<PAGE>
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING
RETAINED PURSUANT TO RULE 901(d) OF REGULATION S-T.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For transition period from __________ to __________
Commission File Number: 0 -17609
WEST SUBURBAN BANCORP, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
ILLINOIS 36-3452469
-------------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
711 SOUTH MEYERS ROAD, LOMBARD, ILLINOIS 60148
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 629-4200
--------------------------------------------------- --------------
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __X__ No _____
Indicate the number of shares outstanding of each of the
Issuer's classes of common stock as of the latest practicable
date.
1,000,000 shares of Common Stock, Class A, no par value, were
authorized and 347,015 shares were issued and outstanding as of
March 31, 1995.
1,000,000 shares of Common Stock, Class B, no par value, were
authorized and 85,480 shares were issued and outstanding as of
March 31, 1995.
<PAGE>
WEST SUBURBAN BANCORP, INC.
Form 10-Q Quarterly Report
Table of Contents
PART I
Page Number
Item 1. Financial Statements....................................... 1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 6
PART II
Item 1. Legal Proceedings.......................................... 12
Item 2. Changes in Securities...................................... 12
Item 3. Defaults Upon Senior Securities............................ 12
Item 4. Submission of Matters to a Vote of Security Holders........ 12
Item 5. Other Information.......................................... 12
Item 6. Exhibits and Reports on Form 8-K........................... 12
Form 10-Q Signature Page............................................ 13
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
---------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 33,141 $ 48,134
Interest-bearing deposits in financial 162 14
institutions
Federal funds sold -- 1,895
---------- ------------
Total cash and cash equivalents 33,303 50,043
Investment securities:
Available for sale (amortized cost of $118,471
in 1995 and $125,630 in 1994) 113,376 117,448
Held to maturity (fair value of $108,151 in
1995 and $102,443 in 1994) 110,411 108,559
Loans, less allowance for loan losses of $8,762
in 1995 and $8,445 in 1994 714,553 709,205
Premises and equipment, net 26,918 26,652
Other real estate 10,585 10,458
Accrued interest and other assets 17,582 19,130
---------- ------------
TOTAL ASSETS $1,026,728 $1,041,495
---------- ------------
---------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 91,452 $ 100,771
Interest-bearing 814,483 822,486
---------- ------------
Total deposits 905,935 923,257
Federal funds purchased 1,590 --
FHLB advances 5,700 9,940
Accrued interest and other liabilities 12,328 10,327
---------- ------------
TOTAL LIABILITIES 925,553 943,524
---------- ------------
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 62,723 61,378
Unrealized loss on securities available for (3,071) (4,930)
sale, net of taxes
---------- ------------
TOTAL SHAREHOLDERS' EQUITY 101,175 97,971
---------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,026,728 $1,041,495
---------- ------------
---------- ------------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
1
<PAGE>
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Dollars in Thousands, Except Per Share Data)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
INTEREST INCOME
Loans, including fees $15,597 $12,146
Investment securities:
U.S. government agencies and corporations 1,834 1,180
Corporate 1,204 2,126
States and political subdivisions 305 281
U.S. Treasury 198 122
Deposits in financial institutions 13 38
Federal funds sold 41 176
------- -------
Total interest income 19,192 16,069
------- -------
INTEREST EXPENSE
Deposits 8,004 5,874
Other 219 78
------- -------
Total interest expense 8,223 5,952
------- -------
Net interest income 10,969 10,117
PROVISION FOR LOAN LOSSES 463 587
------- -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 10,506 9,530
------- -------
OTHER INCOME
Service fees 857 824
Net realized gain (loss) on sale of investment
securities available for sale (46) 234
Trust fees 137 119
Net gain on sale of loans originated for sale 9 172
Loan servicing 232 222
Other 600 528
------- -------
Total other income 1,789 2,099
------- -------
OTHER EXPENSE
Salaries and employee benefits 3,277 3,052
Occupancy 589 549
Premises and equipment 635 578
FDIC insurance premiums 517 494
Professional fees 324 413
