What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-23 compared with 2023-02-23 · 1120 added, 742 removed, 1574 unchanged (54% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Contents of Item 8.

Financial Statements & Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 49 )

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Significant Accounting Policies

Note 2 – Acquisitions

Note 3 – Debt Securities

Note 4 – Portfolio Loans

Note 5 – Other Real Estate Owned and Other Repossessed Assets

Note 6 – Premises and Equipment

Note 7 – Goodwill and Other Intangible Assets

Note 8 – Deposits

Note 9 – Borrowings

Note 10 – Junior Subordinated Debt Owed to Unconsolidated Trusts

Note 11 – Regulatory Capital

Note 12 – Income Taxes

Note 13 – Employee Benefit Plans

Note 14 – Stock-based Compensation

Note 15 – Transactions with Related Parties

Note 16 – Outstanding Commitments and Contingent Liabilities

Note 17 – Derivative Financial Instruments

Note 18 – Fair Value Measurements

Note 19 – Earnings Per Share

Note 20 – Accumulated Other Comprehensive Income (Loss)

Note 21 – Operating Segments and Related Information

Note 22 – Leases

Note 23 – Parent Company Only Financial Information

Report of Independent Registered Public Accounting Firm

Stockholders and the Board of Directors of

Significant Accounting Policies

Debt Securities

Portfolio Loans

Other Real Estate Owned and Other Repossessed Assets

Premises and Equipment

Goodwill and Other Intangible Assets

Junior Subordinated Debt Owed to Unconsolidated Trusts

Regulatory Capital

Employee Benefit Plans

Stock-based Compensation

Transactions with Related Parties

Outstanding Commitments and Contingent Liabilities

Derivative Financial Instruments

Fair Value Measurements

Earnings Per Share

Accumulated Other Comprehensive Income (Loss)

Operating Segments and Related Information

Parent Company Only Financial Information

First Busey Corporation | 2023 — 91

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of First Busey Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of First Busey Corporation and Subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes to the consolidated financial statements (collectively, the financial statements).

We have audited the accompanying consolidated balance sheets of First Busey Corporation and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

6 unchanged sentences

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

5 unchanged sentences

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

First Busey Corporation | 2023 — 92

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

Allowance for Credit Losses on Loans—Adjustments to Historical Loss Factors

1 unchanged sentence

The allowance for credit losses is measured on a collective loan pool basis when similar risk characteristics exist.

Loans that do not share similar risk characteristics are evaluated on an individual basis, at the balance sheet date.

On a case‑by‑case basis, a loan may be evaluated on an individual basis based on disparate risk characteristics.

The measurement of expected credit losses on collectively evaluated loans is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the amortized cost basis.

1 unchanged sentence

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

We identified the adjustments to historical loss factors components of the allowance for credit losses as a critical audit matter as auditing the underlying adjustments required significant auditor judgment as amounts determined by management rely on analysis that is highly subjective and includes significant estimation uncertainty.

We identified the adjustments to historical loss factors component of the allowance for credit losses as a critical audit matter, as auditing the underlying adjustments required significant auditor judgment as amounts determined by management rely on analysis that is highly subjective and includes significant estimation uncertainty.

Our audit procedures related to the adjustments to historical factors within the allowance for credit losses include the following, among others:

• We obtained an understanding of the relevant controls related to the adjustments to historical factors in the calculation of the allowance for credit losses and tested such controls for design and operating effectiveness, including management’s review of the allowance memo and calculation in support of adjustments.

• We tested the completeness and accuracy of data used by management in determining adjustments to historical loss factors by agreeing the supporting data to internal or external source data.

• We tested management’s conclusions regarding the appropriateness of the adjustments, including magnitude and directional consistency, to historical loss factors and agreed the impact to the allowance for credit losses calculation.

• We tested the completeness and accuracy of data used by management in determining adjustments to historical loss factors including testing the supporting data for agreement to internal or external source data.

• We tested management’s conclusions regarding the appropriateness of the adjustments, including magnitude and directional consistency, to historical loss factors included in the allowance for credit losses calculation.

/s/ RSM US LLP

We or our predecessor firms have served as the Company’s auditor since at least 1980;

however, an earlier year could not be established.

/s/ RSM US LLP

Champaign, Illinois

1 unchanged sentence

First Busey Corporation | 2023 — 93

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

8 unchanged sentences

Equity securities 9,812 11,535

Loans held for sale (2022 at LOCOM, 2021 at fair value) 1,253 23,875

Loans held for sale 2,379 1,253

Portfolio loans (net of ACL of $ 91,740 at December 31, 2023;

15 unchanged sentences

Long-term debt 18,000 30,000

Senior notes, net of unamortized issuance costs — 39,944

Subordinated notes, net of unamortized issuance costs 222,882 222,038

15 unchanged sentences

Common shares issued 58,116,969 58,116,970

Less treasury shares ( 2,837,846 ) ( 2,682,060 )

Treasury shares ( 2,872,850 ) ( 2,837,846 )

Common shares outstanding 55,244,119 55,279,124

1 unchanged sentence

First Busey Corporation | 2023 — 94

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

39 unchanged sentences

Interchange expense 6,864 6,298 5,792

FDIC insurance 5,650 4,058 3,083

Other expense 44,161 48,333 40,261

8 unchanged sentences

First Busey Corporation | 2023 — 95

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

11 unchanged sentences

Amortization of unrecognized losses on securities transferred to held to maturity, net of taxes of $( 1,763 ), $( 1,893 ), and $ — , respectively

4,426 4,745 —

Net change in unrealized/unrecognized gains (losses) on debt securities 50,184 ( 229,220 ) ( 58,566 )

3 unchanged sentences

Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of $( 2,443 ), $( 166 ), and $( 304 ), respectively

6,126 417 763

Net change in unrealized gains (losses) on cash flow hedges 4,291 ( 20,300 ) 1,499

3 unchanged sentences

First Busey Corporation | 2023 — 96

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

2 unchanged sentences

Stock Additional

Capital Retained

Deficit) AOCI Treasury Stock Total

Capital Retained Earnings AOCI Treasury Stock Total

Stockholders'

Balance, December 31, 2020 54,404,379 $ 56 $ 1,253,360 $ 20,830 $ 33,309 $ ( 37,486 ) $ 1,270,069

Cumulative effect of change in accounting principle (ASU 2016-13) — — — ( 15,922 ) — — ( 15,922 )

Net income — — — 123,449 — — 123,449

OCI, net of tax — — — — ( 57,067 ) — ( 57,067 )

Stock issued in acquisition, net of stock issuance costs 2,206,237 2 58,953 — — — 58,955

Repurchase of stock ( 1,323,000 ) — — — — ( 33,043 ) ( 33,043 )

Issuance of treasury stock for ESPP 32,063 — ( 59 ) — — 606 547

Net issuance of treasury stock for RSU/DSU vesting and related tax 106,589 — ( 2,648 ) — — 2,013 ( 635 )

Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax 8,069 — ( 51 ) — — 152 101

Issuance of treasury stock for the 2021 ESPP 30,390 — ( 136 ) — — 782 646

Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax 116,904 — ( 4,109 ) — — 3,112 ( 997 )

Cash dividends common stock at $ 0.92 per share

— — — ( 50,764 ) — — ( 50,764 )

Stock dividend equivalents RSUs at $ 0.88 per share

— — 767 ( 767 ) — — —

Stock dividend equivalents on RSUs/PSUs/DSUs — — 1,052 ( 1,052 ) — — —

Stock-based compensation — — 7,864 — — — 7,864

2 unchanged sentences

OCI, net of tax — — — — ( 249,520 ) — ( 249,520 )

Stock issued in acquisition, net of stock issuance costs 2,206,237 2 58,953 — — — 58,955

Repurchase of stock ( 388,614 ) — — — — ( 9,912 ) ( 9,912 )

Issuance of treasury stock for ESPP 30,390 — ( 136 ) — — 782 646

Net issuance of treasury stock for RSU/DSU vesting and related tax 116,904 — ( 4,109 ) — — 3,112 ( 997 )

Issuance of treasury stock for the 2021 ESPP 57,385 — ( 320 ) — — 1,477 1,157

Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax 175,225 — ( 5,789 ) — — 4,513 ( 1,276 )

Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax 218 — ( 5 ) — — 5 —

Cash dividends common stock at $ 0.92 per share

— — — ( 50,863 ) — — ( 50,863 )

Stock dividend equivalents RSUs at $ 0.92 per share

— — 1,052 ( 1,052 ) — — —

Stock dividend equivalents on RSUs/PSUs/DSUs — — 1,142 ( 1,142 ) — — —

Stock-based compensation — — 8,968 — — — 8,968

3 unchanged sentences

Repurchase of stock ( 227,935 ) — — — — ( 4,482 ) ( 4,482 )

Issuance of treasury stock for ESPP 57,385 — ( 320 ) — — 1,477 1,157

Net issuance of treasury stock for RSU/DSU vesting and related tax 175,225 — ( 5,789 ) — — 4,513 ( 1,276 )

Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax 218 — ( 5 ) — — 5 —

Issuance of treasury stock for the 2021 ESPP 59,845 — ( 530 ) — — 1,541 1,011

Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax 132,091 — ( 4,494 ) — — 3,401 ( 1,093 )

Net issuance of treasury stock for warrants exercised 994 — ( 17 ) — — 26 9

Cash dividends common stock at $ 0.96 per share

— — — ( 53,076 ) — — ( 53,076 )

Stock dividend equivalents RSUs at $ 0.92 per share

— — 1,142 ( 1,142 ) — — —

Stock dividend equivalents on RSUs/PSUs/DSUs — — 1,061 ( 1,061 ) — — —

Stock-based compensation — — 6,595 — — — 6,595

2 unchanged sentences

First Busey Corporation | 2023 — 97

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

22 unchanged sentences

(Gain) loss on sales of loans, net ( 733 ) ( 1,944 ) ( 9,323 )

(Gain) loss on sales of OREO ( 54 ) 174 ( 133 )

(Gain) loss on sales of OREO and other repossessed assets ( 46 ) 54 174

(Gain) loss on sales of premises and equipment ( 450 ) ( 825 ) ( 1,023 )

17 unchanged sentences

Proceeds from the redemption of FHLB and other bank stock 43,926 225 —

Net cash received in (paid for) acquisitions (see Note 2) — 228,279 —

Net cash received in (paid for) acquisitions

Net (increase) decrease in loans 65,240 ( 541,713 ) 76,826

3 unchanged sentences

Proceeds from disposition of premises and equipment 4,425 4,528 7,306

Proceeds from sales of OREO 3,184 1,590 1,439

Proceeds from sales of OREO and other repossessed assets, including cash payments collected 860 3,076 1,590

Net cash provided by (used in) investing activities $ 550,987 $ ( 290,964 ) $ ( 829,190 )

First Busey Corporation | 2023 — 98

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

4 unchanged sentences

Net increase (decrease) in deposits $ 220,146 $ ( 696,894 ) $ 767,474

Net change in federal funds purchased and securities sold under agreements to repurchase ( 40,333 ) 77,874 ( 29,877 )

Proceeds from FHLB advances 335,000 5,000 4,000

Repayment of FHLB advances ( 5,678 ) ( 4,658 ) ( 32,711 )

Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase ( 42,410 ) ( 40,333 ) 77,874

Net increase (decrease) in short-term borrowings ( 335,000 ) 330,000 1,000

Proceeds from other borrowings, net of debt issuance costs — 98,094 72,500

3 unchanged sentences

Cash paid for withholding taxes on stock-based payments ( 1,093 ) ( 1,276 ) ( 997 )

Proceeds from stock options exercised — — 101

Proceeds from stock warrants exercised 9 — —

Common stock issuance costs — — ( 150 )

13 unchanged sentences

First Busey Corporation | 2023 — 99

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

First Busey Corporation is a financial holding company organized under the laws of Nevada.

The Company’s subsidiaries provide retail and commercial banking services and payment technology solutions, and offer a full range of financial products and services including depository, lending, security brokerage, investment management, and fiduciary services, to individual, corporate, institutional, and governmental customers through their locations in Illinois, Missouri, southwest Florida and Indianapolis, Indiana.

The Company and its subsidiaries are subject to the regulations of certain regulatory agencies and undergo periodic examinations by those regulatory agencies.

The significant accounting and reporting policies for the Company and its subsidiaries follow:

First Busey Corporation’s subsidiaries provide retail and commercial banking services and payment technology solutions, and offer a full range of financial products and services including depository, lending, security brokerage, investment management, and fiduciary services, to individual, corporate, institutional, and governmental customers through their locations in Illinois, Missouri, southwest Florida and Indianapolis, Indiana.

First Busey Corporation and its subsidiaries are subject to the regulations of certain regulatory agencies and undergo periodic examinations by those regulatory agencies.

Significant accounting and reporting policies for First Busey Corporation and its subsidiaries follow:

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, which include First Busey Risk Management, Deed of Trust Services Corporation, and Busey Bank, including Busey Bank’s wholly-owned subsidiaries FirsTech, Pulaski Service Corporation, and Busey Capital Management, Inc.

Operating results generated from acquired businesses are included with the Company’s results of operations starting from each date of acquisition.

The Company and its subsidiaries maintain various LLCs that hold specific assets for risk mitigation purposes and are consolidated into these Consolidated Financial Statements.

Busey’s Consolidated Financial Statements include the accounts of First Busey Corporation and its subsidiaries, which include First Busey Risk Management (dissolved December 18, 2023), Deed of Trust Services Corporation, and Busey Bank, including Busey Bank’s wholly-owned subsidiaries FirsTech, Pulaski Service Corporation, and Busey Capital Management, Inc.

Operating results generated from acquired businesses are included with Busey’s results of operations starting from each date of acquisition.

First Busey Corporation and its subsidiaries maintain various limited liability companies that hold specific assets for risk mitigation purposes and are consolidated into Busey’s Consolidated Financial Statements .

Intercompany balances and transactions have been eliminated in consolidation.

Because the Company is not the primary beneficiary, the Consolidated Financial Statements exclude the following wholly-owned variable interest entities:

Because Busey is not the primary beneficiary, the Consolidated Financial Statements exclude the following wholly-owned variable interest entities:

First Busey Statutory Trust II, First Busey Statutory Trust III, First Busey Statutory Trust IV, Pulaski Financial Statutory Trust I, and Pulaski Financial Statutory Trust II.

Use of Estimates

In preparing the accompanying Consolidated Financial Statements in conformity with GAAP, the Company’s management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the disclosures provided.

In preparing the accompanying Consolidated Financial Statements in conformity with GAAP, Busey’s management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the disclosures provided.

Actual results could differ from those estimates.

2 unchanged sentences

Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in net income.

Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale debt securities and unrealized gains and losses on cash flow hedges, are reported as a separate component within the equity section of the balance sheet, such items, along with net income, are components of comprehensive income (loss).

Assets held for customers in a fiduciary or agency capacity, other than trust cash on deposit at Busey Bank, are not assets of the Company and, accordingly, are not included in the accompanying Consolidated Financial Statements.

The Company had assets under care of $ 11.1 billion at December 31, 2022, and $ 12.7 billion at December 31, 2021.

Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale debt securities and unrealized gains and losses on cash flow hedges, are reported net of taxes as a separate component within the equity section of the balance sheet, such items, along with net income, are components of comprehensive income (loss).

First Busey Corporation | 2023 — 100

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Assets held for customers in a fiduciary or agency capacity, other than trust cash on deposit at Busey Bank, are not Busey’s assets and, accordingly, are not included in the accompanying Consolidated Financial Statements .

Busey had assets under care of $ 12.1 billion at December 31, 2023, and $ 11.1 billion at December 31, 2022.

Cash and Cash Equivalents

1 unchanged sentence

The carrying amount of these instruments is considered a reasonable estimate of fair value.

