First Busey Corporation
Annual Report 1998

Plain-text annual report

“%%m FIRST BUSEYCORPORATION ANNUAL REPORT 1998 I DOUBT IFWILL WAS THINKING of the financial services industry when he wrote these words – but oh, how true Mis quote is in today’s business climate. We, at First Busey Corporation, are certainly not just “sitting there!” We have a goal – to remain independent. We are determined to “keep Buey – Bu.rey.f” During 1998, Management and the Board began the process of formulating our strategic plan through the year 2010.Through this process, we determined there were several significant decisions that needed to be made during 199S to position us to achieve our future goals. l:. First Busey Corporation Class B stock w= eliminated, leaving only Class A stock outstanding. .:+ Busey Business Bank, Indianapolis, was chartered on January 12th and ten months later became Busey Bank’s 19th Banking Center. Total loans at this location now exceed $59 million. +:. To capitalize on our financial expertise in asset management, we formed Busey Investment Group (“BIG”). This subsidiary will be located on Windsor Road in Champaign and combines the services currently available through First Busey Trust & Investment Co. and First Busey Securities. As the largest provider of asset management in Champaign County, we think the combination of these two entities into one location will provide a tremendous synergy for our clients. l:. First Busey Corporation stock split “two-for-one” on August 3. .:. On October 1, First Busey Corporation stock began trading on Nasdaq National Market under the symbol BUSE. We believe this move will make First Busey Corporation stock more visible and marketable for our Shareholders. +:. We are extremely pleased with the performance of First Busey Corporation stock during 1998. The closing price on December 31, 1998 was $18.25 per share, an increase of 32.7% from the closing price of $13.75 per share on December 31, 1997. There were 13,705,000 shares outstanding with a market capitalization in excess of $250 million. +:. One of the most important “lo~-r~e” decisions made by Busey Bank in 1998 was to bring its information technology systems bad under the Busey umbrella. For the past ten years, an outside vendor handled these systems. This decision will allow us greater flexibility and control over the financial services provided to our customers, as well as assuring us a system that is Y2K compliant. .:+ Our marketing campaign for the year was “What do you do?... you see Busey.” Over the past eighteen months, the Busey Organization has added Busey Insurance Services, serving the McLean County market, and Busey Travel to its family of services. Our goal is to continue to add services that will enhance our relationships with our customers. In this Annua] Report, we will introduce you to several individuals who will express to you how they “see Busey.” See if you don’t agree with me, that with all the Busey Organization has accomplished in the past and what is planned for the future, Busey is right on track. The best is yet to come! Q(*. Douglas C. MiUs Chairman of the Board [3] BUSEY BANK THE w 1998 WM ONE OF GROWTH, CHANGE AND CHALLENGES for Busey Bank with a number of important decisions being made to position&s entity for the future. Busey Bank ended the year with 18 Banking Centers, located in Champai~ McLean and Ford Counties in Illinois and one in the Indianapolis market. Busey’s total assets reached $938,000,000 for the year, well on our way to achieving our tatget of being a $1,000,000,000 bank! Profits increased 9.93%, reaching an all-time highof$11,758,000, even though there were many one-time expenses incurred during the year. Management of Busey Bank has always understood the importance of technology in the financial services arena. In 1966, Busey Bank was one of the first banks in downstate Illinois to install its own computer system, allowing data processing to be done on premises. [n 1991, a decision was made to outsource Als process due to the fast-paced changes and increasing cost of technology. Facing the