MERGERS AND ACQUISITIONS

12 Months Ended

Dec. 31, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

NOTE 2. MERGERS AND ACQUISITIONS

CrossFirst Bankshares, Inc.

On August 26, 2024, First Busey Corporation and CrossFirst, a Kansas corporation, entered into a definitive agreement pursuant to which Busey will acquire CrossFirst and its wholly-owned subsidiary CrossFirst Bank, through a merger transaction. This partnership will create a premier commercial bank in the Midwest, Southwest, and Florida, with 77 full-service locations across 10 states—Arizona, Colorado, Florida, Illinois, Indiana, Kansas, Missouri, New Mexico, Oklahoma, and Texas—and approximately $20 billion in combined assets, $17 billion in total deposits, $14 billion in total loans, and $14 billion in wealth assets under care.

Under the terms of the merger agreement, CrossFirst stockholders will have the right to receive for each share of CrossFirst common stock 0.6675 of a share of Busey’s common stock with a cash payment in lieu of any fractional shares, and for each share of CrossFirst Series A Perpetual Preferred Stock one share of a newly created series of Busey preferred stock or, at the election of Busey, an amount of cash equal to the liquidation preference thereof, plus any unpaid dividends thereon through the effective time of the merger.

On December 20, 2024, Busey and CrossFirst stockholders voted to approve the merger. On January 16, 2025, Busey received regulatory approval from the Board of Governors of the Federal Reserve System for the merger. The transaction has also been approved by the Illinois Department of Financial and Professional Regulation and the Kansas Office of the State Bank Commissioner. Busey and CrossFirst intend to close the merger on March 1, 2025, subject to the satisfaction of the remaining customary closing conditions. It is anticipated that CrossFirst Bank will merge with and into Busey Bank in mid-2025. At the time of the bank merger, CrossFirst Bank locations will become banking centers of Busey Bank.

In connection with the CrossFirst merger, Busey incurred one-time pretax acquisition-related expenses of $3.9 million in 2024, which are reported as components of noninterest expense on the accompanying Consolidated Statements of Income. Of this amount, $3.1 million represents legal, professional, and consulting fees incurred to consummate the acquisition, with the remainder of the expenses comprised primarily of marketing, consulting, and travel expenses.

For further details on the merger, see the 8-K announcing the merger filed with the SEC on August 27, 2024.

Merchants and Manufacturers Bank Corporation

On April 1, 2024, Busey completed its acquisition of M&M and its wholly-owned subsidiary, M&M Bank, through a merger transaction. This partnership added M&M’s Life Equity Loan® products to Busey’s existing suite of services and expanded Busey’s presence in the suburban Chicago market. M&M’s results of operations were included in Busey’s results of operation beginning April 1, 2024.

Merger of M&M Bank into Busey Bank

Busey operated M&M Bank as a separate banking subsidiary of Busey until it was merged with Busey Bank on June 21, 2024. At the time of the bank merger, M&M Bank’s banking centers became banking centers of Busey Bank, except for M&M’s banking center located at 990 Essington Rd., Joliet, Illinois, which was closed in connection with the bank merger.

Merger Consideration

At the effective time of the Merger, each share of M&M common stock converted to the right to receive, at the election of each stockholder and subject to proration and adjustment as provided in the Merger Agreement, either (1) $117.74 in cash (“Cash Election”), (2) 5.7294 shares of Busey common stock (“Share Election”), or (3) mixed consideration of $34.55 in cash and 4.0481 shares of Busey common stock (“Mixed Election”).

