This updated analysis from October 27, 2025, provides a deep dive into First Busey Corporation (BUSE), assessing its business moat, financial health, past performance, future growth, and intrinsic fair value. We contextualize these findings by benchmarking BUSE against key peers like Commerce Bancshares, Inc. (CBSH), Wintrust Financial Corporation (WTFC), and Old National Bancorp (ONB), all through the value investing lens of Warren Buffett and Charlie Munger.
Mixed outlook for First Busey Corporation.
The company is a traditional community bank focused on relationship-based lending in the Midwest.
It offers an attractive dividend yield of 4.26% and appears fairly valued with a forward P/E of 9.23x.
However, performance is inconsistent, with recent earnings declines and shrinking deposits raising concerns.
Growth is slow compared to peers, and the bank lacks a strong competitive advantage or scale.
The company's profitability and diversification lag behind stronger regional competitors.
BUSE may appeal to income-focused investors, but better opportunities for growth likely exist elsewhere.
US: NASDAQ
First Busey Corporation operates as a financial holding company, primarily running a community-focused banking business alongside a significant wealth management division. Its core business model revolves around the traditional banking practice of gathering deposits from local individuals and businesses and using that money to make loans. The difference between the interest it earns on loans and the interest it pays on deposits, known as the net interest margin, is its main source of profit. The company's main services can be broken down into three categories: commercial and retail lending, deposit services, and wealth management. It serves customers through a network of banking centers primarily located in Illinois, Missouri, southwest Florida, and Indianapolis, Indiana, focusing on building long-term relationships with its local communities.
Lending is First Busey's largest business, generating the majority of its revenue through net interest income, which typically accounts for 75-80% of total revenue. The loan portfolio is diversified, with major categories including commercial real estate (CRE), commercial and industrial (C&I) loans for businesses, residential real estate mortgages, and consumer loans. The U.S. regional banking loan market is vast, valued in the trillions, but grows slowly, roughly in line with GDP at a 3-5% CAGR. Competition is extremely high, coming from national giants like JPMorgan Chase, other regional banks such as Commerce Bancshares and Old National Bancorp, and numerous smaller community banks all competing for the same borrowers. First Busey's customers are primarily small-to-medium-sized businesses and individuals within its geographic footprint. The stickiness of these loan customers is moderately high due to the complexities and costs associated with refinancing and moving established business credit lines. The bank's competitive position here relies on its local market knowledge and personal relationships rather than scale or price, creating a moat based on service and switching costs. However, this moat is narrow, as lending products are largely commoditized, making the bank vulnerable to aggressive pricing from competitors and downturns in its specific regional economies.
On the other side of the balance sheet are deposit services, which provide the low-cost funding for the bank's lending activities. This service includes offering checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs). Like the loan market, the market for deposits is enormous but intensely competitive, especially as higher interest rates have prompted customers to seek better returns on their cash. First Busey competes with the same set of national, regional, and local banks for these funds. Its customers are the same local individuals and businesses, who value the convenience and security of a local bank for their primary accounts. Customer stickiness for core deposit accounts is quite high. Many people are reluctant to move their main checking account due to the hassle of changing direct deposits and automatic bill payments. This inertia provides First Busey with a stable and relatively inexpensive source of funds. This 'low-cost funding advantage' is a classic banking moat. However, the strength of this moat has been tested recently, as the bank's percentage of noninterest-bearing deposits has declined and its overall cost of funds has risen, indicating that its advantage, while real, is not impenetrable.
The third key service is wealth management, operated through Busey Wealth Management. This division provides investment management, trust services, financial planning, and brokerage services to affluent individuals, families, and institutions, and it is a key differentiator for the company. This segment contributes a significant portion of the bank's noninterest (fee) income, representing roughly 10-15% of the company's total revenue. The wealth management industry in the U.S. is large and growing faster than traditional banking, with a CAGR of 5-7%, and it typically boasts high profit margins. Competition is fragmented, including wealth divisions of other banks, independent advisory firms, and large brokerage houses like Edward Jones or Merrill Lynch. The customers are high-net-worth clients who require sophisticated financial advice and management. The stickiness of these relationships is extremely high, as they are built on deep trust and personalized service developed over many years. The competitive moat for this business is very strong, based on high switching costs and a trusted brand reputation at the local level. This provides First Busey with a stable, high-margin source of revenue that is not dependent on interest rate cycles, adding significant resilience to its overall business model.
In conclusion, First Busey’s business model is a blend of traditional community banking and a more specialized wealth management service. The banking operation's moat is built on localized customer relationships and the moderate switching costs associated with moving primary banking accounts. This creates a durable, albeit not unbreachable, advantage in its core markets. Its resilience is supported by a generally stable, granular deposit base that funds its lending activities.
The addition of the wealth management division significantly strengthens the overall enterprise. It diversifies the revenue stream away from the cyclical and highly competitive net interest income business, adding a source of recurring, high-margin fee income. This combination makes the company more resilient than a pure-play community bank. However, the bank's primary vulnerability remains its geographic concentration and the perpetual margin pressure inherent in the commoditized banking industry. While not possessing a wide moat, First Busey's business model has a durable foundation that should allow it to remain a consistent performer over time.
First Busey Corporation's financial health presents a tale of two quarters. The most recent quarter (Q2 2025) showed a strong rebound with net income of $47.4 million on revenue of $182.5 million, a significant turnaround from the -$30.0 million net loss in Q1 2025. This volatility was primarily caused by a massive $45.6 million provision for credit losses in the first quarter, which normalized to a more manageable $5.7 million in the second. This suggests the bank may have taken a large, upfront charge to clean up its loan book, possibly related to a recent acquisition that substantially grew its assets from $12.0 billion at year-end 2024 to $18.9 billion by mid-2025.
The bank's balance sheet appears resilient. The loan-to-deposit ratio stands at a healthy 86.2%, indicating that lending activities are well-funded by a stable deposit base. Capitalization is also solid, with a tangible common equity to total assets ratio of 10.17%, which is a good buffer against potential losses. The debt-to-equity ratio is very low at 0.21, reflecting a conservative approach to leverage. These metrics point to a stable financial foundation capable of supporting the newly expanded operations.
Profitability metrics have been inconsistent due to the Q1 loss, with return on equity at 8.26% in the latest data, which is average for the sector. However, core operational performance looks strong. The bank's efficiency ratio of 54.4% is excellent, indicating disciplined cost management relative to its revenue generation. Net interest income, the primary driver of earnings for a regional bank, grew an impressive 85.6% year-over-year in the latest quarter. This demonstrates the bank is effectively managing its larger asset base in the current interest rate environment.
In summary, First Busey's financial foundation appears stable, particularly its capitalization and operational efficiency. The primary red flag is the recent, large credit provision, which raises questions about the quality of its loan portfolio. While the strong rebound in profitability is encouraging, investors should monitor credit trends closely. The bank's ability to successfully integrate its recent expansion and maintain credit discipline will be key to its long-term financial stability.
Analyzing its performance from fiscal year 2020 through 2024, First Busey Corporation shows the characteristics of a traditional community bank that has relied on acquisitions for growth, resulting in inconsistent financial results. While the bank has successfully grown its overall size, its underlying profitability and efficiency have not demonstrated a clear, positive trend. This history suggests a company that is resilient and can generate stable cash flow, but one that struggles to consistently translate that into strong earnings growth or top-tier returns for shareholders.
Over the analysis period (FY2020-FY2024), revenue growth was choppy, resulting in a compound annual growth rate (CAGR) of about 5.7%. More concerning is the trend in earnings per share (EPS), which started at $1.84 in 2020, peaked at $2.32 in 2022, and fell back to $2.01 by 2024, representing a meager 2.2% CAGR. This volatility highlights a lack of consistent organic earnings power. Profitability metrics tell a similar story. Return on Equity (ROE) has fluctuated between 8.1% and 10.4%, a respectable range for a community bank, but it has declined in recent years and consistently trails superior peers like Commerce Bancshares (~14% ROE), indicating BUSE is less effective at generating profits from its shareholders' capital.
The company's cash flow generation is a notable strength. Operating cash flow has been remarkably stable, growing from $163 million in 2020 to $178 million in 2024. This reliability has allowed BUSE to build a strong track record of shareholder returns through dividends. The dividend per share increased steadily from $0.88 to $0.96 over the five-year period. However, this positive is partially offset by shareholder dilution, as diluted shares outstanding increased from 55 million to 58 million during the same timeframe, meaning each share's claim on earnings has been slightly reduced.
