Illinois’ First Busey Corp. grows, diversifies business lines

It's been relatively quiet lately around First Busey Corp.'s headquarters in Champaign, Ill. – at least on the M&A front. And why not? The operator of the Busey Bank franchise has pulled off four acquisitions in the span of as many years, building it up to $7.8 billion in assets – triple its size from a decade ago..First Busey dipped its toes into the acquisition pool in 2014 with a deal for Herget Financial Corp., a nearby bank. It then picked up the pace with the late 2015 purchase of Pulaski Financial Corp., of St Louis. That took it into Missouri. But, with more than 700 charters for banks with less than $1 billion in assets in Illinois, Indiana and Missouri, there was plenty of opportunity for acquisition-minded community banks such as First Busey..The company followed up the Pulaski merger with two deals in 2017. It began with First Community Financial Partners Inc., in a deal valued at $242 million. Just a month later, in March 2017, First Busey announced plans to acquire Mid Illinois Bancorp., Inc., in a $133 million deal..First Busey also has a presence in Florida, established well before the economy went south in 2008. As Barbara Kuhl, then president and CEO of First Busey, remarked at the time the bank moved into the sunshine state, Fort Myers and Lee County, Fla., saw more building permits issued in a month than Champaign-Urbana witnessed in an entire year. Indeed, between 2000 and 2016 the population of Lee County jumped by two-thirds, while in Champaign County, Ill. – Busey's home turf – it rose a more modest 15 percent. Busey has five banking centers spread across three counties in southwest Florida..All of these more recent acquisitions have now been tucked into the Busey Bank system, which now extends to four states (Illinois, Indiana, Missouri and Florida). Busey is now the 20th largest bank operator in Lee County, Fla., with an estimated market share of 0.83 percent (it owns Champaign County, with a 38 percent market share according to its statistics)..Customers in those four states will find a bank with total loans as of Dec. 31, 2017, of $5.6 billion. Real estate is the dominant category, with 63.5 percent of the portfolio – and the majority of that being in commercial and multifamily real estate. Commercial loans account for about a quarter of total loans..First Busey holds itself out as a financial services firm, and it has done so by way of a diversification of its business lineup. Besides normal banking activities, it also operates a wealth management business. In southwest Florida, for example, it operates Trevett Capital Partners, which offers asset management, investment and fiduciary services to high net worth individuals..First Busey has a third diversification leg, a remittance processor called FirsTech Inc. It began in 1984 as a business unit of the First National Bank of Decatur, processing payments made to utility companies. The business line expanded, and after First Busey acquired First National, it worked its way into electronic bill presentment, online pay, mobile bill pay – some 28 million transactions annually..In its first quarter 2018 earnings report, First Busey said that net income from banking operations amounted to $21.8 million (compared to $14.75 million a year earlier). Net income from remittance processing was $953,000 (versus $554,000 a year earlier), while wealth management generated net earnings of $2.76 million (versus $1.84 million a year earlier)..Other information gleaned from its latest earnings report indicate that the company has followed other banks in seeing increased earnings as a result of the 2017 federal income tax cut. Net earnings rose 45 percent year-over-year, while earnings per share rose to 45 cents from 39 cents. The company bumped its quarterly dividend payout from 18 cents per share to 20 cents. (The current dividend yield is 2.69 percent)..Investor sentiment, or at least that of the analysts, is all over the board for First Busey. B. Riley lifted its rating from neutral to a hold, even while it lowered its priced target to $35 from $36. Piper Jaffray recently reiterated a hold, with a $33 price, and Zacks Investment Research lowered shares from a hold to a sell. On average though, the company is presently rated a hold, with a target price of $33.