UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☑ þ			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended ~~June~~September 30, 2022


☐ o			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 0-15950

FIRST BUSEY CORPORATION

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (~~217~~) (217) 365-4544

N/A

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Common Stock, $.001 par value	BUSE	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ◻o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ◻o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑þ	Accelerated filer ☐o	Non-accelerated filer ☐o
Smaller reporting company	☐o	Emerging growth company ☐o

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. ◻o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐o No ☑þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

~~Class~~

Class

Outstanding at ~~August 4,~~November 3, 2022

Common Stock, $.001 par value

~~55,217,703~~

55,232,434

Table of Contents

FIRST BUSEY CORPORATION

FORM 10-Q

~~June~~

September 30, 2022

Table of Contents


GLOSSARY							3
~~GLOSSARY~~		3
Part I		FINANCIAL INFORMATION		5
~~Part I~~		~~FINANCIAL INFORMATION~~		5

Item 1.	FINANCIAL STATEMENTS (UNAUDITED)		5
				CONSOLIDATED BALANCE SHEETS		6
				CONSOLIDATED STATEMENTS OF INCOME ~~(LOSS)~~		7
				CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (L OSS)		8
				CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY		9
				CONSOLIDATED STATEMENTS OF CASH FLOWS		11
		NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS		13
				Note 1:	Significant Accounting Policies	13
				Note 2: Acquisitions	~~Acquisitions~~15			15
				Note 3: Securities	~~Securities~~18			18
				Note 4:	Portfolio Loans	21 22
				Note 5: Deposits	~~Deposits~~31			30
				Note 6: Borrowings	~~Borrowings~~32			31
				Note 7:	Regulatory Capital	33 34
				Note 8:	Stock-Based Compensation	35 36
				Note 9:	Outstanding Commitments and Contingent Liabilities	38 39
				Note 10:	Derivative Financial Instruments	38 40
				Note 11:	Fair Value Measurements	42 44
				Note 12:	Earnings per Common Share	46 48
				Note 13:	Accumulated Other Comprehensive Income (Loss)	48 50
				Note 14:	Operating Segments and Related Information	49 51
				Note 15: Leases	~~Leases~~54			51
Item 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		53 56
Item 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		81 85
Item 4.		CONTROLS AND PROCEDURES		82 86

Part II		OTHER INFORMATION		82 87

Item 1.		LEGAL PROCEEDINGS		82 87
Item 1A.		RISK FACTORS		82 87
Item 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		83 87
Item 3.		DEFAULTS UPON SENIOR SECURITIES		83 87
Item 4.		MINE SAFETY DISCLOSURES		83 87
Item 5.		OTHER INFORMATION		83 87
Item 6.		EXHIBITS		84 88

SIGNATURES				85 89

Table of Contents

GLOSSARY

We use acronyms, abbreviations, and other terms throughout this Quarterly Report, as defined in the glossary below:


~~Term~~	~~Definition~~
Term		Definition
2020 Equity Plan		First Busey's 2020 Equity Incentive Plan
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
AOCI		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
~~CAC~~ bps		~~Cummins-American Corp.~~ basis points
CAC		Cummins-American Corp.
CARES Act		Coronavirus Aid, Relief, and Economic Security Act
CECL		Current Expected Credit Losses
COVID-19		Coronavirus disease 2019
DSU		Deferred stock unit
ESPP		Employee Stock Purchase Plan
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”~~ Measurement”
FDIC		Federal Deposit Insurance Corporation
Federal Reserve		Board of Governors of the Federal Reserve System
FHLB		Federal Home Loan Bank
First Busey		First Busey Corporation and its wholly-owned consolidated subsidiaries; also, “Busey,” the “Company,” “we,” “us,” and “our”
First Busey Risk Management		First Busey Risk Management, Inc.
FirsTech		FirsTech, Inc.
FOMC		Federal Open Market Committee
GAAP		U.S. Generally Accepted Accounting Principles
GSB		Glenview State Bank
Interagency Statement		Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus, issued on March 22, 2020, and revised on April 7, 2020
LIBOR		London Interbank Offered Rate
LOCOM		Lower of Cost or Market, an accounting approach under which loans are carried at amortized historical cost less loan write-offs and downward market value adjustments, as may be applicable
NM		Not meaningful
NMTC		New Markets Tax Credit
OCI		Other comprehensive income (loss)
OREO		Other real estate owned

Table of Contents


~~PCD~~ Term						Definition
PCD						Purchased credit deteriorated
PPP						Paycheck Protection Program
PSU						Performance-based restricted stock unit
Quarterly Report						Quarterly report filed with the SEC on Form 10-Q pursuant to Section 13 or 15(d) of the Exchange Act

~~Table of Contents~~


~~Term~~	~~Definition~~
RSU		Restricted stock unit
SBA		U.S. Small Business Administration
SEC		U.S. Securities and Exchange Commission
SOFR		Secured Overnight Financing Rate published by the Federal Reserve
TDR		Troubled debt restructuring
U.S.		United States of America
U.S. Treasury		U.S. Department of the Treasury

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Table of Contents

FIRST BUSEY CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

(dollars in thousands)

As of

June 30,

December 31,

2022

2021
Assets

Cash and cash equivalents:

Cash and due from banks

$
131,113

$
102,983
Interest-bearing deposits

99,739

733,112
Total cash and cash equivalents

230,852

836,095

Debt securities available for sale

2,744,646

3,981,251
Debt securities held to maturity

953,012

—
Equity securities

11,264

13,571
Loans held for sale (2022 at LOCOM, 2021 at fair value)

4,813

23,875
Portfolio loans (net of ACL of $88,757 at June 30, 2022, and $87,887 at December 31, 2021)

7,409,021

7,101,111
Premises and equipment, net

130,892

136,147
Right of use assets

8,615

10,533
Goodwill

317,873

317,873
Other intangible assets, net

52,089

58,051
Cash surrender value of bank owned life insurance

178,575

176,940
Other assets

314,781

204,242
Total assets

$
12,356,433

$
12,859,689

Liabilities and Stockholders’ Equity

Liabilities

Deposits:

Noninterest-bearing

$
3,505,299

$
3,670,267
Interest-bearing

6,891,929

7,098,310
Total deposits

10,397,228

10,768,577

Securities sold under agreements to repurchase

228,383

270,139
Short-term borrowings

16,396

17,678
Long-term debt

36,000

46,056
Senior notes, net of unamortized issuance costs

—

39,944
Subordinated notes, net of unamortized issuance costs

281,304

182,773
Junior subordinated debt owed to unconsolidated trusts

71,721

71,635
Lease liabilities

8,655

10,591
Other liabilities

154,789

133,184
Total liabilities

11,194,476

11,540,577

Outstanding commitments and contingent liabilities (see Notes 9 and 15)

Stockholders’ Equity

Common stock, ($.001 par value; 100,000,000 shares authorized)

58

58
Additional paid-in capital

1,317,675

1,316,984
Retained earnings

124,685

92,463
AOCI

(211,107)

(23,758)
Total stockholders’ equity before treasury stock

1,231,311

1,385,747

Treasury stock at cost

(69,354)

(66,635)
Total stockholders’ equity

1,161,957

1,319,112
Total liabilities and stockholders’ equity

$
12,356,433

$
12,859,689

Shares

Common shares issued

58,116,970

58,116,970
Less treasury shares

(2,781,267)

(2,682,060)
Common shares outstanding

55,335,703

55,434,910


	As of
	September 30, 2022		December 31, 2021
Assets
Cash and cash equivalents:
Cash and due from banks	$	121,419	$	102,983
Interest-bearing deposits	225,730		733,112
Total cash and cash equivalents	347,149		836,095

Debt securities available for sale	2,547,041		3,981,251
Debt securities held to maturity	936,328		—
Equity securities	11,341		13,571
Loans held for sale (2022 at LOCOM, 2021 at fair value)	4,546		23,875
Portfolio loans (net of ACL of $90,722 at September 30, 2022, and $87,887 at December 31, 2021)	7,579,392		7,101,111
Premises and equipment, net	128,175		136,147
Right of use assets	10,202		10,533
Goodwill	317,873		317,873
Other intangible assets, net	49,218		58,051
Cash surrender value of bank owned life insurance	179,533		176,940
Other assets	386,590		204,242
Total assets	$	12,497,388	$	12,859,689

Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Noninterest-bearing	$	3,628,169	$	3,670,267
Interest-bearing	6,973,228		7,098,310
Total deposits	10,601,397		10,768,577

Securities sold under agreements to repurchase	234,597		270,139
Short-term borrowings	16,225		17,678
Long-term debt	33,000		46,056
Senior notes, net of unamortized issuance costs	—		39,944
Subordinated notes, net of unamortized issuance costs	221,835		182,773
Junior subordinated debt owed to unconsolidated trusts	71,765		71,635
Lease liabilities	10,311		10,591
Other liabilities	201,670		133,184
Total liabilities	11,390,800		11,540,577

Outstanding commitments and contingent liabilities (see Notes 9 and 15)

Stockholders’ Equity
Common stock, ($.001 par value; 100,000,000 shares authorized)	58		58
Additional paid-in capital	1,319,921		1,316,984
Retained earnings	147,358		92,463
AOCI	(288,995)		(23,758)
Total stockholders’ equity before treasury stock	1,178,342		1,385,747

Treasury stock at cost	(71,754)		(66,635)
Total stockholders’ equity	1,106,588		1,319,112
Total liabilities and stockholders’ equity	$	12,497,388	$	12,859,689

Shares
Common shares issued	58,116,970		58,116,970
Less treasury shares	(2,884,536)		(2,682,060)
Common shares outstanding	55,232,434		55,434,910

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(dollars in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Interest income

Interest and fees on loans

$
65,567

$
61,404

$
126,449

$
123,969
Interest and dividends on investment securities:

Taxable interest income

15,840

9,081

29,934

17,692
Non-taxable interest income

831

958

1,669

1,963
Other interest income

358

245

635

395
Total interest income

82,596

71,688

158,687

144,019

Interest expense

Deposits

2,146

3,295

4,270

7,027
Federal funds purchased and securities sold under agreements to repurchase

147

60

206

117
Short-term borrowings

147

64

236

83
Long-term debt

261

116

487

145
Senior notes

237

399

637

799
Subordinated notes

3,022

2,480

5,505

4,956
Junior subordinated debt owed to unconsolidated trusts

708

732

1,362

1,457
Total interest expense

6,668

7,146

12,703

14,584

Net interest income

75,928

64,542

145,984

129,435
Provision for credit losses

1,653

(1,700)

1,400

(8,496)
Net interest income after provision for credit losses

74,275

66,242

144,584

137,931

Noninterest income

Wealth management fees

14,135

13,002

29,914

25,586
Fees for customer services

9,588

8,611

18,495

16,648
Payment technology solutions

4,888

4,530

9,965

9,151
Mortgage revenue

284

1,747

1,259

4,413
Income on bank owned life insurance

874

1,476

1,758

2,440
Realized net gains (losses) on securities

20

94

126

119
Unrealized net gains (losses) recognized on equity securities

(1,734)

804

(2,454)

2,420
Other income

2,964

2,747

7,728

3,679
Total noninterest income

31,019

33,011

66,791

64,456

Noninterest expense

Salaries, wages, and employee benefits

38,110

34,889

77,464

65,273
Data processing

5,375

4,819

10,353

9,099
Net occupancy expense of premises

4,720

4,246

9,787

8,809
Furniture and equipment expenses

2,045

2,066

4,075

4,092
Professional fees

1,607

2,311

3,114

4,256
Amortization of intangible assets

2,951

2,650

5,962

5,051
Interchange expense

1,487

1,442

3,032

2,926
Other expense

12,797

10,202

25,681

17,618
Total noninterest expense

69,092

62,625

139,468

117,124

Income before income taxes

36,202

36,628

71,907

85,263
Income taxes

6,378

6,862

13,644

17,681
Net income

$
29,824

$
29,766

$
58,263

$
67,582

Basic earnings per common share

$
0.54

$
0.54

$
1.05

$
1.23
Diluted earnings per common share

$
0.53

$
0.53

$
1.04

$
1.22
Dividends declared per share of common stock

$
0.23

$
0.23

$
0.46

$
0.46


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Interest income
Interest and fees on loans	$	76,081	$	65,163	$	202,530	$	189,132
Interest and dividends on investment securities:
Taxable interest income	17,436		11,324		47,370		29,016
Non-taxable interest income	813		915		2,482		2,878
Other interest income	1,085		462		1,720		857
Total interest income	95,415		77,864		254,102		221,883

Interest expense
Deposits	3,565		3,059		7,835		10,086
Federal funds purchased and securities sold under agreements to repurchase	459		60		665		177
Short-term borrowings	190		112		426		195
Long-term debt	372		270		859		415
Senior notes	—		400		637		1,199
Subordinated notes	3,738		2,480		9,243		7,436
Junior subordinated debt owed to unconsolidated trusts	786		728		2,148		2,185
Total interest expense	9,110		7,109		21,813		21,693

Net interest income	86,305		70,755		232,289		200,190
Provision for credit losses	2,364		(1,869)		3,764		(10,365)
Net interest income after provision for credit losses	83,941		72,624		228,525		210,555

Noninterest income
Wealth management fees	12,508		13,749		42,422		39,335
Fees for customer services	7,627		9,288		26,122		25,936
Payment technology solutions	5,080		4,620		15,045		13,771
Mortgage revenue	438		1,740		1,697		6,153
Income on bank owned life insurance	958		999		2,716		3,439
Realized net gains (losses) on securities	(74)		(5)		52		114
Unrealized net gains (losses) recognized on equity securities	78		62		(2,376)		2,482
Other income	4,318		2,806		12,046		6,485
Total noninterest income	30,933		33,259		97,724		97,715

Noninterest expense
Salaries, wages, and employee benefits	39,762		41,949		117,226		107,222
Data processing	5,447		7,782		15,800		16,881
Net occupancy expense of premises	4,705		4,797		14,492		13,606
Furniture and equipment expenses	1,799		2,208		5,874		6,300
Professional fees	1,579		1,361		4,693		5,617
Amortization of intangible assets	2,871		3,149		8,833		8,200
Interchange expense	1,574		1,434		4,606		4,360
Other expense	12,999		10,807		38,680		28,425
Total noninterest expense	70,736		73,487		210,204		190,611

Income before income taxes	44,138		32,396		116,045		117,659
Income taxes	8,477		6,455		22,121		24,136
Net income	$	35,661	$	25,941	$	93,924	$	93,523

Basic earnings per common share	$	0.64	$	0.46	$	1.70	$	1.69
Diluted earnings per common share	$	0.64	$	0.46	$	1.67	$	1.67
Dividends declared per share of common stock	$	0.23	$	0.23	$	0.69	$	0.69

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(dollars in thousands)

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Net income

$
29,824

$
29,766

$
58,263

$
67,582
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 $27,162, ($2,700), $56,888, and $9,293, respectively

(68,126)

6,769

(142,682)

(23,310)
Unrealized 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), $1, $29, and $8, respectively

3

(2)

(73)

(20)
Amortization of unrealized losses on securities transferred to held to maturity, net of taxes of ($629), $—, ($881), and $—, respectively

1,578

—

2,209

—
Net change in unrealized gains (losses) on debt securities available for sale

(66,545)

6,767

(175,190)

(23,330)
Unrealized gains (losses) on cash flow hedges:

Net unrealized holding gains (losses) on cash flow hedges, net of taxes of $2,612, $28, $4,543, and ($136), respectively

(6,550)

(69)

(11,395)

341
Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of $160, ($82), $303, and ($161), respectively

(407)

206

(764)

405
Net change in unrealized gains (losses) on cash flow hedges

(6,957)

137

(12,159)

746
Net change in AOCI

(73,502)

6,904

(187,349)

(22,584)
Total comprehensive income (loss)

$
(43,678)

$
36,670

$
(129,086)

$
44,998


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	35,661	$	25,941	$	93,924	$	93,523
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 $27,631, $4,902, $84,519, and $14,195, respectively	(69,306)		(12,296)		(211,988)		(35,606)
Unrealized 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 $(21), $(1), $8, and $7, respectively	53		4		(20)		(16)
Amortization of unrealized losses on securities transferred to held to maturity, net of taxes of $(515), $—, $(1,396), and $—, respectively	1,291		—		3,500		—
Net change in unrealized gains (losses) on debt securities available for sale	(67,962)		(12,292)		(243,152)		(35,622)
Unrealized gains (losses) on cash flow hedges:
Net unrealized holding gains (losses) on cash flow hedges, net of taxes of $4,061, $2, $8,604, and $(134), respectively	(10,192)		(5)		(21,587)		336
Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of $(104), ($82), $199, and ($243), respectively	266		206		(498)		611
Net change in unrealized gains (losses) on cash flow hedges	(9,926)		201		(22,085)		947
Net change in AOCI	(77,888)		(12,091)		(265,237)		(34,675)
Total comprehensive income (loss)	$	(42,227)	$	13,850	$	(171,313)	$	58,848

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(dollars in thousands, except per share amounts)

Three Months Ended June 30, 2022

Accumulated

Additional

Other

Total

Common

Paid-in

Retained

Comprehensive

Treasury

Stockholders'


Shares

Stock

Capital

Earnings

Income (Loss)

Stock

Equity
Balance, March 31, 2022

55,278,785

$
58

$
1,318,701

$
107,890

$
(137,605)

$
(71,019)

$
1,218,025
Net income

—

—

—

29,824

—

—

29,824
OCI, net of tax

—

—

—

—

(73,502)

—

(73,502)
Repurchase of stock

(70,000)

—

—

—

—

(1,604)

(1,604)
Issuance of treasury stock for ESPP

13,900

—

(88)

—

—

358

270
Net issuance of treasury stock for restricted/deferred stock unit vesting and related tax

113,018

—

(3,590)

—

—

2,911

(679)
Cash dividends on common stock at $0.23 per share

—

—

—

(12,713)

—

—

(12,713)
Stock dividend equivalents on RSUs at $0.23 per share

—

—

316

(316)

—

—

—
Stock-based compensation

—

—

2,336

—

—

—

2,336
Balance, June 30, 2022

55,335,703

$
58

$
1,317,675

$
124,685

$
(211,107)

$
(69,354)

$
1,161,957

Six Months Ended June 30, 2022

Accumulated

Additional

Other

Total

Common

Paid-in

Retained

Comprehensive

Treasury

Stockholders'


Shares

Stock

Capital

Earnings

Income (Loss)

Stock

Equity
Balance, December 31, 2021

55,434,910

$
58

$
1,316,984

$
92,463

$
(23,758)

$
(66,635)

$
1,319,112
Net income

—

—

—

58,263

—

—

58,263
OCI, net of tax

—

—

—

—

(187,349)

—

(187,349)
Repurchase of stock

(258,614)

—

—

—

—

(6,824)

(6,824)
Issuance of treasury stock for ESPP

39,040

—

(194)

—

—

1,005

811
Net issuance of treasury stock for RSU/DSU vesting and related tax

120,367

—

(3,949)

—

—

3,100

(849)
Cash dividends on common stock at $0.46 per share

—

—

—

(25,452)

—

—

(25,452)
Stock dividend equivalents on RSUs at $0.46 per share

—

—

589

(589)

—

—

—
Stock-based compensation

—

—

4,245

—

—

—

4,245
Balance, June 30, 2022

55,335,703

$
58

$
1,317,675

$
124,685

$
(211,107)

$
(69,354)

$
1,161,957


	Three Months Ended September 30, 2022
	Shares	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders' Equity
Balance, June 30, 2022	55,335,703	$	58	$	1,317,675	$	124,685	$	(211,107)	$	(69,354)	$	1,161,957
Net income	—	—		—		35,661		—		—		35,661
OCI, net of tax	—	—		—		—		(77,888)		—		(77,888)
Repurchase of stock	(130,000)	—		—		—		—		(3,088)		(3,088)
Issuance of treasury stock for ESPP	10,993	—		(77)		—		—		283		206
Net issuance of treasury stock for RSU/DSU vesting and related tax	15,738	—		(434)		—		—		405		(29)
Cash dividends on common stock at $0.23 per share	—	—		—		(12,707)		—		—		(12,707)
Stock dividend equivalents on RSUs at $0.23 per share	—	—		281		(281)		—		—		—
Stock-based compensation	—	—		2,476		—		—		—		2,476
Balance, September 30, 2022	55,232,434	$	58	$	1,319,921	$	147,358	$	(288,995)	$	(71,754)	$	1,106,588


	Nine Months Ended September 30, 2022
	Shares	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders' Equity
Balance, December 31, 2021	55,434,910	$	58	$	1,316,984	$	92,463	$	(23,758)	$	(66,635)	$	1,319,112
Net income	—	—		—		93,924		—		—		93,924
OCI, net of tax	—	—		—		—		(265,237)		—		(265,237)
Repurchase of stock	(388,614)	—		—		—		—		(9,912)		(9,912)
Issuance of treasury stock for ESPP	50,033	—		(271)		—		—		1,288		1,017
Net issuance of treasury stock for RSU/DSU vesting and related tax	136,105	—		(4,383)		—		—		3,505		(878)
Cash dividends on common stock at $0.69 per share	—	—		—		(38,159)		—		—		(38,159)
Stock dividend equivalents on RSUs at $0.69 per share	—	—		870		(870)		—		—		—
Stock-based compensation	—	—		6,721		—		—		—		6,721
Balance, September 30, 2022	55,232,434	$	58	$	1,319,921	$	147,358	$	(288,995)	$	(71,754)	$	1,106,588

Table of Contents

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(dollars in thousands, except per share amounts)

Three Months Ended June 30, 2021

Retained

Accumulated

Additional

Earnings

Other

Total

Common

Paid-in

(Accumulated

Comprehensive

Treasury

Stockholders'


Shares

Stock

Capital

Deficit)

Income (Loss)

Stock

Equity
Balance, March 31, 2021

54,345,379

$
56

$
1,255,044

$
45,897

$
3,821

$
(38,996)

$
1,265,822
Net income

—

—

—

29,766

—

—

29,766
OCI, net of tax

—

—

—

—

6,904

—

6,904
Stock issued in acquisition, net of stock issuance costs

2,206,237

2

58,982

—

—

—

58,984
Repurchase of stock

(221,000)

—

—

—

—

(5,738)

(5,738)
Cash dividends on common stock at $0.23 per share

—

—

—

(12,484)

—

—

(12,484)
Stock dividend equivalents on RSUs at $0.23 per share

—

—

253

(253)

—

—

—
Stock-based compensation

—

—

2,437

—

—

—

2,437
Balance, June 30, 2021

56,330,616

$
58

$
1,316,716

$
62,926

$
10,725

$
(44,734)

$
1,345,691

Six Months Ended June 30, 2021

Retained

Accumulated

Additional

Earnings

Other

Total

Common

Paid-in

(Accumulated

Comprehensive

Treasury

Stockholders'


Shares

Stock

Capital

Deficit)

Income (Loss)

Stock

Equity
Balance, December 31, 2020

54,404,379

$
56

$
1,253,360

$
20,830

$
33,309

$
(37,486)

$
1,270,069
Net income

—

—

—

67,582

—

—

67,582
OCI, net of tax

—

—

—

—

(22,584)

—

(22,584)
Stock issued in acquisition, net of stock issuance costs

2,206,237

2

58,982

58,984
Repurchase of stock

(280,000)

—

—

—

—

(7,248)

(7,248)
Cash dividends on common stock at $0.46 per share

—

—

—

(24,997)

—

—

(24,997)
Stock dividend equivalents on RSUs at $0.46 per share

—

—

489

(489)

—

—

—
Stock-based compensation

—

—

3,885

—

—

—

3,885
Balance, June 30, 2021

56,330,616

$
58

$
1,316,716

$
62,926

$
10,725

$
(44,734)

$
1,345,691


	Three Months Ended September 30, 2021
	Shares	Common Stock		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders' Equity
Balance, June 30, 2021	56,330,616	$	58	$	1,316,716	$	62,926	$	10,725	$	(44,734)	$	1,345,691
Net income	—	—		—		25,941		—		—		25,941
OCI, net of tax	—	—		—		—		(12,091)		—		(12,091)
Stock issued in acquisition, net of stock issuance costs	—	—		(29)		—		—		—		(29)
Repurchase of stock	(625,000)	—		—		—		—		(14,790)		(14,790)
Issuance of treasury stock for ESPP	14,658	—		(70)		—		—		377		307
Net issuance of treasury stock for RSU/DSU vesting and related tax	106,710			(3,738)		—		—		2,850		(888)
Cash dividends on common stock at $0.23 per share	—	—		—		(12,956)		—		—		(12,956)
Stock dividend equivalents on RSUs at $0.23 per share	—	—		268		(268)		—		—		—
Stock-based compensation	—	—		1,891		—		—		—		1,891
Balance, September 30, 2021	55,826,984	$	58	$	1,315,038	$	75,643	$	(1,366)	$	(56,297)	$	1,333,076


	Nine Months Ended September 30, 2021
	Shares	Common Stock		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		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	—	—		—		93,523		—		—		93,523
OCI, net of tax	—	—		—		—		(34,675)		—		(34,675)
Stock issued in acquisition, net of stock issuance costs	2,206,237	2		58,953								58,955
Repurchase of stock	(905,000)	—		—		—		—		(22,038)		(22,038)
Issuance of treasury stock for ESPP	14,658	—		(70)		—		—		377		307
Net issuance of treasury stock for RSU/DSU vesting and related tax	106,710	—		(3,738)		—		—		2,850		(888)
Cash dividends on common stock at $0.69 per share	—	—		—		(37,953)		—		—		(37,953)
Stock dividend equivalents on RSUs at $0.69 per share	—	—		757		(757)		—		—		—
Stock-based compensation	—	—		5,776		—		—		—		5,776
Balance, September 30, 2021	55,826,984	$	58	$	1,315,038	$	75,643	$	(1,366)	$	(56,297)	$	1,333,076

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(dollars in thousands)

Six Months Ended June 30,

2022

2021
Cash Flows Provided by (Used in) Operating Activities

Net income

$
58,263

$
67,582
Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Provision for credit losses

1,400

(8,496)
Amortization of intangible assets

5,962

5,051
Amortization of mortgage servicing rights

1,901

2,961
Amortization of NMTC

3,003

3,068
Depreciation and amortization of premises and equipment

5,438

5,709
Net amortization (accretion) on portfolio loans

1,140

(5,757)
Net amortization (accretion) of premium (discount) on investment securities

11,069

10,460
Net amortization (accretion) of premium (discount) on time deposits

(227)

(550)
Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings

577

416
Impairment of OREO and other repossessed assets

611

—
Impairment of fixed assets held for sale

100

—
Impairment of mortgage servicing rights

(9)

(506)
Impairment of leases

84

—
Unrealized (gains) losses recognized on equity securities

2,454

(2,420)
(Gain) loss on sales of equity securities, net

(24)

—
(Gain) loss on sales of debt securities, net

(102)

(119)
(Gain) loss on sales of loans, net

(1,451)

(6,133)
(Gain) loss on sales of OREO

39

161
(Gain) loss on sales of premises and equipment

(679)

(986)
(Gain) loss on life insurance proceeds

—

(488)
(Increase) decrease in cash surrender value of bank owned life insurance

(1,758)

(1,953)
Provision for deferred income taxes

(2)

3,804
Stock-based compensation

4,245

3,885
Mortgage loans originated for sale

(47,305)

(157,670)
Proceeds from sales of mortgage loans

67,586

188,216
Net change in operating assets and liabilities:

(Increase) decrease in other assets

(30,313)

(12,063)
Increase (decrease) in other liabilities

(8,320)

(14,260)
Net cash provided by (used in) operating activities

$
73,682

$
79,912

Cash Flows Provided by (Used in) Investing Activities

Purchases of equity securities

$
(5,948)

$
(5,998)
Purchases of debt securities available for sale

(279,831)

(1,274,797)
Proceeds from sales of equity securities

6,546

1,235
Proceeds from sales of debt securities available for sale

—

290,955
Proceeds from paydowns and maturities of debt securities held to maturity

33,894

—
Proceeds from paydowns and maturities of debt securities available for sale

273,524

424,725
Net cash received in (paid for) acquisitions (see Note 2)

—

236,981
Net (increase) decrease in loans

(310,582)

81,441
Cash paid for premiums on bank-owned life insurance

(96)

(113)
Proceeds from life insurance

219

3,227
Purchases of premises and equipment

(2,672)

(3,093)
Proceeds from disposition of premises and equipment

3,068

5,158
Proceeds from sales of OREO

2,469

1,410
Net cash provided by (used in) investing activities

$
(279,409)

$
(238,869)


	Nine Months Ended September 30,
	2022		2021
Cash Flows Provided by (Used in) Operating Activities
Net income	$	93,924	$	93,523
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses	3,764		(10,365)
Amortization of intangible assets	8,833		8,200
Amortization of mortgage servicing rights	2,757		4,202
Amortization of NMTC	4,668		4,308
Depreciation and amortization of premises and equipment	8,035		8,723
Net amortization (accretion) on portfolio loans	2,524		(4,860)
Net amortization (accretion) of premium (discount) on investment securities	15,820		17,263
Net amortization (accretion) of premium (discount) on time deposits	(318)		(929)
Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings	1,152		620
Impairment of OREO and other repossessed assets	611		—
Impairment of fixed assets held for sale	427		—
Impairment of mortgage servicing rights	(9)		(542)
Impairment of leases	84		—
Unrealized (gains) losses recognized on equity securities, net	2,376		(2,482)
(Gain) loss on sales of equity securities, net	(24)		—
(Gain) loss on sales of debt securities, net	(28)		(114)
(Gain) loss on sales of loans, net	(1,777)		(8,202)
(Gain) loss on sales of OREO	56		163
(Gain) loss on sales of premises and equipment	(666)		(1,007)
(Gain) loss on life insurance proceeds	—		(493)
(Increase) decrease in cash surrender value of bank owned life insurance	(2,716)		(2,946)
Provision for deferred income taxes	(3)		2,326
Stock-based compensation	6,721		5,776
Mortgage loans originated for sale	(63,986)		(214,096)
Proceeds from sales of mortgage loans	84,732		244,356

(Increase) decrease in other assets	(45,575)		(17,099)
Increase (decrease) in other liabilities	(3,364)		(23,829)
Net cash provided by (used in) operating activities	$	118,018	$	102,496

Cash Flows Provided by (Used in) Investing Activities
Purchases of equity securities	$	(14,820)	$	(11,017)
Purchases of debt securities available for sale	(279,831)		(2,048,554)
Proceeds from sales of equity securities	15,418		7,254
Proceeds from sales of debt securities available for sale	—		290,955
Proceeds from paydowns and maturities of debt securities held to maturity	51,552		—
Proceeds from paydowns and maturities of debt securities available for sale	370,274		641,754
Proceeds from the redemption of FHLB stock	225		—
Net cash received in (paid for) acquisitions (see Note 2)	—		228,279
Net (increase) decrease in loans	(484,701)		114,729
Cash paid for premiums on bank-owned life insurance	(101)		(118)
Proceeds from life insurance	219		3,232
Purchases of premises and equipment	(4,006)		(4,041)
Proceeds from disposition of premises and equipment	4,182		6,519
Proceeds from sales of OREO	2,662		1,452
Net cash provided by (used in) investing activities	$	(338,927)	$	(769,556)

Table of Contents

FIRST BUSEY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)

(dollars in thousands)

Six Months Ended June 30,

2022

2021
Cash Flows Provided by (Used in) Financing Activities

Net increase (decrease) in deposits

$
(371,122)

$
335,422
Net change in federal funds purchased and securities sold under agreements to repurchase

(41,756)

15,001
Proceeds from FHLB advances

—

5,000
Repayment of FHLB advances

(5,336)

(4,327)
Proceeds from other borrowings, net of debt issuance costs

98,094

72,500
Repayment of other borrowings

(46,000)

—
Cash dividends paid

(25,452)

(24,997)
Purchase of treasury stock

(6,824)

(7,248)
Cash paid for withholding taxes on stock-based payments

(849)

—
Issuance of treasury stock for ESPP

(271)

—
Common stock issuance costs

—

(121)
Net cash provided by (used in) financing activities

$
(399,516)

$
391,230

Net increase (decrease) in cash and cash equivalents

(605,243)

232,273
Cash and cash equivalents, beginning of period

836,095

688,537

Cash and cash equivalents, ending of period

$
230,852

$
920,810

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash payments for:

Interest

$
13,452

$
11,571
Income taxes

20,366

19,156

Non-cash investing and financing activities:

OREO acquired in settlement of loans

132

137
Transfer of debt securities available for sale to held to maturity

985,199

—


	Nine Months Ended September 30,
	2022		2021
Cash Flows Provided by (Used in) Financing Activities
Net increase (decrease) in deposits	$	(166,862)	$	816,551
Net change in federal funds purchased and securities sold under agreements to repurchase	(35,542)		48,977
Proceeds from FHLB advances	—		5,000
Repayment of FHLB advances	(5,507)		(4,492)
Proceeds from other borrowings, net of debt issuance costs	98,094		72,500
Repayment of other borrowings	(109,000)		(15,500)
Cash dividends paid	(38,159)		(37,953)
Purchase of treasury stock	(9,912)		(22,038)
Cash paid for withholding taxes on stock-based payments	(878)		(888)
Issuance of treasury stock for ESPP	(271)		361
Common stock issuance costs	—		(150)
Net cash provided by (used in) financing activities	$	(268,037)	$	862,368

Net increase (decrease) in cash and cash equivalents	(488,946)		195,308
Cash and cash equivalents, beginning of period	836,095		688,537

Cash and cash equivalents, ending of period	$	347,149	$	883,845

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash payments for:
Interest	$	19,465	$	16,257
Income taxes	30,506		19,586

Non-cash investing and financing activities:
OREO acquired in settlement of loans	132		228
Transfer of debt securities available for sale to held to maturity	985,199		—

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1: Significant Accounting Policies

Nature of Operations

First Busey Corporation, a Nevada corporation organized in 1980, is a ~~$12.4~~$12.5 billion financial holding company headquartered in Champaign, Illinois. Our common stock is traded on The Nasdaq Global Select Market under the symbol “BUSE.”

