FIRST BUSEY CORP /NV/ [BUSE] Filings

10-Q 1 buse-20230930.htm 10-Q buse-20230930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


þ			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2023


o			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 0-15950

FIRST BUSEY CORPORATION

(Exact name of registrant as specified in its charter)


Nevada			37-1078406
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
100 W. University Ave. Champaign, Illinois			61820
(Address of principal executive offices)			(Zip code)

Registrant’s telephone number, including area code: (217) 365-4544

N/A

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol (s)

Name of each exchange on which registered

Common Stock, $.001 par value

BUSE

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o
Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

Outstanding at November 2, 2023

Common Stock, $.001 par value

55,258,904

Table of Contents

FIRST BUSEY CORPORATION

FORM 10-Q

September 30, 2023

Table of Contents


GLOSSARY		3

PART I	FINANCIAL INFORMATION	5

Item 1.	FINANCIAL STATEMENTS	5
	CONSOLIDATED BALANCE SHEETS (Unaudited)	6
	CONSOLIDATED STATEMENTS OF INCOME (Unaudited)	7
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)	8
	CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)	9
	CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)	11
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)	13
	Note 1: Significant Accounting Policies	13
	Note 2: Debt Securities	16
	Note 3: Portfolio Loans	20
	Note 4: Leases	31
	Note 5: Deposits	32
	Note 6: Borrowings	33
	Note 7: Regulatory Capital	35
	Note 8: Stock-Based Compensation	37
	Note 9: Outstanding Commitments and Contingent Liabilities	41
	Note 10: Derivative Financial Instruments	41
	Note 11: Fair Value Measurements	47
	Note 12: Earnings per Common Share	52
	Note 13: Accumulated Other Comprehensive Income (Loss)	53
	Note 14: Operating Segments and Related Information	54

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	57
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	89
Item 4.	CONTROLS AND PROCEDURES	90

PART II	OTHER INFORMATION	91

Item 1.	LEGAL PROCEEDINGS	91
Item 1A.	RISK FACTORS	91
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES	91
Item 3.	DEFAULTS UPON SENIOR SECURITIES	91
Item 4.	MINE SAFETY DISCLOSURES	91
Item 5.	OTHER INFORMATION	92
Item 6.	EXHIBITS	93

SIGNATURES		94

Table of Contents

GLOSSARY

We use acronyms, abbreviations, and other terms throughout this Quarterly Report, as defined in the glossary below:


Term						Definition
2020 Equity Plan						First Busey's 2020 Equity Incentive Plan
ACL						Allowance for credit losses
Amended 2020 Equity Plan						First Busey's Amended 2020 Equity Incentive Plan
Annual Report						Annual report filed with the SEC on Form 10-K pursuant to Section 13 or 15(d) of the Exchange Act
AOCI						Accumulated other comprehensive income (loss)

ASC						Accounting Standards Codification
ASU						Accounting Standards Update

Basel III						2010 capital accord adopted by the international Basel Committee on Banking Supervision
Basel III Rule						Regulations promulgated by U.S. federal banking agencies – the OCC, the Federal Reserve, and the FDIC – to both enforce implementation of certain aspects of the Basel III capital reforms and effect certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act

bps						basis points
CAC						Cummins-American Corp.

CECL						ASU 2016-13, codified as ASC Topic 326 “Financial Instruments-Credit Losses,” which established the Current Expected Credit Losses methodology for measuring credit losses on financial instruments


COVID-19						Coronavirus disease 2019







DSU						Deferred stock unit

ESPP						Employee Stock Purchase Plan
Exchange Act						Securities Exchange Act of 1934, as amended
Fair value						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, as defined in ASC Topic 820 “Fair Value Measurement”
FASB						Financial Accounting Standards Board
FDIC						Federal Deposit Insurance Corporation
Federal Reserve						Board of Governors of the Federal Reserve System
FHLB						Federal Home Loan Bank
First Busey						First Busey Corporation, together with its wholly-owned consolidated subsidiaries; also, “Busey,” the “Company,” “we,” “us,” and “our”
First Busey Risk Management						First Busey Risk Management, Inc.

