<PAGE>

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PROFILE

West Suburban Bancorp, Inc. (the "Parent") is the parent bank holding company
of West Suburban Bank, Lombard, Illinois (the "Subsidiary," and together with
the Parent and its other subsidiaries, the "Company" or "West Suburban"). The
Company had total consolidated assets at December 31, 1997 of approximately
$1.29 billion. West Suburban is the twelfth largest bank holding company
headquartered in Illinois and the Subsidiary is the largest independent bank
headquartered in DuPage County.

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                    WEST SUBURBAN BANCORP, INC.
                        FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
                                             Years Ended December 31,
                                (Dollars in thousands, except per share data)
                         -----------------------------------------------------------
                            1997        1996        1995        1994         1993
                         ---------   ---------   ---------   ---------     ---------
<S>                      <C>         <C>         <C>         <C>           <C>
Net income                 $21,784     $15,942     $13,525     $13,026      $11,824
Per share data
  Net income                 50.37       36.86       31.27       30.12        27.72
  Book value                306.02      273.62      254.73      226.53       221.56
Net loans                  762,538     784,242     760,687     709,205      694,301
Total assets             1,293,691   1,235,604   1,154,349   1,041,495      999,878
Deposits                 1,144,949   1,099,397   1,029,789     923,257      883,464
Shareholders' equity       132,353     118,338     110,168      97,971       95,822
</TABLE>

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                         TABLE OF CONTENTS
<TABLE>
<S>                                                                  <C>
Profile                                                               1
Letter to Our Shareholders,
  Customers and Friends                                               2
Corporate Information                                                 3
Business Review                                                       3
Selected Quarterly Financial Data                                     4
Review of Operations                                                  5
Independent Auditors' Report                                          6
Consolidated Financial Statements                                     7
Notes to Consolidated Financial Statements                           12
Selected Financial Data                                              24
Distribution of Assets and Net Interest
  Income and Average Rates
  and Yields on a Tax Equivalent Basis                               25
Management's Discussion
  and Analysis of Financial
  Condition and Results of Operations                                27
Boards of Directors                                                  34
Officers                                                             34
Addresses of Locations                                               36
Map of Locations                                                     37
Shareholder Information                                              38
</TABLE>

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THIS REPORT, INCLUDING THE LETTER TO OUR SHAREHOLDERS, CUSTOMERS AND FRIENDS,
CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. THE COMPANY INTENDS SUCH FORWARD-LOOKING
STATEMENTS TO BE COVERED BY THE SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING
STATEMENTS CONTAINED IN THE PRIVATE SECURITIES REFORM ACT OF 1995, AS
AMENDED, AND IS INCLUDING THIS STATEMENT FOR PURPOSES OF INDICATING SUCH
INTENT. FORWARD-LOOKING STATEMENTS, WHICH ARE BASED ON CERTAIN ASSUMPTIONS
AND DESCRIBE FUTURE PLANS, STRATEGIES AND EXPECTATIONS OF THE COMPANY, ARE
GENERALLY IDENTIFIABLE BY USE OF THE WORDS "BELIEVE," "EXPECT," "INTEND,"
"ANTICIPATE," "ESTIMATE," "PROJECT" OR SIMILAR EXPRESSIONS. 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 PARENT AND THE SUBSIDIARY
INCLUDE, BUT ARE NOT LIMITED TO, CHANGES IN INTEREST RATES, GENERAL ECONOMIC
CONDITIONS, LEGISLATIVE/REGULATORY CHANGES, MONETARY AND FISCAL POLICIES OF
THE U.S. GOVERNMENT, INCLUDING POLICIES OF THE U.S. TREASURY AND THE FEDERAL
RESERVE BOARD, THE QUALITY OR COMPOSITION OF THEIR LOAN OR INVESTMENT
PORTFOLIOS, DEMAND FOR LOAN PRODUCTS, DEPOSIT FLOWS, COMPETITION, DEMAND FOR
FINANCIAL SERVICES IN THE COMPANY'S MARKET AREA AND ACCOUNTING PRINCIPLES,
POLICIES AND GUIDELINES. THESE RISKS AND UNCERTAINTIES SHOULD BE CONSIDERED
IN EVALUATING FORWARD-LOOKING STATEMENTS AND UNDUE RELIANCE SHOULD NOT BE
PLACED ON SUCH STATEMENTS. FURTHER INFORMATION CONCERNING THE COMPANY AND ITS
BUSINESS, INCLUDING ADDITIONAL FACTORS THAT COULD MATERIALLY AFFECT THE
COMPANY'S FINANCIAL RESULTS, IS INCLUDED IN THE COMPANY'S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION.

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                                       1
<PAGE>

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TO OUR SHAREHOLDERS, CUSTOMERS AND FRIENDS:

As we look forward to the new millennium in just two years, we at West
Suburban would like to take time to reflect on our past 35 years. We started
in 1962 as a dream of our founders and, through their efforts, we have grown
to 32 locations in four counties (DuPage, Will, Kane and Kendall). On
December 31, 1997, West Suburban had $1.3 billion in assets. In 1997, we
reported record earnings of $21.8 million which represents a 37% increase
from the prior year. Our return on average assets increased to 1.71% in 1997,
up from 1.38% for 1996.

During 1997, our book value per share grew by $32.40 (11.8%) to $306.02 at
year end 1997 from $273.62 at year end 1996. Our dividends declared in 1997
increased by $2.50 (15.6%) per share to $18.50 per share in 1997 from $16.00
in 1996.

The year 1997 was a year of change for our organization. To help us provide
better service to our customers we merged 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. into West Suburban Bank on May 17, 1997. On November 1, 1997, we
converted to a new computer system which is year 2000 compliant. As a result
of our system conversion we expect to be able to offer electronic banking
later this year.

In 1998, we will expand the number of our locations with a new facility at
Eola Road and New York Avenue on the east side of Aurora. West Suburban will
add its first Romeoville facility in an area that we believe will be greatly
enhanced by a full service bank. We will also add a second facility in the
Bartlett/Hanover Park area. In addition, we will look to the east side of St.
Charles to enhance our position in the rapidly growing St. Charles area. We
will continue to seek expansion opportunities as we build our delivery system
and to grow with the communities in which we have facilities. In 1997, we also
remodeled a number of our facilities to create a better banking environment
for our customers.

In 1998, we will continue to offer the convenient hours of service that have
set us apart from our competition. We will emphasize the areas that have made
us successful like convenience, quality service, quality products,
telebanking, extended hours and leading edge technology.

As always, we appreciate your continued support and welcome your comments,
criticisms and suggestions. We could not have achieved our success without
the support of our shareholders, customers, communities, friends and
employees. Thank you everyone.

Sincerely,

/s/ Kevin J. Acker                                         /s/ Duane G. Debs
Kevin J. Acker                                             Duane G. Debs
Chairman of the Board                                      President and CFO

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                                       2
<PAGE>

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CORPORATE INFORMATION

The Company is a bank holding company headquartered in DuPage County,
Illinois. 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 per share book value as of the end of the indicated periods and
dividends declared for the last two years are set forth in the following
table:

<TABLE>
<CAPTION>
YEAR            QUARTER       BOOK VALUE      DIVIDENDS DECLARED
----------------------------------------------------------------
<S>             <C>           <C>             <C>
1997              4TH           $306.02             $5.00
                  3RD            299.48              4.50
                  2ND            290.87              4.50
                  1ST            282.10              4.50
----------------------------------------------------------------
1996              4th           $273.62             $4.00
                  3rd            266.00              4.00
                  2nd            265.31              4.00
                  1st            258.36              4.00
</TABLE>

BUSINESS REVIEW

The Company had total assets at December 31, 1997 of approximately $1.29
billion. As of December 31, 1997, the Subsidiary operated 32 facilities
throughout DuPage, Kane, Kendall and Will Counties, with its business
activities focusing primarily on the retail and commercial banking markets.
The Company had a total of 460 full-time equivalent employees at December 31,
1997.

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                                       3
<PAGE>

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SELECTED QUARTERLY FINANCIAL DATA

<TABLE>
<CAPTION>
                                FIRST     SECOND    THIRD    FOURTH
                               QUARTER   QUARTER   QUARTER   QUARTER
                           (Dollars in thousands, except per share data)
-----------------------------------------------------------------------------
<S>                            <C>       <C>       <C>       <C>
            1997
INTEREST INCOME                $22,751   $24,278   $24,216   $23,963
NET INTEREST INCOME             12,460    12,849    12,767    12,432
PROVISION FOR LOAN LOSSES          295       276       276       776
OTHER OPERATING INCOME           5,738     2,234     2,029     2,395
OTHER OPERATING EXPENSE          7,795     7,423     6,787     7,685
NET INCOME                       6,565     4,833     5,123     5,263
NET INCOME PER SHARE - BASIC     15.18     11.17     11.85     12.17

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           1996
Interest income                $22,021   $21,378   $21,782   $23,377
Net interest income             12,774    12,480    12,193    12,752
Provision for loan losses          458       338       388       321
Other operating income           2,276     3,187     2,155     2,278
Other operating expense          7,674     6,982    11,616     7,878
Net income                       4,583     5,274     1,640     4,445
Net income per share - basic     10.60     12.19      3.79     10.28

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</TABLE>

                                        4
<PAGE>

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                            REVIEW OF OPERATIONS


This past year presented West Suburban Bank with the challenge of adapting to
significant changes within the organization. Our merger from five separate
institutions into one, accomplished in May, allowed us to more efficiently
utilize bank resources and create a more convenient banking environment for
our customers. Later in the year, we upgraded our data processing capability
with new software. In addition to improving our internal operations, the new
software will allow us to offer enhancements to existing products as well as
a number of entirely new services. These include additional features to our
Telebank-24 bank-by-phone system and a PC Banking service that will allow
customers to do their banking from their home computers. We are committed to
reinforcing our personal, community oriented service with state-of-the-art
convenience in electronic banking.

Amid these internal changes, we adapted to a marketplace characterized by
increased competition for loans and deposits. We continued to promote our
Master Equity Line, a product that combines the best features of a line of
credit with the advantages of a fully amortizing loan. Additionally, we
pursued home mortgage loans, an effort that we anticipate intensifying
particularly if interest rates remain low. On the deposit side, our seasonal
promotional certificates of deposit proved as popular as ever, including two
springtime promotional certificates of deposit that generated over $65
million in deposits. Furthermore, we continued to offer our 5-Year Look-In
Certificate of Deposit as well as our 4-Year Maximum Yield Certificate of
Deposit. These two products are designed to protect customers from interest
rate fluctuations, providing them with competitive alternatives to nonbank
investments.

In the past year, we continued to explore new products, markets, delivery
channels and methods to acquire new customers and strengthen our ties with
existing customers. These efforts, along with our existing products and
services, reflect our dedication to meeting the needs of our customers.

At West Suburban Bank, we feel our responsibility extends beyond our
immediate customer base and into the communities we serve. As a community
bank, we believe we have a special role to play an exemplary corporate
citizen. This was expressed in 1997 both at the institutional level and
through the efforts of our civic-minded employees, by participating in a wide
range of not-for-profit organizations and by making regular donations of
private gifts to community organizations.

We look to 1998 with optimism, and remain dedicated to meeting the needs of
our customers and the communities in which they live. We anticipate expanding
into new markets and strengthening our presence in existing markets, by
opening new facilities and improving certain of our current facilities. We
will remain committed to innovative financial thinking, offering a broad
range of accessible products, improving delivery channels, maintaining high
levels of customer service and dedication to the community. We are confident
that we have demonstrated this commitment in the past, and look forward to
meeting these challenges in the future while remaining profitable and
enhancing shareholder value.

