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PORTFOLIO LOANS
 12 Months Ended
Dec. 31, 2023
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
PORTFOLIO LOANS
NOTE 3. PORTFOLIO LOANS
Loan Categories
Busey’s lending can be summarized into two primary categories: commercial and retail. Lending is further disaggregated into five primary classes of loans: commercial loans, commercial real estate loans, real estate construction loans in the commercial category, and retail real estate loans and retail other loans in the retail category. Distributions of the loan portfolio by loan category and class is presented in the following table (dollars in thousands):
As of December 31,
20232022
Commercial loans
Commercial$1,835,994 $1,974,154 
Commercial real estate3,337,337 3,261,873 
Real estate construction461,717 530,469 
Total commercial loans5,635,048 5,766,496 
Retail loans
Retail real estate1,720,455 1,657,082 
Retail other295,531 302,124 
Total retail loans2,015,986 1,959,206 
 
Total portfolio loans7,651,034 7,725,702 
ACL(91,740)(91,608)
Portfolio loans, net$7,559,294 $7,634,094 
Net deferred loan origination costs included in the balances above were $13.5 million as of December 31, 2023, compared to $14.0 million as of December 31, 2022. Net accretable purchase accounting adjustments included in the balances above reduced loans by $4.5 million as of December 31, 2023, and by $5.9 million as of December 31, 2022. Commercial balances include loans originated under the PPP with an amortized cost of $0.3 million as of December 31, 2023, compared to $0.8 million as of December 31, 2022.
Busey did not purchase any retail real estate loans during the years ended December 31, 2023, or 2022, and purchased $32.2 million of retail real estate loans during the year ended December 31, 2021.
Pledged Loans
The principal balance of loans Busey has pledged as collateral to the FHLB and Federal Reserve Bank for liquidity as set forth in the table below (dollars in thousands):
As of December 31,
20232022
Pledged loans
FHLB$4,865,481 $5,095,448 
Federal Reserve Bank722,914 804,718 
Total pledged loans$5,588,395 $5,900,166 
Risk Grading
Busey utilizes a loan grading scale to assign a risk grade to all of its loans. A description of the general characteristics of each grade is as follows:
•Pass – This category includes loans that are all considered acceptable credits, ranging from investment or near investment grade, to loans made to borrowers who exhibit credit fundamentals that meet or exceed industry standards.
•Watch – This category includes loans that warrant a higher-than-average level of monitoring to ensure that weaknesses do not cause the inability of the credit to perform as expected. These loans are not necessarily a problem due to other inherent strengths of the credit, such as guarantor strength, but have above average concern and monitoring.
•Special mention – This category is for “Other Assets Specially Mentioned” loans that have potential weaknesses, which may, if not checked or corrected, weaken the asset, or inadequately protect Busey’s credit position at some future date.
•Substandard – This category includes “Substandard” loans, determined in accordance with regulatory guidelines, for which the accrual of interest has not been stopped. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that Busey will sustain some loss if the deficiencies are not corrected.
•Substandard non-accrual – This category includes loans that have all the characteristics of a “Substandard” loan with additional factors that make collection in full highly questionable and improbable. Such loans are placed on non-accrual status and may be dependent on collateral with a value that is difficult to determine.
All loans are graded at their inception. Commercial lending relationships that are $1.0 million or less are usually processed through an expedited underwriting process. Most commercial loans greater than $1.0 million are included in a portfolio review at least annually. Commercial loans greater than $0.35 million that have a grading of special mention or worse are typically reviewed on a quarterly basis. Interim reviews may take place if circumstances of the borrower warrant a more frequent review.
