First Busey(BUSE) - 2025 Q2 - Quarterly Report

GLOSSARY The glossary defines acronyms, abbreviations, and other terms used throughout the Quarterly Report to ensure clarity and understanding - The glossary defines acronyms, abbreviations, and other terms used throughout the Quarterly Report to ensure clarity and understanding[10] PART I—FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Presents First Busey Corporation's unaudited consolidated financial statements and notes, prepared under GAAP, with interim results not indicative of full-year performance CONSOLIDATED BALANCE SHEETS (Unaudited) Consolidated Balance Sheet Highlights (dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--------------------------------------- | :------------ | :---------------- | :--------- | | Cash and cash equivalents | $752,352 | $697,659 | 7.8% | | Debt securities available for sale | $2,217,788 | $1,810,221 | 22.5% | | Portfolio loans (net of ACL) | $13,625,285 | $7,613,683 | 79.0% | | Total assets | $18,918,740 | $12,046,722 | 57.0% | | Noninterest-bearing deposits | $3,590,363 | $2,719,907 | 32.0% | | Interest-bearing deposits | $12,211,409 | $7,262,583 | 68.1% | | Total deposits | $15,801,772 | $9,982,490 | 58.3% | | Total liabilities | $16,506,194 | $10,663,453 | 54.8% | | Total stockholders' equity | $2,412,546 | $1,383,269 | 74.4% | - Total assets, portfolio loans, and deposits saw substantial increases, largely driven by the CrossFirst acquisition[14] CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) Net Income (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $47,404 | $27,357 | 73.3% | | Six Months Ended June 30 | $17,414 | $53,582 | -67.5% | Earnings Per Common Share | Period | Basic EPS 2025 | Basic EPS 2024 | Diluted EPS 2025 | Diluted EPS 2024 | | :-------------------------- | :------------- | :------------- | :--------------- | :--------------- | | Three Months Ended June 30 | $0.53 | $0.48 | $0.52 | $0.47 | | Six Months Ended June 30 | $0.22 | $0.95 | $0.22 | $0.94 | Total Interest Income (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $247,446 | $131,939 | 87.5% | | Six Months Ended June 30 | $414,261 | $257,759 | 60.7% | Total Noninterest Income (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $44,863 | $33,703 | 33.1% | | Six Months Ended June 30 | $66,086 | $68,616 | -3.7% | Total Noninterest Expense (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $127,833 | $75,906 | 68.4% | | Six Months Ended June 30 | $239,863 | $147,353 | 62.8% | CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Total Comprehensive Income (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $64,903 | $29,221 | 122.1% | | Six Months Ended June 30 | $69,142 | $52,059 | 32.8% | Net Change in Unrealized/Unrecognized Gains (Losses) on Debt Securities (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $13,208 | $2,208 | 498.2% | | Six Months Ended June 30 | $41,291 | $2,399 | 1621.2% | Net Change in Unrealized Gains (Losses) on Cash Flow Hedges (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $4,291 | $(344) | NM | | Six Months Ended June 30 | $10,437 | $(3,922) | NM | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) Total Stockholders' Equity (dollars in thousands) | Period | June 30, 2025 | December 31, 2024 | Change (%) | | :-------------------------- | :-------------- | :---------------- | :--------- | | Balance | $2,412,546 | $1,383,269 | 74.4% | - Significant equity changes for the six months ended June 30, 2025, include net income of $17.4 million, OCI of $51.7 million, stock issued in acquisition of $808.1 million, preferred stock issuance of $207.4 million, stock repurchases of $(26.5) million, and common stock dividends of $(36.7) million[24] CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Net Increase (Decrease) in Cash and Cash Equivalents (dollars in thousands) | Period | 2025 | 2024 | Change | | :-------------------------- | :------- | :--------- | :------- | | Six Months Ended June 30 | $54,693 | $(434,312) | NM | Cash Flows by Activity (Six Months Ended June 30, dollars in thousands) | Activity | 2025 | 2024 | Change (%) | | :--------------------------------------- | :------- | :------- | :--------- | | Net cash provided by (used in) operating activities | $57,894 | $65,825 | -12.1% | | Net cash provided by (used in) investing activities | $722,404 | $350,930 | 105.9% | | Net cash provided by (used in) financing activities | $(725,605) | $(851,067) | 14.7% | - Investing activities were significantly boosted by $385.8 million in net cash received from acquisitions and $528.9 million from sales of debt securities available for sale[27] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Significant Accounting Policies Outlines First Busey Corporation's operations, segments, and key accounting policies, including a significant franchise tax dispute - First Busey Corporation is an $18.92 billion financial holding company operating in three segments: Banking, Wealth Management, and FirsTech[31] - In connection with the CrossFirst acquisition, Busey issued 7,750 shares of Busey Series A Preferred Stock (8.00% dividend) on March 1, 2025, and 8,600,000 Depositary Shares (representing 1/40th interest in Busey Series B Preferred Stock) on May 20, 2025[44][45] - Busey is evaluating the impact of the 'One Big Beautiful Bill Act' enacted July 4, 2025, which introduces amendments to federal tax legislation including immediate expensing of R&D and 100% bonus depreciation[41] - On July 2, 2025, Busey received a