FIRST BUSEY CORP /NV/ 10-K/A

ITEM 1. BUSINESS Contents of Item 1. Business ORGANIZATION 6 ACQUISITIONS 7 BANKING CENTER MARKETS 8 HUMAN CAPITAL 10 CORPORATE GOVERNANCE 11 SUPERVISION, REGULATION, AND OTHER FACTORS 11 SECURITIES AND EXCHANGE COMMISSION REPORTING AND OTHER INFORMATION 24 NON-GAAP FINANCIAL INFORMATION 24 SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 33 ORGANIZATION First Busey Corporation is a $12.3 billion financial holding company. Organized in Nevada in 1980, First Busey Corporation is headquartered in Champaign, Illinois. First Busey Corporation’s common stock is traded on The Nasdaq Global Select Market under the symbol “BUSE.” Subsidiaries of First Busey Corporation Busey conducts the business of banking and provides related banking services, asset management, brokerage, and fiduciary services through Busey Bank, and provides payment technology solutions through FirsTech. Busey also has various other subsidiaries that are not significant to the consolidated entity. Busey Bank Busey Bank is an Illinois state-chartered bank organized in 1868 with its headquarters in Champaign, Illinois. Busey Bank has 46 banking centers in Illinois, eight in Missouri, three in southwest Florida, and one in Indianapolis, Indiana. Busey Bank offers a range of diversified financial products and services for consumers and businesses, including online and mobile banking capabilities to conveniently serve our customers’ needs. Commercial services include commercial, commercial real estate, real estate construction, and agricultural loans, as well as commercial depository services such as cash management. Retail banking services include residential real estate, home equity lines of credit, consumer loans, customary types of demand and savings deposits, money transfers, safe deposit services, and individual retirement accounts and other fiduciary services through our banking center, automated teller machines, and technology-based networks. Busey Bank’s principal sources of income are interest and fees on loans and investments, wealth management fees, service fees, and payment technology solutions revenue. Principal expenses are interest paid on deposits and borrowings and general operating expenses. Busey Bank’s primary markets are central Illinois; northern Illinois, including the Chicago metropolitan area; the St. Louis, Missouri, metropolitan area; southwest Florida; and central Indiana. First Busey Corporation | 2023 — 6 Table of Contents Contents of Item 1. Business Busey Bank provides a full range of asset management, investment, brokerage, fiduciary, philanthropic advisory, tax preparation, and farm management services to individuals, businesses, and foundations through its Wealth Management business. As of December 31, 2023, $12.1 billion of assets were under care. For individuals, Busey Bank provides investment management, trust and estate advisory services, and financial planning. For businesses, it provides investment management, business succession planning, and employee retirement plan services. For foundations, Busey Bank provides investment management, investment strategy consulting, and fiduciary services. Brokerage-related services are offered by Busey Investment Services, a division of Busey Bank, through a third-party arrangement. In addition, Busey Bank provides professional farm management and brokerage services to the agricultural industry. FirsTech FirsTech, a wholly-owned subsidiary of Busey Bank, provides comprehensive and innovative payment technology solutions. FirsTech's multi-channel payment platform allows businesses to collect payments from their customers in a variety of ways to enable fast, frictionless payments. Payment method vehicles include text-based mobile bill pay; interactive voice response; electronic payment concentration delivered to Automated Clearing House networks, money management, and credit card networks; walk-in payment processing for customers at retail pay agents; customer service payments made over a telephone; direct debit services; and lockbox remittance processing for customers to make payments by mail. FirsTech also provides additional tools to help clients with billing, reconciliation, bill reminders, and treasury services. FirsTech's client base represents a diverse set of industries, with a higher concentration in highly regulated industries, such as financial institutions, utility, insurance, and telecommunications industries. First Busey Risk Management First Busey Risk Management, previously a wholly-owned subsidiary of First Busey Corporation, incorporated in Nevada, was dissolved on December 18, 2023. It was a captive insurance company that insured against certain risks unique to the operations of First Busey Corporation and its subsidiaries for which insurance may not have been available or economically feasible in the insurance marketplace. First Busey Risk Management pooled resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. ACQUISITIONS Over the last several years, Busey completed the following acquisitions as part of our strategy to expand into new service areas and to provide broader coverage in areas where we already maintain a presence: Acquisition Date Companies Acquired January 8, 2015 Herget Financial Corp. and its wholly-owned bank subsidiary, Herget Bank, National Association April 30, 2016 Pulaski Financial Corp. and its wholly-owned subsidiary, Pulaski Bank, National Association July 2, 2017 First Community Financial Partners, Inc. and its wholly-owned subsidiary, First Community Financial Bank October 1, 2017 Mid Illinois Bancorp, Inc. and its wholly-owned subsidiary, South Side Trust & Savings Bank of Peoria January 31, 2019 The Bank Ed Corp. and its wholly-owned subsidiary, TheBANK of Edwardsville August 31, 2019 Investors' Security Trust Company May 31, 2021 Cummins-American Corp. and its wholly-owned subsidiary, Glenview State Bank Planned for 2024 Merchants and Manufacturers Bank Corporation, and its wholly-owned subsidiary, Merchants and Manufacturers Bank First Busey Corporation | 2023 — 7 Table of Contents Contents of Item 1. Business Further information related to completed acquisitions has been presented in the Annual Reports previously filed with the SEC corresponding to the year of each acquisition. Acquisition of Merchants and Manufacturers Bank Corporation Planned for The Second Quarter of 2024 On November 27, 2023, First Busey Corporation announced the signing of a definitive agreement with M&M, pursuant to which Busey will acquire M&M and its wholly-owned subsidiary, M&M Bank, through a merger transaction. This partnership will add M&M’s Life Equity Loan ® products to Busey’s existing suite of services, and expand Busey’s presence in the Chicago Metropolitan Statistical Area. Under the terms of the merger agreement, M&M’s stockholders will have the right to receive for each share of M&M common stock, at the election of each stockholder and subject to proration and adjustment, either (1) $117.74 in cash, (2) 5.7294 shares of Busey common stock, or (3) mixed consideration of $34.55 in cash and 4.0481 shares of Busey common stock, with total consideration to consist of approximately 71% stock and 29% cash. Based upon Busey’s 20‑day volume-weighted average closing price as of November 24, 2023, the aggregate implied transaction value is approximately $41.6 million. The merger is expected to be finalized in the second quarter of 2024, subject to customary closing conditions and required approvals, including regulatory approvals and the approval of M&M’s stockholders. It is anticipated that M&M Bank will be merged with and into Busey Bank at a date following the completion of the merger. At the time of the bank merger, M&M Bank’s banking centers will become banking centers of Busey Bank, except for M&M’s banking center located at 990 Essington Rd., Joliet, Illinois, which is expected to be closed in connection with the bank merger. See “ Note 23. Acquisitions ” in the Notes to the Consolidated Financial Statements for further information relating to this acquisition. BANKING CENTER MARKETS Busey Bank serves the Illinois banking market with 46 banking centers. Our Illinois markets feature several Fortune 1000 companies. Those organizations, coupled with large healthcare and higher education sectors, anchor the communities in which they are located and have provided a comparatively stable foundation for housing, employment, and small business. Ten of our banking centers in Illinois are located within the Chicago Metropolitan Statistical Area, and 12 of our banking centers in Illinois are located within the St. Louis Metropolitan Statistical Area. Busey Bank has eight banking centers in Missouri. St. Louis, Missouri has a diverse economy with major employment sectors including health care, financial services, professional and business services, and retail. We have a total of 20 banking centers within the boundaries of the St. Louis Metropolitan Statistical Area, including branches in both Illinois and Missouri. Busey Bank has three banking centers in southwest Florida, an area which has experienced strong population growth, job growth, and an expanded housing market, as well as the benefits of a tourism and winter resort economy. Busey Bank has one banking center in the Indianapolis, Indiana area, which is the most populous city of Indiana with a diverse economy, particularly because it serves as the headquarters of many large corporations. First Busey Corporation | 2023 — 8 Table of Contents Contents of Item 1. Business Market Competition Busey Bank competes actively with national and state banks, savings and loan associations, and credit unions for deposits and loans mainly in Illinois; the St. Louis, Missouri, metropolitan area; southwest Florida; and central Indiana. Busey Bank competes for real estate and other loans primarily on the basis of type of loan, interest rates and loan fees, and the quality of services provided. Busey Bank and FirsTech compete with other financial institutions, including asset management and trust companies, security broker/dealers, personal loan companies, insurance companies, finance companies, leasing companies, mortgage companies, payment technology solution companies, financial technology companies, and certain governmental agencies, all of which actively engage in marketing various types of loans, deposit accounts, wealth management, and other products and services. Busey Bank faces substantial competition in attracting