First Busey Corporation
Annual Report 2002

Plain-text annual report

Busey? First Busey Corporation A N N U A L R E P O R T 2 0 0 2 Corporate Profile First Busey Corporation is a Financial Holding Company headquartered in Urbana, Illinois. First Busey has two wholly owned banking subsidiaries 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, Indiana and a loan production office in Fort Myers, Florida. Total assets of Busey Bank were $1.3 billion on December 31, 2002. Busey Bank Florida is a federal thrift charter with total assets of $73.2 million as of December 31, 2002. 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 $960 million in assets under care as of December 31, 2002; • First Busey Securities, Inc., a full service broker/dealer subsidiary which has $515 million in assets under care as of December 31, 2002, member NASD/SIPC; • Busey Insurance Services, Inc., pro- viding long-term healthcare insur- ance and other insurance products. First Busey Corporation and its subsidiaries had a total of 548 employees as of December 31, 2002. Table of Contents 2 3 4 6 9 11 12 13 14 16 17 20 21 22 23 ......First Busey Corporation Executive Committee ..........................................................Financial Charts ...............................................Letter to Shareholders ........................................................Why Busey Bank? ................................................Why McLean County? ......................................................Why Indianapolis? ....................................................Why a Florida LPO? ..........................................Why Busey Bank Florida? .........................................Why Busey Ag Resources? ...............Why First Busey Trust & Investment Co.? ..............................Why First Busey Securities, Inc.? ..................................................Why Invest in BUSE? .................................Why Community Involvement? ............Boards of Directors & Management Teams .........................Consolidated Financial Statements Shareholder Information 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 Tuesday, April 22, 2003, at 7:00 p.m. at the Urbana Golf and Country Club. First Busey Corporation Common Stock First Busey Corporation Common Stock is traded on the 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 at www.busey.com on March 17, 2003 — click on Investor Relations. 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 complete acquisitions successfully; Douglas C. Mills Chairman of the Board & Chief Executive Officer First Busey Corporation Barbara J. Kuhl President & Chief Operating Officer First Busey Corporation Edwin A. Scharlau II Chairman of the Board & Chief Executive Officer Busey Investment Group P. David Kuhl President & Chief Executive Officer Busey Bank On our cover: The John & Lea Comet Family Busey Bank Customers • 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. 2 Total Assets Return On Average Assets 1,355 1,301 1,247 952 1,436 1.22 1.22 1.33 1.19 1.12 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 ) e g a t n e c r e p ( Return On Average Equity Diluted Earnings Per Share 16.56 15.80 16.31 14.68 14.02 1.31 1.15 1.03 .90 .81 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 ) s r a l l o d ( Dividend .44 .39 .60 .52 .48 Closing Stock Price 22.63 19.94 21.48 23.06 18.25 ) s r a l l o d ( Dear Shareholders: First Busey Corporation had another outstanding year in 2002. our objective remains the same — to grow earnings and enhance then raise the bar again the next year. For the twelfth consecutive year, earnings increased to record profitability, thereby increasing shareholder value. While we work The theme of this year's annual report is Why Busey? Clearly, levels, rising 14.4% to $17.9 million or diluted earnings per share to grow our core business, we also actively seek opportunities to our ability to grow our earnings annually provides an answer to of $1.31. Solid revenue growth, combined with effective expense expand into new areas, as we have done in the past several years that question. Economic conditions may change, interest rates control, produced these results. Increased earnings allowed us to in Florida, Indianapolis and McLean County. First Busey Trust & may go up and down, but Busey keeps on going and growing. reward our shareholders by raising the dividend to $.60 per share, Investment Co., First Busey Securities and Busey Insurance As a successful organization, we know that to keep winning we up 15.4% over 2001. Our history of delivering consistent earnings Services play a significant role in expanding the Busey brand cannot stand still. We will continue to expand into geographically growth is reflected in the steadily increasing price of our stock. across a wide range of financial services. growing markets, develop innovative ways to serve our customers First Busey Corporation stock (BUSE) closed the year at Our accomplishments are possible because we have the best and seek ways to change for the better. Most of all, we will remain $23.06 per share, an increase of 7.4% over the closing price people for the job. Led by our experienced management team, Busey, an independent community bank where our success on December 31, 2001. talented