<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For fiscal period ended March 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For transition period from __________ to __________
Commission File Number 0 -17609
WEST SUBURBAN BANCORP, INC.
(Exact name of Registrant as specified in its charter)
Illinois 36-3452469
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
711 South Meyers Road, Lombard, Illinois 60148
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 629-4200
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
1,000,000 shares of Common Stock, Class A, no par value, were
authorized and 347,015 shares were issued and outstanding as of March
31, 1994.
1,000,000 shares of Common Stock, Class B, no par value, were
authorized and 85,480 shares were issued and outstanding as of March
31, 1994.
<PAGE>
WEST SUBURBAN BANCORP, INC.
Form 10-Q Quarterly Report
Table of Contents
PART I
Page Number
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . 1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . 6
PART II
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 11
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . 11
Item 3. Defaults upon Senior Securities . . . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote of Security Holders . . . 11
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 11
Form 10-Q Signature Page . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
WEST SUBURBAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
<S> <C> <C>
Assets
Cash and due from banks $32,845 $37,727
Interest-bearing deposits in financial
institutions 559 610
Federal funds sold 6,450 6,160
Total cash and cash equivalents 39,854 44,497
Investment securities:
Available for sale (at fair value
in 1994; market value of $174,088
in 1993) 156,887 171,475
Held to maturity (market value of
$65,267 in 1994; $19,251 in 1993) 66,518 19,119
Mortgage-backed securities available
for sale (at fair value in 1994;
market value of $19,501 in 1993) 16,441 17,559
Loans, less allowance for loan losses
of $7,450 in 1994; $7,125 in 1993 660,387 692,274
Premises and equipment, net 25,321 25,401
Other real estate 8,880 9,954
Banker's acceptances 1,929 2,026
Accrued interest and other assets 16,477 17,573
Total assets $992,694 $999,878
Liabilities and Shareholders' Equity
Deposits
Noninterest-bearing $91,509 $94,268
Interest-bearing 793,771 789,196
Total deposits 885,280 883,464
Federal Home Loan Bank ("FHLB")
advances ---- 8,220
Real Estate Mortgage Investment Conduit
("REMIC") ---- 3,541
Subordinated convertible capital notes 10 50
Banker's acceptances 1,929 2,026
Accrued interest and other liabilities 7,907 6,754
Total liabilities 895,126 904,055
Shareholders' equity
Common stock, Class A, no par value;
1,000,000 shares authorized; 347,015
shares issued and outstanding 2,774 2,774
Common stock, Class B, no par value;
1,000,000 shares authorized; 85,480
shares issued and outstanding 683 683
Surplus 38,066 38,066
Retained earnings 55,831 54,300
Net unrealized holding gains on
securities available for sale 214 ----
Total shareholders' equity 97,568 95,823
Total liabilities and
shareholders' equity $992,694 $999,878
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
1
<PAGE>
WEST SUBURBAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Interest Income
Loans, including fees $12,146 $12,213
Investment securities:
Corporate 2,126 3,250
U.S. government agencies and
corporations 682 471
States and political subdivisions 281 168
U.S. Treasury securities 122 ----
Mortgage-backed securities 498 631
Deposits in financial institutions 38 33
Federal funds sold 176 74
Total interest income 16,069 16,840
Interest Expense
Deposits 5,874 6,730
REMIC 16 101
Subordinated convertible capital
notes ---- 64
Other 62 93
Total interest expense 5,952 6,988
Net interest income 10,117 9,852
Provision for Loan Losses 587 832
Net interest income after provision for
loan losses 9,530 9,020
Other Income
Service fees 824 844
Net gain on sale of investment
securities available for sale 234 14
Trust fees 119 124
Net gain on sale of loans originated
for sale 172 350
Loan servicing 222 236
Other 528 939
Total other income 2,099 2,507
Other Expense
Salaries and employee benefits 3,052 3,187
Occupancy 549 605
Premises and equipment 578 606
FDIC insurance premiums 494 408
Professional fees 413 61
Other 1,773 1,520
Total other expense 6,859 6,387
Income before income taxes 4,770 5,140
Applicable income taxes 1,832 1,944
