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 3/31/2004 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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

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 May 1, 2004
- --------------------------------------------------------------------------------
Common Stock, without par value 13,680,302

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

2

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

March 31, 2004 December 31, 2003
-------------- -----------------
(Dollars in thousands)

ASSETS

Cash and due from banks $ 41,942 $ 52,397

Federal funds sold 5,100 -
Securities available for sale (amortized cost 2004, $193,250;
2003, $209,482) 209,599 224,733

Loans (net of unearned interest) 1,224,831 1,192,396
Allowance for loan losses (16,654) (16,228)
------------ ------------
Net loans 1,208,177 1,176,168

Premises and equipment 22,388 22,223
Cash surrender value of life insurance 17,045 16,836
Goodwill 7,380 7,380
Other intangible assets 1,995 2,100
Other assets 19,968 20,247
------------ ------------
Total assets $ 1,533,594 $ 1,522,084
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Deposits:
Non-interest bearing $ 169,401 $ 160,578
Interest bearing 1,088,608 1,096,017
------------ ------------
Total deposits 1,258,009 1,256,595

Federal funds purchased - 8,500
Securities sold under agreements to repurchase 8,526 7,500
Short-term borrowings 3,250 -
Long-term borrowings 100,603 92,853
Junior subordinated debt owed to unconsolidated trust 25,000 25,000
Other liabilities 9,641 6,459
------------ ------------
Total liabilities 1,405,029 1,396,907
------------ ------------

STOCKHOLDERS' EQUITY

Preferred stock - -
Common stock 6,291 6,291
Surplus 21,019 20,968
Retained earnings 105,070 102,288
Accumulated other comprehensive income 9,852 9,191
------------ ------------
Total stockholders' equity before treasury stock, unearned ESOP
shares and deferred compensation for restricted stock awards 142,232 138,738
Treasury stock, at cost (10,780) (10,667)
Unearned ESOP shares and deferred compensation for restricted stock
awards (2,887) (2,894)
------------ ------------
Total stockholders' equity 128,565 125,177
------------ ------------
Total liabilities and stockholders' equity $ 1,533,594 $ 1,522,084
============ ============

Common Shares outstanding at period end 13,680,902 13,677,477
============ ============

See accompanying notes to unaudited consolidated financial statements.

3

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(UNAUDITED)

2004 2003
-------- --------
(Dollars in thousands, except per
share amounts)

INTEREST INCOME:

Interest and fees on loans $16,639 $16,485
Interest and dividends on investment securities:
Taxable interest income 1,143 1,595
Non-taxable interest income 453 517
Dividends 20 38
Interest on federal funds sold 1 33
------- -------
Total interest income $18,256 $18,668
------- -------

INTEREST EXPENSE:
Deposits $ 4,247 $ 5,424
Short-term borrowings 68 45
Long-term borrowings 1,016 811
Junior subordinated debt owed to unconsolidated trust 563 563
------- -------
Total interest expense $ 5,894 $ 6,843
------- -------
Net interest income $12,362 $11,825
Provision for loan losses 425 600
------- -------
Net interest income after provision for loan losses $11,937 $11,225
------- -------

OTHER INCOME:
Trust fees $ 1,395 $ 1,107
Commissions and brokers fees, net 592 465
Service charges on deposit accounts 1,728 1,693
Other service charges and fees 468 450
Security gains, net 191 183
Gain on sales of loans 822 2,235
Increase in cash surrender value of life insurance 209 160
Other operating income 289 182
------- -------
Total other income $ 5,694 $ 6,475
------- -------

OTHER EXPENSES:
Salaries and wages $ 4,541 $ 4,689
Employee benefits 1,023 962
Net occupancy expense of premises 884 815
Furniture and equipment expenses 535 682
Data processing 438 509
Stationery, supplies and printing 220 293
Amortization of intangible assets 105 103
Other operating expenses 1,721 2,329
------- -------
Total other expenses $ 9,467 $10,382
------- -------
Income before income taxes $ 8,164 $ 7,318
Income taxes 2,804 2,476
------- -------
NET INCOME $ 5,360 $ 4,842
======= =======

BASIC EARNINGS PER SHARE $ 0.39 $ 0.36
======= =======
DILUTED EARNINGS PER SHARE $ 0.39 $ 0.35
======= =======

DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $ 0.19 $ 0.17
======= =======

See accompanying notes to unaudited consolidated financial statements.

4

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(UNAUDITED)

2004 2003
--------- ---------
(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,360 $ 4,842
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation 7 14
Depreciation and amortization 779 1,010
Provision for loan losses 425 600
Provision for deferred income taxes (221) (238)
Stock Dividends (99) (173)
Amortization of investment security discounts (11) (86)
Gain on sales of investment securities, net (191) (183)
Gain on sale of pooled loans (822) (2,235)
Gain on sale and disposition of premises and equipment - (2)
Market valuation adjustment on OREO property - 357
Change in assets and liabilities:
Decrease (increase) in other assets 872 (2,252)
Increase in accrued expenses 712 719
Decrease in interest payable (114) (201)
Increase in income taxes payable 2,369 2,283
Decrease in taxes receivable (593) -
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES BEFORE
LOAN ORIGINATIONS AND SALES $ 8,473 $ 4,455

Loans originated for sale (37,038) (107,157)
Proceeds from sales of loans 44,504 120,781
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 15,939 $ 18,079
--------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities classified available for sale $ 4,667 $ 7,627
Proceeds from maturities of securities classified available for sale 19,749 66,882
Purchase of securities classified available for sale (7,884) (73,749)
Increase in federal funds sold (5,100) (18,500)
Increase in loans (39,078) (10,358)
Proceeds from sale of premises and equipment - 138
Purchases of premises and equipment (839) (530)
Increase in cash surrender value of bank owned life insurance (209) (160)
--------- ---------
NET CASH USED IN BY INVESTING ACTIVITIES $ (28,694) $ (28,650)
--------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in certificates of deposit $ 1,100 $ (10,752)
Net increase (decrease) in demand, money market and saving deposits 314 10,059
Cash dividends paid (2,578) (2,305)
Purchase of treasury stock (610) (174)
Proceeds from sale of treasury stock 548 1,793
Net (decrease) increase in securities sold under agreement to repurchase (7,474) 6,538
Proceeds from short-term borrowings 3,250 -
Proceeds from long-term borrowings 7,750 6,000
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 2,300 $ 11,159
--------- ---------
Net (decrease) increase in cash and due from banks $ (10,455) $ 588
Cash and due from banks, beginning $ 52,397 $ 47,645
--------- ---------
Cash and due from banks, ending $ 41,942 $ 48,233
========= =========

See accompanying notes to unaudited consolidated financial statements

5

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(UNAUDITED)

2004 2003
------- -------
(Dollars in thousands)

Net income $ 5,360 $ 4,842
Other comprehensive income, before tax:
Unrealized gains on securities:
Unrealized holding gains (losses) arising during period 1,288 169
Less reclassification adjustment for gains included in net income (191) (183)
------- -------
Other comprehensive loss before tax 1,097 (14)
Income tax benefit related to items of other comprehensive income 436 (5)
------- -------
Other comprehensive loss, net of tax $ 661 $ (9)
------- -------
Comprehensive income $ 6,021 $ 4,833
======= =======

See accompanying notes to unaudited consolidated financial statements.

