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Item 7. Management’s Discussion and Analysis

2024-02-23 compared with 2023-02-23 · 345 added, 289 removed, 738 unchanged (46% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Contents of Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

SCOPE OF DISCUSSION

CURRENT EVENTS

CRITICAL ACCOUNTING ESTIMATES

2 unchanged sentences

Allowance for Credit Losses

EXECUTIVE SUMMARY

Operating Results

Operating Performance

RESULTS OF OPERATIONS — THREE YEARS ENDED DECEMBER 31, 2023

Operating Performance Metrics

Net Interest Income

11 unchanged sentences

EFFECTS OF INFLATION

First Busey Corporation | 2023 — 53

Table of Contents Contents of Item 7.

SCOPE OF DISCUSSION

The following is management’s discussion and analysis of the financial condition as of December 31, 2022, and 2021, and the results of operations for the years ended December 31, 2022, 2021, and 2020, of First Busey and its subsidiaries.

The following is management’s discussion and analysis of the financial condition as of December 31, 2023, and 2022, and the results of operations for the years ended December 31, 2023, 2022, and 2021, of First Busey Corporation and its subsidiaries.

It should be read in conjunction with “ Item 1.

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Comparison of 2022 to 2021 can be found in “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2021 Annual Report.

CURRENT EVENTS

Hurricane Ian

On September 28, 2022, Hurricane Ian made landfall in southwest Florida, impacting our operations in the region.

We remain focused on assisting our clients and employees as they navigate the challenges from this historic storm.

As of February 23, 2023, two of our three branches are fully operational, and services have been restored at a temporary facility for our third location.

Efforts undertaken to date include:

(i) financial assistance for associates impacted by the storm;

(ii) creation of a relief center for associates to access much needed supplies;

(iii) staffing resource reallocation to support our southwest Florida operations;

(iv) fee waivers for impacted customers;

and (v) loan modification program for impacted commercial and retail real estate customers.

In 2022, we recognized $0.2 million in noninterest income resulting from a gain on hurricane related disposal of fixed assets, partially offset by waived service charges, and $0.4 million in noninterest expense in connection with these initiatives.

Efficiency Optimization Plan & FirsTech Leadership Change

Early in the fourth quarter of 2022, we implemented a targeted restructuring and efficiency optimization plan that is expected to generate annual salary and benefits savings of approximately $4.0 million.

Approximately 33% of the quarterly run-rate for savings was reflected in our results for the fourth quarter of 2022, and we anticipate our savings to be at a 100% run-rate by the first quarter of 2023.

We expect to largely reinvest the anticipated savings to support ongoing growth initiatives across our franchise over the next several quarters.

Late in the fourth quarter of 2022, we instituted a leadership change at our wholly-owned payments subsidiary, FirsTech, that reflects our continued commitment to scaling and growing this business.

Robin Elliott replaces Farhan Yasin as President & CEO of FirsTech and all other leadership remains unchanged.

In less than two years, FirsTech has been re-energized, revenue has increased, talent has been upgraded across the enterprise, and the technology stack has been redesigned and modernized, positioning the company for scalable growth.

Going forward we are squarely focused on executing on our growth strategy to provide comprehensive and innovative payment technology solutions that enable businesses to connect with their customers in a multitude of ways on a single, highly-configurable, secure platform.

The Company incurred one-time severance-related costs of $2.4 million during the fourth quarter of 2022, primarily related to the efficiency optimization plan and FirsTech leadership change.

Throughout the COVID-19 pandemic, First Busey operated as an essential community resource, providing approximately $1.1 billion in payroll assistance for small businesses and select nonprofits through low-interest, 100% government-guaranteed loans as part of the PPP.

First Busey had $0.9 million in PPP loans outstanding, with an amortized cost of $0.8 million, as of December 31, 2022.

In comparison, First Busey had $76.9 million in PPP loans outstanding, with an amortized cost of $75.0 million, as of December 31, 2021.

Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of our 2022 Annual Report .

BUSEY’S CONSERVATIVE BANKING STRATEGY

Busey’s financial strength is built on a long-term conservative operating approach.

The quality of our core deposit franchise is a critical value driver of our institution.

Since March 31, 2023, our deposit base has grown by $490.0 million, allowing us to reduce our higher cost FHLB borrowings to zero.

Busey remains substantially core deposit 1 funded, with robust liquidity and significant market share in the communities we serve.

As of December 31, 2023, our loan to deposit ratio was 74.4% and core deposits 1 represented 96.2% of total deposits.

Furthermore, we have sufficient on- and off-balance sheet liquidity to manage deposit fluctuations and the liquidity needs of our customers.

Our credit performance reflects our highly diversified, conservatively underwritten loan portfolio, which has been originated predominantly to established customers with tenured relationships with our Company.

Our approach to lending and our underwriting standards are designed to emphasize relationship banking rather than transactional banking.

In addition, as a matter of both policy and practice, we limit concentration exposures in any particular loan segment.

As a result, asset quality remains strong by both Busey’s historical and current industry trends.

Busey’s conservative banking strategy is reflected in the strength of our capital base.

We strive to consistently maintain capital ratios well in excess of thresholds required to be designated as well capitalized by applicable regulatory guidelines, thereby ensuring financial strength and flexibility across economic and operating cycles.

At December 31, 2023, our leverage ratio of Tier 1 capital to average assets was 10.1%, our common equity Tier 1 capital to risk weighted assets ratio was 13.1%, and our total capital to risk weighted assets ratio was 17.4%.

CRITICAL ACCOUNTING ESTIMATES

First Busey has established various accounting policies that govern the application of GAAP in the preparation of its Consolidated Financial Statements.

Busey has established various accounting policies that govern the application of GAAP in the preparation of its Consolidated Financial Statements .

Significant accounting policies are described in “ Note 1.

Significant Accounting Policies ” in the Notes to the Consolidated Financial Statements .

Critical accounting estimates are those that are critical to the portrayal and understanding of First Busey’s financial condition and results of operations and require management to make assumptions that are difficult, subjective, or complex.

Critical accounting estimates are those that are critical to the portrayal and understanding of Busey’s financial condition and results of operations and require management to make assumptions that are difficult, subjective, or complex.

These estimates involve judgments, assumptions, and uncertainties that are susceptible to change.

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The following policies could be deemed critical:

1 Core deposits is a non-GAAP financial measure.

For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see “ Item 1.

Business—Non-GAAP Financial Information.

First Busey Corporation | 2023 — 54

Table of Contents Contents of Item 7.

Fair Value of Debt Securities Available for Sale

The fair values of debt securities available for sale are measurements from an independent pricing service and are based on observable data that may include dealer quotes, market spreads, cash flows, the U.S.

Fair values of debt securities available for sale are measurements from an independent pricing service and are based on observable data that may include dealer quotes, market spreads, cash flows, the U.S.

Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the security’s terms and conditions, among other things.

The use of different judgments and estimates to determine the fair value of securities could result in a different fair value estimate.

Different fair value estimates could result from the use of different judgments and estimates to determine the fair values of securities.

Realized securities gains or losses are reported in the Consolidated Statements of Income .

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If either of those selling events is expected, we will write down the amortized cost basis of the security to its fair value.

This is achieved by writing off any previously recorded allowance, if applicable, and recognizing any incremental impairment through earnings.

This is achieved by writing off any previously recorded allowance related to the debt security, if applicable, and recognizing any incremental impairment through earnings.

If we do not intend to sell the security, nor believe it more likely than not that we will be required to sell the security before the fair value recovers to the amortized cost basis, we must determine whether any of the decline in fair value has resulted from a credit loss, or if it is entirely the result of noncredit factors.

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Credit loss recognition is limited to the fair value of the security.

The impairment is recognized by establishing an allowance through provision for credit losses.

Impairment is recognized by establishing an allowance for the debt security through the provision for credit losses.

Impairment related to noncredit factors is recognized in AOCI, net of applicable taxes.

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Fair values are determined based on the definition of “fair value” defined in ASC Topic 820 “Fair Value Measurement” as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”

First Busey Corporation | 2023 — 55

Table of Contents Contents of Item 7.

The fair value of a loan portfolio acquired in a business combination generally requires greater levels of management estimates and judgment than other assets acquired or liabilities assumed.

Acquired loans are in the scope of ASC Topic 326 “Financial Instruments-Credit Losses.” However, the offset to record the allowance at the date of acquisition on acquired loans depends on whether or not the loan is classified as PCD.

Acquired loans are in the scope of ASC Topic 326 “Financial Instruments-Credit Losses.” However, the offset to record the allowance on acquired loans at the date of acquisition depends on whether or not the loan is classified as PCD.

The allowance for PCD loans is recorded through a gross-up effect, while the allowance for acquired non-PCD loans is recorded through provision expense, consistent with originated loans.

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Goodwill is not amortized, instead, we assess the potential for impairment on an annual basis or more frequently if events and circumstances indicate that goodwill might be impaired.

First Busey estimates income tax expense based on amounts expected to be owed to federal and state tax jurisdictions.

