<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 Identification Number)
of incorporation or organization)
711 SOUTH MEYERS ROAD, LOMBARD, ILLINOIS 60148
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 629-4200
-------------------------------------------------- --------------
Securities registered pursuant to Section 12(b) of the Act:
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Name of Each Exchange
Title of Each Class on which Registered
------------------- ---------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
----------------------------------------------------------
CLASS A COMMON STOCK, NO PAR VALUE
----------------------------------
(Title of Class)
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 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 10-K or any amendment to this form
10-K [ ]
The index to exhibits is located on page 29 of 108 total sequentially numbered
pages.
<PAGE>
The aggregate market value of voting common stock of Registrant held by
non-affiliates as of December 31, 1994 was $64,134,720(1). At December 31,
1994, the total number of shares of Class A Common Stock outstanding was 347,015
and the total number of shares of Class B Common Stock outstanding was 85,480.
Documents Incorporated by Reference:
Portions of the Annual Report to Shareholders for the fiscal year ended
December 31, 1994 are incorporated by reference into Parts I, II and IV hereof,
to the extent indicated herein. Portions of the Proxy Statement for the Annual
Meeting of Shareholders to be held May 10, 1995 are incorporated by reference in
Part III hereof, to the extent indicated herein.
________________________
(1) Based on the last reported price of an actual transaction in Registrant's
common stock on February 28, 1995, 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 common stock of Registrant.
2
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WEST SUBURBAN BANCORP, INC.
1994 Form 10-K Annual Report
Table of Contents
PART I
Sequential
Page Number
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . .22
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . .22
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . . . . . .23
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . .23
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . .24
Item 8. Financial Statements and Supplementary Data. . . . . . . . . . . . .24
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Matters . . . . . . . . . . . . . . . . . . . . . .24
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . .25
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . .25
Item 12. Security Ownership of Certain Beneficial Owners and Management . . .25
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . .25
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. . .26
Form 10-K Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . .28
3
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PART I
ITEM 1. BUSINESS
REGISTRANT AND ITS SUBSIDIARIES
West Suburban Bancorp, Inc., an Illinois corporation (the "Company"), is a
multi-bank holding company registered under the Bank Holding Company Act of
1956, as amended (the "BHC Act"), and a thrift holding company registered under
the Home Owner's Loan Act, as amended (the "HOLA"). The Company's operating
subsidiaries consist of: West Suburban Bank, Lombard, Illinois; West Suburban
Bank of Downers Grove/Lombard, Downers Grove, Illinois; West Suburban Bank of
Darien, Darien, Illinois; West Suburban Bank of Carol Stream/Stratford Square,
Bloomingdale, Illinois; and West Suburban Bank of Aurora, F.S.B. Aurora,
Illinois. West Suburban Bank, West Suburban Bank of Downers Grove/Lombard, West
Suburban Bank of Darien and West Suburban Bank of Carol Stream/Stratford Square
may be referred to collectively as the "Bank Subsidiaries," West Suburban Bank
of Aurora, F.S.B. may be referred to as "WSB Aurora" and the Bank Subsidiaries
and WSB Aurora may be referred to collectively as the "Subsidiaries."
The Company was incorporated in 1986 and became the parent bank holding company
of the Bank Subsidiaries in 1988. On July 13, 1990, the Company acquired WSB
Aurora, a federally-chartered thrift, thereby also becoming a thrift holding
company.
The Subsidiaries are headquartered in the near western suburbs of Chicago among
some of the faster growing areas in Illinois. Due to the nature of the market
areas served by the Subsidiaries, the Subsidiaries provide a wide range of
financial services to individuals and small and medium sized businesses. The
western suburbs of Chicago have a diversified economy, with many new corporate
headquarters and numerous small and medium sized industrial and non-industrial
businesses providing employment.
The Subsidiaries engage in a general full service retail banking business and
offer a broad variety of consumer and commercial products and services. The
Subsidiaries also offer trust services, safe deposit boxes and extended banking
hours, including Sunday hours and 24-hour banking through either a proprietary
network of 33 automated teller machines ("ATMs") or Tele-Bank 24, a bank-by-
phone system. Other consumer related services are available including financial
services and a competitively priced VISA card through West Suburban Bank Card
Services.
Although each Subsidiary operates under the direction of its own board of
directors, the Company has standard operating policies regarding asset/liability
management, liquidity management, investment management, lending practices and
deposit structure management. The Company has historically centralized certain
operations where economies of scale can be achieved.
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The following table sets forth financial and other information concerning the
subsidiaries as of December 31, 1994:
SUBSIDIARIES OF WEST SUBURBAN BANCORP, INC. (1)
(Dollars in thousands)
<TABLE>
<CAPTION>
Name of Subsidiary
(Year Formed/ Share-
Year Affiliated Number of Total holder's Net Return on Average
With the Parent) Locations (2) Assets Equity Income Assets Equity
---------------- ------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
West Suburban Bank 25 $375,078 $31,903 $5,266 1.5% 16.8%
(1962/1988)
West Suburban Bank
of Downers Grove/
Lombard 25 140,096 12,697 1,949 1.4% 14.8%
(1972/1988)
West Suburban Bank
of Darien 25 211,921 16,897 2,820 1.4% 16.5%
(1973/1988)
West Suburban Bank
of Carol Stream/
Stratford Square 25 165,388 13,208 1,991 1.3% 14.8%
(1975/1988)
West Suburban Bank
of Aurora, F.S.B. 3 150,352 15,364 1,323 .9% 8.4%
(1926/1990)
<FN>
________________
(1) The data presented in this table is not intended to present the Company's
consolidated financial results for 1994. The Company's consolidated
financial statements are provided in this Form 10-K in response to Item 14.
(2) The number of locations reflected for the Bank Subsidiaries includes all
facilities at which customers of any Bank Subsidiary can conduct their
banking business, and includes a facility which consists solely of a
proprietary stand-alone ATM facility.
</TABLE>
COMPETITION
The Company encounters competition in all areas of its business pursuits. It
competes for loans, deposits, fiduciary and other services with financial and
other institutions located both within and outside of its market area. In order
to compete effectively, to develop its market base, to maintain flexibility and
to move in pace with changing economic and social conditions, the Company
continuously refines and develops its products and services. The principal
methods of competition in the financial services industry are price, service and
convenience.
EMPLOYEES
The Company employed 601 persons (476 full time equivalent employees) on
December 31, 1994. The Company believes that its relations with its employees
are good.
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SUPERVISION AND REGULATION
General
The growth and earnings performance of the Company can be affected not only by
management decisions and general economic conditions, but also by the policies
of various governmental regulatory authorities including, but not limited to,
the Board of Governors of the Federal Reserve System (the "FRB"), the Federal
Deposit Insurance Corporation (the "FDIC"), the Illinois Commissioner of Banks
and Trust Companies (the "Commissioner"), the Office of Thrift Supervision (the
"OTS"), the Internal Revenue Service and state taxing authorities and the
Securities and Exchange Commission (the "SEC"). Financial institutions and
their holding companies are extensively regulated under federal and state law.
The effect of such statutes, regulations and policies can be significant, and
cannot be predicted with a high degree of certainty.
Federal and state laws and regulations generally applicable to financial
institutions, such as the Company regulate, among other things, the scope of
business, investments, loans, deposit insurance, reserves against deposits,
capital adequacy, the establishment of branches, mergers, consolidations,
dividends and other aspects of their operations. The system of supervision and
regulation applicable to the Company and the Subsidiaries establishes a
comprehensive framework for the operations of the Company and the Subsidiaries
and is intended primarily for the protection of the FDIC's deposit insurance
funds and the depositors, rather than the shareholders, of financial
institutions.
The following references to material statutes and regulations affecting the
Company and the Subsidiaries are brief summaries thereof and do not purport to
be complete, and are qualified in their entirety by reference to such statutes
and regulations. Any change in applicable law or regulations may have a
material effect on the business of the Company.
Recent Regulatory Developments
On September 23, 1994, the "Riegle Community Development and Regulatory
Improvement Act of 1994" (the "Riegle Act") was signed into law. The provisions
of Title III of the Riegle Act are intended to reduce the paperwork and
regulatory burdens of federally-insured financial institutions and their holding
companies. These provisions require the federal banking regulators, among other
things: (i) to consider the burdens and benefits to depository institutions and
their customers of proposed regulatory and administrative requirements;
(ii) within two years of the enactment of the Riegle Act, to eliminate from
their regulations and written supervisory policies regulatory inconsistencies,
outmoded or duplicative requirements and unwarranted constraints on credit
availability and to adopt uniform requirements to implement common statutory
schemes or regulatory concerns; (iii) to create a unified examination process
for financial institutions subject to the jurisdiction of more than one
regulator; (iv) within six months of enactment of the Riegle Act, to establish
an internal regulatory appeals process by which regulated institutions may
obtain review of agency determinations relating to such matters as examination
ratings, adequacy of loan loss reserves and significant loan classifications;
(v) to streamline the quarterly call report format; and (vi) in considering
revisions to risk-based capital requirements, to ensure that the standards take
into account the size, activities and reporting burdens of institutions. The
Riegle Act also gives the federal banking agencies greater flexibility with
respect to the implementation and enforcement of certain provisions of the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"),
including the FDICIA provisions regarding safety and soundness standards,
examination frequency and independent audit requirements. Because the federal
banking regulators have not yet taken action to implement the regulatory reforms
contemplated by the Riegle Act, it is not possible at this time to determine the
impact of these reforms on the Company.
On September 29, 1994, the "Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994" (the "Riegle-Neal Act") was signed into law. Effective
September 29, 1995, the Riegle-Neal Act allows bank holding companies to acquire
banks located in any state in the United States without regard to geographic
restrictions or reciprocity requirements imposed by state law, but subject to
certain
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conditions, including limitations on the aggregate amount of deposits that may
be held by the acquiring holding company and all of its insured depository
institution affiliates. Effective June 1, 1997 (or earlier if expressly
authorized by applicable state law), the Riegle-Neal Act allows banks to
establish interstate branch networks through acquisitions of other banks,
subject to certain conditions, including certain limitations on the aggregate
amount of deposits that may be held by the surviving bank and all of its insured
depository institution affiliates. The establishment of DE NOVO 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 allowed
by the Riegle-Neal Act only if specifically authorized by state law. The
legislation allows individual states to "opt-out" of certain provisions of the
Riegle-Neal Act by enacting appropriate legislation prior to June 1, 1997. As a
result of the delayed effective dates of the interstate banking provisions of
the Riegle-Neal Act, and the fact that presently no state authorizes the
establishment of DE NOVO branches by out of state banks, the Riegle-Neal Act is
not expected to have an immediate significant impact on the Company. Over time,
however, the provisions of the Riegle-Neal Act may increase competition in the
market served by the Company. Federal savings associations, such as WSB Aurora,
currently have the ability under OTS regulations to establish interstate branch
networks.
The Company
GENERAL. The Company, as the sole shareholder of the Bank Subsidiaries, is a
bank holding company. As a bank holding company, the Company is registered
with, and is subject to regulation by, the FRB under the BHC Act. In accordance
with FRB policy, the Company is expected to act as a source of financial
strength to the Bank Subsidiaries and to commit resources to support the Bank
Subsidiaries in circumstances where the Company might not do so absent such
policy. Under the BHC Act, the Company is subject to periodic examination by
the FRB and is required to file periodic reports of its operations and such
additional information as the FRB may require.
Because the Company's principal place of business is in Illinois, the Company is
also subject to the requirements of the Illinois Bank Holding Company Act.
Further, due to the Company's ownership of WSB Aurora, a federally chartered
savings association, the Company is a savings and loan holding company within
the meaning of the HOLA and, as such, is subject to the examination,
supervision, reporting and enforcement requirements of the OTS.
INVESTMENTS AND ACTIVITIES. Under the BHC Act, a bank holding company must
obtain FRB approval before: (i) acquiring, directly or indirectly, ownership or
control of any voting shares of another bank or bank holding company if, after
such acquisition, it would own or control more than 5% of such shares (unless it
already owns or controls the majority of such shares); (ii) acquiring all or
substantially all of the assets of another bank or bank holding company; or
(iii) merging or consolidating with another bank holding company.
Pursuant to the BHC Act, as presently in effect, the FRB will prohibit any
direct or indirect acquisition by a bank holding company of more than 5% of the
voting shares, or of all or substantially all of the assets, of a bank located
outside of the state in which the operations of the bank holding company's
banking subsidiaries are principally located unless the laws of the state in
which the bank to be acquired is located specifically authorize such an
acquisition. Some of the interstate banking statutes enacted by individual
states are regional in nature, permitting the enacting state's banks to be
acquired by banking organizations located in specific states within the enacting
state's region, in some cases only if the specified states have reciprocal
statutes which allow banks in such states to be acquired by banking
organizations in the enacting state. A number of states have enacted nationwide
interstate banking laws which allow the enacting state's banks to be acquired by
banking organizations located in any other state (again, in some cases, subject
to the condition that the laws of the other states permit reciprocal
acquisitions by banking organizations within the enacting state). Illinois law
permits bank holding companies located in any state of the United States to
acquire banks or bank holding companies located in Illinois, subject to certain
conditions, including the requirement that the laws of the state in which the
acquiror is located permit bank holding companies located in Illinois to acquire
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banks or bank holding companies in the acquiror's state. Effective September
29, 1995, the FRB may allow a bank holding company to acquire banks located in
any state in the United States without regard to such reciprocity requirements
but subject to certain conditions, including certain deposit concentration
limits. See "Recent Regulatory Developments."
The BHC Act also prohibits, with certain exceptions noted below, the Company
from acquiring direct or indirect ownership or control of more than 5% of the
voting shares of any company which 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, except that bank holding
companies may engage in, and may own shares of companies engaged in, certain
businesses found by the FRB to be "so closely related to banking ... as to be a
proper incident thereto." Under current regulations of the FRB, the Company and
any non-bank subsidiaries are permitted to engage in, among other activities,
such banking-related businesses as the operation of a thrift, sales and consumer
finance, equipment leasing, the operation of a computer service bureau,
including software development, and mortgage banking and brokerage. The BHC Act
does not place territorial restrictions on the activities of non-bank
subsidiaries of bank holding companies.
The HOLA prohibits a savings and loan holding company, such as the Company,
directly or indirectly or through any subsidiary, from: acquiring control of,
or acquiring by merger or purchase of assets, another savings association or
savings and loan holding company without the prior written approval of the OTS;
acquiring or retaining, with certain exceptions, more than 5% of the voting
shares of a non-subsidiary savings association, a non-subsidiary savings and
loan holding company, or a non-subsidiary company engaged in activities other
than those permitted by the HOLA; or acquiring or retaining control of a
depository institution that is not federally insured.
Federal legislation also prohibits acquisition of "control" of a bank or bank
holding company, such as the Company, without prior notice to certain federal
bank regulators. "Control" is defined in certain cases as acquisition of 10% of
the outstanding shares of a bank or bank holding company.
CAPITAL REQUIREMENTS. The FRB uses capital adequacy guidelines in its
examination and regulation of bank holding companies. If capital falls below
minimum guideline levels, a bank holding company, among other things, may be
denied approval to acquire or establish additional banks or non-bank businesses.
The FRB's capital guidelines establish the following minimum regulatory capital
requirements for bank holding companies: a risk-based requirement expressed as a
percentage of total risk-weighted assets, and 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%, of which at
least one-half must be Tier 1 capital (which consists principally of
stockholders' equity). 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% to 5% for all others.
The risk-based and leverage standards presently used by the FRB are minimum
requirements, and higher capital levels will be required if warranted by the
particular circumstances or risk profiles of individual banking organizations.
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, 1994, the Company had regulatory capital in excess of the
FRB's minimum requirements, with a tier 1 risk-based capital ratio of 11.60%, a
total risk-based capital ratio of 12.11% and a leverage ratio of 9.41%.
DIVIDENDS. The FRB has issued a policy statement on the payment of cash
dividends by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses should not
pay cash dividends exceeding its net income or which
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could only be funded in ways that weakened the bank holding company's financial
health, such as by borrowing. Additionally, the FRB 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.
In addition to the restrictions on dividends imposed by the FRB, the Illinois
Business Corporation Act, as amended, prohibits the Company from paying a
dividend if, after giving effect to the dividend, the Company would be insolvent
or the net assets of the Company would be less than zero or less than the
maximum amount then payable to shareholders of the Company who would have
preferential distribution rights if the Company were liquidated.
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 Subsidiaries
GENERAL. The Bank Subsidiaries are Illinois-chartered banks, the deposit
accounts of which are insured by the Bank Insurance Fund (the "BIF") of the
FDIC. As BIF-insured, Illinois-chartered banks, the Bank Subsidiaries are
subject to the examination, supervision, reporting and enforcement requirements
of the Commissioner, as the chartering authority for Illinois banks, and the
FDIC, as administrator of the BIF.
WSB Aurora is a federally chartered savings association, the deposits of which
are insured by the Savings Association Insurance Fund (the "SAIF") of the FDIC.
As a SAIF-insured, federally chartered savings association, WSB Aurora is
subject to the examination, supervision, reporting and enforcement requirements
of the OTS, as the chartering authority for federal savings associations, and
the FDIC as administrator of the SAIF. WSB Aurora is also a member of the
Federal Home Loan Bank System, which provides a central credit facility
primarily for member institutions.
DEPOSIT INSURANCE. As FDIC-insured institutions, the Bank Subsidiaries and WSB
Aurora are required to pay deposit insurance premium assessments to the FDIC.
Pursuant to FDICIA, the FDIC adopted a risk-based assessment system under which
all insured depository institutions are placed into one of nine categories and
assessed insurance premiums, ranging from .23% to .31% of deposits, based upon
their level of capital and supervisory evaluation. Institutions classified as
well-capitalized (as defined by the FDIC) and considered healthy pay the lowest
premium while institutions that are less than adequately capitalized (as defined
by the FDIC) and considered of substantial supervisory concern pay the highest
premium. Risk classification of all insured institutions is made by the FDIC
for each semi-annual assessment period.
During 1994, each of the Bank Subsidiaries and WSB Aurora was assessed at the
rate of .23% of deposits. Each of the Bank Subsidiaries and WSB Aurora has been
advised by the FDIC that it will continue to be assessed at this rate for the
first six months of 1995.
The FDIC has issued a proposal to amend its regulations to change the range of
deposit insurance assessments for BIF members from the current range of between
.23% and .31% of deposits to a range of between .04% and .31% of deposits.
Under the FDIC's proposal, the revised rates would apply to the semi-annual
period in which the BIF reserve ratio (I.E., the ratio of the net worth of the
BIF to the aggregate amount of BIF-insured deposits) reaches 1.25% (which the
FDIC presently expects will occur between May 1, 1995 and July 31, 1995).
Although it is not possible at this time to predict whether the proposed
amendment will be adopted, assuming BIF assessment rates are modified as
proposed and assuming each of the Bank Subsidiaries continues to be assigned to
the same risk assessment category it currently occupies, the proposed change in
assessment rates would significantly reduce the deposit insurance assessments
each of the Bank Subsidiaries pays to the FDIC. However, because the FDIC's
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proposal addresses only the assessment rates charged BIF members, the adoption
of the proposal would not affect the assessment rates of SAIF insured
institutions such as WSB Aurora.
The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution has
engaged or is engaging in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, order, or any condition imposed in writing by, or written agreement
with, the FDIC. The FDIC may also suspend deposit insurance temporarily during
the hearing process for a permanent termination of insurance if the institution
has no tangible capital. Management of the Company is not aware of any activity
or condition that could result in termination of the deposit insurance of any of
the Bank Subsidiaries or WSB Aurora.
CAPITAL REQUIREMENTS. The FDIC has established the following minimum capital
standards for state-chartered insured non-member banks, such as the Bank
Subsidiaries: a leverage requirement consisting of a minimum ratio of Tier 1
capital to total assets of 3% for the most highly-rated banks with minimum
requirements of 4% to 5% for all others and a total risk-based capital
requirement consisting of a minimum ratio of total capital to total risk-
weighted assets of 8%, at least one-half of which must be Tier 1 capital.
The OTS has established the following minimum capital standards for savings
associations, such as WSB Aurora: a core capital requirement, consisting of a
minimum ratio of core capital (consisting primarily of stockholders' equity) to
total assets of 3%; a tangible capital requirement consisting of a minimum ratio
of tangible capital (defined as core capital minus all intangible assets other
than a specified amount of purchased mortgage servicing rights and purchased
credit card relationships) to total assets of 1.5%; and a risk-based capital
requirement, consisting of a minimum ratio of total capital to total risk-
weighted assets of 8%, at least one-half of which must consist of core capital.
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, the regulations of the
FDIC and the OTS provide that additional capital may be required to take
adequate account of the risks posed by concentrations of credit, nontraditional
activities and the institution's ability to manage such risks.
Further, a savings association may be required to maintain additional capital to
account for its interest rate risk ("IRR") exposure. Under OTS regulations, the
OTS quantifies each savings association's level of IRR exposure based on data
reported by each association, using an OTS model designed to measure the change
in the net present value of the association's assets, liabilities and off-
balance sheet positions resulting from a hypothetical 200 basis point increase
or decrease in interest rates. IRR exposure, as measured by the OTS, is used as
the basis for determining whether the association must hold additional risk-
based capital to account for IRR.
Similarly, FDICIA requires the federal banking regulators to amend their risk-
based capital standards to take into account interest rate risk ("IRR")
exposure. On September 14, 1993, the FDIC, the FRB and the Office of the
Comptroller of the Currency, the primary federal regulator of national banks
(the "OCC"), issued a joint proposal which would generally require banks to
quantify their level of IRR exposure using a measurement system developed by the
regulators that weights a bank's assets, liabilities and off-balance sheet
positions by risk factors designed to reflect the approximate change in each
instrument's value that would result from specified changes in interest rates (a
200 basis point increase and decline in rates under the proposal). Any bank
with a level of IRR exposure in excess of a specified threshold (1% of total
assets under the proposal) would be required to maintain additional capital
against its IRR exposure. Although it is not presently possible to predict
whether, or in what form, the proposal will be adopted, assuming IRR capital
rules were to be adopted in substantially the form proposed, it is not
anticipated that such rules would have a material adverse effect on the ability
of the Bank Subsidiaries to maintain compliance with applicable capital
requirements.
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During the year ended December 31, 1994, none of the Bank Subsidiaries or WSB
Aurora was required by the FDIC or the OTS, respectively, to increase its
capital to an amount in excess of the minimum regulatory requirement.
Nonetheless, as of December 31, 1994, each of the Bank Subsidiaries and WSB
Aurora exceeded its minimum regulatory capital requirements.
The following table sets forth selected regulatory capital ratios of the Bank
Subsidiaries at December 31, 1994:
<TABLE>
<CAPTION>
Tier 1 Total
Risk-Based Risk-Based Leverage
Institution Capital Capital Ratio
----------- ------- ------- -----
<S> <C> <C> <C>
West Suburban Bank 11.20 10.92 8.51
West Suburban Bank of Downers Grove/Lombard 13.12 14.10 9.06
West Suburban Bank of Darien 11.03 12.04 7.97
West Suburban Bank of Carol Stream/Stratford Square 11.11 11.98 7.99
</TABLE>
At December 31, 1994, WSB Aurora maintained a core capital ratio of 10.22%, a
tangible capital ratio of 12.56% and a total risk-based capital ratio of 13.66%.
FDICIA 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 "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized" or "critically undercapitalized." Depending
upon the capital category to which an institution is assigned, the regulators'
corrective powers include: requiring the submission of a capital restoration
plan; placing limits on asset growth and restrictions on activities; requiring
the institution to issue additional capital stock (including additional voting
stock) or to be acquired; restricting transactions with affiliates; restricting
the interest rate the institution may pay on deposits; ordering a new election
of directors of the institution; requiring that senior executive officers or
directors be dismissed; prohibiting the institution from accepting deposits from
correspondent banks; requiring the institution to divest certain subsidiaries;
prohibiting the payment of principal or interest on subordinated debt; and
ultimately, appointing a receiver for the institution.
Additionally, institutions insured by the FDIC may be liable for any loss
incurred by, or reasonably expected to be incurred by, the FDIC in connection
with the default of commonly controlled FDIC insured depository institutions or
any assistance provided by the FDIC to commonly controlled FDIC insured
depository institutions in danger of default.
DIVIDENDS. Under the Illinois Banking Act, Illinois-chartered banks may not
pay, without prior regulatory approval, dividends in excess of their adjusted
profits.
OTS regulations impose limitations upon all capital distributions by thrifts,
including cash dividends. The rule establishes three tiers of institutions. An
institution that exceeds all fully phased-in capital requirements before and
after the proposed capital distribution ("Tier 1 Institution") could, after
prior notice to, but without the approval of, the OTS, make capital
distributions during a calendar year of up to the higher of (i) 100% of its net
income to date during the calendar year plus the amount that would reduce by
one-half its "surplus capital ratio" (the excess capital over its fully
phased-in capital requirements) at the beginning of the calendar year, or (ii)
75% of its net income over the most recent preceding four quarter period. Any
additional capital distributions would require prior regulatory approval. As of
December 31, 1994, WSB Aurora was a Tier 1 Institution.
