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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-23 · 963 added, 791 removed, 1903 unchanged (48% of the section changed)

11 unchanged sentences

Significant Accounting Policies

Mergers and Acquisitions

Debt Securities

5 unchanged sentences

Regulatory Capital

Tax Credit and Other Investments in Unconsolidated Entities

Employee Benefit Plans

4 unchanged sentences

Fair Value Measurements

Earnings Per Share

Earnings Per Common Share

Accumulated Other Comprehensive Income (Loss)

1 unchanged sentence

Parent Company Only Financial Information

First Busey Corporation | 2023 — 91

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Table of Contents Contents of Item 8.

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Report of Independent Registered Public Accounting Firm

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

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

Opinion on the Financial Statements

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

First Busey Corporation | 2023 — 92

First Busey Corporation (BUSE) | 2024 — 89

Table of Contents Contents of Item 8.

17 unchanged sentences

February 27, 2025

First Busey Corporation | 2023 — 93

First Busey Corporation (BUSE) | 2024 — 90

Table of Contents Contents of Item 8.

16 unchanged sentences

7,613,683 7,559,294

Restricted bank stock 49,930 6,000

Premises and equipment, net 118,820 122,594

32 unchanged sentences

See accompanying Notes to Consolidated Financial Statements.

First Busey Corporation | 2023 — 94

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Table of Contents Contents of Item 8.

3 unchanged sentences

(dollars in thousands, except per share amounts)

Year Ended December 31,

Years Ended December 31,

2024 2023 2022

4 unchanged sentences

Non-taxable interest income 1,176 2,678 3,272

Dividend income on bank stock 848 1,170 190

Other interest income 22,441 10,531 3,097

18 unchanged sentences

Income on bank owned life insurance 5,130 4,701 3,663

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

Realized net gains (losses) on securities ( 7,033 ) ( 28 ) 50

Unrealized net gains (losses) recognized on equity securities 931 ( 2,171 ) ( 2,183 )

Other income 11,248 14,822 10,292

Other noninterest income 14,309 10,078 14,632

Total noninterest income 139,682 121,214 126,613

8 unchanged sentences

FDIC insurance 5,603 5,650 4,058

Other expense 44,161 48,333 40,261

Other noninterest expense 37,649 44,161 48,333

Total noninterest expense 300,399 285,532 283,881

6 unchanged sentences

See accompanying Notes to Consolidated Financial Statements.

First Busey Corporation | 2023 — 95

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Table of Contents Contents of Item 8.

7 unchanged sentences

Unrealized/Unrecognized gains (losses) on debt securities:

Net unrealized holding gains (losses) on debt securities available for sale, net of taxes of $( 16,674 ), $ 79,460 , and $ 23,367

41,824 ( 199,302 ) ( 58,610 )

Net unrecognized gains (losses) on debt securities transferred to held to maturity from available for sale, net of taxes of $ — , $ 13,812 , and $ — , respectively

— ( 34,644 ) —

Reclassification adjustment for realized (gains) losses on debt securities available for sale included in net income, net of taxes of $( 1,569 ), $ 7 , and $( 17 ), respectively

3,934 ( 19 ) 44

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

4,426 4,745 —

Net unrealized holding gains (losses) on debt securities available for sale 10,295 58,498 ( 278,762 )

Net unrecognized gains (losses) on debt securities transferred to held to maturity from available for sale — — ( 48,456 )

Reclassification adjustment for realized (gains) losses on debt securities available for sale included in net income 7,033 5,503 ( 26 )

Amortization of unrecognized losses on securities transferred to held to maturity 5,481 6,189 6,638

Tax effect ( 7,934 ) ( 20,006 ) 91,386

Net change in unrealized/unrecognized gains (losses) on debt securities 14,875 50,184 ( 229,220 )

Unrealized gains (losses) on cash flow hedges:

Net unrealized holding gains (losses) on cash flow hedges, net of taxes of $ 732 , $ 8,258 , and $( 294 ), respectively

( 1,835 ) ( 20,717 ) 736

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

6,126 417 763

Net unrealized holding gains (losses) on cash flow hedges ( 13,055 ) ( 2,567 ) ( 28,975 )

Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income 9,291 8,569 583

Tax effect 653 ( 1,711 ) 8,092

Net change in unrealized gains (losses) on cash flow hedges ( 3,111 ) 4,291 ( 20,300 )

Net change in AOCI 54,475 ( 249,520 ) ( 57,067 )

OCI 11,764 54,475 ( 249,520 )

Total comprehensive income (loss) $ 125,455 $ 177,040 $ ( 121,209 )

See accompanying Notes to Consolidated Financial Statements.

