425: First Busey and CrossFirst Bankshares Announce Transformative Partnership

First Busey Corporation and CrossFirst Bankshares, Inc. have announced a merger expected to create a combined organization with over $20 billion in assets, offering strategic and financial benefits.

Summary

• First Busey Corporation and CrossFirst Bankshares, Inc. have announced a transformative partnership.
• The combined organization is expected to have over $20 billion in assets.
• The merger is expected to provide significant economies of scale and an enhanced growth profile.
• Busey's low-cost funding base will be combined with CrossFirst's attractive markets and commercial loan engine.
• The deal is expected to result in minimal tangible book value (TBV) dilution of -0.6% with an earnback period of approximately 6 months.
• EPS accretion is projected to be 20%+ in 2026, excluding one-time merger charges, and 16%+ when further excluding rate marks.
• Pro forma capital ratios at closing are expected to be significantly above well-capitalized thresholds, with a 9.6% leverage ratio, 11.0% CET1 ratio, and 14.1% total risk-based capital ratio.
• The combined loan-to-deposit ratio is projected to be 86% at closing, with C&D/CRE concentration ratios of 60%/250%.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the merger between First Busey and CrossFirst, highlighting strategic benefits, financial attractiveness, and leadership continuity. The projected EPS accretion and strong capital ratios contribute to a favorable sentiment.

Positives

• The combined organization will have over $20 billion in assets, leading to economies of scale.
• The merger expands Busey's regional operating model into attractive new markets.
• The deal is expected to result in minimal tangible book value (TBV) dilution of -0.6% with an earnback period of approximately 6 months.
• EPS accretion is projected to be 20%+ in 2026, excluding one-time merger charges.
• Pro forma capital ratios at closing are expected to be significantly above well-capitalized thresholds.

Negatives

• The merger will result in a minimal tangible book value (TBV) dilution of -0.6%.

Risks

• The announcement includes forward-looking statements that are subject to risks and uncertainties.
• The proposed transaction may not close when expected or at all due to regulatory, stockholder, or other approvals not being received.
• The anticipated benefits of the proposed transaction may not be realized when expected or at all.
• The integration of the two companies may be more difficult, time-consuming, or costly than expected.
• The companies may be unable to achieve expected synergies and operating efficiencies.
• Revenue 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.

Future Outlook

The combined organization expects to benefit from significant economies of scale and an enhanced growth profile. The company will be well-positioned for future growth with strong capital ratios and a combined loan-to-deposit ratio of 86%.

Management Comments

• First Busey is pleased to share highlights of the transformative partnership with CrossFirst Bankshares.
• Van Dukeman will continue as Executive Chairman and CEO of First Busey and Executive Chairman of Busey Bank.
• Mike Maddox will assume the role of Executive Vice Chairman & President of First Busey and CEO of Busey Bank at closing.
• Mike Maddox will succeed Van Dukeman as CEO of First Busey on the earlier of the 1-year anniversary of the bank merger or 18-month anniversary of the holding company merger.

Industry Context

The merger reflects a trend of consolidation in the banking industry to achieve greater scale, efficiency, and market presence. Banks are seeking to expand their geographic footprint and diversify their service offerings to better compete in a challenging environment.

Comparison to Industry Standards

• The pro forma capital ratios (9.6% leverage, 11.0% CET1, 14.1% total risk-based capital) are above the regulatory requirements for well-capitalized banks, indicating a strong financial position compared to industry standards.
• The projected EPS accretion of 20%+ in 2026 is a positive sign, suggesting the merger is expected to create significant value for shareholders, which is a key metric in evaluating bank mergers.
• The loan-to-deposit ratio of 86% is within a healthy range, indicating a good balance between lending and deposit gathering activities, which is comparable to other well-managed regional banks.

Management Changes

Stakeholder Impact

• Shareholders are expected to benefit from the potential EPS accretion and enhanced growth profile.
• Customers will have access to a broader range of services and a larger network.
• Employees will have opportunities within the combined organization.
• The merger is expected to create a stronger and more competitive financial institution.

Next Steps

• Busey will file a registration statement on Form S-4 with the SEC.
• A joint proxy statement of Busey and CrossFirst will be sent to stockholders seeking certain approvals related to the proposed transaction.

Key Dates