BUSE filing — read by section

Item 8. Financial Statements and Supplementary Data

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 
 Table of Contents 
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 49 ) 
 80 
 
 
 CONSOLIDATED FINANCIAL STATEMENTS 
 82 
 
 Consolidated Balance Sheets 
 82 
 
 Consolidated Statements of Income 
 83 
 
 Consolidated Statements of Comprehensive Income (Loss) 
 84 
 
 Consolidated Statements of Stockholders’ Equity 
 85 
 
 Consolidated Statements of Cash Flows 
 86 
 
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
 88 
 
 Note 1 – Significant Accounting Policies 
 88 
 
 Note 2 – Acquisitions 
 100 
 
 Note 3 – Debt Securities 
 102 
 
 Note 4 – Portfolio Loans 
 106 
 
 Note 5 – Other Real Estate Owned and Other Repossessed Assets 
 114 
 
 Note 6 – Premises and Equipment 
 115 
 
 Note 7 – Goodwill and Other Intangible Assets 
 115 
 
 Note 8 – Deposits 
 117 
 
 Note 9 – Borrowings 
 117 
 
 Note 10 – Junior Subordinated Debt Owed to Unconsolidated Trusts 
 119 
 
 Note 11 – Regulatory Capital 
 120 
 
 Note 12 – Income Taxes 
 123 
 
 Note 13 – Employee Benefit Plans 
 124 
 
 Note 14 – Stock-based Compensation 
 125 
 
 Note 15 – Transactions with Related Parties 
 129 
 
 Note 16 – Outstanding Commitments and Contingent Liabilities 
 129 
 
 Note 17 – Derivative Financial Instruments 
 129 
 
 Note 18 – Fair Value Measurements 
 134 
 
 Note 19 – Earnings Per Share 
 138 
 
 Note 20 – Accumulated Other Comprehensive Income (Loss) 
 140 
 
 Note 21 – Operating Segments and Related Information 
 141 
 
 Note 22 – Leases 
 144 
 
 Note 23 – Parent Company Only Financial Information 
 146 
 

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 Table of Contents 

 Report of Independent Registered Public Accounting Firm 
 
 
 Stockholders and the Board of Directors of 
 First Busey Corporation 
 
 
 Opinion on the Financial Statements 
 We have audited the accompanying consolidated balance sheets of First Busey Corporation and Subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. 
 We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 23, 2023, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. 
 Basis for Opinion 
 These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 
 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 
 Critical Audit Matters 
 The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate. 
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 Table of Contents 

 Allowance for Credit Losses on Loans—Adjustments to Historical Loss Factors 
 As described in Notes 1 and 4 to the financial statements, the Company’s allowance for credit losses totaled $91.6 million, which consists of a reserve on loans collectively evaluated for impairment (a/k/a general reserve) of $87.1 million and a reserve on loans individually evaluated (a/k/a specific reserve) of $4.5 million at December 31, 2022. The allowance for credit losses is measured on a collective loan pool basis when similar risk characteristics exist. Loans that do not share similar risk characteristics are evaluated on an individual basis, at the balance sheet date. The measurement of expected credit losses on collectively evaluated loans is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the amortized cost basis. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions such as changes in unemployment rates, property values and other relevant factors. The calculation also contemplates that the Company 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. 
 We identified the adjustments to historical loss factors components of the allowance for credit losses as a critical audit matter as auditing the underlying adjustments required significant auditor judgment as amounts determined by management rely on analysis that is highly subjective and includes significant estimation uncertainty. 
 Our audit procedures related to the adjustments to historical factors within the allowance for credit losses include the following, among others: 
 • We obtained an understanding of the relevant controls related to the adjustments to historical factors in the calculation of the allowance for credit losses and tested such controls for design and operating effectiveness, including management’s review of the allowance memo and calculation in support of adjustments. 
 • We tested the completeness and accuracy of data used by management in determining adjustments to historical loss factors by agreeing the supporting data to internal or external source data. 
 • We tested management’s conclusions regarding the appropriateness of the adjustments, including magnitude and directional consistency, to historical loss factors and agreed the impact to the allowance for credit losses calculation. 
 We or our predecessor firms have served as the Company’s auditor since at least 1980; however, an earlier year could not be established. 
 
 
 
 
 /s/ RSM US LLP 
 Champaign, Illinois 
 February 23, 2023 
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 Table of Contents 
 FIRST BUSEY CORPORATION 
 CONSOLIDATED BALANCE SHEETS 
 (dollars in thousands) 

 
 
 
 
 As of December 31, 
 2022 2021 
 Assets 
 Cash and cash equivalents: 
 Cash and due from banks $ 117,513 $ 102,983 
 Interest-bearing deposits 109,651 733,112 
 Total cash and cash equivalents 227,164 836,095 
 
 Debt securities available for sale 2,461,393 3,981,251 
 Debt securities held to maturity 918,312 — 
 Equity securities 11,535 13,571 
 Loans held for sale (2022 at LOCOM, 2021 at fair value) 1,253 23,875 
 Portfolio loans (net of ACL of $ 91,608 at December 31, 2022; $ 87,887 at December 31, 2021) 
 7,634,094 7,101,111 
 Premises and equipment, net 126,524 136,147 
 Right of use assets 12,829 10,533 
 Goodwill 317,873 317,873 
 Other intangible assets, net 46,423 58,051 
 Cash surrender value of bank owned life insurance 180,485 176,940 
 Other assets 398,792 204,242 
 Total assets $ 12,336,677 $ 12,859,689 
 
 Liabilities and Stockholders’ Equity 
 Liabilities 
 Deposits: 
 Noninterest-bearing $ 3,393,666 $ 3,670,267 
 Interest-bearing 6,677,614 7,098,310 
 Total deposits 10,071,280 10,768,577 
 
 Securities sold under agreements to repurchase 229,806 270,139 
 Short-term borrowings 351,054 17,678 
 Long-term debt 30,000 46,056 
 Senior notes, net of unamortized issuance costs — 39,944 
 Subordinated notes, net of unamortized issuance costs 222,038 182,773 
 Junior subordinated debt owed to unconsolidated trusts 71,810 71,635 
 Lease liabilities 12,995 10,591 
 Other liabilities 201,717 133,184 
 Total liabilities 11,190,700 11,540,577 
 
 Outstanding commitments and contingent liabilities (see Notes 16 and 22 ) 
 
 
 Stockholders’ Equity 
 Common stock, ($ 0.001 par value; 100,000,000 shares authorized) 
 58 58 
 Additional paid-in capital 1,320,980 1,316,984 
 Retained earnings 168,769 92,463 
 AOCI ( 273,278 ) ( 23,758 ) 
 Total stockholders’ equity before treasury stock 1,216,529 1,385,747 
 Treasury stock at cost ( 70,552 ) ( 66,635 ) 
 Total stockholders’ equity 1,145,977 1,319,112 
 Total liabilities and stockholders’ equity $ 12,336,677 $ 12,859,689 
 
 Shares 
 Common shares issued 58,116,970 58,116,970 
 Less treasury shares ( 2,837,846 ) ( 2,682,060 ) 
 Common shares outstanding 55,279,124 55,434,910 

 See accompanying Notes to Consolidated Financial Statements. 
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 FIRST BUSEY CORPORATION 
 CONSOLIDATED STATEMENTS OF INCOME 
 (dollars in thousands, except per share amounts) 

 
 Year Ended December 31, 
 2022 2021 2020 
 Interest income 
 Interest and fees on loans $ 287,477 $ 252,097 $ 284,959 
 Interest and dividends on investment securities: 
 Taxable interest income 66,140 41,787 35,364 
 Non-taxable interest income 3,272 3,765 4,552 
 Other interest income 3,097 1,151 1,723 
 Total interest income 359,986 298,800 326,598 
 
 Interest expense 
 Deposits 16,112 12,583 30,691 
 Federal funds purchased and securities sold under agreements to repurchase 1,475 227 660 
 Short-term borrowings 1,647 279 234 
 Long-term debt 1,310 657 525 
 Senior notes 637 1,598 1,598 
 Subordinated notes 12,338 9,918 6,995 
 Junior subordinated debt owed to unconsolidated trusts 3,029 2,840 2,960 
 Total interest expense 36,548 28,102 43,663 
 
 Net interest income 323,438 270,698 282,935 
 Provision for credit losses 4,623 ( 15,101 ) 38,797 
 Net interest income after provision for credit losses 318,815 285,799 244,138 
 
 Noninterest income 
 Wealth management fees 55,378 53,086 42,928 
 Fees for customer services 33,111 35,604 31,604 
 Payment technology solutions 20,067 18,347 15,628 
 Mortgage revenue 1,895 7,239 13,038 
 Income on bank owned life insurance 3,663 5,166 5,380 
 Realized net gains (losses) on securities 50 29 1,724 
 Unrealized net gains (losses) recognized on equity securities ( 2,183 ) 3,041 ( 393 ) 
 Other income 14,822 10,292 8,356 
 Total noninterest income 126,803 132,804 118,265 
 
 Noninterest expense 
 Salaries, wages, and employee benefits 159,016 145,312 126,719 
 Data processing 21,648 21,862 16,426 
 Net occupancy expense of premises 19,130 18,346 17,607 
 Furniture and equipment expenses 7,645 8,301 9,550 
 Professional fees 6,125 7,549 8,396 
 Amortization of intangible assets 11,628 11,274 10,008 
 Interchange expense 6,298 5,792 4,810 
 Other expense 52,391 43,344 40,681 
 Total noninterest expense 283,881 261,780 234,197 
 
 Income before income taxes 161,737 156,823 128,206 
 Income taxes 33,426 33,374 27,862 
 Net income $ 128,311 $ 123,449 $ 100,344 
 
 Basic earnings per common share $ 2.32 $ 2.23 $ 1.84 
 Diluted earnings per common share 2.29 2.20 1.83 
 Dividends declared per share of common stock 0.92 0.92 0.88 

 See accompanying Notes to Consolidated Financial Statements. 
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 FIRST BUSEY CORPORATION 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) 
 (dollars in thousands) 

 
 Years Ended December 31, 
 2022 2021 2020 
 Net income $ 128,311 $ 123,449 $ 100,344 
 OCI: 
 Unrealized/Unrecognized gains (losses) on debt securities: 
 Net unrealized holding gains (losses) on debt securities available for sale, net of taxes of $ 79,460 , $ 23,367 , and $( 8,615 ) 
 ( 199,302 ) ( 58,610 ) 21,561 
 Net unrecognized gains (losses) on debt securities transferred to held to maturity from available for sale, net of taxes of $ 13,812 , $ — , and $ — , respectively 
 ( 34,644 ) — — 
 Reclassification adjustment for realized (gains) losses on debt securities available for sale included in net income, net of taxes of $ 7 , $( 17 ), and $ 496 , respectively 
 ( 19 ) 44 ( 1,228 ) 
 Amortization of unrecognized losses on securities transferred to held to maturity, net of taxes of $( 1,893 ), $ — , and $ — , respectively 
 4,745 — — 
 Net change in unrealized/unrecognized gains (losses) on debt securities ( 229,220 ) ( 58,566 ) 20,333 
 Unrealized gains (losses) on cash flow hedges: 
 Net unrealized holding gains (losses) on cash flow hedges, net of taxes of $ 8,258 , $( 294 ), and $ 1,007 , respectively 
 ( 20,717 ) 736 ( 2,526 ) 
 Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of $( 166 ), $( 304 ), and $( 216 ), respectively 
 417 763 542 
 Net change in unrealized gains (losses) on cash flow hedges ( 20,300 ) 1,499 ( 1,984 ) 
 Net change in AOCI ( 249,520 ) ( 57,067 ) 18,349 
 Total comprehensive income (loss) $ ( 121,209 ) $ 66,382 $ 118,693 

 See accompanying Notes to Consolidated Financial Statements. 
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 FIRST BUSEY CORPORATION 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 
 (dollars in thousands, except per share amounts) 

 
 Shares Common 
Stock Additional 
Paid-in 
Capital Retained 
Earnings 
(Accumulated 
Deficit) AOCI Treasury Stock Total 
Stockholders' 
Equity 
 Balance, December 31, 2019 54,788,772 $ 56 $ 1,248,216 $ ( 14,813 ) $ 14,960 $ ( 27,985 ) $ 1,220,434 
 Cumulative effect of change in accounting principle (ASU 2016-13) — — — ( 15,922 ) — — ( 15,922 ) 
 Net income — — — 100,344 — — 100,344 
 OCI, net of tax — — — — 18,349 — 18,349 
 
 Repurchase of stock ( 531,114 ) — — — — ( 12,272 ) ( 12,272 ) 
 Issuance of treasury stock for ESPP 32,063 — ( 59 ) — — 606 547 
 Net issuance of treasury stock for RSU/DSU vesting and related tax 106,589 — ( 2,648 ) — — 2,013 ( 635 ) 
 Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax 8,069 — ( 51 ) — — 152 101 
 Cash dividends common stock at $ 0.88 per share 
 — — — ( 48,012 ) — — ( 48,012 ) 
 Stock dividend equivalents RSUs at $ 0.88 per share 
 — — 767 ( 767 ) — — — 
 Stock-based compensation — — 7,135 — — — 7,135 
 Balance, December 31, 2020 54,404,379 $ 56 $ 1,253,360 $ 20,830 $ 33,309 $ ( 37,486 ) $ 1,270,069 
 Net income — — — 123,449 — — 123,449 
 OCI, net of tax — — — — ( 57,067 ) — ( 57,067 ) 
 Stock issued in acquisition, net of stock issuance costs 2,206,237 2 58,953 — — — 58,955 
 Repurchase of stock ( 1,323,000 ) — — — — ( 33,043 ) ( 33,043 ) 
 Issuance of treasury stock for ESPP 30,390 — ( 136 ) — — 782 646 
 Net issuance of treasury stock for RSU/DSU vesting and related tax 116,904 — ( 4,109 ) — — 3,112 ( 997 ) 
 
 Cash dividends common stock at $ 0.92 per share 
 — — — ( 50,764 ) — — ( 50,764 ) 
 Stock dividend equivalents RSUs at $ 0.92 per share 
 — — 1,052 ( 1,052 ) — — — 
 Stock-based compensation — — 7,864 — — — 7,864 
 Balance, December 31, 2021 55,434,910 $ 58 $ 1,316,984 $ 92,463 $ ( 23,758 ) $ ( 66,635 ) $ 1,319,112 
 Net income — — — 128,311 — — 128,311 
 OCI, net of tax — — — — ( 249,520 ) — ( 249,520 ) 
 
 Repurchase of stock ( 388,614 ) — — — — ( 9,912 ) ( 9,912 ) 
 Issuance of treasury stock for ESPP 57,385 — ( 320 ) — — 1,477 1,157 
 Net issuance of treasury stock for RSU/DSU vesting and related tax 175,225 — ( 5,789 ) — — 4,513 ( 1,276 ) 
 Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax 218 — ( 5 ) — — 5 — 
 Cash dividends common stock at $ 0.92 per share 
 — — — ( 50,863 ) — — ( 50,863 ) 
 Stock dividend equivalents RSUs at $ 0.92 per share 
 — — 1,142 ( 1,142 ) — — — 
 Stock-based compensation — — 8,968 — — — 8,968 
 Balance, December 31, 2022 55,279,124 $ 58 $ 1,320,980 $ 168,769 $ ( 273,278 ) $ ( 70,552 ) $ 1,145,977 

 See accompanying Notes to Consolidated Financial Statements. 
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 FIRST BUSEY CORPORATION 
 CONSOLIDATED STATEMENTS OF CASH FLOWS 
 (dollars in thousands) 

 
 Years Ended December 31, 
 2022 2021 2020 
 Cash Flows Provided by (Used in) Operating Activities 
 Net income $ 128,311 $ 123,449 $ 100,344 
 Adjustments to reconcile net income to net cash provided by (used in) operating activities: 
 Provision for credit losses 4,623 ( 15,101 ) 38,797 
 Amortization of intangible assets 11,628 11,274 10,008 
 Amortization of mortgage servicing rights 3,540 5,292 5,667 
 Amortization of NMTC 6,333 5,563 2,311 
 Depreciation and amortization of premises and equipment 10,482 11,610 12,273 
 Net amortization (accretion) on portfolio loans 3,932 ( 11,545 ) ( 15,372 ) 
 Net amortization (accretion) of premium (discount) on investment securities 20,799 24,251 9,716 
 Net amortization (accretion) of premium (discount) on time deposits ( 403 ) ( 1,142 ) ( 933 ) 
 Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings 1,400 826 586 
 Impairment of OREO and other repossessed assets 611 1 68 
 Impairment of fixed assets held for sale 427 3,227 6,901 
 Impairment of mortgage servicing rights ( 8 ) ( 639 ) 648 
 Impairment of leases 84 — — 
 Unrealized (gains) losses recognized on equity securities, net 2,183 ( 3,041 ) 393 
 (Gain) loss on sales of equity securities, net ( 24 ) — — 
 (Gain) loss on sales of debt securities, net ( 26 ) ( 29 ) ( 1,724 ) 
 (Gain) loss on sales of loans, net ( 1,944 ) ( 9,323 ) ( 26,999 ) 
 (Gain) loss on sales of OREO ( 54 ) 174 ( 133 ) 
 (Gain) loss on sales of premises and equipment ( 825 ) ( 1,023 ) 286 
 (Gain) loss on life insurance proceeds — ( 1,257 ) ( 1,270 ) 
 (Increase) decrease in cash surrender value of bank owned life insurance ( 3,663 ) ( 3,909 ) ( 4,110 ) 
 Provision for deferred income taxes ( 1,272 ) 4,665 ( 5,309 ) 
 Stock-based compensation 8,968 7,864 7,135 
 
 Mortgage loans originated for sale ( 70,953 ) ( 274,356 ) ( 881,398 ) 
 Proceeds from sales of mortgage loans 95,289 306,074 920,050 
 (Increase) decrease in other assets ( 56,284 ) 7,203 ( 8,210 ) 
 Increase (decrease) in other liabilities 2,633 ( 28,096 ) ( 6,551 ) 
 Net cash provided by (used in) operating activities $ 165,787 $ 162,012 $ 163,174 
 
 Cash Flows Provided by (Used in) Investing Activities 
 Purchases of equity securities $ ( 14,820 ) $ ( 11,017 ) $ ( 13,123 ) 
 Purchases of debt securities available for sale ( 280,083 ) ( 2,298,055 ) ( 1,282,199 ) 
 Proceeds from sales of equity securities 15,418 7,254 13,152 
 Proceeds from sales of debt securities available for sale — 290,955 — 
 Proceeds from paydowns and maturities of debt securities held to maturity 70,116 — — 
 Proceeds from paydowns and maturities of debt securities available for sale 470,134 868,083 665,744 
 Purchases of FHLB and other bank stock ( 12,969 ) — — 
 Proceeds from the redemption of FHLB and other bank stock 225 — — 
 Net cash received in (paid for) acquisitions (see Note 2) — 228,279 — 
 Net (increase) decrease in loans ( 541,713 ) 76,826 ( 113,744 ) 
 Cash paid for premiums on bank-owned life insurance ( 106 ) ( 124 ) ( 120 ) 
 Proceeds from life insurance 219 4,755 2,696 
 Purchases of premises and equipment ( 4,989 ) ( 5,042 ) ( 4,198 ) 
 Proceeds from disposition of premises and equipment 4,528 7,306 814 
 Proceeds from sales of OREO 3,184 1,590 1,439 
 Net cash provided by (used in) investing activities $ ( 290,856 ) $ ( 829,190 ) $ ( 729,539 ) 

 (continued) 
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 FIRST BUSEY CORPORATION 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) 
 (dollars in thousands) 

