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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-23 · 350 added, 370 removed, 713 unchanged (50% of the section changed)

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

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited)

Contents of Item 7.

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

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

SCOPE OF DISCUSSION

BUSEY’S CONSERVATIVE BANKING STRATEGY

Busey executed a two-part balance sheet repositioning strategy in 2024

CRITICAL ACCOUNTING ESTIMATES

Fair Value of Debt Securities Available for Sale

Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations

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EFFECTS OF INFLATION

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Table of Contents Contents of Item 7.

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Business ,” the Consolidated Financial Statements , and the related Notes to the Consolidated Financial Statements included in this Annual Report.

Detailed discussion and analysis of the financial condition and results of operation for 2023 as compared to 2022 can be found below.

Detailed discussion and analysis of Busey’s financial condition and results of operation for 2024 as compared to 2023 can be found below.

Comparison of 2023 to 2022 can be found in “ Item 7.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of Busey's 2023 Annual Report .

BUSEY’S CONSERVATIVE BANKING STRATEGY

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

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

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

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

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

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

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

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

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

The quality of Busey’s core deposit franchise is a critical value driver of the institution.

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

As of December 31, 2024, Busey’s loan to deposit ratio was 77.1% and core deposits 1 represented 96.5% of total deposits.

Furthermore, Busey has sufficient on- and off-balance sheet liquidity to manage deposit fluctuations and the liquidity needs of its customers.

Busey’s credit performance reflects its highly diversified, conservatively underwritten loan portfolio, which has been originated predominantly to established customers with tenured relationships with Busey.

Busey’s approach to lending and its underwriting standards are designed to emphasize relationship banking rather than transactional banking.

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

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

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

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

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

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

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

At December 31, 2024, Busey’s leverage ratio of Tier 1 capital to average assets was 11.1%, its common equity Tier 1 capital to risk weighted assets ratio was 14.1%, and its total capital to risk weighted assets ratio was 18.5%.

Busey executed a two-part balance sheet repositioning strategy in 2024

During the first quarter of 2024, Busey sold the mortgage servicing rights on approximately $923.5 million of one- to four-family mortgage loans for a pre-tax gain of $7.7 million, which enabled Busey to sell available-for-sale investment securities with a book value of approximately $108.2 million for a pre-tax loss of $6.8 million with no resulting negative impact to tangible capital.

At the time of the sale, the securities sold yielded a weighted average rate of 1.98% and had a weighted-average life of 2.3 years.

CRITICAL ACCOUNTING ESTIMATES

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

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

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

In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, the possibility of a materially different financial condition or materially different results of operations is a reasonable likelihood.

Further, changes in accounting standards could impact our critical accounting estimates.

The following policies could be deemed critical:

1 Core deposits is a non-GAAP financial measure.

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Business—Non-GAAP Financial Information.

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Table of Contents Contents of Item 7.

Fair Value of Debt Securities Available for Sale

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

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

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

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

The cost of securities sold is based on the specific identification method.

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, we must first determine if we intend to sell the security or if it is more likely than not that we 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, we will write down the amortized cost basis of the security to its fair value.

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

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

We consider the following factors in assessing whether the decline is due to a credit loss:

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

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

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

• Failure of the issuer of the security to make scheduled interest or principal payments;

• Any changes to the rating of the security by a rating agency.

Impairment related to a credit loss must be measured using the discounted cash flow method.

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

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

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

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

Further, changes in accounting standards could impact Busey’s critical accounting estimates.

Management has reviewed these critical accounting estimates and related disclosures with Busey’s Audit Committee.

The following estimates could be deemed critical:

Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations

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Under the acquisition method of accounting, assets acquired and liabilities assumed are recorded at their estimated fair value on the date of acquisition.

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Table of Contents Contents of Item 7.

Fair values are determined based on the definition of “fair value” defined in ASC Topic 820 “Fair Value Measurement” as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The determination of fair values is based on valuations using management’s assumptions of future growth rates, future attrition, discount rates, multiples of earnings or other relevant factors.

In addition, Busey engages third party specialists to assist in the development of fair values.

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

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

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

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

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Goodwill represents the excess of purchase price over the fair value of net assets acquired using the acquisition method of accounting.

Determining the fair value often involves estimates based on third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques.

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

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

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

Accrued and deferred taxes, as reported in other assets or other liabilities in the Consolidated Balance Sheets , represent the net estimated amount due to or to be received from taxing jurisdictions either currently or in the future.

Management judgment is involved in estimating accrued and deferred taxes, as it may be necessary to evaluate the risks and merits of the tax treatment of transactions, filing positions, and taxable income calculations after considering tax-related statutes, regulations, and other relevant factors.

Because of the complexity of tax laws and interpretations, interpretation is subject to judgment.

Goodwill is not amortized;

instead, Busey assesses the potential for impairment on an annual basis or more frequently if events and circumstances indicate that goodwill might be impaired.

Management applies significant judgement when testing goodwill for impairment, such as the valuation approach chosen, market multiples for competitors used in the calculation, and forecasts of business outlook.

Busey is subject to the income tax laws of U.S., as well as the tax laws of the individual states and municipalities in which the Company conducts its operations.

These laws are often complex and subject to nuanced interpretations.

Income taxes are estimated for the tax effects of the transactions reported on Busey’s Consolidated Financial Statements and consist of an expense for taxes currently due plus assets and/or liabilities for deferred taxes.

Deferred taxes represent the future tax consequences of differences between the tax basis and accounting basis of certain assets and liabilities, which will either be taxable or deductible when the assets and liabilities are recovered or settled.

Deferred tax assets and liabilities are estimates that are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled.

Deferred taxes are reported in other assets or other liabilities on the Consolidated Balance Sheets .

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

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Table of Contents Contents of Item 7.

In establishing its provision for income taxes and its estimates of deferred tax assets and liabilities, Busey must make judgments and interpretations about the application of inherently complex tax laws.

Busey must also make estimates about when in the future certain items will affect taxable income.

Disputes over interpretations of the tax laws may be subject to review and adjudication by the court systems of the various tax jurisdictions or may be settled with the taxing authority upon examination or audit.

Although Busey’s management believes that its judgments are sound and its tax estimates are reasonable, interpretations of tax law applied by the taxing jurisdictions could differ.

As such, Busey may be exposed to losses or gains, which could be material.

An unfavorable tax settlement would result in an increase in Busey’s effective income tax rate in the period of resolution.

A favorable tax settlement would result in a reduction in Busey’s effective income tax rate in the period of resolution.

Allowance for Credit Losses

Busey calculates the ACL at each reporting date.

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

Busey recognizes an allowance for the lifetime expected credit losses for the amount it does not expect to collect.

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

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

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

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

Loans deemed uncollectible are charged against and reduce the ACL.

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

Determining the ACL involves significant judgments and assumptions by management.

Determining the ACL involves significant judgments and assumptions.