issues relating to being Y2K compliant and a strong desire today to control our own destiny, Management determined it wodd be in our best interest to bring the information technology systems back under the Busey umbrella. Don Schlorff, who oversees this Division, said, “we believe tils decision will allow us to better serve the financial needs of our customers today and in the future.” The conversion took place on columbus Day, october 12, 1998, and ~e Operations Division will move into a new state-of-the-art operations center on Windsor Road in Champaign in Febmary. Though there are some difficult times associated with any computer conversion, we feel very comfortable that we have an excellent system in place to provide the information our customers rewire. Busey’s core products continued to grow in 1998, with deposits reaching $828 million and loans closing the year at $655 million, a 9.9% increase. On the deposit side, Susan Abbott has initiated a concentrated effort in the Retail Division to expand on the relationships Busey enjoys with its current customers. “Relationship managers have been established to insure that our customers are receiving the products and services they need,” said Abbott. In another effort to offer greater convenience to our customers, Busey has established “banking days” at numerous retirement communities. Busey’s Internet bank, Busey e-ba~ continues to grow and gain acceptance with our customers who are looking for the utmost in convenience banking. Today we have more than 2,000 customers using Busey e-bank to monitor their accounts, transfer funds and also to pay their bills, at whatever [4] 94 95 96 97 98 Return on Average Assets (percentage) BUSEY BANK time is convenient for them. During 1998, Busey e-bank was named by Gomez Advisors as one of the top Internet banks, right above global giant Citicorp. Another national recognition was given to Buseye-bank inthe November 9thissue of New~week. Champaign-Urbana waslisted as one of the “Hottest Tech Cities” in the world. Busey e-bank was mentioned as an example of how “the atmosphere of innovation permeates everyday life, “ in the Champaign-Urbana area. New enhancements will beadded to Buseye-bankin 1999 tocontinue tomakeit oneofthe premier sites on the Internet. Lee O’Nei]l is providing the leadertilp for Busey e-bank to continue its pioneering efforts on the Internet. Lee also heads up the Lending Division of the Busey Organkation and is Chairman of I i Champaign County’s CCNET. The loan potential in Southwest Florida has been recognized as the Loan production Office in Fort Myers has continued to grow, finishing the year with more than $28 million of commercial loans on the books. A serious effort to cultivate this market is being made and prospects for forming a chartered savings bank in 1999 are good. According to Tom Scharlau and Bill Brigham, who together are growing the Busey franchise in Southwest Florida, “The diversity of loan opportunities in this region presents a significant opportunity for growth.” This potential, along with the increasing number of Busey customers who live in his area, make this a logical expansion area for Busey. Busey Bank Indianapolis continues to grow and expand its focus in the Indiana region. Don Monteith sees great opportunities in offering commercial financing and cash management services to the many manufacturing, distribution, technolo~, retail and real estate development businesses in fils area. “With the volatile financial climate in Indianapolis due to multiple bank mergers and acquisitions, Busey fills a real niche for businesses seeking a stable, responsive banking relationship.” David Mills, son of Doug and Linda Mills, has joined Don Monteith and Lou Hensley in their efforts in this market. Busey Bank Indianapolis currently has assets in excess of $59 million. Another area in which Busey continues to be a strong leader is the Residential Mortgage Division. Gary Jackson led this Division to a record-setting-year — originating in excess of $180,000,000 in real estate mortgages in Champaign County. This performance