Edgar Filing: MAIN STREET TRUST INC

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2006

Commission File Number: 33-90342

MAIN STREET TRUST, INC.
(Exact name of registrant as specified in its charter)

Illinois 37-1338484
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(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)

100 West University, Champaign, Illinois 61820
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(Address of principal executive offices) (Zip Code)

(217) 351-6500
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of Each Class on which registered
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None None

Securities registered pursuant to Section 12(g)of the Act:

Common Stock, $.01 par value per share
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(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.

Yes No X
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Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes No X
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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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of 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 amendments to
this Form 10-K.
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Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer Accelerated filer X Non-accelerated filer
--- --- ---

Indicate by check mark whether the registrant is a shell company (as defined by
Exchange Act Rule 12b-2).

Yes No X
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1

As of March 6, 2007, the Registrant had issued and outstanding 10,033,986 shares
of the Registrant's Common Stock.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant, based on the last reported price on June 30,
2006, the last business day of the registrant's most recently completed second
fiscal quarter, was approximately $211,790,078*.

* Based on the last reported price ($30.50) of an actual transaction in
Registrant's Common Stock on June 30, 2006, and reports of beneficial
ownership filed by directors and executive officers of Registrant and by
beneficial owners of more than 5% of the outstanding shares of Common Stock
of Registrant; however, such determination of shares owned by affiliates
does not constitute an admission of affiliate status or beneficial interest
in shares of Registrant's Common Stock.

Documents Incorporated By Reference

None.

MAIN STREET TRUST, INC.

Form 10-K Annual Report

Table of Contents

Part I

Item 1. Description of Business 4

A. General
B. Business of the Company and Subsidiaries
C. Competition
D. Monetary Policy and Economic Conditions
E. Supervision and Regulation
F. Employees
G. Internet Website

Item 1a. Risk Factors 11

Item 1b. Unresolved Staff Comments 16

Item 2. Properties 16

Item 3. Legal Proceedings 16

Item 4. Submission of Matters to a Vote of Security Holders 16

Part II

Item 5. Market for Registrant's Common Equity and
Related Shareholder Matters 17

Item 6. Selected Consolidated Financial Data 18

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 19

Item 7a. Quantitative and Qualitative Disclosures about Market Risk 40

Item 8. Financial Statements and Supplementary Data 41

Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 74

Item 9a. Controls and Procedures 74

Item 9b. Other Information 76

Part III

Item 10. Directors, Executive Officers and Corporate Governance 77

Item 11. Executive Compensation 79

Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Shareholder Matters 94

Item 13. Certain Relationships and Related Transactions, and
Director Independence 96

Item 14. Principal Accountant Fees and Services 97

Part IV

Item 15. Exhibits and Financial Statement Schedules 98

PART I

Item 1. Description of Business

A. General

MAIN STREET TRUST, INC. (the "Company"), an Illinois corporation, is a bank
holding company registered under the Bank Holding Company Act of 1956, as
amended (the "BHCA"). The Company was incorporated on August 12, 1999, and is
the parent company of Main Street Bank & Trust and FirsTech, Inc.

On March 23, 2000, the Company acquired all of the outstanding stock of
BankIllinois, The First National Bank of Decatur, First Trust Bank of
Shelbyville and FirsTech, Inc. following the merger of BankIllinois Financial
Corporation and First Decatur Bancshares, Inc. into the Company. The merger,
which was accounted for as a pooling of interests, was completed on March 23,
2000. The Company subsequently merged the Company's former banking subsidiary,
First Trust Bank of Shelbyville, into BankIllinois effective June 19, 2002. On
November 10, 2004, the Company merged The First National Bank of Decatur into
BankIllinois and renamed the bank Main Street Bank & Trust.

On September 21, 2006, the Company announced its intent to merge with First
Busey Corporation in Urbana, Illinois. The combined company will operate under
the name First Busey Corporation and will list its common stock on the Nasdaq
Global Select Market and trade under the symbol BUSE. Under terms of the
agreement, Main Street shareholders will receive shares of First Busey common
stock, using a fixed exchange ratio of 1.55 shares of First Busey common stock
for each share of Main Street common stock. As of December 31, 2006, First Busey
Corporation had consolidated assets of $2.510 billion, consolidated total
deposits of $2.015 billion and consolidated stockholders equity of $185.274
million. At separate special meetings of their respective shareholders on
February 28, 2007, a majority of the shareholders of Main Street and First Busey
voted to approve the merger. The merger is still subject to regulatory approval
and other customary conditions. The transaction is expected to be completed
during the second quarter of 2007. Following the merger of the two holding
companies, it will be their intent to merge their Illinois-based banking
subsidiaries, Busey Bank and Main Street Bank & Trust. The two banks will be
merged under Busey Bank's state charter, and the bank name will remain Busey
Bank.

B. Business of the Company and Subsidiaries

General

The Company conducts the business of banking and offers trust services through
Main Street Bank & Trust ("the Bank"), and retail payment processing through
FirsTech, Inc., its wholly owned subsidiaries. As of December 31, 2006, the
Company had consolidated total assets of $1.537 billion, shareholders' equity of
$150.355 million and Wealth Management assets under administration of
approximately $2.345 billion. Substantially all of the income of the Company is
currently derived from dividends received from the subsidiaries and income from
other investments. The amount of these dividends is directly related to the
earnings of the subsidiaries and is subject to various regulatory restrictions.
See "Regulation and Supervision".

Banking Segment

The Bank conducts a general banking business embracing most of the services,
both consumer and commercial, which banks may lawfully provide, including the
following principal services: the acceptance of deposits to demand, savings,
time and individual retirement accounts and the servicing of such accounts;
commercial, consumer and real estate lending, including installment loans and
personal lines of credit; safe deposit operations; and additional services
tailored to the needs of individual customers, such as the sale of traveler's
checks, cashier's checks and other specialized services. The Company offers
personalized financial planning services through Raymond James, which services
include a broad spectrum of investment products, including stocks, bonds, mutual
funds and tax advantaged investments. In addition, the Wealth Management
division offers a wide range of services such as investment management, acting
as trustee, serving as guardian, executor or agent, farm management, 401K
administration and miscellaneous consulting.

Commercial lending at the Bank covers such categories as agriculture,
manufacturing, capital, inventory, construction, real estate development and
commercial mortgages. Commercial lending, particularly loans to small and medium
sized businesses, accounts for a major portion of the Bank's loan portfolios.
The Bank's retail banking division makes loans to consumers for various
purposes, including home equity and automobile loans. The consumer mortgage loan
department, which is part of the retail banking division, specializes in real
estate loans to individuals. The Bank also purchases installment obligations
from retailers, primarily without recourse.

The Bank's principal sources of income are interest and fees on loans and
investments and service fees. Its principal expenses are interest paid on
deposits and general operating expenses. The Bank's primary service area is
Central Illinois.

Remittance Services Segment

FirsTech, Inc. provides the following services to electric, water and gas
utilities, telecommunication companies, cable television firms and charitable
organizations: retail lockbox processing of payments delivered by mail on behalf
of the biller; online payments processed through a biller's web site, electronic
processing of payments delivered by customers to pay agents such as grocery
stores, convenience stores and currency exchanges; concentration of payments
delivered by the Automated Clearing House network, and payments processed
through networks such as Mastercard RPS. For the years ended December 31, 2006,
2005 and 2004, FirsTech accounted for $7.7 million (7%), $6.9 million (7%) and
$7.3 million (10%), respectively, of the consolidated total revenues of the
Company and accounted for $3.1 million (11%), $2.6 million (9%), and $2.3
million (10%), respectively, of the consolidated income before income tax of the
Company. See Note 1 to the Consolidated Financial Statements for an analysis of
segment operations.

Over the past three years, FirsTech's sources of processing revenue have shifted
toward the processing of in-person payments through paying agents. FirsTech's
retail lockbox processing for organizations provided approximately 19%, 20% and
30% of the total revenue of FirsTech in 2006, 2005 and 2004. FirsTech processes
payments delivered by customers to pay agents. Many businesses and merchants
such as grocery stores and convenience stores located throughout the United
States serve as agents of utilities in collecting customer payments. In 2006,
2005 and 2004, the remittance collection business for these companies accounted
for approximately 76%, 79% and 69%, respectively, of the total revenue of
FirsTech.

In June of 2006, FirsTech began offering its new Online Bill Pay product which
generated $123,000 during the remainder of the year. Management expects that
this new product will generate new revenue opportunities as more consumers
migrate towards more automated payment options.

FirsTech has leased office space in Clayton, Missouri due to the expansion of
existing customer relationships and the development of new clients. It will also
serve as a back up processing facility.

FirsTech competes in the retail payment processing business with companies that
range from large national companies to small, local businesses. In addition,
many companies do their own remittance processing rather than out-source the
work to an independent processor such as FirsTech. The principal methods of
competition in the remittance processing industry are pricing of services, use
of technology and quality of service.

C. Competition

The Company faces strong competition both in originating loans and in attracting
deposits. Competition in originating real estate loans comes primarily from
other commercial banks, savings institutions and mortgage bankers making loans
secured by real estate located in the Company's market area. Commercial banks
and finance companies, including finance company affiliates of automobile
manufacturers, provide vigorous competition in consumer lending. In addition to
competition from the local market, the Company faces competition from large
national organizations, such as financial organizations and insurance companies,
for large commercial real estate loans. The Company competes for real estate and
other loans primarily on the basis of the interest rates and loan fees it
charges, the types of loans it originates and the quality of services it
provides to borrowers.

The Company faces substantial competition in attracting deposits from other
commercial banks, savings institutions, money market and mutual funds, credit
unions, insurance agencies, brokerage firms, and other investment vehicles. The
ability of the Company to attract and retain deposits depends on its ability to
provide investment opportunities that satisfy the requirements of investors as
to rate of return, liquidity, risk and other factors. The Company attracts a
significant amount of deposits through its branch offices, primarily from the
communities in which those branch offices are located; therefore, competition
for those deposits is principally from other commercial banks, savings
institutions, and credit unions located in the same communities. The Company
competes for these deposits by offering a variety of deposit accounts at
competitive rates, convenient business hours, internet banking, and convenient
branch locations with interbranch deposit and withdrawal privileges at each.

Under the Gramm-Leach-Bliley Act, which was enacted in 2000, securities firms
and insurance companies that elect to become financial holding companies may
acquire banks and other financial institutions. Although the Company has seen no
significant impact from this change, it has the potential to change the
competitive environment in which the Company and the Bank conduct business. The
financial services industry is also likely to become more competitive as further
technological advances enable more companies to provide financial services.
These technological advances may diminish the importance of depository
institutions and other financial intermediaries in the transfer of funds between
parties.

D. Monetary Policy and Economic Conditions

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 agencies. In particular, the Federal Reserve regulates
money and credit conditions and interest rates in order to influence general
economic conditions and interest rates, primarily through open market operations
in U.S. government securities, varying the discount rate on member banks and
nonmember bank borrowings and setting reserve requirements against bank
deposits. Such Federal Reserve policies and acts have a significant influence on
overall growth and distribution of bank loans, investments, deposits and related
interest rates. The Company cannot accurately predict the effect, if any, such
policies and acts may have in the future on its business or earnings.

E. Supervision and Regulation

General

Financial institutions, their holding companies and their affiliates are
extensively regulated under federal and state law. As a result, the growth and
earnings performance of the Company may be affected not only by management
decisions and general economic conditions, but also by the requirements of
federal and state statutes and by the regulations and policies of various bank
regulatory authorities, including the Illinois Department of Financial and
Professional Regulation (the "DFPR"), the Board of Governors of the Federal
Reserve System (the "Federal Reserve") and the Federal Deposit Insurance
Corporation (the "FDIC"). Furthermore, taxation laws administered by the
Internal Revenue Service and state taxing authorities and securities laws
administered by the Securities and Exchange Commission (the "SEC") and state
securities authorities have an impact on the business of the Company. The effect
of these statutes, regulations and regulatory policies may be significant, and
cannot be predicted with a high degree of certainty.

Federal and state laws and regulations generally applicable to financial
institutions regulate, among other things, the scope of business, the kinds and
amounts of investments, reserve requirements, capital levels relative to
operations, the nature and amount of collateral for loans, the establishment of
branches, mergers and consolidations and the payment of dividends. This system
of supervision and regulation establishes a comprehensive framework for the
respective operations of the Company and its subsidiaries and is intended
primarily for the protection of the FDIC-insured deposits and depositors of the
Bank, rather than shareholders.

The following is a summary of the material elements of the regulatory framework
that applies to the Company and its subsidiaries. It does not describe all of
the statutes, regulations and regulatory policies that apply, nor does it
restate all of the requirements of those that are described. As such, the
following is qualified in its entirety by reference to applicable law. Any
change in statutes, regulations or regulatory policies may have a material
effect on the business of the Company and its subsidiaries.

The Company

General. The Company, as the sole shareholder of the Bank, is a bank holding
company. As a bank holding company, the Company is registered with, and is
subject to regulation by, the Federal Reserve under the Bank Holding Company Act
of 1956, as amended (the "BHCA"). In accordance with Federal Reserve policy, the
Company is expected to act as a source of financial strength to the Bank and to
commit resources to support the Bank in circumstances where the Company might
not otherwise do so. Under the BHCA, the Company is subject to periodic
examination by the Federal Reserve. The Company is also required to file with
the Federal Reserve periodic reports of the Company's operations and such
additional information regarding the Company and its subsidiaries as the Federal
Reserve may require.

Acquisitions, Activities and Change in Control. The primary purpose of a bank
holding company is to control and manage banks. The BHCA generally requires the
prior approval of the Federal Reserve for any merger involving a bank holding
company or any acquisition by a bank holding company of another bank or bank
holding company. Subject to certain conditions (including deposit concentration
limits established by the BHCA), the Federal Reserve may allow a bank holding
company to acquire banks located in any state of the United States. In approving
interstate acquisitions, the Federal Reserve is required to give effect to
applicable state law limitations on the aggregate amount of deposits that may be
held by the acquiring bank holding company and its insured depository
institution affiliates in the state in which the target bank is located
(provided that those limits do not discriminate against out-of-state depository
institutions or their holding companies) and state laws that require that the
target bank have been in existence for a minimum period of time (not to exceed
five years) before being acquired by an out-of-state bank holding company.

The BHCA generally prohibits the Company from acquiring direct or indirect
ownership or control of more than 5% of the voting shares of any company that is
not a bank and from engaging in any business other than that of banking,
managing and controlling banks or furnishing services to banks and their
subsidiaries. This general prohibition is subject to a number of exceptions. The
principal exception allows bank holding companies to engage in, and to own
shares of companies engaged in, certain businesses found by the Federal Reserve
to be "so closely related to banking ... as to be a proper incident thereto."
This authority would permit the Company to engage in a variety of
banking-related businesses, including the operation of a thrift, consumer
finance, equipment leasing, the operation of a computer service bureau
(including software development), and mortgage banking and brokerage. The BHCA
generally does not place territorial restrictions on the domestic activities of
non-bank subsidiaries of bank holding companies.

Additionally, bank holding companies that meet certain eligibility requirements
prescribed by the BHCA and elect to operate as financial holding companies may
engage in, or own shares in companies engaged in, a wider range of nonbanking
activities, including securities and insurance underwriting and sales, merchant
banking and any other activity that the Federal Reserve, in consultation with
the Secretary of the Treasury, determines by regulation or order is financial in
nature, incidental to any such financial activity or complementary to any such
financial activity and does not pose a substantial risk to the safety or
soundness of depository institutions or the financial system generally. The
Company has elected (and the Federal Reserve has accepted the Company's
election) to operate as a financial holding company.

Federal law also prohibits any person or company from acquiring "control" of an
FDIC-insured depository institution or its holding company without prior notice
to the appropriate federal bank regulator. "Control" is conclusively presumed to
exist upon the acquisition of 25% or more of the outstanding voting securities
of a bank or bank holding company, but may arise under certain circumstances at
10% ownership.

Capital Requirements. Bank holding companies are required to maintain minimum
levels of capital in accordance with Federal Reserve capital adequacy
guidelines. If capital levels fall below the minimum required levels, a bank
holding company, among other things, may be denied approval to acquire or
establish additional banks or non-bank businesses.

The Federal Reserve's capital guidelines establish the following minimum
regulatory capital requirements for bank holding companies: (i) a risk-based
requirement expressed as a percentage of total assets weighted according to
risk; and (ii) a leverage requirement expressed as a percentage of total assets.
The risk-based requirement consists of a minimum ratio of total capital to total
risk-weighted assets of 8% and a minimum ratio of Tier 1 capital to total
risk-weighted assets of 4%. The leverage requirement consists of a minimum ratio
of Tier 1 capital to total assets of 3% for the most highly rated companies,
with a minimum requirement of 4% for all others. For purposes of these capital
standards, Tier 1 capital consists primarily of permanent stockholders' equity
less intangible assets (other than certain loan servicing rights and purchased
credit card relationships). Total capital consists primarily of Tier 1 capital
plus certain other debt and equity instruments that do not qualify as Tier 1
capital and a portion of the company's allowance for loan and lease losses.

The risk-based and leverage standards described above are minimum requirements.
Higher capital levels will be required if warranted by the particular
circumstances or risk profiles of individual banking organizations. For example,
the Federal Reserve's capital guidelines contemplate that additional capital may
be required to take adequate account of, among other things, interest rate risk,
or the risks posed by concentrations of credit, nontraditional activities or
securities trading activities. Further, any banking organization experiencing or
anticipating significant growth would be expected to maintain capital ratios,
including tangible capital positions (i.e., Tier 1 capital less all intangible
assets), well above the minimum levels. As of December 31, 2006, the Company had
regulatory capital in excess of the Federal Reserve's minimum requirements.

Dividend Payments. The Company's ability to pay dividends to its shareholders
may be affected by both general corporate law considerations and policies of the
Federal Reserve applicable to bank holding companies. As an Illinois
corporation, the Company is subject to the limitations of the Illinois Business
Corporation Act, as amended, which prohibit the Company from paying a dividend
if, after giving effect to the dividend: (i) the Company would be insolvent; or
(ii) the net assets of the Company would be less than zero; or (iii) the net
assets of the Company would be less than the maximum amount then payable to
shareholders of the Company who would have preferential distribution rights if
the Company were liquidated. Additionally, policies of the Federal Reserve
caution that a bank holding company should not pay cash dividends unless its net
income available to common shareholders over the past year has been sufficient
to fully fund the dividends and the prospective rate of earnings retention
appears consistent with its capital needs, asset quality, and overall financial
condition. The Federal Reserve also possesses enforcement powers over bank
holding companies and their non-bank subsidiaries to prevent or remedy actions
that represent unsafe or unsound practices or violations of applicable statutes
and regulations. Among these powers is the ability to proscribe the payment of
dividends by banks and bank holding companies.

Federal Securities Regulation. The Company's common stock is registered with the
SEC under the Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Consequently, the Company is
subject to the information, proxy solicitation, insider trading and other
restrictions and requirements of the SEC under the Exchange Act.

The Bank

General. The Bank is an Illinois-chartered bank, the deposit accounts of which
are insured by the FDIC's Deposit Insurance Fund ("DIF"). As an
Illinois-chartered FDIC-insured bank, the Bank is subject to the examination,
supervision, reporting and enforcement requirements of the DFPR, the chartering
authority for Illinois banks, and the FDIC, designated by federal law as the
primary federal regulator of insured state banks that, like the Bank, are not
members of the Federal Reserve System ("non-member banks"). The Bank is a member
of the Federal Home Loan Bank System, which provides a central credit facility
primarily for member institutions.

Deposit Insurance. As an FDIC-insured institution, the Bank is required to pay
deposit insurance premium assessments to the FDIC. The FDIC has adopted a
risk-based assessment system under which insured depository institutions are
assigned to one of four risk assessment categories based upon their respective
levels of capital, supervisory evaluations and other financial factors.
Institutions that are well-capitalized and exhibit minimal or no supervisory
weaknesses pay the lowest premium while institutions that are less than
adequately capitalized and considered of substantial supervisory concern pay the
highest premium. An institution's risk-classification is determined by the FDIC.

For the past several years, FDIC insurance assessments ranged from 0% to 0.27%
of total deposits. Pursuant to regulatory amendments adopted by the FDIC,
effective January 1, 2007, insurance assessments will range from 0.05% to 0.43%
of total deposits (unless subsequently adjusted by the FDIC). FDIC-insured
institutions that were in existence as of December 31, 1996, and paid an
FDIC-insurance assessment prior to that date ("eligible institutions"), as well
as successors to eligible institutions, will be entitled to a credit that may be
applied to offset insurance premium assessments due for assessment periods
beginning on and after January 1, 2007. The amount of an eligible institution's
assessment credit will be equal to the institution's pro rata share (based on
its assessment base as of December 31, 1996, as compared to the aggregate
assessment base of all eligible institutions as of December 31, 1996) of the
aggregate amount the FDIC would have collected if it had imposed an assessment
of 10.5 basis points on the combined assessment base of all institutions insured
by the FDIC as of December 31, 2001. Subject to certain statutory limitations,
an institution's assessment credit may be applied to offset the full amount of
premiums assessed in 2007, but may not be applied to more than 90% of the
premiums assessed in 2008, 2009 or 2010. The FDIC will track the amount of an
institution's assessment credit and automatically apply it to the institution's
premium assessment to the maximum extent permitted by federal law.

FICO Assessments. The Financing Corporation ("FICO") is a mixed-ownership
governmental corporation chartered by the former Federal Home Loan Bank Board
pursuant to the Federal Savings and Loan Insurance Corporation Recapitalization
Act of 1987 to function as a financing vehicle for the recapitalization of the
former Federal Savings and Loan Insurance Corporation. FICO issued 30-year
non-callable bonds of approximately $8.2 billion that mature by 2019. Since
1996, federal legislation has required that all FDIC-insured depository
institutions pay assessments to cover interest payments on FICO's outstanding
obligations. These FICO assessments are in addition to amounts assessed by the
FDIC for deposit insurance. During the year ended December 31, 2006, the FICO
assessment rate was approximately 0.01% of deposits.

Supervisory Assessments. All Illinois banks are required to pay supervisory
assessments to the DFPR to fund its operations. The amount of the assessment
paid by an Illinois bank to the DFPR is calculated on the basis of the
institution's total assets, including consolidated subsidiaries, as reported to
the DFPR. During the year ended December 31, 2006, the Bank paid supervisory
assessments to the DFPR totaling $164,000.

Capital Requirements. Banks are generally required to maintain capital levels in
excess of other businesses. The FDIC has established the following minimum
capital standards for insured state non-member banks, such as the Bank: (i) a
leverage requirement consisting of a minimum ratio of Tier 1 capital to total
assets of 3% for the most highly-rated banks with a minimum requirement of at
least 4% for all others; and (ii) a risk-based capital requirement consisting of
a minimum ratio of total capital to total risk-weighted assets of 8% and a
minimum ratio of Tier 1 capital to total risk-weighted assets of 4%. In general,
the components of Tier 1 capital and total capital are the same as those for
bank holding companies discussed above.

The capital requirements described above are minimum requirements. Higher
capital levels will be required if warranted by the particular circumstances or
risk profiles of individual institutions. For example, regulations of the FDIC
provide that additional capital may be required to take adequate account of,
among other things, interest rate risk or the risks posed by concentrations of
credit, nontraditional activities or securities trading activities.

Further, federal law and regulations provide various incentives for financial
institutions to maintain regulatory capital at levels in excess of minimum
regulatory requirements. For example, a financial institution that is
"well-capitalized" may qualify for exemptions from prior notice or application
requirements otherwise applicable to certain types of activities and may qualify
for expedited processing of other required notices or applications.
Additionally, one of the criteria that determines a bank holding company's
eligibility to operate as a financial holding company is a requirement that all
of its financial institution subsidiaries be "well-capitalized." Under the
regulations of the FDIC, in order to be "well-capitalized" a financial
institution must maintain a ratio of total capital to total risk-weighted assets
of 10% or greater, a ratio of Tier 1 capital to total risk-weighted assets of 6%
or greater and a ratio of Tier 1 capital to total assets of 5% or greater.

Federal law also provides the federal banking regulators with broad power to
take prompt corrective action to resolve the problems of undercapitalized
institutions. The extent of the regulators' powers depends on whether the
institution in question is "adequately capitalized," "undercapitalized,"
"significantly undercapitalized" or "critically undercapitalized," in each case
as defined by regulation. Depending upon the capital category to which an
institution is assigned, the regulators' corrective powers include: (i)
requiring the institution to submit a capital restoration plan; (ii) limiting
the institution's asset growth and restricting its activities; (iii) requiring
the institution to issue additional capital stock (including additional voting
stock) or to be acquired; (iv) restricting transactions between the institution
and its affiliates; (v) restricting the interest rate the institution may pay on
deposits; (vi) ordering a new election of directors of the institution; (vii)
requiring that senior executive officers or directors be dismissed; (viii)
prohibiting the institution from accepting deposits from correspondent banks;
(ix) requiring the institution to divest certain subsidiaries; (x) prohibiting
the payment of principal or interest on subordinated debt; and (xi) ultimately,
appointing a receiver for the institution.

As of December 31, 2006: (i) the Bank was not subject to a directive from the
FDIC to increase its capital to an amount in excess of the minimum regulatory
capital requirements; (ii) the Bank exceeded its minimum regulatory capital
requirements under FDIC capital adequacy guidelines; and (iii) the Bank was
"well-capitalized," as defined by applicable regulations.

Dividend Payments. The primary source of funds for the Company is dividends from
the Bank. Under the Illinois Banking Act, the Bank generally may not pay
dividends in excess of its net profits.

The payment of dividends by any financial institution is affected by the
requirement to maintain adequate capital pursuant to applicable capital adequacy
guidelines and regulations, and a financial institution generally is prohibited
from paying any dividends if, following payment thereof, the institution would
be undercapitalized. As described above, the Bank exceeded its minimum capital
requirements under applicable guidelines as of December 31, 2006. As of December
31, 2006, approximately $53.368 million was available to be paid as dividends by
the Bank. Notwithstanding the availability of funds for dividends, however, the
FDIC may prohibit the payment of dividends if it determines such payment would
constitute an unsafe or unsound practice.

Insider Transactions. The Bank is subject to certain restrictions imposed by
federal law on extensions of credit to the Company and its subsidiaries, on
investments in the stock or other securities of the Company and its subsidiaries
and the acceptance of the stock or other securities of the Company or it
subsidiaries as collateral for loans made by the Bank. Certain limitations and
reporting requirements are also placed on extensions of credit by the Bank to
its directors and officers, to directors and officers of the Company and its
subsidiaries, to principal shareholders of the Company and to "related
interests" of such directors, officers and principal shareholders. In addition,
federal law and regulations may affect the terms upon which any person who is a
director or officer of the Company or any of its subsidiaries or a principal
shareholder of the Company may obtain credit from banks with which the Bank
maintains correspondent relationships.

Safety and Soundness Standards. The federal banking agencies have adopted
guidelines that establish operational and managerial standards to promote the
safety and soundness of federally insured depository institutions. The
guidelines set forth standards for internal controls, information systems,
internal audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, compensation, fees and benefits, asset quality and
earnings.

In general, the safety and soundness guidelines prescribe the goals to be
achieved in each area, and each institution is responsible for establishing its
own procedures to achieve those goals. If an institution fails to comply with
any of the standards set forth in the guidelines, the institution's primary
federal regulator may require the institution to submit a plan for achieving and
maintaining compliance. If an institution fails to submit an acceptable
compliance plan, or fails in any material respect to implement a compliance plan
that has been accepted by its primary federal regulator, the regulator is
required to issue an order directing the institution to cure the deficiency.
Until the deficiency cited in the regulator's order is cured, the regulator may
restrict the institution's rate of growth, require the institution to increase
its capital, restrict the rates the institution pays on deposits or require the
institution to take any action the regulator deems appropriate under the
circumstances. Noncompliance with the standards established by the safety and
soundness guidelines may also constitute grounds for other enforcement action by
the federal banking regulators, including cease and desist orders and civil
money penalty assessments.

Branching Authority. Illinois banks have the authority under Illinois law to
establish branches anywhere in the State of Illinois, subject to receipt of all
required regulatory approvals.

Federal law permits state and national banks to merge with banks in other states
subject to: (i) regulatory approval; (ii) federal and state deposit
concentration limits; and (iii) state law limitations requiring the merging bank
to have been in existence for a minimum period of time (not to exceed five
years) prior to the merger. The establishment of new interstate branches or the
acquisition of individual branches of a bank in another state (rather than the
acquisition of an out-of-state bank in its entirety) is permitted only in those
states the laws of which expressly authorize such expansion.

State Bank Investments and Activities. The Bank generally is permitted to make
investments and engage in activities directly or through subsidiaries as
authorized by Illinois law. However, under federal law and FDIC regulations,
FDIC-insured state banks are prohibited, subject to certain exceptions, from
making or retaining equity investments of a type, or in an amount, that are not
permissible for a national bank. Federal law and FDIC regulations also prohibit
FDIC-insured state banks and their subsidiaries, subject to certain exceptions,
from engaging as principal in any activity that is not permitted for a national
bank unless the bank meets, and continues to meet, its minimum regulatory
capital requirements and the FDIC determines the activity would not pose a
significant risk to the deposit insurance fund of which the bank is a member.
These restrictions have not had, and are not currently expected to have, a
material impact on the operations of the Bank.

Federal Reserve System. Federal Reserve regulations, as presently in effect,
require depository institutions to maintain non-interest earning reserves
against their transaction accounts (primarily NOW and regular checking
accounts), as follows: for transaction accounts aggregating $45.8 million or
less, the reserve requirement is 3% of total transaction accounts; and for
transaction accounts aggregating in excess of $45.8 million, the reserve
requirement is $1.119 million plus 10% of the aggregate amount of total
transaction accounts in excess of $45.8 million. The first $8.5 million of
otherwise reservable balances are exempted from the reserve requirements. These
reserve requirements are subject to annual adjustment by the Federal Reserve.
The Bank Subsidiary is in compliance with the foregoing requirements.

F. Employees

The Company had a total of 491 employees at December 31, 2006, consisting of 399
full-time employees and 92 part-time. The Company places a high priority on
staff development, which involves extensive training, including customer service
training. New employees are selected on the basis of both technical skills and
consumer service capabilities. None of the Company's employees are covered by a
collective bargaining agreement with the Company or its subsidiaries. The
Company offers a variety of employee benefits, and management considers its
employee relations to be good.

G. Internet Website

The Company maintains an internet site for its subsidiary bank at
www.mainstreettrust.com. The Company makes available free of charge on these
sites its annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and other reports filed or furnished pursuant to Section
13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after it
electronically files such material with, or furnishes it to, the Securities and
Exchange Commission.

Item 1A. Risk Factors

In addition to the other information in this Annual Report on Form 10-K,
shareholders or prospective investors should carefully consider the following
risk factors:

Our business is concentrated in and dependent upon the continued growth and
welfare of central Illinois.

We operate primarily in central Illinois, with branch locations in eight central
Illinois communities including our headquarters located in Champaign, Illinois.
As a result, our financial condition, results of operations and cash flows are
subject to changes in the economic conditions in central Illinois and our
success depends upon the business activity, population, income levels, deposits
and real estate activity in this area. Although our customers' business and
financial interests may extend well beyond central Illinois, adverse economic
conditions that affect this area could reduce our growth rate, affect the
ability of our customers to repay their loans to us and generally affect our
financial condition and results of operations. Because of our geographic
concentration, we are less able than other regional or national financial
institutions to diversify our credit risks across multiple markets.

Failure to complete the proposed merger with First Busey may have an adverse
effect on the Company.

There can be no assurance that the conditions to the completion of the proposed
merger with First Busey will be satisfied. Consummation of the proposed merger
is subject to the receipt of required regulatory approvals and the satisfaction
of other customary closing conditions. In connection with the proposed merger,
the Company is subject to several risks, including the following:

o The current price of the Company's common stock may reflect a market
assumption that the proposed merger will close. If the proposed
merger is not consummated, the stock price may retreat from its
current trading range.

o Certain costs relating to the proposed merger, including legal,
accounting and other fees, are payable by the Company whether or not
the proposed merger is completed.

o Under circumstances set out in the agreement and plan of merger, upon
termination under specified circumstances related to a competing
acquisition proposal, the Company may be required to pay First Busey
a termination fee of between $7.5 million and $15 million.

Obtaining required approvals and satisfying closing conditions may delay or
prevent completion of the proposed merger.

Completion of the proposed merger is conditioned upon the receipt of all
material governmental authorizations, consents, orders and approvals. No
assurance can be given that the required consents and approvals will be obtained
or that the required conditions to closing will be satisfied, and, if all such
consents and approvals are obtained and the conditions are satisfied, no
assurance can be given as to the terms, conditions and timing of the approvals
or that they will satisfy the terms of the merger agreement. The terms and
conditions of such consents, orders and approvals may require the divestiture of
certain assets or operations of the combined company following the proposed
merger or may impose other conditions that affect the future business and
operations of the combined company.

Uncertainties associated with the proposed merger may cause a loss of employees
and may otherwise affect the Company's future business and operations.

Current and prospective employees of the Company may experience uncertainty
about their roles with the combined company following the proposed merger. This
may adversely affect the ability of the Company to attract and retain key
management, sales, marketing, technical and other personnel. In addition, key
employees may depart because of issues relating to the uncertainty and
difficulty of integration or a desire not to remain with the combined company
following the proposed merger. Accordingly, no assurance can be given that the
combined company will be able to attract or retain key employees of the Company
to the same extent that it has been able to attract or retain employees in the
past.

We may experience difficulties in managing our growth and our growth strategy
involves risks that may negatively impact our net income.

As part of our general strategy, we may acquire banks and related businesses
that we believe provide a strategic fit with our business. To the extent that we
grow through acquisitions, we cannot assure you that we will be able to
adequately and profitably manage this growth. Acquiring other banks and
businesses will involve risks commonly associated with acquisitions, including:

o potential exposure to unknown or contingent liabilities of banks and
businesses we acquire;
o exposure to potential asset quality issues of the acquired bank or
related business;
o difficulty and expense of integrating the operations and personnel of
banks and businesses we acquire;
o potential disruption to our business;
o potential diversion of our management's time and attention; and
o the possible loss of key employees and customers of the banks and
businesses we acquire.

In addition to acquisitions, we may expand into additional communities or
attempt to strengthen our position in our current markets by undertaking de novo
bank formations or branch openings. Generally, it may take several years for new
banking facilities to first achieve operational profitability, due to the impact
of organization and overhead expenses and the start-up phase of generating loans
and deposits. To the extent that we undertake branching and de novo bank and
business formations, we are likely to continue to experience the effects of
higher operating expenses relative to operating income from the new operations,
which may have an adverse effect on our levels of reported net income, return on
average equity and return on average assets.

