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Portfolio Loans (Tables) | 9 Months Ended
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Sep. 30, 2023
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] |
Distribution of portfolio loans | Distributions of the loan portfolio by loan category and class is presented in the following table (dollars in thousands):
| As of
| September 30, 2023 |  | December 31, 2022
Commercial loans |  |  |
Commercial | $ | 1,943,449 |  |  | $ | 1,974,154 |
Commercial real estate | 3,353,753 |  |  | 3,261,873 |
Real estate construction | 527,598 |  |  | 530,469 |
Total commercial loans | 5,824,800 |  |  | 5,766,496 |
Retail loans |  |  |
Retail real estate | 1,715,445 |  |  | 1,657,082 |
Retail other | 315,915 |  |  | 302,124 |
Total retail loans | 2,031,360 |  |  | 1,959,206 |
Total portfolio loans | 7,856,160 |  |  | 7,725,702 |
ACL | (91,710) |  |  | (91,608) |
Portfolio loans, net | $ | 7,764,450 |  |  | $ | 7,634,094 |
Schedule of financial instruments owned and pledged as collateral | Busey had loans pledged to the FHLB and Federal Reserve for liquidity as set forth in the table below (dollars in thousands):
| As of
| September 30, 2023 |  | December 31, 2022
Pledged loans |  |  |
FHLB | $ | 4,852,634 |  |  | $ | 5,095,448 |
Federal Reserve Bank | 858,312 |  |  | 804,718 |
Total pledged loans | $ | 5,710,946 |  |  | $ | 5,900,166 |
To secure its obligations under derivative contracts, Busey pledged cash and held collateral as follows (dollars in thousands):
| As of
| September 30, 2023 |  | December 31, 2022
Cash pledged to secure obligations under derivative contracts | $ | 34,210 |  |  | $ | 38,609 |
Collateral held to secure obligations under derivative contracts | 34,620 |  |  | 29,830 |
Summary of risk grades segregated by category of portfolio loans (excluding accretable purchase accounting adjustments and clearings) | The following table is a summary of risk grades segregated by category and class of portfolio loans (dollars in thousands):
| As of September 30, 2023
| Pass |  | Watch |  | Special Mention |  | Substandard |  | Substandard Non-accrual |  | Total
Commercial loans |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | 1,533,562 |  |  | $ | 350,820 |  |  | $ | 24,705 |  |  | $ | 28,734 |  |  | $ | 5,628 |  |  | $ | 1,943,449 |
Commercial real estate | 2,944,191 |  |  | 351,494 |  |  | 44,771 |  |  | 11,739 |  |  | 1,558 |  |  | 3,353,753 |
Real estate construction | 513,218 |  |  | 9,027 |  |  | — |  |  | 5,353 |  |  | — |  |  | 527,598 |
Total commercial loans | 4,990,971 |  |  | 711,341 |  |  | 69,476 |  |  | 45,826 |  |  | 7,186 |  |  | 5,824,800 |
Retail loans |  |  |  |  |  |  |  |  |  |  |
Retail real estate | 1,698,692 |  |  | 10,245 |  |  | 642 |  |  | 1,824 |  |  | 4,042 |  |  | 1,715,445 |
Retail other | 315,845 |  |  | — |  |  | — |  |  | — |  |  | 70 |  |  | 315,915 |
Total retail loans | 2,014,537 |  |  | 10,245 |  |  | 642 |  |  | 1,824 |  |  | 4,112 |  |  | 2,031,360 |
Total portfolio loans | $ | 7,005,508 |  |  | $ | 721,586 |  |  | $ | 70,118 |  |  | $ | 47,650 |  |  | $ | 11,298 |  |  | $ | 7,856,160 |
| As of December 31, 2022
| Pass |  | Watch |  | Special Mention |  | Substandard |  | Substandard Non-accrual |  | Total
Commercial loans |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | 1,668,495 |  |  | $ | 201,758 |  |  | $ | 46,540 |  |  | $ | 51,187 |  |  | $ | 6,174 |  |  | $ | 1,974,154 |
Commercial real estate | 2,851,709 |  |  | 326,455 |  |  | 43,526 |  |  | 34,539 |  |  | 5,644 |  |  | 3,261,873 |
Real estate construction | 502,904 |  |  | 25,164 |  |  | 1 |  |  | 2,400 |  |  | — |  |  | 530,469 |
Total commercial loans | 5,023,108 |  |  | 553,377 |  |  | 90,067 |  |  | 88,126 |  |  | 11,818 |  |  | 5,766,496 |
