FIRST BUSEY CORP /NV/ - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended 6/30/2002 Commission File No. 0-15950

FIRST BUSEY CORPORATION

(Exact name of registrant as specified in its charter)

Nevada 37-1078406
- ---------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
Incorporation or organization) No.)

201 W. Main St.,
Urbana, Illinois 61801
- ---------------------------------------- ------------------------------------
(Address of principal (Zip Code)
executive offices)

Registrant's telephone number, including area code: (217) 365-4556

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No
--- ---

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.

Class Outstanding at August 1, 2002
- -------------------------------------------------------------------------------
Common Stock, without par value 13,612,920

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2002 AND DECEMBER 31, 2001
(UNAUDITED)

See notes to unaudited consolidated financial statements.

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(UNAUDITED)

See notes to unaudited consolidated financial statements.

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED JUNE 30, 2002 AND 2001
(UNAUDITED)

See notes to unaudited consolidated financial statements.

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(UNAUDITED)

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(UNAUDITED)

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: INTERIM FINANCIAL STATEMENTS
The consolidated interim financial statements of First Busey Corporation and
Subsidiaries are unaudited, but in the opinion of management reflect all
necessary adjustments, consisting only of normal recurring accruals, for a fair
presentation of results as of the dates and for the periods covered by the
financial statements. In preparing the consolidated financial statements, the
Corporation's management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses for the
reporting period. Actual results could differ from those estimates. The results
for the interim periods are not necessarily indicative of the results of
operations that may be expected for the fiscal year.

NOTE 2: LOANS
The major classifications of loans at June 30, 2002 and December 31, 2001 were
as follows:

The real estate-mortgage category includes loans held for sale with carrying
values of $11,681,000 at June 30, 2002 and $21,884,000 at December 31, 2001;
these loans had fair market values of $11,866,000 and $22,069,000 respectively.

The following table sets forth the maturities of the loan portfolio:

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3: EARNINGS PER SHARE

Net income per common share has been computed as follows:

NEW ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2002, First Busey Corporation applied FASB Statement No.
142, Goodwill and Other Intangible Assets. Among its provisions is a requirement
to disclose what reported net income would have been in all periods presented
exclusive of amortization expense, net of related income tax effects, recognized
in those periods related to goodwill, intangible assets no longer being
amortized, and changes in amortization periods for intangible assets that will
continue to be amortized together with related per share amounts.

In June, 2001, Statement of Financial Accounting Standards No. 143, "Accounting
for Asset Retirement Obligations," was issued to address financial reporting and
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This Statement applies to all entities and to
legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development or normal operations of a
long-lived asset, except for certain obligations of lessees. Statement No. 143
is effective for financial statements issued for fiscal years beginning after
June 15, 2002. The Corporation does not believe the adoption of the Standard
will have a material impact on the consolidated financial statements.

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In August, 2001, Statement on Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-lived Assets," was issued to
supercede Statement No. 121, "Accounting for Impairment and for Long-lived
Assets to Be Disposed Of," and the accounting and reporting provisions of APB
Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions." Statement No. 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2002, and
interim periods within those fiscal years, with early application encouraged.
The Corporation does not believe the adoption of the Standard will have a
material impact on the consolidated financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management's discussion and analysis of the financial condition
of First Busey Corporation and Subsidiaries ("Corporation") at June 30, 2002
(unaudited) as compared with December 31, 2001 and the results of operations for
the six months ended June 30, 2002 and 2001 (unaudited) and the results of
operations for the three months ended June 30, 2002 and 2001 (unaudited). This
discussion and analysis should be read in conjunction with the Corporation's
consolidated financial statements and notes thereto appearing elsewhere in this
quarterly report. The accompanying unaudited financial statements should be read
in conjunction with the First Busey Corporation consolidated financial
statements and related notes appearing in the 2001 annual report previously
filed on Form 10-K.

