FIRST BUSEY CORP /NV/ - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 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
incorporation of organization) Identification No.)

201 West Main Street
Urbana, Illinois 61801
------------------------------- -------------------
(Address of principal (Zip Code)
executive offices)

(217) 365-4513
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value

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 if disclosure of delinquent filers pursuant to Item
405 Regulation S-K is not contained herein, and will not be contained to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of March 2, 2001, the aggregate market value of the Common Stock held by
non-affiliates was $144,451,394. The market value of the Common Stock is based
on the closing price for such stock as reported on the Nasdaq National Market on
that date. Affiliates include all directors, executive officers and beneficial
holders owning 5% or more of the shares.

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 March 2, 2001
----- ----------------------------

Common Stock, without par value 13,565,034

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement dated March 16, 2001 for First
Busey Corporation's Annual Meeting of Stockholders to be held April 16, 2001,
(the "2001 Proxy Statement") are incorporated by reference into Part III.

(This page intentionally left blank)

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FIRST BUSEY CORPORATION
Form 10-K Annual Report

Table of Contents

PART 1

Item 1 Business 4
Item 2 Properties 12
Item 3 Legal Proceedings 13
Item 4 Submission of Matters to a Vote of Security Holders 13

PART II

Item 5 Market for Registrant's Common Equity and Related Stockholder Matters 14
Item 6 Selected Financial Data 15
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations 16
Item 7A Quantitative and Qualitative Disclosures About Market Risk . 30
Item 8 Financial Statements and Supplementary Data 31
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure 31

PART III

Item 10 Directors and Executive Officers of the Registrant 31
Item 11 Executive Compensation 31
Item 12 Security Ownership of Certain Beneficial Owners and Management 31
Item 13 Certain Relationships and Related Transactions . 31

PART IV

Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K 32

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PART I

ITEM 1. BUSINESS

INTRODUCTION
First Busey Corporation ("First Busey"), a Nevada corporation, is a
financial holding company located in Urbana, Illinois. As of December 31, 2000,
First Busey had ten wholly owned, directly and indirectly, subsidiaries: one
community bank, one savings and loan, a thrift holding company, a non-bank
holding company, a trust company, a securities broker-dealer, an ATM company, an
insurance company, a real estate company, and a travel agency. First Busey is
engaged primarily in commercial, retail and correspondent banking and provides
trust services, insurance services, and travel services. Based on assets of
$1.36 billion as of December 31, 2000, First Busey, with deposits of $1.15
billion and stockholders' equity of $92 million, is one of the largest financial
institutions headquartered in east central Illinois. First Busey's largest
subsidiary, Busey Bank, with continuous operations since 1868, is one of the
oldest banks chartered in Illinois.

First Busey's strategic plan is to provide a full range of financial
services including commercial, retail and correspondent banking services through
its banking subsidiaries, with emphasis on commercial and retail services. The
strategic plan also emphasizes the operation of its banking centers
autonomously, allowing them to tailor their service and products to the
particular markets they serve while consolidating back-room operations. First
Busey intends to continue its expansion and growth in the three counties it
currently serves in Illinois, Champaign, McLean and Ford County, its banking
center in Indianapolis, Indiana, and its Loan Production Offices in Ft. Myers
and Naples, Florida. In addition to the Florida loan production offices, Busey
opened a 24,000 square foot full-service facility in Fort Myers, Florida in
October, 2000, as a branch of Busey Bank fsb. First Busey engages in
exploratory discussions regarding potential acquisitions from time to time;
however, First Busey does not currently have any commitments to acquire or merge
with any financial institution.

First Busey Corporation's operations are conducted primarily through its
lead bank, Busey Bank (twenty-two locations), Busey Bank fsb (four locations),
the trust company and the securities broker-dealer subsidiary. First Busey
provides its subsidiaries with both financial and managerial support. Each
subsidiary operates under the direction of its own Board of Directors.

BUSEY BANK
Busey Bank was established on January 13, 1868 and is a state-chartered
bank. As of December 31, 2000, Busey Bank had total assets of $1.05 billion,
representing 77% of First Busey's assets, and had total revenues of $86 million,
representing 77% of First Busey's revenues. Busey Bank provides a full range of
banking services including commercial and retail banking products. The services
available to its commercial and retail customers include a broad selection of
depository and lending activities. In the commercial lending area, Busey Bank
is designated a Small Business Administration Preferred Lender authorized to
fund government guaranteed loans on an expedited basis and is also an approved
lender under the Federal National Mortgage Association Program, permitting
expedited origination of single- and multi-family mortgage loans. Busey Bank's
other commercial lending activities consist primarily of secured loans to
borrowers in many different industries. Busey Bank's retail services include
consumer lending, numerous types of deposit accounts and certain specialized
programs such as the Fortune Five-O Program for the mature market.

Management's philosophy continues to be to develop programs tailored to
specific market segments of its customer base with particular emphasis on retail
services. The Busey organization emphasizes establishing strong relationships
with its customers. Busey Bank has adopted a strategy to increase other income
by emphasizing fee-based services, including transaction accounts, full service
brokerage, mortgage origination and other loan services generating fees.

Guidelines for Busey Bank for various collateral advance ratios are set
forth in the Loan Review Grading System under "Collateral Position." Loan

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Officers are required to use the grading system in determining an acceptable
collateral position on any given credit request. Collateral coverage
percentages for various types of credit are set forth in the following table:

Collateral Type Coverage Ratio
--------------------- ---------------

Commercial Loans: Real Estate 125%
Accounts Receivable 125%
Inventory & Equipment 200%

Consumer Real Estate Loans: Real Estate 125%

Installment Loans: Cash or Equivalent 110%
Vehicle 140%
Mobile Homes 150%
Other Collateral 160%

All commercial loans must be supported by a completed and signed financial
statement, which should include a minimum of a balance sheet and income
statement. Loan Officers are encouraged to require borrowers to provide annual
statements prepared by a CPA firm. Where possible, an audit should be obtained,
however, a review or compilation is acceptable. The Credit Analysis Department
tracks delinquent financial statements and provides weekly reports to the
Commercial Loan Department. In addition, the Senior Loan Committee receives a
monthly report detailing delinquent financial statements for customers with
large loan balances. A borrower's financial position including cash flow is
monitored at least annually through an annual review process.

BUSEY BANK FSB
First Busey Corporation acquired First Federal Savings & Loan Association
of Bloomington on October 29, 1999, when it acquired the outstanding shares of
First Federal's parent Eagle BancGroup, Inc. This transaction was accounted for
as a purchase and resulted in intangible assets totaling $8,903,000. Of this,
$2,114,000 was allocated to core deposit intangible which will be amortized over
7 years at the rate of approximately $302,000 per year. The remaining
$6,789,000 was recorded as goodwill and will be amortized over 20 years at the
rate of approximately $340,000 per year. First Federal was established in 1919
and is a federally chartered capital stock savings association regulated by the
Office of Thrift Supervision (OTS). In June, 2000, First Federal changed its
name to Busey Bank fsb. As of December 31, 2000, Busey Bank fsb had total
assets of $298 million, representing 22% of First Busey's assets. Busey Bank
fsb offers a wide range of retail deposit products and invests those deposits in
one-to-four family residential mortgage loans, commercial real estate loans,
commercial business loans and automobile and other consumer loans.

In February, 2001, the Board of Directors of Busey Bank fsb and the Board
of Directors of Busey Bank agreed to merge Busey Bank fsb into Busey Bank. The
merger is scheduled to be completed in the second quarter of 2001.

FIRST BUSEY TRUST AND INVESTMENT COMPANY
First Busey Trust and Investment Company began operation on January 1, 1987
as a successor to the combined trust departments of Busey Bank and Champaign
County Bank & Trust Co., which began trust operations in 1967 and 1947,
respectively. First Busey Trust operates as the asset management subsidiary of
the organization and is exclusively dedicated to providing a full range of trust
and investment management services. In addition to trust and investment
management services, First Busey Trust offers such ancillary services as farm
management, estate and retirement planning, tax preparation, custody services,
and philanthropic advisory services.

First Busey plans to continue to expand its trust activities by increasing
assets under control, currently more than $1 billion, and by developing new
financial services. For the year ending December 31, 2000, First Busey Trust &
Investment Company generated net income of $1.5 million representing 10.4% of
First Busey's earnings.

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OTHER SUBSIDIARIES
First Busey Resources, Inc., owns and manages Busey Plaza, a 90,000 square
foot building which is fully leased to unaffiliated tenants.

First Busey Corporation formed Busey Business Bank on January 12, 1998.
This was a de novo bank established in Indianapolis, Indiana. Upon the
establishment of this chartered bank, Busey Bank closed its Loan Production
Office in Indianapolis. In October of 1998, Busey Business Bank was merged into
Busey Bank and continues to operate as a full-service banking center.

Busey Bank established a full service securities broker-dealer subsidiary,
First Busey Securities, Inc., on April 1, 1991.Through the offering of full
service brokerage, along with various insurance and annuity products, new
sources of fee income are available to First Busey Corporation.

In October of 1997, Busey Bank established an insurance subsidiary, Busey
Insurance Services, Inc., to further enhance the services available to its
customers. This subsidiary focuses primarily on meeting the long-term care and
life insurance needs of customers in the Champaign and McLean County markets.
During 1997, Busey Bank established a subsidiary, BAT, Inc, which owns and
operates automated teller machines. In January of 1998, Busey Bank acquired
Busey Carter Travel, a travel agency serving primarily Champaign County. This
acquisition was also completed to enhance the services available to the
customers of Busey Bank. In January 1999, this subsidiary changed its name to
Busey Travel, Inc.

COMPETITION
First Busey faces intense competition in all phases of its banking business
from other banks and financial institutions. First Busey's subsidiary banks
compete for deposits with a large number of depository institutions including
commercial banks, savings and loan associations, credit unions, money market
funds and other financial institutions and financial intermediaries serving
Champaign County, McLean County, Ford County, Illinois, Hamilton County,
Indiana, and Lee County, Florida. Principal competitive factors with respect to
deposits include interest rates paid on deposits, customer service, convenience
and location.

First Busey's subsidiary banks compete for loans with other banks
headquartered in Illinois and Indiana, with loan production offices of large
money center banks headquartered in other states, as well as with savings and
loan associations, credit unions, finance companies, mortgage bankers, leasing
companies and other institutions. Competitive factors with respect to loans
include interest rates charged, customer service and responsiveness in tailoring
financial products to the needs of customers. First Busey's subsidiary banks
compete for loans primarily by designing their products for and directing their
marketing efforts to businesses in the markets they serve which are locally
owned, well-capitalized and well-managed.

Many of the entities that compete with First Busey's subsidiary banks are
substantially larger in size than First Busey and First Busey's subsidiary
banks, and many non-bank financial intermediaries are not subject to the
regulatory restrictions applicable to First Busey's bank subsidiaries. First
Busey and its subsidiary banks have experienced an increase in the level of
competition as well as the number of competitors in recent years. See
"Supervision and Regulation."

EMPLOYEES
First Busey and its subsidiaries employed 484 employees (full-time equivalent)
on December 31, 2000.Management considers its relationship with its employees to
be good

SUPERVISION AND REGULATION

GENERAL
Financial institutions and their holding companies are extensively
regulated under federal and state laws. As a result, the business, financial
condition and prospects of First Busey and its subsidiary banks can be

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materially affected not only by management decisions and general economic
conditions, but also by applicable statutes and regulations and other regulatory
pronouncements and policies promulgated by regulatory agencies with jurisdiction
over First Busey and its subsidiary banks, such as the Federal Reserve Board
("FRB"), Federal Deposit Insurance Corporation ("FDIC") and the State of
Illinois Office of Banks and Real Estate, and the effect of such statutes,
regulations and other pronouncements and policies can be significant, cannot be
predicted with a high degree of certainty and can change over time.
Furthermore, such statutes, regulations and other pronouncements and policies
are intended to protect the depositors and the FDIC's deposit insurance funds,
not to protect stockholders.

Bank holding companies and banks are subject to enforcement actions by
their regulators for regulatory violations. In addition to compliance with
statutory and regulatory limitations and requirements concerning financial and
operating matters, regulated financial institutions such as First Busey and its
subsidiary banks must file periodic and other reports and information with their
regulators and are subject to examination by each of their regulators.

The statutory requirements applicable to and regulatory supervision of
financial holding companies and banks have increased significantly and have
undergone substantial change in recent years. To a great extent, these changes
are embodied in the Financial Institutions Reform, Recovery and Enforcement Act
("FIRREA"), enacted in August 1989, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"), enacted in December 1991, and the
regulations promulgated under FIRREA and FDICIA.

The following discussion and other references to and descriptions of the
regulation of financial institutions contained herein constitute brief summaries
thereof. This discussion is not intended to constitute and does not purport to
be a complete statement of all legal restrictions and requirements applicable to
First Busey and its subsidiary bank and all such descriptions are qualified in
their entirety by reference to applicable statutes, regulations and other
regulatory pronouncements.

INTERSTATE BANKING AND BRANCHING LEGISLATION
On September 29, 1994, the Riegle-Neal Interstate Banking and Efficiency
Act of 1994 (the "Interstate Banking Act") was enacted. Under the Interstate
Banking Act, adequately capitalized and adequately managed bank holding
companies will be allowed to acquire banks across state lines subject to certain
limitations. In addition, under the Interstate Banking Act, since June 1, 1997,
banks have been permitted, under some circumstances, to merge with one another
across state lines and thereby create a main bank with branches in separate
states. After establishing branches in a state through an interstate merger
transaction, a bank may establish and acquire additional branches at any
location in the state where any bank involved in the interstate merger could
have established or acquired branches under applicable federal and state law.

Under the Interstate Banking Act, states could adopt legislation permitting
interstate mergers before June 1, 1997. Alternatively, states could adopt
legislation before June 1, 1997, subject to certain conditions, opting out of
interstate branching. Illinois adopted legislation, effective September 29,
1995, permitting interstate mergers beginning on June 1, 1997. It is
anticipated that this interstate merger and branching ability will increase
competition and further consolidate the financial institutions industry.

REGULATION OF BANK HOLDING COMPANIES AND THEIR NON-BANK SUBSIDIARIES
First Busey is a registered financial holding company within the meaning of
the Bank Holding Company Act of 1956, as amended ("BHCA"). As such, First Busey
is subject to regulation, supervision and examination by the FRB. First Busey
is also subject to the limitations and requirements of the Illinois Bank Holding
Company Act ("IBHCA"). These limitations and requirements, however, are no more
restrictive in most instances than those imposed by the BHCA and the FRB. The
business and affairs of First Busey are regulated in a variety of ways,
including limitations on acquiring control of other banks and bank holding
companies, limitations on activities and investments, limitations on interstate
acquisitions, regulatory capital requirements and limitations on payment of
dividends. In addition, it is the FRB's policy that a bank holding company is
expected to act as a source of financial strength to banks that it owns or
controls and, as a result, the FRB could require First Busey to commit resources

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to support its subsidiary bank in circumstances in which First Busey might not
do so absent the FRB's policy.

First Busey Trust & Investment Co. is subject to regulation and examination
by the State of Illinois Office of Banks and Real Estate and the FRB. The
federal and state laws generally applicable to a trust company subsidiary of a
financial holding company regulate, among other things, the scope of its
business, investments and other activities. Busey Insurance Services, Inc. is
regulated by the Illinois Department of Insurance. First Busey Securities, Inc.
is regulated by the National Association of Securities Dealers ("NASD").

ACQUISITION OF BANKS AND BANK HOLDING COMPANIES
The BHCA generally prohibits a bank holding company from (1) acquiring,
directly or indirectly, more than 5% of the outstanding shares of any class of
voting securities of a bank or bank holding company, (2) acquiring control of a
bank or another bank holding company, (3) acquiring all or substantially all the
assets of a bank, or (4) merging or consolidating with another bank holding
company without first obtaining FRB approval. In considering an application
with respect to any such transaction, the FRB is required to consider a variety
of factors, including the potential anti-competitive effects of the transaction,
the financial condition and future prospects of the combining and resulting
institutions, the managerial resources of the resulting institution, the
convenience and needs of the communities the combined organization would serve,
the record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the prospective
availability to the FRB of information appropriate to determine ongoing
regulatory compliance with applicable banking laws.

In addition, both the federal Change in Bank Control Act and the Illinois
Banking Act ("IBA") impose limitations on the ability of one or more individuals
or other entities to acquire control of First Busey or its subsidiary banks.

The BHCA generally imposes certain limitations on extensions of credit and
other transactions by and between banks that are members of the Federal Reserve
System and other banks and non-bank companies in the same holding company.
Under the BHCA and the FRB's regulations, a bank holding company and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit, lease or sale of property or furnishing
of services.

The BHCA prohibits a bank holding company from acquiring control of a bank
whose principal office is located outside of the state in which its principal
place of business is located unless specifically authorized by applicable state
law. The IBHCA permits Illinois bank holding companies to acquire control of
banks in any state and permits bank holding companies whose principal place of
business is in another state to acquire control of Illinois banks or bank
holding companies if that state affords reciprocal rights to Illinois bank
holding companies and certain other requirements are met.

The restrictions described above represent limitations on expansion by
First Busey and its subsidiary banks, the acquisition of control of First Busey
by another company and the disposition by First Busey of all or a portion of the
stock of its subsidiary banks or by its subsidiary banks of all or a substantial
portion of its assets.

PERMITTED NON-BANKING ACTIVITIES

On November 12, 1999, President Clinton signed into law the Gramm-Leach-
Bliley Act (the "GLB Act"), which allows financial holding companies to engage
in a wider range of non-banking activities. A bank holding company which elects
to become a financial holding company under this act would be allowed to engage
in any activity the Federal Reserve Board, in consultation with the Secretary of
the Treasury, determines by regulation or order to be financial in nature,
incidental to any such financial activity or complementary to any such financial
activity and does not present a substantial risk to the safety or soundness of
depository institutions or the financial system in general. The Act does not
allow banks or their affiliates to engage in commercial activities that are not

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financial in nature. A bank holding company may elect to be treated as a
financial holding company only if all depository institution subsidiaries of the
holding company are well-capitalized, well-managed, and have at least a
satisfactory rating under the Community Reinvestment Act. First Busey
Corporation became a financial holding company on May 11, 2000.

ALLOWANCE FOR LOAN LOSS
First Busey Corporation maintains an allowance for loan losses to absorb
losses inherent in the loan portfolio. The allowance is based on management's
estimated range of those losses. Actual loan losses may vary significantly from
this estimate. The methodology and assumptions used in calculating the
allowance are continually reviewed as to their appropriateness given recent loss
experience and other factors that influence the estimation process.

First Busey Corporation's loan loss allowance is categorized into five
groups of loans: real estate mortgages, personal loans, commercial loans,
sensitive assets, and dealer paper. The real estate mortgages are further
stratified into single-family mortgage loans and commercial mortgages which
include multifamily loans. The commercial loans are stratified into the three
geographic regions in which the banks generate loans: central Illinois,
Florida, and Indianapolis. Loans which are past due 30-89 days and those past
due more than 90 days are segregated out from each loan category and then the
remaining balances are stratified based on credit underwriting grade. Balances
for each subgrouping of loans are multiplied by individual risk factors to
determine the minimum reserve allocation for each sub-category. The risk
factors are based on historical losses, credit quality of the portfolio, and
current economic conditions and are updated quarterly. The total of the
calculated minimum reserve allocations is compared to the reserve balance at the
end of each quarter. The reserve balance is then adjusted to meet the
calculated minimum reserve. If the reserve balance is greater than the
calculated minimum reserve, no addition to the loan loss provision is made
during the period.