Income before cumulative effect of
accounting change 2,938 3,196
Cumulative effect of accounting change ---- 359
Net income $2,938 $3,555
Earnings Per Share
Before cumulative effect of
accounting change:
Primary $7.92
Fully diluted $7.65
Primary $6.79 $8.81
Fully diluted $6.79 $8.50
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
2
<PAGE>
WEST SUBURBAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from operating activities
Net income $2,938 $3,555
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization 596 511
Cumulative effect of
accounting change ---- (359)
Provision for loan losses 587 832
Provision for deferred income
taxes (684) (745)
Premium amortization of
securities, net 570 1,067
Net gain on sale of investment
securities available for sale (234) (14)
Net gain on sale of loans
originated for sale (172) (350)
Sale of loans originated for
sale 3,803 18,537
Loans originated for sale (6,362) (15,878)
(Gain) loss on sale of
premises and equipment 204 (23)
Gain on sale of other real
estate (3) (122)
(Increase) decrease in other
assets 1,780 (7)
Increase in other liabilities 1,113 2,597
Total adjustments 1,198 6,046
Net cash provided by
operating activities 4,136 9,601
Cash flows from investing activities
Proceeds from sales of investment
securities available for sale 42,113 13,540
Proceeds from maturities of
investment securities 25,330 25,848
Purchases of investment securities (101,296) (36,506)
Proceeds from mortgage-backed
securities 2,038 1,903
Net (increase) decrease in loans 33,724 (2,118)
Purchases of premises and equipment (725) (178)
Proceeds from sale of premises and
equipment 4 132
Proceeds from sale of other real
estate 1,384 1,098
Net cash provided by (used in)
investing activities $2,572 $3,719
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE>
WEST SUBURBAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993 (CONTINUED)
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Cash flows from financing activities
Net decrease in demand deposits, NOW
accounts and savings accounts ($3,264) ($3,539)
Net (decrease) increase in
certificates of deposit 5,080 (10,576)
Net increase in federal funds
purchased ---- 5,990
Decrease in FHLB advances (8,220) (9,820)
Repayment of REMIC (3,541) (2,064)
Repayment of note payable ---- (1,000)
Cash dividends paid (1,406) (1,210)
Net cash used in financing
activities (11,351) (22,219)
Net decrease in cash and cash
equivalents (4,643) (8,899)
Cash and cash equivalents at
beginning of period 44,497 43,817
Cash and cash equivalents at end of
period $39,854 $34,918
Supplemental disclosure of cash flow
information
Cash paid during the year for:
Interest on deposits and other
borrowings $5,973 $7,166
Supplemental schedule of noncash
investing and financing activities:
Decrease in allowance for
unrealized losses on marketable
equity securities ---- ($548)
Securities fair value
adjustment $1,172 ----
Unrealized gain on investment
securities $214 ----
Mortgage-backed securities
fair value adjustment ($1,526) ----
Transfers to other real estate $307 $1,865
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE>
WEST SUBURBAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The unaudited interim consolidated financial statements included
herein are prepared pursuant to the rules and regulations for
reporting on Form 10-Q. Accordingly, certain information and footnote
disclosures normally accompanying the annual financial statements have
been omitted. The interim financial statements and notes should be
read in conjunction with the consolidated financial statements and
notes thereto included in the latest Annual Report on Form 10-K filed
by West Suburban Bancorp, Inc. (the "Company"). In the opinion of
management, the consolidated financial statements include all
adjustments (none of which were other than normal recurring
adjustments) necessary for a fair statement of the results for the
interim periods.
Earnings per share are calculated on the basis of the daily weighted
average number of shares outstanding. Net income has been adjusted
for the interest expense (net of tax) on the convertible debt.
Effective January 1, 1994 the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 requires
that all debt and equity securities be classified as: held to
maturity, trading assets or available for sale. Securities held to
maturity are classified as such only when the Company determines it
has the ability and intent to hold these securities to maturity.
