The following is management's discussion and analysis of the financial condition of First Busey Corporation and subsidiaries (referred to herein as "First Busey", "Company", "we", or "our") at June 30, 2012 (unaudited), as compared with March 31, 2012 (unaudited) and December 31, 2011, and the results of operations for the three and six months ended June 30, 2012 and 2011 (unaudited) and the three months ended March 31, 2012 (unaudited) when applicable. Management's discussion and analysis should be read in conjunction with First Busey's consolidated financial statements and notes thereto appearing elsewhere in this quarterly report, as well as the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

EXECUTIVE SUMMARY

Operating Results

First Busey Corporation's net income for the second quarter of 2012 was $4.9 million and net income available to common stockholders was $4.0 million, or $0.05 per fully-diluted common share, as compared to net income of $7.4 million and net income available to common stockholders of $6.2 million, or $0.07 per fully-diluted common share for the second quarter of 2011. In comparison, the Company reported net income for the first quarter of 2012 of $7.6 million and net income available to common stockholders of $6.7 million, or $0.08 per fully-diluted common share.

While our expenses increased as we continued to build out the infrastructure to support our growth strategy, we were able to maintain stable revenue generation through diversified sources during the quarter. Total revenue, net of interest expense and security gains, for the second quarter of 2012 was $41.0 million, compared to $43.6 million for the first quarter of 2012 and $41.6 million for the second quarter of 2011. Net of private equity fund gains of $2.1 million recorded in the first quarter of 2012, revenue was relatively steady on both a linked-quarter and year-over-year basis. Quarterly revenue was further impacted by seasonal changes in agriculture-based trust fees, declining by $1.4 million on a linked quarter basis in 2012.

Busey Wealth Management's net income of $1.0 million for the second quarter of 2012 increased from $0.9 million for the first quarter of 2012, and was consistent with the amount earned in the second quarter of 2011. Busey Wealth Management's net income for the first six months of 2012 was $1.9 million as compared to $1.7 million for the first six months of 2011. FirsTech's net income of $0.2 million for the second quarter of 2012 slightly decreased from $0.3 million for the first quarter of 2012 and $0.4 million for the second quarter of 2011. FirsTech's net income for the first six months of 2012 was $0.5 million as compared to $0.9 million for the same period of 2011.

Operating performance highlights include:

† Net interest income declined to $25.3 million in the second quarter of 2012 compared to $25.7 million in the first quarter of 2012 and $27.8 million in the second quarter of 2011. Net interest income for the first six months of 2012 was $51.0 million compared to $56.2 million for the same period of 2011. Net interest income declines were driven by decreases in average loan volumes, which have prompted recent initiatives to guide quality asset growth. Additional liquidity generated by our growing deposit base has primarily been deployed into our investment portfolio.

† Net interest margin decreased to 3.21% for the second quarter of 2012 as compared to 3.31% for the first quarter of 2012 and 3.54% for the second quarter of 2011. The net interest margin for the first six months of 2012 decreased to 3.26% compared to 3.54% for the same period of 2011. The Company continues to experience downward pressure on its yield on interest-earning assets resulting from a protracted period of historically low rates and heightened competition for assets, which is being experienced throughout the banking industry.

† Our quarterly efficiency ratio increased to 69.68% for the second quarter of 2012 from 59.79% for the first quarter of 2012 and 57.80% for the second quarter of 2011 due to planned expense increases as part of our growth strategy and one-time charges totaling $1.0 million related to insurance and other benefits, other real estate owned and strategic technology initiatives. The efficiency ratio for the first six months of 2012 was 64.59%, as compared to 56.81% for the same period of 2011. Peer data from Federal Reserve system sources suggests that the Company has historically compared favorably to similarly-sized companies in terms of efficiency ratios, with averages for peers ranging between 65% and 67% during 2011 and the first quarter of 2012.

Asset Quality

While much internal focus is currently being directed toward organic growth, our commitment to credit quality and the strength of our balance sheet remains strong, as evidenced by another quarter of positive trends across a range of credit indicators. We expect to maintain gradual improvement in our overall asset quality during 2012; however, this continues to be dependent upon market-specific economic conditions. The key metrics are as follows:

† Non-performing loans decreased to $33.8 million at June 30, 2012 from $34.1 million at March 31, 2012 and $38.5 million at December 31, 2011.