The Corporation evaluates sensitive assets individually. Sensitive assets
are defined as nonaccrual loans, loans on the Bank's watch loan report, and
other loans identified as having more than reasonable potential for loss. The
remaining loan categories listed above are evaluated as groups.

In determining the risk factors used to calculate the minimum reserve
allocation for each loan category, the Corporation considers guidelines issued
by federal and state regulatory agencies, historical loss experience for each
category, current economic conditions, the level of nonaccrual loans, and
current delinquency reports for each loan class.

CAPITAL REQUIREMENTS
Regulatory capital requirements applicable to all regulated financial
institutions, including bank holding companies and banks, have increased
significantly in recent years and further increases are possible in future
periods. The FRB has adopted risk-based capital standards for bank holding
companies. The articulated objectives of Congress and the FRB in establishing a
risk-based method of measuring capital adequacy are (i) to make regulatory
capital requirements applicable to bank holding companies more sensitive to
differences in risk profiles among bank holding companies, (ii) to factor off-
balance sheet liabilities into the assessment of capital adequacy, (iii) to
reduce disincentives for bank holding companies to hold liquid, low risk assets
and (iv) to achieve greater consistency in the evaluation of capital adequacy of
major banking organizations throughout the world by conforming to the framework
developed jointly by supervisory authorities from countries that are parties to
the so-called "Basle Accord" adopted by such supervisory authorities in July,
1988.

The FRB requires bank holding companies to maintain a minimum ratio of
risk-weighted capital to total risk-adjusted assets. Banking organizations,
however, generally are expected to operate well above the minimum risk-based
ratios. Risk-adjusted assets include a "credit equivalent amount" of
off-balance sheet items, determined in accordance with conversion formulae set
forth in the FRB's regulations. Each asset and off-balance sheet item, after
certain adjustments, is assigned to one of four risk-weighting categories, 0%,
20%, 50% or 100%, and the risk-adjusted values are then added together to
determine risk-weighted assets.

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A bank holding company must meet two risk-based capital standards, a "core"
or "Tier 1" capital requirement and a total capital requirement. The current
regulations require that a bank holding company maintain Tier 1 capital equal to
4% of risk-adjusted assets and total capital equal to 8% of risk-adjusted
assets. Tier 1 capital must represent at least 50% of total capital and may
consist of those items defined in applicable regulations as core capital
elements. Core capital elements include common stockholders' equity; qualifying
noncumulative, nonredeemable perpetual preferred stock; qualifying (i.e., up to
25% of total Tier 1 capital) cumulative, nonredeemable perpetual preferred
stock; and minority interests in the equity accounts of consolidated
subsidiaries. Core capital excludes goodwill and other intangible assets
required to be deducted in accordance with applicable regulations.

Total capital represents the sum of Tier 1 capital plus "Tier 2" capital,
less certain deductions. Tier 2 or "supplementary" capital consists of
allowances for loan and lease losses; perpetual preferred stock (to the extent
not included in Tier 1 capital); hybrid capital instruments; perpetual debt;
mandatory convertible debt securities; term subordinated debt; and intermediate
term preferred stock, in each case subject to applicable regulatory limitations.
The maximum amount of Tier 2 capital that may be included in an organization's
qualifying total capital cannot exceed 100% of Tier 1 capital. In determining
total capital, a bank holding company must deduct from the sum of Tier 1 and
Tier 2 capital its investments in unconsolidated subsidiaries; reciprocal
holdings of certain securities of banking organizations; and other deductions
required by regulation or determined on a case-by-case basis by the appropriate
supervisory authority.

Another capital measure, the Tier 1 leverage ratio, is defined as Tier 1
capital divided by average total assets (net of allowance for losses and
goodwill). The minimum leverage ratio is 3% for banking organizations that do
not anticipate significant growth and that have well-diversified risk (including
no undue interest rate risk), excellent asset quality, high liquidity and good
earnings. Other banking organizations are expected to have ratios of at least
4% to 5%, depending upon their particular condition and growth plans. Higher
capital ratios could be required if warranted by the particular circumstances or
risk profile of a given banking organization. The FRB has not advised First
Busey of any specific minimum Tier 1leverage ratio applicable to it.

As of December 31, 2000, First Busey's Tier 1 and total risk-based capital
ratios were 7.77% and 9.43%, respectively, and its Tier 1 leverage ratio was
5.71%.

The failure of a bank holding company to meet its risk-weighted capital
ratios may result in supervisory action, as well as inability to obtain approval
of any regulatory applications and, potentially, increased frequency of
examination. The nature and intensity of the supervisory action will depend
upon the level of noncompliance. Under the IBHCA, no bank holding company may
acquire control of a bank if, at the time it applies for approval or at the time
the transaction is consummated, its ratio of total capital to total assets, as
determined in accordance with then applicable FRB regulations, is or will be
less than 7%.

Risk-based capital ratios focus principally on broad categories of credit
risk and do not incorporate factors that can affect the Company's financial
condition, such as overall interest rate risk exposure, liquidity, funding and
market risks, the quality and level of earnings, investment or loan portfolio
concentrations, the quality of loans and investments, the effectiveness of loan
and investment policies and management's ability to monitor and control
financial and operating risks. For this reason, the overall financial health of
First Busey and its subsidiary banks and the assessment of First Busey and its
subsidiary banks by various regulatory agencies may differ from conclusions that
might be drawn solely from the level of First Busey or its subsidiary banks'
risk-based capital ratios.

During 1994, the federal banking regulators announced a joint decision not
to modify risk-based capital and leverage requirements for regulatory capital to
reflect the impact of unrealized gains and losses for securities classified as
"available for sale." This decision was made in response to the Financial
Accounting Standards Board's issuance of Statement No. 115 "Accounting for
Certain Investments in Debt and Equity Securities."

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Regulation of Banks

Busey Bank is a banking corporation organized under the IBA. As such, it
is subject to regulation, supervision and examination by the State of Illinois
Office of Banks and Real Estate. The deposit accounts of the bank subsidiary
are insured up to applicable limits by the FDIC's Bank Insurance Fund (the
"BIF"). Thus, Busey Bank is also subject to regulation, supervision and
examination by the FDIC. In certain instances, the statutes administered by and
regulations promulgated by certain of these agencies are more stringent than
those of other agencies with jurisdiction. In these instances, Busey Bank must
comply with the more stringent restrictions, prohibitions or requirements.

Busey Bank fsb is a federally chartered capital stock savings association
regulated by the Office of Thrift Supervision (OTS). Its deposits are insured
up to applicable limits by the FDIC's Savings Association Insurance Fund (the
"SAIF"). This regulatory framework sets parameters for Busey Bank fsb's
activities and operations and grants the OTS extensive discretion with regard to
its supervisory and enforcement powers and examination policies. Busey Bank fsb
files periodic reports with the OTS concerning its activities and financial
condition, must obtain OTS approval prior to entering into certain transactions
or initiating new activities, and is subject to periodic examination by the OTS
to evaluate the institution's compliance with various regulatory requirements.

The business and affairs of Busey Bank and Busey Bank fsb are regulated in
a variety of ways. Regulations apply to, among other things, insurance of
deposit accounts, capital ratios, payment of dividends, liquidity requirements,
the nature and amount of the investments that the bank subsidiary may make,
transactions with affiliates, community and consumer lending laws, internal
policies and controls, reporting by and examination of the bank subsidiaries and
changes in control of the bank subsidiaries.

DIVIDENDS

The FRB has issued a policy statement on the payment of cash dividends by
bank holding companies. In the policy statement, the FRB expressed its view that
a bank holding company experiencing weak earnings should not pay cash dividends
which exceed its net income or which could only be funded in ways that would
weaken its financial health, such as by borrowing. The FRB also may impose
limitations on the payment of dividends as a condition to its approval of
certain applications, including applications for approval of mergers and
acquisitions. First Busey uses funds derived primarily from the payment of
dividends by its largest banking subsidiary for, among other purposes, the
payment of dividends to First Busey's stockholders. Under provisions of the
IBA, dividends may not be declared by banking subsidiaries except out of the
bank's net profit (as defined), and unless the bank has transferred to surplus
at least one-tenth of its net profits since the date of the declaration of the
last preceding dividend, until the amount of its surplus is at least equal to
its capital. Presently, the surplus of Busey Bank exceeds its capital.

All dividends paid by First Busey's banking subsidiaries are restricted by
capital adequacy requirements imposed by federal regulators regarding the
maintenance of the risk-weighted asset ratios and the leverage ratio (as defined
by regulatory agencies). At December 31, 2000, Busey Bank had $28,492,000 and
Busey Bank fsb had $1,340,000 available for the payment of dividends to First
Busey. Sound banking practices require the maintenance of adequate levels of
capital. State and federal regulatory authorities have adopted standards for
the maintenance of capital by banks and savings associations and adherence to
such standards further limits the ability of banks to pay dividends.

First Busey Trust & Investment Co., as an Illinois corporation, is
permitted to make distributions to its stockholder as authorized by its Board of
Directors, except that as long as it continues in a fiduciary business, it may
not withdraw for purposes of payment of dividends or otherwise any portion of
its capital account except with the approval of the State of Illinois Office of
Banks and Real Estate.

11

MONETARY POLICY AND ECONOMIC CONDITION
The earnings of commercial banks and bank holding companies are affected
not only by general economic conditions but also by the policies of various
governmental regulatory authorities. In particular, the FRB influences
conditions in the money and capital markets, which affect interest rates and the
growth in bank credit and deposits. FRB monetary policies have had a
significant effect on the operating results of commercial banks in the past and
this is expected to continue in the future. The general effect, if any, of such
policies upon the future business and earnings of First Busey and its subsidiary
banks cannot be predicted.

ITEM 2. PROPERTIES

As of March 1, 2001, First Busey and its subsidiaries conduct business in
twenty-four locations. First Busey and Busey Bank have their headquarters at
the Busey Bank Building, a 40,000 square foot building owned by Busey Bank. In
addition to the Busey Bank Building, First Busey and/or its subsidiaries own the
land and building for fifteen locations, own the building and lease the land for
two locations and lease seven locations. The Busey Plaza Building, the Naples
loan production office, one of the branch offices in Bloomington, one of the
branch offices in Urbana, and branch offices in Indianapolis, Thomasboro, and
Lexington are the only facilities not fully occupied by First Busey or its
subsidiaries. The Busey Plaza Building, a five-story 90,000 square foot office
building, is leased to unaffiliated tenants.

12

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings, other than routine
litigation incidental to the business, to which First Busey or its subsidiaries
are a part of or which any of their property is the subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

Name Office (year first elected as an officer) Age
- -------------------- ------------------------------------------------ ---

Douglas C. Mills Chairman of the Board, President and Chief 60
Executive Officer of First Busey (1971)

Edwin A. Scharlau II Chairman of the Board of First Busey Trust & 56
Investment Co. and First Busey Securities, Inc.
(1967)

P. David Kuhl President and Chief Executive 51
Officer of Busey Bank (1979)

Barbara J. Kuhl President and Chief Operating 50
Officer of First Busey (1974)

All executive officers except for Barbara J. Kuhl also currently serve on
First Busey's Board of Directors.

13

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Effective October 1, 1998, First Busey Common Stock began trading on the
Nasdaq National Market under the symbol BUSE. Prior to that the stock was
traded and quoted in the National Quotation Bureau's "Pink Sheets" (1988-1997)
and on the OTC Bulletin Board (1997-1998). Although a limited trading market
for shares of First Busey Common Stock has developed recently, there can be no
assurance that it will continue.

The following table presents for the periods indicated the high and low
closing price for First Busey common stock as provided by the Corporation's
market maker Stephens, Inc. and reported on the Nasdaq National Market.

2000 1999
------------------- -------------------
Market Prices of Common Stock High Low High Low
- ----------------------------- -------- -------- -------- --------

First Quarter $23.0000 $18.5000 $19.5000 $18.0000
Second Quarter $21.4375 $16.3750 $26.7500 $18.5000
Third Quarter $22.5000 $16.7500 $26.5000 $19.5000
Fourth Quarter $20.4375 $16.7500 $24.3750 $21.0000

During 2000 and 1999, First Busey, declared cash dividends per share of common
stock as follows:

2000 COMMON STOCK
---- ------------

January $ .1200
April $ .1200
July $ .1200
October $ .1200

1999
----

January $ .1100
April $ .1100
July $ .1100
October $ .1100

A three-for-two stock split on both Class A and Class B Common Stock
occurred on May 7, 1996. All issued and outstanding shares of Class B Common
Stock were converted to Class A Common Stock on December 31, 1997. A three-for-
two stock split on both Class A and Class B Common Stock occurred on May 7,
1996. In April, 1998, shareholders approved Restated Articles of Incorporation
which authorized just one class of stock to be referred to only as "Common
Stock," thus eliminating the "Class A" designation. A two-for-one stock split
on Common Stock occurred on August 3, 1998.

For a discussion of restrictions on dividends, please see the discussion of
dividend restrictions under Item 1, Business, Dividends on page 11.

As of March 2, 2001 there were approximately 932 holders of First Busey
Common Stock.

14

ITEM 6. SELECTED FINANCIAL DATA

SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected financial data for each of the five years in the
period ended December 31, 2000, have been derived from First Busey's annual
consolidated financial statements audited by McGladrey & Pullen, LLP,
independent certified public accountants, whose report on the financial position
as of December 31, 2000 and December 31, 1999, and the results of operations for
each of the three years in the period ended December 31, 2000, appears elsewhere
in this report. This financial data should be read in conjunction with the
financial statements and the related notes thereto appearing in this report.

2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(dollars in thousands, except per share data)

BALANCE SHEET ITEMS
- -------------------------------
Securities $ 228,597 $ 225,046 $217,991 $215,514 $226,350
Loans, net of unearned interest 984,369 886,684 662,281 602,937 569,500
Allowance for loan losses 12,268 10,403 7,101 6,860 6,131
Total assets 1,355,044 1,247,123 951,531 915,540 864,918
Total deposits 1,148,787 1,027,981 826,704 811,453 766,927
Long-term debt 52,976 55,849 25,000 10,000 5,000
Stockholders' equity 92,325 82,284 87,103 81,279 73,417

RESULTS OF OPERATIONS
- -------------------------------
Interest income $ 93,242 $ 72,311 $ 67,048 $ 63,831 $ 61,197
Interest expense 50,476 34,920 32,975 31,119 30,033
Net interest income 42,766 37,391 34,073 32,712 31,164
Provision for loan losses 2,515 2,570 700 1,075 1,100
Net income $ 14,053 $ 12,548 11,398 $ 10,371 $ 9,306

2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(dollars in thousands, except per share data)

PER SHARE DATA(1)
- -------------------------------
Diluted earnings $ 1.03 $ .90 $ .81 $ .74 $ .67
Cash dividends (Class A) .48 .44 .39 .35 .33
Book value 6.86 6.08 6.36 5.92 5.36
Closing price $19.9375 $22.625 18.25 13.75 11.125

OTHER INFORMATION
- -------------------------------
Return on average assets 1.12% 1.22% 1.22% 1.18% 1.08%
Return on average equity 16.56% 14.68% 14.02% 13.42% 13.40%
Net interest margin(2) 3.75% 4.03% 4.10% 4.20% 4.13%
Stockholders' equity to assets 6.81% 6.60% 9.15% 8.88% 8.49%

(1) Per share amounts have been restated to give retroactive effect to the
two-for-one stock split which occurred August 3, 1998, and the
three-for-two stock split which occurred May 7, 1996.
(2) Calculated as a percent of average earning assets.

15

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following is management's discussion and analysis of the financial
condition and results of operations of First Busey Corporation and Subsidiaries
(the "Corporation") for the years ended December 31, 2000, 1999, and 1998. It
should be read in conjunction with "Business," "Selected Financial Data," the
consolidated financial statements and the related notes to the consolidated
financial statements and other data included in this Annual Report. All per
share amounts have been restated to give retroactive effect to the two-for-one
stock split which occurred August 3, 1998.

GENERAL

The Corporation's consolidated income is generated primarily by the
financial services activities of its subsidiaries. Since January 1, 1982, the
Corporation has acquired eleven banks and sold two; acquired six savings and
loan branches and two bank branches; acquired a bank branch in an FDIC assisted
acquisition of a failed bank; acquired a thrift holding company and federal
savings and loan; formed a trust company subsidiary; formed an insurance agency
subsidiary; formed a non-bank ATM subsidiary and acquired a travel agency. All
of the banks acquired during those years were accounted for using the purchase
method of accounting, except for Bank of Urbana which was accounted for using
the pooling of interests method. All subsidiary banks owned by the Corporation
as of November 1991 were merged with Busey Bank. Under the purchase method of
accounting, the earnings of the acquired subsidiaries are included in the
Corporation's earnings only for the periods subsequent to acquisition. The
following table illustrates the amounts of net income contributed by each
subsidiary (on a pre-consolidation basis) since January 1, 1998, less purchase
accounting adjustments (net income for Busey Bank in following table excludes
income from Bank subsidiaries and includes deduction of $395,000 for
amortization expense recorded on parent company statements).

Subsidiary Acquired 2000 1999 1998
- -----------------------------------------------------------------------------------------------------
(dollars in thousands)

Busey Bank(1) 3/20/80 $13,094 82.6% 11,256 83.5% $10,630 86.5%
Busey Bank fsb(2) 10/29/99 937 5.9% 392 2.9% -- --
First Busey Trust & Investment Co.(3) -- 1,459 9.2% 1,304 9.6% 1,175 9.6%
First Busey Securities, Inc.(4) -- 357 2.3% 352 2.6% 301 2.4%
First Busey Resources, Inc.(5) -- 154 1.0% 159 1.2% 205 1.7%
Busey Insurance Services, Inc.(6) -- (38) -0.2% 6 0.0% (14) -0.1%
BAT, Inc.(7) -- 20 0.1% 14 0.1% (3) -0.0%
Busey Travel, Inc.(8) 1/1/98 (153) -1.0% 9 0.1% (10) -0.1%
FFS Investments(9) 10/29/99 19 0.1% (7) 0.0% -- --
-------------------------------------------------------------
Total $15,849 100.0% 13,485 100.0% $12,284 100.0%
=============================================================

(1) City Bank of Champaign and Champaign County Bank & Trust were merged into
Busey Bank as of January 1, 1987. First National Bank of Thomasboro was
merged into Busey Bank as of January 1,1988. State Bank of St. Joseph was
merged into Busey Bank as of November 3, 1989. The Bank of Urbana,
Citizens Bank of Tolono, and the assets of Community Bank of Mahomet
subject to its liabilities were merged into Busey Bank as of
November 16, 1991. Busey Bank of McLean County was merged into Busey
Bank as of January 1, 1996. Busey Business Bank was formed on
January 12, 1998, and merged into Busey Bank as of October 30, 1998.
(2) Acquired as a subsidiary of Eagle BancGroup, Inc. as of October 29, 1999.
(3) Formed as a subsidiary of the Corporation as of January 1, 1987 as a
successor to the combined trust departments of Busey Bank and Champaign
County Bank & Trust.
(4) Formed as a subsidiary of Busey Bank as of April 1, 1991.
(5) Reactivated as a subsidiary of First Busey Corporation as of
January 1, 1997. Real estate and certain other assets previously carried
on the parent company's balance sheet were transferred to subsidiary as
of that date.
(6) Formed as a subsidiary of Busey Bank as of October 1, 1997.
(7) Reactivated as a subsidiary of Busey Bank as of July 1, 1997.
(8) Acquired as a subsidiary of Busey Bank as of January 1, 1998.
(9) Acquired as a subsidiary of First Federal Savings and Loan Association of
Bloomington as of October 29, 1999.