Trading account assets include securities acquired as part of trading
activities and are typically purchased with the expectation of near-
term profit. All securities not qualifying for held to maturity or
trading treatment are classified as available for sale, even if the
Company has no intention to sell the security.
Application of SFAS No. 115 to prior periods is not permitted and,
accordingly, prior-period financial statements have not been restated
to reflect the change in accounting principle. There is no cumulative
effect on the Company's Consolidated Statement of Income for the three
months ended March 31, 1994, from adopting SFAS No. 115.
Shareholders' Equity at March 31, 1994 was increased by $.2 million
which represents the unrealized holding gains, net of deferred income
taxes. The effect of adopting SFAS No. 115 at January 1, 1994
resulted in an increase to shareholders' equity of approximately $2.7
million, net of deferred income taxes.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION - OVERVIEW
The Company experienced pre-tax earnings of $4.7 million for the three
months ended March 31, 1994 and $5.1 million for the same period in
1993. This represents a decrease of $.4 million (7.2%) during the
first three months of 1994 compared to the first three months of 1993.
The reasons for this decrease are discussed in more detail under
"Results of Operations for the Three Months Ended March 31, 1994 and
1993."
LIQUIDITY
The Company continues to maintain an adequate level of liquidity while
maximizing income, not withstanding a decline in cash and cash
equivalents of $4.6 million (10.4%) during the first three months of
1994. The largest component of the decrease in cash and cash
equivalents was cash and due from banks which decreased from $37.7
million to $32.8 million during the three month period ended March 31,
1994. The decreases in cash and cash equivalents and loans were
principally reinvested in investment securities.
The Company depends primarily upon cash and cash equivalents, which
includes federal funds sold, for its sources of liquidity. As in the
past, the Company has not relied on brokered deposits as a source of
liquidity. The Company has used, however, FHLB advances as a short-
term means of funding the residential real estate loan volume of its
thrift subsidiary. Additionally, the Company occasionally has used
federal funds purchased to fund its short term liquidity needs.
ASSET DISTRIBUTION
Investment securities increased $32.8 million (17.2%) from $190.6
million at December 31, 1993 to $223.4 million at March 31, 1994. The
primary reason for this increase resulted from proceeds from loan
repayments used to purchase investment securities. As of March 31,
1994, the investment securities portfolio had a book value of $223.4
million and an estimated market value of $222.2 million compared to
December 31, 1993 at which time the book value of its investment
securities portfolio was $190.6 million and the estimated market value
was $193.3 million. The primary cause in the decline in market value
was rising interest rates which occurred in the first quarter of 1994.
Management reviews its portfolio on an ongoing basis and in doing so
reviews market conditions and trends.
As of March 31, 1994, mortgage-backed securities had a cost basis of
$14.9 million and an estimated market value of $16.4 million compared
to December 31, 1993 when the cost basis was $17.6 million and the
estimated market value was $19.5 million. This resulted in an
unrealized gain of $1.5 million (10.2%) at March 31, 1994 and $1.9
million (11.1%) at December 31, 1993. As with investment securities,
the primary cause for market decline was rising interest rates which
occurred in the first quarter of 1994.
Total assets decreased $7.2 million (.7%) during the first three
months of 1994. The Company experienced a decrease of $15.8 million
(1.6%) during the first three months of 1993. This decrease is
primarily attributable to a $31.9 million (6.1%) decline in loans
resulting from reduced loan demand in the residential mortgage
refinance market caused by a less favorable interest rate environment
for borrowers and borrowers' repayment activity. Proceeds from loan
repayments were reinvested in securities. Furthermore, decreased need
for cash to fund loan activities allowed the Company to pay off the
FHLB advances which were held at the end of 1993.
