SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended 9/30/98
Commission File No. 0-15950
FIRST BUSEY CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 37-1078406
------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
201 W. Main St.,
Urbana, Illinois 61801
------------------------- -------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (217) 365-4556
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the practicable date.
<TABLE>
<CAPTION>
Class Outstanding at October 31, 1998
- --------------------------------------- -------------------------------
<S> <C>
Class A Common Stock, without par value 13,736,689
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Page 2 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, 1998 December 31, 1997
------------------ -----------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $ 35,057 $ 43,299
Federal funds sold 27,950 18,800
Securities available for sale (amort. cost 1998 $154,111; 1997 $206,589) 224,423 215,514
Loans (net of unearned interest) 634,043 602,937
Allowance for loan losses (7,306) (6,860)
------------ ------------
Net loans $ 626,737 $ 596,077
Premises and equipment 24,611 22,834
Other assets 19,772 19,016
------------ ------------
Total assets $ 958,550 $ 915,540
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $ 85,829 $ 92,090
Interest bearing 738,187 719,363
------------ ------------
Total deposits $ 824,016 $ 811,453
Short-term borrowings 15,550 6,550
Long-term debt 25,000 10,000
Other liabilities 7,888 6,258
------------ ------------
Total liabilities $ 872,454 $ 834,261
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 21,253 20,729
Retained earnings 57,708 53,011
Unrealized gain (loss) on securities available for sale, net 6,016 5,801
------------ ------------
Total stockholders' equity before treasury stock, unearned ESOP
shares and deferred compensation for stock grants $ 91,268 $ 85,832
Treasury stock, at cost (4,578) (3,922)
Unearned ESOP shares and deferred compensation for stock grants (594) (631)
------------ ------------
Total stockholders' equity $ 86,096 $ 81,279
------------ ------------
Total liabilities and stockholders' equity $ 958,550 $ 915,540
============ ============
Class A Common Shares outstanding at period end 13,770,330 13,750,786
============ ============
</TABLE>
Page 3 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, 1998 September 30, 1997
------------------ ------------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $ 35,057 $ 51,189
Federal funds sold 27,950 0
Securities held to maturity (fair value 1997 $51,362) 50,314
Securities available for sale (amort. cost 1998 $215,163; 1997 $154,111) 224,423 162,896
Loans (net of unearned interest) 634,043 604,538
Allowance for loan losses (7,306) (6,593)
------------ ------------
Net loans $ 626,737 $ 597,945
Premises and equipment 24,611 22,642
Other assets 19,772 19,227
------------ ------------
Total assets $ 958,550 $ 904,213
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $ 85,829 $ 78,553
Interest bearing 738,187 722,859
------------ ------------
Total deposits $ 824,016 $ 801,412
Short-term borrowings 15,550 5,750
Long-term debt 25,000 10,000
Other liabilities 7,888 6,390
------------ ------------
Total liabilities $ 872,454 $ 823,552
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 21,253 20,714
Retained earnings 57,708 51,554
Unrealized gain (loss) on securities available for sale, net 6,016 5,711
------------ ------------
Total stockholders' equity before treasury stock, unearned ESOP
shares and deferred compensation for stock grants $ 91,268 $ 84,270
Treasury stock, at cost (4,578) (3,006)
Unearned ESOP shares and deferred compensation for stock grants (594) (603)
------------ ------------
Total stockholders' equity $ 86,096 $ 80,661
------------ ------------
Total liabilities and stockholders' equity $ 958,550 $ 904,213
============ ============
Class A Common Shares outstanding at period end 13,770,330 11,581,456
============ ============
Class B Common Shares outstanding at period end 0 2,250,000
============ ============
</TABLE>
Page 4 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
1998 1997
-------- --------
(Dollars in thousands,
except per share amounts)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $40,331 $37,716
Interest and dividends on investment securities:
Taxable interest income 7,958 7,688
Non-taxable interest income 1,280 1,505
Dividends 101 81
Interest on federal funds sold 729 243
-------- --------
Total interest income $50,399 $47,233
-------- --------
INTEREST EXPENSE:
Deposits $22,841 $22,149
Short-term borrowings 901 448
Long-term debt 892 394
-------- --------
Total interest expense $24,634 $22,991
-------- --------
Net interest income $25,765 $24,242
Provision for loan losses 700 600
-------- --------
Net interest income after provision for loan losses $25,065 $23,642
-------- --------
OTHER INCOME:
Trust $ 2,591 $ 2,364
Commissions and brokers' fees, net 927 771
Service charges on deposit accounts 2,212 2,211
Other service charges and fees 1,412 910
Security gains, net 727 357
Trading security gains, net 5 2
Gain on sales of pooled loans 656 293
Other operating income 1,404 617
-------- --------
Total other income $ 9,934 $ 7,525
-------- --------
OTHER EXPENSES:
Salaries and wages $10,168 $ 9,085
Employee benefits 1,929 1,884
Net occupancy expense of bank premises 1,919 1,630
Furniture and equipment expenses 1,581 1,294
Data processing 1,474 1,287
Stationery, supplies and printing 513 509
Foreclosed property write-downs and expenses 24 7
Amortization expense 1,038 991
Other operating expenses 3,762 3,525
-------- --------
Total other expenses $22,408 $20,212
-------- --------
Income before income taxes $12,591 $10,955
Income taxes 3,890 3,260
-------- --------
NET INCOME $ 8,701 $ 7,695
Other comprehensive income, before tax:
Unrealized gains on securities:
Unrealized holding gains (losses) arising during period 1,060 4,090
Less reclassification adjustment for gains included in net income (727) (357)
-------- --------
