# ** **

**Exhibit 13**

 

# **Profile**

# ** **

West Suburban Bancorp, Inc.(“West Suburban”) is the parent bank holding company of West Suburban Bank,Lombard, Illinois (the “Bank” and, together with West Suburban, the “Company”).The Company had total assets at December 31, 2007 of approximately $1.9billion. The Bank is one of the largest independent banks headquartered in DuPage County.

 

**West Suburban Bancorp, Inc.**

**Financial Highlights**

 

| ** **                 | ** ** | **Years Ended December 31,**                 | ** ** |
|----------------------------|------------|---------------------------------------------------|------------|
| ** **                 | ** ** | **(Dollars in thousands, except per share data)** | ** ** |
| ** **                 | ** ** | **2007**                                          | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
| Net income                 |       | $                                                 | 23,413     |   | $ | 25,351 |   | $ | 25,486 |   | $ | 23,658 |   | $ | 25,908 |   |
| Per share data             |       |                                              |       |   |   |   |   |   |   |   |   |
| Earnings                   |       | 54.13                                             |       | 58.62 |   | 58.93 |   | 54.82 |   | 59.90 |   |
| Book value  (GAAP)         |       | 241.76                                            |       | 220.43 |   | 218.87 |   | 223.60 |   | 227.85 |   |
| Book value  (non-GAAP) (1) |       | 373.34                                            |       | 359.18 |   | 344.60 |   | 347.87 |   | 346.62 |   |
| Net loans                  |       | 1,226,571                                         |       | 1,153,885 |   | 1,091,747 |   | 1,046,125 |   | 1,074,215 |   |
| Total assets               |       | 1,851,357                                         |       | 1,876,643 |   | 1,827,191 |   | 1,748,049 |   | 1,710,695 |   |
| Total deposits             |       | 1,637,714                                         |       | 1,677,844 |   | 1,639,666 |   | 1,569,742 |   | 1,529,931 |   |
|                            |            |                                                   |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)                                  Book value per share (non-GAAP)represents the aggregate amount of shareholders’ equity and common stock inESOP subject to contingent repurchase obligation divided by the number ofoutstanding shares. See Note 7 to the Company’s consolidated financialstatements and “Non-GAAP Financial Measures.” This presentation is consistentwith the Company’s belief that it is unlikely that the Company would berequired to satisfy the contingent repurchase obligation.

 

**Table ofContents**

 
| Profile                                                                                               | 1  |
|-------------------------------------------------------------------------------------------------------|----|
| Special  Note Concerning Forward-Looking Statements and Risk Factors                                  | 2  |
| Letter  to Our Shareholders, Customers and Friends                                                    | 3  |
| Common  Stock, Book Value and Dividends                                                               | 4  |
| Business Review                                                                                       | 4  |
| Report of Independent Registered Public Accounting Firm                                               | 5  |
| Consolidated Financial Statements                                                                     | 6  |
| Notes to Consolidated Financial Statements                                                            | 10 |
| Management’s Report on Internal Control Over Financial  Reporting                                | 31 |
| Report of Independent Registered Public Accounting  Firm on Internal Control Over Financial Reporting | 32 |
| Stock Performance Presentation                                                                        | 33 |
| Selected  Financial Data                                                                              | 34 |
| Non-GAAP  Financial Measures                                                                          | 35 |
| Average Balance Sheets, Net Interest Income and  Average Rates and Yields on a Tax Equivalent Basis   | 36 |
| Management’s  Discussion and Analysis of Financial Condition and Results of Operations           | 37 |
| Boards  of Directors and Officers                                                                     | 46 |
| Addresses of West Suburban Facilities                                                                 | 49 |
| Map of Facilities                                                                                     | 51 |
| Shareholder  Information                                                                              | 52 |

 

1

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###### *** ***

###### ***Special Note ConcerningForward-Looking Statements and Risk Factors***

###### *** ***

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

 

*Anumber of factors, many of which are beyond the ability of the Company tocontrol or predict, could cause actual results to differ materially from thosein its forward-looking statements. These factors include, among others, thefollowing: (i) the strength of the local and national economy, includingthe financial markets and local residential and commercial real estate markets;(ii) the timely development and acceptance of new products and services,including products and services offered through alternative delivery channelssuch as the Internet; (iii) changes in federal, state and local laws,regulations and governmental policies (including laws, regulations andgovernment policies relating to taxation) concerning the Company’s generalbusiness; (iv) changes in interest rates and prepayment rates of theCompany’s assets; (v) increased competition in the financial servicessector and the inability to maintain an acceptable net interest margin; (vi) theinability to attract new customers and retain existing customers; (vii) changesin technology implemented by the Company and by other parties includingtechnological changes implemented for, or related to, the Company’s website ornew products such as prepaid solutions cards, payroll cards and other similarproducts and services; (viii) the inability to develop and maintain secureand reliable electronic systems including systems developed for the Company’swebsite or new products such as prepaid solutions cards, payroll cards andother similar products and services; (ix) the loss of key executives oremployees and the difficulty in replacing them; (x) changes in consumerspending, borrowing and saving habits; (xi) the economic impact ofterrorist activities and military actions; (xii) unexpected results ofacquisitions; (xiii) unexpected outcomes of existing or new litigation anddisputes with third parties involving the Company; (xiv) changes in accountingpolicies and practices; (xv) the inability of the Company to manage the risksassociated with the foregoing as well as anticipated; and (xvi) developmentsregarding the pending litigation involving Visa USA Inc. and the timing,pricing and effects of Visa’s initial public offering.**These risks and uncertainties should be considered inevaluating forward-looking statements and undue reliance should not be placedon such statements.*

 

*Additionalinformation concerning the Company and its business, including risk factorsthat could materially affect the Company’s results of operations and financialcondition, is included in the Company’s filings with the Securities andExchange Commission including the Company’s most recent Annual Report on Form 10-K.*

 

2

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# ** **

# **To Our Shareholders,Customers and Friends**

# ** **

The year 2007,specifically the second half of 2007, was a very challenging time for thebanking industry. Sub-prime loans have dominated the headlines of the businesspublications, the financial markets and the news media. Many banks have takenhuge losses and write-downs to their loan and securities portfolios. TheFederal Reserve reduced rates by 225 basis points through the date of thisletter.

 

Thus far, West Suburbanhas generally been able to stay clear from the turmoil. Our nonperforming loansremain at the same low levels as in our previous two year ends. Our overallperformance for 2007 was down compared to 2006. Net income decreased 7.9% to$23,413 for 2007 compared to $25,351 for 2006. Assets decreased 1.3% to$1,851,357 at December 31, 2007 from $1,876,643 at December 31, 2006.The book value per share (non-GAAP) increased 3.9% to $373.34 at December 31,2007 from $359.18 at December 31, 2006. West Suburban continues to pay adividend of $50.00 per share while many financial institutions were forced toreduce their dividends as a result of reduced capital levels.

 

We anticipate that 2008will be a challenging year as we maneuver the slowing economy, lower interestrates, increased foreclosures throughout the country, including in our markets,and the presidential election.

 

At West Suburban, we havea strong commitment to the communities we serve as evidenced by the variousprograms and organizations in which our employees are involved. These programsand organizations include Rebuilding Together Aurora, Inc., DuPage Federationon Human Services Reform, DuPage Pads, DuPage County HomelessContinuum of Care, Exchange Club — Prevention of Child and Adult Abuse, HessedHouse, Kane County Homeless Continuum of Care as well as participation invarious capacities at churches, fraternal organizations, chambers of commerceand local school boards.

 

As in the past, wecontinue to provide our customers traditional banking products such aschecking, savings and certificate of deposit accounts as well as competitivehome equity, residential real estate and commercial loans. We will continue toenhance our online banking services at *www.westsuburbanbank.com*in order to offer our customers improved accessibility 24 hours a day, sevendays a week. Our new consumer banking initiatives will not distract us from ourcommitment to our business customers. We value these relationships andappreciate that our future success depends upon our ability to continue to be agood partner to business throughout the communities we serve.

 

We would like to expressour appreciation to everyone for the support that has allowed us to become andremain one of the largest independent banks headquartered in DuPage Countyand we welcome your comments, criticisms and suggestions. We could not haveachieved our success without the support of our shareholders, customers,communities, friends and employees.

 

| Sincerely,            |   |                                   |
|-----------------------|--------|----------------------------------------|
|                  |   |                                   |
| /s/ Kevin J. Acker    |   | /s/ Duane G. Debs                      |   |
| Kevin J. Acker        |   | Duane G. Debs                          |
| Chairman of the Board |   | President and Chief  Financial Officer |

 

3

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# ** **

# **Common Stock, Book Valueand Dividends**

 

West Suburban has a single class of common stock issued and outstanding.The common stock is not traded on any stock exchange or on the over-the-countermarket. West Suburban’s per share book value as of the end of each quarter anddividends declared for the last two years are set forth below:

 

| ** ** | ** ** | ** **  | ** ** | **BookValue** | ** ** | **BookValue**    | ** ** | **Dividends** | ** ** |
|------------|------------|-------------|------------|---------------|------------|------------------|------------|---------------|------------|
| **Year**   | ** ** | **Quarter** | ** ** | **GAAP**      | ** ** | **Non-GAAP (1)** | ** ** | **Declared**  | ** ** |
| **2007**   |       | 4th         |       | $             | 241.76     |             | $          | 373.34        |       | $ | 20.00 |   |
|       |       | 3rd         |       | 235.85        |       | 377.08           |       | 10.00         |       |
|       |       | 2nd         |       | 227.25        |       | 366.85           |       | 10.00         |       |
|       |       | 1st         |       | 226.33        |       | 366.47           |       | 10.00         |       |
|       |       |        |       |          |       |             |       |          |       |
| 2006       |       | 4th         |       | $             | 220.43     |             | $          | 359.18        |       | $ | 20.00 |   |
|       |       | 3rd         |       | 223.24        |       | 362.46           |       | 10.00         |       |
|       |       | 2nd         |       | 215.43        |       | 347.81           |       | 10.00         |       |
|       |       | 1st         |       | 217.33        |       | 347.07           |       | 10.00         |       |

----

(1)                                  Book value per share (non-GAAP)represents the aggregate amount of shareholders’ equity and common stock inESOP subject to contingent repurchase obligation divided by the number ofoutstanding shares. See Note 7 to the Company’s consolidated financialstatements and “Non-GAAP Financial Measures.” This presentation is consistentwith the Company’s belief that it is unlikely that the Company would berequired to satisfy the contingent repurchase obligation.

 

The dividendsdeclared during the fourth quarter of 2007 included a special $10.00 per sharedividend payable on December 15, 2007 to shareholders of record as of December 1,2007. Similarly, the dividends declared during the fourth quarter of 2006included a special $10.00 per share dividend payable on December 15, 2006to shareholders of record as of December 1, 2006.

 

# **Business Review**

# ** **

As of December 31, 2007, the Companyhad total assets of approximately $1.9 billion and maintained 34 full-servicebranches, four limited-service branches and six departments providinginsurance, financial and other services for the convenience of the customers ofthe Bank throughout DuPage, Kane, Kendall and Will Counties in Illinois. TheBank focuses on providing retail and commercial banking products and servicesin its market area. The Company had 521 full-time equivalent employees at December 31,2007.

 

 

 

# ****

 

 

4

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# ** **

# ** **

# ****

# ** **

 

# **REPORT OF INDEPENDENTREGISTERED PUBLIC ACCOUNTING FIRM**

# ** **

 

 

Board of Directorsand Shareholders

West SuburbanBancorp, Inc.

Lombard, Illinois

 

We have auditedthe accompanying consolidated balance sheets of West Suburban Bancorp, Inc.(the “Company”) as of December 31, 2007 and 2006, and the relatedconsolidated statements of income, changes in shareholders’ equity, and cashflows for each of the three years in the period ended December 31, 2007.These financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statements basedon our audits.

 

We conducted ouraudits in accordance with standards of the Public Company Accounting OversightBoard (United States). Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basisfor our opinion.

 

In our opinion,the consolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of the Company at December 31,2007 and 2006, and the results of its operations and its cash flows for each ofthe three years in the period ended December 31, 2007 in conformity withU.S. generally accepted accounting principles.