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. The consolidated financial statements have been prepared
in accordance with accounting principles generally accepted within the United
States of America for interim financial data and with the instructions to Form
10-Q and Article 10 of Regulation S-X. The results for the interim periods are
not necessarily indicative of the results of operations that may be expected for
the fiscal year.

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.

6

NOTE 2: LOANS

The major classifications of loans at March 31, 2004 and December 31, 2003 were
as follows:

March 31, 2004 December 31, 2003
-------------- -----------------
(Dollars in thousands)

Commercial $ 140,175 $ 138,272
Real estate construction 188,981 168,141
Real estate - farmland 10,357 11,890
Real estate - 1-4 family residential mortgage 397,650 406,102
Real estate - multifamily mortgage 97,179 91,325
Real estate - non-farm nonresidential mortgage 307,069 292,169
Installment 60,893 61,323
Agricultural 21,669 22,300
---------- ----------
$1,223,973 $1,191,522
Plus net deferred loan costs 858 874
---------- ----------
1,224,831 1,192,396

Less allowance for loan losses 16,654 16,228
---------- ----------
Net loans $1,208,177 $1,176,168
========== ==========

The real estate-mortgage category includes loans held for sale with carrying
values of $23,885,000 at March 31, 2004 and $30,529,000 at December 31, 2003;
these loans had fair market values of $24,103,000 and $30,609,000, respectively.

NOTE 3: INCOME PER SHARE

Net income per common share has been computed as follows:

Three Months Ended March 31,
2004 2003
----------- -----------

Net income $ 5,360,000 $ 4,842,000
Shares:
Weighted average common shares outstanding 13,571,826 13,550,573

Dilutive effect of outstanding options as determined by the
application of the treasury stock method 96,692 113,881
----------- -----------

Weighted average common shares outstanding, as
adjusted for diluted earnings per share calculation 13,668,518 13,664,454
=========== ===========

Basic earnings per share $ 0.39 $ 0.36
=========== ===========

Diluted earnings per share $ 0.39 $ 0.35
=========== ===========

NOTE 4: STOCK-BASED COMPENSATION

First Busey Corporation applies Accounting Principles Board Opinion No. 25 in
accounting for stock options and discloses the fair value of options granted as
permitted by SFAS No. 123. The Corporation has recorded no compensation expense
associated with stock options as all options granted under its plan had an
exercise price equal to the market value of the common stock when granted.

7

The following summarizes the pro-forma effects assuming compensation expense had
been recorded based upon the estimated fair value:

Three months ended March 31
2004 2003
----------- -----------
(dollars in thousands)

Net income as reported $ 5,360 $ 4,842
Less compensation expense determined under fair value method for
all options granted, net of related tax effects 57 64
----------- -----------
Pro-forma net income $ 5,303 4,778
=========== ===========

BASIC EARNINGS PER SHARE
Reported net income $ 0.39 $ 0.36
Less compensation expense - 0.01
----------- -----------
Pro-forma net income $ 0.39 $ 0.35
=========== ===========
DILUTED EARNINGS PER SHARE
Reported net income $ 0.39 $ 0.35
Less compensation expense - -
----------- -----------
Pro-forma net income $ 0.39 $ 0.35
=========== ===========

The Corporation has granted no stock options during 2004.

NOTE 5: JUNIOR SUBORDINATED DEBT OWED TO UNCONSOLIDATED TRUST

In June, 2001, First Busey Corporation issued $25 million in cumulative trust
preferred securities through a newly formed Delaware business trust, First Busey
Capital Trust I. The proceeds of the offering were invested by First Busey
Capital Trust I in junior subordinated deferrable interest debentures of the
Corporation. The trust is a wholly-owned subsidiary of the Corporation, and its
sole assets are the junior subordinated deferrable interest debentures.
Distributions are cumulative and are payable quarterly at a rate of 9.00% per
annum. Interest expense on the trust preferred securities was $562,500 for the
three month periods ended March 31, 2004 and March 31, 2003. Prior redemption is
permitted under certain circumstances such as changes in tax and investment
company regulations. The obligations of the trust are fully and unconditionally
guaranteed, on a subordinated basis, by the Corporation. The trust preferred
securities qualify as Tier 1 capital for regulatory purposes.

The trust preferred securities are mandatorily redeemable upon the maturity of
the debentures on June 18, 2031, and are callable beginning June 18, 2006.

Issuance costs of $1,340,000 related to the trust preferred debentures were
deferred and are being amortized over the period until mandatory redemption of
the debentures in June, 2031.

NOTE 6: OUTSTANDING COMMITMENTS

The Corporation is a party to financial instruments with off-balance sheet risk
in the normal course of business to meet the financing needs of its customers in
the way of commitments to extend credit. They involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the balance
sheets.

The Corporation's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual amount of those instruments. The corporation uses
the same credit policies in making commitments and conditional obligations as
they do for on-balance-sheet instruments.

8

A summary of the contractual amount of the Corporation's exposure to off-balance
sheet risk follows:

March 31, 2004 December 31, 2003
-------------------- --------------------
(Dollars in thousands)

Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit $ 307,504 $ 286,037
Standby letters of credit 12,655 11,682

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. These
commitments are generally at variable interest rates and generally have fixed
expiration dates or other termination clauses and may require payment of a fee.
Since many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash
requirements. The customer's credit worthiness is evaluated on a case-by-case
basis. The amount of collateral obtained, if it is deemed necessary by the
Corporation upon extension of credit, is based on management's credit evaluation
of the counter party. Collateral held varies but may include accounts
receivable, inventory, property and equipment and income-producing properties.

Standby letters of credit are conditional commitments issued by the Corporation
to guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing arrangements,
including bond financing and similar transactions and primarily have terms of
one year or less. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers.
The Corporation holds collateral, which may include accounts receivable,
inventory, property and equipment, income-producing properties, supporting those
commitments if deemed necessary. In the event the customer does not perform in
accordance with the terms of the agreement with the third party, the Corporation
would be required to fund the commitment. The maximum potential amount of future
payments the Corporation could be required to make is represented by the
contractual amount shown in the summary above. If the commitment is funded, the
Corporation would be entitled to seek recovery from the customer. As of March
31, 2004, and December 31, 2003, no amounts have been recorded as liabilities
for the Corporation's potential obligations under these guarantees.

