<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, 1995
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:
- -----------------------------------------------------------
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 28 of 89 total sequentially numbered
pages.
<PAGE>
The aggregate market value of voting common stock of Registrant held by
non-affiliates as of December 31, 1995 was $68,516,608 (1). At December 31,
1995, 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, 1995 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 8, 1996 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 March 14, 1996, 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.
1995 Form 10-K Annual Report
Table of Contents
PART I
Sequential
Page Number
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . .21
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . .21
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . . . .22
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . .22
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . .23
Item 8. Financial Statements and Supplementary Data. . . . . . . . . . . . .23
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Matters. . . . . . . . . . . . . . . . . . . . . . . 23
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . 24
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 24
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . 24
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . 25
Form 10-K Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . .27
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 36 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. During 1995, the Subsidiaries began to offer their customers a debit
card called the West Suburban Bank Check Card. The West Suburban Bank Check Card
allows customers to make purchases with funds from their checking accounts
without writing checks.
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.
4
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The following table sets forth financial and other information concerning the
Subsidiaries as of December 31, 1995:
SUBSIDIARIES OF WEST SUBURBAN BANCORP, INC. (1)
(Dollars in thousands)
<TABLE>
<CAPTION>
Return on Average
Name of Subsidiary Share- --------------------
(Year Formed/Year Number of Total holder's Net
Affiliated With the Parent) Locations (2) Assets Equity Income Assests Equity
- --------------------------- --------------- --------- ---------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
West Suburban Bank
(1962/1988) 29 $425,016 $35,821 $5,112 1.3% 14.9%
West Suburban Bank of
Downers Grove/
Lombard
(1972/1988) 29 151,838 14,709 1,951 1.4% 14.2%
West Suburban Bank of
Darien
(1973/1988) 29 229,062 19,354 2,907 1.3% 15.9%
West Suburban Bank
of Carol Stream/
Stratford Square
(1975/1988) 29 205,370 15,215 2,269 1.3% 15.9%
West Suburban Bank
of Aurora, F.S.B.
(1926/1990) 3 152,163 16,392 1,426 1.0% 8.9%
</TABLE>
- ----------------
(1) The data presented in this table is not intended to present the Company's
consolidated financial results for 1995. 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.
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 646 persons (505 full time equivalent employees) on
December 31, 1995. The Company believes that its relations with its employees
are good.
5
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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, the Illinois Department of Revenue 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 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 August 8, 1995, the FDIC amended its regulations to change the range of
deposit insurance assessments charged to members of the Bank Insurance Fund (the
"BIF"), such as the Bank Subsidiaries, from the then-prevailing range of .23% to
.31% of deposits, to a range of .04% to .31% of deposits. Additionally, because
the change in BIF-assessments was applied retroactively to June 1, 1995, BIF-
member institutions, including the Bank Subsidiaries, received a refund of the
difference between the amount of assessments previously paid at the higher
assessment rates for the period from June 30, 1995, and the amount that would
have been paid for that period at the new rates. In the case of the Bank
Subsidiaries, this refund totaled $495,276. The FDIC did not, however, change
the assessment rates charged to members of the Savings Association Insurance
Fund (the "SAIF"), such as WSB Aurora, and SAIF-insured institutions continue to
pay assessments ranging from .23% to .31% of deposits. As a result of the change
in the assessment rates charged to BIF-member institutions, WSB Aurora currently
pays significantly higher deposit insurance assessments as a member of the SAIF
than members of the BIF.
The difference between the deposit insurance assessments paid by BIF-member
institutions and those paid by SAIF-member institutions will increase further in
calendar year 1996. On November 14, 1995, the FDIC reduced the deposit insurance
assessments for BIF-member institutions by four basis points. As a result, the
range of BIF assessments for the semi-annual assessment period commencing
January 1, 1996 will be between 0% and .27% of deposits. BIF-member institutions
which qualify for the 0% assessment category will, however, still have to pay
the $1,000 minimum semi-annual assessment required by federal statute.
The FDIC changed the range for BIF-member deposit insurance assessments to their
current levels because the ratio of the insurance reserves of the BIF to total
BIF-insured deposits exceeds the statutorily designated reserve ratio of 1.25%.
Because the SAIF does not meet this designated reserve ratio, the FDIC is
prohibited by federal law from reducing the deposit insurance assessments
charged to SAIF-member institutions to the same levels currently charged to BIF-
member institutions. Legislative proposals pending before the Congress would
recapitalize the SAIF to the designated reserve ratio by imposing a special
6
<PAGE>
assessment against SAIF-insured institutions, payable in a single installment,
sufficient in the aggregate to increase the ratio of the insurance reserves of
the SAIF to total SAIF-insured deposits to 1.25%. Based upon the information
currently available to the Company with respect to the manner in which any such
special assessment would be calculated under the pending legislation, the
Company estimates that the imposition of a special assessment under the pending
legislation would result in a one-time charge to WSB Aurora of approximately
$1.0 million. At such time as the SAIF meets the designated reserve ratio of
1.25%, the assessment rates charged SAIF-member institutions could be reduced to
levels consistent with those charged to BIF-member institutions. Legislation has
also been introduced in the Congress that would, among other things, require
federal thrift institutions to convert to state or national banks and merge the
BIF and the SAIF into a single deposit insurance fund administered by the FDIC.
At this time, it is not possible to predict whether, or in what form, any such
legislation will be adopted or the impact, if any, such legislation if adopted
would have on the Company, the Bank Subsidiaries or WSB Aurora.
The Company
GENERAL. The Company, as the controlling 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.
Prior to September 29, 1995, the BHC Act prohibited the FRB from approving 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 to be acquired is
located specifically authorized such an acquisition. Pursuant to amendments to
the BHC Act which took effect September 29, 1995, the FRB may now allow a bank
holding company to acquire banks located in any state of the United States
without regard to geographic restrictions or reciprocity requirements imposed by
state law, but subject to certain other acceptable conditions, if any, imposed
by that state that apply to all holding companies, including, for example,
limitations on the aggregate amount of deposits that may be held by a holding
company and all of its insured depository institutions.
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, mortgage banking and mortgage brokerage. The BHC
Act does not place territorial restrictions on the activities of non-bank
subsidiaries of bank holding companies.
7
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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 law also prohibits the 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 the 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
shareholders' 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, 1995, the Company had regulatory capital in excess of the
FRB's minimum requirements, with a Tier 1 risk-based capital ratio of 11.92%, a
total risk-based capital ratio of 12.90% and a leverage ratio of 9.72%.
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 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.
8
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The Subsidiaries
GENERAL. The Bank Subsidiaries are Illinois-chartered banks, the deposit
accounts of which are insured by 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 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.
The amount each FDIC-insured institution pays for deposit insurance coverage is
determined in accordance with a risk-based assessment system under which all
insured depository institutions are placed into one of nine categories and
assessed insurance premiums 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. For the semi-annual
assessment period ended December 31, 1995, BIF assessments ranged from .04% to
.31% of deposits, while SAIF assessments ranged from .23% to .31% of deposits.
The premiums currently paid by WSB Aurora for membership in the SAIF are
substantially higher than the premiums currently paid by the Bank Subsidiaries
for membership in the BIF. See "Recent Regulatory Developments." Risk
classification of all insured institutions is made by the FDIC for each semi-
annual assessment period.
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) 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 may 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.
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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, on August 2, 1995, the FDIC published amendments to its risk-based
capital standards designed to take into account IRR exposure. The amendments
provide that a bank's exposure to declines in the economic value of its capital
due to changes in interest rates will be among the factors considered by the
FDIC in evaluating a bank's capital adequacy. Although the IRR amendments do not
establish a system for measuring IRR exposure, concurrently with the adoption of
the amendments, the FDIC, together with the FRB and the Office of the
Comptroller of the Currency, issued a proposed joint policy statement setting
out a framework that would be used to measure the IRR exposure of individual
banks. The proposed policy statement 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 200 basis point changes in interest
rates. The level of IRR exposure reflected by this measurement system, would
then be considered by the agencies in assessing a bank's capital adequacy.
Although it is not presently possible to predict whether, or in what form, the
proposed policy statement will be adopted, management does not anticipate that
the adoption of a policy statement substantially in the form proposed would have
a material adverse effect on the ability of the Bank Subsidiaries to maintain
compliance with applicable capital requirements.
During the year ended December 31, 1995, 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. As of
December 31, 1995, 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, 1995:
<TABLE>
<CAPTION>
Tier 1 Total
Risk-Based Risk-Based Leverage
Institution Capital Capital Ratio
- ----------- ------- ------- -----
<S> <C> <C> <C>
West Suburban Bank 10.26% 11.24% 8.43%
West Suburban Bank of Downers Grove/Lombard 13.45 14.61 9.69
West Suburban Bank of Darien 11.10 12.11 8.45
West Suburban Bank of Carol Stream/Stratford Square 11.12 11.97 7.41
</TABLE>
At December 31, 1995, WSB Aurora maintained a core capital ratio of 10.77%, a
tangible capital ratio of 12.91% and a total risk-based capital ratio of 13.93%.
Federal law 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
10
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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, 1995, WSB Aurora was a Tier 1 Institution.
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, 1995. As of December
31, 1995, approximately $20.7 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 the Subsidiaries, on investments in the stock or other
securities of the Company and the Subsidiaries and the acceptance of the stock
or other securities of the Company or the 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 the 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 the 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 July 10, 1995, the federal banking
regulators, including the FDIC and the OTS, published final guidelines
establishing operational and managerial standards to promote the safety and
soundness of federally insured depository institutions. The guidelines, which
took effect on August 9, 1995, 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 guidelines prescribe the goals to be achieved in each
area, and each institution will be responsible for establishing its own
procedures to achieve those goals. If an institution fails to comply with any of
the standards set forth in the guidelines, the institution's primary federal
regulator may require the institution to submit a plan for achieving and
maintaining compliance. The preamble to the guidelines states that the agencies
expect to require a compliance plan from any institution whose failure to meet
one or more of the standards is of such severity that it could threaten the safe
and sound operation of the institution. Failure to submit an acceptable
compliance plan, or failure to adhere to a compliance plan that has been
accepted by the appropriate regulator, would constitute grounds for further
enforcement action. The federal banking agencies have also published for comment
proposed asset quality and earnings standards which, if adopted, would be added
to the safety and soundness guidelines. This proposal, like the final
guidelines, would establish the goals to be achieved with respect to asset
quality and earnings,
11
<PAGE>
and each institution would be responsible for establishing its own procedures to
meet such goals.
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.
Effective June 1, 1997 (or earlier if expressly authorized by applicable state
law), the Riegle-Neal Interstate Banking and Branch Efficiency Act of 1994 (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. Illinois has enacted legislation
permitting interstate bank mergers beginning on June 1, 1997. Federal savings
associations, such as WSB Aurora, currently have nationwide interstate branching
authority under the HOLA and OTS regulations.
STATE BANK ACTIVITIES. Under federal law, 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. Federal law, 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
federal law. These restrictions have not had, and are not currently expected to
have, a material impact on the operations of the Bank Subsidiaries.
QUALIFIED THRIFT LENDER TEST. Under the HOLA, as implemented by OTS regulations,
WSB Aurora is required to satisfy a qualified thrift lender ("QTL") test. In
order to meet the current QTL test 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, 1995, 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 (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, 1995,
WSB Aurora was in compliance with OTS liquidity requirements, with an overall
liquidity ratio of 5.54% and a short-term liquidity ratio of 4.45%.
12
<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:
<TABLE>
<CAPTION>
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
- ---------------------------------------------------------------------- -----------------------------------------------------
<S> <C>
Kevin J. Acker (46) Director and President of West Suburban Bank of
Chairman of the Board (1993) and Vice Carol Stream/Stratford Square since 1982.
President (1986)
John A. Clark (47) Director and Executive Vice President of West Suburban
President and Chief Executive Officer (1986) Bank since 1984, Vice 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, 1990 to January, 1992 and Director and
Executive Vice President of WSB Aurora since January,
1992.
Keith W. Acker (46) Director, President and Chairman of the Board of
Chief Operating Officer (1996) West Suburban Bank since 1986.
Duane G. Debs (39) Vice President and Comptroller of the Bank
Chief Financial Officer, Vice President, Subsidiaries since 1987 and of WSB Aurora since July,
Secretary and Treasurer (1993) 1990. Director of West Suburban Bank of Downers
Grove/Lombard since January, 1993.
</TABLE>
13
<PAGE>
STATISTICAL DATA
The statistical data required by Securities and Exchange Act of 1934, as amended
(the "1934 Act") Industry Guide 3, "Statistical Disclosure By Bank Holding
Companies," has been incorporated by reference from the Company's 1995 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 1995 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 1995 Annual Report to Shareholders. All
dollar amounts of the statistical data included below are expressed in
thousands.