11
<PAGE>
The payment of dividends by any financial institution or its holding company is
affected by the requirement to maintain adequate capital pursuant to applicable
capital adequacy guidelines and regulations. As described above, the Company,
the Bank Subsidiaries and WSB Aurora each exceeded its minimum capital
requirements under applicable guidelines as of December 31, 1994. As of
December 31, 1994, approximately $17.4 million was available to be paid as
dividends to the Company by the Bank Subsidiaries and WSB Aurora.
INSIDER TRANSACTIONS. The Bank Subsidiaries and WSB Aurora are subject to
certain restrictions imposed by the Federal Reserve Act on any 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 its subsidiaries as collateral for loans.
Certain limitations and reporting requirements are also placed on extensions of
credit by the Bank Subsidiaries and WSB Aurora to their respective directors and
officers, to directors and officers of the Company and its subsidiaries, to
principal stockholders of the Company, and to "related interests" of such
directors, officers and principal stockholders. In addition, such legislation
and regulations may affect the terms upon which any person becoming a director
or officer of the Company or one of its subsidiaries or a principal stockholder
of the Company may obtain credit from banks with which one of the Bank
Subsidiaries or WSB Aurora maintains a correspondent relationship.
SAFETY AND SOUNDNESS STANDARDS. On November 18, 1994, the FDIC, the OTS, the
FRB and the OCC published for comment proposed rules implementing the FDICIA
requirement that the federal banking agencies establish operational and
managerial standards to promote the safety and soundness of federally insured
depository institutions. The proposal would establish standards for internal
controls, information systems, internal audit systems, loan documentation,
credit underwriting, interest rate exposure, asset growth, and compensation,
fees and benefits. In general, the standards set forth in the proposal consist
of the goals to be achieved in each area, and each institution would be
responsible for establishing its own procedures to achieve those goals.
Additionally, the proposal would establish a maximum permissible ratio of
classified assets to capital and a minimum required earnings ratio. If an
institution failed to comply with any of the standards set forth in the
proposal, the institution would be required to submit to its primary federal
regulator a plan for achieving and maintaining compliance. Failure to submit an
acceptable plan, or failure to comply with a plan that has been accepted by the
appropriate regulator, would constitute grounds for further enforcement action.
Based upon a review of the proposal, management of the Company believes that the
proposal, if adopted in substantially the form proposed, will not have a
material adverse effect on the Company or its subsidiaries. Under the Riegle
Act, the federal banking regulators may elect to set safety and soundness
standards relating to asset quality, earnings and stock valuation through agency
guidelines rather than by regulation and, if established by guidelines, the
agencies are not required to compel institutions that fail to meet such
guidelines to submit compliance plans.
TRUTH-IN-SAVINGS ACT. FDICIA requires the FRB to adopt regulations implementing
the Truth-in-Savings Act. The Federal Reserve Board's Truth-in-Savings
regulations took effect on June 21, 1993, and contain, as key elements: (i) a
requirement that institutions disclose yields, fees, penalties and costs for all
interest-bearing accounts; (ii) a requirement that institutions use the term
"annual percentage yield" in advertisements; (iii) a requirement that
institutions provide 30 days notice prior to reducing rates on most accounts;
and (iv) a requirement that interest be paid on entire balances rather than
investable funds.
BRANCHING AUTHORITY. All banks located in Illinois have traditionally been
restricted as to the number and geographic location of branches which they may
establish. On June 7, 1994, Governor Edgar signed into law legislation
eliminating all branching restrictions. Accordingly, as of that date, the Bank
Subsidiaries were allowed to establish branches anywhere in Illinois without
regard to the location of other bank main offices or the number of branches
previously maintained by the Bank Subsidiaries establishing the branch. Federal
savings associations, such as WSB Aurora, have for some time had similar
branching rights.
12
<PAGE>
Under the Riegle-Neal Act, the Bank Subsidiaries may, in the future, be able to
establish branches in states other than Illinois. See "Recent Regulatory
Developments." Under the HOLA and OTS regulations, federal savings associations
have for some time had nationwide branching authority, subject to OTS approval.
STATE BANK ACTIVITIES. Under FDICIA, as implemented by final regulations
adopted by the FDIC, 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. FDICIA, as implemented by
FDIC regulations, also prohibits 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 or its subsidiary,
respectively, 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. Impermissible investments and activities must be divested or
discontinued within certain time frames set by the FDIC in accordance with
FDICIA. These restrictions have not had, and are no currently expected to have,
a material impact on the operations of the Bank Subsidiaries.
QUALIFIED THRIFT LENDER TEST. Under the current qualified thrift lender ("QTL")
test, which became effective upon the enactment of FDICIA, WSB Aurora generally
is required to invest at least 65% of its portfolio assets in "qualified thrift
investments," as measured on a monthly average basis in nine out of every 12
months. Qualified thrift investments for purposes of the current QTL test
consist principally of residential mortgage loans, mortgage-backed securities
and other housing and consumer-related investments. The term "portfolio assets"
is statutorily defined to mean a savings association's total assets less
goodwill and other intangible assets, the association's business property and a
limited amount of its liquid assets. As of December 31, 1994, WSB Aurora
satisfied the QTL test.
LIQUIDITY REQUIREMENTS. OTS regulations currently require each savings
association to maintain, for each calendar month, an average daily balance of
liquid assets (including cash, certain time deposits, bankers' acceptances, and
specified United States Government, state or federal agency obligations) equal
to at least 5% of the average daily balance of its net withdrawable accounts
plus short-term borrowings (I.E., those repayable in 12 months or less) during
the preceding calendar month. This liquidity requirement may be changed from
time to time by the OTS to an amount within a range of 4% to 10% of such
accounts and borrowings, depending upon economic conditions and the deposit
flows of savings associations. OTS regulations also require each savings
association to maintain, for each calendar month, an average daily balance of
short-term liquid assets (generally liquid assets having maturities of 12 months
or less) equal to at least 1% of the average daily balance of its net
withdrawable accounts plus short-term borrowings during the preceding calendar
month. Penalties may be imposed for failure to meet liquidity ratio
requirements. At December 31, 1994, WSB Aurora was in compliance with OTS
liquidity requirements, with an overall liquidity ratio of 7.06% and a short-
term liquidity ratio of 4.42%.
13
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The names and ages of the executive officers of the Company, along with a brief
description of the business experience of each such person, during the past five
years, and certain other information is set forth below:
Name (Age) and Position
and Offices with the Company Principal Occupations and Employment
(year first elected to office) for Past Five Years and Other Information
------------------------------ -----------------------------------------
Kevin J. Acker (45) Director and President of West Suburban
Chairman of the Board and Vice Bank of Carol Stream/Stratford Square.
President (1986)
John A. Clark (46) Director and Executive Vice President of
President and Chief Executive West Suburban Bank since 1984, Vice
Officer (1986) President Loans for West Suburban Bank of
Downers Grove/Lombard, West Suburban Bank
of Darien and West Suburban Bank of Carol
Stream/Stratford Square since 1988.
Director and President of WSB Aurora from
July 13, 1990 to January, 1992 and
Director and Executive Vice President of
WSB Aurora since January, 1992.
Craig R. Acker (42) Director, President and Chairman of the
Chief Operating Officer (1993) Board of West Suburban Bank of Downers
Grove/Lombard.
Duane G. Debs (38) Vice President and Comptroller of the
Chief Financial Officer, Vice Bank Subsidiaries since 1987 and of WSB
President, Secretary and Treasurer Aurora since 1990. Director of West
(1993) Suburban Bank of Downers Grove/Lombard
since 1993.
14
<PAGE>
STATISTICAL DATA
The statistical data required by Securities and Exchange Act of 1934 Industry
Guide 3, "Statistical Disclosure By Bank Holding Companies," has been
incorporated by reference from the Company's 1994 Annual Report to Shareholders
(attached as Exhibit 13.1 hereto) or is set forth below. This data should be
read in conjunction with the Company's 1994 Consolidated Financial Statements
and related notes, and the discussion included in Management's Discussion and
Analysis of Financial Condition and Results of Operations as set forth in the
Company's 1994 Annual Report to Shareholders. All dollar amounts of the
statistical data included below are expressed in thousands.
Securities
The following table sets forth by category the amortized cost of securities at
December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
---------------------------------------
<S> <C> <C> <C>
Available For Sale:
U.S. Government agencies and corporations $51,510 $26,570 $26,533
Corporate 45,623 139,555 180,719
U. S. Treasury 16,427 -- --
States and political subdivisions -- -- 10,026
Equity securities 11,942 5,350 13,843
---------------------------------------
Total investment securities available for sale 125,502 171,475 231,121
---------------------------------------
Held To Maturity:
Corporate 30,656 -- --
U.S. Government agencies and corporations 55,783 -- --
States and political subdivisions 22,131 19,119 --
---------------------------------------
Total investment securities held to maturity 108,559 19,119 --
---------------------------------------
Total investment securities $234,061 $190,594 $231,121
---------------------------------------
---------------------------------------
</TABLE>
The amortized cost of mortgage-backed securities was $128, $17,559 and $25,321
at December 31, 1994, 1993, and 1992 respectively. The mortgage-backed
securities portfolio was sold during 1994 in connection with the retirement of
the Real Estate Mortgage Investment Conduit (REMIC) bonds. The mortgage-backed
securities portfolio did not have a single maturity date.
The following table sets forth by contractual maturity the amortized cost and
weighted average yield (not tax-effected) of investment securities available for
sale at December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1994
----------------------------------------------------------------------------------------
U.S. Government
agencies and
Corporate corporations U.S. Treasuries
----------------------------------------------------------------------------------------
Weighted Weighted Weighted
Amortized Average Amortized Average Amortized Average
Cost Yield Cost Yield Cost Yield
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
One year or less $15,564 8.98% -- -- -- --
1-5 years 28,184 6.96 $29,844 6.46% $12,237 5.67%
5-10 years -- -- 21,666 7.28 4,190 6.38
10 years or more 1,875 8.75 -- -- -- --
----------------------------------------------------------------------------------------
Total $45,623 7.72% $51,510 6.80% $16,427 5.85%
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
The following table sets forth, by contractual maturity, the amortized cost and
weighted average yield of investment securities held to maturity at December 31,
1994. Yields on tax-exempt securities represent actual coupon yields (dollars
in thousands):
<TABLE>
<CAPTION>
1994
-------------------------------------------------------------------------------------------------------------
U.S. Government
agencies and States and political
Corporate corporations subdivisions Equity securities
-------------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted Weighted
Amortized Average Amortized Average Amortized Average Amortized Average
Cost Yield Cost Yield Cost Yield Cost Yield
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
One year or less $983 4.00% $999 5.79% $938 5.07% -- --
1-5 years 27,662 7.53 23,517 5.52 3,265 4.72 -- --
5-10 years -- -- 31,267 5.47 10,416 4.99 -- --
10 years or more 2,000 7.98 -- -- 7,512 6.41 -- --
-------------------------------------------------------------------------------------------------------------
Total $30,645 7.44% $55,783 5.50% $22,131 5.43% -- --
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
</TABLE>
Loan Portfolio
The following table sets forth the major loan categories at December 31 (dollars
in thousands):
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $156,896 $177,054 $144,581 $148,451 $195,078
Installment 33,542 33,714 43,700 54,955 71,259
Real estate: Mortgage 305,010 288,683 272,199 273,374 236,827
Home equity 120,373 115,910 121,918 119,009 91,528
Construction 72,990 47,442 42,321 55,015 52,350
Held for sale 449 4,543 3,527 4,551 --
VISA-credit card 21,342 22,601 27,138 32,500 37,278
Other 7,048 11,479 4,647 7,447 5,824
------------------------------------------------------------------------
Total loans 717,650 701,426 660,031 695,302 690,144
Less:
Allowance for loan losses 8,445 7,125 8,024 6,489 5,197
------------------------------------------------------------------------
Loans, net $709,205 $694,301 $652,007 $688,813 $684,947
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
The following table sets forth the maturity and interest rate sensitivity of
selected loan categories at December 31, 1994 (dollars in thousands):
<TABLE>
<CAPTION>
Remaining Maturity
------------------------------------------------------
One year One to Over
or less five years five years Total
------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial $137,365 $11,024 $8,507 $156,896
Real Estate-Construction 72,990 -- -- 72,990
------------------------------------------------------
Total $210,355 $11,024 $8,507 $229,886
------------------------------------------------------
------------------------------------------------------
Variable rate $ -- $ -- $ --
Fixed rate 11,024 8,507 19,531
--------------------------------------
Total $11,024 $8,507 $19,531
--------------------------------------
--------------------------------------
</TABLE>
The Company had approximately $21,800, $23,500 and $11,400 of irrevocable
letters of credit outstanding at December 31, 1994, 1993 and 1992, respectively.
16
<PAGE>
Nonperforming Loans
The following table sets forth the aggregate amount of nonperforming loans and
selected ratios at December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $279 $3,234 $8,468 $3,576 $5,885
Restructured loans -- 3,234 6,000 -- --
Accruing loans past due over 90 days 4,448 3,958 5,295 5,416 3,033
------------------------------------------------------------------------
Total nonperforming loans $4,727 $10,426 $19,763 $8,992 $8,918
------------------------------------------------------------------------
Other real estate 10,458 9,954 4,584 5,339 2,297
Total nonperforming assets $15,185 $20,380 $24,347 $14,331 $11,215
------------------------------------------------------------------------
Ratio of nonperforming loans to
net loans .7% 1.5% 3.0% 1.3% 1.3%
------------------------------------------------------------------------
------------------------------------------------------------------------
Ratio of nonperforming assets to
total assets 1.5% 2.0% 2.4% 1.5% 1.1%
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
The Company makes commercial, personal and residential loans primarily to
customers throughout the western suburbs of Chicago. At December 31, 1994 and
1993, the Company's loan portfolio did not include any single borrower or
industry concentration in excess of 10% of total loans, except for loans to the
construction and land development industries which represented 10.2% and 6.8% of
total loans at December 31, 1994 and 1993, respectively. The Company's real
estate construction loans are generally made within the market areas of the
subsidiaries. The Company manages this exposure by continually reviewing local
market conditions and closely monitoring collateral values. No unusual losses
are anticipated as a result of these concentrations.
The Company's normal policy is to discontinue accruing interest on a loan when
it becomes 90 days past due or when management believes, after considering
economic and business conditions and collection efforts, that the borrower's
financial condition is such that collection of principal or interest is
doubtful. In some circumstances a loan that is more than 90 days past due can
remain on accrual status if it can be established that payment will be received
within another 90 days or if it is adequately secured. When a loan has been
placed on nonaccrual status, interest that has been earned but not collected is
charged back to the appropriate interest income account. When payments are
received on nonaccrual loans they are first applied to principal, then to
expenses incurred for collection and finally to interest income. The gross
amount of interest that would have been recorded if all nonperforming loans had
been accruing interest at their original terms was $15 for the year ended
December 31, 1994 and no interest was recorded in operations for the year ended
December 31, 1994.
As of December 31, 1994, due to information regarding possible credit problems
of borrowers or possible deficits in the cash flow of property given as
collateral, management had doubts as to the ability of certain borrowers to
comply with the present repayment terms of loans with an aggregate principal
amount of $223. Accordingly, management may be required to categorize some or
all of the loans as non-performing assets in the future.
Allowance for Loan Losses
The allowance for loan losses reduces the level of gross loans outstanding by an
estimate of uncollectible loans. When management determines that loans are
uncollectible, they are charged-off against the allowance. Periodically, a
provision for loan losses is charged against current income. Management attempts
to maintain the allowance for loan losses at a level adequate to absorb
anticipated loan losses. The amount of the allowance is established based upon
past loan loss experience and other factors which, in management's judgment,
deserve consideration in estimating loan losses. Other factors considered by
management in this regard include growth and composition
17
<PAGE>
of the loan portfolio, the relationship of the allowance for loan losses to
outstanding loans and economic conditions in the Company's market area. Based
on such reviews, management at this time does not anticipate any increase in
nonperforming assets that will have a significant effect on its operations
because the estimated exposure to losses has already been substantially
reflected in its allowance for loan losses. This could, however, change
dramatically if a significant decline in the real estate market area served by
the Company occurs.
The following table sets forth allowance for loan loss activity for the years
ended and at December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for loan losses at beginning of period $7,125 $8,024 $6,489 $5,197 $4,696
Loans charged-off:
Commercial 302 5,862 1,697 1,192 1,750
Installment 162 245 516 1,120 615
Real estate mortgages 463 318 33 48 79
Home equity 7 21 65 38 --
VISA - credit card 356 531 1,110 964 1,292
Other 2 50 14 28 --
----------------------------------------------------------------------
Total loans charged-off 1,292 7,027 3,435 3,390 3,736
Loan recoveries:
Commercial 66 274 236 289 264
Installment 98 186 446 333 794
Real estate mortgages 5 8 -- 5 --
Home equity -- -- -- 38 --
VISA - credit card 227 318 365 347 179
Other -- 3 18 6 --
----------------------------------------------------------------------
Total loan recoveries 396 789 1,065 1,018 1,237
----------------------------------------------------------------------
Net loans charged-off 896 6,238 2,370 2,372 2,499
Provision for loan losses 2,216 5,339 3,905 3,664 3,000
----------------------------------------------------------------------
Allowance for loan losses at end of period $8,445 $7,125 $8,024 $6,489 $5,197
----------------------------------------------------------------------
----------------------------------------------------------------------
Allowance for loan losses to total loans 1.18% 1.02% 1.22% .93% .75%
----------------------------------------------------------------------
----------------------------------------------------------------------
Net chargeoffs to average total loans .13% .96% .35% .34% .43%
----------------------------------------------------------------------
----------------------------------------------------------------------
</TABLE>
18
<PAGE>
Allocation of Allowance for Loan Losses (continued)
The entire allowance for loan losses is available to absorb losses in any
particular category of loans, notwithstanding management's allocation of the
allowance. The following table sets forth the allocation of allowance for loan
losses and the percentage of loans in each category to total loans at December
31 (dollars in thousands):
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
--------------------------------------------------------------------------------------------------------
Amount % Amount % Amount % Amount % Amount %
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial $3,714 32.0% $3,312 24.8% $4,406 21.9% $3,410 21.3% $2,395 20.6%
Installment and other 331 5.7 369 6.5 492 7.3 495 9.1 782 11.4
Real estate 576 42.5 1,273 48.9 1,113 48.2 607 47.8 310 49.4
Home equity 301 16.8 290 16.6 305 18.5 342 17.1 255 13.2
VISA - credit card 664 3.0 626 3.2 676 4.1 390 4.7 447 5.4
Unallocated 2,859 -- 1,255 -- 1,032 -- 1,245 -- 1,008 --
--------------------------------------------------------------------------------------------------------
Total $8,445 100.0% $7,125 100.0% $8,024 100.0% $6,489 100.0% $5,197 100.0%
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>
Deposits
The following table sets forth by category average daily deposits and rates for
the years ended December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------------------------------------------------------
Average Average Average
Balance Rate Balance Rate Balance Rate
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Demand and other noninterest-
bearing $96,428 -- $91,529 -- $71,187 --
Money-market savings and NOW
deposits 486,863 2.6% 469,641 2.3% 451,310 2.8%
Time deposits:
Less than $100,000 275,693 4.6 282,884 4.8 320,467 5.8
$100,000 and over 37,849 4.7 26,821 5.0 25,926 5.7
--------------------------------------------------------------------------------
Total $896,833 3.0% $870,875 3.0% $868,890 3.8%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
The following table sets forth by maturity time deposits $100 and over at
December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1994
-----------
<S> <C>
Three months or less $24,025
3 to 12 months 8,227
1 - 5 years 15,441
Over 5 years --
-----------
Total $47,693
-----------
-----------
</TABLE>
Return on Equity and Assets and Other Financial Ratios
The following table sets forth selected financial ratios at and for the years
ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---------------------------------------
<S> <C> <C> <C>
Return on average total assets 1.29% 1.20% 1.20%
Return on average shareholders' equity 13.29 13.25 14.84
Cash dividends declared to net income 44.10 43.50 40.36
Average shareholders' equity to average total assets 9.67 9.03 8.12
</TABLE>
19
<PAGE>
ITEM 2. PROPERTIES
The Company and the Subsidiaries occupy a total of approximately 206,000 square
feet in 28 locations. The Company's principal offices are located in
approximately 32,500 square feet of office space at 711 South Meyers Road in
Lombard, Illinois. As indicated below, West Suburban Bank also operates the
facility located at 711 South Meyers Road, Lombard, Illinois as a branch.
The following table sets forth certain information concerning the facilities of
the Subsidiaries.
Location of Approximate
Name of Subsidiary Facilities Square Feet Status
------------------ ---------- ----------- ------
West Suburban Bank 711 S. Meyers Rd. 32,500 Owned
Lombard, IL
West Suburban Bank 701 S. Meyers Rd. 5,200 Owned
Lombard, IL
West Suburban Bank 717 S. Meyers Rd. 7,100 Owned
Lombard, IL
West Suburban Bank 100 S. Main St. 325 Owned
Lombard, IL
West Suburban Bank Mr. Z's 100 Lease
401 S. Main St. expires
Lombard, IL 1998
West Suburban Bank 707 N. Main St. 4,100 Owned
Lombard, IL
West Suburban Bank 29 E. St. Charles Rd. 3,200 Lease
Villa Park, IL expires
1995
West Suburban Bank 17 W. 754 22nd St. 6,100 Owned
Oakbrook, IL
West Suburban Bank Lexington Square 100 Lease
400 W. Butterfield Rd. expires
Elmhurst, IL 1996
West Suburban Bank 210 W. Wesley St. 700 Lease
Wheaton, IL expires
1998
West Suburban Bank 879 Geneva Rd. 3,550 Lease
Carol Stream, Il expires
2003
West Suburban Bank 2800 S. Finley Rd. 10,700 Owned
of Downers Grove/ Downers Grove, IL
Lombard
20
<PAGE>
Location of Approximate
Name of Subsidiary Facilities Square Feet Status
------------------ ---------- ----------- ------
West Suburban Bank Route 59 and 1,800 Lease
of Downers Grove/ Meadow Ave. expires
Lombard Warrenville, IL 1999
West Suburban Bank Beacon Hill 100 Lease
of Downers Grove/ 2400 S. Finley Rd. expires
Lombard Lombard, IL 1995
West Suburban Bank Lexington Square 100 Lease
of Downers Grove/ 555 Foxworth Blvd. expires
Lombard Lombard, IL 1996
West Suburban Bank 100 S. Main St. 325 Owned
of Downers Grove/ Lombard, IL
Lombard
West Suburban Bank 1122 S. Main St. 6,400 Owned
of Downers Grove/ Lombard, IL
Lombard
West Suburban Bank 8001 S. Cass Ave. 17,800 Owned
of Darien Darien, IL
West Suburban Bank 1005 75th St. 800 Owned
of Darien Darien, IL
West Suburban Bank 672 E. Boughton Rd. 7,100 Owned
of Darien Bolingbrook, IL
West Suburban Bank 355 W. Army Trail Rd. 10,700 Owned
of Carol Stream/ Bloomingdale, IL
Stratford Square
West Suburban Bank 401 N. Gary Ave. 6,400 Owned
of Carol Stream/ Carol Stream, IL
Stratford Square
West Suburban Bank 1380 Army Trail Rd. 2,300 Lease
of Carol Stream/ Carol Stream, IL expires
Stratford Square 1995
West Suburban Bank 1657 Bloomingdale Rd. 4,100 Owned
of Carol Stream/ Glendale Heights, IL
Stratford Square
West Suburban Bank 1061 W. Stearns Rd. 3,400 Owned
of Carol Stream/ Bartlett, IL
Stratford Square
21
<PAGE>
Location of Approximate
Name of Subsidiary Facilities Square Feet Status
------------------ ---------- ----------- ------
West Suburban Bank 315 S. Randall Rd. 1,400 Owned
of Carol Stream/ St. Charles, IL
Stratford Square
West Suburban Bank 101 N. Lake St. 19,000 Owned
of Aurora, F.S.B. Aurora, IL
West Suburban Bank 2000 W. Galena Blvd. 48,000 Owned
of Aurora, F.S.B Aurora, IL
West Suburban Bank 1830 Douglas St. 2,500 Owned
of Aurora, F.S.B. Montgomery, IL
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or the
Subsidiaries is a party other than ordinary routine litigation incidental to
their respective businesses.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
22
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's authorized and outstanding equity securities consist of Class A
Common Stock, no par value, and Class B Common Stock, no par value. Except as
required by law, rights and privileges of the holders of the Class A Common
Stock and Class B Common Stock are identical.
The Company's per share book value as of the end of each quarter and dividend
information for each quarter is set forth in the following table:
<TABLE>
<CAPTION>
Class A and Class B
---------------------------------
Year Quarter Book Value Dividends Declared
---- ------- ---------- ------------------
<S> <C> <C> <C>
1994 4th $226.53 $3.50
3rd 227.93 3.50
2nd 225.32 3.25
1st 225.59 3.25
1993 4th $221.56 $3.25
3rd 225.99 3.25
2nd 221.58 3.25
1st 216.48 3.00
</TABLE>
The Company's common stock is not traded on any national or regional exchange.