In conclusion, First Busey's historical record supports confidence in its ability to operate as a stable, dividend-paying institution. However, it does not support confidence in its ability to execute on a high-growth strategy or achieve best-in-class profitability. The bank's past performance has been average at best, marked by inconsistent earnings and efficiency challenges when compared to more dynamic and better-run regional competitors. Investors should view its history as one of stability rather than compelling growth.
The U.S. regional banking industry is navigating a period of significant change, with the next 3-5 years expected to be defined by consolidation, technological shifts, and a normalization of the interest rate environment. The intense pressure on funding costs experienced in 2023 is likely to persist, forcing banks to compete fiercely for deposits. This will keep net interest margins (NIMs), the spread between what banks earn on loans and pay on deposits, tighter than in the past. We expect the market for regional banking services to grow at a slow 2-4% CAGR, largely in line with nominal GDP. A key catalyst for improved demand would be a sustained decrease in benchmark interest rates, which would lower borrowing costs and potentially spur loan demand for businesses and homebuyers. Another driver is the continued adoption of digital banking, with customer adoption rates projected to exceed 70%. This shift requires significant ongoing investment in technology to meet customer expectations.
Competition in the sector is not about new entrants, as high capital requirements and regulatory hurdles make starting a bank difficult. Instead, competition is intensifying among existing players. Large national banks are leveraging their scale and technology budgets to push into regional markets, while non-bank fintech companies continue to chip away at specific product areas like payments and personal loans. For a bank like First Busey, this means competition is coming from all sides. To thrive, banks will need to either achieve greater scale through mergers and acquisitions (M&A)—with M&A activity expected to pick up—or effectively differentiate themselves through superior service and niche expertise. The future belongs to banks that can successfully blend personal, relationship-based service with a seamless digital experience.
First Busey's primary product, commercial lending (including Commercial & Industrial and Commercial Real Estate loans), faces a constrained environment. Currently, loan demand is dampened by high interest rates, which makes new projects and expansions less attractive for business customers. Consumption is limited by cautious business sentiment and tighter underwriting standards from banks themselves. Over the next 3-5 years, growth in this segment will likely be muted. We expect a modest increase in C&I lending as businesses invest in automation and efficiency, but a decrease or stagnation in areas like office CRE. The main shift will be towards lending for industrial facilities, logistics, and multi-family housing. A key catalyst for accelerated growth would be a 1-2% drop in the federal funds rate. The U.S. C&I loan market is over $2.5 trillion, but future growth is forecast at a sluggish 2-3% annually. Busey, with its portfolio split roughly between ~50% CRE and ~18% C&I, competes against other regionals like Commerce Bancshares. Busey's path to outperformance is through its high-touch service model for small-to-medium businesses, where it can win deals based on relationships rather than the lowest price. However, larger competitors with lower funding costs are likely to win share on larger, more price-sensitive deals.
The wealth management division is First Busey's standout growth driver. Current consumption of these services—investment management, financial planning, and trust services—is strong among its target market of high-net-worth individuals. The main constraint on growth is the bank's ability to attract and retain talented financial advisors to serve more clients. Looking ahead, this segment is poised for steady expansion. Demand will increase due to demographic tailwinds, specifically the aging U.S. population and the large intergenerational transfer of wealth. Growth will come from deepening relationships with existing banking clients and potentially acquiring smaller advisory firms. The U.S. wealth management industry is projected to grow at a healthy 5-7% CAGR. With over $12 billion in assets under management (AUM), Busey is a significant player in its regional markets. The competitive landscape is fragmented, including everything from wirehouses like Merrill Lynch to independent advisors. Busey outcompetes by offering integrated banking and wealth services, providing a holistic and convenient solution for clients. The primary risk to this business is a prolonged bear market, as a 10% decline in equity markets could directly reduce fee revenue by a similar amount, given that fees are largely based on AUM. The probability of this risk is medium.
On the funding side, deposit gathering remains a significant challenge that will limit growth. Currently, the environment is intensely competitive, with customers actively moving money from low-yielding checking accounts to higher-yielding alternatives like CDs and money market funds. This is a primary constraint on Busey's ability to grow its loan book cheaply. Over the next 3-5 years, this pressure is expected to ease but not disappear. The proportion of noninterest-bearing deposits, which have fallen to 22% for Busey, is unlikely to return to previous highs. Future growth will depend on winning primary household and business operating accounts through service and technology, not just rate. Busey faces fierce competition from online-only banks like Ally that can offer higher rates due to lower overhead, and national giants like JPMorgan Chase with superior digital platforms. A key risk, with a high probability, is that Busey will be unable to keep its deposit costs low enough to maintain a healthy net interest margin, thereby capping its earnings potential.
Finally, Mergers & Acquisitions (M&A) represent a critical, albeit episodic, growth path. Historically, Busey has been a disciplined acquirer of smaller banks within its geographic footprint. This activity has paused across the industry due to interest rate uncertainty creating valuation mismatches. Looking forward 3-5 years, as the rate environment stabilizes, Busey is well-positioned to resume its role as a consolidator. This is one of the most direct ways for a bank of its size (~$12.7 billion in assets) to grow earnings per share and expand into adjacent markets. The bank would likely target smaller institutions in the <$2 billion asset range, where it can achieve significant cost synergies, often 25-35% of the target's non-interest expense. The primary risk in this strategy is execution. Overpaying for a target or failing to properly integrate its systems and culture can destroy shareholder value. Given management's track record, the probability of a major misstep is medium, but the risk is inherent in any M&A-driven strategy.
An important factor for Busey's future is the successful integration of its different business lines. The bank's ability to refer wealth management clients to its commercial and private banking teams, and vice-versa, creates a synergistic growth loop that is difficult for non-bank competitors to replicate. This internal referral network can drive higher customer retention and a greater share of each client's financial wallet. Furthermore, the bank's geographic diversification between its legacy, slower-growth markets in the Midwest and its faster-growing footprint in Florida will be key. Successfully deploying capital and talent to the Florida market could provide an incremental boost to its overall growth rate. Ultimately, Busey's conservative credit culture, while sometimes limiting upside loan growth, provides a stable foundation that reduces the risk of significant credit losses in a downturn, supporting consistent, if modest, long-term performance.
As of October 27, 2025, with a closing price of $22.68, First Busey Corporation's stock presents a mixed but generally reasonable valuation picture for investors. A triangulated valuation approach, considering multiple methodologies, suggests the stock is trading near its intrinsic value range of $23.00–$26.00. This indicates the stock is fairly valued with potential for modest upside if future earnings meet expectations, making it a reasonable consideration for investors seeking income and stability.
A deeper look at valuation multiples reveals potential undervaluation. BUSE's forward P/E ratio of 9.23x is favorable compared to the regional banking industry's average of around 11.7x, suggesting the market hasn't fully priced in an expected earnings recovery. While the trailing P/E is misleadingly high due to a recent quarterly loss, the forward multiple is more indicative of future potential. Meanwhile, the Price to Tangible Book Value (P/TBV) ratio, a critical metric for banks, stands at 1.05x. This is in line with the peer average of approximately 1.11x, indicating the market is valuing its core assets fairly given its current Return on Equity of 8.26%.
From a cash-flow perspective, BUSE offers a compelling dividend yield of 4.26%. However, its sustainability is clouded by a high trailing payout ratio of 88.72%, which is distorted by the recent earnings dip, although a more normalized ratio is a healthier 47.65%. A simple dividend discount model suggests the stock is fully priced from an income perspective alone. Overall, the valuation of BUSE appears fair, with the forward P/E multiple suggesting potential undervaluation while the dividend yield and P/TBV multiples point towards a stock trading close to its intrinsic worth, justifying the consolidated fair value estimate.