Busey Bank, Busey Bank fsb and First Busey Trust & Investment Co. are the
three subsidiaries which contributed more than 10% of the Corporation's
consolidated net income. Busey Bank provides a full range of banking services
to individual and corporate customers through its branch network in central
Illinois, through its branch in Indianapolis, Indiana, and through its loan

16

production office in Fort Myers, Florida. Busey Bank fsb provides a full range
of banking services to individual and corporate customers through its branches
in McLean County in Illinois and its branch in Fort Myers, Florida. First Busey
Trust & Investment provides trust and asset management services to individual
and corporate customers throughout central Illinois.

RESULTS OF OPERATIONS-THREE YEARS ENDED DECEMBER 31, 2000

SUMMARY
The Corporation reported net income of $14,053,000 in 2000, up 12.0% from
$12,548,000 in 1999, which had increased 10.1% from $11,398,000 in 1998.
Diluted earnings per share in 2000 increased 14.4% to $1.03 from $.90 in 1999,
which was a 11.1% increase from $.81 in 1998. The main factors contributing to
the increase in net income in 2000 were increases in net interest income,
service charges on deposit accounts, and trust fees. Operating earnings, which
exclude security gains and the related tax expense, were $13,608,000 or $1.00
per share for 2000; $11,924,000, or $.86 per share for 1999; and $10,590,000, or
$.75 per share for 1998.

Security gains after the related tax expense were $445,000 or 3.2% of net
income in 2000; $624,000 or 5.0% of net income in 1999; and $808,000 or 7.1% of
net income in 1998. First Busey Corporation owns a position in a qualified
equity security with substantial appreciated value. During 1998 First Busey's
Board authorized an orderly liquidation of this asset over a five-year period.

The Corporation's return on average assets was 1.12%, 1.22% and 1.22% for
2000, 1999, and 1998, respectively, and return on average equity was 16.56%,
14.68%, and 14.02% for 2000, 1999, and 1998, respectively. On an operating
earnings basis, return on average assets was 1.08%, 1.16%, and 1.14% for 2000,
1999, and 1998, respectively, and return on average equity was 16.03%, 13.95%
and 13.02% for 2000, 1999, and 1998, respectively.

NET INTEREST INCOME
Net interest income on a tax equivalent basis for 2000 increased 14.0% to
$44,083,000 from $38,668,000 for 1999, which reflected a 9.7% increase from
$35,262,000 in 1998. Net interest income increased in 2000 and 1999 due to
continued growth in average loan balances outstanding.

Average interest-earning assets increased to $1,174,249,000 in 2000 from
$959,860,000 and $860,350,000 in 1999 and 1998, respectively. The growth in
interest-earning assets during 2000 was funded by growth in core deposits and
debt.

The net interest margin was 3.75% in 2000, 4.03% in 1999, and 4.10% in
1998. Interest rate trends continued to have significant impact on the
Corporation's yields and costs during the period from 1998 through 2000.
Interest rates increased during 2000 and led to increases in both the yield
earned on interest-earning assets and rates paid on interest-bearing
liabilities. Although net interest income increased by $5,415,000, the net
interest margin declined to 3.75% for the year ended December 31, 2000, as
compared to 4.03% for the year ended December 31, 1999. Interest income rose by
$20,971,000 resulting in a 38 basis point increase in the yield on interest-
earning assets of 8.05% primarily due to growth in the average balances of loans
outstanding. Interest expense increased by $15,556,000 resulting in a 64 basis
point increase in the average rate paid on interest-bearing liabilities of 4.77%
due to growth in the average balances of all categories of interest-bearing
deposits and debt combined with higher rates paid, particularly on money market
and time deposits.

The decrease in the net interest margin for 1999 was due to the 26 basis
point decline in the average rate earned on interest-earning assets which was
only partially offset by the 22 basis point decrease in the average rate paid on
interest-bearing liabilities. The decline in the average rate earned on
interest-earning assets was partially offset by the $99,510,000 increase in
total interest-earning assets.

PROVISION FOR LOAN LOSSES
The provision for loan losses, which is a current charge against income,
represents an amount which management believes is sufficient to maintain an

17

adequate allowance for future loan losses. In assessing the adequacy of the
allowance for loan losses, management considers the size and quality of the loan
portfolio measured against prevailing economic conditions, regulatory
guidelines, and historical loan loss experience, credit quality of the
portfolio, prevailing economic conditions, and regulatory guidelines. When a
determination is made by management to charge off a loan balance, such write-off
is charged against the allowance for loan losses.

The provision for loan losses decreased slightly to $2,515,000 in 2000 from
$2,570,000 in 1999 which had increased from $700,000 in 1998. The increases in
2000 and 1999 are due primarily to growth in average loan balances, which
increased by $205,748,000 or 28% in 2000 and $110,016,000 or 17.7% in 1999.
During 2000 the Corporation experienced higher net chargeoffs than in prior
years. Net charge-offs increased to $650,000 in 2000 from $369,000 in 1999 which
had decreased from $459,000 in 1998.
Since 1998 the Corporation has also seen growth in total non-performing loans.
Non-performing loans grew $34.2% to $2,117,000 in 1999, but more than doubled
during 2000 to $5,434,000 at December 31, 2000. Depressed prices for
agricultural products combined with increases in interest rates over the past
two years have also resulted in higher risk within the agricultural loan
portfolio.

Sensitive assets include nonaccrual loans, loans on First Busey
Corporation's watch loan report, and other loans identified as having more than
reasonable potential for loss. The watch loan list is comprised of loans which
have been restructured or involve customers in industries which have been
adversely affected by market conditions. The majority of these loans are being
repaid in conformance with their contracts.

OTHER INCOME
Other income increased 12.9% in 2000 to $18,288,000 from $16,192,000 in
1999, which reflected a 19.7% increase from $13,530,000 in 1998. The increases
in 2000 and 1999 are due primarily to increases in service charges on deposit
accounts, trust fee income, and commissions and brokers' fees. As a percentage
of total income, other income was 16.4%, 18.3%, and 16.8% in 2000, 1999, and
1998, respectively. Gains on the sale of securities, as a component of other
income, totaled $737,000 (4.0%) in 2000, $1,035,000 (6.4%) in 1999, and
$1,243,000 (9.2%) in 1998. Other income also includes gains on sales of loans,
as a component of other income, of $1,112,000 (6.1%), $895,000 (5.5%), and
$988,000 (7.3%) in 2000, 1999, and 1998, respectively.

Additional components of other income were fee income and trust fees.
Service charges and other fee income increased 23.0% to $9,317,000 in 2000 from
$7,572,000 in 1999, which was a 25.5% increase from $6,034,000 in 1998. The
growth in fee income in 2000 and 1999 is due to increases in service charges on
deposit accounts and fees for customer services. Trust fees increased 8.7% in
2000; revenues were $4,364,000 in 2000, $4,013,000 in 1999, and $3,445,000 in
1998. Increases in trust department revenues in each year were primarily due to
increases in assets under care to $1,003,157,000 at December 31, 2000, from
$971,554,000 at December 31, 1999, which is an increase from $783,226,000 from
December 31, 1998. Remaining other income increased 3.0% to $2,758,000 in 2000
from $2,677,000 in 1999 which was a 47.1% increase from $1,820,000 in 1998.

OTHER EXPENSES
Other expenses increased 12.7% in 2000 to $37,249,000 from $33,063,000 in
1999, which reflected an increase from $30,400,000 in 1998. As a percentage of
total income, other expenses were 33.4%, 37.4%, and 37.7% in 2000, 1999, and
1998, respectively. Employee related expenses, including salaries and wages and
employee benefits, increased 8.6% in 2000 to $19,080,000, as compared to
$17,565,000 in 1999, which was a 9.1% increase from $16,095,000 in 1998. As a
percent of average assets, employee related expenses were 1.51%, 1.70%, and
1.73% in 2000, 1999, and 1998, respectively. The Corporation had 484, 494, and
433 full-time equivalent employees at December 31, 2000, 1999, and 1998,
respectively. Net occupancy expense of bank premises and furniture and
equipment expenses increased 12.0% in 2000 to $6,729,000 as compared to
$6,010,000 in 1999 and $4,867,000 in 1998. The increases were primarily due to
expenses associated with the addition of the Busey Bank fsb branches and
remodeling of existing facilities.

18

Remaining other expenses increased $1,952,000 or 20.6% to $11,440,000 in
2000 from $9,488,000 in 1999, which was a 0.5% increase from $9,438,000 in 1998.
The increase in 2000 is due primarily to the increase in amortization and
impairment expense associated with the acquisition of Busey Bank fsb.

INCOME TAXES
Income tax expense in 2000 was $7,237,000 as compared to $5,402,000 in 1999
and $5,105,000 in 1998. The provision for income taxes as a percent of income
before income taxes was 34.0%, 30.1%, and 30.9%, for 2000, 1999, and 1998,
respectively.

BALANCE SHEET-DECEMBER 31, 2000 AND DECEMBER 31, 1999

Total assets on December 31, 2000 were $1,355,044,000, an increase of 8.7%
from $1,247,123,000 on December 31, 1999.Total loans, net of unearned interest,
increased 11.0% to $984,369,000 on December 31, 2000, as compared to
$886,684,000 on December 31, 1999. Total deposits increased 11.8% to
$1,148,787,000 on December 31, 2000 as compared to $1,027,981,000 on December
31, 1999. Non-interest bearing deposits increased $31,668,000 or 30.7% during
2000. Interest-bearing deposits increased $89,138,000 or 9.6% during 2000.

Total stockholders' equity increased 12.2% to $92,325,000 on December 31,
2000, as compared to $82,284,000 on December 31, 1999. Growth in equity is due
primarily to $7,643,000 earnings retained in the Corporation combined with a net
increase of $3,843,000 in unrealized gains on available for sale securities.
This growth was partially offset by an increase of $2,085,000 in treasury stock.
Treasury shares will be reissued in future years as participants exercise
outstanding options under the Corporation's stock option plan which is discussed
in Note 13 to the Corporation's consolidated financial statements.

EARNING ASSETS
The average interest-earning assets of the Corporation were 93.2%, 93.0%,
and 92.4%, of average total assets for the years ended December 31, 2000, 1999,
and 1998, respectively.

INVESTMENT SECURITIES
The Corporation has classified all investment securities as securities
available for sale. These securities are held with the option of their disposal
in the foreseeable future to meet investment objectives or for other operational
needs. Securities available for sale are carried at fair value. As of December
31, 2000, the fair value of these securities was $228,597,000 and the amortized
cost was $218,790,000. There were $10,236,000 of gross unrealized gains and
$429,000 of gross unrealized losses for a net unrealized gain of $9,807,000.
The after-tax effect ($5,917,000) of this unrealized gain has been included in
stockholders' equity. The increase in market value for the debt securities in
this classification was a result of declining interest rates. The fair value
increase in the equity securities was primarily due to a $2,305,000 increase in
the value of 117,000 shares of Student Loan Marketing Association (SLM) common
stock owned by the Corporation.

19

The composition of securities available for sale is as follows:

Years ended December 31,
-----------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------
(dollars in thousands)

U.S. Treasuries and Agencies $162,886 $164,565 $159,261 $161,762 $159,044
Equity securities 15,479 13,079 12,550 11,994 9,065
States and political subdivisions 43,197 41,554 37,398 32,351 1,253
Other 7,035 5,848 8,782 9,407 1,881
-----------------------------------------------------
Fair value of securities available for sale $228,597 $225,046 $217,991 $215,514 $171,243
=====================================================
Amortized cost $218,790 $221,601 $207,531 $206,589 $166,189
=====================================================
Fair value as a percentage of amortized cost 104.48% 101.55% 105.04% 104.32% 103.04%
=====================================================

The maturities, fair values and weighted average yields of securities
available for sale as of December 31, 2000 are:

Due in Due after 1 year Due after 5 years Due after
1 year or less through 5 years through 10 years 10 years
-----------------------------------------------------------------------------------
Fair Weighted Fair Weighted Fair Weighted Fair Weighted
Value Average Value Average Value Average Value Average
Investment Securities(1) Yield Yield Yield Yield
-----------------------------------------------------------------------------------
(dollars in thousands)

U.S. Treasuries and Agencies $ 94,352 5.73% $68,329 6.00% $ 205 6.45% $ - -%
States and political subdivisions(2) 3,992 8.48% 16,750 7.84% 19,669 7.09% 2,786 6.98%
Other 2,092 6.34% 3,417 6.28% 840 6.77% 686 10.35%
-----------------------------------------------------------------------------------
Total $100,436 5.85% $88,496 6.36% $20,714 7.07% $3,472 7.65%
===================================================================================

(1) Excludes equity securities and mortgage backed securities.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35% (the
effective federal income tax rate as of December 31, 2000)

The securities held to maturity portfolio consisted of debt securities
which provided the Corporation with a relatively stable source of income.
Additionally, the investment portfolio provides a balance to interest rate and
credit risk in other categories of the balance sheet while providing a vehicle
for the investment of available funds and supplying securities to pledge as
required collateral for certain deposits. All remaining securities were
transferred to the available for sale portfolio as of December 31, 1997.

The composition of securities held to maturity was as follows:

Years ended December 31,
------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------
(dollars in thousands)

U.S. Treasuries and Agencies - - - - $ 8,635
States and political subdivisions - - - - 36,607
Other - - - - 9,865
------------------------------------------------
Amortized cost of securities held to maturity - - - - $55,107
================================================
Fair value of securities held to maturity - - - - $55,800
================================================
Fair value as a percentage of book value - - - - 101.26%
================================================

The Corporation also uses its investment portfolio to manage its tax
position. Depending upon projected levels of taxable income for the
Corporation, periodic changes are made in the mix of tax-exempt and taxable
securities to achieve maximum yields on a tax-equivalent basis. U.S. government
and agency securities as a percentage of total securities decreased to 71.3% at
December 31, 2000 from 73.1% at December 31, 1999 while obligations of state and
political subdivisions (tax-exempt obligations) as a percentage of total
securities increased to 18.9% at December 31, 2000, from 18.5% at December 31,
1999.

20

LOAN PORTFOLIO
Loans, including loans held for sale, before allowance for loan losses,
increased 11.0% to $984,369,000 in 2000 from $886,684,000 in 1999. Non-farm
non-residential real estate mortgage loans increased $18,074,000, or 8.5%, to
$231,230,000 in 2000 from $213,156,000 in 1999. This increase reflects
management's emphasis on commercial loans secured by mortgages. Also, 1 to 4
family residential real estate mortgage loans (not held for sale) increased
$54,995,000, or 16.0%, to $398,734,000 in 2000 from $343,739,000 in 1999. It is
intended that residential mortgage loan origination will generate income and
develop retail and other banking relationships. The Corporation has no loans to
customers engaged in oil and gas exploration or to foreign companies or
governments. Commitments under standby letters of credit, unused lines of
credit and other conditionally approved credit lines, totaled approximately
$185,376,000 as of December 31, 2000.

The loan portfolio includes a concentration of loans for commercial real
estate amounting to approximately $293,184,000 and $276,961,000 as of December
31, 2000 and 1999, respectively. Generally, these loans are collateralized by
assets of the borrowers. The loans are expected to be repaid from cash flows or
from proceeds from the sale of selected assets of the borrowers. Credit losses
arising from lending transactions for commercial real estate entities are
comparable with the Corporation's credit loss experience on its loan portfolio
as a whole.

The composition of loans is as follows:

Years ended December 31,
--------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------
(dollars in thousands)

Commercial and financial $124,052 $119,800 $ 80,958 $ 63,861 $ 62,065
Agricultural 20,844 20,126 19,072 17,403 16,537
Real estate-farmland 15,411 15,841 14,184 11,782 11,468
Real estate-construction 75,672 52,479 44,713 31,306 26,184
Real estate-mortgage 697,410 622,075 467,435 439,660 413,541
Installment loans to individuals 50,980 56,470 35,919 38,925 39,707
--------------------------------------------------
$984,369 $886,791 $662,281 $602,937 $569,502
Unearned interest - (107) - - (2)
--------------------------------------------------
Loans $984,369 $886,684 $662,281 $602,937 $569,500
==================================================

The following table sets forth remaining maturities of selected loans
(excluding certain real estate-farmland, real estate-mortgage loans and
installment loans to individuals) at December 31, 2000.

1 Year or Less 1 to 5 Years Over 5 Years Total
----------------------------------------------------------
(dollars in thousands)

Commercial, financial and agricultural $ 90,761 $ 33,151 $ 20,984 $ 144,896
Real estate-construction 53,955 20,268 1,449 75,672
----------------------------------------------------------
Total $ 144,716 $ 53,419 $ 22,433 $ 220,568
==========================================================
Interest rate sensitivity of selected loans
Fixed rate $ 45,988 $ 19,549 $ 7,191 $ 72,728
Adjustable rate 98,729 33,870 15,241 147,840
----------------------------------------------------------
Total $ 144,717 $ 53,419 $ 22,432 $ 220,568
==========================================================

ALLOWANCE FOR LOAN LOSSES
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.

21

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 appraisal,
on a monthly basis, of all loans judged to present a possibility of loss (if, as
a result of such monthly appraisals, the loan is judged to be not fully
collectible, the carrying value of the loan is reduced to that portion
considered collectible); 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.

The following table shows activity affecting the allowance for loan losses:

Years ended December 31
-----------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------
(dollars in thousands)

Average loans outstanding during period $937,239 $731,491 $621,475 $584,327 $525,311
=====================================================
Allowance for loan losses:
Balance at beginning of period $ 10,403 $ 7,101 $ 6,860 $ 6,131 $ 5,473
-----------------------------------------------------

Loans charged-off:
Commercial, financial and agricultural $ 70 $ 40 $ 62 $ 192 $ 227
Real estate-construction - - - - 19
Real estate-mortgage 290 145 282 50 32
Installment loans to individuals 414 366 260 317 404
-----------------------------------------------------
Total charge-offs $ 774 $ 551 $ 604 $ 559 $ 682
-----------------------------------------------------
Recoveries:
Commercial, financial and agricultural $ 22 $ 16 $ 12 $ 13 $ 43
Real estate-construction - - - - 50
Real estate-mortgage 4 67 49 110 -
Installment loans to individuals 98 99 84 90 147
-----------------------------------------------------
Total recoveries $ 124 $ 182 $ 145 $ 213 $ 240
-----------------------------------------------------
Net loans charged-off $ 650 $ 369 $ 459 $ 346 $ 442
-----------------------------------------------------
Provision for loan losses $ 2,515 $ 2,570 $ 700 $ 1,075 $ 1,100
-----------------------------------------------------
Net additions due to acquisition - $ 1,101 - - -
-----------------------------------------------------
Balance at end of period $ 12,268 $ 10,403 $ 7,101 $ 6,860 $ 6,131
=====================================================
Ratios:
Net charge-offs to average loans 0.07% 0.05% 0.07% 0.06% 0.08%
=====================================================
Allowance for loan losses to total loans
at period end 1.25% 1.17% 1.07% 1.14% 1.08%
=====================================================

22

The following table sets forth the allowance for loan losses by loan
categories as of December 31 for each of the years indicated:

-----------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------
% of % of % of % of % of
Total Total Total Total Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
-----------------------------------------------------------------------------------
(dollars in thousands)

Commercial, financial, agri-
cultural and real estate-farmland $ 1,854 16.3% $ 3,391 17.6% $ 1,757 17.2% $ 1,059 15.4% $ 766 15.8%
Real estate-construction - 7.7% - 5.9% - 6.8% - 5.2% - 4.6%
Real estate-mortgage 9,051 70.8% 5,708 70.1% 4,380 70.6% 4,456 72.9% 3,505 72.6%
Installment loans to individuals 708 5.2% 1,293 6.4% 964 5.4% 1,045 6.5% 1,189 7.0%
Unallocated 655 N/A 11 N/A - N/A 300 N/A 671 N/A
-----------------------------------------------------------------------------------
Total $12,268 100% $10,403 100% $ 7,101 100% $ 6,860 100% $ 6,131 100%
===================================================================================

This table indicates growth in the allowance for loan losses for real
estate mortgages and in the unallocated portion. Growth in the allowance for
loan losses for real estate mortgages is due to growth in the outstanding
balances of real estate mortgage loans as well as an increase in the past due
balances of these loans. The increase in the unallocated portion of the
allowance for loan losses is due to the factor applied for current economic
conditions as well as growth in loans to customers in the Indianapolis and
Florida markets where average loan balances are larger than the average loan
size within the overall portfolio.

