| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(State or other jurisdiction of incorporation of organization) |
| (I.R.S. Employer Identification No.) |
Ave.
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Common Stock ($0.001 par value) | BUSE | The Nasdaq Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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Large accelerated filer | Accelerated filer | ||||
Non-accelerated filer | Smaller reporting company☐ | ||||
Emerging growth company☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Yes ☐o No ☒
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As of February 24, 2022,22, 2024, there were 55,290,64555,247,094 shares of the registrant’s common stock, $0.001 par value, outstanding.
Portions of the definitive Proxy Statement for the 20222024 Annual Meeting of Stockholders of First Busey Corporation to be held May 25, 2022,22, 2024, are incorporated by reference in this Form 10-K in response to Part III.
EXPLANATORY NOTE
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(PCAOB ID 49) |
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Term | Definition | ||||||||||
2020 Equity Plan | First | ||||||||||
| First Busey Corporation 2021 Employee Stock Purchase Plan | ||||||||||
401(k) Plan | First Busey Corporation Profit Sharing Plan and Trust | ||||||||||
ACL | Allowance for credit losses | ||||||||||
Annual Report | Annual report filed with the SEC on Form 10-K pursuant to Section 13 or 15(d) of the Exchange Act | ||||||||||
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| Accumulated other comprehensive income (loss) | |||||||||
ASC | Accounting Standards Codification | ||||||||||
ASU | Accounting Standards Update | ||||||||||
Basel III | 2010 capital accord adopted by the international Basel Committee on Banking Supervision | ||||||||||
Basel III Rule | Regulations promulgated by U.S. federal banking agencies – the OCC, the Federal Reserve, and the FDIC – to both enforce implementation of certain aspects of the Basel III capital reforms and effect certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act | ||||||||||
BHCA | Bank Holding Company Act of 1956, as amended | ||||||||||
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CECL | ASU 2016-13, codified as ASC Topic 326 “Financial Instruments-Credit Losses,” which established the Current Expected Credit Losses methodology for measuring credit losses on financial instruments | ||||||||||
CFPB | Consumer Financial Protection Bureau | ||||||||||
COSO | Committee of Sponsoring Organizations of the Treadway Commission | ||||||||||
COVID-19 | Coronavirus disease 2019 | ||||||||||
CRA | Community Reinvestment Act | ||||||||||
CRE | Commercial real estate | ||||||||||
CRE Guidance | Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices guidance issued jointly by the OCC, the Federal Reserve, and the FDIC | ||||||||||
Current Report | Current report filed with the SEC on Form 8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||||||||
DFPR | Illinois Department of Financial and Professional Regulation | ||||||||||
DIF | Deposit Insurance Fund of the FDIC | ||||||||||
Dodd-Frank Act | Dodd-Frank Wall Street Reform and Consumer Protection Act | ||||||||||
DSU | Deferred stock unit | ||||||||||
Durbin Amendment | The Durbin Amendment to the Dodd-Frank Act, requiring the Federal Reserve to establish a maximum permissible interchange fee for many types of debit transactions | ||||||||||
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Exchange Act | Securities Exchange Act of 1934, as amended | ||||||||||
Fair value | 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, as defined in ASC Topic 820 “Fair Value Measurement” | ||||||||||
FASB | Financial Accounting Standards Board | ||||||||||
FDIC | Federal Deposit Insurance Corporation | ||||||||||
Federal Reserve | Board of Governors of the Federal Reserve System |
Term | Definition | ||||||||
FHLB | Federal Home Loan Bank | ||||||||
First Busey | First Busey Corporation, | ||||||||
First Busey Risk Management | First Busey Risk Management, Inc. | ||||||||
First Community | First Community Financial Partners, Inc. |
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FOMC | Federal Open Market Committee | ||||||||
GAAP | U.S. Generally Accepted Accounting Principles | ||||||||
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Illinois CRA |
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ISOS |
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LIBOR | London Interbank Offered Rate | ||||||||
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M&M | Merchants and Manufacturers Bank Corporation | ||||||||
M&M Bank | Merchants and Manufacturers Bank | ||||||||
Nasdaq | National Association of Securities Dealers Automated Quotations | ||||||||
NMTC | New Markets Tax Credit | ||||||||
OCC | Office of the Comptroller of the Currency | ||||||||
OCI | Other comprehensive income (loss) | ||||||||
OREO | Other real estate owned | ||||||||
PCD | Purchased credit deteriorated | ||||||||
PCI | Purchased credit impaired | ||||||||
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| Paycheck Protection Program | |||||||
| Performance stock unit | ||||||||
Pulaski Financial Corp. | |||||||||
Quarterly Report | Quarterly report filed with the SEC on Form 10-Q pursuant to Section 13 or 15(d) of the Exchange Act | ||||||||
Regulatory Relief Act | Economic Growth, Regulatory Relief, and Consumer Protection Act | ||||||||
RSU | Restricted stock unit | ||||||||
SBA | U.S. Small Business Administration | ||||||||
SEC | U.S. Securities and Exchange Commission | ||||||||
Securities Act | Securities Act of 1933, as amended | ||||||||
SOFR | Secured Overnight Financing Rate published by the Federal Reserve | ||||||||
| Stock repurchase program approved by First Busey Corporation's board of directors on February 3, 2015 | ||||||||
Troubled debt restructuring | |||||||||
Term | $60 million term loan provided for in the Second Amended and Restated Credit Agreement, dated May 28, 2021 | ||||||||
U.S. | United States of America | ||||||||
U.S. Treasury | U.S. Department of the Treasury | ||||||||
USA PATRIOT Act | Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 |
Introduction
Contents of
Item 1. Business
Acquisitions
Over the last several years, First Busey completed the following acquisitions as part of our strategy to expand into new service areas and to provide broader coverage in areas where we already maintain a presence:
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Further information related to acquisitions made prior to January 1, 2021, has been presented in the Annual Reports previously filed with the SEC corresponding to the year of each acquisition.
2021 Acquisition
On May 31, 2021, First Busey acquired CAC, the holding company for GSB, through a merger transaction. The partnership enhances the Company’s existing deposit, commercial banking, and wealth management presence in the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area. First Busey operated GSB as a separate banking subsidiary until August 14, 2021, when it was merged with and into Busey Bank. At that time, all GSB banking centers became branches of Busey Bank.
See “Note 2. Acquisitions” in the Notes to the Consolidated Financial Statements for further information relating to acquisitions.
Subsidiaries of First Busey
Corporation
First
Busey also has various other subsidiaries that are not significant to the consolidated entity.
Busey Bank
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Busey Bank offers a range of diversified financial products and services for consumers and businesses, including online and mobile banking capabilities to conveniently serve our customers’ needs. Commercial services include commercial, commercial real estate, real estate construction, and agricultural loans, as well as commercial depository services such as cash management. Retail banking services include residential real estate, home equity lines of credit, and consumer loans, customary types of demand and savings deposits, money transfers, safe deposit services, and IRAindividual retirement accounts and other fiduciary services through our banking center, ATM,automated teller machines, and technology-based networks.
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FirsTech
First Busey Risk Management
ACQUISITIONS
Acquisition Date | Companies Acquired | |||||||
January 8, 2015 | Herget Financial Corp. and its wholly-owned bank subsidiary, Herget Bank, National Association | |||||||
April 30, 2016 | Pulaski Financial Corp. and its wholly-owned subsidiary, Pulaski Bank, National Association | |||||||
July 2, 2017 | First Community Financial Partners, Inc. and its wholly-owned subsidiary, First Community Financial Bank | |||||||
October 1, 2017 | Mid Illinois Bancorp, Inc. and its wholly-owned subsidiary, South Side Trust & Savings Bank of Peoria | |||||||
January 31, 2019 | The Bank Ed Corp. and its wholly-owned subsidiary, TheBANK of Edwardsville | |||||||
August 31, 2019 | Investors' Security Trust Company | |||||||
May 31, 2021 | Cummins-American Corp. and its wholly-owned subsidiary, Glenview State Bank | |||||||
Planned for 2024 | Merchants and Manufacturers Bank Corporation, and its wholly-owned subsidiary, Merchants and Manufacturers Bank |
year of each acquisition.
Acquisition of Merchants and Manufacturers Bank Corporation Planned for The Second Quarter of 2024
further information relating to this acquisition.
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Banking Center Markets
Busey Bank hasserves the Illinois banking market with 46 banking centers in Illinois.centers. Our Illinois markets feature several Fortune 1000 companies. Those organizations, coupled with large healthcare and higher education sectors, anchor the communities in which they are located and have provided a comparatively stable foundation for housing, employment, and small business. Historically,Ten of our banking centers in Illinois are located within the financial conditionChicago Metropolitan Statistical Area, and 12 of our banking centers in Illinois are located within the state of Illinois, in which the largest portion of Busey Bank’s customer base resides, has been characterized by low credit ratings and budget deficits. However, with the recent improvement in the state’s financial outlook, during the second half of 2021 Illinois received improved ratings from Moody’s Investor Service, S&P Global Ratings, and Fitch.
St. Louis Metropolitan Statistical Area.
Area, including branches in both Illinois and Missouri.
benefits of a tourism and winter resort economy.
In November 2021, First Busey completed its previously announced service center closures as partCorporation | 2023—8
Market Competition
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Based on information obtained from the FDIC Summary of Deposits dated June 30, 2021,2023, the most recent report available, out of 366 financial institutions headquartered in the State of Illinois, Busey Bank ranked fourth in total deposits within the Illinois market. Further, Busey Bank ranked in the top 10 in total deposits in 12nine Illinois counties:
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As of June 30, | |||||||||||
Busey Bank | |||||||||||
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community experiences with our associates as the cornerstone of this unwavering commitment. Busey’s vision, Service Excellence in Everything We Do, starts with dedication to our associates. We are deeply humbled to be consistently recognized nationally and locally throughout our footprint, including being named among America’s Best Banks by
and the Best Banks to Work For by American Banker since 2016; the Best Places to Work in Money Management by Pension and Investments since 2018; and a Leading Disability Employer by the National Organization on Disability. Locally, Busey has been voted as a Best Places to Work in Illinois since 2016 and a Best Company to Work For in Florida since 2017. From exceeding the needs of customers and colleagues to serving our communities selflessly, our associates show unmatched dedication to Busey. Their shared experiences are what make these and other awards possible. Since we opened our doors over 155 years ago, we have maintained our core values, creating a strong foundation and shaping our inclusive culture.
As of December 31, 2023 | |||||||||||||||||
Full-time | Part-time | Total | |||||||||||||||
Busey associates by state | |||||||||||||||||
Illinois | 1,094 | 80 | 1,174 | ||||||||||||||
Missouri | 179 | 5 | 184 | ||||||||||||||
Florida | 93 | — | 93 | ||||||||||||||
Indiana | 28 | — | 28 | ||||||||||||||
Remote | 42 | 1 | 43 | ||||||||||||||
Total number of associates | 1,436 | 86 | 1,522 | ||||||||||||||
Full-time equivalents | 1,436 | 43 | 1,479 |
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The supervisory framework for U.S. banking organizations subjects banks and bank holding companies to regular examination by their respective regulatory agencies, which results in examination reports and ratings that are not publicly available and that can impact the conduct and growth of their businesses. These examinations consider not only compliance with applicable laws and regulations, but also capital levels, asset quality and risk, management ability and performance, earnings, liquidity, and various other factors. The regulatory agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law, or are otherwise inconsistent with laws and regulations.
COVID-19 Pandemic
Federal bank regulatory agencies, along with their state counterparts, issued a steady stream of guidance responding to the COVID-19 pandemic and they took a number of unprecedented steps to help banks navigate the pandemic and mitigate its impact. These included, without limitation: requiring banks to focus on business continuity and pandemic planning; adding pandemic scenarios to stress testing; encouraging bank use of capital buffers and reserves in lending programs; permitting certain regulatory reporting extensions; reducing margin requirements on swaps; permitting certain otherwise prohibited investments in investment funds; issuing guidance to encourage banks to work with customers affected by the pandemic; and providing credit under the CRA for certain pandemic-related loans, investments, and public service. Because of the need for social distancing measures, the agencies revamped the manner in which they conducted periodic examinations of their regulated institutions, including making greater use of off-site reviews, and they have continued virtual examinations in 2022.
Reference is made to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of COVID-19” below for further information on the impact of the COVID-19 pandemic. In addition, information as to selected topics is contained in the relevant sections of this Supervision and Regulation discussion provided below.
The $10.0$10 billion Threshold
The Company
The material consequences to the CompanyBusey of crossing the $10.0$10 billion threshold are as follows:
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Interchange Fees
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Busey’s operations.
CFPB Examination and Enforcement
FDIC.
Clearing Swaps Agreements
Risk Committee
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Capital Levels
The Basel III Rule
Minimum Capital Ratio Requirements
The Basel III Rule requires minimum capital ratios as follows:
A ratio of Common Equity Tier 1 Capital equal to 4.5% of risk-weighted assets; |
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•A ratio of Tier 1 Capital equal to 6% of risk-weighted assets;
Well-Capitalized Requirements
The ratios described above are minimum standards for banking organizations to be considered “adequately capitalized.” Bank regulatory agencies uniformly encourage banks to hold more capital and be “well-capitalized” and, to that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements. For example, a banking organization that is well-capitalized may: (i)(1) qualify for exemptions from prior notice or application requirements otherwise applicable to certain types of activities; (ii)(2) qualify for expedited processing of other required notices or applications; and (iii)(3) accept, roll-over or renew brokered deposits. Higher capital levels also could be required if warranted by the particular circumstances or risk profiles of individual banking organizations. For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, the risks posed by concentrations of credit, nontraditional activities, or securities trading activities. Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions (i.e., Tier 1 Capital less all intangible assets), well above the minimum levels.
A Common Equity Tier 1 Capital ratio to risk-weighted assets of 6.5% or more;
As of December 31, 2021: (i)2023: (1) Busey Bank was not subject to a directive from the FDIC to increase its capital, and (ii)(2) Busey Bank was well-capitalized, as defined by FDIC regulations. As of December 31, 2021, the Company2023, First Busey had regulatory capital in excess of the Federal Reserve’s requirements and met the requirements to be well-capitalized. The CompanyFirst Busey also is in compliance with the capital conservation buffer.
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Prompt Corrective Action
Supervision and Regulation of the Company
First Busey Corporation
General
The Company,
Acquisitions, Activities and Financial Holding Company Election
The primary purpose of a bank holding company is to control and manage banks. The BHCA generally requires the prior approval of the Federal Reserve for any merger involving a bank holding company or any acquisition by a bank holding company of another bank or bank holding company. Subject to certain conditions (including deposit concentration limits established by the BHCA), the Federal Reserve may allow a bank holding company to acquire banks located in any state of the U.S. In approving interstate acquisitions, the Federal Reserve is required to give effect to applicable state law limitations on the aggregate amount of deposits that may be held by the acquiring bank holding company and its FDIC-insured institution affiliates in the state in which the target bank is located (provided that those limits do not discriminate against out-of-state institutions or their holding companies) and state laws that require that the target bank have been in existence for a minimum period of time (not to exceed five years) before being acquired by an out-of-state bank holding company. Furthermore, in accordance with the Dodd-Frank Act, bank holding companies must be well-capitalized and well-managed in order to effect interstate mergers or acquisitions. For a discussion of the capital requirements, see “Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital” above.
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Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity, or that the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally. The CompanyFirst Busey Corporation has elected to operate as a financial holding company. In order to maintain its status as a financial holding company, the CompanyFirst Busey and Busey Bank must be well-capitalized, well-managed, and Busey Bank must have a least a satisfactory CRA rating. If the Federal Reserve determines that a financial holding company is not well-capitalized or well-managed, the company has a period of time in which to achieve compliance, but during the period of noncompliance, the Federal Reserve may place any limitations on the company it believes to be appropriate. Furthermore, if the Federal Reserve determines that a financial holding company’s subsidiary bank has not received a satisfactory CRA rating, that company will not be able to commence any new financial activities or acquire a company that engages in such activities.
Change in Control
Capital Requirements
Bank holding companies are required to maintain capital in accordance with Federal Reserve capital adequacy requirements. For a discussion of capital requirements, see “Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital” above.
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Incentive Compensation
Monetary Policy
Federal Securities Regulation
The Company’s
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Supervision and Regulation of Busey Bank
General
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Deposit Insurance
The18 basis points for financial institutions in the top two categories of examination composite ratings.
eight quarterly assessment periods. The DIF balancebase for the special assessment is equal to an insured depository institution’s estimated uninsured deposits for the December 31, 2022, reporting period, adjusted to exclude the first $5 billion in estimated uninsured deposits. Busey Bank was $121.9not subject to this assessment due to uninsured deposits being below the $5 billion on September 30, 2021, up $1.4 billion from the endexclusion threshold.
Capital Requirements
Banks are generally required to maintain capital levels in excess of other businesses. For a discussion of capital requirements, see “Item 1. Business—Supervision, Regulation and Other Factors—The Role of Capital” above.
Liquidity Requirements
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In addition to liquidity guidelines already in place, federal bank regulatory agencies implemented the Basel III LCR in September 2014, which requires large financial firms to hold levels of liquid assets sufficient to protect against constraints on their funding during times of financial turmoil, and in 2016 proposed implementation of the NSFR. WhileAlthough these rulestests do not, and will not, apply to Busey Bank, itmanagement continues to review its liquidity risk management policiesframework in light of regulatory and industry developments.
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Insider Transactions
Safety and Soundness Standards/Risk Management
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In general, the safety and soundness standards prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals. While regulatory standards do not have the force of law, if an institution operates in an unsafe and unsound manner, the FDIC-insured institution’s primary federal regulator may require the institution to submit a plan for achieving and maintaining compliance. If an FDIC-insured institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the regulator is required to issue an order directing the institution to cure the deficiency. Until the deficiency cited in the regulator’s order is cured, the regulator may restrict the FDIC-insured institution’s rate of growth, require the FDIC-insured institution to increase its capital, restrict the rates the institution pays on deposits, or require the institution to take any action the regulator deems appropriate under the circumstances. Noncompliance with safety and soundness may also constitute grounds for other enforcement action by the federal bank regulatory agencies, including cease and desist orders and civil money penalty assessments.
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Branching Authority
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Transaction Account Reserves
Federal law requires FDIC-insured institutions to maintain reserves against their transaction accounts (primarily NOW and regular checking accounts) to provide liquidity. The amount of reserves is determined by the Federal Reserve based on tranches of zero, three, and ten percent of a bank’s transaction account deposits. However, in March 2020, in an unprecedented move, the Federal Reserve announced that the banking system had ample reserves, and, as reserve requirements no longer played a significant role in this regime, it reduced all reserve tranches to zero percent, thereby freeing banks from the legally mandated reserve maintenance requirement. The action permits Busey Bank to loan or invest funds that previously were unavailable. The Federal Reserve has indicated that it expects to continue to operate in an ample reserves regime for the foreseeable future.
Community Reinvestment Act Requirements
Anti-Money Laundering
The USA PATRIOT Act, the Bank Secrecy Act is the common name for a series of laws and other similarregulations enacted in the United States to combat money laundering and the financing of terrorism. These laws and regulations are designed to deny terrorists and criminals the ability to obtain access to the U.S. financial system and have significant implications for FDIC-insured institutions and other businesses involved in the transfer of money. TheseThe so-called Anti-Money Laundering/Countering the Financing of Terrorism regime under the Bank Secrecy Act provides a foundation to promote financial transparency and deter and detect those who seek to misuse the U.S. financial system to launder criminal proceeds, finance terrorist acts, or move funds for other illicit purposes. The laws mandate financial services companies to have policies and procedures with respect to measures designed to address the following matters: (i)(1) customer identification programs; (ii)(2) money laundering; (iii)(3) terrorist financing; (iv)(4) identifying and reporting suspicious activities and currency transactions; (v)(5) currency crimes; and (vi)(6) cooperation between FDIC-insured institutions and law enforcement authorities.
Concentrations in Commercial Real Estate
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Consumer Financial Services
is under CFPB oversight for consumer banking transactions.
Supervisioncosts and Regulation of Busey Risk Management
First Busey Risk Management, incorporated in Nevada, is a captive insurance company which insures against certain risks unique to the operations of the Company and its subsidiaries and for which insurance may not be currently available or economically feasible in today’s insurance marketplace. First Busey Risk Management is subject to regulations of the State of Nevada and periodic examinations by the Nevada Division of Insurance.
Executive Officers
Following is a description of the business experience for at least the past five years of our executive officers.
Van A. Dukeman. Mr. Dukeman, age 63, has served as a Director, Chief Executive Officer and President of First Busey since August 2007. Prior to August 2007, Mr. Dukeman served as a Director, Chief Executive Officer and President of Main Street Trust, Inc. from May 1998 until its merger with First Busey.
Robin N. Elliott. Mr. Elliott, age 45, was appointed President and Chief Executive Officer of Busey Bank in April 2019. Prior to that, he served as Chief Operating Officer of First Busey since February 2016 and Chief Financial Officer of First Busey since January 2014. Mr. Elliott had previously served as Director of the Business Banking Group of Busey Bank since November 2011. Prior to that appointment, he had served as Director of Finance & Treasury since joining the organization in 2006.
Jeffrey D. Jones. Mr. Jones, age 48, was appointed Chief Financial Officer of First Busey in July 2019. Prior to that, he was Co-Head of the US Depository Group and Head of Depository Investment Banking with Stephens, Inc., since 2015.
Monica L. Bowe. Ms. Bowe, age 48, has served as Chief Risk Officer of First Busey since January 2020. Prior to that, she served as Senior Director of Operational Risk Program Management at KeyBank, a subsidiary of KeyCorp headquartered in Cleveland, Ohio since 2015.
John J. Powers. Mr. Powers, age 66, has served as General Counsel of First Busey since December 2011. Prior to that, he was a stockholder of Meyer Capel, P.C., a law firm based in Champaign, Illinois, since 1998.
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Amy L. Randolph. Mrs. Randolph, age 47, was appointed Chief of Staff in April 2017. Prior to that appointment she served as Executive Vice President and Chief Brand Officer since March 2014. Prior to March 2014, she served as Senior Vice President of Growth Strategies since 2008.
Human Capital
First Busey was built upon a strong commitment to associate, customer, stockholder, and community experiences. Our associates are the cornerstone of this unwavering commitment. Busey’s vision, Service Excellence in Everything We Do, starts with dedication to our associates. We are deeply humbled to be consistently recognized nationally and locally throughout our footprint for this steadfastness. Busey Bank has been named among America’s Best Banks by Forbes magazine. Ranked 52nd overall on the 2022 list, Busey was the top-ranked bank headquartered in Illinois, and only three other Illinois-based banks were included. The organization has also been named among American Banker’s Best Banks to Work For since 2016; voted as one of the Best Places to Work in Illinois since 2016; recognized as one of the 2018 & 2019 Top Workplaces in St. Louis; recognized as a Best Company to Work For in Florida since 2017; recognized among the Best Places to Work in Money Management since 2018 by Pensions & Investments; and recognized as a Best Place to Work in Indiana by the Indiana Chamber of Commerce since 2019 – all in addition to various wellness, training and development, philanthropic and other workplace awards. From exceeding the needs of customers and colleagues to serving our communities selflessly, our associates show unmatched dedication to Busey. Their shared experiences are what make these and other awards possible. Since we opened our doors over 150 years ago, we have maintained our core values, creating a strong foundation and shaping our inclusive culture.
First Busey remains committed to bringing diversity and inclusion to our organization, the banking profession, and the communities where we live and work. Busey is dedicated to attracting and retaining talent across a variety of backgrounds and experiences. A diverse team – one with varying beliefs and opinions – promotes productivity, creativity, and innovation, while better meeting and exceeding the needs of a diverse customer base. Recruiting, supporting, and retaining a diversified workforce with varying perspectives and ideas, while having an inclusive culture, is the foundation of our core values – One Busey. We strive to maintain an inclusive environment free from discrimination of any kind. Busey recognizes the richness diversity brings to our workplace. Our endeavors in this regard are reported to the Employee Benefit and Compensation Committee, which holds the organization accountable to this core value at the highest levels of management. We maintain an Affirmative Action Plan, the results of which – including proactive steps for inclusion – are reviewed by this same group. Busey supports and empowers women in the workplace as reflected in our gender-diverse workforce. In 2021, women comprised of 59% of Team Busey and made up 26% of our senior leadership, providing meaningful contributions not only within the organization but throughout the communities we serve.
Associate engagement is an important barometer of our cultural health. We regularly solicit feedback and understand views of our associates about their work environment and Busey’s culture. The results from engagement surveys are used to implement programs and processes designed to enhance engagement and improve the associate experience. One such way to keep associates informed and engaged is through our quarterly update calls, which are conducted by Busey leadership. The recordings are available for all associates. These calls provide important information about the financial health of the company, but more importantly they provide a cultural touchpoint to solidify Busey’s commitment to our number one asset – our associates. A tenet of our engaged culture is a commitment to investing in associates through unique, award-winning training and development programs. In 2021, 51% of our associate base engaged in talent and leadership development programs. As a result of these programs, 49% of Busey’s open roles were filled internally during 2021 by associates who were promoted or who transferred to new roles. Since 2017, Busey has been a proud recipient of the Association for Talent Development’s BEST Award, which is presented to organizations that demonstrate enterprise-wide success as a result of employee talent development.
Additionally, we care about the health and wellbeing of our associates and their families, as evidenced in the 97% participation rate in our innovative health and wellness program, B Well. Investments in B Well include a stress management component, lifesaving biometric screenings, a corporate health and wellness coach, health club reimbursements, and Health Savings Account (HSA) investments funded by the Company. Busey is honored to be recognized among the 2021 Illinois' Healthiest Employers, presented by Cigna and Crain’s Content Studio.
22
As of December 31, 2021, First Busey and our subsidiaries had a total of 1,463 full-time equivalents.
Geographic distribution of our associates is as follows:
| | | | | | | | | | | | | | | | |
| | As of December 31, 2021 | | |||||||||||||
| | | | | Associates | | ||||||||||
| | Locations | | Full-time | | Part-time | | Total | | % | | |||||
Banking center associates by location | | | | | | | | | | | | | | | | |
Illinois | | | 46 | | | 776 | | | 48 | | | 824 | | | 55.0 | % |
Missouri | | | 8 | | | 143 | | | 3 | | | 146 | | | 9.7 | % |
Florida | | | 3 | | | 62 | | | — | | | 62 | | | 4.1 | % |
Indiana | | | 1 | | | 17 | | | 1 | | | 18 | | | 1.2 | % |
Banking center associates | | | 58 | | | 998 | | | 52 | | | 1,050 | | | 70.0 | % |
Corporate office associates (1) | | | | | | 429 | | | 20 | | | 449 | | | 30.0 | % |
Total number of associates | | | | | | 1,427 | | | 72 | | | 1,499 | | | 100.0 | % |
Percentage of associates | | | | | | 95.2 | % | | 4.8 | % | | | | | | |
Securities and Exchange Commission Reporting and Other Information
First Busey’s website address is www.busey.com. We make available on this website ourmakes its Annual Reports, Quarterly Reports, Current Reports, and any amendments thereto available, free of charge, on its website at busey.comas soon as reasonably practicable after such reports are electronically filed with or furnished with the SEC, and in any event, on the same day as such filing withto the SEC. Reference to thisBusey’s website does not constitute incorporation by reference of the information contained on the website and it should not be considered part of this document. First Busey has adopted a code of ethics applicable to our employees, officers,
accessed.
A reconciliation to what management believes to be the most direct compared GAAP financial measures, specifically total net interest income in the case of pre-provision net revenue, adjusted pre-provision net revenue, pre-provision net revenue to average assets, and adjusted pre-provision net revenue to average assets; net income in the case of adjusted net income, adjusted diluted earnings per share, and adjusted return on average assets; total net interest income in the case of adjusted net interest margin; total noninterest income and total noninterest expense in the case of adjusted noninterest expense, efficiency ratio, and adjusted efficiency ratio; and total stockholders’ equity in the case of tangible common equity, tangible common equity to tangible assets, tangible book value per common share, and return on average tangible common equity, appears below. The CompanyBusey’s peers. Busey believes the adjusted measures are useful for investors and management to understand the effects of certain non-core and non-recurring noninterest items and provide additional perspective on the Company’sBusey’s performance over time as well as comparison to the Company’s peers.
time.
These non-GAAP—24
23
GAAP Financial Measures | Related Non-GAAP Financial Measures | Related Non-GAAP Ratios | ||||||||||||
Net interest income Total noninterest income Net security gains and losses Total noninterest expense | Pre-provision net revenue | Pre-provision net revenue to average assets | ||||||||||||
Adjusted pre-provision net revenue | Adjusted pre-provision net revenue to average assets | |||||||||||||
Net income | Adjusted net income | Adjusted diluted earnings per share | ||||||||||||
Adjusted return on average assets | ||||||||||||||
Adjusted return on average tangible common equity | ||||||||||||||
Average common equity | Average tangible common equity | Return on average tangible common equity | ||||||||||||
Adjusted return on average tangible common equity | ||||||||||||||
Net interest income | Tax-equivalent net interest income | Net interest margin | ||||||||||||
Adjusted net interest income | Adjusted net interest margin | |||||||||||||
Net interest income Total noninterest income Net security gains and losses | Tax-equivalent revenue | Efficiency ratio | ||||||||||||
Adjusted efficiency ratio | ||||||||||||||
Adjusted core efficiency ratio | ||||||||||||||
Total noninterest expense Amortization of intangible assets | Noninterest expense excluding amortization of intangible assets | Efficiency ratio | ||||||||||||
Adjusted noninterest expense | Adjusted efficiency ratio | |||||||||||||
Adjusted core expense | Adjusted core efficiency ratio | |||||||||||||
Total noninterest expense | Noninterest expense, excluding non-operating adjustments | |||||||||||||
Total assets Goodwill and other intangible assets, net | Tangible assets | Tangible common equity to tangible assets | ||||||||||||
Total stockholders’ equity Goodwill and other intangible assets, net | Tangible common equity | Tangible common equity to tangible assets | ||||||||||||
Tangible book value | Tangible book value per common share | |||||||||||||
Portfolio loans | Core loans | Core loans to portfolio loans | ||||||||||||
Core loans to core deposits | ||||||||||||||
Total deposits | Core deposits | Core deposits to total deposits | ||||||||||||
Core loans to core deposits |
Pre-Provision Net Revenue, Adjusted Pre-Provision Net Revenue,
Pre-Provision Net Revenue to Average Assets, and Adjusted Pre-Provision Net Revenue to Average AssetsPre-Provision Net Revenue, Adjusted Pre-Provision Net Revenue,
Pre-Provision Net Revenue to Average Assets, and
Adjusted Pre-Provision Net Revenue to Average Assets(dollars in thousands) Years Ended December 31, 2023 2022 2021 PRE-PROVISION NET REVENUE Net interest income $ 319,451 $ 323,438 $ 270,698 Total noninterest income 122,384 126,803 132,804 Net security (gains) losses 2,199 2,133 (3,070) Total noninterest expense (285,532) (283,881) (261,780) Pre-provision net revenue [a] 158,502 168,493 138,652 Non-GAAP adjustments: Acquisition and other restructuring expenses 4,328 4,537 17,351 Provision for unfunded commitments 461 61 (774) Amortization of New Markets Tax Credits 8,999 6,333 5,563 Adjusted pre-provision net revenue [b] $ 172,290 $ 179,424 $ 160,792 Average total assets [c] $ 12,246,218 $ 12,492,948 $ 11,904,935 [a÷c] 1.29 % 1.35 % 1.16 % [b÷c] 1.41 % 1.44 % 1.35 %
—
| | | | | | | | | | |
| | | | | | | | | | |
| | Years Ended December 31, |
| |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Pre-provision net revenue | | | | | | | | | | |
Net interest income | | $ | 270,698 | | $ | 282,935 | | $ | 287,223 | |
Noninterest income | | | 132,804 | | | 118,265 | | | 116,415 | |
Less net (gains) losses on sales of securities and unrealized (gains) losses recognized on equity securities | |
| (3,070) | |
| (1,331) | |
| 18 | |
Noninterest expense | |
| (261,780) | |
| (234,197) | |
| (258,794) | |
Total pre-provision net revenue | | $ | 138,652 | | $ | 165,672 | | $ | 144,862 | |
| | | | | | | | | | |
Adjustments to pre-provision net revenue | | | | | | | | |||
Acquisition and other restructuring expenses | | | 17,351 | | | 10,711 | | | 20,094 | |
Provision for unfunded commitments | | | (774) | | | 1,822 | | | — | |
Amortization of NMTC | | | 5,563 | | | 2,311 | | | 1,200 | |
Adjusted pre-provision net revenue | | $ | 160,792 | | $ | 180,516 | | $ | 166,156 | |
| | | | | | | | | | |
Average total assets | | $ | 11,904,935 | | $ | 10,292,256 | | $ | 9,443,690 | |
| | | | | | | | | | |
Reported: Pre-provision net revenue to average asset | |
| 1.16 | % |
| 1.61 | % |
| 1.53 | % |
Adjusted: Pre-provision net revenue to average assets | | | 1.35 | % | | 1.75 | % | | 1.76 | % |
24
Adjusted Net Income, Adjusted Diluted Earnings Per Share, and
Adjusted Return on Average Assets
(dollars in thousands, except per share amounts)
| | | | | | | | | | |
| | | | | | | | | | |
| | Years Ended December 31, |
| |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 | |
| | | | | | | | | | |
Adjustments to net income | | | | | | | | | | |
Acquisition expenses: | |
|
| |
|
| |
|
| |
Salaries, wages, and employee benefits | |
| 7,347 | |
| — | |
| 4,083 | |
Data processing | |
| 3,700 | |
| 56 | |
| 1,523 | |
Lease or fixed asset impairment | |
| — | |
| 479 | |
| 580 | |
Professional fees, occupancy, and other | | | 2,599 | | | 864 | | | 8,477 | |
Other restructuring costs: | |
|
| |
|
| |
|
| |
Salaries, wages, and employee benefits | |
| 472 | |
| 2,470 | |
| 495 | |
Data processing | | | — | | | — | | | 827 | |
Lease or fixed asset impairment | | | 3,227 | | | 6,657 | | | 1,861 | |
Professional fees, occupancy, and other | |
| 6 | |
| 185 | |
| 2,248 | |
Related tax benefit | | | (3,692) | | | (2,327) | | | (4,618) | |
Adjusted net income | | $ | 137,108 | | $ | 108,728 | | $ | 118,429 | |
| | | | | | | | | | |
Dilutive average common shares outstanding | | | 56,008,805 | | | 54,826,939 | | | 55,132,494 | |
| | | | | | | | | | |
Reported: Diluted earnings per share | | $ | 2.20 | | $ | 1.83 | | $ | 1.87 | |
Adjusted: Diluted earnings per share | | | 2.45 | | | 1.98 | | | 2.15 | |
| | | | | | | | | | |
Average total assets | | $ | 11,904,935 | | $ | 10,292,256 | | $ | 9,443,690 | |
| | | | | | | | | | |
Reported: Return on average assets | |
| 1.04 | % |
| 0.97 | % |
| 1.09 | % |
Adjusted: Return on average assets | |
| 1.15 | % |
| 1.06 | % |
| 1.25 | % |
25
Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Return on Average Assets, Average Tangible Common Equity, Return on Average Tangible Common Equity, and Adjusted Return on Average Tangible Common Equity | ||||||||||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2023 | 2022 | 2021 | ||||||||||||||||||
NET INCOME ADJUSTED FOR NON-OPERATING ITEMS | ||||||||||||||||||||
Net income | [a] | $ | 122,565 | $ | 128,311 | $ | 123,449 | |||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Acquisition expenses: | ||||||||||||||||||||
Salaries, wages, and employee benefits | — | 587 | 7,347 | |||||||||||||||||
Data processing | — | 214 | 3,700 | |||||||||||||||||
Professional fees, occupancy, and other | 357 | 258 | 2,599 | |||||||||||||||||
Other restructuring expenses: | ||||||||||||||||||||
Salaries, wages, and employee benefits | 3,760 | 2,409 | 472 | |||||||||||||||||
Loss on leases or fixed asset impairment | — | 986 | 3,227 | |||||||||||||||||
Professional fees, occupancy, and other | 211 | 83 | 6 | |||||||||||||||||
Related tax benefit1 | (881) | (938) | (3,692) | |||||||||||||||||
Adjusted net income | [b] | $ | 126,012 | $ | 131,910 | $ | 137,108 | |||||||||||||
DILUTED EARNINGS PER SHARE | ||||||||||||||||||||
Diluted average common shares outstanding | [c] | 56,256,148 | 56,137,164 | 56,008,805 | ||||||||||||||||
Reported: Diluted earnings per share | [a÷c] | $ | 2.18 | $ | 2.29 | $ | 2.20 | |||||||||||||
Adjusted: Diluted earnings per share | [b÷c] | 2.24 | 2.35 | 2.45 | ||||||||||||||||
RETURN ON AVERAGE ASSETS | ||||||||||||||||||||
Average total assets | [d] | $ | 12,246,218 | $ | 12,492,948 | $ | 11,904,935 | |||||||||||||
Reported: Return on average assets | [a÷d] | 1.00 | % | 1.03 | % | 1.04 | % | |||||||||||||
Adjusted: Return on average assets | [b÷d] | 1.03 | % | 1.06 | % | 1.15 | % | |||||||||||||
RETURN ON AVERAGE TANGIBLE COMMON EQUITY | ||||||||||||||||||||
Average common equity | $ | 1,197,511 | $ | 1,195,171 | $ | 1,324,862 | ||||||||||||||
Average goodwill and other intangible assets, net | (359,347) | (370,424) | (372,593) | |||||||||||||||||
Average tangible common equity | [e] | $ | 838,164 | $ | 824,747 | $ | 952,269 | |||||||||||||
Reported: Return on average tangible common equity | [a÷e] | 14.62 | % | 15.56 | % | 12.96 | % | |||||||||||||
Adjusted: Return on average tangible common equity | [b÷e] | 15.03 | % | 15.99 | % | 14.40 | % |
Adjusted Net Interest Margin
(dollars in thousands)
| | | | | | | | | | |
| | | | | | | | | | |
|
| Years Ended December 31, |
| |||||||
| | 2021 |
| 2020 |
| 2019 |
| |||
Net interest income | | $ | 270,698 | | $ | 282,935 | | $ | 287,223 | |
| | | | | | | | | | |
Adjustments to net interest income | | | | | | | | | | |
Tax-equivalent adjustment | |
| 2,355 | |
| 2,740 | |
| 3,013 | |
Acquisition-related purchase accounting accretion | |
| (7,151) | |
| (10,391) | |
| (12,422) | |
Adjusted net interest income | | $ | 265,902 | | $ | 275,284 | | $ | 277,814 | |
| | | | | | | | | | |
Average interest-earning assets | | $ | 10,978,116 | | $ | 9,417,938 | | $ | 8,590,262 | |
| | | | | | | | | | |
Reported: Net interest margin | |
| 2.49 | % |
| 3.03 | % |
| 3.38 | % |
Adjusted: Net Interest margin | | | 2.42 | % | | 2.92 | % | | 3.23 | % |
26
Adjusted Net Interest Income and Adjusted Net Interest Margin | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2023 | 2022 | 2021 | ||||||||||||||||||
Net interest income | $ | 319,451 | $ | 323,438 | $ | 270,698 | ||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Tax-equivalent adjustment1 | 2,173 | 2,199 | 2,355 | |||||||||||||||||
Tax-equivalent net interest income | [a] | 321,624 | 325,637 | 273,053 | ||||||||||||||||
Purchase accounting accretion related to business combinations | (1,477) | (3,134) | (7,151) | |||||||||||||||||
Adjusted net interest income | [b] | $ | 320,147 | $ | 322,503 | $ | 265,902 | |||||||||||||
Average interest-earning assets | [c] | $ | 11,164,594 | $ | 11,473,063 | $ | 10,978,116 | |||||||||||||
Reported: Net interest margin | [a÷c] | 2.88 | % | 2.84 | % | 2.49 | % | |||||||||||||
Adjusted: Net interest margin | [b÷c] | 2.87 | % | 2.81 | % | 2.42 | % |
Adjusted Noninterest Expense, Efficiency Ratio, and Adjusted Efficiency Ratio
(dollars in thousands)
| | | | | | | | | | |
| | | | | | | | | | |
| | Years Ended December 31, |
| |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Net interest income | | $ | 270,698 | | $ | 282,935 | | $ | 287,223 | |
Tax-equivalent adjustment | | | 2,355 | | | 2,740 | | | 3,013 | |
Tax-equivalent interest income | | $ | 273,053 | | $ | 285,675 | | $ | 290,236 | |
| | | | | | | | | | |
Noninterest income | |
| 132,804 | |
| 118,265 | |
| 116,415 | |
Less net (gains) losses on sales of securities and unrealized (gains) losses recognized on equity securities | |
| (3,070) | |
| (1,331) | |
| 18 | |
Adjusted noninterest income | | $ | 129,734 | | $ | 116,934 | | $ | 116,433 | |
| | | | | | | | | | |
Noninterest expense | |
| 261,780 | |
| 234,197 | |
| 258,794 | |
Amortization of intangible assets | |
| (11,274) | |
| (10,008) | |
| (9,547) | |
Non-operating adjustments: | |
|
| |
|
| |
|
| |
Salaries, wages, and employee benefits | |
| (7,819) | |
| (2,470) | |
| (4,578) | |
Data processing | |
| (3,700) | |
| (56) | |
| (2,350) | |
Lease or fixed asset impairment | | | (3,227) | | | (7,136) | | | (2,441) | |
Professional fees and other | |
| (2,605) | |
| (1,049) | |
| (10,725) | |
Adjusted noninterest expense | | $ | 233,155 | | $ | 213,478 | | $ | 229,153 | |
| | | | | | | | | | |
Reported: Efficiency ratio (1) | |
| 62.19 | % |
| 55.68 | % |
| 61.29 | % |
Adjusted: Efficiency ratio (2) | |
| 57.89 | % |
| 53.02 | % |
| 56.35 | % |
27
Noninterest Expense Excluding Amortization of Intangible Assets, Adjusted Noninterest Expense, Adjusted Core Expense, Noninterest Expense Excluding Non-operating Adjustments, Efficiency Ratio, Adjusted Efficiency Ratio, and Adjusted Core Efficiency Ratio | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2023 | 2022 | 2021 | ||||||||||||||||||
Net interest income | $ | 319,451 | $ | 323,438 | $ | 270,698 | ||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Tax-equivalent adjustment1 | 2,173 | 2,199 | 2,355 | |||||||||||||||||
Tax-equivalent net interest income | 321,624 | 325,637 | 273,053 | |||||||||||||||||
Total noninterest income | 122,384 | 126,803 | 132,804 | |||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Net security (gains) losses | 2,199 | 2,133 | (3,070) | |||||||||||||||||
Noninterest income excluding net securities gains and losses | 124,583 | 128,936 | 129,734 | |||||||||||||||||
Tax-equivalent revenue | [a] | $ | 446,207 | $ | 454,573 | $ | 402,787 | |||||||||||||
Total noninterest expense | $ | 285,532 | $ | 283,881 | $ | 261,780 | ||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Amortization of intangible assets | [b] | (10,432) | (11,628) | (11,274) | ||||||||||||||||
Noninterest expense excluding amortization of intangible assets | [c] | 275,100 | 272,253 | 250,506 | ||||||||||||||||
Non-operating adjustments: | ||||||||||||||||||||
Salaries, wages, and employee benefits | (3,760) | (2,996) | (7,819) | |||||||||||||||||
Data processing | — | (214) | (3,700) | |||||||||||||||||
Lease or fixed asset impairment | — | (986) | (3,227) | |||||||||||||||||
Professional fees and other | (568) | (341) | (2,605) | |||||||||||||||||
Adjusted noninterest expense | [f] | 270,772 | 267,716 | 233,155 | ||||||||||||||||
Provision for unfunded commitments | (461) | (61) | 774 | |||||||||||||||||
Amortization of New Markets Tax Credits | (8,999) | (6,333) | (5,563) | |||||||||||||||||
Adjusted core expense | [g] | $ | 261,312 | $ | 261,322 | $ | 228,366 | |||||||||||||
Noninterest expense, excluding non-operating adjustments | [f-b] | $ | 281,204 | $ | 279,344 | $ | 244,429 | |||||||||||||
Reported: Efficiency ratio | [c÷a] | 61.65 | % | 59.89 | % | 62.19 | % | |||||||||||||
Adjusted: Efficiency ratio | [f÷a] | 60.68 | % | 58.89 | % | 57.89 | % | |||||||||||||
Adjusted: Core efficiency ratio | [g÷a] | 58.56 | % | 57.49 | % | 56.70 | % |
Tangible Common Equity, Tangible Common Equity to Tangible Assets,
Tangible Book Value Per Common Share, Return on Average Tangible Common Equity
(dollars in thousands, except per share amounts)
| | | | | | | |
| | | | | | | |
|
| As of December 31, |
| ||||
|
| 2021 |
| 2020 |
| ||
Total assets | | $ | 12,859,689 | | $ | 10,544,047 | |
Goodwill and other intangible assets, net | |
| (375,924) | |
| (363,521) | |
Tax effect of other intangible assets, net | |
| 16,254 | |
| 14,556 | |
Tangible assets | | $ | 12,500,019 | | $ | 10,195,082 | |
| | | | | | | |
Total stockholders’ equity | |
| 1,319,112 | |
| 1,270,069 | |
Goodwill and other intangible assets, net | |
| (375,924) | |
| (363,521) | |
Tax effect of other intangible assets, net | |
| 16,254 | |
| 14,556 | |
Tangible common equity | | $ | 959,442 | | $ | 921,104 | |
| | | | | | | |
Ending number of common shares outstanding | | | 55,434,910 | | | 54,404,379 | |
| | | | | | | |
Tangible common equity to tangible assets (1) | |
| 7.68 | % |
| 9.03 | % |
Tangible book value per share | | $ | 17.01 | | $ | 16.66 | |
| | | | | | | |
Average common equity | | $ | 1,324,862 | | $ | 1,240,374 | |
Average goodwill and other intangible assets, net | |
| (372,593) | |
| (368,624) | |
Average tangible common equity | | $ | 952,269 | | $ | 871,750 | |
| | | | | | | |
Reported: Return on average tangible common equity | |
| 12.96 | % |
| 11.51 | % |
Adjusted: Return on average tangible common equity (2) | |
| 14.40 | % |
| 12.47 | % |
28
Tangible Book Value and Tangible Book Value Per Common Share | ||||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||
As of December 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Total stockholders' equity | $ | 1,271,981 | $ | 1,145,977 | ||||||||||
Goodwill and other intangible assets, net | (353,864) | (364,296) | ||||||||||||
Tangible book value | [a] | $ | 918,117 | $ | 781,681 | |||||||||
Ending number of common shares outstanding | [b] | 55,244,119 | 55,279,124 | |||||||||||
Tangible book value per common share | [a÷b] | $ | 16.62 | $ | 14.14 |
Tangible Assets, Tangible Common Equity, and Tangible Common Equity to Tangible Assets | ||||||||||||||
(dollars in thousands) | ||||||||||||||
As of December 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Total assets | $ | 12,283,415 | $ | 12,336,677 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Goodwill and other intangible assets, net | (353,864) | (364,296) | ||||||||||||
Tax effect of other intangible assets1 | 6,888 | 8,847 | ||||||||||||
Tangible assets2 | [a] | $ | 11,936,439 | $ | 11,981,228 | |||||||||
Total stockholders' equity | $ | 1,271,981 | $ | 1,145,977 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||
Goodwill and other intangible assets, net | (353,864) | (364,296) | ||||||||||||
Tax effect of other intangible assets1 | 6,888 | 8,847 | ||||||||||||
Tangible common equity2 | [b] | $ | 925,005 | $ | 790,528 | |||||||||
Tangible common equity to tangible assets2 | [b÷a] | 7.75 | % | 6.60 | % |
Core Loans, Core Loans to Portfolio Loans, Core Deposits, Core Deposits to Total Deposits, and Core Loans to Core Deposits | ||||||||||||||
(dollars in thousands) | ||||||||||||||
As of December 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Portfolio loans | [a] | $ | 7,651,034 | $ | 7,725,702 | |||||||||
Non-GAAP adjustments: | ||||||||||||||
PPP loans amortized cost | (313) | (845) | ||||||||||||
Core loans | [b] | $ | 7,650,721 | $ | 7,724,857 | |||||||||
Total deposits | [c] | $ | 10,291,156 | $ | 10,071,280 | |||||||||
Non-GAAP adjustments: | ||||||||||||||
Brokered transaction accounts | (6,001) | (1,303) | ||||||||||||
Time deposits of $250,000 or more | (386,286) | (120,377) | ||||||||||||
Core deposits | [d] | $ | 9,898,869 | $ | 9,949,600 | |||||||||
RATIOS | ||||||||||||||
Core loans to portfolio loans | [b÷a] | 100.00 | % | 99.99 | % | |||||||||
Core deposits to total deposits | [d÷c] | 96.19 | % | 98.79 | % | |||||||||
Core loans to core deposits | [b÷d] | 77.29 | % | 77.64 | % |
Special Cautionary Note Regarding Forward-Looking Statements
These forward-looking statements are subject to significant risks, assumptions, and uncertainties, and could be affected by many factors. Factors that could have a material adverse effect on our financial condition, results of operations, and future prospects can be found under “Item 1A. Risk Factors” in this Annual Report and elsewhere in our periodic and current reports filed with the SEC. These factors include, but are not limited to, the following:
the possibility that any of the anticipated benefits of the proposed transaction between Busey and M&M will not be realized or will not be realized within the expected time period;
29
Economic and Market Risks
The COVID-19 pandemic continues to create disruptions that affect our business, financial condition, liquidity, and resultsContents of operations.
The extent to which COVID-19 will continue to affect business operations, financial condition, credit quality, and results of operations will depend on future developments that cannot be predicted, including the duration and scope of the pandemic. The direct or indirect impact on employees, customers, counterparties, and service providers, as well as other market participants, is likely to continue through 2022 as the world attempts to gain control over the virus and emerging variants. The impact that the virus continues to have on global markets, the economy, business restrictions, and employment is ongoing as a projected return to pre-pandemic operating conditions is unknown.
Item 1A. Risk Factors
In the past year, the U.S. economy began to rebound from severe disruptions caused by the onset of the pandemic in March 2020. Economic conditions have begun to normalize with the availability of vaccines and treatments, increasing workforce employment and participation, the lessening of business and education restrictions, and demand for services beginning to return. The financial conditions of households and businesses was bolstered significantly by government stimulus, which contributed to the economic recovery but also brought about growing pains as evidenced by supply chain problems and rising prices. Although current economic conditions are more favorable than the prior year, the outlook for continued growth is characterized by elevated uncertainty with potential for unevenness across markets and sectors. Although household and business credit and liquidity is strong currently, further pandemic-related disruptions could result in increased risk of delinquencies, defaults, foreclosures, and losses on our loans; declines in assets under management, affecting wealth management revenues; negative impacts on regional economic conditions resulting in declines in local loan demand, liquidity of loan guarantors, loan collateral (particularly in real estate), loan originations, and deposit availability; and impacts on the implementation of our growth strategy. While the recovery this past year has been strong, the pace of growth in the U.S. and globally could decline as a result of rising inflation, higher interest rates, the pervasiveness of supply chain challenges across industries, and the persistence of the virus in variant forms.
ECONOMIC AND MARKET RISKS
Overall, we believe that the economic impact from COVID-19 will continue for some time and could have a material and adverse impact on our business and result in significant losses in our loan portfolio, all of which would adversely and materially impact our earnings and capital. Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts to our business as a result of the global economic impact of the COVID-19 pandemic, including the availability of credit, adverse impacts on liquidity, and any recession that has occurred or may occur in the future. There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, nor are there historical indicators to rely on in terms of how markets will react, and as a result, the ultimate impact of the pandemic is highly uncertain and subject to change.
Conditions in the financial market and economic conditions, including conditions in the states in which it operates, generally may adversely affect the Company’sBusey’s business.
The Company’s
30
The Company currently conducts its banking operationsUncertainty regarding economic conditions may result in downstate Illinois; suburban Chicago, Illinois; the St. Louis, Missouri metropolitan area; central Indiana;changes in consumer and southwest Florida. Economic conditions within Busey’s markets were adversely impacted by the COVID-19 pandemic,business spending, borrowing, and although conditions have improved this past year, elevated unemployment, economic decline, on-going business restrictions and operational uncertainty continue to impactsavings habits. Downturns in the markets overall, and in particular, certain industry sectors. The financial condition of the State of Illinois, in which the largest portion of the Company’s customer base resides, is characterized with low credit ratings, pension under-funding, budget deficits, and lower job growth rates than most of the country; furthermore, Illinois was one of three states in the country to lose population in the last decade. Notably, with the recent improvement in the state’s financial outlook, during the second half of 2021 Illinois received improved ratings from Moody’s Investor Service, S&P Global Ratings, and Fitch. The Company operates in markets with significant university and healthcare presence, which rely heavily on state and federal funding and contracts. Payment delays by the State of Illinois to its vendors and government-sponsored entities, as well as potential federal changes to healthcare laws, could affect the Company’s primary market areas, which could in turn adversely affect its financial condition and results of operations. The partial shutdown of colleges and universities across the state may also impact businesses heavily reliant on the colleges and universities for revenue generation. Recent downturns in local operating markets where our banking operations occur could result in a decrease in demand for the Company’sour products and services, an increase in loan delinquencies and defaults, high or increased levels of problem assets and foreclosures, and reduced wealth management fees resulting from lower asset values.