and hard-working Busey associates in Illinois, Indiana benefits our shareholders, our employees, our customers and In 2002, we reached several noteworthy milestones. At year-end and Florida are dedicated to providing the finest in financial our communities. our loan portfolio exceeded $1 billion, ending 2002 at the $1.1 bil- services in all the communities we serve. As always, we appreciate the confidence and support of our lion level, a 12.6% increase over 2001. Total assets surpassed What we have discovered is that the right people create an shareholders and look forward to continuing to operate in a way $1.4 billion, a 10.4% rise. Mortgage lending rates at a 40-year low environment where success comes naturally. Working hard, that enhances your investment. contributed to record new mortgages and refinancing of existing working smart and keeping the corporation's overall goals loans. Loans, sold in the secondary market, increased non-inter- in mind are second nature to people who want to succeed. est income significantly. At Busey, we have a winning game plan, and team members At Busey, we have a clear vision of what we want to accomplish. who have the skills to execute the plan. We start each year Our goals and strategies do not change from year to year. Rather, with high expectations, work hard to achieve our goals, and Chairman of the Board and Chief Executive Officer ) s n o i l l i m n i s r a l l o d ( ) e g a t n e c r e p ( ) s r a l l o d ( 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 3 4 Shahid Khan President & CEO Flex-N-Gate Corporation Urbana, IL Busey Bank? THERE ARE OVER 450 TERRIFIC REASONS TO standards, trained to those standards and meas- In 2002 we continued to promote Carefree Checking, BANK AT BUSEY. Busey associates are talented, ured performance. We recognized our successes the extremely popular and successful account intro- well-trained and enthusiastic about providing our and worked to correct those areas that needed duced in 1999, as well as our VISA Check Card. customers superior service. You'll find them in improvement. Busey associates appreciated receiv- Other innovations in 2002 included adding an every area of our organization — from frontline ing tangible feedback on a job well done and "Investor Relations" section to our website, and tellers, to commercial and mortgage lenders, to learned where changes needed to be made. We are allowing customers to obtain digital images of their trust personnel to our website designers. Many are very pleased with the results of our performance cancelled checks through Busey e-bank. A testa- true veterans — more than 11% of our associates management program. It's a significant step in ment to the success of the Busey brand is our have been with Busey for at least 20 years. establishing a continuous improvement program selection to Who's Who in Business in 2002, spon- In 2002, a year of economic uncertainty, the that ensures that taking care of the customer sored by Adams Outdoor Advertising, and being longevity of our employees was a significant factor remains at the heart of our corporate culture. named the "market leader" in a Top of Mind in our success. Consumers turned to us because our Busey's reputation for service excellence attract- Awareness Survey sponsored by WDWS radio in people are reliable, dependable and trustworthy. ed John and Lea Comet, shown on our cover, to Champaign County. In our 134-year history, we've learned that even Busey. Customers on both the personal and com- The year 2002, with interest rates at a 40-year low, with great people, outstanding service doesn't just mercial sides of the bank, the Comets appreciate was a banner year for mortgage lending. A record happen. It starts with hiring the right people, the ability of Busey associates to get things done. number of new and existing borrowers turned to providing proper training, establishing standards As local business owners, they like dealing with a Busey for mortgage loans and refinancing. Busey and measuring performance to those standards. In bank where decisions are made locally and ques- originated approximately $400 million in real estate 2002 we implemented a performance management tions can be answered right on the spot. mortgages making it the leading residential mort- program that meets those criteria. Our program is Of course, excellent customer service does not gage lender in Champaign County. Customer and based on the premise that everything we do touch- stand by itself. We offer the services people and realtor referrals, as well as new business efforts by es the customer, and that every employee is businesses need at a competitive price — and we our experienced lending staff, generated new cus- accountable to improve performance. We set our communicate this through our marketing programs. tomers in every community we serve. Our record of 5 6 service excellence, along with a complete array of Lender status, the first bank in Illinois to attain this remain valued Busey customers. Hiring the right peo- mortgage services for both new loans and refinanc- classification. Our customers benefit from our ple, giving them the tools to succeed and providing ings, contributed directly to this success. By offering Preferred and Certified Lender status with