株探米国株
英語
エドガーで原本を確認する
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Table of Contents
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 30, 2023
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)
Nevada 37-1078406
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
100 W. University Ave.
Champaign, Illinois
61820
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code: (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 ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  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
Outstanding at August 3, 2023
Common Stock, $.001 par value 55,281,483
Table of Contents
FIRST BUSEY CORPORATION
FORM 10-Q
June 30, 2023

Table of Contents
2
Table of Contents
GLOSSARY
We use acronyms, abbreviations, and other terms throughout this Quarterly Report, as defined in the glossary below:
Term Definition
2020 Equity Plan
First Busey's 2020 Equity Incentive Plan
ACL Allowance for credit losses
Amended 2020 Equity Plan
First Busey's Amended 2020 Equity Incentive Plan
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
bps basis points
CAC Cummins-American Corp.
CECL ASU 2016-13, codified as ASC Topic 326 “Financial Instruments-Credit Losses,” which established the Current Expected Credit Losses methodology for measuring credit losses on financial instruments
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”
FASB Financial Accounting Standards Board
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, together with 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
LIBOR London Interbank Offered Rate
Nasdaq National Association of Securities Dealers Automated Quotations
NMTC New Markets Tax Credit
OCI Other comprehensive income (loss)
OREO Other real estate owned
PCD Purchased credit deteriorated
PPP Paycheck Protection Program
3
Table of Contents
Term Definition
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
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
4
Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
5
Table of Contents
FIRST BUSEY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(dollars in thousands)
As of
June 30,
2023		 December 31,
2022
Assets
Cash and cash equivalents:
Cash and due from banks $ 141,984  $ 117,513 
Interest-bearing deposits 90,719  109,651 
Total cash and cash equivalents 232,703  227,164 
Debt securities available for sale 2,283,848  2,461,393 
Debt securities held to maturity 894,102  918,312 
Equity securities 9,034  11,535 
Loans held for sale 1,545  1,253 
Portfolio loans (net of ACL of $91,639 at June 30, 2023, and $91,608 at December 31, 2022)
 7,713,645  7,634,094 
Premises and equipment, net 122,669  126,524 
Right of use assets 11,806  12,829 
Goodwill 317,873  317,873 
Other intangible assets, net 41,025  46,423 
Cash surrender value of bank owned life insurance 180,950  180,485 
Other assets 399,829  398,792 
Total assets $ 12,209,029  $ 12,336,677 
Liabilities and stockholders’ equity
Liabilities
Deposits:
Noninterest-bearing $ 3,086,885  $ 3,393,666 
Interest-bearing 6,975,870  6,677,614 
Total deposits 10,062,755  10,071,280 
Securities sold under agreements to repurchase 202,953  229,806 
Short-term borrowings 212,000  351,054 
Long-term debt 24,000  30,000 
Subordinated notes, net of unamortized issuance costs 222,454  222,038 
Junior subordinated debt owed to unconsolidated trusts 71,900  71,810 
Lease liabilities 12,059  12,995 
Other liabilities 198,960  201,717 
Total liabilities 11,007,081  11,190,700 
Outstanding commitments and contingent liabilities (see Notes 4 and 9)
Stockholders’ equity
Common stock, ($.001 par value; 100,000,000 shares authorized)
 58  58 
Additional paid-in capital 1,325,173  1,320,980 
Retained earnings 207,660  168,769 
AOCI (260,921) (273,278)
Total stockholders’ equity before treasury stock 1,271,970  1,216,529 
Treasury stock at cost (70,022) (70,552)
Total stockholders’ equity 1,201,948  1,145,977 
Total liabilities and stockholders’ equity $ 12,209,029  $ 12,336,677 
Shares
Common shares issued 58,116,969  58,116,970 
Less: Treasury shares (2,826,122) (2,837,846)
Common shares outstanding 55,290,847  55,279,124 
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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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,
2023 2022 2023 2022
Interest income
Interest and fees on loans $ 94,804  $ 65,567  $ 184,579  $ 126,449 
Interest and dividends on investment securities:
Taxable interest income 20,076  15,840  39,675  29,934 
Non-taxable interest income 708  831  1,451  1,669 
Other interest income 1,311  358  2,299  635 
Total interest income 116,899  82,596  228,004  158,687 
Interest expense
Deposits 26,768  2,146  41,508  4,270 
Federal funds purchased and securities sold under agreements to repurchase 1,223  147  2,445  206 
Short-term borrowings 5,741  147  10,563  236 
Long-term debt 452  261  906  487 
Senior notes —  237  —  637 
Subordinated notes 3,100  3,022  6,197  5,505 
Junior subordinated debt owed to unconsolidated trusts 945  708  1,858  1,362 
Total interest expense 38,229  6,668  63,477  12,703 
Net interest income 78,670  75,928  164,527  145,984 
Provision for credit losses 627  1,653  1,580  1,400 
Net interest income after provision for credit losses 78,043  74,275  162,947  144,584 
Noninterest income
Wealth management fees 14,562  14,135  29,359  29,914 
Fees for customer services 7,239  9,588  14,058  18,495 
Payment technology solutions 5,231  4,888  10,546  9,965 
Mortgage revenue 272  284  560  1,259 
Income on bank owned life insurance 1,029  874  2,681  1,758 
Realized net gains (losses) on securities (178) 20  (174) 126 
Unrealized net gains (losses) recognized on equity securities (1,881) (1,734) (2,501) (2,454)
Other income 1,738  2,964  5,331  7,728 
Total noninterest income 28,012  31,019  59,860  66,791 
Noninterest expense
Salaries, wages, and employee benefits 39,859  38,110  80,190  77,464 
Data processing 5,902  5,375  11,542  10,353 
Net occupancy expense of premises 4,540  4,720  9,302  9,787 
Furniture and equipment expenses 1,681  2,045  3,427  4,075 
Professional fees 973  1,607  3,031  3,114 
Amortization of intangible assets 2,669  2,951  5,398  5,962 
Interchange expense 1,870  1,487  3,723  3,032 
FDIC insurance 1,506  1,153  3,008  2,226 
Other expense 10,205  11,644  19,987  23,455 
Total noninterest expense 69,205  69,092  139,608  139,468 
Income before income taxes 36,850  36,202  83,199  71,907 
Income taxes 7,486  6,378  17,049  13,644 
Net income $ 29,364  $ 29,824  $ 66,150  $ 58,263 
Basic earnings per common share $ 0.53  $ 0.54  $ 1.19  $ 1.05 
Diluted earnings per common share $ 0.52  $ 0.53  $ 1.18  $ 1.04 
Dividends declared per share of common stock $ 0.24  $ 0.23  $ 0.48  $ 0.46 
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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FIRST BUSEY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(dollars in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Net income $ 29,364  $ 29,824  $ 66,150  $ 58,263 
OCI:
Unrealized/Unrecognized gains (losses) on debt securities:
Net unrealized holding gains (losses) on debt securities available for sale, net of taxes of $4,731, $27,162, $(4,018), and $56,888, respectively
 (11,866) (68,126) 10,078  (142,682)
Net unrealized gains (losses) on debt securities transferred to held to maturity from available for sale, net of taxes of $0, $0, $0, and $13,812, respectively
 —  —  —  (34,644)
Reclassification adjustment for realized (gains) losses on debt securities available for sale included in net income, net of taxes of $(51), $(1), $(50), and $29, respectively
 127  3  124  (73)
Amortization of unrecognized losses on securities transferred to held to maturity, net of taxes of $(443), $(629), $(926), and $(881), respectively
 1,113  1,578  2,323  2,209 
Net change in unrealized/unrecognized gains (losses) on debt securities (10,626) (66,545) 12,525  (175,190)
Unrealized gains (losses) on cash flow hedges:
Net unrealized holding gains (losses) on cash flow hedges, net of taxes of $2,406, $2,612, $1,192, and $4,543, respectively
 (6,036) (6,550) (2,986) (11,395)
Reclassification adjustment for realized (gains) losses on cash flow hedges included in net income, net of taxes of $(608), $160, $(1,124), and $303, respectively
 1,525  (407) 2,818  (764)
Net change in unrealized gains (losses) on cash flow hedges (4,511) (6,957) (168) (12,159)
Net change in AOCI (15,137) (73,502) 12,357  (187,349)
Total comprehensive income (loss) $ 14,227  $ (43,678) $ 78,507  $ (129,086)
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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FIRST BUSEY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(dollars in thousands, except per share amounts)
Three Months Ended June 30, 2023
Shares Common
Stock		 Additional
Paid-in
Capital		 Retained
Earnings		 AOCI Treasury
Stock		 Total
Stockholders'
Equity
Balance, March 31, 2023 55,294,455 $ 58  $ 1,322,407  $ 191,924  $ (245,784) $ (70,047) $ 1,198,558 
Net income — — — 29,364 — — 29,364
OCI, net of tax — — — — (15,137) — (15,137)
Repurchase of stock (20,000) — — — — (397) (397)
Issuance of treasury stock for ESPP 10,234 — (88) — — 263 175
Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax 6,158 — (159) — — 159 —
Cash dividends on common stock at $0.24 per share
 — — — (13,271) — — (13,271)
Stock dividend equivalents on RSUs/PSUs/DSUs — — 357 (357) — — —
Stock-based compensation — — 2,656 — — — 2,656
Balance, June 30, 2023 55,290,847 $ 58  $ 1,325,173  $ 207,660  $ (260,921) $ (70,022) $ 1,201,948 
Six Months Ended June 30, 2023
Shares Common
Stock		 Additional
Paid-in
Capital		 Retained
Earnings		 AOCI Treasury
Stock		 Total
Stockholders'
Equity
Balance, December 31, 2022 55,279,124 $ 58  $ 1,320,980  $ 168,769  $ (273,278) $ (70,552) $ 1,145,977 
Net income — — — 66,150 — — 66,150
OCI, net of tax — — — — 12,357 — 12,357
Repurchase of stock (45,000) — — — — (931) (931)
Issuance of treasury stock for ESPP 40,594 — (345) — — 1,045 700
Net issuance of treasury stock for RSU/PSU/DSU vesting and related tax 15,135 — (490) — — 390 (100)
Net issuance of treasury stock for warrants exercised 994 (17) 26 9
Cash dividends on common stock at $0.48 per share
 — — — (26,539) — — (26,539)
Stock dividend equivalents on RSUs/PSUs/DSUs — — 720 (720) — — —
Stock-based compensation — — 4,325 — — — 4,325
Balance, June 30, 2023 55,290,847 $ 58  $ 1,325,173  $ 207,660  $ (260,921) $ (70,022) $ 1,201,948 
(continued)
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FIRST BUSEY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (Continued)
(dollars in thousands, except per share amounts)
Three Months Ended June 30, 2022
Shares   Common
Stock		   Additional
Paid-in
Capital		   Retained
Earnings		   AOCI   Treasury
Stock		   Total
Stockholders'
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 RSU/DSU 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/DSUs 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
Shares Common
Stock		 Additional
Paid-in
Capital		 Retained
Earnings		 AOCI 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 — — — 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/DSUs 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 
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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FIRST BUSEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(dollars in thousands)
Six Months Ended June 30,
2023 2022
Cash flows provided by (used in) operating activities
Net income $ 66,150  $ 58,263 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for credit losses 1,580  1,400 
Amortization of intangible assets 5,398  5,962 
Amortization of mortgage servicing rights 1,472  1,901 
Amortization of NMTC 4,480  3,003 
Depreciation and amortization of premises and equipment 4,694  5,438 
Net amortization (accretion) on portfolio loans 3,653  1,140 
Net amortization (accretion) of premium (discount) on investment securities 8,011  11,069 
Net amortization (accretion) of premium (discount) on time deposits (156) (227)
Net amortization (accretion) of premium (discount) on FHLB advances and other borrowings 506  577 
Impairment of OREO and other repossessed assets 113  611 
Impairment of fixed assets held for sale —  100 
Impairment of mortgage servicing rights —  (9)
Impairment of leases —  84 
Unrealized (gains) losses recognized on equity securities, net 2,501  2,454 
(Gain) loss on sales of equity securities, net —  (24)
(Gain) loss on sales of debt securities, net 174  (102)
(Gain) loss on sales of loans, net (394) (1,451)
(Gain) loss on sales of OREO 4  39 
(Gain) loss on sales of premises and equipment (179) (679)
(Gain) loss on life insurance proceeds (759) — 
(Increase) decrease in cash surrender value of bank owned life insurance (1,922) (1,758)
Provision for deferred income taxes (2,725) (2)
Stock-based compensation 4,325  4,245 
Mortgage loans originated for sale (18,116) (47,305)
Proceeds from sales of mortgage loans 18,208  67,586 
(Increase) decrease in other assets (6,326) (30,313)
Increase (decrease) in other liabilities (5,543) (8,320)
Net cash provided by (used in) operating activities 85,149  73,682 
Cash flows provided by (used in) investing activities
Purchases of equity securities (14) (5,948)
Purchases of debt securities available for sale (7,796) (279,831)
Proceeds from sales of equity securities 14  6,546 
Proceeds from paydowns and maturities of debt securities held to maturity 25,898  33,894 
Proceeds from paydowns and maturities of debt securities available for sale 192,987  273,524 
Purchases of FHLB and other bank stock (30,957) — 
Proceeds from the redemption of FHLB and other bank stock 30,659  — 
Net (increase) decrease in loans (84,900) (310,582)
Cash paid for premiums on bank-owned life insurance (76) (96)
Proceeds from life insurance 2,292  219 
Purchases of premises and equipment (4,523) (2,672)
Proceeds from disposition of premises and equipment 3,863  3,068 
Proceeds from sales of OREO 780  2,469 
Net cash provided by (used in) investing activities 128,227  (279,409)
(continued)
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FIRST BUSEY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)
(dollars in thousands)
Six Months Ended June 30,
2023 2022
Cash flows provided by (used in) financing activities
Net increase (decrease) in deposits $ (8,369) $ (371,122)
Net change in federal funds purchased and securities sold under agreements to repurchase (26,853) (41,756)
Proceeds from FHLB advances 265,000  — 
Repayment of FHLB advances (404,054) (5,336)
Proceeds from other borrowings, net of debt issuance costs —  98,094 
Repayment of other borrowings (6,000) (46,000)
Cash dividends paid (26,539) (25,452)
Purchase of treasury stock (931) (6,824)
Cash paid for withholding taxes on stock-based payments (100) (849)
Proceeds from stock warrants exercised 9  — 
Issuance of treasury stock for ESPP —  (271)
Net cash provided by (used in) financing activities (207,837) (399,516)
Net increase (decrease) in cash and cash equivalents $ 5,539  $ (605,243)
Cash and cash equivalents, beginning of period 227,164  836,095 
Cash and cash equivalents, ending of period $ 232,703  $ 230,852 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 55,665  $ 13,452 
Income taxes 22,060  20,366 
Non-cash investing and financing activities:
OREO acquired in settlement of loans 116  132 
Transfer of debt securities available for sale to held to maturity —  985,199 
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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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 $12.2 billion financial holding company headquartered in Champaign, Illinois. Busey’s common stock is traded on The Nasdaq Global Select Market under the symbol “BUSE.”
First Busey operates and reports its business in three segments: Banking, FirsTech, and Wealth Management.
•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 comprehensive and innovative payment technology solutions including online, mobile, and voice-recognition bill payments; money management and credit card networks; direct debit services; lockbox remittance processing for payments made by mail; and walk-in payments. FirsTech also provides additional tools to help clients with billing, reconciliation, bill reminders, and treasury services.
•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.
For additional information about First Busey's operating segments, see “Note 14. Operating Segments and Related Information.”
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 Busey's 2022 Annual Report. These interim unaudited consolidated financial statements serve to update our 2022 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, Busey’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.
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Impact of Recently Adopted Accounting Standards
In March 2022, the FASB issued ASU 2022-02 “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures,” which 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 310-20-35-9 through 35-11 “Receivables—Nonrefundable Fees and Other Costs—Subsequent Measurement—Loan Refinancing or Restructuring” will apply to all loan modifications, including those made for borrowers experiencing financial difficulty. This standard also enhances disclosure requirements related to certain loan modifications. 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 became effective for Busey beginning January 1, 2023. Adoption of this standard did not have a material impact on Busey’s financial position or results of operations.
In March 2022, the FASB issued ASU 2022-01 “Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method,” which 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 and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This standard became effective for Busey beginning January 1, 2023. Adoption of this standard did not have a material impact on Busey’s financial position or results of operations.
ASU 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” requires measurement and recognition in accordance with ASC Topic 606 “Revenue from Contracts with Customers” for contract assets and contract liabilities acquired in a business combination. This update became effective for Busey beginning January 1, 2023. This standard applies prospectively to all business combinations that occur on or after the date it is adopted. Adoption of this standard did not have an impact on Busey’s financial position or results of operations.
Recently Issued Accounting Standards Not Yet Adopted
In March 2023, the FASB issued ASU 2023-02 “Investments—Equity Method and Joint Ventures (Topic 323),” permitting an election to use the proportional amortization method to account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits, regardless of the tax credit program from which the income tax credits are received, provided that certain conditions are met. The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense. This standard must be applied on a retrospective or modified retrospective basis, and is applicable for Busey beginning on January 1, 2024. Early adoption is permitted. Busey is currently evaluating the potential effect on the Company’s financial position and results of operations, and upon adoption expects changes to be reflected in the Other Expense and Income Taxes line items in the Consolidated Statements of Income.
In March 2023, the FASB issued ASU 2023-01 “Leases (Topic 842): Common Control Arrangements,” which requires amortization over the useful life of leasehold improvements (not the lease term) when the lease is between entities under common control, and any value of such leasehold improvements remaining at the end of the lease term is to be accounted for as a transfer between entities under common control. This standard may be adopted either prospectively, or retrospectively, and is effective for Busey beginning January 1, 2024. Early adoption is permitted. 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)

In June 2022, the FASB issued ASU 2022-03 “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which 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 Busey beginning January 1, 2024. Early adoption is permitted. Busey is currently evaluating the potential effect on the Company’s financial position and results of operations.