Retail loans |  |  |  |  |  |  |  |  |  |  |
Retail real estate | 1,639,599 |  |  | 10,520 |  |  | 1,338 |  |  | 2,529 |  |  | 3,096 |  |  | 1,657,082 |
Retail other | 301,971 |  |  | — |  |  | — |  |  | — |  |  | 153 |  |  | 302,124 |
Total retail loans | 1,941,570 |  |  | 10,520 |  |  | 1,338 |  |  | 2,529 |  |  | 3,249 |  |  | 1,959,206 |
Total portfolio loans | $ | 6,964,678 |  |  | $ | 563,897 |  |  | $ | 91,405 |  |  | $ | 90,655 |  |  | $ | 15,067 |  |  | $ | 7,725,702 |
Risk grades of portfolio loans, further sorted by origination | Risk grades of portfolio loans and net charge-offs are presented in the tables below by loan class, further sorted by origination year (dollars in thousands):
|  | As of and For The Nine Months Ended September 30, 2023
|  | Term Loans Amortized Cost Basis by Origination Year |  | Revolving Loans |  | Total
Risk Grade Ratings |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 279,467 |  |  | $ | 255,619 |  |  | $ | 181,603 |  |  | $ | 74,600 |  |  | $ | 39,483 |  |  | $ | 152,523 |  |  | $ | 550,267 |  |  | $ | 1,533,562 |
Watch |  | 112,285 |  |  | 59,685 |  |  | 44,244 |  |  | 25,119 |  |  | 7,526 |  |  | 24,532 |  |  | 77,429 |  |  | 350,820 |
Special Mention |  | 616 |  |  | 541 |  |  | 651 |  |  | 1,104 |  |  | 499 |  |  | 6,937 |  |  | 14,357 |  |  | 24,705 |
Substandard |  | 8,901 |  |  | 912 |  |  | 1,119 |  |  | 445 |  |  | 3,948 |  |  | 1,859 |  |  | 11,550 |  |  | 28,734 |
Substandard non-accrual |  | 583 |  |  | — |  |  | 2,605 |  |  | 103 |  |  | 130 |  |  | 507 |  |  | 1,700 |  |  | 5,628 |
Total commercial |  | 401,852 |  |  | 316,757 |  |  | 230,222 |  |  | 101,371 |  |  | 51,586 |  |  | 186,358 |  |  | 655,303 |  |  | 1,943,449 |
Current period charge-offs |  | — |  |  | — |  |  | 420 |  |  | — |  |  | 316 |  |  | 997 |  |  | — |  |  | 1,733 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 352,661 |  |  | 850,371 |  |  | 778,662 |  |  | 404,109 |  |  | 281,889 |  |  | 258,207 |  |  | 18,292 |  |  | 2,944,191 |
Watch |  | 82,748 |  |  | 45,945 |  |  | 69,450 |  |  | 33,694 |  |  | 79,906 |  |  | 34,700 |  |  | 5,051 |  |  | 351,494 |
Special Mention |  | 18,753 |  |  | 1,597 |  |  | 13,762 |  |  | 3,908 |  |  | 3,330 |  |  | 3,421 |  |  | — |  |  | 44,771 |
Substandard |  | 1,882 |  |  | 193 |  |  | 904 |  |  | 2,987 |  |  | 1,831 |  |  | 3,898 |  |  | 44 |  |  | 11,739 |
Substandard non-accrual |  | 225 |  |  | 533 |  |  | 165 |  |  | 25 |  |  | — |  |  | 610 |  |  | — |  |  | 1,558 |
Total commercial real estate |  | 456,269 |  |  | 898,639 |  |  | 862,943 |  |  | 444,723 |  |  | 366,956 |  |  | 300,836 |  |  | 23,387 |  |  | 3,353,753 |
Current period charge-offs |  | — |  |  | — |  |  | — |  |  | — |  |  | 239 |  |  | 936 |  |  | — |  |  | 1,175 |
Real estate construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 152,897 |  |  | 171,900 |  |  | 104,963 |  |  | 54,943 |  |  | 1,365 |  |  | 3,899 |  |  | 23,251 |  |  | 513,218 |
Watch |  | 1,065 |  |  | 4,453 |  |  | 253 |  |  | 3,214 |  |  | 42 |  |  | — |  |  | — |  |  | 9,027 |
Substandard |  | 5,353 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,353 |
Total real estate construction |  | 159,315 |  |  | 176,353 |  |  | 105,216 |  |  | 58,157 |  |  | 1,407 |  |  | 3,899 |  |  | 23,251 |  |  | 527,598 |
Retail real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 201,140 |  |  | 379,512 |  |  | 420,164 |  |  | 162,295 |  |  | 71,102 |  |  | 274,617 |  |  | 189,862 |  |  | 1,698,692 |
Watch |  | 767 |  |  | 2,704 |  |  | 2,877 |  |  | 973 |  |  | 579 |  |  | 596 |  |  | 1,749 |  |  | 10,245 |
Special Mention |  | 204 |  |  | 55 |  |  | — |  |  | — |  |  | — |  |  | 383 |  |  | — |  |  | 642 |