The Company operates and reports its business in 3three segments: Banking, FirsTech, and Wealth Management.

Banking

The Banking operating segment provides a full range of banking services to individual and corporate customers through the Company’s wholly-owned bank subsidiary, Busey Bank, with 58 banking centers in Illinois; the St. Louis, Missouri metropolitan area; southwest Florida; and Indianapolis, Indiana.

FirsTech

The FirsTech operating segment provides comprehensive and innovative payment technology solutions that include, but are not limited to, text-based mobile bill pay; electronic payment concentration delivered to Automated Clearing House networks, money management, and credit card networks; walk-in payment processing for customers at retail pay agents; customer service payments made over a telephone; direct debit services; and lockbox remittance processing for customers to make payments by mail. FirsTech also provides additional tools to help clients with billing, reconciliation, bill reminders, and treasury services.

Wealth Management

The Wealth Management operating segment provides a full range of asset management, investment, brokerage, fiduciary, philanthropic advisory, tax preparation, and farm management services to individuals, businesses, and foundations.

Basis of Financial Statement Presentation

These unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements included in our 2021 Annual Report. These interim unaudited consolidated financial statements serve to update our 2021 Annual Report and may not include all information and notes necessary to constitute a complete set of financial statements.

We prepared these unaudited consolidated financial statements in conformity with GAAP. We have eliminated intercompany accounts and transactions. We have also reclassified certain prior year amounts to conform to the current period presentation. These reclassifications did not have a material impact on our consolidated financial condition or results of operations.

In our opinion, the unaudited consolidated financial statements reflect all normal, recurring adjustments needed to present fairly our results for the interim periods. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.

Use of Estimates

In preparing the accompanying unaudited consolidated financial statements in conformity with GAAP, the Company’s management is required to make estimates and assumptions that affect the amounts reported in the 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.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Change in Accounting Principle

Effective January 1, 2022, the Company elected to account for all newly originated loans held for sale at LOCOM. Prior to this change, the Company accounted for loans held for sale at fair value. This change did not have a material impact on our results of operations during the three or ~~six~~nine months ended ~~June~~September 30, 2022.

Impact of Recently Adopted Accounting Standards

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 iswas effective for annual periods beginning January 1, 2022, and applies prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application. Adoption of this standard did not have a material impact on First Busey’s financial position or results of operations.

ASU 2021-05 “Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments” amends the lessor’s classification of certain leases under ASC Topic 842. Under this updated guidance, leases that would otherwise be classified as a sales-type or direct financing lease must be classified by a lessor as an operating lease when the following conditions are met: 1) the contract includes variable lease payments that do not depend on an index or rate and 2) classification as a sales-type or direct financing lease would result in recognition of a selling loss at lease commencement. This guidance was effective for First Busey beginning January 1, 2022, and was applied on a prospective basis. Adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” clarifies how an issuer should account for modifications or exchanges of equity-classified written call options (i.e. a warrant to purchase the issuer’s common stock). This accounting standard requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant. This guidance was effective for First Busey beginning January 1, 2022, and was applied on a prospective basis. Adoption of this standard did not have a material impact on the Company’s financial position or results of operations.

Recently Issued Accounting Standards

ASU 2022-03 “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” clarifies that contractual restrictions on the sale of equity securities are not considered in measuring the fair value of those equity securities, and further that contractual sale restrictions cannot be recognized and measured as a separate unit of account. This standard applies prospectively, and is effective for First Busey beginning January 1, 2024. Early adoption is permitted. First Busey is currently evaluating the potential effect on the Company’s financial position and results of operations.

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

ASU 2022-02 “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” eliminates the TDR accounting model for creditors that have already adopted CECL. In lieu of the TDR accounting model, loan refinancing and restructuring guidance in ASC Subtopic 310-20 ~~“Investments—~~“Investments—Debt Securities” will apply to all loan modifications, including those made for borrowers experiencing financial difficulty. This standard also enhances disclosure requirements related to certain loan modifications. Additionally, this standard introduces new requirements to disclose gross write-off information in the vintage disclosures of financing receivables by credit quality indicator and class of financing receivable by year of origination. This standard applies prospectively. For the transition method related to the recognition and measurement of TDRs, there is an option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. This standard is effective for First Busey beginning January 1, 2023. Early adoption is permitted. First Busey is currently evaluating the potential effect on the Company’s financial position and results of operations.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

ASU 2022-01 “Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method” replaces the current last-of-layer hedge accounting method with an expanded portfolio layer method that permits multiple hedged layers of a single closed portfolio. The scope of the portfolio layer method is also expanded to include non-prepayable financial assets. This update also provides additional guidance on the accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer method, and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. Amendments related to hedge basis adjustments which are included in this standard apply on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. Amendments related to disclosure which are included in this standard may be applied on a prospective basis from the initial application date, or on a retrospective basis to each prior period presented after the date of adoption of the amendments in ASU 2017-12 ~~“Derivatives~~“Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This standard is effective for First Busey beginning January 1, 2023, and may be early adopted. First Busey is currently evaluating the potential effect on the Company’s financial position and results of operations.

ASU 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” requires measurement and recognition in accordance with ASC Topic 606 “Revenue from Contracts with Customers” for contract assets and contract liabilities acquired in a business combination. This update is effective for First Busey 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. First Busey is currently evaluating the potential effect on the Company’s financial position and results of operations.

COVID-19

Throughout the COVID-19 pandemic, First Busey operated as an essential community resource, providing approximately $1.1 billion in payroll assistance for small businesses and select nonprofits through low-interest, 100% government-guaranteed loans as part of the PPP. First Busey had ~~$7.8~~$1.5 million in PPP loans outstanding, with an amortized cost of ~~$7.6~~$1.4 million, as of ~~June~~September 30, 2022. In comparison, First Busey had $76.9 million in PPP loans outstanding, with an amortized cost of $75.0 million, as of December 31, 2021.

Subsequent Events

The Company has evaluated subsequent events for potential recognition and/or disclosure through the date the unaudited consolidated financial statements included in this Quarterly Report were issued. ~~There~~Early in the fourth quarter of 2022, we implemented a targeted restructuring and efficiency optimization plan that is expected to generate annual salary and benefits savings of $4.0 million to $4.4 million. We also expect to incur one-time severance-related costs associated with this initiative of $1.1 million to $1.3 million, most of which are expected to be realized in the fourth quarter of 2022. We expect to largely reinvest the anticipated savings to support ongoing growth initiatives across our franchise over the next several quarters. Other than this item, there were no significant subsequent events for the quarter ended ~~June~~September 30, 2022, through the filing date of these unaudited consolidated financial statements.

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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 shares 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 stock 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 were subject to refinement for up to one year after the closing date, as additional information regarding the closing date fair values became ~~available. There~~available, and were nofinal as of May 31, 2022. The Company did not record any fair value adjustments ~~recorded~~ during ~~the three or six months ended June 30, 2022, and fair values are now final.~~

2022.

As the total consideration paid for CAC exceeded the estimated fair value of net assets acquired, goodwill of $6.3 million was recorded as a result of the acquisition. The amount of goodwill recognized as a result of this transaction ~~is expected to be~~was 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.

During the three months ended ~~June~~September 30, 2022, First Busey did not incur any pre-tax acquisition expenses related to the acquisition of CAC. During the ~~six~~nine months ended ~~June~~September 30, 2022, First Busey incurred $0.8 million in pre-tax acquisition expenses related to the acquisition of CAC, comprised primarily of compensation expense and data processing expense.

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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

Table of Contents

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

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	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~~.

collected.

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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 3: Debt Securities

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

As of June 30, 2022

Amortized

Unrealized

Fair


Cost

Gross Gains

Gross Losses

Value
Debt securities available for sale

U.S. Treasury securities

$
151,222

$
1

$
(4,083)

$
147,140
Obligations of U.S. government corporations and agencies

29,867

53

(81)

29,839
Obligations of states and political subdivisions

305,545

455

(18,388)

287,612
Asset-backed securities

490,932

—

(22,803)

468,129
Commercial mortgage-backed securities

105,584

—

(7,222)

98,362
Residential mortgage-backed securities

1,599,774

50

(158,667)

1,441,157
Corporate debt securities

293,667

49

(21,309)

272,407
Total debt securities available for sale

$
2,976,591

$
608

$
(232,553)

$
2,744,646

Debt securities held to maturity






Commercial mortgage-backed securities

$
492,924

$
—

$
(38,687)

$
454,237
Residential mortgage-backed securities

460,088

—

(37,587)

422,501
Total debt securities held to maturity

$
953,012

$
—

$
(76,274)

$
876,738

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


	As of September 30, 2022
	Amortized Cost		Unrealized				Fair Value
			Gross Gains		Gross Losses
Debt securities available for sale
U.S. Treasury securities	$	145,495	$	—	$	(4,653)	$	140,842
Obligations of U.S. government corporations and agencies	25,287		4		(358)		24,933
Obligations of states and political subdivisions	298,653		35		(27,853)		270,835
Asset-backed securities	490,076		—		(23,552)		466,524
Commercial mortgage-backed securities	98,719		—		(10,968)		87,751
Residential mortgage-backed securities	1,538,308		1		(233,995)		1,304,314
Corporate debt securities	279,310		20		(27,488)		251,842
Total debt securities available for sale	$	2,875,848	$	60	$	(328,867)	$	2,547,041

Debt securities held to maturity
Commercial mortgage-backed securities	$	486,116	$	—	$	(60,341)	$	425,775
Residential mortgage-backed securities	450,212		—		(67,102)		383,110
Total debt securities held to maturity	$	936,328	$	—	$	(127,443)	$	808,885


	As of December 31, 2021
	Amortized Cost		Unrealized				Fair Value
			Gross Gains		Gross Losses
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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FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Maturities of debt securities

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 June 30, 2022


Amortized

Fair


Cost

Value
Debt securities available for sale

Due in one year or less

$
191,190

$
189,295
Due after one year through five years

421,603

399,194
Due after five years through ten years

326,834

307,336
Due after ten years

2,036,964

1,848,821
Debt securities available for sale

$
2,976,591

$
2,744,646

Debt securities held to maturity

Due after one year through five years

48,232

46,533
Due after five years through ten years

66,107

61,995
Due after ten years

838,673

768,210
Debt securities held to maturity

$
953,012

$
876,738


	As of September 30, 2022
	Amortized Cost		Fair Value
Debt securities available for sale
Due in one year or less	$	176,516	$	174,227
Due after one year through five years	410,372		379,095
Due after five years through ten years	353,968		319,381
Due after ten years	1,934,992		1,674,338
Debt securities available for sale	$	2,875,848	$	2,547,041

Debt securities held to maturity
Due after one year through five years	46,961		43,738
Due after five years through ten years	65,516		58,346
Due after ten years	823,851		706,801
Debt securities held to maturity	$	936,328	$	808,885

Gains and losses on debt securities

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

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Realized gains and losses on debt securities

Gross gains on debt securities

$
1

$
499

$
114

$
524
Gross (losses) on debt securities

(5)

(405)

(12)

(405)
Realized net gains (losses) on debt securities⁽¹⁾

$
(4)

$
94

$
102

$
119


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Realized gains and losses on debt securities
Gross gains on debt securities	$	—	$	—	$	114	$	524
Gross (losses) on debt securities	(74)		(5)		(86)		(410)
Realized net gains (losses) on debt securities1	$	(74)	$	(5)	$	28	$	114

	~~(1)~~	~~Net gains (losses) on sales of securities reported in the unaudited Consolidated Statements of Income include sales of equity securities, excluded in this table.~~

Net gains (losses) on sales of securities reported in the unaudited Consolidated Statements of Income include sales of equity securities, excluded in this table.

Debt securities with carrying amounts of ~~$685.2~~$675.8 million on ~~June~~September 30, 2022, and $708.9 million on December 31, 2021, were pledged as collateral for public deposits, securities sold under agreements to repurchase, and for other purposes as required.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Debt securities in an unrealized loss position

The following information pertains to debt securities with gross unrealized 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 June 30, 2022

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

$
21,976

$
(154)

$
124,094

$
(3,929)

$
146,070

$
(4,083)
Obligations of U.S. government corporations and agencies

17,078

(81)

—

—

17,078

(81)
Obligations of states and political subdivisions

192,737

(16,868)

11,056

(1,520)

203,793

(18,388)
Asset-backed securities

465,293

(22,632)

2,835

(171)

468,128

(22,803)
Commercial mortgage-backed securities

91,564

(6,560)

6,798

(662)

98,362

(7,222)
Residential mortgage-backed securities

1,035,112

(96,222)

399,554

(62,445)

1,434,666

(158,667)
Corporate debt securities

178,170

(14,790)

83,656

(6,519)

261,826

(21,309)
Debt securities available for sale with gross unrealized losses

$
2,001,930

$
(157,307)

$
627,993

$
(75,246)

$
2,629,923

$
(232,553)

Debt securities held to maturity

Commercial mortgage-backed securities

$
241,060

$
(19,840)

$
213,177

$
(18,847)

$
454,237

$
(38,687)
Residential mortgage-backed securities

382,897

(33,909)

39,603

(3,678)

422,500

(37,587)
Debt securities held to maturity with gross unrealized losses

$
623,957

$
(53,749)

$
252,780

$
(22,525)

$
876,737

$
(76,274)

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)
Debt securities available for sale with gross unrealized losses

$
2,676,734

$
(49,847)

$
106,443

$
(4,807)

$
2,783,177

$
(54,654)


	As of September 30, 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 securities	$	2,067	$	(5)	$	138,775	$	(4,648)	$	140,842	$	(4,653)
Obligations of U.S. government corporations and agencies	21,629		(358)		—		—		21,629		(358)
Obligations of states and political subdivisions	220,960		(20,029)		41,779		(7,824)		262,739		(27,853)
Asset-backed securities	441,896		(21,681)		24,628		(1,871)		466,524		(23,552)
Commercial mortgage-backed securities	74,334		(8,761)		13,417		(2,207)		87,751		(10,968)
Residential mortgage-backed securities	557,046		(72,807)		747,141		(161,188)		1,304,187		(233,995)
Corporate debt securities	75,608		(9,426)		173,266		(18,062)		248,874		(27,488)
Debt securities available for sale with gross unrealized losses	$	1,393,540	$	(133,067)	$	1,139,006	$	(195,800)	$	2,532,546	$	(328,867)

Debt securities held to maturity
Commercial mortgage-backed securities	$	109,085	$	(15,592)	$	316,690	$	(44,749)	$	425,775	$	(60,341)
Residential mortgage-backed securities	162,575		(29,243)		220,535		(37,859)		383,110		(67,102)
Debt securities held to maturity with gross unrealized losses	$	271,660	$	(44,835)	$	537,225	$	(82,608)	$	808,885	$	(127,443)


	As of December 31, 2021
	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	$	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)
Debt securities available for sale with gross unrealized losses	$	2,676,734	$	(49,847)	$	106,443	$	(4,807)	$	2,783,177	$	(54,654)

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

As of June 30, 2022


Available for Sale

Held to Maturity

Total

Debt securities with gross unrealized losses, fair value

$
2,629,923

$
876,737

$
3,506,660

Gross unrealized losses on debt securities

$
232,553

$
76,274

$
308,827

Ratio of gross unrealized losses to debt securities with gross unrealized losses

8.8
%

8.7
%

8.8
%

Count of debt securities

1,177

55

1,232

Count of debt securities in an unrealized loss position

881

55

936

As of December 31, 2021


Available for Sale

Held to Maturity

Total

Debt securities with gross unrealized losses, fair value

$
2,783,177

$
—

$
2,783,177

Gross unrealized losses on debt securities

$
54,654

$
—

$
54,654

Ratio of gross unrealized losses to debt securities with gross unrealized losses

2.0
%

—

2.0
%

Count of debt securities

1,252

—

1,252

Count of debt securities in an unrealized loss position

373

—

373


	As of September 30, 2022
	Available for Sale			Held to Maturity			Total
Debt securities with gross unrealized losses, fair value	$	2,532,546		$	808,885		$	3,341,431
Gross unrealized losses on debt securities	$	328,867		$	127,443		$	456,310
Ratio of gross unrealized losses to debt securities with gross unrealized losses	13.0		%	15.8		%	13.7		%

Count of debt securities	1,145			55			1,200
Count of debt securities in an unrealized loss position	1,109			55			1,164


	As of December 31, 2021
	Available for Sale			Held to Maturity		Total
Debt securities with gross unrealized losses, fair value	$	2,783,177		$	—	$	2,783,177
Gross unrealized losses on debt securities	$	54,654		$	—	$	54,654
Ratio of gross unrealized losses to debt securities with gross unrealized losses	2.0		%	—		2.0		%

Count of debt securities	1,252			—		1,252
Count of debt securities in an unrealized loss position	373			—		373

Unrealized losses were related to changes in market interest rates and market conditions that do not represent credit-related impairments. The Company does not intend to sell securities that are in an unrealized loss position, and it is more likely than not that the Company will recover the amortized cost prior to being required to sell the debt securities. Full collection of the amounts due according to the contractual terms of the debt securities is expected; therefore, no ACL was recorded in relation to debt securities, and the impairment related to noncredit factors is recognized in AOCI, net of applicable taxes. As of ~~June~~September 30, 2022, the Company did not hold general obligation bonds of any single issuer, the aggregate of which exceeded 10% of the Company’s stockholders’ equity.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4: Portfolio Loans

Loan Categories

The Company’s lending can be summarized into five primary categories: commercial loans, commercial real estate loans, real estate construction loans, retail real estate loans, and retail other loans. Distributions of the loan portfolio by loan category were as follows (dollars in thousands):

As of

June 30,

December 31,

2022

2021
Portfolio loans

Commercial

$
1,919,680

$
1,943,886
Commercial real estate

3,228,090

3,119,807
Real estate construction

466,185

385,996
Retail real estate

1,590,913

1,512,976
Retail other

292,910

226,333
Total portfolio loans

7,497,778

7,188,998
ACL

(88,757)

(87,887)
Portfolio loans, net

$
7,409,021

$
7,101,111


	As of
	September 30, 2022		December 31, 2021
Portfolio loans
Commercial	$	1,945,893	$	1,943,886
Commercial real estate	3,278,684		3,119,807
Real estate construction	499,560		385,996
Retail real estate	1,643,099		1,512,976
Retail other	302,878		226,333
Total portfolio loans	7,670,114		7,188,998
ACL	(90,722)		(87,887)
Portfolio loans, net	$	7,579,392	$	7,101,111

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

Net deferred loan origination costs included in the balances above were ~~$12.9~~$13.7 million as of ~~June~~September 30, 2022, compared to $9.0 million as of December 31, 2021. Net accretable purchase accounting adjustments included in the balances above reduced loans by ~~$7.2~~$6.4 million as of ~~June~~September 30, 2022, and $8.8 million as of December 31, 2021. Commercial balances include loans originated under the PPP with an amortized cost of ~~$7.6~~$1.4 million as of ~~June~~September 30, 2022, and $75.0 million as of December 31, 2021.

There were 0no retail real estate loans purchased during the three or ~~six~~nine months ended ~~June~~September 30, 2022. ~~In comparison,~~There were also no retail real estate loans purchased during the three months ended September 30, 2021. The Company purchased $32.2 million of retail real estate loans during the ~~three and six~~nine months ended ~~June~~September 30, 2021.

Risk Grading

The Company utilizes a loan grading scale to assign a risk grade to all of its loans. A description of the general characteristics of each grade is as follows:

•

●

~~Pass~~ – This category includes loans that are all considered acceptable credits, ranging from investment or near investment grade, to loans made to borrowers who exhibit credit fundamentals that meet or exceed industry standards.

Pass

●

~~Watch~~ – This category includes loans that warrant a higher-than-average level of monitoring to ensure that weaknesses do not cause the inability of the credit to perform as expected. These loans are not necessarily a problem due to other inherent strengths of the credit, such as guarantor strength, but have above average concern and monitoring.

– This category includes loans that are all considered acceptable credits, ranging from investment or near investment grade, to loans made to borrowers who exhibit credit fundamentals that meet or exceed industry standards.

●

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

•

●

~~Substandard~~ – This category includes “Substandard” loans, determined in accordance with regulatory guidelines, for which the accrual of interest has not been stopped. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Watch

●

~~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.

– This category includes loans that warrant a higher-than-average level of monitoring to ensure that weaknesses do not cause the inability of the credit to perform as expected. These loans are not necessarily a problem due to other inherent strengths of the credit, such as guarantor strength, but have above average concern and monitoring.

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

•Substandard – This category includes “Substandard” loans, determined in accordance with regulatory guidelines, for which the accrual of interest has not been stopped. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

•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.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

All loans are graded at their inception. Commercial lending relationships that are $1.0 million or less are usually processed through an expedited underwriting process. Most commercial loans greater than $1.0 million are included in a portfolio review at least annually. Commercial loans greater than $0.35 million that have a grading of special mention or worse are typically reviewed on a quarterly basis. Interim reviews may take place if circumstances of the borrower warrant a more frequent review.

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

As of June 30, 2022






Special



Substandard



Pass

Watch

Mention

Substandard

Non-accrual

Total
Portfolio loans

Commercial

$
1,743,101

$
86,902

$
44,434

$
38,425

$
6,818

$
1,919,680
Commercial real estate

2,867,188

265,920

47,867

40,879

6,236

3,228,090
Real estate construction

450,887

12,848

3

2,400

47

466,185
Retail real estate

1,574,634

7,847

2,022

3,759

2,651

1,590,913
Retail other

292,822

—

—

—

88

292,910
Total portfolio loans

$
6,928,632

$
373,517

$
94,326

$
85,463

$
15,840

$
7,497,778


	As of September 30, 2022
	Pass		Watch		Special Mention		Substandard		Substandard Non-accrual		Total
Portfolio loans
Commercial	$	1,707,528	$	135,254	$	58,189	$	38,695	$	6,227	$	1,945,893
Commercial real estate	2,889,804		299,638		42,728		40,722		5,792		3,278,684
Real estate construction	475,099		22,011		2		2,400		48		499,560
Retail real estate	1,625,702		8,601		2,087		3,469		3,240		1,643,099
Retail other	302,760		—		—		—		118		302,878
Total portfolio loans	$	7,000,893	$	465,504	$	103,006	$	85,286	$	15,425	$	7,670,114


	As of December 31, 2021
	Pass		Watch		Special Mention		Substandard		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

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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

As of June 30, 2022

Term Loans Amortized Cost Basis by Origination Year

Revolving

Risk Grade Ratings

2022

2021

2020

2019

2018

Prior

Loans

Total
Commercial

Pass

$
318,589

$
351,192

$
154,862

$
65,399

$
57,255

$
159,597

$
636,207

$
1,743,101
Watch

16,715

21,174

3,974

8,795

1,416

3,106

31,722

86,902
Special Mention

1,754

737

1,458

1,011

3,301

17,611

18,562

44,434
Substandard

3,332

1,408

2,754

7,212

597

5,486

17,636

38,425
Substandard non-accrual

—

3,766

326

139

—

519

2,068

6,818
Total commercial

340,390

378,277

163,374

82,556

62,569

186,319

706,195

1,919,680

Commercial real estate

Pass

594,333

921,519

529,485

341,259

186,369

273,412

20,811

2,867,188
Watch

44,855

26,003

50,638

95,099

20,877

22,983

5,465

265,920
Special Mention

5,777

5,412

13,455

842

6,630

15,482

269

47,867
Substandard

11,864

12,820

3,009

1,814

10,419

953

—

40,879
Substandard non-accrual

—

4,210

162

—

1,851

13

—

6,236
Total commercial real estate

656,829

969,964

596,749

439,014

226,146

312,843

26,545

3,228,090

��

Real estate construction

Pass

131,894

187,283

86,891

23,572

2,495

2,256

16,496

450,887
Watch

3,299

4,592

3,419

51

—

1,487

—

12,848
Special Mention

—

—

—

3

—

—

—

3
Substandard

—

—

2,400

—

—

—

—

2,400
Substandard non-accrual

—

—

47

—

—

—

—

47
Total real estate construction

135,193

191,875

92,757

23,626

2,495

3,743

16,496

466,185

Retail real estate

Pass

253,800

472,480

187,596

82,372

64,928

302,911

210,547

1,574,634
Watch

1,196

1,185

1,990

1,584

1,168

134

590

7,847
Special Mention

144

1,878

—

—

—

—

—

2,022
Substandard

—

1,184

215

87

15

2,175

83

3,759
Substandard non-accrual

—

436

115

—

43

1,653

404

2,651
Total retail real estate

255,140

477,163

189,916

84,043

66,154

306,873

211,624

1,590,913

Retail other

Pass

103,386

51,497

17,208

19,075

10,189

3,438

88,029

292,822
Substandard non-accrual

—

88

—

—

—

—

—

88
Total retail other

103,386

51,585

17,208

19,075

10,189

3,438

88,029

292,910

Total portfolio loans

$
1,490,938

$
2,068,864

$
1,060,004

$
648,314

$
367,553

$
813,216

$
1,048,889

$
7,497,778


	As of September 30, 2022
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Total
Risk Grade Ratings	2022		2021		2020		2019		2018		Prior
Commercial
Pass	$	403,643	$	315,433	$	145,695	$	60,284	$	53,197	$	149,627	$	579,649	$	1,707,528
Watch	27,665		18,423		4,263		8,372		1,404		3,144		71,983		135,254
Special Mention	1,772		691		1,325		1,078		3,102		17,538		32,683		58,189
Substandard	9,075		1,292		695		6,999		433		5,402		14,799		38,695
Substandard non-accrual	—		3,586		306		137		—		198		2,000		6,227
Total commercial	442,155		339,425		152,284		76,870		58,136		175,909		701,114		1,945,893

Commercial real estate
Pass	765,398		880,522		501,085		332,768		171,177		222,947		15,907		2,889,804
Watch	69,877		44,756		50,799		95,446		18,821		13,338		6,601		299,638
Special Mention	3,010		4,737		15,598		1,517		6,994		10,872		—		42,728
Substandard	14,349		12,681		497		1,841		10,412		942		—		40,722
Substandard non-accrual	—		4,092		41		—		1,650		9		—		5,792
Total commercial real estate	852,634		946,788		568,020		431,572		209,054		248,108		22,508		3,278,684

Real estate construction
Pass	176,071		191,006		84,748		1,570		2,012		1,949		17,743		475,099
Watch	3,100		3,666		3,269		10,533		—		1,443		—		22,011
Special Mention	—		—		—		2		—		—		—		2
Substandard	2,400		—		—		—		—		—		—		2,400
Substandard non-accrual	—		—		48		—		—		—		—		48
Total real estate construction	181,571		194,672		88,065		12,105		2,012		3,392		17,743		499,560

Retail real estate
Pass	344,033		464,066		180,543		79,304		58,925		281,430		217,401		1,625,702
Watch	2,881		1,163		1,875		1,469		1,146		67		—		8,601
Special Mention	148		1,864		—		—		—		—		75		2,087
Substandard	—		1,163		207		82		142		1,868		7		3,469
Substandard non-accrual	—		150		110		—		390		1,985		605		3,240
Total retail real estate	347,062		468,406		182,735		80,855		60,603		285,350		218,088		1,643,099

Retail other
Pass	121,375		47,136		14,999		15,909		7,677		2,124		93,540		302,760



Substandard non-accrual	14		89		3		—		10		2		—		118
Total retail other	121,389		47,225		15,002		15,909		7,687		2,126		93,540		302,878

Total portfolio loans	$	1,944,811	$	1,996,516	$	1,006,106	$	617,311	$	337,492	$	714,885	$	1,052,993	$	7,670,114

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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
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
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


	As of December 31, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Total
Risk Grade Ratings	2021		2020		2019		2018		2017		Prior
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

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



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

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Past Due and Non-accrual Loans

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 June 30, 2022

Loans past due, still accruing

Non-accrual


30-59 Days

60-89 Days

90+Days

Loans
Past due and non-accrual loans

Commercial

$
209

$
24

$
625

$
6,818
Commercial real estate

356

—

—

6,236
Real estate construction

—

—

—

47
Retail real estate

2,428

1,990

1,019

2,651
Retail other

143

7

10

88
Total past due and non-accrual loans

$
3,136

$
2,021

$
1,654

$
15,840

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 September 30, 2022
	Loans past due, still accruing						Non-accrual Loans
	30-59 Days		60-89 Days		90+Days
Past due and non-accrual loans
Commercial	$	19	$	45	$	625	$	6,227
Commercial real estate	411		—		349		5,792
Real estate construction	—		—		—		48
Retail real estate	3,734		1,831		255		3,240
Retail other	262		5		—		118
Total past due and non-accrual loans	$	4,426	$	1,881	$	1,229	$	15,425


	As of December 31, 2021
	Loans past due, still accruing						Non-accrual Loans
	30-59 Days		60-89 Days		90+Days
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

Gross interest income recorded on 90+ days past due loans, and that would have been recorded on non-accrual loans if they had been accruing interest in accordance with their original terms, was $0.3 million and ~~$0.5~~$0.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. Gross interest income recorded on 90+ days past due loans, and that would have been recorded on non-accrual loans if they had been accruing interest in accordance with their original terms, was ~~$0.4~~$0.3 million and ~~$0.9~~$1.2 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. The amount of interest collected on those loans and recognized on a cash basis that was included in interest income was insignificant for the three months ended ~~June~~September 30, 2022, and was $0.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The amount of interest collected on those loans and recognized on a cash basis that was included in interest income was ~~insignificant~~$0.4 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021.

Troubled Debt Restructurings

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

As of

June 30,

December 31,

2022

2021
TDRs

In compliance with modified terms

$
2,017

$
1,801
30 – 89 days past due

12

—
Non-performing TDRs

508

551
Total TDRs

$
2,537

$
2,352


	As of
	September 30, 2022		December 31, 2021
TDRs
In compliance with modified terms	$	1,940	$	1,801
30 – 89 days past due	—		—
Non-performing TDRs	483		551
Total TDRs	$	2,423	$	2,352

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Loans that were newly designated as TDRs during the periods presented, are summarized as follows (dollars in thousands):

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

Recorded Investment

Recorded Investment

Number of

Rate

Payment

Number of

Rate

Payment


Contracts

Modification ⁽¹⁾

Modification ⁽¹⁾

Contracts

Modification ⁽¹⁾

Modification ⁽¹⁾
Commercial

1

$
—

$
446

1

$
—

$
446

Three Months Ended June 30, 2021

Six Months Ended June 30, 2021

Recorded Investment

Recorded Investment

Number of

Rate

Payment

Number of

Rate

Payment


Contracts

Modification ⁽¹⁾

Modification ⁽¹⁾

Contracts

Modification ⁽¹⁾

Modification ⁽¹⁾
Commercial

—

$
—

$
—

1

$
463

$
—


	Three Months Ended September 30, 2022					Nine Months Ended September 30, 2022
		Recorded Investment					Recorded Investment
	Number of Contracts	Rate Modification1		Payment Modification1		Number of Contracts	Rate Modification1		Payment Modification1
Commercial	—	$	—	$	—	1	$	—	$	381


	Three Months Ended September 30, 2021					Nine Months Ended September 30, 2021
		Recorded Investment					Recorded Investment
	Number of Contracts	Rate Modification1		Payment Modification1		Number of Contracts	Rate Modification1		Payment Modification1
Commercial	—	$	—	$	—	1	$	444	$	—

	~~(1)~~	~~TDRs may include multiple concessions; those that include an interest rate concession and payment concession are shown in the rate modification column.~~

TDRs may include multiple concessions; those that include an interest rate concession and payment concession are shown in the rate modification column.

There were 0no TDRs entered into during the 12 months ended ~~June~~September 30, 2022, or 2021, that had subsequent defaults during the three or ~~six~~nine months ended ~~June~~September 30, 2022, or 2021. A default occurs when a loan is 90 days or more past due or transferred to non-accrual.

Gross interest income that would have been recorded in the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, if TDRs had performed in accordance with their original terms compared with their modified terms, was insignificant.