Busey estimates income tax expense based on amounts expected to be owed to federal and state tax jurisdictions.

Estimated income tax expense is reported in the Consolidated Statements of Income .

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Allowance for Credit Losses

First Busey calculates the ACL at each reporting date.

Busey calculates the ACL at each reporting date.

We recognize an allowance for the lifetime expected credit losses for the amount we do not expect to collect.

Measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported book value.

The calculation also contemplates that First Busey may not be able to make or obtain such forecasts for the entire life of the financial assets and requires a reversion to historical credit loss information.

In determining the allowance, management relies predominantly on a disciplined credit review and approval process that extends to the full range of First Busey’s credit exposure.

The calculation also contemplates that Busey may not be able to make or obtain such forecasts for the entire life of the financial assets and requires a reversion to historical credit loss information.

In determining the ACL, management relies predominantly on a disciplined credit review and approval process that extends to the full range of Busey’s credit exposure.

The ACL must be determined on a collective (pool) basis when similar risk characteristics exist.

On a case-by-case basis, we may conclude a loan should be evaluated on an individual basis based on the disparate risk characteristics.

Loans deemed uncollectible are charged against and reduce the allowance.

A provision for credit losses is charged to current expense and acts to replenish the ACL in order to maintain the allowance at a level that management deems adequate.

Determining the allowance involves significant judgments and assumptions by management.

Loans deemed uncollectible are charged against and reduce the ACL.

A provision for credit losses is charged to current expense and acts to replenish the ACL in order to maintain the ACL at a level that management deems adequate.

Determining the ACL involves significant judgments and assumptions by management.

Because of the nature of the judgments and assumptions made by management, actual results may differ from these judgments and assumptions.

EXECUTIVE SUMMARY

Operating Results

First Busey Corporation | 2023 — 56

Table of Contents Contents of Item 7.

RESULTS OF OPERATIONS — THREE YEARS ENDED DECEMBER 31, 2023

Results of our operations are presented below, segregated by operating segment (dollars in thousands) :

3 unchanged sentences

Banking $ 123,853 $ 131,596 $ 117,844

FirsTech 847 1,527 2,372

Wealth Management 18,804 18,543 18,570

FirsTech 830 847 1,527

Other (20,922) (22,675) (14,492)

Net income $ 122,565 $ 128,311 $ 123,449

Operating Performance

Operating Performance Metrics

Operating performance metrics presented in the table below have been derived from information used by management to monitor and manage our financial performance (dollars in thousands, except per share amounts) :

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Business—Non-GAAP Financial Information .”

Non-operating Items

First Busey views certain non-operating items, including acquisition-related and restructuring charges, as adjustments to net income reported under GAAP.

First Busey Corporation | 2023 — 57

Table of Contents Contents of Item 7.

Non-Operating Expenses and Non-GAAP Measures

Busey views certain non-operating items, including acquisition-related and restructuring charges, as adjustments to net income reported under GAAP.

Non-operating pretax adjustments were as follows for the periods presented (dollars in thousands) :

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___________________________________________

Acquisition expenses related to completed acquisitions and exploratory due diligence.

Restructuring charges related to previously disclosed restructuring plans.

A reconciliation of non-GAAP measures—including pre-provision net revenue, adjusted pre-provision net revenue, pre-provision net revenue to average assets, adjusted pre-provision net revenue to average assets, adjusted net income, adjusted earnings per share, adjusted return on average assets, adjusted net interest margin, adjusted noninterest expense, efficiency ratio, adjusted efficiency ratio, tangible common equity, tangible common equity to tangible assets, tangible book value per share, and return on average tangible common equity—which First Busey believes facilitates the assessment of its financial results and peer comparability, is included in tabular form in this Annual Report.

Acquisition expenses related to completed acquisitions, exploratory due diligence, and for 2023 the planned merger with M&M.

Restructuring charges related to previously disclosed restructuring and efficiency plans.

A reconciliation of non-GAAP measures, which we believe facilitate the assessment of our financial results and peer comparability, is included in tabular form in this Annual Report.

See “ Item 1.

Business—Non-GAAP Financial Information .

Wealth Management Fees and Payment Technology Solutions

Combined, revenues from wealth management fees and payment technology solutions activities represented 59.5% of First Busey’s noninterest income in 2022, providing a balance to spread-based revenue from traditional banking activities.

Further, noninterest income, excluding net securities gains (losses), represented 28.5% of total revenue for the year ended December 31, 2022.

RESULTS OF OPERATION — THREE YEARS ENDED DECEMBER 31, 2022

Net Interest Income

Net interest income is the difference between interest income and fees earned on earning assets and interest expense incurred on interest-bearing liabilities.

Interest rate levels and volume fluctuations within earning assets and interest-bearing liabilities impact net interest income.

Net interest margin is tax-equivalent net interest income as a percent of average earning assets.

Certain assets with tax favorable treatment are evaluated on a tax-equivalent basis.

Tax-equivalent basis assumes a federal income tax rate of 21.0%.

Net interest income is the difference between interest income and fees earned on loans and investments (“interest-earning assets”) and interest expense incurred on deposits and borrowings (“interest-bearing liabilities”).

Interest rate levels and volume fluctuations within interest-earning assets and interest-bearing liabilities impact net interest income.

Net interest margin is tax-equivalent net interest income as a percent of average interest-earning assets.

Certain assets with tax favorable treatment are evaluated on a tax-equivalent basis, assuming a federal income tax rate of 21.0%.

Tax favorable assets generally have lower contractual pre-tax yields than fully taxable assets.

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In addition to yield, various other risks are factored into the evaluation process.

The following tables (dollars in thousands) show our Consolidated Average Balance Sheets, detailing the major categories of assets and liabilities, the interest income earned on interest-earning assets, the interest expense paid for the interest-bearing liabilities, and the related interest rates for the periods shown.

The tables also show, for the periods indicated, a summary of the changes in interest earned and interest expense resulting from changes in volume and rates for the major components of interest-earning assets and interest-bearing liabilities.

For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on changes due to rate and changes due to volume.

All average information is provided on a daily average basis.

Consolidated Average Balance Sheets and Interest Rates

Average balances, income and expense, and yield rates are presented below for the periods indicated (dollars in thousands) :

The table below presents our Consolidated Average Balance Sheets, detailing average balances for each major category of assets and liabilities, the interest income earned on interest-earning assets, the interest expense paid for interest-bearing liabilities, and the related interest yields for the periods indicated.

Average information is provided on a daily average basis (dollars in thousands) :

First Busey Corporation | 2023 — 58

Table of Contents Contents of Item 7.

Years Ended December 31,

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Non-accrual loans have been included in average portfolio loans.

Interest income includes a tax-equivalent adjustment of $2.2 million, $2.4 million, and $2.7 million for 2022, 2021 and 2020, respectively.

Interest income includes $1.9 million, $14.0 million, and $15.2 million of fees, net of deferred costs related to PPP loans for 2022, 2021, and 2020, respectively.

Includes short-term borrowings, long-term debt, senior notes, and subordinated notes.

Interest income includes tax-equivalent adjustments of $2.2 million for 2023, $2.2 million for 2022, and $2.4 million for 2021.

Interest income includes an immaterial amount of fees, net of deferred costs, related to PPP loans for 2023, $1.9 million for 2022, and $14.0 million for 2021.

Borrowings include short-term borrowings, long-term debt, senior notes, and subordinated notes.

Interest expense includes a non-usage fee on our revolving credit facility.

The following table presents a breakout of changes in net interest income attributable to changes in average volume and changes in average yield (dollars in thousands) :

First Busey Corporation | 2023 — 59

Table of Contents Contents of Item 7.

The following table presents, for the major components of interest-earning assets and interest-bearing liabilities, a breakout of changes in interest income and interest expense attributable to (1) changes in average volume and (2) changes in average yield.

For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on changes due to rate and changes due to volume (dollars in thousands) :

Years Ended December 31,

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Percentage increase (decrease) in net interest income over prior period (1.2) % 19.3 %

First Busey Corporation | 2023 — 60

Table of Contents Contents of Item 7.

Notable changes in average assets and average liabilities are summarized as follows for the periods presented (dollars in thousands) :

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Net interest income expressed as a percentage of average earning assets, stated on a tax-equivalent basis.

The FOMC raised rates by a total of 425 basis points during 2022.

Rising rates have a positive impact on net interest margin, as assets, in particular commercial loans, reprice more quickly and to a greater extent than liabilities.

In general, net interest margins have been impacted over the last three years by PPP loans, significant growth in the Company’s liquidity position, organic portfolio loan growth over the past seven quarters, and the issuance of debt, with more recent impacts resulting from rate increases.

First Busey remains substantially funded by core deposits 1 , with robust liquidity and significant market share in the communities we serve.

As of December 31, 2022, our loan to deposit ratio was 76.7% and core deposits represented 98.8% of total deposits.

Net interest spread, which represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, was 2.68% in 2022 compared to 2.36% in 2021 and 2.83% in 2020, each on a tax equivalent basis.