While there is no established trading market for the Company's common stock, the
Company is aware that from time to time limited or infrequent quotations are
made with respect to the Company's common stock and that there occurs limited
trading in the Company's common stock resulting from private transactions not
involving brokers or dealers. Transactions in Company's common stock have been
infrequent. As of March 15, 1995, the Company had 347,015 shares of Class A
Common Stock outstanding and approximately 1,423 shareholders of record, and had
85,480 shares of Class B Common Shares outstanding and approximately 706
shareholders of record. Management is aware of approximately 26 transactions
during 1994 involving the sale of approximately 1,310 shares of Class A Common
Stock and approximately 3 transactions during 1994 involving the sale of
approximately 15 shares of Class B Common Stock. The average sale price in such
transactions was approximately $229.53.
ITEM 6. SELECTED FINANCIAL DATA
The Company hereby incorporates by reference the information called for by Item
6 of this Form 10-K from the section entitled "Selected Financial Data" of the
Company's Annual Report to Shareholders for the fiscal year ended December 31,
1994 (attached as Exhibit 13.1 hereto).
23
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company hereby incorporates by reference the information called for by Item
7 of this Form 10-K from the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of the Company's
Annual Report to Shareholders for the fiscal year ended December 31, 1994
(attached as Exhibit 13.1 hereto).
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company hereby incorporates by reference the information called for by Item
8 of this Form 10-K from the Consolidated Financial Statements and from the
section entitled "Selected Quarterly Financial Data" as set forth in the
Company's Annual Report to Shareholders for the fiscal year ended December 31,
1994 (attached as Exhibit 13.1 hereto).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL MATTERS
The Company hereby incorporates by reference the information called for by Item
9 of this Form 10-K from the Form 8-K and the Form 8-K/A, both dated October
21, 1993 filed by the Company with the SEC in connection with the dismissal of
Bansley & Kiener as the Company's independent auditors and the Form 8-K dated
November 12, 1993, filed by the Company in connection with the engagement of
Deloitte & Touche as the Company's independent auditors for the fiscal year
ending December 31, 1993 (Exhibits 99.1, 99.2 and 99.3 to this form 10-K).
24
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company hereby incorporates by reference the information called for by Item
10 of this Form 10-K regarding directors of the Company from the section
entitled "Election of Directors" of the Company's 1994 Proxy Statement.
Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's
executive officers and directors and persons who own more than 10% of their
Company's Common Stock file reports of ownership and changes in ownership with
the Securities and Exchange Commission and with the exchange on which the
Company's shares of Common Stock are traded. Such persons are also required to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on the Company's review of the copies of such forms furnished to the
Company and, if appropriate, representations made to the Company by any such
reporting person concerning whether a Form 5 was required to be filed for the
1994 fiscal year, the Company is not aware that any of its directors and
executive officers or 10% shareholders failed to comply with the filing
requirements of Section 16(a) during the period commencing January 1, 1994
through December 31, 1994 except that Mr. Acker failed to file his Form 4
reporting February, 1994 transactions on a timely basis and Ms. Locicero and
Mr. Howard failed to file their Form 3s in May, 1994 on a timely basis.
ITEM 11. EXECUTIVE COMPENSATION
The Company hereby incorporates by reference the information called for by Item
11 of this Form 10-K from the section entitled "Executive Compensation" of the
Company's 1995 Proxy Statement; provided, however, Report of the Board of
Directors on Executive Compensation is specifically not incorporated into this
Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company hereby incorporates by reference the information called for by Item
12 of this Form 10-K from the section entitled "Security Ownership Of Certain
Beneficial Owners" of the Company's 1995 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company hereby incorporates by reference the information called for by Item
13 of this Form 10-K from the section entitled "Transactions with Directors,
Officers and Associates" of the Company's 1995 Proxy Statement.
25
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
ITEM (a)1 AND 2. FINANCIAL STATEMENTS
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
The following audited Consolidated Financial Statements of the Company and its
subsidiaries and related notes and independent auditors' report are incorporated
by reference from the Company's Annual Report to Shareholders for the fiscal
year ended December 31, 1994 (attached as Exhibit 13.1 hereto).
Annual Report
Page No.
--------------
Report of Independent Auditors 5
Consolidated Balance Sheets- December 31, 1994 and 1993 6
Consolidated Statements of Income- Years Ended
December 31, 1994, 1993, and 1992 7
Consolidated Statements of Changes in Shareholders'
Equity- Years Ended December 31, 1994, 1993 and 1992 8
Consolidated Statements of Cash Flows- Years Ended
December 31, 1994, 1993, and 1992 9
Notes to Consolidated Financial Statements 11
The following Condensed Financial Information-Parent Only is incorporated by
reference from Note 18 to the Company's audited Consolidated Financial
Statements as set forth in the Company's Annual Report to Shareholders for the
fiscal year ended December 31, 1994 (attached as Exhibit 13.1).
Annual Report
Page No.
--------------
Condensed Balance Sheets - December 31, 1994 and 1993 21
Condensed Statements of Income - Years Ended
December 31, 1994, 1993 and 1992 22
Condensed Statements of Cash Flows - Years Ended
December 31, 1994, 1993, and 1992 22
SCHEDULES
Schedules other than those listed above are omitted for the reason that they are
not required or are not applicable or the required information is shown in the
financial statements incorporated by reference or notes thereto.
26
<PAGE>
ITEM 14(a)3. EXHIBITS
The exhibits required by Item 601 of Regulation S-K are included with this Form
10-K and are listed on the "Index to Exhibits" immediately following the
signature page.
ITEM 14(b). REPORTS ON FORM 8-K
None
***
Upon written request to the Chairman of the Board of West Suburban Bancorp,
Inc., 711 S. Meyers Road, Lombard Il, 60148, copies of the exhibits listed above
are available to shareholders of the Company by specifically identifying each
exhibit desired in the request. A fee of $ .20 per page of exhibit will be
charged to shareholders requesting copies of exhibits to cover copying and
mailing costs.
27
<PAGE>
FORM 10-K SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) 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)
By /s/ John A. Clark
------------------------------
John A. Clark
Chief Executive Officer
Date: March 28, 1995
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 the 28th day of March, 1995.
SIGNATURE TITLE
--------- -----
/s/ Kevin J. Acker 3/28/95 Chairman of the Board and
---------------------------------- ----------- Director
Kevin J. Acker Date
/s/ John A. Clark 3/28/95 Chief Executive Officer and
---------------------------------- ----------- Director
John A. Clark Date
/s/ Duane G. Debs 3/28/95 Chief Financial
---------------------------------- ----------- Officer and Chief
Duane G. Debs Date Accounting Officer
/s/ James Bell 3/28/95 Director
---------------------------------- -----------
James Bell Date
/s/ Peggy Locicero 3/28/95 Director
---------------------------------- -----------
Peggy Locicero Date
/s/ Charles Howard 3/28/95 Director
---------------------------------- -----------
Charles Howard Date
The foregoing include all of the Board of Directors of the Company.
28
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page No.
------- ----------- ----------
3.1 Articles of Incorporation - Incorporated by reference N/A
from Exhibit 3.1 of Form S-1 of the Company dated
November 10, 1988, under Registration No. 33-25225
3.2 Form of Certificate of Amendment to Articles of N/A
Incorporation - Incorporated by reference from
Exhibit 3.2 of Form S-1 of the Company dated
November 10, 1988, under Registration No. 33-25225
3.3 Certificate of Amendment to Articles of Incorporation N/A
dated May 10, 1990 - Incorporated by reference from
Exhibit 3.3 of the Form 10-K of the Company dated
March 28, 1991, Commission File No. 0-17609
3.4 By-Laws - Incorporated by reference to Exhibit 3.3 of N/A
Form S-1 of the Company dated November 10, 1988,
Registration No. 33-25225
4.1 Specimen of Class A Common Stock certificate - N/A
Incorporated by reference from Exhibit 4.1 of the
Form 10-K of the Company dated March 28, 1991,
Commission File No. 0-17609
4.2 Specimen of Class B Common Stock certificate - N/A
Incorporated by reference from Exhibit 4.1 of the
Form S-1 of the Company dated November 10, 1988,
Registration No. 33-25225
4.3 Articles of Incorporation of the Company N/A
(see Exhibits 3.1, 3.2, 3.3 and 3.4 above)
4.4 By-Laws of the Company (see Exhibit 3.4 above) N/A
29
<PAGE>
INDEX TO EXHIBITS
(continued)
Exhibit Sequential
Number Description Page No.
------- ----------- ----------
10.1 Employment Agreement between one of the N/A
Company's subsidiaries and Ralph Acker, dated
December 31, 1985 - Incorporated by reference from
Exhibit 10.1 of Form S-1 of the Company dated
November 10, 1988, Registration No. 33-25225
10.2 Employment Agreement between one of the N/A
Company's subsidiaries and John A. Clark, dated
May 10, 1989 - Incorporated by reference from
Exhibit 10.2 of Form 10-K of the Company dated
March 28, 1990, Commission File No. 0-17609
10.3 Employment Agreement between one of the N/A
Company's subsidiaries and Keith W. Acker, dated
November 10, 1989 - Incorporated by reference from
Exhibit 10.3 of Form 10-K of the Company dated
March 28, 1990, Commission File No. 0-17609
10.4 Employment Agreement between one of the N/A
Company's subsidiaries and Craig R. Acker, dated
May 10, 1989 - Incorporated by reference from
Exhibit 10.4 of Form 10-K of the Company dated
March 28, 1990, Commission File No. 0-17609
10.5 Employment Agreement between one of the N/A
Company's subsidiaries and Alana S. Acker, dated
May 9, 1989 - Incorporated by reference to
Exhibit 10.5 of Form 10-K of the Company dated
March 28, 1990, Commission File No. 0-17609
30
<PAGE>
INDEX TO EXHIBITS
(continued)
Exhibit Sequential
Number Description Page No.
------- ----------- ----------
10.6 Employment Agreement between one of the N/A
Company's subsidiaries and Kevin J. Acker, dated
May 9, 1989 - Incorporated by reference from
Exhibit 10.6 of Form 10-K of the Company dated
March 28, 1990, Commission File No. 0-17609
10.7 Employment Agreement between one of the N/A
Company's subsidiaries and Gregory Ruffolo, dated
May 9, 1989 - Incorporated by reference from
Exhibit 10.7 of Form 10-K of the Company dated
March 28, 1990, Commission File No. 0-17609
10.8 Employment Agreement between one of the N/A
Company's subsidiaries and Michael P. Brosnahan,
dated May 10, 1989 - Incorporated by reference from
Exhibit 10.8 of Form 10-K of the Company dated
March 28, 1990, Commission File No. 0-17609
10.9 Employment Agreement between one of the N/A
Company's subsidiaries and Gregory L. Young, dated
November 14, 1990 - Incorporated by reference from
Exhibit 10.9 of Form 10-K of the Company dated
March 28, 1991, Commission File No. 0-17609
10.10 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and John A. Clark, dated
November 14, 1990 - Incorporated by reference from
Exhibit 10.10 of Form 10-K of the Company dated
March 28, 1991, Commission File No. 0-17609
10.11 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Keith W. Acker, dated
November 14, 1990 - Incorporated by reference from
Exhibit 10.11 of Form 10-K of the Company dated
March 28, 1991, Commission File No. 0-17609
31
<PAGE>
INDEX TO EXHIBITS
(continued)
Exhibit Sequential
Number Description Page No.
------- ----------- ----------
10.12 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Craig R. Acker, dated
November 14, 1990 - Incorporated by reference from
Exhibit 10.12 of Form 10-K of the Company dated
March 28, 1991, Commission File No. 0-17609
10.13 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Michael P. Brosnahan,
dated November 14, 1990 - Incorporated by reference
from Exhibit 10.13 of Form 10-K of the Company dated
March 28, 1991, Commission File No. 0-17609
10.14 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Gregory L. Young,
dated November 14, 1990 - Incorporated by reference
from Exhibit 10.14 of Form 10-K of the Company dated
March 28, 1991, Commission File No. 0-17609
10.15 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Alana S. Acker, dated
November 13, 1990 - Incorporated by reference from
Exhibit 10.15 of Form 10-K of the Company dated
March 28, 1991, Commission File No. 0-17609
10.16 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Gregory M. Ruffolo,
dated November 13, 1990 - Incorporated by reference
from Exhibit 10.16 of Form 10-K of the Company dated
March 28, 1991, Commission File No. 0-17609
32
<PAGE>
INDEX TO EXHIBITS
(continued)
Exhibit Sequential
Number Description Page No.
------- ----------- ----------
10.17 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Kevin J. Acker, dated
November 13, 1990 - Incorporated by reference from
Exhibit 10.17 of Form 10-K of the Company dated
March 28, 1991, Commission File No. 0-17609
10.18 Employment Agreement between one of the N/A
Company's subsidiaries and Stanley C. Celner, Jr.,
dated December 10, 1991 - Incorporated by reference
from Exhibit 10.18 of Form 10-K of the Company dated
March 28, 1992, Commission File No. 0-17609
10.19 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Stanley C. Celner,
Jr., dated December 10, 1991 - Incorporated by
reference from Exhibit 10.19 of Form 10-K of the
Company dated March 28, 1992, Commission File
No. 0-17609
10.20 Employment Agreement between one of the N/A
Company's subsidiaries and Duane G. Debs, dated as
of March 8, 1993
10.21 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Duane G. Debs, dated
as of March 8, 1993
10.22 Employment Agreement between one of the Company's N/A
subsidiaries and Jacqueline R. Weigand, dated as of
March 8, 1993
10.23 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Jacqueline R.
Weigand, dated as of March 8, 1993
10.24 Employment Agreement between one of the Company's N/A
subsidiaries and Timothy P. Dineen, dated as of
March 8, 1993
33
<PAGE>
INDEX TO EXHIBITS
(continued)
Exhibit Sequential
Number Description Page No.
------- ----------- ----------
10.25 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Timothy P. Dineen,
dated as of March 8, 1993
10.26 Employment Agreement between one of the N/A
Company's subsidiaries and Pamela N. Greening, dated
as of March 8, 1993
10.27 Deferred Compensation Agreement between one of N/A
the Company's subsidiaries and Pamela N. Greening,
dated as of March 8, 1993
10.28 Employment Agreement between one of the Company's N/A
subsidiaries and Steven A. Jennrich, dated as of
January 12, 1994
10.29 Deferred Compensation Agreement between one of the N/A
Company's subsidiaries and Steven A. Jennrich, dated
as of January 12, 1994
10.30 Amended Employment Agreement between one of the 36
Company's subsidiaries and Jacqueline R. Weigand,
dated as of August 9, 1994
10.31 Amended Employment Agreement between one of the 37
Company's subsidiaries and Timothy P. Dineen, dated
as of August 9, 1994
10.32 Employment Agreement between one of the 39
Company's subsidiaries and George E. Ranstead,
dated as of November 9, 1994
10.33 Deferred Compensation Agreement between one 46
Company's subsidiaries and George E. Ranstead,
dated as of November 9, 1994
10.34 Employment Agreement between one of the 51
Company's subsidiaries and David S. Orr,
dated as of November 9, 1994
34
<PAGE>
10.35 Deferred Compensation Agreement between one of 58
the Company's subsidiaries and David S. Orr,
dated as of November 9, 1994
11.1 Statement regarding computations of earnings per 64
share for the Registrant
13.1 Annual Report to Shareholders of the 65
Company for fiscal year ended December 31, 1994
21.1 Subsidiaries of Registrant 106
23.1 Manually Signed Opinion of Bansley & Kiener 107
concerning financial statements
27. Financial Data Schedule 108
99.1 Form 8-K, dated October 21, 1993 - Incorporated by
reference from Exhibit 99.1 of form 10-K of the
Company dated March 28, 1994, Commission
file No. 0-17609 N/A
99.2 Form 8-K/A, dated October 21, 1993 - Incorporated
by reference from Exhibit 99.2 of Form 10-K of the
Company dated March 28, 1994, Commission
No. 0-17609 N/A
99.3 Form 8-K, dated November 12, 1993 - Incorporated
by reference from Exhibit 99.3 if Form 10K of the
Company dated March 28, 1994, Commission
No. 0-17609 N/A
35
<PAGE>
Exhibit 10.30
AMENDMENT TO EMPLOYMENT AGREEMENT BETWEEN
AURORA FEDERAL SAVINGS BANK AND JACQUELINE R. WEIGAND
-----------------------------------------------------
AURORA FEDERAL SAVINGS BANK ("Institution") and JACQUELINE R. WEIGAND
("Executive") executed a certain Employment Agreement ("Agreement"), effective
March 8, 1993 (the "effective/anniversary date"), wherein they reserved the
joint right to modify or amend said Agreement in writing at any time in whole
or in part.
WHEREAS, upon review, the Office of Thrift Supervision of The Department
of the Treasury has requested that amendments to the Agreement be adopted to
revise the employment term provisions thereof;
WHEREAS, the Institution is desirous of complying with such request and
retaining the services of Executive;
WHEREAS, the Executive is willing to comply with the request and to
continue to serve in the employ of the Institution.
NOW, THEREFORE, in consideration of the Institution continuing to retain
the services of the Executive and for the Executive to continue to serve in
the employ of the Institution and for other good and valuable considerations
in hand paid, the parties hereto agree to amend said Agreement, by revoking
Section 2.(a) regarding the Agreement term and by inserting in lieu thereof:
"(a) The period of Executive's employment under this Agreement
shall be deemed to have commenced as of the date first above written
and shall continue for a period of thirty-six (36) full calendar months
thereafter.
Each year the Board shall review the performance of the Executive
and if it deems appropriate, it may extend the Agreement for an
additional twelve (12) calendar months, resulting in an Agreement term
of thirty-six (36) full calendar months beginning with the next annual
anniversary of the effective date hereof. If the Board should decide
not to continue the Agreement, written notice shall be provided to
Executive, at least sixty (60) days and not more than one hundred
twenty (120) days prior to any such anniversary date, that her
employment shall cease at the end of twenty-four (24) months following
the next anniversary date. In the event that Executive continues in the
full-time employ of the Institution, such continued employment shall be
subject to the terms and conditions of this Agreement, as may be
amended from time to time."
In all other respects, the Institution and the Executive hereby confirm the
Agreement, as herein amended, reserving to the Institution and the Executive
the joint right further to amend or revoke, in whole or in part, the Agreement
and this amendment thereto.
IN WITNESS WHEREOF, the Institution and the Executive have signed this
amendment this 9th day of August, 1994.
BOARD OF DIRECTORS OF
INSTITUTION
/s/ Jacqueline R. Weigand By:/s/ John A. Clark, Chairman of the Board
------------------------------- -----------------------------------------
Jacqueline R. Weigand as authorized by resolution of the
("Executive") Board of Directors on August 9, 1994.
<PAGE>
Exhibit 10.31
AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN AURORA FEDERAL SAVINGS BANK AND TIMOTHY P. DINEEN
AURORA FEDERAL SAVINGS BANK ("Institution") and TIMOTHY P. DINEEN
("Executive") executed a certain Employment Agreement ("Agreement"), effective
March 9, 1993 (the "effective/anniversary date"), wherein they reserved the
joint right to modify or amend said Agreement in writing at any time in whole
or in part.
WHEREAS, upon review, the Office of Thrift Supervision of The Department
of the Treasury has requested that amendments to the Agreement be adopted to
revise the employment term provisions thereof;
WHEREAS, the Institution is desirous of complying with such request and
retaining the services of Executive;
WHEREAS, the Executive is willing to comply with the request and to
continue to serve in the employ of the Institution.
NOW, THEREFORE, in consideration of the Institution continuing to retain
the services of the Executive and for the Executive to continue to serve in
the employ of the Institution and for other good and valuable considerations
in hand paid, the parties hereto agree to amend said Agreement, by revoking
Section 2.(a) regarding the Agreement term and by inserting in lieu thereof:
"(a) The period of Executive's employment under this Agreement
shall be deemed to have commenced as of the date first above written
and shall continue for a period of thirty-six (36) full calendar months
thereafter.
Each year the Board shall review the performance of the Executive
and if it deems appropriate, it may extend the Agreement for an
additional twelve (12) calendar months, resulting in an Agreement term
of thirty-six (36) full calendar months beginning with the next annual
anniversary of the effective date hereof. If the Board should decide
not to continue the Agreement, written notice shall be provided to
Executive, at least sixty (60) days and not more than one hundred
twenty (120) days prior to any such anniversary date, that his
employment shall cease at the end of twenty-four (24) months following
the next anniversary date. In the event that Executive continues in the
full-time employ of the Institution, such continued employment shall be
subject to the terms and conditions of this Agreement, as may be
amended from time to time.
In all other respects, the Institution and the Executive hereby confirm the
Agreement, as herein amended, reserving to the Institution and the Executive
the joint right further to amend or revoke, in whole or in part, the Agreement
and this amendment thereto.
<PAGE>
IN WITNESS WHEREOF, the Institution and the Executive have signed this
amendment this 9th day of August, 1994.
BOARD OF DIRECTORS OF
INSTITUTION
/s/ Timothy P. Dineen By:/s/ John A. Clark, Chairman of the Board
------------------------------- -----------------------------------------
Timothy P. Dineen as authorized by resolution of the
("Executive") Board of Directors on August 9, 1994.
2
<PAGE>
Exhibit 10.32
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of NOVEMBER 9, 1994 by and between
WEST SUBURBAN BANK OF LOMBARD (the "Institution"), a corporation organized
under the laws of Illinois, with its office at 711 South Meyers Road, Lombard,
Illinois and GEORGE E. RANSTEAD ("Executive").
WHEREAS, the Institution agrees to retain the services of Executive for
the period provided in this Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Institution
for said period;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties
hereto agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive shall serve as
Vice-President of the Institution.
2. TERMS AND RESPONSIBILITIES.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of sixty (60) full calendar months thereafter.
This Agreement shall be deemed to continue for an additional twelve (12)
calendar months from each annual anniversary of the effective date hereof
unless written notice is provided to Executive, at least sixty (60) days and
not more than one hundred twenty (120) days prior to any such anniversary
date, that his employment shall cease at the end of forty-eight (48) months
following the next anniversary date. In the event that Executive continues in
the full-time employ of the Institution after the end of the initial sixty
(60) month period from the date first above written, such continued employment
shall be subject to the terms and conditions of this Agreement, as may be
amended from time to time.
(b) Executive shall have such authority and responsibility as is
customarily or appropriately vested in the Vice-President of the Institution
and as from time to time may be prescribed by the Board, provided such
authority and responsibility is consistent with Executive's present authority
and responsibilities and with Executive's position as the Vice-President in
charge of the operations of the Institution.
With the approval of the Board, as evidenced by a resolution of such
Board, adopted from time to time, Executive may serve, or continue to serve,
on the Boards of Directors of, and hold any other offices or positions in,
companies or organizations, which, in such Board's judgement, will not present
any conflict of interest with the Institution or materially affect the
performance of Executive's duties pursuant to this Agreement. In addition,
Executive may
<PAGE>
devote such time and attention to community and civic activities of various
organizations of which he may be a member and other activities as he may in
his discretion determine to be appropriate, consistent with his authority and
responsibilities hereunder.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the position and responsibilities described in
Sections 1 and 2(b). The Institution shall pay Executive as compensation an
annual salary of not less than FIFTY-FIVE THOUSAND DOLLARS ($55,000.00), as
increased by the Board or a duly appointed Committee thereof from time to time
("Base Salary"). Such salary shall be payable bi-weekly. ("Base Salary" shall
be defined as the sum of the Executive's prior twenty-six (26) bi-weekly
salary payments exclusive of bonuses, perquisites and benefits.) Any increase
in base salary shall be at the discretion of the board of Directors or a duly
appointed committee thereof.
(b) The institution shall provide executive, at no cost to Executive, with
all such other benefits as are provided uniformly to permanent full-time
employees of the Institution.
(c) In addition to the salary provided for by paragraph (a) of this
Section 3, the Institution shall pay for all reasonable preapproved travel and
other reasonable preapproved expenses incurred by Executive in performing his
obligations under this Agreement.
4. PAYMENTS TO EXECUTIVE UPON TERMINATION OF EMPLOYMENT.
Upon the occurrence of an Event of Termination (as herein defined) during
the Executive's term of employment under this Agreement, the provisions of
Section 5 shall apply. As used in this Agreement, an "Event of Termination"
shall mean and include the termination by the Institution of Executive's
full-time employment hereunder for any reason other than pursuant to Section 7.
5. TERMINATION BENEFITS.
(a) Upon the occurrence of an Event of Termination of the Institution
followed by the Executive's voluntary severance of employment as defined under
Section 4, the Institution shall pay Executive, or in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate, as the case
may be, as severance pay or liquidated damages, or both, a sum equal to three
(3) times the annual base salary paid to Executive for the year immediately
preceding Executive's termination. Such payment shall be made in a lump sum
within thirty (30) days of the date of severance of Executive's employment.
(b) Upon the occurrence of an Event of Termination, the Institution will
cause to be continued life, health and disability coverage substantially
identical to the coverage maintained by the Institution for Executive and
Executive's dependents prior to such Event of Termination. Such coverage shall
cease upon the earlier of Executive's employment by another employer or
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six (6) months from the effective date of the Event of Termination, whichever
is sooner.