Substandard |  | 73 |  |  | 73 |  |  | 295 |  |  | 53 |  |  | 82 |  |  | 1,010 |  |  | 238 |  |  | 1,824 |
Substandard non-accrual |  | — |  |  | 538 |  |  | 56 |  |  | 187 |  |  | 101 |  |  | 2,434 |  |  | 726 |  |  | 4,042 |
Total retail real estate |  | 202,184 |  |  | 382,882 |  |  | 423,392 |  |  | 163,508 |  |  | 71,864 |  |  | 279,040 |  |  | 192,575 |  |  | 1,715,445 |
Current period charge-offs |  | — |  |  | 5 |  |  | — |  |  | 29 |  |  | 62 |  |  | 156 |  |  | — |  |  | 252 |
Retail other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 86,096 |  |  | 102,834 |  |  | 25,977 |  |  | 8,172 |  |  | 6,388 |  |  | 1,539 |  |  | 84,839 |  |  | 315,845 |
Substandard non-accrual |  | — |  |  | 63 |  |  | — |  |  | 3 |  |  | 3 |  |  | 1 |  |  | — |  |  | 70 |
Total retail other |  | 86,096 |  |  | 102,897 |  |  | 25,977 |  |  | 8,175 |  |  | 6,391 |  |  | 1,540 |  |  | 84,839 |  |  | 315,915 |
Current period charge-offs |  | 4 |  |  | 71 |  |  | 157 |  |  | 1 |  |  | — |  |  | 250 |  |  | — |  |  | 483 |
Total portfolio loans |  | $ | 1,305,716 |  |  | $ | 1,877,528 |  |  | $ | 1,647,750 |  |  | $ | 775,934 |  |  | $ | 498,204 |  |  | $ | 771,673 |  |  | $ | 979,355 |  |  | $ | 7,856,160 |
Total current period charge-offs |  | $ | 4 |  |  | $ | 76 |  |  | $ | 577 |  |  | $ | 30 |  |  | $ | 617 |  |  | $ | 2,339 |  |  | $ | — |  |  | $ | 3,643 |
|  | As of December 31, 2022
|  | Term Loans Amortized Cost Basis by Origination Year |  | Revolving Loans |  | Total
Risk Grade Ratings |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 |  | Prior |  |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 479,893 |  |  | $ | 266,122 |  |  | $ | 136,445 |  |  | $ | 52,046 |  |  | $ | 50,764 |  |  | $ | 135,000 |  |  | $ | 548,225 |  |  | $ | 1,668,495 |
Watch |  | 54,195 |  |  | 49,382 |  |  | 3,288 |  |  | 7,201 |  |  | 1,258 |  |  | 2,160 |  |  | 84,274 |  |  | 201,758 |
Special Mention |  | 1,958 |  |  | 937 |  |  | 1,642 |  |  | 974 |  |  | 1,000 |  |  | 17,024 |  |  | 23,005 |  |  | 46,540 |
Substandard |  | 8,926 |  |  | 1,165 |  |  | 570 |  |  | 6,671 |  |  | 2,382 |  |  | 5,191 |  |  | 26,282 |  |  | 51,187 |
Substandard non-accrual |  | 21 |  |  | 3,292 |  |  | 226 |  |  | 135 |  |  | — |  |  | 100 |  |  | 2,400 |  |  | 6,174 |
Total commercial |  | 544,993 |  |  | 320,898 |  |  | 142,171 |  |  | 67,027 |  |  | 55,404 |  |  | 159,475 |  |  | 684,186 |  |  | 1,974,154 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 883,688 |  |  | 819,133 |  |  | 478,452 |  |  | 297,525 |  |  | 161,409 |  |  | 198,419 |  |  | 13,083 |  |  | 2,851,709 |
Watch |  | 77,346 |  |  | 56,113 |  |  | 64,282 |  |  | 96,664 |  |  | 21,592 |  |  | 5,758 |  |  | 4,700 |  |  | 326,455 |
Special Mention |  | 11,943 |  |  | 5,389 |  |  | 12,386 |  |  | 1,420 |  |  | 6,917 |  |  | 5,471 |  |  | — |  |  | 43,526 |
Substandard |  | 5,340 |  |  | 13,528 |  |  | 3,454 |  |  | 1,907 |  |  | 10,248 |  |  | 62 |  |  | — |  |  | 34,539 |
Substandard non-accrual |  | — |  |  | 3,959 |  |  | 33 |  |  | — |  |  | 1,647 |  |  | 5 |  |  | — |  |  | 5,644 |
Total commercial real estate |  | 978,317 |  |  | 898,122 |  |  | 558,607 |  |  | 397,516 |  |  | 201,813 |  |  | 209,715 |  |  | 17,783 |  |  | 3,261,873 |
Real estate construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 219,112 |  |  | 191,724 |  |  | 68,015 |  |  | 1,490 |  |  | 1,901 |  |  | 1,751 |  |  | 18,911 |  |  | 502,904 |
Watch |  | 8,530 |  |  | 12,019 |  |  | 3,169 |  |  | 48 |  |  | — |  |  | 1,398 |  |  | — |  |  | 25,164 |
Special Mention |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 1 |
Substandard |  | 2,400 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,400 |