once again helps Busey Bank maintain its status as the top mortgage lender in Champaign County. [6] My relationship with Bu.sq began years ago. In fact, I remember attending the Economic Seminars when there were only S(?people in attendance. Recently, my son Eric and I came to Busey with an idea to convert a vacant hotelpropeny into a full-service residence hallfir parkland College studenu. Our commercial banker, Denny McMillan, became m excited as we were about the prospects of thk new endeavor. Z appreciate the way Buseypresented us with a vey thorough, well thought-out plan to make this project a realiy. The fact that Busey k independent is very important to me and I especial~ value local dechion making. Kyle Robeson Chairman of the Board Robeson’s Inc. ASSET MANAGEMENT THE MANAGEMENT OF FIRSTBUSEYTRUST & INVESTMENTCo. and First Busey Securities, Inc. made a BIG decision in 1998, to join together the two entities to create the Busey Investment Group (BIG). Management made this decision in order to adequately address client needs for the future. Through this combination, BIG will enhance client services while enjoying operating efficiencies. “The creation of BIG is also intended to end customer and employee confusion over where to get investment services,” said Curt Anderson of BIG. “We ‘re creating a new identity for the organization,” he said. “This cooperative effort will allow the investment professionals of First Busey Securities and First Busey Trust to work even more closely together while taking advantage of each other’s strengths and maximizing cross-selling opportunities.” BIG’s emphasis will be on financial planning and asset management for non-bank customers as well as those with established relationships with the Busey Organization. More than 40 associates will be located in the new facility in the Fox Development on Windsor Road in ChampaiW. A representative of Busey Insurance Services will also be included at the new office in order to assist customers with financial planning-related insurance products such as long-term health care, life insurance and annuity products. Set to open in March of 1999, the Busey Investment Group office building is designed as a collaborative work environment. Conference and , & q meeting room space has been expanded to accommodate the many private client 4 ~., ,. * :$ j: .:_ .3 luncheons and meetings that will take place as an integral part of BIG’s marketing plan [10] I Isee Busey a a loyal and constituentsupporter of the arts. Bu.seyk generosity to the Krannert Centerfor the Peforming Arts as well as many other communiy Organizations says a lot about the way the Corporation values a high quaiity of [Lye fir its customer. and neighbors. Afier moyin,g to the Central Il[inok area from Neu, York City last year, z immediate~ saw the high standards that the business leaders in the communiy, such m Bu.sey, have estahlkhed. My wz~e Taya, my son Miles and I are e~aying the refreshing decompression we are experiencing in the Midwest. It has been a very grattsing experience to work with the Busey Organization on many levels. Mike Ross Director, Krannert Center for the Performing Arts ASSET MANAGEMENT FIRSTBUSEYSECURITIES,INC. Even in a year of market fluctuations and nervous investors, First Busey Securities, Inc. (FBSI) responded well and reported successes in several areas. Sales assets grew to over $375 million. L 734 new accounts were added i ~z”*- ?> increased nearly 20% and In 1998 alone, an impressive to the customer base. The conversion to BHC Securities as the firm’s new data processing company went smoothly and now allows FBSI to better compete in the area of technology. BHC will allow FBSI to offer Internet- based services to its clients including account information, research, stock quotes and the ability to monitor portfolios, all at a lower cost than in the past. The outlook for future growth prompted First Busey Securities to add sales assistants and operations staff to the firm. All sales assistants are now licensed in insurance and securities. ]n-house research capabilities have