Our continued pace of growth may require us to raise additional capital in the
future, but that capital may not be available when it is needed.

We are required by federal and state regulatory authorities to maintain adequate
levels of capital to support our operations. We anticipate that our existing
capital resources will satisfy our capital requirements for the foreseeable
future. However, we may at some point need to raise additional capital to
support continued growth, both internally and through acquisitions. Our ability
to raise additional capital, if needed, will depend on conditions in the capital
markets at that time, which are outside our control, and on our financial
performance. Accordingly, we cannot assure you of our ability to raise
additional capital if needed on terms acceptable to us. If we cannot raise
additional capital when needed, our ability to further expand our operations
through internal growth and acquisitions could be materially impaired.

We face intense competition in all phases of our business from other banks and
financial institutions.

As described in the business section of this Form 10-K, the banking and
financial services business in our market is highly competitive. Our competitors
include large regional banks, local community banks, savings and loan
associations, securities and brokerage companies, mortgage companies, insurance
companies, finance companies, money market mutual funds, credit unions and other
non-bank financial service providers. Increased competition in our market may
result in a decrease in the amounts of our loans and deposits, reduced spreads
between loan rates and deposit rates or loan terms that are more favorable to
the borrower. Any of these results could have a material adverse effect on our
ability to grow and remain profitable. If increased competition causes us to
significantly discount the interest rates we offer on loans or increase the
amount we pay on deposits, our net interest income could be adversely impacted.
If increased competition causes us to relax our underwriting standards, we could
be exposed to higher losses from lending activities. Additionally, many of our
competitors are much larger in total assets and capitalization, have greater
access to capital markets and offer a broader range of financial services than
we can offer.

Interest rates and other conditions impact our results of operations.

Our profitability is in part a function of the spread between the interest rates
earned on investments and loans and the interest rates paid on deposits and
other interest-bearing liabilities. Like most banking institutions, our net
interest spread and margin will be affected by general economic conditions and
other factors, including fiscal and monetary policies of the federal government,
that influence market interest rates and our ability to respond to changes in
such rates. At any given time, our assets and liabilities will be such that they
are affected differently by a given change in interest rates. As a result, an
increase or decrease in rates, the length of loan terms or the mix of adjustable
and fixed rate loans in our portfolio could have a positive or negative effect
on our net income, capital and liquidity. We measure interest rate risk under
various rate scenarios and using specific criteria and assumptions. A summary of
this process is presented under "Interest Rate Sensitivity" included under Item
7 of Part II of this Form 10-K. Although we believe our current level of
interest rate sensitivity is reasonable and effectively managed, significant
fluctuations in interest rates may have an adverse effect on our business,
financial condition and results of operations.

Commercial, financial and agricultural loans make up a significant portion of
our loan portfolio.

Commercial, financial and agricultural loans were $312.873 million, or
approximately 31.2% of our total loan portfolio as of December 31, 2006. These
loans are primarily made based on the identified cash flow of the borrower and
secondarily on the underlying collateral provided by the borrower. Most often,
this collateral is accounts receivable, inventory, machinery or real estate.
Credit support provided by the borrower for most of these loans and the
probability of repayment is based on the liquidation of the pledged collateral
and enforcement of a personal guarantee, if any exists. As a result, in the case
of loans secured by accounts receivable, the availability of funds for the
repayment of these loans may be substantially dependent on the ability of the
borrower to collect amounts due from its customers. The collateral securing
other loans may depreciate over time, may be difficult to appraise and may
fluctuate in value based on the success of the business.

Our loan portfolio has a large concentration of commercial real estate loans,
which involve risks specific to real estate value.

Commercial real estate lending is a large portion of our loan portfolio. These
categories were $484.003 million, or 48.3% of our total loan portfolio as of
December 31, 2006. The market value of real estate can fluctuate significantly
in a short period of time as a result of market conditions in the geographic
area in which the real estate is located. Although a significant portion of such
loans are secured by real estate as a secondary form of collateral, adverse
developments affecting real estate values in one or more of our markets could
increase the credit risk associated with our loan portfolio. Additionally, real
estate lending typically involves higher loan principal amounts and the
repayment of the loans generally is dependent, in large part, on sufficient
income from the properties securing the loans to cover operating expenses and
debt service. Economic events or governmental regulations outside of the control
of the borrower or lender could negatively impact the future cash flow and
market values of the affected properties.

If the loans that are collateralized by real estate become troubled during a
time when market conditions are declining or have declined, then we may not be
able to realize the amount of security that we anticipated at the time of
originating the loan, which could cause us to increase our provision for loan
losses and adversely affect our operating results and financial condition.

Our construction loans are based upon estimates of costs and value associated
with the complete project. These estimates may be inaccurate and we may be
exposed to more losses on these projects than on other loans.

At December 31, 2006, construction loans, including land acquisition and
development, totaled $123.350 million, or approximately 12.3%, of our total loan
portfolio. These loans are included primarily in our commercial financial and
agricultural, and commercial real estate portfolios. Construction and land
acquisition and development lending involve additional risks because funds are
advanced upon the security of the project, which is of uncertain value prior to
its completion. Because of the uncertainties inherent in estimating construction
costs, as well as the market value of the completed project and the effects of
governmental regulation of real property, it is relatively difficult to evaluate
accurately the total funds required to complete a project and the related
loan-to-value ratio. As a result, commercial construction loans often involve
the disbursement of substantial funds with repayment dependent, in part, on the
success of the ultimate project and the ability of the borrower to sell or lease
the property, rather than the ability of the borrower or guarantor to repay
principal and interest. If our appraisal of the value of the completed project
proves to be overstated, we may have inadequate security for the repayment of
the loan upon completion of construction of the project.

Our concentration of one-to-four family residential mortgage loans may result in
lower yields and profitability.

One-to-four family residential mortgage loans comprised $127.200 million, or
approximately 12.7%, of our loan and lease portfolio at December 31, 2006, and
are secured primarily by properties located in the counties of Champaign, Macon,
Shelby, Tazewell, McLean, Livingston, and contiguous counties. Our concentration
of these loans results in lower yields and lower profitability for us. These
loans are generally made on the basis of the borrower's ability to make
repayments from his or her employment and the value of the property securing the
loan. The market value of real estate can fluctuate significantly in a short
period of time as a result of market conditions in the geographic area in which
the real estate is located. Adverse developments affecting real estate values in
one or more of our markets could increase the credit risk associated with our
loan portfolio.

Our allowance for loan losses may prove to be insufficient to absorb potential
losses in our loan portfolio.

Our management establishes our allowance for loan losses and maintains it at a
level considered adequate to absorb loan losses that are inherent in the
portfolio. The allowance for loan losses is a material estimate that is
particularly susceptible to significant changes in the near term relating to
economic, operating and other conditions, including changes in interest rates,
which may be beyond our control, and such losses may exceed current estimates.
At December 31, 2006, our allowance for loan losses as a percentage of total
loans was 1.44% and as a percentage of total non-performing loans was
approximately 175.8%. Although management believes that the allowance for loan
losses is adequate to absorb probable losses inherent in the loan portfolio, we
cannot predict loan losses with certainty, and we cannot assure you that our
allowance for loan losses will prove sufficient to cover actual loan losses in
the future. Loan losses in excess of our reserves may adversely affect our
business, financial condition and results of operations.

Our community banking strategy relies heavily on our management team, and the
unexpected loss of key managers may adversely affect our operations.

Much of our success to date has been influenced strongly by our ability to
attract and to retain senior management experienced in banking and financial
services and familiar with the communities in our market area. Our ability to
retain executive officers, the current management teams, branch managers and
loan officers will continue to be important, both prior to and after the
proposed merger with First Busey, to the successful implementation of our
strategy. It is also critical, as we grow, both prior to and after the propose
merger with First Busey, to be able to attract and retain qualified additional
management and loan officers with the appropriate level of experience and
knowledge about our market area to implement our community-based operating
strategy. The unexpected loss of services of any key management personnel, or
the inability to recruit and retain qualified personnel in the future, could
have an adverse effect on our business, financial condition and results of
operations.

Government regulation can result in limitations on our operations.

We operate in a highly regulated environment and are subject to supervision and
regulation by a number of governmental regulatory agencies, including the Board
of Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, and the Illinois Department of Financial and Professional
Regulation. Regulations adopted by these agencies, which are generally intended
to provide protection for depositors and customers rather than for the benefit
of shareholders, govern a comprehensive range of matters relating to ownership
and control of our shares, our acquisition of other companies and businesses,
permissible activities for us to engage in, maintenance of adequate capital
levels and other aspects of our operations. These bank regulators possess broad
authority to prevent or remedy unsafe or unsound practices or violations of law.
The laws and regulations applicable to the banking industry could change at any
time and we cannot predict the effects of these changes on our business and
profitability. Increased regulation could increase our cost of compliance and
adversely affect profitability. For example, new legislation or regulation may
limit the manner in which we may conduct our business, including our ability to
offer new products, obtain financing, attract deposits, make loans and achieve
satisfactory interest spreads.

We have a continuing need for technological change and we may not have the
resources to effectively implement new technology.

The financial services industry is undergoing rapid technological changes with
frequent introductions of new technology-driven products and services. In
addition to better serving customers, the effective use of technology increases
efficiency and enables financial institutions to reduce costs. Our future
success will depend in part upon our ability to address the needs of our
customers by using technology to provide products and services that will satisfy
customer demands for convenience as well as to create additional efficiencies in
our operations as we continue to grow and expand our market area. Many of our
larger competitors have substantially greater resources to invest in
technological improvements. As a result, they may be able to offer additional or
superior products to those that we will be able to offer, which would put us at
a competitive disadvantage. Accordingly, we cannot provide you with assurance
that we will be able to effectively implement new technology-driven products and
services or be successful in marketing such products and services to our
customers.

We are subject to certain operational risks, including, but not limited to,
customer or employee fraud and data processing system failures and errors.

Employee errors and misconduct could subject us to financial losses or
regulatory sanctions and seriously harm our reputation. Misconduct by our
employees could include hiding unauthorized activities from us, improper or
unauthorized activities on behalf of our customers or improper use of
confidential information. It is not always possible to prevent employee errors
and misconduct, and the precautions we take to prevent and detect this activity
may not be effective in all cases. Employee errors could also subject us to
financial claims for negligence.

We maintain a system of internal controls and insurance coverage to mitigate
against operational risks, including data processing system failures and errors
and customer or employee fraud. Should our internal controls fail to prevent or
detect an occurrence, or if any resulting loss is not insured or exceeds
applicable insurance limits, it could have a material adverse effect on our
business, financial condition and results of operations.

System failure or breaches of our network security could subject us to increased
operating costs as well as litigation and other liabilities.

The computer systems and network infrastructure we use could be vulnerable to
unforeseen problems. Our operations are dependent upon our ability to protect
our computer equipment against damage from physical theft, fire, power loss,
telecommunications failure or a similar catastrophic event, as well as from
security breaches, denial of service attacks, viruses, worms and other
disruptive problems caused by hackers. Any damage or failure that causes an
interruption in our operations could have a material adverse effect on our
financial condition and results of operations. Computer break-ins, phishing and
other disruptions could also jeopardize the security of information stored in
and transmitted through our computer systems and network infrastructure, which
may result in significant liability to us and may cause existing and potential
customers to refrain from doing business with us. Although we, with the help of
third-party service providers, intend to continue to implement security
technology and establish operational procedures to prevent such damage, there
can be no assurance that these security measures will be successful. In
addition, advances in computer capabilities, new discoveries in the field of
cryptography or other developments could result in a compromise or breach of the
algorithms we and our third-party service providers use to encrypt and protect
customer transaction data. A failure of such security measures could have a
material adverse effect on our financial condition and results of operations.

We must effectively manage our credit risk.

There are risks inherent in making any loan, including risks inherent in dealing
with individual borrowers, risks of nonpayment, risks resulting from
uncertainties as to the future value of collateral and risks resulting from
changes in economic and industry conditions. We attempt to minimize our credit
risk through prudent loan application approval procedures, careful monitoring of
the concentration of our loans within specific industries and periodic
independent reviews of outstanding loans by our credit review department.
However, we cannot assure you that such approval and monitoring procedures will
reduce these credit risks.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company and its subsidiaries conduct business in twenty-three locations. The
Company's and the Bank's headquarters are located at 100 W. University Ave. in
Champaign, Illinois. The Company and/or its subsidiaries own the land and
buildings for fifteen locations and lease eight locations, three of which are
located in supermarkets. The Bank is in the process of constructing an
additional facility in Peoria, Illinois and has contracted to lease a new
facility in Normal, Illinois which would replace its current location.
Additionally, FirsTech has contracted to lease office space in Clayton,
Missouri.

Item 3. Legal Proceedings

In the course of business, the Company and its subsidiaries become involved in
various legal proceedings, claims and litigation arising out of the ordinary
course of business. As of the date of filing this report, there were no claims
or litigation which would have a material adverse effect on the consolidated
financial position of the Company.

Item 4. Submission of Matters to a Vote of Security Holders

There were no items submitted to a vote of security holders in the fourth
quarter of 2006. At a special meeting of its shareholders held on February 28,
2007, a majority of the Company's shareholders voted to approve the merger with
First Busey Corporation.

PART II

Item 5. Market for Registrant's Common Equity and Related Shareholder Matters

The Company's common stock was held by approximately 800 shareholders of record
as of March 6, 2007 and is traded in the over-the-counter market.

The following table shows, for the periods indicated, the range of closing
prices per share of the Company's common stock in the over-the-counter market,
as reported to the Company by the brokers known to the Company to regularly
follow the market for the common stock. Certain other private transactions may
have occurred during the periods indicated of which the Company has no
knowledge. The following prices represent inter-dealer prices without retail
markups, markdowns or commissions.

Cash
High Low Dividends
---------------------------------
2006 First quarter ........... $ 31.50 $ 29.25 $ 0.23
Second quarter .......... 31.00 30.00 0.23
Third quarter ........... 34.45 30.00 0.23
Fourth quarter .......... 36.00 34.15 0.23

2005 First quarter ........... $ 30.00 $ 28.90 $ 0.22
Second quarter .......... 30.00 28.65 0.22
Third quarter ........... 29.40 28.55 0.22
Fourth quarter .......... 30.00 29.30 0.22

During the fourth quarter of 2006 the Company declared a $0.25 per share cash
dividend, which was paid on January 26, 2007. The ability of the Company to pay
dividends in the future will be primarily dependent upon its receipt of
dividends from the Bank. Pursuant to the terms of the Agreement and Plan of
Merger entered into with First Busey, the Company is able to make its regular
quarterly dividend up to $0.25 per share per quarter. Additionally, the Company
must coordinate its dividend payments with First Busey so that the Company's
shareholders will not receive more than one dividend, or fail to receive one
dividend, in any single calendar quarter. In determining cash dividends, the
Board of Directors considers the earnings, capital requirements, debt and
dividend servicing requirements, financial ratio guidelines it has established,
the financial condition of the Company and other relevant factors. The Bank's
ability to pay dividends to the Company and the Company's ability to pay
dividends to its shareholders are also subject to certain regulatory
restrictions. See "Business - Supervision and Regulation - The Company -
Dividend Payments" and "Business - Supervision and Regulation - The Bank
Subsidiaries - Dividend Payments" for a more detailed description of these
limitations.

On October 27, 2003, the Company announced that its Board of Directors had
reinstated the Stock Repurchase Program (the "Program"), allowing the purchase
of up to 500,000 shares of the Company's outstanding stock. During the fourth
quarter of 2006, the Company purchased 24,710 shares, of which 4,863 were
purchased under the Program. The remaining shares purchased were approved by the
Board of Directors on November 21, 2006. The following table summarizes these
transactions:

-------------------------------------------------------------------------------------------------------
Issuer Purchases of Equity Securities
-------------------------------------------------------------------------------------------------------
(c) Total (d) Maximum
Number of Number
Shares of Shares
Purchased as that May
Part of Yet Be
(a) Total Publicly Purchased
Number of (b) Average Announced Under the
Shares Price Paid per Plans or Plans or
Period Purchased Share Programs Programs
---------------------------------------------------------------------------------------------------

October 1 -
October 31, 2006 ...................... -- $ -- -- 4,863

November 1 -
November 30, 2006 ..................... 24,710 $ 34.40 4,863 --

December 1 -
December 31, 2006 ..................... -- $ -- -- --

--------------------------------------------------
Total ................................. 24,710 $ 34.40 4,863 --
==================================================

The graphical presentation omitted herein showed, for the periods indicated, the
Company's common stock total return performance compared to the NASDAQ Composite
and the SNL Midwest Bank Index:

The data points used for the omitted graph were as follows:

Period Ending:
--------------------------------------------------------------------------------------------
Index ................ 12/31/01 12/31/02 12/31/03 12/31/04 12/30/05 12/31/06
--------------------------------------------------------------------------------------------

Main Street Trust, Inc. 100.00 133.23 174.40 167.62 177.80 216.29
NASDAQ Composite ..... 100.00 68.76 103.67 113.16 115.57 127.58
SNL Midwest Bank Index 100.00 96.47 123.48 139.34 134.26 155.19

Item 6. Selected Consolidated Financial Data

The following table presents selected consolidated financial information for the
Company for each of the five years ended December 31, 2006. The selected
consolidated financial data should be read in conjunction with the Consolidated
Financial Statements of the Company, including the related notes, presented
elsewhere herein.

Year Ended December 31,
------------------------------------------------------------------------------------------------------------------------
2006 2005 2004 2003 2002
(dollars in thousands, except per share data)
------------------------------------------------------------------------------------------------------------------------

Interest income ................................... $ 90,759 $ 76,992 $ 54,805 $ 55,686 $ 63,363
Interest expense .................................. 41,212 27,479 16,852 16,723 21,717
------------------------------------------------------------------
Net interest income ............................... 49,547 49,513 37,953 38,963 41,646
Provision for loan losses ......................... 1,800 1,530 1,100 1,470 1,450
------------------------------------------------------------------
Net interest income after provision for loan losses 47,747 47,983 36,853 37,493 40,196
Non-interest income ............................... 22,583 20,477 19,847 20,294 18,866
Non-interest expense .............................. 40,948 39,779 33,879 32,341 33,161
Income tax expense ................................ 10,145 10,373 8,043 8,841 8,520
------------------------------------------------------------------
Net income ................................... $ 19,237 $ 18,308 $ 14,778 $ 16,605 $ 17,381
------------------------------------------------------------------
Basic earnings per share .......................... $ 1.91 $ 1.82 $ 1.56 $ 1.62 $ 1.61
------------------------------------------------------------------
Diluted earnings per share ........................ $ 1.88 $ 1.80 $ 1.54 $ 1.60 $ 1.60
------------------------------------------------------------------
Return on average total assets .................... 1.23% 1.24% 1.22% 1.47% 1.58%
Return on average shareholders' equity ............ 13.10% 13.40% 13.08% 12.67% 12.79%
Dividend payout ratio ............................. 49.21% 48.90% 54.49% 46.91% 33.54%
Cash dividends declared per common share .......... $ 0.94 $ 0.89 $ 0.85 $ 0.76 $ 0.54
------------------------------------------------------------------
Total assets ...................................... $1,536,601 $1,625,137 $1,228,118 $1,154,174 $1,122,728
Investment in debt and equity securities .......... 402,695 444,623 358,726 370,726 316,210
Loans held for investment, net .................... 987,485 1,002,927 761,227 666,259 664,142
Deposits .......................................... 1,233,487 1,275,972 974,577 898,472 868,586
Borrowings ........................................ 132,800 185,838 126,782 132,978 108,457
Total shareholders' equity ........................ 150,355 143,769 113,975 111,450 134,470
Total shareholders' equity to total assets ........ 9.78% 8.85% 9.28% 9.66% 11.98%
Average shareholders' equity to average assets .... 9.36% 9.26% 9.34% 11.63% 12.35%
------------------------------------------------------------------

Item 7. Management's Discussion and Analysis of Financial Condition and Result
of Operations

The following discussion and analysis is designed to provide the reader with a
comprehensive review of the consolidated results of operations for 2006, 2005
and 2004 for the Company, including all subsidiaries, and an analysis of the
Company's financial condition at December 31, 2006 compared to December 31, 2005
and at December 31, 2005 compared to December 31, 2004. This discussion and
analysis should be read in conjunction with the consolidated financial
statements and related notes, which begin at page 41 of this report.

Overview

Net income increased from $18.308 million in 2005 to $19.237 million in 2006,
and diluted earnings per share increased from $1.80 in 2005 to $1.88 in 2006.
The net interest margin decreased during 2006 due, in part, to being somewhat
liability sensitive in a rising rate environment. The Federal Reserve raised
interest rates four times during the first half of 2006. Also affecting the net
interest margin was a decrease of $1.160 million in income from investments in
venture capital funds in 2006 compared to 2005. Due to the nature of venture
capital investments, future results cannot be predicted based on past results.
Loan demand declined slightly in 2006 while loan quality remained relatively
strong, with non-performing loans as a percentage of gross loans at 0.82%,
compared to 0.29% in both 2005 and 2004. Net income increased from $14.778
million in 2004 to $18.308 million in 2005, and diluted earnings per share
increased from $1.54 in 2004 to $1.82 in 2005, due in part to the acquisition of
Citizens and its Bloomington, Illinois locations on April 1, 2005. The net
interest margin increased during 2005 as a result of eight rate hikes by the
Federal Reserve during 2005 and an increase of $1.253 million in income from
investments in venture capital funds in 2005 compared to 2004.

On April 1, 2005, the Company acquired all of the outstanding stock of Citizens.
The transaction has been accounted for as a purchase. Assets and liabilities
related to the acquisition of Citizens are reported as of the April 2005
acquisition date. Results of operations of Citizens since the acquisition date
have been included in the Company's consolidated financial statements.

On September 21, 2006, the Company announced an intendment to a merger of equals
with First Busey Corporation in Urbana, Illinois. The combined company will
operate under the name First Busey Corporation and will list its common stock on
the Nasdaq Global Select Market and trade under the symbol BUSE. Under the terms
of the Agreement and Plan of Merger, Main Street shareholders will receive
shares of First Busey common stock, using a fixed exchange ratio of 1.55 shares
of First Busey common stock for each share of Main Street common stock. As of
December 31, 2006, First Busey Corporation reported consolidated assets of
$2.510 billion, consolidated total deposits of $2.015 billion and consolidated
stockholders equity of $185.274 million. At separate special meetings of their
respective shareholders on February 28, 2007, a majority of the shareholders of
Main Street and First Busey voted to approve the merger. The merger is still
subject to regulatory approval and other customary conditions. The transaction
is expected to be completed during the second quarter of 2007. Following the
merger of the two holding companies, it is their intent to merge their
Illinois-based banking subsidiaries, Busey Bank and Main Street Bank & Trust.
The two banks will be merged under Busey Bank's state charter, and the bank name
will remain Busey Bank.

Segment Operations

FirsTech, Inc. operates as a separate segment of the Company. Results of
Firstech's operations are included as non-interest income and non-interest
expense of the Company.

Critical Accounting Policies

The Company's significant accounting policies are more fully described in Note 1
to the Company's consolidated financial statements located in Item 8 of this
Annual Report on form 10-K. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, and expenses and the related
disclosures of contingent assets and liabilities. Actual results could differ
from those estimates under different assumptions or conditions. The Company
believes that it has one critical accounting policy that is subject to estimates
and judgements used in the preparation of its consolidated financial statements.

Allowance for Loan Losses. The allowance for loan losses is a material estimate
that is particularly susceptible to significant changes in the near term. The
allowance for loan losses is increased by provisions charged to operations and
is reduced by loan charge-offs less recoveries. Management utilizes an approach,
which provides for general and specific valuation allowances, that is based on
current economic conditions, past losses, collection experience, risk
characteristics of the portfolio, assessment of collateral values by obtaining
independent appraisals for significant properties, and such other factors which,
in management's judgment, deserve current recognition in estimating loan losses,
to determine the appropriate level of the allowance for loan losses. The Company
maintains an independent credit administration function, which performs reviews
of all large credit relationships and all loans that present indications of
additional credit risk.

The allowance for loan losses related to impaired loans that are identified for
evaluation is based on discounted cash flow using the loan's initial effective
interest rate or the fair value, less selling costs, of the collateral for
collateral dependent loans. Loans are categorized as "impaired" when, based on
current information or events, it is probable that the Company will be unable to
collect all amounts due, including principal and interest, in accordance with
the contractual terms of the loan agreement. The Company reviews all non-accrual
and substantially delinquent loans, as well as problem loans identified by
management, for impairment as defined above. A specific reserve amount will be
established for impaired loans in which the present value of the expected cash
flows to be generated is less than the amount of the loan recorded on the
Company's books. As an alternative to discounting, the Company may use the "fair
value" of any collateral supporting a collateral-dependent loan in reviewing the
necessity for establishing a specific loan loss reserve amount. Specific
reserves will be established for accounts having a collateral deficiency
estimated to be $50,000 or more. The Company's general reserve is maintained at
an adequate level to cover accounts having a collateral deficiency of less than
$50,000. Loans evaluated as groups or homogeneous pools of loans will be
excluded from this analysis.

The Company utilizes its data processing system to identify loan payments not
made by their contractual due date and to calculate the number of days each loan
exceeds the contractual due date. The accrual of interest on any loan is
discontinued when, in the opinion of management, there is reasonable doubt as to
the collectibility of interest or principal. Management believes the allowance
for loan losses is adequate to absorb probable credit losses inherent in the
loan portfolio. However, there can be no assurance that the allowance for loan
losses will be adequate to cover all losses. While management uses available
information to recognize loan losses, future additions to the allowance for loan
losses may be necessary based on changes in economic conditions. In addition,
various regulatory agencies, as an integral part of their examination process,
periodically review the adequacy of the allowance for loan losses. Such agencies
may require the Company to recognize additions to the allowance for loan losses
based on their judgments of information available to them at the time of their
examination.

Results of Operations

The Company had earnings of $19.237 million in 2006 compared to $18.308 million
in 2005 and $14.778 million in 2004. The Company had a return on average assets
of 1.23%, 1.24% and 1.22% in 2006, 2005 and 2004, respectively. Basic earnings
per share were $1.91, $1.82 and $1.56 in 2006, 2005 and 2004, respectively.
Diluted earnings per share were $1.88, $1.80 and $1.54 in 2006, 2005 and 2004,
respectively. Management believes that a strong balance sheet and earnings are
critical to success.

Net Interest Income

Interest rates and fees charged on loans are affected primarily by the market
demand for loans and the supply of money available for lending purposes. These
factors are affected by, among other things, general economic conditions and the
policies of the Federal government, including the Board of Governors of the
Federal Reserve, legislative tax policies and governmental budgetary matters.

Net interest income, the most significant component of the Company's earnings,
is the difference between interest received or accrued on the Company's earning
assets--primarily loans and investments--and interest paid or accrued on
deposits and borrowings. In order to compare the interest generated from
different types of earning assets, the interest income on certain tax-exempt
investment securities and loans is increased for analysis purposes to reflect
the income tax savings provided by these tax-exempt assets. The adjustment to
interest income for tax-exempt investment securities and loans was calculated
based on the federal income tax statutory rate of 35%. The adjustment to net
interest income for the tax effect of tax-exempt assets is shown in the
following schedule.

Net Interest Income on a Tax Equivalent Basis
(in thousands)
------------------------------------------------------------------------------
2006 2005 2004
------------------------------------------------------------------------------

Total interest income ....... $90,759 $76,992 $54,805
Total interest expense ...... 41,212 27,479 16,852
-------------------------------------

Net interest income ...... 49,547 49,513 37,953
Tax equivalent adjustment:
Tax-exempt investments ... 637 816 993
Tax-exempt loans ......... 16 15 12
-------------------------------------
Total adjustment .... 653 831 1,005
-------------------------------------

Net interest income (TE) .... $50,200 $50,344 $38,958
======================================

The following schedule, "Consolidated Average Balance Sheet and Interest Rates",
provides details of average balances, interest income or interest expense, and
the average rates for the Company's major asset and liability categories.

Consolidated Average Balance Sheet and Interest Rates
(dollars in thousands)

--------------------------------------------------------------------------------------------
2006 2005 2004
--------------------------------------------------------------------------------------------
Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
--------------------------------------------------------------------------------------------

Assets
Taxable investment securities(1) .... $ 418,395 $ 17,742 4.24% $ 326,932 $ 12,465 3.81% $ 327,064 $ 10,793 3.30%
Tax-exempt investment
securities (1) (TE) .............. 30,001 1,820 6.07% 39,195 2,332 5.95% 46,214 2,837 6.14%
Federal funds sold and interest
bearing deposits(2) .............. 19,426 1,327 6.83% 49,020 2,023 4.13% 37,910 600 1.58%
Loans (3),(4) (TE) .................. 974,958 70,523 7.23% 945,089 61,003 6.45% 711,986 41,580 5.84%
--------------------------------------------------------------------------------------------
Total interest earning assets
and interest income (TE) ...... $1,442,780 $ 91,412 6.34% $1,360,236 $ 77,823 5.72% $1,123,174 $ 55,810 4.97%
--------------------------------------------------------------------------------------------

Cash and due from banks ............. $ 44,677 $ 44,210 $ 44,965
Premises and equipment .............. 22,716 21,239 17,184
Other assets ........................ 59,511 49,006 23,944
--------------------------------------------------------------------------------------------
Total assets ..................... $1,569,684 $1,474,691 $1,209,267
============================================================================================

Liabilities and Shareholders' Equity
Interest bearing demand deposits .... $ 70,281 $ 468 0.67% $ 74,976 $ 426 0.57% $ 93,315 $ 635 0.68%
Savings ............................. 474,518 14,205 2.99% 427,341 7,529 1.76% 345,624 3,432 0.99%
Time deposits ....................... 476,470 18,882 3.96% 440,592 13,634 3.09% 352,596 9,905 2.81%
Federal funds purchased and repurchase
agreements ....................... 125,162 5,531 4.42% 115,679 3,097 2.68% 97,503 1,271 1.30%
FHLB advances & other
borrowings ....................... 41,511 2,126 5.12% 60,351 2,793 4.63% 29,925 1,609 5.38%
--------------------------------------------------------------------------------------------
Total interest bearing liabilities
and interest expense .......... $1,187,942 $ 41,212 3.47% $1,118,939 $ 27,479 2.46% $ 918,963 $ 16,852 1.83%
--------------------------------------------------------------------------------------------

Non-interest bearing demand
deposits ......................... 144,853 132,982 100,913
Non-interest bearing savings
deposits ......................... 72,796 71,535 66,163
Other liabilities ................... 17,249 14,614 10,260
--------------------------------------------------------------------------------------------

Total liabilities ................ $1,422,840 $1,338,070 $1,096,299
Shareholders' equity ................ 146,844 136,621 112,968
--------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity .......... $1,569,684 $1,474,691 $1,209,267
--------------------------------------------------------------------------------------------

Interest spread (average
rate earned minus
average rate paid) (TE) .......... 2.87% 3.26% 3.14%
============================================================================================

Net interest income (TE) ............ $ 50,200 $ 50,344 $ 38,958
============================================================================================

Net yield on interest
earnings assets (TE) ............. 3.48% 3.70% 3.47%
============================================================================================
22

Notes to Consolidated Average Balance Sheet and Interest Rates Table:

(1) Investments in debt securities are included at carrying value. Income
from investments in venture capital funds of approximately $397,000,
$1.557 million and $304,000 in 2006, 2005 and 2004, respectively, is
included in interest income from taxable investment securities. Due to
the nature of venture capital investments, future results cannot be
predicted based on past performance.

(2) Federal funds sold and interest earning deposits include approximately
$281,000, $275,000 and $66,000 in 2006, 2005 and 2004, respectively,
of interest income from third party processing of cashier checks.

(3) Loans are net of allowance of loan losses and include mortgage loans
held for sale. Nonaccrual loans are included in the total.

(4) Loan fees of approximately $1.578 million, $1.181 million and $1.410
million in 2006, 2005 and 2004, respectively, are included in total
loan income.

The following table presents, on a fully taxable equivalent basis, an analysis
of changes in net interest income resulting from changes in average volumes of
earning assets and interest bearing liabilities and average rates earned and
paid. The change in interest due to the combined rate/volume variance has been
allocated to rate and volume changes in proportion to the absolute dollar
amounts of change in each.

Analysis of Volume and Rate Changes
(in thousands)
--------------------------------------------------------------------
2006 2005
--------------------------------------------------------------------
Increase Increase
(Decrease) (Decrease)
from from
Previous Due to Due to Previous Due to Due to
Year Volume Rate Year Volume Rate
--------------------------------------------------------------------

Interest Income
Taxable investment securities ..... $ 5,277 $ 3,766 $ 1,511 $ 1,672 $ (4) $ 1,676
Tax-exempt investment securities .. (512) (557) 45 (505) (420) (85)
Federal funds sold and interest
bearing deposits ................ (696) (1,605) 909 1,423 219 1,204
Loans ............................. 9,520 1,976 7,544 19,423 14,697 4,726
--------------------------------------------------------------------
Total interest income .... $ 13,589 $ 3,580 $ 10,009 $ 22,013 $ 14,492 $ 7,521
--------------------------------------------------------------------
Interest Expense
Interest bearing demand
and savings deposits ........... $ 6,718 $ 1,593 $ 5,125 $ 3,888 $ 393 $ 3,495
Time deposits ..................... 5,248 1,180 4,068 3,729 2,650 1,079
Federal funds purchased and repurchase
agreements ..................... 2,434 272 2,162 1,826 275 1,551
Federal Home Loan Bank advances
and other borrowings ........... (667) (941) 274 1,184 1,435 (251)
--------------------------------------------------------------------
Total interest expense ....... $ 13,733 $ 2,104 $ 11,629 $ 10,627 $ 4,753 $ 5,874
--------------------------------------------------------------------
Net Interest Income (TE) ........... $ (144) $ 1,476 $ (1,620) $ 11,386 $ 9,739 $ 1,647
====================================================================

Total average earning assets increased from $1.360 billion in 2005 to $1.443
billion in 2006 and generated higher interest income on a tax equivalent (TE)
basis, mainly as a result of both higher rates and volume. Average loans
increased $29.869 million, resulting in an increase in interest income (TE) of
$9.520 million, of which $7.544 million was due to higher rates and $1.976
million due to an increase in volume. Average taxable investment securities
increased $91.463 million and generated $5.277 million more interest income due
to both higher volume and rates. Somewhat offsetting these increases in average
balances were decreases in average federal funds sold and interest-bearing
deposits and tax-exempt investment securities. Average federal funds sold and
interest-bearing deposits decreased $29.594 million and generated $696,000 less
interest income than in 2005, of which $1.605 million was due to a decrease in
volume, offset somewhat by a $909,000 increase due to higher rates. Average
tax-exempt investment securities decreased $9.194 million and generated $512,000
less interest income, mainly due to a decrease in volume.

