First Busey : Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

About this update from First Busey Corporation

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) SCOPE OF DISCUSSION BUSINESS Banking Center Markets Busey's Conservative Banking Strategy Business Combinations CrossFirst Bankshares, Inc. RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2026 Net Income Non-GAAP Adjusting Items and Non-GAAP Measures Operating Performance Metrics Net Interest Income Consolidated Average Balance Sheets and Net Interest Margins Noninterest Income Noninterest Expense Efficiency Ratio Taxes FINANCIAL CONDITION Balance Sheet Portfolio Loans Portfolio Composition Concentration of Credit Risk Allowance for Credit Losses and Provision for Loan Losses Non-Performing Loans and Non-Performing Assets Potential Problem Loans Deposits Liquidity Off-Balance-Sheet Arrangements Capital Resources NON-GAAP FINANCIAL INFORMATION FORWARD-LOOKING STATEMENTS CRITICAL ACCOUNTING ESTIMATES Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations Goodwill Income Taxes Allowance for Credit Losses First Busey Corporation (BUSE) | 60 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) SCOPE OF DISCUSSION The following discussion and analysis are intended to assist readers in understanding Busey's financial condition and results of operations during the three months ended March 31, 2026, and should be read in conjunction with Busey's Consolidated Financial Statements (Unaudited) and the related Notes to the Consolidated Financial Statements (Unaudited) included in this Quarterly Report, as well as Busey's 2025 Annual Report . BUSINESS First Busey Corporation is an $18.04 billion financial holding company headquartered in Leawood, Kansas. First Busey Corporation's common stock is traded on The Nasdaq Global Select Market under the symbol "BUSE," and its Series B preferred stock is traded on The Nasdaq Global Select Market under the symbol "BUSEP." Busey provides a full range of banking, wealth management, and payment technology solutions to individuals and corporate clients through its subsidiaries, Busey Bank and FirsTech. Banking Center Markets Busey Bank, headquartered in Champaign, Illinois, serves the banking needs of its customers through 80 banking centers located across five geographical regions and verticals spanning 10 states. East Region - Busey Bank serves its East Region through 17 banking centers in the suburban Chicago market and three banking centers located in southwest Florida. Midwest Region - Busey Bank serves its Midwest Region through 21 banking centers in central Illinois, including six in the Chicago MSA; 20 banking centers in the St. Louis MSA, including eight banking centers in eastern Missouri and 12 banking centers in western Illinois; and one banking center in Indianapolis, Indiana. First Busey Corporation (BUSE) | 61 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Central Region - Busey Bank serves its Central Region through three banking centers in the Kansas City MSA, including two locations in Leawood, Kansas and one in Kansas City, Missouri; one banking center in Wichita, Kansas; and three banking centers in Oklahoma, including two in Oklahoma City and one in Tulsa. Texas Region - Busey Bank serves its Texas Region through four banking centers across the Dallas-Fort Worth MSA, including locations in Dallas, Frisco, and Fort Worth, Texas. West Region - Busey Bank serves its West region through three banking centers in Arizona, located in Phoenix and Tucson; three banking centers in Colorado, located in Denver and Colorado Springs; and one banking center in Clayton, New Mexico. Verticals - Transcending geographical boundaries, Busey operates in several industry verticals, including Life Equity Lending, Structured Finance, Energy Banking, and SBA Lending. Busey's Conservative Banking Strategy Busey's financial strength is built on a long-term conservative operating approach. The quality of Busey's core deposit 1 franchise is a critical value driver of the institution. Busey remains substantially core deposit funded, with robust liquidity. As of March 31, 2026, Busey's loan to deposit ratio was 91.3% and core deposits represented 93.7% of total deposits. Busey maintains sufficient on- and off-balance sheet liquidity to manage deposit fluctuations and the liquidity needs of its customers. Busey's credit performance reflects its highly diversified, conservatively underwritten loan portfolio. Busey's approach to lending and its underwriting standards are designed to emphasize relationship banking rather than transactional banking. In addition, as a matter of both policy and practice, Busey limits concentration exposures in any particular loan segment. Busey's conservative banking strategy is reflected in the strength of its capital base. Busey strives to consistently maintain capital ratios well in excess of thresholds required to be designated as well capitalized by applicable regulatory guidelines, thereby ensuring financial strength and flexibility across economic and operating cycles. As of March 31, 2026, Busey's leverage ratio of Tier 1 capital to average assets was 11.9%, its common equity Tier 1 capital to risk weighted assets ratio was 12.3%, and its total capital to risk weighted assets ratio was 15.9%. Business Combinations CrossFirst Bankshares, Inc. On March 1, 2025, Busey completed its acquisition of CrossFirst and its wholly-owned subsidiary, CrossFirst Bank. This transformative partnership helped create a premier commercial bank spanning 10 states. CrossFirst Bank's results of operations were included in Busey's results of operations beginning March 1, 2025. Busey operated CrossFirst Bank as a separate banking subsidiary until it was merged with and into Busey Bank on June 20, 2025. At the time of the bank merger, CrossFirst Bank's banking centers became banking centers of Busey Bank. Further information regarding Busey's acquisitions is provided in Note 2. Business Combinations in the Notes to the Consolidated Financial Statements (Unaudited) . 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 " Non-GAAP Financial Information " included in this MD&A. First Busey Corporation (BUSE) | 62 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2026 Net Income Results of Busey's operations, by operating segment, are presented below: Three Months Ended March 31, (dollars in thousands) 2026 2025 Net income (loss) Banking $ 50,240 $ (19,693) Wealth Management 6,167 6,219 FirsTech (1,680) (239) Other (4,746) (16,277) Net income (loss) $ 49,981 $ (29,990) First Busey Corporation (BUSE) | 63 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Non-GAAP Adjusting Items and Non-GAAP Measures Busey views certain non-operating items, including acquisition-related expenses, restructuring charges, and nonrecurring strategic events, as adjustments to net income reported under GAAP. Busey also adjusts for net securities gains and losses to align with industry and research analyst reporting. The objective of Busey's presentation of adjusted earnings and adjusted earnings metrics is to allow investors and analysts to more clearly identify quarterly trends in core earnings performance. Pre-tax non-GAAP adjustments were as follows: Three Months Ended March 31, (dollars in thousands) 2026 2025 Pre-tax non-GAAP adjustments to net income by income/expense category Net securities (gains) losses $ 940 $ 15,768 Provision for credit losses 1 - 45,572 Salaries, wages, and employee benefits 16,124 15,878 Data processing 80 2,302 Professional fees 119 7,294 Other noninterest expense 1 377 552 Total pre-tax non-GAAP adjustments to net income $ 17,640 $ 87,366 Pre-tax non-GAAP adjustments to net income by business objective Net securities (gains) losses 2 $ 940 $ 15,768 Initial provision for credit losses 3 - 45,572 Other acquisition (income) expenses 4 5,244 26,026 Restructuring expenses 5 11,456 - Total pre-tax non-GAAP adjustments to net income $ 17,640 $ 87,366 ___________________________________________ 1. Beginning in the second quarter of 2025, Busey revised its presentation, for all periods presented, to reclassify the provision for unfunded commitments from other noninterest expense to the provision for credit losses. 2. During the three months ended March 31, 2025, Busey sold available for sale debt securities with a book value of approximately $205.6 million for a pre-tax loss of $15.5 million and related estimated tax benefit of $4.3 million, as part of a balance sheet repositioning strategy. 3. During the three months ended March 31, 2025, in connection with the CrossFirst acquisition, Busey's recorded expense for the initial provision for credit losses consisting of a Day 2 provision for loan losses of $42.4 million, and a Day 2 provision for unfunded commitments of $3.1 million. 