The FOMC raised rates by a total of 100 basis points during 2023, and by a total of 525 basis points since the onset of the current FOMC tightening cycle that began in the first quarter of 2022.

Rising rates initially have a positive impact on net interest margin, as assets, in particular commercial loans, reprice more quickly and to a greater extent than liabilities.

As deposit and funding costs increase in response to the tightening rate cycle, and we experience deposit migration into higher cost offerings and funding alternatives, some of the net interest margin expansion is reversed.

Net interest spread represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, and is presented in the table below for the periods indicated:

Years Ended December 31,

2023 2022 2021

Net interest spread 1

2.27 % 2.68 % 2.36 %

___________________________________________

Calculated on a tax-equivalent basis.

First Busey Corporation | 2023 — 61

Table of Contents Contents of Item 7.

The net interest margin discussion above is based upon the results and average balances for the years ended December 31, 2023, 2022, and 2021.

Annualized net interest margins for the quarterly periods indicated were as follows:

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Fourth Quarter 2.74 % 3.24 % 2.36 %

Management attempts to mitigate the effects of an unpredictable interest-rate environment through effective portfolio management, prudent loan underwriting and operational efficiencies.

1 Core deposits is a non-GAAP financial measure.

For a reconciliation of non-GAAP measures to the most directly comparable financial GAAP measures, see “ Item 1.

Business—Non-GAAP Financial Information .”

Management attempts to mitigate the effects of an unpredictable interest-rate environment through effective portfolio management, prudent loan underwriting and pricing discipline, and operational efficiencies.

Noninterest Income

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Total noninterest income $ 122,384 $ 126,803 $ (4,419) (3.5) %

Assets under care as of period end $ 12,136,869 $ 11,061,831 $ 1,075,038 9.7 %

First Busey Corporation | 2023 — 62

Table of Contents Contents of Item 7.

Years Ended December 31,

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Total noninterest income $ 126,803 $ 132,804 $ (6,001) (4.5) %

Assets under care $ 11,061,831 $ 12,731,319 $ (1,669,488) (13.1) %

Total noninterest income was $122.4 million for the year ended December 31, 2023, a decrease of 3.5% when compared with $126.8 million for the year ended December 31, 2022.

Revenues from wealth management fees and payment technology solutions represented 59.5% and 53.8% of noninterest income for the years ended December 31, 2022, and December 31, 2021, respectively, providing a complement to spread-based revenue from traditional banking activities.

The year-over-year decrease in non-interest income is substantially attributable to Durbin Amendment impacts as described in further detail below.

Total noninterest income represented 27.7% of total revenue 2 in 2023, compared to 28.2% in 2022.

Combined, revenues from wealth management fees and payment technology solutions represented 64.1% and 59.5% of Busey’s noninterest income for the years ended December 31, 2023, and December 31, 2022, respectively, providing a complement to spread-based revenue from traditional banking activities.

On a combined basis, revenue from these two critical operating areas was $78.5 million for the year ended December 31, 2023, a 4.1% increase from $75.4 million for the year ended December 31, 2022.

Wealth management fees increased by 3.5% to $57.3 million in 2023, compared to $55.4 million in 2022.

First Busey’s Wealth Management division had $11.1 billion in assets under care as of December 31, 2022, compared to $12.7 billion as of December 31, 2021.

The decrease in the value of assets under care was principally due to a reduction in market valuations and nonrecurring outflows.

Our portfolio management team continues to produce solid results in the face of very volatile markets.

Busey’s Wealth Management division had $12.1 billion in assets under care as of December 31, 2023, compared to $11.1 billion as of December 31, 2022.

Our portfolio management team continues to focus on long-term returns and managing risk in the face of volatile markets.

Payment technology solutions revenue relates to our payment processing company, FirsTech.

Payment technology solutions revenue increased by 5.6% to $21.2 million in 2023, compared to $20.1 million in 2022.

Increases in payment technology solutions revenue were primarily the result of payment and volume activity as well as growth in customers served by FirsTech.

FirsTech operations add important diversity to our revenue stream while widening our array of service offerings to larger commercial clients both within our footprint and nationally.

We are currently making strategic investments in FirsTech to enhance future growth, including further upgrades to the product and engineering teams to build an API cloud-based platform to provide for fully integrated payment capabilities, as well as the continued development of our BaaS platform.

Results for 2023 marked a new record high reported annual revenue for FirsTech.

2 Total revenue consists of net interest income plus noninterest income.

First Busey Corporation | 2023 — 63

Table of Contents Contents of Item 7.

Fees for customer services decreased by 12.3% to $29.0 million in 2023, compared to $33.1 million in 2022.

Beginning on July 1, 2022, we became subject to the Durbin Amendment of the Dodd-Frank Act.

The Durbin Amendment requires the Federal Reserve to establish a maximum permissible interchange fee for many types of debit transactions, which resulted in a $4.8 million reduction in fee income during the last half of 2022.

Beginning on July 1, 2022, we became subject to the Durbin Amendment, which requires the Federal Reserve to establish a maximum permissible interchange fee for many types of debit transactions.

Reduced fee income is primarily attributable to the impact of the Durbin Amendment for all of 2023 versus only half of 2022, as well to modifications implemented to overdraft and non-sufficient funds fee structures.

Mortgage revenue was $1.1 million in 2023, compared to $1.9 million in 2022.

Decreases primarily resulted from declines in sold-loan mortgage volume due to retaining a higher share of loan production in 2022, as well as lower gain on sale premiums.

Decreases primarily resulted from declines in mortgage origination and sold-loan mortgage volume.

General economic conditions and interest rate volatility may impact future fee income.

Income on bank owned life insurance decreased by 29.1% to $3.7 million in 2022, compared to $5.2 million in 2021, primarily as a result of a decrease in life insurance proceeds.

Other income increased by 44.0% to $14.8 million in 2022, compared to $10.3 million in 2021.

Other income benefited primarily from increases in other asset investment values and check sales, partially offset by smaller gains on commercial loan sales.

Income on bank owned life insurance increased by 28.3% to $4.7 million in 2023, compared to $3.7 million in 2022, resulting from a $0.8 million increase in earnings on death proceeds and a $0.2 million increase in the cash surrender value of the insurance policies.

Other income decreased by 24.1% to $11.2 million in 2023, compared to $14.8 million in 2022.

Primary contributors to other income include swap origination fees, gains on commercial loans sales, and changes in venture capital investment valuations.

First Busey Corporation | 2023 — 64

Table of Contents Contents of Item 7.

Noninterest Expense

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Interchange expense 6,864 6,298 566 9.0 %

FDIC insurance 5,650 4,058 1,592 39.2 %

Other expense 44,161 48,333 (4,172) (8.6) %

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60.7 % 58.9 % 180 bps

Full-time equivalent employees as of period-end 1,497 1,463 34 2.3 %

Full-time equivalent associates as of period-end 1,479 1,497 (18) (1.2) %

___________________________________________

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Business—Non-GAAP Financial Information .”

First Busey Corporation | 2023 — 65

Table of Contents Contents of Item 7.

Years Ended December 31,

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Interchange expense 6,298 5,792 506 8.7 %

FDIC insurance 4,058 3,083 975 31.6 %

Other expense 48,333 40,261 8,072 20.0 %

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58.9 % 57.9 % 100 bps

Full-time equivalent employees as of period-end 1,463 1,346 117 8.7 %

Full-time equivalent associates as of period-end 1,497 1,463 34 2.3 %

___________________________________________

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Business—Non-GAAP Financial Information .”

Total noninterest expense increased to $283.9 million for the year ended December 31, 2022, compared to $261.8 million for the year ended December 31, 2021.

Total noninterest expense increased to $285.5 million for the year ended December 31, 2023, compared to $283.9 million for the year ended December 31, 2022, representing a modest year-over-year increase of 0.6%.

Non-operating acquisition and other restructuring expenses decreased to $4.3 million in 2023, compared to $4.5 million in 2022.

We remain focused on expense discipline, and have made necessary investments during the past two years to support the continued organic growth of our key business lines and related support and risk management functions.

We have effectively managed our noninterest expense during a time of decades-high inflation, and have been purposeful in our efforts to rationalize our expense base given our economic outlook and our view on the future of banking.

Salaries, wages, and employee benefits increased to $162.6 million in 2023, compared to $159.0 million in 2022.

We had a total of 1,497 full-time equivalents at December 31, 2022, compared to 1,463 at December 31, 2021.

Throughout 2022 we continued to invest in talent across our business lines and our risk management infrastructure.

Labor market trends over the past year reflected a tight labor supply, while job gains resulted in increased demands for a skilled workforce, maintaining upward pressure on salaries, wages, and employee benefits.

Data processing expense decreased to $21.6 million in 2022, compared to $21.9 million in 2021.

Decreases were primarily attributable to higher expenses in 2021 related to the CAC acquisition, offset by increased expenses for FirsTech related to transaction volume and continued Company-wide investments in technology enhancements, as well as inflation-driven price increases.

Combined, net occupancy expense of premises and furniture and equipment expenses increased to $26.8 million in 2022, compared to $26.6 million in 2021.