Such conditions could adversely affect the credit quality of our loans, financial condition, and results of operations.
MarketWhile high market volatility and changes inis not expected, managing “higher for longer” interest rates could have an adverse effectcan put pressure on the Company.
Busey’s deposit rates and liquidity.
Changes in
The combination of factors such as changes in interest rates, an adverse credit quality outlook, economic uncertainties, and geopolitical events can contribute to increased fluctuations in market values.
The Company’s wealth management business may also be negatively impacted by changes in general economic conditions and the conditions in the financial and securities markets, whichhikes could affect the values of assets under care. Management contracts generally provide for fees payable for wealth management services based on the market value of assets under care. Because most of the Company’s contracts provide for a fee based on market values of securities, declines in securities prices may have an adverse effect on the Company’s results of operations from this business. Market declines and reductions in the value of customers’ wealth management accounts, could also result in the loss of wealth management customers, including those who are also banking customers.
31
The Federal Reserve has signaled that it will begin to increase rates, taper its quantitative easing program, and reduce its balance sheet of bonds and other assets in 2022, but will do so with the goal of avoiding abrupt or unpredictable changes in economic or financial conditions so as not to disrupt the financial systems, also known as “shocks;” despite this, the impactmitigate some of these changes cannot be certain. Vulnerabilities in the financial system can amplify the impact of an initial shock following rate increases, potentially leading to unintended volatility, as well to disruptions in the provision of financial services, such as clearing payments, the provision of liquidity, and the availability of credit. Furthermore, asset liquidation pressures can be amplified by liquidity mismatches and the leverage of certain nonbank financial intermediaries such as hedge funds. The financial crisis in March 2020 also demonstrated that pressures on dealer intermediation can limit the availability of liquidity during times of market stress. Given the interconnectedness of the global financial system, these vulnerabilities could impact the Company’s business operations and financial condition.
The transition to an alternative reference rate could cause instability and have a negative effect on financial market conditions.
LIBOR represents the interest rate at which banks offer to lend funds to one another in the international interbank market for short-term loans. On July 27, 2017, the United Kingdom Financial Conduct Authority announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR rates after 2021. End dates for LIBOR have now been set, and U.S. Regulators have issued guidance as of October 2021 that urges market participants to address their existing LIBOR exposures and transition to robust and sustainable alternative rates by December 31, 2021. The Alternative Reference Rate Committee has proposed that SOFR is the rate that represents best practice as the alternative to U.S. dollar-LIBOR for use in derivatives and other financial contracts that are currently indexed to LIBOR, but has also advised market participants to conduct a comprehensive evaluation of any alternative reference rates being considered for use.
Contracts linked to LIBOR are vast in number and value, are intertwined with numerous financial products and services, and have diverse parties. Although the Company has actively worked to plan for the transition away from LIBOR, the transition is both complex and challenging and the downstream effect of unwinding or transitioning such contracts could cause instability and negatively impact financial markets and individual institutions. If the Company’s selected alternative rate is based on a small transaction volume, it could be susceptible to volatility and disruption during times of market stress. Furthermore, if the Company fails to properly address legacy contracts by adding robust fallback positions, it will be exposed to interest rate risks and potential loss of yields. Finally, if the Company or other market participants fail to properly plan to implement alternative rates other than LIBOR, it could have an adverse effect on the Company and the financial system as a whole. In 2021, we began the transition to SOFR and other interest rate benchmarks in anticipation of the cessation of the publication of LIBOR.
Continued elevated levels of inflation could adversely impact our business and results of operations.
The U.S. has recently experienced elevated levels of inflation, with the consumer price index climbing approximately 7.0% in 2021. Continued levels of inflation could have complex effects on our business and results of operations, some of which could be materially adverse. For example, if interest rates were to rise in response to, or as a result of, elevated levels of inflation, the value of our securities portfolio would be negatively impacted. In addition, while we generally expect any inflation-related increases in our interest expense to be offset by increases in our interest revenue, inflation-driven increases in our levels of non-interest expense could negatively impact our results of operations. Continued elevated levels of inflation could also cause increased volatility and uncertainty in the business environment, which could adversely affectpositively influence loan demand and mitigate challenges to our clients’clients' ability to repay indebtedness. It is also possible that governmental responses to the current inflation environment, could adversely affect our business, such as changes to monetary and fiscal policy that are too strict, or the imposition or threatened imposition of price controls.controls, could adversely affect our business. The duration and severity of the current inflationary period cannot be estimated with precision.
32
Labor shortageslegislative and failureregulatory actions, influenced by election cycles, introduces an additional layer of uncertainty for our operations. Elections can precipitate changes in government policies and regulations across various industries, potentially impacting our business. Uncertainty regarding potential changes in regulations or policies related to attract and retain qualified employees could negatively impact our business, results of operations and financial condition.
A number of factorsindustry may adversely affect the labor force available to us or increase labor costs, including high employment levels, decreased labor force size and participation rates as a result of the COVID-19 pandemic, expanded unemployment benefits offered in response to the ongoing COVID-19 pandemic, and other government actions. Although we have not experienced any material labor shortage to date, we have recently observed an overall tightening and increasingly competitive local labor market. A sustained labor shortage or increased turnover rates within our employee base could lead to increased costs such asof doing business and operational challenges. Economic conditions, including interest rates, inflation, and consumer spending, may be influenced by shifts in government leadership and policies, affecting our ability to maintain historical growth rates.
In addition, if we are unable to hire and retain employees capable of performing at a high-level, or if mitigation measures we may take to respond to a decrease in labor availability have unintended negative effects, our business could be adversely affected. An overall labor shortage, lack of skilled labor, increased turnover, or labor inflation, caused by COVID-19 or as a result of general macroeconomic factors, could have a material adverse impact on our operations, results of operations, liquidity, or cash flows.
Regulatory and Legal Risks
Legislative and regulatory actions taken now or in the future may increase ourcompliance costs and impactoperational challenges. Political events, including elections, can influence consumer and investor sentiment, affecting demand for our business, governance structure, financial condition, or results of operations.
Laws, regulations, rules, policies,products and regulatory interpretations governing the Company continueservices and impacting investor confidence, which may influence our stock price and access to evolve and will likely continue to change over time as Congress and various regulatory agencies react to adverse economic conditions or other matters. The 2021 change of the presidential administration and Congressional control has prompted new or revitalized financial services regulation. The extent and scope of potential financial regulations is hard to predict, but continued changes are expected to occur as leadership and priorities in various regulatory bodies shifts.
Implementation of current or proposed regulatory or legislative changes to laws applicable to the financial industry may impact the profitability of the Company’s business activities and may change certain business practices, including the ability to offer new products, obtain financing, attract deposits, make loans, achieve satisfactory interest spreads, and enter into acquisition and merger agreements, and could expose the Company to additional expense, including increased compliance costs. Appointments to the primary banking regulatory agencies affect monetary policy and interest rates, and changes in fiscal policy could affect broader patterns of trade and economic growth. Executive orders, future legislation, regulation, and government policy could affect the banking industry as a whole, including our business and results of operations, in ways that are difficult to predict. In addition, our results of operations also could be adversely affected by changes in the way in which existing statutes and regulations are interpreted or applied by courts and government agencies.
These rule and regulatory changes may also require the Company to invest significant management attention and resources so as to make necessary changes to operations in order to comply. capital.
33
As the CompanyBusey continues to grow in asset size and complexity, regulatory expectations and scrutiny will likely increase and could have a potential impact on the Company’sBusey’s operations and business.
The Company
On November 20, 2020, the federal bank regulatory agencies announced an Interim Final Rule, providing temporary relief for certain community banking organizations related
legal consequences.
Laws impacting cannabis-related businesses in Illinois and other states may have an impact on the Company’sBusey’s operations and risk profile.
Creditrisk of legal liability, and Lending Risks
in some cases we or our subsidiaries have been named or threatened to be named as defendants in various lawsuits arising from our business activities. In addition, companies in our industry are frequently the subject of governmental and self-regulatory agency information-gathering requests, reviews, investigations, and proceedings. The results of such proceedings could lead to significant civil or criminal penalties, including monetary penalties, damages, adverse judgments, settlements, fines, injunctions, restrictions on the way in which we conduct our business, or reputational harm.
34
The CompanyBusey estimates and establishes reserves for credit lossesthe ACL and maintains themit at a level considered adequate by management to absorb probable credit losses based on a continual analysis of the Company’sBusey’s portfolio and market environment. These reservesThe ACL represent the Company’sBusey’s estimate of probable losses in the portfolio at each balance sheet date and areis based upon other relevantmanagement judgments as well as forward-looking information available.
In 2016, the FASB published CECL, which requires recording loss estimates for the lifeand forecasts. Any failure of the instrument for loans, a change from the 40-year standard in which losses are recorded under the “incurred loss” concept. Adoptionthese judgments or forecasts could negatively affect our results of CECL in 2020 resulted in additional reserves being set aside to protect against future credit losses.operations and financial condition. Although management believes the reserves areACL is adequate to absorb losses on existing loans that may become uncollectible, management cannot guarantee that additional provisions for credit losses will not be required in the future.
Non-performing assets take significant time to resolve and adversely affect the Company’sBusey’s results of operations and financial condition and could result in further losses in the future.
The Company’s
Federal regulatory agencies, in consultation with FASB, issued updated guidance on March 22, 2020, for classifying loansinterest rates. However, default risk may arise from events or circumstances that are difficult to detect, such as TDRs, which allowed banksfraud, or difficult to modify loanspredict, such as catastrophic events affecting certain industries. Therefore, we cannot assure you that such monitoring procedures will reduce these credit risks.
Item 1A. Risk Factors
Concentrations of credit and market risk could increase the potential for significant losses.
The Company
The Company’sworsen.
35
A significant portion of the Company’sBusey’s loans are collateralized by real estate. Specifically, commercial real estate loans were $3.3 billion, or approximately 43.6% of our total loan portfolio, as of December 31, 2023. Of this amount, $914.5 million, or approximately 27.4%, was owner-occupied. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the area in which the real estate is located. Adverse changes in the economy affectingAdditionally, real estate lending typically involves higher loan principal amounts and the repayment of the loans generally is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. Economic events, including decreases in office occupancy following the COVID-19 pandemic, or governmental regulations outside of the control of the borrower or lender could negatively impact the future cash flow and market values and liquidity generally, and in markets in whichof the Company has banking operations, could significantly impair the value of property pledged as collateral on loans and affect the Company’s ability to sell the collateral upon foreclosure without a loss or additional losses.affected properties. Collateral may have to be sold for less than the outstanding balance of the loan which would result in losses.
Real estate construction, land acquisition, and development loans are based upon estimates of costs and values associated with the complete project. These estimates may be inaccurate, and the CompanyBusey may be exposed to significant losses on loans for these projects.
Credit risk associated with concentration of securities in the Company’sBusey’s investment portfolio may increase the potential for loss.
The Company’s
Capital and Liquidity Risks
CAPITAL AND LIQUIDITY RISKS
The Company
First
36
The Company’sBusey’s failure to continue to maintain capital ratios in excess of the amounts necessary to be considered “well-capitalized” for bank regulatory purposes could affect customer confidence, its ability to grow, its costs of funds and FDIC insurance costs, its ability to pay dividends to its stockholders on outstanding stock, its ability to make acquisitions, and its business, results of operations, and financial condition. Furthermore, under FDIC rules, if the CompanyBusey ceases to meet the requirements to be considered a “well-capitalized” institution for bank regulatory purposes, the interest rates it pays on deposits and its ability to accept, renew, or rollover deposits, particularly brokered deposits, may be restricted.
Liquidity risks could affect operations and jeopardize the Company’sBusey’s business, financial condition, and results of operations.
In addition, increased competition with the largest banks and
During periods—41
TheExternal financial institution failures could impact the soundness of other financial institutions could negatively affect the Company.
defaults.
Competitive and Strategic Risks
COMPETITIVE AND STRATEGIC RISKS
37
The CompanyBusey faces strong competition from financial service companies and other companies that offer banking and wealth management services, which could harm its business.
The Company
Rapid speed of disruptive innovations enabled by new and emerging technologies and/or other market forces may outpace the Company’sBusey’s ability to compete.
Our strategy of pursuing acquisitions exposes us to financial, execution, and operational risks that could negatively affect us.
38
personnel of the acquired entity in order to make the transaction economically feasible. This integration process is complicated and time consuming and can also be disruptive to the customers of the acquired business. If the integration process is not conducted successfully and with minimal effect on the acquired business and its customers, we may not realize the anticipated economic benefits of particular acquisitions within the expected time frame, and we may lose customers or employees of the acquired business. Furthermore, the integration of personnel can be challenging and the likelihood of turnover of personnel from acquired institutions presents potential risks to both operational efficiency as well as customer retention. Busey may also experience greater than anticipated customer losses even if the integration process is successful. •We are subject to due diligence expenses which may not result in an acquisition. •To finance an acquisition, we may borrow funds, thereby increasing our leverage and diminishing our liquidity, or issue capital stock to the sellers in an acquisition or to third-parties to raise capital, which could dilute the interests of our existing stockholders. •The time period in which anticipated benefits of a merger are fully realized may take longer than anticipated, or we may be unsuccessful in realizing the anticipated benefits from mergers and future acquisitions. |
New lines of business or new products and services may subject us to additional risks.
Accounting and Tax Risks
ACCOUNTING AND TAX RISKS
The Company’s
39
The CompanyBusey is subject to changes in accounting principles, policies, or guidelines.
The CompanyBusey is subject to changes in tax law and may not realize tax benefits which could adversely affect our results of operations.
Operational Risks
The Company’sOPERATIONAL RISKS
The Company’s
40
The CompanyBusey relies on the integrity of its operating systems and employees, and those of third-parties, and certain failures of such systems or error by employees or customers could materially and adversely affect the Company’sBusey’s operations.
be controlled.
A breach in the security of the Company’sBusey’s systems could disrupt its businesses, result in the disclosure of confidential information, damage its reputation, and create significant financial and legal exposure for the Company.
Busey.
41
or adequately mitigate, breaches of security, known as “supply chain risk,” could result in a number of negative events, including losses to us or our clients, loss of business or clients, damage to our reputation, the incurrence of additional expenses, additional regulatory scrutiny or penalties, or exposure to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations, and growth prospects.
The Company
Customer or employee misconduct or fraud may affect operations, result in significant financial loss, and have an adverse impact on the Company’sBusey’s reputation.
—47
The Company’sBusey’s ability to attract and retain management and key personnel may affect future growth and earningsearnings.
MuchRobin N. Elliott, the President and Chief Executive Officer of Busey Bank, who also served as Chairman of the Company’s successBoard and growthChief Executive Officer of FirsTech, mutually agreed upon the decision to part ways. In connection with this transition, Van A. Dukeman, the Chairman, President, and Chief Executive Officer of First Busey Corporation has been influenced by itstaken on the additional role of President and Chief Executive Officer of Busey Bank. Busey’s ability to attract and retain management experienced in banking and financial services, and familiar with the communities inincluding its market areas. The Company’s ability to retaincurrent executive officers, current management teams, lending and retail banking officers, and administrative staff of its subsidiaries, continues to be important tois crucial for the successful implementation of its strategy. In addition, the Company’sAdditionally, Busey's ability to retain key personnel at acquired financial institutions is vitally important to the Company’svital for its growth strategy to grow through mergers and acquisitions. AlsoEqually critical is the Company’s abilityBusey’s commitment to attractattracting and retainretaining diverse and qualified staff with the appropriate level of experience and knowledge about its market areas, so as to implementessential for implementing its community-based operating strategy. Recent changes in labor market conditions have contributed to heightened levels of employee attrition and increased competition for talent, which has in turn driven wage rates higher and may contribute to an increase in operating expenses. The unexpected loss of services of key personnel or the inability to recruit and retain qualified personnel in the future could have an adverse effect on the Company’sBusey’s business, financial condition, and results of operation.
42
Damage resulting from negative publicity could harm the Company’sBusey’s reputation and adversely impact its business and financial condition.
The Company’s
Climate change or other adverse external events could significantly impact the Company’s business.
Severe weather, natural disasters, geopoliticalEmerging risks and acts of terrorism or war, widespread disease or pandemics, as is currently being experienced,associated with Generative Artificial Intelligence and other adverse external events could haveLarge Language Models are dynamic and evolving rapidly as the technology advances and regulatory frameworks develop.
Climate change exposes the Company to physical risk as its effects may lead to more frequent shifts in weather patternsinterpretability of models and more extreme weather events that could damage, destroy,potential biases, presenting risks of model misinterpretation and unintended consequences.
Furthermore, banking regulators and other supervisory authorities, investors and other stakeholders have increasingly viewed financial institutions as important in helping to address the risks related to climate change both directly and with respect to their customers, which may result in financial institutions coming under increased pressure regarding the disclosure and management of their climate risks and related lending and investment activities. Given that climate change could impose systemic risks upon the financial sector, either via disruptions in economic activity resulting from the physical impacts of climate change or changes in policies as the economy transitions to a less carbon‐intensive environment, we face regulatory risk of increasing focus on our resilience to climate‐related risks, includingcustomer data in the contexttraining of stress testing for various climate stress scenarios. Ongoing legislativeGAI models.
remains integral to sustaining operational resilience.
None.
ITEM 1C. CYBERSECURITY
The Company
43
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Common Stock
COMMON STOCK
First
The Company’sBusey’s board of directors and management are currently committed to continue paying regular cash dividends; however, no guarantee can be given with respect to future dividends, as they are dependent on certain regulatory restrictions, future earnings, capital requirements, and the financial condition of the CompanyFirst Busey Corporation and its subsidiaries. See “Item 1. Business—Supervision, Regulation, and Other Factors—Supervision and Regulation of the Company—Dividend Payments”and “Item 1. Business—Supervision, Regulation, and Other Factors—Supervision and Regulation of Busey Bank—Dividend Payments”for further discussion of these matters.
—50
Stock Repurchases
STOCK REPURCHASE PLAN
Number of Shares Authorized | |||||
February 3, 2015 | 666,667 | ||||
May 22, 2019 | 1,000,000 | ||||
February 5, 2020 | 2,000,000 | ||||
May 24, 2023 | 2,000,000 | ||||
Total shares that have been authorized for repurchase under the plan | 5,666,667 |
| | | | | | | | | |
Period | | Total Number of Shares Purchased | | Weighted Average Price Paid per Common Share | | Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs | |
October 1-31, 2021 | | 158,000 | | $ | 25.62 | | 158,000 | | 795,824 |
November 1-30, 2021 | | 124,000 | | $ | 27.00 | | 124,000 | | 671,824 |
December 1-31, 2021 | | 136,000 | | $ | 26.55 | | 136,000 | | 535,824 |
Three Months Ended December 31, 2021 | | 418,000 | | $ | 26.33 | | 418,000 | | |
| | | | | | | | | |
Year Ended December 31, 2021 | | 1,323,000 | | $ | 24.98 | | 1,323,000 | | |
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Period | Total Number of Shares Purchased | Weighted Average Price Paid per Common Share | Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
October 1-31, 2023 | 95,001 | $ | 19.17 | 95,001 | 1,942,086 | |||||||||||||||||||||
November 1-30, 2023 | 22,811 | 19.82 | 22,811 | 1,919,275 | ||||||||||||||||||||||
December 1-31, 2023 | — | — | — | 1,919,275 | ||||||||||||||||||||||
Three months ended December 31, 2023 | 117,812 | $ | 19.30 | 117,812 | ||||||||||||||||||||||
Year ended December 31, 2023 | 227,935 | $ | 19.67 | 227,935 |
Performance Graph
STOCK PERFORMANCE GRAPH
| | | | | | | | | | | | | | | | | | |
Index |
| 12/31/16 |
| 12/31/17 |
| 12/31/18 |
| 12/31/19 |
| 12/31/20 |
| 12/31/21 | ||||||
First Busey Corporation | | $ | 100.00 | | $ | 99.63 | | $ | 83.80 | | $ | 97.03 | | $ | 79.59 | | $ | 104.07 |
S&P U.S. BMI Banks – Midwest Region | |
| 100.00 | |
| 107.46 | |
| 91.76 | |
| 119.38 | |
| 102.64 | |
| 135.60 |
Nasdaq Composite | |
| 100.00 | |
| 129.64 | |
| 125.96 | |
| 172.17 | |
| 249.51 | |
| 304.85 |
In prior years,2023. Banks in the Company used the SNL Midwest Bank Index, which was retired as of August 7, 2021. The S&P U.S. BMI Banks – Midwest Region is deemed the closest replacement currently available.
Banks in the S&P U.S. BMI Banks - Midwest RegionIndex represent all Major Exchange Traded Banks in S&P Capital IQ’s coverage universe that are headquartered in Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Ohio, South Dakota, and Wisconsin.
As of December 31, | ||||||||||||||||||||||||||||||||||||||
Index | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||||||||||||||||||
First Busey Corporation | $ | 100.00 | $ | 115.78 | $ | 94.98 | $ | 124.19 | $ | 117.47 | $ | 123.44 | ||||||||||||||||||||||||||
S&P U.S. BMI Banks – Midwest Region | 100.00 | 130.10 | 111.85 | 147.78 | 127.53 | 130.20 | ||||||||||||||||||||||||||||||||
Nasdaq Composite | 100.00 | 136.69 | 198.09 | 242.03 | 163.27 | 236.16 |
Contents of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)
Detailed discussion and analysis of the financial condition and results of operation for 20212023 as compared to 20202022 can be found below. Comparison of 20202022 to 20192021 can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations” of the 2020our 2022 Annual Report.
Report.
45
Impactour core deposit franchise is a critical value driver of COVID-19
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 deposit1
Although the progression of the COVID-19 pandemic funded, with robust liquidity and significant market share in the U.S.communities we serve. As of December 31, 2023, our loan to deposit ratio was 74.4% and core deposits1 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.
Effects on Our Market Areas
Our commercialremains strong by both Busey’s historical and consumercurrent industry trends.
Policy and Regulatory Developments
Federal, state, and local governments, and regulatory authorities have enacted and issued a range of policy responses to the COVID-19 pandemic. Regulatory actions taken during 2021 include the following:
Our Response
We have taken, and continue to take, numerous steps in response to the COVID-19 pandemic, including the following:
46
| | | | | | | | | |
| | CARES | | Economic Aid | | PPP Loan | |||
|
| Act |
| Act |
| Totals | |||
Customers with PPP loans processed/acquired | | | 4,595 | | | 2,753 | | | 7,348 |
PPP loans originated/acquired | | $ | 765,212 | | $ | 324,593 | | $ | 1,089,805 |
| | | | | | | | | |
Customers with PPP loans outstanding | | | 51 | | | 741 | | | 792 |
PPP loans outstanding | | $ | 5,738 | | $ | 71,152 | | $ | 76,890 |
PPP loans outstanding, amortized cost | | | 5,731 | | | 69,227 | | | 74,958 |
| | | | | | | | | |
PPP loan balance forgiveness: | | | | | | | | | |
Received | | $ | 746,899 | | $ | 252,131 | | $ | 999,030 |
Balances submitted to the SBA for forgiveness | | | 1,952 | | | 5,144 | | | 7,096 |
Critical Accounting Estimates
First Busey has established various accounting policies that govern the application of GAAP in the preparation of its Consolidated Financial Statements.Statements. Significant accounting policies are described in “Note 1. Significant Accounting Policies” in the Notes to the Consolidated Financial Statements.
Statements.
Core deposits is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see “Item 1. Business—Non-GAAP Financial Information.”
The fair
securities.
Realized securities gains or losses are reported in the Consolidated Statements of Income.Income. The cost of securities sold is based on the specific identification method.
47
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;
Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations
Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method of accounting, assets acquired and liabilities assumed are recorded at their estimated fair value on the date of acquisition. 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.”
—55
Goodwill
Income Taxes
First 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.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.
Allowance for Credit Losses
First
48
In determining the allowance,ACL, management relies predominantly on a disciplined credit review and approval process that extends to the full range of First Busey’s credit exposure. The ACL must be determined on a collective (pool) basis when similar risk characteristics exists.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.
Executive Summary
Operating Results
—
56
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Net income by operating segment | |||||||||||||||||
Banking | $ | 123,853 | $ | 131,596 | $ | 117,844 | |||||||||||
Wealth Management | 18,804 | 18,543 | 18,570 | ||||||||||||||
FirsTech | 830 | 847 | 1,527 | ||||||||||||||
Other | (20,922) | (22,675) | (14,492) | ||||||||||||||
Net income | $ | 122,565 | $ | 128,311 | $ | 123,449 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Net income by operating segment |
| |
|
| |
|
| |
|
Banking | | $ | 117,844 | | $ | 101,226 | | $ | 106,409 |
FirsTech | |
| 1,527 | |
| 2,372 | |
| 4,060 |
Wealth Management | |
| 18,570 | |
| 13,181 | |
| 11,135 |
Other | |
| (14,492) | |
| (16,435) | |
| (18,651) |
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
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):
Years Ended December 31, | ||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||
Reported: | Net income | $ | 122,565 | $ | 128,311 | $ | 123,449 | |||||||||||||||||||||||||
Adjusted: | Net income1 | 126,012 | 131,910 | 137,108 | ||||||||||||||||||||||||||||
Reported: | Diluted earnings per common share | $ | 2.18 | $ | 2.29 | $ | 2.20 | |||||||||||||||||||||||||
Adjusted: | Diluted earnings per common share1 | 2.24 | 2.35 | 2.45 | ||||||||||||||||||||||||||||
Reported: | Return on average assets | 1.00 | % | 1.03 | % | 1.04 | % | |||||||||||||||||||||||||
Adjusted: | Return on average assets1 | 1.03 | % | 1.06 | % | 1.15 | % | |||||||||||||||||||||||||
Reported: | Return on average tangible common equity1 | 14.62 | % | 15.56 | % | 12.96 | % | |||||||||||||||||||||||||
Adjusted: | Return on average tangible common equity1 | 15.03 | % | 15.99 | % | 14.40 | % | |||||||||||||||||||||||||
Reported: | Pre-provision net revenue1 | $ | 158,502 | $ | 168,493 | $ | 138,652 | |||||||||||||||||||||||||
Adjusted: | Pre-provision net revenue1 | 172,290 | 179,424 | 160,792 | ||||||||||||||||||||||||||||
Reported: | Pre-provision net revenue to average assets1 | 1.29 | % | 1.35 | % | 1.16 | % | |||||||||||||||||||||||||
Adjusted: | Pre-provision net revenue to average assets1 | 1.41 | % | 1.44 | % | 1.35 | % |
| | | | | | | | | | | |
| | | Years Ended December 31, |
| |||||||
| |
| 2021 |
| 2020 |
| 2019 |
| |||
Reported: | Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 | |
Adjusted: | Net income (1) | |
| 137,108 | |
| 108,728 | |
| 118,429 | |
| | | | | | | | | | | |
Reported: | Diluted earnings per common share | | $ | 2.20 | | $ | 1.83 | | $ | 1.87 | |
Adjusted: | Diluted earnings per common share (1) | | | 2.45 | | | 1.98 | | | 2.15 | |
| | | | | | | | | | | |
Reported: | Pre-provision net revenue (1) | | $ | 138,652 | | $ | 165,672 | | $ | 144,862 | |
Adjusted: | Pre-provision net revenue (1) | | | 160,792 | | | 180,516 | | | 166,156 | |
| | | | | | | | | | | |
Reported: | Pre-provision net revenue to average assets (1) | |
| 1.16 | % |
| 1.61 | % |
| 1.53 | % |
Adjusted: | Pre-provision net revenue to average assets (1) | |
| 1.35 | % |
| 1.75 | % |
| 1.76 | % |
On May 31, 2021, First Busey completed its acquisition of CAC, the holding company for GSB. GSB was operated as a separate banking subsidiary from June 1, 2021, until August 14, 2021, when it was merged with and into Busey Bank. At that time GSB’s seven banking centers became banking centers of Busey Bank. When we completed the GSB acquisition, we reset the baseline for the future financial performance of First Busey in a multitude of positive ways. With GSB now merged and integrated, we expect to see the full contribution of synergies of GSB reflected in our financial performance in the years ahead.
Corporation | 2023
49
On November 19, 2021, 17 banking centers, two of which were previously GSB banking centers, were closedNon-Operating Expenses and consolidated, as part of the Company’s efforts to ensure a balance between its physical banking center network and robust digital banking services while also optimizing operating efficiency. Following the completion of these banking center closures and consolidations, the Company continues to operate a total of 58 banking centers across its markets.
Non-GAAP Measures
First Busey views certain non-operating items, including acquisition-related and restructuring charges, as adjustments to net income reported under GAAP. Non-operating pretax adjustments were as follows for 2021 included $13.6 million ofthe periods presented (dollars in thousands):
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Non-operating costs | |||||||||||||||||||||||||||||
Acquisition related expenses1 | $ | 357 | $ | 1,059 | $ | 13,646 | |||||||||||||||||||||||
Restructuring charges2 | 3,971 | 3,478 | 3,705 | ||||||||||||||||||||||||||
Total non-operating costs | $ | 4,328 | $ | 4,537 | $ | 17,351 |
Combined, revenues from wealth management fees and payment technology solutions activities represented 53.8% of First Busey’s noninterest income in 2021, providing a balance to spread-based revenue from traditional banking activities. Further, noninterest income, excluding net securities gains (losses) represented 32.4% of total revenue for the year ended December 31, 2021.
Results of Operation — Three Years Ended December 31, 2021
Net Interest Income
Consolidated Average Balance Sheets and Interest Rates
Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | |||||||||||||||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing bank deposits and federal funds sold | $ | 214,422 | $ | 10,531 | 4.91 | % | $ | 290,875 | $ | 3,097 | 1.06 | % | $ | 630,687 | $ | 1,151 | 0.18 | % | |||||||||||||||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Government obligations | 79,669 | 578 | 0.73 | % | 179,557 | 1,079 | 0.60 | % | 180,041 | 1,692 | 0.94 | % | |||||||||||||||||||||||||||||||||||||||||
Obligations of states and political subdivisions1 | 233,377 | 6,560 | 2.81 | % | 286,220 | 7,611 | 2.66 | % | 299,064 | 7,694 | 2.57 | % | |||||||||||||||||||||||||||||||||||||||||
Other securities | 2,875,769 | 76,568 | 2.66 | % | 3,265,271 | 61,591 | 1.89 | % | 2,876,714 | 37,166 | 1.29 | % | |||||||||||||||||||||||||||||||||||||||||
Loans held for sale | 1,885 | 116 | 6.13 | % | 5,178 | 192 | 3.71 | % | 21,803 | 506 | 2.32 | % | |||||||||||||||||||||||||||||||||||||||||
Portfolio loans1, 2 | 7,759,472 | 387,193 | 4.99 | % | 7,445,962 | 288,615 | 3.88 | % | 6,969,807 | 252,946 | 3.63 | % | |||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets1, 3 | 11,164,594 | $ | 481,546 | 4.31 | % | 11,473,063 | $ | 362,185 | 3.16 | % | 10,978,116 | $ | 301,155 | 2.74 | % | ||||||||||||||||||||||||||||||||||||||
Cash and due from banks | 116,530 | 120,910 | 133,711 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Premises and equipment | 124,565 | 131,657 | 138,731 | ||||||||||||||||||||||||||||||||||||||||||||||||||
ACL | (92,991) | (89,387) | (97,397) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 933,520 | 856,705 | 751,774 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 12,246,218 | $ | 12,492,948 | $ | 11,904,935 | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and stockholders’ equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing transaction deposits | $ | 2,775,045 | $ | 43,268 | 1.56 | % | $ | 2,785,439 | $ | 7,150 | 0.26 | % | $ | 2,619,942 | $ | 1,922 | 0.07 | % | |||||||||||||||||||||||||||||||||||
Savings and money market deposits | 2,870,397 | 37,038 | 1.29 | % | 3,326,259 | 4,237 | 0.13 | % | 3,092,992 | 2,817 | 0.09 | % | |||||||||||||||||||||||||||||||||||||||||
Time deposits | 1,406,928 | 43,679 | 3.10 | % | 846,738 | 4,725 | 0.56 | % | 1,040,709 | 7,844 | 0.75 | % | |||||||||||||||||||||||||||||||||||||||||
Federal funds purchased and repurchase agreements | 200,894 | 5,203 | 2.59 | % | 244,004 | 1,475 | 0.60 | % | 218,454 | 227 | 0.10 | % | |||||||||||||||||||||||||||||||||||||||||
Borrowings4 | 500,301 | 26,881 | 5.37 | % | 309,175 | 15,932 | 5.15 | % | 268,767 | 12,452 | 4.63 | % | |||||||||||||||||||||||||||||||||||||||||
Junior subordinated debt issued to unconsolidated trusts | 71,894 | 3,853 | 5.36 | % | 71,716 | 3,029 | 4.22 | % | 71,545 | 2,840 | 3.97 | % | |||||||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 7,825,459 | $ | 159,922 | 2.04 | % | 7,583,331 | $ | 36,548 | 0.48 | % | 7,312,409 | $ | 28,102 | 0.38 | % | ||||||||||||||||||||||||||||||||||||||
Net interest spread1 | 2.27 | % | 2.68 | % | 2.36 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | 3,018,563 | 3,550,517 | 3,142,155 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 204,685 | 163,929 | 125,509 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 1,197,511 | 1,195,171 | 1,324,862 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 12,246,218 | $ | 12,492,948 | $ | 11,904,935 | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income / earning assets1, 3 | $ | 11,164,594 | $ | 481,546 | 4.31 | % | $ | 11,473,063 | $ | 362,185 | 3.16 | % | $ | 10,978,116 | $ | 301,155 | 2.74 | % | |||||||||||||||||||||||||||||||||||
Interest expense / earning assets | 11,164,594 | 159,922 | 1.43 | % | 11,473,063 | 36,548 | 0.32 | % | 10,978,116 | 28,102 | 0.25 | % | |||||||||||||||||||||||||||||||||||||||||
Net interest margin1 | $ | 321,624 | 2.88 | % | $ | 325,637 | 2.84 | % | $ | 273,053 | 2.49 | % |
volume
50
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
2023 vs. 2022 Change Due To | 2022 vs. 2021 Change Due To | ||||||||||||||||||||||||||||||||||
Average Volume | Average Yield/Rate | Total Change | Average Volume | Average Yield/Rate | Total Change | ||||||||||||||||||||||||||||||
Increase (decrease) in interest income | |||||||||||||||||||||||||||||||||||
Interest-bearing bank deposits and federal funds sold | $ | (1,013) | $ | 8,447 | $ | 7,434 | $ | (921) | $ | 2,867 | $ | 1,946 | |||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||||||||||||||
U.S. Government obligations | (691) | 190 | (501) | (5) | (608) | (613) | |||||||||||||||||||||||||||||
Obligations of state and political subdivisions | (1,466) | 415 | (1,051) | (337) | 254 | (83) | |||||||||||||||||||||||||||||
Other securities | (8,026) | 23,003 | 14,977 | 5,544 | 18,881 | 24,425 | |||||||||||||||||||||||||||||
Loans held for sale | (161) | 85 | (76) | (515) | 201 | (314) | |||||||||||||||||||||||||||||
Portfolio loans | 12,598 | 85,980 | 98,578 | 17,870 | 17,799 | 35,669 | |||||||||||||||||||||||||||||
Change in interest income | 1,241 | 118,120 | 119,361 | 21,636 | 39,394 | 61,030 | |||||||||||||||||||||||||||||
Increase (decrease) in interest expense | |||||||||||||||||||||||||||||||||||
Interest-bearing transaction deposits | (27) | 36,145 | 36,118 | 129 | 5,099 | 5,228 | |||||||||||||||||||||||||||||
Savings and money market deposits | (752) | 33,553 | 32,801 | 151 | 1,269 | 1,420 | |||||||||||||||||||||||||||||
Time deposits | 4,932 | 34,022 | 38,954 | (1,303) | (1,816) | (3,119) | |||||||||||||||||||||||||||||
Federal funds purchased and repurchase agreements | (304) | 4,032 | 3,728 | 30 | 1,218 | 1,248 | |||||||||||||||||||||||||||||
Borrowings | 9,485 | 1,464 | 10,949 | 1,611 | 1,869 | 3,480 | |||||||||||||||||||||||||||||
Junior subordinated debt owed to unconsolidated trusts | 8 | 816 | 824 | 7 | 182 | 189 | |||||||||||||||||||||||||||||
Change in interest expense | 13,342 | 110,032 | 123,374 | 625 | 7,821 | 8,446 | |||||||||||||||||||||||||||||
Increase (decrease) in net interest income | $ | (12,101) | $ | 8,088 | $ | (4,013) | $ | 21,011 | $ | 31,573 | $ | 52,584 | |||||||||||||||||||||||
Percentage increase (decrease) in net interest income over prior period | (1.2) | % | 19.3 | % |
Average Balance SheetsNotable changes in average assets and Interest Rates
Average balances, income and expense, and yield ratesaverage liabilities are presented belowsummarized as follows for the periods indicated presented (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, | | ||||||||||||||||||||||||
| | 2021 | | | 2020 | | | 2019 | | ||||||||||||||||||
|
| Average |
| Income/ |
| Yield/ | | | Average |
| Income/ |
| Yield/ | | | Average |
| Income/ |
| Yield/ | | ||||||
| | Balance |
| Expense |
| Rate | |
| Balance |
| Expense |
| Rate | |
| Balance |
| Expense |
| Rate | | ||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing bank deposits and federal funds sold | | $ | 630,687 | | $ | 1,151 |
| 0.18 | % | | $ | 488,786 | | $ | 1,723 |
| 0.35 | % | | $ | 312,604 | | | 6,320 |
| 2.02 | % |
Investment securities: | |
|
| |
|
|
|
| | |
| | |
|
|
|
| | |
|
| |
|
|
|
| |
U.S. Government obligations | |
| 180,041 | |
| 1,692 |
| 0.94 | % | |
| 135,204 | |
| 2,915 |
| 2.16 | % | |
| 300,805 | |
| 7,323 |
| 2.43 | % |
Obligations of states and political subdivisions (1) | |
| 299,064 | |
| 7,694 | | 2.57 | % | |
| 293,070 | |
| 8,353 |
| 2.85 | % | |
| 281,460 | |
| 8,294 |
| 2.95 | % |
Other securities | |
| 2,876,714 | |
| 37,166 |
| 1.29 | % | |
| 1,411,826 | |
| 29,857 |
| 2.11 | % | |
| 1,187,026 | |
| 31,335 |
| 2.64 | % |
Loans held for sale | |
| 21,803 | |
| 506 |
| 2.32 | % | |
| 82,106 | |
| 2,184 |
| 2.66 | % | |
| 38,447 | |
| 1,275 |
| 3.32 | % |
Portfolio loans (1), (2) | |
| 6,969,807 | |
| 252,946 |
| 3.63 | % | |
| 7,006,946 | |
| 284,306 |
| 4.06 | % | |
| 6,469,920 | |
| 304,700 |
| 4.71 | % |
Total interest-earning assets (1), (3) | | $ | 10,978,116 | | $ | 301,155 |
| 2.74 | % | | $ | 9,417,938 | | $ | 329,338 |
| 3.50 | % | | $ | 8,590,262 | | $ | 359,247 |
| 4.18 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | |
| 133,711 | |
|
|
|
| | |
| 118,739 | |
|
|
|
| | |
| 114,619 | |
|
|
|
| |
Premises and equipment | |
| 138,731 | |
| |
|
| | |
| 146,144 | |
| |
|
| | |
| 148,063 | |
| |
|
| |
ACL | |
| (97,397) | |
| |
|
| | |
| (88,248) | |
| |
|
| | |
| (52,284) | |
| |
|
| |
Other assets | |
| 751,774 | |
|
|
|
| | |
| 697,683 | |
|
|
|
| | |
| 643,030 | |
|
|
|
| |
Total assets | | $ | 11,904,935 | |
|
|
|
| | | $ | 10,292,256 | |
|
|
|
| | | $ | 9,443,690 | |
|
|
|
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | |
|
|
|
| | |
|
| |
|
|
|
| | |
|
| |
|
|
|
| | |||
Interest-bearing transaction deposits | | $ | 2,619,942 | | $ | 1,922 |
| 0.07 | % | | $ | 2,153,230 | | $ | 4,718 |
| 0.22 | % | | $ | 1,865,506 | | $ | 10,638 |
| 0.57 | % |
Savings and money market deposits | |
| 3,092,992 | |
| 2,817 |
| 0.09 | % | |
| 2,567,962 | |
| 5,960 |
| 0.23 | % | |
| 2,386,171 | |
| 13,767 |
| 0.58 | % |
Time deposits | |
| 1,040,709 | |
| 7,844 |
| 0.75 | % | |
| 1,356,347 | |
| 20,013 |
| 1.48 | % | |
| 1,675,477 | |
| 30,672 |
| 1.83 | % |
Federal funds purchased and repurchase agreements | |
| 218,454 | | | 227 |
| 0.10 | % | |
| 187,811 | |
| 660 |
| 0.35 | % | |
| 196,681 | |
| 2,348 |
| 1.19 | % |
Borrowings (4) | |
| 268,767 | | | 12,452 |
| 4.63 | % | |
| 217,702 | |
| 9,352 |
| 4.30 | % | |
| 219,920 | |
| 8,172 |
| 3.72 | % |
Junior subordinated debt issued to unconsolidated trusts | |
| 71,545 | | | 2,840 |
| 3.97 | % | |
| 71,376 | |
| 2,960 |
| 4.15 | % | |
| 71,214 | |
| 3,414 |
| 4.79 | % |
Total interest-bearing liabilities | | $ | 7,312,409 | | $ | 28,102 |
| 0.38 | % | | $ | 6,554,428 | | $ | 43,663 |
| 0.67 | % | | $ | 6,414,969 | | $ | 69,011 |
| 1.08 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest spread (1) | |
|
| |
| |
| 2.36 | % | |
|
| |
| |
| 2.83 | % | |
|
| |
| |
| 3.10 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | |
| 3,142,155 | |
|
|
|
| | |
| 2,364,442 | |
|
|
|
| | |
| 1,746,938 | |
|
|
|
| |
Other liabilities | |
| 125,509 | |
|
|
|
| | |
| 133,012 | |
|
|
|
| | |
| 95,656 | |
|
|
|
| |
Stockholders’ equity | |
| 1,324,862 | |
|
|
|
| | |
| 1,240,374 | |
|
|
|
| | |
| 1,186,127 | |
|
|
|
| |
Total liabilities and stockholders’ equity | | $ | 11,904,935 | |
|
|
|
| | | $ | 10,292,256 | |
|
|
|
| | | $ | 9,443,690 | |
|
|
|
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest income / earning assets (1), (3) | | $ | 10,978,116 | | $ | 301,155 |
| 2.74 | % | | $ | 9,417,938 | | $ | 329,338 |
| 3.50 | % | | $ | 8,590,262 | | $ | 359,247 |
| 4.18 | % |
Interest expense / earning assets | | $ | 10,978,116 | | $ | 28,102 |
| 0.25 | % | | $ | 9,417,938 | | $ | 43,663 |
| 0.47 | % | | $ | 8,590,262 | | $ | 69,011 |
| 0.80 | % |
Net interest margin (1) | |
|
| | $ | 273,053 |
| 2.49 | % | |
|
| | $ | 285,675 |
| 3.03 | % | |
|
| | $ | 290,236 |
| 3.38 | % |
51
Years Ended December 31, | |||||||||||||||||||||||
2023 | 2022 | Change | % Change | ||||||||||||||||||||
Average interest-earning assets | $ | 11,164,594 | $ | 11,473,063 | $ | (308,469) | (2.7) | % | |||||||||||||||
Average interest-bearing liabilities | 7,825,459 | 7,583,331 | 242,128 | 3.2 | % | ||||||||||||||||||
Average noninterest-bearing deposits | 3,018,563 | 3,550,517 | (531,954) | (15.0) | % | ||||||||||||||||||
Total average deposits | 10,070,933 | 10,508,953 | (438,020) | (4.2) | % | ||||||||||||||||||
Total average liabilities | 11,048,707 | 11,297,777 | (249,070) | (2.2) | % | ||||||||||||||||||
Average noninterest-bearing deposits as a percent of total average deposits | 30.0 | % | 33.8 | % | (380) bps | ||||||||||||||||||
Total average deposits as a percent of total average liabilities | 91.2 | % | 93.0 | % | (180) bps |
Average Balance Sheets and Interest Rates (continued)
Changes in Net Interest Income are presented in the table below:
| | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| ||||||||||||||||
| | 2021 vs. 2020 Change Due To | | 2020 vs. 2019 Change Due To |
| ||||||||||||||
|
| Average |
| Average |
| Total |
| Average |
| Average |
| Total |
| ||||||
| | Volume |
| Yield/Rate |
| Change | | Volume |
| Yield/Rate |
| Change |
| ||||||
Increase (decrease) in interest income | | | | | | | | | | | | | | | | | | | |
Interest-bearing bank deposits and federal funds sold | | $ | 410 | | $ | (982) | | $ | (572) | | $ | 2,369 | | $ | (6,966) | | $ | (4,597) | |
Investment securities: | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
U.S. Government obligations | |
| 765 | |
| (1,988) | |
| (1,223) | |
| (3,650) | |
| (758) | |
| (4,408) | |
Obligations of state and political subdivisions | |
| 168 | |
| (827) | |
| (659) | |
| 336 | |
| (277) | |
| 59 | |
Other securities | |
| 22,213 | |
| (14,904) | |
| 7,309 | |
| 5,359 | |
| (6,837) | |
| (1,478) | |
Loans held for sale | |
| (1,430) | |
| (248) | |
| (1,678) | |
| 1,204 | |
| (295) | |
| 909 | |
Portfolio loans | |
| (1,499) | |
| (29,861) | |
| (31,360) | |
| 23,979 | |
| (44,373) | |
| (20,394) | |
Change in interest income | | $ | 20,627 | | $ | (48,810) | | $ | (28,183) | | $ | 29,597 | | $ | (59,506) | | $ | (29,909) | |
| | | | | | | | | | | | | | | | | | | |
Increase (decrease) in interest expense | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Interest-bearing transaction deposits | | $ | 855 | | $ | (3,651) | | $ | (2,796) | | $ | 1,438 | | $ | (7,358) | | $ | (5,920) | |
Savings and money market deposits | |
| 931 | |
| (4,074) | | | (3,143) | |
| 769 | |
| (8,576) | |
| (7,807) | |
Time deposits | |
| (3,923) | |
| (8,246) | |
| (12,169) | |
| (5,281) | |
| (5,378) | |
| (10,659) | |
Federal funds purchased and repurchase agreements | |
| 95 | |
| (528) | |
| (433) | |
| (109) | |
| (1,579) | |
| (1,688) | |
Borrowings | |
| 2,289 | |
| 811 | |
| 3,100 | |
| 260 | |
| 920 | |
| 1,180 | |
Junior subordinated debt owed to unconsolidated trusts | |
| 7 | |
| (127) | |
| (120) | |
| 8 | |
| (462) | |
| (454) | |
Change in interest expense | | $ | 254 | | $ | (15,815) | | $ | (15,561) | | $ | (2,915) | | $ | (22,433) | | $ | (25,348) | |
Increase (decrease) in net interest income | | $ | 20,373 | | $ | (32,995) | | $ | (12,622) | | $ | 32,512 | | $ | (37,073) | | $ | (4,561) | |
| | | | | | | | | | | | | | | | | | | |
Percentage (decrease) increase in net interest income over prior period | |
|
| |
|
| |
| (4.4) | % |
|
| |
|
| |
| (1.6) | % |
Earning Assets, Sources of Funds, and Net Interest Margin
Changes in average earning assets, sources of funds,net interest income and net interest margin are summarized as follows for the periods presented in the tables below (dollars in thousands):
| | | | | | | | | | | | | |
| | Years Ended December 31, | | | | | | | | ||||
|
| 2021 |
| 2020 |
| Change |
| % Change |
| ||||
Average interest-earning assets | | $ | 10,978,116 | | $ | 9,417,938 | | $ | 1,560,178 | | | 16.6 | % |
Average interest-bearing liabilities | | | 7,312,409 | | | 6,554,428 | | | 757,981 | | | 11.6 | % |
Average noninterest-bearing deposits | | | 3,142,155 | | | 2,364,442 | | | 777,713 | | | 32.9 | % |
| | | | | | | | | | | | | |
Total average deposits | | | 9,895,798 | | | 8,441,981 | | | 1,453,817 | | | 17.2 | % |
Total average liabilities | | | 10,580,073 | | | 9,051,882 | | | 1,528,191 | | | 16.9 | % |
| | | | | | | | | | | | | |
Average noninterest-bearing deposits as a percent of total average deposits | | | 31.8 | % | | 28.0 | % | | | | | | |
Total average deposits as a percent of total average liabilities | | | 93.5 | % | | 93.3 | % | | | | | | |
52
Years Ended December 31, | |||||||||||||||||||||||
2023 | 2022 | Change | % Change | ||||||||||||||||||||
Net interest income | |||||||||||||||||||||||
Interest income, on a tax-equivalent basis1 | $ | 481,546 | $ | 362,185 | $ | 119,361 | 33.0 | % | |||||||||||||||
Interest expense | (159,922) | (36,548) | (123,374) | (337.6) | % | ||||||||||||||||||
Net interest income, on a tax-equivalent basis1 | $ | 321,624 | $ | 325,637 | $ | (4,013) | (1.2) | % | |||||||||||||||
Net interest margin1, 2 | 2.88 | % | 2.84 | % | 4 bps |
| | | | | | | | | | | | | |
| | Years Ended December 31, | | | | | | | | ||||
|
| 2021 |
| 2020 |
| Change |
| % Change |
| ||||
Net interest income | | | | | | | | | | | | | |
Interest income, on a tax-equivalent basis (1) | | $ | 301,155 | | $ | 329,338 | | $ | (28,183) | | | (8.6) | % |
Interest expense | | | 28,102 | | | 43,663 | | | (15,561) | | | (35.6) | % |
Net interest income, on a tax equivalent basis (1) | | $ | 273,053 | | $ | 285,675 | | $ | (12,622) | | | (4.4) | % |
| | | | | | | | | | | | | |
Net interest margin (1), (2) | | | 2.49 | % | | 3.03 | % | | | | | | |
Net |
The Consolidated Average Balance Sheets and interest rates were impacted in 2021 and 2020 by numerous factors surrounding COVID-19. Further, the 2021 Consolidated Average Balance Sheet was impacted by the CAC acquisition. income expressed as a percentage of average earning assets, stated on a tax-equivalent basis.
First Busey remains substantially core deposit funded, with robust liquidity and significant market share in the communities we serve. As of December 31, 2021, our loan to deposit ratio was 66.8% and core deposits represented 98.7% of total deposits outstanding (excluding time deposits with balances greater than $250,000).
expansion is reversed.
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Net interest spread1 | 2.27 | % | 2.68 | % | 2.36 | % |
—61
| | | | | | | | |
| 2021 |
| | 2020 |
| | 2019 | |
First Quarter | 2.72 | % |
| 3.20 | % |
| 3.46 | % |
Second Quarter | 2.50 | % |
| 3.03 | % |
| 3.43 | % |
Third Quarter | 2.41 | % |
| 2.86 | % |
| 3.35 | % |
Fourth Quarter | 2.36 | % |
| 3.06 | % |
| 3.27 | % |
2023 | 2022 | 2021 | |||||||||||||||
First Quarter | 3.13 | % | 2.45 | % | 2.72 | % | |||||||||||
Second Quarter | 2.86 | % | 2.68 | % | 2.50 | % | |||||||||||
Third Quarter | 2.80 | % | 3.00 | % | 2.41 | % | |||||||||||
Fourth Quarter | 2.74 | % | 3.24 | % | 2.36 | % |
53
Noninterest Income
Changes in noninterest income are summarized in the tables below for the periods presented (dollars in thousands):
Years Ended December 31, | |||||||||||||||||||||||
2023 | 2022 | Change | % Change | ||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||
Wealth management and payment technology solutions income: | |||||||||||||||||||||||
Wealth management fees | $ | 57,309 | $ | 55,378 | $ | 1,931 | 3.5 | % | |||||||||||||||
Payment technology solutions | 21,192 | 20,067 | 1,125 | 5.6 | % | ||||||||||||||||||
Combined, wealth management fees and payment technology solutions | 78,501 | 75,445 | 3,056 | 4.1 | % | ||||||||||||||||||
Fees for customer services | 29,044 | 33,111 | (4,067) | (12.3) | % | ||||||||||||||||||
Mortgage revenue | 1,089 | 1,895 | (806) | (42.5) | % | ||||||||||||||||||
Income on bank owned life insurance | 4,701 | 3,663 | 1,038 | 28.3 | % | ||||||||||||||||||
Securities income: | |||||||||||||||||||||||
Realized net gains (losses) on securities | (28) | 50 | (78) | (156.0) | % | ||||||||||||||||||
Unrealized net gains (losses) recognized on equity securities | (2,171) | (2,183) | 12 | 0.5 | % | ||||||||||||||||||
Net securities gains (losses) | (2,199) | (2,133) | (66) | (3.1) | % | ||||||||||||||||||
Other income | 11,248 | 14,822 | (3,574) | (24.1) | % | ||||||||||||||||||
Total noninterest income | $ | 122,384 | $ | 126,803 | $ | (4,419) | (3.5) | % | |||||||||||||||
Assets under care as of period end | $ | 12,136,869 | $ | 11,061,831 | $ | 1,075,038 | 9.7 | % |
| | | | | | | | | | | | | |
| | Year Ended December 31, | | | | | | | | ||||
|
| 2021 |
| 2020 |
| Change |
| % Change |
| ||||
Noninterest income | | | | | | | | | | | | | |
Wealth management fees | | $ | 53,086 | | $ | 42,928 | | $ | 10,158 | | | 23.7 | % |
Fees for customer services | | | 35,604 | | | 31,604 | | | 4,000 | | | 12.7 | % |
Payment technology solutions | |
| 18,347 | | | 15,628 | |
| 2,719 | | | 17.4 | % |
Mortgage revenue | |
| 7,239 | | | 13,038 | |
| (5,799) | | | (44.5) | % |
Income on bank owned life insurance | |
| 5,166 | | | 5,380 | |
| (214) | | | (4.0) | % |
Net gains (losses) on sales of securities | |
| 29 | | | 1,724 | |
| (1,695) | | | (98.3) | % |
Unrealized gains (losses) recognized on equity securities | | | 3,041 | | | (393) | | | 3,434 | | | 873.8 | % |
Other income | | | 10,292 | | | 8,356 | | | 1,936 | | | 23.2 | % |
Total noninterest income | | $ | 132,804 | | $ | 118,265 | | $ | 14,539 | | | 12.3 | % |
| | | | | | | | | | | | | |
| | Years Ended December 31, | | | | | | | | ||||
|
| 2020 |
| 2019 |
| Change |
| % Change |
| ||||
Noninterest income | | | | | | | | | | | | | |
Wealth management fees | | $ | 42,928 | | $ | 38,561 | | $ | 4,367 | | | 11.3 | % |
Fees for customer services | | | 31,604 | | | 36,683 | | | (5,079) | | | (13.8) | % |
Payment technology solutions | |
| 15,628 | | | 15,643 | |
| (15) | | | (0.1) | % |
Mortgage revenue | |
| 13,038 | | | 11,703 | |
| 1,335 | | | 11.4 | % |
Income on bank owned life insurance | |
| 5,380 | | | 5,795 | |
| (415) | | | (7.2) | % |
Net gains (losses) on sales of securities | |
| 1,724 | | | 741 | |
| 983 | | | NM | |
Unrealized gains (losses) recognized on equity securities | | | (393) | | | (759) | | | 366 | | | 48.2 | % |
Other income | | | 8,356 | | | 8,048 | | | 308 | | | 3.8 | % |
Total noninterest income | | $ | 118,265 | | $ | 116,415 | | $ | 1,850 | | | 1.6 | % |
—
62
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) | % |
Wealth management fees increased 23.7% to $53.1 million in 2021, compared to $42.9 million in 2020. Assets under care increased 24.5% to $12.7 billion as of December 31, 2021, compared to $10.2 billion at December 31, 2020. The increase in assets under care includes $1.2 billion related to assets obtained in the acquisition of CAC, with the remaining $1.3 million related to organic and market related growth.