Total real estate construction |  | 230,042 |  |  | 203,743 |  |  | 71,184 |  |  | 1,539 |  |  | 1,901 |  |  | 3,149 |  |  | 18,911 |  |  | 530,469 |
Retail real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 396,547 |  |  | 456,158 |  |  | 175,148 |  |  | 77,569 |  |  | 56,887 |  |  | 267,387 |  |  | 209,903 |  |  | 1,639,599 |
Watch |  | 2,928 |  |  | 2,991 |  |  | 1,846 |  |  | 1,444 |  |  | 1,063 |  |  | 27 |  |  | 221 |  |  | 10,520 |
Special Mention |  | 945 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 393 |  |  | — |  |  | 1,338 |
Substandard |  | 77 |  |  | 732 |  |  | 198 |  |  | 81 |  |  | 141 |  |  | 1,293 |  |  | 7 |  |  | 2,529 |
Substandard non-accrual |  | 10 |  |  | 191 |  |  | 107 |  |  | 32 |  |  | 390 |  |  | 1,708 |  |  | 658 |  |  | 3,096 |
Total retail real estate |  | 400,507 |  |  | 460,072 |  |  | 177,299 |  |  | 79,126 |  |  | 58,481 |  |  | 270,808 |  |  | 210,789 |  |  | 1,657,082 |
Retail other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 134,567 |  |  | 43,512 |  |  | 13,141 |  |  | 13,086 |  |  | 5,646 |  |  | 991 |  |  | 91,028 |  |  | 301,971 |
Substandard non-accrual |  | 14 |  |  | 134 |  |  | 3 |  |  | — |  |  | — |  |  | 2 |  |  | — |  |  | 153 |
Total retail other |  | 134,581 |  |  | 43,646 |  |  | 13,144 |  |  | 13,086 |  |  | 5,646 |  |  | 993 |  |  | 91,028 |  |  | 302,124 |
Total portfolio loans |  | $ | 2,288,440 |  |  | $ | 1,926,481 |  |  | $ | 962,405 |  |  | $ | 558,294 |  |  | $ | 323,245 |  |  | $ | 644,140 |  |  | $ | 1,022,697 |  |  | $ | 7,725,702 |
Summary of portfolio loans that are past due and still accruing or on a non-accrual status | An analysis of the amortized cost basis of portfolio loans that are past due and still accruing, or on a non-accrual status, is as follows (dollars in thousands):
| As of September 30, 2023
| Loans past due, still accruing |  | Non-accrual Loans
| 30-59 Days |  | 60-89 Days |  | 90+Days |
Past due and non-accrual loans |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |
Commercial | $ | — |  |  | $ | 112 |  |  | $ | 51 |  |  | $ | 5,628 |
Commercial real estate | — |  |  | 109 |  |  | — |  |  | 1,558 |
Real estate construction | — |  |  | 244 |  |  | — |  |  | — |
Past due and non-accrual commercial loans | — |  |  | 465 |  |  | 51 |  |  | 7,186 |
Retail loans: |  |  |  |  |  |  |
Retail real estate | 3,643 |  |  | 840 |  |  | 558 |  |  | 4,042 |
Retail other | 914 |  |  | 72 |  |  | 100 |  |  | 70 |
Past due and non-accrual retail loans | 4,557 |  |  | 912 |  |  | 658 |  |  | 4,112 |
Total past due and non-accrual loans | $ | 4,557 |  |  | $ | 1,377 |  |  | $ | 709 |  |  | $ | 11,298 |
| As of December 31, 2022
| Loans past due, still accruing |  | Non-accrual Loans
| 30-59 Days |  | 60-89 Days |  | 90+Days |
Past due and non-accrual loans |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |
Commercial | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 6,174 |
Commercial real estate | 124 |  |  | — |  |  | — |  |  | 5,644 |
Past due and non-accrual commercial loans | 126 |  |  | — |  |  | — |  |  | 11,818 |
Retail loans: |  |  |  |  |  |  |
Retail real estate | 4,709 |  |  | 1,239 |  |  | 673 |  |  | 3,096 |
Retail other | 414 |  |  | 60 |  |  | — |  |  | 153 |
Past due and non-accrual retail loans | 5,123 |  |  | 1,299 |  |  | 673 |  |  | 3,249 |
Total past due and non-accrual loans | $ | 5,249 |  |  | $ | 1,299 |  |  | $ | 673 |  |  | $ | 15,067 |
Schedule of loan modifications made to borrowers experiencing financial difficulty | The following tables show the amortized cost basis of loans that were modified for borrowers experiencing financial difficulty during the periods indicated, disaggregated by class of financing receivable and type of concession granted (dollars in thousands):