4. Other acquisition expenses related to the acquisition of CrossFirst, which was completed on March 1, 2025. Final expenses for the acquisition of M&M were also included for 2025. 5. Restructuring expenses were incurred in connection with the execution on additional synergies identified in the first quarter of 2026 related to the CrossFirst acquisition and also in connection with the previously announced departure of Michael J. Maddox. 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 MD&A. See " Non-GAAP Financial Information ." First Busey Corporation (BUSE) | 64 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Operating Performance Metrics Operating performance metrics presented in the table below have been derived from information used by management to monitor and manage Busey's financial performance: Three Months Ended March 31, (dollars in thousands, except per share amounts) 2026 2025 Net income (loss) (GAAP) $ 49,981 $ (29,990) Adjusted net income (Non-GAAP) 1 $ 63,211 $ 39,898 Net income (loss) available to common stockholders (GAAP) $ 45,392 $ (29,990) Adjusted net income available to common stockholders (Non-GAAP) 1 $ 58,622 $ 39,898 Diluted earnings (loss) per common share (GAAP) $ 0.52 $ (0.44) Adjusted diluted earnings per common share (Non-GAAP) 1 $ 0.67 $ 0.57 Return on average assets (Non-GAAP) 1, 2 1.12 % (0.82) % Adjusted return on average assets (Non-GAAP) 1, 2 1.42 % 1.09 % Return on average tangible common equity (Non-GAAP) 1, 2 11.10 % (7.38) % Adjusted return on average tangible common equity (Non-GAAP) 1, 2 14.12 % 11.25 % Pre-provision net revenue (Non-GAAP) 1, 3 $ 67,655 $ 28,692 Adjusted pre-provision net revenue (Non-GAAP) 1, 3 $ 84,355 $ 54,718 Pre-provision net revenue to average total assets (Non-GAAP) 1, 2, 3 1.52 % 0.78 % Adjusted pre-provision net revenue to average total assets (Non-GAAP) 1, 2, 3 1.89 % 1.50 % ___________________________________________ 1. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see " Non-GAAP Financial Information ," included in this MD&A. 2. Annualized measure. 3. Beginning in the second quarter of 2025, Busey revised its presentation, for all periods presented, to reclassify the provision for unfunded commitments so that it is now included within the provision for credit losses, affecting the calculation of pre-provision net revenue and related measures and ratios. Net Interest Income Net interest income is the difference between interest income and fees earned on loans and investments ("interest-earning assets") and interest expense incurred on deposits and borrowings ("interest-bearing liabilities"). Interest rate levels and volume fluctuations within interest-earning assets and interest-bearing liabilities impact net interest income. Net interest margin is tax-equivalent net interest income as a percent of average interest-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. First Busey Corporation (BUSE) | 65 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Consolidated Average Balance Sheets and Net Interest Margins The table below presents Busey's Consolidated Average Balance Sheets, summarizing average balances for each major category of assets and liabilities, the interest income earned on interest-earning assets, the interest expense paid for interest-bearing liabilities, and the related interest yields for the periods indicated. Average information is provided on a daily average basis: First Busey Corporation (BUSE) | 66 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, 2026 2025 (dollars in thousands) Average Balance Income/ Expense Yield/ Rate 5 Average Balance Income/ Expense Yield/ Rate 5 Assets Interest-bearing bank deposits and federal funds sold $ 139,204 $ 1,222 3.56 % $ 688,233 $ 7,584 4.47 % Investment securities: U.S. Government obligations 110,353 1,387 5.10 % 41,729 503 4.89 % Obligations of states and political subdivisions 265,436 2,820 4.31 % 192,984 1,531 3.22 % Other securities 2,542,451 19,082 3.04 % 2,547,722 17,076 2.72 % Restricted bank stock 81,619 880 4.37 % 51,146 759 6.02 % Loans held for sale 5,072 73 5.84 % 3,443 55 6.48 % Portfolio loans 1, 2 13,521,631 200,898 6.03 % 9,838,337 139,844 5.76 % Total interest-earning assets 1, 3 16,665,766 $ 226,362 5.51 % 13,363,594 $ 167,352 5.08 % Cash and due from banks 163,897 172,788 Premises and equipment 193,830 140,490 ACL (175,402) (131,800) Other assets 1,212,129 1,286,226 Total assets $ 18,060,220 $ 14,831,298 Liabilities and stockholders' equity Interest-bearing transaction deposits $ 3,124,068 $ 12,505 1.62 % $ 2,646,916 $ 10,928 1.67 % Savings and money market deposits 5,687,520 31,964 2.28 % 4,443,528 27,592 2.52 % Time deposits 2,409,136 21,557 3.63 % 2,052,337 18,792 3.71 % Federal funds purchased and repurchase agreements 160,822 896 2.26 % 144,838 876 2.45 % Borrowings 4 314,611 3,332 4.30 % 264,615 3,541 5.43 % Junior subordinated debt issued to unconsolidated trusts 77,354 1,262 6.62 % 75,607 1,355 7.27 % Total interest-bearing liabilities 11,773,511 $ 71,516 2.46 % 9,627,841 $ 63,084 2.66 % Net interest spread 1 3.05 % 2.42 % Noninterest-bearing deposits 3,536,830 3,036,127 Other liabilities 279,607 232,254 Stockholders' equity 2,470,272 1,935,076 Total liabilities and stockholders' equity $ 18,060,220 $ 14,831,298 Interest income / earning assets 1, 3 $ 16,665,766 $ 226,362 5.51 % $ 13,363,594 $ 167,352 5.08 % Interest expense / earning assets 16,665,766 71,516 1.74 % 13,363,594 63,084 1.92 % Net interest margin 1 $ 154,846 3.77 % $ 104,268 3.16 % ___________________________________________ 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 " Non-GAAP Financial Information ," included in this MD&A. 2. Non-accrual loans are included in average portfolio loans. 3. Interest income includes tax-equivalent adjustments of $0.9 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively. 4. Includes short-term and long-term borrowings. Interest expense includes non-usage fees on a revolving loan. 5. Annualized. First Busey Corporation (BUSE) | 67 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Notable changes in average assets and average liabilities are summarized as follows: Three Months Ended March 31, (dollars in thousands) 2026 2025 Change % Change Average interest-earning assets $ 16,665,766 $ 13,363,594 $ 3,302,172 24.7 % Average interest-bearing liabilities 11,773,511 9,627,841 2,145,670 22.3 % Average noninterest-bearing deposits 3,536,830 3,036,127 500,703 16.5 % Total average deposits 14,757,554 12,178,908 2,578,646 21.2 % Total average liabilities 15,589,948 12,896,222 2,693,726 20.9 % Average noninterest-bearing deposits as a percent of total average deposits 24.0 % 24.9 % (90) bps Total average deposits as a percent of total average liabilities 94.7 % 94.4 % 30 bps Changes in net interest income and net interest margin are summarized as follows: Three Months Ended March 31, (dollars in thousands) 2026 2025 Change % Change Net interest income Interest income, on a tax-equivalent basis 1 $ 226,362 $ 167,352 $ 59,010 35.3 % Interest expense (71,516) (63,084) (8,432) (13.4) % Net interest income, on a tax-equivalent basis 1 $ 154,846 $ 104,268 $ 50,578 48.5 % Net interest margin 1, 2 3.77 % 3.16 % 61 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 " Non-GAAP Financial Information ," included in this MD&A. 2. Net interest income expressed as a percentage of average earning assets, stated on a tax-equivalent basis. Busey continues to evaluate and execute off-balance sheet hedging and balance sheet strategies as well as embedding rate protection in our asset originations to provide consistent and predictable net interest income performance across different interest rate environments. Busey continues to execute various deposit campaigns to attract term funding and savings accounts at a lower rate than our marginal cost of funds. Net interest spread represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, and is presented in the table below: Three Months Ended March 31, 2026 2025 Net interest spread 1 3.05 % 2.42 % ___________________________________________ 1. Net interest spread is calculated on a tax-equivalent basis. First Busey Corporation (BUSE) | 68 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Annualized net interest margins for the quarterly periods indicated were as follows: 2026 2025 First Quarter 3.77 % 3.16 % Second Quarter 3.49 % Third Quarter 3.58 % Fourth Quarter 3.71 % 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 2025 Annual Report . Noninterest Income Changes in noninterest income are summarized in the table below: Three Months Ended March 31, (dollars in thousands) 2026 2025 Change % Change Noninterest income Wealth management fees $ 19,370 $ 17,364 $ 2,006 11.6 % Payment technology solutions 5,077 5,073 4 0.1 % Treasury management services 4,826 3,017 1,809 60.0 % Card services and ATM fees 4,646 3,709 937 25.3 % Other service charges on deposit accounts 1,506 1,533 (27) (1.8) % Mortgage