“%%m
FIRST BUSEYCORPORATION
ANNUAL REPORT 1998
I DOUBT IFWILL WAS THINKING of the financial services industry when he wrote these words –
but oh, how true Mis quote is in today’s business climate. We, at First Busey Corporation,
are certainly not
just “sitting there!” We have a goal – to remain independent. We are determined to “keep Buey – Bu.rey.f”
During 1998, Management
and the Board began the process of formulating our strategic plan through the
year 2010.Through this process, we determined there were several significant decisions that needed
to be made during 199S to position us to achieve our future goals.
l:.
First Busey Corporation Class B stock w= eliminated,
leaving only Class A stock outstanding.
.:+
Busey Business Bank, Indianapolis, was chartered on January 12th and ten months later became
Busey Bank’s 19th Banking Center. Total
loans at this location now exceed $59 million.
+:.
To capitalize on our financial expertise in asset management, we formed Busey Investment Group
(“BIG”). This subsidiary will be located on Windsor Road in Champaign and combines the services
currently available through First Busey Trust & Investment Co. and First Busey Securities. As the
largest provider of asset management
in Champaign County, we think the combination of these
two entities into one location will provide a tremendous
synergy for our clients.
l:.
First Busey Corporation
stock split “two-for-one”
on August 3.
.:.
On October 1, First Busey Corporation
stock began trading on Nasdaq National Market under
the symbol BUSE. We believe this move will make First Busey Corporation
stock more visible and
marketable for our Shareholders.
+:.
We are extremely pleased with the performance
of First Busey Corporation
stock during 1998. The
closing price on December 31, 1998 was $18.25 per share, an increase of 32.7% from the closing price
of $13.75 per share on December 31, 1997. There were 13,705,000 shares outstanding with a market
capitalization in excess of $250 million.
+:.
One of the most
important
“lo~-r~e”
decisions made by Busey Bank in 1998 was to bring its
information technology systems bad under
the Busey umbrella. For the past ten years, an outside
vendor handled these systems. This decision will allow us greater
flexibility and control over the
financial services provided to our customers, as well as assuring us a system that is Y2K compliant.
.:+
Our marketing campaign for the year was “What do you do?... you see Busey.” Over the past
eighteen months,
the Busey Organization
has added Busey Insurance Services, serving the McLean
County market, and Busey Travel
to its family of services. Our goal is to continue to add services
that will enhance our relationships with our customers.
In this Annua] Report, we will introduce you to several
individuals who will express to you how they
“see Busey.” See if you don’t agree with me, that with all the Busey Organization
has accomplished in the past
and what
is planned for the future, Busey is right on track. The best is yet to come!
Q(*.
Douglas C. MiUs
Chairman of the Board
[3]
BUSEY BANK
THE w
1998 WM ONE OF GROWTH, CHANGE AND CHALLENGES for Busey Bank with a number
of important decisions being made to position&s
entity for the future.
Busey Bank ended the year with 18 Banking Centers,
located in Champai~ McLean and Ford
Counties in Illinois and one in the Indianapolis market. Busey’s total assets reached $938,000,000
for
the year, well on our way to achieving our tatget of being a $1,000,000,000
bank! Profits increased
9.93%, reaching an all-time highof$11,758,000,
even though there were many one-time expenses
incurred during the year.
Management of Busey Bank has always understood the importance of technology in the
financial services arena. In 1966, Busey Bank was one of the first banks in downstate Illinois to
install its own computer system, allowing data processing to be done on premises.
[n 1991, a
decision was made to outsource Als process due to the fast-paced changes and increasing cost of
technology. Facing the issues relating to being Y2K compliant and a strong desire today to control
our own destiny, Management determined it wodd be in our best interest
to bring the information
technology systems back under the Busey umbrella. Don Schlorff, who oversees this Division,
said,
“we believe tils decision will allow us to better serve the financial needs of our customers today and
in the future.” The conversion took place on columbus Day, october
12, 1998, and ~e Operations
Division will move into a new state-of-the-art
operations
center on Windsor Road in Champaign
in Febmary.
Though
there are some difficult
times associated with any computer
conversion, we
feel very comfortable
that we have an excellent
system in place to provide
the information
our
customers
rewire.