NON-PERFORMING LOANS
It is management's policy to place commercial and mortgage loans on non-
accrual status when interest or principal is 90 days or more past due. Such
loans may continue on accrual status only if they are both well-secured and in
the process of collection.

The following table sets forth information concerning non-performing loans at
December 31 for each of the years indicated:

Years ended December 31,
-------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------
(dollars in thousands)

Non-accrual loans $ 767 $1,220 $ 526 $ 628 $ -
Loans 90 days past due and still accruing 4,667 897 1,052 1,033 1,002
Restructured loans - - - - -
-------------------------------------------
Total non-performing loans $5,434 $2,117 $1,578 $1,661 $1,002
-------------------------------------------
Repossessed assets $ 230 $ 459 $ 320 $ 516 $ 805
Other assets acquired in satisfaction of debts
previously contracted 11 5 14 5 1
-------------------------------------------
Total non-performing other assets $ 241 $ 464 $ 334 $ 521 $ 806
-------------------------------------------
Total non-performing loans and non-
performing other assets $5,675 $2,581 $1,912 $2,182 $1,808
===========================================
Non-performing loans to loans, before
allowance for loan losses 0.55% 0.24% 0.24% 0.28% 0.18%
===========================================
Non-performing loans and non-performing
other assets to loans, before allowance for loan
losses 0.58% 0.29% 0.29% 0.36% 0.32%
===========================================

On January 1, 1995, the Corporation adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a
Loan," as amended by Statement No. 118, which requires loans to be considered
impaired when, based on current information and events, it is probable the
Corporation 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. Interest income on these loans is recognized to the extent interest
payments are received and the principal is considered fully collectible. For

23

the years ended December 31, 2000 and 1999, no interest was recognized from
impaired loans, and $4,000 was recognized for the year ended December 31, 1998.

The gross interest income that would have been recorded in the years ended
December 31, 2000 and 1999 if the non-accrual and restructured loans had been
current in accordance with their original terms was $41,000 and $31,000,
respectively. The amount of interest collected on those loans that was included
in interest income was $2,000 for the year ended December 31, 2000, and $0 for
the year ended December 31, 1999.

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 $2,705,000 at December 31, 2000. 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.

OTHER INTEREST-BEARING ASSETS
There are no other interest-bearing assets which are categorized as
impaired.

DEPOSITS
As indicated in the following table, average interest bearing deposits as a
percentage of average total deposits have increased to 89.6% for the year ended
December 31, 2000 from 89.5% for the year ended December 31, 1999.

December 31,
------------------------------------------------------------------------------------------
2000 1999 1998
------------------------------------------------------------------------------------------
(dollars in thousands)
Average % Total Average Average % Total Average Average % Total Average
Balance Rate Balance Rate Balance Rate
------------------------------------------------------------------------------------------

Non-interest bearing
demand deposits $ 107,882 10.4% - % $ 91,484 10.5% -% $ 80,986 10.1% -%
Interest bearing demand
deposits 28,976 2.8% 2.86% 13,951 1.6% 2.01% 19,271 2.4% 1.96%
Savings/Money Market 411,262 39.6% 3.37% 390,781 44.9% 2.98% 351,695 43.9% 3.14%
Time deposits 489,779 47.2% 5.63% 373,563 43.0% 5.13% 349,956 43.6% 5.49%
------------------------------------------------------------------------------------------
Total $1,037,899 100.0% 4.07% $869,779 100.0% 3.99% $801,908 100.0% 4.25%
==========================================================================================

Certificates of deposit of $100,000 and over and other time deposits of $100,000
and over at December 31, 2000, had the following maturities (dollars in
thousands):

Under 3 months $ 43,914
3 to 6 months 37,589
6 to 12 months 65,680
Over 12 months 20,174
--------
Total $167,357
========

24

SHORT-TERM BORROWINGS
The following table sets forth the distribution of short-term borrowings
and weighted average interest rates thereon at the end of each of the last three
years. Federal funds purchased and securities sold under agreements to
repurchase generally represent overnight borrowing transactions. Other short-
term borrowings consist of various demand notes and notes with maturities of
less than one year.

Federal funds
purchased and
securities sold Other short-
under agreements to term
repurchase borrowings
-------------------------------------
(dollars in thousands)

2000
Balance, December 31, 2000 $18,890 $32,283
Weighted average interest rate at end of period 5.68% 8.29%
Maximum outstanding at any month end $24,064 82,120
Average daily balance $29,504 44,961
Weighted average interest rate during period(1) 5.94% 7.76%

1999
Balance, December 31, 1999 $23,580 $48,327
Weighted average interest rate at end of period 5.68% 7.04%
Maximum outstanding at any month end $42,931 $49,727
Average daily balance $16,068 $15,510
Weighted average interest rate during period(1) 5.53% 5.96%

1998
Balance, December 31, 1998 $ - $ 5,900
Weighted average interest rate at end of period - 7.25%
Maximum outstanding at any month end $ 7,900 $16,550
Average daily balance $ 1,686 $12,981
Weighted average interest rate during period(1) 5.29% 7.78%

(1) The weighted average interest rate is computed by dividing total interest
for the year by the average daily balance outstanding.

LIQUIDITY
Liquidity is the availability of funds to meet all present and future cash
flow 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
asset maturities, sales, deposits and capital funds. Additional liquidity is
provided by bank lines of credit, repurchase agreements and the ability to
borrow from the Federal Reserve Bank and Federal Home Loan Bank. The Corporation
does not deal in or use brokered deposits as a source of liquidity. 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.

The objective of liquidity management by the Corporation is to ensure that
funds will be available to meet demand in a timely and efficient manner. Based
upon the level of investment securities that reprice within 30 days and 90 days,
management believes that adequate liquidity exists to meet all projected cash
flow obligations.

25

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. Average liquid
assets are shown in the table below:

LIQUID ASSETS

Years Ended December 31,
------------------------------
Average Balances 2000 1999 1998
------------------------------
(dollars in thousands)

Federal funds sold $10,310 $10,723 $16,463
==============================
Percentage of average total assets 0.82% 1.04% 1.77%
==============================

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.

The following table sets forth the static rate-sensitivity analysis of the
Corporation as of December 31, 2000:

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

Interest-bearing deposits $ 4,471 $ - $ - $ - $ - $ 4,471
Federal funds sold 34,700 - - - - 34,700
Investment securities
U.S. Treasuries and Agencies 10,984 19,851 15,947 41,584 74,520 162,886
States and political subdivisions 60 35 283 3,471 39,348 43,197
Other securities 8,055 1,427 - 99 12,933 22,514
Loans (net of unearned interest) 282,892 92,828 110,536 110,437 387,676 984,369
----------------------------------------------------------------------------------
Total rate-sensitive assets $ 341,162 $ 114,141 $ 126,766 $ 155,591 $ 514,477 $1,252,137
----------------------------------------------------------------------------------

Interest bearing transaction deposits 51,301 - - - - 51,301
Savings deposits 87,517 - - - - 87,517
Money market deposits 329,432 - - - - 329,432
Time deposits 57,541 71,476 132,337 165,149 119,365 545,868
Short-term borrowings 34,445 2,963 3,582 3,976 6,207 51,173
Long-term debt - 21,978 4,999 3,000 22,999 52,976
----------------------------------------------------------------------------------
Total rate-sensitive liabilities $ 560,236 $ 96,417 $ 140,918 $ 172,125 $ 148,571 $1,118,267
----------------------------------------------------------------------------------
Rate-sensitive assets less rate-sensitive
liabilities ($219,074) $ 17,724 ($14,152) ($16,534) $ 365,906 $ 133,870
----------------------------------------------------------------------------------
Cumulative Gap ($219,074) ($201,350) ($215,502) ($232,036) $ 133,870
======================================================================
Cumulative amounts as a percentage
of total rate-sensitive assets -17.50% -16.08% -17.21% -18.53% 10.69%
======================================================================
Cumulative Ratio 0.61x 0.69x 0.73x 0.76x 1.12x
======================================================================

The foregoing table shows a negative (liability sensitive) cumulative
unadjusted gap of approximately $219 million in the 1-30 day repricing category.
The gap report indicates that the cumulative gap is negative through one year.
Beyond one year, the gap becomes asset sensitive as there are more rate
sensitive assets than rate-sensitive liabilities repricing after one year. The
composition of the gap structure at December 31, 2000 will benefit the
Corporation more if interest rates fall 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.

26

CAPITAL RESOURCES
Other than from the issuance of common stock, the Corporation's primary
source of capital is net income retained by the Corporation. During the year
ended December 31, 2000, the Corporation earned $14,053,000 and paid dividends
of $6,410,000 to stockholders, resulting in a retention of current earnings of
$7,643,000.

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%. As of December 31, 2000, the Corporation had a
total capital to total risk-weighted asset ratio of 9.43%, a Tier 1 capital to
risk-weighted asset ratio of 7.77% and a Tier 1 leverage ratio of 5.71%; the
Corporation's bank subsidiary, Busey Bank, had ratios of 11.90%, 10.16%, and
7.36%, respectively; the Corporation's savings and loan subsidiary, Busey Bank
fsb, had ratios of 9.69%, 8.53%, and 6.49%, respectively. As these ratios show,
the Corporation and its bank subsidiaries significantly exceed the regulatory
capital guidelines.

REGULATORY CONSIDERATIONS
It is management's belief that there are no current recommendations by the
regulatory authorities which if implemented, would have a material effect on the
Corporation's liquidity, capital resources, or operations.

NEW ACCOUNTING PRONOUNCEMENTS
Accounting for Derivative Instruments and Hedging Activities. Statement of
-------------------------------------------------------------
Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133) establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The accounting
for changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation. This Statement applies to all
entities. FAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. Earlier application is encouraged. The
Statement is not to be applied retroactively to financial statements of prior
periods. In June 1999, Statement of Financial Accounting Standard No. 137 was
issued to extend the effective date by one year to all fiscal quarters of fiscal
years beginning after June 15, 2000. In June 2000, Statement of Financial
Accounting Standard No. 138 was issued to amend certain accounting and reporting
standards of FAS 133. The Company does not believe the adoption of FAS 133, as
amended by FAS 137 and 138, will have a material impact on the consolidated
financial statements.

Accounting for Transfers and Servicing of Financial Assets and
--------------------------------------------------------------
Extinguishments of Liabilities. In September 2000, Statement on Financial
- ------------------------------
Accounting Standards No. 140 (FAS 140), "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities," was issued to replace
Statement on Financial Accounting Standards No. 125 (FAS 125), which was issued
in June 1996. FAS 125 addressed issues related to transfers of financial assets
in which the transferor has some continuing involvement with the transferred
assets or with the transferee. FAS 140 resolves implementation issues which
arose as a result of FAS 125, but carries forward most of FAS 125's provisions.
FAS 140 is effective for transfers occurring after March 31, 2001 and for
disclosures relating to securitization transactions and collateral for fiscal
years ending after December 15, 2000. Management does not believe the adoption
of FAS 140 will have a significant impact on its financial statements.

27

EFFECTS OF INFLATION
The effect of inflation on a financial institution differs significantly
from the effect on an industrial company. While a financial institution's
operating expenses, particularly salary and employee benefits, are affected by
general inflation, the asset and liability structure of a financial institution
consists largely of monetary items. Monetary items, such as cash, loans and
deposits, are those assets and liabilities which are or will be converted into a
fixed number of dollars regardless of changes in prices. As a result, changes
in interest rates have a more significant impact on a financial institution's
performance than does general inflation. For additional information regarding
interest rates and changes in net interest income see "Selected Statistical
Information."

SELECTED STATISTICAL INFORMATION
The following tables contain information concerning the consolidated
financial condition and operations of the Corporation for the periods, or as of
the dates, shown. All average information is provided on a daily average basis.

28

The following table shows the consolidated average balance sheets,
detailing the major categories of assets and liabilities, the interest income
earned on interest-earning assets, the interest expense paid for interest-
bearing liabilities, and the related interest rates:

Consolidated Average Balance Sheets and Interest Rates

Years Ended December 31,
--------------------------------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
--------------------------------------------------------------------------------------------
(dollars in thousands)

Assets
Federal funds sold $ 10,310 $ 627 6.08% $ 10,723 $ 479 4.47% $ 16,463 $ 891 5.41%
Investment securities:
U.S. Treasuries and Agencies 162,526 9,434 5.80% 153,576 8,637 5.62% 169,680 9,776 5.76%
States and political
subdivisions1 40,833 3,129 7.66% 40,006 3,000 7.50% 33,683 2,665 7.91%
Other securities 23,341 1,223 5.24% 24,064 1,187 4.93% 19,049 980 5.14%
Loans (net of unearned
discount)(1), (2) 937,239 80,146 8.55% 731,491 60,285 8.24% 621,475 53,925 8.68%
--------------------------------------------------------------------------------------------
Total interest-earning assets(1) $1,174,249 $ 94,559 8.05% $ 959,860 $ 73,588 7.67% $860,350 $ 68,237 7.93%
============================================================================================
Cash and due from banks 33,768 30,726 32,175
Premises and equipment 30,399 25,437 24,243
Allowance for loan losses (11,077) (7,777) (7,253)
Other assets 32,777 23,532 21,648
----------- ----------- ---------
Total assets $1,260,116 $1,031,778 $931,163
=========== =========== =========

Liabilities and Stockholders' Equity
Interest bearing transaction deposits $ 28,976 $ 830 2.86% $ 13,951 $ 280 2.01% $ 19,271 $ 377 1.96%
Savings deposits 91,750 2,794 3.05% 85,720 2,554 2.98% 80,648 2,635 3.27%
Money market deposits 319,512 11,073 3.47% 305,061 9,105 2.98% 271,047 8,419 3.11%
Time deposits 489,779 27,589 5.63% 373,563 19,146 5.13% 349,956 19,211 5.49%
Short-term borrowings:
Federal funds purchased and
repurchase agreements 29,504 1,752 5.94% 16,068 888 5.53% 1,686 89 5.29%
Other 44,961 3,491 7.76% 15,510 924 5.96% 12,981 1,010 7.78%
Long-term debt 53,240 2,947 5.54% 36,505 2,023 5.54% 22,548 1,234 5.47%
--------------------------------------------------------------------------------------------
Total interest-bearing liabilities $1,057,722 $ 50,476 4.77% $ 846,378 $ 34,920 4.13% $758,137 $ 32,975 4.35%
============================================================================================
Net interest spread 3.28% 3.54% 3.58%
======= ======= =======
Demand deposits 107,882 91,484 80,986
Other liabilities 9,628 8,425 10,724
Stockholders' equity 84,884 85,491 81,316
----------- ----------- ---------
Total liabilities and
stockholders' equity $1,260,116 $1,031,778 $931,163
=========== =========== =========

Interest income/earning assets(1) $1,174,249 $ 94,559 8.05% $ 959,860 $ 73,588 7.67% $860,350 $ 68,237 7.93%
Interest expense/earning assets $1,174,249 $ 50,476 4.30% $ 959,860 $ 34,920 3.64% $860,350 $ 32,975 3.83%
--------------------------------------------------------------------------------------------
Net interest margin(1) $ 44,083 3.75% $ 38,668 4.03% $ 35,262 4.10%
================= ================= =================

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

29

Changes In Net Interest Income

Years Ended December 31, 2000, 1999, and 1998
-------------------------------------------------------------------------
Year 2000 vs 1999 Change due to(1) Year 1999 vs 1998 Change due to(1)
-------------------------------------------------------------------------
Average Average Total Average Average Total
Volume Yield/Rate Change Volume Yield/Rate Change
-------------------------------------------------------------------------
(dollars in thousands)

Increase (decrease) in interest income:
Federal funds sold ($18) $ 166 $ 148 $ (275) $ (137) $ (412)
Investment securities:
U.S. Treasuries and Agencies 514 283 797 (910) (229) (1,139)
States and political subdivisions(2) 63 66 129 480 (145) 335
Other securities (34) 70 36 212 (5) 207
Loans(2) 17,519 2,342 19,861 9,173 (2,813) 6,360
-------------------------------------------------------------------------
Change in interest income(2) $ 18,044 $ 2,927 $20,971 $ 8,680 $ (3,329) $ 5,351
=========================================================================

Increase (decrease) in interest expense:
Interest bearing transaction deposits $ 394 $ 156 $ 550 $ (106) $ 9 $ (97)
Savings deposits 183 57 240 160 (241) (81)
Money market deposits 447 1,521 1,968 1,025 (339) 686
Time deposits 6,404 2,039 8,443 1,252 (1,317) (65)
Federal funds purchased and repurchase
agreements 793 71 864 795 4 799
Other 2,213 354 2,567 176 (262) (86)
Long-term debt 926 (2) 924 773 16 789
-------------------------------------------------------------------------
Change in interest expense 11,360 4,196 15,556 4,075 $ (2,130) $ 1,945
-------------------------------------------------------------------------
Increase (decrease) in net interest income(2) $ 6,684 ($1,269) $ 5,415 $ 4,605 $ (1,199) $ 3,406
=========================================================================

Percentage increase in net interest income
over prior period 14.0% 9.7%
======== ========

(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%

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES 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 fsb, 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 Policy established by the asset liability
committees 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 26.

30

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 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 points and +/- 200 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 December 31, 2000, is as
follows:

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

Percentage change in net interest income due to an
immediate change in interest over a one-year period (1.69%) (0.69%) (0.08%) (0.42%)

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements are presented beginning on page 35.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a) Directors of the Registrant. Incorporated by reference is the information
set forth on pages 4-6 of the 2001 Proxy Statement.

(b) Executive Officers of the Registrant. Please refer to Part I of this Form
10-K.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference is the information set forth on pages 9-11 of the 2001
Proxy Statement (except the information set forth in the sections "Report of the
Compensation Committee on Executive Compensation").

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Incorporated by reference is the information set forth on page 8 of the 2001
Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated by reference is the information set forth on page 13 of the 2001
Proxy Statement.

