F I R S T B U S E Y C O R P O R A T I O N A N N U A L R E P O R T 2 0 0 1 Table of Contents Financial Charts.................................2 Letter to Shareholders.......................3 What is “WOW!” ................................4 Consolidated Financial Statements...8 Boards of Directors .........................12 Corporate Profile First Busey Corporation is a Financial Holding Company headquartered in Urbana, Illinois. Busey Bank has two wholly-owned banking sub- sidiaries with locations in three states. Busey Bank has eighteen banking centers serving Champaign, McLean, and Ford Counties in Illinois. Busey Bank also has a banking center in Indianapolis and a loan production office in Fort Myers, Florida. Total assets of Busey Bank were $1.2 billion on December 31, 2001. Busey Bank Florida is a federal thrift charter with total assets of $51.0 million as of December 31, 2001. Busey also provides electronic delivery of financial services through Busey e-bank (www.busey.com). Busey Investment Group (BIG) is a wholly owned subsidiary of First Busey Corporation and owns three corporations: • First Busey Trust & Investment Co., specializing in asset management and trust services with over $1.1 billion in assets under care; • First Busey Securities, Inc., a full service broker/dealer subsidiary which has more than $525 million in assets under care, member NASD/SIPC; • Busey Insurance Services, Inc., providing long-term healthcare insurance and other insurance products. First Busey Corporation and its subsidiaries had a total of 498 equivalent full-time employees as of December 31, 2001. Shareholder Informaton Corporate Headquarters First Busey Corporation, 201 W. Main Street, Urbana, Illinois 61801, (217) 365-4556. Visit Busey’s world wide web site at www.busey.com. Annual Meeting The Annual Meeting of Shareholders of First Busey Corporation will be held on Monday, April 15, 2002, at 7:00 p.m. in the Festival Hall at The Krannert Center on the campus of the University of Illinois. First Busey Corporation Common Stock First Busey Corporation Common Stock is traded on Nasdaq National Market under the symbol “BUSE.” First Busey Corporation’s market makers are Stephens Inc., Little Rock, Howe Barnes Investments, Inc., Chicago, and Stifel, Nicolaus & Company, Inc., St. Louis. Annual Report on Form 10-K A copy of the Annual Report on Form 10-K filed with the Securities and Exchange Commission may be obtained without charge by written request to First Busey Corporation, 201 W. Main Street, Urbana, IL 61801. Stock Transfer Agent First Busey Corporation acts as its own transfer agent. Forward Looking Statements This presentation includes forward looking statements that are intended to be covered by the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements include but are not limited to comments with respect to the objectives and strategies, financial condition, results of operations and business of First Busey. These forward looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward looking statements will not be achieved. First Busey cautions you not to place undue reliance on these forward looking statements as a number of important factors could cause actual future results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements. These risks, uncertainties and other factors include: • The general state of the economy, both on a local and national level; • The ability of First Busey to successfully complete acquisitions; • The continued growth in the geographic area in which the banking subsidiaries operate; and • The retention of individuals who currently are very important in the management structure of First Busey. 5 5 3 1 , 1 0 3 1 , 7 4 2 1 , 6 1 9 2 5 9 97 98 99 00 01 TOTAL ASSETS (dollars in millions) % 6 5 6 1 . % 0 8 5 1 . % 8 6 4 1 . % 2 0 4 1 . % 2 4 3 1 . 97 98 99 00 01 RETURN ON AVERAGE EQUITY (percentage) 2 5 . $ 8 4 . $ 4 4 . 9 $ 3 . $ 5 3 . $ 97 98 99 00 01 DIVIDEND (dollars) % 2 2 1 . % 2 2 1 . % 8 1 1 . % 9 1 1 . % 2 1 1 . 97 98 99 00 01 RETURN ON AVERAGE ASSETS (percentage) . 