First Busey Corporation | 2023 — 96

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Table of Contents Contents of Item 8.

10 unchanged sentences

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

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

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

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

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

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

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

Cash dividends common stock at $ 0.92 per share

6 unchanged sentences

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

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

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

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

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

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

Cash dividends common stock at $ 0.96 per share

3 unchanged sentences

Balance, December 31, 2023 55,244,119 58 1,323,595 237,197 ( 218,803 ) ( 70,066 ) 1,271,981

Cumulative effect of change in accounting principal (ASU 2023-02) — — — ( 1,391 ) — — ( 1,391 )

Net income — — — 113,691 — — 113,691

OCI, net of tax — — — — 11,764 — 11,764

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

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

Stock issued in acquisition, net of stock issuance costs 1,429,304 2 34,232 — — — 34,234

Issuance of treasury stock for ESPP 58,843 — ( 325 ) — — 1,515 1,190

Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax 163,387 — ( 5,961 ) — — 4,207 ( 1,754 )

6 unchanged sentences

See accompanying Notes to Consolidated Financial Statements.

First Busey Corporation | 2023 — 97

First Busey Corporation (BUSE) | 2024 — 94

Table of Contents Contents of Item 8.

11 unchanged sentences

Amortization of mortgage servicing rights 997 2,785 3,540

Amortization of NMTC 8,999 6,333 5,563

Amortization of New Markets Tax Credit — 8,999 6,333

Depreciation and amortization of premises and equipment 9,503 9,488 10,482

10 unchanged sentences

(Gain) loss on sales of debt securities, net 7,033 5,503 ( 26 )

(Gain) loss on sales of mortgage servicing rights ( 7,724 ) — —

(Gain) loss on sales of loans, net ( 1,761 ) ( 733 ) ( 1,944 )

5 unchanged sentences

Stock-based compensation 7,726 6,595 8,968

Proceeds from the sale of mortgage servicing rights 9,796 — —

Mortgage loans originated for sale ( 104,176 ) ( 35,413 ) ( 70,953 )

10 unchanged sentences

Proceeds from paydowns and maturities of debt securities available for sale 370,774 326,252 470,134

Purchases of FHLB and other bank stock ( 30,957 ) ( 12,969 ) —

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

Net cash received in (paid for) acquisitions

Purchases of restricted bank stock ( 43,954 ) ( 30,957 ) ( 12,969 )

Proceeds from the redemption of restricted bank stock 884 43,926 225

Purchases of loans ( 14,602 ) — —

Net (increase) decrease in loans 364,455 65,240 ( 541,713 )

Net cash received in (paid for) acquisitions

Cash paid for premiums on bank-owned life insurance ( 74 ) ( 80 ) ( 106 )

4 unchanged sentences

Net cash provided by (used in) investing activities $ 657,903 $ 550,987 $ ( 290,856 )

First Busey Corporation | 2023 — 98

First Busey Corporation (BUSE) | 2024 — 95

Table of Contents Contents of Item 8.

14 unchanged sentences

Cash paid for withholding taxes on stock-based payments ( 1,755 ) ( 1,093 ) ( 1,276 )

Proceeds from stock options exercised ( 3 ) — —

Proceeds from stock warrants exercised — 9 —

10 unchanged sentences

OREO acquired in settlement of loans $ 26 $ 189 $ 175

Transfer of loans held for sale to portfolio loans — — ( 4,808 )

Transfer of debt securities available for sale to held to maturity — — 985,199

See accompanying Notes to Consolidated Financial Statements.

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First Busey Corporation (BUSE) | 2024 — 96

Table of Contents Contents of Item 8.

3 unchanged sentences

SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Organization and Nature of Operations

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

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

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

Principles of Consolidation

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

Busey’s accounting and reporting policies conform to GAAP.

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

Further, until its dissolution on December 18, 2023, First Busey Risk Management was a subsidiary of First Busey Corporation and included in the Company’s Consolidated Financial Statements .

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

2 unchanged sentences

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

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

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

Use of Estimates

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

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

Actual results could differ from those estimates.