Investment Securities
The following table sets forth by category the amortized cost of securities at
December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Available For Sale:
Corporate $69,731 $45,623 $139,555
U.S. Government agencies and corporations 36,119 51,638 44,129
U.S. Treasury 16,291 16,427 ---
States and political subdivisions 1,157 --- ---
Equity securities 10,841 11,942 5,350
---------- ---------- ----------
Total investment securities available for sale 134,139 125,630 189,034
---------- ---------- ----------
Held To Maturity:
Corporate --- 30,645 ---
U.S. Government agencies and corporations 83,237 55,783 ---
States and political subdivisions 32,800 22,131 19,119
---------- ---------- ----------
Total investment securities held to maturity 116,037 108,559 19,119
---------- ---------- ----------
Total investment securities $250,176 $234,189 $208,153
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
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, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
U.S. Government
agencies and States and Political
Corporate corporations U.S. Treasury Subdivisions
------------------- ------------------- ------------------- -------------------
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>
Within one year $9,729 6.49% $ --- ---% $ --- ---% $ --- ---%
After 1 year but within 5 55,889 6.59 22,347 6.20 16,291 4.88 100 5.09
After 5 years but within 10 1,721 6.50 13,662 6.16 --- --- 1,057 5.34
After 10 years 2,392 8.56 110 --- --- --- --- ---
--------- -------- --------- -------- --------- -------- --------- --------
Total $69,731 6.64% $36,119 6.18% $16,291 4.88% $1,157 5.32%
--------- -------- --------- -------- --------- -------- --------- --------
--------- -------- --------- -------- --------- -------- --------- --------
</TABLE>
14
<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,
1995. Yields on tax-exempt securities represent actual coupon yields (dollars in
thousands):
<TABLE>
<CAPTION>
U.S. Government
agencies and States and political
corporations subdivisions
----------------- --------------------
Weighted Weighted
Amortized Average Amortized Average
Cost Yield Cost Yield
-------- -------- --------- ------
<S> <C> <C> <C> <C>
Within one year $18,709 6.24% $ 1,272 4.40%
After 1 year but within 5 30,165 6.20 7,720 4.59
After 5 years but within 10 34,363 5.69 11,341 4.87
After 10 years -- -- 12,467 5.69
Total $83,237 6.00% $32,800 5.07%
</TABLE>
Loan Portfolio
The following table sets forth the major loan categories at December 31 (dollars
in thousands):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Commercial $200,986 $156,896 $177,054 $144,581 $148,451
Installment 37,986 33,542 33,714 43,700 54,955
Real estate:
Mortgage 302,062 305,010 288,683 272,199 273,374
Home equity 120,802 120,373 115,910 121,918 119,009
Construction 81,787 72,990 47,442 42,321 55,015
Held for sale 1,523 449 4,543 3,527 4,551
VISA-credit card 19,034 21,342 22,601 27,138 32,500
Other 5,407 7,048 11,479 4,647 7,447
-------- -------- -------- -------- --------
Total loans 769,587 717,650 701,426 660,031 695,302
Less:
Allowance for loan losses 8,900 8,445 7,125 8,024 6,489
-------- -------- -------- -------- --------
Loans, net $760,687 $709,205 $694,301 $652,007 $688,813
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
The following table sets forth the maturity and interest rate sensitivity of
selected loan categories at December 31, 1995 (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 $149,639 $ -- $51,347 $200,986
Real estate-construction 81,787 -- -- 81,787
-------- ------- ------- --------
Total $231,426 $ -- $51,347 $282,773
-------- ------- ------- --------
-------- ------- ------- --------
Variable rate $ -- $ -- $ --
Fixed rate -- 51,347 51,347
------- ------- --------
Total $ -- $51,347 $51,347
------- ------- -------
------- ------- -------
</TABLE>
15
<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>
1995 1994 1993 1992 1991
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $488 $279 $3,234 $8,468 $3,576
Restructured loans ---- ---- 3,234 6,000 ----
Accruing loans past due over 90 days 11,405 4,448 3,958 5,295 5,416
------- ------- ------- ------- --------
Total nonperforming loans 11,893 4,727 10,426 19,763 8,992
Other real estate 8,317 10,458 9,954 4,584 5,339
------- ------- ------- ------- --------
Total nonperforming assets $20,210 $15,185 $20,380 $24,347 $14,331
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Ratio of nonperforming loans to
net loans 1.6% .7% 1.5% 3.0% 1.3%
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Ratio of nonperforming assets to
total assets 1.8% 1.5% 2.0% 2.4% 1.5%
------- ------- ------- ------- --------
------- ------- ------- ------- --------
</TABLE>
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 approximately fifty-three
thousand dollars for the year ended December 31, 1995 and no interest was
recorded in operations for the year ended December 31, 1995.
As of December 31, 1995, 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, which are not nonaccrual and
not nonperforming, with an aggregate principal amount of $4.9 million.
Accordingly, management may be required to categorize some or all of these loans
as nonperforming 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 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.
16
<PAGE>
The following table sets forth the activity in the allowance for loan losses for
the years ended and at December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Allowance for loan losses at beginning of
period $8,445 $7,125 $8,024 $6,489 $5,197
Loans charged-off:
Commercial 914 302 5,862 1,697 1,192
Installment 47 162 245 516 1,120
Real estate mortgages 311 463 318 33 48
Home equity 46 7 21 65 38
VISA - credit card 404 356 531 1,110 964
Other 7 2 50 14 28
----- ----- ----- ----- -----
Total loans charged-off 1,729 1,292 7,027 3,435 3,390
Loan recoveries:
Commercial 100 66 274 236 289
Installment 56 98 186 446 333
Real estate mortgages 8 5 8 -- 5
Home equity -- -- -- -- 38
VISA - credit card 169 227 318 365 347
Other 1 -- 3 18 6
----- ----- ----- ----- -----
Total loan recoveries 334 396 789 1,065 1,018
----- ----- ----- ----- -----
Net loans charged-off 1,395 896 6,238 2,370 2,372
Provision for loan losses 1,850 2,216 5,339 3,905 3,664
----- ----- ----- ----- -----
Allowance for loan losses at end of period $8,900 $8,445 $7,125 $8,024 $6,489
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Allowance for loan losses to total loans 1.16% 1.18% 1.02% 1.22% .93%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Net chargeoffs to average total loans .19% .13% .96% .35% .34%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
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>
1995 1994 1993 1992 1991
---------------- --------------- --------------- ---------------- ----------------
Amount % Amount % Amount % Amount % Amount %
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial $4,403 36.7% $3,714 32.0% $3,312 24.8% $4,406 21.9% $3,410 21.3%
Installment and other 385 5.6 331 5.7 369 6.5 492 7.3 495 9.1
Real estate 1,877 39.4 576 42.5 1,273 48.9 1,113 48.2 607 47.8
Home equity 302 15.7 301 16.8 290 16.6 305 18.5 342 17.1
VISA - credit card 523 2.6 664 3.0 626 3.2 676 4.1 390 4.7
Unallocated 1,410 -- 2,859 -- 1,255 -- 1,032 -- 1,245 --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total $8,900 100.0% $8,445 100.0% $7,125 100.0% $8,024 100.0% $6,489 100.0%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
</TABLE>
17
<PAGE>
Deposits
The following table sets forth by category average daily deposits and rates for
the years ended December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
----------------- ----------------- -----------------
Average Average Average
Balance Rate Balance Rate Balance Rate
-------- ---- -------- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Demand and other noninterest-
bearing $100,269 --% $96,428 --% $91,529 --%
Money-market savings and NOW
deposits 498,191 3.4 486,863 2.6 469,641 2.3
Time deposits:
Less than $100,000 308,039 5.6 275,693 4.6 282,884 4.8
$100,000 and over 49,427 5.8 37,849 4.7 26,821 5.0
-------- ---- -------- ---- -------- ----
Total $955,926 3.9% $896,833 3.0% $870,875 3.0%
-------- ---- -------- ---- -------- ----
-------- ---- -------- ---- -------- ----
</TABLE>
The following table sets forth by maturity time deposits $100 and over at
December 31 (dollars in thousands):
1995
-------
Within Three months $42,605
After 3 months but within 12 months 12,673
After 1 year but within 5 years --
After 5 years 12,785
-------
Total $68,063
-------
-------
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>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Return on average total assets 1.27% 1.29% 1.20%
Return on average shareholders' equity 13.03 13.29 13.25
Cash dividends declared to net income 47.97 45.65 43.50
Average shareholders' equity to average total assets 9.71 9.67 9.03
</TABLE>
18
<PAGE>
ITEM 2. PROPERTIES
The Company and the Subsidiaries occupy a total of approximately 219,000 square
feet in 32 locations. The Company's principal offices are located in
approximately 32,500 square feet of office space at 711 South Meyers Road,
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:
<TABLE>
<CAPTION>
Location of Approximate
Name of Subsidiary Facilities Square Feet Status
- ------------------ ---------- ----------- ------
<S> <C> <C> <C>
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
2000
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 1998
West Suburban Bank 210 W. Wesley St. 700 Lease
Wheaton, IL expires
1996
West Suburban Bank 879 Geneva Rd. 3,550 Lease
Carol Stream, IL expires
2003
West Suburban Bank 6400 S. Cass Ave. 3,090 Lease
Westmont, IL expires
2000
19
<PAGE>
<CAPTION>
Location of Approximate
Name of Subsidiary Facilities Square Feet Status
- ------------------ ---------- ----------- ------
<S> <C> <C> <C>
West Suburban Bank 221 S. West St. 800 Owned
Wheaton, IL
West Suburban Bank 1104 W. Boughton Rd. 4,500 Owned
Bolingbrook, IL
West Suburban Bank 295 W. Loop Rd. 4,500 Owned
Wheaton, IL
West Suburban Bank 2800 S. Finley Rd. 10,700 Owned
of Downers Grove/ Downers Grove, IL
Lombard
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 Month
of Downers Grove/ 2400 S. Finley Rd. to month
Lombard Lombard, IL
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
20
<PAGE>
<CAPTION>
Location of Approximate
Name of Subsidiary Facilities Square Feet Status
- ------------------ ---------- ----------- ------
<S> <C> <C> <C>
West Suburban Bank 1380 Army Trail Rd. 2,300 Lease
of Carol Stream/ Carol Stream, IL expires
Stratford Square 2000
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
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
</TABLE>
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.
21
<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>
1995 4th $254.73 $3.75
3rd 246.47 3.75
2nd 242.69 3.75
1st 237.68 3.75
1994 4th $226.53 $3.50
3rd 227.93 3.50
2nd 225.32 3.50
1st 225.59 3.25
</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 the Company's common stock have
been infrequent. As of March 15, 1996, the Company had 347,015 shares of Class A
Common Stock outstanding and approximately 943 shareholders of record, and had
85,480 shares of Class B Common Stock outstanding and approximately 236
shareholders of record. Management is aware of approximately 28 transactions
during 1995 involving the sale of approximately 973 shares of Class A Common
Stock and approximately 3 transactions during 1995 involving the sale of
approximately 108 shares of Class B Common Stock. The average sale price in such
transactions was approximately $251.85.
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,
1995 (attached as Exhibit 13 hereto).
22
<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, 1995
(attached as Exhibit 13 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,
1995 (attached as Exhibit 13 hereto).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL MATTERS
None.
23
<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 1996 Proxy Statement.
Section 16(a) of the of 1934 Act 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 1995 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, 1995 through December 31, 1995 except
that Mr. Howard failed to file his Form 4, reporting August, 1995 transactions,
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 1996 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 1996 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 1996 Proxy Statement.
24
<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, 1995 (attached as Exhibit 13 hereto).
Annual Report
Page No.
--------------
Report of Independent Auditors 5
Consolidated Balance Sheets - December 31, 1995 and 1994 6
Consolidated Statements of Income - Years Ended
December 31, 1995, 1994 and 1993 7
Consolidated Statements of Changes in Shareholders'
Equity - Years Ended December 31, 1995, 1994 and 1993 8
Consolidated Statements of Cash Flows - Years Ended
December 31, 1995, 1994 and 1993 9
Notes to Consolidated Financial Statements 11
The following Condensed Financial Information-Parent Only is incorporated by
reference from Note 16 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, 1995 (attached as Exhibit 13).
Annual Report
Page No.
--------------
Condensed Balance Sheets - December 31, 1995 and 1994 21
Condensed Statements of Income - Years Ended
December 31, 1995, 1994 and 1993 21
Condensed Statements of Cash Flows - Years Ended
December 31, 1995, 1994 and 1993 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.
25
<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 South Meyers Road, Lombard, Illinois, 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.
26
<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, 1996
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, 1996.
SIGNATURE TITLE
--------- -----
/s/ Kevin J. Acker 3/28/96 Chairman of the Board
- ----------------------------- ---------- and Director
Kevin J. Acker Date
/s/ John A. Clark 3/28/96 Chief Executive
- ----------------------------- ---------- Officer and
John A. Clark Date Director
/s/ Duane G. Debs 3/28/96 Chief Financial
- ----------------------------- ---------- Officer and Chief
Duane G. Debs Date Accounting Officer
/s/ David Bell 3/28/96 Director
- ----------------------------- ----------
David Bell Date
/s/ Peggy P. LoCicero 3/28/96 Director
- ----------------------------- -----------
Peggy P. LoCicero Date
/s/ Charles P. Howard 3/28/96 Director
- ----------------------------- -----------
Charles P. Howard Date
The foregoing includes all of the Board of Directors of the Company.
27
<PAGE>
INDEX TO EXHIBITS
(continued)
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 Incorporated N/A
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 - Incorporated N/A
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 (see Exhibits 3.1, N/A
3.2, 3.3 and 3.4 above)
4.4 By-Laws of the Company (see Exhibit 3.4 above) N/A
28
<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 Company's N/A
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 Company's N/A
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 Company's N/A
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
29
<PAGE>
INDEX TO EXHIBITS
(continued)
Exhibit Sequential
Number Description Page No.
- ------- ----------- ----------
10.6 Employment Agreement between one of the Company's N/A
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 Company's N/A
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 Company's N/A
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 Company's N/A
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 the Company's N/A
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 the Company's N/A
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
30
<PAGE>
INDEX TO EXHIBITS
(continued)
Exhibit Sequential
Number Description Page No.
- ------- ----------- ----------
10.12 Deferred Compensation Agreement between one of the Company's N/A
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 the Company's N/A
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 the Company's N/A
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 the Company's N/A
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 the Company's N/A
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
31
<PAGE>
INDEX TO EXHIBITS
(continued)
Exhibit Sequential
Number Description Page No.
- ------- ----------- ----------
10.17 Deferred Compensation Agreement between one of the Company's N/A
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 Company's subsidiaries N/A
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 the Company's N/A
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 Company's subsidiaries N/A
and Duane G. Debs, dated as of March 8, 1993 - Incorporated by
reference from Exhibit 10.20 of Form 10-K of the Company dated
March 28, 1994, Commission File No. 0-17609
10.21 Deferred Compensation Agreement between one of the Company's N/A
subsidiaries and Duane G. Debs, dated as of March 8, 1993 -
Incorporated by reference from Exhibit 10.21 of Form 10-K of
the Company dated March 28, 1994, Commission File No. 0-17609
10.22 Employment Agreement between one of the Company's subsidiaries N/A
and Jacqueline R. Weigand, dated as of March 8, 1993 -
Incorporated by reference from Exhibit 10.22 of Form 10-K of
the Company dated March 28, 1994, Commission File No. 0-17609
10.23 Deferred Compensation Agreement between one of the Company's N/A
subsidiaries and Jacqueline R. Weigand, dated as of March 8,
1993 - Incorporated by reference from Exhibit 10.23 of Form
10-K of the Company dated March 28, 1994, Commission File
No. 0-17609
10.24 Employment Agreement between one of the Company's subsidiaries N/A
and Timothy P. Dineen, dated as of March 8, 1993 -
Incorporated by reference from Exhibit 10.24 of Form 10-K of
the Company dated March 28, 1994, Commission File No. 0-17609
32
<PAGE>
INDEX TO EXHIBITS
(continued)
Exhibit Sequential
Number Description Page No.