The Company maintains its cash in deposit accounts, the balance of which, at times, may exceed federally insured limits.

The Company has not experienced any losses in such accounts.

Management believes the Company is not exposed to any significant credit risk on cash and cash equivalents.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt securities classified as available for sale are those debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity.

Any decision to sell a security classified as available for sale would be based on factors including significant movements in interest rates, changes in the maturity mix of the Company's assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors.

Debt securities available for sale are carried at fair value, with unrealized gains and losses reported in other comprehensive income (loss), net of taxes.

Busey maintains its cash in deposit accounts, the balance of which, at times, may exceed federally insured limits.

Busey has not experienced any losses in such accounts.

Management believes Busey is not exposed to any significant credit risk on cash and cash equivalents.

Debt Securities Available for Sale

Debt securities classified as available for sale are those debt securities that Busey intends to hold for an indefinite period of time, but not necessarily to maturity.

Any decision to sell a security classified as available for sale would be based on factors including significant movements in interest rates, changes in the maturity mix of Busey's assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors.

Debt securities available for sale are carried at fair value, with unrealized gains and losses reported in OCI, net of taxes.

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities.

2 unchanged sentences

Debt securities available for sale are not within the scope of the current expected credit losses methodology, however, the accounting for credit losses on these securities is affected by ASC Subtopic 326-30 “Financial Instruments-Credit Losses—Available-for-Sale Debt Securities.” A debt security available for sale is impaired if the fair value of the security declines below its amortized cost basis.

To determine the appropriate accounting, the Company must first determine if it intends to sell the security or if it is more likely than not that it will be required to sell the security before the fair value increases to at least the amortized cost basis.

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

To determine the appropriate accounting, Busey must first determine if it intends to sell the security or if it is more likely than not that it will be required to sell the security before the fair value increases to at least the amortized cost basis.

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

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

If the Company neither intends to sell the security, nor believes it more likely than not will be required to sell the security, before the fair value recovers to the amortized cost basis, the Company must determine whether any of the decline in fair value has resulted from a credit loss, or if it is entirely the result of noncredit factors.

The Company considers the following factors in assessing whether the decline is due to a credit loss:

If Busey neither intends to sell the security nor believes it is more likely than not that the Company will be required to sell the security before the fair value recovers to the amortized cost basis, Busey 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.

Busey considers the following factors in assessing whether the decline is due to a credit loss:

• Extent to which the fair value is less than the amortized cost basis;

• Adverse conditions specifically related to the security, an industry, or a geographic area (for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, in the financial condition of the underlying loan obligors);

First Busey Corporation | 2023 — 101

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future;

3 unchanged sentences

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

Impairment is recognized by establishing an ACL through provision for credit losses.

Impairment 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.

The Company did not recognize any impairment in 2022, 2021, or 2020.

Debt securities classified as held to maturity are those debt securities that the Company has the intent and ability to hold to maturity and are carried at amortized cost.

In 2022, the Company elected to transfer a portion of the agency mortgage-backed securities portfolio from available for sale to held to maturity.

Busey did not recognize any credit impairment in 2023, 2022, or 2021.

Debt Securities Held to Maturity

Debt securities classified as held to maturity are those debt securities that Busey has the intent and ability to hold to maturity and are carried at amortized cost.

In 2022, Busey elected to transfer a portion of the agency mortgage-backed securities portfolio from available for sale to held to maturity.

While held to maturity securities are within the scope of CECL, the standard allows for an assumption of zero credit losses when the expectation of non-payment is zero.

4 unchanged sentences

Accrued interest receivable is reported in other assets on the Consolidated Balance Sheets .

Equity Securities

Equity securities are carried at fair value with changes in fair value recognized in earnings.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans Held for Sale

Loans held for sale include mortgage loans which the Company intends to sell to investors and/or the secondary mortgage market.

Effective January 1, 2022, the Company elected to account for all newly originated loans held for sale at LOCOM.

Loans held for sale include mortgage loans which Busey intends to sell to investors and/or the secondary mortgage market.

Busey accounts for loans held for sale at LOCOM.

Loans held for sale are carried at amortized historical cost less loan write-offs and downward fair value adjustments, as may be applicable.

1 unchanged sentence

Gains and losses on sales of loans are recognized at settlement dates and are determined by the difference between the sales proceeds and the carrying amount, net of the value of any servicing assets for loans that were sold with servicing rights retained.

Prior to this change, the Company accounted for loans held for sale at fair value.

Loans held for sale were recorded at fair value, with changes in fair value recognized in earnings.

Fair value adjustments were recorded as an adjustment to mortgage revenues.

The fair value of loans held for sale was measured using observable quoted market prices, contract prices, or market price equivalents, consistent with those used by other market participants.

Direct loan origination fees and costs related to loans accounted for at fair value were recognized when earned.

Loan Servicing

Servicing assets are recognized when servicing rights are acquired or retained through the sale of mortgage and government-guaranteed commercial loans.

The unpaid principal balances of loans serviced by the Company for the benefit of others totaled $ 1.7 billion as of December 31, 2022, and are not included in the accompanying Consolidated Balance Sheets.

The unpaid principal balances of loans serviced by Busey for the benefit of others totaled $ 1.5 billion as of December 31, 2023, and $ 1.7 billion as of December 31, 2022, and are not included in the accompanying Consolidated Balance Sheets .

Servicing rights are initially recorded at fair value, which is determined using a valuation model that calculates the present value of estimated future net servicing income.

2 unchanged sentences

The amortization of government-guaranteed commercial loans is included in other income.

First Busey Corporation | 2023 — 102

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Servicing rights are periodically evaluated for impairment based on the fair value of those rights as compared to book value.

2 unchanged sentences

A valuation allowance is recognized in the amount by which the amortized cost of the rights for each stratum exceeds its fair value, if any.

If the Company later determines that all or a portion of the impairment no longer exists for a particular group of loans, a reversal of the allowance may be recorded in current period earnings.

The Company had an insignificant amount of impairment recorded at December 31, 2022 and 2021.

If Busey later determines that all or a portion of the impairment no longer exists for a particular group of loans, a reversal of the allowance may be recorded in current period earnings.

Busey had an immaterial amount of impairment recorded at December 31, 2023 and 2022.

Servicing fee income is recorded for fees earned for servicing loans.

1 unchanged sentence

Portfolio Loans

Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, are reported at the principal balance outstanding, net of purchase premiums and discounts, or net deferred origination fees or costs, charge-offs, and the ACL.

Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, are reported at the principal balance outstanding, net of purchase premiums and discounts, deferred origination fees and costs, charge-offs, and the ACL.

Loan origination fees, net of certain direct loan origination costs, are deferred and the net amount is amortized as an adjustment of the related loan’s yield.

The Company amortizes the net amount over the contractual life of the related loan.

Busey amortizes the net amount over the contractual life of the related loan.

Interest income is accrued daily on outstanding loan balances.

2 unchanged sentences

Past due status is based on the contractual terms of the loan.

Interest accrued but not collected for loans that are placed on non-accrual status or charged-off is reversed against interest income.

Interest accrued but not collected for loans that are charged-off or placed on non-accrual status is reversed against interest income.

The interest on non-accrual loans is accounted for on the cost-recovery method, until returned to accrual status.

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

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2022, the Company had $ 0.9 million in PPP loans outstanding, with an amortized cost of $ 0.8 million.

In comparison, at December 31, 2021, the Company had $ 76.9 million in PPP loans outstanding, with an amortized cost of $ 75.0 million.

The Company received fees totaling $ 2.5 million, $ 20.1 million, and $ 25.4 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Incremental direct origination costs the Company incurred were $ 0.6 million, $ 4.2 million, and $ 5.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Both the fees received and the origination costs have been deferred and are being amortized over the contractual life of these loans, subject to prepayment.

The Company recognized $ 1.9 million, $ 14.0 million, and $ 15.2 million in net interest income for fees, net of deferred cost, during the years ended December 31, 2022, 2021, and 2020, respectively.

As of December 31, 2022, the remaining amount of fees to be recognized, net of deferred costs, was insignificant.

Busey had $ 0.3 million in PPP loans outstanding as of December 31, 2023.

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

Busey received an immaterial amount of fees related to these loans for the year ended December 31, 2023, and received fees totaling $ 2.5 million and $ 20.1 million for the years ended December 31, 2022, and 2021, respectively.

Incremental direct origination costs Busey incurred were immaterial for the year ended December 31, 2023, and were $ 0.6 million and $ 4.2 million for the years ended December 31, 2022, and 2021, respectively.

Both the fees received and the origination costs were deferred and are amortized over the contractual life of these loans, subject to prepayment.

Busey recognized an immaterial amount in net interest income for fees, net of deferred cost, during the year ended December 31, 2023, and recognized $ 1.9 million and $ 14.0 million during the years ended December 31, 2022, and 2021, respectively.

As of December 31, 2023, the remaining amount of fees to be recognized, net of deferred costs, was immaterial.

PPP loans contain a forgiveness feature for funds spent on covered expenses, including both principal and accrued interest.

Any remaining balance after loan forgiveness maintains a 100 % government guarantee for the remaining term of the loan.

Troubled Debt Restructurings

The Company’s loan portfolio includes certain loans that have been modified in a TDR, where concessions have been granted to borrowers who have experienced financial difficulties.

The Company will restructure a loan for its customer after evaluating whether the borrower is able to meet the terms of the loan over the long term, though unable to meet the terms of the loan in the near term due to individual circumstances.

The Company considers the customer’s past performance, previous and current credit history, the individual circumstances surrounding the customer’s current difficulties, and the customer’s plan to meet the terms of the loan in the future prior to restructuring the terms of the loan.

Generally, restructurings consist of short-term interest rate relief, short-term principal payment relief, short-term principal and interest payment relief, or forbearance (debt forgiveness).

A restructured loan that exceeds 90 days past due or is placed on non-accrual status, is classified as non-performing.

All TDRs are individually evaluated for purposes of assessing the adequacy of the ACL and for financial reporting purposes.

TDRs are evaluated using present value of the expected future cash flows discounted at the loan’s original effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.

If the Company determines that the fair value of the TDR is less than the recorded investment in the loan, impairment is recognized through a charge to the ACL in the period of the modification and in periods subsequent to the modification.

Modified loans with payment deferrals that fall under the CARES Act or revised Interagency Statement that suspended requirements under GAAP related to TDR classifications are not included in the Company’s TDR totals.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loan Modifications

On January 1, 2023, Busey adopted ASU 2022-02 “Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures,” which eliminated the TDR accounting model for creditors that have already adopted CECL.

In lieu of the TDR accounting model, loan refinancing and restructuring guidance in ASC Subtopic 310-20-35-9 through 35-11 “Receivables—Nonrefundable Fees and Other Costs—Subsequent Measurement—Loan Refinancing or Restructuring” will apply to all loan modifications, including those made for borrowers experiencing financial difficulty.

This standard also enhances disclosure requirements related to certain loan modifications.

Assets Purchased with Credit Deterioration

On January 1, 2020, First Busey adopted ASC Topic 326 “Financial Instruments-Credit Losses” using the prospective transition approach for financial assets PCD that were previously classified as PCI and accounted for under ASC Subtopic 310-30 “Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality.” In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption.

On January 1, 2020, Busey adopted ASC Topic 326 “Financial Instruments-Credit Losses” using the prospective transition approach for financial assets PCD that were previously classified as PCI and accounted for under ASC Subtopic 310-30 “Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality.” In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption.

In accordance with ASC Topic 326, the amortized cost basis of PCD assets were adjusted to reflect an ACL for any remaining credit discount.

Subsequent changes in expected cash flows will be adjusted through the ACL.

The noncredit discount will be accreted into interest income at the effective interest rate as of January 1, 2020.

The noncredit discount will be accreted into interest income using the January 1, 2020, effective interest rate.

Subsequent to the adoption of ASC Topic 326, acquired loans are separated into two categories based on the credit risk characteristics of the underlying borrowers as either PCD, for loans which have experienced more than insignificant credit deterioration since origination, or all other loans.

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For all other loans, an ACL is established immediately after the acquisition through a charge to the provision for credit losses.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Credit Losses

The ACL is a significant estimate in the Company’s Consolidated Financial Statements, affecting both earnings and capital.

The ACL is a significant estimate in Busey’s Consolidated Financial Statements , affecting both earnings and capital.

The ACL is a valuation account that is deducted from the portfolio loans’ amortized cost bases to present the net amount expected to be collected on the portfolio loans.

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Recoveries will be recognized up to the aggregate amount of previously charged-off balances.

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

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

A loan’s amortized cost basis is comprised of the unpaid principal balance of the loan, accrued interest receivable, purchase premiums or discounts, and net deferred origination fees or costs.

The Company has estimated its allowance on the amortized cost basis, exclusive of government guaranteed loans and accrued interest receivable.

The Company writes-off uncollectible accrued interest receivable in a timely manner and has elected to not measure an allowance for accrued interest receivable.

The Company presents the aggregate amount of accrued interest receivable for all financial instruments in other assets on the Consolidated Balance Sheets and the balance of accrued interest receivable is disclosed in “ Note 18.

Busey has estimated its allowance on the amortized cost basis, exclusive of government guaranteed loans and accrued interest receivable.

Busey writes-off uncollectible accrued interest receivable in a timely manner and has elected to not measure an allowance for accrued interest receivable.

Busey presents the aggregate amount of accrued interest receivable for all financial instruments in other assets on the Consolidated Balance Sheets and the balance of accrued interest receivable is disclosed in “ Note 18.

Fair Value Measurements.

Our methodology influences, and is influenced by, the Company’s overall credit risk management processes.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

The ACL is measured on a collective pool basis when similar risk characteristics exist.

Loans that do not share risk characteristics are evaluated on an individual basis.

The 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 disparate risk characteristics.

The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the amortized cost basis.

Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions such as changes in unemployment rates, property values, and other relevant factors.

The Company uses four quarters as its reasonable and supportable forecast period.

Due to rapidly changing forecasts around the impact of COVID-19, the Company does not believe it has the current ability to incorporate reasonable and supportable forecasts into its CECL models extending beyond four quarters.

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

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.

Due to the continued economic uncertainty in the markets in which the Company operates, Busey will continue to utilize a forecast period of 12 months with an immediate reversion to historical loss rates beyond this forecast period in its ACL estimate.

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

Premises and Equipment

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A determination is made at inception if an arrangement contains a lease.

For arrangements containing leases, the Company recognizes leases on the Consolidated Balance Sheets as right of use assets and corresponding lease liabilities.

For arrangements containing leases, Busey recognizes leases on the Consolidated Balance Sheets as right of use assets and corresponding lease liabilities.

Lease-related assets, or right of use assets, are recognized on the lease commencement date at amounts equal to the respective lease liabilities, adjusted for prepaid lease payments, initial direct costs, and lease incentives received.

Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rate.

Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

Busey’s lease agreements often include one or more options to renew at Busey’s discretion.

When Busey considers the exercise of a renewal option to be reasonably certain, that renewal term is included in the calculation of the right of use asset and lease liability.

Operating lease expense is recognized on a straight-line basis over the lease term, including any renewal terms available through options to renew that Busey is reasonably certain to exercise.

Variable lease payments are expensed as incurred.

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ASC Topic 842 “Leases” requires the use of the rate implicit in the lease whenever this rate is readily determinable.

If not readily determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

For operating leases existing prior to January 1, 2019, the Company used a borrowing rate that corresponded to the remaining lease term.

The Company’s lease agreements often include one or more options to renew at the Company’s discretion.

If, at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of its right of use assets and lease liabilities.