Total average earning assets increased from $1.123 billion in 2004 to $1.360
billion in 2005 and generated higher interest income on a tax equivalent (TE)
basis, mainly as a result of the Citizens acquisition along with increased
interest rates in 2005 compared to 2004. Average loans increased $233.103
million, resulting in an increase in interest income (TE) of $19.423 million, of
which $14.697 million was due to higher volume and $4.726 million due to an
increase in rates. Average federal funds sold and interest-bearing deposits
increased $11.110 million and generated $1.423 million more interest income than
in 2004, of which $1.204 million was due to an increase in rates and $219,000
due to higher volume. Somewhat offsetting these increases in average balances
was a decrease in average tax-exempt investment securities of $7.019 million,
resulting in a decrease in interest income of $505,000, mainly due to lower
volume. Average taxable investment securities decreased $132,000, but generated
$1.672 million more interest income, primarily due to higher rates.

The Company establishes interest rates on loans and deposits based on market
rates such as the 91-day Treasury Bill rate and the national prime rate, while
at the same time being mindful of interest rates offered by other financial
institutions in the local communities. The level of risk and the value of
collateral also are evaluated when determining loan rates. Rates were generally
higher in 2006 compared to 2005, primarily due to increases in the Treasury Bill
rates and the national prime rate. The average yield on federal funds sold and
interest bearing-deposits increased 270 basis points, from 4.13% in 2005 to
6.83% in 2006. The average rate earned on loans increased 78 basis points from
6.45% in 2005 to 7.23% in 2006. The average yield on taxable investment
securities increased 43 basis points, from 3.81% in 2005 to 4.24% in 2006. The
average yield on tax-exempt investment securities increased 12 basis points,
from 5.95% in 2005 to 6.07% in 2006. These higher average yields were primarily
due to four interest rate hikes initiated by the Federal Reserve during 2006.

The total actual balance of loans at December 31, 2006 was slightly lower than
at December 31, 2005. Residential real estate loans decreased $13.104 million
from 2005 to 2006. Installment and consumer loans decreased $8.882 million from
2005 to 2006. Commercial, financial and agricultural loans decreased $6.988
million from 2005 to 2006. Somewhat offsetting these decreases was a $14.497
million increase in commercial real estate loans from 2005 to 2006.

Average rates on total interest bearing liabilities increased 101 basis points,
from 2.46% in 2005 to 3.47% in 2006 and total interest expense increased $13.733
million in 2006 compared to 2005 due to an increase in both rates and volume.
The overall increase in interest expense was caused by an increase in interest
expense on interest bearing demand and savings deposits, time deposits, and
federal funds purchased and repurchase agreements, offset somewhat by a decrease
in interest expense on Federal Home Loan Bank advances and other borrowings. The
average rate paid on federal funds purchased and repurchase agreements increased
174 basis points from 2.68% in 2005 to 4.42% in 2006. This resulted in an
increase in interest expense of $2.434 million, of which $2.162 million was due
to higher rates and $272,000 was due to an increase in volume. The average rate
paid on interest bearing demand and savings deposits increased 111 basis points,
from 1.58% in 2005 to 2.69% in 2006. This resulted in an increase in interest
expense of $6.718 million in 2006, of which $5.125 million was attributable to
increased rates and $1.593 million was due to higher volume. Interest expense on
time deposits increased $5.248 million primarily due to higher rates as the
average rate paid on time deposits increased 87 basis points, from 3.09% in 2005
to 3.96% in 2006. Although the average rate paid on Federal Home Loan Bank
advances and other borrowings increased 49 basis points, from 4.63% in 2005 to
5.12% in 2006, interest expense decreased $667,000, of which $941,000 was due to
lower volume, offset somewhat by $274,000 due to higher rates.

Average rates on total interest bearing liabilities increased 63 basis points,
from 1.83% in 2004 to 2.46% in 2005 and interest expense increased $10.627
million in 2005 compared to 2004 due to increases in both rates and volume. The
overall increase in interest expense was caused by an increase in interest
expense on all categories of interest bearing liabilities. The average rate paid
on federal funds purchased and repurchase agreements increased 138 basis points
from 1.30% in 2004 to 2.68% in 2005. This resulted in an increase in interest
expense of $1.826 million, of which $1.551 million was due to higher rates and
$275,000 was due to an increase in volume. The average rate paid on interest
bearing demand and savings deposits increased 65 basis points, from 0.93% in
2004 to 1.58% in 2005. This resulted in an increase in interest expense of
$3.888 million in 2005, of which $3.495 million was attributable to increased
rates and $393,000 was due to higher volume. The average rate paid on time
deposits increased 28 basis points, from 2.81% in 2004 to 3.09% in 2005. This
resulted in an increase of $3.729 million in interest expense, of which $2.650
million was due to an increase in volume and $1.079 million was due to higher
rates. Although the average rate paid on Federal Home Loan Bank advances and
other borrowings decreased 75 basis points, from 5.38% in 2004 to 4.63% in 2005,
interest expense increased a total of $1.184 million, of which $1.435 million
was due to higher volume, offset somewhat by $251,000 due to a decrease in
rates.

Provision for Loan Losses

The quality of the Company's loan portfolio is of prime importance to the
Company's management and its Board of Directors, as loans are the largest
component of the Company's assets. The Company maintains an independent credit
administration function, which performs reviews of all large credit
relationships and all loans that present indications of additional credit risk.

Net charge-offs decreased to $835,000 in 2006 from $1.142 million in 2005. The
Company charged off $1.317 million in loans during 2006 compared to $1.459
million in 2005. This was due to a decrease in charge-offs for installment and
consumer loans of $473,000 in 2006 compared to 2005. This decrease was primarily
due to a decreased emphasis on high-risk indirect lending since 2002. This
decrease was offset somewhat by increases in charge-offs for commercial real
estate loans, residential real estate loans and commercial, financial and
agricultural loans of $250,000, $77,000 and $4,000, respectively. Recoveries of
previously charged off loans increased from $317,000 in 2005 to $482,000 in
2006, with the largest increase in the area of installment and consumer loans,
which increased $183,000 from 2005 to 2006. The provision for loan losses
increased $270,000 from $1.530 million in 2005 to $1.800 million in 2006. Loan
quality continued to be manageable as the ratio of net charge-offs to average
net loans decreased to 0.09% in 2006 from 0.12% in 2005. The Company continues
to emphasize credit analysis and early detection of problem loans.

Non-interest Income and Expense

The following table summarizes selected categories of non-interest income and
non-interest expense for 2006, 2005 and 2004. The acquisition of Citizens on
April 1, 2005, has been accounted for as a purchase and the results of
operations of Citizens since the acquisition date have been included in the
Company's consolidated financial statements. Effective January 1, 2006, the
Company adopted the fair value recognition provisions of FASB Statement No.
123(R), Share-Based Payment, using the modified-prospective-transition method.
(Refer to Note 1(p) in the Notes to Consolidated financial Statements, Stock
Option Plans, for additional information.) As a result, the Company recognized
an additional $659,000 in stock option expense in 2006, with $484,000 being
allocated to salaries and benefits expense and $175,000 attributable to
non-employee options being allocated to other non-interest expense.

Non-Interest Income and Expense
for the Year Ended: December 31,

--------------------------------
Non-interest Income (in thousands) 2006 2005 2004
--------------------------------

Remittance processing (1) ................... $ 7,306 $ 6,748 $ 7,201
Trust and brokerage fees (2) ................ 8,235 7,599 6,492
Service charges on deposit accounts (3) ..... 2,719 2,923 2,419
Securities transactions, net (4) ............ 456 (586) 133
Gain on sales of mortgage loans, net (5) .... 596 886 997
Other (6) ................................... 3,271 2,907 2,605
--------------------------------
Total non-interest income . $ 22,583 $ 20,477 $ 19,847
================================

Non-interest Expense (in thousands) 2006 2005 2004
--------------------------------
Salaries and employee benefits (7) .......... $ 23,572 $ 23,099 $ 18,889
Occupancy (8) ............................... 3,049 3,074 2,669
Equipment ................................... 2,513 2,592 2,512
Data processing (9) ......................... 3,170 2,416 2,283
Office supplies ............................. 1,248 1,245 1,247
Service charges from correspondent banks (10) 284 513 781
Amortization of core deposit intangibles (11) 870 653 --
Other ....................................... 6,242 6,187 5,498
--------------------------------
Total non-interest expense . $ 40,948 $ 39,779 $ 33,879
================================

(1) Remittance processing income increased $558,000, or 8.3%, in 2006
compared to 2005. This was due to a $578,000, or 10.6%, increase in
electronic processing income, offset slightly by a $20,000, or 1.5%,
decrease in lockbox processing income. The increase in electronic
processing income included increases in Internet Agent income, online
bill payment income, indirect agent income and electronic payment
income. Online bill payment income, which was offered for the first
time in 2006, generated $123,000 in additional income. Remittance
processing income decreased $453,000, or 6.3%, in 2005 compared to
2004. This was due to an $867,000, or 40.2%, decrease in lockbox
processing income, offset somewhat by a $434,000, or 8.7%, increase in
electronic processing income. The decrease in lockbox processing
income was mainly due to the loss of two major accounts in the fourth
quarter of 2004. This decrease was offset somewhat by an increase in
electronic processing income from new and existing Internet Agent
customers.

(2) Trust and brokerage fees increased $636,000, or 8.4%, in 2006 compared
to 2005. This increase was mainly due to a $423,000, or 9.0%, increase
in trust fees due to an increase in assets under management and a
$206,000, or 35.6%, increase in estate fees due to a higher number of
estates closed in 2006 compared to 2005. Assets under management
increased $386 million, or 19.7%, to $2.345 billion at December 31,
2006 from $1.959 billion at December 31, 2005. Trust and brokerage
fees increased $1.107 million, or 17.1%, in 2005 compared to 2004.
Included in this increase were a $391,000, or 262.7%, increase in farm
realty income mainly attributable to the environment surrounding
elevated land values and sales activity as a result, and a $325,000,
or 127.9%, increase in estate fees primarily as a result of serving as
executor to one large estate. Assets under management increased
$194.000 million, or 11.0%, to $1.959 billion at December 31, 2005
from $1.765 billion at December 31, 2004.

(3) Service charges on deposit accounts decreased $204,000, or 7.0%, in
2006 compared to 2005. Service charges on deposit accounts increased
$504,000, or 20.8%, in 2005 compared to 2004. The Company's new
Bloomington locations generated $733,000 in service charges on deposit
accounts in 2005.

(4) Gain from securities transactions was $456,000 in 2006, compared to a
loss of $586,000 in 2005. The gain in 2006 was due to gains realized
on sales of several equity securities during the year. Loss from
securities transactions was $586,000 in 2005, compared to a gain of
$133,000 in 2004. The loss in 2005 was due to $601,000 in losses
realized on an investment in one venture capital fund, offset slightly
by net gains of $15,000 on sales of several equity securities.

(5) Gains on sales of mortgage loans decreased $290,000, or 32.7%, in 2006
compared to 2005. This decrease was due to a decrease of approximately
$12.917 million, or 19.8%, in mortgage loans funded in 2006 compared
to 2005, primarily as a result of a decrease in refinancings. Gains on
sales of mortgage loans decreased $111,000, or 11.1%, in 2005 compared
to 2004. This decrease was due to a decrease of approximately $11.530
million, or 15.0%, in mortgage loans funded in 2005 compared to 2004,
primarily as a result of a decrease in refinancings.

(6) Other non-interest income increased $364,000, or 12.5%, in 2006
compared to 2005. Included in this increase was a $146,000, or 257.3%,
increase in Freddie Mac servicing fees attributable to operating the
Company's new Bloomington locations. Other non-interest income
increased $302,000, or 11.6%, in 2005 compared to 2004. Included in
this increase was a $178,000 increase in key man insurance income due
to $120,000 of income from the Company's new Bloomington locations and
$58,000 in proceeds from two policies.

(7) Salaries and employee benefits increased $473,000, or 2.0%, in 2006
compared to 2005. Included in salaries and employee benefits was
$484,000 of stock options expense as a result of adopting FASB
Statement No. 123(R) effective January 1, 2006. Salaries and employee
benefits increased $4.210 million, or 22.3%, in 2005 compared to 2004.
Included in salaries and employee benefits in 2005 was $2.265 million
attributable to the Company's new Bloomington locations and $454,000
attributable to the Company's new East Peoria banking branch.

(8) Occupancy expense decreased $25,000, or 0.8%, in 2006 compared to
2005. Occupancy expense increased $405,000, or 15.2%, in 2005 compared
to 2004. Of this increase, $400,000 was attributable to the Company's
new Bloomington locations.

(9) Data processing expense increased $754,000, or 31.2%, in 2006 compared
to 2005. This increase was mainly due to a $261,000, or 84.5%,
increase in the Wealth Management Group's data processing expense, a
$206,000, or 14.8%, increase in the Bank's core system processing
costs, a $142,000, or 28.6%, increase in internet expense and a
$125,000, or 411.1%, increase in programming fees. The increase in the
Wealth Management Group's data processing expense was due, in part, to
conversion to a new third party system in 2006. The increase in the
Bank's core system processing costs was partly due to the Company's
Bloomington locations switching from in-house processing to third
party processing effective with the October 2005 merger. The increase
in internet expense was mainly due to increased volume attributable to
Bloomington and a significant increase in the number of online bill
payment customers. The increase in programming fees was due to the
Company's remittance processing subsidiary, FirsTech, employing
outside consultants for several projects. Data processing expense
increased $133,000, or 5.8%, in 2005 compared to 2004. This increase
was attributable, in part, to the Company's new Bloomington locations.

(10) Service charges from correspondent banks decreased $229,000, or 44.6%,
in 2006 compared to 2005. This decrease was mainly due to a change in
the Company's cash letter processing vendor in November 2005 which
resulted in a decrease in fees, as well as higher earnings credits due
to the rising rate environment during the first half of 2006. Service
charges from correspondent banks decreased $268,000, or 34.3%, in 2005
compared to 2004. This was largely due to the loss of two lockbox
accounts in the fourth quarter of 2004 as described in footnote 1
above, which resulted in a significant decrease in cleared checks
during 2005 compared to 2004.

(11) Amortization of core deposit intangibles increased $217,000, or 33.2%,
in 2006 compared to 2005. This was due to twelve months of
amortization being booked in 2006 compared to nine months in 2005. The
amortization of core deposit intangibles is attributable to the
acquisition of Citizens.

Income Tax Expense

Income tax expense decreased $228,000, or 2.2%, from $10.373 million in 2005 to
$10.145 million in 2006. This decrease was partly due to a $205,000 tax credit
resulting from a low-income housing project investment in 2006. In 2005, income
tax expense increased $2.330 million, or 29.0%, from $8.043 million in 2004.
This was mainly due to an increase in taxable income. The Company's effective
tax rate was 34.5%, 36.2% and 35.2% for the years ended December 31, 2006, 2005
and 2004, respectively.

The tax effects of temporary differences, which gave rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
2006 and 2005, are shown in note 11 in the Notes to Consolidated Financial
Statements.

Financial Condition

Total assets decreased $88.536 million, or 5.4%, to $1.537 billion at December
31, 2006 compared to $1.625 billion at December 31, 2005. There were decreases
in every asset category except accrued interest receivable and other assets.

Cash and due from banks decreased $3.399 million, or 6.5%, to $48.608 million at
December 31, 2006 compared to $52.007 million at December 31, 2005.

Federal funds sold and interest bearing deposits decreased $29.282 million, or
69.6%, to $12.777 million at December 31, 2006 compared to $42.059 million at
December 31, 2005. Federal funds sold and interest bearing deposits fluctuate
with loan demand, deposit volume and investment opportunities.

Total investments in debt and equity securities decreased $41.928 million, or
9.4%, to $402.695 million at December 31, 2006 compared to $444.623 million at
December 31, 2005. Included in the change were decreases of $24.512 million, or
7.1%, in investments in securities available-for-sale and $10.767 million, or
43.1%, in non-marketable equity securities, and $6.649 million, or 8.7% in
securities held-to-maturity. In response to the FHLB's decision to allow
redemption of excess capital stock owned by member banks, the Company sold
$10.794 million of FHLB stock, which was classified as non-marketable equity
securities. The Company will evaluate the feasibility of any redemption the FHLB
may offer in the future. Investments fluctuate with loan demand, deposit volume,
and investment opportunities.

Loans, net of allowance for loan losses, decreased $15.442 million, or 1.5%, to
$987.485 million at December 31, 2006 compared to $1.003 billion at December 31,
2005. Included in the change were decreases of $13.104 million, or 9.3%, in
residential real estate loans; $8.882 million, or 10.2%, in installment and
consumer loans; and $6.988 million, or 2.2%, in commercial, financial and
agricultural loans offset somewhat by an increase of $14.497 million, or 3.1%,
in commercial real estate loans. Management attributes the decrease in loans to
the Company's unwillingness to meet some of the underwriting and pricing
available in the market. Additionally, the Company has seen a slowdown in the
residential real estate market during 2006 compared to 2005.

Mortgage loans held for sale decreased $545,000, or 32.8%, to $1.116 million at
December 31, 2006 compared to $1.661 million at December 31, 2005.

Premises and equipment decreased $600,000, or 2.6%, to $22.447 million at
December 31, 2006 compared to $23.047 million at December 31, 2005. The decrease
included depreciation and amortization expense on fixed assets of $2.563 million
offset somewhat by purchases of $1.997 million.

Core deposit intangibles decreased $871,000, or 19.1%, to $3.698 million at
December 31, 2006 compared to $4.569 million at December 31, 2005 due to
amortization related to the acquisition of Citizens in 2005.

Total liabilities decreased $95.122 million, or 6.4%, to $1.386 billion at
December 31, 2006 compared to $1.481 billion at December 31, 2005. There were
decreases in all categories of liabilities, except accrued interest payable.

Total deposits decreased $42.485 million, or 3.3%, to $1.233 billion at December
31, 2006 from $1.276 billion at December 31, 2005. Interest bearing deposits
decreased $26.987 million, or 2.6%, to $1.008 billion at December 31, 2006 from
$1.035 billion at December 31, 2005. The $26.987 million decrease in interest
bearing deposits included a $32.882 million decrease in savings and interest
bearing demand deposits and an $18.656 million decrease in money market savings
deposits, offset somewhat by a $24.551 million increase in time deposit
accounts. Non-interest bearing deposits decreased $15.498 million, or 6.4%, to
$225.325 million at December 31, 2006 from $240.823 million at December 31,
2005. The decrease of $15.498 million in non-interest bearing deposits included
a $16.574 million decrease in the balance of one account between December 31,
2005 and December 31, 2006.

Federal funds purchased and repurchase agreements decreased $10.129 million, or
8.6%, to $108.323 million at December 31, 2006 from $118.452 million at December
31, 2005. This change was due to decreases of $8.054 million in repurchase
agreements and $2.075 million in federal funds purchased.

Federal Home Loan Bank advances and other borrowings decreased $42.909 million,
or 63.7%, to $24.477 million at December 31, 2006 compared to $67.386 million at
December 31, 2005 primarily due to $36.386 million of matured FHLB advances, a
$5.000 million decrease in one term loan and a decrease of $1.500 million on a
line of credit from a correspondent bank.

Investment Securities

The carrying value of investments in debt and equity securities was as follows:

Carrying Value of Securities(1)
(in thousands)

------------------------------------
December 31, 2006 2005 2004
------------------------------------

Securities available-for-sale:
Federal agencies .............. $ 299,275 $ 312,484 $ 218,994
Mortgage-backed securities .... 8,947 13,657 27,713
State and municipal ........... 9,658 13,834 16,715
Marketable equity securities .. 695 3,112 6,158
------------------------------------
Total ................... $ 318,575 $ 343,087 $ 269,580
====================================

Securities held-to-maturity:
Federal agencies .............. $ 27,340 $ 38,650 $ 40,931
Mortgage-backed securities .... 28,974 17,091 14,992
State and municipal ........... 13,579 20,801 25,241
------------------------------------
Total ................... $ 69,893 $ 76,542 $ 81,164
====================================
Non-marketable equity securities:
Federal Home Loan Bank Stock(2) $ 10,656 $ 21,450 $ 4,279
Other equity investments(3) ... 3,571 3,544 3,703
------------------------------------
Total ................... $ 14,227 $ 24,994 $ 7,982
====================================
Total securities ........ $ 402,695 $ 444,623 $ 358,726
====================================

(1) Investment securities available-for-sale are carried at fair value.
Investment securities held-to-maturity are carried at amortized cost.
Non-marketable equity securities are carried at fair value.
(2) Federal Home Loan Bank Stock is carried at cost, which approximates
fair value.
(3) Other equity investments are valued at fair value based upon their
financial statements.

The unrealized loss on securities available-for-sale, net of tax effect,
decreased $442,000 to a loss of $1.155 million at December 31, 2006 from a loss
of $1.597 million at December 31, 2005.

The following table shows the maturities and weighted-average yields of
investment securities at December 31, 2006:

Maturities and Weighted Average Yields of Debt Securities
(dollars in thousands)
------------------------------------------------------------------------------------------
December 31, 2006
------------------------------------------------------------------------------------------
1 year 1 to 5 5 to 10 Over
or less years years 10 years Total
Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate
------------------------------------------------------------------------------------------

Securities available-for-sale:
Federal agencies ............... $167,179 3.40% $117,143 4.56% $ 14,953 5.62% $ -- -- $299,275 3.96%
Mortgage-backed securities(1) .. 1,842 3.89% 3,130 5.68% 3,860 5.14% 115 7.74% 8,947 5.10%
State and municipal (TE)(2) .... 3,416 6.47% 5,582 6.98% 660 7.62% -- -- 9,658 6.84%
Marketable equity securities(3) -- -- -- -- -- -- -- -- 695 --
------------------------------------------------------------------------------------------
Total .................... $172,437 $125,855 $ 19,473 $ 115 $318,575
==========================================================================================
Average Yield (TE)(2) ............. 3.47% 4.69% 5.59% 7.74% 4.08%
==========================================================================================

Securities held-to-maturity:
Federal agencies ............... $ 6,168 3.08% $ 20,322 3.18% $ 850 4.15% $ -- -- $ 27,340 3.19%
Mortgage-backed securities(1) .. 1,746 2.97% 25,729 5.31% 1,441 5.24% 58 6.47% 28,974 5.17%
State and municipal (TE)(2) .... 7,847 5.92% 4,417 6.71% 565 7.37% 750 7.74% 13,579 6.34%
------------------------------------------------------------------------------------------

Total .................... $ 15,761 $ 50,468 $ 2,856 $ 808 $ 69,893
==========================================================================================

Average Yield (TE)(2) ............. 4.48% 4.57% 5.34% 7.64% 4.62%
==========================================================================================

Non-marketable equity securities(3)
FHLB stock ..................... -- -- -- -- -- -- -- -- $ 10,656 --
Other equity investments ....... -- -- -- -- -- -- -- -- 3,571 --
------------------------------------------------------------------------------------------
Total .................... $ -- -- $ -- -- $ -- -- $ -- -- $ 14,227 --
==========================================================================================

(1) Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties and certain securities require
principal repayments prior to maturity.

(2) The average yield has been tax equivalized (TE) on state and municipal
tax-exempt securities.

(3) Due to the nature of these securities, they do not have a stated
maturity date or rate.

Loans

The following tables present the amounts and percentages of loans at December 31
for the years indicated according to the categories of commercial, financial and
agricultural; commercial real estate; residential real estate; and installment
and consumer loans.

Amount of Loans Outstanding
(dollars in thousands)
--------------------------------------------------------------
2006 2005 2004 2003 2002
--------------------------------------------------------------

Commercial, financial and agricultural $ 312,873 $ 319,861 $ 314,657 $ 249,795 $ 234,045
Real Estate - Commercial ............. 484,003 469,506 309,830 298,075 265,970
Real Estate - Residential ............ 127,200 140,304 62,464 50,922 77,857
Installment and consumer ............. 77,846 86,728 83,926 77,253 95,529
--------------------------------------------------------------
Total loans ...................... $1,001,922 $1,016,399 $ 770,877 $ 676,045 $ 673,401
==============================================================

Percentage of Loans Outstanding
--------------------------------------------------------------
2006 2005 2004 2003 2002
--------------------------------------------------------------
Commercial, financial and agricultural 31.23% 31.47% 40.82% 36.95% 34.75%
Real Estate - Commercial ............. 48.31% 46.19% 40.19% 44.09% 39.50%
Real Estate - Residential ............ 12.69% 13.81% 8.10% 7.53% 11.56%
Installment and consumer ............. 7.77% 8.53% 10.89% 11.43% 14.19%
--------------------------------------------------------------
Total ............................ 100.00% 100.00% 100.00% 100.00% 100.00%
==============================================================

The Company's loan portfolio totaled approximately $1.002 billion at December
31, 2006, representing 65.2% of total assets at that date. Total loans decreased
$14.477 million, or 1.4%, from December 31, 2005 to December 31, 2006 with
decreases in commercial, financial and agricultural loans, residential real
estate loans, and installment and consumer loans of $6.988 million, $13.104
million and $8.882 million, respectively, offset somewhat by an increase in
commercial real estate loans of $14.497 million.

The Company's loan portfolio totaled approximately $1.016 billion at December
31, 2005, representing 62.5% of total assets at that date. Total loans increased
$245.522 million, or 31.8%, from December 31, 2004 to December 31, 2005 with
increases in commercial, financial and agricultural loans, commercial real
estate loans, residential real estate loans, and installment and consumer loans
of $5.204 million, $159.676 million, $77.840 million and $2.802 million,
respectively.

The balance of loans outstanding as of December 31, 2006 by maturities is shown
in the following table:

Maturity of Loans Outstanding
(dollars in thousands)
----------------------------------------------------
December 31, 2006
----------------------------------------------------
1 year 1-5 Over 5
or less years years Total
----------------------------------------------------

Commercial, financial and agricultural $ 188,720 $ 86,657 $ 37,496 $ 312,873
Real Estate - Commercial ............. 118,971 245,836 119,196 $ 484,003
Real Estate - Residential ............ 10,206 30,483 86,511 $ 127,200
Installment and consumer ............. 17,844 25,918 34,084 $ 77,846
-----------------------------------------------------
Total ........................... $ 335,741 $ 388,894 $ 277,287 $1,001,922
====================================================

Percentage of total loans outstanding 33.51% 38.81% 27.68% 100.00%
====================================================

As of December 31, 2006, commercial, financial and agricultural loans with
maturities of greater than one year were comprised of $51.994 million in
fixed-rate loans and $72.159 million in floating-rate loans. Commercial real
estate loans with maturities greater than one year at December 31, 2006 were
comprised of $178.829 million in fixed-rate loans and $186.203 million in
floating-rate loans. Residential real estate loans with maturities greater than
one year at December 31, 2006 included $54.838 million in fixed-rate loans and
$62.156 million in floating-rate loans.

Allowance for Loan Losses and Loan Quality

The following table summarizes changes in the allowance for loan losses by loan
categories for each period and additions to the allowance for loan losses, which
have been charged to operations.

Allowance for Loan Losses
(in thousands)
------------------------------------------------------------
2006 2005 2004 2003 2002
------------------------------------------------------------

Allowance for loan losses at
beginning of year ............................................. $ 13,472 $ 9,650 $ 9,786 $ 9,259 $ 9,259
Allocation for loan losses attributable to acquisition of Citizens -- 3,434 -- -- --
------------------------------------------------------------

Charge-offs during period:
Commercial, financial and agricultural ........................ $ (556) $ (552) $ (288) $ (148) $ (55)
Real Estate - Commercial ...................................... (250) -- -- -- (48)
Real Estate - Residential ..................................... (141) (64) (48) (42) (125)
Installment and consumer ...................................... (370) (843) (1,356) (1,450) (1,699)
------------------------------------------------------------
Total .................................................. $ (1,317) $ (1,459) $ (1,692) $ (1,640) $ (1,927)
------------------------------------------------------------
Recoveries of loans previously charged off:
Commercial, financial and agricultural ........................ $ 5 $ 34 $ 214 $ 452 $ 245
Real Estate - Commercial ......................................... -- 5 -- 2 --
Real Estate - Residential ........................................ 16 -- 15 46 31
Installment and consumer ...................................... 461 278 227 199 201
------------------------------------------------------------
Total .................................................. $ 482 $ 317 $ 456 $ 699 $ 477
------------------------------------------------------------
Net charge-offs ................................... $ (835) $ (1,142) $ (1,236) $ (941) $ (1,450)
Provision for loan losses ........................................ 1,800 1,530 1,100 1,470 1,450
------------------------------------------------------------
Allowance for loan losses at end of year ......................... $ 14,437 $ 13,472 $ 9,650 $ 9,788 $ 9,259
============================================================

Ratio of net charge-offs to
average net loans ............................................. 0.09% 0.12% 0.17% 0.15% 0.22%
============================================================

Management reviews criteria such as the customer's historic loan payment
performance, financial statements, financial ratios, cash flow, net worth,
collateral and guaranties, as well as local and national economic factors, in
determining whether loans should be written off as uncollectible. The Company
records a loss if it is probable that a loss will occur and the amount can be
reasonably estimated.

The Company's risk of loan loss is dependent on many factors: economic
conditions, the extent and values of underlying collateral, significant
concentrations of loans within the portfolio, the ability and willingness of
borrowers to perform according to loan terms and collecting and loan-monitoring
activities. The risk of loss from commercial, financial and agricultural loans
is significantly impacted by economic factors and how these factors affect the
particular industries involved. The risk of loss from commercial real estate
loans is impacted by the value of real estate, which can fluctuate significantly
in a short period of time. Additionally, commercial real estate lending
typically involves higher loan principal amounts and the repayment of the loans
generally is dependent, in large part, on sufficient income from the properties
securing the loans to cover operating expenses and debt service.

An analysis of the allowance for loan loss adequacy is performed on a quarterly
basis by the Company's credit administration department. This analysis is
reported to executive management and discussed at a quarterly meeting where
specific allocations for problem credits, charge-offs and monthly provisions for
loan losses are reviewed and revised, as necessary. The results are reported to
the board of directors. The analysis includes assessment of the allowance for
loan loss adequacy based on historic loan losses and current quality grades of
specific credits reviewed, credit concentrations and current delinquent loans
and nonperforming loans. The level of charge-offs of installment and consumer
loans reported between 2002 and 2004 were reflective of the significant growth
of the indirect loan portfolio in 1999 and 2000. The level of charge-offs of
installment and consumer loans decreased in 2005 compared to 2004 as a result of
a reduction in Owners Option indirect vehicle program charge-offs from $415,000
in 2004 to $5,000 in 2005. The level of charge-offs of installment and consumer
loans decreased in 2006 compared to 2005 as a result of a change in loan mix out
of indirect lending and improved underwriting.

The following table shows the allocation of the allowance for loan losses to
each loan category.

Allocation of the Allowance for Loan Losses
(in thousands)
-----------------------------------------------
2006 2005 2004 2003 2002
-----------------------------------------------

Allocated:
Commercial, financial and agricultural $ 5,245 $ 4,433 $ 2,945 $ 2,540 $ 2,438
Real Estate - Commercial ................ 6,772 5,991 3,981 3,433 3,294
Real Estate - Residential ............... 424 424 198 153 345
Installment and consumer ............. 1,218 1,447 1,605 2,428 1,763
-----------------------------------------------
Total allocated allowance ..... $13,659 $12,295 $ 8,729 $ 8,554 $ 7,840
Unallocated allowances .................. 778 1,177 921 1,232 1,419
-----------------------------------------------
Total ......................... $14,437 $13,472 $ 9,650 $ 9,786 $ 9,259
===============================================

The allocated portion of the allowance for loan losses increased $1.364 million
from $12.295 million at December 31, 2005 to $13.659 million at December 31,
2006. Of this increase, the allowance for commercial, financial and agricultural
loans increased $812,000 from $4.433 million at December 31, 2005 to $5.245
million at December 31, 2006. The allowance for loan losses for commercial real
estate loans increased $781,000 from $5.991 million at December 31, 2005 to
$6.772 million at December 31, 2006. Somewhat offsetting these increases was a
decrease in the allowance for installment and consumer loans of $229,000 from
$1.447 million at December 31, 2005 to $1.218 million at December 31, 2006. The
allowance for residential real estate loans remained the same at $424,000 at
December 31, 2006 and 2005. The portion of the allowance for loan losses that
was unallocated decreased by $399,000 to $778,000 at December 31, 2006 from
$1.177 million a year earlier. The unallocated amount is determined based on
management's judgment, which considers, in addition to the other factors
previously discussed, the risk of error in the specific allocation.

Management believes that nonperforming and potential problem loans are
appropriately identified and monitored based on the extensive loan analysis
performed by the credit administration department, the internal loan committees
and the board of directors. Historically, there has not been a significant
amount of loans charged off which had not been previously identified as problem
loans by the credit administration department or the loan committees.

The following table presents the aggregate amount of loans considered to be
nonperforming for the periods indicated. Nonperforming loans include loans
accounted for on a nonaccrual basis, accruing loans contractually past due 90
days or more as to interest or principal payments and loans which are troubled
debt restructurings as defined in Statement of Financial Accounting Standards
No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructurings."

Nonperforming Loans
(in thousands)
------------------------------------------
2006 2005 2004 2003 2002
------------------------------------------

Nonaccrual loans(1) .......... $7,469 $2,234 $1,689 $ 399 $1,392
==========================================

Loans past due 90 days or more $ 744 $ 766 $ 547 $ 621 $ 829
==========================================

Restructured loans(2) ........ $ 231 $ 324 $ 497 $ 18 $ 20
==========================================

(1) Includes $2.471 million, $975,000, $509,000, $269,000, and $628,000 at
December 31, 2006, 2005, 2004, 2003 and 2002, respectively, of loans
which management does not consider impaired as defined by the
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairments of a Loan" (SFAS 114).

(2) Loans reported as restructured are performing in accordance with their
new terms, are not 90 days past due or more, and are not on nonaccrual
status. Therefore, the Company excludes these loan balances in the
calculations of its nonperforming loan ratios and percentages.