- ------- ----------- ----------
10.25 Deferred Compensation Agreement between one of the Company's N/A
subsidiaries and Timothy P. Dineen, dated as of March 8,
1993 - Incorporated by reference from Exhibit 10.25 of Form
10-K of the Company dated March 28, 1994, Commission File
No. 0-17609
10.26 Employment Agreement between one of the Company's subsidiaries N/A
and Pamela N. Greening, dated as of March 8, 1993 -
Incorporated by reference from Exhibit 10.26 of Form 10-K of
the Company dated March 28, 1994, Commission File No. 0-17609
10.27 Deferred Compensation Agreement between one of the Company's N/A
subsidiaries and Pamela N. Greening, dated as of March 8,
1993 - Incorporated by reference from Exhibit 10.27 of Form
10-K of the Company dated March 28, 1994, Commission File
No. 0-17609
10.28 Employment Agreement between one of the Company's subsidiaries N/A
and Steven A. Jennrich, dated as of January 12, 1994 -
Incorporated by reference from Exhibit 10.28 of Form 10-K of
the Company dated March 28, 1995, Commission File No. 0-17609
10.29 Deferred Compensation Agreement between one of the Company's N/A
subsidiaries and Steven A. Jennrich, dated as of January 12,
1994 - Incorporated by reference from Exhibit 10.29 of Form
10-K of the Company dated March 28, 1995, Commission File
No. 0-17609
10.30 Amended Employment Agreement between one of the Company's N/A
subsidiaries and Jacqueline R. Weigand, dated as of August 9,
1994 - Incorporated by reference from Exhibit 10.30 of Form
10-K of the Company dated March 28, 1995, Commission File
No. 0-17609
10.31 Amended Employment Agreement between one of the Company's N/A
subsidiaries and Timothy P. Dineen, dated as of August 9,
1994 - Incorporated by reference from Exhibit 10.31 of Form
10-K of the Company dated March 28, 1995, Commission File
No. 0-17609
10.32 Employment Agreement between one of the Company's N/A
subsidiaries and George E. Ranstead, dated as of November 9,
1994 - Incorporated by reference from Exhibit 10.32 of Form
10-K of the Company dated March 28, 1995, Commission File
No. 0-17609
10.33 Deferred Compensation Agreement between one Company's N/A
subsidiaries and George E. Ranstead, dated as of November 9,
1994 - Incorporated by reference from Exhibit 10.33 of Form
10-K of the Company dated March 28, 1995, Commission File
No. 0-17609
10.34 Employment Agreement between one of the Company's N/A
subsidiaries and David S. Orr, dated as of November 9, 1994 -
Incorporated by reference from Exhibit 10.34 of Form 10-K of
the Company dated March 28, 1995, Commission File No. 0-17609
33
<PAGE>
INDEX TO EXHIBITS
(continued)
Exhibit Sequential
Number Description Page No.
- ------- ----------- ----------
10.35 Deferred Compensation Agreement between one of the N/A
Company's subsidiaries and David S. Orr, dated as of
November 9, 1994 - Incorporated by reference from Exhibit
10.35 of Form 10-K of the Company dated March 28, 1995,
Commission File No. 0-17609
10.36 Employment Agreement Amendment entered into between a 35
Subsidiary of the Company and each of John A. Clark,
Kevin J. Acker, Craig R. Acker, Keith W. Acker and Alana S.
Acker, each agreement dated as of August 8, 1995.
10.37 Employment Agreement Amendment entered into between a 41
Subsidiary of the Company and each of Michael P. Brosnahan,
Duane G. Debs, Stanley C. Celner, Jr., Timothy P. Dineen,
Pamela N. Greening, Steven A. Jennrich, David S. Orr, George
Ranstead, Gregory M. Ruffolo, Jacqueline R. Weigand and
Gregory L. Young, each agreement dated as of August 8, 1995.
11 Statement regarding computations of earnings per share 47
for the Registrant
13 Annual Report to Shareholders of the Company for fiscal 48
year ended December 31, 1995
21 Subsidiaries of Registrant 88
27 Financial Data Schedule 89
34
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN WEST SUBURBAN BANK AND [EXECUTIVE]
------------------------------------------
WEST SUBURBAN BANK ("Institution") and ____________________ ("Executive")
executed a certain Employment Agreement ("Agreement"), effective
________________, wherein they reserved the joint right to modify or amend said
Agreement in writing at any time in whole or in part.
WHEREAS, the Institution is desirous of amending the Agreement in certain
respects and retaining the services of Executive; and
WHEREAS, the Executive is willing to accept such amendments 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 consideration in hand
paid, the parties hereto agree to amend said Agreement effective January 1,
1996, as follows:
1. Section 2.(a) is hereby amended to read as follows:
"(a) The period of Executive's employment under this
Agreement shall be deemed to have commenced as of January 1, 1996 (the
"Effective Date") 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. 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."
2. Section 2.(b) is hereby amended to read as follows:
"(b) Executive shall have such authority and responsibility as
is customarily or appropriately vested in the______________________________
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______________________.
<PAGE>
During the period of the Executive's employment hereunder, the
Executive shall devote his best efforts and full business time, energy,
skills and attention to the business and affairs of the Institution. The
Executive's duties and authority shall consist of and include all duties
and authority customarily performed and held by persons holding equivalent
positions with business organizations similar in nature and size to the
Institution, as such duties and authority are reasonably defined, modified
and delegated from time to time by the Board, or as may be provided in a
mutually agreed upon employment description.
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 judgment,
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 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. For all purposes of the Agreement, "Base Salary" shall mean the most
recent Board determined annual salary plus the base amount provided under
the Executive's Deferred Compensation Agreement then in effect, if any.
4. Section 4.(a) is hereby amended to read as follows:
"(a) 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 any one or more of the
following: (i) the termination by the Institution of Executive's full-time
employment hereunder for any reason other than pursuant to
Sections_________; or (ii) Executive's resignation from the Institution's
employ, upon (A) any material change by the Institution in Executive's
function, title, authority, or responsibilities, which change would cause
Executive's position to become one of lesser responsibility, importance,
or scope from the position and attributes thereof described in Section 1,
above, and any reduction in Executive's salary and benefits hereunder
provided (and any such material change without Executive's consent shall be
deemed a continuing breach of this Agreement); (B) without Executive's
consent, any liquidation or dissolution of the Institution or a
consolidation or merger of the Institution or any company acquiring
control of the Institution; (C)in the event of the creation of a holding
company to acquire the Institution ("Prospective Holding Company"), the
liquidation or dissolution, or a consolidation or merger made without
Executive's consent, in which the Institution or Prospective Holding
Company is not the surviving entity, or the transfer of all or
substantially all of the assets of the Institution or Prospective
Holding Company in a transaction in which the Institution or
Prospective Holding Company is not the surviving
2
<PAGE>
entity; (D) any other breach of this Agreement by the Institution; or (iii)
without Executive's consent, a Change in Control (as herein defined).
Upon the occurrence of any event described in clauses (ii)(A) through (D)
above, Executive shall have the right to elect to terminate his employment
under this Agreement by resignation upon not less than thirty (30)
days' prior written notice to the Institution given within a reasonable
period of time not to exceed, except in case of a continuing breach, six
(6) calendar months after the event giving rise to said right to elect.
Upon the occurrence of a Change in Control, Executive shall have the
right to elect to terminate his employment under this Agreement by
resignation upon not less than thirty (30) days' prior written notice to
the Institution given within a reasonable period of time not to exceed
twenty-four (24) calendar months after the Change in Control has occurred.
For purposes of this Agreement, a "Change in Control" of the
Institution shall be defined as a person, acting directly or indirectly or
through or in concert with one or more other persons, who shall acquire
control of the Institution through a purchase, assignment, transfer,
pledge, or other disposition of voting stock of the Institution; provided
that, without limitation, such a Change in Control shall be deemed to have
occurred if any "person" or "group acting in concert" is or becomes the
"beneficial owner" (as defined in Rule 13d-3 issued under the Exchange Act)
or otherwise acquires the beneficial ownership, directly or indirectly, of
fifty percent (50%) or more of any class of security of the Institution or
Prospective Holding Company, or any combination of common stock or other
securities, rights, options or warrants that are convertible into or
otherwise carry the right to acquire, shares of any class of security that
would constitute, upon such conversion or the exercise of such right, fifty
percent (50%) of any class of equity security of the Institution or
Prospective Holding Company after giving effect to such conversion or
exercise.
The term "person" includes an individual, a group acting in concert, a
corporation, a partnership, a trust, an association, a joint venture, a
pool, a syndicate, a sole proprietorship, an unincorporated organization or
similar organization as defined in 12 C.F.R. SECTION 574.2(1). The term
"acquire" when used with respect to stock means obtaining ownership,
control, power to vote or sole power of disposition of stock, directly or
indirectly or through one or more transactions or subsidiaries, through
purchase, assignment, transfer, exchange, succession or other means,
including: (i) an increase in percentage ownership resulting from a
redemption, repurchase, reverse stock split or a similar transaction
involving other securities of the same class; and (ii) the acquisition of
stock by a group of persons and/or companies acting in concert which shall
be deemed to occur upon the formation of such group, provided that an
investment advisor shall not be deemed to acquire the voting stock of it
advisee if the advisor: (a) votes the stock only upon instruction from the
beneficial owner; and (b) does not provide the beneficial owner with advice
concerning the voting of such stock. The term "security" includes
nontransferable subscription rights issued pursuant to a plan of
conversion, as well as a "security," as defined in 15 U.S.C. SECTION
78c(2)(10); and the term "acting in concert" means: (i) knowing
participation in a joint activity or interdependent conscious
3
<PAGE>
parallel action towards a common goal whether or not pursuant to an
express agreement; or (ii) a combination or pooling of voting or other
interests in the securities of an issuer for a common purpose pursuant to
any contract, understanding, relationship, agreement or other arrangement,
whether written or otherwise. Further, acting in concert with any person
or company shall also be deemed to be acting in concert with any person or
company that is acting in concert with such other person or company.
Notwithstanding the above definitions, the Board, in its absolute
discretion, may make a finding that a Change in Control of the Institution
has taken place without the occurrence of any or all of the events
enumerated above."
5. Section 5.(a) is hereby amended to read as follows:
"(a) Upon the occurrence of an Event of Termination or a Change
in Control of the Institution followed by the Executive's voluntary or
involuntary severance of employment as defined under Section 4(a), 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 "Base Salary" paid to Executive for the period 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."
6. Section 5.(e) is hereby amended to read as follows:
"(e) Notwithstanding the preceding paragraphs of this Section
5, in the event that:
(i) the aggregate payments or benefits to be made or
afforded to Executive under the Change in Control provisions of
paragraphs (a) and (c), of this Section 5 (the "Termination Benefits")
would be deemed to be an "excess parachute payment" under Section 280G
of the Code or any successor thereto; and
(ii) if such Termination Benefits were reduced to an
amount (the "Non-Triggering Amount"), the value of which is one dollar
($1.00) less than an amount equal to three (3) times Executive's "base
amount," as determined in accordance with said Section 280G of the
Code, and the Non-Triggering Amount would not be deemed to be an
"excess parachute payment under Section 280G of the Code, then the
Termination Benefits shall be reduced to the Non-Triggering Amount.
The allocation of the reduction required hereby among the Termination
Benefits provided by the preceding paragraphs of this Section 5 shall
be determined by Executive. In the event that Executive receives the
Non-Triggering amount pursuant to this paragraph (e) and it is
subsequently determined by the Internal Revenue Service or judicial
authority that Executive is deemed to have
4
<PAGE>
received an amount in excess of the Non-Triggering Amount, the
Institution shall pay to Executive an amount equal to the value of the
payments or benefits in excess of the Non-Triggering Amount he is so
deemed to have received."
(Only for certain Agreements.)
7. Section 7.(b) is amended to read as follows:
"(b) The Institution will pay Executive, as disability pay,
a payment bi-weekly equal to Eighty Percent (80%) of Executive's bi-weekly
rate of Base Salary on the effective date of such termination. 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."
8. Section_____________ is hereby amended to read as follows:
"____________ GOVERNING LAW.
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the United States and the
State of Illinois."
9. New Section____________ is hereby added to read as follows:
"____________ CONFIDENTIALITY AND LOYALTY.
The Executive acknowledges that heretofore or hereafter during the
course of his employment he has produced and may hereafter produce and have
access to material, records, data, trade secrets and information not
generally available to the public (collectively, "Confidential
Information") regarding the Institution and its subsidiaries and
affiliates. Accordingly, during and subsequent to termination of this
Agreement, the Executive shall hold in confidence and not directly or
indirectly disclose, use, copy or make lists of any such Confidential
Information, except to the extent that such information is or thereafter
becomes lawfully available from public sources, or such disclosure is
authorized in writing by the Institution, required by a law or any
competent administrative agency or judicial authority, or otherwise as
reasonably necessary or appropriate in connection with performance by the
Executive of his duties hereunder. All records, files, documents and other
materials or copies thereof relating to the Institution's business which
the Executive shall prepare or use, shall be and remain the sole property
of the Institution, shall not be removed from the Institution's premises
without its written consent, and shall be promptly returned to the
Institution upon termination of the Executive's employment hereunder. The
Executive agrees to abide by the Institution's reasonable
5
<PAGE>
policies, as in effect from time to time, respecting avoidance of interests
conflicting with those of the Institution."
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 ______ day of ______________________, 199___.
EXECUTIVE BOARD OF DIRECTORS OF INSTITUTION
By:______________________________
__________________________ as authorized by resolution of
the Board of Directors on
_____________________, 199___.
6
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN WEST SUBURBAN BANK AND [EXECUTIVE]
WEST SUBURBAN BANK ("Institution") and ___________ ("Executive") executed a
certain Employment Agreement ("Agreement"), effective ___________, wherein they
reserved the joint right to modify or amend said Agreement in writing at any
time in whole or in part.
WHEREAS, the Institution is desirous of amending the Agreement in certain
respects and retaining the services of Executive; and
WHEREAS, the Executive is willing to accept such amendments 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 consideration in hand
paid, the parties hereto agree to amend said Agreement effective January 1,
1996, as follows:
1. Section 2.(a) is hereby amended to read as follows:
"(a) The period of Executive's employment under this
Agreement shall be deemed to have commenced as of January 1, 1996 (the
"Effective Date") 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. 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."
2. Section 2.(b) is hereby amended to read as follows:
"(b) Executive shall have such authority and responsibility as is
customarily or appropriately vested in the ___________________ 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
_________________.
<PAGE>
During the period of the Executive's employment hereunder, the
Executive shall devote his best efforts and full business time, energy,
skills and attention to the business and affairs of the Institution. The
Executive's duties and authority shall consist of and include all duties
and authority customarily performed and held by persons holding equivalent
positions with business organizations similar in nature and size to the
Institution, as such duties and authority are reasonably defined, modified
and delegated from time to time by the Board, or as may be provided in a
mutually agreed upon employment description.
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 judgment,
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 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. For all purposes of the Agreement, "Base Salary" shall mean the most
recent Board determined annual salary plus the base amount provided under
the Executive's Deferred Compensation Agreement then in effect, if any.