a stream- an environment that rewards their achievements — fixed and adjustable rates, FHA and VHA loans, and lined SBA approval process. this is Busey's time-tested formula for success. participating in numerous government programs, A complete line of loan products, highly cus- Busey associates deserve the credit for our many including special plans for first-time home buyers, Busey is able to serve the needs of most borrowers. Real estate mortgage activity generated in excess of $22 million in interest and fee income for 2002. On the corporate side, our team approach to lending ensures both a quality loan 2002 Highlights international banking services, make Busey ... Busey, a place where serving tomized cash management, long-term customer relationships. They are what • Total loans soared past the $1 billion mark • Return on Average Equity increased from 16.1% in 2001 to 17.3% in 2002 • Strong core deposit growth with approxi- mately 1,500 new accounts opened per month • Net gains on sales of mortgage loans in excess of $3.8 million a full array of depository customers is rewarding for our shareholders, accounts, and a legal lending customers and associates. limit in excess of $20 million enable Busey to serve the needs of our corporate cus- tomers. When you combine these services with the expert- ise of knowledgeable and experienced bankers, you have portfolio and outstanding customer service. a good idea why businesses like Illinois Concrete and Experienced lenders and credit analysts work togeth- Flex-N-Gate are among Busey's long-time customers. er to make sure the loans we put on the books are of Lee Johnston, President of Illinois Concrete, appreci- the highest quality. Loan administrators work closely ates Busey's local decision-making and the accessibil- with customers regarding the details of loan docu- ity of key people. Busey has kept up with Illinois mentation and funds distribution. In-house expertise Concrete's growing needs for more than 20 years, allows our lenders to spend a majority of their time because experienced Busey bankers have a thorough meeting with their customers in their offices, factories, knowledge of this highly successful company. Shahid labs and warehouses. This ongoing contact means Khan, president of Flex-N-Gate, has had a similar Busey customers have bankers who truly understand experience. He opened his first Busey account while their businesses. a student at the University of Illinois. In 1978 we Busey Bank was one of the first banks in Illinois, helped him start a company that now does business Indiana and Florida to earn the SBA's Preferred throughout the world. Today, his son banks at our Lender designation. In 2002, we received Certified Campus Banking Center, and his family and business Lee Johnston President, Illinois Concrete Co., Inc. Champaign, IL 7 8 Why McLean County? THE BEST OF BOTH BANKING WORLDS. McLean County. We will leverage our position as the It boasts a robust and diverse economy that includes Brandt Trucking, a Bloomington-based company that mortgage lender of choice to gain a greater share of major employers such as State Farm, Mitsubishi specializes in overnight deliveries in Illinois and sur- other financial services. Motors, Illinois State University and Illinois Wesleyan rounding states, really appreciates Busey's delivery First Busey Securities and First Busey Trust & University that are growing and adding to their pay- system. This family-owned business likes having a Investment Co. play an important role in this strategy. rolls, thus fueling a booming housing market. Other bank that is small enough to care and yet big enough Business customers who appreciate our responsive- employers in health care, transportation and agribusi- to handle its needs. Brandt Trucking Vice Presidents ness and personal approach Bob Porter and Steve Kubsch have discovered there's to banking find they experi- a real benefit from being able to meet with their ence a similar level of serv- bankers on short notice to discuss loans, cash man- ice from our securities and agement or other business services. Busey's quick investment personnel. We response time is right on target for a business that will continue to grow our guarantees next-day delivery. employee benefit and Our unique combination of strengths holds the key retirement plan volume in 2002 Highlights • Originated over $170 million in mortgage loans • Net gains on sales of mortgage loans in excess of $1.6 million • 5th largest bank based on deposits ness provide additional growth and stability to the economy. Moreover, with annual agricul- tural output in excess of $250 million, McLean County leads the state in the production of corn and soybeans. Add to this the economic impact of Central to Busey's increasing presence in McLean County. McLean County through the joint efforts of our bank- Illinois Airport, and it's easy to see why Busey has In a market served by numerous regional and commu- ing and investment personnel. Likewise, our success chosen to expand in McLean County, enabling us to nity banks, Busey meets the competition head-on by in attracting residential mortgage customers provides serve more businesses, individuals, families and providing the best of both banking worlds. As a com- potential new customers for our complete range of farms. We're confident that focusing on the fastest- munity bank with a regional bank's lending limit, a investment services. Busey's customer-focused growing county in downstate Illinois is a strategy wide range of services and a commitment to technol- approach to investing is well received in the Illinois that will result in profitable growth and enhanced ogy, Busey is positioned to deliver consistent growth heartland by the many homeowners who have turned shareholder value. in McLean County. For several years, Busey has been to Busey for their mortgage loans. the market leader in residential mortgage lending in McLean County is an exciting place to do business. 