† Illinois non-performing loans decreased to $20.6 million at June 30, 2012 from $20.9 million at March 31, 2012 and $23.0 million at December 31, 2011.

† Florida non-performing loans of $8.5 million at June 30, 2012 remained consistent with the amount recorded at March 31, 2012, but decreased from $10.8 million at December 31, 2011.

† Indiana non-performing loans of $4.7 million at June 30, 2012 remained consistent with the amount recorded at both March 31, 2012 and December 31, 2011.

† Loans 30-89 days past due decreased to $4.2 million at June 30, 2012 from $15.9 million at March 31, 2012 and $4.7 million at December 31, 2011. As previously disclosed, the primary reason for the increase in the first quarter of 2012 related to two large commercial credits which have since been sold or reclassified to non-performing.

† Other non-performing assets decreased to $7.8 million at June 30, 2012 from $8.7 million at March 31, 2012 and $8.5 million at December 31, 2011.

† The ratio of non-performing assets to total loans plus other non-performing assets at June 30, 2012 decreased to 2.05% from 2.13% at March 31, 2012 and 2.28% at December 31, 2011.

† The allowance for loan losses to non-performing loans ratio decreased to 150.42% at June 30, 2012 from 157.75% at March 31, 2012 and 151.91% at December 31, 2011.

† The allowance for loan losses to total loans ratio decreased to 2.52% at June 30, 2012 compared to 2.68% at March 31, 2012 and 2.85% at December 31, 2011.

† Net charge-offs of $7.5 million recorded in the second quarter of 2012 were lower than the $9.7 million recorded in the first quarter of 2012 and the $10.4 million recorded in the fourth quarter of 2011.

† Provision expense decreased to $4.5 million in the second quarter of 2012 from $5.0 million recorded in both the first quarter of 2012 and the fourth quarter of 2011.

Our priorities remain balance sheet strength, profitability and growth - in that order. Our results this quarter reflect the culmination of months of planning and focused effort to retool our teams and rebuild our balance sheet in constructive ways for the long-term benefit of the Company. We understood that this commitment would require the deployment of capital to support our investment in the future, and earnings thus far in 2012 have aligned with estimates of the short-term effects of our long-term strategy to maintain a strong balance sheet and support lasting profitability through carefully targeted growth.

Positive changes are occurring in our balance sheet, with the initial inflection of loan volumes in areas specifically targeted for growth and the consistent strengthening in our mix of funding through non-interest bearing deposits. Capital and asset quality continue to trend favorably, and the marriage of old competencies and new is melding together to create a more diverse organization.

Early stage success in building a stronger balance sheet structure is generally a positive leading indicator for future profitability. We are realistic that our strategies will take time to produce results and are working diligently to expand fee-based aspects of our business to counter headwinds the industry is collectively facing due to pressures on net interest margins.

Economic Conditions of Markets

The Illinois markets we operate in possess strong industrial, academic and healthcare employment bases. Our primary downstate Illinois markets of Champaign, Macon, McLean and Peoria counties are anchored by several strong, familiar and stable organizations. Although our downstate Illinois and Indiana markets experienced economic distress in recent years, they did not experience it to the level of many other areas, including our southwest Florida market. While future economic conditions remain uncertain, our markets have not experienced further significant downside impact over the past few years.

Champaign County is home to the University of Illinois - Urbana/Champaign ("U of I"), the University's primary campus. U of I has in excess of 42,000 students. Additionally, Champaign County healthcare providers serve a significant area of downstate Illinois and western Indiana. Macon County is home to Archer Daniels Midland ("ADM"), a Fortune 100 company and one of the largest agricultural processors in the world. ADM's presence in Macon County supports many derivative businesses in the agricultural processing arena. Additionally, Macon County is home to Millikin University, and its healthcare providers serve a significant role in the market. McLean County is home to State Farm, Country Financial, Illinois State University and Illinois Wesleyan University. State Farm, a Fortune 100 company, is the largest employer in McLean County, and Country Financial and the universities provide additional stability to a growing area of downstate Illinois. Peoria County is home to Caterpillar, a Fortune 100 company, and Bradley University, in addition to a large healthcare presence serving much of the western portion of downstate Illinois. The institutions noted above, coupled with a large agricultural sector, anchor the communities in which they are located, and have provided a comparatively stable foundation for housing, employment and small business.