Other comprehensive income, before tax $ 333 $ 3,733
Income tax expense related to items of other comprehensive income 118 1,307
-------- --------
Other comprehensive income, net of tax $ 215 $ 2,426
-------- --------
COMPREHENSIVE INCOME $ 8,916 $10,121
======== ========
BASIC EARNINGS PER SHARE $ 0.63 $ 0.56
DILUTED EARNINGS PER SHARE $ 0.62 $ 0.55
DIVIDENDS DECLARED PER SHARE:
Class A Common Stock $0.2900 $0.2600
======== ========
Class B Common Stock - $0.2364
======== ========
</TABLE>
Page 5 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
1998 1997
-------- --------
(Dollars in thousands,
except per share amounts)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $13,781 $13,127
Interest and dividends on investment securities:
Taxable interest income 2,683 2,500
Non-taxable interest income 433 503
Dividends 32 28
Interest on federal funds sold 133 95
-------- --------
Total interest income $17,062 $16,253
-------- --------
INTEREST EXPENSE:
Deposits $ 7,760 $ 7,730
Short-term borrowings 327 128
Long-term debt 296 147
-------- --------
Total interest expense $ 8,383 $ 8,005
-------- --------
Net interest income $ 8,679 $ 8,248
Provision for loan losses 50 200
-------- --------
Net interest income after provision for loan losses $ 8,629 $ 8,048
-------- --------
OTHER INCOME:
Trust $ 808 $ 739
Commissions and brokers' fees, net 334 264
Service charges on deposit accounts 771 747
Other service charges and fees 459 307
Security gains, net 194 92
Trading security gains, net 5 0
Gain on sales of pooled loans 272 176
Other operating income 439 207
-------- --------
Total other income $ 3,282 $ 2,532
-------- --------
OTHER EXPENSES:
Salaries and wages $ 3,410 $ 3,074
Employee benefits 620 584
Net occupancy expense of bank premises 696 564
Furniture and equipment expenses 568 439
Data processing 513 465
Stationery, supplies and printing 163 164
Foreclosed property write-downs and expenses 24 7
Amortization expense 352 331
Other operating expenses 1,240 1,183
-------- --------
Total other expenses $ 7,586 $ 6,811
-------- --------
Income before income taxes $ 4,325 $ 3,769
Income taxes 1,336 1,129
-------- --------
NET INCOME $ 2,989 $ 2,640
======== ========
Other comprehensive income, before tax:
Unrealized gains on securities:
Unrealized holding gains (losses) arising during period (915) 2,186
Less reclassification adjustment for gains included in net income (194) (92)
-------- --------
Other comprehensive income, before tax (721) 2,094
Income tax expense related to items of other comprehensive income (251) 733
-------- --------
Other comprehensive income, net of tax (470) 1,361
-------- --------
COMPREHENSIVE INCOME $ 2,519 $ 4,001
======== ========
BASIC EARNINGS PER SHARE $ 0.22 $ 0.19
DILUTED EARNINGS PER SHARE $ 0.21 $ 0.19
DIVIDENDS DECLARED PER SHARE:
Class A Common Stock $0.1000 $0.0900
======== ========
Class B Common Stock - $0.0818
======== ========
</TABLE>
Page 6 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
1998 1997
---------- ----------
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 8,701 $ 7,695
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,863 2,574
Provision for loan losses 700 600
(Decrease) in deferred income taxes (813) (659)
Amortization of investment security discounts (110) (245)
Gain on sales of investment securities, net (727) (357)
Proceeds from sales of pooled loans 59,746 26,774
Loans originated for sale (67,016) (30,413)
Gain on sale of pooled loans (656) (293)
(Gain) on sales and dispositions of premises and equipment (10) 0
Change in assets and liabilities:
(Decrease) in other assets (237) (856)
Increase in accrued expenses 1,024 739
Increase (decrease) in interest payable (149) 46
Increase in income taxes payable 522 436
---------- ----------
Net cash provided by operating activities $ 3,838 $ 6,041
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities classified available for sale $ 31,453 $ 10,559
Proceeds from maturities of securities classified available for sale 75,565 67,739
Proceeds from maturities of securities classified held to maturity - 5,887
Purchase of securities classified available for sale (114,759) (65,662)
Purchase of securities classified held to maturity - (1,050)
(Increase) in federal funds sold (9,150) 0
Increase in loans (23,439) (31,379)
Purchases of premises and equipment (3,581) (2,575)
Proceeds from sales of premises and equipment 25 1
Cash acquired in acquisition of Busey Carter Travel, Inc. 204 -
---------- ----------
Net cash (used in) investing activities ($43,682) ($16,480)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in certificates of deposit ($19,995) $ 33,751
Net increase in demand, money market and saving deposits 32,558 734
Cash dividends paid (4,004) (3,543)
Purchase of treasury stock (1,483) (404)
Proceeds from sale of treasury stock 526 1,257
Proceeds from short-term borrowings 10,000 -
Principal payments on short-term borrowings (1,000) (2,500)
Proceeds from long-term borrowings 20,000 5,000
Principal payments on long-term borrowings (5,000) -
Net decrease in federal funds purchased,
repurchase agreements and Federal Reserve discount borrowings - (6,405)
---------- ----------
Net cash provided by (used in) financing activities $ 31,602 $ 27,890
---------- ----------
Net increase (decrease) in cash and cash equivalents ($8,242) $ 17,451
Cash and due from banks, beginning 43,299 $ 33,738
---------- ----------
Cash and due from banks, ending $ 35,057 $ 51,189
========== ==========
</TABLE>
Page 7 of 22
<PAGE>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: INTERIM FINANCIAL STATEMENTS
The consolidated interim financial statements of First Busey Corporation and
Subsidiaries are unaudited, but in the opinion of management reflect all
necessary adjustments, consisting only of normal recurring accruals, for a fair
presentation of results as of the dates and for the periods covered by the
financial statements. The results for the interim periods are not necessarily
indicative of the results of operations that may be expected for the fiscal
year.