31

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

EXHIBITS

Exhibit Description of Exhibit Sequentially
Number Numbered Page
- --------------------------------------------------------------------------------------------------------------

3.1 Certificate of Incorporation of First Busey Corporation (filed as Appendix B to
First Busey's definitive proxy statement filed with the Commission on April 5,
1993 (Commission File No. 0-15950), and incorporated herein by reference)

3.2 By-Laws of First Busey Corporation (filed as Appendix C to First Busey's
definitive proxy statement filed with the Commission on April 5, 1993
(Commission File No. 0-15950), and incorporated herein by reference)

10.1 First Busey Corporation 1993 Restricted Stock Award Plan (filed as Appendix E to
First Busey's definitive proxy statement filed with the Commission on April 5,
1993 (Commission File No. 0-15950), and incorporated herein by reference)

10.3 First Busey Corporation Profit Sharing Plan and Trust (filed as Exhibit 10.3 to First
Busey's Registration Statement on Form S-1 (Registration No. 33-13973), and
incorporated herein by reference)

10.4 Mortgage on County Plaza Building (filed as Exhibit 10.4 to First Busey's
Registration Statement on Form S-1 (Registration No. 33-13973), and incorporated
herein by reference)

10.7 First Busey Corporation Employee Stock Ownership Plan (filed as Exhibit 10.7 to
First Busey's Annual Report on Form 10-K for the fiscal year ended December 31,
1988 (Registration No. 2-66201), and incorporated herein by reference)

10.8 First Busey Corporation 1988 Stock Option Plan (filed as Exhibit 10.8 to First
Busey's Annual Report on Form 10-K for the fiscal year ended December 31, 1988
(Registration No. 2-66201), and incorporated herein by reference)

10.9 First Busey Corporation 1999 Stock Option Plan (filed as Appendix B to First
Busey's definitive proxy statement filed with the Commission on March 25, 1999
(Commission File No. 0-15950), and incorporated herein by reference)

21.1 List of Subsidiaries of First Busey Corporation

23.1 Consent of Independent Public Accountants

32

FINANCIAL STATEMENT SCHEDULES

Financial statement schedules not included in this Form 10-K have been omitted
because they are not applicable for the required information shown in the
financial statements or notes thereto.

FIRST BUSEY CORPORATION INDEX TO FINANCIAL STATEMENTS

Page
-----

Independent Auditor's Report 37
Consolidated Balance Sheets 38
Consolidated Statements of Income 39
Consolidated Statements of Stockholders' Equity 40-42
Consolidated Statements of Cash Flows 43-45
Notes to Consolidated Financial Statements 46-80
Management Report 81
Independent Accountant's Report 82

REPORTS ON FORM 8-K
No reports on Form 8-K have been filed for or on behalf of First Busey
Corporation during the last quarter or the period covered by this Form 10-K.

FORM S-8 UNDERTAKING
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into the registrant's Registration Statement on Form
S-8 File No. 33-30095.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of the expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Urbana,
Illinois on March 16, 2001.

FIRST BUSEY CORPORATION
BY //DOUGLAS C. MILLS//
--------------------
Douglas C. Mills
Chairman of the Board, President,
Chief Executive Officer

33

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
signed below by the following persons on behalf of the Registrant and in the
capacities indicated on March 16, 2001.

Signature Title

//DOUGLAS C. MILLS// Chairman of the Board, Chief
-------------------- Executive Officer
Douglas C. Mills (Principal Executive Officer)

//BARBARA J. JONES// Chief Financial Officer
-------------------- (Principal Financial Officer)
Barbara J. Jones

//JOSEPH M. AMBROSE// Director
---------------------
Joseph M. Ambrose

//SAMUEL P. BANKS// Director
-------------------
Samuel P. Banks

//T.O. DAWSON// Director
---------------
T. O. Dawson

//VICTOR F. FELDMAN// Director
---------------------
Victor F. Feldman

//KENNETH M. HENDREN// Director
----------------------
Kenneth M. Hendren

//E. PHILLIPS KNOX// Director
--------------------
E. Phillips Knox

//P. DAVID KUHL// Director
-----------------
P. David Kuhl

//V. B. LEISTER, JR.// Director
----------------------
V. B. Leister, Jr.

//LINDA M. MILLS// Director
------------------
Linda M. Mills

//EDWIN A. SCHARLAU// Director
---------------------
Edwin A. Scharlau II

//DAVID C. THIES// Director
------------------
David C. Thies

//ARTHUR R. WYATT// Director
-------------------
Arthur R. Wyatt

34

FIRST BUSEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2000, 1999 AND 1998

35

FIRST BUSEY CORPORATION AND SUBSIDIARIES

CONTENTS

- ------------------------------------------------------------------------

INDEPENDENT AUDITOR'S REPORT 37

- ------------------------------------------------------------------------

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheets 38

Consolidated statements of income 39

Consolidated statements of stockholders' equity 40 - 42

Consolidated statements of cash flows 43 - 45

Notes to consolidated financial statements 46 - 80

- ------------------------------------------------------------------------

INTERNAL CONTROL REPORTS

Management Report - Effectiveness of the Internal Control 81

Independent Accountant's Report 82

- ------------------------------------------------------------------------

36

INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors
First Busey Corporation
Urbana, Illinois

We have audited the accompanying consolidated balance sheets of First Busey
Corporation and Subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 2000. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of First Busey
Corporation and Subsidiaries as of December 31, 2000 and 1999, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 2000, in conformity with generally accepted accounting
principles.

//McGladrey & Pullen, LLP//

Champaign, Illinois
February 8, 2001

37

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999

2000 1999
- -----------------------------------------------------------------------------------------------
(Dollars in thousands)

ASSETS
Cash and due from banks $ 58,585 $ 69,722
Federal funds sold 34,700 13,500
Securities available for sale 228,597 225,046
Loans held for sale (fair value 2000 $5,568; 1999 $5,951) 5,492 5,490
Loans (net of allowance for loan losses 2000 $12,268; 1999 $10,403 966,609 870,791
Premises and equipment 31,253 28,647
Goodwill and other intangibles 12,255 14,241
Other assets 17,553 19,686
----------- -----------
TOTAL ASSETS $ 1,355,044 $ 1,247,123
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest bearing $ 134,669 $ 103,001
Interest bearing 1,014,118 924,980
----------- -----------
TOTAL DEPOSITS 1,148,787 1,027,981
Securities sold under agreements to repurchase 18,890 23,580
Short-term borrowings 32,283 48,327
Long-term debt 52,976 55,849
Other liabilities 9,783 9,102
----------- -----------
TOTAL LIABILITIES 1,262,719 1,164,839
----------- -----------

Stockholders' Equity
Preferred stock, no par value, 1,000,000 shares authorized, no
shares issued - -
Common stock, no par value, authorized 40,000,000 shares;
14,154,706 shares issued 6,291 6,291
Surplus 22,044 21,750
Retained earnings 73,215 65,572
Accumulated other comprehensive income 5,917 2,074
----------- -----------
TOTAL STOCKHOLDERS' EQUITY BEFORE TREASURY STOCK,
UNEARNED ESOP SHARES AND DEFERRED COMPENSATION
FOR RESTRICTED STOCK AWARDS 107,467 95,687
Treasury stock, at cost, 703,526 shares 2000; 615,897 shares 1999 (12,858) (10,773)
Unearned ESOP shares and deferred compensation for restricted
stock awards (2,284) (2,630)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 92,325 82,284
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,355,044 $ 1,247,123
=========== ===========

See Accompanying Notes to Consolidated Financial Statements.

38

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 2000, 1999 and 1998

2000 1999 1998
- -------------------------------------------------------------------------------------------------
(Dollars in thousands,
except per share amounts)

Interest income:
Loans $ 79,924 $ 60,058 $ 53,669
Securities
Taxable interest income 10,531 9,699 10,622
Nontaxable interest income 2,034 1,950 1,732
Dividends 126 125 134
Federal funds sold 627 479 891
--------------------------------------
TOTAL INTEREST INCOME 93,242 72,311 67,048
--------------------------------------

Interest expense:
Deposits 42,286 31,085 30,642
Short-term borrowings 5,243 1,812 1,099
Long-term debt 2,947 2,023 1,234
--------------------------------------
TOTAL INTEREST EXPENSE 50,476 34,920 32,975
--------------------------------------
NET INTEREST INCOME 42,766 37,391 34,073
Provision for loan losses 2,515 2,570 700
--------------------------------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 40,251 34,821 33,373
--------------------------------------

Other income:
Service charges on deposit accounts 5,341 3,798 2,938
Trust fees 4,364 4,013 3,445
Commissions and brokers' fees, net 1,901 1,472 1,187
Other service charges and fees 2,075 2,302 1,909
Security gains, net 737 1,035 1,243
Trading security gains (losses), net 0 (27) 5
Gain on sales of loans 1,112 895 988
Net commissions from travel services 922 990 862
Other 1,836 1,714 953
--------------------------------------
TOTAL OTHER INCOME 18,288 16,192 13,530
--------------------------------------

Other expenses:
Salaries and wages 16,192 14,758 13,524
Employee benefits 2,888 2,807 2,571
Net occupancy expense of premises 3,115 2,690 2,497
Furniture and equipment expenses 3,614 3,320 2,370
Data processing 1,142 838 1,924
Amortization and impairment of intangible assets 2,288 1,166 1,404
Stationery, supplies and printing 1,029 986 758
Other 6,981 6,498 5,352
--------------------------------------
TOTAL OTHER EXPENSES 37,249 33,063 30,400
--------------------------------------
INCOME BEFORE INCOME TAXES 21,290 17,950 16,503
Income taxes 7,237 5,402 5,105
--------------------------------------
NET INCOME $ 14,053 $ 12,548 $ 11,398
======================================
Basic earnings per share $ 1.05 $ 0.92 $ 0.83
======================================
Diluted earnings per share $ 1.03 $ 0.90 $ 0.81
======================================

See Accompanying Notes to Consolidated Financial Statements.

39

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 2000, 1999 and 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Deferred
Accumulated Compensation
Other Unearned for Restricted
Common Retained Comprehensive Treasury ESOP Stock
Stock Surplus Earnings Income Stock Shares Awards Total
------------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)

Balance, December 31, 1997 $ 6,291 $20,729 $53,011 $ 5,801 $ (3,922) $ (550) $ (81) $81,279
-------
Comprehensive income:
Net income - - 11,398 - - - - 11,398
Other comprehensive income, net of tax: -------
Change in unrealized gain on securities
available for sale arising during
period, net of taxes of $972 - - - - - - - 1,806
Reclassification adjustment, net of
taxes of ($435) - - - - - - - (808)
Other comprehensive income, net of -------
taxes of $537 - - - 998 - - - 998
-------
Comprehensive income - - - - - - - 12,396
-------
Purchase of 162,774 shares for the treasury - - - - (2,747) - - (2,747)
Issuance of 56,926 shares of treasury stock
for option exercise and related tax benefit - 169 - - 417 - - 586
Issuance of 60,000 shares of treasury stock
for acquisition - 385 - - 440 - - 825
Cash dividends:
Common stock $.39 per share - - (5,381) - - - - (5,381)
Principal payments on employee stock
ownership plan debt - - - - - 150 - 150
Forfeiture of restricted stock issued under
restricted stock award plan - - - - (53) - 53 -
Amortization of restricted stock issued
under restricted stock award plan - - - - - - (5) (5)
------------------------------------------------------------------------------------
Balance, December 31, 1998 6,291 21,283 59,028 6,799 (5,865) (400) (33) 87,103
------------------------------------------------------------------------------------

(Continued)

40

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)
Years Ended December 31, 2000, 1999 and 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Deferred
Accumulated Compensation
Other Unearned for Restricted
Common Retained Comprehensive Treasury ESOP Stock
Stock Surplus Earnings Income Stock Shares Awards Total
------------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)

Balance, December 31, 1998 $ 6,291 $21,283 $59,028 $ 6,799 $ (5,865) $ (400) $ (33) $87,103
-------
Comprehensive income:
Net income - - 12,548 - - - - 12,548
Other comprehensive income, net of tax: -------
Change in unrealized gain on securities
available for sale arising during
period, net of tax benefit of ($1,879) - - - - - - - (4,101)
Reclassification adjustment, net of
taxes of ($411) - - - - - - - (624)
Other comprehensive income, net of -------
taxes of $(2,290) - - - (4,725) - - - (4,725)
-------
Comprehensive income - - - - - - - 7,823
-------
Purchase of 276,409 shares for the treasury - - - - (5,850) - - (5,850)
Issuance of 97,280 shares of treasury stock
for option exercise and related tax benefit - 336 - - 835 - - 1,171
Issuance of 13,000 shares of treasury stock
to benefit plans - 131 - - 109 - - 240
Cash dividends:
Common stock $.44 per share - - (6,004) - - - - (6,004)
Principal payments on employee stock
ownership plan debt - - - - - 150 - 150
Proceeds from employee stock ownership
plan debt - - - - - (2,370) - (2,370)
Forfeiture of restricted stock issued under
restricted stock award plan - - - - (2) - 2 -
Amortization of restricted stock issued
under restricted stock award plan - - - - - - 21 21
------------------------------------------------------------------------------------
Balance, December 31, 1999 6,291 21,750 65,572 2,074 (10,773) (2,620) (10) 82,284
------------------------------------------------------------------------------------

(Continued)

41

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)
Years Ended December 31, 2000, 1999 and 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Deferred
Accumulated Compensation
Other Unearned for Restricted
Common Retained Comprehensive Treasury ESOP Stock
Stock Surplus Earnings Income Stock Shares Awards Total
------------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)

Balance, December 31, 1999 $ 6,291 $21,750 $65,572 $ 2,074 $(10,773) $(2,620) $ (10) $82,284
-------
Comprehensive income:
Net income - - 14,053 - - - - 14,053
Other comprehensive income, net of tax: -------
Unrealized gains on securities available
for sale arising during period, net
of tax benefit of $2,811 - - - - - - - 4,288
Reclassification adjustment, net of
taxes of ($292) - - - - - - - (445)
Other comprehensive income, net of -------
tax of $2,519 - - - 3,843 - - - 3,843
-------
Comprehensive income - - - - - - - 17,896
-------
Purchase of 118,479 shares for the treasury - - - - (2,385) - - (2,385)
Issuance of 20,000 shares of treasury stock
for acquisition of customer list - 205 - - 195 - - 400
Issuance of 10,150 shares of treasury stock
for bonus compensation program - 83 - - 98 - - 181
Issuance of 700 shares of treasury stock
for restricted stock grants - 6 - - 7 - (13) 0
Cash dividends:
Common stock $.48 per share - - (6,410) - - - - (6,410)
Principal payments on employee stock
ownership plan debt - - - - - 337 - 337
Release of restricted stock issued under
restricted stock award plan - - - - - - 22 22
------------------------------------------------------------------------------------
Balance, December 31, 2000 $ 6,291 $22,044 $73,215 $ 5,917 $(12,858) $(2,283) $ (1) $92,325
====================================================================================

See Accompanying Notes to Consolidated Financial Statements.

42

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2000, 1999 and 1998

2000 1999 1998
- ----------------------------------------------------------------------------------------------------
(Dollars in thousands)

Cash Flows from Operating Activities
Net income $ 14,053 $ 12,548 $ 11,398
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock-based compensation 181 - -
Depreciation and amortization 6,052 4,501 4,005
Provision for loan losses 2,515 2,570 700
Provision for deferred income taxes 287 (737) (299)
Accretion of security discounts (340) (161) (142)
Gain on sales of securities, net (737) (1,035) (1,243)
Proceeds from sales of loans 65,828 90,058 88,508
Loan originated for sale (64,718) (81,937) (93,823)
Gain on sales of loans, net (1,112) (895) (988)
Loss on sales and dispositions of
premises and equipment 16 122 8
Change in assets and liabilities:
(Increase) decrease in other assets (22) (2,782) 316
Increase (decrease) in other liabilities 341 (507) 95
--------------------------------------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 22,344 21,745 8,535
--------------------------------------------

Cash Flows from Investing Activities
Securities available for sale:
Purchases (68,198) (129,587) (141,088)
Proceeds from sales 18,157 62,828 47,324
Proceeds from maturities 53,929 102,234 94,207
(Increase) decrease in federal funds sold (21,200) (10,098) 18,800
Increase in loans (98,649) (117,111) (53,857)
Purchases of premises and equipment (6,993) (4,039) (4,188)
Proceeds from sales of premises and equipment 732 43 199
Purchase of subsidiaries, net of cash and due
from banks acquired - (20,456) 204
--------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (122,222) (116,186) (38,399)
--------------------------------------------

(Continued)

43

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31, 2000, 1999 and 1998

2000 1999 1998
- ----------------------------------------------------------------------------------------------------
(Dollars in thousands)

Cash Flows from Financing Activities
Net increase (decrease) in certificates of deposit $ 62,688 $ 49,769 $ (36,425)
Net increase in demand deposits, money market
and savings accounts 58,118 19,380 51,676
Net increase (decrease) in federal funds
purchased and securities sold under agreements
to repurchase (4,690) 23,580 -
Proceeds from short-term borrowings 55,925 42,357 11,000
Principal payments on short-term borrowings (71,632) (2,150) (11,500)
Proceeds from long-term debt 18,000 11,000 20,000
Principal payments on long-term debt (20,873) (4,974) (5,000)
Cash dividends paid (6,410) (6,004) (5,381)
Purchase of treasury stock (2,385) (5,850) (2,747)
Proceeds from sales of treasury stock - 1,411 586
--------------------------------------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 88,741 128,519 22,209
--------------------------------------------

NET INCREASE (DECREASE) IN CASH
AND DUE FROM BANKS (11,137) 34,078 (7,655)

Cash and due from banks, beginning 69,722 35,644 43,299
--------------------------------------------

Cash and due from banks, ending $ 58,585 $ 69,722 $ 35,644
============================================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash payments for:
Interest $ 48,546 $ 34,321 $ 33,124
============================================

Income taxes $ 5,921 $ 6,395 $ 5,104
============================================

(Continued)

44

FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31, 2000, 1999 and 1998

2000 1999 1998
- ----------------------------------------------------------------------------------------------------
(Dollars in thousands)

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Other real estate acquired in settlement of loans $ 316 $ 360 $ 357
============================================

Principal payments on ESOP debt $ 337 $ 150 $ 150
============================================

Proceeds from ESOP debt $ - $ 2,370 $ -
============================================

Customer list acquired in exchange for
common stock $ 400 $ - $ -
============================================

Purchase of Subsidiary:

Purchase price $ - $ 27,075 $ -
============================================

Assets acquired:
Cash and due from banks $ - $ 6,619 $ -
Federal funds sold - 3,402 -
Securities available for sale - 48,349 -
Loans held for sale - 1,450 -
Loans - 112,696 -
Premises and equipment - 3,852 -
Other assets - 10,443 -
Liabilities assumed:
Deposits - (132,128) -
Long-term debt - (24,823) -
Other liabilities - (2,785) -
--------------------------------------------
$ - $ 27,075 $ -
============================================

See Accompanying Notes to Consolidated Financial Statements.

45

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

SIGNIFICANT ACCOUNTING POLICIES

Description of business:
- -----------------------

First Busey Corporation (the Corporation) is a holding company whose
subsidiaries provide a full range of banking services, including security
broker/dealer services and investment management and fiduciary services, to
individual and corporate customers through its locations in Central Illinois,
Indianapolis, Indiana, and Fort Myers, Florida. The Corporation and
subsidiaries are subject to competition from other financial institutions and
nonfinancial institutions providing financial products and services. First
Busey Corporation and its subsidiaries are also subject to the regulations of
certain regulatory agencies and undergo periodic examinations by those
regulatory agencies.