increased as financial-planning software was upgraded to include Standard & Poors, Morningstar, Principia, and Value Line. During 1998, Donna Greene achieved the designation of Certified Financial Planner, and Curt Anderson was named one of the top 120 Financial Advisors in the U.S. by Medical Economics magazine. This is another indication of the qualified associates in the Busey Organization! FIRST BUSEY TRUST& INVESTMENTCo. First Busey Trust& Investment Co. saw a year of considerable growth despite stock market volauliry and severely depressed agriculture commodity prices. Assets under care increased more than 20% from 1997 to more than $760 million and profits increased more than 19%. To address the needs of future clients, Scott Hendrie joined the staff and will concentrate on financial analysis, financial performance and client services. Scott MacAdam will devote his time to creating an investment management division of First Busey Trust to address the growing need for these services. Glen Paine of First Busey Trust, is excited about the creation of BIG and says, “ I am confident tils ‘joining together’ of our organizations will position us to compete effectively and provide the range and quality of financial services our market place will demand in the future.” [12] I see Bu.sey as a vey solid employer. I began my career at Bu.rey in 1990 and have recently become apersona[ lender at the Sunnycrest Bading Center. The Bmq name G very recogni~able in Central Illimti, and many have been touched by 8meY in some way. When sonzeone $nd. out that I work at Bu.se~ I hear stories about how l?u.rey he~ed~nance their $rst home, made a new vehicle possible, a.sskted with the start-up of a new business orprovided~nancial planning. That makes me proud. I believe that the oppo~unitie~fOr me at B~ey are endless and I see myself as a Busey Associate for manyyears to come. Dennis Donaldson Associate REPORT ON VISION 2000 BACK IN ISYA, WE FIRST REPORTED ON FIRST BUSEY’S VISION 2000” in our Annual Report. Vision 2000 involves a strategy that till help Busey maintain its competitive edge through products and services that meet the changing needs of our customers. Meeting this vision also requires a thorough understanding of our customer base, a corporate-wide focus on technology The entire Organization has been busy reviewing their systems and procedures to make sure that our customers will continue to receive uninterrupted service as we move into the next millennium. We have taken a leadership role in meeting with other vital community service providers in an effort to make sure that the communities in which we operate are Y2K ready. Seminars have also been conducted by Busey Associates to assist our customers in their Y2K preparedness. Y2K is an issue that the Busey Organization takes very seriously, and we feel very comfortdle that we will be Y2K compliant. In an effort to provide additional products and semices to its customers, Busey Bank purchased Busey Travel, a full-service travel agency that has been serving the Champaign-Urbana area since 1964. Busey Travel recently consolidated its operations into a single, newly remodeled faciliry in a highly visible location at 303 W. Kirby Avenue in Champaign. In addition to providing its customers with the usual product mix of tours, cruises, and airline tickets, Busey Travel has added a full line of travel accessories and lu~age. Busey Insurance Services, with offices in LeRoy, Saybrook and Melvin, is filling the insurance niche for our customers, providing homeowner policies, as well as mortgage, life, disability, and long-term care. Other products such as auto, farm, health and commercial insurance are all offered at competitive rates. Uniting banking and insurance products is proving to be a winning combination in the Ford and McLean County markets. [16] Isee Busey through the eyes ofa long-time customer and shareholder. I became a Busey mromer after am’ving in Urbana to study at the university of Illinois School of Music in 1.928. I remember my late husband, Mmie, purchasing 10 shares of First Busey