Fees for customer services increased 12.7% to $35.6 million in 2021, compared to $31.6 million in 2020. Fees for customer services have been impacted since early 2020 by changing customer behaviors resulting from COVID-19, and government stimulus programs, and continue to rebound with improving economic conditions and customer activity levels.
Payment technology solutions revenue increased 17.4%by 5.6% to $18.3$21.2 million in 2021,2023, compared to $15.6$20.1 million in 2020. Fluctuations2022. Results for 2023 marked a new record high reported annual revenue for FirsTech.
non-sufficient funds fee structures.
54
Income on bank owned life insurance decreased 4.0%increased by 28.3% to $5.2$4.7 million in 2021,2023, compared to $5.4$3.7 million in 2020, as2022, resulting from a result of a decrease$0.8 million increase in earnings on death proceeds and a $0.2 million increase in the cash surrender value of the insurance policies.
changes in venture capital investment valuations.
—64
Changes in noninterest expense are summarized in the tables below for the periods presented (dollars in thousands):
| | | | | | | | | | | | | |
| | Year Ended December 31, | | | | | | | | ||||
|
| 2021 |
| 2020 |
| Change |
| % Change |
| ||||
Noninterest expense | | | | | | | | | | | | | |
Salaries, wages, and employee benefits | | $ | 145,312 | | $ | 126,719 | | $ | 18,593 | | | 14.7 | % |
Data processing | | | 21,862 | | | 16,426 | | | 5,436 | | | 33.1 | % |
Net occupancy expense of premises | |
| 18,346 | |
| 17,607 | |
| 739 | | | 4.2 | % |
Furniture and equipment expenses | |
| 8,301 | |
| 9,550 | |
| (1,249) | | | (13.1) | % |
Professional fees | |
| 7,549 | |
| 8,396 | |
| (847) | | | (10.1) | % |
Amortization of intangible assets | |
| 11,274 | |
| 10,008 | |
| 1,266 | | | 12.6 | % |
Interchange expense | | | 5,792 | | | 4,810 | | | 982 | | | 20.4 | % |
Other expense | |
| 43,344 | |
| 40,681 | |
| 2,663 | | | 6.5 | % |
Total noninterest expense | | $ | 261,780 | | $ | 234,197 | | $ | 27,583 | | | 11.8 | % |
| | | | | | | | | | | | | |
Income taxes | | $ | 33,374 | | $ | 27,862 | | $ | 5,512 | | | 19.8 | % |
Effective income tax rate | |
| 21.3 | % |
| 21.7 | % |
| | | | | |
| | | | | | | | | | | | | |
Efficiency ratio (1) | |
| 62.2 | % |
| 55.7 | % |
| | | | | |
Adjusted efficiency ratio (1) | | | 57.9 | % | | 53.0 | % | | | | | | |
| | | | | | | | | | | | | |
Full-time equivalent employees as of period-end | |
| 1,463 | | | 1,346 | |
| 117 | | | 8.7 | % |
55
Years Ended December 31, | |||||||||||||||||||||||
2023 | 2022 | Change | % Change | ||||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||
Salaries, wages, and employee benefits | $ | 162,597 | $ | 159,016 | $ | 3,581 | 2.3 | % | |||||||||||||||
Data processing | 23,708 | 21,648 | 2,060 | 9.5 | % | ||||||||||||||||||
Premises expenses: | |||||||||||||||||||||||
Net occupancy expense of premises | 18,214 | 19,130 | (916) | (4.8) | % | ||||||||||||||||||
Furniture and equipment expenses | 6,759 | 7,645 | (886) | (11.6) | % | ||||||||||||||||||
Combined, net occupancy expense of premises and furniture and equipment expenses | 24,973 | 26,775 | (1,802) | (6.7) | % | ||||||||||||||||||
Professional fees | 7,147 | 6,125 | 1,022 | 16.7 | % | ||||||||||||||||||
Amortization of intangible assets | 10,432 | 11,628 | (1,196) | (10.3) | % | ||||||||||||||||||
Interchange expense | 6,864 | 6,298 | 566 | 9.0 | % | ||||||||||||||||||
FDIC insurance | 5,650 | 4,058 | 1,592 | 39.2 | % | ||||||||||||||||||
Other expense | 44,161 | 48,333 | (4,172) | (8.6) | % | ||||||||||||||||||
Total noninterest expense | $ | 285,532 | $ | 283,881 | $ | 1,651 | 0.6 | % | |||||||||||||||
Income taxes | $ | 31,339 | $ | 33,426 | $ | (2,087) | (6.2) | % | |||||||||||||||
Effective income tax rate | 20.4 | % | 20.7 | % | (30) bps | ||||||||||||||||||
Efficiency ratio1 | 61.7 | % | 59.9 | % | 180 bps | ||||||||||||||||||
Adjusted efficiency ratio1 | 60.7 | % | 58.9 | % | 180 bps | ||||||||||||||||||
Full-time equivalent associates as of period-end | 1,479 | 1,497 | (18) | (1.2) | % |
| ||||||||||||||||||||||||||||||||||||||||||||||||
| | Years Ended December 31, | | | | | | | | |||||||||||||||||||||||||||||||||||||||
|
| 2020 |
| 2019 |
| Change |
| % Change |
| |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | Change | % Change | |||||||||||||||||||||||||||||||||||||||||||||
Noninterest expense | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||
Salaries, wages, and employee benefits | | $ | 126,719 | | $ | 140,473 | | $ | (13,754) | | | (9.8) | % | |||||||||||||||||||||||||||||||||||
Salaries, wages, and employee benefits | ||||||||||||||||||||||||||||||||||||||||||||||||
Salaries, wages, and employee benefits | $ | 159,016 | $ | 145,312 | $ | 13,704 | 9.4 | % | ||||||||||||||||||||||||||||||||||||||||
Data processing | | | 16,426 | | | 21,511 | | | (5,085) | | | (23.6) | % | Data processing | 21,648 | 21,862 | 21,862 | (214) | (214) | (1.0) | (1.0) | % | ||||||||||||||||||||||||||
Premises expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||
Premises expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||
Premises expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net occupancy expense of premises | ||||||||||||||||||||||||||||||||||||||||||||||||
Net occupancy expense of premises | ||||||||||||||||||||||||||||||||||||||||||||||||
Net occupancy expense of premises | |
| 17,607 | |
| 18,176 | |
| (569) | | | (3.1) | % | 19,130 | 18,346 | 18,346 | 784 | 784 | 4.3 | 4.3 | % | |||||||||||||||||||||||||||
Furniture and equipment expenses | |
| 9,550 | |
| 9,506 | |
| 44 | | | 0.5 | % | Furniture and equipment expenses | 7,645 | 8,301 | 8,301 | (656) | (656) | (7.9) | (7.9) | % | ||||||||||||||||||||||||||
Combined, net occupancy expense of premises and furniture and equipment expenses | Combined, net occupancy expense of premises and furniture and equipment expenses | 26,775 | 26,647 | 128 | 0.5 | % | ||||||||||||||||||||||||||||||||||||||||||
Professional fees | ||||||||||||||||||||||||||||||||||||||||||||||||
Professional fees | ||||||||||||||||||||||||||||||||||||||||||||||||
Professional fees | |
| 8,396 | |
| 11,104 | |
| (2,708) | | | (24.4) | % | 6,125 | 7,549 | 7,549 | (1,424) | (1,424) | (18.9) | (18.9) | % | |||||||||||||||||||||||||||
Amortization of intangible assets | |
| 10,008 | |
| 9,547 | |
| 461 | | | 4.8 | % | Amortization of intangible assets | 11,628 | 11,274 | 11,274 | 354 | 354 | 3.1 | 3.1 | % | ||||||||||||||||||||||||||
Interchange expense | | | 4,810 | | | 4,141 | | | 669 | | | 16.2 | % | Interchange expense | 6,298 | 5,792 | 5,792 | 506 | 506 | 8.7 | 8.7 | % | ||||||||||||||||||||||||||
FDIC insurance | FDIC insurance | 4,058 | 3,083 | 975 | 31.6 | % | ||||||||||||||||||||||||||||||||||||||||||
Other expense | |
| 40,681 | |
| 44,336 | |
| (3,655) | | | (8.2) | % | Other expense | 48,333 | 40,261 | 40,261 | 8,072 | 8,072 | 20.0 | 20.0 | % | ||||||||||||||||||||||||||
Total noninterest expense | | $ | 234,197 | | $ | 258,794 | | $ | (24,597) | | | (9.5) | % | Total noninterest expense | $ | 283,881 | $ | $ | 261,780 | $ | $ | 22,101 | 8.4 | 8.4 | % | |||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||
Income taxes | ||||||||||||||||||||||||||||||||||||||||||||||||
Income taxes | ||||||||||||||||||||||||||||||||||||||||||||||||
Income taxes | | $ | 27,862 | | $ | 31,485 | | $ | (3,623) | | | (11.5) | % | $ | 33,426 | $ | $ | 33,374 | $ | $ | 52 | 0.2 | 0.2 | % | ||||||||||||||||||||||||
Effective income tax rate | |
| 21.7 | % |
| 23.4 | % |
|
| | |
| | | ||||||||||||||||||||||||||||||||||
Efficiency ratio (1) | |
| 55.7 | % |
| 61.3 | % |
|
| | |
| | |||||||||||||||||||||||||||||||||||
Adjusted efficiency ratio (1) | | | 53.0 | % |
| 56.3 | % | | | | | | | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||
Full-time equivalent employees as of period-end | |
| 1,346 | | | 1,531 | |
| (185) | | | (12.1) | % | |||||||||||||||||||||||||||||||||||
Efficiency ratio1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Efficiency ratio1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Efficiency ratio1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted efficiency ratio1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted efficiency ratio1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted efficiency ratio1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Full-time equivalent associates as of period-end | ||||||||||||||||||||||||||||||||||||||||||||||||
Full-time equivalent associates as of period-end | ||||||||||||||||||||||||||||||||||||||||||||||||
Full-time equivalent associates as of period-end | 1,497 | 1,463 | 34 | 2.3 | % |
banking.
Current trends continue to reflect a competitive labor market, maintaining pressure on costs related to attracting and maintaining our skilled workforce.
real estate taxes.
services.
56
Interchange expense increased to $5.8$6.9 million in 2021,2023, compared to $4.8$6.3 million in 2020, as a2022. Fluctuations in interchange expense were primarily the result of increased payment and volume activity at FirsTech.
Other
as a result of expense discipline.
2022.
Income Taxes
The effective
The efficiency ratio and adjusted efficiency ratio are both non-GAAP financial measures. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see “Item 1. Business—Non-GAAP Financial Information.”
Changes in significant items included in our Consolidated Balance Sheets are summarized in the table below (dollars in thousands):
As of December 31, | |||||||||||||||||||||||
2023 | 2022 | Change | % Change | ||||||||||||||||||||
Assets | |||||||||||||||||||||||
Debt securities available for sale | $ | 2,087,571 | $ | 2,461,393 | $ | (373,822) | (15.2) | % | |||||||||||||||
Debt securities held to maturity | 872,628 | 918,312 | (45,684) | (5.0) | % | ||||||||||||||||||
Portfolio loans, net of ACL | 7,559,294 | 7,634,094 | (74,800) | (1.0) | % | ||||||||||||||||||
Total assets | 12,283,415 | 12,336,677 | (53,262) | (0.4) | % | ||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||
Noninterest-bearing | 2,834,655 | 3,393,666 | (559,011) | (16.5) | % | ||||||||||||||||||
Interest-bearing | 7,456,501 | 6,677,614 | 778,887 | 11.7 | % | ||||||||||||||||||
Total deposits | 10,291,156 | 10,071,280 | 219,876 | 2.2 | % | ||||||||||||||||||
Securities sold under agreements to repurchase | 187,396 | 229,806 | (42,410) | (18.5) | % | ||||||||||||||||||
Short-term borrowings | 12,000 | 351,054 | (339,054) | (96.6) | % | ||||||||||||||||||
Subordinated notes, net of unamortized issuance costs | 222,882 | 222,038 | 844 | 0.4 | % | ||||||||||||||||||
Total liabilities | 11,011,434 | 11,190,700 | (179,266) | (1.6) | % | ||||||||||||||||||
Stockholders’ equity | 1,271,981 | 1,145,977 | 126,004 | 11.0 | % |
| | | | | | | | | | | | | |
|
| As of December 31, | | | | | | |
| ||||
|
| 2021 |
| 2020 |
| Change |
| % Change |
| ||||
Assets |
| |
|
| |
|
| |
|
| |
| |
Debt securities available for sale | | $ | 3,981,251 | | $ | 2,261,187 | | $ | 1,720,064 |
| | 76.1 | % |
Portfolio loans, net | |
| 7,101,111 | |
| 6,713,129 | |
| 387,982 |
| | 5.8 | % |
| | | | | | | | | | | | | |
Total assets | | $ | 12,859,689 | | $ | 10,544,047 | | $ | 2,315,642 |
| | 22.0 | % |
| | | | | | | | | | | | | |
Liabilities | |
|
| |
|
| |
|
|
| |
| |
Deposits: | |
|
| |
|
| |
|
|
| |
| |
Noninterest-bearing | | $ | 3,670,267 | | $ | 2,552,039 | | $ | 1,118,228 |
| | 43.8 | % |
Interest-bearing | |
| 7,098,310 | |
| 6,125,810 | |
| 972,500 |
| | 15.9 | % |
Total deposits | | $ | 10,768,577 | | $ | 8,677,849 | | $ | 2,090,728 |
| | 24.1 | % |
| | | | | | | | | | | | | |
Securities sold under agreements to repurchase | | $ | 270,139 | | $ | 175,614 | | $ | 94,525 |
| | 53.8 | % |
Subordinated notes, net of unamortized issuance costs | |
| 182,773 | |
| 182,226 | |
| 547 |
| | 0.3 | % |
Junior subordinated debt owed to unconsolidated trusts | |
| 71,635 | |
| 71,468 | |
| 167 |
| | 0.2 | % |
| | | | | | | | | | | | | |
Total liabilities | | $ | 11,540,577 | | $ | 9,273,978 | | $ | 2,266,599 |
| | 24.4 | % |
| | | | | | | | | | | | | |
Stockholders’ equity | | $ | 1,319,112 | | $ | 1,270,069 | | $ | 49,043 |
| | 3.9 | % |
(1)ForBusey executed a reconciliationtwo-part balance sheet repositioning strategy
57
Investment Securities
Debt securities available for sale are carried at fair value. As of December 31, 2021, the fair value of debt securities available for sale was $4.0 billion, and the amortized cost was also $4.0 billion. There were $22.4 million of gross unrealized gains and $54.7 million of gross unrealized losses for a net unrealized loss of $32.3 million. The net unrealized loss, net of tax, is recorded in stockholders’ equity. Equity securities are carried at fair value. As of December 31, 2021, the fair value of equity securities was $13.6 million.
The composition of debt securities available for sale was as follows (dollars in thousands):
| | | | | | | | | | |
| | As of December 31, | | |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Debt securities available for sale | | | | | | | | | | |
U.S. Treasury securities | | $ | 165,762 | | $ | 27,837 | | $ | 51,737 | |
Obligations of U.S. government corporations and agencies | |
| 38,470 | |
| 69,519 | |
| 163,000 | |
Obligations of states and political subdivisions | |
| 306,869 | |
| 304,711 | |
| 268,291 | |
Asset-backed securities | | | 492,186 | | | — | | | — | |
Commercial mortgage-backed securities | | | 614,998 | | | 418,616 | | | 139,287 | |
Residential mortgage-backed securities | |
| 2,069,313 | |
| 1,368,315 | |
| 921,966 | |
Corporate debt securities | |
| 293,653 | |
| 72,189 | |
| 103,976 | |
Debt securities available for sale, fair value | | $ | 3,981,251 | | $ | 2,261,187 | | $ | 1,648,257 | |
| | | | | | | | | | |
Debt securities available for sale, amortized cost | | $ | 4,013,523 | | $ | 2,211,543 | | $ | 1,627,065 | |
Fair value as a percentage of amortized cost | |
| 99.20 | % |
| 102.24 | % |
| 101.30 | % |
58
By maturity date, fair values, and weighted average yields of debt securities available for sale as of December 31, 2021, were (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Due after 1 year | | Due after 5 years | | Due after |
| |||||||||
| | Due in 1 year or less | | through 5 years | | through 10 years | | 10 years |
| ||||||||||||
| | | | | Weighted | | | | | Weighted | | | | | Weighted | | | | | Weighted |
|
| | Fair | | Average | | Fair | | Average | | Fair | | Average | | Fair | | Average |
| ||||
|
| Value |
| Yield |
| Value |
| Yield |
| Value |
| Yield |
| Value |
| Yield |
| ||||
Debt securities available for sale (1) | | | | | | | | | | | | | | | | | |||||
U.S. Treasury securities |
| $ | 47,546 | | 0.19 | % | $ | 118,216 | | 0.21 | % | $ | — | | — | % | $ | — | | — | % |
Obligations of U.S. government corporations and agencies | |
| 16,566 | | 2.55 | % |
| 17,906 | | 2.52 | % |
| 3,998 | | 0.66 | % |
| — | | — | % |
Obligations of states and political subdivisions (2) | |
| 29,926 | | 2.73 | % |
| 108,227 | | 2.60 | % |
| 100,442 | | 2.32 | % |
| 68,274 | | 2.68 | % |
Asset-backed securities | | | — | | — | % | | — | | — | % | | 29,498 | | 1.27 | % | | 462,688 | | 1.26 | % |
Commercial mortgage-backed securities | | | 13,522 | | 1.99 | % | | 71,509 | | 1.37 | % | | 54,104 | | 1.56 | % | | 475,863 | | 1.53 | % |
Residential mortgage-backed securities | |
| 54 |
| 2.60 | % |
| 23,008 |
| 2.45 | % |
| 128,597 |
| 1.82 | % |
| 1,917,654 |
| 1.31 | % |
Corporate debt securities | |
| 22,234 |
| 1.15 | % |
| 224,607 |
| 1.03 | % |
| 45,418 |
| 2.92 | % |
| 1,394 |
| 3.00 | % |
Debt securities available for sale | | $ | 129,848 |
| 1.43 | % | $ | 563,473 |
| 1.31 | % | $ | 362,057 |
| 2.00 | % | $ | 2,925,873 |
| 1.37 | % |
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, 2021,2023, we did not havehold general obligation bonds of any non-U.S. Treasury securities or obligationssingle issuer, the aggregate of U.S. government corporations and agencies issued securities thatwhich exceeded 10% of our totalthe Company’s stockholders’ equity.
Debt Securities Available for Sale
As of December 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Debt securities available for sale | |||||||||||||||||||||||
U.S. Treasury securities | $ | 15,946 | $ | 114,061 | |||||||||||||||||||
Obligations of U.S. government corporations and agencies | 5,832 | 19,779 | |||||||||||||||||||||
Obligations of states and political subdivisions | 172,845 | 257,512 | |||||||||||||||||||||
Asset-backed securities | 468,223 | 469,875 | |||||||||||||||||||||
Commercial mortgage-backed securities | 103,509 | 108,394 | |||||||||||||||||||||
Residential mortgage-backed securities | 1,111,312 | 1,243,256 | |||||||||||||||||||||
Corporate debt securities | 209,904 | 248,516 | |||||||||||||||||||||
Debt securities available for sale, fair value | $ | 2,087,571 | $ | 2,461,393 | |||||||||||||||||||
Debt securities available for sale, amortized cost | $ | 2,334,630 | $ | 2,772,453 | |||||||||||||||||||
Fair value as a percentage of amortized cost | 89.42 | % | 88.78 | % |
Due in 1 year or less | Due after 1 year through 5 years | Due after 5 years through 10 years | Due after 10 years | ||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | ||||||||||||||||||||||||||||||||||||||||
Debt securities available for sale1 | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | 15,946 | 0.25 | % | $ | — | — | % | $ | — | — | % | $ | — | — | % | |||||||||||||||||||||||||||||||
Obligations of U.S. government corporations and agencies | 3,757 | 2.69 | % | 1,951 | 5.16 | % | 124 | 7.00 | % | — | — | % | |||||||||||||||||||||||||||||||||||
Obligations of states and political subdivisions2 | 20,680 | 2.82 | % | 48,028 | 2.46 | % | 76,167 | 2.28 | % | 27,970 | 2.65 | % | |||||||||||||||||||||||||||||||||||
Asset-backed securities | — | — | % | — | — | % | 158,964 | 7.06 | % | 309,259 | 6.88 | % | |||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 4,507 | 2.62 | % | 16,982 | 2.56 | % | 32,316 | 2.07 | % | 49,704 | 2.32 | % | |||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | 486 | 2.63 | % | 13,619 | 2.66 | % | 87,161 | 1.75 | % | 1,010,046 | 1.70 | % | |||||||||||||||||||||||||||||||||||
Corporate debt securities | 26,053 | 1.87 | % | 149,719 | 1.37 | % | 34,132 | 3.87 | % | — | — | % | |||||||||||||||||||||||||||||||||||
Debt securities available for sale | $ | 71,429 | 1.88 | % | $ | 230,299 | 1.79 | % | $ | 388,864 | 4.24 | % | $ | 1,396,979 | 2.89 | % |
As of December 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Debt securities held to maturity | |||||||||||||||||||||||
Commercial mortgage-backed securities | $ | 428,526 | $ | 474,820 | |||||||||||||||||||
Residential mortgage-backed securities | 444,102 | 443,492 | |||||||||||||||||||||
Debt securities held to maturity, amortized cost | $ | 872,628 | $ | 918,312 | |||||||||||||||||||
Debt securities held to maturity, fair value | $ | 730,397 | $ | 785,295 | |||||||||||||||||||
Fair value as a percentage of amortized cost | 83.70 | % | 85.52 | % |
Due after 1 year through 5 years | Due after 5 years through 10 years | Due after 10 years | |||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | Fair Value | Weighted Average Yield | ||||||||||||||||||||||||||||||||||||||||||
Debt securities held to maturity1 | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | $ | 69,373 | 2.23 | % | $ | 25,824 | 2.20 | % | $ | 262,329 | 2.43 | % | |||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | % | — | — | % | 372,871 | 2.21 | % | ||||||||||||||||||||||||||||||||||||||
Debt securities held to maturity | $ | 69,373 | 2.23 | % | $ | 25,824 | 2.20 | % | $ | 635,200 | 2.30 | % |
59
Management reviews and approves Busey Bank’s lending policies and procedures on a regular basis. 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. 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.
First
Commercial Loans
—72
60
Real Estate Construction Loans
Retail Real Estate Loans
| | | | | | | | | | | | | | | |
| | As of December 31, | |||||||||||||
|
| 2021 |
| 2020 |
| 2019 |
| 2018 |
| 2017 | |||||
Portfolio loans | | | | | | | | | | | | | | | |
Commercial | | $ | 1,943,886 | | $ | 2,014,576 | | $ | 1,748,368 | | $ | 1,405,106 | | $ | 1,414,631 |
Commercial real estate | |
| 3,119,807 | |
| 2,892,535 | |
| 2,793,417 | |
| 2,366,823 | |
| 2,354,684 |
Real estate construction | |
| 385,996 | |
| 461,786 | |
| 401,861 | |
| 288,197 | |
| 261,506 |
Retail real estate | |
| 1,512,976 | |
| 1,407,852 | |
| 1,693,769 | |
| 1,480,133 | |
| 1,460,801 |
Retail other | |
| 226,333 | |
| 37,428 | |
| 49,834 | |
| 28,169 | |
| 27,878 |
Portfolio loans | | $ | 7,188,998 | | $ | 6,814,177 | | $ | 6,687,249 | | $ | 5,568,428 | | $ | 5,519,500 |
| | | | | | | | | | | | | | | |
ACL | | | (87,887) | | | (101,048) | | | (53,748) | | | (50,648) | | | (53,582) |
Portfolio loans, net | | $ | 7,101,111 | | $ | 6,713,129 | | $ | 6,633,501 | | $ | 5,517,780 | | $ | 5,465,918 |
61
As of December 31, | |||||||||||||||||||||||
2023 | 2022 | Change | % Change | ||||||||||||||||||||
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 | % | ||||||||||||||||||
Real estate construction | 461,717 | 530,469 | (68,752) | (13.0) | % | ||||||||||||||||||
Total commercial loans | 5,635,048 | 5,766,496 | (131,448) | (2.3) | % | ||||||||||||||||||
Retail loans | |||||||||||||||||||||||
Retail real estate | 1,720,455 | 1,657,082 | 63,373 | 3.8 | % | ||||||||||||||||||
Retail other | 295,531 | 302,124 | (6,593) | (2.2) | % | ||||||||||||||||||
Total retail loans | 2,015,986 | 1,959,206 | 56,780 | 2.9 | % | ||||||||||||||||||
Total portfolio loans | 7,651,034 | 7,725,702 | (74,668) | (1.0) | % | ||||||||||||||||||
ACL | (91,740) | (91,608) | (132) | (0.1) | % | ||||||||||||||||||
Portfolio loans, net of ACL | $ | 7,559,294 | $ | 7,634,094 | $ | (74,800) | (1.0) | % |
Geographic distributions of portfolio loans, based on origination, by category were as follows (dollars in thousands):
December 31, 2023 | |||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
Real estate construction | 255,879 | 74,805 | 72,121 | 58,912 | 461,717 | ||||||||||||||||||||||||
Total commercial loans | 3,929,247 | 1,116,334 | 316,899 | 272,568 | 5,635,048 | ||||||||||||||||||||||||
Retail loans | |||||||||||||||||||||||||||||
Retail real estate | 1,284,362 | 225,610 | 129,454 | 81,029 | 1,720,455 | ||||||||||||||||||||||||
Retail other | 290,937 | 2,344 | 1,111 | 1,139 | 295,531 | ||||||||||||||||||||||||
Total retail loans | 1,575,299 | 227,954 | 130,565 | 82,168 | 2,015,986 | ||||||||||||||||||||||||
Total portfolio loans | $ | 5,504,546 | $ | 1,344,288 | $ | 447,464 | $ | 354,736 | $ | 7,651,034 | |||||||||||||||||||
ACL | (91,740) | ||||||||||||||||||||||||||||
Portfolio loans, net of ACL | $ | 7,559,294 |
| | | | | | | | | | | | | | | |
| | December 31, 2021 | |||||||||||||
|
| Illinois |
| Missouri |
| Florida |
| Indiana |
| Total | |||||
Portfolio loans | | | | | | | | | | | | | | | |
Commercial | | $ | 1,372,584 | | $ | 463,085 | | $ | 55,180 | | $ | 53,037 | | $ | 1,943,886 |
Commercial real estate | | | 2,063,681 | | | 691,969 | | | 191,303 | | | 172,854 | | | 3,119,807 |
Real estate construction | |
| 199,471 | |
| 120,785 | |
| 31,265 | |
| 34,475 | |
| 385,996 |
Retail real estate | | | 1,124,486 | | | 235,083 | | | 96,563 | | | 56,844 | | | 1,512,976 |
Retail other | |
| 219,000 | |
| 3,684 | |
| 2,181 | |
| 1,468 | |
| 226,333 |
Total portfolio loans | | $ | 4,979,222 | | $ | 1,514,606 | | $ | 376,492 | | $ | 318,678 | | $ | 7,188,998 |
| | | | | | | | | | | | | | | |
ACL | |
|
| |
|
| |
|
| |
|
| |
| (87,887) |
Portfolio loans, net | |
|
| |
|
| |
|
| |
|
| | $ | 7,101,111 |
| | | | | | | | | | | | | | | |
| | December 31, 2020 | |||||||||||||
|
| Illinois |
| Missouri |
| Florida |
| Indiana |
| Total | |||||
Portfolio loans | | | | | | | | | | | | | | | |
Commercial | | $ | 1,386,587 | | $ | 529,281 | | $ | 50,878 | | $ | 47,830 | | $ | 2,014,576 |
Commercial real estate | |
| 1,880,437 | | | 715,680 | | | 154,234 | | | 142,184 | |
| 2,892,535 |
Real estate construction | |
| 192,971 | |
| 115,227 | |
| 57,381 | |
| 96,207 | |
| 461,786 |
Retail real estate | |
| 963,538 | | | 295,352 | | | 94,748 | | | 54,214 | |
| 1,407,852 |
Retail other | |
| 32,678 | |
| 2,415 | |
| 1,188 | |
| 1,147 | |
| 37,428 |
Total portfolio loans | | $ | 4,456,211 | | $ | 1,657,955 | | $ | 358,429 | | $ | 341,582 | | $ | 6,814,177 |
| | | | | | | | | | | | | | | |
ACL | |
|
| |
|
| |
|
| |
|
| |
| (101,048) |
Portfolio loans, net | |
|
| |
|
| |
|
| |
|
| | $ | 6,713,129 |
—
As74
December 31, 2022 | |||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
Real estate construction | 326,154 | 131,782 | 31,212 | 41,321 | 530,469 | ||||||||||||||||||||||||
Total commercial loans | 3,908,086 | 1,279,218 | 305,076 | 274,116 | 5,766,496 | ||||||||||||||||||||||||
Retail loans | |||||||||||||||||||||||||||||
Retail real estate | 1,253,069 | 210,048 | 122,397 | 71,568 | 1,657,082 | ||||||||||||||||||||||||
Retail other | 296,719 | 2,565 | 1,788 | 1,052 | 302,124 | ||||||||||||||||||||||||
Total retail loans | 1,549,788 | 212,613 | 124,185 | 72,620 | 1,959,206 | ||||||||||||||||||||||||
Total portfolio loans | $ | 5,457,874 | $ | 1,491,831 | $ | 429,261 | $ | 346,736 | $ | 7,725,702 | |||||||||||||||||||
ACL | (91,608) | ||||||||||||||||||||||||||||
Portfolio loans, net of ACL | $ | 7,634,094 |
As of December 31, 2023 | |||||||||||||||||||||||
Investor Owned | Owner Occupied | Total | % Owner Occupied | ||||||||||||||||||||
Commercial Real Estate by Industry | |||||||||||||||||||||||
Industrial/Warehouse | $ | 301,464 | $ | 365,527 | $ | 666,991 | 54.8 | % | |||||||||||||||
Retail | 479,521 | 61,879 | 541,400 | 11.4 | % | ||||||||||||||||||
Apartments | 534,627 | — | 534,627 | — | % | ||||||||||||||||||
Traditional Office | 257,149 | 111,612 | 368,761 | 30.3 | % | ||||||||||||||||||
Specialty | 80,047 | 233,022 | 313,069 | 74.4 | % | ||||||||||||||||||
Medical Office | 153,205 | 93,930 | 247,135 | 38.0 | % | ||||||||||||||||||
Student Housing | 208,763 | — | 208,763 | — | % | ||||||||||||||||||
Hotel | 189,184 | 601 | 189,785 | 0.3 | % | ||||||||||||||||||
Senior Housing | 151,964 | — | 151,964 | — | % | ||||||||||||||||||
Restaurant | 23,093 | 46,178 | 69,271 | 66.7 | % | ||||||||||||||||||
Nursing Homes | 24,101 | 1,498 | 25,599 | 5.9 | % | ||||||||||||||||||
Health Care | 20,000 | 737 | 20,737 | 3.6 | % | ||||||||||||||||||
Other | 544 | 200 | 744 | 26.8 | % | ||||||||||||||||||
Total | $ | 2,423,662 | $ | 915,184 | $ | 3,338,846 | 27.4 | % |
2022.
—75
2022.
The following table sets forth remaining maturities of selected loans (excluding deferred loan fees and costs, purchase premiums and discounts, and certain real estate-mortgage loans and installment loans to individuals) at December 31, 2021 (dollars in thousands). Loan Maturities
| | | | | | | | | | | | | | | |
|
| |
| After 1 Year |
| After 5 Years |
| |
| | |||||
|
| Within 1 Year |
| Through 5 Years |
| Through 15 Years |
| After 15 Years |
| Total | |||||
Selected Loans | | | | | | | | | | | | | | | |
Commercial | | $ | 1,043,137 | | $ | 659,421 | | $ | 222,780 | | $ | 20,719 | | $ | 1,946,057 |
Commercial real estate | |
| 994,593 | |
| 1,499,314 | |
| 627,520 | |
| 815 | |
| 3,122,242 |
Real estate construction | |
| 214,680 | |
| 121,293 | |
| 53,877 | |
| 506 | |
| 390,356 |
Total selected loans | | $ | 2,252,410 | | $ | 2,280,028 | | $ | 904,177 | | $ | 22,040 | | $ | 5,458,655 |
62
Within 1 Year | After 1 Year Through 5 Years | After 5 Years Through 15 Years | After 15 Years | Total | |||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
Real estate construction | 173,939 | 212,219 | 51,941 | 23,618 | 461,717 | ||||||||||||||||||||||||
Retail real estate | 41,180 | 139,749 | 549,397 | 990,129 | 1,720,455 | ||||||||||||||||||||||||
Retail other | 40,721 | 191,588 | 44,581 | 18,641 | 295,531 | ||||||||||||||||||||||||
Total portfolio loans | $ | 1,266,295 | $ | 3,454,711 | $ | 1,851,375 | $ | 1,078,653 | $ | 7,651,034 |
SelectedPortfolio loans maturing after one year are summarized below by interest rate sensitivitystructure and loan category,(dollars in thousands):
| | | | | | | | | |
| | Interest Rate Sensitivity of Selected Loans | |||||||
| | Fixed | | Adjustable | | | | ||
| | Rate | | Rate | | Total | |||
Selected loans maturing after 1 year | | | | | | | | | |
Commercial | | $ | 862,688 | | $ | 40,232 | | $ | 902,920 |
Commercial real estate | |
| 1,967,626 | |
| 160,023 | |
| 2,127,649 |
Real estate construction | |
| 161,388 | |
| 14,288 | |
| 175,676 |
Total selected loans maturing after 1 year | | $ | 2,991,702 | | $ | 214,543 | | $ | 3,206,245 |
Allowance for Credit Losses
The following table summarizes, by loan category, activity affecting the ACL and average portfolio loans outstanding for the year ended December 31, 2021, as well as the related ratios of net charge-offs (recoveries) to average portfolio loans (dollars in thousands):
| | | | | | | | | | |
|
| |
| | | | Ratio of | | ||
| | | | | | Net Charge-offs | | |||
| | | | | Average | | (Recoveries) | | ||
| | | | Portfolio Loans | | To Average | | |||
| | ACL | | Outstanding | | Portfolio Loans | | |||
ACL Balance, January 1, 2021 | �� | $ | 101,048 | | | | | | | |
Day 1 PCD (1) | | | 4,178 | | | | | | | |
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 | % |
Real estate construction | |
| 89 | | | 450,713 | | | (0.02) | % |
Retail real estate | |
| (76) | | | 1,446,673 | | | 0.01 | % |
Retail other | |
| (188) | | | 132,966 | | | 0.14 | % |
Net (charge-offs) recoveries and average portfolio loans | | | (2,238) | | $ | 6,969,807 | | | 0.03 | % |
Provision for credit losses | | | (15,101) | | | | | | | |
ACL Balance, December 31, 2021 | | $ | 87,887 | | | | | | | |
The following table summarizes the relationship between the ACL and total portfolio loans, as of the periods indicated (dollars in thousands):
| | | | | | | | | | |
| | As of December 31, | | |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Portfolio loans | | | | | | | | | | |
Portfolio loans, excluding PPP loans | | $ | 7,114,040 | | $ | 6,367,774 | | $ | 6,687,249 | |
PPP loans, amortized cost | | | 74,958 | | | 446,403 | | | — | |
Total portfolio loans | | $ | 7,188,998 | | $ | 6,814,177 | | $ | 6,687,249 | |
| | | | | | | | | | |
ACL | | $ | 87,887 | | $ | 101,048 | | $ | 53,748 | |
| | | | | | | | | | |
Ratios | | | | | | | | | | |
ACL to portfolio loans | | | 1.22 | % | | 1.48 | % | | 0.80 | % |
ACL to portfolio loans, excluding PPP loans | | | 1.24 | % | | 1.59 | % | | 0.80 | % |
63
The following table sets forth the ACL by loan categories and percentage of loans to total loans as of December 31, for each2023, (dollars in thousands):
Fixed Rate | Adjustable Rate | Total | |||||||||||||||
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 | ||||||||||||||
Real estate construction | 116,875 | 170,903 | 287,778 | ||||||||||||||
Retail real estate | 788,759 | 890,516 | 1,679,275 | ||||||||||||||
Retail other | 208,765 | 46,045 | 254,810 | ||||||||||||||
Total portfolio loans maturing after 1 year | $ | 3,989,951 | $ | 2,394,788 | $ | 6,384,739 |
Contents
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2021 | | 2020 | | 2019 | | 2018 | | 2017 |
| |||||||||||||||
|
| | |
| % of |
| | |
| % of |
| | |
| % of |
| | |
| % of |
| | |
| % of |
|
| | | | | Loans | | | | | Loans | | | | | Loans | | | | | Loans | | | | | Loans |
|
| | | | | to Total | | | | | to Total | | | | | to Total | | | | | to Total | | | | | to Total |
|
|
| Amount |
| Loans |
| Amount |
| Loans |
| Amount |
| Loans |
| Amount |
| Loans |
| Amount |
| Loans |
| |||||
ACL | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 23,855 |
| 27.0 | % | $ | 23,866 |
| 29.6 | % | $ | 18,291 |
| 26.2 | % | $ | 17,829 |
| 25.2 | % | $ | 14,779 |
| 25.6 | % |
Commercial real estate | |
| 38,249 |
| 43.4 | % |
| 46,230 |
| 42.4 | % |
| 21,190 |
| 41.8 | % |
| 21,137 |
| 42.5 | % |
| 21,813 |
| 42.7 | % |
Real estate construction | |
| 5,102 |
| 5.4 | % |
| 8,193 |
| 6.8 | % |
| 3,204 |
| 6.0 | % |
| 2,723 |
| 5.2 | % |
| 2,861 |
| 4.7 | % |
Retail real estate | |
| 17,589 |
| 21.0 | % |
| 21,992 |
| 20.7 | % |
| 10,495 |
| 25.3 | % |
| 8,471 |
| 26.6 | % |
| 13,783 |
| 26.5 | % |
Retail other | |
| 3,092 |
| 3.2 | % |
| 767 |
| 0.5 | % |
| 568 |
| 0.7 | % |
| 488 |
| 0.5 | % |
| 346 |
| 0.5 | % |
Total ACL | | $ | 87,887 |
| 100.0 | % | $ | 101,048 |
| 100.0 | % | $ | 53,748 |
| 100.0 | % | $ | 50,648 |
| 100.0 | % | $ | 53,582 |
| 100.0 | % |
The ongoing impactsContents of CECL will be dependent upon changes in economic conditionsItem 7. MD&A
Provision for Credit Losses
The ACL is a significant estimate in our Consolidated Balance Sheet,Sheets, affecting both earnings and capital. The methodology adopted influences, and is influenced by, Busey Bank’s overall credit risk management processes. The ACL is recorded in accordance with GAAP to provide an adequate reserve for expected credit losses that is reflective of management’s best estimate of what is expected to be collected. All estimates of credit losses should beare 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. WeProvision expenses (releases) were recorded aas follows for each of the years indicated (dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Provision for credit losses | $ | 2,399 | $ | 4,623 | $ | (15,101) |
ACL | Average Portfolio Loans Outstanding | Ratio of Net Charge-offs (Recoveries) To Average Portfolio Loans | |||||||||||||||
ACL balance, December 31, 2020 | $ | 101,048 | |||||||||||||||
Day 1 PCD1 | 4,178 | ||||||||||||||||
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 | % | |||||||||||||
Real estate construction | 89 | 450,713 | (0.02) | % | |||||||||||||
Retail real estate | (76) | 1,446,673 | 0.01 | % | |||||||||||||
Retail other | (188) | 132,966 | 0.14 | % | |||||||||||||
Net (charge-offs) recoveries and average portfolio loans | (2,238) | $ | 6,969,807 | 0.03 | % | ||||||||||||
Provision for credit losses | (15,101) | ||||||||||||||||
ACL balance, December 31, 2021 | 87,887 | ||||||||||||||||
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 | % | |||||||||||||
Real estate construction | 213 | 466,045 | (0.05) | % | |||||||||||||
Retail real estate | 385 | 1,584,859 | (0.02) | % | |||||||||||||
Retail other | (166) | 275,665 | 0.06 | % | |||||||||||||
Net (charge-offs) recoveries and average portfolio loans | (902) | $ | 7,445,962 | 0.01 | % | ||||||||||||
Provision for credit losses | 4,623 | ||||||||||||||||
ACL balance, December 31, 2022 | 91,608 | ||||||||||||||||
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 | % | |||||||||||||
Real estate construction | 171 | 536,280 | (0.03) | % | |||||||||||||
Retail real estate | 183 | 1,689,868 | (0.01) | % | |||||||||||||
Retail other | (365) | 306,683 | 0.12 | % | |||||||||||||
Net (charge-offs) recoveries and average portfolio loans | (2,267) | $ | 7,759,472 | 0.03 | % | ||||||||||||
Provision for credit losses | 2,399 | ||||||||||||||||
ACL balance, December 31, 2023 | $ | 91,740 |
As of December 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
ACL | % of Loans to Total Loans | ACL | % of Loans to Total Loans | ||||||||||||||||||||
Loan Category | |||||||||||||||||||||||
Commercial | $ | 21,256 | 24.0 | % | $ | 23,860 | 25.6 | % | |||||||||||||||
Commercial real estate | 35,465 | 43.6 | % | 38,299 | 42.2 | % | |||||||||||||||||
Real estate construction | 5,163 | 6.0 | % | 6,457 | 6.9 | % | |||||||||||||||||
Retail real estate | 26,298 | 22.5 | % | 18,193 | 21.4 | % | |||||||||||||||||
Retail other | 3,558 | 3.9 | % | 4,799 | 3.9 | % | |||||||||||||||||
Total | $ | 91,740 | 100.0 | % | $ | 91,608 | 100.0 | % |
forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors. As of December 31, 2023, Busey management believed the level of the allowance to be appropriate based upon the information available. However, additional losses may be identified in our loan portfolio as new information is obtained.
Non-performingNon-Performing Loans and Non-performingNon-Performing Assets
64
The following table sets forth information concerning non-performing loans and performing restructured loans (dollars in thousands):
| | | | | | | | | | | | | | | | |
| | As of December 31, | | |||||||||||||
|
| 2021 |
| 2020 |
| 2019 |
| 2018 |
| 2017 |
| |||||
Loans 30 – 89 days past due | | $ | 6,261 | | $ | 7,578 | | $ | 14,271 | | $ | 7,121 | | $ | 12,897 | |
| | | | | | | | | | | | | | | | |
Non-performing assets | | | | | | | | | | | | | | | | |
Non-performing loans: | | | | | | | | | | | | | | | | |
Non-accrual loans | | | 15,946 | | | 22,930 | | | 27,896 | | | 34,997 | | | 24,624 | |
Loans 90+ days past due and still accruing | |
| 906 | |
| 1,371 | |
| 1,611 | |
| 1,601 | |
| 2,741 | |
Total non-performing loans | | | 16,852 | | | 24,301 | | | 29,507 | | | 36,598 | | | 27,365 | |
OREO and other repossessed assets | | | 4,416 | | | 4,571 | | | 3,057 | | | 376 | | | 1,283 | |
Total non-performing assets | | $ | 21,268 | | $ | 28,872 | | $ | 32,564 | | $ | 36,974 | | $ | 28,648 | |
| | | | | | | | | | | | | | | | |
Substandard (excludes 90+ days past due) | | | 70,565 | | | 68,924 | | | 74,315 | | | 85,062 | | | 87,372 | |
Classified assets | | $ | 91,833 | | $ | 97,796 | | $ | 106,879 | | $ | 122,036 | | $ | 116,020 | |
| | | | | | | | | | | | | | | | |
Performing TDRs (includes 30 – 89 days past due) | | $ | 1,801 | | $ | 3,829 | | $ | 5,005 | | $ | 8,446 | | $ | 9,981 | |
ACL | | | 87,887 | | | 101,048 | | | 53,748 | | | 50,648 | | | 53,582 | |
| | | | | | | | | | | | | | | | |
Ratios | | | | | | | | | | | | | | | | |
ACL to non-accrual loans | | | 551.15 | % | | 440.68 | % | | 192.67 | % | | 144.72 | % | | 217.60 | % |
ACL to non-performing loans | | | 521.52 | % | | 415.82 | % | | 182.15 | % | | 138.39 | % | | 195.80 | % |
ACL to non-performing assets | | | 413.24 | % | | 349.99 | % | | 165.05 | % | | 136.98 | % | | 187.04 | % |
Non-accrual loans to portfolio loans | | | 0.22 | % | | 0.34 | % | | 0.42 | % | | 0.63 | % | | 0.45 | % |
Non-performing assets to total assets | | | 0.17 | % | | 0.27 | % | | 0.34 | % | | 0.48 | % | | 0.41 | % |
Non-performing loans to portfolio loans | | | 0.23 | % | | 0.36 | % | | 0.44 | % | | 0.66 | % | | 0.50 | % |
Non-performing loans to portfolio loans, excluding PPP loans | | | 0.24 | % | | 0.38 | % | | 0.44 | % | | 0.66 | % | | 0.50 | % |
Non-performing assets to portfolio loans and OREO | | | 0.30 | % | | 0.42 | % | | 0.49 | % | | 0.66 | % | | 0.52 | % |
Classified assets to Busey Bank Tier 1 Capital and ACL | | | 6.91 | % | | 8.47 | % | | 9.72 | % | | 14.28 | % | | 14.69 | % |
Credit
As of December 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Portfolio loans | $ | 7,651,034 | $ | 7,725,702 | ||||||||||
Loans 30 – 89 days past due | 5,779 | 6,548 | ||||||||||||
Total assets | 12,283,415 | 12,336,677 | ||||||||||||
Non-performing assets | ||||||||||||||
Non-performing loans: | ||||||||||||||
Non-accrual loans | $ | 7,441 | $ | 15,067 | ||||||||||
Loans 90+ days past due and still accruing | 375 | 673 | ||||||||||||
Total non-performing loans | 7,816 | 15,740 | ||||||||||||
OREO and other repossessed assets | 125 | 850 | ||||||||||||
Total non-performing assets | 7,941 | 16,590 | ||||||||||||
Substandard (excludes 90+ days past due) | 64,347 | 90,489 | ||||||||||||
Classified assets | $ | 72,288 | $ | 107,079 | ||||||||||
ACL | $ | 91,740 | $ | 91,608 | ||||||||||
Bank Tier 1 Capital | 1,362,962 | 1,306,716 | ||||||||||||
Ratios | ||||||||||||||
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 | % |
Classified assets, which includes non-performing assets and substandard loans, declined to $91.8 million at December 31, 2021, compared to $97.8 million at December 31, 2020. The ratio of classified assets to Busey Bank Tier 1 capital and ACL declined to 6.9% at December 31, 2021, from 8.5% at December 31, 2020.
65
Potential Problem Loans
COVID-19 Modifications
The following table shows the deposit mix for each of the periods presented (dollars in thousands):
As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Balance | % Total | Balance | % Total | Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||||||||||||||||||||
Non-maturity deposits: | |||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | $ | 2,834,655 | 27.5 | % | $ | 3,393,666 | 33.7 | % | $ | (559,011) | (16.5) | % | |||||||||||||||||||||||||||||||||||
Interest-bearing transaction deposits | 2,717,139 | 26.4 | % | 2,857,818 | 28.4 | % | (140,679) | (4.9) | % | ||||||||||||||||||||||||||||||||||||||
Saving deposits and money market deposits | 2,920,088 | 28.4 | % | 2,964,421 | 29.4 | % | (44,333) | (1.5) | % | ||||||||||||||||||||||||||||||||||||||
Total non-maturity deposits | 8,471,882 | 82.3 | % | 9,215,905 | 91.5 | % | (744,023) | (8.1) | % | ||||||||||||||||||||||||||||||||||||||
Time deposits | 1,819,274 | 17.7 | % | 855,375 | 8.5 | % | 963,899 | 112.7 | % | ||||||||||||||||||||||||||||||||||||||
Total deposits | $ | 10,291,156 | 100.0 | % | $ | 10,071,280 | 100.0 | % | $ | 219,876 | 2.2 | % |
| | | | | | | | | | | | | | | | | | | |
| | As of December 31, | | ||||||||||||||||
| | 2021 | | 2020 | | 2019 | | ||||||||||||
|
| Balance |
| % Total | | Balance |
| % Total | | Balance |
| % Total | | ||||||
Deposits | | | | | | | | | | | | | | | | | | | |
Non-maturity deposits: | | | | | | | | | | | | | | | | | | | |
Demand deposits, noninterest-bearing | | $ | 3,670,267 |
| | 34.1 | % | $ | 2,552,039 |
| | 29.4 | % | $ | 1,832,619 |
| | 23.2 | % |
Interest-bearing transaction deposits | |
| 2,720,417 |
| | 25.2 | % |
| 2,263,093 |
| | 26.1 | % |
| 1,989,854 |
| | 25.2 | % |
Saving deposits and money market deposits | |
| 3,442,244 |
| | 32.0 | % |
| 2,743,369 |
| | 31.6 | % |
| 2,545,073 |
| | 32.2 | % |
Total non-maturity deposits | | | 9,832,928 | | | 91.3 | | | 7,558,501 | | | 87.1 | | | 6,367,546 | | | 80.6 | |
| | | | | | | | | | | | | | | | | | | |
Time deposits | |
| 935,649 |
| | 8.7 | % |
| 1,119,348 |
| | 12.9 | % |
| 1,534,850 |
| | 19.4 | % |
Total deposits | | $ | 10,768,577 |
| | 100.0 | % | $ | 8,677,849 |
| | 100.0 | % | $ | 7,902,396 |
| | 100.0 | % |
| | | | | | | | | | | | | | | | | | | |
Change in non-maturity deposits | | | 2,274,427 | | | | | | 1,190,955 | | | | | | | | | | |
Percent change in non-maturity deposits | | | 30.1 | % | | | | | 18.7 | % | | | | | | | | | |
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 fostermaintain and protect our strong core deposit growth,4 franchise, allowing us to reduce our reliance on wholesale funding. Our 2021 deposit balances were impacted by the retentionAs of PPP loan funding inDecember 31, 2023, our average customer deposit accounts, the impacts of economic stimulus,tenure was 16.5 years for retail customers and other core deposit growth.12.4 years for commercial customers. Core deposits4 include non-brokered transaction accounts, money market deposit accounts, and time deposits of $250,000 or less. TimeCore deposits as a percentage4 represented 96.2% of total deposits decreased to 8.7% as of December 31, 2021,2023, compared to 12.9%98.8% as of December 31, 2020. As time deposits mature, we are actively engaging our customers to renew at current market rates.
2022.
