425: First Busey and CrossFirst Bankshares Announce $916.8 Million Merger, Creating $20 Billion Commercial Banking Powerhouse

First Busey Corporation and CrossFirst Bankshares, Inc. have announced a definitive agreement to merge, creating a combined company with approximately $20 billion in assets and expanded market presence.

Summary

• First Busey Corporation (Busey) and CrossFirst Bankshares, Inc. (CrossFirst) have entered into a definitive merger agreement where CrossFirst will merge into Busey in an all-stock transaction valued at approximately $916.8 million.
• The combined company will operate under the Busey brand and will have approximately $20 billion in total assets, $17 billion in total deposits, and $13 billion in wealth management assets under care.
• CrossFirst shareholders will receive 0.6675 shares of Busey common stock for each share of CrossFirst common stock.
• Busey shareholders will own approximately 63.5% and CrossFirst shareholders will own approximately 36.5% of the combined company.
• The merger is expected to close in the first or second quarter of 2025, subject to regulatory and shareholder approvals.
• The combined holding company will be named First Busey Corporation, and the combined bank will be named Busey Bank.
• The holding company headquarters will move to Leawood, Kansas, while Busey Bank's headquarters will remain in Champaign, Illinois.
• The Board of Directors will consist of 13 members, with 8 from Busey and 5 from CrossFirst.
• Van Dukeman will serve as Executive Chairman and CEO, and Mike Maddox will become President and Executive Vice Chairman, succeeding Dukeman as CEO on the earlier of the one-year anniversary of the bank merger or the 18-month anniversary of the holding company merger.
• The merger is expected to result in approximately 20% earnings per share accretion in 2026, with a tangible book value per share dilution of -0.6% and an earnback period of approximately six months.
• The combined company is expected to have a 9.6% leverage ratio, 11.0% CET1 ratio, and 14.1% total risk-based capital ratio.

Sentiment

Score: 8

Explanation: The document presents a highly positive outlook on the merger, emphasizing strategic benefits, financial improvements, and cultural alignment. The projected earnings accretion and strong capital ratios contribute to the positive sentiment.

Positives

• The merger creates a larger, more diversified commercial banking franchise with an expanded geographic footprint.
• The combined company is expected to benefit from economies of scale and enhanced growth potential.
• CrossFirst shareholders will gain access to Busey's dividend program.
• The merger is expected to be accretive to Busey's earnings per share.
• The combined company will have a strong capital position.
• The integration of CrossFirst's commercial banking relationships and Busey's wealth management and payment technology solutions is expected to create synergies.
• The combined company will have a well-diversified loan and deposit base.
• The leadership team will be a combination of experienced executives from both Busey and CrossFirst.

Negatives

• The merger will result in a modest dilution to Busey's tangible book value per share of -0.6%.
• The integration of the two companies could present challenges and may take time to fully realize the expected synergies.
• The merger is subject to regulatory and shareholder approvals, which may not be obtained or may be delayed.

Risks

• The risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of either or both parties to the proposed transaction.
• The possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Busey and CrossFirst do business.
• Certain restrictions during the pendency of the proposed transaction that may impact the parties' ability to pursue certain business opportunities or strategic transactions.
• The possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events.
• Diversion of management's attention from ongoing business operations and opportunities.
• The possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all and to successfully integrate CrossFirst's operations and those of Busey; such integration may be more difficult, time consuming or costly than expected.
• Revenues following the proposed transaction may be lower than expected.
• The dilution caused by Busey's issuance of additional shares of its capital stock in connection with the proposed transaction.
• Effects of the announcement, pendency or completion of the proposed transaction on the ability of Busey and CrossFirst to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally.

Future Outlook

The combined company expects to capitalize on opportunities in 2025 and beyond, with a focus on commercial banking growth and expanded wealth management and payments businesses. The merger is expected to close in the first or second quarter of 2025.

Management Comments

• Van Dukeman stated that the partnership is a great fit from a strategic, financial, and cultural perspective.
• Mike Maddox stated that Busey is the right partner to continue CrossFirst's customerand community-focus.

Industry Context

The merger reflects a trend of consolidation in the banking industry, as companies seek to achieve greater scale and efficiency. The combined company will be better positioned to compete with larger regional and national banks.

Comparison to Industry Standards

• The pro forma company is expected to have a 9.6% leverage, 11.0% CET1 and 14.1% total risk-based capital, which are significantly above well-capitalized thresholds.
• The pro forma company is expected to have a loan-to-deposit ratio of 86%, C&D concentration of 60% and CRE concentration of 250%, which positions the company well for future growth.
• The pro forma company is expected to have a core ROAA of 1.28% and a core ROATCE of 15.4% in 2025, which are above the peer median of 1.10% and 14.1%, respectively.
• The pro forma company is expected to have a net interest margin of 3.47% in 2025, which is above the peer median of 3.18%.
• The pro forma company is expected to have an efficiency ratio of 52.6% in 2025, which is better than the peer median of 59.2%.

Management Changes

Stakeholder Impact

• Shareholders of CrossFirst will receive Busey common stock and become eligible for Busey's dividend program.
• Customers of both banks will have access to a broader range of products and services.
• Employees of both banks will have opportunities for career advancement within the larger organization.
• Communities served by both banks will benefit from the combined company's commitment to community development.

Next Steps

• Busey and CrossFirst will seek shareholder approvals for the merger.
• The companies will work to obtain regulatory approvals for the holding company merger and the bank merger.
• CrossFirst Bank will merge with and into Busey Bank in mid-2025.
• The combined company will integrate the two organizations and implement cost savings initiatives.