Other 1,980 1,773
------- -------
Total other expense 7,322 6,859
------- -------
INCOME BEFORE INCOME TAXES 4,973 4,770
Applicable income taxes 2,006 1,832
------- -------
NET INCOME $ 2,967 $ 2,938
------- -------
------- -------
EARNINGS PER SHARE $6.86 $6.79
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
2
<PAGE>
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,967 $ 2,938
------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 642 596
Provision for loan losses 463 587
Provision (benefit) for deferred income
taxes 1,058 (684)
Premium amortization of investment
securities, net 135 570
Net realized (gain) loss on sales of
investment securities available for sale 46 (234)
Gain on sale of loans held for sale (9) (172)
Sale of loans originated for sale 294 3,803
Loans originated for sale (996) (6,362)
(Gain) loss on sale of premises and equipment (13) 204
Gain on sale of other real estate -- (3)
Decrease in other assets 1,549 1,780
Increase in other liabilities 833 1,113
------- -------
Total adjustments 4,002 1,198
------- -------
Net cash provided by operating
activities 6,969 4,136
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investment securities
available for sale 1,992 42,113
Proceeds from maturities of investment securities 3,907 25,330
Purchases of investment securities (2,000) (101,296)
Proceeds from repayments of mortgage-backed
securities -- 2,038
Net (increase) decrease in loans (5,753) 33,724
Purchases of premises and equipment (909) (725)
Proceeds from sale of premises and equipment 13 4
Proceeds from sale of other real estate 527 1,384
------- -------
Net cash (used in) provided by investing
activities (2,223) 2,572
------- -------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
3
<PAGE>
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (CONTINUED)
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in demand deposits, NOW accounts
and savings accounts ($25,310) ($3,264)
Net increase in certificates of deposit 7,988 5,080
Net increase in federal funds purchased 1,590 --
Decrease in FHLB advances (4,240) (8,220)
Repayment of REMIC -- (3,541)
Cash dividends paid (1,514) (1,406)
-------- --------
Net cash used in financing activities (21,486) (11,351)
-------- --------
Net decrease in cash and cash equivalents (16,740) (4,643)
Cash and cash equivalents at beginning of period 50,043 44,497
-------- --------
Cash and cash equivalents at end of period $33,303 $39,854
-------- --------
-------- --------
Supplemental cash flow information:
Cash paid during the year for:
Interest on deposits and other borrowings $7,969 $5,973
Transfers from loans to other real estate $ 654 $ 307
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
4
<PAGE>
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The unaudited interim consolidated financial statements include
the accounts of the Company and its subsidiaries and are prepared
pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain information and footnote disclosures
normally accompanying the annual financial statements have been
omitted. The interim financial statements and notes should be
read in conjunction with the consolidated financial statements
and notes thereto included in the latest Annual Report on Form
10-K filed by West Suburban Bancorp, Inc. (the "Company"). The
consolidated financial statements include all adjustments (none
of which were other than normal recurring adjustments) which are,
in the opinion of management, necessary for a fair statement of
the results for the interim periods. The results for the interim
periods are not necessarily indicative of the results to be
expected for the entire fiscal year. Certain amounts reported in
prior periods have been reclassified to conform to the 1995
presentation.
NOTE 2 - SECURITIES
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." SFAS No. 115
requires that all debt and equity securities be classified as
held to maturity, trading or available for sale securities. The
Company does not invest in trading securities. Securities held
to maturity are classified as such only when the Company
determines it has both the ability and positive intent to hold
these securities to maturity. All other securities are
classified as available for sale. Held to maturity securities are
carried at amortized 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.
During the first quarter of 1995, the Company's unrealized loss
net of tax on securities available for sale declined $1.8 million
from $4.9 million at December 31, 1994 to $3.1 million at March
31, 1995.