FINANCIAL CONDITION AT JUNE 30, 2002 AS COMPARED TO DECEMBER 31, 2001

Total assets increased $55,876,000 or 4.3%, to $1,356,565,000 at June 30, 2002
from $1,300,689,000 at December 31, 2001. Securities available for sale
increased $7,613,000, or 3.6%, to $218,482,000 at June 30, 2002 from
$210,869,000 at December 31, 2001. Loans increased $31,045,000, or 3.2%, to
$1,009,151,000 at June 30, 2002 from $978,106,000 at December 31, 2001,
primarily due to increases in real estate construction, 1-4 family mortgages,
and non-farm nonresidential mortgages. These increases were partially offset by
a decrease in commercial loan balances.

Total deposits increased $29,813,000, or 2.7%, to $1,135,812,000 at June 30,
2002 from $1,105,999,000 at December 31, 2001. Noninterest-bearing deposits
decreased 2.9% to $134,671,000 at June 30, 2002 from $138,685,000 at December
31, 2001. Interest-bearing deposits increased 3.5% to $1,001,141,000 at June 30,
2002 from $967,314,000 at December 31, 2001.

There were no short-term borrowings as of June 30, 2002 as compared to
$2,000,000 at December 31, 2001. Long-term debt increased $23,000,000 or 48.9%
to $70,021,000 at June 30, 2002, as compared to $47,021,000 at December 31,
2001. The increase in long-term debt is due to increases in Federal Home Loan
Bank (FHLB) advances outstanding which were used primarily to fund loan growth.

In the first six months of 2002, the Corporation repurchased 84,868 shares of
its common stock at an aggregate cost of $1,796,000. The Corporation is
purchasing shares for the treasury as they become available in order to meet
future issuance requirements of previously granted non-qualified stock options.
As of June 30, 2002, there were 236,200 outstanding options currently
exercisable. There were an additional 353,192 stock options outstanding but not
currently exercisable.

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ASSET QUALITY

The following table sets forth the components of non-performing assets and past
due loans.

The ratio of non-performing assets to loans plus non-performing assets increased
to 0.68% at June 30, 2002, from 0.23% at December 31, 2001. This was due to an
increase in other real estate owned. The increase in other real estate owned was
due primarily to the addition of $4 million for one large commercial credit in
the hotel industry. Busey Bank became mortgagee in possession on June 28, 2002,
and will remain so pending the completion of foreclosure proceedings.

Loans 90 days past due and still accruing at June 30, 2002, were $484,000 or
0.05% of total loans, compared to $959,000, or 0.10% of total loans as of
December 31, 2001. These loans are in the process of collection, and management
believes that sufficient collateral value securing these loans exists to cover
contractual interest and principal payments on the loans.

RESERVE FOR LOAN LOSSES

The Corporation maintains its allowance for loan losses at a level management
believes will be adequate to absorb estimated losses on existing loans based on
an evaluation of the collectibility of loans and prior loss experience. The
allowance is calculated using a risk rating system which involves judgments,
estimates, and uncertainties that are susceptible to change. This risk rating
system is based on continuous credit reviews of the loan portfolio and considers
changes in the nature and volume of the loan portfolio, overall portfolio
quality, loan concentrations, specific problem loans, current and anticipated
economic conditions that may affect the borrowers' ability to pay, historical
loan loss experience and other factors, which, in management's opinion, deserve
current recognition in estimating loan losses. Changes in these factors or
conditions could have significant impact on the Corporation's financial
condition or results of operation.

POTENTIAL PROBLEM LOANS

Potential problem loans are those loans which are not categorized as impaired,
non-accrual, past due or restructured, but where current information indicates
that the borrower may not be able to comply with present loan repayment terms.
Management assesses the potential for loss on such loans as it would with other
problem loans and has considered the effect of any potential loss in determining
its provision for possible loan losses. Potential problem loans totaled $534,000
at June 30, 2002. There are no other loans identified which management believes
represent or result from trends or uncertainties which management reasonably
expects will materially impact future operating results, liquidity or capital
resources. There are no other credits identified about which management is aware
of any information which causes management to have serious doubts as to the
ability of such borrower(s) to comply with the loan repayment terms.