deposits from other commercial banks, savings institutions, digital banks, money market and mutual funds, credit unions, insurance agencies, brokerage firms, and other investment vehicles. Customers for banking services are generally influenced by convenience, quality of service, personal contacts, price of services, and availability of products. Busey Bank attracts a significant amount of deposits through its banking centers, primarily from the communities in which those banking centers are located; therefore, competition for those deposits is principally from other commercial banks, savings institutions, and credit unions located in the same communities. Busey Bank competes for deposits by offering a variety of deposit accounts at competitive rates, high-quality customer service, convenient business hours, technology enabled solutions including internet and mobile banking, and convenient banking centers with inter-branch deposit and withdrawal privileges. Based on information obtained from the FDIC Summary of Deposits dated June 30, 2023, the most recent report available, out of 366 financial institutions headquartered in the State of Illinois, Busey Bank ranked fourth in total deposits within the Illinois market. Further, Busey Bank ranked in the top 10 in total deposits in nine Illinois counties: As of June 30, 2023 County Busey Bank Market Share Ranking Champaign 1 Macon 1 Madison 1 Grundy 3 St. Clair 3 Tazewell 3 McLean 4 Peoria 4 Will 8 First Busey Corporation | 2023 — 9 Table of Contents Contents of Item 1. Business HUMAN CAPITAL Busey is built upon a strong commitment to associate, customer, stockholder, and community experiences with our associates as the cornerstone of this unwavering commitment. Busey’s vision, Service Excellence in Everything We Do, starts with dedication to our associates. We are deeply humbled to be consistently recognized nationally and locally throughout our footprint, including being named among America’s Best Banks by Forbes and the Best Banks to Work For by American Banker since 2016; the Best Places to Work in Money Management by Pension and Investments since 2018; and a Leading Disability Employer by the National Organization on Disability. Locally, Busey has been voted as a Best Places to Work in Illinois since 2016 and a Best Company to Work For in Florida since 2017. From exceeding the needs of customers and colleagues to serving our communities selflessly, our associates show unmatched dedication to Busey. Their shared experiences are what make these and other awards possible. Since we opened our doors over 155 years ago, we have maintained our core values, creating a strong foundation and shaping our inclusive culture. Busey remains committed to bringing diversity and inclusion to our organization, the banking profession, and the communities where we live and work. Busey is dedicated to attracting and retaining talent across a variety of backgrounds and experiences. A diverse team—one with varying beliefs and opinions—promotes productivity, creativity, and innovation, while better meeting and exceeding the needs of a diverse customer base. Recruiting, supporting, and retaining a diversified workforce with varying perspectives and ideas, while having an inclusive culture, is the foundation of our core values—One Busey. Our endeavors in this regard are reported to the Employee Benefit and Compensation Committee, as well as the Board's Enterprise Risk Committee, which hold the organization accountable to this core value at the highest levels of management. We maintain an Affirmative Action Plan, the results of which are reviewed by these same groups. Busey supports and empowers women in the workplace as reflected in our gender-diverse workforce. In 2023, women comprised 59% of Busey's total number of associates, and made up 37% of our senior leadership, providing meaningful contributions not only within the organization but throughout the communities we serve. Associate engagement is an important barometer of our cultural health. We regularly solicit feedback to understand the views of our associates about their work environment and Busey’s culture. The results from engagement surveys are used to implement programs and processes designed to enhance engagement and improve the associate experience. With a strong 91% participation rate and an approach focused on continuous improvement, 2022 results increased to the highest scores in Busey’s history. One such way to keep associates informed and engaged is through our quarterly update calls, which are conducted by Busey leadership. These calls provide important information about the financial health of the Company, but more importantly they provide a cultural touchpoint to solidify Busey’s commitment to our number one asset – our associates. A tenet of our engaged culture is a commitment to investing in associates through unique, award-winning training and development programs. In 2023, 55% of our associate base engaged in talent and leadership development programs. Since 2017, Busey has been a proud recipient of the Association for Talent Development’s BEST Award, which is presented to organizations that demonstrate enterprise-wide success as a result of employee talent development. Additionally, we care about the health and well-being of our associates and their families, as evidenced by a strong investment and a 96% participation rate in our innovative, holistic health and wellness program, B Well. Investments in B Well include a stress management and mental wellness component, lifesaving biometric screenings, a corporate health and wellness coach, onsite wellness center, health club reimbursements, on-demand wellness streaming service and Health Savings Account investments funded by the Company. In 2023, Busey was honored to be recognized among the 2022 Illinois' Healthiest Employers by global health insurer Cigna and Crain’s Content Studio, marking the fifth year the Company was named among this elite group. First Busey Corporation | 2023 — 10 Table of Contents Contents of Item 1. Business As of December 31, 2023, Busey and our subsidiaries had a total of 1,479 full-time equivalents. Geographic distribution of our associates is as follows: As of December 31, 2023 Full-time Part-time Total Busey associates by state Illinois 1,094 80 1,174 Missouri 179 5 184 Florida 93 — 93 Indiana 28 — 28 Remote 42 1 43 Total number of associates 1,436 86 1,522 Full-time equivalents 1,436 43 1,479 CORPORATE GOVERNANCE Information about Busey’s Board of Directors and Executive Officers is presented under “Officers & Directors” on Busey’s Investor Relations website at ir.busey.com . Additionally, a listing of Busey’s executive officers is presented in Part III, Item 10 of this Form 10‑K under the caption “ Executive Officers .” Busey has adopted a code of ethics applicable for all of our associates, officers, and directors. The text of this code of ethics is presented under “Governance Documents” on Busey’s Investor Relations website at ir.busey.com . Reference to Busey’s Investor Relations website does not constitute incorporation by reference of the information contained on the website and it should not be considered part of this document. SUPERVISION, REGULATION, AND OTHER FACTORS General FDIC-insured institutions, like Busey Bank, as well as their holding companies and affiliates, are extensively regulated under federal and state law. As a result, Busey’s growth and earnings performance may be affected not only by management decisions, competitive dynamics, and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the DFPR, the Federal Reserve, the FDIC and the CFPB. Furthermore, taxation laws administered by the Internal Revenue Service and state taxing authorities, accounting rules developed by the FASB, securities laws administered by the SEC and state securities authorities, and anti-money laundering laws enforced by the U.S. Treasury have an impact on Busey’s business. The effect of these statutes, regulations, regulatory policies, and accounting rules are significant to Busey’s operations and results. Federal and state banking laws impose a comprehensive system of supervision, regulation, and enforcement on the operations of FDIC-insured institutions, their holding companies, and affiliates that is intended primarily for the protection of the FDIC-insured deposits and depositors of banks, rather than stockholders. These laws, and the regulations of the bank regulatory agencies issued under them, affect, among other things, the scope of Busey’s business; the kinds and amounts of investments First Busey and Busey Bank may make; required capital levels relative to assets; the nature and amount of collateral for loans; the establishment of branches; the ability to merge, consolidate and acquire; dealings with First Busey’s and Busey Bank’s insiders and affiliates; and Busey’s payment of dividends. First Busey Corporation | 2023 — 11 Table of Contents Contents of Item 1. Business In reaction to the global financial crisis and particularly following the passage of the Dodd-Frank Act in 2010, Busey experienced heightened regulatory requirements and scrutiny. Although the reforms primarily targeted systemically important financial service providers (at the time, those with assets of $50 billion and greater), certain provisions of the law triggered at $10 billion in assets and the influence of other provisions filtered down in varying degrees to community banks over time, causing Busey’s compliance and risk management processes, and the costs thereof, to increase. The Regulatory Relief Act provided meaningful relief for banks and their holding companies that were not considered systemically important (amended to be those with assets under $250 billion). However, the $10 billion threshold remained in place for certain Dodd-Frank Act reforms that are applicable to Busey, as discussed below. The supervisory framework for U.S. banking organizations subjects banks and bank holding companies to regular examination by their respective regulatory agencies, which results in examination reports and ratings that are not publicly available and that can impact the conduct and growth of their businesses. These examinations consider not only compliance with applicable laws and regulations, but also capital levels, asset quality and risk, management ability and performance, earnings, liquidity, and various other factors. The regulatory agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law, or are