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What changed in FIRST BUSEY CORP /NV/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FIRST BUSEY CORP /NV/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+344 added−415 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-23)

Top changes in FIRST BUSEY CORP /NV/'s 2024 10-K

344 paragraphs added · 415 removed · 220 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

95 edited+22 added−22 removed14 unchanged
Biggest changeGeographic distributions of portfolio loans, based on origination, by category were as follows (dollars in thousands) : December 31, 2023 Illinois Missouri Florida Indiana Total Commercial loans Commercial $ 1,395,020 $ 369,767 $ 25,267 $ 45,940 $ 1,835,994 Commercial real estate 2,278,348 671,762 219,511 167,716 3,337,337 Real estate construction 255,879 74,805 72,121 58,912 461,717 Total commercial loans 3,929,247 1,116,334 316,899 272,568 5,635,048 Retail loans Retail real estate 1,284,362 225,610 129,454 81,029 1,720,455 Retail other 290,937 2,344 1,111 1,139 295,531 Total retail loans 1,575,299 227,954 130,565 82,168 2,015,986 Total portfolio loans $ 5,504,546 $ 1,344,288 $ 447,464 $ 354,736 $ 7,651,034 ACL (91,740) Portfolio loans, net of ACL $ 7,559,294 First Busey Corporation | 2023 — 74 Table of Contents Contents of Item 7.
Biggest changeThe geographic distribution of loans originated in each of these markets is presented in the tables below (dollars in thousands) : As of December 31, 2024 Illinois Missouri Florida Indiana Total Commercial loans C&I and other commercial $ 1,493,670 $ 276,140 $ 58,277 $ 76,428 $ 1,904,515 CRE 2,285,915 560,337 245,918 177,394 3,269,564 Real estate construction 232,898 40,816 30,826 73,669 378,209 Total commercial loans 4,012,483 877,293 335,021 327,491 5,552,288 Retail loans Retail real estate 1,275,834 211,878 128,352 80,393 1,696,457 Retail other 443,164 3,731 683 764 448,342 Total retail loans 1,718,998 215,609 129,035 81,157 2,144,799 Total portfolio loans $ 5,731,481 $ 1,092,902 $ 464,056 $ 408,648 $ 7,697,087 ACL (83,404) Portfolio loans, net of ACL $ 7,613,683 As of December 31, 2023 Illinois Missouri Florida Indiana Total Commercial loans C&I and other commercial $ 1,395,020 $ 369,767 $ 25,267 $ 45,940 $ 1,835,994 CRE 2,278,348 671,762 219,511 167,716 3,337,337 Real estate construction 255,879 74,805 72,121 58,912 461,717 Total commercial loans 3,929,247 1,116,334 316,899 272,568 5,635,048 Retail loans Retail real estate 1,284,362 225,610 129,454 81,029 1,720,455 Retail other 290,937 2,344 1,111 1,139 295,531 Total retail loans 1,575,299 227,954 130,565 82,168 2,015,986 Total portfolio loans $ 5,504,546 $ 1,344,288 $ 447,464 $ 354,736 $ 7,651,034 ACL (91,740) Portfolio loans, net of ACL $ 7,559,294 First Busey Corporation (BUSE) | 2024 — 72 Table of Contents Contents of Item 7.
Potential Problem Loans Potential problem loans are loans classified as substandard which are not individually evaluated, restructured, non-accrual, or 90+ days past due, but where current information indicates that the borrower may not be able to comply with loan repayment terms.
Potential Problem Loans Potential problem loans are loans classified as substandard which are not individually evaluated, non-accrual, or 90+ days past due, but where current information indicates that the borrower may not be able to comply with loan repayment terms.
Proceeds from such issuances were used by the trusts to purchase junior subordinated notes of Busey, which are the sole assets of each trust. Concurrent with the issuance of the trust preferred securities, we issued guarantees for the benefit of the holders of the trust preferred securities.
Proceeds from such issuances were used by the trusts to purchase junior subordinated notes of Busey, which are the sole assets of each trust. Concurrent with the issuance of the trust preferred securities, Busey issued guarantees for the benefit of the holders of the trust preferred securities.
These financial obligations consist of needs for funds to meet commitments to borrowers for extensions of credit, fund capital expenditures, honor withdrawals by customers, pay dividends to stockholders, and pay operating expenses. Our most liquid assets are cash and due from banks, interest-bearing bank deposits, and federal funds sold.
These financial obligations consist of needs for funds to meet commitments to borrowers for extensions of credit, fund capital expenditures, honor withdrawals by customers, pay dividends to stockholders, and pay operating expenses. Busey’s most liquid assets are cash and due from banks, interest-bearing bank deposits, and federal funds sold.
When a loan is classified as non-accrual and determined to be collateral dependent, it is appropriately reserved or charged down through the ACL to the fair value of our interest in the underlying collateral less estimated costs to sell. Our loan portfolio is collateralized primarily by real estate.
When a loan is classified as non-accrual and determined to be collateral dependent, it is appropriately reserved or charged down through the ACL to the fair value of Busey’s interest in the underlying collateral less estimated costs to sell. Busey’s loan portfolio is collateralized primarily by real estate.
Management routinely (at least quarterly) reviews the ACL in conjunction with reports related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans. Our underwriting standards are designed to encourage relationship banking rather than transactional banking.
Management routinely (at least quarterly) reviews the ACL in conjunction with reports related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans. Busey’s underwriting standards are designed to encourage relationship banking rather than transactional banking.
For additional information regarding interest rates and changes in net interest income see “ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operation — Three Years Ended December 31, 2023—Consolidated Average Balance Sheets and Interest Rates ” and “ Item 7A.
For additional information regarding interest rates and changes in net interest income see “ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operation — Three Years Ended December 31, 2024—Consolidated Average Balance Sheets and Interest Rates ” and “ Item 7A.
MD&A Portfolio Loans We believe that making sound and profitable loans is a necessary and desirable means of employing funds available for investment. Busey maintains lending policies and procedures designed to focus lending efforts on the types, locations, and duration of loans most appropriate for its business model and markets.
MD&A Portfolio Loans Busey believes that making sound and profitable loans is a necessary and desirable means of employing funds available for investment. Busey maintains lending policies and procedures designed to focus lending efforts on the types, locations, and duration of loans most appropriate for its business model and markets.
The table below presents minimum capital ratios that include the capital conservation buffer in comparison to the capital ratios for First Busey and Busey Bank as of December 31, 2023.
The table below presents minimum capital ratios that include the capital conservation buffer in comparison to the capital ratios for First Busey and Busey Bank as of December 31, 2024.
MD&A Borrowings Term Loan On May 28, 2021, Busey entered into a Second Amended and Restated Credit Agreement, pursuant to which we have access to (1) a $40.0 million revolving line of credit with an initial termination date of April 30, 2022, and (2) a $60.0 million Term Loan with a maturity date of May 31, 2026.
MD&A Borrowings Term Loan On May 28, 2021, Busey entered into a Second Amended and Restated Credit Agreement, pursuant to which it has access to (1) a $40.0 million revolving line of credit with an initial termination date of April 30, 2022, and (2) a $60.0 million Term Loan with a maturity date of May 31, 2026.
Unrecognized losses are included in OCI, and amortized into income over the contractual lives of the securities. An ACL balance will be established for debt securities held to maturity when applicable. No ACL was recorded for our portfolio of debt securities held to maturity as of December 31, 2023 or 2022.
Unrecognized losses are included in OCI and amortized into income over the contractual lives of the securities. An ACL balance will be established for debt securities held to maturity when applicable. No ACL was recorded for Busey’s portfolio of debt securities held to maturity as of December 31, 2024 or 2023.
As of December 31, 2023, Busey management believed the level of the allowance to be appropriate based upon the information available. However, additional losses may be identified in our loan portfolio as new information is obtained.
As of December 31, 2024, Busey management believed the level of the allowance to be appropriate based upon the information available. However, additional losses may be identified in the loan portfolio as new information is obtained.
Securities are presented based upon final contractual maturity or pre-refunded date. 2. Weighted average yield calculated on a tax-equivalent basis, assuming a federal income tax rate of 21.0%. First Busey Corporation | 2023 — 70 Table of Contents Contents of Item 7. MD&A Debt Securities Held to Maturity Debt securities held to maturity are carried at amortized cost.
Securities are presented based upon final contractual maturity or pre-refunded date. 2. Weighted average yield calculated on a tax-equivalent basis, assuming a federal income tax rate of 21.0%. First Busey Corporation (BUSE) | 2024 — 67 Table of Contents Contents of Item 7. MD&A Debt Securities Held to Maturity Debt securities held to maturity are carried at amortized cost.
Retail Real Estate Loans Retail real estate loans are comprised of direct consumer loans that include residential real estate, home equity lines of credit, and home equity loans. In 2023, Busey retained a larger percentage of originated retail real estate loans in our portfolio, electing to sell a smaller percentage to secondary market purchasers.
Retail Real Estate Loans Retail real estate loans are comprised of direct consumer loans that include residential real estate, home equity lines of credit, and home equity loans. In 2024, Busey retained a smaller percentage of originated retail real estate loans in its portfolio, electing to sell a larger percentage to secondary market purchasers.
Interest on the subordinated notes will accrue at a rate equal to (1) 5.000% per annum from the original issue date to, but excluding, June 15, 2027, payable semiannually in arrears, and (2) a floating rate per annum equal to a benchmark rate, which is expected to be the Three-Month Term SOFR (as defined in the subordinated notes), plus a spread of 252 basis points from and including, June 15, 2027, payable quarterly in arrears.
Interest on the subordinated notes accrues at a rate equal to (1) 5.000% per annum from the original issue date to, but excluding, June 15, 2027, payable semiannually in arrears, and (2) a floating rate per annum equal to a benchmark rate, which is expected to be the Three-Month Term SOFR (as defined in the subordinated notes), plus a spread of 252 bps from and including June 15, 2027, payable quarterly in arrears.
Deposits are federally insured up to the FDIC insurance limit of $250,000. When a portion of a deposit account exceeds the FDIC insurance limit, that portion is uninsured. Estimated uninsured deposits were $3.8 billion at December 31, 2023.
Deposits are federally insured up to the FDIC insurance limit of $250,000. When a portion of a deposit account exceeds the FDIC insurance limit, that portion is uninsured. Estimated uninsured deposits were $3.78 billion at December 31, 2024.
As retail real estate loan underwriting is subject to specific regulations, we typically underwrite our retail real estate loans to conform to widely accepted standards. Several factors are considered in underwriting including the debt-to-income ratio and credit history of the borrower, as well as the value of the underlying real estate.
As retail real estate loan underwriting is subject to specific regulations, Busey typically underwrites retail real estate loans to conform to widely accepted standards. Several factors are considered in underwriting including the debt-to-income ratio and credit history of the borrower, as well as the value of the underlying real estate.
Fluctuations in sales of loans held for sale are a function of changes in market rates for mortgage loans, which influence refinance activity. Net cash provided by investing activities totaled $551.0 million in 2023, compared to $291.0 million used in investing activities in 2022. Significant investing activities are those associated with managing Busey’s investment and loan portfolios.
Fluctuations in sales of loans held for sale are a function of changes in market rates for mortgage loans, which influence refinance activity. Net cash provided by investing activities totaled $657.9 million in 2024, compared to $551.0 million provided by investing activities in 2023. Significant investing activities are those associated with managing Busey’s investment and loan portfolios.
Unamortized debt issuance costs related to subordinated notes are presented in the following table (dollars in thousands) : As of December 31, 2023 2022 Unamortized debt issuance costs Subordinated notes issued in 2020 $ 735 $ 1,220 Subordinated notes issued in 2022 1,383 1,742 Total unamortized debt issuance costs $ 2,118 $ 2,962 Junior Subordinated Debt Owed to Unconsolidated Trusts Busey maintains statutory trusts for the sole purpose of issuing and servicing trust preferred securities and related trust common securities.
Unamortized debt issuance costs related to subordinated notes are presented in the following table (dollars in thousands) : As of December 31, 2024 2023 Unamortized debt issuance costs Subordinated notes issued in 2020 $ 222 $ 735 Subordinated notes issued in 2022 1,004 1,383 Total unamortized debt issuance costs $ 1,226 $ 2,118 Junior Subordinated Debt Owed to Unconsolidated Trusts Busey maintains statutory trusts for the sole purpose of issuing and servicing trust preferred securities and related trust common securities.
The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after June 1, 2025. The subordinated notes are unsecured obligations of the Company. First Busey Corporation | 2023 — 84 Table of Contents Contents of Item 7.
The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after June 1, 2025. The subordinated notes are unsecured obligations of the Company. First Busey Corporation (BUSE) | 2024 — 81 Table of Contents Contents of Item 7.
For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “ Item 1. Business—Non-GAAP Financial Information ” included in this Annual Report. First Busey Corporation | 2023 — 82 Table of Contents Contents of Item 7.
For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “ Item 1. Business—Non-GAAP Financial Information ” included in this Annual Report. First Busey Corporation (BUSE) | 2024 — 79 Table of Contents Contents of Item 7.
Management assesses the potential for loss on such loans and considers the effect of any potential loss in determining its provision for expected credit losses. Potential problem loans decreased to $64.3 million at December 31, 2023, compared to $89.2 million at December 31, 2022.
Management assesses the potential for loss on such loans and considers the effect of any potential loss in determining its provision for expected credit losses. Potential problem loans decreased to $62.0 million at December 31, 2024, compared to $64.3 million at December 31, 2023.
As of December 31, 2023, our average customer tenure was 16.5 years for retail customers and 12.4 years for commercial customers. Core deposits 4 include non-brokered transaction accounts, money market deposit accounts, and time deposits of $250,000 or less. Core deposits 4 represented 96.2% of total deposits as of December 31, 2023, compared to 98.8% as of December 31, 2022.
As of December 31, 2024, Busey average customer tenure was 16.9 years for retail customers and 12.8 years for commercial customers. Core deposits include non-brokered transaction accounts, money market and savings deposit accounts, and time deposits of $250,000 or less. Core deposits represented 96.5% of total deposits as of December 31, 2024, compared to 96.2% as of December 31, 2023.
We consider many factors in determining the composition of our investment portfolio including, but not limited to, credit quality, duration, interest rate risk, liquidity, tax-equivalent yield, regulatory considerations, and overall portfolio allocation. As of December 31, 2023, we did not hold general obligation bonds of any single issuer, the aggregate of which exceeded 10% of the Company’s stockholders’ equity.
Busey considers many factors in determining the composition of its investment portfolio including, but not limited to, credit quality, duration, interest rate risk, liquidity, tax-equivalent yield, regulatory considerations, and overall portfolio allocation. As of December 31, 2024, Busey did not hold general obligation bonds of any single issuer, the aggregate of which exceeded 10% of Busey’s stockholders’ equity.
Securities are presented based upon final contractual maturity or pre-refunded date. Equity Securities Equity securities are carried at fair value. The fair value of equity securities was $9.8 million as of December 31, 2023, compared to $11.5 million as of December 31, 2022. First Busey Corporation | 2023 — 71 Table of Contents Contents of Item 7.
Securities are presented based upon final contractual maturity or pre-refunded date. Equity Securities Equity securities are carried at fair value. The fair value of equity securities was $15.9 million as of December 31, 2024, compared to $9.8 million as of December 31, 2023. First Busey Corporation (BUSE) | 2024 — 68 Table of Contents Contents of Item 7.
If economic conditions were to deteriorate, we would expect the credit quality of our loan portfolio to decline and loan defaults to increase.
If economic conditions were to deteriorate, Busey would expect the credit quality of its loan portfolio to decline and loan defaults to increase.
Pledged securities totaled $837.4 million, or 28.3% of total debt securities, as of December 31, 2023, and $746.7 million, or 22.1% of total debt securities, as of December 31, 2022. Debt Securities Available for Sale Debt securities available for sale are carried at fair value. Net unrealized gains or losses, net of tax, are recorded in stockholders’ equity, through AOCI.
Pledged securities totaled $871.4 million, or 33.0% of total debt securities, as of December 31, 2024, and $837.4 million, or 28.3% of total debt securities, as of December 31, 2023. Debt Securities Available for Sale Debt securities available for sale are carried at fair value. Net unrealized gains or losses, net of tax, are recorded in stockholders’ equity, through AOCI.
Repayment of retail other loans is expected from the borrower’s cash flows. First Busey Corporation | 2023 — 73 Table of Contents Contents of Item 7.
Repayment of retail other loans is expected from the borrower’s cash flows. First Busey Corporation (BUSE) | 2024 — 70 Table of Contents Contents of Item 7.
MD&A The following table sets forth the distribution of securities sold under agreements to repurchase and short-term borrowings, as well as the weighted average interest rates thereon (dollars in thousands) : Years Ended December 31, 2023 2022 2021 Securities sold under agreements to repurchase Balance at end of period $ 187,396 $ 229,806 $ 270,139 Weighted average interest rate at end of period 3.26 % 1.91 % 0.08 % Maximum outstanding at any month end in year-to-date period $ 248,850 $ 283,664 $ 270,139 Average daily balance for the year-to-date period 200,702 243,690 218,454 Weighted average interest rate during period 1 2.58 % 0.60 % 0.10 % FHLB advances, current portion due within 12 months Balance at end of period $ — $ 339,054 $ 5,678 Weighted average interest rate at end of period — % 4.28 % 0.36 % Maximum outstanding at any month end in year-to-date period $ 603,881 $ 339,054 $ 5,678 Average daily balance for the year-to-date period 241,382 25,845 4,934 Weighted average interest rate during period 1 4.90 % 4.28 % 0.41 % Term Loan, current portion due within 12 months Balance at end of period $ 12,000 $ 12,000 $ 12,000 Weighted average interest rate at end of period 7.14 % 5.92 % 1.88 % Maximum outstanding at any month end in year-to-date period $ 12,000 $ 12,000 $ 12,000 Average daily balance for the year-to-date period 12,000 12,000 7,167 Weighted average interest rate during period 1 6.88 % 3.55 % 1.79 % ___________________________________________ 1.
MD&A The following table sets forth the distribution of short-term borrowings and securities sold under agreements to repurchase, as well as the weighted average interest rates thereon (dollars in thousands) : Years Ended December 31, 2024 2023 2022 Securities sold under agreements to repurchase Balance at end of period $ 155,610 $ 187,396 $ 229,806 Weighted average interest rate at end of period 2.63 % 3.26 % 1.91 % Maximum outstanding at any month end in year-to-date period $ 214,567 $ 248,850 $ 283,664 Average daily balance for the year-to-date period 147,588 200,702 243,690 Weighted average interest rate during period 1 2.91 % 2.58 % 0.60 % FHLB advances, current portion due within 12 months Balance at end of period $ — $ — $ 339,054 Weighted average interest rate at end of period — % — % 4.28 % Maximum outstanding at any month end in year-to-date period $ 24,100 $ 603,881 $ 339,054 Average daily balance for the year-to-date period 7,018 241,382 25,845 Weighted average interest rate during period 1 5.54 % 4.90 % 4.28 % Term Loan, current portion due within 12 months Balance at end of period $ — $ 12,000 $ 12,000 Weighted average interest rate at end of period — % 7.14 % 5.92 % Maximum outstanding at any month end in year-to-date period $ 12,000 $ 12,000 $ 12,000 Average daily balance for the year-to-date period 2,853 12,000 12,000 Weighted average interest rate during period 1 7.26 % 6.88 % 3.55 % ___________________________________________ 1.
As of December 31, 2023, the fair value of debt securities available for sale was $2.1 billion, and the amortized cost was $2.3 billion. There were $0.2 million of gross unrealized gains and $247.2 million of gross unrealized losses, resulting in a net unrealized loss of $247.1 million.
