportion of liquid assets to total assets, while
liability management monitors future funding requirements and prices liabilities
accordingly.
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The Corporation's banking subsidiaries routinely enter into commitments to
extend credit in the normal course of their business. As of March 31, 2005, and
2004, the Corporation had outstanding loan commitments including lines of credit
of $449,175,000 and $307,504,000, respectively. The balance of commitments to
extend credit represents future cash requirement and some of these commitments
may expire without being drawn upon. The Corporation anticipates it will have
sufficient funds available to meet its current loan commitments, including loan
applications received and in process prior to the issuance of firm commitments.
The Corporation has entered into certain contractual obligations and other
commitments. Such obligations generally relate to funding of operations through
deposits, debt issuance, and property and equipment leases.
The following table summarizes significant contractual obligations and other
commitments as of March 31, 2005:
Securities
Sold under
Agreements to Junior
Repurchase and Subordinated
Short- and Debt Owed to
Certificates Long-term Unconsolidated
Due Within of Deposit Borrowings Leases Trusts Total
- ---------- ---------- ---------- ------ ------ -----
(Dollars in thousands)
1 year $378,414 $ 81,543 $ 963 $ - $460,920
2 years 139,167 26,898 929 - 166,994
3 years 85,964 44,198 827 - 130,989
4 years 23,210 19,123 543 - 42,876
5 years 30,356 12,622 164 - 43,142
Thereafter 696 16,542 238 40,000 57,476
-------- -------- -------- -------- --------
Total $657,807 $200,926 $ 3,664 $ 40,000 $902,397
======== ======== ======== ======== ========
Net cash flows provided by operating activities totaled $13,950,000 during the
three months ended March 31, 2005, compared to $15,939,000 during the comparable
prior year period. Significant items affecting the cash flows provided by
operating activities are net income, depreciation and amortization expense, the
provision for loan losses, and activities related to the origination and sale of
loans held for sale. Operating cash flow decreased during the first three months
of 2005 compared to the same period in 2004 due primarily to lower mortgage loan
sale activity. During the first three months of 2005 the Corporation originated
$29,700,000 in loans held for sale and generated $31,457,000 from the sale of
held-for-sale loans resulting in net cash provided by loan originations and sale
of $1,757,000. During the comparable period in 2004, the Corporation originated
$37,038,000 in held-for-sale loans and generated $44,504,000 from the sale of
held-for-sale loans leading to net cash provided by loan originations and sale
of $7,466,000.
Net cash used in investing activities was $22,404,000 for the three months ended
March 31, 2005, compared to $28,694,000 for the comparable period in 2004.
Significant activities affecting cash flows from investing activities are those
activities associated with managing the Corporation's investment portfolio,
loans held in the Corporation's portfolio, and subsidiary or business unit
acquisition activities. During the three months ended March 31, 2005, proceeds
from the sales and maturities of securities classified as available-for-sale
totaled $45,918,000, and the Corporation purchased $14,696,000 in securities
resulting in net cash provided by securities activity of $31,222,000. In the
comparable period of 2004 proceeds from the sales and maturities of securities
classified as available for sale totaled $24,416,000, and the Corporation
purchased $7,884,000 in securities resulting in net cash provided by securities
activity of $16,532,000. The Corporation's loan portfolio increased $33,578,000
during the first three months of 2005, compared to an increase of $39,078,000 in
the comparable period of 2004.
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Net cash provided by financing activities was $8,866,000 during the first three
months of 2005 compared to $2,300,000 for the comparable period in 2004.
Significant items affecting cash flows from financing activities are deposits,
short-term borrowings, and long-term debt. Deposits, which are the Corporation's
primary funding source, increased by a net of $30,480,000 during the first three
months of 2005, compared to a net increase of $1,414,000 during the comparable
period in 2004. The Corporation reduced its long-term debt by a net of
$18,773,000 during the first quarter of 2005, compared to a net increase of
$11,000,000 during the comparable period in 2004.
On February 24, 2005, the Board of Directors of First Busey Corporation entered
into an agreement with the Board of Directors of Tarpon Coast Bancorp, Inc. to
acquire all of the issued and outstanding stock of Tarpon Coast for
approximately $35.6 million or $27.00 per share. Tarpon shareholders will
receive $27.00 per share with 55% in the form of newly issued common shares of
First Busey and 45% in the form of cash. The issuance of these additional shares
will result in an increase of approximately $18,000,000 in outstanding
stockholders' equity. The agreement limits the number of First Busey shares that
may be issued in this transaction to a maximum of 850,000 shares. First Busey
intends to fund the cash portion of approximately $17,600,000 of this
transaction on a short-term basis through the issuance of additional debt. The
Corporation intends to review various alternatives for refinancing this debt on
a long-term basis and will determine its course of action by the end of March,
2006. The agreement is subject to approval by the shareholders of Tarpon Coast
and the receipt of required regulatory approvals. The acquisition is expected
to close on or before August 30, 2005.