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RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2002 AS COMPARED TO JUNE 30, 2001

SUMMARY

Net income for the six months ended June 30, 2002 increased 10.5% to $8,977,000
as compared to $8,125,000 for the comparable period in 2001. Year-to-date
diluted earnings per share increased 10.0% to $.66 at June 30, 2002 as compared
to $.60 for the same period in 2001.

Operating earnings, which exclude security gains and the related tax expense,
were $8,692,000, or $.64 per share for the six months ended June 30, 2002, as
compared to $7,599,000, or $.56 per share for the same period in 2001.

The Corporation's return on average assets was 1.40% for the six months ended
June 30, 2002, as compared to 1.24% for the comparable period in 2001. The
return on average assets from operations of 1.35% for the six months ended June
30, 2002 was 19 basis points higher than the 1.16% level achieved in the
comparable period of 2001.
During the six months ended June 30, 2002, the Corporation recognized net
security gains of approximately $285,000, after income taxes, representing 3.2%
of net income. During the same period in 2001, net security gains of $526,000,
after income taxes, were recognized, representing 6.5% of net income.

EARNING ASSETS, SOURCES OF FUNDS, AND NET INTEREST MARGIN

The Corporation's net interest margin expressed as a percentage of average
earning assets stated on a fully taxable equivalent basis, was 3.82% for the six
months ended June 30, 2002, as compared to 3.61% for the same period in 2001.
The net interest margin expressed as a percentage of average total assets, also
on a fully taxable equivalent basis, was 3.56% for the six months ended June 30,
2002, compared to 3.40% for the same period in 2001.

Interest income, on a tax equivalent basis, for the six months ended June 30,
2002 decreased $10,255,000 or 21.2% to $38,056,000 from $48,311,000 for the
comparable period in 2001. The decrease in interest income resulted partially
from a decrease in average earning assets but more significantly in the rates
paid on average earning assets for the period ended June 30, 2002, as compared
to the same period of 2001. The average yield on interest-earning assets
decreased from 7.83% for the six months ended June 30, 2001 to 6.35% for the
same period in 2002 due to decreases in the yields on all categories of
interest-earning assets.

Average earnings assets for the first six months of 2002 were $1,208,862,000,
down $35,764,000 or 2.9% from $1,244,626,000 for the same period in 2001.
Average interest-bearing liabilities were $1,050,672,000 for the six months
ending June 30, 2002, a decrease of $53,246,000 or 4.8% from $1,103,918,000 for
the same period in 2001. Runoff in higher-costing time deposit category was
replaced by growth in savings and money market deposits.

Total interest expense decreased $10,844,000 or 41.7% for the six months ended
June 30, 2002 as compared to the prior year period. This decrease resulted from
changes in the mix of funding sources primarily from the lower rates paid on all
categories of interest-bearing liabilities.

PROVISION FOR LOAN LOSSES

The provision for loan losses of $1,480,000 for the six months ended June 30,
2002 is $585,000 higher than the provision for the comparable period in 2001.
The provision and expense level of net charge-offs for the period resulted in
the reserve representing 1.37% of total loans and 835% of non-performing loans
at June 30, 2002, as compared to the reserve representing 1.40% of total loans
and 615% of non-performing loans at December 31, 2001. The adequacy of the
reserve for loan losses is consistent with management's consideration of the

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composition of the portfolio, non-performing asset levels, recent credit quality
experience, historic charge-off trends, prevailing economic conditions among
other factors.

The net chargeoff ratio (net chargeoffs as percentage of average loans) was
0.14% for the six months ending June 30, 2002, which increased from 0.02% for
the same period in 2001.

Like many other financial institutions, the corporation is concerned about the
continued weakening of the economy in 2002. Should the economic climate continue
to deteriorate, borrowers may experience difficulty, and the level of
non-performing loans, charge-offs, and delinquencies could rise and require
further increases in the provision for loan losses which may cause the
Corporation's net income to decrease.