Warren Buffett's investment thesis for banks centers on finding simple, understandable businesses with a durable moat built on low-cost deposits, led by trustworthy management that avoids unnecessary risks. From this perspective, First Busey Corporation (BUSE) would be seen as a solid, but not exceptional, community bank. Buffett would appreciate its traditional banking model and consistent dividend, but would be concerned by its mediocre profitability, highlighted by a Return on Average Equity (ROAE) of around 10% and an efficiency ratio over 60%, which lag behind higher-quality peers. He generally prefers banks that can consistently earn higher returns, such as Commerce Bancshares (CBSH) with its ~14% ROAE. Furthermore, BUSE's reliance on acquisitions for growth introduces a level of unpredictability and integration risk that Buffett typically avoids, preferring steady, organic expansion. Given that its valuation, with a Price-to-Tangible-Book-Value (P/TBV) of 1.3x-1.6x, does not offer a significant margin of safety for its performance level, Buffett would likely avoid the stock and wait for either a much lower price or seek a superior competitor. If forced to choose the best banks in this sector, Buffett would likely favor Commerce Bancshares (CBSH) for its pristine credit quality and high returns, Wintrust Financial (WTFC) for its dominant market position and growth, and UMB Financial (UMBF) for its unique, fee-driven moat, as all three demonstrate the superior, consistent earning power he seeks. A significant price drop, perhaps to below its tangible book value, could make BUSE reconsidered as a value investment, but its business quality would remain a secondary concern.
Charlie Munger would likely view First Busey Corporation as a thoroughly average and uninteresting regional bank, failing to meet his high bar for quality. While he appreciates the simple, understandable business of community banking, he would be unimpressed by BUSE's mediocre profitability metrics, such as a Return on Average Equity (ROAE) around 10%, which barely exceeds its cost of capital and lags superior peers that generate 12-15%. Furthermore, its efficiency ratio consistently above 60% suggests a lack of scale or operational discipline, a sign of a business without a strong competitive edge. Munger would be particularly skeptical of its growth-by-acquisition strategy, seeing it as a common way for management to make value-destroying mistakes rather than a path to intelligent compounding. For retail investors, the takeaway is that while BUSE offers an attractive dividend, Munger would teach that it's far better to buy a wonderful business at a fair price than a fair business at a fair price; he would avoid BUSE and wait for an opportunity in a higher-quality institution. If forced to choose the best banks, Munger would favor Commerce Bancshares (CBSH) for its pristine quality and ~14% ROAE, UMB Financial (UMBF) for its unique high-margin fee businesses that drive a 12-15% ROAE, and Wintrust Financial (WTFC) for its dominant Chicago-area moat and ~14% ROAE, as these businesses demonstrate the ability to compound capital at high rates. A sustained improvement in BUSE's ROAE into the mid-teens without taking on excessive risk might change his mind, but he would not bet on it.
Bill Ackman would likely view First Busey Corporation as an uninvestable, sub-par franchise in the regional banking sector. His investment thesis centers on identifying simple, predictable, high-quality businesses with dominant market positions and strong pricing power, which BUSE lacks. The bank's mediocre profitability, demonstrated by a Return on Average Equity (ROAE) of around 10%—meaning it earns just 10 cents for every dollar of shareholder capital—falls short of the 13-15% generated by higher-quality peers like Wintrust or UMB Financial. Furthermore, BUSE's high efficiency ratio, consistently above 60%, indicates operational bloat and an inability to convert revenue into profit as effectively as competitors who operate in the mid-50% range. Management primarily uses cash to fund a dividend with a payout ratio of ~45%, a common strategy for mature banks but one Ackman might see as an admission of limited high-return reinvestment opportunities. While the stock's lower valuation and higher dividend yield might seem attractive, Ackman would interpret this as a fair price for a lower-quality asset, not a bargain. Given its small size and lack of a clear, dominant moat, he would avoid the stock, seeing no compelling catalyst for value creation. If forced to choose top-tier regional banks, Ackman would favor Wintrust Financial (WTFC) for its dominant Chicago-market position and 13-15% ROAE, UMB Financial (UMBF) for its unique national fee-based businesses and 12-15% ROAE, and Commerce Bancshares (CBSH) for its long history of conservative management and consistent ~14% ROAE. Ackman’s decision would only change if BUSE were targeted for acquisition at a significant premium, creating an event-driven opportunity.
First Busey Corporation operates as a classic community and regional bank, with its fortunes closely tied to the economic health of its primary markets in Illinois, Missouri, Florida, and Indiana. This geographic concentration is a double-edged sword; it allows for deep local market knowledge and strong customer relationships but also exposes the bank to regional economic downturns more so than its geographically diversified competitors. The bank's strategy has historically involved a blend of organic growth and strategic acquisitions to expand its footprint and service offerings. This M&A-driven approach has allowed it to scale up but can also introduce integration risks and pressure on its efficiency metrics in the short term.
Compared to the broader regional banking landscape, BUSE holds a middle-ground position. It is not large enough to benefit from the massive economies of scale seen in super-regional banks, nor is it a small, nimble community bank. This positioning can be challenging, as it competes against larger institutions with broader product suites and marketing budgets, as well as smaller banks that may have deeper roots in specific niche communities. Its performance often reflects this, with profitability and efficiency metrics that are typically average for the industry, rarely leading the pack but also avoiding the bottom tier.
The company's capital and credit quality are generally managed prudently, in line with regulatory expectations and industry norms. Management has demonstrated a commitment to returning capital to shareholders, primarily through a steady and growing dividend, which is a key part of its investment thesis. However, for investors seeking high growth or top-tier operational efficiency, BUSE may not stand out. Its performance is often solid but unspectacular, making it a potentially suitable holding for conservative, income-oriented investors who are comfortable with its regional focus and moderate growth profile.
Wintrust Financial Corporation (WTFC) is a larger, more dynamic, and faster-growing competitor compared to First Busey Corporation (BUSE). Centered in the attractive Chicago metropolitan market, Wintrust has a more diversified business model with significant wealth management and specialty finance segments that generate substantial fee income. BUSE operates a more traditional community banking model and cannot match Wintrust's growth trajectory or profitability metrics. While BUSE may appeal to conservative investors with its steady dividend, Wintrust offers a compelling combination of growth and shareholder returns, making it a stronger overall performer in the Midwest banking scene.
Winner: Wintrust Financial Corporation over BUSE for Business & Moat. Wintrust has a deeper moat built on market density and specialized services. Its brand is exceptionally strong in the Chicago area, operating under a family of community bank charters that fosters local identity while leveraging centralized scale. Switching costs are high for both, but Wintrust's niche businesses, like commercial premium financing, create highly sticky, nationwide client relationships that BUSE lacks. In scale, Wintrust is substantially larger, with assets exceeding ~$50B compared to BUSE's ~$12B. This scale provides significant cost advantages. Wintrust's network effect in the Chicago MSA is powerful, with a dense branch network (~175 locations) that BUSE cannot replicate. Regulatory barriers are high for both. Wintrust's dominant position in a major metro area and its specialized national businesses give it a decisive win.
Winner: Wintrust Financial Corporation over BUSE for Financial Statement Analysis. Wintrust's financials are demonstrably stronger. Wintrust consistently achieves higher revenue growth, driven by both its core banking and specialty finance units. Its profitability is superior, with a TTM ROAE often in the 13-15% range, significantly outpacing BUSE's ~10%. Wintrust also operates more efficiently, with an efficiency ratio typically below 55%, whereas BUSE's is often over 60%. On the balance sheet, Wintrust manages a more complex loan book but has a strong history of credit management, with credit metrics that are generally in line with or better than peers. Its liquidity is well-managed, and its capital ratios are solid. Wintrust’s ability to generate higher profits more efficiently makes it the clear financial winner.
Winner: Wintrust Financial Corporation over BUSE for Past Performance. Wintrust has a superior track record of creating shareholder value. Over the past five years, WTFC has delivered much stronger EPS CAGR, often in the double digits, far exceeding BUSE's single-digit growth. Its margin trend has been resilient, and it has successfully grown its fee-income businesses, making its revenue more durable. This has translated into a significantly higher 5-year TSR for WTFC shareholders compared to BUSE. From a risk perspective, while Wintrust's business mix includes some higher-beta segments, its historical credit performance has been excellent, and its stock has rewarded investors for the risk taken. BUSE is a lower-growth, lower-return investment by comparison. Wintrust is the decisive winner on past performance.
Winner: Wintrust Financial Corporation over BUSE for Future Growth. Wintrust is better positioned for future growth. Its TAM/demand signals are strong, given its focus on the large and economically diverse Chicago market and its nationwide specialty businesses. These specialty finance niches, such as insurance premium financing, offer growth opportunities independent of the Midwest economy, a key edge over BUSE's regionally-focused loan book. Wintrust has a proven playbook for organic growth and tuck-in acquisitions that enhance its existing franchises. Consensus estimates typically forecast higher long-term earnings growth for Wintrust than for BUSE. The primary risk is its sensitivity to commercial real estate, but its history of managing this risk is strong. Wintrust has a much clearer and more dynamic growth path.