Collateral Dependent Loans

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 Company had $14.8 million and $7.9 million of collateral dependent loans secured by real estate or business assets as of September 30, 2022, and December 31, 2021, respectively.

Foreclosures

As of ~~June~~September 30, 2022, the Company had ~~$0.8~~$1.0 million of residential real estate in the process of foreclosure. The Company follows Federal Housing Finance Agency guidelines on single-family foreclosures and real estate owned evictions on portfolio loans.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Loans Modified Under the CARES Act or Interagency Statement

The CARES Act provided financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. Federal regulatory agencies, in consultation with FASB, also issued an Interagency Statement to encourage financial institutions to work with borrowers affected by COVID-19, and to update guidance 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, which suspended GAAP requirements related to TDR classification (dollars in thousands):

As of June 30, 2022

As of December 31, 2021

Number of

Recorded

Number of

Recorded


Contracts

Investment

Contracts

Investment
COVID-19 loan modifications

Commercial loans:

Interest-only deferrals

11

$
31,925

32

$
128,730
Retail loans:

Mortgage and personal loan deferrals

1

99

2

137
Total COVID-19 loans modifications

12

$
32,024

34

$
128,867


	As of September 30, 2022			As of December 31, 2021
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
COVID-19 loan modifications
Commercial loans:

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


Retail loans:
Mortgage and personal loan deferrals	1	99		2	137

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

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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 customer outstanding contractual principal balances 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 September 30, 2022
	Unpaid Principal Balance		Recorded Investment								Average Recorded Investment
			With No Allowance		With Allowance		Total		Related Allowance
Loans evaluated individually
Commercial	$	9,455	$	547	$	5,892	$	6,439	$	2,806	$	7,488
Commercial real estate	7,497		1,663		4,035		5,698		2,000		5,216
Real estate construction	255		255		—		255		—		266
Retail real estate	2,258		2,089		25		2,114		25		2,526

Total loans evaluated individually	$	19,465	$	4,554	$	9,952	$	14,506	$	4,831	$	15,496

As of June 30, 2022

Unpaid

Recorded Investment

Average

Principal

With No

With

Related

Recorded


Balance

Allowance

Allowance

Total

Allowance

Investment
Loans evaluated individually

Commercial

$
10,282

$
932

$
6,092

$
7,024

$
2,826

$
8,317
Commercial real estate

8,099

1,923

4,100

6,023

2,000

5,748
Real estate construction

262

262

—

262

—

272
Retail real estate

2,290

2,121

25

2,146

25

2,890
Total loans evaluated individually

$
20,933

$
5,238

$
10,217

$
15,455

$
4,851

$
17,227

As of 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
Total loans evaluated individually

$
19,489

$
8,865

$
6,515

$
15,380

$
3,589

$
19,556

~~Management's evaluation as to the ultimate collectability~~Table 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 Company had $4.1 million and $7.9 million of collateral dependent loans secured by real estate or business assets as of June 30, 2022, and December 31, 2021, respectively.

Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	As of December 31, 2021
	Unpaid Principal Balance		Recorded Investment								Average Recorded Investment
			With No Allowance		With Allowance		Total		Related Allowance
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

Total loans evaluated individually	$	19,489	$	8,865	$	6,515	$	15,380	$	3,589	$	19,556

Allowance for Credit Losses

Management estimates the ACL balance using relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Company’s historical loss experience beginning in 2010. ~~As of June 30, 2022,~~Due to the ~~Company expects~~ continued economic uncertainty in the markets in which itthe Company operates, ~~and around~~in particular the levels of delinquencies, ~~over~~ the ~~next~~Company will continue to utilize a forecast period of 12 ~~months. Management adjusted the historical loss experience for these expectations~~months with an immediate reversion to historical loss ~~rate~~rates beyond this forecast ~~period.~~period in its ACL estimate. PPP loans were excluded from the ACL calculation as they are 100% government guaranteed.

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

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

Three Months Ended June 30, 2022


Commercial

Real Estate

Retail


Commercial

Real Estate

Construction

Real Estate

Retail Other

Total
ACL balance, March 31, 2022

$
24,173

$
37,339

$
5,705

$
17,555

$
3,441

$
88,213
Provision for credit losses

(743)

1,028

(63)

312

1,119

1,653
Charged-off

(208)

(1,372)

—

(17)

(82)

(1,679)
Recoveries

137

187

27

134

85

570
ACL balance, June 30, 2022

$
23,359

$
37,182

$
5,669

$
17,984

$
4,563

$
88,757

Six Months Ended June 30, 2022


Commercial

Real Estate

Retail


Commercial

Real Estate

Construction

Real Estate

Retail Other

Total
ACL balance, December 31, 2021

$
23,855

$
38,249

$
5,102

$
17,589

$
3,092

$
87,887
Provision for credit losses

(492)

(190)

447

142

1,493

1,400
Charged-off

(208)

(1,372)

—

(33)

(191)

(1,804)
Recoveries

204

495

120

286

169

1,274
ACL balance, June 30, 2022

$
23,359

$
37,182

$
5,669

$
17,984

$
4,563

$
88,757

Three Months Ended June 30, 2021


Commercial

Real Estate

Retail Real


Commercial

Real Estate

Construction

Estate

Retail Other

Total
ACL balance, March 31, 2021

$
23,025

$
43,306

$
6,879

$
19,978

$
755

$
93,943
Day 1 PCD ⁽¹⁾

3,546

336

—

129

167

4,178
Provision for credit losses

(1,420)

(3,390)

671

404

2,035

(1,700)
Charged-off

(1,000)

(317)

—

(157)

(64)

(1,538)
Recoveries

205

39

49

151

83

527
ACL balance, June 30, 2021

$
24,356

$
39,974

$
7,599

$
20,505

$
2,976

$
95,410

Six Months Ended June 30, 2021


Commercial

Real Estate

Retail


Commercial

Real Estate

Construction

Real Estate

Retail Other

Total
ACL balance, December 31, 2020

$
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

(2,084)

(6,085)

(579)

(1,873)

2,125

(8,496)
Charged-off

(1,262)

(620)

(209)

(160)

(251)

(2,502)
Recoveries

290

113

194

417

168

1,182
ACL balance, June 30, 2021

$
24,356

$
39,974

$
7,599

$
20,505

$
2,976

$
95,410

~~(1)~~

~~The Day 1 PCD is attributable to the CAC acquisition in the second quarter of 2021.~~


	Three Months Ended September 30, 2022
	Commercial		Commercial Real Estate		Real Estate Construction		Retail Real Estate		Retail Other		Total
ACL balance, June 30, 2022	$	23,359	$	37,182	$	5,669	$	17,984	$	4,563	$	88,757
Provision for credit losses	615		598		216		684		251		2,364
Charged-off	(381)		—		—		(220)		(218)		(819)
Recoveries	102		19		86		172		41		420
ACL balance, September 30, 2022	$	23,695	$	37,799	$	5,971	$	18,620	$	4,637	$	90,722


	Nine Months Ended September 30, 2022
	Commercial		Commercial Real Estate		Real Estate Construction		Retail Real Estate		Retail Other		Total
ACL balance, December 31, 2021	$	23,855	$	38,249	$	5,102	$	17,589	$	3,092	$	87,887
Provision for credit losses	123		408		663		826		1,744		3,764
Charged-off	(589)		(1,372)		—		(253)		(409)		(2,623)
Recoveries	306		514		206		458		210		1,694
ACL balance, September 30, 2022	$	23,695	$	37,799	$	5,971	$	18,620	$	4,637	$	90,722

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	Three Months Ended September 30, 2021
	Commercial		Commercial Real Estate		Real Estate Construction		Retail Real Estate		Retail Other		Total
ACL balance, June 30, 2021	$	24,356	$	39,974	$	7,599	$	20,505	$	2,976	$	95,410

Provision for credit losses	657		(25)		(1,503)		(1,155)		157		(1,869)
Charged-off	(764)		(191)		—		(155)		(98)		(1,208)
Recoveries	157		73		25		157		57		469
ACL balance, September 30, 2021	$	24,406	$	39,831	$	6,121	$	19,352	$	3,092	$	92,802


	Nine Months Ended September 30, 2021
	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	(1,428)		(6,109)		(2,082)		(3,028)		2,282		(10,365)
Charged-off	(2,026)		(812)		(209)		(315)		(349)		(3,711)
Recoveries	448		186		219		574		225		1,652
ACL balance, September 30, 2021	$	24,406	$	39,831	$	6,121	$	19,352	$	3,092	$	92,802

1.The Day 1 PCD is attributable to the CAC acquisition in the second quarter of 2021.

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


	As of September 30, 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 loan category
Commercial	$	1,939,454	$	6,439	$	1,945,893	$	20,889	$	2,806	$	23,695
Commercial real estate	3,272,986		5,698		3,278,684		35,799		2,000		37,799
Real estate construction	499,305		255		499,560		5,971		—		5,971
Retail real estate	1,640,985		2,114		1,643,099		18,595		25		18,620
Retail other	302,878		—		302,878		4,637		—		4,637
Portfolio loans and related ACL	$	7,655,608	$	14,506	$	7,670,114	$	85,891	$	4,831	$	90,722

Table of Contents

As of June 30, 2022

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

$
1,912,656

$
7,024

$
1,919,680

$
20,533

$
2,826

$
23,359
Commercial real estate

3,222,067

6,023

3,228,090

35,182

2,000

37,182
Real estate construction

465,923

262

466,185

5,669

—

5,669
Retail real estate

1,588,767

2,146

1,590,913

17,959

25

17,984
Retail other

292,910

—

292,910

4,563

—

4,563
Portfolio loans and related ACL

$
7,482,323

$
15,455

$
7,497,778

$
83,906

$
4,851

$
88,757

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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
Portfolio loans and related ACL

$
7,173,618

$
15,380

$
7,188,998

$
84,298

$
3,589

$
87,887

As of December 31, 2021
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 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
Portfolio loans and related ACL $ 7,173,618 $ 15,380 $ 7,188,998 $ 84,298 $ 3,589 $ 87,887

Note 5: Deposits

The composition of deposits is as follows (dollars in thousands):


	As of
	September 30, 2022		December 31, 2021
Deposits
Demand deposits, noninterest-bearing	$	3,628,169	$	3,670,267
Interest-bearing transaction deposits	2,952,414		2,720,417
Saving deposits and money market deposits	3,220,627		3,442,244
Time deposits	800,187		935,649
Total deposits	$	10,601,397	$	10,768,577

As of

June 30,

December 31,


2022

2021
Deposits

Demand deposits, noninterest-bearing

$
3,505,299

$
3,670,267
Interest-bearing transaction deposits

2,751,722

2,720,417
Saving deposits and money market deposits

3,322,386

3,442,244
Time deposits

817,821

935,649
Total deposits

$
10,397,228

$
10,768,577

Additional information about our deposits is as follows (dollars in thousands):

As of

June 30,

December 31,


2022

2021
Brokered savings deposits and money market deposits

$
2,002

$
2,248
Brokered time deposits

271

266
Aggregate amount of time deposits with a minimum denomination of $100,000

390,287

454,649
Aggregate amount of time deposits with a minimum denomination that meets or exceeds the FDIC insurance limit of $250,000

117,958

137,449


	As of
	September 30, 2022		December 31, 2021
Brokered savings deposits and money market deposits	$	2,006	$	2,248
Brokered time deposits	273		266
Aggregate amount of time deposits with a minimum denomination of $100,000	379,136		454,649
Aggregate amount of time deposits with a minimum denomination that meets or exceeds the FDIC insurance limit of $250,000	103,534		137,449

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Scheduled maturities of time deposits are as follows (dollars in thousands):

As of

June 30, 2022
Time deposits by schedule of maturities

Remainder of 2022

$
362,919
2023

315,505
2024

89,743
2025

21,570
2026

18,018
2027

9,413
Thereafter

653
Time deposits

$
817,821

As of
September 30, 2022
Time deposits by schedule of maturities
Remainder of 2022 $ 188,332
2023 431,060
2024 126,309
2025 23,078
2026 17,910
2027 12,844
Thereafter 654
Time deposits $ 800,187

Note 6: Borrowings

Securities Sold Under Agreements to 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’s safekeeping agent. The Company 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

June 30,

December 31,


2022

2021

Securities sold under agreements to repurchase

$
228,383

$
270,139

Weighted average rate for securities sold under agreements to repurchase

0.55
%

0.08
%


	As of
	September 30, 2022			December 31, 2021
Securities sold under agreements to repurchase	$	234,597		$	270,139
Weighted average rate for securities sold under agreements to repurchase	0.98		%	0.08		%

Term Loan

On May 28, 2021, the Company entered into a Second Amended and Restated Credit Agreement, pursuant to which the Company has access to (i) a $40.0 million revolving line of credit with a termination date of April 30, 2022, and (ii) a $60.0 million term loan with a maturity date of May 31, 2026. The loans had an annual interest rate of 1.75% plus the one-month LIBOR rate. On April 30, 2022, the agreement was amended, effecting an extension of the termination date for the revolving line of credit to April 30, 2023, and providing for the transition from a LIBOR-indexed interest rate to a SOFR-indexed interest rate. Under the terms of the amendment, the loans now have an annual interest rate of 1.80% plus the one-month forward-looking term rate based on SOFR.

Proceeds of the term loan were used to fund a part of the cash portion of the merger consideration related to the acquisition of CAC in the second quarter of 2021, and for general corporate purposes. As of ~~June~~September 30, 2022, there was 0no balance outstanding on the revolving credit facility and a total of ~~$48.0~~$45.0 million outstanding on the term loan, of which $12.0 million was short-term and ~~$36.0~~$33.0 million was long-term. The revolving credit facility incurs a non-usage fee based on any undrawn amounts. Quarterly payments on the term loan reduce the outstanding principal balance by $3.0 million each quarter.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Short-term Borrowings

First Busey’s short-term borrowings include loans maturing within one year of the loan origination date, as well as the current portion of long-term debt that is due within 12 months. Short-term borrowings are summarized as follows (dollars in thousands):


	As of
	September 30, 2022		December 31, 2021
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	$	4,225	$	5,678

Term Loan, current portion due within 12 months	12,000		12,000
Total short-term debt	$	16,225	$	17,678

As of

June 30,

December 31,


2022

2021
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

$
4,396

$
5,678
Term Loan, current portion due within 12 months

12,000

12,000
Total short-term debt

$
16,396

$
17,678

Federal funds purchased are short-term borrowings that generally mature between one and 90 days. The Company had 0no federal funds purchased as of ~~June~~September 30, 2022, or December 31, 2021.

Long-term Debt

First Busey’s long-term debt consists of loans maturing more than one year from the loan origination date, excluding the current portion that is due within 12 months. Long-term debt is summarized as follows (dollars in thousands):

As of

June 30,

December 31,


2022

2021
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
Term Loan

36,000

42,000
Total long-term debt

$
36,000

$
46,056


	As of
	September 30, 2022		December 31, 2021
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
Term Loan	33,000		42,000
Total long-term debt	$	33,000	$	46,056

As of December 31, 2021, funds borrowed from the FHLB, listed above, consisted of one variable-rate note maturing in May 2023, with an interest rate of 3.04%. This note became due within 12 months during the second quarter of 2022, and the balance is now fully reflected in short-term borrowings.

Senior and Subordinated Notes

On May 25, 2017, the Company issued $40.0 million of 3.75% senior notes that matured and were redeemed on May 25, 2022. Additionally, on May 25, 2017, the Company issued $60.0 million of fixed-to-floating rate subordinated notes that were scheduled to mature on May 25, 2027. The subordinated notes bore 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 three-month LIBOR plus a spread of 2.919%, as calculated on each applicable determination date. The subordinated notes were payable semi-annually on each May 25 and November 25, commencing on November 25, 2017, during the five-year fixed-term, and thereafter are payable 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, and the~~2022. The Company ~~anticipates redeeming~~redeemed all outstanding $60.0 million fixed-to-floating rate subordinated notes during the third quarter of 2022. ~~The full balance~~At the time of redemption, the redeemed subordinated notes ~~qualified as Tier 2 Capital for First Busey for the first five years, with~~carried interest at a ~~phase out beginning in the second quarter~~floating rate of ~~2022. The senior notes were, and the subordinated notes are, unsecured obligations of the Company.~~

3-month LIBOR plus 2.919%.

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

On June 1, 2020, the Company issued $125.0 million of fixed-to-floating rate subordinated notes that mature on June 1, 2030. The subordinated notes, which qualify as Tier 2 capital for First Busey, bear interest at an annual rate of 5.25% for the first five years after issuance and thereafter bear interest at a floating rate equal to a three-month benchmark rate plus a spread of 5.11%, as calculated on each applicable determination date. The subordinated notes are payable semi-annually on each June 1 and December 1 during the five-year fixed-term, and thereafter on March 1, June 1, September 1, and December 1 of each year, commencing on September 1, 2025. 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.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

On June 2, 2022, the Company issued $100.0 million aggregate principal amount of 5.000% fixed-to-floating rate subordinated notes ~~due~~maturing June 15, 2032, which qualify as Tier 2 Capital for regulatory purposes. The price to the public for the subordinated notes was 100% of the principal amount of the subordinated notes. Interest on the subordinated notes will accrue at a rate equal to (i) 5.000% per annum from the original issue date to, but excluding, June 15, 2027, payable semiannually in arrears, and (ii) a floating rate per annum equal to a benchmark rate, which is expected to be the Three-Month Term SOFR (as defined in the subordinated notes), plus a spread of 252 basis points from and including, June 15, 2027, payable quarterly in arrears. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after June 15, 2027.

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

As of

June 30,

December 31,


2022

2021
Unamortized debt issuance costs

Senior notes issued in 2017

$
—

$
56
Subordinated notes issued in 2017

338

549
Subordinated notes issued in 2020

1,452

1,678
Subordinated notes issued in 2022

1,906

—
Total unamortized debt issuance costs

$
3,696

$
2,283

As of
September 30,
2022 December 31,
2021
Unamortized debt issuance costs
Senior notes issued in 2017 $ — $ 56
Subordinated notes issued in 2017 — 549
Subordinated notes issued in 2020 1,337 1,678
Subordinated notes issued in 2022 1,828 —
Total unamortized debt issuance costs $ 3,165 $ 2,283

Note 7: Regulatory Capital

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Capital amounts and classification also are subject to qualitative judgments by regulators about components, risk weightings, and other factors.

Banking regulations identify five capital categories for insured depository institutions: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. As of ~~June~~September 30, 2022, and December 31, 2021, all capital ratios of the Company and its subsidiary bank exceeded well capitalized levels under the applicable regulatory capital adequacy guidelines. Management believes that no events or changes have occurred subsequent to ~~June~~September 30, 2022, that would change this designation.

Current Expected Credit Loss Model

On March 27, 2020, the FDIC and other federal banking agencies published an interim final rule that provides those banking organizations adopting CECL during 2020 with the option to delay for two years the estimated impact of CECL on regulatory capital and to phase in the aggregate impact of the deferral on regulatory capital over a subsequent three-year period. On August 26, 2020, the CECL final rule was finalized and was substantially similar to the interim final rule. Under this final rule, because the Company has elected to use the deferral option, the regulatory capital impact of our transition adjustments recorded on January 1, 2020, arising from the adoption of CECL was deferred for two years, until January 1, 2022. In addition, 25 percent of the ongoing impact of CECL on our ACL, retained earnings, and average total consolidated assets from January 1, 2020, through the end of the two-year deferral period, each as reported for regulatory

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

capital purposes, has been added to the deferred transition amounts (“adjusted transition amounts”) and deferred for the two-year period. At the conclusion of the two-year period the adjusted transition amounts began to be phased-in for regulatory capital purposes at a rate of 25 percent per year, with the phased-in amounts included in regulatory capital at the beginning of each year.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Changes in Capital Relating to Subordinated Debt

On May 25, 2017, the Company issued $60.0 million of fixed-to-floating rate subordinated notes that were scheduled to mature on May 25, 2027. The full balance of the subordinated note qualified as Tier 2 Capital for First Busey for the first five years, with a phase out beginning in the second quarter of 2022. The subordinated notes ~~have~~had an optional redemption in whole or in part on any interest payment date on or after May 25, 2022, and the Company ~~anticipates redeeming~~redeemed them in full during the third quarter of 2022.

On June 2, 2022, the Company issued $100.0 million aggregate principal amount of 5.000% fixed-to-floating rate subordinated notes ~~due~~that mature on June 15, 2032, which qualify as Tier 2 Capital for regulatory purposes.

Capital Amounts and Ratios

The following tables summarize regulatory capital requirements applicable to the Company and its subsidiary bank (dollars in thousands):

As of June 30, 2022

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

$
1,031,356

11.77
%
$
394,196

4.50
%
$
569,394

6.50
%
Busey Bank

$
1,265,418

14.50
%
$
392,637

4.50
%
$
567,142

6.50
%

Tier 1 Capital to Risk Weighted Assets

Consolidated

$
1,105,356

12.62
%
$
525,594

6.00
%
$
700,792

8.00
%
Busey Bank

$
1,265,418

14.50
%
$
523,516

6.00
%
$
698,021

8.00
%

Total Capital to Risk Weighted Assets

Consolidated

$
1,452,813

16.58
%
$
700,792

8.00
%
$
875,990

10.00
%
Busey Bank

$
1,339,875

15.36
%
$
698,021

8.00
%
$
872,526

10.00
%

Leverage Ratio of Tier 1 Capital to Average Assets

Consolidated

$
1,105,356

9.03
%
$
489,513

4.00
%

N/A

N/A

Busey Bank

$
1,265,418

10.37
%
$
488,139

4.00
%
$
610,174

5.00
%


	As of September 30, 2022
	Actual				Minimum Capital Requirement				Minimum To Be Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Common Equity Tier 1 Capital to Risk Weighted Assets
Consolidated	$	1,056,206	11.79	%	$	403,047	4.50	%	$	582,179	6.50	%
Busey Bank	$	1,288,945	14.45	%	$	401,307	4.50	%	$	579,665	6.50	%

Tier 1 Capital to Risk Weighted Assets
Consolidated	$	1,130,206	12.62	%	$	537,396	6.00	%	$	716,528	8.00	%
Busey Bank	$	1,288,945	14.45	%	$	535,076	6.00	%	$	713,434	8.00	%

Total Capital to Risk Weighted Assets
Consolidated	$	1,431,308	15.98	%	$	716,528	8.00	%	$	895,660	10.00	%
Busey Bank	$	1,365,046	15.31	%	$	713,434	8.00	%	$	891,793	10.00	%

Leverage Ratio of Tier 1 Capital to Average Assets
Consolidated	$	1,130,206	9.15	%	$	494,124	4.00	%	N/A		N/A
Busey Bank	$	1,288,945	10.47	%	$	492,534	4.00	%	$	615,668	5.00	%

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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, 2021
	Actual				Minimum Capital Requirement				Minimum To Be Well 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	%

Capital Conservation Buffer

In July 2013, U.S. federal banking authorities approved the Basel III Rule for strengthening international capital standards. The Basel III Rule introduced a capital conservation buffer, composed entirely of Common Equity Tier 1 Capital, which is added to the minimum risk-weighted asset ratios. The capital conservation buffer is not a minimum capital requirement; however, banking institutions with a ratio of Common Equity Tier 1 Capital to risk-weighted assets below the capital conservation buffer will face constraints on dividends, equity repurchases, and discretionary bonus payments based on the amount of the shortfall. In order to refrain from restrictions on dividends, equity repurchases, and discretionary bonus payments, banking institutions must maintain minimum ratios of (i) Common Equity Tier 1 Capital to risk-weighted assets of at least 7.0%, (ii) Tier 1 Capital to risk-weighted assets of at least 8.5%, and (iii) Total capital to risk-weighted assets of at least 10.5%.

Note 8: Stock-Based Compensation

Stock Options

The Company has outstanding stock options assumed from acquisitions. A summary of the status of, and changes in, the Company's stock option awards for the ~~six~~nine months ended ~~June~~September 30, 2022, follows:

Weighted-



Weighted-

Average

Average

Remaining

Exercise

Contractual


Shares

Price

Life
Options outstanding at December 31, 2021

31,386

$
23.53

4.88
Expired

(220)

23.53

Options outstanding at June 30, 2022

31,166

$
23.53

4.38

Options exercisable at June 30, 2022

31,166

$
23.53

4.38


	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life
Options outstanding at December 31, 2021	31,386	$	23.53	4.88


Expired	(440)	23.53
Options outstanding at September 30, 2022	30,946	$	23.53	4.13

Options exercisable at September 30, 2022	30,946	$	23.53	4.13

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

2020 Equity Plan

Under the terms of the 2020 Equity Plan, the Company has granted RSU, PSU, and DSU awards. Upon vesting/delivery, shares are expected (though not required) to be issued from treasury.

RSU Awards

The Company grants RSUs to members of management periodically throughout the year. Each RSU is equivalent to 1one share of the Company’s common stock. These units have requisite service periods ranging from one year to five years, subject to accelerated vesting upon eligible retirement from the Company. Recipients earn quarterly dividend equivalents on their respective units which entitle the recipients to additional units. Therefore, dividends earned each quarter compound based upon the updated unit balances.

PSU Awards

The Company also grants PSU awards to members of management periodically throughout the year. Each PSU is equivalent to 1one share of the Company’s common stock. The number of units that ultimately vest will be determined based on the achievement of the market or other performance goals, subject to accelerated service-based vesting conditions upon eligible retirement from the Company.

DSU Awards

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 1one 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.

Award Grants and Activity

A summary of changes in the Company’s RSU, PSU, and DSU awards for the ~~six~~nine months ended ~~June~~September 30, 2022, is as follows:

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 December 31, 2021

1,147,927

$
23.97

113,915

$
22.86

34,135

$
24.59
Granted

156,483

25.79

195,240

25.79

32,658

25.79
Dividend equivalents earned

22,800

24.52

—

—

2,797

24.38
Vested

(136,084)

29.27

—

—

(39,065)

24.67
Forfeited

(23,966)

23.65

(2,339)

24.30

—

—
Nonvested at June 30, 2022

1,167,160

$
23.62

306,816

$
24.71

30,525

$
25.76

Vested and outstanding at June 30, 2022

115,208

$
22.80


	RSU Awards			PSU Awards			DSU Awards
	Shares	Weighted- Average Grant Date Fair Value		Shares1	Weighted- Average Grant Date Fair Value		Shares	Weighted- Average Grant Date Fair Value
Nonvested at December 31, 2021	1,147,927	$	23.97	113,915	$	22.86	34,135	$	24.59
Granted	156,483	25.79		195,240	26.14		32,658	25.79
Dividend equivalents earned	33,690	24.56		—	—		4,156	24.47
Vested	(152,992)	28.93		—	—		(40,140)	24.67
Forfeited	(35,172)	23.51		(4,556)	24.86		—	—
Nonvested at September 30, 2022	1,149,936	$	23.59	304,599	$	24.93	30,809	$	25.75

Vested and outstanding at September 30, 2022							116,285	$	22.82

	~~(1)~~	~~Shares for PSU awards represent target shares at grant date.~~

Shares for PSU awards represent target shares at grant date.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

On March 23, 2022, under the terms of the 2020 Equity Plan, the Company granted 156,483 RSUs to members of management. The grant date fair value of the award totaled $4.0 million and will be recognized as compensation expense over the requisite service period ranging from one year to five years. The terms of these awards included an accelerated vesting provision upon eligible retirement from the Company, after a one-year minimum requisite service period. Subsequent to the requisite service period, the awards will become 100% vested.

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

On March 23, 2022, the Company granted a target of 78,233 market-based PSUs with a maximum award of 125,173 units. The actual number of units issued at the vesting date could range from 0% to 160% of the initial grant, depending on attaining a market-based total shareholder return performance goal. The grant date fair value of the award is ~~estimated to be $2.0~~$2.1 million and will be recognized in compensation expense over the performance period ending December 31, 2024. ~~The Company expects to finalize the grant date fair value of these awards in the third quarter of 2022.~~

On March 23, 2022, the Company granted a target of 78,233 performance-based PSUs with a maximum award of 125,173 units. The actual number of units issued at the vesting date could range from 0% to 160% of the initial grant, depending on attaining a core return on average tangible common equity performance goal. The grant date fair value of the award is $2.0 million and will be recognized in compensation expense over the performance period ending December 31, ~~2024,~~2024. The actual amount of compensation expense recognized may vary, subject to achievement of the performance goal.

Further, on March 23, 2022, the Company granted a target of 38,774 PSUs with a maximum award of 77,548 units. The actual number of units issued at the vesting date could range from 0% to 200% of the initial grant, depending on attaining a performance goal based upon the compounded annual revenue growth rate of the FirsTech operating segment. The grant date fair value of the award is $1.0 million and will be recognized in compensation expense over the performance period ending December 31, 2024, subject to achievement of the performance goal.

On March 23, 2022, the Company granted 32,658 DSUs to directors and advisory directors. The grant date fair value of the award totaled $0.8 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.

2021 Employee Stock Purchase Plan

The First Busey Corporation 2021 ESPP was approved at the Company’s 2021 Annual Meeting of Stockholders and details can be found within First Busey’s Definitive Proxy Statement filed with the SEC on April 8, 2021. The purpose of the 2021 ESPP is to provide a means through which our employees may acquire a proprietary interest in the Company 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. The plan initially reserved for issuance and purchase an aggregate of 600,000 shares of the Company’s common stock. The first offering under this plan began on July 1, 2021.

Stock-based Compensation Expense

The Company did not record any stock option compensation expense for the three or ~~six~~nine months ended ~~June~~September 30, 2022, or 2021. As of ~~June~~September 30, 2022, the Company did not have any unrecognized stock option compensation expense.

The Company recognized compensation expense related to nonvested RSU, PSU, and DSU awards, as well as the 2021 ESPP, as summarized in the table below (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Stock-based compensation expense

RSU awards

$
1,273

$
1,816

$
2,449

$
3,046
PSU awards

758

268

1,170

328
DSU awards

257

353

483

511
2021 ESPP

48

—

143

—
Total stock-based compensation expense

$
2,336

$
2,437

$
4,245

$
3,885


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Stock-based compensation expense

RSU awards	$	1,072	$	1,316	$	3,521	$	4,362
PSU awards1	1,172		290		2,342		619
DSU awards	196		231		679		741
2021 ESPP	36		54		179		54
Total stock-based compensation expense	$	2,476	$	1,891	$	6,721	$	5,776

1.Expense for market-based PSU awards represents amounts based on target shares at grant date. Expense for performance-based PSU awards represents amounts based on target shares at grant date, adjusted for performance expectations as of the date indicated.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Unamortized compensation expense related to nonvested RSU, PSU, and DSU awards is summarized in the table below (dollars in thousands):


	As of
	September 30, 2022		December 31, 2021
Unamortized stock-based compensation
RSU awards	$	9,966	$	10,204
PSU awards1	5,279		1,547
DSU awards	371		209
Total unamortized stock-based compensation	$	15,616	$	11,960

Weighted average period over which expense is to be recognized	2.6 yrs		2.9 yrs

As of

June 30,

December 31,


2022

2021

Unamortized stock-based compensation

RSU awards

$
11,273

$
10,204

PSU awards

4,973

1,547

DSU awards

568

209

Total unamortized stock-based compensation

$
16,814

$
11,960

Weighted average period over which expense is to be recognized

2.8
yrs

2.9
yrs

Unamortized expense for market-based PSU awards represents amounts based on target shares at grant date. Unamortized expense for performance-based PSU awards represents amounts based on target shares at grant date, adjusted for performance expectations as of the date indicated.

Shares Available for Issuance Under Stock-based Compensation Plans

Shares remaining available for issuance pursuant to authorized stock-based compensation plans were as follows as of ~~June~~September 30, ~~2022, were as follows:~~

2022:


Plan		Shares Remaining
	Available for Issuance
	Pursuant to the Plan
2020 Equity Plan		645,563	~~644,174~~
2021 Employee Stock Purchase Plan		519,577	~~530,570~~

Note 9: Outstanding Commitments and Contingent Liabilities

Legal Matters

The Company is a party to legal actions which arise in the normal course of its business activities. In the opinion of management, the ultimate resolution of these matters is not expected to have a material effect on the Company’s financial position or results of operations.

Credit Commitments and Contingencies

A summary of the contractual amount of the Company’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
	September 30, 2022		December 31, 2021
Financial instruments whose contract amounts represent credit risk
Commitments to extend credit	$	2,024,255	$	1,983,655
Standby letters of credit	31,933		32,552
Total commitments	$	2,056,188	$	2,016,207

Table of Contents

As of

June 30,

December 31,

2022

2021
Financial instruments whose contract amounts represent credit risk

Commitments to extend credit

$
1,994,872

$
1,983,655
Standby letters of credit

32,482

32,552
Total commitments

$
2,027,354

$
2,016,207

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 10: Derivative Financial Instruments

The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. Additionally, the Company enters into derivative financial instruments, including interest rate lock commitments issued to residential loan customers for loans that will be held for sale, forward sales commitments to sell residential mortgage loans to investors, and interest rate swaps with customers and other third parties. See “Note 11: Fair Value Measurements” for further discussion of the fair value measurement of such derivatives.