Macroeconomic forecasts provided by a third party and the economic indices sourced are significant judgments used in determining the allowance.

Changes in these economic forecasts could significantly affect the ACL and lead to materially different amounts from one period to the next.

Additionally, prepayment assumptions impact model output.

Further, Busey completes a quarterly evaluation of several qualitative factors to determine if there should be adjustments made to the ACL.

These factors include economic conditions, collateral, concentrations, delinquency trends, portfolio composition, underwriting, and certain other risks.

Significant downturns relating to loan quality and economic conditions could result in a requirement for an additional allowance.

Likewise, an upturn in loan quality and improved economic conditions may allow for a reduction in the required allowance.

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

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Table of Contents Contents of Item 7.

RESULTS OF OPERATIONS — THREE YEARS ENDED DECEMBER 31, 2024

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

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

Years Ended December 31,

2024 2023 2022

Net income by operating segment

Banking $ 117,266 $ 123,853 $ 131,596

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Operating Performance Metrics

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

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

Years Ended December 31,

2024 2023 2022

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

$ 113,691 $ 122,565 $ 128,311

Diluted earnings per common share $ 2.18 $ 2.29 $ 2.20

Adjusted net income (Non-GAAP) 1

119,805 126,012 131,910

Diluted earnings per common share

$ 1.98 $ 2.18 $ 2.29

Return on average assets 1.00 % 1.03 % 1.04 %

Adjusted diluted earnings per common share (Non-GAAP) 1

2.08 2.24 2.35

Return on average assets

0.94 % 1.00 % 1.03 %

Return on average tangible common equity 1

Adjusted return on average assets (Non-GAAP) 1

0.99 % 1.03 % 1.06 %

Return on average tangible common equity 1

Return on average tangible common equity (Non-GAAP) 1

11.65 % 14.62 % 15.56 %

Pre-provision net revenue 1

Adjusted return on average tangible common equity (Non-GAAP) 1

12.28 % 15.03 % 15.99 %

Pre-provision net revenue 1

Pre-provision net revenue (Non-GAAP) 1

$ 167,996 $ 158,502 $ 168,493

Pre-provision net revenue to average assets 1

Adjusted pre-provision net revenue (Non-GAAP) 1

167,317 172,290 179,424

Pre-provision net revenue to average assets 1

Pre-provision net revenue to average total assets (Non-GAAP) 1

1.39 % 1.29 % 1.35 %

Adjusted pre-provision net revenue to average total assets (Non-GAAP) 1

1.39 % 1.41 % 1.44 %

___________________________________________

See “ Item 1.

Business—Non-GAAP Financial Information .”

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Table of Contents Contents of Item 7.

Non-Operating Expenses and Non-GAAP Measures

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

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

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

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2024 2023 2022

Non-operating costs

Acquisition related expenses 1

Non-operating expenses

Salaries, wages, and employee benefits

$ 1,580 $ 3,760 $ 2,996

Restructuring charges 2

Data processing

Net occupancy expense of premises and furniture and equipment expenses

Professional fees

4,891 435 312

Total non-operating costs $ 4,328 $ 4,537 $ 17,351

Other noninterest expense

987 133 1,015

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

Restructuring charges related to previously disclosed restructuring and efficiency plans.

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

Total non-operating expenses

$ 8,140 $ 4,328 $ 4,537

Non-operating expenses by business objective

Acquisition expenses 1

$ 6,901 $ 357 $ 1,059

Restructuring expenses 2

1,239 3,971 3,478

Acquisition and restructuring expenses

$ 8,140 $ 4,328 $ 4,537

___________________________________________

Acquisition expenses in 2024 were related to the acquisition of M&M, which was completed on April 1, 2024, as well as the planned merger with CrossFirst.

For 2023, acquisition expenses were related to the then planned acquisition of M&M, as well as to exploratory costs.

For 2022, acquisition expenses related to the integration of Cummins-American Corp.

and its wholly-owned subsidiary, Glenview State Bank, following completion of this acquisition in 2021, as well as to exploratory costs.

Restructuring expenses were related to previously disclosed restructuring and efficiency plans and to corporate strategy advisement.

A reconciliation of non-GAAP measures, which Busey believes facilitates the assessment of its financial results and peer comparability, is included in tabular form in this Annual Report.

See “ Item 1.

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Consolidated Average Balance Sheets and Interest Rates

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

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

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

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Table of Contents Contents of Item 7.

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Other securities 2,567,526 69,786 2.72 % 2,875,769 76,568 2.66 % 3,265,271 61,591 1.89 %

Restricted bank stock 14,414 848 5.88 % 16,416 1,170 7.13 % 6,667 189 2.83 %

Loans held for sale 8,012 503 6.28 % 1,885 116 6.13 % 5,178 192 3.71 %

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

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

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

Interest income includes tax-equivalent adjustments of $1.7 million for 2024, $2.2 million for each of 2023 and 2022.

Interest income includes an immaterial amount of fees, net of deferred costs, related to Paycheck Protection Program loans for 2024 and 2023, and $1.9 million for 2022.

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

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

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

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Table of Contents Contents of Item 7.

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Other securities (8,350) 1,568 (6,782) (8,026) 23,003 14,977

Restricted bank stock (132) (190) (322) 482 499 981

Loans held for sale 384 3 387 (161) 85 (76)

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Percentage increase (decrease) in net interest income over prior period 0.5 % (0.9) %

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Table of Contents Contents of Item 7.

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

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

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

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

After raising federal funds rates by a total of 525 bps between March 2022 and July 2023, the FOMC lowered rates by 100 bps beginning in September 2024.

During 2024, in anticipation of the FOMC pivot to an easing cycle, Busey limited its exposure to term funding structures and intentionally priced savings specials to encourage maturing CD balances to migrate to managed rate non-maturity products.

Beginning in September 2024 Busey began lowering rates on special priced deposit accounts and other managed rate products to benefit from the FOMC rate cuts.

Busey continues to offer CD specials with shorter term structures as well as offering attractive premium savings rates to encourage rotation of maturing CD deposits into nimble pricing products.

Beginning in the second quarter of 2024, Busey also saw the full benefit of the December 2023 and March 2024 targeted balance sheet repositioning in its net interest margin.

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

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Calculated on a tax-equivalent basis.

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Table of Contents Contents of Item 7.

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Income on bank owned life insurance 5,130 4,701 429 9.1 %

Realized net gains (losses) on the sale of mortgage servicing rights 7,724 — 7,724 100.0 %

Securities income:

Realized net gains (losses) on securities (28) 50 (78) (156.0) %

Realized net gains (losses) on securities (7,033) (28) (7,005) NM

Unrealized net gains (losses) recognized on equity securities 931 (2,171) 3,102 142.9 %

Net securities gains (losses) (6,102) (2,199) (3,903) (177.5) %

Other income 11,248 14,822 (3,574) (24.1) %

Other noninterest income 14,309 10,078 4,231 42.0 %

Total noninterest income $ 139,682 $ 121,214 $ 18,468 15.2 %

Assets under care as of period end $ 13,833,654 $ 12,136,869 $ 1,696,785 14.0 %

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Table of Contents Contents of Item 7.