If not readily determinable, Busey uses its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

For operating leases existing prior to Busey’s adoption of ASC Topic 842 on January 1, 2019, Busey used a borrowing rate that corresponded to the lease term remaining as of the date of adoption of ASC Topic 842.

Long-Lived Assets

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Cash flows used for this analysis are those directly associated with, and that are expected to arise as a direct result of, the use and eventual disposition of the asset.

An impairment loss would be measured by the amount by which the carrying value of the asset exceeds its fair value.

Any impairment loss is measured as the amount by which the carrying value of the asset exceeds its fair value.

Other Real Estate Owned and Other Repossessed Assets

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Any adjustment to fair value at the time of transfer to OREO or other repossessed assets is charged to the ACL.

OREO property and other repossessed assets are evaluated regularly to ensure the recorded amount is supported by its current fair value, and valuation allowances to reduce the carrying amount to fair value less estimated costs to dispose are recorded, as necessary.

OREO property and other repossessed assets are evaluated regularly to ensure the recorded amount is supported by its current fair value;

write downs or valuation allowances to reduce the carrying amount to fair value less estimated costs to dispose are recorded, as necessary.

OREO and other repossessed assets are included in other assets on the Consolidated Balance Sheets .

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Goodwill and Other Intangibles

Goodwill represents the excess of the consideration transferred in a business combination over the fair value of the net assets acquired.

Goodwill represents the excess of consideration transferred in a business combination over the fair value of the net assets acquired.

Goodwill is not amortized but is subject to at least annual impairment assessments.

The Company has established December 31 as the annual impairment assessment date.

Busey has established December 31 as the annual impairment assessment date.

As part of this analysis, each reporting unit's carrying value is compared to its fair value.

The Company estimates the fair value of its reporting units as of the measurement date utilizing valuation methodologies including comparable company analysis and precedent transaction analysis.

Busey estimates the fair value of its reporting units as of the measurement date utilizing valuation methodologies including comparable company analysis and precedent transaction analysis.

Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value.

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Goodwill and Other Intangible Assets ” for further discussion.

Other intangible assets consist of core deposit and acquired customer relationship intangible assets arising from acquisitions and are amortized over their estimated useful lives.

Other intangible assets consist of core deposit and acquired customer relationship intangible assets arising from acquisitions.

Other intangible assets are amortized over their estimated useful lives.

Cash Surrender Value of Bank Owned Life Insurance

The Company has purchased, or acquired through acquisitions, life insurance policies on certain executives and senior officers.

Life insurance is recorded at its cash surrender value, which estimates its fair value.

The Company maintains a liability for post-employment benefits promised to an employee based on an arrangement between the Company and an employee.

In an endorsement split-dollar life insurance arrangement, the employer owns and controls the policy, and the employer and employee split the life insurance policy’s cash surrender value and/or death benefits.

If the employer agrees to maintain a life insurance policy during the employee’s retirement, the present value of the cost of maintaining the insurance policy would be accrued over the employee’s active service period.

Similarly, if the employer agrees to provide the employee with a death benefit, the present value of the death benefit would be accrued over the employee’s active service period.

The Company has an accrued liability of $ 5.6 million as of December 31, 2022, included in other liabilities, for these arrangements, compared with $ 5.5 million as of December 31, 2021.

Busey has purchased, or acquired through acquisitions, life insurance policies on certain executives and senior officers.

Life insurance is recorded at its cash surrender value, which approximates its fair value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Busey maintains a liability for post-employment benefits related to split-dollar life insurance arrangements.

If the employer agrees to maintain a life insurance policy during the employee’s retirement, the present value of the cost of maintaining the insurance policy is accrued over the employee’s active service period.

Similarly, if the employer agrees to provide the employee with a death benefit, the present value of the death benefit is accrued over the employee’s active service period.

Busey accrued liabilities for these arrangements totaling $ 5.6 million as of both December 31, 2023, and 2022.

Liabilities for post-employment benefits are included in other liabilities on the Consolidated Balance Sheets .

Busey Bank is a member of the FHLB system.

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Dividends are reported as income.

The Company's investment in FHLB stock was $ 19.0 million as of December 31, 2022, and $ 6.2 million as of December 31, 2021.

Busey Bank's investment in FHLB stock was $ 6.0 million as of December 31, 2023, and $ 19.0 million as of December 31, 2022.

Other Asset Investments

The Company has invested in certain tax-advantaged projects promoting affordable housing, new markets, and historic rehabilitation.

Busey has invested in certain tax-advantaged projects promoting affordable housing, new markets, and historic rehabilitation.

These investments are designed to generate returns primarily though the realization of federal and state income tax credits and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods.

In addition, the Company has private equities, which are primarily small business investment companies in the financial technology, agricultural, environmental, and affordable housing preservation markets.

These investments are considered to be variable interest entities, and are accounted for under the equity method or deferral method, as appropriate.

The Company is not required to consolidate variable interest entities in which it has concluded it does not have a controlling financial interest, and is not the primary beneficiary.

The following table summarizes the impact of the Company’s other asset investments on our Consolidated Balance Sheets for the periods indicated (dollars in thousands) :

These investments are considered to be variable interest entities, and are accounted for under the equity, deferral, or proportional amortization practical expedient methods, as appropriate.

Busey is not required to consolidate variable interest entities in which it has concluded it does not have a controlling financial interest, and is not the primary beneficiary.

Busey’s maximum exposure to loss related to its investments in these unconsolidated variable interest entities is limited to the carrying amount of the investment, net of any unfunded capital commitments and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level.

Busey believes potential losses from these investments are remote.

In addition, Busey has private equity investments, which are primarily in funds that invest in small businesses across diverse sectors including, but not limited to, financial technology, business services, manufacturing, agribusiness, healthcare, software as a service, and environmental, or supporting the preservation of affordable housing.

The following table summarizes the impact of Busey’s other asset investments on the Company’s Consolidated Balance Sheets for the periods indicated (dollars in thousands) :

As of December 31,

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Unfunded investment obligations Other liabilities $ 58,552 $ 67,437

Further, the Company owns Visa Class B shares, recorded at a nominal carrying value.

These shares are subject to certain transfer restrictions currently and will be convertible into Visa Class A shares upon final resolution of certain litigation matters involving Visa.

During 2023, Busey sold all 16,878 shares of Visa Class B common shares it previously held for a pre-tax gain of approximately $ 5.5 million.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Transfers of Financial Assets

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Control over transferred assets is deemed to be surrendered when:

(i) the assets have been isolated from the Company, (ii) the transferee obtains the right to pledge or exchange the assets it receives, and no condition both constrains the transferee from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the transferor, and (iii) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

The Company is subject to income taxes in U.S.

(1) the assets have been isolated from Busey’s assets, (2) the transferee obtains the right to pledge or exchange the assets it receives, and no condition both constrains the transferee from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the transferor, and (3) Busey does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

Busey is subject to income taxes in U.S.

federal and various state jurisdictions.

The Company and its subsidiaries file consolidated federal and state income tax returns with each subsidiary computing its taxes on a separate entity basis.

First Busey Corporation and its subsidiaries file consolidated federal and state income tax returns with each subsidiary computing its taxes on a separate entity basis.

Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply.

With few exceptions, the Company is no longer subject to U.S.

federal, state, or local tax examinations by tax authorities for the years before 2017.

Busey is no longer subject to U.S.

federal, state, or local income tax examinations by tax authorities for the years before 2020.

Under GAAP, a valuation allowance is required to be recognized if it is more likely than not that the deferred tax assets will not be realized.

The determination of the recoverability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Management believes that it is more likely than not that the deferred tax assets included in the accompanying Consolidated Financial Statements will be fully realized.

The Company determined that no valuation allowance was required as of December 31, 2022, or 2021.

Busey determined that no valuation allowance was required as of December 31, 2023, or 2022.

Positions taken in tax returns may be subject to challenge upon examination by the taxing authorities.

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Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts.

When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in operating expenses.

The Company had no accruals for payments of interest and penalties at December 31, 2022, or 2021.

At December 31, 2022, the Company was not under examination by any tax authority;

however, we have received an inquiry from the State of Illinois regarding our prior franchise tax filings.

In the event the Company is required to amend our prior franchise tax filings, we could incur additional expenses.

When applicable, Busey recognizes interest accrued related to unrecognized tax benefits and penalties in operating expenses.

Busey had no accruals for payments of interest and penalties at December 31, 2023, or 2022.

At December 31, 2023, Busey was not under any income tax examination by any income tax authority.

Treasury Stock

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Stock-Based Employee Compensation

The 2020 Equity Plan was approved by stockholders at the 2020 Annual Meeting of Stockholders.

A description of the 2020 Equity Plan can be found in the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders filed on April 9, 2020.

The 2020 Equity Plan replaces the 2010 Equity Incentive Plan and the First Community 2016 Equity Incentive Plan, which, from time to time, the Company used to grant equity awards to legacy employees of First Community.

Under the terms of the 2020 Equity Plan, the Company has granted RSU, DSU and PSU awards.

The Company’s equity incentive plans are designed to encourage ownership of its common stock by its employees and directors, to provide additional incentive for them to promote the success of the Company’s business, and to attract and retain talented personnel.

All of the Company’s employees and directors and those of its subsidiaries are eligible to receive awards under the plans.

The Company grants RSU awards to members of management periodically throughout the year.

Each RSU is equivalent to one share of the Company’s common stock.

These units have requisite service periods ranging from one year to five years , subject to accelerated vesting upon eligible retirement from the Company.

Recipients earn quarterly dividend equivalents on their respective units which entitle the recipients to additional units.

Busey’s equity incentive plans are designed to encourage ownership of its common stock by its employees and directors, to provide additional incentive for them to promote the success of Busey’s business, and to attract and retain talented personnel.

All of Busey’s employees and directors and those of its subsidiaries are eligible to receive awards under the plans.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2020 Equity Plan

The 2020 Equity Plan was originally approved by stockholders at the 2020 Annual Meeting of Stockholders.

A description of the 2020 Equity Plan, as originally approved, can be found in Appendix A within Busey’s Proxy Statement for the 2020 Annual Meeting of Stockholders filed on April 9, 2020 .

Upon the 2020 Equity Plan’s original approval, it replaced the 2010 Equity Incentive Plan and the First Community 2016 Equity Incentive Plan, which, from time to time, Busey used to grant equity awards to legacy employees of First Community.

Under the terms of the 2020 Equity Plan, Busey has granted RSU, DSU, and PSU awards.

An amendment to and restatement of the 2020 Equity Plan was approved by stockholders at the 2023 Annual Meeting of Stockholders.

The terms of the amended and restated 2020 Equity Plan are substantially identical to those of the originally approved 2020 Equity Plan, other than a 1,350,000 increase in the number of shares authorized for issuance under the plan.

More information can be found in Appendix A within Busey’s Proxy Statement for the 2023 Annual Meeting of Stockholders filed on April 14, 2023 .

Busey grants RSU awards to members of management periodically throughout the year.

RSU awards are stock-based awards for which vesting is conditional upon meeting established service criteria.

Each RSU is equivalent to one share of Busey’s common stock.

Busey’s RSUs have requisite service periods ranging from one year to five years , and are subject to accelerated vesting upon eligible retirement from Busey.

Recipients earn quarterly dividend equivalents on their respective RSUs, which entitle the recipients to additional units.

Therefore, dividends earned each quarter compound based upon the updated unit balances.

The Company grants DSU awards, which are RSU awards with a deferred settlement date, to its directors and advisory directors.

Each DSU is equivalent to one share of the Company’s common stock.

Busey grants PSU awards to members of management periodically throughout the year.

PSU awards are stock-based awards for which vesting is conditional upon meeting established performance criteria.

Each PSU is equivalent to one share of Busey’s common stock.

The number of PSUs that ultimately vest will be determined based on the extent to which market or other performance goals are achieved.

Busey’s PSUs are subject to accelerated service-based vesting conditions upon eligible retirement from Busey.

After performance determination, dividend equivalents are compounded based upon the updated PSU balances at each dividend date during the performance period.

Busey grants DSU awards to its directors and advisory directors.

DSU awards are stock-based awards with a deferred settlement date.

Each DSU is equivalent to one share of Busey’s common stock.

DSUs vest over a one-year period following the grant date.

These units generally are subject to the same terms as RSUs under the Company’s 2020 Equity Plan, except that, following vesting, settlement occurs within 30 days following the earlier of separation from the board or a change in control of the Company.

After vesting and prior to delivery, these units will continue to earn dividend equivalents.

The Company also grants PSU awards to members of management periodically throughout the year.

Each PSU is equivalent to one share of the Company’s common stock.

The number of units that ultimately vest will be determined based on the achievement of market or other performance goals, subject to accelerated service-based vesting conditions upon eligible retirement from the Company.

The Company has outstanding stock options assumed from acquisitions.

In 2021, the stockholders of First Busey approved the 2021 ESPP, and since the purchase price under the plan is 85 % of the fair value of a share of common stock (a 15 % discount to the market price), the plan is considered to be a compensatory plan under current accounting guidance.

Therefore, the entire amount of the discount is recognized in salaries, wages, and employee benefits on the Consolidated Statements of Income.

Under the 2020 Equity Plan, DSUs are generally subject to the same terms as RSUs, except that following vesting of DSUs, settlement occurs within 30 days following the earlier of separation from the board or a change in control of the Company.

After vesting and prior to delivery, DSUs will continue to earn dividend equivalents.

Stock Options

Busey has outstanding stock options assumed from acquisitions.

All stock options that remained outstanding as of December 31, 2023, were fully vested.

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2021 Employee Stock Purchase Plan

The 2021 ESPP was approved at Busey’s 2021 Annual Meeting of Stockholders and details can be found in Appendix A within First Busey’s Definitive Proxy Statement filed with the SEC on April 8, 2021 .

One of the primary purposes of the 2021 ESPP is to provide a means through which our associates may acquire a proprietary interest in Busey by purchasing shares of our common stock at a discounted price through voluntary payroll deductions, further incentivizing Busey associates to exert maximum effort toward Busey’s success.

Because the 2021 ESPP provides opportunity for Busey associates to purchase Busey’s common stock at a 15 % discount from the market price, the plan is considered to be a compensatory plan under current accounting guidance.

Therefore, the entire amount of the discount is recognized in salaries, wages, and employee benefits on the Consolidated Statements of Income .

See “ Note 14.

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Segment Disclosure

Operating segments are components of a business that (i) engage in business activities from which the component may earn revenues and incur expenses;

(ii) have operating results that are reviewed regularly by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance;

and (iii) for which discrete financial information is available.

The Company’s operations are managed along three operating segments consisting of Banking, FirsTech, and Wealth Management.

Operating segments are components of a business that (1) engage in business activities from which the component may earn revenues and incur expenses;

(2) have operating results that are reviewed regularly by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance;

and (3) for which discrete financial information is available.

Busey’s operations are managed along three operating segments consisting of Banking, Wealth Management, and FirsTech.

See “ Note 21.

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Business combinations are accounted for under ASC Topic 805 “Business Combinations” using the acquisition method of accounting.

The acquisition method of accounting requires an acquirer to recognize the assets acquired and the liabilities assumed at the acquisition date measured at their estimated fair values as of that date.

To determine the fair values, the Company may utilize third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques.

Under the acquisition method of accounting, the Company will identify the acquirer and the closing date and apply applicable recognition principles.

Operating results generated from acquired businesses are included with the Company’s results of operations starting from each date of acquisition.

Acquisition related costs are costs the Company incurs to effect a business combination.

Those costs may include legal, accounting, valuation, other professional or consulting fees, system conversions, and marketing costs.

The Company accounts for acquisition related costs as expenses in the periods in which the costs are incurred and the services are received.

Costs that the Company expects, but is not obligated to incur in the future, to effect its plan to exit an activity of an acquiree or to terminate the employment of an acquiree’s employees are not liabilities at the acquisition date.