The significant accounting and reporting policies for First Busey Corporation
and its subsidiaries follow:

Basis of consolidation
- ----------------------

The consolidated financial statements include the accounts of First Busey
Corporation and its subsidiaries: Busey Bank and its subsidiaries: Busey
Insurance Services, Inc., Busey Travel, Inc., and BAT, Inc.; Eagle BancGroup,
Inc. and its subsidiary, Busey Bank, fsb; First Busey Trust & Investment Co.;
First Busey Resources, Inc.; First Busey Securities, Inc.; and Busey Investment
Group Inc. All material intercompany balances and transactions have been
eliminated in consolidation.

The consolidated financial statements of First Busey Corporation have been
prepared in conformity with generally accepted accounting principles and conform
to predominant practice within the banking industry.

Use of estimates
- ----------------

In preparing the consolidated financial statements, the Corporation's management
is required to make estimates and assumptions which significantly affect the
amounts reported in the consolidated financial statements. Significant
estimates which are particularly susceptible to change in a short period of time
include the market value of investment securities, the determination of the
allowance for loan losses and valuation of real estate and other properties
acquired in connection with foreclosures or in satisfaction of amounts due from
borrowers on loans. Actual results could differ from those estimates.

Trust assets
- ------------

Assets held for customers in a fiduciary or agency capacity, other than trust
cash on deposit at the Corporation's bank subsidiaries, are not assets of the
Corporation and, accordingly, are not included in the accompanying consolidated
financial statements.

Cash flows
- ----------

For purposes of reporting cash flows, cash and due from banks include cash on
hand and amounts due from banks. Cash flows from federal funds purchased and
sold are reported net, since their original maturities are less than three
months.

46

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Securities
- ----------

Securities classified as available for sale are those debt securities that the
Corporation intends to hold for an indefinite period of time, but not
necessarily to maturity, and marketable equity securities. Any decision to sell
a security classified as available for sale would be based on various factors,
including significant movements in interest rates, changes in the maturity mix
of the Corporation's assets and liabilities, liquidity needs, regulatory capital
considerations and other similar factors. Securities available for sale are
carried at fair value. The difference between fair value and amortized cost
results in an unrealized gain or loss. Unrealized gains or losses are reported
as increases or decreases in accumulated other comprehensive income, net of the
related deferred tax effect, as a part of stockholders' equity. Realized gains
or losses, determined on the basis of the cost of specific securities sold, are
included in earnings. Where applicable, amortization of premiums and accretion
of discounts are recognized in interest income using the interest method over
the period to maturity.

Securities purchased with the intent to earn a profit by trading or reselling
them in a short period of time are classified as trading securities and are
carried at fair value. Realized and unrealized gains and losses are included in
income. At December 31, 2000 and 1999, there were no securities classified in
this category.

Loans
- -----

Loans receivable that management has the intent and ability to hold for the
foreseeable future or until maturity or pay-off are stated at the amount of
unpaid principal, reduced by unearned discount and fees and an allowance for
loan losses.

Loan origination and commitment fees and certain direct loan origination costs
are deferred and the net amount amortized as an adjustment of the related loan's
yield. The Corporation is generally amortizing these amounts over the
contractual life.

Unearned interest on discounted loans is amortized to income over the life of
the loans, using the interest method. For all other loans, interest is accrued
daily on the outstanding balances. For impaired loans, accrual of interest is
discontinued on a loan when management believes, after considering collection
efforts and other factors that the borrower's financial condition is such that
collection of interest is doubtful. Cash collections on impaired loans are
credited to the loan receivable balance, and no interest income is recognized on
those loans until the principal balance has been collected.

A loan is impaired when it is probable the Corporation will be unable to collect
all contractual principal and interest payments due in accordance with the terms
of the loan agreement. Impaired loans are measured based on the present value
of expected future cash flows discounted at the loan's effective interest rate,
or as a practical expedient, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent. The amount of
impairment, if any, and any subsequent changes are included in the allowance for
loan losses.

47

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Allowance for loan losses
- -------------------------

The allowance for loan losses is maintained at a level considered adequate by
management to provide for known and inherent risks in the loan portfolio. The
allowance is increased through a provision charged to operating expense and by
recoveries applicable to loans previously charged to the allowance, and is
reduced by loan balances which are considered uncollectible. The allowance is
based upon 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.

In addition, various regulatory agencies periodically review the allowance for
loan losses, and may require the Bank to make additions to the allowance based
on their judgment of collectibility based on information available to them at
the time of their examination.

Loans held for sale
- -------------------

Loans held for sale consist of fixed rate mortgage loans conforming to
established guidelines and held for sale to investors and the secondary mortgage
market. Loans held for sale are carried at the lower of aggregate cost or
estimated fair value.

Loan servicing
- --------------

The Corporation generally retains the right to service mortgage loans sold to
others. The cost allocated to the mortgage servicing rights retained has been
recognized as a separate asset and is being amortized in proportion to and over
the period of estimated net servicing income.

Mortgage servicing rights are periodically evaluated for impairment based on the
fair value of those rights. Fair values are estimated using discounted cash
flows based on current market rates of interest. For purposes of measuring
impairment, the rights must be stratified by one or more predominant risk
characteristics of the underlying loans. The Corporation stratifies its
capitalized mortgage servicing rights based on the origination date of the
underlying loans. The amount of impairment recognized is the amount, if any, by
which the amortized cost of the rights for each stratum exceeds its fair value.

Premises and equipment
- ----------------------

Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed principally by the straight-line method over the
estimated useful lives of the assets.

Other real estate owned
- -----------------------

Other real estate owned (OREO) represents properties acquired through
foreclosure or other proceedings in settlement of loans. OREO is held for sale
and is recorded at the date of foreclosure at the fair value of the properties
less estimated costs of disposal. Any write-down to fair value at the time of
transfer to OREO is charged to the allowance for loan losses. Property is
evaluated regularly to ensure the recorded amount is supported by its current
fair value, and valuation allowances to reduce the carrying amount to fair value
less estimated costs to dispose are recorded as necessary.

48

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Intangible assets
- -----------------

Costs in excess of the estimated fair value of identifiable net assets acquired
consist primarily of goodwill, core deposit intangible and other identifiable
intangible assets. Goodwill is amortized on a straight-line basis over periods
not to exceed 25 years. Core deposit and other identifiable intangible assets
are amortized on an accelerated basis over the estimated period benefited up to
25 years. Intangible assets, net of accumulated amortization were approximately
$12,255,000 and $14,241,000 as of December 31, 2000 and 1999, respectively.
Total amortization expense was approximately $2,288,000, $1,166,000 and
$1,404,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

Intangible assets are reviewed for possible impairment when events or changed
circumstances may affect the underlying basis of the net assets. Such reviews
include an analysis of current results and take into consideration the
discounted value of projected operating cash flows.

During the year ended December 31, 2000, the Corporation recognized an
impairment write down of $600,000 on the core deposit intangible of Busey Bank,
fsb. The Corporation recognized this write down due to a significant run off of
the core deposit base. This write down is included in the amortization and
impairment of intangible assets line item on the income statement.

Income taxes
- ------------

The Corporation and its subsidiaries file consolidated Federal and State income
tax returns with each organization computing its taxes on a separate entity
basis. The provision for income taxes is based on income as reported in the
financial statements.

Deferred income tax assets and liabilities are computed annually for differences
between the financial statement and tax bases of assets and liabilities that
will result in taxable or deductible amounts in the future. The deferred tax
assets and liabilities are computed based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred tax assets to an amount expected to be realized. Income tax expense is
the tax payable or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities.

Earnings per share
- ------------------

Basic earnings per share are computed by dividing net income for the year by the
weighted average number of shares outstanding.

Diluted earnings per share are determined by dividing net income for the year by
the weighted average number of shares of common stock and common stock
equivalents outstanding. Common stock equivalents assume exercise of stock
options and use of proceeds to purchase treasury stock at the average market
price for the period.

49

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

The following reflects net income per share calculations for basic and diluted
methods:

December 31,
-----------------------------------------
2000 1999 1998
-----------------------------------------

Net income available to common shareholders 14,053,000 12,548,000 11,398,000

Basic average common shares outstanding 13,356,197 13,597,122 13,753,102
Dilutive potential due to stock options 246,995 317,492 281,935
-----------------------------------------

Average number of common shares and dilutive
potential common shares outstanding 13,603,192 13,914,614 14,035,037
=========================================

Basic net income per share $ 1.05 $ 0.92 $ 0.83
=========================================

Diluted net income per share $ 1.03 $ 0.90 $ 0.81
=========================================

Stock split
- -----------

In June 1998, the Board of Directors approved a two-for-one stock split for
stockholders of record on July 17, 1998, and was effected on August 3, 1998.
All share amounts in the consolidated financial statements have been restated to
reflect the stock split.

Recent accounting pronouncements
- --------------------------------

Accounting for Derivative Instruments and Hedging Activities Statement of
- ------------------------------------------------------------
Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133) establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The accounting
for changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation. This Statement applies to all
entities. FAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. Earlier application is encouraged. The
Statement is not to be applied retroactively to financial statements of prior
periods. In June 1999, Statement of Financial Accounting Standard No. 137 was
issued to extend the effective date by one year to all fiscal quarters of fiscal
years beginning after June 15, 2000. In June 2000, Statement of Financial
Accounting Standard No. 138 was issued to amend certain accounting and reporting
standards of FAS 133. The Company does not believe the adoption of FAS 133, as
amended by FAS 137 and 138, will have a material impact on the consolidated
financial statements.

50

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Accounting for Transfers and Servicing of Financial Assets and Extinguishments
- ------------------------------------------------------------------------------
of Liabilities In September 2000, Statement on Financial Accounting Standards
- --------------
No. 140 (FAS 140), "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities," was issued to replace Statement on
Financial Accounting Standards No. 125 (FAS 125), which was issued in June 1996.
FAS 125 addressed issues related to transfers of financial assets in which the
transferor has some continuing involvement with the transferred assets or with
the transferee. FAS 140 resolves implementation issues which arose as a result
of FAS 125, but carries forward most of FAS 125's provisions. FAS 140 is
effective for transfers occurring after March 31, 2001 and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000. Management does not believe the adoption of FAS 140
will have a significant impact on its financial statements.

Comprehensive income
- --------------------

Accounting principles generally require that recognized revenue, expenses, gains
and losses be included in net income. Although certain changes in assets and
liabilities, such as unrealized gains and losses on available-for-sale
securities, are reported as a separate component of the equity section of the
balance sheet, such items, along with net income, are components of
comprehensive income.

BUSINESS COMBINATIONS

On October 29, 1999, the Corporation acquired all the outstanding common stock
of Eagle BancGroup, Inc. and its subsidiary Busey Bank, fsb, an $184,000,000
thrift located in Bloomington, Illinois. This acquisition has been accounted
for as a purchase and the results of operations of both entities since the
acquisition date have been included in the consolidated financial statements.
The purchase price of $27,075,000 was allocated based upon the fair value of the
assets acquired. The excess of the total acquisition cost over the fair value
of the net assets acquired of $8,903,000 is being amortized over periods up to
twenty years using the straight-line method.

51

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Pro forma unaudited operating results, giving effect to the Eagle BancGroup,
Inc. acquisition as if it had occurred on January 1, 1998 is as follows:

1999 1998
------------------------

Interest income $ 82,963 $ 79,546
Interest expense 41,296 40,891
Provision for loan losses 2,770 940
Noninterest income 17,208 15,241
Noninterest expense 38,083 35,377
------------------------
Income before income taxes 18,022 17,579
Income taxes 5,530 5,499
------------------------
Net income $ 12,492 $ 12,080
========================

Earnings per share - basic $ 0.92 $ 0.88
========================
Earnings per share - diluted $ 0.90 $ 0.86
========================

CASH AND DUE FROM BANKS

The Corporation's banking and thrift subsidiaries are required to maintain
certain cash reserve balances with the Federal Reserve Bank of Chicago, which
may be offset by cash on hand. The required reserve balances as of December 31,
2000 and 1999 were approximately $6,103,000 and $5,329,000, respectively.

In October 1997, the Corporation's bank subsidiary established a clearing
balance requirement of $2,000,000 with the Federal Reserve Bank of Chicago to
use Federal Reserve Bank services. As of December 31, 2000 and 1999, the
clearing balance requirement was $2,750,000. These deposited funds generate
earnings credits at market rates which offset service charges resulting from the
use of Federal Reserve Bank services. The clearing balance requirement is
included in the required reserve balance referred to above and may be increased,
or otherwise adjusted, on approval of the Federal Reserve Bank based on
estimated service charges; however, such adjustments will be made no more
frequently than once per month.

The Corporation maintains its cash in deposit accounts which, at times, may
exceed federally insured limits. The Corporation has not experienced any losses
in such accounts. The Corporation believes it is not exposed to any significant
credit risk on cash and cash equivalents.

52

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

SECURITIES

The amortized cost and fair values of securities available for sale are
summarized as follows:

Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------------------------------------------------
(Dollars in thousands)

December 31, 2000:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 162,311 $ 720 $ 145 $ 162,886
Obligations of states and political
subdivisions 42,612 788 203 43,197
Corporate securities 5,076 42 75 5,043
Other debt securities 1,992 - - 1,992
----------------------------------------------------
211,991 1,550 423 213,118
Equity securities 6,799 8,686 6 15,479
----------------------------------------------------

$ 218,790 $ 10,236 $ 429 $ 228,597
====================================================

Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------------------------------------------------
(Dollars in thousands)

December 31, 1999:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 166,996 $ - $ 2,431 $ 164,565
Obligations of states and political
subdivisions 42,275 443 1,164 41,554
Corporate securities 5,358 1 98 5,261
Other debt securities 587 - - 587
----------------------------------------------------
215,216 444 3,693 211,967
Equity securities 6,385 6,721 27 13,079
----------------------------------------------------

$ 221,601 $ 7,165 $ 3,720 $ 225,046
====================================================

53

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

The amortized cost and fair value of securities, other than equity securities,
as of December 31, 2000, by contractual maturity, are shown below.

Amortized Fair
Cost Value
------------------------
(Dollars in thousands)

Due in one year or less $ 100,341 $ 100,436
Due after one year through five years 87,742 88,496
Due after five years through ten years 20,526 20,714
Due after ten years 3,382 3,472
------------------------
$ 211,991 $ 213,118
========================

Gains and losses related to sales of securities are summarized as follows (in
thousands):

For the Years Ended December 31,
-----------------------------------------
2000 1999 1998
-----------------------------------------

Gross security gains $ 973 $ 1,060 $ 1,253
Gross security losses (236) (25) (10)
-----------------------------------------

NET SECURITY GAINS $ 737 $ 1,035 $ 1,243
=========================================

Investment securities with carrying values of $178,117,000 and $169,099,000 on
December 31, 2000 and 1999, respectively, were pledged as collateral on public
deposits, to secure securities sold under agreements to repurchase and for other
purposes as required or permitted by law.

54

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

LOANS

The composition of loans is as follows:

December 31,
------------------------
2000 1999
------------------------
(Dollars in thousands)

Commercial $ 124,052 $ 119,800
Real estate construction 75,672 52,479
Real estate - farmland 15,411 15,841
Real estate - 1 to 4 family residential mortgage 398,734 343,739
Real estate - multifamily mortgage 61,954 63,805
Real estate - non-farm nonresidential mortgage 231,230 213,156
Installment 50,980 52,355
Agricultural 20,844 20,126
------------------------
978,877 881,301
Less:
Unearned interest - 107
------------------------
978,877 881,194
Less:
Allowance for loan losses 12,268 10,403
------------------------

NET LOANS $ 966,609 $ 870,791
========================

The amount of loans serviced by the Corporation for the benefit of others is not
included in the accompanying consolidated balance sheets. The unpaid principal
balances of these loans were $184,419,000, $212,600,000 and $125,754,000 as of
December 31, 2000, 1999 and 1998, respectively.

The loan portfolio includes a concentration of loans for commercial real estate
amounting to approximately $293,184,000 and $276,961,000 as of December 31, 2000
and 1999, respectively. Generally these loans are collateralized by assets of
the borrowers. The loans are expected to be repaid from cash flows or from
proceeds from the sale of selected assets of the borrowers. Credit losses
arising from lending transactions for commercial real estate entities are
comparable with the Corporation's credit loss experience on its loan portfolio
as a whole.

55

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

The Corporation's opinion as to the ultimate collectibility of loans is subject
to estimates regarding future cash flows from operations and the value of
property, real and personal, pledged as collateral. These estimates are
reflected by changing economic conditions and the economic prospects of
borrowers.

The following table presents data on impaired loans:

2000 1999 1998
-----------------------------------------
(Dollars in thousands)

Impaired loans for which an allowance has
been provided $ - $ - $ -
Impaired loans for which no allowance has
been provided 92 246 127
-----------------------------------------

Total loans determined to be impaired $ 92 $ 246 $ 127
=========================================

Allowance for loan loss for impaired loans included
in the allowance for loan losses $ - $ - $ -
=========================================
Average recorded investment in impaired loans $ 170 $ 203 $ 219
=========================================
Interest income recognized from impaired loans $ - $ - $ 4
=========================================
Cash basis interest income recognized from
impaired loans $ - $ - $ 9
=========================================

ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses were as follows:

Years Ended December 31,
-----------------------------------------
2000 1999 1998
-----------------------------------------
(Dollars in thousands)

Balance, beginning of year $ 10,403 $ 7,101 $ 6,860
Allowance associated with acquisition - 1,101 -
Provision for loan losses 2,515 2,570 700
Recoveries applicable to loan balances
previously charged off 124 182 145
Loan balances charged off (774) (551) (604)
-----------------------------------------

Balance, ending of year $ 12,268 $ 10,403 $ 7,101
=========================================

56

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows:

December 31,
------------------------
2000 1999
------------------------
(Dollars in thousands)

Land $ 7,101 $ 7,225
Buildings and improvements 30,999 26,208
Furniture and equipment 18,945 15,342
------------------------
57,045 48,775
Less accumulated depreciation 25,792 20,128
------------------------

$ 31,253 $ 28,647
========================

Depreciation expense was $3,742,000, $3,314,000 and $2,606,000 for the years
ended December 31, 2000, 1999 and 1998, respectively.

DEPOSITS

The aggregate amount of time deposits with a minimum denomination of $100,000
was approximately $167,357,000 and $106,971,000 at December 31, 2000 and 1999,
respectively.

As of December 31, 2000, the scheduled maturities of certificates of deposit, in
thousands, are as follows:

2001 $ 422,348
2002 81,896
2003 27,851
2004 6,743
2005 6,059
Thereafter 971
-----------
$ 545,868
===========

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase, which are classified as secured
borrowings, generally mature within one to four years from the transaction date.
Securities sold under agreements to repurchase are reflected at the amount of
cash received in connection with the transaction. The Corporation may be
required to provide additional collateral based on the fair value of the
underlying securities.