otherwise inconsistent with laws and regulations. The following is a summary of the material elements of the supervisory and regulatory framework applicable to First Busey and Busey Bank. It does not describe all of the statutes, regulations, and regulatory policies that apply, nor does it restate all of the requirements of those that are described. The descriptions are qualified in their entirety by reference to particular statutory and regulatory provisions. The $10 billion Threshold As indicated in the introduction above, the Dodd-Frank Act included a number of requirements that triggered when a banking entity crossed over $10 billion in assets. Those included requirements for stress testing capital, maintenance of a risk committee, adherence to the Volcker Rule’s complicated prohibitions on proprietary trading and ownership of private funds, limitations on interchange fees for certain debit transactions, clearing of swap agreements, and examination and enforcement related to consumer financial services by the CFPB, in addition to a number of heightened reporting requirements. The Regulatory Relief Act eliminated the stress test and risk committee requirements for banking entities between $10 billion and $50 billion, but the other Dodd-Frank regulations and reporting requirements were not changed. Busey crossed the $10 billion threshold in 2020. The material consequences to Busey of crossing the $10 billion threshold are as follows: Interchange Fees The Durbin Amendment to the Dodd-Frank Act required the Federal Reserve to establish a maximum permissible interchange fee for many types of debit transactions. Interchange fees, also known as “swipe” fees, are charges that merchants pay to card-issuing banks, such as Busey Bank, for processing electronic payment transactions. The Federal Reserve set the maximum interchange fee at 21 cents, plus five basis points of the transaction value. The Federal Reserve also adopted a rule to allow a debit card issuer to recover one cent per transaction for fraud prevention purposes if the issuer complies with certain fraud-related requirements required by the Federal Reserve. Fee limits imposed by the Durbin Amendment are applicable to any banking entity with over $10 billion in assets and became applicable to Busey Bank on July 1, 2022, following a six-month transition period. Compliance with the Durbin Amendment has reduced Busey Bank’s earnings on the covered debit transactions. First Busey Corporation | 2023 — 12 Table of Contents Contents of Item 1. Business Volcker Rule The Volcker Rule (also a part of the Dodd-Frank Act) restricts the ability of banking entities (holding companies and their affiliates) with over $10 billion in assets to sponsor or invest in private funds, or to engage in certain types of proprietary trading. In October 2019, the Federal Reserve, OCC, FDIC, Commodity Futures Trading Commission, and SEC finalized rules to tailor the application of the Volcker Rule based on the size and scope of a banking entity’s trading activities and to clarify and amend certain definitions, requirements, and exemptions. Banking entities have two years (with a possibility of extensions) to comply with the Volcker requirements after crossing the $10 billion threshold. Busey does not materially engage in the activities prohibited by the Volcker Rule; therefore, the application of the rule will not have a material effect on Busey’s operations. CFPB Examination and Enforcement Although most of the CFPB’s rules issued under federal consumer financial protection laws are applicable to all providers of consumer financial services, the CFPB only has examination and enforcement authority over banks with more than $10 billion in assets (measured over four consecutive quarters). Busey Bank is under CFPB oversight for consumer banking transactions, and continues to be examined for compliance with consumer laws by its primary federal regulatory agency, the FDIC. Clearing Swaps Agreements Banks with over $10 billion in assets are required to clear swaps agreements on exchanges. Busey Bank began to comply with the exchange requirement beginning in 2021. Risk Committee The Dodd Frank Act required publicly traded bank holding companies with more than $10 billion in total consolidated assets to establish and maintain a risk committee. Pursuant to the Federal Reserve’s final rules issued under the Regulatory Relief Act, that threshold was increased to $50 billion. Although it is not yet required to have a risk committee in place, Busey established a committee comprised of holding company directors in 2018 to oversee risk matters in preparation for future growth. The Role of Capital Regulatory capital represents the net assets of a banking organization available to absorb losses. Because of the risks attendant to their business, FDIC-insured institutions generally are required to hold more capital than other businesses. These requirements directly affects Busey’s earnings capabilities. Although capital historically has been one of the key measures of the financial health of both bank holding companies and banks, its role became fundamentally more important in the wake of the global financial crisis, as the banking regulators recognized that the amount and quality of capital held by banks prior to the crisis was insufficient to absorb losses during periods of severe stress. First Busey Corporation | 2023 — 13 Table of Contents Contents of Item 1. Business Capital Levels Banks have been required to hold minimum levels of capital based on guidelines established by the bank regulatory agencies since 1983. The minimums have been expressed in terms of ratios of “capital” divided by “total assets.” Beginning in 1989, capital guidelines for U.S. banks have been based upon international capital accords, known as “Basel” rules, adopted by the Basel Committee on Banking Supervision, a committee of central banks and bank supervisors that acts as the primary global standard-setter for prudential regulation, as implemented by the U.S. bank regulatory agencies on an interagency basis. The accords recognized that bank assets for the purpose of the capital ratio calculations needed to be risk weighted (the theory being that riskier assets should require more capital) and that off-balance sheet exposures needed to be factored into the calculations. Following the global financial crisis, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced agreement on a strengthened set of capital requirements for banking organizations around the world, known as Basel III, to address deficiencies recognized in connection with the global financial crisis. The Basel III Rule U.S. federal banking agencies adopted the Basel III Rule in regulations that were effective (with a number of phase-ins) in 2015. The Basel III Rule established capital standards for banks and bank holding companies that are meaningfully more stringent than those in place previously. The Basel III Rule is applicable to all banking organizations that are subject to minimum capital requirements, including federal and state banks and savings and loan associations, as well as to most bank and savings and loan holding companies. First Busey and Busey Bank are each subject to the Basel III Rule as described below. Risk-Weighting Assets Three of the required Basel III capital ratios, as discussed immediately below, are calculated using a denominator of total “risk-weighted” assets. In the calculation of so-called “risk weights,” which was introduced in the first Basel accord, bank assets were divided into four basic risk-weighted categories of zero, 20, 50, and 100%. Basel III required a more complex, detailed and calibrated assessment of risk in the calculation of risk weightings. Although it uses the same technique introduced by Basel I in assigning assets to risk-weight categories, it significantly increases the categories and adds conditions. Risk weights were established as high as 250% for certain commercial real estate exposures, and higher for certain derivatives. The assignment of risk weights continues to be under review by the banking agencies and has culminated in an initiative called “Basel III: Endgame,” which, as proposed, would only apply to banks with $100 billion in assets or more and would not impact Busey. Minimum Capital Ratio Requirements Basel III also increased the required quantity and quality of capital. Not only did it increase most of the required minimum capital ratios in effect prior to January 1, 2015, but in requiring that forms of capital be of higher quality to absorb loss, it also introduced the concept of Common Equity Tier 1 Capital, which consists primarily of common stock, related surplus (net of Treasury stock), retained earnings, and Common Equity Tier 1 minority interests subject to certain regulatory adjustments. The Basel III Rule also changed the definition of capital by establishing more stringent criteria that instruments must meet to be considered Additional Tier 1 Capital (primarily non-cumulative perpetual preferred stock that meets certain requirements) and Tier 2 Capital (primarily other types of preferred stock and subordinated debt, subject to limitations). The Basel III Rule also constrained the inclusion of minority interests, mortgage-servicing assets, and deferred tax assets in capital and required deductions from Common Equity Tier 1 Capital if such assets exceeded a percentage of a banking institution’s Common Equity Tier 1 Capital. The Basel III Rule requires minimum capital ratios as follows: • A ratio of Common Equity Tier 1 Capital equal to 4.5% of risk-weighted assets; First Busey Corporation | 2023 — 14 Table of Contents Contents of Item 1. Business • A ratio of Tier 1 Capital equal to 6% of risk-weighted assets; • A continuation of the minimum required amount of Total Capital (Tier 1 plus Tier 2) at 8% of risk-weighted assets; and • A leverage ratio of Tier 1 Capital to total quarterly average assets equal to 4% in all circumstances. Capital Conservation Buffer In addition, institutions that want to make capital distributions (including for dividends and repurchases of stock) and pay discretionary bonuses to executive officers without restriction also must maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer. The purpose of the conservation buffer is to ensure that banking institutions maintain a buffer of capital that can be used to absorb losses during periods of financial and economic stress. Factoring in the conservation buffer increases the minimum ratios depicted above to 7% for Common Equity Tier 1 Capital, 8.5% for Tier 1 Capital and 10.5% for Total Capital. Well-Capitalized Requirements The ratios described above are minimum standards for banking organizations to be considered “adequately capitalized.” Bank regulatory agencies uniformly encourage banks to hold more capital and be “well-capitalized” and, to that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements. For example, a banking organization that is well-capitalized may: (1) qualify for exemptions from prior notice or application requirements otherwise applicable to certain types of activities; (2) qualify for expedited processing of other required notices or applications; and (3) accept, roll-over or renew brokered deposits. Higher capital levels also could be required if warranted by the particular circumstances or risk profiles of individual banking organizations. For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, the risks posed by concentrations of credit, nontraditional activities, or securities trading activities. Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions ( i.e. , Tier 1 Capital less all intangible assets), well above the minimum levels. Under the capital regulations of the FDIC and Federal Reserve, in order to be well-capitalized, a banking organization must maintain all of the following: • A Common Equity Tier 1 Capital ratio to risk-weighted assets of 6.5% or more; • A ratio of Tier 1 Capital to total risk-weighted assets of 8% or more; • A ratio of Total Capital to total risk-weighted assets of 10% or more; and • A leverage ratio of Tier 1 Capital to total adjusted average quarterly assets of 5% or greater. It is possible under the Basel III Rule to be well-capitalized while remaining out of compliance with the capital conservation buffer discussed above. As of December 31, 2023: (1) Busey Bank was not subject to a directive from the FDIC to increase its capital, and (2) Busey Bank was well-capitalized, as defined by FDIC regulations. As of December 31, 2023, First Busey had regulatory capital in excess of the Federal Reserve’s requirements and met the requirements to be well-capitalized. First Busey also is in compliance with the capital conservation buffer. First Busey Corporation | 2023 — 15 Table of Contents Contents of Item 1. Business Prompt Corrective Action The concept of an institution being “well-capitalized” is part of a regulatory enforcement regime that provides the federal banking regulators with broad power to take “prompt corrective action” to resolve the problems of depository institutions based on the capital level of each particular institution. The extent of the regulators’ powers depends on whether the institution in question is “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” in each case as defined by regulation. Depending upon the capital category to which an institution is assigned, the regulators’ corrective powers include: (1) requiring the institution to submit a capital restoration plan; (2) limiting the institution’s asset growth and restricting its activities; (3) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (4) restricting transactions between the institution and its affiliates; (5) restricting the interest rate that the institution may pay on deposits; (6) ordering a new election of directors of the institution; (7) requiring that senior executive officers or directors be dismissed; (8) prohibiting the institution from accepting deposits from correspondent banks; (9) requiring the institution to divest certain subsidiaries; (10) prohibiting the payment of principal or interest on subordinated debt; and (11) ultimately, appointing a receiver for the institution. Supervision and Regulation of First Busey Corporation General First Busey Corporation, as the sole stockholder of Busey Bank, is a bank holding company. As a bank holding company, First Busey Corporation is registered with, and subject to regulation, supervision, and enforcement by, the Federal Reserve under the BHCA. First Busey Corporation is legally obligated to act as a source of financial and managerial strength to Busey Bank and to commit resources to support it in circumstances where we might not otherwise do so. Under the BHCA, First Busey Corporation is subject to periodic examination by the Federal Reserve and is required to file with the Federal Reserve periodic reports of its operations and such additional information regarding First Busey Corporation and Busey Bank as the Federal Reserve may require. Acquisitions, Activities and Financial Holding Company Election The primary purpose of a bank holding company is to control and manage banks. The BHCA generally requires the prior approval of the Federal Reserve for any merger involving a bank holding company or any acquisition by a bank holding company of another bank or bank holding company. Subject to certain conditions (including deposit concentration limits established by the BHCA), the Federal Reserve may allow a bank holding company to acquire banks located in any state of the U.S. In approving interstate acquisitions, the Federal Reserve is required to give effect to applicable state law limitations on the aggregate amount of deposits that may be held by the acquiring bank holding company and its FDIC-insured institution affiliates in the state in which the target bank is located (provided that those limits do not discriminate against out-of-state institutions or their holding companies) and state laws that require that the target bank have been in existence for a minimum period of time (not to exceed five years) before being acquired by an out-of-state bank holding company. Furthermore, in accordance with the Dodd-Frank Act, bank holding companies must be well-capitalized and well-managed in order to effect interstate mergers or acquisitions. For a discussion of the capital requirements, see “ Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital ” above. First Busey Corporation | 2023 — 16 Table of Contents Contents of Item 1. Business The BHCA generally prohibits bank holding companies from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company that is not a bank and from engaging in any business other than that of banking, managing, and controlling banks, or furnishing services to banks and their subsidiaries. This general prohibition is subject to a number of exceptions. The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve prior to November 11, 1999, to be “so closely related to banking ... as to be a proper incident thereto.” This authority permits First Busey Corporation to engage in a variety of banking-related businesses, including the ownership and operation of a savings association, or any entity engaged in consumer finance, equipment leasing, and mortgage banking and brokerage services. The BHCA does not place territorial restrictions on the domestic activities of nonbank subsidiaries of bank holding companies. Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity, or that the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally. First Busey Corporation has elected to operate as a financial holding company. In order to maintain its status as a financial holding company, First Busey and Busey Bank must be well-capitalized, well-managed, and Busey Bank must have a least a satisfactory CRA rating. If the Federal Reserve determines that a financial holding company is not well-capitalized or well-managed, the company has a period of time in which to achieve compliance, but during the period of noncompliance, the Federal Reserve may place any limitations on the company it believes to be appropriate. Furthermore, if the Federal Reserve determines that a financial holding company’s subsidiary bank has not received a satisfactory CRA rating, that company will not be able to commence any new financial activities or acquire a company that engages in such activities. Change in Control Federal law also prohibits any person or company from acquiring “control” of an FDIC-insured depository institution or its holding company without prior notice to the appropriate federal bank regulator. “Control” is conclusively presumed to exist upon the acquisition of 25% or more of the outstanding voting securities of a bank or bank holding company, but may arise under certain circumstances between 10% and 24.99% ownership. Capital Requirements Bank holding companies are required to maintain capital in accordance with Federal Reserve capital adequacy requirements. For a discussion of capital requirements, see “ Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital ” above. Dividend Payments First Busey Corporation's ability to pay dividends to its stockholders may be affected by both general corporate law considerations and the policies of the Federal Reserve applicable to bank holding companies. As a Nevada corporation, First Busey Corporation is subject to the limitations of Nevada law, which allows First Busey Corporation to pay dividends unless, after such dividend, (1) First Busey Corporation would not be able to pay its debts as they become due in the usual course of business or (2) First Busey Corporation’s total assets would be less than the sum of its total liabilities plus any amount that would be needed, if First Busey Corporation were to be dissolved at the time of the dividend payment, to satisfy the preferential rights upon dissolution of stockholders whose rights are superior to the rights of the stockholders receiving the distribution. First Busey Corporation | 2023 — 17 Table of Contents Contents of Item 1. Business As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should eliminate, defer, or significantly reduce dividends to stockholders if: (1) the company’s net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (2) the prospective rate of earnings retention is inconsistent with the company’s capital needs and overall current and prospective financial condition; or (3) the company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. The Federal Reserve also possesses enforcement powers over bank holding companies and their nonbank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies. In addition, under the Basel III Rule, institutions that seek the freedom to pay dividends have to maintain 2.5% in Common Equity Tier 1 Capital attributable to the capital conservation buffer. See “ Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital ” above. Incentive Compensation There