Material estimates which are particularly susceptible to significant change in the near-term relate to the fair value of debt securities available for sale, fair value of assets acquired and liabilities assumed in business combinations, goodwill, income taxes, and the determination of the ACL.

Comprehensive Income (Loss)

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

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

First Busey Corporation | 2023 — 100

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Material estimates which are particularly susceptible to significant change in the near-term relate to the fair value of assets acquired and liabilities assumed in business combinations, goodwill, income taxes, and the determination of the ACL.

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

6 unchanged sentences

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

First Busey Corporation (BUSE) | 2024 — 97

Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business Combinations

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

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

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

Further, management assumptions require consideration of future growth rates, future attrition, discount rates, multiples of earnings or other relevant factors.

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

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

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

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

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

Debt Securities Available for Sale

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

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

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

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

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Table of Contents Contents of Item 8.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

5 unchanged sentences

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

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

Busey did not recognize any credit impairment on debt securities available for sale in 2024, 2023, or 2022.

Debt Securities Held to Maturity

2 unchanged sentences

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

The risk related to mortgage-backed securities issued and/or guaranteed by U.S.

The risk of credit loss related to mortgage-backed securities issued and/or guaranteed by U.S.

government agencies or U.S.

government-sponsored enterprises is considered low, therefore requiring no allowance to be recorded.

Accrued interest receivable for debt securities totaled $ 13.6 million at December 31, 2023, and is excluded from the estimate of credit losses.

government-sponsored enterprises is considered zero, therefore requiring no allowance to be recorded.

Accrued interest receivable for both debt securities available for sale and debt securities held to maturity totaled $ 10.5 million at December 31, 2024, and is excluded from the estimate of credit losses.

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

7 unchanged sentences

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

Loan Servicing

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

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

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

Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.

The amortization of mortgage servicing rights is included in mortgage revenue.

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

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Table of Contents Contents of Item 8.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Loan Servicing

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

The unpaid principal balances of loans serviced by Busey for the benefit of others totaled $ 582.5 million as of December 31, 2024, and $ 1.49 billion as of December 31, 2023, and are not included in the accompanying Consolidated Balance Sheets .

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 an estimated pre-tax gain of $ 7.5 million, which enabled Busey to sell available-for-sale debt securities with a book value of approximately $ 108.2 million for a pre-tax loss of $ 6.8 million.

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

The amortization of mortgage servicing rights is included in mortgage revenue.

The amortization of government-guaranteed commercial loan servicing rights is included in other income.

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

Fair values are estimated using discounted cash flows based on expected prepayment rates and other inputs.

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

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

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

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

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

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

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

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

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

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

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Table of Contents Contents of Item 8.

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Loan Modifications

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

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

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

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

Assets Purchased with Credit Deterioration

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

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

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

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

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

At the date of acquisition, an ACL on PCD loans is determined and netted against the amortized cost basis of the individual loans.

The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan.

The ACL on PCD loans is recorded in the acquisition accounting and no provision for credit losses is recognized at the acquisition date.

Subsequent changes to the ACL are recorded through provision expense.

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

Busey’s loan portfolio includes certain loans that have been modified in accordance with loan refinancing and restructuring guidance in ASC Subtopic 310-20-35-9 through 35-11 “Receivables—Nonrefundable Fees and Other Costs—Subsequent Measurement—Loan Refinancing or Restructuring” for borrowers experiencing financial difficulty.

For additional information about loan modifications for borrowers experiencing financial difficulty, see “ Note 4.

P ortfolio Loans .”

Allowance for Credit Losses

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

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

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

Portfolio loans are charged off against the ACL when management believes the uncollectibility of a loan balance is confirmed.

Portfolio loans are charged off against the ACL when management believes the loan balance is uncollectible.

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

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

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

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

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

Further, as permitted under the practical expedient provided within ASC 326-20-35-6, Busey did not record an ACL for its Life Equity Loan ® portfolio due to no expected credit loss at default.

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

1 unchanged sentence

Fair Value Measurements.

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

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

3 unchanged sentences

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

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Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Assets Purchased with Credit Deterioration

Acquired loans are separated into two categories based on the credit risk characteristics of the underlying borrowers:

(1) PCD, for loans which have experienced more than insignificant credit deterioration since origination, or (2) all other loans.

For PCD loans, an ACL is determined at the date of acquisition using the same methodology as other loans held for investment.

This initial ACL, when determined on a collective basis, is allocated to the individual loans, and the sum of each loan’s purchase price and ACL becomes its initial amortized cost basis.