OTHER INCOME, OTHER EXPENSE AND INCOME TAXES

Total other income, excluding security gains, increased $345,000 or 3.4% for the
six months ended June 30, 2002 as compared to the same period in 2001. Growth in
service charge income and gains on the sale of loans offset declines in
commissions and brokers' fees and net commissions from travel services. In
December, 2001, the Corporation sold the customer list of its travel agency
subsidiary. As a result of this sale, no commissions from travel services were
recognized in the six months ending June 30, 2002, as compared to $526,000 for
the comparable period in 2001.

Gains of $1,356,000 were recognized on the sale of $99,566,000 of loans for the
six months ended June 30, 2002 as compared to gains of $966,000 on the sale of
$97,425,000 of pooled loans in the prior year period. Management anticipates
continued sales from the current mortgage loan production in order to maintain
the asset/liability structure that the Corporation is trying to effect. The
Corporation may realize gains and/or losses on these sales dependent upon
interest rate movements and upon how receptive the debt markets are to mortgage
backed securities.

Total other expenses decreased 3.8% or $735,000 to $18,395,000 for the six
months ended June 30, 2002 as compared to $19,130,000 for the same period in
2001.

Salaries and wages expense remained relatively constant for the first six months
of 2002 as compared to the same period in 2001. Employee benefits expense
increased $20,000 to $1,823,000 for the first six months of 2002 as compared to
$1,803,000 in the same period in 2001. The Corporation had 473 and 502 full-time
equivalent employees as of June 30, 2002 and 2001, respectively.

Occupancy and furniture and equipment expenses decreased 7.8% to $3,229,000 for
the six months ended June 30, 2002 from $3,501,000 in the prior year period.

The Corporation's net overhead expense, total non-interest expense less
non-interest income divided by average assets, decreased to 1.14% for the six
months ended June 30, 2002 from 1.22% in the prior year period as a result of
the changes in the income and expense items described above.

The Corporation's efficiency ratio is defined as operating expenses divided by
net revenue. (More specifically it is defined as non interest expense expressed
as a percentage of the sum of tax equivalent net interest income and non
interest income, excluding security gains). The consolidated efficiency ratio
for the six months ended June 30, 2002, was 55.0% as compared to 58.8% for the
same period in 2001.

Income taxes for the six months ended June 30, 2002 decreased to $4,457,000 as
compared to $4,586,000 for the comparable period in 2001. As a percent of income
before taxes, the provision for income taxes decreased to 33.2% for the six
months ended June 30, 2002 from 36.1% for the same period in 2001. The provision
for income taxes as a percentage of income before taxes has decreased due to the
addition of income from bank owned life insurance which is nontaxable to the
Corporation and to the reduction in nondeductible amortization expense.

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RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2002 AS COMPARED TO JUNE 30, 2001

SUMMARY

Net income for the three months ended June 30, 2002 increased 6.5% to $4,287,000
as compared to $4,027,000 for the comparable period in 2001. Diluted earnings
per share increased 6.7% to $.32 at June 30, 2002 as compared to $.30 for the
same period in 2001.

Operating earnings, which exclude security gains and the related tax expense,
were $4,167,000, or $.31 per share for the three months ended June 30, 2002, as
compared to $3,894,000, or $.29 per share for the same period in 2001.

The Corporation's return on average assets was 1.32% for the three months ended
June 30, 2002, as compared to 1.23% achieved for the comparable period in 2001.
The return on average assets from operations for the three months ended June 30,
2002 of 1.28% was nine basis points higher than the 1.19% level achieved in the
comparable period of 2001.

EARNING ASSETS, SOURCES OF FUNDS, AND NET INTEREST MARGIN

The net interest margin expressed as a percentage of average earning assets was
3.77% for the three months ended June 30, 2002, an increase of 14 basis points
from the level achieved for the like period in 2001. The net interest margin
expressed as a percentage of average total assets increased 10 basis points to
3.52% for the three months ended June 30, 2002, compared to 3.42% for the same
period in 2001. The increase in the net interest margin resulted from a 140
basis point decrease in the yield on interest-earning assets offset by a 154
basis point decrease in the rates paid on interest-bearing liabilities.