Winner: BUSE over Wintrust Financial Corporation for Fair Value. This is the one category where BUSE presents a more compelling case, primarily for a specific type of investor. BUSE consistently offers a much higher dividend yield, often exceeding 4.0%, while Wintrust's yield is typically below 2.0%. From a valuation multiple perspective, BUSE trades at a lower P/TBV ratio (~1.4x) compared to Wintrust (~1.7x). This quality vs. price trade-off is stark: investors pay a premium for Wintrust's growth and profitability. For an investor strictly focused on current income and a lower absolute valuation, BUSE appears cheaper. Wintrust is 'growth at a reasonable price', but BUSE is 'value and yield'. On a pure value basis, BUSE is the better pick today.
Winner: Wintrust Financial Corporation over First Busey Corporation. Wintrust is the superior company and investment choice for most investors. Its key strengths are a powerful growth engine driven by its dominant Chicago presence and unique national specialty businesses, leading to a much higher ROAE of ~14% versus BUSE's ~10%. BUSE's notable weakness is its mature, slower-growth profile and lower profitability. The primary risk for Wintrust is its exposure to the competitive Chicago market, while the risk for BUSE is stagnation. Despite BUSE offering a higher dividend yield and a cheaper valuation, Wintrust's superior business model and proven ability to generate high returns on equity make it the clear winner for long-term capital appreciation.
Old National Bancorp (ONB) and First Busey Corporation (BUSE) are very similar regional banks with a strong Midwest focus, both having grown significantly through acquisitions. ONB is larger, with a presence spanning states like Indiana, Michigan, Wisconsin, and Minnesota, following its major merger with First Midwest. This greater scale gives ONB a slight edge in operational efficiency and geographic diversification. BUSE maintains a very strong community presence in its core Illinois markets. For investors, the choice between them is nuanced, as they share similar business models, dividend appeal, and valuation metrics, but ONB's larger scale and slightly better performance metrics give it a narrow advantage.
Winner: Old National Bancorp over BUSE for Business & Moat. ONB's moat is slightly wider due to its enhanced scale post-merger. Its brand is one of the oldest in Indiana (founded in 1834) and is well-established across a broader multi-state territory. Switching costs are comparable and high for both. The key differentiator is scale: ONB's assets of ~$48B dwarf BUSE's ~$12B. This size allows ONB to invest more in technology and absorb regulatory costs more efficiently. ONB's network effect is stronger across its larger footprint, although BUSE's network may be denser in its specific home markets. Regulatory barriers are identical. ONB's superior scale makes it the winner in this category.
Winner: Old National Bancorp over BUSE for Financial Statement Analysis. ONB holds a slight edge in financial performance. While both have similar revenue growth profiles tied to M&A and interest rate cycles, ONB's larger scale allows it to achieve a better efficiency ratio, often in the high 50s compared to BUSE's 60%+. Profitability metrics like ROAE are often very close, but ONB has recently trended slightly higher, with a TTM ROAE around 10.5% versus BUSE's ~10%. In terms of balance-sheet resilience, both are prudently managed. ONB’s loan-to-deposit ratio is comparable to BUSE's, and both maintain strong capital ratios (Tier 1 capital well above 10%). Their dividend payout ratios are also similar, typically in the 40-50% range. The slight advantage in efficiency gives ONB the win.
Winner: Tie for Past Performance. The past performance of ONB and BUSE is remarkably similar, reflecting their parallel strategies and market exposures. Both have seen their revenue/EPS CAGR driven heavily by acquisitions over the last five years, leading to lumpy but positive growth. Their margin trends have largely followed industry patterns influenced by interest rates. When comparing 5-year TSR, their performance has often been closely correlated, with neither establishing a sustained, significant lead over the other. In terms of risk, both carry integration risk from their M&A activities and have managed credit quality effectively through cycles, with similar non-performing loan ratios. Given the strategic similarities and correlated returns, neither bank has a clear historical advantage.
Winner: Old National Bancorp over BUSE for Future Growth. ONB's larger platform provides a better foundation for future growth. Its expanded presence across more Midwest states gives it access to a more diverse set of market demand signals than BUSE's more concentrated footprint. ONB has a significant edge in its ability to fund larger commercial loans and offer more sophisticated treasury management services due to its scale. Both companies will likely continue to pursue opportunistic M&A, but ONB is in a position to target larger partners. Analyst expectations for long-term growth are modest for both, but ONB's broader geographic base provides a slight diversification benefit and more organic growth levers. The risk for ONB is continued successful integration of its large merger, but its potential is higher.
Winner: Tie for Fair Value. BUSE and ONB typically trade at very similar valuations, making it difficult to declare a clear winner. Both banks often have a P/TBV ratio in the 1.3x-1.6x range and a P/E ratio in the 9x-12x range. Their dividend yields are also highly competitive and often nearly identical, frequently landing in the 4.0%-4.5% bracket. The quality vs. price analysis shows two companies of comparable quality trading at comparable prices. An investor's choice might come down to minor fluctuations in daily market prices or a preference for one company's specific geographic exposure. Neither presents a compelling valuation advantage over the other.
Winner: Old National Bancorp over First Busey Corporation. The verdict is a narrow victory for ONB, primarily due to its superior scale. ONB's key strength is its ~$48B asset base, which provides greater operational leverage and geographic diversification compared to BUSE's ~$12B. This translates into a slightly better efficiency ratio (high 50s for ONB vs. over 60% for BUSE). BUSE's notable weakness is its smaller size, which limits its growth potential relative to the larger ONB. The primary risk for both is successfully managing M&A integration and navigating the Midwest's economic cycles. While very similar, ONB's larger platform gives it a modest but decisive edge for long-term investors.
UMB Financial Corporation (UMBF) represents a distinctly different and more diversified business model compared to First Busey Corporation (BUSE). While both operate in the Midwest, UMBF derives a significant portion of its revenue (often over 30%) from non-interest fee income, particularly from its national institutional banking services like fund services and corporate trust. This diversification makes UMBF less reliant on net interest margin and the traditional lending cycle than BUSE. UMBF is larger, more profitable, and has a stronger growth profile, making it a superior operator, though BUSE may offer a higher dividend yield for income-focused investors.
Winner: UMB Financial Corporation over BUSE for Business & Moat. UMBF has a much stronger and more unique moat. Its brand is powerful not only in retail banking in markets like Kansas City but also nationally in institutional services. The key difference lies in its non-bank businesses. Switching costs are extremely high for its institutional clients (e.g., mutual funds using its custody services), a significant edge over BUSE's retail and small business focus. UMBF's scale is larger, with assets around ~$45B, and more importantly, its ~$400B in assets under administration provides a massive platform. This creates network effects among its institutional clients. BUSE's moat is purely a traditional, geographically-bound banking moat, which is less durable than UMBF's specialized, nationwide moat.
Winner: UMB Financial Corporation over BUSE for Financial Statement Analysis. UMBF's financial profile is superior due to its diversified revenue streams. Its revenue growth is typically more stable and often faster than BUSE's because its fee income businesses are less sensitive to interest rate fluctuations. This leads to higher profitability; UMBF's ROAE is consistently in the 12-15% range, well above BUSE's ~10%. While UMBF's efficiency ratio can be higher than some traditional banks due to the costs of its service businesses, its overall profitability is much stronger. UMBF's balance sheet is conservatively managed with excellent credit quality and strong capital ratios (Tier 1 often ~11% or higher). Its lower reliance on spread income makes its earnings quality higher than BUSE's.
Winner: UMB Financial Corporation over BUSE for Past Performance. UMBF has a track record of superior, high-quality growth. Over the last five years, UMBF has generated stronger EPS CAGR driven by the scaling of its fee businesses. This has resulted in a much better 5-year TSR for UMBF shareholders. The margin trend for UMBF is less volatile as its fee income provides a buffer against swings in Net Interest Margin. From a risk standpoint, UMBF's diversified model has proven to be more resilient through different economic cycles. While BUSE's performance has been adequate, it has not matched the consistency or magnitude of UMBF's shareholder value creation. UMBF is the clear winner on historical performance.
Winner: UMB Financial Corporation over BUSE for Future Growth. UMBF has far more compelling growth prospects. Its primary drivers are the continued expansion of its national institutional banking and wealth management services. These markets have a much larger TAM than the regional commercial lending market BUSE primarily serves. This gives UMBF a significant edge. UMBF is also a leader in certain fintech-oriented services, like healthcare savings accounts (HSAs), which provides another modern growth avenue. BUSE's growth is largely limited to the economic health of its Midwest footprint and its ability to find accretive M&A deals. UMBF's growth is more organic, scalable, and diversified.