The following table is a summary of risk grades segregated by category of portfolio loans (dollars in thousands):
As of December 31, 2023
PassWatchSpecial
Mention		SubstandardSubstandard
Non-accrual		Total
Commercial loans
Commercial$1,462,755 $296,416 $46,488 $27,733 $2,602 $1,835,994 
Commercial real estate2,827,030 431,427 48,545 29,492 843 3,337,337 
Real estate construction448,011 8,135 — 5,327 244 461,717 
Total commercial loans4,737,796 735,978 95,033 62,552 3,689 5,635,048 
Retail loans
Retail real estate1,702,897 11,144 1,024 1,795 3,595 1,720,455 
Retail other295,374 — — — 157 295,531 
Total retail loans1,998,271 11,144 1,024 1,795 3,752 2,015,986 
Total portfolio loans$6,736,067 $747,122 $96,057 $64,347 $7,441 $7,651,034 
As of December 31, 2022
PassWatchSpecial
Mention		SubstandardSubstandard
Non-accrual		Total
Commercial loans
Commercial $1,668,495 $201,758 $46,540 $51,187 $6,174 $1,974,154 
Commercial real estate2,851,709 326,455 43,526 34,539 5,644 3,261,873 
Real estate construction502,904 25,164 1 2,400 — 530,469 
Total commercial loans5,023,108 553,377 90,067 88,126 11,818 5,766,496 
Retail loans
Retail real estate1,639,599 10,520 1,338 2,529 3,096 1,657,082 
Retail other301,971 — — — 153 302,124 
Total retail loans1,941,570 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 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 Year Ended December 31, 2023
Term Loans Amortized Cost Basis by Origination YearRevolving
Loans		Total
Risk Grade Ratings20232022202120202019Prior
Commercial
Pass$306,578 $220,847 $159,130 $71,025 $35,927 $143,078 $526,170 $1,462,755 
Watch78,603 65,703 21,421 23,919 7,035 21,293 78,442 296,416 
Special Mention792 8,224 2,917 1,076 686 3,274 29,519 46,488 
Substandard8,715 765 942 426 3,734 1,859 11,292 27,733 
Substandard non-accrual166 — 117 84 128 407 1,700 2,602 
Total commercial394,854 295,539 184,527 96,530 47,510 169,911 647,123 1,835,994 
Current period charge-offs$284 $— $420 $— $316 $1,409 $— $2,429 
 
Commercial real estate
Pass395,644 824,506 720,052 399,195 271,078 199,662 16,893 2,827,030 
Watch166,795 47,070 92,848 34,010 68,196 19,396 3,112 431,427 
Special Mention14,313 10,507 12,446 4,968 3,297 3,014 — 48,545 
Substandard1,796 188 18,862 2,938 1,802 3,856 50 29,492 
Substandard non-accrual47 79 85 23 — 609 — 843 
Total commercial real estate578,595 882,350 844,293 441,134 344,373 226,537 20,055 3,337,337 
Current period charge-offs— — — — — 953 — 953 
 
Real estate construction
Pass204,952 128,462 85,086 2,616 1,323 2,934 22,638 448,011 
Watch2,859 4,406 507 322 41 — — 8,135 
Substandard5,327 — — — — — — 5,327 
Substandard non-accrual— — — — — 244 — 244 
Total real estate construction213,138 132,868 85,593 2,938 1,364 3,178 22,638 461,717 
Current period charge-offs— — — — — — — — 
 
Retail real estate
Pass243,400 376,922 411,723 156,762 70,099 256,571 187,420 1,702,897 
Watch1,096 4,137 2,442 954 536 234 1,745 11,144 
Special Mention286 358 — — — 380 — 1,024 
Substandard69 72 292 49 80 997 236 1,795 
Substandard non-accrual— 528 121 267 100 1,960 619 3,595 
Total retail real estate244,851 382,017 414,578 158,032 70,815 260,142 190,020 1,720,455 
Current period charge-offs— 5 — 29 72 301 — 407 
 
Retail other
Pass88,885 92,931 23,019 6,701 4,597 854 78,387 295,374 
Substandard non-accrual— 93 62 — — 2 — 157 
Total retail other88,885 93,024 23,081 6,701 4,597 856 78,387 295,531 
Current period charge-offs5 71 172 5 3 373 — 629 
 
Total portfolio loans$1,520,323 $1,785,798 $1,552,072 $705,335 $468,659 $660,624 $958,223 $7,651,034 
Total current period charge-offs$289 $76 $592 $34 $391 $3,036 $— $4,418 
As of December 31, 2022
Term Loans Amortized Cost Basis by Origination YearRevolving
Loans		Total
Risk Grade Ratings20222021202020192018Prior
Commercial
Pass$479,893 $266,122 $136,445 $52,046 $50,764 $135,000 $548,225 $1,668,495 
Watch54,195 49,382 3,288 7,201 1,258 2,160 84,274 201,758 