revenue 438 329 109 33.1 % Income on bank owned life insurance 1,616 1,446 170 11.8 % Securities income: Realized net gains (losses) on securities 23 (15,537) 15,560 100.1 % Unrealized net gains (losses) recognized on equity securities (963) (231) (732) (316.9) % Net securities gains (losses) (940) (15,768) 14,828 94.0 % Other noninterest income 5,726 4,520 1,206 26.7 % Total noninterest income $ 42,265 $ 21,223 $ 21,042 99.1 % Assets under care as of period end $ 15,647,250 $ 13,677,866 $ 1,969,384 14.4 % Total noninterest income provided $42.3 million for the three months ended March 31, 2026, an increase of 99.1% from the comparable period in 2025. During the first quarter of 2025, Busey executed a strategic balance sheet repositioning resulting in a securities loss of $15.5 million. Whereas the first quarter of 2026 included a full quarter of income as a larger organization after the acquisition of CrossFirst, the first quarter of 2025 included only one month of income from CrossFirst following the acquisition, which was completed on March 1, 2025. Busey continues to benefit from its diverse set of product offerings. First Busey Corporation (BUSE) | 69 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Wealth management fees provided income of $19.4 million for the three months ended March 31, 2026, an increase of 11.6% from the comparable period for 2025, primarily due to increases in trust fee income. Busey's Wealth Management division ended the first quarter of 2026 with $15.65 billion in assets under care, an increase of 14.4% compared to the balance on March 31, 2025. Busey's portfolio management team continues to focus on long-term returns and managing risk in the face of volatile markets. Income from payment technology solutions derives from Busey's payment processing company, FirsTech. Payment technology solutions provided income of $5.1 million for the three months ended March 31, 2026, an increase of 0.1% from the comparable period in 2025. Treasury management services, which consist primarily of business analysis charges and wire transfer fees on commercial accounts, provided income of $4.8 million for the three months ended March 31, 2026, representing an increase of 60.0% from the comparable period in 2025, primarily due to the addition of CrossFirst commercial services. Card services and ATM fees, which include both commercial and consumer accounts, provided income of $4.6 million for the three months ended March 31, 2026, representing an increase of 25.3% from the comparable period in 2025, primarily due to the addition of CrossFirst corporate card services. Other service charges on deposit accounts provided income of $1.5 million for the three months ended March 31, 2026, representing a decrease of 1.8% from the comparable period in 2025, primarily as a result of lower non-sufficient fund charges. Mortgage revenue provided $0.4 million for the three months ended March 31, 2026, representing an increase of 33.1% from the comparable period in 2025. General economic conditions and interest rate volatility may impact future mortgage revenue. Income on bank owned life insurance provided $1.6 million for the three months ended March 31, 2026, representing an increase of 11.8% from the comparable period in 2025, which included an increase of $0.4 million on the cash surrender value of the policies and a decrease of $0.2 million in earnings on death proceeds. Net securities losses of $0.9 million were realized during the three months ended March 31, 2026, representing a decrease of 94.0% from the net securities losses realized during the comparable period in 2025. Losses in 2025 were elevated due to the aforementioned strategic balance sheet repositioning. Other noninterest income provided $5.7 million for the three months ended March 31, 2026, representing an increase of 26.7% from the comparable period in 2025. Increases were primarily attributable to swap origination, syndication, and other loan fees, offset by declines in OREO and private equity income. First Busey Corporation (BUSE) | 70 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Noninterest Expense Changes in noninterest expense are summarized in the table below: Three Months Ended March 31, (dollars in thousands) 2026 2025 Change % Change Noninterest expense Salaries, wages, and employee benefits $ 85,230 $ 67,563 $ 17,667 26.1 % Data processing 9,864 9,575 289 3.0 % Premises expenses: Net occupancy expense of premises 7,652 5,799 1,853 32.0 % Furniture and equipment expenses 2,177 1,744 433 24.8 % Combined, net occupancy expense of premises and furniture and equipment expenses 9,829 7,543 2,286 30.3 % Professional fees 3,239 9,511 (6,272) (65.9) % Amortization of intangible assets 4,291 3,083 1,208 39.2 % Interchange expense 1,116 1,343 (227) (16.9) % FDIC insurance 2,451 2,167 284 13.1 % Other noninterest expense 1 13,499 11,245 2,254 20.0 % Total noninterest expense 1 $ 129,519 $ 112,030 $ 17,489 15.6 % Income taxes $ 13,676 $ (2,679) $ 16,355 610.5 % Effective income tax rate 21.5 % 8.2 % 1,330 bps Efficiency ratio (Non-GAAP) 2 54.8 % 58.7 % (390) bps Full-time equivalent associates as of period-end 1,832 1,965 (133) (6.8) % ___________________________________________ 1. Beginning in the second quarter of 2025, Busey revised its presentation, for all periods presented, to reclassify the provision for unfunded commitments from other noninterest expense to the provision for credit losses. 2. The efficiency ratio is a non-GAAP financial measure. For a reconciliation of non-GAAP measures to the most directly comparable financial GAAP measures, see " Non-GAAP Financial Information " included in this MD&A. Total noninterest expense amounted to $129.5 million for the three months ended March 31, 2026, representing an increase of 15.6% from the comparable period in 2025, with the increases primarily attributable to increased salaries, wages, and employee benefits and other noninterest expense, partially offset by declines in professional fees. Salaries, wages, and employee benefits totaled $85.2 million for the three months ended March 31, 2026, representing an increase of 26.1% from the comparable period in 2025. Excluding acquisition and restructuring expenses, which include severance, retention, and stock-based compensation expenses related to the CrossFirst acquisition, salaries, wages, and employee benefits totaled $69.1 million for the three months ended March 31, 2026, representing an increase of 33.7% from the comparable period in 2025. Busey's associate base and footprint broadened in connection with the CrossFirst acquisition, which was completed on March 1, 2025, affecting one month of the first quarter of 2025 and all three months of the first quarter of 2026. Data processing expense totaled $9.9 million for the three months ended March 31, 2026, representing an increase of 3.0% from the comparable period in 2025. Increases were primarily attributable to Company-wide investments in technology enhancements, as well as inflation-driven price increases. First Busey Corporation (BUSE) | 71 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Combined, net occupancy expense of premises and furniture and equipment expense totaled $9.8 million for the three months ended March 31, 2026, representing an increase of 30.3% from the comparable period in 2025. Primary cost drivers in these expense categories include lease costs, repairs and maintenance, depreciation expense, real estate taxes, and utilities. Expense growth resulted primarily from the addition of banking centers assumed in the CrossFirst acquisition, as well as new banking centers opened in 2025 and the first quarter of 2026. Professional fees totaled $3.2 million for the three months ended March 31, 2026, representing a decrease of 65.9% from the comparable period in 2025, primarily as a result of increases in professional fees to execute the CrossFirst acquisition. Excluding acquisition and restructuring expenses, professional fees totaled $3.1 million for the three months ended March 31, 2026, representing an increase of 40.7% from the comparable period in 2025, due to increases in consulting costs and audit and accounting costs, partially offset by declines in legal costs. Amortization of intangible assets totaled $4.3 million for the three months ended March 31, 2026, representing an increase of 39.2% from the comparable period for 2025. The CrossFirst acquisition added $81.8 million of finite-lived intangible assets. Busey uses an accelerated amortization methodology. Interchange expense totaled $1.1 million for the three months ended March 31, 2026, representing a decrease of 16.9% from the comparable period in 2025. Fluctuations in interchange expense relate to payment and volume activity at FirsTech. FDIC insurance expense totaled $2.5 million for the three months ended March 31, 2026, representing an