The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan.

The ACL on PCD loans is recorded in the acquisition accounting and no provision for credit losses is recognized at the acquisition date.

Subsequent changes to the ACL are recorded as a charge to the provision for credit losses.

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

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

The amortized cost basis of these PCD assets was adjusted to reflect an ACL for any remaining credit discount.

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

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

Other Real Estate Owned and Other Repossessed Assets

OREO and other repossessed assets represent properties and other assets acquired through foreclosure or other proceedings in settlement of loans.

OREO and other repossessed assets are recorded at the fair value of the property or asset, less estimated costs of disposal, which establishes a new cost basis.

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

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

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

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

Revenue, expense, gains, and losses from the operations of foreclosed assets are included in earnings.

Long-Lived Assets

Long-lived assets, including premises and equipment, right of use assets, and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

An impairment loss is recognized when estimated undiscounted future cash flows from operations of the asset are less than the carrying value of the asset.

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

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

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Table of Contents Contents of Item 8.

Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Premises and Equipment

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Furniture and equipment 3 — 10 years

Premises and equipment are reviewed for impairment in accordance with Busey’s policies regarding long-lived assets.

Bank property held for sale, included in premises and equipment, represents certain banking center office buildings which Busey had closed and consolidated with other existing banking centers.

Bank property held for sale is measured at the lower of amortized cost or estimated fair value less estimated costs to sell, and depreciation has been stopped.

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

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

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

Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using the rate implicit in the lease or Busey’s incremental borrowing rate.

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

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

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

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

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Variable lease payments are expensed as incurred.

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Right of use assets are reviewed for impairment in accordance with Busey’s policies regarding long-lived assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Long-Lived Assets

An impairment loss is recognized when estimated undiscounted future cash flows from operations of the asset are less than the carrying value of the asset.

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

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

Other Real Estate Owned and Other Repossessed Assets

OREO and other repossessed assets represent properties and other assets acquired through foreclosure or other proceedings in settlement of loans.

OREO and other repossessed assets are recorded at the fair value of the property or asset, less estimated costs of disposal, which establishes a new cost basis.

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

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

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

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

Revenue, expense, gains, and losses from the operations of foreclosed assets are included in earnings.

Goodwill and Other Intangibles

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

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

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

A separate goodwill impairment assessment is performed for each reporting unit on the goodwill that has been allocated to it.

A reporting unit is a component of an operating segment that constitutes a business for which discrete financial information is available, and segment management regularly reviews the operating results of that component.

Busey’s reporting units are the same as its operating segments.

Busey has established December 31 as the annual impairment assessment date for each of its reporting units.

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

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

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There was no impairment as of December 31, 2024 or 2023.

See “ Note 7.

Goodwill and Other Intangible Assets ” for further discussion.

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

Other intangible assets are amortized over their estimated useful lives.

Other intangible assets are amortized over their estimated useful lives, and are reviewed for impairment in accordance with Busey’s policies regarding long-lived assets.

See “ Note 8.

Goodwill and Other Intangible Assets ” for additional information.

Cash Surrender Value of Bank Owned Life Insurance

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

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

Busey accrued liabilities for these arrangements totaling $ 5.7 million as of December 31, 2024, and $5.6 million as of December 31, 2023.

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

Restricted Bank Stock

During the fourth quarter of 2024 Busey Bank became a member of the Federal Reserve System.

Federal Reserve member banks are required to own a certain amount of Federal Reserve Bank stock.

Busey's investment in Federal Reserve Bank stock was $ 43.9 million as of December 31, 2024.

Busey’s investment in Federal Reserve Bank stock represents approximately half of the total required subscription, and the remaining half is unpaid and remains subject to call by the Federal Reserve Bank.

As such, Busey reserved cash of $ 43.9 million as of December 31, 2024.

Busey Bank is a member of the FHLB system.

FHLB members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts.

FHLB stock is carried at cost in other assets in our Consolidated Balance Sheet .

Dividends are reported as income.

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

Other Asset Investments

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

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

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

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

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

Busey believes potential losses from these investments are remote.

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

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

As of December 31,

Location 2023 2022

Other asset investments

Funded investments Other assets $ 68,516 $ 58,912

Unfunded investments Other assets 58,552 67,437

Other asset investments $ 127,068 $ 126,349

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

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

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FHLB members are required to own a certain amount of FHLB stock based on the level of borrowings and other factors, and may invest in additional amounts.

