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 3/31/97 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.)
201 W. Main St.
Urbana, Illinois 61801
------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
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 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 May 12, 1997
--------------------------------------- -----------------------------
<S> <C>
Class A Common Stock, without par value 5,788,578
Class B Common Stock, without par value 1,125,000
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
(Dollars in thousands)
--------------- -----------------
<S> <C> <C>
ASSETS
Cash and due from banks $37,109 $33,738
Federal funds sold 10,800 0
Securities held to maturity (fair value 1997, $51,680; 1996, $55,800) 51,347 55,107
Securities available for sale (amort. cost 1997, $168,407; 1996, $166,189) 172,300 171,243
Loans (net of unearned interest) 560,492 569,500
Allowance for loan losses (6,329) (6,131)
------------ ------------
Net loans $554,163 $563,369
Premises and equipment 22,280 21,588
Other assets 18,925 19,873
------------ ------------
Total assets $866,924 $864,918
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing 76,364 78,077
Interest bearing 692,885 688,850
------------ ------------
Total deposits $769,249 $766,927
Short-term borrowings 6,500 14,405
Long-term debt 10,000 5,000
Other liabilities 6,616 5,169
------------ ------------
Total liabilities $792,365 $791,501
------------ ------------
Stockholders' Equity
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 20,367 20,594
Retained earnings 48,651 47,402
Unrealized gain (loss) on securities available for sale, net 2,530 3,285
------------ ------------
Total stockholders' equity before treasury stock, unearned ESOP $77,839 $77,572
shares and deferred compensation for stock grants
Treasury stock, at cost (2,635) (3,489)
Unearned ESOP shares and deferred compensation for stock grant (645) (666)
------------ ------------
Total stockholders' equity $74,559 73,417
------------ ------------
Total liabilities and stockholders' equity $866,924 864,918
============ ============
Class A Common Shares outstanding at period end 5,792,933 5,721,712
============ ============
Class B Common Shares outstanding at period end 1,125,000 1,125,000
============ ============
</TABLE>
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1997 March 31, 1996
--------------- ---------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $37,109 $41,548
Federal funds sold 10,800 13,000
Securities held to maturity (fair value 1997 $51,680; 1996 $66,594) 51,347 66,024
Securities available for sale (amort. cost 1997 $168,407; 1996 $211,830) 172,300 216,086
Trading securities at fair value 0 1,898
Loans (net of unearned interest) 560,492 488,749
Allowance for loan losses (6,329) (5,569)
------------ ------------
Net loans $554,163 $483,180
Premises and equipment 22,280 21,413
Other assets 18,925 20,685
------------ ------------
Total assets $866,924 $863,834
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $76,364 $70,965
Interest bearing 692,885 684,921
------------ ------------
Total deposits $769,249 $755,886
Short-term borrowings 6,500 28,823
Long-term debt 10,000 5,000
Other liabilities 6,616 5,938
------------ ------------
Total liabilities $792,365 $795,647
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 20,367 20,388
Retained earnings 48,651 43,546
Unrealized gain (loss) on securities available for sale, net 2,530 2,701
------------ ------------
Total stockholders' equity before treasury stock, unearned ESOP $77,839 $ 72,926
shares and deferred compensation for stock grants
Treasury stock, at cost (2,635) (3,951)
Unearned ESOP shares and deferred compensation for stock grants (645) (788)
------------ ------------
Total stockholders' equity $74,559 $68,187
Total liabilities and stockholders' equity $866,924 $863,834
============ ============
Class A Common Shares outstanding at period end 5,792,933 3,781,207
============ ============
Class B Common Shares outstanding at period end 1,125,000 750,000
============ ============
</TABLE>
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
(Dollars in thousands,
except per share amounts)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $12,008 $ 10,603
Interest and dividends on investment securities:
Taxable interest income 2,641 3,531
Non-taxable interest income 500 511
Dividends 28 33
Interest on federal funds sold 100 322
---------- ----------
Total interest income $15,277 $ 15,000
---------- ----------
INTEREST EXPENSE:
Deposits $7,150 $7,129
Short-term borrowings 132 361
Long-term debt 101 69
---------- ----------
Total interest expense $7,383 $7,559
---------- ----------
Net interest income $7,894 $7,441
Provision for loan losses 200 150
---------- ----------
Net interest income after provision for loan losses $7,694 $7,291
---------- ----------
OTHER INCOME:
Trust $775 $616
Commissions and brokers fees, net 287 205
Service charges on deposit accounts 720 699