Busey’s core products continued to grow in 1998, with deposits reaching $828 million and
loans closing the year at $655 million, a 9.9% increase. On the deposit side, Susan Abbott has
initiated a concentrated effort in the Retail Division to expand on the relationships Busey enjoys
with its current customers. “Relationship managers have been established to insure that our
customers are receiving the products and services they need,” said Abbott.
In another effort to
offer greater convenience to our customers, Busey has established “banking days” at numerous
retirement communities.
Busey’s Internet bank, Busey e-ba~
continues
to grow and gain acceptance with our customers
who are looking
for the utmost
in convenience
banking. Today we have more than 2,000 customers
using Busey e-bank to monitor their accounts,
transfer funds and also to pay their bills, at whatever
[4]
94
95
96
97
98
Return on Average Assets
(percentage)
BUSEY BANK
time is convenient
for them. During
1998, Busey e-bank was named by Gomez Advisors as one of
the top Internet banks, right above global giant Citicorp. Another national recognition was given
to Buseye-bank
inthe November 9thissue of New~week. Champaign-Urbana waslisted as one
of the “Hottest Tech Cities” in the world. Busey e-bank was mentioned as an example of how
“the atmosphere of innovation permeates everyday life, “ in the Champaign-Urbana
area. New
enhancements will beadded to Buseye-bankin
1999 tocontinue
tomakeit
oneofthe
premier
sites on the Internet.
Lee O’Nei]l
is providing
the leadertilp
for Busey e-bank to
continue its pioneering efforts on the Internet. Lee also heads up the
Lending Division of the Busey Organkation
and is Chairman of
I
i
Champaign County’s CCNET.
The loan potential
in Southwest Florida has been recognized as the
Loan production Office in Fort Myers has continued to grow, finishing the year with more than
$28 million of commercial
loans on the books. A serious effort to cultivate this market is being
made and prospects for forming a chartered savings bank in 1999 are good. According to Tom
Scharlau and Bill Brigham, who together are growing the Busey franchise in Southwest Florida,
“The diversity of loan opportunities in this region presents a significant opportunity for growth.”
This potential, along with the increasing number of Busey customers who live in his area, make
this a logical expansion area for Busey.
Busey Bank Indianapolis continues to grow and expand its focus in the Indiana region.
Don Monteith sees great opportunities in offering commercial
financing and cash management
services to the many manufacturing, distribution,
technolo~,
retail and real estate development
businesses in fils area. “With the volatile financial climate in Indianapolis due to multiple bank
mergers and acquisitions, Busey fills a real niche for businesses seeking a stable, responsive
banking relationship.” David Mills, son of Doug and Linda Mills, has joined Don Monteith
and Lou Hensley in their efforts in this market. Busey Bank Indianapolis
currently has
assets in excess of $59 million.
Another area in which Busey continues to be a strong leader is the Residential Mortgage
Division. Gary Jackson led this Division to a record-setting-year — originating in excess of
$180,000,000
in real estate mortgages in Champaign County. This performance once again
helps Busey Bank maintain its status as the top mortgage lender in Champaign County.
[6]
My relationship with Bu.sq
began years ago. In fact,
I remember attending the
Economic Seminars when
there were only S(?people in
attendance. Recently, my son
Eric and I came to Busey
with an idea to convert a
vacant hotelpropeny
into a
full-service
residence hallfir
parkland College studenu.
Our commercial banker,
Denny McMillan,
became
m excited as we were about
the prospects of thk new
endeavor. Z appreciate the
way Buseypresented
us
with a vey
thorough, well
thought-out plan to make
this project a realiy. The fact
that Busey k independent
is
very important
to me and
I especial~ value local
dechion making.
Kyle Robeson
Chairman
of the Board
Robeson’s
Inc.
ASSET MANAGEMENT
THE MANAGEMENT OF FIRSTBUSEYTRUST & INVESTMENTCo. and First Busey Securities,
Inc.
made a BIG decision in 1998, to join together the two entities to create the Busey Investment Group
(BIG). Management made this decision in order to adequately address client needs for the future.
Through this combination, BIG will enhance client services while enjoying operating efficiencies.