NOTE 3 - OUTSTANDING LINES OF CREDIT AVAILABLE (IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
Home equity lines $ 97,731 $ 98,029
Commercial loans in process 114,189 135,018
Visa credit lines 48,702 48,443
--------- ------------
Total commitments $260,622 $281,490
--------- ------------
--------- ------------
</TABLE>
The Company had $4.5 million and $2.6 million of commitments to
originate residential mortgage loans as of March 31, 1995 and
December 31, 1994, respectively.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
BALANCE SHEET ANALYSIS
ASSET DISTRIBUTION. Aggregate holdings in investment securities
decreased $2.2 million (1.0%) to $223.8 million at March 31,
1995 from $226.0 million at December 31, 1994. The decrease in
the portfolio is primarily attributable to sales and maturities
of investment securities with not all of the proceeds from such
sales and maturities being reinvested in investment securities.
The Company continues to seek high quality securities for its
portfolio and monitors its portfolio in relation to economic
conditions and the interest rate environment on a daily basis.
Gross loans increased $5.7 million (.8%) during the first three
months of 1995. The increase in loans resulted from increased
commercial and residential mortgage loan demand due to the
stabilization of short term interest rates and decreases in long
term interest rates.
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 judgement, merit consideration in
estimating loan losses. Other factors considered by management
include the growth and the 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 $.4 million to $8.8 million
at March 31, 1995 from $8.4 million at December 31, 1994. This
represents an increase in the allowance for loan losses to total
loans outstanding to 1.21% at March 31, 1995 from 1.18% at
December 31, 1994. This increase was attributable in part to net
effect of provisions for loan losses (which increased the
allowance for loan losses) which were partially offset by net
charge-offs of $.2 million during the first quarter of 1995.
Nonperforming loans increased $1.0 million (21.1%) to $5.7
million at March 31, 1995 from $4.7 million at December 31,
1994. As of March 31, 1995 and December 31, 1994, total
nonperforming loans to net loans was .8% and .7%, respectively.
LIABILITY DISTRIBUTION. Total liabilities decreased $18.0
million (1.9%) to $925.5 million at March 31, 1995 from $943.5
million at December 31, 1994. This decrease was primarily due to
a decrease in the deposits and the repayment of $4.2 million of
FHLB advances.
Total deposits decreased $17.3 million (1.9%) to $905.9 million
at March 31, 1995 from $923.2 million at December 31, 1994.
Balances on demand and other noninterest-bearing and NOW accounts
decreased by $26.8 million (9.6%) from $279.8 million at December
31, 1994 to $253.0 million at March 31, 1995. While balances on
time deposits increased by $8.0 million (2.4%) from $326.1
million at December 31, 1994 to $334.1 million at March 31, 1995
as customers shifted their deposits into higher yielding
certificates of deposit. The proceeds from the increases in
certificates of deposit were used to meet loan demand along with
paying down FHLB advances.
Balances in the Company's major categories of deposits are
summarized in the following table (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31, Dollar Percent
1995 1994 Change Change
--------- ------------ --------- --------
<S> <C> <C> <C> <C>
Demand and other noninterest-bearing $ 91,452 $100,771 ($9,319) (9.2)%
NOW accounts 161,562 179,025 (17,463) (9.8)%
6
<PAGE>
Money market savings 318,851 317,379 1,472 0.5%
Time, $100,000 and over 41,067 47,693 (6,626) (13.9)%
Time, other 293,003 278,389 14,614 5.2%
--------- ------------ --------- --------
Total $905,935 $923,257 ($17,322) (1.9)%
--------- ------------ --------- --------
--------- ------------ --------- --------
</TABLE>
The Company will attempt to remain highly competitive in its
market by offering competitive rates of return on its savings and
certificate of deposit products. Although the Company promotes
its savings products when appropriate, management does not intend
to compromise its net interest margin to attract deposits.
SHAREHOLDERS' EQUITY. Shareholders' equity increased $3.2
million (3.3%) to $101.2 million at March 31, 1995 from $98.0
million at December 31, 1994. This increase was directly the
result of the net retention of 1995 earnings of $1.4 million and
the decline of unrealized loss on securities available for sale
of $1.8 million (net of taxes) from $4.9 million at December 31,
1994 to $3.1 million at March 31, 1995.