Year-over-year increases are primarily attributable to higher building and maintenance costs.

As we continue to divest our recently closed branches we expect to realize incremental cost savings.

Professional fees decreased to $6.1 million in 2022, compared to $7.5 million in 2021, as a result of decreases in legal fees, audit and accounting fees, payroll service costs, and consulting fees.

Amortization of intangible assets increased to $11.6 million in 2022, compared to $11.3 million in 2021, as a result of increases in intangible asset balances from the acquisition of CAC.

Amortization of intangible assets included 12 months of amortization in 2022 in connection with intangible assets obtained in the acquisition of CAC, compared to seven months in 2021.

Our total associate base consisted of 1,479 full-time equivalents as of December 31, 2023, compared to 1,497 at December 31, 2022.

Non-operating costs contributed $0.8 million of the increase in salaries, wages, and employee benefits.

Current trends continue to reflect a competitive labor market, maintaining pressure on costs related to attracting and maintaining our skilled workforce.

Data processing expense increased to $23.7 million in 2023, compared to $21.6 million in 2022.

Increases were primarily attributable to Company-wide investments in technology enhancements, as well as inflation-driven price increases.

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Table of Contents Contents of Item 7.

Combined, net occupancy expense of premises and furniture and equipment expenses decreased to $25.0 million in 2023, compared to $26.8 million in 2022.

Decreases were primarily attributable to declines in depreciation expense and real estate taxes.

Professional fees increased to $7.1 million in 2023, compared to $6.1 million in 2022.

The increase was primarily attributable to higher expenses for audit and accounting fees and payroll services.

Amortization of intangible assets decreased to $10.4 million in 2023, compared to $11.6 million in 2022, due to the continued use of an accelerated amortization methodology.

Interchange expense increased to $6.9 million in 2023, compared to $6.3 million in 2022.

Fluctuations in interchange expense were primarily the result of increased payment and volume activity at FirsTech.

Other expense increased to $52.4 million in 2022, compared to $43.3 million in 2021.

Increases were across multiple expense categories including marketing and business development, NMTC amortization, and regulatory expenses, partially offset by lower fixed asset impairment.

FDIC insurance expense increased to $5.7 million in 2023, compared to $4.1 million in 2022.

Increases were the result of an FDIC final rule to increase the initial base deposit insurance assessment rate applicable to all depository institutions by two basis points beginning in 2023.

Other expense decreased to $44.2 million in 2023, compared to $48.3 million in 2022.

Primary contributors to other expense include business development, collection and preservation, OREO, fixed asset impairments, provision for unfunded commitments, and NMTC impairments.

Decreases were across multiple expense categories as a result of expense discipline.

Efficiency Ratio 3

3 unchanged sentences

Operating costs have been influenced by acquisition expenses and other restructuring costs, and the adjusted efficiency ratio 3 was 60.7% for the year ended December 31, 2023, compared to 58.9% for the year ended December 31, 2022.

The effective income tax rate, or income taxes divided by income before taxes, was 20.7%, 21.3%, and 21.7% for the years ended December 31, 2022, 2021, and 2020, respectively.

The Company's effective tax rate was lower than the combined federal and state statutory rate of approximately 28.0% due to tax exempt interest income, such as municipal bond interest and bank owned life insurance income, and investments in various federal and state tax credits.

Effective income tax rates, calculated by dividing income taxes by income before taxes, were 20.4%, 20.7%, and 21.3% for the years ended December 31, 2023, 2022, and 2021, respectively.

Busey's effective tax rates were lower than the combined federal and state statutory rate of approximately 28.0% due to tax exempt interest income, such as municipal bond interest and bank owned life insurance income, and investments in various tax credits.

We continue to monitor evolving federal and state tax legislation and its potential impact on operations on an ongoing basis.

As of December 31, 2022, we were 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.

2 For a reconciliation of the efficiency ratio and the adjusted efficiency ratio, both of which are non-GAAP financial measures, see “ Item 1.

As of December 31, 2023, we were not under income tax examination by any income tax authority.

3 The efficiency ratio and adjusted efficiency ratio are both non-GAAP financial measures.

For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see “ Item 1.

Business—Non-GAAP Financial Information.

First Busey Corporation | 2023 — 67

Table of Contents Contents of Item 7.

FINANCIAL CONDITION

4 unchanged sentences

Debt securities available for sale $ 2,087,571 $ 2,461,393 $ (373,822) (15.2) %

Debt securities held to maturity 918,312 — 918,312 NM

Debt securities held to maturity 872,628 918,312 (45,684) (5.0) %

Portfolio loans, net of ACL 7,559,294 7,634,094 (74,800) (1.0) %

8 unchanged sentences

Stockholders’ equity 1,271,981 1,145,977 126,004 11.0 %

Busey executed a two-part balance sheet repositioning strategy

During the fourth quarter of 2023, Busey sold all 16,878 shares of Visa Class B common stock it previously held (the “Visa Sale”) resulting in a pre-tax gain of approximately $5.5 million, and also executed a balance sheet repositioning of its available-for-sale securities portfolio (the “Repositioning”).

Busey sold securities with a carrying value of approximately $110 million yielding 1.56%, resulting in a pre-tax loss of $5.3 million.

Proceeds were deposited into an interest-bearing account at the Federal Reserve yielding 5.40%, a higher-yielding lower risk-weighted asset.

The increased net interest spread as a result of the Visa Sale and Repositioning is expected to increase net interest income by approximately $4.3 million on an annualized basis and improve Busey’s net interest margin run rate by 4 basis points.

In addition, execution of these transactions further bolsters Busey’s liquidity position and balance sheet flexibility, while also strengthening its capital position.

Busey anticipates reinvesting the proceeds into higher yielding organic growth opportunities over time.

The combined impact of the gain generated from the Visa Sale and the loss generated from the Repositioning will have an immediate positive impact on consolidated stockholders’ equity and book value per share.

Risk-based regulatory capital ratios will increase modestly as a result of the Repositioning proceeds rotating into lower risk-weighted assets.

Busey expects the above transactions to be accretive to capital and earnings per share in future periods.

First Busey Corporation | 2023 — 68

Table of Contents Contents of Item 7.

Investment Securities

Primary purposes of our investment securities portfolio are to provide a source of earnings by deploying funds which are not needed to fulfill loan demand, deposit redemptions, or other liquidity purposes;

The primary purposes of our investment securities portfolio are to provide a source of earnings by deploying funds that are not needed to fulfill loan demand, deposit redemptions, or other liquidity purposes;

to serve as a tool for interest rate risk positioning;

5 unchanged sentences

Debt securities available for sale are carried at fair value.

Net unrealized gains or losses, net of tax, are recorded in stockholders’ equity, through AOCI.

As of December 31, 2023, the fair value of debt securities available for sale was $2.1 billion, and the amortized cost was $2.3 billion.

There were $0.1 million of gross unrealized gains and $311.2 million of gross unrealized losses, for a net unrealized loss of $311.1 million.

The net unrealized loss, net of tax, is recorded in stockholders’ equity through AOCI.

There were $0.2 million of gross unrealized gains and $247.2 million of gross unrealized losses, resulting in a net unrealized loss of $247.1 million.

The composition of debt securities available for sale was as follows (dollars in thousands) :

12 unchanged sentences

Fair value as a percentage of amortized cost 89.42 % 88.78 %

By maturity date, fair values, and weighted average yields of debt securities available for sale as of December 31, 2022, were (dollars in thousands) :

First Busey Corporation | 2023 — 69

Table of Contents Contents of Item 7.

By maturity date, fair values and weighted average yields of debt securities available for sale as of December 31, 2023, are presented in the following table (dollars in thousands) :

Due in 1 year or less Due after 1 year

19 unchanged sentences

Weighted average yield calculated on a tax-equivalent basis, assuming a federal income tax rate of 21.0%.

First Busey Corporation | 2023 — 70

Table of Contents Contents of Item 7.

Debt Securities Held to Maturity

In 2022, a portion of the debt securities available for sale were transferred to debt securities held to maturity.

Debt securities held to maturity are carried at amortized cost.

As of December 31, 2022, the amortized cost of debt securities held to maturity was $918.3 million, and the fair value was $785.3 million.

There were no gross unrecognized gains and $133.0 million of gross unrecognized losses.

Unrecognized losses are included in OCI, and amortized into income over the contractual lives of the securities.

An ACL balance will be established for debt securities held to maturity when applicable.

As of December 31, 2022, no ACL was recorded for our portfolio of debt securities held to maturity.

No ACL was recorded for our portfolio of debt securities held to maturity as of December 31, 2023 or 2022.

As of December 31, 2023, the amortized cost of debt securities held to maturity was $872.6 million, and the fair value was $730.4 million.

There were no gross unrecognized gains and $142.2 million of gross unrecognized losses.