“The creation of BIG is also intended to end customer and employee confusion over where
to get investment services,” said Curt Anderson of BIG. “We ‘re creating a new identity for the
organization,” he said. “This cooperative effort will allow the investment professionals of First
Busey Securities and First Busey Trust to work even more closely together while taking advantage
of each other’s strengths and maximizing cross-selling opportunities.”
BIG’s emphasis will be on financial planning and asset management
for non-bank customers
as well as those with established relationships with the Busey Organization. More than 40 associates
will be located in the new facility in the Fox Development on Windsor Road in ChampaiW.
A representative of Busey Insurance Services will also be included at the new office
in order to assist customers with financial planning-related insurance products
such as long-term health care, life insurance and annuity products.
Set to open in March of 1999, the Busey Investment Group office
building is designed as a collaborative work environment. Conference and
, &
q
meeting room space has been expanded to accommodate the many private client
4
~.,
,.
*
:$
j:
.:_
.3
luncheons and meetings that will take place as an integral part of BIG’s marketing plan
[10]
I
Isee Busey a a loyal
and constituentsupporter of
the arts. Bu.seyk generosity
to the Krannert Centerfor
the Peforming Arts as well
as many other communiy
Organizations says a lot about
the way the Corporation
values a high quaiity of [Lye
fir its customer. and neighbors.
Afier moyin,g to the Central
Il[inok area from Neu, York
City last year, z immediate~
saw the high standards that
the business leaders in the
communiy,
such m Bu.sey,
have estahlkhed. My wz~e
Taya, my son Miles and
I are e~aying the refreshing
decompression we are
experiencing in the Midwest.
It has been a very grattsing
experience to work with the
Busey Organization on
many levels.
Mike Ross
Director, Krannert Center
for the Performing
Arts
ASSET MANAGEMENT
FIRSTBUSEYSECURITIES,INC.
Even in a year of market
fluctuations
and nervous
investors,
First Busey Securities,
Inc.
(FBSI)
responded well and reported
successes in several areas. Sales
assets grew to over $375 million.
L
734 new accounts were added
i
~z”*-
?>
increased
nearly 20% and
In 1998 alone, an impressive
to the customer
base. The
conversion to BHC Securities as the firm’s new data processing company went smoothly and now
allows FBSI
to better compete in the area of technology. BHC will allow FBSI
to offer Internet-
based services to its clients including account
information,
research, stock quotes and the ability
to monitor portfolios, all at a lower cost than in the past.
The outlook for future growth prompted First Busey Securities to add sales assistants and
operations staff to the firm. All sales assistants are now licensed in insurance and securities.
]n-house
research capabilities have increased as financial-planning
software was upgraded to include Standard
& Poors, Morningstar, Principia, and Value Line.
During 1998, Donna Greene achieved the designation of Certified Financial Planner, and
Curt Anderson was named one of the top 120 Financial Advisors in the U.S. by Medical Economics
magazine. This is another indication of the qualified associates in the Busey Organization!
FIRST BUSEY TRUST& INVESTMENTCo.
First Busey Trust& Investment Co. saw a year of considerable growth despite stock market
volauliry and severely depressed agriculture commodity prices. Assets under care increased more
than 20% from 1997 to more than $760 million and profits increased more than 19%. To address
the needs of future clients, Scott Hendrie joined the staff and will concentrate on financial analysis,
financial performance
and client services. Scott MacAdam will devote his time to creating an
investment management division of First Busey Trust to address the growing need for these
services. Glen Paine of First Busey Trust,
is excited about the creation of BIG and says, “ I am
confident
tils ‘joining together’ of our organizations will position us to compete effectively and
provide the range and quality of financial services our market place will demand in the future.”
[12]
I see Bu.sey as a vey solid
employer. I began my career
at Bu.rey in 1990 and have
recently become apersona[
lender at the Sunnycrest
Bading
Center. The Bmq
name G very recogni~able in
Central Illimti, and many
have been touched by 8meY
in some way. When sonzeone
$nd. out that I work at Bu.se~
I hear stories about how
l?u.rey he~ed~nance
their
$rst home, made a new
vehicle possible, a.sskted
with the start-up of a new
business orprovided~nancial
planning. That makes me
proud. I believe that the
oppo~unitie~fOr me at B~ey
are endless and I see myself
as a Busey Associate for
manyyears
to come.