9 Steve Kubsch (left) Vice President, Brandt Trucking Bob Porter (right) Vice President, Brandt Trucking Bloomington, IL 10 WhyIndianapolis? Whya Florida LPO? PARTNERSHIPS ADD VALUE. Our Indianapolis many reasons to bank with Busey. DIVERSIFICATION. One hallmark of a superior because of our experienced bankers and market Banking Center expands the Busey franchise to a Busey was just what Dr. Michael Evans was seeking loan portfolio is diversification. Our Florida Loan knowledge. Our referral business continues to grow market with solid growth potential. In Indianapolis, for his company, AIT Laboratories (American Institute Production Office (LPO) gives us a strong measure of because of this service. we serve small and middle market companies with a of Toxicology). The national and super-regional banks diversification while capitalizing on growth opportuni- Our relationship with experienced real estate complete line of business banking services. had shown little interest in this provider of forensic ties in south Florida. Now in its seventh year, our LPO developers on Florida's west coast puts us in the Bob Skalitzky Developer Marina Towers, Sarasota, FL Executive Vice President Don Monteith, along with Senior Vice President Lou Hensley and drug testing for law enforce- ment and business. In Busey, 2002 Highlights he found the perfect fit — has delivered consistent growth in earnings of at least middle of a booming commercial real estate market. 25% annually. This robust growth in the highly competi- 2002 Highlights and Vice President Joe Perrin, • 18% increase in total loans to $111million with both working capital and tive south Florida market has • No loan losses for the 7th straight year are more than loan officers to their business customers. With decades of experience, • Consistently ranked in the top ten as a SBA Preferred Lender in Indianapolis equipment financing, as well as direction on a number of issues facing his growing busi- these Busey bankers are frequently asked for busi- ness. AIT is now expanding into a huge new market ness and financial advice from their customers. This — providing clinical testing for the pharmaceutical generated excellent returns for our shareholders. Our Florida LPO focuses on two markets — community banks throughout south Florida • 33% increase in commercial loans out- standing to $109 million • Florida LPO commercial loan fees repre- sented over 34% of Busey Bank’s total commercial loan fees Sarasota developer Bob Skalitzky has been building high-rise condominiums on Florida's west coast for more than 35 years. A veteran builder, he turned to veteran Busey banker Tom Scharlau for the financing of his most Dr. Michael Evans Founder & President AIT Laboratories Indianapolis, IN approach to serving small and middle market compa- industry. Busey is right there, providing financing and that need a source of funding for loans exceeding recent project, a high-rise in downtown Sarasota. nies has proven highly successful for both the bank a variety of financial services, so that AIT can take their legal lending limits and real estate developers. Managing in excess of $100 million is a good and these businesses. advantage of this tremendous growth opportunity. Providing this traditional correspondent bank service example of Busey teamwork in action. With three Our business customers discover in Busey a Nominated by his Busey bankers, Dr. Evans and AIT to community banks is a natural fit for Busey as a lenders and two loan administrators, our Loan bank that offers a complete line of business banking received the SBA Small Business Advocate of the community bank with a regional bank's lending limit. Production Office associates work together to make services, including cash management, depository Year Award for Indiana in 2002. Working as a correspondent bank diversifies our loan sure their customers experience Busey's traditional services, international financing, trust and pension Small and middle market companies in Indiana portfolio in terms of both type and location of loans. superior customer service. management, plus financing capability in excess have a bank that is truly interested in them and pro- of $20 million. Local decision-making adds to the vides all the services they need to grow and succeed. We have earned a reputation in the Lee County banking community as “the little bank that can” 11 12 WhyBusey Bank Florida? WhyBusey Ag Resources? Scott & Diana Willis Owners, Jason’s Deli Ft. Myers, FL RAPIDLY GROWING MARKETS. A major compo- customers and newcomers alike with a personal wel- WE DO