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~The Company was holding collateral of $19.8 million to~~To secure its ~~obligation~~obligations under derivative contracts, ~~as of June 30, 2022. The~~the Company pledged ~~$28.6 million~~cash and ~~$27.3 million~~held collateral as follows (dollars in ~~cash to secure its obligation under derivative contracts as of June 30, 2022, and December 31, 2021, respectively.~~

thousands):


	As of
	September 30, 2022		December 31, 2021
Cash pledged to secure obligations under derivative contracts	$	36,048	$	27,300
Collateral held to secure obligations under derivative contracts	31,550		—

Derivative Instruments Designated as Cash Flow Hedges

The Company entered into derivative instruments designated as cash flow hedges. For a derivative instrument that is designated and qualifies as a cash flow hedge, the change in fair value of the derivative instrument is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Changes in fair value of components excluded from the assessment of effectiveness are recognized in current earnings.

Interest Rate Swaps Designated as Cash Flow Hedges

Interest rate swaps with notional amounts totaling $350.0 million as of ~~June~~September 30, 2022, and $50.0 million as of December 31, 2021, were designated as cash flow hedges. The Company entered into one $50.0 million interest rate swap to hedge the risks of variability in cash flows (future interest payments) attributable to changes in the contractually specified 3-month LIBOR benchmark interest rate on the Company’s junior subordinated debt owed to unconsolidated trusts (Debt Swap). In addition, during the first quarter of 2022, the Company entered into one $300.0 million receive fixed pay floating interest rate swap to reduce our ~~balance sheet~~ asset ~~sensitive profile and~~sensitivity (Loan Swap). We added duration to our loan portfolio by fixing a portion of our floating prime based loans. Interest rates had risen above their historical lows allowing us to lock in ~~earnings~~a portion of our loan portfolio to reduce asset sensitivity while creating a more stable margin in ~~the event future interest~~a volatile rate ~~hikes do not materialize (Loan Swap).~~market. These hedges were determined to be highly effective during the period, and the Company expects its hedges to remain highly effective during the remaining terms of the swaps. Changes in fair value were recorded net of tax in OCI.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

A summary of the interest-rate swaps designated as cash flow hedges is presented below (dollars in thousands):


		As of
	Location	September 30, 2022			December 31, 2021
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		3.29		%	0.20		%
Weighted average maturity, in years		1.96 yrs			2.71 yrs

Loan Swap
Notional amount		$	300,000		N/A
Weighted average fixed receive rates		4.81		%	N/A
Weighted average variable Prime pay rates		5.80		%	N/A
Weighted average maturity, in years		6.35 yrs			N/A

Gross aggregate fair value of the swaps
Gross aggregate fair value of swap assets	Other assets	$	2,486		$	—
Gross aggregate fair value of swap liabilities	Other liabilities	$	34,515		$	958

Balances carried in AOCI
Unrealized gains (losses) on cash flow hedges, net of tax	AOCI	$	(22,770)		$	(685)

As of

June 30,

December 31,


Location

2022

2021

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

1.83
%

0.20
%
Weighted average maturity, in years

2.21
yrs

2.71
yrs

Loan Swap

Notional amount

$
300,000

$
—

Weighted average fixed receive rates

4.45
%

—
%
Weighted average variable Prime pay rates

4.81
%

—
%
Weighted average maturity, in years

6.61
yrs

—
yrs

Gross aggregate fair value of the swaps

Gross aggregate fair value of swap assets

Other assets

$
1,412

$
—

Gross aggregate fair value of swap liabilities

Other liabilities

$
19,296

$
958

Balances carried in AOCI

Unrealized gains (losses) on cash flow hedges, net of tax

AOCI

$
(12,844)

$
(685)

The Company expects ~~$0.1 million of~~to reclassify unrealized gains ~~to be reclassified~~and losses from OCI to interest ~~income.~~income and interest expense as shown in the following table (dollars in thousands). Amounts actually recognized could differ from these expectations due to changes in interest rates, hedge de-designations, and the addition of other hedges subsequent to ~~June~~September 30, 2022.


	As of
	September 30, 2022
Unrealized gains (losses) in OCI expected to be recognized in income
Unrealized gains expected to be reclassified from OCI to interest income	$	190
Unrealized losses expected to be reclassified from OCI to interest expense	(247)
Net unrealized gains (losses) in OCI expected to be recognized in net interest income	$	(57)

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

Interest expense recorded on these swap transactions was as follows for the periods presented (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Interest income (expense) on swap transactions	$	(370)	$	(288)	$	697	$	(854)

Table of Contents

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021
Interest income (expense) on swap transactions

$
567

$
(288)

$
1,067

$
(566)

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table reflects the net gains (losses) relating to cash flow derivative instruments that were recorded in AOCI and the unaudited Consolidated Statements of Income during the periods presented (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021
Unrealized gains (losses) on cash flow hedges

Gain (loss) recognized in OCI, net of tax

$
(6,550)

$
(69)

$
(11,395)

$
341
(Gain) loss reclassified from OCI to interest expense, net of tax

(407)

206

(764)

405
Net change in unrealized gains (losses) on cash flow hedges

$
(6,957)

$
137

$
(12,159)

$
746


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Unrealized gains (losses) on cash flow hedges
Gain (loss) recognized in OCI, net of tax	$	(10,192)	$	(5)	$	(21,587)	$	336
(Gain) loss reclassified from OCI to interest expense, net of tax	266		206		(498)		611
Net change in unrealized gains (losses) on cash flow hedges	$	(9,926)	$	201	$	(22,085)	$	947

Derivative Instruments Not Designated as Hedges

Interest Rate Swaps Not Designated as Hedges

The Company may offer derivative contracts to its customers in connection with their risk management needs. The Company manages the risk associated with these contracts by entering into equal and offsetting derivative agreements with a third-party dealer. These contracts support variable rate, commercial loan relationships totaling ~~$443.8~~$547.9 million and $491.4 million as of ~~June~~September 30, 2022, and December 31, 2021, respectively. These derivatives generally worked together as an economic interest rate hedge, but the Company did not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.

Amounts and fair values of derivative assets and liabilities related to customer interest rate swaps recorded in the unaudited Consolidated Balance Sheets are summarized as follows (dollars in thousands):

As of June 30, 2022

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

$
74,892

$
1,798

$
368,937

$
21,761
Interest rate swaps – pay fixed, receive floating

368,937

21,761

74,892

1,798
Total derivatives not designated as hedging instruments

$
443,829

$
23,559

$
443,829

$
23,559

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 September 30, 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	$	4,668	$	46	$	543,207	$	42,001
Interest rate swaps – pay fixed, receive floating	543,207		42,001		4,668		46
Total derivatives not designated as hedging instruments	$	547,875	$	42,047	$	547,875	$	42,047


	As of December 31, 2021
	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	$	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

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Changes in fair value of these derivative assets and liabilities are recorded in noninterest expense in the unaudited Consolidated Statements of Income and summarized as follows (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,


Location

2022

2021

2022

2021
Interest rate swaps

Pay floating, receive fixed

Noninterest expense

$
7,025

$
1,264

$
3,475

$
(9,331)
Pay fixed, receive floating

Noninterest expense

(7,025)

(1,264)

(3,475)

9,331
Net change in fair value of interest rate swaps

$
—

$
—

$
—

$
—


		Three Months Ended September 30,				Nine Months Ended September 30,
	Location	2022		2021		2022		2021
Interest rate swaps
Pay floating, receive fixed	Noninterest expense	$	18,317	$	(2,024)	$	21,792	$	(11,355)
Pay fixed, receive floating	Noninterest expense	(18,317)		2,024		(21,792)		11,355
Net change in fair value of interest rate swaps		$	—	$	—	$	—	$	—

Risk Participation Agreement

To manage the credit risk exposure related to a customer-facing swap, the Company entered into 1two risk participation ~~agreement~~agreements in conjunction with a loan participation arrangements with ~~another~~other financial ~~institution. This~~institutions. The risk participation ~~agreement matures~~agreements mature in 2026 and 2028, and isare summarized as follows (dollars in thousands):

As of

June 30,

December 31,

2022

2021
Risk participation agreement:

Notional amount

$
3,946

$
3,990
Fair value

3

11


	As of
	September 30, 2022		December 31, 2021
Risk participation agreements
Notional amount	$	18,921	$	3,990
Fair value	4		11

Mortgage Banking Derivatives

Interest Rate Lock Commitments

Interest rate lock commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities in the unaudited 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 Company economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers. Forward sales commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities in the unaudited Consolidated Balance Sheets. While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, the Company did not designate them for hedge accounting treatment. 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.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Amounts and fair values of mortgage banking derivatives included in the unaudited Consolidated Balance Sheets are summarized as follows (dollars in thousands):


		As of September 30, 2022				As of December 31, 2021
	Location	Notional Amount		Fair Value		Notional Amount		Fair Value
Derivatives with positive fair value
Interest rate lock commitments	Other assets	$	3,434	$	42	$	19,384	$	206
Forward sales commitments	Other assets	4,107		134		1,884		10
Mortgage banking derivatives recorded in other assets		$	7,541	$	176	$	21,268	$	216

Derivatives with negative fair value
Interest rate lock commitments	Other liabilities	$	408	$	4	$	499	$	6
Forward sales commitments	Other liabilities	4,342		52		41,002		439
Mortgage banking derivatives recorded in other liabilities		$	4,750	$	56	$	41,501	$	445

As of June 30, 2022

As of December 31, 2021

Notional

Fair

Notional

Fair


Location

Amount

Value

Amount

Value
Derivatives with positive fair value

Interest rate lock commitments

Other assets

$
7,201

$
151

$
19,384

$
206
Forward sales commitments

Other assets

931

4

1,884

10
Mortgage banking derivatives recorded in other assets

$
8,132

$
155

$
21,268

$
216

Derivatives with negative fair value

Interest rate lock commitments

Other liabilities

$
527

$
2

$
499

$
6
Forward sales commitments

Other liabilities

11,551

217

41,002

439
Mortgage banking derivatives recorded in other liabilities

$
12,078

$
219

$
41,501

$
445

Net gains (losses) relating to these derivative instruments are summarized as follows for the periods presented (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,


Location

2022

2021

2022

2021
Net gains (losses)

Interest rate lock commitments

Mortgage revenue

$
134

$
493

$
149

$
965
Forward sales commitments

Mortgage revenue

(319)

(1,358)

(213)

(2,178)
Net gains (losses)

$
(185)

$
(865)

$
(64)

$
(1,213)

Three Months Ended September 30, Nine Months Ended September 30,
Location 2022 2021 2022 2021
Net gains (losses)
Interest rate lock commitments Mortgage revenue $ (111) $ 537 $ 38 $ 1,502
Forward sales commitments Mortgage revenue 295 (1,438) 82 (3,616)
Net gains (losses) $ 184 $ (901) $ 120 $ (2,114)

Note 11: 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” 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 1 Inputs

●

~~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.

– Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

●

~~Level 3 Inputs~~ – Unobservable inputs for determining the fair values of assets or liabilities that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

•

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.

•Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to those Company assets and liabilities that are carried at fair value.

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

In general, fair value is based upon quoted market prices, when available. If such quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable data. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect, among other things, counterparty credit quality and the company's creditworthiness as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. While management believes the Company's valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis

Debt Securities Available for Sale

Debt securities classified as available for sale are reported at fair value utilizing Level 2 measurements. The Company obtains fair value measurements from an independent pricing service. The independent pricing service utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid, and other market information. Because many fixed income securities do not trade on a daily basis, the independent pricing service applies available information, focusing on observable market data such as benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing to prepare evaluations.

The independent pricing service uses model processes, such as the Option Adjusted Spread model, to assess interest rate impact and develop prepayment scenarios. Models and processes take into account market conventions. For each asset class, a team of evaluators gathers information from market sources and integrates relevant credit information, perceived market movements, and sector news into the evaluated pricing applications and models.

Market inputs that the independent pricing service normally seeks for evaluations of securities, listed in approximate order of priority, include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. The independent pricing service also monitors market indicators, industry, and economic events. For certain security types, additional inputs may be used or some of the market inputs may not be applicable. Evaluators may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs listed are available for use in the evaluation process for each security evaluation on a given day. Because the data utilized was observable, the securities have been classified as Level 2.

Equity Securities

Equity securities are reported at fair value utilizing Level 1 or Level 2 measurements. As applicable, for mutual funds, unadjusted quoted prices in active markets for identical assets are utilized to determine fair value at the measurement date and are classified as Level 1. For stock, quoted prices for identical or similar assets in markets that are not active are utilized and classified as Level 2.

Loans Held for Sale

Loans held for sale that were reported at fair value utilized Level 2 measurements at December 31, 2021. The fair values of the mortgage loans held for sale were measured using observable quoted market or contract prices or market price equivalents and were classified as Level 2.

Derivative Assets and Derivative Liabilities

Derivative assets and derivative liabilities are reported at fair value utilizing Level 2 or Level 3 measurements. As applicable, fair values of derivative assets and liabilities are determined based on prices that are obtained from a third-party which uses observable market inputs and are classified as Level 2. Due to the significance of unobservable inputs, derivative assets related to our risk participation agreement are classified as Level 3.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of ~~June~~September 30, 2022, and December 31, 2021, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):

As of June 30, 2022

Level 1

Level 2

Level 3

Total


Inputs

Inputs

Inputs

Fair Value
Debt securities available for sale:

U.S. Treasury securities

$
—

$
147,140

$
—

$
147,140
Obligations of U.S. government corporations and agencies

—

29,839

—

29,839
Obligations of states and political subdivisions

—

287,612

—

287,612
Asset-backed securities

—

468,129

—

468,129
Commercial mortgage-backed securities

—

98,362

—

98,362
Residential mortgage-backed securities

—

1,441,157

—

1,441,157
Corporate debt securities

—

272,407

—

272,407
Equity securities

—

11,264

—

11,264
Derivative assets

—

25,126

3

25,129
Derivative liabilities

—

43,074

—

43,074

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


	As of September 30, 2022
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Debt securities available for sale:
U.S. Treasury securities	$	—	$	140,842	$	—	$	140,842
Obligations of U.S. government corporations and agencies	—		24,933		—		24,933
Obligations of states and political subdivisions	—		270,835		—		270,835
Asset-backed securities	—		466,524		—		466,524
Commercial mortgage-backed securities	—		87,751		—		87,751
Residential mortgage-backed securities	—		1,304,314		—		1,304,314
Corporate debt securities	—		251,842		—		251,842
Equity securities	—		11,341		—		11,341
Derivative assets	—		44,709		4		44,713
Derivative liabilities	—		76,589		—		76,589


	As of December 31, 2021
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total 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

~~Loans Evaluated Individually~~

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Loans Evaluated Individually

The Company does not record portfolio loans at fair value on a recurring basis. However, periodically, a loan is evaluated individually and is reported at the fair value of the underlying collateral, less estimated costs to sell, if repayment is expected solely from the collateral. If the collateral value is not sufficient, a specific reserve is recorded. Collateral values are estimated using a combination of observable inputs, including recent appraisals, and unobservable inputs based on customized discounting criteria. Due to the significance of unobservable inputs, fair values of individually evaluated collateral dependent loans have been classified as Level 3.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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.

~~Table of Contents~~

~~FIRST BUSEY CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

Bank Property Held for Sale

Bank property held for sale represents certain banking center office buildings which the Company 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. Fair values were based upon discounted appraisals or real estate listing 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 September 30, 2022
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Loans evaluated individually, net of related allowance	$	—	$	—	$	5,121	$	5,121
OREO with subsequent impairment	—		—		274		274
Bank property held for sale with impairment	—		—		7,923		7,923


	As of December 31, 2021
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total 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 June 30, 2022

Level 1

Level 2

Level 3

Total


Inputs

Inputs

Inputs

Fair Value
Loans evaluated individually, net of related allowance

$
—

$
—

$
5,366

$
5,366
OREO with subsequent impairment

—

—

274

274
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

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis for which the Company has utilized Level 3 inputs to determine fair value (dollars in thousands):

As of June 30, 2022

Fair Value

Valuation

Unobservable

Range


Estimate

Techniques

Input

(Weighted Average)
Quantitative Information about Level 3 Fair Value Measurements

Loans evaluated individually, net of related allowance

$
5,366

Appraisal of collateral

Appraisal adjustments

-39.8
%
to
-100.0
%
(-47.5)
%
OREO with subsequent impairment

274

Appraisal of collateral

Appraisal adjustments

-16.0
%
to
-100.0
%
(-35.4)
%
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, 2021

Fair Value

Valuation

Unobservable

Range


Estimate

Techniques

Input

(Weighted Average)
Quantitative Information about Level 3 Fair Value Measurements

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)
%

As of September 30, 2022

Fair Value

Valuation
Techniques

Unobservable
Input

Range
(Weighted Average)

Loans evaluated individually, net of related allowance

5,121

Appraisal of collateral

Appraisal adjustments

-41.8% to -100.0%

(-48.5)%

OREO with subsequent impairment

274

Appraisal of collateral

Appraisal adjustments

-16.0% to -33.0%

(-19.8)%

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, 2021

Fair Value

Valuation

Techniques

Unobservable

Input

Range

(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

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)%

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Financial Assets and Financial Liabilities That Are Not Carried at Fair Value

Estimated fair values of financial instruments that are not carried at fair value in the Company’s unaudited Consolidated Balance Sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value, were as follows (dollars in thousands):

As of June 30, 2022

As of December 31, 2021

Carrying

Fair

Carrying

Fair

Amount

Value

Amount

Value
Financial assets

Level 1 inputs:

Cash and cash equivalents

$
230,852

$
230,852

$
836,095

$
836,095
Level 2 inputs:

Debt securities held to maturity

953,012

876,738

—

—
Loans held for sale ⁽¹⁾

4,813

4,818

—

—
Accrued interest receivable

32,886

32,886

31,064

31,064
Level 3 inputs:

Portfolio loans, net

7,409,021

7,293,303

7,101,111

7,161,466
Mortgage servicing rights

7,282

17,967

8,608

12,133
Other servicing rights

1,829

2,235

1,830

2,268

Financial liabilities

Level 2 inputs:

Time deposits

$
817,821

$
800,416

$
935,649

$
935,778
Securities sold under agreements to repurchase

228,383

228,383

270,139

270,139
Short-term borrowings

16,396

16,480

17,678

17,673
Long-term debt

36,000

36,101

46,056

46,164
Junior subordinated debt owed to unconsolidated trusts

71,721

61,349

71,635

63,586
Accrued interest payable

1,978

1,978

2,728

2,728
Level 3 inputs:

Senior notes, net of unamortized issuance costs

—

—

39,944

40,400
Subordinated notes, net of unamortized issuance costs

281,304

280,275

182,773

195,600


	As of September 30, 2022				As of December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Level 1 inputs:
Cash and cash equivalents	$	347,149	$	347,149	$	836,095	$	836,095
Level 2 inputs:
Debt securities held to maturity	936,328		808,885		—		—
Loans held for sale1	4,546		4,555		—		—
Accrued interest receivable	37,409		37,409		31,064		31,064
Level 3 inputs:
Portfolio loans, net	7,579,392		7,319,530		7,101,111		7,161,466
Mortgage servicing rights	6,564		18,815		8,608		12,133
Other servicing rights	1,862		2,253		1,830		2,268

Financial liabilities
Level 2 inputs:
Time deposits	$	800,187	$	775,441	$	935,649	$	935,778
Securities sold under agreements to repurchase	234,597		234,597		270,139		270,139
Short-term borrowings	16,225		16,255		17,678		17,673
Long-term debt	33,000		33,071		46,056		46,164
Junior subordinated debt owed to unconsolidated trusts	71,765		60,603		71,635		63,586
Accrued interest payable	5,075		5,075		2,728		2,728
Level 3 inputs:
Senior notes, net of unamortized issuance costs	—		—		39,944		40,400
Subordinated notes, net of unamortized issuance costs	221,835		209,000		182,773		195,600

	~~(1)~~	~~Effective January 1, 2022, recorded at LOCOM.~~

Effective January 1, 2022, recorded at LOCOM.

Note 12: Earnings Per Common Share

Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding, which include DSUs that are vested but not delivered. Diluted earnings per common share is computed using the treasury stock method and reflects the potential dilution that could occur if the Company’s outstanding stock options and warrants were exercised, stock units were vested, and ESPP shares were issued.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Earnings per common share have been computed as follows (dollars in thousands, except per share amounts):

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Net income

$
29,824

$
29,766

$
58,263

$
67,582

Weighted average number of common shares outstanding, basic

55,421,887

55,050,071

55,424,776

54,762,563
Dilutive effect of common stock equivalents:

Options

—

2,806

2,284

1,453
Warrants

1,686

1,789

1,770

1,746
RSU awards

655,368

667,181

679,471

614,660
PSU awards

14,534

2,888

15,456

1,444
DSU awards

3,039

6,148

16,206

3,076
ESPP

7,503

—

9,503

—
Weighted average number of common shares outstanding, diluted

56,104,017

55,730,883

56,149,466

55,384,942

Basic earnings per common share

$
0.54

$
0.54

$
1.05

$
1.23
Diluted earnings per common share

$
0.53

$
0.53

$
1.04

$
1.22


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	35,661	$	25,941	$	93,924	$	93,523

Weighted average number of common shares outstanding, basic	55,349,547		56,227,816		55,399,424		55,256,348
Dilutive effect of common stock equivalents:
Options	249		122		1,606		1,009
Warrants	1,708		1,704		1,749		1,732
RSU awards	624,576		577,611		661,173		602,311
PSU awards	81,268		4,915		37,393		2,601
DSU awards	10,414		12,796		14,275		6,316
ESPP	5,402		7,554		8,136		2,518
Weighted average number of common shares outstanding, diluted	56,073,164		56,832,518		56,123,756		55,872,835

Basic earnings per common share	$	0.64	$	0.46	$	1.70	$	1.69
Diluted earnings per common share	$	0.64	$	0.46	$	1.67	$	1.67

Average 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:

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Anti-dilutive common stock equivalents

Options

31,166

—

15,583

—
RSU awards

155,649

—

77,824

106,213
PSU awards

278,472

86,080

259,962

100,482
DSU awards

—

—

—

15,485
Total anti-dilutive common stock equivalents

465,287

86,080

353,369

222,180


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Anti-dilutive common stock equivalents
Options	—	—	10,389	—

RSU awards	—	47,805	51,883	86,744
PSU awards	160,391	85,571	226,771	95,511
DSU awards	—	—	—	10,323
Total anti-dilutive common stock equivalents	160,391	133,376	289,043	192,578

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 13: Accumulated Other Comprehensive Income (Loss)

The following table represents changes in AOCI by component, net of tax, for the period below (dollars in thousands):

Three Months Ended June 30,

2022

2021

Before Tax

Tax Effect

Net of Tax

Before Tax

Tax Effect

Net of Tax
Unrealized gains (losses) on debt securities available for sale

Balance at beginning of period

$
(184,233)

$
52,515

$
(131,718)

$
7,547

$
(2,151)

$
5,396
Unrealized holding gains (losses) on debt securities available for sale, net

(95,288)

27,162

(68,126)

9,469

(2,700)

6,769
Amounts reclassified from AOCI, net

4

(1)

3

(3)

1

(2)
Amortization of unrealized losses on securities transferred to held to maturity

2,207

(629)

1,578

—

—

—
Balance at end of period

$
(277,310)

$
79,047

$
(198,263)

$
17,013

$
(4,850)

$
12,163

Unrealized gains (losses) on cash flow hedges

Balance at beginning of period

$
(8,234)

$
2,347

$
(5,887)

$
(2,203)

$
628

$
(1,575)
Unrealized holding gains (losses) on cash flow hedges, net

(9,162)

2,612

(6,550)

(97)

28

(69)
Amounts reclassified from AOCI, net

(567)

160

(407)

288

(82)

206
Balance at end of period

$
(17,963)

$
5,119

$
(12,844)

$
(2,012)

$
574

$
(1,438)

Total AOCI

$
(295,273)

$
84,166

$
(211,107)

$
15,001

$
(4,276)

$
10,725

Six Months Ended June 30,

2022

2021

Before Tax

Tax Effect

Net of Tax

Before Tax

Tax Effect

Net of Tax
Unrealized gains (losses) on debt securities available for sale

Balance at beginning of period

$
(32,272)

$
9,199

$
(23,073)

$
49,644

$
(14,151)

$
35,493
Unrealized holding gains (losses) on debt securities available for sale, net

(199,570)

56,888

(142,682)

(32,603)

9,293

(23,310)
Unrealized losses on debt securities transferred to held to maturity from available for sale

(48,456)

13,812

(34,644)

—

—

—
Amounts reclassified from AOCI, net

(102)

29

(73)

(28)

8

(20)
Amortization of unrealized losses on securities transferred to held to maturity

3,090

(881)

2,209

—

—

—
Balance at end of period

$
(277,310)

$
79,047

$
(198,263)

$
17,013

$
(4,850)

$
12,163

Unrealized gains (losses) on cash flow hedges

Balance at beginning of period

$
(958)

$
273

$
(685)

$
(3,055)

$
871

$
(2,184)
Unrealized holding gains (losses) on cash flow hedges, net

(15,938)

4,543

(11,395)

477

(136)

341
Amounts reclassified from AOCI, net

(1,067)

303

(764)

566

(161)

405
Balance at end of period

$
(17,963)

$
5,119

$
(12,844)

$
(2,012)

$
574

$
(1,438)

Total AOCI

$
(295,273)

$
84,166

$
(211,107)

$
15,001

$
(4,276)

$
10,725


	Three Months Ended September 30,
	2022						2021
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Unrealized gains (losses) on debt securities available for sale
Balance at beginning of period	$	(277,310)	$	79,047	$	(198,263)	$	17,013	$	(4,850)	$	12,163
Unrealized holding gains (losses) on debt securities available for sale, net	(96,937)		27,631		(69,306)		(17,198)		4,902		(12,296)

Amounts reclassified from AOCI, net	74		(21)		53		5		(1)		4
Amortization of unrealized losses on securities transferred to held to maturity	1,806		(515)		1,291		—		—		—
Balance at end of period	$	(372,367)	$	106,142	$	(266,225)	$	(180)	$	51	$	(129)

Unrealized gains (losses) on cash flow hedges
Balance at beginning of period	$	(17,963)	$	5,119	$	(12,844)	$	(2,012)	$	574	$	(1,438)
Unrealized holding gains (losses) on cash flow hedges, net	(14,253)		4,061		(10,192)		(7)		2		(5)
Amounts reclassified from AOCI, net	370		(104)		266		288		(82)		206
Balance at end of period	$	(31,846)	$	9,076	$	(22,770)	$	(1,731)	$	494	$	(1,237)

Total AOCI	$	(404,213)	$	115,218	$	(288,995)	$	(1,911)	$	545	$	(1,366)

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Nine Months Ended September 30,
2022 2021
Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax
Unrealized gains (losses) on debt securities available for sale
Balance at beginning of period $ (32,272) $ 9,199 $ (23,073) $ 49,644 $ (14,151) $ 35,493
Unrealized holding gains (losses) on debt securities available for sale, net (296,507) 84,519 (211,988) (49,801) 14,195 (35,606)
Unrealized losses on debt securities transferred to held to maturity from available for sale (48,456) 13,812 (34,644) — — —
Amounts reclassified from AOCI, net (28) 8 (20) (23) 7 (16)
Amortization of unrealized losses on securities transferred to held to maturity 4,896 (1,396) 3,500 — — —
Balance at end of period $ (372,367) $ 106,142 $ (266,225) $ (180) $ 51 $ (129)
Unrealized gains (losses) on cash flow hedges
Balance at beginning of period $ (958) $ 273 $ (685) $ (3,055) $ 871 $ (2,184)
Unrealized holding gains (losses) on cash flow hedges, net (30,191) 8,604 (21,587) 470 (134) 336
Amounts reclassified from AOCI, net (697) 199 (498) 854 (243) 611
Balance at end of period $ (31,846) $ 9,076 $ (22,770) $ (1,731) $ 494 $ (1,237)
Total AOCI $ (404,213) $ 115,218 $ (288,995) $ (1,911) $ 545 $ (1,366)

Note 14: Operating Segments and Related Information

The Company has 3three reportable operating segments: Banking, FirsTech, and Wealth Management. The Company’s 3three operating segments are strategic business units that are separately managed as they offer different products and services and have different marketing strategies. The Banking operating segment provides a full range of banking services to individual and corporate customers through its banking center network in Illinois; the St. Louis, Missouri metropolitan area; southwest Florida; and Indianapolis, Indiana. The FirsTech operating segment provides solutions for online, mobile, and voice-recognition bill payments; lockbox; and walk-in payments. The Wealth Management operating segment provides a full range of asset management, investment, brokerage, fiduciary, philanthropic advisory, tax preparation, and farm management services to individuals, businesses, and foundations.

The segment financial information provided below has been derived from information used by management to monitor and manage the financial performance of the Company. The accounting policies of the 3three operating segments are the same as those described in the summary of significant accounting policies in “Note 1. Significant Accounting Policies” in the Company’s 2021 Annual Report. The Company accounts for intersegment revenue and transfers at current market value.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Following is a summary of selected financial information for the Company’s operating segments. The “other” category included in the tables below consists of the parent company, First Busey Risk Management, and the elimination of intercompany transactions (dollars in thousands):

Goodwill

Total Assets

As of

As of

June 30,

December 31,

June 30,

December 31,


2022

2021

2022

2021
Operating segment

Banking

$
294,773

$
294,773

$
12,226,414

$
12,746,833
FirsTech

8,992

8,992

47,209

47,481
Wealth Management

14,108

14,108

75,985

65,587
Other

—

—

6,825

(212)
Consolidated total

$
317,873

$
317,873

$
12,356,433

$
12,859,689


	Goodwill				Total Assets
	As of				As of
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Operating segment
Banking	$	294,773	$	294,773	$	12,352,413	$	12,746,833
FirsTech	8,992		8,992		48,499		47,481
Wealth Management	14,108		14,108		80,082		65,587
Other	—		—		16,394		(212)
Consolidated total	$	317,873	$	317,873	$	12,497,388	$	12,859,689

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Net interest income

Banking

$
80,072

$
68,250

$
153,904

$
136,705
FirsTech

17

21

35

41
Other

(4,161)

(3,729)

(7,955)

(7,311)
Total net interest income

$
75,928

$
64,542

$
145,984

$
129,435

Noninterest income

Banking

$
13,982

$
14,938

$
29,268

$
27,822
FirsTech

5,336

4,809

10,755

9,670
Wealth Management

14,135

13,000

29,911

25,587
Other

(2,434)

264

(3,143)

1,377
Total noninterest income

$
31,019

$
33,011

$
66,791

$
64,456

Noninterest expense

Banking

$
54,380

$
48,421

$
109,947

$
90,512
FirsTech

4,809

4,277

9,492

8,567
Wealth Management

7,586

6,717

15,851

13,282
Other

2,317

3,210

4,178

4,763
Total noninterest expense

$
69,092

$
62,625

$
139,468

$
117,124

Income before income taxes

Banking

$
38,021

$
36,467

$
71,825

$
82,511
FirsTech

544

553

1,298

1,144
Wealth Management

6,549

6,283

14,060

12,305
Other

(8,912)

(6,675)

(15,276)

(10,697)
Total income before income taxes

$
36,202

$
36,628

$
71,907

$
85,263

Net income

Banking

$
30,499

$
29,238

$
56,950

$
64,766
FirsTech

397

401

947

830
Wealth Management

5,092

4,884

10,932

9,566
Other

(6,164)

(4,757)

(10,566)

(7,580)
Total net income

$
29,824

$
29,766

$
58,263

$
67,582


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net interest income
Banking	$	90,916	$	74,672	$	244,820	$	211,377
FirsTech	15		19		50		60
Other	(4,626)		(3,936)		(12,581)		(11,247)
Total net interest income	$	86,305	$	70,755	$	232,289	$	200,190

Noninterest income
Banking	$	13,559	$	14,976	$	42,827	$	42,798
FirsTech	5,578		5,030		16,333		14,700
Wealth Management	12,514		13,746		42,425		39,333
Other	(718)		(493)		(3,861)		884
Total noninterest income	$	30,933	$	33,259	$	97,724	$	97,715

Noninterest expense
Banking	$	55,273	$	59,520	$	165,220	$	150,032
FirsTech	5,109		4,519		14,601		13,086
Wealth Management	7,682		7,679		23,533		20,961
Other	2,672		1,769		6,850		6,532
Total noninterest expense	$	70,736	$	73,487	$	210,204	$	190,611

Income before income taxes
Banking	$	46,838	$	31,996	$	118,663	$	114,507
FirsTech	484		530		1,782		1,674
Wealth Management	4,832		6,068		18,892		18,373
Other	(8,016)		(6,198)		(23,292)		(16,895)
Total income before income taxes	$	44,138	$	32,396	$	116,045	$	117,659

Net income
Banking	$	37,082	$	25,123	$	94,032	$	89,889
FirsTech	353		384		1,300		1,214
Wealth Management	3,756		4,719		14,688		14,285
Other	(5,530)		(4,285)		(16,096)		(11,865)
Total net income	$	35,661	$	25,941	$	93,924	$	93,523

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 15: 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 unaudited Consolidated Balance Sheets for the periods presented (dollars in thousands):


	As of
	September 30, 2022			December 31, 2021
Lease balances
Right of use assets	$	10,202		$	10,533
Lease liabilities	10,311			10,591

Supplemental information
Year through which lease terms extend	2037			2031
Weighted average remaining lease term (in years)	8.61			6.47
Weighted average discount rate	2.91		%	2.16		%

As of

June 30,

December 31,

2022

2021

Lease balances

Right of use assets
$
8,615

$
10,533

Lease liabilities

8,655

10,591

Supplemental information

Year through which lease terms extend

2031

2031

Weighted average remaining lease term (in years)

6.25

6.47

Weighted average discount rate

2.04
%

2.16
%

The following table represents lease costs and cash flows related to leases for the periods presented (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Lease costs

Operating lease costs

$
582

$
608

$
1,199

$
1,172
Variable lease costs

94

126

222

300
Short-term lease costs

6

16

10

34
Total lease cost⁽¹⁾

$
682

$
750

$
1,431

$
1,506

Cash flows related to leases

Cash paid for amounts included in the measurement of lease liabilities:

Operating lease cash flows – Fixed payments

$
738

$
590

$
1,369

$
1,136
Operating lease cash flows – Liability reduction

692

546

1,277

1,041
Right of use assets obtained during the period in exchange for operating lease liabilities

—

1,462

55

1,610


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Lease costs
Operating lease costs	$	563	$	656	$	1,762	$	1,828
Variable lease costs	214		94		436		394
Short-term lease costs	5		9		15		43
Total lease cost1	$	782	$	759	$	2,213	$	2,265

Cash flows related to leases
Cash paid for amounts included in the measurement of lease liabilities:
Operating lease cash flows – Fixed payments	$	1,076	$	620	$	2,445	$	1,756
Operating lease cash flows – Liability reduction	464		569		1,741		1,610
Right of use assets obtained during the period in exchange for operating lease liabilities	1,127		3,408		1,182		5,018

	~~(1)~~	~~Lease costs are included in net occupancy and equipment expense in the unaudited Consolidated Statements of Income.~~

1.Lease costs are included in net occupancy and equipment expense in the unaudited Consolidated Statements of Income.