Years Ended December 31,

2022 2021 Change % Change

Noninterest income

Wealth management and payment technology solutions income:

Wealth management fees $ 55,378 $ 53,086 $ 2,292 4.3 %

Payment technology solutions 20,067 18,347 1,720 9.4 %

Combined, wealth management fees and payment technology solutions 75,445 71,433 4,012 5.6 %

Fees for customer services 33,111 35,604 (2,493) (7.0) %

Mortgage revenue 1,895 7,239 (5,344) (73.8) %

Income on bank owned life insurance 3,663 5,166 (1,503) (29.1) %

Securities income:

Realized net gains (losses) on securities 50 29 21 72.4 %

Unrealized net gains (losses) recognized on equity securities (2,183) 3,041 (5,224) (171.8) %

Net securities gains (losses) (2,133) 3,070 (5,203) (169.5) %

Other income 14,822 10,292 4,530 44.0 %

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

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

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

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

Total noninterest income was $139.7 million for the year ended December 31, 2024, an increase of 15.2% when compared with $121.2 million for the year ended December 31, 2023.

Total noninterest income represented 30.2% of total revenue 2 in 2024, compared to 27.4% in 2023.

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

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

Wealth management fees increased by 11.0% to $63.6 million in 2024, compared to $57.3 million in 2023.

Busey’s Wealth Management division had $13.83 billion in assets under care as of December 31, 2024, compared to $12.14 billion as of December 31, 2023.

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

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

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

Payment technology solutions revenue relates to Busey’s payment processing company, FirsTech.

Payment technology solutions revenue increased by 3.7% to $22.0 million in 2024, compared to $21.2 million in 2023.

Results for 2024 marked a new record high reported annual revenue for FirsTech.

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

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Table of Contents Contents of Item 7.

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

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

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

Combined, revenues from wealth management fees and payment technology solutions represented 61.3% and 64.8% of Busey’s noninterest income for the years ended December 31, 2024, and December 31, 2023, respectively, providing a complement to spread-based revenue from traditional banking activities.

On a combined basis, revenue from these two critical operating areas was $85.6 million for the year ended December 31, 2024, a 9.1% increase from $78.5 million for the year ended December 31, 2023.

Fees for customer services increased by 6.5% to $30.9 million in 2024, compared to $29.0 million in 2023.

Mortgage revenue was $2.1 million in 2024, compared to $1.1 million in 2023.

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

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

Increases were primarily related to sold-loan mortgage volume.

General economic conditions and interest rate volatility may impact future mortgage revenue.

Income on bank owned life insurance increased by 9.1% to $5.1 million in 2024, compared to $4.7 million in 2023, resulting from a $0.1 million increase in earnings on death proceeds and a $0.3 million increase in the cash surrender value of the insurance policies.

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

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

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A realized gain on the sale of mortgage servicing rights of $7.7 million was recognized in connection with Busey’s strategic two-part balance sheet repositioning completed during 2024.

Busey sold the mortgage servicing rights on approximately $923.5 million of one- to four-family mortgage loans, which enabled Busey to sell available for sale investment securities with a book value of approximately $108.2 million for a pre-tax loss of $6.8 million with no resulting negative impact to tangible capital.

Other income increased by 42.0% to $14.3 million in 2024, compared to $10.1 million in 2023.

Increases in other income were primarily attributable to increases in commercial loan sales gains and venture capital income, as well as the addition of Life Equity Loan ® servicing income beginning in the second quarter of 2024.

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

First Busey Corporation (BUSE) | 2024 — 61

Table of Contents Contents of Item 7.

14 unchanged sentences

FDIC insurance 5,603 5,650 (47) (0.8) %

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

Other noninterest expense 37,649 44,161 (6,512) (14.7) %

Total noninterest expense $ 300,399 $ 285,532 $ 14,867 5.2 %

1 unchanged sentence

Effective income tax rate 25.8 % 20.4 % 540 bps

Efficiency ratio 1

Efficiency ratio (Non-GAAP) 1

61.8 % 61.7 % 10 bps

Adjusted efficiency ratio 1

Adjusted efficiency ratio (Non-GAAP) 1

61.0 % 60.7 % 30 bps

4 unchanged sentences

Business—Non-GAAP Financial Information .”

First Busey Corporation | 2023 — 65

Total noninterest expense increased to $300.4 million for the year ended December 31, 2024, compared to $285.5 million for the year ended December 31, 2023, representing a year-over-year increase of 5.2%.

Non-operating acquisition and other restructuring expenses increased to $8.1 million in 2024, compared to $4.3 million in 2023.

The remaining increases can be attributed primarily to operating M&M Bank as a stand-alone bank from April 1, 2024, through June 21, 2024, and general inflationary pressures on compensation and benefits and to a lesser extent certain other expense categories.

Busey expects to continue to prudently manage its expenses and to realize the full extent of M&M acquisition synergies in 2025.

First Busey Corporation (BUSE) | 2024 — 62

Table of Contents Contents of Item 7.

Years Ended December 31,

2022 2021 Change % Change

Noninterest expense

Salaries, wages, and employee benefits $ 159,016 $ 145,312 $ 13,704 9.4 %

Data processing 21,648 21,862 (214) (1.0) %

Premises expenses:

Net occupancy expense of premises 19,130 18,346 784 4.3 %

Furniture and equipment expenses 7,645 8,301 (656) (7.9) %

Combined, net occupancy expense of premises and furniture and equipment expenses 26,775 26,647 128 0.5 %

Professional fees 6,125 7,549 (1,424) (18.9) %

Amortization of intangible assets 11,628 11,274 354 3.1 %

Interchange expense 6,298 5,792 506 8.7 %

FDIC insurance 4,058 3,083 975 31.6 %

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

Total noninterest expense $ 283,881 $ 261,780 $ 22,101 8.4 %

Income taxes $ 33,426 $ 33,374 $ 52 0.2 %

Effective income tax rate 20.7 % 21.3 % (60) bps

Efficiency ratio 1

59.9 % 62.2 % (230) bps

Adjusted efficiency ratio 1

58.9 % 57.9 % 100 bps

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

___________________________________________

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

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

Business—Non-GAAP Financial Information .”

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

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

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

Salaries, wages, and employee benefits increased to $175.6 million in 2024, compared to $162.6 million in 2023.

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

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

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

Busey’s total associate base consisted of 1,509 full-time equivalents as of December 31, 2024, compared to 1,479 at December 31, 2023, with the increase largely relating to the M&M acquisition.

Busey recorded $1.6 million and $3.8 million of non-operating expenses during 2024 and 2023, respectively.

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

Data processing expense increased to $27.1 million in 2024, compared to $23.7 million in 2023.

