10-K: First Busey Reports Strong 2025 Growth Post-Acquisition

First Busey Corporation's 2025 annual report highlights significant growth in assets and net income, driven by strategic acquisitions and a conservative banking approach.

Summary

• First Busey Corporation reported total assets of $18.10 billion as of December 31, 2025, a 50.3% increase from $12.05 billion in 2024.
• Net income for 2025 was $135.26 million, up from $113.69 million in 2024, while adjusted net income (Non-GAAP) reached $224.97 million, compared to $120.03 million in 2024.
• The company completed the acquisition of CrossFirst Bankshares, Inc. on March 1, 2025, and Merchants and Manufacturers Bank Corporation on April 1, 2024, significantly expanding its geographic footprint and service offerings.
• Portfolio loans grew by 76.3% to $13.57 billion as of December 31, 2025, primarily due to the CrossFirst acquisition.
• Total deposits increased by 49.3% to $14.91 billion as of December 31, 2025, with core deposits representing 93.7% of total deposits.
• Wealth management fees increased by 9.1% to $69.4 million in 2025, with assets under care reaching $15.66 billion.
• Non-performing loans increased to $53.5 million (0.39% of portfolio loans) in 2025 from $23.2 million (0.30%) in 2024, largely due to purchased credit deteriorated (PCD) loans from the CrossFirst acquisition.
• Net charge-offs totaled $55.9 million in 2025, representing 0.44% of average loans, up from $18.2 million (0.23%) in 2024, including $36.2 million related to PCD loans.
• The company's efficiency ratio (Non-GAAP) was 63.2% in 2025, compared to 62.0% in 2024, while the adjusted efficiency ratio (Non-GAAP) improved to 55.8% from 61.3%.
• First Busey Bank became a member of the Federal Reserve System in October 2024 and maintains capital ratios well in excess of 'well-capitalized' thresholds.
• The company redeemed $125.0 million of subordinated notes on June 1, 2025, and $4.0 million of subordinated notes on December 4, 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, reflecting successful integration and growth from strategic acquisitions, despite some expected increases in non-performing assets and charge-offs related to acquired portfolios. The strong capital position and improved adjusted efficiency ratio are favorable indicators.

Positives

• Total assets grew significantly by 50.3% to $18.10 billion, indicating successful strategic expansion.
• Net income increased to $135.26 million in 2025 from $113.69 million in 2024, demonstrating improved profitability.
• Adjusted net income (Non-GAAP) saw a substantial rise to $224.97 million in 2025 from $120.03 million in 2024, reflecting strong underlying performance.
• Portfolio loans increased by 76.3% to $13.57 billion, driven by strategic acquisitions and lending activities.
• Total deposits grew by 49.3% to $14.91 billion, with a high proportion of core deposits (93.7%), indicating a stable funding base.
• Wealth management fees increased by 9.1% to $69.4 million, and assets under care grew by 13.2% to $15.66 billion, highlighting strength in fee-based income.
• Treasury management services income increased by 106.8% and card services and ATM fees by 34.4%, benefiting from the CrossFirst acquisition.
• The adjusted efficiency ratio improved to 55.8% in 2025 from 61.3% in 2024, suggesting better operational cost management post-acquisition.
• Busey Bank maintains capital ratios well in excess of 'well-capitalized' regulatory guidelines, indicating strong financial health and flexibility.
• Annual pre-tax expense synergy estimates from the CrossFirst acquisition remain on track at $25.0 million, with 100% realization expected in 2026.

Negatives

• Payment technology solutions income decreased by 9.0% to $20.0 million in 2025, primarily due to lower online bill payments.
• Other service charges on deposit accounts declined by 33.5% to $6.3 million, reflecting changes in fee structure.
• Net securities losses increased to $10.7 million in 2025 from $6.1 million in 2024, due to a strategic balance sheet repositioning.
• Non-performing loans increased by 130.2% to $53.5 million in 2025, and non-performing assets increased by 149.4% to $58.1 million, primarily due to PCD loans from the CrossFirst acquisition.
• Net charge-offs significantly increased to $55.9 million (0.44% of average loans) in 2025 from $18.2 million (0.23%) in 2024, with $36.2 million related to PCD loans.
• The effective income tax rate increased to 27.5% in 2025 from 25.8% in 2024, partly due to a one-time revaluation of deferred tax assets and higher disallowance related to compensation.
• The FirsTech operating segment reported a net loss of $1.76 million in 2025, compared to a loss of $0.67 million in 2024 and a profit of $0.83 million in 2023.