 

We also haveaudited, in accordance with the standards of the Public Company AccountingOversight Board (United States), the effectiveness of the Company’s internalcontrol over financial reporting as of December 31, 2007, based oncriteria established in InternalControl—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission and our report dated March 11,2008 expressed an unqualified opinion thereon.

 
|   | /s/ Crowe Chizek and  Company LLC |
|--------|-----------------------------------|
|   | Crowe Chizek and  Company LLC     |

 

Oak Brook, Illinois

March 11, 2008

 

 

5

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**WESTSUBURBAN BANCORP, INC.**

# **CONSOLIDATED BALANCESHEETS**

## **DECEMBER 31, 2007 AND2006**

(Dollars inthousands)

 
| ** **                                                                                        | ** ** | **2007**   | ** ** | **2006**   | ** ** |
|---------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| **Assets**                                                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash and due  from banks                                                                          |       | $          | 32,183     |       | $          | 56,956 |   |
| Federal funds  sold                                                                               |       | 1,000      |       | 67,073     |       |
| Total cash and  cash equivalents                                                                  |       | 33,183     |       | 124,029    |       |
| Securities                                                                                        |       |       |       |       |       |
| Available for  sale (amortized cost of $461,100 in 2007 and $462,147 in 2006)                     |       | 459,405    |       | 453,097    |       |
| Held to maturity  (fair value of $23,953 in 2007 and $44,728 in 2006)                             |       | 24,076     |       | 45,013     |       |
| Federal Home  Loan Bank stock                                                                     |       | 5,258      |       | 5,091      |       |
| Total securities                                                                                  |       | 488,739    |       | 503,201    |       |
| Loans, less  allowance for loan losses of $9,269 in 2007 and $10,650 in 2006                      |       | 1,226,571  |       | 1,153,885  |       |
| Bank-owned life  insurance                                                                        |       | 37,283     |       | 34,422     |       |
| Premises and  equipment, net                                                                      |       | 43,097     |       | 39,965     |       |
| Other real  estate                                                                                |       | 824        |       | 351        |       |
| Accrued interest  and other assets                                                                |       | 21,660     |       | 20,790     |       |
| **Total  assets**                                                                                 |       | $          | 1,851,357  |       | $          | 1,876,643 |   |
|                                                                                              |       |       |       |       |       |
| **Liabilities and shareholders’ equity**                                                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| Deposits                                                                                          |       |       |       |       |       |
| Demand-noninterest-bearing                                                                        |       | $          | 141,724    |       | $          | 155,041 |   |
| Interest-bearing                                                                                  |       | 1,495,990  |       | 1,522,803  |       |
| Total deposits                                                                                    |       | 1,637,714  |       | 1,677,844  |       |
| Prepaid  solutions cards                                                                          |       | 24,649     |       | 21,105     |       |
| Accrued interest  and other liabilities                                                           |       | 27,526     |       | 22,350     |       |
| ** **                                                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| Common stock in  ESOP subject to contingent repurchase obligation                                 |       | 56,907     |       | 60,009     |       |
| ** **                                                                                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| Shareholders’  equity                                                                        |       |       |       |       |       |
| Common stock, no  par value; 15,000,000 shares authorized; 432,495 shares issued and  outstanding |       | 3,457      |       | 3,457      |       |
| Surplus                                                                                           |       | 38,066     |       | 38,066     |       |
| Retained  earnings                                                                                |       | 121,360    |       | 119,572    |       |
| Accumulated  other comprehensive loss                                                             |       | (1,415     | )          | (5,751     | )          |
| Amount  reclassified on ESOP shares                                                               |       | (56,907    | )          | (60,009    | )          |
| **Total  shareholders’ equity**                                                              |       | 104,561    |       | 95,335     |       |
| **Total  liabilities and shareholders’ equity**                                              |       | $          | 1,851,357  |       | $          | 1,876,643 |   |
|                                                                                              |       |       |       |       |       |

 

*Seeaccompanying notes to consolidated financial statements.*

 

6

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**WESTSUBURBAN BANCORP, INC.**

### **CONSOLIDATEDSTATEMENTS OF INCOME**

## **YEARS ENDED DECEMBER 31,2007, 2006 AND 2005**

(Dollars inthousands, except per share data)

 
| ** **                                               | ** ** | **2007**   | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|----------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| **Interest income**                                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Loans, including  fees                                   |       | $          | 85,088     |       | $          | 82,542     |       | $ | 68,459 |   |
| Securities                                               |       |       |       |       |       |       |       |
| Taxable                                                  |       | 19,192     |       | 19,222     |       | 19,235     |       |
| Exempt from  federal income tax                          |       | 1,121      |       | 1,040      |       | 963        |       |
| Federal funds  sold                                      |       | 3,061      |       | 2,932      |       | 732        |       |
| Total interest  income                                   |       | 108,462    |       | 105,736    |       | 89,389     |       |
|                                                     |       |       |       |       |       |       |       |
| **Interest expense**                                     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Deposits                                                 |       | 48,203     |       | 45,303     |       | 30,220     |       |
| Other                                                    |       | 3          |       | 31         |       | 49         |       |
| Total interest  expense                                  |       | 48,206     |       | 45,334     |       | 30,269     |       |
| **Net interest income**                                  |       | 60,256     |       | 60,402     |       | 59,120     |       |
| **Provision for loan losses**                            |       | 375        |       | 150        |       | 1,375      |       |
| **Net interest income after provision for loan  losses** |       | 59,881     |       | 60,252     |       | 57,745     |       |
| ** **                                               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Noninterest income**                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Prepaid  solutions cards                                 |       | 13,380     |       | 8,295      |       | 7,774      |       |
| Service fees on  deposit accounts                        |       | 6,435      |       | 6,978      |       | 7,441      |       |
| Debit card fees                                          |       | 2,081      |       | 1,970      |       | 2,027      |       |
| Bank-owned life  insurance                               |       | 1,525      |       | 1,462      |       | 1,361      |       |
| Net gain on  sales of loans held for sale                |       | 50         |       | 124        |       | 109        |       |
| Net realized  (losses) gains on securities transactions  |       | (6         | )          | 85         |       | 206        |       |
| Impairment of  FHLMC preferred stock                     |       | (381       | )          | —     |       | —     |       |
| Other                                                    |       | 3,980      |       | 3,951      |       | 4,653      |       |
| Total  noninterest income                                |       | 27,064     |       | 22,865     |       | 23,571     |       |
|                                                     |       |       |       |       |       |       |       |
| **Noninterest expense**                                  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Salaries and  employee benefits                          |       | 23,749     |       | 23,621     |       | 22,449     |       |
| Prepaid  solutions cards                                 |       | 9,645      |       | 5,767      |       | 5,459      |       |
| Furniture and  equipment                                 |       | 5,570      |       | 4,759      |       | 4,851      |       |
| Occupancy                                                |       | 4,509      |       | 4,581      |       | 4,073      |       |
| Advertising and  promotion                               |       | 2,324      |       | 1,916      |       | 1,824      |       |
| Professional  fees                                       |       | 1,673      |       | 1,217      |       | 1,313      |       |
| Other                                                    |       | 7,564      |       | 5,995      |       | 5,538      |       |
| Total  noninterest expense                               |       | 55,034     |       | 47,856     |       | 45,507     |       |
|                                                     |       |       |       |       |       |       |       |
| **Income before income taxes**                           |       | 31,911     |       | 35,261     |       | 35,809     |       |
| **Income tax expense**                                   |       | 8,498      |       | 9,910      |       | 10,323     |       |
| **Net income**                                           |       | $          | 23,413     |       | $          | 25,351     |       | $ | 25,486 |   |
|                                                     |       |       |       |       |       |       |       |
| **Earnings per share**                                   |       | $          | 54.13      |       | $          | 58.62      |       | $ | 58.93 |   |
| **Average shares outstanding**                           |       | 432,495    |       | 432,495    |       | 432,495    |       |

 

*Seeaccompanying notes to consolidated financial statements.*

 

7

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** **

 

 

**WESTSUBURBAN BANCORP, INC.**

#### **CONSOLIDATED STATEMENTSOF CHANGES IN SHAREHOLDERS’ EQUITY**

**YEARSENDED DECEMBER 31, 2007, 2006 AND 2005**

(Dollars inthousands, except per share data)

 
| ** **                                                                                                         | ** ** | **Common  Stock  and  Surplus** | ** ** | **Retained  Earnings** | ** ** | **Accumulated  Other  Compre-  hensive  Income  (Loss)** | ** ** | **Amount  Reclassified  on ESOP   Shares** | ** ** | **Total Shareholders’  Equity** | ** ** |
|--------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|------------------------|------------|----------------------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------|------------|
| Balance, January 1, 2005                                                                                      |       | $                               | 41,523     |                   | $          | 111,985                                                  |       | $                                          | (3,054     | )                                    | $          | (53,959 | ) | $ | 96,495 |   |
|                                                                                                               |       |                            |       |                   |       |                                                     |       |                                       |       |                                 |       |
| Comprehensive income                                                                                               |       |                            |       |                   |       |                                                     |       |                                       |       |                                 |       |
| Net income                                                                                                         |       |                            |       | 25,486                 |       |                                                     |       |                                       |       | 25,486                               |       |
| Change in  unrealized loss on available for sale securities, net of reclassification and  tax effects              |       |                            |       |                   |       | (5,277                                                   | )          |                                       |       | (5,277                               | )          |
| Total  comprehensive income                                                                                        |       |                            |       |                   |       |                                                     |       |                                       |       | 20,209                               |       |
| Cash dividends  declared - $50.00 per share                                                                        |       |                            |       | (21,625                | )          |                                                     |       |                                       |       | (21,625                              | )          |
| Reclassification  due to change in fair value of common stock in ESOP subject to contingent  repurchase obligation |       |                            |       |                   |       |                                                     |       | (419                                       | )          | (419                                 | )          |
| Balance, December 31, 2005                                                                                    |       | 41,523                          |       | 115,846                |       | (8,331                                                   | )          | (54,378                                    | )          | 94,660                               |       |
|                                                                                                               |       |                            |       |                   |       |                                                     |       |                                       |       |                                 |       |
| Comprehensive income                                                                                               |       |                            |       |                   |       |                                                     |       |                                       |       |                                 |       |
| Net income                                                                                                         |       |                            |       | 25,351                 |       |                                                     |       |                                       |       | 25,351                               |       |
| Change in  unrealized loss on available for sale securities, net of reclassification and  tax effects              |       |                            |       |                   |       | 2,878                                                    |       |                                       |       | 2,878                                |       |
| Total  comprehensive income                                                                                        |       |                            |       |                   |       |                                                     |       |                                       |       | 28,229                               |       |
| Adjustment to  initially apply SFAS No. 158, net of tax                                                       |       |                            |       |                   |       | (298                                                     | )          |                                       |       | (298                                 | )          |
| Cash dividends  declared - $50.00 per share                                                                        |       |                            |       | (21,625                | )          |                                                     |       |                                       |       | (21,625                              | )          |
| Reclassification  due to change in fair value of common stock in ESOP subject to contingent  repurchase obligation |       |                            |       |                   |       |                                                     |       | (5,631                                     | )          | (5,631                               | )          |
| Balance, December 31, 2006                                                                                    |       | 41,523                          |       | 119,572                |       | (5,751                                                   | )          | (60,009                                    | )          | 95,335                               |       |
|                                                                                                               |       |                            |       |                   |       |                                                     |       |                                       |       |                                 |       |
| Comprehensive income                                                                                               |       |                            |       |                   |       |                                                     |       |                                       |       |                                 |       |
| Net income                                                                                                         |       |                            |       | 23,413                 |       |                                                     |       |                                       |       | 23,413                               |       |
| Change in  unrealized loss on available for sale securities, net of reclassification and  tax effects              |       |                            |       |                   |       | 4,432                                                    |       |                                       |       | 4,432                                |       |
| Change in  post-retirement obligations, net of reclassificaton and tax effects                                     |       |                            |       |                   |       | (96                                                      | )          |                                       |       | (96                                  | )          |
| Total  comprehensive income                                                                                        |       |                            |       |                   |       |                                                     |       |                                       |       | 27,749                               |       |
| Cash dividends  declared - $50.00 per share                                                                        |       |                            |       | (21,625                | )          |                                                     |       |                                       |       | (21,625                              | )          |
| Reclassification  due to change in fair value of common stock in ESOP subject to contingent  repurchase obligation |       |                            |       |                   |       |                                                     |       | 3,102                                      |       | 3,102                                |       |
| **Balance, December 31, 2007**                                                                                |       | $                               | 41,523     |                   | $          | 121,360                                                  |       | $                                          | (1,415     | )                                    | $          | (56,907 | ) | $ | 104,561 |   |
|                                                                                                               |       |                            |       |                   |       |                                                     |       |                                       |       |                                 |       |

