ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)
Contents of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) (“MD&A”)
SCOPE OF DISCUSSION
BUSEY’S CONSERVATIVE BANKING STRATEGY
CRITICAL ACCOUNTING ESTIMATES
Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations
Goodwill
Income Taxes
Allowance for Credit Losses
RESULTS OF OPERATIONS — THREE YEARS ENDED DECEMBER 31, 2025
Net Income
Non-GAAP Adjusting Items and Non-GAAP Measures
Operating Performance Metrics
Net Interest Income
Noninterest Income
Noninterest Expense
Efficiency Ratio
Income Taxes
FINANCIAL CONDITION
Balance Sheet
Investment Securities
Portfolio Loans
Deposits
Borrowings
Liquidity
Off-Balance-Sheet Arrangements
Contractual Obligations
Cash Flows
Capital Resources
NEW ACCOUNTING PRONOUNCEMENTS
EFFECTS OF INFLATION
SCOPE OF DISCUSSION
The following is management’s discussion and analysis of the financial condition as of December 31, 2025, and 2024, and the results of operations for the years ended December 31, 2025, 2024, and 2023, of First Busey Corporation and its subsidiaries. It should be read in conjunction with “ Item 1. 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 2025 as compared to 2024 can be found below. Comparison of 2024 to 2023 can be found in “ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of Busey's 2024 Annual Report .
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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 1 franchise is a critical value driver of the institution. Busey remains substantially core deposit funded, with robust liquidity. As of December 31, 2025, Busey’s loan to deposit ratio was 91.0% and core deposits 1 represented 93.7% of total deposits. Furthermore, Busey has sufficient on- and off-balance sheet liquidity to manage deposit fluctuations and the liquidity needs of its customers.
Busey’s credit performance reflects its highly diversified, conservatively underwritten loan portfolio. Busey’s approach to lending and its underwriting standards are designed to emphasize relationship banking rather than transactional banking. In addition, as a matter of both policy and practice, Busey limits concentration exposures in any particular loan segment. While impacted by loans acquired as a result of the CrossFirst acquisition, 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. 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. At December 31, 2025, Busey’s leverage ratio of Tier 1 capital to average assets was 11.9%, its common equity Tier 1 capital to risk weighted assets ratio was 12.4%, and its total capital to risk weighted assets ratio was 15.9%.
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 .
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. 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. 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. Under the acquisition method of accounting, assets acquired and liabilities assumed are recorded at their estimated fair value on the date of acquisition. 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. 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. 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. The allowance for PCD loans is recorded through a gross-up effect, while the allowance for acquired non-PCD loans is recorded through provision expense, consistent with originated loans. Thus, the determination of which loans are PCD and non-PCD can have a significant effect on the accounting for these loans.
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. ”
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Goodwill
Goodwill represents the excess of the 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. Management applies significant judgment 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 the U.S., as well as the tax laws of the individual states and municipalities in which the Company conducts its operations. 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. 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. 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 . Estimated income tax expense is reported on the Consolidated Statements of Income .
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. 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. 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. 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. Measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported book value. The calculation also contemplates that Busey may not be able to make or obtain such forecasts for the entire life of the financial assets and requires a reversion to historical credit loss information.
In determining the ACL, management relies predominantly on a disciplined credit review and approval process that extends to the full range of Busey’s credit exposure. 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-off against and reduce the ACL. 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.
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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. 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. 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. Because of the nature of the judgments and assumptions made by management, actual results may differ from these judgments and assumptions.
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RESULTS OF OPERATIONS — THREE YEARS ENDED DECEMBER 31, 2025
Net Income
Results of Busey’s operations are presented below, segregated by operating segment:
Years Ended December 31,
(dollars in thousands)
Net income
Banking
Wealth Management
FirsTech
Other
Net income
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Non-GAAP Adjusting Items and Non-GAAP Measures
Busey views certain non-operating items, including acquisition-related expenses, restructuring charges, and nonrecurring strategic events, as adjustments to net income reported under GAAP. Busey also adjusts for net securities gains and losses to align with industry and research analyst reporting. The objective of Busey’s presentation of adjusted earnings and adjusted earnings metrics is to allow investors and analysts to more clearly identify quarterly trends in core earnings performance. Pre-tax non-GAAP adjustments were as follows:
Years Ended December 31,
(dollars in thousands)
Pre-tax non-GAAP adjusting items by income/expense category
Realized net (gains) losses on the sale of mortgage servicing rights
Net securities (gains) losses
Other noninterest income
Provision for credit losses
Salaries, wages, and employee benefits
Data processing
Net occupancy expense of premises
Furniture and equipment expenses
Professional fees
Other noninterest expense
Total pre-tax non-GAAP adjustments
Non-GAAP adjusting items by business objective
Balance sheet repositioning 1
Net securities (gains) losses 1
Initial provision for credit losses 2
Other acquisition (income) expenses 3
Restructuring expenses 4
Total pre-tax non-GAAP adjustments
1. During the year ended December 31, 2024, Busey executed a two-part balance sheet repositioning strategy in which it sold mortgage servicing rights on approximately $923.5 million of one-to-four family mortgage loans for a pre-tax gain of $7.7 million and sold available-for-sale debt securities with a book value of approximately $108.2 million for a pre-tax loss of $6.8 million.
2. During the year ended December 31, 2025, in connection with the CrossFirst acquisition, Busey’s recorded expense for the initial provision for credit losses consisting of a Day 2 provision for loan losses of $42.4 million, a Day 2 provision for unfunded commitments of $3.1 million, and an adjustment to the initial provision for unfunded commitments of $4.0 million that was recorded based on revised estimates resulting from implementation of a new CECL model.
3. Other acquisition expenses related to the acquisition of CrossFirst, which was completed on March 1, 2025, and the acquisition of M&M, which was completed on April 1, 2024.
4. Restructuring expenses were related to previously disclosed restructuring and efficiency plans and to corporate strategy advisement.