notice of hearing from the Illinois Secretary of State regarding purportedly due franchise taxes, penalties, interest, and charges estimated to be in excess of $28 million, which Busey disputes[55][212] Note 2. Mergers and Acquisitions Details the CrossFirst acquisition on March 1, 2025, expanding Busey's commercial banking and adding $48.0 million in goodwill, plus final accounting for the M&M acquisition - Busey completed the acquisition of CrossFirst Bankshares, Inc. on March 1, 2025, expanding its footprint to 78 full-service locations across 10 states. CrossFirst Bank merged into Busey Bank on June 20, 2025[56][57] - The CrossFirst acquisition resulted in $48.0 million of goodwill, reflecting expected synergies and revenue opportunities, assigned to the Banking operating segment[63] Acquisition Date Fair Values (dollars in thousands) | Item | CrossFirst (March 1, 2025) | M&M (April 1, 2024) | | :------------------------------------ | :----------------------- | :---------------- | | Total assets acquired | $7,500,310 | $477,745 | | Total liabilities assumed | $6,739,354 | $444,067 | | Net assets acquired | $760,956 | $33,678 | | Total consideration paid | $808,980 | $49,575 | | Goodwill | $48,024 | $15,897 | Pre-tax Acquisition Expenses (dollars in thousands) | Acquisition | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :---------- | :------------------------------- | :----------------------------- | | CrossFirst | $16,600 | $88,090 | | M&M | $0 | $108 | | Total | $16,600 | $88,198 | Note 3. Debt Securities Details Busey's debt securities (AFS and HTM) with significant unrealized losses, but management expects full collection; Q1 2025 repositioning resulted in $15.5 million in realized net losses Debt Securities Available for Sale (June 30, 2025, dollars in thousands) | Category | Amortized Cost | Gross Gains | Gross Losses | Fair Value | | :--------------------------------------- | :------------- | :---------- | :----------- | :--------- | | Obligations of U.S. government corporations and agencies | $115,902 | $59 | $(404) | $115,557 | | Obligations of states and political subdivisions | $260,997 | $131 | $(18,975) | $242,153 | | Asset-backed securities | $373,231 | $390 | $0 | $373,621 | | Commercial mortgage-backed securities | $149,844 | $479 | $(12,297) | $138,026 | | Residential mortgage-backed securities | $1,433,077 | $3,870 | $(147,818) | $1,289,129 | | Corporate debt securities | $61,613 | $427 | $(2,738) | $59,302 | | Total | $2,394,664 | $5,356 | $(182,232) | $2,217,788 | Debt Securities Held to Maturity (June 30, 2025, dollars in thousands) | Category | Amortized Cost | Gross Gains | Gross Losses | Fair Value | | :--------------------------------------- | :------------- | :---------- | :----------- | :--------- | | Commercial mortgage-backed securities | $407,401 | $0 | $(70,772) | $336,629 | | Residential mortgage-backed securities | $395,564 | $0 | $(61,661) | $333,903 | | Total | $802,965 | $0 | $(132,433) | $670,532 | Realized Net Gains (Losses) on Debt Securities (dollars in thousands) | Period | 2025 | 2024 | Change | | :-------------------------- | :------- | :------- | :------- | | Three Months Ended June 30 | $1 | $(4) | +$5 | | Six Months Ended June 30 | $(15,536) | $(6,806) | -$8,730 | - As of June 30, 2025, debt securities with gross unrealized or unrecognized losses had a fair value of $2.04 billion and total gross losses of $314.7 million. Management does not intend to sell these securities and expects full collection[100] Note 4. Portfolio Loans Details Busey's loan portfolio, which expanded by 79.4% to $13.81 billion due to the CrossFirst acquisition, with ACL increasing by 119.8% to $183.3 million despite strong asset quality Total Portfolio Loans (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $13,808,619 | | December 31, 2024 | $7,697,087 | | Change | +$6,111,532 (+79.4%) | Loan Portfolio Composition (June 30, 2025) | Category | % of Total Portfolio Loans | | :-------------------------- | :------------------------- | | Commercial loans | 80.3% | | C&I and other commercial | 32.4% | | Commercial Real Estate (CRE) | 40.3% | | Real estate construction | 7.6% | | Retail loans | 19.7% | | Retail real estate | 16.1% | | Retail other | 3.6% | Allowance for Credit Losses (ACL) (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $183,334 | | December 31, 2024 | $83,404 | | Change | +$99,930 (+119.8%) | Non-Performing Assets (dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--------------------------------------- | :------------ | :---------------- | :--------- | | Non-performing loans | $54,555 | $23,237 | 134.8% | | Non-performing assets | $58,151 | $23,300 | 149.6% | | Classified assets | $175,731 | $85,323 | 106.0% | Note 5. Leases Details Busey's operating lease obligations as lessee and lessor; the CrossFirst acquisition significantly increased right-of-use assets, lease liabilities, and total lease costs Lease Balances (dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :------------------ | :------------ | :---------------- | :--------- | | Right of use assets | $38,065 | $10,608 | 258.8% | | Lease liabilities | $39,235 | $11,040 | 255.4% | Total Lease Cost (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $1,828 | $618 | 195.8% | | Six Months Ended June 30 | $2,812 | $1,180 | 138.3% | - The increase in right-of-use assets and lease liabilities is primarily due to $29.6 million recognized in connection with the CrossFirst acquisition[144] Future Undiscounted Lease Payments (As of