Deposits are federally insured up to the FDIC insurance limit of $250,000. When a portion of a deposit account exceeds the FDIC insurance limit, that portion is uninsured. Estimated uninsured deposits were $3.8 billion at December 31, 2023. The portion of our deposit base that was uninsured and not otherwise collateralized was estimated to be $2.8 billion at December 31, 2023, which represented 27% of total deposits. Of that amount, $350.1 million represented time deposits. The following table summarizespresents estimates of the uninsured portion of time deposits by maturity date (dollars in thousands):
| | | |
|
| As of | |
| | December 31, 2021 | |
Uninsured time deposits by schedule of maturities | | | |
3 months or less |
| $ | 24,946 |
Over 3 months through 6 months | |
| 23,108 |
Over 6 months through 12 months | |
| 34,362 |
Thereafter | |
| 47,396 |
Uninsured time deposits | | $ | 129,812 |
66
As of December 31, 2023 | |||||
Estimated uninsured time deposits by schedule of maturities | |||||
3 months or less | $ | 115,498 | |||
Over 3 months through 6 months | 123,186 | ||||
Over 6 months through 12 months | 88,335 | ||||
Thereafter | 23,059 | ||||
Uninsured time deposits | $ | 350,078 |
Borrowings
Term Loan
Item 7. MD&A
The following table sets forth the distribution of securities sold under agreements to repurchase and short-term borrowings, andas well as the weighted average interest rates thereon (dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Securities sold under agreements to repurchase | |||||||||||||||||
Balance at end of period | $ | 187,396 | $ | 229,806 | $ | 270,139 | |||||||||||
Weighted average interest rate at end of period | 3.26 | % | 1.91 | % | 0.08 | % | |||||||||||
Maximum outstanding at any month end in year-to-date period | $ | 248,850 | $ | 283,664 | $ | 270,139 | |||||||||||
Average daily balance for the year-to-date period | 200,702 | 243,690 | 218,454 | ||||||||||||||
Weighted average interest rate during period1 | 2.58 | % | 0.60 | % | 0.10 | % | |||||||||||
FHLB advances, current portion due within 12 months | |||||||||||||||||
Balance at end of period | $ | — | $ | 339,054 | $ | 5,678 | |||||||||||
Weighted average interest rate at end of period | — | % | 4.28 | % | 0.36 | % | |||||||||||
Maximum outstanding at any month end in year-to-date period | $ | 603,881 | $ | 339,054 | $ | 5,678 | |||||||||||
Average daily balance for the year-to-date period | 241,382 | 25,845 | 4,934 | ||||||||||||||
Weighted average interest rate during period1 | 4.90 | % | 4.28 | % | 0.41 | % | |||||||||||
Term Loan, current portion due within 12 months | |||||||||||||||||
Balance at end of period | $ | 12,000 | $ | 12,000 | $ | 12,000 | |||||||||||
Weighted average interest rate at end of period | 7.14 | % | 5.92 | % | 1.88 | % | |||||||||||
Maximum outstanding at any month end in year-to-date period | $ | 12,000 | $ | 12,000 | $ | 12,000 | |||||||||||
Average daily balance for the year-to-date period | 12,000 | 12,000 | 7,167 | ||||||||||||||
Weighted average interest rate during period1 | 6.88 | % | 3.55 | % | 1.79 | % |
| | | | | | | | | | |
|
| Years Ended December 31, | | |||||||
|
| 2021 |
| 2020 |
| 2019 | | |||
Securities sold under agreements to repurchase |
| |
|
| |
|
| |
| |
Balance at end of period | | $ | 270,139 | | $ | 175,614 | | $ | 205,491 | |
Weighted average interest rate at end of period | |
| 0.08 | % |
| 0.13 | % |
| 1.05 | % |
Maximum outstanding at any month end in year-to-date period | | $ | 270,139 | | $ | 210,529 | | $ | 225,531 | |
Average daily balance for the year-to-date period | | $ | 218,454 | | $ | 187,032 | | $ | 196,681 | |
Weighted average interest rate during period (1) | |
| 0.10 | % |
| 0.35 | % |
| 1.19 | % |
| | | | | | | | | | |
Short-term borrowings, FHLB advances | |
|
| |
|
| |
|
| |
Balance at end of period | | $ | 5,678 | | $ | 4,658 | | $ | 2,551 | |
Weighted average interest rate at end of period | |
| 0.36 | % |
| 0.43 | % |
| 1.90 | % |
Maximum outstanding at any month end in year-to-date period | | $ | 5,678 | | $ | 4,658 | | $ | 99,739 | |
Average daily balance for the year-to-date period | | $ | 4,934 | | $ | 3,556 | | $ | 27,495 | |
Weighted average interest rate during period (1) | |
| 0.41 | % |
| 0.53 | % |
| 2.81 | % |
| | | | | | | | | | |
Term loan, current portion due within 12 months | |
|
| |
|
| |
|
| |
Balance at end of period | | $ | 12,000 | | $ | — | | $ | — | |
Weighted average interest rate at end of period | |
| 1.88 | % |
| — | % |
| — | % |
Maximum outstanding at any month end in year-to-date period | | $ | 12,000 | | $ | — | | $ | — | |
Average daily balance for the year-to-date period | | $ | 7,167 | | $ | — | | $ | — | |
Weighted average interest rate during period (1) | |
| 1.79 | % |
| — | % |
| — | % |
1.The weighted average interest rate is computed by dividing total interest for |
In addition to the term loan, long-term debt includes funds borrowed fromperiod by the FHLB which totaled $4.1 millionaverage daily balance outstanding.
Subordinated Notes
On May 25, 2017, we issued $40.0 million of 3.75% senior notes that maturematured and were redeemed on May 25, 2022. The senior notes are payable semi-annually on each May 25 and November 25, commencing on November 25, 2017. The senior notes are not subject to optional redemption by the Company. 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. The subordinated notes, which qualify as Tier 2 capital for First Busey, bear interest at an annual rate of 4.75% for the first five years after issuance and thereafter bear interest at a floating rate equal to 3-month LIBOR plus a spread of 2.919%, as calculated on each applicable determination date. The subordinated notes are payable semi-annually on each May 25 and November 25, commencing on November 25, 2017, during the five year fixed-term and thereafter on February 25, May 25, August 25, and November 25 of each year, commencing on August 25, 2022. The subordinated notes have2027,with an optional redemption in whole or in part on any interest payment date on or after May 25, 2022. The senior notes andWe redeemed all $60.0 million of the outstanding fixed-to-floating rate subordinated notes are unsecured obligationsduring the third quarter of First Busey.
2022. At the time of redemption, the redeemed subordinated notes carried interest at a floating rate of 3-month LIBOR plus 2.919%.
67
On June 1, 2020, weBusey issued $125.0 million of fixed-to-floating rate subordinated notes that mature on June 1, 2030. The subordinated notes, which qualify as Tier 2 capital for First Busey,regulatory purposes, bear interest at an annual rate of 5.25% for the first five years after issuance and thereafter bear interest at a floating rate equal to a three-month benchmark rate plus a spread of 5.11%, as calculated on each applicable determination date. TheInterest on the subordinated notes areis payable semi-annually on each June 1 and December 1 during the five-year fixed-term, and thereafter on March 1, June 1, September 1, and December 1 of each year, commencing on September 1, 2025. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after June 1, 2025. The subordinated notes are unsecured obligations of the Company.
Busey Corporation | 2023
—84
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Unamortized debt issuance costs | |||||||||||
Subordinated notes issued in 2020 | $ | 735 | $ | 1,220 | |||||||
Subordinated notes issued in 2022 | 1,383 | 1,742 | |||||||||
Total unamortized debt issuance costs | $ | 2,118 | $ | 2,962 |
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Unamortized debt issuance costs | | | | | | |
Senior notes issued in 2017 | | $ | 56 | | $ | 191 |
Subordinated notes issued in 2017 | | | 549 | | | 651 |
Subordinated notes issued in 2020 | | | 1,678 | | | 2,123 |
Total unamortized debt issuance costs | | $ | 2,283 | | $ | 2,965 |
Junior Subordinated Debt Owed to Unconsolidated Trusts
First
Liquidity
—85
| | | | | | | | | | |
| | Years Ended December 31, |
| |||||||
|
| 2021 |
| 2020 |
| 2019 |
| |||
Average liquid assets | | | | | | | | | | |
Cash and due from banks | | $ | 133,711 | | $ | 118,739 | | $ | 114,619 | |
Interest-bearing bank deposits | |
| 630,687 | |
| 488,786 | |
| 312,580 | |
Federal funds sold | |
| — | |
| — | |
| 24 | |
Total average liquid assets | | $ | 764,398 | | $ | 607,525 | | $ | 427,223 | |
| | | | | | | | | | |
Average liquid assets as a percent of average total assets | |
| 6.4 | % |
| 5.9 | % |
| 4.5 | % |
68
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Average liquid assets | |||||||||||||||||
Cash and due from banks | $ | 116,530 | $ | 120,910 | $ | 133,711 | |||||||||||
Interest-bearing bank deposits | 214,422 | 290,875 | 630,687 | ||||||||||||||
Total average liquid assets | $ | 330,952 | $ | 411,785 | $ | 764,398 | |||||||||||
Average liquid assets as a percent of average total assets | 2.7 | % | 3.3 | % | 6.4 | % |
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash and unencumbered securities | |||||||||||
Total cash and cash equivalents | $ | 719,581 | $ | 227,164 | |||||||
Debt securities available for sale | 2,087,571 | 2,461,393 | |||||||||
Debt securities available for sale pledged as collateral | (649,769) | (746,675) | |||||||||
Cash and unencumbered securities | $ | 2,157,383 | $ | 1,941,882 |
First Busey’s primary sources of funds consist of deposits, investment maturities and sales, loan principal repayments, and capital funds. At December 31, 2021, cash and unencumbered securities on our Consolidated Balance Sheets totaled $4.1 billion. Additional liquidity is provided by the ability to borrow from the FHLB, the Federal Reserve First Busey’sBank, and our revolving credit facility, or to utilize brokered deposits, as summarized in the table below (dollars in thousands):
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Additional borrowing capacity available from: | | | | | | |
FHLB | |
| 1,536,019 | |
| 1,336,655 |
Federal Reserve | | | 624,627 | | | 507,813 |
Revolving credit facility | |
| 40,000 | |
| 20,000 |
Additional borrowing capacity | | $ | 2,200,646 | | $ | 1,864,468 |
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Additional available borrowing capacity | |||||||||||
FHLB | $ | 1,898,737 | $ | 1,765,388 | |||||||
Federal Reserve Bank | 598,878 | 659,680 | |||||||||
Federal funds purchased | 482,500 | 482,500 | |||||||||
Revolving credit facility | 40,000 | 40,000 | |||||||||
Additional borrowing capacity | $ | 3,020,115 | $ | 2,947,568 |
—86
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Outstanding loan commitments and standby letters of credit | $ | 2,176,496 | $ | 2,024,777 | |||||||
Reserve for unfunded commitments | 7,062 | 6,601 |
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Provision for unfunded commitments expense (release) | $ | 461 | $ | 61 | $ | (774) |
Contractual Obligations
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, 2021, 2023, (dollars in thousands):
| | | | | | | | | | | | | | | | | | |
|
|
| |
|
| |
| Junior |
| |
|
| |
|
| | ||
| | | | | | | | Subordinated | | | | Senior and | | | | |||
| | | | | | | | Debt Owed to | | | | Subordinated Notes, | | | | |||
| | Certificates of | | Operating | | Unconsolidated | | Long-term | | Net of Unamortized | | | | |||||
|
| Deposit |
| Leases |
| Trusts |
| Debt |
| Issuance Costs |
| Total | ||||||
Contractual obligations by schedule of maturities | | | | | | | | | | | | | ||||||
2022 | | $ | 643,826 | | $ | 2,271 | | $ | — | | $ | — | | $ | 39,944 | | $ | 686,041 |
2023 | |
| 191,995 | |
| 2,098 | |
| — | |
| 16,056 | |
| — | |
| 210,149 |
2024 | |
| 70,111 | |
| 1,650 | |
| — | |
| 12,000 | |
| — | |
| 83,761 |
2025 | |
| 16,149 | |
| 1,413 | |
| — | |
| 12,000 | |
| — | |
| 29,562 |
2026 | |
| 12,834 | |
| 1,164 | |
| — | |
| 6,000 | |
| — | |
| 19,998 |
Thereafter | |
| 734 | |
| 2,766 | |
| 71,635 | |
| — | |
| 182,773 | |
| 257,908 |
Contractual obligations | | $ | 935,649 | | $ | 11,362 | | $ | 71,635 | | $ | 46,056 | | $ | 222,717 | | $ | 1,287,419 |
| | | | | | | | | | | | | | | | | | |
Commitments to extend credit and standby letters of credit | | $ | 2,016,207 |
69
Certificates of Deposit | Operating Leases | Junior Subordinated Debt Owed to Unconsolidated Trusts | Long-term Debt | Subordinated Notes, Net of Unamortized Issuance Costs | Total | ||||||||||||||||||||||||||||||
Contractual obligations by schedule of maturities | |||||||||||||||||||||||||||||||||||
2024 | $ | 1,705,846 | $ | 2,023 | $ | — | $ | — | $ | — | $ | 1,707,869 | |||||||||||||||||||||||
2025 | 68,738 | 1,768 | — | 12,000 | — | 82,506 | |||||||||||||||||||||||||||||
2026 | 21,222 | 1,443 | — | 6,000 | — | 28,665 | |||||||||||||||||||||||||||||
2027 | 12,470 | 1,277 | — | — | — | 13,747 | |||||||||||||||||||||||||||||
2028 | 10,451 | 1,255 | — | — | — | 11,706 | |||||||||||||||||||||||||||||
Thereafter | 547 | 5,478 | 71,993 | — | 222,882 | 300,900 | |||||||||||||||||||||||||||||
Contractual obligations | $ | 1,819,274 | $ | 13,244 | $ | 71,993 | $ | 18,000 | $ | 222,882 | $ | 2,145,393 | |||||||||||||||||||||||
Commitments to extend credit and standby letters of credit | $ | 2,176,496 |
Cash Flows
Net cash used in investing activities totaled $829.2 million in 2021, compared to $729.5 million in 2020.2022. Significant investmentinvesting activities are those associated with managing First Busey’s investment and loan portfolios,portfolios.
Cash Flows
Net cash provided by financing activities totaled $814.7 million in 2021, compared to $725.6 million in 2020. Significant items affecting cash flows from financing activities are debt issuance, deposits, short-term borrowings, long-term debt, payment of dividends, and proceeds and redemption from stock issuances. Deposits, which represent First Busey’s primary funding source, increased by $767.5 million in 2021, compared to an increase of $776.4 million in 2020, excluding acquired deposits.
Capital Resources
| | | | | | | | | | |
| | Minimum Capital | | As of December 31, 2021 | | |||||
| | Requirements with | | First Busey | | Busey | | |||
|
| Capital Buffer |
| Corporation |
| Bank | | |||
Common Equity Tier 1 Capital to Risk Weighted Assets | | | 7.00 | % | | 11.85 | % | | 14.81 | % |
Tier 1 Capital to Risk Weighted Assets | | | 8.50 | % | | 12.73 | % | | 14.81 | % |
Total Capital to Risk Weighted Assets | | | 10.50 | % | | 15.70 | % | | 15.59 | % |
Leverage Ratio of Tier 1 Capital to Average Assets | | | 6.50 | | | 8.52 | % | | 9.91 | % |
Bank as of December 31, 2023.
Minimum Capital Requirements with Capital Buffer | As of December 31, 2023 | ||||||||||||||||
First Busey | Busey Bank | ||||||||||||||||
Common Equity Tier 1 Capital to Risk Weighted Assets | 7.00 | % | 13.09 | % | 15.48 | % | |||||||||||
Tier 1 Capital to Risk Weighted Assets | 8.50 | % | 13.93 | % | 15.48 | % | |||||||||||
Total Capital to Risk Weighted Assets | 10.50 | % | 17.44 | % | 16.45 | % | |||||||||||
Leverage Ratio of Tier 1 Capital to Average Assets | 6.50 | % | 10.08 | % | 11.19 | % |
New Accounting Pronouncements
NEW ACCOUNTING PRONOUNCEMENTS
70
Effects of Inflation
EFFECTS OF INFLATION
71
First Busey has an asset-liability committee, whose policy is to meet at least quarterly, to review current market conditions and to structure the Consolidated Balance Sheets to optimize stability in net interest income in consideration of projected future changes in interest rates.
The
| | | | | | | |
| | Year-One: Basis Point Changes | | ||||
|
| +100 |
| +200 |
| +300 |
|
December 31, 2021 |
| 8.77 | % | 17.19 | % | 25.64 | % |
December 31, 2020 |
| 7.40 | % | 14.16 | % | 20.20 | % |
| | | | | | | |
|
| Year-Two: Basis Point Changes | | ||||
|
| +100 |
| +200 |
| +300 |
|
December 31, 2021 |
| 9.51 | % | 18.22 | % | 26.84 | % |
December 31, 2020 |
| 9.59 | % | 17.95 | % | 25.40 | % |
Year-One: Basis Point Changes | Year-Two: Basis Point Changes | ||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||
+400 | 7.38 | % | 12.27 | % | 8.55 | % | 16.02 | % | |||||||||||||||
+300 | 5.49 | % | 9.18 | % | 6.34 | % | 11.94 | % | |||||||||||||||
+200 | 3.64 | % | 6.11 | % | 4.20 | % | 7.91 | % | |||||||||||||||
+100 | 1.81 | % | 3.05 | % | 2.10 | % | 3.94 | % | |||||||||||||||
- 100 | (1.91) | % | (3.95) | % | (2.98) | % | (5.27) | % | |||||||||||||||
-200 | (3.86) | % | (8.08) | % | (6.12) | % | (10.76) | % | |||||||||||||||
-300 | (5.60) | % | (14.74) | % | (9.17) | % | (19.56) | % | |||||||||||||||
-400 | (6.91) | % | (21.24) | % | (11.36) | % | (27.82) | % |
72
TableContents of Contents
Item 8. Financial Statements & Supplementary Data
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73
First Busey Corporation
it relates.
—92
Historical Loss Factors
74
The calculation also contemplates that the Company may not be able to make or obtain such forecasts for the entire life of the financial assets and requires a reversion to historical credit loss information.
• |
Business Combination - Fair Value of Acquired Loans
As described in Notes 1 and 2 to the consolidated financial statements, on May 31, 2021, the Company completed its acquisition of Cummins-American Corp. (CAC). The Company recorded $6.3 million of goodwill as a result of the acquisition, which represents the excess of the purchase price over the fair value of net assets acquired using the acquisition method of accounting. The fair value determination of a loan portfolio requires greater levels of estimates and assumptions than the other assets acquired or liabilities assumed. Acquired loans are initially recorded at their acquisition-date fair values using Level 3 inputs. The Company prepared loan fair value adjustments that it believed a market participant might employ in estimating the fair value for the acquired loan portfolio. This analysis was performed for loans without signs of credit deterioration as well as those identified as purchase credit deteriorated (PCD). The acquired loan portfolio was recorded at an estimated fair value of $430.5 million at the acquisition date, of which $60.5 million was for PCD loans, without carryover of CAC’s previously established allowance for loan losses.
We identified the fair value of acquired loans as a critical audit matter, because of the judgments necessary to determine the fair value of the loan portfolio acquired, the high degree of auditor judgment involved and the extensive audit effort involved in testing management estimates and assumptions.
Our audit procedures related to the valuation of the acquired loan portfolio included the following, among others:
We obtained an understanding of the relevant controls related to the business combination, includingadjustments to historical factors in the valuationcalculation of the acquired loan portfolio and management’s development of significant assumptions,allowance for credit losses and tested such controls for design and operating effectiveness.
75
/s/ RSM US LLP
76
| | | | | | |
| | As of | ||||
| | December 31, | | December 31, | ||
| | 2021 | | 2020 | ||
Assets | | | | | | |
Cash and cash equivalents: | | | | | | |
Cash and due from banks | | $ | 102,983 | | $ | 118,824 |
Interest-bearing deposits | | | 733,112 | | | 569,713 |
Total cash and cash equivalents | | | 836,095 | | | 688,537 |
| | | | | | |
Debt securities available for sale | |
| 3,981,251 | |
| 2,261,187 |
Equity securities | | | 13,571 | | | 5,530 |
Loans held for sale, at fair value | |
| 23,875 | |
| 42,813 |
Portfolio loans (net of ACL of $87,887 at December 31, 2021; $101,048 at December 31, 2020) | |
| 7,101,111 | |
| 6,713,129 |
Premises and equipment, net | |
| 136,147 | |
| 135,191 |
Right of use assets | | | 10,533 | | | 7,714 |
Goodwill | |
| 317,873 | |
| 311,536 |
Other intangible assets, net | |
| 58,051 | |
| 51,985 |
Cash surrender value of bank owned life insurance | |
| 176,940 | |
| 176,405 |
Other assets | |
| 204,242 | |
| 150,020 |
Total assets | | $ | 12,859,689 | | $ | 10,544,047 |
| | | | | | |
Liabilities and Stockholders’ Equity | | | | | | |
Liabilities | | | | | | |
Deposits: | | | | | | |
Noninterest-bearing | | $ | 3,670,267 | | $ | 2,552,039 |
Interest-bearing | |
| 7,098,310 | |
| 6,125,810 |
Total deposits | | | 10,768,577 | | | 8,677,849 |
| | | | | | |
Securities sold under agreements to repurchase | |
| 270,139 | |
| 175,614 |
Short-term borrowings | | | 17,678 | | | 4,658 |
Long-term debt | |
| 46,056 | |
| 4,757 |
Senior notes, net of unamortized issuance costs | | | 39,944 | | | 39,809 |
Subordinated notes, net of unamortized issuance costs | | | 182,773 | | | 182,226 |
Junior subordinated debt owed to unconsolidated trusts | | | 71,635 | | | 71,468 |
Lease liabilities | | | 10,591 | | | 7,757 |
Other liabilities | |
| 133,184 | |
| 109,840 |
Total liabilities | | | 11,540,577 | | | 9,273,978 |
| | | | | | |
Outstanding commitments and contingent liabilities (see Notes 16 and 22) | | | | | | |
| | | | | | |
Stockholders’ Equity | | | | | | |
Common stock, ($.001 par value; 100,000,000 shares authorized) | |
| 58 | |
| 56 |
Additional paid-in capital | |
| 1,316,984 | |
| 1,253,360 |
Retained earnings | |
| 92,463 | |
| 20,830 |
AOCI | |
| (23,758) | |
| 33,309 |
Total stockholders’ equity before treasury stock | | | 1,385,747 | | | 1,307,555 |
| | | | | | |
Treasury stock at cost | |
| (66,635) | |
| (37,486) |
Total stockholders’ equity | | | 1,319,112 | | | 1,270,069 |
Total liabilities and stockholders’ equity | | $ | 12,859,689 | | $ | 10,544,047 |
| | | | | | |
Shares | | | | | | |
Common shares issued | | | 58,116,970 | | | 55,910,733 |
Less treasury shares | | | (2,682,060) | | | (1,506,354) |
Common shares outstanding | | | 55,434,910 | | | 54,404,379 |
As of December 31, 2023 2022 Assets Cash and cash equivalents: Cash and due from banks $ 134,680 $ 117,513 Interest-bearing deposits 584,901 109,651 Total cash and cash equivalents 719,581 227,164 Debt securities available for sale 2,087,571 2,461,393 Debt securities held to maturity 872,628 918,312 Equity securities 9,812 11,535 Loans held for sale 2,379 1,253 Portfolio loans (net of ACL of $91,740 at December 31, 2023; $91,608 at December 31, 2022) 7,559,294 7,634,094 Premises and equipment, net 122,594 126,524 Right of use assets 11,027 12,829 Goodwill 317,873 317,873 Other intangible assets, net 35,991 46,423 Cash surrender value of bank owned life insurance 182,975 180,485 Other assets 361,690 398,792 Total assets $ 12,283,415 $ 12,336,677 Liabilities and stockholders’ equity Liabilities Deposits: Noninterest-bearing $ 2,834,655 $ 3,393,666 Interest-bearing 7,456,501 6,677,614 Total deposits 10,291,156 10,071,280 Securities sold under agreements to repurchase 187,396 229,806 Short-term borrowings 12,000 351,054 Long-term debt 18,000 30,000 Subordinated notes, net of unamortized issuance costs 222,882 222,038 Junior subordinated debt owed to unconsolidated trusts 71,993 71,810 Lease liabilities 11,308 12,995 Other liabilities 196,699 201,717 Total liabilities 11,011,434 11,190,700 Stockholders’ equity Common stock, ($0.001 par value; 100,000,000 shares authorized) 58 58 Additional paid-in capital 1,323,595 1,320,980 Retained earnings 237,197 168,769 AOCI (218,803) (273,278) Total stockholders’ equity before treasury stock 1,342,047 1,216,529 Treasury stock at cost (70,066) (70,552) Total stockholders’ equity 1,271,981 1,145,977 Total liabilities and stockholders’ equity $ 12,283,415 $ 12,336,677 Shares Common shares issued 58,116,969 58,116,970 Less: Treasury shares (2,872,850) (2,837,846) Common shares outstanding 55,244,119 55,279,124
77
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Interest income | | | | | | | | | |
Interest and fees on loans | | $ | 252,097 | | $ | 284,959 | | $ | 304,193 |
Interest and dividends on investment securities: | | | | | | | | | |
Taxable interest income | | | 41,787 | | | 35,364 | | | 41,090 |
Non-taxable interest income | | | 3,765 | | | 4,552 | | | 4,631 |
Other interest income | | | 1,151 | | | 1,723 | | | 6,320 |
Total interest income | | | 298,800 | | | 326,598 | | | 356,234 |
| | | | | | | | | |
Interest expense | | | | | | | | | |
Deposits | | | 12,583 | | | 30,691 | | | 55,077 |
Federal funds purchased and securities sold under agreements to repurchase | | | 227 | | | 660 | | | 2,348 |
Short-term borrowings | | | 279 | | | 234 | | | 1,041 |
Long-term debt | | | 657 | | | 525 | | | 2,608 |
Senior notes | | | 1,598 | | | 1,598 | | | 1,599 |
Subordinated notes | | | 9,918 | | | 6,995 | | | 2,924 |
Junior subordinated debt owed to unconsolidated trusts | | | 2,840 | | | 2,960 | | | 3,414 |
Total interest expense | | | 28,102 | | | 43,663 | | | 69,011 |
| | | | | | | | | |
Net interest income | | | 270,698 | | | 282,935 | | | 287,223 |
Provision for credit losses | | | (15,101) | | | 38,797 | | | 10,406 |
Net interest income after provision for credit losses | | | 285,799 | | | 244,138 | | | 276,817 |
| | | | | | | | | |
Noninterest income | | | | | | | | | |
Wealth management fees | | | 53,086 | | | 42,928 | | | 38,561 |
Fees for customer services | | | 35,604 | | | 31,604 | | | 36,683 |
Payment technology solutions | | | 18,347 | | | 15,628 | | | 15,643 |
Mortgage revenue | | | 7,239 | | | 13,038 | | | 11,703 |
Income on bank owned life insurance | | | 5,166 | | | 5,380 | | | 5,795 |
Net gains (losses) on sales of securities | | | 29 | | | 1,724 | | | 741 |
Unrealized gains (losses) recognized on equity securities | | | 3,041 | | | (393) | | | (759) |
Other income | | | 10,292 | | | 8,356 | | | 8,048 |
Total noninterest income | | | 132,804 | | | 118,265 | | | 116,415 |
| | | | | | | | | |
Noninterest expense | | | | | | | | | |
Salaries, wages, and employee benefits | | | 145,312 | | | 126,719 | | | 140,473 |
Data processing | | | 21,862 | | | 16,426 | | | 21,511 |
Net occupancy expense of premises | | | 18,346 | | | 17,607 | | | 18,176 |
Furniture and equipment expenses | | | 8,301 | | | 9,550 | | | 9,506 |
Professional fees | | | 7,549 | | | 8,396 | | | 11,104 |
Amortization of intangible assets | | | 11,274 | | | 10,008 | | | 9,547 |
Interchange expense | | | 5,792 | | | 4,810 | | | 4,141 |
Other expense | | | 43,344 | | | 40,681 | | | 44,336 |
Total noninterest expense | | | 261,780 | | | 234,197 | | | 258,794 |
| | | | | | | | | |
Income before income taxes | | | 156,823 | | | 128,206 | | | 134,438 |
Income taxes | | | 33,374 | | | 27,862 | | | 31,485 |
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
| | | | | | | | | |
Basic earnings per common share | | $ | 2.23 | | $ | 1.84 | | $ | 1.88 |
Diluted earnings per common share | | $ | 2.20 | | $ | 1.83 | | $ | 1.87 |
Dividends declared per share of common stock | | $ | 0.92 | | $ | 0.88 | | $ | 0.84 |
Year Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Interest income | |||||||||||||||||||||||||||||
Interest and fees on loans | $ | 385,848 | $ | 287,477 | $ | 252,097 | |||||||||||||||||||||||
Interest and dividends on investment securities: | |||||||||||||||||||||||||||||
Taxable interest income | 80,316 | 66,140 | 41,787 | ||||||||||||||||||||||||||
Non-taxable interest income | 2,678 | 3,272 | 3,765 | ||||||||||||||||||||||||||
Other interest income | 10,531 | 3,097 | 1,151 | ||||||||||||||||||||||||||
Total interest income | 479,373 | 359,986 | 298,800 | ||||||||||||||||||||||||||
Interest expense | |||||||||||||||||||||||||||||
Deposits | 123,985 | 16,112 | 12,583 | ||||||||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 5,203 | 1,475 | 227 | ||||||||||||||||||||||||||
Short-term borrowings | 12,775 | 1,647 | 279 | ||||||||||||||||||||||||||
Long-term debt | 1,700 | 1,310 | 657 | ||||||||||||||||||||||||||
Senior notes | — | 637 | 1,598 | ||||||||||||||||||||||||||
Subordinated notes | 12,406 | 12,338 | 9,918 | ||||||||||||||||||||||||||
Junior subordinated debt owed to unconsolidated trusts | 3,853 | 3,029 | 2,840 | ||||||||||||||||||||||||||
Total interest expense | 159,922 | 36,548 | 28,102 | ||||||||||||||||||||||||||
Net interest income | 319,451 | 323,438 | 270,698 | ||||||||||||||||||||||||||
Provision for credit losses | 2,399 | 4,623 | (15,101) | ||||||||||||||||||||||||||
Net interest income after provision for credit losses | 317,052 | 318,815 | 285,799 | ||||||||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||||||||
Wealth management fees | 57,309 | 55,378 | 53,086 | ||||||||||||||||||||||||||
Fees for customer services | 29,044 | 33,111 | 35,604 | ||||||||||||||||||||||||||
Payment technology solutions | 21,192 | 20,067 | 18,347 | ||||||||||||||||||||||||||
Mortgage revenue | 1,089 | 1,895 | 7,239 | ||||||||||||||||||||||||||
Income on bank owned life insurance | 4,701 | 3,663 | 5,166 | ||||||||||||||||||||||||||
Realized net gains (losses) on securities | (28) | 50 | 29 | ||||||||||||||||||||||||||
Unrealized net gains (losses) recognized on equity securities | (2,171) | (2,183) | 3,041 | ||||||||||||||||||||||||||
Other income | 11,248 | 14,822 | 10,292 | ||||||||||||||||||||||||||
Total noninterest income | 122,384 | 126,803 | 132,804 | ||||||||||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||||||||
Salaries, wages, and employee benefits | 162,597 | 159,016 | 145,312 | ||||||||||||||||||||||||||
Data processing | 23,708 | 21,648 | 21,862 | ||||||||||||||||||||||||||
Net occupancy expense of premises | 18,214 | 19,130 | 18,346 | ||||||||||||||||||||||||||
Furniture and equipment expenses | 6,759 | 7,645 | 8,301 | ||||||||||||||||||||||||||
Professional fees | 7,147 | 6,125 | 7,549 | ||||||||||||||||||||||||||
Amortization of intangible assets | 10,432 | 11,628 | 11,274 | ||||||||||||||||||||||||||
Interchange expense | 6,864 | 6,298 | 5,792 | ||||||||||||||||||||||||||
FDIC insurance | 5,650 | 4,058 | 3,083 | ||||||||||||||||||||||||||
Other expense | 44,161 | 48,333 | 40,261 | ||||||||||||||||||||||||||
Total noninterest expense | 285,532 | 283,881 | 261,780 | ||||||||||||||||||||||||||
Income before income taxes | 153,904 | 161,737 | 156,823 | ||||||||||||||||||||||||||
Income taxes | 31,339 | 33,426 | 33,374 | ||||||||||||||||||||||||||
Net income | $ | 122,565 | $ | 128,311 | $ | 123,449 | |||||||||||||||||||||||
Basic earnings per common share | $ | 2.21 | $ | 2.32 | $ | 2.23 | |||||||||||||||||||||||
Diluted earnings per common share | 2.18 | 2.29 | 2.20 | ||||||||||||||||||||||||||
Dividends declared per share of common stock | 0.96 | 0.92 | 0.92 |
78
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
| | | | | | | | | |
OCI: | | | | | | | | | |
Unrealized gains (losses) on debt securities available for sale: | | | | | | | | | |
Net unrealized holding gains (losses) on debt securities available for sale, net of taxes of $23,367, ($8,615), and ($7,525), respectively | | | (58,610) | | | 21,561 | | | 18,905 |
Net unrealized (gains) losses on debt securities transferred from held to maturity to available for sale, net of taxes of $—, $—, and ($1,433), respectively | | | — | | | — | | | 3,590 |
Reclassification adjustment for realized (gains) losses on debt securities available for sale included in net income, net of taxes of ($17), $496, and $210, respectively | |
| 44 | | | (1,228) | | | (523) |
Net change in unrealized gains (losses) on debt securities available for sale | | | (58,566) | | | 20,333 | | | 21,972 |
| | | | | | | | | |
Unrealized gains (losses) on cash flow hedges: | | | | | | | | | |
Net unrealized holding gains (losses) on cash flow hedges, net of taxes of ($294), $1,007, and $81, respectively | |
| 736 | | | (2,526) | | | (202) |
Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of ($304), ($216), and ($1), respectively | | | 763 | | | 542 | | | 2 |
Net change in unrealized gains (losses) on cash flow hedges | | | 1,499 | | | (1,984) | | | (200) |
| | | | | | | | | |
Net change in AOCI | | | (57,067) | | | 18,349 | | | 21,772 |
| | | | | | | | | |
Total comprehensive income | | $ | 66,382 | | $ | 118,693 | | $ | 124,725 |
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Net income | $ | 122,565 | $ | 128,311 | $ | 123,449 | |||||||||||||||||||||||
OCI: | |||||||||||||||||||||||||||||
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 change in unrealized/unrecognized gains (losses) on debt securities | 50,184 | (229,220) | (58,566) | ||||||||||||||||||||||||||
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 change in unrealized gains (losses) on cash flow hedges | 4,291 | (20,300) | 1,499 | ||||||||||||||||||||||||||
Net change in AOCI | 54,475 | (249,520) | (57,067) | ||||||||||||||||||||||||||
Total comprehensive income (loss) | $ | 177,040 | $ | (121,209) | $ | 66,382 |
79
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Retained | | | | | | | | | ||
| | | | | | | Additional | | Earnings | | | | | | | Total | ||||
| | | | Common | | Paid-in | | (Accumulated | | | | Treasury | | Stockholders' | ||||||
| | Shares |
| Stock |
| Capital |
| Deficit) |
| AOCI |
| Stock |
| Equity | ||||||
Balance, December 31, 2018 | | 48,874,836 | | $ | 49 | | $ | 1,080,084 | | $ | (72,167) | | $ | (6,812) | | $ | (6,190) | | $ | 994,964 |
Net income | | — | |
| — | |
| — | |
| 102,953 | |
| — | |
| — | |
| 102,953 |
OCI, net of tax | | — | |
| — | |
| — | |
| — | |
| 21,772 | |
| — | |
| 21,772 |
Stock issued for acquisition of Banc Ed, net of stock issuance costs | | 6,725,152 | | | 7 | | | 166,274 | | | — | | | — | | | — | | | 166,281 |
Repurchase of stock | | (943,396) | | | — | | | — | | | — | | | — | | | (24,292) | | | (24,292) |
Issuance of treasury stock for ESPP | | 25,698 | |
| — | |
| 137 | |
| — | |
| — | |
| 487 | |
| 624 |
Net issuance of treasury stock for restricted/deferred stock unit vesting and related tax | | 92,996 | |
| — | |
| (2,600) | | | — | | | — | | | 382 | |
| (2,218) |
Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax | | 13,486 | | | — | | | (104) | | | — | | | — | | | 1,628 | | | 1,524 |
Cash dividends common stock at $0.84 per share | | — | |
| — | |
| — | |
| (45,171) | |
| — | |
| — | |
| (45,171) |
Stock dividend equivalents RSUs at $0.84 per share | | — | |
| — | |
| 428 | |
| (428) | |
| — | |
| — | |
| — |
Stock-based compensation | | — | | | — | |
| 3,997 | |
| — | |
| — | |
| — | | | 3,997 |
Balance, December 31, 2019 | | 54,788,772 | | $ | 56 | | $ | 1,248,216 | | $ | (14,813) | | $ | 14,960 | | $ | (27,985) | | $ | 1,220,434 |
Cumulative effect of change in accounting principle (ASU 2016-13) | | — | | | — | | | — | | | (15,922) | | | — | | | — | | | (15,922) |
Net income | | — | | | — | | | �� | | | 100,344 | | | — | | | — | |
| 100,344 |
OCI, net of tax | | — | | | — | | | — | | | — | | | 18,349 | | | — | |
| 18,349 |
Repurchase of stock | | (531,114) | | | — | | | — | | | — | | | — | | | (12,272) | |
| (12,272) |
Issuance of treasury stock for ESPP | | 32,063 | | | — | | | (59) | | | — | | | — | | | 606 | | | 547 |
Net issuance of treasury stock for restricted/deferred stock unit vesting and related tax | | 106,589 | | | — | | | (2,648) | | | — | | | — | | | 2,013 | | | (635) |
Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax | | 8,069 | | | — | | | (51) | | | — | | | — | | | 152 | | | 101 |
Cash dividends common stock at $0.88 per share | | — | | | — | | | — | | | (48,012) | | | — | | | — | |
| (48,012) |
Stock dividend equivalents RSUs at $0.88 per share | | — | | | — | | | 767 | | | (767) | | | — | | | — | |
| — |
Stock-based compensation | | — | | | — | | | 7,135 | | | — | | | — | | | — | |
| 7,135 |
Balance, December 31, 2020 | | 54,404,379 | | $ | 56 | | $ | 1,253,360 | | $ | 20,830 | | $ | 33,309 | | $ | (37,486) | | $ | 1,270,069 |
Net income | | — | | | — | | | — | | | 123,449 | | | — | | | — | | | 123,449 |
OCI, net of tax | | — | | | — | | | — | | | — | | | (57,067) | | | — | | | (57,067) |
Stock issued in acquisition, net of stock issuance costs | | 2,206,237 | | | 2 | | | 58,953 | | | — | | | — | | | — | | | 58,955 |
Repurchase of stock | | (1,323,000) | | | — | | | — | | | — | | | — | | | (33,043) | | | (33,043) |
Issuance of treasury stock for ESPP | | 30,390 | | | — | | | (136) | | | — | | | — | | | 782 | | | 646 |
Net issuance of treasury stock for restricted/deferred stock unit vesting and related tax | | 116,904 | | | — | | | (4,109) | | | — | | | — | | | 3,112 | | | (997) |
Cash dividends common stock at $0.92 per share | | — | | | — | | | — | | | (50,764) | | | — | | | — | | | (50,764) |
Stock dividend equivalents RSUs at $0.92 per share | | — | | | — | | | 1,052 | | | (1,052) | | | — | | | — | | | — |
Stock-based compensation | | — | | | — | | | 7,864 | | | — | | | — | | | — | | | 7,864 |
Balance, December 31, 2021 | | 55,434,910 | | $ | 58 | | $ | 1,316,984 | | $ | 92,463 | | $ | (23,758) | | $ | (66,635) | | $ | 1,319,112 |
Shares | Common Stock | Additional Paid-in Capital | Retained Earnings | AOCI | Treasury Stock | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 54,404,379 | $ | 56 | $ | 1,253,360 | $ | 20,830 | $ | 33,309 | $ | (37,486) | $ | 1,270,069 | ||||||||||||||||||||||||||||
Net income | — | — | — | 123,449 | — | — | 123,449 | ||||||||||||||||||||||||||||||||||
OCI, net of tax | — | — | — | — | (57,067) | — | (57,067) | ||||||||||||||||||||||||||||||||||
Stock issued in acquisition, net of stock issuance costs | 2,206,237 | 2 | 58,953 | — | — | — | 58,955 | ||||||||||||||||||||||||||||||||||
Repurchase of stock | (1,323,000) | — | — | — | — | (33,043) | (33,043) | ||||||||||||||||||||||||||||||||||
Issuance of treasury stock for the 2021 ESPP | 30,390 | — | (136) | — | — | 782 | 646 | ||||||||||||||||||||||||||||||||||
Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax | 116,904 | — | (4,109) | — | — | 3,112 | (997) | ||||||||||||||||||||||||||||||||||
Cash dividends common stock at $0.92 per share | — | — | — | (50,764) | — | — | (50,764) | ||||||||||||||||||||||||||||||||||
Stock dividend equivalents on RSUs/PSUs/DSUs | — | — | 1,052 | (1,052) | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 7,864 | — | — | — | 7,864 | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | 55,434,910 | 58 | 1,316,984 | 92,463 | (23,758) | (66,635) | 1,319,112 | ||||||||||||||||||||||||||||||||||
Net income | — | — | — | 128,311 | — | — | 128,311 | ||||||||||||||||||||||||||||||||||
OCI, net of tax | — | — | — | — | (249,520) | — | (249,520) | ||||||||||||||||||||||||||||||||||
Repurchase of stock | (388,614) | — | — | — | — | (9,912) | (9,912) | ||||||||||||||||||||||||||||||||||
Issuance of treasury stock for the 2021 ESPP | 57,385 | — | (320) | — | — | 1,477 | 1,157 | ||||||||||||||||||||||||||||||||||
Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax | 175,225 | — | (5,789) | — | — | 4,513 | (1,276) | ||||||||||||||||||||||||||||||||||
Issuance of treasury stock for stock options exercised, net of shares redeemed and related tax | 218 | — | (5) | — | — | 5 | — | ||||||||||||||||||||||||||||||||||
Cash dividends common stock at $0.92 per share | — | — | — | (50,863) | — | — | (50,863) | ||||||||||||||||||||||||||||||||||
Stock dividend equivalents on RSUs/PSUs/DSUs | — | — | 1,142 | (1,142) | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 8,968 | — | — | — | 8,968 | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | 55,279,124 | 58 | 1,320,980 | 168,769 | (273,278) | (70,552) | 1,145,977 | ||||||||||||||||||||||||||||||||||
Net income | — | — | — | 122,565 | — | — | 122,565 | ||||||||||||||||||||||||||||||||||
OCI, net of tax | — | — | — | — | 54,475 | — | 54,475 | ||||||||||||||||||||||||||||||||||
Repurchase of stock | (227,935) | — | — | — | — | (4,482) | (4,482) | ||||||||||||||||||||||||||||||||||
Issuance of treasury stock for the 2021 ESPP | 59,845 | — | (530) | — | — | 1,541 | 1,011 | ||||||||||||||||||||||||||||||||||
Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax | 132,091 | — | (4,494) | — | — | 3,401 | (1,093) | ||||||||||||||||||||||||||||||||||
Net issuance of treasury stock for warrants exercised | 994 | — | (17) | — | — | 26 | 9 | ||||||||||||||||||||||||||||||||||
Cash dividends common stock at $0.96 per share | — | — | — | (53,076) | — | — | (53,076) | ||||||||||||||||||||||||||||||||||
Stock dividend equivalents on RSUs/PSUs/DSUs | — | — | 1,061 | (1,061) | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 6,595 | — | — | — | 6,595 | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2023 | 55,244,119 | $ | 58 | $ | 1,323,595 | $ | 237,197 | $ | (218,803) | $ | (70,066) | $ | 1,271,981 |
80
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Cash Flows Provided by (Used in) Operating Activities | | | | | | | | | |
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | | | | | |
Provision for credit losses | |
| (15,101) | |
| 38,797 | |
| 10,406 |
Amortization of intangible assets | | | 11,274 | | | 10,008 | | | 9,547 |
Amortization of mortgage servicing rights | | | 5,292 | | | 5,667 | | | 2,710 |
Amortization of NMTC | | | 5,563 | | | 2,311 | | | 1,200 |
Depreciation and amortization of premises and equipment | |
| 11,610 | |
| 12,273 | |
| 11,879 |
Net amortization (accretion) on portfolio loans | | | (11,545) | | | (15,372) | | | (3,383) |
Net amortization (accretion) of premium (discount) on investment securities | |
| 24,251 | |
| 9,716 | |
| 6,106 |
Net amortization (accretion) of premium (discount) on time deposits | | | (1,142) | | | (933) | | | (1,648) |
Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings | | | 826 | | | 586 | | | 309 |
Impairment of OREO and other repossessed assets | | | 1 | | | 68 | | | 62 |
Impairment of fixed assets held for sale | |
| 3,227 | |
| 6,901 | |
| 2,026 |
Impairment of mortgage servicing rights | | | (639) | | | 648 | | | — |
Impairment of leases | | | — | | | — | | | 348 |
Unrealized (gains) losses recognized on equity securities | | | (3,041) | | | 393 | | | 759 |
(Gain) loss on sales of equity securities, net | | | — | | | — | | | (8) |
(Gain) loss on sales of debt securities, net | | | (29) | | | (1,724) | | | (733) |
(Gain) loss on sales of loans, net | |
| (9,323) | |
| (26,999) | |
| (16,819) |
(Gain) loss on sales of OREO | | | 174 | | | (133) | | | (102) |
(Gain) loss on sales of premises and equipment | | | (1,023) | | | 286 | | | 113 |
(Gain) loss on life insurance proceeds | | | (1,257) | | | (1,270) | | | (1,604) |
(Increase) decrease in cash surrender value of bank owned life insurance | |
| (3,909) | |
| (4,110) | |
| (4,191) |
Provision for deferred income taxes | |
| 4,665 | |
| (5,309) | |
| 96 |
Stock-based compensation | |
| 7,864 | |
| 7,135 | |
| 3,997 |
Increase (decrease) in deferred compensation | | | — | | | — | | | (6,781) |
Mortgage loans originated for sale | | | (274,356) | | | (881,398) | | | (667,515) |
Proceeds from sales of mortgage loans | | | 306,074 | | | 920,050 | | | 641,778 |
Net change in operating assets and liabilities: | | | | | | | | | |
(Increase) decrease in other assets | |
| 7,203 | |
| (8,210) | |
| 4,197 |
Increase (decrease) in other liabilities | |
| (28,096) | |
| (6,551) | |
| (7,380) |
Net cash provided by (used in) operating activities | | $ | 162,012 | | $ | 163,174 | | $ | 88,322 |
| | | | | | | | | |
Cash Flows Provided by (Used in) Investing Activities | | | | | | | | | |
Purchases of equity securities | | $ | (11,017) | | $ | (13,123) | | $ | (550) |
Purchases of debt securities available for sale | | | (2,298,055) | | | (1,282,199) | | | (408,941) |
Purchases of FHLB stock | | | — | | | — | | | (3,700) |
Proceeds from sales of equity securities | | | 7,254 | | | 13,152 | | | 1,474 |
Proceeds from sales of debt securities available for sale | |
| 290,955 | |
| — | |
| 227,371 |
Proceeds from paydowns and maturities of debt securities held to maturity | | | — | | | — | | | 14,422 |
Proceeds from paydowns and maturities of debt securities available for sale | |
| 868,083 | |
| 665,744 | |
| 541,753 |
Proceeds from the redemption of FHLB stock | | | — | | | — | | | 5,369 |
Net cash received in (paid for) acquisitions (see Note 2) | | | 228,279 | | | — | | | (61,481) |
Net (increase) decrease in loans | |
| 76,826 | |
| (113,744) | |
| (251,855) |
Cash paid for premiums on bank-owned life insurance | | | (124) | | | (120) | | | (6) |
Proceeds from life insurance | | | 4,755 | | | 2,696 | | | 3,915 |
Purchases of premises and equipment | | | (5,042) | | | (4,198) | | | (13,238) |
Proceeds from disposition of premises and equipment | |
| 7,306 | |
| 814 | |
| 424 |
Capitalized expenditures on OREO | | | — | | | — | | | (2) |
Proceeds from sales of OREO | |
| 1,590 | |
| 1,439 | |
| 2,481 |
Net cash provided by (used in) investing activities | | $ | (829,190) | | $ | (729,539) | | $ | 57,436 |
(continued)
81
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Cash flows provided by (used in) operating activities | |||||||||||||||||
Net income | $ | 122,565 | $ | 128,311 | $ | 123,449 | |||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||||||
Provision for credit losses | 2,399 | 4,623 | (15,101) | ||||||||||||||
Amortization of intangible assets | 10,432 | 11,628 | 11,274 | ||||||||||||||
Amortization of mortgage servicing rights | 2,785 | 3,540 | 5,292 | ||||||||||||||
Amortization of NMTC | 8,999 | 6,333 | 5,563 | ||||||||||||||
Depreciation and amortization of premises and equipment | 9,488 | 10,482 | 11,610 | ||||||||||||||
Net amortization (accretion) on portfolio loans | 6,971 | 3,932 | (11,545) | ||||||||||||||
Net amortization (accretion) of premium (discount) on investment securities | 14,406 | 20,799 | 24,251 | ||||||||||||||
Net amortization (accretion) of premium (discount) on time deposits | (270) | (403) | (1,142) | ||||||||||||||
Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings | 1,027 | 1,400 | 826 | ||||||||||||||
Impairment of OREO and other repossessed assets | 100 | 611 | 1 | ||||||||||||||
Impairment of fixed assets held for sale | — | 427 | 3,227 | ||||||||||||||
Impairment of mortgage servicing rights | 1 | (8) | (639) | ||||||||||||||
Impairment of leases | — | 84 | — | ||||||||||||||
Unrealized (gains) losses recognized on equity securities, net | 2,171 | 2,183 | (3,041) | ||||||||||||||
(Gain) loss on sales of equity securities, net | (5,475) | (24) | — | ||||||||||||||
(Gain) loss on sales of debt securities, net | 5,503 | (26) | (29) | ||||||||||||||
(Gain) loss on sales of loans, net | (733) | (1,944) | (9,323) | ||||||||||||||
(Gain) loss on sales of OREO and other repossessed assets | (46) | 54 | 174 | ||||||||||||||
(Gain) loss on sales of premises and equipment | (450) | (825) | (1,023) | ||||||||||||||
(Gain) loss on life insurance proceeds | (759) | — | (1,257) | ||||||||||||||
(Increase) decrease in cash surrender value of bank owned life insurance | (3,942) | (3,663) | (3,909) | ||||||||||||||
Provision for deferred income taxes | (2,920) | (1,272) | 4,665 | ||||||||||||||
Stock-based compensation | 6,595 | 8,968 | 7,864 | ||||||||||||||
Mortgage loans originated for sale | (35,413) | (70,953) | (274,356) | ||||||||||||||
Proceeds from sales of mortgage loans | 35,018 | 95,289 | 306,074 | ||||||||||||||
(Increase) decrease in other assets | (17,888) | (56,284) | 7,203 | ||||||||||||||
Increase (decrease) in other liabilities | 12,826 | 2,633 | (28,096) | ||||||||||||||
Net cash provided by (used in) operating activities | $ | 173,390 | $ | 165,895 | $ | 162,012 | |||||||||||
Cash flows provided by (used in) investing activities | |||||||||||||||||
Purchases of equity securities | $ | (6,617) | $ | (14,820) | $ | (11,017) | |||||||||||
Purchases of debt securities available for sale | (10,436) | (280,083) | (2,298,055) | ||||||||||||||
Proceeds from sales of equity securities | 11,644 | 15,418 | 7,254 | ||||||||||||||
Proceeds from sales of debt securities available for sale | 105,044 | — | 290,955 | ||||||||||||||
Proceeds from paydowns and maturities of debt securities held to maturity | 48,927 | 70,116 | — | ||||||||||||||
Proceeds from paydowns and maturities of debt securities available for sale | 326,252 | 470,134 | 868,083 | ||||||||||||||
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 | — | — | 228,279 | ||||||||||||||
Net (increase) decrease in loans | 65,240 | (541,713) | 76,826 | ||||||||||||||
Cash paid for premiums on bank-owned life insurance | (80) | (106) | (124) | ||||||||||||||
Proceeds from life insurance | 2,292 | 219 | 4,755 | ||||||||||||||
Purchases of premises and equipment | (9,533) | (4,989) | (5,042) | ||||||||||||||
Proceeds from disposition of premises and equipment | 4,425 | 4,528 | 7,306 | ||||||||||||||
Proceeds from sales of OREO and other repossessed assets, including cash payments collected | 860 | 3,076 | 1,590 | ||||||||||||||
Net cash provided by (used in) investing activities | $ | 550,987 | $ | (290,964) | $ | (829,190) | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
| | | | | | | | | |
| | Years Ended December 31, | |||||||
| | 2021 | | 2020 | | 2019 | |||
Cash Flows Provided by (Used in) Financing Activities | | | | | | | | | |
Net increase (decrease) in deposits | | $ | 767,474 | | $ | 776,386 | | $ | 215,519 |
Net change in federal funds purchased and securities sold under agreements to repurchase | |
| 77,874 | |
| (29,877) | |
| (30,904) |
Proceeds from FHLB advances | | | 5,000 | | | 4,000 | | | — |
Repayment of FHLB advances | | | (4,658) | | | (32,711) | | | (24,667) |
Proceeds from other borrowings | | | 72,500 | | | 142,634 | | | 60,000 |
Repayment of other borrowings | | | (18,500) | | | (74,000) | | | (6,000) |
Cash dividends paid | | | (50,764) | | | (48,012) | | | (45,171) |
Purchase of treasury stock | | | (33,043) | | | (12,272) | | | (24,292) |
Cash paid for withholding taxes on stock-based payments | | | (997) | | | (635) | | | (863) |
Proceeds from stock options exercised | | | — | | | 101 | | | 169 |
Common stock issuance costs | | | (150) | | | — | | | (234) |
Net cash provided by (used in) financing activities | | $ | 814,736 | | $ | 725,614 | | $ | 143,557 |
| | | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | 147,558 | | | 159,249 | | | 289,315 |
Cash and cash equivalents, beginning of period | | | 688,537 | | | 529,288 | | | 239,973 |
| | | | | | | | | |
Cash and cash equivalents, ending of period | | $ | 836,095 | | $ | 688,537 | | $ | 529,288 |
| | | | | | | | | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | | | | | | | | | |
| | | | | | | | | |
Cash payments for: | | | | | | | | | |
Interest | | $ | 25,374 | | $ | 53,601 | | $ | 70,577 |
Income taxes | |
| 12,542 | |
| 22,195 | |
| 24,725 |
| | | | | | | | | |
Non-cash investing and financing activities: | | | | | | | | | |
OREO acquired in settlement of loans | |
| 1,610 | |
| 2,867 | |
| 4,872 |
Transfer of loans held for sale to portfolio loans | | | (4,808) | | | — | | | — |
Transfer of debt securities held to maturity to available for sale | | | — | | | — | | | 593,548 |
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Cash flows provided by (used in) financing activities | |||||||||||||||||
Net increase (decrease) in deposits | $ | 220,146 | $ | (696,894) | $ | 767,474 | |||||||||||
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase | (42,410) | (40,333) | 77,874 | ||||||||||||||
Net increase (decrease) in short-term borrowings | (335,000) | 330,000 | 1,000 | ||||||||||||||
Proceeds from other borrowings, net of debt issuance costs | — | 98,094 | 72,500 | ||||||||||||||
Repayment of other borrowings | (16,054) | (112,678) | (19,158) | ||||||||||||||
Cash dividends paid | (53,076) | (50,863) | (50,764) | ||||||||||||||
Purchase of treasury stock | (4,482) | (9,912) | (33,043) | ||||||||||||||
Cash paid for withholding taxes on stock-based payments | (1,093) | (1,276) | (997) | ||||||||||||||
Proceeds from stock warrants exercised | 9 | — | — | ||||||||||||||
Common stock issuance costs | — | — | (150) | ||||||||||||||
Net cash provided by (used in) financing activities | $ | (231,960) | $ | (483,862) | $ | 814,736 | |||||||||||
Net increase (decrease) in cash and cash equivalents | $ | 492,417 | $ | (608,931) | $ | 147,558 | |||||||||||
Cash and cash equivalents, beginning of period | 227,164 | 836,095 | 688,537 | ||||||||||||||
Cash and cash equivalents, ending of period | $ | 719,581 | $ | 227,164 | $ | 836,095 | |||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||||||||||||
Cash payments for: | |||||||||||||||||
Interest | $ | 135,482 | $ | 35,297 | $ | 25,374 | |||||||||||
Income taxes | 25,408 | 30,676 | 22,487 | ||||||||||||||
Non-cash investing and financing activities: | |||||||||||||||||
OREO acquired in settlement of loans | $ | 189 | $ | 175 | $ | 1,610 | |||||||||||
Transfer of loans held for sale to portfolio loans | — | — | (4,808) | ||||||||||||||
Transfer of debt securities available for sale to held to maturity | — | 985,199 | — |
82
SIGNIFICANT ACCOUNTING POLICIES
Nature of operations
Operations
The significant
Principles of consolidation
Consolidation
The Consolidated Financial Statements include the accounts of the CompanyFirst Busey Corporation and its subsidiaries, which include First Busey Risk Management (dissolved December 18, 2023), Deed of Trust Services Corporation, and Busey Bank, including Busey Bank’s wholly-owned subsidiaries FirsTech, Pulaski Service Corporation, and Busey Capital Management, Inc. Operating results generated from acquired businesses are included with the Company’sBusey’s results of operations starting from each date of acquisition. The CompanyFirst Busey Corporation and its subsidiaries maintain various LLCslimited liability companies that hold specific assets for risk mitigation purposes and are consolidated into these Busey’s Consolidated Financial Statements.Statements. Intercompany balances and transactions have been eliminated in consolidation.