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                                       5
<PAGE>

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[Deloitte & Touche LLP Letterhead]




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 subsidiary (the "Company") as of December 31, 1997 and
1996, 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, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our 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 subsidiary at December 31, 1997 and 1996 and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted
accounting principles.

/s/ Deloitte & Touche LLP
Chicago, Illinois
January 30, 1998

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                                       6
<PAGE>

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                           WEST SUBURBAN BANCORP, INC.
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                           --------------
                                                               1997             1996
                                                             ----------    ----------
<S>                                                          <C>           <C>
ASSETS

Cash and due from banks                                         $38,251       $38,520
Interest-earning deposits in financial institutions                 343           240
Federal funds sold                                               21,740        29,890
                                                             ----------    ----------
  Total cash and cash equivalents                                60,334        68,650
Investment securities:
  Available for sale (amortized cost of $218,892 in 1997;
    $159,614 in 1996)                                           218,587       158,578
  Held to maturity (fair value of $199,905 in 1997;
    $170,202 in 1996)                                           199,292       170,191
Loans, less allowance for loan losses of $9,772 in 1997;
    $9,603 in 1996                                              762,538       784,242
Premises and equipment, net                                      31,142        30,130
Other real estate                                                 2,450         2,757
Accrued interest and other assets                                19,348        21,056
                                                             ----------    ----------
     TOTAL ASSETS                                            $1,293,691    $1,235,604
                                                             ----------    ----------
                                                             ----------    ----------

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
  Noninterest-bearing                                          $123,969      $102,583
  Interest-bearing                                            1,020,980       996,814
                                                             ----------    ----------
    Total deposits                                            1,144,949     1,099,397
FHLB advances                                                                   1,350
Accrued interest and other liabilities                           16,389        16,519
                                                             ----------    ----------
    TOTAL LIABILITIES                                         1,161,338     1,117,266
                                                             ----------    ----------
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                                               91,014        77,439
 Unrealized loss on securities available for sale, net of
  tax benefit of ($121) in 1997; ($412) in 1996                    (184)         (624)
                                                             ----------    ----------
  TOTAL SHAREHOLDERS' EQUITY                                    132,353       118,338
                                                             ----------    ----------
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                 $1,293,691    $1,235,604
                                                             ----------    ----------
                                                             ----------    ----------
                                                           --------------
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.

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                                       7
<PAGE>

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                          WEST SUBURBAN BANCORP, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                           -----------
                                                              1997                   1996                1995
                                                             -------                -------             -------
<S>                                                          <C>                    <C>                 <C>
INTEREST INCOME
   Loans, including fees                                     $69,414                $70,759             $67,381
                                                             -------                -------             -------
   Investment securities:
      Taxable                                                 21,979                 13,859              12,801
      Nontaxable                                               1,825                  2,084               1,290
                                                             -------                -------             -------
         Total investment securities                          23,804                 15,943              14,091
   Deposits in financial institutions                             12                     16                   7
   Federal funds sold                                          1,978                  1,840               1,949
                                                             -------                -------             -------
         Total interest income                                95,208                 88,558              83,428
                                                             -------                -------             -------
INTEREST EXPENSE
   Deposits                                                   44,313                 37,787              36,988
   Other                                                         387                    572                 426
                                                             -------                -------             -------
         Total interest expense                               44,700                 38,359              37,414
                                                             -------                -------             -------
         Net interest income                                  50,508                 50,199              46,014
PROVISION FOR LOAN LOSSES                                      1,623                  1,505               1,850
                                                             -------                -------             -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES           48,885                 48,694              44,164
                                                             -------                -------             -------
OTHER OPERATING INCOME
   Service fees                                                3,414                  3,746               3,529
   Trust fees                                                    171                    157                 243
   Net gain on sales of loans                                    280                    151                 110
   Loan servicing                                                659                    899                 941
   Net realized gain on sales of investment securities
      available for sale                                         136                    449                  41
   Net gain on sale of other real estate                       1,466                     55                  12
   Litigation settlement                                       2,344
   Other                                                       3,926                  4,439               2,948
                                                             -------                -------             -------
         Total other operating income                         12,396                  9,896               7,824
                                                             -------                -------             -------
OTHER OPERATING EXPENSE
   Salaries and employee benefits                             15,849                 14,954              13,228
   Occupancy                                                   2,901                  2,743               2,604
   Furniture and equipment                                     2,802                  2,655               2,413
   FDIC insurance premiums                                       172                  1,113               1,213
   Professional fees                                             829                  1,062               1,106
   Data processing                                               772                    827                 967
   Other real estate                                             523                  5,042               3,516
   Other                                                       5,842                  5,754               5,145
                                                             -------                -------             -------
         Total other operating expense                        29,690                 34,150              30,192
                                                             -------                -------             -------
INCOME BEFORE INCOME TAXES                                    31,591                 24,440              21,796
INCOME TAXES                                                   9,807                  8,498               8,271
                                                             -------                -------             -------
NET INCOME                                                   $21,784                $15,942             $13,525
                                                             -------                -------             -------
                                                             -------                -------             -------

EARNINGS PER SHARE - BASIC                                    $50.37                 $36.86              $31.27
                                                             -------                -------             -------
                                                             -------                -------             -------
                                                           -----------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

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                                       8
<PAGE>

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                        WEST SUBURBAN BANCORP, INC.
        CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
               YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                          (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                       Unrealized
                                                                                       Gain (Loss)
                                               Class A  Class B                       on Securities           Total
                                                Common   Common           Retained  Available For Sale,   Shareholders'
                                                 Stock    Stock  Surplus  Earnings     Net of Taxes          Equity
                                               -------  -------  -------  --------  -------------------   -------------
<S>                                            <C>      <C>      <C>      <C>       <C>                   <C>
BALANCE, JANUARY 1, 1995                        $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

Net income                                                                  15,942                           15,942
Cash dividends declared                                                     (6,919)                          (6,919)
Change in net unrealized gain (loss) on
  securities available for sale, net of taxes                                               (853)              (853)
                                                ------    ----   -------   -------         ------          --------
BALANCE, DECEMBER 31, 1996                       2,774     683    38,066    77,439          (624)           118,338
                                              -----------------------------------------------------------------------

Net income                                                                  21,784                           21,784
Cash dividends declared                                                     (8,001)                          (8,001)
Change in net unrealized gain (loss) on
  securities available for sale, net of taxes                                                440                440
Purchase of minority interest in
  subsidiaries                                                                (208)                            (208)
                                                ------    ----   -------   -------         ------          --------
BALANCE, DECEMBER 31, 1997                      $2,774    $683   $38,066   $91,014         ($184)          $132,353
                                                ------    ----   -------   -------         ------          --------
                                                ------    ----   -------   -------         ------          --------
                                              -----------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

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                                       9
<PAGE>

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                           WEST SUBURBAN BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                 ------------
                                                     1997         1996        1995
                                                   --------    ---------    --------
<S>                                                <C>         <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                        $21,784      $15,942     $13,525
                                                   --------    ---------    --------

  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                   3,236        2,974       2,720
      Provision for loan losses                       1,623        1,505       1,850
      Provision for deferred income tax (benefit)     1,342       (2,185)       (593)
      Net premium amortization and discount
        accretion of investment securities              502          487         463
      Net realized gain on sales of
        securities available for sale                  (136)        (449)        (41)
      Net gain on sale of loans held for sale          (280)        (151)       (110)
      Proceeds from sale of loans held for sale       3,296          727       1,964
      Origination of loans held for sale             (4,491)      (1,043)     (3,038)
      Provision for loss on other real estate                      5,460       1,543
      Loss (gain) on sale of premises and
        equipment                                        (8)          90         (31)
      Net gain on sale of other real estate          (1,466)         (55)        (12)
      Decrease (increase) in accrued interest
        and other assets                                 72       (1,165)      2,835
     (Decrease) increase in accrued interest
        and other liabilities                          (561)       2,114       3,606
                                                   --------    ---------    --------
          Total adjustments                           3,129        8,309      11,156
                                                   --------    ---------    --------
      NET CASH PROVIDED BY OPERATING ACTIVITIES      24,913       24,251      24,681
                                                   --------    ---------    --------

CASH FLOWS FROM INVESTING ACTIVITIES
  Investment securities available for sale:
    Proceeds from sales                              11,414       30,160       9,087
    Proceeds from maturities                         92,057       16,721       3,162
    Purchases                                      (163,281)     (72,537)    (24,676)
  Investment securities held to maturity:
    Proceeds from maturities                         82,407       48,343      55,632
    Purchases                                      (111,341)    (102,353)    (63,016)
  Purchase of minority interest in
    subsidiaries                                       (208)
  Net decrease (increase) in loans                   20,605      (26,697)    (53,869)
  Purchases of premises and equipment                (4,248)      (4,017)     (5,273)
  Proceeds from sale of premises and
    equipment                                             8           29          32
  Proceeds from sale of other real estate             2,725        2,259       2,330
                                                   --------    ---------    --------
      NET CASH USED IN INVESTING ACTIVITIES        ($69,862)   ($108,092)   ($76,591)
                                                   --------    ---------    --------
                                                 ------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

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                                      10
<PAGE>

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                           WEST SUBURBAN BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                   (CONTINUED)
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                 ------------
                                                     1997         1996        1995
                                                   --------    ---------    --------
<S>                                                <C>         <C>          <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in total deposits                    $45,552      $69,608    $106,531
 (Decrease) increase in FHLB advances                (1,350)       1,350      (9,940)
  Cash dividends paid                                (7,569)      (6,812)     (6,379)
                                                   --------    ---------    --------
    NET CASH PROVIDED BY FINANCING ACTIVITIES        36,633       64,146      90,212
                                                   --------    ---------    --------
NET (DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                   (8,316)     (19,695)     38,302
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR       68,650       88,345      50,043
                                                   --------    ---------    --------
CASH AND CASH EQUIVALENTS AT END OF YEAR            $60,334      $68,650     $88,345
                                                   --------    ---------    --------
                                                   --------    ---------    --------
Supplemental cash flow information:
  Cash paid during the year for:
    Interest on deposits and other borrowings       $42,229      $37,694     $35,707
    Income taxes                                      9,407       10,244       7,673
  Transfers from loans to other real estate             951        2,104       1,721
  Transfer of investment securities from held to
    maturity to available for sale                                            32,288
                                                 ------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

-----------------------------------------------------------------------------


                                      11
<PAGE>
-------------------------------------------------------------------------------

                           WEST SUBURBAN BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (Dollars in thousands)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION
During the first quarter of 1997, West Suburban Bank (the "Subsidiary")
received approvals from the Federal Deposit Insurance Corporation ("FDIC"),
the Office of the Illinois Commissioner of Banks and Real Estate and the
Office of Thrift Supervision to merge the four bank subsidiaries and the
thrift subsidiary into one state chartered bank under the name "West Suburban
Bank." On May 17, 1997, the subsidiaries were merged and since that date,
West Suburban Bancorp, Inc. (the "Parent") has conducted its banking
activities through its single bank subsidiary. The merger had no significant
impact on the Company's financial condition or results of operations. The
Parent together with the Subsidiary may be referred to as the "Company." The
consolidated financial statements include the accounts of the Parent and the
Subsidiary. Significant intercompany accounts and transactions have been
eliminated.

BASIS OF ACCOUNTING
The accompanying consolidated 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 the consolidated 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, primarily the allowance for loan losses, and disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.

INVESTMENT SECURITIES
Debt and marketable equity securities are classified into two categories,
"held to maturity" and "available for sale." Held to maturity securities
include those debt securities where the Company has both the ability and
positive intent to hold them to maturity. Securities not meeting these
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
does not engage in trading activities. 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.

-------------------------------------------------------------------------------
                                     12
<PAGE>
-------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company reviews its commercial and real estate construction and
non-residential mortgage loans on a quarterly basis to determine the amount
of impairment, if any. 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 maintained for the amount of 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.