As of December 31, 2024, the fair value of debt securities available for sale was $1.81 billion, and the amortized cost was $2.04 billion. There were $0.6 million of gross unrealized gains and $230.3 million of gross unrealized losses, resulting in a net unrealized loss of $229.7 million.
Commercial loans will generally be guaranteed, in full or a material percentage, by the primary owners of the business. Commercial loans are made based primarily on the borrower’s historical and projected cash flows and secondarily on the underlying assets pledged as collateral by the borrower. Cash flows of the borrower, however, may not perform consistently with historical or projected information.
C&I and other commercial loans will generally be guaranteed, in full or a material percentage, by the primary owners of the business. C&I and other commercial loans are made based primarily on the borrower’s historical and projected cash flows and secondarily on the underlying assets pledged as collateral by the borrower.
These balances are then multiplied by the factor appropriate for that risk-weighted category. In order to refrain from restrictions on dividends, equity repurchases, and discretionary bonus payments, banking institutions must maintain capital in excess of regulatory minimum capital requirements.
Risk-based capital ratios are established by allocating assets and certain off-balance-sheet commitments into risk-weighted categories. These balances are then multiplied by the factor appropriate for that risk-weighted category. In order to refrain from restrictions on dividends, equity repurchases, and discretionary bonus payments, banking institutions must maintain capital in excess of regulatory minimum capital requirements.
In addition, the loan review department reviews risk assessments made by our credit department, lenders, and loan committees. Results of these reviews are presented to management and the audit committee at least quarterly. Busey Bank’s lending activities can be summarized into two primary categories: commercial and retail. Within these primary categories, loans are further classified into five primary lending areas.
In addition, the loan review department reviews risk assessments made by Busey’s credit department, lenders, and loan committees. Results of these reviews are presented to management and the audit committee at least quarterly. Busey Bank’s lending can be summarized into five primary lending activities, which can be further categorized as either commercial or retail lending.
Management continues to monitor these credits and anticipates that restructurings, guarantees, additional collateral, or other planned actions will result in full repayment of the debts. As of December 31, 2023, management identified no other loans that represent or result from trends or uncertainties that would be expected to materially impact future operating results, liquidity, or capital resources.
Management continues to monitor these loans and work with the borrowers on restructurings, guarantees, additional collateral, or other planned actions. As of December 31, 2024, management identified no other loans that represent or result from trends or uncertainties that would be expected to materially impact future operating results, liquidity, or capital resources.
Loans to related parties, including executive officers and directors of First Busey Corporation and its subsidiaries, are reviewed for compliance with regulatory guidelines. Busey maintains an independent loan review department that reviews loans for compliance with our loan policy on a periodic basis.
Busey generally limits such relationships to amounts substantially less than the regulatory limit. Loans to related parties, including executive officers and directors of First Busey Corporation and its subsidiaries, are reviewed for compliance with regulatory guidelines. Busey maintains an independent loan review department that reviews loans for compliance with Busey’s loan policy on a periodic basis.
Additional liquidity is provided by the ability to borrow from the FHLB, the Federal Reserve Bank, and our revolving credit facility, as summarized in the table below (dollars in thousands) : As of December 31, 2023 2022 Additional available borrowing capacity FHLB $ 1,898,737 $ 1,765,388 Federal Reserve Bank 598,878 659,680 Federal funds purchased 482,500 482,500 Revolving credit facility 40,000 40,000 Additional borrowing capacity $ 3,020,115 $ 2,947,568 Further, the company could utilize brokered deposits as additional sources of liquidity, as needed.
Additional liquidity is provided by the ability to borrow from the FHLB, the Federal Reserve Bank, and Busey’s revolving credit facility, as summarized in the table below (dollars in thousands) : As of December 31, 2024 2023 Additional available borrowing capacity FHLB $ 1,679,463 $ 1,898,737 Federal Reserve Bank 664,083 598,878 Federal funds purchased 477,500 482,500 Revolving credit facility 40,000 40,000 Additional borrowing capacity $ 2,861,046 $ 3,020,115 Further, Busey could utilize brokered deposits as additional sources of liquidity, as needed.
Quantitative and Qualitative Disclosures About Market Risk .” First Busey Corporation | 2023 — 89 Table of Contents
Quantitative and Qualitative Disclosures About Market Risk .” First Busey Corporation (BUSE) | 2024 — 86 Table of Contents
MD&A EFFECTS OF INFLATION The effect of inflation on a financial institution differs significantly from the effect on an industrial company. While a financial institution’s operating expenses, particularly salaries, wages, and employee benefits, are affected by general inflation, the asset and liability structure of a financial institution consists largely of monetary items.
While a financial institution’s operating expenses, particularly salaries, wages, and employee benefits, are affected by general inflation, the asset and liability structure of a financial institution consists largely of monetary items.
Net cash used in financing activities totaled $232.0 million in 2023, compared to $483.9 million used in financing activities in 2022. Significant financing activities affecting cash flows include deposit and other borrowings, as well as cash dividends paid. For additional detail, see the Consolidated Statemen ts of Cash F lo ws .
Net cash used in financing activities totaled $858.1 million in 2024, compared to $232.0 million used in financing activities in 2023. Significant financing activities affecting cash flows include deposit and other borrowings, as well as cash dividends paid. For additional detail, see the Consolidated Statements of Cash Flows .
MD&A Average liquid assets are summarized in the table below (dollars in thousands) : Years Ended December 31, 2023 2022 2021 Average liquid assets Cash and due from banks $ 116,530 $ 120,910 $ 133,711 Interest-bearing bank deposits 214,422 290,875 630,687 Total average liquid assets $ 330,952 $ 411,785 $ 764,398 Average liquid assets as a percent of average total assets 2.7 % 3.3 % 6.4 % Cash and unencumbered securities on our Consolidated Balance Sheets are summarized as follows for the periods presented (dollars in thousands) : As of December 31, 2023 2022 Cash and unencumbered securities Total cash and cash equivalents $ 719,581 $ 227,164 Debt securities available for sale 2,087,571 2,461,393 Debt securities available for sale pledged as collateral (649,769) (746,675) Cash and unencumbered securities $ 2,157,383 $ 1,941,882 Busey’s primary sources of funds consist of deposits, investment maturities and sales, loan principal repayments, and capital funds.
Average liquid assets are summarized in the table below (dollars in thousands) : Years Ended December 31, 2024 2023 2022 Average liquid assets Cash and due from banks $ 109,400 $ 116,530 $ 120,910 Interest-bearing bank deposits 445,881 214,422 290,875 Total average liquid assets $ 555,281 $ 330,952 $ 411,785 Average liquid assets as a percent of average total assets 4.6 % 2.7 % 3.3 % Cash and unencumbered securities on Busey’s Consolidated Balance Sheets are summarized as follows for the periods presented (dollars in thousands) : As of December 31, 2024 2023 Cash and unencumbered securities Total cash and cash equivalents $ 697,659 $ 719,581 Debt securities available for sale 1,810,221 2,087,571 Debt securities available for sale pledged as collateral (653,454) (649,769) Cash and unencumbered securities $ 1,854,426 $ 2,157,383 Busey’s primary sources of funds consist of deposits, investment maturities and sales, loan principal repayments, and capital funds.
Minimum Capital Requirements with Capital Buffer As of December 31, 2023 First Busey Busey Bank Common Equity Tier 1 Capital to Risk Weighted Assets 7.00 % 13.09 % 15.48 % Tier 1 Capital to Risk Weighted Assets 8.50 % 13.93 % 15.48 % Total Capital to Risk Weighted Assets 10.50 % 17.44 % 16.45 % Leverage Ratio of Tier 1 Capital to Average Assets 6.50 % 10.08 % 11.19 % Management believes that no conditions or events have occurred since December 31, 2023, that would materially adversely change First Busey’s or Busey Bank’s capital classifications.
Minimum Capital Requirements with Capital Buffer As of December 31, 2024 First Busey Busey Bank Common Equity Tier 1 Capital to Risk Weighted Assets 7.00 % 14.10 % 16.46 % Tier 1 Capital to Risk Weighted Assets 8.50 % 14.98 % 16.46 % Total Capital to Risk Weighted Assets 10.50 % 18.53 % 17.40 % Leverage Ratio of Tier 1 Capital to Average Assets 6.50 % 11.06 % 12.14 % Management believes that no conditions or events have occurred since December 31, 2024, that would materially adversely change First Busey’s or Busey Bank’s capital classifications.
Department of Agriculture lending programs, when prudent. Generally, loans are collateralized by assets, primarily real estate, and guaranteed by individuals. Loans are expected to be repaid primarily from cash flows of the borrowers or from proceeds from the sale of selected assets of the borrowers. Management reviews and approves Busey Bank’s lending policies and procedures on a regular basis.
Loans are expected to be repaid primarily from cash flows of the borrowers or from proceeds from the sale of selected assets of the borrowers. Management reviews and approves Busey Bank’s lending policies and procedures on a regular basis.
The loan generally must be supported by an adequate “as completed” value of the underlying project. In addition to the underlying project, the financial history of the developer and business owners weighs significantly in determining approval. Repayment of these loans is typically through permanent financing following completion of the construction.
In addition to the underlying project, the financial history of the developer and business owners weighs significantly in determining approval. Repayment of these loans is typically through permanent financing following completion of the construction.
The following table summarizes our outstanding commitments and reserves for unfunded commitments (dollars in thousands) : As of December 31, 2023 2022 Outstanding loan commitments and standby letters of credit $ 2,176,496 $ 2,024,777 Reserve for unfunded commitments 7,062 6,601 The following table summarizes our provision for unfunded commitments expenses (releases) for the periods presented (dollars in thousands) : Years Ended December 31, 2023 2022 2021 Provision for unfunded commitments expense (release) $ 461 $ 61 $ (774) We anticipate we will have sufficient funds available to meet current loan commitments, including loan applications received and in process prior to the issuance of firm commitments.
The following table summarizes Busey’s outstanding commitments and reserves for unfunded commitments (dollars in thousands) : As of December 31, 2024 2023 Outstanding loan commitments and standby letters of credit $ 2,548,178 $ 2,176,496 Reserve for unfunded commitments 5,967 7,062 The following table summarizes Busey’s provision for unfunded commitments expenses (releases) for the periods presented (dollars in thousands) : Years Ended December 31, Location 2024 2023 2022 Provision for unfunded commitments expense (release) Other noninterest expense $ (1,095) $ 461 $ 61 Busey anticipates that it will have sufficient funds available to meet current loan commitments, including loan applications received and in process prior to the issuance of firm commitments.
The Day 1 PCD is attributable to the CAC acquisition. First Busey Corporation | 2023 — 78 Table of Contents Contents of Item 7.
The Day 1 PCD is attributable to the M&M acquisition. First Busey Corporation (BUSE) | 2024 — 75 Table of Contents Contents of Item 7.
As of December 31, 2023, the amortized cost of debt securities held to maturity was $872.6 million, and the fair value was $730.4 million. There were no gross unrecognized gains and $142.2 million of gross unrecognized losses.
As of December 31, 2024, the amortized cost of debt securities held to maturity was $826.6 million, and the fair value was $675.1 million. There were no gross unrecognized gains and $151.6 million of gross unrecognized losses.
The portion of our deposit base that was uninsured and not otherwise collateralized was estimated to be $2.8 billion at December 31, 2023, which represented 27% of total deposits. Of that amount, $350.1 million represented time deposits.
The portion of Busey’s deposit base that was uninsured and not otherwise collateralized was estimated to be $2.96 billion at December 31, 2024, which represented 30% of total deposits. Of that amount, $286.4 million represented time deposits.
Significant underwriting factors in addition to location, duration, a sound and profitable cash flow basis, and the borrower’s character, include the quality of the borrower’s financial history, the liquidity of the underlying collateral, and the reliability of the valuation of the underlying collateral.
Significant underwriting factors in addition to location, duration, a sound and profitable cash flow basis, and the borrower’s character, include the quality of the borrower’s financial history, the liquidity of the underlying collateral, and the reliability of the valuation of the underlying collateral. At no time is a borrower’s total borrowing relationship permitted to exceed Busey Bank’s regulatory lending limit.
Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are considered to mature within one year.
Loan Maturities The determination of loan maturities is based on contractual loan terms. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are considered to mature within one year.
In connection with the Pulaski acquisition in 2016, we acquired similar statutory trusts previously maintained by Pulaski and the fair value adjustment is being accreted over their weighted average remaining life, with a balance remaining to be accreted of $2.6 million at December 31, 2023.
In connection with its acquisitions of Pulaski Financial Corp. in 2016 and M&M in 2024, Busey has acquired similar statutory trusts and the fair value adjustment is being accreted over their weighted average remaining lives, with a balance remaining to be accreted of $2.9 million and $2.6 million at December 31, 2024, and 2023, respectively.
MD&A Commercial Real Estate Loans The commercial environment, along with the academic presence in some of our markets, provides for the majority of our commercial lending opportunities to be commercial real estate related, including multi-unit housing.
First Busey Corporation (BUSE) | 2024 — 69 Table of Contents Contents of Item 7. MD&A Commercial Real Estate Loans The commercial environment, along with the academic presence in some of the markets in which Busey operates, provides for the majority of Busey’s commercial lending opportunities to be CRE related, including multi-unit housing.
The following table presents estimates of the uninsured portion of time deposits by maturity date (dollars in thousands) : As of December 31, 2023 Estimated uninsured time deposits by schedule of maturities 3 months or less $ 115,498 Over 3 months through 6 months 123,186 Over 6 months through 12 months 88,335 Thereafter 23,059 Uninsured time deposits $ 350,078 4 Core deposits is a non-GAAP financial measure.
The following table presents estimates of the uninsured portion of time deposits by maturity date (dollars in thousands) : As of December 31, 2024 Estimated uninsured time deposits by schedule of maturities 3 months or less $ 107,163 Over 3 months through 6 months 86,546 Over 6 months through 12 months 84,104 Thereafter 8,615 Uninsured time deposits $ 286,428 4 Core deposits is a non-GAAP financial measure.
The commercial category includes commercial loans, commercial real estate loans, and real estate construction loans. The retail category includes retail real estate loans and retail other loans. Commercial Loans Commercial loans typically comprise working capital loans or business expansion loans, including loans for asset purchases and other business loans.
Commercial lending activities consist of C&I and other commercial loans, CRE loans, and real estate construction loans while retail lending activities consist of retail real estate loans and retail other loans. C&I and Other Commercial Loans C&I and other commercial loans typically comprise working capital loans or business expansion loans, including loans for asset purchases and other business loans.
Under the terms of the amendment, the loans now have an annual interest rate of 1.80% plus the one-month forward-looking term rate based on SOFR. On April 30, 2023, the agreement was further amended to extend the term for the revolving line of credit to April 30, 2024.
Under the terms of the amendment, the annual interest rate for the loans was established at 1.80% plus the one-month forward-looking term rate based on SOFR. The agreement has subsequently been amended twice to extend the termination date for the revolving line of credit, which is currently April 30, 2025.
Contractual Obligations We have entered into certain contractual obligations and other commitments that generally relate to funding of operations through deposits, debt issuance, and property and equipment leases.
Contractual Obligations Busey has entered into certain contractual obligations and other commitments that generally relate to funding of operations through deposits, debt issuance, and property and equipment leases. First Busey Corporation (BUSE) | 2024 — 84 Table of Contents Contents of Item 7.
Loan proceeds are monitored by the Company and advanced for the improvement of real estate in which we hold a mortgage. Real estate construction loans will generally be guaranteed, in full or a material percentage, by the developer or primary owners of the business. These loans are subject to underwriting standards and guidelines similar to commercial loans.
Real estate construction loans will generally be guaranteed, in full or a material percentage, by the developer or primary owners of the business. These loans are subject to underwriting standards and guidelines similar to commercial loans. The loan generally must be supported by an adequate “as completed” value of the underlying project.
The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after June 15, 2027.
The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after June 15, 2027. Associated with the M&M acquisition completed on April 1, 2024 (see “ Note 2.
As the majority of our loan portfolio is within the commercial real estate class, our goal is to maintain a high quality, geographically diverse portfolio of commercial real estate loans. Commercial real estate loans are subject to underwriting standards and guidelines similar to commercial loans.
As the majority of Busey’s loan portfolio is within the CRE class, Busey’s goal is to maintain a high quality, geographically diverse portfolio of CRE loans. CRE loans are subject to underwriting standards and guidelines similar to commercial loans. CRE loans are generally guaranteed, in full or a material percentage, by the primary owners of the business.
First Busey Corporation | 2023 — 77 Table of Contents Contents of Item 7.
First Busey Corporation (BUSE) | 2024 — 76 Table of Contents Contents of Item 7.
First Busey Corporation | 2023 — 79 Table of Contents Contents of Item 7.
First Busey Corporation (BUSE) | 2024 — 78 Table of Contents Contents of Item 7.
Growth in our deposit base coupled with cash flows from our securities portfolio allows us to fund loan growth while limiting our reliance on higher cost wholesale funding alternatives. We focus on deepening our relationship with customers to maintain and protect our strong core deposit 4 franchise, allowing us to reduce our reliance on wholesale funding.
The quality of Busey’s core deposit 4 franchise coupled with cash flows from its securities portfolio allows Busey to fund loan growth while limiting its reliance on higher cost wholesale funding alternatives. Busey focuses on deepening its customer relationships to maintain and protect its strong core deposit franchise.
MD&A The following table summarizes, by loan category, activity affecting the ACL and average portfolio loans outstanding for the years indicated, as well as the related ratios of net charge-offs (recoveries) to average portfolio loans (dollars in thousands) : ACL Average Portfolio Loans Outstanding Ratio of Net Charge-offs (Recoveries) To Average Portfolio Loans ACL balance, December 31, 2020 $ 101,048 Day 1 PCD 1 4,178 Net (charge-offs) recoveries and average portfolio loans by loan category: Commercial (1,397) $ 1,985,511 0.07 % Commercial real estate (666) 2,953,944 0.02 % Real estate construction 89 450,713 (0.02) % Retail real estate (76) 1,446,673 0.01 % Retail other (188) 132,966 0.14 % Net (charge-offs) recoveries and average portfolio loans (2,238) $ 6,969,807 0.03 % Provision for credit losses (15,101) ACL balance, December 31, 2021 87,887 Net (charge-offs) recoveries and average portfolio loans by loan category: Commercial (492) $ 1,919,227 0.03 % Commercial real estate (842) 3,200,166 0.03 % Real estate construction 213 466,045 (0.05) % Retail real estate 385 1,584,859 (0.02) % Retail other (166) 275,665 0.06 % Net (charge-offs) recoveries and average portfolio loans (902) $ 7,445,962 0.01 % Provision for credit losses 4,623 ACL balance, December 31, 2022 91,608 Net (charge-offs) recoveries and average portfolio loans by loan category: Commercial (1,877) $ 1,910,008 0.10 % Commercial real estate (379) 3,316,633 0.01 % Real estate construction 171 536,280 (0.03) % Retail real estate 183 1,689,868 (0.01) % Retail other (365) 306,683 0.12 % Net (charge-offs) recoveries and average portfolio loans (2,267) $ 7,759,472 0.03 % Provision for credit losses 2,399 ACL balance, December 31, 2023 $ 91,740 ___________________________________________ 1.