6. TERMINATION UPON DISABILITY.
(a) Executive or the Institution may terminate Executive's employment
hereunder upon the occurrence of a Disability. The term "disability" when
used herein shall mean an individual is permanently or totally disabled if he
is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which is lasted or can be expected to last for a continuous
period of not less than twelve (12) months. An individual shall not be
considered to be permanently and totally disabled unless he furnishes proof of
the existence thereof in such form and manner, and at such times as the
Institution may require. The compensation and benefits to which Executive
will be entitled upon termination for disability are as follows in this
Section 6.
(b) The Institution will pay Executive, as disability pay, the lower of a
payment bi-weekly equal to Sixty Percent (60%) of Executive's bi-weekly rate
of Base Salary on the effective date of such termination or FIVE THOUSAND
DOLLARS ($5,000.00) per month. These disability payments shall commence on the
effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Institution, in
the same capacity as he was employed prior to his termination for Disability
and pursuant to an employment agreement between Executive and the Institution;
(ii) Executive's full-time employment by another employer; (iii) Executive's
sixty-fifth (65th) birthday; or (iv) Executive's death.
(c) The Institution will cause to be continued life, health and disability
coverage substantially identical to the coverage maintained by the Institution
for Executive and his dependents prior to his termination. This coverage
shall cease upon the earlier of (i) the date Executive returns to the
full-time employment of the Institution, in the same capacity as he was
employed prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Institution; (ii) Executive's full-time
employment by another employer; (iii) Executive's 65th birthday; or (iv)
Executive's death.
(d) Notwithstanding the foregoing; there will be no reduction in the
compensation otherwise payable to Executive during any period in which
Executive is incapable of performing his duties hereunder by reason of
temporary disability. Temporary disability means any disability that does not
meet the definition of disability contained in Section 6(a).
7. TERMINATION FOR CAUSE.
(i) The Institution may terminate the Executive's employment for cause.
Termination for cause as used herein shall include termination because of the
Executive's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule, or regulation (other than
traffic violations or similar offenses) or final cease-and-desist order, or
material breach of
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any provision of the contract. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be considered "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that
the action or omission was in the best interest of the Institution or its
subsidiaries. Executive shall not have the right to receive compensation or
other benefits for any period after Termination for Cause. Notwithstanding
the foregoing, Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than three-fourths of the
Institution's Board of Directors at a meeting of such Board called and held
for that purpose (after reasonable notice to Executive and an opportunity for
him, together with counsel, to be heard before the Board), finding that in the
good faith opinion of such Board, Executive was guilty of conduct set forth
above and specifying the particulars thereof in detail.
8. NOTICE OF TERMINATION.
Any purported termination by the Institution or by Executive shall be
communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated. "Date of Termination" shall mean
(A) if Executive's employment is terminated for Disability, thirty (30) days
after a Notice of Termination is given (provided that he shall not have
returned to the performance of his duties on a full-time basis during such
thirty (30) day period), and (B) if his employment is terminated for Cause or
for any other reason, the date specified in the Notice of Termination (which,
in the case of Termination for Cause shall not be less than thirty (30) days
from the date such Notice of Termination is given); provided that if, within
thirty (30) days after any Notice of Termination is given, the party receiving
such Notice of Termination notified the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written agreement of the
parties, by a binding arbitration award, or by a final judgement, order or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected) and provided further that
the Date of Termination shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute, the Institution will continue to pay Executive
his full compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, Base Salary) and continue him as a
participant in all compensation, benefit and insurance plans in which he was
participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.
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9. INDEMNIFICATION.
To the fullest extent permitted by applicable law, the Institution shall
indemnify Executive (and his heirs, executors and administrators) against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his being or having been a trustee, director or officer of the
Institution (whether or not he continues to be a trustee, director or officer
at the time of incurring such expenses or liabilities), such expenses and
liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost or reasonable settlements approved by the Board
of the Institution. The Institution shall not however, indemnify such
director, or officer with respect to matters as to which he shall be finally
adjudged in any action, suit or proceeding to have been liable for gross
negligence or willful misconduct in the performance of his duties as such
director or officer.
10. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 10 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Institution or affiliates thereof as may reasonably be
required by the Institution or affiliates in connection with any litigation in
which they or any of their subsidiaries are, or may become, parties.
11. SOURCE OF PAYMENTS.
It is intended by the parties hereto that all payments provided in this
Agreement shall be paid in cash or check from the general funds of the
Institution. No special or separate fund of the Institution shall be
established and no other segregation of assets of the Institution shall be
made to assure payment.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Institution
and Executive, except that this Agreement shall not affect or operate to
reduce any benefit or compensation inuring to Executive of a kind elsewhere
provided. No provision of this agreement shall be interpreted to mean that
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
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13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and
any attempt, voluntary or involuntary, to affect any such action shall be
null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Institution and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition waived and shall not
constitute a waiver for such term or condition for the future or as to any act
other than that specifically waived.
15. EMPLOYMENT TERMINATION.
The Board may terminate Executive's employment at any time, but any
termination by the Institution, other than termination for Cause, shall not
prejudice Executive's right to compensation or other benefits under the
contract.
16. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so invalid,
and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
17. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation
of any provisions of this Agreement.
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18. GOVERNING LAW.
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the United States.
19. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Institution if Executive is successful.
20. SIGNATURES.
IN WITNESS WHEREOF, the Institution has caused this Agreement to be
executed and its seal to be affixed hereunto by its directors thereunto duly
authorized, and the Executive has signed this Agreement, all as of the day and
year first above written.
("INSTITUTION")
ATTEST: The Board of Directors
/s/ D.A. Bell By:/s/ Keith W. Acker
----------------------------- ------------------------------
As Authorized By
ATTEST: Resolution of the Board of
Directors on November 10, 1994
/s/ George E. Ranstead
-----------------------------
George E. Ranstead ("Executive")
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Exhibit 10.33
DEFERRED COMPENSATION AGREEMENT
This Agreement, made and entered into this 9th day of November, 1994, by and
between West Suburban Bank, a corporation organized and existing under the laws
of the State of Illinois, hereinafter referred to as "Corporation" and George E.
Ranstead, a Key Employee and Executive of the Corporation, hereinafter referred
to as "Executive".
It is the mutual desire of the Corporation and the Executive that Executive
remain in the employ of the Corporation and, to assist Executive in establishing
a program to provide supplemental retirement benefits, disability and
preretirement death benefits, they mutually establish a Deferred Compensation
Plan. Accordingly, it is the desire of the Corporation and the Executive to
enter into this Agreement under which the Corporation will agree to make certain
payments to Executive upon his retirement or disability and, alternatively, to
his beneficiaries in the event of his premature death while employed by
Corporation.
Therefore, in consideration of Executive's services for those to be performed in
the future and based upon the mutual promises and covenants herein contained,
the Corporation and the Executive agree as follows:
I. ARTICLE ONE - DEFINITIONS
A. Effective Date.
The effective date of this Agreement shall be November 9, 1994.
B. Employment Agreement.
Agreement entered into between Executive and Corporation dated November
9, 1994.
II. ARTICLE TWO - EMPLOYMENT
Employment shall be in accordance with the terms of
the Employment Agreement entered into between Executive and Corporation
dated November 9, 1994 hereinafter referred to as the Employment Agreement.
III. ARTICLE THREE - DEFERRED COMPENSATION
A. The Corporation shall set aside and accrue to the benefit of Executive
the sum of the following no later than December 31, of each year subject
to the terms set forth in this Agreement:
1. A base of $5,000 per year; and
2. Such additional annual deferred compensation as determined by the
Board of Directors.
<PAGE>
B. The sum of the above ("Annual Set Aside"), plus each year's prior set
aside, shall be referred to as Executive's Deferred Compensation Account
("EDC Account"). The EDC Account shall bear annual interest equal to the
one year treasury note constant maturity interest rate published by the
Federal Home Loan Bank in effect on January 1 of each year (constant one
year U.S. Treasury Index per FRB H15).
C. Corporation may purchase life insurance in its discretion to fund all or
part of the above EDC Account and Executive shall execute all reasonable
insurance applications to facilitate the foregoing provided, however,
Executive shall have no right, title or interest in the above insurance
or in the EDC Account until the occurrence of one of the events described
below.
IV. ARTICLE FOUR - BENEFITS
The following benefits provided by the Corporation to the Executive shall be
available under this Agreement:
The Executive shall be entitled to receive the accrued balance in lump sum
in his EDC Account upon the following occurrences as provided for and
defined in the Employment Agreement:
A. Termination of employment as provided for in Section 4 of the Employment
Agreement;
B. Termination of benefits as provided for in Section 5 of the Employment
Agreement;
C. Termination upon disability as provided for in Section 6 of the
Employment Agreement; or
D. Termination upon death as provided for in Section 7 of the Employment
Agreement.
V. ARTICLE FIVE - RESTRICTIONS UPON FUNDING
Corporation shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement. The
Executive, his beneficiaries or any successor in interest to him shall be
and remain simply a general creditor of the Corporation in the same manner
as any other creditor having a general claim for matured and unpaid
compensation.
The Corporation reserves the absolute right as its sole discretion to either
fund the obligations undertaken by this Agreement or to refrain from funding
the same and to determine the extent, nature and method of such funding.
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Should Corporation elect to fund this Agreement, in whole or in part,
through the purchase of life insurance, mutual funds, disability policies or
annuities, the Corporation reserves the absolute right, in its sole
discretion, to terminate such funding at any time, in whole or in part. At
no time shall Executive be deemed to have any lien nor right, title or
interest in or to any specific funding investment or to any assets of the
Corporation.
If Corporation elects to invest in a life insurance, disability, or annuity
policy upon the life of Executive, then Executive shall assist the
Corporation by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or annuities.
VI. ARTICLE SIX - MISCELLANEOUS
A. Alienability and Assignment Prohibition.
Neither Executive, his widow nor any other beneficiary under this
Agreement shall have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify or otherwise encumber, in advance,
any of the benefits payable hereunder nor shall any of said benefits be
subject to seizure for the payment of any debts, judgements, alimony or
separate maintenance owed by the Executive or his beneficiary nor be
transferable by operation of law in the event of bankruptcy, insolvency
or otherwise. In the event Executive or any beneficiary attempts
assignment, commutation, hypothecation, transfer or disposal of the
benefits hereunder, the Corporation's liabilities shall forthwith cease
and terminate.
B. Binding Obligation of Corporation and Any Successor in Interest.
Corporation expressly agrees that it shall not merge or consolidate into
or with another Corporation or sell substantially all of its assets to
another Corporation, firm or person until such Corporation, firm or
person expressly agrees, in writing, to assume and discharge the duties
and obligations of the Corporation under this Agreement. This Agreement
shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representative.
C. Revocation.
It is agreed by and between the parties hereto that, during the lifetime
of the Executive, this Agreement may be amended or revoked at any time or
times, in whole or in part, by the mutual written assent of the Executive
and the Corporation.
D. Gender.
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Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender whenever they should so apply.
E. Effect on Other Corporation Benefit Plans.
Nothing contained in this Agreement shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified pension, profit-sharing, group, bonus or supplemental
compensation or fringe benefit plan constituting a part of Corporation's
existing or future compensation structure.
F. Headings.
Headings and Subheadings in this Agreement are inserted for reference and
convenience only and shall not be deemed a part of this Agreement.
G. Applicable Law.
The validity and interpretation of this Agreement shall be governed by
the laws of the State of Illinois.
VII. ARTICLE SEVEN - ERISA PROVISIONS
A. Named Fiduciary and Plan Administrator.
The "Named Fiduciary and Plan Administrator" of this plan shall be Duane
G. Debs until his resignation or removal by the Board of Directors. As
Named Fiduciary and Administrator, Duane G. Debs shall be responsible for
the management, control and administration of the Salary Continuation
Agreement as established herein. He may delegate to others certain
aspects of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
B. Claims Procedure and Arbitration.
In the event that benefits under this Plan Agreement are not paid to the
Executive (or to his beneficiary in the case of the Executive's death)
and such claimants feel they are entitled to receive such benefits, then
a written claim must be made to the Named Fiduciary and Administrator
named above within sixty (60) days from the date payments are refused.
The Plan Fiduciary and Administrator and the Corporation shall review the
written claim and, if the claim is denied in whole or in part, they shall
provide, in writing and within ninety (90) days of receipt of such claim,
their specific reasons for such denial and reference to the provisions of
this Agreement upon which the denial is based and any additional material
or
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information necessary to perfect the claim. Such written notice shall
further indicate the additional steps to be taken by claimants if a
further review of the claim denial is desired. A claim shall be deemed
denied if the Plan Fiduciary and Administrator fails to take any action
within the aforesaid ninety (90) day period.
If claimants desire a second review, they shall notify the Plan Fiduciary
and Administrator in writing with sixty (60) days of the first claim
denial. Claimants may review the Plan Agreement or any documents relating
thereto and submit any written issues and comments they may feel
appropriate. In its sole discretion, the Plan Fiduciary and Administrator
shall then review the second claim and provide a written decision within
sixty (60) days of receipt of such claim. This decision shall likewise
state the specific reasons for the decision and shall include reference
to specific provisions of the Plan Agreement upon which the decision is
based.
If claimants continue to dispute the benefit denial based upon completed
performance of the Agreement or the meaning and effect of the terms and
conditions thereof, then claimants may submit the dispute to a Board of
Arbitration for final arbitration. Said Board shall consist of one member
selected by the claimant, one member selected by the Corporation and the
third member selected by the first two members. The Board shall operate
under any generally-recognized set of arbitration rules. The parties
hereto agree that they and their heirs, personal representatives,
successors and assigns shall be bound by the decision of such Board with
respect to any controversy properly submitted to it for determination.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read
this Agreement and executed the original thereof on the 9th day of November,
1994 and that, upon execution, each has received a confirming copy.
/s/ D.A. Bell /s/ George E. Ranstead
------------------------------------ -------------------------------------
(Witness) George E. Ranstead
WEST SUBURBAN BANK
/s/ Peggy P. LoCicero By:/s/ Keith W. Acker
------------------------------------ -------------------------------------
(Witness) Its: President
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Exhibit 10.34
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of NOVEMBER 9, 1994 by and between
WEST SUBURBAN BANK OF DOWNERS GROVE/LOMBARD (the "Institution"), a corporation
organized under the laws of Illinois, with its office at 711 South Meyers
Road, Lombard, Illinois and DAVID S. ORR ("Executive").
WHEREAS, the Institution agrees to retain the services of Executive for
the period provided in this Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Institution
for said period;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties
hereto agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive shall serve as
Vice-President of the Institution.
2. TERMS AND RESPONSIBILITIES.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of sixty (60) full calendar months thereafter.
This Agreement shall be deemed to continue for an additional twelve (12)
calendar months from each annual anniversary of the effective date hereof
unless written notice is provided to Executive, at least sixty (60) days and
not more than one hundred twenty (120) days prior to any such anniversary
date, that his employment shall cease at the end of forty-eight (48) months
following the next anniversary date. In the event that Executive continues in
the full-time employ of the Institution after the end of the initial sixty
(60) month period from the date first above written, such continued employment
shall be subject to the terms and conditions of this Agreement, as may be
amended from time to time.
(b) Executive shall have such authority and responsibility as is
customarily or appropriately vested in the Vice-President of the Institution
and as from time to time may be prescribed by the Board, provided such
authority and responsibility is consistent with Executive's present authority
and responsibilities and with Executive's position as the Vice-President in
charge of the operations of the Institution.
With the approval of the Board, as evidenced by a resolution of such
Board, adopted from time to time, Executive may serve, or continue to serve,
on the Boards of Directors of, and hold any other offices or positions in,
companies or organizations, which, in such Board's judgement, will not present
any conflict of interest with the Institution or materially affect the
<PAGE>
performance of Executive's duties pursuant to this Agreement. In addition,
Executive may devote such time and attention to community and civic activities
of various organizations of which he may be a member and other activities as
he may in his discretion determine to be appropriate, consistent with his
authority and responsibilities hereunder.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the position and responsibilities described in
Sections 1 and 2(b). The Institution shall pay Executive as compensation an
annual salary of not less than FIFTY-FIVE THOUSAND DOLLARS ($55,000.00), as
increased by the Board or a duly appointed Committee thereof from time to time
("Base Salary"). Such salary shall be payable bi-weekly. ("Base Salary" shall
be defined as the sum of the Executive's prior twenty-six (26) bi-weekly
salary payments exclusive of bonuses, perquisites and benefits.) Any increase
in base salary shall be at the discretion of the Board of Directors or a duly
appointed committee thereof.
(b) The institution shall provide executive, at no cost to Executive, with
all such other benefits as are provided uniformly to permanent full-time
employees of the Institution.
(c) In addition to the salary provided for by paragraph (a) of this
Section 3, the Institution shall pay for all reasonable pre-approved travel
and other reasonable pre-approved expenses incurred by Executive in performing
his obligations under this Agreement.
4. PAYMENTS TO EXECUTIVE UPON TERMINATION OF EMPLOYMENT.
Upon the occurrence of an Event of Termination (as herein defined) during
the Executive's term of employment under this Agreement, the provisions of
Section 5 shall apply. As used in this Agreement, an "Event of Termination"
shall mean and include the termination by the Institution of Executive's
full-time employment hereunder for any reason other than pursuant to Section 7.
5. TERMINATION BENEFITS.
(a) Upon the occurrence of an Event of Termination of the Institution
followed by the Executive's voluntary severance of employment as defined under
Section 4, the Institution shall pay Executive, or in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate, as the case
may be, as severance pay or liquidated damages, or both, a sum equal to three
(3) times the annual base salary paid to Executive for the year immediately
preceding Executive's termination. Such payment shall be made in a lump sum
within thirty (30) days of the date of severance of Executive's employment.
(b) Upon the occurrence of an Event of Termination, the Institution will
cause to be continued life, health and disability coverage substantially
identical to the coverage maintained by the Institution for Executive and
Executive's dependents prior to such Event of Termination.
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Such coverage shall cease upon the earlier of Executive's employment by
another employer or six (6) months from the effective date of the Event of
Termination, whichever is sooner.
6. TERMINATION UPON DISABILITY.
(a) Executive or the Institute may terminate Executive's employment
hereunder upon the occurrence of a Disability. The term "disability" when
used herein shall mean an individual is permanently or totally disabled if he
is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which is lasted or can be expected to last for a continuous
period of not less than twelve (12) months. An individual shall not be
considered to be permanently and totally disabled unless he furnishes proof of
the existence thereof in such form and manner, and at such times as the
Institution may require. The compensation and benefits to which Executive
will be entitled upon termination for disability are as follows in this
Section 6.
(b) The Institution will pay Executive, as disability pay, the lower of a
payment bi- weekly equal to Sixty Percent (60%) of Executive's bi-weekly rate
of Base Salary on the effective date of such termination or FIVE THOUSAND
DOLLARS ($5,000.00) per month. These disability payments shall commence on the
effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Institution, in
the same capacity as he was employed prior to his termination for Disability
and pursuant to an employment agreement between Executive and the Institution;
(ii) Executive's full-time employment by another employer; (iii) Executive's
sixty-fifth (65th) birthday; or (iv) Executive's death.
(c) The Institution will cause to be continued life, health and disability
coverage substantially identical to the coverage maintained by the Institution
for Executive and his dependents prior to his termination. This coverage
shall cease upon the earlier of (i) the date Executive returns to the
full-time employment of the Institution, in the same capacity as he was
employed prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Institution; (ii) Executive's full-time
employment by another employer; (iii) Executive's 65th birthday; or (iv)
Executive's death.
(d) Notwithstanding the foregoing; there will be no reduction in the
compensation otherwise payable to Executive during any period in which
Executive is incapable of performing his duties hereunder by reason of
temporary disability. Temporary disability means any disability that does not
meet the definition of disability contained in Section 6(a).
7. TERMINATION FOR CAUSE.
(i) The Institution may terminate the Executive's employment for cause.
Termination for cause as used herein shall include termination because of the
Executive's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule,
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<PAGE>
or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of the contract.
For purposes of this Section, no act, or the failure to act, on Executive's
part shall be considered "willful" unless done, or omitted to be done, not in
good faith and without reasonable belief that the action or omission was in
the best interest of the Institution or its subsidiaries. Executive shall not
have the right to receive compensation or other benefits for any period after
Termination for Cause. Notwithstanding the foregoing, Executive shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to him a copy of a resolution duly adopted by the affirmative
vote of not less than three-fourths of the Institution's Board of Directors at
a meeting of such Board called and held for that purpose (after reasonable
notice to Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of such Board,
Executive was guilty of conduct set forth above and specifying the particulars
thereof in detail.
8. NOTICE OF TERMINATION.
Any purported termination by the Institution or by Executive shall be
communicated by a Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated. "Date of Termination" shall mean
(A) if Executive's employment is terminated for Disability, thirty (30) days
after a Notice of Termination is given (provided that he shall not have
returned to the performance of his duties on a full-time basis during such
thirty (30) day period), and (B) if his employment is terminated for Cause or
for any other reason, the date specified in the Notice of Termination (which,
in the case of Termination for Cause shall not be less than thirty (30) days
from the date such Notice of Termination is given); provided that if, within
thirty (30) days after any Notice of Termination is given, the party receiving
such Notice of Termination notified the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written agreement of the
parties, by a binding arbitration award, or by a final judgement, order or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected) and provided further that
the Date of Termination shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute, the Institution will continue to pay Executive
his full compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, Base Salary) and continue him as a
participant in all compensation, benefit and insurance plans in which he was
participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.
4
<PAGE>
9. INDEMNIFICATION.
To the fullest extent permitted by applicable law, the Institution shall
indemnify Executive (and his heirs, executors and administrators) against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his being or having been a trustee, director or officer of the
Institution (whether or not he continues to be a trustee, director or officer
at the time of incurring such expenses or liabilities), such expenses and
liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost or reasonable settlements approved by the Board
of the Institution. The Institution shall not however, indemnify such
director, or officer with respect to matters as to which he shall be finally
adjudged in any action, suit or proceeding to have been liable for gross
negligence or willful misconduct in the performance of his duties as such
director or officer.
10. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 10
during the term of this Agreement and for one (1) full year after the
expiration or termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Institution or affiliates thereof as may reasonably be
required by the Institution or affiliates in connection with any litigation in
which they or any of their subsidiaries are, or may become, parties.
11. SOURCE OF PAYMENTS.
It is intended by the parties hereto that all payments provided in this
Agreement shall be paid in cash or check from the general funds of the
Institution. No special or separate fund of the Institution shall be
established and no other segregation of assets of the Institution shall be
made to assure payment.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Institution
and Executive, except that this Agreement shall not affect or operate to
reduce any benefit or compensation inuring to Executive of a kind elsewhere
provided. No provision of this agreement shall be interpreted to mean that
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement
5
<PAGE>
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and
of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Institution and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition waived and shall not
constitute a waiver for such term or condition for the future or as to any act
other than that specifically waived.
15. EMPLOYMENT TERMINATION.
The Board may terminate Executive's employment at any time, but any
termination by the Institution, other than termination for Cause, shall not
prejudice Executive's right to compensation or other benefits under the
contract.
16. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so invalid,
and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
17. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation
of any provisions of this Agreement.
18. GOVERNING LAW.
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the United States.
6
<PAGE>
19. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Institution if Executive is successful.
20. SIGNATURES.
IN WITNESS WHEREOF, the Institution has caused this Agreement to be
executed and its seal to be affixed hereunto by its directors thereunto duly
authorized, and the Executive has signed this Agreement, all as of the day and
year first above written.
("INSTITUTION")
ATTEST: The Board of Directors
/s/ Duane G. Debs By:/s/ Craig R. Acker
------------------------------- -------------------------------
As Authorized by
ATTEST: Resolution of the Board of
Directors on November 9, 1994
/s/ David S. Orr
-------------------------------
David S. Orr ("Executive")
7
<PAGE>
Exhibit 10.35
DEFERRED COMPENSATION AGREEMENT
This Agreement, made and entered into this 9th day of November, 1994, by and
between West Suburban Bank, a corporation organized and existing under the laws
of the State of Illinois, hereinafter referred to as "Corporation" and David S.
Orr, a Key Employee and Executive of the Corporation, hereinafter referred to as
"Executive".
The Executive has been in the employ of the Corporation for several years, and
has now and for years past faithfully served the Corporation. It is the
consensus of the Board of Directors that Executive's services have been of
exceptional merit, in excess of the compensation paid and an invaluable
contribution to the profits and position of the Corporation in its field of
activity.
It is the mutual desire of the Corporation and the Executive that Executive
remain in the employ of the Corporation and, to assist Executive in establishing
a program to provide supplemental retirement benefits, disability and
pre-retirement death benefits, they mutually establish a Deferred Compensation
Plan. Accordingly, it is the desire of the Corporation and the Executive to
enter into this Agreement under which the Corporation will agree to make certain
payments to Executive upon his retirement or disability and, alternatively, to
his beneficiaries in the event of his premature death while employed by
Corporation.
Therefore, in consideration of Executive's services performed in the past and
those to be performed in the future and based upon the mutual promises and
covenants herein contained, the Corporation and the Executive agree as follows:
I. ARTICLE ONE - DEFINITIONS
A. Effective Date.
The effective date of this Agreement shall be November 9, 1994.
