SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 1O-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended 3/31/96 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
incorporation or organization) Identification No.)
102 E. Main St., Suite 102
Urbana, Illinois 61801
------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (217) 384-4513
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 the number of shares outstanding of each of the Registrant's classes
of common stock, as of the practicable date.
<TABLE>
<CAPTION>
Class Outstanding at April 30, 1996
--------------------------------------- -----------------------------
<S> <C>
Class A Common Stock, without par value 3,780,333
Class B Common Stock, without par value 750,000
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
------------------ -----------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $41,548 $39,358
Federal funds sold 13,000 650
Securities held to maturity (fair value 1996 $66,594; 1995 $62,625) 66,024 61,501
Securities available for sale (amort. cost 1996 $211,830;
1995 $218,257) 216,086 223,016
Trading Securities at fair value 1,898 -
Loans (net of unearned interest) 488,749 481,772
Allowance for loan losses (5,569) (5,473)
------------------ -----------------
Net loans $483,180 $476,299
Premises and equipment 21,413 21,857
Other assets 20,685 21,985
------------------ -----------------
Total assets $863,834 $844,666
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $70,965 $72,386
Interest bearing 684,921 672,511
------------------ -----------------
Total deposits $755,886 $744,897
Short-term borrowings 28,823 21,674
Long-term debt 5,000 5,000
Other liabilities 5,938 5,317
------------------ -----------------
Total liabilities $795,647 $776,888
================== =================
STOCKHOLDER'S EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 20,388 20,380
Retained earnings 43,546 42,474
Unrealized gain (loss) on securities available for sale, net 2,701 3,093
------------------ -----------------
Total stockholders' equity before treasury stock, unearned ESOP $72,926 $72,238
shares and deferred compensation for stock grants
Treasury stock, at cost (3,951) (3,659)
Unearned ESOP shares and deferred compensation for stock grants (788) (801)
------------------ -----------------
Total stockholders' equity $68,187 $67,778
------------------ -----------------
Total liabilities and stockholders' equity $863,834 $844,666
================== =================
Class A Common Shares outstanding at period end 3,781,207 3,791,305
================== =================
Class B Common Shares outstanding at period end 750,000 750,000
================== =================
</TABLE>
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1996 March 31, 1995
------------------ -----------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $41,548 $38,014
Federal funds sold 13,000 15,600
Securities held to maturity (fair value 1996 $66,594; 1995 $65,471) 66,024 65,425
Securities available for sale (amort. cost 1996 $211,830;
1995 $154,007) 216,086 154,777
Trading securities at fair value 1,898 0
Loans (net of unearned interest) 488,749 436,859
Allowance for loan losses (5,569) (5,402)
------------------ -----------------
Net loans $483,180 $431,457
Premises and equipment 21,413 21,573
Other assets 20,685 18,414
------------------ -----------------
Total assets $863,834 $745,260
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $70,965 $61,933
Interest bearing 684,921 593,036
------------------ -----------------
Total deposits $755,886 $654,969
Short-term borrowings 28,823 19,084
Long-term debt 5,000 5,000
Other liabilities 5,938 4,647
------------------ -----------------
Total liabilities $795,647 $683,700
------------------ -----------------
STOCKHOLDER'S EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 20,388 20,316
Retained earnings 43,546 38,824
Unrealized gain (loss) on securities available for sale, net 2,701 487
------------------ -----------------
Total stockholders' equity before treasury stock, unearned ESOP $72,926 $65,918
shares and deferred compensation for stock grants
Treasury stock, at cost (3,951) (3,236)
Unearned ESOP shares and deferred compensation for stock grants (788) (1,122)
------------------ -----------------
Total stockholders' equity $68,187 $61,560
------------------ -----------------
Total liabilities and stockholders' equity $863,834 $745,260
================== =================
Class A Common Shares outstanding at period end 3,781,207 3,802,136
================== =================
Class B Common Shares outstanding at period end 750,000 750,000
================== =================
</TABLE>
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------------ -----------------
(Dollars in thousands, except per share amounts)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $10,603 $9,299
Interest and dividends on investment securities:
Taxable interest income 3,531 2,701
Non-taxable interest income 511 480
Dividends 33 34
Interest on federal funds sold 322 121
------------------ -----------------
Total interest income $15,000 $12,635
------------------ -----------------
INTEREST EXPENSE:
Deposits $7,129 $5,617
Short-term borrowings 361 272
Long-term debt 69 68