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.

MORTGAGE SERVICING RIGHTS
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("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. The
adoption of SFAS 122 did not have a material effect on the Company's
financial condition or results of operations. In June 1996, the Financial
Accounting Standards Board ("FASB") issued SFAS 125, "Accounting for the
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," which supercedes SFAS 122. The adoption of SFAS 125 did not
have a material effect on the Company's financial condition or results of
operations.

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 of other real estate is a reasonable estimate
of its fair value.

INTANGIBLES
The Company accounted for the acquisition of its former thrift subsidiary
using the purchase method of accounting. The related intangibles are being
amortized over 15 years using the straight-line method.

Effective January 1, 1996 the Company adopted 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. The adoption of SFAS 121 did not have a material effect
on the Company's financial condition or results of operations.

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
Deferred tax assets and liabilities are reflected at currently enacted income
tax rates applicable to the period in which the deferred tax assets or
liabilities are expected to be realized or settled. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through
the provision for income taxes. The Company files consolidated federal and
state income tax returns.

-------------------------------------------------------------------------------
                                     13
<PAGE>
-------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE
The Company adopted SFAS 128, "Earnings per Share," in 1997, which revised
the standards for computing and presenting basic and diluted earnings per
share. All prior periods have been restated. Earnings per share are
calculated on the basis of the daily weighted average number of shares
outstanding. The Company has no dilutive potential common shares outstanding.

CASH FLOWS
For purposes of reporting cash flows, cash and cash equivalents include cash
and due from banks, interest-earning deposits in financial institutions and
federal funds sold. Generally, federal funds are sold for one day periods.

NEW ACCOUNTING STANDARDS
In June 1996, the FASB issued SFAS 125, which provides new accounting and
reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities. Those standards are based on consistent
application of a "financial-components" approach that focuses on control.
Under that approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the liabilities
it has incurred, derecognizes financial assets when control has been
surrendered, and derecognizes liabilities when extinguished. SFAS 125 was
effective for the Company beginning January 1, 1997. The adoption of SFAS 125
did not have a material impact on the Company's financial condition or
results of operations.

In December 1996, FASB issued SFAS 127, "Deferral of the Effective Date of
Certain Provisions of SFAS 125," which deferred the effective date of certain
of the provisions of SFAS 125 for one year. The Company believes the adoption
of these provisions will not have a material impact on its financial
condition or results of operations.

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
are as follows at December 31:

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                             1997
                                                      ---------------------------------------------------------------------------
                                                                               Gross               Gross             Fair
                                                       Amortized Cost     Unrealized Gains   Unrealized Losses      Value
                                                      ------------------  -----------------  ------------------ -----------------
<S>                                                   <C>                 <C>                <C>                <C>
Corporate                                                      $170,335               $498              ($506)          $170,327
U.S. government agencies and corporations                        26,550                120               (537)            26,133
U.S. Treasury                                                    12,084                                   (73)            12,011
States and political subdivisions                                 1,178                 19                                 1,197
                                                      ------------------  -----------------  ------------------ -----------------
    Total debt securities                                       210,147                637             (1,116)           209,668
Federal Home Loan Mortgage Corp.
  Preferred Stock and other equity securities                     8,745                181                 (7)             8,919
                                                      ------------------  -----------------  ------------------ -----------------
      Total                                                    $218,892               $818            ($1,123)          $218,587
                                                      ==================  =================  ================== =================
-------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                                             1996
                                                      ---------------------------------------------------------------------------
                                                                               Gross               Gross             Fair
                                                       Amortized Cost     Unrealized Gains   Unrealized Losses      Value
                                                      ------------------  -----------------  ------------------ -----------------
<S>                                                   <C>                 <C>                <C>                <C>
Corporate                                                       $64,634               $283              ($322)           $64,595
U.S. government agencies and corporations                        63,591                134               (890)            62,835
U.S. Treasury                                                    16,151                                  (206)            15,945
States and political subdivisions                                 1,168                  8                 (3)             1,173
                                                      ------------------  -----------------  ------------------ -----------------
    Total debt securities                                       145,544                425             (1,421)           144,548
Federal Home Loan Mortgage Corp.
  Preferred Stock and other equity securities                    14,070                 16                (56)            14,030
                                                      ------------------  -----------------  ------------------ -----------------
      Total                                                    $159,614               $441            ($1,477)          $158,578
                                                      ==================  =================  ================== =================
</TABLE>
-------------------------------------------------------------------------------
                                     14
<PAGE>
-------------------------------------------------------------------------------

NOTE 2 - INVESTMENT SECURITIES (CONTINUED)

The amortized cost and fair value of investment securities held to maturity
are as follows at December 31:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                              1997
                                                        -------------------------------------------------------------------------
                                                        Amortized Cost          Gross               Gross           Fair Value
                                                                              Unrealized         Unrealized
                                                                                Gains              Losses
                                                        ----------------    ---------------    ----------------   ---------------
<S>                                                     <C>                 <C>                <C>                <C>
U.S. government agencies and corporations                      $162,176               $134              ($168)          $162,142
States and political subdivisions                                37,116                679                (32)            37,763
                                                        ----------------    ---------------    ----------------   ---------------
      Total                                                    $199,292               $813              ($200)          $199,905
                                                        ================    ===============    ================   ===============
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                                          1996
                                                        -------------------------------------------------------------------------
                                                        Amortized Cost          Gross               Gross           Fair Value
                                                                              Unrealized         Unrealized
                                                                                Gains              Losses
                                                        ----------------    ---------------    ----------------   ---------------
<S>                                                     <C>                 <C>                <C>                <C>
U.S. government agencies and corporations                      $130,250               $164              ($383)          $130,031
States and political subdivisions                                39,941                312                (82)            40,171
                                                        ----------------    ---------------    ----------------   ---------------
      Total                                                    $170,191               $476              ($465)          $170,202
                                                        ================    ===============    ================   ===============
</TABLE>

Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties. The amortized cost and fair value of debt securities
available for sale and held to maturity at December 31, 1997 by contractual
maturity are as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                       Available for Sale                         Held to Maturity
                                             ---------------------------------------    --------------------------------------
                                                 Amortized                Fair              Amortized               Fair
                                                    Cost                 Value                 Cost                 Value
                                             -----------------     -----------------    -----------------     ----------------
                                             <C>                   <C>                  <C>                   <C>
Due in 1 year or less                                 $57,889               $57,942              $16,204              $16,198
Due after 1 year through 5 years                      142,638               142,618              162,732              162,897
Due after 5 years through 10 years                      9,335                 8,823                7,669                7,858
Due after 10 years                                        285                   285               12,687               12,952
                                             -----------------     -----------------    -----------------     ----------------
     Total                                           $210,147              $209,668             $199,292             $199,905
                                             =================     =================    =================     ================
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Gross gains and gross (losses) of $150 and ($14), $476 and ($27), $161 and
($120) were realized on sales in 1997, 1996 and 1995, respectively.

Investment securities with a carrying value of approximately $24,688 and
$29,848 at December 31, 1997 and 1996, respectively, were pledged to secure
public deposits, fiduciary activities and for other purposes required or
permitted by law.

-------------------------------------------------------------------------------
                                     15
<PAGE>
-------------------------------------------------------------------------------

NOTE 3 - LOANS

Major classifications of loans were as follows at December 31:

<TABLE>
<CAPTION>
                        -----------------------------
                                     1997                         1996
                            ----------------------       ----------------------
<S>                         <C>                          <C>
Commercial                         $213,167                     $232,210
Installment                          41,191                       37,511
Real estate:
  Mortgage                          292,675                      299,664
  Home equity                       127,587                      124,805
  Construction                       72,415                       73,432
  Held for sale                       4,491                        1,043
VISA - credit card                   16,235                       17,951
Other                                 4,549                        7,229
                            ----------------------       ----------------------
      Total                         772,310                      793,845
Allowance for loan losses            (9,772)                      (9,603)
                            ----------------------       ----------------------
      Loans, net                   $762,538                     $784,242
                            ----------------------       ----------------------
                            ----------------------       ----------------------
                        -----------------------------
</TABLE>

The Company makes commercial, personal and residential loans primarily to
customers throughout the western suburbs of Chicago. The Company's loans to
the construction and land development industries represented 9.4% and 9.3% of
total loans at December 31, 1997 and 1996, respectively. The Company's real
estate construction loans are generally made within its market area. The
Company manages this exposure by continually reviewing local market
conditions and closely monitoring collateral values.

Loans on which the accrual of interest has been discontinued or reduced
amounted to $3,042, $2,283 and $1,478 at December 31, 1997, 1996 and 1995,
respectively. If interest on those loans had been accrued, such income would
have approximated $321, $136 and $146 for 1997, 1996 and 1995, respectively.

Changes in the allowance for loan losses were as follows for the years ended
December 31:

<TABLE>
<CAPTION>
                                                  ---------------------------
                                                              1997                         1996                          1995
                                                   ----------------------       ----------------------        ---------------------
<S>                                                <C>                          <C>                           <C>
Balance, beginning of year                                        $9,603                       $8,900                       $8,445
   Provision for loan losses                                       1,623                        1,505                        1,850
   Loans charged-off                                              (1,732)                      (1,097)                      (1,729)
   Recoveries                                                        278                          295                          334
                                                   ----------------------       ----------------------        ---------------------
Balance, end of year                                              $9,772                       $9,603                       $8,900
                                                   ======================       ======================        =====================
                                                ---------------------------
</TABLE>

The Company's impaired loans consisted of commercial and non-residential
mortgage loans totaling $17,156 at December 31, 1997 and $17,755 at December
31, 1996. Of these impaired loans, $2,496 required a valuation allowance of
$676 at December 31, 1997 compared to impaired loans of $1,422 with a
valuation allowance of $182 at December 31, 1996. The average outstanding
balance of impaired loans was approximately $15,718 and $17,389 for the years
ended December 31, 1997 and 1996, respectively. The interest income
recognized on impaired loans was approximately $1,783 and $1,706 for the
years ended December 31, 1997 and 1996, respectively. The Company had no
impaired real estate construction loans during 1997 or 1996.

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, 1997 and 1996, the
Company was servicing loans for the benefit of others with aggregate unpaid
principal balances of $148,386 and $296,282, respectively.

At December 31, 1997, the Company had no outstanding banker's acceptances
compared to $304 at December 31, 1996.