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. Business—Non-GAAP Financial Information . ”
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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:
Years Ended December 31,
(dollars in thousands, except per share amounts)
Net income (GAAP)
Adjusted net income (Non-GAAP) 1, 2
Net income available to common stockholders (GAAP)
Adjusted net income available to common stockholders (Non-GAAP) 1
Diluted earnings per common share
Adjusted diluted earnings per common share (Non-GAAP) 1, 2
Return on average assets
Adjusted return on average assets (Non-GAAP) 1, 2
Return on average tangible common equity (Non-GAAP) 1
Adjusted return on average tangible common equity (Non-GAAP) 1, 2
Pre-provision net revenue (Non-GAAP) 1, 3
Adjusted pre-provision net revenue (Non-GAAP) 1, 3
Pre-provision net revenue to average total assets (Non-GAAP) 1, 3
Adjusted pre-provision net revenue to average total assets (Non-GAAP) 1, 3
1. 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.
2. Beginning in 2025, Busey revised its calculation of adjusted net income for all periods presented to include, as applicable, adjustments for net securities gains and losses, realized net gains and losses on the sale of mortgage servicing rights, and non-recurring deferred tax adjustments.
3. Beginning in 2025, Busey revised its presentation, for all periods presented, to reclassify the provision for unfunded commitments so that it is now included within the provision for credit losses, affecting the calculation of pre-provision net revenue and related measures and ratios.
Net Interest Income
Net interest income is the difference between interest income and fees earned on loans and investments (“interest-earning assets”) and interest expense incurred on deposits and borrowings (“interest-bearing liabilities”). Interest rate levels and volume fluctuations within interest-earning assets and interest-bearing liabilities impact net interest income. Net interest margin is tax-equivalent net interest income as a percent of average interest-earning assets.
Certain assets with tax-favorable treatment are evaluated on a tax-equivalent basis, assuming a federal income tax rate of 21.0%. Tax-favorable assets generally have lower contractual pre-tax yields than fully taxable assets. A tax-equivalent analysis is performed by adding the tax savings to the earnings on tax-favorable assets. After factoring in the tax-favorable effects of these assets, the yields may be more appropriately evaluated against alternative earning assets. In addition to yield, various other risks are factored into the evaluation process.
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The tables below present Busey’s Consolidated Average Balance Sheets, summarizing 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. Average information is provided on a daily average basis:
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Year Ended December 31, 2025
(dollars in thousands)
Average
Balance
Income/
Expense
Yield/
Rate
Assets
Interest-bearing bank deposits and federal funds sold
Investment securities:
U.S. Government obligations
Obligations of states and political subdivisions
Other securities
Restricted bank stock
Loans held for sale
Portfolio loans 1, 2
Total interest-earning assets 1, 3
Cash and due from banks
Premises and equipment
ACL
Other assets
Total assets
Liabilities and stockholders’ equity
Interest-bearing transaction deposits
Savings and money market deposits
Time deposits
Federal funds purchased and repurchase agreements
Borrowings 4
Junior subordinated debt issued to unconsolidated trusts
Total interest-bearing liabilities
Net interest spread 1
Noninterest-bearing deposits
Other liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
Interest income / earning assets 1, 3
Interest expense / earning assets
Net interest margin 1
1. 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 $3.0 million.
4. Borrowings include, as applicable, short-term borrowings, long-term borrowings, senior notes, and subordinated notes. Interest expense includes a non-usage fee on the revolving credit facility.
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Year Ended December 31, 2024
(dollars in thousands)
Average
Balance
Income/
Expense
Yield/
Rate
Assets
Interest-bearing bank deposits and federal funds sold
Investment securities:
U.S. Government obligations
Obligations of states and political subdivisions
Other securities
Restricted bank stock
Loans held for sale
Portfolio loans 1, 2
Total interest-earning assets 1, 3
Cash and due from banks
Premises and equipment
ACL
Other assets
Total assets
Liabilities and stockholders’ equity
Interest-bearing transaction deposits
Savings and money market deposits
Time deposits
Federal funds purchased and repurchase agreements
Borrowings 4
Junior subordinated debt issued to unconsolidated trusts
Total interest-bearing liabilities
Net interest spread 1
Noninterest-bearing deposits
Other liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
Interest income / earning assets 1, 3
Interest expense / earning assets
Net interest margin 1
1. 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.
4. Borrowings include, as applicable, short-term borrowings, long-term borrowings, senior notes, and subordinated notes. Interest expense includes a non-usage fee on the revolving credit facility.
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Year Ended December 31, 2023
(dollars in thousands)
Average
Balance
Income/
Expense
Yield/
Rate
Assets
Interest-bearing bank deposits and federal funds sold
Investment securities:
U.S. Government obligations
Obligations of states and political subdivisions
Other securities
Restricted bank stock
Loans held for sale
Portfolio loans 1, 2
Total interest-earning assets 1, 3
Cash and due from banks
Premises and equipment
ACL
Other assets
Total assets
Liabilities and stockholders’ equity
Interest-bearing transaction deposits
Savings and money market deposits
Time deposits
Federal funds purchased and repurchase agreements
Borrowings 4
Junior subordinated debt issued to unconsolidated trusts
Total interest-bearing liabilities
Net interest spread 1
Noninterest-bearing deposits
Other liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
Interest income / earning assets 1, 3
Interest expense / earning assets
Net interest margin 1
1. 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.
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.