Subsequent Events
Busey 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 were no significant subsequent events for the quarter ended June 30, 2023, through the filing date of these unaudited consolidated financial statements.
Note 2: Debt Securities
Busey's portfolio of debt securities includes both available for sale and held to maturity 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, 2023
Amortized
Cost		 Unrealized Fair
Value
Gross Gains Gross Losses
Debt securities available for sale
U.S. Treasury securities $ 61,995  $ —  $ (2,065) $ 59,930 
Obligations of U.S. government corporations and agencies 11,391  2  (281) 11,112 
Obligations of states and political subdivisions1
 262,306  71  (22,622) 239,755 
Asset-backed securities1
 487,190  —  (13,108) 474,082 
Commercial mortgage-backed securities 120,596  —  (16,833) 103,763 
Residential mortgage-backed securities 1,384,992  2  (218,301) 1,166,693 
Corporate debt securities 252,168  104  (23,759) 228,513 
Total debt securities available for sale $ 2,580,638  $ 179  $ (296,969) $ 2,283,848 
___________________________________________
1.Includes securities marked at par, with no gain or loss to report.
Amortized
Cost		 Unrecognized Fair
Value
Gross Gains Gross Losses
Debt securities held to maturity
Commercial mortgage-backed securities $ 463,895  $ —  $ (75,806) $ 388,089 
Residential mortgage-backed securities 430,207  —  (71,794) 358,413 
Total debt securities held to maturity $ 894,102  $ —  $ (147,600) $ 746,502 
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

As of December 31, 2022
Amortized
Cost		 Unrealized Fair
Value
Gross Gains Gross Losses
Debt securities available for sale
U.S. Treasury securities $ 117,805  $ —  $ (3,744) $ 114,061 
Obligations of U.S. government corporations and agencies 20,097  3  (321) 19,779 
Obligations of states and political subdivisions 283,481  106  (26,075) 257,512 
Asset-backed securities 489,558  —  (19,683) 469,875 
Commercial mortgage-backed securities 124,423  —  (16,029) 108,394 
Residential mortgage-backed securities 1,463,971  2  (220,717) 1,243,256 
Corporate debt securities 273,118  33  (24,635) 248,516 
Total debt securities available for sale $ 2,772,453  $ 144  $ (311,204) $ 2,461,393 
Amortized
Cost		 Unrecognized Fair
Value
Gross Gains Gross Losses
Debt securities held to maturity
Commercial mortgage-backed securities $ 474,820  $ —  $ (63,738) $ 411,082 
Residential mortgage-backed securities 443,492  —  (69,279) 374,213 
Total debt securities held to maturity $ 918,312  $ —  $ (133,017) $ 785,295 
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, 2023
Amortized
Cost		 Fair
Value
Debt securities available for sale
Due in one year or less $ 97,674  $ 95,155 
Due after one year through five years 341,606  318,067 
Due after five years through ten years 368,196  333,186 
Due after ten years 1,773,162  1,537,440 
Debt securities available for sale $ 2,580,638  $ 2,283,848 
Debt securities held to maturity
Due after one year through five years $ 63,693  $ 58,693 
Due after five years through ten years 40,943  36,482 
Due after ten years 789,466  651,327 
Debt securities held to maturity $ 894,102  $ 746,502 
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Gains and Losses on Debt Securities Available for Sale
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,
2023 2022 2023 2022
Realized gains and losses on debt securities
Gross gains on debt securities $ —  $ 1  $ 10  $ 114 
Gross (losses) on debt securities (178) (5) (184) (12)
Realized net gains (losses) on debt securities1
 $ (178) $ (4) $ (174) $ 102 
___________________________________________
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.
Debt securities with carrying amounts of $823.6 million on June 30, 2023, and $746.7 million on December 31, 2022, were pledged as collateral for public deposits, securities sold under agreements to repurchase, and for other purposes as required.
Debt Securities in an Unrealized or Unrecognized Loss Position
The following information pertains to debt securities with gross unrealized or unrecognized losses, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (dollars in thousands):
As of June 30, 2023
Less than 12 months 12 months or more Total
Fair
Value		 Unrealized
Losses		 Fair
Value		 Unrealized
Losses		 Fair
Value		 Unrealized
Losses
Debt securities available for sale
U.S. Treasury securities $ 1,168  $ (28) $ 58,762  $ (2,037) $ 59,930  $ (2,065)
Obligations of U.S. government corporations and agencies 4,146  (98) 6,821  (183) 10,967  (281)
Obligations of states and political subdivisions 84,821  (1,112) 142,226  (21,510) 227,047  (22,622)
Asset-backed securities —  —  473,897  (13,108) 473,897  (13,108)
Commercial mortgage-backed securities —  —  103,763  (16,833) 103,763  (16,833)
Residential mortgage-backed securities 30,250  (1,650) 1,136,283  (216,651) 1,166,533  (218,301)
Corporate debt securities 11,453  (962) 211,467  (22,797) 222,920  (23,759)
Debt securities available for sale with gross unrealized losses $ 131,838  $ (3,850) $ 2,133,219  $ (293,119) $ 2,265,057  $ (296,969)
Less than 12 months 12 months or more Total
Fair
Value		 Unrecognized
Losses		 Fair
Value		 Unrecognized
Losses		 Fair
Value		 Unrecognized
Losses
Debt securities held to maturity
Commercial mortgage-backed securities $ —  $ —  $ 388,089  $ (75,806) $ 388,089  $ (75,806)
Residential mortgage-backed securities —  —  358,413  (71,794) 358,413  (71,794)
Debt securities held to maturity with gross unrecognized losses $ —  $ —  $ 746,502  $ (147,600) $ 746,502  $ (147,600)
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

As of December 31, 2022
Less than 12 months 12 months or more Total
Fair
Value		 Unrealized
Losses		 Fair
Value		 Unrealized
Losses		 Fair
Value		 Unrealized
Losses
Debt securities available for sale
U.S. Treasury securities1
 $ 74  $ —  $ 113,987  $ (3,744) $ 114,061  $ (3,744)
Obligations of U.S. government corporations and agencies 19,603  (321) —  —  19,603  (321)
Obligations of states and political subdivisions 166,147  (10,059) 75,217  (16,016) 241,364  (26,075)
Asset-backed securities 390,164  (15,648) 79,711  (4,035) 469,875  (19,683)
Commercial mortgage-backed securities 89,428  (12,623) 18,966  (3,406) 108,394  (16,029)
Residential mortgage-backed securities 366,221  (38,111) 876,668  (182,606) 1,242,889  (220,717)
Corporate debt securities 39,037  (5,079) 204,310  (19,556) 243,347  (24,635)
Debt securities available for sale with gross unrealized losses $ 1,070,674  $ (81,841) $ 1,368,859  $ (229,363) $ 2,439,533  $ (311,204)
Less than 12 months 12 months or more Total
Fair
Value		 Unrecognized
Losses		 Fair
Value		 Unrecognized
Losses		 Fair
Value		 Unrecognized
Losses
Debt securities held to maturity
Commercial mortgage-backed securities $ 58,065  $ (8,009) $ 353,017  $ (55,729) $ 411,082  $ (63,738)
Residential mortgage-backed securities —  —  374,213  (69,279) 374,213  (69,279)
Debt securities held to maturity with gross unrecognized losses $ 58,065  $ (8,009) $ 727,230  $ (125,008) $ 785,295  $ (133,017)
___________________________________________
1.Unrealized losses for U.S. Treasury securities that had been in a continuous unrealized loss position for less than 12 months were insignificant, rounding to zero thousand.
Additional information about debt securities in an unrealized or unrecognized loss position is presented in the tables below (dollars in thousands):
As of June 30, 2023
Available for Sale Held to Maturity Total
Debt securities with gross unrealized or unrecognized losses, fair value $ 2,265,057  $ 746,502  $ 3,011,559 
Gross unrealized or unrecognized losses on debt securities 296,969  147,600  444,569 
Ratio of gross unrealized or unrecognized losses to debt securities with gross unrealized or unrecognized losses 13.1  % 19.8  % 14.8  %
Count of debt securities 1,027  55  1,082 
Count of debt securities in an unrealized or unrecognized loss position 986  55  1,041 
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

As of December 31, 2022
Available for Sale Held to Maturity Total
Debt securities with gross unrealized or unrecognized losses, fair value $ 2,439,533  $ 785,295  $ 3,224,828 
Gross unrealized or unrecognized losses on debt securities 311,204  133,017  444,221 
Ratio of gross unrealized or unrecognized losses to debt securities with gross unrealized or unrecognized losses 12.8  % 16.9  % 13.8  %
Count of debt securities 1,091  55  1,146 
Count of debt securities in an unrealized or unrecognized loss position 1,032  55  1,087 
Unrealized and unrecognized losses were related to changes in market interest rates and market conditions that do not represent credit-related impairments. Busey does not intend to sell securities that are in an unrealized or unrecognized 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 30, 2023, Busey did not hold general obligation bonds of any single issuer, the aggregate of which exceeded 10% of the Company’s stockholders’ equity.
Note 3: Portfolio Loans
Loan Categories
Busey’s lending can be summarized in two primary categories: commercial and retail. Lending is further classified into five primary areas of loans: 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 and class is presented in the following table (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Commercial loans
Commercial $ 1,899,718  $ 1,974,154 
Commercial real estate 3,361,308  3,261,873 
Real estate construction 532,400  530,469 
Total commercial loans 5,793,426  5,766,496 
Retail loans
Retail real estate 1,703,057  1,657,082 
Retail other 308,801  302,124 
Total retail loans 2,011,858  1,959,206 
Total portfolio loans 7,805,284  7,725,702 
ACL (91,639) (91,608)
Portfolio loans, net $ 7,713,645  $ 7,634,094 
Net deferred loan origination costs included in the balances above were $13.4 million as of June 30, 2023, compared to $14.0 million as of December 31, 2022. Net accretable purchase accounting adjustments included in the balances above reduced loans by $5.1 million as of June 30, 2023, and $5.9 million as of December 31, 2022. Commercial balances include loans originated under the PPP with an amortized cost of $0.7 million as of June 30, 2023, and $0.8 million as of December 31, 2022.
Busey did not purchase any retail real estate loans during the three or six months ended June 30, 2023, or 2022.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Pledged Loans
Busey had loans pledged to the FHLB and Federal Reserve for liquidity as set forth in the table below (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Pledged loans
FHLB $ 4,817,800  $ 5,095,448 
Federal Reserve Bank 793,823  804,718 
Total pledged loans $ 5,611,623  $ 5,900,166 
Risk Grading
Busey 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.
•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.
•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.
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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table is a summary of risk grades segregated by category and class of portfolio loans (dollars in thousands):
As of June 30, 2023
Pass Watch Special
Mention		 Substandard Substandard
Non-accrual		 Total
Commercial loans
Commercial $ 1,552,632  $ 267,583  $ 30,528  $ 42,812  $ 6,163  $ 1,899,718 
Commercial real estate 2,954,169  341,825  44,247  16,001  5,066  3,361,308 
Real estate construction 515,598  11,423  —  5,379  —  532,400 
Total commercial loans 5,022,399  620,831  74,775  64,192  11,229  5,793,426 
Retail loans
Retail real estate 1,686,591  10,162  497  1,897  3,910  1,703,057 
Retail other 308,731  —  —  —  70  308,801 
Total retail loans 1,995,322  10,162  497  1,897  3,980  2,011,858 
Total portfolio loans $ 7,017,721  $ 630,993  $ 75,272  $ 66,089  $ 15,209  $ 7,805,284 
As of December 31, 2022
Pass Watch Special
Mention		 Substandard Substandard
Non-accrual		 Total
Commercial loans
Commercial $ 1,668,495  $ 201,758  $ 46,540  $ 51,187  $ 6,174  $ 1,974,154 
Commercial real estate 2,851,709  326,455  43,526  34,539  5,644  3,261,873 
Real estate construction 502,904  25,164  1  2,400  —  530,469 
Total commercial loans 5,023,108  553,377  90,067  88,126  11,818  5,766,496 
Retail loans
Retail real estate 1,639,599  10,520  1,338  2,529  3,096  1,657,082 
Retail other 301,971  —  —  —  153  302,124 
Total retail loans 1,941,570  10,520  1,338  2,529  3,249  1,959,206 
Total portfolio loans $ 6,964,678  $ 563,897  $ 91,405  $ 90,655  $ 15,067  $ 7,725,702 
Risk grades of portfolio loans and net charge-offs are presented in the tables below by loan class, further sorted by origination year (dollars in thousands):
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

As of and For The Six Months Ended June 30, 2023
Term Loans Amortized Cost Basis by Origination Year Revolving
Loans		 Total
Risk Grade Ratings 2023 2022 2021 2020 2019 Prior
Commercial
Pass $ 238,885  $ 258,601  $ 210,737  $ 84,565  $ 52,048  $ 189,011  $ 518,785  $ 1,552,632 
Watch 53,019  66,345  45,506  23,440  6,017  15,102  58,154  267,583 
Special Mention 1,081  1,166  786  1,175  2,362  7,047  16,911  30,528 
Substandard 5,664  1,056  1,182  490  4,168  5,053  25,199  42,812 
Substandard non-accrual 1,050  —  2,797  184  132  —  2,000  6,163 
Total commercial 299,699  327,168  261,008  109,854  64,727  216,213  621,049  1,899,718 
Current period charge-offs —  —  420  —  16  539  —  975 
Commercial real estate
Pass 275,324  862,753  800,484  412,069  290,406  296,497  16,636  2,954,169 
Watch 64,094  41,392  64,833  36,255  79,265  50,306  5,680  341,825 
Special Mention 6,507  1,631  14,350  14,527  3,393  3,839  —  44,247 
Substandard 4,363  198  1,969  3,036  1,827  4,558  50  16,001 
Substandard non-accrual 225  1,174  3,074  28  —  565  —  5,066 
Total commercial real estate 350,513  907,148  884,710  465,915  374,891  355,765  22,366  3,361,308 
Current period charge-offs —  —  —  —  137  936  —  1,073 
Real estate construction
Pass 112,757  183,359  131,457  55,596  1,407  2,978  28,044  515,598 
Watch 860  3,879  3,329  3,311  44  —  —  11,423 
Substandard 5,379  —  —  —  —  —  —  5,379 
Total real estate construction 118,996  187,238  134,786  58,907  1,451  2,978  28,044  532,400 
Current period charge-offs —  —  —  —  —  —  —  — 
Retail real estate
Pass 143,072  391,593  429,040  166,221  73,904  289,770  192,991  1,686,591 
Watch 529  2,764  2,915  990  597  865  1,502  10,162 
Special Mention 54  56  —  —  —  387  —  497 
Substandard 123  74  297  58  82  1,022  241  1,897 
Substandard non-accrual —  368  377  98  103  2,215  749  3,910 
Total retail real estate 143,778  394,855  432,629  167,367  74,686  294,259  195,483  1,703,057 
Current period charge-offs —  5  —  29  —  74  —  108 
Retail other
Pass 62,466  113,226  28,921  9,702  8,400  2,634  83,382  308,731 
Substandard non-accrual —  63  —  3  3  1  —  70 
Total retail other 62,466  113,289  28,921  9,705  8,403  2,635  83,382  308,801 
Current period charge-offs 2  64  137  1  —  168  —  372 
Total portfolio loans $ 975,452  $ 1,929,698  $ 1,742,054  $ 811,748  $ 524,158  $ 871,850  $ 950,324  $ 7,805,284 
Total current period charge-offs $ 2  $ 69  $ 557  $ 30  $ 153  $ 1,717  $ —  $ 2,528 
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

As of December 31, 2022
Term Loans Amortized Cost Basis by Origination Year Revolving
Loans		 Total
Risk Grade Ratings 2022 2021 2020 2019 2018 Prior
Commercial
Pass $ 479,893  $ 266,122  $ 136,445  $ 52,046  $ 50,764  $ 135,000  $ 548,225  $ 1,668,495 
Watch 54,195  49,382  3,288  7,201  1,258  2,160  84,274  201,758 
Special Mention 1,958  937  1,642  974  1,000  17,024  23,005  46,540 
Substandard 8,926  1,165  570  6,671  2,382  5,191  26,282  51,187 
Substandard non-accrual 21  3,292  226  135  —  100  2,400  6,174 
Total commercial 544,993  320,898  142,171  67,027  55,404  159,475  684,186  1,974,154 
Commercial real estate
Pass 883,688  819,133  478,452  297,525  161,409  198,419  13,083  2,851,709 
Watch 77,346  56,113  64,282  96,664  21,592  5,758  4,700  326,455 
Special Mention 11,943  5,389  12,386  1,420  6,917  5,471  —  43,526 
Substandard 5,340  13,528  3,454  1,907  10,248  62  —  34,539 
Substandard non-accrual —  3,959  33  —  1,647  5  —  5,644 
Total commercial real estate 978,317  898,122  558,607  397,516  201,813  209,715  17,783  3,261,873 
Real estate construction
Pass 219,112  191,724  68,015  1,490  1,901  1,751  18,911  502,904 
Watch 8,530  12,019  3,169  48  —  1,398  —  25,164 
Special Mention —  —  —  1  —  —  —  1 
Substandard 2,400  —  —  —  —  —  —  2,400 
Total real estate construction 230,042  203,743  71,184  1,539  1,901  3,149  18,911  530,469 
Retail real estate
Pass 396,547  456,158  175,148  77,569  56,887  267,387  209,903  1,639,599 
Watch 2,928  2,991  1,846  1,444  1,063  27  221  10,520 
Special Mention 945  —  —  —  —  393  —  1,338 
Substandard 77  732  198  81  141  1,293  7  2,529 
Substandard non-accrual 10  191  107  32  390  1,708  658  3,096 
Total retail real estate 400,507  460,072  177,299  79,126  58,481  270,808  210,789  1,657,082 
Retail other
Pass 134,567  43,512  13,141  13,086  5,646  991  91,028  301,971 
Substandard non-accrual 14  134  3  —  —  2  —  153 
Total retail other 134,581  43,646  13,144  13,086  5,646  993  91,028  302,124 
Total portfolio loans $ 2,288,440  $ 1,926,481  $ 962,405  $ 558,294  $ 323,245  $ 644,140  $ 1,022,697  $ 7,725,702 
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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, 2023
Loans past due, still accruing Non-accrual
Loans
30-59 Days 60-89 Days 90+Days
Past due and non-accrual loans
Commercial loans:
Commercial $ 53  $ —  $ —  $ 6,163 
Commercial real estate 610  —  18  5,066 
Past due and non-accrual commercial loans 663  —  18  11,229 
Retail loans:
Retail real estate 2,736  1,424  551  3,910 
Retail other 276  70  —  70 
Past due and non-accrual retail loans 3,012  1,494  551  3,980 
Total past due and non-accrual loans $ 3,675  $ 1,494  $ 569  $ 15,209 
As of December 31, 2022
Loans past due, still accruing Non-accrual
Loans
30-59 Days 60-89 Days 90+Days
Past due and non-accrual loans
Commercial loans:
Commercial $ 2  $ —  $ —  $ 6,174 
Commercial real estate 124  —  —  5,644 
Past due and non-accrual commercial loans 126  —  —  11,818 
Retail loans:
Retail real estate 4,709  1,239  673  3,096 
Retail other 414  60  —  153 
Past due and non-accrual retail loans 5,123  1,299  673  3,249 
Total past due and non-accrual loans $ 5,249  $ 1,299  $ 673  $ 15,067 
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 $0.7 million for the three and six months ended June 30, 2023, respectively, and was $0.3 million and $0.5 million for the three and six months ended June 30, 2022, 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 and six months ended June 30, 2023. Interest collected on these loans and recognized on a cash basis was insignificant for the three months ended June 30, 2022, and was $0.4 million for the six months ended June 30, 2022.