 

*Seeaccompanying notes to consolidated financial statements.*

 

8

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**WESTSUBURBAN BANCORP, INC.**

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**YEARSENDED DECEMBER 31, 2007, 2006 AND 2005**

(Dollars inthousands)

 
| ** **                                                                        | ** ** | **2007**   | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|-----------------------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| **Cash flows from operating activities**                                          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net income                                                                        |       | $          | 23,413     |       | $          | 25,351     |       | $ | 25,486 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities |       |       |       |       |       |       |       |
| Depreciation                                                                      |       | 3,299      |       | 3,607      |       | 3,284      |       |
| Provision for  loan losses                                                        |       | 375        |       | 150        |       | 1,375      |       |
| Deferred income  tax (benefit) provision                                          |       | (1,269     | )          | (1,701     | )          | 1,239      |       |
| Net premium  amortization of securities                                           |       | 291        |       | 564        |       | 1,140      |       |
| Net realized  loss (gain) on securities transactions                              |       | 6          |       | (85        | )          | (206       | )          |
| Impairment of  FHLMC preferred stock                                              |       | 381        |       | —     |       | —     |       |
| Federal Home  Loan Bank stock dividends                                           |       | —     |       | —     |       | (267       | )          |
| Increase in cash  surrender value of bank-owned life insurance                    |       | (1,525     | )          | (1,462     | )          | (1,361     | )          |
| Amortization of  deferred loan fees                                               |       | 57         |       | 100        |       | 185        |       |
| Net gain on  sales of loans held for sale                                         |       | (50        | )          | (124       | )          | (109       | )          |
| Sales of loans  held for sale                                                     |       | 5,875      |       | 9,730      |       | 6,943      |       |
| Origination of  loans held for sale                                               |       | (6,175     | )          | (9,466     | )          | (6,645     | )          |
| Net gain on  sales of premises and equipment                                      |       | (2         | )          | (7         | )          | —     |       |
| Net loss (gain)  on sales of other real estate                                    |       | 2          |       | (99        | )          | (223       | )          |
| Increase in  accrued interest and other assets                                    |       | (2,461     | )          | (117       | )          | (883       | )          |
| Increase in  accrued interest and other liabilities                               |       | 5,017      |       | 3,275      |       | 2,373      |       |
| **Net  cash provided by operating activities**                                    |       | 27,234     |       | 29,716     |       | 32,331     |       |
| **Cash flows from investing activities**                                          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Securities  available for sale                                                    |       |       |       |       |       |       |       |
| Sales                                                                             |       | 470        |       | —     |       | 22,612     |       |
| Maturities,  calls and redemptions                                                |       | 89,870     |       | 104,658    |       | 61,864     |       |
| Purchases                                                                         |       | (90,255    | )          | (87,250    | )          | (78,426    | )          |
| Securities held  to maturity                                                      |       |       |       |       |       |       |       |
| Maturities and  calls                                                             |       | 21,054     |       | 22,851     |       | 9,584      |       |
| Purchases                                                                         |       | —     |       | (2,800     | )          | (2,539     | )          |
| Net increase in  loans                                                            |       | (73,782    | )          | (63,252    | )          | (48,808    | )          |
| Investment in  bank-owned life insurance policies                                 |       | (1,336     | )          | (735       | )          | (568       | )          |
| Purchases of  premises and equipment                                              |       | (6,521     | )          | (3,435     | )          | (2,822     | )          |
| Sales of  premises and equipment                                                  |       | 92         |       | 49         |       | —     |       |
| Sales of other  real estate                                                       |       | 539        |       | 682        |       | 4,606      |       |
| **Net  cash used in investing activities**                                        |       | (59,869    | )          | (29,232    | )          | (34,497    | )          |
| **Cash flows from financing activities**                                          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net (decrease)  increase in deposits                                              |       | (40,130    | )          | 38,178     |       | 69,924     |       |
| Net increase in  prepaid solutions cards                                          |       | 3,544      |       | 1,198      |       | 8,261      |       |
| Dividends paid                                                                    |       | (21,625    | )          | (21,625    | )          | (21,625    | )          |
| **Net  cash (used in) provided by financing activities**                          |       | (58,211    | )          | 17,751     |       | 56,560     |       |
| **Net (decrease) increase in cash and cash  equivalents**                         |       | (90,846    | )          | 18,235     |       | 54,394     |       |
| **Beginning cash and cash equivalents**                                           |       | 124,029    |       | 105,794    |       | 51,400     |       |
| **Ending cash and cash equivalents**                                              |       | $          | 33,183     |       | $          | 124,029    |       | $ | 105,794 |   |
| **Supplemental disclosures**                                                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash paid for                                                                     |       |       |       |       |       |       |       |
| Interest                                                                          |       | $          | 48,816     |       | $          | 43,976     |       | $ | 29,026 |   |
| Income taxes                                                                      |       | 9,082      |       | 11,270     |       | 9,907      |       |
| Other real  estate acquired through loan foreclosures                             |       | 1,014      |       | 724        |       | 1,437      |       |

 

*Seeaccompanying notes to consolidated financial statements.*

 

9

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## **WEST SUBURBAN BANCORP, INC.**

## **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

(Dollars inthousands, except per share data)

 

# **Note 1 - Nature ofBusiness and Summary of Significant Accounting Policies**

# ** **

West SuburbanBancorp, Inc. (“West Suburban”) through the branch network of itssubsidiary, West Suburban Bank (the “Bank” and, together with West Suburban,the “Company”), operates 34 full-service branches, four limited-service branchesand six departments providing insurance, financial and other services for theconvenience of the customers of the Bank throughout DuPage, Kane, Kendall andWill Counties in Illinois. Customers in these areas are the primary consumersof the Company’s loan and deposit products and services. Although borrower cashflow is expected to be the primary source of repayment, the Company’s loans aregenerally secured by various forms of collateral including real estate,business assets, consumer goods, personal guarantees and other items.

 

***OperatingSegments***

While the Company’ssenior management monitors the revenue streams derived from various individualand groups of products and services, any identifiable segments are notmaterial. Moreover, operations are managed and financial performance isevaluated on a Company-wide basis. Accordingly, all of the Company’s operationsare considered by management to be aggregated in one reportable operatingsegment.

 

***Principlesof Consolidation***

Theconsolidated financial statements include the accounts of West Suburban and theBank. Significant intercompany accounts and transactions have been eliminated.

 

***Useof Estimates***

To preparefinancial statements in conformity with accounting principles generallyaccepted in the United States of America, management makes estimates andassumptions, which are subject to change, based on available information. Theseestimates and assumptions affect the amounts reported in the financialstatements and the disclosures provided, and future results could differ. Theallowance for loan losses, fair values of financial instruments, impairment ofsecurities and status of contingencies are particularly subject to change.

 

***Securities***

Debt andmarketable equity securities are classified into two categories, “available forsale” and “held to maturity.” Available for sale securities are carried at fairvalue with net unrealized gains and losses (net of deferred tax) reported inaccumulated other comprehensive loss as a separate component of shareholders’equity. Held to maturity securities are carried at amortized cost as theCompany has both the ability and positive intent to hold them to maturity.Other securities such as Federal Home Loan Bank stock are carried at cost.Interest income includes amortization of purchase premium or discount. Premiumsand discounts on securities are amortized on the level-yield method withoutanticipating prepayments, except for mortgage backed securities whereprepayments are anticipated. Gains and losses on sales are recorded on thetrade date and determined using the specific identification method. The Companydoes not engage in trading activities.

 

Declines in the fairvalue of securities below their cost that are other than temporary arereflected as realized losses. In estimating other-than-temporary losses,management considers: (1) the length of time and extent that fair valuehas been less than cost; (2) the financial condition and near termprospects of the issuer; and (3) the Company’s ability and intent to holdthe security for a period sufficient to allow for any anticipated recovery infair value.

 

***Loansand Allowance for Loan Losses***

Loans thatmanagement has the intent and ability to hold for the foreseeable future oruntil maturity or payoff are reported at the principal balance outstanding, netof unearned interest, deferred loan fees and costs and an allowance for loanlosses. Interest income is accrued on the unpaid balance of the Company’s loansand includes amortization of net deferred loan fees and costs over the loanterm. Loan origination fees, net of certain direct origination costs, aredeferred and recognized in interest income using the level-yield method withoutanticipating prepayments. Accrual of interest is generally discontinued onloans 90 days past due, or on an earlier date, if management

 

10

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believes, afterconsidering economic and business conditions and collection efforts, that theborrower’s financial condition is such that collection of principal or interestis doubtful. In some circumstances, a loan more than 90 days past due maycontinue to accrue interest if it is fully secured and in the process ofcollection. When a loan is classified as nonaccrual, interest previouslyaccrued but not collected is charged back to interest income. When payments arereceived on nonaccrual loans they are first applied to principal, then tointerest income and finally to expenses incurred for collection.

 

The allowance forloan losses is a valuation allowance for probable incurred credit losses in theloan portfolio. The allowance is increased by a provision for loan lossescharged to earnings. Loan losses are charged against the allowance whenmanagement believes the uncollectibility of a loan has been established.Subsequent recoveries, if any, are credited to the allowance. The allowanceconsists of specific and general components. The specific component relates tospecific loans that are individually classified as impaired. The generalcomponent covers pools of other loans and is based on historical lossexperience adjusted for current factors. The allowance for loan losses isevaluated monthly based on management’s periodic review of loan collectibilityin light of historical loan loss experience, the nature and volume of the loanportfolio, information about specific borrower situations and estimatedcollateral values and prevailing economic conditions. Although allocations ofthe allowance may be made for specific loans, the entire allowance is availablefor any loan that, in management’s judgment, should be charged-off. Management’sevaluation of loan collectibility is inherently subjective as it requiresestimates that are subject to significant revision as more information becomesavailable or as relevant circumstances change.

 

The Companyevaluates commercial, real estate construction and commercial mortgage loansmonthly for impairment. A loan is considered impaired when, based on currentinformation and events, full payment under the loan terms is not expected.Impairment is measured based on the present value of expected future cash flowsdiscounted at the loan’s effective interest rate or the fair value of the loan’scollateral, if repayment of the loan is collateral dependent. A valuation allowanceis maintained for the amount of impairment. Generally, loans 90 days or morepast due and all loans classified as nonaccrual status are considered forimpairment. Impairment is considered on an entire category basis forsmaller-balance loans of similar nature such as residential real estate andconsumer loans, and on an individual basis for other loans. In general,consumer and credit card loans are charged-off no later than 180 days after aconsumer or credit card loan becomes past due.

 

***LoansHeld for Sale***

Loans areidentified as either held for investment or held for sale upon origination.Loans held for sale are recorded at the lower of amortized cost or marketvalue, determined on an aggregate basis. Unrealized losses, if any, arerecognized on a current basis by charges to earnings. At December 31,2007, loans held for sale was $350 and the cost and market value wasapproximately the same. There were no loans held for sale at December 31,2006. Mortgage loans held for sale are generally sold with servicing released.

 

***Bank-OwnedLife Insurance (“BOLI”)***

The Company has purchasedlife insurance policies on certain officers and directors. Upon adoption ofEmerging Issues Task Force (the “EITF”) 06-5, which is discussed further below,Bank-owned life insurance is recorded at the amount that can be realized underthe insurance contract at the balance sheet date, which is the cash surrender value adjustedfor other charges or other amounts due that are probable at settlement. Priorto adoption of EITF 06-5, the Company recorded Bank-owned life insurance at itscash surrender value.

 

In September 2006, theFinancial Accounting Standards Board (the “FASB”) EITF finalized Issue No. 06-5,“Accounting for Purchases of LifeInsurance - Determining the Amount That Could Be Realized in Accordance withFASB Technical Bulletin No. 85-4 (Accounting for Purchases of LifeInsurance).” This issue requires that a policyholder considercontractual terms of a life insurance policy in determining the amount thatcould be realized under the insurance contract. It also requires that if thecontract provides for a greater surrender value if all individual policies in agroup are surrendered at the same time, that the surrender value be determinedbased on the assumption that policies will be surrendered on an individualbasis. Lastly, the issue requires disclosure when there are contractualrestrictions on the Company’s ability to surrender a policy. The adoption ofEITF 06-5 on January 1, 2007 had no impact on the Company’s financialcondition or results of operations.

