KBRA affirms First Busey ratings with stable outlook

Traders Union
All News
Financial News
KBRA affirms First Busey ratings

Highlights

KBRA affirms First Busey senior unsecured debt at BBB+, Busey Bank senior debt at A-, and all long-term ratings with a Stable outlook.
First Busey posts five-year average adjusted ROA of 1.10%, with 1Q26 ROA rising to 1.42% and net interest margin reaching 3.77%.
The Cross First Bankshares acquisition lifts criticized and classified loans to 3.8% of total loans, but credit quality and capital ratios—CET1 at 12.3%, TCE at 9.8%—remain within rating expectations.

Rating action and financial drivers

As reported by Kroll Bond Rating Agency, the rating agency affirms First Busey Corporation’s senior unsecured debt rating at BBB+, subordinated debt at BBB, preferred shares at BBB-, and short-term debt at K2. It also affirms Busey Bank’s deposit and senior unsecured debt ratings at A-, subordinated debt at BBB+, and short-term deposit and debt ratings at K2, while maintaining a Stable outlook on all long-term ratings.

KBRA says the ratings are supported by consistent core earnings, a diversified revenue base, and a comparatively low-cost core deposit franchise. The agency also points to historically sound credit performance and an efficient operating model, with an adjusted efficiency ratio in the mid-50% range contributing to profitability.

First Busey’s earnings track record remains a central support for the ratings. KBRA notes the company’s average five-year adjusted return on assets is 1.10%, with adjusted ROA improving to 1.42% in 1Q26, while net interest margin averages 3.50% over the last four quarters and reaches 3.77% in 1Q26.

Acquisition integration and outlook for the bank

KBRA says the March 1, 2025 acquisition of Cross First Bankshares gives First Busey room to expand fee income across a broader customer base. Stable fee income already accounts for more than 70% of noninterest income, which the agency says helps cushion pressure from interest-rate movements on spread revenue.

The agency expects further organic loan growth in 2H26 after recent payoff headwinds and as the company continues working through the acquired Cross First portfolio. It says stronger loan pricing, lower deposit beta, and balance sheet repositioning through available-for-sale securities sales have helped lift margin performance.

Credit quality remains sound, according to KBRA, even as criticized and classified loans rise to 3.8% of total loans from 2.3% before the acquisition. The agency says that increase is largely acquisition-driven rather than a sign of broader deterioration, and adds that disciplined underwriting, a diversified loan mix, and an allowance for credit losses equal to 1.26% of loans provide downside protection.

KBRA also notes that capital ratios decline after the Cross First deal, though it still views capital as solid for the current rating category. First Busey reports CET1 at 12.3% and tangible common equity at 9.8% in 1Q26, and the agency says positive rating momentum over time would depend on continued earnings outperformance, strong asset quality, better deposit gathering, and an above-peer CET1 ratio, while weaker credit trends or more aggressive capital management could pressure the ratings.

Our earlier coverage of KBRA UK’s preliminary ratings for Bletchley Park Funding 2026-1 PLC outlined a UK RMBS transaction backed by a £286.0 million static pool of first-ranking buy-to-let mortgages across England, Wales, and Northern Ireland. We noted that the loans were originated by specialist lender Quantum Mortgages Limited and that the deal’s structural features—such as sequential amortisation, liquidity reserves, and hedging—support its capital-markets funding model for buy-to-let lending.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.