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PORTFOLIO LOANS
 3 Months Ended
Mar. 31, 2024
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
PORTFOLIO LOANS PORTFOLIO LOANS
Loan Categories
Busey’s lending can be summarized in two primary categories: commercial and retail. Lending is further classified into five primary areas of loans: C&I and other commercial loans, commercial real estate loans, real estate construction loans, retail real estate loans, and retail other loans. Distributions of the loan portfolio by loan category and class is presented in the following table (dollars in thousands):
As of
March 31,
2024		December 31,
2023
Commercial loans
C&I and other commercial$1,828,711 $1,835,994 
Commercial real estate3,331,670 3,337,337 
Real estate construction445,860 461,717 
Total commercial loans5,606,241 5,635,048 
Retail loans
Retail real estate1,708,663 1,720,455 
Retail other273,173 295,531 
Total retail loans1,981,836 2,015,986 
Total portfolio loans7,588,077 7,651,034 
ACL(91,562)(91,740)
Portfolio loans, net$7,496,515 $7,559,294 
Net deferred loan origination costs included in the balances above were $13.4 million as of March 31, 2024, compared to $13.5 million as of December 31, 2023. Net accretable purchase accounting adjustments included in the balances above reduced loans by $4.3 million as of March 31, 2024, and $4.5 million as of December 31, 2023.
Busey did not purchase any retail real estate loans during the three months ended March 31, 2024 or 2023.
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
March 31,
2024		December 31,
2023
Pledged loans
FHLB$4,821,485 $4,865,481 
Federal Reserve Bank724,971 722,914 
Total pledged loans$5,546,456 $5,588,395 
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 and class of portfolio loans (dollars in thousands):
As of March 31, 2024
PassWatchSpecial
Mention		SubstandardSubstandard
Non-accrual		Total
Commercial loans
C&I and other commercial$1,491,166 $243,635 $37,711 $42,853 $13,346 $1,828,711 
Commercial real estate2,797,374 447,313 49,932 36,987 64 3,331,670 
Real estate construction410,089 22,483 7,743 5,301 244 445,860 
Total commercial loans4,698,629 713,431 95,386 85,141 13,654 5,606,241 
Retail loans
Retail real estate1,692,013 9,371 922 2,689 3,668 1,708,663 
Retail other273,030 — — — 143 273,173 
Total retail loans1,965,043 9,371 922 2,689 3,811 1,981,836 
Total portfolio loans$6,663,672 $722,802 $96,308 $87,830 $17,465 $7,588,077 
As of December 31, 2023
PassWatchSpecial
Mention		SubstandardSubstandard
Non-accrual		Total
Commercial loans
C&I and other 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 
Risk grades of portfolio loans and gross charge-offs are presented in the tables below by loan class, further sorted by origination year (dollars in thousands):
As of and For The Three Months Ended March 31, 2024
Term Loans Amortized Cost Basis by Origination YearRevolving
Loans		Total
Risk Grade Ratings20242023202220212020Prior
C&I and other commercial
Pass$92,898 $261,771 $214,944 $156,831 $66,161 $154,099 $544,462 $1,491,166 
Watch4,869 58,913 49,671 14,389 23,226 27,759 64,808 243,635 
Special Mention665 239 7,964 2,654 677 3,264 22,248 37,711 
Substandard8,371 5,700 1,386 819 525 2,348 23,704 42,853 
Substandard non-accrual— 75 — 117 66 1,388 11,700 13,346 
Total commercial106,803 326,698 273,965 174,810 90,655 188,858 666,922 1,828,711 
Gross charge-offs— 5,130 — — — 88 — 5,218 
Commercial real estate
Pass77,146 362,541 845,621 676,837 384,545 433,216 17,468 2,797,374 
Watch58,049 131,059 35,873 111,998 32,964 73,846 3,524 447,313 
Special Mention1,405 8,646 13,126 12,578 5,015 9,162 — 49,932 
Substandard1,362 5,626 2,677 18,821 3,337 5,114 50 36,987 
Substandard non-accrual— 44 — — 20 — — 64 
Total commercial real estate137,962 507,916 897,297 820,234 425,881 521,338 21,042 3,331,670 
Gross charge-offs— — — — — 96 — 96 
Real estate construction
Pass58,333 177,437 72,325 75,282 2,458 3,332 20,922 410,089 
Watch— 3,678 18,030 455 320 — — 22,483 
Special Mention— 7,743 — — — — — 7,743 
Substandard— 5,301 — — — — — 5,301 
Substandard non-accrual— — — — — 244 — 244 
Total real estate construction58,333 194,159 90,355 75,737 2,778 3,576 20,922 445,860 
Gross charge-offs— — — — — — — — 
Retail real estate
Pass19,533 240,662 376,623 378,955 153,995 313,080 209,165 1,692,013 
Watch805 832 2,873 2,242 937 401 1,281 9,371 