stock when he became a director of Bmey Bank. Although we added many more shares over the yems, its performance ha been so impressive, I wish I had purchased more! I still bank at Busey every Thursday, right here at Clark Lindsey Village. I even won the long-time customer contest duting Bu.rey5 130th Anniversary celebration. Bea Tepper Shareholder FIRST BUSEY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS Assets Cash and due from banks Investment securities Loans, net of unearned interest Allowance for loan losses h~et loans Premises and equipment other assets Total assets Liabilities Deposits: Non-interest bearing Interest bearing Total deposits Short-term borrowings Long-term debt other IiAilities Total ]i&ilities Stockholders’ Equity Common stock surplus Retained earnings Accumulated other comprehensi},e income Total stockholders’ equity before treasury stock, unearned ESOP shares and deferred compensation for stock grants Treasury stock, at cost Unearned ESOP shares and deferred compensation for stock grants Total stockholders’ equity Total liabilities and stockholders’ equity December 31, @ 1997 1996 (dollam in thousands) $ 35,644 217,991 $ 62,099 215,514 $ 33,738 226,350 662,281 (7,101) 602,937 (6,860) 569,500 (6,131) $ 655,180 $ 596,077 $ 563,369 24,232 18,484 22,834 19,016 21,588 19,873 $ 951,531 $ 915,540 $ 864,918 $ 96,555 730,149 $ 92,090 719>363 $ 78,077 688,850 $ 826,704 $$811,453 $$766,927 5,900 25,000 6,824 6,550 10,000 6,258 14,405 5,000 5,169 $ 864,428 $ 834,261 $ 791,501 $ 6,291 21,283 59,028 6,799 $ 6,291 20,729 53,011 5,801 $ 6,291 20,594 47,402 3,285 $ 93,401 $ 85,832 $ 77,572 (5,865) (3,922) (3,489) (433) (631) (666) $ $ 87,103 951,531 $ $ 81,279 915,540 $ $ 73,417 864,918 [18] FIRST BUSEY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME Interest Income Loans Investment securities Taxable Non-tmable Other Total interest income Interest Expense Deposits Short-term borrowings Long-term debt Total interest expense Net interest income Pro>,ision for loan losses Net interest income after provision for loan losses Non-interest Income Trust Service charges on deposit accounts Commissions and brokers fees, net Security gains, net Other income Total non-interest income Non-interest Expense Salaries and employee benefits Net occupancy expense of premises Furniture and equipment e~ense Amortization of intangible assets Other expense Total non-interest expense Income before income taxes Income tax expense Net income Basic earnings per share Diluted earnings per share Years Ended December 31, 1997 1996 w (dollars in thousands, except per share data) $ 53,669 $ 51,061 $ 45,948 10)756 1,732 891 10,318 1,964 488 12,697 2,111 441 $ 67,048 $ 63,831 $ 61,197 $ $ $ 30,642 1,099 1,234 32,975 34,073 700 $ $ $ 30,002 575 542 31,119 32,712 1,075 $ $ $ 28,710 1,045 278 30,033 31,164 1,100 $ 33,373 $ 31,637 $ 30,064 $ 3,445 2>938 1,187 1,243 4,717 $ 3,156 2,947 1,051 520 2,705 $ 2>651 2,937 812 256 2,113 $ 13,530 $ 10,379 $ 8,769 $ 14,615 $ 13,868 16,095 2,497 2,370 1,404 8,0M $ $ $ 30,400 16,503 5,105 $ $ %225 1,83s 1,328 7,260 27,266 14,750 4,379 1,936 1,651 1,321 7,010 25,786 13,047 3,741 9,306 .68 .67 $ $ $ $ $ . $ 11,398 $ 10>371 $ $ .83 .81 $ $ .75 .74 [19] FIRST BUSEY CORPORATION SUPPLEMENTAL INFORMATION Changes in Stockholdersr Equity Balance at beginning of year hret income Cash dividends declared: Cims A common stock Class B common stock Common stock issued Treasury stock purchased Principal payments on ESOP debt Change in accumulated other comprehensive income* Amortization of restricted stock issued under restricted stock award plan m 1997 1996 (dollars in thousands) $ 81,279 $ 73,417 $ 67>778 11,398 10,371 9,306 (5,381) 1,41I (2,800) I50 998 48 (4,046) (716) 1,405 (1,948) 200 2,516 80 (3,71o) (668) 797 (605) 250 192 77 Balance at end of year $ 87,103 $ 81,279 $ 73,417 Reserve for possible Loan Losses Balance at beginning of year Provision charged to expense Recoveries on loans previously charged off Loans charged off Balance at end of year As a percent of loans Non-performing Loans Loan% Non-accrual Loans 90 days