57

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

SHORT-TERM BORROWINGS

Short-term borrowings are summarized as follows:

December 31,
2000 1999
------------------------

Notes payable, American National Bank of Chicago, due
January 19, 2001, interest payable quarterly:

$10,000,000 line of credit, at LIBOR plus 1.40% (effective rate of
8.29375% at December 31, 2000), collateralized by all of the common
stock of Busey Bank and Busey Bank fsb $ 5,000 $ 5,750

$27,000,000 line of credit, at LIBOR plus 1.40% (effective rate of
8.29375% at December 31, 2000), collateralized by all of the common
stock of Busey Bank and Busey Bank fsb 25,000 26,957

$2,370,000 line of credit, at LIBOR plus 1.40% (effective rate of
8.29375% at December 31, 2000), collateralized by 120,000 shares
of First Busey Corporation common stock owned by employee
stock ownership plan 2,133 -

$250,000 line of credit, at LIBOR plus 1.40% (effective rate of
8.29375% at December 31, 2000), collateralized by 120,000 shares
of First Busey Corporation common stock owned by employee
stock ownership plan 150 -

LIBOR plus 1.50%, collateralized by 20,000 shares of First Busey
Corporation common stock owned by employee stock ownership plan - 250

LIBOR plus 1.40%, collateralized by 100,000 shares of First Busey
Corporation common stock owned by employee stock ownership plan - 2,370

Notes payable, Federal Home Loan Bank of Chicago, collateralized by
all unpledged U.S. Treasury and U.S. Agency securities, first mortgages
on 1-4 family residential real estate and Federal Home Loan Bank of
Chicago stock:

Fixed rate at 5.68%, monthly installment of interest through February 7,
2000, balance due February 7, 2000 - 3,000

One-month LIBOR flat with monthly reset, monthly installment of
interest through February 14, 2000, balance due February 14, 2000 - 5,000

Fixed rate at 5.74%, monthly installment of interest through March 6,
2000, balance due March 6, 2000 - 5,000
------------------------
$ 32,283 $ 48,327
========================

In August 1997, the employee stock ownership plan borrowed $250,000 to acquire
additional shares. The employee stock ownership plan borrowed $2,370,000 to
acquire additional shares in December, 1999.

58

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

LONG-TERM BORROWINGS

Long-term borrowings are summarized as follows:

December 31,
------------------------
2000 1999
------------------------
(Dollars in thousands)

Notes payable, Federal Home Loan Bank of Chicago, collateralized
by all unpledged U.S. Treasury and U.S. Agency securities, first
mortgages on 1-4 family residential real estate and Federal Home
Loan Bank of Chicago stock

Fixed rate at 5.30%, monthly installment of interest through
January 16, 2008, balance due January 16, 2008, redeemable
by issuer on January 16, 2003 $ 5,000 $ 5,000

Fixed rate at 5.01%, monthly installment of interest through
February 17, 2008, balance due February 17, 2008, redeemable
by issuer on February 17, 2001 and quarterly thereafter 10,000 10,000

Fixed rate at 5.55%, monthly installment of interest through
September 3, 2003, balance due September 3, 2003 5,000 5,000

Fixed rate at 5.49%, monthly installment of interest through
February 19, 2004, balance due February 19, 2004 5,000 5,000

Fixed rate at 4.95%, monthly installment of interest through
January 16, 2008, balance due January 16, 2008, redeemable
by issuer on January 16, 2001 and quarterly thereafter 4,992 4,966

Fixed rate at 5.07%, monthly installment of interest through
February 27, 2008, balance due February 27, 2008, redeemable
by issuer on February 27, 2001 and quarterly thereafter 1,997 1,988

Fixed rate at 4.30%, monthly installment of interest through
October 6, 2008, balance due October 6, 2008, redeemable
by issuer on October 5, 2001 and quarterly thereafter 2,987 2,950

Fixed rate at 6.58%, monthly installment of interest through
February 28, 2001, balance due February 28, 2001 5,000 -

Fixed rate at 6.60%, monthly installment of interest through
March 20, 2002, balance due March 20, 2002 2,000 -

59

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Fixed rate at 6.60%, monthly installment of interest through
March 20, 2002, balance due March 20, 2002 2,000 -

Three month LIBOR less 7 basis points (effective rate of 6.4663%
at December 31, 2000), monthly installment of interest through
March 20, 2001, balance due March 20, 2001, redeemable by
issuer on June 20, 2000 and quarterly thereafter 5,000 -

Fixed rate at 6.54%, monthly installment of interest through
March 22, 2002, balance due March 22, 2002 4,000 -

Fixed rate at 6.08%, monthly installment of interest through
February 21, 2000, balance due February 21, 2000 - 5,000

Fixed rate at 5.50%, monthly installment of interest through
June 16, 2000, balance due June 16, 2000 - 1,000

Fixed rate at 5.59%, monthly installment of interest through
July 24, 2000, balance due July 24, 2000 - 5,000

Fixed rate at 5.71%, monthly installment of interest through
June 18, 2002, balance due June 18, 2002, redeemable
by issuer June 18, 1998, and quarterly thereafter - 4,965

Fixed rate at 5.40%, monthly installment of interest through
August 8, 2002, balance due August 8, 2002, redeemable
by issuer on August 8, 1998 and quarterly thereafter - 2,997

Fixed rate at 4.20%, monthly installment of interest through
October 6, 2008, balance due October 6, 2008, redeemable
by issuer on October 5, 2000 and quarterly thereafter - 1,983
------------------------
$ 52,976 $ 55,849
========================

The notes listed above are collateralized by all unpledged U.S. Treasury and
U.S. Agency securities, first mortgages on residential real estate and Federal
Home Loan Bank of Chicago stock.

60

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

As of December 31, 2000, the scheduled maturities of long-term debt, in
thousands, are as follows:

2001 $ 10,000
2002 8,000
2003 5,000
2004 5,000
2005 -
Thereafter 24,976
-----------
$ 52,976
===========

The Corporation had letters of credit outstanding with the Federal Home Loan
Bank of Chicago for $51,660,000 and $15,000,000 at December 31, 2000 and 1999,
respectively. There were no claims on the letters of credit as of December 31,
2000 and 1999.

INCOME TAXES

The components of income taxes consist of:

Years Ended December 31,
-----------------------------------------
2000 1999 1998
-----------------------------------------
(Dollars in thousands)

Current $ 6,950 $ 6,139 $ 5,404
Deferred 287 (737) (299)
-----------------------------------------

TOTAL INCOME TAX EXPENSE $ 7,237 $ 5,402 $ 5,105
=========================================

A reconciliation of federal and state income taxes at statutory rates to the
income taxes included in the statements of income is as follows:

Years Ended December 31,
--------------------------------------------------------------------
2000 1999 1998
--------------------------------------------------------------------
% of % of % of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
--------------------------------------------------------------------
(Dollars in thousands)

Income tax at statutory rate $ 7,452 35.0 % $ 6,283 35.0 % $ 5,776 35.0 %
Effect of:
Benefit of income taxed
at lower rates (100) (0.5)% (100) (0.6)% (100) (0.6)%
Tax-exempt interest, net (759) (3.5)% (830) (4.6)% (673) (4.1)%
Amortization of intangibles 615 2.9 % 251 1.4 % 186 1.1 %
Other 29 0.1 % (202) (1.1)% (84) (0.5)%
--------------------------------------------------------------------

$ 7,237 34.0 % $ 5,402 30.1 % $ 5,105 30.9 %
====================================================================

61

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Net deferred taxes, included in other assets or liabilities, in the accompanying
balance sheets includes the following amounts of deferred tax assets and
liabilities:

2000 1999
------------------------
(Dollars in thousands)

Deferred tax liability $ (5,901) $ (2,751)
Deferred tax asset 5,561 5,217
Valuation allowance for deferred tax assets - -
------------------------

NET DEFERRED TAX ASSET (LIABILITY) $ (340) $ 2,466
========================

The tax effects of principal temporary differences are shown in the following
table:

2000 1999
------------------------
(Dollars in thousands)

Investment securities:
Unrealized gain on securities available for sale $ (3,890) $ (1,371)
Other (19) 168
Basis in premises and equipment (1,171) (691)
Allowance for loan losses 4,867 4,127
Property acquired in settlement of loans (14) (32)
Loans held for sale 31 7
Mortgage servicing assets (167) (198)
Deferred loan fees (303) (252)
Basis in deposit intangibles 187 (116)
Deferred compensation 85 657
Performance/restricted stock - 4
State net operating loss carryforward 250 254
Other (196) (91)
------------------------

NET DEFERRED TAX ASSET (LIABILITY) $ (340) $ 2,466
========================

State net operating loss carryforwards of approximately $5,347,000 are available
to offset future taxable income. The carryforwards expire as follows: 2005 -
$1,907,000; 2006 - $1,002,000; 2010 - $986,000 and 2011 - $1,452,000.

62

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

EMPLOYEE BENEFIT PLANS

Employees' Stock Ownership Plan
- -------------------------------

The First Busey Corporation Employees' Stock Ownership Plan (ESOP) is available
to all full-time employees who meet certain age and length of service
requirements. The ESOP purchased common shares of the Corporation using the
proceeds of bank borrowings which is secured by the stock. The borrowings are
to be repaid using fully deductible contributions to the trust fund. As the
ESOP makes each payment of principal, an appropriate percentage of stock will be
allocated to eligible employees' accounts in accordance with applicable
regulations under the Internal Revenue Code. Allocations of common stock
released and forfeitures are based on the eligible compensation of each
participant. Dividends on allocated shares of common stock are distributed
directly to the participants, and dividends on unallocated shares are used to
service the bank borrowings. All shares held by the ESOP, which were acquired
prior to the issuance of Statement of Position 93-6, are included in the
computation of average common shares and common share equivalents. This
accounting treatment is grandfathered under Statement of Position 93-6,
"Employers' Accounting for Employee Stock Ownership Plans" for shares purchased
prior to December 31, 1992.

As permitted by AICPA Statement of Position (SOP) 93-6, compensation expense for
shares released during 1999 and 1998 is equal to the original acquisition cost
of the shares if they were acquired prior to December 31, 1992. During the year
ended December 31, 1999 and 1998, $150,000 of compensation expense was
recognized for ESOP shares acquired prior to December 31, 1992, releasing 44,286
common shares to participant accounts, and is reflected in the chart below under
"Employee Benefits." During 1999 and 1998, no shares were released that were
acquired by the ESOP after December 31, 1992. During 2000, $337,000 of
compensation expense was recognized for the ESOP, releasing 18,000 shares to
participant accounts, and is reflected in the chart below under "Employee
Benefits". For such shares, compensation expense would be equal to the fair
market value of the shares released. Compensation expense related to the ESOP
plan, including related interest expense, was $488,000, $203,000 and $189,000 in
the years ended December 31, 2000, 1999 and 1998.

Shares held in the ESOP which were acquired prior to December 31, 1992 were as
follows:

2000 1999
-----------------------------

Allocated shares 791,138 831,091
Unallocated shares - -
-----------------------------

TOTAL 791,138 831,091
=============================

Fair value of allocated shares at December 31 $ 15,773,000 $ 18,803,000
=============================

63

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Shares held in the ESOP which were acquired after December 31, 1992 and their
fair values were as follows:

2000 1999
----------------------------------------------------
Fair Fair
Shares Value Shares Value
----------------------------------------------------

Allocated shares 18,000 $ 359,000 - $ -
Unallocated shares 102,000 2,034,000 120,000 2,715,000
----------------------------------------------------
TOTAL 120,000 $2,393,000 120,000 $2,715,000
====================================================

Profit Sharing Plan
- -------------------

All full-time employees who meet certain age and length of service requirements
are eligible to participate in the Corporation's profit-sharing plan. The
contributions, if any, are determined solely by the Boards of Directors of the
Corporation and its subsidiaries and in no case may the annual contributions be
greater than the amounts deductible for federal income tax purposes for that
year. The rights of the participants vest ratably over a seven-year period.
Contributions to the plan were $361,000, $652,000 and $637,000 for the years
ended December 31, 2000, 1999 and 1998, respectively.

Employer contributions to the employee benefit plans are included in the
statements of income as follows:

Years Ended December 31,
-----------------------------------------
2000 1999 1998
-----------------------------------------
(Dollars in thousands)

Employee benefits $ 849 $ 855 $ 826
Interest on employee stock ownership
plan debt 151 53 39
-----------------------------------------

TOTAL EMPLOYER CONTRIBUTIONS $ 1,000 $ 908 $ 865
=========================================

STOCK INCENTIVE PLANS

Stock Option Plan:
- -----------------

In March 1989, the Corporation adopted the 1988 Stock Option Plan pursuant to
which incentive stock options and nonqualified stock options for up to 900,000
shares of common stock may be granted by the Compensation Committee of the Board
of Directors to certain executive officers and key personnel of First Busey
Corporation and its subsidiaries. In March 1996, the Board of Directors
approved an increase in the number of shares reserved for issuance as stock
options from 900,000 to 1,500,000.

64

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

In January of 1999, the Corporation adopted the 1999 Stock Option Plan pursuant
to which nonqualified stock options for up to 500,000 shares of common stock may
be granted by the Compensation Committee of the Board of Directors to certain
executive officers and key personnel of First Busey Corporation and its
subsidiaries.

A summary of the status of the Corporation's stock option plan for the years
ended December 31, 2000, 1999 and 1998 and the changes during the years ending
on those dates is as follows:

2000 1999 1998
--------------------------------------------------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------------------------------------------------------------------

Outstanding at begin-
ning of year 668,642 $ 12.23 715,622 $ 10.82 659,606 $ 9.34
Granted 62,000 19.88 67,000 18.25 129,542 16.71
Exercised - - (97,280) 6.02 (56,926) 7.42
Terminated and
reissuable (11,600) 14.67 (16,700) 12.49 (16,600) 9.69
--------- ----------- ------------
Outstanding at end
of year 719,042 $ 12.68 668,642 $ 12.23 715,622 $ 10.82
====================================================================

Exercisable at end
of year 64,000 $ 18.25 - $ - 94,880 $ 5.81

Weighted-average fair
value per option of
options granted
during the year $ 3.19 $ 6.72 $ 4.17

65

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

The following table summarizes information about stock options outstanding at
December 31, 2000:

Options
Options Outstanding Exercisable
--------------------------------------------
Weighted-
Average
Remaining
Exercise Number Contractual Number
Prices Outstanding Life Outstanding
----------------------------------------------------------

$ 8.75 285,000 1 year -
9.25 12,000 1 year -
12.13 126,800 3 years -
13.75 52,000 1 year -
16.75 120,242 3.75 years -
18.25 64,000 2.96 years 64,000
20.06 54,000 3.96 years -
17.88 5,000 4 years -
--------------------------------------------
719,042 2.23 years 64,000
============================================

Grants under the above plan are accounted for following APB No. 25 and related
Interpretations. Accordingly, no compensation cost has been recognized for
grants under this plan. Had compensation cost for stock-based compensation been
determined based on the grant date fair values of awards (the method described
in SFAS 123), reported net income and earnings per common share would have been
reduced to the pro forma amounts shown below:

2000 1999 1998
-----------------------------------------

Net income (in thousands):
As reported $ 14,053 $ 12,548 $ 11,398
Pro forma $ 13,809 $ 12,119 $ 11,254

Basic earnings per share:
As reported $ 1.05 $ 0.92 $ 0.83
Pro forma $ 1.03 $ 0.89 $ 0.82

Diluted earnings per share:
As reported $ 1.03 $ 0.90 $ 0.81
Pro forma $ 1.02 $ 0.87 $ 0.80

The Black-Scholes option pricing model was developed for use in estimating the
fair value of traded options which have no vesting restrictions. In addition,
such models require the use of subjective assumptions, including expected stock
price volatility. In management's opinion, such valuation models may not
necessarily provide the best single measure of option value.

66

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

The fair value of the stock options granted has been estimated using the
Black-Scholes option pricing model with the following weighted average
assumptions.

2000 1999 1998
----------------------------------------------------
Block 1 Block 2
-------------------------

Number of options granted 57,000 5,000 67,000 128,942
Risk-free interest rate 4.90% 4.90% 5.84% 5.46%
Expected life, in years 4 4 4 5
Expected volatility 19.89% 19.89% 16.20% 12.05%
Expected dividend yield 2.41% 2.41% 1.94% 2.10%
Estimated fair value per option $ 3.10 $ 4.22 $ 6.72 $ 4.17

An additional 600 options granted in 1998 vested and were exercised during the
year ended December 31, 1998.

Restricted Stock Award Plan:
- ---------------------------

The 1993 Restricted Stock Award Plan provides for restricted stock awards of up
to 450,000 shares of common stock which may be granted by the Compensation
Committee of the Board of Directors to certain executive officers and key
personnel of First Busey Corporation and its subsidiaries. Shares vest over a
period established by the Compensation Committee at grant date and are based on
the attainment of specified earnings per share and earnings growth. As of
December 31, 2000, there were 100 shares under grant with performance
restrictions allowed by the plan which expire December 31, 2001.

Number of Shares
-----------------------------------------
2000 1999 1998
-----------------------------------------

Under restriction, beginning of year 4,000 8,200 13,200
Granted 700 - -
Restrictions released 4,600 4,000 -
Forfeited and reissuable - 200 5,000
-----------------------------------------

Under restriction, end of year 100 4,000 8,200
=========================================

Available to grant, end of year 408,400 409,100 408,900
=========================================

Compensation expense is recognized for financial statement purposes over the
period of performance. Compensation expense of $22,000, $21,000, and $(5,000)
was recognized for financial statement purposes during the years ended December
31, 2000, 1999, and 1998, respectively. There was no compensation expense
recognized for income tax purposes in any of the years ended December 31, 2000,
1999, and 1998.

67

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS

The Corporation and its subsidiaries have had, and may be expected to have in
the future, banking transactions in the ordinary course of business with
directors, executive officers, their immediate families and affiliated companies
in which they have 10% or more beneficial ownership (commonly referred to as
related parties), on the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with others.

The following is an analysis of the changes in loans to related parties during
the year ended December 31, 2000:

Balance at the beginning of year $ 5,535
New loans 1,873
Repayments 2,308
-----------
Balance at end of year $ 5,100
===========

CAPITAL

The ability of the Corporation to pay cash dividends to its stockholders and to
service its debt is dependent on the receipt of cash dividends from its
subsidiaries. State chartered banks have certain statutory and regulatory
restrictions on the amount of cash dividends they may pay. As a practical
matter, dividend payments are restricted because of the desire to maintain a
strong capital position in the subsidiaries.

The Corporation and the Banks are subject to various regulatory capital
requirements administered by federal and state banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory, and possibly
additional discretionary, actions by regulators that, if undertaken, could have
a direct material effect on the Corporation's or the Banks' financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Corporation and the Banks must meet specific
capital guidelines that involve quantitative measures of their assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Corporation's and the Banks' capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors. Prompt corrective action
provisions are not applicable to bank holding companies.

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 December
31, 2000, that the Corporation and the Banks meet all capital adequacy
requirements to which they are subject.

As of December 31, 2000, the most recent notification from the federal and state
regulatory agencies categorized the Banks as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Banks must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the Banks' categories.