Instead, the Company recognizes these costs in its post-combination Consolidated Financial Statements in accordance with other applicable accounting guidance.

The acquisition method of accounting requires that the assets acquired and the liabilities assumed are recognized, measured at their estimated fair values, as of the date Busey obtains control of the acquiree (the acquisition date).

To estimate fair values of assets acquired and liabilities assumed, Busey may utilize third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques.

Operating results generated from acquired businesses are included with Busey’s results of operations starting from each acquisition date.

Acquisition related costs are costs that Busey incurs to effect a business combination, and may include legal, accounting, valuation, other professional or consulting fees, system conversions, and marketing costs.

Busey accounts for acquisition related costs by recording them as expenses in the periods in which the costs are incurred and the services are received.

Costs that Busey expects, but is not obligated to incur in the future, to effect its plan to exit an activity of an acquiree or to terminate the employment of an acquiree’s employees are not liabilities at the acquisition date.

Instead, Busey recognizes these costs in its post-combination Consolidated Financial Statements in accordance with other applicable accounting guidance.

Derivative Financial Instruments

The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position.

Additionally, the Company enters into derivative financial instruments, including interest rate lock commitments issued to residential loan customers for loans that will be held for sale, forward sales commitments to sell residential mortgage loans to investors, and interest rate swaps with customers and other third parties.

Busey utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position.

Additionally, Busey enters into derivative financial instruments, including interest rate lock commitments issued to residential loan customers for loans that will be held for sale, forward sales commitments to sell residential mortgage loans to investors, and interest rate swaps with customers and other third parties.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Interest Rate Swaps Designated as Cash Flow Hedges

The Company entered into derivative instruments designated as cash flow hedges.

For a derivative instrument that is designated and qualifies as a cash flow hedge, the change in fair value of the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Busey entered into derivative instruments designated as cash flow hedges.

For a derivative instrument that qualifies and is designated as a cash flow hedge, the change in fair value of the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Changes in fair value of components excluded from the assessment of effectiveness are recognized in current earnings.

Interest Rate Swaps Not Designated as Hedges

The Company may offer derivative contracts to its customers in connection with their risk management needs.

The Company manages the risk associated with these contracts by entering into an equal and offsetting derivative with a third-party dealer.

These derivatives generally worked together as an economic interest rate hedge, but the Company did not designate them for hedge accounting treatment.

Busey may offer derivative contracts to its customers in connection with their risk management needs.

Busey manages the risk associated with these contracts by entering into equal and offsetting derivatives with third-party dealers.

Generally, these derivatives have worked together as an economic interest rate hedge, but Busey did not designate them for hedge accounting treatment.

Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.

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Interest rate lock commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Financial Statements , with changes in the fair values of the corresponding derivative financial assets or liabilities recorded as either a charge or credit to current earnings during the period in which the changes occurred.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Forward Sales Commitments

The Company economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding best-efforts forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers.

Busey economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers.

Forward sales commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Financial Statements .

While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, the Company did not designate them for hedge accounting treatment.

While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, Busey did not designate them for hedge accounting treatment.

Changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.

Risk Participation Agreements

The Company has entered into a risk participation agreement to manage the credit risk of its derivative position.

This agreement transfers counterparty credit risk related to an interest rate swap to another financial institution.

In this type of transaction, the Company (purchaser) has a swap agreement with a customer.

The Company then enters into a risk participation agreement with a counterparty (seller), under which the counterparty receives a fee to accept a portion of the credit risk.

If the customer defaults on the swap contract, the counterparty to the risk participation agreement must reimburse the Company for the counterparty's percentage of the positive fair value of the customer swap as of the default date.

Busey has entered into risk participation agreements to manage the credit risk of its derivative position.

These agreements transfer credit risk related to an interest rate swap to another financial institution.

Risk participation agreements that Busey has entered into are structured as follows:

• Busey has a swap agreement with a customer.

Busey (purchaser) entered into a risk participation agreement with a counterparty (seller), under which the counterparty receives a fee to accept a portion of the credit risk.

If Busey’s customer defaults on the swap contract, the counterparty to the risk participation agreement must reimburse Busey for the counterparty's percentage of the positive fair value of the customer swap as of the default date.

If the customer swap has a negative fair value, the counterparty has no reimbursement requirements.

If the customer defaults on the swap contract and the counterparty (seller) fulfills its payment obligations under the risk participation agreement, the seller is entitled to a pro rata share of the Company’s claim against the customer under the terms of the swap agreement.

If Busey’s customer defaults on the swap contract and the counterparty (seller) fulfills its payment obligations under the risk participation agreement, the counterparty (seller) is entitled to a pro rata share of Busey’s claim against the customer under the terms of the swap agreement.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• A counterparty has a swap agreement with a customer.

Busey (seller) entered into a risk participation with a counterparty (purchaser), under which Busey receives a fee to accept a portion of the credit risk.

If the counterparty’s customer defaults on the swap contract, Busey must reimburse the counterparty (purchaser) for Busey's percentage of the positive fair value of the customer swap as of the default date.

If the customer swap has a negative fair value, Busey has no reimbursement requirements.

If the counterparty’s customer defaults on the swap contract and Busey (seller) fulfills its payment obligations under the risk participation agreement, Busey (seller) is entitled to a pro rata share of the counterparty’s claim against the customer under the terms of the swap agreement.

Foreign Currency Forward Contracts

Busey entered into foreign currency exchange contracts to support the business requirements of its customers.

Foreign currency contracts involve the exchange of one currency for another on a specified date and at a specified rate.

These contracts are executed on behalf of Busey's customers and are used by customers to manage fluctuations in foreign exchange rates.

Busey minimizes its exposure by entering into similar offsetting positions with other financial institutions.

Busey is subject to the credit risk that another party will fail to perform.

Off-Balance Sheet Arrangements

The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.

These financial instruments include commitments to extend credit and standby letters of credit.

Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheets.

The Company’s exposure to credit loss is represented by the contractual amount of those commitments.

The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

In the normal course of business, to meet the financing needs of its customers, Busey is a party to credit-related financial instruments with off-balance-sheet risk, including commitments to extend credit and standby letters of credit.

These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheets .

Busey’s exposure to credit loss is represented by the contractual amount of the commitments.

Busey uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as no condition established in the contract has been violated.

These commitments are generally at variable interest rates and generally have fixed expiration dates or other termination clauses and may require payment of a fee.

The commitments for equity lines of credit may expire without being drawn upon.

These commitments are generally at variable interest rates, they generally have fixed expiration dates or other termination clauses, and they may require the customer to pay a fee.

Commitments for equity lines of credit may expire without being drawn upon;

therefore, the total commitment amounts do not necessarily represent future cash requirements.

These commitments may be secured based on management’s credit evaluation of the borrower.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer’s obligation to a third-party.

Those guarantees are primarily issued to support public and private borrowing arrangements, including bond financing and similar transactions, and primarily have terms of two years or less.

Standby letters of credit are conditional commitments Busey has issued to guarantee the performance of a customer’s obligation to a third-party.

Those guarantees are primarily issued to support public and private borrowing arrangements, including bond financing and similar transactions.

The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

The Company holds collateral, which may include accounts receivable, inventory, property and equipment, and income producing properties, supporting those commitments if deemed necessary.

In the event the customer does not perform in accordance with the terms of the agreement with the third-party, the Company would be required to fund the commitment.

If the commitment is funded, the Company would be entitled to seek recovery from the customer.

Busey holds collateral, which may include accounts receivable, inventory, property and equipment, and income producing properties, supporting those commitments if deemed necessary.

In the event the customer does not perform in accordance with the terms of the agreement with the third-party, Busey would be required to fund the commitment.

If the commitment is funded, Busey would be entitled to seek recovery from the customer.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company estimates expected credit losses for off-balance sheet arrangements over the contractual period in which it is exposed to credit risk via a present contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the issuer.

To be considered unconditionally cancellable for accounting purposes, the Company must have the ability to, at any time, with or without cause, refuse to extend credit under the commitment.

Busey estimates expected credit losses for off-balance sheet arrangements over the contractual period during which it is exposed to credit risk via a present contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the issuer.

To be considered unconditionally cancellable for accounting purposes, Busey must have the ability to, at any time, with or without cause, refuse to extend credit under the commitment.

Off-balance-sheet credit exposure segments share the same risk characteristics as portfolio loans.

The Company incorporates a probability of funding and utilizes the ACL loss rates to calculate the reserve.

The reserve for off-balance-sheet credit exposure is carried on the Consolidated Balance Sheets in other liabilities rather than as a component of the ACL.

The reserve for off-balance-sheet credit exposure is adjusted as a provision for off-balance-sheet credit exposure reported as a component of noninterest expense in the accompanying Consolidated Statements of Income.

Liabilities recorded as reserves for the Company’s off-balance sheet credit exposure under these commitments was $ 6.6 million as of December 31, 2022, and was $ 6.5 million as of December 31, 2021.

Busey incorporates a probability of funding and utilizes the ACL loss rates to calculate a reserve for off-balance-sheet credit exposure, which is carried on the Consolidated Balance Sheets in other liabilities rather than as a component of the ACL.

The reserve for off-balance-sheet credit exposure is adjusted as a provision for off-balance-sheet credit exposure and is reported as a component of noninterest expense in the accompanying Consolidated Statements of Income .

Liabilities recorded as reserves for Busey’s off-balance sheet credit exposure under these commitments totaled $ 7.1 million as of December 31, 2023, and $ 6.6 million as of December 31, 2022.

Fair Value of Financial Instruments

Fair value of financial instruments is estimated using relevant market information and other assumptions, as more fully disclosed in “ Note 18.

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in “ Note 18.

Fair Value Measurements .” Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.

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ASC Topic 606 requires that companies recognize revenue based on the value of transferred goods or services as they occur in the contract and establishes additional disclosures.

The Company’s revenue is comprised of net interest income, which is explicitly excluded from the scope of ASC Topic 606, and noninterest income.

The Company has evaluated its noninterest income and the nature of its contracts with customers and determined that further disaggregation of revenue beyond what is presented in the accompanying Consolidated Financial Statements is not necessary.

The Company satisfies its performance obligations on its contracts with customers as services are rendered so there is limited judgment involved in applying ASC Topic 606 that affects the determination of the timing and amount of revenue from contracts with customers.

Descriptions of the Company’s primary revenue generating activities that are within the scope of ASC Topic 606, and are presented in the accompanying Consolidated Statements of Income as components of noninterest income, include wealth management fees, payment technology solutions, and fees for customer services.

Busey’s revenue is comprised of net interest income, which is explicitly excluded from the scope of ASC Topic 606, and noninterest income.

Busey has evaluated its noninterest income and the nature of its contracts with customers and determined that further disaggregation of revenue beyond what is presented in the accompanying Consolidated Financial Statements is not necessary.

Busey satisfies its performance obligations on its contracts with customers as services are rendered, so there is limited judgment involved in applying ASC Topic 606 that affects the determination of the timing and amount of revenue from contracts with customers.

Descriptions of Busey’s primary revenue generating activities that are within the scope of ASC Topic 606, and are presented in the accompanying Consolidated Statements of Income as components of noninterest income, include wealth management fees, payment technology solutions, and fees for customer services.

Wealth Management Fees

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Wealth management and trust services include custody of assets, investment management, fees for trust services, and other fiduciary activities.

Also included are fees received from a third-party broker-dealer as part of a revenue sharing agreement for fees earned from customers that the Company refers to the third party.

Also included are fees received from a third-party broker-dealer as part of a revenue sharing agreement for fees earned from customers that Busey refers to the third party.

Revenue is recognized when the performance obligation is completed, which is generally monthly.

Payment Technology Solutions

Payment technology solutions revenue represents transaction-based fees for technology-driven payment solutions primarily for walk-in, lockbox, interactive voice recognition, and online bill payments through the Company’s subsidiary, FirsTech.

Revenue is recognized when the performance obligation is completed, which is generally monthly.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fees for Customer Services

2 unchanged sentences

Payments for such performance obligations are generally received at the time the performance obligations are satisfied.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications

Reclassifications have been made to certain prior year account balances, with no effect on net income or stockholders’ equity, to be consistent with the classifications adopted as of and for the year ended December 31, 2023.

Subsequent Events

The Company has evaluated subsequent events for potential recognition and/or disclosure through the date the Consolidated Financial Statements included in this Annual Report on Form 10-K were issued.

There were no significant subsequent events for the year ended December 31, 2022, through the filing date of these Consolidated Financial Statements.

Impact of Recently Adopted Accounting Standards

ASU 2022-06 “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848” deferred the sunset date of ASC Topic 848 from December 31, 2022, to December 31, 2024, extending the time during which entities may apply certain practical expedients for contract modifications that replace a reference to LIBOR or another reference rate that is expected to be discontinued as a result of reference rate reform.

This update was effective upon issuance on December 21, 2022.

Adoption of this standard did not have a material impact on First Busey’s financial position or results of operations.

ASU 2021-10 “Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance” establishes disclosure requirements for transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model.

Disclosures required under this standard include 1) the types of transactions, 2) the accounting for those transactions, and 3) the effect of those transactions on the consolidated financial statements.

This update was effective for annual periods beginning January 1, 2022, and applies prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application.

Adoption of this standard did not have a material impact on First Busey’s financial position or results of operations.

ASU 2021-05 “Leases (Topic 842):

Lessors—Certain Leases with Variable Lease Payments” amends the lessor’s classification of certain leases under ASC Topic 842.

Under this updated guidance, leases that would otherwise be classified as a sales-type or direct financing lease must be classified by a lessor as an operating lease when the following conditions are met:

1) the contract includes variable lease payments that do not depend on an index or rate and 2) classification as a sales-type or direct financing lease would result in recognition of a selling loss at lease commencement.

This guidance was effective for First Busey beginning January 1, 2022, and was applied on a prospective basis.

Adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” clarifies how an issuer should account for modifications or exchanges of equity-classified written call options (i.e.

a warrant to purchase the issuer’s common stock).

This accounting standard requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant.

This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant.

This guidance was effective for First Busey beginning January 1, 2022, and was applied on a prospective basis.

Adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

Recently Issued Accounting Standards

ASU 2022-03 “Fair Value Measurements (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” clarifies that contractual restrictions on the sale of equity securities are not considered in measuring the fair value of those equity securities, and further that contractual sale restrictions cannot be recognized and measured as a separate unit of account.

This standard applies prospectively, and will be effective for First Busey beginning January 1, 2024.

Early adoption is permitted.

First Busey is currently evaluating the potential effect on the Company’s financial position and results of operations.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ASU 2022-02 “Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures” eliminates the TDR accounting model for creditors that have already adopted CECL.

In July 2023, the FASB issued ASU 2023‑03 “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718)” pursuant to:

(1) SEC Staff Accounting Bulletin No.

120, which provided interpretive guidance related to estimating the fair value of share-based payment transactions while in possession of material non-public information;

(2) an SEC Staff Announcement at the March 24, 2022, Emerging Issues Task Force Meeting, which provided interpretive guidance on accounting for share-based payments to employees and non-employees;

and (3) Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X:

Income or Loss Applicable to Common Stock, which provided interpretive guidance on the reporting of income or loss applicable to common stock.

This update was reflected in the Accounting Standards Codification upon issuance.

Adoption of this standard did not have a material impact on Busey’s financial position or results of operations.

In March 2022, the FASB issued ASU 2022‑02 “Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures,” which eliminates the TDR accounting model for creditors that have already adopted CECL.

3 unchanged sentences

For the transition method related to the recognition and measurement of TDRs, there is an option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption.

This standard became effective for First Busey beginning January 1, 2023.

