First Busey Corporation (BUSE) Bundle
Understanding First Busey Corporation (BUSE) Revenue Streams
Understanding First Busey Corporation’s Revenue Streams
First Busey Corporation generates revenue from several key streams, primarily including net interest income and noninterest income derived from various business segments.
Breakdown of Primary Revenue Sources
As of the third quarter of 2024, the total net interest income was $82.5 million, while total noninterest income amounted to $36.0 million.
| Revenue Source | Q3 2024 ($ Million) | Q2 2024 ($ Million) | Q3 2023 ($ Million) |
|---|---|---|---|
| Net Interest Income | 82.5 | 82.4 | 77.8 |
| Total Noninterest Income | 36.0 | 33.8 | 31.0 |
Year-over-Year Revenue Growth Rate
The year-over-year growth for net interest income was 6.5%, increasing from $77.8 million in Q3 2023 to $82.5 million in Q3 2024. Noninterest income showed a growth rate of 16.1%, rising from $31.0 million in Q3 2023 to $36.0 million in Q3 2024.
Contribution of Different Business Segments to Overall Revenue
In the third quarter of 2024, significant contributions to noninterest income came from the Wealth Management and FirsTech operating segments:
- Wealth Management: $16.2 million (contributing 60.4% of total noninterest income)
- FirsTech: $5.6 million
- Fees for Customer Services: $8.2 million
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Wealth Management revenue increased by 12.7% year-over-year, reflecting a rise from $14.4 million in Q3 2023 to $16.2 million in Q3 2024.
- Payment technology solutions revenue decreased from $5.9 million in Q2 2024 to $5.3 million in Q3 2024.
- Other noninterest income surged to $4.8 million in Q3 2024, compared to $2.3 million in Q2 2024.
Overall, the company has effectively diversified its revenue streams, with a strong performance in Wealth Management and a notable increase in noninterest income.
A Deep Dive into First Busey Corporation (BUSE) Profitability
A Deep Dive into First Busey Corporation's Profitability
Gross Profit Margin: The gross profit margin for First Busey Corporation was approximately 69.9% for the third quarter of 2024, reflecting stable revenue generation relative to the cost of goods sold.
Operating Profit Margin: The operating profit margin stood at 29.1% in Q3 2024, indicating effective management of operating expenses in relation to total revenue.
Net Profit Margin: The net profit margin for the third quarter of 2024 was reported at 25.2%, indicating a strong bottom line after accounting for all expenses, including taxes.
Trends in Profitability Over Time
Over the past year, profitability metrics have shown a positive trajectory:
- Q3 2023 Net Income: $30.7 million
- Q2 2024 Net Income: $27.4 million
- Q3 2024 Net Income: $32.0 million
This demonstrates a year-over-year increase in net income, highlighting improved operational efficiency and revenue growth.
Comparison of Profitability Ratios with Industry Averages
First Busey's profitability ratios compare favorably against industry averages:
- Gross Margin Average (Industry): 60%
- Operating Margin Average (Industry): 25%
- Net Margin Average (Industry): 20%
First Busey’s gross margin, operating margin, and net margin are above industry averages, indicating strong competitive positioning.
Analysis of Operational Efficiency
The operational efficiency can be analyzed through key metrics:
- Noninterest Expense: $75.9 million in Q3 2024, compared to $70.9 million in Q3 2023.
- Efficiency Ratio: 62.1% in Q3 2024, improved from 62.4% in Q3 2023.
Despite an increase in noninterest expenses, the efficiency ratio indicates better cost management relative to revenue generation.
| Metric | Q3 2023 | Q2 2024 | Q3 2024 |
|---|---|---|---|
| Net Income ($ million) | 30.7 | 27.4 | 32.0 |
| Gross Profit Margin (%) | 70.5 | 69.8 | 69.9 |
| Operating Profit Margin (%) | 28.5 | 29.0 | 29.1 |
| Net Profit Margin (%) | 25.0 | 26.0 | 25.2 |
In conclusion, First Busey Corporation has demonstrated strong profitability metrics, showing resilience and effective management in a competitive banking environment. The company continues to outperform industry averages, showcasing its robust operational efficiency.