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The following tables present, 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. 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:
Years Ended December 31,
2025 vs. 2024 Change Due To
(dollars in thousands)
Average
Volume
Average
Yield/Rate
Total
Change
Increase (decrease) in interest income
Interest-bearing bank deposits and federal funds sold
Investment securities:
U.S. Government obligations
Obligations of state and political subdivisions
Other securities
Restricted bank stock
Loans held for sale
Portfolio loans
Change in interest income
Increase (decrease) in interest expense
Interest-bearing transaction deposits
Savings and money market deposits
Time deposits
Federal funds purchased and repurchase agreements
Borrowings
Junior subordinated debt owed to unconsolidated trusts
Change in interest expense
Increase (decrease) in net interest income
Percentage increase (decrease) in net interest income over prior period
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Years Ended December 31,
2024 vs. 2023 Change Due To
(dollars in thousands)
Average
Volume
Average
Yield/Rate
Total
Change
Increase (decrease) in interest income
Interest-bearing bank deposits and federal funds sold
Investment securities:
U.S. Government obligations
Obligations of state and political subdivisions
Other securities
Restricted bank stock
Loans held for sale
Portfolio loans
Change in interest income
Increase (decrease) in interest expense
Interest-bearing transaction deposits
Savings and money market deposits
Time deposits
Federal funds purchased and repurchase agreements
Borrowings
Junior subordinated debt owed to unconsolidated trusts
Change in interest expense
Increase (decrease) in net interest income
Percentage increase (decrease) in net interest income over prior period
Notable changes in average assets and average liabilities are summarized as follows for the periods presented:
Years Ended December 31,
(dollars in thousands)
Change
% Change
Average interest-earning assets
Average interest-bearing liabilities
Average noninterest-bearing deposits
Total average deposits
Total average liabilities
Average noninterest-bearing deposits as a percent of total average deposits
(390) bps
Total average deposits as a percent of total average liabilities
170 bps
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Changes in net interest income and net interest margin are summarized as follows for the periods presented:
Years Ended December 31,
(dollars in thousands)
Change
% Change
Net interest income
Interest income, on a tax-equivalent basis 1
Interest expense
Net interest income, on a tax-equivalent basis 1
Net interest margin 1, 2
56 bps
1. 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.
Busey continues to evaluate and execute off-balance sheet hedging and balance sheet strategies as well as embedding rate protection in our asset originations to provide stabilization to net interest income in lower rate environments. Stability in core deposit balances, as well as retail time deposit and savings specials, have continued to provide sufficient funding flows to allow intentional runoff of brokered and high-cost, non-relationship funding.
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,
Net interest spread 1
1. Calculated on a tax-equivalent basis.
Annualized net interest margins for the quarterly periods indicated were as follows:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
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.
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Noninterest Income
Changes in noninterest income are summarized in the tables below for the periods presented:
Years Ended December 31,
(dollars in thousands)
Change
% Change
Noninterest income
Wealth management fees
Payment technology solutions
Treasury management services
Card services and ATM fees
Other service charges on deposit accounts
Mortgage revenue
Income on bank owned life insurance
Realized net gains (losses) on the sale of mortgage servicing rights
Securities income:
Realized net gains (losses) on securities
Unrealized net gains (losses) recognized on equity securities
Net securities gains (losses)
Other noninterest income
Total noninterest income
Assets under care as of period end
Total noninterest income was $150.0 million for the year ended December 31, 2025, an increase of 7.4% when compared with $139.7 million for the year ended December 31, 2024. Total noninterest income represented 20.8% of total revenue 2 in 2025, compared to 30.2% in 2024. The year ended December 31, 2025, includes ten months of income from the CrossFirst acquisition.
Revenues from wealth management fees and payment technology solutions provide a complement to spread-based revenue from traditional banking activities.
Wealth management fees increased by 9.1% to $69.4 million for 2025, compared to $63.6 million for 2024. Busey’s Wealth Management division had $15.66 billion in assets under care as of December 31, 2025, compared to $13.83 billion as of December 31, 2024. Busey’s portfolio management team continues to focus on long-term returns and managing risk in the face of volatile markets.
Income from payment technology solutions derives from Busey’s payment processing company, FirsTech. This income decreased by 9.0% to $20.0 million for 2025, compared to $22.0 million for 2024, primarily due to decreases in income from online bill payments.
Treasury management services consist primarily of business analysis charges and wire transfer fees on commercial accounts. Income from treasury management services increased by 106.8% compared to 2024 due to the addition of CrossFirst commercial services.
Card services and ATM fees, which include both commercial and consumer accounts, increased by 34.4% compared to 2024 primarily due to the addition of CrossFirst corporate card services.
2 Total revenue consists of net interest income plus noninterest income.
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Other service charges on deposit accounts were $6.3 million for the year ended December 31, 2025, a decline of 33.5% from the comparable period in 2024. Declines were largely related to lower non-sufficient fund charges, reflecting changes Busey made to its fee structure in 2025.
Mortgage revenue was $2.6 million for 2025, compared to $2.1 million for 2024. General economic conditions and interest rate volatility may impact future mortgage revenue.
Income on bank owned life insurance increased by 28.6% to $6.6 million for 2025, compared to $5.1 million for 2024, resulting from a $1.9 million increase in the cash surrender value of the insurance policies partially offset by a $0.4 million decrease in earnings on death proceeds.
During the year ended December 31, 2025, Busey did not record any realized gains on the sale of mortgage servicing rights. In comparison, during the year ended December 31, 2024, Busey recognized a $7.7 million gain on the sale of mortgage servicing rights in connection with a strategic two-part balance sheet repositioning. For more information, see “ Busey executed a two-part balance sheet repositioning strategy ” in the Management Discussion and Analysis included in Busey’s Quarterly Report for the first quarter of 2024, filed with the SEC on May 7, 2024.
Net securities losses of $10.7 million during the year ended December 31, 2025, were greater than the net securities losses realized during the comparable period in 2024. Losses for the year ended December 31, 2025, were comprised of $15.2 million of realized net losses on securities resulting from a strategic balance sheet repositioning completed in the first quarter of 2025, partially offset by unrealized net gains on Busey’s approximately 3% equity ownership of a financial institution that was the target of an acquisition at a significant market premium.
