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DERIVATIVE FINANCIAL INSTRUMENTS
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS
NOTE 19. DERIVATIVE FINANCIAL INSTRUMENTS
Busey utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. Additionally, Busey enters into derivative financial instruments, including interest rate lock commitments issued to residential loan customers for loans that will be held for sale; forward sales commitments to sell residential mortgage loans to investors; and interest rate swaps and risk participation agreements with customers and other third parties. See “Note 20. Fair Value Measurements” for further discussion of the fair value measurement of such derivatives.
To secure its obligations under derivative contracts, Busey pledged cash and held collateral as follows:
As of December 31,
(dollars in thousands)20252024
Cash pledged to secure obligations under derivative contracts$14,400 $21,900 
Collateral held to secure obligations under derivative contracts5,050 20,260 
Derivative Instruments Designated as Hedges
Busey entered into derivative instruments designated as cash flow hedges. For a derivative instrument that is designated and qualifies as a cash flow hedge, the change in fair value of the derivative instrument is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Changes in fair value of components excluded from the assessment of effectiveness are recognized in current earnings.
Interest Rate Swaps Designated as Cash Flow Hedges
Interest rate swaps with notional amounts totaling $500.0 million as of both December 31, 2025, and December 31, 2024, were designated as cash flow hedges. Busey entered into a $300.0 million receive-fixed pay-floating interest rate swap to reduce Busey's asset sensitivity (“Prime Loan Swap”). Duration was added to Busey’s loan portfolio by fixing a portion of floating prime-based loans. Interest rates had risen above their historical lows allowing Busey to lock in a portion of its loan portfolio to reduce asset sensitivity while creating a more stable margin in a volatile rate market. These hedges were determined to be highly effective during the period, and Busey expects its hedges to remain highly effective during the remaining terms of the swaps. Further, Busey entered into forward-starting SOFR-based receive-fixed pay-floating interest rate swaps totaling $200.0 million to reduce Busey’s asset sensitivity (“SOFR Loan Swaps”). These hedges were determined to be highly effective during the period, and Busey expects its hedges to remain highly effective during the remaining terms of the swaps. Changes in fair value were recorded net of tax in OCI.
A summary of the interest-rate swaps designated as cash flow hedges is presented below:
As of December 31,
(dollars in thousands)Location20252024
Prime Loan Swap
Notional amount$300,000 $300,000 
Weighted average rate: receive-fixed4.81 %4.81 %
Weighted average variable Prime pay rates6.81 %7.62 %
Weighted average maturity
3.10 years
4.10 years
 
SOFR Loan Swaps
Notional amount$200,000 $200,000 
Weighted average rate: receive-fixed3.78 %3.78 %
Weighted average variable 1-month CME Term SOFR pay rates3.82 %— %
Weighted average maturity
3.76 years
4.76 years
 
Gross aggregate fair value of the swaps
Gross aggregate fair value of swap assetsOther assets$3,215 $— 
Gross aggregate fair value of swap liabilitiesOther liabilities$14,589 $27,770 
 