Other service charges and fees 270 201
Security gains (losses), net 99 1
Trading security gains (losses), net 1 (88)
Gain on sales of pooled loans 35 48
Other operating income 269 257
---------- ----------
Total other income 2,456 $1,939
---------- ----------
OTHER EXPENSES:
Salaries and wages $3,005 $2,852
Employee benefits 673 568
Net occupancy expense of bank premises 565 468
Furniture and equipment expenses 430 394
Data processing 359 336
Stationery, supplies and printing 184 158
Foreclosed property write-downs and expenses 0 4
Amortization expense 330 330
Other operating expenses 1,196 1,043
---------- ----------
Total other expenses $6,742 $6,153
---------- ----------
Income before income taxes $3,408 $3,077
Income taxes 1,000 886
---------- ----------
Net income $2,408 $2,191
========== ==========
NET INCOME PER SHARE OF COMMON STOCK AND STOCK EQUIVALENTS: $0.34 $0.32
========== ==========
DIVIDENDS DECLARED PER SHARE:
Class A Common Stock $0.17 $0.17
========== ==========
Class B Common Stock $0.15 $0.15
========== ==========
</TABLE>
<PAGE>
FIRST BUSEY CORPORATION and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $2,408 $2,191
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 829 825
Provision for loan losses 200 150
Increase in deferred income taxes 10 10
Amortization of investment security discounts (131) (606)
(Gain) on sales of investment securities, net (99) (1)
Proceeds from sales of pooled loans 5,180 4,508
Loans originated for sale (4,973) (3,597)
Gain on sale of pooled loans (35) (48)
Change in assets and liabilities:
Decrease in other assets 1,015 1,204
Increase in accrued expenses 564 (49)
(Decrease) in interest payable (90) (126)
Increase in income taxes payable 973 796
---------- ----------
Net cash provided by operating activities $5,851 $5,257
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities classified available for sale $1,571 $4,954
Proceeds from maturities of securities classified available for sale 37,325 215,624
Proceeds from maturities of securities classified held to maturity 4,079 12,090
Purchase of securities classified available for sale (40,903) (215,634)
Purchase of securities classified held to maturity (300) (16,521)
Increase in federal funds sold (10,800) (12,350)
(Increase) decrease in loans 8,834 (7,927)
Purchases of premises and equipment (1,171) (38)
---------- ----------
Net cash (used in) investing activities ($1,365) ($19,802)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) in certificates of deposit ($844) ($108)
Net increase in demand, money market and saving deposits 3,166 11,097
Cash dividends paid (1,159) (1,119)
Purchase of treasury stock (177) (318)
Proceeds from sale of treasury stock 804 34
Proceeds from long-term borrowings 5,000 0
Principal payments on short-term borrowings (1,500) (500)
Net increase (decrease) in federal funds purchased,
repurchase agreements and Federal Reserve discount borrowings (6,405) 7,649
---------- ----------
Net cash provided by (used in) financing activities ($1,115) $16,735
---------- ----------
Net increase (decrease) in cash and cash equivalents $3,371 $2,190
Cash and due from banks, beginning 33,738 39,358
---------- ----------
Cash and due from banks, ending $37,109 $41,548
========== ==========
</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, 1997 and December 31, 1996 were
as follows:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Commercial $59,621 $62,065
Real estate construction 25,970 26,184
Real estate - farmland 11,037 11,468
Real estate - 1-4 family residential mortgage 214,307 207,946
Real estate - multifamily mortgage 72,516 74,245
Real estate - non-farm nonresidential mortgage 125,649 131,350
Installment 39,096 39,707
Agricultural 12,297 16,537
------------------------------------------
$560,493 569,502
Less:
Unearned interest 1 2
------------------------------------------
$560,492 $569,500
------------------------------------------
Less:
Allowance for loan losses 6,329 6,131
------------------------------------------
Net loans $554,163 $563,369
==========================================
</TABLE>
The real estate-mortgage category includes loans held for sale with carrying
values of $1,275,000 at March 31, 1997 and $1,447,000 at December 31, 1996;
these loans had fair market values of $1,276,000 and $1,457,000, 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,
1997 1996
------------ ------------
<S> <C> <C>
Net income $2,408,000 $2,191,000
Shares:
Weighted average common shares outstanding 6,911,371 6,805,560
Dilutive effect of outstanding options, as determined
by the application of the treasury stock method 99,847 107,660
------------ ------------
Weighted average common shares outstanding,
as adjusted 7,011,218 6,913,220
============ ============
Net income per share of common stock and stock equivalents: $0.34 $0.32
============ ============
</TABLE>
NOTE 4: SUPPLEMENTAL CASH FLOW DISCLOSURES FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1996.