-------------------------------------------------------------------------------
                                     16
<PAGE>
-------------------------------------------------------------------------------

NOTE 4 - PREMISES AND EQUIPMENT

Major classifications of these assets are summarized as follows at December 31:

<TABLE>
<CAPTION>
                         -------------------------
                                    1997                          1996
                           ---------------------         ----------------------
<S>                        <C>                           <C>
Land                                      $5,848                         $5,848
Premises                                  26,060                         24,944
Leasehold improvements                       679                            679
Furniture and equipment                   28,625                         25,612
                           ---------------------         ----------------------
                                          61,212                         57,083
Less accumulated depreciation
 and amortization                        (30,070)                       (26,953)
                           ---------------------         ----------------------
   Total                                 $31,142                        $30,130
                           =====================         ======================

                        --------------------------
</TABLE>

NOTE 5 - DEPOSITS

The major categories of deposits are summarized as follows at December 31:

<TABLE>
<CAPTION>
                       --------------------------
                                  1997                          1996
                         ----------------------        ---------------------
<S>                      <C>                           <C>
Demand and other
 noninterest-bearing                   $123,969                     $102,583
NOW accounts                             49,162                      182,861
Money market savings                    465,970                      342,872
Time, $100,000 and over                  84,083                       86,343
Time, other                             421,765                      384,738
                         ----------------------        ---------------------
   Total                             $1,144,949                   $1,099,397
                         ======================        =====================

                       --------------------------
</TABLE>

Interest expense on interest-bearing deposits is summarized as follows for
the years ended December 31:

<TABLE>
<CAPTION>
                                                      --------------------------
                                                                1997                       1996                        1995
                                                         --------------------        ------------------        ------------------
<S>                                                      <C>                         <C>                       <C>
NOW accounts                                                          $1,374                    $2,836                    $3,057
Money market savings                                                  13,100                    12,314                    13,836
Time, $100,000 and over                                                5,100                     3,675                     2,848
Time, other                                                           24,739                    18,962                    17,247
                                                         --------------------        ------------------        ------------------
   Total                                                             $44,313                   $37,787                   $36,988
                                                         ====================        ==================        ==================
                                                      --------------------------
</TABLE>

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                                     17
<PAGE>
-------------------------------------------------------------------------------

NOTE 6 - INCOME TAXES

The income tax provision reflected in the Consolidated Statements of Income is
as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                                  --------------------------
                                                              1997                        1996                        1995
                                                      ---------------------       ---------------------        --------------------
<S>                                                   <C>                         <C>                          <C>
Current:
   Federal                                                          $7,271                      $9,068                      $7,593
   State                                                             1,194                       1,615                       1,271
Deferred                                                             1,342                      (2,185)                       (593)
                                                      ---------------------       ---------------------        --------------------
   Total                                                            $9,807                      $8,498                      $8,271
                                                      =====================       =====================        ====================

                                                  --------------------------
</TABLE>

A reconciliation between taxes computed at the statutory income tax rates and
the consolidated effective tax rates follows:

<TABLE>
<CAPTION>
                                                  --------------------------
                                                              1997                      1996               1995
                                                       ----------------          ---------------    ----------------
<S>                                                    <C>                       <C>                <C>
Statutory income tax rates                                         35.0%                   35.0%               35.0%
(Decrease) increase in taxes resulting from:
   Federal tax-exempt income                                       (2.8)                   (3.9)               (2.3)
   State income taxes, net of federal tax benefit                   4.8                     4.8                 4.8
   Resolution of Internal Revenue Service Examination              (3.4)
   Other                                                           (2.6)                   (1.1)                0.4
                                                       ----------------          ---------------    ----------------
Consolidated effective tax rates                                   31.0%                   34.8%               37.9%
                                                        ===============          ===============    ================
                                                   --------------------------
</TABLE>

The temporary differences which created deferred tax assets and liabilities
at December 31 are detailed below:

<TABLE>
<CAPTION>
                                                                  --------------------------
                                                                             1997                         1996
                                                                    ------------------        ---------------------
<S>                                                                 <C>                       <C>
Deferred tax assets:
   Allowance for loan loss                                                     $3,377                        $3,208
   Deferred compensation                                                        1,374                           991
   Unrealized loss on securities available for sale                               121                           412
   Other                                                                                                      1,892
                                                                    ------------------         ---------------------
      Total deferred tax assets                                                 4,872                         6,503
                                                                    ------------------         ---------------------
Deferred tax liabilities:
   Depreciation                                                                   707                           935
   Other                                                                          230
                                                                    ------------------         ---------------------
      Total deferred tax liabilities                                              937                           935
                                                                    ------------------         ---------------------
      Net deferred tax assets                                                  $3,935                        $5,568
                                                                    ==================         =====================
                                                                ----------------------------
</TABLE>

                         NOTE 7 - EMPLOYEE BENEFIT PLANS

As of December 31, 1997, the Company maintained an employee stock ownership
plan, The West Suburban Bank Employee Stock Ownership Plan (the "Plan"),
covering substantially all full-time employees who have satisfied specific
age and service requirements. 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 were made in
accordance with resolutions passed by the board of directors of the
Subsidiary and in aggregate amounted to $1,347 in 1997, $1,221 in 1996 and
$1,117 in 1995. The Subsidiary also maintains deferred compensation plans in
which former and current executive officers participate. The deferred
compensation expense for the years ended December 31, 1997, 1996 and 1995
amounted to $204, $406 and $219, respectively. These plans are not qualified
under the Code and, therefore, tax deductions are allowed only when benefits
are paid.

-------------------------------------------------------------------------------
                                     18
<PAGE>



NOTE 7 - EMPLOYEE BENEFIT PLANS (CONTINUED)

During 1996, the Company terminated the Aurora Federal Savings Bank, F.S.B.
Pension Plan (the "Aurora Pension Plan"). The Aurora Pension Plan was a
successor plan to the Financial Institutions Retirement Fund program (the
"FIRF Plan") which the former thrift subsidiary maintained prior to its
acquisition by the Company. As a result of the termination of the Aurora
Pension Plan, approximately $1.1 million of excess assets reverted to the
Company. This amount was recognized as income by the Company during 1996 and
is reflected in other operating income-other.

NOTE 8 - 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. The
Company generally 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 is as follows:

<TABLE>
<CAPTION>
                                                               --------------------------
                                                                           1997                         1996
                                                                   ---------------------        ---------------------
<S>                                                                <C>                          <C>
Financial instruments whose contractual amounts represent credit risks:
      Commitments to extend credit                                             $292,527                     $353,460
      Letters of credit                                                          19,912                       32,566

                                                               --------------------------
</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 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 9 - 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.

NOTE 10 - 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-earning deposits in
financial institutions) it has been assumed that their estimated fair values
approximate their carrying values. Similarly, for loans and deposits with
variable interest rates, it has been assumed that their estimated fair values
also approximate their carrying values.


------------------------------------------------------------------------------
                                       19
<PAGE>



NOTE 10 - FINANCIAL INSTRUMENTS FAIR VALUE DISCLOSURE (CONTINUED)

The estimated fair values of the Company's financial instruments as of
December 31 are set forth in the table below:

<TABLE>
<CAPTION>
                                                  ------------------------------------------
                                                                      1997                                        1996
                                                      -------------------------------------    ------------------------------------
                                                      Carrying Value       Estimated Fair      Carrying Value      Estimated Fair
                                                                               Value                                    Value
                                                      ----------------    -----------------    ----------------    ----------------
<S>                                                   <C>                 <C>                  <C>                 <C>
Financial assets:
  Cash and cash equivalents                                   $60,334              $60,334             $68,650             $68,650
  Investment securities:
    Available for sale                                        218,587              218,587             158,578             158,578
    Held to maturity                                          199,292              199,905             170,191             170,202
  Loans, less allowance for loan losses                       762,538              772,410             784,242             779,945
                                                      ----------------    -----------------    ----------------    ----------------
     Total financial assets                                $1,240,751           $1,251,236          $1,181,661          $1,177,375
                                                      ================    =================    ================    ================

Financial liabilities:
  Deposits                                                 $1,144,949           $1,159,387          $1,099,397          $1,100,862
  Short-term borrowings                                                                                  3,271               3,271
                                                      ----------------    -----------------    ----------------    ----------------
     Total financial liabilities                           $1,144,949           $1,159,387          $1,102,668          $1,104,133
                                                      ================    =================    ================    ================

                                                  ----------------------------------------
</TABLE>

The fair values for investment securities were derived from quoted market
values as of the close of business on December 31, 1997 and 1996 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.

Off-balance-sheet items totaled $312,439 at December 31, 1997 and $386,026 at
December 31, 1996 and are primarily comprised of unfunded loan commitments
which are generally priced at market at the time of funding. There is no
material difference between the contractual amount and the estimated fair
value of off-balance-sheet items.

NOTE 11 - 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
Subsidiary in the ordinary course of business, and/or are indebted to the
Subsidiary for loans of $60,000 or more. It is anticipated that they will
continue to be customers of and indebted to the Subsidiary 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 provided, as those prevailing at the
same time for comparable loans made by the Subsidiary 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 $22,570 and $20,376 at December 31, 1997
and 1996, respectively. During 1997, $28,740 in additions and $26,546 in
reductions were made.

NOTE 12 - INVESTMENT IN SUBSIDIARY AND REGULATORY RESTRICTIONS

The Parent is economically dependent on the cash dividends received from the
Subsidiary. 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 $20,747, $8,136 and $7,401 for the years ended
December 31, 1997, 1996 and 1995, respectively. The Company and the
Subsidiary are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory - and possibly additional
discretionary - actions by regulators that, if undertaken, could have direct
material effect on the Company's consolidated financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt
corrective action, each entity must meet specific capital guidelines that
involve quantitative measures of each entity's assets, liabilities, and
certain off-balance-sheet items as calculated under regulatory accounting
practices. Capital amounts and classification are also subject to qualitative
judgements by the regulators about components, risk weightings and other
factors.


------------------------------------------------------------------------------
                                       20
<PAGE>

NOTE 12 - INVESTMENT IN SUBSIDIARY AND REGULATORY RESTRICTIONS (CONTINUED)

Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Subsidiary to maintain minimum amounts and ratios
(set forth in the table below) of total and Tier I capital to risk-weighted
assets, and of Tier I capital to average assets. Management believes as of
December 31, 1997, that the Company and the Subsidiary met all capital
adequacy requirements to which they were subject.

Management's present policy is to limit the amount of dividends from the
Subsidiary such that the 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 capital to fund
growth. As of December 31, 1997, the Subsidiary could pay, in the aggregate,
dividends totaling $16,147 to the Parent while remaining a "well-capitalized"
institution. The Subsidiary could pay additional dividends without seeking
regulatory approval.

As of December 31, 1997 and 1996, the most recent notification from the FDIC
categorized the Company and Subsidiary as "well-capitalized" under the
regulatory framework for prompt corrective action. To be categorized as
"well-capitalized" the Parent and the Subsidiary must maintain minimum total
risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the
table. There are no conditions or events since that notification that
management believes would result in a change of the Company's or the
Subsidiary's category. The capital amounts and ratios of the Company and the
Subsidiary are also presented in the table:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 1997                                                     Actual         For Capital Adequacy       To Be Well
                                                                                                 Purposes            Capitalized
                                                                     --------------------- -------------------- -------------------
 TOTAL CAPITAL (TO RISK WEIGHTED ASSETS):                              AMOUNT      RATIO     AMOUNT      RATIO    AMOUNT     RATIO
                                                                     ------------ -------- ----------- -------- ---------- --------
<S>                                                                  <C>           <C>       <C>         <C>      <C>        <C>
West Suburban Bancorp, Inc.                                          $140,781      13.7%    $82,252       8.0%        N/A      N/A
West Suburban Bank                                                    120,242      11.6      83,276       8.0    $104,095     10.0%
 TIER I CAPITAL (TO RISK WEIGHTED ASSETS):
West Suburban Bancorp, Inc.                                           131,009      12.7      41,126       4.0         N/A      N/A
West Suburban Bank                                                    110,470      10.6      41,638       4.0      62,457      6.0
 TIER I CAPITAL (TO AVERAGE ASSETS):
West Suburban Bancorp, Inc.                                           131,009      10.2      51,386       4.0         N/A      N/A
West Suburban Bank                                                    110,470       8.3      53,400       4.0      66,750      5.0
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 1996                                                     Actual         For Capital Adequacy       To Be Well
                                                                                                 Purposes            Capitalized
                                                                     --------------------- -------------------- -------------------
 TOTAL CAPITAL (TO RISK WEIGHTED ASSETS):                              AMOUNT      RATIO     AMOUNT      RATIO     AMOUNT     RATIO
                                                                     ------------ -------- ----------- -------- ---------- --------
<S>                                                                  <C>           <C>       <C>         <C>       <C>        <C>
West Suburban Bancorp, Inc.                                           $126,811      13.0%    $78,199       8.0%        N/A      N/A
West Suburban Bank                                                      41,682      10.8      30,834       8.0     $38,543     10.0%
West Suburban Bank of Downers Grove/Lombard                             17,310      16.6       8,344       8.0      10,429     10.0
West Suburban Bank of Darien                                            23,045      14.0      13,178       8.0      16,473     10.0
West Suburban Bank of Carol Stream/Stratford Square                     17,723      11.8      12,004       8.0      15,005     10.0
 TIER I CAPITAL (TO RISK WEIGHTED ASSETS):
West Suburban Bancorp, Inc.                                            117,208      12.0      39,099       4.0         N/A      N/A
West Suburban Bank                                                      38,036       9.9      15,417       4.0      23,126      6.0
West Suburban Bank of Downers Grove/Lombard                             16,000      15.3       4,172       4.0       6,258      6.0
West Suburban Bank of Darien                                            21,023      12.8       6,589       4.0       9,884      6.0
West Suburban Bank of Carol Stream/Stratford Square                     16,490      11.0       6,002       4.0       9,003      6.0
 TIER I CAPITAL (TO AVERAGE ASSETS):
West Suburban Bancorp, Inc.                                            117,208       9.8      47,843       4.0         N/A      N/A
West Suburban Bank                                                      37,825       8.0      18,921       4.0      23,651      5.0
West Suburban Bank of Downers Grove/Lombard                             15,761      10.8       5,822       4.0       7,277      5.0
West Suburban Bank of Darien                                            20,959       9.1       9,204       4.0      11,506      5.0
West Suburban Bank of Carol Stream/Stratford Square                     16,385       7.9       8,256       4.0      10,320      5.0
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

At December 31, 1996, West Suburban Bank of Aurora, F.S.B. maintained a core
capital ratio of 11.3%, a tangible capital ratio of 13.2% and a total
risk-based capital ratio of 14.2%.