| Three Months Ended September 30, 2023
| Interest Rate Reduction 1 |  | % of Total Class of Financing Receivable 2 |  |  |  |  |  | Term Extension 3 |  | % of Total Class of Financing Receivable 2 |  |  |  |  |  |  |  |  |  |  |  |
Loan class: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | — |  |  | — | % |  |  |  |  |  | $ | 12,026 |  |  | 0.6 | % |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | 880 |  |  | — | % |  |  |  |  |  | 553 |  |  | — | % |  |  |  |  |  |  |  |  |  |  |  |
Total of loans modified during the period 4 | $ | 880 |  |  | — | % |  |  |  |  |  | $ | 12,579 |  |  | 0.2 | % |  |  |  |  |  |  |  |  |  |  |  |
___________________________________________ 1.For one loan, the default rate was removed once forbearance was entered. 2.Modified loans represent an insignificant portion of commercial real estate loans, rounding to zero percent. 3.Modifications to extend loan terms also included, in some cases, interest rate increases during the extension period. 4.All modifications were for loans classified as substandard.
| Nine Months Ended September 30, 2023
| Interest Rate Reduction 1 |  | % of Total Class of Financing Receivable 2 |  | Payment Deferral 3 |  | % of Total Class of Financing Receivable 2 |  | Term Extension 4 |  | % of Total Class of Financing Receivable 2 |  |  |  |  |  |  |  |  |  |  |  |
Loan class: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | — |  |  | — | % |  | $ | — |  |  | — | % |  | $ | 17,334 |  |  | 0.9 | % |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | 880 |  |  | — | % |  | 225 |  |  | — | % |  | 1,003 |  |  | — | % |  |  |  |  |  |  |  |  |  |  |  |
Real estate construction | — |  |  | — | % |  | — |  |  | — | % |  | 5,353 |  |  | 1.0 | % |  |  |  |  |  |  |  |  |  |  |  |
Total of loans modified during the period 5 | $ | 880 |  |  | — | % |  | $ | 225 |  |  | — | % |  | $ | 23,690 |  |  | 0.3 | % |  |  |  |  |  |  |  |  |  |  |  |
___________________________________________ 1.For one loan, the default rate was removed once forbearance was entered. 2.Modified loans represent an insignificant portion of commercial real estate loans, rounding to zero percent. 3.A loan with payment deferral was modified to defer all principal payments until the end of the loan term, which was shortened. 4.Modifications to extend loan terms also included, in some cases, interest rate increases during the extension period. 5.Modifications include two loans on non-accrual status, and the remaining loans were classified as substandard. The following table summarizes the effects of loan modifications made during the periods indicated, for borrowers experiencing financial difficulty:
| Three Months Ended September 30, 2023 |  | Nine Months Ended September 30, 2023
| Weighted Average Interest Rate Reduction |  | Weighted Average Term Extension |  |  |  | Weighted Average Interest Rate Reduction |  | Weighted Average Term Extension |  |
Loan class: |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 15.3 months |  |  |  |  |  | 14.3 months |  |
Commercial real estate | 2.50 | % |  | 9.0 months |  |  |  | 2.50 | % |  | 11.2 months |  |
Real estate construction |  |  |  |  |  |  |  |  | 12.0 months |  |
Total financial effect | 2.50 | % |  | 15.0 months |  |  |  | 2.50 | % |  | 13.7 months |  |
The following table provides the amortized cost basis of financing receivables that had a payment default during the nine months ended September 30, 2023, after having been modified during the 12 months before default for borrowers experiencing financial difficulty (dollars in thousands). A default occurs when a loan is 90 days or more past due or transferred to non-accrual status.
