8-K: First Busey Corporation Announces Fourth Quarter Earnings, Highlights CrossFirst Merger

First Busey Corporation reports Q4 2024 net income of $28.1 million and announces progress on its merger with CrossFirst Bankshares.

Summary

• First Busey Corporation (BUSE) reported a net income of $28.1 million for the fourth quarter of 2024, or $0.49 per diluted common share.
• Adjusted net income for the quarter was $30.7 million, or $0.53 per diluted common share.
• The company's tangible book value per common share increased by 7.6% year-over-year to $17.88 as of December 31, 2024.
• Stockholder approvals for the CrossFirst Bankshares, Inc. merger were received in December 2024, with regulatory approvals following in January 2025.
• The merger is expected to close on March 1, 2025.
• Wealth Management segment achieved record high quarterly and annual revenue of $17.0 million and $65.0 million, respectively.
• Tangible common equity increased to 8.76% of tangible assets at December 31, 2024, compared to 7.75% at December 31, 2023.
• The company's Common Equity Tier 1 ratio was 14.10% and the Total Capital to Risk Weighted Assets ratio was 18.53% in the fourth quarter of 2024.
• A cash dividend of $0.25 per common share will be paid on January 31, 2025, representing a 4.2% increase from the previous quarter.

Sentiment

Score: 7

Explanation: The document presents a balanced view, highlighting both positive achievements and areas where performance declined. The outlook is cautiously optimistic, pending the CrossFirst merger.

Positives

• Tangible book value per common share increased by 7.6% year-over-year.
• Tangible common equity increased to 8.76% of tangible assets.
• Wealth Management segment achieved record high quarterly and annual revenue.
• Regulatory capital ratios continue to provide a buffer of more than $610 million above levels required to be designated well-capitalized.
• The company increased the quarterly dividend by 4.2% to $0.25 per common share.
• Core deposits represent 96.5% of total deposits as of December 31, 2024.

Negatives

• Net income for the fourth quarter of 2024 was $28.1 million, compared to $32.0 million for the third quarter of 2024.
• Non-performing assets increased to $23.3 million during the fourth quarter of 2024, representing 0.19% of total assets.
• Net charge-offs totaled $2.9 million for the fourth quarter of 2024.
• The efficiency ratio was 64.5% for the fourth quarter of 2024, compared to 62.1% for the third quarter of 2024.

Risks

• The company faces risks related to the proposed transaction with CrossFirst, including the possibility that the transaction will not close or that the anticipated benefits will not be realized.
• Economic factors, such as inflationary pressures and supply chain constraints, could negatively impact the company's performance.
• Changes in interest rates and prepayment rates of Busey's assets could affect the company's profitability.
• Increased competition in the financial services sector could make it difficult to attract new customers.
• Unexpected outcomes of existing or new litigation, investigations, or inquiries involving Busey could have a negative impact.

Future Outlook

The company anticipates closing the merger with CrossFirst Bankshares on March 1, 2025, and expects to realize full synergies from the M&M acquisition in 2025.

Management Comments

• As we reflect back on 2024 and look ahead to 2025, we feel confident that we are well positioned to produce quality growth and profitability.
• The pending CrossFirst transaction fits with our acquisition strategy and we are excited to welcome our CrossFirst colleagues into the Busey family.
• We are grateful for the opportunities to consistently earn the business of our customers, based on the contributions of our talented associates and the continued support of our loyal stockholders.

Industry Context

The announcement reflects ongoing consolidation trends in the banking industry, with institutions seeking to expand their geographic footprint and service offerings through mergers and acquisitions.

Comparison to Industry Standards

• First Busey's financial metrics, such as ROAA and ROATCE, can be compared to regional and national bank averages to assess its relative performance.
• The company's efficiency ratio can be benchmarked against peers to evaluate its operational efficiency.
• Capital ratios are compared to regulatory minimums and peer averages to assess the company's financial strength.
• The company's wealth management performance can be compared to other wealth management divisions of regional banks, such as those of Commerce Bancshares or UMB Financial Corporation.
• The company's payment technology solutions can be compared to other payment processors such as Jack Henry or Fiserv.

Stakeholder Impact

• Shareholders will see an increased dividend of $0.25 per share.
• Customers will gain access to a broader range of services and locations following the merger with CrossFirst.
• Employees will experience integration with CrossFirst colleagues and potential career opportunities.
• The community will benefit from First Busey's continued commitment to corporate responsibility and community development.

Next Steps

• Close the merger with CrossFirst Bankshares on March 1, 2025.
• Merge CrossFirst Bank with and into Busey Bank in late June 2025.
• Continue integration planning focused on customer retention and best-in-class products.
• Achieve full quarterly run-rate savings from the M&M acquisition by the first quarter of 2025.

Key Dates