 
 Years Ended December 31, 
 2022 2021 2020 
 Cash Flows Provided by (Used in) Financing Activities 
 Net increase (decrease) in deposits $ ( 696,894 ) $ 767,474 $ 776,386 
 Net change in federal funds purchased and securities sold under agreements to repurchase ( 40,333 ) 77,874 ( 29,877 ) 
 Proceeds from FHLB advances 335,000 5,000 4,000 
 Repayment of FHLB advances ( 5,678 ) ( 4,658 ) ( 32,711 ) 
 Proceeds from other borrowings, net of debt issuance costs 98,094 72,500 142,634 
 Repayment of other borrowings ( 112,000 ) ( 18,500 ) ( 74,000 ) 
 Cash dividends paid ( 50,863 ) ( 50,764 ) ( 48,012 ) 
 Purchase of treasury stock ( 9,912 ) ( 33,043 ) ( 12,272 ) 
 Cash paid for withholding taxes on stock-based payments ( 1,276 ) ( 997 ) ( 635 ) 
 Proceeds from stock options exercised — — 101 
 
 Common stock issuance costs — ( 150 ) — 
 Net cash provided by (used in) financing activities $ ( 483,862 ) $ 814,736 $ 725,614 
 
 Net increase (decrease) in cash and cash equivalents ( 608,931 ) 147,558 159,249 
 Cash and cash equivalents, beginning of period 836,095 688,537 529,288 
 
 Cash and cash equivalents, ending of period $ 227,164 $ 836,095 $ 688,537 
 
 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION 
 
 Cash payments for: 
 Interest $ 35,297 $ 25,374 $ 53,601 
 Income taxes 30,676 22,487 22,195 
 
 Non-cash investing and financing activities: 
 OREO acquired in settlement of loans 175 1,610 2,867 
 Transfer of loans held for sale to portfolio loans — ( 4,808 ) — 
 Transfer of debt securities available for sale to held to maturity 985,199 — — 

 See accompanying Notes to Consolidated Financial Statements. 
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 FIRST BUSEY CORPORATION 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

 
 
 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES 
 Nature of Operations 
 First Busey Corporation is a financial holding company organized under the laws of Nevada. The Company’s subsidiaries provide retail and commercial banking services and payment technology solutions, and offer a full range of financial products and services including depository, lending, security brokerage, investment management, and fiduciary services, to individual, corporate, institutional, and governmental customers through their locations in Illinois, Missouri, southwest Florida and Indianapolis, Indiana. The Company and its subsidiaries are subject to the regulations of certain regulatory agencies and undergo periodic examinations by those regulatory agencies. 
 The significant accounting and reporting policies for the Company and its subsidiaries follow: 
 Principles of Consolidation 
 The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, which include First Busey Risk Management, Deed of Trust Services Corporation, and Busey Bank, including Busey Bank’s wholly-owned subsidiaries FirsTech, Pulaski Service Corporation, and Busey Capital Management, Inc. Operating results generated from acquired businesses are included with the Company’s results of operations starting from each date of acquisition. The Company and its subsidiaries maintain various LLCs that hold specific assets for risk mitigation purposes and are consolidated into these Consolidated Financial Statements. Intercompany balances and transactions have been eliminated in consolidation. 
 Because the Company is not the primary beneficiary, the Consolidated Financial Statements exclude the following wholly-owned variable interest entities: First Busey Statutory Trust II, First Busey Statutory Trust III, First Busey Statutory Trust IV, Pulaski Financial Statutory Trust I, and Pulaski Financial Statutory Trust II. 
 Use of Estimates 
 In preparing the accompanying Consolidated Financial Statements in conformity with GAAP, the Company’s management is required to make estimates and assumptions that affect the amounts reported in the Consolidated 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. 
 Comprehensive Income (Loss) 
 Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale debt securities and unrealized gains and losses on cash flow hedges, are reported as a separate component within the equity section of the balance sheet, such items, along with net income, are components of comprehensive income (loss). 
 Trust Assets 
 Assets held for customers in a fiduciary or agency capacity, other than trust cash on deposit at Busey Bank, are not assets of the Company and, accordingly, are not included in the accompanying Consolidated Financial Statements. The Company had assets under care of $ 11.1 billion at December 31, 2022, and $ 12.7 billion at December 31, 2021. 
 Cash and Cash Equivalents 
 Cash and cash equivalents include cash on hand, cash items in process of collection, amounts due from other banks, interest-bearing deposits held with other financial institutions, and federal funds sold. The carrying amount of these instruments is considered a reasonable estimate of fair value. 
 The Company maintains its cash in deposit accounts, the balance of which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. Management believes the Company is not exposed to any significant credit risk on cash and cash equivalents. 
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 FIRST BUSEY CORPORATION 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

 Securities 
 Debt securities classified as available for sale are those debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on factors including significant movements in interest rates, changes in the maturity mix of the Company's assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors. Debt securities available for sale are carried at fair value, with unrealized gains and losses reported in other comprehensive income (loss), net of taxes. 
 Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. The amortization period for certain callable debt securities held at a premium are amortized to the earliest call date, while discounts on debt securities are amortized to maturity. Gains and losses on the sale of debt securities available for sale are recorded on the trade date and are determined using the specific identification method. 
 Debt securities available for sale are not within the scope of the current expected credit losses methodology, however, the accounting for credit losses on these securities is affected by ASC Subtopic 326-30 “Financial Instruments-Credit Losses—Available-for-Sale Debt Securities.” A debt security available for sale is impaired if the fair value of the security declines below its amortized cost basis. To determine the appropriate accounting, the Company must first determine if it intends to sell the security or if it is more likely than not that it will be required to sell the security before the fair value increases to at least the amortized cost basis. If either of those selling events is expected, the Company will write down the amortized cost basis of the security to its fair value. This is achieved by writing off any previously recorded allowance, if applicable, and recognizing any incremental impairment through earnings. If the Company neither intends to sell the security, nor believes it more likely than not will be required to sell the security, before the fair value recovers to the amortized cost basis, the Company must determine whether any of the decline in fair value has resulted from a credit loss, or if it is entirely the result of noncredit factors. 
 The Company considers the following factors in assessing whether the decline is due to a credit loss: 
 • Extent to which the fair value is less than the amortized cost basis 
 • Adverse conditions specifically related to the security, an industry, or a geographic area (for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, in the financial condition of the underlying loan obligors) 
 • Payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future 
 • Failure of the issuer of the security to make scheduled interest or principal payments 
 • Any changes to the rating of the security by a rating agency 
 Impairment related to a credit loss must be measured using the discounted cash flow method. Credit loss recognition is limited to the fair value of the security. Impairment is recognized by establishing an ACL through provision for credit losses. Impairment related to noncredit factors is recognized in AOCI, net of applicable taxes. The Company did not recognize any impairment in 2022, 2021, or 2020. 
 Debt securities classified as held to maturity are those debt securities that the Company has the intent and ability to hold to maturity and are carried at amortized cost. In 2022, the Company elected to transfer a portion of the agency mortgage-backed securities portfolio from available for sale to held to maturity. While held to maturity securities are within the scope of CECL, the standard allows for an assumption of zero credit losses when the expectation of non-payment is zero. The risk related to mortgage-backed securities issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises, is considered low therefore requiring no allowance to be recorded. 
 Accrued interest receivable for debt securities totaled $ 14.7 million at December 31, 2022, and is excluded from the estimate of credit losses. Accrued interest receivable is reported in other assets on the Consolidated Balance Sheets. 
 Equity securities are carried at fair value with changes in fair value recognized in earnings. 
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 Loans Held for Sale 
 Loans held for sale include mortgage loans which the Company intends to sell to investors and/or the secondary mortgage market. 
 Effective January 1, 2022, the Company elected to account for all newly originated loans held for sale at LOCOM. Loans held for sale are carried at amortized historical cost less loan write-offs and downward fair value adjustments, as may be applicable. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Gains and losses on sales of loans are recognized at settlement dates and are determined by the difference between the sales proceeds and the carrying amount, net of the value of any servicing assets for loans that were sold with servicing rights retained. 
 Prior to this change, the Company accounted for loans held for sale at fair value. Loans held for sale were recorded at fair value, with changes in fair value recognized in earnings. Fair value adjustments were recorded as an adjustment to mortgage revenues. The fair value of loans held for sale was measured using observable quoted market prices, contract prices, or market price equivalents, consistent with those used by other market participants. Direct loan origination fees and costs related to loans accounted for at fair value were recognized when earned. 
 Loan Servicing 
 Servicing assets are recognized when servicing rights are acquired or retained through the sale of mortgage and government-guaranteed commercial loans. The unpaid principal balances of loans serviced by the Company for the benefit of others totaled $ 1.7 billion as of December 31, 2022, and are not included in the accompanying Consolidated Balance Sheets. Servicing rights are initially recorded at fair value which is determined using a valuation model that calculates the present value of estimated future net servicing income. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. The amortization of mortgage servicing rights is included in mortgage revenue. The amortization of government-guaranteed commercial loans is included in other income. 
 Servicing rights are periodically evaluated for impairment based on the fair value of those rights as compared to book value. Fair values are estimated using discounted cash flows based on expected prepayment rates and other inputs. For purposes of measuring impairment, servicing rights are stratified by one or more predominant characteristics of the underlying loans. A valuation allowance is recognized in the amount by which the amortized cost of the rights for each stratum exceeds its fair value, if any. If the Company later determines that all or a portion of the impairment no longer exists for a particular group of loans, a reversal of the allowance may be recorded in current period earnings. The Company had an insignificant amount of impairment recorded at December 31, 2022 and 2021. 
 Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal and are recorded as income when earned. 
 Portfolio Loans 
 Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, are reported at the principal balance outstanding, net of purchase premiums and discounts, or net deferred origination fees or costs, charge-offs, and the ACL. 
 Loan origination fees, net of certain direct loan origination costs, are deferred and the net amount is amortized as an adjustment of the related loan’s yield. The Company amortizes the net amount over the contractual life of the related loan. 
 Interest income is accrued daily on outstanding loan balances. 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 provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. Past due status is based on the contractual terms of the loan. 
 Interest accrued but not collected for loans that are placed on non-accrual status or charged-off is reversed against interest income. The interest on non-accrual loans is accounted for on the cost-recovery method, until returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. 
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 PPP Loans 
 At December 31, 2022, the Company had $ 0.9 million in PPP loans outstanding, with an amortized cost of $ 0.8 million. In comparison, at December 31, 2021, the Company had $ 76.9 million in PPP loans outstanding, with an amortized cost of $ 75.0 million. The Company received fees totaling $ 2.5 million, $ 20.1 million, and $ 25.4 million for the years ended December 31, 2022, 2021, and 2020, respectively. Incremental direct origination costs the Company incurred were $ 0.6 million, $ 4.2 million, and $ 5.1 million for the years ended December 31, 2022, 2021, and 2020, respectively. Both the fees received and the origination costs have been deferred and are being amortized over the contractual life of these loans, subject to prepayment. The Company recognized $ 1.9 million, $ 14.0 million, and $ 15.2 million in net interest income for fees, net of deferred cost, during the years ended December 31, 2022, 2021, and 2020, respectively. As of December 31, 2022, the remaining amount of fees to be recognized, net of deferred costs, was insignificant. PPP loans contain a forgiveness feature for funds spent on covered expenses, including both principal and accrued interest. Any remaining balance after loan forgiveness maintains a 100 % government guarantee for the remaining term of the loan. 
 Troubled Debt Restructurings 
 The Company’s loan portfolio includes certain loans that have been modified in a TDR, where concessions have been granted to borrowers who have experienced financial difficulties. The Company will restructure a loan for its customer after evaluating whether the borrower is able to meet the terms of the loan over the long term, though unable to meet the terms of the loan in the near term due to individual circumstances. 
 The Company considers the customer’s past performance, previous and current credit history, the individual circumstances surrounding the customer’s current difficulties, and the customer’s plan to meet the terms of the loan in the future prior to restructuring the terms of the loan. Generally, restructurings consist of short-term interest rate relief, short-term principal payment relief, short-term principal and interest payment relief, or forbearance (debt forgiveness). A restructured loan that exceeds 90 days past due or is placed on non-accrual status, is classified as non-performing. 
 All TDRs are individually evaluated for purposes of assessing the adequacy of the ACL and for financial reporting purposes. TDRs are evaluated using present value of the expected future cash flows discounted at the loan’s original effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. If the Company determines that the fair value of the TDR is less than the recorded investment in the loan, impairment is recognized through a charge to the ACL in the period of the modification and in periods subsequent to the modification. 
 Modified loans with payment deferrals that fall under the CARES Act or revised Interagency Statement that suspended requirements under GAAP related to TDR classifications are not included in the Company’s TDR totals. 
 Assets Purchased with Credit Deterioration 
 On January 1, 2020, First Busey adopted ASC Topic 326 “Financial Instruments-Credit Losses” using the prospective transition approach for financial assets PCD that were previously classified as PCI and accounted for under ASC Subtopic 310-30 “Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality.” In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. In accordance with ASC Topic 326, the amortized cost basis of PCD assets were adjusted to reflect an ACL for any remaining credit discount. Subsequent changes in expected cash flows will be adjusted through the ACL. The noncredit discount will be accreted into interest income at the effective interest rate as of January 1, 2020. 
 Subsequent to the adoption of ASC Topic 326, acquired loans are separated into two categories based on the credit risk characteristics of the underlying borrowers as either PCD, for loans which have experienced more than insignificant credit deterioration since origination, or all other loans. At the date of acquisition, an ACL on PCD loans is determined and netted against the amortized cost basis of the individual loans. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. The ACL on PCD loans is recorded in the acquisition accounting and no provision for credit losses is recognized at the acquisition date. Subsequent changes to the ACL are recorded through provision expense. For all other loans, an ACL is established immediately after the acquisition through a charge to the provision for credit losses. 
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 Allowance for Credit Losses 
 The ACL is a significant estimate in the Company’s Consolidated Financial Statements, affecting both earnings and capital. The ACL is a valuation account that is deducted from the portfolio loans’ amortized cost bases to present the net amount expected to be collected on the portfolio loans. Portfolio loans are charged off against the ACL when management believes the uncollectibility of a loan balance is confirmed. Recoveries will be recognized up to the aggregate amount of previously charged-off balances. The ACL is established through provision for credit loss expense charged to income. 
 A loan’s amortized cost basis is comprised of the unpaid principal balance of the loan, accrued interest receivable, purchase premiums or discounts, and net deferred origination fees or costs. The Company has estimated its allowance on the amortized cost basis, exclusive of government guaranteed loans and accrued interest receivable. The Company writes-off uncollectible accrued interest receivable in a timely manner and has elected to not measure an allowance for accrued interest receivable. The Company presents the aggregate amount of accrued interest receivable for all financial instruments in other assets on the Consolidated Balance Sheets and the balance of accrued interest receivable is disclosed in “ Note 18. Fair Value Measurements. ” 
 Our methodology influences, and is influenced by, the Company’s overall credit risk management processes. The ACL is managed in accordance with GAAP to provide an adequate reserve for expected credit losses that is reflective of management’s best estimate of what is expected to be collected. The ACL is measured on a collective pool basis when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis. 
 The 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 amortized cost basis. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions such as changes in unemployment rates, property values, and other relevant factors. The calculation also contemplates that the Company 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. The Company uses four quarters as its reasonable and supportable forecast period. Due to rapidly changing forecasts around the impact of COVID-19, the Company does not believe it has the current ability to incorporate reasonable and supportable forecasts into its CECL models extending beyond four quarters. 
 Ongoing impacts of CECL will be dependent upon changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors. 
 Premises and Equipment 
 Land is carried at cost less accumulated depreciation of depreciable land improvements. Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the estimated useful lives of the assets. The estimated useful lives for premises and equipment are: 
 
 Asset Description Estimated Useful Life 
 Buildings and improvements 3 — 40 years 
 
 Furniture and equipment 3 — 10 years 
 

 
 Leases 
 A determination is made at inception if an arrangement contains a lease. For arrangements containing leases, the Company recognizes leases on the Consolidated Balance Sheets as right of use assets and corresponding lease liabilities. Lease-related assets, or right of use assets, are recognized on the lease commencement date at amounts equal to the respective lease liabilities, adjusted for prepaid lease payments, initial direct costs, and lease incentives received. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rate. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. 
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 ASC Topic 842 “Leases” requires the use of the rate implicit in the lease whenever this rate is readily determinable. If not readily determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the Company used a borrowing rate that corresponded to the remaining lease term. 
 The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If, at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of its right of use assets and lease liabilities. 
 Long-Lived Assets 
 Long-lived assets, including premises and equipment, right of use assets, and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recognized when estimated undiscounted future cash flows from operations of the asset are less than the carrying value of the asset. Cash flows used for this analysis are those directly associated with, and that are expected to arise as a direct result of, the use and eventual disposition of the asset. An impairment loss would be measured by the amount by which the carrying value of the asset exceeds its fair value. 
 Other Real Estate Owned and Other Repossessed Assets 
 OREO and other repossessed assets represent properties and other assets acquired through foreclosure or other proceedings in settlement of loans. OREO and other repossessed assets are recorded at the fair value of the property or asset, less estimated costs of disposal, which establishes a new cost basis. Any adjustment to fair value at the time of transfer to OREO or other repossessed assets is charged to the ACL. OREO property and other repossessed assets are evaluated regularly to ensure the recorded amount is supported by its current fair value, and valuation allowances to reduce the carrying amount to fair value less estimated costs to dispose are recorded, as necessary. OREO and other repossessed assets are included in other assets on the Consolidated Balance Sheets. Revenue, expense, gains, and losses from the operations of foreclosed assets are included in earnings. 
 Goodwill and Other Intangibles 
 Goodwill represents the excess of the consideration transferred in a business combination over the fair value of the net assets acquired. Goodwill is not amortized but is subject to at least annual impairment assessments. The Company has established December 31 as the annual impairment assessment date. As part of this analysis, each reporting unit's carrying value is compared to its fair value. 
 The Company estimates the fair value of its reporting units as of the measurement date utilizing valuation methodologies including comparable company analysis and precedent transaction analysis. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. There was no impairment as of December 31, 2022, or 2021. See “ Note 7. Goodwill and Other Intangible Assets ” for further discussion. 
 Other intangible assets consist of core deposit and acquired customer relationship intangible assets arising from acquisitions and are amortized over their estimated useful lives. 
 Cash Surrender Value of Bank Owned Life Insurance 
 The Company has purchased, or acquired through acquisitions, life insurance policies on certain executives and senior officers. Life insurance is recorded at its cash surrender value, which estimates its fair value. 
 The Company maintains a liability for post-employment benefits promised to an employee based on an arrangement between the Company and an employee. In an endorsement split-dollar life insurance arrangement, the employer owns and controls the policy, and the employer and employee split the life insurance policy’s cash surrender value and/or death benefits. If the employer agrees to maintain a life insurance policy during the employee’s retirement, the present value of the cost of maintaining the insurance policy would be accrued over the employee’s active service period. Similarly, if the employer agrees to provide the employee with a death benefit, the present value of the death benefit would be accrued over the employee’s active service period. The Company has an accrued liability of $ 5.6 million as of December 31, 2022, included in other liabilities, for these arrangements, compared with $ 5.5 million as of December 31, 2021. 
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 FHLB Stock 
 Busey Bank is a member of the FHLB system. FHLB members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost in other assets in our Consolidated Balance Sheet. Dividends are reported as income. 
 The Company's investment in FHLB stock was $ 19.0 million as of December 31, 2022, and $ 6.2 million as of December 31, 2021. 
 Other Asset Investments 
 The Company has invested in certain tax-advantaged projects promoting affordable housing, new markets, and historic rehabilitation. These investments are designed to generate returns primarily though the realization of federal and state income tax credits and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. In addition, the Company has private equities, which are primarily small business investment companies in the financial technology, agricultural, environmental, and affordable housing preservation markets. These investments are considered to be variable interest entities, and are accounted for under the equity method or deferral method, as appropriate. The Company is not required to consolidate variable interest entities in which it has concluded it does not have a controlling financial interest, and is not the primary beneficiary. 
 The following table summarizes the impact of the Company’s other asset investments on our Consolidated Balance Sheets for the periods indicated (dollars in thousands) : 
 