------------------ -----------------
Total interest expense $7,559 $5,957
------------------ -----------------
Net interest income $7,441 $6,678
Provision for loan losses 150 50
------------------ -----------------
Net interest income after provision for loan losses $7,291 $6,628
------------------ -----------------
OTHER INCOME:
Trust $616 $672
Service charges on deposit accounts 699 622
Other service charges and fees 406 310
Security gains (losses), net 1 (98)
Trading security gains (losses), net (88) 9
Gain on sales of pooled loans 48 340
Other operating income 257 398
------------------ -----------------
Total other income $1,939 $2,253
------------------ -----------------
OTHER EXPENSES:
Salaries and wages $2,852 $2,594
Employee benefits 568 519
Net occupancy expense of bank premises 468 417
Furniture and equipment expenses 394 361
Data processing 336 344
Stationery, supplies and printing 158 165
Foreclosed property write-downs and expenses 4 62
Amortization expense 330 215
Other operating expenses 1,043 1,086
------------------ -----------------
Total other expenses $6,153 $5,763
------------------ -----------------
Income before income taxes $3,077 $3,118
Income taxes 886 947
------------------ -----------------
Net income $2,191 $2,171
================== =================
NET INCOME PER SHARE OF COMMON STOCK AND STOCK EQUIVALENTS: $0.48 $0.47
DIVIDENDS DECLARED PER SHARE:
Class A Common Stock $0.25 $0.22
================== =================
Class B Common Stock $0.23 $0.20
================== =================
</TABLE>
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------------ -----------------
(Dollars in thousands, except per share amounts)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $2,191 $2,171
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 825 694
Provision for loan losses 150 50
Increase (decrease) in deferred income taxes 10 25
Amortization of investment security discounts (606) (79)
(Gain) loss on sales of investment securities, net (1) 98
Proceeds from sales of pooled loans 4,508 9,601
Loans originated for sale (3,597) 7,521
Gain on sale of pooled loans (48) (340)
Change in assets and liabilities:
Decrease in other assets 1,204 9
Increase in accrued expenses (49) 245
Increase (decrease) in interest payable (126) 362
Increase in income taxes payable 796 851
------------------ -----------------
Net cash provided by operating activities $5,257 $21,208
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities classified available for sale $4,954 $6,457
Proceeds from maturities of securities classified available for sale 215,624 25,875
Proceeds from maturities of securities classified held to maturity 12,090 3,381
Purchase of securities classified available for sale (215,634) (41,167)
Purchase of securities classified held to maturity (16,521) (2,198)
(Increase) decrease in federal funds sold (12,350) (15,600)
Increase in loans (7,927) (2,983)
Purchases of premises and equipment (38) (105)
------------------ -----------------
Net cash (used in) investing activities ($19,802) ($26,340)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in certificates of deposit ($108) $35,032
Net increase (decrease) in demand, money market and saving deposits 11,097 (15,757)
Cash dividends paid (1,119) (986)
Purchase of treasury stock (318) (55)
Proceeds from sale of treasury stock 34 62
Proceeds from short-term borrowings 0 5,000
Principal payments on short-term borrowings (500) 0
Net increase (decrease) in federal funds purchased,
repurchase agreements and Federal Reserve discount borrowings 7,649 (11,476)
------------------ -----------------
Net cash provided by (used in) financing activities $16,735 $11,820
------------------ -----------------
Net increase (decrease) in cash and cash equivalents $2,190 $6,688
Cash and due from banks, beginning 39,358 31,326
------------------ -----------------
Cash and due from banks, ending $41,548 $38,014
================== =================
</TABLE>
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
NOTES TO 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 results for the interim periods are not
necessarily indicative of the results of operations that may be expected for
the fiscal year.
NOTE 2: LOANS
The major classifications of loans at March 31, 1996 and December 31, 1995
were as follows:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Commercial $52,719 $55,687
Real estate construction 22,323 25,566
Real estate - farmland 10,831 11,162
Real estate - 1-4 family residential mortgage 187,053 179,047
Real estate - multifamily mortgage 58,880 57,364
Real estate - non-farm nonresidential mortgage 105,205 98,006
Installment 41,227 42,353
Agricultural 10,516 12,594
------------------------------------------
$488,754 $481,779
Less:
Unearned interest 5 7
------------------------------------------
$488,749 $481,772
------------------------------------------
Less:
Allowance for loan losses 5,569 5,473
------------------------------------------
Net loans $483,180 $476,299
==========================================
</TABLE>
The real estate-mortgage category includes loans held for sale with carrying
values of $940,000 at March 31, 1996 and $1,803,000 at December 31, 1995;
these loans had fair market values of $948,000 and $1,840,000, respectively.