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Loan Modification Disclosures Pursuant to ASU 2022-02
The followings table show the amortized cost basis of loans that were modified for borrowers experiencing financial difficulty during the periods indicated, disaggregated by class of financing receivable and type of concession granted (dollars in thousands):
Three Months Ended June 30, 2023
Payment Deferral1
% of Total Class of Financing Receivable2
Term Extension3
 % of Total Class of Financing Receivable
Loan class:
Commercial $ —  —  % $ 2,717  0.1  %
Commercial real estate 225  —  % 3,031  0.1  %
Real estate construction —  —  % 5,379  1.0  %
Total of loans modified during the period4
 $ 225  —  % $ 11,127  0.1  %
Six Months Ended June 30, 2023
Payment Deferral1
% of Total Class of Financing Receivable2
Term Extension3
 % of Total Class of Financing Receivable
Loan class:
Commercial $ —  —  % $ 16,594  0.9  %
Commercial real estate 225  —  % 4,586  0.1  %
Real estate construction —  —  % 5,379  1.0  %
Total of loans modified during the period4
 $ 225  —  % $ 26,559  0.3  %
___________________________________________
1.A loan with payment deferral was modified to defer all principal payments until the end of the loan term, which was shortened.
2.Loans with payment deferrals represent an insignificant portion of commercial loans and total loans, rounding to zero percent.
3.Modifications to extend loan terms also included, in some cases, interest rate increases during the extension period.
4.Modifications include two loans on non-accrual status, one on special mention status, and the remaining loans were classified as substandard.
The following table summarizes the effects of loan modifications made during the periods indicated, for borrowers experiencing financial difficulty:
Three Months Ended June 30, 2023 Six Months Ended June 30, 2023
Weighted Average Term Extension Weighted Average Term Extension
Loan class:
Commercial
11.5 months
11.4 months
Commercial real estate
6.0 months
8.2 months
Real estate construction
12.0 months
12.0 months
Total financial effect
10.3 months
11.0 months
The following table provides the amortized cost basis of financing receivables that had a payment default during the period and were modified in the 12 months before default for borrowers experiencing financial difficulty (dollars in thousands). A default occurs when a loan is 90 days or more past due or transferred to non-accrual status.
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three and Six Months Ended June 30, 2023
Payment Deferral Term Extension
Loan class:
Commercial $ —  $ 958 
Commercial real estate 225  — 
Amortized cost of modified loans with subsequent defaults $ 225  $ 958 
Busey closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.
The following table depicts the payment performance of loans modified on or after January 1, 2023, the date we adopted ASU 2022-02 (dollars in thousands):
As of June 30, 2023
Current 30-89 Days 90+ Days Non-accrual
Loan class:
Commercial $ 15,636  $ —  $ —  $ 958 
Commercial real estate 4,586  —  —  225 
Real estate construction 5,379  —  —  — 
Amortized cost of modified loans $ 25,601  $ —  $ —  $ 1,183 
TDR Disclosures Prior to the Adoption of ASU 2022-02
At December 31, 2022, performing TDR’s were $3.0 million and non-performing TDR’s were $0.5 million.
One loan was newly designated as a TDR during the three and six months ended June 30, 2022. There were no TDRs entered into during the 12 months ended June 30, 2022, that had subsequent defaults during the three or six months ended June 30, 2022. Gross interest income that would have been recorded in the three and six months ended June 30, 2022, 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 $13.6 million and $14.0 million of collateral dependent loans secured by real estate or business assets as of June 30, 2023, and December 31, 2022, respectively.
Foreclosures
As of June 30, 2023, Busey had $1.1 million of residential real estate in the process of foreclosure. Busey follows Federal Housing Finance Agency guidelines on single-family foreclosures and real estate owned evictions on portfolio loans.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Loans Evaluated Individually
Busey evaluates loans with disparate risk characteristics on an individual basis. The following tables provide details of loans evaluated individually, segregated by loan category and class. 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 June 30, 2023
Unpaid
Principal
Balance		 Recorded Investment Average
Recorded
Investment
With No
Allowance		 With
Allowance		 Total Related
Allowance
Loans evaluated individually
Commercial loans:
Commercial $ 9,583  $ 90  $ 5,938  $ 6,028  $ 2,582  $ 6,362 
Commercial real estate 7,536  4,909  —  4,909  —  5,789 
Real estate construction —  —  —  —  —  153 
Commercial loans evaluated individually 17,119  4,999  5,938  10,937  2,582  12,304 
Retail loans:
Retail real estate 213  60  25  85  25  1,608 
Retail loans evaluated individually 213  60  25  85  25  1,608 
Total loans evaluated individually $ 17,332  $ 5,059  $ 5,963  $ 11,022  $ 2,607  $ 13,912 
As of December 31, 2022
Unpaid
Principal
Balance		 Recorded Investment Average
Recorded
Investment
With No
Allowance		 With
Allowance		 Total Related
Allowance
Loans evaluated individually
Commercial loans:
Commercial $ 9,589  $ 656  $ 5,918  $ 6,574  $ 2,476  $ 6,761 
Commercial real estate 8,039  2,334  3,903  6,237  2,000  5,219 
Real estate construction 247  247  —  247  —  260 
Commercial loans evaluated individually 17,875  3,237  9,821  13,058  4,476  12,240 
Retail loans:
Retail real estate 2,733  2,564  25  2,589  25  2,311 
Retail loans evaluated individually 2,733  2,564  25  2,589  25  2,311 
Total loans evaluated individually $ 20,608  $ 5,801  $ 9,846  $ 15,647  $ 4,501  $ 14,551 
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 Busey’s historical loss experience beginning in 2010. Due to the continued economic uncertainty in the markets in which the Company operates, Busey will continue to utilize a forecast period of 12 months with an immediate reversion to historical loss rates beyond this forecast period in its ACL estimate. PPP loans were excluded from the ACL calculation as they are 100% government guaranteed.
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following tables summarize activity in the ACL attributable to each loan category. 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, 2023
Commercial Commercial
Real Estate		 Real Estate
Construction		 Retail
Real Estate		 Retail Other Total
ACL balance, March 31, 2023 $ 24,276  $ 34,421  $ 5,159  $ 24,255  $ 3,616  $ 91,727 
Provision for credit losses 690  (392) (179) 353  155  627 
Charged-off (575) (534) —  (103) (135) (1,347)
Recoveries 119  161  91  170  91  632 
ACL balance, June 30, 2023 $ 24,510  $ 33,656  $ 5,071  $ 24,675  $ 3,727  $ 91,639 
Six Months Ended June 30, 2023
Commercial Commercial
Real Estate		 Real Estate
Construction		 Retail
Real Estate		 Retail Other Total
ACL balance, December 31, 2022 $ 23,860  $ 38,299  $ 6,457  $ 18,193  $ 4,799  $ 91,608 
Provision for credit losses 1,385  (3,751) (1,508) 6,301  (847) 1,580 
Charged-off (975) (1,073) —  (108) (372) (2,528)
Recoveries 240  181  122  289  147  979 
ACL balance, June 30, 2023 $ 24,510  $ 33,656  $ 5,071  $ 24,675  $ 3,727  $ 91,639 
Three Months Ended June 30, 2022
Commercial Commercial
Real Estate		 Real Estate
Construction		 Retail
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 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 (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 
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following tables present the ACL and amortized cost of portfolio loans by loan category and class (dollars in thousands):
As of June 30, 2023
Portfolio Loans ACL Attributed to Portfolio Loans
Collectively
Evaluated for
Impairment		 Individually
Evaluated for
Impairment		 Total Collectively
Evaluated for
Impairment		 Individually
Evaluated for
Impairment		 Total
Portfolio loans and related ACL
Commercial loans:
Commercial $ 1,893,690  $ 6,028  $ 1,899,718  $ 21,928  $ 2,582  $ 24,510 
Commercial real estate 3,356,399  4,909  3,361,308  33,656  —  33,656 
Real estate construction 532,400  —  532,400  5,071  —  5,071 
Commercial loans and related ACL 5,782,489  10,937  5,793,426  60,655  2,582  63,237 
Retail loans:
Retail real estate 1,702,972  85  1,703,057  24,650  25  24,675 
Retail other 308,801  —  308,801  3,727  —  3,727 
Retail loans and related ACL 2,011,773  85  2,011,858  28,377  25  28,402 
Portfolio loans and related ACL $ 7,794,262  $ 11,022  $ 7,805,284  $ 89,032  $ 2,607  $ 91,639 
As of December 31, 2022
Portfolio Loans ACL Attributed to Portfolio Loans
Collectively
Evaluated for
Impairment		 Individually
Evaluated for
Impairment		 Total Collectively
Evaluated for
Impairment		 Individually
Evaluated for
Impairment		 Total
Portfolio loans and related ACL
Commercial loans:
Commercial $ 1,967,580  $ 6,574  $ 1,974,154  $ 21,384  $ 2,476  $ 23,860 
Commercial real estate 3,255,636  6,237  3,261,873  36,299  2,000  38,299 
Real estate construction 530,222  247  530,469  6,457  —  6,457 
Commercial loans and related ACL 5,753,438  13,058  5,766,496  64,140  4,476  68,616 
Retail loans:
Retail real estate 1,654,493  2,589  1,657,082  18,168  25  18,193 
Retail other 302,124  —  302,124  4,799  —  4,799 
Retail loans and related ACL 1,956,617  2,589  1,959,206  22,967  25  22,992 
Portfolio loans and related ACL $ 7,710,055  $ 15,647  $ 7,725,702  $ 87,107  $ 4,501  $ 91,608 
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 4: Leases
Busey as the Lessee
Busey 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 reported in our Consolidated Balance Sheets for the periods presented (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Lease balances
Right of use assets $ 11,806  $ 12,829 
Lease liabilities 12,059  12,995 
Supplemental information
Year through which lease terms extend 2037 2037
Weighted average remaining lease term, in years 8.71 8.90
Weighted average discount rate 3.51  % 3.45  %
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,
2023 2022 2023 2022
Lease costs
Operating lease costs $ 593  $ 582  $ 1,221  $ 1,199 
Variable lease costs 13  94  18  222 
Short-term lease costs 16  6  22  10 
Total lease cost1
 $ 622  $ 682  $ 1,261  $ 1,431 
Cash flows related to leases
Cash paid for amounts included in the measurement of lease liabilities:
Operating lease cash flows – Fixed payments $ 564  $ 738  $ 1,134  $ 1,369 
Operating lease cash flows – Liability reduction 461  692  940  1,277 
Right of use assets obtained during the period in exchange for operating lease liabilities 5  —  9  55 
___________________________________________
1.Lease costs are included in net occupancy and equipment expense in the Consolidated Statements of Income.
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Busey was obligated under noncancelable operating leases for office space and other commitments, as follows (dollars in thousands):
As of
June 30, 2023
Rent commitments
Remainder of 2023 $ 1,089 
2024 1,935 
2025 1,716 
2026 1,442 
2027 1,276 
2028 1,255 
Thereafter 5,476 
Total undiscounted cash flows 14,189 
Less: Amounts representing interest 2,130 
Present value of net future minimum lease payments $ 12,059 
Busey as the Lessor
Busey occasionally leases parking lots and office space to outside 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,
2023 2022 2023 2022
Rental income $ 183  $ 143  $ 374  $ 373 
Note 5: Deposits
The composition of Busey’s deposits is as follows (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Deposits
Noninterest-bearing demand deposits $ 3,086,885  $ 3,393,666 
Interest-bearing transaction deposits 2,725,297  2,857,818 
Saving deposits and money market deposits 2,778,958  2,964,421 
Time deposits 1,471,615  855,375 
Total deposits $ 10,062,755  $ 10,071,280 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Additional information about Busey’s deposits follows (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Brokered savings deposits and money market deposits $ 6,055  $ 1,303 
Brokered time deposits 280  275 
Aggregate amount of time deposits with a minimum denomination of $100,000
 857,309  416,445 
Aggregate amount of time deposits with a minimum denomination that meets or exceeds the FDIC insurance limit of $250,000
 297,967  120,377 
Scheduled maturities of time deposits are as follows (dollars in thousands):
As of
June 30, 2023
Time deposits by schedule of maturities
Remainder of 2023 $ 405,424 
2024 982,225 
2025 45,768 
2026 18,196 
2027 13,130 
2028 6,328 
Thereafter 544 
Time deposits $ 1,471,615 
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 Busey’s safekeeping agent. Busey 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,
2023		 December 31,
2022
Securities sold under agreements to repurchase $ 202,953  $ 229,806 
Weighted average rate for securities sold under agreements to repurchase 2.64  % 1.91  %
Term Loan
On May 28, 2021, Busey entered into a Second Amended and Restated Credit Agreement, pursuant to which Busey 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. On April 30, 2023, the agreement was further amended to extend the term for the revolving line of credit to April 30, 2024.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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 30, 2023, there was no balance outstanding on the revolving credit facility and a total of $36.0 million outstanding on the term loan, of which $12.0 million was short-term and $24.0 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.
Short-term Borrowings
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
June 30,
2023		 December 31,
2022
Short-term borrowings
FHLB advances maturing in less than one year from date of origination, and the current portion of long-term FHLB advances due within 12 months $ 200,000  $ 339,054 
Term Loan, current portion due within 12 months 12,000  12,000 
Total short-term debt $ 212,000  $ 351,054 
Funds borrowed from the FHLB, listed above, consisted of one note with an interest rate of 5.17% and a maturity period of four days as of June 30, 2023, and four notes with a weighted average interest rate of 4.28% and a weighted average maturity period of five days as of December 31, 2022.
Federal funds purchased are short-term borrowings that generally mature between one day and 90 days. During the first quarter of 2023, Busey purchased federal funds to test operational availability to access funds if needed. Busey had no federal funds purchased as of June 30, 2023, or December 31, 2022.
Long-term Debt
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,
2023		 December 31,
2022
Long-term debt
Term Loan $ 24,000  $ 30,000 
Senior and Subordinated Notes
On June 1, 2020, Busey 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 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. Interest on the subordinated notes is 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

On June 2, 2022, Busey issued $100.0 million aggregate principal amount of 5.000% fixed-to-floating rate subordinated notes 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 accrues 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,
2023		 December 31,
2022
Unamortized debt issuance costs
Subordinated notes issued in 2020 $ 981  $ 1,220 
Subordinated notes issued in 2022 1,565  1,742 
Total unamortized debt issuance costs $ 2,546  $ 2,962 
Note 7: Regulatory Capital
First Busey Corporation and Busey 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 Busey'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 30, 2023, and December 31, 2022, all capital ratios of First Busey Corporation and Busey Bank exceeded well capitalized levels under the applicable regulatory capital adequacy guidelines. Management believes that no events or changes have occurred subsequent to June 30, 2023, that would change this designation.