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $7,473 $7,685
========== ==========
Income taxes $12 $0
========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Other real estate acquired in settlement of loans $0 $33
========== ==========
Change in unrealized gain (loss) on securities available for sale ($1,161) ($603)
========== ==========
(Decrease) increase in deferred income taxes attributable to the
unrealized (gain) loss on investment securities available for sale $406 $211
========== ==========
</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, 1997
(unaudited) when compared with December 31, 1996 and the results of operations
for the three months ended March 31, 1997 and 1996 (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, 1997 AS COMPARED TO DECEMBER 31, 1996
Total assets increased $2,006,000, or 0.2%, to $866,924,000 at March 31, 1997
from $864,918,000 at December 31, 1996.
Securities held to maturity decreased $3,760,000, or 6.8%, to $51,347,000 at
March 31, 1997 from $55,107,000 at December 31, 1996. Securities available for
sale increased $1,057,000, or 0.6%, to $172,300,000 at March 31, 1997 from
$171,243,000 at December 31, 1996.
Loans decreased $9,008,000 or 1.6%, to $560,492,000 at March 31, 1997 from
$569,500,000 at December 31, 1996, primarily due to decreases in multifamily and
non-farm nonresidential mortgage loans that exceeded the increases in other
loan categories.
Total deposits increased $2,322,000, or 0.3%, to $769,249,000 at March 31, 1997
from $766,927,000 at December 31, 1996. Non-interest bearing deposits decreased
2.2% to $76,364,000 at March 31, 1997 from $78,077,000 at December 31, 1996.
Interest bearing deposits increased 0.6% to $692,885,000 at March 31, 1997 from
$688,850,000 at December 31, 1996. Short-term borrowings decreased $7,905,000,
or 54.9%, to $6,500,000 at March 31, 1997, as compared to $14,405,000 at
December 31, 1996. This was due primarily to a decrease in federal funds
purchased.
In the first three months of 1997, the Corporation repurchased 7,879 shares of
its Class A stock at an aggregate cost of $177,000. 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, 1997, 4,500 of the 58,500 options which became exercisable on
January 1, 1995 (and expire December 31, 1997) have not yet been exercised and
54,341 of the 133,441 options which became exercisable on January 1, 1997 (and
expire December 31, 1999) have not yet been exercised.
The following table sets forth the components of non-performing assets and past
due loans.
<TABLE>
<CAPTION>
March 31, 1997 December 31,1996
----------------- ------------------
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans $ -- $--
Loans 90 days past due, still accruing 1,291 1,002
Restructured loans -- --
Other real estate owned 760 805
Non-performing other assets 5 1
----------------- ------------------
Total non-performing assets $2,056 $1,808
================= ==================
Total non-performing assets as a percentage of total assets 0.24% 0.21%
================= ==================
Total non-performing assets as a percentage of loans plus non-performing assets 0.37% 0.32%
================= ==================
</TABLE>
The ratio of non-performing assets to loans plus non-performing assets increased
to 0.37% at March 31, 1997 from 0.32 % at December 31, 1996. This was due to
increases in the balance of loans 90 days past due and still accruing, offset
partly by a decrease in other real estate owned. The balance of loans
outstanding decreased during the period, while the balance of non-performing
assets increased, thereby causing a further increase in the percentage of non-
performing assets.