 

 

11

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** **

 

***Premisesand Equipment***

Land is carried atcost. Premises and equipment are stated at cost less accumulated depreciation.Depreciation is generally computed on the straight-line method over theestimated useful lives of the assets ranging from 8 to 50 years for premisesand from 3 to 15 years for furniture and equipment.

 

***OtherReal Estate***

Other real estateincludes properties acquired in partial or total settlement of problem loans.The properties are recorded at the lower of cost or fair value less estimatedselling costs at the date acquired. Losses recognized at the time ofacquisition of such properties are charged to the allowance for loan losses.Any subsequent decline in value is charged to current operations. The revenuereceived from and expenses incurred in maintaining such properties are alsoincluded in current operations.

 

###### ***Long-term Assets***

Premises andequipment and other long-term assets are reviewed for impairment when eventsindicate their carrying amount may not be recoverable from future undiscountedcash flows. If impaired, the assets are recorded at fair value.

 

***LoanCommitments and Related Financial Instruments***

Financialinstruments include off-balance sheet credit instruments, such as commitmentsto make loans and commercial letters of credit, issued to meet customerfinancing needs. The face amount for these items represents the exposure toloss, before considering customer collateral or ability to repay. Suchfinancial instruments are recorded when they are funded.

 

***PrepaidSolutions Cards***

Prepaid solutionscards revenues are recognized when services are performed. These revenues arecomprised primarily of service and transaction fees. Service fees representpayments associated with card preparation, customization, usage, non-usage andprocessing. Transaction fees primarily represent interchange fees generated astransactions are made by cardholders. These fees are recognized as revenue inthe same period the related transactions occur or services are rendered.

 

Prepaid solutionscards expenses are recognized as incurred. These expenses generally includecosts associated with the card preparation and customization, data processingfees associated with the card transaction processing, and other expensesdirectly associated with the Bank’s prepaid solutions cards customers. Generaland administrative expenses, such as salaries and benefits, furniture andequipment, advertising and promotion, and professional fees are not included inthe prepaid solutions cards expense category, but rather are included in theappropriate expense classification in the Company’s consolidated statements ofincome.

 

***IncomeTaxes***

Income tax expense is thetotal of the current year income tax due or refundable and the change indeferred tax assets and liabilities. Deferred tax assets and liabilities arethe expected future tax consequences of temporary differences between thecarrying amounts and the tax basis of assets and liabilities, computed usingenacted tax rates. A valuation allowance, if needed, reduces deferred taxassets to the amount expected to be realized.

 

The Company adopted FASB Interpretation 48, “Accounting for Uncertainty in Income Taxes”(“FIN 48”), as of January 1, 2007. A tax position is recognized as abenefit only if it is “more likely than not” that the tax position would besustained in a tax examination, with a tax examination being presumed to occur.The amount recognized is the largest amount of tax benefit that is greater than50% likely of being realized on examination. For tax positions not meeting the “morelikely than not” test, no tax benefit is recorded. The adoption had no impacton the Company’s financial condition or results of operations.

 

The Company recognizes interest and/or penaltiesrelated to income tax matters in income tax expense.

 

12

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***EmployeeStock Ownership Plan (“ESOP”) and Other Retirement Plans***

In July 2007,the Company established the West Suburban Bank 401(k) Profit Sharing Plan.This plan was established to assist the Company in recruiting and retaining itspersonnel. Participation in the plan issubject to certain age and service requirements. Although the Company currentlyintends to match a percentage of the contributions that each employeevoluntarily makes to the plan, all contributions by the Company arediscretionary and are subject to review by the Board of Directors from time totime. The plan is also intended to enable long time employees of the Companythat also participate in the ESOP to diversify their retirement savings.

 

TheBank also maintains an ESOP, which is a noncontributory tax qualifiedretirement plan that covers employees who have satisfied specific servicerequirements. The Bank makes contributions to the ESOP for the benefit of theparticipants. Dividends declared on common stock owned by the ESOP are chargedagainst retained earnings.

 

Dividendspaid on ESOP shares are passed through to participants. Earned and allocatedESOP shares are voted by the respective participants. Because participants mayrequire the Company to purchase their ESOP shares upon termination of theiremployment, the appraised fair value of all earned and allocated ESOP shares isreclassified from shareholders’ equity. ESOP shares committed to be releasedare reported as a reduction of shareholders’ equity. Once the shares have beenreleased they are added to shareholders’ equity.

 

The Company has apostretirement heathcare plan covering certain executives. Postretirementbenefit costs are net of service and interest costs and amortization of gainsand losses not immediately recognized.

 

The Company hasdeferred compensation arrangements with certain former and current executiveofficers. Deferred compensation expense allocates the benefits over years ofservice.

 

***EarningsPer Share***

Earnings per shareis calculated on the basis of the daily weighted average number of sharesoutstanding. ESOP shares are considered outstanding for this calculation unlessunearned.

 

***CashFlows***

For purposes ofreporting cash flows, cash and cash equivalents include cash and due from banksand federal funds sold. Generally, federal funds are sold for one-day periods.Net cash flows are reported for customer loan, deposit and prepaid solutionscards transactions.

 

***ComprehensiveIncome***

Comprehensiveincome includes net income and other comprehensive income. The Company’s othercomprehensive income consists of the change in unrealized gains and losses onavailable for sale securities and change in postretirement obligations, net ofreclassification adjustments and deferred tax effects.

 

***LegalProceedings***

Legal proceedings,including claims and legal actions arising in the ordinary course of business,are recorded as liabilities when the likelihood of loss is probable and anamount or range of loss can be reasonably estimated.

 

Not withstanding theforegoing, beginning on June 22, 2005, a series of antitrust class actionlawsuits were filed against Visa USA Inc., and certain other defendants. Theplaintiffs, merchants operating commercial businesses throughout the UnitedStates and trade associations, claim that the interchange fees charged bycard-issuing banks are unreasonable and seek injunctive relief and unspecifieddamages. The cases have been consolidated for pretrial proceedings in the UnitedStates District Court for the Eastern District of New York. The Company, as amember of the Visa network and pursuant to the bylaws of Visa USA Inc. and theLoss Sharing Agreement discussed in Note 8 to the Consolidated FinancialStatements, is obligated to indemnify Visa USA Inc. for certain losses relatedto these litigation matters.

 

***Restrictionson Cash***

Cash on hand or ondeposit with the Federal Reserve Bank of $13,055 and $12,705 was required tomeet regulatory reserve and clearing requirements at year end 2007 and 2006,respectively. These balances do not earn interest.

 

13

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***DividendRestriction***

Banking regulationsrequire maintaining certain capital levels and may limit the dividends paid bythe Bank to West Suburban or by West Suburban to shareholders. Theserestrictions pose no practical limit on the ability of the Bank or WestSuburban to pay dividends at historical levels. (See Note 11 in theConsolidated Financial Statements for more specific disclosure.)

 

***FairValue of Financial Instruments***

Fair value of financialinstruments are estimated using relevant market information and otherassumptions. (See Note 9 for more specific disclosure.) Fair value estimatesinvolve uncertainties and matters of significant judgment regarding interestrates, credit risk, prepayments, and other factors, especially in the absenceof active markets for particular items. Changes in assumptions or in marketconditions could significantly affect the estimates.

 

***Reclassifications***

Certainreclassifications have been made in prior years’ financial statements toconform to the current year’s presentation.

 

***Effectof Newly Issued But Not Yet Effective Accounting Standards***

InSeptember 2006, the FASB issued SFAS 157, “Fair Value Measurements.” SFAS157 defines fair value, establishes a framework for measuring fair value andexpands disclosures about fair value measurements. SFAS 157 establishes a fairvalue hierarchy about the assumptions used to measure fair value and clarifiesassumptions about risk and the effect of a restriction on the sale or use of anasset. SFAS 157 is effective for fiscal years beginning after November 15,2007. The impact ofadoption of SFAS 157 on January 1, 2008 did not have a material impact on the Company’s financial condition orresults of operations.

 

InFebruary 2007, the FASB issued SFAS 159, “The Fair Value Option forFinancial Assets and Financial Liabilities.” SFAS 159 provides companies withan option to report selected financial assets and liabilities at fair value andestablishes presentation and disclosure requirements designed to facilitatecomparisons between companies that choose different measurement attributes forsimilar types of assets and liabilities. SFAS 159 is effective for the Company onJanuary 1, 2008. The Company did not elect the fair value option for anyfinancial assets or financial liabilities as of January 1, 2008.

 

In September 2006, the FASB EITF finalized Issue06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspectsof Endorsement Split-Dollar Life Insurance Arrangements.” This issue requiresthat a liability be recorded during the service period when a split-dollar lifeinsurance agreement continues after participants’ employment or retirement. Therequired accrued liability will be based on either the postretirement benefitcost for the continuing life insurance or based on the future death benefitdepending on the contractual terms of the underlying agreement. This issue iseffective for fiscal years beginning after December 15, 2007. Uponadoption of EITF 06-04 on January 1, 2008, the Company recorded acumulative effect adjustment to reduce beginning retained earnings as of January 1,2008 by $123. The adjustment will increase other liabilities by $200 (pre-tax)and reduce the deferred tax liability by $77.

 

On November 5, 2007,the Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”)No. 109, “Written Loan Commitments Recorded at Fair Value throughEarnings.” Previously, SAB 105, “Application of Accounting Principles to LoanCommitments,” stated that in measuring the fair value of a derivative loancommitment, a company should not incorporate the expected net future cash flowsrelated to the associated servicing of the loan. SAB 109 supersedes SAB 105 andindicates that the expected net future cash flows related to the associatedservicing of the loan should be included in measuring fair value for allwritten loan commitments that are accounted for at fair value through earnings.SAB 105 also indicated that internally-developed intangible assets should notbe recorded as part of the fair value of a derivative loan commitment, and SAB109 retains that view. SAB 109 is effective for derivative loan commitmentsissued or modified in fiscal quarters beginning after December 15, 2007.The Company does not expect the impact of this standard to be material to the financial condition or results ofoperations.

 

In December 2007,the FASB issued SFAS 141R, “Business Combinations.” SFAS 141R replaces thecurrent standard on business combinations and will significantly change theaccounting for and reporting of business combinations in consolidated financialstatements. Thisstatement requires an entity to measure the business

 

14

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acquired at fair value andto recognize goodwill attributable to any noncontrolling interests (previouslyreferred to as minority interests) rather than just the portion attributable tothe acquirer.  The statement will alsoresult in fewer exceptions to the principle of measuring assets acquired andliabilities assumed in a business combination at fair value.  In addition, the statement will result inpayments to third parties for consulting, legal, audit, and similar servicesassociated with an acquisition to be recognized as expenses when incurredrather than capitalized as part of the business combination.  SFAS 141R is effective for fiscal yearsbeginning on or after December 15, 2008.