Dennis Donaldson
Associate
REPORT
ON VISION
2000
BACK IN ISYA, WE FIRST REPORTED ON FIRST BUSEY’S VISION 2000” in our Annual Report. Vision
2000 involves a strategy that till help Busey maintain its competitive edge through products and
services that meet the changing needs of our customers. Meeting this vision also requires a
thorough understanding of our customer base, a corporate-wide
focus on technology
The entire Organization has been busy reviewing their systems and procedures
to make sure that our customers will continue to receive uninterrupted service as
we move into the next millennium. We have taken a leadership role in meeting with other vital
community service providers in an effort to make sure that the communities
in which we operate
are Y2K ready. Seminars have also been conducted by Busey Associates
to assist our customers in
their Y2K preparedness. Y2K is an issue that the Busey Organization takes very seriously, and we
feel very comfortdle
that we will be Y2K compliant.
In an effort to provide additional products and semices to its customers, Busey Bank purchased
Busey Travel, a full-service
travel agency that has been serving the Champaign-Urbana
area since
1964. Busey Travel recently consolidated its operations into a single, newly remodeled faciliry in a
highly visible location at 303 W. Kirby Avenue in Champaign.
In addition to providing its customers
with the usual product mix of tours, cruises, and airline tickets, Busey Travel has added a full line
of travel accessories and lu~age.
Busey Insurance Services, with offices in LeRoy, Saybrook and Melvin,
is filling the
insurance niche for our customers, providing homeowner policies, as well as mortgage,
life,
disability, and long-term care. Other products such as auto, farm, health and commercial
insurance
are all offered
at competitive
rates. Uniting
banking
and insurance
products
is
proving
to be a winning
combination
in the Ford and McLean County markets.
[16]
Isee Busey through the
eyes ofa long-time
customer
and shareholder. I became
a Busey mromer after
am’ving in Urbana to
study at the university of
Illinois School of Music in
1.928. I remember my late
husband, Mmie, purchasing
10 shares of First Busey
stock when he became a
director of Bmey Bank.
Although we added many
more shares over the yems,
its performance ha been
so impressive,
I wish I had
purchased more! I still bank
at Busey every Thursday,
right here at Clark Lindsey
Village. I even won the
long-time customer contest
duting Bu.rey5 130th
Anniversary celebration.
Bea Tepper
Shareholder
FIRST
BUSEY CORPORATION
CONDENSED
CONSOLIDATED
BALANCE
SHEETS
Assets
Cash and due from banks
Investment securities
Loans, net of unearned interest
Allowance for loan losses
h~et loans
Premises and equipment
other assets
Total assets
Liabilities
Deposits:
Non-interest bearing
Interest bearing
Total deposits
Short-term borrowings
Long-term debt
other
IiAilities
Total ]i&ilities
Stockholders’
Equity
Common stock
surplus
Retained earnings
Accumulated other
comprehensi},e income
Total stockholders’ equity before
treasury stock, unearned ESOP shares and
deferred compensation for stock grants
Treasury stock, at cost
Unearned ESOP shares and deferred
compensation for stock grants
Total stockholders’ equity
Total liabilities and stockholders’ equity
December
31,
@
1997
1996
(dollam in thousands)
$
35,644
217,991
$
62,099
215,514
$
33,738
226,350
662,281
(7,101)
602,937
(6,860)
569,500
(6,131)
$
655,180
$
596,077
$
563,369
24,232
18,484
22,834
19,016
21,588
19,873
$
951,531
$
915,540
$
864,918
$
96,555
730,149
$
92,090
719>363
$
78,077
688,850
$
826,704
$$811,453
$$766,927
5,900
25,000
6,824
6,550
10,000
6,258
14,405
5,000
5,169
$
864,428
$
834,261
$
791,501
$
6,291
21,283
59,028
6,799
$
6,291
20,729
53,011
5,801
$
6,291
20,594
47,402
3,285
$
93,401
$
85,832
$
77,572
(5,865)
(3,922)
(3,489)
(433)
(631)
(666)
$
$
87,103
951,531
$
$
81,279
915,540
$
$
73,417
864,918
[18]
FIRST BUSEY CORPORATION
CONDENSED
CONSOLIDATED
STATEMENTS
OF INCOME