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AS COMPARED TO MARCH 31, 1996
SUMMARY
Net income for the three months ended March 31, 1997 increased 9.9% to
$2,408,000 as compared to $2,191,000 for the comparable period in 1996.
Earnings per share increased 6.3% to $.34 at March 31, 1997 as compared to $.32
for the same period in 1996.
Operating earnings, which exclude security gains (losses) and the related tax
expense (benefit), were $2,343,000, or $.33 per share for the three months ended
March 31, 1997, as compared to $2,190,000, or $.32 per share for the same period
in 1996.
The Corporation's return on average assets was 1.13% for the three months ended
March 31, 1997, as compared to 1.03% achieved for the comparable period in 1996.
The return on average assets from operations of 1.10% for the three months ended
March 31, 1997 was an improvement over the 1.03% achieved in the comparable
period of 1996.
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 4.22% for the three months ended March 31, 1997, as compared to 3.96% for
the same period in 1996. The net interest margin expressed as a percentage of
average total assets, also on a fully taxable equivalent basis, was 3.85% for
the three months ended March 31, 1997, compared to 3.65% for the same period in
1996. The increase in the net interest margin reflects the increase in interest
income the Corporation experienced due to increasing the average balance of
loans by $79.6 million in the current period over the same period last year.
During the three months ended March 31, 1997, the Corporation recognized
security gains of approximately $65,000, after income taxes, representing 2.7%
of net income. During the same period in 1996, security gains of approximately
$1,000 after income taxes, were recognized, representing an insignificant
portion of net income.
INTEREST INCOME
Interest income, on a tax equivalent basis, for the three months ended March 31,
1997 increased 1.8% to $15,625,000 from $15,344,000 for the comparable period
in 1996. The increase in interest income resulted from an increase in average
earning assets of $4,706,000 for the period ended March 31, 1997, an increase of
0.6% from the 1996 level of average earning assets. The average yield on
interest earning assets increased 18 basis points for the three months ended
March 31, 1997 as compared to the same period in 1996, as investment security
proceeds were reinvested in loans.
INTEREST EXPENSE
Total interest expense decreased 2.3% for the three months ended March 31, 1997
as compared to the prior year period. This decrease resulted in large part from
a $10,036,000 decrease in the average balance of money market deposits and a
$17,211,000 decrease in the average balance of short-term borrowings, for the
three months ended March 31, 1997, as compared to the same period in 1996.
<PAGE>
PROVISION FOR LOAN LOSSES
The provision for loan losses of $200,000 for the three months ended March 31,
1997 is $50,000 more than the provision for the comparable period in 1996. The
provision and the low level of net charge-offs for the period resulted in the
reserve representing 1.13% of total loans on March 31, 1997, a slight increase
from the 1.08% at December 31, 1996. 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 future 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, increased 26.7% for the
three months ended March 31, 1997 as compared to the same period in 1996. This
was a combination of increased trust revenue, commissions and brokers fees,
other service charges and fees, securities gains and trading security gains.
Gains of $35,000 were recognized on the sale of $5,145,000 of pooled loans for
the three months ended March 31, 1997 as compared to gains of $48,000 on the
sale of $4,460,000 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 allow 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 9.6% or $589,000 for the three months ended March
31, 1997 as compared to the same period in 1996.
Salaries and wages expense increased $153,000 or 5.4% and employee benefits
expense increased $105,000 or 18.5% for the three months ended March 31, 1997,
as compared to the same period last year. The Corporation had 390 and 375 full-
time-equivalent employees as of March 31,1997 and 1996, respectively.
Occupancy and furniture and equipment expenses increased 15.4% to $995,000 for
the three months ended March 31, 1997 from $862,000 in the prior year period.
Data processing expense increased $23,000 or 6.8% to $359,000 for the three
months ended March 31, 1997 from the prior year period. Foreclosed property
write-downs and expenses were $4,000 for the three months ended March 31, 1996;
there were no foreclosed property write-downs and expenses in 1997.
