FIRST BUSEY CORP /NV/

Busey believes that making sound and profitable loans is a necessary and desirable means of employing funds available for investment. Busey maintains lending policies and procedures designed to focus lending efforts on the types, locations, and duration of loans most appropriate for its business model and markets. While not specifically limited, Busey attempts to focus its lending on short to intermediate-term loans (0-10 years) in geographic areas within 125 miles of its lending offices. Loans originated outside of these areas are generally to existing customers of Busey Bank. Busey attempts to utilize government-assisted lending programs, such as the SBA and U.S. Department of Agriculture lending programs, when prudent. Generally, loans are collateralized by assets, primarily real estate, and guaranteed by individuals. Loans are expected to be repaid primarily from cash flows of the borrowers or from proceeds from the sale of selected assets of the borrowers.

Management reviews and approves Busey Bank’s lending policies and procedures on a regular basis. Management routinely—at least quarterly—reviews the ACL in conjunction with reports related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans. Busey’s underwriting standards are designed to encourage relationship banking rather than transactional banking. Relationship banking implies a primary banking relationship with the borrower that includes, at a minimum, an active deposit banking relationship in addition to the lending relationship. Significant underwriting factors in addition to location, duration, a sound and profitable cash flow basis, and the borrower’s character, include the quality of the borrower’s financial history, the liquidity of the underlying collateral, and the reliability of the valuation of the underlying collateral.

At no time is a borrower’s total borrowing relationship permitted to exceed Busey Bank’s regulatory lending limit. Busey generally limits such relationships to amounts substantially less than the regulatory limit. Loans to related parties, including executive officers and directors of First Busey Corporation and its subsidiaries, are reviewed for compliance with regulatory guidelines.

Busey maintains an independent loan review department that reviews loans for compliance with Busey’s loan policy on a periodic basis. In addition, the loan review department reviews risk assessments made by Busey’s credit department, lenders, and loan committees. Results of these reviews are presented to management and the audit committee at least quarterly.

Busey Bank’s lending can be summarized into five primary lending activities, which can be further categorized as either commercial or retail lending. Commercial lending activities consist of C&I and other commercial loans, CRE loans, and real estate construction loans while retail lending activities consist of retail real estate loans and retail other loans. A description of each of the five primary areas can be found in“Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Portfolio Loans” of Busey’s 2024 Annual Report.

Portfolio Composition

The composition of Busey’s loan portfolio as of the dates indicated, as well as changes in portfolio loan balances, were as follows:

Total portfolio loans were $13.81 billion at June 30, 2025, compared to $7.70 billion at December 31, 2024. The $6.11 billion growth in the loan portfolio during the first half of 2025 was attributable to the CrossFirst acquisition. Busey remains steadfast in its conservative approach to underwriting and disciplined approach to pricing. Loan demand has been tempered, with borrowers hesitant to invest because of lingering macroeconomic uncertainty. At the same time, Busey’s commercial real estate portfolio continues to season, resulting in payoffs as properties are completed, stabilized, and refinanced to permanent markets or sold. We expect continued pressure from pay downs within our commercial real estate portfolio through the remainder of 2025.

Concentration of Credit Risk

As a matter of policy and practice, Busey limits the level of concentration exposure in any particular loan segment with the goal of maintaining a well-diversified loan portfolio. The following table presents the percentage of total portfolio loans for each lending activity:

Busey Bank originates loans across its regional operating model. Busey’s regions are defined as follows:

•East – Suburban Chicago markets, the St. Louis MSA, and southwest Florida

•Midwest – Central Illinois and Indianapolis, Indiana

•Central – The Kansas City MSA, central Kansas, and Oklahoma

•Texas – The Dallas-Fort Worth MSA

•West – Colorado, New Mexico, and Arizona

•Verticals – Busey’s Life Equity Lending, Sponsor Finance, Energy Lending, and SBA Lending products

The geographic distribution of Busey Bank loans outstanding as of June 30, 2025, that were originated in each of these markets is presented in the table below:

Prior to the CrossFirst acquisition on March 1, 2025, Busey Bank’s loan origination occurred in the Illinois, Missouri, Florida, and Indiana markets. The geographic distribution of Busey Bank loans outstanding as of December 31, 2024, that were originated in each of these markets is presented in the table below:

CRE loans made up 40.3% of Busey’s total loan portfolio as of June 30, 2025, and were 25.6% owner occupied. CRE loans are made across a variety of industries, as depicted in the table below. Balances reflected in the table below do not include loan origination fees or costs, purchase accounting adjustments, SBA discounts, or negative escrow amounts.