4. Section 4 is hereby amended to read as follows:
"4. 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 any one or more of the
following: (i) the termination by the Institution of Executive's full-time
employment hereunder for any reason other than pursuant to Section ____; or
(ii) Executive's resignation from the Institution's employ, upon (A) any
material change by the Institution in Executive's function, title,
authority, or responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance, or scope from
the position and attributes thereof described in Section 1, above, and any
reduction in Executive's salary and benefits hereunder provided (and any
such material change without Executive's consent shall be deemed a
continuing breach of this Agreement); (B) without Executive's consent, any
liquidation or dissolution of the Institution or a consolidation or merger
of the Institution or any company acquiring control of the Institution; (C)
in the event of the creation of a holding company to acquire the
Institution ("Prospective Holding Company"), the liquidation or
dissolution, or a consolidation or merger made without Executive's consent,
in which the Institution or Prospective Holding Company is not the
surviving entity, or the transfer of all or substantially all of the assets
of the Institution or Prospective Holding Company in a transaction in
which the Institution or Prospective Holding Company is not the surviving
2
<PAGE>
entity; (D) any other breach of this Agreement by the Institution; or (iii)
without Executive's consent, a Change in Control (as herein defined). Upon
the occurrence of any event described in clauses (ii)(A) through (D) above,
Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon not less than thirty (30) days' prior
written notice to the Institution given within a reasonable period of time
not to exceed, except in case of a continuing breach, six (6) calendar
months after the event giving rise to said right to elect. Upon the
occurrence of a Change in Control, Executive shall have the right to elect
to terminate his employment under this Agreement by resignation upon not
less than thirty (30) days' prior written notice to the Institution given
within a reasonable period of time not to exceed twenty-four (24) calendar
months after the Change in Control has occurred.
For purposes of this Agreement, a "Change in Control" of the
Institution shall be defined as a person, acting directly or indirectly or
through or in concert with one or more other persons, who shall acquire
control of the Institution through a purchase, assignment, transfer,
pledge, or other disposition of voting stock of the Institution; provided
that, without limitation, such a Change in Control shall be deemed to have
occurred if any "person" or "group acting in concert" is or becomes the
"beneficial owner" (as defined in Rule 13d-3 issued under the Exchange Act)
or otherwise acquires the beneficial ownership, directly or indirectly, of
fifty percent (50%) or more of any class of security of the Institution or
Prospective Holding Company, or any combination of common stock or other
securities, rights, options or warrants that are convertible into or
otherwise carry the right to acquire, shares of any class of security that
would constitute, upon such conversion or the exercise of such right, fifty
percent (50%) of any class of equity security of the Institution or
Prospective Holding Company after giving effect to such conversion or
exercise.
The term "person" includes an individual, a group acting in concert, a
corporation, a partnership, a trust, an association, a joint venture, a
pool, a syndicate, a sole proprietorship, an unincorporated organization or
similar organization as defined in 12 C.F.R. SECTION 574.2(1). The term
"acquire" when used with respect to stock means obtaining ownership,
control, power to vote or sole power of disposition of stock, directly or
indirectly or through one or more transactions or subsidiaries, through
purchase, assignment, transfer, exchange, succession or other means,
including: (i) an increase in percentage ownership resulting from a
redemption, repurchase, reverse stock split or a similar transaction
involving other securities of the same class; and (ii) the acquisition of
stock by a group of persons and/or companies acting in concert which shall
be deemed to occur upon the formation of such group, provided that an
investment advisor shall not be deemed to acquire the voting stock of its
advisee if the advisor: (a) votes the stock only upon instruction from the
beneficial owner; and (b) does not provide the beneficial owner with advice
concerning the voting of such stock. The term "security" includes
nontransferable subscription rights issued pursuant to a plan of
conversion, as well as a "security," as defined in 15 U.S.C. SECTION
78C(2)(10); and the term "acting in concert" means: (i) knowing
participation in a joint activity or interdependent conscious
3
<PAGE>
parallel action towards a common goal whether or not pursuant to an express
agreement; or (ii) a combination or pooling of voting or other interests in
the securities of an issuer for a common purpose pursuant to any contract,
understanding, relationship, agreement or other arrangement, whether
written or otherwise. Further, acting in concert with any person or
company shall also be deemed to be acting in concert with any person or
company that is acting in concert with such other person or company.
Notwithstanding the above definitions, the Board, in its absolute
discretion, may make a finding that a Change in Control of the Institution
has taken place without the occurrence of any or all of the events
enumerated above."
5. Section 5.(a) is hereby amended to read as follows:
"(a) Upon the occurrence of an Event of Termination or a Change
in Control of the Institution followed by the Executive's voluntary or
involuntary 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 "Base Salary" paid to Executive for the period 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."
6. New Section 5.(c) is hereby added to read as follows:
"(c) Notwithstanding the preceding paragraphs of this Section 5,
in the event that:
(i) the aggregate payments or benefits to be made or
afforded to Executive under the Change in Control provisions of
paragraphs (a) and (b), of this Section 5 (the "Termination Benefits")
would be deemed to be an "excess parachute payment" under Section 280G
of the Code or any successor thereto; and
(ii) if such Termination Benefits were reduced to an amount
(the "Non-Triggering Amount"), the value of which is one dollar
($1.00) less than an amount equal to three (3) times Executive's "base
amount," as determined in accordance with said Section 280G of the
Code, and the Non-Triggering Amount would not be deemed to be an
"excess parachute payment under Section 280G of the Code, then the
Termination Benefits shall be reduced to the Non-Triggering Amount.
The allocation of the reduction required hereby among the Termination
Benefits provided by the preceding paragraphs of this Section 5 shall
be determined by Executive. In the event that Executive receives the
Non-Triggering amount pursuant to this paragraph (c) and it is
subsequently determined by the Internal Revenue Service or judicial
authority that Executive is deemed to have
4
<PAGE>
received an amount in excess of the Non-Triggering Amount, the
Institution shall pay to Executive an amount equal to the value of the
payments or benefits in excess of the Non-Triggering Amount he is so
deemed to have received."
7. Section ______ is hereby amended to read as follows:
"______. GOVERNING LAW.
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the United States and the State
of Illinois."
8. New Section _________ is hereby added to read as follows:
"______. CONFIDENTIALITY AND LOYALTY.
The Executive acknowledges that heretofore or hereafter during the
course of his employment he has produced and may hereafter produce and have
access to material, records, data, trade secrets and information not
generally available to the public (collectively, "Confidential
Information") regarding the Institution and its subsidiaries and
affiliates. Accordingly, during and subsequent to termination of this
Agreement, the Executive shall hold in confidence and not directly or
indirectly disclose, use, copy or make lists of any such Confidential
Information, except to the extent that such information is or thereafter
becomes lawfully available from public sources, or such disclosure is
authorized in writing by the Institution, required by a law or any
competent administrative agency or judicial authority, or otherwise as
reasonably necessary or appropriate in connection with performance by the
Executive of his duties hereunder. All records, files, documents and other
materials or copies thereof relating to the Institution's business which
the Executive shall prepare or use, shall be and remain the sole property
of the Institution, shall not be removed from the Institution's premises
without its written consent, and shall be promptly returned to the
Institution upon termination of the Executive's employment hereunder. The
Executive agrees to abide by the Institution's reasonable policies, as in
effect from time to time, respecting avoidance of interests conflicting
with those of the Institution."
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 there to.
5
<PAGE>
IN WITNESS WHEREOF, the Institution and the Executive have signed this
amendment this ______ day of _______, 199_.
EXECUTIVE BOARD OF DIRECTORS OF INSTITUTION
_______________________________ By: _______________________________________
as authorized by resolution of
the Board of Directors on
____________________________ , 199___.
6
<PAGE>
EXHIBIT 11
COMPUTATION OF SHARES USED FOR EARNINGS PER SHARE CALCULATION
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Weighted Average Shares
Outstanding:
Primary 432,495 432,495 403,525
Fully Diluted 432,495 432,495 432,495
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<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"): 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, 1995 of approximately $1.15 billion.
WEST SUBURBAN BANCORP, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Years Ended December 31,
(Dollars in thousands, except per share data)
---------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net income $13,525 $13,026 $11,824 $11,996 $12,040
Per share data
Net income fully diluted 31.27 30.12 27.72 28.74 28.80
Book value 254.73 226.53 221.56 209.31 190.61
Net loans 760,687 709,205 694,301 652,007 688,813
Total assets 1,154,349 1,041,495 999,878 1,000,200 980,358
Deposits 1,029,789 923,257 883,464 877,923 870,404
Shareholders' equity 110,168 97,971 95,822 84,444 76,901
</TABLE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
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
Distribution of Assets and Net Interest
Income Average Rates
and Yields on a Tax Equivalent Basis....................................... 24
Management's Discussion
and Analysis of Financial
Condition and Results of Operations........................................ 26
Boards of Directors.......................................................... 34
Officers..................................................................... 35
Addresses of Locations....................................................... 38
Map of Locations............................................................. 39
Shareholder Information...................................................... 40
</TABLE>
1
<PAGE>
TO OUR SHAREHOLDERS, CUSTOMERS AND FRIENDS:
In 1995, we experienced tremendous growth as our total assets grew from $1.04
billion to $1.15 billion. This growth was the result of various initiatives on
the part of West Suburban including the opening of new facilities, a competitive
product mix and successful marketing strategies.
Our net income increased to $13.5 million in 1995 from $13.0 million in 1994.
The Company benefitted from reduced Federal Deposit Insurance Corporation
premiums for its bank subsidiaries as the premiums were reduced from 23.5 cents
per hundred dollars of deposits to 4 cents per hundred dollars of deposits on
June 1, 1995. In 1996, we will see increased savings as each of the bank
subsidiaries will pay only $2,000 in premiums for the entire year.
As in the past, we continue to look for opportunities to develop new products
for the benefit and convenience of our customers. During the summer of 1995, we
introduced our new debit card known as the West Suburban Bank Check Card. During
1995, we enjoyed the opening of our Danada facility, Bolingbrook West facility,
Westmont facility and a second facility in Wheaton increasing our accessibility
for our customers. These facilities brought the total number of West Suburban
locations serving our communities to thirty. We look forward to the opening of
our newest location at 2020 Feldott Lane in Naperville. The Company will
continue to look for opportunities to expand in the future in order to retain
and increase our market presence.
During 1995, our shareholders continued to benefit from our success. We
increased our dividends paid to $14.75 per share compared to $13.50 in 1994.
Book value increased $28.20 per share to $254.73 as of December 31, 1995 from
$226.53 as of December 31, 1994.
During the first few months of 1996, an election year, we have experienced
increased mortgage loan generation activity from refinancings and new mortgages
as interest rates move lower. As one of the few locally owned and managed
banking organizations in the market, we look forward to the challenges that 1996
will present. We take pride that our independence allows us to provide our
customers a high level of service, accessibility and enables us to adapt to the
needs and desires of the communities we serve.
We appreciate your continued support and, as always, welcome your comments,
criticisms and suggestions as we look forward to being your bank of the future.
Sincerely,
/s/ John A. Clark /s/ Kevin J. Acker
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 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 shares of the Company's common stock are not traded on
any stock exchange or on the over-the-counter market. The Company's quarterly
per share book value and dividends declared for the last two years is set forth
in the following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year Quarter Book Value Dividends Declared
1995 4th $254.73 $3.75
3rd 246.47 3.75
2nd 242.69 3.75
1st 237.68 3.75
1994 4th $226.53 $3.50
3rd 227.93 3.50
2nd 225.32 3.50
1st 225.59 3.25
</TABLE>
BUSINESS REVIEW
The Subsidiaries ranged in size from total assets at December 31, 1995 of $152
million to $425 million. As of December 31, 1995, the Subsidiaries operated 30
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 505 full-time equivalent employees at December 31, 1995.
SELECTED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
(Dollars in thousands, except per share data)
1995
<S> <C> <C> <C> <C>
Interest income $19,192 $21,020 $21,376 $21,840
Net interest income 10,969 11,466 11,598 11,981
Provision for loan losses 463 462 463 462
Other operating income 1,789 1,983 1,811 2,241
Other operating expense 7,322 7,180 8,122 7,568
Net income 2,967 3,428 3,238 3,892
Net income per share 6.86 7.92 7.49 9.00
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 operating income 2,099 3,422 1,920 2,244
Other operating expense 6,859 7,070 5,959 7,285
Net income 2,938 3,761 3,290 3,037
Net income per share 6.79 8.70 7.61 7.02
</TABLE>
3
<PAGE>
REVIEW OF OPERATIONS
During the past year, West Suburban continued to strengthen its position as one
of the few remaining locally owned and managed multi-bank holding companies in
Chicago's western suburbs. Our resources, experience and dedication to service
allowed us to develop our existing markets and pursue new markets for our
products and services.
West Suburban continued to grow in 1995, opening four new facilities. We
expanded our presence in Wheaton, opening a full service lobby/drive-up facility
at 295 West Loop Road, near Danada Square, in April, and another full service
location at 221 South West Street in September. In March, we opened a second
Bolingbrook location at 1104 West Boughton Road to better serve our customers in
Bolingbrook and its surrounding communities. In November, we also opened our
first location in Westmont at 6400 South Cass Avenue. We expect to see this
growth continue, with plans for a new location in Naperville in the spring of
1996.
In 1995, we also maintained our emphasis on providing innovative financial
products and services to our customers. We began the year by restructuring our
savings accounts to reward increased levels of saving with higher yields.
Throughout the year, we offered our customers opportunities to earn competitive
yields on their accounts even as the environment for interest rates trended
down. For example, we introduced to all our customers our 5-Year Look-In
Certificate of Deposit, which allows for an annual "look-in" when customers may
withdraw any or all of their initial deposit, without penalty. In addition, in
June we began to offer the Investment Access Account, which allows not-for-
profit organizations to earn high yields on their NOW account deposits.
West Suburban also provided loan products that offered real value to our
customers in 1995. In particular, customers responded very favorably to our
5-Year Fixed Rate Home Equity Loan. This product gives our customers the
opportunity to receive fixed rate, below-prime financing for a variety of
purposes.
We also enhanced our line of electronic banking services with the introduction
of the West Suburban Bank Check Card. This card enables our customers to make
purchases with funds from their checking accounts without writing checks. Along
with our telebanking and automated teller machine systems, the West Suburban
Bank Check Card provides our customers with the latest in electronic banking
convenience.
Responding to the needs of our customers is only part of what makes West
Suburban successful. We understand that our continued success depends on our
responsiveness to the needs of the communities we serve. In 1995, as before, our
involvement in community programs was expressed at both the institutional and
individual levels.
At the institutional level, in 1995, we continued our leading role in several
programs for disadvantaged individuals. Specifically, West Suburban was an
active participant in the Fair Housing Network, the DuPage Homeownership Center,
Neighborhood Housing Service of Aurora, Catholic Charities and the Diocese of
Joliet. We will continue to work with organizations like these to provide
assistance in meeting the housing needs of the communities we serve. West
Suburban also maintained active participation in the U.S. Small Business
Administration's programs, enabling us to provide credit more easily and quickly
to small businesses in our area. We understand we have a critical role in the
development of these businesses that provide our communities with products,
services and jobs. As in the past, West Suburban assisted the fundraising
efforts of a host of charitable organizations with numerous financial and
resource contributions. Additionally, we continued our involvement in a wide
range of not-for-profit organizations, including, but not limited to, the
Cooperative Education Program, the DuPage County Crime Commission, Hesed House,
Lifesource Blood Center and St. Jude's Ranch for Children.
At the individual level, we take great pride in and offer encouragement to our
civic-minded employees who donate their time and money to a multitude of
charitable organizations that are too numerous to list. We count our caring
employees as one of our greatest resources.