Other Nonperforming Assets
(in thousands)
------------------------------------------
2006 2005 2004 2003 2002
------------------------------------------

Other real estate owned .. $ 171 $ 188 $ -- $ -- $ 58
==========================================

Nonperforming other assets $ 6 $ 36 $ 33 $ 55 $ 94
==========================================

There were no other interest earning assets that would be required to be
disclosed as being nonperforming if such other assets were loans.

At December 31, 2006, the Company had $21.877 million in potential problem
loans, excluding nonperforming loans. Potential problem loans are those loans
identified by management as being worthy of special attention, and although
currently performing, may have some underlying weaknesses. None of these
potential problem loans were considered impaired as defined in SFAS 114. The
$21.877 million of potential problem loans have either had timely payments or
are adequately secured and loss of principal or interest is determined to be
unlikely.

Loans over 90 days past due, which are not well secured and in the process of
collection, are placed on nonaccrual status. There were $7.469 million of
nonaccrual loans at December 31, 2006 compared to $2.234 million at December 31,
2005. Included in nonaccrual loans at December 31, 2006 was $4.134 million
attributable to three commercial real estate loans to a real estate developer.
As of December 31, 2006, a specific valuation allowance of $1.0 million had been
assigned to these loans. Loans past due 90 days or more but still accruing
interest increased by $80,000 in 2006 to a balance of $744,000 at December 31,
2006, from $664,000 at December 31, 2005. These loans are well secured and in
the process of collection.

The following table categorizes nonaccrual loans as of December 31, 2006 based
on levels of performance and also details the allocation of interest collected
during the period in 2006 in which the loans were on nonaccrual. Substantial
performance, yet contractually past due, includes borrowers making sizable
periodic payments relative to the required periodic payments due. A borrower
that is not making substantial payments but is making periodic payments would be
included in the limited performance category.

Nonaccrual and Related Interest Payments
(in thousands)
------------------------------------------------------------
Cash Interest Payments Applied As:
------------------------------------------------------------
At December 31, 2006 Recovery of Reduction
Book Contractual Interest Prior Partial of
Balance Balance Income Charge-offs Principal
------------------------------------------------------------

Not contractually past due . $ 418 $ 418 $ 7 $ -- $ --
Contractually past due with:
Substantial performance . 2,127 2,128 -- -- 127
Limited performance ..... 1,553 1,560 7 -- 8
No performance .......... 3,371 3,517 -- -- --
----------------------------------------------------------
Total ...................... $ 7,469 $ 7,623 $ 14 $ -- $ 135
==========================================================

The difference between the book balance and the contractual balance represents
charge-offs made since the loans were funded.

Management believes that the allowance for loan losses at December 31, 2006 was
adequate to absorb credit losses in the total loan portfolio and that the
policies and procedures in place to identify potential problem loans are being
effectively implemented. However, there can be no assurance that the allowance
for loan losses will be adequate to cover all losses.

Premises and Equipment

Premises and equipment decreased $600,000, or 2.6%, from $23.047 million at
December 31, 2005 to $22.447 million at December 31, 2006. The decrease
consisted primarily of depreciation and amortization expense of $2.563 million
offset somewhat by purchases of $1.997 million.

Other Assets

Other assets increased $2.329 million, or 9.3%, to $27.376 million at December
31, 2006 compared to $25.047 million at December 31, 2005.

Deposits

The following table shows the average balance and weighted average rate of
deposits at December 31 for the years indicated:

Average Balance and Weighted Average Rate of Deposits
(dollars in thousands)
--------------------------------------------------------------------------
2006 2005 2004
--------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average Average Average Average
Balance Rate Balance Rate Balane Rate
--------------------------------------------------------------------------

Demand
Non-interest bearing $ 144,853 -- $ 132,982 -- $ 100,913 --
Interest bearing ... 70,281 0.67% 74,976 0.57% 93,315 0.68%
Savings
Non-interest bearing 72,796 -- 71,535 -- 66,163 --
Interest bearing ... 474,518 2.99% 427,341 1.76% 345,624 0.99%
Time
$100,000 and more .. 131,660 4.22% 126,344 3.17% 111,317 2.64%
Under $100,000 ..... 344,810 3.87% 314,248 3.06 % 241,279 2.89%
--------------------------------------------------------------------------
Totals $ 1,238,918 $ 1,147,426 $ 958,611
==========================================================================

In analyzing deposit activity, it should be noted that average total deposits
increased $91.492 million, or 8.0%, during 2006. Included in this increase were
increases in average non-interest bearing demand deposits of $11.871 million, or
8.9%, average non-interest bearing savings deposits of $1.261 million, or 1.8%,
average interest bearing savings deposits of $47.177 million, or 11.0%, average
time deposits of $100,000 and more of $5.316 million, or 4.2%, and average time
deposits under $100,000 of $30.562 million, or 9.7%. Slightly offsetting these
increases in average deposits was a decrease in average interest bearing demand
deposits of $4.695 million, or 6.3%.

The table below sets forth the maturity of time deposits greater than $100,000
at December 31, 2006:

Maturity of Time Deposits of $100,000 or More
(in thousands)
---------------------------------------------------------
Total Time
State of Illinois Deposits of
Maturity at December 31, 2006: Time Deposits CDs IRAs $100,000 or More
---------------------------------------------------------

3 months or less .................... $ 1,050 $ 41,276 $ 1,206 $ 43,532
3 to 6 months ....................... -- 25,648 444 26,092
6 to 12 months ...................... -- 32,330 2,895 35,225
Over 12 months ...................... 2,750 32,324 5,957 41,031
--------------------------------------------------
Total ....................... $ 3,800 $131,578 $ 10,502 $145,880
==================================================

Federal Funds Purchased and Repurchase Agreements

This category includes federal funds purchased, which are generally overnight
transactions, and securities sold under repurchase agreements, which mature from
one day to one year from the date of sale. The table in note 8 in the Notes to
Consolidated Financial Statements shows the balances of federal funds purchased
and repurchase agreements at December 31, 2006 and 2005, the average balance for
the years ended December 31, 2006, 2005 and 2004, and the maximum month-end
value during each year.

Fair Values of Financial Instruments

The estimated fair values of financial instruments for which no listed market
exists and the fair values of investment securities, which are based on listed
market quotes at December 31, 2006 and 2005, are disclosed in note 17 in the
Notes to Consolidated Financial Statements.

Capital

Total shareholders' equity increased $6.586 million, from $143.769 million at
December 31, 2005 to $150.355 million at December 31, 2006. Net income of
$19.237 million, and increases of $659,000 in stock option expense, $442,000 in
accumulated other comprehensive income and $241,000 in deferred tax benefit on
stock option exercises were offset somewhat by cash dividends declared of $9.470
million and a decrease of $4.523 million as a result of net treasury stock
transactions.

Financial institutions are required by regulatory agencies to maintain minimum
levels of capital based on asset size and risk characteristics. Currently, the
Company and the Bank are required by their primary regulators to maintain
adequate capital based on two measurements: the total assets leverage ratio and
the risk-weighted assets ratio.

Based on Federal Reserve guidelines, a bank holding company generally is
required to maintain a leverage ratio of 3% plus an additional cushion of at
least 100 to 200 basis points. The Company's total assets leverage ratio at
December 31, 2006 and 2005 was 8.4% and 7.8%, respectively. The leverage ratio
for the Bank is disclosed in note 19 in the Notes to the Consolidated Financial
Statements and is well above the regulatory minimum.

The minimum risk-weighted assets ratio for bank holding companies is 8%. The
Company's total risk-weighted assets ratio at December 31, 2006 and 2005 was
12.5% and 11.7%, respectively - significantly higher than the regulatory
minimum. The Bank's total risk-weighted assets ratio is disclosed in note 19 in
the Notes to the Consolidated Financial Statements and is significantly higher
than the regulatory minimum.

Inflation and Changing Prices

Changes in interest rates and a bank's ability to react to interest rate
fluctuations have a much greater impact on a bank's balance sheet and net income
than inflation. A review of net interest income, liquidity and rate sensitivity
should assist in the understanding of how well the Company is positioned to
react to changes in interest rates.

Liquidity and Cash Flows

The Company requires cash to fund loan demand and deposit withdrawals. Cash
flows fluctuate with changes in economic conditions, current interest rate
trends and as a result of management strategies and programs. In general, funds
provided by customer deposits, federal funds purchased and repurchase
agreements, and maturities, calls and paydowns of investment securities are used
to fund loans and purchase investment securities. Available funds are used to
fund demand for loans that meet the Company's credit quality guidelines, with
the remaining funds used to purchase investment securities and/or federal funds
sold. The Company monitors the demand for cash and initiates programs and
policies as considered necessary to meet funding gaps.

The Company was able to adequately fund loan demand and meet liquidity needs in
2006. A review of the consolidated statement of cash flows in the accompanying
financial statements shows that the Company's cash and cash equivalents
decreased $32.681 million from December 31, 2005 to December 31, 2006. The
decrease in 2006 resulted from cash used in financing activities, offset
somewhat by cash provided by operating and investing activities. There were
differences in sources and uses of cash during 2006 compared to 2005. Cash used
in financing activities during 2006 was $109.103 million compared to cash
provided of $76.175 million during the same period in 2005, primarily due to a
decrease in deposits during 2006 of $42.485 million compared to an increase of
$69.306 million in 2005, a decrease in federal funds purchased and repurchase
agreements of $10.129 million during 2006 compared to an increase of $21.552
million during 2005, advances from Federal Home Loan Bank advances and other
borrowings of $1.000 million during 2006 compared to $39.000 million during 2005
and payments on Federal Home Loan Bank advances and other borrowings of $43.909
million in 2006 compared to $39.095 million in 2005. Less cash was used in 2006
for treasury stock transactions compared to 2005.

Cash was provided by investing activities during 2006 compared to cash used
during the same period in 2005, primarily due to differences in investments in
debt and equity securities. Cash provided by activities related to investments
in debt and equity securities during 2006 was $43.018 million compared to cash
used of $47.272 million during the same period in 2005. In 2006, proceeds of
$134.231 million from maturities, calls and sales of debt and equity securities,
principal paydowns on mortgage-backed securities, and return of principal on
non-marketable equity securities and proceeds from redemption of non-marketable
equity securities were somewhat offset by cash used to purchase debt and equity
securities of $91.213 million. In 2005, cash used to purchase debt and equity
securities of $335.505 million was somewhat offset by proceeds of $288.233
million from maturities, calls and sales of debt and equity securities,
principal paydowns on mortgage-backed securities, and return of principal on
non-marketable equity securities. There was also a difference in loan volume
during 2006 compared to 2005. Cash of $12.918 million was provided in 2006 by a
decrease in loans compared to cash used of $15.264 million in 2005 due to an
increase in loans. The decrease in loans in 2006 was attributable to the
Company's unwillingness to meet some of the underwriting and pricing available
in the market. Less cash was provided by operating activities in 2006 compared
to 2005.

The Company's future short-term cash requirements are expected to be provided by
maturities and sales of investments, sales of loans and deposits. Cash required
to meet longer-term liquidity requirements will mostly depend on future goals
and strategies of management, the competitive environment, economic factors and
changes in the needs of customers. If current sources of liquidity cannot
provide needed cash in the future, the Company can obtain long-term funds from
several sources, including, but not limited to, utilizing the Company's $15.000
million line of credit from a third party lender, FHLB borrowings and brokered
CDs. To meet short-term liquidity needs, the Company is able to borrow funds on
a temporary basis from the Federal Reserve Bank, the FHLB and correspondent
banks. With sound capital levels, the Company continues to have several options
for longer-term cash needs that may arise.

Management is not aware of any current recommendations by the Company's primary
regulators which if implemented would have a material effect on the Company's
liquidity, capital resources or operations.

The following table summarizes significant obligations and other commitments at
December 31, 2006 (in thousands):

FHLB and Other Operating
Years Ended December 31, Time Deposits borrowings(1) Leases Total
----------------------------------------------------

2007 $ 330,652 $ 2,454 $ 374 $ 333,480
2008 77,298 22,023 341 99,662
2009 73,887 -- 316 74,203
2010 14,685 -- 304 14,989
2011 2,475 -- 288 2,763
Thereafter 10 -- 147 157
----------------------------------------------------
Total $ 499,007 $ 24,477 $ 1,770 $ 525,254
====================================================
Commitments to extend credit:
Commitments $ 333,416
Standby letters of credit 28,464

(1) Fixed rate callable FHLB advances are included in the period of their
modified duration rather than in the period in which they are due.
FHLB and other borrowings include fixed rate callable advances of $16
million, redeemable at the option of the holder on a quarterly basis
until their maturity dates in 2008.

Interest Rate Sensitivity

The concept of interest sensitivity attempts to gauge exposure of the Company's
net interest income to adverse changes in market driven interest rates by
measuring the amount of interest-sensitive assets and interest-sensitive
liabilities maturing or subject to repricing within a specified time period.
Liquidity represents the ability of the Company to meet the day-to-day demands
of deposit customers balanced by its investments of these deposits. The Company
must also be prepared to fulfill the needs of credit customers for loans with
various types of maturities and other financing arrangements. One way the
Company monitors its interest rate sensitivity and liquidity is through the use
of static gap reports, which measure the difference between assets and
liabilities maturing or repricing within specified time periods.

The following table shows the Company's interest rate sensitivity position at
various intervals at December 31, 2006:

Rate Sensitivity of Earning Assets and Interest Bearing Liabilities
(in thousands)
-----------------------------------------------------------------------------
1 - 30 31 - 90 91 - 180 181 - 365 Over
Days Days Days Days 1 year Total
-----------------------------------------------------------------------------

Interest earning assets:
Federal funds sold and interest bearing deposits $ 12,777 $ -- $ -- $ -- $ -- $ 12,777
Debt and equity securities(1) .................. 14,453 38,734 46,140 126,373 176,995 402,695
Loans(2) ....................................... 292,213 46,924 41,597 95,771 526,533 1,003,038
-----------------------------------------------------------------------------
Total interest earning assets .......... $ 319,443 $ 85,658 $ 87,737 $ 222,144 $ 703,528 $1,418,510
-----------------------------------------------------------------------------
Interest bearing liabilities:
Savings and interest bearing demand deposits ... $ 43,512 $ 1,594 $ 2,391 $ 4,781 $ 181,705 $ 233,983
Money market savings deposits .................. 275,172 -- -- -- -- 275,172
Time deposits .................................. 52,075 71,442 69,133 181,388 124,969 499,007
Federal funds purchased and repurchase
agreements ................................... 103,159 2,009 104 3,051 -- 108,323
FHLB Advances and other borrowings ............. 3,431 16,046 -- -- 5,000 24,477
-----------------------------------------------------------------------------
Total interest bearing liabilities ..... $ 477,349 $ 91,091 $ 71,628 $ 189,220 $ 311,674 $1,140,962
=============================================================================
Net asset (liability) funding gap ................ $ (157,906) $ (5,433) $ 16,109 $ 32,924 $ 391,854 $ 277,548
-----------------------------------------------------------------------------
Repricing gap .................................... 0.67 0.94 1.22 1.17 2.26 1.24
Cumulative repricing gap ......................... 0.67 0.71 0.77 0.86 1.24 1.24
=============================================================================

(1)Debt and equity securities include securities available-for-sale.
(2)Loans include mortgage loans held-for-sale.

Included in the 1-30 day category of savings and interest bearing demand
deposits is non-core deposits plus a percentage, based upon industry-accepted
assumptions, of the core deposits. "Core deposits" are the lowest average
balance of the prior twelve months for each product type included in this
category. "Non-core deposits" are the difference between the current balance and
core deposits. The time frames include a percentage, based upon
industry-accepted assumptions, of the core deposits as follows:

1-30 Days 31-90 Days 91-180 Days 181-365 Days Over 1 Year
-------------------------------------------------------------------

Savings and interest bearing
demand deposits .............................. 0.45% 0.85% 1.25% 2.45% 95.00%

At December 31, 2006, the Company tended to be somewhat liability sensitive due
to the levels of savings and interest bearing demand deposits, time deposits,
federal funds purchased and repurchase agreements. As such, the effect of a
decrease in the prime rate of 100 basis points would increase net interest
income by approximately $1.579 million in 30 days and $1.633 million in 90 days
assuming no management intervention. A rise in interest rates would have the
opposite effect for the same periods. The Company's Asset and Liability
Management Policy states that the cumulative ratio of rate-sensitive assets
("RSA") to rate-sensitive liabilities "(RSL") for the 12-month period shall fall
within the range of 0.75-1.25. As of December 31, 2006, the Company's RSA/RSL
was 0.86, which was within the established guidelines.

In addition to managing interest rate sensitivity and liquidity through the use
of gap reports, the Company has provided for emergency liquidity situations with
informal agreements with correspondent banks that permit the Company to borrow
federal funds on an unsecured basis. Additionally, at December 31, 2006, the
Company had a $15 million unsecured line of credit with a correspondent bank,
all of which was available at that date. The Company also has sufficient
capacity to permit it to borrow funds from the Federal Home Loan Bank on a
secured basis (refer to the Liquidity and Cash Flows section for additional
information).

The Company uses financial forecasting/budgeting/reporting software packages to
perform interest rate sensitivity analysis for all product categories. The
Company's primary focus of its analysis is on the effect of interest rate
increases and decreases on net interest income. Management believes that this
analysis reflects the potential effects on current earnings of interest rate
changes. Call criteria and prepayment assumptions are taken into consideration
for investments in debt and equity securities. All of the Company's financial
instruments are analyzed by a software database, which includes each of the
different product categories, which are tied to key rates such as prime,
Treasury Bills, or the federal funds rate. The relationships of each of the
different products to the key rate that the product is tied to is proportional.
The software reprices the products based on current offering rates. The software
performs interest rate sensitivity analysis by performing rate shocks of plus or
minus 200 basis points in 100 basis point increments.

The following table shows projected results at December 31, 2006 and December
31, 2005 of the impact on net interest income from an immediate change in
interest rates. The results are shown as a percentage change in net interest
income over the next twelve months.

+200 +100 -100 -200
-----------------------------------

December 31, 2006 ....................... 4.7% 2.4% (2.5%) (5.2%)
December 31, 2005 ....................... 8.9% 4.7% (4.7%) (9.4%)

The foregoing computations are based on numerous assumptions, including relative
levels of market interest rates, prepayments and deposit mix. The computed
estimates should not be relied upon as a projection of actual results. Despite
the limitations on preciseness inherent in these computations, management
believes that the information provided is reasonably indicative of the effect of
changes in interest rate levels on the net earning capacity of the Company's
current mix of interest earning assets and interest bearing liabilities.
Management continues to use the results of these computations, along with the
results of its computer model projections, in order to maximize current earnings
while positioning the Company to minimize the effect of a prolonged shift in
interest rates that would adversely affect future results of operations.

At the present time, the most significant market risk affecting the Company is
interest rate risk. Other market risks such as foreign currency exchange risk
and commodity price risk do not occur in the normal business of the Company. The
Company also is not currently using trading activities or derivative instruments
to control interest rate risk.

Emerging Accounting Standards

In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes."(FIN 48). FIN 48 clarifies the accounting and
reporting for income taxes recognized in accordance with SFAS No. 109,
"Accounting for Income Taxes." This interpretation prescribes a comprehensive
model for the financial statement recognition, measurement, presentation and
disclosure of uncertain tax positions taken or expected to be taken in income
tax returns. The Company does not expect the adoption of FIN 48 to have a
material impact on its financial statements. The Company will adopt FIN 48 in
the first quarter of 2007.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This
Statement defines fair value, establishes a framework for measuring fair value,
and expands disclosures about fair value measurements. It clarifies that fair
value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants in the market in
which the reporting entity transacts. The Statement does not require any new
fair value measurements, but rather, it provides enhanced guidance to other
pronouncements that require or permit assets or liabilities to be measured at
fair value. This Statement is effective for fiscal years beginning after
November 15, 2007, with earlier adoption permitted. The Company does not expect
that the adoption of this Statement will have a material impact on its financial
position, results of operations and cash flows.

In September 2006, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 108 to require quantification of financial
statement misstatements under both the "rollover approach" and the "iron curtain
approach". The "rollover approach" quantifies a misstatement based on the amount
of the error originating in the current year income statement, but ignores the
effects of correcting the portion of the current year balance sheet misstatement
that originated in prior years. The "iron curtain approach" quantifies a
misstatement based on the effects of correcting the misstatement existing in the
balance sheet at the end of the current year, irrespective of the misstatement's
year(s) of origination. The provisions of SAB No. 108 were applied to the
Company for the year ended December 31, 2006 and adoption had no impact on the
financial statements.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This document (including information incorporated by reference) contains, and
future oral and written statements of the Company and its management may
contain, forward-looking statements, within the meaning of such term in the
Private Securities Litigation Reform Act of 1995, with respect to the financial
condition, results of operations, plans, objectives, future performance and
business of the Company. Forward-looking statements, which may be based upon
beliefs, expectations and assumptions of the Company's management and on
information currently available to management, are generally identifiable by the
use of words such as "believe", "expect", "anticipate", "plan", "intend",
"estimate", "may", "will", "would", "could", "should", or other similar
expressions. Additionally, all statements in this document, including
forward-looking statements, speak only as of the date they are made, and the
Company undertakes no obligation to update any statement in light of new
information or future events.

The Company's ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. The factors which could have a material
adverse effect on the operations and future prospects of the Company and its
subsidiaries include, but are not limited to, the following:

o Unexpected results of the proposed merger with First Busey
Corporation.

o The economic impact of past and any future terrorist attacks, acts of
war or threats thereof and the response of the United States to any
such threats and attacks.

o The costs, effects and outcomes of existing or future litigation.

o Changes in accounting policies and practices, as may be adopted by
state and federal regulatory agencies, the Financial Accounting
Standards Board, the Securities and Exchange Commission and the Public
Company Accounting Oversight Board.

o The ability of the Company to manage the risks associated with the
foregoing as well as anticipated.

In addition to the risk factors described above, there are other factors that
may impact any public company, including ours, which could have a material
adverse affect on the operations and future prospects of the Company and its
subsidiaries. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk

See the "Interest Rate Sensitivity" section contained in Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations.

Item 8. Financial Statements and Supplementary Data

MAIN STREET TRUST, INC.
AND SUBSIDIARIES

Consolidated Financial Statements

December 31, 2006, 2005 and 2004

MAIN STREET TRUST, INC.
AND SUBSIDIARIES

TABLE OF CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM .. 43

CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets .............................. 44

Consolidated Statements of Income ........................ 45

Consolidated Statements of Changes in Shareholders' Equity 46

Consolidated Statements of Cash Flows .................... 47-48

Notes to Consolidated Financial Statements ............... 49-73

Report of Independent Registered Public Accounting Firm

The Board of Directors
Main Street Trust, Inc.
Champaign, Illinois

We have audited the accompanying consolidated balance sheets of Main Street
Trust, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 2006. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 consolidated financial position of Main
Street Trust, Inc. and subsidiaries as of December 31, 2006 and 2005, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2006, in conformity with accounting principles
generally accepted in the United States of America.

We also have audited, in accordance with standards of the Public Accounting
Oversight Board (United States), the effectiveness of Main Street Trust, Inc.
and subsidiaries' internal control over financial reporting as of December 31,
2006 based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and our report dated March 14, 2007 expressed an unqualified opinion on
management's assessment of the effectiveness of Main Street Trust, Inc. and
subsidiaries' internal control over financial reporting and an unqualified
opinion on the effectiveness of Main Street Trust, Inc. and subsidiaries'
internal control over financial reporting.

As described in Note 1 to the Consolidated Financial Statements, the Company
adopted Financial Accounting Standards Board Statement No. 123(R), effective
January 1, 2006.

/s/ McGladrey & Pullen, LLP
---------------------------

Champaign, Illinois
March 14, 2007

MAIN STREET TRUST, INC.
AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2006 and 2005
(in thousands, except share data)

2006 2005
--------------------------

Assets
Cash and due from banks ........................................ $ 48,608 $ 52,007
Federal funds sold and interest bearing deposits ............... 12,777 42,059
--------------------------
Cash and cash equivalents ............................ 61,385 94,066
--------------------------
Investments in debt and equity securities:
Available-for-sale, at fair value ............................ 318,575 343,087
Held-to-maturity, at cost (fair value of $69,037 and $75,665
at December 31, 2006 and 2005, respectively) ............... 69,893 76,542
Non-marketable equity securities ............................. 14,227 24,994
--------------------------
Total investments in debt and equity securities ...... 402,695 444,623
--------------------------
Loans, net of allowance for loan losses of $14,437 and $13,472
at December 31, 2006 and 2005, respectively .................. 987,485 1,002,927
Mortgage loans held for sale ................................... 1,116 1,661
Premises and equipment ......................................... 22,447 23,047
Goodwill ....................................................... 20,736 20,736
Core deposit intangibles ....................................... 3,698 4,569
Accrued interest receivable .................................... 9,663 8,461
Other assets ................................................... 27,376 25,047
--------------------------
Total assets ......................................... $ 1,536,601 $ 1,625,137
==========================

Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Non-interest bearing ....................................... $ 225,325 $ 240,823
Interest bearing ........................................... 1,008,162 1,035,149
--------------------------
Total deposits ....................................... 1,233,487 1,275,972

Federal funds purchased and repurchase agreements ............ 108,323 118,452
Federal Home Loan Bank advances and other borrowings ......... 24,477 67,386
Accrued interest payable ..................................... 5,187 4,657
Other liabilities ............................................ 14,772 14,901
--------------------------
Total liabilities .................................... 1,386,246 1,481,368
--------------------------

Commitments and Contingencies (Notes 17 and 18)

Shareholders' equity:
Preferred stock, no par value; 2,000,000 shares authorized .. -- --
Common stock, $0.01 par value; 15,000,000 shares authorized;
11,219,319 shares issued ................................... 112 112
Paid in capital .............................................. 56,089 55,189
Retained earnings ............................................ 129,539 120,238
Accumulated other comprehensive loss ......................... (1,155) (1,597)
--------------------------
184,585 173,942
Less: treasury stock, at cost, 1,196,950 and 1,072,644 shares
at December 31, 2006 and 2005, respectively ............... (34,230) (30,173)
--------------------------
Total shareholders' equity ........................... 150,355 143,769
--------------------------
Total liabilities and shareholders' equity ........... $ 1,536,601 $ 1,625,137
==========================

See accompanying notes to consolidated financial statements.

MAIN STREET TRUST, INC.
AND SUBSIDIARIES

Consolidated Statements of Income

Years Ended December 31, 2006, 2005 and 2004 (in thousands,
except share and per share data)

2006 2005 2004
-------------------------------------------

Interest income:
Loans and fees on loans ...................................... $ 70,507 $ 60,988 $ 41,568
Investments in debt and equity securities
Taxable .................................................... 17,742 12,465 10,793
Tax-exempt ................................................. 1,183 1,516 1,844
Federal funds sold and interest bearing deposits ............. 1,327 2,023 600
-------------------------------------------
Total interest income ................................ 90,759 76,992 54,805

Interest expense:
Deposits ..................................................... 33,555 21,589 13,972
Federal funds purchased and repurchase agreements ............ 5,531 3,097 1,271
Federal Home Loan Bank advances and other borrowings ......... 2,126 2,793 1,609
-------------------------------------------
Total interest expense ............................... 41,212 27,479 16,852
-------------------------------------------

Net interest income .................................. 49,547 49,513 37,953
Provision for loan losses ...................................... 1,800 1,530 1,100
-------------------------------------------
Net interest income after provision for loan losses .. 47,747 47,983 36,853

Non-interest income:
Remittance processing ........................................ 7,306 6,748 7,201
Trust and brokerage fees ..................................... 8,235 7,599 6,492
Service charges on deposit accounts .......................... 2,719 2,923 2,419
Securities transactions, net ................................. 456 (586) 133
Gain on sales of mortgage loans, net ......................... 596 886 997
Other ........................................................ 3,271 2,907 2,605
-------------------------------------------
Total non-interest income ............................ 22,583 20,477 19,847

Non-interest expense:
Salaries and employee benefits ............................... 23,572 23,099 18,889
Occupancy .................................................... 3,049 3,074 2,669
Equipment .................................................... 2,513 2,592 2,512
Data processing .............................................. 3,170 2,416 2,283
Office supplies .............................................. 1,248 1,245 1,247
Service charges from correspondent banks ..................... 284 513 781
Amortization of core deposit intangibles ..................... 870 653 --
Other ........................................................ 6,242 6,187 5,498
-------------------------------------------
Total non-interest expense ........................... 40,948 39,779 33,879

Income before income taxes ........................... 29,382 28,681 22,821
Income taxes ................................................... 10,145 10,373 8,043
-------------------------------------------
Net income ........................................... $ 19,237 $ 18,308 $ 14,778
===========================================

Per share data:
Basic earnings per share ..................................... $ 1.91 $ 1.82 $ 1.56
Weighted average shares of common stock outstanding .......... 10,094,433 10,060,032 9,481,034

Diluted earnings per share ................................... $ 1.88 $ 1.80 $ 1.54
Weighted average shares of common stock and dilutive potential
common shares outstanding .................................. 10,222,543 10,157,409 9,594,148

Dividends declared per share ................................... $ 0.94 $ 0.89 $ 0.85

See accompanying notes to consolidated financial statements.

MAIN STREET TRUST, INC.
AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders' Equity

Years Ended December 31, 2006,
2005 and 2004 (in thousands,
except share and per share data)

Accumulated
Other
Comprehensive
Common Stock Paid-in Retained Income Treasury Stock
Shares Amount Capital Earnings (Loss) Shares Amount Total
-------------------------------------------------------------------------------------------

Balance, December 31, 2003 ............ 11,219,319 $ 112 $ 55,271 $ 101,521 $ 1,941 1,718,950 $ (47,395) $111,450
Comprehensive Income:
Net income .......................... -- -- -- 14,778 -- -- -- 14,778
Net change in unrealized
gain (loss) on securities
available-for-sale, net of
taxes of ($1,386) ................. -- -- -- -- (2,079) -- -- (2,079)
Reclassification adjustment,
net of tax of ($53) ............... -- -- -- -- (80) -- -- (80)
--------
Comprehensive income ........ 12,619
--------
Stock appreciation rights ............. -- -- (82) -- -- -- -- (82)
Cash dividends declared ($0.85
per share) .......................... -- -- -- (8,056) -- -- -- (8,056)
Treasury stock transactions, net ...... -- -- -- (172) -- 51,379 (1,784) (1,956)
-------------------------------------------------------------------------------------------
Balance, December 31, 2004 ............ 11,219,319 112 55,189 108,071 (218) 1,770,329 (49,179) 113,975
Comprehensive Income:
Net income .......................... -- -- -- 18,308 -- -- -- 18,308
Net change in unrealized
gain (loss) on securities
available-for-sale, net of
taxes of ($1,154) ................. -- -- -- -- (1,731) -- -- (1,731)
Reclassification adjustment,
net of tax of $234 ................ -- -- -- -- 352 -- -- 352
--------
Comprehensive income ........ 16,929
--------
Cash dividends declared ($0.89
per share) .......................... -- -- -- (8,926) -- -- -- (8,926)
Acquisition of Citizens First
Financial Corp. ....................... -- -- -- 2,888 -- (896,899) 24,916 27,804
Treasury stock transactions, net ...... -- -- -- (103) -- 199,214 (5,910) (6,013)
-------------------------------------------------------------------------------------------
Balance, December 31, 2005 ............ 11,219,319 112 55,189 120,238 (1,597) 1,072,644 (30,173) 143,769
Comprehensive Income:
Net income ........................ -- -- -- 19,237 -- -- -- 19,237
Net change in unrealized
gain (loss) on securities
available-for-sale, net of
taxes of $478 ................... -- -- -- -- 715 -- -- 715
Reclassification adjustment,
net of tax of ($183) ............ -- -- -- -- (273) -- -- (273)
--------
Comprehensive income ........ 19,679
--------
Paid-in capital- stock options ........ -- -- 659 -- -- -- -- 659
Deferred tax benefit on stock option
exercises ........................... -- -- 241 -- -- -- -- 241
Cash dividends declared ($0.94
per share) .......................... -- -- -- (9,470) -- -- -- (9,470)
Treasury stock transactions, net ...... -- -- -- (466) -- 124,306 (4,057) (4,523)
-------------------------------------------------------------------------------------------

Balance, December 31, 2006 ............ 11,219,319 $ 112 $ 56,089 $ 129,539 $ (1,155) 1,196,950 $ (34,230) $150,355
===========================================================================================

See accompanying notes to consolidated financial statements.

MAIN STREET TRUST, INC.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows
Years Ended December 31, 2006, 2005 and 2004
(in thousands)

2006 2005 2004
-----------------------------------

Cash flows from operating activities:
Net income ................................................................. $ 19,237 $ 18,308 $ 14,778
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization - fixed assets ............................... 2,563 2,533 2,544
Amortization of bond premiums and accretion of discounts, net .............. 500 1,082 2,386
Amortization of core deposit intangibles ................................... 870 653 --
Provision for loan losses .................................................. 1,800 1,530 1,100
Deferred income taxes ...................................................... (2,191) (13) 208
Securities transactions, net ............................................... (456) 586 (133)
Federal Home Loan Bank stock dividend ...................................... -- (797) (250)
Undistributed earnings from non-marketable equity securities ............... (397) (1,555) (304)
Gain on sales of mortgage loans, net ....................................... (596) (886) (997)
Loss (gain) on disposal of premises and equipment .......................... 13 8 (236)
Proceeds from sales of mortgage loans originated for sale .................. 52,417 65,334 76,864
Mortgage loans originated for sale ......................................... (51,276) (64,822) (76,240)
Stock based compensation plan expense ...................................... 659 -- --
Other, net ................................................................. (1,412) 2,527 463
-----------------------------------
Net cash provided by operating activities .......................... 21,731 24,488 20,183
-----------------------------------

Cash flows from investing activities:
Net decrease (increase) in loans ........................................... 12,918 (15,264) (96,108)
Proceeds from maturities and calls of investments in debt securities:
Held-to-maturity ......................................................... 20,917 9,549 20,793
Available-for-sale ....................................................... 84,805 194,110 192,975
Proceeds from sales of investments in debt and equity securities:
Available-for-sale ....................................................... 6,078 56,245 3,223
Purchases of investments in debt and equity securities:
Held-to-maturity ......................................................... (19,882) (17,377) (49,029)
Available-for-sale ....................................................... (69,906) (317,443) (219,215)
Non-marketable equity securities ......................................... (1,425) (685) (425)
Principal paydowns from mortgage-backed securities:
Held-to-maturity ......................................................... 5,322 11,752 42,967
Available-for-sale ....................................................... 4,520 14,777 14,660
Return of principal on non-marketable equity securities .................... 1,795 1,800 522
Proceeds from redemption of non-marketable equity securities ............... 10,794 -- 231
Purchases of premises and equipment ........................................ (1,997) (2,516) (2,396)
Proceeds from disposal of premises and equipment ........................... 21 8 623
Proceeds from sales of other real estate ................................... 731 -- 40
Acquisition of Citizens First Financial Corporation, net of cash and
cash equivalents ......................................................... -- (6,385) --
-----------------------------------
Net cash provided by (used in) investing activities ................ 54,691 (71,429) (91,139)
-----------------------------------

Cash flows from financing activities:
Net (decrease) increase in deposits ........................................ (42,485) 69,306 76,105
Net (decrease) increase in federal funds purchased and repurchase agreements (10,129) 21,552 (6,098)
Advances from Federal Home Loan Bank advances and other borrowings ......... 1,000 39,000 --
Payments on Federal Home Loan Bank advances and other borrowings ........... (43,909) (39,095) (98)
Cash dividends paid ........................................................ (9,298) (8,671) (7,972)
Excess tax benefit- stock based compensation plan .......................... 241 -- --
Treasury stock transactions, net ........................................... (4,523) (6,013) (1,956)
-----------------------------------
Net cash (used in) provided by financing activities ................ (109,103) 76,079 59,981
-----------------------------------
Net (decrease) increase in cash and cash equivalents ............... (32,681) 29,138 (10,975)
Cash and cash equivalents at beginning of year ............................... 94,066 64,928 75,903
-----------------------------------
Cash and cash equivalents at end of period ................................... $ 61,385 $ 94,066 $ 64,928
===================================

See accompanying notes to consolidated financial statements.