 

##### **Note 2 -Securities**

##### ** **

Theamortized cost and fair value of securities available for sale are as followsat December 31:

 
| ** **                         | ** ** | **2007**            | ** ** |
|------------------------------------|------------|---------------------|------------|
| ** **                         | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| Corporate                          |       | $                   | 44,066     |   | $ | 95 |   | $ | (1,573 | ) | $ | 42,588 |   |
| U.S. government sponsored entities |       | 195,193             |       | 134 |   | (833 | ) | 194,494 |   |
| Mortgage-backed                    |       | 207,302             |       | 1,456 |   | (936 | ) | 207,822 |   |
| States and political subdivisions  |       | 13,918              |       | 38 |   | (76 | ) | 13,880 |   |
| Total debt  securities             |       | 460,479             |       | 1,723 |   | (3,418 | ) | 458,784 |   |
| Preferred stock                    |       | 621                 |       | — |   | — |   | 621 |   |
| Total                              |       | $                   | 461,100    |   | $ | 1,723 |   | $ | (3,418 | ) | $ | 459,405 |   |
|                               |       |                |       |   |   |   |   |   |   |
|                               |       |                |       |   |   |   |   |   |   |
| ** **                         | ** ** | **2006**            | ** ** |
| ** **                         | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| Corporate                          |       | $                   | 46,384     |   | $ | 193 |   | $ | (1,203 | ) | $ | 45,374 |   |
| U.S. government sponsored entities |       | 224,276             |       | — |   | (5,682 | ) | 218,594 |   |
| Mortgage-backed                    |       | 176,784             |       | 347 |   | (2,419 | ) | 174,712 |   |
| States and political subdivisions  |       | 13,700              |       | 33 |   | (186 | ) | 13,547 |   |
| Total debt  securities             |       | 461,144             |       | 573 |   | (9,490 | ) | 452,227 |   |
| Preferred stock                    |       | 1,003               |       | — |   | (133 | ) | 870 |   |
| Total                              |       | $                   | 462,147    |   | $ | 573 |   | $ | (9,623 | ) | $ | 453,097 |   |

 

15

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

 
| ** **                         | ** ** | **2007**            | ** ** |
|------------------------------------|------------|---------------------|------------|
| ** **                         | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| U.S. government sponsored entities |       | $                   | —     |   | $ | — |   | $ | — |   | $ | — |   |
| Mortgage-backed                    |       | 11,450              |       | 25 |   | (223 | ) | 11,252 |   |
| States and political subdivisions  |       | 12,626              |       | 137 |   | (62 | ) | 12,701 |   |
| Total                              |       | $                   | 24,076     |   | $ | 162 |   | $ | (285 | ) | $ | 23,953 |   |
|                               |       |                |       |   |   |   |   |   |   |
|                               |       |                |       |   |   |   |   |   |   |
| ** **                         | ** ** | **2006**            | ** ** |
| ** **                         | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| U.S. government sponsored entities |       | $                   | 17,597     |   | $ | — |   | $ | (126 | ) | $ | 17,471 |   |
| Mortgage-backed                    |       | 13,882              |       | 11 |   | (347 | ) | 13,546 |   |
| States and political subdivisions  |       | 13,534              |       | 213 |   | (36 | ) | 13,711 |   |
| Total                              |       | $                   | 45,013     |   | $ | 224 |   | $ | (509 | ) | $ | 44,728 |   |

 

 

Securities withunrealized losses at year end 2007 and 2006 not recognized in income arepresented below by the length of time the securities have been in a continuousunrealized loss position:

 
| ** **                         | ** ** | **2007**                | ** ** |
|------------------------------------|------------|-------------------------|------------|
| ** **                         | ** ** | **Less than 12 Months** | ** ** | **12 Months or More** | ** ** | **Total** | ** ** |
| ** **                         | ** ** | **Fair  Value**         | ** ** | **Unrealized  Loss** | ** ** | **Fair  Value** | ** ** | **Unrealized  Loss** | ** ** | **Fair  Value** | ** ** | **Unrealized  Loss** | ** ** |
| Corporate                          |       | $                       | 7,769      |   | $ | 809 |   | $ | 34,728 |   | $ | 764 |   | $ | 42,497 |   | $ | 1,573 |   |
| U.S. government sponsored entities |       | —                  |       | — |   | 165,712 |   | 833 |   | 165,712 |   | 833 |   |
| Mortgage-backed                    |       | 8,775                   |       | 240 |   | 65,677 |   | 919 |   | 74,452 |   | 1,159 |   |
| States and political subdivisions  |       | 2,903                   |       | 51 |   | 10,448 |   | 87 |   | 13,351 |   | 138 |   |
| Total  temporarily impaired        |       | $                       | 19,447     |   | $ | 1,100 |   | $ | 276,565 |   | $ | 2,603 |   | $ | 296,012 |   | $ | 3,703 |   |
|                               |       |                    |       |   |   |   |   |   |   |   |   |   |   |
|                               |       |                    |       |   |   |   |   |   |   |   |   |   |   |
| ** **                         | ** ** | **2006**                | ** ** |
| ** **                         | ** ** | **Less than 12 Months** | ** ** | **12 Months or More** | ** ** | **Total** | ** ** |
| ** **                         | ** ** | **Fair  Value**         | ** ** | **Unrealized  Loss** | ** ** | **Fair  Value** | ** ** | **Unrealized  Loss** | ** ** | **Fair  Value** | ** ** | **Unrealized  Loss** | ** ** |
| Corporate                          |       | $                       | 2,497      |   | $ | 3 |   | $ | 40,184 |   | $ | 1,200 |   | $ | 42,681 |   | $ | 1,203 |   |
| U.S. government sponsored entities |       | —                  |       | — |   | 236,065 |   | 5,808 |   | 236,065 |   | 5,808 |   |
| Mortgage-backed                    |       | 11,959                  |       | 34 |   | 117,748 |   | 2,733 |   | 129,707 |   | 2,767 |   |
| States and political subdivisions  |       | 754                     |       | 6 |   | 11,412 |   | 215 |   | 12,166 |   | 221 |   |
| Preferred stock                    |       | —                  |       | — |   | 870 |   | 133 |   | 870 |   | 133 |   |
| Total  temporarily impaired        |       | $                       | 15,210     |   | $ | 43 |   | $ | 406,279 |   | $ | 10,089 |   | $ | 421,489 |   | $ | 10,132 |   |

 

In accordance with generally accepted accounting principles, unrealizedlosses on debt securities are not recognized if management has the intent andability to hold the securities until their maturity date and no concerns existwith respect to the ability of the issuer to satisfy its obligations atmaturity. Management believes that the fair value of these debt securities withunrealized losses will recover as the securities approach their maturity dateor repricing date. Management does notbelieve any individual unrealized loss as of December 31, 2007 representsother than temporary impairment.

 

16

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** **

 

For the year ended December 31,2007, the Company recognized a $381 pre-tax charge for the other-than-temporarydecline in fair value of preferred stock issued by the Federal Home LoanMortgage Corporation (the “FHLMC”). As required by SFAS 115, when a decline infair value below cost is deemed to be other-than-temporary, the unrealized lossmust be recognized as a charge to earnings. During the fourth quarter of 2007, there was a significant decline in thefair value of the preferred stock and as a result the Company concluded thatthe preferred stock was other-than-temporarily impaired.

 

The amortized costand fair value of debt securities available for sale and held to maturity at December 31,2007 by contractual maturity are as follows:

 
| ** **                         | ** ** | **Available for Sale** | ** ** | **Held to Maturity** | ** ** |
|------------------------------------|------------|------------------------|------------|----------------------|------------|
| ** **                         | ** ** | **Amortized  Cost**    | ** ** | **Fair Value**       | ** ** | **Amortized  Cost** | ** ** | **Fair Value** | ** ** |
| Due in 1 year or less              |       | $                      | 114,655    |                 | $          | 114,063 |   | $ | 618 |   | $ | 625 |   |
| Due after 1 year through 5 years   |       | 123,656                |       | 122,838              |       | 6,330 |   | 6,348 |   |
| Due after 5 years through 10 years |       | 2,379                  |       | 2,387                |       | 2,645 |   | 2,734 |   |
| Due after 10 years                 |       | 12,487                 |       | 11,674               |       | 3,033 |   | 2,994 |   |
| Mortgage-backed                    |       | 207,302                |       | 207,822              |       | 11,450 |   | 11,252 |   |
| Total                              |       | $                      | 460,479    |                 | $          | 458,784 |   | $ | 24,076 |   | $ | 23,953 |   |

 

Expected maturities willdiffer from contractual maturities because issuers may have the right to callor prepay obligations with or without call or prepayment penalties.Approximately $129,305 of securities are callable in 2008. Most of thesecallable securities were issued by U.S. government sponsored entities.

 

Securities with a carryingvalue of approximately $40,778 and $56,526 at December 31, 2007 and 2006,respectively, were pledged to secure public deposits, fiduciary activities andfor other purposes required or permitted by law.

 

Sales ofsecurities available for sale were as follows:

 

| ** **            | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
|-----------------------|------------|----------|------------|----------|------------|----------|------------|
| Proceeds from sales   |       | $        | 470        |     | $          | —   |       | $ | 22,612 |   |
| Gross realized gains  |       | —   |       | —   |       | 185      |       |
| Gross realized losses |       | (30      | )          | —   |       | (3       | )          |
|                       |            |          |            |          |            |          |            |  |  |  |

 

*Net gains on securities transactions in 2007, 2006 and 2005include recoveries of $24, $85 and $24, respectively, on securities writtendown in 2001.  There were no tax benefitsrecorded on securities transactions.*

* *

*17*

----

* *

**Note 3 -Loans**

 

Majorclassifications of loans were as follows at December 31:

 

| ** **                | ** ** | **2007**  | ** ** | **2006**  | ** ** |
|---------------------------|------------|-----------|------------|-----------|------------|
| Commercial                |       | $         | 279,916    |      | $          | 282,826 |   |
| Consumer                  |       | 5,653     |       | 6,821     |       |
| Indirect automobile       |       | 8,559     |       | 13,855    |       |
| Real estate               |       |      |       |      |       |
| Residential               |       | 224,755   |       | 177,885   |       |
| Commercial                |       | 249,836   |       | 232,865   |       |
| Home equity               |       | 272,098   |       | 240,720   |       |
| Construction              |       | 182,329   |       | 197,528   |       |
| Held for sale             |       | 350       |       | —    |       |
| Credit card               |       | 11,191    |       | 10,375    |       |
| Other                     |       | 1,153     |       | 1,660     |       |
| Total                     |       | 1,235,840 |       | 1,164,535 |       |
| Allowance for loan losses |       | (9,269    | )          | (10,650   | )          |
| Loans, net                |       | $         | 1,226,571  |      | $          | 1,153,885 |   |

 

TheCompany makes commercial, consumer and residential real estate loans primarilyto customers throughout the western suburbs of Chicago. Construction loans areprimarily made to customers engaged in the development and construction ofresidential real estate projects within the Company’s market area. From time totime the Company will make loans outside of its market area which include loanstotaling $20,885 at December 31, 2007, to a customer with collateral inArizona and loans totaling $9,442 at December 31, 2007 to a secondcustomer with collateral in Florida.

 

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

 
| ** **                 | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------|------------|----------|------------|----------|------------|----------|------------|
| Balance, beginning of year |       | $        | 10,650     |     | $          | 10,681   |       | $ | 10,527 |   |
| Provision for  loan losses |       | 375      |       | 150      |       | 1,375    |       |
| Loans  charged-off         |       | (2,046   | )          | (418     | )          | (1,589   | )          |
| Recoveries                 |       | 290      |       | 237      |       | 368      |       |
| Balance, end of year       |       | $        | 9,269      |     | $          | 10,650   |       | $ | 10,681 |   |

 

Impaired loans aresummarized as follows at December 31:

 
| ** **                                                                       | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Year-end loans  with no allocated allowance for loan losses                      |       | $        | 1,048      |     | $          | 12       |       | $ | 904 |   |
| Year-end loans  with allocated allowance for loan losses                         |       | 2,685    |       | 9,222    |       | 5,403    |       |
| Total                                                                            |       | $        | 3,733      |     | $          | 9,234    |       | $ | 6,307 |   |
|                                                                             |       |     |       |     |       |     |       |
| Amount of the  allowance for loan losses allocated to impaired loans at year-end |       | $        | 421        |     | $          | 4,689    |       | $ | 3,497 |   |
| Average impaired  loans during the year                                          |       | 4,629    |       | 7,060    |       | 4,962    |       |
| Interest income  recognized during impairment                                    |       | 129      |       | 1,096    |       | 306      |       |

 

18

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Nonperformingloans were as follows at December 31:

 
| ** **                                       | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
|--------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Loans past due  90 days or more still on accrual |       | $        | 480        |     | $          | 319      |       | $ | 1,665 |   |
| Nonaccrual loans                                 |       | 2,297    |       | 1,131    |       | 533      |       |
| Total                                            |       | $        | 2,777      |     | $          | 1,450    |       | $ | 2,198 |   |

 

The Companygenerally sells mortgage loans with servicing rights released.

 
| ** **                                  | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
|---------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Activity during  the year:                  |       |     |       |     |       |     |       |
| Origination of  loans held for sale         |       | $        | 6,175      |     | $          | 9,466    |       | $ | 6,645 |   |
| Proceeds from  sales of loans held for sale |       | 5,875    |       | 9,730    |       | 6,943    |       |
| Net gains on  sales of loans held for sale  |       | 50       |       | 124      |       | 109      |       |
|                                             |            |          |            |          |            |          |            |  |  |  |

