Earnings To Watch: First Busey (BUSE) Reports Q4 Results Tomorrow

What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official boosted hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Regional Banks company Texas Capital Bank jumped 4.3%. Is now the time to buy Texas Capital Bank? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company S&T Bancorp jumped 4.5%. Is now the time to buy S&T Bancorp? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Hope Bancorp jumped 4.6%. Is now the time to buy Hope Bancorp? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company First Busey jumped 4.5%. Is now the time to buy First Busey? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Community Bank jumped 4.4%. Is now the time to buy Community Bank? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Hope Bancorp (HOPE)

Hope Bancorp’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 3 months ago when the stock gained 6% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.

Hope Bancorp is down 13.9% since the beginning of the year, and at $10.32 per share, it is trading 26.4% below its 52-week high of $14.02 from November 2024. Investors who bought $1,000 worth of Hope Bancorp’s shares 5 years ago would now be looking at an investment worth $1,063.

As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the regional banks industry, including Merchants Bancorp and its peers.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

The 94 regional banks stocks we track reported a satisfactory Q3. As a group, revenues missed analysts’ consensus estimates by 1.1%.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Merchants Bancorp

With a strategic focus on low-risk, government-backed lending programs, Merchants Bancorp (NASDAQCM:MBIN) is an Indiana-based bank holding company specializing in multi-family mortgage banking, mortgage warehousing, and traditional banking services.

Merchants Bancorp reported revenues of $171.1 million, up 14.4% year on year. This print exceeded analysts’ expectations by 3%. Overall, it was a very strong quarter for the company with a beat of analysts’ EPS and revenue estimates.

Unsurprisingly, the stock is down 2.4% since reporting and currently trades at $31.59.

Is now the time to buy Merchants Bancorp? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Customers Bancorp

Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.

Customers Bancorp reported revenues of $232.1 million, up 38.5% year on year, outperforming analysts’ expectations by 7%. The business had a stunning quarter with an impressive beat of analysts’ net interest income estimates and a solid beat of analysts’ revenue estimates.

The market seems content with the results as the stock is up 2.2% since reporting. It currently trades at $66.99.

Is now the time to buy Customers Bancorp? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: The Bancorp

Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.

The Bancorp reported revenues of $174.6 million, up 38.8% year on year, falling short of analysts’ expectations by 10%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and net interest income estimates.

As expected, the stock is down 20% since the results and currently trades at $61.62.

Read our full analysis of The Bancorp’s results here.

First Busey

Tracing its roots back to 1868 during America's post-Civil War reconstruction era, First Busey is a bank holding company that provides commercial and retail banking, wealth management, and payment technology solutions across Illinois, Missouri, Florida, and Indiana.

First Busey reported revenues of $196.3 million, up 66.8% year on year. This result met analysts’ expectations. Zooming out, it was a mixed quarter as it also produced an impressive beat of analysts’ tangible book value per share estimates but a narrow beat of analysts’ EPS estimates.

The stock is flat since reporting and currently trades at $23.27.

Read our full, actionable report on First Busey here, it’s free for active Edge members.

Texas Capital Bank

Founded during the Texas banking renaissance of the 1990s with an entrepreneurial spirit, Texas Capital Bancshares is a financial services firm that provides banking, wealth management, and investment banking services to businesses and individuals across Texas and beyond.

Texas Capital Bank reported revenues of $340.4 million, up 11.6% year on year. This number surpassed analysts’ expectations by 4.1%. It was an exceptional quarter as it also recorded a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.

The stock is up 3.1% since reporting and currently trades at $84.65.

Read our full, actionable report on Texas Capital Bank here, it’s free for active Edge members.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

Regional banking company First Busey met Wall Street’s revenue expectations in Q3 CY2025, with sales up 66.8% year on year to $196.3 million. Its non-GAAP profit of $0.64 per share was 2.5% above analysts’ consensus estimates.

Is now the time to buy First Busey? Find out by accessing our full research report, it’s free for active Edge members.

First Busey (BUSE) Q3 CY2025 Highlights:

• Net Interest Income: $155.1 million vs analyst estimates of $155.9 million (88% year-on-year growth, in line)
• Net Interest Margin: 3.6% vs analyst estimates of 3.5% (5 basis point beat)
• Revenue: $196.3 million vs analyst estimates of $195.6 million (66.8% year-on-year growth, in line)
• Efficiency Ratio: 58.5% vs analyst estimates of 56.2% (230.3 basis point miss)
• Adjusted EPS: $0.64 vs analyst estimates of $0.62 (2.5% beat)
• Tangible Book Value per Share: $19.69 vs analyst estimates of $19.66 (8.2% year-on-year growth, in line)
• Market Capitalization: $2.07 billion

Company Overview

Tracing its roots back to 1868 during America's post-Civil War reconstruction era, First Busey is a bank holding company that provides commercial and retail banking, wealth management, and payment technology solutions across Illinois, Missouri, Florida, and Indiana.

Sales Growth

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Over the last five years, First Busey grew its revenue at an impressive 10.1% compounded annual growth rate. Its growth beat the average banking company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. First Busey’s annualized revenue growth of 19% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, First Busey’s year-on-year revenue growth of 66.8% was magnificent, and its $196.3 million of revenue was in line with Wall Street’s estimates.

Net interest income made up 71.4% of the company’s total revenue during the last five years, meaning lending operations are First Busey’s largest source of revenue.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

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Tangible Book Value Per Share (TBVPS)

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

First Busey’s TBVPS grew at a tepid 3.8% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 14.3% annually over the last two years from $15.07 to $19.69 per share.

Over the next 12 months, Consensus estimates call for First Busey’s TBVPS to grow by 10% to $21.67, solid growth rate.

Key Takeaways from First Busey’s Q3 Results

Net interest income, revenue, and book value per share were all in line with Wall Street’s estimates. EPS did manage to beat, tough. Overall, this quarter was without many surprises. The stock remained flat at $23.24 immediately after reporting.

Big picture, is First Busey a buy here and now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.