The Corporation's net overhead expense, total non-interest expense less non-
interest income divided by average assets, increased to 2.05% for the three
months ended March 31, 1997 from 1.93% 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, 1997 was 63.6% as compared to 63.4%
for the prior year period. When the gains on the sales of pooled loans are
excluded, these ratios are 63.8% and 63.6%, 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, 1997 increased to $1,000,000
as compared to $886,000 for the comparable period in 1996 due to the higher
level of pre-tax income. As a percent of income before taxes, the provision for
income taxes increased to 29.3% for the three months ended March 31, 1997 from
28.8% for the same period in 1996.
<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 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 has an operating line with
American National Bank and Trust Company of Chicago in the amount of $10,000,000
with $3,500,000 available as of March 31, 1997. Long-term liquidity needs will
be satisfied primarily through retention of capital funds.
The Corporation's dependence on large liabilities (defined as time deposits over
$100,000 and short-term borrowings) decreased to 9.1% at March 31, 1997 from
10.1% at December 31, 1996. This is the ratio of total large liabilities to
total liabilities. This change was due to a $7,905,000 decrease in short-term
borrowings which resulted in a lower 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,
1997, the Corporation earned $2,408,000 and paid dividends of $1,159,000 to
stockholders, resulting in a retention of current earnings of $1,249,000. The
Corporation's dividend payout for the three months ended March 31, 1997 was
48.1%. The Corporation's risk-based capital ratio was 13.20% and the leverage
ratio was 7.43% as of March 31 1997, as compared to 12.48% and 7.14%
respectively as of December 31, 1996. The Corporation and its bank subsidiary
were well above all minimum required capital ratios as of March 31, 1997.
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, 1997.
<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 $10,800 $0 $0 $0 $0 $10,800
Investment securities
U.S. Governments 15,207 22,820 16,024 47,748 65,097 166,896
Obligations of states and
political subdivisions 250 857 104 6,433 29,350 36,994
Other securities 2,230 58 87 768 16,614 19,757
Loans (net of unearned int.) 150,568 28,065 44,757 64,556 272,546 560,492
---------------------------------------------------------------------------------
Total rate-sensitive assets $179,055 $51,800 $60,972 $119,505 $383,607 $794,939
---------------------------------------------------------------------------------
Interest bearing transaction
deposits $145,361 $0 $0 $0 $0 $145,361
Savings deposits 85,241 0 0 0 0 85,241
Money market deposits 116,265 0 0 0 0 116,265
Time deposits 33,092 49,759 69,137 78,943 115,087 346,018
Short-term borrowings:
Federal funds purchased &
repurchase agreements 0 0 0 0 0 0
Other 0 0 6,500 0 0 6,500
Long-term debt 0 0 0 0 10,000 10,000
---------------------------------------------------------------------------------
Total rate-sensitive
liabilities $379,959 $49,759 $75,637 $78,943 $125,087 $709,385
---------------------------------------------------------------------------------
Rate-sensitive assets less
rate-sensitive liabilities ($200,904) $2,041 ($14,665) $40,562 $258,520 $85,554
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Cumulative Gap ($200,904) ($198,863) ($213,528) ($172,966) $85,554 ---
=================================================================================
Cumulative amounts as a
percentage of total
rate-sensitive assets -25.27% -25.02% -26.86% -21.76% 10.76% ---
=================================================================================
Cumulative ratio 0.47X 0.54X 0.58X 0.70X 1.12X 1.12X
=================================================================================
</TABLE>
The foregoing table shows a negative (liability sensitive) rate-sensitivity gap
of $200.9 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, 1997 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, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-----------------------------------------------------------------------
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 $7,680 $100 5.30% $23,675 $321 5.45%
Investment securities
U.S. Government obligations 167,324 2,416 5.86% 222,235 3,227 5.82%