# ** **

# **Note 4 - Premises and Equipment**

# ** **

Majorclassifications of assets comprising premises and equipment are summarized asfollows at December 31:

 
| ** **                    | ** ** | **2007** | ** ** | **2006** | ** ** |
|-------------------------------|------------|----------|------------|----------|------------|
| Land                          |       | $        | 15,263     |     | $          | 11,671 |   |
| Premises                      |       | 42,963   |       | 42,006   |       |
| Furniture and equipment       |       | 47,477   |       | 45,681   |       |
| Total                         |       | 105,703  |       | 99,358   |       |
| Less accumulated depreciation |       | (62,606  | )          | (59,393  | )          |
| Premises and  equipment, net  |       | $        | 43,097     |     | $          | 39,965 |   |

 

The Company leasescertain branch properties and equipment under operating leases. Rent expensewas $465, $227 and $170 for 2007, 2006 and 2005, respectively. Rent commitmentsbefore considering renewal options that generally are present, are summarizedas follows:

##### ** **

| 2008       |   | $   | 598    |   |
|------------|--------|-----|--------|--------|
| 2009       |   | 587 |   |
| 2010       |   | 512 |   |
| 2011       |   | 434 |   |
| 2012       |   | 294 |   |
| Thereafter |   | 801 |   |
| Total      |   | $   | 3,226  |   |

 

19

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** **

##### **Note 5 - Deposits**

##### ** **

The major categories ofdeposits are summarized as follows at December 31:

 

| ** **                  | ** ** | **2007** | ** ** | **2006** | ** ** |
|-----------------------------|------------|----------|------------|----------|------------|
| Demand-noninterest-bearing  |       | $        | 141,724    |     | $          | 155,041 |   |
| NOW                         |       | 314,741  |       | 325,415  |       |
| Money market checking       |       | 292,208  |       | 271,209  |       |
| Savings                     |       | 337,028  |       | 374,484  |       |
| Time deposits               |       |     |       |     |       |
| Less than  $100,000         |       | 380,094  |       | 389,196  |       |
| $ 100,000 and  greater |       | 171,919  |       | 162,499  |       |
| Total                       |       | $        | 1,637,714  |     | $          | 1,677,844 |   |
|                        |       |     |       |     |       |

 

At December 31,2007, the scheduled maturities of time deposits were as follows:

 

| 2008       |   | $    429,837 |   |   |   |
|------------|--------|----------------------------------|--------|--------|--------|
| 2009       |   | 60,985                           |   |   |   |
| 2010       |   | 29,014                           |   |   |   |
| 2011       |   | 13,502                           |   |   |   |
| 2012       |   | 18,658                           |   |   |   |
| Thereafter |   | 17                               |   |   |   |
| Total      |   | $    552,013 |   |   |   |

 

##### **Note 6 - IncomeTaxes**

##### ** **

Income tax expense is asfollows for the years ended December 31:

 
| ** **                      | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
|---------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Currently payable tax           |       |     |       |     |       |     |       |
| Federal                         |       | $        | 9,767      |     | $          | 11,611   |       | $ | 9,181 |   |
| State                           |       | —   |       | —   |       | (97      | )          |
| Deferred tax (benefit) provison |       | (1,269   | )          | (1,701   | )          | 1,239    |       |
| Total                           |       | $        | 8,498      |     | $          | 9,910    |       | $ | 10,323 |   |

 

A reconciliation betweentaxes computed at the statutory federal income tax rate and the consolidatedeffective tax rates follows:

 
| ** **                                      | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
|-------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Statutory federal income tax rate               |       | 35.0     | %          | 35.0     | %          | 35.0     | %          |
| Decrease in taxes resulting from:               |       |     |       |     |       |     |       |
| Tax-exempt  income                              |       | (1.3     | )%         | (1.1     | )%         | (1.0     | )%         |
| State income  taxes, net of federal tax benefit |       | (1.1     | )%         | (1.3     | )%         | (0.2     | )%         |
| Dividends on  ESOP shares                       |       | (4.1     | )%         | (2.7     | )%         | (3.7     | )%         |
| Other items, net                                |       | (1.9     | )%         | (1.8     | )%         | (1.3     | )%         |
| Effective tax  rate                             |       | 26.6     | %          | 28.1     | %          | 28.8     | %          |
|                                            |       |     |       |     |       |     |       |

 

 

20

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The temporary differenceswhich created deferred tax assets and liabilities at December 31 aresummarized below:

 
| ** **                                        | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------------------------------------|------------|----------|------------|----------|------------|
| Deferred tax assets                               |       |     |       |     |       |
| Allowance for  loan losses                        |       | $        | 3,585      |     | $          | 4,134 |   |
| Deferred  compensation                            |       | 3,230    |       | 2,846    |       |
| Unrealized loss  on securities available for sale |       | 674      |       | 3,597    |       |
| Nonaccrual loan  interest income                  |       | 33       |       | 56       |       |
| SFAS 158  adjustment                              |       | 260      |       | 197      |       |
| State net  operating loss                         |       | 1,474    |       | 844      |       |
| Impairment of  FHLMC preferred stock              |       | 152      |       | —   |       |
| Other                                             |       | 933      |       | 302      |       |
| Total deferred  tax assets                        |       | 10,341   |       | 11,976   |       |
| Deferred tax liabilities                          |       |     |       |     |       |
| Depreciation                                      |       | 468      |       | 555      |       |
| Federal Home  Loan Bank stock dividends           |       | 611      |       | 611      |       |
| Undistributed  REIT income                        |       | 32       |       | 32       |       |
| Deposit base  intangible                          |       | 252      |       | 234      |       |
| Qualified  prepaid expenses                       |       | 298      |       | 273      |       |
| Other                                             |       | —   |       | —   |       |
| Total deferred  tax liabilities                   |       | 1,661    |       | 1,705    |       |
| Net deferred tax  assets                          |       | $        | 8,680      |     | $          | 10,271 |   |

 

Net deferred tax assetsare included in accrued interest and other assets. No valuation allowance wasconsidered necessary for net deferred tax assets. At December 31, 2007,the Company had a net operating loss carryforward for state tax purposestotaling approximately $31.0 million, which expire at various dates beginningin 2018.

 

The Company filesincome tax returns in the U.S. federal jurisdiction and in Illinois.  The Company is no longer subject toexamination by the U.S. federal tax authorities or by Illinois tax authoritiesfor years prior to 2004.

 

The Companyadopted the provisions of FIN 48 on January 1, 2007.  As a result of the implementation of FIN 48,the Company was not required to recognize any additional liability forunrecognized tax benefits. A reconciliation of the beginning and ending amountof unrecognized tax benefits is as follows:

 
| Balance at January 1, 2007                               |   | $   | 1,030  |   |
|---------------------------------------------------------------|--------|-----|--------|--------|
| Additions based on tax positions related to the  current year |   | 470 |   |
| Balance at December 31, 2007                             |   | $   | 1,500  |   |

 

Of this total,$1,082 represents the amount of unrecognized tax benefits that, if recognized,would favorably affect the effective income tax rate in future periods. TheCompany does not expect the total amount of unrecognized tax benefits tosignificantly increase or decrease in the next twelve months.

 

The total amountof interest and penalties recorded in the income statement for the year ended December 31,2007 was $110, and the amount accrued for interest and penalties at December 31,2007 was $305.

 

# **Note 7 - Benefit Plans**

# ** **

During 2007, the Bankestablished the West Suburban Bank 401(k) Profit Sharing Plan (the “401(k) Plan”),which is anticipated to serve as the Company’s principal retirement plan. The401(k) Plan was established to address the limited availability of WestSuburban common stock for acquisition by the ESOP and to offer participants anavenue to diversify their retirement savings. The Company made contributions tothe 401(k) Plan totaling $1,454 during 2007.

 

 

21

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The ESOP providesincentives to employees by granting participants an interest in West Suburbancommon stock, which represents the ESOP’s primary investment. An individualaccount is established for each participant and the benefits payable uponretirement, termination, disability or death are based upon service, the amountof the employer’s contributions and any income, expenses, gains and losses andforfeitures allocated to the participant’s account. Contributions, which aredetermined by the board of directors of the Bank, are paid by the Bank and were$2,062 in 2006 and $1,951 in 2005. The Bank did not make a contribution to theESOP in 2007.

 

At December 31,2007 and 2006, the ESOP held 86,617 and 85,727 shares of West Suburban commonstock, respectively, that were allocated to ESOP participants. Upon terminationof their employment, participants who elect to receive their benefitdistributions in the form of West Suburban common stock may require the Companyto purchase the common stock distributed at fair value during two 60-dayperiods. The first purchase period begins on the date the benefit isdistributed and the second purchase period begins on the first anniversary ofthe distribution date. This contingent repurchase obligation is reflected inthe Company’s financial statements as “Common stock in ESOP subject tocontingent repurchase obligation” and reduces shareholders’ equity by an amountthat represents the independently appraised fair value of all West Suburbancommon stock held by the ESOP and allocated to participants, without regard towhether it is likely that the shares would be distributed or that therecipients of the shares would be likely to exercise their right to require theCompany to purchase the shares.

 

During 2007 and 2006,the ESOP distributed $814 and $764, respectively, in cash representing theinterests of participants. In addition, the ESOP distributed 194 shares in 2007and 292 shares in 2006 of West Suburban common stock.

 

The Company maintainsdeferred compensation arrangements with certain former and current executiveofficers. The deferred compensation expense was $165, $190 and $190 for theyears ended December 31, 2007, 2006 and 2005, respectively. Executiveofficers can elect to defer the payment of a percentage of their salaries andcash bonuses and members of the board of directors can elect to defer thepayment of their directors’ fees. In addition, the Company makes annualcontributions for the benefit of current participants ($25 for certain seniorexecutive officers and $5 for other executive officers) in the Company’sdeferred compensation arrangements. As of December 31, 2007, 13 currentexecutive officers participated in the deferred compensation plan.

 

The total accumulatedliability for all deferred compensation arrangements was $8,124 and $7,160 at December 31,2007 and 2006, respectively. These amounts are included in accrued interest andother liabilities in the consolidated balance sheets.

 

In March 2004, theCompany established a noncontributory postretirement benefit plan coveringcertain senior executives. The plan provides postretirement medical, dental andlong term care coverage for certain executives and their surviving spouses. Theeligible retirement age under the plan is age 62. The Company used a December 31measurement date for its postretirement benefit plan. The plan is unfunded. Netperiodic postretirement benefit cost for 2005 was immaterial.

 

 

22

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** **

 

Information about changesduring 2007 and 2006 in obligations of the postretirement benefit plan follows:

 

| ** **                                   | ** ** | **2007** | ** ** | **2006** | ** ** |
|----------------------------------------------|------------|----------|------------|----------|------------|
| Change in benefit obligation:                |       |     |       |     |       |
| Beginning  benefit obligation                |       | $        | 651        |     | $          | 515 |   |
| Service cost                                 |       | 26       |       | 26       |       |
| Interest cost                                |       | 38       |       | 30       |       |
| Actuarial loss                               |       | 189      |       | 80       |       |
| Benefits paid                                |       | (19      | )          | —   |       |
| Ending benefit obligation                    |       |     | 885        |     |       | 651 |   |
|                                         |       |     |       |     |       |
| Change in plan assets, at fair value:        |       |     |       |     |       |
| Beginning plan  assets                       |       |     | —     |     |       | — |   |
| Employer  contributions                      |       | 19       |       | —   |       |
| Benefits paid                                |       | (19      | )          | —   |       |
| Ending plan assets                           |       |     | —     |     |       | — |   |
|                                         |       |     |       |     |       |
| Funded (unfunded) status at December 31 |       | $        | (885       | )        | $          | (651 | ) |

 

Amounts recognized inaccumulated other comprehensive loss at December 31 consist of:

 

| ** **         | ** ** | **2007** | ** ** | **2006** | ** ** |
|--------------------|------------|----------|------------|----------|------------|
| Net actuarial loss |       | $        | 380        |     | $          | 200 |   |
| Prior service cost |       | 274      |       | 295      |       |
| Total              |       | $        | 654        |     | $          | 495 |   |

 

The accumulated benefitobligation was $885 and $651 at December 31, 2007 and 2006, respectively.