5 1 1 $ . 3 0 1 $ 0 9 . $ 1 8 . $ 4 7 . $ 9797 98 99 00 01 DILUTED EARNINGS PER SHARE (dollars) 3 6 . 2 2 $ 8 4 . 1 2 $ 4 9 . 9 1 $ 5 2 . 8 1 $ 5 7 . 3 1 $ 97 98 99 00 01 CLOSING STOCK PRICE (dollars) Edwin A. Scharlau II Barbara J. Kuhl P. David Kuhl Dear Shareholders, WOW! Within the Busey Organization, "WOW" has special meaning. It is an acronym for Wisdom plus Opportunity equals Winning. As you read our Annual Report, it will explain how "WOW" plays an important role in our pursuit of Vision 2010 as well as what "WOW" means to our associates. As Chairman of the Board, I am committed to enhancing shareholder value. In an effort to accomplish this, we have set a goal in Vision 2010 to attain Return on Shareholders' Equity of 20% and a Return on Assets of 1.40%. Our Return on Shareholders' Equity for 2001 was 15.80% and our Return on Assets was 1.19%. Another element of shareholder value is the price of BUSE. Our stock ended the year at $21.48, an increase of 7.7% for the year. During the year, over 1.3 million shares of BUSE were traded. First Busey has approximately 2,000 shareholders who own the 13,677,680 shares outstanding. To increase shareholder value, First Busey Corporation will aggressively seek opportunities to expand its operations and enhance its profitability. We continue to be focused on providing the finest in financial services in the communities we serve. The year 2001 has now secured its place in the history book. What a year it has been! Let us now look to the future and remember, The Future is Bright and Strong in pursuit of Vision 2010! Chairman of the Board and Chief Executive Officer 3 Wisdom: “Life is a succession of lessons which must be lived to be understood.” Ralph Waldo Emerson What is WOW? "WOW"—an expression used in the English language—a phrase that brings a smile to your face or a "high five" from those around you—a word used to compliment someone for accomplishing something outstanding—and an enthusi- astic exclamation utilized in pursuit of Vision 2010: Wisdom plus Opportunity equals Winning! W4 Vision 2010 was presented at the April 2001 Annual Shareholders' Meeting. Vision 2010 is Busey's long-range strategic plan to enhance shareholder value through strong financial perform- ance while keeping Busey…Busey! Busey's strategic plan draws on its past—over 130 years of providing finan- cial services to individuals, businesses and institutions. "WOW" is the foundation of Vision 2010; with the Wisdom derived from our strong team of associates will come Opportunities, resulting in Winning for Busey's shareholders, associates and their communities today and in the future. Busey is committed to attracting and retaining talented and well-educated WISDOM associates to better serve its clients. Busey's senior officers have each dedicated an average of 15 years to the Busey organization. Corporate-wide internal education courses are provided to Busey associates to ensure profession- al development. In addition, Busey encourages and supports associates in obtaining financial designations such as Certified Public Accountant, Certified Financial Planner, and Chartered Financial Analyst. Busey recognizes that ongoing training and knowledge is critical to its reputation and success. Superior credit quality and solid loan growth are primary components of Busey's financial performance. Credit quality remains exceptional in comparison to Busey's peer group and national averages, with the ratio of total non-performing loans to loans being .23% and the ratio of net loans charged off to average loans of .06%. A balanced loan portfolio, coupled with consistent loan growth and managed risk, has contributed to 11 consecutive years of earnings per share growth and positive quarterly earnings per share comparisons since 1996. Opportunity: “Great minds must be ready, not only to take opportunities, but to make them.” Charles Caleb Colton OPPORTUNITY growth of 5.3% for the same period. Busey's business model continues to serve the company well as it