B. Employment Agreement.
Agreement entered into between Executive and Corporation dated November
9, 1994.
II. ARTICLE TWO - EMPLOYMENT
Employment shall be in accordance with the terms of the Employment Agreement
entered into between Executive and Corporation dated November 9, 1994
hereinafter referred to as the Employment Agreement.
III. ARTICLE THREE - DEFERRED COMPENSATION
A. The Corporation shall set aside and accrue to the benefit of Executive
the sum of the following no later than December 31, of each year subject
to the terms set forth in this Agreement:
<PAGE>
1. A base of $5,000 per year; and
2. Such additional annual deferred compensation as determined by the
Board of Directors.
B. The sum of the above ("Annual Set Aside"), plus each year's prior set
aside, shall be referred to as Executive's
Deferred Compensation Account ("EDC Account"). The EDC Account shall bear annual
interest equal to the one year treasury note constant maturity interest rate
published by the Federal Home Loan Bank in effect on January 1 of each year
(constant one year U.S. Treasury Index per FRB H15).
C. Corporation may purchase life insurance in its discretion to fund all or
part of the above EDC Account and Executive shall execute all reasonable
insurance applications to facilitate the foregoing provided, however,
Executive shall have no right, title or interest in the above insurance
or in the EDC Account until the occurrence of one of the events described
below.
IV. ARTICLE FOUR - BENEFITS
The following benefits provided by the Corporation to the Executive shall be
available under this Agreement:
The Executive shall be entitled to receive the accrued balance in lump sum
in his EDC Account upon the following occurrences as provided for and
defined in the Employment Agreement:
A. Termination of employment as provided for in Section 4 of the Employment
Agreement;
B. Termination of benefits as provided for in Section 5 of the Employment
Agreement;
C. Termination upon disability as provided for in Section 6 of the
Employment Agreement; or
D. Termination upon death as provided for in Section 7 of the Employment
Agreement.
V. ARTICLE FIVE - RESTRICTIONS UPON FUNDING
Corporation shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement. The
Executive, his beneficiaries
2
<PAGE>
or any successor in interest to him shall be and remain simply a general
creditor of the Corporation in the same manner as any other creditor having
a general claim for matured and unpaid compensation.
The Corporation reserves the absolute right as its sole discretion to either
fund the obligations undertaken by this Agreement or to refrain from funding
the same and to determine the extent, nature and method of such funding.
Should Corporation elect to fund this Agreement, in whole or in part,
through the purchase of life insurance, mutual funds, disability policies or
annuities, the Corporation reserves the absolute right, in its sole
discretion, to terminate such funding at any time, in whole or in part. At
no time shall Executive be deemed to have any lien nor right, title or
interest in or to any specific funding investment or to any assets of the
Corporation.
If Corporation elects to invest in a life insurance, disability, or annuity
policy upon the life of Executive, then Executive shall assist the
Corporation by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or annuities.
VI. ARTICLE SIX - MISCELLANEOUS
A. Alienability and Assignment Prohibition.
Neither Executive, his widow nor any other beneficiary under this
Agreement shall have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify or otherwise encumber, in advance,
any of the benefits payable hereunder nor shall any of said benefits be
subject to seizure for the payment of any debts, judgements, alimony or
separate maintenance owed by the Executive or his beneficiary nor be
transferable by operation of law in the event of bankruptcy, insolvency
or otherwise. In the event Executive or any beneficiary attempts
assignment, commutation, hypothecation, transfer or disposal of the
benefits hereunder, the Corporation's liabilities shall forthwith cease
and terminate.
B. Binding obligation of Corporation and Any Successor in Interest.
Corporation expressly agrees that it shall not merge or consolidate into
or with another Corporation or sell substantially all of its assets to
another Corporation, firm or person until such Corporation, firm or
person expressly agrees, in writing, to assume and discharge the duties
and obligations of the Corporation under this Agreement. This Agreement
shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representative.
3
<PAGE>
C. Revocation.
It is agreed by and between the parties hereto that, during the lifetime
of the Executive, this Agreement may be amended or revoked at any time or
times, in whole or in part, by the mutual written assent of the Executive
and the Corporation.
D. Gender.
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender whenever they should so apply.
E. Effect on Other Corporation Benefit Plans.
Nothing contained in this Agreement shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified pension, profit-sharing, group, bonus or supplemental
compensation or fringe benefit plan constituting a part of Corporation's
existing or future compensation structure.
F. Headings.
Headings and Subheadings in this Agreement are inserted for reference
and convenience only and shall not be deemed a part of this Agreement.
G. Applicable Law.
The validity and interpretation of this Agreement shall be
governed by the laws of the State of Illinois.
VII. ARTICLE SEVEN - ERISA PROVISIONS
A. Named Fiduciary and Plan Administrator.
The "Named Fiduciary and Plan Administrator" of this plan shall be Duane
G. Debs until his resignation or removal by the Board of Directors. As
Named Fiduciary and Administrator, Duane G. Debs shall be responsible for
the management, control and administration of the Salary Continuation
Agreement as established herein. He may delegate to others certain
aspects of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
B. Claims Procedure and Arbitration.
4
<PAGE>
In the event that benefits under this Plan Agreement are not paid to the
Executive (or to his beneficiary in the case of the Executive's death)
and such claimants feel they are entitled to receive such benefits, then
a written claim must be made to the Named Fiduciary and Administrator
named above within sixty (60) days from the date payments are refused.
The Plan Fiduciary and Administrator and the Corporation shall review the
written claim and, if the claim is denied in whole or in part, they shall
provide, in writing and within ninety (90) days of receipt of such claim,
their specific reasons for such denial and reference to the provisions of
this Agreement upon which the denial is based and any additional material
or information necessary to perfect the claim. Such written notice shall
further indicate the additional steps to be taken by claimants if a
further review of the claim denial is desired. A claim shall be deemed
denied if the Plan Fiduciary and Administrator fails to take any action
within the aforesaid ninety (90) day period.
If claimants desire a second review, they shall notify the Plan Fiduciary
and Administrator in writing with sixty (60) days of the first claim
denial. Claimants may review the Plan Agreement or any documents relating
thereto and submit any written issues and comments they may feel
appropriate. In its sole discretion, the Plan Fiduciary and Administrator
shall then review the second claim and provide a written decision within
sixty (60) days of receipt of such claim. This decision shall likewise
state the specific reasons for the decision and shall include reference
to specific provisions of the Plan Agreement upon which the decision is
based.
If claimants continue to dispute the benefit denial based upon completed
performance of the Agreement or the meaning and effect of the terms and
conditions thereof, then claimants may submit the dispute to a Board of
Arbitration for final arbitration. Said Board shall consist of one member
selected by the claimant, one member selected by the Corporation and the
third member selected by the first two members. The Board shall operate
under any generally-recognized set of arbitration rules. The parties
hereto agree that they and their heirs, personal representatives,
successors and assigns shall be bound by the decision of such Board with
respect to any controversy properly submitted to it for determination.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read
this Agreement and executed the original thereof on the 9th day of November,
1994 and that, upon execution, each has received a confirming copy.
/s/ Duane G. Debs /s/ David S. Orr
------------------------------------ -------------------------------------
(Witness) David S. Orr
WEST SUBURBAN BANK OF DOWNERS
GROVE/LOMBARD
/s/ George E. Ranstead By:/s/ Craig R. Acker
------------------------------------ -------------------------------------
(Witness) Its:President
6
<PAGE>
EXHIBIT 11.1
COMPUTATION OF SHARES USED FOR EARNINGS PER SHARE CALCULATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Weighted Average Shares
Outstanding 432,495 432,495 403,445
Common Stock Equivalents --- --- 20,286
--------- --------- ---------
432,495 432,495 423,731
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
Exhibit 13.1
[LOGO]
WEST SUBURBAN BANCORP, INC.
1994
ANNUAL REPORT
<PAGE>
PROFILE
West Suburban Bancorp, Inc. (the "Parent"), a bank and thrift holding
company, is the parent company of the following (the "Subsidiaries, and
together with the Parent, the "Company" or "West Suburban Banking"): West
Suburban Bank, Lombard, Illinois; West Suburban Bank of Downers
Grove/Lombard, Downers Grove, Illinois; West Suburban Bank of Darien, Darien,
Illinois; West Suburban Bank of Carol Stream/Stratford Square, Bloomingdale,
Illinois; and West Suburban Bank of Aurora, F.S.B., Aurora, Illinois ("WSB
Aurora"). The Company had total consolidated assets at December 31, 1994 of
approximately $1 billion.
WEST SUBURBAN BANCORP, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in thousands, except per share data)
-----------------------------------------------------------
1994 1993 1992 1991 1990
---------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net income $13,026 $11,824 $11,996 $12,040 $11,991
Per common share
Net income fully diluted 30.12 27.72 28.74 28.80 28.80
Book value 226.53 221.56 209.31 190.61 170.30
Net loans 709,205 694,301 652,007 688,813 684,947
Total assets 1,041,495 999,878 1,000,200 980,358 1,008,257
Deposits 923,257 883,464 877,923 870,404 898,068
Shareholders' equity 97,971 95,822 84,444 76,901 69,218
</TABLE>
TABLE OF CONTENTS
Profile..................................... 1
Letter to Our Shareholders,
Customers and Friends.................... 2
Corporate Information....................... 3
Business Review............................. 3
Selected Quarterly Financial Data........... 3
Review of Operations........................ 4
Independent Auditors' Report................ 5
Consolidated Financial Statements........... 6
Notes to Consolidated Financial Statements.. 11
Selected Financial Data..................... 23
Management's Discussion
and Analysis of Financial
Condition and Results of Operations...... 26
Boards of Directors......................... 34
Officers.................................... 35
Addresses and Map of Locations.............. 38
Shareholder Information..................... 40
1
<PAGE>
TO OUR SHAREHOLDERS, CUSTOMERS AND FRIENDS:
West Suburban Banking enjoyed a successful year in 1994. We achieved record
earnings of $13.0 million and reached a record level of assets of $1.041
billion. Asset growth was made possible by increases in deposit levels as
depositors returned to safer FDIC-insured products in response to increased
interest rates in 1994. Growth in deposits was also aided by our opening of
new locations in recent years.
During 1994, we added a location in Carol Stream and in the first quarter of
1995 we expect to add a new Bolingbrook branch at 1104 West Boughton Road and
a new facility in Wheaton at Danada Square, located on 295 West Loop Road. We
are also exploring the Naperville and Westmont markets for expansion
opportunities, and are considering increasing our space at our downtown
Wheaton facility. If our expansion plans for 1995 are met, West Suburban
Banking will offer over 30 locations in the western suburbs of Chicago by
this time next year.
Our customers have also benefitted, and we have aided
our growth, by our continuous efforts to provide new and more convenient
products and services. For example, we have been offering and promoting
totally-free checking, competitive interest rates on certificates of deposit,
tiered savings accounts that provide greater returns at higher levels of
savings and convenient drive-up ATM's that allow customers to conduct
business from their cars 24 hours a day.
Our shareholders also benefitted from West Suburban Banking's success in
1994. Shareholders received dividends of $13.50 per share in 1994 compared
to $12.75 in 1993. Our book value increased from $221.56 at December 31,
1993 to $226.53 at December 31, 1994. Book value would have increased an
additional $11.39 per share if the accounting rules regarding the valuation
of securities had not changed during 1994. Like those of its peers in the
industry, the value of West Suburban Banking's securities portfolio was
adversely affected by the increases in interest rates experienced in 1994.
West Suburban Banking's asset quality showed improvement in 1994 as total
non-performing loans decreased by $5.8 million (55.2%) to $4.7 million. As
of December 31, 1994, the Company's percentage of non-performing loans to net
loans stood at .7% compared to 1.5% at December 31, 1993. The Company's
allowance for loan losses as a percentage of total loans increased to 1.18%
at December 31, 1994, providing greater protection than the 1.02% at December
31, 1993.
We appreciate your continued support and, as always, welcome your comments
and suggestions.
Sincerely,
John A. Clark Kevin J. Acker
President and CEO Chairman of the Board
2
<PAGE>
CORPORATE INFORMATION
The Company is a multi-bank and thrift holding company for four banks
headquartered in DuPage County, Illinois and WSB Aurora, a federally charted
thrift headquartered in Aurora, Illinois. The Company primarily conducts
business in DuPage, Kane, Kendall and Will Counties. The shares of common
stock of the Company are not traded on any stock exchange or on the
over-the-counter market.
The Company has two classes of common stock issued and outstanding and, in
accordance with the terms of its articles of incorporation and bylaws, the
Company treats both classes equally for all purposes including book value and
dividend purposes. The Company's quarterly per share book value and dividend
information for the last two years is set forth in the following table:
<TABLE>
<CAPTION>
Year Quarter Book Value Dividends Declared
---- ------- ---------- ------------------
<S> <C> <C> <C>
1994 4th $226.53 $3.50
3rd 227.93 3.50
2nd 225.32 3.25
1st 225.59 3.25
1993 4th $221.56 $3.25
3rd 225.99 3.25
2nd 221.58 3.25
1st 216.48 3.00
</TABLE>
BUSINESS REVIEW
The Subsidiaries ranged in size from total assets at December 31, 1994 of
$140 million to $375 million. As of December 31, 1994, the Subsidiaries
operated 28 branches throughout DuPage, Kane, Kendall and Will Counties, with
their business activities focusing primarily on the retail and commercial
banking markets. The Company had a total of 476 full-time equivalent
employees at December 31, 1994.
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
(Dollars in thousands, except per share data)
-----------------------------------------------
<S> <C> <C> <C> <C>
1994
Interest income $16,069 $16,781 $17,300 $18,962
Net interest income 10,117 10,278 10,189 11,097
Provision for loan losses 587 513 543 573
Other income 2,099 3,422 1,920 2,244
Other expense 6,859 7,070 5,959 7,285
Net income 2,938 3,761 3,290 3,037
Per share of common stock
Net income - Primary 6.79 8.70 7.61 7.02
Net income - Fully diluted 6.79 8.70 7.61 7.02
1993
Interest income $16,840 $16,780 $17,050 $16,726
Net interest income 9,852 10,020 10,544 10,252
Provision for loan losses 832 721 721 3,065
Other income 2,507 2,542 2,419 2,588
Other expense 6,387 6,513 7,072 6,914
Net income 3,556 3,367 3,094 1,807
Per share of common stock
Net income - Primary (1) 8.81 8.35 7.67 4.47
Net income - Fully diluted (1) 8.30 7.87 7.24 4.31
<FN>
(1) Net income before the cumulative effect of accounting change was $7.92 on
a primary basis and $7.47 on a fully diluted basis for the first quarter.
</TABLE>
3
<PAGE>
REVIEW OF OPERATIONS
COMMITMENT TO OUR SHAREHOLDERS AND CUSTOMERS
West Suburban Banking is proud to remain one of the largest locally owned
multi-bank holding companies headquartered in Chicago's western suburbs. We
have considerable resources and knowledge of our market, which enables us to
offer the highest level of service to our customers. Our ability to attract
and retain our customers has produced positive financial results for our
shareholders.
As part of our commitment to our customers and shareholders, West Suburban
Banking seeks to grow by strategically establishing additional facilities in
markets we presently serve as well as by expanding into new markets. Our
newest branch opened in the Spring of 1994 at 879 East Geneva Road in Carol
Stream. Additionally, we also intend to add additional branches in Wheaton
and Bolingbrook and to expand into Naperville and Westmont during 1995. In
all, by the end of 1995, we expect to have more than 30 facilities throughout
DuPage, Kane, Kendall and Will counties.
Our emphasis on customer service is also reflected by our lobby and drive-up
hours, which include Sunday hours. We also continually update and expand our
24-hour bank-by-phone system, Telebank 24, and our automated teller machine
(ATM) network. In fact, we now have 33 ATMs, many of which are drive-up
accessible. Our ATMs participate in most major networks, including the Money
Network, Plus, Cirrus, Cash Station, The Exchange, Easy Answer, Tyme, Mobil
and VISA and MasterCard networks, thereby enabling our customers to do most
of their banking from just about anywhere. Our ATMs even provide cash
advances to our WSB VISA customers.
Of course, West Suburban Banking continues to offer competitive and
innovative banking products and services. For example, we introduced many
new products during 1994 including the Smart Line of Credit, a personal line
of credit with a competitive yield, and an eight-month certificate of deposit
designed to reward our customers with multiple accounts. We also recently
improved our checking account monthly statements by substituting reduced-size
copies of canceled checks for the checks themselves.
West Suburban Banking understands that it has to be responsive to its
customers in order to maintain and strengthen its position as one of the
largest financial services companies headquartered in the western suburbs.
For example, while other institutions maintained their rates during 1994, we
offered deposit products with very competitive rates as interest rates rose.
During 1995, we plan to launch a VISA promotion that will rebate a percentage
of all purchases to a local charitable organization. This program will
reflect our commitment to the communities we serve.
COMMITMENT TO THE COMMUNITIES WE SERVE
While West Suburban Banking is dedicated to serving the credit and investment
needs of its customers, we believe that our role as a good corporate citizen
requires more. As a locally owned and managed institution, we believe we
have a special role in ensuring the vitality of the communities we serve.
For example, in 1994 we continued our leading role in several programs for
individuals with lower incomes. Specifically, WSB Aurora and the Joseph
Corporation, a not-for-profit housing contractor, provided subsidized
residential loans to lower-income households through an affordable housing
program of the Federal Home Loan Bank ("FHLB"). We also were an active
participant in the Fair Housing Network, the DuPage Homeownership Center and
Neighborhood Housing Service of Aurora. These organizations distribute
information and offer counseling to home buyers in the area and assist them
with their credit needs.
West Suburban Banking also continued to participate in the U.S. Small
Business Administration LOW DOC program which is designed to provide credit
more easily and quickly to small businesses in our area. Of course, by
assisting our commercial clients, we are indirectly benefitting other members
of the communities we serve who rely on these businesses for products,
services and jobs.
As in the past, during 1994 West Suburban Banking made financial and resource
contributions to a host of charitable organizations. Among them are the
Cooperative Education Program, Citizens Against Crime, Lifesource Blood
Center and the Leukemia Society of America. We also take great pride in and
offer encouragement to our employees who give of their time and money to a
host of charitable organizations. We believe our civic-minded employees are
one of our greatest assets.
4
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
West Suburban Bancorp, Inc.
We have audited the accompanying consolidated balance sheets of West Suburban
Bancorp, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of income, changes in shareholders' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits. The
consolidated statements of income, changes in shareholders' equity and cash
flows of West Suburban Bancorp, Inc. and subsidiaries for the year ended
December 31, 1992 were audited by other auditors whose report, dated January
29, 1993, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. 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, such 1994 and 1993 consolidated financial statements present
fairly, in all material respects, the financial position of West Suburban
Bancorp, Inc. and subsidiaries at December 31, 1994 and 1993 and the results
of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
As discussed in Notes 1 and 2 to the consolidated financial statements, the
Company changed its method of accounting for investments to conform with
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", at January 1, 1994. As
discussed in Notes 1 and 9 to the consolidated financial statements, in 1993
the Company changed its method of accounting for income taxes to conform with
SFAS No. 109, "Accounting for Income Taxes".
/s/ DELOITTE & TOUCHE LLP
January 28, 1995
5
<PAGE>
WEST SUBURBAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks $48,134 $37,727
Interest-bearing deposits in financial institutions 14 609
Federal funds sold 1,895 6,160
------------ ------------
Total cash and cash equivalents 50,043 44,496
Investment securities:
Available for sale (amortized cost of $125,502 in 1994;
fair value of $174,088 in 1993) 117,320 171,475
Held to maturity (fair value of $102,403 in 1994;
fair value of $19,251 in 1993) 108,559 19,119
Mortgage-backed securities available for sale (amortized
cost of $128 in 1994; fair value of $19,501 in 1993) 128 17,559
Loans, less allowance for loan losses of $8,445 in 1994;
$7,125 in 1993 709,205 694,301
Premises and equipment, net 26,652 25,401
Other real estate 10,458 9,954
Accrued interest and other assets 19,130 17,573
------------ ------------
TOTAL ASSETS $1,041,495 $999,878
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $100,771 $94,268
Interest-bearing 822,486 789,196
---------- ------------
Total deposits 923,257 883,464
FHLB advances 9,940 8,220
Real estate mortgage investment conduit ("REMIC") ---- 3,541
Accrued interest and other liabilities 10,327 8,831
------------ ------------
TOTAL LIABILITIES 943,524 904,056
------------ ------------
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 61,378 54,299
Unrealized loss on securities available for sale, net of
taxes of $3,252 (4,930) ----
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 97,971 95,822
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,041,495 $999,878
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
WEST SUBURBAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees $53,570 $50,216 $55,597
Investment securities:
Corporate 6,300 11,549 12,313
U.S. government agencies and corporations 5,746 2,028 1,825
States and political subdivisions 1,194 827 853
U.S. Treasury 722 ---- ----
Mortgage-backed securities 740 2,329 2,703
Deposits in financial institutions 97 133 157
Federal funds sold 743 314 650
---------- ---------- ----------
Total interest income 69,112 67,396 74,098
---------- ---------- ----------
INTEREST EXPENSE
Deposits 27,093 25,832 32,719
Other 338 896 1,657
---------- ---------- ----------
Total interest expense 27,431 26,728 34,376
---------- ---------- ----------
Net interest income 41,681 40,668 39,722
PROVISION FOR LOAN LOSSES 2,216 5,339 3,905
---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 39,465 35,329 35,817
---------- ---------- ----------
OTHER INCOME
Service fees 3,496 3,523 3,571
Trust fees 280 270 254
Gain on sales of loans 213 1,362 2,050
Loan servicing 876 927 893
Net realized gain (loss) on sales of securities
available for sale 1,524 48 (117)
Other 3,296 3,926 4,494
---------- ---------- ----------
Total other income 9,685 10,056 11,145
---------- ---------- ----------
OTHER EXPENSE
Salaries and employee benefits 12,860 12,585 13,619
Occupancy 2,127 2,211 2,195
Premises and equipment 2,186 2,198 2,409
FDIC insurance premiums 1,997 1,741 1,917
Professional fees 1,180 1,069 1,000
Other 6,823 7,082 6,931
---------- ---------- ----------
Total other expense 27,173 26,886 28,071
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 21,977 18,499 18,891
Applicable income taxes 8,951 7,035 6,895
---------- ---------- ----------
Income before cumulative effect of accounting change 13,026 11,464 11,996
Cumulative effect of accounting change ---- 360 ----
---------- ---------- ----------
NET INCOME $13,026 $11,824 $11,996
---------- ---------- ----------
---------- ---------- ----------
EARNINGS PER SHARE
Before cumulative effect of accounting change:
Primary $28.41
----------
----------
Fully diluted $26.85
----------
----------
Primary $30.12 $29.30 $29.73
---------- ---------- ----------
---------- ---------- ----------
Fully diluted $30.12 $27.72 $28.74
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE>
WEST SUBURBAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
Allowance
Unrealized for
Gain Unrealized
(Loss) on Loss on Total
Class A Class B Securities Marketable Share-
Common Common Retained Available Equity holders'
Stock Stock Surplus Earnings For Sale Securities Equity
------- ------- ------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1992 $2,542 $683 $34,148 $40,464 $---- ($936) $76,901
Net income ---- ---- ---- 11,996 ---- ---- 11,996
Cash dividends declared ---- ---- ---- (4,841) ---- ---- (4,841)
Recovery of net
unrealized loss on
marketable equity
securities ---- ---- ---- ---- ---- 388 388
------- ------- ------- -------- ---------- ---------- --------
BALANCE, DECEMBER 31, 1992 2,542 683 34,148 47,619 ---- (548) 84,444
Net income ---- ---- ---- 11,824 ---- ---- 11,824
Cash dividends declared ---- ---- ---- (5,144) ---- ---- (5,144)
Issuance of 29,050
shares of Class A
common stock 232 ---- 3,918 ---- ---- ---- 4,150
Recovery of net
unrealized loss on
marketable equity
securities ---- ---- ---- ---- ---- 548 548
------- ------- ------- -------- ---------- ---------- --------
BALANCE, DECEMBER 31, 1993 2,774 683 38,066 54,299 ---- ---- 95,822
Net income ---- ---- ---- 13,026 ---- ---- 13,026
Cash dividends declared ---- ---- ---- (5,947) ---- ---- (5,947)
Unrealized gain on
securities available for
sale, net of taxes, at
January 1, 1994 ---- ---- ---- ---- 1,574 ---- 1,574
Net change in
unrealized loss
on securities available
for sale, net of taxes ---- ---- ---- ---- (6,504) ---- (6,504)
------- ------- ------- -------- ---------- ---------- --------
BALANCE, DECEMBER 31, 1994 $2,774 $683 $38,066 $61,378 ($4,930) $---- $97,971
------- ------- ------- -------- ---------- ---------- --------
------- ------- ------- -------- ---------- ---------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
8
<PAGE>
WEST SUBURBAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $13,026 $11,824 $11,996
-------- ------- --------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,426 2,434 2,467
Cumulative effect of accounting change ---- (360) ----
Provision for loan losses 2,216 5,339 3,905
Provision for deferred income taxes (18) (604) (404)
Premium amortization of investment
securities, net 1,523 3,335 1,219
Net realized (gain) loss on sales of
securities available for sale (1,524) (48) 117
Gain on sale of loans held for sale (213) (1,362) (2,050)
Sale of loans originated for sale 8,599 80,884 136,917
Loans held for sale (12,693) (79,868) (137,941)
Loss (gain) on sale of premises and
equipment 266 (26) (100)
(Gain) loss on sale of other real estate (481) (166) 45
Decrease in other assets 1,715 174 1,113
Increase (decrease) in other liabilities (1,960) (127) 109
-------- ------- --------
Total adjustments (144) 9,605 5,397
-------- ------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 12,882 21,429 17,393
-------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investment securities
available for sale 54,162 35,808 24,055
Proceeds from sales of mortgage-backed
securities available for sale 15,973 ---- ----
Proceeds from maturities of investment
securities 67,853 80,123 107,719
Proceeds from maturities of mortgage-backed
securities 2,644 7,762 4,447
Purchases of investment securities (163,415) (78,142) (213,961)
Net (increase) decrease in loans (21,773) (53,324) 35,329
Purchases of premises and equipment (3,966) (1,281) (1,890)
Proceeds from sale of premises and
equipment 23 40 105
Proceeds from sale of other real estate 8,937 2,858 1,355
-------- ------- --------
NET CASH USED IN INVESTING ACTIVITIES ($39,562) ($6,156) ($42,841)
-------- ------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
9
<PAGE>
WEST SUBURBAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits, NOW
accounts and savings accounts $17,376 $23,205 $63,043
Net increase (decrease) in certificates of
deposit 22,417 (17,665) (56,572)
Increase (decrease) in FHLB advances 1,720 (4,830) 13,050
Repayment of REMIC (3,541) (8,261) (4,782)
Repayment of note payable ---- (2,000) (4,500)
Cash dividends paid (5,745) (5,043) (4,841)
------- ------- -------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 32,227 (14,594) 5,398
------- ------- -------
Net increase (decrease) in cash and cash
equivalents 5,547 679 (20,050)
Cash and cash equivalents at beginning of year 44,496 43,817 63,867
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR $50,043 $44,496 $43,817
------- ------- -------
------- ------- -------
Supplemental cash flow information:
Cash paid during the year for:
Interest on deposits and other borrowings $27,417 $27,221 $35,243
Income taxes 7,046 9,375 7,422
Transfers from loans to other real estate 8,960 8,064 646
Transfer of subordinated convertible
capital notes to shareholders' equity
in connection with the note conversion ---- 4,150 ----
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
10
<PAGE>
WEST SUBURBAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the
accounts of West Suburban Bancorp, Inc. (the "Parent") and its wholly-owned
subsidiaries (collectively, the "Subsidiaries" and together with the Parent,
the "Company"): West Suburban Bank; West Suburban Bank of Downers
Grove/Lombard; West Suburban Bank of Darien; West Suburban Bank of Carol
Stream/Stratford Square; and West Suburban Bank of Aurora, F.S.B. ("WSB
Aurora"). Significant intercompany accounts and transactions have been
eliminated.