Because the CompanyBusey is not the primary beneficiary, the Consolidated Financial Statements exclude the following wholly-owned variable interest entities: First Busey Statutory Trust II, First Busey Statutory Trust III, First Busey Statutory Trust IV, Pulaski Financial Statutory Trust I, and Pulaski Financial Statutory Trust II.
Use of estimates
Estimates
In preparing the accompanying Consolidated Financial Statements in conformity with GAAP, the Company’sBusey’s management is required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the disclosures provided. Actual results could differ from those estimates. 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)
Income (Loss)
—100
Assets
Assets held for customers in a fiduciary or agency capacity, other than trust cash on deposit at Busey Bank, are not Busey’s assets of the Company and, accordingly, are not included in the accompanying Consolidated Financial Statements. The CompanyStatements. Busey had assets under care of $12.7 billion and $10.2$12.1 billion at December 31, 2021,2023, and 2020, respectively.
$11.1 billion at December 31, 2022.
Cash and cash equivalents
Cash Equivalents
83
The CompanyBusey maintains its cash in deposit accounts, the balance of which, at times, may exceed federally insured limits. The CompanyBusey has not experienced any losses in such accounts. Management believes the CompanyBusey is not exposed to any significant credit risk on cash and cash equivalents.
Securities
Debt Securities Available for Sale
Debt securities available for sale are not within the scope of CECL,the current expected credit losses methodology, however, the accounting for credit losses on these securities is affected by ASC 326-30.Subtopic 326-30 “Financial Instruments-Credit Losses—Available-for-Sale Debt Securities.” A debt security available for sale is impaired if the fair value of the security declines below its amortized cost basis. To determine the appropriate accounting, the CompanyBusey must first determine if it intends to sell the security or if it is more likely than not that it will be required to sell the security before the fair value increases to at least the amortized cost basis. If either of those selling events is expected, the CompanyBusey will write down the amortized cost basis of the security to its fair value. This is achieved by writing off any previously recorded allowance, if applicable, and recognizing any incremental impairment through earnings. If the CompanyBusey 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, the CompanyBusey must determine whether any of the decline in fair value has resulted from a credit loss, or if it is entirely the result of noncredit factors.
The Company
Extent to which the fair value is less than the amortized cost basis;
2021.
Debt Securities Held to Maturity
Sheets
Debt securities classified as held to maturity were those debt securities that the Company had the intent and ability to hold to maturity and were carried at amortized cost. The Company no longer carries debt securities classified as held to maturity.
Equity Securities
84
Loans held for sale
Loans held for sale include mortgage loans which the CompanyBusey intends to sell to investors and/or the secondary mortgage market.
servicing rights retained.
Loan servicing
Servicing
Servicing assets are recognized when servicing rights are acquired or retained through the sale of mortgage and government-guaranteed commercial loans. The unpaid principal balances of loans serviced by the CompanyBusey for the benefit of others totaled $1.8$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.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.
—102
2022.
Portfolio loans
Loans
85
At December 31, 2021, the CompanyBusey had $76.9$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 $75.0$0.8 million. In comparison, atBusey received an immaterial amount of fees related to these loans for the year ended December 31, 2020, the Company had $451.5 million in PPP loans outstanding, with an amortized cost of $446.4 million. The Company2023, and received fees totaling $20.1$2.5 million and $25.4 million, and incurred incremental direct origination costs of $4.2 million and $5.1$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 2020, respectively, both of which have beenwere $0.6 million and $4.2 million for the years ended December 31, 2022, and 2021, respectively.
Troubled debt restructurings
The Company’s loan portfolio includes certain loanscreditors that have been modified in a TDR, where concessions have been granted to borrowers who have experienced financial difficulties. The Company will restructure a loan for its customer after evaluating whether the borrower is able to meet the terms of the loan over the long term, though unable to meet the terms of the loan in the near term due to individual circumstances.
The Company considers the customer’s past performance, previous and current credit history, the individual circumstances surrounding the customer’s current difficulties, and the customer’s plan to meet the terms of the loan in the future prior to restructuring the terms of the loan. Generally, restructurings consist of short-term interest rate relief, short-term principal payment relief, short-term principal and interest payment relief, or forbearance (debt forgiveness). A restructured loan that exceeds 90 days past due or is placed on non-accrual status, is classified as non-performing.
All TDRs are individually evaluated for purposes of assessing the adequacy of the ACL and for financial reporting purposes. TDRs are evaluated using present value of the expected future cash flows discounted at the loan’s original effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. If the Company determines that the fair valuealready adopted CECL. In lieu of the TDR is less than the recorded investmentaccounting model, loan refinancing and restructuring guidance in theASC Subtopic 310-20-35-9 through 35-11
Modified loans with payment deferrals that fall under the CARES Act or revised Interagency Statement that suspendedmodifications, including those made for borrowers experiencing financial difficulty. This standard also enhances disclosure requirements under GAAP related to TDR classifications are not included in the Company’s TDR totals.
certain loan modifications.
Assets purchasedPurchased with credit deterioration
Credit Deterioration
On January 1, 2020, First Busey adopted ASC Topic 326“Financial Instruments-Credit Losses” using the prospective transition approach for financial assets PCD that were previously classified as PCI and accounted for under ASC 310-30.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 atusing the January 1, 2020, effective interest rate as of January 1, 2020.
rate.
86
Allowance for credit losses
Credit Losses
The ACL is a significant estimate in the Company’s 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. Recoveries will be recognized up to the aggregate amount of previously charged-off balances. The ACL is established through the provision for credit loss expense charged to income.
A loan’s amortized cost basis is comprised of the unpaid principal balance of the loan, accrued interest receivable, purchase premiums or discounts, and net deferred origination fees or costs. The CompanyBusey has estimated its allowance on the amortized cost basis, exclusive of government guaranteed loans and accrued interest receivable. The CompanyBusey writes-off uncollectible accrued interest receivable in a timely manner and has elected to not measure an allowance for accrued interest receivable. The CompanyBusey presents the aggregate amount of accrued interest receivable for all financial instruments in other assets on the Consolidated Balance Sheets and the balance of accrued interest receivable is disclosed in “Note 18. Fair Value MeasurementsMeasurements..”
—104
basis based on disparate risk characteristics.
ACL estimate.
Premises and equipment, net
Equipment
Asset Description | Estimated Useful Life | ||||||||
Buildings and improvements | 3 — 40 | years | |||||||
Furniture and equipment | 3 — 10 | years |
Leases
A determination is made at inception if an arrangement contains a lease. For arrangements containing leases, the CompanyBusey recognizes leases on the Consolidated Balance Sheets as right of use assets and corresponding lease liabilities. Lease-related assets, or right of use assets, are recognized on the lease commencement date at amounts equal to the respective lease liabilities, adjusted for prepaid lease payments, initial direct costs, and lease incentives received. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rate.
87
ASC Topic 842“Leases” requires the use of the rate implicit in the lease whenever this rate is readily determinable. If not readily determinable, the Company utilizesBusey 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, the CompanyBusey used a borrowing rate that corresponded to the lease term remaining lease term.
The Company’s lease agreements often include one or more options to renew atas of the Company’s discretion. If, at lease inception, the Company considers the exercisingdate of a renewal option to be reasonably certain, the Company will include the extended term in the calculationadoption of its right of use assets and lease liabilities.
ASC Topic 842.
Long-lived assets
Long-Lived Assets
Other real estate ownedReal Estate Owned and other repossessed assets
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, andvalue; 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.Sheets. Revenue, expense, gains, and losses from the operations of foreclosed assets are included in earnings.
Goodwill and other intangibles
Other Intangibles
The CompanyBusey estimates the fair value of its reporting units as of the measurement date utilizing valuation methodologies including comparable company analysis and precedent transaction analysis. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. There was 0no impairment as of December 31, 2021,2023, or 2020.2022. See “Note 7. Goodwill and Other Intangible Assets” for further discussion.
Cash surrender valueSurrender Value of bank owned life insurance
Bank Owned Life Insurance
The Company
88
The CompanyBusey maintains a liability for post-employment benefits promisedrelated to an employee based on an arrangement between the Company and an employee.split-dollar life insurance arrangements. In an endorsement split-dollar life insurance arrangement, the employer owns and controls the policy, and the employer and employee split the life insurance policy’s cash surrender value and/or death benefits. If the employer agrees to maintain a life insurance policy during the employee’s retirement, the present value of the cost of maintaining the insurance policy would beis accrued over the employee’s active service period. Similarly, if the employer agrees to provide the employee with a death benefit, the present value of the death benefit would beis accrued over the employee’s active service period. The Company has anBusey accrued liabilityliabilities for these arrangements totaling $5.6 million as of $5.5both December 31, 2023, and 2022. Liabilities for post-employment benefits are included in other liabilities on the Consolidated Balance Sheets.
2022.
Other asset investments
Asset Investments
The Company
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 the Company’sBusey’s other asset investments on our the Company’s Consolidated Balance Sheets for the periods indicated (dollars in thousands):
| | | | | | | | | |
| | | | | As of December 31, | ||||
|
| Location |
| 2021 |
| 2020 | |||
Other asset investments | | | | | | | | | |
Funded investments | | Other assets | | $ | 37,417 | | | 20,368 | |
Unfunded investments | | Other assets | | | 52,765 | | | 16,776 | |
Other asset investments | | | | | $ | 90,182 | | | 37,144 |
| | | | | | | | | |
Unfunded investment obligations | | Other liabilities | | $ | (52,765) | | $ | (16,776) |
Further, the Company owns
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 |
approximately $5.5 million.
—107
Financial Assets
Income taxes
Taxes
The Company
89
Under GAAP, a valuation allowance is required to be recognized if it is more likely than not that the deferred tax assets will not be realized. The determination of the recoverability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions.
Management believes that it is more likely than not that the deferred tax assets included in the accompanying Consolidated Financial Statements will be fully realized. The CompanyBusey determined that 0no valuation allowance was required as of December 31, 2021,2023, or 2020.
2022.
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. Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts. When applicable, the CompanyBusey recognizes interest accrued related to unrecognized tax benefits and penalties in operating expenses. The CompanyBusey had 0no accruals for payments of interest and penalties at December 31, 2021,2023, or 2020.
2022.
Treasury Stock
Stock-based employee compensation
Stock-Based Employee Compensation
The 2020 Equity Plan was approved by stockholders at the 2020 Annual Meeting of Stockholders. A description of the 2020 Equity Plan can be found in the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders filed on April 9, 2020. The 2020 Equity Plan replaces the 2010 Equity Incentive Plan and the First Community 2016 Equity Incentive Plan, which, from time to time, the Company used to grant equity awards to legacy employees of First Community. Under the terms of the 2020 Equity Plan, the Company has granted RSU, DSU and PSU awards.
The Company’s
—108
PSU Awards
The Company also grants PSU awards to members of management periodically throughout the year. Each PSU is equivalent to 1 share of the Company’s common stock. The number of units that ultimately vest will be determined based on the achievement of market or other performance goals, subject to accelerated service-based vesting conditions upon eligible retirement from the Company.
90
The CompanyBusey has outstanding stock options assumed from acquisitions.
In 2021, the stockholders All stock options that remained outstanding as of December 31, 2023, were fully vested.
Income
Segment disclosure
Disclosure
Operating segments are components of a business that (i)(1) engage in business activities from which the component may earn revenues and incur expenses; (ii)(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 (iii)(3) for which discrete financial information is available. The Company’sBusey’s operations are managed along 3three operating segments consisting of Banking, FirsTech,Wealth Management, and Wealth Management.FirsTech. See “Note 21. Operating Segments and Related Information” for further discussion.
Business Combinations
Business combinations are accounted for under ASC Topic 805 “BusinessCombinations, Combinations” using the acquisition method of accounting. The acquisition method of accounting requires an acquirer to recognizethat the assets acquired and the liabilities assumed at the acquisition dateare recognized, measured at their estimated fair values, as of that date.the date Busey obtains control of the acquiree (the acquisition date). To determine theestimate fair values the Companyof 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. Under the acquisition method of accounting, the Company will identify the acquirer and the closing date and apply applicable recognition principles.
Operating results generated from acquired businesses are included with the Company’sBusey’s results of operations starting from each date of acquisition.acquisition date. Acquisition related costs are costs the Companythat Busey incurs to effect a business combination. Those costscombination, and may include legal, accounting, valuation, other professional or consulting fees, system conversions, and marketing costs. The CompanyBusey 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 the CompanyBusey expects, but is not obligated to incur in the future, to effect its plan to exit an activity of an acquiree or to terminate the employment of an acquiree’s employees are not liabilities at the acquisition date. Instead, the CompanyBusey recognizes these costs in its post-combination Consolidated Financial Statements in accordance with other applicable accounting guidance.
Derivative Financial Instruments
The Company
—110
The Company
91
Interest Rate Lock Commitments
Interest rate lock commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging,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.
Forward Sales Commitments
The CompanyBusey economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding best-efforts forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers. Forward sales commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging,Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Financial Statements.Statements. While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, the CompanyBusey did not designate them for hedge accounting treatment. Changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.
Risk Participation Agreements
The Company
Off-balance-sheet arrangements
The Company—111
92
Standby letters of credit are conditional commitments Busey has issued by the Company to guarantee the performance of a customer’s obligation to a third-party. Those guarantees are primarily issued to support public and private borrowing arrangements, including bond financing and similar transactions, and primarily have terms of one year or less.transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The CompanyBusey holds collateral, which may include accounts receivable, inventory, property and equipment, and income producing properties, supporting those commitments if deemed necessary. In the event the customer does not perform in accordance with the terms of the agreement with the third-party, the CompanyBusey would be required to fund the commitment. If the commitment is funded, the CompanyBusey would be entitled to seek recovery from the customer.
The Company—112
2022.
Fair valueValue of Financial Instruments
Fair value of financial instruments is are estimated using relevant market information and other assumptions, as more fully disclosed in
Revenue
ASC Topic 606“Revenue from Contracts with Customers” outlines a single model for companies to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance, including industry-specific guidance. ASC Topic 606 requires that companies recognize revenue based on the value of transferred goods or services as they occur in the contract and establishes additional disclosures. The Company’sBusey’s revenue is comprised of net interest income, which is explicitly excluded from the scope of ASC Topic 606, and noninterest income. The CompanyBusey has evaluated its noninterest income and the nature of its contracts with customers and determined that further disaggregation of revenue beyond what is presented in the accompanying Consolidated Financial Statements is not necessary. The CompanyBusey satisfies its performance obligations on its contracts with customers as services are rendered, so there is limited judgment involved in applying ASC Topic 606 that affects the determination of the timing and amount of revenue from contracts with customers.
Descriptions of the Company’sBusey’s primary revenue generating activities that are within the scope of ASC Topic 606, and are presented in the accompanying Consolidated Statements of Income as components of noninterest income, include wealth management fees, payment technology solutions, and fees for customer services.
Wealth Management Fees
93
Payment Technology Solutions
—113
Reclassifications
2023.
Impact of Recently Adopted Accounting Standards
Measurement—Loan Refinancing or Restructuring”
Statements
Impact of recently adopted accounting standards
ASU 2020-01, “Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815).” ASU 2020-01 clarifies the interaction between ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and the ASU on equity method investments. ASU 2016-01 provides companies with an alternative to measure certain equity securities without a readily determinable fair value at cost, minus impairment, if any, unless an observable transaction for an identical or similar security occurs. ASU 2020-01 clarifies that for purposes of applying the Topic 321 measurement alternative, an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting under Topic 323, immediately before applying or upon discontinuing the equity method. In addition, the new ASU provides direction that a company should not consider whether the underlying securities would be accounted for under the equity method or the fair value option when it is determining the accounting for certain forward contracts and purchased options, upon either settlement or exercise. The amendments in this update become effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.
ASU 2021-06 “Presentation of Financial Statements (Topic 205), Financial Services—Depository and Lending (Topic 942), and Financial Services—Investment Companies (Topic 946): Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, and No. 33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants” amends certain disclosure requirements for banks and bank holding companies, as well as savings and loan organizations, by 1) simplifying loan category disclosure requirements, 2) requiring separate disclosure of the amounts of total loans, related allowance for losses, and unearned income, and 3) when a threshold is met, requires disclosure of the aggregate amount of loans to directors, executive officers, or principal holders of equity securities, or to any associate of such persons, including an explanation of changes in the amount of such loans, as well as disclosure of such loans that are past due, nonaccrual, or TDRs. This update was effective upon issuance on August 9, 2021, and applies prospectively. Adoption of this standard did not have a material impact on our results of operations or our consolidated financial statements.
94
Recently issued accounting standards
ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” clarifies how an issuer should account for modifications or exchanges of equity-classified written call options (i.e. a warrant to purchase the issuer’s common stock). This accounting standard requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant. This guidance is effective beginning January 1, 2022, and will be applied on a prospective basis. Adoption of this standard will not have a material impact on our financial position or results of operations.
ASU 2021-05 “Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments” amends the lessor’s classification of certain leases under ASC 842. Under this updated guidance, leases that would otherwise be classified as a sales-type or direct financing lease must be classified by a lessor as an operating lease when the following conditions are met: 1) the contract includes variable lease payments that do not depend on an index or rate and 2) classification as a sales-type or direct financing lease would result in recognition of a selling loss at lease commencement. This guidance is effective beginning January 1, 2022, and will be applied on a prospective basis. Adoption of this standard will not have a material impact on our financial position or results of operations.
ASU 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” requires measurement and recognition in accordance with Topic 606 for contract assets and contract liabilities acquired in a business combination. This update is effective beginning January 1, 2023, and may be adopted early. This standard applies prospectively to all business combinations that occur on or after the date it is adopted and, if applicable, retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application. We have not yet selected an adoption date and we are currently evaluating the effect on our financial position and results of operations.
ASU 2021-10 “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” establishes disclosure requirements for transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model. Disclosures required under this standard include 1) the types of transactions, 2) the accounting for those transactions, and 3) the effect of those transactions on the consolidated financial statements. This update is effective for annual periods beginning January 1, 2022, and applies prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application. Adoption of this standard will not have a material impact on our financial position or results of operations.
Note 2. Acquisitions
Cummins-American Corp.
Effective May 31, 2021, the Company completed its acquisition of CAC, the holding company for GSB. The partnership has enhanced the Company’s existing deposit, commercial banking, and wealth management presence in the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area. GSB’s results of operations were included in the Company’s results of operations beginning June 1, 2021. First Busey operated GSB as a separate banking subsidiary until August 14, 2021, when it was merged with and into Busey Bank. At that time, all GSB banking centers became branches of Busey Bank.
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TableBusey's portfolio of Contents
FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Under the terms of the definitive agreement, each share of CAC common stock issued and outstanding as of the effective date was converted into the right to receive 444.4783 shares of First Busey common stock and $14,173.96 in cash, which reflects adjustments made to the cash consideration in accordance with the terms of the definitive agreement. The fair value of the common stock of First Busey issued as part of the consideration paid to the holders of CAC common stock was determined on the basis of the closing price of First Busey’s common shares on May 28, 2021, the last trading day immediately preceding the acquisition date of May 31, 2021. As additional consideration provided to CAC’s shareholders in the merger, CAC paid a special dividend to its shareholders in the amount of $60.0 million, or $12,087.58 per share of CAC common stock, on May 28, 2021.
This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged was recorded at estimated fair values on the date of acquisition. Fair values are subject to refinement for up to one year after the closing date as additional information regarding the closing date fair values becomes available. For the year ended December 31, 2021, $0.4 million of fair value adjustments were recorded as more information became available regarding unrecorded liabilities. The Company does not expect any further adjustments will be necessary.
As the total consideration paid for CAC exceeded the estimated fair value of net assets acquired, goodwill of $6.3 million was recorded as a result of the acquisition. The amount of goodwill recognized as a result of this transaction is expected to be fully tax deductible for federal income tax purposes in accordance with the Company’s election pursuant to Section 338(h)(10) of the Internal Revenue Code. Goodwill recorded for this transaction reflects synergies expected from the acquisition and expansion within the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Statistical Area, and was assigned to the Banking operating segment.
First Busey incurred $13.6 million in pre-tax expenses related to the acquisition of CAC for the year ended December 31, 2021, primarily for compensation expense, data processing expense, and professional fees, which are reported as components of noninterest expense in the accompanying Consolidated Statements of Income.
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Estimated fair values of the assets acquired and liabilities assumed, as well as the fair value of consideration transferred, were as follows (dollars in thousands):
| | | |
|
| CAC | |
|
| May 31, 2021 | |
Assets acquired | |
| |
Cash and cash equivalents | | $ | 298,637 |
Securities | |
| 702,367 |
Portfolio loans, net of ACL | |
| 430,470 |
Premises and equipment | |
| 17,034 |
Other intangible assets | | | 17,340 |
Mortgage servicing rights | |
| 629 |
Other assets | |
| 8,176 |
Total assets acquired | |
| 1,474,653 |
| | | |
Liabilities assumed | | | |
Deposits | |
| 1,315,671 |
Other borrowings | |
| 16,651 |
Other liabilities | |
| 19,205 |
Total liabilities assumed | |
| 1,351,527 |
| | | |
Net assets acquired | | $ | 123,126 |
| | | |
Consideration paid: | | | |
Cash | | $ | 70,358 |
Common stock | |
| 59,105 |
Total consideration paid | | $ | 129,463 |
| | | |
Goodwill | | $ | 6,337 |
The fair value of PCD financial assets was $60.5 million on the date of acquisition. Gross contractual amounts receivable relating to the PCD financial assets was $65.2 million. The Company estimated, on the date of acquisition, that $4.2 million of the contractual cash flows specific to the PCD financial assets will not be collected.
Note 3. Debt Securities
The tabletables below provides the amortized cost, unrealized and unrecognized gains and losses, and fair values of debt securities, summarized by major category (dollars in thousands):
| | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||
| | Amortized | | Unrealized | | Fair | ||||||
|
| Cost |
| Gross Gains |
| Gross Losses |
| Value | ||||
Debt securities available for sale | | | | | | | | | | | | |
U.S. Treasury securities | | $ | 166,768 | | $ | 41 | | $ | (1,047) | | $ | 165,762 |
Obligations of U.S. government corporations and agencies | |
| 37,579 | |
| 891 | |
| — | |
| 38,470 |
Obligations of states and political subdivisions | |
| 300,602 | |
| 7,760 | |
| (1,493) | |
| 306,869 |
Asset-backed securities | | | 492,055 | | | 295 | | | (164) | | | 492,186 |
Commercial mortgage-backed securities | | | 625,339 | | | 3,425 | | | (13,766) | | | 614,998 |
Residential mortgage-backed securities | |
| 2,095,104 | |
| 8,889 | |
| (34,680) | |
| 2,069,313 |
Corporate debt securities | |
| 296,076 | |
| 1,081 | |
| (3,504) | |
| 293,653 |
Total debt securities available for sale | | $ | 4,013,523 | | $ | 22,382 | | $ | (54,654) | | $ | 3,981,251 |
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As of December 31, 2023 | |||||||||||||||||||||||
Amortized Cost | Unrealized | Fair Value | |||||||||||||||||||||
Gross Gains | Gross Losses | ||||||||||||||||||||||
Debt securities available for sale | |||||||||||||||||||||||
U.S. Treasury securities | $ | 16,031 | $ | — | $ | (85) | $ | 15,946 | |||||||||||||||
Obligations of U.S. government corporations and agencies | 5,889 | 1 | (58) | 5,832 | |||||||||||||||||||
Obligations of states and political subdivisions1 | 190,819 | 52 | (18,026) | 172,845 | |||||||||||||||||||
Asset-backed securities | 470,046 | — | (1,823) | 468,223 | |||||||||||||||||||
Commercial mortgage-backed securities | 119,044 | — | (15,535) | 103,509 | |||||||||||||||||||
Residential mortgage-backed securities | 1,306,854 | 5 | (195,547) | 1,111,312 | |||||||||||||||||||
Corporate debt securities | 225,947 | 128 | (16,171) | 209,904 | |||||||||||||||||||
Total debt securities available for sale | $ | 2,334,630 | $ | 186 | $ | (247,245) | $ | 2,087,571 |
Amortized Cost | Unrecognized | Fair Value | |||||||||||||||||||||
Gross Gains | Gross Losses | ||||||||||||||||||||||
Debt securities held to maturity | |||||||||||||||||||||||
Commercial mortgage-backed securities | $ | 428,526 | $ | — | $ | (71,000) | $ | 357,526 | |||||||||||||||
Residential mortgage-backed securities | 444,102 | — | (71,231) | 372,871 | |||||||||||||||||||
Total debt securities held to maturity | $ | 872,628 | $ | — | $ | (142,231) | $ | 730,397 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | As of December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Amortized | | Unrealized | | Fair | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Cost |
| Gross Gains |
| Gross Losses |
| Value | ||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2022 | As of December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost | Amortized Cost | Unrealized | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Gains | Gross Gains | Gross Losses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities available for sale | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | | $ | 27,481 | | $ | 356 | | $ | — | | $ | 27,837 | ||||||||||||||||||||||||||||||||||||||||||||||
Obligations of U.S. government corporations and agencies | |
| 67,406 | |
| 2,162 | |
| (49) | |
| 69,519 | ||||||||||||||||||||||||||||||||||||||||||||||
Obligations of states and political subdivisions | |
| 292,940 | |
| 11,779 | |
| (8) | |
| 304,711 | ||||||||||||||||||||||||||||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | | | 408,716 | | | 10,212 | | | (312) | | | 418,616 | ||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | |
| 1,344,047 | |
| 24,571 | |
| (303) | |
| 1,368,315 | ||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt securities | |
| 70,953 | |
| 1,237 | |
| (1) | |
| 72,189 | ||||||||||||||||||||||||||||||||||||||||||||||
Total debt securities available for sale | | $ | 2,211,543 | | $ | 50,317 | | $ | (673) | | $ | 2,261,187 |
Amortized Cost | Unrecognized | Fair Value | |||||||||||||||||||||
Gross Gains | Gross Losses | ||||||||||||||||||||||
Debt securities held to maturity | |||||||||||||||||||||||
Commercial mortgage-backed securities | $ | 474,820 | $ | — | $ | (63,738) | $ | 411,082 | |||||||||||||||
Residential mortgage-backed securities | 443,492 | — | (69,279) | 374,213 | |||||||||||||||||||
Total debt securities held to maturity | $ | 918,312 | $ | — | $ | (133,017) | $ | 785,295 |
Amortized cost and fair value of debt securities, by contractual maturity or pre-refunded date, are shown below. Mortgages underlying mortgage-backed securities and asset-backed securities may be called or prepaid; therefore, actual maturities could differ from the contractual maturities. All mortgage-backed securities were issued by U.S. government corporations and agencies (dollars in thousands):
As of December 31, 2023 | |||||||||||
Amortized Cost | Fair Value | ||||||||||
Debt securities available for sale | |||||||||||
Due in one year or less | $ | 71,960 | $ | 71,429 | |||||||
Due after one year through five years | 244,231 | 230,299 | |||||||||
Due after five years through ten years | 418,655 | 388,864 | |||||||||
Due after ten years | 1,599,784 | 1,396,979 | |||||||||
Debt securities available for sale | $ | 2,334,630 | $ | 2,087,571 | |||||||
Debt securities held to maturity | |||||||||||
Due after one year through five years | $ | 73,943 | $ | 69,373 | |||||||
Due after five years through ten years | 28,489 | 25,824 | |||||||||
Due after ten years | 770,196 | 635,200 | |||||||||
Debt securities held to maturity | $ | 872,628 | $ | 730,397 |
| | | | | | |
| | As of December 31, 2021 | ||||
|
| Amortized |
| Fair | ||
|
| Cost |
| Value | ||
Debt securities available for sale | | | | | | |
Due in one year or less | | $ | 129,260 | | $ | 129,848 |
Due after one year through five years | |
| 564,284 | |
| 563,473 |
Due after five years through ten years | |
| 356,782 | |
| 362,057 |
Due after ten years | |
| 2,963,197 | |
| 2,925,873 |
Total debt securities available for sale | | $ | 4,013,523 | | $ | 3,981,251 |
—118
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Realized gains and losses on debt securities | |||||||||||||||||||||||||||||
Gross gains on debt securities | $ | 20 | $ | 115 | $ | 543 | |||||||||||||||||||||||
Gross (losses) on debt securities | (5,523) | (89) | (514) | ||||||||||||||||||||||||||
Realized net gains (losses) on debt securities1 | $ | (5,503) | $ | 26 | $ | 29 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Realized gains and losses on sales of debt securities | | | | | | | | | |
Gross security gains | | $ | 543 | | $ | 1,732 | | $ | 1,318 |
Gross security (losses) | | | (514) |
| | (8) |
| | (585) |
Net gains (losses) on sales of debt securities (1) | | $ | 29 | | $ | 1,724 | | $ | 733 |
Debt securities with carrying amounts of $708.9$837.4 million on December 31, 2021,2023, and $628.0$746.7 million on December 31, 2020,2022, were pledged as collateral for public deposits, securities sold under agreements to repurchase, and for other purposes as required.
98
The following information pertains to debt securities with gross unrealized or unrecognized losses, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (dollars in thousands):
As of December 31, 2023 | |||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||
Debt securities available for sale | |||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | — | $ | — | $ | 15,946 | $ | (85) | $ | 15,946 | $ | (85) | |||||||||||||||||||||||
Obligations of U.S. government corporations and agencies | — | — | 5,709 | (58) | 5,709 | (58) | |||||||||||||||||||||||||||||
Obligations of states and political subdivisions | 11,442 | (54) | 146,797 | (17,972) | 158,239 | (18,026) | |||||||||||||||||||||||||||||
Asset-backed securities | — | — | 468,223 | (1,823) | 468,223 | (1,823) | |||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | 103,509 | (15,535) | 103,509 | (15,535) | |||||||||||||||||||||||||||||
Residential mortgage-backed securities | 141 | (1) | 1,110,906 | (195,546) | 1,111,047 | (195,547) | |||||||||||||||||||||||||||||
Corporate debt securities | 1,450 | (10) | 198,694 | (16,161) | 200,144 | (16,171) | |||||||||||||||||||||||||||||
Debt securities available for sale with gross unrealized losses | $ | 13,033 | $ | (65) | $ | 2,049,784 | $ | (247,180) | $ | 2,062,817 | $ | (247,245) |
12 months or more | Total | ||||||||||||||||||||||||||||||||||
Fair Value | Unrecognized Losses | Fair Value | Unrecognized Losses | ||||||||||||||||||||||||||||||||
Debt securities held to maturity | |||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | $ | 357,526 | $ | (71,000) | $ | 357,526 | $ | (71,000) | |||||||||||||||||||||||||||
Residential mortgage-backed securities | 372,871 | (71,231) | 372,871 | (71,231) | |||||||||||||||||||||||||||||||
Debt securities held to maturity with gross unrecognized losses | $ | 730,397 | $ | (142,231) | $ | 730,397 | $ | (142,231) |
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||||||||
| | Less than 12 months | | 12 months or more | | Total | ||||||||||||
| | Fair |
| Unrealized |
| Fair |
| Unrealized |
| Fair |
| Unrealized | ||||||
|
| Value |
| Losses |
| Value |
| Losses |
| Value |
| Losses | ||||||
Debt securities available for sale | | | | | | | | | | | | | | | | | | |
U.S. Treasury securities | | $ | 163,653 | | $ | (1,047) | | $ | — | | $ | — | | $ | 163,653 | | $ | (1,047) |
Obligations of states and political subdivisions | | | 92,680 | | | (1,493) | | | — | | | — | | | 92,680 | | | (1,493) |
Asset-backed securities | | | 89,983 | | | (164) | | | — | | | — | | | 89,983 | | | (164) |
Commercial mortgage-backed securities | | | 389,078 | | | (10,186) | | | 85,905 | | | (3,580) | | | 474,983 | | | (13,766) |
Residential mortgage-backed securities | |
| 1,700,187 | |
| (33,453) | |
| 20,538 | |
| (1,227) | |
| 1,720,725 | |
| (34,680) |
Corporate debt securities | |
| 241,153 | |
| (3,504) | |
| — | |
| — | |
| 241,153 | |
| (3,504) |
Total temporarily impaired securities | | $ | 2,676,734 | | $ | (49,847) | | $ | 106,443 | | $ | (4,807) | | $ | 2,783,177 | | $ | (54,654) |
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||||||||
| | Less than 12 months | | 12 months or more | | Total | ||||||||||||
| | Fair |
| Unrealized |
| Fair |
| Unrealized |
| Fair |
| Unrealized | ||||||
|
| Value |
| Losses |
| Value |
| Losses |
| Value |
| Losses | ||||||
Debt securities available for sale | | | | | | | | | | | | | | | | | | |
Obligations of U.S. government corporations and agencies | | $ | — | | $ | — | | $ | 4,957 | | $ | (49) | | $ | 4,957 | | $ | (49) |
Obligations of states and political subdivisions | | | 762 | | | (8) | | | — | | | — | | | 762 | | | (8) |
Commercial mortgage-backed securities | | | 129,655 | | | (312) | | | — | | | — | | | 129,655 | | | (312) |
Residential mortgage-backed securities | |
| 89,997 | |
| (300) | |
| 139 | |
| (3) | |
| 90,136 | |
| (303) |
Corporate debt securities | |
| 1,499 | |
| (1) | |
| — | |
| — | |
| 1,499 | |
| (1) |
Total temporarily impaired securities | | $ | 221,913 | | $ | (621) | | $ | 5,096 | | $ | (52) | | $ | 227,009 | | $ | (673) |
—
No ACL was recorded120
As of December 31, 2022 | |||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||
Debt securities available for sale | |||||||||||||||||||||||||||||||||||
U.S. Treasury securities1 | $ | 74 | $ | — | $ | 113,987 | $ | (3,744) | $ | 114,061 | $ | (3,744) | |||||||||||||||||||||||
Obligations of U.S. government corporations and agencies | 19,603 | (321) | — | — | 19,603 | (321) | |||||||||||||||||||||||||||||
Obligations of states and political subdivisions | 166,147 | (10,059) | 75,217 | (16,016) | 241,364 | (26,075) | |||||||||||||||||||||||||||||
Asset-backed securities | 390,164 | (15,648) | 79,711 | (4,035) | 469,875 | (19,683) | |||||||||||||||||||||||||||||
Commercial mortgage-backed securities | 89,428 | (12,623) | 18,966 | (3,406) | 108,394 | (16,029) | |||||||||||||||||||||||||||||
Residential mortgage-backed securities | 366,221 | (38,111) | 876,668 | (182,606) | 1,242,889 | (220,717) | |||||||||||||||||||||||||||||
Corporate debt securities | 39,037 | (5,079) | 204,310 | (19,556) | 243,347 | (24,635) | |||||||||||||||||||||||||||||
Debt securities available for sale with gross unrealized losses | $ | 1,070,674 | $ | (81,841) | $ | 1,368,859 | $ | (229,363) | $ | 2,439,533 | $ | (311,204) |
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||
Fair Value | Unrecognized Losses | Fair Value | Unrecognized Losses | Fair Value | Unrecognized Losses | ||||||||||||||||||||||||||||||
Debt securities held to maturity | |||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | $ | 58,065 | $ | (8,009) | $ | 353,017 | $ | (55,729) | $ | 411,082 | $ | (63,738) | |||||||||||||||||||||||
Residential mortgage-backed securities | — | — | 374,213 | (69,279) | 374,213 | (69,279) | |||||||||||||||||||||||||||||
Debt securities held to maturity with gross unrecognized losses | $ | 58,065 | $ | (8,009) | $ | 727,230 | $ | (125,008) | $ | 785,295 | $ | (133,017) |
As of December 31, 2023 | |||||||||||||||||
Available for Sale | Held to Maturity | Total | |||||||||||||||
Debt securities with gross unrealized or unrecognized losses, fair value | $ | 2,062,817 | $ | 730,397 | $ | 2,793,214 | |||||||||||
Gross unrealized or unrecognized losses on debt securities | 247,245 | 142,231 | 389,476 | ||||||||||||||
Ratio of gross unrealized or unrecognized losses to debt securities with gross unrealized or unrecognized losses | 12.0 | % | 19.5 | % | 13.9 | % | |||||||||||
Count of debt securities | 835 | 55 | 890 | ||||||||||||||
Count of debt securities in an unrealized or unrecognized loss position | 779 | 55 | 834 |
As of December 31, 2022 | |||||||||||||||||
Available for Sale | Held to Maturity | Total | |||||||||||||||
Debt securities with gross unrealized or unrecognized losses, fair value | $ | 2,439,533 | $ | 785,295 | $ | 3,224,828 | |||||||||||
Gross unrealized or unrecognized losses on debt securities | 311,204 | 133,017 | 444,221 | ||||||||||||||
Ratio of gross unrealized or unrecognized losses to debt securities with gross unrealized or unrecognized losses | 12.8 | % | 16.9 | 13.8 | % | ||||||||||||
Count of debt securities | 1,091 | 55 | 1,146 | ||||||||||||||
Count of debt securities in an unrealized or unrecognized loss position | 1,032 | 55 | 1,087 |
99
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Portfolio loans | | | | | | |
Commercial | | $ | 1,943,886 | | $ | 2,014,576 |
Commercial real estate | | | 3,119,807 | | | 2,892,535 |
Real estate construction | | | 385,996 | | | 461,786 |
Retail real estate | | | 1,512,976 | | | 1,407,852 |
Retail other | | | 226,333 | | | 37,428 |
Total portfolio loans | | $ | 7,188,998 | | $ | 6,814,177 |
| | | | | | |
ACL | | | (87,887) | | | (101,048) |
Portfolio loans, net | | $ | 7,101,111 | | $ | 6,713,129 |
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Commercial loans | |||||||||||
Commercial | $ | 1,835,994 | $ | 1,974,154 | |||||||
Commercial real estate | 3,337,337 | 3,261,873 | |||||||||
Real estate construction | 461,717 | 530,469 | |||||||||
Total commercial loans | 5,635,048 | 5,766,496 | |||||||||
Retail loans | |||||||||||
Retail real estate | 1,720,455 | 1,657,082 | |||||||||
Retail other | 295,531 | 302,124 | |||||||||
Total retail loans | 2,015,986 | 1,959,206 | |||||||||
Total portfolio loans | 7,651,034 | 7,725,702 | |||||||||
ACL | (91,740) | (91,608) | |||||||||
Portfolio loans, net | $ | 7,559,294 | $ | 7,634,094 |
The Company purchased2022.
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Pledged loans | |||||||||||
FHLB | $ | 4,865,481 | $ | 5,095,448 | |||||||
Federal Reserve Bank | 722,914 | 804,718 | |||||||||
Total pledged loans | $ | 5,588,395 | $ | 5,900,166 |
Contents
Contents of Item 8. Financial Statements & Supplementary Data
The Company
100
FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
interest has not been stopped. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that Busey will sustain some loss if the deficiencies are not corrected.
•Substandard non-accrual – This category includes loans that have all the characteristics of a “Substandard” loan with additional factors that make collection in full highly questionable and improbable. Such loans are placed on non-accrual status and may be dependent on collateral with a value that is difficult to determine.