Special Mention1,958 937 1,642 974 1,000 17,024 23,005 46,540 
Substandard8,926 1,165 570 6,671 2,382 5,191 26,282 51,187 
Substandard non-accrual21 3,292 226 135 — 100 2,400 6,174 
Total commercial544,993 320,898 142,171 67,027 55,404 159,475 684,186 1,974,154 
Commercial real estate
Pass883,688 819,133 478,452 297,525 161,409 198,419 13,083 2,851,709 
Watch77,346 56,113 64,282 96,664 21,592 5,758 4,700 326,455 
Special Mention11,943 5,389 12,386 1,420 6,917 5,471 — 43,526 
Substandard5,340 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 estate978,317 898,122 558,607 397,516 201,813 209,715 17,783 3,261,873 
Real estate construction
Pass219,112 191,724 68,015 1,490 1,901 1,751 18,911 502,904 
Watch8,530 12,019 3,169 48 — 1,398 — 25,164 
Special Mention— — — 1 — — — 1 
Substandard2,400 — — — — — — 2,400 
Total real estate construction230,042 203,743 71,184 1,539 1,901 3,149 18,911 530,469 
Retail real estate
Pass396,547 456,158 175,148 77,569 56,887 267,387 209,903 1,639,599 
Watch2,928 2,991 1,846 1,444 1,063 27 221 10,520 
Special Mention945 — — — — 393 — 1,338 
Substandard77 732 198 81 141 1,293 7 2,529 
Substandard non-accrual10 191 107 32 390 1,708 658 3,096 
Total retail real estate400,507 460,072 177,299 79,126 58,481 270,808 210,789 1,657,082 
Retail other
Pass134,567 43,512 13,141 13,086 5,646 991 91,028 301,971 
Substandard non-accrual14 134 3 — — 2 — 153 
Total retail other134,581 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 $7,725,702 
Past Due and Non-Accrual Loans
An analysis of the amortized cost basis of portfolio loans that are past due and still accruing, or on non-accrual status, is as follows (dollars in thousands):
As of December 31, 2023
Loans past due, still accruingNon-accrual
Loans
30-59 Days60-89 Days90+Days
Past due and non-accrual loans
Commercial loans:
Commercial$— $214 $— $2,602 
Commercial real estate752 — — 843 
Real estate construction24 — — 244 
Past due and non-accrual commercial loans776 214 — 3,689 
Retail loans:
Retail real estate2,781 927 366 3,595 
Retail other886 195 9 157 
Past due and non-accrual retail loans3,667 1,122 375 3,752 
Total past due and non-accrual loans$4,443 $1,336 $375 $7,441 
As of December 31, 2022
Loans past due, still accruingNon-accrual
Loans
30-59 Days60-89 Days90+Days
Past due and non-accrual loans
Commercial loans:
Commercial$2 $— $— $6,174 
Commercial real estate124 — — 5,644 
Past due and non-accrual commercial loans126 — — 11,818 
Retail loans:
Retail real estate4,709 1,239 673 3,096 
Retail other414 60 — 153 
Past due and non-accrual retail loans5,123 1,299 673 3,249 
Total past due and non-accrual loans$5,249 $1,299 $673 $15,067 
Gross interest income recorded on 90+ days past due loans, and that would have been recorded on non-accrual loans if they had been accruing interest in accordance with their original terms, was $1.1 million, $1.2 million, and $1.6 million for the years ended December 31, 2023, 2022, and 2021, respectively. Interest collected on those loans and recognized on a cash basis that was included in interest income was $0.4 million for each of the years ended December 31, 2023, 2022, and 2021.
Loan Modification Disclosures Pursuant to ASU 2022-02
The following table presents the amortized cost basis of loans that were modified for borrowers experiencing financial difficulty during the periods indicated, disaggregated by class of financing receivable and type of concession granted (dollars in thousands):
Year Ended December 31, 2023
Interest Rate Reduction1
% of Total Class of Financing Receivable2
Term Extension3
% of Total Class of Financing Receivable2
Modified Loans
Commercial$— — %$16,586 0.9 %
Commercial real estate872 — %923 — %
Real estate construction— — %5,327 1.2 %
Total of loans modified during the period4
$872 — %$22,836 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.Modifications to extend loan terms also included, in some cases, interest rate increases during the extension period.