Interest income on a fully taxable equivalent basis decreased $4,654,000, or
19.7% for the three months ended June 30, 2002 from the same period in 2001. The
decrease resulted primarily from the decline in market interest rates.

Total interest expense decreased $4,885,000 or 39.3% for the three months ended
June 30, 2002 as compared to the prior year period. This decline is primarily
due to the decline in rates paid on interest-bearing liabilities combined with a
change in the mix of funding sources.

OTHER INCOME, OTHER EXPENSE AND INCOME TAXES

During the three months ended June 30, 2002, the Corporation recognized security
gains of approximately $120,000, after income taxes, representing 2.8% of net
income. During the same period in 2001, security gains of approximately
$133,000, after income taxes, were recognized, representing 3.3% of net income.

Total other income, excluding security transactions, decreased 1.9% to
$5,387,000 for the three months ended June 30, 2002 as compared to $5,491,000
for the same period in 2001. This was a combination of the loss of net
commissions from travel services, and lower other income offset by an increase
in service charge income. Gains of $559,000 were recognized on the sale of
$39,844,000 of pooled loans for the three months ended June 30, 2002 as compared
to gains of $533,000 on the sale of $62,019,000 of pooled loans in the prior
year period.

Total other expense decreased 4.1% or $402,000 to $9,400,000 for the three
months ended June 30, 2002 as compared to the same period in 2001. Salaries and
wages expense decreased $35,000 or 0.8% and employee benefits expense increased
$57,000 or 6.8% for the three months ended June 30, 2002, as compared to the
same period last year. Occupancy and furniture and equipment expenses decreased
6.1% to $1,622,000 for the three months ended June 30, 2002 from $1,728,000 in
the prior year period.

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The consolidated efficiency ratio for the three months ended June 30, 2002 was
55.9% as compared to 58.7% for the prior year period. The change in the current
year efficiency ratio is due to the income and expense items noted above.

Income taxes for the three months ended June 30, 2002 decreased to $2,102,000 as
compared to $2,252,000 for the comparable period in 2001. As a percent of income
before taxes, the provision for income taxes decreased to 32.9% for the three
months ended June 30, 2001 from 35.9% for the same period in 2001. The provision
for income taxes as a percentage of income before taxes has decreased due to the
addition of income from bank owned life insurance which is nontaxable to the
Corporation and to the reduction in nondeductible amortization expense.

REPORTABLE SEGMENTS AND RELATED INFORMATION

First Busey Corporation has three reportable segments, Busey Bank, Busey Bank
Florida and First Busey Trust & Investment Co. Busey Bank provides a full range
of banking services to individual and corporate customers through its branch
network in Champaign, McLean and Ford Counties in Illinois, through its branch
in Indianapolis, Indiana, and through its loan production office in Fort Myers,
Florida. In November, 2001, Busey Bank fsb transferred its charter to Florida,
and changed its name to Busey Bank Florida. Simultaneously, the Illinois assets
of Busey Bank fsb were merged into Busey Bank. Busey Bank Florida provides a
full range of banking services to individual and corporate customers in Fort
Myers, Florida. First Busey Trust & Investment Company provides trust and asset
management services to individual and corporate customers throughout central
Illinois.

The Corporation's three reportable segments are strategic business units that
are separately managed as they offer different products and services and have
different marketing strategies.

The segment financial information provided below has been derived from the
internal profitability reporting system used by management to monitor and manage
the financial performance of the Corporation. The accounting policies of the
three segments are the same as those described in the summary of significant
accounting policies in the annual report. The Corporation accounts for
intersegment revenue and transfers at current market value.