Other income increased by 46.1% to $20.5 million for 2025, compared to $14.0 million for 2024. Increases in other income were primarily attributable to increases in commercial loan servicing income and swap origination fees.
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Noninterest Expense
Changes in noninterest expense are summarized in the tables below for the periods presented:
Years Ended December 31,
(dollars in thousands)
Change
% Change
Noninterest expense
Salaries, wages, and employee benefits
Data processing
Premises expenses:
Net occupancy expense of premises
Furniture and equipment expenses
Combined, net occupancy expense of premises and furniture and equipment expenses
Professional fees
Amortization of intangible assets
Interchange expense
FDIC insurance
Other noninterest expense
Total noninterest expense
Income taxes
Effective income tax rate
170 bps
Efficiency ratio (Non-GAAP) 1
120 bps
Adjusted efficiency ratio (Non-GAAP) 1
(550) bps
Full-time equivalent associates as of period-end
1. 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 the Annual Report.
Total noninterest expense increased to $480.2 million for the year ended December 31, 2025, compared to $301.5 million for the year ended December 31, 2024, representing a year-over-year increase of 59.3%. Growth in noninterest expense was primarily attributable to acquisition expenses related to the CrossFirst acquisition, added costs for operating expenses for two banks from March 1, 2025, until the banks were merged on June 20, 2025, and increased expenses associated with Busey’s larger organization and expanded branch network. Acquisition and restructuring expenses contributed $54.6 million to total noninterest expense for the year ended December 31, 2025, compared to $8.1 million for the comparable period in 2024. Annual pre-tax expense synergy estimates resulting from the CrossFirst acquisition remain on track at $25.0 million with 100% realization of identified synergies in 2026.
Salaries, wages, and employee benefits increased to $289.1 million for 2025, compared to $175.6 million for 2024. Excluding acquisition and restructuring expenses, which include severance, retention, and stock-based compensation expenses related to the CrossFirst acquisition, salaries, wages, and employee benefits were $252.0 million for 2025, compared to $174.0 million for 2024, representing an increase of 44.8%. During 2025, Busey added 17 banking centers, largely in connection with the CrossFirst acquisition, resulting in the expansion of Busey’s workforce, including the addition of 405 full-time equivalent associates.
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Data processing expense increased to $43.2 million for 2025, compared to $27.1 million for 2024. Excluding acquisition and restructuring expenses, data processing expense was $36.2 million for 2025, compared to $26.6 million for 2024, representing an increase of 36.2%. Increases were primarily attributable to Company-wide investments in technology enhancements, as well as inflation-driven price increases.
Combined, net occupancy expense of premises and furniture and equipment expenses increased to $38.0 million for 2025, compared to $25.5 million for 2024. The CrossFirst acquisition added 16 banking centers. Further, on August 18, 2025, Busey opened its second Denver service center, located in the Cherry Creek North neighborhood. Primary cost drivers in these expense categories include lease costs, repairs and maintenance, depreciation expense, real estate taxes, and utilities.
Professional fees increased to $18.8 million for 2025, compared to $12.8 million for 2024. Excluding acquisition and restructuring expenses, professional fees were $10.7 million for 2025, compared to $7.9 million for 2024, representing an increase of 35.3%. Primary cost drivers in this expense category include legal, audit and accounting, and consulting expenses.
Amortization of intangible assets increased to $16.6 million for 2025, compared to $10.1 million for 2024. The CrossFirst acquisition added an estimated $81.8 million of finite-lived intangible assets with amortization of $7.8 million during the year ended December 31, 2025. Busey uses an accelerated amortization methodology.
Interchange expense decreased to $5.2 million for 2025, compared to $6.0 million for 2024. Fluctuations in interchange expense relate to payment and volume activity at FirsTech.
FDIC insurance expense increased to $10.4 million for 2025, compared to $5.6 million for 2024. Additional FDIC insurance assessments were the result of Busey’s growth in average assets in connection with the CrossFirst acquisition.
Other noninterest expense increased to $59.0 million for 2025, compared to $38.7 million for 2024. Excluding acquisition and restructuring expenses, other noninterest expense was $56.5 million for 2025, compared to $37.8 million for 2024, representing an increase of 49.8%. Increases in other noninterest expense were attributable to multiple items, including increased costs on loans, marketing, business development, and office supplies.
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. Busey’s efficiency ratio was 63.2% for the year ended December 31, 2025, compared to 62.0% for the year ended December 31, 2024.
Operating costs have been influenced by acquisition expenses and other restructuring costs, and the adjusted efficiency ratio 3 was 55.8% for the year ended December 31, 2025, compared to 61.3% for the year ended December 31, 2024.
Income Taxes
Effective income tax rates, calculated by dividing income taxes by income before taxes, were 27.5%, 25.8%, and 20.4% for the years ended December 31, 2025, 2024, and 2023, respectively. Busey's effective tax rate increased in 2025 primarily due to the deferred tax impact of the lower blended state tax rates resulting in (1) a one-time revaluation of deferred tax assets; and (2) a higher disallowance related to Internal Revenue Code Section 162(m) limited compensation. These results were partially offset by increased tax credit investments and tax-exempt interest. Following the acquisition of CrossFirst Bank, and the inclusion of the CrossFirst entities within the Busey consolidated group, the deferred tax attributes were revalued to reflect the new consolidated group's state tax rates. As such, there was a significant rate change adjustment recognized against deferred tax assets in 2025, which increased Busey's effective tax rate for the year ended December 31, 2025.
3 The efficiency ratio and adjusted efficiency ratio are both non-GAAP financial measures. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see “ Item 1. Business—Non-GAAP Financial Information. ”
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Busey continues to monitor evolving federal and state tax legislation and its potential impact on operations on an ongoing basis. As of December 31, 2025, Busey remains under examination by the Illinois Department of Revenue for Merchant & Manufacturers Bank's tax filings for the tax years ended December 31, 2022 and 2023. The Florida Department of Revenue examination of Busey Bank's tax years 2020 to 2022 corporate income tax filings was completed with no additional income tax assessments.