We look with optimism to 1996 and the opportunities it will present to us in our
position as the leading independent locally owned and managed financial
institution in the area. We plan to further develop our existing market areas,
as well as pursue new market areas in which to offer the service and
market-leading products that have made West Suburban a success for our customers
and shareholders alike.
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 (the "Company") as of December 31, 1995 and 1994,
and the related consolidated statements of income, changes in shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1995. 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.
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, the accompanying consolidated financial statements present
fairly, in all material respects, the financial position of West Suburban
Bancorp, Inc. and subsidiaries at December 31, 1995 and 1994 and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995 in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for investments to conform with Statement of
Financial Accounting Standards ("SFAS") 115, "Accounting for Certain Investments
in Debt and Equity Securities", at January 1, 1994. As discussed in Note 1 to
the consolidated financial statements, in 1993 the Company changed its method of
accounting for income taxes to conform with SFAS 109, "Accounting for Income
Taxes".
DELOITTE & TOUCHE LLP
January 26, 1996
Chicago, Illinois
5
<PAGE>
WEST SUBURBAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
Assets
1995 1994
------------ -------------
<S> <C> <C>
Cash and due from banks $50,094 $48,134
Interest-bearing deposits in financial institutions 141 14
Federal funds sold 38,110 1,895
------------ -------------
Total cash and cash equivalents 88,345 50,043
Investment securities:
Available for sale (amortized cost of $134,139 in 1995;
$125,630 in 1994) 134,519 117,448
Held to maturity (fair value of $116,199 in 1995;
$102,403 in 1994) 116,037 108,559
Loans, less allowance for loan losses of $8,900 in 1995;
$8,445 in 1994 760,687 709,205
Premises and equipment, net 29,206 26,652
Other real estate 8,317 10,458
Accrued interest and other assets 17,238 19,130
------------ -------------
TOTAL ASSETS $1,154,349 $1,041,495
------------ -------------
------------ -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $104,821 $100,771
Interest-bearing 924,968 822,486
------------ -------------
Total deposits 1,029,789 923,257
FHLB advances ---- 9,940
Accrued interest and other liabilities 14,392 10,327
------------ -------------
TOTAL LIABILITIES 1,044,181 943,524
------------ -------------
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 68,416 61,378
Unrealized gain (loss) on securities available for sale, net
of taxes of $151 in 1995; $3,252 benefit in 1994 229 (4,930)
------------ -------------
TOTAL SHAREHOLDERS' EQUITY 110,168 97,971
------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,154,349 $1,041,495
------------ -------------
------------ -------------
</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, 1995, 1994 AND 1993
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees $67,381 $53,570 $50,216
---------- ---------- ----------
Investment securities:
Taxable 12,801 13,572 15,948
Nontaxable 1,290 1,194 827
---------- ---------- ----------
Total investment securities 14,091 14,766 16,775
Deposits in financial institutions 7 33 91
Federal funds sold 1,949 743 314
---------- ---------- ----------
Total interest income 83,428 69,112 67,396
---------- ---------- ----------
INTEREST EXPENSE
Deposits 36,988 27,093 25,832
Other 426 338 896
---------- ---------- ----------
Total interest expense 37,414 27,431 26,728
---------- ---------- ----------
Net interest income 46,014 41,681 40,668
PROVISION FOR LOAN LOSSES 1,850 2,216 5,339
---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 44,164 39,465 35,329
---------- ---------- ----------
OTHER OPERATING INCOME
Service fees 3,529 3,496 3,523
Trust fees 243 280 270
Gain on sales of loans 110 213 1,362
Loan servicing 941 876 927
Net realized gain on sales of securities
available for sale 41 1,524 48
Other 2,960 3,296 3,926
---------- ---------- ----------
Total other operating income 7,824 9,685 10,056
---------- ---------- ----------
OTHER OPERATING EXPENSE
Salaries and employee benefits 13,228 12,860 12,585
Occupancy 2,604 2,127 2,211
Furniture and equipment 2,413 2,186 2,198
FDIC insurance premiums 1,213 1,997 1,741
Professional fees 1,106 1,180 1,069
Data processing 967 916 728
Other real estate 3,516 824 ----
Other 5,145 5,083 6,354
---------- ---------- ----------
Total other operating expense 30,192 27,173 26,886
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 21,796 21,977 18,499
Income taxes 8,271 8,951 7,035
---------- ---------- ----------
Income before cumulative effect of accounting change 13,525 13,026 11,464
Cumulative effect of accounting change --- ---- 360
---------- ---------- ----------
NET INCOME $13,525 $13,026 $11,824
---------- ---------- ----------
---------- ---------- ----------
EARNINGS PER SHARE
Income before cumulative effect of accounting change:
Primary $28.41
----------
----------
Fully diluted $26.85
----------
----------
Net Income:
Primary $31.27 $30.12 $29.30
---------- ---------- ----------
---------- ---------- ----------
Fully diluted $31.27 $30.12 $27.72
---------- ---------- ----------
---------- ---------- ----------
</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, 1995, 1994 AND 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Unrealized Allowance
Gain for
(Loss) on Unrealized
Securities Loss on Total
Class A Class B Available Marketable Share-
Common Common Retained For Sale, Equity holders'
Stock Stock Surplus Earnings Net of Tax Securities Equity
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1993 $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 unrealized gain on
securities available for
sale, net of taxes, at
January 1, 1994 ---- ---- ---- ---- $1,574 ---- 1,574
Net income ---- ---- ---- 13,026 ---- ---- 13,026
Cash dividends declared ---- ---- ---- (5,947) ---- ---- (5,947)
Change in net
unrealized gain (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
Net income ---- ---- ---- 13,525 ---- ---- 13,525
Cash dividends declared ---- ---- ---- (6,487) ---- ---- (6,487)
Change in net
unrealized gain (loss)
on securities available
for sale, net of taxes ---- ---- ---- ---- 5,159 ---- 5,159
-----------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31,
1995 $2,774 $683 $38,066 $68,416 $229 $---- $110,168
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
</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, 1995, 1994 AND 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $13,525 $13,026 $11,824
----------- ----------- -----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,720 2,426 2,434
Cumulative effect of accounting change ---- ---- (360)
Provision for loan losses 1,850 2,216 5,339
Provision for deferred income taxes (593) (18) (604)
Net premium amortization and discount
accretion of investment securities 463 1,523 3,335
Net realized gain on sales of
securities available for sale (41) (1,524) (48)
Gain on sale of loans held for sale (110) (213) (1,362)
Sale of loans held for sale 1,964 8,599 80,884
Origination of loans held for sale (3,038) (12,693) (79,868)
Provision for loss on other real estate 1,543 ---- ----
(Gain) loss on sale of premises and
equipment (31) 266 (26)
Gain on sale of other real estate (12) (481) (166)
Decrease in other assets 2,835 1,715 174
Increase (decrease) in other liabilities 3,606 (1,960) (127)
---------- ---------- ----------
Total adjustments 11,156 (144) 9,605
---------- ---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 24,681 12,882 21,429
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from sales 9,087 70,135 35,808
Proceeds from maturities 3,162 68,117 ----
Purchases (24,676) (72,249)
Investment securities held to maturity:
Proceeds from maturities 55,632 2,380 87,885
Purchases (63,016) (91,166) (78,142)
Net increase in loans (53,869) (21,773) (53,324)
Purchases of premises and equipment (5,273) (3,966) (1,281)
Proceeds from sale of premises and
equipment 32 23 40
Proceeds from sale of other real estate 2,330 8,937 2,858
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES ($76,591) ($39,562) ($6,156)
---------- ---------- ----------
</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, 1995, 1994 AND 1993
(CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits, NOW
accounts and savings accounts $39,986 $17,376 $23,205
Net increase (decrease) in certificates of deposit 66,545 22,417 (17,665)
(Decrease) increase in FHLB advances (9,940) 1,720 (4,830)
Repayment of REMIC ---- (3,541) (8,261)
Repayment of note payable ---- ---- (2,000)
Cash dividends paid (6,379) (5,745) (5,043)
---------- ---------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 90,212 32,227 (14,594)
---------- ---------- ---------
Net increase in cash and cash equivalents 38,302 5,547 679
Cash and cash equivalents at beginning of year 50,043 44,496 43,817
---------- ---------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $88,345 $50,043 $44,496
---------- ---------- ---------
---------- ---------- ---------
Supplemental cash flow information:
Cash paid during the year for:
Interest on deposits and other borrowings $35,707 $27,417 $27,221
Income taxes 7,636 7,046 9,375
Transfers from loans to other real estate 1,721 8,960 8,064
Transfer of investment securities from held to
maturity to available for sale 32,288 ---- ----
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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
INVESTMENT SECURITIES
On January 1, 1994, the Company adopted Statement of Financial Accounting
Standards ("SFAS") 115, "Accounting for Certain Investments in Debt and Equity
Securities", which requires debt and marketable equity securities to be
classified into two categories, "held to maturity" and "available for sale".
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 shareholders' 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.
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 borrowers' 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 fully secured and in the process of collection. 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 borrowers' ability to pay.
11
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Effective January 1, 1995, the Company adopted SFAS 114, "Accounting by
Creditors for Impairment of a Loan", and SFAS 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures", which addresses the
accounting by creditors for impairment of certain loans. SFAS 114 defines a loan
as impaired when it is probable that the creditor will be unable to collect all
amounts due, both principal and interest, according to the contractual terms of
the loan agreement. Impairment is measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate, the
loan's observable market price, or the fair value of the loan's collateral, if
repayment of the loan is collateral dependent. A valuation allowance is required
for the amount of impairment. The Company reviews its commercial and real estate
construction and non-residential loans on a quarterly basis to determine
impairment. Generally, loans 90 or more days past due and all loans on a
nonaccrual basis are considered impaired. Interest income on impaired loans is
recognized in a manner consistent with the Company's interest policy. The
adoption of SFAS 114 and SFAS 118 did not have a material effect on the
Company's financial condition or results of operations.
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, 1995 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 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. In connection with the adoption of SFAS 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 for 1993 has been adjusted for the
interest expense (net of tax) on the subordinated convertible capital notes.
12
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 sold for one day periods.
RECLASSIFICATIONS
Certain reclassifications have been made in prior years' financial statements to
conform with the current year's presentation.
NOTE 2 - INVESTMENT SECURITIES
The amortized cost and fair value of investment securities available for sale at
December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995
-----------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Corporate $69,731 $1,053 ($105) $70,679
U.S. government agencies and
corporations 36,119 254 (783) 35,590
U.S. Treasury 16,291 ---- (107) 16,184
States and political subdivisions 1,157 14 (33) 1,138
----------- ----------- ----------- -----------
Total debt securities 123,298 1,321 (1,028) 123,591
Federal Home Loan
Mortgage Corp. Preferred
Stock and other equity
securities 10,841 117 (30) 10,928
----------- ----------- ----------- -----------
Total $134,139 $1,438 ($1,058) $134,519
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
1994
-----------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. government agencies and
corporations $51,638 $---- ($4,352) $47,286
Corporate 45,623 5 (1,579) 44,049
U.S. Treasury 16,427 ---- (1,324) 15,103
----------- ----------- ----------- -----------
Total debt securities 113,688 5 (7,255) 106,438
Federal Home Loan
Mortgage Corp. Preferred
Stock and other equity
securities 11,942 ---- (932) 11,010
----------- ----------- ----------- -----------
Total $125,630 $5 ($8,187) $117,448
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
13
<PAGE>
NOTE 2 - INVESTMENT SECURITIES (CONTINUED)
The amortized cost and fair value of investment securities held to maturity at
December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995
-----------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. government agencies and
corporations $83,237 $159 ($140) $83,256
States and political subdivisions 32,800 216 (73) 32,943
----------- ----------- ----------- -----------
Total $116,037 $375 ($213) $116,199
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<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
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
In November 1995, the Financial Accounting Standards Board ("FASB") issued a
Special Report on Implementation of SFAS 115. In applying the provisions of this
report, the Company transferred to available for sale those corporate bonds that
had previously been classified as held to maturity. These corporate bonds had an
aggregate market value of $32.8 million, and an unrealized gain, net of tax of
$.3 million, at the transfer date.
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
available for sale and held to maturity at December 31, 1995 by contractual
maturity are as follows:
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
------------------------------- -------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Due in 1 year or less $9,729 $9,803 $19,981 $19,973
Due after 1 year through 5 years 94,626 95,416 37,885 38,036
Due after 5 years through 10 years 16,440 15,812 45,704 45,738
Due after 10 years 2,503 2,560 12,467 12,452
----------- ----------- ----------- -----------
Total $123,298 $123,591 $116,037 $116,199
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Gross gains and gross (losses) of $161 and ($120), $1,639 and ($115), $690 and
($642) were realized on sales in 1995, 1994 and 1993, respectively.
Investment securities with an amortized cost of approximately $20,982 and
$22,393 at December 31, 1995 and 1994, respectively, were pledged to secure
public deposits, fiduciary activities and for other purposes required or
permitted by law.
14
<PAGE>
NOTE 3 - LOANS
Major classifications of loans were as follows at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
-------------- ---------------
<S> <C> <C>
Commercial $200,986 $156,896
Installment 37,986 33,542
Real estate:
Mortgage 302,062 305,010
Home equity 120,802 120,373
Construction 81,787 72,990
Held for sale 1,523 449
VISA - credit card 19,034 21,342
Other 5,407 7,048
------------- ---------------
Total 769,587 717,650
Allowance for loan losses (8,900) (8,445)
------------- ---------------
Loans, net $760,687 $709,205
------------- ---------------
------------- ---------------
</TABLE>
The Company makes commercial, personal and residential loans primarily to
customers throughout the western suburbs of Chicago. At December 31, 1995 and
1994, 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 10.6% and 10.2%
of total loans at December 31, 1995 and 1994, 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 $488, $279 and $6,468 at December 31, 1995, 1994 and 1993, respectively. If
interest on those loans had been accrued, such income would have approximated
$53, $15 and $243 for 1995, 1994 and 1993, respectively.
Changes in the allowance for loan losses were as follows for the years ended
December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Balance, beginning of year $8,445 $7,125 $8,024
Provision for loan losses 1,850 2,216 5,339
Loans charged-off (1,729) (1,292) (7,027)
Recoveries 334 396 789
---------- ---------- ----------
Balance, end of year $8,900 $8,445 $7,125
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
At December 31, 1995, the Company's impaired loans consisted of commercial loans
totaling $13,351 of which $2,522 required a valuation allowance of $408. The
average outstanding balance and interest income recognized on impaired loans was
approximately $10,043 and $897, respectively, for the year ended December 31,
1995. The Company had no impaired real estate construction or non-residential
loans during 1995.
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, 1995 and 1994, the Company was
servicing loans for the benefit of others with aggregate unpaid principal
balances of $330,042 and $335,244, respectively.