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LIQUIDITY

Liquidity is the availability of funds to meet all present and future financial
obligations arising in the daily operations of the business at a minimal cost.
These financial obligations consist of needs for funds to meet extensions of
credit, deposit withdrawals and debt servicing.

The sources of short-term liquidity utilized by the Corporation consist of
non-reinvested asset maturities, deposits, borrowed funds, and capital funds.
Long-term liquidity needs will be satisfied primarily through retention of
capital funds. The Corporation does not deal in or use brokered deposits as a
source of liquidity. Additional liquidity is provided by bank lines of credit,
repurchase agreements and the ability to borrow from the Federal Reserve Bank
and the Federal Home Loan Bank of Chicago. The Corporation has an operating line
with American National Bank and Trust Company of Chicago in the amount of
$10,000,000 with $10,000,000 available as of June 30, 2002.

The Corporation's dependence on large liabilities (defined as time deposits over
$100,000 and short-term borrowings) increased to 9.1% at June 30, 2002 from 8.6%
at December 31, 2001. This is the ratio of total large liabilities to total
liabilities. Large liabilities increased $9,858,000 to $112,942,000 as of June
30, 2002, as compared to $103,084,000 as of December 31, 2001. Total liabilities
grew $50,895,000 to $1,245,794,000 as of June 30, 2002, as compared to
$1,194,899,000 as of December 31, 2001.

CAPITAL RESOURCES

Other than from the issuance of common stock, the Corporation's primary source
of capital is retained net income. During the six months ended June 30, 2002,
the Corporation earned $8,977,000 and paid dividends of $4,074,000 to
stockholders, resulting in a retention of current earnings of $4,903,000. The
Corporation's dividend payout for the six months ended June 30, 2002 was 45.4%.

The Corporation and the Banks are subject to regulatory capital requirements
administered by federal and state banking agencies. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Corporation and the Banks must meet specific capital guidelines that involve the
quantitative measure of their assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. Quantitative measures
established by regulation to ensure capital adequacy require the Corporation and
the Banks to maintain minimum amounts and ratios (set forth in the table below)
of total and Tier I capital (as defined in the regulations) to risk-weighted
assets (as defined), and Tier 1 capital (as defined) to average assets (as
defined). Management believes, as of June 30, 2002, that the Corporation and the
Banks meet all capital adequacy requirements to which they are subject.

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RATE SENSITIVE ASSETS AND LIABILITIES

Interest rate sensitivity is a measure of the volatility of the net interest
margin as a consequence of changes in market rates. The rate-sensitivity chart
shows the interval of time in which given volumes of rate-sensitive, earning
assets and rate-sensitive, interest bearing liabilities would be responsive to
changes in market interest rates based on their contractual maturities or terms
for repricing. It is, however, only a static, single-day depiction of the
Corporation's rate sensitivity structure, which can be adjusted in response to
changes in forecasted interest rates.

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The following table sets forth the static rate-sensitivity analysis of the
Corporation as of June 30, 2002.

The foregoing table shows a negative (liability sensitive) rate-sensitivity gap
of $189.1 million in the 1-30 day as there were more liabilities subject to
repricing in that time period than there were assets subject to repricing within
that same time period. The volume of assets subject to repricing exceeds the
volume of liabilities subject to repricing for all time periods beyond 30 days.
On a cumulative basis, however, the gap remains liability sensitive through one
year. The composition of the gap structure at June 30, 2002, will benefit the
Corporation more if interest rates decrease during the next year by allowing the
net interest margin to grow as liability rates would reprice more quickly than
rates on rate-sensitive assets. After 1 year, a rate increase would benefit the
Corporation because the volume of rate-sensitive assets subject to repricing
would exceed the volume of rate-sensitive liabilities subject to repricing.

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND INTEREST RATES
SIX MONTHS ENDED JUNE 30, 2002 AND 2001

(1) On a tax-equivalent basis, assuming a federal income tax rate of 35%
for 2002 and 2001.
(2) Non-accrual loans have been included in average loans, net of unearned
interest.