NOTE 2: LOANS
The major classifications of loans at September 30, 1998 and December 31, 1997
were as follows:
<TABLE>
<CAPTION>
September 30, 1998 December 31, 1997
----------------------------------------
(Dollars in thousands)
<S> <C> <C>
Commercial $ 74,775 $ 63,861
Real estate construction 40,402 31,306
Real estate - farmland 13,627 11,782
Real estate - 1-4 family residential mortgage 240,366 225,622
Real estate - multifamily mortgage 54,314 74,385
Real estate - non-farm nonresidential mortgage 155,830 139,653
Installment 36,613 38,925
Agricultural 18,116 17,403
----------------------------------------
$634,043 $602,937
Less:
Allowance for loan losses $ 7,306 $ 6,860
----------------------------------------
Net loans $626,737 $596,077
========================================
</TABLE>
The real estate-mortgage category includes loans held for sale with carrying
values of $12,889,000 at
September 30, 1998 and $4,963,000 at December 31, 1997; these loans had fair
market values of $13,103,000 and $5,016,000 respectively.
Page 8 of 22
<PAGE>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: INCOME PER SHARE
Net income per common share has been computed as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income $ 2,989,000 $ 2,640,000 $ 8,701,000 $ 7,695,000
Shares:
Weighted average common shares outstanding 13,765,820 13,822,138 13,771,120 13,824,380
Dilutive effect of outstanding options, as determined
by the application of the treasury stock method 320,817 239,424 278,929 213,502
----------- ----------- ----------- -----------
Weighted average common shares outstanding,
as adjusted 14,086,637 14,061,562 14,050,049 14,037,882
=========== =========== =========== ===========
Basic earnings per share $ 0.22 $ 0.19 $ 0.63 $ 0.56
----------- ----------- ----------- -----------
Diluted earnings per share $ 0.21 $ 0.19 $ 0.62 $ 0.55
----------- ----------- ----------- -----------
</TABLE>
NOTE 4: SUPPLEMENTAL CASH FLOW DISCLOSURES FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997.
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 24,783 $ 22,945
========= =========
Income taxes $ 3,368 $ 3,081
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Other real estate acquired in settlement of loans $ 237 $ 135
========= =========
Change in unrealized gain (loss) on securities available for sale $ 333 $ 3,733
========= =========
(Decrease) in deferred income taxes attributable to the
unrealized (gain) on investment securities available for sale
($118) ($1,307)
========= =========
</TABLE>
Page 9 of 22
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the financial condition
of First Busey Corporation and Subsidiaries ("Corporation") at September 30,
1998 (unaudited) when compared with December 31, 1997 and the results of
operations for the nine months ended September 30, 1998 and 1997 (unaudited) and
the results of operations for the three months ended September 30, 1998 and 1997
(unaudited). This discussion and analysis should be read in conjunction with
the Corporation's consolidated financial statements and notes thereto appearing
elsewhere in this quarterly report.
FINANCIAL CONDITION AT SEPTEMBER 30, 1998 AS COMPARED TO DECEMBER 31, 1997
Total assets increased $43,010,000, or 4.7%, to $958,550,000 at September 30,
1998 from $915,540,000 at December 31, 1997.
Securities available for sale increased $8,909,000, or 4.1%, to $224,423,000 at
September 30, 1998 from $215,514,000 at December 31, 1997.
Loans increased $31,106,000 or 5.2%, to $634,043,000 at September 30, 1998 from
$602,937,000 at December 31, 1997, primarily due to increases in commercial and
mortgage loans.
Total deposits increased $12,563,000, or 1.5%, to $824,016,000 at September 30,
1998 from $811,453,000 at December 31, 1997. Non-interest bearing deposits
decreased 6.8% to $85,829,000 at September 30, 1998 from $92,090,000 at December
31, 1997. Interest-bearing deposits increased 2.6% to $738,187,000 at September
30, 1998 from $719,363,000 at December 31, 1997. Short-term borrowings
increased $9,000,000 to $15,550,000 at September 30, 1998, as compared to
$6,550,000 at December 31, 1997. Proceeds from the increase in short-term
borrowings were used to capitalize Busey Business Bank, the holding company's
bank subsidiary located in Indianapolis, Indiana.
In the first nine months of 1998, the Corporation repurchased 93,182 shares of
its Class A stock at an aggregate cost of $1,483,000. The Corporation is
purchasing shares for the treasury as they become available in order to meet
future issuance requirements of previously granted non-qualified stock options.
As of September 30, 1998, 72,680 of the 266,882 options which became exercisable
on January 1, 1997 (and expire December 31, 1999) have not yet been exercised
and 26,400 of the 63,900 options which became exercisable on January 1, 1998
(and expire December 31, 1999) have not yet been exercised. It is anticipated
that the Corporation may from time to time continue to make purchases of its
common stock in order to meet future issuance requirements.
The following table sets forth the components of non-performing assets and past
due loans.