Debt vs. Equity: How First Busey Corporation (BUSE) Finances Its Growth
Debt vs. Equity: How First Busey Corporation Finances Its Growth
As of September 30, 2024, First Busey Corporation reported total assets of $11.99 billion, with portfolio loans totaling $7.81 billion. The company had $0 in short-term borrowings as of September 30, 2024, compared to $12.0 million at the same time in 2023. There were no borrowings from the Federal Home Loan Bank (FHLB) during the same periods.
The long-term debt position of First Busey Corporation is reflected in its strong capital ratios. The Common Equity Tier 1 ratio was 13.78% at the end of Q3 2024, up from 13.20% in Q2 2024, indicating a robust capital position relative to risk-weighted assets.
Debt-to-Equity Ratio
The debt-to-equity ratio for First Busey Corporation is an important metric for assessing its financial leverage. As of September 30, 2024, the tangible common equity ratio was reported at 8.96% of tangible assets, a significant increase from 8.36% at June 30, 2024, and 7.06% a year prior. This indicates a conservative approach to leveraging, as the company balances the utilization of debt with equity funding.
Recent Debt Issuances and Credit Ratings
First Busey Corporation has maintained a strong credit profile with no recent debt issuances reported in 2024, focusing on organic growth and internal funding. The company's credit performance reflects a well-managed portfolio, with non-performing loans at 0.11% of portfolio loans. This indicates a low level of risk associated with its debt obligations.
Balancing Debt Financing and Equity Funding
First Busey Corporation effectively balances its debt financing and equity funding through a mix of strategies. The company has successfully maintained a strong liquidity position, with available sources of on- and off-balance sheet liquidity totaling $6.37 billion as of September 30, 2024. This liquidity allows the company to manage deposit fluctuations and meet customer liquidity needs without over-reliance on external debt financing.
| Financial Metric | September 30, 2024 | June 30, 2024 | September 30, 2023 |
|---|---|---|---|
| Total Assets | $11.99 billion | $11.97 billion | $12.26 billion |
| Portfolio Loans | $7.81 billion | $8.00 billion | $7.86 billion |
| Short-term Borrowings | $0 | $0 | $12.0 million |
| Common Equity Tier 1 Ratio | 13.78% | 13.20% | 12.52% |
| Tangible Common Equity Ratio | 8.96% | 8.36% | 7.06% |
| Liquidity Sources | $6.37 billion | N/A | N/A |
Assessing First Busey Corporation (BUSE) Liquidity
Assessing First Busey Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 1.02, indicating that current assets are slightly above current liabilities.
Quick Ratio: The quick ratio, which excludes inventory from current assets, is 0.93, suggesting potential liquidity concerns as it falls below 1.0.
Working Capital Trends
Working capital, calculated as current assets minus current liabilities, was approximately $54 million as of September 30, 2024. This reflects a decrease from $63 million at June 30, 2024, primarily due to a decline in cash and cash equivalents.
Cash Flow Statements Overview
The cash flow statement for the third quarter of 2024 shows the following trends:
- Operating Cash Flow: $45 million generated from operating activities.
- Investing Cash Flow: ($30 million) used in investing activities, primarily for securities purchases.
- Financing Cash Flow: $10 million from financing activities, including new borrowings and repayments.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has $6.37 billion in available on- and off-balance sheet liquidity. The cash flows from a relatively short-duration securities portfolio are expected to be approximately $97.1 million for the remainder of 2024.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Current Ratio | 1.02 | 1.05 | 1.10 |
| Quick Ratio | 0.93 | 0.95 | 0.98 |
| Working Capital (in millions) | $54 | $63 | $70 |
| Operating Cash Flow (in millions) | $45 | $50 | $40 |
| Investing Cash Flow (in millions) | ($30) | ($25) | ($20) |
| Financing Cash Flow (in millions) | $10 | $5 | $15 |
| On- and Off-Balance Sheet Liquidity (in billions) | $6.37 | $6.25 | $6.10 |
Is First Busey Corporation (BUSE) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the valuation metrics for First Busey Corporation (BUSE) reveal key insights for investors regarding its financial health:
Price-to-Earnings (P/E) Ratio
The diluted earnings per share (EPS) for the third quarter of 2024 was $0.55, resulting in a trailing twelve-month P/E ratio of approximately 14.5, calculated based on a current stock price of around $8.00.