FirsTech						FirsTech, Inc.
FOMC						Federal Open Market Committee
GAAP						U.S. Generally Accepted Accounting Principles



LIBOR						London Interbank Offered Rate

Nasdaq						National Association of Securities Dealers Automated Quotations

NMTC						New Markets Tax Credit


OCI						Other comprehensive income (loss)
OREO						Other real estate owned
PCD						Purchased credit deteriorated

PPP						Paycheck Protection Program

Table of Contents


Term						Definition
PSU						Performance-based restricted stock unit

Quarterly Report						Quarterly report filed with the SEC on Form 10-Q pursuant to Section 13 or 15(d) of the Exchange Act

RSU						Restricted stock unit
SBA						U.S. Small Business Administration
SEC						U.S. Securities and Exchange Commission

SOFR						Secured Overnight Financing Rate published by the Federal Reserve
TDR						Troubled debt restructuring

U.S.						United States of America
U.S. Treasury						U.S. Department of the Treasury

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Table of Contents

FIRST BUSEY CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

(dollars in thousands)


	As of
	September 30, 2023		December 31, 2022
Assets
Cash and cash equivalents:
Cash and due from banks	$	122,574	$	117,513
Interest-bearing deposits	215,345		109,651
Total cash and cash equivalents	337,919		227,164

Debt securities available for sale	2,182,841		2,461,393
Debt securities held to maturity	882,614		918,312
Equity securities	8,782		11,535
Loans held for sale	3,051		1,253
Portfolio loans (net of ACL of $91,710 at September 30, 2023, and $91,608 at December 31, 2022)	7,764,450		7,634,094
Premises and equipment, net	122,538		126,524
Right of use assets	11,500		12,829
Goodwill	317,873		317,873
Other intangible assets, net	38,470		46,423
Cash surrender value of bank owned life insurance	181,955		180,485
Other assets	406,257		398,792
Total assets	$	12,258,250	$	12,336,677

Liabilities and stockholders’ equity
Liabilities
Deposits:
Noninterest-bearing	$	2,918,574	$	3,393,666
Interest-bearing	7,413,788		6,677,614
Total deposits	10,332,362		10,071,280

Securities sold under agreements to repurchase	183,702		229,806
Short-term borrowings	12,000		351,054
Long-term debt	21,000		30,000

Subordinated notes, net of unamortized issuance costs	222,666		222,038
Junior subordinated debt owed to unconsolidated trusts	71,946		71,810
Lease liabilities	11,783		12,995
Other liabilities	212,633		201,717
Total liabilities	11,068,092		11,190,700

Outstanding commitments and contingent liabilities (see Notes 4 and 9)

Stockholders’ equity
Common stock, ($.001 par value; 100,000,000 shares authorized)	58		58
Additional paid-in capital	1,324,438		1,320,980
Retained earnings	224,698		168,769
AOCI	(290,730)		(273,278)
Total stockholders’ equity before treasury stock	1,258,464		1,216,529
Treasury stock at cost	(68,306)		(70,552)
Total stockholders’ equity	1,190,158		1,145,977
Total liabilities and stockholders’ equity	$	12,258,250	$	12,336,677

Shares
Common shares issued	58,116,969		58,116,970
Less: Treasury shares	(2,774,952)		(2,837,846)
Common shares outstanding	55,342,017		55,279,124

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(dollars in thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Interest income
Interest and fees on loans	$	99,844	$	76,081	$	284,423	$	202,530
Interest and dividends on investment securities:
Taxable interest income	20,549		17,436		60,224		47,370
Non-taxable interest income	685		813		2,136		2,482
Other interest income	1,591		1,085		3,890		1,720
Total interest income	122,669		95,415		350,673		254,102

Interest expense
Deposits	37,068		3,565		78,576		7,835
Federal funds purchased and securities sold under agreements to repurchase	1,327		459		3,772		665
Short-term borrowings	1,964		190		12,527		426
Long-term debt	425		372		1,331		859
Senior notes	—		—		—		637
Subordinated notes	3,103		3,738		9,300		9,243
Junior subordinated debt owed to unconsolidated trusts	991		786		2,849		2,148
Total interest expense	44,878		9,110		108,355		21,813

Net interest income	77,791		86,305		242,318		232,289
Provision for credit losses	364		2,364		1,944		3,764
Net interest income after provision for credit losses	77,427		83,941		240,374		228,525