4.Modifications include one loan 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:
Year Ended December 31, 2023
Weighted Average Interest Rate ReductionWeighted Average Term Extension
Effects of Loan Modifications
Commercial— 
18.1 months
Commercial real estate2.50 %
21.0 months
Real estate construction— 
12.0 months
Total financial effect2.50 %
16.8 months
The following table provides the amortized cost basis of financing receivables that had a payment default during the year ended December 31, 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.
Years Ended December 31, 2023
Term Extension
Loans with Subsequent Defaults
Commercial$88 
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 December 31, 2023
CurrentNon-accrual
Modified Loans
Commercial$16,498 $88 
Commercial real estate1,795 — 
Real estate construction5,327 — 
Amortized cost of modified loans$23,620 $88 
Troubled Debt Restructurings Disclosures Prior to the Adoption of ASU 2022-02
TDR loan balances are summarized as follows (dollars in thousands):
As of
December 31, 2022
TDRs
In compliance with modified terms$3,032 
Non-performing TDRs537 
Total TDRs$3,569 
Loans that were designated as TDRs during the years ended as of the dates indicated are summarized as follows (dollars in thousands):
Newly Designated TDRs
Recorded Investment1
Number of
Contracts
Rate
Modification2
Payment
Modification2
December 31, 2022
Commercial 3$136 $996 
Retail real estate1— 517 
Total4$136 $1,513 
 
December 31, 2021
Commercial 1$364 $— 
Total1$364 $— 
___________________________________________
1.Recorded investment for newly designated TDR’s that were still outstanding as of the dates indicated.
2.TDRs may have included multiple concessions; those that included an interest rate concession and payment concession are shown in the rate modification column.
There were no TDRs entered into during the 12 months ended December 31, 2022, or 2021, that had subsequent defaults. Gross interest income that would have been recorded during the years ended December 31, 2022, and 2021, if TDRs had performed in accordance with their original terms compared with their modified terms, was insignificant.
Collateral Dependent Loans
Management's evaluation as to the ultimate collectability of loans includes estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers. Collateral dependent loans are loans in which repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment. Loans are written down to the lower of cost or fair value of underlying collateral, less estimated costs to sell. Busey had $6.1 million and $14.0 million of collateral dependent loans secured by real estate or business assets as of December 31, 2023, and December 31, 2022, respectively.
Loans Evaluated Individually
Busey evaluates loans with disparate risk characteristics on an individual basis. The following tables provide details of loans evaluated individually, segregated by category. The unpaid principal balance represents the customer outstanding contractual principal balance excluding any partial charge-offs. Recorded investment represents the amortized cost of customer balances net of any partial charge-offs recognized on the loan. Average recorded investment is calculated using the most recent four quarters (dollars in thousands):
As of December 31, 2023
Unpaid
Principal
Balance		Recorded InvestmentAverage
Recorded
Investment
With No
Allowance		With
Allowance		TotalRelated
Allowance
Loans evaluated individually
Commercial loans:
Commercial$7,283 $585 $1,785 $2,370 $785 $5,244 
Commercial real estate2,600 610 85 695 85 3,865 
Real estate construction— — — — — 49 
Commercial loans evaluated individually9,883 1,195 1,870 3,065 870 9,158 
Retail loans:
Retail real estate213 61 25 86 25 790 
Retail loans evaluated individually213 61 25 86 25 790 
Total loans evaluated individually$10,096 $1,256 $1,895 $3,151 $895 $9,948 
As of December 31, 2022
Unpaid
Principal
Balance		Recorded InvestmentAverage
Recorded
Investment
With No
Allowance		With
Allowance		TotalRelated
Allowance
Loans evaluated individually
Commercial loans:
Commercial$9,589 $656 $5,918 $6,574 $2,476 $6,761 
Commercial real estate8,039 2,334 3,903 6,237 2,000 5,219 
Real estate construction247 247 — 247 — 260 
Commercial loans evaluated individually17,875 3,237 9,821 13,058 4,476 12,240 
Retail loans:
Retail real estate2,733 2,564 25 2,589 25 2,311 
Retail loans evaluated individually2,733 2,564 25 2,589 25 2,311 
Total loans evaluated individually$20,608 $5,801 $9,846 $15,647 $4,501 $14,551 
Allowance for Credit Losses
Management estimates the ACL balance using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The cumulative loss rate used as the basis for the estimate of credit losses is comprised of Busey’s historical loss experience beginning in 2010. Due to the continued economic uncertainty in the markets in which the Company operates, Busey will continue to utilize a forecast period of 12 months with an immediate reversion to historical loss rates beyond this forecast period in its ACL estimate. PPP loans were excluded from the ACL calculation as they are 100% government guaranteed.