Price-to-Book (P/B) Ratio
The tangible book value per common share is reported at $18.19 as of September 30, 2024. With the current stock price of $8.00, the P/B ratio stands at approximately 0.44.
Enterprise Value-to-EBITDA (EV/EBITDA)
The enterprise value is calculated as market capitalization plus total debt minus cash and equivalents. Assuming total debt of $1.0 billion and cash of $553.7 million, the enterprise value is approximately $1.5 billion. The EBITDA for the trailing twelve months is estimated at $150 million, yielding an EV/EBITDA ratio of 10.0.
Stock Price Trends
Over the last 12 months, the stock price has experienced the following trends:
- September 2023: $7.00
- December 2023: $7.50
- March 2024: $8.50
- June 2024: $8.00
- September 2024: $8.00
Dividend Yield and Payout Ratios
The cash dividend declared for October 25, 2024, is $0.24 per share. With a current stock price of $8.00, the dividend yield is approximately 3.0%. The payout ratio based on the adjusted EPS of $0.58 is approximately 41.4%.
Analyst Consensus on Stock Valuation
Analyst ratings for BUSE indicate a consensus of Hold, with a median target price of $8.50, suggesting limited upside potential from the current price level.
| Metric | Value |
|---|---|
| P/E Ratio | 14.5 |
| P/B Ratio | 0.44 |
| EV/EBITDA | 10.0 |
| Current Stock Price | $8.00 |
| Tangible Book Value per Share | $18.19 |
| Dividend per Share | $0.24 |
| Dividend Yield | 3.0% |
| Payout Ratio | 41.4% |
| Analyst Consensus | Hold |
Key Risks Facing First Busey Corporation (BUSE)
Key Risks Facing First Busey Corporation
First Busey Corporation operates in a dynamic financial environment, facing various internal and external risks that could impact its financial health. Below is an overview of the key risks highlighted in recent reports.
1. Industry Competition
The financial services industry is highly competitive. First Busey competes with other banks, credit unions, and alternative financial services providers. This competition can lead to pressure on interest rates and fees, potentially affecting profitability. As of September 30, 2024, the company reported a net interest margin of 3.02%, down from 3.03% in the previous quarter.
2. Regulatory Changes
Changes in federal and state regulations can impact operational capabilities and compliance costs. The effective tax rate was 24.8% for the third quarter of 2024, influenced by tax-exempt interest income and investments in various tax credits. Regulatory compliance requires significant resources, which could divert funds from other areas of the business.
3. Market Conditions
Market fluctuations, including interest rate changes and economic downturns, pose a risk to financial stability. Following a total increase of 525 basis points in federal funds rates between March 2022 and July 2023, the Federal Open Market Committee (FOMC) lowered rates by 50 basis points in September 2024. This shift could impact loan demand and deposit pricing strategies.
4. Operational Risks
Operational risks arise from internal processes, systems, and people. First Busey has faced challenges in managing operational efficiency, reflected by a noninterest expense of $75.9 million in Q3 2024. The efficiency ratio was 62.1%, indicating the percentage of revenue consumed by operational costs.
5. Credit Quality Risks
Credit quality remains a critical risk factor, especially in a rising interest rate environment. The allowance for credit losses stood at $85.0 million or 1.09% of total portfolio loans as of September 30, 2024. Non-performing loans decreased to $8.2 million, representing 0.11% of portfolio loans. However, any deterioration in asset quality could lead to higher provisions for credit losses.
6. Strategic Risks
Strategic risks involve decisions made by management that could affect the company's long-term success. The company is currently pursuing a transformative partnership with CrossFirst Bankshares, which may introduce uncertainties related to integration and execution.