Winner: BUSE over UMB Financial Corporation for Fair Value. The primary reason an investor might choose BUSE over UMBF is for its superior dividend yield and lower valuation multiples. BUSE's dividend yield is often 4.0% or higher, which is significantly more attractive for income investors than UMBF's typical yield of ~2.0%. BUSE also trades at a lower valuation, with a P/TBV of around 1.4x compared to UMBF's ~1.8x. The quality vs. price comparison is clear: UMBF is the higher-quality company, and the market prices it accordingly. For an investor prioritizing current income and a cheaper entry point, BUSE is the better value proposition, even if it means sacrificing growth and quality.
Winner: UMB Financial Corporation over First Busey Corporation. UMBF is unequivocally the superior company due to its diversified business model and higher profitability. Its key strength is the significant contribution from non-interest fee businesses, which provides stable, high-quality earnings and a path for growth beyond traditional banking, driving its ROAE to ~13% versus BUSE's ~10%. BUSE's notable weakness in this matchup is its complete reliance on traditional banking in a limited geography. The primary risk for a UMBF investor is that its valuation already reflects its quality, limiting upside, while the risk for a BUSE investor is being confined to a lower-growth, less-profitable business model. UMBF's stronger moat and superior financial engine make it the better long-term investment.
Hancock Whitney Corporation (HWC) operates in the Gulf South region (states like Mississippi, Louisiana, Alabama, Florida, and Texas), offering a clear geographical diversification contrast to First Busey Corporation's (BUSE) Midwest focus. The two banks are similar in asset size and operate a traditional commercial banking model. However, HWC's exposure to the faster-growing, energy-influenced Gulf Coast economy provides different opportunities and risks compared to BUSE's more stable but slower-growing Midwest markets. HWC has recently shown stronger profitability and efficiency, giving it a slight edge over BUSE.
Winner: Hancock Whitney Corporation over BUSE for Business & Moat. HWC's moat is arguably stronger due to its dominant market share in its home territories. The brand 'Hancock Whitney' is over 100 years old and is a top-3 bank by deposit share in both Louisiana and Mississippi, giving it a powerful local incumbency. Switching costs are high for both. In terms of scale, both are similar, with HWC at ~$35B in assets and BUSE at ~$12B, giving HWC an advantage. HWC's network effect is very strong within the Gulf South, creating a dense service area that is hard to replicate. While BUSE has a solid community presence, HWC's regional dominance is more pronounced, giving it the win.
Winner: Hancock Whitney Corporation over BUSE for Financial Statement Analysis. HWC currently holds an advantage in core financial metrics. HWC has demonstrated stronger revenue growth recently, benefiting from the economic activity in its Sun Belt markets. More importantly, it has superior profitability, with a TTM ROAE of ~12-13%, which is a clear step up from BUSE's ~10%. HWC is also more efficient, with an efficiency ratio that has trended down into the mid-50s, outperforming BUSE's consistent 60%+ level. Both banks maintain solid balance sheets with strong capital ratios. However, HWC's ability to generate higher returns more efficiently makes it the winner in this category.
Winner: Hancock Whitney Corporation over BUSE for Past Performance. HWC has shown better performance in recent years. While both banks have been acquisitive, HWC's execution on profitability improvement post-acquisitions has been more impressive. Over the last three years, HWC's EPS growth has been more robust than BUSE's. Its margin trend has also been favorable, with management successfully controlling costs to improve its efficiency ratio. This has translated into stronger TSR for HWC over the past 1- and 3-year periods. From a risk perspective, HWC carries exposure to the volatile energy sector and hurricane-related disruptions, but it has a long history of managing these risks effectively. Its recent operational outperformance gives it the edge over BUSE.
Winner: Hancock Whitney Corporation over BUSE for Future Growth. HWC is better positioned for future organic growth. Its TAM/demand signals are more favorable, as its Gulf South markets are generally projected to have higher population and economic growth than BUSE's Midwest markets. This provides a natural tailwind for loan demand and is a significant edge. While BUSE can grow through M&A, HWC has a stronger base for organic expansion. HWC management has outlined clear strategic plans for cost programs and improving returns, which appear more dynamic than BUSE's steady-state approach. The primary risk for HWC is a downturn in the energy sector or a major weather event, but its underlying economic environment is more promising.
Winner: Tie for Fair Value. Both HWC and BUSE often trade at attractive and very similar valuations. They typically sport P/TBV ratios in the 1.3x-1.6x range and forward P/E ratios below 10x. Their dividend yields are also highly competitive with each other, frequently in the 4.0%+ range. The quality vs. price dynamic shows two similarly priced banks, but HWC currently offers slightly better profitability and growth prospects for that price. However, the valuation gap is usually negligible. An investor could choose either based on their preference for geographic exposure (Midwest vs. Gulf South) without sacrificing much on the valuation front. Neither holds a decisive valuation advantage.
Winner: Hancock Whitney Corporation over First Busey Corporation. HWC emerges as the stronger choice due to its superior profitability and more favorable geographic footprint. HWC's key strengths are its higher ROAE of ~12% versus BUSE's ~10%, a more efficient operation, and its exposure to the higher-growth Gulf South economy. BUSE's notable weakness is its concentration in slower-growing Midwest markets and its lagging efficiency. The primary risk for an HWC investor is the volatility associated with the energy industry and coastal weather events, while the risk for a BUSE investor is economic stagnation in its core markets. HWC’s better financial performance and more promising growth outlook make it the more compelling investment.
Associated Banc-Corp (ASB) is a direct competitor to First Busey Corporation (BUSE), with both banks having a significant presence in the Midwest, particularly in Illinois and Wisconsin. ASB is considerably larger than BUSE, which provides it with advantages in scale, product diversity, and brand recognition across a wider territory. While both companies are traditional commercial banks focused on relationship-based lending, ASB's larger commercial and industrial (C&I) lending platform and recent efforts to improve efficiency give it a competitive edge. BUSE competes with a strong local community focus, but generally lags ASB in key performance metrics.
Winner: Associated Banc-Corp over BUSE for Business & Moat. ASB's moat is wider due to its greater scale and market penetration. Its brand is one of the largest in Wisconsin and has a significant presence in Illinois and Minnesota. Switching costs are high for both. The defining factor is scale: ASB's assets of ~$41B are more than triple BUSE's ~$12B. This allows ASB to service larger corporate clients and spread its fixed costs over a much larger revenue base. ASB's network effect is stronger across its three-state core footprint, giving it better coverage than BUSE's more scattered presence. Regulatory barriers are the same for both. ASB's superior scale and brand recognition in key markets make it the clear winner.
Winner: Associated Banc-Corp over BUSE for Financial Statement Analysis. ASB demonstrates a stronger financial profile. While both banks' revenue growth is sensitive to interest rates, ASB has a larger and more diversified loan portfolio. ASB has recently shown better profitability, with its TTM ROAE trending towards 11-12%, ahead of BUSE's ~10%. Crucially, ASB has been more successful in managing costs, with an efficiency ratio improving into the high 50s, compared to BUSE's, which remains stubbornly above 60%. On the balance sheet, both are well-capitalized, but ASB's larger deposit base provides more stable and cheaper funding. The better profitability and efficiency give ASB the win.
Winner: Tie for Past Performance. Over a longer five-year horizon, the performance of ASB and BUSE has been quite similar, with neither delivering standout returns. Both have experienced fluctuating EPS growth tied to the economic cycle and M&A activities. Their 5-year TSR figures are often comparable, reflecting the similar challenges and opportunities in the slow-growth Midwest banking market. From a risk perspective, both have managed their credit portfolios effectively, with no major blow-ups. ASB's stock has sometimes shown slightly more volatility due to its larger exposure to commercial real estate. Given that neither has been able to durably outperform the other over the long term, this category is a tie.
Winner: Associated Banc-Corp over BUSE for Future Growth. ASB has a slight edge in future growth potential. Its TAM/demand signals benefit from its presence in more diverse metropolitan markets like Milwaukee, Madison, and Minneapolis, in addition to Chicago. ASB's management has been vocal about its strategic initiatives to improve efficiency and optimize its balance sheet, which seem more proactive than BUSE's strategy. This focus on cost programs and organic growth in specialized commercial lending gives it an edge. BUSE's growth path seems more reliant on finding suitable M&A partners in a consolidating industry. ASB's larger platform and clearer strategic initiatives give it a more promising outlook.