June 30, 2025, dollars in thousands) | Period | Amount | | :---------------- | :------- | | Remainder of 2025 | $3,446 | | 2026 | $6,549 | | 2027 | $6,161 | | 2028 | $5,682 | | 2029 | $4,684 | | 2030 | $3,802 | | Thereafter | $17,796 | | Total | $48,120 | Note 6. Deposits Details Busey's deposit composition; total deposits increased by 58.3% to $15.80 billion due to CrossFirst acquisition, with core deposits at 92.5% and uninsured deposits at $6.66 billion Total Deposits (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $15,801,772 | | December 31, 2024 | $9,982,490 | | Change | +$5,819,282 (+58.3%) | Deposit Composition (June 30, 2025, dollars in thousands) | Type | Amount | % of Total | | :-------------------------------- | :----------- | :--------- | | Noninterest-bearing demand deposits | $3,590,363 | 22.7% | | Interest-bearing transaction deposits | $3,216,601 | 20.4% | | Saving deposits and money market deposits | $6,362,352 | 40.3% | | Time deposits | $2,632,456 | 16.7% | | Total Deposits | $15,801,772 | 100.0% | - Core deposits represented 92.5% of total deposits as of June 30, 2025[388] - Estimated uninsured deposits were $6.66 billion (42% of total deposits) as of June 30, 2025, up from $3.78 billion (38%) at December 31, 2024[388] Note 7. Borrowings Outlines Busey's borrowing activities, including repurchase agreements, credit lines, and debt; $125.0 million of subordinated notes were redeemed, and long-term debt increased to $86.6 million Securities Sold Under Agreements to Repurchase (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $158,030 | | December 31, 2024 | $155,610 | | Weighted average rate (June 30, 2025) | 2.61% | - Busey has a $40.0 million revolving line of credit with no outstanding balance as of June 30, 2025, and no short-term borrowings[152][153] Long-term Debt (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $86,557 | | December 31, 2024 | $0 | | FHLB borrowings (June 30, 2025) | $78,888 | | Secured borrowings (June 30, 2025) | $7,669 | - Busey redeemed $125.0 million of fixed-to-floating rate subordinated notes on June 1, 2025. $100.0 million of 5.000% fixed-to-floating rate subordinated notes (issued June 2022) remain outstanding[157][158] Note 8. Regulatory Capital Confirms First Busey and its subsidiary bank maintain capital ratios well above 'well capitalized' thresholds, demonstrating strong financial strength and flexibility - All capital ratios for First Busey and Busey Bank exceeded 'well capitalized' levels as of June 30, 2025, and 2024[162] Regulatory Capital Ratios (As of June 30, 2025) | Ratio | Minimum Capital Requirement | Minimum To Be Well Capitalized | First Busey (Actual) | Busey Bank (Actual) | | :--------------------------------------- | :-------------------------- | :--------------------------- | :------------------- | :------------------ | | Common equity Tier 1 capital to risk weighted assets | 4.50% | 6.50% | 12.22% | 13.62% | | Tier 1 capital to risk weighted assets | 6.00% | 8.00% | 13.66% | 13.62% | | Total capital to risk weighted assets | 8.00% | 10.00% | 15.75% | 14.53% | | Leverage ratio of Tier 1 capital to average assets | 4.00% | 5.00% (Bank only) | 11.26% | 11.22% | - First Busey exceeded the capital conservation buffer requirements by 522 bps for Common Equity Tier 1, 516 bps for Tier 1 Capital, and 525 bps for Total Capital as of June 30, 2025[167] Note 9. Tax Credit Investments and Other Investments in Unconsolidated Entities Details Busey's investments in unconsolidated entities, primarily tax-advantaged projects; funded investments increased by 25.5% to $88.8 million as of June 30, 2025 Investments in Unconsolidated Entities (dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | | Funded investments | $88,846 | $70,796 | 25.5% | | Unfunded investments | $54,701 | $61,210 | -10.6% | | Total Investments | $143,547 | $132,006 | 8.7% | Income Tax Credits and Other Tax Benefits (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $4,319 | $3,800 | 13.7% | | Six Months Ended June 30 | $8,908 | $7,901 | 12.7% | Amortization of Investments in Tax-Advantaged Projects (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $3,829 | $3,371 | 13.6% | | Six Months Ended June 30 | $7,937 | $7,018 | 13.1% | Note 10. Stock-Based Compensation Details the impact of the CrossFirst acquisition on Busey's equity awards and compensation expenses, which significantly increased for the three and six months ended June 30, 2025 - The CrossFirst acquisition led to the conversion of CrossFirst equity awards into Busey equity awards and modifications to existing Busey PSUs[171][174][175] - 424,390 replacement SSARs were issued as part of the CrossFirst acquisition, with 344,357 shares outstanding at June 30, 2025[178][179] Total Stock-Based Compensation Expense (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $5,433 | $1,134 | 379.1% | | Six Months Ended June 30 | $8,827 | $3,537 | 149.6% | Total Unamortized Stock-Based Compensation (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $23,617 | | December 31, 2024 | $10,317 | | Weighted average period for 2020 Equity Plan | 2.0 years | Note 11. Outstanding Commitments and Contingent Liabilities Outlines Busey's off-balance sheet commitments, which increased by 72.9% to $4.41 billion due to the CrossFirst acquisition, and details a $28 million franchise tax dispute Total Off-Balance Sheet Commitments (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $4,406,199 | | December 31, 2024 | $2,548,178 | | Change | +$1,858,021 (+72.9%) | Reserve for Unfunded Commitments (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $13,803 | | December 31, 2024 | $5,967 | - Busey is involved in a franchise tax dispute with the Illinois Secretary of State, who preliminarily estimated an amount due in excess of $28 million. Busey disputes the methodology and intends to vigorously defend itself[212] - The potential loss from the franchise tax matter cannot be reasonably estimated as of June 30, 2025, but could be material if an accrual is required[214] Note 12. Derivative Financial Instruments Describes Busey's use of derivative financial instruments for asset liability and customer risk management, including $500.0 million in cash flow hedges and $924.7 million in customer swaps - Busey utilizes interest rate swap agreements for asset liability management and offers derivative contracts to customers, managing associated risks through offsetting agreements[215] Cash Pledged to Secure Derivative Obligations (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $24,810 | | December 31, 2024 | $21,900 | - Interest rate swaps designated as cash flow hedges had notional amounts totaling $500.0 million as of June 30, 2025, with unrealized losses (net of tax) of $(9.4) million in AOCI[218][221] - Customer interest rate swaps not designated as hedges supported variable rate commercial loan relationships totaling $924.7 million as of June 30, 2025[225][226] Note 13. Fair Value Measurements Explains Busey's fair value measurement methodologies for financial assets and liabilities, categorized into a three-level hierarchy based on input observability, detailing recurring and non-recurring measurements - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[241] Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (June 30, 2025, dollars in thousands) | Item | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--------------------------------------- | :------ | :-------- | :------ | :--------------- | | Debt securities available for sale | $0 | $2,217,788 | $0 | $2,217,788 | | Equity securities | $177 | $15,994 | $0 | $16,171 | | Derivative assets | $0 | $34,843 | $34 | $34,877 | | Derivative liabilities | $0 | $48,633 | $79 | $48,712 | Financial Assets Measured at Fair Value on a Non-recurring Basis (June 30, 2025, dollars in thousands) | Item | Fair Value | Valuation Techniques | Unobservable Input (Weighted Average) | | :--------------------------------------- | :--------- | :------------------- | :------------------------------------ | | Loans evaluated individually, net of related allowance | $32,734 | Appraisal of collateral | Appraisal adjustments (-33.7%) | | OREO and other repossessed assets with subsequent impairment | $3,431 | Appraisal of collateral | Appraisal adjustments (-7.7%) | | Bank property held for sale with impairment | $2,653 | Appraisal of collateral or real estate listing price | Appraisal adjustments (-55.0%) | Note 14. Earnings Per Common Share Explains basic and diluted EPS calculation; Q2 2025 basic EPS increased to $0.53, but six-month EPS decreased significantly to $0.22 due to the CrossFirst acquisition Net Income Available to Common Stockholders (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $47,249 | $27,357 | 72.7% | | Six Months Ended June 30 | $17,259 | $53,582 | -67.8% | Earnings Per Common Share | Period | Basic EPS 2025 | Basic EPS 2024 | Diluted EPS 2025 | Diluted EPS 2024 | | :-------------------------- | :------------- | :------------- | :--------------- | :--------------- | | Three Months Ended June 30 | $0.53 | $0.48 | $0.52 | $0.47 | | Six Months Ended June 30 | $0.22 | $0.95 | $0.22 | $0.94 | - The weighted average number of common shares outstanding (diluted) for the six months ended June 30, 2025, was 80,251,577, with 223,149 anti-dilutive common stock equivalents excluded[264] Note 15. Accumulated Other Comprehensive Income (Loss) Presents changes in AOCI by component, net of tax; AOCI significantly improved for the three and six months ended June 30, 2025, reaching a balance of $(155.3) million AOCI Balance (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $(155,311) | | December 31, 2024 | $(207,039) | | Change | +$51,728 (+25.0%) | Unrealized Holding Gains (Losses) on Debt Securities Available For Sale, Net (dollars in thousands) | Period | 2025 | 2024 | Change | | :-------------------------- | :------- | :------- | :------- | | Three Months Ended June 30 | $11,988 | $1,205 | +$10,783 | | Six Months Ended June 30 | $28,569 | $(4,476) | NM | Unrealized Gains (Losses) on Cash Flow Hedges, Net (dollars in thousands) | Period | 2025 | 2024 | Change | | :-------------------------- | :------- | :------- | :------- | | Three Months Ended June 30 | $2,598 | $(1,996) | NM | | Six Months Ended June 30 | $7,239 | $(7,228) | NM | Note 16. Operating Segments and Related Information Provides financial information for Busey's three segments: Banking, Wealth Management, and FirsTech; Banking is the largest contributor, significantly impacted by the CrossFirst acquisition - Busey operates in three reportable segments: Banking, Wealth Management, and FirsTech, each offering distinct products and services[269] Goodwill and Total Assets by Segment (June 30, 2025, dollars in thousands) | Segment | Goodwill | Total Assets | | :---------------- | :--------- | :----------- | | Banking | $358,694 | $18,708,690 | | Wealth Management | $14,108 | $137,756 | | FirsTech | $8,992 | $46,681 | | Other | $0 | $25,613 | | Total | $381,794 | $18,918,740 | Net