Interest
Income
Loans
Investment securities
Taxable
Non-tmable
Other
Total interest income
Interest Expense
Deposits
Short-term borrowings
Long-term debt
Total interest expense
Net interest income
Pro>,ision for loan losses
Net interest income after provision
for loan losses
Non-interest Income
Trust
Service charges on deposit accounts
Commissions and brokers fees, net
Security gains, net
Other income
Total non-interest
income
Non-interest Expense
Salaries and employee benefits
Net occupancy expense of premises
Furniture and equipment e~ense
Amortization of intangible assets
Other expense
Total non-interest expense
Income before income taxes
Income tax expense
Net income
Basic earnings per share
Diluted earnings per share
Years Ended December
31,
1997
1996
w
(dollars in thousands, except per share data)
$
53,669
$
51,061
$
45,948
10)756
1,732
891
10,318
1,964
488
12,697
2,111
441
$
67,048
$
63,831
$
61,197
$
$
$
30,642
1,099
1,234
32,975
34,073
700
$
$
$
30,002
575
542
31,119
32,712
1,075
$
$
$
28,710
1,045
278
30,033
31,164
1,100
$
33,373
$
31,637
$
30,064
$
3,445
2>938
1,187
1,243
4,717
$
3,156
2,947
1,051
520
2,705
$
2>651
2,937
812
256
2,113
$
13,530
$
10,379
$
8,769
$
14,615
$
13,868
16,095
2,497
2,370
1,404
8,0M
$
$
$
30,400
16,503
5,105
$
$
%225
1,83s
1,328
7,260
27,266
14,750
4,379
1,936
1,651
1,321
7,010
25,786
13,047
3,741
9,306
.68
.67
$
$
$
$
$
.
$
11,398
$
10>371
$
$
.83
.81
$
$
.75
.74
[19]
FIRST
BUSEY CORPORATION
SUPPLEMENTAL
INFORMATION
Changes in Stockholdersr Equity
Balance at beginning of year
hret income
Cash dividends declared:
Cims A common stock
Class B common stock
Common stock issued
Treasury stock purchased
Principal payments on ESOP debt
Change in accumulated other
comprehensive income*
Amortization of restricted stock issued under
restricted stock award plan
m
1997
1996
(dollars in thousands)
$
81,279
$
73,417
$
67>778
11,398
10,371
9,306
(5,381)
1,41I
(2,800)
I50
998
48
(4,046)
(716)
1,405
(1,948)
200
2,516
80
(3,71o)
(668)
797
(605)
250
192
77
Balance at end of year
$
87,103
$
81,279
$
73,417
Reserve for possible Loan Losses
Balance at beginning of year
Provision charged to expense
Recoveries on loans previously charged off
Loans charged off
Balance at end of year
As a percent of loans
Non-performing Loans
Loan%
Non-accrual
Loans 90 days past due and still accruing
Total non-performing loans
As a percent of loans
$
6,860
$
6,131
$
5,473
700
145
(604)
1,075
213
(559)
1,100
240
(682)
$
7,101
$
6,860
$
6,131
i .07%
1.14%
1.08%
$
$
526
1,052
1,578
$
$
628
1,033
1,661
$–
$
1,001
1,001
0.24%
0.28%
O.18%
* Change h utlre$lzed gain on investment wcurities avail&le for sale, net
[20]
FIVE YEAR SUMMARY
OF SELECTED
CONSOLIDATED
FINANCIAL
DATA
FIRST BUSEY CORPORATION
Balance Sheet Items
Total assets
Investment
securities
Loans, net of unearned interest
Total deposits
Long-term debt
Stockholders’ equity
Results of Operations
Interest
ir]come
Interest
expense
Netinterest income
N-et
income
Per Share Data O)
Diluted earnings
Cash &]vidends declared
Book value
Closing price
Other Information
Return on atferageassets
Re’mrn on average equity
Net interest margin(z)
Stockholders’ equity to assets
1997
1996
1995
1994
(dollars in thousands,
except per share data)
$
951,531
217,991
662,281
826,704
25,000
87,103
$ 915,540
215,514
602,937
811>453
10,000
81,279
$
864,918
$
844,666
$
226,350
569,500
766>927
5,000
73,417
284,517
481,772
744>897
5,000
67,778
728,459
210,525
451,051
635,694
5,000
59,016
$
67,048
32,975
$
34,073
63,831
31,119
32,712
$ 61,197
30,033
31,164
26,515
27,979
$
54>494
$
47,126
$
11,398
$
10,371
$
9,306
$
8,775
$
.81
.39
6.36
18.25
$
.74
.35
5.92
13.75
$
.67
.33
5.36
11.13
$
.63
.29
4.97
9.00
$
$
20,212
26,914
8,238
.59
.27
4.32
8.08
1.22%
13.51
4.08
9.15
1.18%
13.42
4.20
8.88
1.08%
13.40
4.13
8.49
1.15%
1.14%
13.86
4.20
8.02
14.16
4.30
8.10
(1) Per share amounts ha}e been restated to give retroactive
effect to the m,v-for-one
stock split which occurred August 3,1998,
andthethree-for-mo
stock split which occurrd May7, 1996.