The composition of debt securities held to maturity was as follows (dollars in thousands) :

5 unchanged sentences

Debt securities held to maturity, fair value $ 730,397 $ 785,295

Fair value as a percentage of amortized cost 85.52 % N/A

By maturity date, fair values, and weighted average yields of debt securities held to maturity as of December 31, 2022, were (dollars in thousands) :

Due in 1 year or less Due after 1 year

Fair value as a percentage of amortized cost 83.70 % 85.52 %

By maturity date, fair values and weighted average yields of debt securities held to maturity as of December 31, 2023, are presented in the following table (dollars in thousands) :

Due after 1 year

through 5 years Due after 5 years

3 unchanged sentences

Value Weighted

Debt securities held to maturity 1

7 unchanged sentences

The fair value of equity securities was $9.8 million as of December 31, 2023, compared to $11.5 million as of December 31, 2022.

First Busey Corporation | 2023 — 71

Table of Contents Contents of Item 7.

Portfolio Loans

We believe that making sound and profitable loans is a necessary and desirable means of employing funds available for investment.

First Busey maintains lending policies and procedures designed to focus lending efforts on the types, locations, and duration of loans most appropriate for its business model and markets.

GSB’s policies were similar in nature to Busey Bank’s policies, and we are migrating the legacy GSB portfolio toward Busey Bank’s policies.

Busey maintains lending policies and procedures designed to focus lending efforts on the types, locations, and duration of loans most appropriate for its business model and markets.

While not specifically limited, we attempt to focus our lending on short to intermediate-term (0-10 years) loans in geographic areas within 125 miles of our lending offices.

Loans originated outside of these areas are generally residential mortgage loans originated for sale in the secondary market or loans to existing customers of Busey Bank.

Loans originated outside of these areas are generally to existing customers of Busey Bank.

We attempt to utilize government-assisted lending programs, such as the SBA and U.S.

10 unchanged sentences

We generally limit such relationships to amounts substantially less than the regulatory limit.

Loans to related parties, including executive officers and directors of First Busey and its subsidiaries, are reviewed for compliance with regulatory guidelines.

First Busey maintains an independent loan review department that reviews loans for compliance with our loan policy on a periodic basis.

In addition, the loan review department reviews the risk assessments made by our credit department, lenders, and loan committees.

Loans to related parties, including executive officers and directors of First Busey Corporation and its subsidiaries, are reviewed for compliance with regulatory guidelines.

Busey maintains an independent loan review department that reviews loans for compliance with our loan policy on a periodic basis.

In addition, the loan review department reviews risk assessments made by our credit department, lenders, and loan committees.

Results of these reviews are presented to management and the audit committee at least quarterly.

Busey Bank’s lending can be summarized into five primary areas:

commercial loans, commercial real estate loans, real estate construction loans, retail real estate loans, and retail other loans.

Busey Bank’s lending activities can be summarized into two primary categories:

commercial and retail.

Within these primary categories, loans are further classified into five primary lending areas.

The commercial category includes commercial loans, commercial real estate loans, and real estate construction loans.

The retail category includes retail real estate loans and retail other loans.

Commercial Loans

1 unchanged sentence

Commercial loans will generally be guaranteed, in full or a material percentage, by the primary owners of the business.

Commercial loans are made based primarily on the historical and projected cash flow of the underlying borrower and secondarily on the underlying assets pledged as collateral by the borrower.

Cash flows of the underlying borrower, however, may not perform consistently with historical or projected information.

Commercial loans are made based primarily on the borrower’s historical and projected cash flows and secondarily on the underlying assets pledged as collateral by the borrower.

Cash flows of the borrower, however, may not perform consistently with historical or projected information.

Further, collateral securing loans may fluctuate in value due to individual economic or other factors.

Busey Bank has established minimum standards and underwriting guidelines for all commercial loan types.

First Busey Corporation | 2023 — 72

Table of Contents Contents of Item 7.

Commercial Real Estate Loans

19 unchanged sentences

Retail real estate loans are comprised of direct consumer loans that include residential real estate, home equity lines of credit, and home equity loans.

In 2022, the Company retained a larger percentage of originated retail real estate loans in our portfolio over selling to secondary market purchasers.

In 2023, Busey retained a larger percentage of originated retail real estate loans in our portfolio, electing to sell a smaller percentage to secondary market purchasers.

As retail real estate loan underwriting is subject to specific regulations, we typically underwrite our retail real estate loans to conform to widely accepted standards.

3 unchanged sentences

These loans are centrally underwritten utilizing the borrower’s financial history, including credit scores, as well as information about the underlying collateral.

Retail other loans also include whole-life loans which are secured by the cash value of life insurance policies.

Repayment of retail other loans is expected from the cash flow of the borrower.

Portfolio Loans by Loan Category

The composition of our portfolio loans as of the dates indicated was as follows (dollars in thousands) :

Retail other loans also include whole-life loans which are secured by the cash value of underlying life insurance policies.

Repayment of retail other loans is expected from the borrower’s cash flows.

First Busey Corporation | 2023 — 73

Table of Contents Contents of Item 7.

Portfolio Composition

The composition of our loan portfolio as of the dates indicated, as well as changes in portfolio loan balances, were as follows (dollars in thousands) :

As of December 31,

2023 2022 Change % Change

Portfolio loans

Commercial loans

Commercial $ 1,835,994 $ 1,974,154 $ (138,160) (7.0) %

1 unchanged sentence

Real estate construction 461,717 530,469 (68,752) (13.0) %

Total commercial loans 5,635,048 5,766,496 (131,448) (2.3) %

Retail real estate 1,720,455 1,657,082 63,373 3.8 %

Retail other 295,531 302,124 (6,593) (2.2) %

Total retail loans 2,015,986 1,959,206 56,780 2.9 %

Total portfolio loans 7,651,034 7,725,702 (74,668) (1.0) %

ACL (91,740) (91,608) (132) (0.1) %

Portfolio loans, net $ 7,634,094 $ 7,101,111 $ 532,983 7.5 %

Portfolio loans, net of ACL $ 7,559,294 $ 7,634,094 $ (74,800) (1.0) %

Commercial balances decreased by $131.4 million, or 2.3%, during the year ended December 31, 2023.

Retail balances increased by $56.8 million, or 2.9%, during the year ended December 31, 2023.

As has been our practice, we remain steadfast in our conservative approach to underwriting and disciplined approach to pricing, particularly given our outlook for the economy in the coming quarters, and this approach has impacted loan growth for 2023 as predicted.

Geographic distributions of portfolio loans, based on origination, by category were as follows (dollars in thousands) :

1 unchanged sentence

Illinois Missouri Florida Indiana Total

Portfolio loans

Commercial loans

Commercial $ 1,395,020 $ 369,767 $ 25,267 $ 45,940 $ 1,835,994

1 unchanged sentence

Real estate construction 255,879 74,805 72,121 58,912 461,717

Total commercial loans 3,929,247 1,116,334 316,899 272,568 5,635,048

Retail real estate 1,284,362 225,610 129,454 81,029 1,720,455

Retail other 290,937 2,344 1,111 1,139 295,531

Total retail loans 1,575,299 227,954 130,565 82,168 2,015,986

Total portfolio loans $ 5,504,546 $ 1,344,288 $ 447,464 $ 354,736 $ 7,651,034

Portfolio loans, net of ACL $ 7,559,294

First Busey Corporation | 2023 — 74

Table of Contents Contents of Item 7.

December 31, 2022

Illinois Missouri Florida Indiana Total

Portfolio loans

Commercial $ 1,372,584 $ 463,085 $ 55,180 $ 53,037 $ 1,943,886

Commercial real estate 2,063,681 691,969 191,303 172,854 3,119,807

Real estate construction 199,471 120,785 31,265 34,475 385,996

Retail real estate 1,124,486 235,083 96,563 56,844 1,512,976

Retail other 219,000 3,684 2,181 1,468 226,333

Total portfolio loans $ 4,979,222 $ 1,514,606 $ 376,492 $ 318,678 $ 7,188,998

Portfolio loans, net of ACL $ 7,101,111

The Company generated $610.8 million, or 8.6%, in core loan 3 growth during 2022.

Changes in portfolio loan balances, by loan category, were as follows (dollars in thousands) :

As of December 31,

2022 2021 Change % Change

Portfolio loans

Commercial loans

2 unchanged sentences

Real estate construction 326,154 131,782 31,212 41,321 530,469

Commercial loan balances 5,766,496 5,449,689 316,807 5.8 %

Retail loans:

Total commercial loans 3,908,086 1,279,218 305,076 274,116 5,766,496

Retail real estate 1,253,069 210,048 122,397 71,568 1,657,082

Retail other 296,719 2,565 1,788 1,052 302,124

Retail loan balances 1,959,206 1,739,309 219,897 12.6 %

Total retail loans 1,549,788 212,613 124,185 72,620 1,959,206

Total portfolio loans $ 5,457,874 $ 1,491,831 $ 429,261 $ 346,736 $ 7,725,702

ACL (91,608) (87,887) (3,721) 4.2 %

Portfolio loans, net of ACL $ 7,634,094

Excluding the amortized cost of PPP loans, changes in commercial loan balances were as follows:

Commercial real estate loans are made across a variety of industries, as depicted in the table below (dollars in thousands) .