15
<PAGE>
NOTE 3 - LOANS (CONTINUED)
At December 31, 1995 and 1994, the Company had outstanding banker's acceptances
of $753 and $1,659, 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 4 - PREMISES AND EQUIPMENT
Major classifications of these assets are summarized as follows at December 31:
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Land $5,848 $5,213
Premises 23,160 20,826
Leasehold improvements 652 418
Furniture and equipment 24,008 22,012
------------ -----------
53,668 48,469
Less accumulated depreciation
and amortization (24,462) (21,817)
------------ -----------
Total $29,206 $26,652
------------ -----------
------------ -----------
</TABLE>
NOTE 5 - DEPOSITS
The major categories of deposits are summarized as follows at December 31:
<TABLE>
<CAPTION>
1995 1994
-------------- ---------------
<S> <C> <C>
Demand and other noninterest-
bearing $104,821 $100,771
NOW accounts 191,626 179,025
Money market savings 340,714 317,379
Time, $100,000 and over 68,063 47,693
Time, other 324,565 278,389
------------ -----------
Total $1,029,789 $923,257
------------ -----------
------------ -----------
</TABLE>
Interest expense on interest-bearing deposits is summarized as follows for the
years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
NOW accounts $3,057 $3,004 $2,896
Money market savings 13,836 9,656 7,910
Time, $100,000 and over 2,848 1,788 1,334
Time, other 17,247 12,645 13,692
---------- ---------- ----------
Total $36,988 $27,093 $25,832
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
NOTE 6 - BORROWINGS
Federal Home Loan Bank ("FHLB") advances are used as a source of liquidity to
meet cash demands. There were no FHLB advances outstanding at December 31, 1995.
At December 31, 1994, FHLB advances had an annual rate of 6.4%.
16
<PAGE>
NOTE 7 - 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>
1995 1994 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
Current:
Federal $7,593 $7,656 $6,316
State 1,271 1,313 1,323
Deferred (593) (18) (604)
----------------- ----------------- -----------------
Total $8,271 $8,951 $7,035
----------------- ----------------- -----------------
----------------- ----------------- -----------------
</TABLE>
A reconciliation between taxes computed at the statutory income tax rates and
the consolidated effective tax rates follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
Statutory income tax rates 35.0% 35.0% 35.0%
(Decrease) increase in taxes resulting
from:
Federal tax-exempt income (2.3) (2.4) (2.5)
State income taxes, net of federal
tax benefit 4.8 4.8 4.8
Other 0.4 3.3 (1.2)
---------- --------- ---------
Consolidated effective tax rates 37.9% 40.7% 36.1%
---------- --------- ---------
---------- --------- ---------
</TABLE>
The temporary differences which created deferred tax assets and liabilities at
December 31 are detailed below:
<TABLE>
<CAPTION>
1995 1994
----------------- -----------------
<S> <C> <C>
Deferred tax assets:
Allowance for loan loss $2,929 $3,255
Deferred compensation 837 749
Unrealized loss on securities
available for sale ---- 3,252
Other assets 365 ----
----------------- -----------------
Total deferred tax assets 4,131 7,256
----------------- -----------------
Deferred tax liabilities:
Depreciation 1,160 1,386
Unrealized gain on securities
available for sale 151 ----
Other liabilities ---- 240
----------------- -----------------
Total deferred tax liabilities 1,311 1,626
----------------- -----------------
Net deferred tax assets $2,820 $5,630
----------------- -----------------
----------------- -----------------
</TABLE>
NOTE 8 - 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 $1,117 in 1995,
$1,112 in 1994 and $1,000 in 1993.
17
<PAGE>
NOTE 8 - EMPLOYEE BENEFIT PLANS (CONTINUED)
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, 1995, 1994 and 1993 amounted to $219, $180, and
$214, respectively. These plans are not qualified under the Code and, therefore,
tax deductions are allowed only when benefits are paid.
NOTE 9 - 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, 1995 and
1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Financial instruments whose contractual amounts
represent credit risks:
Commitments to extend credit $329,372 $286,807
Letters of credit 31,373 21,790
</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 10 - 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 or results of operations.
18
<PAGE>
NOTE 11 - FINANCIAL INSTRUMENTS FAIR VALUE DISCLOSURE
Estimated fair values of financial instruments 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. The estimated fair values of the
Company's financial instruments as of December 31 are set forth in the table
below:
<TABLE>
<CAPTION>
1995 1994
Carrying Estimated Carrying Estimated
Value Fair Value Fair
Value Value
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $88,345 $88,405 $50,043 $50,717
Investment securities:
Available for sale 134,519 134,519 117,448 117,448
Held to maturity 116,037 116,199 108,559 102,403
Loans, less allowance for
loan losses 759,944 759,677 707,546 714,508
---------- ---------- -------- --------
Total financial assets $1,098,845 $1,098,800 $983,596 $985,076
---------- ---------- -------- --------
---------- ---------- -------- --------
Financial liabilities:
Deposits $1,029,789 $1,031,926 $923,257 $921,753
Short-term borrowings 1,825 1,825 9,940 9,940
Long-term debt ---- ---- 10 19
---------- ---------- -------- --------
Total financial liabilities $1,031,614 $1,033,751 $933,207 $931,712
---------- ---------- -------- --------
---------- ---------- -------- --------
</TABLE>
The fair values for investment securities were derived from quoted market values
as of the close of business December 31, 1995 and 1994 when available, or when
quotes were not available, the fair value was estimated based on quoted prices
of comparable securities. The fair values for loans, less allowance for loan
losses were estimated by discounting the future cash flows from loan repayments
using current interest rates for loans having comparable maturities. The fair
values for deposits were estimated using 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 $360,745 at December 31, 1995
and $308,597 at December 31, 1994 and are primarily comprised of unfunded loan
commitments which are generally priced at market at the time of funding.
NOTE 12 - RELATED PARTY TRANSACTIONS
Certain directors and officers of the Company, and some of the corporations and
firms with which these individuals are associated, are customers of the
Subsidiaries in the ordinary course of business, and/or are indebted to a
Subsidiary for loans in the amount of $60,000 or more. It is anticipated that
they will continue to be customers of and indebted to the Subsidiaries in the
future. All such loans, however, were made in the ordinary course of business,
did not involve more than the normal risk of collectibility or present other
unfavorable features, and were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the same time for
comparable loans made by the Subsidiaries in transactions with unaffiliated
persons, although directors were regularly allowed the lowest interest rate
given to others on personal loans.
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 $27,279 and $24,442 at December 31, 1995 and 1994,
respectively. During 1995, $20,837 in additions and $18,000 in reductions were
made.
19
<PAGE>
NOTE 13 - 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 $7,401 and $7,292 for the years ended December 31, 1995 and
1994, respectively.
The Subsidiaries are subject to statutory and regulatory restrictions on the
amount of dividends that they may pay to the Parent. Management's present policy
is to limit the amount of dividends from each Subsidiary such that each
Subsidiary qualifies as a "well-capitalized" institution as defined by the
Federal Deposit Insurance Corporation Improvement Act of 1991 as amended,
thereby minimizing the amount of FDIC insurance premiums paid by the Subsidiary
and providing for capital to fund growth. As of December 31, 1995, the
Subsidiaries could pay, in aggregate, dividends totaling $20,716 to the Parent
while remaining a "well-capitalized" institution. As a practical matter, the
Subsidiaries could pay additional dividends without seeking regulatory approval.
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. The Company's
consolidated capital ratios for December 31, 1995 are presented in the table
below:
<TABLE>
<CAPTION>
Consolidated Capital Ratios
---------------------------------
Regulatory
1995 Minimum
----------- --------------
<S> <C> <C>
Tier 1 leverage ratio 9.72% 3.00%
Tier 1 risk-weighted capital ratio 11.92% 4.00%
Total risk-weighted capital ratio 12.90% 8.00%
</TABLE>
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, 1995 and 1994 was approximately $7,124 and $5,956,
respectively.
NOTE 14 - 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.
During 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 15 - NEW ACCOUNTING PRONOUNCEMENTS
In March 1995, FASB issued SFAS 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of", which requires that
long-lived assets and certain identifiable intangibles that are used in
operations be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of assets might not be
recoverable. SFAS 121 is effective for financial statements issued for fiscal
years beginning after December 15, 1995. Management believes that the adoption
of SFAS 121 will not have a material impact on the Company's financial condition
or results of operations.
In May 1995, FASB issued SFAS 122, "Accounting for Mortgage Servicing Rights",
which requires certain accounting for mortgage servicing rights and the
valuation and recognition of impairment of mortgage servicing rights. SFAS 122
is effective for the fiscal years beginning after December 15, 1995. Management
has not determined the impact of the adoption of SFAS 122 on the Company's
financial condition or results of operations.
In October 1995, FASB issued SFAS 123, "Accounting for Stock-Based
Compensation", which provides an alternative method for accounting for
stock-based compensation and requires certain disclosures regarding the fair
value of stock-based compensation and the assumptions used to determine such.
As the Company does not have a stock-based compensation plan, SFAS 123 is not
applicable.
20
<PAGE>
NOTE 16 - CONDENSED FINANCIAL INFORMATION - PARENT ONLY
CONDENSED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Assets
1995 1994
----------------- -----------------
<S> <C> <C>
Cash on deposit in Subsidiaries $8,354 $7,239
Equity investment in Subsidiaries 101,492 90,069
Intangibles, net 1,935 2,139
Other assets 9 38
----------------- -----------------
TOTAL ASSETS $111,790 $99,485
----------------- -----------------
----------------- -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Dividends payable $1,622 $1,514
----------------- -----------------
TOTAL LIABILITIES 1,622 1,514
Shareholders' equity 110,168 97,971
----------------- -----------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $111,790 $99,485
----------------- -----------------
----------------- -----------------
</TABLE>
CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- --------- ----------
<S> <C> <C> <C>
OPERATING INCOME
Dividends from Subsidiaries $7,401 $7,292 $11,292
Interest income 279 144 27
---------- --------- ----------
Total operating income 7,680 7,436 11,319
---------- --------- ----------
OPERATING EXPENSE
Amortization of intangibles 204 266 279
Other 205 238 278
---------- --------- ----------
Total operating expense 409 504 557
---------- --------- ----------
Income before income taxes 7,271 6,932 10,762
Income tax (benefit) expense 10 (37) (100)
---------- --------- ----------
Income before equity in undistributed
net income of Subsidiaries 7,261 6,969 10,862
Equity in undistributed net income of
Subsidiaries 6,264 6,057 962
---------- --------- ----------
NET INCOME $13,525 $13,026 $11,824
---------- --------- ----------
---------- --------- ----------
</TABLE>
21
<PAGE>
NOTE 16 - CONDENSED FINANCIAL INFORMATION - PARENT ONLY (CONTINUED)
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $13,525 $13,026 $11,824
--------- --------- ---------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in undistributed net
income of Subsidiaries (6,264) (6,057) (962)
Amortization of intangibles 204 266 279
Decrease in other assets 29 62 74
--------- --------- ---------
Total adjustments (6,031) (5,729) (609)
--------- --------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 7,494 7,796 11,215
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid (6,379) (5,745) (5,043)
Repayment of note payable ---- ---- (2,000)
--------- --------- ---------
NET CASH USED IN FINANCING ACTIVITIES (6,379) (5,745) (7,043)
--------- --------- ---------
Net increase in cash 1,115 1,552 4,172
Cash at beginning of year 7,239 5,687 1,515
--------- --------- ---------
CASH AT END OF YEAR $8,354 $7,239 $5,687
--------- --------- ---------
--------- --------- ---------
</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 together
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>
Years Ended December 31,
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA
Interest income $83,428 $69,112 $67,396 $74,098 $92,058
Interest expense 37,414 27,431 26,728 34,376 50,423
--------- --------- --------- --------- ---------
Net interest income 46,014 41,681 40,668 39,722 41,635
Provision for loan losses 1,850 2,216 5,339 3,905 3,663
--------- --------- --------- --------- ---------
Net interest income after
provisions 44,164 39,465 35,329 35,817 37,972
Other operating income(1) 7,824 9,685 10,056 11,145 9,632
Other operating expense 30,192 27,173 26,886 28,071 28,245
--------- --------- --------- --------- ---------
Income before income taxes 21,796 21,977 18,499 18,891 19,359
Income taxes 8,271 8,951 7,035 6,895 7,319
Cumulative effect of accounting
change ---- ---- 360 ---- ----
--------- --------- --------- --------- ---------
Net income $13,525 $13,026 $11,824 $11,996 $12,040
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
PER SHARE DATA
Income before cumulative
effect of accounting change:
Primary $28.41
Fully diluted 26.85
Net income:
Primary $31.27 $30.12 29.30 $29.73 $29.74
Fully diluted 31.27 30.12 27.72 28.74 28.80
Cash dividends declared 15.00 13.75 12.75 12.00 12.00
Book value 254.73 226.53 221.56 209.31 190.61
SELECTED BALANCES
Investment securities $250,556 $226,007 $190,594 $231,121 $149,883
Net loans 760,687 709,205 694,301 652,007 688,813
Total assets 1,154,349 1,041,495 999,878 1,000,200 980,358
Deposits 1,029,789 923,257 883,464 877,923 870,404
Long-term debt ---- ---- ---- 13,348 21,902
Shareholders' equity 110,168 97,971 95,822 84,444 76,901
RATIOS
Return on average total assets 1.27% 1.29% 1.20% 1.20% 1.19%
Return on average
shareholders' equity 13.03 13.29 13.25 14.84 16.41
Cash dividends to net income 47.16 44.10 42.65 40.36 40.36
Average equity to average total
assets 9.71 9.67 9.03 8.12 7.25
Net interest margin (FTE)(2) 4.40 4.21 4.19 4.06 4.20
</TABLE>
(1) Other operating income includes the following gains on sales of loans for
the years ended December 31, 1995, 1994, 1993, 1992 and 1991, respectively:
$110, $213, $1,362, $2,050 and $801.
(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, 1995, 1994
and 1993 and 34% for the years ended December 31, 1992 and 1991.
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
nonaccruing loans has been included in the table (dollars in thousands).