Adoption of this standard is not expected to have a material impact on our financial position or results of operations.

ASU 2022-01 “Derivatives and Hedging (Topic 815):

Fair Value Hedging—Portfolio Layer Method” replaces the current last-of-layer hedge accounting method with an expanded portfolio layer method that permits multiple hedged layers of a single closed portfolio.

This standard became effective for Busey beginning January 1, 2023.

Adoption of this standard did not have a material impact on Busey’s financial position or results of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In March 2022, the FASB issued ASU 2022‑01 “Derivatives and Hedging (Topic 815):

Fair Value Hedging—Portfolio Layer Method,” which replaces the current last-of-layer hedge accounting method with an expanded portfolio layer method that permits multiple hedged layers of a single closed portfolio.

The scope of the portfolio layer method is also expanded to include non-prepayable financial assets.

2 unchanged sentences

Amendments related to disclosure which are included in this standard may be applied on a prospective basis from the initial application date, or on a retrospective basis to each prior period presented after the date of adoption of the amendments in ASU 2017-12 “Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities.” This standard became effective for First Busey beginning January 1, 2023.

Adoption of this standard is not expected to have a material impact on our financial position or results of operations.

Targeted Improvements to Accounting for Hedging Activities.” This standard became effective for Busey beginning January 1, 2023.

Adoption of this standard did not have a material impact on Busey’s financial position or results of operations.

ASU 2021‑08 “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” requires measurement and recognition in accordance with ASC Topic 606 “Revenue from Contracts with Customers” for contract assets and contract liabilities acquired in a business combination.

This update became effective for First Busey beginning January 1, 2023.

This standard applies prospectively to all business combinations that occur on or after the date it is adopted.

Adoption of this standard is not expected to have a material impact on our financial position or results of operations.

Cummins-American Corp.

Effective May 31, 2021, the Company completed its acquisition of CAC, the holding company for GSB.

The partnership has enhanced the Company’s existing deposit, commercial banking, and wealth management presence in the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area.

GSB’s results of operations were included in the Company’s results of operations beginning June 1, 2021.

First Busey operated GSB as a separate banking subsidiary until August 14, 2021, when it was merged with and into Busey Bank.

At that time, all GSB banking centers became branches of Busey Bank.

Under the terms of the definitive agreement, each share of CAC common stock issued and outstanding as of the effective date was converted into the right to receive 444.4783 shares of First Busey common stock and $ 14,173.96 in cash, which reflects adjustments made to the cash consideration in accordance with the terms of the definitive agreement.

The fair value of the common stock of First Busey issued as part of the consideration paid to the holders of CAC common stock was determined on the basis of the closing price of First Busey’s common shares on May 28, 2021, the last trading day immediately preceding the acquisition date of May 31, 2021.

As additional consideration provided to CAC’s stockholders in the merger, CAC paid a special dividend to its stockholders in the amount of $ 60.0 million, or $ 12,087.58 per share of CAC common stock, on May 28, 2021.

This update became effective for Busey beginning January 1, 2023.

This standard applied prospectively to all business combinations that occurred on or after the date of adoption.

Adoption of this standard did not have an impact on Busey’s financial position or results of operations.

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023‑09 “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires more detailed disclosures of income taxes paid net of refunds received, income from continuing operations before income tax expense or benefit, and income tax expense from continuing operations.

This standard is to be applied on a prospective basis, with retrospective application permitted, and will be effective for Busey for annual periods beginning on January 1, 2025.

Busey does not expect adoption of this standard to have a material impact on the Company’s financial position or results of operations.

In November 2023, the FASB issued ASU 2023‑07 “Segment Reporting Topic 820):

Improvements to Reportable Segment Disclosures” requiring enhanced disclosures related to significant segment expenses.

This standard is to be applied on a retrospective basis, and is effective for Busey beginning with its fiscal year starting on January 1, 2024, and for interim reporting periods within fiscal years starting January 1, 2025.

Busey does not expect adoption of this standard to have a material impact on the Company’s financial position or results of operations.

In October 2023, the FASB issued ASU 2023‑06 “Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative” which aligns certain GAAP disclosure requirements with the SEC’s disclosure requirements, in order to better facilitate comparisons between entities that are subject to the SEC’s existing disclosures with entities that were not previously subject to the SEC’s requirements.

Amendments in this update should be applied prospectively, and the effective date for Busey for each amendment in this accounting standards update will be the date on which the SEC removes the related disclosure from Regulation S‑X or Regulation S‑K.

Early adoption is prohibited.

Busey does not expect adoption of this standard to have a material impact on the Company’s financial position or results of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged was recorded at estimated fair values on the date of acquisition.

Fair values were subject to refinement for up to one year after the closing date, as additional information regarding the closing date fair values became available, and were final as of May 31, 2022.

The Company did not record any fair value adjustments during 2022.

As the total consideration paid for CAC exceeded the estimated fair value of net assets acquired, goodwill of $ 6.3 million was recorded as a result of the acquisition.

The amount of goodwill recognized as a result of this transaction is expected to be fully tax deductible for federal income tax purposes in accordance with the Company’s election pursuant to Section 338(h)(10) of the Internal Revenue Code.

Goodwill recorded for this transaction reflects synergies expected from the acquisition and expansion within the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area, and was assigned to the Banking operating segment.

First Busey incurred $ 0.8 million and $ 13.6 million in pre-tax expenses related to the acquisition of CAC for the years ended December 31, 2022, and December 31, 2021, respectively.

Expenses in 2022 were comprised primarily of compensation expense and data processing expense, which are reported as components of noninterest expense in the accompanying Consolidated Statements of Income.

Estimated fair values of the assets acquired and liabilities assumed, as well as the fair value of consideration transferred, were as follows (dollars in thousands) :

Assets acquired

Cash and cash equivalents $ 298,637

Securities 702,367

Portfolio loans, net of ACL 430,470

Premises and equipment 17,034

Other intangible assets 17,340

Mortgage servicing rights 629

Other assets 8,176

Total assets acquired 1,474,653

Liabilities assumed

Deposits 1,315,671

Other borrowings 16,651

Other liabilities 19,205

Total liabilities assumed 1,351,527

Net assets acquired $ 123,126

Consideration paid:

Cash $ 70,358

Common stock 59,105

Total consideration paid $ 129,463

Goodwill $ 6,337

In March 2023, the FASB issued ASU 2023‑02 “Investments—Equity Method and Joint Ventures (Topic 323),” permitting an election to use the proportional amortization method to account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits, regardless of the tax credit program from which the income tax credits are received, provided that certain conditions are met.

The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense.

This standard must be applied on a retrospective or modified retrospective basis, and became effective for Busey beginning on January 1, 2024.

Busey recorded an after-tax decrease to retained earnings of $ 1.4 million as of January 1, 2024, for the cumulative effect of adopting ASU 2023‑02.

This transition adjustment included a $ 2.4 million decrease in other assets, a $ 0.5 million decrease in other liabilities, and a $ 0.5 million increase in deferred tax assets.

In March 2023, the FASB issued ASU 2023‑01 “Leases (Topic 842):

Common Control Arrangements,” which requires amortization over the useful life of leasehold improvements (not the lease term) when the lease is between entities under common control, and any value of such leasehold improvements remaining at the end of the lease term is to be accounted for as a transfer between entities under common control.

This standard may be adopted either prospectively, or retrospectively, and became effective for Busey beginning January 1, 2024.

Busey does not expect adoption of this standard to have a material impact on the Company’s financial position or results of operations.

In June 2022, the FASB issued ASU 2022‑03 “Fair Value Measurements (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which clarifies that contractual restrictions on the sale of equity securities are not considered in measuring the fair value of those equity securities, and further that contractual sale restrictions cannot be recognized and measured as a separate unit of account.

This standard applies prospectively, and became effective for Busey beginning January 1, 2024.

Busey does not expect adoption of this standard to have a material impact on the Company’s financial position or results of operations.

Subsequent Events

Busey has evaluated subsequent events for potential recognition and/or disclosure through the date the Consolidated Financial Statements included in this Annual Report on Form 10-K were issued.

There were no significant subsequent events for the year ended December 31, 2023, through the filing date of these Consolidated Financial Statements .

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of PCD financial assets was $ 60.5 million on the date of acquisition.

Gross contractual amounts receivable relating to the PCD financial assets was $ 65.2 million.

The Company estimated, on the date of acquisition, that $ 4.2 million of the contractual cash flows specific to the PCD financial assets will not be collected.

DEBT SECURITIES

The Company reassessed classification of certain securities in 2022, and transferred a portion of its commercial and residential mortgage-backed securities from available for sale to held to maturity.

The transfers occurred at fair value.

The unrecognized loss associated with these securities is in OCI, and is being amortized out of OCI with an offsetting entry to investment securities interest income as a yield adjustment over the remaining contractual lives of the securities.

No gain or loss was recorded at the time of the transfer.

The table below provides the amortized cost, unrealized and unrecognized gains and losses, and fair values of debt securities, summarized by major category (dollars in thousands) :

Busey's portfolio of debt securities includes both available for sale and held to maturity securities.

The tables below provides the amortized cost, unrealized and unrecognized gains and losses, and fair values of debt securities, summarized by major category (dollars in thousands) :

As of December 31, 2023

6 unchanged sentences

Obligations of states and political subdivisions 1

190,819 52 ( 18,026 ) 172,845

Asset-backed securities 470,046 — ( 1,823 ) 468,223

9 unchanged sentences

Total debt securities held to maturity $ 872,628 $ — $ ( 142,231 ) $ 730,397

___________________________________________

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

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022

11 unchanged sentences

Total debt securities available for sale $ 2,772,453 $ 144 $ ( 311,204 ) $ 2,461,393

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cost Unrecognized Fair

Gross Gains Gross Losses

Debt securities held to maturity

Commercial mortgage-backed securities $ 474,820 $ — $ ( 63,738 ) $ 411,082

Residential mortgage-backed securities 443,492 — ( 69,279 ) 374,213

Total debt securities held to maturity $ 918,312 $ — $ ( 133,017 ) $ 785,295

Amortized cost and fair value of debt securities, by contractual maturity or pre-refunded date, are shown below.

15 unchanged sentences

Debt securities held to maturity $ 872,628 $ 730,397

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Realized gains and losses related to sales and calls of debt securities available for sale are summarized as follows (dollars in thousands) :

10 unchanged sentences

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following information pertains to debt securities with gross unrealized and unrecognized losses, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (dollars in thousands) :

The following information pertains to debt securities with gross unrealized or unrecognized losses, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (dollars in thousands) :

As of December 31, 2023

5 unchanged sentences

Treasury securities $ — $ — $ 15,946 $ ( 85 ) $ 15,946 $ ( 85 )

$ 74 $ — $ 113,987 $ ( 3,744 ) $ 114,061 $ ( 3,744 )

Obligations of U.S.

6 unchanged sentences

Debt securities available for sale with gross unrealized losses $ 13,033 $ ( 65 ) $ 2,049,784 $ ( 247,180 ) $ 2,062,817 $ ( 247,245 )

Less than 12 months 12 months or more Total

Value Unrecognized

12 months or more Total

Value Unrecognized

4 unchanged sentences

Debt securities held to maturity with gross unrecognized losses $ 730,397 $ ( 142,231 ) $ 730,397 $ ( 142,231 )

___________________________________________

Unrealized losses for U.S.

Treasury securities that have been in a continuous loss position for less than 12 months were insignificant, rounding to zero thousand.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6 unchanged sentences

Treasury securities 1

$ 74 $ — $ 113,987 $ ( 3,744 ) $ 114,061 $ ( 3,744 )

Obligations of U.S.

government corporations and agencies 19,603 ( 321 ) — — 19,603 ( 321 )

Obligations of states and political subdivisions 166,147 ( 10,059 ) 75,217 ( 16,016 ) 241,364 ( 26,075 )

4 unchanged sentences

Debt securities available for sale with gross unrealized losses $ 1,070,674 $ ( 81,841 ) $ 1,368,859 $ ( 229,363 ) $ 2,439,533 $ ( 311,204 )

Less than 12 months 12 months or more Total

Value Unrecognized

Debt securities held to maturity

Commercial mortgage-backed securities $ 58,065 $ ( 8,009 ) $ 353,017 $ ( 55,729 ) $ 411,082 $ ( 63,738 )

Residential mortgage-backed securities — — 374,213 ( 69,279 ) 374,213 ( 69,279 )

Debt securities held to maturity with gross unrecognized losses $ 58,065 $ ( 8,009 ) $ 727,230 $ ( 125,008 ) $ 785,295 $ ( 133,017 )

___________________________________________

Unrealized losses for U.S.

Treasury securities that have been in a continuous loss position for less than 12 months were insignificant, rounding to zero thousand.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additional information about debt securities in an unrealized or unrecognized loss position is presented in the tables below (dollars in thousands) :

8 unchanged sentences

Available for Sale Held to Maturity Total

Debt securities with gross unrealized losses, fair value $ 2,783,177 $ — $ 2,783,177

Gross unrealized losses on debt securities 54,654 — 54,654

Ratio of gross unrealized losses to debt securities with gross unrealized losses 2.0 % — % 2.0 %

Debt securities with gross unrealized or unrecognized losses, fair value $ 2,439,533 $ 785,295 $ 3,224,828

Gross unrealized or unrecognized losses on debt securities 311,204 133,017 444,221

Ratio of gross unrealized or unrecognized losses to debt securities with gross unrealized or unrecognized losses 12.8 % 16.9 13.8 %

Count of debt securities 1,091 55 1,146

Count of debt securities in an unrealized loss position 373 — 373

Count of debt securities in an unrealized or unrecognized loss position 1,032 55 1,087

Unrealized and unrecognized losses were related to changes in market interest rates and market conditions that do not represent credit-related impairments.

The Company does not intend to sell securities that are in an unrealized or unrecognized loss position, and it is more likely than not that the Company will recover the amortized cost prior to being required to sell the debt securities.

Unless part of a corporate strategy or restructuring plan, Busey does not intend to sell securities that are in an unrealized or unrecognized loss position, and it is more likely than not that Busey will recover the amortized cost prior to being required to sell the debt securities.

Full collection of the amounts due according to the contractual terms of the debt securities is expected;

therefore, no ACL was recorded in relation to debt securities, and the impairment related to noncredit factors is recognized in AOCI, net of applicable taxes.

As of December 31, 2022, the Company did not hold general obligation bonds of any single issuer, the aggregate of which exceeded 10% of the Company’s stockholders’ equity.

therefore, no ACL was recorded in relation to debt securities, and the impairment related to noncredit factors on debt securities available for sale is recognized in AOCI, net of applicable taxes.

As of December 31, 2023, Busey did not hold general obligation bonds of any single issuer, the aggregate of which exceeded 10% of the Company’s stockholders’ equity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Loan Categories

The Company’s lending can be summarized into five primary categories:

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

Distributions of the loan portfolio by loan category were as follows (dollars in thousands) :

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

commercial and retail.

Lending is further disaggregated into five primary classes of loans:

commercial loans, commercial real estate loans, real estate construction loans in the commercial category, and retail real estate loans and retail other loans in the retail category.

Distributions of the loan portfolio by loan category and class is presented in the following table (dollars in thousands) :

As of December 31,

Portfolio loans

Commercial loans

Commercial $ 1,835,994 $ 1,974,154

1 unchanged sentence

Real estate construction 461,717 530,469

Total commercial loans 5,635,048 5,766,496

Retail real estate 1,720,455 1,657,082

Retail other 295,531 302,124

Total retail loans 2,015,986 1,959,206

Total portfolio loans 7,651,034 7,725,702

4 unchanged sentences

Commercial balances include loans originated under the PPP with an amortized cost of $ 0.3 million as of December 31, 2023, compared to $ 0.8 million as of December 31, 2022.