Balances reflected in the table below do not include loan origination fees or costs, purchase accounting adjustments, SBA discounts, or negative escrow amounts.

As of December 31, 2023

2022 2021 Change % Change

Commercial loan balances $ 5,766,496 $ 5,449,689 $ 316,807 5.8 %

PPP loans amortized cost (845) (74,958) 74,113 (98.9) %

Commercial loan balances, excluding PPP loans $ 5,765,651 $ 5,374,731 $ 390,920 7.3 %

Commercial balances—consisting of commercial, commercial real estate, and real estate construction loans—excluding PPP loans, increased by $390.9 million, or 7.3%, during the year ended December 31, 2022.

Retail real estate and retail other loans increased by $219.9 million, or 12.6%, during the year ended December 31, 2022.

PPP loans decreased by $74.1 million during the year ended December 31, 2022, to $0.8 million.

Investor Owned Owner Occupied Total % Owner Occupied

Commercial Real Estate by Industry

Industrial/Warehouse $ 301,464 $ 365,527 $ 666,991 54.8 %

Retail 479,521 61,879 541,400 11.4 %

Apartments 534,627 — 534,627 — %

Traditional Office 257,149 111,612 368,761 30.3 %

Specialty 80,047 233,022 313,069 74.4 %

Medical Office 153,205 93,930 247,135 38.0 %

Student Housing 208,763 — 208,763 — %

Hotel 189,184 601 189,785 0.3 %

Senior Housing 151,964 — 151,964 — %

Restaurant 23,093 46,178 69,271 66.7 %

Nursing Homes 24,101 1,498 25,599 5.9 %

Health Care 20,000 737 20,737 3.6 %

Other 544 200 744 26.8 %

Total $ 2,423,662 $ 915,184 $ 3,338,846 27.4 %

Paycheck Protection Program Loans

Throughout the COVID-19 pandemic, Busey operated as an essential community resource, providing approximately $1.1 billion in payroll assistance for small businesses and select nonprofits through low-interest, 100% government-guaranteed loans as part of the PPP.

We had $0.3 million in PPP loans outstanding as of December 31, 2023, compared to $0.9 million in PPP loans outstanding as of December 31, 2022.

First Busey Corporation | 2023 — 75

Table of Contents Contents of Item 7.

Loan Commitments

Commitments to extend credit and standby letters of credit increased by $8.6 million, or 0.4%, to a total of $2.0 billion as of December 31, 2022.

3 Core loans is a non-GAAP financial measure.

For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “ Item 1.

Business—Non-GAAP Financial Information ” included in this Annual Report.

Commitments to extend credit and standby letters of credit increased by $151.7 million, or 7.5%, to a total of $2.2 billion as of December 31, 2023, compared to $2.0 billion as of December 31, 2022.

Loan Maturities

The following table sets forth remaining maturities of selected loans (excluding deferred loan fees and costs, purchase premiums and discounts, and certain real estate-mortgage loans and installment loans to individuals) at December 31, 2022, (dollars in thousands) .

The determination of loan maturities is based on contractual loan terms.

For the purposes of categorization within the table below, demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are considered to mature within one year.

Maturities for non-contractual rollovers or extensions are determined based on the rate review date.

Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are considered to mature within one year.

The following table sets forth remaining maturities of portfolio loans at December 31, 2023, (dollars in thousands) :

Within 1 Year After 1 Year

1 unchanged sentence

Through 15 Years After 15 Years Total

Selected Loans

Portfolio loans

Commercial $ 522,304 $ 942,390 $ 337,483 $ 33,817 $ 1,835,994

1 unchanged sentence

Real estate construction 173,939 212,219 51,941 23,618 461,717

Total selected loans $ 2,336,924 $ 2,258,635 $ 1,151,197 $ 23,267 $ 5,770,023

Retail real estate 41,180 139,749 549,397 990,129 1,720,455

Retail other 40,721 191,588 44,581 18,641 295,531

Total portfolio loans $ 1,266,295 $ 3,454,711 $ 1,851,375 $ 1,078,653 $ 7,651,034

Interest Rate Structure

Selected loans maturing after one year are summarized below by interest rate structure and loan category, as of December 31, 2022, (dollars in thousands) :

Portfolio loans maturing after one year are summarized below by interest rate structure and loan category, as of December 31, 2023, (dollars in thousands) :

Rate Adjustable

Selected loans maturing after 1 year

Portfolio loans maturing after 1 year

Commercial $ 745,328 $ 568,362 $ 1,313,690

1 unchanged sentence

Real estate construction 116,875 170,903 287,778

Total selected loans maturing after 1 year $ 3,265,451 $ 167,648 $ 3,433,099

Allowance for Credit Losses

The following table summarizes, by loan category, activity affecting the ACL and average portfolio loans outstanding for the year ended December 31, 2022, as well as the related ratios of net charge-offs (recoveries) to average portfolio loans (dollars in thousands) :

Retail real estate 788,759 890,516 1,679,275

Retail other 208,765 46,045 254,810

Total portfolio loans maturing after 1 year $ 3,989,951 $ 2,394,788 $ 6,384,739

First Busey Corporation | 2023 — 76

Table of Contents Contents of Item 7.

Allowance and Provision for Credit Losses

The ACL is a significant estimate in our Consolidated Balance Sheets , affecting both earnings and capital.

The methodology adopted influences, and is influenced by, Busey Bank’s overall credit risk management processes.

The ACL is recorded in accordance with GAAP to provide an adequate reserve for expected credit losses that is reflective of management’s best estimate of what is expected to be collected.

All estimates of credit losses are based on a careful consideration of all significant factors affecting the collectability as of the evaluation date.

The ACL is established through the provision for credit loss expense charged to income.

Provision expenses (releases) were recorded as follows for each of the years indicated (dollars in thousands) :

Years Ended December 31,

2023 2022 2021

Provision for credit losses $ 2,399 $ 4,623 $ (15,101)

The provision release in 2021 reflected improvements in macroeconomic conditions and asset quality, following a build-up of the ACL in the prior year attributable to the adoption of CECL in combination with the economic impacts of the COVID-19 pandemic.

First Busey Corporation | 2023 — 77

Table of Contents Contents of Item 7.

The following table summarizes, by loan category, activity affecting the ACL and average portfolio loans outstanding for the years indicated, as well as the related ratios of net charge-offs (recoveries) to average portfolio loans (dollars in thousands) :

Portfolio Loans

3 unchanged sentences

ACL balance, December 31, 2020 $ 101,048

Adoption of ASC 326-30 16,833

Net (charge-offs) recoveries and average portfolio loans by loan category:

25 unchanged sentences

ACL balance, December 31, 2023 $ 91,740

The following table presents ACL to portfolio loan ratios, as of the periods indicated (dollars in thousands) :

As of December 31,

Portfolio loans $ 7,725,702 $ 7,188,998

PPP loans amortized cost (845) (74,958)

___________________________________________

ACL $ 91,608 $ 87,887

ACL to portfolio loans 1.19 % 1.22 %

ACL to core loans 1

1.19 % 1.24 %

___________________________________________

Core loans is a non-GAAP financial measure.

For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see " Item 1.

Business—Non-GAAP Financial Information ."

The Day 1 PCD is attributable to the CAC acquisition.

First Busey Corporation | 2023 — 78

Table of Contents Contents of Item 7.

The following table sets forth the ACL by loan categories and percentage of loans to total loans as of December 31 for each of the years indicated (dollars in thousands) :

9 unchanged sentences

The ongoing impacts of CECL will be dependent upon changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors.

As of December 31, 2022, management believed the level of the allowance to be appropriate based upon the information available.

As of December 31, 2023, Busey management believed the level of the allowance to be appropriate based upon the information available.

However, additional losses may be identified in our loan portfolio as new information is obtained.

Provision for Credit Losses

The ACL is a significant estimate in our Consolidated Balance Sheet, affecting both earnings and capital.

The methodology adopted influences, and is influenced by, Busey Bank’s overall credit risk management processes.

The ACL is recorded in accordance with GAAP to provide an adequate reserve for expected credit losses that is reflective of management’s best estimate of what is expected to be collected.

All estimates of credit losses should be based on a careful consideration of all significant factors affecting the collectability as of the evaluation date.

The ACL is established through the provision for credit loss expense charged to income.

Provision expenses (releases) were recorded as follows for each of the years indicated (dollars in thousands) :

Years Ended December 31,

2022 2021 2020

Provision for credit losses $ 4,623 $ (15,101) $ 38,797

The relatively high expense in 2020 was attributed to the adoption of CECL in combination with the impacts of the COVID-19 pandemic on the economy, followed by a provision release in 2021 reflecting improvements in macroeconomic conditions and asset quality.

In 2022 we began to see a stabilization of the provision expense.

Non-Performing Loans and Non-Performing Assets

2 unchanged sentences

Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due.

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Typically, loans are secured by collateral.

1 unchanged sentence

Our loan portfolio is collateralized primarily by real estate.

First Busey Corporation | 2023 — 79

Table of Contents Contents of Item 7.