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CHANGES IN NET INTEREST INCOME
SIX MONTHS ENDED JUNE 30, 2002 AND 2001

(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35% for
2002 and 2001.

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND INTEREST RATES
QUARTERS ENDED JUNE 30, 2002 AND 2001

(1) On a tax-equivalent basis, assuming a federal income tax rate of 35% for
2002 and 2001.
(2) Non-accrual loans have been included in average loans, net of unearned
interest.

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FIRST BUSEY CORPORATION AND SUBSIDIARIES
CHANGES IN NET INTEREST INCOME
QUARTERS ENDED JUNE 30, 2002 AND 2001

(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35% for
2002 and 2001.

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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 the Corporation.

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. The Corporation 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 the Corporation to
successfully complete acquisitions, the continued growth of geographic regions
served by the Corporation, and the retention of individuals who currently are
very important in the management structure of the Corporation.

ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISK

Market risk is the risk of change in asset values due to movements in underlying
market rates and prices. Interest rate risk is the risk to earnings and capital
arising from movements in interest rates. Interest rate risk is the most
significant market risk affecting the Corporation as other types of market risk,
such as foreign currency exchange rate risk and commodity price risk, do not
arise in the normal course of the Corporation's business activities.

The Corporation's subsidiary banks, Busey Bank and Busey Bank Florida have
asset-liability committees which meet at least quarterly to review current
market conditions and attempt to structure the banks' balance sheets to ensure
stable net interest income despite potential changes in interest rates with all
other variables constant.

The asset-liability committee uses gap analysis to identify mismatches in the
dollar value of assets and liabilities subject to repricing within specific time
periods. The Funds Management Policy established by the asset-liability
committee and approved by the Corporation's board of directors establishes
guidelines for maintaining the ratio of cumulative rate-sensitive assets to
rate-sensitive liabilities within prescribed ranges at certain intervals. A
summary of the Corporation's gap analysis is summarized on page 18.

The committee does not rely solely on gap analysis to manage interest-rate risk
as interest rate changes do not impact all categories of assets and liabilities
equally or simultaneously. The asset-liability committee supplements gap
analysis with balance sheet and income simulation analysis to determine the
potential impact on net interest income of changes in market interest rates. In
these simulation models the balance sheet is projected out over a one-year
period and net interest income is calculated under current market rates, and
then assuming permanent instantaneous shifts in the yield curve of +/- 100 basis
point, + 200 basis points, and -175 basis points. These interest-rate scenarios
indicate the interest rate risk of the Corporation over a one-year time horizon
due to changes in interest rates, as of June 30, 2002, is as follows:

These results do not differ materially from those reported as of December 31,
2002.

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PART II - OTHER INFORMATION

ITEM 1: Legal Proceedings
Not Applicable

ITEM 2: Changes in Securities and Use of Proceeds
Not Applicable

ITEM 3: Defaults Upon Senior Securities
Not Applicable

ITEM 4: Submission of Matters to a Vote of Security Holders
The annual meeting of the stockholders of First Busey
Corporation was held on April 15, 2002. Please refer to the
Corporation's quarterly report filed on Form 10-Q for the
period ending March 31, 2002 for the results of the matters
approved by the stockholders.

ITEM 5: Other Information
Not Applicable

ITEM 6: Exhibits and Reports on Form 8-K
(a.) EXHIBITS

(b.) REPORTS ON FORM 8-K

On July 18, 2002, the Corporation filed a report on Form
8-K (Item 5) dated July 18, 2002, revising information
contained in its press release dated and issued July 15,
2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

FIRST BUSEY CORPORATION
(REGISTRANT)

By: //Barbara J. Jones//
---------------------------------------------------

Barbara J. Jones
Chief Financial Officer
(Principal financial and accounting officer)

By: //Douglas C. Mills//
---------------------------------------------------

Douglas C. Mills
Chairman of the Board and Chief Executive Officer

Date: August 14, 2002

(Certification of Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 accompanies this filing as
separate correspondence.)

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