Winner: Tie for Fair Value. ASB and BUSE are often valued very similarly by the market, reflecting their comparable business models and geographic focus. Both typically trade with a P/TBV ratio in the 1.2x-1.5x range and offer very attractive dividend yields, often in the 4.5%-5.5% range, making them both appealing to income investors. The quality vs. price comparison does not reveal a clear winner; ASB offers slightly better profitability for a very similar price. However, the valuation differences are usually too small to be statistically significant. For a value-oriented income investor, both stocks present a similar proposition.
Winner: Associated Banc-Corp over First Busey Corporation. ASB earns a victory over BUSE, primarily on the back of its superior scale and better operational efficiency. Its key strengths are its ~$41B asset base, which allows it to serve larger clients and generate economies of scale, and its superior efficiency ratio, which is trending below 60% while BUSE's remains above it. BUSE's notable weakness is its smaller scale and persistent struggle with cost control relative to larger peers. The primary risk for both is the slow economic growth in the Midwest, but ASB's larger, more diversified footprint provides a better cushion. Despite similar valuations and dividend appeal, ASB's stronger operational profile makes it the slightly better choice.
Based on industry classification and performance score:
First Busey Corporation operates a traditional community banking model focused on lending and deposit-gathering in the Midwest and Florida, complemented by a strong wealth management business. The company's primary strength lies in its diversified fee income from wealth services, which provides a stable revenue stream less dependent on interest rates. However, its core banking operations face intense competition, with average branch efficiency and a solid but not exceptional low-cost deposit base. Overall, the investor takeaway is mixed; Busey is a solid, well-run community bank with a valuable fee-generating arm, but it lacks a distinct competitive moat in its primary lending and deposit businesses.
With over a quarter of its revenue coming from noninterest sources, driven by a robust wealth management business, First Busey shows strong revenue diversification that sets it apart from many peers.
A key strength for First Busey is its ability to generate significant fee-based income, which reduces its dependence on interest rate-sensitive lending. In the most recent quarter, noninterest income was $31.1 million out of $122.9 million in total revenue, or about 25.3%. This is ABOVE the typical community bank average, which often hovers around 15-20%. The primary driver is its wealth management fees, which contributed $16.0 million, representing over half of the fee income. This is a high-quality, recurring revenue stream that provides a valuable buffer against the compression of net interest margins, making the bank's earnings profile more stable and resilient through economic cycles.
First Busey benefits from a well-diversified deposit base spread across retail, small business, and municipal customers, which enhances funding stability and reduces concentration risk.
The bank's business model is fundamentally built on serving a broad cross-section of its local communities. This includes individual retail customers, small-to-medium-sized businesses, and public entities like school districts and municipalities. While specific percentages are not always disclosed, this operational focus ensures that the bank is not overly reliant on a few large depositors or a single industry for its funding. A diversified deposit base is less volatile and less susceptible to sudden outflows during times of market stress. This inherent diversification is a key structural strength and a core tenet of a sound community banking franchise, reducing overall business risk.
First Busey operates as a generalist commercial and consumer lender within its communities, lacking a distinct, specialized lending niche that would confer significant pricing power or a competitive edge.
An analysis of the bank's loan portfolio reveals a focus on standard lending categories for a community bank. As of early 2024, the portfolio is heavily weighted toward commercial real estate (both owner-occupied and non-owner-occupied) at around 50%, with commercial and industrial loans making up another 18%. While the bank is a competent and important lender to local businesses, it does not demonstrate a specialized focus in a high-margin niche like national SBA lending, agriculture, or another specialized industry. This generalist approach means it competes broadly on service and price against numerous other banks in its markets, rather than from a position of unique expertise. The absence of a defensible, high-return niche means this aspect of its business model does not contribute strongly to its moat.
The bank possesses a solid funding base but faces pressure, with its proportion of noninterest-bearing 'free' deposits falling below peer averages and its overall cost of funds on the rise.
A bank's strength often comes from a low-cost, stable deposit base. As of the first quarter of 2024, First Busey's noninterest-bearing deposits made up 22% of its total deposits. This is slightly BELOW the sub-industry average, which has historically been closer to 25-30%, indicating a somewhat weaker position in attracting 'free' funding. Furthermore, its cost of total deposits has risen to 2.45%, reflecting the intense competition for customer funds in a higher interest rate environment. While its level of uninsured deposits is manageable at around 28%, the overall metrics show a funding base that is solid but not elite. This erosion in its low-cost funding advantage prevents it from earning a passing grade.
BUSE maintains a sizable branch network essential for its community banking model, but its efficiency in gathering deposits per branch is average, not indicating a strong competitive advantage.
First Busey operates approximately 100 banking centers across its primary markets of Illinois, Missouri, Florida, and Indiana. With total deposits around $10.3 billion, its deposits per branch are approximately $103 million. This level of productivity is IN LINE with the typical range for regional and community banks, which often falls between $80 million and $150 million. While the physical network is crucial for its relationship-based strategy and attracting local deposit customers, these figures do not suggest superior operating leverage compared to peers. The bank has engaged in some branch consolidation to improve efficiency, but its current scale advantage appears modest. The network provides a necessary presence but does not translate into a standout economic moat.
First Busey Corporation's recent financial statements show a dramatic recovery in the latest quarter after a significant loss, driven by a large one-time provision for loan losses. The bank's balance sheet has expanded significantly, likely through an acquisition, leading to strong growth in revenue and net interest income. Key metrics like the Q2 2025 net income of $47.4 million and an efficiency ratio of 54.4% highlight operational strength. However, the prior quarter's loss and reliance on its loan portfolio create some uncertainty. The overall investor takeaway is mixed, reflecting a strong operational rebound balanced against recent credit quality concerns.
The bank maintains a strong capital base and a healthy liquidity profile, providing a solid cushion to absorb potential shocks and fund its operations.
First Busey demonstrates robust capital and liquidity. The tangible common equity to total assets ratio was 10.17% as of Q2 2025, a strong level that is well above what is typically considered well-capitalized for a regional bank (usually benchmarked around 8%). This provides a substantial buffer to absorb unexpected losses. Further, the bank's leverage is low, with a debt-to-equity ratio of just 0.21, indicating minimal reliance on borrowed funds relative to its equity base.
The bank's liquidity position is also sound. The loans-to-deposits ratio stood at 86.2% ($13.6 billion in loans vs. $15.8 billion in deposits) in the most recent quarter. A ratio below 100% is desirable as it shows the bank is not over-extended and can fund its loan growth primarily through its stable customer deposit base. This strong capital and liquidity foundation is a key strength, providing financial stability and flexibility.
A massive one-time provision for loan losses in the first quarter raises significant concerns about the underlying credit quality of the bank's loan portfolio.
The most significant red flag in First Busey's recent financials is the spike in its provision for credit losses to $45.6 million in Q1 2025. This figure is exceptionally high compared to the $5.7 million set aside in Q2 2025 and the $8.6 million for the entire fiscal year of 2024. Such a large provision suggests either a significant deterioration in the existing loan portfolio or an aggressive move to build reserves for newly acquired loans. While proactive reserving can be prudent, the sheer size of the charge implies that management identified considerable risk that needed to be addressed immediately.
As of Q2 2025, the bank's allowance for credit losses stands at $183.3 million, which is 1.33% of its gross loans ($13.8 billion). This reserve level is generally in line with industry standards. However, without data on nonperforming loans or net charge-offs, it is difficult to assess if this coverage is adequate. The necessity of the huge Q1 provision overshadows the current reserve level, signaling that recent credit quality has been a major issue. This uncertainty and the magnitude of the recent provisioning warrant a cautious stance.
The bank's balance sheet shows some sensitivity to interest rate changes, with unrealized losses on its investment portfolio negatively impacting its tangible book value.
While specific metrics like the duration of the securities portfolio are not provided, we can assess interest rate sensitivity by looking at the 'comprehensiveIncomeAndOther' line item on the balance sheet. As of Q2 2025, this account shows a negative balance of -$155.3 million, which typically reflects unrealized losses on investment securities caused by rising interest rates. This figure represents about 8.1% of the bank's tangible common equity ($1.92 billion), indicating a moderate but notable impact on its capital base. A significant portion of the bank's assets are in investment securities ($3.2 billion), and further increases in interest rates could expand these unrealized losses.