<TABLE>
<CAPTION>
September 30, 1998 December 31,1997
------------------ ----------------
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans $ 464 $ 628
Loans 90 days past due, still accruing 2,953 1,033
Restructured loans - -
Other real estate owned 200 516
Non-performing other assets 2 5
------------------ ----------------
Total non-performing assets $3,619 $2,182
================== ================
Total non-performing assets as a percentage of total assets 0.38% 0.24%
================== ================
Total non-performing assets as a percentage of loans plus non-performing assets 0.57% 0.36%
================== ================
</TABLE>
The ratio of non-performing assets to loans plus non-performing assets increased
to 0.57% at September 30, 1998 from 0.36% at December 31, 1997. This was due to
an increase in the balance of loans 90 days past due and still accruing, offset
partially by decreases in the balance of non-accrual loans and other real estate
owned. Although the non-performing ratios have increased over the last nine
months, the Corporation's ratios compare favorably with those of its peers.
Page 10 of 22
<PAGE>
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO SEPTEMBER 30, 1997
SUMMARY
- -------
Net income for the nine months ended September 30, 1998 increased 13.1% to
$8,701,000 as compared to $7,695,000 for the comparable period in 1997. Diluted
earnings per share increased 12.7% to $.62 at September 30, 1998 as compared to
$.55 for the same period in 1997.
Operating earnings, which exclude security gains and the related tax expense,
were $8,228,000, or $.59 per share for the nine months ended September 30, 1998,
as compared to $7,463,000, or $.53 per share for the same period in 1997.
The Corporation's return on average assets was 1.26% for the nine months ended
September 30, 1998, as compared to 1.18% for the comparable period in 1997. The
return on average assets from operations of 1.19% for the nine months ended
September 30, 1998 was 5 basis points higher than the 1.14% level achieved in
the comparable period of 1997.
Net interest margin, the Corporation's net interest income expressed as a
percentage of average earning assets stated on a fully taxable equivalent basis,
was 4.16% for the nine months ended September 30, 1998, as compared to 4.21% for
the same period in 1997. The net interest margin expressed as a percentage of
average total assets, also on a fully taxable equivalent basis, was 3.86% for
the nine months ended September 30, 1998, compared to 3.87% for the same period
in 1997. The decrease in the net interest margin reflects the decrease in the
net interest spread the Corporation has experienced.
During the nine months ended September 30, 1998, the Corporation recognized
security gains of approximately $473,000, after income taxes, representing 5.4%
of net income. During the same period in 1997, security gains of $232,000,
after income taxes, were recognized, representing 3.0% of net income.
INTEREST INCOME
- ---------------
Interest income, on a tax equivalent basis, for the nine months ended September
30, 1998 increased 6.3% to $51,292,000 from $48,274,000 for the comparable
period in 1997. The increase in interest income resulted from an increase in
average earning assets of $53,038,000 for the period ended September 30, 1998,
as compared to the same period of 1997, offset by a three point decrease in the
average yield on interest-earning assets from 8.04% to 8.01% in the current
period when compared to the same period in 1997.
INTEREST EXPENSE
- ----------------
Total interest expense increased 7.1% for the nine months ended September 30,
1998 as compared to the prior year period. This increase resulted primarily
from the growth of $35,306,000 in average interest-bearing liabilities to
$754,523,000 for the nine months ending September 30, 1998, compared to
$719,217,000 for the same period in 1997.
PROVISION FOR LOAN LOSSES
- -------------------------
The provision for loan losses of $700,000 for the nine months ended September
30, 1998 is $100,000 more than the provision for the comparable period in 1997.
The provision and the net charge-offs of $254,000 for the period resulted in the
reserve representing 1.15% of total loans and 202% of non-performing loans at
September 30, 1998, as compared to the reserve representing 1.14% of total loans
and 413% of non-performing loans at December 31, 1997. The adequacy of the
reserve for loan losses is consistent with management's consideration of the
composition of the portfolio, recent credit quality experience, and prevailing
economic conditions.
Page 11 of 22
<PAGE>
OTHER INCOME, OTHER EXPENSE AND INCOME TAXES
- --------------------------------------------
Total other income, excluding security gains, increased 28.4% for the nine
months ended September 30, 1998 as compared to the same period in 1997. This
was a combination of increases in trust, commissions and brokers' fees, other
service charges and fees, and gains on sales of pooled loans for the nine months
ended September 30, 1998 as compared to the same period in 1997. Gains of
$656,000 were recognized on the sale of $59,090,000 of pooled loans for the nine
months ended September 30, 1998 as compared to gains of $293,000 on the sale of
$26,481,000 of pooled loans in the prior year period.
Management anticipates continued sales from the current mortgage loan production
of the Corporation if mortgage loan originations are high relative to historic
norms and the sales of the loans are necessary to maintain the asset/liability
structure that the Corporation is trying to effect. The Corporation may realize
gains and/or losses on these sales dependent upon interest rate movements and
upon how receptive the debt markets are to mortgage backed securities.
Total other expense increased 10.9% or $2,196,000 for the nine months ended
September 30, 1998 as compared to the same period in 1997.
Salaries and wages expense increased $1,083,000 or 11.9%, and employee benefits
expense increased $45,000 or 2.4% for the nine months ended September 30, 1998,
as compared to the same period last year. The Corporation had 423 full time
equivalent employees as of September 30, 1998 as compared to 386 as of
September 30, 1997. Occupancy and furniture and equipment expenses increased
19.7% to $3,500,000 for the nine months ended September 30, 1998 from $2,924,000
in the prior year period. Data processing expense increased $187,000 or 14.5%
to $1,474,000 for the nine months ended September 30, 1998 from the prior year
period. Foreclosed property write-downs and expenses increased $17,000 to
$24,000 for the nine months ended September 30, 1998 from the prior year period.