 As of December 31, 
 Location 2022 2021 
 Other asset investments 
 Funded investments Other assets $ 58,912 $ 37,417 
 Unfunded investments Other assets 67,437 52,765 
 Other asset investments $ 126,349 $ 90,182 
 
 Unfunded investment obligations Other liabilities $ ( 67,437 ) $ ( 52,765 ) 

 Further, the Company owns Visa Class B shares, recorded at a nominal carrying value. These shares are subject to certain transfer restrictions currently and will be convertible into Visa Class A shares upon final resolution of certain litigation matters involving Visa. 
 Transfers of Financial Assets 
 Transfers of financial assets are accounted for as sales only when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when: (i) the assets have been isolated from the Company, (ii) the transferee obtains the right to pledge or exchange the assets it receives, and no condition both constrains the transferee from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the transferor, and (iii) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. 
 Income Taxes 
 The Company is subject to income taxes in U.S. federal and various state jurisdictions. The Company and its subsidiaries file consolidated federal and state income tax returns with each subsidiary computing its taxes on a separate entity basis. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state, or local tax examinations by tax authorities for the years before 2017. 
 Under GAAP, a valuation allowance is required to be recognized if it is more likely than not that the deferred tax assets will not be realized. The determination of the recoverability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. 
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 Management believes that it is more likely than not that the deferred tax assets included in the accompanying Consolidated Financial Statements will be fully realized. The Company determined that no valuation allowance was required as of December 31, 2022, or 2021. 
 Positions taken in tax returns may be subject to challenge upon examination by the taxing authorities. Uncertain tax positions are initially recognized in the Consolidated Financial Statements when it is more likely than not the position will not be sustained upon examination by the tax authorities. Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in operating expenses. The Company had no accruals for payments of interest and penalties at December 31, 2022, or 2021. 
 At December 31, 2022, the Company was not under examination by any tax authority; however, we have received an inquiry from the State of Illinois regarding our prior franchise tax filings. In the event the Company is required to amend our prior franchise tax filings, we could incur additional expenses. 
 Treasury Stock 
 Treasury stock acquired is recorded at cost. Treasury stock issued is valued based on the “first-in, first-out” method. Gains and losses on issuance are recorded as increases or decreases to additional paid-in capital. 
 Stock-Based Employee Compensation 
 The 2020 Equity Plan was approved by stockholders at the 2020 Annual Meeting of Stockholders. A description of the 2020 Equity Plan can be found in the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders filed on April 9, 2020. The 2020 Equity Plan replaces the 2010 Equity Incentive Plan and the First Community 2016 Equity Incentive Plan, which, from time to time, the Company used to grant equity awards to legacy employees of First Community. Under the terms of the 2020 Equity Plan, the Company has granted RSU, DSU and PSU awards. 
 The Company’s equity incentive plans are designed to encourage ownership of its common stock by its employees and directors, to provide additional incentive for them to promote the success of the Company’s business, and to attract and retain talented personnel. All of the Company’s employees and directors and those of its subsidiaries are eligible to receive awards under the plans. 
 The Company grants RSU awards to members of management periodically throughout the year. Each RSU is equivalent to one share of the Company’s common stock. These units have requisite service periods ranging from one year to five years , subject to accelerated vesting upon eligible retirement from the Company. Recipients earn quarterly dividend equivalents on their respective units which entitle the recipients to additional units. Therefore, dividends earned each quarter compound based upon the updated unit balances. 
 The Company grants DSU awards, which are RSU awards with a deferred settlement date, to its directors and advisory directors. Each DSU is equivalent to one share of the Company’s common stock. DSUs vest over a one-year period following the grant date. These units generally are subject to the same terms as RSUs under the Company’s 2020 Equity Plan, except that, following vesting, settlement occurs within 30 days following the earlier of separation from the board or a change in control of the Company. After vesting and prior to delivery, these units will continue to earn dividend equivalents. 
 The Company also grants PSU awards to members of management periodically throughout the year. Each PSU is equivalent to one share of the Company’s common stock. The number of units that ultimately vest will be determined based on the achievement of market or other performance goals, subject to accelerated service-based vesting conditions upon eligible retirement from the Company. 
 The Company has outstanding stock options assumed from acquisitions. 
 In 2021, the stockholders of First Busey approved the 2021 ESPP, and since the purchase price under the plan is 85 % of the fair value of a share of common stock (a 15 % discount to the market price), the plan is considered to be a compensatory plan under current accounting guidance. Therefore, the entire amount of the discount is recognized in salaries, wages, and employee benefits on the Consolidated Statements of Income. 
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 See “ Note 14. Stock-based Compensation ” for further discussion. 
 Segment Disclosure 
 Operating segments are components of a business that (i) engage in business activities from which the component may earn revenues and incur expenses; (ii) have operating results that are reviewed regularly by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance; and (iii) for which discrete financial information is available. The Company’s operations are managed along three operating segments consisting of Banking, FirsTech, and Wealth Management. See “ Note 21. Operating Segments and Related Information ” for further discussion. 
 Business Combinations 
 Business combinations are accounted for under ASC Topic 805 “Business Combinations” using the acquisition method of accounting. The acquisition method of accounting requires an acquirer to recognize the assets acquired and the liabilities assumed at the acquisition date measured at their estimated fair values as of that date. To determine the fair values, the Company may utilize third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques. Under the acquisition method of accounting, the Company will identify the acquirer and the closing date and apply applicable recognition principles. 
 Operating results generated from acquired businesses are included with the Company’s results of operations starting from each date of acquisition. Acquisition related costs are costs the Company incurs to effect a business combination. Those costs may include legal, accounting, valuation, other professional or consulting fees, system conversions, and marketing costs. The Company accounts for acquisition related costs as expenses in the periods in which the costs are incurred and the services are received. Costs that the Company expects, but is not obligated to incur in the future, to effect its plan to exit an activity of an acquiree or to terminate the employment of an acquiree’s employees are not liabilities at the acquisition date. Instead, the Company recognizes these costs in its post-combination Consolidated Financial Statements in accordance with other applicable accounting guidance. 
 Derivative Financial Instruments 
 The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. Additionally, the Company enters into derivative financial instruments, including interest rate lock commitments issued to residential loan customers for loans that will be held for sale, forward sales commitments to sell residential mortgage loans to investors, and interest rate swaps with customers and other third parties. 
 Interest Rate Swaps Designated as Cash Flow Hedges 
 The Company entered into derivative instruments designated as cash flow hedges. For a derivative instrument that is designated and qualifies as a cash flow hedge, the change in fair value of the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Changes in fair value of components excluded from the assessment of effectiveness are recognized in current earnings. 
 Interest Rate Swaps Not Designated as Hedges 
 The Company may offer derivative contracts to its customers in connection with their risk management needs. The Company manages the risk associated with these contracts by entering into an equal and offsetting derivative with a third-party dealer. These derivatives generally worked together as an economic interest rate hedge, but the Company did not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred. 
 Interest Rate Lock Commitments 
 Interest rate lock commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Financial Statements, with changes in the fair values of the corresponding derivative financial assets or liabilities recorded as either a charge or credit to current earnings during the period in which the changes occurred. 
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 Forward Sales Commitments 
 The Company economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding best-efforts forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers. Forward sales commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Financial Statements. While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, the Company did not designate them for hedge accounting treatment. Changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred. 
 Risk Participation Agreements 
 The Company has entered into a risk participation agreement to manage the credit risk of its derivative position. This agreement transfers counterparty credit risk related to an interest rate swap to another financial institution. In this type of transaction, the Company (purchaser) has a swap agreement with a customer. The Company then enters into a risk participation agreement with a counterparty (seller), under which the counterparty receives a fee to accept a portion of the credit risk. If the customer defaults on the swap contract, the counterparty to the risk participation agreement must reimburse the Company for the counterparty's percentage of the positive fair value of the customer swap as of the default date. If the customer swap has a negative fair value, the counterparty has no reimbursement requirements. If the customer defaults on the swap contract and the counterparty (seller) fulfills its payment obligations under the risk participation agreement, the seller is entitled to a pro rata share of the Company’s claim against the customer under the terms of the swap agreement. 
 Off-Balance Sheet Arrangements 
 The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheets. The Company’s exposure to credit loss is represented by the contractual amount of those commitments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. 
 Commitments to extend credit are agreements to lend to a customer as long as no condition established in the contract has been violated. These commitments are generally at variable interest rates and generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for equity lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. These commitments may be secured based on management’s credit evaluation of the borrower. 
 Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer’s obligation to a third-party. Those guarantees are primarily issued to support public and private borrowing arrangements, including bond financing and similar transactions, and primarily have terms of two years or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds collateral, which may include accounts receivable, inventory, property and equipment, and income producing properties, supporting those commitments if deemed necessary. In the event the customer does not perform in accordance with the terms of the agreement with the third-party, the Company would be required to fund the commitment. If the commitment is funded, the Company would be entitled to seek recovery from the customer. 
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 The Company estimates expected credit losses for off-balance sheet arrangements over the contractual period in which it is exposed to credit risk via a present contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the issuer. To be considered unconditionally cancellable for accounting purposes, the Company must have the ability to, at any time, with or without cause, refuse to extend credit under the commitment. Off-balance-sheet credit exposure segments share the same risk characteristics as portfolio loans. The Company incorporates a probability of funding and utilizes the ACL loss rates to calculate the reserve. The reserve for off-balance-sheet credit exposure is carried on the Consolidated Balance Sheets in other liabilities rather than as a component of the ACL. The reserve for off-balance-sheet credit exposure is adjusted as a provision for off-balance-sheet credit exposure reported as a component of noninterest expense in the accompanying Consolidated Statements of Income. Liabilities recorded as reserves for the Company’s off-balance sheet credit exposure under these commitments was $ 6.6 million as of December 31, 2022, and was $ 6.5 million as of December 31, 2021. 
 Fair Value of Financial Instruments 
 Fair value of financial instruments is estimated using relevant market information and other assumptions, as more fully disclosed in “ Note 18. Fair Value Measurements .” Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates. 
 Revenue 
 ASC Topic 606 “Revenue from Contracts with Customers” outlines a single model for companies to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance, including industry-specific guidance. ASC Topic 606 requires that companies recognize revenue based on the value of transferred goods or services as they occur in the contract and establishes additional disclosures. The Company’s revenue is comprised of net interest income, which is explicitly excluded from the scope of ASC Topic 606, and noninterest income. The Company has evaluated its noninterest income and the nature of its contracts with customers and determined that further disaggregation of revenue beyond what is presented in the accompanying Consolidated Financial Statements is not necessary. The Company satisfies its performance obligations on its contracts with customers as services are rendered so there is limited judgment involved in applying ASC Topic 606 that affects the determination of the timing and amount of revenue from contracts with customers. 
 Descriptions of the Company’s primary revenue generating activities that are within the scope of ASC Topic 606, and are presented in the accompanying Consolidated Statements of Income as components of noninterest income, include wealth management fees, payment technology solutions, and fees for customer services. 
 Wealth Management Fees 
 Wealth management fees represent fees due from wealth management customers as consideration for managing the customers' assets. Wealth management and trust services include custody of assets, investment management, fees for trust services, and other fiduciary activities. Also included are fees received from a third-party broker-dealer as part of a revenue sharing agreement for fees earned from customers that the Company refers to the third party. Revenue is recognized when the performance obligation is completed, which is generally monthly. 
 Payment Technology Solutions 
 Payment technology solutions revenue represents transaction-based fees for technology-driven payment solutions primarily for walk-in, lockbox, interactive voice recognition, and online bill payments through the Company’s subsidiary, FirsTech. Revenue is recognized when the performance obligation is completed, which is generally monthly. 
 Fees for Customer Services 
 Fees for customer services consist of time-based revenue from service fees for account maintenance, item-based revenue from fee-based activity, and transaction-based fee revenue. Revenue is recognized when the performance obligation is completed, which is generally monthly for account maintenance services or when a transaction has been completed. Payments for such performance obligations are generally received at the time the performance obligations are satisfied. 
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 Reclassifications 
 Reclassifications have been made to certain prior year account balances, with no effect on net income or stockholders’ equity, to be consistent with the classifications adopted as of and for the year ended December 31, 2022. 
 Subsequent Events 
 The Company has evaluated subsequent events for potential recognition and/or disclosure through the date the Consolidated Financial Statements included in this Annual Report on Form 10-K were issued. There were no significant subsequent events for the year ended December 31, 2022, through the filing date of these Consolidated Financial Statements. 
 Impact of Recently Adopted Accounting Standards 
 ASU 2022-06 “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848” deferred the sunset date of ASC Topic 848 from December 31, 2022, to December 31, 2024, extending the time during which entities may apply certain practical expedients for contract modifications that replace a reference to LIBOR or another reference rate that is expected to be discontinued as a result of reference rate reform. This update was effective upon issuance on December 21, 2022. Adoption of this standard did not have a material impact on First Busey’s financial position or results of operations. 
 ASU 2021-10 “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” establishes disclosure requirements for transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model. Disclosures required under this standard include 1) the types of transactions, 2) the accounting for those transactions, and 3) the effect of those transactions on the consolidated financial statements. This update was effective for annual periods beginning January 1, 2022, and applies prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application. Adoption of this standard did not have a material impact on First Busey’s financial position or results of operations. 
 ASU 2021-05 “Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments” amends the lessor’s classification of certain leases under ASC Topic 842. Under this updated guidance, leases that would otherwise be classified as a sales-type or direct financing lease must be classified by a lessor as an operating lease when the following conditions are met: 1) the contract includes variable lease payments that do not depend on an index or rate and 2) classification as a sales-type or direct financing lease would result in recognition of a selling loss at lease commencement. This guidance was effective for First Busey beginning January 1, 2022, and was applied on a prospective basis. Adoption of this standard did not have a material impact on the Company’s financial position or results of operations. 
 ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” clarifies how an issuer should account for modifications or exchanges of equity-classified written call options (i.e. a warrant to purchase the issuer’s common stock). This accounting standard requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant. This guidance was effective for First Busey beginning January 1, 2022, and was applied on a prospective basis. Adoption of this standard did not have a material impact on the Company’s financial position or results of operations. 
 Recently Issued Accounting Standards 
 ASU 2022-03 “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” 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 will be effective for First Busey beginning January 1, 2024. Early adoption is permitted. First Busey is currently evaluating the potential effect on the Company’s financial position and results of operations. 
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 ASU 2022-02 “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” 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 First Busey beginning January 1, 2023. Adoption of this standard is not expected to have a material impact on our financial position or results of operations. 
 ASU 2022-01 “Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method” 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 First Busey beginning January 1, 2023. Adoption of this standard is not expected to have a material impact on our 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 First Busey beginning January 1, 2023. This standard applies prospectively to all business combinations that occur on or after the date it is adopted. Adoption of this standard is not expected to have a material impact on our financial position or results of operations. 
 
 NOTE 2. ACQUISITIONS 
 Cummins-American Corp. 
 Effective May 31, 2021, the Company completed its acquisition of CAC, the holding company for GSB. The partnership has enhanced the Company’s existing deposit, commercial banking, and wealth management presence in the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area. GSB’s results of operations were included in the Company’s results of operations beginning June 1, 2021. First Busey operated GSB as a separate banking subsidiary until August 14, 2021, when it was merged with and into Busey Bank. At that time, all GSB banking centers became branches of Busey Bank. 
 Under the terms of the definitive agreement, each share of CAC common stock issued and outstanding as of the effective date was converted into the right to receive 444.4783 shares of First Busey common stock and $ 14,173.96 in cash, which reflects adjustments made to the cash consideration in accordance with the terms of the definitive agreement. The fair value of the common stock of First Busey issued as part of the consideration paid to the holders of CAC common stock was determined on the basis of the closing price of First Busey’s common shares on May 28, 2021, the last trading day immediately preceding the acquisition date of May 31, 2021. As additional consideration provided to CAC’s stockholders in the merger, CAC paid a special dividend to its stockholders in the amount of $ 60.0 million, or $ 12,087.58 per share of CAC common stock, on May 28, 2021. 
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 This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged was recorded at estimated fair values on the date of acquisition. Fair values were subject to refinement for up to one year after the closing date, as additional information regarding the closing date fair values became available, and were final as of May 31, 2022. The Company did not record any fair value adjustments during 2022. 
 As the total consideration paid for CAC exceeded the estimated fair value of net assets acquired, goodwill of $ 6.3 million was recorded as a result of the acquisition. The amount of goodwill recognized as a result of this transaction is expected to be fully tax deductible for federal income tax purposes in accordance with the Company’s election pursuant to Section 338(h)(10) of the Internal Revenue Code. Goodwill recorded for this transaction reflects synergies expected from the acquisition and expansion within the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area, and was assigned to the Banking operating segment. 
 First Busey incurred $ 0.8 million and $ 13.6 million in pre-tax expenses related to the acquisition of CAC for the years ended December 31, 2022, and December 31, 2021, respectively. Expenses in 2022 were comprised primarily of compensation expense and data processing expense, which are reported as components of noninterest expense in the accompanying Consolidated Statements of Income. 
 Estimated fair values of the assets acquired and liabilities assumed, as well as the fair value of consideration transferred, were as follows (dollars in thousands) : 
 
 CAC 
 May 31,
2021 
 Assets acquired 
 Cash and cash equivalents $ 298,637 
 Securities 702,367 
 Portfolio loans, net of ACL 430,470 
 Premises and equipment 17,034 
 Other intangible assets 17,340 
 Mortgage servicing rights 629 
 Other assets 8,176 
 Total assets acquired 1,474,653 
 
 Liabilities assumed 
 Deposits 1,315,671 
 Other borrowings 16,651 
 Other liabilities 19,205 
 Total liabilities assumed 1,351,527 
 
 Net assets acquired $ 123,126 
 
 Consideration paid: 
 Cash $ 70,358 
 Common stock 59,105 
 Total consideration paid $ 129,463 
 
 Goodwill $ 6,337 

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 The fair value of PCD financial assets was $ 60.5 million on the date of acquisition. Gross contractual amounts receivable relating to the PCD financial assets was $ 65.2 million. The Company estimated, on the date of acquisition, that $ 4.2 million of the contractual cash flows specific to the PCD financial assets will not be collected. 
 