Current Expected Credit Loss Model
On August 26, 2020, the FDIC and other federal banking agencies adopted a final rule which provided banking organizations that adopted 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. 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. 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 capital purposes, has been added to the deferred transition amounts (“adjusted transition amounts”) and deferred for the two-year period. On January 1, 2022, 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Capital Amounts and Ratios
The following tables summarize regulatory capital requirements applicable to First Busey Corporation and Busey Bank (dollars in thousands):
As of June 30, 2023
Actual Minimum
Capital Requirement		 Minimum
To Be Well
Capitalized
Amount Ratio Amount Ratio Amount Ratio
Common equity Tier 1 capital to risk weighted assets
First Busey $ 1,124,480  12.35  % $ 409,646  4.50  % $ 591,712  6.50  %
Busey Bank $ 1,338,375  14.76  % $ 408,157  4.50  % $ 589,560  6.50  %
Tier 1 capital to risk weighted assets
First Busey $ 1,198,480  13.17  % $ 546,195  6.00  % $ 728,260  8.00  %
Busey Bank $ 1,338,375  14.76  % $ 544,209  6.00  % $ 725,612  8.00  %
Total capital to risk weighted assets
First Busey $ 1,507,454  16.56  % $ 728,260  8.00  % $ 910,325  10.00  %
Busey Bank $ 1,422,349  15.68  % $ 725,612  8.00  % $ 907,015  10.00  %
Leverage ratio of Tier 1 capital to average assets
First Busey $ 1,198,480  9.93  % $ 482,935  4.00  %  N/A N/A
Busey Bank $ 1,338,375  11.12  % $ 481,612  4.00  % $ 602,015  5.00  %
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

As of December 31, 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
First Busey $ 1,081,686  11.96  % $ 406,980  4.50  % $ 587,861  6.50  %
Busey Bank $ 1,306,716  14.49  % $ 405,736  4.50  % $ 586,063  6.50  %
Tier 1 capital to risk weighted assets
First Busey $ 1,155,686  12.78  % $ 542,640  6.00  % $ 723,521  8.00  %
Busey Bank $ 1,306,716  14.49  % $ 540,981  6.00  % $ 721,308  8.00  %
Total capital to risk weighted assets
First Busey $ 1,457,994  16.12  % $ 723,521  8.00  % $ 904,401  10.00  %
Busey Bank $ 1,384,024  15.35  % $ 721,308  8.00  % $ 901,635  10.00  %
Leverage ratio of Tier 1 capital to average assets
First Busey $ 1,155,686  9.45  % $ 489,124  4.00  % N/A N/A
Busey Bank $ 1,306,716  10.72  % $ 487,541  4.00  % $ 609,426  5.00  %
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
Busey 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 months ended June 30, 2023, follows:
Shares Weighted-
Average
Exercise
Price		 Weighted-
Average
Remaining
Contractual
Life
Options outstanding at December 31, 2022 26,106 $ 23.53  3.88
Forfeited (4,180) 23.53 
Options outstanding at June 30, 2023 21,926 23.53  3.38
Options exercisable at June 30, 2023 21,926 23.53  3.38
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Amended 2020 Equity Plan
The 2020 Equity Plan was approved by stockholders at the 2020 Annual Meeting of Stockholders. A description of the 2020 Equity Plan can be found in Busey’s Proxy Statement for the 2020 Annual Meeting of Stockholders filed on April 9, 2020. The Amended 2020 Equity Plan was approved by stockholders at the 2023 Annual Meeting of Stockholders. The terms of the Amended 2020 Equity Plan are substantially identical to those of the stockholder approved 2020 Equity Plan, other than an increase of 1,350,000 in the number of shares authorized for issuance under the plan. More information can be found in Busey’s Proxy Statement for the 2023 Annual Meeting of Stockholders filed on April 14, 2023.
Under the terms of the 2020 Equity Plan, Busey has granted RSU, PSU, and DSU awards. Upon vesting and delivery, shares are expected (though not required) to be issued from treasury. There were 1,536,783 shares available for issuance under the Amended 2020 Equity Plan as of June 30, 2023.
RSU Awards
Busey grants RSUs to members of management periodically throughout the year. Each RSU is equivalent to one share of Busey’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.
On March 22, 2023, under the terms of the 2020 Equity Plan, Busey granted 224,316 RSUs to members of management. The grant date fair value of the award totaled $4.6 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.
A summary of changes in Busey’s RSU awards for the six months ended June 30, 2023, is as follows:
RSU Awards
Shares Weighted-
Average
Grant Date
Fair Value
Nonvested at December 31, 2022 1,096,931 $ 23.61 
Granted 224,316 20.44 
Dividend equivalents earned 28,956 20.04 
Vested (4,308) 25.79 
Forfeited (10,452) 21.84 
Nonvested at June 30, 2023 1,335,443 23.00 
PSU Awards
Busey grants PSUs, which are restricted stock units that are subject to certain performance criteria, to members of management periodically throughout the year. Each PSU is equivalent to one share of Busey’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.
On March 22, 2023, under the terms of the 2020 Equity Plan, Busey granted a target of 104,643 PSUs with a maximum award of 167,429 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 stockholder return performance goal. The grant date fair value of the award was $2.0 million and will be recognized in compensation expense over the performance period ending December 31, 2025.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

On March 22, 2023, under the terms of the 2020 Equity Plan, Busey granted a target of 104,643 PSUs with a maximum award of 167,429 units. The actual number of units issued at the vesting date could range from 0% to 160% of the initial grant, depending on attaining an adjusted return on average tangible common equity performance goal. The grant date fair value of the award was $2.1 million and will be recognized in compensation expense over the performance period ending December 31, 2025. The actual amount of compensation expense recognized may vary, subject to achievement of the performance goal.
On March 22, 2023, under the terms of the 2020 Equity Plan, Busey granted a target of 15,045 PSUs with a maximum award of 30,090 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 was $0.3 million and will be recognized in compensation expense over the performance period ending December 31, 2025, subject to achievement of the performance goal.
A summary of changes in Busey’s PSU awards for the six months ended June 30, 2023, is as follows:
PSU Awards
Shares1
 Weighted-
Average
Grant Date
Fair Value
Nonvested at December 31, 2022 285,351  $ 25.40 
Granted 224,331  20.04 
Dividend equivalents earned 92  22.85 
Vested (92) 22.85 
Forfeited (37,722) 25.18 
Nonvested at June 30, 2023 471,960  22.87 
___________________________________________
1.Shares for PSU awards represent target shares at the grant date.
DSU Awards
Busey grants DSUs, which are restricted stock units with a deferred settlement date, to its directors and advisory directors. Each DSU is equivalent to one share of Busey’s common stock. DSUs vest over a one-year period following the grant date. Under both the 2020 Equity Plan and the Amended 2020 Equity Plan, DSUs are generally are subject to the same terms as RSUs, except that following vesting of DSUs, 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.
On March 22, 2023, under the terms of the 2020 Equity Plan, Busey granted 41,548 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.
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A summary of changes in Busey’s DSU awards for the six months ended June 30, 2023, is as follows:
DSU Awards
Shares Weighted-
Average
Grant Date
Fair Value
Nonvested at December 31, 2022 31,085  $ 25.75 
Granted 41,548  20.44 
Dividend equivalents earned 3,969  19.96 
Vested (34,507) 25.20 
Forfeited (73) 20.44 
Nonvested at June 30, 2023 42,022  20.41 
Vested and outstanding at June 30, 2023 140,776  23.60 
2021 Employee Stock Purchase Plan
The First Busey Corporation 2021 ESPP was approved at Busey’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 2021 ESPP initially reserved for issuance and purchase an aggregate of 600,000 shares of Busey’s common stock. The first offering under the 2021 ESPP began on July 1, 2021. There were 471,630 shares available for issuance under the 2021 ESPP as of June 30, 2023.
Stock-based Compensation Expense
Busey did not record any stock option compensation expense for the three or six months ended June 30, 2023, or 2022. As of June 30, 2023, the Company did not have any unrecognized stock option compensation expense.
Busey 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,
2023 2022 2023 2022
Stock-based compensation expense
RSU awards $ 1,231  $ 1,273  $ 2,251  $ 2,449 
PSU awards1
 1,184  758  1,544  1,170 
DSU awards 211  257  407  483 
2021 ESPP 30  48  123  143 
Total stock-based compensation expense $ 2,656  $ 2,336  $ 4,325  $ 4,245 
___________________________________________
1.Expense for PSU awards with a market-based total stockholder return performance goal represents amounts based on target shares at the grant date. Expense for PSU awards with return on average tangible common equity and compounded annual revenue growth rate performance goals represents amounts based on target shares at the grant date, adjusted for performance expectations as of the date indicated.
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Unamortized compensation expense related to nonvested RSU, PSU, and DSU awards is summarized in the table below (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Unamortized stock-based compensation
RSU awards $ 10,697  $ 8,570 
PSU awards1
 7,179  4,279 
DSU awards 616  175 
Total unamortized stock-based compensation $ 18,492  $ 13,024 
Weighted average period over which expense is to be recognized
2.6 years
2.5 years
___________________________________________
1.Unamortized expense for PSU awards with a market-based total stockholder return performance goal represents amounts based on target shares at grant date. Unamortized expense for PSU awards with return on average tangible common equity and compounded annual revenue growth rate performance goals represents amounts based on target shares at grant date, adjusted for performance expectations as of the date indicated.
Note 9: Outstanding Commitments and Contingent Liabilities
Legal Matters
Busey 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 Busey’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
June 30,
2023		 December 31,
2022
Financial instruments whose contract amounts represent credit risk
Commitments to extend credit $ 2,105,034  $ 1,991,769 
Standby letters of credit 38,356  33,008 
Total commitments $ 2,143,390  $ 2,024,777 
Note 10: Derivative Financial Instruments
Busey utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. Additionally, Busey enters into derivative financial instruments, including interest rate lock commitments issued to residential loan customers for loans that will be held for sale, forward sales commitments to sell residential mortgage loans to investors, and interest rate swaps and foreign currency exchange contracts with customers and other third parties. See “Note 11: Fair Value Measurements” for further discussion of the fair value measurement of such derivatives.
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To secure its obligations under derivative contracts, Busey pledged cash and held collateral as follows (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Cash pledged to secure obligations under derivative contracts $ 34,210  $ 38,609 
Collateral held to secure obligations under derivative contracts 27,670  29,830 
Derivative Instruments Designated as Hedges
Busey 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 both June 30, 2023, and December 31, 2022, were designated as cash flow hedges. Busey entered into one $50.0 million interest rate swap to hedge the risks of variability in cash flows for future interest payments attributable to changes in the contractually specified 3-month LIBOR benchmark interest rate on the Busey’s junior subordinated debt owed to unconsolidated trusts (Debt Swap). In addition, Busey entered into one $300.0 million receive fixed pay floating interest rate swap to reduce Busey’s asset sensitivity (Loan Swap). Duration was added to our loan portfolio by fixing a portion of floating prime based loans. Interest rates had risen above their historical lows allowing Busey to lock in a portion of its loan portfolio to reduce asset sensitivity while creating a more stable margin in a volatile rate market. These hedges were determined to be highly effective during the period, and Busey 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.
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A summary of the interest-rate swaps designated as cash flow hedges is presented below (dollars in thousands):
As of
Location June 30,
2023		 December 31,
2022
Debt Swap
Notional amount $ 50,000  $ 50,000 
Weighted average fixed pay rates 1.79  % 1.79  %
Weighted average variable 3-month LIBOR receive rates 5.55  % 4.77  %
Weighted average maturity
1.21 years
1.71 years
Loan Swap
Notional amount $ 300,000  $ 300,000 
Weighted average fixed receive rates 4.81  % 4.81  %
Weighted average variable Prime pay rates 8.25  % 7.32  %
Weighted average maturity
5.61 years
6.10 years
Gross aggregate fair value of the swaps
Gross aggregate fair value of swap assets Other assets $ 2,230  $ 2,535 
Gross aggregate fair value of swap liabilities Other liabilities 32,505  32,367 
Balances carried in AOCI
Unrealized gains (losses) on cash flow hedges, net of tax AOCI $ (21,153) $ (20,985)
Busey expects to reclassify unrealized gains and losses from OCI to interest income and interest expense as shown in the following table, during the next 12 months (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 30, 2023.
As of
June 30, 2023
Unrealized gains (losses) in OCI expected to be recognized in income
Unrealized losses expected to be reclassified from OCI to interest income $ (859)
Unrealized gains expected to be reclassified from OCI to interest expense 481 
Net unrealized gains (losses) in OCI expected to be recognized in net interest income $ (378)
Interest expense recorded on these swap transactions was as follows for the periods presented (dollars in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Interest on swap transactions
Increase (decrease) in interest income on swap transactions $ (2,537) $ 668  $ (4,729) $ 1,353 
(Increase) decrease in interest expense on swap transactions 404  (101) 787  (286)
Net increase (decrease) in net interest income on swap transactions $ (2,133) $ 567  $ (3,942) $ 1,067 
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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,
2023 2022 2023 2022
Unrealized gains (losses) on cash flow hedges
Net gain (loss) recognized in OCI, net of tax $ (6,036) $ (6,550) $ (2,986) $ (11,395)
(Gain) loss reclassified from OCI to interest income, net of tax 1,813  (479) 3,380  (968)
(Gain) loss reclassified from OCI to interest expense, net of tax (288) 72  (562) 204 
Net change in unrealized gains (losses) on cash flow hedges, net of tax $ (4,511) $ (6,957) $ (168) $ (12,159)
Derivative Instruments Not Designated as Hedges
Interest Rate Swaps Not Designated as Hedges
Busey may offer derivative contracts to its customers in connection with their risk management needs. Busey 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 $623.2 million as of June 30, 2023, and $576.9 million as of December 31, 2022. These derivatives generally work together as an economic interest rate hedge, but Busey did not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability are 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 Consolidated Balance Sheets are summarized as follows (dollars in thousands):
As of June 30, 2023
Derivative Asset Derivative Liability
Notional
Amount		 Fair
Value		 Notional
Amount		 Fair
Value
Derivatives not designated as hedging instruments
Interest rate swaps – pay floating, receive fixed $ 21,803  $ 185  $ 601,384  $ 35,750 
Interest rate swaps – pay fixed, receive floating 601,384  35,750  21,803  185 
Total derivatives not designated as hedging instruments $ 623,187  $ 35,935  $ 623,187  $ 35,935 
As of December 31, 2022
Derivative Asset Derivative Liability
Notional
Amount		 Fair
Value		 Notional
Amount		 Fair
Value
Derivatives not designated as hedging instruments
Interest rate swaps – pay floating, receive fixed $ 48,728  $ 370  $ 528,183  $ 39,685 
Interest rate swaps – pay fixed, receive floating 528,183  39,685  48,728  370 
Total derivatives not designated as hedging instruments $ 576,911  $ 40,055  $ 576,911  $ 40,055 
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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 2023 2022 2023 2022
Interest rate swaps
Pay floating, receive fixed Noninterest expense $ 3,306  $ 7,025  $ (4,361) $ 3,475 
Pay fixed, receive floating Noninterest expense (3,306) (7,025) 4,361  (3,475)
Net change in fair value of interest rate swaps $ —  $ —  $ —  $ — 
Risk Participation Agreements
To manage the credit risk exposure related to customer-facing swaps, Busey entered into risk participation agreements in conjunction with loan participation arrangements with other financial institutions. The risk participation agreements mature between 2026 and 2029, and are summarized as follows (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Risk participation agreements
Number of risk participation agreements 3  2 
Notional amount $ 34,297  $ 18,899 
Fair value 15  5 
Foreign Currency Forward Contracts
Busey entered into foreign currency exchange contracts to support the business requirements of its customers. Foreign currency contracts involve the exchange of one currency for another on a specified date and at a specified rate. These contracts are executed on behalf of the Busey's customers and are used by customers to manage fluctuations in foreign exchange rates. Busey minimizes its exposure by entering into similar offsetting positions with other financial institutions. Busey is subject to the credit risk that another party will fail to perform. Amounts and fair values of derivative assets and liabilities related to foreign currency contracts recorded in the Consolidated Balance Sheets are summarized as follows (dollars in thousands):
As of June 30, 2023
Derivative Asset Derivative Liability
Notional
Amount		 Fair
Value		 Notional
Amount		 Fair
Value
Foreign currency forward contracts
Foreign currency exchange forward contract (Buy) $ 354  $ 47  $ —  $ — 
Foreign currency exchange forward contract (Sell) —  —  344  (37)
Total foreign currency forward contracts $ 354  $ 47  $ 344  $ (37)
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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 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
Busey economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers. Forward sales commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities in the Consolidated Balance Sheets. While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, Busey did not designate them for hedge accounting treatment. Changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.
Amounts and fair values of mortgage banking derivatives included in the Consolidated Balance Sheets are summarized as follows (dollars in thousands):
As of June 30, 2023 As of December 31, 2022
Location Notional
Amount		 Fair
Value		 Notional
Amount		 Fair
Value
Derivatives with positive fair value
Interest rate lock commitments Other assets $ 1,553  $ 10  $ 1,517  $ 16 
Forward sales commitments Other assets 1,274  16  83  1 
Mortgage banking derivatives recorded in other assets $ 2,827  $ 26  $ 1,600  $ 17 
Derivatives with negative fair value
Interest rate lock commitments Other liabilities $ 765  $ 6  $ 83  $ 1 
Forward sales commitments Other liabilities 2,557  23  2,757  39 
Mortgage banking derivatives recorded in other liabilities $ 3,322  $ 29  $ 2,840  $ 40 
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 2023   2022 2023   2022
Net gains (losses)
Interest rate lock commitments Mortgage revenue $ (49) $ 134  $ (12) $ 149 
Forward sales commitments Mortgage revenue 86  (319) 32  (213)
Net gains (losses) $ 37  $ (185) $ 20  $ (64)
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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 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.
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.
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 Busey'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 inputs. Busey 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.
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Equity Securities
Equity securities are reported at fair value utilizing Level 1 or Level 2 inputs. Fair value measurements of mutual funds, when held, are determined using unadjusted quoted prices in active markets for identical assets at the measurement date and are classified as Level 1. Fair value measurements of stock utilize quoted prices for identical or similar assets in markets that are not active and are classified as Level 2.
Derivative Assets and Derivative Liabilities
The majority of our derivative assets and derivative liabilities are reported at fair value utilizing Level 2 or Level 3 inputs. 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, with the exception of our risk participation agreements, are classified as Level 2. Due to the significance of unobservable inputs, derivative assets related to our risk participation agreements are classified as Level 3.
The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2023, and December 31, 2022, 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, 2023
Level 1
Inputs		 Level 2
Inputs		 Level 3
Inputs		 Total
Fair Value
Debt securities available for sale:
U.S. Treasury securities $ —  $ 59,930  $ —  $ 59,930 
Obligations of U.S. government corporations and agencies —  11,112  —  11,112 
Obligations of states and political subdivisions —  239,755  —  239,755 
Asset-backed securities —  474,082  —  474,082 
Commercial mortgage-backed securities —  103,763  —  103,763 
Residential mortgage-backed securities —  1,166,693  —  1,166,693 
Corporate debt securities —  228,513  —  228,513 
Equity securities —  9,034  —  9,034 
Derivative assets —  38,238  15  38,253 
Derivative liabilities —  68,506  —  68,506 
As of December 31, 2022
Level 1
Inputs		 Level 2
Inputs		 Level 3
Inputs		 Total
Fair Value
Debt securities available for sale:
U.S. Treasury securities $ —  $ 114,061  $ —  $ 114,061 
Obligations of U.S. government corporations and agencies —  19,779  —  19,779 
Obligations of states and political subdivisions —  257,512  —  257,512 
Asset-backed securities —  469,875  —  469,875 
Commercial mortgage-backed securities —  108,394  —  108,394 
Residential mortgage-backed securities —  1,243,256  —  1,243,256 
Corporate debt securities —  248,516  —  248,516 
Equity securities —  11,535  —  11,535 
Derivative assets —  42,607  5  42,612 
Derivative liabilities —  72,462  —  72,462 
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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
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
Busey 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.