CAPITAL RESOURCES
The Company's capital ratios as well as those of its subsidiaries
as of March 31, 1995 are presented below. All such ratios are in
excess of the fully phased-in regulatory capital requirements
which call for a minimum total risk-based capital ratio of 8% for
the Company and each of its subsidiaries, and a minimum leverage
ratio of 3% for the most highly rated banks that do not expect
significant growth, (all other institutions are required to
maintain a minimum leverage capital ratio of 4% to 5% depending
on their particular circumstances and risk profiles) and a
minimum tangible capital ratio and core capital ratio for thrifts
of 1.5% and 3%, respectively. Bank holding companies and their
subsidiaries are generally expected to operate at or above the
minimum capital requirements and the ratios shown below are in
excess of regulator minimums and should allow the Company and its
subsidiaries to operate without capital adequacy concerns.
The following table sets forth selected regulatory capital ratios
of the Company and the bank subsidiaries at March 31, 1995:
<TABLE>
<CAPTION>
Tier 1 Total
Risk-Based Risk-Based Leverage
Institution Capital Capital Capital
- ----------- ---------- ---------- --------
<S> <C> <C> <C>
West Suburban Bancorp, Inc. 11.73% 12.78% 9.85%
West Suburban Bank 11.21% 12.32% 9.06%
West Suburban Bank of Downers 13.27% 14.32% 9.41%
Grove/Lombard
West Suburban Bank of Darien 11.26% 12.30% 8.43%
West Suburban Bank of Carol 11.14% 12.01% 8.57%
Stream/Stratford Square
</TABLE>
At March 31, 1995, WSB Aurora maintained a core capital ratio of
10.52%, a tangible capital ratio of 13.02% and a total risk-based
capital ratio of 14.14%.
7
<PAGE>
The Federal Deposit Insurance Corporation Improvement Act of 1931
("FDICIA") provided 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.
Management has been advised that as of March 31, 1995, 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. 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.
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 ,
federal funds sold and investment securities available for sale.
As of March 31, 1995 and December 31, 1994 liquid assets
represented 14.3% and 16.1% of total assets, respectively. The
Company experienced a decrease in its cash and due from banks of
$15.0 million (31.1%) from $48.1 million at December 31, 1994 to
$33.1 million at March 31, 1995 as a result of decreased balances
at correspondent banks.
RATE SENSITIVITY GAPS AND NET INTEREST MARGIN
The Company attempts to maintain a conservative posture with
regard to interest rate risk, actively managing its
asset/liability gap positions and constantly monitoring the
direction and magnitude of gaps and risk. The Company attempts
to moderate the effects of changes in interest rates by adjusting
its asset and liability mix to achieve desired relationships
between rate sensitive assets and rate sensitive liabilities.
Rate sensitive assets and liabilities are those instruments that
reprice within a given time period. An asset or liability
reprices when it is subject to change or upon its maturity. The
consolidated interest rate sensitivity position of the Company at
March 31, 1995, reflects cumulative interest rate sensitive
assets compared to interest rate sensitive liabilities of 107.4%
and cumulative interest rate sensitive assets that reprice or
mature within one year compared to similarly sensitive
liabilities of 4.9%.
Movements in general market interest rates are a key element in
changes in the net interest margin. During a period of rising
interest rates, a negative gap would tend to adversely affect net
interest income. Conversely, a positive gap would tend to
positively affect net interest income when assets reprice more
quickly than liabilities. 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
8
<PAGE>
net interest margin does vary somewhat due to management's
response to increasing competition from other financial
institutions.