 NOTE 3. DEBT SECURITIES 
 The Company reassessed classification of certain securities in 2022, and transferred a portion of its commercial and residential mortgage-backed securities from available for sale to held to maturity. The transfers occurred at fair value. The unrecognized loss associated with these securities is in OCI, and is being amortized out of OCI with an offsetting entry to investment securities interest income as a yield adjustment over the remaining contractual lives of the securities. No gain or loss was recorded at the time of the transfer. 
 The table below provides the amortized cost, unrealized and unrecognized gains and losses, and fair values of debt securities, summarized by major category (dollars in thousands) : 
 
 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 ) $ 114,061 
 Obligations of U.S. government corporations and agencies 20,097 3 ( 321 ) 19,779 
 Obligations of states and political subdivisions 283,481 106 ( 26,075 ) 257,512 
 Asset-backed securities 489,558 — ( 19,683 ) 469,875 
 Commercial mortgage-backed securities 124,423 — ( 16,029 ) 108,394 
 Residential mortgage-backed securities 1,463,971 2 ( 220,717 ) 1,243,256 
 Corporate debt securities 273,118 33 ( 24,635 ) 248,516 
 Total debt securities available for sale $ 2,772,453 $ 144 $ ( 311,204 ) $ 2,461,393 
 
 Amortized
Cost Unrecognized Fair
Value 
 Gross Gains Gross Losses 
 Debt securities held to maturity 
 Commercial mortgage-backed securities $ 474,820 $ — $ ( 63,738 ) $ 411,082 
 Residential mortgage-backed securities 443,492 — ( 69,279 ) 374,213 
 Total debt securities held to maturity $ 918,312 $ — $ ( 133,017 ) $ 785,295 

 
 As of December 31, 2021 
 Amortized
Cost Unrealized Fair
Value 
 Gross Gains Gross Losses 
 Debt securities available for sale 
 U.S. Treasury securities $ 166,768 $ 41 $ ( 1,047 ) $ 165,762 
 Obligations of U.S. government corporations and agencies 37,579 891 — 38,470 
 Obligations of states and political subdivisions 300,602 7,760 ( 1,493 ) 306,869 
 Asset-backed securities 492,055 295 ( 164 ) 492,186 
 Commercial mortgage-backed securities 625,339 3,425 ( 13,766 ) 614,998 
 Residential mortgage-backed securities 2,095,104 8,889 ( 34,680 ) 2,069,313 
 Corporate debt securities 296,076 1,081 ( 3,504 ) 293,653 
 Total debt securities available for sale $ 4,013,523 $ 22,382 $ ( 54,654 ) $ 3,981,251 

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 Amortized cost and fair value of debt securities, by contractual maturity or pre-refunded date, are shown below. Mortgages underlying mortgage-backed securities and asset-backed securities may be called or prepaid; therefore, actual maturities could differ from the contractual maturities. All mortgage-backed securities were issued by U.S. government corporations and agencies (dollars in thousands) : 
 
 As of December 31, 2022 
 Amortized
Cost Fair
Value 
 Debt securities available for sale 
 Due in one year or less $ 135,698 $ 133,967 
 Due after one year through five years 395,914 368,754 
 Due after five years through ten years 364,065 330,280 
 Due after ten years 1,876,776 1,628,392 
 Debt securities available for sale $ 2,772,453 $ 2,461,393 
 
 Debt securities held to maturity 
 
 Due after one year through five years $ 44,392 $ 41,483 
 Due after five years through ten years 64,593 57,955 
 Due after ten years 809,327 685,857 
 Debt securities held to maturity $ 918,312 $ 785,295 

 
 Realized gains and losses related to sales and calls of debt securities available for sale are summarized as follows (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Realized gains and losses on debt securities 
 Gross gains on debt securities $ 115 $ 543 $ 1,732 
 Gross (losses) on debt securities ( 89 ) ( 514 ) ( 8 ) 
 Realized net gains (losses) on debt securities 1 
 $ 26 $ 29 $ 1,724 

 ___________________________________________ 
 1. Net gains (losses) on sales of securities reported on the Consolidated Statements of Income include the sale of equity securities, excluded in this table. 
 Debt securities with carrying amounts of $ 746.7 million on December 31, 2022, and $ 708.9 million on December 31, 2021, were pledged as collateral for public deposits, securities sold under agreements to repurchase, and for other purposes as required. 
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 The following information pertains to debt securities with gross unrealized and unrecognized losses, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (dollars in thousands) : 
 
 As of December 31, 2022 
 Less than 12 months 12 months or more Total 
 Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses 
 Debt securities available for sale 
 U.S. Treasury securities 1 
 $ 74 $ — $ 113,987 $ ( 3,744 ) $ 114,061 $ ( 3,744 ) 
 Obligations of U.S. government corporations and agencies 19,603 ( 321 ) — — 19,603 ( 321 ) 
 Obligations of states and political subdivisions 166,147 ( 10,059 ) 75,217 ( 16,016 ) 241,364 ( 26,075 ) 
 Asset-backed securities 390,164 ( 15,648 ) 79,711 ( 4,035 ) 469,875 ( 19,683 ) 
 Commercial mortgage-backed securities 89,428 ( 12,623 ) 18,966 ( 3,406 ) 108,394 ( 16,029 ) 
 Residential mortgage-backed securities 366,221 ( 38,111 ) 876,668 ( 182,606 ) 1,242,889 ( 220,717 ) 
 Corporate debt securities 39,037 ( 5,079 ) 204,310 ( 19,556 ) 243,347 ( 24,635 ) 
 Debt securities available for sale with gross unrealized losses $ 1,070,674 $ ( 81,841 ) $ 1,368,859 $ ( 229,363 ) $ 2,439,533 $ ( 311,204 ) 
 
 Less than 12 months 12 months or more Total 
 Fair
Value Unrecognized
Losses Fair
Value Unrecognized
Losses Fair
Value Unrecognized
Losses 
 Debt securities held to maturity 
 Commercial mortgage-backed securities $ 58,065 $ ( 8,009 ) $ 353,017 $ ( 55,729 ) $ 411,082 $ ( 63,738 ) 
 Residential mortgage-backed securities — — 374,213 ( 69,279 ) 374,213 ( 69,279 ) 
 Debt securities held to maturity with gross unrecognized losses $ 58,065 $ ( 8,009 ) $ 727,230 $ ( 125,008 ) $ 785,295 $ ( 133,017 ) 

 ___________________________________________ 
 1. Unrealized losses for U.S. Treasury securities that have been in a continuous loss position for less than 12 months were insignificant, rounding to zero thousand. 
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 As of December 31, 2021 
 Less than 12 months 12 months or more Total 
 Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses Fair
Value Unrealized
Losses 
 Debt securities available for sale 
 U.S. Treasury securities $ 163,653 $ ( 1,047 ) $ — $ — $ 163,653 $ ( 1,047 ) 
 
 Obligations of states and political subdivisions 92,680 ( 1,493 ) — — 92,680 ( 1,493 ) 
 Asset-backed securities 89,983 ( 164 ) — — 89,983 ( 164 ) 
 Commercial mortgage-backed securities 389,078 ( 10,186 ) 85,905 ( 3,580 ) 474,983 ( 13,766 ) 
 Residential mortgage-backed securities 1,700,187 ( 33,453 ) 20,538 ( 1,227 ) 1,720,725 ( 34,680 ) 
 Corporate debt securities 241,153 ( 3,504 ) — — 241,153 ( 3,504 ) 
 Debt securities available for sale with gross unrealized losses $ 2,676,734 $ ( 49,847 ) $ 106,443 $ ( 4,807 ) $ 2,783,177 $ ( 54,654 ) 
 
 
 
 
 

 Additional information about debt securities in an unrealized or unrecognized loss position is presented in the tables below (dollars in thousands) : 
 
 As of December 31, 2022 
 Available for Sale Held to Maturity Total 
 Debt securities with gross unrealized or unrecognized losses, fair value $ 2,439,533 $ 785,295 $ 3,224,828 
 Gross unrealized or unrecognized losses on debt securities 311,204 133,017 444,221 
 Ratio of gross unrealized or unrecognized losses to debt securities with gross unrealized or unrecognized losses 12.8 % 16.9 % 13.8 % 
 
 Count of debt securities 1,091 55 1,146 
 Count of debt securities in an unrealized or unrecognized loss position 1,032 55 1,087 

 
 As of December 31, 2021 
 Available for Sale Held to Maturity Total 
 Debt securities with gross unrealized losses, fair value $ 2,783,177 $ — $ 2,783,177 
 Gross unrealized losses on debt securities 54,654 — 54,654 
 Ratio of gross unrealized losses to debt securities with gross unrealized losses 2.0 % — % 2.0 % 
 
 Count of debt securities 1,252 — 1,252 
 Count of debt securities in an unrealized loss position 373 — 373 

 Unrealized and unrecognized losses were related to changes in market interest rates and market conditions that do not represent credit-related impairments. The Company does not intend to sell securities that are in an unrealized or unrecognized loss position, and it is more likely than not that the Company will recover the amortized cost prior to being required to sell the debt securities. Full collection of the amounts due according to the contractual terms of the debt securities is expected; therefore, no ACL was recorded in relation to debt securities, and the impairment related to noncredit factors is recognized in AOCI, net of applicable taxes. As of December 31, 2022, the Company did not hold general obligation bonds of any single issuer, the aggregate of which exceeded 10% of the Company’s stockholders’ equity. 
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 NOTE 4. PORTFOLIO LOANS 
 Loan Categories 
 The Company’s lending can be summarized into five primary categories: commercial loans, commercial real estate loans, real estate construction loans, retail real estate loans, and retail other loans. Distributions of the loan portfolio by loan category were as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Portfolio loans 
 Commercial $ 1,974,154 $ 1,943,886 
 Commercial real estate 3,261,873 3,119,807 
 Real estate construction 530,469 385,996 
 Retail real estate 1,657,082 1,512,976 
 Retail other 302,124 226,333 
 Total portfolio loans $ 7,725,702 $ 7,188,998 
 ACL ( 91,608 ) ( 87,887 ) 
 Portfolio loans, net $ 7,634,094 $ 7,101,111 

 
 Net deferred loan origination costs included in the balances above were $ 14.0 million as of December 31, 2022, compared to $ 9.0 million as of December 31, 2021. Net accretable purchase accounting adjustments included in the balances above reduced loans by $ 5.9 million as of December 31, 2022, and by $ 8.8 million as of December 31, 2021. Commercial balances include loans originated under the PPP with an amortized cost of $ 0.8 million as of December 31, 2022, compared to $ 75.0 million as of December 31, 2021. 
 The Company did not purchase any retail real estate loans during the year ended December 31, 2022, compared to $ 32.2 million of retail real estate loan purchases during the year ended December 31, 2021. 
 Pledged Loans 
 The Company pledged loans as collateral to the FHLB and Federal Reserve Bank for liquidity as set forth in the table below (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Pledged loans 
 FHLB $ 5,095,448 $ 4,656,331 
 Federal Reserve Bank 804,718 808,254 
 Total pledged loans $ 5,900,166 $ 5,464,585 

 Risk Grading 
 The Company utilizes a loan grading scale to assign a risk grade to all of its loans. A description of the general characteristics of each grade is as follows: 
 • Pass – This category includes loans that are all considered acceptable credits, ranging from investment or near investment grade, to loans made to borrowers who exhibit credit fundamentals that meet or exceed industry standards. 
 • Watch – This category includes loans that warrant a higher-than-average level of monitoring to ensure that weaknesses do not cause the inability of the credit to perform as expected. These loans are not necessarily a problem due to other inherent strengths of the credit, such as guarantor strength, but have above average concern and monitoring. 
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 • Special mention – This category is for “Other Assets Specially Mentioned” loans that have potential weaknesses, which may, if not checked or corrected, weaken the asset, or inadequately protect the Company’s credit position at some future date. 
 • Substandard – This category includes “Substandard” loans, determined in accordance with regulatory guidelines, for which the accrual of interest has not been stopped. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. 
 • Substandard non-accrual – This category includes loans that have all the characteristics of a “Substandard” loan with additional factors that make collection in full highly questionable and improbable. Such loans are placed on non-accrual status and may be dependent on collateral with a value that is difficult to determine. 
 All loans are graded at their inception. Commercial lending relationships that are $ 1.0 million or less are usually processed through an expedited underwriting process. Most commercial loans greater than $ 1.0 million are included in a portfolio review at least annually. Commercial loans greater than $ 0.35 million that have a grading of special mention or worse are typically reviewed on a quarterly basis. Interim reviews may take place if circumstances of the borrower warrant a more frequent review. 
 The following table is a summary of risk grades segregated by category of portfolio loans (dollars in thousands) : 
 
 As of December 31, 2022 
 Pass Watch Special
Mention Substandard Substandard
Non-accrual Total 
 Portfolio loans 
 Commercial $ 1,668,495 $ 201,758 $ 46,540 $ 51,187 $ 6,174 $ 1,974,154 
 Commercial real estate 2,851,709 326,455 43,526 34,539 5,644 3,261,873 
 Real estate construction 502,904 25,164 1 2,400 — 530,469 
 Retail real estate 1,639,599 10,520 1,338 2,529 3,096 1,657,082 
 Retail other 301,971 — — — 153 302,124 
 Total portfolio loans $ 6,964,678 $ 563,897 $ 91,405 $ 90,655 $ 15,067 $ 7,725,702 

 
 As of December 31, 2021 
 Pass Watch Special
Mention Substandard Substandard
Non-accrual Total 
 Portfolio loans 
 Commercial $ 1,747,756 $ 93,582 $ 69,427 $ 26,117 $ 7,004 $ 1,943,886 
 Commercial real estate 2,682,441 343,304 49,695 38,394 5,973 3,119,807 
 Real estate construction 369,797 13,793 6 2,400 — 385,996 
 Retail real estate 1,491,845 12,374 1,992 3,867 2,898 1,512,976 
 Retail other 226,262 — — — 71 226,333 
 Total portfolio loans $ 6,518,101 $ 463,053 $ 121,120 $ 70,778 $ 15,946 $ 7,188,998 

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 Risk grades of portfolio loans, further sorted by origination year, are as follows (dollars in thousands) : 
 
 As of December 31, 2022 
 Term Loans Amortized Cost Basis by Origination Year Revolving
Loans Total 
 Risk Grade Ratings 2022 2021 2020 2019 2018 Prior 
 Commercial 
 Pass $ 479,893 $ 266,122 $ 136,445 $ 52,046 $ 50,764 $ 135,000 $ 548,225 $ 1,668,495 
 Watch 54,195 49,382 3,288 7,201 1,258 2,160 84,274 201,758 
 Special Mention 1,958 937 1,642 974 1,000 17,024 23,005 46,540 
 Substandard 8,926 1,165 570 6,671 2,382 5,191 26,282 51,187 
 Substandard non-accrual 21 3,292 226 135 — 100 2,400 6,174 
 Total commercial 544,993 320,898 142,171 67,027 55,404 159,475 684,186 1,974,154 
 
 Commercial real estate 
 Pass 883,688 819,133 478,452 297,525 161,409 198,419 13,083 2,851,709 
 Watch 77,346 56,113 64,282 96,664 21,592 5,758 4,700 326,455 
 Special Mention 11,943 5,389 12,386 1,420 6,917 5,471 — 43,526 
 Substandard 5,340 13,528 3,454 1,907 10,248 62 — 34,539 
 Substandard non-accrual — 3,959 33 — 1,647 5 — 5,644 
 Total commercial real estate 978,317 898,122 558,607 397,516 201,813 209,715 17,783 3,261,873 
 
 Real estate construction 
 Pass 219,112 191,724 68,015 1,490 1,901 1,751 18,911 502,904 
 Watch 8,530 12,019 3,169 48 — 1,398 — 25,164 
 Special Mention — — — 1 — — — 1 
 Substandard 2,400 — — — — — — 2,400 
 
 Total real estate construction 230,042 203,743 71,184 1,539 1,901 3,149 18,911 530,469 
 
 Retail real estate 
 Pass 396,547 456,158 175,148 77,569 56,887 267,387 209,903 1,639,599 
 Watch 2,928 2,991 1,846 1,444 1,063 27 221 10,520 
 Special Mention 945 — — — — 393 — 1,338 
 Substandard 77 732 198 81 141 1,293 7 2,529 
 Substandard non-accrual 10 191 107 32 390 1,708 658 3,096 
 Total retail real estate 400,507 460,072 177,299 79,126 58,481 270,808 210,789 1,657,082 
 
 Retail other 
 Pass 134,567 43,512 13,141 13,086 5,646 991 91,028 301,971 
 
 
 
 Substandard non-accrual 14 134 3 — — 2 — 153 
 Total retail other 134,581 43,646 13,144 13,086 5,646 993 91,028 302,124 
 
 Total portfolio loans $ 2,288,440 $ 1,926,481 $ 962,405 $ 558,294 $ 323,245 $ 644,140 $ 1,022,697 $ 7,725,702 

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 As of December 31, 2021 
 Term Loans Amortized Cost Basis by Origination Year Revolving
Loans Total 
 Risk Grade Ratings 2021 2020 2019 2018 2017 Prior 
 Commercial 
 Pass $ 512,729 $ 228,811 $ 107,877 $ 84,873 $ 74,351 $ 122,418 $ 616,697 $ 1,747,756 
 Watch 13,847 5,913 14,274 5,060 1,361 2,866 50,261 93,582 
 Special Mention 7,062 898 5,961 4,025 6,790 11,845 32,846 69,427 
 Substandard 3,595 3,362 3,136 1,855 1,125 5,459 7,585 26,117 
 Substandard non-accrual 4,126 364 142 — 320 52 2,000 7,004 
 Total commercial 541,359 239,348 131,390 95,813 83,947 142,640 709,389 1,943,886 
 
 Commercial real estate 
 Pass 969,548 637,550 425,850 235,928 200,373 198,002 15,190 2,682,441 
 Watch 51,560 38,820 123,324 48,088 46,761 32,608 2,143 343,304 
 Special Mention 9,542 7,060 6,585 10,098 6,357 9,870 183 49,695 
 Substandard 21,002 3,781 1,218 11,451 521 421 — 38,394 
 Substandard non-accrual 112 181 359 1,893 3,407 21 — 5,973 
 Total commercial real estate 1,051,764 687,392 557,336 307,458 257,419 240,922 17,516 3,119,807 
 
 Real estate construction 
 Pass 202,082 123,491 31,927 3,155 738 1,223 7,181 369,797 
 Watch 7,886 4,159 54 — 1,574 120 — 13,793 
 Special Mention — — 6 — — — — 6 
 Substandard — 2,400 — — — — — 2,400 
 
 Total real estate construction 209,968 130,050 31,987 3,155 2,312 1,343 7,181 385,996 
 
 Retail real estate 
 Pass 523,541 215,068 96,617 79,158 82,478 281,737 213,246 1,491,845 
 Watch 4,100 2,460 1,780 1,312 343 150 2,229 12,374 
 Special Mention 1,965 27 — — — — — 1,992 
 Substandard 1,369 232 12 71 165 1,687 331 3,867 
 Substandard non-accrual 235 63 — 16 227 1,705 652 2,898 
 Total retail real estate 531,210 217,850 98,409 80,557 83,213 285,279 216,458 1,512,976 
 
 Retail other 
 Pass 59,366 22,305 26,126 16,189 7,180 1,326 93,770 226,262 
 
 
 
 Substandard non-accrual 34 10 — 14 13 — — 71 
 Total retail other 59,400 22,315 26,126 16,203 7,193 1,326 93,770 226,333 
 
 Total portfolio loans $ 2,393,701 $ 1,296,955 $ 845,248 $ 503,186 $ 434,084 $ 671,510 $ 1,044,314 $ 7,188,998 

 
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 Past Due and Non-Accrual Loans 
 An analysis of the amortized cost basis of portfolio loans that are past due and still accruing, or on non-accrual status, is as follows (dollars in thousands) : 
 
 As of December 31, 2022 
 Loans past due, still accruing Non-accrual
Loans 
 30-59 Days 60-89 Days 90+Days 
 Past due and non-accrual loans 
 Commercial $ 2 $ — $ — $ 6,174 
 Commercial real estate 124 — — 5,644 
 
 Retail real estate 4,709 1,239 673 3,096 
 Retail other 414 60 — 153 
 Total past due and non-accrual loans $ 5,249 $ 1,299 $ 673 $ 15,067 

 
 As of December 31, 2021 
 Loans past due, still accruing Non-accrual
Loans 
 30-59 Days 60-89 Days 90+Days 
 Past due and non-accrual loans 
 Commercial $ 363 $ 10 $ 213 $ 7,004 
 Commercial real estate 151 441 — 5,973 
 Real estate construction 56 — — — 
 Retail real estate 3,312 1,830 693 2,898 
 Retail other 82 16 — 71 
 Total past due and non-accrual loans $ 3,964 $ 2,297 $ 906 $ 15,946 

 Gross interest income recorded on 90+ days past due loans, and that would have been recorded on non-accrual loans if they had been accruing interest in accordance with their original terms, was $ 1.2 million, $ 1.6 million, and $ 1.8 million for the years ended December 31, 2022, 2021, and 2020, respectively. Interest collected on those loans and recognized on a cash basis that was included in interest income was $ 0.4 million for each of the years ended December 31, 2022, and 2021, and was insignificant for the year ended December 31, 2020. 
 Troubled Debt Restructurings 
 TDR loan balances are summarized as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 TDRs 
 In compliance with modified terms $ 3,032 $ 1,801 
 
 Non-performing TDRs 537 551 
 Total TDRs $ 3,569 $ 2,352 

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 Loans that were designated as TDRs during the years ended as of the dates indicated are summarized as follows (dollars in thousands) : 
 