Corporation | 2023
—124
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||||||||
|
| |
| |
| Special |
| |
| Substandard |
| | ||||||
|
| Pass |
| Watch |
| Mention |
| Substandard |
| Non-accrual |
| Total | ||||||
Portfolio loans | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,747,756 | | $ | 93,582 | | $ | 69,427 | | $ | 26,117 | | $ | 7,004 | | $ | 1,943,886 |
Commercial real estate | |
| 2,682,441 | |
| 343,304 | |
| 49,695 | |
| 38,394 | |
| 5,973 | |
| 3,119,807 |
Real estate construction | |
| 369,797 | |
| 13,793 | |
| 6 | |
| 2,400 | |
| — | |
| 385,996 |
Retail real estate | |
| 1,491,845 | |
| 12,374 | |
| 1,992 | |
| 3,867 | |
| 2,898 | |
| 1,512,976 |
Retail other | |
| 226,262 | |
| — | |
| — | |
| — | |
| 71 | |
| 226,333 |
Total portfolio loans | | $ | 6,518,101 | | $ | 463,053 | | $ | 121,120 | | $ | 70,778 | | $ | 15,946 | | $ | 7,188,998 |
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||||||||
|
| |
| |
| Special |
| |
| Substandard |
| | ||||||
|
| Pass |
| Watch |
| Mention |
| Substandard |
| Non-accrual |
| Total | ||||||
Portfolio loans | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,768,755 | | $ | 136,948 | | $ | 72,447 | | $ | 27,903 | | $ | 8,523 | | $ | 2,014,576 |
Commercial real estate | |
| 2,393,372 | |
| 383,277 | |
| 75,486 | |
| 34,897 | |
| 5,503 | |
| 2,892,535 |
Real estate construction | |
| 434,681 | |
| 24,481 | |
| 77 | |
| 2,546 | |
| 1 | |
| 461,786 |
Retail real estate | |
| 1,382,616 | |
| 10,264 | |
| 2,471 | |
| 3,702 | |
| 8,799 | |
| 1,407,852 |
Retail other | |
| 37,324 | |
| — | |
| — | |
| — | |
| 104 | |
| 37,428 |
Total portfolio loans | | $ | 6,016,748 | | $ | 554,970 | | $ | 150,481 | | $ | 69,048 | | $ | 22,930 | | $ | 6,814,177 |
101
As of December 31, 2023 | |||||||||||||||||||||||||||||||||||
Pass | Watch | Special Mention | Substandard | Substandard Non-accrual | Total | ||||||||||||||||||||||||||||||
Commercial loans | |||||||||||||||||||||||||||||||||||
Commercial | $ | 1,462,755 | $ | 296,416 | $ | 46,488 | $ | 27,733 | $ | 2,602 | $ | 1,835,994 | |||||||||||||||||||||||
Commercial real estate | 2,827,030 | 431,427 | 48,545 | 29,492 | 843 | 3,337,337 | |||||||||||||||||||||||||||||
Real estate construction | 448,011 | 8,135 | — | 5,327 | 244 | 461,717 | |||||||||||||||||||||||||||||
Total commercial loans | 4,737,796 | 735,978 | 95,033 | 62,552 | 3,689 | 5,635,048 | |||||||||||||||||||||||||||||
Retail loans | |||||||||||||||||||||||||||||||||||
Retail real estate | 1,702,897 | 11,144 | 1,024 | 1,795 | 3,595 | 1,720,455 | |||||||||||||||||||||||||||||
Retail other | 295,374 | — | — | — | 157 | 295,531 | |||||||||||||||||||||||||||||
Total retail loans | 1,998,271 | 11,144 | 1,024 | 1,795 | 3,752 | 2,015,986 | |||||||||||||||||||||||||||||
Total portfolio loans | $ | 6,736,067 | $ | 747,122 | $ | 96,057 | $ | 64,347 | $ | 7,441 | $ | 7,651,034 |
As of December 31, 2022 | |||||||||||||||||||||||||||||||||||
Pass | Watch | Special Mention | Substandard | Substandard Non-accrual | Total | ||||||||||||||||||||||||||||||
Commercial loans | |||||||||||||||||||||||||||||||||||
Commercial | $ | 1,668,495 | $ | 201,758 | $ | 46,540 | $ | 51,187 | $ | 6,174 | $ | 1,974,154 | |||||||||||||||||||||||
Commercial real estate | 2,851,709 | 326,455 | 43,526 | 34,539 | 5,644 | 3,261,873 | |||||||||||||||||||||||||||||
Real estate construction | 502,904 | 25,164 | 1 | 2,400 | — | 530,469 | |||||||||||||||||||||||||||||
Total commercial loans | 5,023,108 | 553,377 | 90,067 | 88,126 | 11,818 | 5,766,496 | |||||||||||||||||||||||||||||
Retail loans | |||||||||||||||||||||||||||||||||||
Retail real estate | 1,639,599 | 10,520 | 1,338 | 2,529 | 3,096 | 1,657,082 | |||||||||||||||||||||||||||||
Retail other | 301,971 | — | — | — | 153 | 302,124 | |||||||||||||||||||||||||||||
Total retail loans | 1,941,570 | 10,520 | 1,338 | 2,529 | 3,249 | 1,959,206 | |||||||||||||||||||||||||||||
Total portfolio loans | $ | 6,964,678 | $ | 563,897 | $ | 91,405 | $ | 90,655 | $ | 15,067 | $ | 7,725,702 |
Risk grades of portfolio loans and net charge-offs are presented in the tables below by loan class, further sorted by origination year are as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| As of December 31, 2021 | ||||||||||||||||||||||
|
| Term Loans Amortized Cost Basis by Origination Year | | | Revolving | | | | ||||||||||||||||
Risk Grade Ratings |
| 2021 |
| 2020 |
| 2019 |
| 2018 |
| 2017 |
| | Prior |
| | loans |
| | Total | |||||
Commercial |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 512,729 | | $ | 228,811 | | $ | 107,877 | | $ | 84,873 | | $ | 74,351 | | $ | 122,418 | | $ | 616,697 | | $ | 1,747,756 |
Watch | | | 13,847 | | | 5,913 | | | 14,274 | | | 5,060 | | | 1,361 | | | 2,866 | | | 50,261 | | | 93,582 |
Special Mention | | | 7,062 | | | 898 | | | 5,961 | | | 4,025 | | | 6,790 | | | 11,845 | | | 32,846 | | | 69,427 |
Substandard | | | 3,595 | | | 3,362 | | | 3,136 | | | 1,855 | | | 1,125 | | | 5,459 | | | 7,585 | | | 26,117 |
Substandard non-accrual | | | 4,126 | | | 364 | | | 142 | | | — | | | 320 | | | 52 | | | 2,000 | | | 7,004 |
Total commercial | | | 541,359 | | | 239,348 | | | 131,390 | | | 95,813 | | | 83,947 | | | 142,640 | | | 709,389 | | | 1,943,886 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | |||
Pass | | | 969,548 | | | 637,550 | | | 425,850 | | | 235,928 | | | 200,373 | | | 198,002 | | | 15,190 | | | 2,682,441 |
Watch | | | 51,560 | | | 38,820 | | | 123,324 | | | 48,088 | | | 46,761 | | | 32,608 | | | 2,143 | | | 343,304 |
Special Mention | | | 9,542 | | | 7,060 | | | 6,585 | | | 10,098 | | | 6,357 | | | 9,870 | | | 183 | | | 49,695 |
Substandard | | | 21,002 | | | 3,781 | | | 1,218 | | | 11,451 | | | 521 | | | 421 | | | — | | | 38,394 |
Substandard non-accrual | | | 112 | | | 181 | | | 359 | | | 1,893 | | | 3,407 | | | 21 | | | — | | | 5,973 |
Total commercial real estate | | | 1,051,764 | | | 687,392 | | | 557,336 | | | 307,458 | | | 257,419 | | | 240,922 | | | 17,516 | | | 3,119,807 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Real estate construction | | | | | | | | | | | | | | | | | | | | | | |||
Pass | | | 202,082 | | | 123,491 | | | 31,927 | | | 3,155 | | | 738 | | | 1,223 | | | 7,181 | | | 369,797 |
Watch | | | 7,886 | | | 4,159 | | | 54 | | | — | | | 1,574 | | | 120 | | | — | | | 13,793 |
Special Mention | | | — | | | — | | | 6 | | | — | | | — | | | — | | | — | | | 6 |
Substandard | | | — | | | 2,400 | | | — | | | — | | | — | | | — | | | — | | | 2,400 |
Substandard non-accrual | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Total real estate construction | | | 209,968 | | | 130,050 | | | 31,987 | | | 3,155 | | | 2,312 | | | 1,343 | | | 7,181 | | | 385,996 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Retail real estate |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | | 523,541 | | | 215,068 | | | 96,617 | | | 79,158 | | | 82,478 | | | 281,737 | | | 213,246 | | | 1,491,845 |
Watch | | | 4,100 | | | 2,460 | | | 1,780 | | | 1,312 | | | 343 | | | 150 | | | 2,229 | | | 12,374 |
Special Mention | | | 1,965 | | | 27 | | | — | | | — | | | — | | | — | | | — | | | 1,992 |
Substandard | | | 1,369 | | | 232 | | | 12 | | | 71 | | | 165 | | | 1,687 | | | 331 | | | 3,867 |
Substandard non-accrual | | | 235 | | | 63 | | | — | | | 16 | | | 227 | | | 1,705 | | | 652 | | | 2,898 |
Total retail real estate | | | 531,210 | | | 217,850 | | | 98,409 | | | 80,557 | | | 83,213 | | | 285,279 | | | 216,458 | | | 1,512,976 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Retail other |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | | 59,366 | | | 22,305 | | | 26,126 | | | 16,189 | | | 7,180 | | | 1,326 | | | 93,770 | | | 226,262 |
Watch | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Special Mention | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Substandard non-accrual | | | 34 | | | 10 | | | — | | | 14 | | | 13 | | | — | | | — | | | 71 |
Total retail other | | | 59,400 | | | 22,315 | | | 26,126 | | | 16,203 | | | 7,193 | | | 1,326 | | | 93,770 | | | 226,333 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total portfolio loans | | $ | 2,393,701 | | $ | 1,296,955 | | $ | 845,248 | | $ | 503,186 | | $ | 434,084 | | $ | 671,510 | | $ | 1,044,314 | | $ | 7,188,998 |
102
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| As of December 31, 2020 | ||||||||||||||||||||||
|
| Term Loans Amortized Cost Basis by Origination Year | | | Revolving | | | | ||||||||||||||||
Risk Grade Ratings |
| 2020 |
| 2019 |
| 2018 |
| 2017 |
| 2016 |
| | Prior |
| | loans |
| | Total | |||||
Commercial |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 812,536 | | $ | 158,307 | | $ | 107,565 | | $ | 93,190 | | $ | 61,847 | | $ | 79,970 | | $ | 455,340 | | $ | 1,768,755 |
Watch | | | 16,544 | | | 22,247 | | | 14,954 | | | 13,724 | | | 2,577 | | | 10,943 | | | 55,959 | | | 136,948 |
Special Mention | | | 6,402 | | | 2,671 | | | 2,069 | | | 7,164 | | | 6,763 | | | 13,733 | | | 33,645 | | | 72,447 |
Substandard | | | 7,772 | | | 3,791 | | | 2,371 | | | 1,939 | | | 819 | | | 1,233 | | | 9,978 | | | 27,903 |
Substandard non-accrual | | | 150 | | | 3,045 | | | 451 | | | 2,168 | | | 641 | | | 68 | | | 2,000 | | | 8,523 |
Total commercial | | | 843,404 | | | 190,061 | | | 127,410 | | | 118,185 | | | 72,647 | | | 105,947 | | | 556,922 | | | 2,014,576 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | | | | | | | | | | | | | | | | | | | | |||
Pass | | | 717,559 | | | 503,977 | | | 360,573 | | | 384,843 | | | 180,555 | | | 227,068 | | | 18,797 | | | 2,393,372 |
Watch | | | 88,297 | | | 110,526 | | | 90,412 | | | 33,734 | | | 32,887 | | | 27,023 | | | 398 | | | 383,277 |
Special Mention | | | 16,490 | | | 8,858 | | | 10,490 | | | 10,505 | | | 7,102 | | | 21,808 | | | 233 | | | 75,486 |
Substandard | | | 17,445 | | | 4,166 | | | 1,491 | | | 7,812 | | | 2,111 | | | 1,377 | | | 495 | | | 34,897 |
Substandard non-accrual | | | 1,091 | | | 776 | | | 821 | | | 882 | | | 286 | | | 1,647 | | | — | | | 5,503 |
Total commercial real estate | | | 840,882 | | | 628,303 | | | 463,787 | | | 437,776 | | | 222,941 | | | 278,923 | | | 19,923 | | | 2,892,535 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Real estate construction | | | | | | | | | | | | | | | | | | | | | | |||
Pass | | | 179,232 | | | 171,663 | | | 64,025 | | | 1,468 | | | 761 | | | 1,444 | | | 16,088 | | | 434,681 |
Watch | | | 18,485 | | | 3,657 | | | 337 | | | 1,838 | | | 164 | | | | | | | | | 24,481 |
Special Mention | | | 67 | | | 10 | | | — | | | — | | | — | | | — | | | — | | | 77 |
Substandard | | | 2,400 | | | — | | | — | | | — | | | 146 | | | — | | | — | | | 2,546 |
Substandard non-accrual | | | — | | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 |
Total real estate construction | | | 200,184 | | | 175,330 | | | 64,362 | | | 3,306 | | | 1,071 | | | 1,445 | | | 16,088 | | | 461,786 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Retail real estate |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | | 319,302 | | | 162,711 | | | 135,065 | | | 136,427 | | | 140,600 | | | 257,147 | | | 231,364 | | | 1,382,616 |
Watch | | | 2,715 | | | 2,053 | | | 1,396 | | | 349 | | | 579 | | | 233 | | | 2,939 | | | 10,264 |
Special Mention | | | 509 | | | — | | | — | | | — | | | 1,962 | | | — | | | — | | | 2,471 |
Substandard | | | 899 | | | 96 | | | 56 | | | 26 | | | 727 | | | 1,631 | | | 267 | | | 3,702 |
Substandard non-accrual | | | 687 | | | 78 | | | 646 | | | 1,147 | | | 233 | | | 4,815 | | | 1,193 | | | 8,799 |
Total retail real estate | | | 324,112 | | | 164,938 | | | 137,163 | | | 137,949 | | | 144,101 | | | 263,826 | | | 235,763 | | | 1,407,852 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Retail other |
| | | | | | | | | | | | | | | | | | | | | | | |
Pass | | | 8,357 | | | 9,430 | | | 5,600 | | | 2,516 | | | 691 | | | 440 | | | 10,290 | | | 37,324 |
Watch | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Special Mention | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Substandard | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Substandard non-accrual | | | 14 | | | 7 | | | 5 | | | 15 | | | 5 | | | 57 | | | 1 | | | 104 |
Total retail other | | | 8,371 | | | 9,437 | | | 5,605 | | | 2,531 | | | 696 | | | 497 | | | 10,291 | | | 37,428 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total portfolio loans | | $ | 2,216,953 | | $ | 1,168,069 | | $ | 798,327 | | $ | 699,747 | | $ | 441,456 | | $ | 650,638 | | $ | 838,987 | | $ | 6,814,177 |
103
As of and For The Year Ended December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | Revolving Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Risk Grade Ratings | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | ||||||||||||||||||||||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 306,578 | $ | 220,847 | $ | 159,130 | $ | 71,025 | $ | 35,927 | $ | 143,078 | $ | 526,170 | $ | 1,462,755 | ||||||||||||||||||||||||||||||||||
Watch | 78,603 | 65,703 | 21,421 | 23,919 | 7,035 | 21,293 | 78,442 | 296,416 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 792 | 8,224 | 2,917 | 1,076 | 686 | 3,274 | 29,519 | 46,488 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 8,715 | 765 | 942 | 426 | 3,734 | 1,859 | 11,292 | 27,733 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 166 | — | 117 | 84 | 128 | 407 | 1,700 | 2,602 | ||||||||||||||||||||||||||||||||||||||||||
Total commercial | 394,854 | 295,539 | 184,527 | 96,530 | 47,510 | 169,911 | 647,123 | 1,835,994 | ||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | $ | 284 | $ | — | $ | 420 | $ | — | $ | 316 | $ | 1,409 | $ | — | $ | 2,429 | ||||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 395,644 | 824,506 | 720,052 | 399,195 | 271,078 | 199,662 | 16,893 | 2,827,030 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 166,795 | 47,070 | 92,848 | 34,010 | 68,196 | 19,396 | 3,112 | 431,427 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 14,313 | 10,507 | 12,446 | 4,968 | 3,297 | 3,014 | — | 48,545 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 1,796 | 188 | 18,862 | 2,938 | 1,802 | 3,856 | 50 | 29,492 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 47 | 79 | 85 | 23 | — | 609 | — | 843 | ||||||||||||||||||||||||||||||||||||||||||
Total commercial real estate | 578,595 | 882,350 | 844,293 | 441,134 | 344,373 | 226,537 | 20,055 | 3,337,337 | ||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | — | — | — | — | — | 953 | — | 953 | ||||||||||||||||||||||||||||||||||||||||||
Real estate construction | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 204,952 | 128,462 | 85,086 | 2,616 | 1,323 | 2,934 | 22,638 | 448,011 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 2,859 | 4,406 | 507 | 322 | 41 | — | — | 8,135 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 5,327 | — | — | — | — | — | — | 5,327 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | — | — | — | — | — | 244 | — | 244 | ||||||||||||||||||||||||||||||||||||||||||
Total real estate construction | 213,138 | 132,868 | 85,593 | 2,938 | 1,364 | 3,178 | 22,638 | 461,717 | ||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Retail real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 243,400 | 376,922 | 411,723 | 156,762 | 70,099 | 256,571 | 187,420 | 1,702,897 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 1,096 | 4,137 | 2,442 | 954 | 536 | 234 | 1,745 | 11,144 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 286 | 358 | — | — | — | 380 | — | 1,024 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 69 | 72 | 292 | 49 | 80 | 997 | 236 | 1,795 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | — | 528 | 121 | 267 | 100 | 1,960 | 619 | 3,595 | ||||||||||||||||||||||||||||||||||||||||||
Total retail real estate | 244,851 | 382,017 | 414,578 | 158,032 | 70,815 | 260,142 | 190,020 | 1,720,455 | ||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | — | 5 | — | 29 | 72 | 301 | — | 407 | ||||||||||||||||||||||||||||||||||||||||||
Retail other | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 88,885 | 92,931 | 23,019 | 6,701 | 4,597 | 854 | 78,387 | 295,374 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | — | 93 | 62 | — | — | 2 | — | 157 | ||||||||||||||||||||||||||||||||||||||||||
Total retail other | 88,885 | 93,024 | 23,081 | 6,701 | 4,597 | 856 | 78,387 | 295,531 | ||||||||||||||||||||||||||||||||||||||||||
Current period charge-offs | 5 | 71 | 172 | 5 | 3 | 373 | — | 629 | ||||||||||||||||||||||||||||||||||||||||||
Total portfolio loans | $ | 1,520,323 | $ | 1,785,798 | $ | 1,552,072 | $ | 705,335 | $ | 468,659 | $ | 660,624 | $ | 958,223 | $ | 7,651,034 | ||||||||||||||||||||||||||||||||||
Total current period charge-offs | $ | 289 | $ | 76 | $ | 592 | $ | 34 | $ | 391 | $ | 3,036 | $ | — | $ | 4,418 |
As of December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year | Revolving Loans | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Risk Grade Ratings | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | ||||||||||||||||||||||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 479,893 | $ | 266,122 | $ | 136,445 | $ | 52,046 | $ | 50,764 | $ | 135,000 | $ | 548,225 | $ | 1,668,495 | ||||||||||||||||||||||||||||||||||
Watch | 54,195 | 49,382 | 3,288 | 7,201 | 1,258 | 2,160 | 84,274 | 201,758 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 1,958 | 937 | 1,642 | 974 | 1,000 | 17,024 | 23,005 | 46,540 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 8,926 | 1,165 | 570 | 6,671 | 2,382 | 5,191 | 26,282 | 51,187 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 21 | 3,292 | 226 | 135 | — | 100 | 2,400 | 6,174 | ||||||||||||||||||||||||||||||||||||||||||
Total commercial | 544,993 | 320,898 | 142,171 | 67,027 | 55,404 | 159,475 | 684,186 | 1,974,154 | ||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 883,688 | 819,133 | 478,452 | 297,525 | 161,409 | 198,419 | 13,083 | 2,851,709 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 77,346 | 56,113 | 64,282 | 96,664 | 21,592 | 5,758 | 4,700 | 326,455 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 11,943 | 5,389 | 12,386 | 1,420 | 6,917 | 5,471 | — | 43,526 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 5,340 | 13,528 | 3,454 | 1,907 | 10,248 | 62 | — | 34,539 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | — | 3,959 | 33 | — | 1,647 | 5 | — | 5,644 | ||||||||||||||||||||||||||||||||||||||||||
Total commercial real estate | 978,317 | 898,122 | 558,607 | 397,516 | 201,813 | 209,715 | 17,783 | 3,261,873 | ||||||||||||||||||||||||||||||||||||||||||
Real estate construction | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 219,112 | 191,724 | 68,015 | 1,490 | 1,901 | 1,751 | 18,911 | 502,904 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 8,530 | 12,019 | 3,169 | 48 | — | 1,398 | — | 25,164 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 2,400 | — | — | — | — | — | — | 2,400 | ||||||||||||||||||||||||||||||||||||||||||
Total real estate construction | 230,042 | 203,743 | 71,184 | 1,539 | 1,901 | 3,149 | 18,911 | 530,469 | ||||||||||||||||||||||||||||||||||||||||||
Retail real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 396,547 | 456,158 | 175,148 | 77,569 | 56,887 | 267,387 | 209,903 | 1,639,599 | ||||||||||||||||||||||||||||||||||||||||||
Watch | 2,928 | 2,991 | 1,846 | 1,444 | 1,063 | 27 | 221 | 10,520 | ||||||||||||||||||||||||||||||||||||||||||
Special Mention | 945 | — | — | — | — | 393 | — | 1,338 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 77 | 732 | 198 | 81 | 141 | 1,293 | 7 | 2,529 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 10 | 191 | 107 | 32 | 390 | 1,708 | 658 | 3,096 | ||||||||||||||||||||||||||||||||||||||||||
Total retail real estate | 400,507 | 460,072 | 177,299 | 79,126 | 58,481 | 270,808 | 210,789 | 1,657,082 | ||||||||||||||||||||||||||||||||||||||||||
Retail other | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | 134,567 | 43,512 | 13,141 | 13,086 | 5,646 | 991 | 91,028 | 301,971 | ||||||||||||||||||||||||||||||||||||||||||
Substandard non-accrual | 14 | 134 | 3 | — | — | 2 | — | 153 | ||||||||||||||||||||||||||||||||||||||||||
Total retail other | 134,581 | 43,646 | 13,144 | 13,086 | 5,646 | 993 | 91,028 | 302,124 | ||||||||||||||||||||||||||||||||||||||||||
Total portfolio loans | $ | 2,288,440 | $ | 1,926,481 | $ | 962,405 | $ | 558,294 | $ | 323,245 | $ | 644,140 | $ | 1,022,697 | $ | 7,725,702 |
An analysis of the amortized cost basis of portfolio loans that are past due and still accruing, or on a non-accrual status, is as follows (dollars in thousands):
| | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||
| | Loans past due, still accruing | | Non-accrual | ||||||||
|
| 30-59 Days |
| 60-89 Days |
| 90+Days |
| Loans | ||||
Past due and non-accrual loans | | | | | | | | | | | | |
Commercial | | $ | 363 | | $ | 10 | | $ | 213 | | $ | 7,004 |
Commercial real estate | | | 151 | | | 441 | | | — | | | 5,973 |
Real estate construction | |
| 56 | |
| — | |
| — | |
| — |
Retail real estate | | | 3,312 | | | 1,830 | | | 693 | | | 2,898 |
Retail other | |
| 82 | |
| 16 | |
| — | |
| 71 |
Total past due and non-accrual loans | | $ | 3,964 | | $ | 2,297 | | $ | 906 | | $ | 15,946 |
| | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||
| | Loans past due, still accruing | | Non-accrual | ||||||||
|
| 30-59 Days |
| 60-89 Days |
| 90+Days |
| Loans | ||||
Past due and non-accrual loans | | | | | | | | | | | | |
Commercial | | $ | 243 | | $ | — | | $ | — | | $ | 8,523 |
Commercial real estate | |
| — | | | — | | | — | | | 5,503 |
Real estate construction | |
| 237 | |
| 235 | |
| — | |
| 1 |
Retail real estate | |
| 6,248 | | | 400 | | | 1,305 | | | 8,799 |
Retail other | |
| 66 | |
| 149 | |
| 66 | |
| 104 |
Total past due and non-accrual loans | | $ | 6,794 | | $ | 784 | | $ | 1,371 | | $ | 22,930 |
As of December 31, 2023 | |||||||||||||||||||||||
Loans past due, still accruing | Non-accrual Loans | ||||||||||||||||||||||
30-59 Days | 60-89 Days | 90+Days | |||||||||||||||||||||
Past due and non-accrual loans | |||||||||||||||||||||||
Commercial loans: | |||||||||||||||||||||||
Commercial | $ | — | $ | 214 | $ | — | $ | 2,602 | |||||||||||||||
Commercial real estate | 752 | — | — | 843 | |||||||||||||||||||
Real estate construction | 24 | — | — | 244 | |||||||||||||||||||
Past due and non-accrual commercial loans | 776 | 214 | — | 3,689 | |||||||||||||||||||
Retail loans: | |||||||||||||||||||||||
Retail real estate | 2,781 | 927 | 366 | 3,595 | |||||||||||||||||||
Retail other | 886 | 195 | 9 | 157 | |||||||||||||||||||
Past due and non-accrual retail loans | 3,667 | 1,122 | 375 | 3,752 | |||||||||||||||||||
Total past due and non-accrual loans | $ | 4,443 | $ | 1,336 | $ | 375 | $ | 7,441 |
As of December 31, 2022 | |||||||||||||||||||||||
Loans past due, still accruing | Non-accrual Loans | ||||||||||||||||||||||
30-59 Days | 60-89 Days | 90+Days | |||||||||||||||||||||
Past due and non-accrual loans | |||||||||||||||||||||||
Commercial loans: | |||||||||||||||||||||||
Commercial | $ | 2 | $ | — | $ | — | $ | 6,174 | |||||||||||||||
Commercial real estate | 124 | — | — | 5,644 | |||||||||||||||||||
Past due and non-accrual commercial loans | 126 | — | — | 11,818 | |||||||||||||||||||
Retail loans: | |||||||||||||||||||||||
Retail real estate | 4,709 | 1,239 | 673 | 3,096 | |||||||||||||||||||
Retail other | 414 | 60 | — | 153 | |||||||||||||||||||
Past due and non-accrual retail loans | 5,123 | 1,299 | 673 | 3,249 | |||||||||||||||||||
Total past due and non-accrual loans | $ | 5,249 | $ | 1,299 | $ | 673 | $ | 15,067 |
Troubled Debt Restructurings
TDR loan balances are summarized as follows (dollars in thousands):
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
TDRs | | | | | | |
In compliance with modified terms | | $ | 1,801 | | $ | 3,814 |
30 – 89 days past due | | | — | | | 15 |
Non-performing TDRs | | | 551 | | | 1,249 |
Total TDRs | | $ | 2,352 | | $ | 5,078 |
104
Year Ended December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Rate Reduction1 | % of Total Class of Financing Receivable2 | Term Extension3 | % of Total Class of Financing Receivable2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Modified Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | $ | — | — | % | $ | 16,586 | 0.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | 872 | — | % | 923 | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate construction | — | — | % | 5,327 | 1.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total of loans modified during the period4 | $ | 872 | — | % | $ | 22,836 | 0.3 | % |
| | | | | ��� | | | | |
| | Newly Designated TDRs | |||||||
| | | | | Recorded Investment (2) | ||||
| | Number of | | Rate | | Payment | |||
|
| Contracts (1) |
| Modification (3) | | Modification (3) | |||
December 31, 2021 | | | | | | | | | |
Commercial | | | 1 | | $ | 364 | | $ | — |
| | | | | | | | | |
December 31, 2020 | | | | | | | | | |
Commercial | | | 3 | | $ | 130 | | $ | — |
Commercial real estate | |
| 1 | | | 651 | | | — |
Retail real estate | |
| 4 | | | — | | | 986 |
Total | | | 8 | | $ | 781 | | $ | 986 |
| | | | | | | | | |
December 31, 2019 | | | | | | | | | |
Commercial | | | 2 | | $ | 342 | | $ | — |
Commercial real estate (4) | | | 1 | | | — | | | — |
Real estate construction | | | 1 | | | 185 | | | — |
Total | | | 4 | | $ | 527 | | $ | — |
Year Ended December 31, 2023 | |||||||||||||||||||||||||||||||||||
Weighted Average Interest Rate Reduction | Weighted Average Term Extension | ||||||||||||||||||||||||||||||||||
Effects of Loan Modifications | |||||||||||||||||||||||||||||||||||
Commercial | — | 18.1 months | |||||||||||||||||||||||||||||||||
Commercial real estate | 2.50 | % | 21.0 months | ||||||||||||||||||||||||||||||||
Real estate construction | — | 12.0 months | |||||||||||||||||||||||||||||||||
Total |
2.50 | 16.8 months |
The following table provides the amortized cost basis of financing receivables that had a payment default during the year ended December 31, 2023, after having been modified during the |
Loans that were designated as TDRs and had subsequent defaults within 12 months are summarized in the table below before default for borrowers experiencing financial difficulty (dollars in thousands). A default occurs when a loan is 90 days or more past due or transferred to non-accrual.
non-accrual status.
Years Ended December 31, 2023 | |||||||||||||||||||||||||||||
Term Extension | |||||||||||||||||||||||||||||
Loans with Subsequent Defaults | |||||||||||||||||||||||||||||
Commercial | $ | 88 | |||||||||||||||||||||||||||
| | | | | | | | | |
| | Year Ended December 31, | |||||||
| | 2021 | | 2020 | | 2019 | |||
Defaults on loans designated as TDRs within the last 12 months | | | | | | | | | |
Commercial | | $ | — | | $ | — | | $ | — |
Commercial real estate | |
| — | |
| — | |
| 3,277 |
—129
As of December 31, 2023 | |||||||||||||||||||||||
Current | Non-accrual | ||||||||||||||||||||||
Modified Loans | |||||||||||||||||||||||
Commercial | $ | 16,498 | $ | 88 | |||||||||||||||||||
Commercial real estate | 1,795 | — | |||||||||||||||||||||
Real estate construction | 5,327 | — | |||||||||||||||||||||
Amortized cost of modified loans | $ | 23,620 | $ | 88 |
As of December 31, 2022 | |||||||||||
TDRs | |||||||||||
In compliance with modified terms | $ | 3,032 | |||||||||
Non-performing TDRs | 537 | ||||||||||
Total TDRs | $ | 3,569 |
Newly Designated TDRs | |||||||||||||||||
Recorded Investment1 | |||||||||||||||||
Number of Contracts | Rate Modification2 | Payment Modification2 | |||||||||||||||
December 31, 2022 | |||||||||||||||||
Commercial | 3 | $ | 136 | $ | 996 | ||||||||||||
Retail real estate | 1 | — | 517 | ||||||||||||||
Total | 4 | $ | 136 | $ | 1,513 | ||||||||||||
December 31, 2021 | |||||||||||||||||
Commercial | 1 | $ | 364 | $ | — | ||||||||||||
Total | 1 | $ | 364 | $ | — |
Loans Modified Under the CARES Act or Interagency Statement
The CARES Act provided financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. Federal regulatory agencies, in consultation with FASB, also issued an Interagency Statement to encourage financial institutions to work with borrowers affected by COVID-19, and updating guidance which allowed banks to modify loans of customers stressed by COVID-19 without having to classify the loan as a TDR. The Company’s TDR loan totals do not include the following modified loans with payment deferrals that fall under the CARES Act or Interagency Statement that suspended requirements under GAAP related to TDR classification (dollars in thousands):
105
| | | | | | | | | | | | |
| | As of December 31, 2021 | | As of December 31, 2020 | ||||||||
| | Number of | | Recorded | | Number of | | Recorded | ||||
|
| Contracts |
| Investment |
| Contracts |
| Investment | ||||
COVID-19 loan modifications | | | | | | | | | | | | |
Commercial loans: | | | | | | | | | | | | |
Full payment deferral (1) | | | — | | $ | — | | | 46 | | $ | 37,150 |
Interest-only deferrals | | | 32 | | | 128,730 | | | 23 | | | 85,270 |
Blended principal and interest and interest-only deferrals | | | — | | | — | | | 29 | | | 86,204 |
Total commercial loans | | | 32 | | | 128,730 | | | 98 | | | 208,624 |
| | | | | | | | | | | | |
Retail loans: | |
| | | | | | | | | | |
Mortgage and personal loan deferrals | | | 2 | | | 137 | | | 351 | | | 47,671 |
Purchased home equity line of credit pool deferrals | | | — | | | — | | | 1 | | | 119 |
Total retail loans | | | 2 | | | 137 | | | 352 | | | 47,790 |
| | | | | | | | | | | | |
Total COVID-19 loans modifications | | | 34 | | $ | 128,867 | | | 450 | | $ | 256,414 |
Loans Evaluated Individually
The Company evaluates loans with disparate risk characteristics on an individual basis. The following tables provide details of loans evaluated individually, segregated by category. The unpaid principal balance represents the customer outstanding contractual principal balance excluding any partial charge-offs. Recorded investment represents the amortized cost of customer balances net of any partial charge-offs recognized on the loan. Average recorded investment is calculated using the most recent four quarters (dollars in thousands):
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2021 | ||||||||||||||||
| | Unpaid | | Recorded Investment | | | | | Average | |||||||||
| | Principal | | With No | | With | | | | Related | | Recorded | ||||||
|
| Balance |
| Allowance |
| Allowance |
| Total |
| Allowance |
| Investment | ||||||
Loans evaluated individually | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 10,247 | | $ | 498 | | $ | 6,490 | | $ | 6,988 | | $ | 3,564 | | $ | 8,791 |
Commercial real estate | |
| 6,456 | | | 5,750 | | | — | |
| 5,750 | |
| — | |
| 6,390 |
Real estate construction | |
| 272 | |
| 272 | |
| — | |
| 272 | |
| — | |
| 282 |
Retail real estate | |
| 2,514 | |
| 2,345 | |
| 25 | |
| 2,370 | |
| 25 | |
| 4,093 |
Retail other | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total loans evaluated individually | | $ | 19,489 | | $ | 8,865 | | $ | 6,515 | | $ | 15,380 | | $ | 3,589 | | $ | 19,556 |
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2020 | ||||||||||||||||
| | Unpaid | | Recorded Investment | | | | | Average | |||||||||
| | Principal | | With No | | With | | | | Related | | Recorded | ||||||
|
| Balance |
| Allowance |
| Allowance |
| Total |
| Allowance |
| Investment | ||||||
Loans evaluated individually | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 16,771 | | $ | 4,001 | | $ | 4,371 | | $ | 8,372 | | $ | 1,600 | | $ | 7,920 |
Commercial real estate | |
| 7,406 | | | 6,067 | | | — | |
| 6,067 | |
| — | |
| 9,349 |
Real estate construction | |
| 292 | |
| 292 | |
| — | |
| 292 | |
| — | |
| 581 |
Retail real estate | |
| 5,873 | |
| 5,490 | |
| 25 | |
| 5,515 | |
| 25 | |
| 7,439 |
Retail other | |
| — | |
| — | |
| — | |
| — | |
| — | |
| 10 |
Total loans evaluated individually | | $ | 30,342 | | $ | 15,850 | | $ | 4,396 | | $ | 20,246 | | $ | 1,625 | | $ | 25,299 |
106
Management's evaluation as to the ultimate collectability of loans includes estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers. Collateral dependent loans are loans in which repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment. Loans are written down to the lower of cost or fair value of underlying collateral, less estimated costs to sell. The CompanyBusey had $7.9$6.1 million and $14.8$14.0 million of collateral dependent loans secured by real estate or business assets as of December 31, 2021,2023, and December 31, 2020,2022, respectively.
—131
As of December 31, 2023 | |||||||||||||||||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Average Recorded Investment | |||||||||||||||||||||||||||||||||
With No Allowance | With Allowance | Total | Related Allowance | ||||||||||||||||||||||||||||||||
Loans evaluated individually | |||||||||||||||||||||||||||||||||||
Commercial loans: | |||||||||||||||||||||||||||||||||||
Commercial | $ | 7,283 | $ | 585 | $ | 1,785 | $ | 2,370 | $ | 785 | $ | 5,244 | |||||||||||||||||||||||
Commercial real estate | 2,600 | 610 | 85 | 695 | 85 | 3,865 | |||||||||||||||||||||||||||||
Real estate construction | — | — | — | — | — | 49 | |||||||||||||||||||||||||||||
Commercial loans evaluated individually | 9,883 | 1,195 | 1,870 | 3,065 | 870 | 9,158 | |||||||||||||||||||||||||||||
Retail loans: | |||||||||||||||||||||||||||||||||||
Retail real estate | 213 | 61 | 25 | 86 | 25 | 790 | |||||||||||||||||||||||||||||
Retail loans evaluated individually | 213 | 61 | 25 | 86 | 25 | 790 | |||||||||||||||||||||||||||||
Total loans evaluated individually | $ | 10,096 | $ | 1,256 | $ | 1,895 | $ | 3,151 | $ | 895 | $ | 9,948 |
As of December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Unpaid Principal Balance | Recorded Investment | Average Recorded Investment | |||||||||||||||||||||||||||||||||||||||||||||
With No Allowance | With Allowance | Total | Related Allowance | ||||||||||||||||||||||||||||||||||||||||||||
Loans evaluated individually | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial loans: | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 9,589 | $ | 656 | $ | 5,918 | $ | 6,574 | $ | 2,476 | $ | 6,761 | |||||||||||||||||||||||||||||||||||
Commercial real estate | 8,039 | 2,334 | 3,903 | 6,237 | 2,000 | 5,219 | |||||||||||||||||||||||||||||||||||||||||
Real estate construction | 247 | 247 | — | 247 | — | 260 | |||||||||||||||||||||||||||||||||||||||||
Commercial loans evaluated individually | 17,875 | 3,237 | 9,821 | 13,058 | 4,476 | 12,240 | |||||||||||||||||||||||||||||||||||||||||
Retail loans: | |||||||||||||||||||||||||||||||||||||||||||||||
Retail real estate | 2,733 | 2,564 | 25 | 2,589 | 25 | 2,311 | |||||||||||||||||||||||||||||||||||||||||
Retail loans evaluated individually | 2,733 | 2,564 | 25 | 2,589 | 25 | 2,311 | |||||||||||||||||||||||||||||||||||||||||
Total loans evaluated individually | $ | 20,608 | $ | 5,801 | $ | 9,846 | $ | 15,647 | $ | 4,501 | $ | 14,551 |
The following tables summarizetable summarizes activity in the ACL.ACL attributable to each loan class. Allocation of a portion of the ACL to one categoryloan class does not preclude its availability to absorb losses in other categories loan classes (dollars in thousands):
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2021 | ||||||||||||||||
| | | |
| Commercial |
| Real Estate |
| Retail | | | | | | | |||
|
| Commercial |
| Real Estate |
| Construction |
| Real Estate |
| Retail Other |
| Total | ||||||
ACL beginning balance | | $ | 23,866 | | $ | 46,230 | | $ | 8,193 | | $ | 21,992 | | $ | 767 | | $ | 101,048 |
Day 1 PCD (1) | | | 3,546 | | | 336 | | | — | | | 129 | | | 167 | | | 4,178 |
Provision for credit losses | |
| (2,160) | |
| (7,651) | |
| (3,180) | |
| (4,456) | |
| 2,346 | |
| (15,101) |
Charged-off | |
| (2,026) | |
| (925) | |
| (209) | | | (1,145) | |
| (478) | |
| (4,783) |
Recoveries | |
| 629 | |
| 259 | |
| 298 | |
| 1,069 | |
| 290 | |
| 2,545 |
ACL ending balance | | $ | 23,855 | | $ | 38,249 | | $ | 5,102 | | $ | 17,589 | | $ | 3,092 | | $ | 87,887 |
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2020 | ||||||||||||||||
| | | |
| Commercial |
| Real Estate |
| Retail Real | | | | | | | |||
|
| Commercial |
| Real Estate |
| Construction |
| Estate |
| Retail Other |
| Total | ||||||
Beginning balance, prior to adoption of ASC 326-30 | | $ | 18,291 | | $ | 21,190 | | $ | 3,204 | | $ | 10,495 | | $ | 568 | | $ | 53,748 |
Adoption of ASC 326-30 | | | 715 | | | 9,306 | | | 2,954 | | | 3,292 | | | 566 | | | 16,833 |
Provision for credit losses | |
| 10,832 | |
| 17,511 | |
| 1,452 | |
| 9,050 | |
| (48) | |
| 38,797 |
Charged-off | |
| (6,376) | |
| (1,972) | |
| (18) | | | (2,057) | |
| (665) | |
| (11,088) |
Recoveries | |
| 404 | |
| 195 | |
| 601 | |
| 1,212 | |
| 346 | |
| 2,758 |
ACL ending balance | | $ | 23,866 | | $ | 46,230 | | $ | 8,193 | | $ | 21,992 | | $ | 767 | | $ | 101,048 |
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2019 | ||||||||||||||||
| | | |
| Commercial |
| Real Estate |
| Retail Real | | | | | | | |||
|
| Commercial |
| Real Estate |
| Construction |
| Estate |
| Retail Other |
| Total | ||||||
Beginning balance | | $ | 17,829 | | $ | 21,137 | | $ | 2,723 | | $ | 8,471 | | $ | 488 | | $ | 50,648 |
Provision for credit losses | |
| 4,893 | |
| 3,002 | |
| (70) | |
| 2,102 | |
| 479 | |
| 10,406 |
Charged-off | |
| (6,478) | |
| (3,257) | |
| — | | | (1,162) | |
| (863) | |
| (11,760) |
Recoveries | |
| 2,047 | |
| 308 | |
| 551 | |
| 1,084 | |
| 464 | |
| 4,454 |
Ending balance | | $ | 18,291 | | $ | 21,190 | | $ | 3,204 | | $ | 10,495 | | $ | 568 | | $ | 53,748 |
107
Commercial | Commercial Real Estate | Real Estate Construction | Retail Real Estate | Retail Other | Total | ||||||||||||||||||||||||||||||
ACL Balance, December 31, 2020 | $ | 23,866 | $ | 46,230 | $ | 8,193 | $ | 21,992 | $ | 767 | $ | 101,048 | |||||||||||||||||||||||
Day 1 PCD1 | 3,546 | 336 | — | 129 | 167 | 4,178 | |||||||||||||||||||||||||||||
Provision for credit losses | (2,160) | (7,651) | (3,180) | (4,456) | 2,346 | (15,101) | |||||||||||||||||||||||||||||
Charged-off | (2,026) | (925) | (209) | (1,145) | (478) | (4,783) | |||||||||||||||||||||||||||||
Recoveries | 629 | 259 | 298 | 1,069 | 290 | 2,545 | |||||||||||||||||||||||||||||
ACL balance, December 31, 2021 | 23,855 | 38,249 | 5,102 | 17,589 | 3,092 | 87,887 | |||||||||||||||||||||||||||||
Provision for credit losses | 497 | 892 | 1,142 | 219 | 1,873 | 4,623 | |||||||||||||||||||||||||||||
Charged-off | (1,069) | (1,375) | (23) | (251) | (461) | (3,179) | |||||||||||||||||||||||||||||
Recoveries | 577 | 533 | 236 | 636 | 295 | 2,277 | |||||||||||||||||||||||||||||
ACL balance, December 31, 2022 | 23,860 | 38,299 | 6,457 | 18,193 | 4,799 | 91,608 | |||||||||||||||||||||||||||||
Provision for credit losses | (727) | (2,455) | (1,465) | 7,922 | (876) | 2,399 | |||||||||||||||||||||||||||||
Charged-off | (2,429) | (953) | — | (407) | (629) | (4,418) | |||||||||||||||||||||||||||||
Recoveries | 552 | 574 | 171 | 590 | 264 | 2,151 | |||||||||||||||||||||||||||||
ACL balance, December 31, 2023 | $ | 21,256 | $ | 35,465 | $ | 5,163 | $ | 26,298 | $ | 3,558 | $ | 91,740 |
The following tables present the ACL and amortized cost of portfolio loans by loan category and class (dollars in thousands):
As of December 31, 2023 | |||||||||||||||||||||||||||||||||||
Portfolio Loans | ACL Attributed to Portfolio Loans | ||||||||||||||||||||||||||||||||||
Collectively Evaluated for Impairment | Individually Evaluated for Impairment | Total | Collectively Evaluated for Impairment | Individually Evaluated for Impairment | Total | ||||||||||||||||||||||||||||||
Portfolio loans and related ACL | |||||||||||||||||||||||||||||||||||
Commercial loans: | |||||||||||||||||||||||||||||||||||
Commercial | $ | 1,833,624 | $ | 2,370 | $ | 1,835,994 | $ | 20,471 | $ | 785 | $ | 21,256 | |||||||||||||||||||||||
Commercial real estate | 3,336,642 | 695 | 3,337,337 | 35,380 | 85 | 35,465 | |||||||||||||||||||||||||||||
Real estate construction | 461,717 | — | 461,717 | 5,163 | — | 5,163 | |||||||||||||||||||||||||||||
Commercial loans and related ACL | 5,631,983 | 3,065 | 5,635,048 | 61,014 | 870 | 61,884 | |||||||||||||||||||||||||||||
Retail loans: | |||||||||||||||||||||||||||||||||||
Retail real estate | 1,720,369 | 86 | 1,720,455 | 26,273 | 25 | 26,298 | |||||||||||||||||||||||||||||
Retail other | 295,531 | — | 295,531 | 3,558 | — | 3,558 | |||||||||||||||||||||||||||||
Retail loans and related ACL | 2,015,900 | 86 | 2,015,986 | 29,831 | 25 | 29,856 | |||||||||||||||||||||||||||||
Portfolio loans and related ACL | $ | 7,647,883 | $ | 3,151 | $ | 7,651,034 | $ | 90,845 | $ | 895 | $ | 91,740 |
As of December 31, 2022 | |||||||||||||||||||||||||||||||||||
Portfolio Loans | ACL Attributed to Portfolio Loans | ||||||||||||||||||||||||||||||||||
Collectively Evaluated for Impairment | Individually Evaluated for Impairment | Total | Collectively Evaluated for Impairment | Individually Evaluated for Impairment | Total | ||||||||||||||||||||||||||||||
Portfolio loans and related ACL | |||||||||||||||||||||||||||||||||||
Commercial loans: | |||||||||||||||||||||||||||||||||||
Commercial | $ | 1,967,580 | $ | 6,574 | $ | 1,974,154 | $ | 21,384 | $ | 2,476 | $ | 23,860 | |||||||||||||||||||||||
Commercial real estate | 3,255,636 | 6,237 | 3,261,873 | 36,299 | 2,000 | 38,299 | |||||||||||||||||||||||||||||
Real estate construction | 530,222 | 247 | 530,469 | 6,457 | — | 6,457 | |||||||||||||||||||||||||||||
Commercial loans and related ACL | 5,753,438 | 13,058 | 5,766,496 | 64,140 | 4,476 | 68,616 | |||||||||||||||||||||||||||||
Retail loans: | |||||||||||||||||||||||||||||||||||
Retail real estate | 1,654,493 | 2,589 | 1,657,082 | 18,168 | 25 | 18,193 | |||||||||||||||||||||||||||||
Retail other | 302,124 | — | 302,124 | 4,799 | — | 4,799 | |||||||||||||||||||||||||||||
Retail loans and related ACL | 1,956,617 | 2,589 | 1,959,206 | 22,967 | 25 | 22,992 | |||||||||||||||||||||||||||||
Portfolio loans and related ACL | $ | 7,710,055 | $ | 15,647 | $ | 7,725,702 | $ | 87,107 | $ | 4,501 | $ | 91,608 |
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||||||||
| | Portfolio Loans | | ACL Attributed to Portfolio Loans | ||||||||||||||
| | Collectively | | Individually | | | | Collectively | | Individually | | | | |||||
| | Evaluated for | | Evaluated for | | | | Evaluated for | | Evaluated for | | | ||||||
|
| Impairment |
| Impairment |
| Total |
| Impairment |
| Impairment |
| Total | ||||||
Portfolio loan category | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,936,898 | | $ | 6,988 | | $ | 1,943,886 | | $ | 20,291 | | $ | 3,564 | | $ | 23,855 |
Commercial real estate | | | 3,114,057 | | | 5,750 | | | 3,119,807 | | | 38,249 | | | — | | | 38,249 |
Real estate construction | | | 385,724 | | | 272 | | | 385,996 | | | 5,102 | | | — | | | 5,102 |
Retail real estate | | | 1,510,606 | | | 2,370 | | | 1,512,976 | | | 17,564 | | | 25 | | | 17,589 |
Retail other | | | 226,333 | | | — | | | 226,333 | | | 3,092 | | | — | | | 3,092 |
Total portfolio loans and related ACL | | $ | 7,173,618 | | $ | 15,380 | | $ | 7,188,998 | | $ | 84,298 | | $ | 3,589 | | $ | 87,887 |
| | | | | | | | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||||||||
| | Portfolio Loans | | ACL Attributed to Portfolio Loans | ||||||||||||||
| | Collectively | | Individually | | | | Collectively | | Individually | | | | |||||
| | Evaluated for | | Evaluated for | | | | Evaluated for | | Evaluated for | | | ||||||
|
| Impairment |
| Impairment |
| Total |
| Impairment |
| Impairment |
| Total | ||||||
Portfolio loan category | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 2,006,204 | | $ | 8,372 | | $ | 2,014,576 | | $ | 22,266 | | $ | 1,600 | | $ | 23,866 |
Commercial real estate | | | 2,886,468 | | | 6,067 | | | 2,892,535 | | | 46,230 | | | — | | | 46,230 |
Real estate construction | | | 461,494 | | | 292 | | | 461,786 | | | 8,193 | | | — | | | 8,193 |
Retail real estate | | | 1,402,337 | | | 5,515 | | | 1,407,852 | | | 21,967 | | | 25 | | | 21,992 |
Retail other | | | 37,428 | | | — | | | 37,428 | | | 767 | | | — | | | 767 |
Total portfolio loans and related ACL | | $ | 6,793,931 | | $ | 20,246 | | $ | 6,814,177 | | $ | 99,423 | | $ | 1,625 | | $ | 101,048 |
—
Note 5. Other Real Estate Owned and Other Repossessed Assets
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
OREO | |||||||||||
Residential | $ | 125 | $ | 70 | |||||||
Total OREO | 125 | 70 | |||||||||
Other repossessed assets | — | 780 | |||||||||
OREO and other repossessed assets | $ | 125 | $ | 850 |
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
OREO | | | | | | |
Commercial |
| $ | 2,839 |
| $ | 4,206 |
Residential |
| | 235 |
| | 364 |
Total OREO | | | 3,074 | | | 4,570 |
Other repossessed assets | |
| 1,342 | |
| 1 |
OREO and other repossessed assets | | $ | 4,416 | | $ | 4,571 |
The following table summarizes activity related tochanges in the balance OREO and other repossessed assets (dollars in thousands):
| | | | | | |
|
| As of and for the Years Ended December 31, | ||||
|
| 2021 |
| 2020 | ||
Changes in OREO and other repossessed assets |
| | | | | |
OREO and other repossessed assets beginning balance |
| $ | 4,571 |
| $ | 3,057 |
Additions, transfers from loans | |
| 1,610 | |
| 2,867 |
Sales | |
| (1,721) | |
| (1,282) |
Cash payments collected | |
| (43) | |
| (3) |
Impairment of OREO and other repossessed assets | | | (1) | | | (68) |
OREO and other repossessed assets ending balance | | $ | 4,416 | | $ | 4,571 |
108
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
OREO and other repossessed assets at January 1 | $ | 850 | $ | 4,416 | $ | 4,571 | |||||||||||
Additions, transfers from loans | 189 | 175 | 1,610 | ||||||||||||||
Sales | (770) | (2,565) | (1,721) | ||||||||||||||
Cash payments collected | (44) | (565) | (43) | ||||||||||||||
Impairment of OREO and other repossessed assets | (100) | (611) | (1) | ||||||||||||||
OREO and other repossessed assets at December 31 | $ | 125 | $ | 850 | $ | 4,416 |
At December 31, 2021, the CompanyBusey had $0.2 million of residential real estate in the process of foreclosure. The Companyforeclosure totaling $0.3 million as of December 31, 2023, and $1.1 million as of December 31, 2022. Busey has elected to follow Federal Housing Finance Agency guidelines on single-family foreclosures and real estate owned evictions on portfolio loans, as well as all COVID-19 related state foreclosureloans.
Note 6. Premisesmay have income from, OREO and Equipment, net
other repossessed assets. Upon sale, Busey may recognize a gain or loss on the sale of OREO and other repossessed assets. The table below summarizes the effect of these activities, included in Other expense on Busey’s
(dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Activity for OREO and other repossessed assets | |||||||||||||||||
Net loss (gain) on sales | $ | 54 | $ | 665 | $ | 173 | |||||||||||
Operating expenses, net of income | 67 | 248 | 468 | ||||||||||||||
Activity for OREO and other repossessed assets | $ | 121 | $ | 913 | $ | 641 |
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Premises and equipment | |||||||||||
Land and improvements | $ | 43,076 | $ | 44,193 | |||||||
Buildings and improvements | 128,322 | 128,669 | |||||||||
Furniture and equipment | 51,077 | 52,991 | |||||||||
Premises and equipment, gross | 222,475 | 225,853 | |||||||||
Accumulated depreciation | 99,881 | 99,329 | |||||||||
Premises and equipment, net | $ | 122,594 | $ | 126,524 |
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Premises and equipment | | | | | | |
Land and improvements | | $ | 45,595 | | $ | 40,762 |
Buildings and improvements | |
| 132,011 | |
| 130,610 |
Furniture and equipment | |
| 54,473 | |
| 53,766 |
Premises and equipment, gross | |
| 232,079 | |
| 225,138 |
Accumulated depreciation | |
| 95,932 | |
| 89,947 |
Premises and equipment, net | | $ | 136,147 | | $ | 135,191 |
Depreciation expense was $11.6 million, $12.3 million, and $11.9 millionis presented in the table below for the yearsperiods indicated (dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Depreciation expense | $ | 9,488 | $ | 10,482 | $ | 11,610 |
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Lease balances | |||||||||||
Right of use assets | $ | 11,027 | $ | 12,829 | |||||||
Lease liabilities | 11,308 | 12,995 | |||||||||
Supplemental information | |||||||||||
Year through which lease terms extend | 2037 | 2037 | |||||||||
Weighted average remaining lease term | 8.39 years | 8.90 years | |||||||||
Weighted average discount rate | 3.59 | % | 3.45 | % |
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Lease costs | |||||||||||||||||
Operating lease costs | $ | 2,395 | $ | 2,495 | $ | 2,464 | |||||||||||
Variable lease costs | 38 | 365 | 540 | ||||||||||||||
Short-term lease costs | 50 | 22 | 49 | ||||||||||||||
Total lease cost1 | $ | 2,483 | $ | 2,882 | $ | 3,053 | |||||||||||
Cash flows related to leases | |||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
Operating lease cash flows – Fixed payments | $ | 2,290 | $ | 3,080 | $ | 2,417 | |||||||||||
Operating lease cash flows – Liability reduction | 1,883 | 2,285 | 2,217 | ||||||||||||||
Right of use assets obtained during the period in exchange for operating lease liabilities2 | 231 | 6,206 | 5,818 |
other commitments. Future undiscounted lease payments with initial terms of one year or more, are as follows
As of December 31, 2023 | |||||
Rent commitments | |||||
2024 | $ | 2,023 | |||
2025 | 1,768 | ||||
2026 | 1,443 | ||||
2027 | 1,277 | ||||
2028 | 1,255 | ||||
Thereafter | 5,478 | ||||
Total undiscounted cash flows | 13,244 | ||||
Less: Amounts representing interest | 1,936 | ||||
Present value of net future minimum lease payments | $ | 11,308 |
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Rental income | $ | 724 | $ | 707 | $ | 566 |
Other than goodwill, the Company does not have any other intangible assets that are not amortized. The Company’s
years ended December 31, 2023, or 2022.
During 2021, in connection with the acquisition of CAC, the company recorded goodwill totaling $6.3 million and other intangible assets totaling $8.8 million in the Banking operating segment, as well as other intangible assets totaling $8.5 million in the Wealth Management segment. During 2020, the Company recorded other intangible assets totaling $0.4 million in the Wealth Management operating segment in connection with an asset acquisition.
The carrying amount of goodwill by operating segment is as follows (dollars in thousands):
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Goodwill | | | | | | |
Banking | | $ | 294,773 | | $ | 288,436 |
FirsTech | | | 8,992 | | | 8,992 |
Wealth Management | |
| 14,108 | |
| 14,108 |
Total goodwill | | $ | 317,873 | | $ | 311,536 |
109
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Goodwill | |||||||||||
Banking | $ | 294,773 | $ | 294,773 | |||||||
Wealth Management | 14,108 | 14,108 | |||||||||
FirsTech | 8,992 | 8,992 | |||||||||
Total goodwill | $ | 317,873 | $ | 317,873 |
FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Core deposit and customer relationship intangible assets are amortized over the estimated period benefited.during which Busey expects to benefit from the assets. Intangible asset disclosures are as follows (dollars in thousands):
As of December 31, 2023 | |||||||||||||||||
Core deposit intangible | Customer relationship intangible | Total | |||||||||||||||
Intangible Assets | |||||||||||||||||
Intangible assets, gross | $ | 99,065 | $ | 33,138 | $ | 132,203 | |||||||||||
Accumulated amortization | 71,092 | 25,120 | 96,212 | ||||||||||||||
Intangible assets, net | $ | 27,973 | $ | 8,018 | $ | 35,991 |
As of December 31, 2022 | |||||||||||||||||
Core deposit intangible | Customer relationship intangible | Total | |||||||||||||||
Intangible Assets | |||||||||||||||||
Intangible assets, gross | $ | 99,065 | $ | 33,138 | $ | 132,203 | |||||||||||
Accumulated amortization | 63,476 | 22,304 | 85,780 | ||||||||||||||
Intangible assets, net | $ | 35,589 | $ | 10,834 | $ | 46,423 |
| | | | | | | | | | | | | | | | | | |
| | As of and for the Years Ended December 31, | ||||||||||||||||
| | 2021 | | 2020 | ||||||||||||||
| | | | | Customer | | | | | | | | Customer | | | | ||
| | Core deposit | | relationship | | | | Core deposit | | relationship | | | | |||||
|
| intangible |
| intangible |
| Total |
| intangible |
| intangible |
| Total | ||||||
Intangibles | | | | | | | | | | | | | | | | | | |
Intangible assets, gross | | $ | 99,065 | | $ | 33,138 | | $ | 132,203 | | $ | 90,256 | | $ | 24,608 | | $ | 114,864 |
Accumulated amortization | | | 55,161 | | | 18,991 | | | 74,152 | | | 46,909 | | | 15,970 | | | 62,879 |
Intangible assets, net | | $ | 43,904 | | $ | 14,147 | | $ | 58,051 | | $ | 43,347 | | $ | 8,638 | | $ | 51,985 |
| | | | | | | | | | | | | | | | | | |
Amortization expense | | $ | 8,253 | | $ | 3,021 | | $ | 11,274 | | $ | 7,753 | | $ | 2,255 | | $ | 10,008 |
—138
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Amortization Expense | |||||||||||||||||
Core deposit intangible | $ | 7,616 | $ | 8,315 | $ | 8,253 | |||||||||||
Customer relationship intangible | 2,816 | 3,313 | 3,021 | ||||||||||||||
Amortization of intangible assets | $ | 10,432 | $ | 11,628 | $ | 11,274 |
As of December 31, 2023 | |||||||||||||||||
Core deposit intangible | Customer relationship intangible | Total | |||||||||||||||
Estimated amortization expense | |||||||||||||||||
2024 | $ | 6,902 | $ | 2,318 | $ | 9,220 | |||||||||||
2025 | 5,956 | 1,887 | 7,843 | ||||||||||||||
2026 | 5,227 | 1,479 | 6,706 | ||||||||||||||
2027 | 4,490 | 1,091 | 5,581 | ||||||||||||||
2028 | 3,740 | 703 | 4,443 | ||||||||||||||
Thereafter | 1,658 | 540 | 2,198 | ||||||||||||||
Total estimated amortization expense | $ | 27,973 | $ | 8,018 | $ | 35,991 |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | As of December 31, 2021 | |||||||
| | | | | | | | | | | | | | Customer | | | | |
| | | | | | | | | | | Core deposit | | relationship | | | |||
| | | | | | | | | | | intangible | | intangible | | Total | |||
Estimated amortization expense | | | | | | | | | | | | | | | | |||
2022 | | | | | | | | | | | $ | 8,315 | | $ | 3,313 | | $ | 11,628 |
2023 | | | | | | | | | | | | 7,616 | |
| 2,816 | |
| 10,432 |
2024 | | | | | | | | | | | | 6,902 | |
| 2,318 | |
| 9,220 |
2025 | | | | | | | | | | | | 5,956 | |
| 1,887 | |
| 7,843 |
2026 | | | | | | | | | | | | 5,227 | | | 1,479 | | | 6,706 |
Thereafter | | | | | | | | | | | | 9,888 | | | 2,334 | | | 12,222 |
Total estimated amortization expense | | | | | | | | $ | 43,904 | | $ | 14,147 | | $ | 58,051 |
NoteNOTE 8. Deposits
DEPOSITS
The composition of Busey’s deposits is as follows (dollars in thousands):
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Deposits | |||||||||||
Noninterest-bearing demand deposits | $ | 2,834,655 | $ | 3,393,666 | |||||||
Interest-bearing transaction deposits | 2,717,139 | 2,857,818 | |||||||||
Saving deposits and money market deposits | 2,920,088 | 2,964,421 | |||||||||
Time deposits | 1,819,274 | 855,375 | |||||||||
Total deposits | $ | 10,291,156 | $ | 10,071,280 |
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Deposits | | | | | | |
Demand deposits, noninterest-bearing | | $ | 3,670,267 | | $ | 2,552,039 |
Interest-bearing transaction deposits | |
| 2,720,417 | |
| 2,263,093 |
Saving deposits and money market deposits | |
| 3,442,244 | | | 2,743,369 |
Time deposits | |
| 935,649 | |
| 1,119,348 |
Total deposits | | $ | 10,768,577 | | $ | 8,677,849 |
Additional information about ourBusey’s deposits is as follows (dollars in thousands):
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Brokered savings deposits and money market deposits | | $ | 2,248 | | $ | 2,251 |
Brokered time deposits | | | 266 | | | 5,257 |
Aggregate amount of time deposits with a minimum denomination of $100,000 | | | 454,649 | | | 568,735 |
Aggregate amount of time deposits with a minimum denomination that meets or exceeds the FDIC insurance limit of $250,000 | | | 137,449 | | | 192,563 |
110
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Brokered savings deposits and money market deposits | $ | 6,001 | $ | 1,303 | |||||||
Brokered time deposits | 285 | 275 | |||||||||
Total time deposits with a minimum denomination of $100,000 | 1,072,189 | 416,445 | |||||||||
Total time deposits with a minimum denomination that meets or exceeds the FDIC insurance limit of $250,000 | 386,286 | 120,377 |
As of December 31, 2023 | |||||
Time deposits by schedule of maturities | |||||
2024 | $ | 1,705,846 | |||
2025 | 68,738 | ||||
2026 | 21,222 | ||||
2027 | 12,470 | ||||
2028 | 10,451 | ||||
Thereafter | 547 | ||||
Time deposits | $ | 1,819,274 |
| | | |
|
| As of | |
| | December 31, 2021 | |
Time deposits by schedule of maturities | | | |
2022 |
| $ | 643,826 |
2023 | |
| 191,995 |
2024 | |
| 70,111 |
2025 | |
| 16,149 |
2026 | |
| 12,834 |
Thereafter | |
| 734 |
Time deposits | | $ | 935,649 |
NoteNOTE 9. Borrowings
BORROWINGS
Securities sold under agreementsSold Under Agreements to repurchase
Repurchase
Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature daily. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The underlying securities are held by the Company’sBusey’s safekeeping agent. The CompanyBusey may be required to provide additional collateral based on fluctuations in the fair value of the underlying securities. Securities sold under agreements to repurchase were as follows (dollars in thousands):
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Securities sold under agreements to repurchase | $ | 187,396 | $ | 229,806 | |||||||
Weighted average rate for securities sold under agreements to repurchase | 3.26 | % | 1.91 | % |
| | | | | | | |
|
| As of December 31, | | ||||
|
| 2021 |
| 2020 |
| ||
Securities sold under agreements to repurchase | | $ | 270,139 | | $ | 175,614 | |
Weighted average rate for securities sold under agreements to repurchase | | | 0.08 | % | | 0.13 | % |
Term Loan
Short-term Borrowings
due within 12 months. Short-term borrowings are summarized as follows
(dollars in thousands):
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Short-term borrowings | | | | | | |
FHLB advances maturing in less than one year from date of origination, and the current portion of long-term FHLB advances due within 12 months | | $ | 5,678 | | $ | 4,658 |
Term Loan, current portion due within 12 months | | | 12,000 | | | — |
Total short-term debt | | $ | 17,678 | | $ | 4,658 |
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Short-term borrowings | |||||||||||
FHLB advances maturing in less than one year from date of origination, and the current portion of long-term FHLB advances due within 12 months | $ | — | $ | 339,054 | |||||||
Term Loan, current portion due within 12 months | 12,000 | 12,000 | |||||||||
Total short-term debt | $ | 12,000 | $ | 351,054 |
111
TableBusey’s long-term debt consists of Contents
FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Long-term Debt
loans maturing more than one year from the loan origination date, excluding the current portion that is due within 12 months. Long-term debt is summarized as follows (dollars in thousands):
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Long-term debt | |||||||||||
Term Loan | $ | 18,000 | $ | 30,000 | |||||||
Total long-term debt | $ | 18,000 | $ | 30,000 |
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Long-term debt | | | | | | |
Notes payable, FHLB, original maturity of 5 years, collateralized by FHLB deposits, residential and commercial real estate loans and FHLB stock | | $ | 4,056 | | $ | 4,757 |
Term Loan | | | 42,000 | | | — |
Total long-term debt | | $ | 46,056 | | $ | 4,757 |
Subordinated Notes
As of December 31, 2021, and 2020, funds borrowed from the FHLB, listed above, consisted of one variable-rate note maturing May 2023, with an interest rate of 3.04%.