NOTE 7: SUBSEQUENT EVENT

On April 30, 2004, First Busey Corporation, through First Busey Statutory Trust
II, issued $15 million of Trust Preferred Securities ("Securities") in a private
placement. The Securities were issued at an initial coupon rate of 3.82875%, pay
cumulative cash distributions quarterly, and are subject to repricing on a
quarterly basis (3-month LIBOR plus 2.65%). The proceeds of the offering were
invested by First Busey Statutory Trust II in junior subordinated deferrable
interest debentures of First Busey Corporation which represents all of the
assets of the Trust. The Securities are subject to mandatory redemption, in
whole or in part, upon repayment of the junior subordinated debentures at the
stated maturity or their earlier redemption, in each case at a redemption price
equal to the aggregate liquidation preference of the Securities plus any
accumulated and unpaid distributions thereon to the date of redemption. Prior
redemption is permitted under certain circumstances such as changes in tax and
investment company regulations subject to payment of premium above par value if
made within 5 years of issuance. The obligations of the trust are fully and
unconditionally guaranteed on a subordinated basis, by the Corporation.

First Busey Corporation intends to use the proceeds of these debentures for
general corporate purposes and to partially fund the acquisition of First
Capital Bankshares, Inc. On January 6, 2004, the Board of Directors of First
Busey Corporation entered into an agreement with the Board of Directors of First
Capital Bankshares, Inc. to acquire all of the issued and outstanding stock of
First Capital for approximately $42 million or $5,750 per share. The agreement
has been approved by the shareholders of First Capital. The acquisition is
scheduled to close on June 1, 2004, subject to receipt of required regulatory
approvals.

9

NOTE 8. NEW ACCOUNTING PRONOUNCEMENTS AND RECENT REGULATORY DEVELOPMENTS

First Busey Capital Trust I (the "Trust"), a Delaware statutory business trust
formed in 2001 under the Delaware Business Trust Act, was formed for the purpose
of issuing $25 million in trust preferred securities and investing the proceeds
in junior subordinated deferrable interest debentures of First Busey
Corporation. First Busey guarantees, on a limited basis, payments of
distributions on the trust preferred securities and payments on redemption of
the trust preferred securities.

Prior to the implementation of a new accounting standard in the first quarter of
2004, the financial statements of the Trust were included in the consolidated
financial statements of the Corporation because First Busey owns all of the
outstanding common equity securities of the Trust. However, because First Busey
is not the primary beneficiary of the Trust, in accordance with the new
accounting standard the financial statements of the Trust is no longer included
in the consolidated financial statements of the Corporation. The Corporation's
prior financial statements have been reclassified to de-consolidate the
Corproration's investment in the Trusts.

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 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. First Busey 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 First Busey
Corporation to successfully complete acquisitions, the continued growth of
geographic regions served by the Corporation, and the retention of key
individuals in the Corporation's management structure.

10

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 March 31, 2004
(unaudited) when compared with December 31, 2003 and the results of operations
for the three months ended March 31, 2004 and 2003 (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.

Certain reclassifications have been made to the balances, with no effect on net
income, as of and for the three months ending March 31, 2003, to be consistent
with the classifications adopted as of and for the three months ending March 31,
2004.

CRITICAL ACCOUNTING ESTIMATES

Critical accounting estimates are those that are critical to the portrayal and
understanding of the Corporation's financial condition and results of operations
and require management to make assumptions that are difficult, subjective or
complex. These estimates involve judgments, estimates and uncertainties that are
susceptible to change. In the event that different assumptions or conditions
were to prevail, and depending on the severity of such changes, the possibility
of materially different financial condition or results of operations is a
reasonable likelihood.

ALLOWANCE FOR LOAN LOSSES

First Busey Corporation has established an allowance for loan losses which
represents the corporation's estimate of the probable losses that have occurred
as of the date of the consolidated financial statements.

Management has established an allowance for loan losses which reduces the total
loans outstanding by an estimate of uncollectible loans. Loans deemed
uncollectible are charged against and reduce the allowance. Periodically, a
provision for loan losses is charged to current expense. This provision acts to
replenish the allowance for loan losses and to maintain the allowance at a level
that management deems adequate.

There is no precise method of predicting specific loan losses or amounts which
ultimately may be charged off on segments of the loan portfolio. The
determination that a loan may become uncollectible, in whole or in part, is a
matter of judgment. Similarly, the adequacy of the allowance for loan losses can
be determined only on a judgmental basis, after full review, including (a)
consideration of economic conditions and their effect on particular industries
and specific borrowers; (b) a review of borrowers' financial data, together with
industry data, the competitive situation, the borrowers' management capabilities
and other factors; (c) a continuing evaluation of the loan portfolio, including
monitoring by lending officers and staff credit personnel of all loans which are
identified as being of less than acceptable quality; (d) an in-depth evaluation,
on a monthly basis, of all impaired loans (loans are considered to be impaired
when based on current information and events, it is probable the Corporation
will not be able to collect all amounts due); and (e) an evaluation of the
underlying collateral for secured lending, including the use of independent
appraisals of real estate properties securing loans.

Periodic provisions for loan losses are determined by management based upon the
size and the quality of the loan portfolio measured against prevailing economic
conditions and historical loan loss experience and also based on specific
exposures in the portfolio. Management has instituted a formal loan review
system supported by an effective credit analysis and control process. The
Corporation will maintain the allowance for loan losses at a level sufficient to
absorb estimated uncollectible loans and, therefore, expects to make periodic
additions to the allowance for loan losses.

REVENUE RECOGNITION

Income on interest-earning assets is accrued based on the effective yield of the
underlying financial instruments. A loan is considered to be impaired when,
based on current information and events, it is probable the Corporation

11

will not be able to collect all amounts due. The accrual of interest income on
impaired loans is discontinued when there is reasonable doubt as to the
borrower's ability to meet contractual payments of interest or principal.

FINANCIAL CONDITION AT MARCH 31, 2004 AS COMPARED TO DECEMBER 31, 2003

Total assets increased $11,510,000, or 0.8%, to $1,533,594,000 at March 31, 2004
from $1,522,084,000 at December 31, 2003. Securities available for sale
decreased $15,134,000 or 6.7%, to $209,599,000 at March 31, 2004 from
$224,733,000 at December 31, 2003. Loans increased $32,435,000 or 2.7% to
$1,224,831,000 at March 31, 2004 from $1,192,396,000 at December 31, 2003,
primarily due to increases in the balances of real estate construction,
multifamily, and non-farm nonresidential mortgage loans offset partially by a
decline in the amount of 1-4 family mortgage loans.