have been a number of developments in recent years focused on incentive compensation plans sponsored by bank holding companies and banks, reflecting recognition by the bank regulatory agencies and Congress that flawed incentive compensation practices in the financial industry were one of many factors contributing to the global financial crisis. The result is interagency guidance on sound incentive compensation practices. The interagency guidance recognized three core principles. Effective incentive plans should: (1) provide employees incentives that appropriately balance risk and reward; (2) be compatible with effective controls and risk-management; and (3) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors. Much of the guidance addresses large banking organizations and, because of the size and complexity of their operations, the regulators expect those organizations to maintain systematic and formalized policies, procedures, and systems for ensuring that the incentive compensation arrangements for all executive and non-executive employees covered by this guidance are identified and reviewed, and appropriately balance risks and rewards. Smaller banking organizations, like First Busey, that use incentive compensation arrangements are expected to be less extensive, formalized, and detailed than those of the larger banks. Monetary Policy The monetary policy of the Federal Reserve has a significant effect on the operating results of financial or bank holding companies and their subsidiaries, which was exacerbated by the COVID-19 pandemic. Among the tools available to the Federal Reserve to affect the money supply are open market transactions in U.S. government securities and changes in the discount rate on bank borrowings. These tools are used in varying combinations to influence overall growth and distribution of bank loans, investments, and deposits, and their use may affect interest rates charged on loans or paid on deposits. Federal Securities Regulation First Busey Corporation’s common stock is registered with the SEC under the Securities Act and the Exchange Act. Consequently, First Busey Corporation is subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act. First Busey Corporation | 2023 — 18 Table of Contents Contents of Item 1. Business Corporate Governance The Dodd-Frank Act addressed many investor protection, corporate governance, and executive compensation matters that will affect most U.S. publicly traded companies. It increased stockholder influence over boards of directors by requiring companies to give stockholders a nonbinding vote on executive compensation and so-called “golden parachute” payments and by authorizing the SEC to promulgate rules that would allow stockholders to nominate and solicit voters for their own candidates using a company’s proxy materials. The legislation also directed the Federal Reserve to promulgate rules prohibiting excessive compensation paid to executives of bank holding companies, regardless of whether such companies are publicly traded. Supervision and Regulation of Busey Bank General Busey Bank is an Illinois-chartered bank. Its deposit accounts are insured by the DIF to the maximum extent provided under federal law and FDIC regulations, currently $250,000 per insured depositor category. As an Illinois-chartered FDIC-insured bank, Busey Bank is subject to the examination, supervision, reporting, and enforcement requirements of the DFPR, the chartering authority for Illinois banks. Busey Bank is also regulated by the FDIC, designated by federal law as the primary federal regulator of insured state banks that, like Busey Bank, are not members of the Federal Reserve System. Deposit Insurance As an FDIC-insured institution, Busey Bank is required to pay deposit insurance premium assessments to the FDIC. The FDIC has adopted a risk-based assessment system whereby FDIC-insured institutions pay insurance premiums at rates based on their risk classification. For institutions like Busey Bank that are not considered large and highly complex banking organizations, the risk classification is based on examination ratings and financial ratios. A bank’s assessment is then calculated by multiplying its assessment rate by its assessment base (average consolidated total assets minus its average tangible equity). The total base assessment rates currently range from 1.5 basis points to 30 basis points on an annualized basis. However, the maximum rate is 18 basis points for financial institutions in the top two categories of examination composite ratings. At least semi-annually, the FDIC updates its loss and income projections for the DIF and, if needed, increases or decreases the assessment rates, following notice and comment on proposed rule making. For this purpose, the reserve ratio is the DIF balance divided by estimated insured deposits. In response to the global financial crisis, the Dodd-Frank Act increased the minimum reserve ratio from 1.15% to 1.35% of the estimated amount of total insured deposits. In the semi-annual update in June 2022, the FDIC projected that the reserve ratio was at risk of not reaching the statutory minimum of 1.35% by September 30, 2028, statutory deadline. Based on this update, the FDIC approved an increase in initial base deposit insurance assessment rate schedules uniformly by two basis points, applicable to all insured depository institutions. The increase was effective on January 1, 2023, applicable to the first quarterly assessment period of 2023 (January 1 through March 31, 2023). In addition, because the total cost of the failures of Silicon Valley Bank and Signature Bank was approximately $16.3 billion, the FDIC adopted a special assessment for banks having deposits above $5 billion, at an annual rate of 13.4 basis points beginning with the first quarterly assessment period of 2024 (January 1 through March 31, 2024) with an invoice payment date of June 28, 2024, and will continue to collect special assessments for an anticipated total of eight quarterly assessment periods. The base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits for the December 31, 2022, reporting period, adjusted to exclude the first $5 billion in estimated uninsured deposits. Busey Bank was not subject to this assessment due to uninsured deposits being below the $5 billion exclusion threshold. First Busey Corporation | 2023 — 19 Table of Contents Contents of Item 1. Business Supervisory Assessments All Illinois-chartered banks are required to pay supervisory assessments to the DFPR to fund the operations of that agency. The amount of the assessment is calculated on the basis of each bank’s total assets. During the year ended December 31, 2023, Busey Bank paid supervisory assessments to the DFPR totaling approximately $0.7 million. Capital Requirements Banks are generally required to maintain capital levels in excess of other businesses. For a discussion of capital requirements, see “ Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital ” above. Liquidity Requirements Liquidity is a measure of the ability and ease with which bank assets may be converted to meet financial obligations to pay deposits or other funding sources. Banks are required to implement liquidity risk management frameworks that ensure they maintain sufficient liquidity, including a cushion of unencumbered, high quality, liquid assets to withstand a range of stress events. The level and speed of deposit outflows contributing to the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank in the first half of 2023 was unprecedented and contributed to acute liquidity and funding strain on the financial industry. These events have further underscored the importance of liquidity risk management and contingency funding planning by insured depository institutions like Busey Bank. The primary role of liquidity risk management is to: (1) prospectively assess the need for funds to meet obligations; and (2) ensure the availability of cash or collateral to fulfill those needs at the appropriate time by coordinating the various sources of funds available to the institution under normal and stressed conditions. Basel III includes a liquidity framework that requires the largest insured institutions to measure their liquidity against specific liquidity tests. One test, referred to as the liquidity coverage ratio, is designed to ensure that the banking entity has an adequate stock of unencumbered high-quality liquid assets that can be converted easily and immediately in private markets into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario. The other test, known as the net stable funding ratio, is designed to promote more medium- and long-term funding of the assets and activities of FDIC-insured institutions over a one-year horizon. These tests provide an incentive for banks and holding companies to increase their holdings in Treasury securities and other sovereign debt as a component of assets, increase the use of long-term debt as a funding source and rely on stable funding like core deposits (in lieu of brokered deposits). Although these tests do not, and will not, apply to Busey Bank, management continues to review its liquidity risk management framework in light of regulatory and industry developments. Dividend Payments The primary source of funds for First Busey Corporation is dividends from Busey Bank. Under Illinois banking law, Illinois-chartered banks generally may pay dividends only out of undivided profits. The DFPR may restrict the declaration or payment of a dividend by an Illinois-chartered bank. The payment of dividends by any FDIC-insured institution is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and a FDIC-insured institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized. Notwithstanding the availability of funds for dividends, the FDIC and the DFPR may prohibit the payment of dividends by Busey Bank if either or both determine such payment would constitute an unsafe or unsound practice. In addition, under the Basel III Rule, institutions that seek the freedom to pay dividends have to maintain 2.5% in Common Equity Tier 1 Capital attributable to the capital conservation buffer. First Busey Corporation | 2023 — 20 Table of Contents Contents of Item 1. Business State Bank Investments and Activities Busey Bank is permitted to make investments and engage in activities directly or through subsidiaries as authorized by Illinois law. However, under federal law and FDIC regulations, FDIC-insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments of a type, or in an amount, that are not permissible for a national bank. Federal law and FDIC regulations also prohibit FDIC-insured state banks and their subsidiaries, subject to certain exceptions, from engaging as principal in any activity that is not permitted for a national bank unless the bank meets, and continues to meet, its minimum regulatory capital requirements, and the FDIC determines that the activity would not pose a significant risk to the DIF. These restrictions have not had, and are not currently expected to have, a material impact on the operations of Busey Bank. Insider Transactions Busey Bank is subject to certain restrictions imposed by federal law on “covered transactions” between Busey Bank and its “affiliates.” First Busey Corporation is an affiliate of Busey Bank for purposes of these restrictions, and covered transactions subject to the restrictions include extensions of credit to First Busey Corporation, investments in the stock or other securities of First Busey Corporation, and the acceptance of the stock or other securities of First Busey Corporation as collateral for loans made by Busey Bank. The Dodd-Frank Act enhanced the requirements for certain transactions with affiliates, including an expansion of the definition of “covered transactions” and an increase in the amount of time for which collateral requirements regarding covered transactions must be maintained. Certain limitations and reporting requirements are also placed on extensions of credit by Busey Bank to its directors and officers, to directors and officers of First Busey Corporation and its subsidiaries, to principal stockholders of First Busey Corporation, and to “related interests” of such directors, officers, and principal stockholders. In addition, federal law and regulations may affect the terms upon which any person who is a director or officer of First Busey Corporation or Busey Bank, or a principal stockholder of First Busey Corporation, may obtain credit from banks with which Busey Bank maintains a correspondent relationship. Safety and Soundness Standards/Risk Management Federal banking agencies have adopted operational and managerial standards to promote the safety and soundness of FDIC-insured institutions. The standards apply to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality, and earnings. In general, the safety and soundness standards prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals. While regulatory standards do not have the force of law, if an institution operates in an unsafe and unsound manner, the FDIC-insured institution’s primary federal regulator may require the institution to submit a plan for achieving and maintaining compliance. If an FDIC-insured institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the regulator is required to issue an order directing the institution to cure the deficiency. Until the deficiency cited in the regulator’s order is cured, the regulator may restrict the FDIC-insured institution’s rate of growth, require the FDIC-insured institution to increase its capital, restrict the rates the institution pays on deposits, or require the institution to take any action the regulator deems appropriate under the circumstances. Noncompliance with safety and soundness may also constitute grounds for other enforcement action by the federal bank regulatory agencies, including cease and desist orders and civil money penalty assessments. First Busey Corporation | 2023 — 21 Table of Contents Contents of Item 1. Business During the past decade, bank regulatory agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the FDIC-insured institutions they supervise. Properly managing risk has been identified as critical to the conduct of safe and sound banking activities, and has become even more important as new technologies, product innovation, and the size and speed of financial transactions have changed the nature of banking markets. The agencies have identified a spectrum of risks facing a banking institution including, but not limited to, credit, market, liquidity, operational, legal, and reputational risk. The key risk themes identified by the Company for 2024 are discussed under “ Item 1A. Risk Factors ” below. Busey Bank is expected to have active board and senior management oversight; adequate policies, procedures, and limits; adequate risk measurement, monitoring, and management information systems; and comprehensive internal controls. Privacy and Cybersecurity Busey Bank is subject to many U.S. federal and state laws and regulations governing requirements for maintaining policies and procedures to protect non-public confidential information of its customers. These laws require Busey Bank to periodically disclose its privacy policies and practices relating to sharing such information and permit consumers to opt out of their ability to share information with unaffiliated third parties under certain circumstances. They also impact Busey Bank’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers. In addition, Busey Bank is required to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer records and information. These security and privacy policies and procedures, for the protection of personal and confidential information, are in effect across all businesses and geographic locations. Branching Authority Illinois banks, such as Busey Bank, have the authority under Illinois law to establish branches anywhere in the State of Illinois, subject to receipt of all required regulatory approvals. The Dodd-Frank Act permits well-capitalized and well-managed banks to establish new interstate branches or acquire individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) without impediments. Federal law permits state and national banks to merge with banks in other states subject to: (1) regulatory approval; (2) federal and state deposit concentration limits; and (3) state law limitations requiring the merging bank to have been in existence for a minimum period of time (not to exceed five years) prior to the merger. Community Reinvestment Act Requirements The CRA requires Busey Bank to have a continuing and affirmative obligation in a safe and sound manner to help meet the credit needs of the entire community, including low- and moderate-income neighborhoods. Federal regulators regularly assess Busey Bank’s record of meeting the credit needs of its communities in dedicated examinations. Applications for acquisitions are affected by the evaluation of Busey Bank’s effectiveness in meeting its CRA requirements. First Busey Corporation | 2023 — 22 Table of Contents Contents of Item 1. Business On October 24, 2023, the bank regulatory agencies issued a final rule to strengthen and modernize CRA regulations (the "CRA Rule"), some of which is effective beginning April 1, 2024. The CRA Rule is designed to update how CRA activities qualify for consideration, where CRA activities are considered, and how CRA activities are evaluated. More specifically, the bank regulatory agencies described the goals of the CRA Rule as follows: (1) to expand access to credit, investment, and basic banking services in low and moderate-income communities; (2) to adapt to changes in the banking industry, including mobile and internet banking by modernizing assessment areas while maintaining a focus on branch based areas; (3) to provide greater clarity, consistency, and transparency in the application of the regulations through the use of standardized metrics as part of CRA evaluations and clarifying eligible CRA activities focused on low- and moderate-income communities and under-served rural communities; (4) to tailor CRA rules and data collection to bank size and business model; and (5) to maintain a unified approach among the regulators. Management of Busey Bank is assessing the impact of the CRA Rule on its CRA lending and investment activities in its markets. In 2022, Busey Bank, like all Illinois chartered banks, became subject to state level CRA standards, following passage of the Illinois CRA. This means that, in addition to the federal CRA review, Busey Bank will be reviewed by the DFPR to assess Busey Bank’s record of meeting the credit needs of its communities. Like the potential impact under the federal CRA, applications for additional acquisitions or activities would be affected by the evaluation of Busey Bank’s effectiveness in meeting its Illinois CRA requirements. Anti-Money Laundering/Countering the Financing of Terrorism The Bank Secrecy Act is the common name for a series of laws and regulations enacted in the United States to combat money laundering and the financing of terrorism. These laws and regulations are designed to deny terrorists and criminals the ability to obtain access to the U.S. financial system and have significant implications for FDIC-insured institutions and other businesses involved in the transfer of money. The so-called Anti-Money Laundering/Countering the Financing of Terrorism regime under the Bank Secrecy Act provides a foundation to promote financial transparency and deter and detect those who seek to misuse the U.S. financial system to launder criminal proceeds, finance terrorist acts, or move funds for other illicit purposes. The laws mandate financial services companies to have policies and procedures with respect to measures designed to address the following matters: (1) customer identification programs; (2) money laundering; (3) terrorist financing; (4) identifying and reporting suspicious activities and currency transactions; (5) currency crimes; and (6) cooperation between FDIC-insured institutions and law enforcement authorities. Concentrations in Commercial Real Estate Concentration risk exists when FDIC-insured institutions deploy too many assets to any one industry or segment. A concentration in CRE is one example of regulatory concern. The interagency CRE Guidance provides supervisory criteria, including the following numerical indicators, to assist bank examiners in identifying banks with potentially significant CRE loan concentrations that may warrant greater supervisory scrutiny: (1) CRE loans exceeding 300% of capital and increasing 50% or more in the preceding three years; or (2) construction and land development loans exceeding 100% of capital. The CRE Guidance does not limit banks’ levels of CRE lending activities, but rather guides institutions in developing risk management practices and levels of capital that are commensurate with the level and