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Acquisitions

12 Months Ended

Dec. 31, 2020

Note 2. Acquisitions

The Banc Ed Corp.

On January 31, 2019, the Company completed its acquisition of Banc Ed. TheBANK, Banc Ed’s wholly-owned bank subsidiary, was operated as a separate subsidiary from the completion of the acquisition until October 4, 2019, when it was merged with and into Busey Bank. At that time, TheBANK’s banking centers became banking centers of Busey Bank.

Under the terms of the Merger Agreement with Banc Ed, at the effective time of the acquisition, each share of Banc Ed common stock issued and outstanding was converted into the right to receive 8.2067 shares of the Company’s common stock, cash in lieu of fractional shares, and $111.53 cash consideration per share. The market value of the 6.7 million shares of First Busey common stock issued at the effective time of the acquisition was approximately $166.5 million based on First Busey’s closing stock price of $24.76 on January 31, 2019.

This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged was recorded at estimated fair values on the date of acquisition. Recorded fair value adjustments were disclosed as of March 31, 2019, and adjustments totaling $5.2 million were made to the fair value assigned to various assets and liabilities during 2019, as more information became available. The measurement period adjustments included a clarification in the interpretation of tax regulations that resulted in the $4.6 million reversal of a deferred tax liability that was initially recorded in connection with the acquisition. As the total consideration paid for Banc Ed exceeded the net assets acquired, goodwill of $41.4 million was recorded as a result of the acquisition. Goodwill recorded in the transaction, which reflected the synergies expected from the acquisition and expansion within the St. Louis MSA, is not tax deductible and was assigned to the Banking operating segment.

First Busey incurred $0.5 million in pre-tax expenses related to the acquisition of Banc Ed for the year ended December 31, 2020, primarily related to fixed asset and lease impairment. First Busey incurred $13.7 million in pre-tax expenses related to the acquisition of Banc Ed for the year ended December 31, 2019, primarily for salaries, wages and employee benefits, professional and legal fees and deconversion expenses, all of which are reported as a component of non-interest expense in the accompanying Consolidated Financial Statements. Of this amount, $2.3 million was considered transaction costs, primarily related to legal and professional fees associated with the acquisition. First Busey incurred $0.4 million in pre-tax expenses related to the acquisition of Banc Ed for the year ended December 31, 2018, primarily for professional and legal fees, all of which are reported as a component of non-interest expense in the accompanying Consolidated Financial Statements.

The following table presents the fair value of Banc Ed assets acquired and liabilities assumed as of January 31, 2019 (dollars in thousands):



	Fair Value
Assets acquired:
Cash and cash equivalents	$	42,013
Securities		692,716
Loans held for sale		2,157
Portfolio loans		873,336
Premises and equipment		32,156
Other intangible assets		32,617
Mortgage servicing rights		6,946
Other assets		57,332
Total assets acquired		1,739,273

Liabilities assumed:
Deposits		1,439,203
Other borrowings		63,439
Other liabilities		20,153
Total liabilities assumed		1,522,795

Net assets acquired	$	216,478

Consideration paid:
Cash	$	91,400
Common stock		166,515
Total consideration paid	$	257,915

Goodwill	$	41,437

The following table provides the unaudited pro forma information for the results of operations for the years ended December 31, 2019 and 2018, as if the acquisition had occurred January 1, 2018. The pro forma results combine the historical results of Banc Ed into the Company’s Consolidated Statements of Income, including the impact of purchase accounting adjustments such as loan discount accretion, intangible assets amortization, deposit accretion and premises accretion, net of taxes. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2018. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, expense efficiencies or asset dispositions (dollars in thousands, except per share amounts):


		Pro Forma
	Years Ended December 31,
	2019		2018
Total revenues (net interest income plus non-interest income)	$	409,324	$	411,633
Net income		113,640		118,361
Diluted earnings per common share		2.03		2.15

Investors’ Security Trust Company

On August 31, 2019, the Company completed its acquisition by Busey Bank of IST, a Fort Myers, Florida wealth management firm. This partnership added to the Company’s wealth management offerings, but did not have a material impact on the Company’s earnings or overall business. This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged was recorded at estimated fair values on the date of acquisition.

First Busey incurred $0.4 million in pre-tax expenses related to the acquisition of IST for the year ended December 31, 2020, primarily for contingent earn-out payments owed under the purchase agreement, which are reported as components of non-interest expense in the accompanying Consolidated Statements of Income. First Busey incurred $0.9 million in pre-tax expenses related to the acquisition of IST for the year ended December 31, 2019, primarily for professional and legal fees, which are reported as a component of non-interest expense in the accompanying Consolidated Financial Statements.

Cummins-American Corp.

On January 19, 2021, the Company and CAC, the holding company for GSB, jointly announced the signing of a definitive agreement pursuant to which the Company will acquire CAC and GSB through a merger transaction. The partnership will enhance the Company’s existing deposit, commercial banking, and wealth management presence in the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area. It is anticipated GSB will be merged with and into Busey Bank at a date following the completion of the merger. At the time of the bank merger, GSB banking centers will become banking centers of Busey Bank.

Under the terms of the merger agreement, CAC’s stockholders will have the right to receive 444.4783 shares of First Busey’s common stock and $27,969.67 in cash for each share of common stock of CAC with total consideration to consist of approximately 73% cash and 27% stock. Based upon the closing price of Busey’s common stock of $23.54 on January 15, 2021, the implied per share purchase price is $38,432.69 with an aggregate transaction value of approximately $190.8 million. The merger agreement provides that the cash consideration to be paid in the merger will be funded with a combination of cash from First Busey and a special dividend to be paid by CAC to its shareholders. Specifically, immediately prior to closing and subject to the completion of all closing conditions, CAC will cause GSB to pay a one-time special cash dividend of $60.0 million to CAC and, upon receipt, CAC will declare and issue a $60.0 million special cash dividend to CAC’s shareholders, which will be used to fund, in part, the cash consideration to be paid to CAC’s shareholders at closing. The transaction is expected to close in the second quarter of 2021, subject to customary closing conditions and required approvals, including the approval of CAC’s stockholders.

During 2020, First Busey incurred $0.5 million in pre-tax acquisition expenses related to the planned acquisition of CAC, comprised primarily of legal expenses.