Noninterest income
Wealth management fees	14,235		12,508		43,594		42,422
Fees for customer services	7,502		7,627		21,560		26,122
Payment technology solutions	5,226		5,080		15,772		15,045
Mortgage revenue	311		438		871		1,697
Income on bank owned life insurance	1,001		958		3,682		2,716
Realized net gains (losses) on securities	(33)		(74)		(207)		52
Unrealized net gains (losses) recognized on equity securities	(252)		78		(2,753)		(2,376)
Other income	3,018		4,318		8,349		12,046
Total noninterest income	31,008		30,933		90,868		97,724

Noninterest expense
Salaries, wages, and employee benefits	39,677		39,762		119,867		117,226
Data processing	5,930		5,447		17,472		15,800
Net occupancy expense of premises	4,594		4,705		13,896		14,492
Furniture and equipment expenses	1,638		1,799		5,065		5,874
Professional fees	1,542		1,579		4,573		4,693
Amortization of intangible assets	2,555		2,871		7,953		8,833
Interchange expense	1,786		1,574		5,509		4,606
FDIC insurance	1,475		882		4,483		3,108
Other expense	11,748		12,117		31,735		35,572
Total noninterest expense	70,945		70,736		210,553		210,204

Income before income taxes	37,490		44,138		120,689		116,045
Income taxes	6,824		8,477		23,873		22,121
Net income	$	30,666	$	35,661	$	96,816	$	93,924

Basic earnings per common share	$	0.55	$	0.64	$	1.75	$	1.70
Diluted earnings per common share	$	0.54	$	0.64	$	1.72	$	1.67
Dividends declared per share of common stock	$	0.24	$	0.23	$	0.72	$	0.69

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(dollars in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income	$	30,666	$	35,661	$	96,816	$	93,924
OCI:
Unrealized/Unrecognized gains (losses) on debt securities:
Net unrealized holding gains (losses) on debt securities available for sale, net of taxes of $10,746, $27,631, $6,728, and $84,519, respectively	(26,950)		(69,306)		(16,872)		(211,988)
Net unrealized gains (losses) on debt securities transferred to held to maturity from available for sale, net of taxes of $0, $0, $0, and $13,812, respectively	—		—		—		(34,644)
Reclassification adjustment for realized (gains) losses on debt securities available for sale included in net income, net of taxes of $(9), $(21), $(59), and $8, respectively	24		53		148		(20)
Amortization of unrecognized losses on securities transferred to held to maturity, net of taxes of $(420), $(515), $(1,346), and $(1,396), respectively	1,056		1,291		3,379		3,500
Net change in unrealized/unrecognized gains (losses) on debt securities	(25,870)		(67,962)		(13,345)		(243,152)
Unrealized gains (losses) on cash flow hedges:
Net unrealized holding gains (losses) on cash flow hedges, net of taxes of $2,220, $4,061, $3,412, and $8,604, respectively	(5,577)		(10,192)		(8,563)		(21,587)
Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of $(652), ($104), $(1,776), and $199, respectively	1,638		266		4,456		(498)
Net change in unrealized gains (losses) on cash flow hedges	(3,939)		(9,926)		(4,107)		(22,085)
Net change in AOCI	(29,809)		(77,888)		(17,452)		(265,237)
Total comprehensive income (loss)	$	857	$	(42,227)	$	79,364	$	(171,313)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(dollars in thousands, except per share amounts)


	Three Months Ended September 30, 2023
	Shares	Common Stock		Additional Paid-in Capital		Retained Earnings		AOCI		Treasury Stock		Total Stockholders' Equity
Balance, June 30, 2023	55,290,847	$	58	$	1,325,173	$	207,660	$	(260,921)	$	(70,022)	$	1,201,948
Net income	—	—		—		30,666		—		—		30,666
OCI, net of tax	—	—		—		—		(29,809)		—		(29,809)
Repurchase of stock	(65,123)	—		—		—		—		(1,278)		(1,278)
Issuance of treasury stock for ESPP	11,291	—		(106)		—		—		290		184
Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax	105,002	—		(3,593)		—		—		2,704		(889)