Busey's investment in FHLB stock was $ 6.0 million as of both December 31, 2024 and 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Federal Reserve Bank stock and FHLB stock are carried at cost in restricted bank stock on the Consolidated Balance Sheets .

Cash reserves are included in interest-bearing deposits as part of Busey’s total cash and cash equivalents balances reported on the Consolidated Balance Sheets .

Dividends are reported as interest income on the Consolidated Statements of Income .

Dividend income is accrued on Federal Reserve Bank stock and is recognized when declared on FHLB stock.

Transfers of Financial Assets

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

When transfers of financial assets fail to meet these criteria, those transfers are accounted for as secured borrowings.

Busey is subject to income taxes in U.S.

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

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

Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations, which requires significant judgment.

Busey is no longer subject to U.S.

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

In 2024, Busey recorded a 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, but created a negative adjustment to the carrying value of Busey’s deferred tax asset in 2024.

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

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

Uncertain tax positions are initially recognized in the Consolidated Financial Statements when it is more likely than not the position will not be sustained upon examination by the tax authorities.

Uncertain tax positions are initially recognized on the Consolidated Financial Statements when it is more likely than not the position will not be sustained upon examination by the tax authorities.

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

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

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

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

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

Busey Bank accrued $ 0.1 million related to potential assessment adjustments and interest.

Other than this, Busey had no accruals for payments of interest and penalties related to uncertain tax positions at December 31, 2024, or 2023.

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

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Tax Credit and Other Investments in Unconsolidated Entities

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

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

These investments involve significant management judgments, including a determination of which entities have the power to direct activities, and whether these entities are variable interest entities.

Busey is required to evaluate whether to consolidate a variable interest entity at both inception and on an ongoing basis.

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

Busey believes potential losses from these investments are remote.

Upon adoption of ASU 2023-02 on January 1, 2024, Busey elected to apply the proportional amortization method in accounting for investments in tax-advantaged projects.

Income tax credits and other tax benefits, net of investment amortization, were included as a component of Busey’s estimated annual effective tax rate used for the calculation of income taxes presented on the Consolidated Statements of Income .

For additional information regarding these investments, see “ Note 14.

Tax Credit and Other Investments in Unconsolidated Entities .”

Treasury Stock

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

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

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2020 Equity Plan

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

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Financial Statements & Supplementary Data

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

PSU awards are stock-based awards for which vesting is conditional upon meeting established performance criteria for the applicable performance period and remaining employed through the end of such performance period.

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

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

The number of PSUs that ultimately vest will be determined based on the extent to which the established performance criteria are achieved.

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

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

Busey grants DSU awards to its directors and advisory directors.

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

Busey grants DSU awards to its non-employee directors.

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

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All stock options that remained outstanding as of December 31, 2024, were fully vested.

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Employee Stock Purchase Plan

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

The purpose of the ESPP is to provide a means through which Busey associates may acquire a proprietary interest in the Company by purchasing shares of its common stock at a discounted price through voluntary payroll deductions, to assist in retaining the services of current associates and securing and retaining the services of new associates, and to provide incentives for Busey associates to exert maximum efforts toward the Company’s success.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2021 Employee Stock Purchase Plan

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

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

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

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Stock-based Compensation ” for further discussion.

Segment Disclosure

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

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

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

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

See “ Note 21.

Operating Segments and Related Information ” for further discussion.

Business Combinations

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

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

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

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

Off-Balance Sheet Arrangements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Liabilities recorded as reserves for Busey’s off-balance sheet credit exposure under these commitments totaled $ 6.0 million as of December 31, 2024, and $ 7.1 million as of December 31, 2023.

Derivative Financial Instruments

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

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Interest Rate Lock Commitments

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

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

Forward Sales Commitments

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

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

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

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

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

Risk Participation Agreements

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

• Busey has a swap agreement with a customer.

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

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

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Busey has a swap agreement with a customer.

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

If the customer swap has a negative fair value (from the purchaser’s perspective), the counterparty has no reimbursement requirements.

• A counterparty has a swap agreement with a customer.

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

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

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

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

If the customer swap has a negative fair value (from the purchaser’s perspective), Busey has no reimbursement requirements.

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

Foreign Currency Forward Contracts

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

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

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

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

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

Off-Balance Sheet Arrangements

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