FIRST BUSEY CORP NV

Changes in noninterest expense are summarized as follows for the periods presented(dollars in thousands):

1. The efficiency ratio and adjusted efficiency ratio are non-GAAP financial measures. For a reconciliation of non-GAAP measures to the most directly comparable financial GAAP measures, see“Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

1. The efficiency ratio and adjusted efficiency ratio are non-GAAP financial measures. For a reconciliation of non-GAAP measures to the most directly comparable financial GAAP measures, see“Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

Total noninterest expense was $75.5 million for the three months ended June 30, 2024, a 9.1% increase from the comparable period in 2023, and was $146.3 million for the six months ended June 30, 2024, a 4.8% increase from the comparable period in 2023. Non-operating acquisition and other restructuring expenses contributed $2.2 million to total noninterest expense for the three months ended June 30, 2024, compared to an immaterial amount for the comparable period in 2023, and contributed $2.6 million to total noninterest expense for the six months ended June 30, 2024, compared to an immaterial amount for the comparable period in 2023. Second quarter expenses include the costs of operating M&M Bank as a stand-alone bank from April 1, 2024, through June 21, 2024. Busey remains focused on expense discipline and has been purposeful in our efforts to rationalize our expense base given our economic outlook and our view on the future of banking. Busey expects to accelerate the realization of M&M acquisition synergies in the second half of 2024.

Salaries, wages, and employee benefits were $43.5 million for the three months ended June 30, 2024, a 9.1% increase from the comparable period in 2023, and were $85.6 million for the six months ended June 30, 2024, a 6.7% increase from the comparable period in 2023. Busey recorded $1.1 million and $1.3 million of non-operating expenses for salaries, wages, and employee benefits for the three and six months ended June 30, 2024, respectively; in comparison we did not record any non-operating expense in this category during the three and six months ended June 30, 2023. Our total associate base consisted of 1,520 full-time equivalents as of June 30, 2024, compared to 1,477 at June 30, 2023. The increase in our associate-base at June 30, 2024, was largely due to the M&M acquisition. Current trends continue to reflect a competitive labor market, maintaining pressure on costs related to attracting and maintaining our skilled workforce.

Data processing expense was $7.1 million for the three months ended June 30, 2024, a 20.3% increase from the comparable period in 2023. Excluding non-operating expenses, data processing expense was $6.8 million for the three months ended June 30, 2024, a 14.5% increase from the comparable period in 2023. Data processing expense was $13.7 million for the six months ended June 30, 2024, an 18.3% increase from the comparable period in 2023. Excluding non-operating expenses, data processing expense was $13.2 million for the six months ended June 30, 2024, a 14.4% increase from the comparable period in 2023. Increases were primarily attributable to Company-wide investments in technology enhancements, as well as inflation-driven price increases.

Combined, net occupancy expense of premises and furniture and equipment expense totaled $6.3 million for the three months ended June 30, 2024, a 1.0% increase from the comparable period in 2023, and $12.8 million for the six months ended June 30, 2024, a 0.7% increase from the comparable period in 2023. Primary cost drivers in these expense categories include lease costs, repairs and maintenance, depreciation expense, real estate taxes, and utilities.

Professional fees were $2.5 million for the three months ended June 30, 2024, a 156.4% increase from the comparable period in 2023, and were $4.7 million for the six months ended June 30, 2024, a 56.6% increase from the comparable period in 2023. Busey recorded $0.4 million and $0.5 million of non-operating expenses for professional fees for the three and six months ended June 30, 2024, respectively; in comparison we did not record any non-operating expense in this category during the three and six months ended June 30, 2023. Further increases were primarily attributable to legal, payroll services, and consulting fees.

Amortization of intangible assets was $2.6 million for the three months ended June 30, 2024, a 1.5% decrease from the comparable period in 2023, and $5.0 million for the six months ended June 30, 2024, a 6.7% decrease from the comparable period for 2023. Decreases in 2024 were due to the use of an accelerated amortization methodology, and were partially offset by the addition of $6.3 million of intangible assets related to the M&M acquisition.

Interchange expense was $1.7 million for the three months ended June 30, 2024, a 7.3% decrease from the comparable period in 2023, and was $3.3 million for the six months ended June 30, 2024, a 10.2% decrease from the comparable period in 2023. Fluctuations in interchange expense relate to payment and volume activity at FirsTech.

FDIC insurance expense was $1.5 million for the three months ended June 30, 2024, a 3.1% decrease from the comparable period in 2023, and $2.9 million for the six months ended June 30, 2024, a 4.9% decrease from the comparable period in 2023.

Other noninterest expense was $10.4 million for the three months ended June 30, 2024, a 1.5% increase from the comparable period in 2023, and was $18.3 million for the six months ended June 30, 2024, an 8.5% decrease from the comparable period in 2023. In connection with Busey’s adoption of ASU 2023-02 on January 1, 2024, Busey began recording amortization of New Markets Tax Credits as income tax expense instead of other noninterest expense, resulting in decreases in other noninterest expense of $2.3 million and $4.5 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. Further changes in other noninterest expense are attributable to multiple items, including the provision for unfunded commitments, sales of other real estate owned, marketing, and business development expenses.