Income by Segment (dollars in thousands) | Segment | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :---------------- | :------------------------------- | :----------------------------- | | Banking | $45,838 | $26,145 | | Wealth Management | $5,823 | $12,042 | | FirsTech | $(544) | $(783) | | Other | $(3,713) | $(19,990) | | Total Net Income | $47,404 | $17,414 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Provides management's analysis of First Busey Corporation's financial condition and results of operations, highlighting the significant impact of the CrossFirst acquisition on various financial metrics SCOPE OF DISCUSSION - The discussion aims to assist readers in understanding Busey's financial condition and results of operations for the three and six months ended June 30, 2025[288] - It should be read in conjunction with Busey's unaudited consolidated financial statements and the 2024 Annual Report[288] BUSINESS Banking Center Markets Details Busey Bank's extensive network of 78 banking centers across six regions in 10 states, highlighting diverse economic markets and tailored financial services - Busey Bank operates 78 banking centers across six regions spanning 10 states, including Illinois, Missouri, Florida, Indiana, Kansas, Oklahoma, Texas, Arizona, Colorado, and New Mexico[290][306] - The East Region includes suburban Chicago (17 centers), St. Louis MSA (20 centers), and southwest Florida (3 centers)[292][293][294] - Busey also operates in several industry verticals, including Life Equity Lending, Sponsor Finance, Energy Lending, and SBA Lending[303] Busey's Conservative Banking Strategy Busey's financial strength is built on a conservative operating approach, emphasizing a strong core deposit franchise, robust liquidity, and capital ratios well above regulatory thresholds - Busey maintains a conservative operating approach, focusing on core deposit funding and robust liquidity[304] Key Financial Ratios (June 30, 2025) | Ratio | Value | | :--------------------------------------- | :------ | | Loan to deposit ratio | 87.4% | | Core deposits as % of total deposits | 92.5% | | Leverage ratio of Tier 1 capital to average assets | 11.3% | | Common equity Tier 1 capital to risk weighted assets ratio | 12.2% | | Total capital to risk weighted assets ratio | 15.8% | - Busey's underwriting standards emphasize relationship banking and limit concentration exposures in loan segments[304] Mergers and Acquisitions Reaffirms the completion of the CrossFirst acquisition on March 1, 2025, significantly expanding Busey's commercial banking presence across 10 states - The acquisition of CrossFirst was completed on March 1, 2025, creating a premier commercial bank with 78 full-service locations across 10 states[306] - CrossFirst Bank's results were included in Busey's consolidated operations from March 1, 2025, and the bank was merged into Busey Bank on June 20, 2025[307] RESULTS OF OPERATIONS — THREE AND SIX MONTHS ENDED JUNE 30, 2025 Net Income Presents Busey's net income by operating segment; Banking and Wealth Management were profitable, while FirsTech and 'Other' reported losses, reflecting acquisition impacts Net Income by Operating Segment (dollars in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Banking | $45,838 | $26,697 | $26,145 | $53,189 | | Wealth Management | $5,823 | $5,561 | $12,042 | $10,559 | | FirsTech | $(544) | $28 | $(783) | $114 | | Other | $(3,713) | $(4,929) | $(19,990) | $(10,280) | | Total Net Income | $47,404 | $27,357 | $17,414 | $53,582 | Non-Operating Expenses and Non-GAAP Measures Identifies and quantifies non-operating expenses, adjusted from GAAP net income to provide a clearer view of core earnings, significantly increased by the CrossFirst acquisition in 2025 - Busey adjusts for certain non-operating expenses (acquisition, restructuring, non-recurring strategic events) to provide a clearer view of core earnings[310] Total Non-Operating Expenses (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $20,630 | $2,212 | 832.6% | | Six Months Ended June 30 | $92,228 | $2,620 | 3420.9% | - For the six months ended June 30, 2025, non-operating expenses included $49.6 million for initial provision for credit losses (related to CrossFirst acquisition) and $42.6 million for other acquisition expenses[310] Operating Performance Metrics Presents key GAAP and adjusted non-GAAP operating performance metrics, showing significant improvements in adjusted net income and returns on assets and tangible common equity Adjusted Net Income (Non-GAAP, dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $57,394 | $30,519 | 88.1% | | Six Months Ended June 30 | $97,292 | $56,232 | 73.0% | Adjusted Diluted Earnings Per Common Share (Non-GAAP) | Period | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :------- | | Three Months Ended June 30 | $0.63 | $0.53 | +$0.10 | | Six Months Ended June 30 | $1.21 | $0.98 | +$0.23 | Adjusted Return on Average Assets (Non-GAAP, Annualized) | Period | 2025 | 2024 | Change (bps) | | :-------------------------- | :----- | :----- | :----------- | | Three Months Ended June 30 | 1.21% | 1.02% | +19 bps | | Six Months Ended June 30 | 1.16% | 0.94% | +22 bps | Adjusted Return on Average Tangible Common Equity (Non-GAAP, Annualized) | Period | 2025 | 2024 | Change (bps) | | :-------------------------- | :------ | :------ | :----------- | | Three Months Ended June 30 | 13.61% | 12.85% | +76 bps | | Six Months Ended June 30 | 12.21% | 12.04% | +17 bps | Net Interest Income Analyzes changes