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

First Busey Corporation | 2023 — 66

Table of Contents Contents of Item 7.

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

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

Combined, net occupancy expense of premises and furniture and equipment expenses increased to $25.5 million in 2024, compared to $25.0 million in 2023.

Primary cost drivers in these expense categories include lease costs, repairs and maintenance, depreciation expense, real estate taxes, and utilities.

Professional fees increased to $12.8 million in 2024, compared to $7.1 million in 2023.

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

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

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

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

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

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

Busey recorded $4.9 million and $0.4 million of non-operating expenses during 2024 and 2023, respectively.

The significant increase in non-operating professional fees related primarily to the acquisition of M&M, which was completed in the second quarter of 2024, and the planned merger with CrossFirst, which is expected to be completed in the first quarter of 2025.

Amortization of intangible assets decreased to $10.1 million in 2024, compared to $10.4 million in 2023.

Decreases in 2024 were due to the use of an accelerated amortization methodology and were partially offset by the addition of $6.3 million of intangible assets related to the M&M acquisition.

Interchange expense decreased to $6.0 million in 2024, compared to $6.9 million in 2023.

Fluctuations in interchange expense relate to payment and volume activity at FirsTech.

FDIC insurance expense decreased to $5.6 million in 2024, compared to $5.7 million in 2023.

Other expense decreased to $37.6 million in 2024, compared to $44.2 million in 2023.

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

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

In connection with Busey’s adoption of ASU 2023-02 on January 1, 2024, Busey began recording amortization of New Markets Tax Credits as income tax expense instead of other noninterest expense, resulting in decreases in other noninterest expense of $9.0 million for the year ended December 31, 2024.

Further changes in other noninterest expense are attributable to multiple items, including the provision for unfunded commitments, sales of other real estate owned, fixed asset impairment, marketing, and business development expenses.

Efficiency Ratio

1 unchanged sentence

The efficiency ratio, which is a measure commonly used by management and the banking industry, measures the amount of expense incurred to generate a dollar of revenue.

Our efficiency ratio was 61.7% for the year ended December 31, 2023, compared to 59.9% for the year ended December 31, 2022.

Busey’s efficiency ratio was 61.8% for the year ended December 31, 2024, compared to 61.7% for the year ended December 31, 2023.

Operating costs have been influenced by acquisition expenses and other restructuring costs, and the adjusted efficiency ratio 3 was 61.0% for the year ended December 31, 2024, compared to 60.7% for the year ended December 31, 2023.

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

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

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

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

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

1 unchanged sentence

Business—Non-GAAP Financial Information.

First Busey Corporation | 2023 — 67

First Busey Corporation (BUSE) | 2024 — 63

Table of Contents Contents of Item 7.

Effective income tax rates, calculated by dividing income taxes by income before taxes, were 25.8%, 20.4%, and 20.7% for the years ended December 31, 2024, 2023, and 2022, respectively.

Busey’s effective tax rates increased in 2024 due to the adoption of ASU 2023-02 in January 2024, yet remained lower than the combined federal and state statutory rate of approximately 28.0% due to tax exempt interest income, such as municipal bond interest and bank owned life insurance income.

Busey’s effective income tax rate for the year ended December 31, 2024, includes an estimated one-time deferred tax valuation adjustment of $1.4 million resulting from a change to the Illinois apportionment rate due to recently enacted regulations.

These new regulations are expected to lower Busey’s ongoing tax obligation in future periods.

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

As of December 31, 2024, Busey Bank is under examination by the Florida Department of Revenue for its 2020 to 2022 corporate income tax filings.

Further, in February of 2025, Busey received a notice of audit initiation from the Illinois Department of Revenue for M&M’s tax filings for the tax years 2022 and 2023.

First Busey Corporation (BUSE) | 2024 — 64

Table of Contents Contents of Item 7.

FINANCIAL CONDITION

Balance Sheet

Changes in significant items included in our Consolidated Balance Sheets are summarized in the table below (dollars in thousands) :

Changes in significant items included on Busey’s Consolidated Balance Sheets are summarized in the table below (dollars in thousands) :

As of December 31,

8 unchanged sentences

Securities sold under agreements to repurchase 155,610 187,396 (31,786) (17.0) %

Short-term borrowings 12,000 351,054 (339,054) (96.6) %

Subordinated notes, net of unamortized issuance costs 227,723 222,882 4,841 2.2 %

1 unchanged sentence

Stockholders’ equity 1,383,269 1,271,981 111,288 8.7 %

Busey executed a two-part balance sheet repositioning strategy

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

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

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

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

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

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

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

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

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

First Busey Corporation | 2023 — 68

Table of Contents Contents of Item 7.

Investment Securities

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

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

to serve as a tool for interest rate risk positioning;

and to provide collateral for pledging purposes against public deposits and repurchase agreements, all while providing a source of liquidity.

We consider many factors in determining the composition of our investment portfolio including, but not limited to, credit quality, duration, interest rate risk, liquidity, tax-equivalent yield, regulatory considerations, and overall portfolio allocation.

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

Busey considers many factors in determining the composition of its investment portfolio including, but not limited to, credit quality, duration, interest rate risk, liquidity, tax-equivalent yield, regulatory considerations, and overall portfolio allocation.

As of December 31, 2024, Busey did not hold general obligation bonds of any single issuer, the aggregate of which exceeded 10% of Busey’s stockholders’ equity.

Pledged securities totaled $871.4 million, or 33.0% of total debt securities, as of December 31, 2024, and $837.4 million, or 28.3% of total debt securities, as of December 31, 2023.

4 unchanged sentences

There were $0.6 million of gross unrealized gains and $230.3 million of gross unrealized losses, resulting in a net unrealized loss of $229.7 million.

First Busey Corporation (BUSE) | 2024 — 65

Table of Contents Contents of Item 7.

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

12 unchanged sentences

Fair value as a percentage of amortized cost 88.74 % 89.42 %

First Busey Corporation | 2023 — 69

First Busey Corporation (BUSE) | 2024 — 66

Table of Contents Contents of Item 7.

8 unchanged sentences

Debt securities available for sale 1

Treasury securities $ 15,946 0.25 % $ — — % $ — — % $ — — %

Obligations of U.S.

10 unchanged sentences

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

First Busey Corporation | 2023 — 70

First Busey Corporation (BUSE) | 2024 — 67

Table of Contents Contents of Item 7.

3 unchanged sentences

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

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

No ACL was recorded for Busey’s portfolio of debt securities held to maturity as of December 31, 2024 or 2023.

As of December 31, 2024, the amortized cost of debt securities held to maturity was $826.6 million, and the fair value was $675.1 million.

9 unchanged sentences

By maturity date, fair values and weighted average yields of debt securities held to maturity as of December 31, 2024, are presented in the following table (dollars in thousands) :

Due after 1 year

Due in 1 year or less Due after 1 year

through 5 years Due after 5 years

3 unchanged sentences

Value Weighted

Debt securities held to maturity 1

7 unchanged sentences

The fair value of equity securities was $15.9 million as of December 31, 2024, compared to $9.8 million as of December 31, 2023.