The Company did not purchase any retail real estate loans during the year ended December 31, 2022, compared to $ 32.2 million of retail real estate loan purchases during the year ended December 31, 2021.

Busey did not purchase any retail real estate loans during the years ended December 31, 2023, or 2022, and purchased $ 32.2 million of retail real estate loans during the year ended December 31, 2021.

Pledged Loans

The Company pledged loans as collateral to the FHLB and Federal Reserve Bank for liquidity as set forth in the table below (dollars in thousands) :

The principal balance of loans Busey has pledged as collateral to the FHLB and Federal Reserve Bank for liquidity as set forth in the table below (dollars in thousands) :

As of December 31,

3 unchanged sentences

Total pledged loans $ 5,588,395 $ 5,900,166

The Company utilizes a loan grading scale to assign a risk grade to all of its loans.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Busey utilizes a loan grading scale to assign a risk grade to all of its loans.

A description of the general characteristics of each grade is as follows:

2 unchanged sentences

These loans are not necessarily a problem due to other inherent strengths of the credit, such as guarantor strength, but have above average concern and monitoring.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Special mention – This category is for “Other Assets Specially Mentioned” loans that have potential weaknesses, which may, if not checked or corrected, weaken the asset, or inadequately protect the Company’s credit position at some future date.

• Substandard – This category includes “Substandard” loans, determined in accordance with regulatory guidelines, for which the accrual of interest has not been stopped.

Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

They are characterized by the distinct possibility that Busey will sustain some loss if the deficiencies are not corrected.

• Substandard non-accrual – This category includes loans that have all the characteristics of a “Substandard” loan with additional factors that make collection in full highly questionable and improbable.

5 unchanged sentences

Interim reviews may take place if circumstances of the borrower warrant a more frequent review.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table is a summary of risk grades segregated by category of portfolio loans (dollars in thousands) :

3 unchanged sentences

Non-accrual Total

Portfolio loans

Commercial loans

Commercial $ 1,462,755 $ 296,416 $ 46,488 $ 27,733 $ 2,602 $ 1,835,994

1 unchanged sentence

Real estate construction 448,011 8,135 — 5,327 244 461,717

Total commercial loans 4,737,796 735,978 95,033 62,552 3,689 5,635,048

Retail real estate 1,702,897 11,144 1,024 1,795 3,595 1,720,455

Retail other 295,374 — — — 157 295,531

Total retail loans 1,998,271 11,144 1,024 1,795 3,752 2,015,986

Total portfolio loans $ 6,736,067 $ 747,122 $ 96,057 $ 64,347 $ 7,441 $ 7,651,034

3 unchanged sentences

Non-accrual Total

Portfolio loans

Commercial loans

Commercial $ 1,668,495 $ 201,758 $ 46,540 $ 51,187 $ 6,174 $ 1,974,154

1 unchanged sentence

Real estate construction 502,904 25,164 1 2,400 — 530,469

Total commercial loans 5,023,108 553,377 90,067 88,126 11,818 5,766,496

Retail real estate 1,639,599 10,520 1,338 2,529 3,096 1,657,082

Retail other 301,971 — — — 153 302,124

Total retail loans 1,941,570 10,520 1,338 2,529 3,249 1,959,206

Total portfolio loans $ 6,964,678 $ 563,897 $ 91,405 $ 90,655 $ 15,067 $ 7,725,702

Risk grades of portfolio loans and net charge-offs are presented in the tables below by loan class, further sorted by origination year (dollars in thousands) :

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Risk grades of portfolio loans, further sorted by origination year, are as follows (dollars in thousands) :

As of December 31, 2022

As of and For The Year Ended December 31, 2023

Term Loans Amortized Cost Basis by Origination Year Revolving

6 unchanged sentences

Total commercial 394,854 295,539 184,527 96,530 47,510 169,911 647,123 1,835,994

Current period charge-offs $ 284 $ — $ 420 $ — $ 316 $ 1,409 $ — $ 2,429

Commercial real estate

5 unchanged sentences

Total commercial real estate 578,595 882,350 844,293 441,134 344,373 226,537 20,055 3,337,337

Current period charge-offs — — — — — 953 — 953

Real estate construction

1 unchanged sentence

Watch 2,859 4,406 507 322 41 — — 8,135

Special Mention — — — 1 — — — 1

Substandard 5,327 — — — — — — 5,327

Substandard non-accrual — — — — — 244 — 244

Total real estate construction 213,138 132,868 85,593 2,938 1,364 3,178 22,638 461,717

Current period charge-offs — — — — — — — —

Retail real estate

5 unchanged sentences

Total retail real estate 244,851 382,017 414,578 158,032 70,815 260,142 190,020 1,720,455

Current period charge-offs — 5 — 29 72 301 — 407

Pass 88,885 92,931 23,019 6,701 4,597 854 78,387 295,374

1 unchanged sentence

Total retail other 88,885 93,024 23,081 6,701 4,597 856 78,387 295,531

Current period charge-offs 5 71 172 5 3 373 — 629

Total portfolio loans $ 1,520,323 $ 1,785,798 $ 1,552,072 $ 705,335 $ 468,659 $ 660,624 $ 958,223 $ 7,651,034

Total current period charge-offs $ 289 $ 76 $ 592 $ 34 $ 391 $ 3,036 $ — $ 4,418

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

33 unchanged sentences

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5 unchanged sentences

Past due and non-accrual loans

Commercial loans:

Commercial $ — $ 214 $ — $ 2,602

Commercial real estate 752 — — 843

Real estate construction 24 — — 244

Past due and non-accrual commercial loans 776 214 — 3,689

Retail loans:

Retail real estate 2,781 927 366 3,595

Retail other 886 195 9 157

Past due and non-accrual retail loans 3,667 1,122 375 3,752

Total past due and non-accrual loans $ 4,443 $ 1,336 $ 375 $ 7,441

3 unchanged sentences

Past due and non-accrual loans

Commercial loans:

Commercial $ 2 $ — $ — $ 6,174

Commercial real estate 124 — — 5,644

Real estate construction 56 — — —

Past due and non-accrual commercial loans 126 — — 11,818

Retail loans:

Retail real estate 4,709 1,239 673 3,096

Retail other 414 60 — 153

Past due and non-accrual retail loans 5,123 1,299 673 3,249

Total past due and non-accrual loans $ 5,249 $ 1,299 $ 673 $ 15,067

Gross interest income recorded on 90+ days past due loans, and that would have been recorded on non-accrual loans if they had been accruing interest in accordance with their original terms, was $ 1.1 million, $ 1.2 million, and $ 1.6 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Interest collected on those loans and recognized on a cash basis that was included in interest income was $ 0.4 million for each of the years ended December 31, 2022, and 2021, and was insignificant for the year ended December 31, 2020.

Troubled Debt Restructurings

TDR loan balances are summarized as follows (dollars in thousands) :

Interest collected on those loans and recognized on a cash basis that was included in interest income was $ 0.4 million for each of the years ended December 31, 2023, 2022, and 2021.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loan Modification Disclosures Pursuant to ASU 2022-02

The following table presents the amortized cost basis of loans that were modified for borrowers experiencing financial difficulty during the periods indicated, disaggregated by class of financing receivable and type of concession granted (dollars in thousands) :

Year Ended December 31, 2023

Interest Rate Reduction 1

% of Total Class of Financing Receivable 2

Term Extension 3

% of Total Class of Financing Receivable 2

Modified Loans

Commercial $ — — % $ 16,586 0.9 %

Commercial real estate 872 — % 923 — %

Real estate construction — — % 5,327 1.2 %

Total of loans modified during the period 4

$ 872 — % $ 22,836 0.3 %

___________________________________________

For one loan, the default rate was removed once forbearance was entered.

Modified loans represent an insignificant portion of commercial real estate loans, rounding to zero percent.

Modifications to extend loan terms also included, in some cases, interest rate increases during the extension period.

Modifications include one loan on non-accrual status, and the remaining loans were classified as substandard.

The following table summarizes the effects of loan modifications made during the periods indicated, for borrowers experiencing financial difficulty:

Year Ended December 31, 2023

Weighted Average Interest Rate Reduction Weighted Average Term Extension

Effects of Loan Modifications

Commercial — 18.1 months

Commercial real estate 2.50 % 21.0 months

Real estate construction — 12.0 months

Total financial effect 2.50 % 16.8 months

The following table provides the amortized cost basis of financing receivables that had a payment default during the year ended December 31, 2023, after having been modified during the 12 months before default for borrowers experiencing financial difficulty (dollars in thousands) .

A default occurs when a loan is 90 days or more past due or transferred to non-accrual status.

Years Ended December 31, 2023

Term Extension

Loans with Subsequent Defaults

Commercial $ 88

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Busey closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table depicts the payment performance of loans modified on or after January 1, 2023, the date we adopted ASU 2022-02 (dollars in thousands) :

As of December 31, 2023

Current Non-accrual

Modified Loans

Commercial $ 16,498 $ 88

Commercial real estate 1,795 —

Real estate construction 5,327 —

Amortized cost of modified loans $ 23,620 $ 88

Troubled Debt Restructurings Disclosures Prior to the Adoption of ASU 2022-02

TDR loan balances are summarized as follows (dollars in thousands) :

December 31, 2022

In compliance with modified terms $ 3,032

1 unchanged sentence

Total TDRs $ 3,569

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans that were designated as TDRs during the years ended as of the dates indicated are summarized as follows (dollars in thousands) :

10 unchanged sentences

Commercial 1 $ 364 $ —

December 31, 2020

Commercial 3 $ 130 $ —

Commercial real estate 1 651 —

Real estate construction 4 — 986

Total 1 $ 364 $ —

1 unchanged sentence

Recorded investment for newly designated TDR’s that were still outstanding as of the dates indicated.

TDRs may include multiple concessions;

those that include an interest rate concession and payment concession are shown in the rate modification column.

TDRs may have included multiple concessions;

those that included an interest rate concession and payment concession are shown in the rate modification column.

There were no TDRs entered into during the 12 months ended December 31, 2022, or 2021, that had subsequent defaults.

A default occurs when a loan is 90 days or more past due or transferred to non-accrual.

Gross interest income that would have been recorded during the years ended December 31, 2022, and 2021, if TDRs had performed in accordance with their original terms compared with their modified terms, was insignificant.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Collateral Dependent Loans

3 unchanged sentences

Loans are written down to the lower of cost or fair value of underlying collateral, less estimated costs to sell.

The Company had $ 14.0 million and $ 7.9 million of collateral dependent loans secured by real estate or business assets as of December 31, 2022, and December 31, 2021, respectively.

Busey had $ 6.1 million and $ 14.0 million of collateral dependent loans secured by real estate or business assets as of December 31, 2023, and December 31, 2022, respectively.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans Modified Under the CARES Act or Interagency Statement

The CARES Act provided financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19.

Federal regulatory agencies, in consultation with FASB, also issued an Interagency Statement to encourage financial institutions to work with borrowers affected by COVID-19 and to update guidance to allow banks to modify loans of customers stressed by COVID-19 without having to classify the loan as a TDR.

The Company’s TDR loan totals do not include the following modified loans with payment deferrals that fall under the CARES Act or Interagency Statement that suspended requirements under GAAP related to TDR classification (dollars in thousands) :

As of December 31, 2022 As of December 31, 2021

Contracts Recorded

Investment Number of

Contracts Recorded

COVID-19 loan modifications

Commercial loans:

Interest-only deferrals 8 $ 20,556 32 $ 128,730

Retail loans:

Mortgage and personal loan deferrals 1 99 2 137

Total COVID-19 loans modifications 9 $ 20,655 34 $ 128,867

Loans Evaluated Individually

The Company evaluates loans with disparate risk characteristics on an individual basis.

Busey evaluates loans with disparate risk characteristics on an individual basis.

The following tables provide details of loans evaluated individually, segregated by category.

7 unchanged sentences

Loans evaluated individually

Commercial loans:

Commercial $ 7,283 $ 585 $ 1,785 $ 2,370 $ 785 $ 5,244

1 unchanged sentence

Real estate construction — — — — — 49

Commercial loans evaluated individually 9,883 1,195 1,870 3,065 870 9,158

Retail loans:

Retail real estate 213 61 25 86 25 790

Retail loans evaluated individually 213 61 25 86 25 790

Total loans evaluated individually $ 10,096 $ 1,256 $ 1,895 $ 3,151 $ 895 $ 9,948

4 unchanged sentences

Loans evaluated individually

Commercial loans:

Commercial $ 9,589 $ 656 $ 5,918 $ 6,574 $ 2,476 $ 6,761

1 unchanged sentence

Real estate construction 247 247 — 247 — 260

Commercial loans evaluated individually 17,875 3,237 9,821 13,058 4,476 12,240

Retail loans:

Retail real estate 2,733 2,564 25 2,589 25 2,311

Retail loans evaluated individually 2,733 2,564 25 2,589 25 2,311

Total loans evaluated individually $ 20,608 $ 5,801 $ 9,846 $ 15,647 $ 4,501 $ 14,551

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

Historical credit loss experience provides the basis for the estimation of expected credit losses.

The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Company’s historical loss experience beginning in 2010.

Due to the continued economic uncertainty in the markets in which the Company operates, in particular the levels of delinquencies, the Company will continue to utilize a forecast period of 12 months with an immediate reversion to historical loss rates beyond this forecast period in its ACL estimate.

The cumulative loss rate used as the basis for the estimate of credit losses is comprised of Busey’s historical loss experience beginning in 2010.

PPP loans were excluded from the ACL calculation as they are 100% government guaranteed.

The following tables summarize activity in the ACL attributable to each loan category.

Allocation of a portion of the ACL to one category does not preclude its availability to absorb losses in other categories (dollars in thousands) :

The following table summarizes activity in the ACL attributable to each loan class.

Allocation of a portion of the ACL to one loan class does not preclude its availability to absorb losses in other loan classes (dollars in thousands) :

Commercial Commercial

3 unchanged sentences

ACL Balance, December 31, 2020 $ 23,866 $ 46,230 $ 8,193 $ 21,992 $ 767 $ 101,048

Adoption of ASC 326-30 715 9,306 2,954 3,292 566 16,833

3,546 336 — 129 167 4,178

Provision for credit losses ( 2,160 ) ( 7,651 ) ( 3,180 ) ( 4,456 ) 2,346 ( 15,101 )

2 unchanged sentences

ACL balance, December 31, 2021 23,855 38,249 5,102 17,589 3,092 87,887

3,546 336 — 129 167 4,178

Provision for credit losses 497 892 1,142 219 1,873 4,623

7 unchanged sentences

__________________________________________

The Day 1 PCD is attributable to the CAC acquisition.

The following tables present the ACL and amortized cost of portfolio loans by category (dollars in thousands) :

The Day 1 PCD is attributable to the CAC acquisition, finalized May 31, 2021.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the ACL and amortized cost of portfolio loans by loan category and class (dollars in thousands) :

As of December 31, 2023

8 unchanged sentences

Impairment Total

Portfolio loan category

Portfolio loans and related ACL

Commercial loans:

Commercial $ 1,833,624 $ 2,370 $ 1,835,994 $ 20,471 $ 785 $ 21,256

1 unchanged sentence

Real estate construction 461,717 — 461,717 5,163 — 5,163

Commercial loans and related ACL 5,631,983 3,065 5,635,048 61,014 870 61,884

Retail loans:

Retail real estate 1,720,369 86 1,720,455 26,273 25 26,298

Retail other 295,531 — 295,531 3,558 — 3,558

Retail loans and related ACL 2,015,900 86 2,015,986 29,831 25 29,856

Portfolio loans and related ACL $ 7,647,883 $ 3,151 $ 7,651,034 $ 90,845 $ 895 $ 91,740

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022

8 unchanged sentences

Impairment Total

Portfolio loan category

Portfolio loans and related ACL

Commercial loans:

Commercial $ 1,967,580 $ 6,574 $ 1,974,154 $ 21,384 $ 2,476 $ 23,860

1 unchanged sentence

Real estate construction 530,222 247 530,469 6,457 — 6,457

Commercial loans and related ACL 5,753,438 13,058 5,766,496 64,140 4,476 68,616

Retail loans:

Retail real estate 1,654,493 2,589 1,657,082 18,168 25 18,193

Retail other 302,124 — 302,124 4,799 — 4,799

Retail loans and related ACL 1,956,617 2,589 1,959,206 22,967 25 22,992

Portfolio loans and related ACL $ 7,710,055 $ 15,647 $ 7,725,702 $ 87,107 $ 4,501 $ 91,608

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OTHER REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS

OREO and other repossessed assets represent properties and other assets acquired through foreclosure or other proceedings in settlement of loans and is included in other assets in the accompanying Consolidated Balance Sheets .