 Newly Designated TDRs 
 Recorded Investment 1 
 
 Number of 
Contracts Rate 
 Modification 2 
 Payment 
 Modification 2 
 
 December 31, 2022 
 Commercial 3 $ 136 $ 996 
 Retail real estate 1 — 517 
 Total 4 $ 136 $ 1,513 
 
 December 31, 2021 
 Commercial 1 $ 364 $ — 
 
 
 
 
 December 31, 2020 
 Commercial 3 $ 130 $ — 
 Commercial real estate 1 651 — 
 Real estate construction 4 — 986 
 Total 8 $ 781 $ 986 

 ___________________________________________ 
 1. Recorded investment for newly designated TDR’s that were still outstanding as of the dates indicated. 
 2. TDRs may include multiple concessions; those that include an interest rate concession and payment concession are shown in the rate modification column. 
 There were no TDRs entered into during the 12 months ended December 31, 2022, 2021, or 2020, that had subsequent defaults. A default occurs when a loan is 90 days or more past due or transferred to non-accrual. 
 Gross interest income that would have been recorded during the years ended December 31, 2022, 2021, and 2020, if TDRs had performed in accordance with their original terms compared with their modified terms, was insignificant. 
 Collateral Dependent Loans 
 Management's evaluation as to the ultimate collectability of loans includes estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers. Collateral dependent loans are loans in which repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment. Loans are written down to the lower of cost or fair value of underlying collateral, less estimated costs to sell. The Company had $ 14.0 million and $ 7.9 million of collateral dependent loans secured by real estate or business assets as of December 31, 2022, and December 31, 2021, respectively. 
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 Loans Modified Under the CARES Act or Interagency Statement 
 The CARES Act provided financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. Federal regulatory agencies, in consultation with FASB, also issued an Interagency Statement to encourage financial institutions to work with borrowers affected by COVID-19 and to update guidance to allow banks to modify loans of customers stressed by COVID-19 without having to classify the loan as a TDR. The Company’s TDR loan totals do not include the following modified loans with payment deferrals that fall under the CARES Act or Interagency Statement that suspended requirements under GAAP related to TDR classification (dollars in thousands) : 
 
 As of December 31, 2022 As of December 31, 2021 
 Number of
Contracts Recorded
Investment Number of
Contracts Recorded
Investment 
 COVID-19 loan modifications 
 Commercial loans: Interest-only deferrals 8 $ 20,556 32 $ 128,730 
 Retail loans: Mortgage and personal loan deferrals 1 99 2 137 
 Total COVID-19 loans modifications 9 $ 20,655 34 $ 128,867 

 
 Loans Evaluated Individually 
 The Company evaluates loans with disparate risk characteristics on an individual basis. The following tables provide details of loans evaluated individually, segregated by category. The unpaid principal balance represents the customer outstanding contractual principal balance excluding any partial charge-offs. Recorded investment represents the amortized cost of customer balances net of any partial charge-offs recognized on the loan. Average recorded investment is calculated using the most recent four quarters (dollars in thousands) : 
 
 As of December 31, 2022 
 Unpaid
Principal
Balance Recorded Investment Average
Recorded
Investment 
 With No
Allowance With
Allowance Total Related
Allowance 
 Loans evaluated individually 
 Commercial $ 9,589 $ 656 $ 5,918 $ 6,574 $ 2,476 $ 6,761 
 Commercial real estate 8,039 2,334 3,903 6,237 2,000 5,219 
 Real estate construction 247 247 — 247 — 260 
 Retail real estate 2,733 2,564 25 2,589 25 2,311 
 
 Total loans evaluated individually $ 20,608 $ 5,801 $ 9,846 $ 15,647 $ 4,501 $ 14,551 

 
 As of December 31, 2021 
 Unpaid
Principal
Balance Recorded Investment Average
Recorded
Investment 
 With No
Allowance With
Allowance Total Related
Allowance 
 Loans evaluated individually 
 Commercial $ 10,247 $ 498 $ 6,490 $ 6,988 $ 3,564 $ 8,791 
 Commercial real estate 6,456 5,750 — 5,750 — 6,390 
 Real estate construction 272 272 — 272 — 282 
 Retail real estate 2,514 2,345 25 2,370 25 4,093 
 
 Total loans evaluated individually $ 19,489 $ 8,865 $ 6,515 $ 15,380 $ 3,589 $ 19,556 

 
 
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 Allowance for Credit Losses 
 Management estimates the ACL balance using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Company’s historical loss experience beginning in 2010. Due to the continued economic uncertainty in the markets in which the Company operates, in particular the levels of delinquencies, the Company will continue to utilize a forecast period of 12 months with an immediate reversion to historical loss rates beyond this forecast period in its ACL estimate. PPP loans were excluded from the ACL calculation as they are 100% government guaranteed. 
 The following tables summarize activity in the ACL attributable to each loan category. Allocation of a portion of the ACL to one category does not preclude its availability to absorb losses in other categories (dollars in thousands) : 
 
 Commercial Commercial
Real Estate Real Estate
Construction Retail Real
Estate Retail Other Total 
 ACL Balance, December 31, 2019 $ 18,291 $ 21,190 $ 3,204 $ 10,495 $ 568 $ 53,748 
 Adoption of ASC 326-30 715 9,306 2,954 3,292 566 16,833 
 Provision for credit losses 10,832 17,511 1,452 9,050 ( 48 ) 38,797 
 Charged-off ( 6,376 ) ( 1,972 ) ( 18 ) ( 2,057 ) ( 665 ) ( 11,088 ) 
 Recoveries 404 195 601 1,212 346 2,758 
 ACL balance, December 31, 2020 23,866 46,230 8,193 21,992 767 101,048 
 Day 1 PCD 1 
 3,546 336 — 129 167 4,178 
 Provision for credit losses ( 2,160 ) ( 7,651 ) ( 3,180 ) ( 4,456 ) 2,346 ( 15,101 ) 
 Charged-off ( 2,026 ) ( 925 ) ( 209 ) ( 1,145 ) ( 478 ) ( 4,783 ) 
 Recoveries 629 259 298 1,069 290 2,545 
 ACL balance, December 31, 2021 23,855 38,249 5,102 17,589 3,092 87,887 
 Provision for credit losses 497 892 1,142 219 1,873 4,623 
 Charged-off ( 1,069 ) ( 1,375 ) ( 23 ) ( 251 ) ( 461 ) ( 3,179 ) 
 Recoveries 577 533 236 636 295 2,277 
 ACL balance, December 31, 2022 $ 23,860 $ 38,299 $ 6,457 $ 18,193 $ 4,799 $ 91,608 

 __________________________________________ 
 1. The Day 1 PCD is attributable to the CAC acquisition. 
 The following tables present the ACL and amortized cost of portfolio loans by category (dollars in thousands) : 
 
 As of December 31, 2022 
 Portfolio Loans ACL Attributed to Portfolio Loans 
 Collectively
Evaluated for
Impairment Individually
Evaluated for
Impairment Total Collectively
Evaluated for
Impairment Individually
Evaluated for
Impairment Total 
 Portfolio loan category 
 Commercial $ 1,967,580 $ 6,574 $ 1,974,154 $ 21,384 $ 2,476 $ 23,860 
 Commercial real estate 3,255,636 6,237 3,261,873 36,299 2,000 38,299 
 Real estate construction 530,222 247 530,469 6,457 — 6,457 
 Retail real estate 1,654,493 2,589 1,657,082 18,168 25 18,193 
 Retail other 302,124 — 302,124 4,799 — 4,799 
 Portfolio loans and related ACL $ 7,710,055 $ 15,647 $ 7,725,702 $ 87,107 $ 4,501 $ 91,608 

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 As of December 31, 2021 
 Portfolio Loans ACL Attributed to Portfolio Loans 
 Collectively
Evaluated for
Impairment Individually
Evaluated for
Impairment Total Collectively
Evaluated for
Impairment Individually
Evaluated for
Impairment Total 
 Portfolio loan category 
 Commercial $ 1,936,898 $ 6,988 $ 1,943,886 $ 20,291 $ 3,564 $ 23,855 
 Commercial real estate 3,114,057 5,750 3,119,807 38,249 — 38,249 
 Real estate construction 385,724 272 385,996 5,102 — 5,102 
 Retail real estate 1,510,606 2,370 1,512,976 17,564 25 17,589 
 Retail other 226,333 — 226,333 3,092 — 3,092 
 Portfolio loans and related ACL $ 7,173,618 $ 15,380 $ 7,188,998 $ 84,298 $ 3,589 $ 87,887 

 
 
 NOTE 5. OTHER REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS 
 OREO and other repossessed assets represent properties and other assets acquired through foreclosure or other proceedings in settlement of loans and is included in other assets in the accompanying Consolidated Balance Sheets. The following table summarizes the composition of the Company’s OREO and other repossessed asset balances as of the periods presented (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 OREO 
 Commercial $ — $ 2,839 
 Residential 70 235 
 Total OREO 70 3,074 
 Other repossessed assets 780 1,342 
 OREO and other repossessed assets $ 850 $ 4,416 

 
 The following table summarizes activity related to OREO and other repossessed assets (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Changes in OREO and other repossessed assets 
 OREO and other repossessed assets beginning balance $ 4,416 $ 4,571 $ 3,057 
 Additions, transfers from loans 175 1,610 2,867 
 Sales ( 2,565 ) ( 1,721 ) ( 1,282 ) 
 Cash payments collected ( 565 ) ( 43 ) ( 3 ) 
 Impairment of OREO and other repossessed assets ( 611 ) ( 1 ) ( 68 ) 
 OREO and other repossessed assets ending balance $ 850 $ 4,416 $ 4,571 

 The Company had residential real estate in the process of foreclosure totaling $ 1.1 million as of December 31, 2022, and $ 0.2 million as of December 31, 2021. The Company has elected to follow Federal Housing Finance Agency guidelines on single-family foreclosures and real estate owned evictions on portfolio loans. 
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 Activity related to OREO and other repossessed assets included the following (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Activity for OREO and other repossessed assets 
 Net loss (gain) on sales 665 173 ( 90 ) 
 Operating expenses, net of income 248 468 538 
 
 Activity for OREO and other repossessed assets $ 913 $ 641 $ 448 

 
 NOTE 6. PREMISES AND EQUIPMENT 
 Premises and equipment are summarized as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Premises and equipment 
 Land and improvements $ 44,193 $ 45,595 
 Buildings and improvements 128,669 132,011 
 Furniture and equipment 52,991 54,473 
 Premises and equipment, gross 225,853 232,079 
 Accumulated depreciation 99,329 95,932 
 Premises and equipment, net $ 126,524 $ 136,147 

 Depreciation expense was $ 10.5 million, $ 11.6 million, and $ 12.3 million for the years ended December 31, 2022, 2021, and 2020, respectively. 
 
 NOTE 7. GOODWILL AND OTHER INTANGIBLE ASSETS 
 Goodwill 
 The Company’s goodwill is associated with its three operating segments, Banking, FirsTech, and Wealth Management. Goodwill is tested annually for impairment, and as part of this analysis, the reporting unit's carrying value is compared to its estimated fair value. Based on the impairment testing performed at December 31, 2022, there were no indicators of potential impairment based on the estimated fair value of those operating segments. 
 The Company did not record any new goodwill during the year ended December 31, 2022. During 2021, in connection with the acquisition of CAC, the Company recorded goodwill totaling $ 6.3 million and other intangible assets totaling $ 8.8 million in the Banking operating segment, as well as other intangible assets totaling $ 8.5 million in the Wealth Management segment. 
 The carrying amount of goodwill by operating segment is as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Goodwill 
 Banking $ 294,773 $ 294,773 
 FirsTech 8,992 8,992 
 Wealth Management 14,108 14,108 
 Total goodwill $ 317,873 $ 317,873 

 Indefinite-lived intangible assets, such as goodwill, are not amortized. Goodwill is the Company's only indefinite-lived intangible asset. 
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 Intangible Assets 
 Core deposit and customer relationship intangible assets are amortized over the estimated period during which the Company expects to benefit from the assets. Intangible asset disclosures are as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Core deposit
intangible Customer
relationship
intangible Total Core deposit
intangible Customer
relationship
intangible Total 
 Intangible Assets 
 Intangible assets, gross $ 99,065 $ 33,138 $ 132,203 $ 99,065 $ 33,138 $ 132,203 
 Accumulated amortization 63,476 22,304 85,780 55,161 18,991 74,152 
 Intangible assets, net $ 35,589 $ 10,834 $ 46,423 $ 43,904 $ 14,147 $ 58,051 

 Amortization expense related to intangible assets, as reflected in the Company's Consolidated Statements of Income, is presented in the table below (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Amortization Expense 
 Core deposit intangible $ 8,315 $ 8,253 $ 7,753 
 Customer relationship intangible 3,313 3,021 2,255 
 Amortization of intangible assets $ 11,628 $ 11,274 $ 10,008 

 Future expense for the amortization of intangible assets, as estimated, is summarized in the table below (dollars in thousands) : 
 
 As of December 31, 2022 
 Core deposit
intangible Customer
relationship
intangible Total 
 Estimated amortization expense 
 2023 $ 7,616 $ 2,816 $ 10,432 
 2024 6,902 2,318 9,220 
 2025 5,956 1,887 7,843 
 2026 5,227 1,479 6,706 
 2027 4,490 1,091 5,581 
 Thereafter 5,398 1,243 6,641 
 Total estimated amortization expense $ 35,589 $ 10,834 $ 46,423 

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 Table of Contents 
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 NOTE 8. DEPOSITS 
 The composition of deposits is as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Deposits 
 Noninterest-bearing demand deposits $ 3,393,666 $ 3,670,267 
 Interest-bearing transaction deposits 2,857,818 2,720,417 
 Saving deposits and money market deposits 2,964,421 3,442,244 
 Time deposits 855,375 935,649 
 Total deposits $ 10,071,280 $ 10,768,577 

 Additional information about our deposits is as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Brokered savings deposits and money market deposits $ 1,303 $ 2,248 
 Brokered time deposits 275 266 
 Total time deposits with a minimum denomination of $100,000 416,445 454,649 
 Total time deposits with a minimum denomination that meets or exceeds the FDIC insurance limit of $250,000 120,377 137,449 

 Scheduled maturities of time deposits are as follows (dollars in thousands) : 
 
 As of 
December 31, 2022 
 Time deposits by schedule of maturities 
 
 2023 $ 560,147 
 2024 229,263 
 2025 34,307 
 2026 16,637 
 2027 14,301 
 Thereafter 720 
 Time deposits $ 855,375 

 
 NOTE 9. BORROWINGS 
 Securities Sold Under Agreements to Repurchase 
 Securities sold under agreements to repurchase, which are classified as secured borrowings, mature daily. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The underlying securities are held by the Company’s safekeeping agent. The Company may be required to provide additional collateral based on fluctuations in the fair value of the underlying securities. Securities sold under agreements to repurchase were as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Securities sold under agreements to repurchase $ 229,806 $ 270,139 
 Weighted average rate for securities sold under agreements to repurchase 1.91 % 0.08 % 

 
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 Term Loan 
 On May 28, 2021, the Company entered into a Second Amended and Restated Credit Agreement, pursuant to which the Company has access to (i) a $ 40.0 million revolving line of credit with an initial termination date of April 30, 2022, and (ii) a $ 60.0 million term loan with a maturity date of May 31, 2026. The loans had an annual interest rate of 1.75 % plus the one-month LIBOR rate. On April 30, 2022, the agreement was amended, effecting an extension of the termination date for the revolving line of credit to April 30, 2023, and providing for the transition from a LIBOR-indexed interest rate to a SOFR-indexed interest rate. Under the terms of the amendment, the loans now have an annual interest rate of 1.80 % plus the one-month forward-looking term rate based on SOFR. 
 Proceeds of the term loan were used to fund a part of the cash portion of the merger consideration related to the acquisition of CAC in the second quarter of 2021, and for general corporate purposes. As of December 31, 2022, there was no balance outstanding on the revolving credit facility and a total of $ 42.0 million outstanding on the term loan, of which $ 12.0 million was short-term and $ 30.0 million was long-term. The revolving credit facility incurs a non-usage fee based on any undrawn amounts. Quarterly payments on the term loan reduce the outstanding principal balance by $ 3.0 million each quarter. 
 Short-Term Borrowings 
 Short-term borrowings are summarized as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Short-term borrowings 
 
 FHLB advances maturing in less than one year from date of origination, and the current portion of long-term FHLB advances due within 12 months $ 339,054 $ 5,678 
 
 Term Loan, current portion due within 12 months 12,000 12,000 
 Total short-term debt $ 351,054 $ 17,678 

 Funds borrowed from the FHLB, listed above, consisted of four notes with a weighted average interest rate of 4.28 % as of December 31, 2022, and two notes with a weighted average interest rate of 0.36 % as of December 31, 2021. 
 Federal funds purchased are short-term borrowings that generally mature between one and 90 days. The Company had no federal funds purchased as of December 31, 2022, or December 31, 2021. 
 Long-Term Debt 
 First Busey’s long-term debt consists of loans maturing more than one year from the loan origination date, excluding the current portion that is due within 12 months. Long-term debt is summarized as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Long-term debt 
 Notes payable, FHLB, original maturity of 5 years, collateralized by FHLB deposits, residential and commercial real estate loans and FHLB stock 
 $ — $ 4,056 
 Term Loan 30,000 42,000 
 Total long-term debt $ 30,000 $ 46,056 

 
 As of December 31, 2021, funds borrowed from the FHLB, listed above, consisted of one variable-rate note maturing in May 2023, with an interest rate of 3.04 %. During the second quarter of 2022, this note became due within 12 months and the balance is now fully reflected in short-term borrowings. 
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 Senior and Subordinated Notes 
 On May 25, 2017, the Company issued $ 40.0 million of 3.75 % senior notes that matured and were redeemed on May 25, 2022. Additionally, on May 25, 2017, the Company issued $ 60.0 million of fixed-to-floating rate subordinated notes that were scheduled to mature on May 25, 2027, with an optional redemption in whole or in part on any interest payment date on or after May 25, 2022. The Company redeemed all outstanding $ 60.0 million fixed-to-floating rate subordinated notes during the third quarter of 2022. At the time of redemption, the redeemed subordinated notes carried interest at a floating rate of 3-month LIBOR plus 2.919 %. 
 On June 1, 2020, the Company issued $ 125.0 million of fixed-to-floating rate subordinated notes that mature on June 1, 2030. The subordinated notes, which qualify as Tier 2 capital for First Busey, bear interest at an annual rate of 5.25 % for the first five years after issuance and thereafter bear interest at a floating rate equal to a three-month benchmark rate plus a spread of 5.11 %, as calculated on each applicable determination date. The subordinated notes are payable semi-annually on each June 1 and December 1 during the five-year fixed-term, and thereafter on March 1, June 1, September 1, and December 1 of each year, commencing on September 1, 2025. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after June 1, 2025. The subordinated notes are unsecured obligations of the Company. 
 On June 2, 2022, the Company issued $ 100.0 million aggregate principal amount of 5.000 % fixed-to-floating rate subordinated notes maturing June 15, 2032, which qualify as Tier 2 Capital for regulatory purposes. The price to the public for the subordinated notes was 100 % of the principal amount of the subordinated notes. Interest on the subordinated notes will accrue at a rate equal to (i) 5.000 % per annum from the original issue date to, but excluding, June 15, 2027, payable semiannually in arrears, and (ii) a floating rate per annum equal to a benchmark rate, which is expected to be the Three-Month Term SOFR (as defined in the subordinated notes), plus a spread of 252 basis points from and including, June 15, 2027, payable quarterly in arrears. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after June 15, 2027. 
 Unamortized debt issuance costs related to senior notes and subordinated notes are presented in the following table (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Unamortized debt issuance costs 
 Senior notes issued in 2017 $ — $ 56 
 Subordinated notes issued in 2017 — 549 
 Subordinated notes issued in 2020 1,220 1,678 
 Subordinated notes issued in 2022 1,742 — 
 Total unamortized debt issuance costs $ 2,962 $ 2,283 

 
 
 NOTE 10. JUNIOR SUBORDINATED DEBT OWED TO UNCONSOLIDATED TRUSTS 
 First Busey maintains statutory trusts for the sole purpose of issuing and servicing trust preferred securities and related trust common securities. Proceeds from such issuances were used by the trusts to purchase junior subordinated notes of the Company, which are the sole assets of each trust. Concurrent with the issuance of the trust preferred securities, the Company issued guarantees for the benefit of the holders of the trust preferred securities. The trust preferred securities are instruments that qualify, and are treated by the Company, as Tier 1 regulatory capital. The Company owns all of the common securities of each trust. The trust preferred securities issued by each trust rank equally with the common securities in right of payment, except that if an event of default under the indenture governing the notes has occurred and is continuing, the preferred securities will rank senior to the common securities in right of payment. In connection with the Pulaski acquisition in 2016, the Company acquired similar statutory trusts previously maintained by Pulaski and the fair value adjustment is being accreted over their weighted average remaining life, with a balance of $ 2.8 million remaining to be accreted. The Company had $ 71.8 million and $ 71.6 million of junior subordinated debt owed to unconsolidated trusts at December 31, 2022, and 2021, respectively, maturing in 2034 through 2036. 
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 The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated notes at par value at the stated maturity date or upon redemption. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related junior subordinated notes. The Company’s obligations under the junior subordinated notes and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by the Company of each trust’s obligations under the trust preferred securities issued by each trust. The Company has the right to defer payment of interest on the notes, in which case the distributions on the trust preferred securities will also be deferred, for up to five years , but not beyond the stated maturity date. 
 For regulatory capital purposes, current banking regulations allow for the inclusion in Tier 1 Capital qualifying trust preferred securities issued prior to May 19, 2010, by bank holding companies with less than $ 15.0 billion of assets, but do not allow for additional Tier 1 Capital to be raised through the future issuance of trust preferred securities. As of December 31, 2022, 100 % of the trust preferred securities qualified as Tier 1 Capital; however, once the Company reaches $ 15.0 billion in assets, its trust preferred securities will no longer quality as Tier 1 Capital. 
 