Total deposits grew $1,414,000, or 0.1%, to $1,258,009,000 at March 31, 2004
from $1,256,595,000 at December 31, 2003. Non interest-bearing deposits
increased $8,823,000 or 5.5% to $169,401,000 at March 31, 2004 from $160,578,000
at December 31, 2003. Interest-bearing deposits decreased $7,409,000 or 0.7% to
$1,088,608,000 at March 31, 2004 from $1,096,017,000 at December 31, 2003.
Long-term borrowings increased $7,750,000 or 8.3% to $100,603,000 at March 31,
2004, as compared to $92,853,000 at December 31, 2003.

In the first three months of 2004, the Corporation repurchased 22,500 shares of
its common stock at an aggregate cost of $610,000. Following the repurchase of
these shares the Corporation has repurchased $432,756 shares under its 2001
Stock Repurchase Plan. On February 27, 2004, First Busey's board of directors
approved a stock repurchase plan for the repurchase of 500,000 shares of common
stock. Through March 31, 2004, the Corporation has made no repurchases under the
2004 plan.

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

March 31, 2004 December 31, 2003
-------------------- ----------------------
(Dollars in thousands)

Non-accrual loans $ 2,695 $ 2,638
Loans 90 days past due, still accruing 727 581
Restructured loans - -
------------------- ---------------------
Non-performing loans 3,422 3,219
Other real estate owned 4,783 4,781
Non-performing other assets 1 10
------------------- ---------------------
Total non-performing assets $ 8,206 $ 8,010
=================== =====================
Total non-performing assets as a percentage of total assets 0.54% 0.53%
=================== =====================
Total non-performing assets as a percentage of loans plus non-performing assets 0.67% 0.67%
=================== =====================

Non-performing loans increased $203,000 to $3,422,000 as of March 31, 2004,
compared to $3,219,000 as of December 31, 2003. This is due to moderate
increases in both non-accrual loans and loans 90 days past due, still accruing.
The balance of other real estate owned was $4,783,000 as of March 31, 2004,
reflecting minimal change from the balance on December 31, 2003.

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 probable loan losses. Potential problem loans totaled
$5,511,000 as of March 31, 2004, as compared to $10,566,000 as of December 31,
2003. 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

12

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.

RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2004 AS COMPARED TO MARCH 31, 2003

SUMMARY

Net income for the three months ended March 31, 2004, increased $518,000 or
10.7% to $5,360,000 as compared to $4,842,000 for the comparable period in 2003.
Diluted earnings per share increased $0.04 or 11.4% to $.39 for the quarter
ending March 31, 2004, as compared to $0.35 for the same period in 2003.

The Corporation's return on average assets, net income annualized over the
three-month period expressed as a percentage of average assets, was 1.42% for
the three months ended March 31, 2004, as compared to 1.38% achieved for the
comparable period in 2003. The Corporation's return on average stockholders'
equity, net income annualized over the three-month period expressed as a
percentage of average equity, was 17.01% for the three months ended March 31,
2004, as compared to 16.73% for the same period in 2003.

EARNING ASSETS, SOURCES OF FUNDS, AND NET INTEREST MARGIN

Average earning assets increased $90,576,000 or 6.8% to $1,422,618,000 for the
quarter ending March 31, 2004, as compared to $1,332,042,000 for the same period
last year. This is due primarily to growth in the average balance of outstanding
loans, partially offset by declines in the average balance of U.S. Government
obligations and obligations of states and political subdivisions.

Interest-bearing liabilities averaged $1,218,146,000 for the quarter ending
March 31, 2004, an increase of $60,331,000 or 5.2% from the average balance of
$1,157,815,000 for the same period in 2003. Growth in long-term borrowings,
short-term borrowings, interest-bearing transaction accounts, savings, and money
market deposits, was partially offset by a decline in the average balance of
time deposits.

Net interest margin, the Corporation's net interest income expressed as a
percentage of average earning assets stated on a fully taxable equivalent basis,
was 3.58% for the three months ended March 31, 2004, as compared to 3.70% for
the same period in 2003. The net interest margin expressed as a percentage of
average total assets, also on a fully taxable equivalent basis, was 3.36% for
the three months ended March 31, 2004, compared to 3.43% for the comparable
period in 2003.

Interest income, on a tax equivalent basis, for the three months ended March 31,
2004 was $18,545,000, which is $447,000 or 2.4% less than for the comparable
period in 2003. The average yield on total earning assets declined 54 basis
points to 5.24% for the first quarter of 2004 as compared to 5.78% for the same
period in 2003. The decline in yield on all categories of interest-earning
assets combined with declines in the average balances of U.S. Government
obligations and obligations of states and political subdivisions offset growth
in the average balances of loans.

Interest expense for the three months ended March 31, 2004, was $5,894,000,
which is $949,000 or 13.9% lower than for the comparable period in 2003. The
average rate paid on total interest-bearing liabilities declined 45 basis points
to 1.95% for the first quarter of 2004 as compared to 2.40% for the same period
in 2003. Declines in rates paid on all categories of interest-bearing
liabilities offset growth in the average balances of long-term debt and
short-term borrowings was offset.

PROVISION FOR LOAN LOSSES

The provision of loan losses of $425,000 for the three months ended March 31,
2004, was $175,000 less than the provision expense of $600,000 for the
comparable period in 2003. The provision and the net recoveries of

13

$1,000 for the quarter ending March 31, 2004, resulted in the reserve
representing 1.36% of total loans and 487% of non-performing loans at March 31,
2004, as compared to the reserve representing 1.36% of outstanding loans and
504% of non-performing loans at December 31, 2003. Net recoveries for the first
quarter of 2004 were $1,000 compared to net chargeoffs of $12,000 for the first
quarter of 2003. The adequacy of the reserve for loan losses is consistent with
management's consideration of the composition of the portfolio, non-performing
asset levels, recent credit quality experience, historic charge-off trends, and
prevailing economic conditions among other factors.

OTHER INCOME, OTHER EXPENSE AND INCOME TAXES

Total other income, excluding security transactions, decreased $789,000 or 12.5%
to $5,503,000 for the three months ended March 31, 2004, from $6,292,000 for the
same period in 2003. Improved performance in the equity markets combined with
business development efforts resulted in growth in trust fees and commissions
and brokerage fees. Growth in trust fees, commissions and brokers' fees, service
charges and other operating income partially offset the large decline in gains
from the sale of loans.

Gains of $822,000 were recognized on the sale of loans totaling $43,682,000
during the three months ended March 31, 2004, compared to gains of $2,235,000
recognized on the sale of $118,546,000 of loans for the three months ended March
31, 2003. The decline in gains on the sale of loans and the principal balances
sold can be attributed to differences in the interest-rate environment and its
impact on mortgage banking activity. Management anticipates continued sales from
the current mortgage loan production of the Corporation if mortgage loan
originations allow and the sales of the loans necessary to maintain the
Corporation's desired asset/liability structure. 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.