The agriculture sector within our communities has been impacted by recent drought conditions and indirect economic influences are also likely to be felt in surrounding markets. Loans to finance agricultural production and other loans to farmers do not represent a significant portion of our total loan portfolio, with balances of $27.2 million or approximately 1% of total loans as of June 30, 2012. Additionally, loans secured by farmland totaled $41.2 million or approximately 2% of total loans for the same period. While adverse impacts of the drought are expected to be generally mitigated by insurance for our borrowers, the financial condition of these clients and the agriculture base in our communities will continue to be monitored by management for negative effects in upcoming periods.

Southwest Florida has shown signs of improvement in areas such as unemployment and home sales since 2011. As southwest Florida's economy is based primarily on tourism and the secondary/retirement residential market, significant declines in discretionary spending brought on by the difficult economic period since 2008 have caused significant damage to that economy and, the recent improvement in certain economic indicators notwithstanding, we expect it will take southwest Florida a number of years to return to the economic strength it demonstrated just a few years ago.

The largest portion of the Company's customer base is within the State of Illinois, the financial condition of which is among the most troubled of any state in the United States with severe pension under-funding, recurring bill payment delays, and budget gaps. Additionally, the Company is located in markets with significant universities and healthcare companies, which rely heavily on state funding and contracts. The State of Illinois continues to be significantly behind on payments to its vendors and government sponsored entities. Further and continued payment lapses by the State of Illinois to its vendors and government sponsored entities may have significant, negative effects on our primary market areas.

OPERATING PERFORMANCE

NET INTEREST INCOME

Net interest income is the difference between interest income and fees earned on earning assets and interest expense incurred on interest-bearing liabilities. Interest rate levels and volume fluctuations within earning assets and interest-bearing liabilities impact net interest income. Net interest margin is tax-equivalent net interest income as a percentage of average earning assets.

Certain assets with tax favorable treatment are evaluated on a tax-equivalent basis. Tax-equivalent basis assumes a federal income tax rate of 35%. Tax favorable assets generally have lower contractual pre-tax yields than fully taxable assets. A tax-equivalent analysis is performed by adding the tax savings to the earnings on tax favorable assets. After factoring in the tax favorable effects of these assets, the yields may be more appropriately evaluated against alternative earning assets. In addition to yield, various other risks are factored into the evaluation process.

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 the interest-bearing liabilities, and the related interest rates for the periods, or as of the dates, shown. All average information is provided on a daily average basis.

                   AVERAGE BALANCE SHEETS AND INTEREST RATES

                   THREE MONTHS ENDED JUNE 30, 2012 AND 2011



                                                                                                                Change in income/
                                       2012                                    2011                             expense due to (1)
                         Average       Income/      Yield/       Average       Income/      Yield/     Average       Average        Total
                         Balance       Expense     Rate (3)      Balance       Expense     Rate (3)     Volume      Yield/Rate      Change
                                                                      (dollars in thousands)
Assets
Interest-bearing
bank deposits          $    310,306    $    194        0.25 %  $    308,414    $    193        0.25 %  $      1    $          -    $      1
Investment
securities
U.S. Government
obligations                 461,684       2,076        1.81 %       395,315       2,433        2.47 %       363            (720 )      (357 )
Obligations of
states and
political
subdivisions(1)             202,080       1,590        3.16 %        78,727       1,041        5.30 %     1,102            (553 )       549
Other securities            280,572       1,323        1.90 %       227,932       1,397        2.46 %       283            (357 )       (74 )

Loans(1) (2)              1,984,721      24,610        4.99 %     2,199,573      29,261        5.34 %    (2,787 )        (1,864 )    (4,651 )
Total
interest-earning
assets                 $  3,239,363    $ 29,793        3.70 %  $  3,209,961    $ 34,325        4.29 %  $ (1,038 )  $     (3,494 )  $ (4,532 )

Cash and due from
banks                        75,776                                  74,096
Premises and
equipment                    69,871                                  72,030
Allowance for loan
losses                      (52,190 )                               (74,668 )
Other assets                188,980                                 209,818