increase of 13.1% from the comparable period in 2025. Additional FDIC insurance assessments were the result of Busey's growth in average assets in connection with the CrossFirst acquisition. Other noninterest expense totaled $13.5 million for the three months ended March 31, 2026, representing an increase of 20.0% from the comparable period in 2025. Significant drivers of the increase included business development costs, software amortization, and loan expenses, impacted by the timing of the CrossFirst acquisition. Efficiency Ratio The efficiency ratio 2 , which is a measure commonly used by management and the banking industry, measures the amount of expense incurred to generate a dollar of revenue. Busey's efficiency ratio was 54.8% for the three months ended March 31, 2026, compared to 58.7% for the same period in 2025. Taxes Busey's effective income tax rate was 21.5% for the three months ended March 31, 2026, which is lower than the combined federal and state statutory rate of approximately 26%, primarily due to tax exempt interest income, apportionment changes, and investments in various income tax credits. Busey continues to monitor evolving federal and state tax legislation and its potential impact on operations on an ongoing basis. As of March 31, 2026, Busey was under examination by the Illinois Department of Revenue for M&M's tax filings for the tax years 2022 and 2023. 2 The efficiency ratio is a non-GAAP financial measure. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see " Non-GAAP Financial Information " included in this MD&A. First Busey Corporation (BUSE) | 72 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) FINANCIAL CONDITION Balance Sheet Changes in significant items on Busey's Consolidated Balance Sheets (Unaudited) are summarized in the table below: As of (dollars in thousands) March 31, 2026 December 31, 2025 Change % Change Assets Debt securities available for sale $ 2,215,267 $ 2,162,548 $ 52,719 2.4 % Debt securities held to maturity 725,540 746,385 (20,845) (2.8) % Portfolio loans, net of ACL 13,290,836 13,393,776 (102,940) (0.8) % Total assets 18,036,622 18,104,736 (68,114) (0.4) % Liabilities Deposits: Noninterest-bearing 3,526,036 3,659,421 (133,385) (3.6) % Interest-bearing 11,210,024 11,246,537 (36,513) (0.3) % Total deposits 14,736,060 14,905,958 (169,898) (1.1) % Securities sold under agreements to repurchase 156,364 166,929 (10,565) (6.3) % Short-term borrowings 170,000 - 170,000 N/A Long-term borrowings 123,466 113,806 9,660 8.5 % Subordinated notes, net of unamortized issuance costs 99,499 99,395 104 0.1 % Junior subordinated debt owed to unconsolidated trusts 77,400 77,328 72 0.1 % Total liabilities 15,623,600 15,635,754 (12,154) (0.1) % Stockholders' equity 2,413,022 2,468,982 (55,960) (2.3) % Portfolio Loans Busey believes that making sound and profitable loans is a necessary and desirable means of employing funds available for investment. Busey maintains lending policies and procedures designed to focus lending efforts on the types, locations, and duration of loans most appropriate for its business model and markets. While not specifically limited, Busey attempts to focus its lending on short to intermediate-term loans (0-10 years) in states where Busey maintains lending offices. Busey attempts 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. Busey's underwriting standards are designed to encourage relationship banking rather than transactional banking. Relationship banking implies a primary banking relationship with the borrower that includes, at a minimum, an active deposit banking relationship in addition to the lending relationship. Significant underwriting factors in addition to location, duration, a sound and profitable cash flow basis, and the borrower's character, include the quality of the borrower's financial history, the liquidity of the underlying collateral, and the reliability of the valuation of the underlying collateral. First Busey Corporation (BUSE) | 73 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) At no time is a borrower's total borrowing relationship permitted to exceed Busey Bank's regulatory lending limit. Busey generally limits such relationships to amounts substantially less than the regulatory limit. Loans to related parties, including executive officers and directors of First Busey Corporation and its subsidiaries, are reviewed for compliance with regulatory guidelines. Busey maintains an independent loan review department that reviews loans for compliance with Busey's loan policy on a periodic basis. In addition, the loan review department reviews risk assessments made by Busey's credit department, lenders, and loan committees. Results of these reviews are presented to management and the audit committee at least quarterly. Busey Bank's lending can be summarized into five primary lending activities, which can be further categorized as either commercial or retail lending. Commercial lending activities consist of C&I and other commercial loans, CRE loans, and real estate construction loans while retail lending activities consist of retail real estate loans and retail other loans. A description of each of the five primary lending activities can be found in " Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Portfolio Loans " of Busey's 2025 Annual Report . Portfolio Composition The composition of Busey's loan portfolio as of the dates indicated, as well as changes in portfolio loan balances, were as follows: As of (dollars in thousands) March 31, 2026 December 31, 2025 Change % Change Commercial loans C&I and other commercial $ 4,124,737 $ 4,229,208 $ (104,471) (2.5) % CRE 5,566,044 5,550,018 16,026 0.3 % Real estate construction 1,052,505 1,039,289 13,216 1.3 % Total commercial loans 10,743,286 10,818,515 (75,229) (0.7) % Retail loans Retail real estate 2,119,621 2,154,616 (34,995) (1.6) % Retail other 596,983 594,668 2,315 0.4 % Total retail loans 2,716,604 2,749,284 (32,680) (1.2) % Total portfolio loans 13,459,890 13,567,799 (107,909) (0.8) % ACL (169,054) (174,023) 4,969 (2.9) % Portfolio loans, net $ 13,290,836 $ 13,393,776 $ (102,940) (0.8) % Seasonally slow new production and payoff headwinds contributed to anticipated declines in portfolio loan balances during the three months ended March 31, 2026. First Busey Corporation (BUSE) | 74 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Concentration of Credit Risk As a matter of policy and practice, Busey limits the level of concentration exposure in any particular loan segment with the goal of maintaining a well-diversified loan portfolio. The following table presents the percentage of total portfolio loans for each lending activity: As of March 31, 2026 December 31, 2025 Commercial loans C&I and other commercial 30.7 % 31.2 % CRE 41.4 % 40.9 % Real estate construction 7.8 % 7.6 % Total commercial loans 79.9 % 79.7 % Retail loans Retail real estate 15.7 % 15.9 % Retail other 4.4 % 4.4 % Total retail loans 20.1 % 20.3 % Total portfolio loans 100.0 % 100.0 % Busey Bank originates loans across its regional operating model and through its specialty product lines, as described below: • East - Suburban Chicago markets and southwest Florida • Midwest - Central Illinois, the St. Louis MSA, and Indianapolis, Indiana • Central - The Kansas City MSA, central Kansas, and Oklahoma • Texas - The Dallas-Fort Worth MSA • West - Colorado, New Mexico, and Arizona • Verticals - Busey's Life Equity Lending, Structured Finance, Energy Banking, and SBA Lending products The distribution of Busey Bank loans outstanding that were originated in each of these markets is presented in the tables below: As of March 31, 2026 (dollars in thousands) C&I and other commercial CRE Real estate construction Retail real estate Retail other Total Loans by region of origination East $ 684,137 $ 1,192,985 $ 87,345 $ 521,508 $ 66,993 $ 2,552,968 Midwest 1,199,443 2,103,352 270,008 1,033,902 11,133 4,617,838 Central 587,666 786,158 220,228 358,188 13,105 1,965,345 Texas 573,603 780,103 286,489 110,241 144 1,750,580 West 245,709 550,422 172,890 83,341 316 1,052,678 Verticals 834,179 153,024 15,545 12,441 505,292 1,520,481 Total portfolio loans $ 4,124,737 $ 5,566,044 $ 1,052,505 $ 2,119,621 $ 596,983 13,459,890 ACL (169,054) Portfolio loans, net of ACL $ 13,290,836 First Busey Corporation (BUSE) | 75 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) As of December 31, 2025 (dollars in thousands) C&I and other commercial CRE Real estate construction Retail real estate Retail other Total Loans by region of origination 1 East $ 658,068 $ 1,173,323 $ 86,972 $ 521,515 $ 79,430 $ 2,519,308 Midwest 1,281,283 2,078,637 294,267 1,070,395 7,654 4,732,236 Central 621,370 828,888 206,332 359,062 13,220 2,028,872 Texas 592,692 786,899 276,881 110,746 3,215 1,770,433 West 244,347 525,820 155,017 80,558 483 1,006,225 Verticals 831,448 156,451 19,820 12,340 