FINANCIAL CONDITION
Balance Sheet
Changes in significant items included on Busey’s Consolidated Balance Sheets are summarized in the table below:
As of December 31,
(dollars in thousands)
Change
% Change
Assets
Debt securities available for sale
Debt securities held to maturity
Portfolio loans, net of ACL
Total assets
Liabilities
Deposits:
Noninterest-bearing
Interest-bearing
Total deposits
Securities sold under agreements to repurchase
Long-term borrowings
Subordinated notes, net of unamortized issuance costs
Total liabilities
Stockholders’ equity
Investment Securities
The primary purposes of Busey’s investment securities portfolio are to provide a source of earnings by deploying funds that are not needed to fulfill loan demand, deposit redemptions, or other liquidity purposes; to serve as a tool for interest rate risk positioning; and to provide collateral for pledging purposes against public deposits and repurchase agreements, all while providing a source of liquidity.
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, 2025, Busey did not hold general obligation bonds of any single issuer, the aggregate of which exceeded 10% of Busey’s stockholders’ equity.
Pledged securities totaled $744.2 million, or 25.6% of total debt securities, as of December 31, 2025, and $871.4 million, or 33.0% of total debt securities, as of December 31, 2024.
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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. As of December 31, 2025, the fair value of debt securities available for sale was $2.16 billion, and the amortized cost was $2.30 billion. There were $13.9 million of gross unrealized gains and $152.2 million of gross unrealized losses, resulting in a net unrealized loss of $138.3 million.
The composition of debt securities available for sale was as follows:
As of December 31,
(dollars in thousands)
Debt securities available for sale
Obligations of U.S. government corporations and agencies
Obligations of states and political subdivisions
Asset-backed securities
Commercial mortgage-backed securities
Residential mortgage-backed securities
Corporate debt securities
Debt securities available for sale, fair value
Debt securities available for sale, amortized cost
Fair value as a percentage of amortized cost
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By maturity date, fair values and weighted average yields of debt securities available for sale as of December 31, 2025, are presented in the following table:
Due in 1 year or less
Due after 1 year
through 5 years
Due after 5 years
through 10 years
Due after
10 years
(dollars in thousands)
Fair
Value
Weighted
Average
Yield
Fair
Value
Weighted
Average
Yield
Fair
Value
Weighted
Average
Yield
Fair
Value
Weighted
Average
Yield
Debt securities available for sale 1
Obligations of U.S. government corporations and agencies
Obligations of states and political subdivisions 2
Asset-backed securities
Commercial mortgage-backed securities
Residential mortgage-backed securities
Corporate debt securities
Debt securities available for sale
1. 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%.
Debt Securities Held to Maturity
Debt securities held to maturity are carried at amortized cost. Unrecognized losses related to securities that were transferred in 2022 are included in OCI, net of taxes, 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, 2025 or 2024.
As of December 31, 2025, the amortized cost of debt securities held to maturity was $746.4 million, and the fair value was $626.0 million. There were no gross unrecognized gains and $120.4 million of gross unrecognized losses.
The composition of debt securities held to maturity was as follows:
As of December 31,
(dollars in thousands)
Debt securities held to maturity
Commercial mortgage-backed securities
Residential mortgage-backed securities
Debt securities held to maturity, amortized cost
Debt securities held to maturity, fair value
Fair value as a percentage of amortized cost
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By maturity date, fair values and weighted average yields of debt securities held to maturity as of December 31, 2025, are presented in the following table:
Due in 1 year or less
Due after 1 year
through 5 years
Due after 5 years
through 10 years
Due after
10 years
(dollars in thousands)
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
Residential mortgage-backed securities
Debt securities held to maturity
1. 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 $14.9 million as of December 31, 2025, compared to $15.9 million as of December 31, 2024.
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. While not specifically limited, Busey attempts to focus its lending on short to intermediate-term loans (0-10 years) in states where Busey maintains lending offices. Busey attempts to utilize government-assisted lending programs, such as the SBA and U.S. 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. 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. Relationship banking implies a primary banking relationship with the borrower that includes, at a minimum, an active deposit banking relationship in addition to the lending relationship. 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. 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. 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.
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Busey Bank’s lending can be summarized into five primary lending activities, which can be further categorized as either commercial or retail lending. 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. 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. 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.
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. 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. Repayment of these loans is primarily dependent on the cash flows of the underlying property. Nevertheless, 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. 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. 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 and 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. Real estate construction loans are inherently more risky than loans on completed properties as the unimproved nature and the financial risks of construction significantly enhance the risks of commercial real estate loans. These loans are closely monitored and subject to other industry guidelines.
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 2025, Busey retained a smaller percentage of originated retail real estate loans in its portfolio, electing to sell a larger percentage to secondary market purchasers. 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.
Retail Other Loans
Retail other loans consist of installment loans to individuals, including automotive loans and indirect lending. These loans are centrally underwritten utilizing the borrower’s financial history, including credit scores, as well as information about the underlying collateral. Retail other loans also include whole-life loans which are secured by the cash value of underlying life insurance policies. Repayment of retail other loans is expected from the borrower’s cash flows.
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Portfolio Composition
The composition of Busey’s loan portfolio as of the dates indicated, as well as changes in portfolio loan balances, were as follows:
As of December 31,
(dollars in thousands)
Change
% Change
Commercial loans
C&I and other commercial
CRE
Real estate construction
Total commercial loans
Retail loans
Retail real estate
Retail other
Total retail loans
Total portfolio loans
ACL
Portfolio loans, net
Portfolio loan growth in 2025 was primarily attributable to the CrossFirst acquisition. Busey remains steadfast in its conservative approach to underwriting and disciplined approach to pricing. During 2025, Busey experienced elevated payoffs that outpaced new production momentums.