------------------------------------------------------------------------------
                                       21
<PAGE>



NOTE 12 - INVESTMENT IN SUBSIDIARY AND REGULATORY RESTRICTIONS (CONTINUED)

In accordance with the regulations of the Board of Governors of the Federal
Reserve System, the Subsidiary must maintain noninterest-earning cash
balances with the Federal Reserve Bank of Chicago. The average amount of
these balances for years ended December 31, 1997 and 1996 was approximately
$10,436 and $7,767, respectively.

NOTE 13 - 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.

NOTE 14 - NEW ACCOUNTING PRONOUNCEMENTS

In June 1997, FASB issued SFAS 130, "Reporting Comprehensive Income," which
requires businesses to disclose comprehensive income and its components in
their general-purpose financial statements. SFAS 130 is effective for fiscal
years beginning after December 15, 1997, with reclassification of comparative
financial statements and is applicable to interim periods. The Company has
not yet completed its analysis of the impact of adoption of this standard.

In June 1997, FASB issued SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information," which will be effective for the Company
beginning January 1, 1998. SFAS 131 redefines how operating segments are
determined and requires disclosure of certain financial and descriptive
information about a company's operating segments. The Company has not yet
completed its analysis of which operating segments it will report on.

NOTE 15 - CONDENSED FINANCIAL INFORMATION - PARENT ONLY


                                                     CONDENSED BALANCE SHEETS
                                                    DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>

                                                                                   ---------------------
ASSETS                                                                                     1997                        1996
                                                                                   ---------------------        --------------------
<S>                                                                                <C>                          <C>
Cash on deposit in Subsidiary                                                                   $22,618                      $9,740
Equity investment in Subsidiary                                                                 110,286                     108,594
Intangibles, net                                                                                  1,527                       1,731
Other assets                                                                                        107                           3
                                                                                   ---------------------        --------------------
   TOTAL ASSETS                                                                                $134,538                    $120,068
                                                                                   =====================        ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Dividends payable                                                                                $2,162                      $1,730
Other liabilities                                                                                    23
                                                                                   ---------------------        --------------------
   TOTAL LIABILITIES                                                                              2,185                       1,730
Shareholders' equity                                                                            132,353                     118,338
                                                                                   ---------------------        --------------------
   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                  $134,538                    $120,068
                                                                                   =====================        ====================

                                                                                   ---------------------
</TABLE>


------------------------------------------------------------------------------
                                       22
<PAGE>



NOTE 15 - CONDENSED FINANCIAL INFORMATION - PARENT ONLY (CONTINUED)

                                          CONDENSED STATEMENTS OF INCOME
                                   YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>

                                                                -----------------------
OPERATING INCOME                                                          1997                     1996                   1995
                                                                   -------------------       ------------------    ----------------
<S>                                                                <C>                       <C>                   <C>
   Dividends from Subsidiary                                                  $20,747                   $8,136               $7,401
   Interest income                                                                538                      337                  279
                                                                   -------------------       ------------------    ----------------
      Total operating income                                                   21,285                    8,473                7,680
                                                                   -------------------       ------------------    ----------------
OPERATING EXPENSE
   Amortization of intangibles                                                    204                      204                  204
   Other                                                                          481                      240                  205
                                                                   -------------------       ------------------    ----------------
      Total operating expense                                                     685                      444                  409
                                                                   -------------------       ------------------    ----------------
Income before income taxes                                                     20,600                    8,029                7,271
Income tax expense                                                                 25                       41                   10
                                                                   -------------------       ------------------    ----------------
Income before equity in undistributed
   net income of Subsidiary                                                    20,575                    7,988                7,261
Equity in undistributed net income of Subsidiary                                1,209                    7,954                6,264
                                                                   -------------------       ------------------    ----------------
NET INCOME                                                                    $21,784                  $15,942              $13,525
                                                                   ===================       ==================    ================

                                                                -----------------------
</TABLE>

                                        CONDENSED STATEMENTS OF CASH FLOWS
                                   YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
                                                                -----------------------
                                                                          1997                     1996                   1995
                                                                   -------------------      -------------------     ---------------
<S>                                                                <C>                      <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                $21,784                  $15,942              $13,525
                                                                   -------------------      -------------------     ---------------

   Adjustments to reconcile net income to net cash provided by operating
      activities:
         Equity in undistributed net income of
            Subsidiary                                                        (1,209)                  (7,954)              (6,264)
         Amortization of intangibles                                             204                      204                  204
         (Increase) decrease in other assets                                    (104)                       6                   29
         Decrease in other liabilities                                           (20)
                                                                   -------------------      -------------------     ---------------
            Total adjustments                                                 (1,129)                  (7,744)              (6,031)
                                                                   -------------------      -------------------     ---------------
   NET CASH PROVIDED BY OPERATING ACTIVITIES                                  20,655                    8,198                7,494
                                                                   -------------------      -------------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of minority interest in subsidiaries                                (208)
                                                                   -------------------      -------------------     ---------------
   NET CASH USED IN INVESTING ACTIVITIES                                        (208)
                                                                   -------------------      -------------------     ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Cash dividends paid                                                        (7,569)                  (6,812)              (6,379)
                                                                   -------------------      -------------------     ---------------
   NET CASH USED IN FINANCING ACTIVITIES                                      (7,569)                  (6,812)              (6,379)
                                                                   -------------------      -------------------     ---------------

NET INCREASE IN CASH                                                          12,878                    1,386                1,115
CASH AT BEGINNING OF YEAR                                                      9,740                    8,354                7,239
                                                                   -------------------      -------------------     ---------------
CASH AT END OF YEAR                                                          $22,618                   $9,740               $8,354
                                                                   ===================      ===================     ===============

                                                                -----------------------
</TABLE>


------------------------------------------------------------------------------
                                       23
<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,

                                         ------------------------------------------------------------------------------------------
                                                 1997                  1996              1995              1994              1993
                                             --------------       ---------------   ---------------   ---------------   -----------
<S>                                          <C>                  <C>               <C>               <C>               <C>
SELECTED OPERATING DATA
Interest income                                 $95,208               $88,558           $83,428           $69,112           $67,396
Interest expense                                 44,700                38,359            37,414            27,431            26,728
                                             --------------       ---------------   ---------------   ---------------   -----------
  Net interest income                            50,508                50,199            46,014            41,681            40,668
Provision for loan losses                         1,623                 1,505             1,850             2,216             5,339
                                             --------------       ---------------   ---------------   ---------------   -----------
  Net interest income after
    provisions                                   48,885                48,694            44,164            39,465            35,329
Other operating income(1)                        12,396                 9,896             7,824             9,685            10,056
Other operating expense                          29,690                34,150            30,192            27,173            26,886
                                             --------------       ---------------   ---------------   ---------------   -----------
  Income before income taxes                     31,591                24,440            21,796            21,977            18,499
Income taxes                                      9,807                 8,498             8,271             8,951             7,035
Cumulative effect of accounting
  change                                                                                                                        360
                                             --------------       ---------------   ---------------   ---------------   -----------
Net income                                      $21,784               $15,942           $13,525           $13,026           $11,824
                                             ==============       ===============   ===============   ===============   ===========

PER SHARE DATA
Income before cumulative effect of
  accounting change:
    Basic                                        $50.37                $36.86            $31.27            $30.12            $28.41
    Diluted                                       50.37                 36.86             31.27             30.12             26.88
Net income:
    Basic                                         50.37                 36.86             31.27             30.12             29.30
    Diluted                                       50.37                 36.86             31.27             30.12             27.75
Cash dividends declared                           18.50                 16.00             15.00             13.75             12.75
Book value                                       306.02                273.62            254.73            226.53            221.56

SELECTED BALANCES
Investment securities                          $417,879              $328,769          $250,556          $226,007          $190,594
Net loans                                       762,538               784,242           760,687           709,205           694,301
Total assets                                  1,293,691             1,235,604         1,154,349         1,041,495           999,878
Deposits                                      1,144,949             1,099,397         1,029,789           923,257           883,464
Shareholders' equity                            132,353               118,338           110,168            97,971            95,822

RATIOS
Return on average total assets                     1.71%                 1.38%             1.27%             1.29%             1.20%
Return on average
  shareholders' equity                            17.48                 13.93             13.03             13.29             13.25
Cash dividends paid to net
  income                                          34.74                 42.73             47.16             44.10             42.65
Average equity to average total
  assets                                           9.78                  9.90              9.71              9.67              9.03
Net interest margin (FTE)(2)                       4.13                  4.50              4.43              4.21              4.19
                                         ----------------------
</TABLE>


(1) Other operating income includes the following gains on sales of loans for
    the years ended December 31, 1997, 1996, 1995, 1994, and 1993
    respectively: $280, $151, $110, $213, and $1,362. Other operating income
    in 1997 also includes a $2,344 settlement of a claim related to an
    investment that the Company made during the late 1980's.

(2) Net interest margin is presented on a tax equivalent basis, assuming a
    federal income tax rate of 35% and a state income tax rate of 7.3%.