The following table sets forth information concerning non-performing loans and performing restructured loans (dollars in thousands) :

1 unchanged sentence

Portfolio loans $ 7,651,034 $ 7,725,702

Non-GAAP adjustments:

PPP loans amortized cost (845) (74,958)

$ 7,724,857 $ 7,114,040

Loans 30 – 89 days past due 5,779 6,548

9 unchanged sentences

Classified assets $ 72,288 $ 107,079

Performing TDRs (includes 30 – 89 days past due) $ 3,032 $ 1,801

ACL $ 91,740 $ 91,608

Bank Tier 1 Capital 1,362,962 1,306,716

ACL to portfolio loans 1.20 % 1.19 %

ACL to non-accrual loans 1,232.90 % 608.00 %

3 unchanged sentences

Non-performing loans to portfolio loans 0.10 % 0.20 %

Non-performing loans to core loans 1

0.20 % 0.24 %

Non-performing assets to total assets 0.06 % 0.13 %

Non-performing assets to portfolio loans and OREO 0.21 % 0.30 %

Non-performing assets to portfolio loans and OREO and other repossessed assets 0.10 % 0.21 %

Classified assets to Bank Tier 1 Capital and ACL 4.97 % 7.66 %

___________________________________________

Core loans is a non-GAAP financial measure.

For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see " Item 1.

Business—Non-GAAP Financial Information ."

Credit quality continues to be exceptionally strong.

Total non-performing assets were $16.6 million at December 31, 2022, compared to $21.3 million at December 31, 2021.

Asset quality remains strong by both Busey’s historical and current industry trends, and our operating mandate and focus have been on emphasizing credit quality over asset growth.

As a result of continued disciplined credit management, non-performing loan balances declined by 50.34% to $7.8 million as of December 31, 2023, compared to $15.7 million as of December 31, 2022.

Non-performing loans represented 0.10% of portfolio loans as of December 31, 2023, compared to 0.20% as of December 31, 2022.

Our allowance coverage of non-performing loans increased to 1,173.75% at December 31, 2023, compared to 582.01% at December 31, 2022.

Non-performing assets declined by 52.13% to $7.9 million as of December 31, 2023, compared to $16.6 million as of December 31, 2022.

Non-performing assets represented 0.06% of total assets as of December 31, 2023, compared to 0.13% as of December 31, 2022.

Our allowance for credit losses provided 1,155.27% coverage of our non-performing assets at December 31, 2023, up from 552.19% at December 31, 2022.

First Busey Corporation | 2023 — 80

Table of Contents Contents of Item 7.

Classified assets, which includes non-performing assets and substandard loans, decreased to $72.3 million as of December 31, 2023, compared to $107.1 million as of December 31, 2022.

Classified assets represented 4.97% of Busey Bank’s Tier 1 capital and ACL at December 31, 2023, down from 7.66% at December 31, 2022.

Net charge-offs totaled $2.3 million in 2023, representing 0.03% of average loans, compared with net charge-offs of $0.9 million in 2022, representing 0.01% of average loans.

Asset quality metrics remain dependent upon market-specific economic conditions, and specific measures may fluctuate from period to period.

Continued disciplined credit management resulted in non-performing loans as a percentage of portfolio loans of 0.20% at December 31, 2022, compared with 0.23% at December 31, 2021.

Furthermore, net charge-offs in 2022 totaled $0.9 million, representing 0.01% of average loans, compared with net charge-offs in 2021 of $2.2 million, representing 0.03% of average loans.

If economic conditions were to deteriorate, we would expect the credit quality of our loan portfolio to decline and loan defaults to increase.

Allowance coverage of non-performing loans increased to 582.0% at December 31, 2022, compared to 521.5% at December 31, 2021.

Classified assets, which includes non-performing assets and substandard loans, increased to $107.1 million at December 31, 2022, compared to $91.8 million at December 31, 2021.

The ratio of classified assets to Busey Bank Tier 1 capital and ACL increased to 7.7% at December 31, 2022, from 6.9% at December 31, 2021.

Potential Problem Loans

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Management assesses the potential for loss on such loans and considers the effect of any potential loss in determining its provision for expected credit losses.

Potential problem loans increased to $89.2 million at December 31, 2022, compared to $70.5 million at December 31, 2021.

Potential problem loans decreased to $64.3 million at December 31, 2023, compared to $89.2 million at December 31, 2022.

Management continues to monitor these credits and anticipates that restructurings, guarantees, additional collateral, or other planned actions will result in full repayment of the debts.

As of December 31, 2022, management identified no other loans that represent or result from trends or uncertainties which would be expected to materially impact future operating results, liquidity, or capital resources.

As of December 31, 2023, management identified no other loans that represent or result from trends or uncertainties that would be expected to materially impact future operating results, liquidity, or capital resources.

COVID-19 Modifications

To alleviate some of the financial hardships faced as a result of COVID-19, Busey offered a Financial Relief Program to qualifying customers.

The program included options for short-term loan payment deferrals and certain fee waivers.

We had no commercial or retail loans remaining in the program as of December 31, 2023.

In comparison, we had eight payment deferred commercial loans totaling $20.6 million that were on interest-only payment terms, and one payment deferred retail loan totaling $0.1 million as of December 31, 2022.

First Busey Corporation | 2023 — 81

Table of Contents Contents of Item 7.

The following table shows the deposit mix for each of the periods presented (dollars in thousands) :

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Total deposits $ 10,291,156 100.0 % $ 10,071,280 100.0 % $ 219,876 2.2 %

We focus on deepening our relationship with customers to foster core deposit 4 growth, allowing us to reduce our reliance on wholesale funding.

Our 2022 deposit balances were impacted by the declining retention of PPP loan funding in customer deposit accounts and the residual impacts of economic stimulus measures, along with the movement of deposits by certain non-relationship customers to competitors based on rate offerings.

Total deposits increased by 2.2% to $10.3 billion as of December 31, 2023, compared to $10.1 billion as of December 31, 2022.

Growth in our deposit base coupled with cash flows from our securities portfolio allows us to fund loan growth while limiting our reliance on higher cost wholesale funding alternatives.

We focus on deepening our relationship with customers to maintain and protect our strong core deposit 4 franchise, allowing us to reduce our reliance on wholesale funding.

As of December 31, 2023, our average customer tenure was 16.5 years for retail customers and 12.4 years for commercial customers.

Core deposits 4 include non-brokered transaction accounts, money market deposit accounts, and time deposits of $250,000 or less.

Core deposits 4 represented 96.2% of total deposits as of December 31, 2023, compared to 98.8% as of December 31, 2022.

Time deposits as a percentage of total deposits declined to 8.5% as of December 31, 2022, compared to 8.7% as of December 31, 2021.

As time deposits mature, we are actively engaging our customers to renew at current market rates.

4 Core deposits is a non-GAAP financial measure.

For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “ Item 1.

Business—Non-GAAP Financial Information ” included in this Annual Report.

Deposits are federally insured up to the FDIC insurance limit of $250,000.

When a portion of a deposit account exceeds the FDIC insurance limit, that portion is uninsured.

Estimated uninsured deposits were $3.8 billion at December 31, 2023.

The portion of our deposit base that was uninsured and not otherwise collateralized was estimated to be $2.8 billion at December 31, 2023, which represented 27% of total deposits.

Of that amount, $350.1 million represented time deposits.

The following table presents estimates of the uninsured portion of time deposits by maturity date (dollars in thousands) :

Uninsured time deposits by schedule of maturities

Estimated uninsured time deposits by schedule of maturities

3 months or less $ 115,498

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Uninsured time deposits $ 350,078

On May 28, 2021, the Company entered into a Second Amended and Restated Credit Agreement, pursuant to which we have 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.

4 Core deposits is a non-GAAP financial measure.

For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “ Item 1.

Business—Non-GAAP Financial Information ” included in this Annual Report.

First Busey Corporation | 2023 — 82

Table of Contents Contents of Item 7.

On May 28, 2021, Busey entered into a Second Amended and Restated Credit Agreement, pursuant to which we have access to (1) a $40.0 million revolving line of credit with an initial termination date of April 30, 2022, and (2) a $60.0 million Term Loan with a maturity date of May 31, 2026.

The loans had an annual interest rate of 1.75% plus the one-month LIBOR rate.

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Under the terms of the amendment, the loans now have an annual interest rate of 1.80% plus the one-month forward-looking term rate based on SOFR.

On April 30, 2023, the agreement was further amended to extend the term for the revolving line of credit to April 30, 2024.

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 total outstanding balance on the Term Loan was $30.0 million as of December 31, 2023, of which $12.0 million was short-term and $18.0 million was long-term.

Quarterly payments on the Term Loan reduce the outstanding principal balance by $3.0 million each quarter.

As of December 31, 2023, there was no balance outstanding on the revolving credit facility.

The revolving credit facility incurs a non-usage fee based on any undrawn amounts.

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Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature daily.

Short-term borrowings include FHLB advances which mature in less than one year from the date of origination, and the current portion of long-term debt due within 12 months.

