First Busey income drops in third quarter from a year ago
CHAMPAIGN — Busey Bank's parent company, First Busey Corp., reported a 35 percent drop in third-quarter net income on Tuesday.
Net income totaled $4.9 million for the quarter that ended Sept. 30, down from $7.6 million for the same quarter a year earlier.
Earnings for the quarter amounted to 5 cents per fully diluted common share, down from 8 cents per share a year earlier. On Friday, the company paid a cash dividend of 4 cents a share to stockholders.
First Busey CEO Van Dukeman said the lower earnings reflect changes the company is making to position itself for growth, profitability and a strong balance sheet.
That includes investment in talent, Dukeman said. Salaries, wages and employee benefits increased to $16.5 million in the third quarter, up from $13.6 million in the third quarter of 2011. Employee recruiting expense rose by $400,000 from last year.
Data processing expense also went up, as a result of the bank's core system conversion in September.
Other operating expenses likewise rose, as a result of increased spending on marketing and business development.
Also Tuesday, First Busey announced it has created Trevett Capital Partners, a private wealth management boutique to serve "high net worth clientele" in southwest Florida.
"A highly tenured team of sophisticated wealth management professionals with an in-depth knowledge of the Florida market" will provide investment, estate planning, trust and private banking services, the company said.
The new entity derives its name from the Trevett-Mattis Banking Co., a forerunner of Bank of Illinois and today's Busey Bank.
Dukeman said the company's loan growth initiative increased gross loans to $2.04 billion, up about 0.6 percent from the close of the previous quarter.
"We are encouraged by the volumes building in our loan pipeline and the new loan growth experienced in recent quarters," Dukeman said.
Gross loans have yet to catch up with volume from a year earlier, when Busey had $2.1 billion in gross loans.
Dukeman said this year's drought didn't affect the bank greatly.
"Loans to finance agricultural production and other loans to farmers do not represent a significant portion of our loan portfolio," he said, adding they make up only about 1 percent of total loans.
"The economic impact of the drought appears to be less than originally anticipated in our markets," Dukeman said. "Commodity prices along with crop insurance have helped soften the effect of poor corn yields."
Net income for one First Busey subsidiary was up from a year earlier, while net income for another was down.
Busey Wealth Management's net income was $780,000 in the third quarter, up from $749,000 a year earlier. FirsTech's net income was $237,000, down from $381,000 for the same quarter in 2011.
Many of First Busey's statistics indicated improvement in asset quality, but the company cited two areas where results differed from the end of the second quarter.
Loans 30 to 89 days past due increased to $7.9 million on Sept. 30, up from $4.2 million on June 30. The company said the increase came as the result of "a few large commercial credits that are actively being pursued for collection."
Other non-performing assets increased to $8.5 million on Sept. 30, up from $7.8 million on June 30. The increase in "other real estate owned" — a key component of other non-performing assets — was due to the foreclosure of a large commercial property, the company said.