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993
-------------------------------- -------------------------------- ------------------------------
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 $127 $7 5.5% $552 $33 6.0% $1,217 $42 3.5%
-------------------------------- -------------------------------- ------------------------------
Federal funds sold 34,422 1,949 5.7 17,819 743 4.2 10,580 314 3.0
-------------------------------- -------------------------------- ------------------------------
Investment securities:
Corporate 63,302 4,581 7.2 90,831 6,300 6.9 168,348 11,543 6.9
U.S. Treasury 16,363 798 4.9 14,923 722 4.8 ---- ---- ----
U.S. government
agencies and
corporations 118,453 7,369 6.2 91,291 5,746 6.3 30,380 2,034 6.7
States and political
subdivisions (1) 23,678 1,985 8.4 21,630 1,837 8.5 13,626 1,273 9.3
FHLB stock 854 53 6.2 845 64 7.6 1,655 91 5.5
-------------------------------- -------------------------------- ------------------------------
Total investment
securities (1) 222,650 14,786 6.6 219,520 14,669 6.7 214,009 14,941 7.0
-------------------------------- -------------------------------- ------------------------------
Mortgage-backed
securities ---- ---- ---- 7,246 740 10.2 21,464 2,329 10.9
-------------------------------- -------------------------------- ------------------------------
Loans:
Commercial and
industrial (1) 248,544 25,706 10.3 212,147 18,878 8.9 191,732 15,642 8.2
Real estate 305,822 23,777 7.8 295,559 20,415 6.9 272,421 19,734 7.2
Home equity 119,013 11,475 9.6 116,827 8,818 7.5 120,660 8,543 7.1
Installment 36,399 3,516 9.7 33,342 2,656 8.0 38,483 2,848 7.4
Visa and other 26,619 3,238 12.2 25,662 3,148 12.3 27,990 3,709 13.3
-------------------------------- -------------------------------- ------------------------------
Total loans (1) 736,397 67,712 9.2 683,537 53,915 7.9 651,286 50,476 7.8
-------------------------------- -------------------------------- ------------------------------
Total interest-bearing
assets (1) 993,596 $84,454 8.5% 928,674 $70,100 7.5% 898,556 $68,102 7.6%
Cash and due from banks 35,666 37,428 39,203
Premises and equipment, net 27,849 25,554 25,751
Other real estate 7,993 6,873 6,623
Allowance for loan losses (8,909) (7,907) (7,876)
Accrued interest and
other assets (2) 12,683 22,519 26,310
------------ ------------ ------------
Total assets $1,068,878 $1,013,141 $988,567
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
(1) Interest income and yields are presented on a tax equivalent basis,
assuming a federal income tax rate of 35%.
(2) The average balances of nonaccrual loans are included in accrued
interest and other assets.
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>
Years Ended December 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993
-------------------------------- -------------------------------- ------------------------------
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 $498,191 $16,893 3.4% $486,863 $12,660 2.6% $469,641 $10,806 2.3%
Time deposits:
Less than $100,000 308,039 17,248 5.6 275,693 12,645 4.6 282,884 13,692 4.8
$100,000 and greater 49,427 2,847 5.8 37,849 1,788 4.7 26,821 1,334 5.0
-------------------------------- -------------------------------- ------------------------------
Total interest-
bearing deposits 855,657 36,988 4.3 800,405 27,093 3.4 779,346 25,832 3.3
Federal funds purchased 3,216 189 5.9 3,526 158 4.5 4,097 126 3.1
Deferred compensation 1,318 81 6.1 1,077 35 3.3 871 26 3.0
Real Estate Mortgage
Investment Conduit ---- ---- ---- 579 18 3.1 8,159 288 3.5
Note payable ---- ---- ---- ---- ---- ---- 422 27 6.4
FHLB advances 2,071 156 7.5 2,558 126 4.9 5,297 174 3.3
Subordinated convertible
capital notes ---- ---- ---- 10 1 6.5 4,223 255 6.0
-------------------------------- -------------------------------- ------------------------------
Total interest-bearing
liabilities 862,262 37,414 4.3 808,155 27,431 3.4 802,415 26,728 3.3
------------------- ------------------- -------------------
Demand deposits 100,269 96,428 91,529
Other liabilities 2,535 10,564 5,352
Shareholders' equity 103,812 97,994 89,271
------------ ------------ ------------
Total liabilities and
shareholders' equity $1,068,878 $1,013,141 $988,567
------------ ------------ ------------
------------ ------------ ------------
Net interest income $47,040 $42,669 $41,374
--------- --------- ---------
--------- --------- ---------
Net interest margin 4.4% 4.2% 4.2%
------ ------ ------
------ ------ ------
Net yield on interest
earning assets 4.7% 4.6% 4.6%
------ ------ ------
------ ------ ------
</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, 1995 and 1994 and results of
operations for the years ended December 31, 1995, 1994 and 1993. 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
$112.8 million (10.8%) to $1,154.3 million at December 31, 1995 from $1,041.5
million at December 31, 1994. Increases in total loans along with federal funds
sold were the largest components of this increase.
CASH AND CASH EQUIVALENTS. The Company's cash and cash equivalents increased
$38.3 million (76.5%) to $88.3 million at December 31, 1995 from $50.0 million
at December 31, 1994. This resulted mainly from the Company's increased holdings
in federal funds sold which increased $36.2 million to $38.1 million as of
December 31, 1995 from $1.9 million as of December 31, 1994. The Company took
advantage of the higher yields available on federal funds sold compared to short
term investments.
INVESTMENT SECURITIES. Aggregate holdings in investment securities increased
$24.6 million (10.9%) to $250.6 million at December 31, 1995 from $226.0 million
at December 31, 1994. 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 high growth rate in deposits which
resulted in additional funds available for investing purposes. The Company will
continue to seek high quality securities for the investment portfolio and remain
conservative in its management.
As of December 31, 1995, 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 $11.3 million and
$11.6 million, respectively.
LOANS. Total loans outstanding increased $51.9 million (7.2%) to $769.6 million
at December 31, 1995 from $717.7 million at December 31, 1994. This increase was
primarily due to the growth in the Company's commercial loan portfolio.
Specifically, commercial loans increased $44.1 million to $201.0 million at
December 31, 1995 from $156.9 million at December 31, 1994. Construction loans
increased $8.8 million to $81.8 million at December 31, 1995 from $73.0 million
at December 31, 1994. Installment loans increased $4.5 million to $38.0 million
at December 31, 1995 from $33.5 million at December 31, 1994. These increases in
loans primarily resulted from increased loan demand due to the stabilization of
short-term interest rates, decreases in long-term interest rates and promotional
efforts. The Company will attempt to remain competitive in its market by
offering competitive rates on its loan products. The Company will promote its
loan products when appropriate. However, management will not compromise its
credit evaluation standards or its net interest margin to attract new business.
26
<PAGE>
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 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. In determining a
proper level of the allowance, management evaluates the adequacy of the
allowance based on past loan loss experience, known and inherent risks in the
loan portfolio, adverse situations that may affect the borrowers' ability to
repay, estimated value of any underlying collateral and current and prospective
economic conditions. The allowance for loan losses increased $.5 million (5.4%)
to $8.9 million at December 31, 1995 from $8.4 million at December 31, 1994. The
ratio of the allowance for loan losses to total loans outstanding remained
stable at 1.16% at December 31, 1995 compared to 1.18% at December 31, 1994. As
of December 31, 1995, the total nonperforming loans to net loans was 1.6%
compared to .7% at December 31, 1994. This increase was principally due to the
classification of one $8.0 million commercial loan as nonperforming. Although
the loan matured in March 1995, interest payments on this loan were current as
of December 31, 1995. The borrower, a health care provider, is presently under
Chapter 11 bankruptcy protection. The Company and certain other secured
creditors have proposed a plan of reorganization which would reorganize the
borrower and appoint new management. Pending the resolution in the bankruptcy
proceedings, the Company and certain other secured creditors continue to receive
interest payments. Management will continue to monitor this loan closely and
will take additional action, if appropriate.
The following table is an analysis of the Company's nonperforming loans for
December 31, 1995 and 1994 (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994 Dollar Change
---------- --------- -------------
<S> <C> <C> <C>
Nonaccrual loans $488 $279 $209
Accruing loans 90 days past due 11,405 4,448 6,957
---------- --------- -------------
Total nonperforming loans $11,893 $4,727 $7,166
---------- --------- -------------
---------- --------- -------------
Nonperforming loans as a percent
of net loans 1.6% .7% ----
Other real estate $8,317 $10,458 ($2,141)
---------- --------- -------------
---------- --------- -------------
</TABLE>
OTHER REAL ESTATE. During 1995, other real estate decreased $2.2 million
(20.4%) to $8.3 million at December 31, 1995 from $10.5 million at December 31,
1994. This decrease was principally due to the sale of properties with an
aggregate carrying value of $2.3 million. In addition, the Company recognized a
$1.5 million write-down related to a property held as other real estate. These
decreases were partially offset by additions of properties with an aggregate
carrying value of $1.7 million. Management continues its efforts to reduce its
holdings of other real estate.
DEPOSITS. Total deposits increased $106.5 million (11.5%) to $1,029.8 million at
December 31, 1995 from $923.3 million at December 31, 1994. The increase was the
result of successful marketing efforts and the establishment of four new
locations. The proceeds from the increases in deposits were used to meet loan
demand and to make investments in federal funds sold.
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
------------------------
1995 1994 Change Change
----------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Demand and other
noninterest-bearing $104,821 $100,771 $4,050 4.0%
NOW accounts 191,626 179,025 12,601 7.0
Money market savings 340,714 317,379 23,335 7.4
Time, $100,000 and over 68,063 47,693 20,370 42.7
Time, other 324,565 278,389 46,176 16.6
----------- ---------- ----------- -------------
Total $1,029,789 $923,257 $106,532 11.5%
----------- ---------- ----------- -------------
----------- ---------- ----------- -------------
</TABLE>
The Company attempts to remain highly competitive in its market by offering
competitive rates on its savings and certificate of deposit products. Although
the Company promotes its deposit products when appropriate, management does not
intend to compromise its net interest margin to attract deposits.
27
<PAGE>
CAPITAL RESOURCES
Shareholders' equity increased $12.2 million (12.4%) to approximately $110.2
million at December 31, 1995 from $98.0 million at December 31, 1994. This
increase was the direct result of the net retention of 1995 earnings of $7.0
million in addition to the change in the unrealized gain on securities available
for sale of $5.2 million (net of taxes).
Management has been advised that as of December 31, 1995 and 1994, each of the
Subsidiaries qualified as a "well-capitalized" institution as defined by the
Federal Deposit Insurance Corporation Improvement Act of 1991 as amended.
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 withdrawal 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, 1995 and 1994, liquid assets represented
19.3% and 16.1% of total assets, respectively.
During 1995, the Company's cash and cash equivalents increased approximately
$38.3 million. Operating activities caused an increase to cash and cash
equivalents of approximately $24.7 million from the prior year. Investing
activities caused a decrease of approximately $76.6 million while financing
activities resulted in an increase of approximately $90.2 million.
INCOME STATEMENT ANALYSIS -- 1995 COMPARED TO 1994
GENERAL. The Company's 1995 net income of $13.5 million represented an increase
of $.5 million (3.8%) from 1994 net income of $13.0 million. This increase was
primarily due to a $4.4 million improvement in net interest income on a fully
tax equivalent basis and reductions of $.4 million and $.7 million in the
provision for loan losses and income tax expense, respectively. Offsetting a
portion of the rise in net income was a decrease in total other operating income
of $1.9 million and an increase in total other operating expense of $3.0
million.
NET INTEREST INCOME. Net interest income is the primary source of income for
the Company. Net interest income is the difference between interest income
earned on earning assets and interest expense paid on interest-bearing
liabilities. As such, net interest income is affected by changes in the volume
and yields on earning assets and the volume and rates paid on interest-bearing
liabilities. Interest-earning assets consist of loans, deposits in financial
institutions, deposits in the FHLB, federal funds sold and securities. Interest-
bearing liabilities primarily consist of deposits, federal funds purchased and
FHLB advances. Net interest margin is the ratio of tax equivalent net interest
income to average earning assets. Total interest income, on a tax equivalent
basis, increased $14.4 million (20.5%) to $84.5 million at December 31, 1995
from $70.1 million at December 31, 1994. Of this increase, $5.0 million was due
to average balance changes while $9.4 million was due to interest rate changes.
The Company's average interest-earning assets grew $64.9 million (7.0%) to
$993.6 million at December 31, 1995 from $928.7 million at December 31, 1994.
Yields on total interest-earning assets increased primarily due to increases in
average interest rates on the loan portfolio as the Company's average prime rate
increased to 8.8% for 1995 from 7.2% for 1994. Average rates on the securities
portfolio remained level as the Company sought to minimize credit risk to the
portfolio while achieving an acceptable rate of return. Additionally, the
Company took advantage of higher yields on federal funds sold during 1995.
28
<PAGE>
Total interest expense increased $10.0 million (36.4%) to $37.4 million at
December 31, 1995 from $27.4 million at December 31, 1994. Of this increase,
$2.8 million was due to average balance increases while $7.2 million was due to
increases in interest rates. Average interest-bearing liabilities increased
$54.1 million (6.7%) to $862.3 million at December 31, 1995 from $808.2 million
at December 31, 1994 due to customers taking advantage of the availability of
higher rates on deposit products.
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, 1995 and 1994 (dollars in thousands):
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
compared to 1994 compared to 1993
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 ($23) ($3) ($26) ($40) $31 ($9)
Federal funds sold 940 266 1,206 302 127 429
Investment securities (80) 197 117 (152) (120) (272)
Mortgage-backed securities (740) --- (740) (1,452) (137) (1,589)
Loans 4,861 8,936 13,797 2,544 895 3,439
---------- -------- --------- ---------- -------- ---------
Total interest income 4,958 9,396 14,354 1,202 796 1,998
---------- -------- --------- ---------- -------- ---------
INTEREST EXPENSE
Interest-bearing deposits 2,862 7,033 9,895 639 622 1,261
Borrowed funds (40) 128 88 (674) 116 (558)
---------- -------- --------- ---------- -------- ---------
Total interest expense 2,822 7,161 9,983 (35) 738 703
---------- -------- --------- ---------- -------- ---------
Net interest income $2,136 $2,235 $4,371 $1,237 $58 $1,295
---------- -------- --------- ---------- -------- ---------
---------- -------- --------- ---------- -------- ---------
</TABLE>
PROVISION FOR LOAN LOSSES. The provision for loan losses decreased $.4 million
(16.5%) to $1.8 million in 1995 compared to $2.2 million in 1994. The lower
provision was the result of management's determination that the allowance for
loan losses was adequate and general economic conditions in the Company's
primary market. A more detailed discussion concerning the allowance for loan
losses is presented in the Allowance for Loan Losses and Asset Quality section
of this report.
OTHER OPERATING INCOME. During 1995, other operating income decreased $1.9
million (19.2%) to $7.8 million in 1995 compared to $9.7 million in 1994. This
decrease was primarily attributable to the $1.5 million net realized gain on
sales of securities available for sale during 1994. The 1994 income was
principally due to the liquidation of the mortgage-backed securities portfolio.
The Company also recognized a $.4 million gain on sale of other real estate
during 1994.