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: INCOME PER SHARE
Net income per common share has been computed as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---------- ----------
<S> <C> <C>
Net income $2,191,000 $2,171,000
Shares:
Weighted average common shares outstanding 4,537,040 4,552,112
Dilutive effect of outstanding options, as determined
by the application of the treasury stock method 71,773 63,029
---------- ----------
Weighted average common shares outstanding,
as adjusted 4,608,813 4,615,141
========== ==========
Net income per share of common stock and stock equivalents: $0.48 $0.47
========== ==========
</TABLE>
NOTE 4: SUPPLEMENTAL CASH FLOW DISCLOSURES FOR THE THREE MONTHS ENDED
MARCH 31, 1996 AND 1995.
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $7,685 $5,595
========== ==========
Income taxes $0 $51
========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Other real estate acquired in settlement of loans $33 $510
========== ==========
Change in unrealized gain (loss) on securities available for sale $603 $2,044
========== ==========
(Decrease) increase in deferred income taxes attributable to the
unrealized (gain) loss on investment securities available for sale $211 ($715)
========== ==========
</TABLE>
<PAGE>
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, 1996 (unaudited) when compared with December 31, 1995 and the
results of operations for the three months ended March 31, 1996 and 1995
(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.
FINANCIAL CONDITION AT MARCH 31, 1996 AS COMPARED TO DECEMBER 31, 1995
Total assets increased $19,168,000, or 2.3%, to $863,834,000 at March 31,
1996 from $844,666,000 at December 31, 1995.
Securities held to maturity increased $4,523,000, or 7.4%, to $66,024,000 at
March 31, 1996 from $61,501,000 at December 31, 1995. Securities available
for sale decreased $6,930,000, or 3.1%, to $216,086,000 at March 31, 1996
from $233,016,000 at December 31, 1995.
Loans increased $7,037,000 or 1.5%, to $488,749,000 at March 31, 1996 from
$481,772,000 at December 31, 1995, primarily due to increases in mortgage
loans that exceeded the decreases in other loan categories.
Total deposits increased $10,989,000, or 1.5%, to $755,886,000 at March 31,
1996 from $744,897,000 at December 31, 1995. Non-interest bearing deposits
decreased 2.0% to $70,965,000 at March 31, 1996 from $72,386,000 at
December 31, 1995. Interest bearing deposits increased 1.8% to $684,921,000
at March 31, 1996 from $672,511,000 at December 31, 1995. Short-term
borrowings increased $7,149,000, or 33.0%, to $28,823,000 at March 31,
1996, as compared to $21,674,000 at December 31, 1995. This was due
primarily to an increase in repurchase agreements.
In the first three months of 1996, the Corporation repurchased 11,598 shares
of its Class A stock at an aggregate cost of $318,000. 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, 1996, 10,500 of the 64,500 options which became
exercisable on January 1, 1993 (and expire December 31, 1996) have not yet
been exercised and 28,500 of the 39,000 options which became exercisable on
January 1, 1995 (and expire December 31, 1997) have not yet been exercised.
The following table sets forth the components of non-performing assets and
past due loans.
<TABLE>
<CAPTION>
March 31, 1996 December 31,1995
-------------- ----------------
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans $482 $532
Loans 90 days past due, still accruing 994 897
Restructured loans 0 0
Other real estate owned 1,185 1,380
Non-performing other assets 1 1
-------------- ----------------
Total non-performing assets $2,662 $2,810
============== ================
Total non-performing assets as a percentage of total assets 0.31% 0.33%
============== ================
Total non-performing assets as a percentage of loans plus non-performing assets 0.54% 0.58%
============== ================
</TABLE>
The ratio of non-performing assets to loans plus non-performing assets
decreased to .54% at March 31, 1996 from .58% at December 31, 1995. This
was due to decreases in the balance of non-accrual loans and other real
estate owned, offset partially by an increase in the balance of loans 90 days
past due and still accruing. The balance of loans outstanding increased
during the period, while the balance of non-performing assets decreased,
thereby causing a further decrease in the percentage of non-performing assets.