ALLOWANCE FOR LOAN LOSSES AND ASSET QUALITY
The allowance for loan losses represents the amount which management
has determined will be adequate to cover possible future losses based
on the current loan portfolio. Management's determination is based
upon considerations of risk factors of the various components in the
loan
6
<PAGE>
portfolio, past loan loss experience and trends, current loan
holdings and delinquencies and anticipated economic conditions in the
Company's market area. The allowance for loan losses increased $.3
million (4.6%) from $7.1 million at December 31, 1993 to $7.4 million
at March 31, 1994. This represents an increase in the allowance for
loan losses to total loans outstanding from 1.02% at December 31, 1993
to 1.12% at March 31, 1994, and was attributable in part to the lower
volume of loans outstanding. General improvement in the quality of
the loan portfolio resulted in a decrease in nonaccrual loans in the
amount of $.5 million (8.4%) from $6.5 million at December 31, 1993 to
$6.0 million at March 31, 1994. As of March 31, 1994 and December 31,
1993, the ratio of nonperforming loans to net loans was 1.5%. Loans
90 days or more past due decreased $.3 million (6.1%) from $4.0
million at December 31, 1993 to $3.7 million at March 31, 1994.
Management believes that the allowance for loan losses adequately
reflects potential losses at March 31, 1994. At the end of 1993,
management was aware of two troubled commercial real estate loans that
were of significance. During 1993, one of the loans was transferred
to other real estate owned and, as of March 31, 1994, the real
property that secured the loan is due to be sold in 1994. Other real
estate decreased $1.1 million (10.8%) primarily as a result of sales
of the properties.
LIABILITY DISTRIBUTION
Total liabilities decreased $8.9 million (1.0%) from $904.0 million at
December 31, 1993 to $895.1 million at March 31, 1994. This decrease
primarily resulted from the repayment of FHLB advances ($8.2 million)
and a paydown of the REMIC obligation. These decreases were partially
offset by an increase in the Company's deposit base of $1.8 million
(.2%)
Total deposits increased $1.8 million (.2%) to $885.3 million during
the first three months of 1994. The Company expects its deposit
growth to remain even during 1994 as customers continue to search for
higher yields in other investments, including, for example, mutual
funds, equity securities and other noninterest-bearing investment
vehicles. While the Company has not experienced deposit runoff during
the first quarter of 1994, there has been minimal deposit growth
during this period. Although, noninterest bearing deposits decreased
$2.8 million (2.9%) for the three months ended March 31, 1994,
interest-bearing deposits increased $4.6 million (.6%) for this
period. Increases in money market savings and certificates of deposit
were partially offset by decreases in NOW accounts. Management
believes this to be a shift from short-term savings to longer-term,
due to a more favorable interest-rate environment for savings. If the
current interest rate environment continues to improve for savers,
management expects growth trends in long-term deposits to continue and
eventually lead to actual deposit base growth.
The Company will attempt to continue to remain highly competitive in
its market by offering competitive rates of return on its savings and
certificate of deposit instruments. The Company will promote its
savings products when appropriate. However, the Company will not
compromise its net interest margin in order to attract deposits.
SHAREHOLDERS' EQUITY
Shareholder's equity increased $1.8 million (1.8%) from $95.8 million
at December 31, 1993 to $97.6 million at March 31, 1994. This
increase was primarily the result of net income of $2.9 million which
was partially reduced by dividend declarations of $1.4 million.
RATE SENSITIVITY GAPS AND NET INTEREST MARGIN
The Company attempts to maintain a conservative posture with regard to
interest rate risk actively managing its asset/liability gap positions
and constantly monitoring the direction and magnitude of gaps and
risk. The Company attempts to moderate the effects of changes in
interest rates by adjusting its asset and liability mix to achieve
desired relationships between rate sensitive assets and rate sensitive
liabilities. Rate sensitive assets and liabilities are those
instruments that reprice within a given time period. An asset or
liability reprices when it is subject to change in its interest rate
or upon maturity. The consolidated rate sensitivity position of the
Company at March 31, 1994 reflects cumulative interest rate sensitive
assets compared to interest rate sensitive liabilities of 108.3% and a
cumulative net
7
<PAGE>
position to total assets of positive 5.6% considering a twelve month
time frame.
