KBRA Affirms Ratings for First Busey Corporation; Assigns Preferred Shares Rating
KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Leawood, Kansas based First Busey Corporation (NASDAQ:BUSE) ("the company"). In addition, KBRA assigns a preferred shares rating of BBB- to BUSE. 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 the rating category and supported by a strong and consistent earnings profile underpinned by a well-diversified revenue base, solid asset quality, and a comparatively low-cost, stable core deposit franchise. The company has maintained a solid track record of adjusted core ROA in the ~1.00%–1.10% range over the last five years, including 1.09% in 1Q25, which compares favorably to peers. This performance has been achieved despite industry-wide funding and NIM pressures. Busey's NIM increased to 3.16% in 1Q25 (3.08% adjusted), aided by proactive balance sheet repositioning, securities sales, and the CrossFirst Bankshares, Inc. ("CFB") acquisition completed March 1, 2025. The CFB acquisition is expected to further enhance net interest income and NIM, and earnings and efficiency metrics through cost savings, revenue synergies, notably in the wealth and payments businesses, and commercial lending scale. While total deposit costs increased post-acquisition, reaching 1.91% in 1Q25, this remains below peer averages, and management expects a slight increase 2Q25 with a full quarter of the acquired funding base before normalization in 2H25 as wholesale funding run-off continues.
Credit quality remains sound with only modest increases in nonperforming and classified assets following the CFB acquisition. While classified assets rose to 8.4% of capital in 1Q25 from 5.6% at YE24, the increase was largely acquisition-driven and not indicative of broader portfolio deterioration. Net charge-offs also increased due to $29.6 million in write-downs on previously identified PCD loans, which were fully reserved for at acquisition close and did not require additional provisions. BUSE's disciplined underwriting, diversified loan mix, and strong reserve position (ACL at 1.41% of loans; 3.57x coverage of NPLs) continue to provide meaningful downside protection. Though some normalization of credit metrics is expected over time, the risk profile remains well-managed and within tolerable bounds in KBRA's view.
Although BUSE's capital profile has been conservatively positioned with a solid credit track record, the company's CET1, Tier 1 and Total Capital ratios notably declined post-CFB acquisition from its historically strong levels. However, TCE increased to 8.8% in 1Q25 from 8.7% at 4Q24 and CET1 ratios remain solidly positioned at 12.0% at 1Q25. KBRA expects the company to build capital going forward fueled by BUSE's earnings power and 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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Methodologies
- Financial Institutions: Bank & Bank Holding Company Global Rating Methodology
- ESG Global Rating Methodology
Disclosures
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan's Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.
Doc ID: 1009402
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Analytical Contacts
Brian Ropp, Managing Director (Lead Analyst)
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John Rempe, Senior Director
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Bain Rumohr, Managing Director
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Ashley Phillips, Managing Director (Rating Committee Chair)
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Business Development Contact
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