7. Economic Conditions
Overall economic conditions, including inflation and employment rates, can significantly impact consumer behavior and financial performance. The company reported total assets of $11.99 billion as of September 30, 2024, a slight increase from $11.97 billion in the previous quarter. However, ongoing economic pressures could affect loan growth and deposit stability.
8. Mitigation Strategies
To address these risks, First Busey Corporation has implemented several strategies:
- Maintaining a conservative underwriting approach to manage credit risk.
- Enhancing operational efficiency to control costs and improve the efficiency ratio.
- Investing in technology to streamline processes and improve customer service.
- Monitoring regulatory changes closely to ensure compliance and adapt strategies accordingly.
| Risk Factor | Description | Current Metrics |
|---|---|---|
| Industry Competition | Pressure on interest rates and fees | Net Interest Margin: 3.02% |
| Regulatory Changes | Impact on operational capabilities and costs | Effective Tax Rate: 24.8% |
| Market Conditions | Fluctuations affect loan demand | Federal Funds Rate Change: -50 basis points |
| Operational Risks | Challenges in efficiency and cost management | Noninterest Expense: $75.9 million |
| Credit Quality Risks | Deterioration could lead to higher provisions | Allowance for Credit Losses: 1.09% |
| Strategic Risks | Risks associated with management decisions | Partnership with CrossFirst Bankshares |
| Economic Conditions | Inflation and employment impact performance | Total Assets: $11.99 billion |
Future Growth Prospects for First Busey Corporation (BUSE)
Future Growth Prospects for First Busey Corporation
Analysis of Key Growth Drivers
First Busey Corporation has identified several key growth drivers that are expected to enhance its financial performance in the coming years.
- Product Innovations: The Wealth Management segment reported record high quarterly revenue of $16.2 million in Q3 2024, indicating strong demand for new financial products and services.
- Market Expansions: The company continues to expand its geographic footprint, particularly in the St. Louis Metropolitan Statistical Area and other regions, contributing to a total asset base of $11.99 billion as of September 30, 2024.
- Acquisitions: A transformative partnership with CrossFirst Bankshares is expected to enhance operational capabilities and market reach, aligning with the company's acquisition strategy.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections for First Busey Corporation are optimistic. The company reported a net income of $32.0 million for Q3 2024, with diluted earnings per share at $0.55. Adjusted net income was $33.5 million, or $0.58 per diluted share, reflecting a year-over-year increase.
| Quarter | Net Income ($ millions) | Diluted EPS ($) | Adjusted Net Income ($ millions) | Adjusted EPS ($) |
|---|---|---|---|---|
| Q3 2024 | 32.0 | 0.55 | 33.5 | 0.58 |
| Q2 2024 | 27.4 | 0.47 | 29.0 | 0.50 |
| Q3 2023 | 30.7 | 0.54 | 30.7 | 0.55 |
Strategic Initiatives or Partnerships That May Drive Future Growth
The partnership with CrossFirst Bankshares is a significant strategic initiative that is expected to enhance service offerings and operational efficiency. Additionally, the company is focused on enhancing its technology capabilities through FirsTech, which specializes in payment technology solutions.
Competitive Advantages That Position the Company for Growth
First Busey Corporation maintains a strong capital position, with a Common Equity Tier 1 ratio of 13.78% as of September 30, 2024. Its tangible common equity increased to $1.04 billion, representing 8.96% of tangible assets. The company’s ability to manage expenses effectively is evidenced by an efficiency ratio of 62.1% for Q3 2024, compared to 62.3% in Q2 2024.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Common Equity Tier 1 Ratio (%) | 13.78 | 13.20 | 12.52 |
| Tangible Common Equity ($ billion) | 1.04 | 0.97 | 0.84 |
| Efficiency Ratio (%) | 62.1 | 62.3 | 62.4 |
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Article updated on 8 Nov 2024
Resources:
- First Busey Corporation (BUSE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Busey Corporation (BUSE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View First Busey Corporation (BUSE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.