past due and still accruing Total non-performing loans As a percent of loans $ 6,860 $ 6,131 $ 5,473 700 145 (604) 1,075 213 (559) 1,100 240 (682) $ 7,101 $ 6,860 $ 6,131 i .07% 1.14% 1.08% $ $ 526 1,052 1,578 $ $ 628 1,033 1,661 $– $ 1,001 1,001 0.24% 0.28% O.18% * Change h utlre$lzed gain on investment wcurities avail&le for sale, net [20] FIVE YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA FIRST BUSEY CORPORATION Balance Sheet Items Total assets Investment securities Loans, net of unearned interest Total deposits Long-term debt Stockholders’ equity Results of Operations Interest ir]come Interest expense Netinterest income N-et income Per Share Data O) Diluted earnings Cash &]vidends declared Book value Closing price Other Information Return on atferageassets Re’mrn on average equity Net interest margin(z) Stockholders’ equity to assets 1997 1996 1995 1994 (dollars in thousands, except per share data) $ 951,531 217,991 662,281 826,704 25,000 87,103 $ 915,540 215,514 602,937 811>453 10,000 81,279 $ 864,918 $ 844,666 $ 226,350 569,500 766>927 5,000 73,417 284,517 481,772 744>897 5,000 67,778 728,459 210,525 451,051 635,694 5,000 59,016 $ 67,048 32,975 $ 34,073 63,831 31,119 32,712 $ 61,197 30,033 31,164 26,515 27,979 $ 54>494 $ 47,126 $ 11,398 $ 10,371 $ 9,306 $ 8,775 $ .81 .39 6.36 18.25 $ .74 .35 5.92 13.75 $ .67 .33 5.36 11.13 $ .63 .29 4.97 9.00 $ $ 20,212 26,914 8,238 .59 .27 4.32 8.08 1.22% 13.51 4.08 9.15 1.18% 13.42 4.20 8.88 1.08% 13.40 4.13 8.49 1.15% 1.14% 13.86 4.20 8.02 14.16 4.30 8.10 (1) Per share amounts ha}e been restated to give retroactive effect to the m,v-for-one stock split which occurred August 3,1998, andthethree-for-mo stock split which occurrd May7, 1996. (2) Calculated as a percent of avemge earning assets. [21] Joseph M. Ambrose fiecutive Vice President Anderson FinancialNetwork Inc. BOARD OF DIRECTORS q ,.V. B. Leister, Jr. President Carter’sMeting&Storage, Inc. Samuel P. Banks fiecutive Director Cunningham Children’sHome Douglas C. Mills Chai)man of the Board, president, CEO G CFO firstBusay Corp. T. O. Dawson Chairmm ofthe Board, President, CEO Insurance RiskManagers, Ltd. Linda M. Mills Chairman of the Board BuseyTravel H Victor F. Feldman, MD Physicim - OPhthdmolo~ Chtistie Clinic ? Kenneth M. Hendren Owner Hendren Farms Broker,Jim Bouas Realty,Inc. E. Phillips Knox $ Attorney Tummelson Bryan& Knox H P. David Kuhl President G CEO Busey Bank mRobert C. parker, Jr., MD President Health Alliance Medical Plans CEO Carle ClinicAssociation ;. Edwin A. Scharlau II Chairman of the Board Busey Bank; Fiti BuseySecurities& FirstBuseyTrust& Investment Co. David C Thies Aztorney Webber &Thies, P.C t H *“ H ..”. . Arthur R Wyatt Retired Parmer Arthur Andersen & Co. A~. Pro$ of Accountancy Universityof Illinois q q q q q MEMBERS BUSEY BANK MANAGEMENT TEAM P. David Kuhl Susan E. Abbott Don A. Monteith Lee H. O’Neifl Donald J. Schlorff BUSEY INVESTMENT GROUP MANAGEMENT TEAM Edwin A. Scharlau II Curt A. Anderson Scott MacAdam Glen C. Paine CHAIRMAN’S COUNCIL Joseph J. Ambrose Kenneth G. Bash Orville G. Bendey Richard E. Dukes Judy L. Ikenberry Harlan J. Faiior Stuart M. Mamer Riley J. McCulley Jack W. Pollard Stanley B. Weaver FIRST BUSEY CORPORATION MANAGEMENT TEAM Douglas C. Mills Barbara J. Kuh~ FIRST BUSEY CORPOMTION WOULD LIKE to acknowledge Judy Ikerrberry and Ben Snyder and thank them for their dedication as they retire from their Board positions. Judy joined the Busey Bank Board in 1984 and remained as a Director in the Busey Organization until 1998 when she and her husband Judy L. Ikenberry moved to Washington D.C. Judy enjoys extensive travel and entertaining. She is developing new interests and is now a student of piano and art. Be% a resident of Bloomington, was a member of the Busey Bank Board for 4 years and the FBC Board for 2 years. He still serves on the Advisory Board of Busey Bank Bloomington. Ben is also a member of tie Zoning Board of Appeals in Bloomington and continues KIS work with Century 21, Alexander Reahy. Benjamin G. Snyder [23] 

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