| Nine Months Ended September 30, 2023
| Payment Deferral |  | Term Extension |  |  |  |  |  |
Loan class: |  |  |  |  |  |  |  |  |
Commercial | $ | — |  |  | $ | 500 |  |  |  |  |  |  |
Commercial real estate | 225 |  |  | — |  |  |  |  |  |  |
Amortized cost of modified loans with subsequent defaults | $ | 225 |  |  | $ | 500 |  |  |  |  |  |  |
Busey closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the payment performance of loans modified on or after January 1, 2023, the date we adopted ASU 2022-02 (dollars in thousands):
| As of September 30, 2023
| Current |  |  |  |  |  | Non-accrual
Loan class: |  |  |  |  |  |  |
Commercial | $ | 16,834 |  |  |  |  |  |  | $ | 500 |
Commercial real estate | 1,883 |  |  |  |  |  |  | 225 |
Real estate construction | 5,353 |  |  |  |  |  |  | — |
Amortized cost of modified loans | $ | 24,070 |  |  |  |  |  |  | $ | 725 |
Schedule of details of impaired loans, segregated by category | Average recorded investment is calculated using the most recent four quarters (dollars in thousands):
| As of September 30, 2023
| Unpaid Principal Balance |  | Recorded Investment |  |  |  | Average Recorded Investment
|  | With No Allowance |  | With Allowance |  | Total |  | Related Allowance |
Loans evaluated individually |  |  |  |  |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | 10,007 |  |  | $ | 597 |  |  | $ | 4,909 |  |  | $ | 5,506 |  |  | $ | 1,576 |  |  | $ | 6,058 |
Commercial real estate | 3,946 |  |  | 1,289 |  |  | 116 |  |  | 1,405 |  |  | 116 |  |  | 4,866 |
Real estate construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 100 |
Commercial loans evaluated individually | 13,953 |  |  | 1,886 |  |  | 5,025 |  |  | 6,911 |  |  | 1,692 |  |  | 11,024 |
Retail loans: |  |  |  |  |  |  |  |  |  |  |
Retail real estate | 213 |  |  | 61 |  |  | 25 |  |  | 86 |  |  | 25 |  |  | 1,196 |
Retail loans evaluated individually | 213 |  |  | 61 |  |  | 25 |  |  | 86 |  |  | 25 |  |  | 1,196 |
Total loans evaluated individually | $ | 14,166 |  |  | $ | 1,947 |  |  | $ | 5,050 |  |  | $ | 6,997 |  |  | $ | 1,717 |  |  | $ | 12,220 |
| As of December 31, 2022
| Unpaid Principal Balance |  | Recorded Investment |  |  |  | Average Recorded Investment
|  | With No Allowance |  | With Allowance |  | Total |  | Related Allowance |
Loans evaluated individually |  |  |  |  |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | 9,589 |  |  | $ | 656 |  |  | $ | 5,918 |  |  | $ | 6,574 |  |  | $ | 2,476 |  |  | $ | 6,761 |
Commercial real estate | 8,039 |  |  | 2,334 |  |  | 3,903 |  |  | 6,237 |  |  | 2,000 |  |  | 5,219 |
Real estate construction | 247 |  |  | 247 |  |  | — |  |  | 247 |  |  | — |  |  | 260 |
Commercial loans evaluated individually | 17,875 |  |  | 3,237 |  |  | 9,821 |  |  | 13,058 |  |  | 4,476 |  |  | 12,240 |
Retail loans: |  |  |  |  |  |  |  |  |  |  |
Retail real estate | 2,733 |  |  | 2,564 |  |  | 25 |  |  | 2,589 |  |  | 25 |  |  | 2,311 |
Retail loans evaluated individually | 2,733 |  |  | 2,564 |  |  | 25 |  |  | 2,589 |  |  | 25 |  |  | 2,311 |