MAIN STREET TRUST, INC.
AND SUBSIDIARIES

Supplemental Disclosure of Cash Flow Information
Years Ended December 31, 2006, 2005 and 2004
(in thousands)

2006 2005 2004
-----------------------------------

Cash paid during the year for:
Interest ............................................. $ 40,682 $ 25,616 $ 15,920
Income Taxes ......................................... 11,504 8,931 6,780
Real estate acquired through or in lieu of foreclosure 704 148 40
Dividends declared not paid ............................ 2,506 2,334 2,079

Acquisition of Citizens First Financial Corporation:
Stock issued ......................................... $ 27,804
Cash paid ............................................ 28,416
Capitalized expenses ................................. 621
---------
Total cost of acquisition .................... $ 56,841
=========

Assets acquired:
Cash and due from banks .............................. $ 6,022
Federal funds sold and interest bearing deposits ..... 16,630
---------
Cash and cash equivalents .................... 22,652

Investments in debt and equity securities:
Available-for-sale, at fair value .................... 23,865
Non-marketable equity securities ..................... 16,374
Loans, net of allowance for loan losses ................ 228,114
Mortgage loans held for sale ........................... 282
Premises and equipment ................................. 5,993
Accrued interest receivable ............................ 1,571
Goodwill ............................................... 20,736
Core deposit intangibles ............................... 5,222
Other assets ........................................... 6,174
Liabilities assumed:
Deposits ............................................... (232,089)
Federal Home Loan Bank advances and other borrowings ... (37,599)
Accrued interest payable ............................... (193)
Other liabilities ...................................... (4,261)
---------
Net assets acquired .................................... $ 56,841
=========

See accompanying notes to consolidated financial statements

MAIN STREET TRUST, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

(a) Nature of Operations

Through Main Street Bank & Trust (the "Bank"), Main Street Trust,
Inc. (the "Company") provides a full range of banking services to
individual and corporate customers located within Champaign,
Decatur, Peoria, Bloomington, and Shelbyville, Illinois, and the
surrounding communities. In addition, the Company provides retail
payment processing services through FirsTech, Inc. The
subsidiaries are subject to competition from other financial
institutions and nonfinancial institutions providing financial
products and similar payment processing services. Additionally,
the Company is subject to the regulations of certain regulatory
agencies and undergo periodic examinations by those regulatory
agencies.

(b) Use of Estimates

The consolidated financial statements of the company have been
prepared in conformity with accounting principles generally
accepted in the United States of America and conform to
predominant practices within the banking industry. The
preparation of the consolidated financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates
and assumptions, including the determination of the allowance for
loan losses, impairment of goodwill and the valuation of real
estate acquired in connection with foreclosure or in satisfaction
of loans, that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

The consolidated financial statements include the accounts of
Main Street Trust, Inc. and its wholly owned subsidiaries, Main
Street Bank & Trust and FirsTech, Inc., a retail payment
processing company. On April 1, 2005, the Company purchased
Citizens First Financial Corp., which was the parent company of
Citizens Savings Bank, based in Bloomington, Illinois. At the
close of business on October 7, 2005, Citizens Savings Bank was
merged into Main Street Bank & Trust. During 2004, the Company's
subsidiary banks, BankIllinois and The First National Bank of
Decatur, were merged to form Main Street Bank & Trust.
Significant intercompany accounts and transactions have been
eliminated in consolidation.

Property held in fiduciary or agency capacities for its customers
is not included in the accompanying consolidated balance sheets,
since such items are not assets of the Company.

(d) Segment Information

The Company currently operates in two industry segments. The
primary business involves providing banking services to central
Illinois. The Bank offers a full range of financial services to
business and individual customers. These services include demand,
savings, time and individual retirement accounts; commercial,
consumer (including automobile loans and personal lines of
credit), agricultural, and real estate lending; safe deposit and
night depository services; farm management; full service trust
departments that offer a wide range of services such as
investment management, acting as trustee, serving as guardian,
executor or agent and miscellaneous consulting; and purchases of
installment obligations from retailers, primarily without
recourse. The other industry segment involves retail payment
processing. FirsTech provides the following services to electric,
water and gas utilities, telecommunication companies, cable
television firms and charitable organizations: retail lockbox
processing of payments delivered by mail on behalf of the biller;
processing of payments delivered by customers to pay agents such
as grocery stores, convenience stores and currency exchanges; and
concentration of payments delivered by the Automated Clearing
House network, money management software such as Quicken and
through networks such as Visa e-Pay and MasterCard RPS.

Company information is provided for informational purposes only,
since it is not considered a separate segment for reporting
purposes. Effective January 1, 2005, certain administrative,
audit, compliance, accounting, finance, property management,
human resources, courier, information systems and other support
services previously included in the budget of the Company was
moved to the Banking Services Segment. During this process,
approximately 77 full time equivalent employees were moved from
the Company to Main Street Bank & Trust. The net expenses of
these functions were allocated to the Company and FirsTech by
charging a monthly management fee.

The following is a summary of selected data for the various
business segments as of and for the year ending December 31 (in
thousands):

Banking Remittance
Services Services Company Eliminations Total
-------------------------------------------------------------------

2006
Total interest income $ 90,139 $ 29 $ 657 $ (66) $ 90,759
Total interest expense 40,970 -- 308 (66) 41,212
Provision for loan losses 1,800 -- -- -- 1,800
Total non-interest income 15,754 7,693 427 (1,291) 22,583
Total non-interest expense 35,988 4,605 1,646 (1,291) 40,948
Income before income tax 27,135 3,117 (870) -- 29,382
Income tax expense 9,593 1,309 (757) -- 10,145
Net income 17,542 1,808 (113) -- 19,237
Goodwill 20,736 -- -- -- 20,736
Total assets 1,524,734 4,506 154,880 (147,519) 1,536,601
Depreciation and amortization - fixed assets 2,190 318 55 -- 2,563

2005
Total interest income $ 75,087 $ 14 $ 1,935 $ (44) $ 76,992
Total interest expense 27,180 -- 343 (44) 27,479
Provision for loan losses 1,530 -- -- -- 1,530
Total non-interest income 15,238 6,899 (592) (1,068) 20,477
Total non-interest expense 35,199 4,281 1,367 (1,068) 39,779
Income before income tax 26,416 2,632 (367) -- 28,681
Income tax expense 9,428 1,107 (162) -- 10,373
Net income 16,988 1,525 (205) -- 18,308
Goodwill 20,736 -- -- -- 20,736
Total assets 1,610,026 3,365 153,974 (142,228) 1,625,137
Depreciation and amortization - fixed assets 2,126 354 53 -- 2,533

2004
Total interest income $ 54,383 $ 23 $ 497 $ (98) $ 54,805
Total interest expense 16,876 -- 74 (98) 16,852
Provision for loan losses 1,100 -- -- -- 1,100
Total non-interest income 12,779 7,283 4,697 (4,912) 19,847
Total non-interest expense 27,120 5,012 6,659 (4,912) 33,879
Income before income tax 22,066 2,294 (1,539) -- 22,821
Income tax expense 7,709 963 (629) -- 8,043
Net income 14,357 1,331 (910) -- 14,778
Total assets 1,209,207 3,936 121,348 (106,373) 1,228,118
Depreciation and amortization - fixed assets 1,535 623 386 -- 2,544

(e) 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.

(f) Investments in Debt and Equity Securities

Debt securities classified as held-to-maturity are those
securities which the Company has the ability and intent to hold
until maturity. These securities are carried at amortized cost,
in which the amortization of premiums and accretion of discounts,
which are recognized as adjustments to interest income, are
recorded using methods which approximate the interest method.
These methods consider the timing and amount of prepayments of
underlying mortgages in estimating future cash flows on
individual mortgage-related securities. Unrealized holding gains
and losses for held-to-maturity securities are excluded from
earnings and shareholders' equity.

Debt and equity securities classified as available-for-sale are
those securities that the Company intends to hold for an
indefinite period of time but not necessarily to maturity. Any
decision to sell a security classified as available-for-sale is
based on various factors, including significant movements in
interest rates, changes in the maturity mix of the Company'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 cost, adjusted for amortization of premium
and accretion of discounts, results in an unrealized gain or
loss. Unrealized gains or losses are reported as accumulated
other comprehensive income (loss), net of the related deferred
tax effect. Gains or losses from the sale of securities are
determined using the specific identification method. Premiums and
discounts are recognized in interest income using methods, which
approximate the interest method over their amortization periods.
Amortization period is defined as call date if the security was
purchased at a premium or maturity date if purchased at a
discount.

Declines in the fair value of held-to-maturity and
available-for-sale securities below their cost that are deemed to
be other than temporary are reflected in earnings as realized
losses. In estimating other-than-temporary impairment losses,
management considers (1) the length of time and the extent to
which the fair value has been less than cost, (2) the financial
condition and near-term prospects of the issuer, and (3) the
intent and ability of the Company to retain its investment in the
issuer for a period of time sufficient to allow for any
anticipated recovery in fair value.

Effective for the period ended December 31, 2005, the Company
modified its policy for evaluating investments for
other-than-temporary impairment. Under its new policy,
investments, other than debt security investments where the
impairment is deemed to be due solely to interest rate movements,
are assumed to be impaired and the impairment recognized through
earnings no later than twelve months from the date the security
was first impaired, unless there is "overwhelming evidence to the
contrary." Under the policy, "overwhelming evidence to the
contrary" is a rare instance, but might include, among other
things, an announced sale soon after a reporting period where the
price would cause an impairment to reverse. Further, under
certain circumstances, including a bankruptcy, catastrophic event
or other circumstances which cause the Company to determine,
after analyzing the specific facts, that the decline in the fair
value is other than temporary, the Company would recognize an
other than temporary impairment write-down upon such occurrence
or determination, and not wait twelve months from the time of the
impairment.

Non-marketable equity securities include other investments which
are carried at fair value as well as the Bank's required
investment in the capital stock of the Federal Home Loan Bank. No
ready market exists for FHLB stock, and it has no quoted market
value. For disclosure purpose, such stock is assumed to have a
market value which is equal to cost. Dividends received on such
stock are included with interest income in the consolidated
statements of operations.

On April 18, 2006, the Federal Home Loan Bank of Chicago
("FHLBC") announced plans to redeem excess (or "voluntary")
capital stock held by its members. The FHLBC received regulatory
approval to redeem approximately $795 million of stock held by
members in excess of the minimum required as a condition for
membership. During the second quarter of 2006, the Company
redeemed approximately $7.397 million of excess stock (the
Company's pro rata share). On November 8, 2006, the Federal
Housing Finance Board authorized the FHLBC's redemption of an
additional $375 million of members' excess (or "voluntary")
capital stock. The Company's pro-rata share of approximately
$3.397 million was redeemed during the fourth quarter. No gain or
loss was recognized on the redemption.

(g) Loans

Loans are stated at the principal amount outstanding, net of the
allowance for loan losses. Interest is credited to income as
earned, based upon the principal amount outstanding.

The accrual of interest on loans is discontinued when, in the
opinion of management, the borrower is unable to meet payments as
they become due. Interest accrued in the current year is reversed
against interest income, and prior years' interest is charged to
the allowance for loan losses. Interest income on impaired loans
is recognized to the extent interest payments are received and
the principal is considered fully collectible.

Mortgage loans held for sale are carried at the lower of
aggregate cost or estimated market value. Gains or losses on
sales of loans held for sale are computed using the
specific-identification method and are reflected in income at the
time of sale.

Loan origination fees and certain direct origination costs are
being amortized as an adjustment of the yield over the
contractual life of the related loan, adjusted for prepayments,
using the interest method.

(h) Mortgage Servicing Rights

The fair market value of servicing rights on mortgage loans that
are sold with servicing retained is capitalized. The capitalized
servicing rights are amortized against income based on the
estimated lives of the loans. Capitalized servicing rights are
evaluated for impairment based on the fair value of the servicing
rights and any impairment is reflected in income.

(i) Allowance for Loan Losses

The allowance for loan losses is increased by provisions charged
to operations and is reduced by loan charge-offs less recoveries.
Management utilizes an approach, which provides for general and
specific valuation allowances, that is based on current economic
conditions, past losses, collection experience, risk
characteristics of the portfolio, assessment of collateral values
by obtaining independent appraisals for significant properties,
and such other factors which, in management's judgment, deserve
current recognition in estimating loan losses, to determine the
appropriate level of the allowance for loan losses.

Loans are categorized as "impaired" when, based on current
information or events, it is probable that the Company will be
unable to collect all amounts due, including principal and
interest, in accordance with the contractual terms of the loan
agreement. The Company reviews all non-accrual and substantially
delinquent loans, as well as problem loans identified by
management, for impairment as defined above. A specific reserve
amount will be established for impaired loans in which the
present value of the expected cash flows to be generated is less
than the amount of the loan recorded on the Company's books. As
an alternative to discounting, the Company may use the "fair
value" of any collateral supporting a collateral-dependent loan
in reviewing the necessity for establishing a specific loan loss
reserve amount. Specific reserves will be established for
accounts having a collateral deficiency estimated to be $50,000
or more. The Company's general reserve is maintained at an
adequate level to cover accounts having a collateral deficiency
of less than $50,000. Loans evaluated as groups or homogeneous
pools of loans will be excluded from this analysis.

The Company utilizes its data processing system to identify loan
payments not made by their contractual due date and calculate the
number of days each loan exceeds the contractual due dates. The
accrual of interest on any loan is discontinued when, in the
opinion of management, there is reasonable doubt as to the
collectibility of interest or principal.

Management believes the allowance for loan losses is adequate to
absorb probable credit losses inherent in the loan portfolio.
While management uses available information to recognize loan
losses, future additions to the allowance for loan losses may be
necessary based on changes in economic conditions. In addition,
various regulatory agencies, as an integral part of their
examination process, periodically review the adequacy of the
allowance for loan losses. Such agencies may require the Company
to recognize additions to the allowance for loan losses based on
their judgments of information available to them at the time of
their examination.

(j) Premises and Equipment

Premises and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization
applicable to furniture and equipment and buildings and leasehold
improvements is charged to the related occupancy or equipment
expense using straight-line and accelerated methods over the
estimated useful lives of the assets. Estimated lives are 2 to 39
years for buildings and leasehold improvements and 1 to 10 years
for furniture and equipment.

(k) Other Real Estate

Other real estate, included in other assets in the accompanying
consolidated balance sheets, is initially recorded at fair value,
if it will be held and used, or at its fair value less costs to
sell if it will be disposed of. If, subsequent to foreclosure,
the fair value is less than the carrying amount, the carrying
value is reduced through a charge to income. Expenses incurred in
maintaining the properties are charged to operations. The Company
had $171,000 of other real estate at December 31, 2006 and
$188,000 of other real estate at December 31, 2005.

(l) Income Taxes

Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates
in effect for the year in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.

(m) Earnings Per Share

Basic earnings per share is computed by dividing net income by
the weighted average number of common stock shares outstanding.
Diluted earnings per share is computed by dividing net income by
the weighted average number of common stock and dilutive
potential common shares outstanding. Options to purchase shares
of the Company's common stock are the only dilutive potential
common shares. The weighted average number of dilutive potential
common shares is calculated using the treasury stock method.

Earnings per share has been computed as follows:

2006 2005 2004
-------------------------------------------

Net Income $19,237,000 $18,308,000 $14,778,000
Shares:
Weighted average common shares outstanding 10,094,433 10,060,032 9,481,034
Dilutive effect of outstanding options, as determined
by the application of the treasury stock method 128,110 97,377 113,114
-------------------------------------------
Weighted average common shares outstanding,
as adjusted $10,222,543 10,157,409 9,594,148
============================================
Basic earnings per share $ 1.91 $ 1.82 $ 1.56
============================================
Diluted earnings per share $ 1.88 $ 1.80 $ 1.54
============================================

(n) Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, cash
and cash equivalents include cash and due from banks and federal
funds sold and interest bearing deposits. Generally, federal
funds are sold for one-day periods. Cash flows from loans,
deposits, and federal funds purchased and repurchase agreements
are reported net.

(o) Emerging Accounting Standards

In July 2006, the FASB issued FASB Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes."(FIN 48). FIN 48
clarifies the accounting and reporting for income taxes
recognized in accordance with SFAS No. 109, "Accounting for
Income Taxes." This interpretation prescribes a comprehensive
model for the financial statement recognition, measurement,
presentation and disclosure of uncertain tax positions taken or
expected to be taken in income tax returns. The Company does not
expect the adoption of FIN 48 to have a material impact on its
financial statements. The Company will adopt FIN 48 in the first
quarter of 2007.

In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements." This Statement defines fair value, establishes a
framework for measuring fair value, and expands disclosures about
fair value measurements. It clarifies that fair value is the
price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants
in the market in which the reporting entity transacts. The
Statement does not require any new fair value measurements, but
rather, it provides enhanced guidance to other pronouncements
that require or permit assets or liabilities to be measured at
fair value. This Statement is effective for fiscal years
beginning after November 15, 2007, with earlier adoption
permitted. The Company does not expect that the adoption of this
Statement will have a material impact on its financial position,
results of operations and cash flows.

In September 2006, the Securities and Exchange Commission (SEC)
issued Staff Accounting Bulletin (SAB) No. 108 to require
quantification of financial statement misstatements under both
the "rollover approach" and the "iron curtain approach". The
"rollover approach" quantifies a misstatement based on the amount
of the error originating in the current year income statement,
but ignores the effects of correcting the portion of the current
year balance sheet misstatement that originated in prior years.
The "iron curtain approach" quantifies a misstatement based on
the effects of correcting the misstatement existing in the
balance sheet at the end of the current year, irrespective of the
misstatement's year(s) of origination. The provisions of SAB No.
108 were applied to the Company for the year ended December 31,
2006 and adoption had no impact on the financial statements.

(p) Stock Option Plans

The Company has one share-based compensation plan. Prior to
January 1, 2006, the Company accounted for that plan under the
recognition and measurement provisions of APB Opinion No. 25,
Accounting for Stock Issued to Employees, and related
interpretations, as permitted by FASB Statement No. 123,
Accounting for Stock-Based Compensation. No stock-based
compensation cost was recognized in the Statements of Income for
the periods ended prior to January 1, 2006, as all options
granted under the plan had an exercise price equal to the market
value of the underlying common stock on the date of grant.
Effective January 1, 2006, the Company adopted the fair value
recognition provisions of FASB Statement No. 123(R), Share-Based
Payment, using the modified-prospective-transition method. Under
that transition method, compensation cost recognized in 2006
includes: (a) compensation cost for all share-based payments
granted prior to, but not yet vested as of January 1, 2006, based
on the grant date fair value estimated in accordance with the
original provisions of Statement 123, and (b) compensation cost
for all share-based payments granted subsequent to January 1,
2006, based on the grant-date fair value estimated in accordance
with the provisions of Statement 123(R). Results for prior
periods have not been restated.

As a result of adopting Statement 123(R) on January 1, 2006, the
Company's income before income taxes and net income for the year
ended December 31, 2006 were $659,000 and $396,000 lower,
respectively, than if it had continued to account for share-based
compensation under APB Opinion No. 25. Basic and diluted earnings
per share for the year ended December 31, 2006 would have been
$1.94 and $1.92, respectively, if the Company had not adopted
Statement 123(R), compared to reported basic and diluted earnings
per share of $1.91 and $1.88, respectively.

Prior to adoption of Statement 123(R), the Company presented all
tax benefits of deductions resulting from the exercise of stock
options as operating cash flows in the Statement of Cash Flows.
Statement 123(R) requires the cash flows resulting from the tax
benefits resulting from tax deductions in excess of compensation
cost recognized for those options (excess tax benefits) to be
classified as financing cash flows. The $241,000 excess tax
benefit classified as a financing cash inflow would have been
classified as an operating cash flow if the Company had not
adopted Statement 123(R).

The following table illustrates the effect on net income (in
thousands) and earnings per share if the Company had applied the
fair value recognition provisions of Statement 123 to options
granted under the Company's stock option plan in all periods
presented. For purposes of this pro forma disclosure, the value
of the options is estimated using a Black-Scholes option-pricing
formula and amortized over the options' vesting periods.

2005 2004
------------------------

Net income, as reported ........................ $ 18,308 $ 14,778
Deduct total stock-based compensation expense
determined under the fair value method for all
awards, net of related tax effects ........... (365) (366)
------------------------
Pro forma ...................................... $ 17,943 $ 14,412
========================
Basic earnings per share:
As reported .................................. $ 1.82 $ 1.56
Pro forma .................................... 1.78 1.52
Diluted earnings per share:
As reported .................................. $ 1.80 $ 1.54
Pro forma .................................... 1.77 1.50

The Main Street Trust, Inc. 2000 Stock Incentive Plan (the
"Plan"), which is shareholder-approved, permits the grant of
options for up to 2,205,000 shares of the Company's common stock.
The Board of Directors, or a committee appointed by the Board,
may issue options that constitute incentive stock options to
officers and employees and nonqualified options to directors,
officers, employees, consultants and advisors of the Company and
its related corporations (provided that such consultants and
advisors render bona fide services not in connection with the
offer and sale of securities in a capital-raising transaction).
Restricted stock and stock appreciation rights ("SARs") may also
be granted. SARs may be granted separately or in tandem with or
by reference to an option granted prior to or simultaneously with
the grant of such rights, to such eligible directors, officers,
employees, consultants and advisors as may be selected by the
Board of Directors. The Plan is intended to provide a means
whereby directors, officers, employees, consultants and advisors
of the Company and its related corporations may sustain a sense
of proprietorship and personal involvement in the continued
development and financial success of the Company and its related
corporations, and to encourage them to remain with and devote
their best efforts to the business of the Company and its related
corporations, thereby advancing the interests of the Company and
its shareholders. Grants under the Plan to date have been
nonqualified options granted to directors and officers. Options
granted under the Plan have an exercise price equal to market
value of the underlying common stock on the grant date. Existing
director options granted prior to 2003 are fully vested and
exercisable on the date granted while director options granted in
or after 2003 vest ratably over a one-year period from the date
granted. Existing officer options vest ratably over a three-year
period from the date granted. All outstanding options have a 10
year contractual life. Dividends are not paid on unexercised
options. In the event of a change of control, options and SARs
become immediately and fully exercisable.

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

2006 2005 2004
----------------------------------------------

Number of options granted ... 150,500 137,500 140,500
Risk-free interest rate ..... 4.59% - 4.65% 3.83% - 4.08% 3.94%
Expected life, in years ..... 6.50 - 8.00 7.00 - 8.00 8.00
Expected volatility ......... 14.28% 15.05% - 15.42% 15.95%
Expected dividend yield ..... 3.06% 2.97% - 3.06% 2.75%

Expected volatilities are based on historical volatility of the
Company's stock. The Company uses historical data to estimate
option exercises and terminations (turnover percentage) within
the valuation method. The expected term of options granted is
derived from the output of the options valuation model which uses
historical data and represents the period of time that options
granted are expected to be outstanding. Expected turnover
percentage and expected term are estimated separately for
directors and officers. The risk-free rate for periods within the
contractual life of the option is based on the U.S. Treasury
Strips as of the grant date.

(q) Acquired Goodwill and Intangible Assets

Goodwill of $20.736 million resulted from the acquisition of
Citizens First Financial Corp. in 2005. Goodwill was tested for
impairment annually on October 31. No impairment was found.

Intangible assets consist of core deposit intangibles from
business acquisitions. This amount is amortized into other
expense on a straight-line basis over a six year period. On a
periodic basis, the Company reviews the intangible assets for
events or circumstances that may indicate a change in
recoverability of the underlying basis.

As of December 31, 2006
------------------------
Gross
Carrying Accumulated
Amount Amortization
------------------------

Amortized intangible assets
Core deposit intangibles ............................. $ 5,222 $ 1,523

Unamortized intangible assets
Goodwill ............................................. $20,736 $ --

Aggregate Future Amortization Expense:
For the year ended 12/31/07 ........................ 871
For the year ended 12/31/08 ........................ 870
For the year ended 12/31/09 ........................ 870
For the year ended 12/31/10 ........................ 870
For the year ended 12/31/11 ........................ 218

2. Mergers and Acquisitions

On April 1, 2005, the Company acquired all of the outstanding stock of Citizens
First Financial Corp. ("Citizens"), which was the parent company of Citizens
Savings Bank, based in Bloomington, Illinois. The transaction has been accounted
for as a purchase. Assets and liabilities related to the acquisition of Citizens
are reported as of the April 2005 acquisition date. Results of operations of
Citizens since the acquisition date have been included in the Company's
consolidated financial statements. The Company merged Citizens Savings Bank into
the Bank as of the close of business on October 7, 2005. The Citizens
acquisition purchase price of approximately $56.841 million was allocated based
upon the fair value of the assets acquired and liabilities assumed. The Citizens
excess purchase price has been allocated to goodwill and identifiable intangible
assets in accordance with current accounting literature. $5.222 million was
allocated to core deposit intangibles at acquisition and is being amortized over
a period of six years.

Proforma unaudited operating results for the year ended December 31, 2005 and
2004, giving effect to the Citizens acquisition as if it had occurred as of the
beginning of each period are as follows:

2005 2004
-----------------------
(in thousands, except
per share data)

Interest Income ..... $ 81,160 $ 72,854
Interest Expense .... 29,074 23,952
Net Income .......... 18,297 17,393
Basic EPS ........... 1.82 1.68
Diluted EPS ......... 1.80 1.66

These unaudited proforma results have been prepared for comparative purposes
only and include certain adjustments, such as additional amortization expense on
revalued purchased assets and implied interest on additional borrowings to fund
the acquisition. In addition, 2005 merger related expenses were reallocated to a
period prior to the pro forma dates presented. All adjustments were tax
effected. They do not purport to be indicative of the results of operations that
actually would have resulted had the combination occurred on January 1, 2005 or
of future results of operations of the consolidated entities.

On September 21, 2006, the Company announced its intent to merge with First
Busey Corporation in Urbana, Illinois. The combined company will operate under
the name First Busey Corporation and will list its common stock on the Nasdaq
Global Select Market and trade under the symbol BUSE. Under terms of the
agreement, Main Street shareholders will receive shares of First Busey common
stock, using a fixed exchange ratio of 1.55 shares of First Busey common stock
for each share of Main Street common stock. At separate special meetings of
their respective shareholders on February 28, 2007, a majority of the
shareholders of Main Street and First Busey voted to approve the merger. The
merger is subject to regulatory approval and other customary conditions. The
transaction is expected to be completed during the first half of 2007. The
combined company, First Busey Corporation, will have total assets of
approximately $4.2 billion. Following the merger of the two holding companies,
it will be their intent to merge their Illinois-based banking subsidiaries,
Busey Bank and Main Street Bank & Trust. The two banks will be merged under
Busey Bank's state charter, and the bank name will remain Busey Bank. The merged
bank will have total assets of approximately $3.6 billion and total deposits
exceeding $2.7 billion. Wealth management assets under care for the combined
organization will be approximately $4.5 billion.

3. Cash and Due from Banks

The compensating balances held at correspondent banks were $34.695 million and
$35.711 million at December 31, 2006 and 2005, respectively. The Bank maintains
such compensating balances with correspondent banks to offset charges for
services rendered by those banks. In addition, the Bank was required by the
Federal Reserve Bank to maintain reserves in the form of cash on hand or
balances at the Federal Reserve Bank. The balance of reserves held was $14.063
million and $12.014 million at December 31, 2006 and 2005, respectively.

4. Investments in Debt and Equity Securities

The amortized cost and fair values of investments in debt and equity securities
(in thousands) were as follows:

Available-for-Sale
-------------------------------------------------
Gross Gross
Amortized unrealized unrealized Fair
Cost gains losses value
-------------------------------------------------

December 31, 2006
U.S. Treasury and other
government agencies ............................................ $ 301,507 $ 5 $ 2,237 $ 299,275
Mortgage-backed securities ....................................... 9,116 36 205 8,947
Obligations of state and political subdivisions .................. 9,462 235 39 9,658
Other ............................................................ 415 309 29 695
-------------------------------------------------
$ 320,500 $ 585 $ 2,510 $ 318,575
=================================================

December 31, 2005
U.S. Treasury and other
government agencies ............................................ $ 315,930 $ 15 $ 3,461 $ 312,484
Mortgage-backed securities ....................................... 13,729 79 151 13,657
Obligations of state and political subdivisions .................. 13,539 363 68 13,834
Other ............................................................ 2,551 619 58 3,112
-------------------------------------------------
$ 345,749 $ 1,076 $ 3,738 $ 343,087
=================================================

Held-to-Maturity
-------------------------------------------------
Gross Gross
Amortized unrealized unrealized Fair
Cost gains losses value
-------------------------------------------------

December 31, 2006
U.S. Treasury and other
government agencies ............................................ $ 27,340 $ -- $ 588 $ 26,752
Mortgage-backed securities ....................................... 28,974 5 410 28,569
Obligations of state and political subdivisions .................. 13,579 172 35 13,716
-------------------------------------------------
$ 69,893 $ 177 $ 1,033 $ 69,037
=================================================
December 31, 2005
U.S. Treasury and other
government agencies ............................................ $ 38,650 $ -- $ 919 $ 37,731
Mortgage-backed securities ....................................... 17,091 55 162 16,984
Obligations of state and political subdivisions .................. 20,801 230 81 20,950
-------------------------------------------------
$ 76,542 $ 285 $ 1,162 $ 75,665
=================================================

Unrealized losses and fair value, aggregated by investment category and length
of time that individual securities have been in a continuous unrealized loss
position, as of December 31, 2006 are summarized as follows:

Continuous unrealized Continuous unrealized
losses existing for less losses existing greater
than 12 months than 12 months Total
--------------------------------------------------------------------------
Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized
Losses Losses Losses
--------------------------------------------------------------------------

Available-for-Sale:
U.S. Treasury and other
government agencies ............ $ 42,002 $ 150 $253,782 $ 2,087 $295,784 $ 2,237
Mortgage-backed securities ....... 1,141 9 5,541 196 6,682 205
Obligations of state and
political subdivisions ......... -- -- 1,590 39 1,590 39
-------------------------------------------------------------------------
Subtotal, debt securities $ 43,143 $ 159 $260,913 $ 2,322 $304,056 $ 2,481
Other ............................ 166 29 -- -- 166 29
-------------------------------------------------------------------------
Total temporarily impaired
securities ............... $ 43,309 $ 188 $260,913 $ 2,322 $304,222 $ 2,510
=========================================================================

Held-to-Maturity:
U.S. Treasury and other
government agencies ............ $ -- $ -- $ 26,655 $ 588 $ 26,655 $ 588
Mortgage-backed securities ....... 12,995 123 14,578 287 27,573 410
Obligations of state and
political subdivisions ......... 1,025 1 2,986 34 4,011 35
-------------------------------------------------------------------------
Total temporarily impaired
securities ............... $ 14,020 $ 124 $ 44,219 $ 909 $ 58,239 $ 1,033
=========================================================================

Available-for-Sale:
U.S. Treasury and other
government agencies ............ $149,575 $ 420 $139,128 $ 3,041 $288,703 $ 3,461
Mortgage-backed securities ....... 2,511 22 6,654 129 9,165 151
Obligations of state and
political subdivisions ......... -- -- 3,188 68 3,188 68
-------------------------------------------------------------------------

Subtotal, debt securities $152,086 $ 442 $148,970 $ 3,238 $301,056 $ 3,680
Other ............................ 847 58 -- -- 847 58
-------------------------------------------------------------------------

Total temporarily impaired
securities ............... $152,933 $ 500 $148,970 $ 3,238 $301,903 $ 3,738
=========================================================================

Held-to-Maturity:
U.S. Treasury and other
government agencies ............ $ 492 $ 8 $ 37,239 $ 911 $ 37,731 $ 919
Mortgage-backed securities ....... 8,708 90 3,321 72 12,029 162
Obligations of state and
political subdivisions ......... 3,996 39 3,332 42 7,328 81
-------------------------------------------------------------------------

Total temporarily impaired
securities ............... $ 13,196 $ 137 $ 43,892 $ 1,025 $ 57,088 $ 1,162
=========================================================================

Management evaluates securities for other-than-temporary impairment on at least
a quarterly basis, and more frequently when economic or market concerns warrant
such evaluation. In estimating other-than-temporary impairment losses,
management considers (1) the length of time and the extent to which the fair
value has been less than cost, (2) the financial condition and near-term
prospects of the issuer, and (3) the intent and ability of the Company to retain
its investment in the issuer for the period of time sufficient to allow for any
anticipated recovery in fair value.

For the period ended December 31, 2006 the $2.322 million continuous unrealized
loss greater than 12 months on available-for-sale securities was made up of 62
debt securities and was believed to be a temporary loss. The continuous
unrealized loss greater than 12 months on available-for-sale securities at
December 31, 2006 was a reduction of $916,000 from the $3.238 million continuous
unrealized loss greater than 12 months at December 31, 2005. None of the
marketable equity securities available-for-sale had a continuous unrealized loss
greater than 12 months. The $909,000 continuous unrealized loss greater than 12
months on held-to-maturity securities was made up of 50 debt securities and was
believed to be a temporary loss and is a reduction of $116,000 from the
unrealized continuous loss on held-to-maturity securities at December 31, 2005.