Senior and subordinated notes
On May 25, 2017, the Company issued $40.0 million of 3.75% senior notes that mature on May 25, 2022. The senior notes are payable semi-annually on each May 25 and November 25, commencing on November 25, 2017. The senior notes are not subject to optional redemption by the Company. Additionally, on May 25, 2017, the Company issued $60.0 million of fixed-to-floating rate subordinated notes that mature on May 25, 2027. The subordinated notes, which qualify as Tier 2 capital for First Busey, bear interest at an annual rate of 4.75% for the first five years after issuance and thereafter bear interest at a floating rate equal to the 3-month LIBOR plus a spread of 2.919%, as calculated on each applicable determination date. The subordinated notes are payable semi-annually on each May 25 and November 25, commencing on November 25, 2017, during the five-year fixed term and thereafter on February 25, May 25, August 25, and November 25 of each year, commencing on August 25, 2022. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after May 25, 2022. The senior notes and subordinated notes are unsecured obligations of the Company.
—141
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Unamortized debt issuance costs | | | | | | |
Senior notes issued in 2017 | | $ | 56 | | $ | 191 |
Subordinated notes issued in 2017 | | | 549 | | | 651 |
Subordinated notes issued in 2020 | | | 1,678 | | | 2,123 |
Total unamortized debt issuance costs | | $ | 2,283 | | $ | 2,965 |
112
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Unamortized debt issuance costs | |||||||||||
Subordinated notes issued in 2020 | $ | 735 | $ | 1,220 | |||||||
Subordinated notes issued in 2022 | 1,383 | 1,742 | |||||||||
Total unamortized debt issuance costs | $ | 2,118 | $ | 2,962 |
FIRST BUSEY CORPORATION
NOTESNOTE 10. JUNIOR SUBORDINATED DEBT OWED TO CONSOLIDATED FINANCIAL STATEMENTS
UNCONSOLIDATED TRUSTS
Note 10. Junior Subordinated Debt Owed to Unconsolidated Trusts
First Busey maintains statutory trusts for the sole purpose of issuing and servicing trust preferred securities and related trust common securities. Proceeds from such issuances were used by the trusts to purchase junior subordinated notes of the Company,issued by Busey, which are the sole assets of each trust. Concurrent with the issuance of the trust preferred securities, the CompanyBusey issued guarantees for the benefit of the holders of the trust preferred securities. The trust preferred securities are instruments that qualify and are treated by the Company, as Tier 1 regulatory capital. The CompanyBusey owns all of the common securities of each trust. The trust preferred securities issued by each trust rank equally with the common securities in right of payment, except that if an event of default under the indenture governing the notes has occurred and is continuing, the preferred securities will rank senior to the common securities in right of payment. In connection with the Pulaski acquisition in 2016, the CompanyBusey acquired similar statutory trusts previously maintained by Pulaski and the fair value adjustment is being accreted over their weighted average remaining life, with a balance of $3.0$2.6 million remaining to be accreted. The CompanyBusey had $71.6$72.0 million and $71.5$71.8 million of junior subordinated debt owed to unconsolidated trusts at December 31, 2021,2023, and 2020,2022, respectively, maturing in 2034 through 2036.
The
REGULATORY CAPITAL
The CompanyBusey and Busey Bankits subsidiary bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory – mandatory—and possibly additional discretionary – discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements.Busey's Consolidated Financial Statements. Capital amounts and classification also are subject to qualitative judgments by regulators about components, risk weightings, and other factors.
Current Expected Credit Loss Model
113
On June 1, 2020, the Company issued $125.0 million of fixed-to-floating rate subordinated notes that mature on June 1, 2030, which qualify as Tier 2 capital for regulatory purposes.
Capital Amounts and Ratios
| | | | | | | | | | | | | | | | |
| | As of December 31, 2021 | | |||||||||||||
| | | | | | | | | | | | Minimum | | |||
| | | | | | | Minimum | | To Be Well |
| ||||||
| | Actual | | Capital Requirement | | Capitalized |
| |||||||||
|
| Amount |
| Ratio |
| Amount |
| Ratio |
| Amount |
| Ratio |
| |||
Common Equity Tier 1 Capital to Risk Weighted Assets | | | | | | | | | | | | |||||
Consolidated | | $ | 995,874 |
| 11.85 | % | $ | 378,334 |
| 4.50 | % | $ | 546,482 |
| 6.50 | % |
Busey Bank | | $ | 1,241,303 |
| 14.81 | % | $ | 377,096 |
| 4.50 | % | $ | 544,695 |
| 6.50 | % |
| | | | | | | | | | | | | | | | |
Tier 1 Capital to Risk Weighted Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 1,069,874 |
| 12.73 | % | $ | 504,445 |
| 6.00 | % | $ | 672,594 |
| 8.00 | % |
Busey Bank | | $ | 1,241,303 |
| 14.81 | % | $ | 502,795 |
| 6.00 | % | $ | 670,394 |
| 8.00 | % |
| | | | | | | | | | | | | | | | |
Total Capital to Risk Weighted Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 1,320,187 |
| 15.70 | % | $ | 672,594 |
| 8.00 | % | $ | 840,742 |
| 10.00 | % |
Busey Bank | | $ | 1,306,616 |
| 15.59 | % | $ | 670,394 |
| 8.00 | % | $ | 837,992 |
| 10.00 | % |
| | | | | | | | | | | | | | | | |
Leverage Ratio of Tier 1 Capital to Average Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 1,069,874 |
| 8.52 | % | $ | 502,336 |
| 4.00 | % |
| N/A |
| N/A | |
Busey Bank | | $ | 1,241,303 |
| 9.91 | % | $ | 501,104 |
| 4.00 | % | $ | 626,379 |
| 5.00 | % |
| | | | | | | | | | | | | | | | |
| | As of December 31, 2020 | | |||||||||||||
| | | | | | | | | | | | Minimum | | |||
| | | | | | | Minimum | | To Be Well | | ||||||
| | Actual | | Capital Requirement | | Capitalized | | |||||||||
|
| Amount |
| Ratio |
| Amount |
| Ratio |
| Amount |
| Ratio |
| |||
Common Equity Tier 1 Capital to Risk Weighted Assets | | | | | | | | | | | | |||||
Consolidated | | $ | 909,033 |
| 12.43 | % | $ | 329,071 |
| 4.50 | % | $ | 475,325 |
| 6.50 | % |
Busey Bank | | $ | 1,053,910 |
| 14.44 | % | $ | 328,546 |
| 4.50 | % | $ | 474,567 |
| 6.50 | % |
| | | | | | | | | | | | | | | | |
Tier 1 Capital to Risk Weighted Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 983,033 |
| 13.44 | % | $ | 438,761 |
| 6.00 | % | $ | 585,015 |
| 8.00 | % |
Busey Bank | | $ | 1,053,910 |
| 14.44 | % | $ | 438,062 |
| 6.00 | % | $ | 584,082 |
| 8.00 | % |
| | | | | | | | | | | | | | | | |
Total Capital to Risk Weighted Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 1,245,997 |
| 17.04 | % | $ | 585,015 |
| 8.00 | % | $ | 731,269 |
| 10.00 | % |
Busey Bank | | $ | 1,131,875 |
| 15.50 | % | $ | 584,082 |
| 8.00 | % | $ | 730,103 |
| 10.00 | % |
| | | | | | | | | | | | | | | | |
Leverage Ratio of Tier 1 Capital to Average Assets | | | | | | | | | | | | | | | | |
Consolidated | | $ | 983,033 |
| 9.79 | % | $ | 401,717 |
| 4.00 | % |
| N/A |
| N/A | |
Busey Bank | | $ | 1,053,910 |
| 10.52 | % | $ | 400,581 |
| 4.00 | % | $ | 500,727 |
| 5.00 | % |
114
As of December 31, 2023 | |||||||||||||||||||||||||||||||||||
Actual | Minimum Capital Requirement | Minimum To Be Well Capitalized | |||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||
Common equity Tier 1 capital to risk weighted assets | |||||||||||||||||||||||||||||||||||
First Busey | $ | 1,155,973 | 13.09 | % | $ | 397,331 | 4.50 | % | $ | 573,923 | 6.50 | % | |||||||||||||||||||||||
Busey Bank | $ | 1,362,962 | 15.48 | % | $ | 396,128 | 4.50 | % | $ | 572,185 | 6.50 | % | |||||||||||||||||||||||
Tier 1 capital to risk weighted assets | |||||||||||||||||||||||||||||||||||
First Busey | $ | 1,229,973 | 13.93 | % | $ | 529,775 | 6.00 | % | $ | 706,367 | 8.00 | % | |||||||||||||||||||||||
Busey Bank | $ | 1,362,962 | 15.48 | % | $ | 528,171 | 6.00 | % | $ | 704,228 | 8.00 | % | |||||||||||||||||||||||
Total capital to risk weighted assets | |||||||||||||||||||||||||||||||||||
First Busey | $ | 1,540,318 | 17.44 | % | $ | 706,367 | 8.00 | % | $ | 882,958 | 10.00 | % | |||||||||||||||||||||||
Busey Bank | $ | 1,448,307 | 16.45 | % | $ | 704,228 | 8.00 | % | $ | 880,285 | 10.00 | % | |||||||||||||||||||||||
Leverage ratio of Tier 1 capital to average assets | |||||||||||||||||||||||||||||||||||
First Busey | $ | 1,229,973 | 10.08 | % | $ | 488,315 | 4.00 | % | N/A | N/A | |||||||||||||||||||||||||
Busey Bank | $ | 1,362,962 | 11.19 | % | $ | 487,103 | 4.00 | % | $ | 608,879 | 5.00 | % |
As of December 31, 2022 Actual Minimum
Capital RequirementMinimum
To Be Well
CapitalizedAmount Ratio Amount Ratio Amount Ratio Common equity Tier 1 capital to risk weighted assets First Busey $ 1,081,686 11.96 % $ 406,980 4.50 % $ 587,861 6.50 % Busey Bank $ 1,306,716 14.49 % $ 405,736 4.50 % $ 586,063 6.50 % Tier 1 capital to risk weighted assets First Busey $ 1,155,686 12.78 % $ 542,640 6.00 % $ 723,521 8.00 % Busey Bank $ 1,306,716 14.49 % $ 540,981 6.00 % $ 721,308 8.00 % Total capital to risk weighted assets First Busey $ 1,457,994 16.12 % $ 723,521 8.00 % $ 904,401 10.00 % Busey Bank $ 1,384,024 15.35 % $ 721,308 8.00 % $ 901,635 10.00 % Leverage ratio of Tier 1 capital to average assets First Busey $ 1,155,686 9.45 % $ 489,124 4.00 % N/A N/A Busey Bank $ 1,306,716 10.72 % $ 487,541 4.00 % $ 609,426 5.00 %
TheSubsidiary Dividend Payments
respectively.
INCOME TAXES
The componentsComponents of Busey’s income taxestax expense consist of the following (dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Income tax expense | |||||||||||||||||
Current expense: | |||||||||||||||||
Federal | $ | 20,139 | $ | 20,815 | $ | 20,261 | |||||||||||
State | 14,120 | 13,883 | 8,448 | ||||||||||||||
Deferred expense: | |||||||||||||||||
Federal | (1,557) | (700) | 3,644 | ||||||||||||||
State | (1,363) | (572) | 1,021 | ||||||||||||||
Total income tax expense | $ | 31,339 | $ | 33,426 | $ | 33,374 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Income tax expense | | | | | | | | | |
Current expense: | | | | | | | | | |
Federal | | $ | 20,261 | | $ | 21,027 | | $ | 22,479 |
State | | | 8,448 | | | 12,144 | | | 8,910 |
Deferred expense: | |
| | | | | | | |
Federal | | | 3,644 | | | (3,657) | | | (380) |
State | | | 1,021 | | | (1,652) | | | 476 |
Total income tax expense | | $ | 33,374 | | $ | 27,862 | | $ | 31,485 |
A reconciliation of federal and state income taxes at statutory rates to theBusey’s income taxes included in the accompanying Consolidated Statements of Income is as follows:
| | | | | | | | | | |
| | | Years Ended December 31, |
| ||||||
|
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
Percent of pretax income | | | | | | | | | | |
Income tax at federal statutory rate |
|
| 21.0 | % |
| 21.0 | % |
| 21.0 | % |
Effect of: | | | | | | | | | | |
Tax-exempt interest, net |
|
| (1.1) | % |
| (1.6) | % |
| (1.7) | % |
Stock incentive | | | — | % | | 0.2 | % | | (0.1) | % |
State income taxes, net |
|
| 4.5 | % |
| 6.5 | % |
| 5.5 | % |
Income on bank owned life insurance |
|
| (0.7) | % |
| (0.9) | % |
| (0.9) | % |
Tax credit investments | | | (3.6) | % | | (3.2) | % | | (1.3) | % |
Other, net |
|
| 1.2 | % |
| (0.3) | % |
| 0.9 | % |
Effective income tax rate |
|
| 21.3 | % |
| 21.7 | % |
| 23.4 | % |
115
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Percent of pretax income | |||||||||||||||||
Income tax at federal statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
Effect of: | |||||||||||||||||
Tax-exempt interest, net | (1.0) | % | (1.1) | % | (1.1) | % | |||||||||||
Stock incentive | 0.2 | % | 0.1 | % | — | % | |||||||||||
State income taxes, net | 6.5 | % | 6.5 | % | 4.5 | % | |||||||||||
Income on bank owned life insurance | (0.6) | % | (0.5) | % | (0.7) | % | |||||||||||
Tax credit investments | (6.0) | % | (5.6) | % | (3.6) | % | |||||||||||
Other, net | 0.3 | % | 0.3 | % | 1.2 | % | |||||||||||
Effective income tax rate | 20.4 | % | 20.7 | % | 21.3 | % |
Net deferred taxes, reported in other assets or other liabilities in the accompanying Busey’s Consolidated Balance Sheets, include the following amounts of deferred tax assets and liabilities (dollars in thousands):
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Deferred taxes | |||||||||||
Deferred tax assets: | |||||||||||
ACL | $ | 27,068 | $ | 26,979 | |||||||
Unrealized loss on cash flow hedge | 6,654 | 8,365 | |||||||||
Unrealized losses on securities available for sale, net | 70,423 | 88,666 | |||||||||
Unrealized losses on securities held to maturity | 10,156 | 11,919 | |||||||||
Stock-based compensation | 5,767 | 5,504 | |||||||||
Deferred compensation | — | 53 | |||||||||
Purchase accounting adjustments | 764 | 656 | |||||||||
Accrued vacation | 456 | 411 | |||||||||
Lease liabilities | 3,092 | 3,564 | |||||||||
Employee costs | 4,789 | 3,298 | |||||||||
Unrealized loss on equity securities | 75 | — | |||||||||
Other | 67 | 376 | |||||||||
Total deferred tax assets | 129,311 | 149,791 | |||||||||
Deferred tax liabilities: | |||||||||||
Basis in premises and equipment | (2,830) | (1,541) | |||||||||
Affordable housing partnerships and other investments | (8,341) | (6,669) | |||||||||
Purchase accounting adjustments | (1,133) | (1,207) | |||||||||
Mortgage servicing assets | (1,336) | (2,132) | |||||||||
Basis in core deposit, customer intangible assets, and asset purchase goodwill | (4,709) | (6,956) | |||||||||
Deferred loan origination costs | (3,691) | (3,845) | |||||||||
Right of use assets | (3,015) | (3,518) | |||||||||
Unrealized gain on equity securities | — | (512) | |||||||||
Other | (251) | (586) | |||||||||
Total deferred tax liabilities | (25,306) | (26,966) | |||||||||
Net deferred tax asset | $ | 104,005 | $ | 122,825 |
| | | | | | |
|
| As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Deferred taxes | | | | | | |
Deferred tax assets: | | | | | | |
ACL | | $ | 25,884 | | $ | 30,332 |
Unrealized loss on cash flow hedge | | | 273 | | | 871 |
Unrealized losses on securities available for sale | | | 9,199 | | | — |
Stock-based compensation | |
| 4,204 | |
| 2,975 |
Deferred compensation | |
| 55 | |
| 66 |
Purchase accounting adjustments | | | 1,213 | | | 4,470 |
Accrued vacation | |
| 398 | |
| 610 |
Lease liabilities | | | 2,893 | | | 2,142 |
Employee costs | |
| 2,847 | |
| 1,598 |
Other | |
| 390 | |
| 431 |
Total deferred tax assets | | | 47,356 | | | 43,495 |
| | | | | | |
Deferred tax liabilities: | | | | | | |
Unrealized gain on securities available for sale | | | — | | | (14,151) |
Basis in premises and equipment | |
| (1,347) | |
| (348) |
Affordable housing partnerships and other investments | | | (3,696) | | | (1,995) |
Purchase accounting adjustments | | | (1,362) | | | (1,835) |
Mortgage servicing assets | |
| (2,853) | |
| (3,418) |
Basis in core deposit, customer intangible assets, and asset purchase goodwill | |
| (9,485) | |
| (12,714) |
Deferred loan origination costs | |
| (2,454) | |
| (2,654) |
Right of use assets | | | (2,877) | | | (2,130) |
Unrealized gain on equity securities | | | (1,099) | | | (276) |
Other | |
| (560) | |
| (405) |
Total deferred tax liabilities | | | (25,733) | | | (39,926) |
| | | | | | |
Net deferred tax asset | | $ | 21,623 | | $ | 3,569 |
At December 31, 2021, the Company had state net operating loss carryforwards for Wisconsin and California, both of which were an insignificant amount and will begin to expire in the year 2041.
Management believes that it is more likely than not that the other deferred tax assets included in the accompanying Consolidated Balance Sheets will be fully realized. The CompanyBusey has determined that 0no valuation allowance is required for any deferred tax assets as of December 31, 2021,2023, or 2020.
2022.
EMPLOYEE BENEFIT PLANS
Active Benefit Plans
Profit-Sharing401(k) Plan
Safe Harbor Match
The rights of participants in the profit-sharing plancontributions vest ratably over a five-year period, except for the 401(k) Safe Harbor match component of the profit-sharing plan, which vests immediately.
116
Terminated Benefit Plans
Employees’ Stock Ownership Plan
Prior to 2014, the First Busey ESOP was available to all associates who met certain age and service requirements. Effective March 20, 2014, the ESOP was frozen, all shares were fully vested, and there were no new contributions under the ESOP. On October 31, 2019, First Busey’s board of directors elected to terminate the ESOP. First Busey filed a determination letter with the Internal Revenue Service on February 10, 2020. During 2020, First Busey received a favorable determination ruling from the Internal Revenue Service, and all plan assets were distributed by the end of the year.
Deferred Compensation Plan
The Company previously sponsored deferred compensation plans for executive officers for deferral of compensation. Effective March 28, 2018, the deferred compensation plans were terminated, and account balances were distributed in April 2019. There was 0 deferred compensation liability balance as of December 31, 2021, or 2020.
Benefit401(k) Plan Expenses
Expenses related to ourBusey’s employee benefit plans, reported in salaries, wages, and employee benefits in the accompanying Consolidated Statements of Income, are summarized in the table below (dollars in thousands):
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
401(k) Plan expenses | |||||||||||||||||
Safe Harbor match expenses | $ | 3,745 | $ | 4,094 | $ | 3,708 | |||||||||||
Profit-sharing expenses | 3,031 | 2,960 | 2,823 | ||||||||||||||
Total 401(k) Plan expenses | $ | 6,776 | $ | 7,054 | $ | 6,531 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Employee benefit plan expenses | | | | | | | | | |
Profit-sharing plan | | $ | 6,531 | | $ | 5,982 | | $ | 5,777 |
Deferred compensation plan | | | — | | | — | | | 80 |
Total employee benefit plan expenses | | $ | 6,531 | | $ | 5,982 | | $ | 5,857 |
—
STOCK-BASED COMPENSATION
Stock Options
The CompanyBusey has outstanding stock options that were issued under the First Community 2016 Equity Incentive Plan and assumed from acquisitions. A summary of the status of, and changes in, the Company'sBusey's stock option awards follows (dollars in thousands, except weighted-average exercise price):
| | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2021 | ||||||||||
| | | | | | | | Weighted- | | | | |
| | |
|
| Weighted- | | Average | | | | ||
| | | | | Average | | Remaining | | | | ||
| | | | | Exercise | | Contractual | | Intrinsic | |||
|
| Shares |
| Price |
| Life |
| Value | ||||
Outstanding at beginning of year | | | 39,085 | | $ | 23.53 | | | 5.88 | | $ | — |
Exercised | | | — | | | — | | | | | | |
Forfeited | | | — | | | — | | | | | | |
Expired | | | (7,699) | |
| 23.53 | | | | | | |
Outstanding at end of year | | | 31,386 | | $ | 23.53 | | | 4.88 | | $ | 113 |
| | | | | | | | | | | | |
Exercisable at end of year | | | 31,386 | | $ | 23.53 | | | 4.88 | | $ | 113 |
117
Options | Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life | Intrinsic Value | ||||||||||||||||||||||
Outstanding at December 31, 2022 | 26,106 | $ | 23.53 | 3.88 | $ | 31 | ||||||||||||||||||||
Forfeited | (4,840) | 23.53 | ||||||||||||||||||||||||
Outstanding at December 31, 2023 | 21,266 | 23.53 | 2.88 | 27 | ||||||||||||||||||||||
Exercisable at December 31, 2023 | 21,266 | 23.53 | 2.88 | 27 |
Appendix A within Busey’s Proxy Statement for the 2020 Annual Meeting of Stockholders filed on April 9, 2020. An amendment and restatement of the 2020 Equity Plan was approved by stockholders at the 2023 Annual Meeting of Stockholders. Terms of the amended and restated 2020 Equity Plan are substantially identical to those of the originally approved 2020 Equity Plan, other than a 1,350,000 increase in the number of shares authorized for issuance under the plan. More information can be found in Appendix A within Busey’s Proxy Statement for the 2023 Annual Meeting of Stockholders filed on April 14, 2023.
The Company also grants PSU awards to members—149
Item 8. Financial Statements & Supplementary Data
The Company grants DSUs, which are restricted stock units with a deferred settlement date, to its directors and advisory directors. Each DSU is equivalent to 1 share of the Company’s common stock. DSUs vest over a one-year period following the grant date. These units generally are subject to the same terms as RSUs under the 2020 Equity Plan, except that, following vesting, settlement occurs within 30 days following the earlier of separation from the board or a change in control of the Company. After vesting and prior to delivery, these units will continue to earn dividend equivalents.
Upon exercise or vesting/delivery, shares are expected (though not required) to be issued from treasury.
Restricted Stock Unit, Performance-Based Restricted Stock Unit, and Deferred Stock Unit Awards
Changes in the Company’s RSU, PSU, and DSU awards are summarized as follows:
| | | | | | | | | | | | | | | | | | |
| | As of and for the Year Ended December 31, 2021 | ||||||||||||||||
| | RSU Awards | | PSU Awards | | DSU Awards | ||||||||||||
| | | | | Weighted- | | | | | Weighted- | | | | | Weighted- | |||
| | | | Average | | | | Average | | | | Average | ||||||
| | | | Grant Date | | | | Grant Date | | | | Grant Date | ||||||
|
| Shares |
| Fair Value |
| Shares (1) |
| Fair Value |
| Shares |
| Fair Value | ||||||
Nonvested at beginning of period |
| | 1,017,038 |
| $ | 23.87 |
| | 15,724 |
| $ | 16.25 |
| | 34,263 |
| $ | 17.18 |
Granted |
| | 260,231 | |
| 24.26 |
| | 99,159 | |
| 23.91 |
| | 35,664 | |
| 24.59 |
Dividend equivalents earned |
| | 43,783 | |
| 23.65 |
| | — | |
| — |
| | 4,891 | |
| 23.72 |
Vested |
| | (143,242) | |
| 23.50 |
| | — | |
| — |
| | (40,683) | |
| 18.24 |
Forfeited |
| | (29,883) | |
| 24.88 |
| | (968) | |
| 23.48 |
| | — | |
| — |
Nonvested at end of period |
| | 1,147,927 |
| $ | 23.97 |
| | 113,915 |
| $ | 22.86 |
| | 34,135 |
| $ | 24.59 |
| | | | | | | | | | | | | | | | | | |
Vested and outstanding at end of period |
| | | | | | | | | | | |
| | 97,297 |
| $ | 22.02 |
RSU Awards | Shares | Weighted- Average Grant Date Fair Value | ||||||||||||
Nonvested at December 31, 2022 | 1,096,931 | $ | 23.61 | |||||||||||
Granted | 224,316 | 20.44 | ||||||||||||
Dividend equivalents earned | 58,930 | 20.16 | ||||||||||||
Vested | (154,995) | 29.71 | ||||||||||||
Forfeited | (183,738) | 22.33 | ||||||||||||
Nonvested at December 31, 2023 | 1,041,444 | $ | 22.05 |
PSU Awards | Shares1 | Weighted- Average Grant Date Fair Value | ||||||||||||
Nonvested at December 31, 2022 | 285,351 | $ | 25.40 | |||||||||||
Granted | 224,331 | 20.04 | ||||||||||||
Dividend equivalents earned | 1,728 | 23.28 | ||||||||||||
Vested | (83,399) | 23.86 | ||||||||||||
Forfeited | (88,923) | 23.80 | ||||||||||||
Adjustment for performance conditions2 | 2,612 | 25.52 | ||||||||||||
Nonvested at December 31, 2023 | 341,700 | $ | 22.67 | |||||||||||
Vested and outstanding at December 31, 2023³ | 65,996 | $ | 23.48 |
During
118
DSU Awards | Shares | Weighted- Average Grant Date Fair Value | ||||||||||||
Nonvested at December 31, 2022 | 31,085 | $ | 25.75 | |||||||||||
Granted | 41,548 | 20.44 | ||||||||||||
Dividend equivalents earned | 8,334 | 20.09 | ||||||||||||
Vested | (37,868) | 24.76 | ||||||||||||
Forfeited | (73) | 20.44 | ||||||||||||
Nonvested at December 31, 2023 | 43,026 | $ | 20.41 | |||||||||||
Vested and outstanding at December 31, 2023 | 144,137 | $ | 23.52 |
Further, during the first quarter of 2021, the Company granted a target of 28,344 PSUs with a maximum award of 39,682 units. The actual number of units issued at the vesting date could range from 0% to 140% of the initial grant, depending on attaining a performance goal based upon FirsTech’s compounded annual revenue growth rate. The grant date fair value of the award is $0.7 million and will be recognized in compensation expense over the performance period ending August 31, 2023, subject to achievement of the performance goal.
On May 19, 2021, under the terms of the 2020 Equity Plan, the Company granted 2,376 DSUs to directors. The grant date fair value of the award totaled $0.1 million and will be recognized as compensation expense over the requisite service period of one year. Subsequent to the requisite service period, the awards will become 100% vested.
On September 22, 2021, under the terms of the 2020 Equity Plan, the Company granted 47,805 RSUs to members of management. The grant date fair value of the award totaled $1.1 million and will be recognized as compensation expense over the requisite service period ranging from three year to five years. Subsequent to the requisite service period, the awards will become 100% vested.
A description of RSU, PSU and DSU awards granted in 2020 and 2019 under the terms of the 2020 Equity Plan, 2010 Equity Plan, or the First Community 2016 Equity Incentive Plan can be found in the Company’s Annual Reports for the years ended December 31, 2020, and 2019.
The Company issued 116,904 treasury shares in conjunction with the vesting of RSUs and settlement of DSUs in 2021. The difference between the number of shares issued and the number of vested units is due to shares issued under a net share settlement option.
2021 Employee Stock Purchase Plan
The 2021 ESPP was approved at the Company’sBusey’s 2021 Annual Meeting of Stockholders, replacing the 2011 ESPP which terminated at the end of 2020.Stockholders. The purpose of the 2021 ESPP is to provide a means through which our employees may acquire a proprietary interest in the CompanyBusey by purchasing shares of our common stock at a 15% discount through voluntary payroll deductions, to assist us in retaining the services of our employees and securing and retaining the services of new employees, and to provide incentives for our employees to exert maximum efforts toward our success. Under the terms of the 2021 ESPP, all participating employees will have equal rights and privileges. Substantially all of our employees are eligible to participate in the 2021 ESPP. Further details can be found in Appendix Awithin First Busey’s Definitive Proxy Statement filed with the SEC on April 8, 2021.
2021.
2023.
Stock-basedStock-Based Compensation Expense
The CompanyBusey recognized compensation expense related to non-vested RSU, PSU, and DSU awards, as well as the 2021 ESPP, as presentedsummarized in the table below (dollars in thousands):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Stock-based compensation expense | | | | | | | | | |
Stock options (1) | | $ | — | | $ | — | | $ | 146 |
RSU awards | | | 5,809 | | | 6,493 | | | 3,249 |
PSU awards | | | 979 | | | 77 | | | — |
DSU awards | | | 962 | | | 565 | | | 602 |
2021 ESPP | | | 114 | | | — | | | — |
Total stock-based compensation expense | | $ | 7,864 | | $ | 7,135 | | $ | 3,997 |
119
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||
RSU awards | $ | 2,622 | $ | 4,648 | $ | 5,809 | |||||||||||||||||||||||
PSU awards1 | 2,962 | 3,240 | 979 | ||||||||||||||||||||||||||
DSU awards | 833 | 876 | 962 | ||||||||||||||||||||||||||
2021 ESPP | 178 | 204 | 114 | ||||||||||||||||||||||||||
Total stock-based compensation expense | $ | 6,595 | $ | 8,968 | $ | 7,864 |
FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the date indicated.
Unamortized stock-based compensation expense is presented in the table below (dollars in thousands):
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Unamortized stock-based compensation | |||||||||||
RSU awards | $ | 6,842 | $ | 8,570 | |||||||
PSU awards1 | 3,607 | 4,279 | |||||||||
DSU awards | 190 | 175 | |||||||||
Total unamortized stock-based compensation | $ | 10,639 | $ | 13,024 | |||||||
Weighted average period over which expense is to be recognized | 2.4 years | 2.5 years |
| | | | | | | |
| | As of December 31, | | ||||
|
| 2021 |
| 2020 |
| ||
Unamortized stock-based compensation | | | | | | | |
RSU awards | | $ | 10,204 | | $ | 10,411 | |
PSU awards | | | 1,547 | | | 179 | |
DSU awards | | | 209 | | | 294 | |
Total unamortized stock-based compensation | | $ | 11,960 | | $ | 10,884 | |
| | | | | | | |
Weighted average period over which expense is to be recognized | | | 2.9 | yrs | | 3.0 | yrs |
___________________________________________
TRANSACTIONS WITH RELATED PARTIES
The Company
The following is an analysis of thetable presents changes in loans to related parties, as a group (dollars in thousands):
| | | |
|
| As of and for the Year Ended | |
| | December 31, 2021 | |
Loans to related parties | | | |
Balance at beginning of year |
| $ | 41,921 |
Change in relationship | |
| (2,033) |
New loans/advances | |
| 31,761 |
Repayments | | | (29,092) |
Balance at end of year | | $ | 42,557 |
As of and for the Year Ended December 31, 2023 | |||||
Balance of loans to related parties, December 31, 2022 | $ | 55,341 | |||
Change in relationship | 9,247 | ||||
New loans/advances | 34,116 | ||||
Repayments | (21,055) | ||||
Balance of loans to related parties, December 31, 2023 | $ | 77,649 | |||
Unused commitments to directors and executive officers | $ | 4,692 |
modified.
Additionally, total unused commitments to directors and executive officers were $8.6 million at December 31, 2021.
NoteNOTE 16. Outstanding Commitments and Contingent Liabilities
OUTSTANDING COMMITMENTS AND CONTINGENT LIABILITIES
Legal Matters
The Company
operations or financial position.
Credit Commitments and Contingencies
A summary of the contractual amount of the Company’sBusey’s exposure to off-balance-sheet risk relating to the Company’s commitments to extend credit and standby letters of credit follows (dollars in thousands):
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Financial instruments whose contract amounts represent credit risk | | | | | | |
Commitments to extend credit | | $ | 1,983,655 | | $ | 1,754,370 |
Standby letters of credit | |
| 32,552 | |
| 38,937 |
Total commitments | | $ | 2,016,207 | | $ | 1,793,307 |
120
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Financial instruments whose contract amounts represent credit risk | |||||||||||
Commitments to extend credit | $ | 2,132,500 | $ | 1,991,769 | |||||||
Standby letters of credit | 43,996 | 33,008 | |||||||||
Total commitments | $ | 2,176,496 | $ | 2,024,777 |
DERIVATIVE FINANCIAL INSTRUMENTS
The CompanyBusey utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. Additionally, the CompanyBusey enters into derivative financial instruments, including interest rate lock commitments issued to residential loan customers for loans that will be held for sale,sale; forward sales commitments to sell residential mortgage loans to investors,investors; and interest rate swaps, risk participation agreements, and foreign currency exchange contracts with customers and other third parties. See “Note 18. Fair Value Measurements” for further discussion of the fair value measurement of such derivatives.
(dollars in thousands):
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash pledged to secure obligations under derivative contracts | $ | 34,210 | $ | 38,609 | |||||||
Collateral held to secure obligations under derivative contracts | 19,280 | 29,830 |
Interest Rate Swaps Designated as Cash Flow Hedges
The Company
—154
swaps. Changes in fair value were recorded net of tax in OCI.
A summary of the interest-rate swaps designated as cash flow hedges is presented below (dollars in thousands):
As of December 31, | |||||||||||||||||
Location | 2023 | 2022 | |||||||||||||||
Debt Swap | |||||||||||||||||
Notional amount | $ | 50,000 | $ | 50,000 | |||||||||||||
Weighted average fixed pay rates | 1.79 | % | 1.79 | % | |||||||||||||
Weighted average variable 3-month LIBOR receive rates | 5.61 | % | 4.77 | % | |||||||||||||
Weighted average maturity | 0.71 years | 1.71 years | |||||||||||||||
Loan Swap | |||||||||||||||||
Notional amount | $ | 300,000 | $ | 300,000 | |||||||||||||
Weighted average fixed receive rates | 4.81 | % | 4.81 | % | |||||||||||||
Weighted average variable Prime pay rates | 8.50 | % | 7.32 | % | |||||||||||||
Weighted average maturity | 5.10 years | 6.10 years | |||||||||||||||
Gross aggregate fair value of the swaps | |||||||||||||||||
Gross aggregate fair value of swap assets | Other assets | $ | 1,293 | $ | 2,535 | ||||||||||||
Gross aggregate fair value of swap liabilities | Other liabilities | $ | 25,411 | $ | 32,367 | ||||||||||||
Balances carried in AOCI | |||||||||||||||||
Unrealized gains (losses) on cash flow hedges, net of tax | AOCI | $ | (16,694) | $ | (20,985) |
| | | | | | | |
| | As of December 31, | | ||||
|
| 2021 |
| 2020 |
| ||
Notional amount | | $ | 50,000 | | $ | 70,000 | |
Weighted average fixed pay rates | |
| 1.79 | % |
| 1.80 | % |
Weighted average variable 3-month LIBOR receive rates | | | 0.20 | % | | 0.22 | % |
Weighted average maturity, in years | | | 2.71 | yrs | | 2.85 | yrs |
Unrealized gains (losses), net of tax | | $ | (685) | | $ | (2,184) | |
The Company—155
2023.
As of December 31, 2023 | |||||
Unrealized gains (losses) in OCI expected to be recognized in income | |||||
Unrealized losses expected to be reclassified from OCI to interest income | $ | (952) | |||
Unrealized gains expected to be reclassified from OCI to interest expense | 483 | ||||
Net unrealized gains (losses) in OCI expected to be recognized in net interest income | $ | (469) |
Interest income (expense) recorded on swap transactions was as follows for the periods presented (dollars in thousands):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Interest income (expense) on swap transactions | | $ | (1,067) | | $ | (758) | | $ | 60 |
121
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Interest on swap transactions | |||||||||||||||||||||||||||||
Increase (decrease) in interest income on swap transactions | $ | (10,326) | $ | (553) | $ | — | |||||||||||||||||||||||
(Increase) decrease in interest expense on swap transactions | 1,757 | (30) | (1,067) | ||||||||||||||||||||||||||
Net increase (decrease) in net interest income on swap transactions | $ | (8,569) | $ | (583) | $ | (1,067) |
The following table reflects the net gains (losses) recorded in AOCI and the Consolidated Statements of Comprehensive Income relating to cash flow derivative instruments for the periods presented (dollars in thousands):
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedges | |||||||||||||||||||||||||||||
Net gain (loss) recognized in OCI, net of tax | $ | (1,835) | $ | (20,717) | $ | 736 | |||||||||||||||||||||||
(Gain) loss reclassified from OCI to interest income, net of tax | 7,382 | 395 | — | ||||||||||||||||||||||||||
(Gain) loss reclassified from OCI to interest expense, net of tax | (1,256) | 22 | 763 | ||||||||||||||||||||||||||
Net change in unrealized gains (losses) on cash flow hedges, net of tax | $ | 4,291 | $ | (20,300) | $ | 1,499 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Unrealized gains (losses) on cash flow hedges | | | | | | | | | |
Gain (loss) recognized in OCI, net of tax | | $ | 736 | | $ | (2,526) | | $ | (202) |
(Gain) loss reclassified from OCI to interest expense, net of tax | | | 763 | | | 542 | | | 2 |
Net change in unrealized gains (losses) on cash flow hedges | | $ | 1,499 | | $ | (1,984) | | $ | (200) |
The Company pledged $1.0 million and $3.2 million in cash to secure its obligation under these contracts at December 31, 2021, and 2020, respectively.
—
156
Interest Rate Swaps
The Company
Amounts and fair values of derivative assets and liabilities related to customer interest rate swaps, included in other assets and other liabilities in the Consolidated Balance Sheets, are summarized as follows (dollars in thousands):
As of December 31, 2023 | |||||||||||||||||||||||
Derivative Asset | Derivative Liability | ||||||||||||||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||||||
Interest rate swaps – pay floating, receive fixed | $ | 177,883 | $ | 2,375 | $ | 485,253 | $ | 26,289 | |||||||||||||||
Interest rate swaps – pay fixed, receive floating | 485,253 | 26,289 | 177,883 | 2,375 | |||||||||||||||||||
Total derivatives not designated as hedging instruments | $ | 663,136 | $ | 28,664 | $ | 663,136 | $ | 28,664 |
As of December 31, 2022 | |||||||||||||||||||||||
Derivative Asset | Derivative Liability | ||||||||||||||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||||||
Interest rate swaps – pay floating, receive fixed | $ | 48,728 | $ | 370 | $ | 528,183 | $ | 39,685 | |||||||||||||||
Interest rate swaps – pay fixed, receive floating | 528,183 | 39,685 | 48,728 | 370 | |||||||||||||||||||
Total derivatives not designated as hedging instruments | $ | 576,911 | $ | 40,055 | $ | 576,911 | $ | 40,055 |
| | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||
| | Derivative Asset | | Derivative Liability | ||||||||
| | Notional | | Fair | | Notional | | Fair | ||||
|
| Amount |
| Value |
| Amount |
| Value | ||||
Derivatives not designated as hedging instruments | | | | | | | | | | | | |
Interest rate swaps – pay floating, receive fixed | | $ | 404,572 | | $ | 17,839 | | $ | 86,784 | | $ | 2,259 |
Interest rate swaps – pay fixed, receive floating | | | 86,784 | | | 2,259 | | | 404,572 | | | 17,839 |
Total derivatives not designated as hedging instruments | | $ | 491,356 | | $ | 20,098 | | $ | 491,356 | | $ | 20,098 |
| | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||
| | Derivative Asset | | Derivative Liability | ||||||||
| | Notional | | Fair | | Notional | | Fair | ||||
|
| Amount |
| Value |
| Amount |
| Value | ||||
Derivatives not designated as hedging instruments | | | | | | | | | | | | |
Interest rate swaps – pay floating, receive fixed | | $ | 394,954 | | $ | 32,685 | | $ | — | | $ | — |
Interest rate swaps – pay fixed, receive floating | | | — | | | — | | | 394,954 | | | 32,685 |
Total derivatives not designated as hedging instruments | | $ | 394,954 | | $ | 32,685 | | $ | 394,954 | | $ | 32,685 |
—
157
| | | | | | | | | | | | |
| | | | | Years Ended December 31, | |||||||
|
| Location |
| 2021 |
| 2020 |
| 2019 | ||||
Interest rate swaps | | | | | | | | | | | | |
Pay floating, receive fixed | | Noninterest expense | | $ | (12,587) | | $ | 20,331 | | $ | 10,915 | |
Pay fixed, receive floating | | Noninterest expense | | | 12,587 | | | (20,331) | | | (10,915) | |
Net change in fair value of interest rate swaps | | | | | $ | — | | $ | — | | $ | — |
122
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
Location | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
Interest rate swaps | |||||||||||||||||||||||||||||||||||
Pay floating, receive fixed | Noninterest expense | $ | (11,525) | $ | 19,308 | $ | (12,587) | ||||||||||||||||||||||||||||
Pay fixed, receive floating | Noninterest expense | 11,525 | (19,308) | 12,587 | |||||||||||||||||||||||||||||||
Net change in fair value of interest rate swaps | $ | — | $ | — | $ | — |
The Company pledged $26.3 million and $36.0 million in cash to secure its obligation under these contracts at December 31, 2021, and 2020, respectively.
Risk Participation AgreementAgreements
In addition, the Company has entered into 1 risk participation agreement in conjunction with a loan participation with another financial institution to
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Risk participation agreements purchased | |||||||||||
Number of risk participation agreements | 3 | 2 | |||||||||
Notional amount | $ | 34,251 | $ | 18,899 | |||||||
Fair value | 15 | 5 | |||||||||
Risk participation agreements sold | |||||||||||
Number of risk participation agreements | 1 | — | |||||||||
Notional amount | $ | 20,001 | — | ||||||||
Fair value | — | — |
its
.
Interest Rate Lock Commitments
Interest rate lock commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging,Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Balance Sheets, 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.
Forward Sales Commitments
The CompanyBusey economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding best-efforts forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers. Forward sales commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging,Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Balance Sheets.Sheets. While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, the CompanyBusey 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.
—159
| | | | | | | | | | | | | | | |
| | | | | As of December 31, 2021 | | As of December 31, 2020 | ||||||||
| | | | | Notional | | Fair | | Notional | | Fair | ||||
|
| Location |
| Amount |
| Value |
| Amount |
| Value | |||||
Derivatives with positive fair value | | | | | | | | | | | | | | | |
Interest rate lock commitments | | Other assets | | $ | 19,384 | | $ | 206 | | $ | 45,004 | | $ | 1,201 | |
Forward sales commitments | | Other assets | | | 1,884 | | | 10 | | | 978 | | | 32 | |
Mortgage banking derivatives recorded in other assets | | $ | 21,268 | | $ | 216 | | $ | 45,982 | | $ | 1,233 | |||
| | | | | | | | | | | | | | | |
Derivatives with negative fair value | | | | | | | | | | | | | | | |
Interest rate lock commitments | | Other liabilities | | $ | 499 | | $ | 6 | | $ | 118 | | $ | 1 | |
Forward sales commitments | | Other liabilities | | | 41,002 | | | 439 | | | 84,964 | | | 2,662 | |
Mortgage banking derivatives recorded in other liabilities | | $ | 41,501 | | $ | 445 | | $ | 85,082 | | $ | 2,663 |
123
As of December 31, 2023 | As of December 31, 2022 | ||||||||||||||||||||||||||||
Location | Notional Amount | Fair Value | Notional Amount | Fair Value | |||||||||||||||||||||||||
Mortgage banking derivative assets | |||||||||||||||||||||||||||||
Interest rate lock commitments | Other assets | $ | 3,477 | $ | 25 | $ | 1,517 | $ | 16 | ||||||||||||||||||||
Forward sales commitments | Other assets | 1,761 | 11 | 83 | 1 | ||||||||||||||||||||||||
Mortgage banking derivative assets | $ | 5,238 | $ | 36 | $ | 1,600 | $ | 17 | |||||||||||||||||||||
Mortgage banking derivative liabilities | |||||||||||||||||||||||||||||
Interest rate lock commitments | Other liabilities | $ | 1,615 | $ | 10 | $ | 83 | $ | 1 | ||||||||||||||||||||
Forward sales commitments | Other liabilities | 5,216 | 47 | 2,757 | 39 | ||||||||||||||||||||||||
Mortgage banking derivative liabilities | $ | 6,831 | $ | 57 | $ | 2,840 | $ | 40 |
Net gains (losses) relating to these derivative instruments are summarized as follows for the periods presented (dollars in thousands):
| | | | | | | | | | | | |
| | | | | Years Ended December 31, | |||||||
|
| Location |
| 2021 |
| 2020 |
| 2019 | ||||
Net gains (losses) | | | | | | | | | | | | |
Interest rate lock commitments | | Mortgage revenue | | $ | 1,702 | | $ | 9,667 | | $ | 3,988 | |
Forward sales commitments | | Mortgage revenue | |
| (4,045) | | | (18,329) | | | (6,751) | |
Net gains (losses) | | | | | $ | (2,343) | | $ | (8,662) | | $ | (2,763) |
The
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
Location | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
Net gains (losses) | |||||||||||||||||||||||||||||||||||
Interest rate lock commitments | Mortgage revenue | $ | — | $ | 15 | $ | 1,702 | ||||||||||||||||||||||||||||
Forward sales commitments | Mortgage revenue | 2 | (38) | (4,045) | |||||||||||||||||||||||||||||||
Net gains (losses) | $ | 2 | $ | (23) | $ | (2,343) |
In 2022, Busey began carrying loans held for sale at LOCOM, so while Busey will continue to recognize gains or losses on these mortgage banking derivative instruments in earnings, any corresponding increase in the fair value of loans held for sale will not be recognized in earnings until the loans are sold, at which time the increase is factored into the calculated gain on sale. Decreases in the market value of loans held for sale will continue to be recognized in earnings at each measurement period.
FAIR VALUE MEASUREMENTS
The fair value of an asset or liability is the price that would be received by selling that asset or paid in transferring that liability (exit price) in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. ASC Topic 820 “Fair Value Measurement,Measurement” establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
Level 1 Inputs
– Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
124
—161
Equity Securities
Loans Held for Sale
Derivative Assets and Derivative Liabilities
Loans held for sale
Derivative Assets and Derivative Liabilities
Derivative assets and derivative liabilities are reported at estimated fair value utilizing Level 2 inputs andbalances are included in other assets or other liabilities on the
The Company
125
The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2021,2023, and 2020,2022, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):
As of December 31, 2023 | |||||||||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||||||||||
Debt securities available for sale: | |||||||||||||||||||||||
U.S. Treasury securities | $ | — | $ | 15,946 | $ | — | $ | 15,946 | |||||||||||||||
Obligations of U.S. government corporations and agencies | — | 5,832 | — | 5,832 | |||||||||||||||||||
Obligations of states and political subdivisions | — | 172,845 | — | 172,845 | |||||||||||||||||||
Asset-backed securities | — | 468,223 | — | 468,223 | |||||||||||||||||||
Commercial mortgage-backed securities | — | 103,509 | — | 103,509 | |||||||||||||||||||
Residential mortgage-backed securities | — | 1,111,312 | — | 1,111,312 | |||||||||||||||||||
Corporate debt securities | — | 209,904 | — | 209,904 | |||||||||||||||||||
Equity securities | 448 | 9,364 | — | 9,812 | |||||||||||||||||||
Derivative assets | — | 29,993 | 15 | 30,008 | |||||||||||||||||||
Derivative liabilities | — | 54,132 | — | 54,132 |
As of December 31, 2022 | |||||||||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||||||||||
Debt securities available for sale: | |||||||||||||||||||||||
U.S. Treasury securities | $ | — | $ | 114,061 | $ | — | $ | 114,061 | |||||||||||||||
Obligations of U.S. government corporations and agencies | — | 19,779 | — | 19,779 | |||||||||||||||||||
Obligations of states and political subdivisions | — | 257,512 | — | 257,512 | |||||||||||||||||||
Asset-backed securities | — | 469,875 | — | 469,875 | |||||||||||||||||||
Commercial mortgage-backed securities | — | 108,394 | — | 108,394 | |||||||||||||||||||
Residential mortgage-backed securities | — | 1,243,256 | — | 1,243,256 | |||||||||||||||||||
Corporate debt securities | — | 248,516 | — | 248,516 | |||||||||||||||||||
Equity securities | — | 11,535 | — | 11,535 | |||||||||||||||||||
Derivative assets | — | 42,607 | 5 | 42,612 | |||||||||||||||||||
Derivative liabilities | — | 72,462 | — | 72,462 |
| | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
|
| Inputs |
| Inputs |
| Inputs |
| Fair Value | ||||
Debt securities available for sale: | | | | | | | | | | | | |
U.S. Treasury securities | | $ | — | | $ | 165,762 | | $ | — | | $ | 165,762 |
Obligations of U.S. government corporations and agencies | | | — | | | 38,470 | | | — | | | 38,470 |
Obligations of states and political subdivisions | | | — | | | 306,869 | | | — | | | 306,869 |
Asset-backed securities | | | — | | | 492,186 | | | — | | | 492,186 |
Commercial mortgage-backed securities | | | — | | | 614,998 | | | — | | | 614,998 |
Residential mortgage-backed securities | | | — | | | 2,069,313 | | | — | | | 2,069,313 |
Corporate debt securities | | | — | | | 293,653 | | | — | | | 293,653 |
Equity securities | | | — | | | 13,571 | | | — | | | 13,571 |
Loans held for sale | | | — | | | 23,875 | | | — | | | 23,875 |
Derivative assets | | | — | | | 20,314 | | | — | | | 20,314 |
Derivative liabilities | | | — | | | 21,501 | | | — | | | 21,501 |
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
| | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
|
| Inputs |
| Inputs |
| Inputs |
| Fair Value | ||||
Debt securities available for sale: | | | | | | | | | | | | |
U.S. Treasury securities | | $ | — | | $ | 27,837 | | $ | — | | $ | 27,837 |
Obligations of U.S. government corporations and agencies | | | — | | | 69,519 | | | — | | | 69,519 |
Obligations of states and political subdivisions | | | — | | | 304,711 | | | — | | | 304,711 |
Commercial mortgage-backed securities | | | — | | | 418,616 | | | — | | | 418,616 |
Residential mortgage-backed securities | | | — | | | 1,368,315 | | | — | | | 1,368,315 |
Corporate debt securities | | | — | | | 72,189 | | | — | | | 72,189 |
Equity securities | | | — | | | 5,530 | | | — | | | 5,530 |
Loans held for sale | | | — | | | 42,813 | | | — | | | 42,813 |
Derivative assets | | | — | | | 33,918 | | | — | | | 33,918 |
Derivative liabilities | | | — | | | 38,403 | | | — | | | 38,403 |
—163
The Company
OREO
Non-financial assets measured at fair value include OREO (upon initial recognition or subsequent impairment). OREO properties are measured using a combination of observable inputs, including recent appraisals, and unobservable inputs. Due to the significance of unobservable inputs, all OREO fair values have been classified as Level 3.