OREO and Other Repossessed Assets
Non-financial assets measured at fair value, upon initial recognition or subsequent impairment, include OREO and other repossessed assets. OREO properties and other repossessed assets are measured using a combination of observable inputs, including recent appraisals, and unobservable inputs. Due to the significance of unobservable inputs, the fair values of all OREO and other repossessed assets have been classified as Level 3.
Bank Property Held for Sale
Bank property held for sale represents certain banking center office buildings which Busey 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 June 30, 2023
Level 1
Inputs		 Level 2
Inputs		 Level 3
Inputs		 Total
Fair Value
Loans evaluated individually, net of related allowance $ —  $ —  $ 3,356  $ 3,356 
Bank property held for sale with impairment —  —  4,286  4,286 
As of December 31, 2022
Level 1
Inputs		 Level 2
Inputs		 Level 3
Inputs		 Total
Fair Value
Loans evaluated individually, net of related allowance $ —  $ —  $ 5,345  $ 5,345 
Bank property held for sale with impairment —  —  7,923  7,923 
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, 2023
Fair Value Valuation
Techniques		 Unobservable
Input		 Range
(Weighted Average)
Loans evaluated individually, net of related allowance $ 3,356  Appraisal of collateral Appraisal adjustments
-15.7% to -100.0%
(-43.7)%
Bank property held for sale with impairment 4,286  Appraisal of collateral or real estate listing price Appraisal adjustments
-6.2% to -64.9%
(-38.4)%
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As of December 31, 2022
Fair Value
Valuation
Techniques
Unobservable
Input
Range
(Weighted Average)
Loans evaluated individually, net of related allowance $ 5,345  Appraisal of collateral Appraisal adjustments
-22.7% to -100.0%
(-45.7)%
Bank property held for sale with impairment 7,923  Appraisal of collateral or real estate listing price Appraisal adjustments
-0.7% to -70.1%
(-35.1)%
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 Busey’s 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, 2023 As of December 31, 2022
Carrying
Amount		 Fair
Value		 Carrying
Amount		 Fair
Value
Financial assets
Level 1 inputs:
Cash and cash equivalents $ 232,703  $ 232,703  $ 227,164  $ 227,164 
Level 2 inputs:
Debt securities held to maturity 894,102  746,502  918,312  785,295 
Loans held for sale 1,545  1,558  1,253  1,276 
Accrued interest receivable 42,689  42,689  43,372  43,372 
Level 3 inputs:
Portfolio loans, net 7,713,645  7,389,784  7,634,094  7,320,422 
Mortgage servicing rights 4,498  17,873  5,861  18,284 
Other servicing rights 1,729  2,179  1,914  2,331 
Financial liabilities
Level 2 inputs:
Time deposits $ 1,471,615  $ 1,447,372  $ 855,375  $ 830,596 
Securities sold under agreements to repurchase 202,953  202,953  229,806  229,806 
Short-term borrowings 212,000  212,033  351,054  351,085 
Long-term debt 24,000  24,031  30,000  30,052 
Junior subordinated debt owed to unconsolidated trusts 71,900  55,475  71,810  59,111 
Accrued interest payable 11,791  11,791  3,978  3,978 
Level 3 inputs:
Subordinated notes, net of unamortized issuance costs 222,454  193,250  222,038  208,562 
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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 Busey’s outstanding stock options and warrants were exercised, stock units were vested, and ESPP shares were issued.
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,
2023 2022 2023 2022
Net income $ 29,364  $ 29,824  $ 66,150  $ 58,263 
Weighted average number of common shares outstanding, basic 55,440,277  55,421,887  55,419,250  55,424,776 
Dilutive effect of common stock equivalents:
Options —  —  —  2,284 
Warrants —  1,686  648  1,770 
RSU awards 622,993  655,368  637,385  679,471 
PSU awards 123,849  14,534  107,247  15,456 
DSU awards 3,851  3,039  14,098  16,206 
ESPP 4,831  7,503  9,192  9,503 
Weighted average number of common shares outstanding, diluted 56,195,801  56,104,017  56,187,820  56,149,466 
Basic earnings per common share $ 0.53  $ 0.54  $ 1.19  $ 1.05 
Diluted earnings per common share $ 0.52  $ 0.53  $ 1.18  $ 1.04 
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,
2023 2022 2023 2022
Anti-dilutive common stock equivalents
Options 21,926 31,166 22,366  15,583
RSU awards 157,781 155,649 78,891  77,824
PSU awards 63,220 278,472 164,339  259,962
Total anti-dilutive common stock equivalents 242,927  465,287 265,596  353,369
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 13: Accumulated Other Comprehensive Income (Loss)
The following tables present changes in AOCI by component, net of tax, for the periods indicated (dollars in thousands):
Three Months Ended June 30,
2023 2022
Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax
Unrealized/Unrecognized gains (losses) on debt securities
Balance at beginning of period $ (320,496) $ 91,354  $ (229,142) $ (184,233) $ 52,515  $ (131,718)
Unrealized holding gains (losses) on debt securities available for sale, net (16,597) 4,731  (11,866) (95,288) 27,162  (68,126)
Unrecognized losses on debt securities transferred to held to maturity from available for sale —  —  —  —  —  — 
Amounts reclassified from AOCI, net 178  (51) 127  4  (1) 3 
Amortization of unrecognized losses on securities transferred to held to maturity 1,556  (443) 1,113  2,207  (629) 1,578 
Balance at end of period $ (335,359) $ 95,591  $ (239,768) $ (277,310) $ 79,047  $ (198,263)
Unrealized gains (losses) on cash flow hedges
Balance at beginning of period $ (23,277) $ 6,635  $ (16,642) $ (8,234) $ 2,347  $ (5,887)
Unrealized holding gains (losses) on cash flow hedges, net (8,442) 2,406  (6,036) (9,162) 2,612  (6,550)
Amounts reclassified from AOCI, net 2,133  (608) 1,525  (567) 160  (407)
Balance at end of period $ (29,586) $ 8,433  $ (21,153) $ (17,963) $ 5,119  $ (12,844)
Total AOCI $ (364,945) $ 104,024  $ (260,921) $ (295,273) $ 84,166  $ (211,107)
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Six Months Ended June 30,
2023 2022
Before Tax Tax Effect Net of Tax Before Tax Tax Effect Net of Tax
Unrealized/Unrecognized gains (losses) on debt securities
Balance at beginning of period $ (352,878) $ 100,585  $ (252,293) $ (32,272) $ 9,199  $ (23,073)
Unrealized holding gains (losses) on debt securities available for sale, net 14,096  (4,018) 10,078  (199,570) 56,888  (142,682)
Unrecognized losses on debt securities transferred to held to maturity from available for sale —  —  —  (48,456) 13,812  (34,644)
Amounts reclassified from AOCI, net 174  (50) 124  (102) 29  (73)
Amortization of unrecognized losses on securities transferred to held to maturity 3,249  (926) 2,323  3,090  (881) 2,209 
Balance at end of period $ (335,359) $ 95,591  $ (239,768) $ (277,310) $ 79,047  $ (198,263)
Unrealized gains (losses) on cash flow hedges
Balance at beginning of period $ (29,350) $ 8,365  $ (20,985) $ (958) $ 273  $ (685)
Unrealized holding gains (losses) on cash flow hedges, net (4,178) 1,192  (2,986) (15,938) 4,543  (11,395)
Amounts reclassified from AOCI, net 3,942  (1,124) 2,818  (1,067) 303  (764)
Balance at end of period $ (29,586) $ 8,433  $ (21,153) $ (17,963) $ 5,119  $ (12,844)
Total AOCI $ (364,945) $ 104,024  $ (260,921) $ (295,273) $ 84,166  $ (211,107)
Note 14: Operating Segments and Related Information
Busey has three reportable operating segments: Banking, FirsTech, and Wealth Management. Busey’s three 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
The Banking operating segment provides a full range of banking services to individual and corporate customers through First Busey Corporation’s wholly-owned bank subsidiary, Busey Bank, with 58 banking centers in Illinois; the St. Louis, Missouri, metropolitan area; southwest Florida; and Indianapolis, Indiana.
Banking services offered to individual customers include customary types of demand and savings deposits, money transfers, safe deposit services, individual retirement accounts and other fiduciary services, automated teller machines, and technology-based networks, as well as a variety of loan products including residential real estate, home equity lines of credit, and consumer loans. Banking services offered to corporate customers include commercial, commercial real estate, real estate construction, and agricultural loans, as well as commercial depository services such as cash management.
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The FirsTech Operating Segment
The FirsTech operating segment provides comprehensive and innovative payment technology solutions through Busey Bank’s wholly-owned subsidiary, FirsTech. FirsTech's multi-channel payment platform allows businesses to collect payments from their customers in a variety of ways to enable fast, frictionless payments. Payment method vehicles include, but are not limited to, text-based mobile bill pay; interactive voice response; electronic payment concentration delivered to Automated Clearing House networks, money management, and credit card networks; walk-in payment processing for customers at retail pay agents; customer service payments made over a telephone; direct debit services; and lockbox remittance processing for customers to make payments by mail. FirsTech also provides additional tools to help clients with billing, reconciliation, bill reminders, and treasury services.
FirsTech's client base represents a diverse set of industries, with a higher concentration in highly regulated industries, such as financial institutions, utility, insurance, and telecommunications industries.
The Wealth Management Operating Segment
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. Services are provided through Busey Capital Management, Inc., a wholly-owned subsidiary of Busey Bank, and Busey Wealth Management, a division of Busey Bank.
Wealth management services tailored to individuals include trust and estate advisory services and financial planning. Business services include business succession planning and employee retirement plan services. Services for foundations include investment strategy consulting and fiduciary services.
Segment Financial Information
The segment financial information provided below has been derived from information used by management to monitor and manage Busey’s financial performance. The accounting policies of the three operating segments are the same as those described in the summary of significant accounting policies in “Note 1. Significant Accounting Policies” in Busey’s 2022 Annual Report. The Company accounts for intersegment revenue and transfers at current market value.
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,
2023		 December 31,
2022		 June 30,
2023		 December 31,
2022
Operating segment
Banking $ 294,773  $ 294,773  $ 12,057,131  $ 12,199,960 
FirsTech 8,992  8,992  48,558  48,715 
Wealth Management 14,108  14,108  93,408  84,082 
Other —  —  9,932  3,920 
Consolidated total $ 317,873  $ 317,873  $ 12,209,029  $ 12,336,677 
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FIRST BUSEY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Net interest income
Banking $ 82,710  $ 80,072  $ 172,600  $ 153,904 
FirsTech 14  17  27  35 
Other (4,054) (4,161) (8,100) (7,955)
Total net interest income $ 78,670  $ 75,928  $ 164,527  $ 145,984 
Noninterest income
Banking $ 10,312  $ 13,982  $ 22,733  $ 29,268 
FirsTech 5,615  5,336  11,289  10,755 
Wealth Management 14,717  14,135  29,643  29,911 
Other (2,632) (2,434) (3,805) (3,143)
Total noninterest income $ 28,012  $ 31,019  $ 59,860  $ 66,791 
Noninterest expense
Banking $ 53,491  $ 54,380  $ 108,142  $ 109,947 
FirsTech 5,319  4,809  11,058  9,492 
Wealth Management 8,228  7,586  16,762  15,851 
Other 2,167  2,317  3,646  4,178 
Total noninterest expense $ 69,205  $ 69,092  $ 139,608  $ 139,468 
Income before income taxes
Banking $ 38,904  $ 38,021  $ 85,611  $ 71,825 
FirsTech 310  544  258  1,298 
Wealth Management 6,489  6,549  12,881  14,060 
Other (8,853) (8,912) (15,551) (15,276)
Total income before income taxes $ 36,850  $ 36,202  $ 83,199  $ 71,907 
Net income
Banking $ 30,665  $ 30,499  $ 67,500  $ 56,950 
FirsTech 226  397  188  947 
Wealth Management 4,932  5,092  9,790  10,932 
Other (6,459) (6,164) (11,328) (10,566)
Total net income $ 29,364  $ 29,824  $ 66,150  $ 58,263 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Table of Contents
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OVERVIEW
First Busey Corporation is a $12.2 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 Busey’s financial condition and results of operations during the three and six months ended June 30, 2023, and should be read in conjunction with our Consolidated Financial Statements (unaudited) and the related Notes to the Consolidated Financial Statements (unaudited) included in this Quarterly Report, as well as our 2022 Annual Report.
Busey’s Conservative Banking Strategy
Busey’s financial strength is built on a sound business strategy of conservative banking, and that focus will not change now or in the future.
The quality of our core deposit franchise is a critical value driver of our institution. Despite recent turmoil experienced in certain sectors of the banking industry, we have seen relative stability in our deposit franchise. We have sufficient on- and off-balance sheet liquidity to manage deposit fluctuations and the liquidity needs of our customers. Our credit performance reflects our highly diversified, conservatively underwritten loan portfolio, which has been originated predominantly to established customers with tenured relationships with our Company. Asset quality remains strong by both historical and current industry trends.
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EXECUTIVE SUMMARY
Operating Performance
Operating performance metrics presented in the table below have been derived from information used by management to monitor and manage Busey’s financial performance (dollars in thousands, except per share amounts):
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Reported: Net income $ 29,364  $ 29,824  $ 66,150  $ 58,263 
Adjusted:
Net income1
 $ 29,373  $ 30,081  $ 66,159  $ 59,185 
Reported: Diluted earnings per common share $ 0.52  $ 0.53  $ 1.18  $ 1.04 
Adjusted:
Diluted earnings per common share1
 $ 0.52  $ 0.54  $ 1.18  $ 1.05 
Reported:
Return on average assets2
 0.96  % 0.96  % 1.09  % 0.94  %
Adjusted:
Return on average assets1, 2
 0.96  % 0.97  % 1.09  % 0.95  %
Reported:
Return on average tangible common equity1, 2
 13.90  % 14.50  % 16.12  % 13.57  %
Adjusted:
Return on average tangible common equity1, 2
 13.90  % 14.62  % 16.12  % 13.79  %
Reported:
Pre-provision net revenue1
 $ 39,536  $ 39,569  $ 87,454  $ 75,635 
Adjusted:
Pre-provision net revenue1
 $ 42,072  $ 41,267  $ 91,576  $ 80,621 
Reported:
Pre-provision net revenue to average assets1, 2
 1.30  % 1.27  % 1.44  % 1.21  %
Adjusted:
Pre-provision net revenue to average assets1, 2
 1.38  % 1.33  % 1.51  % 1.29  %
___________________________________________
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.
Non-Operating Expenses and Non-GAAP Measures
Busey views certain non-operating items, including acquisition-related and restructuring charges, as adjustments to net income reported under GAAP. Non-operating pretax adjustments were as follows for the periods presented (dollars in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Non-operating costs
Acquisition related expenses1
 $ 12  $ 204  $ 12  $ 1,039 
Restructuring charges2
 —  99  —  99 
Total non-operating costs $ 12  $ 303  $ 12  $ 1,138 
___________________________________________
1.Acquisition expenses related to completed acquisitions and exploratory due diligence.
2.Restructuring charges related to previously disclosed restructuring and efficiency plans.
A reconciliation of non-GAAP measures, which Busey believes facilitates the assessment of its financial results and peer comparability, is included in tabular form in this Quarterly Report. See “Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information.”
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Banking Center Markets
Busey Bank serves the Illinois banking market with 46 banking centers. Our Illinois markets feature several Fortune 1000 companies. Those organizations, coupled with large healthcare and higher education sectors, anchor the communities in which they are located and have provided a comparatively stable foundation for housing, employment, and small business. Ten of our banking centers in Illinois are located within the Chicago Metropolitan Statistical Area, and 12 of our banking centers in Illinois are located within the St. Louis Metropolitan Statistical Area.
Busey Bank has eight banking centers in Missouri. St. Louis, Missouri has a diverse economy with major employment sectors including health care, financial services, professional and business services, and retail. We have a total of 20 banking centers within the boundaries of the St. Louis Metropolitan Statistical Area, including branches in both Illinois and Missouri.
Busey Bank has three banking centers in southwest Florida, an area which has experienced strong population growth, job growth, and an expanded housing market, as well as the benefits of a tourism and winter resort economy.
Busey Bank has one banking center in the Indianapolis, Indiana area, which is the most populous city of Indiana with a diverse economy, due in part to it serving as 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.