Balances carried in AOCI
Unrealized gains (losses) on cash flow hedges, net of taxAOCI$(7,616)$(19,805)
During the next 12 months, Busey expects to reclassify unrealized gains and losses from OCI to interest income and interest expense as shown in the following table. Amounts actually recognized could differ from these expectations due to changes in interest rates, hedge de-designations, and the addition of other hedges subsequent to December 31, 2025.
(dollars in thousands)As of
December 31, 2025
Unrealized gains (losses) expected to be reclassified from OCI to interest income$(521)
Interest income and interest expense recorded on swap transactions is presented in the following table:
Years Ended December 31,
(dollars in thousands)202520242023
Interest on swap transactions
Increase (decrease) in interest income on swap transactions$(8,432)$(10,669)$(10,326)
(Increase) decrease in interest expense on swap transactions— 1,378 1,757 
Net increase (decrease) in net interest income on swap transactions$(8,432)$(9,291)$(8,569)
Net gains (losses) relating to cash flow derivative instruments that were recorded in OCI on the Consolidated Statements of Income are presented in the table below:
Years Ended December 31,
(dollars in thousands)202520242023
Unrealized gains (losses) on cash flow hedges
Net gain (loss) recognized in OCI, net of tax$5,919 $(10,790)$(1,835)
(Gain) loss reclassified from OCI to interest income, net of tax6,270 8,818 7,382 
(Gain) loss reclassified from OCI to interest expense, net of tax— (1,139)(1,256)
Net change in unrealized gains (losses) on cash flow hedges, net of tax$12,189 $(3,111)$4,291 
Derivative Instruments Not Designated as Hedges
Interest Rate Swaps Not Designated as Hedges
Busey may offer derivative contracts to its customers in connection with their risk management needs. Busey manages the risk associated with these contracts by entering into equal and offsetting derivative agreements with a third-party dealer. These contracts supported variable rate, commercial loan relationships totaling $1.16 billion as of December 31, 2025, and $719.2 million as of December 31, 2024. These derivatives generally worked together as an economic interest rate hedge, but Busey did not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.
Amounts and fair values of derivative assets and derivative liabilities related to customer interest rate swaps recorded on the Consolidated Balance Sheets are summarized as follows:
As of December 31, 2025As of December 31, 2024
(dollars in thousands)LocationNotional
Amount		Fair
Value		Notional
Amount		Fair
Value
Derivative assets not designated as hedging instruments
Interest rate swaps: receive-fixed, pay-floatingOther assets$703,286 $11,542 $156,539 $1,465 
Interest rate swaps: receive-floating, pay-fixedOther assets456,973 15,998 562,697 28,854 
Derivative assets not designated as hedging instruments$1,160,259 $27,540 $719,236 $30,319 
Derivative liabilities not designated as hedging instruments
Interest rate swaps: receive-fixed, pay-floatingOther liabilities$456,973 $15,998 $562,697 $28,854 
Interest rate swaps: receive-floating, pay-fixedOther liabilities703,286 11,542 156,539 1,465 
Derivative liabilities not designated as hedging instruments$1,160,259 $27,540 $719,236 $30,319 
Changes in fair value of these derivative assets and derivative liabilities were recorded in noninterest expense on the Consolidated Statements of Income and are summarized as follows:
Years Ended December 31,
(dollars in thousands)Location202520242023
Interest rate swaps
Receive-fixed, pay-floatingNoninterest expense$(2,604)$1,726 $(11,525)
Receive-floating, pay-fixedNoninterest expense2,604 (1,726)11,525 
Net change in fair value of interest rate swaps$— $— $— 
Risk Participation Agreements
To manage the credit risk exposure related to customer-facing swaps, Busey entered into risk participation agreements in conjunction with loan participation arrangements with other financial institutions. Under these risk participation agreements, Busey purchased credit risk participation, paying an up-front fee to a counterparty to accept a portion of its credit exposure, and will receive a payment from the counterparty if the swap customer defaults on its obligations. Busey also assumed additional risk participation agreements entered into by CrossFirst, in which CrossFirst purchased credit risk participation, and Busey will receive a payment from the counterparty if the swap customer defaults on its obligations.
In connection with the CrossFirst acquisition, Busey assumed risk participation agreements entered into by CrossFirst, under which CrossFirst sold credit risk participation, receiving an up-front fee from a counterparty in exchange for accepting a portion of the counterparty’s credit exposure. Under these agreements, Busey will be required to make a payment to the counterparty if the swap customer defaults on its obligations.
Notional amounts of the risk participation agreements reflect the participating banks’ pro-rata shares of the derivative instruments, consistent with their shares of the related participated loans. The risk participation agreements mature between May 2026 and October 2033, and are summarized as follows:
As of December 31,
(dollars in thousands)20252024
Risk participation agreements purchased
Number of risk participation agreements12 5 
Notional amount$74,590 $40,092 
Fair value30 5 
 
Risk participation agreements sold
Number of risk participation agreements13 — 
Notional amount$108,743 $— 
Fair value65 — 
Mortgage Banking Derivatives
Interest Rate Lock Commitments
Interest rate lock commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities on the Consolidated Balance Sheets, with changes in the fair values of the corresponding derivative financial assets or liabilities recorded as either a charge or credit to current earnings during the period in which the changes occurred.
Forward Sales Commitments
Busey economically hedges mortgage loans held for sale and interest rate lock commitments issued to its residential loan customers related to loans that will be held for sale by obtaining corresponding forward sales commitments with an investor to sell the loans at an agreed-upon price at the time the interest rate locks are issued to the customers. Forward sales commitments that meet the definition of derivative financial instruments under ASC Topic 815 “Derivatives and Hedging” are carried at their fair values in other assets or other liabilities on the Consolidated Balance Sheets. While such forward sales commitments generally served as an economic hedge to mortgage loans held for sale and interest rate lock commitments, Busey did not designate them for hedge accounting treatment. Changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.
Amounts and fair values of mortgage banking derivatives included on the Consolidated Balance Sheets are summarized as follows:
As of December 31, 2025As of December 31, 2024
(dollars in thousands)LocationNotional
Amount		Fair
Value		Notional
Amount		Fair
Value
Mortgage banking derivative assets
Interest rate lock commitmentsOther assets$6,159 $145 $2,430 $28 
Forward sales commitmentsOther assets1,520 2 3,457 21 
Mortgage banking derivative assets$7,679 $147 $5,887 $49 
 
Mortgage banking derivative liabilities
Interest rate lock commitmentsOther liabilities$— $— $436 $4 
Forward sales commitmentsOther liabilities9,278 26 1,955 6 
Mortgage banking derivative liabilities$9,278 $26 $2,391 $10 
Gains and losses relating to these derivative instruments are reported in noninterest income, and are summarized as follows:
Years Ended December 31,
(dollars in thousands)Location202520242023
Net gains (losses) on mortgage banking derivatives
Gains (losses) on interest rate lock commitmentsMortgage revenue$789 $585 $— 
Gains (losses) on forward sales commitmentsMortgage revenue(40)(147)2 
Net gains (losses) on mortgage banking derivatives$749 $438 $2 
Gains or losses are recognized on these mortgage banking derivative instruments in earnings; however, because loans held for sale are carried at LOCOM, any corresponding increase in the fair value of loans held for sale will not be recognized in earnings until the loans are sold, at which time the increase is factored into the calculated gain on sale. Decreases in the market value of loans held for sale are recognized in earnings at each measurement period.
For additional information about Busey’s accounting policies related to derivative financial instruments, see “Derivative Financial Instruments” in “Note 1. Significant Accounting Policies.”