 

Net postretirementbenefit costs included the following components:

 

| ** **                                                | ** ** | **2007** | ** ** | **2006** | ** ** |
|-----------------------------------------------------------|------------|----------|------------|----------|------------|
| Service cost                                              |       | $        | 26         |     | $          | 26 |   |
| Interest cost                                             |       | 38       |       | 30       |       |
| Amortization of unrecognized prior service cost           |       | 21       |       | 21       |       |
| Amortization of net loss                                  |       | 10       |       | 4        |       |
| Net periodic  postretirement benefit cost                 |       | 95       |       | 81       |       |
|                                                      |       |     |       |     |       |
| Net loss                                                  |       | 189      |       | 200      |       |
| Prior service cost                                        |       | —   |       | 295      |       |
| Amortization of net gain                                  |       | (9       | )          | —   |       |
| Amortization of prior service cost                        |       | (21      | )          | —   |       |
| Total recognized  in other comprehensive loss             |       | 159      |       | 495      |       |
| Postretirement  benefit cost and other comprehensive loss |       | $        | 254        |     | $          | 576 |   |

 

The estimated net lossand prior service costs for the defined postretirement benefit plan that willbe amortized from accumulated other comprehensive income into net periodicbenefit cost over the next fiscal year are $19 and $21, respectively.

 

 

The discount rate used todetermine net periodic benefit costs and benefit obligations in 2007 and 2006was 6.00%.

 

23

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For measurement purposes,a 10% annual rate of increase in the per capita premium cost of covered healthcare benefits was assumed for 2008, with rates reducing .5% per annum to anultimate rate of 5% in 2017. Dental benefits were assumed to increase 7% for2008 with rates reducing .5% per annum to an ultimate rate of 5% in 2012.

 

Assumed health care cost trend rates have a significant effect on the amountsreported for the health care plans. A one-percentage-point change in assumedhealth care cost trend rates would have the following effects:

 
| ** **                                              | ** ** | **One-Percentage-Point  Increase** | ** ** | **One-Percentage-Point  Decrease** | ** ** |
|---------------------------------------------------------|------------|------------------------------------|------------|------------------------------------|------------|
| Effect on total service and interest cost               |       | $                                  | 17         |                               | $          | (14 | ) |
| Effect on accumulated postretirement benefit obligation |       | 154                                |       | (127                               | )          |
|                                                         |            |                                    |            |                                    |            |  |  |

 

The Company expects tocontribute amounts in 2008 to satisfy its obligations. The following benefitpayments, which reflect expected future service, are expected for the yearsindicated:

 

| 2008              |   | $  | 22     |   |
|-------------------|--------|----|--------|--------|
| 2009              |   | 24 |   |
| 2010              |   | 26 |   |
| 2011              |   | 28 |   |
| 2012              |   | 21 |   |
| Following 5 Years |   | 97 |   |

 

# **Note 8 -Off-Balance-Sheet Risk, Contingent Liabilities and Guarantees**

# ** **

The Company is a partyto off-balance-sheet financial instruments to meet the financing needs of itscustomers. These financial instruments include commitments to extend credit andstandby letters of credit. These financial instruments involve, to varyingdegrees, elements of credit and interest rate risks. Such financial instrumentsare recorded when funded.

 

Commitmentsto extend credit are agreements to lend to a customer as long as there is noviolation of any condition established in the agreement. These commitmentsprimarily consist of unused lines of credit, undrawn portions of constructionloans and commitments to make new loans. Commitments generally have fixedexpiration dates or other termination provisions and may require the payment ofa fee. Since many of the commitments are expected to expire without beingexercised or drawn upon, the total commitment amounts do not necessarilyrepresent future cash requirements.

 

The Company’sexposure to credit risk in connection with commitments to extend credit andstandby letters of credit is the contractual amount of those instruments beforeconsidering customer collateral or ability to repay. The Company uses the samecredit policies in making commitments and conditional obligations as it doesfor on-balance-sheet instruments. The Company generally requires collateral orother security to support financial instruments with credit risk. The Company evaluateseach customer’s creditworthiness on a case-by-case basis. The amount ofcollateral obtained, if deemed necessary by the Company, is based on management’scredit evaluation of the customer. Collateral held varies and may includeaccounts receivable, inventory and equipment or commercial or residentialproperties.

 

24

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A summary of thecontractual exposure to off-balance-sheet risk as of December 31 follows:

 
| ** **                           | ** ** | **2007**        | ** ** | **2006**           | ** ** |
|--------------------------------------|------------|-----------------|------------|--------------------|------------|
| ** **                           | ** ** | **Fixed  Rate** | ** ** | **Variable  Rate** | ** ** | **Total** | ** ** | **Fixed  Rate** | ** ** | **Variable  Rate** | ** ** | **Total** | ** ** |
| Commercial loans and lines of credit |       | $               | 1,274      |               | $          | 228,725 |   | $ | 229,999 |   | $ | 2,336 |   | $ | 172,361 |   | $ | 174,697 |   |
| Check credit lines of credit         |       | 1,077           |       | —             |       | 1,077 |   | 1,133 |   | — |   | 1,133 |   |
| Mortgage loans                       |       | 7,802           |       | 884                |       | 8,686 |   | 8,991 |   | 7,722 |   | 16,713 |   |
| Home equity lines of credit          |       | —          |       | 180,918            |       | 180,918 |   | — |   | 179,009 |   | 179,009 |   |
| Letters of credit                    |       | —          |       | 17,663             |       | 17,663 |   | — |   | 34,660 |   | 34,660 |   |
| Credit card lines of credit          |       | —          |       | 40,528             |       | 40,528 |   | — |   | 40,708 |   | 40,708 |   |
| Total                                |       | $               | 10,153     |               | $          | 468,718 |   | $ | 478,871 |   | $ | 12,460 |   | $ | 434,460 |   | $ | 446,920 |   |

 

Fixedrate commercial loan commitments at December 31, 2007 generally hadinterest rates ranging from 5.75% to 9.00% with remaining terms ranging from 1month to 5 years. Fixed rate mortgage loan commitments at December 31,2007 generally had interest rates ranging from 5.50% to 6.875% with termsranging from 10 to 30 years. Fixed rate check credit lines of credit had aninterest rate of 18.00% as of December 31, 2007.

 

Pursuant to the bylaws ofVisa USA Inc., the Company is obligated to indemnify Visa, Inc. forcertain litigation losses. On October 3, 2007, a Loss Sharing Agreementbecame effective which reaffirmed the Company’s obligation to indemnify Visa, Inc.for potential future settlement of certain litigation. The Company’s indemnificationobligation is limited to its proportionate equity interest in Visa USA Inc.During 2007, Visa announced that it had recognized liabilities for probablesettlements for two of the covered suits. The Company has accrued itsproportionate share of these anticipated settlements. In addition, the Companyhas recognized a guarantee liability for the other covered suits. As of December 31,2007, the Company’s estimated liability related to its obligation to indemnifyVisa for covered litigation was $.8 million.

 

# **Note 9 - Fair Value ofFinancial Instruments**

# ** **

The methods andassumptions used to estimate the fair value of financial instruments are asfollows. For short-term assets (i.e., cash and due from banks and federal fundssold), their estimated fair value approximate their carrying value. Fordeposits with variable interest rates, it has been assumed that their estimatedfair value approximates their carrying value. Because of their short terms, thecarrying values of accrued interest receivable and payable approximates theirfair values.

 

The fair value forsecurities was derived from quoted market values or, when quotes were notavailable, the fair value was estimated based on the rate and term of thesecurity and information about the issuer. The fair value for loans wasestimated by discounting the future expected cash flows from loan repaymentsusing current interest rates for loans having comparable maturities and creditrisk. The fair value for time deposits was estimated by discounting expectedcash flows at discount rates comparable to current market rates for similarmaturing liabilities.

 

Off-balance-sheetfinancial instruments are comprised of letters of credit and commitments toextend credit. The estimated fair value of off-balance-sheet financialinstruments is not considered material.

 

While theseestimates of fair value are based on management’s judgment of the mostappropriate factors as of the balance sheet date, there is no assurance thatthe estimated fair value would have been realized if the assets would have beendisposed of or the liabilities settled at that date, since market value maydiffer depending on various factors. In addition, the estimated fair valuewould not apply to subsequent dates.

 

25

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The estimated fairvalue of the Company’s financial instruments as of December 31 is setforth in the table below:

 
| ** **                             | ** ** | **2007**            | ** ** | **2006**                  | ** ** |
|----------------------------------------|------------|---------------------|------------|---------------------------|------------|
| ** **                             | ** ** | **Carrying  Value** | ** ** | **Estimated  Fair Value** | ** ** | **Carrying  Value** | ** ** | **Estimated  Fair Value** | ** ** |
| Financial assets                       |       |                |       |                      |       |   |   |   |   |
| Cash and cash  equivalents             |       | $                   | 33,183     |                      | $          | 33,183 |   | $ | 124,029 |   | $ | 124,029 |   |
| Securities                             |       |                |       |                      |       |   |   |   |   |
| Available for  sale                    |       | 459,405             |       | 459,405                   |       | 453,097 |   | 453,097 |   |
| Held to maturity                       |       | 24,076              |       | 23,953                    |       | 45,013 |   | 44,728 |   |
| Federal Home  Loan Bank stock          |       | 5,258               |       | 5,258                     |       | 5,091 |   | 5,091 |   |
| Loans, less  allowance for loan losses |       | 1,226,571           |       | 1,242,746                 |       | 1,153,885 |   | 1,163,694 |   |
| Accrued interest                       |       | 7,793               |       | 7,793                     |       | 8,129 |   | 8,129 |   |
|                                   |       |                |       |                      |       |   |   |   |   |
| Financial liabilities                  |       |                |       |                      |       |   |   |   |   |
| Deposits                               |       | 1,637,714           |       | 1,642,377                 |       | 1,677,844 |   | 1,676,881 |   |
| Accrued interest                       |       | 6,066               |       | 6,066                     |       | 6,676 |   | 6,676 |   |
|                                        |            |                     |            |                           |            |  |  |  |  |  |  |  |  |

 

# **Note 10 - Related PartyTransactions**

# ** **

Certain executiveofficers and directors of the Company, their affiliates and companies in whichthey have 10% or more beneficial ownership, are customers of the Bank andreceived loans from the Bank totaling $21,316 and $25,595 at December 31,2007 and 2006, respectively. During 2007, $5,594 in loans and $9,873 inprincipal payments were made. Related parties maintained deposits at the Banktotaling $51,442 and $46,908 at December 31, 2007 and 2006, respectively.

 

# **Note 11 - CapitalRequirements**

# ** **

The Company andthe Bank are subject to various regulatory capital requirements administered byfederal banking agencies. Failure to meet minimum capital requirements mayresult in the initiation of actions by regulators that could have directmaterial effects on the financial statements. Under capital adequacy guidelinesand the regulatory framework for prompt corrective action, each entity mustmeet specific capital guidelines that involve quantitative measures of assets,liabilities and certain off-balance-sheet items as calculated under regulatoryaccounting practices. Capital amounts and classifications are also subject toqualitative judgements by the regulators about components, risk weightings andother factors.

 

Regulationsrequire the Company and the Bank to maintain minimum capital amounts and ratios(set forth in the following table). Management believes that as of December 31,2007, the Company and the Bank exceeded all capital adequacy requirements.

 

Management’spresent policy is to limit dividends from the Bank so that the Bank qualifiesas a “well-capitalized” institution as defined by the Federal Deposit InsuranceCorporation Improvement Act of 1991. This policy minimizes the amount of FederalDeposit Insurance Corporation (“FDIC”) insurance premiums paid by the Bank andprovides capital to fund growth. As of December 31, 2007, the Bank couldpay, in the aggregate, dividends of approximately $3,800 to West Suburban whileremaining a “well-capitalized” institution. Dividends from the Bank are WestSuburban’s primary source of cash flow.

 

Asof December 31, 2007 and 2006, the most recent notifications from the FDICcategorized the Bank as “well-capitalized” under the regulatory framework for promptcorrective action. To be categorized as “well-capitalized”, the Bank mustmaintain minimum ratios for total capital to risk weighted assets, Tier 1capital to risk weighted assets and Tier 1 capital to average assets as setforth in the following table. There are no conditions or events since thatnotification that management believes would result in a change of the category.