Movements in general market interest rates are a key element in
changes in the net interest margin. During a period of falling
interest rates, a negative gap would tend to result in an increase in
net interest income while a positive gap would tend to adversely
affect net interest income. The Company's policy is to manage its
balance sheet so that fluctuations in net interest margin are
minimized regardless of the level of interest rates. The net interest
margin has varied somewhat due to management's response to increasing
competition from other financial institutions. As interest rates have
stabilized over the past few months, the net interest margin has done
likewise.
Listed below are the balances in the major categories of rate
sensitive assets and liabilities that are subject to repricing as of
March 31, 1994 (dollars in thousands):
<TABLE>
<CAPTION>
Over three
Three months to Over one
months twelve year to Over five
or less months five years years Total
<S> <C> <C> <C> <C> <C>
Rate sensitive assets:
Interest-bearing
deposits in financial
institutions $559 -- -- -- $559
Federal funds sold 6,450 -- -- -- 6,450
Investment securities 20,489 $87,184 $70,015 $62,158 239,846
Loans 218,520 393,143 24,492 25,763 661,918
Total $246,018 $480,327 $94,507 $87,921 $908,773
Rate sensitive
liabilities:
Money market savings $318,368 -- -- -- $318,368
Now accounts 166,658 -- -- -- 166,658
Time deposits:
Less than $100,000 68,281 $100,242 $109,584 -- 278,107
$100,000 and over 10,447 6,878 13,313 -- 30,638
Nondeposit liabilities -- 10 -- -- 10
Total $563,754 $107,130 $122,897 -- $793,781
Interest sensitivity
gap ($317,736) $373,197 ($28,390) $87,921
Cumulative interest
sensitivity gap ($317, 736) $55,461 $27,071 $114,992
Cumulative net
interest-earning assets
as a percentage of net
interest-bearing
liabilities 43.6% 108.3% 03.4% 114.5%
Cumulative interest
sensitivity gap as a
percentage of total
assets -32.0% 5.6% 2.7% 11.6%
</TABLE>
The above table does not necessarily indicate the future impact of
general interest rate movements on the Company's net interest income
because the repricing of certain assets and liabilities is
discretionary and is subject to competitive and other pressures. As a
result, assets and liabilities indicated as repricing within the same
period may in fact reprice at different times and at different rate
levels. Assets and liabilities are reported in the earliest time
frame in which maturity or repricing may occur. The percentage
indicated for the cumulative net interest-earning assets as a
percentage of net interest-bearing liabilities is well within the
Company's target range of acceptable gap values for the three month to
twelve month time frame.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND
1993
The Company's net income for the three months ended March 31, 1994 was
$2.9 million compared to $3.5 million at March 31, 1993. This
represents a decrease of $.6 million (17.4%) compared to the same
period in 1993. Approximately 60% of this decrease was attributable
to the initial benefit of adopting SFAS No. 109 during 1994. The
Company's net interest margin increased $.3 million (2.7%) from $9.8
million at March 31, 1993 to $10.1 million at March 31, 1994. This
increase primarily resulted from a lower cost of funds, thereby
maintaining the net interest margin spread. The
8
<PAGE>
Company's provision for loan loss decreased $.2 million (29.5%) for
the three months ended March 31, 1994 when compared to 1993. Lower
bad debt exposure levels coupled with increased collection efforts on
current activity accounted for this decrease. Total other income
decreased $.4 million (16.3%) for the three months ended March 31,
1994 compared to 1993. This was primarily due to the losses incurred
by the Company on the sale of computer equipment, along with a
declining refinance market which has led to a lower income from loan
sales. Total other expenses increased $.5 million (7.4%) from $6.4
million at March 31, 1993 to $6.9 million at March 31, 1994. This
increase was principally due to increased professional fees and other
real estate operating expense during this period. The increase in
professional fees is due to costs related to certain other real estate
owned of the Company's subsidiaries and increased legal fees
associated with the disputed tax returns of the Company's thrift
subsidiary, West Suburban Bank of Aurora, FSB ("WSB Aurora").