MD&A The following table summarizes, by lending activity, net charge-off and recovery activity affecting the ACL balance, together with average portfolio loans outstanding and the related ratios of net charge-offs (recoveries) to average portfolio loans (dollars in thousands) : ACL Average Portfolio Loans Outstanding Ratio of Net Charge-offs (Recoveries) To Average Portfolio Loans ACL balance, December 31, 2021 $ 87,887 Net (charge-offs) recoveries and average portfolio loans by loan category: C&I and other commercial (492) $ 1,919,227 0.03 % CRE (842) 3,200,166 0.03 % Real estate construction 213 466,045 (0.05) % Retail real estate 385 1,584,859 (0.02) % Retail other (166) 275,665 0.06 % Net (charge-offs) recoveries and average portfolio loans (902) $ 7,445,962 0.01 % Provision for credit losses 4,623 ACL balance, December 31, 2022 91,608 Net (charge-offs) recoveries and average portfolio loans by loan category: C&I and other commercial (1,877) $ 1,910,008 0.10 % CRE (379) 3,316,633 0.01 % Real estate construction 171 536,280 (0.03) % Retail real estate 183 1,689,868 (0.01) % Retail other (365) 306,683 0.12 % Net (charge-offs) recoveries and average portfolio loans (2,267) $ 7,759,472 0.03 % Provision for credit losses 2,399 ACL balance, December 31, 2023 91,740 Day 1 PCD 1 1,243 Net (charge-offs) recoveries and average portfolio loans by loan category: C&I and other commercial (14,946) $ 1,892,293 0.79 % CRE (3,168) 3,361,644 0.09 % Real estate construction 67 416,439 (0.02) % Retail real estate 348 1,714,681 (0.02) % Retail other (470) 419,572 0.11 % Net (charge-offs) recoveries and average portfolio loans (18,169) $ 7,804,629 0.23 % Provision for credit losses 8,590 ACL balance, December 31, 2024 $ 83,404 ___________________________________________ 1.
Balances of these assets are dependent on our operating, investing, lending, and financing activities during any given period. First Busey Corporation | 2023 — 85 Table of Contents Contents of Item 7.
Balances of these assets are dependent on Busey’s operating, investing, lending, and financing activities during any given period.
Treasury securities $ 15,946 $ 114,061 Obligations of U.S. government corporations and agencies 5,832 19,779 Obligations of states and political subdivisions 172,845 257,512 Asset-backed securities 468,223 469,875 Commercial mortgage-backed securities 103,509 108,394 Residential mortgage-backed securities 1,111,312 1,243,256 Corporate debt securities 209,904 248,516 Debt securities available for sale, fair value $ 2,087,571 $ 2,461,393 Debt securities available for sale, amortized cost $ 2,334,630 $ 2,772,453 Fair value as a percentage of amortized cost 89.42 % 88.78 % First Busey Corporation | 2023 — 69 Table of Contents Contents of Item 7.
Treasury securities $ — $ 15,946 Obligations of U.S. government corporations and agencies 1,400 5,832 Obligations of states and political subdivisions 139,829 172,845 Asset-backed securities 336,557 468,223 Commercial mortgage-backed securities 92,174 103,509 Residential mortgage-backed securities 1,087,210 1,111,312 Corporate debt securities 153,051 209,904 Debt securities available for sale, fair value $ 1,810,221 $ 2,087,571 Debt securities available for sale, amortized cost $ 2,039,952 $ 2,334,630 Fair value as a percentage of amortized cost 88.74 % 89.42 % First Busey Corporation (BUSE) | 2024 — 66 Table of Contents Contents of Item 7.
The composition of debt securities available for sale was as follows (dollars in thousands) : As of December 31, 2023 2022 Debt securities available for sale U.S.
First Busey Corporation (BUSE) | 2024 — 65 Table of Contents Contents of Item 7. MD&A The composition of debt securities available for sale was as follows (dollars in thousands) : As of December 31, 2024 2023 Debt securities available for sale U.S.
First Busey Corporation | 2023 — 86 Table of Contents Contents of Item 7. MD&A Off-Balance-Sheet Arrangements Busey Bank routinely enters into commitments to extend credit and standby letters of credit in the normal course of business to meet the financing needs of its customers.
Busey Bank paid dividends to First Busey Corporation totaling $100.0 million and $90.0 million for the years ended December 31, 2024, and 2023, respectively. Off-Balance-Sheet Arrangements Busey Bank routinely enters into commitments to extend credit and standby letters of credit in the normal course of business to meet the financing needs of its customers.
Further, collateral securing loans may fluctuate in value due to individual economic or other factors. Busey Bank has established minimum standards and underwriting guidelines for all commercial loan types. First Busey Corporation | 2023 — 72 Table of Contents Contents of Item 7.
Cash flows of the borrower, however, may not perform consistently with historical or projected information. Further, collateral securing loans may fluctuate in value due to individual economic or other factors. Busey Bank has established minimum standards and underwriting guidelines for all C&I and other commercial loan types.
MD&A Deposits The following table shows the deposit mix for each of the periods presented (dollars in thousands) : As of December 31, 2023 2022 Balance % Total Balance % Total Change % Change Deposits Non-maturity deposits: Noninterest-bearing demand deposits $ 2,834,655 27.5 % $ 3,393,666 33.7 % $ (559,011) (16.5) % Interest-bearing transaction deposits 2,717,139 26.4 % 2,857,818 28.4 % (140,679) (4.9) % Saving deposits and money market deposits 2,920,088 28.4 % 2,964,421 29.4 % (44,333) (1.5) % Total non-maturity deposits 8,471,882 82.3 % 9,215,905 91.5 % (744,023) (8.1) % Time deposits 1,819,274 17.7 % 855,375 8.5 % 963,899 112.7 % Total deposits $ 10,291,156 100.0 % $ 10,071,280 100.0 % $ 219,876 2.2 % Total deposits increased by 2.2% to $10.3 billion as of December 31, 2023, compared to $10.1 billion as of December 31, 2022.
MD&A Deposits The following table shows the deposit mix for each of the periods presented (dollars in thousands) : As of December 31, 2024 2023 Balance % Total Balance % Total Change % Change Deposits Non-maturity deposits: Noninterest-bearing demand deposits $ 2,719,907 27.3 % $ 2,834,655 27.5 % $ (114,748) (4.0) % Interest-bearing transaction deposits 2,423,237 24.3 % 2,717,139 26.4 % (293,902) (10.8) % Saving deposits and money market deposits 3,348,711 33.5 % 2,920,088 28.4 % 428,623 14.7 % Total non-maturity deposits 8,491,855 85.1 % 8,471,882 82.3 % 19,973 0.2 % Time deposits 1,490,635 14.9 % 1,819,274 17.7 % (328,639) (18.1) % Total deposits $ 9,982,490 100.0 % $ 10,291,156 100.0 % $ (308,666) (3.0) % Total deposits decreased by 3.0% to $9.98 billion as of December 31, 2024, compared to $10.29 billion as of December 31, 2023.
MD&A Cash Flows Busey’s cash flows consist of operating activities, investing activities, and financing activities. Net cash flows provided by operating activities totaled $173.4 million in 2023, compared to $165.9 million provided by operating activities in 2022. Significant operating activities affecting cash flows include net income, depreciation and amortization, and mortgage loan sale activity.
Net cash flows provided by operating activities totaled $178.3 million in 2024, compared to $173.4 million provided by operating activities in 2023. Significant operating activities affecting cash flows include net income, depreciation and amortization, the provision for credit losses, stock-based compensation, and mortgage loan sale activity.
Short-term borrowings include FHLB advances that mature in less than one year from the date of origination, and the current portion of long-term debt due within 12 months. First Busey Corporation | 2023 — 83 Table of Contents Contents of Item 7.
Short-term Borrowings and Securities Sold Under Agreements to Repurchase Short-term borrowings include FHLB advances that mature in less than one year from the date of origination, and the current portion of long-term debt due within 12 months. Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature daily.
MD&A The following table sets forth information concerning non-performing loans and performing restructured loans (dollars in thousands) : As of December 31, 2023 2022 Portfolio loans $ 7,651,034 $ 7,725,702 Loans 30 – 89 days past due 5,779 6,548 Total assets 12,283,415 12,336,677 Non-performing assets Non-performing loans: Non-accrual loans $ 7,441 $ 15,067 Loans 90+ days past due and still accruing 375 673 Total non-performing loans 7,816 15,740 OREO and other repossessed assets 125 850 Total non-performing assets 7,941 16,590 Substandard (excludes 90+ days past due) 64,347 90,489 Classified assets $ 72,288 $ 107,079 ACL $ 91,740 $ 91,608 Bank Tier 1 Capital 1,362,962 1,306,716 Ratios ACL to portfolio loans 1.20 % 1.19 % ACL to non-accrual loans 1,232.90 % 608.00 % ACL to non-performing loans 1,173.75 % 582.01 % ACL to non-performing assets 1,155.27 % 552.19 % Non-accrual loans to portfolio loans 0.10 % 0.20 % Non-performing loans to portfolio loans 0.10 % 0.20 % Non-performing assets to total assets 0.06 % 0.13 % Non-performing assets to portfolio loans and OREO and other repossessed assets 0.10 % 0.21 % Classified assets to Bank Tier 1 Capital and ACL 4.97 % 7.66 % Asset quality remains strong by both Busey’s historical and current industry trends, and our operating mandate and focus have been on emphasizing credit quality over asset growth.
MD&A The following table sets forth information concerning non-performing loans and performing restructured loans (dollars in thousands) : As of December 31, 2024 2023 Change % Change Portfolio loans $ 7,697,087 $ 7,651,034 $ 46,053 0.6 % Loans 30 – 89 days past due 8,124 5,779 2,345 40.6 % Total assets 12,046,722 12,283,415 (236,693) (1.9) % Non-performing assets Non-performing loans: Non-accrual loans $ 22,088 $ 7,441 $ 14,647 196.8 % Loans 90+ days past due and still accruing 1,149 375 774 206.4 % Total non-performing loans 23,237 7,816 15,421 197.3 % OREO and other repossessed assets 63 125 (62) (49.6) % Total non-performing assets 23,300 7,941 15,359 193.4 % Substandard (excludes 90+ days past due) 62,023 64,347 (2,324) (3.6) % Classified assets $ 85,323 $ 72,288 $ 13,035 18.0 % ACL $ 83,404 $ 91,740 (8,336) (9.1) % Bank Tier 1 Capital 1,438,296 1,362,962 75,334 5.5 % Ratios ACL to portfolio loans 1.08 % 1.20 % (12) bps ACL to non-accrual loans 3.78 x 12.33 x (8.55) x ACL to non-performing loans 3.59 x 11.74 x (8.15) x ACL to non-performing assets 3.58 x 11.55 x (7.97) x Non-accrual loans to portfolio loans 0.29 % 0.10 % 19 bps Non-performing loans to portfolio loans 0.30 % 0.10 % 20 bps Non-performing assets to total assets 0.19 % 0.06 % 13 bps Non-performing assets to portfolio loans and OREO and other repossessed assets 0.30 % 0.10 % 20 bps Classified assets to Bank Tier 1 Capital and ACL 5.61 % 4.97 % 64 bps Asset quality remains strong by both Busey’s historical and current industry trends, and Busey’s operating mandate and focus have been on emphasizing credit quality over asset growth.
Capital Resources Our capital ratios are in excess of those required to be considered “well-capitalized” pursuant to applicable regulatory guidelines. The Federal Reserve uses capital adequacy guidelines in its examination and regulation of bank holding companies and their subsidiary banks. Risk-based capital ratios are established by allocating assets and certain off-balance-sheet commitments into risk-weighted categories.
First Busey Corporation (BUSE) | 2024 — 85 Table of Contents Contents of Item 7. MD&A Capital Resources Busey’s capital ratios are in excess of those required to be considered “well-capitalized” pursuant to applicable regulatory guidelines. The Federal Reserve uses capital adequacy guidelines in its examination and regulation of bank holding companies and their subsidiary banks.
The composition of debt securities held to maturity was as follows (dollars in thousands) : As of December 31, 2023 2022 Debt securities held to maturity Commercial mortgage-backed securities $ 428,526 $ 474,820 Residential mortgage-backed securities 444,102 443,492 Debt securities held to maturity, amortized cost $ 872,628 $ 918,312 Debt securities held to maturity, fair value $ 730,397 $ 785,295 Fair value as a percentage of amortized cost 83.70 % 85.52 % By maturity date, fair values and weighted average yields of debt securities held to maturity as of December 31, 2023, are presented in the following table (dollars in thousands) : Due after 1 year through 5 years Due after 5 years through 10 years Due after 10 years Fair Value Weighted Average Yield Fair Value Weighted Average Yield Fair Value Weighted Average Yield Debt securities held to maturity 1 Commercial mortgage-backed securities $ 69,373 2.23 % $ 25,824 2.20 % $ 262,329 2.43 % Residential mortgage-backed securities — — % — — % 372,871 2.21 % Debt securities held to maturity $ 69,373 2.23 % $ 25,824 2.20 % $ 635,200 2.30 % ___________________________________________ 1.
The composition of debt securities held to maturity was as follows (dollars in thousands) : As of December 31, 2024 2023 Debt securities held to maturity Commercial mortgage-backed securities $ 415,530 $ 428,526 Residential mortgage-backed securities 411,100 444,102 Debt securities held to maturity, amortized cost $ 826,630 $ 872,628 Debt securities held to maturity, fair value $ 675,053 $ 730,397 Fair value as a percentage of amortized cost 81.66 % 83.70 % By maturity date, fair values and weighted average yields of debt securities held to maturity as of December 31, 2024, are presented in the following table (dollars in thousands) : Due in 1 year or less Due after 1 year through 5 years Due after 5 years through 10 years Due after 10 years Fair Value Weighted Average Yield Fair Value Weighted Average Yield Fair Value Weighted Average Yield Fair Value Weighted Average Yield Debt securities held to maturity 1 Commercial mortgage-backed securities $ 18,327 2.27 % $ 58,733 2.15 % $ 12,609 2.42 % $ 248,619 2.20 % Residential mortgage-backed securities — — — — — — 336,765 2.20 % Debt securities held to maturity $ 18,327 2.27 % $ 58,733 2.15 % $ 12,609 2.42 % $ 585,384 2.20 % ___________________________________________ 1.
NEW ACCOUNTING PRONOUNCEMENTS We review new accounting standards as issued. Information relating to accounting pronouncements applicable to Busey appears in “ Note 1. Significant Accounting Policies ” in the Notes to the Consolidated Financial Statements. First Busey Corporation | 2023 — 88 Table of Contents Contents of Item 7.
NEW ACCOUNTING PRONOUNCEMENTS Busey reviews new accounting standards as issued. Information relating to accounting pronouncements applicable to Busey appears in “ Note 1. Significant Accounting Policies ” in the Notes to the Consolidated Financial Statements. EFFECTS OF INFLATION The effect of inflation on a financial institution differs significantly from the effect on an industrial company.
Commercial real estate loans are generally guaranteed, in full or a material percentage, by the primary owners of the business. Repayment of these loans is primarily dependent on the cash flows of the underlying property. However, commercial real estate loans generally must be supported by an adequate underlying collateral value.
Repayment of these loans is primarily dependent on the cash flows of the underlying property. However, CRE loans generally must be supported by an adequate underlying collateral value. The performance and the value of the underlying property may be adversely affected by economic factors or geographical and/or industry specific factors.
The ACL is recorded in accordance with GAAP to provide an adequate reserve for expected credit losses that is reflective of management’s best estimate of what is expected to be collected. All estimates of credit losses are based on a careful consideration of all significant factors affecting the collectability as of the evaluation date.
The methodology adopted influences, and is influenced by, Busey’s overall credit risk management processes. The ACL is recorded in accordance with GAAP to provide an adequate reserve for expected credit losses that is reflective of management’s best estimate of what is expected to be collected.
The weighted average interest rate is computed by dividing total interest for the period by the average daily balance outstanding. Senior and Subordinated Notes On May 25, 2017, we issued $40.0 million of 3.75% senior notes that matured and were redeemed on May 25, 2022.
The weighted average interest rate is computed by dividing total interest for the period by the average daily balance outstanding. Subordinated Notes On June 1, 2020, Busey issued $125.0 million of fixed-to-floating rate subordinated notes that mature on June 1, 2030.
As of December 31, 2023, management believed that adequate liquidity existed to meet all projected cash flow obligations. We seek to achieve a satisfactory degree of liquidity by actively managing both assets and liabilities. Asset management guides the proportion of liquid assets to total assets, while liability management monitors future funding requirements and prices liabilities accordingly.
First Busey Corporation (BUSE) | 2024 — 83 Table of Contents Contents of Item 7. MD&A As of December 31, 2024, management believed that adequate liquidity existed to meet all projected cash flow obligations. Busey seeks to achieve a satisfactory degree of liquidity by actively managing both assets and liabilities.
MD&A The following table sets forth the ACL by loan categories and percentage of loans to total loans as of December 31 for each of the years indicated (dollars in thousands) : As of December 31, 2023 2022 ACL % of Loans to Total Loans ACL % of Loans to Total Loans Loan Category Commercial $ 21,256 24.0 % $ 23,860 25.6 % Commercial real estate 35,465 43.6 % 38,299 42.2 % Real estate construction 5,163 6.0 % 6,457 6.9 % Retail real estate 26,298 22.5 % 18,193 21.4 % Retail other 3,558 3.9 % 4,799 3.9 % Total $ 91,740 100.0 % $ 91,608 100.0 % The ongoing impacts of CECL will be dependent upon changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors.
MD&A The following table sets forth the ACL by loan categories and percentage of loans to total loans as of December 31 for each of the years indicated (dollars in thousands) : As of December 31, 2024 2023 ACL % of Loans to Total Loans ACL % of Loans to Total Loans Loan Category C&I and other commercial $ 21,589 24.8 % $ 21,256 24.0 % CRE 32,301 42.5 % 35,465 43.6 % Real estate construction 3,345 4.9 % 5,163 6.0 % Retail real estate 23,711 22.0 % 26,298 22.5 % Retail other 2,458 5.8 % 3,558 3.9 % Total $ 83,404 100.0 % $ 91,740 100.0 % Busey did not record an allowance for credit loss for its Life Equity Loan ® portfolio, a component of its retail other lending activity, due to no expected credit loss at default, as permitted under the practical expedient provided within ASC 326-20-35-6.
The performance and the value of the underlying property may be adversely affected by economic factors or geographical and/or industry specific factors. These loans are subject to other industry guidelines which we closely monitor. Real Estate Construction Loans Real estate construction loans are primarily commercial in nature.
These loans are subject to other industry guidelines which Busey closely monitors. Real Estate Construction Loans Real estate construction loans are primarily commercial in nature. Loan proceeds are monitored by Busey and advanced for the improvement of real estate in which Busey holds a mortgage.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBusey may also experience greater than anticipated customer losses even if the integration process is successful. • We are subject to due diligence expenses which may not result in an acquisition. • To finance an acquisition, we may borrow funds, thereby increasing our leverage and diminishing our liquidity, or issue capital stock to the sellers in an acquisition or to third-parties to raise capital, which could dilute the interests of our existing stockholders. • The time period in which anticipated benefits of a merger are fully realized may take longer than anticipated, or we may be unsuccessful in realizing the anticipated benefits from mergers and future acquisitions.
Biggest changeFurther, Busey could incur due diligence expenses which may not result in an acquisition. • Delayed or unrealized benefits: The time period in which anticipated benefits of a merger are fully realized may take longer than anticipated, or Busey may be unsuccessful in realizing the anticipated benefits from mergers and future acquisitions.
Busey’s general financial performance is highly dependent upon the business environment in the markets where it operates and, in particular, the ability of borrowers to pay interest on, and repay principal of, outstanding loans, and value of collateral securing those loans, as well as demand for loans and other products and services it offers.