(2) Calculated as a percent of avemge earning assets.
[21]
Joseph M. Ambrose
fiecutive Vice President
Anderson FinancialNetwork Inc.
BOARD OF DIRECTORS
q ,.V. B. Leister, Jr.
President
Carter’sMeting&Storage, Inc.
Samuel P. Banks
fiecutive Director
Cunningham Children’sHome
Douglas C. Mills
Chai)man of the Board, president, CEO G CFO
firstBusay Corp.
T. O. Dawson
Chairmm ofthe Board, President, CEO
Insurance RiskManagers, Ltd.
Linda M. Mills
Chairman of the Board
BuseyTravel
H
Victor F. Feldman, MD
Physicim - OPhthdmolo~
Chtistie Clinic
?
Kenneth M. Hendren
Owner
Hendren Farms
Broker,Jim Bouas Realty,Inc.
E. Phillips Knox
$
Attorney
Tummelson Bryan& Knox
H P. David Kuhl
President G CEO
Busey Bank
mRobert C. parker, Jr., MD
President
Health Alliance Medical Plans
CEO
Carle ClinicAssociation
;.
Edwin A. Scharlau II
Chairman of the Board
Busey Bank; Fiti BuseySecurities&
FirstBuseyTrust& Investment Co.
David C Thies
Aztorney
Webber &Thies, P.C
t
H
*“
H
..”.
.
Arthur R Wyatt
Retired Parmer
Arthur Andersen & Co.
A~. Pro$ of Accountancy
Universityof Illinois
q
q
q
q
q
MEMBERS
BUSEY BANK
MANAGEMENT
TEAM
P. David Kuhl
Susan E. Abbott
Don A. Monteith
Lee H. O’Neifl
Donald J. Schlorff
BUSEY INVESTMENT
GROUP
MANAGEMENT
TEAM
Edwin A. Scharlau II
Curt A. Anderson
Scott MacAdam
Glen C. Paine
CHAIRMAN’S
COUNCIL
Joseph J. Ambrose
Kenneth G. Bash
Orville G. Bendey
Richard E. Dukes
Judy L. Ikenberry
Harlan J. Faiior
Stuart M. Mamer
Riley J. McCulley
Jack W. Pollard
Stanley B. Weaver
FIRST
BUSEY CORPORATION
MANAGEMENT
TEAM
Douglas C. Mills
Barbara J. Kuh~
FIRST BUSEY CORPOMTION
WOULD LIKE to acknowledge
Judy Ikerrberry
and Ben Snyder
and thank them for
their dedication
as they retire from their Board positions.
Judy joined
the Busey Bank Board in 1984 and remained as a
Director
in the Busey Organization until 1998 when she and her husband
Judy L. Ikenberry
moved to Washington D.C.
Judy enjoys extensive travel and entertaining.
She is developing new interests and is now a student of piano and art.
Be% a resident of Bloomington, was a member of the Busey Bank
Board for 4 years and the FBC Board for 2 years. He still serves on the
Advisory Board of Busey Bank Bloomington. Ben is also a member of
tie Zoning Board of Appeals in Bloomington and continues KIS work
with Century 21, Alexander Reahy.
Benjamin G. Snyder
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