Unrealized losses on debt securities are generally due to changes in interest
rates and, as such, are considered by the Company to be temporary. Because of
the nature of U.S. Agency securities, most of which are single pay at maturity,
and because the Company has the ability to hold these investments until a
recovery of market value, which may be maturity, the Company does not consider
these investments to be other than temporarily impaired. Because the Company
believes the decline in market value of mortgage-backed securities is
attributable to changes in interest rates and not credit quality and because the
Company has the ability to hold these investments until recovery of market
value, the Company does not consider these investments to be other than
temporarily impaired.

Management has analyzed the equity securities to determine whether an other than
temporary loss exists and considered several factors, including, but not limited
to, the length of time and the extent to which the market value of the security
has been less than cost, the financial condition and near-term prospects of the
issuer and the intent and ability of the Company to retain its investment in the
issuer for a period of time sufficient to allow for any anticipated recovery in
market value. Effective for the period ended December 31, 2005, the Company
modified its policy for evaluating investments for other-than-temporary
impairment. Under its new policy, investments, other than debt security
investments where the impairment is deemed to be due solely to interest rate
movements, are assumed to be impaired and the impairment recognized through
earnings no later than 12 months from the date the security was first impaired,
unless there is "overwhelming evidence to the contrary." Under the policy,
"overwhelming evidence to the contrary" is a rare instance, but might include,
among other things, an announced sale soon after a reporting period where the
price would cause an impairment to reverse. Further, under certain
circumstances, including a bankruptcy, catastrophic event or other circumstances
which cause the Company to determine, after analyzing the specific facts, that
the decline in the fair value is other than temporary, the Company would
recognize an other than temporary impairment write-down upon such occurrence or
determination, and not wait twelve months from the time of the impairment.

A summary of non-marketable equity securities (in thousands) at December 31,
2006 and 2005 is as follows:

2006 2005
---------------------

Federal Home Loan Bank Stock, at cost $ 10,656 $ 21,450
Other investments, at fair value .... 3,571 3,544
---------------------
$ 14,227 $ 24,994
=====================

Realized gains and (losses) (in thousands) on sales, maturities and impairment
losses for the years ended December 31, 2006, 2005 and 2004 were as follows:

2006 2005 2004
-----------------------------
Gross gains ..................... $ 693 $ 1,228 $ 380
Gross (losses) .................. (237) (1,814) (247)
-----------------------------
Net gains (losses) .............. $ 456 $ (586) $ 133
=============================
Applicable income taxes (benefit) $ 183 $ (234) $ 53
=============================

Investments in debt and equity securities with a carrying value of $242.599
million and $275.609 million were pledged at December 31, 2006 and 2005,
respectively, to secure public deposits, repurchase agreements, and for other
purposes as required or permitted by law.

The amortized cost and fair value of investments in debt and marketable equity
securities (in thousands) at December 31, 2006, by amortization date, are shown
below. Amortization date is defined as call date if the security was purchased
at a premium or maturity date if purchased at a discount. Borrowers may have the
right to call or prepay obligations with or without call or prepayment penalties
and certain securities require principal repayments prior to maturity.
Therefore, these securities and equity securities with no stated maturities are
not included in the following maturity summary.

Available-for-sale Held-to-maturity
-------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
-------------------------------------------------

Due in one year or less .............. $ 171,548 $ 170,595 $ 14,015 $ 13,999
Due after one year through five years 123,814 122,725 24,739 24,264
Due after five years through ten years 15,607 15,613 1,415 1,395
Due after ten years .................. -- -- 750 810
-------------------------------------------------

$ 310,969 $ 308,933 $ 40,919 $ 40,468
Mortgage-backed securities ........... 9,116 8,947 28,974 28,569
Marketable equity securities ......... 415 695 -- --
-------------------------------------------------
Total ...................... $ 320,500 $ 318,575 $ 69,893 $ 69,037
=================================================

5. Loans

A summary of loans (in thousands), by classification, at December 31, 2006 and
2005 is as follows:

2006 2005
-----------------------
Commercial, financial, and agricultural $ 312,873 $ 319,861
Real Estate - Commercial .............. 484,003 469,506
Real Estate - Residential ............. 127,200 140,304
Installment and consumer .............. 77,846 86,728
-----------------------
$1,001,922 $1,016,399
Less:
Allowance for loan losses ........... 14,437 13,472
-----------------------
$ 987,485 $1,002,927
=======================

The Company makes commercial, financial and agricultural; commercial real
estate; residential real estate; and installment and consumer loans to customers
located in central Illinois and the surrounding communities. As such, the
Company is susceptible to changes in the economic environment in central
Illinois.

The loan portfolio includes a concentration of loans in commercial real estate
amounting to $484.003 million and $469.506 million at December 31, 2006 and
2005, respectively. The loans are expected to be repaid from cash flows or from
proceeds from the sale of selected assets of the borrowers. The concentration of
credit with commercial real estate is taken into consideration by management in
determining the allowance for loan losses. The Company's opinion as to the
ultimate collectibility of these loans is subject to estimates regarding future
cash flows from operations and the value of the property, real and personal,
pledged as collateral. These estimates are affected by changing economic
conditions and the economic prospects of the borrowers.

During 2006, 2005 and 2004, the Company sold approximately $52.417 million,
$65.334 million and $76.864 million, respectively, of residential mortgage loans
in the secondary market with servicing released on approximately $24.840
million, $19.982 million and $28.860 million, respectively. Capitalized mortgage
servicing rights totaled $1.282 million and $1.311 million at December 31, 2006
and 2005, respectively. The fair values of these rights were $1.937 million and
$1.938 million at December 31, 2006 and 2005, respectively. An independent
evaluation was performed to assess the fair value of the servicing rights in
each year reported.

Mortgage loans serviced for others are not included in the accompanying
consolidated financial statements. The unpaid balances of these loans consisted
of the following (in thousands) at December 31, 2006, 2005 and 2004:

2006 2005 2004
------------------------------
Fannie Mae ........................... $172,550 $186,840 $196,174
Freddie Mac .......................... 72,367 81,643 9,564
Illinois Housing Development Authority 687 758 939

In the normal course of business, loans are made to directors, executive
officers, and principal shareholders of the Company and to parties which the
Company or its directors, executive officers, and shareholders have the ability
to significantly influence its management or operating policies (related
parties). The terms of these loans, including interest rates and collateral, are
similar to those prevailing for comparable transactions with other customers and
do not involve more than a normal risk of collectibility. Activity associated
with loans (in thousands) made to related parties during 2006 was as follows:

2006
--------
Balance, January 1 ... $ 52,667
Change of relationship (3,388)
New loans ............ 19,384
Repayments ........... (18,721)
--------
Balance, December 31 . $ 49,942
========

At December 31, 2006 and 2005, one to four family real estate mortgage loans of
approximately $167.886 million and $188.088 million, respectively, were pledged
to secure advances from the Federal Home Loan Bank.

Activity in the allowance for loan losses (in thousands) for 2006, 2005 and 2004
was as follows:

2006 2005 2004
--------------------------------
Balance, beginning of year ............... $ 13,472 $ 9,650 $ 9,786
Balance, acquisition of Citizens ......... -- 3,434 --
Provision charged to expense ............. 1,800 1,530 1,100
Loans charged off ........................ (1,317) (1,459) (1,692)
Recoveries on loans previously charged off 482 317 456
--------------------------------
Balance, end of year ..................... $ 14,437 $ 13,472 $ 9,650
================================

The following table presents summary data on nonaccrual and other impaired loans
(in thousands) at December 31, 2006, 2005 and 2004:

2006 2005 2004
------------------------
Impaired loans on nonaccrual ...................... $4,998 $1,144 $1,126
Impaired loans continuing to accrue interest ...... 231 324 1,005
------------------------
Total impaired loans .............................. $5,229 $1,468 $2,131
========================
Other non-accrual loans not classified
as impaired .................................... $2,471 $1,090 $ 563
========================
Loans contractually past due 90 days or
more, still accruing interest and not classified
as impaired .................................... $ 744 $ 664 $ 547
========================
Allowance for loan losses on impaired loans ....... $1,297 $ 374 $ 491
========================
Impaired loans for which there is no related
allowance for loan losses ...................... $ 539 $ 545 $ 863
========================
Average recorded investment in impaired
loans .......................................... $4,459 $2,005 $2,336
========================
Interest income recognized from impaired
loans .......................................... $ 10 $ 67 $ 68
========================
Cash basis interest income recognized from
impaired loans ................................. $ 3 $ 34 $ 16
========================

6. Premises and Equipment

A summary of premises and equipment (in thousands) at December 31, 2006 and 2005
is as follows:

2006 2005
-----------------
Land .......................................... $ 7,282 $ 7,257
Furniture and equipment ....................... 14,351 15,191
Buildings and leasehold improvements .......... 28,946 28,517
-----------------
$50,579 $50,965
Less: accumulated depreciation and amortization 28,132 27,918
-----------------
$22,447 $23,047
=================

The Company leases various operating facilities and equipment under
noncancellable operating lease arrangements. These leases expire at various
dates through September 2012 and have renewal options to extend the lease terms
for various dates. The Company also leases an ATM location as well as some
parking and record storage space on a month-to-month lease. The rental expense
for these leases was $355,000, $270,000 and $222,000 in 2006, 2005 and 2004,
respectively.

Minimum annual rental payments required under the operating leases (in
thousands), which have initial or remaining terms in excess of one year at
December 31, 2006 are as follows:

2007 $ 374
2008 341
2009 316
2010 304
2011 288
Thereafter 147
--------
$ 1,770
========

7. Deposits

The aggregate amount of time certificate of deposits in denominations of
$100,000 or more was $145.880 million and $130.203 million at December 31, 2006
and 2005, respectively. As of December 31, 2006, the scheduled maturities of
time deposits (in thousands) were as follows:

2007 $330,652
2008 77,298
2009 73,887
2010 14,685
2011 2,475
Thereafter 10
--------
$499,007
========

8. Federal Funds Purchased and Repurchase Agreements

A summary of short-term borrowings (in thousands) at December 31, 2006 and 2005
is as follows:

2006 2005
-------------------
Federal funds purchased ...................... $ 2,025 $ 4,100
Securities sold under agreements to repurchase 106,298 114,352
-------------------
$108,323 $118,452
===================

Information relating to short-term borrowings (dollars in thousands) is as
follows:

2006 2005 2004
-----------------------------------------

Federal funds purchased:
Average daily balance ....................... $ 6,292 $ 5,869 $ 3,515
Maximum balance at month-end ................ $ 31,650 $ 24,225 $ 5,575
Weighted average interest rate at year-end .. 4.69% 3.56% 1.75%
Weighted average interest rate for the year . 4.90% 3.08% 0.94%

Securities sold under agreements to repurchase:
Average daily balance ....................... $ 118,870 $ 109,810 $ 93,246
Maximum balance at month-end ................ $ 125,150 $ 119,845 $ 112,052
Weighted average interest rate at year-end .. 4.67% 3.31% 1.65%
Weighted average interest rate for the year . 4.39% 2.66% 1.32%

Securities sold under agreements to repurchase ("repos") amounted to $106.298
million at December 31, 2006, of which $12.004 million were term repos with
maturities of 1 year or less and $94.294 million were repos which mature on a
daily basis. Securities which are under the control of the Bank with a fair
value of $109.716 million were pledged to these repurchase agreements at
December 31, 2006.

9. Federal Home Loan Bank Advances and Other Borrowings

A summary of Federal Home Loan Bank (FHLB) advances and other borrowings
(dollars in thousands) at December 31, 2006 and 2005 is as follows:

December 31
----------------------------------------------------------
2006 2005
----------------------------------------------------------
Weighted
FHLB Other Average
Advances Borrowings Total Rate Total
----------------------------------------------------------

Maturing in year ending:
2006 $ -- $ -- $ -- -- $ 29,910
2007 2,431 23 2,454 6.84% 2,453
2008 21,000 1,023 22,023 5.38% 35,023
----------------------------------------------------------
$ 23,431 $ 1,046 $ 24,477 5.53% $ 67,386
==========================================================

The terms of a security agreement with the FHLB require the Bank to pledge as
collateral for advances both qualifying first mortgage loans in an amount equal
to at least 167% of these advances and all stock of the FHLB. Advances are
subject to restrictions or penalties in the event of prepayment. At December 31,
2006, the Company had sufficient borrowing capacity to permit it to borrow
additional funds from the FHLB at a rate equal to the FHLB's current advance
rates.

10. Line of Credit

The Company has an unsecured line of credit of $15.000 million from a third
party lender. As of December 31, 2006, the entire line was available.

11. Income Taxes

Income tax expense (in thousands) for 2006, 2005 and 2004 is summarized as
follows:

2006 2005 2004
--------------------------------

Federal ....... $ 11,274 $ 9,560 $ 7,029
State ......... 1,062 826 806
--------------------------------
Current ...... 12,336 10,386 7,835
Deferred ..... (2,191) (13) 208
--------------------------------
Total ....... $ 10,145 $ 10,373 $ 8,043
================================

Actual income tax expense (in thousands) for 2006, 2005 and 2004 differ from the
"expected" income taxes (computed by applying the maximum U.S. federal corporate
income tax rate of 35% to earnings before income taxes) as follows:

2006 2005 2004
--------------------------------
Computed "expected" income taxes . $ 10,284 $ 10,038 $ 7,987
Tax-exempt interest income, net of
disallowed interest expense .... (363) (488) (607)
State tax, net of federal benefit 690 537 524
Other, net ....................... (466) 286 139
--------------------------------
$ 10,145 $ 10,373 $ 8,043
================================

The tax effects of temporary differences (in thousands) that give rise to
significant portions of the deferred tax assets and deferred tax liabilities,
included in other assets, at December 31, 2006 and 2005 are as follows:

2006 2005
--------------------
Deferred tax assets:
Unrealized holding loss on available-for-sale
securities ......................................... $ 770 $ 1,065
Allowance for loan losses ............................ 5,738 5,238
Deferred compensation ................................ 1,939 1,943
Other employee benefits .............................. 310 348
Phantom stock ........................................ 194 242
Net Operating Loss Carryforward ...................... -- 148
Nonqualified Stock Options ........................... 261 --
Other ................................................ 1,035 434
--------------------
Total deferred tax assets .................. $ 10,247 $ 9,418
--------------------
Deferred tax liabilities:
Premises and equipment ............................... $ (916) $ (817)
Mortgage servicing rights ............................ (486) (481)
Deferred loan fees ................................... (470) (394)
Discount accretion ................................... (42) (75)
FHLB Stock Dividend .................................. (608) (1,867)
Prepaid Expenses ..................................... (312) (258)
Purchase Accounting .................................. (1,276) (1,286)
--------------------
Total deferred tax liabilities ............. $ (4,110) $ (5,178)
--------------------
Net deferred tax assets .................... $ 6,137 $ 4,240
====================

12. Retirement Plans

The Company has established a profit sharing plan and a 401(k) plan for
substantially all employees who meet the eligibility requirements. The 401(k)
plan allowed for participant contributions up to the maximum amount allowed by
IRS regulations, of which, the first 6% of gross salary was available for the
Company's 50% match. The profit sharing plan is non-contributory. All
contributions to the profit sharing plan are at the discretion of the Company.
Contributions by the Company totaled $1.163 million, $1.101 million and $927,000
for 2006, 2005 and 2004, respectively.

Certain key officers and directors participate in various deferred compensation
or supplemental retirement agreements with the Company. The Company accrues the
liability for these agreements based on the present value of the amount the
employee or director is currently eligible to receive. The Company recorded
expenses of $278,000, $281,000 and $277,000 in 2006, 2005 and 2004,
respectively, related to these agreements. At December 31, 2006 and 2005, the
Company had a recorded liability in the amount of approximately $4.027 million
and $3.868 million, respectively for these plans. The Company has purchased life
insurance policies, which are reported as other assets, to assist in funding the
aforementioned liabilities and other employee benefits, with recorded cash
surrender values in 2006 and 2005 of approximately $11.124 million and $10.533
million, respectively.

The Company has an outstanding liability for a deferred compensation plan for
nonemployee directors of the Company which allowed participating directors to
defer directors' fees in a fixed income fund or, alternatively, in the form of
"phantom stock units." For directors that elected to receive phantom stock, a
deferred compensation account, included in other liabilities on the consolidated
balance sheet, was credited with phantom stock units. No additional
contributions were allowed to these plans since 2000, however, phantom stock
units continue to be increased by any dividends or stock splits declared by the
Company. At December 31, 2006 and 2005, $200,000 and $296,000 had been deferred
for the phantom stock plan, which represented 13,822 and 20,708 phantom stock
units. At December 31, 2006 and 2005, the Company had a recorded liability in
the amount of $492,000 and $618,000, respectively for these plans.

Additionally, in connection with the acquisition of Citizens First Financial
Corp., the Company assumed the outstanding liability for the Director Emeritus
Plan. At both December 31, 2006 and 2005, the Company had a recorded liability
in the amount of $1.263 million which is fully funded through single premium
insurance annuities.

13. Stock Options and Related Plans

In 2000, the Company established a stock incentive plan, which provides for the
granting of options of the Company's common stock to certain directors, officers
and employees. This plan provides for the granting of both qualified and
non-qualified options. Existing director options granted prior to 2003 are fully
vested and exercisable on the date granted while director options granted in or
after 2003 vest, and thus become exercisable, ratably over a one-year period
from the date granted. Existing officer and employee options vest, and thus
become exercisable, ratably over a three-year period from the date granted.
Under the 2000 incentive plan, the Company has outstanding options of 845,381
shares and 1,217,873 shares remain eligible for grant.

The following is a summary of the changes in options outstanding under the stock
incentive and stock option plans:

2006 2005 2004
--------------------------------------------------------------------------------------
Grant Grant Grant
Price Price Price
Shares Range Shares Range Shares Range
--------------------------------------------------------------------------------------

Options outstanding,
beginning of year ............ 767,413 $17.50 - $30.60 661,465 $17.50 - $30.60 581,780 $ 6.92 - $24.85
Granted ........................ 150,500 $ 30.10 137,500 $28.80 - $29.60 140,500 $30.60 - $30.60
Exercised ...................... (63,177) $17.50 - $30.60 (22,886) $17.50 - $24.80 (58,921) $ 6.92 - $24.80
Options forfeited .............. (9,355) $24.80 - $30.60 (8,666) $18.60 - $30.60 (1,894) $18.60 - $30.60
--------------------------------------------------------------------------------------
Options outstanding, end of year 845,381 $17.50 - $30.60 767,413 $17.50 - $30.60 661,465 $17.50 - $30.60
======================================================================================

Options exercisable, end of year 722,759 $17.50 - $30.60 654,463 $17.50 - $30.60 547,769 $17.50 - $30.60
======================================================================================
Weighted average fair value
of options granted ........... $4.79 $4.71 $5.39
================ ================ ================

The total intrinsic value of options exercised during the years ended December
31, 2006 and 2005 was $605,000 and $235,000, respectively. The fair value of
nonvested shares is determined based on the market price of the Company's shares
on the grant date.

Options Outstanding Options Exercisable
----------------------------------------------------------------------------------------------------------------------------------
Weighted
Outstanding average Aggregate Weghted Exercisable Weighted Aggregate
Range as of remaining Intrinsic average as of average Intrinsic
of December 31, contractual Value exercise December 31, exercise Value
Exercise price 2006 life ($000) price 2006 price ($000)
----------------------------------------------------------------------------------------------------------------------------------

$17.50 - $17.50 ............................ 111,441 4.2 $ 17.50 111,441 $ 17.50
$18.37 - $18.60 ............................ 213,967 4.4 18.50 213,967 18.50
$24.80 - $24.85 ............................ 117,930 6.2 24.80 117,930 24.80
$28.80 - $30.60 ............................ 402,043 8.2 30.10 279,421 30.15
------------------------------------------------------------------------------------
845,381 6.4 $ 8,865 $ 24.76 722,759 $ 23.88 $ 8,218
====================================================================================

A summary of the status of the Company's nonvested shares as of December 31,
2006 and changes since January 1, 2006 is presented below:

Weighted-
Average
Grant-Date
Nonvested shares Shares Fair Value
-----------------------------------------------------
Nonvested at January 1, 2006 . 112,950 4.83
Granted ...................... 150,500 4.79
Vested ....................... 133,284 4.90
Forfeited .................... 7,544 4.75
-------------------
Nonvested at December 31, 2006 122,622 4.71
===================

As of December 31, 2006, there was $586,000 of total unrecognized compensation
cost related to nonvested stock option compensation arrangements granted under
the Plan. That cost is expected to be recognized over a weighted-average period
of 1.6 years. The weighted average grant date fair value of shares vested during
the years ended 2006 and 2005 was $4.90 and $4.72, respectively.

14. Dividend Restrictions

Federal and state banking regulations place certain restrictions on dividends
paid and loans or advances made by the Bank to the Company. Without prior
approval, the Bank is restricted by Illinois law and regulations of the Illinois
Department of Financial and Professional Regulation and the Federal Deposit
Insurance Corporation as to the maximum amount of dividends it can pay to its
parent to the balance of the retained earnings account, as adjusted (as
defined). At December 31, 2006, the Bank had available retained earnings of
approximately $53.368 million for the payment of dividends without obtaining
prior regulatory approval. In addition, dividends paid by the Bank to the
Company would be prohibited if the effect thereof would cause the Bank's capital
to be reduced below applicable minimum capital requirements.

15. Condensed Financial Information of Parent Company

Following are the condensed balance sheets as of December 31, 2006 and 2005 and
the related condensed statements of income and cash flows for the years ended
December 31, 2006, 2005 and 2004 for Main Street Trust, Inc.:

Condensed Balance Sheets
(in thousands)

2006 2005
--------------------

Assets:
Cash .................................. $ 2,034 $ 342
Investment in Bank .................... 138,507 136,399
Investment in FirsTech ................ 4,072 3,264
Investment in other securities ........ 3,987 6,303
Loans, net of allowance for loan losses 2,241 2,682
Other assets .......................... 4,119 6,000
--------------------
$154,960 $154,990
===================

Liabilities and shareholders' equity:
Dividend payable ...................... $ 2,506 $ 2,334
Other borrowings ...................... 1,000 7,500
Other liabilities ..................... 1,099 1,387
Shareholders' equity .................. 150,355 143,769
--------------------
$154,960 $154,990
===================

Condensed Statements of Income
(in thousands)
2006 2005 2004
--------------------------------

Revenue:
Equity in net income of subsidiaries .............. $ 19,349 $ 18,512 $ 15,688
Interest income on deposits ....................... 36 174 102
Income on securities .............................. 449 1,622 395
Interest income on loans .......................... 172 139 --
Securities transactions, net ...................... 418 (598) (1)
Other ............................................. 10 6 4,698
--------------------------------
Total revenue ............................. 20,434 19,855 20,882
--------------------------------
Expenses:
Salary and benefits ............................... -- 17 4,433
Interest expense on other borrowings .............. 308 343 74
Other ............................................. 1,646 1,349 2,226
--------------------------------
Total expenses ............................ 1,954 1,709 6,733
--------------------------------
Income before applicable income tax benefit 18,480 18,146 14,149
Applicable income tax benefit ....................... (757) (162) (629)
--------------------------------
Net income ................................ $ 19,237 $ 18,308 $ 14,778
================================

Condensed Statements of Cash Flows
(in thousands)

2006 2005 2004
--------------------------------

Cash flows from operating activities:
Net income ........................................................ $ 19,237 $ 18,308 $ 14,778
Adjustments to reconcile net income to net
cash provided by operating activities:
Distributions in excess of (less than) net income of subsidiaries (2,349) 7,488 (5,688)
Depreciation .................................................... 55 53 386
Other, net ...................................................... 1,695 2,073 (509)
--------------------------------
Net cash provided by operating activities: ................ 18,638 27,922 8,967
--------------------------------

Cash flows from investing activities:
Acquisition of Citizens First Financial Corporation ............... -- (28,738) --
Securities transactions, net ...................................... 2,925 3,065 (273)
Proceeds from sales of premises and equipment ..................... -- 558 --
Net decrease in loans ............................................. 479 780 --
Purchases of premises and equipment ............................... (29) (2) (316)
--------------------------------
Net cash provided by (used by) investing activities ....... 3,375 (24,337) (589)
--------------------------------

Cash flows from financing activities:
Stock transactions, net ........................................... (4,523) (6,013) (1,956)
Proceeds from and (payments) on other borrowings, net ............. (6,500) 2,233 --
Cash dividends paid ............................................... (9,298) (8,671) (7,972)
Other, net ........................................................ -- -- (83)
--------------------------------
Net cash used in financing activities ..................... (20,321) (12,451) (10,011)
--------------------------------
Net increase (decrease) in cash and cash equivalents ...... 1,692 (8,866) (1,633)
Cash at beginning of year ........................................... 342 9,208 10,841
--------------------------------
Cash at end of year ................................................. $ 2,034 $ 342 $ 9,208
================================

16. Quarterly Results of Operations (Unaudited) (in thousands, except per
share data)

Year Ended December 31, 2006
Three Months Ended:
---------------------------------------------------
December 31 September 30 June 30 March 31
---------------------------------------------------

Interest income ......................................................... $ 23,360 $ 23,243 $ 22,628 $ 21,528
Interest expense ........................................................ 11,013 10,720 10,229 9,250
---------------------------------------------------
Net interest income ........................................... 12,347 12,523 12,399 12,278
Provision for losses on loans ........................................... 450 450 450 450
---------------------------------------------------
Net interest income after
provision for losses
on loans ...................................................... 11,897 12,073 11,949 11,828
Non-interest income ..................................................... 6,071 5,488 5,505 5,519
Non-interest expense .................................................... 10,179 10,422 10,302 10,045
---------------------------------------------------
Income before income taxes .................................... 7,789 7,139 7,152 7,302
Income taxes ............................................................ 2,720 2,460 2,353 2,612
---------------------------------------------------
Net income .................................................... $ 5,069 $ 4,679 $ 4,799 $ 4,690
===================================================

Basic earnings per share ................................................ $ 0.51 $ 0.46 $ 0.47 $ 0.47
===================================================

Diluted earnings per share .............................................. $ 0.49 $ 0.46 $ 0.47 $ 0.46
===================================================

Year Ended December 31, 2005
Three Months Ended:
---------------------------------------------------
December 31 September 30 June 30 March 31
---------------------------------------------------

Interest income ......................................................... $ 21,354 $ 21,116 $ 20,131 $ 14,391
Interest expense ........................................................ 8,495 7,550 6,941 4,493
---------------------------------------------------
Net interest income ........................................... 12,859 13,566 13,190 9,898
Provision for losses on loans ........................................... 450 450 300 330
---------------------------------------------------
Net interest income after
provision for losses
on loans ...................................................... 12,409 13,116 12,890 9,568
Non-interest income ..................................................... 5,106 5,298 5,058 5,015
Non-interest expense .................................................... 10,465 10,311 10,554 8,449
---------------------------------------------------
Income before income taxes .................................... 7,050 8,103 7,394 6,134
Income taxes ............................................................ 2,553 2,952 2,667 2,201
---------------------------------------------------
Net income .................................................... $ 4,497 $ 5,151 $ 4,727 $ 3,933
===================================================
Basic earnings per share ................................................ $ 0.44 $ 0.50 $ 0.46 $ 0.42
===================================================
Diluted earnings per share .............................................. $ 0.44 $ 0.50 $ 0.45 $ 0.41
===================================================

17. Disclosures About Commitments and Financial Instruments

The Company is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. Those instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of amounts recognized in the
consolidated balance sheets. The contractual amounts of those instruments
reflect the extent of involvement the Company has in particular classes of
financial instruments.

The Company's 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 is represented by the contractual amount of those
instruments. The Company uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments. Management
does not anticipate any significant losses as a result of these transactions.

The following table summarizes these financial instruments and commitments (in
thousands) at December 31, 2006 and 2005:

2006 2005
--------------------
Financial instruments whose contract
amounts represent credit risk:
Commitments .......................... $333,416 $279,647
Standby letters of credit ............ 28,464 34,512

The majority of commitments are agreements to extend credit to a customer as
long as there is no violation of any condition established in the contract.
Commitments, principally variable interest rates, 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. For commitments to extend credit, the Company evaluates each
customer's creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Company upon extension of credit, is based
on management's credit evaluation. Collateral held varies, but may include
accounts receivable; inventory; property, plant and equipment; and
income-producing commercial properties. Also included in commitments at December
31, 2006 was $3.655 million to purchase other equity securities and $1.619
million for construction of new branches.

Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements and,
generally, have terms of one year or less. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan
facilities to customers. The Bank may hold collateral, which include accounts
receivables, inventory, property and equipment, and income producing properties,
supporting those commitments, if deemed necessary. In the event the customer
does not perform in accordance with the terms of the agreement with the third
party, the Bank would be required to fund the commitment. The maximum potential
amount of future payments the Bank could be required to make is represented by
the contractual amount shown in the summary above. If the commitment is funded,
the Bank would be entitled to seek recovery from the customer. At December 31,
2006 and 2005, no amounts have been recorded as liabilities for the Bank's
potential obligations under these guarantees.

Following is a summary of the carrying amounts and fair values of the Company's
financial instruments at December 31, 2006 and 2005:

2006 2005
-------------------------------------------------
Carrying Fair Carrying Fair
amount Value amount Value
-------------------------------------------------

Assets:
Cash and cash equivalents ....................... $ 61,385 $ 61,385 $ 94,066 $ 94,066
Investments in debt and equity securities ....... 402,695 401,839 444,623 443,746
Mortgage loans held for sale .................... 1,116 1,116 1,661 1,661
Loans ........................................... 987,485 972,284 1,002,927 1,000,301
Accrued interest receivable ..................... 9,663 9,663 8,461 8,461
Liabilities:
Deposits ........................................ $1,233,487 $1,232,895 $1,275,972 $1,272,296
Federal funds purchased and repurchase agreements 108,323 108,322 118,452 118,436
FHLB advances and other borrowings .............. 24,477 24,478 67,386 67,559
Accrued interest payable ........................ 5,187 5,187 4,657 4,657

Management's fair value estimates, methods, and assumptions are set forth below
for the Company's financial instruments.

Cash and Cash Equivalents

The carrying value of cash and cash equivalents approximates fair value due
to the relatively short period of time between the origination of the
instrument and its expected realization.

Investments in Debt and Equity Securities

The fair value of investments in debt and equity securities is estimated
based on bid prices received from securities dealers. Venture capital
investments are valued at fair value based upon their financial statements.
FHLB stock is valued at cost which approximates fair value.

Mortgage Loans Held For Sale

Fair values of mortgage loans held for sale are based on commitments on
hand from investors or prevailing market prices.

Loans

Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as commercial,
commercial real estate, residential mortgage, and consumer. Each loan
category is further segmented into fixed and adjustable rate interest terms
and by performing and nonperforming categories. The fair value of
performing loans is calculated by discounting scheduled cash flows through
the estimated maturity using estimated market discount rates equal to rates
at which loans, similar in type, would be originated at December 31, 2006
and 2005. Estimated maturities are based upon the average remaining
contractual lives for each loan classification. Fair value for
nonperforming loans is based on the use of discounted cash flow techniques.

Accrued Interest Receivable

The carrying value of accrued interest receivable approximates fair value
due to the relatively short period of time between the origination of the
instrument and its expected realization.

Deposit Liabilities

The fair value of deposits with no stated maturity, such as non-interest
bearing and interest bearing demand deposits and savings deposits is the
amount payable on demand. The fair value of time deposits is based on the
discounted value of contractual cash flows. The discount rate is estimated
using rates currently offered for deposits of similar remaining maturities.
The fair value estimates do not include the benefit that results from the
low-cost funding provided by the deposit liabilities compared to the cost
of borrowing funds in the market nor the benefit derived from the customer
relationship inherent in existing deposits.

Federal Funds Purchased and Repurchase Agreements

The carrying values of federal funds purchased and daily repurchase
agreements, approximate fair value due to the relatively short period of
time between the origination of the instruments and their expected
realization. The fair value of term repurchase agreements is based on the
discounted value of contractual cash flows. The discount rate is estimated
using rates currently offered for comparable instruments of similar
remaining maturities.

Federal Home Loan Bank Advances and Other Borrowings

The fair value of FHLB advances is based on the discounted value of
contractual cash flows. The discount rate is estimated using rates on
current FHLB advances with similar remaining maturities.

Accrued Interest Payable

The carrying value of accrued interest payable approximates fair value due
to the relatively short period of time between the origination of the
instrument and its expected realization.

Commitments to Extend Credit and Standby Letters of Credit

The fair value of commitments to extend credit is generally 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. The estimated fair value of commitments to extend credit
and standby letters of credit approximates the balances of such
commitments.

18. Litigation

The Company and its subsidiaries are involved in various legal proceedings,
claims and litigation arising out of the ordinary course of business.

It is the opinion of management that the disposition or ultimate resolution of
any other claims and lawsuits arising out of the ordinary course of business
will not have a material adverse effect on the consolidated financial position
of the Company.

19. Regulatory Capital

The Company and its subsidiary bank are subject to various regulatory capital
requirements administered by the federal 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 Company's and its subsidiary bank's financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, banks must meet specific capital guidelines that
involve quantitative measures of assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices. The
Company's and its subsidiary bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Company and its subsidiary bank 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 of Tier I capital (as
defined) to average assets (as defined). Management believes, as of December 31,
2006, that the Company and its subsidiary bank exceeded all capital adequacy
requirements to which they are subject.

As of December 31, 2006, the most recent notifications from primary regulatory
agencies categorized the Company's subsidiary bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, banks must maintain minimum total capital to risk-weighted assets,
Tier I capital to risk-weighted assets, and Tier I capital to average assets
ratios as set forth in the table. There are no conditions or events since that
notification that management believes have changed any of the Company's
subsidiary bank's categories.