Busey’s general financial performance is highly dependent upon the business environment in the markets where it operates and, in particular, the ability of borrowers to pay interest on, and repay principal of, outstanding loans, and the value of collateral securing those loans, as well as demand for loans and other products and services it offers.
Busey’s failure to continue to maintain capital ratios in excess of the amounts necessary to be considered “well-capitalized” for bank regulatory purposes could affect customer confidence, its ability to grow, its costs of funds and FDIC insurance costs, its ability to pay dividends to its stockholders on outstanding stock, its ability to make acquisitions, and its business, results of operations, and financial condition.
Busey’s failure to continue to maintain capital ratios in excess of the amounts necessary to be considered “well-capitalized” for bank regulatory purposes could affect customer confidence, its ability to grow, its costs of funds, the cost of FDIC insurance, its ability to pay dividends to its stockholders on outstanding stock, its ability to make acquisitions, and its business, results of operations, and financial condition.
Periodically, agencies such as the FASB or the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of Busey’s Financial Statements. These changes are beyond the Company’s control, can be difficult to predict, and could materially impact how Busey reports its financial condition and results of operations.
Periodically, agencies such as the FASB or the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of Busey’s Financial Statements. These changes are beyond Busey’s control, can be difficult to predict, and could materially impact how Busey reports its financial condition and results of operations.
Because of the uncertainties inherent in estimating construction costs and the realizable market value of the completed project, and the effects of governmental regulation on real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio.
Because of the uncertainties inherent in estimating construction costs and the realizable market value of the completed project, and the effects of governmental regulation on real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and to estimate the related loan-to-value ratio.
Further, Busey’s investments in certain tax-advantaged projects may not generate returns as anticipated and may have an adverse impact on Busey’s financial results. Busey invests in certain tax-advantaged projects promoting affordable housing, community development, and other community revitalization projects.
Investments in tax-advantaged projects may not generate returns as anticipated and may have an adverse impact on Busey’s financial results. Busey invests in certain tax-advantaged projects promoting affordable housing, community development, and other community revitalization projects.
While Busey has determined that no valuation allowance is currently required for any deferred tax assets, if future events differ significantly from current forecasts, the Company may need to establish a valuation allowance against its net deferred tax assets, which would have a material adverse effect on its results of operations and financial condition.
Risk Factors While Busey has determined that no valuation allowance is currently required for any deferred tax assets, if future events differ significantly from current forecasts, the Company may need to establish a valuation allowance against its net deferred tax assets, which would have a material adverse effect on its results of operations and financial condition.
Negative public opinion could result from the Company’s actual or alleged conduct in a number of activities, including, but not limited to, employee misconduct, a failure or perceived failure to deliver appropriate standards of service and quality or to treat customers fairly, faulty lending practices, compliance failures, security breaches, corporate governance, sharing or inadequate protection of customer information, failure to comply with laws or regulations, and actions taken by government regulators and community organizations in response to that conduct.
Negative public opinion could result from the Company’s actual or alleged conduct in a number of activities, including, but not limited to, employee misconduct, failure or perceived failure to deliver appropriate standards of service and quality, faulty lending practices, compliance failures, security breaches, corporate governance, sharing or inadequate protection of customer information, failure to comply with laws or regulations, and actions taken by government regulators and community organizations in response to that conduct.
Downturns in the markets where our banking operations occur could result in a decrease in demand for our products and services, an increase in loan delinquencies and defaults, high or increased levels of problem assets and foreclosures, and reduced wealth management fees resulting from lower asset values.
Downturns in the markets where Busey’s banking operations occur could result in a decrease in demand for Busey’s products and services, an increase in loan delinquencies and defaults, high or increased levels of problem assets and foreclosures, and reduced wealth management fees resulting from lower asset values.
Busey Bank is taking reasonable measures, including appropriate new account screening and customer due diligence measures, to ensure that existing and potential customers that operate in the states in which the Bank operates do not engage in any such activities.
Busey Bank uses reasonable measures, including appropriate new account screening and customer due diligence measures, to ensure that existing and potential customers that operate in the states in which the Bank operates do not engage in any such activities.
Accordingly, Busey cannot guarantee that it will be able to raise additional capital if needed or on terms acceptable to the Company. In particular, if Busey is required to raise additional capital in the current interest rate environment, we believe the pricing and other terms investors may require in such an offering may not be attractive to us.
Accordingly, Busey cannot guarantee that it will be able to raise additional capital if needed or on terms acceptable to the Company. In particular, if Busey is required to raise additional capital in the current interest rate environment, Busey believes the pricing and other terms investors may require in such an offering may not be attractive to the Company.
Busey’s ability to raise additional capital, when and if needed, will depend on conditions in the capital markets, economic conditions, and a number of other factors, including investor perceptions regarding the banking industry and market condition, and governmental activities, many of which are outside Busey’s control, and on its financial condition and performance.
Busey’s ability to raise additional capital as needed will depend on conditions in the capital markets, economic conditions, and a number of other factors, including investor perceptions regarding the banking industry, market conditions, and governmental activities, many of which are outside Busey’s control, as well as on its financial condition and performance.
ITEM 1A. RISK FACTORS This section highlights the risks management believes could adversely affect our financial performance. Additional possible risks that could affect Busey adversely and cannot be predicted may arise at any time. Other risks that are immaterial at this time may also have an adverse impact on our future financial condition. Contents of Item 1A.
ITEM 1A. RISK FACTORS This section highlights the risks management believes could adversely affect Busey’s financial performance. Additional risks that could affect Busey adversely and cannot be predicted may arise at any time. Further, risks that are immaterial at this time may have an adverse impact on Busey’s future financial condition. Contents of Item 1A.
Busey’s investments in these projects are designed to generate a return primarily through the realization of federal and state income tax credits, and other tax benefits, over specified time periods.
These investments are designed to generate a return primarily through the realization of federal and state income tax credits and other tax benefits over specified periods.
COMPETITIVE AND STRATEGIC RISKS If securities or industry analysts do not publish or cease publishing research reports about us, if they adversely change their recommendations regarding our stock, or if our operating results do not meet their expectations, the price of our stock could decline.
Risk Factors COMPETITIVE AND STRATEGIC RISKS If securities or industry analysts do not publish or cease publishing research reports about Busey, if they adversely change their recommendations regarding Busey’s stock, or if Busey’s operating results do not meet their expectations, the price of Busey’s stock could decline.
The results of such actual or alleged misconduct could include customer dissatisfaction, inability to attract potential acquisition prospects, litigation, and heightened regulatory scrutiny, all of which could lead to lost revenue, higher operating costs, and harm to Busey’s reputation.
The results of such actual or alleged misconduct or missteps could include customer dissatisfaction, inability to attract potential acquisition prospects, litigation, and heightened regulatory scrutiny. These outcomes may lead to lost revenue, higher operating costs, and harm to Busey’s reputation.
Risk Factors ECONOMIC AND MARKET RISKS 35 REGULATORY AND LEGAL RISKS 37 CREDIT AND LENDING RISKS 39 CAPITAL AND LIQUIDITY RISKS 41 COMPETITIVE AND STRATEGIC RISKS 42 ACCOUNTING AND TAX RISKS 44 OPERATIONAL RISKS 45 ECONOMIC AND MARKET RISKS Conditions in the financial market and economic conditions, including conditions in the states in which it operates, generally may adversely affect Busey’s business.
Risk Factors ECONOMIC AND MARKET RISKS 35 REGULATORY AND LEGAL RISKS 36 CREDIT AND LENDING RISKS 38 CAPITAL AND LIQUIDITY RISKS 40 COMPETITIVE AND STRATEGIC RISKS 41 ACCOUNTING AND TAX RISKS 43 OPERATIONAL RISKS 44 ECONOMIC AND MARKET RISKS Conditions in the financial market and economic conditions, including conditions in the states in which it operates, generally may adversely affect Busey’s business.
Outstanding Commitments and Contingent Liabilities” in the Notes to the Consolidated Financial Statements for information regarding an inquiry from the ISOS, pursuant to which the ISOS asked for additional information regarding certain of our franchise tax filings and the calculation of amounts due thereunder.
Outstanding Commitments and Contingent Liabilities ” in the Notes to the Consolidated Financial Statements for information regarding an inquiry from the Illinois Secretary of State, pursuant to which the Illinois Secretary of State asked for additional information regarding certain of Busey’s franchise tax filings and the calculation of amounts due thereunder.
Construction, land acquisition, and development loans involve additional risks because funds are advanced upon the security of the project, which is of uncertain value prior to its completion, and costs may exceed realizable values in declining real estate markets.
These estimates may be inaccurate, and Busey may be exposed to significant losses on loans for these projects. Construction, land acquisition, and development loans involve additional risks because funds are advanced upon the security of the project, which is of uncertain value prior to its completion, and costs may exceed realizable values in declining real estate markets.
Any future goodwill or other intangible assets impairment charges, based on the current balances or future balances arising out of acquisitions, could have a material adverse effect on the results of operations by reducing net income or increasing net losses. Busey is subject to changes in accounting principles, policies, or guidelines.
Any future impairment of goodwill or other intangible assets, whether based on the current balances or future balances arising out of acquisitions, could have a material adverse effect on the results of operations by reducing net income or increasing net losses. Changes in accounting principles or guidelines could adversely affect financial reporting.
Uncertainty regarding economic conditions may result in changes in consumer and business spending, borrowing, and savings habits.
Shifts in consumer and business behavior during economic uncertainty may impact Busey’s business. Uncertainty regarding economic conditions may result in changes in consumer and business spending, borrowing, and savings habits.
Although Busey’s analysis does not indicate impairments exist, the Company is required to perform additional impairment assessments on at least an annual basis, which could result in future impairment charges.
One such assumption and estimate is the valuation analysis of Busey’s goodwill and other intangible assets. Although Busey’s analysis does not indicate impairments exist, the Company is required to perform additional impairment assessments on at least an annual basis, which could result in future impairment charges.
Busey is subject to the risk that previously recorded tax credits, which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level, will fail to meet certain government compliance requirements and will not be realized.
Busey is subject to the risk that previously recorded tax credits, which remain subject to recapture by taxing authorities based on compliance features required at the project level, may fail to meet certain government compliance requirements and may not be realized. The potential inability to realize these tax credits and other tax benefits could negatively impact Busey’s financial results.
Laws impacting cannabis-related businesses in Illinois and other states may have an impact on Busey’s operations and risk profile. The Controlled Substances Act makes it illegal under federal law to manufacture, distribute, or dispense marijuana. Starting January 1, 2020, however, the Illinois Cannabis Regulation and Tax Act began permitting adults to legally purchase marijuana for recreational use from licensed dispensaries.
The Controlled Substances Act makes it illegal under federal law to manufacture, distribute, or dispense marijuana. Starting January 1, 2020, however, the Illinois Cannabis Regulation and Tax Act began permitting adults 21 years or older to legally purchase marijuana for recreational use from licensed dispensaries.
CREDIT AND LENDING RISKS Heightened credit risk associated with lending activities may result in insufficient credit loss provisions, which could have material adverse effect on Busey’s results of operations and financial condition.
CREDIT AND LENDING RISKS Heightened credit risk associated with lending activities may result in insufficient credit loss provisions, which could have material adverse effects on Busey’s results of operations and financial condition. Busey’s lending activities involve inherent risks, including borrower nonpayment, fluctuations in collateral value, and the effects of economic and market conditions.
In addition, increased competition with the largest banks and First Busey Corporation | 2023 — 41 Table of Contents Contents of Item 1A. Risk Factors Fintechs for retail deposits may impact our ability to raise funds through deposits and could have a negative effect on our liquidity.
In addition, increased competition with the largest banks and fintechs for retail deposits may impact Busey’s ability to raise funds through deposits and could have a negative effect on Busey’s liquidity.
These industries rely heavily on state and federal funding and contracts. Timely payments by the State of Illinois to its vendors and government-sponsored entities, as well as potential federal changes to healthcare laws, could affect Busey’s primary market areas, which could in turn affect its financial condition and results of operations.
Timely payments by the State of Illinois to its vendors and government-sponsored entities, as well as potential federal changes to healthcare laws, could affect Busey’s primary market areas, which could in turn affect its financial condition and results of operations. A small part of Busey’s business resides in Florida, which can be affected by inclement weather.
Risk Factors Concentrations of credit and market risk could increase the potential for significant losses. Busey may have higher credit risk, or experience higher credit losses, to the extent its loans are concentrated by loan type, industry segment, borrower type, or geographic location of the borrower or collateral.
Risk Factors Loan concentrations in volatile markets could increase Busey’s exposure to economic downturns, adversely impacting financial stability. Busey may have higher credit risk, or experience higher credit losses, to the extent its loans are concentrated by loan type, industry segment, borrower type, or geographic location of the borrower or collateral.
In evaluating the need for a valuation allowance, Busey estimates future taxable income based on management forecasts and tax planning strategies that may be available to us.
Significant judgment by management about matters that are, by nature, uncertain is required to record a deferred tax asset and establish a valuation allowance. In evaluating the need for a valuation allowance, Busey estimates future taxable income based on management forecasts and tax planning strategies that may be available to the Company.
First Busey Corporation | 2023 — 48 Table of Contents Contents of Item 1A.
First Busey Corporation (BUSE) | 2024 — 40 Table of Contents Contents of Item 1A.
Changes in tax laws at national or state levels could have an effect on Busey’s short-term and long-term earnings. Tax law changes are both difficult to predict and are beyond the Company’s control. Changes in tax laws could affect Busey’s earnings as well as its customers’ financial positions, or both.
Busey is subject to changes in tax law and may not realize tax benefits which could adversely affect its results of operations. Changes in tax laws at national or state levels could have an effect on Busey’s short-term and long-term earnings. Tax law changes are both difficult to predict and beyond Busey’s control.
Some of these policies require the use of estimates and assumptions that may affect the value of assets or liabilities and financial results. Certain accounting policies are critical and require management to make difficult, subjective, and complex judgments about matters that are inherently uncertain, and materially different amounts could be reported under different conditions or using different assumptions.
Certain accounting policies are critical and require management to make subjective and complex judgments about matters that are inherently uncertain, and materially different amounts could be reported under different conditions or using different assumptions. If such estimates or assumptions underlying Busey’s Consolidated Financial Statements are incorrect, the Company may experience material losses.
If Busey were the subject of an enforcement action, it could have an adverse impact on the Company. As Busey continues to grow in asset size and complexity, regulatory expectations and scrutiny will increase and could have a potential impact on Busey’s operations and business.
As Busey continues to grow in asset size and complexity, regulatory expectations and scrutiny will increase and could have a potential impact on Busey’s operations and business. As Busey’s assets grow, so do regulatory expectations. The planned acquisition of CrossFirst amplifies the complexity of compliance.
The ultimate realization of the tax credits and other tax benefits depends upon having sufficient taxable income and on many factors outside of the Company’s control, including changes in the applicable tax code and the ability of the projects to be completed. OPERATIONAL RISKS Busey’s framework for managing risks may not be effective in mitigating risk and loss.
The ultimate realization of these benefits depends upon having sufficient taxable income and on many other factors outside of Busey’s control, including changes in the applicable tax code and the ability of the projects to be completed. Busey continues to monitor tax law developments and compliance with applicable regulations to mitigate these risks.
Such interactions could create additional legal, regulatory, strategic, and reputational risk to Busey Bank and First Busey Corporation. Busey is or may become involved from time to time in suits, legal proceedings, information-gathering requests, investigations, and proceedings by governmental and self-regulatory agencies that may lead to adverse consequences.
Risk Factors Busey is or may become involved from time to time in suits, legal proceedings, information-gathering requests, investigations, and proceedings by governmental and self-regulatory agencies that may lead to adverse consequences. Busey may be subject to lawsuits, governmental inquiries, or self-regulatory reviews. These proceedings could result in penalties, adverse judgments, or operational restrictions.
In addition, Busey may be required to fund additional amounts to complete the project and may have to hold the property for an unspecified period of time while it attempts to dispose of it. Credit risk associated with concentration of securities in Busey’s investment portfolio may increase the potential for loss.
In addition, Busey may be required to fund additional amounts to complete the project and may have to hold the property for an unspecified period of time while it attempts to dispose of it. First Busey Corporation (BUSE) | 2024 — 39 Table of Contents Contents of Item 1A.
No assurance can be made, despite the cost or efforts made by the Company to address the issues arising from reputational harm, that results could not adversely affect Busey’s business, financial condition, and results of operations.
Despite the cost or efforts made by the Company to address issues arising from reputational harm, there is no assurance that these efforts could fully mitigate adverse impacts on Busey’s business, financial condition, and results of operations. Rapid adoption of generative artificial intelligence technologies introduces operational vulnerabilities.
Deferred tax assets are designed to reduce subsequent period’s income tax expense and arise, in part, as a result of net loss carry-overs, and other book accounting to tax accounting differences including expected credit losses, stock-based compensation, and deferred compensation. Such items are recorded as assets when it is anticipated the tax consequences will be recorded in future periods.
Changes in tax laws could affect Busey’s earnings, its customers’ financial positions, or both. Deferred tax assets are designed to reduce subsequent period income tax expense. They arise, in part, as a result of net loss carry-overs, and other book accounting to tax accounting differences, for items such as expected credit losses, stock-based compensation, and deferred compensation.
Collateral securing other loans may depreciate over time, may be difficult to appraise, and may fluctuate in value based on the success of the business.
In periods of economic recession, this capacity could decline, increasing repayment risks. Collateral securing loans may depreciate over time, be difficult to appraise, or fluctuate in value based on the borrower’s business performance.
As a result, construction loans often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project and the ability of the First Busey Corporation | 2023 — 40 Table of Contents Contents of Item 1A.
As a result, construction loans often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project and the ability of the borrower to sell or lease the property, rather than the ability of the borrower or guarantor to repay principal and interest.
Risk Factors be higher, and possibly significantly so, than the amounts accrued for legal loss contingencies, which could adversely affect our financial condition and results of operations. See “Note 16.
While accruals are established for legal contingencies when losses are probable and estimable, outcomes may exceed these amounts, and accordingly, Busey’s ultimate losses may be higher, possibly significantly so, than the amounts accrued for legal loss contingencies, which could adversely affect Busey’s financial condition and results of operations. See “ Note 1 8 .
ACCOUNTING AND TAX RISKS Financial statements are created, in part, by estimates, assumptions, and methods used by management, which, if incorrect, could cause unexpected losses in the future. Busey’s financial performance is impacted by accounting principles, policies, and guidelines.
Busey’s ability to navigate competitive pressures and strategic challenges depends on proactive investments in innovation, efficient integration of acquisitions, and the ability to anticipate and adapt to emerging trends. ACCOUNTING AND TAX RISKS Financial statements are created, in part, by estimates, assumptions, and methods used by management, which, if incorrect, could cause unexpected losses in the future.
Changes in these standards are continuously occurring and the implementation of such changes could have a material adverse effect on Busey’s financial condition and results of operations. Busey is subject to changes in tax law and may not realize tax benefits which could adversely affect our results of operations.
In addition, trends in financial and business reporting, including environmental, social, and governance related disclosures, could require Busey to incur additional reporting expense. Changes in these standards are continuously occurring, and the implementation of such changes could have a material adverse effect on Busey’s financial condition and results of operations.
We have experienced times during which acquisitions could not be made in specific markets at prices our management considered acceptable, and we expect that we will experience this condition in the future in one or more markets. • The acquisition of other entities generally requires integration of systems, procedures, and First Busey Corporation | 2023 — 43 Table of Contents Contents of Item 1A.