490,666 1,510,725 Total portfolio loans $ 4,229,208 $ 5,550,018 $ 1,039,289 $ 2,154,616 $ 594,668 13,567,799 ACL (174,023) Portfolio loans, net of ACL $ 13,393,776 ___________________________________________ 1. In 2026, Busey moved all of its banking centers in the St. Louis MSA from its East region to its Midwest region. In addition, Busey adjusted its methodology for allocation of purchase accounting, loan fees, and clearings. Commercial Real Estate Loans CRE loans comprised 41.4% of Busey's total loan portfolio as of March 31, 2026, and CRE properties were 25.9% owner occupied. Owner occupied commercial real estate is generally dependent on the performance of the borrowers' businesses, whereas non-owner occupied commercial real estate is generally reliant on property cash flows generated by third-party tenants. As of (dollars in thousands) March 31, 2026 December 31, 2025 CRE by Occupancy Non-owner occupied CRE $ 4,125,785 74.1 % $ 4,118,361 74.2 % Owner occupied CRE 1,440,259 25.9 % 1,431,657 25.8 % CRE $ 5,566,044 100.0 % $ 5,550,018 100.0 % First Busey Corporation (BUSE) | 76 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) CRE loans are made across a variety of industries, as depicted in the table below. Balances reflected in the table below do not include loan origination fees or costs, purchase accounting adjustments, SBA discounts, or negative escrow amounts. As of March 31, 2026 CRE Loans Occupied By % of CRE Loans That Are Owner Occupied (dollars in thousands) Non-Owner Owner Industrial and warehousing $ 1,237,363 $ 745,152 $ 492,211 39.8 % Apartments 864,840 864,653 187 - % Retail 860,313 749,893 110,420 12.8 % Traditional office 676,774 466,720 210,054 31.0 % Specialty 538,308 211,185 327,123 60.8 % Hotel 331,816 327,145 4,671 1.4 % Medical office 284,498 134,362 150,136 52.8 % Student housing 274,269 274,154 115 - % Restaurant 154,305 37,615 116,690 75.6 % Self-Storage 150,964 146,589 4,375 2.9 % Senior housing 148,640 144,615 4,025 2.7 % Nursing homes 46,999 45,627 1,372 2.9 % Healthcare 20,174 20,000 174 0.9 % Group homes 4,947 3,544 1,403 28.4 % Continuing Care Facilities 2,952 2,952 - - % Land acquisition and development 91 - 91 100.0 % Other 833 378 455 54.6 % Total $ 5,598,086 $ 4,174,584 $ 1,423,502 25.4 % Allowance for Credit Losses and Provision for Loan Losses The ACL is a significant estimate on Busey's unaudited consolidated financial statements, affecting both earnings and capital. 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 the collectability as of the evaluation date. The ACL is established through the provision for loan losses, charged to income. Provision expenses for loan losses were recorded as follows: Three Months Ended March 31, (dollars in thousands) Location 2026 2025 1 Provision for loan losses Provision for credit losses $ 2,393 $ 42,452 ___________________________________________ 1. The three months ended March 31, 2025, included $42.4 million of provision for loan losses expense recorded to establish an initial allowance for non-PCD loans immediately following the close of the CrossFirst acquisition in accordance with ASC 326-20-30-15. First Busey Corporation (BUSE) | 77 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) The ACL and the ratio of ACL to portfolio loan balances is presented below by lending activity: As of March 31, 2026 As of December 31, 2025 (dollars in thousands) Portfolio Loans ACL Ratio of ACL to Portfolio Loans Portfolio Loans ACL Ratio of ACL to Portfolio Loans Commercial C&I and other commercial $ 4,124,737 $ 57,804 1.40 % $ 4,229,208 $ 61,370 1.45 % CRE 5,566,044 70,100 1.26 % 5,550,018 70,328 1.27 % Real estate construction 1,052,505 12,588 1.20 % 1,039,289 11,568 1.11 % Total commercial 10,743,286 140,492 1.31 % 10,818,515 143,266 1.32 % Retail Retail real estate 2,119,621 27,140 1.28 % 2,154,616 29,178 1.35 % Retail other 596,983 1,422 0.24 % 594,668 1,579 0.27 % Total retail 2,716,604 28,562 1.05 % 2,749,284 30,757 1.12 % Total $ 13,459,890 $ 169,054 1.26 % $ 13,567,799 $ 174,023 1.28 % As of March 31, 2026, Busey management believed the level of the allowance to be appropriate based upon the information available. However, additional losses may be identified in the loan portfolio as new information is obtained. Factors that influence Busey's calculation of its ACL include changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors. Non-Performing Loans and Non-Performing Assets Loans are considered past due if the required principal 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 Busey's interest in the underlying collateral less estimated costs to sell. Busey's loan portfolio is collateralized primarily by real estate. First Busey Corporation (BUSE) | 78 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) The following table sets forth information concerning non-performing assets and asset quality ratios: As of (dollars in thousands) March 31, 2026 December 31, 2025 Change % Change Total assets $ 18,036,622 $ 18,104,736 $ (68,114) (0.4) % Portfolio loans 13,459,890 13,567,799 (107,909) (0.8) % Loans 30 - 89 days past due 17,465 16,475 990 6.0 % Non-performing assets Non-performing loans: Non-accrual loans $ 45,799 $ 51,198 $ (5,399) (10.5) % Loans 90+ days past due and still accruing 812 2,288 (1,476) (64.5) % Total non-performing loans 46,611 53,486 (6,875) (12.9) % OREO and other repossessed assets 3,337 4,626 (1,289) NM Total non-performing assets 49,948 58,112 (8,164) (14.0) % Substandard (excludes 90+ days past due) 166,467 116,402 50,065 43.0 % Classified assets $ 216,415 $ 174,514 $ 41,901 24.0 % ACL $ 169,054 $ 174,023 $ (4,969) (2.9) % Bank Tier 1 Capital 2,144,335 2,150,048 (5,713) (0.3) % Ratios ACL to portfolio loans 1.26 % 1.28 % (2) bps ACL to non-accrual loans 3.69 x 3.40 x 2,922 bps ACL to non-performing loans 3.63 x 3.25 x 3,733 bps ACL to non-performing assets 3.38 x 2.99 x 3,900 bps Non-accrual loans to portfolio loans 0.34 % 0.38 % (4) bps Non-performing loans to portfolio loans 0.35 % 0.39 % (4) bps Non-performing assets to total assets 0.28 % 0.32 % (4) bps Non-performing assets to portfolio loans and OREO and other repossessed assets 0.37 % 0.43 % (6) bps Classified assets to Bank Tier 1 Capital and ACL 9.35 % 7.51 % 184 bps Asset quality continues to be strong. Busey Bank maintains a well-diversified loan portfolio and, as a matter of policy and practice, limits concentration exposure in any particular loan segment. Busey's operating mandate and focus remain on emphasizing credit quality over asset growth. Non-performing assets, which include non-performing loans, OREO, and other repossessed assets, declined to $49.9 million as of March 31, 2026, compared to $58.1 million as of December 31, 2025. Non-performing assets represented 0.28% of total assets as of March 31, 2026, compared to 0.32% as of December 31, 2025. Busey's ACL was 3.38 times its non-performing assets as of March 31, 2026, compared to 2.99 times its non-performing assets as of December 31, 2025. Classified assets, which include non-performing assets and substandard loans, increased to $216.4 million as of March 31, 2026, compared to $174.5 million as of December 31, 2025, as a few larger commercial credits that Busey has been monitoring shifted to substandard still accruing. Classified assets represented 9.35% of the Bank's Tier 1 capital and ACL at March 31, 2026, compared to 7.51% at December 31, 2025. First Busey Corporation (BUSE) | 79 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) 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, Busey would expect the credit quality of its loan portfolio to decline and loan defaults to increase. Potential Problem Loans Potential problem loans are loans classified as substandard that 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 increased to $166.5 million, or 1.2% of portfolio loans, as of March 31, 2026, compared to $116.4 million, or 0.9% of portfolio loans, as of December 31, 2025. Management continues to monitor these loans and work with the borrowers on restructurings, guarantees, additional collateral, or other planned actions. As of March 31, 2026, management identified no other loans that represent or result from trends or uncertainties that would be expected to materially impact future operating results, liquidity, or capital resources. Deposits Total deposits decreased by 1.1% to $14.74 billion as of March 31, 2026, compared to $14.91 billion as of December 31, 2025. Busey focuses on deepening its customer relationships to maintain and protect its strong core deposit 3 franchise. Core deposits include non-brokered transaction accounts, money market and savings deposit accounts, and time deposits of $250,000 or less. Core deposits represented 93.7% of total deposits as of March 31, 2026. Deposits are federally insured up to the FDIC insurance limit of $250,000. When a portion of a deposit account exceeds the FDIC insurance limit, that portion is uninsured. Estimated uninsured deposits were $6.31 billion, or 43% of total deposits, as of March 31, 2026, compared to $6.46 billion, or 43% of total deposits, as of December 31, 2025. Excluding intercompany accounts, fully collateralized accounts (including preferred deposits), and pass-through accounts where clients have deposit insurance at the correspondent financial institution, the portion of Busey's deposit base that was uninsured and not otherwise collateralized was estimated to be $5.45 billion, or 37% of total deposits, as of March 31, 2026, compared to $5.58 billion, or 37% of total deposits, as of December 31, 2025. For additional information about Busey's deposits, see " Note 6. Deposits ." Liquidity Liquidity management is the process by which Busey ensures that adequate liquid funds are available to meet the present and future cash flow obligations arising in the daily operations of its business. 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. Busey's most liquid assets are cash and due from banks, interest-bearing bank deposits, and federal funds sold. Balances of these assets are dependent on Busey's operating, investing, lending, and financing activities during any given period. 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. First Busey Corporation (BUSE) | 80 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) Average liquid assets are summarized in the table below: Three Months Ended March 31, (dollars in thousands) 2026 2025 Average liquid assets Cash and due from banks $ 163,897 $ 172,788 Interest-bearing bank deposits 139,204 688,233 Less: Restricted and pledged cash and bank deposits (96,102) (70,777) Total average liquid assets $ 206,999 $ 790,244 Average liquid assets as a percent of average total assets 1.1 % 5.3 % Unencumbered cash and securities on Busey's Consolidated Balance Sheets (Unaudited) are summarized as follows: As of (dollars in thousands) March 31, 2026 December 31, 2025 Unencumbered cash and securities Total cash and cash equivalents $ 288,462 $ 280,227 Interest-bearing time deposits in other banks 13,725 13,825 Restricted and pledged cash and bank deposits (96,102) (96,102) Debt securities available for sale 2,215,267 2,162,548 Debt securities available for sale pledged as collateral (553,790) (562,566) Cash and unencumbered securities $ 1,867,562 $ 1,797,932 Busey's primary sources of funds consist of deposits, investment maturities and sales, loan principal repayments, and capital funds. Additional liquidity is provided by the ability to borrow from the FHLB, the Federal Reserve Bank, and Busey's revolving credit facility, as summarized in the table below: As of (dollars in thousands) March 31, 2026 December 31, 2025 Additional available borrowing capacity FHLB $ 2,631,617 $ 1,775,157 Federal Reserve Bank 1,646,599 1,585,816 Federal funds purchased 485,000 485,000 Revolving credit facility 40,000 40,000 Additional borrowing capacity $ 4,803,216 $ 3,885,973 Further, Busey could utilize brokered deposits as additional sources of liquidity, as needed. As of March 31, 2026, management believed that adequate liquidity existed to meet all projected cash flow obligations. Busey seeks to achieve a satisfactory degree of liquidity by actively managing both assets and liabilities. Asset management guides the proportion of liquid assets to total assets, while liability management monitors future funding requirements and prices liabilities accordingly. First Busey Corporation (BUSE) | 81 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) 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 Busey's outstanding commitments and reserves for unfunded commitments: As of (dollars in thousands) March 31, 2026 December 31, 2025 Outstanding loan commitments and standby letters of credit $ 4,709,603 $ 4,820,613 Reserve for unfunded commitments 13,629 12,964 The following table summarizes Busey's provision for unfunded commitments expenses (releases): Three Months Ended March 31, (dollars in thousands) Location 2026 2025 1 Provision for unfunded commitments Provision for credit losses $ 665 $ 3,141 ___________________________________________ 1. The three months ended March 31, 2025, included $3.1 million to establish an initial allowance for unfunded commitments in connection with the CrossFirst acquisition. Busey anticipates that it will have sufficient funds available to meet current loan commitments, including loan applications received and in process prior to the issuance of firm commitments. Capital Resources Busey's capital ratios are in excess of those required to be considered "well-capitalized" pursuant to applicable regulatory guidelines. The Federal Reserve uses capital adequacy guidelines in its examination and regulation of bank holding companies and their subsidiary banks. 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 its subsidiary bank as of March 31, 2026: Minimum Capital Requirements with Capital Buffer As of March 31, 2026 First Busey Busey Bank Common equity Tier 1 capital to risk weighted assets 7.00 % 12.31 % 14.06 % Tier 1 capital to risk weighted assets 8.50 % 13.77 % 14.06 % Total capital to risk weighted assets 10.50 % 15.87 % 14.99 % Leverage ratio of Tier 1 capital to average assets 4.00 % 11.88 % 12.14 % For further discussion of capital resources and requirements, see "Note 8. Regulatory Capital." First Busey Corporation (BUSE) | 82 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) 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. Busey believes the adjusted measures are useful for investors and management to understand the effects of certain non-core and non-recurring noninterest items and provide additional perspective on Busey's 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 federal income tax rates or effective tax rates as noted in the tables below. The following tables present reconciliations between these non-GAAP measures and what management believes to be the most directly comparable GAAP financial measures. First Busey Corporation (BUSE) | 83 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) Calculation of Adjusted Net Income and Adjusted Diluted Earnings Per Common Share Three Months Ended March 31, (dollars in thousands, except per share amounts) 2026 2025 Net income (loss) (GAAP) [a] $ 49,981 $ (29,990) Day 2 provision for credit losses 1 - 45,572 Other acquisition (income) expenses 5,244 26,026 Restructuring expenses 11,456 - Net securities (gains) losses 940 15,768 Related tax benefit 2 (4,410) (22,069) Non-recurring deferred tax adjustment 3 - 4,591 Adjusted net income (Non-GAAP) [b] 63,211 39,898 Preferred dividends [c] 4,589 - Adjusted net income available to common stockholders (Non-GAAP) [d] $ 58,622 $ 39,898 Weighted average number of common shares outstanding, diluted (GAAP) [e] 87,831,295 68,517,647 Diluted earnings (loss) per common share (GAAP) [(a-c)÷e] $ 0.52 $ (0.44) Weighted average number of common shares outstanding, diluted (Non-GAAP) 4 [f] 87,831,295 69,502,717 Adjusted diluted earnings per common share (Non-GAAP) 4 [d÷f] $ 0.67 $ 0.57 ___________________________________________ 1. The Day 2 provision represents the initial provision for credit losses recorded in connection with the CrossFirst acquisition to establish an allowance on non-PCD loans and unfunded commitments and is reflected within the provision for credit losses line on the Statements of Income (Unaudited). 2. Tax benefits were calculated using tax rates of 25.0% and 25.3% for the three months ended March 31, 2026 and 2025, respectively. 3. A deferred valuation tax adjustment was recorded in the first quarter of 2025 in connection with the CrossFirst acquisition and the expansion of Busey's footprint into new states. Deferred tax adjustments are reflected within the income taxes line on the Statements of Income (Unaudited). 4. Dilution includes shares that would have been dilutive if there had been net income during the period. First Busey Corporation (BUSE) | 84 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) Calculation of Return On Average Assets, Return On Average Tangible Common Equity, and Related Adjusted Return Measures Three Months Ended (dollars in thousands) March 31, 2026 March 31, 2025 Net income (loss) (GAAP) [a] $ 49,981 $ (29,990) Amortization of intangible assets 4,291 3,083 Tax effect of amortization of intangible assets 1 (1,073) (779) Preferred dividends (4,589) - Tangible net income available to common stockholders (Non-GAAP) [b] $ 48,610 $ (27,686) Adjusted net income (Non-GAAP) 2 [c] $ 63,211 $ 39,898 Amortization of intangible assets 4,291 3,083 Tax effect of amortization of intangible assets 1 (1,073) (779) Preferred dividends (4,589) - Adjusted tangible net income available to common stockholders (Non-GAAP) [d] $ 61,840 $ 42,202 Average total assets [e] $ 18,060,220 $ 14,831,298 Return on average assets (Non-GAAP) 3 [a÷e] 1.12 % (0.82) % Adjusted return on average assets (Non-GAAP) 3 [c÷e] 1.42 % 1.09 % Average common equity $ 2,255,075 $ 1,932,407 Average goodwill and other intangible assets, net (478,885) (411,020) Average tangible common equity (Non-GAAP) [f] $ 1,776,190 $ 1,521,387 Return on average tangible common equity (Non-GAAP) 3, 4 [b÷f] 11.10 % (7.38) % Adjusted return on average tangible common equity (Non-GAAP) 3, 4 [d÷f] 14.12 % 11.25 % ___________________________________________ 1. Tax effects were calculated using income tax rates of 25.0% and 25.3% for the three months ended March 31, 2026 , and March 31, 2025, respectively. 2. A reconciliation is provided in the previous table. 3. Annualized measure. 4. Beginning in 2026, Busey revised, for all periods presented, its calculation of return on average tangible common equity and adjusted return on average tangible common equity to eliminate the effects of intangible asset amortization from the numerator of both calculations. First Busey Corporation (BUSE) | 85 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) Calculation of Net Interest Margin and Adjusted Net Interest Margin Three Months Ended March 31, (dollars in thousands) 2026 2025 Net interest income (GAAP) $ 153,969 $ 103,731 Tax-equivalent adjustment 1 877 537 Tax-equivalent net interest income (Non-GAAP) [a] 154,846 104,268 Purchase accounting accretion related to business combinations (5,394) (2,728) Adjusted net interest income (Non-GAAP) [b] $ 149,452 $ 101,540 Average interest-earning assets (Non-GAAP) [c] $ 16,665,766 $ 13,363,594 Net interest margin (Non-GAAP) 2 [a÷c] 3.77 % 3.16 % Adjusted net interest margin (Non-GAAP) 2 [b÷c] 3.64 % 3.08 % ___________________________________________ 1. Tax-equivalent adjustments were calculated using an estimated federal income tax rate of 21.0%, applied to non-taxable interest income on investments and loans. 2. Annualized measure. Calculation of Pre-Provision Net Revenue and Related Measures Three Months Ended March 31, (dollars in thousands) 2026 2025 Net interest income (GAAP) $ 153,969 $ 103,731 Total noninterest income (GAAP) 42,265 21,223 Net security (gains) losses (GAAP) 940 15,768 Total noninterest expense (GAAP) 1 (129,519) (112,030) Pre-provision net revenue (Non-GAAP) [a] 67,655 28,692 Acquisition and restructuring (income) expenses, excluding initial provision expenses 16,700 26,026 Adjusted pre-provision net revenue (Non-GAAP) [b] $ 84,355 $ 54,718 Average total assets [c] $ 18,060,220 $ 14,831,298 Pre-provision net revenue to average total assets (Non-GAAP) 2 [a÷c] 1.52 % 0.78 % Adjusted pre-provision net revenue to average total assets (Non-GAAP) 2 [b÷c] 1.89 % 1.50 % ___________________________________________ 1. Beginning in the second quarter of 2025, Busey revised its presentation, for all periods presented, to reclassify the provision for unfunded commitments out of total noninterest expense and into the provision for credit losses. This change affects all measures and ratios derived from total noninterest expense. 2. Annualized measure. First Busey Corporation (BUSE) | 86 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) Calculation of Efficiency Ratio Three Months Ended March 31, (dollars in thousands) 2026 2025 Net interest income (GAAP) [a] $ 153,969 $ 103,731 Tax-equivalent adjustment 1 877 537 Tax-equivalent net interest income (Non-GAAP) [b] 154,846 104,268 Total noninterest income (GAAP) 42,265 21,223 Net security (gains) losses 940 15,768 Adjusted noninterest income (Non-GAAP) [c] $ 43,205 $ 36,991 Operating revenue (Non-GAAP) [d = a+c] $ 197,174 $ 140,722 Tax-equivalent operating revenue (Non-GAAP) 2 [e = b+c] 198,051 141,259 Adjusted noninterest income to operating revenue (Non-GAAP) [c÷d] 21.91 % 26.29 % Total noninterest expense (GAAP) 3 $ 129,519 $ 112,030 Acquisition and restructuring expenses, excluding initial provision expenses (16,700) (26,026) Adjusted noninterest expense (Non-GAAP) 3, 4 112,819 86,004 Amortization of intangible assets (4,291) (3,083) Adjusted noninterest expense excluding amortization of intangible assets (Non-GAAP) 3, 5 [f] $ 108,528 $ 82,921 Efficiency ratio (Non-GAAP) 3, 6 [f÷e] 54.80 % 58.70 % ___________________________________________ 1. Tax-equivalent adjustments were calculated using an estimated federal income tax rate of 21.0%, applied to non-taxable interest income on investments and loans. 2. Beginning in 2026, Busey changed the caption for this revenue measure, which was previously called "adjusted tax-equivalent revenue." The calculation itself has not changed. 3. Beginning in the second quarter of 2025, Busey revised its presentation, for all periods presented, to reclassify the provision for unfunded commitments out of total noninterest expense and into the provision for credit losses. This change affects all measures and ratios derived from total noninterest expense. 4. Beginning in 2026, to better align with industry standards, Busey revised its calculation of adjusted noninterest expense, for all periods presented, to exclude any adjustment for amortization of intangible assets. 5. Beginning in 2026, Busey changed the caption for the efficiency ratio numerator from "adjusted noninterest expense" to "adjusted noninterest expense excluding amortization of intangible assets." The calculation itself has not changed. 6. Beginning in 2026, Busey now reports a single efficiency ratio, which was previously reported as the "Adjusted efficiency ratio." First Busey Corporation (BUSE) | 87 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) Calculation of Tangible Common Equity, and Related Measures and Ratio As of (dollars in thousands, except per share amounts) March 31, 2026 December 31, 2025 Total assets (GAAP) $ 18,036,622 $ 18,104,736 Goodwill and other intangible assets, net (475,520) (480,729) Tangible assets (Non-GAAP) 1 [a] $ 17,561,102 $ 17,624,007 Total stockholders' equity (GAAP) $ 2,413,022 $ 2,468,982 Preferred stock and additional paid in capital on preferred stock (215,197) (215,197) Common equity [b] 2,197,825 2,253,785 Goodwill and other intangible assets, net (475,520) (480,729) Tangible common equity (Non-GAAP) 1 [c] $ 1,722,305 $ 1,773,056 Tangible common equity to tangible assets (Non-GAAP) 1 [c÷a] 9.81 % 10.06 % Ending number of common shares outstanding (GAAP) [d] 85,507,160 87,624,430 Book value per common share (Non-GAAP) [b÷d] $ 25.70 $ 25.72 Tangible book value per common share (Non-GAAP) [c÷d] $ 20.14 $ 20.23 ___________________________________________ 1. Beginning in 2025, Busey revised its calculation of tangible assets and tangible common equity, for all periods presented, to exclude any tax adjustment. Calculation of Core Deposits and Related Ratio As of (dollars in thousands) March 31, 2026 December 31, 2025 Total deposits (GAAP) [a] $ 14,736,060 $ 14,905,958 Brokered deposits, excluding brokered time deposits of $250,000 or more (60,123) (70,140) Time deposits of $250,000 or more (865,493) (876,207) Core deposits (Non-GAAP) [b] $ 13,810,444 $ 13,959,611 Core deposits to total deposits (Non-GAAP) [b÷a] 93.72 % 93.65 % First Busey Corporation (BUSE) | 88 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) FORWARD-LOOKING STATEMENTS This Quarterly Report may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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," "position," or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and Busey undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond Busey's ability to control or predict, could cause actual results to differ materially from those in any forward-looking statements. These factors include, among others, the following: (1) the strength of the local, state, national, and international economies and financial markets (including effects of inflationary pressures, the threat or implementation of tariffs, trade wars, and changes to immigration policy); (2) changes in, and the interpretation and prioritization of, local, state, and federal laws, regulations, and governmental policies (including those concerning Busey's general business); (3) the economic impact of any future terrorist threats or attacks, widespread disease or pandemics, military conflicts, acts of war or threats thereof, or other adverse external events that could cause economic deterioration or instability in credit markets (including the conflicts in the Middle East and Russia's invasion of Ukraine); (4) unexpected results of acquisitions, including the acquisition of CrossFirst, which may include the failure to realize the anticipated benefits of the acquisitions and the possibility that the transaction and integration costs may be greater than anticipated; (5) the imposition of tariffs or other governmental policies impacting the value of products produced by Busey's commercial