The Company's and the Bank's actual capital amounts and ratios as of December
31, 2006 and 2005 are presented in the following tables:

To be well capitalized
For capital adequacy under prompt corrective
Actual purposes: action provisions:
-----------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
-----------------------------------------------------------------------

As of December 31, 2006:
Total capital
(to risk-weighted assets)
Consolidated ............ $142,741 12.5% $ 91,673 8.0% N/A
Main Street Bank & Trust $131,005 11.6% $ 90,662 8.0% $113,327 10.0%
Tier I capital
(to risk-weighted assets)
Consolidated ............ $128,290 11.2% $ 45,837 4.0% N/A
Main Street Bank & Trust $116,716 10.3% $ 45,331 4.0% $ 67,996 6.0%
Tier I capital
(to average assets)
Consolidated ............ $128,290 8.4% $ 60,779 4.0% N/A
Main Street Bank & Trust $116,716 7.7% $ 60,474 4.0% $ 75,593 5.0%

As of December 31, 2005:
Total capital
(to risk-weighted assets)
Consolidated ............ $135,368 11.7% $ 92,324 8.0% N/A
Main Street Bank & Trust $128,227 11.3% $ 91,010 8.0% $113,762 10.0%
Tier I capital
(to risk-weighted assets)
Consolidated ............ $121,644 10.5% $ 46,162 4.0% N/A
Main Street Bank & Trust $114,652 10.1% $ 45,505 4.0% $ 68,257 6.0%
Tier I capital
(to average assets)
Consolidated ............ $121,644 7.8% $ 62,693 4.0% N/A
Main Street Bank & Trust $114,652 7.4% $ 62,162 4.0% $ 77,702 5.0%

Item 9. Changes in and Disagreements on Accounting and Financial Disclosure

None

Item 9a. Controls and Procedures

A. Disclosure Controls.

As of the date of the end of the period covered by this Annual Report
on Form 10-K, the Company carried out an evaluation under the
supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer along with the
Company's Chief Financial Officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures
pursuant to Rule 13a-15(b), as adopted by the Securities and Exchange
Commission (SEC) under the Securities Exchange Act of 1934 (Exchange
Act). Based upon that evaluation, the Company's Chief Executive
Officer along with the Company's Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective to
timely alert them to material information relating to the Company
(including its consolidated subsidiaries) required to be included in
the Company's periodic SEC filings.

Disclosure controls and procedures are the controls and other
procedures that are designed to ensure that information required to be
disclosed in the reports that the Company files or submits under the
Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms. Disclosure
controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be
disclosed in the reports that the Company files or submits under the
Exchange Act is accumulated and communicated to management, including
the Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in the Company's internal controls, or in
other factors which could significantly affect this controls, over
financial reporting that have materially affected, or are reasonably
likely to materially affect, the Company's internal control over
financial reporting.

B. Management's Report on Internal Control Over Financial Reporting

The management of Main Street Trust, Inc. (the Company) is responsible
for establishing and maintaining adequate internal control over
financial reporting. The Company's internal control over financial
reporting is a process designed under the supervision of the Company's
Chief Executive and Chief Financial officers to provide reasonable
assurance regarding the realiability of financial reporting and the
preparation of the Company's financial statements for external
reporting purposes in accordance with U.S. generally accepted
accounting principles.

As of December 31, 2006, management assessed the effectiveness of the
Company's internal control over financial reporting based on the
criteria of effective internal control over financial reporting
established in "Internal Control - Integrated Framework" issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on the assessment, management determined that the
Company maintained effective internal control over financial reporting
as of December 31, 2006, based on those criteria.

McGladrey & Pullen, LLP, the independent registered public accounting
firm that audited the consolidated financial statements of the Company
included in this Annual Report on Form 10-K, has issued an attestation
report on management's assessment of the effectiveness of the
Company's internal control over financial reporting as of December 31,
2006. The report, which expresses unqualified opinions on management's
assessment and on the effectiveness of the Company's internal control
over financial reporting as of December 31, 2006, is included in this
Item under the heading "Report of Independent Registered Public
Accounting Firm."

Report of Independent Registered Public Accounting Firm

To the Board of Directors
Main Street Trust, Inc.
Champaign, Illinois

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control over Financial Reporting, that Main
Street Trust, Inc. maintained effective internal control over financial
reporting as of December 31, 2006, based on criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Main Street Trust, Inc.'s
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion on
management's assessment and an opinion on the effectiveness of the Company's
internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Oversight Board (United States). Those standards required that we plan and
perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of America. A
company's internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with accounting principles generally accepted in the United States of
America, and the receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company assets that could
have a material effect on the financial statements.

Because of its inherent limitations, internal controls over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls 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 assessment that Main Street Trust, Inc. maintained
effective internal control over financial reporting as of December 31, 2006, is
fairly stated, in all material respects, based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Also, in our opinion, Main
Street Trust, Inc. maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2006, based on criteria
established in Internal Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company
Oversight Board (United States), the consolidated balance sheets of Main Street,
Inc. and subsidiaries as of December 31, 2006 and 2005 and the related
consolidated statements of income, changes in shareholders' equity, cash flows
for each of the three years ended in December 31, 2006 and our report dated
March 14, 2007 expressed an unqualified opinion.

/s/ McGladrey & Pullen, LLP
----------------------------

Champaign, Illinois
March 14, 2007

Item 9b. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors

The directors of the Company are as follows:

Name Director Position with the Company and
(Age) since(1) Occupation for the last five years
-----------------------------------------------------------------------------------------------------------------------

David J. Downey 1992 Director of the Company; President of The Downey Group, Inc.
(Age 65) (estate planning, wealth transfer and executive compensation
organization) (1963-present)

Van A. Dukeman 1994 Director, President and Chief Executive Officer of the
(Age 48) Company and Main Street Bank & Trust, and Director of
FirsTech; Director,President and Chief Executive Officer of
the Company, Director, Chairman of the Board and Chief
Executive Officer of BankIllinois, and Director of
The First National Bank and FirsTech (2001-2004);
Director, President and Chief Executive Officer of
the Company and BankIllinois (2000-2001)

Larry D. Haab 1987 Director of the Company and Director of FirsTech; Director of
(Age 69) Illinova, the holding company of Illinois Power Company, and
consultant to Illinova (1998-2000); Chairman, President and
Chief Executive Officer of Illinois Power Company (a public
electric and gas utility) (1991-1998)

Frederic L. Kenney 1996 Director of the Company; Corporate Counsel, Archer Daniels
(Age 48) Midland (2001-present); Attorney for Winters, Featherstun,
Gaumer, Kenney, Postlewait and Stocks (1983-2001)

Gregory B. Lykins 1994 Director and Chairman of the Board of the Company and Main
(Age 59) Street Bank & Trust, and Director of FirsTech; Director and
Chairman of the Board of the Company, Director and Vice-Chairman
of BankIllinois and Director of The First National Bank
of Decatur and FirsTech (2001-2004); Director and Vice Chairman
of the Board of the Company (2000-2001)

August C. Meyer, Jr. 1962 Director of the Company; President, Midwest Television, Inc.
(Age 69) (1976-present)

George T. Shapland 1994 Director of the Company; President, Shapland Management Co.
(Age 76) (a real estate management company) (1990-present)

Thomas G. Sloan 1995 Director of the Company; President and Chief Executive
(Age 57) Officer of Sloan Implement Co., Inc. (a John Deere implement
dealer in Assumption, Illinois) (1971-present)

H. Gale Zacheis, M.D. 1990 Director of the Company; practicing surgeon and physician in
(Age 68) Decatur, Illinois (1973-present)

(1) Indicates the year first elected to the Board of Directors of
BankIllinois Financial or First Decatur, the predecessor companies to
the Company.

All of the Company's directors will hold office for a term of one year, or until
their respective successors are duly elected and qualified. There are no
arrangements or understandings between any of the directors, executive officers
or any other person pursuant to which any of the Company's directors or
executive officers have been selected for their respective positions. No
director is a director or executive officer of another company with a class of
securities registered pursuant to Section 12 of the Exchange Act or subject to
the requirements of Section 15(d) of the Exchange Act. There are also no family
relationships between any of the directors or executive officers.

Executive Officers

The term of office for the executive officers of the Company is from the date of
election until the next annual organizational meeting of the Board of Directors.
In addition to Van A. Dukeman and Gregory B. Lykins, whose information is set
forth above, the names and ages of the executive officers of the Company as of
December 31, 2006, as well as the offices of the Company and its subsidiaries
held by these officers on that date, and principal occupations for the past five
years are set forth below.

Name Position with the Company and its Subsidiaries
(Age) and Occupation for the last five years
---------------------------------------------------------------------------------------------------------------

Paul E. Donohue Executive Vice President of Sales & Marketing for the Company and Main
(Age 43) Street Bank & Trust; General Manager WSMH-TV, Flint, MI (2003-2004);
Station Manager, WICD-TV, Champaign, IL (2001-2003)

Donna R. Greene Executive Vice President of the Company and President of Main Street Bank
(Age 53) & Trust Wealth Management; Senior Vice President and Certified Financial
Planner with First Busey Securities, Inc. (1998-2004)

Leanne C. Heacock Executive Vice President, Management Information Systems for the Company
(Age 41) and Main Street Bank & Trust and Director of FirsTech; Executive Vice
President, Management Information Systems, BankIllinois and The First
National Bank of Decatur (2001-2002)

Howard F. Mooney II President, FirsTech and Executive Vice President for the Company and
(Age 42) Director of FirsTech

Robert F. Plecki, Jr. Executive Vice President of the Company and President of Main Street Bank
(Age 46) & Trust Retail Banking; President and Director of BankIllinois (2001-2004)

Christopher M. Shroyer Executive Vice President of the Company and President of Main Street Bank
(Age 41) & Trust Commercial Banking; President, Chief Executive Officer and
Director of The First National Bank of Decatur (2001-2004)

David B. White Executive Vice President and Chief Financial Officer of the Company and
(Age 55) Main Street Bank & Trust and Director of FirsTech

Nicholas John Waddock III Executive Vice President and Chief Credit Officer of Main Street and Main
(Age 44) Street Bank & Trust; Executive Vice President, Commercial Lending, Central
Illinois Bank (1997-2006)

Compliance with Section 16(a) of the Securities Exchange Act

Section 16(a) of the Securities Exchange Act requires that the directors,
executive officers and persons who own more than 10% of the Company's common
stock file reports of ownership and changes in ownership with the Securities and
Exchange Commission. These persons are also required to furnish us with copies
of all Section 16(a) forms they file. Based solely on our review of the copies
of such forms furnished to us and, if appropriate, representations made by any
reporting person concerning whether a Form 5 was required to be filed for 2006,
we are not aware of any failures to comply with the filing requirements of
Section 16(a) during 2006 except for Mr. Meyer, who filed a Form 4 late in
connection with shares distributed to Mr. Meyer as an annuity payment from a
grantor retained annuity trust and 165,125 shares distributed to Mr. Meyer's
spouse as an annuity payment from a grantor retained annuity trust.

Code of Ethics

The Company has a code of ethics in place that applies to our Chief Executive
Officer and Chief Financial Officer. Shareholders can receive a copy of the code
free of charge by contacting Teresa Marsh, the Company's Corporate Secretary, at
100 W. University Avenue, Champaign, Illinois 61820.

Audit Committee

In 2006, Messrs. Zacheis (Chair), Sloan and Haab were members of the Audit
Committee. Each of these members was deemed to be "independent" as defined by
Nasdaq and the rules and regulations promulgated by the Securities and Exchange
Commission. The Board of Directors has determined that Mr. Haab qualifies as an
"audit committee financial expert" under the regulations of the Securities and
Exchange Commission. The Board based this decision on Mr. Haab's education, and
his professional experience as President and Chief Executive Officer of Illinois
Power Company, a public electric and gas utility. Mr. Haab is a certified public
accountant and served on the audit staff of Price Waterhouse, where he was
responsible for auditing Fortune 500 companies.

Item 11. Executive Compensation

Compensation Discussion and Analysis

Introduction.

This Compensation Discussion and Analysis section describes Main Street's
compensation philosophy and policies for 2006 as applicable to the executive
officers named in the Summary Compensation Table on page 86. This section
explains the structure and rationale associated with each material element of
the executive's compensation, and it provides important context for the more
detailed disclosure tables and specific compensation amounts provided following
the section. It is important to note that the Company, Main Street Bank and
Trust and FirsTech share an executive management team, the members of which are
compensated by the bank rather than the holding company. The compensation
packages of the named executive officers are determined and approved by our
compensation committee based upon their performances and roles for both the
Company and Main Street Bank and Trust.

Additionally, as previously announced on September 21, 2006, the Company entered
into an Agreement and Plan of Merger with First Busey Corporation. Upon
consummation of this merger of equals, which is expected to occur in the 2nd
quarter of 2007, many of the Company's executive officers will continue as
employees and executive officers of the combined company. This section will
discuss the effect of this proposed transaction on decisions for 2007
compensation.

Compensation-Related Governance and Role of the Compensation Committee.

Committee Membership. Members of the Compensation Committee are directors of the
Company. During the calendar year of 2006, Messrs. Kenney (Chair), Downey,
Shapland and Sloan were members of the Compensation Committee and each of these
directors was considered "independent" as defined by the Nasdaq stock market, an
"outside" director pursuant to Section 162(m) of the Internal Revenue Code, and
a "non-employee" director under Section 16 of the Securities Exchange Act of
1934.

The committee is generally responsible for the following:

o to adopt, review and refine an executive compensation philosophy and
guiding principles that reflect The Company's mission, values and
long-term strategic objectives;

o to administer the Company's executive compensation programs in a
manner that furthers The Company's strategic goals and serves the
interests of our shareholders;

o to establish compensation-related performance objectives under our
bonus arrangements with our executive officers;

o to determine the total compensation levels of our executive officers
and to allocate total compensation among the various components of
executive pay;

o to administer the Company's equity compensation and incentive
compensation plans;

o to make recommendations to the Board regarding incentive and
equity-based compensation plans;

o to make recommendations regarding succession plans for senior
executive officers; and

o to recommend to the Board the compensation arrangements with
non-employee directors.

Meetings. The committee typically meets several times each year (two times in
2006). The committee subscribes to an independent service that provides surveys
and data regarding the compensation levels and programs at other financial
institutions. The committee also reviews other generally available industry
compensation information. In the past, the committee has not relied on outside
consultants; however, that option is available to the committee.

Role of Executives in Committee Meetings. The Compensation Committee relies upon
the input of management, and particularly Messrs. Dukeman and Lykins, when
carrying out its responsibilities in establishing executive compensation.
Management provides the committee with recommendations regarding compensation
philosophy, plan design as well as evaluations of employee performance and
guidance on establishing performance targets and objectives. The committee also
consults with management on matters related to executive compensation and
benefit plans where Board or shareholder action is expected, including the
adoption of new compensation plans or the amendment of existing plans. No
executive officer participates in any recommendation or decision regarding his
or her own compensation.

Additionally, because of the nature of the ongoing negotiations in 2006 relating
to the proposed merger with First Busey, many decisions and factors relating to
compensation in 2007 were influenced by the Corporate Developments Committee, a
special committee established to streamline the evaluation and negotiation of
the proposed First Busey transaction. The members of the Corporate Developments
Committee, including Messrs. Kenney, Meyer and Shapland, were all independent
directors.

Compensation Philosophy and Objectives.

We are committed to providing a total compensation program that supports our
long-term business strategy and performance culture and creates a commonality of
interest with our shareholders. In establishing executive compensation, we
generally divide compensation into three separate components: salary, cash bonus
and long-term incentive awards. These components are intended to work together
to compensate the executive fairly for his or her services and reward the
executive officer based upon our overall performance during the year.

The general philosophy in making decisions regarding the compensation of the
executive officers is:

o to provide incentives for executive officers to work toward achieving
successful annual results and strategic objectives;

o to provide significant reward for achievement of superior performance;

o to provide market-based compensation to help recruit and retain
professionals of exceptional quality;

o to create significant opportunity and incentive for our executive
officers to be long-term shareholders;

o to link executive compensation rewards to increases in shareholder
value, as measured by favorable long-term results and continued
strengthening of the Company's financial condition; and

o to provide flexibility to recognize, differentiate and reward
individual performance.

Additionally, in connection with the proposed transaction with First Busey, the
Corporate Developments Committee and the Board gave special attention to our
need to retain certain individuals following the completion of the proposed
transaction.

Compensation Factors

General. The committee generally seeks to ensure that executive compensation is
tied to furthering the goals and objectives described above. To this end, the
committee evaluates compensation decisions based on a combination of our overall
corporate performance and the achievement of individual performance goals.
Additionally, the committee considers the compensation paid to executive
officers at certain peer financial institutions to ensure that we are able to
continue to attract and retain talented individuals. Because the committee
believes that it is important to retain flexibility in setting executive
compensation and to be able to reward specific individual contributions to our
success, it does not apply a formula or assign these performance measures
relative weights. Instead, the committee makes a subjective determination after
considering such measures collectively.

Corporate Performance. In establishing executive compensation, the committee
measures the Company's performance compared to management's and the Board's
goals and objectives as well as to the performance of other similarly-sized
financial institutions. The committee believes that using the Company's
performance as a factor in determining an executive officer's compensation is
effective in helping to align the executive's interests with those of our
shareholders. With that in mind, the committee focuses on applicable performance
measures including return on equity, return on assets, earnings per share, net
income, asset growth and credit quality. As part of the evaluation and review of
these criteria, the committee will also take into account the general economic
conditions and how they may affect the Company's performance.

Individual Performance. Individual performance has a significant impact on the
compensation of all employees, including the Chief Executive Officer and the
other executive officers. With respect to the Chief Executive Officer, the
Chairman of the Board, the independent directors, under the direction of the
presiding director, meet with the Chief Executive Officer in executive session
annually at the beginning of the year to agree upon the Chief Executive
Officer's performance goals and areas of emphasis for both the individual and
the Company for the year. At the end of the year, the committee meets under the
direction of the Chairman of the Board to conduct a performance review of the
Chief Executive Officer based on his achievements, contribution to our
performance and other leadership accomplishments for the year. As with the
evaluation of corporate performance, the committee does not apply formulas or
assign these performance measures relative weights and the committee makes a
subjective determination after considering such measures collectively. The
evaluation is shared with the Chief Executive Officer and the committee uses the
review as a focal point in setting the Chief Executive Officer's compensation.

For the other named executive officers, the committee receives a performance
assessment and compensation recommendation from the Chief Executive Officer and
also exercises its judgment based on the Board's interactions with the executive
officers. As with the Chief Executive Officer, the performance evaluation of
these executives is based on achievement of goals and objectives by the
executive and his or her department, his or her contribution to our performance,
and other leadership accomplishments.

Peer Comparison. In establishing the compensation of the named executive
officers, the committee also utilizes market data regarding the compensation
practices of other financial institutions of a similar size. Although the
committee does not target a specific level of peer compensation when making
executive compensation decisions, it believes that such comparisons are useful
to stay competitive in the marketplace and attracting and retaining qualified
executives. As such, the committee often performs an informal review of
executive compensation at other similarly sized financial institutions in the
Midwest.

Components of Compensation.

General. There are three major components to executive officer compensation:
base salary, cash bonus and long-term incentive awards. The committee's
decisions regarding each of these components for the named executive officers
are based, in part, on the committee's subjective judgment and take into account
qualitative and quantitative factors, as will be set forth in the discussion
below. In reviewing an executive officer's compensation, the committee considers
and evaluates all components of the officer's total compensation package. This
involves reviewing base salary, bonus, incentive stock awards, perquisites,
participation in our non-qualified executive plans, participation in our 401(k)
plan and any other payments, awards or benefits that an officer earns.
Additionally, the committee takes into consideration any amounts an executive
officer is entitled to upon retirement, termination or a change-in-control
event.

Salary. The Compensation Committee reviews each executive's base salary on an
annual basis. The committee believes that the base salaries should offer
security to each executive and allow us to attract qualified executives and
maintain a stable management team and environment. The committee targets base
salaries at levels comparable to those of similar positions within the market
place. The committee may adjust salaries to reflect our overall financial
performance, as discussed above. Additionally, base salaries are determined by
examining and evaluating the individual's performance over the past year as well
as the individual's level of responsibility, prior experience, education,
breadth of knowledge and the current market level of executives at similar
positions at our peer institutions. The committee will also factor in other
payments and awards that the executive may receive, including stock options and
participation in our profit sharing plan prior to making a determination on the
individual's salary. When establishing the salary of executives other than their
own, Messrs. Dukeman and Lykins participated with and made recommendations to
the committee.

The salaries for 2006, determined by the committee in the first quarter of 2006,
are set forth in the summary compensation table on page 86. In determining these
salary levels, the committee considered the following:

o the growth in 2005 of earnings by 16.9% from $1.54 net income per
diluted share in 2004 to $1.80 net income per diluted share;

o the growth in 2005 of net income by 23.9% from $14.778 million in 2004
to $18.308 million;

o the growth in 2005 of the return on average assets from 1.22% in 2004
to 1.24%;

o the growth of average assets in 2005 from $1.209 billion in 2004 to
$1.474 billion;

o the growth in 2005 of revenue in our Wealth Management group by 17.1%
from $6.492 million in 2004 to $7.599 million;

o the growth in 2005 of assets under management in our Wealth Management
group by 11.0% from $1.765 billion in 2004 to $1.959 billion;

o the record net income in 2005 of FirsTech, our payment processing
subsidiary, of $1.525 million compared to $1.331 million in 2004, an
increase of 14.6%;

o the base salary paid to the officers in comparable positions at
financial institutions of similar size;

o the experience and industry knowledge of the named executive officers
and the quality and effectiveness of their leadership at the Company;

o the successful completion in 2005 of the acquisition of Citizens First
Financial Corp., and the merger of Citizens Bank in Bloomington,
Illinois, into Main Street Bank & Trust, and the opening of a banking
office in Peoria, Illinois;

o minimum base salaries provided for in an executive officers'
employment agreement;

o all of the components of executive compensation, including base
salary, bonus, stock options, retirement and death benefits, as well
as benefits and perquisites; and

o internal pay equity among the Company's executives.

Our performance in 2005 was a key factor in setting salaries, as personal
performance is rewarded more heavily in cash incentives and long-term incentive
awards. The total increase in base salaries for the named executive officers for
2006 represented an overall increase of 3.6% over 2005.

Bonus. The incentive bonus is a discretionary payment primarily related to the
Company's financial performance, as measured by return on equity, return on
assets, earnings per share, net income, asset growth and credit quality, and the
Company's performance relative to its long-term goals. Because of the strong
link to our financial performance, bonuses to named executive officers are paid
in 1st quarter following the end of the year. As with salary, all of the factors
described herein are considered on a subjective basis in the aggregate, and none
of the factors is accorded a specific weight.

When establishing bonuses, the committee also considers individual performance
criteria in addition to company-wide objectives. The committee considers the
achievement of goals and objectives by the executive and his or her department,
his or her contribution to our performance, and other leadership accomplishments
when recommending a bonus. These factors are considered on a subjective basis in
the aggregate, and none of the factors is accorded a specific weight.

In regard to bonuses for executives other than himself, Mr. Dukeman participated
with and made recommendations to the committee. The committee determines Messrs.
Dukeman's and Lykins' bonuses using the same philosophies and factors listed
above.

The bonuses paid to named executive officers in 2007 for 2006 performance are
set forth in the Summary Compensation Table and reflect:

o the growth in 2006 of net income per share by 4.4% from $1.80 net
income per diluted share in 2005 to $1.88 net income per diluted
share;

o the growth in 2006 of net income by 5.1% from $18.308 million in 2005
to $19.237 million;

o strong credit quality with non-performing loans as a percentage of
gross loans at 0.82%;

o the growth in 2006 of revenue in our Wealth Management group by 8.4%
from $7.599 million in 2005 to $8.235 million;

o the growth in 2006 of assets under management in our Wealth Management
group from $1.959 billion in 2005 to over $2.3 billion;

o the record net income in 2006 of FirsTech, our payment processing
subsidiary, of $1.807 million compared to $1.525 million in 2005, an
increase of 18.5%; and

o two other measures typically considered in bonus decisions are the
return on assets and the return on equity, and although down slightly
from 2005, return on equity from 13.40% to 13.10% and return on assets
from 1.24% to 1.23%, they were reflective of solid financial
performance.

Long-Term Incentive Compensation. The committee has regularly granted options to
executive officers, as well as other employees, on an annual basis. The
committee believes that stock options align executives' incentives with
shareholders' because options have value only if our stock price increases over
time. Therefore, the committee believes that 10-year options, granted at the
market price on the date of grant, help focus employees on long-term growth. In
addition, options are intended to help retain key employees because they
typically cannot be exercised for three years and, if not exercised, are
forfeited if the employee leaves the Company before retirement. The three-year
vesting also helps keep employees focused on long-term performance. The Company
does not reprice options; likewise, if the stock price declines after the grant
date, we do not replace options.

Generally, in approving option grants, the committee considers our compensation
philosophy, the position and level of responsibility of each officer, our belief
that equity awards should be a significant part of the total mix of executive
compensation, and the level of options granted to them in prior years.

The committee's procedure for timing of equity grants provides assurances that
grant timing is not being manipulated to result in a price that is favorable to
employees. Annual equity grants are made for all eligible employees, including
executive officers at the committee's regularly scheduled meetings with an
exercise price equal to the closing price of our shares on the date of grant.
Grants are made at committee meetings held at the beginning of each year because
they coincide with our calendar-year-based performance management cycle that
allows supervisors to deliver the equity awards close in time to performance
appraisals, which increases the impact of the awards by strengthening the link
between pay and performance.

The stock option awards made to named executive officers in 2006 are reflected
in the Grants of Plan Based Award Table and reflect:

o the compensation philosophy and guiding principles described above;

o all of the components of executive compensation, including base
salary, bonus, stock options, retirement and death benefits, as well
as benefits and perquisites; and

o internal pay equity among the Company executives.

All Other Compensation. We provide general and customary benefit programs to
executive officers and other employees. Benefits offered to executives are
intended to serve a different purpose than base salary, bonus and equity awards.
While the benefits offered are competitive with the market place and help
attract and retain executives, the benefits also provide financial security for
employees for retirement as well as in the event of illness, disability, or
death. Benefits offered to executive officers are generally those offered to
other employees with some variation to promote tax efficiency and replacement of
benefit opportunities lost to regulatory limits, although there are some
additional perquisites that may only be offered to executive officers. Because
of the nature of the benefits offered, the committee normally does not adjust
the level of benefits offered on a year to year basis.

The following table summarizes the benefits and perquisites we do and do not
provide as well as identifies those employees who may be eligible to receive
them:

Executive Officers Other Officers/Managers Full-Time Employees
----------------------------------------------------------------------------------------------------------------------

Retirement Plans:
401(k)Plan/Profit Sharing X X X
Deferred Compensation Plan X X Not Offered

Perquisites:
Automobile Allowance X X Not Offered
Country Club Membership X X Not Offered
Bonus Life Insurance Premiums X X Not Offered

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

A. Main Street Trust, Inc. 401(k) Plan. We also sponsor a qualified,
tax-exempt pension plan qualifying under Section 401(k) of the
Internal Revenue Code. The plan is eligible for all employees meeting
age and service requirements, including our executive officers. The
401(k) plan allows for participants' contributions up to the maximum
amount allowed by the IRS regulations, and contributions up to 6% of
gross salary are eligible for the Company's match of 50%. Participants
can choose between several different investment options under the
401(k) plan.

The 2006 contributions for named executive officers are set forth in the Summary
Compensation Table and were established pursuant to the 401(k) plan.

Main Street Trust, Inc. Profit Sharing Plan. The Company also sponsors a
qualified retirement plan commonly referred to as a profit sharing plan. All
employees meeting age and service requirements, including our executive officers
are eligible to participate in the plan. Employees are not permitted to
contribute to the plan. The amounts of all company contributions made to the
profit sharing plan are at the Company's discretion. Generally, company
contribution amounts are based upon the Company's net income, return on average
assets, other financial factors and the Company's performance relative to its
long-term goals although company contributions are not based on a formula and
the above factors are each considered on a subjective basis. Participants can
choose between several different investment options under the profit sharing
plan.

The 2006 profit sharing contributions for named executive officers are set forth
in the Summary Compensation Table and were established pursuant to the profit
sharing plan.

Deferred Compensation Arrangements for Executive Officers. We sponsor a deferred
compensation arrangement with our executive officers that provides a means for
the participants to voluntarily defer a portion of their salary or bonus. This
arrangement is an unfunded, nonqualified deferred compensation arrangement. We
have also assumed the outstanding liability for similar arrangements for the
deferral of director fees and executive officer compensation offered by our
predecessor companies in connection with the merger of BankIllinois Financial
and Central Illinois Financial Corporation of Champaign in 1995, the merger of
BankIllinois Financial Corporation and First Decatur Bancshares, Inc., in 2000,
and in connection with the acquisition of Citizens First Financial Corp.

Other Perquisites. It is our belief that perquisites for executive officers
should be very limited in scope and value. Due to this philosophy, the Company
has generally provided nominal benefits to executives that are not available to
all full time employees and we plan to continue this approach in the future. We
do provide country club memberships to certain executives and managers in the
ordinary course of business to give them the opportunity to bring in and recruit
new business opportunities. Those individuals are eligible to use the club
membership for their own personal use. In addition, certain executive officers
and managers are eligible for a monthly automobile allowance. We also pay the
premiums on life insurance policies for certain executive officers and managers.

We have disclosed the value of all perquisites to named executive officers in
the Summary Compensation Table even if they fall below the disclosure thresholds
under the SEC rules.

Tax and Accounting Policies Affecting Compensation Decisions

Section 162(m) of the Internal Revenue Code limits the deductibility of annual
compensation in excess of $1.0 million paid to the Chief Executive Officer and
any of the four other highest paid officers, to the extent they are listed
officers on the last day of any given tax year. However, compensation is exempt
from this limit if it qualifies as "performance-based compensation."
Performance-based compensation generally includes only payments that are
contingent on achievement of performance objectives, and excludes fixed or
guaranteed payments.

Although we will consider deductibility under Section 162(m) with respect to the
compensation arrangements for executive officers, deductibility will not be the
sole factor used in determining appropriate levels or methods of compensation.
Since our objectives may not always be consistent with the requirements for full
deductibility, we may enter into compensation arrangements under which payments
would not be deductible under Section 162(m).

We are required to amortize the fair value of equity awards as required under
SFAS No. 123R, "Share-Based Payments". Under this accounting bulletin, which
became effective for us on January 1, 2006, we apply the Black-Scholes valuation
model to determine the fair value of equity awards on the date of grant, which
is then amortized on a straight-line basis over the requisite service period.
When making equity awards, the committee considered the amortization of expenses
in granting equity awards in 2006.

Decisions Affecting 2007 and Future Compensation

In 2007, compensation components and factors are anticipated to be similar to
2006. However, with the proposed merger of First Busey and Main Street Trust,
Inc., the decision was made to defer equity grants until some time after the
completion of the merger. If for some reason the merger is not expected to be
completed in 2007, the Compensation Committee will reconsider the granting of
options in 2007.

As discussed above, in connection with the execution of the merger agreement
with First Busey, we entered into letter agreements with Messrs. Lykins, Dukeman
and White that amend the terms of their current employment agreements upon the
completion of the proposed merger. Under Mr. Lykins's agreement, effective upon
the closing of the proposed merger, Mr. Lykins, would receive a one-time change
of control payment, would continue as an employee of the Company or its
successor and receive an annual salary of $50,000. Under Mr. Dukeman's letter
agreement, he has agreed to waive change in control benefits under his
employment agreement if the proposed merger is completed. Lastly, under Mr.
White's letter agreement, he has agreed to waive certain "walk away" rights
following a change of control and instead, is entitled to a change of control
payment if he is terminated without cause or if he is constructively discharged
during the 36-month period following the proposed merger. Additionally, Mr.
White would be entitled to a change of control payment if he terminates his
employment agreement for any reason during the period beginning on the eighteen
month anniversary of the closing of the proposed merger and ending on the third
anniversary of the closing or if his employment is terminated because of death
or disability during the first eighteen months following the proposed merger.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the foregoing Compensation
Discussion and Analysis with management. Based on our review and discussion with
management, we have recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Form 10-K for the year ended
December 31, 2006.

Submitted by:

Members of the Compensation Committee:

Frederic L. Kenney (chair)
David J. Downey
George T. Shapland
Thomas G. Sloan

Executive and Director Compensation

Summary Compensation Table
----------------------------------------------------------------------------------------------------------------
Name and principal Year Salary ($) Bonus ($) Option Change in All other Total ($)
position awards pension compensation
($)(1) value and ($)(3)
nonqualified
deferred
compensation
earnings
($)((2))
(a) (b) (c) (d) (f) (h) (i) (j)
----------------------------------------------------------------------------------------------------------------

Gregory B. Lykins 2006 $153,230 $65,000 $24,758 $2,564 $45,031 $290,583
Chairman of the Board

Van A. Dukeman 2006 $277,846 $150,000 $36,471 $1,900 $47,974 $514,191
President and Chief
Executive Officer

Donna R. Greene 2006 $147,461 $30,000 $11,551 $85 $30,732 $219,829
Executive Vice
President
of Wealth Management

Paul E. Donohue 2006 $147,461 $25,000 $18,729 $192 $30,120 $221,502
Executive Vice
President
of Sales and Marketing

David B. White 2006 $144,230 $50,000 $19,922 $1,509 $32,482 $248,143
Executive Vice
President, Treasurer
and
Chief Financial
Officer

(1) Amounts reflect the compensation cost recognized for 2006 under
Financial Accounting Standards Board's Financial Accounting Series
Statement 123(R) (revised 2004), Share-Based Payment ("FAS 123R"). See
Note 1(p) to the Consolidated Financial Statements contained in our
Annual Report on Form 10-K for the year-ended December 31, 2006 for a
discussion of the relevant assumptions used in calculating the
compensation cost and grant date fair value under FAS 123R.

(2) Represents above-market interest on deferred compensation. The
interest yield on the deferred compensation plan is determined
according to the plan document and is 125% of the declared interest
rate on Security Life Corp. III policies for the current calendar
month as determined by Security Life of Denver (or any successor
thereto). If that monthly rate is no longer published or no longer
deemed appropriate by the Company, a substantially similar rate may be
chosen by the Compensation Committee.

(3) The following table includes amounts reflected under the All Other
Compensation column for each named executive officer:

---------------------------------------------------------------------------------------------------------
Mr. Lykins Mr. Dukeman Ms. Greene Mr. Donohue Mr.White
---------------------------------------------------------------------------------------------------------

401(k) match .............. $ 5,646 $ 7,500 $ 3,951 $3,950 $ 4,090

Non-qualified
Retirement Plan
contribution ............ 3,000 7,585 2,627 3,169 3,220

Profit Sharing
contribution .......... 12,100 12,100 10,213 9,668 10,074

Life insurance premiums ... 8,548 3,848 1,942 1,334 3,098

Automobile allowance ...... 7,361 8,566 7,200 7,200 7,200

Country club fees ......... 8,376 8,376 4,800 4,800 4,800
------------------------------------------------------------------------------
Total $ 45,031 $ 47,974 $ 30,732 $ 30,120 $ 32,482
==============================================================================

Grants of Plan Based Awards

The following table includes stock options granted pursuant to The Company's
2000 Stock Incentive Plan during 2006. No stock appreciation rights, restricted
stock or other equity awards were granted to named executive officers in 2006
nor were any cash or non-cash awards made pursuant to an incentive plan.