Busey has experienced times during which acquisitions could not be made in specific markets at prices that Busey’s management considered acceptable, and Busey expects that it will experience this condition in the future in one or more markets. • Employee Attrition: The integration process can lead to employee turnover, particularly among key personnel.
A valuation allowance is established against a deferred tax asset when it is unlikely the future tax effects will be realized. Significant judgment by management about matters that are by nature uncertain is required to record a deferred tax asset and establish a valuation allowance.
Deferred tax assets are recorded for such items when it is anticipated that the tax consequences will be recognized in earnings in future periods. A valuation allowance is established against a deferred tax asset when it is unlikely the future tax effects will be realized.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors. If there is limited or no securities or industry analyst coverage of us, the market price for our stock would be negatively impacted.
The trading market for Busey’s common stock is significantly influenced by research and reports from industry analysts. Limited or negative analyst coverage could reduce the stock’s demand, market price, and trading volume. Downgrades, unfavorable comparisons with competitors, or operating results that fall short of analyst expectations may further negatively affect stock performance.
Such conditions could adversely affect the credit quality of our loans, financial condition, and results of operations. Busey currently conducts its banking operations in central and suburban Chicago, Illinois; the St. Louis, Missouri metropolitan area; central Indiana; and southwest Florida. Busey operates in markets with a significant university and healthcare presence.
Such conditions could adversely affect the credit quality of Busey’s loans, financial condition, and results of operations. First Busey Corporation (BUSE) | 2024 — 35 Table of Contents Contents of Item 1A. Risk Factors Regional economic vulnerabilities and reliance on key industries may heighten risks. Busey currently conducts its banking operations in central and suburban Chicago, Illinois; the St.
Real estate construction, land acquisition, and development loans are based upon estimates of costs and values associated with the complete project. These estimates may be inaccurate, and Busey may be exposed to significant losses on loans for these projects.
With larger commercial loans and the less readily marketable nature of collateral, even a small number of loan loss incidents could materially impact Busey’s financial condition and operational results. Real estate construction, land acquisition, and development loans are based upon estimates of costs and values associated with the complete project.
CAPITAL AND LIQUIDITY RISKS Busey is required to maintain capital to meet regulatory requirements, and if it fails to maintain sufficient capital, whether as a result of losses, inability to raise additional capital, or otherwise, its financial condition, liquidity, and results of operations, as well as its ability to maintain regulatory compliance would be adversely affected.
These factors could result in realized losses, negatively impacting Busey’s financial condition and results of operations. CAPITAL AND LIQUIDITY RISKS Failure to maintain sufficient capital to meet regulatory requirements could have material adverse effects on financial condition, liquidity, results of operations, and regulatory compliance. Busey must meet regulatory capital requirements and maintain sufficient liquidity.
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A small part of Busey’s business resides in Florida, which can be affected by inclement weather. While high market volatility is not expected, managing “higher for longer” interest rates can put pressure on Busey’s deposit rates and liquidity. Prolonged periods of high-interest rates pose several risks to Busey. Offering higher interest rates to attract deposits elevates the cost of funding.
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Given the complex factors affecting the strength of the U.S. economy, including uncertainties regarding the persistence of inflation; geopolitical developments, such as ongoing conflicts in the Middle East and the Russian invasion of Ukraine, and resulting disruptions in the global energy market; tight labor market conditions domestically; supply chain issues both domestically and internationally; and the potential effects of the new presidential administration, including its response to the foregoing, potential imposition of new tariffs, mass deportations and changes to tax or other financial regulations, uncertainty surrounding future changes may adversely affect Busey’s operating environment and therefore its business, financial condition, results of operations, and growth prospects.
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Concurrently, Busey may experience increased interest expenses on its borrowings and debt. Moreover, high-interest rates can deter borrowing and spending, potentially reducing demand for loans and impacting liquidity. In such an environment, heightened competition for deposits may necessitate maintaining competitive interest rates to retain and attract customers.
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Louis, Missouri metropolitan area; central Indiana; and southwest Florida. Busey operates in markets with a significant university and healthcare presence. These industries rely heavily on state and federal funding and contracts.
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Interest rates are sensitive to many factors beyond First Busey Corporation | 2023 — 35 Table of Contents Contents of Item 1A. Risk Factors Busey’s control, including general economic conditions and policies of various governmental and regulatory agencies, such as the FOMC. In March 2022, the Federal Reserve initiated a series of interest rate hikes to combat inflation.
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Prolonged elevated interest rates followed by easing cycles create financial volatility. Prolonged periods of elevated interest rates followed by an easing cycle pose significant challenges and opportunities for Busey.
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After 11 successive increases, as of December 2023, the fed funds target range stood at 5.25% - 5.5%, reaching its highest level since 2001. Throughout 2023, the health of the U.S. economy improved, surpassing expectations and reducing likelihood of a recession.
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While an easing cycle, which is characterized by the FOMC taking action to reduce interest rates, can alleviate some funding pressures and encourage borrowing, it also introduces risks to the banking sector. A rapid shift in rates can compress net interest margins, disrupt asset-liability management, and affect the valuation of financial instruments.
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Despite recent positive economic indicators, certain risks persist, including record-high U.S. credit card debt and increasing delinquencies in mortgages, auto loans, and credit cards. In December 2023, the FOMC projected U.S. GDP growth to slow to 1.4% in 2024.
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After a series of rate hikes starting in March 2022, the FOMC began an easing cycle in September 2024, responding to slowing inflation and economic growth. As of December 2024, the federal funds target range was reduced to 4.25%–4.5%, marking a gradual reversal from the peak of 5.25%–5.5% in 2023.
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The Federal Reserve aims for a soft landing by maintaining its 2023 plan into 2024, hoping that sustained elevated interest rates will cool the economy and alleviate inflationary pressures. These effects, combined with other considerations, could have a material impact on our business, financial condition, liquidity, and results of operations.
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This shift reflects a softening economic environment, with the FOMC aiming to balance inflation reduction while avoiding a sharp contraction in economic activity. Declining interest rates result in reduced income from lending and investment activities, and may drive consumers to seek higher-yielding alternatives outside of traditional banking, both of which could negatively impact Busey’s liquidity and results of operations.
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In the context of the multifaceted factors influencing the U.S. economy, uncertainties loom over the persistence of inflation, exacerbated by geopolitical tensions such as the Russia-Ukraine and Israel-Hamas conflicts. Additionally, unforeseen disruptions in the global energy market and challenges in the tight labor market and supply chain add to the complexity.
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While rate cuts can stimulate loan demand, they also create potential threats to the banking sector. Falling interest rates may reduce yields on loans and securities more quickly than the cost of deposits declines, narrowing margins. Deposit outflows could accelerate if customers seek higher-yielding alternatives outside traditional banking, further challenging liquidity.
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Earlier in the year, there was a substantial risk that central banks, including the Federal Reserve, might raise interest rates excessively, potentially constraining economic growth and triggering a recession. However, as inflation decelerated throughout the year and market data hinted at easing housing price pressures, there is potential for a positive impact on loan demand.
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Lower rates can lead to prepayments on fixed-rate loans, impacting the value of interest-earning assets and requiring adjustments to portfolios. Despite these risks, the easing cycle may present opportunities for growth. Lower rates can revitalize loan demand, particularly in key areas such as mortgages, auto loans, and small business lending, while providing some relief to borrowers under stress.
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Ongoing monetary policy, including the persistence of elevated interest rates, significantly impacts not only the interest earned from loans and investment securities, as well as the interest paid on deposits and borrowings, but also influences Busey's ability to originate loans and attract deposits, and the fair value of its financial assets and liabilities.
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However, the broader economic environment, including rising consumer debt levels, increasing delinquencies, and persistent inflation risks could still impact Busey’s financial condition, liquidity, and overall performance. REGULATORY AND LEGAL RISKS Changes in government policies and regulatory frameworks could adversely affect operations and profitability.
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As interest rates remain elevated, intensified competition for deposits may persist, potentially altering Busey’s funding mix and cost of funding. In addition to the aforementioned risks, Busey acknowledges the potential challenges arising from falling interest rates. For example, a decrease in interest rates may adversely affect Busey’s floating rate loan portfolios, leading to a reduction in interest income.
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Changes in policy and at banking agencies, including changes in interpretation and prioritization, occur over time through policy and personnel changes following federal- and state-level elections, which lead to changes involving the level of oversight and focus on the financial services industry.
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Any substantial, unexpected, and prolonged changes in market interest rates, even if they are maintained at a high level, could still have a material adverse effect on Busey’s business, financial condition, and results of operations.
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The nature, timing, and economic and political effects of potential changes to the current legal and regulatory framework affecting financial institutions remain highly uncertain in connection with a change in presidential administration. First Busey Corporation (BUSE) | 2024 — 36 Table of Contents Contents of Item 1A.
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The combination of factors such as changes in interest rates, an adverse credit quality outlook, economic uncertainties, and geopolitical events can contribute to increased fluctuations in market values.
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Risk Factors Economic conditions, including interest rates, inflation, and consumer spending, may be influenced by shifts in government leadership and policies, affecting Busey’s operations. Additionally, heightened regulatory scrutiny, particularly in consumer compliance, anti-money laundering, and cybersecurity increases operational and compliance burdens for Busey.
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The market value of investments may be affected by factors other than the underlying performance of the servicer of the securities or the mortgages underlying the securities, such as changes in the interest rate environment, negative trends in the residential and commercial real estate markets, ratings downgrades, adverse changes in the business climate, and a lack of liquidity in the secondary market for certain investment securities.
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Certain regulations and laws have embedded asset thresholds that increase scrutiny, reporting requirements, and operational demands. For example, the Dodd-Frank Act includes thresholds for asset size that trigger enhanced oversight. Busey’s continued expansion necessitates adapting its compliance frameworks to meet these increasing demands.
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On a quarterly basis, we formally evaluate investments and other assets for impairment indicators. Reduction in the value, or impairment of our investment securities, can impact our earnings and common stockholders' equity. Changes in market interest rates can affect the value of these investment securities, with increasing interest rates generally resulting in a reduction of value.
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Failure to manage compliance risks effectively could result in regulatory violations, leading to significant fines, penalties, and legal costs. Additionally, non-compliance could damage Busey's reputation, erode customer trust, and undermine investor confidence, resulting in a negative impact to Busey’s market valuation. It could also lead to further scrutiny from regulators, potentially hindering future growth opportunities.
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Although the reduction in value from temporary increases in market rates does not affect our income until the security is sold, it does result in an unrealized loss recorded in OCI that can reduce our common stockholders’ equity.
Added
Evolving privacy, data protection, and information security laws and regulations present operational and legal challenges. In the normal course of business, Busey collects, processes, and retains sensitive and confidential information regarding its customers, and Busey’s collection and handling of such information is subject to regulatory scrutiny.
Removed
Further, we may have to record provision expense to establish an allowance for credit losses on our carried at fair value debt securities, and we must periodically test our investment securities for other-than-temporary impairment in value.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Factors—Operational Risks .” Accordingly, we have long devoted significant resources to assessing, identifying and managing risks associated with cybersecurity threats, including: • an internal cybersecurity team that is responsible for conducting regular assessments of our information systems, existing controls, vulnerabilities and potential improvements; • continuous monitoring tools that can detect and help respond to cybersecurity threats in real-time; • performing due diligence with respect to our third-party service providers, including their cybersecurity practices, and requiring contractual commitments from our service providers to take certain cybersecurity measures; • third-party cybersecurity consultants, who conduct periodic penetration testing, vulnerability assessments and other procedures to identify potential weaknesses in our systems and processes; and • periodic cybersecurity training for our workforce.
Biggest changeBusey has long devoted significant resources to assessing, identifying, and managing risks associated with cybersecurity threats, including: • Establishing an internal cybersecurity team that is responsible for conducting regular assessments of Busey’s information systems, existing controls, vulnerabilities, and potential improvements; First Busey Corporation (BUSE) | 2024 — 46 Table of Contents • Employing continuous monitoring tools that can detect and help respond to cybersecurity threats in real-time; • Performing due diligence with respect to third-party service providers, including their cybersecurity practices, and requiring contractual commitments from Busey’s service providers to take certain cybersecurity measures; • Ongoing monitoring and assessment of third-party vendors' cybersecurity practices, including regular audits, compliance checks, and incident reporting requirements; • Engaging third-party cybersecurity consultants, who conduct periodic penetration testing, vulnerability assessments, and other procedures to identify potential weaknesses in Busey’s systems and processes; • Mandating periodic cybersecurity training for Busey’s workforce, which includes awareness programs on phishing, social engineering, and other common cyber threats; • Implementing access control measures such as multi-factor authentication, role-based access controls, and regular access reviews to ensure that only authorized personnel have access to critical systems and data; • Using data encryption for both data at rest and data in transit to protect sensitive information; and • Creating an incident response plan that outlines the steps to contain, mitigate, and remediate the impact of cybersecurity incidents, including communication protocols and post-incident analysis.
Our CISO has been in the role since September 2020, and has 15 years of experience across external and internal audit, technology risk management, and cybersecurity spanning various industries primarily within the financial services sector, but also including healthcare, technology, consumer products, and manufacturing for both regional and multinational corporations.
Busey’s CISO has been in the role since September 2020 and has over 15 years of experience across external and internal audit, technology risk management, and cybersecurity matters, spanning various industries primarily within the financial services sector, but also including healthcare, technology, consumer products, and manufacturing for both regional and multinational corporations.
In that role, our board of directors and Risk Committee, with support from Busey’s cybersecurity advisors, are responsible for ensuring that the risk management processes designed and implemented by management are adequate and functioning as designed.
Busey’s board of directors, as a whole and through its Enterprise Risk Committee (the “Risk Committee”), is responsible for the oversight of risk management. In that role, Busey’s board of directors and Risk Committee, with support from Busey’s cybersecurity advisors, are responsible for ensuring that the risk management processes developed and implemented by management are adequate and functioning as designed.
To carry out those duties, both our board of directors and the Risk Committee receive quarterly reports from our management team regarding cybersecurity risks, and Busey’s efforts to prevent, detect, mitigate, and remediate any cybersecurity incidents.
To carry out those duties, both the board of directors and the Risk Committee receive quarterly reports from Busey’s management team regarding cybersecurity risks, and Busey’s efforts to prevent, detect, mitigate, and remediate any cybersecurity incidents. Busey’s historical data indicates that while Busey has encountered cybersecurity threats and incidents, none have materially affected the Company.
This information security program is a key part of our overall risk management system, which is administered by our Chief Risk Officer. The program includes administrative, technical and physical safeguards to help ensure the security and confidentiality of customer records and information. These security and privacy policies and procedures are in effect across all of our businesses and geographic locations.
Busey’s cyber security risk management program is a key part of the Company’s overall risk management system, which is administered by the Chief Risk Officer. Busey’s cyber security risk management program includes administrative, technical, and physical safeguards to help ensure the security and confidentiality of customer records and information.
While none of these identified threats or incidents have materially affected us, it is possible that threats and incidents we identify in the future could have a material adverse effect on our business strategy, results of operations, and financial condition.
Still, Busey faces a number of cybersecurity risks in connection with its business, and it is possible that threats and incidents identified in the future could have a material adverse effect on Busey’s business strategy, results of operations, and financial condition. For additional information on the risks that cybersecurity threats pose to Busey see “ Item 1A.
Removed
ITEM 1C. CYBERSECURITY Busey relies extensively on various information systems and other electronic resources to operate our business. In addition, nearly all of our customers, service providers and other business partners on whom we depend, including the providers of our online banking, mobile banking, and accounting systems, use their own information systems and electronic resources.
Added
ITEM 1C. CYBERSECURITY Busey maintains a cyber security risk management program designed to prevent, detect, and respond to information security threats. The program is designed to align with the Cyber Risk Institute’s Profile framework, which is based on the National Institute of Standards and Technology’s Cybersecurity Framework. The program is led by Busey’s Chief Information Security Officer (“CISO”).
Removed
Any of these systems can be compromised, including through the employees, customers, and other individuals who are authorized to use them, and bad actors who use a sophisticated and constantly evolving set of software, tools, and strategies to do so.
Added
Busey’s security and privacy policies and procedures are in effect across all of its businesses and geographic locations. Busey adheres to various regulatory requirements and standards, including the Gramm-Leach-Bliley Act to ensure compliance with data protection laws. Additionally, Busey maintains cybersecurity insurance coverage to mitigate potential financial impacts from cyber incidents.
Removed
Moreover, the nature of our business, as a financial services provider, and our relative size, make us and our business partners high-value targets for these bad actors to pursue. For additional information see “ Item 1A.
Removed
We face a number of cybersecurity risks in connection with our business. From time-to-time, we have identified cybersecurity threats and cybersecurity incidents that require us to make changes to our processes and to implement additional safeguards.
Removed
First Busey Corporation | 2023 — 49 Table of Contents Our management team is responsible for the day-to-day management of risks we face, including our Chief Information Security Officer (“CISO”).
Removed
In addition, our board of directors, as a whole and through its Enterprise Risk Committee (the “Risk Committee”), is responsible for the oversight of risk management.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFirst Busey Corporation and its subsidiaries also own or lease other facilities, such as banking centers of Busey Bank, for business operations. Busey considers its properties to be suitable and adequate for its present needs. None of the properties are subject to any material encumbrance.
Biggest changeFirst Busey Corporation and its subsidiaries also own or lease other facilities, such as banking centers of Busey Bank, for business operations. First Busey Corporation (BUSE) | 2024 — 47 Table of Contents Busey considers its properties to be suitable and adequate for its present needs. None of the properties are subject to any material encumbrance.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased Weighted Average Price Paid per Common Share Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs October 1-31, 2023 95,001 $ 19.17 95,001 1,942,086 November 1-30, 2023 22,811 19.82 22,811 1,919,275 December 1-31, 2023 — — — 1,919,275 Three months ended December 31, 2023 117,812 $ 19.30 117,812 Year ended December 31, 2023 227,935 $ 19.67 227,935 First Busey Corporation | 2023 — 51 Table of Contents STOCK PERFORMANCE GRAPH The following graph compares Busey’s performance, as measured by the change in price of its common stock plus reinvested dividends, with the Nasdaq Composite and the S&P U.S.
Biggest changeFirst Busey Corporation (BUSE) | 2024 — 49 Table of Contents STOCK PERFORMANCE GRAPH The following graph compares Busey’s performance, as measured by the change in price of its common stock plus reinvested dividends, with the Nasdaq Composite and the S&P U.S. BMI Banks – Midwest Region for the five years ended December 31, 2024. Banks in the S&P U.S.
The Stock Repurchase Plan provides Busey with treasury shares from which stock-based compensation can be issued, and limits the number of outstanding shares that may be actively traded. The Stock Repurchase Plan does not obligate Busey to purchase any shares of its common stock, and has no expiration date.
The Stock Repurchase Plan provides Busey with treasury shares from which stock-based compensation can be issued, and it limits the number of outstanding shares that may be actively traded. The Stock Repurchase Plan does not obligate Busey to purchase any shares of its common stock, and has no expiration date.
As of December 31, 2023, Busey had 1,919,275 shares that may still be purchased under the Stock Repurchase Plan.
As of December 31, 2024, Busey had 1,919,275 shares that may still be purchased under the Stock Repurchase Plan.
Under the Stock Repurchase Plan, Busey's board of directors has authorized shares for repurchase as shown in the table below: Number of Shares Authorized February 3, 2015 666,667 May 22, 2019 1,000,000 February 5, 2020 2,000,000 May 24, 2023 2,000,000 Total shares that have been authorized for repurchase under the plan 5,666,667 During the fourth quarter of 2023, Busey purchased 117,812 shares of its common stock pursuant to the Stock Repurchase Plan, as reflected in the table below.