Concentration of Credit Risk
As a matter of policy and practice, Busey limits the level of concentration exposure in any particular loan segment with the goal of maintaining a well-diversified loan portfolio. The following table presents the percentage of total portfolio loans for each lending activity.
As of December 31,
Commercial loans
C&I and other commercial
CRE
Real estate construction
Total commercial loans
Retail loans
Retail real estate
Retail other
Total retail loans
Total portfolio loans
Busey Bank originates loans across its regional operating model and through its specialty product lines, as described below:
• East – Suburban Chicago markets, the St. Louis MSA, and southwest Florida
• Midwest – Central Illinois and Indianapolis, Indiana
• Central – The Kansas City MSA, Central Kansas, and Oklahoma
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• Texas – The Dallas-Fort Worth MSA
• West – Colorado, New Mexico, and Arizona
• Verticals – Busey’s Life Equity Lending, Sponsor Finance, Energy Lending, and SBA Lending products
The distribution of Busey Bank loans outstanding as of December 31, 2025, that were originated in each of these markets is presented in the table below:
As of December 31, 2025
(dollars in thousands)
C&I and other commercial
CRE
Real estate construction
Retail real estate
Retail other
Total
Loans by region of origination
East
Midwest
Central
Texas
West
Verticals
Total portfolio loans
ACL
Portfolio loans, net of ACL
Prior to the CrossFirst acquisition on March 1, 2025, Busey Bank’s loan origination occurred in the Illinois, Missouri, Florida, and Indiana markets. The geographic distribution of Busey Bank loans outstanding as of December 31, 2024, that were originated in each of these markets is presented in the table below:
As of December 31, 2024
(dollars in thousands)
C&I and other commercial
CRE
Real estate construction
Retail real estate
Retail other
Total
Loans by state of origination
Illinois
Missouri
Florida
Indiana
Total portfolio loans
ACL
Portfolio loans, net of ACL
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Commercial Real Estate Loans
CRE loans made up 40.9% of Busey’s total loan portfolio as of December 31, 2025, and CRE properties were approximately 25.8% owner occupied. Owner occupied commercial real estate is generally dependent on the performance of the borrowers’ businesses, whereas non-owner occupied commercial real estate is generally reliant on property cash flows generated by third-party tenants.
As of December 31,
(dollars in thousands)
COMMERCIAL REAL ESTATE LOANS
Non-owner occupied commercial real estate
Owner-occupied commercial real estate
Total commercial real estate loans
CRE loans are made across a variety of industries, as depicted in the table below. Balances reflected in the table below do not include loan origination fees or costs, purchase accounting adjustments, SBA discounts, or negative escrow amounts.
As of December 31, 2025
CRE Loans
Occupied By
% of CRE Loans That Are Owner Occupied
(dollars in thousands)
Non-Owner
Owner
Industry
Industrial and warehousing
Apartments
Retail
Traditional office
Specialty
Hotel
Medical office
Student housing
Restaurant
Self-Storage
Senior housing
Nursing homes
Healthcare
Group homes
Continuing Care Facilities
1-4 Family
Land acquisition and development
Other
Total
Loan Commitments
Commitments to extend credit and standby letters of credit increased by $2.27 billion, or 89.2%, to a total of $4.82 billion as of December 31, 2025, compared to $2.55 billion as of December 31, 2024.
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.
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The following table sets forth the remaining maturities of portfolio loans at December 31, 2025:
(dollars in thousands)
Within 1 Year
After 1 Year
Through 5 Years
After 5 Years
Through 15 Years
After 15 Years
Total
Portfolio loans
C&I and other commercial
CRE
Real estate construction
Retail real estate
Retail other
Total portfolio loans
Interest Rate Structure
Portfolio loans maturing after one year are summarized below by interest rate structure and lending activity, as of December 31, 2025:
(dollars in thousands)
Fixed
Rate
Adjustable
Rate
Total
Portfolio loans maturing after 1 year
C&I and other commercial
CRE
Real estate construction
Retail real estate
Retail other
Total portfolio loans maturing after 1 year
Allowance for Credit Losses and Provision for Credit Losses
The ACL is a significant estimate on Busey’s Consolidated Financial Statements , affecting both earnings and capital. 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. Estimates of credit losses are based on a careful consideration of all significant factors affecting the collectability as of the evaluation date. The ACL is established through the provision for credit loss charged to income. Provision expenses for loan losses were recorded as follows for each of the years indicated:
Years Ended December 31,
(dollars in thousands)
Location
Provision for loan losses 1
Provision for credit losses
1. The year ended December 31, 2025, included $42.4 million provision expense that was recorded to establish an initial allowance for loan losses on non-PCD loans immediately following the close of the CrossFirst acquisition in accordance with ASC 326‑20‑30‑15.
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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, 2022
Net (charge-offs) recoveries and average portfolio loans by lending activity:
C&I and other commercial
CRE
Real estate construction
Retail real estate
Retail other
Net (charge-offs) recoveries and average portfolio loans
Provision for loan losses
ACL balance, December 31, 2023
Day 1 PCD 1
Net (charge-offs) recoveries and average portfolio loans by lending activity:
C&I and other commercial
CRE
Real estate construction
Retail real estate
Retail other
Net (charge-offs) recoveries and average portfolio loans
Provision for loan losses
ACL balance, December 31, 2024
Day 1 PCD 1
Day 2 Provision for loan losses 2
Net (charge-offs) recoveries and average portfolio loans by lending activity:
C&I and other commercial
CRE
Real estate construction
Retail real estate
Retail other
Net (charge-offs) recoveries and average portfolio loans
Provision for loan losses
ACL balance, December 31, 2025
1. The Day 1 PCD was attributable to the M&M acquisition in 2024 and the CrossFirst acquisition in 2025.
2. The Day 2 Provision for loan losses was attributable to the CrossFirst acquisition.
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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:
As of December 31,
(dollars in thousands)
ACL
% of Loans to Total Loans
ACL
% of Loans to Total Loans
Loan Category
C&I and other commercial
CRE
Real estate construction
Retail real estate
Retail other
Total
Busey did not record an allowance for loan losses 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 Life Equity Loan ® portfolio balance was $445.4 million as of December 31, 2025, and $264.2 million as of December 31, 2024.