Table of Contents

FIRST BUSEY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The Company was obligated under noncancelable operating leases for office space and other commitments, as follows (dollars in thousands):

As of

June 30, 2022
Rent commitments

Remainder of 2022

$
1,066
2023

1,833
2024

1,500
2025

1,265
2026

995
2027

701
Thereafter

1,853
Total undiscounted cash flows

9,213
Less: Amounts representing interest

558
Present value of net future minimum lease payments

$
8,655


	As of September 30, 2022
Rent commitments
Remainder of 2022	$	539
2023	1,857
2024	1,573
2025	1,349
2026	1,059
2027	886
Thereafter	4,626
Total undiscounted cash flows	11,889
Less: Amounts representing interest	1,578
Present value of net future minimum lease payments	$	10,311

Busey as the Lessor

Busey occasionally leases parking lots and office space to outside parties. Further, in connection with the acquisition of CAC in the second quarter of 2021, the Company acquired office buildings in Glenview, IL and Northbrook, IL, along with operating leases for space within these buildings that is rented to third parties. Revenues recorded in connection with these leases and reported in other income on our unaudited Consolidated Statements of Income are summarized as follows (dollars in thousands):

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Rental income

$
143

$
87

$
373

$
131


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Rental income	$	146	$	208	$	519	$	339

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Table of Contents

OVERVIEW

First Busey is a ~~$12.4~~$12.5 billion financial holding company headquartered in Champaign, Illinois. Our common stock is traded on The Nasdaq Global Select Market under the symbol “BUSE.”

Our three operating segments provide a full range of banking, payment technology solutions, and wealth management services through our subsidiaries, Busey Bank and FirsTech, in Illinois; the St. Louis, Missouri metropolitan area; southwest Florida; and Indianapolis, Indiana.

The following discussion and analysis are intended to assist readers in understanding First Busey’s financial condition and results of operations during the three and ~~six~~nine months ended ~~June~~September 30, 2022, and should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in this Quarterly Report, as well as our 2021 Annual Report.

CURRENT EVENTS

Hurricane Ian

On September 28, 2022, Hurricane Ian made landfall in southwest Florida impacting our operations in the region. We are focused on assisting our clients and employees as they navigate the challenges from this historic storm. Efforts undertaken to date include: 1) financial assistance for associates impacted by the storm; 2) creation of a relief center for associates to access much needed supplies; 3) staffing resource reallocation to support our southwest Florida operations; 4) fee waivers for impacted customers; and 5) loan modification programs for impacted commercial and residential customers. These are but a few of the initiatives and efforts implemented to date.

Efficiency Initiative

Early in the fourth quarter of 2022, we implemented a targeted restructuring and efficiency optimization plan that is expected to generate annual salary and benefits savings of $4.0 million to $4.4 million. We also expect to incur one-time severance-related costs associated with this initiative of $1.1 million to $1.3 million, most of which are expected to be realized in the fourth quarter. We expect to largely reinvest the anticipated savings to support ongoing growth initiatives across our franchise over the next several quarters.

Table of Contents

EXECUTIVE SUMMARY

Operating Results

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

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,

2022

2021

2022

2021

Reported:
Net income

$
29,824

$
29,766

$
58,263

$
67,582

Adjusted:
Net income⁽¹⁾

$
30,081

$
31,921

$
59,185

$
69,986

Reported:
Diluted earnings per common share

$
0.53

$
0.53

$
1.04

$
1.22

Adjusted:
Diluted earnings per common share ⁽¹⁾

$
0.54

$
0.57

$
1.05

$
1.26

Reported:
Return on average assets ⁽²⁾

0.96
%

1.05
%

0.94
%

1.24
%
Adjusted:
Return on average assets ^{(1), (2)}

0.97
%

1.12
%

0.95
%

1.28
%

Reported:
Return on average tangible common equity^{(1), (2)}

14.50
%

12.26
%

13.57
%

14.44
%
Adjusted:
Return on average tangible common equity ^{(1), (2)}

14.62
%

13.14
%

13.79
%

14.96
%

Reported:
Pre-provision net revenue ⁽¹⁾

$
39,569

$
34,030

$
75,635

$
74,228

Adjusted:
Pre-provision net revenue ⁽¹⁾

$
41,267

$
37,486

$
80,621

$
80,239

Reported:
Pre-provision net revenue to average assets ^{(1), (2)}

1.27
%

1.20
%

1.21
%

1.36
%
Adjusted:
Pre-provision net revenue to average assets ^{(1), (2)}

1.33
%

1.32
%

1.29
%

1.47
%


		Three Months Ended September 30,						Nine Months Ended September 30,
		2022			2021			2022			2021
Reported:	Net income	$	35,661		$	25,941		$	93,924		$	93,523
Adjusted:	Net income1	$	36,435		$	32,845		$	95,620		$	102,831

Reported:	Diluted earnings per common share	$	0.64		$	0.46		$	1.67		$	1.67
Adjusted:	Diluted earnings per common share1	$	0.65		$	0.58		$	1.70		$	1.84

Reported:	Return on average assets2	1.13		%	0.81		%	1.00		%	1.08		%
Adjusted:	Return on average assets1, 2	1.15		%	1.03		%	1.02		%	1.19		%

Reported:	Return on average tangible common equity1, 2	17.41		%	10.60		%	14.81		%	13.12		%
Adjusted:	Return on average tangible common equity1, 2	17.79		%	13.43		%	15.08		%	14.43		%

Reported:	Pre-provision net revenue1	$	46,498		$	30,470		$	122,133		$	104,698
Adjusted:	Pre-provision net revenue1	$	48,800		$	39,409		$	129,421		$	119,648

Reported:	Pre-provision net revenue to average assets1, 2	1.47		%	0.95		%	1.30		%	1.21		%
Adjusted:	Pre-provision net revenue to average assets1, 2	1.54		%	1.23		%	1.38		%	1.38		%

	~~(1)~~	~~A non-GAAP financial measure. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “~~~~Item 2. Management’s Discussion and Analysis~~—~~Non-GAAP Financial Information~~~~” included in this Quarterly Report.~~

~~(2)~~

~~Annualized measure.~~

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

Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information ” included in this Quarterly Report.

2.Annualized measure.

Acquisitions

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 banking centers became banking centers of Busey Bank. Upon completion of the GSB acquisition, we reset the baseline for the future financial performance of First Busey in a multitude of positive ways.

~~Table of Contents~~

Non-operating Expenses and 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 pre-tax adjustments for the three and ~~six~~nine months ended ~~June~~September 30, 2022, included ~~$0.3~~$1.0 million and ~~$1.1~~$2.1 million of expenses, respectively, related to acquisitions and restructuring.

Table of Contents

A reconciliation of non-GAAP measures—including pre-provision net revenue, adjusted pre-provision net revenue, pre-provision net revenue to average assets, adjusted pre-provision net revenue to average assets, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, return on average tangible common equity, adjusted return on average tangible common equity, adjusted net interest income, adjusted net interest margin, adjusted noninterest expense, adjusted core expense, efficiency ratio, adjusted efficiency ratio, adjusted core efficiency ratio, tangible book value per common share, tangible common equity, tangible common equity to tangible assets, core loans, core loans to portfolio loans, core deposits, core deposits to total deposits, and core loans to core deposits—which First Busey believes facilitates the assessment of its financial results and peer comparability, is included in tabular form in “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial ~~Information~~Information”” included in this Quarterly Report.

Banking Center Markets

We serve the Illinois banking market with 46 Busey Bank banking centers. Our Illinois markets feature several Fortune 1000 companies. Those organizations, coupled with large healthcare and higher education sectors, anchor the communities in which they are located and have provided a comparatively stable foundation for housing, employment, and small business. Ten of our banking centers in Illinois are located within the Chicago Metropolitan Statistical Area, and 12 of our banking centers in Illinois are located within the St. Louis Metropolitan Statistical Area.

Busey Bank has eight banking centers in Missouri, all within the St. Louis Metropolitan Statistical Area. St. Louis, Missouri has a diverse economy with major employment sectors including health care, financial services, professional and business services, and retail. We have a total of 20 banking centers within the boundaries of the St. Louis Metropolitan Statistical Area, including branches in both Illinois and Missouri.

Busey Bank has three banking centers in southwest Florida, an area which has experienced strong population growth, job growth, and an expanded housing market over the last several years.

Busey Bank has one banking center in the Indianapolis, Indiana area, which is the most populous city of Indiana with a diverse economy, including the headquarters of many large corporations.

Net Interest Income

Net interest income is the difference between interest income and fees earned on earning assets and interest expense incurred on interest-bearing liabilities. Interest rate levels and volume fluctuations within earning assets and interest-bearing liabilities impact net interest income. Net interest margin is tax-equivalent net interest income as a percent of average earning assets.

Certain assets with tax favorable treatment are evaluated on a tax-equivalent basis, assuming a federal income tax rate of 21.0%. Tax favorable assets generally have lower contractual pre-tax yields than fully taxable assets. A tax-equivalent analysis is performed by adding the tax savings to the earnings on tax favorable assets. After factoring in the tax favorable effects of these assets, the yields may be more appropriately evaluated against alternative earning assets. In addition to yield, various other risks are factored into the evaluation process.

Table of Contents

Consolidated Average Balance Sheets and Interest Rates (Unaudited)

The following tables show our unaudited Consolidated Average Balance Sheets (dollars in thousands), and details the major categories of assets and liabilities, the interest income earned on interest-earning assets, the interest expense paid for interest-bearing liabilities, and the related interest yields for the periods shown. Average information is provided on a daily average basis.


	Three Months Ended September 30,
	2022						2021
	Average Balance		Income/ Expense		Yield/ Rate5		Average Balance		Income/ Expense		Yield/ Rate5
Assets
Interest-bearing bank deposits and federal funds sold	$	207,917	$	1,085	2.07	%	$	860,200	$	462	0.21	%
Investment securities:
U.S. Government obligations	174,357		267		0.61	%	251,553		416		0.66	%
Obligations of states and political subdivisions1	284,069		1,900		2.65	%	299,024		1,900		2.52	%
Other securities	3,209,327		16,298		2.01	%	3,171,163		10,167		1.27	%
Loans held for sale	4,195		53		5.01	%	15,589		99		2.52	%
Portfolio loans1, 2	7,617,918		76,355		3.98	%	7,133,108		65,418		3.64	%
Total interest-earning assets1, 3	$	11,497,783	$	95,958	3.31	%	$	11,730,637	$	78,462	2.65	%

Cash and due from banks	123,480						149,550
Premises and equipment	130,367						144,334
ACL	(89,019)						(96,682)
Other assets	869,245						769,956
Total assets	$	12,531,856					$	12,697,795

Liabilities and Stockholders’ Equity
Interest-bearing transaction deposits	$	2,880,802	$	1,582	0.22	%	$	2,809,669	$	522	0.07	%
Savings and money market deposits	3,311,327		1,058		0.13	%	3,369,482		811		0.10	%
Time deposits	800,996		925		0.46	%	1,074,091		1,726		0.64	%
Federal funds purchased and repurchase agreements	233,032		459		0.78	%	221,813		60		0.11	%
Borrowings4	307,255		4,300		5.55	%	296,185		3,262		4.37	%
Junior subordinated debt issued to unconsolidated trusts	71,736		786		4.35	%	71,565		728		4.04	%
Total interest-bearing liabilities	$	7,605,148	$	9,110	0.48	%	$	7,842,805	$	7,109	0.36	%

Net interest spread1					2.83	%					2.29	%

Noninterest-bearing deposits	3,583,693						3,365,823
Other liabilities	161,567						137,751
Stockholders’ equity	1,181,448						1,351,416
Total liabilities and stockholders’ equity	$	12,531,856					$	12,697,795

Interest income / earning assets1, 3	$	11,497,783	$	95,958	3.31	%	$	11,730,637	$	78,462	2.65	%
Interest expense / earning assets	11,497,783		$	9,110	0.31	%	$	11,730,637	$	7,109	0.24	%
Net interest margin1			$	86,848	3.00	%			$	71,353	2.41	%

1.On a tax-equivalent basis and assuming a federal income tax rate of 21.0%. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

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

3.Interest income includes a tax-equivalent adjustment of $0.5 million and $0.6 million for the three months ended September 30, 2022, and 2021, respectively.

4.Includes short-term and long-term borrowings. Interest expense includes a non-usage fee on a revolving loan.

5.Annualized.

Table of Contents


	Three Months Ended June 30,
	2022						2021

	Average		Income/		Yield/		Average		Income/		Yield/
	Balance		Expense		Rate⁽⁵⁾		Balance		Expense		Rate⁽⁵⁾
														Nine Months Ended September 30,
														2022						2021
														Average Balance		Income/ Expense		Yield/ Rate5		Average Balance		Income/ Expense		Yield/ Rate5
Assets													Assets
Interest-bearing bank deposits and federal funds sold	$	230,129	$	358	0.62	%	$	505,223	$	245	0.19	%	Interest-bearing bank deposits and federal funds sold	$	331,664	$	1,720	0.69	%	$	597,960	$	857	0.19	%
Investment securities:													Investment securities:
U.S. Government obligations		187,785		281	0.60	%		151,612		476	1.26	%	U.S. Government obligations	186,493		836		0.60	%	166,300		1,375		1.11	%
Obligations of states and political subdivisions ⁽¹⁾		293,276		1,947	2.66	%		296,201		1,908	2.58	%
Obligations of states and political subdivisions1													Obligations of states and political subdivisions1	293,161		5,762		2.63	%	297,094		5,772		2.60	%
Other securities		3,359,950		14,664	1.75	%		2,583,437		7,909	1.23	%	Other securities	3,345,611		43,913		1.75	%	2,645,746		25,513		1.29	%
Loans held for sale		3,089		32	4.16	%		22,393		146	2.62	%	Loans held for sale	6,376		168		3.52	%	23,060		401		2.32	%
Portfolio loans ^{(1), (2)}		7,378,969		65,860	3.58	%		6,889,551		61,583	3.59	%
Total interest-earning assets ^{(1), (3)}	$	11,453,198	$	83,142	2.91	%	$	10,448,417	$	72,267	2.77	%

Portfolio loans1, 2													Portfolio loans1, 2	7,387,582		203,338		3.68	%	6,921,226		189,743		3.67	%
Total interest-earning assets1, 3													Total interest-earning assets1, 3	$	11,550,887	$	255,737	2.96	%	$	10,651,386	$	223,661	2.81	%

Cash and due from banks		121,568						142,242					Cash and due from banks	123,881						134,998
Premises and equipment		133,242						135,760					Premises and equipment	132,977						138,257
ACL		(88,753)						(96,626)					ACL	(88,744)						(98,522)
Other assets		832,815						768,862					Other assets	828,815						745,151
Total assets	$	12,452,070					$	11,398,655					Total assets	$	12,547,816					$	11,571,270


Liabilities and Stockholders’ Equity													Liabilities and Stockholders’ Equity
Interest-bearing transaction deposits	$	2,662,976	$	500	0.08	%	$	2,479,380	$	495	0.08	%	Interest-bearing transaction deposits	$	2,742,105	$	2,446	0.12	%	$	2,534,979	$	1,529	0.08	%
Savings and money market deposits		3,459,414		692	0.08	%		2,911,791		705	0.10	%	Savings and money market deposits	3,399,782		2,310		0.09	%	2,981,559		2,151		0.10	%
Time deposits		848,693		954	0.45	%		1,041,165		2,095	0.81	%	Time deposits	855,219		3,079		0.48	%	1,060,993		6,406		0.81	%
Federal funds purchased and repurchase agreements		235,733		147	0.25	%		204,417		60	0.12	%	Federal funds purchased and repurchase agreements	246,481		665		0.36	%	203,777		177		0.12	%
Borrowings ⁽⁴⁾		296,168		3,667	4.97	%		257,770		3,059	4.76	%
Borrowings4													Borrowings4	296,034		11,165		5.04	%	262,024		9,245		4.72	%
Junior subordinated debt issued to unconsolidated trusts		71,693		708	3.96	%		71,523		732	4.11	%	Junior subordinated debt issued to unconsolidated trusts	71,693		2,148		4.01	%	71,524		2,185		4.08	%
Total interest-bearing liabilities	$	7,574,677	$	6,668	0.35	%	$	6,966,046	$	7,146	0.41	%	Total interest-bearing liabilities	$	7,611,314	$	21,813	0.38	%	$	7,114,856	$	21,693	0.41	%

Net interest spread ⁽¹⁾					2.56	%					2.36	%


Net interest spread1													Net interest spread1					2.58	%					2.40	%

Noninterest-bearing deposits		3,535,110						2,970,890					Noninterest-bearing deposits	3,569,562						3,010,999
Other liabilities		145,231						118,948					Other liabilities	147,295						121,844
Stockholders’ equity		1,197,052						1,342,771					Stockholders’ equity	1,219,645						1,323,571
Total liabilities and stockholders’ equity	$	12,452,070					$	11,398,655					Total liabilities and stockholders’ equity	$	12,547,816					$	11,571,270

Interest income / earning assets ^{(1), (3)}	$	11,453,198	$	83,142	2.91	%	$	10,448,417	$	72,267	2.77	%

Interest income / earning assets1, 3													Interest income / earning assets1, 3	$	11,550,887	$	255,737	2.96	%	$	10,651,386	$	223,661	2.81	%
Interest expense / earning assets	$	11,453,198	$	6,668	0.23	%	$	10,448,417	$	7,146	0.27	%	Interest expense / earning assets	$	11,550,887	$	21,813	0.25	%	$	10,651,386	$	21,693	0.27	%
Net interest margin ⁽¹⁾			$	76,474	2.68	%			$	65,121	2.50	%
Net interest margin1													Net interest margin1			$	233,924	2.71	%			$	201,968	2.54	%

	~~(1)~~	~~On a tax-equivalent basis and assuming a federal income tax rate of 21.0%. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see~~ “~~Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information~~” ~~included in this Quarterly Report.~~

~~(2)~~

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

3.Interest income includes a tax-equivalent adjustment of $1.6 million and $1.8 million for the nine months ended September 30, 2022, and 2021, respectively.

4.Includes short-term and long-term borrowings. Interest expense includes a non-usage fee on a revolving loan.

~~(3)~~

~~Interest income includes a tax-equivalent adjustment of $0.5 million and $0.6 million for the three months ended June 30, 2022, and 2021, respectively.~~

~~(4)~~

~~Includes short-term and long-term borrowings. Interest expense includes a non-usage fee on a revolving loan.~~

~~(5)~~

Annualized.

Table of Contents

Six Months Ended June 30,

2022

2021


Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Rate⁽⁵⁾


Balance

Expense

Rate⁽⁵⁾

Assets

Interest-bearing bank deposits and federal funds sold

$
394,562

$
635

0.32
%

$
464,128

$
395

0.17
%
Investment securities:











U.S. Government obligations

192,660

569

0.60
%

122,966

959

1.57
%
Obligations of states and political subdivisions ⁽¹⁾

297,781

3,862

2.62
%

296,112

3,872

2.64
%
Other securities

3,414,885

27,615

1.63
%

2,378,684

15,346

1.30
%
Loans held for sale

7,485

115

3.10
%

26,858

302

2.27
%
Portfolio loans ^{(1), (2)}

7,270,506

126,983

3.52
%

6,813,530

124,325

3.68
%
Total interest-earning assets ^{(1), (3)}

$
11,577,879

$
159,779

2.78
%

$
10,102,278

$
145,199

2.90
%

Cash and due from banks

124,085





128,139





Premises and equipment

134,304



135,168



ACL

(88,604)



(99,458)



Other assets

808,264





732,545





Total assets

$
12,555,928





$
10,998,672





Liabilities and Stockholders’ Equity











Interest-bearing transaction deposits

$
2,671,606

$
864

0.07
%

$
2,395,358

$
1,007

0.08
%
Savings and money market deposits

3,444,744

1,252

0.07
%

2,784,383

1,340

0.10
%
Time deposits

882,779

2,154

0.49
%

1,054,335

4,680

0.90
%
Federal funds purchased and repurchase agreements

253,316

206

0.16
%

194,610

117

0.12
%
Borrowings ⁽⁴⁾

290,331

6,865

4.77
%

244,661

5,983

4.93
%
Junior subordinated debt issued to unconsolidated trusts

71,672

1,362

3.83
%

71,503

1,457

4.11
%
Total interest-bearing liabilities

$
7,614,448

$
12,703

0.34
%

$
6,744,850

$
14,584

0.44
%

Net interest spread ⁽¹⁾

2.44
%



2.46
%

Noninterest-bearing deposits

3,562,380





2,830,646





Other liabilities

140,040





113,758





Stockholders’ equity

1,239,060





1,309,418





Total liabilities and stockholders’ equity

$
12,555,928





$
10,998,672





Interest income / earning assets ^{(1), (3)}

$
11,577,879

$
159,779

2.78
%

$
10,102,278

$
145,199

2.90
%
Interest expense / earning assets

$
11,577,879

$
12,703

0.22
%

$
10,102,278

$
14,584

0.29
%
Net interest margin ⁽¹⁾



$
147,076

2.56
%



$
130,615

2.61
%

~~(1)~~

~~On a tax-equivalent basis and assuming a federal income tax rate of 21.0%. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see~~ “~~Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information~~” ~~included in this Quarterly Report.~~

~~(2)~~

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

~~(3)~~

~~Interest income includes a tax-equivalent adjustment of $1.1 million and $1.2 million for the six months ended June 30, 2022, and 2021, respectively.~~

~~(4)~~

~~Includes short-term and long-term borrowings. Interest expense includes a non-usage fee on a revolving loan.~~

~~(5)~~

~~Annualized.~~

~~Table of Contents~~

Notable changes in average assets and average liabilities are summarized as follows for the periods presented (dollars in thousands):

Three Months Ended June 30,


2022

2021

Change

% Change

Average interest-earning assets

$
11,453,198

$
10,448,417

$
1,004,781

9.6
%
Average interest-bearing liabilities

7,574,677

6,966,046

608,631

8.7
%
Average noninterest-bearing deposits

3,535,110

2,970,890

564,220

19.0
%

Total average deposits

10,506,193

9,403,226

1,102,967

11.7
%
Total average liabilities

11,255,018

10,055,884

1,199,134

11.9
%

Average noninterest-bearing deposits as a percent of total average deposits

33.6
%

31.6
%

Total average deposits as a percent of total average liabilities

93.3
%

93.5
%

Six Months Ended June 30,


2022

2021

Change

% Change

Average interest-earning assets

$
11,577,879

$
10,102,278

$
1,475,601

14.6
%
Average interest-bearing liabilities

7,614,448

6,744,850

869,598

12.9
%
Average noninterest-bearing deposits

3,562,380

2,830,646

731,734

25.9
%

Total average deposits

10,561,509

9,064,722

1,496,787

16.5
%
Total average liabilities

11,316,868

9,689,254

1,627,614

16.8
%

Average noninterest-bearing deposits as a percent of total average deposits

33.7
%

31.2
%

Total average deposits as a percent of total average liabilities

93.3
%

93.6
%

Three Months Ended June 30,


2022

2021

Change

% Change

Net interest income

Interest income, on a tax-equivalent basis⁽¹⁾

$
83,142

$
72,267

$
10,875

15.0
%
Interest expense

6,668

7,146

(478)

(6.7)
%
Net interest income, on a tax-equivalent basis⁽¹⁾

$
76,474

$
65,121

$
11,353

17.4
%

Net interest margin^{(1), (2)}

2.68
%

2.50
%

Six Months Ended June 30,


2022

2021

Change

% Change

Net interest income

Interest income, on a tax-equivalent basis⁽¹⁾

$
159,779

$
145,199

$
14,580

10.0
%
Interest expense

12,703

14,584

(1,881)

(12.9)
%
Net interest income, on a tax-equivalent basis⁽¹⁾

$
147,076

$
130,615

$
16,461

12.6
%

Net interest margin^{(1), (2)}

2.56
%

2.61
%


	Three Months Ended September 30,
	2022			2021			Change		% Change
Average interest-earning assets	$	11,497,783		$	11,730,637		$	(232,854)	(2.0)	%
Average interest-bearing liabilities	7,605,148			7,842,805			(237,657)		(3.0)	%
Average noninterest-bearing deposits	3,583,693			3,365,823			217,870		6.5	%

Total average deposits	10,576,818			10,619,065			(42,247)		(0.4)	%
Total average liabilities	11,350,408			11,346,379			4,029		—	%

Average noninterest-bearing deposits as a percent of total average deposits	33.9		%	31.7		%	220 bps
Total average deposits as a percent of total average liabilities	93.2		%	93.6		%	(40) bps


	Nine Months Ended September 30,
	2022			2021			Change		% Change
Average interest-earning assets	$	11,550,887		$	10,651,386		$	899,501	8.4	%
Average interest-bearing liabilities	7,611,314			7,114,856			496,458		7.0	%
Average noninterest-bearing deposits	3,569,562			3,010,999			558,563		18.6	%

Total average deposits	10,566,668			9,588,530			978,138		10.2	%
Total average liabilities	11,328,171			10,247,699			1,080,472		10.5	%

Average noninterest-bearing deposits as a percent of total average deposits	33.8		%	31.4		%	240 bps
Total average deposits as a percent of total average liabilities	93.3		%	93.6		%	(30) bps

Table of Contents

Changes in net interest income and net interest margin are summarized as follows for the periods presented (dollars in thousands):


	Three Months Ended September 30,
	2022			2021			Change		% Change
Net interest income
Interest income, on a tax-equivalent basis1	$	95,958		$	78,462		$	17,496	22.3	%
Interest expense	(9,110)			(7,109)			(2,001)		28.1	%
Net interest income, on a tax-equivalent basis1	$	86,848		$	71,353		$	15,495	21.7	%

Net interest margin1, 2	3.00		%	2.41		%	59 bps


	Nine Months Ended September 30,
	2022			2021			Change		% Change
Net interest income
Interest income, on a tax-equivalent basis1	$	255,737		$	223,661		$	32,076	14.3	%
Interest expense	(21,813)			(21,693)			(120)		0.6	%
Net interest income, on a tax-equivalent basis1	$	233,924		$	201,968		$	31,956	15.8	%

Net interest margin1, 2	2.71		%	2.54		%	17 bps

	~~(1)~~	~~Assuming a federal income tax rate of 21.0%. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see~~ “~~Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information~~” ~~included in this Quarterly Report.~~

~~(2)~~

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

1.Assuming a federal income tax rate of 21.0%. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

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

~~Table of Contents~~

The FOMC raised ~~its target benchmark rate~~rates by 25150 basis points during the third quarter of 2022, and a total of 300 basis points during the first ~~quarter~~three quarters of ~~2022, the first increase in three years, and again by 50 basis points in May, and by another 75 basis points June~~ 2022. Rising rates have a positive impact on net interest margin, as assets, in particular commercial loans, reprice more quickly and to a greater extent than liabilities. Given the timing of the FOMC meetings in ~~May and June,~~September, the full benefit of the associated movement in rates to our net interest margin will be ~~largely~~ realized in subsequent ~~quarters. Subsequent to quarter end, in July 2022 the FOMC raised the target interest rate an additional 75 basis points, which will further positively impact future~~ quarters. In general, net interest margins have been impacted over the last two years by PPP loans, significant growth in the Company’s liquidity position, organic portfolio loan growth over the past six quarters, and the ~~Company’s~~ issuance of ~~debt.~~

debt, with more recent impacts resulting from rate increases.

First Busey remains substantially core deposit⁽¹⁾ funded, with robust liquidity and significant market share in the communities we serve. As of ~~June~~September 30, 2022, our loan to deposit ratio was ~~72.1%~~72.4% and core deposits represented ~~98.9%~~99.0% of total deposits.

Net interest spread, which represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, was ~~2.56%~~2.83% and ~~2.44%~~2.58% for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, compared to ~~2.36%~~2.29% and ~~2.46%~~2.40% for the three and ~~six~~nine months ended ~~June~~September 30, 2021, each on a tax-equivalent basis.

The net interest margin discussion above is based upon the results and average balances for the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021. Annualized net interest margins for the quarterly periods indicated were as follows:


	2022		2021
First Quarter	2.45	%	2.72	%
Second Quarter	2.68	%	2.50	%
Third Quarter	3.00	%	2.41	%
Fourth Quarter			2.36	%

2022

2021

First Quarter
2.45
%

2.72
%
Second Quarter
2.68
%

2.50
%
Third Quarter

2.41
%
Fourth Quarter

2.36
%

Core deposits is a non-GAAP financial measure. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

Table of Contents

Management attempts to mitigate the effects of an unpredictable interest-rate environment through effective portfolio management, prudent loan underwriting and pricing discipline, and operational efficiencies. For a description of accounting policies underlying the recognition of interest income and expense, refer to the Notes to Consolidated Financial Statements in the Company’s 2021 Annual Report.