Under the Stock Repurchase Plan, Busey's board of directors has authorized shares for repurchase as shown in the table below: Number of Shares Authorized February 3, 2015 666,667 May 22, 2019 1,000,000 February 5, 2020 2,000,000 May 24, 2023 2,000,000 During the fourth quarter of 2024, Busey purchased no shares of its common stock pursuant to the Stock Repurchase Plan.
BMI Banks – Midwest Region for the five years ended December 31, 2023. Banks in the S&P U.S. BMI Banks – Midwest Region Index represent all Major Exchange Traded Banks in S&P Capital IQ’s coverage universe that are headquartered in Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Ohio, South Dakota, and Wisconsin.
BMI Banks – Midwest Region Index represent all Major Exchange Traded Banks in S&P Capital IQ’s coverage universe that are headquartered in Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Ohio, South Dakota, and Wisconsin.
First Busey Corporation | 2023 — 50 Table of Contents As of February 22, 2024, First Busey Corporation had 55,247,094 shares of common stock outstanding held by 1,804 holders of record. Additionally, there were an estimated 10,830 beneficial holders whose stock was held in street name by brokerage houses and nominees as of that date.
Additionally, there were an estimated 14,297 beneficial holders whose stock was held in street name by brokerage houses and nominees as of that date.
See “ Item 1. Business—Supervision, Regulation, and Other Factors—Supervision and Regulation of the Company—Dividend Payments ” and “ Item 1. Business—Supervision, Regulation, and Other Factors—Supervision and Regulation of Busey Bank—Dividend Payments ” for further discussion of these matters.
See “ Item 1. Business—Supervision, Regulation, and Other Factors—Supervision and Regulation of First Busey Corporation—Dividend Payments ” and “ Item 1. Business—Supervision, Regulation, and Other Factors—Supervision and Regulation of Busey Bank—Dividend Payments ” for further discussion of these matters. As of February 27, 2025, First Busey Corporation had 56,958,853 shares of common stock outstanding held by 1,766 holders of record.
As of December 31, Index 2018 2019 2020 2021 2022 2023 First Busey Corporation $ 100.00 $ 115.78 $ 94.98 $ 124.19 $ 117.47 $ 123.44 S&P U.S. BMI Banks – Midwest Region 100.00 130.10 111.85 147.78 127.53 130.20 Nasdaq Composite 100.00 136.69 198.09 242.03 163.27 236.16
As of December 31, Index 2019 2020 2021 2022 2023 2024 First Busey Corporation $ 100.00 $ 82.03 $ 107.26 $ 101.45 $ 106.61 $ 105.30 S&P U.S. BMI Banks – Midwest Region 100.00 85.98 113.59 98.03 100.08 122.10 Nasdaq Composite 100.00 144.92 177.06 119.45 172.77 223.87

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGovernment obligations 79,669 578 0.73 % 179,557 1,079 0.60 % 180,041 1,692 0.94 % Obligations of states and political subdivisions 1 233,377 6,560 2.81 % 286,220 7,611 2.66 % 299,064 7,694 2.57 % Other securities 2,875,769 76,568 2.66 % 3,265,271 61,591 1.89 % 2,876,714 37,166 1.29 % Loans held for sale 1,885 116 6.13 % 5,178 192 3.71 % 21,803 506 2.32 % Portfolio loans 1, 2 7,759,472 387,193 4.99 % 7,445,962 288,615 3.88 % 6,969,807 252,946 3.63 % Total interest-earning assets 1, 3 11,164,594 $ 481,546 4.31 % 11,473,063 $ 362,185 3.16 % 10,978,116 $ 301,155 2.74 % Cash and due from banks 116,530 120,910 133,711 Premises and equipment 124,565 131,657 138,731 ACL (92,991) (89,387) (97,397) Other assets 933,520 856,705 751,774 Total assets $ 12,246,218 $ 12,492,948 $ 11,904,935 Liabilities and stockholders’ equity Interest-bearing transaction deposits $ 2,775,045 $ 43,268 1.56 % $ 2,785,439 $ 7,150 0.26 % $ 2,619,942 $ 1,922 0.07 % Savings and money market deposits 2,870,397 37,038 1.29 % 3,326,259 4,237 0.13 % 3,092,992 2,817 0.09 % Time deposits 1,406,928 43,679 3.10 % 846,738 4,725 0.56 % 1,040,709 7,844 0.75 % Federal funds purchased and repurchase agreements 200,894 5,203 2.59 % 244,004 1,475 0.60 % 218,454 227 0.10 % Borrowings 4 500,301 26,881 5.37 % 309,175 15,932 5.15 % 268,767 12,452 4.63 % Junior subordinated debt issued to unconsolidated trusts 71,894 3,853 5.36 % 71,716 3,029 4.22 % 71,545 2,840 3.97 % Total interest-bearing liabilities 7,825,459 $ 159,922 2.04 % 7,583,331 $ 36,548 0.48 % 7,312,409 $ 28,102 0.38 % Net interest spread 1 2.27 % 2.68 % 2.36 % Noninterest-bearing deposits 3,018,563 3,550,517 3,142,155 Other liabilities 204,685 163,929 125,509 Stockholders’ equity 1,197,511 1,195,171 1,324,862 Total liabilities and stockholders’ equity $ 12,246,218 $ 12,492,948 $ 11,904,935 Interest income / earning assets 1, 3 $ 11,164,594 $ 481,546 4.31 % $ 11,473,063 $ 362,185 3.16 % $ 10,978,116 $ 301,155 2.74 % Interest expense / earning assets 11,164,594 159,922 1.43 % 11,473,063 36,548 0.32 % 10,978,116 28,102 0.25 % Net interest margin 1 $ 321,624 2.88 % $ 325,637 2.84 % $ 273,053 2.49 % ___________________________________________ 1.
Biggest changeGovernment obligations 5,495 158 2.88 % 79,669 578 0.73 % 179,557 1,079 0.60 % Obligations of states and political subdivisions 1 153,467 4,338 2.83 % 233,377 6,560 2.81 % 286,220 7,611 2.66 % Other securities 2,567,526 69,786 2.72 % 2,875,769 76,568 2.66 % 3,265,271 61,591 1.89 % Restricted bank stock 14,414 848 5.88 % 16,416 1,170 7.13 % 6,667 189 2.83 % Loans held for sale 8,012 503 6.28 % 1,885 116 6.13 % 5,178 192 3.71 % Portfolio loans 1, 2 7,804,629 427,300 5.47 % 7,759,472 387,193 4.99 % 7,445,962 288,615 3.88 % Total interest-earning assets 1, 3 10,999,424 $ 525,374 4.78 % 11,181,010 $ 482,716 4.32 % 11,479,730 $ 362,374 3.16 % Cash and due from banks 109,400 116,530 120,910 Premises and equipment 121,663 124,565 131,657 ACL (89,369) (92,991) (89,387) Other assets 910,753 917,104 850,038 Total assets $ 12,051,871 $ 12,246,218 $ 12,492,948 Liabilities and stockholders’ equity Interest-bearing transaction deposits $ 2,469,664 $ 42,925 1.74 % $ 2,775,045 $ 43,268 1.56 % $ 2,785,439 $ 7,150 0.26 % Savings and money market deposits 3,246,507 74,536 2.30 % 2,870,397 37,038 1.29 % 3,326,259 4,237 0.13 % Time deposits 1,584,953 61,002 3.85 % 1,406,928 43,679 3.10 % 846,738 4,725 0.56 % Federal funds purchased and repurchase agreements 147,786 4,308 2.92 % 200,894 5,203 2.59 % 244,004 1,475 0.60 % Borrowings 4 240,137 13,651 5.68 % 500,301 26,881 5.37 % 309,175 15,932 5.15 % Junior subordinated debt issued to unconsolidated trusts 74,037 4,648 6.28 % 71,894 3,853 5.36 % 71,716 3,029 4.22 % Total interest-bearing liabilities 7,763,084 $ 201,070 2.59 % 7,825,459 $ 159,922 2.04 % 7,583,331 $ 36,548 0.48 % Net interest spread 1 2.19 % 2.28 % 2.68 % Noninterest-bearing deposits 2,738,892 3,018,563 3,550,517 Other liabilities 207,471 204,685 163,929 Stockholders’ equity 1,342,424 1,197,511 1,195,171 Total liabilities and stockholders’ equity $ 12,051,871 $ 12,246,218 $ 12,492,948 Interest income / earning assets 1, 3 $ 10,999,424 $ 525,374 4.78 % $ 11,181,010 $ 482,716 4.32 % $ 11,479,730 $ 362,374 3.16 % Interest expense / earning assets 10,999,424 201,070 1.83 % 11,181,010 159,922 1.43 % 11,479,730 36,548 0.32 % Net interest margin 1 $ 324,304 2.95 % $ 322,794 2.89 % $ 325,826 2.84 % ___________________________________________ 1.
Efficiency Ratio 3 The efficiency ratio is calculated as total noninterest expense, less amortization charges, as a percentage of tax-equivalent net interest income plus noninterest income, less security gains and losses. The efficiency ratio, which is a measure commonly used by management and the banking industry, measures the amount of expense incurred to generate a dollar of revenue.
Efficiency Ratio The efficiency ratio 3 is calculated as total noninterest expense, less amortization charges, as a percentage of tax-equivalent net interest income plus noninterest income, less security gains and losses. The efficiency ratio, which is a measure commonly used by management and the banking industry, measures the amount of expense incurred to generate a dollar of revenue.
MD&A SCOPE OF DISCUSSION The following is management’s discussion and analysis of the financial condition as of December 31, 2023, and 2022, and the results of operations for the years ended December 31, 2023, 2022, and 2021, of First Busey Corporation and its subsidiaries. It should be read in conjunction with “ Item 1.
MD&A SCOPE OF DISCUSSION The following is management’s discussion and analysis of the financial condition as of December 31, 2024, and 2023, and the results of operations for the years ended December 31, 2024, 2023, and 2022, of First Busey Corporation and its subsidiaries. It should be read in conjunction with “ Item 1.
In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, the possibility of a materially different financial condition or materially different results of operations is a reasonable likelihood. Further, changes in accounting standards could impact our critical accounting estimates.
In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, the possibility of a materially different financial condition or materially different results of operations is a reasonable likelihood. Further, changes in accounting standards could impact Busey’s critical accounting estimates.
Acquired loans are in the scope of ASC Topic 326 “Financial Instruments-Credit Losses.” However, the offset to record the allowance on acquired loans at the date of acquisition depends on whether or not the loan is classified as PCD.
Acquired loans are within the scope of ASC Topic 326 “Financial Instruments-Credit Losses.” However, the offset to record the allowance on acquired loans at the date of acquisition depends on whether or not the loan is classified as PCD.
Consolidated Average Balance Sheets and Interest Rates The table below presents our Consolidated Average Balance Sheets, detailing average balances for each major category of assets and liabilities, the interest income earned on interest-earning assets, the interest expense paid for interest-bearing liabilities, and the related interest yields for the periods indicated.
Consolidated Average Balance Sheets and Interest Rates The table below presents Busey’s Consolidated Average Balance Sheets, detailing average balances for each major category of assets and liabilities, the interest income earned on interest-earning assets, the interest expense paid for interest-bearing liabilities, and the related interest yields for the periods indicated.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Contents of Item 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) Contents of Item 7.
Business ,” the Consolidated Financial Statements , and the related Notes to the Consolidated Financial Statements included in this Annual Report. Detailed discussion and analysis of the financial condition and results of operation for 2023 as compared to 2022 can be found below. Comparison of 2022 to 2021 can be found in “ Item 7.
Business ,” the Consolidated Financial Statements , and the related Notes to the Consolidated Financial Statements included in this Annual Report. Detailed discussion and analysis of Busey’s financial condition and results of operation for 2024 as compared to 2023 can be found below. Comparison of 2023 to 2022 can be found in “ Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of our 2022 Annual Report . BUSEY’S CONSERVATIVE BANKING STRATEGY Busey’s financial strength is built on a long-term conservative operating approach. The quality of our core deposit franchise is a critical value driver of our institution.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of Busey's 2023 Annual Report . BUSEY’S CONSERVATIVE BANKING STRATEGY Busey’s financial strength is built on a long-term conservative operating approach. The quality of Busey’s core deposit franchise is a critical value driver of the institution.
The ACL must be determined on a collective (pool) basis when similar risk characteristics exist. On a case-by-case basis, we may conclude a loan should be evaluated on an individual basis based on the disparate risk characteristics. Loans deemed uncollectible are charged against and reduce the ACL.
The ACL must be determined on a collective (pool) basis when similar risk characteristics exist. On a case-by-case basis, Busey may conclude that a loan should be evaluated on an individual basis based on disparate risk characteristics. Loans deemed uncollectible are charged against and reduce the ACL.
Critical accounting estimates are those that are critical to the portrayal and understanding of Busey’s financial condition and results of operations and require management to make assumptions that are difficult, subjective, or complex. These estimates involve judgments, assumptions, and uncertainties that are susceptible to change.
MD&A Critical accounting estimates are those that are critical to the portrayal and understanding of Busey’s financial condition and results of operations and require management to make assumptions that are subjective or complex. These estimates involve judgments, assumptions, and uncertainties that are susceptible to change.
We strive to consistently maintain capital ratios well in excess of thresholds required to be designated as well capitalized by applicable regulatory guidelines, thereby ensuring financial strength and flexibility across economic and operating cycles.
Busey strives to consistently maintain capital ratios well in excess of thresholds required to be designated as well capitalized by applicable regulatory guidelines, thereby ensuring financial strength and flexibility across economic and operating cycles.
First Busey Corporation | 2023 — 59 Table of Contents Contents of Item 7. MD&A The following table presents, for the major components of interest-earning assets and interest-bearing liabilities, a breakout of changes in interest income and interest expense attributable to (1) changes in average volume and (2) changes in average yield.
First Busey Corporation (BUSE) | 2024 — 57 Table of Contents Contents of Item 7. MD&A The following table presents, for the major components of interest-earning assets and interest-bearing liabilities, a breakout of changes in interest income and interest expense attributable to (1) changes in average volume and (2) changes in average yield.
Our credit performance reflects our highly diversified, conservatively underwritten loan portfolio, which has been originated predominantly to established customers with tenured relationships with our Company. Our approach to lending and our underwriting standards are designed to emphasize relationship banking rather than transactional banking.
Busey’s credit performance reflects its highly diversified, conservatively underwritten loan portfolio, which has been originated predominantly to established customers with tenured relationships with Busey. Busey’s approach to lending and its underwriting standards are designed to emphasize relationship banking rather than transactional banking.
Net interest spread represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, and is presented in the table below for the periods indicated: Years Ended December 31, 2023 2022 2021 Net interest spread 1 2.27 % 2.68 % 2.36 % ___________________________________________ 1. Calculated on a tax-equivalent basis.
Net interest spread represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, and is presented in the table below for the periods indicated: Years Ended December 31, 2024 2023 2022 Net interest spread 1 2.19 % 2.28 % 2.68 % ___________________________________________ 1. Calculated on a tax-equivalent basis.
In addition, as a matter of both policy and practice, we limit concentration exposures in any particular loan segment. As a result, asset quality remains strong by both Busey’s historical and current industry trends. Busey’s conservative banking strategy is reflected in the strength of our capital base.
In addition, as a matter of both policy and practice, Busey limits concentration exposures in any particular loan segment. As a result, asset quality remains strong by both Busey’s historical and current industry trends. Busey’s conservative banking strategy is reflected in the strength of its capital base.
First Busey Corporation | 2023 — 61 Table of Contents Contents of Item 7. MD&A The net interest margin discussion above is based upon the results and average balances for the years ended December 31, 2023, 2022, and 2021.
First Busey Corporation (BUSE) | 2024 — 59 Table of Contents Contents of Item 7. MD&A The net interest margin discussion above is based upon the results and average balances for the years ended December 31, 2024, 2023, and 2022.
For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on changes due to rate and changes due to volume (dollars in thousands) : Years Ended December 31, 2023 vs. 2022 Change Due To 2022 vs. 2021 Change Due To Average Volume Average Yield/Rate Total Change Average Volume Average Yield/Rate Total Change Increase (decrease) in interest income Interest-bearing bank deposits and federal funds sold $ (1,013) $ 8,447 $ 7,434 $ (921) $ 2,867 $ 1,946 Investment securities: U.S.
For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on changes due to rate and changes due to volume (dollars in thousands) : Years Ended December 31, 2024 vs. 2023 Change Due To 2023 vs. 2022 Change Due To Average Volume Average Yield/Rate Total Change Average Volume Average Yield/Rate Total Change Increase (decrease) in interest income Interest-bearing bank deposits and federal funds sold $ 11,643 $ 267 $ 11,910 $ (1,013) $ 8,447 $ 7,434 Investment securities: U.S.
On a tax-equivalent basis, assuming a federal income tax rate of 21.0%. 2. Non-accrual loans have been included in average portfolio loans. 3. Interest income includes tax-equivalent adjustments of $2.2 million for 2023, $2.2 million for 2022, and $2.4 million for 2021.
On a tax-equivalent basis, assuming a federal income tax rate of 21.0%. 2. Non-accrual loans have been included in average portfolio loans. 3. Interest income includes tax-equivalent adjustments of $1.7 million for 2024, $2.2 million for each of 2023 and 2022.
See “ Item 1. Business—Non-GAAP Financial Information .” First Busey Corporation | 2023 — 57 Table of Contents Contents of Item 7. MD&A Non-Operating Expenses and Non-GAAP Measures Busey views certain non-operating items, including acquisition-related and restructuring charges, as adjustments to net income reported under GAAP.
See “ Item 1. Business—Non-GAAP Financial Information .” First Busey Corporation (BUSE) | 2024 — 55 Table of Contents Contents of Item 7. MD&A Non-Operating Expenses and Non-GAAP Measures Busey views certain non-operating items, such as acquisition-related expenses and restructuring charges, as adjustments to net income reported under GAAP.
Interest income includes an immaterial amount of fees, net of deferred costs, related to PPP loans for 2023, $1.9 million for 2022, and $14.0 million for 2021. 4. Borrowings include short-term borrowings, long-term debt, senior notes, and subordinated notes. Interest expense includes a non-usage fee on our revolving credit facility.
Interest income includes an immaterial amount of fees, net of deferred costs, related to Paycheck Protection Program loans for 2024 and 2023, and $1.9 million for 2022. 4. Borrowings include short-term borrowings, long-term debt, senior notes, and subordinated notes. Interest expense includes a non-usage fee on the revolving credit facility.
Average information is provided on a daily average basis (dollars in thousands) : First Busey Corporation | 2023 — 58 Table of Contents Contents of Item 7.
Average information is provided on a daily average basis (dollars in thousands) : First Busey Corporation (BUSE) | 2024 — 56 Table of Contents Contents of Item 7.
Annualized net interest margins for the quarterly periods indicated were as follows: 2023 2022 2021 First Quarter 3.13 % 2.45 % 2.72 % Second Quarter 2.86 % 2.68 % 2.50 % Third Quarter 2.80 % 3.00 % 2.41 % Fourth Quarter 2.74 % 3.24 % 2.36 % Management attempts to mitigate the effects of an unpredictable interest-rate environment through effective portfolio management, prudent loan underwriting and pricing discipline, and operational efficiencies.