Short-term borrowings include FHLB advances that mature in less than one year from the date of origination, and the current portion of long-term debt due within 12 months.

First Busey Corporation | 2023 — 83

Table of Contents Contents of Item 7.

The following table sets forth the distribution of securities sold under agreements to repurchase and short-term borrowings, as well as the weighted average interest rates thereon (dollars in thousands) :

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The weighted average interest rate is computed by dividing total interest for the period by the average daily balance outstanding.

Long-term Debt

In addition to the term loan, long-term debt includes funds borrowed from the FHLB which totaled $4.1 million at December 31, 2021.

We did not have any funds borrowed from the FHLB included in long-term debt as of December 31, 2022.

Senior and Subordinated Notes

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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, we 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.

On June 1, 2020, Busey 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 regulatory purposes, 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.

Interest on the subordinated notes is 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 First Busey.

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 subordinated notes are unsecured obligations of the Company.

First Busey Corporation | 2023 — 84

Table of Contents Contents of Item 7.

On June 2, 2022, Busey 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.

Interest on the subordinated notes will accrue at a rate equal to (1) 5.000% per annum from the original issue date to, but excluding, June 15, 2027, payable semiannually in arrears, and (2) a floating rate per annum equal to a benchmark rate, which is expected to be the Three-Month Term SOFR (as defined in the subordinated notes), plus a spread of 252 basis points from and including, June 15, 2027, payable quarterly in arrears.

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) :

Unamortized debt issuance costs related to subordinated notes are presented in the following table (dollars in thousands) :

As of December 31,

Unamortized debt issuance costs

Senior notes issued in 2017 $ — $ 56

Subordinated notes issued in 2020 $ 735 $ 1,220

Subordinated notes issued in 2022 1,383 1,742

Subordinated notes issued in 2022 1,742 —

Total unamortized debt issuance costs $ 2,118 $ 2,962

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 First Busey, which are the sole assets of each trust.

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 Busey, which are the sole assets of each trust.

Concurrent with the issuance of the trust preferred securities, we issued guarantees for the benefit of the holders of the trust preferred securities.

The trust preferred securities are instruments that qualify, and are treated by First Busey, as Tier 1 regulatory capital.

First Busey owns all of the common securities of each trust.

The trust preferred securities are instruments that qualify, and are treated, as Tier 1 regulatory capital.

Busey 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.

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Balances of these assets are dependent on our operating, investing, lending, and financing activities during any given period.

First Busey Corporation | 2023 — 85

Table of Contents Contents of Item 7.

Average liquid assets are summarized in the table below (dollars in thousands) :

4 unchanged sentences

Interest-bearing bank deposits 214,422 290,875 630,687

Federal funds sold — — —

Total average liquid assets $ 330,952 $ 411,785 $ 764,398

Average liquid assets as a percent of average total assets 2.7 % 3.3 % 6.4 %

First Busey’s primary sources of funds consist of deposits, investment maturities and sales, loan principal repayments, and capital funds.

Cash and unencumbered securities on our Consolidated Balance Sheets are summarized as follows for the periods presented (dollars in thousands) :

3 unchanged sentences

Debt securities available for sale 2,087,571 2,461,393

Debt securities pledged as collateral (746,675) (708,939)

Debt securities available for sale pledged as collateral (649,769) (746,675)

Cash and unencumbered securities $ 2,157,383 $ 1,941,882

Additional liquidity is provided by the ability to borrow from the FHLB, the Federal Reserve Bank, First Busey’s revolving credit facility, or to utilize brokered deposits, as summarized in the table below (dollars in thousands) :

Busey’s primary sources of funds consist of deposits, investment maturities and sales, loan principal repayments, and capital funds.

Additional liquidity is provided by the ability to borrow from the FHLB, the Federal Reserve Bank, and our revolving credit facility, as summarized in the table below (dollars in thousands) :

As of December 31,

Additional borrowing capacity available from:

Additional available borrowing capacity

FHLB $ 1,898,737 $ 1,765,388

Federal Reserve Bank 598,878 659,680

Federal funds purchased 482,500 482,500

Revolving credit facility 40,000 40,000

Additional borrowing capacity $ 3,020,115 $ 2,947,568

Further, the company could utilize brokered deposits as additional sources of liquidity, as needed.

As of December 31, 2023, management believed that adequate liquidity existed to meet all projected cash flow obligations.

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Our ability to pay cash dividends to our stockholders and to service our debt is dependent on the receipt of cash dividends from our subsidiaries.

Busey Bank paid dividends to First Busey totaling $95.0 million and $60.0 million for the years ended December 31, 2022, and 2021, respectively.

Busey Bank paid dividends to First Busey Corporation totaling $90.0 million and $95.0 million for the years ended December 31, 2023, and 2022, respectively.

First Busey Corporation | 2023 — 86

Table of Contents Contents of Item 7.

Off-Balance-Sheet Arrangements

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Contractual Obligations

We have entered into certain contractual obligations and other commitments which generally relate to funding of operations through deposits, debt issuance, and property and equipment leases.

We have entered into certain contractual obligations and other commitments that generally relate to funding of operations through deposits, debt issuance, and property and equipment leases.

The following table summarizes significant contractual obligations and other commitments, excluding short-term borrowings and the current portion of long-term debt, as of December 31, 2023, (dollars in thousands) :

16 unchanged sentences

Commitments to extend credit and standby letters of credit $ 2,176,496

Net cash flows provided by operating activities totaled $165.8 million in 2022, compared to $162.0 million in 2021.

Significant items affecting the cash flows provided by operating activities include net income;

the provision for credit losses;

depreciation and amortization;

gain on sales of mortgage loans, net of origination costs and activities related to the origination and sales of loans held for sale;

and stock-based compensation.

Net cash used to originate mortgage loans held for sale totaled $24.3 million in 2022, compared to $31.7 million of in 2021.

Fluctuations in sales are a function of changes in market rates for mortgage loans, which influence refinance activity.

Our provision for credit losses reflects a provision expense of $4.6 million in 2022, compared to a reserve release of $15.1 million in 2021.

Stock-based compensation increased to $9.0 million in 2022, compared to $7.9 million in 2021.

Net cash used in investing activities totaled $290.9 million in 2022, compared to $829.2 million in 2021.

Significant investment activities are those associated with managing First Busey’s investment and loan portfolios, as well as acquisition activities.

We purchased $280.1 million of debt securities available for sale in 2022, compared to $2.3 billion in 2021.

In 2021, investing outflows were partially offset with $228.3 million net cash received in connection with the CAC acquisition.

Net cash used in financing activities totaled $483.9 million in 2022, compared to $814.7 million provided by financing activities in 2021.

Significant items affecting cash flows from financing activities are debt issuance, deposits, short-term borrowings, long-term debt, payment of dividends, and proceeds and redemption from stock issuances.

Deposits, which represent First Busey’s primary funding source, decreased by $696.9 million in 2022, compared to an increase of $767.5 million in 2021, excluding acquired deposits.

Proceeds from FHLB advances totaled $335.0 million in 2022, compared to $5.0 million in 2021.

First Busey Corporation | 2023 — 87

Table of Contents Contents of Item 7.

Busey’s cash flows consist of operating activities, investing activities, and financing activities.

Net cash flows provided by operating activities totaled $173.4 million in 2023, compared to $165.9 million provided by operating activities in 2022.

Significant operating activities affecting cash flows include net income, depreciation and amortization, and mortgage loan sale activity.

Fluctuations in sales of loans held for sale are a function of changes in market rates for mortgage loans, which influence refinance activity.

Net cash provided by investing activities totaled $551.0 million in 2023, compared to $291.0 million used in investing activities in 2022.

Significant investing activities are those associated with managing Busey’s investment and loan portfolios.

Net cash used in financing activities totaled $232.0 million in 2023, compared to $483.9 million used in financing activities in 2022.

Significant financing activities affecting cash flows include deposit and other borrowings, as well as cash dividends paid.

For additional detail, see the Consolidated Statemen ts of Cash F lo ws .

Capital Resources

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In order to refrain from restrictions on dividends, equity repurchases, and discretionary bonus payments, banking institutions must maintain capital in excess of regulatory minimum capital requirements.

The table below presents minimum capital ratios with capital buffer and capital ratios for First Busey and Busey Bank as of December 31, 2022.

The table below presents minimum capital ratios that include the capital conservation buffer in comparison to the capital ratios for First Busey and Busey Bank as of December 31, 2023.

Minimum Capital Requirements with

Capital Buffer As of December 31, 2023

Corporation Busey

Common Equity Tier 1 Capital to Risk Weighted Assets 7.00 % 13.09 % 15.48 %

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We review new accounting standards as issued.

Information relating to accounting pronouncements applicable to First Busey appears in “ Note 1.

Information relating to accounting pronouncements applicable to Busey appears in “ Note 1.

Significant Accounting Policies ” in the Notes to the Consolidated Financial Statements.

First Busey Corporation | 2023 — 88

Table of Contents Contents of Item 7.

EFFECTS OF INFLATION

6 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk .”

First Busey Corporation | 2023 — 89

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis