UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended December 31, 2002
OR
o	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

 

 

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

 

	Title of Each Class				Name of Each Exchange on which Registered
None				None

 

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

 

 

 

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 ý No o

 

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 ý

 

Indicate by check mark whether the Registrant in an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934.  Yes ý No o

 

The aggregate fair value of voting common stock of Registrant held by non-affiliates as of February 17, 2003 was $164,144,845(1). At December 31, 2002, the total number of shares of Common Stock outstanding was 432,495.

 

Documents Incorporated by Reference:

 

Portions of the Annual Report to Shareholders for the fiscal year ended December 31, 2002 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 14, 2003 are incorporated by reference in Part III hereof, to the extent indicated herein.

 

 

(1)          Based on the last independently appraised fair value of the Registrant’s common stock on February 17, 2003, 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.

 

 

 

Special Note Concerning Forward-Looking Statements

 

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

 

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

 

•                                          The strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of the Company’s assets.

 

•                                          The economic impact of terrorist activities and military actions.

 

•                                          The effects of, and changes in, federal, state and local laws, regulations and policies affecting banking, securities, insurance and monetary and financial matters.

 

•                                          The effects of changes in interest rates (including the effects of changes in the rate of prepayments of the Company’s assets) and the policies of the Board of Governors of the Federal Reserve System.

 

•                                          The ability of the Company to compete with other financial institutions as effectively as the Company currently intends due to increases in competitive pressures in the financial services sector.

 

•                                          The inability of the Company to obtain new customers and to retain existing customers.

 

•                                          The timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet.

 

•                                          Technological changes implemented by the Company and by other parties, including third party vendors, which may be more difficult or more expensive than anticipated or which may have unforeseen consequences to the Company and its customers.

 

•                                          The ability of the Company to develop and maintain secure and reliable electronic systems.

 

•                                          The ability of the Company to retain key executives and employees and the difficulty that the Company may experience in replacing key executives and employees in an effective manner.

 

•                                          Consumer spending and saving habits which may change in a manner that affects the Company’s business adversely.

 

•                                          Business combinations and the integration of acquired businesses which may be more difficult or expensive than expected.

 

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

 

 

•                                          Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board.

 

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

 

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including other factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

 

PART I

 

ITEM 1.                                                     BUSINESS

 

REGISTRANT AND ITS SUBSIDIARY

 

West Suburban Bancorp, Inc., an Illinois corporation (“West Suburban”), is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the “BHCA”), and the parent company of West Suburban Bank, Lombard, Illinois. West Suburban Bank may be referred to as the “Bank” and, collectively, with West Suburban, may be referred to as the “Company.”

 

The Bank is headquartered in Lombard, Illinois, and, as of December 31, 2002, had 33 full service branches, five limited service branches as well as five departments providing other convenient services throughout the western suburbs of Chicago. Due to the nature of the market areas served by the Bank, the Bank provides a wide range of financial services to individuals and small to medium size businesses. The western suburbs of Chicago have a diversified economy with many corporate headquarters and numerous small to medium size industrial and non-industrial businesses.

 

The Bank engages in a general full service retail banking business and offers a broad variety of consumer and commercial products and services. The Bank also offers insurance services through West Suburban Insurance Services, Inc., travel agency services through Travel With West Suburban, land trust services and safe deposit boxes. The Bank provides extended banking hours including Sunday hours and 24-hour banking through a proprietary network of 61 automated teller machines (“ATMs”), Tele-Bank 24 (a bank-by-phone system) and online banking at www.westsuburbanbank.com. Other consumer related services are available, including investment products and a Visa card through West Suburban Bank Card Services.

 

The following table sets forth financial and other information concerning the Bank as of and for the year ended December 31, 2002 (dollars in thousands):

 

Year Formed/Year Affiliated With the Parent
		Number of Locations		Total Assets			Shareholders’ Equity			Net Income			Return on Average
													Assets		Equity
West Suburban Bank (1962/1988)		38		$	1,585,599		$	136,151		$	17,959		1.17	%	13.39	%

 

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, technological 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.

 

 

Under the Gramm-Leach-Bliley Act of 1999 (the “GLBA”), effective March 11, 2000, securities firms and insurance companies that elect to become financial holding companies may acquire banks and other financial institutions. The GLBA may significantly change the competitive environment in which the Company and the Bank conduct business. The financial services industry is also likely to become more competitive as further technological advances enable more companies to provide financial services. These technological advances may diminish the importance of depository institutions and other financial intermediaries.

 

EMPLOYEES

 

The Company employed 598 persons (487 full-time equivalent employees) on December 31, 2002. The Company believes that its relationship with its employees is good.

 

SUPERVISION AND REGULATION

 

General

 

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

 

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

 

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

 

West Suburban

 

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

 

Acquisitions, Activities and Change in Control. The primary purpose of a bank holding company is to control and manage banks.  The BHCA generally requires the prior approval of the Federal Reserve for any merger involving a bank holding company or any acquisition by a bank holding company of another bank or bank holding company acquisition.  Subject to certain conditions (including certain deposit concentration limits established by the BHCA), the Federal Reserve may allow a bank holding company to acquire banks located in

 

 

any state of the United States. In approving interstate acquisitions, the Federal Reserve is required to give effect to applicable state law limitations on the aggregate amount of deposits that may be held by the acquiring bank holding company and its insured depository institution affiliates in the state in which the target bank is located (provided that those limits do not discriminate against out-of-state depository institutions or their holding companies) and state laws that require that the target bank have been in existence for a minimum period of time (not to exceed five years) before being acquired by an out-of-state bank holding company.

 

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

 

Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature, incidental to any such financial activity or complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally.  As of the date of this filing, West Suburban has neither applied for nor received approval to operate as a financial holding company.

 

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

 

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

 

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

 

The risk-based and leverage standards described above are minimum requirements. Higher capital levels will be required if warranted by the particular circumstances or risk profiles of individual banking organizations. For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, or the risks posed by concentrations of credit, nontraditional activities or securities trading activities.  Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions

 

 

(i.e., Tier 1 capital less all intangible assets), well above the minimum levels.  As of December 31, 2002, West Suburban had regulatory capital in excess of the Federal Reserve’s minimum requirements.

 

Dividend Payments.  West Suburban’s ability to pay dividends to its shareholders may be affected by both general corporate law considerations and policies of the Federal Reserve applicable to bank holding companies. As an Illinois corporation, West Suburban is subject to the Illinois Business Corporation Act, as amended, which prohibits West Suburban from paying a dividend if, after giving effect to the dividend: (i) West Suburban would be insolvent; (ii) the net assets of West Suburban would be less than zero; or (iii) the net assets of West Suburban would be less than the maximum amount then payable to shareholders of West Suburban who would have preferential distribution rights if West Suburban were liquidated. Additionally, policies of the Federal Reserve caution that a bank holding company should not pay cash dividends that exceed its net income or that can only be funded in ways that weaken the bank holding company’s financial health, such as by borrowing.  The Federal Reserve also possesses enforcement powers over bank holding companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations.  Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies.

 

Federal Securities Regulation.  West Suburban’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, West Suburban is subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act.

 

The Bank

 

General.  The Bank is an Illinois-chartered bank, the deposit accounts of which are insured by the FDIC’s Bank Insurance Fund (“BIF”).  As an Illinois-chartered bank, the Bank is subject to the examination, supervision, reporting and enforcement requirements of the Commissioner, the chartering authority for Illinois banks, and the FDIC, designated by federal law as the primary federal regulator of state-chartered, FDIC-insured banks that, like the Bank, are not members of the Federal Reserve System.

 

Deposit Insurance.  As an FDIC-insured institution, the Bank is required to pay deposit insurance premium assessments to the FDIC.  The FDIC has adopted a risk-based assessment system under which all insured depository institutions are placed into one of nine categories and assessed insurance premiums based upon their respective levels of capital and results of supervisory evaluations.  Institutions classified as well-capitalized (as defined by the FDIC) and considered healthy pay the lowest premium while institutions that are less than adequately capitalized (as defined by the FDIC) and considered of substantial supervisory concern pay the highest premium.  Risk classification of all insured institutions is made by the FDIC for each semi-annual assessment period.

 

During the year ended December 31, 2002, BIF assessments ranged from 0% of deposits to 0.27% of deposits.  For the semi-annual assessment period beginning January 1, 2003, BIF assessment rates will continue to range from 0% of deposits to 0.27% of deposits.

 

FICO Assessments.  Since 1987, a portion of the deposit insurance assessments paid by members of the FDIC’s Savings Association Insurance Fund (“SAIF”) has been used to cover interest payments due on the outstanding obligations of the Financing Corporation (“FICO”). FICO was created in 1987 to finance the recapitalization of the Federal Savings and Loan Insurance Corporation, the SAIF’s predecessor insurance fund. As a result of federal legislation enacted in 1996, beginning as of January 1, 1997, both SAIF members and BIF members became subject to assessments to cover the interest payments on outstanding FICO obligations until the final maturity of such obligations in 2019.  These FICO assessments are in addition to amounts assessed by the FDIC for deposit insurance. During the year ended December 31, 2002, the FICO assessment rate for BIF and SAIF members was approximately 0.02% of deposits.

 

Supervisory Assessments.  All Illinois banks are required to pay supervisory assessments to the Commissioner to fund the operations of the Commissioner.  The amount of the assessment is calculated on the basis of an

 

 

institution’s total assets, including consolidated subsidiaries, as reported to the Commissioner.  During the year ended December 31, 2002, the Bank paid supervisory assessments to the Commissioner totaling $.13 million.

 

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

 

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

 

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

 

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

 

As of December 31, 2002: (i) the Bank was not subject to a directive from the FDIC to increase its capital to an amount in excess of the minimum regulatory capital requirements; (ii) the Bank exceeded its minimum regulatory capital requirements under FDIC capital adequacy guidelines; and (iii) the Bank was “well-capitalized,” as defined by FDIC regulations.

 

Dividend Payments.  The primary source of funds for the Company is dividends from the Bank.  Under the Illinois Banking Act, Illinois-chartered banks generally may not pay dividends in excess of their net profits. 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, and a financial institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized.  As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of December 31, 2002.  As of December 31, 2002, approximately $9.3 million was available to be paid as dividends by the Bank.  Notwithstanding the availability of funds for dividends, however, the FDIC may prohibit the payment of any dividends by the Bank if the FDIC determines the payment would constitute an unsafe or unsound practice.

 

 

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

 

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

 

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

 

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

 

State and national banks are allowed 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 new interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) is allowed only if specifically authorized by state law.  Illinois law permits interstate mergers subject to certain conditions, including a condition requiring an Illinois bank involved in an interstate merger to have been in existence and continuous operation for more than five years.

 

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

 

Federal Reserve System.  Federal Reserve regulations, as presently in effect, require depository institutions to maintain non-interest earning reserves against their transaction accounts (primarily NOW and regular checking accounts), as follows:  for transaction accounts aggregating $42.1 million or less, the reserve requirement is 3% of total transaction accounts; and for transaction accounts aggregating in excess of $42.1 million, the reserve requirement is $1.083 million plus 10% of the aggregate amount of total transaction accounts in excess of $42.1 million.  The first $6.0 million of otherwise reservable balances are exempted from the reserve requirements.

 

 

These reserve requirements are subject to annual adjustment by the Federal Reserve.  The Bank is in compliance with the foregoing requirements.

 

The Insurance Subsidiary

 

The Bank is the sole shareholder of West Suburban Insurance Services, Inc. (“WSIS”), an Illinois corporation licensed as a general insurance agency by the Illinois Department of Insurance (the “Department”). WSIS is subject to supervision and regulation by the Department with regard to compliance with the laws and regulations governing insurance agents and by the Commissioner and the FDIC with regard to compliance with banking laws and regulations applicable to subsidiaries of Illinois-chartered, FDIC insured banks.

 

Available Information

 

West Suburban’s Internet address is www.westsuburbanbank.com.  Beginning from at least November 15, 2002, West Suburban has made available on or through its Internet website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendment to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material was electronically filed with, or furnished to, the Securities and Exchange Commission.

 

EXECUTIVE OFFICERS OF THE COMPANY

 

The names and ages of the executive officers of West Suburban, along with a brief description of the business experience of each person during the past five years, and certain other information is set forth below:

 

Name (Age) and Position and Offices with West Suburban (year first elected to office)		Principal Occupations and Employment for Past Five Years and Other Information
Kevin J. Acker (53) Chairman and Chief Executive Officer (1993) and Vice President (1986)		Senior Vice President - Marketing of the Bank since 1997
Keith W. Acker (53) Chief Operations Officer (1996)		Director and President of the Bank since 1986
Duane G. Debs (46) President (1997) and Chief Financial Officer (1993)		Senior Vice President since 1997 and Comptroller of the Bank since 1987
Michael P. Brosnahan (53) Vice President (1997)		Senior Vice President - Commercial Lending of the Bank since 1989

 

 

STATISTICAL DATA

 

The statistical data required by Exchange Act Industry Guide 3, “Statistical Disclosure By Bank Holding Companies,” has been incorporated by reference from the Company’s 2002 Annual Report to Shareholders (attached as Exhibit 13 hereto) or is set forth below. This data should be read in conjunction with the Company’s 2002 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 2002 Annual Report to Shareholders.

 

Securities

 

The following table sets forth by category the amortized cost of securities at December 31 (dollars in thousands):

 

		2002			2001			2000
Available for sale
Corporate		$	63,251		$	124,811		$	97,390
U.S. government agencies and corporations(1)		185,303			9,280			26,806
States and political subdivisions		2,842			405			908
Preferred stock and other equity securities		21,908			12,685			8,390
Total securities available for sale		273,304			147,181			133,494
Held to maturity
U.S. government agencies and corporations(1)		26,127			93,524			135,490
States and political subdivisions		23,750			27,444			28,490
Total securities held to maturity		49,877			120,968			163,980
Total securities		$	323,181		$	268,149		$	297,474

 

(1)          Includes mortgage-backed securities.

 

The following table sets forth, by contractual maturity, the amortized cost and weighted average yield of debt securities available for sale at December 31, 2002. Yields on tax-exempt securities represent actual coupon yields, net of premium amortization and discount accretion (dollars in thousands):

 

		Corporate					U.S. Government Agencies and Corporations(1)					States and Political Subdivisions
		Amortized Cost			Weighted Average Yield		Amortized Cost			Weighted Average Yield		Amortized Cost			Weighted Average Yield
Within 1 year		$	7,960		5.50	%	$	—		—	%	$	590		3.29	%
After 1 year but within 5 years		54,796			5.23	%	162,325			4.32	%	1,620			2.95	%
After 5 years but within 10 years		495			7.50	%	22,918			4.74	%	632			3.85	%
After 10 years		—			—	%	60			—	%	—			—	%
Total		$	63,251		5.28	%	$	185,303		4.37	%	$	2,842		3.22	%

 

(1)          Includes mortgage-backed securities.

 

The weighted average yield on preferred stock and other equity securities was 4.99% at December 31, 2002.

 

 

The following table sets forth, by contractual maturity, the amortized cost and weighted average yield of securities held to maturity at December 31, 2002 (dollars in thousands). Yields on tax-exempt securities represent actual coupon yields, net of premium amortization and discount accretion:

 

		U.S. Government Agencies and Corporations(1)					States and Political Subdivisions
		Amortized Cost			Weighted Average Yield		Amortized Cost			Weighted Average Yield
Within 1 year		$	—		—	%	$	3,202		3.83	%
After 1 year but within 5 years		23,012			4.79	%	7,228			4.62	%
After 5 years but within 10 years		—			—	%	10,492			5.67	%
After 10 years		3,115			4.91	%	2,828			4.99	%
Total		$	26,127		4.80	%	$	23,750		5.02	%

 

(1)          Includes mortgage-backed securities.

 

No securities holdings of a single issuer exceed 10% of the shareholders’ equity of the Company at December 31, 2002. Expected maturities may differ from contractual maturities because issers may have the right to call or prepay obligations with or without prepayment penalties. Approximately $143.1 million of securities are callable in 2003. Most of these callable securities were issued by U.S. government agencies and corporations.

 

During 2001, the Company wrote down its investments in debt securities issued by Comdisco, Inc., FINOVA Group, Inc. and Enron Corp. after making a determination that the value of the debt securities had become impaired. These impairment losses totaled $3.0 million in 2001. The carrying values of the Comdisco, Inc., FINOVA Group, Inc. and Enron Corp. securities totaled $4.8 million at December 31, 2001. The Comdisco, Inc. and Enron Corp. securities were sold in 2002. The carrying value of the FINOVA Group, Inc. securities was $.4 million at December 31, 2002.

 

Loan Portfolio

 

The following table sets forth the major loan categories at December 31 (dollars in thousands):

 

		2002			2001			2000			1999			1998
Commercial		$	330,775		$	323,036		$	276,519		$	212,505		$	225,774
Consumer(1)		11,591			10,514			9,101			10,451			16,468
Indirect automobile		90,617			102,183			100,847			81,782			31,625
Real estate
Residential		135,311			152,495			180,089			169,035			174,328
Commercial		212,010			195,800			183,899			160,522			127,655
Home equity(1)		169,020			145,972			133,609			126,496			111,446
Construction		174,001			157,328			129,316			79,526			69,640
Held for sale		4,224			5,840			160			338			4,465
Credit card		13,732			10,437			12,037			12,960			14,210
Other		1,382			2,033			1,962			2,850			6,748
Total		1,142,663			1,105,638			1,027,539			856,465			782,359
Allowance for loan losses		(13,847		)	(12,262		)	(11,399		)	(10,759		)	(9,998		)
Loans, net		$	1,128,816		$	1,093,376		$	1,016,140		$	845,706		$	772,361

 

(1)          In 1999, consumer loans ($10 million) for home equity loan customers were reclassified for 1999 from consumer loans to real estate-home equity. Balances prior to 1999 were not reclassified.

 

 

The following table sets forth the maturity and interest rate sensitivity of selected loan categories at December 31, 2002 (dollars in thousands):

 

 

Nonperforming Loans

 

The following table sets forth the aggregate amount of nonperforming loans and selected ratios at December 31 (dollars in thousands):

 

 

The Company’s 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 fully secured and in process of collection. When a loan has been placed on nonaccrual, interest earned but not collected is charged back to interest income. When payments are received on nonaccrual loans they are first applied to principal, then to interest income and finally to expenses incurred for collection. Interest income on nonaccrual loans was immaterial for the years presented above. As of the date of the Form 10-K, management does not believe that there are potential problem loans that are not included in the disclosure above.

 

Allowance for Loan Losses

 

The allowance for loan losses is evaluated quarterly based on management’s periodic review of loan collectibility in light of historical loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, and prevailing economic conditions. The Company has historically evaluated the adequacy of the allowance for loan losses on an overall basis, and the resulting provision charged to expense has similarly been determined in relation to management’s evaluation of the entire loan portfolio. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events occur.

 

 

Management monitors identified problem loans by the use of a “watch list” which includes nonaccrual, delinquent and other nonperforming loans. This analysis of the adequacy of the allowance for loan losses also includes allocations of the allowance, such as for pools of loans, that are primarily based upon historical loan loss experience, the changing nature and volume of the loan portfolio, and prevailing economic conditions. The aggregate required allowance for loan losses for the entire loan portfolio is maintained through provisions charged to earnings.

 

The following table sets forth the activity in the allowance for loan losses for the years ended and at December 31 (dollars in thousands):

 

		2002			2001			2000			1999			1998
Allowance for loan losses at beginning of period		$	12,262		$	11,399		$	10,759		$	9,998		$	9,772
Loan charge-offs
Commercial		5,869			1,789			1,132			2,109			1,868
Consumer		61			6			50			9			77
Indirect automobile		244			171			101			51			—
Real estate
Residential		—			45			7			88			237
Commercial		341			—			—			—			—
Home equity		—			30			—			—			37
Construction		—			—			—			23			—
Credit card		274			217			208			304			483
Other		12			47			4			2			30
Total loan charge-offs		6,801			2,305			1,502			2,586			2,732
Loan recoveries
Commercial		95			113			520			138			124
Consumer		5			8			14			13			58
Indirect automobile		52			22			6			10			—
Real estate
Residential		3			4			8			1			91
Commercial		—			—			—			—			—
Home equity		—			9			—			—			—
Construction		—			—			—			—			—
Credit card		106			62			94			97			114
Other		—			—			—			4			8
Total loan recoveries		261			218			642			263			395
Net loan charge-offs		6,540			2,087			860			2,323			2,337
Provision for loan losses		8,125			2,950			1,500			3,084			2,563
Allowance for loan losses at end of period		$	13,847		$	12,262		$	11,399		$	10,759		$	9,998
Allowance for loan losses to total loans		1.21		%	1.11		%	1.11		%	1.26		%	1.28		%
Net charge-offs to average total loans		0.59		%	0.20		%	0.09		%	0.29		%	0.31		%

 

The amount of the additions to the allowance for loan losses charged to expense for the periods indicated were based on a variety of factors, including actual loans charged-off during the respective year, historical loss experience, changes in the nature and volume of the loan portfolio including nonperforming loans, specific loss allocations for individual loans and an evaluation of current economic conditions.

 

The allocation shown in the following table, encompassing the major segments of the loan portfolio, represents only an estimate for each category of loans based on historical loss experience and management’s judgment of amounts deemed reasonable to provide for probable losses within each category.

 

 

Estimated losses for categories of homogeneous loan types are generally made on an aggregate basis (dollars in thousands).

 

		2002					2001					2000					1999					1998
		Amount			Percent of Loans in Each Category to Total Loans		Amount			Percent of Loans in Each Category to Total Loans		Amount			Percent of Loans in Each Category to Total Loans		Amount			Percent of Loans in Each Category to Total Loans		Amount			Percent of Loans in Each Category to Total Loans
Commercial		$	9,304		29.0	%	$	5,619		29.2	%	$	4,339		26.9	%	$	3,729		24.8	%	$	4,025		28.9		%
Consumer(1)		78			1.1	%	60			1.1	%	79			1.1	%	96			1.6	%	170			3.0		%
Indirect automobile		380			7.9	%	479			9.3	%	491			9.8	%	409			9.5	%	152			4.0		%
Real estate
Residential(2)		346			12.2	%	491			14.3	%	900			17.5	%	845			19.7	%	872			22.9		%
Commercial		615			18.6	%	1,880			17.7	%	1,808			17.9	%	1,581			18.8	%	1,269			16.3		%
Home equity		522			14.8	%	526			13.2	%	668			13.0	%	632			14.8	%	557			14.2		%
Construction		1,984			15.2	%	2,946			14.2	%	2,586			12.6	%	1,590			9.3	%	1,393			8.9		%
Credit card		432			1.2	%	245			1.0	%	324			1.2	%	327			1.5	%	333			1.8		%
Unallocated		186			—	%	16			—	%	204			—	%	1,550			—	%	1,227			—		%
Total		$	13,847		100.0	%	$	12,262		100.0	%	$	11,399		100.0	%	$	10,759		100.0	%	$	9,998			100.0	%

 

(1)          Consumer loans include consumer and other loans.

(2)          Residential real estate loans include real estate - held for sale.

 

Deposits

 

The following table sets forth by category average daily deposits and interest rates for the years ended December 31 (dollars in thousands):

 

		2002					2001					2000
		Average Balance			Rate		Average Balance			Rate		Average Balance			Rate
Demand-noninterest-bearing		$	144,352		—	%	$	134,219		—	%	$	130,420		—	%
NOW		260,916			0.4	%	233,765			0.8	%	217,982			1.3	%
Money market checking		228,555			1.9	%	192,587			3.6	%	137,260			5.2	%
Savings		337,671			1.8	%	291,569			2.6	%	284,240			3.4	%
Time deposits
Less than $100,000		307,122			4.1	%	320,397			5.6	%	341,035			5.8	%
$100,000 and greater		90,053			3.9	%	103,327			5.4	%	106,736			6.1	%
Total		$	1,368,669		2.0	%	$	1,275,864		3.2	%	$	1,217,673		3.8	%

 

The following table sets forth by maturity time deposits $100,000 and greater at December 31 (dollars in thousands):

 

 

 

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:

 

 

 

ITEM 2.

PROPERTIES

 

West Suburban and the Bank occupy a total of approximately 259,300 square feet in 33 full service branches, five limited service branches as well as five departments. West Suburban’s principal office is located in approximately 32,500 square feet of office space at 711 South Meyers Road, Lombard, Illinois. As indicated below, the Bank also operates its principal office as a branch. Travel With West Suburban, West Suburban Bank Land Trust, West Suburban Financial Services and West Suburban Insurance Services, Inc. are included in 711 South Meyers Road. West Suburban Bank VISA is included in 701 South Meyers Road.

 

The following table sets forth certain information concerning the branches of the Bank as of December 31, 2002:

 

 

 

 

 

 

ITEM 3

LEGAL PROCEEDINGS

 

There are no material pending legal proceedings to which West Suburban or the Bank is a party to other than ordinary routine litigation incidental to their respective businesses.

 

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None.

 

PART II

 

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

West Suburban’s authorized and outstanding equity securities consist of Common Stock, no par value.

 

West Suburban hereby incorporates by reference the information called for by Item 5 of this Form 10-K from the section entitled “Common Stock, Book Value and Dividends” on page 3 of West Suburban’s Annual Report to Shareholders for the fiscal year ended December 31, 2002 (attached as Exhibit 13 hereto).

 

West Suburban’s Common Stock is not traded on any national or regional exchange. While there is no established trading market for West Suburban’s Common Stock, West Suburban is aware that from time to time limited or infrequent quotations are made with respect to West Suburban’s Common Stock and that there occurs limited trading in West Suburban’s Common Stock resulting from private transactions not involving brokers or dealers. Transactions in West Suburban’s Common Stock have been infrequent. As of February 6, 2003, West Suburban had 432,495 shares of Common Stock outstanding held by 1,107 shareholders of record. Management is aware of 21 transactions during 2002 involving the sale, in the aggregate, of 1,054 shares of Common Stock. The average sale price in such transactions was $541.80 per share.

 

ITEM 6.

SELECTED FINANCIAL DATA

 

West Suburban hereby incorporates by reference the information called for by Item 6 of this Form 10-K from the section entitled “Selected Financial Data” on page 25 of West Suburban’s Annual Report to Shareholders for the fiscal year ended December 31, 2002 (attached as Exhibit 13 hereto).

 

 

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

West Suburban 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” on pages 27 through 33 of West Suburban’s Annual Report to Shareholders for the fiscal year ended December 31, 2002 (attached as Exhibit 13 hereto).

 

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

West Suburban hereby incorporates by reference the information called for by Item 7A of this Form 10-K from the Interest Rate Sensitivity section included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 32 of West Suburban’s Annual Report to Shareholders for the fiscal year ended December 31, 2002 (attached as Exhibit 13 hereto).

 

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

West Suburban hereby incorporates by reference the information called for by Item 8 of this Form 10-K from the Consolidated Financial Statements on pages 5 through 24 of West Suburban’s Annual Report to Shareholders for the fiscal year ended December 31, 2002 (attached as Exhibit 13 hereto).

 

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL MATTERS

 

None.

 

PART III

 

ITEM 10.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

 

West Suburban hereby incorporates by reference the information called for by Item 10 of this Form 10-K regarding directors of West Suburban from the section entitled “Election of Directors” of West Suburban’s 2003 Proxy Statement.

 

Section 16(a) of the 1934 Act requires that the Company’s executive officers and directors and persons who own more than 10% of the Company’s Common Stock file reports of ownership and changes in ownership with the Securities and Exchange Commission and with the exchange on which West Suburban’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 and 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 2002 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 2002.

 

ITEM 11.

EXECUTIVE COMPENSATION

 

West Suburban hereby incorporates by reference the information called for by Item 11 of this Form 10-K from the section entitled “Executive Compensation” of West Suburban’s 2003 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

 

West Suburban 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 West Suburban’s 2003 Proxy Statement.

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

West Suburban 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 West Suburban’s 2003 Proxy Statement.

 

ITEM 14.

CONTROLS AND PROCEDURES

 

Based upon an evaluation within 90 days prior to the filing date of this report, the Company’s Chairman and Chief Executive Officer and President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s internal controls subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weakness.

 

 

Part IV

 

ITEM 15.

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 West Suburban and its subsidiaries and related notes and report of independent auditors are incorporated by reference from West Suburban’s Annual Report to Shareholders for the fiscal year ended December 31, 2002 (attached as Exhibit 13 hereto).

 

Report of Independent Auditors	4
Consolidated Balance Sheets – December 31, 2002 and 2001	5
Consolidated Statements of Income – Years Ended December 31, 2002, 2001 and 2000	6
Consolidated Statements of Changes in Shareholders’ Equity – Years Ended December 31, 2002, 2001 and 2000	7
Consolidated Statements of Cash Flows – Years Ended December 31, 2002, 2001 and 2000	8
Notes to Consolidated Financial Statements	9

 

The following Condensed Financial Information-Parent Only is incorporated by reference from Note 15 to West Suburban’s audited Consolidated Financial Statements as set forth in West Suburban’s Annual Report to Shareholders for the fiscal year ended December 31, 2002 (attached as Exhibit 13).

 

Condensed Balance Sheets – December 31, 2002 and 2001	22
Condensed Statements of Income – Years Ended December 31, 2002, 2001 and 2000	22
Condensed Statements of Cash Flows – Years Ended December 31, 2002, 2001 and 2000	23

 

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 included in the financial statements incorporated by reference or notes thereto.

 

 

Item 15(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 15(b).                                        Reports on Form 8-K

 

None.

 

***

Upon written request to the President and Chief Financial Officer of West Suburban Bancorp, Inc., 2800 Finley Road, Downers Grove, Illinois, 60515, copies of the exhibits listed above are available to shareholders of West Suburban by specifically identifying each exhibit desired in the request.

 

 

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/ Duane G. Debs
		Duane G. Debs
		President and Chief Financial Officer
Date: March 21, 2003

 

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 21st day of March, 2003.

 

SIGNATURE				TITLE
/s/ Kevin J. Acker		3/21/2003		Chairman, Chief Executive Officer and Director
Kevin J. Acker		Date
/s/ Duane G. Debs		3/21/2003		President, Chief Financial Officer and Director
Duane G. Debs		Date
/s/ David S. Bell		3/21/2003		Director
David S. Bell		Date
/s/ Peggy P. LoCicero		3/21/2003		Director
Peggy P. LoCicero		Date
/s/ Charles P. Howard		3/21/2003		Director
Charles P. Howard		Date

 

 

The foregoing includes all of the Board of Directors of West Suburban.

 

 

CERTIFICATIONS

 

I, Kevin J. Acker, certify that:

 

1)              I have reviewed this annual report on Form 10-K of West Suburban Bancorp, Inc.;

 

2)              Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

 

3)              Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

 

4)              The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 

a)              designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

 

b)             evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

 

c)              presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

 

5)              The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

 

a)              all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weakness in internal controls; and

 

b)             any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

 

6)              The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

 

Date: March 21, 2003
/s/ Kevin J. Acker
Kevin J. Acker
Chairman and Chief Executive Officer

 

 

I, Duane G. Debs, certify that:

 

1)              I have reviewed this annual report on Form 10-K of West Suburban Bancorp, Inc.;

 

2)              Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

 

3)              Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

 

4)              The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 

a)              designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

 

b)             evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

 

c)              presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

 

5)              The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

 

a)              all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weakness in internal controls; and

 

b)             any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

 

6)              The registrant’s other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

 

Date: March 21, 2003
/s/ Duane G. Debs
Duane G. Debs
President and Chief Financial Officer

 

 

INDEX TO EXHIBITS

 

Exhibit Number		Description
3.1		Articles of  Incorporation of West Suburban filed March 14, 1986
3.2		Articles of Amendment to Article of Incorporation of West Suburban filed November 2, 1988
3.3		Articles of Amendment to Articles of Incorporation of West Suburban filed June 20, 1990
3.4		Articles of Amendment to Articles of Incorporation of West Suburban filed June 8, 1998
3.5		Amended and Restated By-laws of West Suburban
4.1		Specimen of Common Stock certificate - Incorporated by reference from Exhibit 4.1 of the Form 10-K of West Suburban dated March 29, 1999, Commission file No. 0-17609
10.1		Employment Agreement dated May 1, 1997 between West Suburban and Mr. Kevin J. Acker - Incorporated by reference from Exhibit 10.1 of Form 10-Q of West Suburban dated August 14, 1997, Commission File No. 0-17609
10.2		Employment Agreement dated May 1, 1997 between West Suburban and Mr. Keith W. Acker - Incorporated by reference from Exhibit 10.2 of Form 10-Q of West Suburban dated August 14, 1997, Commission File No. 0-17609
10.3		Employment Agreement dated May 1, 1997 between West Suburban and Mr. Duane G. Debs - Incorporated by reference from Exhibit 10.3 of Form 10-Q of West Suburban dated August 14, 1997, Commission File No. 0-17609
10.4		Employment Agreement dated May 1, 1997 between West Suburban and Mr. Michael P. Brosnahan - Incorporated by reference from Exhibit 10.4 of Form 10-Q of West Suburban dated August 14, 1997, Commission File No. 0-17609

 

 

Exhibit Number		Description
10.5		Form of Amended Deferred Compensation Agreement between West Suburban and Messrs. Kevin J. Acker, Keith W. Acker, Duane G. Debs and Michael P. Brosnahan - Incorporated by reference from Exhibit 10.5 of Form 10-Q of West Suburban dated August 14, 1997, Commission File No. 0-17609
10.6		Employment Agreement dated December 24, 1998 between West Suburban and Mr. James Chippas - Incorporated by reference from Exhibit 10.6 of Form 10-K of West Suburban dated March 29, 1999, Commission File No. 0-17609
10.7		Form of Amendment to Employment Agreement dated January 21, 1999 between West Suburban and Messrs. Kevin J. Acker, Keith W. Acker, Duane G. Debs and Michael P. Brosnahan - Incorporated by reference from Exhibit 10.7 of Form 10-K of West Suburban dated March 29, 1999, Commission File No. 0-17609
10.8		Employment Agreement dated January 1, 2001 between West Suburban and Mr. Daniel P. Grotto - Incorporated by reference from Exhibit 10.8 of Form 10-K of West Suburban dated March 27, 2002, Commission File No. 0-17609
13		Annual Report to Shareholders of West Suburban for fiscal year ended December 31, 2002
21		Subsidiaries of Registrant
99.1		Certification of Kevin J. Acker, Chairman and Chief Executive Officer.
99.2		Certification of Duane G. Debs, Chief Financial Officer.