⁽¹⁾ ~~Core deposits is a non-GAAP financial measure. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see~~ “~~Item~~ ~~2. Management’s Discussion and Analysis~~—~~Non-GAAP Financial Information~~” ~~included in this Quarterly Report.~~

~~Table of Contents~~

Noninterest Income

Changes in noninterest income are summarized as follows for the periods presented (dollars in thousands):

Three Months Ended June 30,


2022

2021

Change

% Change

Noninterest income

Wealth management and payment technology income:

Wealth management fees

$
14,135

$
13,002

$
1,133

8.7
%
Payment technology solutions

4,888

4,530

358

7.9
%
Combined, wealth management fees and payment technology solutions

19,023

17,532

1,491

8.5
%

Fees for customer services

9,588

8,611

977

11.3
%
Mortgage revenue

284

1,747

(1,463)

(83.7)
%
Income on bank owned life insurance

874

1,476

(602)

(40.8)
%

Securities income:

Realized net gains (losses) on securities

20

94

(74)

(78.7)
%
Unrealized net gains (losses) recognized on equity securities

(1,734)

804

(2,538)

(315.7)
%
Net securities gains (losses)

(1,714)

898

(2,612)

(290.9)
%

Other income

2,964

2,747

217

7.9
%
Total noninterest income

$
31,019

$
33,011

$
(1,992)

(6.0)
%

Six Months Ended June 30,


2022

2021

Change

% Change

Noninterest income

Wealth management and payment technology income:

Wealth management fees

$
29,914

$
25,586

$
4,328

16.9
%
Payment technology solutions

9,965

9,151

814

8.9
%
Combined, wealth management fees and payment technology solutions

39,879

34,737

5,142

14.8
%

Fees for customer services

18,495

16,648

1,847

11.1
%
Mortgage revenue

1,259

4,413

(3,154)

(71.5)
%
Income on bank owned life insurance

1,758

2,440

(682)

(28.0)
%

Securities income:

Realized net gains (losses) on securities

126

119

7

5.9
%
Unrealized net gains (losses) recognized on equity securities

(2,454)

2,420

(4,874)

(201.4)
%
Net securities gains (losses)

(2,328)

2,539

(4,867)

(191.7)
%

Other income

7,728

3,679

4,049

110.1
%
Total noninterest income

$
66,791

$
64,456

$
2,335

3.6
%


	Three Months Ended September 30,
	2022		2021		Change		% Change
Noninterest income
Wealth management and payment technology income:
Wealth management fees	$	12,508	$	13,749	$	(1,241)	(9.0)	%
Payment technology solutions	5,080		4,620		460		10.0	%
Combined, wealth management fees and payment technology solutions	17,588		18,369		(781)		(4.3)	%

Fees for customer services	7,627		9,288		(1,661)		(17.9)	%
Mortgage revenue	438		1,740		(1,302)		(74.8)	%
Income on bank owned life insurance	958		999		(41)		(4.1)	%

Securities income:
Realized net gains (losses) on securities	(74)		(5)		(69)		NM
Unrealized net gains (losses) recognized on equity securities	78		62		16		25.8	%
Net securities gains (losses)	4		57		(53)		(93.0)	%

Other income	4,318		2,806		1,512		53.9	%
Total noninterest income	$	30,933	$	33,259	$	(2,326)	(7.0)	%

Table of Contents

Nine Months Ended September 30,
2022 2021 Change % Change
Noninterest income
Wealth management and payment technology income:
Wealth management fees $ 42,422 $ 39,335 $ 3,087 7.8 %
Payment technology solutions 15,045 13,771 1,274 9.3 %
Combined, wealth management fees and payment technology solutions 57,467 53,106 4,361 8.2 %
Fees for customer services 26,122 25,936 186 0.7 %
Mortgage revenue 1,697 6,153 (4,456) (72.4) %
Income on bank owned life insurance 2,716 3,439 (723) (21.0) %
Securities income:
Realized net gains (losses) on securities 52 114 (62) (54.4) %
Unrealized net gains (losses) recognized on equity securities (2,376) 2,482 (4,858) (195.7) %
Net securities gains (losses) (2,324) 2,596 (4,920) (189.5) %
Other income 12,046 6,485 5,561 85.8 %
Total noninterest income $ 97,724 $ 97,715 $ 9 — %

Total noninterest income was ~~$31.0~~$30.9 million for the three months ended ~~June~~September 30, 2022, a ~~6.0%~~7.0% decrease from the comparable period in 2021, and was ~~$66.8~~$97.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022, ~~a 3.6% increase from~~consistent with the comparable period in 2021. Results for the ~~three and six~~nine months ended ~~June~~September 30, 2021, included ~~one month~~four months of operating income for GSB, whereas results for the same ~~periods~~period in 2022 reflect the fully integrated acquisition for the complete ~~periods.~~period. Revenues from wealth management fees and payment technology solutions represented ~~61.3%~~56.9% and ~~59.7%~~58.8% of the Company’s noninterest income for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, providing a complement to spread-based revenue from traditional banking activities. On a combined basis, revenue from these two critical operating areas was ~~$19.0~~$17.6 million for the three months ended ~~June~~September 30, 2022, ~~an 8.5% increase~~a 4.3% decrease from the comparable period in 2021, and was ~~$39.9~~$57.5 million for the ~~six~~nine months ended ~~June~~September 30, 2022, ~~a 14.8%~~an 8.2% increase from the comparable period in 2021.

Wealth management fees were ~~$14.1~~$12.5 million for the three months ended ~~June~~September 30, 2022, ~~an 8.7% increase~~a 9.0% decrease from the comparable period in 2021, and were ~~$29.9~~$42.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022, a ~~16.9%~~7.8% increase from the comparable period for 2021. First Busey’s Wealth Management division ended the ~~second~~third quarter of 2022 with ~~$11.5~~$10.7 billion in assets under care, compared to $12.7 billion as of December 31, 2021. The decrease in assets under care was principally due to a reduction in market ~~valuations, offset partially by relative outperformance from our investment~~valuations. Our portfolio management team ~~as well as new asset under care inflows.~~

continues to produce solid results in the face of very volatile markets. In the third quarter, Busey's core investment strategy outperformed its blended benchmark, which consists of 60% MSCI All Country World Index and 40% Bloomberg Intermediate Government/Credit Index.

Payment technology solutions revenue relates to our payment processing company, FirsTech. Payment technology solutions revenue was ~~$4.9~~$5.1 million for the three months ended ~~June~~September 30, 2022, a ~~7.9%~~10.0% increase from the comparable period in 2021, and was ~~$10.0~~$15.0 million for the ~~six~~nine months ended ~~June~~September 30, 2022, ~~an 8.9%~~a 9.3% increase from the comparable period in 2021. FirsTech segment revenue was ~~$5.4~~$5.6 million for the three months ended ~~June~~September 30, 2022, a 10.8% increase from the comparable period of 2021, and was ~~$10.8~~$16.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022, ~~a 11.1%~~an 11.0% increase from the comparable period in 2021. FirsTech operations add important diversity to our revenue stream while widening our array of service offerings to larger commercial clients both within our footprint and nationally. We are currently making strategic investments in FirsTech to enhance future growth, including further upgrades to the product and engineering teams to build an Application Programming Interface (API) cloud-based platform to provide for fully integrated payment capabilities as well as the continued development of our Banking as a Service (BaaS) platform.

Table of Contents

Fees for customer services were ~~$9.6~~$7.6 million for the three months ended ~~June~~September 30, 2022, ~~an 11.3% increase~~a 17.9% decrease from the comparable period in 2021, and were ~~$18.5~~$26.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022, ~~an 11.1%~~a 0.7% increase from the comparable period in 2021. Beginning on July 1, 2022, we became subject to the Durbin Amendment of the Dodd-Frank Act. The Durbin Amendment requires the Federal Reserve to establish a maximum permissible interchange fee for many types of debit transactions, which ~~will negatively impact fees for customer services~~resulted in a $2.4 million reduction in fee income during the ~~second half of 2022 and in future years.~~

three months ended September 30, 2022.

Mortgage revenue was ~~$0.3~~$0.4 million for the three months ended ~~June~~September 30, 2022, ~~an 83.7%~~a 74.8% decrease from the comparable period in 2021, and was ~~$1.3~~$1.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022, a ~~71.5%~~72.4% decrease from the comparable period in 2021. Decreases primarily resulted from ~~lower~~declines in sold-loan mortgage volume ~~as a greater portion of closed loan volume was directed in adjustable-rate mortgage loans held in portfolio.~~and gain on sale premiums. General economic conditions and interest rate volatility may impact fees in future quarters.

Income on bank owned life insurance was ~~$0.9~~$1.0 million for the three months ended ~~June~~September 30, 2022, a ~~40.8%~~4.1% decrease from the comparable period in 2021, and was ~~$1.8~~$2.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022, a ~~28.0%~~21.0% decrease from the comparable period in 2021. Decreases resulted from lower life insurance proceeds and a decline in earnings on the cash surrender value of the policies.

Other income was ~~$3.0~~$4.3 million for the three months ended ~~June~~September 30, 2022, a ~~$0.2~~$1.5 million increase from the comparable period in 2021, and was ~~$7.7~~$12.0 million for the ~~six~~nine months ended ~~June~~September 30, 2022, a ~~$4.0~~$5.6 million increase from the comparable period in 2021. Other income benefited from higher income recognized on venture capital investments, check sales, ~~rental income,~~ and swap origination fees, partially offset by losses on fixed asset disposal and lower ~~SBA~~commercial loan sale gains recorded during the three and ~~six~~nine months ended ~~June~~September 30, 2022.

~~Table of Contents~~

Noninterest Expense

Changes in noninterest expense are summarized as follows for the periods presented (dollars in thousands):

Three Months Ended June 30,


2022

2021

Change

% Change

Noninterest expense

Salaries, wages, and employee benefits

$
38,110

$
34,889

$
3,221

9.2
%
Data processing

5,375

4,819

556

11.5
%

Premises expenses:

Net occupancy expense of premises

4,720

4,246

474

11.2
%
Furniture and equipment expenses

2,045

2,066

(21)

(1.0)
%
Combined, net occupancy expense of premises and furniture and equipment expenses

6,765

6,312

453

7.2
%

Professional fees

1,607

2,311

(704)

(30.5)
%
Amortization of intangible assets

2,951

2,650

301

11.4
%
Interchange expense

1,487

1,442

45

3.1
%
Other expense

12,797

10,202

2,595

25.4
%
Total noninterest expense

$
69,092

$
62,625

$
6,467

10.3
%

Income taxes

$
6,378

$
6,862

$
(484)

(7.1)
%
Effective income tax rate

17.6
%

18.7
%

Efficiency ratio⁽¹⁾

60.6
%

61.7
%

Adjusted efficiency ratio⁽¹⁾

60.3
%

58.9
%


	Three Months Ended September 30,
	2022			2021			Change		% Change
Noninterest expense
Salaries, wages, and employee benefits	$	39,762		$	41,949		$	(2,187)	(5.2)	%
Data processing	5,447			7,782			(2,335)		(30.0)	%

Premises expenses:
Net occupancy expense of premises	4,705			4,797			(92)		(1.9)	%
Furniture and equipment expenses	1,799			2,208			(409)		(18.5)	%
Combined, net occupancy expense of premises and furniture and equipment expenses	6,504			7,005			(501)

Professional fees	1,579			1,361			218		16.0	%
Amortization of intangible assets	2,871			3,149			(278)		(8.8)	%
Interchange expense	1,574			1,434			140		9.8	%
Other expense	12,999			10,807			2,192		20.3	%
Total noninterest expense	$	70,736		$	73,487		$	(2,751)	(3.7)	%

Income taxes	$	8,477		$	6,455		$	2,022	31.3	%
Effective income tax rate	19.2		%	19.9		%	(70) bps

Efficiency ratio1	57.6		%	67.3		%	(970) bps
Adjusted efficiency ratio1	56.8		%	59.0		%	(220) bps

	~~(1)~~	~~The efficiency ratio and adjusted efficiency ratio are non-GAAP financial measures. For a reconciliation of non-GAAP measures to the most directly comparable financial GAAP measures, see~~ “~~Item 2. Management’s Discussion and Analysis~~—~~Non-GAAP Financial Information~~” ~~included in this Quarterly Report.~~

1.The efficiency ratio and adjusted efficiency ratio are non-GAAP financial measures. For a reconciliation of non-GAAP measures to the most directly comparable financial GAAP measures, see “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

Table of Contents


	Six Months Ended June 30,
	2022			2021			Change		% Change

													Nine Months Ended September 30,
													2022			2021			Change		% Change
Noninterest expense												Noninterest expense
Salaries, wages, and employee benefits	$	77,464		$	65,273		$	12,191		18.7	%	Salaries, wages, and employee benefits	$	117,226		$	107,222		$	10,004	9.3	%
Data processing		10,353			9,099			1,254		13.8	%	Data processing	15,800			16,881			(1,081)		(6.4)	%


Premises expenses:												Premises expenses:
Net occupancy expense of premises		9,787			8,809			978		11.1	%	Net occupancy expense of premises	14,492			13,606			886		6.5	%
Furniture and equipment expenses		4,075			4,092			(17)		(0.4)	%	Furniture and equipment expenses	5,874			6,300			(426)		(6.8)	%
Combined, net occupancy expense of premises and furniture and equipment expenses		13,862			12,901			961		7.4	%	Combined, net occupancy expense of premises and furniture and equipment expenses	20,366			19,906			460


Professional fees		3,114			4,256			(1,142)		(26.8)	%	Professional fees	4,693			5,617			(924)		(16.5)	%
Amortization of intangible assets		5,962			5,051			911		18.0	%	Amortization of intangible assets	8,833			8,200			633		7.7	%
Interchange expense		3,032			2,926			106		3.6	%	Interchange expense	4,606			4,360			246		5.6	%
Other expense		25,681			17,618			8,063		45.8	%	Other expense	38,680			28,425			10,255		36.1	%
Total noninterest expense	$	139,468		$	117,124		$	22,344		19.1	%	Total noninterest expense	$	210,204		$	190,611		$	19,593	10.3	%


Income taxes	$	13,644		$	17,681		$	(4,037)		(22.8)	%	Income taxes	$	22,121		$	24,136		$	(2,015)	(8.3)	%
Effective income tax rate		19.0	%		20.7	%						Effective income tax rate	19.1		%	20.5		%	(140) bps

Efficiency ratio⁽¹⁾		61.8	%		58.2	%
Adjusted efficiency ratio⁽¹⁾		61.2	%		56.6	%


Efficiency ratio1												Efficiency ratio1	60.3		%	61.4		%	(110) bps
Adjusted efficiency ratio1												Adjusted efficiency ratio1	59.7		%	57.5		%	220 bps

Full-time equivalent employees as of period-end		1,493			1,503			(10)		(0.7)	%	Full-time equivalent employees as of period-end	1,513			1,462			51		3.5	%

	~~(1)~~	~~The efficiency ratio and adjusted efficiency ratio are non-GAAP financial measures. For a reconciliation of non-GAAP measures to the most directly comparable financial GAAP measures, see~~ “~~Item 2. Management’s Discussion and Analysis~~—~~Non-GAAP Financial Information~~” ~~included in this Quarterly Report.~~

The efficiency ratio and adjusted efficiency ratio are non-GAAP financial measures. For a reconciliation of non-GAAP measures to the most directly comparable financial GAAP measures, see “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

Total noninterest expense was ~~$69.1~~$70.7 million for the three months ended ~~June~~September 30, 2022, a 3.7% decrease from the comparable period in 2021, and was $210.2 million for the nine months ended September 30, 2022, a 10.3% increase from the comparable period in ~~2021, and was $139.5 million for the six months ended June 30, 2022, a 19.1% increase from the comparable period in~~ 2021. Results for the ~~three and six~~nine months ended ~~June 31,~~September 30, 2021, included ~~one month~~four months of operating expenses for GSB, whereas results for the same ~~periods~~period in 2022 reflect the fully integrated acquisition for the complete ~~periods.~~

period.

Salaries, wages, and employee benefits were ~~$38.1~~$39.8 million for the three months ended ~~June~~September 30, 2022, a ~~9.2% increase~~5.2% decrease from the comparable period in 2021, and were ~~$77.5~~$117.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022, ~~an 18.7%~~a 9.3% increase from the comparable period in 2021. Full-time equivalents were ~~1,493~~1,513 as of ~~June~~September 30, 2022, compared to ~~1,503~~1,462 at ~~June~~September 30, 2021. ~~Salaries, wages,~~The Company continues to invest in talent across our business lines and ~~employee benefits increases are attributable to the Company’s acquisition of GSB as well as investments in its regional operating model, business line leadership, and~~our risk management ~~professionals. In addition, current labor~~infrastructure. Labor market trends ~~reflect~~over the past year reflected a shrinking labor supply, while job growth ~~reflects increasing demand~~resulted in increased demands for a skilled workforce, putting further upward pressure on salaries, wages, and employee benefits.

Data processing expense was $5.4 million for the three months ended ~~June~~September 30, 2022, ~~an 11.5% increase~~a 30.0% decrease from the comparable period in 2021, and was ~~$10.4~~$15.8 million for the ~~six~~nine months ended ~~June~~September 30, 2022, a ~~13.8% increase~~6.4% decrease from the comparable period in 2021. ~~Increases~~Decreases were primarily attributable to higher expenses in 2021 related to the CAC acquisition. Excluding non-operating expenses, data processing expenses increased by $0.8 million and $2.3 million for ~~software maintenance, web hosting, internet,~~the three and ~~general data processing.~~

nine months ended September 30, 2022, compared to the same periods in 2021.

Combined, net occupancy expense of premises and furniture and equipment expense totaled ~~$6.8~~$6.5 million for the three months ended ~~June~~September 30, 2022, a 7.2% ~~increase~~decrease from the comparable period in 2021, and ~~$13.9~~$20.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022, a ~~7.4%~~2.3% increase from the comparable period in 2021. ~~Increases~~Year-over-year increases are primarily attributable to higher maintenance costs, elevated utility costs, and increased real estate taxes.

Table of Contents

Professional fees were $1.6 million for the three months ended ~~June~~September 30, 2022, a ~~30.5%~~16.0% increase from the comparable period in 2021, and $4.7 million for the nine months ended September 30, 2022, a 16.5% decrease from the comparable period in 2021. Excluding non-operating expenses, professional fees increased by $0.3 million and $0.2 million for the three and nine months ended September 30, 2022, compared to the same periods in 2021.

Amortization of intangible assets was $2.9 million for the three months ended September 30, 2022, an 8.8% decrease from the comparable period in 2021, and ~~$3.1~~$8.8 million for the ~~six~~nine months ended ~~June~~September 30, 2022, a 26.8% decrease from the comparable period in 2021. Non-operating expenses contributed $0.7 million and $1.0 of the decrease in professional fees for the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, respectively.

Amortization of intangible assets was $3.0 million for the three months ended June 30, 2022, an 11.4% increase from the comparable period in 2021, and $6.0 million for the six months ended June 30, 2022, an 18.0%7.7% increase from the comparable period for 2021. ~~Increases~~Year-over-year increases primarily related to intangible assets acquired in the acquisition of CAC during the second quarter of 2021.

Interchange expense was ~~$1.5~~$1.6 million for the three months ended ~~June~~September 30, 2022, a ~~3.1%~~9.8% increase from the comparable period in 2021, and was ~~$3.0~~$4.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022, a ~~3.6%~~5.6% increase from the comparable period in 2021. Fluctuations in interchange expense were primarily the result of increased payment and volume activity at FirsTech.

Other expense was ~~$12.8~~$13.0 million for the three months ended ~~June~~September 30, 2022, a ~~$2.6~~$2.2 million increase from the comparable period in 2021, and was ~~$25.7~~$38.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022, an ~~$8.1~~$10.3 million increase from the comparable period in 2021. Increases were across multiple expense categories including marketing and business development, NMTC amortization, regulatory expenses, and fluctuations in provision for unfunded commitments.

The efficiency ratio⁽¹⁾2, which is a measure commonly used by management and the banking industry, measures the amount of expense incurred to generate a dollar of revenue. ~~The~~Our efficiency ratios⁽¹⁾2 were ~~60.6%~~57.6% and ~~61.8%~~60.3% for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, compared to ~~61.7%~~67.3% and ~~58.2%~~61.4% for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively.

~~The~~Our adjusted efficiency ratios⁽¹⁾2 were ~~60.3%~~56.8% and ~~61.2%~~59.7% for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, compared to ~~58.9%~~59.0% and ~~56.6%~~57.5% for three and ~~six~~nine months ended ~~June~~September 30, 2021. The Company remains focused on expense discipline, while making necessary investments to ~~support~~promote the organic growth of our key business lines and related support and risk management functions.

Taxes

Effective income tax rates of ~~17.6%~~19.2% and ~~19.0%~~19.9% for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, were lower than the combined federal and state statutory rate of approximately ~~28%~~28.0% due to tax exempt interest income, such as municipal bond interest and bank owned life insurance income, and investments in various federal and state tax credits. We continue to monitor evolving federal and state tax legislation and its potential impact on operations on an ongoing basis. As of ~~June~~September 30, 2022, we were not under examination by any tax authority; however, we have received an inquiry from the State of Illinois regarding our prior franchise tax filings. In the event the Company is required to amend our prior franchise tax filings, we could incur additional expenses.

⁽¹⁾

2 The efficiency ratio and adjusted efficiency ratio are non-GAAP financial measures. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

Table of Contents

FINANCIAL CONDITION

Balance Sheet

Changes in significant items included in our unaudited Consolidated Balance Sheets are summarized as follows as of each of the dates indicated (dollars in thousands):

As of

June 30,

December 31,


2022

2021

Change

% Change

Assets









Debt securities available for sale

$
2,744,646

$
3,981,251

$
(1,236,605)

(31.1)
%
Debt securities held to maturity

953,012

—

953,012

NM

Portfolio loans, net of ACL

7,409,021

7,101,111

307,910

4.3
%

Total assets

$
12,356,433

$
12,859,689

$
(503,256)

(3.9)
%

Liabilities









Deposits:









Noninterest-bearing

$
3,505,299

$
3,670,267

$
(164,968)

(4.5)
%
Interest-bearing

6,891,929

7,098,310

(206,381)

(2.9)
%
Total deposits

$
10,397,228

$
10,768,577

$
(371,349)

(3.4)
%

Securities sold under agreements to repurchase

$
228,383

$
270,139

$
(41,756)

(15.5)
%
Subordinated notes, net of unamortized issuance costs

281,304

182,773

98,531

53.9
%
Junior subordinated debt owed to unconsolidated trusts

71,721

71,635

86

0.1
%

Total liabilities

$
11,194,476

$
11,540,577

$
(346,101)

(3.0)
%

Stockholders’ equity

$
1,161,957

$
1,319,112

$
(157,155)

(11.9)
%


	As of
	September 30, 2022		December 31, 2021		Change		% Change
Assets
Debt securities available for sale	$	2,547,041	$	3,981,251	$	(1,434,210)	(36.0)	%
Debt securities held to maturity	936,328		—		936,328		N/A
Portfolio loans, net of ACL	7,579,392		7,101,111		478,281		6.7	%
Total assets	$	12,497,388	$	12,859,689	$	(362,301)	(2.8)	%

Liabilities
Deposits:
Noninterest-bearing	$	3,628,169	$	3,670,267	$	(42,098)	(1.1)	%
Interest-bearing	6,973,228		7,098,310		(125,082)		(1.8)	%
Total deposits	$	10,601,397	$	10,768,577	$	(167,180)	(1.6)	%
Securities sold under agreements to repurchase	$	234,597	$	270,139	$	(35,542)	(13.2)	%



Subordinated notes, net of unamortized issuance costs	221,835		182,773		39,062		21.4	%
Junior subordinated debt owed to unconsolidated trusts	71,765		71,635		130		0.2	%
Total liabilities	$	11,390,800	$	11,540,577	$	(149,777)	(1.3)	%

Stockholders’ Equity	$	1,106,588	$	1,319,112	$	(212,524)	(16.1)	%

Portfolio Loans

We believe that making sound and profitable loans is a necessary and desirable means of employing funds available for investment. First Busey maintains lending policies and procedures designed to focus lending efforts on the types, locations, and duration of loans most appropriate for its business model and markets. While not specifically limited, we attempt to focus our lending on short to intermediate-term (0-10 years) loans in geographic areas within 125 miles of our lending offices. Loans originated outside of these areas are generally ~~residential mortgage loans originated for sale in the secondary market or loans~~ to existing customers of Busey Bank. We attempt to utilize government-assisted lending programs, such as the SBA and U.S. Department of Agriculture lending programs, when prudent. Generally, loans are collateralized by assets, primarily real estate, and guaranteed by individuals. Loans are expected to be repaid primarily from cash flows of the borrowers or from proceeds from the sale of selected assets of the borrowers.

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.

The Company maintains a well-diversified loan portfolio and, as a matter of policy and practice, limits concentration exposure in any particular loan segment.

Table of Contents

At no time is a borrower’s total borrowing relationship permitted to exceed Busey Bank’s regulatory lending limit. We generally limit such relationships to amounts substantially less than the regulatory limit. Loans to related parties, including executive officers and directors of First Busey and its subsidiaries, are reviewed for compliance with regulatory guidelines.

First Busey maintains an independent loan review department that reviews loans for compliance with our loan policy on a periodic basis. In addition, the loan review department reviews risk assessments made by our credit department, lenders, and loan committees. Results of these reviews are presented to management and the audit committee at least quarterly.

Busey Bank’s lending activities can be summarized into five primary areas: commercial loans, commercial real estate loans, real estate construction loans, retail real estate loans, and retail other loans. A description of each of the lending areas can be found in the Company’s 2021 Annual Report. A significant majority of our portfolio lending activity occurs in the Illinois and Missouri markets, with the remainder in the Florida and Indiana markets.

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

June 30, 2022


Illinois

Missouri

Florida

Indiana

Total
Portfolio loans

Commercial

$
1,352,370

$
464,002

$
50,997

$
52,311

$
1,919,680
Commercial real estate

2,175,947

682,013

205,289

164,841

3,228,090
Real estate construction

258,643

140,998

37,627

28,917

466,185
Retail real estate

1,197,150

210,838

115,543

67,382

1,590,913
Retail other

287,502

1,783

2,215

1,410

292,910
Total portfolio loans

$
5,271,612

$
1,499,634

$
411,671

$
314,861

$
7,497,778

ACL









(88,757)
Portfolio loans, net









$
7,409,021

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


	September 30, 2022
	Illinois		Missouri		Florida		Indiana		Total
Portfolio loans
Commercial	$	1,371,973	$	475,655	$	47,527	$	50,738	$	1,945,893
Commercial real estate	2,211,923		680,607		202,927		183,227		3,278,684
Real estate construction	290,248		135,102		41,062		33,148		499,560
Retail real estate	1,240,568		210,693		121,881		69,957		1,643,099
Retail other	297,772		2,177		1,699		1,230		302,878
Total portfolio loans	$	5,412,484	$	1,504,234	$	415,096	$	338,300	$	7,670,114
ACL									(90,722)
Portfolio loans, net of ACL									$	7,579,392


	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 of ACL									$	7,101,111

Table of Contents

Changes in portfolio loan balances were as follows (dollars in thousands):

As of

June 30,

December 31,


2022

2021

Change

% Change

Portfolio loans

Commercial loans:

Commercial

$
1,919,680

$
1,943,886

$
(24,206)

(1.2)
%
Commercial real estate

3,228,090

3,119,807

108,283

3.5
%
Real estate construction

466,185

385,996

80,189

20.8
%
Commercial loan balances

5,613,955

5,449,689

164,266

3.0
%

Retail loans:

Retail real estate

1,590,913

1,512,976

77,937

5.2
%
Retail other

292,910

226,333

66,577

29.4
%
Retail loan balances

1,883,823

1,739,309

144,514

8.3
%

Total portfolio loans

7,497,778

7,188,998

308,780

4.3
%
ACL

(88,757)

(87,887)

(870)

(1.0)
%
Portfolio loans, net

$
7,409,021

$
7,101,111

$
307,910

4.3
%


	As of
	September 30, 2022		December 31, 2021		Change		% Change
Portfolio loans
Commercial loans:
Commercial	$	1,945,893	$	1,943,886	$	2,007	0.1	%
Commercial real estate	3,278,684		3,119,807		158,877		5.1%
Real estate construction	499,560		385,996		113,564		29.4%
Commercial loan balances	5,724,137		5,449,689		274,448		5.0%

Retail loans:
Retail real estate	1,643,099		1,512,976		130,123		8.6%
Retail other	302,878		226,333		76,545		33.8%
Retail loan balances	1,945,977		1,739,309		206,668		11.9%

Total portfolio loans	7,670,114		7,188,998		481,116		6.7%
ACL	(90,722)		(87,887)		(2,835)		3.2	%
Portfolio loans, net of ACL	$	7,579,392	$	7,101,111	$	478,281	6.7%

Excluding the amortized cost of PPP loans, changes in commercial loan balances were as follows:


	As of
	September 30, 2022		December 31, 2021		Change		% Change
Commercial loan balances	$	5,724,137	$	5,449,689	$	274,448	5.0%
PPP loans amortized cost	(1,426)		(74,958)		73,532		(98.1)	%
Commercial loan balances, excluding PPP loans	$	5,722,711	$	5,374,731	$	347,980	6.5%

As of September 30, 2022, the Company has experienced its sixth consecutive quarter of strong core loan

As of

June 30,

December 31,


2022

2021

Change

% Change

Commercial loan balances

$
5,613,955

$
5,449,689

$
164,266

3.0
%
PPP Loans amortized cost

(7,616)

(74,958)

67,342

(89.8)
%
Commercial loan balances, excluding PPP loans

$
5,606,339

$
5,374,731

$
231,608

4.3
%

growth. As has been our practice, we remain steadfast in our disciplined underwriting.

Allowance and Provision for Credit Losses

The ACL is a significant estimate in our unaudited consolidated financial statements, 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 be 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.

~~The provision~~

Provision for credit loss ~~expense~~expenses increased for the three months ended ~~June~~September 30, 2022, due to a provision expense of ~~$1.7~~$2.4 million, compared to a provision release of ~~$1.7~~$1.9 million for the same period in 2021. Provision expense increased for the ~~six~~nine months ended ~~June~~September 30, 2022, due to a provision expense of ~~$1.4~~$3.8 million, compared to a provision release of ~~$8.5~~$10.4 million for the same period in 2021.

Releases in 2021 reflect a normalization of the reserve balances following a build-up at the onset of the COVID-19.

3Core loans is a non-GAAP financial measure. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

Table of Contents

The relationship between our portfolio loan balances and our ACL is summarized as follows, as of each of the dates indicated (dollars in thousands):


		As of
		September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
Portfolio loans	[a]	$	7,670,114	$	7,497,778	$	7,272,873	$	7,188,998	$	7,150,635
Non-GAAP adjustments:
PPP loans amortized cost		(1,426)		(7,616)		(31,769)		(74,958)		(178,231)

Core loans1	[b]	$	7,668,688	$	7,490,162	$	7,241,104	$	7,114,040	$	6,972,404

ACL	[c]	$	90,722	$	88,757	$	88,213	$	87,887	$	92,802

Ratios
ACL to portfolio loans	[c÷a]	1.18%		1.18%		1.21%		1.22%		1.30%
ACL to core loans1	[c÷b]	1.18%		1.18%		1.22%		1.24%		1.33%

Core loans is a non-GAAP financial measure. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see

“Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

As of ~~June~~September 30, 2022, management believed the level of the ACL to be appropriate based upon the information available. However, additional losses may be identified in our loan portfolio as new information is obtained. The ongoing impacts of CECL will be dependent upon changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors.

Non-performing Loans and Non-performing Assets

Loans are considered past due if the required principal ~~and~~or interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory guidelines. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Typically, loans are secured by collateral. When a loan is classified as non-accrual and determined to be collateral dependent, it is appropriately reserved or charged down through the ACL to the fair value of our interest in the underlying collateral less estimated costs to sell. Our loan portfolio is collateralized primarily by real estate.