This exposure creates a tangible risk for investors. If the bank were forced to sell these securities at a loss, it would directly reduce its reported earnings and equity. Although these are currently paper losses, they reduce the bank's flexibility and have already eroded a portion of its tangible book value. Given this measurable negative impact on equity, the bank's management of its assets and liabilities in the current rate environment appears to be a point of weakness.
The bank has achieved very strong growth in its net interest income, showing it is effectively managing its larger asset base to generate core earnings.
First Busey's core earning power appears robust, driven by strong growth in Net Interest Income (NII), which is the difference between the interest it earns on loans and the interest it pays on deposits. In the most recent quarter (Q2 2025), NII was $153.2 million, a remarkable 85.6% increase year-over-year. This substantial growth is a direct result of the bank's expanded balance sheet and suggests that the assets from its recent acquisition are generating healthy returns.
Sequentially, NII also grew an impressive 47.7% from $103.7 million in Q1 2025 to $153.2 million in Q2 2025. This indicates a positive trend in its core profitability. While the specific Net Interest Margin (NIM) percentage is not provided, this strong dollar growth in NII is a powerful indicator that the bank is successfully managing its loan pricing and funding costs in the current interest rate environment. This performance in its primary business line is a significant positive for investors.
The bank operates with excellent efficiency, demonstrating strong cost control that allows it to convert a high proportion of its revenue into profit.
First Busey has demonstrated impressive expense discipline. In Q2 2025, its efficiency ratio was approximately 54.4%, calculated by dividing total noninterest expense ($102.45 million) by the sum of net interest income and noninterest income ($188.19 million). This is a strong result, as an efficiency ratio below 60% is typically considered very good for a regional bank, with many peers operating in the 60-65% range. A lower ratio indicates that the bank is spending less to generate each dollar of revenue.
While noninterest expenses have grown, this is expected given the significant expansion of the bank's balance sheet. The key is that revenue has grown faster, leading to improved operating leverage. Salaries and employee benefits ($61.6 million) constitute the largest portion of noninterest expenses at around 60%, which is typical for a service-oriented business. The bank's ability to maintain a lean cost structure while growing its operations is a clear strength that supports its profitability.
First Busey Corporation's past performance presents a mixed picture for investors. The bank has been a reliable dividend payer, consistently increasing its payout, which currently yields an attractive 4.26%. However, its core performance has been inconsistent over the last five years, with earnings per share (EPS) declining in both 2023 and 2024. Profitability, measured by Return on Equity, has hovered around a modest 8-10%, lagging stronger competitors. While the bank has grown its assets, a recent decline in deposits is a concern. The investor takeaway is mixed: BUSE may appeal to income-focused investors, but those seeking consistent growth and operational excellence will find its track record uninspiring compared to higher-quality regional banks.
While the bank has successfully grown its loan portfolio over the last five years, a concerning trend of shrinking total deposits since 2021 weakens its funding base.
First Busey's balance sheet has expanded, with total assets growing from $10.5 billion in FY2020 to $12.0 billion in FY2024. This was driven primarily by loan growth, as the gross loan portfolio increased from $6.8 billion to $7.7 billion in the same period. This indicates success in deploying capital and expanding its lending relationships.
A significant weakness has emerged in its funding, however. Total deposits peaked at $10.8 billion in FY2021 but have since fallen to $9.98 billion in FY2024, marking a 7.3% decline over three years. This trend is worrying because deposits are a bank's primary source of low-cost funding. As a result, the bank's loan-to-deposit ratio has climbed from 66% in FY2021 to 76% in FY2024, suggesting an increasing reliance on its loan book relative to its deposit franchise. This decline in core funding is a historical red flag, especially in a competitive environment.
The bank's past performance is held back by a persistently high and worsening efficiency ratio, indicating poor cost control relative to its revenue generation.
First Busey's operational efficiency has been a long-standing weakness. The efficiency ratio, which measures non-interest expenses as a percentage of revenue, has consistently been above 60% and has worsened over the past three years, rising from 62.1% in FY2022 to 64.5% in FY2024. A lower number is better, and top-performing peers often operate with ratios in the 50s. This high ratio suggests that BUSE struggles with cost discipline or lacks the scale to operate more efficiently.
Furthermore, the bank's Net Interest Income (NII), the profit made from lending, has been stagnant despite a period of rising interest rates, which should have provided a tailwind. NII was $323.6 million in FY2022 and ended at a slightly lower $322.6 million in FY2024. This indicates challenges in pricing loans and managing deposit costs effectively. The combination of poor cost control and lackluster NII growth points to fundamental issues in managing core profitability.
The bank's earnings per share (EPS) have been volatile and have declined for the past two consecutive years, demonstrating a poor track record of consistent growth.
A review of First Busey's earnings history reveals a distinct lack of momentum. EPS grew from $1.84 in FY2020 to a peak of $2.32 in FY2022, but this progress was completely reversed in the subsequent years. EPS fell to $2.21 in FY2023 (a -4.8% decline) and further to $2.01 in FY2024 (a -9.17% decline). This resulted in a five-year compound annual growth rate of just 2.2%, which is very low and signals an inability to generate sustainable earnings growth.
This weak performance is also reflected in its profitability. The average Return on Equity (ROE) over the last three fiscal years was approximately 9.7%. While not poor, this level of profitability is underwhelming and lags what investors can find at more efficient and faster-growing regional banks. The inconsistent and recently negative EPS growth trend is a significant weakness in the company's historical performance.
The bank's credit history appears manageable, but its credit quality metrics are weaker than top-tier peers, and a recent uptick in provisions for loan losses warrants caution.
First Busey has navigated the last five years without a major credit crisis. The provision for credit losses has fluctuated, from a high of $38.8 million during the pandemic uncertainty of 2020 to a net benefit (a release of reserves) of -$15.1 million in 2021. More recently, provisions have been climbing again, reaching $8.59 million in FY2024, up from $2.4 million in FY2023, suggesting management sees rising risk in the loan portfolio. The bank's allowance for loan losses stands at 1.08% of gross loans, a reasonable coverage level.
However, BUSE's credit performance is not best-in-class. As noted in competitive comparisons, its ratio of non-performing loans (problem loans) is often higher than that of high-quality peers like Commerce Bancshares. A history of merely adequate, rather than excellent, credit underwriting means the bank may be more vulnerable in an economic downturn. Given that its credit metrics trail stronger competitors, its historical performance in this area is not a compelling strength.
The company has a solid record of consistently paying and modestly growing its dividend, but share buybacks have not been sufficient to prevent shareholder dilution over the past five years.
First Busey has demonstrated a strong commitment to its dividend, making it attractive to income-oriented investors. The dividend per share grew from $0.88 in FY2020 to $0.96 in FY2024, providing a steady and increasing income stream. The payout ratio has remained manageable, typically ranging from 40% to 48% of earnings, which indicates the dividend is well-covered and sustainable. Total cash paid for dividends has been around $50 million to $54 million annually.
However, the company's capital return policy is less impressive when considering share count. While BUSE has conducted some share repurchases, they have been minimal. For example, it repurchased just $1.76 million in shares in FY2024. These buybacks have not been enough to offset shares issued for acquisitions and employee compensation. As a result, diluted shares outstanding have increased from 55 million in FY2020 to 58 million in FY2024, a 5.5% increase that dilutes the ownership stake of long-term shareholders.
First Busey's future growth outlook is mixed, leaning towards modest. The company's primary growth engine is its strong wealth management division, which provides a stable and growing source of fee income, a key advantage over many community bank peers. However, this strength is counterbalanced by significant headwinds in its core banking operations, where intense competition for loans and deposits in slow-growing Midwestern markets will likely constrain loan growth and pressure its net interest margin. Compared to banks in more dynamic geographic regions, Busey's overall growth will likely be slower. The investor takeaway is that Busey is positioned for steady, low-single-digit growth, making it more suitable for conservative, income-oriented investors rather than those seeking high growth.
The company anticipates modest low-single-digit loan growth, reflecting a cautious stance amid a challenging interest rate environment and the slow-growth nature of its primary markets.
Management's public guidance points towards a subdued outlook for organic loan growth. The forecast for low-single-digit growth is a direct reflection of the current economic landscape, where higher interest rates have tempered borrowing demand from both businesses and consumers. While the bank serves its communities well, its geographic concentration in the Midwest places it in markets that are not experiencing high levels of economic or population growth. This conservative outlook, while prudent from a risk management perspective, signals that the core lending business is unlikely to be a significant driver of growth in the near to medium term.