Listed below are the balances in the major categories of rate
sensitive assets and liabilities that are subject to repricing as
of March 31, 1995 (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 $162 $ -- $ -- $ -- $ 162
Federal funds sold -- -- -- -- 0
Investment securities 18,582 55,006 106,632 43,566 223,786
Loans 250,609 410,430 456 60,489 721,984
------- ---------- ---------- ---------- --------
Total $269,353 $465,436 $107,088 $104,055 $945,932
------- ---------- ---------- ---------- --------
------- ---------- ---------- ---------- --------
Rate sensitive liabilities:
Money market savings $318,850 $ -- $ -- $ -- $318,850
Now accounts 161,562 -- -- -- 161,562
Time deposits:
Less than $100,000 68,851 100,308 123,843 -- 293,002
$100,000 and over 19,623 7,959 -- 13,486 41,068
Nondeposit liabilities 7,290 -- -- -- 7,290
------- ---------- ---------- ---------- --------
Total $576,176 $108,267 $123,843 13,486 $821,772
------- ---------- ---------- ---------- --------
------- ---------- ---------- ---------- --------
Interest sensitivity gap ($306,823 $357,169 ($16,755) $90,568 $ --
Cumulative interest sensitivity gap ($306,823) $50,346 $33,591 $124,160 $124,160
Cumulative net interest-earning assets
as a percentage of net interest-bearing
liabilities 46.7% 107.4 104.2 115.1
Cumulative interest sensitivity gap as a
percentage of total assets -29.9% 4.9% 3.3% 12.1%
</TABLE>
The above table does not necessarily indicate the future impact
of general interest rate movements on the Company's net interest
income because the repricing of certain assets and liabilities is
discretionary and is subject to competitive and other pressures.
As a result, assets and liabilities indicated as repricing within
the same period may, in fact, reprice at different times and at
different rate levels. Assets and liabilities are reported in the
earliest time frame in which maturity or repricing may occur. The
percentage indicated for the cumulative net interest-earning
assets as a percentage of net interest-bearing liabilities is
well within the Company's target range of acceptable gap values
for the three month to twelve month time frame.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1995
AND 1994
NET INCOME. The Company's net income for the three months ended
March 31, 1995 and 1994 was approximately $3.0 million and $2.9
million, respectively. The Company's net interest margin
increased $.9 million (8.4%) to $11.0 million at March 31, 1995
from $10.1 million at March 31, 1994. This increase was primarily
due to an increase in the average yield and balances of the loan
portfolio, which has been brought on by a more stable interest
rate environment along with management's increased efforts to
generate new business.
9
<PAGE>
INTEREST INCOME. Total interest income, on a tax equivalent
basis, increased $3.1 million for the three months ended March
31, 1995 compared to the same period in 1994. This increase
resulted from an increase of $.5 million that resulted from
volume increases and $2.6 million that was due to rate increases.
The largest component of this increase was interest on loans
which increased $3.4 million. Of this increase, $2.3 million was
the result of higher interest rates and $1.1 million was due to
higher balances. This increase was in part, offset by a decrease
in average balances and yields on interest-bearing deposits in
financial institutions, federal funds sold, and investment
securities.
INTEREST EXPENSE. Total interest expense increased $2.3 million
for the three months ended March 31, 1995 compared to the same
period during 1994. The largest component of this increase was
interest on deposits which increased $2.1 million for the first
quarter of 1995 compared to the first quarter of 1994. Of this
increase $1.8 million was due to higher interest rates while $.3
million was due to higher average balances.
