BUSE 10-K & 10-Q changes, risk factors and insider trading

ConditionsEconomic in theand financial market and economic conditions, including conditions in the states in which it operates, generally may adversely affect Busey’s business.

Busey’s general financial performance is highly dependent upon the business environment in the markets where it operates and, in particular, the ability of borrowers to pay interest on, and repay principal of, outstanding loans, and the value of collateral securing those loans, as well as demand for loans and other products and services it offers. A favorable business environment is generally characterized by, among other factors, economic growth, efficient capital markets, low and stable inflation, lowfull unemployment,employment, high business and investor confidence, and strong business earnings. Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity, or investor or business confidence; limitations on the availability, or increases in the cost, of credit and capital; increases in inflation or interest rates; high unemployment; natural disasters; or a combination of these or other factors. Current conditions reflect elevated interest rates and persistent inflation above the Federal Reserve’s 2% target, which continue to pressure borrowing costs and consumer confidence. Fiscal imbalances, including a large federal deficit and rising debt-service obligations, add longer-term uncertainty. Geopolitical conflicts across the globe, including conflicts in the Middle East, the Russian invasion of Ukraine, and the recent military activity in Venezuela, sustain volatility in energy and trade markets, while domestic labor markets remain tight in key sectors despite slowing job growth. Supply chain disruptions, though improved, persist due to structural and geopolitical factors. Policy uncertainty—including tariffs, immigration enforcement, and regulatory changes—further complicates planning. These factors may adversely affect Busey’s business, financial condition, results of operations, and growth prospects.

Uncertainty regarding economic conditions may result in changes in consumer and business spending, borrowing, and savings habits. Downturns in the markets where Busey’s banking operations occur could result in a decrease in demand for Busey’s products and services, an increase in loan delinquencies and defaults, high or increased levels of problem assets and foreclosures, and reduced wealth management fees resulting from lower asset values. Such conditions could adversely affect the credit quality of Busey’s loans,asset quality, financial condition, and results of operations.

Regional economic vulnerabilities and reliance on key industries may heighten risks.

In the normal course of business, Busey collects, processes, and retains sensitive and confidential information regarding its customers, and Busey’s collection and handling of such information is subject to regulatory scrutiny. There has been a heightened legislative and regulatory focus on privacy, data protection, and information security. New or revised laws and regulations, including with the respect to the use of artificial intelligence by financial institutions and service providers, may significantly impact Busey’s current and planned privacy, data protection, and information security-related practices; the collection, use, retention, and safeguarding of customer and employee information; and current or planned business activities. Compliance with current or future privacy, data protection, and information security laws could result in higher compliance and technology costs and could restrict Busey’s ability to provide certain products and services, which could materially and adversely affect Busey’s business.business, financial condition, and results of operations.

Busey may be subject to lawsuits, governmental inquiries, or self-regulatory reviews. These proceedings could result in penalties, adverse judgments, or operational restrictions. While accruals are established for legal contingencies when losses are probable and estimable, outcomes may exceed these amounts, and accordingly, Busey’s ultimate losses may be higher, possibly significantly so, than the amounts accrued for legal loss contingencies, which couldmay materially and adversely affect Busey’s financial condition and results of operations.

See “Note 18. Outstanding Commitments and Contingent Liabilities” in the Notes to the Consolidated Financial Statements for information regarding an inquiryongoing dispute regarding the amount of franchise taxes, penalties, interest, fees, and charges purportedly due from First Busey Corporation to the Illinois Secretary of State, pursuant to which the Illinois Secretary of State asked for additional information regarding certain of Busey’s franchise tax filings and the calculation of amounts due thereunder.State.

Busey’s lending activities involve inherent risks, including borrower nonpayment, fluctuations in collateral value, and the effects of economic and market conditions. These risks have been amplified by recentcertain economic factors, such as elevated interest rates,rates above the Federal Reserve’s 2% target, inflationary pressures, tariffs, geopolitics, and a more cautiousincreased economic outlook.uncertainty. Busey employs rigorous underwriting standards, monitors portfolio performance, including industry and geographic loan concentrations, and conducts both internal and external independent loan reviews to mitigate these risks. Additionally, Busey leverages stress testing at both the borrower and portfolio levels to proactively identify potential vulnerabilities. Despite these efforts, credit risks cannot be entirely eliminated, and increased borrower defaultsstress could lead to increased delinquencies, non-performing loans, charge-offs, delinquencies, and higher ACL provisions.provisions, and charge-offs.

Busey establishes the ACL based on detailed analyses of the loan portfolio and broader market conditions, incorporating managementforward-looking judgmentsforecasts and forward-lookingmanagement forecasts.judgments. While management considers the ACL adequate to absorb probable losses, unforeseen economic disruptions or borrower-specific events could necessitate additional provisions,provisions and adversely affectingaffect Busey’s financial performance.condition and results of operations.

HighElevated levels of non-performing assets could reduce Busey’s profitability and strain operational resources.

Non-performing assets negatively impact Busey’s financial condition through lost interest income, increased loan administration costs, and adverse effects on efficiency ratios. The resolution of these assets demands significant management attention and regulatory compliance, which can divert resources from other priorities. Non-performing loans and OREO properties elevate Busey’s risk profile and require ongoing vigilance to minimize financial and operational disruptions.disruptions, which may adversely affect Busey’s financial condition and results of operations.

Loan concentrations in volatile markets could increase Busey’s exposure to adverse economic downturns,conditions adverselyand impactingheighten financialcredit stability.risk.

Busey may haveface higherelevated credit risk,risks, or experience higherincreased credit losses, to the extentwhen its loansloan areportfolio is concentrated by loan type, industry segment, borrower type,characteristics, or the geographic location of the borrowerborrowers or collateral. CRE representsis ana importantsignificant component of Busey’s loan portfolio and is inherently sensitive to broader economic and market fluctuations. Busey’s twoCRE primaryportfolio categoriesprimarily consists of CRE are (1) CRE that isowner occupied by the property owner,CRE and (2) CREnon-owner thatoccupied isCRE, held as investment property. The risks associatedeach with thesedistinct categoriesrisk differ, as provided belowprofiles:

•OccupantOwner ownedoccupied CRE: The repaymentRepayment of occupantowner ownedoccupied CRE loans is largely dependentdepends on the financial performance and operational stability of the underlying business occupying the property. IfFinancial thestress, borrower’scash businessflow experiences financial challengesconstraints, or operational disruptions,disruptions itat the borrower level may impactimpair theirrepayment ability to service the loan.capacity. However, occupant owned CREthese loans generallymay benefit from the borrower’s vestedincentive interestto in maintainingmaintain the property forto theirsupport ownits ongoing business operations, which may reduce the risk of customer default.operations.

•InvestorNon-owner ownedoccupied CRE: InNon-owner contrast, investor ownedoccupied CRE loans are primarily reliantrely on propertyrental cash flowsincome generated by third-partythird party tenants. These loans are particularlymore sensitivevulnerable to factorschanges suchin asmarket demand, tenant turnover, rising vacancy rates, reduced rental income, higherand vacancy rates, andpotential regulatory changes.shifts Declinesaffecting incommercial market demand, economic downturns,leasing or increasedproperty use. Economic downturns or weakened tenant defaultsperformance couldcan significantlymaterially impact the borrower’s ability to repaymeet theserepayment loans.obligations.

Busey’sBusey primarily underwrites commercial loans are primarily underwritten based on the identifiedborrower’s projected cash flow of the borrower,flows, with collateral serving as secondary support. Credit enhancements—such often includeas pledged collateral and personal guarantees,guarantees—are whichoften enhanceused to improve the likelihood of repayment. However, therepayment availabilitycapacity, of funds for repayment—particularly for loans secured by accounts receivable—receivable, may depend significantlyheavily on the borrower’s ability to collect payments from theirits own customers. InDuring periods of economic recession,stress thisor capacityindustry‑specific coulddownturns, decline,borrowers increasingmay experience weakened collections, which can elevate repayment risks.risk.