The company maintains a strong capital base and has a history of disciplined M&A and opportunistic buybacks, positioning it well to pursue strategic acquisitions once market conditions stabilize.
First Busey operates with a robust capital position, with its Common Equity Tier 1 (CET1) ratio comfortably above regulatory requirements. This financial strength provides significant flexibility for future growth initiatives. Management has a clear strategy of using acquisitions to expand its footprint and has historically been a prudent acquirer. While no deals have been announced recently amid industry-wide uncertainty, the bank's strong capital levels ensure it has the capacity to act when the right opportunity arises. This readiness to deploy capital through M&A, a key growth lever for regional banks, combined with an ongoing share buyback program, represents a clear path to enhancing shareholder value over the next several years.
BUSE is appropriately managing its branch network and investing in digital services, but its branch efficiency metrics are average, suggesting its strategy is more about keeping pace than creating a distinct growth advantage.
First Busey is actively participating in the industry-wide trend of branch consolidation to streamline operations and reduce costs. Its current deposit base of ~$10.3 billion spread across roughly 100 branches yields about $103 million in deposits per branch, a figure that is solid but squarely in line with peer averages. While the company emphasizes its digital offerings, it has not publicly disclosed specific targets for digital user growth or announced a dollar amount for expected cost savings from its optimization efforts. Without clear, forward-looking metrics, it is difficult to assess the magnitude of this strategy's future impact on profitability. The current approach appears to be a necessary defensive measure rather than a proactive driver of significant future growth.
Rising deposit costs are putting significant pressure on the bank's net interest margin, creating a major headwind for near-term earnings growth until interest rates stabilize or decline.
First Busey, like the broader banking industry, is facing a substantial challenge from rising funding costs. The bank's cost of deposits has climbed to 2.45%, and its base of noninterest-bearing deposits has shrunk to 22% of the total. This trend, known as deposit beta, means the bank has to pay more to retain customer funds. While some of its loans will reprice at higher yields, the pace is not enough to fully offset the rapid increase in deposit expenses. This dynamic is causing net interest margin (NIM) compression, which directly constrains the bank's primary source of earnings and will likely limit profit growth until the interest rate cycle turns.
The bank's significant and growing wealth management business provides a powerful and differentiated engine for future growth, reducing its reliance on interest rate-sensitive lending.
A key pillar of First Busey's growth story is its well-established wealth management division. This segment generates a substantial portion of the bank's noninterest income, which at over 25% of total revenue is well above the average for most community bank peers. This high-margin, recurring revenue stream provides a valuable buffer against the volatility of net interest income. With over $12 billion in assets under management, the business has the scale to compete effectively and is poised to benefit from demographic trends. This strong fee income base is a clear strategic advantage and a reliable driver of future earnings growth.
Based on its valuation as of October 27, 2025, First Busey Corporation (BUSE) appears to be fairly valued to modestly undervalued. With a stock price of $22.68, the company trades at a forward P/E ratio of 9.23x, which is attractive compared to the regional bank average that typically ranges from 11x to 13x. Key metrics supporting this view include a Price to Tangible Book Value (P/TBV) of 1.05x and a solid dividend yield of 4.26%. The stock is currently trading in the lower half of its 52-week range, suggesting it has not participated in a broader market rally. The primary investor takeaway is neutral to slightly positive, as the attractive forward earnings multiple and dividend are balanced by recent earnings volatility and a lack of share buybacks.
The stock trades at a Price to Tangible Book Value of 1.05x, which is a fair price for a bank with its level of profitability (Return on Equity of 8.26%).
Price to Tangible Book Value (P/TBV) is a primary valuation tool for banks. BUSE's P/TBV stands at 1.05x, calculated from its price of $22.68 and its tangible book value per share of $21.60. This is very close to the industry average for regional banks, which is approximately 1.11x. A P/TBV multiple slightly above 1.0x is generally considered fair for a bank generating a Return on Equity (ROE) of 8.26%. It indicates that investors are paying a small premium over the bank's liquidation value, which is justified by its ongoing profitability. This factor passes because the valuation is reasonable and aligned with industry norms, rather than being excessively high or low.
The Price to Book ratio of 0.87x appears low relative to the company's 8.26% Return on Equity, especially when compared to the current 10-Year Treasury yield of around 4.0%.
A bank's ability to generate profit from its equity (ROE) should be a key driver of its Price to Book (P/B) multiple. BUSE currently has an ROE of 8.26% and a P/B ratio of 0.87x. For context, the risk-free rate, represented by the 10-Year Treasury yield, is approximately 4.03%. BUSE's ROE provides a healthy premium of over 4 percentage points above the risk-free rate, which should justify a P/B ratio closer to or above 1.0x. The fact that it trades below its book value (0.87x) while generating a solid return suggests a misalignment and potential undervaluation. This indicates the market may be overly pessimistic about the bank's future profitability.
The forward P/E ratio is attractively low at 9.23x, suggesting the stock is undervalued relative to its strong expected earnings recovery.
The trailing P/E ratio of 20.83x is inflated due to a recent quarterly loss and does not reflect the company's future earnings potential. The forward P/E ratio of 9.23x is a much better indicator for valuation. This multiple is comfortably below the average for the regional banking sector, which is currently around 11.7x. Such a low forward P/E implies that the market has not fully priced in the anticipated rebound in earnings per share (EPS). This discrepancy between the current price and future earnings expectations offers a potentially attractive entry point for investors who believe the earnings recovery will materialize.
The stock offers a strong dividend yield, but this is undermined by a high recent payout ratio and shareholder dilution from stock issuance instead of buybacks.
First Busey Corporation provides a robust forward dividend yield of 4.26%, which is a positive for income-focused investors. However, the sustainability is questionable when viewed against recent earnings. The payout ratio based on trailing-twelve-month earnings is a very high 88.72%. While this is distorted by a poor first quarter in 2025, it signals that the dividend could be at risk if earnings do not recover as expected. More concerning is the lack of capital return through buybacks. The company's shares outstanding have increased significantly, reflected in a negative buybackYieldDilution of -21.82%. This means shareholders' stakes are being diluted, not concentrated, which is a significant negative for total return.
On a relative basis, the stock appears attractive with a low forward P/E and a strong dividend yield compared to peers, despite its recent price underperformance.
When compared to its peers in the regional banking sector, BUSE presents a compelling valuation snapshot. Its forward P/E ratio of 9.23x is lower than the industry average of ~11.7x. Its dividend yield of 4.26% is higher than the average for regional banks, which often falls in the 3-4% range. The Price to Tangible Book value of 1.05x is roughly in line with the peer average of 1.11x. Furthermore, its beta of 0.78 suggests it is less volatile than the overall market. The stock price is in the lower half of its 52-week range, indicating it has underperformed, which could present a value opportunity.
The primary risk for First Busey is macroeconomic, particularly from interest rate fluctuations. The bank's profitability, measured by its net interest margin (the difference between what it earns on loans and pays for deposits), has been helped by higher rates. However, if the Federal Reserve cuts rates in 2025 or beyond, Busey's margins will likely shrink as loan yields fall faster than its funding costs. As a regional bank, its fortunes are also directly linked to the economy. A recession would increase loan defaults and reduce borrowing demand, with its significant concentration in commercial real estate loans being a key vulnerability, as this sector is sensitive to economic downturns.
The banking industry is intensely competitive, placing constant pressure on First Busey. It competes with giant national banks that have larger technology and marketing budgets, as well as other local banks fighting for the same customers. A more significant long-term threat comes from financial technology (fintech) firms, which are attracting customers with user-friendly digital tools and lower fees. This forces Busey to make continuous, costly investments in technology to stay relevant. Furthermore, regulators are watching regional banks more closely, which could lead to stricter rules requiring them to hold more capital, potentially limiting lending and reducing overall profitability.
Looking at the company itself, a key vulnerability is its loan portfolio's concentration in commercial real estate (CRE). This includes office, retail, and multi-family properties, sectors that face challenges from remote work trends and higher borrowing costs, increasing the risk of future defaults. While the bank has a history of successful growth through acquisitions, this strategy is not without risk. Integrating another bank can be complex and expensive, and there's always a chance of inheriting a loan portfolio with hidden problems. Finally, the battle for customer deposits remains a challenge, as higher interest rates elsewhere could force Busey to increase what it pays to depositors, further pressuring its margins.
Click a section to jump