Other operating expenses decreased $237,000 or 6.7% to $3,762,000 for the nine
months ended September 30, 1998.
The Corporation's net overhead expense, total non-interest expense less
non-interest income divided by average assets, decreased to 1.91% for the nine
months ended September 30, 1998 from 2.00% in the prior year period as a result
of the income and expense items described above.
The Corporation's efficiency ratio is defined as operating expenses divided by
net revenue. (More specifically it is defined as non-interest expense
expressed as a percentage of the sum of tax equivalent net interest income and
non-interest income, excluding security gains). The consolidated efficiency
ratio for the nine months ended
September 30, 1998 was 62.5% as compared to 62.3% for the prior year period.
When the gains on the sales of pooled loans are excluded, these ratios are 63.6%
and 62.9%, respectively. The change in the current year efficiency ratio is due
to the income and expense items noted above.
Income taxes for the nine months ended September 30, 1998 increased to
$3,890,000 as compared to $3,260,000 for the comparable period in 1997. As a
percent of income before taxes, the provision for income taxes increased to
30.9% for the nine months ended September 30, 1998 from 29.8% for the same
period in 1997.
Page 12 of 22
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AS COMPARED TO SEPTEMBER 30, 1997
SUMMARY
- -------
Net income for the three months ended September 30, 1998 increased 13.2% to
$2,989,000 as compared to $2,640,000 for the comparable period in 1997. Diluted
earnings per share increased 10.5% to $.21 at September 30, 1998 as compared to
$.19 for the same period in 1997.
Operating earnings, which exclude security gains and the related tax expense,
were $2,863,000, or $.20 per share for the three months ended September 30,
1998, as compared to $2,580,000, or $.18 per share for the same period in 1997.
The Corporation's return on average assets was 1.26% for the three months ended
September 30, 1998, as compared to 1.18% achieved for the comparable period in
1997. The return on average assets from operations of 1.21% for the three
months ended September 30, 1998 is 6 basis points higher than the 1.15% level
achieved in the comparable period of 1997.
The net interest margin expressed as a percentage of average earning assets was
4.10% for the three months ended September 30, 1998, 6 basis points lower than
the level achieved for the like period in 1997. The net interest margin
expressed as a percentage of average total assets was 3.80% for the three months
ended September 30, 1998, as compared to 3.84% for the same period in 1997.
During the three months ended September 30, 1998, the Corporation recognized
security gains of approximately $126,000, after income taxes, representing 4.2%
of net income. During the same period in 1997, security gains of approximately
$60,000, after income taxes, were recognized, representing 2.3% of net income.
INTEREST INCOME
- ---------------
Interest income on a fully taxable equivalent basis increased $760,000, or 4.6%
for the three months ended September 30, 1998 from the same period in 1997. The
increase resulted from a higher level of interest income on greater average
volumes of loans and U.S. government obligations outstanding for the three
months ended September 30, 1998 as compared to the same period of 1997,
partially offset by lower yields on all categories of interest-earning assets.
The yield on interest earning assets decreased 11 basis points for the three
months ended September 30, 1998 as compared to the same period in 1997.
INTEREST EXPENSE
- ----------------
Total interest expense increased 4.7% for the three months ended September 30,
1998 as compared to the prior year period. This increase resulted in large part
from a $22,995,000 increase in short-term borrowings and long-term debt for the
three months ended September 30, 1998, as compared to the same period in 1997.
OTHER INCOME, OTHER EXPENSE AND INCOME TAXES
- --------------------------------------------
Total other income, excluding security transactions, increased 26.6% for the
three months ended September 30, 1998 as compared to the same period in 1997.
This was a combination of increased trust revenue, commissions and brokers'
fees, service charges on deposit accounts, and other service charges and fees.
Gains of $272,000 were recognized on the sale of $21,114,000 of pooled loans for
the three months ended September 30, 1998 as compared to gains of $176,000 on
the sale of $12,865,000 of pooled loans in the prior year period.
Total other expense increased 11.4% or $775,000 for the three months ended
September 30, 1998 as compared to the same period in 1997.
Page 13 of 22
<PAGE>
Salaries and wages expense increased $336,000 or 10.9% and employee benefits
expense increased $36,000 or 6.2% for the three months ended September 30, 1998,
as compared to the same period last year. Occupancy and furniture and
equipment expenses increased 26.0% to $1,264,000 for the three months ended
September 30, 1998 from $1,003,000 in the prior year period. Data processing
expense increased $48,000 or 10.3% to $513,000 for the three months ended
September 30, 1998 from the prior year period. Foreclosed property write-downs
and expenses increased $17,000 to $24,000 for the three months ended September
30, 1998 from the prior year period. Other operating expenses increased $57,000
to $1,240,000 for the three months ended September 30, 1998 from the prior year
period.
The consolidated efficiency ratio for the three months ended September 30, 1998
was 62.9% as compared to 61.7% for the prior year period. When the gains on the
sales of pooled loans are excluded, these ratios are 64.3% and 62.7%,
respectively. The change in the current year efficiency ratio is due to the
income and expense items noted above.
Income taxes for the three months ended September 30, 1998 increased to
$1,336,000 as compared to $1,129,000 for the comparable period in 1997. As a
percent of income before taxes, the provision for income taxes increased to
30.9% for the three months ended September 30, 1998 from 30.0% for the same
period in 1997.
LIQUIDITY
- ---------
Liquidity is the availability of funds to meet all present and future financial
obligations arising in the daily operations of the business at a minimal cost.
These financial obligations consist of needs for funds to meet extensions of
credit, deposit withdrawals and debt servicing.