BASIS OF ACCOUNTING
The accompanying financial statements are prepared in
accordance with generally accepted accounting principles and conform to
general practices within the banking industry. A summary of accounting
policies follows.
SECURITIES
On January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", which requires debt and marketable equity
securities to be classified into three categories. Trading account securities
represent securities bought and held principally for the purpose of selling
them in the near term. The Company does not invest in trading securities. The
remaining securities have been segregated into "Held to Maturity" and
"Available for Sale" categories. Held to Maturity securities include those
securities where the Company has both the ability and positive intent to hold
them to maturity. Securities not meeting this criteria are classified as
Available for Sale. Held to Maturity securities are carried at amortized
historical cost while Available for Sale securities are carried at fair value
with net unrealized gains and losses (net of tax) reported as a separate
component of equity. Gains or losses on disposition are based on the net
proceeds and the adjusted carrying amount of the securities sold, using the
specific identification method.
Prior to the adoption of SFAS No. 115, when the Company had the ability and
intent to hold securities to maturity, such securities were stated at cost
adjusted for amortization of premium or discount and when the Company
intended to hold securities for an indefinite period of time, such securities
were segregated as "available-for-sale" and carried at the lower of amortized
cost or then current market value. Securities, which had been transferred to
the available-for-sale category, were recorded at the lower of cost or market
value at the date of transfer.
The Company has not utilized futures, forwards, swaps or option contracts in
order to manage its interest rate risk or otherwise.
LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans are stated at the amount of unpaid
principal, reduced by an allowance for loan losses. Interest on loans is
recognized based upon the principal amount outstanding. Accrual of interest
is generally discontinued on a loan when it becomes 90 days past due or when
management believes, after considering economic and business conditions and
collection efforts, that the borrower's financial condition is such that
collection of principal or interest is doubtful. In some circumstances a
loan that is more than 90 days past due can remain on accrual status if it
can be established that payment will be received within another 90 days or if
it is adequately secured. When a loan has been placed on nonaccrual status,
interest that has been earned but not collected is charged back to the
appropriate interest income account. When payments are received on
nonaccrual loans they are first applied to principal, then to expenses
incurred for collection and finally to interest income.
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for loan
losses when management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be
adequate to absorb losses on existing loans that may become uncollectible,
based on evaluations of the collectibility of loans and prior loan loss
experience. The evaluations take into consideration such factors as changes
in the nature and volume of the loan portfolio, overall portfolio quality,
review of specific problem loans and current economic conditions that may
affect the borrower's ability to pay.
11
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LOANS HELD FOR SALE
Loans are identified as either held for investment or
held for sale upon their origination. Loans held for sale are recorded at
the lower of amortized cost or market value, determined on an aggregate
basis. Unrealized losses, if any, are recognized on a current basis.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less
accumulated depreciation, which is generally computed on the straight-line
method over the estimated useful lives of the assets. Leasehold improvements
are amortized on the straight-line method over the shorter of the estimated
useful lives of the improvements or the terms of the related leases.
OTHER REAL ESTATE
Other real estate includes properties acquired in partial
or total settlement of problem loans. The properties are recorded at the
lower of cost or fair value less estimated selling costs at the date
acquired. Losses arising at the time of acquisition of such properties are
charged to the allowance for loan losses. Any subsequent decline in value is
charged to current operations. The revenue received from, and expenses
incurred in maintaining, such properties are also included in current
operations. The amounts the Company could ultimately recover from other real
estate could differ materially from the amounts used in determining the net
carrying value of the assets because of future market factors beyond the
Company's control or changes in the Company's strategy for recovering its
investment. Management believes the net carrying value at December 31, 1994
is a reasonable estimate of the ultimate value of other real estate.
INTANGIBLES
The Company accounted for the acquisition of its thrift
subsidiary, WSB Aurora, using the purchase method of accounting. The related
intangibles are being amortized over 15 years on the straight-line method.
TRUST ASSETS AND FEES
Assets held in fiduciary or agency capacities are not
included in the consolidated balance sheets since such items are not assets
of the Company. Income from trust fees is recorded when received. This
income does not differ materially from trust fees computed on an accrual
basis.
INCOME TAXES
Effective January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes", which requires the liability method of
accounting. Under this method, deferred tax liabilities and assets are
determined based upon the difference between the financial statement and tax
bases of assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse. Prior to the adoption
of SFAS No. 109, the Company accounted for income taxes in accordance with
Accounting Principles Board Opinion No. 11 ("APB 11"). In accordance with
APB 11, income taxes were accrued based upon income and expenses reported for
financial statement purposes. In connection with the adoption of SFAS No.
109 on a prospective basis, the Company recorded a cumulative credit
adjustment to income of $360 at January 1, 1993.
The Parent files consolidated federal and state income tax returns with the
Subsidiaries.
EARNINGS PER SHARE
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 subordinated
convertible capital notes.
CASH FLOWS
For purposes of reporting cash flows, cash and cash equivalents
include cash and due from banks, interest-bearing deposits in financial
institutions and federal funds sold. Generally, federal funds are purchased
and sold for one day periods.
RECLASSIFICATIONS
Certain reclassifications have been made in prior years'
financial statements to conform with the current year presentation.
12
<PAGE>
NOTE 2 - INVESTMENT SECURITIES
The amortized cost and fair value of investment securities available for sale
at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
U.S. government agencies
and corporations $51,510 $---- ($4,352) $47,158
Corporate 45,623 5 (1,579) 44,049
U.S. Treasury 16,427 ---- (1,324) 15,103
------- ----- -------- -------
Total debt securities 113,560 5 (7,255) 106,310
Federal Home Loan
Mortgage Corp. Preferred
Stock and other equity
securities 11,942 ---- (932) 11,010
------- ----- -------- -------
Total $125,502 $5 ($8,187) $117,320
-------- ----- -------- --------
-------- ----- -------- --------
<CAPTION>
1993
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Corporate $139,555 $1,887 ($433) $141,009
U.S. government agencies
and corporations 26,570 1,084 (19) 27,635
-------- ------ ------ --------
Total debt securities 166,125 2,971 (452) 168,644
Federal Home Loan
Mortgage Corp. Preferred
Stock and other equity
securities 5,350 94 ---- 5,444
-------- ------ ------ --------
Total $171,475 $3,065 ($452) $174,088
-------- ------ ------- --------
-------- ------ ------- --------
</TABLE>
The amortized cost and fair value of debt securities available for sale at
December 31, 1994 and 1993 by contractual maturity are as follows:
<TABLE>
<CAPTION>
1994 1993
-------------------- --------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Due in 1 year or less $15,564 $15,448 $81,726 $82,518
Due after 1 year through 5 years 70,265 66,262 41,439 42,256
Due after 5 years through 10 years 25,856 22,827 25,941 27,027
Due after 10 years 1,875 1,773 17,019 16,843
--------- -------- --------- --------
Total $113,560 $106,310 $166,125 $168,644
--------- -------- --------- --------
--------- -------- --------- --------
</TABLE>
13
<PAGE>
NOTE 2 - INVESTMENT SECURITIES (CONTINUED)
The amortized cost and fair value of investment securities held to maturity
at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
U.S. government agencies
and corporations $55,783 $---- ($4,460) $51,323
Corporate 30,645 25 (931) 29,739
States and political
subdivisions 22,131 1 (791) 21,341
-------- ---------- --------- --------
Total $108,559 $26 ($6,182) $102,403
-------- ---------- --------- --------
-------- ---------- --------- --------
<CAPTION>
1993
--------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
States and political
subdivisions $19,119 $158 ($26) $19,251
-------- --------- ---------- -------
Total $19,119 $158 ($26) $19,251
-------- --------- ---------- -------
-------- --------- ---------- -------
</TABLE>
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties. The amortized cost and fair value of debt securities
held to maturity at December 31, 1994 and 1993 by contractual maturity are as
follows:
<TABLE>
<CAPTION>
1994 1993
-------------------- ----------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Due in 1 year or less $2,920 $2,898 $1,336 $1,340
Due after 1 year through 5 years 54,444 51,886 1,513 1,526
Due after 5 years through 10 years 41,683 38,189 8,227 8,335
Due after 10 years 9,512 9,430 8,043 8,050
-------- -------- -------- -------
Total $108,559 $102,403 $19,119 $19,251
-------- -------- -------- -------
-------- -------- -------- -------
</TABLE>
Gross gains of $452 and gross losses of $115 were realized on 1994 sales.
Gross gains of $690 and gross losses of $642 were realized on 1993 sales.
Gross gains of $392 and gross losses of $509 were recognized on 1992 sales.
Investment securities with an amortized cost of approximately $22,393 and
$14,988 at December 31, 1994 and 1993, respectively, were pledged to secure
public deposits, fiduciary activities and for other purposes required or
permitted by law.
14
<PAGE>
NOTE 3 - MORTGAGE-BACKED SECURITIES
The amortized cost and fair values of mortgage-backed securities available
for sale at December 31, 1994 was $128 and those for 1993 are summarized as
follows:
<TABLE>
<CAPTION>
1993
------------------------------------
Gross
Amortized Unrealized Fair
Cost Gains Value
---------- ---------- ----------
<S> <C> <C> <C>
Mortgage-backed securities - pledged $17,427 $1,941 $19,368
Interest-only securities
(collateralized mortgage obligations) 128 ---- 128
GNMA certificates 4 1 5
---------- ---------- ----------
Total $17,559 $1,942 $19,501
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
At December 31, 1993, mortgage-backed securities with an amortized cost of
approximately $17,427 and a fair value of $19,368 served as collateral for
the REMIC bonds.
NOTE 4 - LOANS
Major classifications of loans were as follows at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Commercial $156,896 $177,054
Installment 33,542 33,714
Real estate:
Mortgage 305,010 288,683
Home equity 120,373 115,910
Construction 72,990 47,442
Held for sale 449 4,543
VISA - credit card 21,342 22,601
Other 7,048 11,479
--------- ---------
Total 717,650 701,426
Allowance for loan losses (8,445) (7,125)
--------- ---------
Loans, net $709,205 $694,301
--------- ---------
--------- ---------
</TABLE>
The Company makes commercial, personal and residential loans primarily to
customers throughout the western suburbs of Chicago. At December 31, 1994
and 1993, the Company's loan portfolio did not include any single borrower or
industry concentration in excess of 10% of total loans, except for loans to
the construction and land development industries which represented 10.2% and
6.8% of total loans at December 31, 1994 and 1993, respectively. The
Company's real estate construction loans are generally made within the market
areas of the Subsidiaries. The Company manages this exposure by continually
reviewing local market conditions and closely monitoring collateral values.
No unusual losses are anticipated as a result of these concentrations.
Loans on which the accrual of interest has been discontinued or reduced
amounted to approximately $279, $6,468 and $14,468 at December 31, 1994, 1993
and 1992, respectively. If interest on those loans had been accrued, such
income would have approximated $15, $243 and $637 for 1994, 1993 and 1992,
respectively. Interest income on those loans is recorded only when received.
15
<PAGE>
NOTE 4 - LOANS (CONTINUED)
Changes in the allowance for loan losses were as follows for the years ended
December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Balance, beginning of year $7,125 $8,024 $6,489
Provision for loan losses 2,216 5,339 3,905
Loans charged-off (1,292) (7,027) (3,435)
Recoveries 396 789 1,065
------- ------- -------
Balance, end of year $8,445 $7,125 $8,024
------- ------- -------
------- ------- -------
</TABLE>
Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheets. Servicing loans for others generally consists
of collecting mortgage payments, maintaining escrow accounts, disbursing
payments to investors and foreclosure processing. Loan servicing income is
recorded on the accrual basis and includes servicing fees from investors and
certain charges collected from borrowers. At December 31, 1994 and 1993, the
Company was servicing loans for the benefit of others with aggregate unpaid
principal balances of $335,244 and $362,752, respectively.
At December 31, 1994 and 1993, the Company maintained banker's acceptances of
$1,659 and $2,026, respectively. A banker's acceptance is a draft that has
been drawn on and accepted by the Company for payment at a future date. Funds
are advanced to the drawer of the acceptance by discounting the accepted
draft. The Company has an unconditional obligation to fund the holder upon
presentation of the draft. Likewise, the customer has an unconditional
obligation to fund the Company at or before the maturity date specified in
the instrument.
NOTE 5 - PREMISES AND EQUIPMENT
Major classifications of these assets are summarized as follows at December 31:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Land $5,213 $3,803
Premises 20,826 20,140
Leasehold improvements 418 331
Furniture and equipment 22,012 21,606
--------- ---------
48,469 45,880
Less accumulated depreciation and amortization (21,817) (20,479)
--------- ---------
Total $26,652 $25,401
--------- ---------
--------- ---------
</TABLE>
NOTE 6 - DEPOSITS
The major categories of deposits are summarized as follows at December 31:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Demand and other noninterest-bearing $100,771 $94,268
NOW accounts 179,025 175,917
Money market savings 317,379 309,614
Time, $100,000 and over 47,693 28,955
Time, other 278,389 274,710
--------- ---------
Total $923,257 $883,464
--------- ---------
--------- ---------
</TABLE>
16
<PAGE>
NOTE 6 - DEPOSITS (CONTINUED)
Interest expense on interest-bearing deposits is summarized as follows for
the years ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------- -------- -------
<S> <C> <C> <C>
NOW accounts $3,004 $2,896 $2,921
Money market savings 9,656 7,910 9,884
Time, $100,000 and over 1,788 1,334 1,479
Time, other 12,645 13,692 18,435
------- -------- -------
Total $27,093 $25,832 $32,719
------- -------- -------
------- -------- -------
</TABLE>
NOTE 7 - REAL ESTATE MORTGAGE INVESTMENT CONDUIT (REMIC)
The Company maintained REMIC bonds with a stated maturity of December 1,
2013. Interest on the REMIC bonds was payable quarterly at an interest rate
equal to the bond equivalent on one year U.S. Treasury Bills plus 50 basis
points, but in no event to exceed 13.5%. The REMIC bonds were collateralized
by mortgage-backed securities. During 1994, the Company retired the REMIC
bonds and liquidated the mortgage-backed securities collateralizing the bonds.
NOTE 8 - BORROWINGS
Federal Home Loan Bank ("FHLB") advances are used as a source of liquidity to
meet cash demands. Interest was payable on the FHLB advances, which carry no
specific maturity, at an annual rate of 6.4% and 3.2% at December 31, 1994
and 1993, respectively.
NOTE 9 - INCOME TAXES
The income tax provision (benefit) reflected in the Consolidated Statements
of Income is as follows for the years ended December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------- -------- -------
<S> <C> <C> <C>
Current:
Federal $7,656 $6,316 $5,946
State 1,313 1,323 1,353
Deferred (18) (604) (404)
------- -------- -------
Total $8,951 $7,035 $6,895
------- -------- -------
------- -------- -------
</TABLE>
The temporary differences and tax carryforwards which created deferred tax
assets and liabilities at January 1, 1993 (upon adoption of SFAS No. 109) and
December 31, 1994 and 1993 are detailed below:
<TABLE>
<CAPTION>
December 31, December 31, January 1,
1994 1993 1993
------------ ------------ ------------
<S> <C> <C> <C>
Deferred tax assets:
Allowance for loan loss $3,255 $3,284 $2,806
Deferred compensation 749 692 626
Unrealized loss on
securities available for sale 3,252 ---- ----
------------ ------------ ------------
Total deferred tax assets 7,256 3,976 3,432
------------ ------------ ------------
Deferred tax liabilities:
Depreciation 1,386 1,396 1,431
Other 240 221 246
------------ ------------ ------------
Total deferred tax liabilities 1,626 1,617 1,677
------------ ------------ ------------
Net deferred tax assets $5,630 $2,359 $1,755
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
17
<PAGE>
NOTE 9 - INCOME TAXES (CONTINUED)
Prior to the adoption of SFAS 109, a deferred income tax credit resulted from
the following timing differences for the year ended December 31, 1992:
<TABLE>
<S> <C>
Provision for loan losses ($462)
Deferred compensation (69)
Accelerated depreciation 33
Other, net 94
---------
Total ($404)
---------
---------
</TABLE>
A reconciliation between taxes computed at the statutory income tax rates and
the consolidated effective tax rates follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Statutory income tax rates 35.0% 35.0% 34.0%
(Decrease) increase in taxes resulting from:
Federal tax-exempt income (2.4) (2.5) (2.3)
State income taxes, net of federal tax benefit 4.8 4.8 4.8
Other 3.3 (1.2) ----
------ ------ ------
Consolidated effective tax rates 40.7% 36.1% 36.5%
------ ------ ------
------ ------ ------
</TABLE>
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 believes its judgments in these matters
have been appropriate and intends to continue to contest the adjustments
proposed by the IRS.
NOTE 10 - EMPLOYEE BENEFIT PLANS
Historically, the Company maintained a stock ownership plan covering
substantially all full-time employees who have satisfied specific age and
service requirements. During the first quarter of 1994, the West Suburban
Bank Stock Bonus Trust Plan was converted into an employee stock ownership
plan and renamed the West Suburban Bank Employee Stock Ownership Plan (the
"Plan"). The respective boards of directors of the Subsidiaries took the
actions necessary to allow their respective employees to participate in the
Plan. The Plan is a tax-qualified stock bonus plan under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code"). The Plan is
designed to provide incentives to participants by granting them an interest
in the Company's common stock in which the Plan invests. 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, termination, disability or death is
based upon service and the amount of the employer's contributions and any
income, expenses, gains or losses which may have been allocated to the
participant's account. Annual contributions to the current and former plans
were made in accordance with resolutions passed by the boards of directors
of the Subsidiaries and in aggregate amounted to $1,112 in 1994, $1,000 in
1993 and $1,168 in 1992.
The Subsidiaries also maintain deferred compensation plans in which former
and current executive officers participate. The deferred compensation
expense for the years ended December 31, 1994, 1993 and 1992 amounted to
$180, $214 and $225, respectively. These plans are not qualified under the
Code and, therefore, tax deductions are allowed only when benefits are paid.
18
<PAGE>
NOTE 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
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. These financial instruments involve, to
varying degrees, elements of credit and interest rate risks in addition to
the amount 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 risk 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.
Unless noted otherwise, the Company requires collateral or other security to
support financial instruments with credit risk.
A summary of the contractual amount of the Company's exposure to
off-balance-sheet risk as of December 31, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1994 1993
--------- --------
<S> <C> <C>
Financial instruments whose contractual amounts
represent credit risks:
Commitments to extend credit $286,807 $295,386
Letters of credit 21,790 23,490
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments 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 exercised, the total commitment amounts do
not necessarily represent future cash requirements. 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 of the counterparty.
Collateral held varies and may include accounts receivable, inventory,
property and equipment and commercial or residential properties.
Letters of credit written are conditional commitments issued by the Company
to either extend credit to a customer or to guarantee the performance of a
customer to a third party. Guarantees of performance are primarily issued to
support public and private borrowing arrangements. The credit risk involved
in issuing letters of credit is essentially the same as that involved in
extending loan facilities to customers. The Company holds collateral
supporting those commitments for which collateral is deemed necessary. The
extent of collateral held for those commitments varies.
NOTE 12 - CONTINGENT LIABILITIES
The Company is a party to various legal actions arising from normal business
activities. Management believes that pending actions are either without
merit or that the ultimate liability, if any, resulting from them will not
materially affect the Company's consolidated financial position.
NOTE 13 - FINANCIAL INSTRUMENTS FAIR VALUE DISCLOSURE
SFAS No. 107, "Disclosures about the Fair Value of Financial Instruments",
requires the disclosure of estimated fair values of financial instrument
assets and liabilities. Estimated fair values have been calculated based on
certain assumptions and selected data from within the Company's various
financial instrument classifications. For short-term maturing assets, i.e.
cash and due from banks, federal funds sold and interest-bearing deposits
with financial institutions, it has been assumed that their estimated fair
values approximate their carrying values. Similarly, for loans and deposits
with variable interest rates, it has been assumed that their estimated fair
values also approximate their carrying values.
19
<PAGE>
NOTE 13 - FINANCIAL INSTRUMENTS FAIR VALUE DISCLOSURE (CONTINUED)
The investment securities available for sale portfolio is estimated to have a
fair value of $117,320 and $174,088 at December 31, 1994 and 1993,
respectively. The investment securities held to maturity portfolio is
estimated to have a fair value of $102,403 and $19,251 at December 31, 1994
and 1993, respectively. The mortgage-backed securities portfolio is
estimated to have a fair value of $128 and $19,501 at December 31, 1994 and
1993, respectively. These fair values were derived from quoted market values
as of the close of business December 31, 1994 and 1993. The net loan
portfolio is estimated to have a fair value of $714,508 and $698,622 at
December 31, 1994 and 1993, respectively. These fair values were estimated by
discounting the future cash flows from loan repayments using current interest
rates for loans having comparable maturities.
The total deposit liabilities are estimated to have a fair value of $921,753
and $885,389 at December 31, 1994 and 1993, respectively. These fair values
were estimated by the use of the present value discounted cash flow method at
discount rates comparable to current market rates for similar liabilities.
There is no material difference between the contractual amount and the
estimated fair value of off-balance-sheet items which total $308,597 at
December 31, 1994 and $318,876 at December 31, 1993 and are primarily
comprised of unfunded loan commitments which are generally priced at market
at the time of funding.
NOTE 14 - RELATED PARTY TRANSACTIONS
At December 31, 1994, certain officers and directors of the Company, their
affiliates and companies in which they have 10% or more beneficial ownership,
were indebted to the Company in the aggregate amount of approximately
$24,442. During 1994, approximately $16,896 in additions and $14,547 in
reductions were made.
NOTE 15 - INVESTMENTS IN SUBSIDIARIES AND REGULATORY RESTRICTIONS
The Parent is economically dependent on the cash dividends received from the
Subsidiaries. These dividends represent the primary cash flow used to fund
dividend payments to the Parent's shareholders. Cash dividends received by
the Parent amounted to $7,292 and $11,292 for the years ended December 31,
1994 and 1993, respectively.