OTHER OPERATING EXPENSE. Other operating expense increased $3.0 million (11.1%)
to $30.2 million in 1995 from $27.2 million in 1994. Salary and employee
benefits increased $.4 million primarily due to expenses relating to the opening
of new facilities. Other real estate expense increased $2.7 million during this
same period. This increase reflects a $1.5 million write-down of a property
classified as other real estate during 1995. In addition, the Company incurred
approximately $1.1 million in expenses related to this property during the year
ended December 31, 1995. The Company intends to continue its efforts to sell
this property. FDIC insurance premiums declined $.8 million (39.3%) to $1.2
million at December 31, 1995 from $2.0 million at December 31, 1994. This
occurred due to the receipt by the Company's bank subsidiaries of reimbursement
credits of approximately $.5 million as a result of being well-capitalized
institutions and the over-funding of the insurance reserve of the Bank Insurance
Fund of the FDIC and reduced FDIC insurance premiums. Occupancy expense and
furniture and equipment expense increased $.5 million and $.2 million,
respectively, for the year ended December 31, 1995. These increases were
primarily due to expenses incurred with the opening and operation of new
facilities.
INCOME TAXES. Income tax expense declined $.7 million (7.6%) to $8.3 million in
1995 from $9.0 million in 1994. The lower income tax expense in 1995 was due to
a reduction in the amounts provided for potential adjustments to prior years'
income tax returns.
29
<PAGE>
RETURN ON AVERAGE TOTAL ASSETS. Return on average total assets was 1.27% for
1995 and 1.29% for 1994 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.
INCOME STATEMENT ANALYSIS -- 1994 COMPARED TO 1993
GENERAL. The Company's 1994 net income of $13.0 million represented an increase
of $1.2 million (10.2%) from 1993 net income of $11.8 million. This increase was
primarily due to a $1.3 million improvement in net interest income on a fully
tax equivalent basis 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. 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 rate adjustments tied to increases in the prime rate
that occurred during 1994.
Total interest expense increased $.7 million (2.6%) to $27.4 million at December
31, 1994 from $26.7 million at December 31, 1993 due primarily to changes in
average interest rates.
Average interest-bearing liabilities increased $5.8 million (.7%) 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.
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 OPERATING INCOME. During 1994, other operating 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.
OTHER OPERATING EXPENSE. Other operating 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 real estate expense increased by
$.8 million in 1994 due to increased expenses relating to properties held in
other real estate. Other expenses decreased by $1.3 million to $5.1 million in
1994 from $6.4 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.
30
<PAGE>
During 1993, President Clinton signed into law the Revenue Reconciliation Act of
1993. Management believes that this legislation 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 legislation.
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.
IMPACT OF NEW ACCOUNTING STANDARDS
In March 1995, FASB issued SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of", which requires
that long-lived assets and certain identifiable intangibles that are used in
operations be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of assets might not be
recoverable. SFAS 121 is effective for financial statements issued for fiscal
years beginning after December 15, 1995. Management believes that the adoption
of SFAS 121 will not have a material impact on the Company's financial condition
or results of operations.
In May 1995, FASB issued SFAS 122, "Accounting for Mortgage Servicing Rights",
which requires certain accounting for mortgage servicing rights and the
valuation and recognition of impairment of mortgage servicing rights. SFAS 122
is effective for the fiscal years beginning after December 15, 1995. Management
has not determined the impact of the adoption of SFAS 122 on the Company's
financial condition or results of operations.
In October 1995, FASB issued SFAS 123, "Accounting for Stock-Based
Compensation", which provides an alternative method for accounting for
stock-based compensation and requires certain disclosures regarding the fair
value of stock-based compensation and the assumptions used to determine such.
As the Company does not have a stock-based compensation plan, SFAS 123 is not
applicable.
INTEREST RATE SENSITIVITY
The Company attempts to maintain a conservative posture with regard to interest
rate risk by actively managing its asset/liability gap position 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.
Movements in general market interest rates are a key element in changes in the
net interest margin. 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.
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, 1995 (dollars
in thousands):
<TABLE>
<CAPTION>
Over
Three Over One
Three Months to Year to Over
Months Twelve Five Five
or Less Months Years Years Total
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rate sensitive assets:
Interest-bearing deposits in financial
institutions $141 $---- $---- $---- $141
Federal funds sold 38,110 ---- ---- ---- 38,110
Investment securities 5,861 60,547 146,160 37,988 250,556
Loans 270,853 378,732 482 119,033 769,100
--------- -------- -------- -------- ----------
Total $314,965 $439,279 $146,642 $157,021 $1,057,907
--------- -------- -------- -------- ----------
--------- -------- -------- -------- ----------
Rate sensitive liabilities:
Money market savings $340,714 $---- $---- $---- $340,714
NOW accounts 191,626 ---- ---- ---- 191,626
Time deposits:
Less than $100,000 93,815 134,835 95,915 ---- 324,565
$100,000 and over 42,605 12,673 ---- 12,785 68,063
--------- -------- -------- -------- ----------
Total $668,760 $147,508 $95,915 $12,785 $924,968
--------- -------- -------- -------- ----------
--------- -------- -------- -------- ----------
Interest sensitivity gap ($353,795) $291,771 $50,727 $144,236 $132,939
Cumulative interest sensitivity gap (353,795) (62,024) (11,297) 132,939
Cumulative net interest-earning assets
as a percentage of net interest-
bearing liabilities 47.1% 92.4% 98.8% 114.4%
Cumulative interest sensitivity gap as a
percentage of total assets (30.6) (5.4) (1.0) 11.5
</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 consolidated interest
rate sensitivity position of the Company within the one year window at December
31, 1995 reflects cumulative net interest-earning assets compared to cumulative
net interest-bearing liabilities of 92.4% and cumulative net interest-earning
assets that reprice or mature within one year compared to similarly sensitive
liabilities of negative 5.4%. The percentage indicated for the cumulative net
interest-earning assets as a percentage of net interest-bearing liabilities is
within the Company's target range of acceptable gap values for the three-month
to twelve-month time frame.
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 labilities, over time, to offset these
potential effects.
32
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BOARDS OF DIRECTORS
WEST SUBURBAN BANCORP, INC.
Kevin J. Acker Chairman of the Board
John A. Clark President and CEO
David Bell Certified Public Accountant
Charles P. Howard Business Operations Director, Inner City
Impact
Peggy P. 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 P. LoCicero Former Banker
James Bell Director Emeritus
WEST SUBURBAN BANK OF DOWNERS GROVE/LOMBARD
Craig R. Acker President and Chairman of the Board
Eileen V. Abbamonte Former Banker
Jeffrey J. Bell Member Board of Directors, 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 Vice President, Bracing Systems
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
Keith W. Acker Vice President, Chief Operations Officer
Duane G. Debs Vice President, CFO, Secretary to the
Board and Treasurer
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
Raymond P. Rynne Senior Vice President, Business
Administration
Craig R. Acker Vice President, Operations and Trust
Officer
Danielle Budig Vice President, Operations
Duane G. Debs Vice President and Comptroller
Edward J. Garvey Vice President, Facility Management
Pamela N. Greening Vice President, Director of Human
Resources
Daniel Hunt Vice President, Business Services
Steven A. Jennrich Vice President, Data Processing
John A. Machonga Vice President, Investments
David S. Orr Vice President, Loans
George Ranstead Vice President, Cashier and Secretary to
the Board
Gregory M. Ruffolo Vice President, Loans
Allison J. Triplett Vice President, Loss Prevention Officer
and Auditor
Jaqueline R. Weigand Vice President, Operations and VISA
Marcia K. Worobec Vice President, Facility Manager -
Westmore
Gregory L. Young Vice President, Loans
Margaret M. Zatarski Vice President, Facilities Director
Michael Abbatacola Assistant Vice President, Financial
Services
Louis Amador Assistant Vice President, Operations
Michelle M. Bozzi Assistant Vice President, Facility
Manager - Westmont
Jill Davenport Assistant Vice President, Operations
Marie V. Dunk Assistant Vice President, Personnel
Director
Gail Michalek Assistant Vice President
Kim Neitzel Assistant Vice President, Facility
Manager - Bolingbrook West
Helen Schmitt Assistant Vice President, Purchasing
Joanne T. Tosch Assistant Vice President, Director of
Employee Development
Judith C. Tomasek Assistant Vice President
Joyce Dudek Facility Manager - President Street
Derek Gubala Facility Manager - Wheaton
Marlene A. Johnson Facility Manager - Oakbrook Terrace
Mark Mascarella Facility Manager - Villa Park
Gwen B. O'Loughlin Facility Manager - North Main
Eileen Abbamonte Trust Officer
Mary K. DiMarco Compliance Coordinator
Patricia L. Fleischman Trust Officer
Patricia D. Haesly Loan Officer and Compliance Coordinator
Debra H. Kolze Commercial Loan Operations Manager
Cynthia A. Meredith Home Equity Loan Operations Manager
David J. Mulkerin Compliance Officer
Joanne Vokurka Assistant Trust Officer
David Wanek Loan Officer
35
<PAGE>
WEST SUBURBAN BANK OF DOWNERS GROVE/LOMBARD
Craig R. Acker President
Raymond P. Rynne Senior Vice President, Business
Administration
Beverly J. Viscariello Vice President, Facility Manager -
Finley Road, 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
Edward J. Garvey Vice President, Facility Management
John A. Machonga Vice President, Investments
David S. Orr Vice President, Loans
George Ranstead Vice President and Assistant Comptroller
Allison J. Triplett Vice President, Loss Prevention Officer
and Auditor
Gregory L. Young Vice President, Loans
Michael Abbatacola Assistant Vice President, Financial
Services
Jill Castillo Assistant Vice President
Norine LaPrall Assistant Vice President
Kay J. Piotrowski Assistant Vice President, Facility
Manager - Warrenville
Nelda D. Walters Assistant Vice President, Facility
Manager - South Main, Compliance
Coordinator
Cynthia A. Meredith Home Equity Loan Operations Manager
David J. Mulkerin Compliance Officer
David Wanek Loan Officer
WEST SUBURBAN BANK OF DARIEN
Alana S. Acker President
Gregory M. Ruffolo Executive Vice President and Secretary
to the Board
Raymond P. Rynne Senior Vice President, Business
Administration
Rose Marie Little Vice President, Facility Manager - Cass
Ave. and Cashier
Michael P. Brosnahan Vice President and CRA Officer
William Cahill Vice President, Business Services
John A. Clark Vice President, Loans
Duane G. Debs Vice President and Comptroller
Edward J. Garvey Vice President, Facility Management
John A. Machonga Vice President, Investments
George Ranstead Vice President and Assistant Comptroller
Allison J. Triplett Vice President, Loss Prevention Officer
and Auditor
Michael Abbatacola Assistant Vice President, Financial
Services
Grace Badocha Assistant Vice President
Michelle M. Bozzi Assistant Vice President
Kevin Denny Assistant Vice President
Kathleen Heckman Assistant Vice President
Terry L. Leitner Assistant Vice President, Facility
Manager - 75th Street
Sue Nuestrom Assistant Vice President, Facility
Manager - Bolingbrook
Chris Pawlak Assistant Vice President
Cynthia A. Meredith Home Equity Loan Operations Manager
David J. Mulkerin Compliance Officer
Penny S. Skogh Compliance Coordinator
36
<PAGE>
WEST SUBURBAN BANK OF CAROL STREAM/STRATFORD SQUARE
Kevin J. Acker President
Raymond P. Rynne Senior Vice President, Business
Administration
Margaret M. Zatarski Vice President, 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
Edward J. Garvey Vice President, Facility Management
John A. Machonga Vice President, Investments
George Ranstead Vice President and Assistant Comptroller
Allison J. Triplett Vice President, Loss Prevention Officer
and Auditor
Michael Abbatacola Assistant Vice President, Financial
Services
Robert L. Pauling Assistant Vice President, Loan Officer
Sharon Buck Assistant Vice President, Facility
Manager - St. Charles
Sharon A. Fonte Assistant Vice President, Facility
Manager - Glendale Heights
Linda M. Grube Assistant Vice President, Facility
Manager - Fair Oaks
Roseann Hamilton Assistant Vice President, Facility
Manager - Carol Stream
Rebecca McNeel Assistant Vice President
Pat Newton Assistant Vice President, Facility
Manager - Bartlett
Donald E. Hayes Facility Manager - Stratford Square and
Compliance Coordinator
Cynthia A. Meredith Home Equity Loan Operations Manager
David J. Mulkerin Compliance Officer
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
Raymond P. Rynne Senior Vice President, Business
Administration
Karin I. Choate Vice President, Loan Servicing
Duane G. Debs Vice President and Comptroller
Timothy P. Dineen Vice President, Loans
Edward J. Garvey Vice President, Facility Management
John A. Machonga Vice President, Investments
George Ranstead Vice President, Secretary to the Board
and Treasurer
Allison J. Triplett Vice President, Loss Prevention Officer
and Auditor
Michael Abbatacola Assistant Vice President, Financial
Services
Amy L. Andrews Facility Manager - Montgomery
Kathleen Brockman Facility Manager - Lake Street
Cynthia Picton Facility Manager - Galena Blvd.
Susan Buchanan Compliance Coordinator
Tammy Hatcher Mortgage Operations Manager
Barbara Lacy Loan Officer
Cynthia A. Meredith Home Equity Loan Operations Manager
David J. Mulkerin Compliance Officer
37
<PAGE>
WEST SUBURBAN BANK
- -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 ATM Facility: 210 W. Wesley St., Wheaton, IL 60187
- -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
- -Wheaton Facility: 221 S. West St., Wheaton, IL 60187 - (708) 221-8220
- -Westmont Facility: 6400 S. Cass Ave., Westmont, IL 60559 - (708) 963-2735
- -Naperville Facility: 2020 Feldott Ln., Naperville, IL 60540
WEST SUBURBAN BANK OF DOWNERS GROVE/LOMBARD
- -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
- -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
- -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.
- -West Suburban Bank - 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
NOTE: EFFECTIVE AUGUST 3, 1996, THE AREA CODE FOR ALL WEST SUBURBAN FACILITIES
WILL BE 630
WEST SUBURBAN BANCORP, INC.
711 S. MEYERS ROAD,
LOMBARD, ILLINOIS
WHERE STRENGTH IS MATCHED BY SERVICE
38
<PAGE>
- ------------------------------------------------------------------------------
[MAP OF WEST SUBURBAN LOCATIONS]
- ------------------------------------------------------------------------------
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 8, 1996 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>
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
Subsidiary State of Incorporation
- ---------- ----------------------
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
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 88,345
<SECURITIES> 250,556
<RECEIVABLES> 0
<ALLOWANCES> 8,900
<INVENTORY> 0
<CURRENT-ASSETS> 754,244
<PP&E> 29,206
<DEPRECIATION> 24,462
<TOTAL-ASSETS> 1,154,349
<CURRENT-LIABILITIES> 816,268
<BONDS> 0
0
0
<COMMON> 3,457
<OTHER-SE> 106,711
<TOTAL-LIABILITY-AND-EQUITY> 1,154,349
<SALES> 0
<TOTAL-REVENUES> 91,252
<CGS> 0
<TOTAL-COSTS> 36,988
<OTHER-EXPENSES> 30,192
<LOSS-PROVISION> 1,850
<INTEREST-EXPENSE> 426
<INCOME-PRETAX> 21,796
<INCOME-TAX> 8,271
<INCOME-CONTINUING> 13,525
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<NET-INCOME> 13,525
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