Table of Contents

The following table sets forth information concerning non-performing loans and performing restructured loans, as of each of the dates indicated (dollars in thousands):

As of

June 30,

March 31,

December 31,

September 30,

June 30,



2022

2022

2021

2021

2021

Portfolio loans
[a]

$
7,497,778

$
7,272,873

$
7,188,998

$
7,150,635

$
7,185,650

Non-GAAP adjustments:

PPP loans, amortized cost

(7,616)

(31,769)

(74,958)

(178,231)

(390,395)

Core loans
[b]

$
7,490,162

$
7,241,104

$
7,114,040

$
6,972,404

$
6,795,255

Loans 30 – 89 days past due

$
5,157

$
3,916

$
6,261

$
6,446

$
3,888

Total assets
[c]

12,356,433

12,567,509

12,859,689

12,899,330

12,415,449

Non-performing assets

Non-performing loans:

Non-accrual loans
[d]

15,840

12,488

15,946

25,369

27,725

Loans 90+ days past due and still accruing

1,654

197

906

491

590

Total non-performing loans
[e]

17,494

12,685

16,852

25,860

28,315

OREO and other repossessed assets
[f]

1,429

3,606

4,416

3,184

3,137

Total non-performing assets
[g]

18,923

16,291

21,268

29,044

31,452

Substandard (excludes 90+ days past due)

84,411

79,962

70,565

51,740

44,877

Classified assets
[h]

$
103,334

$
96,253

$
91,833

$
80,784

$
76,329

Performing TDRs (includes 30 – 89 days past due)

$
2,029

$
1,771

$
1,801

$
2,083

$
2,518

ACL
[i]

88,757

88,213

87,887

92,802

95,410

Bank Tier 1 Capital
[j]

1,265,418

1,247,370

1,241,303

1,238,060

1,238,685

Ratios

ACL to non-accrual loans
[i÷d]

560.33
%

706.38
%

551.15
%

365.81
%

344.13
%
ACL to non-performing loans
[i÷e]

507.36
%

695.41
%

521.52
%

358.86
%

336.96
%
ACL to non-performing assets
[i÷g]

469.04
%

541.48
%

413.24
%

319.52
%

303.35
%
Non-accrual loans to portfolio loans
[d÷a]

0.21
%

0.17
%

0.22
%

0.35
%

0.39
%
Non-performing loans to portfolio loans
[e÷a]

0.23
%

0.17
%

0.23
%

0.36
%

0.39
%
Non-performing loans to core loans
[e÷b]

0.23
%

0.18
%

0.24
%

0.37
%

0.42
%
Non-performing assets to total assets
[g÷c]

0.15
%

0.13
%

0.17
%

0.23
%

0.25
%
Non-performing assets to portfolio loans and OREO
[g÷(a+f)]

0.25
%

0.22
%

0.30
%

0.41
%

0.44
%
Classified assets to Bank Tier 1 Capital and ACL
[h÷(i+j)]

7.63
%

7.21
%

6.91
%

6.07
%

5.72
%


		As of
		September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
Portfolio loans	[a]	$	7,670,114		$	7,497,778		$	7,272,873		$	7,188,998		$	7,150,635
Non-GAAP adjustments:
PPP loans amortized cost		(1,426)			(7,616)			(31,769)			(74,958)			(178,231)

Core loans1	[b]	$	7,668,688		$	7,490,162		$	7,241,104		$	7,114,040		$	6,972,404

Loans 30 – 89 days past due		$	6,307		$	5,157		$	3,916		$	6,261		$	6,446

Total assets	[c]	12,497,388			12,356,433			12,567,509			12,859,689			12,899,330

Non-performing assets
Non-performing loans:
Non-accrual loans	[d]	15,425			15,840			12,488			15,946			25,369
Loans 90+ days past due and still accruing		1,229			1,654			197			906			491
Total non-performing loans	[e]	16,654			17,494			12,685			16,852			25,860
OREO and other repossessed assets	[f]	1,219			1,429			3,606			4,416			3,184
Total non-performing assets	[g]	$	17,873		$	18,923		$	16,291		$	21,268		$	29,044

Substandard (excludes 90+ days past due)		84,148			84,411			79,962			70,565			51,740
Classified assets	[h]	$	102,021		$	103,334		$	96,253		$	91,833		$	80,784

Performing TDRs (includes 30 – 89 days past due)		$	1,940		$	2,029		$	1,771		$	1,801		$	2,083
ACL	[i]	$	90,722		$	88,757		$	88,213		$	87,887		$	92,802
Bank Tier 1 Capital	[j]	$	1,288,945		$	1,265,418		$	1,247,370		$	1,241,303		$	1,238,060

Ratios


ACL to non-accrual loans	[i÷d]	588.15		%	560.33		%	706.38		%	551.15		%	365.81		%
ACL to non-performing loans	[i÷e]	544.75		%	507.36		%	695.41		%	521.52		%	358.86		%
ACL to non-performing assets	[i÷g]	507.59		%	469.04		%	541.48		%	413.24		%	319.52		%
Non-accrual loans to portfolio loans	[d÷a]	0.20		%	0.21		%	0.17		%	0.22		%	0.35		%
Non-performing loans to portfolio loans	[e÷a]	0.22		%	0.23		%	0.17		%	0.23		%	0.36		%
Non-performing loans to core loans1	[e÷b]	0.22		%	0.23		%	0.18		%	0.24		%	0.37		%
Non-performing assets to total assets	[g÷c]	0.14		%	0.15		%	0.13		%	0.17		%	0.23		%
Non-performing assets to portfolio loans and OREO	[g÷(a+f)]	0.23		%	0.25		%	0.22		%	0.30		%	0.41		%
Classified assets to Bank Tier 1 Capital and ACL	[h÷(i+j)]	7.39		%	7.63		%	7.21		%	6.91		%	6.07		%

1.Core loans is a non-GAAP financial measure. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

Table of Contents

Asset quality remains strong by both historical as well as present-day industry standards. Non-performing loan balances ~~increased~~decreased by ~~3.8%~~1.2% to ~~$17.5~~$16.7 million as of ~~June~~September 30, 2022, compared with $16.9 million as of December 31, 2021. ~~The increase in non-performing loans in the second quarter of 2022 is largely attributable to a single borrower in the skilled nursing industry.~~ Continued disciplined credit management resulted in non-performing loans as a percentage of portfolio loans of ~~0.23%~~0.22% as of ~~both June~~September 30, 2022, and ~~December 31, 2021. Excluding the amortized cost of PPP loans, non-performing loans as a percentage of portfolio loans was~~ 0.23% ~~as of June 30, 2022, and 0.24%~~ as of December 31, 2021.

Asset quality metrics remain dependent upon market-specific economic conditions, which may fluctuate from period to period. If economic conditions were to deteriorate, we would expect the credit quality of our loan portfolio to decline and loan defaults to increase.

Potential Problem Loans

Potential problem loans are loans classified as substandard which are not individually evaluated, restructured, non-accrual, or 90+ days past due, but where current information indicates that the borrower may not be able to comply with loan repayment terms. Management assesses the potential for loss on such loans and considers the effect of any potential loss in determining its provision for expected credit losses. Potential problem loans increased to ~~$83.9~~$83.7 million as of ~~June~~September 30, 2022, compared to $70.5 million as of December 31, 2021. Management continues to monitor these credits and anticipates that restructurings, guarantees, additional collateral, or other planned actions will result in full repayment of the debts. As of ~~June~~September 30, 2022, management identified no other loans that represent or result from trends or uncertainties which would be expected to materially impact future operating results, liquidity, or capital resources.

COVID-19 Modifications

To alleviate some of the financial hardships faced as a result of COVID-19, the Company offered a Financial Relief Program to qualifying customers. The program included options for short-term loan payment deferrals and certain fee waivers. As of ~~June~~September 30, 2022, the Company had no loans remaining on full payment deferral, 118 commercial loans on interest-only payment deferral representing ~~$31.9~~$20.6 million in loans, and one payment deferred retail loan representing $0.1 million in loans. In comparison, the Company had 32 commercial loans on interest-only payment deferral representing $128.7 million in loans, and two payment deferred retail loans representing $0.1 million as of December 31, 2021. As these deferrals expire, the Company will continue to monitor credits for potential problem loans.

Deposits

~~Deposits~~

Total deposits decreased by ~~3.4%~~1.6% to ~~$10.4~~$10.6 billion as of ~~June~~September 30, 2022, compared to $10.8 billion as of December 31, 2021. We focus on deepening our relationships with customers to foster core deposit⁽¹⁾4 growth, allowing us to reduce our reliance on wholesale funding. Core deposits include non-brokered transaction accounts, money market deposit accounts, and time deposits of $250,000 or less. Fluctuations in deposit balances can be attributed to the retention of PPP loan funding in customer deposit accounts, the impacts of fiscal stimulus, inflation and related economic ~~stimulus, transfer of funds from bank deposits to assets under care, time deposit attrition, other core deposit growth, and the~~effects on our customers, as well as typical seasonality ~~of public funds.~~

aspects within our portfolio.

LIQUIDITY

Liquidity management is the process by which we ensure that adequate liquid funds are available to meet the present and future cash flow obligations arising in the daily operations of our business. These financial obligations consist of needs for funds to meet commitments to borrowers for extensions of credit, fund capital expenditures, honor withdrawals by customers, pay dividends to stockholders, and pay operating expenses. Our most liquid assets are cash and due from banks, interest-bearing bank deposits, and federal funds sold. Balances of these assets are dependent on our operating, investing, lending, and financing activities during any given period.

⁽¹⁾

4Core deposits is a non-GAAP financial measure. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial ~~Information~~Information”” included in this Quarterly Report.

Table of Contents

First Busey’s primary sources of funds consist of deposits, investment maturities and sales, loan principal repayments, and capital funds. Additional liquidity is provided by the ability to borrow from the FHLB, the Federal Reserve, First Busey’s revolving credit facility, or to utilize brokered deposits, as summarized in the table below (dollars in thousands):

As of

June 30,

December 31,

2022

2021
Additional borrowing capacity available from:

FHLB

$
1,761,890

$
1,536,019
Federal Reserve

778,335

624,627
Revolving credit facility

40,000

40,000
Additional borrowing capacity

$
2,580,225

$
2,200,646


	As of
	September 30, 2022		December 31, 2021
Additional borrowing capacity available from:
FHLB	$	1,824,424	$	1,536,019
Federal Reserve	752,733		624,627
Revolving credit facility	40,000		40,000
Additional borrowing capacity	$	2,617,157	$	2,200,646

As of ~~June~~September 30, 2022, management believed that adequate liquidity existed to meet all projected cash flow obligations. We seek to achieve a satisfactory degree of liquidity by actively managing both assets and liabilities. Asset management guides the proportion of liquid assets to total assets, while liability management monitors future funding requirements and prices liabilities accordingly.

OFF-BALANCE-SHEET ARRANGEMENTS

Busey Bank routinely enters into commitments to extend credit and standby letters of credit in the normal course of business to meet the financing needs of its customers. We had outstanding loan commitments and standby letters of credit of ~~$2.0~~$2.1 billion as of both ~~June~~September 30, 2022, and December 31, 2021. The balance of commitments to extend credit represents future cash requirements and some of these commitments may expire without being drawn upon. We anticipate we will have sufficient funds available to meet current loan commitments, including loan applications received and in process prior to the issuance of firm commitments.

As of ~~June~~September 30, 2022, our reserve for unfunded commitments was ~~$7.4~~$7.1 million, compared to $6.5 million as of December 31, 2021. ~~The Company~~We recorded a $0.3 million release of the provision for unfunded commitments for the three months ended ~~June~~September 30, 2022, compared with a provision release of ~~$0.5~~$1.0 million for the same period in 2021. We recorded ~~$0.8~~$0.5 million of expenses for the provision for unfunded commitments for the ~~six~~nine months ended ~~June~~September 30, 2022, compared to provision releases totaling ~~$0.1~~$1.1 million of for the same period in 2021.

CAPITAL RESOURCES

Our capital ratios are in excess of those required to be considered “well-capitalized” pursuant to applicable regulatory guidelines. The Federal Reserve Board uses capital adequacy guidelines in its examination and regulation of bank holding companies and their subsidiary banks. Risk-based capital ratios are established by allocating assets and certain off-balance-sheet commitments into risk-weighted categories. These balances are then multiplied by the factor appropriate for that risk-weighted category. In order to refrain from restrictions on dividends, equity repurchases, and discretionary bonus payments, banking institutions must maintain capital in excess of regulatory minimum capital requirements. The table below presents minimum capital ratios that include the capital conservation buffer in comparison to the capital ratios for First Busey and Busey Bank as of ~~June~~September 30, 2022:


	Minimum Capital Requirements with Capital Buffer		As of September 30, 2022
			First Busey Corporation		Busey Bank
Common Equity Tier 1 Capital to Risk Weighted Assets	7.00	%	11.79	%	14.45	%
Tier 1 Capital to Risk Weighted Assets	8.50	%	12.62	%	14.45	%
Total Capital to Risk Weighted Assets	10.50	%	15.98	%	15.31	%
Leverage Ratio of Tier 1 Capital to Average Assets	6.50	%	9.15	%	10.47	%

Minimum Capital

As of June 30, 2022

Requirements with

First Busey

Busey


Capital Buffer

Corporation

Bank

Common Equity Tier 1 Capital to Risk Weighted Assets

7.00
%

11.77
%

14.50
%
Tier 1 Capital to Risk Weighted Assets

8.50
%

12.62
%

14.50
%
Total Capital to Risk Weighted Assets

10.50
%

16.58
%

15.36
%
Leverage Ratio of Tier 1 Capital to Average Assets

6.50
%

9.03
%

10.37
%

For further discussion of capital resources and requirements, see “Note 7: Regulatory ~~Capital~~Capital..”

Table of Contents

NON-GAAP FINANCIAL INFORMATION

This Quarterly Report contains certain financial information determined by methods other than GAAP. Management uses these non-GAAP measures, together with the related GAAP measures, in analysis of the Company’s performance and in making business decisions, as well as for comparison to the Company’s peers. The Company believes the adjusted measures are useful for investors and management to understand the effects of certain non-recurring noninterest items and provide additional perspective on the Company’s performance over time.

A reconciliation of non-GAAP financial measures to what management believes to be the most directly comparable GAAP financial measures—specifically, net interest income, total noninterest income, net security gains and losses, and total noninterest expense 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, adjusted return on average assets, return on average tangible common equity, and adjusted return on average tangible common equity; net interest income in the case of adjusted net interest income and adjusted net interest margin; net interest income, total noninterest income, and total noninterest expense in the case of adjusted noninterest expense, adjusted core expense, efficiency ratio, adjusted efficiency ratio, and adjusted core efficiency ratio; total stockholders’ equity in the case of tangible book value per common share; total assets and total stockholders’ equity in the case of tangible common equity and tangible common equity to tangible assets; portfolio loans in the case of core loans and core loans to portfolio loans; total deposits in the case of core deposits and core deposits to total deposits; and portfolio loans and total deposits in the case of core loans to core deposits—appears below.

These non-GAAP disclosures have inherent limitations and are not audited. They should not be considered in isolation or as a substitute for operating results reported in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Tax effected numbers included in these non-GAAP disclosures are based on estimated statutory rates or effective rates as appropriate.

Table of Contents

~~RECONCILIAITON~~

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

~~Pre-Provision Net Revenue, Adjusted Pre-Provision Net Revenue,~~

~~Pre-Provision Net Revenue to Average Assets, and Adjusted Pre-Provision Net Revenue to Average Assets~~

~~(dollars in thousands)~~

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,


2022

2021

2022

2021

PRE-PROVISION NET REVENUE

Net interest income

$
75,928

$
64,542

$
145,984

$
129,435

Total noninterest income

31,019

33,011

66,791

64,456

Net (gains) losses on sales of securities and unrealized (gains) losses recognized on equity securities

1,714

(898)

2,328

(2,539)

Total noninterest expense

(69,092)

(62,625)

(139,468)

(117,124)

Pre-provision net revenue

39,569

34,030

75,635

74,228

Non-GAAP adjustments:

Acquisition and other restructuring expenses

303

2,713

1,138

3,033

Provision for unfunded commitments

(267)

(496)

845

(90)

Amortization of NMTC

1,662

1,239

3,003

3,068

Adjusted pre-provision net revenue

$
41,267

$
37,486

$
80,621

$
80,239

Pre-provision net revenue, annualized
[a]

$
158,711

$
136,494

$
152,524

$
149,686

Adjusted pre-provision net revenue, annualized
[b]

165,521

150,356

162,578

161,808

Average total assets
[c]

12,452,070

11,398,655

12,555,928

10,998,672

Reported: Pre-provision net revenue to average assets⁽¹⁾
[a÷c]

1.27
%

1.20
%

1.21
%

1.36
%
Adjusted: Pre-provision net revenue to average assets⁽¹⁾
[b÷c]

1.33
%

1.32
%

1.29
%

1.47
%


Pre-Provision Net Revenue, Adjusted Pre-Provision Net Revenue, Pre-Provision Net Revenue to Average Assets, and Adjusted Pre-Provision Net Revenue to Average Assets
(dollars in thousands)

		Three Months Ended		Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
PRE-PROVISION NET REVENUE
Net interest income		$	86,305	$	70,755	$	232,289	$	200,190
Total noninterest income		30,933		33,259		97,724		97,715
Net security (gains) losses		(4)		(57)		2,324		(2,596)
Total noninterest expense		(70,736)		(73,487)		(210,204)		(190,611)
Pre-provision net revenue		46,498		30,470		122,133		104,698
Non-GAAP adjustments:
Acquisition and other restructuring expenses		957		8,677		2,095		11,710
Provision for unfunded commitments		(320)		(978)		525		(1,068)
Amortization of New Markets Tax Credits		1,665		1,240		4,668		4,308
Adjusted pre-provision net revenue		$	48,800	$	39,409	$	129,421	$	119,648

Pre-provision net revenue, annualized	[a]	$	184,476	$	120,886	$	163,291	$	139,981
Adjusted pre-provision net revenue, annualized	[b]	193,609		156,351		173,035		159,969
Average total assets	[c]	12,531,856		12,697,795		12,547,816		11,571,270

Reported: Pre-provision net revenue to average assets1	[a÷c]	1.47%		0.95%		1.30%		1.21%
Adjusted: Pre-provision net revenue to average assets1	[b÷c]	1.54%		1.23%		1.38%		1.38%

	~~(1)~~	~~Annualized measure.~~

1.Annualized measure.

Table of Contents

~~RECONCILIAITON~~

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

~~Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Return on Average Assets~~

~~Return on Average Tangible Common Equity, and Adjusted Return on Average Tangible Common Equity~~

~~(dollars in thousands, except per share amounts)~~


		Three Months Ended						Six Months Ended
		June 30,			June 30,			June 30,			June 30,
		2022			2021			2022			2021

Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Return on Average Assets, Return on Average Tangible Common Equity, and Adjusted Return on Average Tangible Common Equity														Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Return on Average Assets, Return on Average Tangible Common Equity, and Adjusted Return on Average Tangible Common Equity
(dollars in thousands, except per share amounts)														(dollars in thousands, except per share amounts)

																Three Months Ended			Nine Months Ended
																September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
NET INCOME ADJUSTED FOR NON-OPERATING ITEMS	NET INCOME ADJUSTED FOR NON-OPERATING ITEMS													NET INCOME ADJUSTED FOR NON-OPERATING ITEMS
Net income	[a]	$	29,824		$	29,766		$	58,263		$	67,582		Net income	[a]	$	35,661		$	25,941		$	93,924		$	93,523
Non-GAAP adjustments:														Non-GAAP adjustments:
Acquisition expenses:														Acquisition expenses:
Salaries, wages, and employee benefits			—			1,125			587			1,125		Salaries, wages, and employee benefits		—			4,462			587			5,587
Data processing			—			368			214			375		Data processing		—			3,182			214			3,557
Loss on leases or fixed asset impairment														Loss on leases or fixed asset impairment		—			—			—			—
Professional fees, occupancy, and other			204			1,220			238			1,533		Professional fees, occupancy, and other		4			776			242			2,309
Other restructuring costs:
Lease or fixed asset impairment			99			—			99			—
Other restructuring expenses:														Other restructuring expenses:
Salaries, wages, and employee benefits														Salaries, wages, and employee benefits		—			257			—			257
Data processing														Data processing		—			—			—			—
Loss on leases or fixed asset impairment														Loss on leases or fixed asset impairment		877			—			976			—
Professional fees, occupancy, and other														Professional fees, occupancy, and other		76			—			76			—
MSR valuation impairment														MSR valuation impairment		—			—			—			—
Related tax benefit			(46)			(558)			(216)			(629)		Related tax benefit		(183)			(1,773)			(399)			(2,402)
TJCA related adjustment														TJCA related adjustment		$	—		$	—		$	—		$	—
Adjusted net income	[b]	$	30,081		$	31,921		$	59,185		$	69,986		Adjusted net income	[b]	$	36,435		$	32,845		$	95,620		$	102,831


DILUTED EARNINGS PER SHARE	DILUTED EARNINGS PER SHARE													DILUTED EARNINGS PER SHARE
Dilutive average common shares outstanding	[c]		56,104,017			55,730,883			56,149,466			55,384,942

Reported: Diluted earnings per share	[a÷c]	$	0.53		$	0.53		$	1.04		$	1.22
Adjusted: Diluted earnings per share	[b÷c]		0.54			0.57			1.05			1.26

Diluted average common shares outstanding														Diluted average common shares outstanding	[c]	56,073,164			56,832,518			56,123,756			55,872,835

Reported: Diluted earnings per share														Reported: Diluted earnings per share	[a÷c]	$	0.64		$	0.46		$	1.67		$	1.67
Adjusted: Diluted earnings per share														Adjusted: Diluted earnings per share	[b÷c]	$	0.65		$	0.58		$	1.70		$	1.84

RETURN ON AVERAGE ASSETS	RETURN ON AVERAGE ASSETS													RETURN ON AVERAGE ASSETS
Net income, annualized	[d]	$	119,624		$	119,391		$	117,492		$	136,284		Net income, annualized	[d]	$	141,481		$	102,918		$	125,576		$	125,040
Adjusted net income, annualized	[e]		120,655			128,035			119,351			141,132		Adjusted net income, annualized	[e]	144,552			130,309			127,844			137,485
Average total assets	[f]		12,452,070			11,398,655			12,555,928			10,998,672		Average total assets	[f]	12,531,856			12,697,795			12,547,816			11,571,270

Reported: Return on average assets⁽¹⁾	[d÷f]		0.96	%		1.05	%		0.94	%		1.24	%
Adjusted: Return on average assets⁽¹⁾	[e÷f]		0.97	%		1.12	%		0.95	%		1.28	%


Reported: Return on average assets1														Reported: Return on average assets1	[d÷f]	1.13		%	0.81		%	1.00		%	1.08		%
Adjusted: Return on average assets1														Adjusted: Return on average assets1	[e÷f]	1.15		%	1.03		%	1.02		%	1.19		%

RETURN ON AVERAGE TANGIBLE COMMON EQUITY	RETURN ON AVERAGE TANGIBLE COMMON EQUITY													RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Average common equity		$	1,197,052		$	1,342,771		$	1,239,060		$	1,309,418		Average common equity		$	1,181,448		$	1,351,416		$	1,219,645		$	1,323,571
Average goodwill and other intangible assets, net			(371,890)			(368,709)			(373,342)			(365,718)		Average goodwill and other intangible assets, net		(368,981)			(380,885)			(371,873)			(370,829)
Average tangible common equity	[g]	$	825,162		$	974,062		$	865,718		$	943,700		Average tangible common equity	[g]	$	812,467		$	970,531		$	847,772		$	952,742

Reported: Return on average tangible common equity⁽¹⁾	[d÷g]		14.50	%		12.26	%		13.57	%		14.44	%
Adjusted: Return on average tangible common equity⁽¹⁾	[e÷g]		14.62	%		13.14	%		13.79	%		14.96	%

Reported: Return on average tangible common equity1														Reported: Return on average tangible common equity1	[d÷g]	17.41		%	10.60		%	14.81		%	13.12		%
Adjusted: Return on average tangible common equity1														Adjusted: Return on average tangible common equity1	[e÷g]	17.79		%	13.43		%	15.08		%	14.43		%

	~~(1)~~	~~Annualized measure.~~

1.Annualized measure.

Table of Contents

~~RECONCILIAITON~~

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

~~Adjusted Net Interest Income and Adjusted Net Interest Margin~~

~~(dollars in thousands)~~


Adjusted Net Interest Income and Adjusted Net Interest Margin
(dollars in thousands)

		Three Months Ended			Nine Months Ended
		September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net interest income		$	86,305		$	70,755		$	232,289		$	200,190
Non-GAAP adjustments:
Tax-equivalent adjustment		543			598			1,635			1,778
Tax-equivalent net interest income		86,848			71,353			233,924			201,968
Purchase accounting accretion related to business combinations		(830)			(1,799)			(2,588)			(5,682)
Adjusted net interest income		$	86,018		$	69,554		$	231,336		$	196,286

Tax-equivalent net interest income, annualized	[a]	$	344,560		$	283,085		$	312,756		$	270,030
Adjusted net interest income, annualized	[b]	341,267			275,948			309,295			262,434
Average interest-earning assets	[c]	11,497,783			11,730,637			11,550,887			10,651,386

Reported: Net interest margin1	[a÷c]	3.00		%	2.41		%	2.71		%	2.54		%
Adjusted: Net interest margin1	[b÷c]	2.97		%	2.35		%	2.68		%	2.46		%

	~~(1)~~	~~Annualized measure.~~

1.Annualized measure.

Table of Contents

~~RECONCILIAITON~~

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

~~Adjusted Noninterest Expense, Adjusted Core Expense,~~

~~Efficiency Ratio, Adjusted Efficiency Ratio, and Adjusted Core Efficiency Ratio~~

~~(dollars in thousands)~~

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,


2022

2021

2022

2021

Net interest income

$
75,928

$
64,542

$
145,984

$
129,435

Non-GAAP adjustments:

Tax-equivalent adjustment

546

579

1,092

1,180

Tax-equivalent net interest income

76,474

65,121

147,076

130,615

Total noninterest income

31,019

33,011

66,791

64,456

Non-GAAP adjustments:

Net (gains) losses on sales of securities and unrealized (gains) losses recognized on equity securities

1,714

(898)

2,328

(2,539)

Noninterest income excluding net securities gains and losses

32,733

32,113

69,119

61,917

Tax-equivalent net interest income plus noninterest income excluding net securities gains and losses
[a]

$
109,207

$
97,234

$
216,195

$
192,532

Total noninterest expense

69,092

62,625

139,468

117,124

Non-GAAP adjustments:

Amortization of intangible assets
[b]

(2,951)

(2,650)

(5,962)

(5,051)

Non-interest expense excluding amortization of intangible assets
[c]

66,141

59,975

133,506

112,073

Non-operating adjustments:





Salaries, wages, and employee benefits

—

(1,125)

(587)

(1,125)

Data processing

—

(368)

(214)

(375)

Lease or fixed asset impairment

(99)

—

(99)

—

Professional fees and other

(204)

(1,220)

(238)

(1,533)

Adjusted noninterest expense
[d]

65,838

57,262

132,368

109,040

Provision for unfunded commitments

267

496

(845)

90

Amortization of NMTC

(1,662)

(1,239)

(3,003)

(3,068)

Adjusted core expense
[e]

$
64,443

$
56,519

$
128,520

$
106,062

Noninterest expense, excluding non-operating adjustments
[d-b]

68,789

59,912

138,330

114,091

Reported: Efficiency ratio
[c÷a]

60.56
%

61.68
%

61.75
%

58.21
%
Adjusted: Efficiency ratio
[d÷a]

60.29
%

58.89
%

61.23
%

56.63
%
Adjusted: Core efficiency ratio
[e÷a]

59.01
%

58.13
%

59.45
%

55.09
%


Adjusted Noninterest Expense, Adjusted Core Expense, Efficiency Ratio, Adjusted Efficiency Ratio, and Adjusted Core Efficiency Ratio
(dollars in thousands)

		Three Months Ended			Nine Months Ended
		September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net interest income		$	86,305		$	70,755		$	232,289		$	200,190
Non-GAAP adjustments:
Tax-equivalent adjustment		543			598			1,635			1,778
Tax-equivalent net interest income		86,848			71,353			233,924			201,968

Total noninterest income		30,933			33,259			97,724			97,715
Non-GAAP adjustments:
Net security (gains) losses		(4)			(57)			2,324			(2,596)
Noninterest income excluding net securities gains and losses		30,929			33,202			100,048			95,119

Tax-equivalent net interest income plus noninterest income excluding net securities gains and losses	[a]	$	117,777		$	104,555		$	333,972		$	297,087

Total noninterest expense		70,736			73,487			210,204			190,611
Non-GAAP adjustments:
Amortization of intangible assets	[b]	(2,871)			(3,149)			(8,833)			(8,200)
Non-interest expense excluding amortization of intangible assets	[c]	67,865			70,338			201,371			182,411
Non-operating adjustments:
Salaries, wages, and employee benefits		—			(4,719)			(587)			(5,844)
Data processing		—			(3,182)			(214)			(3,557)
Impairment, professional fees, occupancy, and other		(957)			(776)			(1,294)			(2,309)
Adjusted noninterest expense	[f]	66,908			61,661			199,276			170,701
Provision for unfunded commitments		320			978			(525)			1,068
Amortization of New Markets Tax Credits		(1,665)			(1,240)			(4,668)			(4,308)
Adjusted core expense	[g]	$	65,563		$	61,399		$	194,083		$	167,461

Noninterest expense, excluding non-operating adjustments	[f-b]	69,779			64,810			208,109			178,901

Reported: Efficiency ratio	[c÷a]	57.62		%	67.27		%	60.30		%	61.40		%
Adjusted: Efficiency ratio	[f÷a]	56.81		%	58.97		%	59.67		%	57.46		%
Adjusted: Core efficiency ratio	[g÷a]	55.67		%	58.72		%	58.11		%	56.37		%

Table of Contents

~~RECONCILIAITON~~

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

~~Tangible Book Value Per Common Share~~

~~(dollars in thousands, except per share amounts)~~

As of

June 30,

December 31,

2022

2021
Total stockholders’ equity

$
1,161,957

$
1,319,112
Goodwill and other intangible assets, net

(369,962)

(375,924)
Tangible book value
[a]

$
791,995

$
943,188

Ending number of common shares outstanding
[b]

55,335,703

55,434,910

Tangible book value per common share
[a÷b]

$
14.31

$
17.01

~~Tangible Common Equity and Tangible Common Equity to Tangible Assets~~

~~(dollars in thousands)~~

As of


June 30,

December 31,


2022

2021

Total assets

$
12,356,433

$
12,859,689

Non-GAAP adjustments:

Goodwill and other intangible assets, net

(369,962)

(375,924)

Tax effect of other intangible assets⁽¹⁾

9,905

16,254

Tangible assets
[a]

$
11,996,376

$
12,500,019

Total stockholders’ equity

$
1,161,957

$
1,319,112

Non-GAAP adjustments:

Goodwill and other intangible assets, net

(369,962)

(375,924)

Tax effect of other intangible assets⁽¹⁾

9,905

16,254

Tangible common equity
[b]

$
801,900

$
959,442

Tangible common equity to tangible assets ⁽²⁾
[b÷a]

6.68
%

7.68
%


Tangible Book Value Per Common Share
(dollars in thousands, except per share amounts)

		As of
		September 30, 2022		December 31, 2021
Total stockholders' equity		$	1,106,588	$	1,319,112
Goodwill and other intangible assets, net		(367,091)		(375,924)
Tangible book value	[a]	$	739,497	$	943,188

Ending number of common shares outstanding	[b]	55,232		55,435

Tangible book value per common share	[a÷b]	$	13.39	$	17.01


Tangible Common Equity and Tangible Common Equity to Tangible Assets
(dollars in thousands)

		As of
		September 30, 2022		December 31, 2021
Total assets		$	12,497,388	$	12,859,689
Non-GAAP adjustments:
Goodwill and other intangible assets, net		(367,091)		(375,924)
Tax effect of other intangible assets1		9,369		16,254
Tangible assets	[a]	$	12,139,666	$	12,500,019

Total stockholders' equity		$	1,106,588	$	1,319,112
Non-GAAP adjustments:
Goodwill and other intangible assets, net		(367,091)		(375,924)
Tax effect of other intangible assets1		9,369		16,254
Tangible common equity	[b]	$	748,866	$	959,442

Tangible common equity to tangible assets2	[b÷a]	6.17%		7.68%

	~~(1)~~	~~Net of estimated deferred tax liability.~~

~~(2)~~

~~Tax-effected measure.~~

1.Net of estimated deferred tax liability.

2.Tax-effected measure.

Table of Contents

~~RECONCILIAITON~~

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)

~~Core Loans, Core Loans to Portfolio Loans,~~

~~Core Deposits, Core Deposits to Total Deposits, and Core Loans to Core Deposits~~

~~(dollars in thousands)~~

As of


June 30,

December 31,


2022

2021

Portfolio loans
[a]

$
7,497,778

$
7,188,998

Non-GAAP adjustments:

PPP Loans amortized cost

(7,616)

(74,958)

Core loans
[b]

$
7,490,162

$
7,114,040

Total deposits
[c]

$
10,397,228

$
10,768,577

Non-GAAP adjustments:

Brokered transaction accounts

(2,002)

(2,248)

Time deposits of $250,000 or more

(117,957)

(137,449)

Core deposits
[d]

$
10,277,269

$
10,628,880

RATIOS

Core loans to portfolio loans
[b÷a]

99.90
%

98.96
%
Core deposits to total deposits
[d÷c]

98.85
%

98.70
%
Core loans to core deposits
[b÷d]

72.88
%

66.93
%


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
		September 30, 2022		December 31, 2021
Portfolio loans	[a]	$	7,670,114	$	7,188,998
Non-GAAP adjustments:
PPP loans amortized cost		(1,426)		(74,958)
Loans acquired in business combinations, prior to integration		—		—
Core loans	[b]	$	7,668,688	$	7,114,040

Total deposits	[c]	10,601,397		10,768,577
Non-GAAP adjustments:
Brokered transaction accounts		(2,006)		(2,248)
Time deposits of $250,000 or more		(103,534)		(137,449)
Deposits acquired in business combinations, prior to integration		—		—
Core deposits	[d]	$	10,495,857	$	10,628,880

RATIOS
Core loans to portfolio loans	[b÷a]	99.98%		98.96%
Core deposits to total deposits	[d÷c]	99.00%		98.70%
Core loans to core deposits	[b÷d]	73.06%		66.93%

Table of Contents

FORWARD-LOOKING STATEMENTS

Statements made in this document, other than those concerning historical financial information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to First Busey’s financial condition, results of operations, plans, objectives, future performance, and business. Forward-looking statements, which may be based upon beliefs, expectations, and assumptions of the Company’s management, and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should,” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond our ability to control or predict, could cause actual results to differ materially from those in our forward-looking statements. These factors include, among others, the following: (i) the strength of the local, state, national, and international economy (including effects of inflationary pressures and supply chain constraints); (ii) the economic impact of any future terrorist threats or attacks, widespread disease or pandemics (including the COVID-19 pandemic), or other adverse external events that could cause economic deterioration or instability in credit markets (including Russia’s invasion of Ukraine); (iii) changes in state and federal laws, regulations, and governmental policies concerning First Busey’s general business; (iv) changes in interest rates and prepayment rates of First Busey’s assets (including the impact of the LIBOR phase-out) (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) the loss of key executives or associates; (viii) changes in consumer spending; (ix) unexpected results of current and/or future acquisitions, which may include failure to realize the anticipated benefits of any acquisition and the possibility that transaction costs may be greater than anticipated; (x) unexpected outcomes of existing or new litigation involving First Busey; (xi) the economic impact of exceptional weather occurrences such as tornadoes, hurricanes, floods, and blizzards; and (xii) changes in accounting policies and practices. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning First Busey and our business, including additional factors that could materially affect our financial results, is included in our filings with the SEC.