in net interest income and margin; net interest income significantly increased by 85.7% (QoQ) and 62.2% (YoY), with margin improving, largely due to the CrossFirst acquisition Net Interest Income (Tax-Equivalent Basis, dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $153,974 | $82,934 | 85.7% | | Six Months Ended June 30 | $258,242 | $159,237 | 62.2% | Net Interest Margin (Tax-Equivalent Basis, Annualized) | Period | 2025 | 2024 | Change (bps) | | :-------------------------- | :----- | :----- | :----------- | | Three Months Ended June 30 | 3.49% | 3.03% | +46 bps | | Six Months Ended June 30 | 3.35% | 2.91% | +44 bps | Average Interest-Earning Assets (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | | Three Months Ended June 30 | $17,700,356 | $11,000,785 | 60.9% | | Six Months Ended June 30 | $15,543,955 | $11,003,344 | 41.3% | Net Interest Spread (Tax-Equivalent Basis) | Period | 2025 | 2024 | Change (bps) | | :-------------------------- | :----- | :----- | :----------- | | Three Months Ended June 30 | 2.72% | 2.27% | +45 bps | | Six Months Ended June 30 | 2.59% | 2.16% | +43 bps | Noninterest Income Analyzes changes in noninterest income; increased by 33.1% (QoQ) due to equity gains and CrossFirst acquisition, but decreased by 3.7% (YoY) due to securities losses and prior year's MSR sale gains Total Noninterest Income (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $44,863 | $33,703 | 33.1% | | Six Months Ended June 30 | $66,086 | $68,616 | -3.7% | Wealth Management Fees (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $16,777 | $15,917 | 5.4% | | Six Months Ended June 30 | $34,141 | $31,466 | 8.5% | Net Securities Gains (Losses) (dollars in thousands) | Period | 2025 | 2024 | Change | | :-------------------------- | :------- | :------- | :------- | | Three Months Ended June 30 | $5,997 | $(353) | +$6,350 | | Six Months Ended June 30 | $(9,771) | $(6,728) | -$3,043 | - Treasury management services income increased by 132.2% (QoQ) and 97.7% (YoY) due to the addition of CrossFirst commercial services[336] - Other service charges on deposit accounts declined by 34.8% (QoQ and YoY) due to changes in Busey's fee structure in 2025[338] Noninterest Expense Examines significant increase in noninterest expense by 68.4% (QoQ) and 62.8% (YoY), driven by CrossFirst acquisition and operating costs, while the adjusted efficiency ratio improved Total Noninterest Expense (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $127,833 | $75,906 | 68.4% | | Six Months Ended June 30 | $239,863 | $147,353 | 62.8% | - Acquisition and restructuring expenses contributed $16.6 million (QoQ) and $42.6 million (YoY) to total noninterest expense[348] Salaries, Wages, and Employee Benefits (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $78,360 | $43,478 | 80.2% | | Six Months Ended June 30 | $145,923 | $85,568 | 70.5% | Adjusted Efficiency Ratio (Non-GAAP) | Period | 2025 | 2024 | Change (bps) | | :-------------------------- | :----- | :----- | :----------- | | Three Months Ended June 30 | 55.3% | 60.9% | -560 bps | | Six Months Ended June 30 | 56.7% | 61.6% | -490 bps | - The effective income tax rate for the six months ended June 30, 2025, was 45.3%, impacted by a first-quarter loss and non-recurring adjustments, including a $4.6 million deferred tax valuation expense related to the CrossFirst acquisition[347][360] FINANCIAL CONDITION Balance Sheet Provides a high-level overview of Busey's balance sheet, highlighting significant growth in total assets, portfolio loans, and deposits, primarily driven by the CrossFirst acquisition Consolidated Balance Sheet Highlights (dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :-------------------------- | :------------ | :---------------- | :--------- | | Total assets | $18,918,740 | $12,046,722 | 57.0% | | Portfolio loans, net of ACL | $13,625,285 | $7,613,683 | 79.0% | | Total deposits | $15,801,772 | $9,982,490 | 58.3% | | Total stockholders' equity | $2,412,546 | $1,383,269 | 74.4% | Portfolio Loans Details Busey's loan portfolio composition, growth, and credit quality; portfolio grew by 79.4% to $13.81 billion due to CrossFirst acquisition, with ACL increasing to $183.3 million Total Portfolio Loans (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $13,808,619 | | December 31, 2024 | $7,697,087 | | Change | +$6,111,532 (+79.4%) | Portfolio Composition (June 30, 2025) | Category | % of Total Portfolio Loans | | :-------------------------- | :------------------------- | | Commercial loans | 80.3% | | Retail loans | 19.7% | Non-Performing Assets and Asset Quality Ratios (dollars in thousands) | Item | June 30, 2025 | December 31, 2024 | Change (%) | | :--------------------------------------- | :------------ | :---------------- | :--------- | | Non-performing loans | $54,555 | $23,237 | 134.8% | | Non-performing assets | $58,151 | $23,300 | 149.6% | | Classified assets | $175,731 | $85,323 | 106.0% | | ACL to portfolio loans | 1.33% | 1.08% | +25 bps | | Non-performing loans to portfolio loans | 0.40% | 0.30% | +10 bps | | Non-performing assets to total assets | 0.31% | 0.19% | +12 bps | - Net charge-offs for the six months ended June 30, 2025, totaled $44.3 million, including $31.1 million related to PCD loans acquired from CrossFirst Bank[385] Deposits Details significant increase in total deposits, growing by 58.3% to $15.80 billion due to CrossFirst acquisition, with core deposits at 92.5% and uninsured deposits at $6.66 billion Total Deposits (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $15,801,772 | | December 31, 2024 | $9,982,490 | | Change | +$5,819,282 (+58.3%) | - Core deposits represented 92.5% of total deposits as of June 30, 2025[388] - Estimated uninsured deposits were $6.66 billion (42% of total deposits) as of June 30, 2025, with $5.25 billion (33%) uninsured and not otherwise collateralized[388] Liquidity Discusses Busey's liquidity management strategy; average liquid assets increased significantly, and additional borrowing capacity grew by 33.2% to $3.81 billion due to the CrossFirst acquisition Total Average Liquid Assets (dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $789,505 | $312,171 | 152.9% | | Six Months Ended June 30 | $789,873 | $436,077 | 81.1% | Cash and Unencumbered Securities (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $2,297,491 | | December 31, 2024 | $1,788,596 | | Change | +$508,895 (+28.5%) | Additional Borrowing Capacity (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $3,810,520 | | December 31, 2024 | $2,861,046 | | Change | +$949,474 (+33.2%) | - Management believes that adequate liquidity existed as of June 30, 2025, to meet all projected cash flow obligations[392] Off-Balance-Sheet Arrangements Details Busey's off-balance-sheet commitments, which increased by 72.9% to $4.41 billion due to the CrossFirst acquisition, with the reserve for unfunded commitments rising to $13.8 million Outstanding Loan Commitments and Standby Letters of Credit (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $4,406,199 | | December 31, 2024 | $2,548,178 | | Change | +$1,858,021 (+72.9%) | Reserve for Unfunded Commitments (dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $13,803 | | December 31, 2024 | $5,967 | - The provision for unfunded commitments for the six months ended June 30, 2025, included $3.1 million to establish an initial allowance following the CrossFirst acquisition[393] Capital Resources Highlights Busey's strong capital position, with capital ratios consistently exceeding 'well-capitalized' regulatory guidelines and the capital conservation buffer - Busey's capital ratios are in excess of those required to be considered 'well-capitalized' by regulatory guidelines[395] Minimum Capital Requirements with Capital Buffer (As of June 30, 2025) | Ratio | Minimum Capital Requirements with Capital Buffer | First Busey (Actual) | Busey Bank (Actual) | | :--------------------------------------- | :--------------------------------------- | :------------------- | :------------------ | | Common Equity Tier 1 Capital to Risk Weighted Assets | 7.00% | 12.22% | 13.62% | | Tier 1 Capital to Risk Weighted Assets | 8.50% | 13.66% | 13.62% | | Total Capital to Risk Weighted Assets | 10.50% | 15.75% | 14.53% | | Leverage Ratio of Tier 1 Capital to Average Assets | 6.50% | 11.26% | 11.22% | NON-GAAP FINANCIAL INFORMATION Provides reconciliations of non-GAAP financial measures to GAAP, used by management for performance analysis and peer comparison, offering additional perspective on core earnings trends - Non-GAAP financial measures are used by management to analyze performance and for peer comparison, providing additional perspective on core earnings trends[396] Adjusted Net Income (Non-GAAP, dollars in thousands) | Period | 2025 | 2024 | Change (%) | | :-------------------------- | :------- | :------- | :--------- | | Three Months Ended June 30 | $57,394 | $30,519 | 88.1% | | Six Months Ended June 30 | $97,292 | $56,232 | 73.0% | Tangible Common Equity (Non-GAAP, dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $1,709,168 | | December 31, 2024 | $1,017,294 | | Change | +$691,874 (+68.0%) | Core Deposits (Non-GAAP, dollars in thousands) | Date | Amount | | :---------------- | :----------- | | June 30, 2025 | $14,620,396 | | December 31, 2024 | $9,634,897 | | Change | +$4,985,499 (+51.7%) | FORWARD-LOOKING STATEMENTS Contains cautionary statements regarding forward-looking statements, subject to various factors like economic conditions, regulatory changes, and acquisition risks, which could cause actual results to differ materially - Forward-looking statements are based on management's beliefs and assumptions but are subject to factors that could cause actual results to differ materially[419] - Key risk factors include economic strength, regulatory changes, unexpected acquisition results, interest rate changes, increased competition, technological changes, and legal proceedings (e.g., Illinois franchise taxes)[420] CRITICAL ACCOUNTING ESTIMATES Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations Explains that assets and liabilities in business combinations are recorded at estimated fair value, involving significant management judgment, especially for loan portfolios and ACL accounting - Assets acquired and liabilities assumed in business combinations are recorded at estimated fair value, requiring significant management estimates and judgment[424] - The determination of whether acquired loans are classified as PCD or non-PCD significantly affects the accounting for the Allowance for Credit Losses (ACL)[425] Goodwill Defines goodwill as the excess of purchase price over net assets, which is not amortized but assessed annually for impairment, requiring significant management judgment - Goodwill is not amortized but is assessed annually (or more frequently) for impairment[426] - Testing goodwill for impairment involves significant management judgment regarding valuation approach, market multiples, and business outlook forecasts[426] Income Taxes Describes