First Busey Corporation | 2023 — 71

First Busey Corporation (BUSE) | 2024 — 68

Table of Contents Contents of Item 7.

Portfolio Loans

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

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

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

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

M&M’s policies were similar in nature to Busey Bank’s policies, and Busey is in the process of migrating the legacy M&M portfolio toward Busey Bank’s policies.

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

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

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

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

Department of Agriculture lending programs, when prudent.

3 unchanged sentences

Management routinely (at least quarterly) reviews the ACL in conjunction with reports related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans.

Our underwriting standards are designed to encourage relationship banking rather than transactional banking.

Busey’s underwriting standards are designed to encourage relationship banking rather than transactional banking.

Relationship banking implies a primary banking relationship with the borrower that includes, at a minimum, an active deposit banking relationship in addition to the lending relationship.

Significant underwriting factors in addition to location, duration, a sound and profitable cash flow basis, and the borrower’s character, include the quality of the borrower’s financial history, the liquidity of the underlying collateral, and the reliability of the valuation of the underlying collateral.

As a matter of policy and practice, we limit the level of concentration exposure in any particular loan segment with the goal of maintaining a well-diversified loan portfolio.

At no time is a borrower’s total borrowing relationship permitted to exceed Busey Bank’s regulatory lending limit.

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

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

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

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

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

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

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

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

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

commercial and retail.

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

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

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

Commercial Loans

Commercial loans typically comprise working capital loans or business expansion loans, including loans for asset purchases and other business loans.

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

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

Busey Bank’s lending can be summarized into five primary lending activities, which can be further categorized as either commercial or retail lending.

Commercial lending activities consist of C&I and other commercial loans, CRE loans, and real estate construction loans while retail lending activities consist of retail real estate loans and retail other loans.

C&I and Other Commercial Loans

C&I and other commercial loans typically comprise working capital loans or business expansion loans, including loans for asset purchases and other business loans.

C&I and other commercial loans will generally be guaranteed, in full or a material percentage, by the primary owners of the business.

C&I and other commercial loans are made based primarily on the borrower’s historical and projected cash flows and secondarily on the underlying assets pledged as collateral by the borrower.

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

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

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

First Busey Corporation | 2023 — 72

Busey Bank has established minimum standards and underwriting guidelines for all C&I and other commercial loan types.

First Busey Corporation (BUSE) | 2024 — 69

Table of Contents Contents of Item 7.

Commercial Real Estate Loans

The commercial environment, along with the academic presence in some of our markets, provides for the majority of our commercial lending opportunities to be commercial real estate related, including multi-unit housing.

As the majority of our loan portfolio is within the commercial real estate class, our goal is to maintain a high quality, geographically diverse portfolio of commercial real estate loans.

Commercial real estate loans are subject to underwriting standards and guidelines similar to commercial loans.

Commercial real estate loans are generally guaranteed, in full or a material percentage, by the primary owners of the business.

The commercial environment, along with the academic presence in some of the markets in which Busey operates, provides for the majority of Busey’s commercial lending opportunities to be CRE related, including multi-unit housing.

As the majority of Busey’s loan portfolio is within the CRE class, Busey’s goal is to maintain a high quality, geographically diverse portfolio of CRE loans.

CRE loans are subject to underwriting standards and guidelines similar to commercial loans.

CRE loans are generally guaranteed, in full or a material percentage, by the primary owners of the business.

Repayment of these loans is primarily dependent on the cash flows of the underlying property.

However, commercial real estate loans generally must be supported by an adequate underlying collateral value.

However, CRE loans generally must be supported by an adequate underlying collateral value.

The performance and the value of the underlying property may be adversely affected by economic factors or geographical and/or industry specific factors.

These loans are subject to other industry guidelines which we closely monitor.

These loans are subject to other industry guidelines which Busey closely monitors.

Real Estate Construction Loans

Real estate construction loans are primarily commercial in nature.

Loan proceeds are monitored by the Company and advanced for the improvement of real estate in which we hold a mortgage.

Loan proceeds are monitored by Busey and advanced for the improvement of real estate in which Busey holds a mortgage.

Real estate construction loans will generally be guaranteed, in full or a material percentage, by the developer or primary owners of the business.

7 unchanged sentences

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

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

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

In 2024, Busey retained a smaller percentage of originated retail real estate loans in its portfolio, electing to sell a larger percentage to secondary market purchasers.

As retail real estate loan underwriting is subject to specific regulations, Busey typically underwrites retail real estate loans to conform to widely accepted standards.

Several factors are considered in underwriting including the debt-to-income ratio and credit history of the borrower, as well as the value of the underlying real estate.

4 unchanged sentences

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

First Busey Corporation | 2023 — 73

First Busey Corporation (BUSE) | 2024 — 70

Table of Contents Contents of Item 7.

Portfolio Composition

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

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

As of December 31,

1 unchanged sentence

Commercial loans

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

Commercial real estate 3,337,337 3,261,873 75,464 2.3 %

C&I and other commercial $ 1,904,515 $ 1,835,994 $ 68,521 3.7 %

CRE 3,269,564 3,337,337 (67,773) (2.0) %

Real estate construction 378,209 461,717 (83,508) (18.1) %

6 unchanged sentences

Portfolio loans, net of ACL $ 7,613,683 $ 7,559,294 $ 54,389 0.7 %

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

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

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

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

December 31, 2023

Portfolio loan growth in 2024 was due to the M&M acquisition.

As has been Busey’s practice, the Company remains steadfast in its conservative approach to underwriting and disciplined approach to pricing, particularly given Busey’s outlook for the economy in the coming quarters.

This posture will continue to impact loan growth, which Busey expects to remain modest over the next several quarters.

Concentration of Credit Risk

As a matter of policy and practice, Busey limits the level of concentration exposure in any particular loan segment with the goal of maintaining a well-diversified loan portfolio.

The following table presents the percentage of total portfolio loans for each lending activity.

As of December 31,

Commercial loans

C&I and other commercial 24.8 % 24.0 %

CRE 42.5 % 43.6 %

Real estate construction 4.9 % 6.0 %

Total commercial loans 72.2 % 73.6 %

Retail real estate 22.0 % 22.5 %

Retail other 5.8 % 3.9 %

Total retail loans 27.8 % 26.4 %

Total portfolio loans 100.0 % 100.0 %

First Busey Corporation (BUSE) | 2024 — 71

Table of Contents Contents of Item 7.

A significant majority of Busey’s portfolio lending activity occurs in the Illinois and Missouri markets, with the remainder in the Florida and Indiana markets.