Total loans evaluated individually | $ | 20,608 |  |  | $ | 5,801 |  |  | $ | 9,846 |  |  | $ | 15,647 |  |  | $ | 4,501 |  |  | $ | 14,551 |
Schedule of activity on the allowance for loan losses | The following tables summarize activity in the ACL attributable to each loan category. Allocation of a portion of the ACL to one category does not preclude its availability to absorb losses in other categories (dollars in thousands):
| Three Months Ended September 30, 2023
| Commercial |  | Commercial Real Estate |  | Real Estate Construction |  | Retail Real Estate |  | Retail Other |  | Total
ACL balance, June 30, 2023 | $ | 24,510 |  |  | $ | 33,656 |  |  | $ | 5,071 |  |  | $ | 24,675 |  |  | $ | 3,727 |  |  | $ | 91,639 |
Provision for credit losses | (1,306) |  |  | 745 |  |  | 104 |  |  | 674 |  |  | 147 |  |  | 364 |
Charged-off | (758) |  |  | (102) |  |  | — |  |  | (144) |  |  | (111) |  |  | (1,115) |
Recoveries | 187 |  |  | 392 |  |  | 31 |  |  | 128 |  |  | 84 |  |  | 822 |
ACL balance, September 30, 2023 | $ | 22,633 |  |  | $ | 34,691 |  |  | $ | 5,206 |  |  | $ | 25,333 |  |  | $ | 3,847 |  |  | $ | 91,710 |
| Nine Months Ended September 30, 2023
| Commercial |  | Commercial Real Estate |  | Real Estate Construction |  | Retail Real Estate |  | Retail Other |  | Total
ACL balance, December 31, 2022 | $ | 23,860 |  |  | $ | 38,299 |  |  | $ | 6,457 |  |  | $ | 18,193 |  |  | $ | 4,799 |  |  | $ | 91,608 |
Provision for credit losses | 79 |  |  | (3,006) |  |  | (1,404) |  |  | 6,975 |  |  | (700) |  |  | 1,944 |
Charged-off | (1,733) |  |  | (1,175) |  |  | — |  |  | (252) |  |  | (483) |  |  | (3,643) |
Recoveries | 427 |  |  | 573 |  |  | 153 |  |  | 417 |  |  | 231 |  |  | 1,801 |
ACL balance, September 30, 2023 | $ | 22,633 |  |  | $ | 34,691 |  |  | $ | 5,206 |  |  | $ | 25,333 |  |  | $ | 3,847 |  |  | $ | 91,710 |
| Three Months Ended September 30, 2022
| Commercial |  | Commercial Real Estate |  | Real Estate Construction |  | Retail Real Estate |  | Retail Other |  | Total
ACL balance, June 30, 2022 | $ | 23,359 |  |  | $ | 37,182 |  |  | $ | 5,669 |  |  | $ | 17,984 |  |  | $ | 4,563 |  |  | $ | 88,757 |
Provision for credit losses | 615 |  |  | 598 |  |  | 216 |  |  | 684 |  |  | 251 |  |  | 2,364 |
Charged-off | (381) |  |  | — |  |  | — |  |  | (220) |  |  | (218) |  |  | (819) |
Recoveries | 102 |  |  | 19 |  |  | 86 |  |  | 172 |  |  | 41 |  |  | 420 |
ACL balance, September 30, 2022 | $ | 23,695 |  |  | $ | 37,799 |  |  | $ | 5,971 |  |  | $ | 18,620 |  |  | $ | 4,637 |  |  | $ | 90,722 |
| Nine Months Ended September 30, 2022
| Commercial |  | Commercial Real Estate |  | Real Estate Construction |  | Retail Real Estate |  | Retail Other |  | Total
ACL balance, December 31, 2021 | $ | 23,855 |  |  | $ | 38,249 |  |  | $ | 5,102 |  |  | $ | 17,589 |  |  | $ | 3,092 |  |  | $ | 87,887 |
Provision for credit losses | 123 |  |  | 408 |  |  | 663 |  |  | 826 |  |  | 1,744 |  |  | 3,764 |
Charged-off | (589) |  |  | (1,372) |  |  | — |  |  | (253) |  |  | (409) |  |  | (2,623) |
Recoveries | 306 |  |  | 514 |  |  | 206 |  |  | 458 |  |  | 210 |  |  | 1,694 |
