10-K: First Busey Corporation Reports 2024 Annual Results, Announces Planned Merger with CrossFirst

First Busey Corporation's 2024 10-K filing highlights financial performance, strategic acquisitions, and regulatory compliance, with a focus on a planned merger with CrossFirst Bankshares.

Summary

• First Busey Corporation, a $12.05 billion financial holding company, reported its 2024 financial results.
• The company is headquartered in Champaign, Illinois, and its common stock trades on The Nasdaq Global Select Market under the symbol BUSE.
• Busey conducts banking operations through Busey Bank and provides payment technology solutions through FirsTech.
• In 2024, Busey completed the acquisition of Merchants and Manufacturers Bank Corporation (M&M).
• A planned merger with CrossFirst Bankshares, Inc. is expected to close on March 1, 2025, creating a combined entity with approximately $20 billion in assets.
• In 2024, Busey incurred one-time pretax acquisition-related expenses of $3.9 million related to the CrossFirst merger.
• Busey Bank operates 50 banking centers in Illinois, eight in Missouri, three in southwest Florida, and one in Indianapolis, Indiana.
• The company faces competition from national and state banks, savings and loan associations, and credit unions.
• As of December 31, 2024, Busey and its subsidiaries had 1,509 full-time equivalent employees.
• Busey is subject to extensive regulations under federal and state law, including those from the DFPR, the Federal Reserve, the FDIC, and the CFPB.
• The company crossed the $10 billion asset threshold in 2020, triggering additional regulatory requirements.
• Busey Bank is required to pay deposit insurance premium assessments to the FDIC.
• The Basel III Rule establishes capital standards for banks and bank holding companies.
• As of December 31, 2024, Busey Bank was well-capitalized as defined by Federal Reserve regulations.
• The company's ability to pay dividends is subject to regulatory restrictions and capital requirements.
• Busey is subject to various laws and regulations governing privacy, data protection, and information security.
• The company maintains a cybersecurity risk management program.
• Net income for 2024 was $113.7 million.
• Adjusted net income (Non-GAAP) was $119.8 million.
• The company executed a two-part balance sheet repositioning strategy in 2024.
• The company's strategy of pursuing acquisitions exposes Busey to financial, execution, and operational risks that could negatively affect Busey.

Sentiment

Score: 7

Explanation: The document presents a balanced view with both positive growth and strategic initiatives alongside challenges and risks, resulting in a moderately positive sentiment.

Positives

• Planned merger with CrossFirst Bankshares will create a premier commercial bank in the Midwest, Southwest, and Florida.
• Completion of the acquisition of Merchants and Manufacturers Bank Corporation expanded Busey's presence in the suburban Chicago market.
• Wealth management fees increased by 11.0% to $63.6 million in 2024.
• Payment technology solutions revenue increased by 3.7% to $22.0 million in 2024, marking a record high.
• Busey Bank was well-capitalized as defined by Federal Reserve regulations as of December 31, 2024.
• The company has a strong core deposit franchise with core deposits representing 96.5% of total deposits as of December 31, 2024.

Negatives

• The company incurred one-time pretax acquisition-related expenses of $3.9 million in 2024 related to the CrossFirst merger.
• Total deposits decreased by 3.0% to $9.98 billion as of December 31, 2024.
• Non-performing loan balances increased by 197.30% to $23.2 million as of December 31, 2024.
• Net charge-offs totaled $18.2 million in 2024, compared with $2.3 million in 2023.
• The company's ACL coverage decreased to 3.59 times its non-performing loan balance at December 31, 2024, compared to 11.74 times at December 31, 2023.

Risks

• The proposed transaction with CrossFirst may not close or the anticipated benefits may not be realized.
• Economic conditions and financial markets may adversely affect Busey's business.
• Changes in government policies and regulatory frameworks could adversely affect operations and profitability.
• Heightened credit risk associated with lending activities may result in insufficient credit loss provisions.
• Loan concentrations in volatile markets could increase Busey's exposure to economic downturns.
• Failure to maintain sufficient capital to meet regulatory requirements could have material adverse effects.
• Liquidity risks could affect operations and jeopardize Busey's business, financial condition, and results of operations.
• Intense competition from traditional banks and fintech companies threatens market share.
• Failure to adapt to rapid technological advancements could erode competitiveness.
• Busey's strategy of pursuing acquisitions exposes Busey to financial, execution, and operational risks.
• Financial statements are created, in part, by estimates, assumptions, and methods used by management, which, if incorrect, could cause unexpected losses in the future.
• Busey's framework for managing risks may not be fully effective in mitigating risk and loss.
• Fraudulent activities could erode financial stability and customer trust.
• Damage resulting from negative publicity could harm Busey's reputation and adversely impact its business and financial condition.

Future Outlook

Busey expects modest loan growth over the next several quarters and anticipates realizing the full extent of M&M acquisition synergies in 2025.

Management Comments

• Busey's financial strength is built on a long-term conservative operating approach.
• The quality of Busey's core deposit franchise is a critical value driver of the institution.
• Busey's credit performance reflects its highly diversified, conservatively underwritten loan portfolio.
• Busey strives to consistently maintain capital ratios well in excess of thresholds required to be designated as well capitalized by applicable regulatory guidelines.

Industry Context

The announcement reflects ongoing consolidation trends in the banking industry, with institutions seeking to expand their geographic footprint and service offerings to remain competitive.

Comparison to Industry Standards

• Busey Bank ranked fourth in total deposits within the Illinois market out of 355 financial institutions headquartered in the State of Illinois, based on information obtained from the FDIC Summary of Deposits dated June 30, 2024.
• Busey Bank ranked in the top 10 in total deposits in nine Illinois counties as of June 30, 2024.

Management Changes

Legal Proceedings

• Busey Bank is under examination by the Florida Department of Revenue for its 2020 to 2022 corporate income tax filings.
• Busey received a notice of audit initiation from the Illinois Department of Revenue for M&Ms tax filings for the tax years 2022 and 2023.

Stakeholder Impact

• The merger with CrossFirst is expected to create a stronger, more competitive institution, potentially benefiting shareholders.
• Employees may experience changes due to integration and restructuring following the merger.
• Customers may benefit from an expanded range of products and services.
• The company's performance impacts the communities it serves through lending, investment, and employment.

Next Steps

• Close the merger with CrossFirst Bankshares on March 1, 2025.
• Merge CrossFirst Bank with and into Busey Bank in mid-2025.
• Realize the full extent of M&M acquisition synergies in 2025.

Key Dates