IT ALL! Why do landowners and farmers strategies, and issues related to taxes and govern- nent of First Busey Corporation’s consistent growth in come. In the highly competitive southwest Florida choose Busey? Because Busey Ag Resources can do it ment programs. Farmers, landowners and others earnings has been our ability to invest our resources market, Busey is making our mark by going the extra all. Our complete array of ag services includes farm involved with agriculture may call seeking information in expanding markets. Busey Bank Florida provides mile in serving our customers. management, farmland sales and acquisitions, farm on one topic, but they soon discover they can turn to Forrest & Julian Stipp Agricultural Professionals Sidney, IL an excellent example. Southwest Florida is growing Take the case of Scott and Diana Willis, the owners appraisals, financial management and marketing. In Busey professionals for help in a variety of areas. rapidly. With more than 1,400 new residents in Lee of Jason's Deli, a fast-growing franchise that opened a 2002, real estate commissions created a greater source An excellent example is the case of Julian and County every month, there is a steady stream of newcomers 2002 Highlights needing banking services. • 41% increase in loans Busey Bank Florida is there to • 44% increase in total assets serve them with a complete menu of banking services, • 57% increase in deposits 4,000-square-foot restaurant in Ft. Myers in 2002. Before establishing a banking rela- tionship for their new venture, Scott and Diana visited numer- ous banks and chose Busey with special emphasis on lending, including commer- because of the warm welcome they received and the of revenue for our ag division. Ag personnel handled $2.7 mil- lion in farmland sales and gen- erated $109,000 in fee income. Consulting services, such as providing potential landowners with detailed financial analysis 2002 Highlights • Fees from sale of farm real estate increased over 169% from last year • Significantly enhanced plot research program, testing over 150 hybrid combinations Forrest Stipp. The brothers have farmed approximately 2,000 acres near Sidney, Illinois for Busey Ag Resources for sev- eral years. Farm manager Tom Wiggins introduced these well- respected farmers to Charlie cial, mortgage and consumer loans. In 2002, Busey level of professionalism they experienced. When of the income and appreciation potential for Huber in our Tolono Banking Center, who now counts Bank Florida expanded its presence in this growing Busey Bank Florida President Michael Geml learned their investments, also contributed to a growth in Stipp Brothers, Inc. among his customers. market by opening a branch office in Cape Coral and of the new business, he personally called on Scott fee income. Meeting the financial needs of farmers and adding mortgage lending personnel in Ft. Myers. and Diana, a move that further demonstrated Busey's The success Busey Ag Resources enjoys is also due landowners allows Busey to generate loans, earn Plans for 2003 include adding yet another Banking commitment to personal service and paved the way to having the right people. Ron Wesbecher, along with fee income and serve a significant market segment Center in Cape Coral. for the expansion of this new relationship. Accredited Farm Managers and Certified Crop in central Illinois. We will explore new ways to The growth of Busey Bank Florida is a direct result This clearly demonstrates that Busey’s strategy of Advisors, Tom Wiggins and Steve Myers, are more provide innovative financial services to the agri- of Busey associates who are committed to providing being in the right markets with the right people, and than service providers — they are trusted, knowledge- cultural community so that farmers and landowners outstanding customer service. When people walk in delivering the right products works in rapidly growing able partners. Daily, they field questions about every- alike can continue to respond to Why Busey? with the door of Busey Bank Florida, our associates greet southwest Florida. thing from seed and fertilizer selection, to marketing "Because Busey does it all." 13 14 WhyFirst Busey Trust & Investment Co.? A COMPREHENSIVE, CUSTOMER-FOCUSED and all First Busey subsidiaries. First Busey Trust customer Sid Tracy provides an APPROACH. First Busey Trust & Investment Co., This comprehensive, customer-focused approach excellent example of how Busey associates work under the umbrella of the Busey Investment Group, served us well in 2002 as investors recognized that together. His company, Traco Labs, was a valued provides one “BIG” reason for investors to choose the right kind of professional help really can make a Busey commercial banking customer. When Mr. Tracy Busey — our comprehensive, customer-focused difference. During the past year, First Busey Trust & sold the company, he knew he needed a profession- approach. Over the years, we've learned that while Investment Co. attracted $100 million in new assets al to manage his money. Busey Bank Senior Vice many people knew they needed professional help from approximately 100 new relationships. President Dennis McMillan introduced him to the with their investments and overall financial manage- Our well diversified, quali- ment, they