The following table reflects the extent to which changes in the
volume of interest-earning assets and interest-bearing
liabilities and changes in interest rates have affected net
interest income for the three-month period ended March 31, 1995
as compared to the same period in 1994 (dollars in thousands):
<TABLE>
<CAPTION>
CHANGE DUE TO:
INTEREST INCOME VOLUME RATE TOTAL
------ ----- -----
<S> <C> <C> <C>
Interest-bearing deposits in financial
institutions ($15) ($10) ($25)
Federal funds sold (284) 149 (135)
Investment securities (389) 232 (157)
Loans 1,163 2,282 3,445
------ ----- -----
Total interest income 475 2,653 3,128
------ ----- -----
INTEREST EXPENSE
Interest-bearing deposits 301 1,829 2,130
Borrowed funds 134 7 141
------ ----- -----
Total interest expense 435 1,836 2,271
------ ----- -----
Net interest income $ 40 $ 817 $ 857
------ ----- -----
------ ----- -----
</TABLE>
PROVISION FOR LOAN LOSSES. The Company's provision for loan
losses decreased $.1 million (21.1%) for the three months ended
March 31, 1995 to $.5 million from $.6 million compared to 1994
as a result of the Company's analysis of the overall credit risk
in its loan portfolio. The Company charged-off $.3 million while
recovering $.1 million during the three months ended March 31,
1995 compared to charge-offs of $.4 million and recoveries of $.1
million during the same period in 1994.
OTHER INCOME. Total other income decreased $.3 million (14.8%)
for the three months ended March 31, 1995 when compared to the
same period in 1994. This decrease was primarily due to reduced
gains on the sale of mortgage loans in the secondary market of
approximately $.2 million and a net decline in income from
securities sold of $.3 million.
10
<PAGE>
OTHER EXPENSE. Total other expense increased $.4 million for
the three months ended March 31, 1995 to $7.3 million compared
to $6.9 million in 1994. Salary and employee benefits increased
$.2 million due to increased salary and benefits expenses.
Other operating expenses increased $.2 million during this
period. This increase was principally due to increased
maintenance costs on computer equipment along with increased
costs related to property held as Other Real Estate.
Professional fees decreased $.1 million for the three months
ended March 31, 1995 when compared to the same period during
1994.
INCOME TAX EXPENSE. Income tax expense increased $.2 million
(9.5%) for the three months ended March 31, 1995 to $2.0 million
from $1.8 million compared to the same period in 1994 due to
higher income before taxes thereby increasing the effective tax
rate of the Company to 40.3% from 38.4% for the three month
period ending March 31, 1995 and March 31, 1994, respectively.
IMPACT OF NEW ACCOUNTING STANDARDS
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 were
adopted as of January 1, 1995. Neither standard has had a
material impact on the Company.
OTHER CONSIDERATIONS
Earnings of bank and thrift holding companies and their
subsidiaries are affected by general economic conditions and also
by the fiscal and monetary policies of federal regulatory
agencies, including the Board of Governors of the Federal Reserve
System. Such policies have affected the operating results of all
commercial banks and thrifts in the past and are expected to do
so in the future. The Company cannot accurately predict the
nature or the extent of any effects which fiscal or monetary
policies may have on its subsidiaries' business and earnings.
The Internal Revenue Service (the "IRS") is currently examining
the income tax returns of WSB Aurora for 1988, 1989 and 1990.
The IRS has proposed certain adjustments to the income tax
returns of WSB Aurora for 1988, 1989 and 1990. The periods
under examination are prior to the acquisition of WSB Aurora by
the Company. The Company continues to contest the adjustments
proposed by the IRS.
11
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Company or any of its subsidiaries is a party other than ordinary
routine litigation incidental to their respective businesses.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
27. Financial Data Schedule
B. Reports on Form 8-K - The Company did not file a report on
Form 8-K during the three months ended March 31, 1995.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
WEST SUBURBAN BANCORP, INC.
(Registrant)
Date: May 12, 1995
/s/ KEVIN J. ACKER
---------------------------
KEVIN J. ACKER
CHAIRMAN OF THE BOARD
/s/ DUANE G. DEBS
---------------------------
DUANE G. DEBS
CHIEF ACCOUNTING OFFICER
13
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> $33,141
<SECURITIES> 223,787
<RECEIVABLES> 731,444
<ALLOWANCES> 8,761
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<PP&E> 26,918
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<TOTAL-ASSETS> 1,026,728
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0
0
<OTHER-SE> 97,718
<TOTAL-LIABILITY-AND-EQUITY> 1,026,728
<SALES> 0
<TOTAL-REVENUES> 20,981
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