The sources of short-term liquidity utilized by the Corporation consist of
non-reinvested asset maturities, deposits and capital funds. Long-term
liquidity needs will be satisfied primarily through retention of capital funds.
The Corporation does not deal in or use brokered deposits as a source of
liquidity. The Corporation generally does not rely upon the purchases of
federal funds for liquidity needs. Additional liquidity is provided by bank
lines of credit, repurchase agreements and the ability to borrow from the
Federal Reserve Bank. The Corporation has an operating line with American
National Bank and Trust Company of Chicago in the amount of $10,000,000 with
$5,000,000 available as of September 30, 1998.
The Corporation's dependence on large liabilities (defined as time deposits over
$100,000 and short-term borrowings) decreased to 10.9% at September 30, 1998
from 12.4% at December 31, 1997. This is the ratio of total large liabilities
to total liabilities, and is low in comparison to the Corporation's peers. This
decrease was due largely to a $16,953,000 decrease in time deposits over
$100,000 offset partially by a $9,000,000 increase in short-term debt which
resulted in a lower ratio of large liabilities to total liabilities.
CAPITAL RESOURCES
- -----------------
Other than from the issuance of common stock, the Corporation's primary source
of capital is retained net income. During the nine months ended September 30,
1998, the Corporation earned $8,701,000 and paid dividends of $4,004,000 to
stockholders, resulting in a retention of current earnings of $4,697.000. The
Corporation's dividend payout for the nine months ended September 30, 1998 was
46.0%. The Corporation's risk-based capital ratio was 13.66% and the leverage
ratio was 7.89% as of September 30, 1998, as compared to 13.01% and 7.61%
respectively as of December 31, 1997. The Corporation and its bank subsidiary
were well above all minimum required capital ratios as of September 30, 1998.
YEAR 2000 COMPLIANCE
- --------------------
The year 2000 poses a unique set of challenges to the Corporation. If not
effectively addressed, this problem could result in the production of inaccurate
data, or in the worst case, the inability of certain systems to function
altogether. Financial institutions are particularly vulnerable due to the
industry's dependence on electronic data processing systems.
Page 14 of 22
<PAGE>
In 1997, the Corporation started the process of identifying the hardware and
software systems required to be addressed to assure year 2000 compliance. The
corporation began by assessing the issues related to the year 2000 and the
potential for those issues to adversely affect the Corporation's own operations
and those of its subsidiaries.
Since that time, the Corporation has established a Year 2000 Compliance
Committee composed of associates from key areas throughout the organization. It
is the mission of this committee to identify areas subject to complications
related to the year 2000. The committee has identified all mission-critical
software and hardware that may be adversely affected by the year 2000 and either
upgraded, replaced, or eliminated them to make the Corporation compliant.
The Corporation has a goal that all mission-critical software and hardware be
renovated, tested, and implemented by April 1, 1999. A committee has been
formed to develop a contingency plan that will cover all possible scenarios
including the loss of power and telecommunications. The contingency plan will
be completed by December 31, 1998 and will be tested throughout 1999.
The committee has taken steps to educate customers and associates for the year
2000. Commercial loan customers have been asked to complete questionnaires
regarding their state of readiness for year 2000 compliance in an effort to
minimize loan losses due to this type of risk.
Management expects total expenditures related to the Year 2000 to be
approximately $4,000,000. Of this total, approximately $3,800,000 is related to
the purchase of equipment and software licensing for conversion from a
non-compliant outsourced data processing system to an in-house solution which is
Year 2000 compliant.
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 lead bank, Busey Bank, has an asset-liability committee which
meets monthly to review current market conditions and attempts to structure the
bank's balance sheet to ensure stable net interest income despite potential
changes in interest rates with all other variables constant.
The asset-liability committee uses gap analysis to identify mismatches in the
dollar value of assets and liabilities subject to repricing within specific time
periods. The Funds Management Policy established by the asset-liability
committee and approved by the Corporation's board of directors establishes
guidelines for maintaining the ratio of cumulative rate-sensitive assets to
rate-sensitive liabilities within prescribed ranges at certain intervals. A
summary of the Corporation's gap analysis is summarized on page 25.
The committee does not rely solely on gap analysis to manage interest-rate risk
as interest rate changes do not impact all categories of assets and liabilities
equally or simultaneously. The asset-liability committee supplements gap
analysis with balance sheet and income simulation analysis to determine the
potential impact on net interest income of changes in market interest rates.
In these simulation models the balance sheet is projected out over a one-year
period and net interest income is calculated under current market rates, and
then assuming
permanent instantaneous shifts in the yield curve of +/- 100 basis point 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 September 30, 1998, is as follows:
<TABLE>
<CAPTION>
Basis Point Changes
-----------------------------------------
-200 -100 +100 +200
-----------------------------------------
<S> <C> <C> <C> <C>
Percentage change in net interest income due to an immediate
change in interest over a one-year period (3.79%) (1.69%) 0.96% 1.23%
</TABLE>
Page 15 of 22
<PAGE>
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 September 30, 1998.