ACL balance, September 30, 2022 | $ | 23,695 |  |  | $ | 37,799 |  |  | $ | 5,971 |  |  | $ | 18,620 |  |  | $ | 4,637 |  |  | $ | 90,722 |
Schedule of allowance for loan losses and recorded investments in portfolio loans, by category | The following tables present the ACL and amortized cost of portfolio loans by loan category and class (dollars in thousands):
| As of September 30, 2023
| Portfolio Loans |  | ACL Attributed to Portfolio Loans
| Collectively Evaluated for Impairment |  | Individually Evaluated for Impairment |  | Total |  | Collectively Evaluated for Impairment |  | Individually Evaluated for Impairment |  | Total
Portfolio loans and related ACL |  |  |  |  |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | 1,937,943 |  |  | $ | 5,506 |  |  | $ | 1,943,449 |  |  | $ | 21,057 |  |  | $ | 1,576 |  |  | $ | 22,633 |
Commercial real estate | 3,352,348 |  |  | 1,405 |  |  | 3,353,753 |  |  | 34,575 |  |  | 116 |  |  | 34,691 |
Real estate construction | 527,598 |  |  | — |  |  | 527,598 |  |  | 5,206 |  |  | — |  |  | 5,206 |
Commercial loans and related ACL | 5,817,889 |  |  | 6,911 |  |  | 5,824,800 |  |  | 60,838 |  |  | 1,692 |  |  | 62,530 |
Retail loans: |  |  |  |  |  |  |  |  |  |  |
Retail real estate | 1,715,359 |  |  | 86 |  |  | 1,715,445 |  |  | 25,308 |  |  | 25 |  |  | 25,333 |
Retail other | 315,915 |  |  | — |  |  | 315,915 |  |  | 3,847 |  |  | — |  |  | 3,847 |
Retail loans and related ACL | 2,031,274 |  |  | 86 |  |  | 2,031,360 |  |  | 29,155 |  |  | 25 |  |  | 29,180 |
Portfolio loans and related ACL | $ | 7,849,163 |  |  | $ | 6,997 |  |  | $ | 7,856,160 |  |  | $ | 89,993 |  |  | $ | 1,717 |  |  | $ | 91,710 |
| As of December 31, 2022
| Portfolio Loans |  | ACL Attributed to Portfolio Loans
| Collectively Evaluated for Impairment |  | Individually Evaluated for Impairment |  | Total |  | Collectively Evaluated for Impairment |  | Individually Evaluated for Impairment |  | Total
Portfolio loans and related ACL |  |  |  |  |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | 1,967,580 |  |  | $ | 6,574 |  |  | $ | 1,974,154 |  |  | $ | 21,384 |  |  | $ | 2,476 |  |  | $ | 23,860 |
Commercial real estate | 3,255,636 |  |  | 6,237 |  |  | 3,261,873 |  |  | 36,299 |  |  | 2,000 |  |  | 38,299 |
Real estate construction | 530,222 |  |  | 247 |  |  | 530,469 |  |  | 6,457 |  |  | — |  |  | 6,457 |
Commercial loans and related ACL | 5,753,438 |  |  | 13,058 |  |  | 5,766,496 |  |  | 64,140 |  |  | 4,476 |  |  | 68,616 |
Retail loans: |  |  |  |  |  |  |  |  |  |  |
Retail real estate | 1,654,493 |  |  | 2,589 |  |  | 1,657,082 |  |  | 18,168 |  |  | 25 |  |  | 18,193 |
Retail other | 302,124 |  |  | — |  |  | 302,124 |  |  | 4,799 |  |  | — |  |  | 4,799 |
Retail loans and related ACL | 1,956,617 |  |  | 2,589 |  |  | 1,959,206 |  |  | 22,967 |  |  | 25 |  |  | 22,992 |
Portfolio loans and related ACL | $ | 7,710,055 |  |  | $ | 15,647 |  |  | $ | 7,725,702 |  |  | $ | 87,107 |  |  | $ | 4,501 |  |  | $ | 91,608 |

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