During the three months ended March 31, 2004, the Corporation recognized
security gains of approximately $115,000, after income taxes, representing 2.1%
of net income. During the same period in 2003, security gains of approximately
$110,000 after income taxes were recognized, representing 2.3% of net income.
The Corporation owns a position in a qualified equity security with substantial
appreciated value. First Busey's Board of Directors has authorized an orderly
liquidation of this asset over a six-year period.

Total other expense fell $915,000 or 8.8% to $9,467,000 for the three months
ended March 31, 2004 as compared to $10,382,000 for the same period in 2003.

Salaries and wages expense decreased $148,000 or 3.2% to $4,541,000 for the
three months ended March 31, 2004, as compared to $4,689,000 during the same
period last year. Most of the decline in salary expense is related to lower
commission and other incentive compensation costs for associates involved in
originating, processing, and selling mortgage loans held for sale. The
Corporation had 481 and 493 full-time-equivalent employees as of March 31, 2004,
and 2003, respectively. Employee benefit expense increased $61,000 or 6.3% to
$1,023,000 for the three months ended March 31, 2004, compared to $962,000 for
the three months ended March 31, 2003 due primarily to increases in health
insurance premiums. Occupancy and furniture and equipment expenses decreased
$78,000 or 5.2% to $1,419,000 for the first quarter of 2004, from $1,497,000 in
the prior year period.

Other operating expenses decreased $608,000 or 26.1% to $1,721,000 for the three
months ending March 31, 2004, compared to $2,329,000 for the same period in
2003. Other operating expenses for the three months ending March 31, 2003,
include $70,000 in OREO expenses associated with operating the hotel property as
mortgagee in possession as well as $357,000 in market valuation adjustments to
reflect reductions in the estimated net realizable values of this property as
well as others held in other real estate owned.

The Corporation's net overhead expense, total non-interest expense less
non-interest income, net of security gains, divided by average assets, decreased
to 1.05% for the three months ended March 31, 2004 from 1.17% in the comparable
prior year period.

14

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 and amortization expense). The
consolidated efficiency ratio for the three months ended March 31, 2004 was
51.6% as compared to 55.7% for the prior year period.

Income taxes for the three months ended March 31, 2004 increased to $2,804,000
as compared to $2,476,000 for the comparable period in 2003. As a percent of
income before taxes, the provision for income taxes increased slightly to 34.3%
for the quarter ending March 31, 2004, as compared to 33.8% for the same period
in 2003.

REPORTABLE SEGMENTS AND RELATED INFORMATION

First Busey Corporation has three reportable segments, Busey Bank, Busey Bank
Florida, and Busey Investment Group. 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. Busey Bank Florida provides a full range of banking services to
individual and corporate customers in Fort Myers, and Cape Coral, Florida. Busey
Investment Group is a wholly-owned subsidiary of First Busey Corporaton and owns
three subsidiaries: First Busey Trust & Investment Co. which provides trust and
asset management services to individual and corporate customers throughout
central Illinois; First Busey Securities, Inc., a full-service broker/dealer
subsidiary; and Busey Insurance Services, Inc., an insurance agency which
provides personal insurance products and specializes in long-term healthcare
insurance.

In prior periods First Busey has reported First Busey Trust & Investment Co. as
a separate segment. Over time, the three subsidiaries of Busey Investment Group
have converged and are now directed by a common management team in a similar
operating style, share similar marketing strategies, and share common office
locations. Likewise, the financial results of these three subsidiaries are
reviewed and monitored on a consolidated basis. Therefore, management of First
Busey Corporation have identified Busey Investment Group as the more appropriate
reportable segment.

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. The Corporation accounts for inter-segment revenue and
transfers at current market value.

15

March 31, 2004
----------------------------------------------------------------------------------------------------
Busey
Busey Bank Investment Consolidated
Busey Bank Florida Group All Other Totals Eliminations Totals
----------------------------------------------------------------------------------------------------

Interest income $ 16,617 $ 1,567 $ 39 $ 39 $ 18,262 $ (6) $ 18,256
Interest expense 4,767 550 - 585 5,902 $ (8) 5,894
Other income 3,861 126 1,830 6,112 11,929 $ (6,235) 5,694
Net income 5,098 237 534 5,344 11,213 $ (5,853) 5,360
Total assets 1,399,841 116,793 5,962 163,486 1,686,082 $(152,488) 1,533,594

March 31, 2004
----------------------------------------------------------------------------------------------------
Busey
Busey Bank Investment Consolidated
Busey Bank Florida Group All Other Totals Eliminations Totals
----------------------------------------------------------------------------------------------------

Interest income $ 17,689 $ 924 $ 39 $ 594 $ 19,246 $ (578) $ 18,668
Interest expense 5,787 494 - 1,141 7,422 $ (579) 6,843
Other income 5,043 104 1,454 5,594 12,195 $ (5,720) 6,475
Net income 5,089 (64) 301 4,859 10,185 $ (5,343) 4,842
Total assets 1,354,514 84,609 5,073 178,948 1,623,144 $ (169,002) 1,454,142

LIQUIDITY

Liquidity management is the process by which the Corporation ensures that
adequate liquid funds are available to meet the present and future cash flow
obligations arising in the daily operations of the business. These financial
obligations consist of needs for funds to meet commitments to borrowers for
extensions of credit, funding capital expenditures, withdrawals by customers,
maintaining deposit reserve requirements, servicing debt, paying dividends to
shareholders, and paying operating expenses.

The Corporation's most liquid assets are cash and due from banks,
interest-bearing bank deposits, and Federal funds sold. The balances of these
assets are dependent on the Corporation's operating, investing, lending and
financing activities during any given period.

The Corporation's primary sources of funds consist of deposits, investment
maturities and sales, loan principal repayment, deposits, and capital funds.
Additional liquidity is provided by bank lines of credit, repurchase agreements,
the ability to issue brokered deposits, and the ability to borrow from the
Federal Reserve Bank and the Federal Home Loan Banks of Chicago and Atlanta. The
Corporation has an operating line with Bank One in the amount of $10,000,000,
all of which was available as of March 31, 2004. Long-term liquidity needs will
be satisfied primarily through retention of capital funds.

An additional source of liquidity that can be managed for short-term and
long-term needs is the Corporation's ability to securitize or package loans
(primarily mortgage loans) for sale. During the first quarter of 2004 the
Corporation sold $43,682,000 and originated $37,038,000 in mortgage loans for
sale compared to sales of $118,546,000 and originations of $107,157,000 during
the first quarter of 2003. As of March 31, 2004, the Corporation held
$23,885,000 in mortgage loans held for sale. Management intends to sell these
loans during the second quarter of 2004.