<TABLE>
<CAPTION>
Rate Sensitive Within
-----------------------------------------------------------------------
1-30 31-90 91-180 181 Days - Over
Days Days Days 1 Year 1 Year Total
-----------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Federal Funds Sold $ 27,950 $ 0 $ 0 $ 0 $ 0 $ 27,950
Investment securities
U.S. Governments 0 18,280 50,582 26,151 75,139 170,152
Obligations of states and
political subdivisions 942 3,574 309 50 29,702 34,577
Other securities 4,807 100 251 910 13,626 19,694
Loans (net of unearned int.) 170,327 32,165 54,970 100,966 275,615 634,043
-----------------------------------------------------------------------
Total rate-sensitive assets $ 204,026 $ 54,119 $ 106,112 $ 128,077 $394,082 $886,416
-----------------------------------------------------------------------
Interest bearing transaction
deposits $ 161,320 $ 0 $ 0 $ 0 $ 0 $161,320
Savings deposits 81,427 0 0 0 0 81,427
Money market deposits 142,374 0 0 0 0 142,374
Time deposits 45,796 52,783 73,698 87,526 93,263 25,000
Short-term borrowings:
Federal funds purchased &
repurchase agreements 0 0 0 0 0 0
Other 0 0 15,550 0 0 15,550
Long-term debt 0 0 0 0 25,000 25,000
-----------------------------------------------------------------------
Total rate-sensitive
liabilities $ 430,917 $ 52,783 $ 89,248 $ 87,526 $118,263 $778,737
-----------------------------------------------------------------------
Rate-sensitive assets less
rate-sensitive liabilities ($226,891) $ 1,336 $ 16,864 $ 40,551 $275,819 $107,679
-----------------------------------------------------------------------
Cumulative gap ($226,891) ($225,555) ($208,691) ($168,140) $107,679 $ -
=======================================================================
Cumulative gap as a
percentage of total
rate-sensitive assets -25.60% -25.45% -23.54% -18.97% 12.15%
=======================================================================
Cumulative ratio (cumulative
RSA/RSL) 0.47x 0.53x 0.64x 0.75x 1.14x 1.14x
=======================================================================
</TABLE>
The foregoing table shows a negative (liability sensitive) rate-sensitivity gap
of $226.891 million in the 1-30 day repricing category. The gap beyond 30 days
becomes slightly less liability sensitive as rate-sensitive assets that reprice
after 30 days are greater in volume than rate- sensitive liabilities that are
subject to repricing in the same respective time periods. The composition of the
gap structure at September 30, 1998, will benefit the Corporation more if
interest rates fall during the next 30 days by allowing the net interest margin
to grow as liability rates would reprice more quickly than rates on interest
rate-sensitive assets. After 30 days through one year, a rate change would have
little effect on the Corporation because the volume of rate-sensitive assets
repricing would be similar to the volume of rate-sensitive liabilities that
would be repricing.
Page 16 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND INTEREST RATES
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997
----------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold $ 17,677 $ 729 5.51% $ 5,962 $ 243 5.43%
Investment securities
U.S. Government obligations 169,331 7,320 5.78% 161,073 7,008 5.82%
Obligations of states and political
subdivisions(1) 32,801 1,969 8.03% 36,911 2,316 8.39%
Other securities 19,493 739 5.07% 21,077 761 4.83%
Loans (net of unearned interest)(1) (2) 616,573 40,535 8.79% 577,814 37,946 8.78%
------------------ ------------------
Total interest- earning assets $855,875 $51,292 8.01% $802,837 $48,274 8.04%
======= =======
Cash and due from banks 31,772 37,400
Premises and equipment 24,200 22,404
Reserve for possible loan losses (7,255) (6,421)
Other assets 18,062 18,023
--------- ---------
Total Assets $922,654 $874,243
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing transaction deposits $ 11,356 $ 169 2.00% $144,669 $ 2,128 1.97%
Savings deposits 80,624 1,996 3.31% 80,677 1,976 3.27%
Money market deposits 273,139 6,150 3.01% 120,514 3,338 3.70%
Time deposits 351,571 14,526 5.52% 355,573 14,707 5.53%
Short-term borrowings:
Federal funds purchased and
Repurchase agreements 1,112 44 5.25% 2,218 102 6.14%
Other 15,000 857 7.64% 6,500 346 7.11%
Long-term debt 21,721 892 5.49% 9,066 394 5.82%
------------------ ------------------
Total interest bearing liabilities $754,523 $24,634 4.37% $719,217 $22,991 4.27%
======= =======
----- -----
Net interest spread 3.64% 3.77%
===== =====
Demand deposits 79,451 72,733
Other liabilities 7,893 5,734
Stockholders' equity 80,787 76,559
--------- ---------
Total Liabilities and Stockholders' Equity $922,654 $874,243
========= =========
Interest income / earning assets(1) $855,875 $51,292 8.01% 802,837 48,274 8.04%
Interest expense / earning assets $855,875 24,634 3.85% 802,837 22,991 3.83%
----------------- -----------------
Net interest margin(1) $26,658 4.16% $25,283 4.21%
================= =================
<FN>
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35% for 1998 and 1997.
(2) Non-accrual loans have been included in average loans, net of unearned interest.
</TABLE>
Page 17 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CHANGES IN NET INTEREST INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Change due to (1)
Average Average Total
Volume Yield/Rate Change
-------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Increase (decrease) in interest income:
Federal funds sold $ 484 $ 2 $ 486
Investment securities:
U.S. Government obligations 357 (45) 312
Obligations of states and political
subdivisions(2) (250) (97) (347)
Other securities (66) 44 (22)
Loans(2) 2,549 40 2,589
-------------------------------------
Change in interest income(2) $ 3,074 ($56) $ 3,018
-------------------------------------
Increase (decrease) in interest expense:
Interest bearing transaction deposits ($1,990) $ 31 ($1,959)
Savings deposits (1) 21 20
Money market deposits 3,299 (487) 2,812
Time deposits (165) (16) (181)
Short-term borrowings:
Federal funds purchased and repurchase
agreements (45) (13) (58)
Other 484 27 511
Long-term debt 518 (20) 498
-------------------------------------
Change in interest expense $ 2,100 ($457) $ 1,643
-------------------------------------
Increase in net interest income(2) $ 974 $ 401 $ 1,375
=====================================
<FN>
(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35% for
1998 and 1997.