Risks

• Economic and financial market conditions, including elevated interest rates and persistent inflation, may adversely affect business, borrower repayment ability, and collateral values.
• Shifts in consumer and business behavior during economic uncertainty could decrease demand for products, increase loan delinquencies, and reduce wealth management fees.
• Regional economic vulnerabilities in concentrated metropolitan areas could heighten risks due to volatility in employment, housing, and commercial development.
• Changes in interest rates and yield curve dynamics may compress net interest margin, affect asset valuations, and create liquidity pressures.
• Changes in government policies and regulatory frameworks, including those related to digital innovation (AI, digital assets) and geopolitical conflicts, could increase compliance costs and strategic risk.
• Evolving privacy, data protection, and information security laws and regulations present operational and legal challenges, potentially increasing compliance costs and restricting product offerings.
• Laws impacting cannabis-related businesses, despite the company's policy to avoid them, could create additional legal, regulatory, strategic, and reputational risk due to increasing legalization at the state level.
• Involvement in suits, legal proceedings, investigations, and regulatory actions may lead to adverse consequences, including penalties, adverse judgments, or operational restrictions.
• Heightened credit risk associated with lending activities may result in insufficient credit loss provisions, particularly from borrower nonpayment and collateral value fluctuations.
• Elevated levels of non-performing assets could reduce profitability and strain operational resources due to lost interest income and increased administration costs.
• Loan concentrations in volatile markets, especially Commercial Real Estate (CRE), could increase exposure to adverse economic conditions and heighten credit risk.
• Commercial lending activities expose the company to repayment risks that may increase during economic stress, as repayment often depends on projected cash flows rather than solely collateral.
• Construction, land acquisition, and development loans involve heightened risks due to reliance on projected property values, construction costs, and market conditions.
• Credit exposure to the energy industry may increase vulnerability to sector-specific volatility, potentially leading to higher delinquencies and charge-offs.
• Credit quality deterioration in investment securities, such as credit downgrades or issuer defaults, may result in significant realized losses.
• Failure to maintain sufficient capital to meet regulatory requirements could negatively affect customer confidence, constrain growth, increase funding costs, and restrict dividends.
• Liquidity risks, including inability to access funding sources or increased competition for deposits, could affect operations and jeopardize financial condition.
• Challenges accessing contingent liquidity during market stress, due to operational readiness or collateral requirements, could heighten the risk of liquidity shortfalls.
• If securities or industry analysts cease publishing research or adversely change recommendations, the stock price could decline.
• Significant competition from traditional and nonbank financial institutions, including fintech companies, threatens market share and requires continuous investment in technology.
• Rapid technological change, digital innovation, and emerging artificial intelligence capabilities present competitive, operational, and compliance risks, including cybersecurity and data privacy.
• Acquisitions and strategic combinations involve significant regulatory, operational, financial, and strategic risks, including integration challenges, undisclosed liabilities, and potential customer attrition.
• Introduction of new products and services carries financial and strategic risks, such as competitive pressures, underdeveloped markets, and unforeseen challenges.
• The rapid evolution of digital assets and emerging regulatory frameworks introduces new competitive, compliance, and operational risks, even without offering digital asset products.
• Financial statements rely on estimates, assumptions, and management judgments, which if incorrect, could result in material misstatement and adverse effects.
• Changes in accounting principles or guidelines could adversely affect financial reporting.
• Changes in tax law and the potential inability to realize tax benefits could adversely affect results of operations.
• Investments in tax-advantaged projects may not generate anticipated returns if compliance features are not met or tax laws change.
• The company's risk management framework may not be fully effective in mitigating all risks and losses, especially as new risks emerge.
• Technological investments, while driving efficiency, introduce cybersecurity risks, including sophisticated attacks and vendor vulnerabilities.
• Outsourcing dependencies could disrupt operations and increase compliance risks, particularly with multi-layered supply chains and geopolitical tensions.
• Fraudulent activities pose a persistent challenge, potentially leading to financial losses, regulatory penalties, and erosion of customer trust.
• Inability to attract and retain key personnel may affect future growth and earnings.
• Damage from negative publicity could harm reputation and adversely impact business and financial condition.
• Severe weather, natural disasters, pandemics, acts of war or terrorism, and other external events could significantly impact operations and customer repayment capacity.