As of December 31, 2025, 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. Factors that influence Busey’s calculation of its ACL include changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors.
Non-Performing Loans and Non-Performing Assets
Loans are considered past due if the required principal or interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory guidelines. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Typically, loans are secured by collateral. 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.
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The following table sets forth information concerning non-performing assets and asset quality ratios:
As of December 31,
(dollars in thousands)
Change
% Change
Total assets
Portfolio loans
Loans 30 – 89 days past due
Non-performing assets
Non-performing loans:
Non-accrual loans
Loans 90+ days past due and still accruing
Total non-performing loans
OREO and other repossessed assets
Total non-performing assets
Substandard (excludes 90+ days past due)
Classified assets
ACL
Bank Tier 1 Capital
Ratios
ACL to portfolio loans
20 bps
ACL to non-accrual loans
ACL to non-performing loans
ACL to non-performing assets
Non-accrual loans to portfolio loans
9 bps
Non-performing loans to portfolio loans
9 bps
Non-performing assets to total assets
13 bps
Non-performing assets to portfolio loans and OREO and other repossessed assets
13 bps
Classified assets to Bank Tier 1 Capital and ACL
190 bps
Busey’s total assets grew by 50.3% to $18.10 billion as of December 31, 2025, compared to $12.05 billion as of December 31, 2024, largely in connection with the CrossFirst acquisition. Further, Busey’s loan portfolio grew by 76.3% to $13.57 billion as of December 31, 2025, compared to $7.70 billion as of December 31, 2024.
Asset quality continues to be strong. Following the merger of CrossFirst Bank into Busey Bank in June, Busey is operating as one bank, with a singular credit policy, concentration limits, and monitoring that will continue to align with Busey’s pillars of credit quality. Busey’s operating mandate and focus remain on emphasizing credit quality over asset growth.
Non-performing loan balances increased to $53.5 million as of December 31, 2025, compared to $23.2 million as of December 31, 2024, primarily due to PCD loans assumed in the CrossFirst acquisition. Non-performing loans represented 0.39% of portfolio loans as of December 31, 2025, compared to 0.30% as of December 31, 2024. Busey’s ACL was 3.25 times its non-performing loan balance at December 31, 2025, compared to 3.59 times its non-performing loan balance at December 31, 2024.
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Non-performing assets, which include non-performing loans, OREO, and other repossessed assets, increased to $58.1 million as of December 31, 2025, compared to $23.3 million as of December 31, 2024. Non-performing assets represented 0.32% of total assets as of December 31, 2025, compared to 0.19% as of December 31, 2024. Busey’s ACL was 2.99 times its non-performing assets as of December 31, 2025, compared to 3.58 times its non-performing assets as of December 31, 2024.
Classified assets, which include non-performing assets and substandard loans, increased to $174.5 million as of December 31, 2025, compared to $85.3 million as of December 31, 2024. Classified assets represented 7.51% of Busey Bank’s Tier 1 capital and ACL at December 31, 2025, up from 5.61% at December 31, 2024.
Net charge-offs totaled $55.9 million in 2025, representing 0.44% of average loans, compared with net charge-offs of $18.2 million in 2024, representing 0.23% of average loans. Net charge-offs for the year ended December 31, 2025, included $36.2 million related to PCD loans.
Asset quality metrics remain dependent upon market-specific economic conditions, and specific measures may fluctuate from period to period. If economic conditions were to deteriorate, Busey would expect the credit quality of its loan portfolio to decline and loan defaults to increase.
Potential Problem Loans
Potential problem loans are loans classified as substandard that 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. 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 increased to $116.4 million, or 0.9% of portfolio loans, as of December 31, 2025, compared to $62.0 million, or 0.8% of portfolio loans, as of December 31, 2024. Management continues to monitor these loans and work with the borrowers on restructurings, guarantees, additional collateral, or other planned actions. As of December 31, 2025, 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.
Deposits
The following table presents the composition of, and changes in, Busey’s deposits:
As of December 31,
(dollars in thousands)
Balance
% Total
Balance
% Total
Change
% Change
Deposits
Non-maturity deposits:
Noninterest-bearing demand deposits
Interest-bearing transaction deposits
Saving deposits and money market deposits
Total non-maturity deposits
Time deposits
Total deposits
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Contents of Item 7. MD&A
Total deposits increased by 49.3% to $14.91 billion as of December 31, 2025, compared to $9.98 billion as of December 31, 2024, in connection with the CrossFirst acquisition. Busey focuses on deepening its customer relationships to maintain and protect its strong core deposit 4 franchise. Core deposits include non-brokered transaction accounts, money market and savings deposit accounts, and time deposits of $250,000 or less. Core deposits represented 93.7% of total deposits as of December 31, 2025.
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 $6.46 billion, or 43% of total deposits, as of December 31, 2025. Excluding intercompany accounts, fully collateralized accounts (including preferred deposits), and pass-through accounts where clients have deposit insurance at the correspondent financial institution, the portion of Busey’s deposit base that was uninsured and not otherwise collateralized was estimated to be $5.58 billion, or 37% of total deposits, at December 31, 2025. Of that amount, $759.4 million represented time deposits. The following table presents estimates of the uninsured portion of time deposits by maturity date:
(dollars in thousands)
December 31,
Estimated uninsured time deposits by schedule of maturities
3 months or less
Over 3 months through 6 months
Over 6 months through 12 months
Thereafter
Uninsured time deposits
Additional information about Busey’s deposits is located in “ Note 9. Deposits .”