The geographic distribution of loans originated in each of these markets is presented in the tables below (dollars in thousands) :

As of December 31, 2024

Illinois Missouri Florida Indiana Total

Commercial loans

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

Commercial real estate 2,278,348 671,762 219,511 167,716 3,337,337

C&I and other commercial $ 1,493,670 $ 276,140 $ 58,277 $ 76,428 $ 1,904,515

CRE 2,285,915 560,337 245,918 177,394 3,269,564

Real estate construction 232,898 40,816 30,826 73,669 378,209

5 unchanged sentences

Portfolio loans, net of ACL $ 7,613,683

First Busey Corporation | 2023 — 74

Table of Contents Contents of Item 7.

December 31, 2022

As of December 31, 2023

Illinois Missouri Florida Indiana Total

Commercial loans

Commercial $ 1,401,165 $ 466,904 $ 52,925 $ 53,160 $ 1,974,154

Commercial real estate 2,180,767 680,532 220,939 179,635 3,261,873

C&I and other commercial $ 1,395,020 $ 369,767 $ 25,267 $ 45,940 $ 1,835,994

CRE 2,278,348 671,762 219,511 167,716 3,337,337

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

5 unchanged sentences

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

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

First Busey Corporation (BUSE) | 2024 — 72

Table of Contents Contents of Item 7.

CRE loans made up 42.5% of Busey’s total loan portfolio as of December 31, 2024, and were 27.9% owner occupied.

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

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

As of December 31, 2024

Investor Owned Owner Occupied Total % Owner Occupied

Commercial Real Estate by Industry

CRE Loans % of Total Loans Owned By % of CRE Loans That Are Owner Occupied

Investor Occupant

Industrial/Warehouse $ 654,223 8.5 % $ 287,460 $ 366,763 56.1 %

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

Apartments 565,235 7.3 % 565,235 — — %

Retail 557,008 7.2 % 470,111 86,897 15.6 %

Traditional Office 364,331 4.7 % 260,432 103,899 28.5 %

Specialty 290,135 3.8 % 67,899 222,236 76.6 %

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

Student Housing 227,149 3.0 % 227,149 — — %

Medical Office 213,808 2.8 % 135,024 78,784 36.8 %

Hotel 160,330 2.1 % 159,740 590 0.4 %

5 unchanged sentences

Total $ 3,274,100 42.5 % $ 2,362,148 $ 911,952 27.9 %

Paycheck Protection Program Loans

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

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

First Busey Corporation | 2023 — 75

Table of Contents Contents of Item 7.

Loan Commitments

3 unchanged sentences

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

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

The following table sets forth the remaining maturities of portfolio loans at December 31, 2024, (dollars in thousands) :

Within 1 Year After 1 Year

2 unchanged sentences

Portfolio loans

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

Commercial real estate 488,151 1,968,765 867,973 12,448 3,337,337

C&I and other commercial $ 599,723 $ 908,332 $ 50,052 $ 346,408 $ 1,904,515

CRE 572,016 2,065,193 9,130 623,225 3,269,564

Real estate construction 130,383 235,123 8,058 4,645 378,209

2 unchanged sentences

Total portfolio loans $ 1,387,321 $ 3,749,185 $ 1,084,706 $ 1,475,875 $ 7,697,087

First Busey Corporation (BUSE) | 2024 — 73

Table of Contents Contents of Item 7.

Interest Rate Structure

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

Portfolio loans maturing after one year are summarized below by interest rate structure and lending activity, as of December 31, 2024, (dollars in thousands) :

Rate Adjustable

Portfolio loans maturing after 1 year

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

Commercial real estate 2,130,224 718,962 2,849,186

C&I and other commercial $ 648,823 $ 655,969 $ 1,304,792

CRE 1,908,192 789,356 2,697,548

Real estate construction 53,040 194,786 247,826

2 unchanged sentences

Total portfolio loans maturing after 1 year $ 3,501,428 $ 2,808,338 $ 6,309,766

First Busey Corporation | 2023 — 76

Table of Contents Contents of Item 7.

Allowance and Provision for Credit Losses

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

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

The ACL is a significant estimate on Busey’s C onsolidated F inancial S tatements , affecting both earnings and capital.

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

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

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

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

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

3 unchanged sentences

Provision for credit losses $ 8,590 $ 2,399 $ 4,623

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

First Busey Corporation | 2023 — 77

First Busey Corporation (BUSE) | 2024 — 74

Table of Contents Contents of Item 7.

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

The following table summarizes, by lending activity, net charge-off and recovery activity affecting the ACL balance, together with average portfolio loans outstanding and the related ratios of net charge-offs (recoveries) to average portfolio loans (dollars in thousands) :

Portfolio Loans

4 unchanged sentences

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

Commercial (1,397) $ 1,985,511 0.07 %

Commercial real estate (666) 2,953,944 0.02 %

C&I and other commercial (492) $ 1,919,227 0.03 %

CRE (842) 3,200,166 0.03 %

Real estate construction 213 466,045 (0.05) %

5 unchanged sentences

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

Commercial (492) $ 1,919,227 0.03 %

Commercial real estate (842) 3,200,166 0.03 %

C&I and other commercial (1,877) $ 1,910,008 0.10 %

CRE (379) 3,316,633 0.01 %

Real estate construction 171 536,280 (0.03) %

5 unchanged sentences

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

Commercial (1,877) $ 1,910,008 0.10 %

Commercial real estate (379) 3,316,633 0.01 %

C&I and other commercial (14,946) $ 1,892,293 0.79 %

CRE (3,168) 3,361,644 0.09 %

Real estate construction 67 416,439 (0.02) %

5 unchanged sentences

___________________________________________

The Day 1 PCD is attributable to the CAC acquisition.

First Busey Corporation | 2023 — 78

The Day 1 PCD is attributable to the M&M acquisition.

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Table of Contents Contents of Item 7.

3 unchanged sentences

Loan Category

Commercial $ 21,256 24.0 % $ 23,860 25.6 %

Commercial real estate 35,465 43.6 % 38,299 42.2 %

C&I and other commercial $ 21,589 24.8 % $ 21,256 24.0 %

CRE 32,301 42.5 % 35,465 43.6 %

Real estate construction 3,345 4.9 % 5,163 6.0 %

2 unchanged sentences

Total $ 83,404 100.0 % $ 91,740 100.0 %

Busey did not record an allowance for credit loss for its Life Equity Loan ® portfolio, a component of its retail other lending activity, due to no expected credit loss at default, as permitted under the practical expedient provided within ASC 326-20-35-6.

The Life Equity Loan ® portfolio balance was $264.2 million as of December 31, 2024.

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

As of December 31, 2024, Busey management believed the level of the allowance to be appropriate based upon the information available.

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

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

Non-Performing Loans and Non-Performing Assets

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Typically, loans are secured by collateral.

When a loan is classified as non-accrual and determined to be collateral dependent, it is appropriately reserved or charged down through the ACL to the fair value of our interest in the underlying collateral less estimated costs to sell.