Special Mention— 191 354 — — 377 — 922 
Substandard— 136 1,049 519 45 935 5 2,689 
Substandard non-accrual— — 527 65 253 1,982 841 3,668 
Total retail real estate20,338 241,821 381,426 381,781 155,230 316,775 211,292 1,708,663 
Gross charge-offs— — — — — 52 — 52 
Retail other
Pass1,458 78,006 83,891 20,205 5,438 3,546 80,486 273,030 
Substandard non-accrual— — 93 49 — 1 — 143 
Total retail other1,458 78,006 83,984 20,254 5,438 3,547 80,486 273,173 
Gross charge-offs— 3 — 23 — 68 — 94 
Total portfolio loans$324,894 $1,348,600 $1,727,027 $1,472,816 $679,982 $1,034,094 $1,000,664 $7,588,077 
Total gross charge-offs$— $5,133 $— $23 $— $304 $— $5,460 
As of and For The Year Ended December 31, 2023
Term Loans Amortized Cost Basis by Origination YearRevolving
Loans		Total
Risk Grade Ratings20232022202120202019Prior
C&I and other 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 
Gross charge-offs284 — 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 
Gross 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 
Gross 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 
Gross 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 
Gross 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 gross charge-offs$289 $76 $592 $34 $391 $3,036 $— $4,418 
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 a non-accrual status, is as follows (dollars in thousands):
As of March 31, 2024
Loans past due, still accruingNon-accrual
Loans
30-59 Days60-89 Days90+Days
Past due and non-accrual loans
Commercial loans:
C&I and other commercial$43 $— $— $13,346 
Commercial real estate3,174 338 — 64 
Real estate construction— — — 244 
Past due and non-accrual commercial loans3,217 338 — 13,654 
Retail loans:
Retail real estate2,869 385 77 3,668 
Retail other530 102 11 143 
Past due and non-accrual retail loans3,399 487 88 3,811 
Total past due and non-accrual loans$6,616 $825 $88 $17,465 
As of December 31, 2023
Loans past due, still accruingNon-accrual
Loans
30-59 Days60-89 Days90+Days
Past due and non-accrual loans
Commercial loans:
C&I and other commercial$— $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 
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 $0.3 million for the three months ended March 31, 2024, and was $0.4 million for the three months ended March 31, 2023. The amount of interest collected on those loans and recognized on a cash basis that was included in interest income was immaterial for the three months ended March 31, 2024 and 2023.
Loan Modifications for Borrowers Experiencing Financial Difficulty
The following tables present the amortized cost basis of loans that were modified—specifically in the form of (1) principal forgiveness, (2) an interest rate reduction, (3) an other-than-insignificant payment deferral, and/or (4) a term extension—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 March 31, 2024
Payment Deferral1
% of Total Class of Financing Receivable
Term Extension2
% of Total Class of Financing Receivable
Modified Loans
C&I and other commercial$10,000 0.5 %$17,155 0.9 %
Commercial real estate— — %1,705 0.1 %
Total of loans modified during the period$10,000 0.1 %$18,860 0.2 %
___________________________________________
1.One loan was modified and classified as non-accrual during the three months ended March 31, 2024.
2.Modifications to extend loan terms also included, in some cases, interest rate increases during the extension period. All modifications were for loans classified as substandard.
Three Months Ended March 31, 2023
Payment Deferral1
% of Total Class of Financing Receivable2
Term Extension3
% of Total Class of Financing Receivable
Modified Loans
C&I and other commercial$489 — %$25,155 1.3 %
Commercial real estate— — %12,698 0.4 %
Total of loans modified during the period4
$489 — %$37,853 0.5 %
___________________________________________
1.Loans with payment deferrals were modified to defer all principal payments until the end of the loan terms, which were shortened. Regular interest payments continue to be required during the deferral period.
2.Loans with payment deferrals represent an insignificant portion of commercial loans and total loans, rounding to zero percent.
3.Modifications to extend loan terms also included, in most cases, interest rate increases during the extension period.
4.All modifications were for loans classified as substandard.