CAPITAL RESOURCES
Other than from the issuance of common stock, the Corporation's primary source
of capital is retained net income. During the three months ended March 31, 2005,
the Corporation earned $6,536,000 and paid dividends of $2,865,000 to
stockholders, resulting in a retention of current earnings of $3,671,000. The
Corporation's dividend payout ratio for the three months ended March 31, 2005
was 43.8%.
The Corporation and the Banks are subject to regulatory capital requirements
administered by federal and state banking agencies. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Corporation and the Banks must meet specific capital guidelines that involve the
quantitative measure of their assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. Quantitative measures
established by regulation to ensure capital adequacy require the Corporation and
the Banks to maintain minimum amounts and ratios (set forth in the table below)
of total and Tier I capital (as defined in the regulations) to risk-weighted
assets (as defined), and Tier 1 capital (as defined) to average assets (as
defined). Management believes, as of March 31, 2005, that the Corporation and
the Banks meet all capital adequacy requirements to which they are subject.
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To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------ ----------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(Dollars in thousands)
AS OF MARCH 31, 2005:
Total Capital (to Risk Weighted Assets)
Consolidated $159,730 10.82% $118,075 8.00% N/A N/A
Busey Bank $131,138 11.42% $ 91,838 8.00% $114,797 10.00%
Busey Bank Florida $ 17,203 10.71% $ 12,857 8.00% $ 16,071 10.00%
First Capital Bank $ 18,476 12.10% $ 12,217 8.00% $ 15,271 10.00%
Tier I Capital (to Risk Weighted Assets)
Consolidated $135,496 9.18% $ 59,038 4.00% $ N/A N/A
Busey Bank $111,809 9.74% $ 45,919 4.00% $ 68,879 6.00%
Busey Bank Florida $ 15,193 9.45% $ 6,429 4.00% $ 9,643 6.00%
First Capital Bank $ 16,564 10.85% $ 6,109 4.00% $ 9,163 6.00%
Tier I Capital (to Average Assets)
Consolidated $135,496 7.01% $ 77,283 4.00% N/A N/A
Busey Bank $111,809 7.41% $ 60,338 4.00% $ 75,423 5.00%
Busey Bank Florida $ 15,193 7.89% $ 7,705 4.00% $ 9,631 5.00%
First Capital Bank $ 16,564 7.41% $ 8,945 4.00% $ 11,181 5.00%
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISK
MARKET RISK
Market risk is the risk of change in asset values due to movements in underlying
market rates and prices. Interest rate risk is the risk to earnings and capital
arising from movements in interest rates. Interest rate risk is the most
significant market risk affecting the Corporation as other types of market risk,
such as foreign currency exchange rate risk and commodity price risk, do not
arise in the normal course of the Corporation's business activities.
The Corporation's subsidiary banks, Busey Bank, Busey Bank Florida, and First
Capital Bank have asset-liability committees which meet at least quarterly to
review current market conditions and attempt to structure the banks' balance
sheets to ensure stable net interest income despite potential changes in
interest rates with all other variables constant.
The asset-liability committees use gap analysis to identify mismatches in the
dollar value of assets and liabilities subject to repricing within specific time
periods. The Funds Management Policies established by the asset-liability
committees and approved by the Corporation's Board of Directors establish
guidelines for maintaining the ratio of cumulative rate-sensitive assets to
rate-sensitive liabilities within prescribed ranges at certain intervals.
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Interest-rate sensitivity is a measure of the volatility of the net interest
margin as a consequence of changes in market rates. The rate-sensitivity chart
shows the interval of time in which given volumes of rate-sensitive earning
assets and rate-sensitive interest-bearing liabilities would be responsive to
changes in market interest rates based on their contractual maturities or terms
for repricing. It is, however, only a static, single-day depiction of the
Corporation's rate sensitivity structure, which can be adjusted in response to
changes in forecasted interest rates.
