KBRA Affirms Ratings for First Busey Corporation

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, the preferred shares rating of BBB-, and the short-term debt rating of K2 for Leawood, Kansas-based First Busey Corporation (NASDAQ: BUSE) (“the company”). KBRA also affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for its subsidiary, Busey Bank. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

First Busey’s ratings are well-positioned in its rating category and supported by its consistent and above peer level of core earnings underpinned by a well-diversified revenue base, a comparatively low-cost, stable core deposit franchise, and historically sound credit performance. In addition, the efficient operating model with an adjusted efficiency ratio in the mid-50% range further contributes to its earnings profile. The company’s consistent earnings track record is reflected by an average 5-year adjusted ROA of 1.10% with significant improvement more recently with an adjusted 1Q26 ROA of 1.42%. Total revenue is enhanced with a solid level of stable, fee income contributions, which represent over 70% of noninterest income and provides a buffer to interest rate pressures on spread revenue. BUSE also has an opportunity to further expand its strong fee income base across the expanded customer base related to the Cross First Bankshares, Inc. ("CFB") acquisition closed on March 1, 2025. The addition of CFB, alongside more disciplined loan pricing strategies, strong downward deposit beta, and proactive balance sheet repositionings with AFS securities sales has translated into stronger NIM with a 3.50% average over the last four quarters and 3.77% in 1Q26. KBRA expects further organic loan growth in 2H26 to support earnings following recent payoff headwinds and the company’s focus on working through the CFB portfolio. The credit quality remains sound with only modest increases in nonperforming, although criticized and classified loans are 3.8% of total loans, up from 2.3% pre-CFB acquisition, the increase was largely acquisition-driven and not indicative of broader portfolio deterioration. KBRA views BUSE’s disciplined underwriting, diversified loan mix, and solid reserve position (ACL at 1.26% of loans) to continue to provide meaningful downside protection. Although BUSE’s capital profile has been conservatively positioned with a favorable credit track record, the company’s capital ratios declined post-CFB acquisition from its historically higher levels. However, CET1 and TCE remain solidly positioned at 12.3% and 9.8% at 1Q26, respectively. KBRA expects the company to deploy capital into balance sheet growth and shareholder returns and believes that capital will remain at comfortable levels within the rating category going forward consistent with its conservative capital management history.

Rating Sensitivities

Demonstrating consistent outperformance in core and risk adjusted earnings, maintaining strong asset quality across a credit cycle or economic downturn, enhanced deposit gathering, and sustaining an above peer CET1 ratio could lead to positive rating momentum over time. Conversely, degradation in credit, including persistent losses meaningfully above peer levels, or aggressive capital management leading to capital ratios, notably the CET1 ratio, declining to levels substantially below peers could pressure the ratings.

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