Cash dividends on common stock at $0.24 per share	—	—		—		(13,267)		—		—		(13,267)
Stock dividend equivalents on RSUs/PSUs/DSUs	—	—		361		(361)		—		—		—
Stock-based compensation	—	—		2,603		—		—		—		2,603
Balance, September 30, 2023	55,342,017	$	58	$	1,324,438	$	224,698	$	(290,730)	$	(68,306)	$	1,190,158


	Nine Months Ended September 30, 2023
	Shares	Common Stock		Additional Paid-in Capital		Retained Earnings		AOCI		Treasury Stock		Total Stockholders' Equity
Balance, December 31, 2022	55,279,124	$	58	$	1,320,980	$	168,769	$	(273,278)	$	(70,552)	$	1,145,977
Net income	—	—		—		96,816		—		—		96,816
OCI, net of tax	—	—		—		—		(17,452)		—		(17,452)
Repurchase of stock	(110,123)	—		—		—		—		(2,209)		(2,209)
Issuance of treasury stock for ESPP	51,885	—		(451)		—		—		1,335		884
Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax	120,137	—		(4,083)		—		—		3,094		(989)

Net issuance of treasury stock for warrants exercised	994			(17)						26		9
Cash dividends on common stock at $0.72 per share	—	—		—		(39,806)		—		—		(39,806)
Stock dividend equivalents on RSUs/PSUs/DSUs	—	—		1,081		(1,081)		—		—		—
Stock-based compensation	—	—		6,928		—		—		—		6,928
Balance, September 30, 2023	55,342,017	$	58	$	1,324,438	$	224,698	$	(290,730)	$	(68,306)	$	1,190,158

(continued)

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FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (Continued)

(dollars in thousands, except per share amounts)


	Three Months Ended September 30, 2022
	Shares	Common Stock		Additional Paid-in Capital		Retained Earnings		AOCI		Treasury Stock		Total Stockholders' Equity
Balance, June 30, 2022	55,335,703	$	58	$	1,317,675	$	124,685	$	(211,107)	$	(69,354)	$	1,161,957
Net income	—	—		—		35,661		—		—		35,661
OCI, net of tax	—	—		—		—		(77,888)		—		(77,888)

Repurchase of stock	(130,000)	—		—		—		—		(3,088)		(3,088)
Issuance of treasury stock for ESPP	10,993	—		(77)		—		—		283		206
Net issuance of treasury stock for RSU/DSU vesting and related tax	15,738			(434)		—		—		405		(29)
Cash dividends on common stock at $0.23 per share	—	—		—		(12,707)		—		—		(12,707)
Stock dividend equivalents on RSUs/DSUs at $0.23 per share	—	—		281		(281)		—		—		—
Stock-based compensation	—	—		2,476		—		—		—		2,476
Balance, September 30, 2022	55,232,434	$	58	$	1,319,921	$	147,358	$	(288,995)	$	(71,754)	$	1,106,588


	Nine Months Ended September 30, 2022
	Shares	Common Stock		Additional Paid-in Capital		Retained Earnings		AOCI		Treasury Stock		Total Stockholders' Equity
Balance, December 31, 2021	55,434,910	$	58	$	1,316,984	$	92,463	$	(23,758)	$	(66,635)	$	1,319,112
Net income	—	—		—		93,924		—		—		93,924
OCI, net of tax	—	—		—		—		(265,237)		—		(265,237)

Repurchase of stock	(388,614)	—		—		—		—		(9,912)		(9,912)
Issuance of treasury stock for ESPP	50,033	—		(271)		—		—		1,288		1,017
Net issuance of treasury stock for RSU/DSU vesting and related tax	136,105	—		(4,383)		—		—		3,505		(878)
Cash dividends on common stock at $0.69 per share	—	—		—		(38,159)		—		—		(38,159)
Stock dividend equivalents on RSUs/DSUs at $0.69 per share	—	—		870		(870)		—		—		—
Stock-based compensation	—	—		6,721		—		—		—		6,721
Balance, September 30, 2022	55,232,434	$	58	$	1,319,921	$	147,358	$	(288,995)	$	(71,754)	$	1,106,588

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(dollars in thousands)