Total Assets           $  3,521,800                            $  3,491,237

Liabilities and
Stockholders'
Equity
Interest-bearing
transaction
deposits               $     44,166    $     17        0.15 %  $     44,333    $     24        0.22 %  $      -    $         (7 )  $     (7 )
Savings deposits            199,475          72        0.15 %       192,325          81        0.17 %         3             (12 )        (9 )
Money market
deposits                  1,367,060         801        0.24 %     1,236,594         999        0.32 %        96            (294 )      (198 )
Time deposits               745,446       2,428        1.31 %       881,664       3,716        1.69 %      (524 )          (764 )    (1,288 )
Short-term
borrowings:
Repurchase
agreements                  129,690          76        0.24 %       123,473         100        0.32 %         5             (29 )       (24 )
Other                             -           9           - %             -          10           - %         -              (1 )        (1 )
Long-term debt               19,087         220        4.64 %        36,131         486        5.40 %      (205 )           (61 )      (266 )
Junior subordinated
debt owed to
unconsolidated
trusts                       55,000         328        2.40 %        55,000         616        4.49 %         -            (288 )      (288 )
Total
interest-bearing
liabilities            $  2,559,924    $  3,951        0.62 %  $  2,569,520    $  6,032        0.94 %  $   (625 )  $     (1,456 )  $ (2,081 )

Net interest spread                                    3.08 %                                  3.35 %

Noninterest-bearing
deposits                    522,026                                 468,220
Other liabilities            26,611                                  27,889
Stockholders'
equity                      413,239                                 425,608

Total Liabilities
and Stockholders'
Equity                 $  3,521,800                            $  3,491,237

Interest income /
earning assets(1)      $  3,239,363    $ 29,793        3.70 %  $  3,209,961    $ 34,325        4.29 %
Interest expense /
earning assets         $  3,239,363    $  3,951        0.49 %  $  3,209,961    $  6,032        0.75 %

Net interest margin
(1)                                    $ 25,842        3.21 %                  $ 28,293        3.54 %  $   (413 )  $     (2,038 )  $ (2,451 )

(2) Non-accrual loans have been included in average loans.

(3) Annualized.

                   AVERAGE BALANCE SHEETS AND INTEREST RATES

                    SIX MONTHS ENDED JUNE 30, 2012 AND 2011



                                                                                                                        Change in income/
                                        2012                                       2011                                 expense due to (1)
                          Average        Income/       Yield/        Average        Income/       Yield/      Average        Average         Total
                          Balance        Expense      Rate (3)       Balance        Expense      Rate (3)      Volume       Yield/Rate       Change
                                                                           (dollars in thousands)
Assets
Interest-bearing
bank deposits          $     296,201    $      371        0.25 %  $     333,576    $      414        0.25 %  $      (46 )  $          3    $      (43 )
Investment
securities
U.S. Government
obligations                  442,151         4,110        1.87 %        376,479         4,617        2.47 %         731          (1,238 )        (507 )
Obligations of
states and
political
subdivisions(1)              186,535         3,044        3.28 %         77,678         2,126        5.52 %       2,053          (1,135 )         918
Other securities             279,702         2,661        1.91 %        216,932         2,685        2.50 %         682            (706 )         (24 )

Loans(1) (2)               2,006,716        50,240        5.03 %      2,247,132        59,858        5.37 %      (6,063 )        (3,555 )      (9,618 )
Total
interest-earning
assets                 $   3,211,305    $   60,426        3.78 %  $   3,251,797    $   69,700        4.32 %  $   (2,643 )  $     (6,631 )  $   (9,274 )

Cash and due from
banks                         77,187                                     76,325
Premises and
equipment                     69,758                                     72,547
Allowance for loan
losses                       (54,878 )                                  (75,837 )
Other assets                 190,231                                    215,567

Total Assets           $   3,493,603                              $   3,540,399

Liabilities and
Stockholders'
Equity
Interest-bearing
transaction
deposits               $      41,620    $       38        0.18 %  $      40,349    $       47        0.23 %  $        1    $        (10 )  $       (9 )
Savings deposits             196,867           148        0.15 %        190,489           162        0.17 %           5             (19 )         (14 )
Money market
deposits                   1,332,759         1,700        0.26 %      1,233,565         1,999        0.33 %         153            (452 )        (299 )
Time deposits                763,661         5,180        1.36 %        922,556         7,871        1.72 %      (1,221 )        (1,470 )      (2,691 )
Short-term
borrowings:
Repurchase
agreements                   133,851           154        0.23 %        131,409           211        0.32 %           4             (61 )         (57 )
Other                              -            18           - %              -            20           - %           -              (2 )          (2 )
Long-term debt                19,252           446        4.66 %         38,369           982        5.16 %        (448 )           (88 )        (536 )
Junior subordinated
debt owed to
unconsolidated
trusts                        55,000           665        2.43 %         55,000         1,299        4.76 %           -            (634 )        (634 )
Total
interest-bearing
liabilities            $   2,543,010    $    8,349        0.66 %  $   2,611,737    $   12,591        0.97 %  $   (1,506 )  $     (2,736 )  $   (4,242 )