The following table summarizes the composition of the Company’s OREO and other repossessed asset balances as of the periods presented (dollars in thousands) :

The following table summarizes the composition of Busey’s OREO and other repossessed asset balances as of the periods presented (dollars in thousands) :

As of December 31,

Commercial $ — $ 2,839

Residential $ 125 $ 70

2 unchanged sentences

OREO and other repossessed assets $ 125 $ 850

The following table summarizes activity related to OREO and other repossessed assets (dollars in thousands) :

The following table summarizes changes in the balance OREO and other repossessed assets (dollars in thousands) :

Years Ended December 31,

2023 2022 2021

Changes in OREO and other repossessed assets

OREO and other repossessed assets beginning balance $ 4,416 $ 4,571 $ 3,057

OREO and other repossessed assets at January 1 $ 850 $ 4,416 $ 4,571

Additions, transfers from loans 189 175 1,610

2 unchanged sentences

Impairment of OREO and other repossessed assets ( 100 ) ( 611 ) ( 1 )

OREO and other repossessed assets ending balance $ 850 $ 4,416 $ 4,571

The Company had residential real estate in the process of foreclosure totaling $ 1.1 million as of December 31, 2022, and $ 0.2 million as of December 31, 2021.

The Company has elected to follow Federal Housing Finance Agency guidelines on single-family foreclosures and real estate owned evictions on portfolio loans.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Activity related to OREO and other repossessed assets included the following (dollars in thousands) :

OREO and other repossessed assets at December 31 $ 125 $ 850 $ 4,416

Busey had residential real estate in the process of foreclosure totaling $ 0.3 million as of December 31, 2023, and $ 1.1 million as of December 31, 2022.

Busey has elected to follow Federal Housing Finance Agency guidelines on single-family foreclosures and real estate owned evictions on portfolio loans.

Busey incurs operating expenses for, and may have income from, OREO and other repossessed assets.

Upon sale, Busey may recognize a gain or loss on the sale of OREO and other repossessed assets.

The table below summarizes the effect of these activities, included in Other expense on Busey’s Consolidated Statements of Income (dollars in thousands) :

Years Ended December 31,

4 unchanged sentences

Activity for OREO and other repossessed assets $ 121 $ 913 $ 641

First Busey Corporation | 2023 — 135

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PREMISES AND EQUIPMENT

8 unchanged sentences

Premises and equipment, net $ 122,594 $ 126,524

Depreciation expense was $ 10.5 million, $ 11.6 million, and $ 12.3 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Depreciation expense is presented in the table below for the periods indicated (dollars in thousands) :

Years Ended December 31,

2023 2022 2021

Depreciation expense $ 9,488 $ 10,482 $ 11,610

Busey as The Lessee

Busey has operating leases consisting primarily of equipment leases and real estate leases for banking centers, ATM locations, and office space.

The following table summarizes lease related information and balances Busey reported in its Consolidated Balance Sheets for the periods presented (dollars in thousands) :

As of December 31,

Lease balances

Right of use assets $ 11,027 $ 12,829

Lease liabilities 11,308 12,995

Supplemental information

Year through which lease terms extend 2037 2037

Weighted average remaining lease term 8.39 years 8.90 years

Weighted average discount rate 3.59 % 3.45 %

First Busey Corporation | 2023 — 136

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table represents lease costs and cash flows related to leases for the periods presented (dollars in thousands) :

Years Ended December 31,

2023 2022 2021

Operating lease costs $ 2,395 $ 2,495 $ 2,464

Variable lease costs 38 365 540

Short-term lease costs 50 22 49

Total lease cost 1

$ 2,483 $ 2,882 $ 3,053

Cash flows related to leases

Cash paid for amounts included in the measurement of lease liabilities:

Operating lease cash flows – Fixed payments $ 2,290 $ 3,080 $ 2,417

Operating lease cash flows – Liability reduction 1,883 2,285 2,217

Right of use assets obtained during the period in exchange for operating lease liabilities 2

231 6,206 5,818

___________________________________________

Lease costs are included in net occupancy and equipment expense in the Consolidated Statements of Income .

The year ended December 31, 2021, includes $ 0.4 million related to a lease obtained in the acquisition of CAC.

Busey was obligated under noncancelable operating leases for office space and other commitments.

Future undiscounted lease payments with initial terms of one year or more, are as follows (dollars in thousands) :

December 31, 2023

Rent commitments

Thereafter 5,478

Total undiscounted cash flows 13,244

Amounts representing interest 1,936

Present value of net future minimum lease payments $ 11,308

Busey as The Lessor

Busey occasionally leases parking lots and office space to outside parties.

Revenues recorded in connection with these leases, reported in other income on our Consolidated Statements of Income , are summarized as follows (dollars in thousands) :

Years Ended December 31,

2023 2022 2021

Rental income $ 724 $ 707 $ 566

First Busey Corporation | 2023 — 137

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GOODWILL AND OTHER INTANGIBLE ASSETS

The Company’s goodwill is associated with its three operating segments, Banking, FirsTech, and Wealth Management.

Busey’s goodwill is associated with its three operating segments, Banking, Wealth Management, and FirsTech.

Goodwill is tested annually for impairment, and as part of this analysis, the reporting unit's carrying value is compared to its estimated fair value.

Based on the impairment testing performed at December 31, 2022, there were no indicators of potential impairment based on the estimated fair value of those operating segments.

The Company did not record any new goodwill during the year ended December 31, 2022.

During 2021, in connection with the acquisition of CAC, the Company recorded goodwill totaling $ 6.3 million and other intangible assets totaling $ 8.8 million in the Banking operating segment, as well as other intangible assets totaling $ 8.5 million in the Wealth Management segment.

Based on the impairment testing performed at December 31, 2023, there were no indicators of potential impairment.

Busey did not record any new goodwill during the years ended December 31, 2023, or 2022.

The carrying amount of goodwill by operating segment is as follows (dollars in thousands) :

1 unchanged sentence

Banking $ 294,773 $ 294,773

FirsTech 8,992 8,992

Wealth Management 14,108 14,108

FirsTech 8,992 8,992

Total goodwill $ 317,873 $ 317,873

Indefinite-lived intangible assets, such as goodwill, are not amortized.

Goodwill is the Company's only indefinite-lived intangible asset.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill is Busey's only indefinite-lived intangible asset.

Intangible Assets

Core deposit and customer relationship intangible assets are amortized over the estimated period during which the Company expects to benefit from the assets.

Core deposit and customer relationship intangible assets are amortized over the estimated period during which Busey expects to benefit from the assets.

Intangible asset disclosures are as follows (dollars in thousands) :

1 unchanged sentence

intangible Customer

intangible Total Core deposit

intangible Total

Intangible Assets

Intangible assets, gross $ 99,065 $ 33,138 $ 132,203

Accumulated amortization 71,092 25,120 96,212

Intangible assets, net $ 27,973 $ 8,018 $ 35,991

As of December 31, 2022

intangible Customer

4 unchanged sentences

Intangible assets, net $ 35,589 $ 10,834 $ 46,423

Amortization expense related to intangible assets, as reflected in the Company's Consolidated Statements of Income, is presented in the table below (dollars in thousands) :

First Busey Corporation | 2023 — 138

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amortization expense related to intangible assets, as reflected in Busey's Consolidated Statements of Income , is presented in the table below (dollars in thousands) :

Years Ended December 31,

16 unchanged sentences

Total estimated amortization expense $ 27,973 $ 8,018 $ 35,991

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The composition of deposits is as follows (dollars in thousands) :

The composition of Busey’s deposits is as follows (dollars in thousands) :

As of December 31,

4 unchanged sentences

Total deposits $ 10,291,156 $ 10,071,280

Additional information about our deposits is as follows (dollars in thousands) :

Additional information about Busey’s deposits follows (dollars in thousands) :

As of December 31,

3 unchanged sentences

Total time deposits with a minimum denomination that meets or exceeds the FDIC insurance limit of $250,000 386,286 120,377

First Busey Corporation | 2023 — 139

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Scheduled maturities of time deposits are as follows (dollars in thousands) :

5 unchanged sentences

Securities Sold Under Agreements to Repurchase

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

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

Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction.

The underlying securities are held by the Company’s safekeeping agent.

The Company may be required to provide additional collateral based on fluctuations in the fair value of the underlying securities.

The underlying securities are held by Busey’s safekeeping agent.

Busey may be required to provide additional collateral based on fluctuations in the fair value of the underlying securities.

Securities sold under agreements to repurchase were as follows (dollars in thousands) :

2 unchanged sentences

Weighted average rate for securities sold under agreements to repurchase 3.26 % 1.91 %

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On May 28, 2021, the Company entered into a Second Amended and Restated Credit Agreement, pursuant to which the Company has access to (i) a $ 40.0 million revolving line of credit with an initial termination date of April 30, 2022, and (ii) a $ 60.0 million term loan with a maturity date of May 31, 2026.

On May 28, 2021, Busey entered into a Second Amended and Restated Credit Agreement, pursuant to which Busey has 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.

1 unchanged sentence

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

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.

First Busey Corporation | 2023 — 140

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Short-Term Borrowings

Busey’s short-term borrowings include loans maturing within one year of the loan origination date, as well as the current portion of long-term debt that is due within 12 months.

Short-term borrowings are summarized as follows (dollars in thousands) :

4 unchanged sentences

Total short-term debt $ 12,000 $ 351,054

Funds borrowed from the FHLB, listed above, consisted of four notes with a weighted average interest rate of 4.28 % as of December 31, 2022, and two notes with a weighted average interest rate of 0.36 % as of December 31, 2021.

Federal funds purchased are short-term borrowings that generally mature between one and 90 days.

The Company had no federal funds purchased as of December 31, 2022, or December 31, 2021.

Funds borrowed from the FHLB, listed above, consisted of four notes with a weighted average interest rate of 4.28 % and a weighted average maturity period of five days as of December 31, 2022.

Federal funds purchased are short-term borrowings that generally mature between one day and 90 days.

During the first quarter of 2023, Busey purchased federal funds to test operational availability to access funds if needed.

Busey had no federal funds purchased as of December 31, 2023, or 2022.

Long-Term Debt

First Busey’s long-term debt consists of loans maturing more than one year from the loan origination date, excluding the current portion that is due within 12 months.

Busey’s long-term debt consists of loans maturing more than one year from the loan origination date, excluding the current portion that is due within 12 months.

Long-term debt is summarized as follows (dollars in thousands) :

1 unchanged sentence

Long-term debt

Notes payable, FHLB, original maturity of 5 years, collateralized by FHLB deposits, residential and commercial real estate loans and FHLB stock

Term Loan $ 18,000 $ 30,000

Total long-term debt $ 18,000 $ 30,000

As of December 31, 2021, funds borrowed from the FHLB, listed above, consisted of one variable-rate note maturing in May 2023, with an interest rate of 3.04 %.

During the second quarter of 2022, this note became due within 12 months and the balance is now fully reflected in short-term borrowings.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Senior and Subordinated Notes

On May 25, 2017, the Company issued $ 40.0 million of 3.75 % senior notes that matured and were redeemed on May 25, 2022.

Additionally, on May 25, 2017, the Company issued $ 60.0 million of fixed-to-floating rate subordinated notes that were scheduled to mature on May 25, 2027, with an optional redemption in whole or in part on any interest payment date on or after May 25, 2022.

The Company redeemed all outstanding $ 60.0 million fixed-to-floating rate subordinated notes during the third quarter of 2022.

At the time of redemption, the redeemed subordinated notes carried interest at a floating rate of 3-month LIBOR plus 2.919 %.

On June 1, 2020, the Company issued $ 125.0 million of fixed-to-floating rate subordinated notes that mature on June 1, 2030.

The subordinated notes, which qualify as Tier 2 capital for First Busey, bear interest at an annual rate of 5.25 % for the first five years after issuance and thereafter bear interest at a floating rate equal to a three-month benchmark rate plus a spread of 5.11 %, as calculated on each applicable determination date.

Subordinated Notes

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.

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.

1 unchanged sentence

The subordinated notes are unsecured obligations of the Company.

On June 2, 2022, the Company issued $ 100.0 million aggregate principal amount of 5.000 % fixed-to-floating rate subordinated notes maturing June 15, 2032, which qualify as Tier 2 Capital for regulatory purposes.

First Busey Corporation | 2023 — 141

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 accrues 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 Busey’s 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 the Company, which are the sole assets of each trust.

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

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

The Company owns all of the common securities of each trust.

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 issued by Busey, which are the sole assets of each trust.

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

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.

In connection with the Pulaski acquisition in 2016, the Company acquired similar statutory trusts previously maintained by Pulaski and the fair value adjustment is being accreted over their weighted average remaining life, with a balance of $ 2.8 million remaining to be accreted.

The Company had $ 71.8 million and $ 71.6 million of junior subordinated debt owed to unconsolidated trusts at December 31, 2022, and 2021, respectively, maturing in 2034 through 2036.

In connection with the Pulaski acquisition in 2016, Busey acquired similar statutory trusts previously maintained by Pulaski and the fair value adjustment is being accreted over their weighted average remaining life, with a balance of $ 2.6 million remaining to be accreted.

Busey had $ 72.0 million and $ 71.8 million of junior subordinated debt owed to unconsolidated trusts at December 31, 2023, and 2022, respectively, maturing in 2034 through 2036.

Busey’s trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated notes at par value at the stated maturity date or upon redemption.

Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon Busey making payments on the related junior subordinated notes.

Busey’s obligations under the junior subordinated notes and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by Busey of each trust’s obligations under the trust preferred securities issued by each trust.

Busey has the right to defer payment of interest on the notes, in which case the distributions on the trust preferred securities will also be deferred, for up to five years , but not beyond the stated maturity date.

For regulatory capital purposes, current banking regulations allow for the inclusion in Tier 1 Capital of qualifying trust preferred securities issued prior to May 19, 2010, by bank holding companies with less than $ 15.0 billion of assets, but do not allow for additional Tier 1 Capital to be raised through the future issuance of trust preferred securities.

As of December 31, 2023, 100 % of the trust preferred securities qualified as Tier 1 Capital;

however, once Busey reaches $ 15.0 billion in assets, its trust preferred securities will no longer quality as Tier 1 Capital.

First Busey Corporation | 2023 — 142

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated notes at par value at the stated maturity date or upon redemption.

Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related junior subordinated notes.

The Company’s obligations under the junior subordinated notes and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by the Company of each trust’s obligations under the trust preferred securities issued by each trust.

The Company has the right to defer payment of interest on the notes, in which case the distributions on the trust preferred securities will also be deferred, for up to five years , but not beyond the stated maturity date.