The Corporation also realized significant growth in loans held for investment
during the first quarter of 2004. This loan growth was funded primarily through
the sale and maturity of securities classified as available for sale and
advances from the Federal Home Loan Banks of Chicago and Atlanta.

16

The Corporation achieves a satisfactory degree of liquidity through actively
managing both assets and liabilities. Asset management guides the proportion of
liquid assets to total assets, while liability management monitors future
funding requirements and prices liabilities accordingly.

The Corporation's banking subsidiaries routinely enter into commitments to
extend credit in the normal course of their business. As of March 31, 2004, and
2003, the Corporation had outstanding loan commitments including lines of credit
of $307,504,000 and $221,643,000, respectively. The balance of commitments to
extend credit represents future cash requirement and some of these commitments
may expire without being drawn upon. The asset-liability committees of the
Corporation's bank subsidiaries are developing specific strategies to provide
sufficient funds to meet current loan commitments, including loan applications
received and in process prior to the issuance of firm commitments. It is likely
that one or both of the bank subsidiaries will issue brokered deposits during
the second quarter of 2004 to meet expected continued growth in the
Corporation's funding requirements.

First Busey Corporation has secured a commitment to borrow funds to finance the
acquisition of the outstanding shares and options of First Capital Bankshares,
Inc. of Peoria, Illinois. On April 30, 2004, the Corporation issued $15 million
in trust preferred securities to finance a portion of the $42 million required
to complete this transaction. The Corporation will continue to review various
alternatives for refinancing this acquisition on a long-term basis and will
determine its course of action during 2005.

The Corporation has entered into certain contractual obligations and other
commitments. Such obligations generally relate to funding of operations through
deposits, debt issuance, and property and equipment leases. The following table
summarizes significant contractual obligations and other commitments as of March
31, 2004:

Junior
Subordinated
Short- and Debt Owed to
Certificates Long-term Unconsolidated
Due Within of Deposit Borrowing Leases Trust Total
- ----------------------- ------------------- ------------------- -------------------- ------------------- -------------------
(dollars in thousands)

1 year $ 293,585 $ 14,648 $ 856 $ - $ 309,089
2 years 79,125 17,398 735 - 97,258
3 years 50,468 15,398 717 - 66,583
4 years 45,268 34,373 621 - 80,262
5 years 20,058 15,123 416 - 35,597
Thereafter 51 6,913 343 25,000 32,307
------------------- ------------------- -------------------- ------------------- -------------------
Total $ 488,555 $ 103,853 $ 3,688 $ 25,000 $ 621,096
=================== =================== ==================== =================== ===================

Commitments to extend credit $ 307,504
===================

Net cash flows provided by operating activities totaled $15,938,000 during the
three months ended March 31, 2004, compared to $18,079,000 during the prior year
period. Significant items affection the cash flows provided by operating
activities are net income, depreciation and amortization expense, the provision
for loan losses, and activities related to the origination and sale of loans
held for sale. Operating cash flow decreased during the first quarter of 2004
compared to the first quarter of 2003 due primarily to lower mortgage loan sale
activity. During the first quarter of 2004 the Corporation originated
$37,038,000 in loans held for sale and generated $44,504,000 from the sale of
held-for sale loans resulting in net cash provided by loan originations and
sales of $7,466,000. During the first quarter of 2003 the Corporation originated
$107,157,000 in held-for-sale loans and generated $120,781,000 from the sale of
held-for-sale loans leading to net cash provided by loan originations and sales
of $13,624,000.

17

Net cash used in investing activities was $28,693,000 during the first quarter
of 2004 compared to $28,650,000 during the comparable period in 2003.
Significant items affecting cash flows from investing activities are those
activities associated with managing the Corporation's investment portfolio and
loans held in the Corporation's portfolio. During the first quarter of 2004
proceeds from the sales and maturities of securities classified as available for
sale totaled $24,416,000, and the Corporation purchased $7,884,000 in securities
resulting in net cash provided by securities activity of $16,532,000. During the
first quarter of 2003 proceeds from the sales and maturities of securities
classified as available for sale totaled $74,509,000, and the Corporation
purchased $73,749,000 in securities resulting in net cash provided by securities
activity of $760,000. The Corporation's loan portfolio increased $39,078,000
during the first quarter of 2004 compared to an increase of $10,358,000 during
the first quarter of 2003.

Net cash provided by financing activities was $2,300,000 during the first
quarter of 2004 compared to $11,159,000 during the first quarter of 2003.
Significant items affecting cash flows from financing activities are deposits,
short-term borrowings, and long-term borrowings. Deposits, which are the
Corporation's primary funding source, grew $1,414,000 during the first quarter
of 2004 compared to a net decrease of $693,000 during the first quarter of 2003.
The Corporation has increased its use of short-term and long-term advances from
the Federal Home Loan Bank of Chicago and Atlanta to partially fund loan growth.
During the first quarter of 2004 net funds provided by proceeds from the
issuance of short-term and long-term borrowing totaled $11,000,000, compared to
$6,000 during the first quarter of 2003.

CAPITAL RESOURCES

Other than from the issuance of common stock, the Corporation's primary source
of capital is retained net income. During the three months ended March 31, 2004,
the Corporation earned $5,360,000 and paid dividends of $2,578,000 to
stockholders, resulting in a retention of current earnings of $2,782,000. The
Corporation's dividend payout ratio for the three months ended March 31, 2004
was 48.1%.

The Federal Reserve Board uses capital adequacy guidelines in its examination
and regulation of bank holding companies and their subsidiary banks. Risk-based
capital ratios are established by allocating assets and certain off-balance
sheet commitments into four risk-weighted categories. These balances are then
multiplied by the factor appropriate for that risk-weighted category. The
guidelines require bank holding companies and their subsidiary banks to maintain
a total capital to total risk-weighted asset ratio of not less than 8.00%, of
which at least one half must be Tier 1 capital, and a Tier 1 leverage ratio of
not less than 4.00%.