Borrowings
Busey’s borrowings include, as applicable, securities sold under agreements to repurchase, a revolving line of credit, short-term borrowings, long-term borrowings, subordinated notes, and junior subordinated debt owed to unconsolidated trusts.
4 Core deposits is a non-GAAP financial measure. 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.
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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:
Years Ended December 31,
(dollars in thousands)
Securities sold under agreements to repurchase
Balance at end of period
Weighted average interest rate at end of period
Maximum outstanding at any month end in year-to-date period
Average daily balance for the year-to-date period
Weighted average interest rate during period 1
FHLB advances, current portion due within 12 months
Balance at end of period
Weighted average interest rate at end of period
Maximum outstanding at any month end in year-to-date period
Average daily balance for the year-to-date period
Weighted average interest rate during period 1
Term Loan, current portion due within 12 months
Balance at end of period
Weighted average interest rate at end of period
Maximum outstanding at any month end in year-to-date period
Average daily balance for the year-to-date period
Weighted average interest rate during period 1
1. The weighted average interest rate is computed by dividing total interest for the period by the average daily balance outstanding.
Additional information about Busey’s borrowing activities is located in “ Note 10. Borrowings .” Additional information about Busey’s contractual obligations related to its borrowing activities is located under the heading “ Contractual Obligations ” within this MD&A .
Liquidity
Liquidity management is the process by which Busey ensures that adequate liquid funds are available to meet the present and future cash flow obligations arising in the daily operations of its business. 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. Balances of these assets are dependent on Busey’s operating, investing, lending, and financing activities during any given period.
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Contents of Item 7. MD&A
Average liquid assets are summarized in the table below:
Years Ended December 31,
(dollars in thousands)
Average liquid assets
Cash and due from banks
Interest-bearing bank deposits
Less: Restricted and pledged cash and bank deposits
Total average liquid assets
Average liquid assets as a percent of average total assets
Cash and unencumbered securities on Busey’s Consolidated Balance Sheets are summarized as follows:
As of December 31,
(dollars in thousands)
Unencumbered cash and securities
Total cash and cash equivalents
Restricted and pledged cash and bank deposits
Debt securities available for sale
Debt securities available for sale pledged as collateral
Cash and unencumbered securities
Busey’s primary sources of funds consist of deposits, investment maturities and sales, loan principal repayments, and capital funds. 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:
As of December 31,
(dollars in thousands)
Additional available borrowing capacity
FHLB
Federal Reserve Bank
Federal funds purchased
Revolving credit facility
Additional borrowing capacity
Further, Busey could utilize brokered deposits as additional sources of liquidity, as needed.
As of December 31, 2025, 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. Asset management guides the proportion of liquid assets to total assets, while liability management monitors future funding requirements and prices liabilities accordingly.
Busey’s ability to pay cash dividends to its stockholders and to service its debt is dependent on the receipt of cash dividends from its subsidiaries. Busey Bank paid dividends to First Busey Corporation totaling $160.0 million and $100.0 million for the years ended December 31, 2025, and 2024, 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. The balance of commitments to extend credit represents future cash requirements and some of these commitments may expire without being drawn upon.
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Contents of Item 7. MD&A
The following table summarizes Busey’s outstanding commitments and reserves for unfunded commitments :
As of December 31,
(dollars in thousands)
Outstanding loan commitments and standby letters of credit
Reserve for unfunded commitments
The following table summarizes Busey’s provision for unfunded commitments for the periods presented:
Years Ended December 31,
(dollars in thousands)
Location
Provision for unfunded commitments 1
Provision for credit losses
1. The year ended December 31, 2025, included $7.2 million to establish an initial allowance for unfunded commitments in connection with the CrossFirst acquisition.
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.
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.
The following table summarizes significant contractual obligations and other commitments, excluding, when applicable, short-term borrowings and the current portion of long-term borrowings, as of December 31, 2025:
(dollars in thousands)
Time deposits
Long-term
Borrowings
Subordinated Notes,
Net of Unamortized
Issuance Costs
Junior
Subordinated
Debt Owed to Unconsolidated
Trusts
Operating
Leases in Other Liabilities
Total
Contractual obligations 1
Thereafter
Contractual obligations
Commitments to extend credit and standby letters of credit
1. The contractual obligations in this table include principal and estimated interest without any purchase accounting or debt issuance cost adjustments.
Cash Flows
Busey’s cash flows consist of operating activities, investing activities, and financing activities.
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Contents of Item 7. MD&A
Net cash flows provided by operating activities totaled $192.6 million in 2025, compared to $178.3 million provided by operating activities in 2024. 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. 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 $1.10 billion in 2025, compared to $657.9 million provided by investing activities in 2024. Significant investing activities are those associated with managing Busey’s investment and loan portfolios.
Net cash used in financing activities totaled $1.69 billion in 2025, compared to $858.1 million used in financing activities in 2024. Significant financing activities affecting cash flows include deposit and other borrowings, issuance of preferred stock, and cash dividends paid.
For additional detail, see the Consolidated Statements of Cash Flows .
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. 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. 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, 2025.
Minimum Capital Requirements with
Capital Buffer
As of December 31, 2025
First
Busey
Busey
Bank
Common equity Tier 1 capital to risk weighted assets
Tier 1 capital to risk weighted assets
Total capital to risk weighted assets
Leverage ratio of Tier 1 capital to average assets
Management believes that no conditions or events have occurred since December 31, 2025, that would materially adversely change First Busey’s or Busey Bank’s capital classifications. For further discussion of capital resources and requirements, see “ Note 12. Regulatory Capital .”
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 Consolidated Financial Statements .
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. Monetary items, such as cash, loans, and deposits, are those assets and liabilities which are or will be converted into a fixed number of dollars regardless of changes in prices. As a result, changes in interest rates have a more significant impact on a financial institution’s performance than does general inflation. 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, 2025—Net Interest Income ” and “ Item 7A. Quantitative and Qualitative Disclosures About Market Risk .”
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