The Subsidiaries are subject to statutory and regulatory restrictions on the
amount of dividends which may be paid to the Parent. Dividends which can be
paid to the Parent without obtaining prior approval from bank and thrift
regulatory agencies amounted to approximately $17,380 and $22,147 at December
31, 1994 and 1993, respectively. As a practical matter, dividend payments
are restricted to lesser amounts because of management's desire that each
subsidiary maintain the status of a "well-capitalized" institution, as
defined by the Federal Deposit Insurance Corporation Improvement Act of 1991,
(thereby keeping FDIC insurance premiums at a minimum) and to allow for
growth. The Parent and the Subsidiaries are required to maintain a minimum
leverage ratio (Tier 1 capital to total assets) and minimum amounts of
capital to total "risk weighted" assets, as defined by the banking
regulators. At December 31, 1994 and 1993 the Company was required to have a
minimum leverage ratio of 3% and minimum Tier 1 and Total risk-weighted
capital ratios of 4.00% and 8.00%, respectively. The Company's Tier 1
leverage ratio was 9.41% and 9.58% at December 31, 1994, and 1993,
respectively. The Company's Total capital ratio was 12.11% and 11.58% at
December 31, 1994, and 1993, respectively, and its Tier 1 risk-weighted
capital ratio was 11.60% and 10.76% at December 31, 1994, and 1993,
respectively.
In accordance with the Board of Governors of the Federal Reserve System
reserve requirements, the Subsidiaries must maintain noninterest-bearing
cash balances with the Federal Reserve Bank of Chicago. The average amount
of these balances for years ended December 31, 1994 and 1993 was
approximately $5,956 and $6,112, respectively.
NOTE 16 - COMMON STOCK
The Company's common stock is divided into two classes consisting of Class A
and Class B common stock. Except as required by law, the rights, powers and
limitations of the Class A common stock and Class B common stock are
identical.
20
<PAGE>
NOTE 16 - COMMON STOCK-(CONTINUED)
During the year ended December 31, 1993, the Company issued 29,050 shares of
Class A common stock in connection with an exchange of Class A common stock
for the bank subsidiary common stock issued upon conversion of the
subordinated convertible capital notes, which were previously issued by the
Subsidiaries.
NOTE 17 - NEW ACCOUNTING PRONOUNCEMENTS
In May 1993, the FASB issued SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan", which requires that impaired loans, as defined, be
measured based on the present value of expected future cash flows discounted
at the loan's effective interest rate or, as a practical expedient, at the
loan's observable market price or the fair value of the collateral if the
loan is collateral dependent. SFAS No. 114 was amended in October, 1994 by
SFAS No. 118, "Accounting by Creditors for Impairment of a Loan-Income
Recognition and Disclosures", to allow a creditor to use existing methods for
recognizing interest income on an impaired loan. SFAS No.114 and No. 118 are
effective for fiscal years beginning after December 15, 1994. Management does
not expect the adoption of SFAS No.114 or SFAS No.118 to have a material
impact on the Company.
NOTE 18 - CONDENSED FINANCIAL INFORMATION - PARENT ONLY
CONDENSED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
ASSETS 1994 1993
-------- --------
<S> <C> <C>
Cash on deposit in Subsidiaries $ 7,239 $ 5,687
Equity investment in Subsidiaries 90,069 88,942
Intangibles, net 2,139 2,405
Other assets 38 100
-------- --------
TOTAL ASSETS $99,485 $97,134
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Dividends payable $ 1,514 $ 1,312
-------- --------
TOTAL LIABILITIES 1,514 1,312
Shareholders' equity 97,971 95,822
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $99,485 $97,134
-------- --------
-------- --------
</TABLE>
21
<PAGE>
NOTE 18 - CONDENSED FINANCIAL INFORMATION - PARENT ONLY (CONTINUED)
CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
OPERATING INCOME
Dividends from Subsidiaries $ 7,292 $11,292 $ 9,195
Interest income 144 27 16
--------- --------- ---------
Total operating income 7,436 11,319 9,211
--------- --------- ---------
OPERATING EXPENSE
Amortization of intangibles 266 279 293
Interest expense ---- 27 285
Other 238 251 165
--------- --------- ---------
Total operating expense 504 557 743
--------- --------- ---------
Income before income taxes 6,932 10,762 8,468
Applicable income tax benefit (37) (100) (183)
--------- --------- ---------
Income before equity in undistributed
net income of Subsidiaries 6,969 10,862 8,651
Equity in undistributed net income of
Subsidiaries 6,057 962 3,345
--------- --------- ---------
NET INCOME $13,026 $11,824 $11,996
--------- --------- ---------
--------- --------- ---------
</TABLE>
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $13,026 $11,824 $11,996
--------- --------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in undistributed net income
of Subsidiaries (6,057) (962) (3,345)
Amortization of intangibles 266 279 293
Decrease in other assets 62 74 49
Decrease in other liabilities ---- ---- (24)
--------- --------- ---------
Total adjustments (5,729) (609) (3,027)
--------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,297 11,215 8,969
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of subordinated convertible capital notes ---- ---- (4)
--------- --------- ---------
NET CASH USED IN INVESTING ACTIVITIES ---- ---- (4)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of note payable ---- (2,000) (4,500)
Cash dividends paid (5,745) (5,043) (4,841)
--------- --------- ---------
NET CASH USED IN FINANCING ACTIVITIES (5,745) (7,043) (9,341)
Net increase (decrease) in cash 1,552 4,172 (376)
Cash at beginning of year 5,687 1,515 1,891
--------- --------- ---------
CASH AT END OF YEAR $7,239 $5,687 $1,515
--------- --------- ---------
--------- --------- ---------
</TABLE>
22
<PAGE>
SELECTED FINANCIAL DATA
(Unaudited)
The following table consists of financial data derived from the Consolidated
Financial Statements of the Company. This information should be read in
connection with Management's Discussion and Analysis of Financial Condition
and Results of Operations and the Company's Consolidated Financial Statements
included elsewhere in this report (dollars in thousands, except per share
data).
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992 1991 1990
--------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA
Interest income $69,112 $67,396 $74,098 $92,058 $85,189
Interest expense 27,431 26,728 34,376 50,423 48,228
--------- -------- --------- --------- --------
Net interest income 41,681 40,668 39,722 41,635 36,961
Provision for loan losses 2,216 5,339 3,905 3,663 3,000
--------- -------- --------- --------- --------
Net interest income after
provisions 39,465 35,329 35,817 37,972 33,961
Other income(1) 9,685 10,056 11,145 9,632 6,530
Other expense 27,173 26,886 28,071 28,245 22,375
--------- -------- --------- --------- --------
Income before income taxes 21,977 18,499 18,891 19,359 18,116
Applicable income taxes(2) 8,951 7,035 6,895 7,319 6,125
Cumulative effect of accounting change ---- 360 ---- ---- ----
--------- -------- --------- --------- --------
Net income $13,026 $11,824 $11,996 $12,040 $11,991
--------- -------- --------- --------- --------
--------- -------- --------- --------- --------
PER SHARE DATA
Net income before cumulative
effect of accounting change:
Primary $28.41
Fully diluted 26.85
Net income - Primary $30.12 29.30 $29.73 $29.74 $29.88
Net income - Fully diluted 30.12 27.72 28.74 28.80 28.80
Cash dividends declared 13.50 12.75 12.00 12.00 10.50
Book value 226.53 221.56 209.31 190.61 170.30
SELECTED BALANCES
Investment securities $225,879 $190,594 $231,121 $149,883 $192,171
Net loans 709,205 694,301 652,007 688,813 684,947
Total assets 1,041,495 999,878 1,000,200 980,358 1,008,257
Deposits 923,257 883,464 877,923 870,404 898,068
Long-term debt ---- ---- 13,348 21,902 26,834
Shareholders' equity 97,971 95,822 84,444 76,901 69,218
RATIOS
Return on average total assets 1.29% 1.20% 1.20% 1.19% 1.41%
Return on average
shareholders' equity 13.29 13.25 14.84 16.41 20.43
Cash dividends to net income 44.10 43.50 40.36 40.36 35.21
Average equity to average total assets 9.67 9.03 8.12 7.25 6.88
Net interest margin (FTE)(2) 4.21 4.19 4.06 4.20 4.22
<FN>
(1) Other income includes the following amounts of gain (loss) on sale of
loans for the years ended December 31, 1994, 1993, 1992, 1991 and 1990,
respectively: $213, $1,362 $2,050, $801 and ($69).
(2) Net interest margin is presented on a tax equivalent basis, assuming a
federal income tax rate of 35% for the years ended December 31, 1994 and 1993
and 34% for the years ended December 31, 1992, 1991 and 1990.
</TABLE>
23
<PAGE>
DISTRIBUTION OF ASSETS AND NET INTEREST INCOME
AVERAGE RATES AND YIELDS ON A TAX EQUIVALENT BASIS
(Unaudited)
The following table presents for the periods indicated the total dollar
amount of interest income from average interest-earning assets and the
resultant yields, as well as the interest expense on average interest-bearing
liabilities, and the resultant costs, expressed both in dollars and rates.
All average balances are daily average balances. To the extent received,
interest on non-accruing loans has been included in the table (dollars in
thousands).
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993(3) 1992(3)
-------------------------- ------------------------ ------------------------
Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
---------- -------- ---- -------- -------- ---- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing
deposits in financial
institutions $552 $33 6.0% $1,217 $42 3.5% $1,453 $61 4.2%
---------- -------- ---- -------- -------- ---- -------- -------- ----
Federal funds sold 17,819 743 4.2 10,580 314 3.0 17,794 650 3.7
---------- -------- ---- -------- -------- ---- -------- -------- ----
Investment securities:
Corporate 90,831 6,300 6.9 168,348 11,543 6.9 147,584 11,558 7.8
U.S. Treasury and
U.S. government
agencies and
corporations 106,214 6,468 6.1 30,306 2,028 6.7 24,810 1,825 7.4
States and political
subdivisions (1) 21,630 1,837 8.5 13,626 1,273 9.3 13,021 1,261 9.7
Mutual funds ---- ---- ---- 74 6 8.1 9,359 755 8.1
FHLB stock 845 64 7.6 1,655 91 5.6 1,768 96 5.4
---------- -------- ---- -------- -------- ---- -------- -------- ----
Total investment
securities (1) 219,520 14,669 6.7 214,009 14,941 7.0 196,542 15,495 7.9
---------- -------- ---- -------- -------- ---- -------- -------- ----
Mortgage-backed
securities 7,246 740 10.2 21,464 2,329 10.9 27,738 2,703 9.7
---------- -------- ---- -------- -------- ---- -------- -------- ----
Loans: (1)
Commercial and
industrial (1) 212,147 18,878 8.9 191,732 15,642 8.2 184,724 16,243 8.8
Real estate 295,559 20,415 6.9 272,421 19,734 7.2 280,568 21,935 7.8
Home equity 116,827 8,818 7.5 120,660 8,543 7.1 120,059 9,354 7.8
Installment 33,342 2,656 8.0 38,483 2,848 7.4 49,142 4,019 8.2
Visa and other 25,662 3,148 12.3 27,990 3,709 13.3 33,502 4,304 12.8
---------- -------- ---- -------- -------- ---- -------- -------- ----
Total loans (1) 683,537 53,915 7.9 651,286 50,476 7.8 667,995 55,855 8.4
---------- -------- ---- -------- -------- ---- -------- -------- ----
Total interest-bearing
assets (1) 928,674 $70,100 7.5% 898,556 $68,102 7.6% 911,522 $74,764 8.2%
Cash and due from
banks 37,428 39,203 36,833
Premises and
equipment, net 25,554 25,751 26,999
Other real estate 6,873 6,623 5,283
Allowance for loan
losses (7,907) (7,876) (6,570)
Loss on mutual funds ---- (7) (940)
Accrued interest and
other assets (2) 22,519 26,317 22,624
---------- -------- --------
Total assets $1,013,141 $988,567 $995,751
---------- -------- --------
---------- -------- --------
</TABLE>
24
<PAGE>
DISTRIBUTION OF ASSETS AND NET INTEREST INCOME
AVERAGE RATES AND YIELDS ON A TAX EQUIVALENT BASIS
(Unaudited)
(continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993(3) 1992(3)
-------------------------- ------------------------ ------------------------
Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
---------- -------- ---- -------- -------- ---- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest-bearing
deposits:
NOW accounts and
savings deposits $486,863 $12,660 2.6% $469,641 $10,806 2.3% $451,310 $12,805 2.8%
Time deposits:
Less than $100,000 275,693 12,645 4.6 282,884 13,692 4.8 320,467 18,435 5.8
$100,000 and
greater 37,849 1,788 4.7 26,821 1,334 5.0 25,926 1,479 5.7
---------- -------- ---- -------- -------- ---- -------- -------- ----
Total interest-
bearing deposits 800,405 27,093 3.4 779,346 25,832 3.3 797,703 32,719 4.1
Federal funds
purchased 3,526 158 4.5 4,097 126 3.1 3,614 127 3.5
Deferred compensation 1,077 35 3.2 871 26 3.0 697 25 3.6
Real Estate Mortgage
Investment Conduit 579 18 3.1 8,159 288 3.5 14,560 619 4.3
Note payable ---- ---- ---- 422 27 6.4 4,540 285 6.3
FHLB advances 2,558 126 4.9 5,297 174 3.3 9,110 325 3.6
Subordinated
convertible
capital notes 10 1 6.5 4,223 255 6.0 4,247 276 6.5
---------- -------- ---- -------- -------- ---- -------- -------- ----
Total interest-bearing
liabilities 808,155 27,431 3.4 802,415 26,728 3.3 834,471 34,376 4.1
-------- ---- -------- ---- -------- ----
Demand deposits 96,428 91,529 71,187
Other liabilities 10,564 5,352 9,253
Shareholders' equity 97,994 89,271 80,840
---------- -------- --------
Total liabilities and
shareholders' equity $1,013,141 $988,567 $995,751
---------- -------- --------
---------- -------- --------
Net interest income $42,669 $41,374 $40,388
-------- -------- -------
-------- -------- -------
Net interest margin 4.2% 4.2% 4.1%
---- ---- ----
---- ---- ----
Net yield on interest
earning assets 4.6% 4.6% 4.4%
---- ---- ----
---- ---- ----
<FN>
(1) Interest income and yields are presented on a tax equivalent basis, assuming
a federal income tax rate of 35% for the years ended December 31, 1994 and
1993 and 34% for the year ended December 31, 1992.
(2) The average balances of nonaccrual loans are included in accrued interest
and other assets.
(3) Certain reclassifications have been made in prior years' financial
statements to conform with the current year presentation.
</TABLE>
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis provides information regarding the
Company's financial condition as of December 31, 1994 and 1993 and results of
operations for the years ended December 31, 1994, 1993 and 1992. The
discussion and analysis should be read in conjunction with the financial
statements, notes and tables included elsewhere in this annual report. The
financial information provided below may be rounded to the nearest decimal in
order to simplify the presentation of management's discussion and analysis.
However, the ratios and percentages provided below are calculated (adjusted
for rounding) using the detailed financial information contained in the
financial statements, notes and tables included elsewhere in this annual
report.
BALANCE SHEET ANALYSIS
TOTAL CONSOLIDATED ASSETS. Total consolidated assets of the Company
increased $41.6 million (4.2%) to $1,041.5 million at December 31, 1994 from
$999.9 million at December 31, 1993. Increases in investment securities
comprised the largest component of this increase.
SECURITIES. Aggregate holdings in investment securities increased $35.3
million (18.5%) to $225.9 million at December 31, 1994 from $190.6 million at
December 31, 1993. The Company's objectives in managing the securities
portfolio are driven by the dynamics of the entire balance sheet and general
economic conditions including the interest rate environment. The increase in
the portfolio is primarily attributable to a higher growth rate in deposits
compared to loan growth which resulted in additional funds available for
investing purposes. The Company continues to seek high quality securities
for its portfolio.
The held to maturity portfolio increased to $108.6 million at December 31,
1994 from $19.1 million at December 31, 1993 as the Company invested
significantly in U.S. Treasury and U.S. Government agency and corporation
obligations. Investment securities available for sale decreased to $117.3
million at December 31, 1994 from $171.5 million at December 31, 1993. This
decrease resulted primarily from the Company's focus on investing in
securities in the held to maturity portfolio with proceeds from the sale of
corporate debt securities out of the available for sale portfolio.
Holdings in mortgage-backed securities decreased $17.4 million to $.1 million
at December 31, 1994 from $17.5 million at December 31, 1993. During 1994
the mortgage-backed securities portfolio was liquidated in connection with
the termination of the REMIC.
The Company's unrealized losses on securities available for sale of $4.9
million (net of taxes) at December 31, 1994 was primarily due to the
increasing interest rate environment during 1994.
As of December 31, 1994, the Company's only investment securities that
exceeded ten percent of its shareholders' equity were debt securities issued
by Lehman Brothers Inc., the amortized cost and fair value of which were
$12.6 million and $12.0 million, respectively.
LOANS. Total loans outstanding increased $16.2 million (2.3%) to $717.6
million at December 31, 1994 from $701.4 million at December 31, 1993. This
increase was primarily from growth in the Company's real estate loan
portfolio. Specifically, mortgage loans, most of which were adjustable rate
mortgage loans ("ARMs"), increased to $305.0 million at December 31, 1994
from $288.7 million at December 31, 1993, while construction loans increased
to $73.0 million from $47.4 million during the same time period. These
increases were offset by a $20.2 million decrease in commercial loans during
the same time period. This loan decrease was indirectly due to the slowdown
in the refinance market which resulted in lower loan demand in certain
segments of the loan customer base.
ALLOWANCE FOR LOAN LOSSES AND ASSET QUALITY. Management attempts to maintain
the allowance for loan losses at a level adequate to absorb anticipated loan
losses. The amount of the allowance is established based upon past loan loss
experience and other factors which, in management's judgment, deserve
consideration in estimating loan losses. Other factors considered by
management in this regard include growth and composition of the loan
portfolio, the relationship of the allowance for loan losses to outstanding
loans and economic conditions in the Company's market area. The allowance
for loan losses increased $1.3 million (18.5%) to $8.4 million at December
31, 1994 from $7.1 million at December 31, 1993. This represents an increase
in the allowance for loan losses to total loans outstanding
26
<PAGE>
to 1.18% at December 31, 1994 from 1.02% at December 31, 1993. General
improvement in the Company's loan portfolio along with the transfer of one
significant problem loan to other real estate caused nonperforming loans to
decrease $5.8 million (55.2%) to $4.7 million at December 31, 1994 from $10.5
million at December 31, 1993. As of December 31, 1994, the total
nonperforming loans to net loans was .7% compared to 1.5% at December 31,
1993. Management believes that the allowance for loan losses adequately
reflects potential loan losses at December 31, 1994. Management monitors the
adequacy of the allowance for loan losses on an ongoing basis.
OTHER REAL ESTATE. During 1994 other real estate increased $.5 million
(5.1%) to $10.5 million at December 31, 1994 from $10.0 million at December
31, 1993. This increase was principally the result of the transfer to other
real estate of one significant real estate property in the amount of
approximately $7.0 million and offset by the sale of properties with a
carrying value of $8.5 million during 1994.
DEPOSITS. Total deposits increased $39.8 million (4.5%) to $923.3 million at
December 31, 1994 from $883.5 million at December 31, 1993. Total deposits
increased due to increases in market interest rates as well as the Company's
promotion efforts. The Company's growth in deposits of greater than $100,000
is due to competitive rates offered to customers for that product. The
proceeds from the increases in jumbo certificates of deposit along with
increases in other deposits were used to meet loan demand with the excess
from loans being utilized for investments. If interest rates continue to
rise, management expects further growth in its deposit base.
Year-end balances in the Company's major categories of deposits are
summarized in the following table (dollars in thousands):
<TABLE>
<CAPTION>
December 31,
----------------- Dollar Percent
1994 1993 Change Change
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Demand and other noninterest-bearing $100,771 $94,268 $6,503 6.9%
NOW accounts 179,025 175,917 3,108 1.8
Money market savings 317,379 309,614 7,765 2.5
Time, $100,000 and over 47,693 28,955 18,738 64.7
Time, other 278,389 274,710 3,679 1.3
-------- -------- ------- -------
Total $923,257 $883,464 $39,793 4.5%
-------- -------- ------- -------
-------- -------- ------- -------
</TABLE>
CAPITAL RESOURCES
Shareholders' equity increased $2.2 million (2.2%) to approximately $98.0
million at December 31, 1994 from $95.8 million at December 31, 1993. This
increase was the direct result of the net retention of 1994 earnings of $7.1
million less unrealized loss on securities available for sale of $4.9 million
(net of taxes).
Management has been advised that as of December 31, 1994 and 1993, each of
the Subsidiaries qualified as a "well- capitalized" institution as defined by
the Federal Deposit Insurance Corporation Improvement Act of 1991.
LIQUIDITY
Effective liquidity management allows a banking institution to accommodate
the changing net funds flow requirements of customers who may deposit or
withdraw funds, or modify their credit requirements. One of the principal
obligations of the banking system, and individual banks, is to provide for
the withdrawals of funds by depositors and the credit demands of customers.
The Company manages its liquidity position through continuous monitoring of
profitability trends, asset quality, interest rate sensitivity, maturity
schedules of earning assets and supporting liabilities. Appropriate
responses to changes in these conditions preserve customer confidence in the
ability of the Company to continually meet the deposit withdrawal and credit
requirements of its customers.
Generally, the Company uses cash and cash equivalents to meet its liquidity
needs. Additional liquidity is provided by maintaining assets which mature
within a short time-frame or which may be quickly converted to cash without
significant loss. These assets include interest-bearing deposits in
financial institutions and the FHLB, federal funds sold and investment
securities available for sale. As of December 31, 1994 and 1993 liquid assets
represented 16.1% and 21.6% of total assets, respectively.
27
<PAGE>
During 1994, the Company's cash flow increased approximately $5.5 million.
Operating activities caused an increase to cash and cash equivalents of
approximately $12.9 million from the prior year. Investing activities caused
a decrease of approximately $39.6 million while financing activities caused
an increase of approximately $32.2 million.
INCOME STATEMENT ANALYSIS -- 1994 COMPARED TO 1993
GENERAL. The Company's 1994 net income of $13.0 million represents an
increase of $1.2 million (10.2%) from 1993 net income of $11.8 million. This
increase was primarily due to a $1.0 million improvement in net interest
income (before provision for loan losses) and a $3.1 million reduction in the
provision for loan losses. Offsetting a portion of the rise in net income
was an increase in income tax expense of $1.9 million.
NET INTEREST INCOME. Net interest income is the primary source of income for
the Company. Generally, net interest income is the difference between income
from interest-earning assets and expenses from interest-bearing liabilities.
Interest-earning assets consist of loans, deposits in financial institutions,
deposits in the FHLB, federal funds sold, taxable and tax-exempt investment
securities and mortgage-backed and related securities. Interest-bearing
liabilities consist of deposits, federal funds purchased, FHLB advances and
certain other liabilities.
Total interest income, on a tax equivalent basis, increased $2.0 million
(2.9%) to $70.1 million at December 31, 1994 from $68.1 million at December
31, 1993. Of this increase, $1.2 million was due to average balance changes
while $.8 million was due to increases in interest rates. The Company's
average interest-earning assets grew $30.1 million (3.4%) to $928.7 million
at December 31, 1994 from $898.6 million at December 31, 1993. Yields on
total interest-earning assets declined marginally due to the decrease in
average interest rates on the securities portfolio. The average interest
rate on the securities portfolio declined primarily due to the reinvestment
of proceeds from maturing and sold securities into lower yielding securities.
On the other hand, the average interest rates earned on the loan portfolio
increased due to increases in the prime rate. The yield on the real estate
loan portfolio declined due to refinancings of mortgages at lower rates.
Consequently, even though the Company has a significant ARM portfolio,
increased interest rates did not raise the overall yield on the real estate
loan portfolio to the levels during 1993. The home equity loan portfolio
experienced increased rates of return, primarily due to the rate adjustment
tied to increases in the prime rate.
Total interest expense increased $.7 million (2.6%) to $27.4 million at
December 31, 1994 from $26.7 million at December 31, 1993. Of this increase,
$.2 million was due to average balance increases while $.5 million was due to
increases in interest rates.
Average interest-bearing liabilities increased $5.8 million (.6%) to $808.2
million at December 31, 1994 from $802.4 million at December 31, 1993. This
increase primarily was due to increases in average balances and rates of
total interest- earning deposits, which occurred as a result of increases in
interest rates. Average balances and rates grew for borrowed funds due to
increases in FHLB advances and general economic conditions.