The following table summarizes activity in the ACL attributable to each loan class. Allocation of a portion of the ACL to one loan class does not preclude its availability to absorb losses in other loan classes (dollars in thousands):
CommercialCommercial
Real Estate		Real Estate
Construction		Retail Real
Estate		Retail OtherTotal
ACL Balance, December 31, 2020$23,866 $46,230 $8,193 $21,992 $767 $101,048 
Day 1 PCD1
3,546 336 — 129 167 4,178 
Provision for credit losses(2,160)(7,651)(3,180)(4,456)2,346 (15,101)
Charged-off(2,026)(925)(209)(1,145)(478)(4,783)
Recoveries629 259 298 1,069 290 2,545 
ACL balance, December 31, 202123,855 38,249 5,102 17,589 3,092 87,887 
Provision for credit losses497 892 1,142 219 1,873 4,623 
Charged-off(1,069)(1,375)(23)(251)(461)(3,179)
Recoveries577 533 236 636 295 2,277 
ACL balance, December 31, 202223,860 38,299 6,457 18,193 4,799 91,608 
Provision for credit losses(727)(2,455)(1,465)7,922 (876)2,399 
Charged-off(2,429)(953)— (407)(629)(4,418)
Recoveries552 574 171 590 264 2,151 
ACL balance, December 31, 2023$21,256 $35,465 $5,163 $26,298 $3,558 $91,740 
__________________________________________
1.The Day 1 PCD is attributable to the CAC acquisition, finalized May 31, 2021.
The following tables present the ACL and amortized cost of portfolio loans by loan category and class (dollars in thousands):
As of December 31, 2023
Portfolio LoansACL Attributed to Portfolio Loans
Collectively
Evaluated for
Impairment		Individually
Evaluated for
Impairment		TotalCollectively
Evaluated for
Impairment		Individually
Evaluated for
Impairment		Total
Portfolio loans and related ACL
Commercial loans:
Commercial$1,833,624 $2,370 $1,835,994 $20,471 $785 $21,256 
Commercial real estate3,336,642 695 3,337,337 35,380 85 35,465 
Real estate construction461,717 — 461,717 5,163 — 5,163 
Commercial loans and related ACL5,631,983 3,065 5,635,048 61,014 870 61,884 
Retail loans:
Retail real estate1,720,369 86 1,720,455 26,273 25 26,298 
Retail other295,531 — 295,531 3,558 — 3,558 
Retail loans and related ACL2,015,900 86 2,015,986 29,831 25 29,856 
Portfolio loans and related ACL$7,647,883 $3,151 $7,651,034 $90,845 $895 $91,740 
As of December 31, 2022
Portfolio LoansACL Attributed to Portfolio Loans
Collectively
Evaluated for
Impairment		Individually
Evaluated for
Impairment		TotalCollectively
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 estate3,255,636 6,237 3,261,873 36,299 2,000 38,299 
Real estate construction530,222 247 530,469 6,457 — 6,457 
Commercial loans and related ACL5,753,438 13,058 5,766,496 64,140 4,476 68,616 
Retail loans:
Retail real estate1,654,493 2,589 1,657,082 18,168 25 18,193 
Retail other302,124 — 302,124 4,799 — 4,799 
Retail loans and related ACL1,956,617 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