Allowance for Credit Losses and Provision for Loan Losses

The ACL is a significant estimate on Busey’s unaudited consolidated financial statements, affecting both earnings and capital. The methodology adopted influences, and is influenced by, Busey’s overall credit risk management processes. The ACL is recorded in accordance with GAAP to provide an adequate reserve for expected credit losses that is reflective of management’s best estimate of what is expected to be collected. Estimates of credit losses are based on a careful consideration of all significant factors affecting the collectability as of the evaluation date. The ACL is established through the provision for credit loss expense charged to income. Provision for loan losses expenses were recorded as follows:

The $1.0 million provision for loan losses recorded in the second quarter of 2025 included a release of the PCD provision of $11.8 million due to PCD loan payoffs/paydowns and non-PCD provision expense of $12.8 million to support charge-offs, to adjust for the loan portfolio mix, and as a response to economic factors. The provision for loan losses for the six months ended June 30, 2025, included $42.4 million provision expense recorded to establish an initial allowance for non-PCD loans immediately following the close of the CrossFirst acquisition in accordance with ASC 326-20-30-15.

The ACL and the ratio of ACL to portfolio loan balances is presented below by lending activity:

As of June 30, 2025, management believed the level of the ACL to be appropriate based upon the information available. However, additional losses may be identified in the loan portfolio as new information is obtained. Factors that influence Busey’s calculation of its ACL include changes in economic conditions and forecasts, originated and acquired loan portfolio composition, credit performance trends, portfolio duration, and other factors.

Non-Performing Loans and Non-Performing Assets

Loans are considered past due if the required principal or interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory guidelines. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Typically, loans are secured by collateral. When a loan is classified as non-accrual and determined to be collateral dependent, it is appropriately reserved or charged down through the ACL to the fair value of Busey’s interest in the underlying collateral less estimated costs to sell. Busey’s loan portfolio is collateralized primarily by real estate.

The following table sets forth information concerning non-performing assets and asset quality ratios:

Busey’s total assets grew by 57.0% to $18.92 billion as of June 30, 2025, compared to $12.05 billion as of December 31, 2024, largely in connection with the CrossFirst acquisition. Further, Busey’s loan portfolio grew by 79.4% to $13.81 billion as of June 30, 2025, compared to $7.70 billion as of December 31, 2024.

Asset quality continues to be strong. Following the CrossFirst Bank Merger in June, Busey is operating as one bank, with a singular credit policy, concentration limits, and monitoring that will continue to align with Busey’s pillars of credit quality. Busey’s operating mandate and focus remain on emphasizing credit quality over asset growth.

Non-performing loan balances increased to $54.6 million as of June 30, 2025, compared to $23.2 million as of December 31, 2024, due to PCD loans assumed in the CrossFirst acquisition. Non-performing loans represented 0.40% of portfolio loans as of June 30, 2025, compared to 0.30% as of December 31, 2024. Busey’s allowance for credit losses provided coverage of 3.36 times non-performing loans at June 30, 2025, compared to 3.59 times at December 31, 2024.

Non-performing assets, which includes non-performing loans, OREO, and other repossessed assets, increased to $58.2 million as of June 30, 2025, compared to $23.3 million as of December 31, 2024, due to PCD loans assumed in the CrossFirst acquisition. Non-performing assets represented 0.31% of total assets as of June 30, 2025, compared to 0.19% as of December 31, 2024. Busey’s allowance for credit losses provided coverage of 3.15 times non-performing assets at June 30, 2025, compared to 3.58 times at December 31, 2024.

Classified assets, which includes non-performing assets and substandard loans, increased to $175.7 million as of June 30, 2025, compared to $85.3 million as of December 31, 2024, due to PCD loans assumed in the CrossFirst acquisition. Classified assets represented 7.70% of the Bank’s Tier 1 capital and ACL at June 30, 2025, compared to 5.61% at December 31, 2024.

Net charge-offs totaled $12.9 million and $44.3 million for the three and six months ended June 30, 2025, respectively, compared to $9.9 million and $15.1 million for the comparable periods in 2024. Net charge-offs for the six months ended June 30, 2025, include $31.1 million related to PCD loans acquired from CrossFirst Bank, which were fully reserved at acquisition and did not require recording additional provision expense.

Asset quality metrics remain dependent upon market-specific economic conditions, and specific measures may fluctuate from period to period. If economic conditions were to deteriorate, Busey would expect the credit quality of its loan portfolio to decline and loan defaults to increase.

Potential Problem Loans

Potential problem loans are loans classified as substandard which are not individually evaluated, non-accrual, or 90+ days past due, but where current information indicates that the borrower may not be able to comply with loan repayment terms. Management assesses the potential for loss on such loans and considers the effect of any potential loss in determining its provision for expected credit losses. Potential problem loans increased to $105.3 million as of June 30, 2025, compared to $62.0 million as of December 31, 2024. Management continues to monitor these loans and work with the borrowers on restructurings, guarantees, additional collateral, or other planned actions. As of June 30, 2025, management identified no other loans that represent or result from trends or uncertainties that would be expected to materially impact future operating results, liquidity, or capital resources.