Collateral securing commercial loans may depreciate over time, be difficult to appraise,accurately value, or fluctuate in valueresponse basedto onchanges in the borrower’s financial condition or business performance. WithGiven largerthe size of certain commercial loansloan exposures and the often less readily ‑marketable nature of related collateral, even a smalllimited number of loancredit losslosses incidentswithin this portfolio could materiallyresult in a disproportionately negative impact Busey’son financialthe condition and operational results.Company.

Busey mustis meetrequired to satisfy regulatory capital requirementsstandards and to maintain sufficient liquidity.liquidity Busey’sto support ongoing operations and strategic objectives. Its ability to raise additional capital aswhen needed will dependdepends on conditions in the capital markets, broader economic conditions, and a number of other factors, includingtrends, investor perceptionssentiment regardingtoward the banking industry, marketgovernmental conditions,actions, and governmentalother activities, many of which arefactors outside Busey’s control, as well as onBusey’s itsown financial conditionperformance and performance.condition. Accordingly,As a result, Busey cannot guarantee that it will be able to raiseobtain additional capital ifon neededfavorable terms, or onat terms acceptable to the Company. In particular,all, if Busey is required to raise additional capital in the current interest rate environment, Busey believes the pricing and other terms investors maycircumstances require in such an offering may not be attractive to the Company.it.

Busey’s failure to continueFailure to maintain capital ratios inat excesslevels of the amounts necessarysufficient to be considered “well-capitalizedwell‑capitalized” for bank regulatory purposes could negatively affect customer confidence, itsconstrain abilitygrowth toopportunities, grow,increase itsfunding costscosts, of funds, the cost ofraise FDIC insurance,insurance itspremiums, restrict the ability to pay dividendsdividends, tolimit itsacquisition stockholders on outstanding stock, its ability to make acquisitions,capacity, and itsotherwise business,adversely resultsaffect ofbusiness operations,operations. andIn financial condition. Furthermore,addition, under FDIC rules,regulations, if Busey ceasesno tolonger meetmeets the requirementsstandards to be considered adeemed “well-capitalizedwell‑capitalized,” institutionit formay bankface regulatoryrestrictions purposes,on the interest rates it paysmay pay on deposits and on its ability to accept, renew, or rolloverroll over deposits, particularly brokered deposits, may be restricted.deposits.

Busey’s financial strength is built on a long-term conservative operating approach. The quality of Busey’s core depositdeposit1 franchise is a critical value driver of the institution. Busey remains substantially core deposit1deposit funded, with robust liquidity and significant market share in the communities Busey serves.liquidity. As of December 31, 2024,2025, Busey’s loan to deposit ratio was 77.1%91.0% and core deposits1 represented 96.5%93.7% of total deposits. Furthermore, Busey has 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, which has been originated predominantly to established customers with tenured relationships with Busey.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. AsWhile impacted by loans acquired as a result,result of the CrossFirst acquisition, asset quality remains strong by both Busey’s historical and current industry trends.

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 judgementjudgment when testing goodwill for impairment, such as the valuation approach chosen, market multiples for competitors used in the calculation, and forecasts of business outlook.

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.

Loans deemed uncollectible are chargedcharged-off 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.

Results of Busey’s operations are presented below, segregated by operating segment (dollars in thousands):

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):

A1.For a reconciliation of non-GAAP measures,measures which Busey believes facilitatesto the assessmentmost ofdirectly itscomparable GAAP financial resultsmeasures, and peer comparability, is included in tabular form in this Annual Report. Seesee “Item 1. Business—Non-GAAP Financial Information.Information” included in this Annual Report.