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AS COMPARED TO MARCH 31, 1995
SUMMARY
Net income for the three months ended March 31, 1996 increased 0.9% to
$2,191,000 as compared to $2,171,000 for the comparable period in 1995.
Earnings per share increased 2.1% to $.48 at March 31, 1996 as compared to
$.47 for the same period in 1995.
Operating earnings, which exclude security gains (losses) and the related
tax expense (benefit), were $2,190,000, or $.48 per share for the three
months ended March 31, 1996, as compared to $2,235,000, or $.48 per share
for the same period in 1995.
The Corporation's return on average assets was 1.03% for the three months
ended March 31, 1996, as compared to 1.21% achieved for the comparable
period in 1995. The return on average assets from operations of 1.03% for
the three months ended March 31, 1996 was less than the 1.25% achieved in the
comparable period of 1995.
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 3.96% for the three months ended March 31, 1996, as compared to
4.29% for the same period in 1995. The net interest margin expressed as a
percentage of average total assets, also on a fully taxable equivalent basis,
was 3.65% for the three months ended March 31, 1996, compared to 3.90% for
the same period in 1995. The decrease in the net interest margin reflects the
increase in interest expense the Corporation experienced due to the $78
million in deposit liabilities assumed in December 1995. The Corporation is
planning to reinvest investment security maturities and sales proceeds in
higher yielding loans in order to increase the net interest margin.
During the three months ended March 31, 1996, the Corporation recognized
security gains of approximately $1,000, after income taxes, representing an
insignificant portion of net income. During the same period in 1995, security
losses of approximately $64,000 after income tax benefits, were recognized,
representing 2.9% of net income.
INTEREST INCOME
Interest income, on a tax equivalent basis, for the three months ended
March 31, 1996 increased 18.4% to $15,344,000 from $12,963,000 for the
comparable period in 1995. The increase in interest income resulted from an
increase in average earning assets of $126,536,000 for the period ended
March 31, 1996, due largely to an increase of $64,339,000 in average U.S.
government obligations outstanding, and an increase of $40,885,000 in average
loan balances outstanding. The average yield on interest earning assets
decreased 13 basis points for the three months ended March 31, 1996 as
compared to the same period in 1995.
INTEREST EXPENSE
Total interest expense increased 26.9% for the three months ended
March 31, 1996 as compared to the prior year period. This increase resulted
in large part from a $65,226,000 increase in average time deposit balances
and from 34 and 59 basis point increases in the rates paid on time deposits
and savings deposits, respectively, for the three months ended March 31,
1996, as compared to the same period in 1995.
<PAGE>
PROVISION FOR LOAN LOSSES
The provision for loan losses of $150,000 for the three months ended
March 31, 1996 is $100,000 more than the provision for the comparable
period in 1995. The provision and the net recoveries for the period
resulted in the reserve representing 1.14% of total loans on March 31, 1996,
the same as the level at December 31, 1995. The adequacy of the reserve for
loan losses is consistent with management's consideration of the composition
of the portfolio, recent credit quality experience, and prevailing economic
conditions.
Within the last three years, the Corporation has rapidly grown its installment
loan portfolio through dealer paper, installment car loans originated by
dealers at the time of sale. It is possible that a weakening in the economic
cycle could adversely affect the quality of these loans and resultant
charge-offs may necessitate larger loan loss provisions.
OTHER INCOME, OTHER EXPENSE AND INCOME TAXES
Total other income, excluding security transactions, decreased 17.6% for the
three months ended March 31, 1996 as compared to the same period in 1995.
This was a combination of decreased trust revenue, trading security losses,
reduced gains on the sales of pooled loans and reduced other income. Other
operating income decreased $141,000 from the comparable period in 1995. Gains
of $48,000 were recognized on the sale of $4,460,000 of pooled loans for the
three months ended March 31, 1996 as compared to gains of $340,000 on the
sale of $9,261,000 of pooled loans in the prior year period.
Management anticipates continued sales from the current mortgage loan
production of the Corporation if mortgage loan originations are high relative
to historic norms and the sales of the loans are necessary to maintain the
asset/liability structure that the Corporation is trying to effect. 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.
Total other expense increased 6.8% or $390,000 for the three months ended
March 31, 1996 as compared to the same period in 1995.