did not know exactly what form that assis- ty-driven investment style tance should take. Did they need brokerage services, was right on target for 2002. a trust relationship, an investment management We appealed to investors account or estate planning? What about taxes or seeking to minimize overall long-term care insurance, retirement and education risk, reduce volatility and planning? During the past decade, the number of earn consistent returns. investment and financial services providers has pro- Having an experienced staff liferated, further complicating the decision-making that is second to none gives 2002 Highlights • First Busey Trust & Investment Co.’s net income increased 2%, despite a decline in the S & P 500 Index of 22% • Over $100 million generated in new assets • Addition of a CPA to expand our personal tax services investment company's Scott MacAdam. Mr. Tracy was famil- iar with Busey's customer- focused way of doing business and wanted to maintain that type of relationship. He knew Scott would be just as interest- ed in seeing him succeed with his investments as Dennis had process for investors. Busey a real advantage during challenging market been for his business on the banking side. At Busey Investment Group we offer all of these conditions. First Busey Trust & Investment Co.'s key Busey's conservative, comprehensive and cus- services under one umbrella. All people need to people all have at least 20 years experience as finan- tomer-focused approach enabled us to attract a sig- know is Busey. Because our associates work as a cial professionals. Because they've managed invest- nificant volume of new business in a challenging year team, we ensure that our customers deal with the ments through good markets and bad, they're able for the investment industry. We believe our way of right people for their individual needs. The result to provide our customers valuable insights plus a doing business is the right way to ensure continued is a seamless transition between First Busey Trust long-term perspective. earnings growth. Sid Tracy Entrepreneur Champaign, IL 15 16 WhyFirst Busey Securities, Inc.? A TRUSTED PERSPECTIVE. First Busey Securities, Busey's distinctive approach and staff expertise played a role in our 2002 accomplishments and the brokerage and securities arm of Busey are evident in our relationship with Carle Foundation shows great potential in this growth market. A suc- Investment Group, added more than 1,170 new cus- Hospital. In 2002, the Urbana-based healthcare cessful bankwide referral program also contributed tomers in 2002. This achievement is noteworthy in a provider selected First Busey Securities to provide to First Busey Securities' successful year. Busey asso- year when many securities firms experienced its 403(b) employee benefit plan. Education for Carle ciates from throughout the organization provided declines in their level of business. The Busey name employees figured promi- and reputation as a trusted financial advisor enabled nently in the choice. Senior us to attract new customers who were looking for Vice President Donna 2002 Highlights • Generated 1,170 new account rela- honest, objective advice. Greene and numerous other tionships When it comes to educational background and investment advisors coordi- level of professional training, our investment associ- nated enrollment meetings ates really shine. First Busey Securities personnel that included individual include several Certified Financial Planners. In addi- counseling sessions, "lunch • First Busey Securities, Inc. commis- sions fell only 2.2%, despite market declines of 15% to 30% in the major indexes referrals that resulted in a signif- icant number of new customers. We added an investment repre- sentative in Busey Bank’s head- quarters in Urbana and in our Champaign Banking Center early in 2003. This facilitates the referral process for our tion, all investment associates are licensed, and the and learn" meetings and a series of investment semi- associates and makes it easier for banking customers average length of employment is 14 years. With spe- nars. First Busey Securities personnel continue to to work directly with Securities personnel. cialists in nearly every financial discipline, including visit Carle, often several times each week, meeting We're committed to our distinctive approach to stocks, bonds, asset management, financial planning, with new employees or discussing investment issues serving our Securities customers. It's a winning strat- insurance, estate planning, retirement plans and with 403(b) participants. Carle's Director of Human egy that enhances our relationships with customers taxes, we provide a holistic approach to our cus- Resources, Kathy Howell, recognized that First Busey and provides long-term value for shareholders. tomers’ financial well-being. The addition of a private Securities is unique in its ability to provide in-depth banker makes it even more convenient for Securities investment education on a regular basis to Carle's customers to take care of banking business at our more than 2,000 employees. Windsor Road location in Champaign. First Busey Securities in McLean County also 17 Kathy Howell Director of Human Resources Carle Foundation Hospital 18 WhyInvest in BUSE? QUALITY LEADS TO STEADY GROWTH. The story ices delivered conveniently through branches, an seeking new customers. Several areas deserve of Busey is one of consistent growth in revenues extensive ATM network and Busey e-bank complete special recognition for 2002. The first is mortgage and earnings. the picture of Busey as a company dedicated to lending, which set a new record for loan originations We achieved these results by having a clear vision delivering quality. and gains on the sales of mortgage loans. The sec- of who we are and what we want to accomplish. Shareholder Kay Briscoe Through different economic climates and changes in was attracted to Busey as an our industry, we have stayed the course, and the out- investment because the com- come has been steady, solid results. pany stood for quality. As a In carrying out our vision, the single most impor- customer, she always found tant factor is our unwavering commitment to quality. Busey personnel to be pro- It starts with quality people — from our management fessional and dependable. team to the newest Busey associates. The men and When the opportunity arose women who lead the Busey organization are top- to invest in Busey stock, she notch individuals whose vast experience has taught welcomed the chance to be them how to weather the ups and downs of business both a customer and a share- cycles. They are flexible enough to change as times holder. Investor Highlights • BUSE stock out-performed NASDAQ, DJIA and S & P 500 Indexes by 83%, 62% and 77%, respectively, for the five year period ending December 31, 2002 • Annualized total return on BUSE stock exceeds 17% since its IPO on June 30, 1988 • $1,000 invested in BUSE stock on June 30, 1988 would have been worth $6,289 on December 31, 2002 ond area is the loan portfolio which exceeded $1 billion for the first time in the company’s history. Lastly, non-interest income increased 7.9%. Just as good coaches don't change their game plans when they're winning, Busey will follow the same course in 2003. We will remain an independent bank that oper- ates in growing geographical mar- dictate and seasoned enough not to overreact. Most Of course, the true test of a quality company is kets. We will focus our strategies on the goals set of all, they share a winning attitude that permeates how it performs in a challenging economic environ- forth in Vision 2010: to provide a return on average the organization. In turn, Busey associates are peo- ment. In 2002, Busey took the test and passed with equity of 20%, to return 1.4% on average assets, and ple who want to be part of a winning team. This flying colors. We did it by managing our assets and to attain double-digit core earnings growth. approach means we attract quality customers — liabilities for profitability rather than simply for businesses and individuals who want to deal with growth, maintaining our credit standards, continuing the best. The result is a quality loan portfolio and our expansion plans, proactively implementing new dependable earnings. Innovative products and serv- efficiencies, protecting valuable relationships and Kay Briscoe Long-time Busey Shareholder Urbana, IL 19 20 WhyCommunity Involvement? SERVICE IS AT THE HEART OF BUSEY. A commitment to Kim Lewis, Busey's web designer, is involved in community service has been a hallmark throughout one of the more unusual service projects. Kim and Busey’s 134-year history. At Busey, we know that by Jake, her three-year old Belgian Tervuren, are mem- serving our communities we improve the quality of bers of ISAR — Illinois Search and Rescue — and cur- life for our customers and employees, as well as peo- rently are training to become a certified search and ple we may never meet. Busey associates can be found working in most every civic and charitable organiza- tion in all of our communities. They are members of boards of directors, serve as commit- tee chairs and work as hands- on volunteers in Chambers of Commerce, schools, churches, health and welfare organiza- tions, children's agencies and service clubs. People see that 2002 Highlights • Busey contributed nearly $200,000 to area youth and student activities, arts programs, sporting events and com- munity needs • In 2002, Busey Associates donated over 15,700 hours of volunteer serv- ice in over 100 different organiza- tions. They can be found throughout the Busey market areas lending a hand where needed — it’s “The Busey Way!” rescue team. To date, Kim is certified in CPR and First Aid and is an amateur radio operator-KC9DDX. Her activi- ties with ISAR total at least 10 hours every week. ISAR, an entirely volunteer organi- zation, works with law enforcement agencies throughout Illinois as well as parts of Indiana and Missouri. An ISAR member for the past three years, Kim also serves Kim Lewis Busey Bank Associate and Jake what matters to them also matters to us. The result is as the group's treasurer. that Busey comes to mind first when people name The American spirit of volunteering is unmatched their community's leading financial institution. We by any other people in the world. At Busey, we take believe our position as the area's leading financial pride in doing our part in helping to make our com- institution is directly related to our image as a com- munities — and the world — a better place. munity-involved and service-oriented organization. First Busey Corporation and Busey Bank Boards of Directors Joseph M. Ambrose Samuel P. Banks T.O. Dawson Victor F. Feldman, M.D. Kenneth M. Hendren E. Phillips Knox Barbara J. Kuhl Busey Bank Florida Board of Directors Todd A.Caruso Carol P. Conway Michael J. Frye P. David Kuhl V.B. Leister, Jr. Douglas C. Mills Linda M. Mills Edwin A. Scharlau II David C. Thies Arthur R. Wyatt Michael P. Geml Edwin A. Scharlau II Management Teams (As of January 1, 2003) First Busey Corporation Douglas C. Mills, Chairman & CEO Barbara J. Kuhl, President & COO Edwin A. Scharlau II, Vice Chairman Barbara J. Jones, EVP & CFO Thomas M. Good, EVP Busey Bank P. David Kuhl, Chairman & CEO David D. Mills, President & COO Susan E. Abbott, EVP Don A. Monteith, EVP Lee H. O’Neill, EVP Donald J. Schlorff, EVP David R. Wampler, EVP Busey Bank Florida Edwin A. Scharlau II, Chairman & CEO Michael P. Geml, President & COO Busey Investment Group Edwin A. Scharlau II, Chairman & CEO R. Scott MacAdam, President & CEO First Busey Trust & Investment, Co. Curt A. Anderson, President Glen C. Paine, Chairman First Busey Trust & Investment, Co. 21 22 CONDENSED CONSOLIDATED BALANCE SHEETS CONDENSED CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31 2002 2001 2000 Years Ended December 31 2002 2001 2000 (dollars in thousands) (dollars in thousands, except per share data) 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 $ 47,645 233,830 1,101,043 (15,460) $ 61,580 210,869 $ 93,285 228,597 978,106 (13,688) 984,369 (12,268) $1,085,583 $ 964,418 $ 972,101 27,359 9,844 31,317 29,081 10,504 24,237 31,253 12,255 17,553 $1,435,578 $ 1,300,689 $ 1,355,044 $ 151,105 1,062,500 $ 138,685 967,314 $ 134,669 1,014,118 $1,213,605 $ 1,105,999 $ 1,148,787 2,467 71,759 25,000 7,584 11,767 47,021 25,000 5,112 48,890 55,259 — 9,783 $1,320,415 $ 1,194,899 $ 1,262,719 $ 6,291 20,862 91,639 10,276 $ 6,291 21,170 81,861 8,128 $ 6,291 22,044 73,215 5,917 $ 129,068 $ 117,450 $ 107,467 (12,050) (1,855) (9,639) (2,021) (12,858) (2,284) Total stockholders’ equity $ 115,163 $ 105,790 $ 92,325 Total liabilities and stockholders’ equity $1,435,578 $ 1,300,689 $ 1,355,044 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 $ 66,586 $ 76,618 $ 79,924 7,198 2,041 260 10,128 2,060 1,179 10,657 2,034 627 $ 76,085 $ 89,985 $ 93,242 $ 24,598 394 3,252 2,250 $ 30,494 $ 45,591 3,125 $ 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 Net interest income after provision for loan losses $ 42,466 $ 41,530 $ 40,251 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 $ 4,567 7,054 2,106 762 8,048 $ 22,537 $ 21,003 3,076 3,469 660 10,718 $ 38,926 $ 26,077 8,173 $ 17,904 $ $ 1.32 1.31 $ 4,607 6,121 2,162 1,285 7,285 $ 4,364 5,341 1,901 737 5,945 $ 21,460 $ 18,288 $ 21,066 3,110 3,847 1,751 9,200 $ 38,974 $ 24,016 8,363 $ 19,080 3,115 3,614 2,288 9,152 $ 37,249 $ 21,290 7,237 $ 15,653 $ 14,053 $ $ 1.16 1.15 $ $ 1.05 1.03 First Busey Corporation 23 First Busey Corporation 24 SUPPLEMENTAL INFORMATION FIVE YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA Years Ended December 31 2002 2001 2000 Years Ended December 31 2002 2001 2000 1999 1998 (dollars in thousands) (dollars in thousands, except per share data) CHANGES IN STOCKHOLDERS’ EQUITY Balance at beginning of year $105,790 $ 92,325 $ 82,284 Net income Cash dividends declared Common stock issued Treasury stock purchased Principal payments on ESOP debt Change in accumulated other comprehensive income(1) Amortization of restricted stock issued under restricted stock award plan 17,904 (8,126) 876 (3,792) 247 2,148 116 15,653 (7,007) 5,595 (3,237) 244 14,053 (6,410) 581 (2,385) 337 2,211 3,843 6 22 Balance at end of year $115,163 $ 105,790 $ 92,325 RESERVE FOR POSSIBLE LOAN LOSSES Balance at beginning of year $ 13,688 $ 12,268 $ 10,403 Provision charged to expense Recoveries on loans previously charged off Loans charged off 3,125 476 (1,829) 2,020 176 (776) 2,515 124 (774) Balance at end of year As a percent of loans NON-PERFORMING LOANS Loans: $ 15,460 $ 13,688 $ 12,268 1.40% 1.40% 1.25% 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 Diluted earnings Cash dividends declared Book value Closing price OTHER INFORMATION Return on average assets Return on average equity Net interest margin* Stockholders’ equity to assets $1,435,578 233,830 1,101,043 1,213,605 71,759 115,163 $ 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 $ $ 76,085 30,494 45,591 17,904 1.31 .60 8.49 23.06 $ $ 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 19.94 72,311 34,920 37,391 12,548 $ 67,048 32,975 34,073 11,398 .90 .44 6.08 22.63 $ .81 .39 6.36 18.25 1.33% 1.19% 1.12% 1.22% 1.22% 16.31 3.74 8.02 15.80 3.64 8.13 16.56 3.74 6.81 14.68 4.02 6.60 14.02 4.10 9.15 Non-accrual Loans 90 days past due and still accruing $ 1,265 963 $ 1,265 959 $ 767 4,667 Total non-performing loans $ 2,228 $ 2,224 $ 5,434 *Calculated as a percent of average earning assets. As a percent of loans 0.20% 0.23% 0.55% First Busey Corporation First Busey Corporation 25 (1) Change in unrealized gain on investment securities available for sale, net 26 First Busey Corporation® 201 W. MAIN STREET URBANA, IL 61801 (217) 365-4556 www.busey.com Nasdaq: BUSE 

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