First Busey Corporation Annual Report 2002

FY2002 Annual Report · First Busey Corporation

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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

......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.

Total Assets

Return On Average Assets

1,355

1,301

1,247

952

1,436

1.22

1.33

1.19

1.12

1998

1999

2000

2001

2002

1998

1999

2000

2001

2002

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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

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s
r
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Dividend

.44

.39

.60

.52

.48

Closing Stock Price

22.63

19.94

21.48

23.06

18.25

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a
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(

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

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1998

1999

2000

2001

2002

1998

1999

2000

2001

2002

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

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

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.

Steve Kubsch (left)

Vice President, Brandt Trucking

Bob Porter (right)

Vice President, Brandt Trucking

Bloomington, IL

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”

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."

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

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

Kathy Howell
Director of Human Resources
Carle Foundation Hospital

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

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.

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

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

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%

1.25%

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%

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

(1) Change in unrealized gain on investment securities available for sale, net

First Busey Corporation®
201 W. MAIN STREET
URBANA, IL 61801
(217) 365-4556
www.busey.com
Nasdaq: BUSE