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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 June 30,
2023 2022
Average
Balance		 Income/
Expense
Yield/
Rate5
 Average
Balance		 Income/
Expense
Yield/
Rate5
Assets
Interest-bearing bank deposits and federal funds sold $ 116,998  $ 1,311  4.49  % $ 230,129  $ 358  0.62  %
Investment securities:
U.S. Government obligations 84,944  148  0.70  % 187,785  281  0.60  %
Obligations of states and political subdivisions1
 244,080  1,704  2.80  % 293,276  1,947  2.66  %
Other securities 2,926,717  19,121  2.62  % 3,359,950  14,664  1.75  %
Loans held for sale 1,941  26  5.37  % 3,089  32  4.16  %
Portfolio loans1, 2
 7,755,618  95,150  4.92  % 7,378,969  65,860  3.58  %
Total interest-earning assets1, 3
 11,130,298  $ 117,460  4.23  % 11,453,198  $ 83,142  2.91  %
Cash and due from banks 118,860  121,568 
Premises and equipment 125,205  133,242 
ACL (92,970) (88,753)
Other assets 928,472  832,815 
Total assets $ 12,209,865  $ 12,452,070 
Liabilities and stockholders’ equity
Interest-bearing transaction deposits $ 2,651,083  $ 9,549  1.44  % $ 2,662,976  $ 500  0.08  %
Savings and money market deposits 2,802,675  7,717  1.10  % 3,459,414  692  0.08  %
Time deposits 1,343,830  9,502  2.84  % 848,693  954  0.45  %
Federal funds purchased and repurchase agreements 201,020  1,223  2.44  % 235,733  147  0.25  %
Borrowings4
 692,150  9,293  5.39  % 296,168  3,667  4.97  %
Junior subordinated debt issued to unconsolidated trusts 71,870  945  5.27  % 71,693  708  3.96  %
Total interest-bearing liabilities 7,762,628  $ 38,229  1.98  % 7,574,677  $ 6,668  0.35  %
Net interest spread1
 2.26  % 2.56  %
Noninterest-bearing deposits 3,054,483  3,535,110 
Other liabilities 184,819  145,231 
Stockholders’ equity 1,207,935  1,197,052 
Total liabilities and stockholders’ equity $ 12,209,865  $ 12,452,070 
Interest income / earning assets1, 3
 $ 11,130,298  $ 117,460  4.23  % $ 11,453,198  $ 83,142  2.91  %
Interest expense / earning assets 11,130,298  38,229  1.38  % 11,453,198  6,668  0.23  %
Net interest margin1
 $ 79,231  2.86  % $ 76,474  2.68  %
___________________________________________
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 $0.6 million and $0.5 million for the three months ended June 30, 2023, and 2022, respectively.
4.Includes short-term and long-term borrowings. Interest expense includes a non-usage fee on a revolving loan.
5.Annualized.
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Six Months Ended June 30,
2023 2022
Average
Balance		 Income/
Expense		 Yield/
Rate		 Average
Balance		 Income/
Expense		 Yield/
Rate
Assets
Interest-bearing bank deposits and federal funds sold $ 112,550  $ 2,299  4.12  % $ 394,562  $ 635  0.32  %
Investment securities:
U.S. Government obligations 104,970  343  0.66  % 192,660  569  0.60  %
Obligations of states and political subdivisions1
 249,213  3,469  2.81  % 297,781  3,862  2.62  %
Other securities 2,953,392  37,700  2.57  % 3,414,885  27,615  1.63  %
Loans held for sale 1,796  49  5.53  % 7,485  115  3.10  %
Portfolio loans1, 2
 7,733,370  185,263  4.83  % 7,270,506  126,983  3.52  %
Total interest-earning assets1, 3
 11,155,291  $ 229,123  4.14  % 11,577,879  $ 159,779  2.78  %
Cash and due from banks 117,013  124,085 
Premises and equipment 126,145  134,304 
ACL (92,832) (88,604)
Other assets 931,026  808,264 
Total assets $ 12,236,643  $ 12,555,928 
Liabilities and stockholders’ equity
Interest-bearing transaction deposits $ 2,708,973  $ 16,487  1.23  % $ 2,671,606  $ 864  0.07  %
Savings and money market deposits 2,856,635  11,669  0.82  % 3,444,744  1,252  0.07  %
Time deposits 1,152,331  13,352  2.34  % 882,779  2,154  0.49  %
Federal funds purchased and repurchase agreements 215,604  2,445  2.29  % 253,316  206  0.16  %
Borrowings4
 683,796  17,666  5.21  % 290,331  6,865  4.77  %
Junior subordinated debt issued to unconsolidated trusts 71,848  1,858  5.21  % 71,672  1,362  3.83  %
Total interest-bearing liabilities 7,689,187  $ 63,477  1.66  % 7,614,448  $ 12,703  0.34  %
Net interest spread1
 2.48  % 2.44  %
Noninterest-bearing deposits 3,163,011  3,562,380 
Other liabilities 194,966  140,040 
Stockholders’ equity 1,189,479  1,239,060 
Total liabilities and stockholders’ equity $ 12,236,643  $ 12,555,928 
Interest income / earning assets1, 3
 $ 11,155,291  $ 229,123  4.14  % $ 11,577,879  $ 159,779  2.78  %
Interest expense / earning assets 11,155,291  63,477  1.15  % 11,577,879  12,703  0.22  %
Net interest margin1
 $ 165,646  2.99  % $ 147,076  2.56  %
___________________________________________
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 for the six months ended June 30, 2023, and 2022.
4.Includes short-term and long-term borrowings. Interest expense includes a non-usage fee on a revolving loan.
5.Annualized.
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Notable changes in average assets and average liabilities are summarized as follows for the periods presented (dollars in thousands):
Three Months Ended June 30,
2023 2022 Change % Change
Average interest-earning assets $ 11,130,298  $ 11,453,198  $ (322,900) (2.8) %
Average interest-bearing liabilities 7,762,628  7,574,677  187,951  2.5  %
Average noninterest-bearing deposits 3,054,483  3,535,110  (480,627) (13.6) %
Total average deposits 9,852,071  10,506,193  (654,122) (6.2) %
Total average liabilities 11,001,930  11,255,018  (253,088) (2.2) %
Average noninterest-bearing deposits as a percent of total average deposits 31.0  % 33.6  % (260) bps
Total average deposits as a percent of total average liabilities 89.5  % 93.3  % (380) bps
Six Months Ended June 30,
2023 2022 Change % Change
Average interest-earning assets $ 11,155,291  $ 11,577,879  $ (422,588) (3.6) %
Average interest-bearing liabilities 7,689,187  7,614,448  74,739  1.0  %
Average noninterest-bearing deposits 3,163,011  3,562,380  (399,369) (11.2) %
Total average deposits 9,880,950  10,561,509  (680,559) (6.4) %
Total average liabilities 11,047,164  11,316,868  (269,704) (2.4) %
Average noninterest-bearing deposits as a percent of total average deposits 32.0  % 33.7  % (170) bps
Total average deposits as a percent of total average liabilities 89.4  % 93.3  % (390) bps
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Changes in net interest income and net interest margin are summarized as follows for the periods presented (dollars in thousands):
Three Months Ended June 30,
2023 2022 Change % Change
Net interest income
Interest income, on a tax-equivalent basis1
 $ 117,460  $ 83,142  $ 34,318  41.3  %
Interest expense (38,229) (6,668) (31,561) (473.3) %
Net interest income, on a tax-equivalent basis1
 $ 79,231  $ 76,474  $ 2,757  3.6  %
Net interest margin1, 2
 2.86  % 2.68  % 18 bps
Six Months Ended June 30,
2023 2022 Change % Change
Net interest income
Interest income, on a tax-equivalent basis1
 $ 229,123  $ 159,779  $ 69,344  43.4  %
Interest expense (63,477) (12,703) (50,774) (399.7) %
Net interest income, on a tax-equivalent basis1
 $ 165,646  $ 147,076  $ 18,570  12.6  %
Net interest margin1, 2
 2.99  % 2.56  % 43 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.
The FOMC raised rates by 25 basis points during the second quarter of 2023, and by a total of 500 basis points since the onset of the current FOMC tightening cycle that began in the first quarter of 2022. Rising rates initially have a positive impact on net interest margin, as assets, in particular commercial loans, reprice more quickly and to a greater extent than liabilities. As deposit and funding costs increase in response to the tightening rate cycle, and we experience deposit migration into higher cost offerings along with an increase in wholesale borrowings, some of the net interest margin expansion is reversed.
Busey remains substantially core deposit1 funded, with robust liquidity and significant market share in the communities we serve. As of June 30, 2023, our loan to deposit ratio was 77.6% and core deposits represented 97.0% 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 2.26% and 2.48% for the three and six months ended June 30, 2023, respectively, compared to 2.56% and 2.44% for the three and six months ended June 30, 2022, 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 months ended June 30, 2023, and 2022. Annualized net interest margins for the quarterly periods indicated were as follows:
2023 2022
First Quarter 3.13  % 2.45  %
Second Quarter 2.86  % 2.68  %
Third Quarter 3.00  %
Fourth Quarter 3.24  %
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 Busey’s 2022 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.
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Noninterest Income
Changes in noninterest income are summarized as follows for the periods presented (dollars in thousands):
Three Months Ended June 30,
2023 2022 Change % Change
Noninterest income
Wealth management and payment technology income:
Wealth management fees $ 14,562  $ 14,135  $ 427  3.0  %
Payment technology solutions 5,231  4,888  343  7.0  %
Combined, wealth management fees and payment technology solutions 19,793  19,023  770  4.0  %
Fees for customer services 7,239  9,588  (2,349) (24.5) %
Mortgage revenue 272  284  (12) (4.2) %
Income on bank owned life insurance 1,029  874  155  17.7  %
Securities income:
Realized net gains (losses) on securities (178) 20  (198) (990.0) %
Unrealized net gains (losses) recognized on equity securities (1,881) (1,734) (147) (8.5) %
Net securities gains (losses) (2,059) (1,714) (345) (20.1) %
Other income 1,738  2,964  (1,226) (41.4) %
Total noninterest income $ 28,012  $ 31,019  $ (3,007) (9.7) %
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Six Months Ended June 30,
2023 2022 Change % Change
Noninterest income
Wealth management and payment technology solutions income:
Wealth management fees $ 29,359  $ 29,914  $ (555) (1.9) %
Payment technology solutions 10,546  9,965  581  5.8  %
Combined, wealth management fees and payment technology solutions 39,905  39,879  26  0.1  %
Fees for customer services 14,058  18,495  (4,437) (24.0) %
Mortgage revenue 560  1,259  (699) (55.5) %
Income on bank owned life insurance 2,681  1,758  923  52.5  %
Securities income:
Realized net gains (losses) on securities (174) 126  (300) (238.1) %
Unrealized net gains (losses) recognized on equity securities (2,501) (2,454) (47) (1.9) %
Net securities gains (losses) (2,675) (2,328) (347) (14.9) %
Other income 5,331  7,728  (2,397) (31.0) %
Total noninterest income $ 59,860  $ 66,791  $ (6,931) (10.4) %
Assets under care as of period end $ 11,477,985  $ 11,453,753  $ 24,232  0.2  %
Total noninterest income was $28.0 million for the three months ended June 30, 2023, a decrease of 9.7% from the comparable period in 2022, and was $59.9 million for the six months ended June 30, 2023, a decrease of 10.4% from the comparable period in 2022. Combined, revenues from wealth management fees and payment technology solutions represented 70.7% and 66.7% of Busey’s noninterest income for the three and six months ended June 30, 2023, respectively, providing a complement to spread-based revenue from traditional banking activities. On a combined basis, revenue from these two critical operating areas was $19.8 million for the three months ended June 30, 2023, a 4.0% increase from the comparable period in 2022, and was $39.9 million for the six months ended June 30, 2023, an 0.1% increase from the comparable period in 2022.
Wealth management fees were $14.6 million for the three months ended June 30, 2023, a 3.0% increase from the comparable period in 2022, and were $29.4 million for the six months ended June 30, 2023, a 1.9% decrease from the comparable period for 2022. Busey’s Wealth Management division ended the second quarter of 2023 with $11.5 billion in assets under care, which is comparable to June 30, 2022. Our portfolio management team continues to produce solid results in the face of volatile markets.
Payment technology solutions revenue relates to our payment processing company, FirsTech. Payment technology solutions revenue was $5.2 million for the three months ended June 30, 2023, a 7.0% increase from the comparable period in 2022, and was $10.5 million for the six months ended June 30, 2023, a 5.8% increase from the comparable period in 2022. We have made strategic investments in FirsTech to enhance future growth, including 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.
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Fees for customer services were $7.2 million for the three months ended June 30, 2023, a 24.5% decrease from the comparable period in 2022, and were $14.1 million for the six months ended June 30, 2023, a 24.0% decrease from the comparable period in 2022. Beginning on July 1, 2022, we became subject to the Durbin Amendment of the Dodd-Frank Act. The Durbin Amendment required the Federal Reserve to establish a maximum permissible interchange fee for many types of debit transactions, which resulted in a reduction in fee income totaling $2.4 million and $4.7 million during the three and six months ended June 30, 2023, respectively. Excluding the impact of the Durbin Amendment, fees for customer services would have shown an increase of 0.8% and 1.3% from the comparable three and six month periods in 2022, respectively.
Mortgage revenue was $0.3 million for the three months ended June 30, 2023, a 4.2% decrease from the comparable period in 2022, and was $0.6 million for the six months ended June 30, 2023, a 55.5% decrease from the comparable period in 2022. Decreases primarily resulted from declines in mortgage origination and sold-loan mortgage volume. General economic conditions and interest rate volatility may impact fees in future quarters.
Income on bank owned life insurance was $1.0 million for the three months ended June 30, 2023, a 17.7% increase from the comparable period in 2022, and was $2.7 million for the six months ended June 30, 2023, a 52.5% increase from the comparable period in 2022. Year to date increases resulted primarily from earnings on death proceeds of $0.8 million.
Net securities losses were $2.1 million for the three months ended June 30, 2023, a 20.1% increase from the comparable period in 2022. Losses were comprised of $0.2 million of realized net losses and $1.9 million of unrealized net losses recognized on equity securities. For the six months ended June 30, 2023, net securities losses were $2.7 million, a 14.9% increase from the comparable period in 2022, and were comprised of $0.2 million of realized net losses and $2.5 million of unrealized net losses recognized on equity securities.
Other income was $1.7 million for the three months ended June 30, 2023, a $1.2 million decrease from the comparable period in 2022, and was $5.3 million for the six months ended June 30, 2023, a $2.4 million decrease from the comparable period in 2022. Other income fluctuations were primarily attributable to lower income recognized on venture capital investments during the three and six months ended June 30, 2023.
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Noninterest Expense
Changes in noninterest expense are summarized as follows for the periods presented (dollars in thousands):
Three Months Ended June 30,
2023 2022 Change % Change
Noninterest expense
Salaries, wages, and employee benefits $ 39,859  $ 38,110  $ 1,749  4.6  %
Data processing 5,902  5,375  527  9.8  %
Premises expenses:
Net occupancy expense of premises 4,540  4,720  (180) (3.8) %
Furniture and equipment expenses 1,681  2,045  (364) (17.8) %
Combined, net occupancy expense of premises and furniture and equipment expenses 6,221  6,765  (544) (8.0) %
Professional fees 973  1,607  (634) (39.5) %
Amortization of intangible assets 2,669  2,951  (282) (9.6) %
Interchange expense 1,870  1,487  383  25.8  %
FDIC insurance 1,506  1,153  353  30.6  %
Other expense 10,205  11,644  (1,439) (12.4) %
Total noninterest expense $ 69,205  $ 69,092  $ 113  0.2  %
Income taxes $ 7,486  $ 6,378  $ 1,108  17.4  %
Effective income tax rate 20.3  % 17.6  % 270 bps
Efficiency ratio1
 60.9  % 60.6  % 30 bps
Adjusted efficiency ratio1
 60.9  % 60.3  % 60 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.
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Six Months Ended June 30,
2023 2022 Change % Change
Noninterest expense
Salaries, wages, and employee benefits $ 80,190  $ 77,464  $ 2,726  3.5  %
Data processing 11,542  10,353  1,189  11.5  %
Premises expenses:
Net occupancy expense of premises 9,302  9,787  (485) (5.0) %
Furniture and equipment expenses 3,427  4,075  (648) (15.9) %
Combined, net occupancy expense of premises and furniture and equipment expenses 12,729  13,862  (1,133) (8.2) %
Professional fees 3,031  3,114  (83) (2.7) %
Amortization of intangible assets 5,398  5,962  (564) (9.5) %
Interchange expense 3,723  3,032  691  22.8  %
FDIC insurance 3,008  2,226  782  35.1  %
Other expense 19,987  23,455  (3,468) (14.8) %
Total noninterest expense $ 139,608  $ 139,468  $ 140  0.1  %
Income taxes $ 17,049  $ 13,644  $ 3,405  25.0  %
Effective income tax rate 20.5  % 19.0  % 150 bps
Efficiency ratio1
 58.8  % 61.8  % (300) bps
Adjusted efficiency ratio1
 58.8  % 61.2  % (240) bps
Full-time equivalent employees as of period-end 1,477 1,493 (16) (1.1) %
___________________________________________
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.
Total noninterest expense was $69.2 million for the three months ended June 30, 2023, a 0.2% increase from the comparable period in 2022, and was $139.6 million for the six months ended June 30, 2023, a 0.1% increase from the comparable period in 2022. We remain focused on expense discipline, and have been purposeful in our efforts to rationalize our expense base given our economic outlook and our view on the future of banking. During a time of decades-high inflation, we have effectively managed our noninterest expense base.
Salaries, wages, and employee benefits were $39.9 million for the three months ended June 30, 2023, a 4.6% increase from the comparable period in 2022, and were $80.2 million for the six months ended June 30, 2023, a 3.5% increase from the comparable period in 2022. Full-time equivalents were 1,477 as of June 30, 2023, compared to 1,493 at June 30, 2022. Labor market trends over the past year reflected a tight labor supply, while job gains resulted in increased demands for a skilled workforce, maintaining upward pressure on salaries, wages, and employee benefits.
Data processing expense was $5.9 million for the three months ended June 30, 2023, a 9.8% increase from the comparable period in 2022, and was $11.5 million for the six months ended June 30, 2023, a 11.5% increase from the comparable period in 2022. Increases were primarily attributable to expenses for FirsTech transaction volume and continued Company-wide investments in technology enhancements, as well as inflation-driven price increases.
Combined, net occupancy expense of premises and furniture and equipment expense totaled $6.2 million for the three months ended June 30, 2023, a 8.0% decrease from the comparable period in 2022, and $12.7 million for the six months ended June 30, 2023, a 8.2% decrease from the comparable period in 2022. Year-over-year decreases were primarily attributable to lower maintenance costs and declines in depreciation expense.