 NOTE 11. REGULATORY CAPITAL 
 The Company and its subsidiary bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Capital amounts and classification also are subject to qualitative judgments by regulators about components, risk weightings, and other factors. 
 Banking regulations identify five capital categories for insured depository institutions: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. As of December 31, 2022, and December 31, 2021, all capital ratios of the Company and its subsidiary bank exceeded well capitalized levels under the applicable regulatory capital adequacy guidelines. Management believes that no events or changes have occurred subsequent to December 31, 2022, that would change this designation. 
 Current Expected Credit Loss Model 
 On August 26, 2020, the FDIC and other federal banking agencies adopted a final rule which provided banking organizations that adopted CECL during 2020 with the option to delay for two years the estimated impact of CECL on regulatory capital and to phase in the aggregate impact of the deferral on regulatory capital over a subsequent three-year period. Under this final rule, because the Company has elected to use the deferral option, the regulatory capital impact of our transition adjustments recorded on January 1, 2020, arising from the adoption of CECL was deferred for two years. In addition, 25 percent of the ongoing impact of CECL on our ACL, retained earnings, and average total consolidated assets from January 1, 2020, through the end of the two-year deferral period, each as reported for regulatory capital purposes, has been added to the deferred transition amounts (“adjusted transition amounts”) and deferred for the two-year period. On January 1, 2022, at the conclusion of the two-year period, the adjusted transition amounts began to be phased-in for regulatory capital purposes at a rate of 25 percent per year, with the phased-in amounts included in regulatory capital at the beginning of each year. 
 Changes in Capital Relating to Subordinated Debt 
 On May 25, 2017, the Company issued $ 60.0 million of fixed-to-floating rate subordinated notes that were scheduled to mature on May 25, 2027. The full balance of the subordinated note qualified as Tier 2 Capital for First Busey for the first five years, with a phase out beginning in the second quarter of 2022. The subordinated notes had an optional redemption in whole or in part on any interest payment date on or after May 25, 2022, and the Company redeemed them in full during the third quarter of 2022. 
 On June 2, 2022, the Company issued $ 100.0 million aggregate principal amount of 5.000 % fixed-to-floating rate subordinated notes that mature on June 15, 2032, which qualify as Tier 2 Capital for regulatory purposes. 
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 Capital Amounts and Ratios 
 The following tables summarize regulatory capital requirements applicable to the Company and its subsidiary bank (dollars in thousands) : 
 
 As of December 31, 2022 
 Actual Minimum
Capital Requirement Minimum
To Be Well
Capitalized 
 Amount Ratio Amount Ratio Amount Ratio 
 Common Equity Tier 1 Capital to Risk Weighted Assets 
 Consolidated $ 1,081,686 11.96 % $ 406,980 4.50 % $ 587,861 6.50 % 
 Busey Bank 1,306,716 14.49 % 405,736 4.50 % 586,063 6.50 % 
 
 Tier 1 Capital to Risk Weighted Assets 
 Consolidated $ 1,155,686 12.78 % $ 542,640 6.00 % $ 723,521 8.00 % 
 Busey Bank 1,306,716 14.49 % 540,981 6.00 % 721,308 8.00 % 
 
 Total Capital to Risk Weighted Assets 
 Consolidated $ 1,457,994 16.12 % $ 723,521 8.00 % $ 904,401 10.00 % 
 Busey Bank 1,384,024 15.35 % 721,308 8.00 % 901,635 10.00 % 
 
 Leverage Ratio of Tier 1 Capital to Average Assets 
 Consolidated $ 1,155,686 9.45 % $ 489,124 4.00 % N/A N/A 
 Busey Bank 1,306,716 10.72 % 487,541 4.00 % $ 609,426 5.00 % 

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 As of December 31, 2021 
 Actual Minimum
Capital Requirement Minimum
To Be Well
Capitalized 
 Amount Ratio Amount Ratio Amount Ratio 
 Common Equity Tier 1 Capital to Risk Weighted Assets 
 Consolidated $ 995,874 11.85 % $ 378,334 4.50 % $ 546,482 6.50 % 
 Busey Bank 1,241,303 14.81 % 377,096 4.50 % 544,695 6.50 % 
 
 Tier 1 Capital to Risk Weighted Assets 
 Consolidated $ 1,069,874 12.73 % $ 504,445 6.00 % $ 672,594 8.00 % 
 Busey Bank 1,241,303 14.81 % 502,795 6.00 % 670,394 8.00 % 
 
 Total Capital to Risk Weighted Assets 
 Consolidated $ 1,320,187 15.70 % $ 672,594 8.00 % $ 840,742 10.00 % 
 Busey Bank 1,306,616 15.59 % 670,394 8.00 % 837,992 10.00 % 
 
 Leverage Ratio of Tier 1 Capital to Average Assets 
 Consolidated $ 1,069,874 8.52 % $ 502,336 4.00 % N/A N/A 
 Busey Bank 1,241,303 9.91 % 501,104 4.00 % $ 626,379 5.00 % 

 
 Capital Conservation Buffer 
 In July 2013, U.S. federal banking authorities approved the Basel III Rule for strengthening international capital standards. The Basel III Rule introduced a capital conservation buffer, composed entirely of Common Equity Tier 1 Capital, which is added to the minimum risk-weighted asset ratios. The capital conservation buffer is not a minimum capital requirement; however, banking institutions with a ratio of Common Equity Tier 1 Capital to risk-weighted assets below the capital conservation buffer will face constraints on dividends, equity repurchases, and discretionary bonus payments based on the amount of the shortfall. In order to refrain from restrictions on dividends, equity repurchases, and discretionary bonus payments, banking institutions must maintain minimum ratios of (i) Common Equity Tier 1 to risk-weighted assets of at least 7.0%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) Total capital to risk-weighted assets of at least 10.5%. 
 Subsidiary Dividend Payments 
 The ability of the Company to pay cash dividends to its stockholders and to service its debt is dependent on the receipt of cash dividends from its subsidiaries. Under applicable regulatory requirements, an Illinois state-chartered bank, such as Busey Bank, may not pay dividends in excess of its net profits. Busey Bank paid dividends to the Company of $ 95.0 million, $ 60.0 million, and $ 122.0 million during the years ended December 31, 2022, 2021, and 2020, respectively. 
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 NOTE 12. INCOME TAXES 
 The components of income taxes consist of (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Income tax expense 
 Current expense: 
 Federal $ 20,815 $ 20,261 $ 21,027 
 State 13,883 8,448 12,144 
 Deferred expense: 
 Federal ( 700 ) 3,644 ( 3,657 ) 
 State ( 572 ) 1,021 ( 1,652 ) 
 Total income tax expense $ 33,426 $ 33,374 $ 27,862 

 A reconciliation of federal and state income taxes at statutory rates to the income taxes included in the accompanying Consolidated Statements of Income is as follows: 
 
 Years Ended December 31, 
 2022 2021 2020 
 Percent of pretax income 
 Income tax at federal statutory rate 21.0 % 21.0 % 21.0 % 
 Effect of: 
 Tax-exempt interest, net ( 1.1 ) % ( 1.1 ) % ( 1.6 ) % 
 Stock incentive 0.1 % — % 0.2 % 
 State income taxes, net 6.5 % 4.5 % 6.5 % 
 Income on bank owned life insurance ( 0.5 ) % ( 0.7 ) % ( 0.9 ) % 
 Tax credit investments ( 5.6 ) % ( 3.6 ) % ( 3.2 ) % 
 Other, net 0.3 % 1.2 % ( 0.3 ) % 
 Effective income tax rate 20.7 % 21.3 % 21.7 % 

 
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 Net deferred taxes, reported in other assets or other liabilities in the accompanying Consolidated Balance Sheets, include the following amounts of deferred tax assets and liabilities (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Deferred taxes 
 Deferred tax assets: 
 ACL $ 26,979 $ 25,884 
 Unrealized loss on cash flow hedge 8,365 273 
 Unrealized losses on securities available for sale 88,666 9,199 
 Unrealized losses on securities held to maturity 11,919 — 
 Stock-based compensation 5,504 4,204 
 Deferred compensation 53 55 
 Purchase accounting adjustments 656 1,213 
 Accrued vacation 411 398 
 Lease liabilities 3,564 2,893 
 Employee costs 3,298 2,847 
 Other 376 390 
 Total deferred tax assets 149,791 47,356 
 
 Deferred tax liabilities: 
 
 Basis in premises and equipment ( 1,541 ) ( 1,347 ) 
 Affordable housing partnerships and other investments ( 6,669 ) ( 3,696 ) 
 Purchase accounting adjustments ( 1,207 ) ( 1,362 ) 
 Mortgage servicing assets ( 2,132 ) ( 2,853 ) 
 Basis in core deposit, customer intangible assets, and asset purchase goodwill ( 6,956 ) ( 9,485 ) 
 Deferred loan origination costs ( 3,845 ) ( 2,454 ) 
 Right of use assets ( 3,518 ) ( 2,877 ) 
 Unrealized gain on equity securities ( 512 ) ( 1,099 ) 
 Other ( 586 ) ( 560 ) 
 Total deferred tax liabilities ( 26,966 ) ( 25,733 ) 
 
 Net deferred tax asset $ 122,825 $ 21,623 

 Management believes that it is more likely than not that the other deferred tax assets included in the accompanying Consolidated Balance Sheets will be fully realized. The Company has determined that no valuation allowance is required for any deferred tax assets as of December 31, 2022, or 2021. 
 
 NOTE 13. EMPLOYEE BENEFIT PLANS 
 First Busey Corporation Profit Sharing Plan and Trust ( “ the 401(k) Plan ” ) 
 All associates who meet certain age requirements are eligible to participate in the 401(k) Plan. There is no waiting period for participation in the 401(k) Plan. The 401(k) Plan offers two contribution options: (i) the traditional option allows plan participants to elect pre-tax contributions, and (ii) the Roth option allows plan participants to elect after tax contributions. Plan participants may elect to make traditional and/or Roth 401(k) contributions, up to the annual deferral and catch-up limits established by the Internal Revenue Service. 
 First Busey supplements participant contributions by making Safe Harbor matching and discretionary profit sharing contributions. 
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 Safe Harbor Match 
 First Busey makes Safe Harbor matching contributions equal to 100 % of the first 3 % of eligible contributions and 50 % of the next 2 % of eligible contributions. The rights of participants in Safe Harbor matching contributions vest immediately. 
 Profit Sharing 
 All associates who meet certain age and service requirements are eligible to participate in the Company's profit-sharing contributions. Discretionary profit-sharing contributions and related expenses, if any, are approved solely by the First Busey board of directors, and in no case may annual contributions be greater than the amounts deductible for federal income tax purposes for that year. The rights of participants in profit-sharing contributions vest ratably over a five-year period. 
 401(k) Plan Expenses 
 Expenses related to our employee benefit plans, reported in salaries, wages, and employee benefits in the accompanying Consolidated Statements of Income, are summarized in the table below (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 401(k) Plan expenses 
 Profit-sharing expenses $ 2,960 $ 2,823 $ 2,551 
 Safe Harbor match expenses $ 4,094 $ 3,708 $ 3,431 
 Total 401(k) Plan expenses $ 7,054 $ 6,531 $ 5,982 

 
 NOTE 14. STOCK-BASED COMPENSATION 
 Stock Options 
 The Company has outstanding stock options that were issued under the First Community 2016 Equity Incentive Plan and assumed from acquisitions. A summary of the status of, and changes in, the Company's stock option awards follows (dollars in thousands, except weighted-average exercise price) : 
 
 Shares Weighted-
Average
Exercise
Price Weighted-
Average
Remaining
Contractual
Life Intrinsic
Value 
 Options outstanding at December 31, 2021 31,386 $ 23.53 4.88 $ 113 
 Exercised ( 4,840 ) 23.53 
 
 Expired ( 440 ) 23.53 
 Options outstanding at December 31, 2022 26,106 $ 23.53 3.88 $ 31 
 
 Options exercisable at December 31, 2022 26,106 $ 23.53 3.88 $ 31 

 
 2020 Equity Plan 
 Under the terms of the 2020 Equity Plan, the Company has granted RSU, PSU, and DSU awards. Upon vesting/delivery, shares are expected (though not required) to be issued from treasury. 
 A description of RSU, PSU and DSU awards granted in 2022 under the terms of the 2020 Equity Plan is provided below. A description of RSU, PSU and DSU awards granted in 2021 and 2020 under the terms of the 2020 Equity Plan and 2010 Equity Plan can be found in the Company’s Annual Reports for the years ended December 31, 2021, and 2020, respectively. 
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 The Company issued 175,225 treasury shares in conjunction with the vesting of RSUs and settlement of DSUs in 2022. The difference between the number of shares issued and the number of vested units is due to shares issued under a net share settlement option. There were 657,570 shares available for issuance under the 2020 Equity Plan as of December 31, 2022. 
 RSU Awards 
 The Company grants RSUs to members of management periodically throughout the year. Each RSU is equivalent to one share of the Company’s common stock. These units have requisite service periods ranging from one year to five years , subject to accelerated vesting upon eligible retirement from the Company. Recipients earn quarterly dividend equivalents on their respective units which entitle the recipients to additional units. Therefore, dividends earned each quarter compound based upon the updated unit balances. 
 On March 23, 2022, under the terms of the 2020 Equity Plan, the Company granted 156,483 RSUs to members of management. The grant date fair value of the award totaled $ 4.0 million and will be recognized as compensation expense over the requisite service period ranging from one year to five years . The terms of these awards included an accelerated vesting provision upon eligible retirement from the Company, after a one-year minimum requisite service period. Subsequent to the requisite service period, the awards will become 100 % vested. 
 A summary of changes in the Company’s RSU awards for the year ended December 31, 2022, is as follows: 
 
 RSU Awards 
 Shares Weighted-
Average
Grant Date
Fair Value 
 Nonvested at December 31, 2021 1,147,927 $ 23.97 
 Granted 156,483 25.79 
 Dividend equivalents earned 43,916 24.83 
 Vested ( 203,230 ) 27.66 
 Forfeited ( 48,165 ) 23.46 
 
 Nonvested at December 31, 2022 1,096,931 23.61 
 
 

 PSU Awards 
 The Company grants PSUs, which are restricted stock units that are subject to certain performance criteria, to members of management periodically throughout the year. Each PSU is equivalent to one share of the Company’s common stock. The number of units that ultimately vest will be determined based on the achievement of the market or other performance goals, subject to accelerated service-based vesting conditions upon eligible retirement from the Company. 
 On March 23, 2022, the Company granted a target of 78,233 market-based PSUs with a maximum award of 125,173 units. The actual number of units issued at the vesting date could range from 0 % to 160 % of the initial grant, depending on attaining a market-based total stockholder return performance goal. The grant date fair value of the award is $ 2.1 million and will be recognized in compensation expense over the performance period ending December 31, 2024. 
 On March 23, 2022, the Company granted a target of 78,233 performance-based PSUs with a maximum award of 125,173 units. The actual number of units issued at the vesting date could range from 0 % to 160 % of the initial grant, depending on attaining an adjusted return on average tangible common equity performance goal. The grant date fair value of the award is $ 2.0 million and will be recognized in compensation expense over the performance period ending December 31, 2024. The actual amount of compensation expense recognized may vary, subject to achievement of the performance goal. 
 Further, on March 23, 2022, the Company granted a target of 38,774 PSUs with a maximum award of 77,548 units. The actual number of units issued at the vesting date could range from 0 % to 200 % of the initial grant, depending on attaining a performance goal based upon the compounded annual revenue growth rate of the FirsTech operating segment. The grant date fair value of the award is $ 1.0 million and will be recognized in compensation expense over the performance period ending December 31, 2024, subject to achievement of the performance goal. 
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 A summary of changes in the Company’s PSU awards for the year ended December 31, 2022, is as follows: 
 
 PSU Awards 
 Shares 1 
 Weighted-
Average
Grant Date
Fair Value 
 Nonvested at December 31, 2021 113,915 $ 22.86 
 Granted 195,240 26.14 
 Dividend equivalents earned 2 
 832 22.63 
 Vested 2 
 ( 8,694 ) 16.86 
 Forfeited 2 
 ( 8,080 ) 25.21 
 Adjustment for performance conditions 2,3 
 ( 7,862 ) 16.25 
 Nonvested at December 31, 2022 285,351 25.40 
 
 Vested and outstanding at December 31, 2022 8,694 16.86 

 ___________________________________________ 
 1. Shares for PSU awards represent target shares at grant date. 
 2. PSUs granted in 2020 vested on December 31, 2022. In January 2023, it was determined that performance criteria had been met at 50% of target. 
 3. Adjustments for performance conditions represent the difference between the number of target shares at grant date and the number of actual shares earned for the performance period completed. 
 DSU Awards 
 The Company grants DSUs, which are restricted stock units with a deferred settlement date, to its directors and advisory directors. Each DSU is equivalent to one share of the Company’s common stock. DSUs vest over a one-year period following the grant date. These units generally are subject to the same terms as RSUs under the 2020 Equity Plan, except that, following vesting, settlement occurs within 30 days following the earlier of separation from the board or a change in control of the Company. After vesting and prior to delivery, these units will continue to earn dividend equivalents. 
 On March 23, 2022, the Company granted 32,658 DSUs to directors and advisory directors. The grant date fair value of the award totaled $ 0.8 million and will be recognized as compensation expense over the requisite service period of one year . Subsequent to the requisite service period, the awards will become 100 % vested. 
 A summary of changes in the Company’s DSU awards for the year ended December 31, 2022, is as follows: 
 
 DSU Awards 
 Shares Weighted-
Average
Grant Date
Fair Value 
 Nonvested at December 31, 2021 34,135 $ 24.59 
 Granted 32,658 25.79 
 Dividend equivalents earned 5,473 24.47 
 Vested ( 41,181 ) 24.67 
 