Salaries and wages expense increased $258,000 or 9.9% and employee benefits
expense increased $49,000 or 9.4% for the three months ended March 31, 1996,
as compared to the same period last year as a result of new staffing at the
banking centers added in December 1995. Occupancy and furniture and equipment
expenses increased 10.8% to $862,000 for the three months ended March 31, 1996
from $778,000 in the prior year period. Data processing expense decreased
$8,000 or 2.3% to $336,000 for the three months ended March 31, 1996 from the
prior year period. Foreclosed property write-downs and expenses decreased
$58,000 to $4,000 for the three months ended March 31, 1996 from the prior
year period.
The Corporation's net overhead expense, total non-interest expense less
non-interest income divided by average assets, increased to 1.93% for the
three months ended March 31, 1996 from 1.91% in the prior year period as a
result of the income and expense items described above.
The Corporation's efficiency ratio is defined as operating expenses divided
by net revenue. (More specifically it is defined as non interest expense
expressed as a percentage of the sum of tax equivalent net interest income
and non interest income, excluding security gains). The consolidated
efficiency ratio for the three months ended March 31, 1996 was 63.4% as
compared to 61.7% for the prior year period. When the gains on the sales of
pooled loans are excluded, these ratios are 63.6% and 63.9%, respectively.
The change in the current year efficiency ratio is due to the income and
expense items noted above.
Income taxes for the three months ended March 31, 1996 decreased to $886,000
as compared to $947,000 for the comparable period in 1995 due to the
reclassification of expenses of certain acquisition costs. As a percent of
income before taxes, the provision for income taxes decreased to 28.8% for
the three months ended March 31, 1996 from 30.4% for the same period in 1995.
<PAGE>
LIQUIDITY
Liquidity is the availability of funds to meet all present and future
financial obligations arising in the daily operations of the business at a
minimal cost. These financial obligations consist of needs for funds to meet
extensions of credit, deposit withdrawals and debt servicing.
The sources of short-term liquidity utilized by the Corporation consist of
non-reinvested asset maturities, deposits and capital funds. Additional
liquidity is provided by bank lines of credit, repurchase agreements and the
ability to borrow from the Federal Reserve Bank. The Corporation has an
operating line with American National Bank and Trust Company of Chicago in
the amount of $10,000,000 with $2,000,000 available as of March 31, 1996.
Long-term liquidity needs will be satisfied primarily through retention of
capital funds. The Corporation does not deal in or use brokered deposits as
a source of liquidity. The Corporation purchases federal funds as a service
to its respondent banks, but does not rely upon these purchases for liquidity
needs.
The Corporation's dependence on large liabilities (defined as time deposits
over $100,000 and short-term borrowings) increased to 10.9% at March 31, 1996
from 9.6% at December 31, 1995. This is the ratio of total large liabilities
to total liabilities. This change was due to a $5,073,000 increase in time
deposits over $100,000 and a $7,971,000 increase in repurchase agreements
which resulted in a higher ratio of large liabilities to total liabilities.
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,
1996, the Corporation earned $2,191,000 and paid dividends of $1,119,000 to
stockholders, resulting in a retention of current earnings of $1,072,000.
The Corporation's dividend payout for the three months ended March 31, 1996
was 51.1%. The Corporation's risk-based capital ratio was 12.44% and the
leverage ratio was 6.56% as of March 31 1996, as compared to 12.36% and 6.92%
respectively as of December 31, 1995. The Corporation and its bank subsidiary
were well above all minimum required capital ratios as of March 31, 1996.
RATE SENSITIVE ASSETS AND LIABILITIES
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.
<PAGE>
The following table sets forth the static rate-sensitivity
analysis of the Corporation as of March 31, 1996.
