First Busey (BUSE)

Regional banking company First Busey (NASDAQ:BUSE) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 71.2% year on year to $200.2 million. Its non-GAAP profit of $0.68 per share was 9.2% above analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1868 during America's post-Civil War reconstruction era, First Busey (NASDAQ:BUSE) is a bank holding company that provides commercial and retail banking, wealth management, and payment technology solutions across Illinois, Missouri, Florida, and Indiana.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

First Busey competes with other regional banks operating in the Midwest and Florida, including First Midwest Bancorp (NASDAQ:FMBI), Old National Bancorp (NASDAQ:ONB), and Fifth Third Bancorp (NASDAQ:FITB), as well as national banks like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) that have significant presence in its markets.

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Luckily, First Busey’s revenue grew at a solid 12.8% compounded annual growth rate over the last five years. Its growth beat the average banking company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. First Busey’s annualized revenue growth of 28.2% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, First Busey reported magnificent year-on-year revenue growth of 71.2%, and its $200.2 million of revenue beat Wall Street’s estimates by 1.5%.

Net interest income made up 71.8% of the company’s total revenue during the last five years, meaning lending operations are First Busey’s largest source of revenue.

Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.

Topline growth alone doesn't tell the complete story - the profitability of that growth shapes actual earnings impact. Banks track this dynamic through efficiency ratios, which compare non-interest expenses such as personnel, rent, IT, and marketing costs to total revenue streams.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last five years, First Busey’s efficiency ratio has increased by 3.2 percentage points, going from 56.3% to 56.6%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

In Q4, First Busey’s efficiency ratio was 57.4%, falling short of analysts’ expectations by 77.3 basis points (100 basis points = 1 percentage point).

For the next 12 months, Wall Street expects First Busey to maintain its trailing one-year ratio with a projection of 56.2%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

First Busey’s EPS grew at a weak 4.9% compounded annual growth rate over the last five years, lower than its 12.8% annualized revenue growth. However, its efficiency ratio actually improved during this time, telling us that non-fundamental factors such as taxes affected its ultimate earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For First Busey, its two-year annual EPS growth of 6.1% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q4, First Busey reported adjusted EPS of $0.68, up from $0.53 in the same quarter last year. This print beat analysts’ estimates by 9.2%. Over the next 12 months, Wall Street expects First Busey’s full-year EPS of $2.52 to grow 1.2%.

Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

First Busey’s TBVPS grew at a tepid 4% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 10.3% annually over the last two years from $16.62 to $20.23 per share.

Over the next 12 months, Consensus estimates call for First Busey’s TBVPS to grow by 6.7% to $21.59, lousy growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, First Busey has averaged a Tier 1 capital ratio of 12.9%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, First Busey has averaged an ROE of 9%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

It was encouraging to see First Busey beat analysts’ tangible book value per share expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock remained flat at $25.08 immediately after reporting.

Updated: January 27, 2026 at 5:08 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

First Busey isn’t a terrible business, but it isn’t one of our picks. Although its revenue growth was solid over the last five years, it’s expected to deteriorate over the next 12 months and its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. And while the company’s expanding net interest margin shows its loan book is becoming more profitable, the downside is its projected EPS for the next year is lacking.

First Busey’s P/B ratio based on the next 12 months is 0.9x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $27.14 on the company (compared to the current share price of $25.08).