Most of the M&M common stockholders who submitted an election form by the election deadline made the Share Election to receive their Merger consideration solely in the form of shares of Busey common stock. As a result of the elections of M&M common stockholders, and in accordance with the proration and adjustment provisions of the Merger Agreement, the Merger consideration paid to M&M common stockholders was comprised of an aggregate of 1,429,304 shares of Busey common stock and an aggregate of $12.2 million in cash, allocated as follows for each share of M&M stock: (1) $117.74 in cash for the Cash Election, (2) $5.3966 in cash and 5.4668 shares of Busey common stock for the Share Election, and (3) $34.55 in cash and 4.0481 shares of Busey common stock for the Mixed Election. Pursuant to the terms of the Merger Agreement, M&M common stockholders that did not make an election or submit a properly completed election form by the election deadline of March 29, 2024, received cash consideration of $117.74 for each share of M&M common stock held. No fractional shares of Busey common stock were issued in the Merger. Fractional shares were paid in cash at the rate of $23.32 per share.

Additional Merger consideration of $3.0 million was paid to redeem 300 shares of M&M preferred stock.

Acquisition Accounting

This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair values on April 1, 2024, the date of acquisition. Fair values, including initial accounting for deferred taxes, are subject to refinement for up to one year after the closing date as additional information regarding the closing date fair values becomes available. Fair value adjustments totaling $0.4 million were recorded during the year ended December 31, 2024, as additional information became available regarding unrecorded assets and liabilities. Busey does not expect any further adjustments will be necessary.

As the total consideration paid for M&M exceeded the estimated fair value of net assets acquired, goodwill of $15.8 million was recorded as a result of the acquisition. Goodwill recorded for this transaction reflects synergies expected from the acquisition and expansion within the Chicago metropolitan market, and was assigned to the Banking operating segment. None of the goodwill recognized in the M&M acquisition is expected to be tax deductible.

Acquisition Date Fair Values

Estimated acquisition-date fair values of the assets acquired and liabilities assumed, as well as the fair value of consideration transferred, were as follows (dollars in thousands):


	April 1, 2024
Assets acquired
Cash and cash equivalents	$	33,577
Securities	8,086
Portfolio loans, net of ACL	417,230
Premises and equipment	2,045
Right of use assets	253
Other intangible assets	6,346
Other assets	10,283
Total assets acquired	477,820

Liabilities assumed
Deposits	392,838
Short-term borrowings	35,932
Long-term debt	1,450
Subordinated notes, net of unamortized issuance costs	3,911
Junior subordinated debt owed to unconsolidated trusts	2,594
Lease liabilities	253
Other liabilities	7,089
Total liabilities assumed	444,067

Net assets acquired	$	33,753

Consideration paid
Cash	$	15,200
Common stock	34,375
Total consideration paid	$	49,575

Goodwill	$	15,822

Loans Purchased with Credit Deterioration

A small portion of the acquired loans were PCD. The following table provides a reconciliation between the purchase price and the fair value of these loans (dollars in thousands):


	As of April 1, 2024
PCD Financial Assets
Gross contractual receivable for PCD financial assets	$	29,290
ACL recorded for estimated uncollectible contractual cash flows specific to PCD financial assets	(1,243)
Interest premium (discount) specific to PCD financial assets	(1,773)
Fair value of PCD financial assets	$	26,274

Pro Forma Results

The following table provides the unaudited pro forma information for the results of operations for the years ended December 31, 2024 and 2023, as if the acquisition had occurred January 1, 2023. The pro forma results combine the historical results of M&M into Busey’s Consolidated Statements of Income, including the impact of purchase accounting adjustments such as loan discount accretion, intangible assets amortization, and deposit accretion, net of taxes. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2023. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, expense efficiencies, or asset dispositions. Only the merger related expenses that have been recognized are included in net income in the table below (dollars in thousands):


	Years Ended December 31,
	2024		2023
Revenue (net interest income plus noninterest income)	$	468,401	$	466,973
Net income	115,530		130,483
Diluted earnings per common share	2.00		2.26

Other Acquisition Costs

In connection with the M&M acquisition, Busey incurred $3.0 million in pre-tax acquisition expenses during the year ended December 31, 2024, which are reported as components of noninterest expense on the accompanying Consolidated Statements of Income. Of this amount, $0.1 million represents legal, professional, and consulting fees incurred to consummate the acquisition, with the remainder of the expenses comprised primarily of salaries, wages and employee benefits; data processing; and other professional fees.