------------------------------------------------------------------------------
                                       24

<PAGE>

               DISTRIBUTION OF ASSETS AND NET INTEREST INCOME AND
               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,
                         --------------------------------------------------------------------------------------------------------
                                          1997                                  1996                               1995
                           ----------------------------------   -------------------------------  --------------------------------
                               Average                              Average                         Average
                               Balance     Interest    Rate         Balance    Interest   Rate      Balance    Interest    Rate
                           -------------  ----------  ------    ------------  ---------  ------  -----------  ----------  -------
<S>                        <C>            <C>         <C>       <C>           <C>        <C>     <C>          <C>         <C>
ASSETS
Interest-earning
   deposits in financial
   institutions                   $286         $12      4.2%           $301       $16      5.3%         $127        $7       5.5%
                           -------------  ----------  ------    ------------  ---------  ------  -----------  ----------  -------
Federal funds sold              35,879       1,978      5.5          34,719     1,840      5.3        34,422     1,949       5.7
                           -------------  ----------  ------    ------------  ---------  ------  -----------  ----------  -------
Investment securities:
   Corporate                   107,036       6,978      6.5          67,382     4,453      6.6        63,302     4,581       7.2
   U.S. Treasury                15,109         782      5.2          19,308       975      5.0        16,363       798       4.9
   U.S. government
      agencies and
      corporations (1)         213,642      14,685      6.9         136,029     8,818      6.5       118,453     7,689       6.5
   States and political
      subdivisions (1)          40,475       3,060      7.6          39,626     3,137      7.9        23,678     1,985       8.4
   FHLB stock                    1,318          29      2.2             748        52      7.0           854        53       6.2
                           -------------  ----------  ------    ------------  ---------  ------  -----------  ----------  -------
      Total
         investment
         securities (1)        377,580      25,534      6.8         263,093    17,435      6.6       222,650    15,106       6.8
                           -------------  ----------  ------    ------------  ---------  ------  -----------  ----------  -------
Loans:
   Commercial and
      industrial (1)           302,774      28,722      9.5         298,872    28,307      9.5       248,544    25,706      10.3
   Real estate                 291,578      24,021      8.2         299,492    24,812      8.3       305,822    23,777       7.8
   Home equity                 125,497      10,538      8.4         121,543    11,161      9.2       119,013    11,475       9.6
   Installment                  38,677       3,518      9.1          37,883     3,487      9.2        36,399     3,516       9.7
   Visa and other               23,129       2,976     12.9          23,582     3,390     14.4        26,619     3,238      12.2
                           -------------  ----------  ------    ------------  ---------  ------  -----------  ----------  -------
      Total loans (1)          781,655      69,775      8.9         781,372    71,157      9.1       736,397    67,712       9.2
                           -------------  ----------  ------    ------------  ---------  ------  -----------  ----------  -------
      Total
         interest-earning
         assets (1)          1,195,400     $97,299      8.1%      1,079,485   $90,448      8.4%      993,596   $84,774       8.5%

Cash and due from banks         37,991                               37,349                           35,666
Premises and equipment,
   net                          30,796                               29,935                           27,849
Other real estate                2,525                                5,208                            7,993
Allowance for loan losses       (9,898)                              (9,432)                          (8,909)
Accrued interest and
   other assets (2)             17,406                               13,907                           12,683
                           ------------                         ------------                     ------------
      TOTAL ASSETS          $1,274,220                           $1,156,452                       $1,068,878
                           ------------                         ------------                     ------------
                           ------------                         ------------                     ------------
                         --------------------------------------
</TABLE>

(1) Interest income and yields are presented on a tax equivalent basis, assuming
    a federal income tax rate of 35% and a state income tax rate of 7.3%.

(2) The average balances of nonaccrual loans are included in accrued interest
    and other assets.


-------------------------------------------------------------------------------
                                      25
<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,
                           --------------------------------------------------------------------------------------------------------
                                        1997                                 1996                               1995
                           --------------------------------  -----------------------------------  ---------------------------------
                             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         $523,616   $14,474      2.8%       $524,669     $15,152      2.9%      $498,191    $16,893      3.4%
Time deposits:
   Less than $100,000           421,156    24,739      5.9         334,177      18,960      5.7        308,039     17,248      5.6
   $100,000 and greater          87,996     5,100      5.8          63,079       3,675      5.8         49,427      2,847      5.8
                           ------------  --------  --------  -------------  ----------  --------  ------------  ---------  --------
         Total interest-
            bearing
            deposits          1,032,768    44,313      4.3         921,925      37,787      4.1        855,657     36,988      4.3

Federal funds purchased           2,397       133      5.5           7,710         419      5.4          3,216        189      5.9

Deferred compensation             2,545       200      7.9           1,684          79      4.7          1,318         81      6.1
FHLB advances                       911        54      5.9           1,366          74      5.4          2,071        156      7.5
                           ------------  --------  --------  -------------  ----------  --------  ------------  ---------  --------
      TOTAL INTEREST-
         BEARING
         LIABILITIES          1,038,621    44,700      4.3         932,685      38,359      4.1        862,262     37,414      4.3
                                         --------  --------                 ----------  --------                ---------  --------

Demand deposits                 110,248                            103,448                             100,269
Other liabilities                   719                              5,864                               2,535
Shareholders' equity            124,632                            114,455                             103,812
                           ------------                     --------------                       -------------
   TOTAL LIABILITIES AND
      SHAREHOLDERS' EQUITY   $1,274,220                         $1,156,452                          $1,068,878
                           ------------                     --------------                       -------------
                           ------------                     --------------                       -------------

   Net interest income                    $52,599                              $52,089                            $47,360
                                       ----------                        -------------                       ------------
                                       ----------                        -------------                       ------------
   Net interest margin                                 4.1%                                 4.5%                               4.4%
                                                 ----------                           ----------                         ----------
                                                 ----------                           ----------                         ----------
   Net yield on interest-
      earning assets                                   4.4%                                 4.8%                               4.8%
                                                 ----------                           ----------                         ----------
                                                 ----------                           ----------                         ----------
                          ------------------------------------
</TABLE>


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                                      26
<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, 1997 and 1996 and results of
operations for the years ended December 31, 1997, 1996 and 1995. 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
$58.1 million (4.7%) to $1,293.7 million at December 31, 1997 from $1,235.6
million at December 31, 1996. Increases in investment securities were the
largest component of this increase.

CASH AND CASH EQUIVALENTS. The Company's cash and cash equivalents decreased
$8.3 million (12.1%) to $60.3 million at December 31, 1997 from $68.6 million at
December 31, 1996. This resulted primarily from the Company's decreased holdings
in federal funds sold as the Company shifted a portion of these funds into
investment securities.

INVESTMENT SECURITIES. Aggregate holdings in investment securities increased
$89.1 million (27.1%) to $417.9 million from $328.8 million at December 31,
1996. The Company's objectives in managing its securities portfolio are driven
by the dynamics of the entire balance sheet which includes monitoring the
maturity structure of its portfolio along with general economic conditions
including the interest rate environment. In managing its portfolio, the Company
seeks to provide liquidity, minimize exposure to interest rate risk and achieve
an acceptable rate of return. The increase in the portfolio is primarily
attributable to growth in deposits and decreased loan demand which resulted in
additional funds available for investing purposes. The Company intends to
continue to seek high quality securities for the investment portfolio and to
remain conservative in its management.

LOANS. Total loans outstanding decreased $21.5 million (2.7%) to $772.3 million
at December 31, 1997 from $793.8 million at December 31, 1996. Commercial loans
have declined as competition intensified during 1997. The Company strives to
remain competitive in its markets by offering competitive products and services
while not compromising its credit evaluation standards to attract new business.

ALLOWANCE FOR LOAN LOSSES AND ASSET QUALITY. The allowance for loan losses is an
amount that management believes is adequate to absorb losses on existing loans
that may become uncollectible. 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 $.2 million (1.8%) to $9.8 million at
December 31, 1997 from $9.6 million at December 31, 1996. The ratio of the
allowance for loan losses to total loans outstanding increased to 1.27% at
December 31, 1997 from 1.21% at December 31, 1996. The allowance for loan losses
as of December 31, 1997 was approximately 124% of the level of nonperforming
loans which represents a decrease from the 158% coverage ratio of nonperforming
loans at December 31, 1996. This was primarily due to increased charge-offs
during 1997. As of December 31, 1997, the total nonperforming loans to total
loans was 1.0% compared to .8% at December 31, 1996. This increase was primarily
due to increased nonperforming personal real estate accounts.

The following table is an analysis of the Company's nonperforming loans at
December 31 (dollars in thousands):

<TABLE>
<CAPTION>
                                                        --------------------
                                                                 1997                  1996              Dollar Change
                                                           ---------------      -----------------      ----------------
<S>                                                        <C>                  <C>                    <C>
Nonaccrual loans                                                   $3,042                 $2,283                  $759
Accruing loans 90 days past due                                     4,829                  3,813                 1,016
                                                           ---------------      -----------------      ----------------
Total nonperforming loans                                          $7,871                 $6,096                $1,775
                                                           ---------------      -----------------      ----------------
                                                           ---------------      -----------------      ----------------

Nonperforming loans as a percent of total loans                       1.0%                   0.8%
Other real estate                                                  $2,450                 $2,757                 ($307)
                                                           ---------------      -----------------      ----------------
                                                           ---------------      -----------------      ----------------
                                                        --------------------
</TABLE>


-------------------------------------------------------------------------------
                                      27
<PAGE>

OTHER REAL ESTATE. During 1997, other real estate decreased $.3 million
(11.1%) to $2.5 million at December 31, 1997 from $2.8 million at December
31, 1996. Sales of properties had an aggregate carrying value of $1.2 million
while additions of properties totaled $.9 million.  Management continues its
efforts to reduce its holdings in other real estate.

DEPOSITS. Total deposits increased $45.5 million (4.1%) to $1,144.9 million
at December 31, 1997 from $1,099.4 million at December 31, 1996. This
increase was principally due to increases in certificates of deposit
resulting from promotions like the Company's 35th Anniversary Certificate.
The proceeds from the increases in deposits were primarily used as a funding
vehicle to purchase investment securities.

Year-end balances in the Company's major categories of deposits for December
31 are summarized in the following table (dollars in thousands):

<TABLE>
<CAPTION>
                                          -----------------
                                                                                Dollar       Percent
                                                  1997            1996          Change        Change
                                             ------------    ------------    -----------    ---------
<S>                                          <C>             <C>             <C>            <C>
Demand and other noninterest-bearing            $123,969        $102,583       $21,386         20.8%
NOW accounts                                      49,162         182,861      (133,699)       (73.1)
Money market savings                             465,970         342,872       123,098         35.9
Time, $100,000 and over                           84,083          86,343        (2,260)        (2.6)
Time, other                                      421,765         384,738        37,027          9.6
                                             ------------    ------------    -----------    ---------
   Total                                      $1,144,949      $1,099,397       $45,552          4.1%
                                             ------------    ------------    -----------    ---------
                                             ------------    ------------    -----------    ---------
                                          -----------------
</TABLE>

Certain of the changes in NOW and money market savings balances from 1997
compared to 1996 are the result of changes in the manner in which the Company
manages its Federal Reserve Bank reserve requirements. The changes in
classifications have not resulted in significant changes in the Company's
cost of funds.

The Company attempts to remain well positioned 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.

CAPITAL RESOURCES

Shareholders' equity increased $14.1 million (11.8%) to approximately $132.4
million at December 31, 1997 from $118.3 million at December 31, 1996. This
increase was primarily the result of the net retention of 1997 earnings of
$13.8 million.

Management has been advised that as of December 31, 1997 and 1996, the
Subsidiary 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 and maturity
schedules of earning assets and 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-earning deposits in financial
institutions and the FHLB, federal funds sold and investment securities
available for sale. As of December 31, 1997 and 1996, liquid assets
represented 21.6% and 18.4% of total assets, respectively.


-------------------------------------------------------------------------------
                                      28
<PAGE>

During 1997, the Company's cash and cash equivalents decreased approximately
$8.3 million. This decrease was due primarily to an increase in investing
activities of approximately $69.9 million which was offset by decreases in
operating and financing activities of approximately $25.0 million and $36.6
million, respectively.

INCOME STATEMENT ANALYSIS -- 1997 COMPARED TO 1996

GENERAL. The Company's 1997 net income of $21.8 million represented an
increase of $5.9 million (36.6%) from 1996 net income of $15.9 million. This
was primarily due to the decrease in other real estate expense of $4.5
million in 1997 when compared to the same period in 1996. Other operating
income increased by $2.5 million during this period and net interest income
improved by $.3 million. These increases to income were partially offset by
an increase in income tax expense of $1.3 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 investment securities. Interest-bearing liabilities primarily consist of
deposits, federal funds purchased and FHLB advances. The net interest margin
is the difference between tax equivalent net interest income and average
earning assets. Total interest income, on a tax equivalent basis, increased
$6.9 million (7.6%) to $97.3 million for the year ended December 31, 1997
from $90.4 million for the year ended December 31, 1996. This increase
resulted from an increase of $7.8 million due to growth in average
interest-earning balances, which was partially offset by ($.9) million due to
declining yields. The Company's average interest-earning assets grew $115.9
million (10.7%) to $1,195.4 million at December 31, 1997 from $1,079.5
million at December 31, 1996. Yields on the Company's loan portfolio declined
primarily from the Company reducing its rates on its home equity lines from
prime plus one to prime. This reduction in rates was a result of competitive
conditions surrounding this product. Yields on total interest-earning assets
decreased during 1997. This decrease was offset by improvements in the
federal funds sold and investment securities portfolios. Specifically, the
Company's average federal funds rate increased to 5.5% for 1997 from 5.3% for
1996. Additionally, interest on the securities portfolio increased primarily
due to higher yields on U.S. government agencies and corporations along with
higher average outstanding balances.

Total interest expense increased $6.3 million (16.5%) to $44.7 million for
the year ended December 31, 1997 from $38.4 million for the year ended
December 31, 1996. This increase was due to growth in average balances.
Average interest-bearing liabilities increased $105.9 million (11.4%) to
$1,038.6 million for the year ended December 31, 1997 from $932.7 million for
the year ended December 31, 1996 primarily due to deposit promotions.

The following table reflects the impact of changes in volume and interest
rates on interest-earning assets and interest-bearing liabilities on a tax
equivalent basis for each of the two years ended December 31, 1997 and 1996
(dollars in thousands):

<TABLE>
<CAPTION>
                                   ----------------------------------------------
                                                 December 31, 1997                                 December 31, 1996
                                                  compared to 1996                                 compared to 1995
                                                   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                  ($1)           ($3)             ($4)                $9                            $9
  Federal funds sold                         64             74              138                 16           ($125)         (109)
  Investment securities                   7,690            409            8,099              2,752            (423)        2,329
  Loans                                      25         (1,407)          (1,382)             4,095            (650)        3,445
                                     -----------     ----------     ------------       ------------    ------------   -----------
      Total interest income               7,778           (927)           6,851              6,872          (1,198)        5,674
                                     -----------     ----------     ------------       ------------    ------------   -----------

INTEREST EXPENSE
  Interest-bearing deposits               6,525              1            6,526              3,043          (2,244)          799
  Borrowed funds                           (253)            68             (185)               223             (77)          146
                                     -----------     ----------     ------------       ------------    ------------   -----------
      Total interest expense              6,272             69            6,341              3,266          (2,321)          945
                                     -----------     ----------     ------------       ------------    ------------   -----------
      Net interest income                $1,506          ($996)            $510             $3,606          $1,123        $4,729
                                     -----------     ----------     ------------       ------------    ------------   -----------
                                     -----------     ----------     ------------       ------------    ------------   -----------
                                   ----------------------------------------------
</TABLE>


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                                      29
<PAGE>

PROVISION FOR LOAN LOSSES. The provision for loan losses increased $.1
million (7.8%) to $1.6 million in 1997 compared to $1.5 million in 1996. 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 1997, other operating income increased $2.5
million (25.3%) to $12.4 million in 1997 compared to $9.9 million in 1996.
The Company recorded $2.3 million of income related to a settlement of a
claim arising from an investment that it made during the late 1980's. During
the first quarter of 1997, the Company also sold its interest in a property
held as other real estate for $1.5 million. As the property was previously
written off, this amount is reflected as a gain on sale of other real estate.
These increases to income were partially offset by decreases in gains on sale
of investment securities available for sale of $.3 million and service fees
of $.3 million. During 1996, the Company recorded $1.1 million of income from
a refund of the over funding of its former thrift subsidiary's terminated
benefits plan.

OTHER OPERATING EXPENSE. Total operating expense decreased $4.5 million
(13.1%) to $29.7 million in 1997 from $34.2 million in 1996. Salary and
employee benefits increased $.9 million due primarily to increased salaries
and severance payouts to two former executives of the Company. Occupancy and
furniture and equipment expense increased $.2 million and $.1 million,
respectively. FDIC insurance premiums declined $1.0 million during 1997.
During 1996, the Company incurred a one-time special SAIF assessment of $.8
million payable to the FDIC which was imposed under the Deposit Insurance
Funds Act of 1996 (the "DIFA"). Professional fees decreased $.2 million
during this period. Other real estate expense decreased $4.5 million during
the same period. During 1996, the Company recognized a $3.8 million write
down of a property classified as other real estate.

INCOME TAXES. Income tax expense increased $1.3 million (15.4%) to $9.8
million in 1997 from $8.5 million in 1996. This increase was principally due
to higher taxable income and includes a reevaluation of the Company's tax
position. The primary reason for the reduction in the overall consolidated
effective tax rate was a result of the reversal of an income tax reserve
established in prior years. This reserve was no longer necessary as a result
of an Internal Revenue Service settlement in 1996.

RETURN ON AVERAGE TOTAL ASSETS. Return on average total assets was 1.71% for
1997 and 1.38% for 1996 as net income and average total assets grew.

INCOME STATEMENT ANALYSIS -- 1996 COMPARED TO 1995

GENERAL. The Company's 1996 net income of $15.9 million represented an
increase of $2.4 million (17.9%) from 1995 net income of $13.5 million. This
increase was primarily due to a $4.2 million improvement in net interest
income and other operating income also increased by $2.1 million
during this period. These increases were offset
by an increase in total other operating expense of $4.0 million.

NET INTEREST INCOME. Total interest income, on a tax equivalent basis,
increased $5.7 million (6.7%) to $90.5 million for the year ended December 31,
1996 from $84.8 million for year ended December 31, 1995. This increase resulted
from an increase of $6.9 million due to growth in average balances which was
offset by a ($1.2) million decrease due to declining interest rates. The
Company's average interest-earning assets grew $85.9 million (8.6%) to $1,079.5
million at December 31, 1996 from $993.6 million at December 31, 1995. Yields on
total interest-earning assets decreased primarily due to decreases in average
interest rates on the Company's commercial loan portfolio and federal funds sold
portfolio. Specifically, the Company's average prime rate decreased to 8.3% for
1996 from 8.8% for 1995. The average federal funds rate decreased to 5.3% for
1996 from 5.7% for 1995. 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.

Total interest expense increased $1.0 million (2.5%) to $38.4 million for
the year ended December 31, 1996 from $37.4 million for the year ended December
31, 1995. Of this increase, $3.3 million was due to growth in average balances
while ($2.3) million was due to declining interest rates. Average
interest-bearing liabilities increased $70.4 million (8.2%) to $932.7 million
for the year ended December 31, 1996 from $862.3 million for the year ended
December 31, 1995 primarily due to deposit promotions.

PROVISION FOR LOAN LOSSES. The provision for loan losses decreased $.3
million (18.6%) to $1.5 million in 1996 compared to $1.8 million in 1995. The
lower provision was the result of management determining the level of the
allowance for loan losses.


-------------------------------------------------------------------------------
                                      30
<PAGE>

OTHER OPERATING INCOME. During 1996, other operating income increased $2.1
million (26.5%) to $9.9 million in 1996 compared to $7.8 million in 1995.
This increase was primarily due to the recording of $1.1 million of income
from a refund of the over funding of a terminated benefits plan of the
Company's former thrift subsidiary. The Company also experienced a gain on
investment securities available for sale of $.4 million during this period.
Additionally, the Company also recognized increased service fees along with
increased interchange income brought about from the Company's WSB Check Card
which was introduced during mid-1995.

OTHER OPERATING EXPENSE. Other operating expense increased $4.0 million
(13.1%) to $34.2 million in 1996 from $30.2 million in 1995. Salary and
employee benefits increased $1.7 million due to increased salary levels and
the operation of additional facilities. FDIC insurance declined $.1 million
to $1.1 million for the year ended December 31, 1996 from $1.2 million for
the year ended December 31, 1995. This occurred due to reduced insurance
premiums being paid by the Subsidiary (including the Company's former
subsidiaries prior to their merger into the Subsidiary). The reduced premiums
of the Subsidiary were offset by the payment (by the Company's former thrift
subsidiary) of a special assessment to the FDIC of $.8 million, which was
imposed under the DIFA. Other real estate expense increased $1.5 million
during the same period. This increase reflects a $3.8 million write-down of a
property and approximately $.9 million in expenses related to this property
during the year ended December 31, 1996. During 1995, the Company incurred a
$1.5 million write-down and approximately $1.8 million in expenses related to
this same property. Occupancy expense and furniture and equipment expense
increased $.1 million and $.2 million, respectively, for the year ended
December 31, 1996. These increases were primarily due to expenses incurred
with the opening and operation of new facilities. Data processing expense
decreased $.1 million during this period. Other operating expense increased
$.6 million during this period. This was principally due to increased loan
expense.

INCOME TAXES. Income tax expense increased $.2 million (2.7%) to $8.5 million
in 1996 from $8.3 million in 1995. This increase was principally due to
higher taxable income and was offset by provisions made during the first six
months of 1995 for potential adjustments to prior years' income tax returns.

RETURN ON AVERAGE TOTAL ASSETS. Return on average total assets was 1.38% for
1996 and 1.27% for 1995 as net income and average total assets grew.

IMPACT OF NEW ACCOUNTING STANDARDS

In June 1997, FASB issued SFAS 130, "Reporting Comprehensive Income," which
requires businesses to disclose comprehensive income and its components in
their general-purpose financial statements. SFAS 130 is effective for fiscal
years beginning after December 15, 1997, with reclassification of comparative
financial statements and is applicable to interim periods. The Company has
not yet completed its analysis of the impact of adoption of this Standard.

In June 1997, FASB issued SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information," which will be effective for the Company
beginning January 1, 1998. SFAS 131 redefines how operating segments are
determined and requires disclosure of certain financial and descriptive
information about a company's operating segments. The Company has not yet
completed its analysis of which operating segments it will report on.

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, 1997 (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                                          $343                                                                  $343
  Federal funds sold                                 21,740                                                                21,740
  Investment securities                              20,093            $69,637         $307,322         $20,827           417,879
  Loans                                             291,737            261,675          182,183          33,673           769,268
                                              --------------     --------------     ------------     -----------     -------------
    Total                                          $333,913           $331,312         $489,505         $54,500        $1,209,230
                                              --------------     --------------     ------------     -----------     -------------
                                              --------------     --------------     ------------     -----------     -------------

Rate sensitive liabilities:
  Money market savings                             $465,970                                                              $465,970
  NOW accounts                                       49,162                                                                49,162
  Time deposits
    Less than $100,000                              103,265           $159,019         $138,700         $20,781           421,765
    $100,000 and over                                31,684             20,975           27,678           3,746            84,083
                                              --------------     --------------     ------------     -----------     -------------
    Total                                          $650,081           $179,994         $166,378         $24,527        $1,020,980
                                              --------------     --------------     ------------     -----------     -------------
                                              --------------     --------------     ------------     -----------     -------------

Interest sensitivity gap                          ($316,168)          $151,318         $323,127         $29,973          $188,250
Cumulative interest sensitivity gap                (316,168)          (164,850)         158,277         188,250
Cumulative net interest-earning asset
   as a percentage of net interest-
   bearing liabilities                                 51.4%              80.1%           115.9%          118.4%
Cumulative interest sensitivity gap as a
  percentage of total assets                          (24.4)             (12.7)            12.2            14.6
</TABLE>

The above table does not necessarily indicate the future impact of general
interest rate movements on the Company's net interest income because the
repricing of certain assets and liabilities is discretionary and is subject to
competitive and other pressures. As a result, assets and liabilities indicated
as repricing within the same period may in fact reprice at different times and
at different rate levels. Assets and liabilities are reported in the earliest
time frame in which maturity or repricing may occur. The consolidated interest
rate sensitivity position of the Company within the one year window at December
31, 1997 reflects cumulative net interest-earning assets compared to cumulative
net interest-bearing liabilities of 80.1% and cumulative net interest-earning
assets that reprice or mature within one year compared to similarly sensitive
liabilities of negative 12.7%. 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 liabilities, over time, to offset these
potential effects.


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                                      32
<PAGE>

THE YEAR 2000

During 1996, West Suburban initiated the process of preparing its computer
systems and applications for the Year 2000. This process involves updating or
replacing certain of the Company's computer hardware components and software
applications and communicating with vendors and external service providers to
confirm that their applications are Year 2000 compliant. The Company has tested
and replaced, as necessary, its critical computer hardware components and
software applications and intends to continue its testing procedures in order to
ensure that its computer hardware components and software applications are Year
2000 compliant and that the operations of the Company will not be adversely
effected. The Company believes that the cost that will be incurred in connection
with testing and replacing hardware and software applications will not have a
material effect on its results of operations. Purchased computer hardware
components and software applications are capitalized in accordance with the
Company's policy. All internal and external costs are expensed when incurred.


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                                      33
<PAGE>

                             BOARDS OF DIRECTORS
<TABLE>
<S>                                       <C>
WEST SUBURBAN BANCORP, INC.
Kevin J. Acker                            Chairman of the Board
David Bell                                Certified Public Accountant
Duane G. Debs                             President, Chief Financial Officer
Charles P. Howard                         Business Operations Director, Inner City Impact
Peggy P. LoCicero                         Former Banker

WEST SUBURBAN BANK
Robert W. Schulz                          Chairman of the Board; Oliver Hoffmann Corporation
Keith W. Acker                            President
Craig R. Acker                            Former Banker
Earl K. Harbaugh                          President, Ditch Witch of Illinois
Ronald Kuhn                               Harry W. Kuhn, Inc., Secretary and Treasurer
Richard Hill Lauber                       J & E Duff, Inc.
Paul J. Lehman                            President, Macom Corporation
Walter Myers                              Vice President, Terrace Supply
John G. Williams                          Vice President, Bracing Systems
James Bell                                Director Emeritus
George Hazdra                             Director Emeritus
Harry Kuhn                                Director Emeritus
Harold Moser                              Director Emeritus
Ralph Weber                               Director Emeritus
F. Willis Caruso                          Director Emeritus
Richard P. McCarthy                       Director Emeritus
</TABLE>

                                   OFFICERS
<TABLE>
<S>                                       <C>
WEST SUBURBAN BANCORP, INC.
Duane G. Debs                             President, Chief Financial Officer
Keith W. Acker                            Chief Operations Officer
Michael P. Brosnahan                      Vice President
David J. Mulkerin                         Chief Compliance Officer
George E. Ranstead                        Secretary to the Board and Treasurer
Jay J.P. Greifenkamp                      Assistant Secretary to the Board
Michael J. Lynch                          Director of Internal Audit

WEST SUBURBAN BANK
Keith W. Acker                            President and Data Processing Manager
Kevin J. Acker                            Senior Vice President, Marketing
Michael P. Brosnahan                      Senior Vice President and Community Reinvestment Act Officer
Duane G. Debs                             Senior Vice President, Comptroller
Raymond P. Rynne                          Senior Vice President, Business Administration
Michael Abbatacola                        Vice President, Financial Services
Danielle Budig                            Vice President, Operations
Stanley C. Celner, Jr.                    Vice President, Loans
Karin Choate                              Vice President, Mortgage Servicing
Edward J. Garvey                          Vice President, Facility Management
Tammy Hatcher                             Vice President, Mortgage Operations Manager
Steven A. Jennrich                        Vice President, Data Processing
Rose Marie Little                         Vice President, Facility Manager-Cass Avenue
Michael J. Lynch                          Vice President, Director of Internal Audit
John A. Machonga                          Vice President, Investments and Trust Officer
James Mastrino                            Vice President, Facilities Director
Cynthia A. Meredith                       Vice President, Home Equity Loan Operations Manager
David S. Orr                              Vice President, Loans
George E. Ranstead                        Vice President, Assistant Comptroller/Assistant Secretary
Gregory M. Ruffolo                        Vice President, Loans
</TABLE>
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<TABLE>
<S>                                       <C>
WEST SUBURBAN BANK OFFICERS (CONTINUED)
Allison J. Triplett                       Vice President, Loss Prevention Officer
Beverly J. Viscariello                    Vice President
Jacqueline R. Weigand                     Vice President, Operations and VISA
Marcia K. Worobec                         Vice President, Facility Manager - Westmore, Metra Main
Gregory L. Young                          Vice President, Loans
Amy Andrews                               Assistant Vice President, Montgomery
Kathleen Brockman                         Assistant Vice President, Lake
Sharon Buck                               Assistant Vice President, Facility Manager - St. Charles
Barbara Darden                            Assistant Vice President, Facility Manager - Bolingbrook West
Jill C. Davenport                         Assistant Vice President, Operations
Kevin Denny                               Assistant Vice President, Facility Manager - Oakbrook Terrace
Joyce Dudek-Fedele                        Assistant Vice President, Facility Manager - Danada, Wheaton
Marie V. Dunk                             Assistant Vice President, Personnel Director
Miriam Farah                              Assistant Vice President, Facility Manager - President Street
Sharon A. Fonte                           Assistant Vice President, Facility Manager - Glendale Heights
Roseann Hamilton                          Assistant Vice President, Facility Manager - Carol Stream
Uma Jani                                  Assistant Vice President, Facility Manager - Villa Park
Janet Kemble                              Assistant Vice President, Electronic Services
Debra H. Kolze                            Assistant  Vice President, Commercial Loan Operations Manager
Norine LaPrall                            Assistant Vice President, Facility Manager - Warrenville
Terri Leitner                             Assistant Vice President, Facility Manager - 75th, Westmont
Mark Mascarella                           Assistant Vice President, Facility Manager - Fair Oaks
Sue Nuestrom                              Assistant Vice President, Facility Manager - Bolingbrook East
Gwen B. O'Loughlin                        Assistant Vice President, Facility Manager - North Main
Robert L. Pauling                         Assistant Vice President, Facility Manager - Stratford Square
Cynthia Picton                            Assistant Vice President, Facility Manager - Galena
Kay J. Piotrowski                         Assistant Vice President, Facility Manager - Naperville
Helen Schmitt                             Assistant Vice President, Purchasing
Jerome Sheeman                            Assistant Vice President, Facility Manager - Finley
Joseph Sperlick                           Assistant Vice President, Facility Manager - South Main
Joanne T. Tosch                           Assistant Vice President, Director of Employee Development
Paula Zupmano                             Assistant Vice President, Facility Manager - Bartlett
Jay J.P. Greifenkamp                      Secretary to the Board
Michelle Hoisington                       Assistant Secretary to the Board
Joseph Maloney                            Director of Marketing
David J. Mulkerin                         Compliance Officer
Christine Pawlak                          Trust Officer
David Wanek                               Loan Officer
</TABLE>
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<PAGE>

                           WEST SUBURBAN BANCORP, INC.
                               711 S. MEYERS ROAD
                               LOMBARD, ILLINOIS


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AURORA

Lake Street Facility: 101 N. Lake St., Aurora, IL 60507 - (630) 844-5200

Galena Facility: 2000 W. Galena Blvd., Aurora, IL 60507 - (630) 896-7000

BARTLETT

Bartlett Facility: 1061 W. Stearns Rd., Bartlett, IL 60103 - (630) 830-5330

BLOOMINGDALE

Stratford Square Facility: 355 W. Army Trail Rd., Bloomingdale, IL 60108 -
(630) 351-0600

BOLINGBROOK

Bolingbrook East Facility: 672 E. Boughton Rd., Bolingbrook, IL 60440 - (630)
972-9550

Bolingbrook West Facility: 1104 W. Boughton Rd., Bolingbrook, IL 60440 -
(630) 378-9680

CAROL STREAM

Carol Stream Facility: 401 N. Gary Ave., Carol Stream, IL 60188 - (630)
690-8700

Fair Oaks Facility: 1380 Army Trail Rd., Carol Stream, IL 60188 - (630)
213-5920

President Street Facility: 879 Geneva Rd., Carol Stream, IL 60188 - (630)
752-1175

DARIEN

Cass Avenue Facility: 8001 S. Cass Ave., Darien, IL 60561 - (630) 852-6900

75th Street Facility: 1005 75th St., Darien, IL 60561 - (630) 852-9226

DOWNERS GROVE

Finley Road Facility: 2800 S. Finley Rd., Downers Grove, IL 60515 - (630)
495-3600

GLENDALE HEIGHTS

Glendale Heights Facility: 1657 Bloomingdale Rd., Glendale Heights, IL 60139
- (630) 690-8600

LOMBARD

Westmore Facility: 711 S. Meyers Rd., Lombard, IL 60148 - (630) 629-4200

North Main Street Facility: 707 N. Main St., Lombard, IL 60148 - (630)
691-8558

Metra Main Facility: 100 S. Main St., Lombard, IL 60148 - (630) 268-9010

S. Main Street Facility: 1122 S. Main St., Lombard, IL 60148 - (630) 495-3605

Mr. Z's: 401 S. Main St., Lombard, IL 60148

MONTGOMERY

Montgomery Facility: 1830 Douglas Rd., Montgomery, IL 60538 - (630) 844-5600

NAPERVILLE

Naperville Facility: 2020 Feldott Ln., Naperville, IL 60540 - (630) 416-3800

OAKBROOK TERRACE

Oakbrook Terrace Facility: 17W754 22nd St., Oakbrook Terrace, IL 60181 -
(630) 916-1195

ST. CHARLES

St. Charles Facility: 315 S. Randall Rd., St. Charles, IL 60174 - (630)
377-6930

VILLA PARK

Villa Park Facility: 29 E. St. Charles Rd., Villa Park, IL 60181 - (630)
832-8775

WARRENVILLE

Warrenville Facility: 3S041 Rte. 59, Warrenville, IL 60555 - (630) 393-6060

WESTMONT

Westmont Facility: 6400 S. Cass Ave., Westmont, IL 60559 - (630) 963-2735

WHEATON
Danada Square Facility: 295 W. Loop Rd., Wheaton, IL 60187 - (630) 871-9890

Wheaton Facility: 221 S. West St., Wheaton, IL 60187 - (630) 221-8220

WS 24 ATMs are available at all of the above banking locations.

VISA HEADQUARTERS, 701 S. MEYERS RD., LOMBARD, IL 60148 - (630) 629-4200
FINANCIAL CENTER, 717 S. MEYERS RD., LOMBARD, IL 60148 - (630) 629-4200
LEXINGTON SQUARE OF ELMHURST, ELMHURST, IL 60126
LEXINGTON SQUARE OF LOMBARD, LOMBARD, IL 60148
BEACON HILL, LOMBARD, IL 60148
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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. Duane G. Debs, President and Chief Financial Officer
West Suburban Bancorp, Inc., 2800 S. Finley Road, Downers Grove, Illinois
60515

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 13, 1998 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:

George E. Ranstead, Secretary to the Board and Treasurer
West Suburban Bank, 2800 South Finley Road, Downers Grove, Illinois 60515

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 Community Reinvestment
Act Officer
West Suburban Bank, 717 South Meyers Road, Lombard, Illinois 60148

INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two Prudential Plaza
180 North Stetson Avenue
Chicago, Illinois  60601

CORPORATE COUNSEL - CHICAGO, ILLINOIS
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606

MEMBER FDIC

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