<TABLE>
<CAPTION>
Rate Sensitive Within
----------------------------------------------------------------------
1-30 31-90 91-180 181 Days- Over
Days Days Days 1 Year 1 Year Total
----------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold $13,000 $0 $0 $0 $0 $13,000
Investment securities
U.S. Governments 42,612 17,039 18,764 62,092 81,467 221,974
Obligations of states and
political subdivisions 100 847 200 3,990 32,898 38,035
Other securities 8,728 10 0 1,702 13,559 23,999
Loans (net of unearned int.) 136,034 29,633 45,990 60,847 216,245 488,749
----------------------------------------------------------------------
Total rate-sensitive assets $200,474 $47,529 $64,954 $128,631 $344,169 $785,757
----------------------------------------------------------------------
Interest bearing transactions
deposits $131,215 $0 $0 $0 $0 $131,215
Savings deposits 81,154 0 0 0 0 81,154
Money market deposits 126,900 0 0 0 0 126,900
Time deposits 39,682 49,298 77,259 89,361 90,052 345,652
Short-term borrowings:
Federal funds purchased &
repurchase agreements 500 0 0 0 19,573 20,073
Other 8,750 0 0 0 0 8,750
Long-term debt 0 0 0 5,000 5,000
----------------------------------------------------------------------
Total rate-sensitive liabilities $388,201 $49,298 $77,259 $89,361 $114,625 $718,744
----------------------------------------------------------------------
Rate-sensitive assets less
rate-sensitive liabilities ($187,727) ($1,769) ($12,305) $39,270 $229,544 $67,013
----------------------------------------------------------------------
----------------------------------------------------------------------
Cumulative Gap ($187,727) ($189,496) ($201,801) ($162,531) $67,013 ---
======================================================================
Cumulative amounts as
percentage of total
rate-sensitive assets -93.64% -76.41% -64.48% -36.81% 8.53% ---
======================================================================
Cumulative ratio 0.52X 0.57X 0.61X 0.73X 1.09X 1.09X
======================================================================
</TABLE>
The foregoing table shows a negative (liability sensitive) rate-sensitivity
gap of $187.7 million in the 1-30 day repricing category. The gap beyond 30
days, through 180 days, becomes slightly more liability sensitive as rate-
sensitive assets that reprice in those time periods are slightly less in
volume than rate-sensitive liabilities that are subject to repricing in the
same respective time periods. The gap beyond 180 days become less liability
sensitive as rate-sensitive assets that reprice after 180 days become greater
in volume than rate-sensitive liabilities that are subject to repricing in
the same respective time periods. The composition of the gap structure at
March 31, 1996 will benefit the Corporation more if interest rates fall
during the next 180 days by allowing the net interest margin to grow as
liability rates would reprice more quickly than rates on interest
rate-sensitive assets. After 180 days, a rate increase would benefit the
Corporation because the volume of rate-sensitive assets repricing would
exceed the volume of rate-sensitive liabilities that would be repricing.
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
AVERAGE BALANCE SHEETS AND INTEREST RATES
QUARTERS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
---------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold $23,675 $321 5.45% $8,336 $121 5.89%
Investment securities
U.S. Government obligations 222,235 3,227 5.82% 157,896 2,394 6.15%
Obligations of states and political
subdivisions (1) 37,165 786 8.48% 34,295 739 8.74%
Other securities 24,120 337 5.60% 21,017 341 6.58%
Loans (net of unearned interest) (1) (2) 481,131 10,673 8.90% 440,246 9,368 8.63%
------------------ ------------------
Total interest earning assets $788,326 $15,344 7.81% $661,790 $12,963 7.94%
======= =======
Cash and due from banks 34,654 31,498
Premises and equipment 21,619 21,670
Reserve for possible loan losses (5,506) (5,420)
Other assets 19,807 18,142
-------- --------
Total Assets $858,900 $727,680
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing transaction deposits $131,895 $520 1.58% $123,288 $577 1.90%
Savings deposits 76,919 601 3.13% 47,734 299 2.54%
Money market deposits 131,491 1,238 3.78% 127,645 1,148 3.65%
Time deposits 347,754 4,770 5.50% 282,528 3,593 5.16%
Short-term borrowings:
Federal funds purchased and
repurchase agreements 15,771 201 5.11% 11,112 169 6.16%
Other 9,000 160 7.14% 5,190 103 8.05%
Long-term debt 5,000 69 5.54% 5,000 68 5.54%
------------------ ------------------
Total interest bearing liabilities $717,830 $7,559 4.23% $602,497 $5,957 4.01%
======= =======
Net interest spread 3.58% 3.93%
======= =======
Demand deposits 67,328 61,214
Other liabilities 5,514 3,892
Stockholders' equity 68,228 60,077
-------- --------
Total Liabilities and Stockholders' Equity $858,900 $727,680
======== ========
Interest income / earning assets (1) $788,326 $15,344 7.81% $661,790 $12,963 7.94%
Interest expense / earning assets 788,326 7,559 3.85% 661,790 5,957 3.65%
----------------- -----------------
Net interest margin (1) $7,785 3.96% $7,006 4.29%
================= =================
<FN>
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35%
for 1996 and 1995.