The following table sets forth the static rate-sensitivity analysis of the
Corporation as of March 31, 2005:
Rate Sensitive Within
---------------------
1-30 31-90 91-180 181 Days - Over
Days Days Days 1 Year 1 Year Total
---- ---- ---- ------ ------ -----
(Dollars in thousands)
Interest-bearing deposits $ 677 $ - $ - $ - $ - $ 677
Federal funds sold 21,300 - - - - 21,300
Investment securities
U.S. Governments 5,623 7,024 18,150 53,743 130,665 215,205
Obligations of states and
political subdivisions 255 1,426 660 9,189 42,025 53,555
Other securities 14,305 323 1,956 1,876 30,647 49,107
Loans (net of unearned int.) 667,634 86,538 93,945 164,972 494,860 1,507,949
------------ ------------ ------------ ------------ ----------- ------------
Total rate-sensitive assets $ 709,794 $ 95,311 $ 114,711 $ 229,780 $ 698,197 $ 1,847,793
------------ ------------ ------------ ------------ ----------- ------------
Interest bearing transaction
Deposits $ 61,888 $ - $ - $ - $ - $ 61,888
Savings deposits 114,477 - - - - 114,477
Money market deposits 557,759 - - - - 557,759
Time deposits 72,168 81,872 105,177 146,194 252,396 657,807
Short-term borrowings:
Repurchase agreements 43,075 - - - - 43,075
Other 5,000 4,000 - 1,000 - 10,000
Long-term debt 1,050 7,000 5,800 42,676 91,325 147,851
Junior subordinated debt owed
to unconsolidated trusts - 15,000 - - 25,000 40,000
------------ ------------ ------------ ------------ ----------- ------------
Total rate-sensitive liabilities $ 855,417 $ 107,872 $ 110,977 $ 189,870 $ 368,721 $ 1,632,857
Rate-sensitive assets less
rate-sensitive liabilities $ (145,623) $ (12,561) $ 3,734 $ 39,910 $ 329,476 $ 214,936
------------ ------------ ------------ ------------ ----------- ------------
Cumulative Gap $ (145,623) $ (158,184) $ (154,450) $ (114,540) $ 214,936
============ ============ ============ ============ ===========
Cumulative amounts as a
percentage of total
rate-sensitive assets -7.88% -8.56% -8.36% -6.20% 11.63%
============ ============ ============ ============ ===========
Cumulative ratio 0.83 0.84 0.86 0.91 1.13
============ ============ ============ ============ ===========
The funds management policy of First Busey Corporation require the banks to
maintain a cumulative rate-sensitivity ratio of .75 - 1.25 in the 90-day,
180-day, and 1-year time periods. As of March 31, 2005, the Banks and the
Corporation, on a consolidated basis, are within those guidelines.
The foregoing table shows a negative (liability-sensitive) rate-sensitivity gap
of $145.6 million in the 1-30 day repricing period and $158.2 million in the
31-90 day repricing period as there were more liabilities subject to repricing
during those time periods than there were assets subject to repricing within
those same time periods. The volume of assets subject to repricing exceeds the
volume of liabilities subject to repricing for all time periods beyond 90 days.
On a cumulative basis, the gap remains liability sensitive through one year. The
composition of the gap structure at March 31, 2005, indicates the Corporation
would benefit more if interest rates decrease
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during the next year by allowing the net interest margin to grow as the volume
of interest-bearing liabilities subject to repricing would be greater than the
volume of interest-earning assets subject to repricing during the same period.
The Corporation's asset/liability committees do not rely solely on gap analysis
to manage interest-rate risk as interest rate changes do not impact all
categories of assets and liabilities equally or simultaneously. The committees
supplement gap analysis with balance sheet and income simulation analysis to
determine the potential impact on net interest income of changes in market
interest rates. In these simulation models the balance sheet is projected over a
one-year period and net interest income is calculated under current market
rates, and then assuming permanent instantaneous shifts of +/-100 basis points
and +200 basis points. Management measures such changes assuming immediate and
sustained shifts in the Federal funds rate and the corresponding shifts in other
rate indices based on their historical changes relative to changes in the
Federal funds rate. The model assumes asset and liability remain constant at
March 31, 2005, balances. The model uses repricing frequency on all
variable-rate assets and liabilities. The model also uses a historical decay
rate on all fixed-rate core deposit balances. Prepayment speeds on loans have
been adjusted up and down to incorporate expected prepayment in both a declining
and rising rate environment. Utilizing this measurement concept the interest
rate risk of the Corporation, expressed as a change in net interest income as a
percentage of the net income calculated in the constant base model, due to an
immediate and sustained change in interest rates at March 31, 2005, and December
31, 2004 was as follows:
Basis Point Changes
-------------------
-100 +100 +200
---- ---- ----
March 31, 2005 (3.41%) 0.79% 1.59%
December 31, 2004 (5.57%) 3.05% 6.06%
ITEM 4: CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The Corporation conducted an evaluation, with the participation of its Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
Corporation's disclosure controls and procedures as of March 31, 2005. The
Corporation's disclosure controls and procedures are designed to ensure that
information required to be disclosed by the Corporation in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized, and
reported on a timely basis.