18

Following is a summary of First Busey Corporation's capital ratios as of March
31, 2004 and December 31, 2003:

To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
-------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
-------------------------------------------------------------------------------
(Dollars in Thousands)

As of March 31, 2004:

Total Capital (to Risk
Weighted Assets)
Consolidated $ 154,332 13.15% $ 93,902 8.00% N/A N/A
Busey Bank $ 120,112 11.26% $ 85,370 8.00% $ 106,712 10.00%
Busey Bank Florida $ 12,765 14.15% $ 7,219 8.00% $ 9,024 10.00%

Tier I Capital (to Risk
Weighted Assets)
Consolidated $ 134,104 11.43% $ 46,951 4.00% N/A N/A
Busey Bank $ 102,126 9.57% $ 42,685 4.00% $ 64,027 6.00%
Busey Bank Florida $ 11,752 13.02% $ 3,610 4.00% $ 5,415 6.00%

Tier I Capital (to
Average Assets)
Consolidated $ 134,104 9.00% $ 59,582 4.00% N/A N/A
Busey Bank $ 102,126 7.48% $ 54,577 4.00% $ 68,221 5.00%
Busey Bank Florida $ 11,752 10.07% $ 4,667 4.00% $ 5,834 5.00%

As of December 31, 2003:

Total Capital (to Risk
Weighted Assets)
Consolidated $ 150,545 13.33% $ 90,350 8.00% N/A N/A
Busey Bank $ 117,133 11.30% $ 82,934 8.00% $ 103,667 10.00%
Busey Bank Florida $ 12,402 15.50% $ 6,402 8.00% $ 8,003 10.00%

Tier I Capital (to Risk
Weighted Assets)
Consolidated $ 131,277 11.62% $ 45,175 4.00% N/A N/A
Busey Bank $ 99,920 9.64% $ 41,467 4.00% $ 62,201 6.00%
Busey Bank Florida $ 11,514 14.39% $ 3,201 4.00% $ 4,802 6.00%

Tier I Capital (to
Average Assets)
Consolidated $ 131,277 8.85% $ 59,363 4.00% N/A N/A
Busey Bank $ 99,920 7.33% $ 54,543 4.00% $ 68,179 5.00%
Busey Bank Florida $ 11,514 10.16% $ 4,533 4.00% $ 5,666 5.00%

19

FIRST BUSEY CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND INTEREST RATES
QUARTERS ENDED MARCH 31, 2004 AND 2003

2004 2003
-------------------------------------- ----------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
-------------------------------------- ----------------------------------------
(Dollars in thousands)

ASSETS
Federal funds sold $ 609 $ 1 0.66% $ 11,627 $ 33 1.15%
Investment securities
U.S. Government obligations 141,841 956 2.71% 161,105 1,444 3.64%
Obligations of states and political
subdivisions (1) 46,782 697 5.99% 50,874 795 6.34%
Other securities 27,458 208 3.05% 25,056 189 3.06%
Loans (net of unearned interest) (1)(2) 1,205,928 16,683 5.56% 1,083,380 16,531 6.19%
------------- ------------ ------------- -------------
Total interest earning assets $ 1,422,618 $ 18,545 5.24% $ 1,332,042 $ 18,992 5.78%
============ ============

Cash and due from banks 40,591 37,051
Premises and equipment 22,445 27,433
Reserve for loan losses (16,385) (15,591)
Other assets 46,239 42,095
------------- -------------

Total Assets $ 1,515,508 $ 1,423,030
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing transaction deposits $ 21,002 $ 20 0.38% $ 17,794 $ 25 0.57%
Savings deposits 109,921 158 0.58% 101,745 212 0.85%
Money market deposits 459,987 714 0.62% 425,608 916 0.87%
Time deposits 477,975 3,355 2.82% 507,093 4,271 3.42%
Short-term borrowings:
Federal funds purchased 12,793 39 1.23% 1,639 6 1.48%
Repurchase agreements 10,329 17 0.66% 5,977 39 2.65%
Other 3,747 12 1.29% - - 0.00%
Long-term debt 97,392 1,016 4.20% 72,959 811 4.51%
Junior subordinated debt owed
to unconsolidated trust 25,000 563 9.06% 25,000 563 9.13%
------------- ------------ ------------- ------------
Total interest-bearing liabilities $ 1,218,146 $ 5,894 1.95% $ 1,157,815 $ 6,843 2.40%
============ ============

Net interest spread 3.29% 3.38%
==== ====

Demand deposits 162,333 138,466
Other liabilities 8,287 9,349
Stockholders' equity 126,742 117,400
------------- -------------

Total Liabilities and Stockholders' Equity $ 1,515,508 $ 1,423,030
============= =============

Interest income / earning assets (1) $ 1,422,618 $ 18,545 5.24% $ 1,332,042 $ 18,992 5.78%
Interest expense / earning assets $ 1,422,618 5,894 1.66% $ 1,332,042 6,843 2.08%
------------ ---- ------------ ----

Net interest margin (1) $ 12,651 3.58% $ 12,149 3.70%
============ ==== ============= ====

(1) On a tax-equivalent basis, assuming a federal income tax rate of 35% for
2004 and 2003.

(2) Non-accrual loans have been included in average loans, net of unearned
interest.

20

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CHANGES IN NET INTEREST INCOME
QUARTERS ENDED MARCH 31, 2004 AND 2003

Change due to (1)

Average Average Total
Volume Yield/Rate Change
------------------------------------------
(Dollars in thousands)

Increase (decrease) in interest income:
Federal funds sold $ (26) $ (6) $ (32)
Investment securities:
U.S. Government obligations (150) (338) (488)
Obligations of states and political
subdivisions (2) (60) (38) (98)
Other securities 19 - 19
Loans (2) 1,863 (1,711) 152
----------------------------------------

Change in interest income (2) $ 1,646 $ (2,093) $ (447)
----------------------------------------

Increase (decrease) in interest expense:
Interest-bearing transaction deposits $ 4 $ (9) $ (5)
Savings deposits 16 (70) (54)
Money market deposits 71 (273) (202)
Time deposits (228) (688) (916)
Short-term borrowings:
Federal funds purchased 34 (1) 33
Repurchase agreements 18 (40) (22)
Other 12 - 12
Long-term debt 263 (58) 205
Junior subordinated debt owed to unconsolidated trust - - -
----------------------------------------

Change in interest expense $ 190 $ (1,139) $ (949)
----------------------------------------

Increase in net interest income (2) $ 1,456 $ (954) $ 502
========================================

(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
2004 and 2003.

21

ITEM 3: QUANTITAVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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 committees use gap analysis to identify mismatches in the
dollar value of assets and liabilities subject to repricing within specific time
periods. The Funds Management Policies established by the asset-liability
committees and approved by the Corporation's board of directors establish
guidelines for maintaining the ratio of cumulative rate-sensitive assets to
rate-sensitive liabilities within prescribed ranges at certain intervals.

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 earnings
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.

