First Busey's Credit Provision Jumps on One Commercial Relationship

The Tip Desk · November 8, 2026 · 3 min read

Provision expense rose to $9.6 million as a Central-region relationship took a $10.0 million partial charge-off, while net interest income edged up to $153.1 million.

First Busey Corporation (BUSE), the Kansas-based regional bank, reported third-quarter 2026 net income of $55.8 million, or $0.61 a share, down from $63.2 million, or $0.69 a share, in the second quarter. Adjusted diluted earnings were $0.63 a share.

The earnings decline was concentrated in credit. Provision for credit losses rose to $9.6 million from $2.2 million, which the company said was primarily the result of a single commercial relationship in the Central region that incurred a $10.0 million partial charge-off and moved to non-accrual. Net charge-offs were $11.4 million, or 0.35% annualized, versus $6.4 million, or 0.19%, in the prior quarter.

That relationship totaled $37.6 million. Busey allocated an individual reserve of $17.8 million against the remaining $27.6 million balance at September 30. Non-performing assets rose $13.3 million to $83.6 million, or 0.45% of total assets, from $70.3 million, or 0.39%. Non-accrual loans increased to $80.9 million from $62.8 million. The allowance for credit losses was $164.3 million, equal to 1.28% of portfolio loans and 2.01 times non-performing loans. The company said asset quality remained strong apart from that credit.

Operating revenue, on the company’s adjusted basis, was $194.3 million. Net interest income increased $0.7 million to $153.1 million, driven by growth in average earning assets. The net interest margin compressed 14 basis points to 3.58% from 3.72% in the second quarter. Average earning-asset yields slipped to 5.43% from 5.47%. Deposit funding costs were 13 basis points higher, which the company attributed to deposit-gathering initiatives and a late-quarter Federal Open Market Committee rate hike. Total deposit cost of funds rose to 1.93% from 1.80%; average total cost of funds was 1.99%.

Deposits continued to grow at an annualized 11% for the second consecutive quarter. Period-end deposits rose $408.8 million, or 2.7%, to $15.54 billion, primarily from seasonal public funds inflows. The loan-to-deposit ratio improved to 82.5% from 87.2%. Core deposits were 94.0% of total deposits. Cash and due from banks were $907.5 million. Brokered funding fell $50.0 million to $10.0 million, or 0.1% of deposits.

Portfolio loans declined to $12.82 billion from $13.20 billion, including the repositioning of about $65 million of lender finance loans to held for sale. Commercial and industrial loans fell to $3.77 billion from $3.96 billion; commercial real estate fell to $5.26 billion from $5.45 billion. Loans held for sale included $65.1 million of commercial loans and $3.0 million of mortgage loans. The company recognized a $0.7 million lower-of-cost-or-market adjustment on the lender-finance pool and a $0.7 million release of allowance. Those loans were subsequently sold in the fourth quarter.

Total noninterest income was $40.4 million, down 8.8% from the second quarter, primarily a $3.1 million unfavorable swing in net securities gains (losses) and the $0.7 million LOCOM adjustment. Wealth management fees were $19.8 million, up 15.5% from the year-earlier quarter, with assets under care of $16.72 billion.

Total noninterest expense decreased 1.1% to $111.4 million. The efficiency ratio was 54.4%. Adjusted noninterest expense rose 0.7%, primarily on higher data processing and other expense, partly offset by lower FDIC insurance.

Common Equity Tier 1 capital to risk-weighted assets rose to 12.5% from 12.3% a year ago, even after $188.4 million of year-to-date share repurchases, including $59.6 million in the third quarter. Chairman, President and CEO Van A. Dukeman said the company remains well positioned with an indomitable balance sheet, ample liquidity, and significant capital flexibility as it enters the final quarter of 2026.