Future Outlook

The company anticipates achieving 100% realization of identified pre-tax expense synergies of $25.0 million from the CrossFirst acquisition in 2026. Management continues to monitor evolving federal and state tax legislation and its potential impact on operations. The company expects to complete the redemption of trust preferred securities issued by First Busey Statutory Trust II in June 2026. Future mortgage revenue may be impacted by general economic conditions and interest rate volatility. The company will continue to utilize a 12-month forecast period with an immediate reversion to historical loss rates for its Allowance for Credit Losses (ACL) estimate due to continued economic uncertainty.

Management Comments

• Our financial strength is built on a long-term conservative operating approach.
• The quality of our core deposit franchise is a critical value driver of the institution.
• Busey remains substantially core deposit funded, with robust liquidity.
• Our credit performance reflects its highly diversified, conservatively underwritten loan portfolio.
• Our approach to lending and its underwriting standards are designed to emphasize relationship banking rather than transactional banking.
• We strive to consistently maintain capital ratios well in excess of thresholds required to be designated as well capitalized by applicable regulatory guidelines, thereby ensuring financial strength and flexibility across economic and operating cycles.
• Busey's operating mandate and focus remain on emphasizing credit quality over asset growth.
• Annual pre-tax expense synergy estimates resulting from the CrossFirst acquisition remain on track at $25.0 million with 100% realization of identified synergies in 2026.
• Management believes that adequate liquidity existed to meet all projected cash flow obligations as of December 31, 2025.

Industry Context

StockSavvy.ai notes that First Busey's significant asset and loan growth, primarily driven by the CrossFirst acquisition, positions it as a larger regional player in a consolidating banking sector. The emphasis on core deposit funding and conservative underwriting aligns with broader industry trends prioritizing stability and risk management amidst economic uncertainties and evolving regulatory landscapes. The increase in non-performing assets and charge-offs, while notable, is partially attributable to acquired portfolios, a common integration challenge in M&A. The focus on technology investments and digital capabilities is crucial for competitiveness against both traditional and fintech rivals.

Comparison to Industry Standards

• Busey Bank ranked fourth in total deposits among 349 financial institutions headquartered in Illinois as of June 30, 2025, demonstrating strong market presence in its home state.
• Busey Bank ranked in the top 10 in total deposits in nine Illinois counties, two Kansas counties, and two New Mexico counties, indicating strong local market penetration.
• The company's capital ratios (Common Equity Tier 1: 12.43%, Tier 1: 13.88%, Total Capital: 15.93%, Leverage: 11.93%) are well above the 'well-capitalized' minimums (7.00%, 8.50%, 10.50%, 4.00% respectively, including capital buffer), indicating a robust capital position compared to regulatory benchmarks.
• The adjusted efficiency ratio of 55.8% in 2025, while an improvement, suggests that the company is managing costs effectively post-acquisition, which is a key metric for regional banks aiming for operational leverage.
• The increase in non-performing loans to 0.39% of portfolio loans and net charge-offs to 0.44% of average loans in 2025, while higher than previous years, should be evaluated in the context of the CrossFirst acquisition, which introduced PCD loans. This is a common occurrence in bank mergers, and the company's ACL coverage of 3.25x non-performing loans indicates a reasonable buffer.