income tax estimation, involving complex interpretations of tax laws and significant judgments; disputes or changes could materially impact Busey's effective income tax rate - Income taxes are estimated based on complex tax laws and require significant judgment and interpretations[427][430] - Deferred taxes represent future tax consequences of differences between the tax basis and accounting basis of assets and liabilities[428] - An unfavorable tax settlement could result in a material increase in Busey's effective income tax rate[430] Allowance for Credit Losses Explains the ACL methodology, a critical estimate for expected lifetime credit losses, involving significant judgment on macroeconomic forecasts and qualitative factors that could materially affect the ACL - The ACL is a valuation account for the lifetime expected credit losses, based on past events, current conditions, and reasonable forecasts[431] - Determining the ACL involves significant judgments and assumptions, particularly regarding macroeconomic forecasts, economic indices, and prepayment assumptions[434] - A quarterly evaluation of qualitative factors (economic conditions, collateral, concentrations, etc.) is used to adjust the ACL[434] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Discusses Busey's market risk, primarily interest rate risk, managed through an asset-liability committee using simulation analysis to assess the impact of hypothetical interest rate changes on net interest income - Interest rate risk is the most significant market risk affecting Busey[435] - Busey's asset-liability committee uses balance sheet and income simulation analysis to determine the potential impact of changes in market interest rates on net interest income[436][438] Interest Rate Risk (Change in Net Interest Income as % of Constant Base Model) | Basis Point Changes | Year-One (June 30, 2025) | Year-Two (June 30, 2025) | | :------------------ | :----------------------- | :----------------------- | | +400 | 11.28% | 12.30% | | +300 | 8.41% | 9.14% | | +200 | 5.57% | 6.06% | | +100 | 2.79% | 3.05% | | -100 | (2.07)% | (3.27)% | | -200 | (3.51)% | (6.37)% | | -300 | (4.30)% | (9.20)% | | -400 | (5.00)% | (11.26)% | ITEM 4. CONTROLS AND PROCEDURES Confirms the effectiveness of Busey's disclosure controls and procedures as of June 30, 2025, with no material changes in internal control over financial reporting - Busey's disclosure controls and procedures were effective as of June 30, 2025[441] - No material changes occurred in Busey's internal control over financial reporting during the three months ended June 30, 2025[442] PART II—OTHER INFORMATION—OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS States Busey is involved in routine litigation incidental to its business, with no material pending litigation beyond ordinary course or involving directors/officers with material interest - Busey is a party to legal actions arising in the normal course of its business activities[445] - There is no material pending litigation, other than ordinary routine litigation incidental to its business[446] ITEM 1A. RISK FACTORS This section states that there have been no material changes to the risk factors previously discussed in Busey's 2024 Annual Report - No material changes to the risk factors discussed in Part II—Item 1A of Busey's 2024 Annual Report[448] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES Reports no unregistered sales of equity securities; details issuer common stock repurchase activity in Q2 2025, with 1,012,000 shares repurchased at $21.40 weighted average price - No unregistered sales of equity securities occurred[449] Common Share Repurchase Activity (Three Months Ended June 30, 2025) | Period | Total Number of Common Shares Purchased | Weighted Average Price Paid per Common Share | | :---------------- | :-------------------------------------- | :------------------------------------------- | | April 1-30, 2025 | 420,000 | $20.22 | | May 1-31, 2025 | 302,000 | $21.86 | | June 1-30, 2025 | 290,000 | $22.62 | | Three months ended June 30, 2025 | 1,012,000 | $21.40 | - On May 29, 2025, the board authorized an additional 2,000,000 shares to be repurchased under the plan[451] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section states that there were no defaults upon senior securities during the reported period - No defaults upon senior securities occurred[453] ITEM 4. MINE SAFETY DISCLOSURES This section states that the disclosure requirement for mine safety is not applicable to Busey - Mine safety disclosures are not applicable to Busey[455] ITEM 5. OTHER INFORMATION This section reports that none of Busey's directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025 - No Rule 10b5-1 trading arrangements were adopted or terminated by Busey's directors or executive officers during the fiscal quarter ended June 30, 2025[457] ITEM 6. EXHIBITS This section lists the exhibits filed as part of the Quarterly Report, including certifications from the Principal Executive Officer and Principal Financial Officer, and iXBRL taxonomy documents - Exhibits include certifications from the Principal Executive Officer (31.1, 32.1) and Principal Financial Officer (31.2, 32.2), as well as iXBRL instance and taxonomy documents (101.INS, 101.SCH, etc.)[460] SIGNATURES - The report was duly signed on behalf of First Busey Corporation by Van A. Dukeman, Chairman and Chief Executive Officer, and Scott A. Phillips, Interim Chief Financial Officer, as of August 5, 2025[462][463]