	Nine Months Ended September 30,
	2023		2022
Cash flows provided by (used in) operating activities
Net income	$	96,816	$	93,924
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses	1,944		3,764
Amortization of intangible assets	7,953		8,833
Amortization of mortgage servicing rights	2,155		2,757
Amortization of NMTC	6,740		4,668
Depreciation and amortization of premises and equipment	7,052		8,035
Net amortization (accretion) on portfolio loans	5,399		2,524
Net amortization (accretion) of premium (discount) on investment securities	11,351		15,820
Net amortization (accretion) of premium (discount) on time deposits	(223)		(318)
Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings	764		1,152
Impairment of OREO and other repossessed assets	113		611
Impairment of fixed assets held for sale	—		427
Impairment of mortgage servicing rights	1		(9)
Impairment of leases	—		84
Unrealized (gains) losses recognized on equity securities, net	2,753		2,376
(Gain) loss on sales of equity securities, net	—		(24)
(Gain) loss on sales of debt securities, net	207		(28)
(Gain) loss on sales of loans, net	(603)		(1,777)
(Gain) loss on sales of OREO	4		56
(Gain) loss on sales of premises and equipment	(197)		(666)
(Gain) loss on life insurance proceeds	(759)		—
(Increase) decrease in cash surrender value of bank owned life insurance	(2,923)		(2,716)
Provision for deferred income taxes	(2,000)		(3)
Stock-based compensation	6,928		6,721

Mortgage loans originated for sale	(28,663)		(63,986)
Proceeds from sales of mortgage loans	27,418		84,732
(Increase) decrease in other assets	(15,072)		(45,575)
Increase (decrease) in other liabilities	171		(3,364)
Net cash provided by (used in) operating activities	127,329		118,018

Cash flows provided by (used in) investing activities
Purchases of equity securities	(6,169)		(14,820)
Purchases of debt securities available for sale	(7,796)		(279,831)
Proceeds from sales of equity securities	6,169		15,418

Proceeds from paydowns and maturities of debt securities held to maturity	38,172		51,552
Proceeds from paydowns and maturities of debt securities available for sale	253,648		370,274
Purchases of FHLB and other bank stock	(30,957)		—
Proceeds from the redemption of FHLB and other bank stock	43,926		225

Net (increase) decrease in loans	(137,843)		(484,701)
Cash paid for premiums on bank-owned life insurance	(80)		(101)
Proceeds from life insurance	2,292		219
Purchases of premises and equipment	(6,750)		(4,006)
Proceeds from disposition of premises and equipment	3,881		4,182
Proceeds from sales of OREO	781		2,662
Net cash provided by (used in) investing activities	159,274		(338,927)

(continued)

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FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)

(dollars in thousands)


	Nine Months Ended September 30,
	2023		2022
Cash flows provided by (used in) financing activities
Net increase (decrease) in deposits	$	261,305	$	(166,862)
Net change in federal funds purchased and securities sold under agreements to repurchase	(46,104)		(35,542)
Proceeds from FHLB advances	265,000		—
Repayment of FHLB advances	(604,054)		(5,507)
Proceeds from other borrowings, net of debt issuance costs	—		98,094
Repayment of other borrowings	(9,000)		(109,000)
Cash dividends paid	(39,806)		(38,159)
Purchase of treasury stock	(2,209)		(9,912)
Cash paid for withholding taxes on stock-based payments	(989)		(878)

Proceeds from stock warrants exercised	9		—
Issuance of treasury stock for ESPP	—		(271)

Net cash provided by (used in) financing activities	(175,848)		(268,037)

Net increase (decrease) in cash and cash equivalents	$	110,755	$	(488,946)
Cash and cash equivalents, beginning of period	227,164		836,095
Cash and cash equivalents, ending of period	$	337,919	$	347,149

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash payments for:
Interest	$	89,572	$	19,465
Income taxes	23,594		30,506

Non-cash investing and financing activities:
OREO acquired in settlement of loans	144		132

Transfer of debt securities available for sale to held to maturity	—		985,199

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1: Significant Accounting Policies

Nature of Operations

First Busey Corporation, a Nevada corporation organized in 1980, is a $12.3 billion financial holding company headquartered in Champaign, Illinois. Busey’s common stock is traded on The Nasdaq Global Select Market under the symbol “BUSE.”