 
 Nonvested at December 31, 2022 31,085 25.75 
 
 Vested and outstanding at December 31, 2022 112,434 23.10 

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 2021 Employee Stock Purchase Plan 
 The First Busey Corporation 2021 ESPP was approved at the Company’s 2021 Annual Meeting of Stockholders. The purpose of the 2021 ESPP is to provide a means through which our employees may acquire a proprietary interest in the Company by purchasing shares of our common stock at a 15 % discount through voluntary payroll deductions, to assist us in retaining the services of our employees and securing and retaining the services of new employees, and to provide incentives for our employees to exert maximum efforts toward our success. Under the terms of the 2021 ESPP, all participating employees have equal rights and privileges. Substantially all of our employees are eligible to participate in the 2021 ESPP. Further details can be found within First Busey’s Definitive Proxy Statement filed with the SEC on April 8, 2021. 
 The 2021 ESPP initially reserved for issuance and purchase an aggregate of 600,000 shares of the Company’s common stock. The first offering under the 2021 ESPP began on July 1, 2021. There were 512,225 shares available for issuance under the 2021 ESPP as of December 31, 2022. 
 Stock-Based Compensation Expense 
 The Company did no t record any stock option compensation expense for the years ended December 31, 2022, 2021, or 2020. As of December 31, 2022, the Company did no t have any unrecognized stock option compensation expense. 
 The Company recognized compensation expense related to non-vested RSU, PSU, and DSU awards, as well as the 2021 ESPP, as presented in the table below (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Stock-based compensation expense 
 
 RSU awards $ 4,648 $ 5,809 $ 6,493 
 PSU awards 1 
 3,240 979 77 
 DSU awards 876 962 565 
 2021 ESPP 204 114 — 
 Total stock-based compensation expense $ 8,968 $ 7,864 $ 7,135 

 ___________________________________________ 
 1. Expense for market-based PSU awards represents amounts based on target shares at grant date. Expense for performance-based PSU awards represents amounts based on target shares at grant date, adjusted for performance expectations as of the date indicated. 
 Unamortized stock-based compensation expense is presented in the table below (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Unamortized stock-based compensation 
 RSU awards $ 8,570 $ 10,204 
 PSU awards 1 
 4,279 1,547 
 DSU awards 175 209 
 Total unamortized stock-based compensation $ 13,024 $ 11,960 
 
 Weighted average period over which expense is to be recognized 2.5 yrs 
 2.9 yrs 
 

 ___________________________________________ 
 1. Unamortized expense for market-based PSU awards represents amounts based on target shares at grant date. Unamortized expense for performance-based PSU awards represents amounts based on target shares at grant date, adjusted for performance expectations as of the date indicated. 
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 NOTE 15. TRANSACTIONS WITH RELATED PARTIES 
 The Company has had, and may be expected to have in the future, banking transactions in the ordinary course of business with related parties which include directors, executive officers, chief credit officers, their immediate families, and affiliated companies in which they have 10% or more beneficial ownership, on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with others. 
 The following is an analysis of the changes in loans to related parties, as a group (dollars in thousands) : 
 
 As of and for the Year Ended
December 31, 2022 
 Balance of loans to related parties, December 31, 2021 $ 42,557 
 Change in relationship ( 11,254 ) 
 New loans/advances 39,545 
 Repayments ( 15,507 ) 
 Balance of loans to related parties, December 31, 2022 $ 55,341 
 
 Unused commitments to directors and executive officers $ 12,722 

 Loans to related parties did not include significant amounts that were past due, nonaccrual, or TDRs. 
 
 NOTE 16. OUTSTANDING COMMITMENTS AND CONTINGENT LIABILITIES 
 Legal Matters 
 The Company is a party to legal actions which arise in the normal course of its business activities. In the opinion of management, the ultimate resolution of these matters is not expected to have a material effect on the Company’s financial position or the results of operations. 
 Credit Commitments and Contingencies 
 A summary of the contractual amount of the Company’s exposure to off-balance-sheet risk relating to the Company’s commitments to extend credit and standby letters of credit follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Financial instruments whose contract amounts represent credit risk 
 Commitments to extend credit $ 1,991,769 $ 1,983,655 
 Standby letters of credit 33,008 32,552 
 Total commitments $ 2,024,777 $ 2,016,207 

 
 NOTE 17. DERIVATIVE FINANCIAL INSTRUMENTS 
 The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. Additionally, the Company enters into derivative financial instruments, including interest rate lock commitments issued to residential loan customers for loans that will be held for sale, forward sales commitments to sell residential mortgage loans to investors, and interest rate swaps with customers and other third parties. See “ Note 18. Fair Value Measurements ” for further discussion of the fair value measurement of such derivatives. 
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 To secure its obligations under derivative contracts, the Company pledged cash and held collateral as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Cash pledged to secure obligations under derivative contracts $ 38,609 $ 27,300 
 Collateral held to secure obligations under derivative contracts 29,830 — 

 Derivative Instruments Designated as Hedges 
 The Company entered into derivative instruments designated as cash flow hedges. For a derivative instrument that is designated and qualifies as a cash flow hedge, the change in fair value of the derivative instrument is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Changes in fair value of components excluded from the assessment of effectiveness are recognized in current earnings. 
 Interest Rate Swaps Designated as Cash Flow Hedges 
 Interest rate swaps with notional amounts totaling $ 350.0 million as of December 31, 2022, and $ 50.0 million as of December 31, 2021, were designated as cash flow hedges. The Company entered into one $ 50.0 million interest rate swap to hedge the risks of variability in cash flows for future interest payments attributable to changes in the contractually specified 3-month LIBOR benchmark interest rate on the Company’s junior subordinated debt owed to unconsolidated trusts (Debt Swap). In 2022, the Company entered into one $ 300.0 million receive fixed pay floating interest rate swap to reduce the Company's asset sensitivity (Loan Swap). We added duration to our loan portfolio by fixing a portion of our floating prime based loans. Interest rates had risen above their historical lows allowing us to lock in a portion of our loan portfolio to reduce asset sensitivity while creating a more stable margin in a volatile rate market. These hedges were determined to be highly effective during the period, and the Company expects its hedges to remain highly effective during the remaining terms of the swaps. Changes in fair value were recorded net of tax in OCI. 
 A summary of the interest-rate swaps designated as cash flow hedges is presented below (dollars in thousands) : 
 
 As of December 31, 
 Location 2022 2021 
 Debt Swap 
 Notional amount $ 50,000 $ 50,000 
 Weighted average fixed pay rates 1.79 % 1.79 % 
 Weighted average variable 3-month LIBOR receive rates 4.77 % 0.20 % 
 Weighted average maturity, in years 1.71 yrs 
 2.71 yrs 
 
 
 Loan Swap 
 Notional amount $ 300,000 N/A 
 Weighted average fixed receive rates 4.81 % N/A 
 Weighted average variable Prime pay rates 7.32 % N/A 
 Weighted average maturity, in years 6.10 yrs 
 N/A 
 
 Gross aggregate fair value of the swaps 
 Gross aggregate fair value of swap assets Other assets $ 2,535 $ — 
 Gross aggregate fair value of swap liabilities Other liabilities $ 32,367 $ 958 
 
 Balances carried in AOCI 
 Unrealized gains (losses) on cash flow hedges, net of tax AOCI $ ( 20,985 ) $ ( 685 ) 

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 The Company expects to reclassify unrealized gains and losses from OCI to interest income and interest expense as shown in the following table, during the next 12 months (dollars in thousands) . Amounts actually recognized could differ from these expectations due to changes in interest rates, hedge de-designations, and the addition of other hedges subsequent to December 31, 2022. 
 
 As of 
December 31, 2022 
 Unrealized gains (losses) in OCI expected to be recognized in income 
 Unrealized gains expected to be reclassified from OCI to interest income $ 372 
 Unrealized losses expected to be reclassified from OCI to interest expense ( 648 ) 
 Net unrealized gains (losses) in OCI expected to be recognized in net interest income $ ( 276 ) 

 Interest income (expense) recorded on swap transactions was as follows for the periods presented (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Interest income (expense) on swap transactions $ ( 583 ) $ ( 1,067 ) $ ( 758 ) 

 The following table reflects the net gains (losses) recorded in AOCI and the Consolidated Statements of Comprehensive Income relating to cash flow derivative instruments for the periods presented (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Unrealized gains (losses) on cash flow hedges 
 Net gain (loss) recognized in OCI, net of tax $ ( 20,717 ) $ 736 $ ( 2,526 ) 
 (Gain) loss reclassified from OCI to interest income 395 — — 
 (Gain) loss reclassified from OCI to interest expense 22 763 542 
 Net change in unrealized gains (losses) on cash flow hedges, net of tax $ ( 20,300 ) $ 1,499 $ ( 1,984 ) 

 Derivative Instruments Not Designated as Hedges 
 Interest Rate Swaps 
 The Company may offer derivative contracts to its customers in connection with their risk management needs. The Company manages the risk associated with these contracts by entering into equal and offsetting derivative agreements with a third-party dealer. These contracts support variable rate, commercial loan relationships totaling $ 576.9 million and $ 491.4 million at December 31, 2022, and 2021, respectively. These derivatives generally worked together as an economic interest rate hedge, but the Company did not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred. 
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 Amounts and fair values of derivative assets and liabilities related to customer interest rate swaps, included in other assets and other liabilities in the Consolidated Balance Sheets, are summarized as follows (dollars in thousands) : 
 
 As of December 31, 2022 
 Derivative Asset Derivative Liability 
 Notional
Amount Fair
Value Notional
Amount Fair
Value 
 Derivatives not designated as hedging instruments 
 Interest rate swaps – pay floating, receive fixed $ 48,728 $ 370 $ 528,183 $ 39,685 
 Interest rate swaps – pay fixed, receive floating 528,183 39,685 48,728 370 
 Total derivatives not designated as hedging instruments $ 576,911 $ 40,055 $ 576,911 $ 40,055 

 
 As of December 31, 2021 
 Derivative Asset Derivative Liability 
 Notional
Amount Fair
Value Notional
Amount Fair
Value 
 Derivatives not designated as hedging instruments 
 Interest rate swaps – pay floating, receive fixed $ 404,572 $ 17,839 $ 86,784 $ 2,259 
 Interest rate swaps – pay fixed, receive floating 86,784 2,259 404,572 17,839 
 Total derivatives not designated as hedging instruments $ 491,356 $ 20,098 $ 491,356 $ 20,098 

 Changes in fair value of these derivative assets and liabilities are recorded in noninterest expense in the Consolidated Statements of Income and summarized as follows (dollars in thousands) : 
 
 Years Ended December 31, 
 Location 2022 2021 2020 
 Interest rate swaps 
 Pay floating, receive fixed Noninterest expense $ 19,308 $ ( 12,587 ) $ 20,331 
 Pay fixed, receive floating Noninterest expense ( 19,308 ) 12,587 ( 20,331 ) 
 Net change in fair value of interest rate swaps $ — $ — $ — 

 Risk Participation Agreements 
 To manage credit risk exposure related to a customer-facing swap, the Company entered into two risk participation agreements in conjunction with loan participation arrangements with other financial institutions. The risk participation agreements mature in 2026 and 2028, and are summarized as follows (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Risk participation agreements 
 Notional amount $ 18,899 $ 3,990 
 Fair value 5 — 

 
 Mortgage Banking Derivatives 
 Interest Rate Lock Commitments 
 Interest rate lock commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Balance Sheets, with changes in the fair values of the corresponding derivative financial assets or liabilities recorded as either a charge or credit to current earnings during the period in which the changes occurred. 
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 Forward Sales Commitments 
 The Company economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers. Forward sales commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Balance Sheets. While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, the Company did not designate them for hedge accounting treatment. Changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred. 
 Amounts and fair values of mortgage banking derivatives included in the Consolidated Balance Sheets are summarized as follows (dollars in thousands) : 
 
 As of December 31, 2022 As of December 31, 2021 
 Location Notional
Amount Fair
Value Notional
Amount Fair
Value 
 Derivatives with positive fair value 
 Interest rate lock commitments Other assets $ 1,517 $ 16 $ 19,384 $ 206 
 Forward sales commitments Other assets 83 1 1,884 10 
 Mortgage banking derivatives recorded in other assets $ 1,600 $ 17 $ 21,268 $ 216 
 
 Derivatives with negative fair value 
 Interest rate lock commitments Other liabilities $ 83 $ 1 $ 499 $ 6 
 Forward sales commitments Other liabilities 2,757 39 41,002 439 
 Mortgage banking derivatives recorded in other liabilities $ 2,840 $ 40 $ 41,501 $ 445 

 Net gains (losses) relating to these derivative instruments are summarized as follows for the periods presented (dollars in thousands) : 
 
 Years Ended December 31, 
 Location 2022 2021 2020 
 Net gains (losses) 
 Interest rate lock commitments Mortgage revenue $ 15 $ 1,702 $ 9,667 
 Forward sales commitments Mortgage revenue ( 38 ) ( 4,045 ) ( 18,329 ) 
 Net gains (losses) $ ( 23 ) $ ( 2,343 ) $ ( 8,662 ) 

 In 2020 and 2021, the impact of the net gains or losses recognized in earnings on interest rate lock commitments and forward sales commitments was almost entirely offset by the recognition of a corresponding change in the fair value of loans held for sale. In 2022, the Company began carrying loans held for sale at LOCOM, so while the Company will continue to recognize gains or losses on these mortgage banking derivative instruments in earnings, any corresponding increase in the fair value of loans held for sale will not be recognized in earnings until the loans are sold, at which time the increase is factored into the calculated gain on sale. Decreases in the market value of loans held for sale will continue to be recognized in earnings at each measurement period. 
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 NOTE 18. FAIR VALUE MEASUREMENTS 
 The fair value of an asset or liability is the price that would be received by selling that asset or paid in transferring that liability (exit price) in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. ASC Topic 820 “Fair Value Measurement” establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: 
 • Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. 
 • Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. 
 • Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. 
 A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to those Company assets and liabilities that are carried at fair value. 
 In general, fair value is based upon quoted market prices, when available. If such quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable data. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect, among other things, counterparty credit quality and the company's creditworthiness as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. While management believes the Company's valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. 
 Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis 
 Debt Securities Available for Sale 
 Debt securities classified as available for sale are reported at fair value utilizing Level 2 inputs. The Company obtains fair value measurements from an independent pricing service. The independent pricing service utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid, and other market information. Because many fixed income securities do not trade on a daily basis, the independent pricing service applies available information, focusing on observable market data such as benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing, to prepare evaluations. 
 The independent pricing service uses model processes, such as the Option Adjusted Spread model, to assess interest rate impact and develop prepayment scenarios. Models and processes take into account market conventions. For each asset class, a team of evaluators gathers information from market sources and integrates relevant credit information, perceived market movements, and sector news into the evaluated pricing applications and models. 
 Market inputs that the independent pricing service normally seeks for evaluations of securities, listed in approximate order of priority, include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. The independent pricing service also monitors market indicators, industry, and economic events. For certain security types, additional inputs may be used or some of the market inputs may not be applicable. Evaluators may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs listed are available for use in the evaluation process for each security evaluation on a given day. Because the data utilized was observable, the securities have been classified as Level 2. 
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 Equity Securities 
 Equity securities are reported at fair value utilizing Level 1 or Level 2 inputs. Fair value measurements of mutual funds, when held, are determined using unadjusted quoted prices in active markets for identical assets at the measurement date and are classified as Level 1. For stock, quoted prices for identical or similar assets in markets that are not active are utilized and classified as Level 2. 
 Loans Held for Sale 
 Effective January 1, 2022, the Company elected to account for all newly originated loans held for sale at LOCOM. Prior to this change, the Company accounted for loans held for sale at fair value. Loans held for sale that were reported at fair value as of December 31, 2021, utilized Level 2 inputs. The fair values of the mortgage loans held for sale were measured using observable quoted market prices, contract prices, or market price equivalents and were classified as Level 2. 
 Derivative Assets and Derivative Liabilities 
 The majority of our derivative assets and derivative liabilities are reported at fair value utilizing Level 2 or Level 3 inputs. Derivative balances are included in other assets or other liabilities on the Consolidated Balance Sheets, and consist of interest rate swaps and risk participation agreements where there is no significant deterioration in the counterparties (loan customers) credit risk since origination of the interest rate swap or risk participation agreement, as well as mortgage banking derivatives, including interest rate lock commitments and forward sales commitments. 
 Fair values of derivative assets and liabilities are determined based on prices that are obtained from a third-party which uses observable market inputs and, with the exception of our risk participation agreements, are classified as Level 2. For purposes of potential valuation adjustments to our derivative positions, the Company evaluates the credit risk of its counterparties as well as its own credit risk. Accordingly, the Company has considered factors such as the likelihood of default, expected loss given default, net exposures, and remaining contractual life, among other things, in determining if any estimated fair value adjustments related to credit risk are required. The Company reviews counterparty exposure quarterly, and when necessary, appropriate adjustments are made to reflect the exposure. No changes in counterparty credit were identified. 
 Due to the significance of unobservable inputs, derivative assets related to our risk participation agreements are classified as Level 3. 
 The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2022, and 2021, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands) : 
 
 As of December 31, 2022 
 Level 1
Inputs Level 2
Inputs Level 3
Inputs Total
Fair Value 
 Debt securities available for sale: 
 U.S. Treasury securities $ — $ 114,061 $ — $ 114,061 
 Obligations of U.S. government corporations and agencies — 19,779 — 19,779 
 Obligations of states and political subdivisions — 257,512 — 257,512 
 Asset-backed securities — 469,875 — 469,875 
 Commercial mortgage-backed securities — 108,394 — 108,394 
 Residential mortgage-backed securities — 1,243,256 — 1,243,256 
 Corporate debt securities — 248,516 — 248,516 
 Equity securities — 11,535 — 11,535 
 Derivative assets — 42,607 5 42,612 
 Derivative liabilities — 72,462 — 72,462 

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 As of December 31, 2021 
 Level 1
Inputs Level 2
Inputs Level 3
Inputs Total
Fair Value 
 Debt securities available for sale: 
 U.S. Treasury securities $ — $ 165,762 $ — $ 165,762 
 Obligations of U.S. government corporations and agencies — 38,470 — 38,470 
 Obligations of states and political subdivisions — 306,869 — 306,869 
 Asset-backed securities — 492,186 — 492,186 
 Commercial mortgage-backed securities — 614,998 — 614,998 
 Residential mortgage-backed securities — 2,069,313 — 2,069,313 
 Corporate debt securities — 293,653 — 293,653 
 Equity securities — 13,571 — 13,571 
 Loans held for sale — 23,875 — 23,875 
 Derivative assets — 20,314 — 20,314 
 Derivative liabilities — 21,501 — 21,501 

 
 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis 
 Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). 
 Loans Evaluated Individually 
 The Company does not record portfolio loans at fair value on a recurring basis. However, periodically, a loan is evaluated individually and is reported at the fair value of the underlying collateral, less estimated costs to sell, if repayment is expected solely from the collateral. If the collateral value is not sufficient, a specific reserve is recorded. Collateral values are estimated using a combination of observable inputs, including recent appraisals, and unobservable inputs based on customized discounting criteria. Due to the significance of unobservable inputs, fair values of individually evaluated collateral dependent loans have been classified as Level 3. 
 OREO 
 Non-financial assets measured at fair value include OREO (upon initial recognition or subsequent impairment). OREO properties are measured using a combination of observable inputs, including recent appraisals, and unobservable inputs. Due to the significance of unobservable inputs, all OREO fair values have been classified as Level 3. 
 Bank Property Held for Sale 
 Bank property held for sale represents certain banking center office buildings which the Company has closed and consolidated with other existing banking centers. Bank property held for sale is measured at the lower of amortized cost or fair value less estimated costs to sell, and is included in premises and equipment, net on the Consolidated Balance Sheets. Fair values were based upon discounted appraisals or real estate listing prices. Due to the significance of unobservable inputs, fair values of all bank property held for sale have been classified as Level 3. 
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 The following tables summarize assets and liabilities measured at fair value on a non-recurring basis for the periods presented, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands) : 
 