nature of their CRE concentrations. On December 18, 2015, federal banking agencies issued a statement to reinforce prudent risk-management practices related to CRE lending, having observed substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards. Federal bank agencies reminded FDIC-insured institutions to maintain underwriting discipline and exercise prudent risk-management practices to identify, measure, monitor, and manage the risks arising from CRE lending. In addition, FDIC-insured institutions must maintain capital commensurate with the level and nature of their CRE concentration risk. As of December 31, 2023, Busey Bank did not exceed these guidelines. First Busey Corporation | 2023 — 23 Table of Contents Contents of Item 1. Business Consumer Financial Services The historical structure of federal consumer protection regulation applicable to all providers of consumer financial products and services changed significantly on July 21, 2011, when the CFPB commenced operations to supervise and enforce consumer protection laws. The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including Busey Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices. The CFPB has examination and enforcement authority over providers with more than $10 billion in assets. Busey Bank is under CFPB oversight for consumer banking transactions. Because abuses in connection with residential mortgages were a significant factor contributing to the financial crisis, many new rules issued by the CFPB and required by the Dodd-Frank Act addressed mortgage and mortgage-related products, their underwriting, origination, servicing, and sales. The Dodd-Frank Act significantly expanded underwriting requirements applicable to loans secured by 1-4 family residential real property, and augmented federal law combating predatory lending practices. In addition to numerous disclosure requirements, the Dodd-Frank Act imposed new standards for mortgage loan originations on all lenders, including banks and savings associations, in an effort to strongly encourage lenders to verify a borrower’s ability to repay, while also establishing a presumption of compliance for certain “qualified mortgages.” The CFPB has from time to time released additional rules as to qualified mortgages and the borrower’s ability to repay. Over the last several years, the CFPB has taken a proactive, multi-front approach to protect consumers from excessive overdraft and non-sufficient funds fees. This includes proposed rules, interpretive opinions and enforcement actions. In January 2024, this included a proposed rule that would prohibit non-sufficient funds fees on transactions declined in real time (debit card purchases, ATM withdrawals, and peer-to-peer payments) and a proposal to subject overdrafts on bank accounts to disclosure rules applicable to other kinds of credit. The actions proposed or taken thus far by the CFPB affects financial institutions, like Busey Bank, with more than $10 billion in assets. Busey Bank’s management expects continued developments in this area that will impact its overdraft practices and may result in a decrease in fee income. The CFPB’s rules have an impact on Busey Bank’s operations, including by increasing compliance costs and potentially negatively affecting revenue. SECURITIES AND EXCHANGE COMMISSION REPORTING AND OTHER INFORMATION Busey makes its Annual Reports, Quarterly Reports, Current Reports, and any amendments thereto available, free of charge, on its website at busey.com as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. Reference to Busey’s website does not constitute incorporation by reference of the information contained on the website and it should not be considered part of this document. The SEC maintains an internet site at sec.gov , which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, and from which Busey’s SEC filings may be accessed. NON-GAAP FINANCIAL INFORMATION This Annual Report contains certain financial information determined by methods other than in accordance with GAAP. Management uses these non-GAAP financial measures and non-GAAP ratios, together with the related GAAP financial measures, in analysis of Busey’s performance and in making business decisions, as well as for comparison to Busey’s peers. Busey believes the adjusted measures are useful for investors and management to understand the effects of certain non-core and non-recurring noninterest items and provide additional perspective on Busey’s performance over time. First Busey Corporation | 2023 — 24 Table of Contents Contents of Item 1. Business Non-GAAP disclosures have inherent limitations and are not audited. They should not be considered in isolation or as a substitute for the results reported in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Tax effected numbers included in these non-GAAP disclosures are based on estimated statutory rates and effective rates as appropriate. A listing of Busey's non-GAAP financial measures and ratios are shown in the table below, together with the related GAAP financial measures, followed by a reconciliation of non-GAAP financial measures to what management believes to be the most directly comparable GAAP financial measures. First Busey Corporation | 2023 — 25 Table of Contents Contents of Item 1. Business GAAP Financial Measures Related Non-GAAP Financial Measures Related Non-GAAP Ratios Net interest income Total noninterest income Net security gains and losses Total noninterest expense Pre-provision net revenue Pre-provision net revenue to average assets Adjusted pre-provision net revenue Adjusted pre-provision net revenue to average assets Net income Adjusted net income Adjusted diluted earnings per share Adjusted return on average assets Adjusted return on average tangible common equity Average common equity Average tangible common equity Return on average tangible common equity Adjusted return on average tangible common equity Net interest income Tax-equivalent net interest income Net interest margin Adjusted net interest income Adjusted net interest margin Net interest income Total noninterest income Net security gains and losses Tax-equivalent revenue Efficiency ratio Adjusted efficiency ratio Adjusted core efficiency ratio Total noninterest expense Amortization of intangible assets Noninterest expense excluding amortization of intangible assets Efficiency ratio Adjusted noninterest expense Adjusted efficiency ratio Adjusted core expense Adjusted core efficiency ratio Total noninterest expense Noninterest expense, excluding non-operating adjustments Total assets Goodwill and other intangible assets, net Tangible assets Tangible common equity to tangible assets Total stockholders’ equity Goodwill and other intangible assets, net Tangible common equity Tangible common equity to tangible assets Tangible book value Tangible book value per common share Portfolio loans Core loans Core loans to portfolio loans Core loans to core deposits Total deposits Core deposits Core deposits to total deposits Core loans to core deposits First Busey Corporation | 2023 — 26 Table of Contents Contents of Item 1. Business RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) Pre-Provision Net Revenue, Adjusted Pre-Provision Net Revenue, Pre-Provision Net Revenue to Average Assets, and Adjusted Pre-Provision Net Revenue to Average Assets (dollars in thousands) Years Ended December 31, 2023 2022 2021 PRE-PROVISION NET REVENUE Net interest income $ 319,451 $ 323,438 $ 270,698 Total noninterest income 122,384 126,803 132,804 Net security (gains) losses 2,199 2,133 (3,070) Total noninterest expense (285,532) (283,881) (261,780) Pre-provision net revenue [a] 158,502 168,493 138,652 Non-GAAP adjustments: Acquisition and other restructuring expenses 4,328 4,537 17,351 Provision for unfunded commitments 461 61 (774) Amortization of New Markets Tax Credits 8,999 6,333 5,563 Adjusted pre-provision net revenue [b] $ 172,290 $ 179,424 $ 160,792 Average total assets [c] $ 12,246,218 $ 12,492,948 $ 11,904,935 Reported: Pre-provision net revenue to average assets [a÷c] 1.29 % 1.35 % 1.16 % Adjusted: Pre-provision net revenue to average assets [b÷c] 1.41 % 1.44 % 1.35 % First Busey Corporation | 2023 — 27 Table of Contents Contents of Item 1. Business RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Return on Average Assets, Average Tangible Common Equity, Return on Average Tangible Common Equity, and Adjusted Return on Average Tangible Common Equity (dollars in thousands, except per share amounts) Years Ended December 31, 2023 2022 2021 NET INCOME ADJUSTED FOR NON-OPERATING ITEMS Net income [a] $ 122,565 $ 128,311 $ 123,449 Non-GAAP adjustments: Acquisition expenses: Salaries, wages, and employee benefits — 587 7,347 Data processing — 214 3,700 Professional fees, occupancy, and other 357 258 2,599 Other restructuring expenses: Salaries, wages, and employee benefits 3,760 2,409 472 Loss on leases or fixed asset impairment — 986 3,227 Professional fees, occupancy, and other 211 83 6 Related tax benefit 1 (881) (938) (3,692) Adjusted net income [b] $ 126,012 $ 131,910 $ 137,108 DILUTED EARNINGS PER SHARE Diluted average common shares outstanding [c] 56,256,148 56,137,164 56,008,805 Reported: Diluted earnings per share [a÷c] $ 2.18 $ 2.29 $ 2.20 Adjusted: Diluted earnings per share [b÷c] 2.24 2.35 2.45 RETURN ON AVERAGE ASSETS Average total assets [d] $ 12,246,218 $ 12,492,948 $ 11,904,935 Reported: Return on average assets [a÷d] 1.00 % 1.03 % 1.04 % Adjusted: Return on average assets [b÷d] 1.03 % 1.06 % 1.15 % RETURN ON AVERAGE TANGIBLE COMMON EQUITY Average common equity $ 1,197,511 $ 1,195,171 $ 1,324,862 Average goodwill and other intangible assets, net (359,347) (370,424) (372,593) Average tangible common equity [e] $ 838,164 $ 824,747 $ 952,269 Reported: Return on average tangible common equity [a÷e] 14.62 % 15.56 % 12.96 % Adjusted: Return on average tangible common equity [b÷e] 15.03 % 15.99 % 14.40 % ___________________________________________ 1. Tax benefits were calculated by multiplying acquisition expenses and other restructuring expenses by the effective tax rates for each period. Effective tax rates used in this calculation were 20.4%, 20.7%, and 21.3% for the years ended December 31, 2023, 2022, and 2021, respectively. First Busey Corporation | 2023 — 28 Table of Contents Contents of Item 1. Business RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Net Interest Income and Adjusted Net Interest Margin (dollars in thousands) Years Ended December 31, 2023 2022 2021 Net interest income $ 319,451 $ 323,438 $ 270,698 Non-GAAP adjustments: Tax-equivalent adjustment 1 2,173 2,199 2,355 Tax-equivalent net interest income [a] 321,624 325,637 273,053 Purchase accounting accretion related to business combinations (1,477) (3,134) (7,151) Adjusted net interest income [b] $ 320,147 $ 322,503 $ 265,902 Average interest-earning assets [c] $ 11,164,594 $ 11,473,063 $ 10,978,116 Reported: Net interest margin [a÷c] 2.88 % 2.84 % 2.49 % Adjusted: Net interest margin [b÷c] 2.87 % 2.81 % 2.42 % ___________________________________________ 1. Tax-equivalent adjustments were calculated using an estimated federal income tax rate of 21%, applied to non-taxable interest income on investments and loans. First Busey Corporation | 2023 — 29 Table of Contents Contents of Item 1. Business RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) Noninterest Expense Excluding Amortization of Intangible Assets, Adjusted Noninterest Expense, Adjusted Core Expense, Noninterest Expense Excluding Non-operating Adjustments, Efficiency Ratio, Adjusted Efficiency Ratio, and Adjusted Core Efficiency Ratio (dollars in thousands) Years Ended December 31, 2023 2022 2021 Net interest income $ 319,451 $ 323,438 $ 270,698 Non-GAAP adjustments: Tax-equivalent adjustment 1 2,173 2,199 2,355 Tax-equivalent net interest income 321,624 325,637 273,053 Total noninterest income 122,384 126,803 132,804 Non-GAAP adjustments: Net security (gains) losses 2,199 2,133 (3,070) Noninterest income excluding net securities gains and losses 124,583 128,936 129,734 Tax-equivalent revenue [a] $ 446,207 $ 454,573 $ 402,787 Total noninterest expense $ 285,532 $ 283,881 $ 261,780 Non-GAAP adjustments: Amortization of intangible assets [b] (10,432) (11,628) (11,274) Noninterest expense excluding amortization of intangible assets [c] 275,100 272,253 250,506 Non-operating adjustments: Salaries, wages, and employee benefits (3,760) (2,996) (7,819) Data processing — (214) (3,700) Lease or fixed asset impairment — (986) (3,227) Professional fees and other (568) (341) (2,605) Adjusted noninterest expense [f] 270,772 267,716 233,155 Provision for unfunded commitments (461) (61) 774 Amortization of New Markets Tax Credits (8,999) (6,333) (5,563) Adjusted core expense [g] $ 261,312 $ 261,322 $ 228,366 Noninterest expense, excluding non-operating adjustments [f-b] $ 281,204 $ 279,344 $ 244,429 Reported: Efficiency ratio [c÷a] 61.65 % 59.89 % 62.19 % Adjusted: Efficiency ratio [f÷a] 60.68 % 58.89 % 57.89 % Adjusted: Core efficiency ratio [g÷a] 58.56 % 57.49 % 56.70 % ___________________________________________ 1. The tax-equivalent adjustments were calculated using an estimated federal income tax rate of 21%, applied to non-taxable interest income on investments and loans. First Busey Corporation | 2023 — 30 Table of Contents Contents of Item 1. Business RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) Tangible Book Value and Tangible Book Value Per Common Share (dollars in thousands, except per share amounts) As of December 31, 2023 2022 Total stockholders' equity $ 1,271,981 $ 1,145,977 Goodwill and other intangible assets, net (353,864) (364,296) Tangible book value [a] $ 918,117 $ 781,681 Ending number of common shares outstanding [b] 55,244,119 55,279,124 Tangible book value per common share [a÷b] $ 16.62 $ 14.14 Tangible Assets, Tangible Common Equity, and Tangible Common Equity to Tangible Assets (dollars in thousands) As of December 31, 2023 2022 Total assets $ 12,283,415 $ 12,336,677 Non-GAAP adjustments: Goodwill and other intangible assets, net (353,864) (364,296) Tax effect of other intangible assets 1 6,888 8,847 Tangible assets 2 [a] $ 11,936,439 $ 11,981,228 Total stockholders' equity $ 1,271,981 $ 1,145,977 Non-GAAP adjustments: Goodwill and other intangible assets, net (353,864) (364,296) Tax effect of other intangible assets 1 6,888 8,847 Tangible common equity 2 [b] $ 925,005 $ 790,528 Tangible common equity to tangible assets 2 [b÷a] 7.75 % 6.60 % ___________________________________________ 1. Net of estimated deferred tax liability, calculated using the estimated statutory tax rate of 28%. 2. Tax-effected measure. First Busey Corporation | 2023 — 31 Table of Contents Contents of Item 1. Business RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited) Core Loans, Core Loans to Portfolio Loans, Core Deposits, Core Deposits to Total Deposits, and Core Loans to Core Deposits (dollars in thousands) As of December 31, 2023 2022 Portfolio loans [a] $ 7,651,034 $ 7,725,702 Non-GAAP adjustments: PPP loans amortized cost (313) (845) Core loans [b] $ 7,650,721 $ 7,724,857 Total deposits [c] $ 10,291,156 $ 10,071,280 Non-GAAP adjustments: Brokered transaction accounts (6,001) (1,303) Time deposits of $250,000 or more (386,286) (120,377) Core deposits [d] $ 9,898,869 $ 9,949,600 RATIOS Core loans to portfolio loans [b÷a] 100.00 % 99.99 % Core deposits to total deposits [d÷c] 96.19 % 98.79 % Core loans to core deposits [b÷d] 77.29 % 77.64 % First Busey Corporation | 2023 — 32 Table of Contents Item 1. Business Contents SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Statements contained in or incorporated by reference into this Annual Report that are not historical facts may constitute forward-looking statements within the meaning of Section 27A Securities Act, and Section 21E of the Exchange Act. These forward-looking statements are covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements, which are based on certain assumptions and estimates and describe our future plans, strategies, and expectations, can generally be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “goal,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target,” “aim” and similar expressions. These forward-looking statements include statements relating to our projected growth, anticipated future financial performance, financial condition, credit quality, and management’s long-term performance goals, as well as statements relating to the anticipated effects on results of operations and financial condition from expected developments or events, our business and growth strategies, and any other statements that are not historical facts. These forward-looking statements are subject to significant risks, assumptions, and uncertainties, and could be affected by many factors. Factors that could have a material adverse effect on our financial condition, results of operations, and future prospects can be found under “ Item 1A. Risk Factors ” in this Annual Report and elsewhere in our periodic and current reports filed with the SEC. These factors include, but are not limited to, the following: 1. the possibility that any of the anticipated benefits of the proposed transaction between Busey and M&M will not be realized or will not be realized within the expected time period; 2. the risk that integration of operations of M&M with those of Busey will be materially delayed or will be more costly or difficult than expected; 3. the inability to complete the proposed transaction due to the failure of the required approval of M&M’s stockholders; 4. the failure to satisfy other conditions to completion of the proposed transaction, including receipt of required regulatory and other approvals; 5. the failure of the proposed transaction to close for any other reason; 6. the effect of the announcement of the transaction on customer relationships and operating results; 7. the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; 8. the strength of the local, state, national, and international economy (including effects of inflationary pressures and supply chain constraints); 9. the economic impact of any future terrorist threats or attacks, widespread disease or pandemics (including the Coronavirus Disease 2019 pandemic), or other adverse external events that could cause economic deterioration or instability in credit markets (including Russia’s invasion of Ukraine and the Israeli-Palestinian conflict); 10. changes in state and federal laws, regulations, and governmental policies concerning Busey's or M&M's general business (including changes in response to the recent failures of other banks); 11. changes in accounting policies and practices; 12. changes in interest rates and prepayment rates of Busey’s or M&M's assets (including the impact of the LIBOR phase-out and the recent and potential additional rate increases by the Federal Reserve); First Busey Corporation | 2023 — 33 Table of Contents Item 1. Business Contents 13. increased competition in the financial services sector (including from non-bank competitors such as credit unions and fintech companies) and the inability to attract new customers; 14. changes in technology and the ability to develop and maintain secure and reliable electronic systems; 15. the loss of key executives or associates; 16. changes in consumer spending; 17. unexpected results of acquisitions, including the acquisition of M&M and the performance of M&M’s life equity loan business; 18. unexpected outcomes of existing or new litigation involving Busey or M&M; 19. fluctuations in the value of securities held in Busey’s or M&M’s securities portfolio; 20. concentrations within Busey’s or M&M’s loan portfolio, large loans to certain borrowers, and large deposits from certain clients; 21. the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; 22. the level of non-performing assets on Busey’s or M&M’s balance sheets; 23. interruptions involving information technology and communications systems or third-party servicers; 24. breaches or failures of information security controls or cybersecurity-related incidents; 25. the economic impact of exceptional weather occurrences such as tornadoes, hurricanes, floods, blizzards, and droughts; and 26. other factors and risks described under “ Item 1A. Risk Factors ” herein. Because of those risks and other uncertainties, our actual future results, performance, achievement, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, our past results of operations are not necessarily indicative of our future results. You should not place undue reliance on any forward-looking statements, which speak only as of the dates on which they were made. We are not undertaking an obligation to update these forward-looking statements, even though circumstances may change in the future, except as required under federal securities law. We qualify all of our forward-looking statements by these cautionary statements. First Busey Corporation | 2023 — 34 Table of Contents