The following tabletables presents,present, for the major components of interest-earning assets and interest-bearing liabilities, a breakout of changes in interest income and interest expense attributable to (1) changes in average volume and (2) changes in average yield. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on changes due to rate and changes due to volume (dollars in thousands):

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

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

The net interest margin discussion above is based upon the results and average balances for the years ended December 31, 2024, 2023, and 2022. Annualized net interest margins for the quarterly periods indicated were as follows:

Changes in noninterest income are summarized in the tables below for the periods presented (dollars in thousands):

There have been no material changes to the factors discussed in “Part III—Item 1A1A. Risk Factors” of Busey’s 2025 Annual Report.

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First Busey Corporation, a Nevada corporation organized in 1980, is an $18.04$18.19 billion financial holding company headquartered in Leawood, Kansas. First Busey’s stock is traded on The Nasdaq Global Select Market, with its common stock trading under the symbol “BUSE” and its depositary shares of Busey Series B Preferred Stock trading under the symbol “BUSEP.”

Busey conductsoperates and reports its Bankingbusiness in three segments: Banking, Wealth Management, and WealthFirsTech. ManagementBusey provides a full range of banking and wealth management services through Busey Bank, and provides payment technology solutions through Busey Bank’s wholly owned subsidiary, FirsTech. For additional information about Busey's operating segments, see “Note 16. Operating Segments and Related Information.” Busey also has various other subsidiaries that are not significant to the consolidated entity.

Assets held for customers in a fiduciary or agency capacity, other than trust cash on deposit at Busey Bank, are not Busey’s assets and, accordingly, are not included in the accompanying unaudited consolidated financial statements. Busey had assets under care of $15.65$16.51 billion at MarchJune 31,30, 2026, and $15.66 billion at December 31, 2025.

Busey is subject to income taxes in U.S. federal and various state jurisdictions. First Busey Corporation and its subsidiaries file consolidated federal and state income tax returns with each subsidiary computing its taxes on a separate entity basis. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations, which requires significant judgment. Busey monitors evolving federal and state tax legislation and its potential impact on operations on an ongoing basis.

As of MarchJune 31,30, 2026, Busey remains under examination by the Illinois Department of Revenue for M&M's tax filings for the tax years ended December 31, 2022 and 2023.

The following table summarizes First Busey’s preferred stock issuances as of both MarchJune 31,30, 2026, and December 31, 2025:

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In July 2025, the FASB issued ASU 2025-05 “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” providing a practical expedient which,to ifreduce elected,complexity permitsin estimating the ACL for current accounts receivable and current contract assets arising from transactions subject to ASC 606 by permitting an entity to assume that current conditions as of the balance sheet date will remain static for the remaining life of thethese assets,assets. removingBusey theadopted requirement to consider reasonable, supportable forecasts. Thisthis ASU was adopted prospectively for annual and interim reporting periods beginning January 1, 2026.2026, Adoptionand elected the practical expedient for in-scope assets. Loans and other financial assets measured at amortized cost are not within the scope of this ASU. Because Busey does not currently have in-scope assets, adoption of this standard did not have a material impact on Busey’s financial position or results of operations.

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1.During the threesix months ended MarchJune 31,30, 2026, Busey recorded acquisition expenses comprising salaries, wages,salaries and employee benefits for multi-year retention agreements, replacement stock-based compensation awards, and relocation related to the CrossFirst acquisition; data processing; and professional fees. During the three months ended March 31, 2025, Busey recorded an initial provision to establish an ACL on non-PCD loans and unfunded commitments and multiple components of noninterest expense including salaries, wages and employee benefits (including equity compensation); data processing; and legal, professional, and consulting costs.

2.During the threesix months ended MarchJune 31,30, 2025, Busey recorded final acquisition expenses, comprising data processing and consulting expensesexpenses, related to the acquisition of M&M, which was completed on April 1, 2024.

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Debt securities with carrying amounts of $723.0$711.8 million on MarchJune 31,30, 2026, and $744.2 million on December 31, 2025, were pledged as collateral for public deposits, securities sold under agreements to repurchase, and for other purposes as required.

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