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Professional fees were $1.0 million for the three months ended June 30, 2023, a 39.5% decrease from the comparable period in 2022. This decrease is primarily attributable to a recapture of legal expenses related to the payoff of a large classified asset in the quarter. Professional fees were $3.0 million for the six months ended June 30, 2023, a 2.7% decrease from the comparable period in 2022.
Amortization of intangible assets was $2.7 million for the three months ended June 30, 2023, an 9.6% decrease from the comparable period in 2022, and $5.4 million for the six months ended June 30, 2023, a 9.5% decrease from the comparable period for 2022, due to the use of an accelerated amortization methodology.
Interchange expense was $1.9 million for the three months ended June 30, 2023, a 25.8% increase from the comparable period in 2022, and was $3.7 million for the six months ended June 30, 2023, a 22.8% increase from the comparable period in 2022. Fluctuations in interchange expense were primarily the result of increased payment and volume activity at FirsTech.
FDIC insurance expense was $1.5 million for the three months ended June 30, 2023, a 30.6% increase from the comparable period in 2022, and $3.0 million for the six months ended June 30, 2023, a 35.1% increase from the comparable period in 2022. Increases were the result of an FDIC final rule to increase the initial base deposit insurance assessment rate applicable to all depository institutions by two basis points beginning in 2023.
Other expense was $10.2 million for the three months ended June 30, 2023, a 12.4% decrease from the comparable period in 2022, and was $20.0 million for the six months ended June 30, 2023, a 14.8% decrease from the comparable period in 2022. Decreases were across multiple expense categories as a result of expense discipline in marketing and business development activities and lower check card fees, partially offset by increases in New Markets Tax Credits amortization. Year to date decreases were also influenced by fluctuations in OREO and the provision for unfunded commitments.
The efficiency ratio2, which is a measure commonly used by management and the banking industry, measures the amount of expense incurred to generate a dollar of revenue. Our efficiency ratios were 60.9% and 58.8% for the three and six months ended June 30, 2023, respectively, compared to 60.6% and 61.8% for the three and six months ended June 30, 2022, respectively.
Our adjusted efficiency ratios2 were 60.9% and 58.8% for the three and six months ended June 30, 2023, respectively, compared to 60.3% and 61.2% for three and six months ended June 30, 2022, respectively.
Taxes
Effective income tax rates of 20.3% and 20.5% for the three and six months ended June 30, 2023, respectively, were lower than the combined federal and state statutory rate of approximately 28.0% due to tax exempt interest income, such as municipal bond interest and bank owned life insurance income, and investments in various tax credits. We continue to monitor evolving federal and state tax legislation and its potential impact on operations on an ongoing basis. As of June 30, 2023, 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.
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.
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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,
2023		 December 31,
2022		 Change % Change
Assets
Debt securities available for sale $ 2,283,848  $ 2,461,393  $ (177,545) (7.2) %
Debt securities held to maturity 894,102  918,312  (24,210) (2.6) %
Portfolio loans, net of ACL 7,713,645  7,634,094  79,551  1.0  %
Total assets $ 12,209,029  $ 12,336,677  $ (127,648) (1.0) %
Liabilities
Deposits:
Noninterest-bearing $ 3,086,885  $ 3,393,666  $ (306,781) (9.0) %
Interest-bearing 6,975,870  6,677,614  298,256  4.5  %
Total deposits 10,062,755  10,071,280  (8,525) (0.1) %
Securities sold under agreements to repurchase 202,953  229,806  (26,853) (11.7) %
Short-term borrowings 212,000  351,054  (139,054) (39.6) %
Subordinated notes, net of unamortized issuance costs 222,454  222,038  416  0.2  %
Total liabilities $ 11,007,081  $ 11,190,700  $ (183,619) (1.6) %
Stockholders’ equity $ 1,201,948  $ 1,145,977  $ 55,971  4.9  %
Portfolio Loans
We believe that making sound and profitable loans is a necessary and desirable means of employing funds available for investment. Busey maintains lending policies and procedures designed to focus lending efforts on the types, locations, and duration of loans most appropriate for its business model and markets. While not specifically limited, we attempt to focus our lending on short to intermediate-term (0-10 years) loans in geographic areas within 125 miles of our lending offices. Loans originated outside of these areas are generally to existing customers of Busey Bank. We attempt to utilize government-assisted lending programs, such as the SBA and U.S. 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.
Busey Bank maintains a well-diversified loan portfolio and, as a matter of policy and practice, limits concentration exposure in any particular loan segment.
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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 Corporation and its subsidiaries, are reviewed for compliance with regulatory guidelines.
Busey maintains an independent loan review department that reviews loans for compliance with our loan policy on a periodic basis. In addition, the loan review department reviews risk assessments made by our credit department, lenders, and loan committees. Results of these reviews are presented to management and the audit committee at least quarterly.
Busey Bank’s lending activities can be summarized into two primary categories: commercial and retail. Lending is further classified 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 five primary areas can be found in Busey’s 2022 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 and class were as follows (dollars in thousands):
June 30, 2023
Illinois Missouri Florida Indiana Total
Commercial loans
Commercial $ 1,400,687  $ 405,859  $ 43,271  $ 49,901  $ 1,899,718 
Commercial real estate 2,253,168  712,853  228,396  166,891  3,361,308 
Real estate construction 332,904  98,902  48,513  52,081  532,400 
Total commercial loans 3,986,759  1,217,614  320,180  268,873  5,793,426 
Retail loans
Retail real estate 1,270,584  228,378  128,616  75,479  1,703,057 
Retail other 304,193  1,690  1,557  1,361  308,801 
Total retail loans 1,574,777  230,068  130,173  76,840  2,011,858 
Total portfolio loans $ 5,561,536  $ 1,447,682  $ 450,353  $ 345,713  $ 7,805,284 
ACL (91,639)
Portfolio loans, net of ACL $ 7,713,645 
December 31, 2022
Illinois Missouri Florida Indiana Total
Commercial loans
Commercial $ 1,401,165  $ 466,904  $ 52,925  $ 53,160  $ 1,974,154 
Commercial real estate 2,180,767  680,532  220,939  179,635  3,261,873 
Real estate construction 326,154  131,782  31,212  41,321  530,469 
Total commercial loans 3,908,086  1,279,218  305,076  274,116  5,766,496 
Retail loans
Retail real estate 1,253,069  210,048  122,397  71,568  1,657,082 
Retail other 296,719  2,565  1,788  1,052  302,124 
Total retail loans 1,549,788  212,613  124,185  72,620  1,959,206 
Total portfolio loans $ 5,457,874  $ 1,491,831  $ 429,261  $ 346,736  $ 7,725,702 
ACL (91,608)
Portfolio loans, net of ACL $ 7,634,094 
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Busey generated $79.6 million, or 1.0%, in net loan growth during the six months ended June 30, 2023. Like prior periods, most of the loan growth occurred within the Company’s existing client base. Changes in portfolio loan balances were as follows (dollars in thousands):
As of
June 30,
2023		 December 31,
2022		 Change % Change
Commercial loans
Commercial $ 1,899,718 $ 1,974,154 $ (74,436) (3.8) %
Commercial real estate 3,361,308 3,261,873 99,435 3.0  %
Real estate construction 532,400 530,469 1,931 0.4  %
Total commercial loans 5,793,426 5,766,496 26,930 0.5  %
Retail loans
Retail real estate 1,703,057 1,657,082 45,975 2.8  %
Retail other 308,801 302,124 6,677 2.2  %
Total retail loans 2,011,858 1,959,206 52,652 2.7  %
Total portfolio loans 7,805,284 7,725,702 79,582 1.0  %
ACL (91,639) (91,608) (31) —  %
Portfolio loans, net of ACL $ 7,713,645 $ 7,634,094 $ 79,551 1.0  %
Excluding the amortized cost of PPP loans, changes in commercial loan balances were as follows (dollars in thousands):
As of
June 30,
2023		 December 31,
2022		 Change % Change
Total commercial loans $ 5,793,426  $ 5,766,496  $ 26,930 0.5  %
Less: PPP loans amortized cost (667) (845) 178 21.1  %
Commercial loan balances, excluding PPP loans $ 5,792,759 $ 5,765,651 $ 27,108 0.5  %
As has been our practice, we remain steadfast in our conservative approach to underwriting and disciplined approach to pricing, particularly given our outlook for the economy in the coming quarters. This posture will impact loan growth in subsequent quarters. Given this outlook, loan growth is likely to slow compared to Busey’s results of the last twelve months and our previous expectations.
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. Estimates of credit losses are based on a careful consideration of all significant factors affecting collectability as of the evaluation date. The ACL is established through the provision for credit loss expense charged to income. Provision expenses were recorded as follows for each of the periods indicated (dollars in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Provision for credit losses $ 627  $ 1,653  $ 1,580  $ 1,400 
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The ACL and the ratio of ACL to portfolio loan balances is presented below by loan category and class, as of each of the dates indicated (dollars in thousands):
As of June 30, 2023 As of December 31, 2022
Portfolio Loans ACL Ratio of ACL to
Portfolio Loans		 Portfolio Loans ACL Ratio of ACL to
Portfolio Loans
Commercial
Commercial $ 1,899,718  $ 24,510  1.29  % $ 1,974,154  $ 23,860  1.21  %
Commercial real estate 3,361,308  33,656  1.00  % 3,261,873  38,299  1.17  %
Real estate construction 532,400  5,071  0.95  % 530,469  6,457  1.22  %
Total commercial 5,793,426  63,237  1.09  % 5,766,496  68,616  1.19  %
Retail
Retail real estate 1,703,057  24,675  1.45  % 1,657,082  18,193  1.10  %
Retail other 308,801  3,727  1.21  % 302,124  4,799  1.59  %
Total retail 2,011,858  28,402  1.41  % 1,959,206  22,992  1.17  %
Total $ 7,805,284  $ 91,639  1.17  % $ 7,725,702  $ 91,608  1.19  %
As of June 30, 2023, 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, prepayment speeds, credit performance trends, portfolio duration, and other factors.
Non-Performing Loans and Non-Performing Assets
Loans are considered past due if the required principal 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.
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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,
2023		 December 31,
2022		 Change % Change
Portfolio loans $ 7,805,284  $ 7,725,702  $ 79,582  1.0  %
Loans 30 – 89 days past due 5,169  6,548  (1,379) (21.1) %
Total assets 12,209,029  12,336,677  (127,648) (1.0) %
Non-performing assets
Non-performing loans:
Non-accrual loans $ 15,209  $ 15,067  $ 142  0.9  %
Loans 90+ days past due and still accruing 569  673  (104) (15.5) %
Total non-performing loans 15,778  15,740  38  0.2  %
OREO and other repossessed assets 68  850  (782) (92.0) %
Total non-performing assets 15,846  16,590  (744) (4.5) %
Substandard (excludes 90+ days past due) 66,007  90,489  (24,482) (27.1) %
Classified assets $ 81,853  $ 107,079  $ (25,226) (23.6) %
ACL $ 91,639  $ 91,608  $ 31  —  %
Bank Tier 1 Capital 1,338,375  1,306,716  31,659  2.4  %
Ratios
ACL to portfolio loans 1.17  % 1.19  % (2) bps
ACL to non-accrual loans 602.53  % 608.00  % (547) bps
ACL to non-performing loans 580.80  % 582.01  % (121) bps
ACL to non-performing assets 578.31  % 552.19  % 2,612 bps
Non-accrual loans to portfolio loans 0.19  % 0.20  % (1) bps
Non-performing loans to portfolio loans 0.20  % 0.20  % — bps
Non-performing assets to total assets 0.13  % 0.13  % — bps
Non-performing assets to portfolio loans and OREO and other repossessed assets 0.20  % 0.21  % (1) bps
Classified assets to Bank Tier 1 Capital and ACL 5.72  % 7.66  % (194) bps
Asset quality remains strong by both historical and current industry trends, and our operating mandate and focus have been on emphasizing credit quality over asset growth. Non-performing loan balances increased by 0.2% to $15.8 million as of June 30, 2023, compared to $15.7 million as of December 31, 2022. We saw a decline in classified assets from $107.1 million as of December 31, 2022 to $81.9 million as of June 30, 2023. Continued disciplined credit management resulted in non-performing loans as a percentage of portfolio loans of 0.20% as of both June 30, 2023, and December 31, 2022.
Asset quality metrics remain dependent upon market-specific economic conditions, and specific measures may fluctuate from period to period. If economic conditions were to deteriorate, we would expect the credit quality of our loan portfolio to decline and loan defaults to increase.
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Potential Problem Loans
Potential problem loans are loans classified as substandard which are not individually evaluated, non-accrual, or 90+ days past due, but where current information indicates that the borrower may not be able to comply with loan repayment terms. Management assesses the potential for loss on such loans and considers the effect of any potential loss in determining its provision for expected credit losses. Potential problem loans decreased to $66.0 million as of June 30, 2023, compared to $89.2 million as of December 31, 2022. Management continues to monitor these loans and anticipates that restructurings, guarantees, additional collateral, or other planned actions will result in full repayment of the debts. As of June 30, 2023, 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, Busey offered a Financial Relief Program to qualifying customers. The program included options for short-term loan payment deferrals and certain fee waivers. We had no commercial loans remaining in the program, and one payment deferred retail loan representing $0.1 million in loans, as of June 30, 2023. In comparison, we had eight payment deferred commercial loans totaling $20.6 million that were on interest-only payment terms, and one payment deferred retail loans totaling $0.1 million as of December 31, 2022. As the remaining deferral expires, we will continue to monitor for indications of a potential problem loan.
Deposits
Total deposits of $10.1 billion as of June 30, 2023, remained steady with the prior year end balance. We focus on deepening our relationships with customers to strengthen our core deposit3 franchise. Core deposits include non-brokered transaction accounts, money market deposit accounts, and time deposits of $250,000 or less. Core deposits represented 97.0% of total deposits as of June 30, 2023, compared to 98.8% as of December 31, 2022.
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. Average liquid assets are summarized in the table below (dollars in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Average liquid assets
Cash and due from banks $ 118,860  $ 121,568  $ 117,013  $ 124,085 
Interest-bearing bank deposits 116,998  230,129  112,550  394,562 
Total average liquid assets $ 235,858  $ 351,697  $ 229,563  $ 518,647 
Average liquid assets as a percent of average total assets 1.9  % 2.8  % 1.9  % 4.1  %
3 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.
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Cash and unencumbered securities on our Consolidated Balance Sheets are summarized as follows (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Cash and unencumbered securities
Total cash and cash equivalents $ 232,703  $ 227,164 
Debt securities available for sale 2,283,848  2,461,393 
Debt securities available for sale pledged as collateral (636,687) (746,675)
Cash and unencumbered securities $ 1,879,864  $ 1,941,882 
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, and our revolving credit facility, as summarized in the table below (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Additional borrowing capacity available from:
FHLB $ 1,596,430 $ 1,765,388
Federal Reserve Bank 650,402 659,680
Federal funds purchased 482,500 482,500
Revolving credit facility 40,000 40,000
Additional borrowing capacity $ 2,769,332 $ 2,947,568
Further, the company could utilize brokered deposits as additional sources of liquidity, as needed.
As of June 30, 2023, 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. The balance of commitments to extend credit represents future cash requirements and some of these commitments may expire without being drawn upon.
The following table summarizes our outstanding commitments and reserves for unfunded commitments (dollars in thousands):
As of
June 30,
2023		 December 31,
2022
Outstanding loan commitments and standby letters of credit $ 2,143,390  $ 2,024,777 
Reserve for unfunded commitments 6,232  6,601 
The following table summarizes our provision for unfunded commitments expenses (releases) for the periods presented (dollars in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Provision for unfunded commitments expense (release) $ 265  $ (267) $ (370) $ 845 
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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.
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 30, 2023:
Minimum Capital Requirements with
Capital Buffer		 As of June 30, 2023
First
Busey		 Busey
Bank
Common Equity Tier 1 Capital to Risk Weighted Assets 7.00  % 12.35  % 14.76  %
Tier 1 Capital to Risk Weighted Assets 8.50  % 13.17  % 14.76  %
Total Capital to Risk Weighted Assets 10.50  % 16.56  % 15.68  %
Leverage Ratio of Tier 1 Capital to Average Assets 6.50  % 9.93  % 11.12  %
For further discussion of capital resources and requirements, see “Note 7: Regulatory Capital.”
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NON-GAAP FINANCIAL INFORMATION
This Quarterly Report contains certain financial information determined by methods other than in accordance with GAAP. Management uses these non-GAAP financial measures and non-GAAP ratios, together with the related GAAP financial measures, in analysis of Busey’s performance and in making business decisions, as well as for comparison to Busey’s peers. We believe the adjusted measures are useful for investors and management to understand the effects of certain non-recurring noninterest items and provide additional perspective on our performance over time.
Non-GAAP disclosures have inherent limitations and are not audited. They should not be considered in isolation or as a substitute for the results reported in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Tax effected numbers included in these non-GAAP disclosures are based on estimated statutory rates and effective rates as appropriate.
A listing of Busey's non-GAAP financial measures and ratios are shown in the table below, together with the related GAAP financial measures.
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GAAP Financial Measures Related Non-GAAP Financial Measures Related Non-GAAP Ratios
Net interest income
Total noninterest income
Net security gains and losses
Total noninterest expense		 Pre-provision net revenue Pre-provision net revenue to average assets
Adjusted pre-provision net revenue Adjusted pre-provision net revenue to average assets
Net income Adjusted net income Adjusted diluted earnings per share
Adjusted return on average assets
Adjusted return on average tangible common equity
Average common equity Average tangible common equity Return on average tangible common equity
Adjusted return on average tangible common equity
Net interest income Tax-equivalent net interest income Net interest margin
Adjusted net interest income Adjusted net interest margin
Net interest income
Total noninterest income
Net security gains and losses		 Tax-equivalent revenue Efficiency ratio
Adjusted efficiency ratio
Adjusted core efficiency ratio
Total noninterest expense
Amortization of intangible assets		 Non-interest expense excluding amortization of intangible assets Efficiency ratio
Adjusted noninterest expense Adjusted efficiency ratio
Adjusted core expense Adjusted core efficiency ratio
Total noninterest expense Noninterest expense, excluding non-operating adjustments
Total assets
Goodwill and other intangible assets, net		 Tangible assets Tangible common equity to tangible assets
Total stockholders’ equity
Goodwill and other intangible assets, net		 Tangible common equity Tangible common equity to tangible assets
Tangible book value Tangible book value per common share
Portfolio loans Core loans Core loans to portfolio loans
Core loans to core deposits
Total deposits Core deposits Core deposits to total deposits
Core loans to core deposits
A reconciliation of non-GAAP financial measures to what management believes to be the most directly comparable GAAP financial measures appears below.