68

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

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 December 31, 2000:
Total Capital (to Risk
Weighted Assets)
Consolidated $89,944 9.43% $ 76,303 8.0% N/A N/A
Busey Bank $86,878 11.90% $ 58,386 8.0% $72,983 10.0%
Busey Bank fsb $20,471 9.69% $ 16,901 8.0% $21,127 10.0%

Tier I Capital (to Risk
Weighted Assets)
Consolidated $74,111 7.77% $ 38,152 4.0% N/A N/A
Busey Bank $74,176 10.16% $ 29,193 4.0% $43,790 6.0%
Busey Bank fsb $18,031 8.53% $ 8,451 4.0% $12,676 6.0%

Tier I Capital (to
Average Assets)
Consolidated $74,111 5.71% $ 51,938 4.0% N/A N/A
Busey Bank $74,176 7.36% $ 40,334 4.0% $50,418 5.0%
Busey Bank fsb $18,031 6.49% $ 11,111 4.0% $13,888 5.0%

69

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

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 December 31, 1999:
Total Capital (to Risk
Weighted Assets)
Consolidated $79,122 9.40% $ 67,328 8.0% N/A N/A
Busey Bank $84,773 11.88% $ 57,132 8.0% $71,415 10.0%
First Federal $17,091 15.06% $ 9,081 8.0% $11,351 10.0%

Tier I Capital (to Risk
Weighted Assets)
Consolidated $65,706 7.81% $ 33,664 4.0% N/A N/A
Busey Bank $73,335 10.28% $ 28,536 4.0% $42,804 6.0%
First Federal $15,958 14.06% $ 4,540 4.0% $ 6,810 6.0%

Tier I Capital (to
Average Assets)
Consolidated $65,706 5.62% $ 46,794 4.0% N/A N/A
Busey Bank $73,335 7.06% $ 41,847 4.0% $52,309 5.0%
First Federal $15,958 9.13% $ 6,993 4.0% $ 8,742 5.0%

COMMITMENTS, CONTINGENCIES AND CREDIT RISK

The Corporation and its subsidiaries are parties to legal actions which arise in
the normal course of their business activities. In the opinion of management,
the ultimate resolution of these matters is not expected to have a material
effect on the financial position or the results of operations of the Corporation
and its subsidiaries.

The Corporation and its subsidiaries are parties to financial instruments with
off-balance-sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include commitments to
extend credit, standby letters of credit and financial guarantees. Those
instruments involve, to varying degrees, elements of credit and interest rate
risk. The contract or notional amounts of those instruments reflect the extent
of involvement the Corporation has in particular classes of financial
instruments.

70

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

The Corporation and its subsidiaries' exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for commitments to
extend credit and standby letters of credit and financial guarantees written is
represented by the contractual amount of those instruments. The Corporation and
its subsidiaries use the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.

Unless noted otherwise, the Corporation and its subsidiaries do not require
collateral or other security to support financial instruments with credit risk.

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

December 31,
------------------------
2000 1999
------------------------
(Dollars in thousands)

Financial instruments whose contract amounts represent
credit risk:
Commitments to extend credit $ 182,736 $ 164,262
Standby letters of credit 2,640 5,424

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 counterparty. Collateral held varies but may include accounts
receivable, inventory, property and equipment and income-producing commercial
properties.

Standby letters of credit are conditional commitments issued by the Corporation
to guarantee the performance of a customer to a third party. Those letters of
credit are primarily issued to support public and private borrowing
arrangements, including bond financing and similar transactions. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers.

As of December 31, 2000, the Corporation has no futures, forwards, swaps or
option contracts, or other financial instruments with similar characteristics.

71

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Lease Commitments
- -----------------

At December 31, 2000, the Corporation was obligated under noncancelable
operating leases for office space and other commitments. Rent expense under
operating leases, included in net occupancy expense of premises, was
approximately $715,000, $609,000, and $632,000 for the years ended December 31,
2000, 1999 and 1998, respectively.

The projected minimum rental payments under the terms of the leases at December
31, 2000, in thousands, are as follows:

2001 $ 659
2002 588
2003 448
2004 439
2005 427
Thereafter 1,643
-----------
$ 4,204
===========

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instrument for which it is practicable to estimate that
value:

Cash and cash equivalents
- -------------------------

The carrying amounts reported in the balance sheet for cash and due from banks
and federal funds sold approximate those assets' fair values.

Securities
- ----------

For securities available for sale, fair values are based on quoted market prices
or dealer quotes, where available. If a quoted market price is not available,
fair value is estimated using quoted market prices for similar securities. The
carrying amount of accrued interest receivable approximates fair value.

Loans
- -----

For certain homogeneous categories of loans, such as some residential mortgages,
fair value is estimated using the quoted market prices for similar loans or
securities backed by similar loans, adjusted for differences in loan
characteristics. The fair value of other types of loans is estimated by
discounting the future cash flows using the current rates at which similar loans
would be made to borrowers with similar credit ratings and for the same
remaining maturities. The carrying amount of accrued interest receivable
approximates fair value.

72

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Deposits and securities sold under agreements to repurchase
- -----------------------------------------------------------

The fair value of demand deposits, savings accounts, interest-bearing
transaction accounts, and certain money market deposits is defined as the amount
payable on demand at the reporting date. The fair value of fixed-maturity
certificates of deposit and securities sold under agreements to repurchase is
estimated using the rates currently offered for deposits of similar remaining
maturities. The carrying amount of accrued interest payable approximates fair
value.

Short-term borrowings and long-term debt
- ----------------------------------------

Rates currently available to the Corporation for debt with similar terms and
remaining maturities are used to estimate fair value of existing debt. The
carrying amount of accrued interest payable approximates fair value.

Commitments to extend credit and standby letters of credit
- ----------------------------------------------------------

The fair value of commitments is estimated using the fees currently charged to
enter into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counterparties. For
fixed-rate loan commitments, fair value also considers the difference between
current levels of interest rates and the committed rates. The fair value of
letters of credit is based on fees currently charged for similar agreements or
on the estimated cost to terminate them or otherwise settle the obligations with
the counterparties at the reporting date. As of December 31, 2000 and 1999,
these items are immaterial in nature.

The estimated fair values of the Corporation's financial instruments are as
follows:

2000 1999
----------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
----------------------------------------------------
(Dollars in thousands)

Financial assets:
Cash and cash equivalents $ 93,285 $ 93,285 $ 83,222 $ 83,222
Securities 228,597 228,597 225,046 225,046
Loans, net 972,101 970,391 876,281 873,018
Accrued interest receivable 10,035 10,035 8,926 8,926

Financial liabilities:
Deposits 1,148,787 1,148,639 1,027,981 1,026,169
Securities sold under agreements to
repurchase 18,890 18,840 23,580 23,580
Short-term borrowings 32,283 32,283 48,327 48,327
Long-term debt 52,976 52,472 55,849 53,866
Accrued interest payable 6,460 6,460 4,530 4,530

73

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

In addition, other assets and liabilities of the Corporation that are not
defined as financial instruments are not included in the above disclosures, such
as property and equipment. Also, nonfinancial instruments typically not
recognized in financial statements nevertheless may have value but are not
included in the above disclosures. These include, among other items, the
estimated earnings power of core deposit accounts, the earnings potential of
loan servicing rights, the earnings potential of the trust operations, the
trained work force, customer goodwill and similar items.

REPORTABLE SEGMENTS AND RELATED INFORMATION

First Busey Corporation has three reportable segments, Busey Bank, First Busey
Trust & Investment Co., and Busey Bank fsb. Busey Bank provides a full range of
banking services to individual and corporate customers through its branch
network in central Illinois, through its branch in Indianapolis, Indiana, and
through its loan production office in Fort Myers, Florida. First Busey Trust &
Investment Co. provides trust and asset management services to individual and
corporate customers throughout central Illinois. Busey Bank fsb provides a full
range of banking services to individuals and corporate customers in McLean
County and the surrounding communities.

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 intersegment revenue and
transfers at current market value.

74

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

The following summarized information relates to the Company's reportable
segments:

December 31, 2000
- ----------------------------------------------------------------------------------------------------------------
Busey
Bank, fsb
(formerly First
First Busey
Federal Trust &
Busey Savings & Investment All Consolidated
Bank Loan Co. Other Totals Eliminations Totals
------------------------------------------------------------------------------------------

Interest income $ 75,634 $ 17,342 $ 179 $ 140 $ 93,295 $ (53) $ 93,242
Interest expense 38,374 9,439 - 2,564 50,377 99 50,476
Other income 10,106 1,149 4,411 20,806 36,472 (18,184) 18,288
Total income 85,740 18,491 4,590 20,946 129,767 (18,237) 111,530
Net income 13,564 919 1,459 14,393 30,335 (16,282) 14,053
Total assets 1,051,969 297,803 3,485 134,222 1,487,479 (132,435) 1,355,044

December 31, 1999
- ----------------------------------------------------------------------------------------------------------------
First
First Busey
Federal Trust &
Busey Savings & Investment All Consolidated
Bank Loan Co. Other Totals Eliminations Totals
------------------------------------------------------------------------------------------

Interest income $ 69,908 $ 2,064 $ 191 $ 148 $ 72,311 $ 0 $ 72,311
Interest expense 32,997 1,130 - 768 34,895 25 34,920
Other income 9,731 108 4,056 18,167 32,062 (15,870) 16,192
Total income 79,639 2,172 4,247 18,315 104,373 (15,870) 88,503
Net income 12,191 384 1,304 13,460 27,339 (14,791) 12,548
Total assets 1,050,137 182,752 3,299 154,976 1,391,164 (144,041) 1,247,123

December 31, 1998
- ----------------------------------------------------------------------------------------------------------------
First
Busey
Trust &
Busey Investment All Consolidated
Bank Co. Other Totals Eliminations Totals
-----------------------------------------------------------------------------

Interest income $ 66,778 $ 165 $ 108 $ 67,051 $ (3) $ 67,048
Interest expense 31,966 - 971 32,937 38 32,975
Other income 8,003 3,490 16,434 27,927 (14,397) 13,530
Total income 74,781 3,655 16,542 94,978 (14,400) 80,578
Net income 11,758 1,175 11,877 24,810 (13,412) 11,398
Total assets 937,710 3,360 103,617 1,044,687 (93,156) 951,531

75

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

PARENT COMPANY ONLY FINANCIAL INFORMATION

Condensed financial data for First Busey Corporation is presented below.

BALANCE SHEETS

December 31,
------------------------
2000 1999
------------------------
(Dollars in thousands)

ASSETS

Cash and due from subsidiary bank $ 241 $ 351
Securities available for sale 1,698 1,899
Investments in subsidiaries:
Bank 108,591 104,921
Non-bank 10,443 8,294
Premises and equipment, net 27 3
Other assets 3,881 4,316
------------------------
TOTAL ASSETS $ 124,881 $ 119,784
========================

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Short-term corporate borrowings $ 30,000 $ 32,707
Short-term ESOP borrowings 2,283 2,620
Other liabilities 273 2,173
------------------------
TOTAL LIABILITIES 32,556 37,500
========================

Stockholders' equity before unearned ESOP shares and deferred
compensation for restricted stock awards 94,609 84,914
Unearned ESOP shares and deferred compensation for restricted
stock awards (2,284) (2,630)
------------------------
STOCKHOLDERS' EQUITY 92,325 82,284
------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 124,881 $ 119,784
========================

76

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

STATEMENTS OF INCOME

Years Ended December 31,
-----------------------------------------
2000 1999 1998
-----------------------------------------
(Dollars in thousands)

Operating income:
Dividends from subsidiaries:
Bank $ 14,138 $ 9,000 $ 18,000
Non-bank 2,825 1,850 975
Interest and dividend income 52 75 40
Other income 1,115 790 820
-----------------------------------------
TOTAL OPERATING INCOME 18,130 11,715 19,835
-----------------------------------------

Expenses:
Salaries and employee benefits 1,040 1,006 957
Interest expense 2,563 768 971
Operating expense 1,096 1,344 1,543
-----------------------------------------
TOTAL EXPENSES 4,699 3,118 3,471
-----------------------------------------

INCOME BEFORE INCOME TAX BENEFIT
AND EQUITY IN UNDISTRIBUTED
INCOME OF SUBSIDIARIES 13,431 8,597 16,364

Income tax benefit 1,378 776 872
-----------------------------------------

INCOME BEFORE EQUITY IN
UNDISTRIBUTED INCOME OF
SUBSIDIARIES 14,809 9,373 17,236

Equity in undistributed income of subsidiaries:
Bank (574) 3,562 (6,242)
Non-bank (182) (387) 404
-----------------------------------------

NET INCOME $ 14,053 $ 12,548 $ 11,398
=========================================

77

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

STATEMENTS OF CASH FLOWS

Years Ended December 31,
-----------------------------------------
2000 1999 1998
-----------------------------------------
(Dollars in thousands)

Cash Flows from Operating Activities
Net income $ 14,053 $ 12,548 $ 11,398
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 430 592 872
Equity in undistributed net income of subsidiaries 756 (3,175) 5,838
Noncash dividends from subsidiaries (2,137) - -
Stock-based compensation 181 - -
Gain on sales of securities (123) (25) (58)
(Gain) loss on disposal of premises and
equipment - - 11
Changes in assets and liabilities:
Decrease (increase) in other assets 167 (138) (213)
Increase (decrease) in other liabilities (1,900) 498 389
-----------------------------------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 11,427 10,300 18,237
-----------------------------------------

Cash Flows from Investing Activities
Proceeds from sales of securities available
for sale 279 238 86
Purchases of securities available for sale (277) (81) (203)
Purchases of premises and equipment (37) (3) (1)
Capital contribution to subsidiary - (27,075) (10,000)
-----------------------------------------
NET CASH (USED IN) INVESTING ACTIVITIES (35) (26,921) (10,118)
-----------------------------------------

Cash Flows from Financing Activities
Proceeds from short-term borrowings 1,925 29,357 11,000
Principal payments on short-term borrowings (4,632) (2,150) (11,500)
Purchases of treasury stock (2,385) (5,850) (2,747)
Proceeds from sales of treasury stock - 1,411 586
Dividends paid (6,410) (6,004) (5,381)
-----------------------------------------
NET CASH PROVIDED BY (USED IN )
FINANCING ACTIVITIES (11,502) 16,764 (8,042)
-----------------------------------------

NET (DECREASE) INCREASE IN CASH
AND DUE FROM BANKS (110) 143 77

Cash and due from banks, beginning 351 208 131
-----------------------------------------

Cash and due from banks, ending $ 241 $ 351 $ 208
=========================================

78

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

STATEMENTS OF CASH FLOWS (Continued)

Years Ended December 31,
-----------------------------------------
2000 1999 1998
-----------------------------------------
(Dollars in thousands)

Supplemental Schedule of Noncash Investing
and Financing Activities
Principal payments on ESOP debt $ 337 $ 150 $ 150
=========================================

Proceeds from ESOP debt $ - $ 2,370 $ -
=========================================

Issuance of treasury stock for acquisition
of customer list $ 400 $ - $ 825
=========================================

Change in unrealized gain on securities
available for sale - holding company $ (322) $ 38 $ 216
=========================================

Increase in deferred income taxes
attributable to the unrealized gain on
securities available for sale - holding
company $ 128 $ (63) $ (76)
=========================================

Change in unrealized gain on securities
available for sale - subsidiaries $ 6,684 $ (4,700) $ 858
=========================================

Transfer of bank subsidiaries to
holding company $ 2,137 $ - $ -
=========================================

79

FIRST BUSEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

UNAUDITED INTERIM FINANCIAL DATA

The following table reflects summarized quarterly data for the periods described
(unaudited), in thousands, except per share data:

2000
----------------------------------------------------
December 31 September 30 June 30 March 31
----------------------------------------------------

Interest income $ 24,885 $ 24,026 $ 22,587 $ 21,744
Interest expense 14,099 13,111 11,801 11,465
----------------------------------------------------
Net interest income 10,786 10,915 10,786 10,279
Provision for loan losses 840 690 595 390
Noninterest income 4,942 4,338 4,616 4,392
Noninterest expense 10,750 9,055 8,729 8,715
----------------------------------------------------
Income before income taxes 4,138 5,508 6,078 5,566
Income taxes 1,157 1,975 2,146 1,959
----------------------------------------------------
Net income $ 2,981 $ 3,533 $ 3,932 $ 3,607
====================================================

Basic earnings per share $ 0.22 $ 0.27 $ 0.29 $ 0.27
Diluted earnings per share $ 0.22 $ 0.26 $ 0.29 $ 0.26

1999
----------------------------------------------------
December 31 September 30 June 30 March 31
----------------------------------------------------

Interest income $ 20,766 $ 18,058 $ 16,889 $ 16,598
Interest expense 10,824 8,643 7,765 7,688
----------------------------------------------------
Net interest income 9,942 9,415 9,124 8,910
Provision for loan losses 1,670 300 300 300
Noninterest income 4,861 3,820 3,951 3,560
Noninterest expense 9,221 8,044 7,873 7,925
----------------------------------------------------
Income before income taxes 3,912 4,891 4,902 4,245
Income taxes 1,115 1,437 1,544 1,306
----------------------------------------------------
Net income $ 2,797 $ 3,454 $ 3,358 $ 2,939
====================================================

Basic earnings per share $ 0.21 $ 0.25 $ 0.25 $ 0.21
Diluted earnings per share $ 0.20 $ 0.25 $ 0.24 $ 0.21

80

MANAGEMENT REPORT
BUSEY BANK
AS OF DECEMBER 31, 2000

FINANCIAL STATEMENTS
Management of Busey Bank is responsible for the preparation, integrity and fair
presentation of its published financial statements as of December 31, 2000, and
for the year then ended. The financial statements have been prepared in
accordance with generally accepted accounting principles and, as such, include
amounts, some of which are based on judgments and estimates of management.

INTERNAL CONTROLS
Management is responsible for establishing and maintaining effective internal
control over financial reporting. The internal control system contains
monitoring mechanisms, and actions are taken to correct deficiencies identified.

There are inherent limitations in the effectiveness of any system of internal
control, including the possibility of human error and the circumvention or
overriding of controls. Accordingly, even an effective internal control system
can provide only reasonable assurance with respect to financial statement
preparation. Further, because of changes in conditions, the effectiveness of
internal control may vary over time.

Management assessed its internal control over financial reporting as of December
31, 2000. This assessment was based on criteria for effective internal control
over financial reporting described in "Internal Control - Integrated Framework"
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this assessment, management believes that Busey Bank maintained
effective internal control over financial reporting as of December 31, 2000.

DESIGNATED LAWS
Management is also responsible for compliance with the federal and state laws
and regulations relating to safety and soundness, including those designated
laws and regulations regarding dividend restrictions and loans to insiders.
Based on our assessment, management believes Busey Bank complied, in all
material respects, with those designated laws and regulations for the year ended
December 31, 2000.

//Douglas C. Mills//
-----------------------------------
Douglas C. Mills, Chairman of the Board
First Busey Corporation (Holding Company)

//P. David Kuhl//
-----------------------------------
P. David Kuhl, President
Busey Bank

81

INDEPENDENT ACCOUNTANT'S REPORT

To the Board of Directors
Busey Bank
Urbana, Illinois

We have examined management's assertion that Busey Bank, a wholly owned
subsidiary of First Busey Corporation, maintained a system of internal control
over financial reporting which is designed to provide reasonable assurance to
the Bank's management and Board of Directors regarding the preparation of
reliable published financial statements as of December 31, 2000, included in the
accompanying management report.

Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
obtaining an understanding of the internal control structure over financial
reporting, testing and evaluating the design and operating effectiveness of the
internal control structure, and such other procedures as we considered necessary
in the circumstances. We believe that our examination provides a reasonable
basis for our opinion.

Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projections of any
evaluation of the internal control structure over financial reporting to future
periods are subject to the risk that the internal control structure may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, management's assertions that Busey Bank maintained a system of
internal control over financial reporting which is designed to provide
reasonable assurance to the Bank's management and Board of Directors regarding
the preparation of reliable published financial statements as of December 31,
2000, is fairly stated, in all material respects, based upon criteria
established in "Internal Control - Integrated Framework" issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).

//McGladrey & Pullen, LLP//

Champaign, Illinois
February 8, 2001

82