</TABLE>
Page 18 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND INTEREST RATES
QUARTERS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997
----------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold $ 9,536 $ 133 5.53% $ 6,751 $ 95 5.58%
Investment securities
U.S. Government obligations 170,732 2,470 5.74% 156,386 2,274 5.77%
Obligations of states and political
subdivisions(1) 33,444 666 7.90% 36,760 773 8.34%
Other securities 21,587 246 4.52% 21,991 254 4.59%
Loans (net of unearned interest)(1) (2) 632,909 13,843 8.68% 597,156 13,202 8.77%
------------------ ------------------
Total interest earning assets $868,208 $17,358 7.93% $819,044 $16,598 8.04%
======= =======
Cash and due from banks 32,248 35,744
Premises and equipment 25,080 22,739
Reserve for possible loan losses (7,316) (6,585)
Other assets 19,490 17,967
--------- ---------
Total Assets 937,710 $888,909
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing transaction deposits $ 11,422 $ 59 2.04% $142,741 $ 755 2.10%
Savings deposits 80,900 678 3.32% 77,851 649 3.31%
Money market deposits 283,673 2,213 3.10% 122,152 1,119 3.63%
Time deposits 347,998 4,810 5.48% 371,135 5,207 5.57%
Short-term borrowings:
Federal funds purchased and 2,760 36 5.18% 837 17 8.00%
repurchase agreements
Other 15,550 291 7.41% 6,000 111 7.36%
Long-term debt 21,522 296 5.46% 10,000 147 5.85%
------------------ ------------------
Total interest bearing liabilities $763,825 $ 8,383 4.35% $730,716 $ 8,005 4.35%
======= =======
Net interest spread 3.58% 3.69%
===== =====
Demand deposits 80,135 73,239
Other liabilities 8,439 5,836
Stockholders' equity 85,311 79,118
--------- ---------
Total Liabilities and Stockholders' Equity $937,710 $888,909
========= =========
Interest income / earning assets(1) $868,208 $17,358 7.93% $819,044 16,598 8.04%
Interest expense / earning assets 868,208 8,383 3.83% 819,044 8,005 3.88%
----------------- -----------------
Net interest margin(1) $ 8,975 4.10% 8,593 4.16%
================= =================
<FN>
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35% for 1998 and 1997.
(2) Non-accrual loans have been included in average loans, net of unearned interest.
</TABLE>
Page 19 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CHANGES IN NET INTEREST INCOME
QUARTERS ENDED SEPTEMBER 30, 1998 AND 1997
Change due to (1)
Average Average Total
Volume Yield/Rate Change
---------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Increase (decrease) in interest income:
Federal funds sold $ 40 ($2) $ 38
Investment securities:
U.S. Government obligations 207 (11) 196
Obligations of states and political
subdivisions(2) (68) (39) (107)
Other securities (4) (4) (8)
Loans(2) 780 (139) 641
---------------------------------
Change in interest income(2) $ 955 ($195) $ 760
---------------------------------
Increase (decrease) in interest expense:
Interest bearing transaction deposits ($676) ($20) ($696)
Savings deposits 25 4 29
Money market deposits 1,232 (138) 1,094
Time deposits (321) (76) (397)
Short-term borrowings:
Federal funds purchased and repurchase
agreements 23 (4) 19
Other 179 1 180
Long-term debt 158 (9) 149
---------------------------------
Change in interest expense $ 620 ($242) $ 378
---------------------------------
Increase in net interest income (2) $ 335 $ 47 $ 382
=================================
<FN>
(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35% for
1998 and 1997.
</TABLE>
Page 20 of 22
<PAGE>
PART II - OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
(a) There were no reports on Form 8-K filed during the three months
ending September 30, 1998.
Page 21 of 22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST BUSEY CORPORATION
(REGISTRANT)
By: //Douglas C. Mills//
----------------------------
Douglas C. Mills
Chairman of the Board
Chief Financial Officer
(Principal financial and accounting officer)
Date: November 13, 1998
Page 22 of 22
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 35,057
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 27,950
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 224,423
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 634,043
<ALLOWANCE> 7,306
<TOTAL-ASSETS> 958,550
<DEPOSITS> 824,016
<SHORT-TERM> 15,550
<LIABILITIES-OTHER> 7,888
<LONG-TERM> 25,000
0
0
<COMMON> 6,291
<OTHER-SE> 79,805
<TOTAL-LIABILITIES-AND-EQUITY> 958,550
<INTEREST-LOAN> 13,781
<INTEREST-INVEST> 3,148
<INTEREST-OTHER> 133
<INTEREST-TOTAL> 17,062
<INTEREST-DEPOSIT> 7,760
<INTEREST-EXPENSE> 8,383
<INTEREST-INCOME-NET> 8,679
<LOAN-LOSSES> 50
<SECURITIES-GAINS> 194
<EXPENSE-OTHER> 7,586
<INCOME-PRETAX> 4,325
<INCOME-PRE-EXTRAORDINARY> 2,989
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,989
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.21
<YIELD-ACTUAL> 7.93
<LOANS-NON> 464
<LOANS-PAST> 2,953
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 227
<ALLOWANCE-OPEN> 7,312
<CHARGE-OFFS> 111
<RECOVERIES> 55
<ALLOWANCE-CLOSE> 7,306
<ALLOWANCE-DOMESTIC> 6,948
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 358
</TABLE>