Management Changes

Corporate Governance

Legal Proceedings

• First Busey Corporation filed two lawsuits against the Illinois Secretary of State on November 25, 2025, contesting a preliminary estimate of over $28.0 million in franchise taxes, penalties, interest, fees, and charges. The company views the methodology as inconsistent with past practice and existing law.
• The Illinois Secretary of State scheduled an administrative hearing to ascertain the purportedly due amounts, which First Busey Corporation is contesting, including jurisdiction.
• The company believes potential liabilities related to this matter could be material if an accrual is required in the future, but a reasonable estimate of loss cannot currently be made.

Related Party Transactions

• Loans to related parties (directors, executive officers, their immediate families, and affiliated companies with 10% or more beneficial ownership) totaled $34.91 million as of December 31, 2025, down from $98.01 million in 2024.
• These transactions are conducted in the ordinary course of business on the same terms as comparable transactions with others.
• Unused commitments to directors and executive officers totaled $35.86 million as of December 31, 2025.
• Deposits from related parties totaled $98.0 million as of December 31, 2025, up from $31.2 million in 2024.
• No significant amounts of loans to related parties were past due, non-accrual, or modified.

Stakeholder Impact

• Shareholders: Experience increased net income and adjusted EPS, but diluted EPS decreased due to share issuance for acquisitions. Stock repurchase plan continues, and preferred stock dividends are paid. The Illinois franchise tax dispute poses a potential material liability.
• Employees: Workforce expanded by 405 full-time equivalents due to acquisitions. The company continues to invest in talent development and health/wellness programs. Executive compensation is subject to a new clawback policy.
• Customers: Benefit from an expanded banking center network (79 centers across 10 states) and diversified financial products and services. The integration of CrossFirst and M&M banks aims to enhance service offerings.
• Regulators: The company maintains capital ratios well above 'well-capitalized' thresholds and is subject to increased oversight from the CFPB and Federal Reserve due to crossing the $10 billion asset threshold. Compliance with evolving regulations, including those for digital assets and cybersecurity, is ongoing.
• Communities: The company's expansion into new markets and continued focus on Community Reinvestment Act (CRA) standards aim to meet credit needs in diverse communities. Investments in tax-advantaged projects support affordable housing and community development.

Next Steps

• Continue to integrate acquired operations and realize remaining expense synergies from the CrossFirst acquisition, with 100% realization expected in 2026.
• Monitor and manage credit quality, particularly for acquired loan portfolios and concentrations in Commercial Real Estate (CRE).
• Evaluate and potentially adopt new accounting standards, including ASU 2025-09 (Derivatives and Hedging), ASU 2025-08 (Financial Instruments-Credit Losses: Purchased Loans), and ASU 2025-06 (Intangibles-Goodwill and Other-Internal-Use Software).
• Complete the redemption of trust preferred securities issued by First Busey Statutory Trust II in June 2026.
• Continue to defend against the Illinois Secretary of State's claim regarding franchise taxes through pending lawsuits and administrative hearings.
• Monitor and adapt to evolving regulatory frameworks, including those related to digital innovation and geopolitical dynamics.
• Address the departure of a named executive officer, Michael J. Maddox, and record related severance expenses in the first quarter of 2026.

Key Dates

Recommendation

First Busey Corporation's 2025 performance demonstrates significant growth in assets, loans, and deposits, primarily driven by successful strategic acquisitions. The improved adjusted efficiency ratio and strong capital position are positive indicators. However, the increase in non-performing assets and net charge-offs, while partially attributable to acquired portfolios, warrants close monitoring. The ongoing legal dispute regarding Illinois franchise taxes presents an unquantified but potentially material liability. Given the substantial integration efforts post-acquisition and the mixed financial metrics (strong growth but increased credit losses), a 'hold' recommendation is appropriate. Investors should observe the successful realization of synergies, the trajectory of asset quality, and the resolution of the tax dispute before considering a stronger position.

Keywords

Banking, Financial Services, Wealth Management, Payment Technology, Acquisition, Commercial Banking, Retail Banking, Credit Quality, Regulatory Capital, SEC Filing, 10-K, BUSE, CrossFirst, Merchants and Manufacturers Bank, Loan Portfolio, Deposits, Net Interest Income, Non-GAAP, Risk Management, Cybersecurity, Corporate Governance