First Busey operates and reports its business in three segments: Banking, Wealth Management, and FirsTech.

•The Banking operating segment provides a full range of banking services to individual and corporate customers through its banking center network in Illinois; the St. Louis, Missouri metropolitan area; southwest Florida; and Indianapolis, Indiana.

•The Wealth Management operating segment provides a full range of asset management, investment, brokerage, fiduciary, philanthropic advisory, tax preparation, and farm management services to individuals, businesses, and foundations.

•The FirsTech operating segment provides comprehensive and innovative payment technology solutions including online, mobile, and voice-recognition bill payments; money management and credit card networks; direct debit services; lockbox remittance processing for payments made by mail; and walk-in payments. FirsTech also provides additional tools to help clients with billing, reconciliation, bill reminders, and treasury services.

For additional information about First Busey's operating segments, see “Note 14. Operating Segments and Related Information.”

Basis of Financial Statement Presentation

These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements included in Busey's 2022 Annual Report. These interim unaudited consolidated financial statements serve to update our 2022 Annual Report and may not include all information and notes necessary to constitute a complete set of financial statements.

We prepared these unaudited consolidated financial statements in conformity with GAAP. We have eliminated intercompany accounts and transactions. We have also reclassified certain prior year amounts to conform to the current period presentation. These reclassifications did not have a material impact on our consolidated financial condition or results of operations.

In our opinion, the unaudited consolidated financial statements reflect all normal, recurring adjustments needed to present fairly our results for the interim periods. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.

Use of Estimates

In preparing the accompanying unaudited consolidated financial statements in conformity with GAAP, Busey’s management is required to make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures provided. Actual results could differ from those estimates. Material estimates which are particularly susceptible to significant change in the near term relate to the fair value of debt securities available for sale, fair value of assets acquired and liabilities assumed in business combinations, goodwill, income taxes, and the determination of the ACL.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Impact of Recently Adopted Accounting Standards

In July 2023, the FASB issued ASU 2023-03 “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718)” pursuant to: (i) SEC Staff Accounting Bulletin No. 120, which provided interpretive guidance related to estimating the fair value of share-based payment transactions while in possession of material non-public information; (ii) an SEC Staff Announcement at the March 24, 2022, Emerging Issues Task Force Meeting, which provided interpretive guidance on accounting for share-based payments to employees and non-employees; and (iii) Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock, which provided interpretive guidance on the reporting of income or loss applicable to common stock. This update was reflected in the Accounting Standards Codification upon issuance. Adoption of this standard did not have a material impact on Busey’s financial position or results of operations.

In March 2022, the FASB issued ASU 2022-02 “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures,” which eliminates the TDR accounting model for creditors that have already adopted CECL. In lieu of the TDR accounting model, loan refinancing and restructuring guidance in ASC Subtopic 310-20-35-9 through 35-11 “Receivables—Nonrefundable Fees and Other Costs—Subsequent Measurement—Loan Refinancing or Restructuring” will apply to all loan modifications, including those made for borrowers experiencing financial difficulty. This standard also enhances disclosure requirements related to certain loan modifications. Additionally, this standard introduces new requirements to disclose gross write-off information in the vintage disclosures of financing receivables by credit quality indicator and class of financing receivable by year of origination. This standard applies prospectively. For the transition method related to the recognition and measurement of TDRs, there is an option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. This standard became effective for Busey beginning January 1, 2023. Adoption of this standard did not have a material impact on Busey’s financial position or results of operations.

In March 2022, the FASB issued ASU 2022-01 “Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method,” which replaces the current last-of-layer hedge accounting method with an expanded portfolio layer method that permits multiple hedged layers of a single closed portfolio. The scope of the portfolio layer method is also expanded to include non-prepayable financial assets. This update also provides additional guidance on the accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer method, and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. Amendments related to hedge basis adjustments which are included in this standard apply on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. Amendments related to disclosure which are included in this standard may be applied on a prospective basis from the initial application date, or on a retrospective basis to each prior period presented after the date of adoption of the amendments in ASU 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This standard became effective for Busey beginning January 1, 2023. Adoption of this standard did not have a material impact on Busey’s financial position or results of operations.

