INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 12. INCOME TAXES

Components of Busey’s income tax expense consist of the following (dollars in thousands):

	Years Ended December 31,
	2023		2022		2021
Income tax expense
Current expense:
Federal	$	20,139	$	20,815	$	20,261
State	14,120		13,883		8,448
Deferred expense:
Federal	(1,557)		(700)		3,644
State	(1,363)		(572)		1,021
Total income tax expense	$	31,339	$	33,426	$	33,374

A reconciliation of federal and state income taxes at statutory rates to Busey’s income taxes included in the accompanying Consolidated Statements of Income is as follows:

	Years Ended December 31,
	2023		2022		2021
Percent of pretax income
Income tax at federal statutory rate	21.0	%	21.0	%	21.0	%
Effect of:
Tax-exempt interest, net	(1.0)	%	(1.1)	%	(1.1)	%
Stock incentive	0.2	%	0.1	%	—	%
State income taxes, net	6.5	%	6.5	%	4.5	%
Income on bank owned life insurance	(0.6)	%	(0.5)	%	(0.7)	%
Tax credit investments	(6.0)	%	(5.6)	%	(3.6)	%
Other, net	0.3	%	0.3	%	1.2	%
Effective income tax rate	20.4	%	20.7	%	21.3	%

Net deferred taxes, reported in other assets or other liabilities in Busey’s Consolidated Balance Sheets, include the following amounts of deferred tax assets and liabilities (dollars in thousands):

	As of December 31,
	2023		2022
Deferred taxes
Deferred tax assets:
ACL	$	27,068	$	26,979
Unrealized loss on cash flow hedge	6,654		8,365
Unrealized losses on securities available for sale, net	70,423		88,666
Unrealized losses on securities held to maturity	10,156		11,919
Stock-based compensation	5,767		5,504
Deferred compensation	—		53
Purchase accounting adjustments	764		656
Accrued vacation	456		411
Lease liabilities	3,092		3,564
Employee costs	4,789		3,298
Unrealized loss on equity securities	75		—
Other	67		376
Total deferred tax assets	129,311		149,791
Deferred tax liabilities:
Basis in premises and equipment	(2,830)		(1,541)
Affordable housing partnerships and other investments	(8,341)		(6,669)
Purchase accounting adjustments	(1,133)		(1,207)
Mortgage servicing assets	(1,336)		(2,132)
Basis in core deposit, customer intangible assets, and asset purchase goodwill	(4,709)		(6,956)
Deferred loan origination costs	(3,691)		(3,845)
Right of use assets	(3,015)		(3,518)
Unrealized gain on equity securities	—		(512)
Other	(251)		(586)
Total deferred tax liabilities	(25,306)		(26,966)
Net deferred tax asset	$	104,005	$	122,825

Management believes that it is more likely than not that the other deferred tax assets included in the accompanying Consolidated Balance Sheets will be fully realized. Busey has determined that no valuation allowance is required for any deferred tax assets as of December 31, 2023, or 2022.