---------------------------------------------------------------------------------------------------------------------
Name Grant date All other option Exercise or base Grant Date Fair
awards; Number of price of option Value ($)(1)
securities underlying awards ($/Sh)
options
(#)
(a) (b) (j) (k) (l)
---------------------------------------------------------------------------------------------------------------------

Gregory B. Lykins 02/21/2006 5,000 $30.10 $4.6865

Van A. Dukeman 02/21/2006 7,500 $30.10 $4.6865

Donna R. Greene 02/21/2006 4,000 $30.10 $4.6865

Paul E. Donohue 02/21/2006 4,000 $30.10 $4.6865

David B. White 02/21/2006 4,000 $30.10 $4.6865

(1) The grant date fair value of stock option awards is calculated in
accordance with FAS 123R. See Note 1(p) to the Consolidated Financial
Statements contained in our Annual Report on Form 10-K for the year
ended December 31, 2006 for a discussion of the relevant assumptions
used in calculating the grant date fair value under FAS 123R.

Outstanding Equity Awards at Fiscal Year-End

The table below summarizes stock options outstanding at December 31, 2006 for
each of the named executive officers.

-------------------------------------------------------------------------------
Name Number of Number of Option Option
securities securities exercise expiration
underlying underlying Price date
unexercised unexercised ($)
options options
(#) (#)
Exercisable Unexercisable(2)
(a) (b)(1) (c) (d)(1) (e)
-------------------------------------------------------------------------------

Gregory B. Lykins 5,512 0 $18.37 04/12/2010
5,250 0 $17.50 03/20/2011
5,000 0 $18.60 03/19/2012
5,000 0 $24.80 03/18/2013
4,785 215 $30.60 02/17/2014
3,123 1,877 $29.60 02/15/2015
1,429 3,571 $30.10 02/21/2016

Van A. Dukeman 5,512 0 $18.37 04/12/2010
5,250 0 $17.50 03/20/2011
5,000 0 $18.60 03/19/2012
5,000 0 $24.80 03/18/2013
7,178 322 $30.60 02/17/2014
4,684 2,816 $29.60 02/15/2015
2,143 5,357 $30.10 02/21/2016

Donna R. Greene 2,498 1,502 $29.60 02/15/2015
1,143 2,857 $30.10 02/21/2016

Paul E. Donohue 3,828 172 $30.60 02/17/2014
2,498 1,502 $29.60 02/15/2015
1,143 2,857 $30.10 02/21/2016

David B. White 3,307 0 $18.37 04/12/2010
3,150 0 $17.50 03/20/2011
3,000 0 $18.60 03/19/2012
3,000 0 $24.80 03/18/2013
3,828 172 $30.60 02/17/2014
2,498 1,502 $29.60 02/15/2015
1,143 2,857 $30.10 02/21/2016

(1) The number of unexercised options and the option exercise price for
grants expiring in 2010 and 2011 for Messrs. Lykins, Dukeman and White
have been adjusted for stock dividends.

(2) All option awards included in the Outstanding Equity Awards at Fiscal
Year End Table vest ratably over three years from the date of grant.
The exercise price for all option awards is the closing price on the
date of grant.

Option Exercises and Stock Vested

The following table summarizes the stock option exercises stock by named
executive officers in 2006.

-------------------------------------------------------------------
Option Awards
-------------------------------------------------------------------
Name Number of shares Value realized
acquired on exercise on exercise
(#) ($)(1)
(a) (b) (c)
-------------------------------------------------------------------

Gregory B. Lykins - -

Van A. Dukeman - -

Donna R. Greene - -

Paul E. Donohue - -

David B. White 1,000 $10,300

(1) Amounts reflect the difference between the exercise price of the
option and the market price at the time of exercise.

Nonqualified Deferred Compensation

The following table provides information regarding 2006 nonqualified deferred
compensation for our named executive officers. For further explanation of our
deferred compensation arrangements, see the discussion under "Compensation
Discussion and Analysis."

----------------------------------------------------------------------------------------------------------
Name Executive Registrant Aggregate Aggregate Aggregate
contributions contributions earnings in withdrawals/ balance at
in last FY in last FY last FY distrib last FYE
($)(1) ($)(2) ($)(3) ($) ($)
(a) (b) (c) (d) (e) (f)
----------------------------------------------------------------------------------------------------------

Gregory B. Lykins $31,942 $3,000 $34,490 - $595,499

Van A. Dukeman $35,284 $7,585 $25,471 - $452,397

Donna R. Greene $11,853 $2,627 $1,212 - $28,056

Paul E. Donohue $21,723 $3,169 $2,700 - $57,841

David B. White $21,365 $3,220 $20,316 - $354,511

(1) Executive Contributions includes amounts reported in the Summary
Compensation Table as Salary.

(2) Registrant Contributions includes amounts reported in the Summary
Compensation Table under All Other Compensation.

(3) Aggregate Earnings in last fiscal year includes amounts reported in
the Summary Compensation Table under Change in Pension Value and
Nonqualified Deferred Compensation Earnings as above-market interest
on deferred compensation.

Director Compensation

The following table describes compensation for the Company's non-employee
directors for 2006. The amounts reported include compensation paid to the
non-employee directors in their capacity as directors of our wholly-owned
subsidiaries, Main Street Bank and Trust and FirsTech, in addition to their
service as directors of the Company.

--------------------------------------------------------------------------------
Name(1) Fees Option Awards Total
earned or ($)(3) ($)
paid in
cash
($)(2)

(a) (b) (h)
--------------------------------------------------------------------------------

David J. Downey $7,000 $25,059 $32,059

Van A. Dukeman(1) - $36,471 $36,471

Larry D. Haab $4,250 $25,059 $29,309

Frederic L. Kenney $7,000 $25,059 $32,059

Gregory B. Lykins(1) - $24,758 $24,758

August C. Meyer, Jr. - $25,059 $25,059

George T. Shapland $7,000 $25,059 $32,059

Thomas G. Sloan $3,000 $25,059 $28,059

H. Gale Zacheis, M.D. $2,000 $25,059 $27,059

(1) Directors of the Company who are also employees were not separately
compensated for service on the boards or committees. Non-employee
directors receive 5,000 options for service on the holding company
Board but do not otherwise receive cash compensation for service on
the holding company Board. Options awarded to non-employee directors
vest ratably over a one year period. Non-employee directors receive an
annual fee of $2,000 for service on the Audit Committee, an annual fee
of $1,000 for service on the Compensation and Nominating Committees
combined, an annual fee of $6,000 for service on the Senior Loan
Committee and an annual fee of $1,250 for service on the FirsTech
Board.

(2) The following table provides additional information on 2006
compensation for non-employee directors who served during 2006.

Holding
Company Bank FirsTech
Committee Committee Board Total
Name Fees($) Fees($) Fees($) Fees($)
------------------------------------------------------------------
David J. Downey 1,000 6,000 - 7,000
Larry D. Haab 3,000 - 1,250 4,250
Frederic L. Kenney 1,000 6,000 - 7,000
August C. Meyer, Jr. - - - -
George T. Shapland 1,000 6,000 - 7,000
Thomas G. Sloan 3,000 - - 3,000
H. Gale Zacheis 2,000 - - 2,000

(3) Amounts reflect the compensation cost recognized for 2006 under FAS
123R. See Note 1(p) to the Consolidated Financial Statements contained
in our Annual Report on Form 10-K for the year-ended December 31, 2006
for a discussion of the relevant assumptions used in calculating the
compensation cost and grant date fair value under FAS 123R.

Potential Payments Upon Termination or Change in Control

The following table sets forth information concerning potential payments and
benefits under the Company's compensation programs and benefit plans to which
the named executive officers would be entitled upon a hypothetical termination
of employment as of December 31, 2006. Please note that the amounts set forth
below, may not reflect amounts due to any executive officer in connection with
the proposed transaction with First Busey, which amounts may depend on
circumstances beyond the control of the Company such as individual negotiations
with First Busey. As is more fully described below, all five of named executive
officers have entered into employment agreements with the Company (or its
predecessor), which provide for payments and benefits to the executives if an
executive should experience a termination of employment without cause, a
constructive discharge, death or disability (in the case of Messrs. Lykins and
Dukeman) or a termination in connection with a change in control of the Company.
Except for the payments and benefits provided by the employment agreements, all
other payments and benefits provided to any named executive officer upon
termination of his employment are the same as the payments and benefits provided
to other eligible executives of the Company. For purposes of estimating the
value of certain equity awards management has assumed a price per share of the
Company's common stock of $35.25, which was the closing price on December 29,
2006, the last trading day of the year.

--------------------------------------------------------------------------------------------------------------------
Continuation Acceleration
Cash of Medical/ of Deferred Acceleration Total
Severance Dental Compensation of Equity Excise Tax Termination
Payment Benefits((1)) Vesting Awards Gross-Up((2)) Benefits
--------------------------------------------------------------------------------------------------------------------

Gregory B. Lykins

Termination - without $289,000 $11,819 --- --- --- $300,819
cause, constructive
discharge, death or
disability

Termination in $900,000 $35,457 --- $29,995 --- $965,452
connection with change
in control
--------------------------------------------------------------------------------------------------------------------
Van A. Dukeman

Termination - without $505,000 $15,264 --- --- --- $520,264
cause, constructive
discharge, death or
disability

Termination in $1,515,000 $45,792 --- $44,996 $548,165 $2,153,953
connection with change
in control
--------------------------------------------------------------------------------------------------------------------
Donna R. Greene

Termination - without $209,976 $7,292 --- --- --- $217,268
cause or constructive
discharge

Termination in $407,976 $14,584 $315 $23,200 --- $446,075
connection with change
in control
--------------------------------------------------------------------------------------------------------------------
Paul E. Donohue

Termination - without $202,119 $9,320 --- --- --- $211,439
cause or constructive
discharge

Termination in $400,119 $18,640 $849 $24,000 --- $443,608
connection with change
in control
--------------------------------------------------------------------------------------------------------------------
David B. White

Termination - without $195,000 $7,466 --- --- --- $202,466
cause or constructive
discharge

Termination in $390,000 $14,932 --- $24,000 --- $428,932
connection with change
in control
--------------------------------------------------------------------------------------------------------------------

(1) These are estimated amounts due for continuation of medical,
disability and life insurance benefits based on 2007 group premiums
charged to the Company and its employees under the group plans
sponsored by the Company.

(2) Pursuant to the terms of their employment agreements, Messrs. Lykins
and Dukeman are entitled to receive a "gross-up" payment for any
excise tax (and income and employment taxes thereon) that would be due
in connection with parachute payments made to them. While
circumstances could exist under which an excise tax gross-up payment
would be due to Mr. Lykins, management does not believe that any
payments reflected in this table would result in the imposition of an
excise tax under the Internal Revenue Code based upon a termination of
employment in connection with a change in control occurring on
December 31, 2006. Further, although an excise tax gross-up payment is
included above for Mr. Dukeman, management believes that there are
alternatives, which would typically be considered in the context of an
actual change in control situation, that would result in no excise tax
being imposed on Mr. Dukeman at the time of an actual change in
control. The terms of the employment agreements for Ms. Greene and
Messrs. Donohue and White require that their parachute payments be
reduced to an amount that is one dollar less than the threshold for
imposing an excise tax under the Internal Revenue Code, in order to
avoid the imposition of any such excise tax. While circumstances could
exist under which such a reduction would be required, management does
not believe that any payments reflected in this table would result in
the imposition of an excise tax under the Internal Revenue Code based
upon a termination of employment in connection with a change in
control occurring on December 31, 2006.

Accrued Pay and Regular Retirement Benefits. The amounts shown in the table
above do not include payments and benefits to the extent they are provided on a
non-discriminatory basis to salaried employees generally upon termination of
employment. These include:

o Accrued salary and vacation pay.

o Distributions of plan balances under any of the following Company
plans: the 401(k) plan, the profit-sharing plan and the deferred
compensation plan. See "All Other Compensation" in the Compensation
Discussion and Analysis section for a general description of each such
plan. Also, see the "Nonqualified Deferred Compensation" table for
information on current account balances.

o The value of option continuation upon a termination of employment,
since all employees are treated in a similar manner under the terms of
the Company's 2000 Stock Incentive Plan.

Death, Disability and Retirement. As is the case with any other eligible
participant under the Company's 2000 Stock Incentive Plan, upon a termination of
employment for any reason other than death, disability, retirement or in
connection with a change in control, the named executive officers will have a
period of three months during which to exercise their vested outstanding stock
options. Upon a termination of employment due to death or disability, the named
executive officers will have a period of twelve months to exercise their vested
outstanding stock options. If the named executive officer retires, his or her
vested outstanding stock options may be exercised at any time during the
remainder of an option's original ten-year term; provided, however, that if the
executive officer dies after retirement, any vested outstanding stock options
must be exercised within twelve months of his or her death. Any options which
are not vested at the time of termination will be forfeited.

Acceleration of Vesting Upon a Change in Control. All employees, including the
named executive officers, who receive stock options under the Company's 2000
Stock Incentive Plan will immediately and fully vest in any unvested stock
options held by such employee upon the occurrence of a change in control.

Employment Agreements. Other than as is provided in the employment agreements,
no named executive officer will be entitled to any payments or benefits (in
addition to those provided under the standard terms of the Company's employee
benefit plans and programs) upon a termination of employment that occurs other
than in connection with a change in control. Other than as is provided in the
employment agreements, and except as is provided in accordance with the terms of
the Company's 2000 Stock Incentive Plan, no named executive officer will be
entitled to any payments or benefits (in addition to those provided under the
standard terms of the Company's employee benefit plans and programs) as a result
of the occurrence of a change in control or as a result of a termination of
employment in connection with a change in control.

In the case of a termination of employment by the Company without cause or a
constructive discharge (or, in the case of Messrs. Lykins and Dukeman, in
addition to such terminations, termination of employment due to death or
disability), the employment agreements provide for the following:

o Payment of a severance benefit equal to the sum of the executive's
current annual base salary plus the amount of his or her most recently
awarded performance bonus. In addition, if the executive officer's
employment is terminated prior to the end of his or her employment
term, he or she will be entitled to receive an additional cash payment
in an amount equal to the value of contributions that would have been
made on behalf of the executive officer under all applicable
retirement and other employee benefit plans had the executive officer
remained employed by the Company through the end of his or her
employment term. All of the employment agreements currently provide
for a one-year term of employment.

o The Company will provide each named executive officer (and his or her
dependents) with continuing coverage under all existing health and
disability programs (and, in the case of Messrs. Lykins, Dukeman and
White, life insurance programs) for a period of one year following the
effective date of termination, provided that, with respect to Ms.
Greene and Messrs. Donohue and White, to the extent the executive
officer paid a portion of the premium for any such benefit prior to
termination, he or she shall continue to pay such portion during the
continuation period. The total cost of the continuation benefits for
Messrs. Lykins and Dukeman will be paid by the Company.

In the case of Ms. Greene and Messrs. Donohue and White, if an executive
officer's employment is terminated within 12 months immediately following a
change in control, the employment agreements provide for the following:

o Payment of a severance benefit equal to two times the sum of the
executive's current annual base salary plus the amount of his or her
most recently awarded performance bonus. In addition, if the executive
officer's employment is terminated prior to the end of his or her
employment term, he or she will be entitled to receive an additional
cash payment in an amount equal to the value of contributions that
would have been made on behalf of the executive officer under all
applicable retirement and other employee benefit plans had the
executive officer remained employed by the Company through the end of
his or her employment term.

o The Company will provide Ms. Greene and Messrs. Donohue and White (and
each of their dependents) with continuing coverage under all existing
health and disability programs (and, in the case of Mr. White, life
insurance programs) for a period of two years following the effective
date of termination, provided that, to the extent the executive
officer paid a portion of the premium for any such benefit prior to
termination, he or she shall continue to pay such portion during the
continuation period.

o Upon a change in control, executives may be subject to certain excise
taxes under Section 280G of the Internal Revenue Code on any parachute
payments due to them. The employment agreements for Ms. Greene and
Messrs. Donohue and White provide that the value of their parachute
payments shall be reduced to an amount that is one dollar less than
the threshold for imposition of an excise tax under Section 280G of
the Internal Revenue Code to avoid the imposition of such excise tax.
While circumstances could exist under which such a reduction would be
required, management does not believe that any payments reflected in
this table would result in the imposition of an excise tax under the
Internal Revenue Code based upon a termination of employment in
connection with a change in control occurring on December 31, 2006.

In the case of Messrs. Lykins and Dukeman, if an executive officer's employment
is terminated within the 18 months preceding or the 12 months immediately
following a change in control, the employment agreements provide for the
following:

o Payment of a severance benefit equal to the greater of (i) $900,000 or
(ii) three times the sum of the executive's current annual base salary
plus the amount of his most recently awarded performance bonus. In
addition, if the executive officer's employment is terminated prior to
the end of his employment term, he will be entitled to receive an
additional cash payment in an amount equal to the value of
contributions that would have been made on behalf of the executive
officer under all applicable retirement and other employee benefit
plans had the executive officer remained employed by the Company
through the end of his employment term.

o The Company will provide Messrs. Lykins and Dukeman (and each of their
dependents) with continuing coverage under all existing health,
disability and life insurance programs for a period of three years
following the effective date of termination. The total cost of the
continuation benefits for Messrs. Lykins and Dukeman will be paid by
the Company.

o Upon a change in control, Messrs. Lykins and Dukeman may be subject to
certain excise taxes under Section 280G of the Internal Revenue Code.
The Company agreed to "gross-up" each of them for those excise taxes
as well as any income and employment taxes payable by the executive as
a result of any reimbursements for the 280G excise taxes. While
circumstances could exist under which excise tax gross-up payments
would be due to the executives, management does not believe that any
payments made to Messrs. Lykins and Dukeman as a result of a
termination of employment in connection with a change in control
occurring on December 31, 2006 would result in the imposition of an
excise tax under the Internal Revenue Code.

In exchange for the payments and benefits provided under the employment
agreements, the named executive officers agree to be bound by a one-year
restrictive covenant, which will be effective throughout the geographic area
within a 50 mile radius from the Company's main office in Champaign, Illinois,
and, in addition, in the case of Ms. Greene, within a 50 mile radius of any of
its subsidiary banks. The restrictive covenant will prohibit the executive from
competing, in any way, with the Company for the one-year period.

Compensation Committee Interlocks and Insider Participation

The following directors served on the Compensation Committee in 2006: Messrs.
Kenney (chair), Downey, Shapland and Sloan. The Company's Compensation Committee
establishes compensation and benefits for the Chief Executive Officer and
reviews and recommends compensation and benefits for other executive officers
and senior management of the Company and of the subsidiaries. During 2006, no
executive officer served on the Board of Directors or compensation committee of
any other corporation with respect to which any member of the Compensation
Committee was engaged as an executive officer. No member of the Compensation
Committee was a company employee in 2006 and none was formerly an executive
officer.

Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information regarding the Company's
common stock beneficially owned on March 13, 2007 with respect to all persons
known to the Company to be the beneficial owner of more than five percent of the
common stock, each director and nominee, other named executive officers and all
directors and executive officers of the Company as a group.

Name of Individual and Amount and Nature of Percent
Number of Persons in Group Beneficial Ownership(1) of Class
--------------------------------------------------------------------------------

David J. Downey 275,453 2.7%
Van A. Dukeman(2) 162,680 1.6%
Larry D. Haab(3) 40,968 *
Frederic L. Kenney(4) 75,380 *
Gregory B. Lykins(5) 2,160,103 21.5%
August C. Meyer, Jr. 105,566 1.0%
George T. Shapland 383,848 3.8%
Thomas G. Sloan(6) 114,584 1.1%
H. Gale Zacheis(7) 50,024 *
Paul E. Donohue 8,605 *
Donna R. Greene(8) 7,443 *
David B. White 23,689 *

All directors and executive 3,508,944 35.0%
officers as a group((9))
(17 persons)

(1) The information contained in this column is based upon information
furnished to the Company by the persons named above and the members of
the designated group. The nature of beneficial ownership for shares
shown in this column is sole voting and investment power, except as
set forth in the footnotes below. Pursuant to the rules of the
Securities and Exchange Commission, shares obtainable through the
exercise of options which are currently exercisable, or which will
become exercisable within 60 days of the date of the information
contained in this table, are included as beneficially owned. The
number of shares obtainable through options and included in this table
are as follows: 35,762 shares for Messrs. Downey, Kenney, Meyer,
Shapland, Sloan, and Zacheis; 20,000 shares for Mr. Haab; 36,898
shares for Mr. Dukeman; 31,519 shares for Mr. Lykins; 8,605 shares for
Mr. Donohue; 4,605 shares for Ms. Greene; and 21,062 shares for Mr.
White. Each director and officer has sole voting and investment power
over such shares. Inclusion of shares shall not constitute an
admission of beneficial ownership or voting or investment power over
such shares.

(2) Includes 2,866 shares owned by Mr. Dukeman's spouse over which Mr.
Dukeman has shared voting and investment power, and 2,902 shares held
in the the Company profit sharing plan.

(3) Includes 2,707 shares held in a trust for which Mr. Haab serves as
trustee over which Mr. Haab has shared voting and investment power.

(4) Includes 29,208 shares owned by Mr. Kenney's spouse over which Mr.
Kenney has shared voting and investment power; 6,304 shares owned
jointly with Mr. Kenney's spouse over which Mr. Kenney has shared
voting and investment power; and 2,097 shares held by Mr. Kenney's
minor children over which Mr. Kenney has shared voting and sole
investment power.

(5) Includes 4,209 shares owned by Mr. Lykins' spouse over which Mr.
Lykins has shared voting and investment power and 2,555 shares held in
the the Company profit sharing plan. Also includes 1,818,691 shares
held in certain trusts for the benefit of Mr. Meyer's descendents, for
which Mr. Lykins serves as the trustee and has sole voting and
investment power.

(6) Includes 800 shares owned by Mr. Sloan's spouse over which Mr. Sloan
has shared voting and investment power.

(7) Includes 1,082 shares owned by Dr. Zacheis' spouse over which Dr.
Zacheis has shared voting and investment power.

(8) Includes 284 shares owned by Ms. Greene's spouse over which Ms. Greene
has shared voting and investment power; 559 shares held in the the
Company profit sharing plan; 1,244 shares owned jointly with Ms.
Greene's spouse over which Ms. Greene has shared voting and investment
power; and 400 shares owned jointly with Ms. Greene's father over
which Ms. Greene has shared voting and investment power.

(9) Includes 418,895 total shares obtainable through the exercise of
options that are currently exercisable.

Securities Authorized for Issuance Under Equity Compensation Plans

The table below sets forth the following information as of December 31, 2006 for
all compensation plans previously approved by our shareholders:

(a) the number of securities to be issued upon the exercise of outstanding
options, warrants and rights;

(b) the weighted-average exercise price of such outstanding options,
warrants and rights;

(c) other than securities to be issued upon the exercise of such
outstanding options, warrants and rights, the number of securities
remaining available for future issuance under the plans.

-----------------------------------------------------------------------------------------------------------------------
Plan category Number of securities to be Weighted-average exercise Number of securities
issued upon exercise of price of outstanding remaining available
outstanding options options for future issuance
-----------------------------------------------------------------------------------------------------------------------

Equity compensation plans 845,381 $24.76 1,217,873
approved by security holders

Equity compensation plans not 0 --- 0
approved by security holders

Item 13. Certain Relationships and Related Transactions, and Director
Independence

Certain Relationships and Related Transactions

Directors and officers of the Company and its respective subsidiaries were
customers of and had transactions with, the Company and its subsidiaries during
2006. Additional transactions may be expected to take place in the future. All
outstanding loans, commitments to loan, transactions in repurchase agreements
and certificates of deposit and depository relationships, in the opinion of
management, were made in the ordinary course of business, on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and did not involve more
than the normal risk of collectibility or present other unfavorable features.
All such loans are approved by the subsidiary bank's board of directors in
accordance with the bank regulatory requirements. Additionally, it is the
practice and policy of the Board of Directors that the full Board considers
other non-lending transactions between a director and the Company, including its
subsidiaries, to ensure that such transactions do not affect a director's
independence.

In November 1999, BankIllinois Financial, the predecessor of Main Street Bank
and Trust, entered into a lease agreement with Midwest Television, Inc. for
office space located in the Company's main office building located at 100 West
University Avenue, Champaign. The Company is now a party to the lease as
successor of BankIllinois Financial. Mr. Meyer, a director of the Company,
serves as president of Midwest Television, Inc., and is a controlling
shareholder of Midwest Television, Inc. Lease payments are approximately $86,000
annually. In addition, the Company leases space from Mr. Meyer in a building in
Champaign that is used for the Company's campus branch banking operations, with
lease payments totaling approximately $61,000 annually. Management believes that
the terms of these leases are no less favorable to the Company or its
subsidiaries than would have been obtained from non-affiliated parties.

Director Independence

A majority of the Company's directors are deemed to be "independent" as defined
by Nasdaq . Because of their positions as executive officers, Messrs. Dukeman
and Lykins are not "independent" under the rules established by Nasdaq. With the
exception of Mr. Meyer, the remaining directors are deemed to be independent.
The Board of Directors has established an Audit Committee, a Compensation
Committee, and a Nominating Committee, and each member of those committees is
"independent" under the rules established by Nasdaq.

Item 14. Principal Accountant Fees and Services

Accountant Fees

Audit Fees. The aggregate amount of fees billed by McGladrey & Pullen, LLP for
its audit of the Company's annual financial statements for 2006 and 2005 were
$245,575 and $233,500. The audit services also include the review of financial
statements included in our quarterly reports on Form 10-Q and Form 10-K as well
as attestation of internal controls over financial reporting in accordance with
Section 404 of the Sarbanes-Oxley Act of 2002 and FDICIA. Fees also include
services normally performed by an independent auditor in connection with
statutory and regulatory filings such as the filing of an S-4 and 8-K in
relation to the Citizen's acquisition in 2005 and the Busey merger in 2006. The
fees included in the amounts listed above for these filings were $12,925 in 2006
and $1,750 in 2005.

Audit Related Fees. The aggregate amount of fees billed by McGladrey & Pullen,
LLP, for professional services rendered in 2006 and 2005 were $5,000 and
$21,450. The services provided in 2005 were principally for consultations
concerning SEC filings.

Tax Fees. The aggregate amounts of tax-related services billed by RSM McGladrey,
Inc., an affiliate of McGladrey & Pullen, LLP, for 2006 and 2005 were $36,665
and $20,447, for professional services rendered for tax compliance, tax advice
and tax planning. The services provided also included assistance with the
preparation of the Company's tax return and guidance with respect to estimated
tax payments.

All Other Fees. The aggregate amount of fees billed by RSM McGladrey, Inc. for
professional services rendered in 2005 were $3,100. There were no professional
services rendered in 2006. The services provided in 2005 were in conjunction
with assisting the Bank in the development and presentation of a Bank Secrecy
Act risk assessment.

The Audit Committee, after consideration of the matter, does not believe that
the rendering of these services by McGladrey & Pullen, LLP and its affiliate to
be incompatible with maintaining its independence as our principal accountant.

Audit Committee Pre-Approval Policy

Among other things, the Audit Committee is responsible for appointing, setting
compensation for and overseeing the work of the independent auditor. The Audit
Committee has adopted a policy concerning the approval of the audit and
permissible non-audit services to be provided by McGladrey & Pullen, LLP and RSM
McGladrey, Inc. On a case-by-case basis, audit or permissible non-audit services
proposed to be performed are considered by and, if deemed appropriate, approved
by the Audit Committee in advance of the performance of such services. All of
the fees earned by McGladrey & Pullen, LLP and RSM McGladrey, Inc. described
above were attributable to services pre-approved by the Audit Committee.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Index to Financial Statements

See page 42.

(a)(2) Financial Statement Schedules

N/A

(a)(3) Schedule of Exhibits

The Exhibit Index which immediately follows the signature page to this
Form 10-K is incorporated by reference.

(b) Exhibits

The exhibits required to be filed with this Form 10-K are included
with this Form 10-K and are located immediately following the Exhibit
Index to this Form 10-K.

MAIN STREET TRUST, INC.

EXHIBIT INDEX
TO
ANNUAL REPORT ON FORM 10-K

Incorporated
Exhibit No. Description Herein by Filed
Reference To Herewith
-------------- ---------------------------- ------------------------------------- -----------------

3.1 Amended and Restated Exhibit 3.1 to the Form S-4 filed
Articles of Incorporation with the Commission on December 23,
2004 (SEC File No. 333-121579)

3.2 Amendment to Articles of Exhibit 3.2 to the Form S-4 filed
Incorporation of Main with the Commission on December 23,
Street Trust, Inc. 2004 (SEC File No. 333-121579)

3.3 Bylaws Exhibit 3.3 to the Form S-4 filed
with the Commission on December 23,
2004 (SEC File No. 333-121579)

4.1 Specimen common stock Exhibit 4.1 to the Form 10-K filed
certificate with the Commission on March 30,
2001 (SEC File No.000-30031)

4.2 Second Amended and Exhibit 4.2 to the Form 10-K filed
Restated Shareholders' with the Commission on March 30,
Agreement, dated as of 2001 (SEC File No. 000-30031)
November 1, 2000

10.1 Employment Agreement by Exhibit 10.1 to the Form 10-K filed
and between the Company with the Commission on March 29,
and Gregory B. Lykins 2002 (SEC File No. 000-30031)

10.2 Employment Agreement by Exhibit 10.2 to the Form 10-K filed
and between the Company with the Commission on March 29,
and Van A. Dukeman 2002 (SEC File No. 000-30031)

10.3 Employment Agreement by Exhibit 10.5 to the Registration
and between the Company Statement on Form S-4 filed with
and David B. White the Commission on March 15, 1996,
as amended (SEC File No. 33-90342)

10.4 Employment Agreement by Exhibit 10.5 to the Form 10-K filed
and between The First with the Commission on March 24,
National Bank of Decatur 2003 (SEC File No. 000-30031)
and Chris Shroyer

10.5 Employment Agreement by Exhibit 10.6 to the Form 10-K filed
and between the Company with the Commission on March 15,
and Robert F. Plecki 2004 (SEC File No. 000-30031)

10.6 Employment Agreement by Exhibit 10.5 to the Form 10-K filed
and between the Company with the Commission on March 15,
and Paul E. Donohue 2005 (SEC File No. 000-30031)

10.7 Employment Agreement by Exhibit 10.5 to the Form 10-K filed
and between the Company with the Commission on March 15,
and Donna R. Greene 2005 (SEC File No. 000-30031)

10.8 Main Street Trust, Inc. Exhibit 10.1 to the Form S-8 filed
2000 Stock Incentive Plan with the Commission on November 29,
2000 (SEC File No. 333-50890)
10.9 Main Street Trust, Inc. Exhibit 10.5 to the Form 10-K filed
2000 Stock Incentive Plan with the Commission on March 15,
Director Stock Option 2005 (SEC File No. 000-30031)
Agreement

10.10 Main Street Trust, Inc. Exhibit 10.5 to the Form 10-K filed
2000 Stock Incentive Plan with the Commission on March 15,
Employee Stock Option 2005 (SEC File No. 000-30031)
Agreement

10.11 Credit Agreement dated as Exhibit 10.1 to the Form 10-Q filed
of March 31, 2005 between with the Commission on May 10, 2005
JP Morgan Chase Bank, N.A. (SEC File No. 000-30031)
and Main Street Trust, Inc.

10.12 Agreement and Plan of Exhibit 2.1 to the Form 8-K filed
Merger between Main Street with the Commission on September
Trust, Inc. and First 21, 2006 (SEC File No. 000-30031)
Busey Corporation dated
September 20, 2006

10.13 Letter agreement between Exhibit 99.1 to the Form 8-K filed
Main Street Trust, Inc. with the Commission on September
and Gregory B. Lykins, 21, 2006 (SEC File No. 000-30031)
dated September 20, 2006

10.14 Letter agreement between Exhibit 99.2 to the Form 8-K filed
Main Street Trust, Inc. with the Commission on September
and Van A. Dukeman, dated 21, 2006 (SEC File No. 000-30031)
September 20, 2006

10.15 Letter agreement between Exhibit 99.3 to the Form 8-K filed
Main Street Trust, Inc. with the Commission on September
and David B. White, dated 21, 2006 (SEC File No. 000-30031)
September 20, 2006

21.1 Subsidiaries of the Exhibit 21.1 to the Form 10-K filed
Registrant with the Commission on March 16,
2006 (SEC File No. 000-30031)

23.1 Consent of McGladrey & X
Pullen, LLP

31.1 Certification of Chief X
Executive Officer Pursuant
to Rule 13a-14(a)/15d-14(a)

31.2 Certification of Chief X
Financial Officer Pursuant
to Rule 13a-14(a)/15d-14(a)

32.1 Certification of Chief X
Executive Officer Pursuant
to 18 U.S.C. Section 1350,
as adopted Pursuant to
Section 906 of the
Sarbanes-Oxley Act of 2002

32.2 Certification of Chief X
Executive Officer Pursuant
to 18 U.S.C. Section 1350,
as adopted Pursuant to
Section 906 of the
Sarbanes-Oxley Act of 2002

100

SIGNATURES

Pursuant to the requirements of Section 13 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 on March 16, 2007.

By: /s/ Van A. Dukeman By: /s/ David B. White
--------------------------- ------------------------------
Van A. Dukeman David B. White
President, CEO and Director Executive Vice President and
Principal Financial and
Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on March 16, 2007.

/s/ Gregory B. Lykins
--------------------------------------
Gregory B. Lykins Chairman and Director

/s/ Van A. Dukeman
--------------------------------------
Van A. Dukeman President, CEO and Director

/s/ David J. Downey
--------------------------------------
David J. Downey Director

/s/ Larry D. Haab
--------------------------------------
Larry D. Haab Director

/s/ Frederic L. Kenney
--------------------------------------
Frederic L. Kenney Director

/s/ August C. Meyer, Jr.
--------------------------------------
August C. Meyer, Jr. Director

/s/ George T. Shapland
--------------------------------------
George T. Shapland Director

/s/ Thomas G. Sloan
--------------------------------------
Thomas G. Sloan Director

/s/ H. Gale Zacheis
--------------------------------------
H. Gale Zacheis Director

101