ASU 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” requires measurement and recognition in accordance with ASC Topic 606 “Revenue from Contracts with Customers” for contract assets and contract liabilities acquired in a business combination. This update became effective for Busey beginning January 1, 2023. This standard applied prospectively to all business combinations that occurred on or after the date of adoption. Adoption of this standard did not have an impact on Busey’s financial position or results of operations.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Recently Issued Accounting Standards Not Yet Adopted

In March 2023, the FASB issued ASU 2023-02 “Investments—Equity Method and Joint Ventures (Topic 323),” permitting an election to use the proportional amortization method to account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits, regardless of the tax credit program from which the income tax credits are received, provided that certain conditions are met. The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense. This standard must be applied on a retrospective or modified retrospective basis, and is applicable for Busey beginning on January 1, 2024. Early adoption is permitted. Busey is currently evaluating the potential effect on the Company’s financial position and results of operations, and upon adoption expects changes to be reflected in the Other Expense and Income Taxes line items in the Consolidated Statements of Income (Unaudited).

In March 2023, the FASB issued ASU 2023-01 “Leases (Topic 842): Common Control Arrangements,” which requires amortization over the useful life of leasehold improvements (not the lease term) when the lease is between entities under common control, and any value of such leasehold improvements remaining at the end of the lease term is to be accounted for as a transfer between entities under common control. This standard may be adopted either prospectively, or retrospectively, and is effective for Busey beginning January 1, 2024. Early adoption is permitted. Busey does not expect adoption of this standard to have a material impact on the Company’s financial position and results of operations.

In June 2022, the FASB issued ASU 2022-03 “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which clarifies that contractual restrictions on the sale of equity securities are not considered in measuring the fair value of those equity securities, and further that contractual sale restrictions cannot be recognized and measured as a separate unit of account. This standard applies prospectively, and is effective for Busey beginning January 1, 2024. Early adoption is permitted. Busey is currently evaluating the potential effect on the Company’s financial position and results of operations.

Subsequent Events

Busey has evaluated subsequent events for potential recognition and/or disclosure through the date the unaudited consolidated financial statements included in this Quarterly Report were issued. The Company issued a Form 8‑K on October 24, 2023, regarding the departure of a named executive officer, and during the fourth quarter of 2023 expects to record related severance expenses according to Schedule 1 of the Separation Letter that was filed as Exhibit 10.1 to the Form 8‑K. Other than this, there were no significant subsequent events for the quarter ended September 30, 2023, through the filing date of these unaudited consolidated financial statements.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2: Debt Securities

Busey's portfolio of debt securities includes both available for sale and held to maturity securities. The tables below provide the amortized cost, unrealized gains and losses, and fair values of debt securities summarized by major category (dollars in thousands):


	As of September 30, 2023
	Amortized Cost		Unrealized				Fair Value
			Gross Gains		Gross Losses
Debt securities available for sale
U.S. Treasury securities	$	51,522	$	—	$	(1,392)	$	50,130
Obligations of U.S. government corporations and agencies	10,071		2		(254)		9,819
Obligations of states and political subdivisions1	254,549		6		(27,758)		226,797
Asset-backed securities	486,517		—		(7,069)		479,448
Commercial mortgage-backed securities	120,117		—		(19,817)		100,300
Residential mortgage-backed securities2	1,343,324		—		(254,528)		1,088,796
Corporate debt securities	251,194		91		(23,734)		227,551
Total debt securities available for sale	$	2,517,294	$	99	$	(334,552)	$	2,182,841

___________________________________________

1.Includes securities marked at par, with no gain or loss to report.

2.Gross gains on Residential mortgage-backed securities were insignificant, rounding to zero thousand.



	Amortized Cost		Unrecognized				Fair Value
			Gross Gains		Gross Losses
Debt securities held to maturity
Commercial mortgage-backed securities	$	459,866	$	—	$	(93,401)	$	366,465
Residential mortgage-backed securities	422,748		—		(87,537)		335,211
Total debt securities held to maturity	$	882,614	$	—	$	(180,938)	$	701,676

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	As of December 31, 2022
	Amortized Cost		Unrealized					Fair Value
			Gross Gains		Gross Losses
Debt securities available for sale
U.S. Treasury securities	$	117,805	$	—	$	(3,744)	</