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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 June 30, Six Months Ended June 30,
2023 2022 2023 2022
PRE-PROVISION NET REVENUE 
Net interest income $ 78,670  $ 75,928  $ 164,527  $ 145,984 
Total noninterest income 28,012  31,019  59,860  66,791 
Net security (gains) losses 2,059  1,714  2,675  2,328 
Total noninterest expense (69,205) (69,092) (139,608) (139,468)
Pre-provision net revenue 39,536  39,569  87,454  75,635 
Non-GAAP adjustments:
Acquisition and other restructuring expenses 12  303  12  1,138 
Provision for unfunded commitments 265  (267) (370) 845 
Amortization of New Markets Tax Credits 2,259  1,662  4,480  3,003 
Adjusted pre-provision net revenue $ 42,072  $ 41,267  $ 91,576  $ 80,621 
Pre-provision net revenue, annualized [a] $ 158,578  $ 158,711  $ 176,358  $ 152,524 
Adjusted pre-provision net revenue, annualized [b] 168,750  165,521  184,670  162,578 
Average total assets [c] 12,209,865  12,452,070  12,236,643  12,555,928 
Reported: Pre-provision net revenue to average assets1
 [a÷c] 1.30  % 1.27  % 1.44  % 1.21  %
Adjusted: Pre-provision net revenue to average assets1
 [b÷c] 1.38  % 1.33  % 1.51  % 1.29  %
___________________________________________
1.Annualized measure.
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Return on Average Assets, Average Tangible Common Equity, Return on Average Tangible Common Equity, and Adjusted Return on Average Tangible Common Equity
(dollars in thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
NET INCOME ADJUSTED FOR NON-OPERATING ITEMS
Net income [a] $ 29,364  $ 29,824  $ 66,150  $ 58,263 
Non-GAAP adjustments:
Acquisition expenses:
Salaries, wages, and employee benefits —  —  —  587 
Data processing —  —  —  214 
Professional fees, occupancy, and other 12  204  12  238 
Other restructuring expenses:
Loss on leases or fixed asset impairment —  99  —  99 
Related tax benefit (3) (46) (3) (216)
Adjusted net income [b] $ 29,373  $ 30,081  $ 66,159  $ 59,185 
DILUTED EARNINGS PER SHARE
Diluted average common shares outstanding [c] 56,195,801 56,104,017 56,187,820 56,149,466
Reported: Diluted earnings per share
 [a÷c] $ 0.52  $ 0.53  $ 1.18  $ 1.04 
Adjusted: Diluted earnings per share
 [b÷c] $ 0.52  $ 0.54  $ 1.18  $ 1.05 
RETURN ON AVERAGE ASSETS
Net income, annualized [d] $ 117,779  $ 119,624  $ 133,396  $ 117,492 
Adjusted net income, annualized [e] 117,815  120,655  133,415  119,351 
Average total assets [f] 12,209,865  12,452,070  12,236,643  12,555,928 
Reported: Return on average assets1
 [d÷f] 0.96  % 0.96  % 1.09  % 0.94  %
Adjusted: Return on average assets1
 [e÷f] 0.96  % 0.97  % 1.09  % 0.95  %
RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Average common equity $ 1,207,935  $ 1,197,052  $ 1,189,479  $ 1,239,060 
Average goodwill and other intangible assets, net (360,641) (371,890) (361,990) (373,342)
Average tangible common equity [g] $ 847,294  $ 825,162  $ 827,489  $ 865,718 
Reported: Return on average tangible common equity1
 [d÷g] 13.90  % 14.50  % 16.12  % 13.57  %
Adjusted: Return on average tangible common equity1
 [e÷g] 13.90  % 14.62  % 16.12  % 13.79  %
___________________________________________
1.Annualized measure.
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Net Interest Income and Adjusted Net Interest Margin
(dollars in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Net interest income $ 78,670  $ 75,928  $ 164,527  $ 145,984 
Non-GAAP adjustments:
Tax-equivalent adjustment 561  546  1,119  1,092 
Tax-equivalent net interest income 79,231  76,474  165,646  147,076 
Purchase accounting accretion related to business combinations (413) (599) (816) (1,758)
Adjusted net interest income $ 78,818  $ 75,875  $ 164,830  $ 145,318 
Tax-equivalent net interest income, annualized [a] $ 317,795  $ 306,736  $ 334,038  $ 296,590 
Adjusted net interest income, annualized [b] 316,138  304,334  332,392  293,045 
Average interest-earning assets [c] 11,130,298  11,453,198  11,155,291  11,577,879 
Reported: Net interest margin1
 [a÷c] 2.86  % 2.68  % 2.99  % 2.56  %
Adjusted: Net interest margin1
 [b÷c] 2.84  % 2.66  % 2.98  % 2.53  %
___________________________________________
1.Annualized measure.
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Noninterest Expense Excluding Amortization of Intangible Assets, Adjusted Noninterest Expense,
Adjusted Core Expense, Noninterest Expense Excluding Non-operating Adjustments,
Efficiency Ratio, Adjusted Efficiency Ratio, and Adjusted Core Efficiency Ratio
(dollars in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Net interest income $ 78,670  $ 75,928  $ 164,527  $ 145,984 
Non-GAAP adjustments:
Tax-equivalent adjustment 561  546  1,119  1,092 
Tax-equivalent net interest income 79,231  76,474  165,646  147,076 
Total noninterest income 28,012  31,019  59,860  66,791 
Non-GAAP adjustments:
Net security (gains) losses 2,059  1,714  2,675  2,328 
Noninterest income excluding net securities gains and losses 30,071  32,733  62,535  69,119 
Tax-equivalent revenue [a] $ 109,302  $ 109,207  $ 228,181  $ 216,195 
Total noninterest expense $ 69,205  $ 69,092  $ 139,608  $ 139,468 
Non-GAAP adjustments:
Amortization of intangible assets [b] (2,669) (2,951) (5,398) (5,962)
Non-interest expense excluding amortization of intangible assets [c] 66,536  66,141  134,210  133,506 
Non-operating adjustments:
Salaries, wages, and employee benefits —  —  —  (587)
Data processing —  —  —  (214)
Lease or fixed asset impairment —  (99) —  (99)
Professional fees and other (12) (204) (12) (238)
Adjusted noninterest expense [f] 66,524  65,838  134,198  132,368 
Provision for unfunded commitments (265) 267  370  (845)
Amortization of New Markets Tax Credits (2,259) (1,662) (4,480) (3,003)
Adjusted core expense [g] $ 64,000  $ 64,443  $ 130,088  $ 128,520 
Noninterest expense, excluding non-operating adjustments [f-b] $ 69,193  $ 68,789  $ 139,596  $ 138,330 
Reported: Efficiency ratio
 [c÷a] 60.87  % 60.56  % 58.82  % 61.75  %
Adjusted: Efficiency ratio
 [f÷a] 60.86  % 60.29  % 58.81  % 61.23  %
Adjusted: Core efficiency ratio
 [g÷a] 58.55  % 59.01  % 57.01  % 59.45  %
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Tangible Book Value and Tangible Book Value Per Common Share
(dollars in thousands, except per share amounts)
As of
June 30,
2023		 December 31,
2022
Total stockholders' equity $ 1,201,948 $ 1,145,977
Goodwill and other intangible assets, net (358,898) (364,296)
Tangible book value [a] $ 843,050 $ 781,681
Ending number of common shares outstanding [b] 55,290,847 55,279,124
Tangible book value per common share [a÷b] $ 15.25 $ 14.14
Tangible Common Equity and Tangible Common Equity to Tangible Assets
(dollars in thousands)
As of
June 30,
2023		 December 31,
2022
Total assets $ 12,209,029 $ 12,336,677
Non-GAAP adjustments:
Goodwill and other intangible assets, net (358,898) (364,296)
Tax effect of other intangible assets1
 7,833 8,847
Tangible assets [a] $ 11,857,964 $ 11,981,228
Total stockholders' equity $ 1,201,948 $ 1,145,977
Non-GAAP adjustments:
Goodwill and other intangible assets, net (358,898) (364,296)
Tax effect of other intangible assets1
 7,833 8,847
Tangible common equity [b] $ 850,883 $ 790,528
Tangible common equity to tangible assets2
 [b÷a] 7.18% 6.60%
___________________________________________
1.Net of estimated deferred tax liability.
2.Tax-effected measure.
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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,
2023		 December 31,
2022
Portfolio loans [a] $ 7,805,284 $ 7,725,702
Non-GAAP adjustments:
PPP loans amortized cost (667) (845)
Core loans [b] $ 7,804,617  $ 7,724,857 
Total deposits [c] $ 10,062,755  $ 10,071,280 
Non-GAAP adjustments:
Brokered transaction accounts (6,055) (1,303)
Time deposits of $250,000 or more (297,967) (120,377)
Core deposits [d] $ 9,758,733  $ 9,949,600 
RATIOS
Core loans to portfolio loans [b÷a] 99.99% 99.99%
Core deposits to total deposits [d÷c] 96.98% 98.79%
Core loans to core deposits [b÷d] 79.98% 77.64%
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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 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 Busey’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 Coronavirus Disease 2019 pandemic), or other adverse external events that could cause economic deterioration or instability in credit markets (including Russia’s invasion of Ukraine); (iii) changes in state and federal laws, regulations, and governmental policies concerning Busey’s general business (including changes in response to the recent failures of other banks); (iv) changes in accounting policies and practices (v) changes in interest rates and prepayment rates of Busey’s assets (including the impact of the LIBOR phase-out); (vi) increased competition in the financial services sector (including from non-bank competitors such as credit unions and fintech companies) and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) the loss of key executives or associates; (ix) changes in consumer spending; (x) 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; (xi) unexpected outcomes of existing or new litigation involving Busey; (xii) fluctuations in the value of securities held in our securities portfolio; (xiii) concentrations within our loan portfolio, large loans to certain borrowers, and large deposits from certain clients; (xiv) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; (xv) the level of non-performing assets on our balance sheets; (xvi) interruptions involving our information technology and communications systems or third-party servicers; (xvii) breaches or failures of our information security controls or cybersecurity-related incidents; and (xviii) the economic impact of exceptional weather occurrences such as tornadoes, hurricanes, floods, blizzards, and droughts. 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 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
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 Busey’s 2022 Annual Report.
Critical accounting estimates are those that are critical to the portrayal and understanding of Busey’s financial condition and results of operations and require management to make assumptions that are difficult, subjective, or complex. These estimates involve judgments, assumptions, and uncertainties that are susceptible to change. In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, the possibility of a materially different financial condition or materially different results of operations is a reasonable likelihood. Further, changes in accounting standards could impact our critical accounting estimates. 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
Fair values of debt securities available for sale are measurements from an independent pricing service and are based on observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the security’s terms and conditions, among other things. Different fair value estimates could result from the use of different judgments and estimates to determine the fair values of securities.
Realized securities gains or losses are reported in the 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 allowance related to the debt security, if applicable, and recognizing any incremental impairment through earnings. If we do not intend to sell the security, nor believe it more likely than not that we will be required to sell the security before the fair value recovers to the amortized cost basis, we must determine whether any of the decline in fair value has resulted from a credit loss, or if it is entirely the result of noncredit factors.
We consider the following factors in assessing whether the decline is due to a credit loss:
•Extent to which the fair value is less than the amortized cost basis;
•Adverse conditions specifically related to the security, an industry, or a geographic area (for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, in the financial condition of the underlying loan obligors);
•Payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future;
•Failure of the issuer of the security to make scheduled interest or principal payments; 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. Impairment is recognized by establishing an allowance for the debt security through the provision for credit losses. Impairment related to noncredit factors is recognized in AOCI, net of applicable taxes.
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 allowance on acquired loans at the date of acquisition depends on whether or not the loan is classified as PCD. The allowance for PCD loans is recorded through a gross-up effect, while the allowance for acquired non-PCD loans is recorded through provision expense, consistent with originated loans. 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
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
Busey calculates the ACL at each reporting date. We recognize an allowance for the lifetime expected credit losses for the amount we do not expect to collect. 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 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 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 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 Busey’s business activities.
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, +/-300, and +/-400 basis points. 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.
Busey’s interest rate risk resulting from 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
-400 -300 -200 - 100 +100 +200 +300 +400
June 30, 2023 (11.34) % (8.16)% (5.12) % (2.61)% 2.20% 4.45% 6.71% 8.99%
December 31, 2022 (21.24) % (14.74)% (8.08) % (3.95)% 3.05% 6.11% 9.18% 12.27%
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Year-Two: Basis Point Changes
-400 -300 -200 - 100 +100 +200 +300 +400
June 30, 2023 (15.99) % (11.32)% (6.97) % (3.51)% 2.53% 5.15% 7.82% 10.54%
December 31, 2022 (27.82) % (19.56)% (10.76) % (5.27)% 3.94% 7.91% 11.94% 16.02%
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 30, 2023, 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 30, 2023, 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 30, 2023, 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 Corporation 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 Corporation 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 Busey in which any director, officer, or affiliate of 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 Busey’s 2022 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On February 3, 2015, 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, and has been amended to increase the number of shares available for repurchase as follows:
•On May 22, 2019, Busey’s board of directors approved an amendment to increase the authorized shares under the repurchase plan by 1,000,000 shares.
•On February 5, 2020, Busey’s board of directors approved an amendment to increase the authorized shares under the repurchase plan by an additional 2,000,000 shares.
•On May 24, 2023, Busey’s board of directors approved an amendment to increase the authorized shares under the repurchase plan by an additional 2,000,000 shares.
During the second quarter of 2023, Busey purchased 20,000 shares under the repurchase plan. As of June 30, 2023, the Company had 2,102,210 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, 2023 — $ — — 122,210
May 1-31, 2023 — $ — — 2,122,210
June 1-30, 2023 20,000 $ 19.86 20,000 2,102,210
Three months ended June 30, 2023 20,000 $ 19.86 20,000
Six months ended June 30, 2023 45,000 $ 20.68 45,000
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
During the fiscal quarter ended June 30, 2023, none of the Company’s directors or executive officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement.
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ITEM 6. EXHIBITS
Incorporated herein by reference
Exhibit
Number		 Description of Exhibit
Filing Entity1
(File No.)
 Form Exhibit Filing Date Filed
Herewith
10.1 BUSE
(0-15950)		 DEF 14A Appendix A 04/14/2023
10.2 BUSE
(333-272268)		 S-8 4.5 05/30/2023
10.3 BUSE
(333-272268)		 S-8 4.6 05/30/2023
10.4 BUSE
(333-272268)		 S-8 4.7 05/30/2023
31.1 X
31.2 X
32.1 X
32.2 X
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
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101.DEF iXBRL Taxonomy Extension Definition Linkbase
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: August 3, 2023
FIRST BUSEY CORPORATION
(Registrant)
By: /s/ VAN A. DUKEMAN
Van A. Dukeman
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ JEFFREY D. JONES
Jeffrey D. Jones
Chief Financial Officer
(Principal Financial Officer)
By: /s/ SCOTT A. PHILLIPS
Scott A. Phillips
Corporate Controller and Principal Accounting Officer
(Principal Accounting Officer)
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EX-31.1 2 buse_20230630xex311.htm EX-31.1 Document

EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Van A. Dukeman, Chairman, President and Chief Executive Officer of First Busey Corporation, certify that:
1)I have reviewed this Quarterly Report on Form 10-Q of First Busey Corporation;
2)Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;
3)Based on my knowledge, the Financial Statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;
4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Financial Statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and
d)disclosed in this Quarterly Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ VAN A. DUKEMAN
Van A. Dukeman
Chairman, President and Chief Executive Officer
Date: August 3, 2023
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EX-31.2 3 buse_20230630xex312.htm EX-31.2 Document

EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Jeffrey D. Jones, Chief Financial Officer of First Busey Corporation, certify that:
1)I have reviewed this Quarterly Report on Form 10-Q of First Busey Corporation;
2)Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;
3)Based on my knowledge, the Financial Statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;
4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Financial Statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and
d)disclosed in this Quarterly Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ JEFFREY D. JONES
Jeffrey D. Jones
Chief Financial Officer
Date: August 3, 2023
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EX-32.1 4 buse_20230630xex321.htm EX-32.1 Document

EXHIBIT 32.1
The following certification is provided by the undersigned Chief Executive Officer of First Busey Corporation on the basis of such officer’s knowledge and belief for the sole purpose of complying with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
CERTIFICATION
I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the accompanying Quarterly Report of First Busey Corporation on Form 10-Q for the quarter ended June 30, 2023, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of First Busey Corporation as of and for the periods covered by the Quarterly Report.
/s/ VAN A. DUKEMAN
Van A. Dukeman
Chairman, President and Chief Executive Officer
Date: August 3, 2023
1
EX-32.2 5 buse_20230630xex322.htm EX-32.2 Document

EXHIBIT 32.2
The following certification is provided by the undersigned Chief Financial Officer of First Busey Corporation on the basis of such officer’s knowledge and belief for the sole purpose of complying with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
CERTIFICATION
I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the accompanying Quarterly Report of First Busey Corporation on Form 10-Q for the quarter ended June 30, 2023, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of First Busey Corporation as of and for the periods covered by the Quarterly Report.
/s/ JEFFREY D. JONES
Jeffrey D. Jones
Chief Financial Officer
Date: August 3, 2023
1