borrowers; (6) the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry, including investor and depositor sentiment regarding bank stability and liquidity; (7) new or revised accounting policies and practices as may be adopted by state and federal regulatory banking agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission, or the Public Company Accounting Oversight Board; (8) changes in interest rates and prepayment rates of Busey's assets (including the impact of sustained elevated interest rates); (9) increased competition in the financial services sector (including from non-bank competitors such as credit unions, digital asset service providers, private credit, and fintech companies) and the inability to attract new customers; (10) technological changes implemented by us and other parties, including our third-party vendors, which may have unforeseen consequences to us and our customers, including the development and implementation of tools incorporating artificial intelligence; (11) the loss of key executives or associates, talent shortages, and employee turnover; (12) unexpected outcomes and costs of existing or new litigation, investigations, or other legal proceedings, inquiries, and regulatory actions involving Busey (including with respect to Busey's Illinois franchise taxes); (13) fluctuations in the value of securities held in Busey's securities portfolio, including as a result of changes in interest rates; (14) credit risk and risk from concentrations (by type of borrower, geographic area, collateral, and industry), within Busey's loan portfolio and large loans to certain borrowers (including commercial real estate loans); (15) the concentration of large deposits from certain clients who have balances above current Federal Deposit Insurance Corporation insurance limits and may withdraw deposits to diversify their exposure; (16) the level of non-performing assets on Busey's balance sheets; (17) interruptions involving information technology and communications systems or third-party servicers; (18) breaches or failures of information security controls or cybersecurity-related incidents; (19) the economic impact on Busey and its customers of climate change, natural disasters, and exceptional weather occurrences such as tornadoes, hurricanes, floods, blizzards, and droughts; (20) the ability to successfully manage liquidity risk, which may increase dependence on non-core funding sources such as brokered deposits, and may negatively impact Busey's cost of funds; (21) the ability to maintain an adequate level of allowance for credit losses on loans; (22) the effectiveness of Busey's risk management framework; and (23) the ability of Busey to manage the risks associated with the foregoing. 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 its business, including additional factors that could materially affect Busey's financial results, is included in Busey's 2025 Annual Report . 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 2025 Annual Report . First Busey Corporation (BUSE) | 89 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) 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 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 Busey's critical accounting estimates. Management has reviewed these critical accounting estimates and related disclosures with Busey's Audit Committee. The following estimates could be deemed critical: Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations 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 determination of fair values is based on valuations using management's assumptions of future growth rates, future attrition, discount rates, multiples of earnings, or other relevant factors. In addition, Busey engages third party specialists to assist in the development of fair values. The fair value of a loan portfolio acquired in a business combination generally requires greater levels of management estimates and judgment than other assets acquired or liabilities assumed. Acquired loans are within the scope of ASC Topic 326 "Financial Instruments-Credit Losses." However, the offset to record the allowance on acquired loans at the date of acquisition depends on whether or not the loan is classified as PCD. The allowance for PCD loans is recorded through a gross-up effect, while the allowance for acquired non-PCD loans is recorded through provision expense, consistent with originated loans. 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 the purchase price over the fair value of net assets acquired using the acquisition method of accounting. Goodwill is not amortized; instead, Busey assesses the potential for impairment on an annual basis or more frequently if events and circumstances indicate that goodwill might be impaired. Management applies significant judgment when testing goodwill for impairment, such as the valuation approach chosen, market multiples for competitors used in the calculation, and forecasts of business outlook. Income Taxes Busey is subject to the income tax laws of the U.S., as well as the tax laws of the individual states and municipalities in which the Company conducts its operations. These laws are often complex and subject to nuanced interpretations. Income taxes are estimated for the tax effects of the transactions reported on Busey's unaudited consolidated financial statements and consist of an expense for taxes currently due plus assets and/or liabilities for deferred taxes. Deferred taxes represent the future tax consequences of differences between the tax basis and accounting basis of certain assets and liabilities, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are estimates that are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. Deferred taxes are reported in other assets or other liabilities on the Consolidated Balance Sheets (Unaudited) . Estimated income tax expense is reported on the Consolidated Statements of Income (Unaudited) . First Busey Corporation (BUSE) | 90 TABLE OF CONTENTS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) In establishing its provision for income taxes and its estimates of deferred tax assets and liabilities, Busey must make judgments and interpretations about the application of inherently complex tax laws. Busey must also make estimates about when in the future certain items will affect taxable income. Disputes over interpretations of the tax laws may be subject to review and adjudication by the court systems of the various tax jurisdictions or may be settled with the taxing authority upon examination or audit. Although Busey's management believes that its judgments are sound and its tax estimates are reasonable, interpretations of tax law applied by the taxing jurisdictions could differ. As such, Busey may be exposed to losses or gains, which could be material. An unfavorable tax settlement would result in an increase in Busey's effective income tax rate in the period of resolution. A favorable tax settlement would result in a reduction in Busey's effective income tax rate in the period of resolution. Allowance for Credit Losses Busey calculates the ACL at each reporting date. Busey recognizes an allowance for the lifetime expected credit losses for the amount it does not expect to collect. Measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported book value. 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, Busey may conclude that a loan should be evaluated on an individual basis based on disparate risk characteristics. Loans deemed uncollectible are charged against and reduce the ACL. A provision for credit losses is charged to current expense and acts to replenish the ACL in order to maintain the ACL at a level that management deems adequate. Determining the ACL involves significant judgments and assumptions. Macroeconomic forecasts provided by a third party and the economic indices sourced are significant judgments used in determining the allowance. Changes in these economic forecasts could significantly affect the ACL and lead to materially different amounts from one period to the next. Additionally, prepayment assumptions impact model output. Further, Busey completes a quarterly evaluation of several qualitative factors to determine if there should be adjustments made to the ACL. These factors include economic conditions, collateral, concentrations, delinquency trends, portfolio composition, underwriting, and certain other risks. Significant downturns relating to loan quality and economic conditions could result in a requirement for an additional allowance. Likewise, an upturn in loan quality and improved economic conditions may allow for a reduction in the required allowance. Because of the nature of the judgments and assumptions made by management, actual results may differ from these judgments and assumptions. First Busey Corporation (BUSE) | 91 TABLE OF CONTENTS

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