The Company’s year-to-date net income through June 30, 2014 was $16.1 million and net income available to common stockholders was $15.7 million, or $0.18 per fully-diluted common share, compared to net income of $13.9 million and net income available to common stockholders of $12.1 million, or $0.14 per fully-diluted common share, for the comparable period of 2013.
Growth in quarterly and year-to-date net income available to common stockholders over the same periods in 2013 was led by a reduction in preferred dividends, improved credit costs, and lower operating expenses as the Company remains focused on cost control and productivity. Robust loan growth during 2013 pushed Small Business Lending Fund (“SBLF”) qualified credits above certain thresholds required to meaningfully reduce costs of the preferred stock dividend beginning in 2014. Dividends paid on the preferred stock totaled $0.4 million for the first six months of 2014 compared to $1.8 million for the comparable period of 2013.
Provision for loan loss of $1.0 million in the second quarter of 2014 was unchanged from the $1.0 million provision in the first quarter of 2014 but decreased from $2.0 million in the second quarter of 2013. For the first six months of 2014, the provision for loan loss was $2.0 million, compared to $4.0 million for the same period of 2013, as the Company’s continued commitment to improving asset quality and building balance sheet strength continues to yield positive results.
Gross loans at June 30, 2014 increased $91.4 million from March 31, 2014 after overcoming seasonal slowness and extreme winter weather conditions that reduced loan demand in the first quarter of 2014. Gross loans increased to $2.324 billion at June 30, 2014 from $2.233 billion at March 31, 2014 and $2.159 billion at June 30, 2013. Commercial loans increased to $1.738 billion as of June 30, 2014, which represents an increase of 3.2% from March 31, 2014 and 10.0% from June 30, 2013.
Challenging conditions across the mortgage industry began to moderate during the second quarter of 2014 as gains on sales of loans and mortgage portfolio balances both increased from the first quarter of 2014. Mortgage production nearly doubled from the first quarter to the second quarter of 2014, with total retail real estate portfolio balances growing by $36.0 million from $540.6 million as of March 31, 2014 to $576.6 million as of June 30, 2014, including held for sale loans. Gain on sales of loans increased to $1.2 million for the second quarter of 2014, a 25.8% increase from the $1.0 million reported for the first quarter of 2014, but decreased from $2.8 million in the second quarter of 2013. Year-to-date gain on sales of loans through June 30, 2014 were $2.2 million compared to $6.3 million in the same period of 2013 due to lower refinance volume as a result of market-based influences and higher interest rates.
Overall deposit levels of $2.9 billion at June 30, 2014 held steady from March 31, 2014 and June 30, 2013, while deposit costs continued to trend favorably lower. Non-interest bearing deposits of $605.3 million rose from $578.1 million at March 31, 2014 and from $514.1 million at June 30, 2013. The Company remained strongly core deposit funded at 77.3% of total assets as of June 30, 2014, with solid liquidity and significant market share in the communities it serves.
Revenues from trust, brokerage and commissions and remittance processing activities – which are primarily generated through Busey Wealth Management and FirsTech – represented 56% of the Company’s non-interest income for the first six months of 2014, providing a balance to traditional banking activities.Furthermore, the Company believes the boutique services offered to ultra-high net worth clients by Trevett Capital Partners within its suite of wealth services broadens its business base and enhances its ability to further develop revenue sources.
Trust fees decreased to $5.1 million for the second quarter of 2014 compared to $5.6 million for the first quarter of 2014 but increased from $4.7 million for the second quarter of 2013.The decline from the first quarter of 2014 was due to seasonal farm management fees recorded in the first quarter 2014; however, other trust fees increased over the same period.Trust fees for the first six months of 2014 were $10.7 million compared to $9.9 million in the same period of 2013.
We are pleased with the sustained earnings momentum and strong performances across a broad spectrum of our businesses.Net income in each of our operating segments was up by over 15.0% from the prior year-to-date period.Investment portfolio changes added incremental revenue to net interest income from the prior quarter and we are encouraged by the resurgence of loan growth in the second quarter of 2014.On a linked quarter basis, total revenues expanded for the second consecutive quarter.Comprehensive expense discipline continues driving improvement in operating costs and efficiency ratios.Sound asset quality management supported further balance sheet strength and credit cost reductions benefited our bottom line.In addition, retail branch transaction activity increased during the second quarter of 2014 representing positive customer trends and recovery from the harsh winter.
Further, Busey Bank was recognized among the Top 50 Community Bank Leaders in Social Media, presented by Independent Community Bankers of America in June 2014.Busey Bank was chosen based on engagement with fans and followers, content distributed and frequency of posting new content .
Our emphasis on maximizing stockholder value was evidenced in the first half of 2014 by the growth in earnings per share and increased quarterly dividend.With our strong capital position, a stable core funding base, and a sound credit foundation, we are actively engaged in growing our Company through both organic and external measures.As we take pride in our past and look confidently towards our future, we thank our associates for their efforts, our customers for their business and you, our shareholders, for your continued support.
/s/ Van A. Dukeman
President & Chief Executive Officer
First Busey Corporation
Busey Wealth Management is a wholly-owned subsidiary of First Busey Corporation. Through Busey Trust Company, Busey Wealth Management provides asset management, investment and fiduciary services to individuals, businesses and foundations. As of June 30, 2014, Busey Wealth Management’s assets under care were approximately $5.1 billion.
This document may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company.Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions.Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements.These factors include, among others, the following: (i)the strength of the local and national economy; (ii)changes in state and federal laws, regulations and governmental policies concerning the Company’s general business (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the extensive regulations to be promulgated thereunder, as well as the rules adopted by the federal bank regulatory agencies to implement Basel III); (iii) changes in interest rates and prepayment rates of the Company’s assets; (iv)increased competition in the financial services sector and the inability to attract new customers; (v)changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vi)the loss of key executives or employees; (vii)changes in consumer spending; (viii)unexpected results of acquisitions; (ix) unexpected outcomes of existing or new litigation involving the Company; (x)the economic impact of any future terrorist threats or attacks; (xi) the economic impact of exceptional weather occurrences such as tornadoes, hurricanes, floods, and blizzards; and (xii) changes in accounting policies and practices.These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.