SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following tables show selected unaudited pro forma condensed combined financial information about the financial condition and results of operations of First Busey Corporation ("First Busey"), including per share data, after giving effect to the merger with Pulaski Financial Corp. ("Pulaski") and other pro forma adjustments. The selected unaudited pro forma condensed combined financial information assumes that the merger is accounted for under the acquisition method of accounting for business combinations in accordance with GAAP, and that the assets and liabilities of Pulaski will be recorded by First Busey at their respective fair values as of the date the merger is completed. The unaudited pro forma condensed combined balance sheet gives effect to the transactions as if the transactions had occurred on December 31, 2015. The unaudited pro forma condensed combined income statements for the three months ended March 31, 2016, and the year ended December 31, 2015, give effect to the transactions as if the transactions had become effective at January 1, 2015.

The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined at the beginning of each period presented. The unaudited pro forma condensed combined financial information also does not consider any expense efficiencies, increased revenue or other potential financial benefits of the merger. The fair values are estimates as of the date hereof and actual amounts are still in the process of being finalized.  Fair values are subject to refinement for up to one year after the closing date as additional information regarding the closing date fair values becomes available.

Pulaski's fiscal year end was September 30 and First Busey's is December 31.  In order to provide stockholders with comparable information, for purposes of the unaudited pro forma condensed combined statements of income, certain financial information for Pulaski has been presented as if Pulaski's year end was December 31.  To calculate operating results for the year ended December 31, 2015, the operating results for Pulaski's quarter ended December 31, 2015 were added to the operating results for Pulaski's year ended September 30, 2015 and the operating results for Pulaski's quarter ended December 31, 2014 were subtracted.

Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2015
(in thousands, except per share data)

Unaudited Pro Forma Condensed Combined Statement of Income for the

Three Months Ended March 31, 2016

(in thousands, except per share data)

Unaudited Pro Forma Condensed Combined Statement of Income for the Year Ended

December 31, 2015
(in thousands, except per share data)

Notes to Unaudited Pro Forma Condensed Combined Balance Sheet and Statement of Income

Note 1—Basis of Presentation

First Busey acquired Pulaski on April 30, 2016 for a fixed exchange ratio of 0.79 shares of First Busey common stock for each share of Pulaski common stock. The acquisition is accounted for under the acquisition method of accounting and, accordingly, the assets and liabilities of Pulaski presented in these pro forma condensed combined financial statements have been adjusted to their estimated fair values based upon conditions as of the merger date and as if the transaction had been effective on January 1, 2015 for statement of income data. Since these are pro forma statements, we cannot assure that the amounts reflected in these financial statements would have been representative of the actual amounts earned had the companies been combined at that time. The fair values are estimates as of the date hereof and actual amounts are still in the process of being finalized.  Fair values are subject to refinement for up to one year after the closing date as additional information regarding the closing date fair values becomes available.

Note 2—Pro Forma Adjustments Footnotes

(1)

To adjust interest-earning assets of Pulaski to approximate fair value, consisting of an increase to investments by $0.1 million and a decrease to loans by $28.9 million.  The loan fair value adjustment includes a $19.8 million discount to adjust for credit deterioration of the acquired portfolio, a $4.0 million discount for the impact of changes in market interest rates and a $5.1 million write-off of net deferred loan costs.  $15.5 million is expected to be accreted over an estimated 4 year remaining life of the respective loans in a manner that approximates level yield.

(2)	To eliminate Pulaski's allowance for loan losses of $15.9 million.

(3)	To record the fair value adjustment to increase premises and equipment by $0.1 million.

(4)	To record goodwill of $74.0 million resulting from the difference between the purchase price and identifiable net assets as follows:

(5)	To eliminate Pulaski's existing goodwill of $3.9 million.

(6)	To record core deposit intangible asset of $15.5 million.  Amount to be amortized using a sum of years digits method over a 14 year useful life.

(7)	To record the fair value adjustment to reduce other real estate owned by $2.5 million and other assets by $0.3 million.

(8)	To record the fair value adjustment to increase time deposits by $1.1 million.  Amount to be accreted over 2 years.

(9)	To record the fair value adjustment to increase borrowings by $0.9 million.  Such borrowings were repaid shortly after the merger date, so no discount accretion is presented in these pro forma financial statements.

(10)	To record the fair value adjustment to decrease trust preferred securities by $3.8 million.  Amount to be accreted over the weighted average remaining life of 18 years.

 

(11)

To record estimated transaction costs to be incurred totaling $21.1 million, net of tax of $14.9 million.  Significant costs include $6.6 million of vendor termination costs, $4.8 million of employee related costs, net of tax, and $2.9 million of professional fees.  For purposes of the pro forma presentation, the aggregate amount of these transaction costs is excluded from the pro forma income statements, which is consistent with applicable guidance.

(12)	To record fair value adjustments to reduce other liabilities by $1.0 million and a net deferred tax liability related to the fair value adjustments and establishment of the core deposit intangible assets of $1.2 million.

(13)	To eliminate Pulaski's stockholders' equity of $124.0 million.  The adjustment also includes a $15.7 million decrease in retained earnings to record transaction costs, net of tax.

(14)	To record the issuance of 9.4 million shares of First Busey common stock at $20.44 per share totaling $193.0 million.  The purchase price is also adjusted for cash in lieu of fractional shares and the fair value of outstanding Pulaski stock options.

(15)	To record accretion on the credit adjustment and interest rate adjustment on the loan portfolio.

(16)	To record accretion on interest rate adjustment on time deposits.

(17)	To record accretion on interest rate adjustment on trust preferred securities.

(18)	To record amortization of core deposit intangible.

(19)	To record tax effects at an effective rate of 35%.

(20)	Includes estimated 115,000 shares of equivalent roll over option for Pulaski's existing option awards.