Furthermore, FDIC insurance premiums increased slightly for the
three month period ended March 31, 1994 as compared to March 31,
1993, primarily due to an increase in average deposit balances held
during the 1994 period. Additionally, WSB Aurora had received a
credit toward its premium during the 1993 period. Finally, income
tax expense decreased $.1 million (5.8%) for the three months ended
March 31, 1994 compared to 1993. Total interest income, on a tax
equivalent basis, decreased $.7 million for the three months ended
March 31, 1994 compared to 1993. The largest component of this
decrease was interest on corporate securities which decreased $1.1
million. Of this decrease, $.8 million was the result of lower average
balances during the period and $.3 million was the result of a decline
in interest rates. This decrease was partially offset by an increase
in interest on securities held in U.S. government agencies and
corporations which increased $.3 million. Total interest expense
decreased $1.0 million for the three months ended March 31, 1994
compared to the same period during 1993. The largest component
this decrease was nterest on deposits which decreased $.9 million
largely due to a decline in interest rates. Management believes that
this trend may reverse as interest rates increase.
The following table reflects the extent to which changes in the volume
of interest-earning assets and interest-bearing liabilities and
changes in interest rates have affected net interest income for the
period ended March 31, 1994 as compared to March 31, 1993 (dollars in
thousands):
Change due to:
<TABLE>
<CAPTION>
Volume Rate Total
<S> <C> <C> <C>
Interest income
Interest-bearing
deposits in financial
institutions ($17) $22 $5
Federal funds sold 97 5 102
Investment securities (364) (249) (613)
Mortgage-backed
securities (226) 93 (133)
Loans 704 (749) (45)
Total interest
income 194 (878) (684)
Interest expense
Interest-bearing
deposits (38) (818) (856)
Borrowed funds (152) (28) (180)
Total interest
expense (190) (846) (1,036)
Net interest income $384 ($32) $352
</TABLE>
OTHER CONSIDERATIONS
Earnings of bank and thrift holding companies and their subsidiaries
are affected by general economic conditions and also by the fiscal
and monetary policies of federal regulatory agencies, including the
Board of Governors of the Federal Reserve System. Such policies have
affected the operating results of all commercial banks and thrifts
in the past and are expected to do so in the future. The Company
cannot accurately predict the nature or the extent of any effects
which fiscal or monetary policies may have on its subsidiaries'
business and earnings.
9
<PAGE>
The Internal Revenue Service (the "IRS") is currently examining the
income tax returns of WSB Aurora for 1988, 1989 and 1990. The IRS
has proposed certain adjustments to the income tax returns of WSB
Aurora for 1988, 1989 and 1990. The periods under examination are
prior to the acquisition of WSB Aurora by the Company. The Company
continues to contest the adjustments proposed by the IRS. However,
in the event that the IRS is successful in whole or in part, the
Company believes any adjustments which might result would not have a
material effect on the Company's financial position.
EMPLOYEE STOCK OWNERSHIP PLAN
During the first quarter of 1994, the West Suburban Bank Stock Bonus
Trust Plan was converted into an employee stock ownership plan (the
"Plan"). The respective boards of directors of the Company's
subsidiaries have taken the actions necessary to allow their
respective employees to participate in the Plan. The converted Plan
is a tax-qualified stock bonus plan under Section 401(a) of the
Internal Revenue Code of 1986, as amended. The Plan is designed
to provide incentives to participants by giving them a proprietary
interest in the Company. The Plan is an individual account
defined contribution plan, which means that an individual account
is established for each participant of the Plan and that the amount of
benefits payable upon retirement, disability or death is based upon
the amount of the employer's contributions and any income, expenses,
gains or losses which may be allocated to the participant's account.
10
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company
or any of its subsidiaries is a party other than ordinary routine
litigation incidental to their respective businesses.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. None
B. None
11
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
WEST SUBURBAN BANCORP,INC.
(Registrant)
Date: May 12, 1994
Kevin J. Acker
Chairman of the Board
Duane G. Debs
Chief Accounting Officer
12