CRITICAL ACCOUNTING ESTIMATES

First Busey has established various accounting policies that govern the application of GAAP in the preparation of its unaudited consolidated financial statements. Significant accounting policies are described in “Note 1. Significant Accounting Policies” of the Company’s 2021 Annual Report.

Critical accounting estimates are those that are critical to the portrayal and understanding of First Busey’s financial condition and results of operations and require management to make assumptions that are difficult, subjective, or complex. These estimates involve judgments, assumptions, and uncertainties that are susceptible to change. In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, the possibility of a materially different financial condition or materially different results of operations is a reasonable likelihood. Further, changes in accounting standards could impact our critical accounting estimates. Management has reviewed these critical accounting estimates and related disclosures with our Audit Committee. The following accounting policies could be deemed critical:

Fair Value of Debt Securities Available for Sale

The fair values of debt securities available for sale are measurements from an independent pricing service and are based on observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the security’s terms and conditions, among other things. The use of different judgments and estimates to determine the fair value of securities could result in a different fair value estimate.

Realized securities gains or losses are reported in the unaudited Consolidated Statements of Income. The cost of securities sold is based on the specific identification method.

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A debt security available for sale is impaired if the fair value of the security declines below its amortized cost basis. To determine the appropriate accounting, we must first determine if we intend to sell the security or if it is more likely than not that we will be required to sell the security before the fair value increases to at least the amortized cost basis. If either of those selling events is expected, we will write down the amortized cost basis of the security to its fair value. This is achieved by writing off any previously recorded ACL balance related to the debt security, if applicable, and recognizing any incremental impairment through earnings. If we do not intend to sell the security, nor believe it more likely than not that we will be required to sell the security before the fair value recovers to the amortized cost basis, we must determine whether any of the decline in fair value has resulted from a credit loss, or if it is entirely the result of noncredit factors.

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

•

●

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

●

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

●

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

●

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

●

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

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

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

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

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

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

Impairment related to a credit loss must be measured using the discounted cash flow method. Credit loss recognition is limited to the fair value of the security. The impairment is recognized by establishing an ACL balance for the debt security through the provision for credit losses. Impairment related to noncredit factors is recognized in AOCI, net of applicable taxes.

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.”

The fair value of a loan portfolio acquired in a business combination generally requires greater levels of management estimates and judgment than other assets acquired or liabilities assumed. Acquired loans are in the scope of ASC Topic 326 “Financial Instruments—Credit Losses.” However, the offset to record the ACL on acquired loans at the date of acquisition depends on whether or not the loan is classified as PCD. The ACL for PCD loans is recorded through a gross-up effect, while the ACL for acquired non-PCD loans is recorded through provision expense, consistent with originated loans. Thus, the determination of which loans are PCD and non-PCD can have a significant effect on the accounting for these loans.

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired using the acquisition method of accounting. Determining the fair value often involves estimates based on third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques. Goodwill is not amortized. Instead, we assess the potential for impairment on an annual basis or more frequently if events and circumstances indicate that goodwill might be impaired.

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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 unaudited Consolidated Statements of Income. Accrued and deferred taxes, as reported in other assets or other liabilities in the unaudited 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 Busey calculates the ACL at each reporting date. We recognize an allowance for the lifetime expected credit losses for the amount the Company does not expect to collect. Measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported book value. The calculation also contemplates that First Busey may not be able to make or obtain such forecasts for the entire life of the financial assets and requires a reversion to historical credit loss information.

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

Loans deemed uncollectible are charged against and reduce the ACL. A provision for credit losses is charged to current expense and acts to replenish the ACL in order to maintain the ACL at a level that management deems adequate. Determining the ACL involves significant judgments and assumptions by management. Because of the nature of the judgments and assumptions made by management, actual results may differ from these judgments and assumptions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of changes in asset values due to movements in underlying market rates and prices. Interest rate risk is a type of market risk to earnings and capital arising from movements in interest rates. Interest rate risk is the most significant market risk affecting First Busey as other types of market risk, such as foreign currency exchange rate risk and commodity price risk, have minimal impact or do not arise in the normal course of First Busey’s business activities.

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.

As interest rate changes do not impact all categories of assets and liabilities equally or simultaneously, the asset-liability committee primarily relies on balance sheet and income simulation analysis to determine the potential impact of changes in market interest rates on net interest income. In these standard simulation models, the balance sheet is projected over a one-year and a two-year time horizon and net interest income is calculated under current market rates and assuming permanent instantaneous shifts of +/-100, ~~+200~~+/-200 and ~~+300~~+/-300 basis points. ~~Due to the low interest rate environment,~~As of December 31, 2021, a downward adjustment in federal fund rates was not meaningful ~~as of December 31, 2021.~~due to the low interest rate environment at that time. The model assumes immediate and sustained shifts in the federal funds rate and other market rate indices and corresponding shifts in other non-market rate indices based on their historical changes relative to changes in the federal funds rate and other market indices. Assets and liabilities are assumed to remain constant as of the measurement date; variable-rate assets and liabilities are repriced based on repricing frequency; and prepayment speeds on loans are projected for both declining and rising rate environments.

~~Table of Contents~~

The interest rate risk of First Busey as a result of immediate and sustained changes in interest rates, expressed as a change in net interest income as a percentage of the net interest income calculated in the constant base model, was as follows:


	Year-One: Basis Point Changes
	-300		-200	- 100		+100	+200	+300
September 30, 2022	(22.39)	%	(13.99)%	(5.83)	%	4.60%	9.17%	13.76%
December 31, 2021	NM		NM	NM		8.77%	17.19%	25.64%

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Year-One: Basis Point Changes


- 100

+100

+200

+300

June 30, 2022

(7.15)
%
4.33
%
8.57
%
12.79
%
December 31, 2021

NM

8.77
%
17.19
%
25.64
%

Year-Two: Basis Point Changes


- 100

+100

+200

+300

June 30, 2022

(8.93)
%
5.23
%
10.48
%
15.75
%
December 31, 2021

NM

9.51
%
18.22
%
26.84
%


	Year-Two: Basis Point Changes
	-300		-200	- 100		+100	+200	+300
September 30, 2022	(27.75)	%	(17.09)%	(7.21)	%	5.52%	11.12%	16.78%
December 31, 2021	NM		NM	NM		9.51%	18.22%	26.84%

Interest rate risk is monitored and managed within approved policy limits and any temporary exceptions to policy in periods of rapid rate movement are approved and documented. The calculation of potential effects of hypothetical interest rate changes is based on numerous assumptions and should not be relied upon as indicative of actual results. Actual results would likely differ from simulated results due to the timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, was carried out as of ~~June~~September 30, 2022, under the supervision and with the participation of our Chief Executive Officer, Chief Financial Officer, and several other members of our senior management. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~June~~September 30, 2022, our disclosure controls and procedures were effective in ensuring that the information we are required to disclose in the reports we file or submit under the Exchange Act was (i) accumulated and communicated to our management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure, and (ii) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

During the three months ended ~~June~~September 30, 2022, 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.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As part of the ordinary course of business, First Busey and its subsidiaries are parties to litigation that is incidental to their regular business activities.

There is no material pending litigation, other than ordinary routine litigation incidental to its business, in which First Busey or any of its subsidiaries is involved or of which any of their property is the subject. Furthermore, there is no pending legal proceeding that is adverse to First Busey in which any director, officer, or affiliate of First Busey, or any associate of any such director or officer, is a party, or has a material interest.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Part I—Item 1A of First Busey’s 2021 Annual Report.

~~Table of Contents~~

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 3, 2015, First Busey’s board of directors authorized the Company to repurchase up to an aggregate of 666,667 shares of its common stock. The repurchase plan has no expiration date. On May 22, 2019, First Busey’s board of directors approved an amendment to increase the authorized shares under the repurchase program by 1,000,000 shares, and on February 5, 2020, First Busey’s board of directors approved another amendment to increase the authorized shares under the repurchase program by an additional 2,000,000 shares. During the ~~second~~third quarter of 2022, the Company purchased ~~70,000~~130,000 shares under the plan. As of ~~June~~September 30, 2022, the Company had ~~277,210~~147,210 shares that may still be purchased under the plan.

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
April 1-30, 2022

4,000

$
25.92

4,000

343,210
May 1-31, 2022

—

$
—

—

343,210
June 1-30, 2022

66,000

$
22.73

66,000

277,210
Three Months Ended June 30, 2022

70,000

$
22.91

70,000

Six Months Ended June 30, 2022

258,614

$
26.39

258,614

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
July 1-31, 2022 106,000 $ 23.58 106,000 171,210
August 1-31, 2022 24,000 $ 24.50 24,000 147,210
September 1-30, 2022 — $ — — 147,210
Three months ended September 30, 2022 130,000 $ 23.75 130,000
Nine months ended September 30, 2022 388,614 $ 25.50 388,614

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

~~None.~~

None.

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ITEM 6. EXHIBITS

Exhibit
Number

~~Exhibit~~
~~Number~~

Description of Exhibit

Filed
Herewith

31.1

Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a)

31.2

Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a)

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, from First Busey’s Chief Executive Officer

32.2

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, from First Busey’s Chief Financial Officer

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

~~104~~

104.0

Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: November 3, 2022		FIRST BUSEY CORPORATION			(Registrant)
~~Date: August 4, 2022~~			~~FIRST BUSEY CORPORATION~~ ~~(Registrant)~~
		By:
	~~By:~~	/s/ VAN A. DUKEMAN
				Van A. Dukeman
				Chairman, President and Chief Executive Officer (Principal Executive Officer)

		By:	~~By:~~	/s/ JEFFREY D. JONES
				Jeffrey D. Jones
				Chief Financial Officer (Principal Financial Officer)

		By:	~~By:~~	/s/ LYNETTE M. STRODE
				Lynette M. Strode
				Principal Accounting Officer


	As of
	June 30,		December 31,
	2022		2021
Assets
Cash and cash equivalents:
Cash and due from banks	$	131,113	$	102,983
Interest-bearing deposits		99,739		733,112
Total cash and cash equivalents		230,852		836,095

Debt securities available for sale		2,744,646		3,981,251
Debt securities held to maturity		953,012		—
Equity securities		11,264		13,571
Loans held for sale (2022 at LOCOM, 2021 at fair value)		4,813		23,875
Portfolio loans (net of ACL of $88,757 at June 30, 2022, and $87,887 at December 31, 2021)		7,409,021		7,101,111
Premises and equipment, net		130,892		136,147
Right of use assets		8,615		10,533
Goodwill		317,873		317,873
Other intangible assets, net		52,089		58,051
Cash surrender value of bank owned life insurance		178,575		176,940
Other assets		314,781		204,242
Total assets	$	12,356,433	$	12,859,689

Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Noninterest-bearing	$	3,505,299	$	3,670,267
Interest-bearing		6,891,929		7,098,310
Total deposits		10,397,228		10,768,577

Securities sold under agreements to repurchase		228,383		270,139
Short-term borrowings		16,396		17,678
Long-term debt		36,000		46,056
Senior notes, net of unamortized issuance costs		—		39,944
Subordinated notes, net of unamortized issuance costs		281,304		182,773
Junior subordinated debt owed to unconsolidated trusts		71,721		71,635
Lease liabilities		8,655		10,591
Other liabilities		154,789		133,184
Total liabilities		11,194,476		11,540,577

Outstanding commitments and contingent liabilities (see Notes 9 and 15)

Stockholders’ Equity
Common stock, ($.001 par value; 100,000,000 shares authorized)		58		58
Additional paid-in capital		1,317,675		1,316,984
Retained earnings		124,685		92,463
AOCI		(211,107)		(23,758)
Total stockholders’ equity before treasury stock		1,231,311		1,385,747

Treasury stock at cost		(69,354)		(66,635)
Total stockholders’ equity		1,161,957		1,319,112
Total liabilities and stockholders’ equity	$	12,356,433	$	12,859,689

Shares
Common shares issued		58,116,970		58,116,970
Less treasury shares		(2,781,267)		(2,682,060)
Common shares outstanding		55,335,703		55,434,910


	Three Months Ended June 30, 2022
								Accumulated
				Additional				Other				Total
		Common		Paid-in		Retained		Comprehensive		Treasury		Stockholders'
	Shares	Stock		Capital		Earnings		Income (Loss)		Stock		Equity
Balance, March 31, 2022	55,278,785	$	58	$	1,318,701	$	107,890	$	(137,605)	$	(71,019)	$	1,218,025
Net income	—		—		—		29,824		—		—		29,824
OCI, net of tax	—		—		—		—		(73,502)		—		(73,502)
Repurchase of stock	(70,000)		—		—		—		—		(1,604)		(1,604)
Issuance of treasury stock for ESPP	13,900		—		(88)		—		—		358		270
Net issuance of treasury stock for restricted/deferred stock unit vesting and related tax	113,018		—		(3,590)		—		—		2,911		(679)
Cash dividends on common stock at $0.23 per share	—		—		—		(12,713)		—		—		(12,713)
Stock dividend equivalents on RSUs at $0.23 per share	—		—		316		(316)		—		—		—
Stock-based compensation	—		—		2,336		—		—		—		2,336
Balance, June 30, 2022	55,335,703	$	58	$	1,317,675	$	124,685	$	(211,107)	$	(69,354)	$	1,161,957


	Six Months Ended June 30, 2022
								Accumulated
				Additional				Other				Total
		Common		Paid-in		Retained		Comprehensive		Treasury		Stockholders'
	Shares	Stock		Capital		Earnings		Income (Loss)		Stock		Equity
Balance, December 31, 2021	55,434,910	$	58	$	1,316,984	$	92,463	$	(23,758)	$	(66,635)	$	1,319,112
Net income	—		—		—		58,263		—		—		58,263
OCI, net of tax	—		—		—		—		(187,349)		—		(187,349)
Repurchase of stock	(258,614)		—		—		—		—		(6,824)		(6,824)
Issuance of treasury stock for ESPP	39,040		—		(194)		—		—		1,005		811
Net issuance of treasury stock for RSU/DSU vesting and related tax	120,367		—		(3,949)		—		—		3,100		(849)
Cash dividends on common stock at $0.46 per share	—		—		—		(25,452)		—		—		(25,452)
Stock dividend equivalents on RSUs at $0.46 per share	—		—		589		(589)		—		—		—
Stock-based compensation	—		—		4,245		—		—		—		4,245
Balance, June 30, 2022	55,335,703	$	58	$	1,317,675	$	124,685	$	(211,107)	$	(69,354)	$	1,161,957


	Three Months Ended June 30, 2021
						Retained		Accumulated
				Additional		Earnings		Other				Total
		Common		Paid-in		(Accumulated		Comprehensive		Treasury		Stockholders'
	Shares	Stock		Capital		Deficit)		Income (Loss)		Stock		Equity
Balance, March 31, 2021	54,345,379	$	56	$	1,255,044	$	45,897	$	3,821	$	(38,996)	$	1,265,822
Net income	—		—		—		29,766		—		—		29,766
OCI, net of tax	—		—		—		—		6,904		—		6,904
Stock issued in acquisition, net of stock issuance costs	2,206,237		2		58,982		—		—		—		58,984
Repurchase of stock	(221,000)		—		—		—		—		(5,738)		(5,738)
Cash dividends on common stock at $0.23 per share	—		—		—		(12,484)		—		—		(12,484)
Stock dividend equivalents on RSUs at $0.23 per share	—		—		253		(253)		—		—		—
Stock-based compensation	—		—		2,437		—		—		—		2,437
Balance, June 30, 2021	56,330,616	$	58	$	1,316,716	$	62,926	$	10,725	$	(44,734)	$	1,345,691


	Six Months Ended June 30, 2021
						Retained		Accumulated
				Additional		Earnings		Other				Total
		Common		Paid-in		(Accumulated		Comprehensive		Treasury		Stockholders'
	Shares	Stock		Capital		Deficit)		Income (Loss)		Stock		Equity
Balance, December 31, 2020	54,404,379	$	56	$	1,253,360	$	20,830	$	33,309	$	(37,486)	$	1,270,069
Net income	—		—		—		67,582		—		—		67,582
OCI, net of tax	—		—		—		—		(22,584)		—		(22,584)
Stock issued in acquisition, net of stock issuance costs	2,206,237		2		58,982								58,984
Repurchase of stock	(280,000)		—		—		—		—		(7,248)		(7,248)
Cash dividends on common stock at $0.46 per share	—		—		—		(24,997)		—		—		(24,997)
Stock dividend equivalents on RSUs at $0.46 per share	—		—		489		(489)		—		—		—
Stock-based compensation	—		—		3,885		—		—		—		3,885
Balance, June 30, 2021	56,330,616	$	58	$	1,316,716	$	62,926	$	10,725	$	(44,734)	$	1,345,691


	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


	As of June 30, 2022
	Amortized		Unrealized				Fair
	Cost		Gross Gains		Gross Losses		Value
Debt securities available for sale
U.S. Treasury securities	$	151,222	$	1	$	(4,083)	$	147,140
Obligations of U.S. government corporations and agencies		29,867		53		(81)		29,839
Obligations of states and political subdivisions		305,545		455		(18,388)		287,612
Asset-backed securities		490,932		—		(22,803)		468,129
Commercial mortgage-backed securities		105,584		—		(7,222)		98,362
Residential mortgage-backed securities		1,599,774		50		(158,667)		1,441,157
Corporate debt securities		293,667		49		(21,309)		272,407
Total debt securities available for sale	$	2,976,591	$	608	$	(232,553)	$	2,744,646

Debt securities held to maturity
Commercial mortgage-backed securities	$	492,924	$	—	$	(38,687)	$	454,237
Residential mortgage-backed securities		460,088		—		(37,587)		422,501
Total debt securities held to maturity	$	953,012	$	—	$	(76,274)	$	876,738


	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


	As of June 30, 2022
	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	$	21,976	$	(154)	$	124,094	$	(3,929)	$	146,070	$	(4,083)
Obligations of U.S. government corporations and agencies		17,078		(81)		—		—		17,078		(81)
Obligations of states and political subdivisions		192,737		(16,868)		11,056		(1,520)		203,793		(18,388)
Asset-backed securities		465,293		(22,632)		2,835		(171)		468,128		(22,803)
Commercial mortgage-backed securities		91,564		(6,560)		6,798		(662)		98,362		(7,222)
Residential mortgage-backed securities		1,035,112		(96,222)		399,554		(62,445)		1,434,666		(158,667)
Corporate debt securities		178,170		(14,790)		83,656		(6,519)		261,826		(21,309)
Debt securities available for sale with gross unrealized losses	$	2,001,930	$	(157,307)	$	627,993	$	(75,246)	$	2,629,923	$	(232,553)

Debt securities held to maturity
Commercial mortgage-backed securities	$	241,060	$	(19,840)	$	213,177	$	(18,847)	$	454,237	$	(38,687)
Residential mortgage-backed securities		382,897		(33,909)		39,603		(3,678)		422,500		(37,587)
Debt securities held to maturity with gross unrealized losses	$	623,957	$	(53,749)	$	252,780	$	(22,525)	$	876,737	$	(76,274)


	As of June 30, 2022
	Available for Sale			Held to Maturity			Total
Debt securities with gross unrealized losses, fair value	$	2,629,923		$	876,737		$	3,506,660
Gross unrealized losses on debt securities	$	232,553		$	76,274		$	308,827
Ratio of gross unrealized losses to debt securities with gross unrealized losses		8.8	%		8.7	%		8.8	%

Count of debt securities		1,177			55			1,232
Count of debt securities in an unrealized loss position		881			55			936


	As of June 30, 2022
					Special				Substandard
	Pass		Watch		Mention		Substandard		Non-accrual		Total
Portfolio loans
Commercial	$	1,743,101	$	86,902	$	44,434	$	38,425	$	6,818	$	1,919,680
Commercial real estate		2,867,188		265,920		47,867		40,879		6,236		3,228,090
Real estate construction		450,887		12,848		3		2,400		47		466,185
Retail real estate		1,574,634		7,847		2,022		3,759		2,651		1,590,913
Retail other		292,822		—		—		—		88		292,910
Total portfolio loans	$	6,928,632	$	373,517	$	94,326	$	85,463	$	15,840	$	7,497,778


	As of June 30, 2022
	Term Loans Amortized Cost Basis by Origination Year													Revolving
Risk Grade Ratings	2022		2021		2020		2019		2018			Prior		Loans		Total
Commercial
Pass	$	318,589	$	351,192	$	154,862	$	65,399	$	57,255	$	159,597	$	636,207	$	1,743,101
Watch		16,715		21,174		3,974		8,795		1,416		3,106		31,722		86,902
Special Mention		1,754		737		1,458		1,011		3,301		17,611		18,562		44,434
Substandard		3,332		1,408		2,754		7,212		597		5,486		17,636		38,425
Substandard non-accrual		—		3,766		326		139		—		519		2,068		6,818
Total commercial		340,390		378,277		163,374		82,556		62,569		186,319		706,195		1,919,680

Commercial real estate
Pass		594,333		921,519		529,485		341,259		186,369		273,412		20,811		2,867,188
Watch		44,855		26,003		50,638		95,099		20,877		22,983		5,465		265,920
Special Mention		5,777		5,412		13,455		842		6,630		15,482		269		47,867
Substandard		11,864		12,820		3,009		1,814		10,419		953		—		40,879
Substandard non-accrual		—		4,210		162		—		1,851		13		—		6,236
Total commercial real estate		656,829		969,964		596,749		439,014		226,146		312,843		26,545		3,228,090
													��
Real estate construction
Pass		131,894		187,283		86,891		23,572		2,495		2,256		16,496		450,887
Watch		3,299		4,592		3,419		51		—		1,487		—		12,848
Special Mention		—		—		—		3		—		—		—		3
Substandard		—		—		2,400		—		—		—		—		2,400
Substandard non-accrual		—		—		47		—		—		—		—		47
Total real estate construction		135,193		191,875		92,757		23,626		2,495		3,743		16,496		466,185

Retail real estate
Pass		253,800		472,480		187,596		82,372		64,928		302,911		210,547		1,574,634
Watch		1,196		1,185		1,990		1,584		1,168		134		590		7,847
Special Mention		144		1,878		—		—		—		—		—		2,022
Substandard		—		1,184		215		87		15		2,175		83		3,759
Substandard non-accrual		—		436		115		—		43		1,653		404		2,651
Total retail real estate		255,140		477,163		189,916		84,043		66,154		306,873		211,624		1,590,913

Retail other
Pass		103,386		51,497		17,208		19,075		10,189		3,438		88,029		292,822
Substandard non-accrual		—		88		—		—		—		—		—		88
Total retail other		103,386		51,585		17,208		19,075		10,189		3,438		88,029		292,910

Total portfolio loans	$	1,490,938	$	2,068,864	$	1,060,004	$	648,314	$	367,553	$	813,216	$	1,048,889	$	7,497,778


	As of June 30, 2022
	Loans past due, still accruing						Non-accrual
	30-59 Days		60-89 Days		90+Days		Loans
Past due and non-accrual loans
Commercial	$	209	$	24	$	625	$	6,818
Commercial real estate		356		—		—		6,236
Real estate construction		—		—		—		47
Retail real estate		2,428		1,990		1,019		2,651
Retail other		143		7		10		88
Total past due and non-accrual loans	$	3,136	$	2,021	$	1,654	$	15,840


	As of June 30, 2022				As of December 31, 2021
	Number of		Recorded		Number of		Recorded
	Contracts		Investment		Contracts		Investment
COVID-19 loan modifications
Commercial loans:
Interest-only deferrals		11	$	31,925		32	$	128,730
Retail loans:
Mortgage and personal loan deferrals		1		99		2		137
Total COVID-19 loans modifications		12	$	32,024		34	$	128,867


	As of June 30, 2022
	Unpaid		Recorded Investment								Average
	Principal		With No		With				Related		Recorded
	Balance		Allowance		Allowance		Total		Allowance		Investment
Loans evaluated individually
Commercial	$	10,282	$	932	$	6,092	$	7,024	$	2,826	$	8,317
Commercial real estate		8,099		1,923		4,100		6,023		2,000		5,748
Real estate construction		262		262		—		262		—		272
Retail real estate		2,290		2,121		25		2,146		25		2,890
Total loans evaluated individually	$	20,933	$	5,238	$	10,217	$	15,455	$	4,851	$	17,227


	Three Months Ended June 30, 2022
			Commercial		Real Estate		Retail
	Commercial		Real Estate		Construction		Real Estate		Retail Other		Total
ACL balance, March 31, 2022	$	24,173	$	37,339	$	5,705	$	17,555	$	3,441	$	88,213
Provision for credit losses		(743)		1,028		(63)		312		1,119		1,653
Charged-off		(208)		(1,372)		—		(17)		(82)		(1,679)
Recoveries		137		187		27		134		85		570
ACL balance, June 30, 2022	$	23,359	$	37,182	$	5,669	$	17,984	$	4,563	$	88,757


	As of June 30, 2022
	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	$	1,912,656	$	7,024	$	1,919,680	$	20,533	$	2,826	$	23,359
Commercial real estate		3,222,067		6,023		3,228,090		35,182		2,000		37,182
Real estate construction		465,923		262		466,185		5,669		—		5,669
Retail real estate		1,588,767		2,146		1,590,913		17,959		25		17,984
Retail other		292,910		—		292,910		4,563		—		4,563
Portfolio loans and related ACL	$	7,482,323	$	15,455	$	7,497,778	$	83,906	$	4,851	$	88,757


	As of
	June 30, 2022
Time deposits by schedule of maturities
Remainder of 2022	$	362,919
2023		315,505
2024		89,743
2025		21,570
2026		18,018
2027		9,413
Thereafter		653
Time deposits	$	817,821


	As of September 30, 2022
Time deposits by schedule of maturities
Remainder of 2022	$	188,332
2023	431,060
2024	126,309
2025	23,078
2026	17,910
2027	12,844
Thereafter	654
Time deposits	$	800,187


	As of June 30, 2022
									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	$	1,031,356	11.77	%	$	394,196	4.50	%	$	569,394	6.50	%
Busey Bank	$	1,265,418	14.50	%	$	392,637	4.50	%	$	567,142	6.50	%

Tier 1 Capital to Risk Weighted Assets
Consolidated	$	1,105,356	12.62	%	$	525,594	6.00	%	$	700,792	8.00	%
Busey Bank	$	1,265,418	14.50	%	$	523,516	6.00	%	$	698,021	8.00	%

Total Capital to Risk Weighted Assets
Consolidated	$	1,452,813	16.58	%	$	700,792	8.00	%	$	875,990	10.00	%
Busey Bank	$	1,339,875	15.36	%	$	698,021	8.00	%	$	872,526	10.00	%

Leverage Ratio of Tier 1 Capital to Average Assets
Consolidated	$	1,105,356	9.03	%	$	489,513	4.00	%		N/A	N/A
Busey Bank	$	1,265,418	10.37	%	$	488,139	4.00	%	$	610,174	5.00	%


					Weighted-
			Weighted-		Average
			Average		Remaining
			Exercise		Contractual
	Shares		Price		Life
Options outstanding at December 31, 2021		31,386	$	23.53		4.88
Expired		(220)		23.53
Options outstanding at June 30, 2022		31,166	$	23.53		4.38

Options exercisable at June 30, 2022		31,166	$	23.53		4.38


	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 December 31, 2021		1,147,927	$	23.97		113,915	$	22.86		34,135	$	24.59
Granted		156,483		25.79		195,240		25.79		32,658		25.79
Dividend equivalents earned		22,800		24.52		—		—		2,797		24.38
Vested		(136,084)		29.27		—		—		(39,065)		24.67
Forfeited		(23,966)		23.65		(2,339)		24.30		—		—
Nonvested at June 30, 2022		1,167,160	$	23.62		306,816	$	24.71		30,525	$	25.76

Vested and outstanding at June 30, 2022										115,208	$	22.80


	As of June 30, 2022
	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	$	74,892	$	1,798	$	368,937	$	21,761
Interest rate swaps – pay fixed, receive floating		368,937		21,761		74,892		1,798
Total derivatives not designated as hedging instruments	$	443,829	$	23,559	$	443,829	$	23,559


		Three Months Ended June 30,				Six Months Ended June 30,
	Location	2022		2021		2022		2021
Interest rate swaps
Pay floating, receive fixed	Noninterest expense	$	7,025	$	1,264	$	3,475	$	(9,331)
Pay fixed, receive floating	Noninterest expense		(7,025)		(1,264)		(3,475)		9,331
Net change in fair value of interest rate swaps		$	—	$	—	$	—	$	—


	As of June 30, 2022
	Level 1		Level 2		Level 3		Total
	Inputs		Inputs		Inputs		Fair Value
Debt securities available for sale:
U.S. Treasury securities	$	—	$	147,140	$	—	$	147,140
Obligations of U.S. government corporations and agencies		—		29,839		—		29,839
Obligations of states and political subdivisions		—		287,612		—		287,612
Asset-backed securities		—		468,129		—		468,129
Commercial mortgage-backed securities		—		98,362		—		98,362
Residential mortgage-backed securities		—		1,441,157		—		1,441,157
Corporate debt securities		—		272,407		—		272,407
Equity securities		—		11,264		—		11,264
Derivative assets		—		25,126		3		25,129
Derivative liabilities		—		43,074		—		43,074


	As of June 30, 2022
	Fair Value		Valuation	Unobservable	Range
	Estimate		Techniques	Input	(Weighted Average)
Quantitative Information about Level 3 Fair Value Measurements
Loans evaluated individually, net of related allowance	$	5,366	Appraisal of collateral	Appraisal adjustments	-39.8	%	to	-100.0	%	(-47.5)	%
OREO with subsequent impairment		274	Appraisal of collateral	Appraisal adjustments	-16.0	%	to	-100.0	%	(-35.4)	%
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 June 30, 2022				As of December 31, 2021
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets
Level 1 inputs:
Cash and cash equivalents	$	230,852	$	230,852	$	836,095	$	836,095
Level 2 inputs:
Debt securities held to maturity		953,012		876,738		—		—
Loans held for sale ⁽¹⁾		4,813		4,818		—		—
Accrued interest receivable		32,886		32,886		31,064		31,064
Level 3 inputs:
Portfolio loans, net		7,409,021		7,293,303		7,101,111		7,161,466
Mortgage servicing rights		7,282		17,967		8,608		12,133
Other servicing rights		1,829		2,235		1,830		2,268

Financial liabilities
Level 2 inputs:
Time deposits	$	817,821	$	800,416	$	935,649	$	935,778
Securities sold under agreements to repurchase		228,383		228,383		270,139		270,139
Short-term borrowings		16,396		16,480		17,678		17,673
Long-term debt		36,000		36,101		46,056		46,164
Junior subordinated debt owed to unconsolidated trusts		71,721		61,349		71,635		63,586
Accrued interest payable		1,978		1,978		2,728		2,728
Level 3 inputs:
Senior notes, net of unamortized issuance costs		—		—		39,944		40,400
Subordinated notes, net of unamortized issuance costs		281,304		280,275		182,773		195,600


	Goodwill				Total Assets
	As of				As of
	June 30,		December 31,		June 30,		December 31,
	2022		2021		2022		2021
Operating segment
Banking	$	294,773	$	294,773	$	12,226,414	$	12,746,833
FirsTech		8,992		8,992		47,209		47,481
Wealth Management		14,108		14,108		75,985		65,587
Other		—		—		6,825		(212)
Consolidated total	$	317,873	$	317,873	$	12,356,433	$	12,859,689


	As of
	June 30, 2022
Rent commitments
Remainder of 2022	$	1,066
2023		1,833
2024		1,500
2025		1,265
2026		995
2027		701
Thereafter		1,853
Total undiscounted cash flows		9,213
Less: Amounts representing interest		558
Present value of net future minimum lease payments	$	8,655


OVERVIEW		57
~~OVERVIEW~~	54
CURRENT EVENTS		57
~~EXECUTIVE SUMMARY~~	54
EXECUTIVE SUMMARY		~~Operating Results~~58	54
	~~Acquisitions~~Operating Results	54 58
	Acquisitions	58
	Non-operating Expenses and Non-GAAP Measures	55 58
	Banking Center Markets	55 59
	Net Interest Income	55 59
	Noninterest Income	60 64
	Noninterest Expense	62 66

FINANCIAL CONDITION		65 69
	Balance Sheet	65 69
	Portfolio Loans	65 69
	Deposits	70 74

LIQUIDITY		70 74

OFF-BALANCE SHEET ARRANGEMENTS		71 75

CAPITAL RESOURCES		71 75

NON-GAAP FINANCIAL INFORMATION		72 76

FORWARD LOOKING STATEMENTS		79 83

CRITICAL ACCOUNTING ESTIMATES		79 83
	Fair Value of Debt Securities Available for Sale	79 83
	Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations	80 84
	Goodwill	80 84
	Income Taxes	81 85
	Allowance for Credit Losses	81 85

Nevada

~~37-1078406~~

(State or other jurisdiction of incorporation
or organization)

(I.R.S. Employer Identification No.)

100 W. University Ave.
Champaign,, Illinois

(Address of principal executive offices)

(Zip code)