For regulatory capital purposes, current banking regulations allow for the inclusion in Tier 1 Capital qualifying trust preferred securities issued prior to May 19, 2010, by bank holding companies with less than $ 15.0 billion of assets, but do not allow for additional Tier 1 Capital to be raised through the future issuance of trust preferred securities.

As of December 31, 2022, 100 % of the trust preferred securities qualified as Tier 1 Capital;

however, once the Company reaches $ 15.0 billion in assets, its trust preferred securities will no longer quality as Tier 1 Capital.

REGULATORY CAPITAL

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by federal banking agencies.

Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements.

Busey and its subsidiary bank are subject to various regulatory capital requirements administered by federal banking agencies.

Capital amounts and classification also are subject to qualitative judgments by regulators about components, risk weightings, and other factors.

1 unchanged sentence

well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.

As of December 31, 2022, and December 31, 2021, all capital ratios of the Company and its subsidiary bank exceeded well capitalized levels under the applicable regulatory capital adequacy guidelines.

As of December 31, 2023, and December 31, 2022, all capital ratios of Busey and its subsidiary bank exceeded well capitalized levels under the applicable regulatory capital adequacy guidelines.

Management believes that no events or changes have occurred subsequent to December 31, 2023, that would change this designation.

1 unchanged sentence

On August 26, 2020, the FDIC and other federal banking agencies adopted a final rule which provided banking organizations that adopted CECL during 2020 with the option to delay for two years the estimated impact of CECL on regulatory capital and to phase in the aggregate impact of the deferral on regulatory capital over a subsequent three-year period.

Under this final rule, because the Company has elected to use the deferral option, the regulatory capital impact of our transition adjustments recorded on January 1, 2020, arising from the adoption of CECL was deferred for two years.

Under this final rule, because Busey elected to use the deferral option, the regulatory capital impact of our transition adjustments recorded on January 1, 2020, arising from the adoption of CECL was deferred for two years.

In addition, 25 percent of the ongoing impact of CECL on our ACL, retained earnings, and average total consolidated assets from January 1, 2020, through the end of the two-year deferral period, each as reported for regulatory capital purposes, has been added to the deferred transition amounts (“adjusted transition amounts”) and deferred for the two-year period.

On January 1, 2022, at the conclusion of the two-year period, the adjusted transition amounts began to be phased-in for regulatory capital purposes at a rate of 25 percent per year, with the phased-in amounts included in regulatory capital at the beginning of each year.

Changes in Capital Relating to Subordinated Debt

On May 25, 2017, the Company issued $ 60.0 million of fixed-to-floating rate subordinated notes that were scheduled to mature on May 25, 2027.

The full balance of the subordinated note qualified as Tier 2 Capital for First Busey for the first five years, with a phase out beginning in the second quarter of 2022.

The subordinated notes had an optional redemption in whole or in part on any interest payment date on or after May 25, 2022, and the Company redeemed them in full during the third quarter of 2022.

On June 2, 2022, the Company issued $ 100.0 million aggregate principal amount of 5.000 % fixed-to-floating rate subordinated notes that mature on June 15, 2032, which qualify as Tier 2 Capital for regulatory purposes.

First Busey Corporation | 2023 — 143

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Capital Amounts and Ratios

The following tables summarize regulatory capital requirements applicable to the Company and its subsidiary bank (dollars in thousands) :

The following tables summarize regulatory capital requirements applicable to Busey and its subsidiary bank (dollars in thousands) :

As of December 31, 2023

3 unchanged sentences

Common equity Tier 1 capital to risk weighted assets

Consolidated $ 1,081,686 11.96 % $ 406,980 4.50 % $ 587,861 6.50 %

First Busey $ 1,155,973 13.09 % $ 397,331 4.50 % $ 573,923 6.50 %

Busey Bank $ 1,362,962 15.48 % $ 396,128 4.50 % $ 572,185 6.50 %

Tier 1 capital to risk weighted assets

Consolidated $ 1,155,686 12.78 % $ 542,640 6.00 % $ 723,521 8.00 %

First Busey $ 1,229,973 13.93 % $ 529,775 6.00 % $ 706,367 8.00 %

Busey Bank $ 1,362,962 15.48 % $ 528,171 6.00 % $ 704,228 8.00 %

Total capital to risk weighted assets

Consolidated $ 1,457,994 16.12 % $ 723,521 8.00 % $ 904,401 10.00 %

First Busey $ 1,540,318 17.44 % $ 706,367 8.00 % $ 882,958 10.00 %

Busey Bank $ 1,448,307 16.45 % $ 704,228 8.00 % $ 880,285 10.00 %

Leverage ratio of Tier 1 capital to average assets

Consolidated $ 1,155,686 9.45 % $ 489,124 4.00 % N/A N/A

First Busey $ 1,229,973 10.08 % $ 488,315 4.00 % N/A N/A

Busey Bank $ 1,362,962 11.19 % $ 487,103 4.00 % $ 608,879 5.00 %

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4 unchanged sentences

Common equity Tier 1 capital to risk weighted assets

Consolidated $ 995,874 11.85 % $ 378,334 4.50 % $ 546,482 6.50 %

First Busey $ 1,081,686 11.96 % $ 406,980 4.50 % $ 587,861 6.50 %

Busey Bank $ 1,306,716 14.49 % $ 405,736 4.50 % $ 586,063 6.50 %

Tier 1 capital to risk weighted assets

Consolidated $ 1,069,874 12.73 % $ 504,445 6.00 % $ 672,594 8.00 %

First Busey $ 1,155,686 12.78 % $ 542,640 6.00 % $ 723,521 8.00 %

Busey Bank $ 1,306,716 14.49 % $ 540,981 6.00 % $ 721,308 8.00 %

Total capital to risk weighted assets

Consolidated $ 1,320,187 15.70 % $ 672,594 8.00 % $ 840,742 10.00 %

First Busey $ 1,457,994 16.12 % $ 723,521 8.00 % $ 904,401 10.00 %

Busey Bank $ 1,384,024 15.35 % $ 721,308 8.00 % $ 901,635 10.00 %

Leverage ratio of Tier 1 capital to average assets

Consolidated $ 1,069,874 8.52 % $ 502,336 4.00 % N/A N/A

First Busey $ 1,155,686 9.45 % $ 489,124 4.00 % N/A N/A

Busey Bank $ 1,306,716 10.72 % $ 487,541 4.00 % $ 609,426 5.00 %

5 unchanged sentences

however, banking institutions with a ratio of common equity Tier 1 capital to risk-weighted assets below the capital conservation buffer will face constraints on dividends, equity repurchases, and discretionary bonus payments based on the amount of the shortfall.

In order to refrain from restrictions on dividends, equity repurchases, and discretionary bonus payments, banking institutions must maintain minimum ratios of (i) Common Equity Tier 1 to risk-weighted assets of at least 7.0%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) Total capital to risk-weighted assets of at least 10.5%.

In order to refrain from restrictions on dividends, equity repurchases, and discretionary bonus payments, banking institutions must maintain minimum ratios of (1) common equity Tier 1 capital to risk-weighted assets of at least 7.0%, (2) Tier 1 capital to risk-weighted assets of at least 8.5%, and (3) total capital to risk-weighted assets of at least 10.5%.

Subsidiary Dividend Payments

The ability of the Company to pay cash dividends to its stockholders and to service its debt is dependent on the receipt of cash dividends from its subsidiaries.

First Busey Corporation’s ability to pay cash dividends to its stockholders and to service its debt is dependent on the receipt of cash dividends from its subsidiaries.

Under applicable regulatory requirements, an Illinois state-chartered bank, such as Busey Bank, may not pay dividends in excess of its net profits.

Busey Bank paid dividends to the Company of $ 95.0 million, $ 60.0 million, and $ 122.0 million during the years ended December 31, 2022, 2021, and 2020, respectively.

Busey Bank paid $ 90.0 million, $ 95.0 million, and $ 60.0 million in dividends to First Busey Corporation during the years ended December 31, 2023, 2022, and 2021, respectively.

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of income taxes consist of (dollars in thousands) :

Components of Busey’s income tax expense consist of the following (dollars in thousands) :

Years Ended December 31,

8 unchanged sentences

Total income tax expense $ 31,339 $ 33,426 $ 33,374

A reconciliation of federal and state income taxes at statutory rates to the income taxes included in the accompanying Consolidated Statements of Income is as follows:

A reconciliation of federal and state income taxes at statutory rates to Busey’s income taxes included in the accompanying Consolidated Statements of Income is as follows:

Years Ended December 31,

10 unchanged sentences

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net deferred taxes, reported in other assets or other liabilities in the accompanying Consolidated Balance Sheets, include the following amounts of deferred tax assets and liabilities (dollars in thousands) :

Net deferred taxes, reported in other assets or other liabilities in Busey’s Consolidated Balance Sheets , include the following amounts of deferred tax assets and liabilities (dollars in thousands) :

As of December 31,

3 unchanged sentences

Unrealized loss on cash flow hedge 6,654 8,365

Unrealized losses on securities available for sale 88,666 9,199

Unrealized losses on securities available for sale, net 70,423 88,666

Unrealized losses on securities held to maturity 10,156 11,919

5 unchanged sentences

Employee costs 4,789 3,298

Other 376 390

Unrealized loss on equity securities 75 —

Total deferred tax assets 129,311 149,791

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Management believes that it is more likely than not that the other deferred tax assets included in the accompanying Consolidated Balance Sheets will be fully realized.

The Company has determined that no valuation allowance is required for any deferred tax assets as of December 31, 2022, or 2021.

Busey has determined that no valuation allowance is required for any deferred tax assets as of December 31, 2023, or 2022.

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMPLOYEE BENEFIT PLANS

First Busey Corporation Profit Sharing Plan and Trust ( “ the 401(k) Plan ” )

All associates who meet certain age requirements are eligible to participate in the 401(k) Plan.

Busey provides retirement benefits under its 401(k) Plan.

All Busey associates who meet certain age requirements are eligible to participate in the 401(k) Plan.

There is no waiting period for participation in the 401(k) Plan.

The 401(k) Plan is funded primarily through participant contributions via payroll deductions.

The 401(k) Plan offers two contribution options:

(i) the traditional option allows plan participants to elect pre-tax contributions, and (ii) the Roth option allows plan participants to elect after tax contributions.

(1) the traditional option allows plan participants to elect pre-tax contributions, and (2) the Roth option allows plan participants to elect after tax contributions.

Plan participants may elect to make traditional and/or Roth 401(k) contributions, up to the annual deferral and catch-up limits established by the Internal Revenue Service.

First Busey supplements participant contributions by making Safe Harbor matching and discretionary profit sharing contributions.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Busey supplements participant contributions by making Safe Harbor matching and discretionary profit sharing contributions to the 401(k) Plan.

Safe Harbor Match

First Busey makes Safe Harbor matching contributions equal to 100 % of the first 3 % of eligible contributions and 50 % of the next 2 % of eligible contributions.

Busey makes Safe Harbor matching contributions to the 401(k) Plan equal to 100 % of the first 3 % of eligible participant contributions and 50 % of the next 2 % of eligible participant contributions.

The rights of participants in Safe Harbor matching contributions vest immediately.

Profit Sharing

All associates who meet certain age and service requirements are eligible to participate in the Company's profit-sharing contributions.

Discretionary profit-sharing contributions and related expenses, if any, are approved solely by the First Busey board of directors, and in no case may annual contributions be greater than the amounts deductible for federal income tax purposes for that year.

All associates who meet certain age and service requirements are eligible to participate in Busey's profit-sharing contributions.

Discretionary profit-sharing contributions and related expenses, if any, are approved solely by the First Busey Corporation board of directors, and in no case may annual contributions be greater than the amounts deductible for federal income tax purposes for that year.

The rights of participants in profit-sharing contributions vest ratably over a five-year period.

401(k) Plan Expenses

Expenses related to our employee benefit plans, reported in salaries, wages, and employee benefits in the accompanying Consolidated Statements of Income, are summarized in the table below (dollars in thousands) :

Expenses related to Busey’s employee benefit plans, reported in salaries, wages, and employee benefits in the accompanying Consolidated Statements of Income , are summarized in the table below (dollars in thousands) :

Years Ended December 31,

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401(k) Plan expenses

Profit-sharing expenses $ 2,960 $ 2,823 $ 2,551

Safe Harbor match expenses $ 3,745 $ 4,094 $ 3,708

Profit-sharing expenses 3,031 2,960 2,823

Total 401(k) Plan expenses $ 6,776 $ 7,054 $ 6,531

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

STOCK-BASED COMPENSATION

Stock Options

The Company has outstanding stock options that were issued under the First Community 2016 Equity Incentive Plan and assumed from acquisitions.

A summary of the status of, and changes in, the Company's stock option awards follows (dollars in thousands, except weighted-average exercise price) :

Shares Weighted-

Busey has outstanding stock options that were issued under the First Community 2016 Equity Incentive Plan and assumed from acquisitions.

A summary of the status of, and changes in, Busey's stock option awards follows (dollars in thousands, except weighted-average exercise price) :

Options Shares Weighted-

Price Weighted-

Life Intrinsic

Options outstanding at December 31, 2021 31,386 $ 23.53 4.88 $ 113

Exercised ( 4,840 ) 23.53

Expired ( 440 ) 23.53

Options outstanding at December 31, 2022 26,106 $ 23.53 3.88 $ 31

Options exercisable at December 31, 2022 26,106 $ 23.53 3.88 $ 31

Outstanding at December 31, 2022 26,106 $ 23.53 3.88 $ 31

Forfeited ( 4,840 ) 23.53

Outstanding at December 31, 2023 21,266 23.53 2.88 27

Exercisable at December 31, 2023 21,266 23.53 2.88 27

2020 Equity Plan

Under the terms of the 2020 Equity Plan, the Company has granted RSU, PSU, and DSU awards.

Upon vesting/delivery, shares are expected (though not required) to be issued from treasury.

The 2020 Equity Plan was originally approved by stockholders at the 2020 Annual Meeting of Stockholders.

A description of the 2020 Equity Plan, as originally approved, can be found in Appendix A within Busey’s Proxy Statement for the 2020 Annual Meeting of Stockholders filed on April 9, 2020 .

An amendment and restatement of the 2020 Equity Plan was approved by stockholders at the 2023 Annual Meeting of Stockholders.

Terms of the amended and restated 2020 Equity Plan are substantially identical to those of the originally approved 2020 Equity Plan, other than a 1,350,000 increase in the number of shares authorized for issuance under the plan.

More information can be found in Appendix A within Busey’s Proxy Statement for the 2023 Annual Meeting of Stockholders filed on April 14, 2023 .

Under the terms of the 2020 Equity Plan, Busey has granted RSU, PSU, and DSU awards.

Upon vesting and delivery, shares are expected, though not required, to be issued from treasury.

A description of RSU, PSU, and DSU awards granted in 2023 under the terms of the 2020 Equity Plan is provided below.

A description of RSU, PSU and DSU awards granted in 2021 and 2020 under the terms of the 2020 Equity Plan and 2010 Equity Plan can be found in the Company’s Annual Reports for the years ended December 31, 2021, and 2020, respectively.

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company issued 175,225 treasury shares in conjunction with the vesting of RSUs and settlement of DSUs in 2022.

A description of RSU, PSU, and DSU awards granted in 2022 and 2021 under the terms of the 2020 Equity Plan can be found in Busey’s Annual Reports for the years ended December 31, 2022, and 2021, respectively.

Busey issued 132,091 treasury shares in conjunction with the vesting of RSUs and PSUs, and settlement of DSUs in 2023.

The difference between the number of shares issued and the number of vested units is due to shares issued under a net share settlement option.

There were 1,723,343 shares available for issuance under the 2020 Equity Plan as of December 31, 2023.

The Company grants RSUs to members of management periodically throughout the year.