Our loan portfolio is collateralized primarily by real estate.

First Busey Corporation | 2023 — 79

When a loan is classified as non-accrual and determined to be collateral dependent, it is appropriately reserved or charged down through the ACL to the fair value of Busey’s interest in the underlying collateral less estimated costs to sell.

Busey’s loan portfolio is collateralized primarily by real estate.

First Busey Corporation (BUSE) | 2024 — 76

Table of Contents Contents of Item 7.

1 unchanged sentence

As of December 31,

2024 2023 Change % Change

Portfolio loans $ 7,697,087 $ 7,651,034 $ 46,053 0.6 %

12 unchanged sentences

Bank Tier 1 Capital 1,438,296 1,362,962 75,334 5.5 %

ACL to portfolio loans 1.20 % 1.19 %

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

ACL to non-performing loans 1,173.75 % 582.01 %

ACL to non-performing assets 1,155.27 % 552.19 %

Non-accrual loans to portfolio loans 0.10 % 0.20 %

Non-performing loans to portfolio loans 0.10 % 0.20 %

Non-performing assets to total assets 0.06 % 0.13 %

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

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

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

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

ACL to portfolio loans 1.08 % 1.20 % (12) bps

ACL to non-accrual loans 3.78 x 12.33 x (8.55) x

ACL to non-performing loans 3.59 x 11.74 x (8.15) x

ACL to non-performing assets 3.58 x 11.55 x (7.97) x

Non-accrual loans to portfolio loans 0.29 % 0.10 % 19 bps

Non-performing loans to portfolio loans 0.30 % 0.10 % 20 bps

Non-performing assets to total assets 0.19 % 0.06 % 13 bps

Non-performing assets to portfolio loans and OREO and other repossessed assets 0.30 % 0.10 % 20 bps

Classified assets to Bank Tier 1 Capital and ACL 5.61 % 4.97 % 64 bps

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

Non-performing loan balances increased by 197.30% to $23.2 million as of December 31, 2024, compared to $7.8 million as of December 31, 2023.

The increase was primarily related to one CRE loan that was classified in the fourth quarter of 2023 and was moved to non-accrual during the fourth quarter of 2024.

This loan carries a remaining balance of $15.0 million following a $3.0 million charge-off in the fourth quarter of 2024.

Non-performing loans represented 0.30% of portfolio loans as of December 31, 2024, compared to 0.10% as of December 31, 2023.

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

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

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

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

First Busey Corporation | 2023 — 80

Busey’s ACL coverage decreased to 3.59 times its non-performing loan balance at December 31, 2024, compared to 11.74 times its non-performing loan balance at December 31, 2023.

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Table of Contents Contents of Item 7.

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

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

Non-performing assets, which includes non-performing loans, OREO, and other repossessed assets, increased by 193.41% to $23.3 million as of December 31, 2024, compared to $7.9 million as of December 31, 2023.

Non-performing assets represented 0.19% of total assets as of December 31, 2024, compared to 0.06% as of December 31, 2023.

Busey’s ACL provided coverage of 3.58 times its non-performing assets at December 31, 2024, down from 11.55 times its non-performing assets at December 31, 2023.

Classified assets, which include non-performing assets and substandard loans, increased to $85.3 million as of December 31, 2024, compared to $72.3 million as of December 31, 2023.

Classified assets represented 5.61% of Busey Bank’s Tier 1 capital and ACL at December 31, 2024, up from 4.97% at December 31, 2023.

Net charge-offs totaled $18.2 million in 2024, representing 0.23% of average loans, compared with net charge-offs of $2.3 million in 2023, representing 0.03% of average loans.

Increases in net charge-offs during the year ended December 31, 2024, were significantly attributable to a single C&I credit relationship and the CRE loan relationship mentioned above.

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

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

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

Potential Problem Loans

Potential problem loans are loans classified as substandard which are not individually evaluated, restructured, non-accrual, or 90+ days past due, but where current information indicates that the borrower may not be able to comply with loan repayment terms.

Potential problem loans are loans classified as substandard which are not individually evaluated, non-accrual, or 90+ days past due, but where current information indicates that the borrower may not be able to comply with loan repayment terms.

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

Potential problem loans decreased to $62.0 million at December 31, 2024, compared to $64.3 million at December 31, 2023.

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

Management continues to monitor these loans and work with the borrowers on restructurings, guarantees, additional collateral, or other planned actions.

As of December 31, 2024, management identified no other loans that represent or result from trends or uncertainties that would be expected to materially impact future operating results, liquidity, or capital resources.

COVID-19 Modifications

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

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

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

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

First Busey Corporation | 2023 — 81

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Table of Contents Contents of Item 7.

9 unchanged sentences

Total deposits $ 9,982,490 100.0 % $ 10,291,156 100.0 % $ (308,666) (3.0) %

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

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

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

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

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

Total deposits decreased by 3.0% to $9.98 billion as of December 31, 2024, compared to $10.29 billion as of December 31, 2023.

The quality of Busey’s core deposit 4 franchise coupled with cash flows from its securities portfolio allows Busey to fund loan growth while limiting its reliance on higher cost wholesale funding alternatives.

Busey focuses on deepening its customer relationships to maintain and protect its strong core deposit franchise.

As of December 31, 2024, Busey average customer tenure was 16.9 years for retail customers and 12.8 years for commercial customers.

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

Core deposits represented 96.5% of total deposits as of December 31, 2024, compared to 96.2% as of December 31, 2023.

2 unchanged sentences

Estimated uninsured deposits were $3.78 billion at December 31, 2024.

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

The portion of Busey’s deposit base that was uninsured and not otherwise collateralized was estimated to be $2.96 billion at December 31, 2024, which represented 30% of total deposits.

Of that amount, $286.4 million represented time deposits.

9 unchanged sentences

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

First Busey Corporation | 2023 — 82

First Busey Corporation (BUSE) | 2024 — 79

Table of Contents Contents of Item 7.

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

On May 28, 2021, Busey entered into a Second Amended and Restated Credit Agreement, pursuant to which it 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.

On April 30, 2022, the agreement was amended, effecting an extension of the termination date for the revolving line of credit to April 30, 2023, and providing for the transition from a LIBOR-indexed interest rate to a SOFR-indexed interest rate.

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

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.

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.

Under the terms of the amendment, the annual interest rate for the loans was established at 1.80% plus the one-month forward-looking term rate based on SOFR.

The agreement has subsequently been amended twice to extend the termination date for the revolving line of credit, which is currently April 30, 2025.

During the first quarter of 2024, Busey paid the full $30.0 million balance remaining on the Term Loan, at which time the Term Loan carried interest at a rate of 7.13%.

As of December 31, 2024, there was no balance outstanding on the revolving credit facility.

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

Securities Sold Under Agreements to Repurchase and Short-term Borrowings

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

Short-term Borrowings and Securities Sold Under Agreements to Repurchase

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

First Busey Corporation | 2023 — 83

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

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Table of Contents Contents of Item 7.

