First Busey (BUSE) shares came under pressure this week after it reported fourth-quarter EPS of $0.65, versus $0.61 in both the fourth quarter of 2021 and the third quarter of 2022. However, results were $0.08 less than expectations, due to a higher-than-expected tax rate, which jumped to 24.7% from 19.2% in the third quarter.

The company attributed the higher-than-expected tax rate to greater-than-expected interest income. This explanation does not make much sense, as BUSE is already in the top marginal bracket for corporations with annual income exceeding $128 million. Unfortunately, the company does not have a conference call, so no further explanation is available at this time.

Aside from the tax issue, the company is strong operationally. Loan growth was 2.9% on an annualized basis, net interest margins increased 0.24% from the third quarter to 3.24%, and credit quality remains very strong with non-performing assets just 0.13% of total assets.

Therefore, even with a higher tax rate, BUSE is in good shape to earn at least $2.70 a share this year, and I expect the stock to bounce back quickly. My new buy under price for BUSE is $23, and my target is $28.

Old Republic (ORI) retreated today, but the stock is still sharply higher since reported much better-than-expected results yesterday. EPS of $0.80, vs. $0.88 in the same quarter last year, beat expectations for $0.55 a share. Much of the upside was driven by favorable developments in claims from prior years.

In addition, while title insurance premiums continue to be under pressure, falling 29.7% in the quarter, general insurance premiums increased 6.5% and underwriting results continued to be strong, with the company avoiding the losses that impacted Travelers’ (TRV) results this week.

The stock got relatively close to my $27 price target before pulling back. At this time, I am undecided on whether I should raise my target. Given that a lot of the upside in the quarter came from prior period developments, EPS estimates for 2023 are not going up dramatically; $2.40 a share seems reasonable. However, I am comfortable holding the stock for now as any downside in the stock is limited with insurance premiums still firm. ORI is a buy below $24. My target remains $27 for now.