22

The following table sets forth the static rate-sensitivity analysis of the
Corporation as of March 31, 2004:

Rate Sensitive Within
-----------------------------------------------------------------------------------
1-30 31-90 91-180 181 Days - Over
Days Days Days 1 Year 1 Year Total
-----------------------------------------------------------------------------------
(Dollars in thousands)

Interest-bearing deposits $ 84 $ - $ - $ - $ - $ 84
Federal funds sold 5,100 - - - - 5,100
Investment securities
U.S. Governments 5,008 12,056 20,644 23,467 75,323 136,498
Obligations of states and
political subdivisions 932 218 1,497 8,164 36,034 46,845
Other securities 12,224 126 103 103 13,700 26,256
Loans (net of unearned int.) 544,683 72,806 83,864 133,203 390,275 1,224,831
-----------------------------------------------------------------------------------
Total rate-sensitive assets $ 568,031 $ 85,206 $ 106,108 $ 164,937 $ 515,332 $ 1,439,614
-----------------------------------------------------------------------------------

Interest bearing transaction
deposits $ 40,512 $ - $ - $ - $ - $ 40,512
Savings deposits 113,065 - - - - 113,065
Money market deposits 446,476 - - - - 446,476
Time deposits 50,590 64,620 63,506 117,723 192,116 488,555
Short-term borrowings:
Repurchase agreements 8,526 - - - - 8,526
Other - 1,000 - 2,250 - 3,250
Long-term debt - - - 13,853 86,750 100,603
Junior subordinated debt owed
to unconsolidated trust - - - - 25,000 25,000
-----------------------------------------------------------------------------------
Total rate-sensitive liabilities $ 659,169 $ 65,620 $ 63,506 $ 133,826 $ 303,866 $ 1,225,987
Rate-sensitive assets less
rate-sensitive liabilities $ (91,138) $ 19,586 $ 42,602 $ 31,111 $ 211,466 $ 213,627
-----------------------------------------------------------------------------------

Cumulative Gap $ (91,138) $ (71,552) $ (28,950) $ 2,161 $ 213,627
=====================================================================
Cumulative amounts as a
percentage of total
rate-sensitive assets -6.33% -4.97% -2.01% 0.15% 14.84%
=====================================================================
Cumulative ratio 0.86 0.90 0.96 1.00 1.17
=====================================================================

The funds management policies of Busey Bank and Busey Bank Florida require the
banks to maintain a cumulative rate-sensitivity ratio of .75 - 1.25 in the
90-day, 180-day, and 1-year time periods. As of March 31, 2004, the banks and
the Corporation, on a consolidated basis are within those guidelines.

The foregoing table shows a negative (liability-sensitive) rate-sensitivity gap
of $91.1 million in the 1-30 day repricing period as there were more liabilities
subject to repricing during 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 180 days. The composition of the gap structure at
March 31, 2004 indicates the Corporation would benefit more if interest rates
decrease during the next 180 days by allowing the net interest margin to grow as
the volume of interest-bearing liabilities subject to repricing would be greater
than the volume of interest-earning assets subject to repricing during the same
period.

The committees do 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 committees supplement 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 over a one-year period
and net interest income is calculated under current market rates, and then
assuming permanent instantaneous shifts of +/-100 basis points and +200 basis
points. Management measure such changes

23

assuming immediate and sustained shifts in the Federal funds rate and the
corresponding shifts in other rate indices based on their historical changes
relative to changes in the Federal funds rate. The model assumes asset and
liability remain constant at March 31, 2004 balances. The model uses repricing
frequency on all variable-rate assets and liabilities. The model also uses a
historical decay rate on all fixed-rate core deposit balances. Prepayment speeds
on loans have been adjusted up and down to incorporate expected prepayment in
both a declining and rising rate environment. Utilizing this measurement concept
the interest rate risk of the Corporation, expressed as a change in net interest
income as a percentage of the net income calculated in the constant base model,
due to an immediate and sustained change in interest rates at March 31, 2004,
and December 31, 2003 was as follows:

Basis Point Changes
-------------------------------------
-100 +100 +200
------------ ------------ -----------

March 31, 2004 (6.62%) 4.24% 8.72%
December 31, 2003 (5.57%) 3.05% 6.06%

ITEM 4: CONTROLS AND PROCEDURES

Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with the participation of the
Corporation's management, including its Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the Corporation's disclosure controls
and procedures (as defined in Rule 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934). Based on their evaluation, the Corporation's Chief
Executive Officer and Chief Financial Officer have concluded that the
Corporation's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Corporation in reports that it files
or submits under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.

In addition, since their evaluation, there have been no significant changes to
the Corporation's internal controls or in other factors that could significantly
affect these controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.

24

PART II - OTHER INFORMATION

ITEM 1: Legal Proceedings
None

ITEM 2: Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities

The following table presents for the periods indicated a summary of the
purchases made by or on behalf of First Busey Corporation of shares of
its common stock.

Total Maximum
Number of Number of
Shares Shares
Purchased that May
as Part of Yet Be
Total Publicly Purchased
Number of Average Announced Under the
Shares Price Paid per Plans or Plans or
Purchased Share Programs Programs (1)
- -------------------------------------------------------------------------------------------------------------

January 1 - 31, 2004 - $ - - 89,744
February 1 - 29, 2004 - - - 589,744
March 1 - 31, 2004 22,500 27.11 22,750 567,244
-----------------------------------------------------
Total 22,750 $ 27.11 22,750

(1) First Busey Corporation's board of directors approved a stock purchase plan
on March 20, 2001, for the repurchase of up to 500,000 shares of common stock.
The Corporation's 2001 repurchase plan has no expiration date. First Busey
Corporation's board of directors approved a stock purchase plan on February 17,
2004 for the repurchase of up to 500,000 shares of common stock. The
Corporation's 2004 repurchase plan has no expiration date.

ITEM 3: Defaults Upon Senior Securities
Not applicable

ITEM 4: Submission of Matters to a Vote of Security Holders
None

ITEM 5: Other Information
Not Applicable

ITEM 6: Exhibits and Reports on Form 8-K

(a) Exhibits

3.1 Restated Articles of Incorporation

3.2 Revised First Busey Corporation By-Laws

10.1 2004 Stock Option Plan incorporated by reference to
Exhibit 4.1 to the Registrant's Form S-8 filed on May 6,
2004 (SEC File No. 333-115237)

31.1 Certification of Principal Executive Officer

31.2 Certification of Principal Financial Officer

25

32.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, from the Corporation's Chief Executive Officer.

32.2 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, from the Corporation's Chief Financial Officer.

(b) Reports on Form 8-K

On January 8, 2004, the Corporation filed a report on Form 8-K
(Items 5 and 7) dated January 6, 2004, announcing that on
January 5, 2004, it entered into an agreement to acquire First
Capital Bankshares, Inc., Peoria, IL.

On January 20, 2004, the Corporation filed a report on Form 8-K
(Item 12) dated January 20, 2004, releasing its financial
results for the three months and fiscal year ending December 31,
2003.

On February 24, 2004, the Corporation filed a report on Form 8-K
(Items 5 and 7) dated February 24, 2004, announcing its
intention to repurchase up to 500,000 shares, or approximately
4%, of its common stock outstanding.

SIGNATURES

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

FIRST BUSEY CORPORATION
(REGISTRANT)

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

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

By: //Barbara J. Harrington//
----------------------------------------------

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

Date: May 10, 2004

26