28
<PAGE>
The following table reflects the impact of changes in volume and interest
rates on interest-earning assets and interest-bearing liabilities for each of
the two years ended December 31, 1994 and 1993 (dollars in thousands):
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
compared to 1993 compared to 1992
Change due to: Change due to:
Volume Rate Total Volume Rate Total
------ ---- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest-earning deposits in
financial institutions ($101) $65 ($36) ($8) ($11) ($19)
Federal funds sold 302 127 429 (214) (123) (337)
Investment securities (91) (155) (246) 1,249 (1,799) (550)
Mortgage-backed securities (1,452) (137) (1,589) (681) 307 (374)
Loans 2,544 895 3,439 (1,295) (4,084) (5,379)
------ ---- ------ ------ ----- ------
Total interest income 1,202 795 1,997 (949) (5,710) (6,659)
------ ---- ------ ------ ----- ------
INTEREST EXPENSE
Interest-bearing deposits 639 622 1,261 (1,353) (5,533) (6,886)
Borrowed funds (427) (131) (558) (592) (170) (762)
------ ---- ------ ------ ----- ------
Total interest expense 212 491 703 (1,945) (5,703) (7,648)
------ ---- ------ ------ ----- ------
Net interest income $990 $304 $1,294 $996 ($7) $989
------ ---- ------ ------ ----- ------
------ ---- ------ ------ ----- ------
</TABLE>
PROVISION FOR LOAN LOSSES. The provision for loan losses decreased $3.1
million (58.5%) to $2.2 million in 1994 compared to $5.3 million in 1993.
The Company had a lower provision primarily due to significantly fewer loan
charge-offs during 1994 compared to 1993, along with a general improvement in
the credit quality of its loan portfolio.
OTHER INCOME. During 1994, other income decreased $.4 million (3.7%) to $9.7
million in 1994 compared to $10.1 million in 1993. This decrease was
primarily attributable to a $1.2 million decrease in gains on sales of loans
to $.2 million in 1994 from $1.4 million in 1993 and a $.5 million decrease
in mortgage fee related income. Partially offsetting these decreases to other
income was $1.5 million in realized gain on sales of securities available for
sale principally due to the liquidation of the mortgage-backed securities
portfolio which collateralized the REMIC bonds.
OTHER EXPENSE. Other expense increased $.3 million (1.1%) to $27.2 million
in 1994 from $26.9 million in 1993. Salaries and employee benefits increased
slightly to $12.9 million in 1994 from $12.6 million in 1993, primarily due
to the Company opening new facilities over the past year. FDIC insurance
premiums increased to $2.0 million in 1994 from $1.7 million in 1993, due to
an increase in the deposit base. Additionally during 1993, WSB Aurora
received a one time credit from the FDIC. Other operating expenses
decreased by $.3 million to $6.8 million in 1994 from $7.1 million in 1993.
INCOME TAXES. Income tax expense increased $1.9 million (27.2%) to $8.9
million in 1994 from $7.0 million in 1993 due principally to higher taxable
income.
During 1993, President Clinton signed into law the Revenue Reconciliation Act
of 1993. Management believes that this act has had and will continue to have
minimal effect on the Company. Other than raising the 1993 federal tax rate
for corporate taxable income over $10 million to 35% from 34% and eliminating
the adjusted current earnings depreciation adjustment, for property placed in
service after December 31, 1993, there were few changes affecting corporate
taxpayers like the Company in the act.
RETURN ON AVERAGE TOTAL ASSETS. Return on average total assets was 1.29%
for 1994 and 1.20% for 1993 as net income and average total assets grew. The
Company has consistently achieved at least a 1.0% annual return on average
total assets, which is considered an industry benchmark.
29
<PAGE>
INCOME STATEMENT ANALYSIS -- 1993 COMPARED TO 1992
GENERAL. The Company's 1993 net income of $11.8 million remained stable as
compared to the Company's 1992 net income of $12.0 million. During 1993, net
income decreased slightly due to a $1.4 million increase in the provision for
loan losses as the Company replenished its allowance for loan losses which
was reduced by charge-offs primarily related to two commercial real estate
loans. This was offset in part by an improved net interest margin of $.9
million and the non-recurring benefit of adopting SFAS No. 109, "Accounting
for Income Taxes", of $.4 million.
NET INTEREST INCOME. The Company's average interest-earning assets were
$898.6 million during 1993 compared to $911.5 million during 1992,
representing a decrease of $12.9 million (1.4%). Total interest income, on a
tax equivalent basis, decreased $6.7 million (8.9%) to $68.1 million in 1993
from $74.8 million in 1992. Of this decrease, $5.7 million was the result of
a decline in interest rates.
Interest income on investment securities, on a tax equivalent basis,
decreased $.6 million (3.6%) to $14.9 million in 1993 from $15.5 million in
1992. Interest income on loans, on a tax equivalent basis, decreased $5.4
million (9.6%) to $50.5 million in 1993 from $55.9 million in 1992. This was
attributable to decreases in both the average outstanding balances as well as
declines in interest rates.
Average interest-bearing liabilities decreased $32.1 million (3.8%) to $802.4
million during 1993 from $834.5 million during 1992. Total interest expense
decreased $7.7 million (22.3%) to $26.7 million in 1993 from $34.4 million in
1992 as the Company experienced an $18.4 million (2.3%) decrease in average
outstanding interest-bearing deposits.
PROVISION FOR LOAN LOSSES. The provision for loan losses increased $1.4
million (36.7%) to $5.3 million in 1993 from $3.9 million in 1992 as the
Company replenished its allowance for loan losses, which was reduced due to
charge-offs related primarily to two commercial real estate loans. The
Company charged-off $7.0 million in loans in 1993.
OTHER INCOME. During 1993, other income decreased $1.0 million (9.8%) to
$10.1 million in 1993 from $11.1 million in 1992. This decrease was
primarily attributable to a $.7 million decrease in gains on sales of loans
to $1.4 million in 1993 from $2.1 million in 1992. Sales of loans were
adversely affected by a slowdown in the refinancing market. Also
contributing $.5 million to this decrease was the discontinuance of the
Company's VISA merchant program in 1992.
OTHER EXPENSE. Other expense decreased $1.2 million (4.2%) to $26.9 million
in 1993 from $28.1 million in 1992. Salaries and employee benefits decreased
$1.0 million (7.6%) to $12.6 million in 1993 from $13.6 million in 1992.
This decrease can be primarily attributed to the Company experiencing the
benefits of downsizing loan operations during 1993. FDIC insurance premiums
declined $.2 million (9.2%) during 1993 when compared to 1992. This is due
to the receipt of a one time credit from the FDIC. Other operating expenses
increased $.2 million to $7.1 million in 1993 from $6.9 million in 1992. In
December 1990, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 106, "Employer's Accounting for Postretirement Benefits Other than
Pensions", which became effective during 1993. The effect on the Company's
financial position and results of operations has not been material.
INCOME TAXES. In February 1992, the FASB issued SFAS No. 109, "Accounting
for Income Taxes". SFAS No. 109 was adopted by the Company during the first
quarter of 1993. The effective tax rates on the income of the Company for
1993 and 1992 were 36.1% and 36.5%, respectively. The major differences
between the federal statutory rates of 35% and 34% for 1993 and 1992,
respectively, and the effective tax rates resulted from state income taxes
(net of federal benefit) and tax exempt interest income on state and
political subdivision securities.
EFFECTS OF INFLATION
Unlike industrial companies, virtually all of the assets and liabilities of
the Company are monetary in nature. As a result, interest rates have a more
significant impact on the Company's performance than do the effects of
general levels of inflation. Interest rates do not necessarily move in the
same direction or experience the same magnitude of change as goods and
services, since such prices are affected by inflation. In the current
economic environment, liquidity and interest rate adjustments are features of
the Company's assets and liabilities which are important to the maintenance
of acceptable performance levels. The Company attempts to maintain a balance
between monetary assets and monetary liabilities, over time, to offset these
potential effects. Based on the Company's existing loan portfolio, the
adoption of these statements are not expected to have a significant effect on
the Company's consolidated financial condition.
30
<PAGE>
IMPACT OF NEW ACCOUNTING STANDARDS
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan", was amended
in October 1994 by SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures". Both standards are effective for
fiscal years beginning after December 15, 1994.
INTEREST RATE SENSITIVITY
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 its interest rate is subject to
change or upon maturity. The consolidated interest rate sensitivity position
of the Company at December 31, 1994 reflects cumulative interest rate
sensitive assets compared to interest rate sensitive liabilities of 104.7%
and cumulative interest rate sensitive assets that reprice or mature within
one year compared to similarly sensitive liabilities of 3.1%.
Movements in general market interest rates are a key element in changes in
the net interest margin. During 1994, a period in which interest rates rose,
the Company's positive interest rate sensitivity gap resulted in an increase
in net interest income as assets repriced more quickly than liabilities.
During such a period, a negative 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, although the net interest margin does vary somewhat due to
management's response to increasing competition from other financial
institutions. As interest rates increased during 1994, the net interest
margin has done likewise.
31
<PAGE>
Listed below are the balances in the major categories of rate sensitive
assets and liabilities that are subject to repricing as of December 31, 1994
(dollars in thousands):
<TABLE>
<CAPTION>
Over
three
Three months to Over one
months twelve year to Over
or less months five years five years Total
--------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Rate sensitive assets:
Interest-bearing deposits in financial
institutions $14 $---- $---- $---- $14
Federal funds sold 1,895 ---- ---- ---- 1,895
Investment securities 22,848 53,774 101,132 48,253 226,007
Loans 256,303 389,948 57,858 11,603 715,712
--------- --------- ---------- ---------- --------
Total $281,060 $443,722 $158,990 $59,856 $943,628
--------- --------- ---------- ---------- --------
--------- --------- ---------- ---------- --------
Rate sensitive liabilities:
Money market savings $317,379 $---- $---- $---- $317,379
Now accounts 179,025 ---- ---- ---- 179,025
Time deposits:
Less than $100,000 44,006 109,585 124,799 ---- 278,390
$100,000 and over 24,025 8,227 15,440 ---- 47,692
FHLB advances 9,940 ---- ---- ---- 9,940
Nondeposit liabilities ---- 10 ---- ---- 10
--------- --------- ---------- ---------- --------
Total $574,375 $117,822 $140,239 $---- $832,436
--------- --------- ---------- ---------- --------
--------- --------- ---------- ---------- --------
Interest sensitivity gap ($293,315) $325,900 $18,751 $59,856 $----
Cumulative interest sensitivity gap (293,315) 32,585 51,336 111,192 111,192
Cumulative net interest-earning assets
as a percentage of net interest-
bearing liabilities 48.9% 104.7% 106.2% 113.4%
Cumulative interest sensitivity gap as a
percentage of total assets (28.2) 3.1 4.9 10.7
</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.
32
<PAGE>
[INSERT WSB LOGO]
33
<PAGE>
BOARDS OF DIRECTORS
WEST SUBURBAN BANCORP, INC.
Kevin J. Acker Chairman of the Board
John A. Clark President and CEO
James Bell President, Maple Investment & Development
Charles P. Howard Vice President, Howard Concrete
Peggy LoCicero Former Banker
WEST SUBURBAN BANK
Keith W. Acker President and Chairman of the Board
David Bell Certified Public Accountant
John A. Clark Executive Vice President
Richard Hill Lauber J & E Duff, Inc.
Peggy LoCicero Former Banker
WEST SUBURBAN BANK OF DOWNERS GROVE/LOMBARD
Craig R. Acker President and Chairman of the Board
Eileen V. Abbamonte Former Banker
Jeffrey Bell Treasurer, Lexington Health Care &
Retirement Communities
Duane G. Debs Vice President and Comptroller
Randall Patterson Senior Systems Analyst
George Hazdra Director Emeritus
Harry Kuhn Director Emeritus
WEST SUBURBAN BANK OF DARIEN
Alana S. Acker President and Chairman of the Board
F. Willis Caruso Attorney
Richard P. McCarthy Vice President, Macom Corporation
Thomas Patterson Contractor
Gregory M. Ruffolo Executive Vice President
WEST SUBURBAN BANK OF CAROL STREAM/STRATFORD SQUARE
Paul J. Lehman Chairman of the Board; President,
Macom Corporation
Kevin J. Acker President
Earl K. Harbaugh President, Ditch Witch of Illinois
Brian Howard President, Howard Concrete
Ronald Kuhn Contractor
Walter Myers President, Terrace Supply
John G. Williams Contractor
WEST SUBURBAN BANK OF AURORA, F.S.B.
John A. Clark Chairman of the Board and Executive
Vice President
Jacqueline R. Weigand President
Craig R. Acker President, West Suburban Bank of
Downers Grove/Lombard
Alejandro Benavides President, Pomona Valley Farms, Inc.
Michael P. Brosnahan Senior Vice President
Timothy P. Dineen Vice President, Loans
Robert W. Schulz Vice President and Treasurer,
Oliver Hoffman Corporation
Ralph Weber Director Emeritus
34
<PAGE>
OFFICERS
WEST SUBURBAN BANCORP, INC.
Kevin J. Acker Chairman of the Board
John A. Clark President and CEO
Duane G. Debs CFO, Secretary to the Board and Treasurer
Craig R. Acker Chief Operations Officer
David J. Mulkerin Chief Compliance Officer
George Ranstead Assistant Secretary to the Board and
Assistant Treasurer
Allison J. Triplett Auditor
WEST SUBURBAN BANK
Keith W. Acker President and Data Processing Manager
John A. Clark Executive Vice President
Michael P. Brosnahan Senior Vice President and CRA Officer
Ray Rynne Senior Vice President, Business Administration
Pamela N. Greening Vice President, Operations, Cashier and
Secretary to the Board
Craig R. Acker Vice President, Operations
Duane G. Debs Vice President and Comptroller
Steven A. Jennrich Vice President, Data Processing
John A. Machonga Vice President, Investments
George Ranstead Vice President and Assistant Comptroller
Allison J. Triplett Vice President and Auditor
Marcia K. Worobec Vice President, Operations
Gregory L. Young Vice President, Loans
Michael D. Abbatacola Financial Services
Jeffrey Austin Assistant Trust Officer
Jill Davenport Assistant Vice President
Mary K. DiMarco Compliance Coordinator
Marie V. Dunk Personnel/Marketing/Advertising Director
Patricia L. Fleischman Trust Officer
Patricia D. Haesly Loan Officer and Compliance Coordinator
Sharon Heuer Facility Manager - President Street and Wheaton
Marlene A. Johnson Facility Manager - Oakbrook Terrace
Debra H. Kolze Loan Operations Manager
Mark Mascarella Facility Manager - Villa Park
Gail Michalek Assistant Vice President
David J. Mulkerin Compliance Officer
Diane M. Norris Trust Officer
Gwen B. O'Loughlin Facility Manager - North Main (Lombard)
Michael Phipps Loan Officer
Helen G. Schmitt Assistant Vice President
Judith C. Tomasek Assistant Cashier
35
<PAGE>
WEST SUBURBAN BANK OF DOWNERS GROVE/LOMBARD
Craig R. Acker President
Ray Rynne Senior Vice President, Business Administration
Beverly J. Viscariello Vice President, Operations, Cashier and
Secretary to the Board
Michael P. Brosnahan Vice President and CRA Officer
John A. Clark Vice President, Loans
Duane G. Debs Vice President and Comptroller
John A. Machonga Vice President, Investments
David S. Orr Vice President, Loans
George Ranstead Vice President and Assistant Comptroller
Michael D. Abbatacola Financial Services
David J. Mulkerin Compliance Officer
Fannie Mae Pantaleon Loan Officer
Kay J. Piotrowski Facility Manager - Warrenville
Mary J. Silvestri Facility Manager - Downers Grove
Allison J. Triplett Auditor
Nelda D. Walters Facility Manager - South Main and
Compliance Coordinator
WEST SUBURBAN BANK OF DARIEN
Alana S. Acker President
Gregory M. Ruffolo Executive Vice President and Secretary to
the Board
Ray Rynne Senior Vice President, Business Administration
Rose Marie Little Vice President, Operations and Cashier
Michael P. Brosnahan Vice President and CRA Officer
John A. Clark Vice President, Loans
Duane G. Debs Vice President and Comptroller
John A. Machonga Vice President, Investments
George Ranstead Vice President and Assistant Comptroller
Michael D. Abbatacola Financial Services
Michelle M. Bozzi Assistant Vice President/Loan Officer
Kevin Denny Assistant Vice President
Kathleen Heckman Assistant Vice President
Terry L. Leitner Facility Manager - 75th Street (Darien)
Cynthia A. Meredith Loan Officer
David J. Mulkerin Compliance Officer
Kim Neitzel Facility Manager - Bolingbrook
Susan Nuestrom Assistant Vice President
Chris Pawlak Assistant Vice President
Penny S. Skogh Compliance Coordinator
Allison J. Triplett Auditor
36
<PAGE>
WEST SUBURBAN BANK OF CAROL STREAM/STRATFORD SQUARE
Kevin J. Acker President
Ray Rynne Senior Vice President, Business Administration
Margaret M. Zatarski Vice President, Operations, Cashier and
Secretary to the Board
Michael P. Brosnahan Vice President and CRA Officer
Stanley C. Celner, Jr. Vice President, Loans
John A. Clark Vice President, Loans
Duane G. Debs Vice President and Comptroller
John A. Machonga Vice President, Investments
George Ranstead Vice President and Assistant Comptroller
Michael D. Abbatacola Financial Services
Sharon Buck Facility Manager - St. Charles
Sharon A. Fonte Facility Manager - Glendale Heights
Linda M. Grube Facility Manager - Fair Oaks (Carol Stream)
Roseann Hamilton Facility Manager - Carol Stream
Donald E. Hayes Compliance Coordinator
David J. Mulkerin Compliance Officer
Pat Newton Facility Manager - Bartlett
Rob Pauling Loan Officer
Allison J. Triplett Auditor
WEST SUBURBAN BANK OF AURORA, F.S.B.
Jacqueline R. Weigand President
John A. Clark Executive Vice President
Michael P. Brosnahan Senior Vice President and CRA Officer
Ray Rynne Senior Vice President, Business Administration
Danielle A. Budig Vice President, Secretary to the Board and
Treasurer
Karin I. Choate Vice President, Loan Servicing
Duane G. Debs Vice President and Comptroller
Timothy P. Dineen Vice President, Loans
John A. Machonga Vice President, Investments
Michael Novak Vice President, Loans
George Ranstead Vice President and Assistant Comptroller
Michael D. Abbatacola Financial Services
Amy L. Andrews Facility Manager - Montgomery
David J. Mulkerin Compliance Officer
Cynthia Picton Facility Manager - Galena Blvd.
Joanne T. Tosch Assistant Vice President and Compliance
Coordinator
Allison J. Triplett Auditor
37
<PAGE>
WEST SUBURBAN BANCORP, INC.
711 S. Meyers Road,
Lombard, Illinois
WEST SUBURBAN BANK
/X/West Suburban Bank:
711 S. Meyers Rd., Lombard, IL 60148 - (708) 629-4200
/ /North Main Street Facility: 707 N. Main St.,
Lombard, IL 60148 - (708) 691-8558
/ /Villa Park Facility:
29 E. St. Charles Rd., Villa Park, IL 60181 - (708) 832-8775
/ /Oakbrook Terrace Facility:
17W754 22nd St., Oakbrook Terrace, IL 60181 - (708) 916-1195
/ /Metra Main Facility:
100 S. Main St., Lombard, IL 60148 - (708) 268-9010
/ /Wheaton Facility:
210 W. Wesley St., Wheaton, IL 60187 - (708) 665-8007
/ /President Street Facility:
879 Geneva Rd., Carol Stream, IL 60188 - (708) 752-1175
/ /Bolingbrook West Facility:
1104 W. Boughton Rd., Bolingbrook, IL 60440 - (708) 378-9680
/ /Danada Square Facility:
295 W. Loop Rd., Wheaton, IL 60187 - (708) 871-9890
WEST SUBURBAN BANK OF DOWNERS GROVE/LOMBARD
/X/West Suburban Bank of Downers Grove/Lombard:
2800 S. Finley Rd., Downers Grove, IL 60515 - (708) 495-3600
/ /S. Main Street Facility:
1122 S. Main St., Lombard, IL 60148 - (708) 495-3605
/ /Warrenville Facility:
3S041 Rte. 59, Warrenville, IL 60555 - (708) 393-6060
/ /Mr. Z's: 401 S. Main St., Lombard, IL 60148
WEST SUBURBAN BANK OF DARIEN
/X/West Suburban Bank of Darien:
8001 S. Cass Ave., Darien, IL 60561 - (708) 852-6900
/ /75th Street Facility:
1005 75th St., Darien, IL 60561 - (708) 852-9226
/ /Bolingbrook Facility:
672 E. Boughton Rd., Bolingbrook, IL 60440 - (708) 972-9550
WEST SUBURBAN BANK OF CAROL STREAM/STRATFORD SQUARE
/X/West Suburban Bank of Carol Stream/Stratford Square:
355 W. Army Trail Rd., Bloomingdale, IL 60108 - (708) 351-0600
/ /Carol Stream Facility:
401 N. Gary Ave., Carol Stream, IL 60188 - (708) 690-8700
/ /Fair Oaks Facility:
1380 Army Trail Rd., Carol Stream, IL 60188 - (708) 213-5920
/ /Glendale Heights Facility:
1657 Bloomingdale Rd., Glendale Heights, IL 60139 - (708) 690-8600
/ /Bartlett Facility:
1061 W. Stearns Rd., Bartlett, IL 60103 - (708) 830-5330
/ /St. Charles Facility:
315 S. Randall Rd., St. Charles, IL 60174 - (708) 377-6930
WEST SUBURBAN BANK OF AURORA, F.S.B.
/X/West Suburban Banking - Aurora, F.S.B.:
101 N. Lake St., Aurora, IL 60507 - (708) 844-5200
/ /Galena Facility:
2000 W. Galena Blvd., Aurora, IL 60507 - (708) 896-7000
/ /Montgomery Facility:
1830 Douglas Rd., Montgomery, IL 60538 - (708) 844-5600
WS 24 ATMs are available at all of the above banking locations.
VISA HEADQUARTERS, 701 S. MEYERS RD., LOMBARD, IL 60148 - (708) 629-4200
FINANCIAL CENTER, 717 S. MEYERS RD., LOMBARD, IL 60148 - (708) 629-4200
WHERE STRENGTH IS MATCHED BY SERVICE
38
<PAGE>
[INSERT MAP]
39
<PAGE>
ANNUAL REPORT ON FORM 10-K
A copy of West Suburban Bancorp, Inc.'s Annual Report on Form 10-K, filed
with the Securities and Exchange Commission, is available without charge by
writing:
Mr. John A. Clark, President and CEO
West Suburban Bancorp, Inc., 711 South Meyers Road, Lombard, Illinois 60148.
ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of West Suburban Bancorp, Inc. will be
held at West Suburban Bank, 711 South Meyers Road, Lombard, Illinois on
Wednesday, May 10, 1995 at 8:00 a.m. All shareholders are cordially invited
to attend.
STOCK TRANSFER AGENT AND REGISTRAR
Inquiries regarding stock transfer, registration, lost certificates or
changes of name and address should be directed to the stock transfer agent
and registrar by writing:
West Suburban Bank, 17W754 22nd St., Oakbrook Terrace, Illinois 60181.
COMMUNITY REINVESTMENT ACT
West Suburban Bancorp, Inc. adheres to a well-established policy of helping
to meet the credit needs of our local communities, consistent with safe and
sound lending practices, in accordance with the Community Reinvestment Act.
For additional information, contact Mr. Michael P. Brosnahan, Senior Vice
President and CRA Officer.
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two Prudential Plaza
180 North Stetson Avenue
Chicago, Illinois 60601
MEMBER FDIC
40
<PAGE>
Appendix
The map on page 39 of the Annual Report to Shareholders indicates the
location of the Company's facilities.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
SUBSIDIARY STATE OF INCORPORATION
---------- ----------------------
<S> <C>
West Suburban Bank Illinois
West Suburban Bank of Downers Grove/Lombard Illinois
West Suburban Bank of Darien Illinois
West Suburban Bank of Carol Stream/Stratford Square Illinois
West Suburban Bank of Aurora, F.S.B. Federally-chartered
</TABLE>
<PAGE>
BANSLEY AND KIENER, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
125 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606-4496
AREA CODE 312 263-2700
EXHIBIT 23.1
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Board of Directors and Shareholders
West Suburban Bancorp, Inc.
Lombard, Illinois
We have audited the accompanying consolidated balance sheet of West Suburban
Bancorp, Inc. and subsidiaries as of December 31, 1992, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for the year then ended. 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
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of West
Suburban Bancorp, Inc. and subsidiaries at December 31, 1992, and the results
of their operations and their cash flows for the year ended in conformity
with generally accepted accounting principles.
Certified Public Accountants
January 29, 1993
<PAGE>
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1994
[PERIOD-START] JAN-01-1994
[PERIOD-END] DEC-31-1994
[CASH] 48,134
[SECURITIES] 225,879
[RECEIVABLES] 726,752
[ALLOWANCES] 8,445
[INVENTORY] 0
[CURRENT-ASSETS] 724,781
[PP&E] 26,652
[DEPRECIATION] 2,426
[TOTAL-ASSETS] 1,041,495
[CURRENT-LIABILITIES] 692,198
[BONDS] 0
[COMMON] 3,457
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 94,514
[TOTAL-LIABILITY-AND-EQUITY] 1,041,495
[SALES] 0
[TOTAL-REVENUES] 78,797
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 2,216
[INTEREST-EXPENSE] 27,431
[INCOME-PRETAX] 21,977
[INCOME-TAX] 8,951
[INCOME-CONTINUING] 13,026
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 13,026
[EPS-PRIMARY] 30.12
[EPS-DILUTED] 30.12
</TABLE>