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

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

Years Ended December 31,

23 unchanged sentences

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

Senior and Subordinated Notes

On May 25, 2017, we issued $40.0 million of 3.75% senior notes that matured and were redeemed on May 25, 2022.

Additionally, on May 25, 2017, we 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.

We redeemed all $60.0 million of the outstanding 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%.

Subordinated Notes

On June 1, 2020, Busey issued $125.0 million of fixed-to-floating rate subordinated notes that mature on June 1, 2030.

3 unchanged sentences

The subordinated notes are unsecured obligations of the Company.

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Table of Contents Contents of Item 7.

1 unchanged sentence

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 (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.

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 bps 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.

Associated with the M&M acquisition completed on April 1, 2024 (see “ Note 2.

Mergers and Acquisitions ” ), Busey acquired $4.0 million of 5.25% fixed-to-floating rate subordinated notes maturing December 4, 2030, which qualify as Tier 2 capital for regulatory purposes.

Interest on the subordinated notes accrues at a rate equal to (1) 5.25% per annum from the original issue date to December 4, 2025, 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 497 bps from December 4, 2025.

The subordinated notes have an optional redemption, in whole or in part, on or after December 4, 2025.

At December 31, 2024, there was $0.1 million of fair value discount outstanding, to be accreted through the earliest optional redemption date.

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

7 unchanged sentences

Proceeds from such issuances were used by the trusts to purchase junior subordinated notes of Busey, which are the sole assets of each trust.

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

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.

1 unchanged sentence

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, we 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 remaining to be accreted of $2.6 million at December 31, 2023.

We had $72.0 million and $71.8 million of junior subordinated debt owed to unconsolidated trusts at December 31, 2023, and 2022, respectively.

Liquidity management is the process by which we ensure that adequate liquid funds are available to meet the present and future cash flow obligations arising in the daily operations of our business.

These financial obligations consist of needs for funds to meet commitments to borrowers for extensions of credit, fund capital expenditures, honor withdrawals by customers, pay dividends to stockholders, and pay operating expenses.

Our most liquid assets are cash and due from banks, interest-bearing bank deposits, and federal funds sold.

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

First Busey Corporation | 2023 — 85

Busey had $74.8 million and $72.0 million of junior subordinated debt owed to unconsolidated trusts at December 31, 2024, and 2023, respectively.

In connection with its acquisitions of Pulaski Financial Corp.

in 2016 and M&M in 2024, Busey has acquired similar statutory trusts and the fair value adjustment is being accreted over their weighted average remaining lives, with a balance remaining to be accreted of $2.9 million and $2.6 million at December 31, 2024, and 2023, respectively.

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Table of Contents Contents of Item 7.

Liquidity management is the process by which Busey ensures that adequate liquid funds are available to meet the present and future cash flow obligations arising in the daily operations of its business.

Busey’s most liquid assets are cash and due from banks, interest-bearing bank deposits, and federal funds sold.

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

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

6 unchanged sentences

Average liquid assets as a percent of average total assets 4.6 % 2.7 % 3.3 %

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

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

As of December 31,

5 unchanged sentences

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

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

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

As of December 31,

5 unchanged sentences

Additional borrowing capacity $ 2,861,046 $ 3,020,115

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

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

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Table of Contents Contents of Item 7.

As of December 31, 2024, management believed that adequate liquidity existed to meet all projected cash flow obligations.

We seek to achieve a satisfactory degree of liquidity by actively managing both assets and liabilities.

Busey seeks to achieve a satisfactory degree of liquidity by actively managing both assets and liabilities.

Asset management guides the proportion of liquid assets to total assets, while liability management monitors future funding requirements and prices liabilities accordingly.

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

Busey’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.

Busey Bank paid dividends to First Busey Corporation totaling $100.0 million and $90.0 million for the years ended December 31, 2024, and 2023, respectively.

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Table of Contents Contents of Item 7.

Off-Balance-Sheet Arrangements

1 unchanged sentence

The balance of commitments to extend credit represents future cash requirements and some of these commitments may expire without being drawn upon.

The following table summarizes our outstanding commitments and reserves for unfunded commitments (dollars in thousands) :

The following table summarizes Busey’s outstanding commitments and reserves for unfunded commitments (dollars in thousands) :

As of December 31,

1 unchanged sentence

Reserve for unfunded commitments 5,967 7,062

The following table summarizes our provision for unfunded commitments expenses (releases) for the periods presented (dollars in thousands) :

The following table summarizes Busey’s provision for unfunded commitments expenses (releases) for the periods presented (dollars in thousands) :

Years Ended December 31,

2023 2022 2021

Provision for unfunded commitments expense (release) $ 461 $ 61 $ (774)

We anticipate we will have sufficient funds available to meet current loan commitments, including loan applications received and in process prior to the issuance of firm commitments.

Location 2024 2023 2022

Provision for unfunded commitments expense (release) Other noninterest expense $ (1,095) $ 461 $ 61

Busey anticipates that it will have sufficient funds available to meet current loan commitments, including loan applications received and in process prior to the issuance of firm commitments.

Contractual Obligations

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

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

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

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Table of Contents Contents of Item 7.

The following table summarizes significant contractual obligations and other commitments, excluding, when applicable, short-term borrowings and the current portion of long-term debt, as of December 31, 2024, (dollars in thousands) :

Certificates of

15 unchanged sentences

Commitments to extend credit and standby letters of credit $ 2,548,178

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Table of Contents Contents of Item 7.

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

Net cash flows provided by operating activities totaled $178.3 million in 2024, compared to $173.4 million provided by operating activities in 2023.

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

Significant operating activities affecting cash flows include net income, depreciation and amortization, the provision for credit losses, stock-based compensation, and mortgage loan sale activity.

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

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

Net cash provided by investing activities totaled $657.9 million in 2024, compared to $551.0 million provided by investing activities in 2023.

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

1 unchanged sentence

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

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

For additional detail, see the Consolidated Statements of Cash Flows .

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Table of Contents Contents of Item 7.

Capital Resources

Our capital ratios are in excess of those required to be considered “well-capitalized” pursuant to applicable regulatory guidelines.

Busey’s capital ratios are in excess of those required to be considered “well-capitalized” pursuant to applicable regulatory guidelines.

The Federal Reserve uses capital adequacy guidelines in its examination and regulation of bank holding companies and their subsidiary banks.

11 unchanged sentences

NEW ACCOUNTING PRONOUNCEMENTS

We review new accounting standards as issued.

Busey reviews new accounting standards as issued.

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

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

First Busey Corporation | 2023 — 88

Table of Contents Contents of Item 7.

EFFECTS OF INFLATION

6 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk .”

First Busey Corporation | 2023 — 89

First Busey Corporation (BUSE) | 2024 — 86

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

What changed 10-K

Item 7. Management’s Discussion and Analysis