Net interest spread                                       3.12 %                                     3.35 %

Noninterest-bearing
deposits                     512,077                                    473,659
Other liabilities             26,732                                     31,695
Stockholders'
equity                       411,784                                    423,308

Total Liabilities
and Stockholders'
Equity                 $   3,493,603                              $   3,540,399

Interest income /
earning assets(1)      $   3,211,305    $   60,426        3.78 %  $   3,251,797    $   69,700        4.32 %
Interest expense /
earning assets         $   3,211,305    $    8,349        0.52 %  $   3,251,797    $   12,591        0.78 %

Net interest margin
(1)                                     $   52,077        3.26 %                   $   57,109        3.54 %  $   (1,137 )  $     (3,895 )  $   (5,032 )

(2) Non-accrual loans have been included in average loans.

(3) Annualized.

Average earning assets increased for the three month period ended June 30, 2012 as compared to the same period of 2011; however, average earning assets decreased for the six month period ended June 30, 2012 as compared to the same period of 2011. Average loans declined $214.9 million and $240.4 million for the three and six month periods ended June 30, 2012, respectively. These declines are the primary reason that the Company is creating a strong focus around rebuilding the loan portfolio with new assets and have created the impetus behind the recent investment in tools and talent to support organic growth. Securities increased by $242.3 million and $237.3 million for the three and six month periods ended June 30, 2012, respectively, which generally offset the declines in average loans; however, at a much lower yield. Interest-bearing liabilities decreased for the three and six month periods ended June 30, 2012 as compared to the same periods of 2011 due to a focus on reducing more expensive non-core funding, which we were able to do in light of the decrease in our average loans and a continued increase in our average core deposits.

Interest income, on a tax-equivalent basis, decreased $4.5 million and $9.3 million for the three and six month periods ended June 30, 2012, respectively, as compared to the same periods of 2011. The interest income declines partially related to the decreases in loan volume. Interest expense decreased $2.1 million and $4.2 million for the three and six month periods ended June 30, 2012, respectively, as compared to the same periods of 2011, partially as a result of reductions in all non-core funding sources. In addition, the decreases in interest income and expense from average yield/rate was due to the repricing of instruments at lower market rates based on a declining interest rate environment and changes in the composition of assets and liabilities.

Net interest margin

Net interest margin, our net interest income expressed as a percentage of average earning assets stated on a tax-equivalent basis, decreased to 3.21% for the three month period ended June 30, 2012 from 3.54% for the same period in 2011 and decreased to 3.26% for the six month period ended June 30, 2012 from 3.54% for the same period in 2011.

Quarterly net interest margins for 2012 and 2011 are as follows:

                 2012   2011
First Quarter    3.31 % 3.55 %
Second Quarter   3.21 % 3.54 %
Third Quarter       -   3.57 %
Fourth Quarter      -   3.44 %

The net interest spread, also on a tax-equivalent basis, was 3.08% for the three month period ended June 30, 2012, compared to 3.35% for the same period in 2011 and was 3.12% for the six months ended June 30, 2012 compared to 3.35% for the same period in 2011.

We continue to experience downward pressure on our yield in interest-earning assets. We have limited ability to improve margin through funding rate decreases and we believe improvements in margin will be achieved in the short term through redeployment of our liquid funds at higher yields. The Company is prioritizing efforts to support organic growth of high quality loans in 2012 through active investment in sales talent and more robust, dynamic relationship building.

Management attempts to mitigate the effects of an unpredictable interest-rate environment through effective portfolio management, prudent loan underwriting and operational efficiencies. Please refer to the Notes to Consolidated Financial Statement in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 for accounting policies underlying the recognition of interest income and expense.

. . .