moves forward into new geographic markets. In 2001, Busey implemented corporate- wide strategic plans that complemented Vision 2010, focusing on aggressively expanding business segments with a goal of maximizing efficiencies and enhancing profitability. During the year, Busey divested itself of two subsidiaries, Busey Travel and BAT, Inc., allowing management to focus more closely on the company's core busi- ness operations. In addition, Busey merged the assets and liabilities from Busey Bank fsb in McLean County into Busey Bank. Consolidating the Illinois operations under one charter will create tremendous synergies, which adds strength to each region and will result in financial savings. Busey has determined that geographic expansion is a critical element of its plat- form for future growth. Potential markets have been carefully studied for expansion to enhance continued earnings growth. Busey is positioned to expand through its federally chartered thrift, Busey Bank Florida, located in Fort Myers, Florida. Lee County, one of the fastest growing areas in the United States, has averaged approximately 11,000 new permanent residents per year since 1990. Busey's Indianapolis branch, located in Hamilton County, has seen similar growth over the past few years with it and two adjoining counties, Marion and Johnson, account- ing for 30% of the state's 9.7% popula- tion growth in 2000. Busey's more mature markets have also experienced solid growth, with Champaign and McLean Counties having grown 10.6% and 8.6%, respectively, in the past five years, compared to the State of Illinois' O In June 2001, Busey successfully raised $25 million in capital through the issuance of Trust Preferred Securities. The proceeds from this issuance were used to repay short-term borrowings. Additional borrowing capability is now available for corporate use, including possible acquisitions. Busey Investment Group has aligned itself with the banking side of the organization. Its subsidiary, First Busey Trust offers asset management and trust services in Champaign and Bloomington, Illinois 5 Winning: “The talent of success is nothing more than doing what you can do well and doing well whatever you do.” Henry Wadsworth Longfellow and Fort Myers, Florida, while First Busey Securities, also a subsidiary of Busey Investment Group, offers brokerage services in Champaign and Bloomington, Illinois. Busey is committed to expanding these services in existing and new markets to enhance the company's fee income. WINNING Vision 2010 calls for double-digit earnings growth year-in and year-out. Busey's financial performance continues to be strong despite a soft economy. The Corporation has posted eleven consecutive years of increased earnings while its stock has outperformed the S&P 500 Index in total return seven of the last ten years. Shareholders who invested $1,000 with Busey in June 1988 would have in excess of $26,000 today, not including earnings from dividends which have increased 11.1% annually, on average. Busey Bank continues to have a strong market presence in Champaign County with approximately 30% of all deposits. Busey ranks first in total deposits in the combined markets of Champaign, McLean and Ford Counties. Who's Who in Business in Champaign County named Busey the "leader" in banking for 2001. In a separate survey, Top of the Mind Awareness, Busey was the first name to come to mind in banking for residents of Champaign County. While the stock markets were volatile in 2001, First Busey Trust and First Busey Securities persevered throughout the year. First Busey Trust added more than $100 million in assets under care through new and existing relationships. According to the Trust Performance Report, First Busey Trust is the tenth largest trust company in the State of Illinois and one of only two in the top ten outside the Chicago market. First Busey Securities had a record year, opening more than 1,000 new accounts. Gross revenue rose 14% in 2001, despite commission revenue drop- ping 20-50% industry-wide. In addition, assets grew over 6% in 2001, while the market experienced a double-digit drop. W "WOW," what a year it has been! Knowledge, strong financial performance, and success will continue to be the foun- dation that Busey builds upon in pursuit of Vision 2010. Busey is committed to utilizing Wisdom, seizing Opportunities and being a Winning company! 