Obligations of states and political
subdivisions (1) 36,896 769 8.46% 37,165 786 8.48%
Other securities 20,427 253 5.01% 24,120 337 5.60%
Loans (net of unearned interest) (1) (2) 560,759 12,087 8.74% 481,131 10,673 8.90%
--------------------- ---------------------
Total interest earning assets $793,086 $15,625 7.99% $788,326 $15,344 7.81%
======= =======
Cash and due from banks 38,497 34,654
Premises and equipment 21,939 21,619
Reserve for possible loan losses -6,248 -5,506
Other assets 17,661 19,807
-------- --------
Total Assets $864,935 $858,900
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing transaction deposits 142,848 616 1.75% $131,895 $520 1.58%
Savings deposits 84,303 677 3.26% 76,919 601 3.13%
Money market deposits 121,455 1,115 3.72% 131,491 1,238 3.78%
Time deposits 348,931 4,741 5.51% 347,754 4,770 5.50%
Short-term borrowings:
Federal funds purchased and repurchase
agreements 310 6 7.90% 15,771 201 5.11%
Other 7,250 127 7.08% 9,000 160 7.14%
Long-term debt 7,167 101 5.73% 5,000 69 5.54%
--------------------- ---------------------
Total interest bearing liabilities $712,264 $7,383 4.20% $717,830 $7,559 4.23%
======= =======
Net interest spread 3.79% 3.58%
======= =======
Demand deposits 72,657 67,328
Other liabilities 5,734 5,514
Stockholders' equity 74,280 68,228
-------- --------
Total Liabilities and Stockholders' Equity $864,935 $858,900
======== ========
Interest income / earning assets (1) $793,086 15,625 7.99% $788,326 $15,344 7.81%
Interest expense / earning assets 793,086 7,383 3.77% 788,326 7,559 3.85%
--------------------- ---------------------
Net interest margin (1) $8,242 4.22% $7,785 3.96%
===================== =====================
<FN>
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35%
for 1997 and 1996.
(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, 1997 AND 1996
<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 ($209) ($12) ($221)
Investment securities:
U.S. Government obligations (793) (18) (811)
Obligations of states and political
subdivisions (2) (6) (11) (17)
Other securities (48) (36) (84)
Loans (2) 1,706 (292) 1,414
-----------------------------------
Change in interest income (2) $650 ($369) $281
-----------------------------------
Increase (decrease) in interest expense:
Interest bearing transaction deposits $45 $51 $96
Savings deposits 59 17 76
Money market deposits (93) (30) (123)
Time deposits 16 (45) (29)
Short-term borrowings:
Federal funds purchased and repurchase
agreements (424) 229 (195)
Other (31) (2) (33)
Long-term debt 31 1 32
-----------------------------------
Change in interest expense ($397) $221 ($176)
-----------------------------------
Increase in net interest income (2) $1,047 ($590) $457
===================================
<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
1997 and 1996.
</FN>
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
ITEM 4:
The annual meeting of Stockholders of First Busey Corporation was held on
April 16, 1997. 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. Ratification of the appointment of McGladrey & Pullen, LLP as
independent auditors for the fiscal year ending December 31, 1997.
For: 14,542,596 (99.87%)
Against: 1,682 (0.01%)
Abstain: 17,029 (0.12%)
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, 1997.
<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, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<PERIOD-TYPE> 3-MOS
<CASH> 37,109
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 10,800
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 172,300
<INVESTMENTS-CARRYING> 51,347
<INVESTMENTS-MARKET> 51,680
<LOANS> 560,492
<ALLOWANCE> 6,329
<TOTAL-ASSETS> 866,924
<DEPOSITS> 769,249
<SHORT-TERM> 6,500
<LIABILITIES-OTHER> 6,616
<LONG-TERM> 10,000
0
0
<COMMON> 6,291
<OTHER-SE> 68,268
<TOTAL-LIABILITIES-AND-EQUITY> 866,924
<INTEREST-LOAN> 12,008
<INTEREST-INVEST> 3,169
<INTEREST-OTHER> 100
<INTEREST-TOTAL> 15,277
<INTEREST-DEPOSIT> 7,150
<INTEREST-EXPENSE> 7,383
<INTEREST-INCOME-NET> 7,894
<LOAN-LOSSES> 200
<SECURITIES-GAINS> 99
<EXPENSE-OTHER> 6,742
<INCOME-PRETAX> 3,408
<INCOME-PRE-EXTRAORDINARY> 2,408
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,408
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
<YIELD-ACTUAL> 7.99
<LOANS-NON> 0
<LOANS-PAST> 1,291
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 875
<ALLOWANCE-OPEN> 6,131
<CHARGE-OFFS> 66
<RECOVERIES> 64
<ALLOWANCE-CLOSE> 6,329
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,075
</TABLE>