126
Bank property held for sale represents certain banking center office buildings which the CompanyBusey has closed and consolidated with other existing banking centers. Bank property held for sale is measured at the lower of amortized cost or fair value less estimated costs to sell, and is included in premises and equipment, net on the Consolidated Balance Sheets.Sheets. Fair values were based upon discounted appraisals or real estate listing price.prices. Due to the significance of unobservable inputs, fair values of all bank property held for sale have been classified as Level 3.
The following tables summarize assets and liabilities measured at fair value on a non-recurring basis for the periods presented, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):
As of December 31, 2023 | |||||||||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||||||||||
Loans evaluated individually, net of related allowance | $ | — | $ | — | $ | 1,000 | $ | 1,000 | |||||||||||||||
Bank property held for sale with impairment | — | — | 4,286 | 4,286 |
As of December 31, 2022 | |||||||||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||||||||||
Loans evaluated individually, net of related allowance | $ | — | $ | — | $ | 5,345 | $ | 5,345 | |||||||||||||||
Bank property held for sale with impairment | — | — | 7,923 | 7,923 |
| | | | | | | | | | | | |
| | As of December 31, 2021 | ||||||||||
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
|
| Inputs |
| Inputs |
| Inputs |
| Fair Value | ||||
Loans evaluated individually, net of related allowance | | $ | — | | $ | — | | $ | 2,926 | | $ | 2,926 |
OREO with subsequent impairment | |
| — | |
| — | |
| 51 | |
| 51 |
Bank property held for sale with impairment | |
| — | |
| — | |
| 10,103 | |
| 10,103 |
| | | | | | | | | | | | |
| | As of December 31, 2020 | ||||||||||
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
|
| Inputs | �� | Inputs |
| Inputs |
| Fair Value | ||||
Loans evaluated individually, net of related allowance | | $ | — | | $ | — | | $ | 2,771 | | $ | 2,771 |
OREO with subsequent impairment | |
| — | |
| — | |
| 106 | |
| 106 |
Bank property held for sale with impairment | | | — | |
| — | |
| 10,676 | |
| 10,676 |
—
164
| | | | | | | | | | | | | | | |
| | Quantitative Information about Level 3 Fair Value Measurements | |||||||||||||
| | Fair Value | | Valuation | | Unobservable | | Range | |||||||
December 31, 2021: |
| Estimate |
| Techniques |
| Input |
| (Weighted Average) | |||||||
Loans evaluated individually, net of related allowance | | $ | 2,926 | | Appraisal of collateral | | Appraisal adjustments | | -50.0 | % | to | -100.0 | % | (-55.1) | % |
OREO with subsequent impairment | | | 51 | | Appraisal of collateral | | Appraisal adjustments | | -33.0 | % | to | -100.0 | % | (-67.9) | % |
Bank property held for sale with impairment | | | 10,103 | | Appraisal of collateral or real estate listing price | | Appraisal adjustments | | -0.7 | % | to | -70.1 | % | (-41.3) | % |
| | | | | | | | | | | | | | | |
December 31, 2020: | | | | | | | | | | | | | | | |
Loans evaluated individually, net of related allowance | | $ | 2,771 | | Appraisal of collateral | | Appraisal adjustments | | -30.0 | % | to | -100.0 | % | (-37.0) | % |
OREO with subsequent impairment | | | 106 | | Appraisal of collateral | | Appraisal adjustments | | -25.0 | % | to | -100.0 | % | (-54.5) | % |
Bank property held for sale with impairment | | | 10,676 | | Appraisal of collateral or real estate listing price | | Appraisal adjustments | | -6.2 | % | to | -64.9 | % | (-42.8) | % |
127
As of December 31, 2023 | |||||||||||||||||||||||
Fair Value | Valuation Techniques | Unobservable Input | Range (Weighted Average) | ||||||||||||||||||||
Loans evaluated individually, net of related allowance | $ | 1,000 | Appraisal of collateral | Appraisal adjustments | -41.2% to -100.0% (-47.2)% | ||||||||||||||||||
Bank property held for sale with impairment | 4,286 | Appraisal of collateral or real estate listing price | Appraisal adjustments | -6.2% to -64.9% (-38.4)% |
As of December 31, 2022 | |||||||||||||||||||||||
Fair Value | Valuation Techniques | Unobservable Input | Range (Weighted Average) | ||||||||||||||||||||
Loans evaluated individually, net of related allowance | $ | 5,345 | Appraisal of collateral | Appraisal adjustments | -22.7% to -100.0% (-45.7)% | ||||||||||||||||||
Bank property held for sale with impairment | 7,923 | Appraisal of collateral or real estate listing price | Appraisal adjustments | -0.7% to -70.1% (-35.1)% |
As of December 31, 2023 | As of December 31, 2022 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Financial assets | |||||||||||||||||||||||
Level 1 inputs: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 719,581 | $ | 719,581 | $ | 227,164 | $ | 227,164 | |||||||||||||||
Level 2 inputs: | |||||||||||||||||||||||
Debt securities held to maturity | 872,628 | 730,397 | 918,312 | 785,295 | |||||||||||||||||||
Loans held for sale | 2,379 | 2,401 | 1,253 | 1,276 | |||||||||||||||||||
Accrued interest receivable | 45,288 | 45,288 | 43,372 | 43,372 | |||||||||||||||||||
Level 3 inputs: | |||||||||||||||||||||||
Portfolio loans, net | 7,559,294 | 7,276,905 | 7,634,094 | 7,320,422 | |||||||||||||||||||
Mortgage servicing rights | 3,289 | 18,079 | 5,861 | 18,284 | |||||||||||||||||||
Other servicing rights | 1,597 | 2,062 | 1,914 | 2,331 | |||||||||||||||||||
Financial liabilities | |||||||||||||||||||||||
Level 2 inputs: | |||||||||||||||||||||||
Time deposits | $ | 1,819,274 | $ | 1,804,905 | $ | 855,375 | $ | 830,596 | |||||||||||||||
Securities sold under agreements to repurchase | 187,396 | 187,396 | 229,806 | 229,806 | |||||||||||||||||||
Short-term borrowings | 12,000 | 12,034 | 351,054 | 351,085 | |||||||||||||||||||
Long-term debt | 18,000 | 18,020 | 30,000 | 30,052 | |||||||||||||||||||
Junior subordinated debt owed to unconsolidated trusts | 71,993 | 57,153 | 71,810 | 59,111 | |||||||||||||||||||
Accrued interest payable | 28,418 | 28,418 | 3,978 | 3,978 | |||||||||||||||||||
Level 3 inputs: | |||||||||||||||||||||||
Subordinated notes, net of unamortized issuance costs | 222,882 | 200,000 | 222,038 | 208,562 |
| | | | | | | | | | | | |
| | As of December 31, 2021 | | As of December 31, 2020 | ||||||||
| | Carrying |
| Fair |
| Carrying |
| Fair | ||||
| | Amount |
| Value |
| Amount |
| Value | ||||
Financial assets | | | | | | | | | | | | |
Level 1 inputs: | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 836,095 | | $ | 836,095 | | $ | 688,537 | | $ | 688,537 |
Level 2 inputs: | | | | | | | | | | | | |
Accrued interest receivable | |
| 31,064 | |
| 31,064 | |
| 33,240 | |
| 33,240 |
Level 3 inputs: | | | | | | | | | | | | |
Portfolio loans, net | |
| 7,101,111 | |
| 7,161,466 | |
| 6,713,129 | |
| 6,755,425 |
Mortgage servicing rights | | | 8,608 | | | 12,133 | | | 10,912 | | | 11,107 |
Other servicing rights | | | 1,830 | | | 2,268 | | | 1,434 | | | 1,966 |
| | | | | | | | | | | | |
Financial liabilities | | | | | | | | | ||||
Level 2 inputs: | | | | | | | | | | | | |
Time deposits | | $ | 935,649 | | $ | 935,778 | | $ | 1,119,348 | | $ | 1,132,107 |
Securities sold under agreements to repurchase | |
| 270,139 | |
| 270,139 | |
| 175,614 | |
| 175,614 |
Short-term borrowings | | | 17,678 | | | 17,673 | | | 4,658 | | | 4,661 |
Long-term debt | |
| 46,056 | |
| 46,164 | | | 4,757 | |
| 5,014 |
Junior subordinated debt owed to unconsolidated trusts | |
| 71,635 | |
| 63,586 | |
| 71,468 | |
| 59,943 |
Accrued interest payable | |
| 2,728 | |
| 2,728 | |
| 3,401 | |
| 3,401 |
Level 3 inputs: | | | | | | | | | | | | |
Senior notes, net of unamortized issuance costs | | | 39,944 | | | 40,400 | | | 39,809 | | | 40,104 |
Subordinated notes, net of unamortized issuance costs | | | 182,773 | | | 195,600 | | | 182,226 | | | 187,697 |
—
EARNINGS PER SHARE
issued under the 2021 ESPP.
Earnings per common share have been computed as follows (dollars in thousands, except per share amounts):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
| | 2021 |
| 2020 |
| 2019 | |||
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
Shares: | | | | | | | | | |
Weighted average common shares outstanding | |
| 55,369,476 | |
| 54,567,429 | |
| 54,851,652 |
Dilutive effect of outstanding options, warrants, and stock units as determined by the application of the treasury stock method | |
| 635,221 | |
| 259,510 | |
| 280,842 |
Dilutive effect of ESPP shares | | | 4,108 | | | — | | | — |
Weighted average common shares outstanding, as adjusted for diluted earnings per share calculation | | | 56,008,805 | | | 54,826,939 | | | 55,132,494 |
| | | | | | | | | |
Basic earnings per common share | | $ | 2.23 | | $ | 1.84 | | $ | 1.88 |
| | | | | | | | | |
Diluted earnings per common share | | $ | 2.20 | | $ | 1.83 | | $ | 1.87 |
128
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Net income | $ | 122,565 | $ | 128,311 | $ | 123,449 | |||||||||||||||||||||||
Weighted average number of common shares outstanding, basic | 55,432,322 | 55,387,073 | 55,369,476 | ||||||||||||||||||||||||||
Dilutive effect of common stock equivalents: | |||||||||||||||||||||||||||||
Options | — | 1,632 | 1,639 | ||||||||||||||||||||||||||
Warrants | 324 | 1,753 | 1,753 | ||||||||||||||||||||||||||
RSU awards | 647,217 | 665,998 | 615,759 | ||||||||||||||||||||||||||
PSU awards | 151,190 | 58,206 | 5,429 | ||||||||||||||||||||||||||
DSU awards | 18,154 | 15,532 | 10,641 | ||||||||||||||||||||||||||
2021 ESPP | 6,941 | 6,970 | 4,108 | ||||||||||||||||||||||||||
Weighted average number of common shares outstanding, diluted | 56,256,148 | 56,137,164 | 56,008,805 | ||||||||||||||||||||||||||
Basic earnings per common share | $ | 2.21 | $ | 2.32 | $ | 2.23 | |||||||||||||||||||||||
Diluted earnings per common share | 2.18 | 2.29 | 2.20 |
SharesAverage shares that were excluded from the computation of diluted earnings per common share because their effect would have been anti-dilutive are summarized in the table below for the periods presented:
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Anti-dilutive common stock equivalents | |||||||||||||||||||||||||||||
Options | 21,981 | 7,792 | — | ||||||||||||||||||||||||||
RSU awards | 39,445 | 38,912 | 65,058 | ||||||||||||||||||||||||||
PSU awards | 106,955 | 189,000 | 93,026 | ||||||||||||||||||||||||||
DSU awards | — | — | 7,742 | ||||||||||||||||||||||||||
Total anti-dilutive common stock equivalents | 168,381 | 235,704 | 165,826 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
| | 2021 |
| 2020 |
| 2019 | |||
Anti-dilutive common stock equivalents | | | | | | | | | |
Options | | | — | | | 39,085 | | | — |
RSU and DSU awards | | | 72,800 | | | 159,408 | | | 201,029 |
PSU awards | | | 93,026 | | | 7,862 | | | — |
Total anti-dilutive common stock equivalents | | | 165,826 | | | 206,355 | | | 201,029 |
—
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table representstables present changes in AOCI by component, net of tax, for the periods below (dollars in thousands):
| | | | | | | | | |
|
| Year Ended December 31, 2021 | |||||||
| | | Before Tax | | | Tax Effect | | | Net of Tax |
Unrealized gains (losses) on debt securities available for sale | | | | | | | | | |
Balance at beginning of period | | $ | 49,644 | | $ | (14,151) | | $ | 35,493 |
Unrealized holding gains (losses) on debt securities available for sale, net | | | (81,977) | | | 23,367 | | | (58,610) |
Amounts reclassified from AOCI, net | | | 61 | | | (17) | | | 44 |
Balance at end of period | | | (32,272) | | | 9,199 | | | (23,073) |
| | | | | | | | | |
Unrealized gains (losses) on cash flow hedges | | | | | | | | | |
Balance at beginning of period | | | (3,055) | | | 871 | | | (2,184) |
Unrealized holding gains (losses) on cash flow hedges, net | | | 1,030 | | | (294) | | | 736 |
Amounts reclassified from AOCI, net | | | 1,067 | | | (304) | | | 763 |
Balance at end of period | | | (958) | | | 273 | | | (685) |
| | | | | | | | | |
Total AOCI | | $ | (33,230) | | $ | 9,472 | | $ | (23,758) |
| | | | | | | | | |
|
| Year Ended December 31, 2020 | |||||||
| | | Before Tax | | | Tax Effect | | | Net of Tax |
Unrealized gains (losses) on debt securities available for sale | | | | | | | | | |
Balance at beginning of period | | $ | 21,192 | | $ | (6,032) | | $ | 15,160 |
Unrealized holding gains (losses) on debt securities available for sale, net | | | 30,176 | | | (8,615) | | | 21,561 |
Amounts reclassified from AOCI, net | | | (1,724) | | | 496 | | | (1,228) |
Balance at end of period | | | 49,644 | | | (14,151) | | | 35,493 |
| | | | | | | | | |
Unrealized gains (losses) on cash flow hedges | | | | | | | | | |
Balance at beginning of period | | | (280) | | | 80 | | | (200) |
Unrealized holding gains (losses) on cash flow hedges, net | | | (3,533) | | | 1,007 | | | (2,526) |
Amounts reclassified from AOCI, net | | | 758 | | | (216) | | | 542 |
Balance at end of period | | | (3,055) | | | 871 | | | (2,184) |
| | | | | | | | | |
Total AOCI | | $ | 46,589 | | $ | (13,280) | | $ | 33,309 |
129
Year Ended December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Before Tax | Tax Effect | Net of Tax | |||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized/Unrecognized gains (losses) on debt securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | (352,878) | $ | 100,585 | $ | (252,293) | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on debt securities available for sale, net | 58,498 | (16,674) | 41,824 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI, net | 5,503 | (1,569) | 3,934 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of unrecognized losses on securities transferred to held to maturity | 6,189 | (1,763) | 4,426 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | $ | (282,688) | $ | 80,579 | $ | (202,109) | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedges | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | (29,350) | $ | 8,365 | $ | (20,985) | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on cash flow hedges, net | (2,567) | 732 | (1,835) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI, net | 8,569 | (2,443) | 6,126 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | $ | (23,348) | $ | 6,654 | $ | (16,694) | |||||||||||||||||||||||||||||||||||||||||||||||
Total AOCI | $ | (306,036) | $ | 87,233 | $ | (218,803) |
Year Ended December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Before Tax | Tax Effect | Net of Tax | |||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized/Unrecognized gains (losses) on debt securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | (32,272) | $ | 9,199 | $ | (23,073) | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on debt securities available for sale, net | (278,762) | 79,460 | (199,302) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Unrecognized losses on debt securities transferred to held to maturity from available for sale | (48,456) | 13,812 | (34,644) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI, net | (26) | 7 | (19) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of unrecognized losses on securities transferred to held to maturity | 6,638 | (1,893) | 4,745 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | $ | (352,878) | $ | 100,585 | $ | (252,293) | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedges | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | (958) | $ | 273 | $ | (685) | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on cash flow hedges, net | (28,975) | 8,258 | (20,717) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI, net | 583 | (166) | 417 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | $ | (29,350) | $ | 8,365 | $ | (20,985) | |||||||||||||||||||||||||||||||||||||||||||||||
Total AOCI | $ | (382,228) | $ | 108,950 | $ | (273,278) |
Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Before Tax | Tax Effect | Net of Tax | |||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized/Unrecognized gains (losses) on debt securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | 49,644 | $ | (14,151) | $ | 35,493 | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on debt securities available for sale, net | (81,977) | 23,367 | (58,610) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI, net | 61 | (17) | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | $ | (32,272) | $ | 9,199 | $ | (23,073) | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedges | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | (3,055) | $ | 871 | $ | (2,184) | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) on cash flow hedges, net | 1,030 | (294) | 736 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts reclassified from AOCI, net | 1,067 | (304) | 763 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | $ | (958) | $ | 273 | $ | (685) | |||||||||||||||||||||||||||||||||||||||||||||||
Total AOCI | $ | (33,230) | $ | 9,472 | $ | (23,758) |
| | | | | | | | | |
|
| Year Ended December 31, 2019 | |||||||
| | | Before Tax | | | Tax Effect | | | Net of Tax |
Unrealized gains (losses) on debt securities available for sale | | | | | | | | | |
Balance at beginning of period | | $ | (9,528) | | $ | 2,716 | | $ | (6,812) |
Unrealized holding gains (losses) on debt securities available for sale, net | | | 26,430 | | | (7,525) | | | 18,905 |
Unrealized losses on debt securities transferred from held to maturity to available for sale | | | 5,023 | | | (1,433) | | | 3,590 |
Amounts reclassified from AOCI, net | | | (733) | | | 210 | | | (523) |
Balance at end of period | | | 21,192 | | | (6,032) | | | 15,160 |
| | | | | | | | | |
Unrealized gains (losses) on cash flow hedges | | | | | | | | | |
Balance at beginning of period | | | — | | | — | | | — |
Unrealized holding gains (losses) on cash flow hedges, net | | | (283) | | | 81 | | | (202) |
Amounts reclassified from AOCI, net | | | 3 | | | (1) | | | 2 |
Balance at end of period | | | (280) | | | 80 | | | (200) |
| | | | | | | | | |
Total AOCI | | $ | 20,912 | | $ | (5,952) | | $ | 14,960 |
NoteNOTE 21. Operating Segments and Related Information
OPERATING SEGMENTS AND RELATED INFORMATION
The Company
Services are provided through Busey Capital Management, Inc., a wholly-owned subsidiary of Busey Bank, and Busey Wealth Management, a division of Busey Bank.
The FirsTech Operating Segment
prices.
—170
| | | | | | | | | | | | |
| | Goodwill | | Total Assets | ||||||||
| | As of December 31, | | As of December 31, | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Operating segment | | | | | | | | | | | | |
Banking | | $ | 294,773 | | $ | 288,436 | | $ | 12,746,833 | | $ | 10,462,673 |
FirsTech | |
| 8,992 | |
| 8,992 | |
| 47,481 | |
| 46,553 |
Wealth Management | |
| 14,108 | |
| 14,108 | |
| 65,587 | |
| 46,504 |
Other | |
| — | |
| — | |
| (212) | |
| (11,683) |
Consolidated total | | $ | 317,873 | | $ | 311,536 | | $ | 12,859,689 | | $ | 10,544,047 |
130
Goodwill | Total Assets | ||||||||||||||||||||||
As of December 31, | As of December 31, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Operating segment | |||||||||||||||||||||||
Banking | $ | 294,773 | $ | 294,773 | $ | 12,125,298 | $ | 12,199,960 | |||||||||||||||
Wealth Management | 14,108 | 14,108 | 103,147 | 84,082 | |||||||||||||||||||
FirsTech | 8,992 | 8,992 | 51,600 | 48,715 | |||||||||||||||||||
Other | — | — | 3,370 | 3,920 | |||||||||||||||||||
Consolidated total | $ | 317,873 | $ | 317,873 | $ | 12,283,415 | $ | 12,336,677 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
| | | | | | | | | |
|
| 2021 |
| 2020 |
| 2019 | |||
Net interest income | | | | | | | | | |
Banking | | $ | 285,678 | | $ | 294,728 | | $ | 296,754 |
FirsTech | | | 79 | | | 79 | | | 76 |
Wealth Management | |
| — | |
| — | |
| — |
Other | |
| (15,059) | |
| (11,872) | |
| (9,607) |
Total net interest income | | $ | 270,698 | | $ | 282,935 | | $ | 287,223 |
| | | | | | | | | |
Noninterest income | | | | | | | | | |
Banking | | $ | 59,393 | | $ | 61,043 | | $ | 63,613 |
FirsTech | |
| 19,629 | |
| 16,548 | |
| 16,450 |
Wealth Management | |
| 53,082 | |
| 43,429 | |
| 39,075 |
Other | |
| 700 | |
| (2,755) | |
| (2,723) |
Total noninterest income | | $ | 132,804 | | $ | 118,265 | | $ | 116,415 |
| | | | | | | | | |
Noninterest expense | | | | | | | | | |
Banking | | $ | 205,905 | | $ | 185,445 | | $ | 211,559 |
FirsTech | | | 17,574 | | | 13,279 | | | 10,990 |
Wealth Management | | | 29,198 | | | 26,086 | | | 24,534 |
Other | | | 9,103 | | | 9,387 | | | 11,711 |
Total noninterest expense | | $ | 261,780 | | $ | 234,197 | | $ | 258,794 |
| | | | | | | | | |
Income before income taxes | | | | | | | | | |
Banking | | $ | 154,267 | | $ | 131,529 | | $ | 138,401 |
FirsTech | | | 2,134 | | | 3,348 | | | 5,536 |
Wealth Management | | | 23,884 | | | 17,343 | | | 14,541 |
Other | | | (23,462) | | | (24,014) | | | (24,040) |
Total income before income taxes | | $ | 156,823 | | $ | 128,206 | | $ | 134,438 |
| | | | | | | | | |
Net income | | | | | | | | | |
Banking | | $ | 117,844 | | $ | 101,226 | | $ | 106,409 |
FirsTech | |
| 1,527 | |
| 2,372 | |
| 4,060 |
Wealth Management | |
| 18,570 | |
| 13,181 | |
| 11,135 |
Other | |
| (14,492) | |
| (16,435) | |
| (18,651) |
Total net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
Years Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||||||||||||||
Net interest income | |||||||||||||||||||||||||||||
Banking | $ | 335,345 | $ | 340,083 | $ | 285,678 | |||||||||||||||||||||||
FirsTech | 54 | 65 | 79 | ||||||||||||||||||||||||||
Other | (15,948) | (16,710) | (15,059) | ||||||||||||||||||||||||||
Total net interest income | $ | 319,451 | $ | 323,438 | $ | 270,698 | |||||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||||||||
Banking | $ | 46,701 | $ | 54,154 | $ | 59,393 | |||||||||||||||||||||||
Wealth Management | 57,823 | 55,394 | 53,082 | ||||||||||||||||||||||||||
FirsTech | 22,746 | 21,720 | 19,629 | ||||||||||||||||||||||||||
Other | (4,886) | (4,465) | 700 | ||||||||||||||||||||||||||
Total noninterest income | $ | 122,384 | $ | 126,803 | $ | 132,804 | |||||||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||||||||
Banking | $ | 223,451 | $ | 221,997 | $ | 205,905 | |||||||||||||||||||||||
Wealth Management | 33,081 | 31,545 | 29,198 | ||||||||||||||||||||||||||
FirsTech | 21,653 | 20,619 | 17,574 | ||||||||||||||||||||||||||
Other | 7,347 | 9,720 | 9,103 | ||||||||||||||||||||||||||
Total noninterest expense | $ | 285,532 | $ | 283,881 | $ | 261,780 | |||||||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||||||||
Banking | $ | 156,196 | $ | 167,617 | $ | 154,267 | |||||||||||||||||||||||
Wealth Management | 24,742 | 23,849 | 23,884 | ||||||||||||||||||||||||||
FirsTech | 1,147 | 1,166 | 2,134 | ||||||||||||||||||||||||||
Other | (28,181) | (30,895) | (23,462) | ||||||||||||||||||||||||||
Total income before income taxes | $ | 153,904 | $ | 161,737 | $ | 156,823 | |||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||
Banking | $ | 123,853 | $ | 131,596 | $ | 117,844 | |||||||||||||||||||||||
Wealth Management | 18,804 | 18,543 | 18,570 | ||||||||||||||||||||||||||
FirsTech | 830 | 847 | 1,527 | ||||||||||||||||||||||||||
Other | (20,922) | (22,675) | (14,492) | ||||||||||||||||||||||||||
Total net income | $ | 122,565 | $ | 128,311 | $ | 123,449 |
131
Note 22. Leases
Busey as the Lessee
The Company has operating leases consisting primarily of equipment leases and real estate leases for banking centers, ATM locations, and office space. The following table summarizes lease related information and balances the Company reported in its Consolidated Balance Sheets for the periods presented (dollars in thousands):
| | | | | | |
| As of December 31, | | ||||
| 2021 |
| 2020 |
| ||
Lease balances | | | | | | |
Right of use assets | $ | 10,533 | | $ | 7,714 | |
Lease liabilities | | 10,591 | | | 7,757 | |
| | | | | | |
Supplemental information | | | | | | |
Year through which lease terms extend | | 2031 | | | 2032 | |
Weighted average remaining lease term (in years) | | 6.47 | | | 5.93 | |
Weighted average discount rate | | 2.16 | % | | 2.82 | % |
The following table represents lease costs and cash flows related to leases for the periods presented (dollars in thousands):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 | | 2019 | |||
Lease costs | | | | | | | | | |
Operating lease costs | | $ | 2,464 | | $ | 2,524 | | $ | 2,364 |
Variable lease costs | | | 540 | |
| 416 | |
| 432 |
Short-term lease costs | | | 49 | | | 35 | | | 84 |
Total lease cost (1) | | $ | 3,053 | | $ | 2,975 | | $ | 2,880 |
| | | | | | | | | |
Cash flows related to leases | | | | | | | | | |
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | | | |
Operating lease cash flows – Fixed payments | | $ | 2,417 | | $ | 2,526 | | $ | 2,296 |
Operating lease cash flows – Liability reduction | | | 2,217 | |
| 2,289 | |
| 2,010 |
Right of use assets obtained during the period in exchange for operating lease liabilities (2) | | | 5,818 | | | 743 | | | 923 |
At December 31, 2021, the Company was obligated under noncancelable operating leases for office space and other commitments.
132
Future undiscounted lease payments with initial terms of one year or more, are as follows (dollars in thousands):
| | | |
| | As of | |
|
| December 31, 2021 | |
Rent commitments | | | |
2022 | | $ | 2,271 |
2023 | |
| 2,098 |
2024 | | | 1,650 |
2025 | | | 1,413 |
2026 | | | 1,164 |
Thereafter | | | 2,766 |
Total undiscounted cash flows | | | 11,362 |
Less: Amounts representing interest | | | 771 |
Present value of net future minimum lease payments | | $ | 10,591 |
Busey as the Lessor
Busey occasionally leases parking lots and office space to outside parties. Further, in connection with the acquisition of CAC, the Company acquired 2 office buildings in Glenview, IL and 1 office building in Northbrook, IL, along with operating leases for space within these buildings that is rented to outside parties. Revenues recorded in connection with these leases and reported in other income on our Consolidated Statements of Income are summarized as follows (dollars in thousands):
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 | | 2019 | |||
Rental income | | $ | 566 | | $ | 228 | | $ | 263 |
133
Note 23. Parent Company Only Financial Information
Condensed financial data for First Busey Corporation is presented below.
CONDENSED BALANCE SHEETS
| | | | | | |
| | As of December 31, | ||||
|
| 2021 |
| 2020 | ||
Assets | | | | | | |
Cash and cash equivalents | | $ | 78,217 | | $ | 129,183 |
Equity securities | | | 13,571 | | | 5,530 |
Investments in subsidiaries: | | | | | | |
Bank | |
| 1,565,226 | |
| 1,417,130 |
Non-bank | |
| 2,812 | |
| 2,746 |
Premises and equipment, net | |
| 30 | |
| 51 |
Other assets | |
| 22,444 | |
| 21,664 |
Total assets | | $ | 1,682,300 | | $ | 1,576,304 |
| | | | | | |
Liabilities and Stockholders' Equity | | | | | | |
Liabilities: | | | | | | |
Short-term borrowings | | $ | 12,000 | | $ | — |
Long-term debt | | | 42,000 | | | — |
Senior notes, net of unamortized issuance costs | | | 39,944 | | | 39,809 |
Subordinated notes, net of unamortized issuance costs | | | 182,773 | | | 182,226 |
Junior subordinated debentures owed to unconsolidated trusts | | | 71,635 | | | 71,468 |
Other liabilities | |
| 14,836 | |
| 12,732 |
Total liabilities | |
| 363,188 | |
| 306,235 |
| | | | | | |
Total stockholders' equity | |
| 1,319,112 | |
| 1,270,069 |
Total liabilities and stockholders' equity | | $ | 1,682,300 | | $ | 1,576,304 |
134
As of December 31, | |||||||||||
2023 | 2022 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 100,098 | $ | 91,812 | |||||||
Debt securities | 987 | — | |||||||||
Equity securities | 9,364 | 11,535 | |||||||||
Investments in subsidiaries: | |||||||||||
Bank | 1,478,118 | 1,369,261 | |||||||||
Non-bank | — | 2,181 | |||||||||
Premises and equipment, net | 7 | 18 | |||||||||
Other assets | 20,100 | 22,316 | |||||||||
Total assets | $ | 1,608,674 | $ | 1,497,123 | |||||||
Liabilities and stockholders' equity | |||||||||||
Liabilities: | |||||||||||
Short-term borrowings | $ | 12,000 | $ | 12,000 | |||||||
Long-term debt | 18,000 | 30,000 | |||||||||
Subordinated notes, net of unamortized issuance costs | 222,882 | 222,038 | |||||||||
Junior subordinated debentures owed to unconsolidated trusts | 71,993 | 71,810 | |||||||||
Other liabilities | 11,818 | 15,298 | |||||||||
Total liabilities | 336,693 | 351,146 | |||||||||
Total stockholders' equity | 1,271,981 | 1,145,977 | |||||||||
Total liabilities and stockholders' equity | $ | 1,608,674 | $ | 1,497,123 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Operating income: | | | | | | | | | |
Dividends from subsidiaries: | | | | | | | | | |
Bank | | $ | 60,000 | | $ | 122,000 | | $ | 70,000 |
Non-bank | |
| 1,745 | |
| — | |
| — |
Interest income | |
| 79 | |
| 154 | |
| 441 |
Unrealized gains (losses) recognized on equity securities | | | 3,041 | | | (393) | | | (759) |
Other income | |
| 12,109 | |
| 10,083 | |
| 10,224 |
Total operating income | |
| 76,974 | |
| 131,844 | |
| 79,906 |
| | | | | | | | | |
Expense: | | | | | | | | | |
Salaries, wages, and employee benefits | |
| 17,914 | |
| 16,205 | |
| 15,288 |
Interest expense | |
| 15,163 | |
| 12,056 | |
| 10,054 |
Operating expense | |
| 7,429 | |
| 7,685 | |
| 8,960 |
Total expense | |
| 40,506 | |
| 35,946 | |
| 34,302 |
| | | | | | | | | |
Income (loss) before income tax benefit and equity in undistributed (in excess of) net income of subsidiaries | | | 36,468 | |
| 95,898 | |
| 45,604 |
Income tax benefit | |
| 8,974 | |
| 7,727 | |
| 5,389 |
Income (loss) before equity in undistributed (in excess of) net income of subsidiaries | |
| 45,442 | |
| 103,625 | |
| 50,993 |
| | | | | | | | | |
Equity in undistributed (in excess of) net income of subsidiaries: | | | | | | | | | |
Bank | |
| 77,941 | |
| (5,221) | |
| 51,604 |
Non-bank | |
| 66 | |
| 1,940 | |
| 356 |
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
135
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Operating income | |||||||||||||||||
Dividends from subsidiaries: | |||||||||||||||||
Bank | $ | 90,000 | $ | 95,000 | $ | 60,000 | |||||||||||
Non-bank | 900 | 1,630 | 1,745 | ||||||||||||||
Income from dissolution of non-bank subsidiary | 733 | — | — | ||||||||||||||
Interest income | 2,956 | 1,094 | 79 | ||||||||||||||
Gains (losses) recognized on equity securities, net | (2,171) | (2,159) | 3,041 | ||||||||||||||
Other income | 14,130 | 15,195 | 12,109 | ||||||||||||||
Total operating income | 106,548 | 110,760 | 76,974 | ||||||||||||||
Expense | |||||||||||||||||
Salaries, wages, and employee benefits | 17,766 | 20,964 | 17,914 | ||||||||||||||
Interest expense | 19,005 | 17,854 | 15,163 | ||||||||||||||
Operating expense | 8,009 | 7,294 | 7,429 | ||||||||||||||
Total expense | 44,780 | 46,112 | 40,506 | ||||||||||||||
Income (loss) before income tax benefit and equity in undistributed (in excess of) net income of subsidiaries | 61,768 | 64,648 | 36,468 | ||||||||||||||
Income tax benefit | 7,310 | 8,286 | 8,974 | ||||||||||||||
Income (loss) before equity in undistributed (in excess of) net income of subsidiaries | 69,078 | 72,934 | 45,442 | ||||||||||||||
Equity in undistributed (in excess of) net income of subsidiaries | |||||||||||||||||
Bank | 53,487 | 55,986 | 77,941 | ||||||||||||||
Non-bank | — | (609) | 66 | ||||||||||||||
Net income | $ | 122,565 | $ | 128,311 | $ | 123,449 |
| | | | | | | | | |
| | Years Ended December 31, | |||||||
|
| 2021 |
| 2020 |
| 2019 | |||
Cash Flows Provided by (Used in) Operating Activities | | | | | | | | | |
Net income | | $ | 123,449 | | $ | 100,344 | | $ | 102,953 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | | | | | |
Depreciation and amortization | |
| 882 | |
| 648 | |
| 420 |
Distributions more (less) than net income of subsidiaries | |
| (78,007) | |
| 3,281 | |
| (51,961) |
Unrealized (gains) losses recognized on equity securities | | | (3,041) | | | 393 | | | 759 |
Stock-based compensation | |
| 7,864 | |
| 7,135 | |
| 3,997 |
Changes in assets and liabilities: | | | | | | | | | |
(Increase) decrease in other assets | |
| (1,186) | |
| 405 | |
| (4,279) |
Increase (decrease) in other liabilities | |
| (3,302) | |
| (5,772) | |
| (1,280) |
Net cash provided by (used in) operating activities | |
| 46,659 | |
| 106,434 | |
| 50,609 |
| | | | | | | | | |
Cash Flows Provided by (Used in) Investing Activities | | | | | | | | | |
Purchases of equity securities | | | (5,000) | | | — | | | (520) |
Net cash paid for acquisitions | | | (61,656) | | | — | | | (90,722) |
Purchases of premises and equipment | |
| (15) | |
| (19) | |
| (31) |
Net cash provided by (used in) investing activities | |
| (66,671) | |
| (19) | |
| (91,273) |
| | | | | | | | | |
Cash Flows Provided by (Used in) Financing Activities | | | | | | | | | |
Cash paid for withholding taxes on stock-based payments | |
| (997) | |
| (635) | |
| (863) |
Cash dividends paid | |
| (50,764) | |
| (48,012) | |
| (45,171) |
Repayments of borrowings | | | (18,500) | | | (74,000) | | | (6,000) |
Proceeds from issuance of debt | | | 72,500 | | | 142,634 | | | 60,000 |
Proceeds from stock options exercised | | | — | | | 101 | | | 169 |
Purchase of treasury stock | | | (33,043) | | | (12,272) | | | (24,292) |
Common stock issuance costs | | | (150) | | | — | | | (234) |
Net cash provided (used in) by financing activities | |
| (30,954) | |
| 7,816 | |
| (16,391) |
| | | | | | | | | |
Net increase (decrease) in cash and cash equivalents | |
| (50,966) | |
| 114,231 | |
| (57,055) |
Cash and cash equivalents, beginning of period | |
| 129,183 | |
| 14,952 | |
| 72,007 |
| | | | | | | | | |
Cash and cash equivalents, ending of period | | $ | 78,217 | | $ | 129,183 | | $ | 14,952 |
136
Years Ended December 31, | |||||||||||||||||
2023 | 2022 | 2021 | |||||||||||||||
Cash flows provided by (used in) operating activities | |||||||||||||||||
Net income | $ | 122,565 | $ | 128,311 | $ | 123,449 | |||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||||||
Depreciation and amortization | 1,038 | 1,423 | 882 | ||||||||||||||
Distributions more (less) than net income of subsidiaries | (53,487) | (55,377) | (78,007) | ||||||||||||||
(Gains) losses recognized on equity securities, net | 2,171 | 2,159 | (3,041) | ||||||||||||||
Stock-based compensation | 6,595 | 8,968 | 7,864 | ||||||||||||||
(Increase) decrease in other assets | 6,253 | (17,754) | (1,186) | ||||||||||||||
Increase (decrease) in other liabilities | (7,687) | 21,233 | (3,302) | ||||||||||||||
Net cash provided by (used in) operating activities | 77,448 | 88,963 | 46,659 | ||||||||||||||
Cash flows provided by (used in) investing activities | |||||||||||||||||
Sales (purchases) of equity securities, net | — | 598 | (5,000) | ||||||||||||||
Net cash paid for acquisitions | — | — | (61,656) | ||||||||||||||
Purchases of premises and equipment | — | (9) | (15) | ||||||||||||||
Repayments of investments in subsidiaries | 1,480 | — | — | ||||||||||||||
Net cash provided by (used in) investing activities | 1,480 | 589 | (66,671) | ||||||||||||||
Cash flows provided by (used in) financing activities | |||||||||||||||||
Cash paid for withholding taxes on stock-based payments | (1,093) | (1,276) | (997) | ||||||||||||||
Cash dividends paid | (53,076) | (50,863) | (50,764) | ||||||||||||||
Repayments of borrowings | (12,000) | (112,000) | (18,500) | ||||||||||||||
Proceeds from issuance of debt | — | 98,094 | 72,500 | ||||||||||||||
Proceeds from the exercise of stock options and warrants | 9 | — | — | ||||||||||||||
Purchase of treasury stock | (4,482) | (9,912) | (33,043) | ||||||||||||||
Common stock issuance costs | — | — | (150) | ||||||||||||||
Net cash provided (used in) by financing activities | (70,642) | (75,957) | (30,954) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | 8,286 | 13,595 | (50,966) | ||||||||||||||
Cash and cash equivalents, beginning of period | 91,812 | 78,217 | 129,183 | ||||||||||||||
Cash and cash equivalents, ending of period | $ | 100,098 | $ | 91,812 | $ | 78,217 |
Changes in Internal Control Over Financial Reporting
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
During the three months ended December 31, 2021, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Evaluation of Disclosure Controls and Procedures
Management’s Report on Internal Control Over Financial Reporting
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
First
RSM US LLP, an independent registered public accounting firm that audited the Busey’s Consolidated Financial Statements of the Company included in this Annual Report, has issued an audit opinion on the effectiveness of the Company’sBusey’s internal control over financial reporting as of December 31, 2021.2023. The report, which expresses an unqualified opinion on the effectiveness of the Company’sBusey’s internal control over financial reporting as of December 31, 2021,2023, is included in this Item under the heading “Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting.”
137
First Busey Corporation
As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Glenview State Bank from its assessment of internal control over financial reporting from June 1, 2021 through August 14, 2021 because it was acquired by the Company in a purchase business combination on May 31, 2021 and merged into Busey Bank on August 14, 2021. We have also excluded Glenview State Bank from our audit of internal control over financial reporting for the period from June 1, 2021 through August 14, 2021. Glenview State Bank was a wholly owned subsidiary whose net income did not represent a material percentage of the Company’s net income, and whose balance sheet accounted for 11.9% of the Company’s consolidated total assets as of the acquisition date.
Basis for Opinion
138
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
139
(a)EXECUTIVE OFFICERS
(b) Executive Officers of the Registrant. “Delinquent Section 16(a) Reports.”
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to First Busey’s Proxy Statement for its 20222024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of First Busey’s fiscal year-end under the captions “
140
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Stock Incentive Plans
STOCK INCENTIVE PLANS
(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights1 | (b) Weighted- average exercise price of outstanding options, warrants and rights2 | (c) Number of securities remaining for future issuance under equity compensation plans (excluding securities reflected in column (a))3 | |||||||||||||||
Equity compensation plans | |||||||||||||||||
Approved by stockholders4 | 1,657,569 | $ | 23.53 | 2,175,722 | |||||||||||||
Not approved by stockholders | — | — | — | ||||||||||||||
Total as of December 31, 2023 | 1,657,569 | $ | 23.53 | 2,175,722 |
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| | securities to be | | average | | under equity |
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| | issued upon | | exercise price of | | compensation |
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| | exercise of | | outstanding | | plans (excluding |
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| | options, warrants | | warrants and | | reflected in |
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| rights (1) |
| column (a)) |
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Equity compensation plans | | | | | | | | |
Approved by stockholders (2) |
| 1,427,421 | (3) | $ | 23.53 |
| 1,597,235 | (4) |
Not approved by stockholders |
| — | |
| — |
| — | |
Total as of December 31, 2021 |
| 1,427,421 | | $ | 23.53 |
| 1,597,235 | |
4.Includes outstanding awards under the 2020 Equity Plan, the First Busey Corporation 2010 Equity Incentive Plan, as amended, and the First Community 2016 Equity Incentive Plan. |
Other information required by Item 12 is incorporated herein by reference to First Busey’s Proxy Statement for its 20222024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of First Busey’s fiscal year-end under the caption “Stock Ownership of Certain Beneficial Owners and Management.”
The information required by this Item is incorporated herein by reference to First Busey’s Proxy Statement for its 20222024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of First Busey’s fiscal year-end under the captions “Certain Relationships and Related-Person Transactions” and “Corporate Governance and Board of Directors Matters.Matters” and “Certain Relationships and Related-Person Transactions.”
The information required by this Item is incorporated herein by reference to First Busey’s Proxy Statement for its 20222024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of First Busey’s fiscal year-end under the caption “Audit and Related Fees.Fees.”
141
Financial Statement Schedules
EXHIBITS
Our Consolidated Financial Statements are included as part of this Annual Report in “Part II, Item 8. Financial Statements and Supplementary Data,” as follows:
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Reports on Internal Control Over Financial Reporting are included as part of this Annual Report in “Part II, Item 9A. Controls and Procedures,” as follows:
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Exhibits
A list of exhibits to this Annual Report is set forth on the Exhibit Index beginning on page 143,183, and is incorporated into this Annual Report by reference.
Stockholders may obtain a copy of any of the exhibits by writing to First Busey Corporation, Corporate Secretary, at 100 W. University, Champaign, IL 61820, or by visiting the SEC’s EDGAR database at http://www.sec.gov. The Company’ssec.gov. Busey’s SEC file number is 0-15950.
Item 8. Financial Statements and Supplementary Data,” as follows:
Report of Independent Registered Public Accounting Firm (PCAOB ID 49) |
142
EXHIBIT INDEX
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| | | | Incorporated herein by reference | | | ||||||
Exhibit |
| Description of Exhibit |
| Filing Entity (1) |
| Form |
| Exhibit |
| Filing Date |
| Filed |
2.1* | | | BUSE | | 8-K | | 2.1 | | 1/19/2021 | | | |
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3.1 | | | BUSE | | 10-Q | | 3.1 | | 11/6/2015 | | | |
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3.2 | | Certificate of Amendment to Articles of Incorporation, dated May 22, 2020 | | BUSE | | S-8 | | 4.2 | | 5/29/2020 | | |
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3.3 | | | BUSE | | 8-K | | 3.1 | | 11/24/2008 | | | |
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4.1 | | Certain instruments defining the rights of holders of long-term debt of the First Busey, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the First Busey and its subsidiaries on a consolidated basis, have not been filed as exhibits. First Busey hereby agrees to furnish a copy of any of these agreements to the SEC upon request. | | | | | | | | | | |
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4.2 | | | BUSE | | 10-K | | 4.2 | | 2/25/2021 | | | |
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10.1† | | | BUSE | | 10-K | | 10.1 | | 2/28/2018 | | | |
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10.2† | | | MSTI | | 10-K | | 10.2 | | 3/29/2002 | | | |
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10.3† | | Letter Agreement between Main Street Trust, Inc., and Van A. Dukeman, dated September 20, 2006 | | MSTI | | 8-K | | 99.2 | | 9/21/2006 | | |
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10.4† | | | BUSE | | 10-Q | | 10.1 | | 5/13/2010 | | | |
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143
Incorporated herein by reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Description of Exhibit | Filing Entity1 (File No.) | Form | Exhibit | Filing Date | Filed Herewith | ||||||||||||||||||||||||||||||||
3.1 | BUSE (0-15950) | 10-Q | 3.1 | 11/06/2015 | ||||||||||||||||||||||||||||||||||
3.2 | BUSE (333-238782) | S-8 | 4.2 | 05/29/2020 | ||||||||||||||||||||||||||||||||||
3.3 | BUSE (0-15950) | 8-K | 3.1 | 12/07/2023 | ||||||||||||||||||||||||||||||||||
4.1 | Certain instruments defining the rights of holders of long-term debt of First Busey, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the First Busey and its subsidiaries on a consolidated basis, have not been filed as exhibits. First Busey hereby agrees to furnish a copy of any of these agreements to the SEC upon request. | |||||||||||||||||||||||||||||||||||||
4.2 | BUSE (0-15950) | 10-K | 4.2 | 02/23/2024 | ||||||||||||||||||||||||||||||||||
10.1† | MSTI (000-30031) | 10-K | 10.2 | 03/29/2002 | ||||||||||||||||||||||||||||||||||
10.2† | MSTI (000-30031) | 8-K | 99.2 | 09/21/2006 | ||||||||||||||||||||||||||||||||||
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10.4† | Van A. Dukeman First Amendment to Employment Agreement, dated December 31, 2008 | BUSE (0-15950) | 10-Q | 05/08/2012 |
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| First Busey Corporation 2010 Equity Incentive Plan, as amended | BUSE (0-15950) |
| DEF 14A | Appendix C |
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| BUSE (0-15950) | 10-K | 02/28/2018 |
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| First Community Financial Partners, Inc. Amended and Restated 2008 Equity Incentive Plan | FCFP (333-185041) | S-4 |
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| FCFP (001-37505) | 10-K | 03/14/2016 |
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| First Community Financial Partners, Inc. 2016 Equity Incentive Plan | FCFP (333-211811) | S-8 | 06/03/2016 |
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| First Amendment of the First Community Financial Partners, Inc. 2016 Equity Incentive Plan | BUSE (0-15950) | 10-K | 02/28/2018 | |||||||||||||||||||||||||||||||||||||||||||||||
Exhibit Number | Filing Entity1 (File No.) | Form | Filing Date | Filed Herewith | ||||||||||||||||||||||||||||||||||
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| BUSE (0-15950) | 10-Q | 08/07/2018 |
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| Robin N. Elliott Employment Agreement, dated December 5, 2019 | BUSE (0-15950) | 8-K |
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| Amy L. Randolph Employment Agreement, dated December 5, 2019 | BUSE (0-15950) | 8-K |
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| Jeffrey D. Jones Amendment to Employment Agreement, dated December 5, 2019 | BUSE (0-15950) | 8-K |
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| | | | Incorporated herein by reference | | | ||||||
Exhibit |
| Description of Exhibit |
| Filing Entity (1) |
| Form |
| Exhibit |
| Filing Date |
| Filed |
10.32† | | Gregory B. Lykins Letter of Understanding, dated April 1, 2021 | | BUSE | | 10-Q | | 10.33 | | 5/6/2021 | | |
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10.33 | | | BUSE | | 8-K | | 10.34 | | 6/2/2021 | | | |
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21.1 | | | | | | | | | | | X | |
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23.1 | | Consent of Independent Registered Public Accounting Firm, RSM US LLP | | | | | | | | | | X |
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31.1 | | Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) | | | | | | | | | | X |
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31.2 | | Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) | | | | | | | | | | X |
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32.1 | | | | | | | | | | | X | |
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32.2 | | | | | | | | | | | X | |
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101.INS | | iXBRL Instance Document | | | | | | | | | | |
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101.SCH | | iXBRL Taxonomy Extension Schema | | | | | | | | | | |
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101.CAL | | iXBRL Taxonomy Extension Calculation Linkbase | | | | | | | | | | |
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101.LAB | | iXBRL Taxonomy Extension Label Linkbase | | | | | | | | | | |
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101.PRE | | iXBRL Taxonomy Extension Presentation Linkbase | | | | | | | | | | |
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101.DEF | | iXBRL Taxonomy Extension Definition Linkbase | | | | | | | | | | |
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104 | | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101) | | | | | | | | | | |
146
Incorporated herein by reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Description of Exhibit | Filing Entity1 (File No.) | Form | Exhibit | Filing Date | Filed Herewith | ||||||||||||||||||||||||||||||||
10.23† | BUSE (0-15950) | DEF 14A | Appendix A | 04/14/2023 | ||||||||||||||||||||||||||||||||||
10.24† | BUSE (0-15950) | S-8 | 4.5 | 05/29/2020 | ||||||||||||||||||||||||||||||||||
10.25† | BUSE (0-15950) | 8-K | 10.1 | 07/09/2020 | ||||||||||||||||||||||||||||||||||
10.26† | BUSE (0-15950) | 10-Q | 10.1 | 08/06/2020 | ||||||||||||||||||||||||||||||||||
10.27† | BUSE (0-15950) | DEF 14A | Appendix A | 04/08/2021 | ||||||||||||||||||||||||||||||||||
10.28† | BUSE (0-15950) | 10-Q | 10.33 | 05/06/2021 | ||||||||||||||||||||||||||||||||||
10.29 | BUSE (0-15950) | 8-K | 10.34 | 06/02/2021 | ||||||||||||||||||||||||||||||||||
10.30† | BUSE (0-15950) | 10-K | 10.30 | 02/23/2023 | ||||||||||||||||||||||||||||||||||
10.31† | BUSE (0-15950) | 8-K | 10.1 | 10/24/2023 | ||||||||||||||||||||||||||||||||||
21.1 | BUSE (0-15950) | 10-K | 21.1 | 02/23/2024 | ||||||||||||||||||||||||||||||||||
Incorporated herein by reference Description of Exhibit Form Exhibit Filing Date 23.1 X 31.1 X 31.2 X 32.1 X 32.2 X 97.1 10-K 97.1 02/23/2024 101.INS iXBRL Instance Document 101.SCH iXBRL Taxonomy Extension Schema 101.CAL iXBRL Taxonomy Extension Calculation Linkbase 101.LAB iXBRL Taxonomy Extension Label Linkbase 101.PRE iXBRL Taxonomy Extension Presentation Linkbase 101.DEF iXBRL Taxonomy Extension Definition Linkbase
Incorporated herein by reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Description of Exhibit | Filing Entity1 (File No.) | Form | Exhibit | Filing Date | Filed Herewith | ||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101) |
Date: February |
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| FIRST BUSEY CORPORATION | ||||||||||
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| /s/ VAN A. DUKEMAN | ||||||||||
Van A. Dukeman | |||||||||||
Chairman, President and Chief Executive Officer | |||||||||||
(Principal Executive Officer) | |||||||||||
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| /s/ JEFFREY D. JONES | ||||||||||
Jeffrey D. Jones | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial Officer) | |||||||||||
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| Corporate Controller and Principal Accounting Officer | ||||||||||
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/s/ VAN A. DUKEMAN | Chairman, President and Chief Executive Officer |
| February | |||||||||||||
Van A. Dukeman | (Principal Executive Officer) |
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/s/ JEFFREY D. JONES | Chief Financial Officer |
| February | |||||||||||||
Jeffrey D. Jones | (Principal Financial Officer) |
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/s/ | Corporate Controller and Principal Accounting Officer |
| February | |||||||||||||
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/s/ GREGORY B. LYKINS |
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Gregory B. Lykins |
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/s/ SAMUEL P. BANKS |
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Samuel P. Banks |
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/s/ GEORGE BARR |
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George Barr |
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/s/ STANLEY J. BRADSHAW |
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Stanley J. Bradshaw |
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/s/ MICHAEL D. CASSENS |
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Michael D. Cassens |
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/s/ KAREN M. JENSEN |
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| February | ||||||||||
Karen M. Jensen |
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/s/ FREDERIC L. KENNEY |
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Frederic L. Kenney |
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/s/ STEPHEN V. KING |
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Stephen V. King | |||||||||||||
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148