(2) Non-accrual loans have been included in average loans, net of
unearned interest.
</FN>
</TABLE>
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
CHANGES IN NET INTEREST INCOME
QUARTERS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
Change due to (1)
Average Average Total
Volume Yield/Rate Change
-----------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Increase (decrease) in interest income:
Federal funds sold $208 (8) $200
Investment securities:
U.S. Government obligations 929 (96) 833
Obligations of states and political
subdivisions (2) 61 (14) 47
Other securities (89) 85 (4)
Loans (2) 895 410 1,305
-----------------------------------
Change in interest income (2) $2,004 $377 $2,381
-----------------------------------
Increase (decrease) in interest expense:
Interest bearing transaction deposits $45 ($102) ($57)
Savings deposits 215 87 302
Money market deposits 35 55 90
Time deposits 878 299 1,177
Short-term borrowings:
Federal funds purchased and
repurchase agreements 52 (20) 32
Other 67 (10) 57
Long-term debt 0 1 1
-----------------------------------
Change in interest expense $1,292 $310 $1,602
-----------------------------------
Increase in net interest income (2) $712 $67 $779
===================================
<FN>
(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 1996 and 1995.
</FN>
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
ITEM 4:
The annual meeting of Stockholders of First Busey Corporation
was held on April 16, 1996. At that meeting, the following
matters were approved by the Stockholders:
1. Election of the following seventeen (17) directors to serve
until the next annual meeting of stockholders:
Joseph M. Ambrose Samuel P. Banks
T. O. Dawson Victor F. Feldman
Kenneth M. Hendren Judith L. Ikenberry
E. Phillips Knox P. David Kuhl
V. B. Leister, Jr. Douglas C. Mills
Linda M. Mills Robert C. Parker
John W. Pollard David C. Thies
Edwin A. Scharlau II Ben Snyder
Arthur R. Wyatt
2. Increase of the number of authorized shares of stock to the following:
A. 40,000,000 shares of Class A Common Stock, without par value
B. 10,000,000 shares of Class B Common Stock, without par value
For: 10,198,468 (99.45%) Against: 33,504 (0.32%)
Abstain: 23,311 (0.23%)
3. Ratification of the appointment of McGladrey & Pullen, LLP as
independent auditors for the fiscal year ending December 31, 1995.
For: 10,241,459(99.87%) Against: 6,601 (0.06%)
Abstain: 7,223 (0.07%)
ITEM 6: Exhibits and Reports on Form 8-K
(a) There were no reports on Form 8-K filed during the three
months ending March 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused the report to be signed on
its behalf by the undersigned thereunto duly authorized.
FIRST BUSEY CORPORATION
(Registrant)
By: //Scott L. Hendrie//
---------------------------
Scott L. Hendrie
Senior Vice President and
Chief Financial Officer
(Principal financial and accounting officer)
Date: May 13, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 41,548
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 216,086
<INVESTMENTS-CARRYING> 66,024
<INVESTMENTS-MARKET> 66,594
<LOANS> 488,749
<ALLOWANCE> 5,569
<TOTAL-ASSETS> 863,834
<DEPOSITS> 755,886
<SHORT-TERM> 28,823
<LIABILITIES-OTHER> 5,938
<LONG-TERM> 5,000
0
0
<COMMON> 6,291
<OTHER-SE> 61,896
<TOTAL-LIABILITIES-AND-EQUITY> 863,834
<INTEREST-LOAN> 10,603
<INTEREST-INVEST> 4,075
<INTEREST-OTHER> 322
<INTEREST-TOTAL> 15,000
<INTEREST-DEPOSIT> 7,129
<INTEREST-EXPENSE> 7,559
<INTEREST-INCOME-NET> 7,441
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 6,153
<INCOME-PRETAX> 3,077
<INCOME-PRE-EXTRAORDINARY> 2,191
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,191
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.48
<YIELD-ACTUAL> 7.81
<LOANS-NON> 482
<LOANS-PAST> 994
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 750
<ALLOWANCE-OPEN> 5,473
<CHARGE-OFFS> 84
<RECOVERIES> 30
<ALLOWANCE-CLOSE> 5,569
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 115
</TABLE>