Three Months Ended March 31,
20242023
Weighted Average Term ExtensionWeighted Average Term Extension
Effects of Loan Modifications
C&I and other commercial
19.1 months
9.1 months
Commercial real estate
2.0 months
5.8 months
Total effect
17.6 months
8.0 months
No loans to borrowers experiencing financial difficulty had a payment default during the three months ended March 31, 2024 or 2023, after having been modified during the 12 months before that default. A default occurs when a loan is 90 days or more past due or transferred to non-accrual status.
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 during the last twelve months (dollars in thousands):
As of March 31, 2024
Current30-89 Days90+ DaysNon-accrual
Modified Loans
C&I and other commercial$21,641 $— $— $10,000 
Commercial real estate3,009 — — — 
Real estate construction5,301 — — — 
Amortized cost of modified loans$29,951 $— $— $10,000 
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 operation or sale of 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 the underlying collateral, less estimated costs to sell. Busey had $14.2 million and $6.1 million of collateral dependent loans secured by real estate or business assets as of March 31, 2024, and December 31, 2023, respectively.
Foreclosures
As of March 31, 2024, Busey had $0.9 million of residential real estate loans in the process of foreclosure. Busey follows Federal Housing Finance Agency guidelines on single-family foreclosures and real estate owned evictions on portfolio loans.
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 loan category and class. The unpaid principal balance represents customer outstanding contractual principal balances 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 March 31, 2024
Unpaid
Principal
Balance		Recorded InvestmentAverage
Recorded
Investment
With No
Allowance		With
Allowance		TotalRelated
Allowance
Loans evaluated individually
Commercial loans:
C&I and other commercial$20,372 $2,197 $10,920 $13,117 $7,498 $6,553 
Commercial real estate— — — — — 2,618 
Commercial loans evaluated individually20,372 2,197 10,920 13,117 7,498 9,171 
Retail loans:
Retail real estate213 61 25 86 25 289 
Retail loans evaluated individually213 61 25 86 25 289 
Total loans evaluated individually$20,585 $2,258 $10,945 $13,203 $7,523 $9,460 
As of December 31, 2023
Unpaid
Principal
Balance		Recorded InvestmentAverage
Recorded
Investment
With No
Allowance		With
Allowance		TotalRelated
Allowance
Loans evaluated individually
Commercial loans:
C&I and other 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 
Allowance for Credit Losses
The ACL is a valuation account that is deducted from the portfolio loans’ amortized cost bases to present the net amount expected to be collected on the portfolio loans. Portfolio loans are charged off against the ACL when management believes the uncollectibility of a loan balance is confirmed. Recoveries will be recognized up to the aggregate amount of previously charged-off balances. The ACL is established through the provision for credit loss charged to income.
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.
The following tables summarize 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):
Three Months Ended March 31, 2024
C&I and Other CommercialCommercial
Real Estate		Real Estate
Construction		Retail
Real Estate		Retail OtherTotal
ACL balance, December 31, 2023$21,256 $35,465 $5,163 $26,298 $3,558 $91,740 
Provision for credit losses10,125 (1,864)(491)(2,093)(639)5,038 
Charged-off(5,218)(96)— (52)(94)(5,460)
Recoveries44 — 41 128 31 244 
ACL balance, March 31, 2024$26,207 $33,505 $4,713 $24,281 $2,856 $91,562 
Three Months Ended March 31, 2023
C&I and Other CommercialCommercial
Real Estate		Real Estate
Construction		Retail
Real Estate		Retail OtherTotal
ACL balance, December 31, 2022$23,860 $38,299 $6,457 $18,193 $4,799 $91,608 
Provision for credit losses695 (3,359)(1,329)5,948 (1,002)953 
Charged-off(400)(539)— (5)(237)(1,181)
Recoveries121 20 31 119 56 347 
ACL balance, March 31, 2023$24,276 $34,421 $5,159 $24,255 $3,616 $91,727 
The following tables present the ACL and amortized cost of portfolio loans by loan category and class (dollars in thousands):
As of March 31, 2024
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:
C&I and other commercial$1,815,594 $13,117 $1,828,711 $18,709 $7,498 $26,207 
Commercial real estate3,331,670 — 3,331,670 33,505 — 33,505 
Real estate construction445,860 — 445,860 4,713 — 4,713 
Commercial loans and related ACL5,593,124 13,117 5,606,241 56,927 7,498 64,425 
Retail loans:
Retail real estate1,708,577 86 1,708,663 24,256 25 24,281 
Retail other273,173 — 273,173 2,856 — 2,856 
Retail loans and related ACL1,981,750 86 1,981,836 27,112 25 27,137 
Portfolio loans and related ACL$7,574,874 $13,203 $7,588,077 $84,039 $7,523 $91,562 
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:
C&I and other 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