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Corporation's disclosure controls and procedures as
of March 31, 2005, are effective in timely alerting them to material information
relating to First Busey Corporation, including its consolidated subsidiaries,
required to be included in the Corporation's periodic filings under the Exchange
Act.
CHANGES IN INTERNAL CONTROLS
During the quarter ended March 31, 2005, the Corporation did not make any
significant changes in, nor take any corrective actions regarding, its internal
controls or other factors that could significantly affect these controls.
DISCLOSURE CONTROLS AND INTERNAL CONTROLS
Disclosure controls are procedures that are designed with the objective of
ensuring that information required to be disclosed in First Busey Corporation's
reports filed under the Exchange Act is recorded, processed,
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summarized, and reported within the time periods specified in the Securities and
Exchange Commission's (SEC) rules and forms. Disclosure controls are also
designed with the objective of ensuring that such information is accumulated and
communicated to management, as appropriate to allow timely decisions regarding
required disclosure. Internal controls are procedures which are designed with
the objective of providing reasonable assurance that transactions are properly
authorized, assets are safeguarded against unauthorized or improper use, and
transactions are properly recorded and reported, all to permit the preparation
of financial statements in conformity with accounting principles generally
accepted in the United States of America.
LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS
First Busey Corporation's management does not expect that our disclosure
controls or our internal controls will prevent all errors and all fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of the control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within First Busey Corporation
have been detected. These inherent limitations include the realities that
judgments in decision making can be faulty, and that breakdowns can occur
because of simple error or mistake. Additionally, controls can be circumvented
by the individual acts of some persons, by collusion of two or more people, or
by management override of the control. The design of any system of controls also
is based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Over time, controls may
become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.
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PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
Not Applicable
ITEM 2: Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities
The following table presents for the periods indicated a summary of the
purchases made by or on behalf of First Busey Corporation of shares of
its common stock.
Total Maximum
Number of Number of
Shares Shares
Purchased that May
as Part of Yet Be
Total Publicly Purchased
Number of Average Announced Under the
Shares Price Paid per Plans or Plans or
Purchased(2) Share(2) Programs(2) Programs (1),(2)
------------ -------- ----------- ----------------
January 1 - 31, 2005 25,000 $ 20.93 25,000 735,889
February 1 - 29, 2005 20,000 20.81 20,000 715,889
March 1 - 31, 2005 40,000 20.75 40,000 675,889
------ --------- ------
Total 85,000 $ 20.82 85,000
(1) First Busey Corporation's board of directors approved a stock purchase plan
on March 20, 2001, for the repurchase of up to 750,000 shares of common stock.
The Corporation's 2001 repurchase plan has no expiration date. First Busey
Corporation's board of directors approved a stock purchase plan on February 17,
2004 for the repurchase of up to 750,000 shares of common stock. The
Corporation's 2004 repurchase plan has no expiration date.
(2) Share and per share amounts have been retroactively adjusted to effect a
three-for-two common stock split effective August 3, 2004, as if it had occurred
on January 1, 2004.
ITEM 3: Defaults Upon Senior Securities
Not Applicable
ITEM 4: Submission of Matters to a Vote of Security Holders
None
ITEM 5: Other Information
(a) None
(b) Not applicable
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ITEM 6: Exhibits
(a.) Exhibits
31.1 Certification of Principal Executive Officer
31.2 Certification of Principal Financial Officer
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
from the Corporation's Chief Executive Officer.
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
from the Corporation's Chief Financial Officer.
(b.) On January 18, 2005, the Corporation filed a report on Form 8-K
(Item 2.02) dated January 18, 2005, releasing its financial
results for the three months ending December 31, 2004.
On January 24, 2005, the Corporation filed a report on Form 8-K
(Item 1.01) dated January 18, 2005, reporting board approval of
bonus payments and restricted shares released to executive
officers.
On February 2, 2005, the Corporation filed a report on Form 8-K
(Item 1.01) dated January 28, 2005, announcing board approval of
fiscal year 2005 compensation to executive officers.
One February 25, 2005, the Corporation filed a report on Form 8-K
(Item 1.01) dated February 24, 2005, announcing that on February
24, 2005 it entered into an agreement to acquire Tarpon Coast
Bancorp, Inc., Port Charlotte, Florida.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST BUSEY CORPORATION
(REGISTRANT)
By: //Douglas C. Mills//
----------------------------
Douglas C. Mills
Chairman of the Board and
Chief Executive Officer
By: //Barbara J. Harrington//
----------------------------
Barbara J. Harrington
Chief Financial Officer
(Principal financial and
accounting officer)
Date: May 10, 2005
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