6 What “WOW” Means To Me Winning is being proud to work for an organization that is more like a family than a business, an organization that serves its clients well, and an organization that is committed to Betty Owen, First Busey Trust & Investment Co. the local communities it serves. Todd McHenry, First Busey Securities, Inc. comes when talented to mean that success Rob Meyer, First Busey Securities, Inc. people are given appreciate my efforts will grow and prosper, WOW is a statement that will be here in the long run, exudes confidence that Busey W I understand WOW Wisdom means the experience I have gained with time leaders and trusting these good leaders. my family and enjoying what I do and something I think of in having good Winning is being able to provide for in the banking field. Opportunity is apply it. Our clients nothing less. If they expect and deserve while focusing on remind me of the who I work with. level of expertise to develop their the opportunity opportunities to and looking for common goals. WOW serves to importance of furthering my Lonna Buhr, Busey Marketing Dept. win, we win! continually and provide opportuni- ties to me. individual strengths Jan Buerkett, Busey Mortgage Lending CONDENSED CONSOLIDATED CONDENSED CONSOLIDATED BALANCE SHEETS BALANCE SHEETS First Busey Corporation Years Ended December 31 2001 2000 1999 (dollars in thousands) ASSETS Cash and federal funds sold Investment securities Loans Allowance for loan losses Net loans Premises and equipment Goodwill and other intangible assets Other assets Total assets LIABILITIES Deposits: Non-interest bearing Interest bearing Total deposits Short-term borrowings Long-term debt Company obligated mandatorily redeemable preferred securities Other liabilities Total liabilities STOCKHOLDERS’ EQUITY Common stock Surplus Retained earnings Accumulated other comprehensive 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 $ 61,580 210,869 $ 93,285 228,597 $ 83,222 225,046 978,106 (13,688) 984,369 (12,268) 886,684 (10,403) $ 964,418 $ 972,101 $ 876,281 29,081 10,504 24,237 31,253 12,255 17,553 28,647 14,241 19,686 $1,300,689 $ 1,355,044 $1,247,123 $ 138,685 967,314 $ 134,669 1,014,118 $ 103,001 924,980 $1,105,999 $ 1,148,787 $1,027,981 11,767 47,021 25,000 5,112 48,890 55,259 — 9,783 71,907 55,849 — 9,102 $1,194,899 $ 1,262,719 $1,164,839 $ 6,291 21,170 81,861 8,128 $ 6,291 22,044 73,215 5,917 $ 6,291 21,750 65,572 2,074 $ 117,450 $ 107,467 $ 95,687 (9,639) (2,021) (12,858) (10,773) (2,284) (2,630) Total stockholders’ equity $ 105,790 $ 92,325 $ 82,284 Total liabilities and stockholders’ equity $1,300,689 $ 1,355,044 $1,247,123 8 CONDENSED CONSOLIDATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME STATEMENTS OF INCOME First Busey Corporation Years Ended December 31 2001 2000 1999 (dollars in thousands, except per share data) INTEREST INCOME Loans Investment securities: Taxable Non-taxable Other Total interest income INTEREST EXPENSE Deposits Short-term borrowings Long-term debt Company obligated mandatorily redeemable preferred securities Total interest expense Net interest income Provision for loan losses $ 76,618 $ 79,924 $ 60,058 10,128 2,060 1,179 10,657 2,034 627 9,824 1,950 479 $ 89,985 $ 93,242 $ 72,311 $ 40,614 2,089 2,532 1,200 $ 46,435 $ 43,550 2,020 $ 42,286 5,243 2,947 — $ 50,476 $ 42,766 2,515 $ 31,085 1,812 2,023 — $ 34,920 $ 37,391 2,570 Net interest income after provision for loan losses $ 41,530 $ 40,251 $ 34,821 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 EXPENSES Salaries and employee benefits Net occupancy expense of premises Furniture and equipment expenses Amortization of intangible assets Other expenses Total non-interest