 As of December 31, 2022 
 Level 1
Inputs Level 2
Inputs Level 3
Inputs Total
Fair Value 
 Loans evaluated individually, net of related allowance $ — $ — $ 5,345 $ 5,345 
 
 Bank property held for sale with impairment — — 7,923 7,923 

 
 As of December 31, 2021 
 Level 1
Inputs Level 2
Inputs Level 3
Inputs Total
Fair Value 
 Loans evaluated individually, net of related allowance $ — $ — $ 2,926 $ 2,926 
 OREO with subsequent impairment — — 51 51 
 Bank property held for sale with impairment — — 10,103 10,103 

 The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis for which the Company has utilized Level 3 inputs to determine fair value (dollars in thousands) : 
 
 As of December 31, 2022 
 Fair Value Valuation
Techniques Unobservable
Input Range
(Weighted Average) 
 Loans evaluated individually, net of related allowance $ 5,345 Appraisal of collateral Appraisal adjustments - 22.7 % to - 100.0 % 
 (- 45.7 )% 
 
 
 Bank property held for sale with impairment 7,923 Appraisal of collateral or real estate listing price Appraisal adjustments - 0.7 % to - 70.1 % 
 (- 35.1 )% 
 

 
 As of December 31, 2021 
 Fair Value Valuation 
 Techniques 
 Unobservable 
 Input 
 Range
(Weighted Average) 
 Loans evaluated individually, net of related allowance $ 2,926 Appraisal of collateral Appraisal adjustments - 50.0 % to - 100.0 % 
 (- 55.1 )% 
 
 OREO with subsequent impairment 51 Appraisal of collateral Appraisal adjustments - 33.0 % to - 100.0 % 
 (- 67.9 )% 
 
 Bank property held for sale with impairment 10,103 Appraisal of collateral or real estate listing price Appraisal adjustments - 0.7 % to - 70.1 % 
 (- 41.3 )% 
 

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 Financial Assets and Financial Liabilities That Are Not Carried at Fair Value 
 Estimated fair values of financial instruments that are not carried at fair value in the Company’s Consolidated Balance Sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value, were as follows (dollars in thousands) : 
 
 As of December 31, 2022 As of December 31, 2021 
 Carrying
Amount Fair
Value Carrying
Amount Fair
Value 
 Financial assets 
 Level 1 inputs: 
 Cash and cash equivalents $ 227,164 $ 227,164 $ 836,095 $ 836,095 
 Level 2 inputs: 
 Debt securities held to maturity 918,312 785,295 — — 
 Loans held for sale 1 
 1,253 1,276 — — 
 Accrued interest receivable 43,372 43,372 31,064 31,064 
 Level 3 inputs: 
 Portfolio loans, net 7,634,094 7,320,422 7,101,111 7,161,466 
 Mortgage servicing rights 5,861 18,284 8,608 12,133 
 Other servicing rights 1,914 2,331 1,830 2,268 
 
 Financial liabilities 
 Level 2 inputs: 
 Time deposits $ 855,375 $ 830,596 $ 935,649 $ 935,778 
 Securities sold under agreements to repurchase 229,806 229,806 270,139 270,139 
 Short-term borrowings 351,054 351,085 17,678 17,673 
 Long-term debt 30,000 30,052 46,056 46,164 
 Junior subordinated debt owed to unconsolidated trusts 71,810 59,111 71,635 63,586 
 Accrued interest payable 3,978 3,978 2,728 2,728 
 Level 3 inputs: 
 Senior notes, net of unamortized issuance costs — — 39,944 40,400 
 Subordinated notes, net of unamortized issuance costs 222,038 208,562 182,773 195,600 

 ___________________________________________ 
 1. Effective January 1, 2022, recorded at LOCOM. 
 
 NOTE 19. EARNINGS PER SHARE 
 Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding, which include DSUs that are vested but not delivered. Diluted earnings per common share is computed using the treasury stock method and reflects the potential dilution that could occur if the Company’s outstanding stock options and warrants were exercised, stock units were vested, and ESPP shares were issued. 
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 Earnings per common share have been computed as follows (dollars in thousands, except per share amounts) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Net income $ 128,311 $ 123,449 $ 100,344 
 
 Weighted average number of common shares outstanding, basic 55,387,073 55,369,476 54,567,429 
 Dilutive effect of common stock equivalents: 
 Options 1,632 1,639 900 
 Warrants 1,753 1,753 1,469 
 RSU awards 665,998 615,759 252,153 
 PSU awards 58,206 5,429 — 
 DSU awards 15,532 10,641 4,988 
 ESPP 6,970 4,108 — 
 Weighted average number of common shares outstanding, diluted 56,137,164 56,008,805 54,826,939 
 
 Basic earnings per common share $ 2.32 $ 2.23 $ 1.84 
 Diluted earnings per common share 2.29 2.20 1.83 

 Average shares that were excluded from the computation of diluted earnings per common share because their effect would have been anti-dilutive are summarized in the table below for the periods presented: 
 
 Years Ended December 31, 
 2022 2021 2020 
 Anti-dilutive common stock equivalents 
 Options 7,792 — 39,085 
 
 RSU awards 38,912 65,058 159,408 
 PSU awards 189,000 93,026 7,862 
 DSU awards — 7,742 — 
 Total anti-dilutive common stock equivalents 235,704 165,826 206,355 

 
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 NOTE 20. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) 
 The following tables present changes in AOCI by component, net of tax, for the periods below (dollars in thousands) : 
 
 Year Ended December 31, 2022 
 Before Tax Tax Effect Net of Tax 
 Unrealized/Unrecognized gains (losses) on debt securities 
 Balance at beginning of period $ ( 32,272 ) $ 9,199 $ ( 23,073 ) 
 Unrealized holding gains (losses) on debt securities available for sale, net ( 278,762 ) 79,460 ( 199,302 ) 
 Unrecognized losses on debt securities transferred to held to maturity from available for sale ( 48,456 ) 13,812 ( 34,644 ) 
 Amounts reclassified from AOCI, net ( 26 ) 7 ( 19 ) 
 Amortization of unrecognized losses on securities transferred to held to maturity 6,638 ( 1,893 ) 4,745 
 Balance at end of period ( 352,878 ) 100,585 ( 252,293 ) 
 
 Unrealized gains (losses) on cash flow hedges 
 Balance at beginning of period ( 958 ) 273 ( 685 ) 
 Unrealized holding gains (losses) on cash flow hedges, net ( 28,975 ) 8,258 ( 20,717 ) 
 Amounts reclassified from AOCI, net 583 ( 166 ) 417 
 Balance at end of period ( 29,350 ) 8,365 ( 20,985 ) 
 
 Total AOCI $ ( 382,228 ) $ 108,950 $ ( 273,278 ) 

 
 Year Ended December 31, 2021 
 Before Tax Tax Effect Net of Tax 
 Unrealized gains (losses) on debt securities available for sale 
 Balance at beginning of period $ 49,644 $ ( 14,151 ) $ 35,493 
 Unrealized holding gains (losses) on debt securities available for sale, net ( 81,977 ) 23,367 ( 58,610 ) 
 
 Amounts reclassified from AOCI, net 61 ( 17 ) 44 
 
 Balance at end of period ( 32,272 ) 9,199 ( 23,073 ) 
 
 Unrealized gains (losses) on cash flow hedges 
 Balance at beginning of period ( 3,055 ) 871 ( 2,184 ) 
 Unrealized holding gains (losses) on cash flow hedges, net 1,030 ( 294 ) 736 
 Amounts reclassified from AOCI, net 1,067 ( 304 ) 763 
 Balance at end of period ( 958 ) 273 ( 685 ) 
 
 Total AOCI $ ( 33,230 ) $ 9,472 $ ( 23,758 ) 

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 Year Ended December 31, 2020 
 Before Tax Tax Effect Net of Tax 
 Unrealized gains (losses) on debt securities available for sale 
 Balance at beginning of period $ 21,192 $ ( 6,032 ) $ 15,160 
 Unrealized holding gains (losses) on debt securities available for sale, net 30,176 ( 8,615 ) 21,561 
 
 Amounts reclassified from AOCI, net ( 1,724 ) 496 ( 1,228 ) 
 
 Balance at end of period 49,644 ( 14,151 ) 35,493 
 
 Unrealized gains (losses) on cash flow hedges 
 Balance at beginning of period ( 280 ) 80 ( 200 ) 
 Unrealized holding gains (losses) on cash flow hedges, net ( 3,533 ) 1,007 ( 2,526 ) 
 Amounts reclassified from AOCI, net 758 ( 216 ) 542 
 Balance at end of period ( 3,055 ) 871 ( 2,184 ) 
 
 Total AOCI $ 46,589 $ ( 13,280 ) $ 33,309 

 
 
 NOTE 21. OPERATING SEGMENTS AND RELATED INFORMATION 
 The Company has three reportable operating segments: Banking, FirsTech, and Wealth Management. The Company’s operating segments are strategic business units that are separately managed as they offer different products and services and have different marketing strategies. 
 The Banking Operating Segment 
 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. Banking services offered to individual customers include customary types of demand and savings deposits, money transfers, safe deposit services, individual retirement accounts and other fiduciary services, automated teller machines, and technology-based networks, as well as a variety of loan products including residential real estate, home equity lines of credit, and consumer loans. Banking services offered to corporate customers include commercial, commercial real estate, real estate construction, and agricultural loans, as well as commercial depository services such as cash management. 
 The FirsTech Operating Segment 
 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. 
 FirsTech's client base represents a diverse set of industries, with a higher concentration in highly regulated industries, such as financial institutions, utility, insurance, and telecommunications industries. 
 The Wealth Management Operating Segment 
 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. 
 Wealth management services tailored to individuals include trust and estate advisory services and financial planning. Business services include business succession planning and employee retirement plan services. Services for foundations include investment strategy consulting and fiduciary services. 
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 Segment Financial Information 
 The segment financial information provided below has been derived from information used by management to monitor and manage the financial performance of the Company. The accounting policies of the three operating segments are the same as those described in the summary of significant accounting policies in “ Note 1. Significant Accounting Policies. ” The Company accounts for intersegment revenue and transfers at current market prices. 
 Following is a summary of selected financial information for the Company’s operating segments. The “other” category included in the tables below consists of the parent company, First Busey Risk Management, and the elimination of intercompany transactions (dollars in thousands) : 
 
 Goodwill Total Assets 
 As of December 31, As of December 31, 
 2022 2021 2022 2021 
 Operating segment 
 Banking $ 294,773 $ 294,773 $ 12,199,960 $ 12,746,833 
 FirsTech 8,992 8,992 48,715 47,481 
 Wealth Management 14,108 14,108 84,082 65,587 
 Other — — 3,920 ( 212 ) 
 Consolidated total $ 317,873 $ 317,873 $ 12,336,677 $ 12,859,689 

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 Years Ended December 31, 
 2022 2021 2020 
 Net interest income 
 Banking $ 340,083 $ 285,678 $ 294,728 
 FirsTech 65 79 79 
 Wealth Management — — — 
 Other ( 16,710 ) ( 15,059 ) ( 11,872 ) 
 Total net interest income $ 323,438 $ 270,698 $ 282,935 
 
 Noninterest income 
 Banking $ 54,154 $ 59,393 $ 61,043 
 FirsTech 21,720 19,629 16,548 
 Wealth Management 55,394 53,082 43,429 
 Other ( 4,465 ) 700 ( 2,755 ) 
 Total noninterest income $ 126,803 $ 132,804 $ 118,265 
 
 Noninterest expense 
 Banking $ 221,997 $ 205,905 $ 185,445 
 FirsTech 20,619 17,574 13,279 
 Wealth Management 31,545 29,198 26,086 
 Other 9,720 9,103 9,387 
 Total noninterest expense $ 283,881 $ 261,780 $ 234,197 
 
 Income before income taxes 
 Banking $ 167,617 $ 154,267 $ 131,529 
 FirsTech 1,166 2,134 3,348 
 Wealth Management 23,849 23,884 17,343 
 Other ( 30,895 ) ( 23,462 ) ( 24,014 ) 
 Total income before income taxes $ 161,737 $ 156,823 $ 128,206 
 
 Net income 
 Banking $ 131,596 $ 117,844 $ 101,226 
 FirsTech 847 1,527 2,372 
 Wealth Management 18,543 18,570 13,181 
 Other ( 22,675 ) ( 14,492 ) ( 16,435 ) 
 Total net income $ 128,311 $ 123,449 $ 100,344 

 
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 NOTE 22. LEASES 
 Busey as The Lessee 
 The Company has operating leases consisting primarily of equipment leases and real estate leases for banking centers, ATM locations, and office space. The following table summarizes lease related information and balances the Company reported in its Consolidated Balance Sheets for the periods presented (dollars in thousands) : 
 
 As of December 31, 
 2022 2021 
 Lease balances 
 Right of use assets $ 12,829 $ 10,533 
 Lease liabilities 12,995 10,591 
 
 Supplemental information 
 Year through which lease terms extend 2037 2031 
 Weighted average remaining lease term (in years) 8.90 6.47 
 Weighted average discount rate 3.45 % 2.16 % 

 
 The following table represents lease costs and cash flows related to leases for the periods presented (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Lease costs 
 Operating lease costs $ 2,495 $ 2,464 $ 2,524 
 Variable lease costs 365 540 416 
 Short-term lease costs 22 49 35 
 Total lease cost 1 
 $ 2,882 $ 3,053 $ 2,975 
 
 Cash flows related to leases 
 Cash paid for amounts included in the measurement of lease liabilities: 
 Operating lease cash flows – Fixed payments $ 3,080 $ 2,417 $ 2,526 
 Operating lease cash flows – Liability reduction 2,285 2,217 2,289 
 Right of use assets obtained during the period in exchange for operating lease liabilities 2 
 6,206 5,818 743 

 ___________________________________________ 
 1. Lease costs are included in net occupancy and equipment expense in the Consolidated Statements of Income. 
 2. The year ended December 31, 2021, includes $ 0.4 million related to a lease obtained in the acquisition of CAC. 
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 At December 31, 2022, the Company was obligated under noncancelable operating leases for office space and other commitments. Future undiscounted lease payments with initial terms of one year or more, are as follows (dollars in thousands) : 
 
 As of 
December 31, 2022 
 Rent commitments 
 
 2023 $ 2,254 
 2024 1,942 
 2025 1,719 
 2026 1,442 
 2027 1,277 
 Thereafter 6,699 
 Total undiscounted cash flows 15,333 
 Less: Amounts representing interest 2,338 
 Present value of net future minimum lease payments $ 12,995 

 
 Busey as The Lessor 
 Busey occasionally leases parking lots and office space to outside parties. Further, in connection with the acquisition of CAC in the second quarter of 2021, the Company acquired office buildings in Glenview and Northbrook, Illinois, along with operating leases for space within these buildings that is rented to third parties. Revenues recorded in connection with these leases and reported in other income on our Consolidated Statements of Income are summarized as follows (dollars in thousands) : 
 
 Years Ended December 31, 
 2022 2021 2020 
 Rental income $ 707 $ 566 $ 228 

 
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 NOTE 23. PARENT COMPANY ONLY FINANCIAL INFORMATION 
 Condensed financial data for First Busey Corporation is presented below. 
 CONDENSED BALANCE SHEETS 
 (dollars in thousands) 
 
 As of December 31, 
 2022 2021 
 Assets 
 Cash and cash equivalents $ 91,812 $ 78,217 
 Equity securities 11,535 13,571 
 Investments in subsidiaries: 
 Bank 1,369,261 1,565,226 
 Non-bank 2,181 2,812 
 Premises and equipment, net 18 30 
 Other assets 22,316 22,444 
 Total assets $ 1,497,123 $ 1,682,300 
 
 Liabilities and Stockholders' Equity 
 Liabilities: 
 Short-term borrowings $ 12,000 $ 12,000 
 Long-term debt 30,000 42,000 
 Senior notes, net of unamortized issuance costs — 39,944 
 Subordinated notes, net of unamortized issuance costs 222,038 182,773 
 Junior subordinated debentures owed to unconsolidated trusts 71,810 71,635 
 Other liabilities 15,298 14,836 
 Total liabilities 351,146 363,188 
 
 Total stockholders' equity 1,145,977 1,319,112 
 Total liabilities and stockholders' equity $ 1,497,123 $ 1,682,300 

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 CONDENSED STATEMENTS OF INCOME 
 (dollars in thousands) 
 
 Years Ended December 31, 
 2022 2021 2020 
 Operating income: 
 Dividends from subsidiaries: 
 Bank $ 95,000 $ 60,000 $ 122,000 
 Non-bank 1,630 1,745 — 
 Interest income 1,094 79 154 
 Gains (losses) recognized on equity securities, net ( 2,159 ) 3,041 ( 393 ) 
 Other income 15,195 12,109 10,083 
 Total operating income 110,760 76,974 131,844 
 
 Expense: 
 Salaries, wages, and employee benefits 20,964 17,914 16,205 
 Interest expense 17,854 15,163 12,056 
 Operating expense 7,294 7,429 7,685 
 Total expense 46,112 40,506 35,946 
 
 Income (loss) before income tax benefit and equity in undistributed (in excess of) net income of subsidiaries 64,648 36,468 95,898 
 Income tax benefit 8,286 8,974 7,727 
 Income (loss) before equity in undistributed (in excess of) net income of subsidiaries 72,934 45,442 103,625 
 
 Equity in undistributed (in excess of) net income of subsidiaries: 
 Bank 55,986 77,941 ( 5,221 ) 
 Non-bank ( 609 ) 66 1,940 
 Net income $ 128,311 $ 123,449 $ 100,344 

 
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 CONDENSED STATEMENTS OF CASH FLOWS 
 (dollars in thousands) 
 
 Years Ended December 31, 
 2022 2021 2020 
 Cash Flows Provided by (Used in) Operating Activities 
 Net income $ 128,311 $ 123,449 $ 100,344 
 Adjustments to reconcile net income to net cash provided by (used in) operating activities: 
 Depreciation and amortization 1,423 882 648 
 Distributions more (less) than net income of subsidiaries ( 55,377 ) ( 78,007 ) 3,281 
 (Gains) losses recognized on equity securities, net 2,159 ( 3,041 ) 393 
 Stock-based compensation 8,968 7,864 7,135 
 Changes in assets and liabilities: 
 (Increase) decrease in other assets ( 17,754 ) ( 1,186 ) 405 
 Increase (decrease) in other liabilities 21,233 ( 3,302 ) ( 5,772 ) 
 Net cash provided by (used in) operating activities 88,963 46,659 106,434 
 
 Cash Flows Provided by (Used in) Investing Activities 
 Sales (purchases) of equity securities, net 598 ( 5,000 ) — 
 Net cash paid for acquisitions — ( 61,656 ) — 
 Purchases of premises and equipment ( 9 ) ( 15 ) ( 19 ) 
 Net cash provided by (used in) investing activities 589 ( 66,671 ) ( 19 ) 
 
 Cash Flows Provided by (Used in) Financing Activities 
 Cash paid for withholding taxes on stock-based payments ( 1,276 ) ( 997 ) ( 635 ) 
 Cash dividends paid ( 50,863 ) ( 50,764 ) ( 48,012 ) 
 Repayments of borrowings ( 112,000 ) ( 18,500 ) ( 74,000 ) 
 Proceeds from issuance of debt 98,094 72,500 142,634 
 Proceeds from stock options exercised — — 101 
 
 Purchase of treasury stock ( 9,912 ) ( 33,043 ) ( 12,272 ) 
 Common stock issuance costs — ( 150 ) — 
 Net cash provided (used in) by financing activities ( 75,957 ) ( 30,954 ) 7,816 
 
 Net increase (decrease) in cash and cash equivalents 13,595 ( 50,966 ) 114,231 
 Cash and cash equivalents, beginning of period 78,217 129,183 14,952 
 
 Cash and cash equivalents, ending of period $ 91,812 $ 78,217 $ 129,183 

 
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 Table of Contents 

 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
 None.
FIRST BUSEY CORP /NV/ 10-K

Item 8. Financial Statements and Supplementary Data