Annualized net interest margins for the quarterly periods indicated were as follows: 2024 2023 2022 First Quarter 2.79 % 3.13 % 2.45 % Second Quarter 3.03 % 2.86 % 2.68 % Third Quarter 3.02 % 2.81 % 3.00 % Fourth Quarter 2.95 % 2.75 % 3.24 % Management attempts to mitigate the effects of an unpredictable interest-rate environment through effective portfolio management, prudent loan underwriting and pricing discipline, and operational efficiencies.
Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method of accounting, assets acquired and liabilities assumed are recorded at their estimated fair value on the date of acquisition.
Under the acquisition method of accounting, assets acquired and liabilities assumed are recorded at their estimated fair value on the date of acquisition.
MD&A Years Ended December 31, 2023 2022 2021 Average Balance Income/ Expense Yield/ Rate Average Balance Income/ Expense Yield/ Rate Average Balance Income/ Expense Yield/ Rate Assets Interest-bearing bank deposits and federal funds sold $ 214,422 $ 10,531 4.91 % $ 290,875 $ 3,097 1.06 % $ 630,687 $ 1,151 0.18 % Investment securities: U.S.
MD&A Years Ended December 31, 2024 2023 2022 Average Balance Income/ Expense Yield/ Rate Average Balance Income/ Expense Yield/ Rate Average Balance Income/ Expense Yield/ Rate Assets Interest-bearing bank deposits and federal funds sold $ 445,881 $ 22,441 5.03 % $ 214,422 $ 10,531 4.91 % $ 290,875 $ 3,097 1.06 % Investment securities: U.S.
Business—Non-GAAP Financial Information .” Total noninterest expense increased to $285.5 million for the year ended December 31, 2023, compared to $283.9 million for the year ended December 31, 2022, representing a modest year-over-year increase of 0.6%. Non-operating acquisition and other restructuring expenses decreased to $4.3 million in 2023, compared to $4.5 million in 2022.
Business—Non-GAAP Financial Information .” Total noninterest expense increased to $300.4 million for the year ended December 31, 2024, compared to $285.5 million for the year ended December 31, 2023, representing a year-over-year increase of 5.2%. Non-operating acquisition and other restructuring expenses increased to $8.1 million in 2024, compared to $4.3 million in 2023.
MD&A RESULTS OF OPERATIONS — THREE YEARS ENDED DECEMBER 31, 2023 Net Income Results of our operations are presented below, segregated by operating segment (dollars in thousands) : Years Ended December 31, 2023 2022 2021 Net income by operating segment Banking $ 123,853 $ 131,596 $ 117,844 Wealth Management 18,804 18,543 18,570 FirsTech 830 847 1,527 Other (20,922) (22,675) (14,492) Net income $ 122,565 $ 128,311 $ 123,449 Operating Performance Metrics Operating performance metrics presented in the table below have been derived from information used by management to monitor and manage our financial performance (dollars in thousands, except per share amounts) : Years Ended December 31, 2023 2022 2021 Reported: Net income $ 122,565 $ 128,311 $ 123,449 Adjusted: Net income 1 126,012 131,910 137,108 Reported: Diluted earnings per common share $ 2.18 $ 2.29 $ 2.20 Adjusted: Diluted earnings per common share 1 2.24 2.35 2.45 Reported: Return on average assets 1.00 % 1.03 % 1.04 % Adjusted: Return on average assets 1 1.03 % 1.06 % 1.15 % Reported: Return on average tangible common equity 1 14.62 % 15.56 % 12.96 % Adjusted: Return on average tangible common equity 1 15.03 % 15.99 % 14.40 % Reported: Pre-provision net revenue 1 $ 158,502 $ 168,493 $ 138,652 Adjusted: Pre-provision net revenue 1 172,290 179,424 160,792 Reported: Pre-provision net revenue to average assets 1 1.29 % 1.35 % 1.16 % Adjusted: Pre-provision net revenue to average assets 1 1.41 % 1.44 % 1.35 % ___________________________________________ 1.
MD&A RESULTS OF OPERATIONS — THREE YEARS ENDED DECEMBER 31, 2024 Net Income Results of Busey’s operations are presented below, segregated by operating segment (dollars in thousands) : Years Ended December 31, 2024 2023 2022 Net income Banking $ 117,266 $ 123,853 $ 131,596 Wealth Management 22,030 18,804 18,543 FirsTech (670) 830 847 Other (24,935) (20,922) (22,675) Net income $ 113,691 $ 122,565 $ 128,311 Operating Performance Metrics Operating performance metrics presented in the table below have been derived from information used by management to monitor and manage Busey’s financial performance (dollars in thousands, except per share amounts) : Years Ended December 31, 2024 2023 2022 Net income $ 113,691 $ 122,565 $ 128,311 Adjusted net income (Non-GAAP) 1 119,805 126,012 131,910 Diluted earnings per common share $ 1.98 $ 2.18 $ 2.29 Adjusted diluted earnings per common share (Non-GAAP) 1 2.08 2.24 2.35 Return on average assets 0.94 % 1.00 % 1.03 % Adjusted return on average assets (Non-GAAP) 1 0.99 % 1.03 % 1.06 % Return on average tangible common equity (Non-GAAP) 1 11.65 % 14.62 % 15.56 % Adjusted return on average tangible common equity (Non-GAAP) 1 12.28 % 15.03 % 15.99 % Pre-provision net revenue (Non-GAAP) 1 $ 167,996 $ 158,502 $ 168,493 Adjusted pre-provision net revenue (Non-GAAP) 1 167,317 172,290 179,424 Pre-provision net revenue to average total assets (Non-GAAP) 1 1.39 % 1.29 % 1.35 % Adjusted pre-provision net revenue to average total assets (Non-GAAP) 1 1.39 % 1.41 % 1.44 % ___________________________________________ 1.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) SCOPE OF DISCUSSION 54 CRITICAL ACCOUNTING ESTIMATES 54 Fair Value of Debt Securities Available for Sale 55 Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations 55 Goodwill 56 Income Taxes 56 Allowance for Credit Losses 56 RESULTS OF OPERATIONS — THREE YEARS ENDED DECEMBER 31, 2023 57 Net Income 57 Operating Performance Metrics 57 Net Interest Income 58 Noninterest Income 62 Noninterest Expense 65 Efficiency Ratio 67 Income Taxes 67 FINANCIAL CONDITION 68 Balance Sheet 68 Investment Securities 69 Portfolio Loans 72 Deposits 82 Borrowings 83 Liquidity 85 Off-Balance-Sheet Arrangements 87 Contractual Obligations 87 Cash Flows 88 Capital Resources 88 NEW ACCOUNTING PRONOUNCEMENTS 88 EFFECTS OF INFLATION 89 First Busey Corporation | 2023 — 53 Table of Contents Contents of Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) (“MD&A”) SCOPE OF DISCUSSION 52 BUSEY’S CONSERVATIVE BANKING STRATEGY 52 Busey executed a two-part balance sheet repositioning strategy in 2024 52 CRITICAL ACCOUNTING ESTIMATES 52 Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations 53 Goodwill 53 Income Taxes 53 Allowance for Credit Losses 54 RESULTS OF OPERATIONS — THREE YEARS ENDED DECEMBER 31, 2024 55 Net Income 55 Operating Performance Metrics 55 Net Interest Income 56 Noninterest Income 60 Noninterest Expense 62 Efficiency Ratio 63 Income Taxes 64 FINANCIAL CONDITION 65 Balance Sheet 65 Investment Securities 65 Portfolio Loans 69 Deposits 79 Borrowings 80 Liquidity 83 Off-Balance-Sheet Arrangements 84 Contractual Obligations 84 Cash Flows 85 Capital Resources 86 NEW ACCOUNTING PRONOUNCEMENTS 86 EFFECTS OF INFLATION 86 First Busey Corporation (BUSE) | 2024 — 51 Table of Contents Contents of Item 7.
MD&A The fair value of a loan portfolio acquired in a business combination generally requires greater levels of management estimates and judgment than other assets acquired or liabilities assumed.
In addition, Busey engages third party specialists to assist in the development of fair values. The fair value of a loan portfolio acquired in a business combination generally requires greater levels of management estimates and judgment than other assets acquired or liabilities assumed.
Our efficiency ratio was 61.7% for the year ended December 31, 2023, compared to 59.9% for the year ended December 31, 2022. Operating costs have been influenced by acquisition expenses and other restructuring costs, and the adjusted efficiency ratio 3 was 60.7% for the year ended December 31, 2023, compared to 58.9% for the year ended December 31, 2022.
Operating costs have been influenced by acquisition expenses and other restructuring costs, and the adjusted efficiency ratio 3 was 61.0% for the year ended December 31, 2024, compared to 60.7% for the year ended December 31, 2023. 3 The efficiency ratio and adjusted efficiency ratio are both non-GAAP financial measures.
Combined, revenues from wealth management fees and payment technology solutions represented 64.1% and 59.5% of Busey’s noninterest income for the years ended December 31, 2023, and December 31, 2022, respectively, providing a complement to spread-based revenue from traditional banking activities.
Results for 2024 marked a new record high reported annual revenue for FirsTech. Combined, revenues from wealth management fees and payment technology solutions represented 61.3% and 64.8% of Busey’s noninterest income for the years ended December 31, 2024, and December 31, 2023, respectively, providing a complement to spread-based revenue from traditional banking activities.
The following policies could be deemed critical: 1 Core deposits is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see “ Item 1. Business—Non-GAAP Financial Information. ” First Busey Corporation | 2023 — 54 Table of Contents Contents of Item 7.
Significant Accounting Policies ” in the Notes to the Consolidated Financial Statements . 1 Core deposits is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see “ Item 1. Business—Non-GAAP Financial Information. ” First Busey Corporation (BUSE) | 2024 — 52 Table of Contents Contents of Item 7.
On a combined basis, revenue from these two critical operating areas was $78.5 million for the year ended December 31, 2023, a 4.1% increase from $75.4 million for the year ended December 31, 2022. Wealth management fees increased by 3.5% to $57.3 million in 2023, compared to $55.4 million in 2022.
On a combined basis, revenue from these two critical operating areas was $85.6 million for the year ended December 31, 2024, a 9.1% increase from $78.5 million for the year ended December 31, 2023. Fees for customer services increased by 6.5% to $30.9 million in 2024, compared to $29.0 million in 2023.
General economic conditions and interest rate volatility may impact future fee income. Income on bank owned life insurance increased by 28.3% to $4.7 million in 2023, compared to $3.7 million in 2022, resulting from a $0.8 million increase in earnings on death proceeds and a $0.2 million increase in the cash surrender value of the insurance policies.
Income on bank owned life insurance increased by 9.1% to $5.1 million in 2024, compared to $4.7 million in 2023, resulting from a $0.1 million increase in earnings on death proceeds and a $0.3 million increase in the cash surrender value of the insurance policies.
Fair values are determined based on the definition of “fair value” defined in ASC Topic 820 “Fair Value Measurement” as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” First Busey Corporation | 2023 — 55 Table of Contents Contents of Item 7.
Fair values are determined based on the definition of “fair value” defined in ASC Topic 820 “Fair Value Measurement” as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The determination of fair values is based on valuations using management’s assumptions of future growth rates, future attrition, discount rates, multiples of earnings or other relevant factors.
First Busey Corporation | 2023 — 56 Table of Contents Contents of Item 7.
First Busey Corporation (BUSE) | 2024 — 61 Table of Contents Contents of Item 7.
At December 31, 2023, our leverage ratio of Tier 1 capital to average assets was 10.1%, our common equity Tier 1 capital to risk weighted assets ratio was 13.1%, and our total capital to risk weighted assets ratio was 17.4%.
At December 31, 2024, Busey’s leverage ratio of Tier 1 capital to average assets was 11.1%, its common equity Tier 1 capital to risk weighted assets ratio was 14.1%, and its total capital to risk weighted assets ratio was 18.5%.
A provision for credit losses is charged to current expense and acts to replenish the ACL in order to maintain the ACL at a level that management deems adequate. Determining the ACL involves significant judgments and assumptions by management. Because of the nature of the judgments and assumptions made by management, actual results may differ from these judgments and assumptions.
A provision for credit losses is charged to current expense and acts to replenish the ACL in order to maintain the ACL at a level that management deems adequate. Determining the ACL involves significant judgments and assumptions. Macroeconomic forecasts provided by a third party and the economic indices sourced are significant judgments used in determining the allowance.
MD&A Noninterest Expense Changes in noninterest expense are summarized in the tables below for the periods presented (dollars in thousands) : Years Ended December 31, 2023 2022 Change % Change Noninterest expense Salaries, wages, and employee benefits $ 162,597 $ 159,016 $ 3,581 2.3 % Data processing 23,708 21,648 2,060 9.5 % Premises expenses: Net occupancy expense of premises 18,214 19,130 (916) (4.8) % Furniture and equipment expenses 6,759 7,645 (886) (11.6) % Combined, net occupancy expense of premises and furniture and equipment expenses 24,973 26,775 (1,802) (6.7) % Professional fees 7,147 6,125 1,022 16.7 % Amortization of intangible assets 10,432 11,628 (1,196) (10.3) % Interchange expense 6,864 6,298 566 9.0 % FDIC insurance 5,650 4,058 1,592 39.2 % Other expense 44,161 48,333 (4,172) (8.6) % Total noninterest expense $ 285,532 $ 283,881 $ 1,651 0.6 % Income taxes $ 31,339 $ 33,426 $ (2,087) (6.2) % Effective income tax rate 20.4 % 20.7 % (30) bps Efficiency ratio 1 61.7 % 59.9 % 180 bps Adjusted efficiency ratio 1 60.7 % 58.9 % 180 bps Full-time equivalent associates as of period-end 1,479 1,497 (18) (1.2) % ___________________________________________ 1.
MD&A Noninterest Expense Changes in noninterest expense are summarized in the tables below for the periods presented (dollars in thousands) : Years Ended December 31, 2024 2023 Change % Change Noninterest expense Salaries, wages, and employee benefits $ 175,619 $ 162,597 $ 13,022 8.0 % Data processing 27,124 23,708 3,416 14.4 % Premises expenses: Net occupancy expense of premises 18,737 18,214 523 2.9 % Furniture and equipment expenses 6,805 6,759 46 0.7 % Combined, net occupancy expense of premises and furniture and equipment expenses 25,542 24,973 569 2.3 % Professional fees 12,804 7,147 5,657 79.2 % Amortization of intangible assets 10,057 10,432 (375) (3.6) % Interchange expense 6,001 6,864 (863) (12.6) % FDIC insurance 5,603 5,650 (47) (0.8) % Other noninterest expense 37,649 44,161 (6,512) (14.7) % Total noninterest expense $ 300,399 $ 285,532 $ 14,867 5.2 % Income taxes $ 39,613 $ 31,339 $ 8,274 26.4 % Effective income tax rate 25.8 % 20.4 % 540 bps Efficiency ratio (Non-GAAP) 1 61.8 % 61.7 % 10 bps Adjusted efficiency ratio (Non-GAAP) 1 61.0 % 60.7 % 30 bps Full-time equivalent associates as of period-end 1,509 1,479 30 2.0 % ___________________________________________ 1.
CRITICAL ACCOUNTING ESTIMATES Busey has established various accounting policies that govern the application of GAAP in the preparation of its Consolidated Financial Statements . Significant accounting policies are described in “ Note 1. Significant Accounting Policies ” in the Notes to the Consolidated Financial Statements .
At the time of the sale, the securities sold yielded a weighted average rate of 1.98% and had a weighted-average life of 2.3 years. CRITICAL ACCOUNTING ESTIMATES Busey has established various accounting policies that govern the application of GAAP in the preparation of its Consolidated Financial Statements . Significant accounting policies are described in “ Note 1.
Busey’s Wealth Management division had $12.1 billion in assets under care as of December 31, 2023, compared to $11.1 billion as of December 31, 2022. Our portfolio management team continues to focus on long-term returns and managing risk in the face of volatile markets. Payment technology solutions revenue relates to our payment processing company, FirsTech.
Busey’s portfolio management team continues to focus on long-term returns and managing risk in the face of volatile markets. Payment technology solutions revenue relates to Busey’s payment processing company, FirsTech. Payment technology solutions revenue increased by 3.7% to $22.0 million in 2024, compared to $21.2 million in 2023.
Noninterest Income Changes in noninterest income are summarized in the tables below for the periods presented (dollars in thousands) : Years Ended December 31, 2023 2022 Change % Change Noninterest income Wealth management and payment technology solutions income: Wealth management fees $ 57,309 $ 55,378 $ 1,931 3.5 % Payment technology solutions 21,192 20,067 1,125 5.6 % Combined, wealth management fees and payment technology solutions 78,501 75,445 3,056 4.1 % Fees for customer services 29,044 33,111 (4,067) (12.3) % Mortgage revenue 1,089 1,895 (806) (42.5) % Income on bank owned life insurance 4,701 3,663 1,038 28.3 % Securities income: Realized net gains (losses) on securities (28) 50 (78) (156.0) % Unrealized net gains (losses) recognized on equity securities (2,171) (2,183) 12 0.5 % Net securities gains (losses) (2,199) (2,133) (66) (3.1) % Other income 11,248 14,822 (3,574) (24.1) % Total noninterest income $ 122,384 $ 126,803 $ (4,419) (3.5) % Assets under care as of period end $ 12,136,869 $ 11,061,831 $ 1,075,038 9.7 % First Busey Corporation | 2023 — 62 Table of Contents Contents of Item 7.
Noninterest Income Changes in noninterest income are summarized in the tables below for the periods presented (dollars in thousands) : Years Ended December 31, 2024 2023 Change % Change Noninterest income Wealth management and payment technology solutions income: Wealth management fees $ 63,630 $ 57,309 $ 6,321 11.0 % Payment technology solutions 21,983 21,192 791 3.7 % Combined, wealth management fees and payment technology solutions 85,613 78,501 7,112 9.1 % Fees for customer services 30,933 29,044 1,889 6.5 % Mortgage revenue 2,075 1,089 986 90.5 % Income on bank owned life insurance 5,130 4,701 429 9.1 % Realized net gains (losses) on the sale of mortgage servicing rights 7,724 — 7,724 100.0 % Securities income: Realized net gains (losses) on securities (7,033) (28) (7,005) NM Unrealized net gains (losses) recognized on equity securities 931 (2,171) 3,102 142.9 % Net securities gains (losses) (6,102) (2,199) (3,903) (177.5) % Other noninterest income 14,309 10,078 4,231 42.0 % Total noninterest income $ 139,682 $ 121,214 $ 18,468 15.2 % Assets under care as of period end $ 13,833,654 $ 12,136,869 $ 1,696,785 14.0 % First Busey Corporation (BUSE) | 2024 — 60 Table of Contents Contents of Item 7.
As of December 31, 2023, our loan to deposit ratio was 74.4% and core deposits 1 represented 96.2% of total deposits. Furthermore, we have sufficient on- and off-balance sheet liquidity to manage deposit fluctuations and the liquidity needs of our customers.
Busey remains substantially core deposit 1 funded, with robust liquidity and significant market share in the communities Busey serves. As of December 31, 2024, Busey’s loan to deposit ratio was 77.1% and core deposits 1 represented 96.5% of total deposits. Furthermore, Busey has sufficient on- and off-balance sheet liquidity to manage deposit fluctuations and the liquidity needs of its customers.
MD&A Combined, net occupancy expense of premises and furniture and equipment expenses decreased to $25.0 million in 2023, compared to $26.8 million in 2022. Decreases were primarily attributable to declines in depreciation expense and real estate taxes. Professional fees increased to $7.1 million in 2023, compared to $6.1 million in 2022.
Combined, net occupancy expense of premises and furniture and equipment expenses increased to $25.5 million in 2024, compared to $25.0 million in 2023. Primary cost drivers in these expense categories include lease costs, repairs and maintenance, depreciation expense, real estate taxes, and utilities. Professional fees increased to $12.8 million in 2024, compared to $7.1 million in 2023.
