425: First Busey Corp to Merge with CrossFirst Bankshares in $20 Billion Deal

CrossFirst Bankshares, Inc. will merge with First Busey Corporation, creating a premier commercial bank with approximately $20 billion in combined assets.

Summary

• CrossFirst Bankshares, Inc. is set to merge with First Busey Corporation.
• The combined entity will have approximately $20 billion in assets and operate across 77 locations in 10 states.
• The merger is expected to close in the first or second quarter of 2025.
• The combined company will be led by executives from both organizations, including Mike Maddox, Randy Rapp, and Amy Fauss.
• The pro forma board of directors will include representation from both organizations.
• The merger aims to expand Busey's presence in growing metro markets and allow CrossFirst to clear the $10 billion asset threshold.
• The combined company anticipates significant cross-sell and upsell opportunities.
• Busey has assets of $11.9 billion and 62 locations, while CrossFirst has assets of nearly $7.4 billion and 15 banking centers.
• The headquarters of First Busey Corporation will move to Leawood, Kansas, where CrossFirst is currently headquartered.
• Busey Bank's headquarters will remain in Champaign, Illinois.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook on the merger, highlighting the strategic benefits, financial attractiveness, and cultural compatibility of the two organizations. The management's comments and the emphasis on associate and community benefits further contribute to the positive sentiment.

Positives

• The merger will create a larger, more competitive regional bank.
• The combined company will have an expanded geographical footprint.
• The merger is expected to improve efficiency, scale, and liquidity for shareholders.
• The merger will provide additional balance sheet capacity.
• The merger will diversify the client base, loans, and deposits.
• The merger will facilitate greater scale and capabilities to deploy across metro markets.
• The merger will add additional dividend and shareholder return capacity with enhanced earnings.
• The merger will provide greater opportunity to drive enhanced ROTCE.
• The merger will create significant revenue synergies with enhanced product offerings and cross-sell opportunities.
• The merger will provide a stable, low-cost funding source.
• The merger will accelerate the transition to a $10B+ regulatory environment for CrossFirst.
• The merger will enhance DDA composition.
• The merger will diversify revenue with wealth management and payments platform.
• The merger will provide access to new quality markets to leverage CFB's platform.
• The merger will create continuity in executive leadership.
• The merger will add a high-performing loan growth engine in excellent markets.
• The merger will improve net interest margin.

Negatives

• The merger is expected to result in minimal dilution to tangible book value (-0.6%) with an earnback period of approximately six months.
• There may be some change to organizational structures and associate positioning following the bank merger in mid-2025.
• The integration process may have operational and systems considerations that could impact customers and associates.

Risks

• The merger agreement could be terminated.
• Legal proceedings could be instituted against Busey or CrossFirst.
• Required regulatory, stockholder, or other approvals may not be received.
• The anticipated benefits of the proposed transaction may not be realized.
• The integration of the two companies may be difficult.
• Revenues following the proposed transaction may be lower than expected.
• The announcement of the transaction could have adverse effects on the market price of the common stock of either or both parties.
• The companies may be unable to achieve expected synergies and operating efficiencies.
• The companies may be unable to retain customers and retain and hire key personnel and maintain relationships with their suppliers.
• Changes in interest rates and prepayment rates could affect the companies' assets.
• Concentrations within the companies' loan portfolios could pose risks.
• The companies could be affected by the strength of the local, state, national, and international economy.
• The companies could be affected by risks related to the potential impact of general economic, political and market factors or of exceptional weather occurrences.
• The companies could be affected by the economic impact of any future terrorist threats or attacks, widespread disease or pandemics or other adverse external events.
• Changes in state and federal laws, regulations, and governmental policies could affect the companies' general business.
• Increased competition in the financial services sector could affect the companies.
• Breaches or failures of information security controls or cybersecurity-related incidents could affect the companies.
• Changes in technology and the ability to develop and maintain secure and reliable electronic systems could affect the companies.
• The loss of key executives or associates could affect the companies.
• Changes in consumer spending could affect the companies.
• Unexpected outcomes of existing or new litigation, investigations, or inquiries involving Busey or CrossFirst could affect the companies.

Future Outlook

The combined company expects to benefit from significant economies of scale and an enhanced growth profile in attractive growth markets. The merger is expected to be accretive to earnings and provide additional balance sheet capacity.

Management Comments

• We believe that together we will be able to accelerate CrossFirsts goal to be a top-tier regional bank and position us even better to support our clients and communities.
• This merger also provides new opportunities for career development and advancement for our team.
• Like CrossFirst, Busey is a strong and respected bank with a team of incredibly talented bankers.
• Busey shares our passion for relationship-focused banking and for serving clients and communities in extraordinary ways.
• As a combined company, we intend to build on our complementary cultures and continue to support our communities throughout our expanding footprint.

Industry Context

The banking industry is undergoing consolidation as institutions seek to achieve greater scale, improve efficiency, and expand their geographic reach. This merger reflects that trend, as Busey and CrossFirst aim to create a stronger regional bank with a broader footprint and enhanced capabilities.

Comparison to Industry Standards

• The combined company's $20 billion in assets would place it among the larger regional banks in the Midwest and Southwest.
• Busey's wealth management assets under care of $13 billion are comparable to those of other regional banks with established wealth management divisions.
• The anticipated earnings accretion of approximately 20% in 2026 is a significant improvement and suggests a successful integration.
• The pro forma capital ratios (9.6% leverage, 11.0% CET1, 14.1% TRBC) are significantly above well-capitalized thresholds, indicating a strong financial position.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders will benefit from improved efficiency, scale, and liquidity.
• Employees will have new opportunities for career development and advancement.
• Customers will have access to an expanded range of products and services.
• Communities will benefit from the combined company's commitment to community involvement.

Next Steps

• Obtain regulatory and shareholder approvals.
• Collaborate on integration planning.
• Develop timelines for integrating both the holding companies and the banks.
• Executives from both companies will be visiting locations over the coming weeks and months.
• Periodic updates will be shared as key milestones are reached.

Key Dates