First Busey (BUSE)

Regional banking company First Busey (NASDAQ:BUSE) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 66.8% year on year to $196.3 million. Its non-GAAP profit of $0.64 per share was 2.5% 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. Thankfully, First Busey’s 10.1% annualized revenue growth over the last five years was impressive. 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 19% 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’s year-on-year revenue growth of 66.8% was magnificent, and its $196.3 million of revenue was in line with Wall Street’s estimates.

Net interest income made up 71.4% of the company’s total revenue during the last five years, meaning lending operations are First Busey’s largest source of revenue.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Investors place greater emphasis on efficiency ratio movements than absolute values, understanding that expense structures reflect revenue mix variations. Lower ratios represent better operational performance since they show banks generating more revenue per dollar of expense.

Over the last five years, First Busey’s efficiency ratio has increased by 4.2 percentage points, going from 56.3% to 57.5%. 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 Q3, First Busey’s efficiency ratio was 58.5%, falling short of analysts’ expectations by 230.3 basis points (100 basis points = 1 percentage point). This result was 1.7 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects First Busey to rein in some of its expenses as it anticipates an efficiency ratio of 55.6%.

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 an unimpressive 4.2% compounded annual growth rate over the last five years, lower than its 10.1% 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 more recent period because it can provide insight into an emerging theme or development for the business.

For First Busey, EPS didn’t budge over the last two years, a regression from its five-year trend. We hope it can revert to earnings growth in the coming years.

In Q3, First Busey reported adjusted EPS of $0.64, up from $0.58 in the same quarter last year. This print beat analysts’ estimates by 2.5%. Over the next 12 months, Wall Street expects First Busey’s full-year EPS of $2.37 to grow 9.2%.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

First Busey’s TBVPS grew at a tepid 3.8% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 14.3% annually over the last two years from $15.07 to $19.69 per share.

Over the next 12 months, Consensus estimates call for First Busey’s TBVPS to grow by 10% to $21.67, solid 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 13%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, First Busey has averaged an ROE of 9%, respectable for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired.

Net interest income, revenue, and book value per share were all in line with Wall Street’s estimates. EPS did manage to beat, tough. Overall, this quarter was without many surprises. The stock remained flat at $23.24 immediately after reporting.

Updated: December 4, 2025 at 11:01 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own First Busey, you should also grasp the company’s longer-term business quality and valuation.

First Busey isn’t a terrible business, but it doesn’t pass our quality test. To kick things off, its revenue growth was mediocre over the last five years. And while its estimated net interest income growth for the next 12 months is great, the downside is its estimated sales for the next 12 months are weak. On top of that, its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders.

First Busey’s P/B ratio based on the next 12 months is 0.9x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $26.29 on the company (compared to the current share price of $24.12).