Assuming a federal income tax rate of 21.0%. 2. Net interest income expressed as a percentage of average earning assets, stated on a tax-equivalent basis.
Assuming a federal income tax rate of 21.0%. 2. Net interest income expressed as a percentage of average earning assets, stated on a tax-equivalent basis. After raising federal funds rates by a total of 525 bps between March 2022 and July 2023, the FOMC lowered rates by 100 bps beginning in September 2024.
Government obligations (691) 190 (501) (5) (608) (613) Obligations of state and political subdivisions (1,466) 415 (1,051) (337) 254 (83) Other securities (8,026) 23,003 14,977 5,544 18,881 24,425 Loans held for sale (161) 85 (76) (515) 201 (314) Portfolio loans 12,598 85,980 98,578 17,870 17,799 35,669 Change in interest income 1,241 118,120 119,361 21,636 39,394 61,030 Increase (decrease) in interest expense Interest-bearing transaction deposits (27) 36,145 36,118 129 5,099 5,228 Savings and money market deposits (752) 33,553 32,801 151 1,269 1,420 Time deposits 4,932 34,022 38,954 (1,303) (1,816) (3,119) Federal funds purchased and repurchase agreements (304) 4,032 3,728 30 1,218 1,248 Borrowings 9,485 1,464 10,949 1,611 1,869 3,480 Junior subordinated debt owed to unconsolidated trusts 8 816 824 7 182 189 Change in interest expense 13,342 110,032 123,374 625 7,821 8,446 Increase (decrease) in net interest income $ (12,101) $ 8,088 $ (4,013) $ 21,011 $ 31,573 $ 52,584 Percentage increase (decrease) in net interest income over prior period (1.2) % 19.3 % First Busey Corporation | 2023 — 60 Table of Contents Contents of Item 7.
Government obligations (919) 499 (420) (691) 190 (501) Obligations of state and political subdivisions (2,259) 37 (2,222) (1,466) 415 (1,051) Other securities (8,350) 1,568 (6,782) (8,026) 23,003 14,977 Restricted bank stock (132) (190) (322) 482 499 981 Loans held for sale 384 3 387 (161) 85 (76) Portfolio loans 2,266 37,841 40,107 12,598 85,980 98,578 Change in interest income 2,633 40,025 42,658 1,723 118,619 120,342 Increase (decrease) in interest expense Interest-bearing transaction deposits (5,029) 4,686 (343) (27) 36,145 36,118 Savings and money market deposits 3,489 34,009 37,498 (752) 33,553 32,801 Time deposits 5,985 11,338 17,323 4,932 34,022 38,954 Federal funds purchased and repurchase agreements (1,489) 594 (895) (304) 4,032 3,728 Borrowings (16,737) 3,507 (13,230) 9,485 1,464 10,949 Junior subordinated debt owed to unconsolidated trusts 118 677 795 8 816 824 Change in interest expense (13,663) 54,811 41,148 13,342 110,032 123,374 Increase (decrease) in net interest income $ 16,296 $ (14,786) $ 1,510 $ (11,619) $ 8,587 $ (3,032) Percentage increase (decrease) in net interest income over prior period 0.5 % (0.9) % First Busey Corporation (BUSE) | 2024 — 58 Table of Contents Contents of Item 7.
Allowance for Credit Losses Busey calculates the ACL at each reporting date. We recognize an allowance for the lifetime expected credit losses for the amount we do not expect to collect.
A favorable tax settlement would result in a reduction in Busey’s effective income tax rate in the period of resolution. Allowance for Credit Losses Busey calculates the ACL at each reporting date. Busey recognizes an allowance for the lifetime expected credit losses for the amount it does not expect to collect.
Fluctuations in interchange expense were primarily the result of increased payment and volume activity at FirsTech. FDIC insurance expense increased to $5.7 million in 2023, compared to $4.1 million in 2022.
Interchange expense decreased to $6.0 million in 2024, compared to $6.9 million in 2023. Fluctuations in interchange expense relate to payment and volume activity at FirsTech. FDIC insurance expense decreased to $5.6 million in 2024, compared to $5.7 million in 2023. Other expense decreased to $37.6 million in 2024, compared to $44.2 million in 2023.
Acquisition expenses related to completed acquisitions, exploratory due diligence, and for 2023 the planned merger with M&M. 2. Restructuring charges related to previously disclosed restructuring and efficiency plans. A reconciliation of non-GAAP measures, which we believe facilitate the assessment of our financial results and peer comparability, is included in tabular form in this Annual Report. See “ Item 1.
A reconciliation of non-GAAP measures, which Busey believes facilitates the assessment of its financial results and peer comparability, is included in tabular form in this Annual Report. See “ Item 1.
Goodwill is not amortized, instead, we assess the potential for impairment on an annual basis or more frequently if events and circumstances indicate that goodwill might be impaired. Income Taxes Busey estimates income tax expense based on amounts expected to be owed to federal and state tax jurisdictions.
Goodwill Goodwill represents the excess of purchase price over the fair value of net assets acquired using the acquisition method of accounting. Goodwill is not amortized; instead, Busey assesses the potential for impairment on an annual basis or more frequently if events and circumstances indicate that goodwill might be impaired.
The efficiency ratio and adjusted efficiency ratio are both non-GAAP financial measures. For a reconciliation of non-GAAP financial measure to the most directly comparable GAAP financial measures, see “ Item 1. Business—Non-GAAP Financial Information .” First Busey Corporation | 2023 — 65 Table of Contents Contents of Item 7.
For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see “
Data processing expense increased to $23.7 million in 2023, compared to $21.6 million in 2022. Increases were primarily attributable to Company-wide investments in technology enhancements, as well as inflation-driven price increases. First Busey Corporation | 2023 — 66 Table of Contents Contents of Item 7.
Current trends continue to reflect a competitive labor market, maintaining pressure on costs related to attracting and maintaining Busey’s skilled workforce. Data processing expense increased to $27.1 million in 2024, compared to $23.7 million in 2023. Increases were primarily attributable to Company-wide investments in technology enhancements, as well as inflation-driven price increases.
MD&A Notable changes in average assets and average liabilities are summarized as follows for the periods presented (dollars in thousands) : Years Ended December 31, 2023 2022 Change % Change Average interest-earning assets $ 11,164,594 $ 11,473,063 $ (308,469) (2.7) % Average interest-bearing liabilities 7,825,459 7,583,331 242,128 3.2 % Average noninterest-bearing deposits 3,018,563 3,550,517 (531,954) (15.0) % Total average deposits 10,070,933 10,508,953 (438,020) (4.2) % Total average liabilities 11,048,707 11,297,777 (249,070) (2.2) % Average noninterest-bearing deposits as a percent of total average deposits 30.0 % 33.8 % (380) bps Total average deposits as a percent of total average liabilities 91.2 % 93.0 % (180) bps Changes in net interest income and net interest margin are summarized as follows for the periods presented (dollars in thousands) : Years Ended December 31, 2023 2022 Change % Change Net interest income Interest income, on a tax-equivalent basis 1 $ 481,546 $ 362,185 $ 119,361 33.0 % Interest expense (159,922) (36,548) (123,374) (337.6) % Net interest income, on a tax-equivalent basis 1 $ 321,624 $ 325,637 $ (4,013) (1.2) % Net interest margin 1, 2 2.88 % 2.84 % 4 bps ___________________________________________ 1.
MD&A Notable changes in average assets and average liabilities are summarized as follows for the periods presented (dollars in thousands) : Years Ended December 31, 2024 2023 Change % Change Average interest-earning assets $ 10,999,424 $ 11,181,010 $ (181,586) (1.6) % Average interest-bearing liabilities 7,763,084 7,825,459 (62,375) (0.8) % Average noninterest-bearing deposits 2,738,892 3,018,563 (279,671) (9.3) % Total average deposits 10,040,016 10,070,933 (30,917) (0.3) % Total average liabilities 10,709,447 11,048,707 (339,260) (3.1) % Average noninterest-bearing deposits as a percent of total average deposits 27.3 % 30.0 % (270) bps Total average deposits as a percent of total average liabilities 93.7 % 91.2 % 250 bps Changes in net interest income and net interest margin are summarized as follows for the periods presented (dollars in thousands) : Years Ended December 31, 2024 2023 Change % Change Net interest income Interest income, on a tax-equivalent basis 1 $ 525,374 $ 482,716 $ 42,658 8.8 % Interest expense (201,070) (159,922) (41,148) (25.7) % Net interest income, on a tax-equivalent basis 1 $ 324,304 $ 322,794 $ 1,510 0.5 % Net interest margin 1, 2 2.95 % 2.89 % 6 bps ___________________________________________ 1.
Non-operating pretax adjustments were as follows for the periods presented (dollars in thousands) : Years Ended December 31, 2023 2022 2021 Non-operating costs Acquisition related expenses 1 $ 357 $ 1,059 $ 13,646 Restructuring charges 2 3,971 3,478 3,705 Total non-operating costs $ 4,328 $ 4,537 $ 17,351 ___________________________________________ 1.
Non-operating pretax adjustments were as follows for the periods presented (dollars in thousands) : Years Ended December 31, 2024 2023 2022 Non-operating expenses Salaries, wages, and employee benefits $ 1,580 $ 3,760 $ 2,996 Data processing 548 — 214 Net occupancy expense of premises and furniture and equipment expenses 134 — — Professional fees 4,891 435 312 Other noninterest expense 987 133 1,015 Total non-operating expenses $ 8,140 $ 4,328 $ 4,537 Non-operating expenses by business objective Acquisition expenses 1 $ 6,901 $ 357 $ 1,059 Restructuring expenses 2 1,239 3,971 3,478 Acquisition and restructuring expenses $ 8,140 $ 4,328 $ 4,537 ___________________________________________ 1.
The increase was primarily attributable to higher expenses for audit and accounting fees and payroll services. Amortization of intangible assets decreased to $10.4 million in 2023, compared to $11.6 million in 2022, due to the continued use of an accelerated amortization methodology. Interchange expense increased to $6.9 million in 2023, compared to $6.3 million in 2022.
Amortization of intangible assets decreased to $10.1 million in 2024, compared to $10.4 million in 2023. Decreases in 2024 were due to the use of an accelerated amortization methodology and were partially offset by the addition of $6.3 million of intangible assets related to the M&M acquisition.
Our total associate base consisted of 1,479 full-time equivalents as of December 31, 2023, compared to 1,497 at December 31, 2022. Non-operating costs contributed $0.8 million of the increase in salaries, wages, and employee benefits. Current trends continue to reflect a competitive labor market, maintaining pressure on costs related to attracting and maintaining our skilled workforce.
Busey’s total associate base consisted of 1,509 full-time equivalents as of December 31, 2024, compared to 1,479 at December 31, 2023, with the increase largely relating to the M&M acquisition. Busey recorded $1.6 million and $3.8 million of non-operating expenses during 2024 and 2023, respectively.
Estimated income tax expense is reported in the Consolidated Statements of Income . Accrued and deferred taxes, as reported in other assets or other liabilities in the Consolidated Balance Sheets , represent the net estimated amount due to or to be received from taxing jurisdictions either currently or in the future.
Deferred tax assets and liabilities are estimates that are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. Deferred taxes are reported in other assets or other liabilities on the Consolidated Balance Sheets .
Removed
Since March 31, 2023, our deposit base has grown by $490.0 million, allowing us to reduce our higher cost FHLB borrowings to zero. Busey remains substantially core deposit 1 funded, with robust liquidity and significant market share in the communities we serve.
Added
Busey executed a two-part balance sheet repositioning strategy in 2024 During the first quarter of 2024, Busey sold the mortgage servicing rights on approximately $923.5 million of one- to four-family mortgage loans for a pre-tax gain of $7.7 million, which enabled Busey to sell available-for-sale investment securities with a book value of approximately $108.2 million for a pre-tax loss of $6.8 million with no resulting negative impact to tangible capital.
Removed
MD&A Fair Value of Debt Securities Available for Sale Fair values of debt securities available for sale are measurements from an independent pricing service and are based on observable data that may include dealer quotes, market spreads, cash flows, the U.S.
Added
Management has reviewed these critical accounting estimates and related disclosures with Busey’s Audit Committee. The following estimates could be deemed critical: Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations Business combinations are accounted for using the acquisition method of accounting.
Removed
Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the security’s terms and conditions, among other things. Different fair value estimates could result from the use of different judgments and estimates to determine the fair values of securities. Realized securities gains or losses are reported in the Consolidated Statements of Income .
Added
Management applies significant judgement when testing goodwill for impairment, such as the valuation approach chosen, market multiples for competitors used in the calculation, and forecasts of business outlook. Income Taxes Busey is subject to the income tax laws of U.S., as well as the tax laws of the individual states and municipalities in which the Company conducts its operations.
Removed
The cost of securities sold is based on the specific identification method. A debt security available for sale is impaired if the fair value of the security declines below its amortized cost basis.
Added
These laws are often complex and subject to nuanced interpretations. Income taxes are estimated for the tax effects of the transactions reported on Busey’s Consolidated Financial Statements and consist of an expense for taxes currently due plus assets and/or liabilities for deferred taxes.
Removed
To determine the appropriate accounting, we must first determine if we intend to sell the security or if it is more likely than not that we will be required to sell the security before the fair value increases to at least the amortized cost basis.
Added
Deferred taxes represent the future tax consequences of differences between the tax basis and accounting basis of certain assets and liabilities, which will either be taxable or deductible when the assets and liabilities are recovered or settled.
Removed
If either of those selling events is expected, we will write down the amortized cost basis of the security to its fair value. This is achieved by writing off any previously recorded allowance related to the debt security, if applicable, and recognizing any incremental impairment through earnings.
Added
Estimated income tax expense is reported on the Consolidated Statements of Income . First Busey Corporation (BUSE) | 2024 — 53 Table of Contents Contents of Item 7. MD&A In establishing its provision for income taxes and its estimates of deferred tax assets and liabilities, Busey must make judgments and interpretations about the application of inherently complex tax laws.
Removed
If we do not intend to sell the security, nor believe it more likely than not that we will be required to sell the security before the fair value recovers to the amortized cost basis, we must determine whether any of the decline in fair value has resulted from a credit loss, or if it is entirely the result of noncredit factors.
Added
Busey must also make estimates about when in the future certain items will affect taxable income. Disputes over interpretations of the tax laws may be subject to review and adjudication by the court systems of the various tax jurisdictions or may be settled with the taxing authority upon examination or audit.
Removed
We consider the following factors in assessing whether the decline is due to a credit loss: • Extent to which the fair value is less than the amortized cost basis; • Adverse conditions specifically related to the security, an industry, or a geographic area (for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, in the financial condition of the underlying loan obligors); • Payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future; • Failure of the issuer of the security to make scheduled interest or principal payments; and • Any changes to the rating of the security by a rating agency.
Added
Although Busey’s management believes that its judgments are sound and its tax estimates are reasonable, interpretations of tax law applied by the taxing jurisdictions could differ. As such, Busey may be exposed to losses or gains, which could be material. An unfavorable tax settlement would result in an increase in Busey’s effective income tax rate in the period of resolution.
Removed
Impairment related to a credit loss must be measured using the discounted cash flow method. Credit loss recognition is limited to the fair value of the security. Impairment is recognized by establishing an allowance for the debt security through the provision for credit losses. Impairment related to noncredit factors is recognized in AOCI, net of applicable taxes.
Added
Changes in these economic forecasts could significantly affect the ACL and lead to materially different amounts from one period to the next. Additionally, prepayment assumptions impact model output. Further, Busey completes a quarterly evaluation of several qualitative factors to determine if there should be adjustments made to the ACL.
Removed
Goodwill Goodwill represents the excess of purchase price over the fair value of net assets acquired using the acquisition method of accounting. Determining the fair value often involves estimates based on third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques.
Added
These factors include economic conditions, collateral, concentrations, delinquency trends, portfolio composition, underwriting, and certain other risks. Significant downturns relating to loan quality and economic conditions could result in a requirement for an additional allowance. Likewise, an upturn in loan quality and improved economic conditions may allow for a reduction in the required allowance.
Removed
Management judgment is involved in estimating accrued and deferred taxes, as it may be necessary to evaluate the risks and merits of the tax treatment of transactions, filing positions, and taxable income calculations after considering tax-related statutes, regulations, and other relevant factors. Because of the complexity of tax laws and interpretations, interpretation is subject to judgment.
Added
Because of the nature of the judgments and assumptions made by management, actual results may differ from these judgments and assumptions. First Busey Corporation (BUSE) | 2024 — 54 Table of Contents Contents of Item 7.
Removed
The FOMC raised rates by a total of 100 basis points during 2023, and by a total of 525 basis points since the onset of the current FOMC tightening cycle that began in the first quarter of 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed6 unchanged
Biggest changeBusey’s interest rate risk resulting from immediate and sustained changes in interest rates, expressed as a change in net interest income as a percentage of the net interest income calculated in the constant base model, was as follows: Year-One: Basis Point Changes Year-Two: Basis Point Changes December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 +400 7.38 % 12.27 % 8.55 % 16.02 % +300 5.49 % 9.18 % 6.34 % 11.94 % +200 3.64 % 6.11 % 4.20 % 7.91 % +100 1.81 % 3.05 % 2.10 % 3.94 % - 100 (1.91) % (3.95) % (2.98) % (5.27) % -200 (3.86) % (8.08) % (6.12) % (10.76) % -300 (5.60) % (14.74) % (9.17) % (19.56) % -400 (6.91) % (21.24) % (11.36) % (27.82) % Interest rate risk is monitored and managed within approved policy limits and any temporary exceptions to policy in periods of rapid rate movement are approved and documented.
Biggest changeBusey’s interest rate risk resulting from immediate and sustained changes in interest rates, expressed as a change in net interest income as a percentage of the net interest income calculated in the constant base model, was as follows: Year-One: Basis Point Changes Year-Two: Basis Point Changes December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 400 8.50 % 7.38 % 10.85 % 8.55 % 300 6.26 % 5.49 % 8.01 % 6.34 % 200 4.05 % 3.64 % 5.24 % 4.20 % 100 1.96 % 1.81 % 2.59 % 2.10 % -100 (1.81) % (1.91) % (3.35) % (2.98) % -200 (3.39) % (3.86) % (6.65) % (6.12) % -300 (4.03) % (5.60) % (9.47) % (9.17) % -400 (4.41) % (6.91) % (12.43) % (11.36) % Interest rate risk is monitored and managed within approved policy limits and any temporary exceptions to policy in periods of rapid rate movement are approved and documented.
Interest rate risk is the most significant market risk affecting Busey as other types of market risk, such as foreign currency exchange rate risk and commodity price risk, have minimal impact or do not arise in the normal course of Busey’s business activities.
Interest rate risk is the most significant market risk affecting Busey as other types of market risk, such as foreign currency exchange rate risk and commodity price risk, have a minimal impact or do not arise in the normal course of Busey’s business activities.
In these standard simulation models, the balance sheet is projected over a one-year and a two-year time horizon and net interest income is calculated under current market rates and assuming permanent instantaneous shifts of +/-100, +/-200, +/-300, and +/-400 basis points.
In these standard simulation models, the balance sheet is projected over a one-year and a two-year time horizon and net interest income is calculated under current market rates and assuming permanent instantaneous shifts of +/-100, +/-200, +/-300, and +/-400 bps.
First Busey Corporation | 2023 — 90 Table of Contents
First Busey Corporation (BUSE) | 2024 — 87 Table of Contents

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