expenses Income before income taxes Income tax expense Net income BASIC EARNINGS PER SHARE DILUTED EARNINGS PER SHARE $ 4,607 6,121 2,162 1,285 7,285 $ 21,460 $ 21,066 3,110 3,847 1,751 9,200 $ 38,974 $ 24,016 8,363 $ 15,653 $ $ 1.16 1.15 $ 4,364 5,341 1,901 737 5,945 $ 4,013 3,798 1,472 1,035 5,874 $ 18,288 $ 16,192 $ 19,080 3,115 3,614 2,288 9,152 $ 37,249 $ 21,290 7,237 $ 17,565 2,690 3,320 1,166 8,322 $ 33,063 $ 17,950 5,402 $ 14,053 $ 12,548 $ $ 1.05 1.03 $ $ .92 .90 9 SUPPLEMENTAL INFORMATION First Busey Corporation Years Ended December 31 2001 2000 1999 CHANGES IN STOCKHOLDERS’ EQUITY Balance at beginning of year $ 92,325 $ 82,284 $ 87,103 (dollars in thousands) Net income Cash dividends declared Common stock issued Treasury stock purchased Proceeds from ESOP debt Principal payments on ESOP debt Change in accumulated other comprehensive income(1) Amortization of restricted stock issued under restricted stock award plan 15,653 (7,007) 5,595 (3,237) — 244 14,053 (6,410) 581 (2,385) — 337 12,548 (6,004) 1,411 (5,850) (2,370) 150 2,211 3,843 (4,725) 6 22 21 Balance at end of year $105,790 $ 92,325 $ 82,284 RESERVE FOR POSSIBLE LOAN LOSSES Balance at beginning of year $ 12,268 $ 10,403 $ 7,101 Addition due to acquisition 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 Loans: — 2,020 176 (776) — 2,515 124 (774) 1,101 2,570 182 (551) $ 13,688 $ 12,268 $ 10,403 1.40% 1.25% 1.17% Non-accrual Loans 90 days past due and still accruing $ 1,265 959 $ 767 4,667 $ 1,220 897 Total non-performing loans $ 2,224 $ 5,434 $ 2,117 As a percent of loans 0.23% 0.55% 0.24% (1) Change in unrealized gain on investment securities available for sale, net 10 FIVE YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA First Busey Corporation Years Ended December 31 2001 2000 1999 1998 1997 (dollars in thousands, except per share data) BALANCE SHEET ITEMS Total assets Investment securities Loans, net of unearned interest Total deposits Long-term debt Stockholders’ equity Results of Operations Interest income Interest expense Net interest income Net income Per Share Data (1) Diluted earnings Cash dividends declared Book value Closing price OTHER INFORMATION Return on average assets Return on average equity Net interest margin (2) Stockholders’ equity to assets $1,300,689 210,869 978,106 1,105,999 47,021 105,790 $ 1,355,044 228,597 984,369 1,148,787 55,259 92,325 $1,247,123 225,046 886,684 1,027,981 55,849 82,284 $ 951,531 217,991 662,281 826,704 25,000 87,103 $ 915,540 215,514 602,937 811,453 10,000 81,279 $ $ 89,985 46,435 43,550 15,653 1.15 .52 7.73 21.48 $ $ 93,242 50,476 42,766 14,053 1.03 .48 6.86 19.938 $ $ 72,311 34,920 37,391 12,548 $ 67,048 32,975 34,073 11,398 $ 63,831 31,119 32,712 10,371 .90 .44 6.08 22.625 $ .81 .39 6.36 18.25 $ .74 .35 5.92 13.75 1.19% 1.12% 1.22% 1.22% 1.18% 15.80 3.64 8.13 16.56 3.75 6.81 14.68 4.03 6.60 14.02 4.10 9.15 13.42 4.20 8.88 (1) Per share amounts have been restated to give retroactive effect to the two-for-one stock split which occurred August 3, 1998. (2) Calculated as a percent of average earning assets. 11 First Busey Corporation and Busey Bank Boards of Directors Joseph M. Ambrose Samuel P. Banks T.O. Dawson Victor F. Feldman, MD Kenneth M. Hendren E. Phillips Knox Barbara J. Kuhl P. David Kuhl V.B. Leister, Jr. Douglas C. Mills Linda M. Mills Edwin A. Scharlau II David C. Thies Arthur R. Wyatt Busey Bank Florida Board of Directors Todd A.Caruso Michael P. Geml Barbara J. Kuhl Douglas C. Mills Thomas W. Scharlau Management Teams First Busey Corporation Douglas C. Mills, Chairman & CEO Barbara J. Kuhl, President Thomas M. Good Barbara J. Jones Busey Bank P. David Kuhl, President & CEO Susan E. Abbott Don A. Monteith Lee H. O’Neill Donald J. Schlorff David R. Wampler Busey Bank Florida Barbara J. Kuhl, Chairman & CEO Michael P. Geml, President 12 Edwin A. Scharlau II, Chairman & CEO R. Scott MacAdam Curt A. Anderson, President Glen C. Paine Busey Investment Group First Busey Corporation ® 201 W. MAIN STREET • URBANA, IL 61801 (217) 365-4556 • www.busey.com