 

26

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Thecapital amounts and ratios of the Company and the Bank for purposes of theprompt corrective action framework are presented in the table below:

 
| ** **                                | ** ** | **Actual** | ** ** | **Minimum For  Capital Adequacy  Purposes** | ** ** | **Minumum  To Be Well-  Capitalized** | ** ** |
|-------------------------------------------|------------|------------|------------|---------------------------------------------|------------|---------------------------------------|------------|
| **As of December 31, 2007**          | ** ** | **Amount** | ** ** | **Ratio**                                   | ** ** | **Amount**                            | ** ** | **Ratio** | ** ** | **Amount** | ** ** | **Ratio** | ** ** |
| Total capital  (to risk weighted assets)  |       |       |       |                                        |       |                                  |       |   |   |   |   |   |   |
| Company                                   |       | $          | 171,440    |                                        | 11.7       | %                                     | $          | 117,473 |   | 8.0 | % | N/A |   | N/A |   |
| Bank                                      |       | 150,495    |       | 10.3                                        | %          | 117,330                               |       | 8.0 | % | 146,663 |   | 10.0 | % |
| Tier 1 capital  (to risk weighted assets) |       |       |       |                                        |       |                                  |       |   |   |   |   |   |   |
| Company                                   |       | 162,170    |       | 11.0                                        | %          | 58,736                                |       | 4.0 | % | N/A |   | N/A |   |
| Bank                                      |       | 141,225    |       | 9.6                                         | %          | 58,665                                |       | 4.0 | % | 87,998 |   | 6.0 | % |
| Tier 1 capital  (to average assets)       |       |       |       |                                        |       |                                  |       |   |   |   |   |   |   |
| Company                                   |       | 162,170    |       | 8.8                                         | %          | 73,848                                |       | 4.0 | % | N/A |   | N/A |   |
| Bank                                      |       | 141,225    |       | 7.7                                         | %          | 73,688                                |       | 4.0 | % | 92,109 |   | 5.0 | % |
|                                      |       |       |       |                                        |       |                                  |       |   |   |   |   |   |   |
| As of December 31, 2006              |       |       |       |                                        |       |                                  |       |   |   |   |   |   |   |
| Total capital  (to risk weighted assets)  |       |       |       |                                        |       |                                  |       |   |   |   |   |   |   |
| Company                                   |       | $          | 170,952    |                                        | 11.8       | %                                     | $          | 116,191 |   | 8.0 | % | N/A |   | N/A |   |
| Bank                                      |       | 149,312    |       | 10.3                                        | %          | 116,054                               |       | 8.0 | % | 145,067 |   | 10.0 | % |
| Tier 1 capital  (to risk weighted assets) |       |       |       |                                        |       |                                  |       |   |   |   |   |   |   |
| Company                                   |       | 160,302    |       | 11.0                                        | %          | 58,096                                |       | 4.0 | % | N/A |   | N/A |   |
| Bank                                      |       | 138,662    |       | 9.6                                         | %          | 58,027                                |       | 4.0 | % | 87,040 |   | 6.0 | % |
| Tier 1 capital  (to average assets)       |       |       |       |                                        |       |                                  |       |   |   |   |   |   |   |
| Company                                   |       | 160,302    |       | 8.7                                         | %          | 73,947                                |       | 4.0 | % | N/A |   | N/A |   |
| Bank                                      |       | 138,662    |       | 7.5                                         | %          | 73,828                                |       | 4.0 | % | 92,285 |   | 5.0 | % |

 

The appraised fair valueof West Suburban common stock owned by the ESOP is included in Tier 1 capital.

 

**Note 12 - Other ComprehensiveIncome**

 

Other comprehensiveincome components and related taxes were as follows:

 
| ** **                                                                      | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
|---------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Net unrealized holding gain (loss) on available for  sale securities            |       | $        | 6,968      |     | $          | 4,862    |       | $ | (8,553 | ) |
| Reclassification adjustments for losses and (gains)  later recognized in income |       | 387      |       | (85      | )          | (206     | )          |
| Tax effect                                                                      |       | (2,923   | )          | (1,899   | )          | 3,482    |       |
| Net unrealized gain (loss) on available for sale  securities                    |       | 4,432    |       | 2,878    |       | (5,277   | )          |
|                                                                            |       |     |       |     |       |     |       |
| Change in postretirement obligation, loss                                       |       | (159     | )          | —   |       | —   |       |
| Tax effect                                                                      |       | 63       |       | —   |       | —   |       |
| Net change in postretirement obligation, loss                                   |       | (96      | )          | —   |       | —   |       |
| Other  comprehensive gain (loss)                                                |       | $        | 4,336      |     | $          | 2,878    |       | $ | (5,277 | ) |

 

# ** **

27

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# ** **

# **Note 13 - CondensedFinancial Information - Parent Only**

# ** **

**CondensedBalance Sheets**

## **December 31, 2007and 2006**

 
| ** **                                                                           | ** ** | **2007**   | ** ** | **2006**   | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| **Assets**                                                                           | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash,  substantially all on deposit in subsidiary                                    |       | $          | 17,632     |       | $          | 18,468     |       |   |   |
| Securities  available for sale (amortized cost of $2,948 in 2007 and $2,966 in 2006) |       | 2,912      |       | 2,883      |       |       |       |
| Securities held  to maturity (fair value of $4,510 in 2007 and $4,421 in 2006)       |       | 4,564      |       | 4,426      |       |       |       |
| Investment in  subsidiary                                                            |       | 139,956    |       | 133,167    |       |       |       |
| Goodwill                                                                             |       | 712        |       | 712        |       |       |       |
| Other assets                                                                         |       | 317        |       | 272        |       |       |       |
| **Total  assets**                                                                    |       | $          | 166,093    |       | $          | 159,928    |       |   |   |
|                                                                                 |       |       |       |       |       |       |       |
| **Liabilities and shareholders’ equity**                                        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Dividends  payable                                                                   |       | $          | 4,325      |       | $          | 4,325      |       |   |   |
| Other  liabilities                                                                   |       | 300        |       | 259        |       |       |       |
| ** **                                                                           |       | ** ** |       | ** ** |       |       |       |
| Common stock in  ESOP subject to contingent repurchase obligation                    |       | 56,907     |       | 60,009     |       |       |       |
| ** **                                                                           |       | ** ** |       | ** ** |       |       |       |
| Shareholders’  equity                                                           |       | 104,561    |       | 95,335     |       |       |       |
| **Total  liabilities and shareholders’ equity**                                 |       | $          | 166,093    |       | $          | 159,928    |       |   |   |

 

**Condensed Statements of Income**

**YearsEnded December 31, 2007, 2006 and 2005**

 
| ** **                                                          | ** ** | **2007**   | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|---------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| **Income**                                                          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Dividends from  subsidiary                                          |       | $          | 20,558     |       | $          | 20,755     |       | $ | 24,907 |   |
| Interest income                                                     |       |       |       |       |       |       |       |
| Deposits                                                            |       | 513        |       | 573        |       | 259        |       |
| Securities                                                          |       | 291        |       | 291        |       | 293        |       |
| Net realized  gains on securities transactions                      |       | —     |       | —     |       | 162        |       |
| Other                                                               |       | —     |       | 56         |       | —     |       |
| Total income                                                        |       | 21,362     |       | 21,675     |       | 25,621     |       |
|                                                                |       |       |       |       |       |       |       |
| **Expense**                                                         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Other                                                               |       | 417        |       | 382        |       | 359        |       |
| Total expense                                                       |       | 417        |       | 382        |       | 359        |       |
| **Income before income taxes**                                      |       | 20,945     |       | 21,293     |       | 25,262     |       |
| **Income tax expense**                                              |       | 14         |       | 120        |       | 14         |       |
| **Income before equity in undistributed net income  of subsidiary** |       | 20,931     |       | 21,173     |       | 25,248     |       |
| **Equity in undistributed net income of subsidiary**                |       | 2,482      |       | 4,178      |       | 238        |       |
| **Net income**                                                      |       | $          | 23,413     |       | $          | 25,351     |       | $ | 25,486 |   |

## ** **

28

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**Condensed Statements of CashFlows**

**YearsEnded December 31, 2007, 2006 and 2005**

** **
| ** **                                                                        | ** ** | **2007**   | ** ** | **2006**   | ** ** | **2005**   | ** ** |
|-----------------------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| **Cash flows from operating activities**                                          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net income                                                                        |       | $          | 23,413     |       | $          | 25,351     |       | $ | 25,486 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities |       |       |       |       |       |       |       |
| Deferred income  tax provison (benefit)                                           |       | 7          |       | 8          |       | (41        | )          |
| Equity in  undistributed net income of subsidiary                                 |       | (2,482     | )          | (4,178     | )          | (238       | )          |
| Net discount  accretion of securities                                             |       | (121       | )          | (121       | )          | (120       | )          |
| Net realized  gains on securities transactions                                    |       | —     |       | —     |       | (162       | )          |
| (Increase)  decrease in other assets                                              |       | (69        | )          | (42        | )          | 438        |       |
| Increase in  other liabilities                                                    |       | 41         |       | 49         |       | 19         |       |
| **Net  cash provided by operating activities**                                    |       | 20,789     |       | 21,067     |       | 25,382     |       |
| **Cash flows from investing activities**                                          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Securities  available for sale                                                    |       |       |       |       |       |       |       |
| Sales                                                                             |       | —     |       | —     |       | 1,535      |       |
| Purchases                                                                         |       | —     |       | —     |       | (500       | )          |
| **Net  cash provided by investing activities**                                    |       | —     |       | —     |       | 1,035      |       |
| **Cash flows from financing activities**                                          | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash dividends  paid                                                              |       | (21,625    | )          | (21,625    | )          | (21,625    | )          |
| **Net  cash used in financing activities**                                        |       | (21,625    | )          | (21,625    | )          | (21,625    | )          |
| **Net (decrease) increase in cash**                                               |       | (836       | )          | (558       | )          | 4,792      |       |
| **Beginning cash**                                                                |       | 18,468     |       | 19,026     |       | 14,234     |       |
| **Ending cash**                                                                   |       | $          | 17,632     |       | $          | 18,468     |       | $ | 19,026 |   |

 

29

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# ** **

# **Note 14 - QuarterlyResults of Operations (Unaudited)**

# ** **

The following table setsforth certain unaudited income, expense and per share data on a quarterly basisfor the three-month periods indicated:

 
| ** **                                          | ** ** | **Fourth**  | ** ** | **Third**   | ** ** | **Second**  | ** ** | **First**   | ** ** |
|-----------------------------------------------------|------------|-------------|------------|-------------|------------|-------------|------------|-------------|------------|
| **Year Ended December 31, 2007**               | ** ** | **Quarter** | ** ** | **Quarter** | ** ** | **Quarter** | ** ** | **Quarter** | ** ** |
| Interest income                                     |       | $           | 26,048     |        | $          | 27,647      |       | $           | 27,673     |   | $ | 27,094 |   |
| Interest expense                                    |       | 11,661      |       | 12,304      |       | 12,160      |       | 12,081      |       |
| Net interest income                                 |       | 14,387      |       | 15,343      |       | 15,513      |       | 15,013      |       |
| Provision for loan losses                           |       | 275         |       | 100         |       | —      |       | —      |       |
| Net interest income after provision for loan losses |       | 14,112      |       | 15,243      |       | 15,513      |       | 15,013      |       |
| Noninterest income                                  |       | 6,846       |       | 7,075       |       | 6,814       |       | 6,329       |       |
| Noninterest expense                                 |       | 14,547      |       | 13,799      |       | 13,769      |       | 12,919      |       |
| Income before income taxes                          |       | 6,411       |       | 8,519       |       | 8,558       |       | 8,423       |       |
| Income tax expense                                  |       | 1,480       |       | 2,444       |       | 2,506       |       | 2,068       |       |
| Net income                                          |       | $           | 4,931      |        | $          | 6,075       |       | $           | 6,052      |   | $ | 6,355 |   |
| Earnings per share                                  |       | $           | 11.40      |        | $          | 14.04       |       | $           | 14.00      |   | $ | 14.69 |   |
|                                                |       |        |       |        |       |        |       |        |       |
| **Year  Ended December 31, 2006**              | ** ** | ** **  | ** ** | ** **  | ** ** | ** **  | ** ** | ** **  | ** ** |
| Interest income                                     |       | $           | 27,292     |        | $          | 27,253      |       | $           | 26,401     |   | $ | 24,790 |   |
| Interest expense                                    |       | 12,580      |       | 11,996      |       | 10,974      |       | 9,784       |       |
| Net interest income                                 |       | 14,712      |       | 15,257      |       | 15,427      |       | 15,006      |       |
| Provision for loan losses                           |       | —      |       | —      |       | 150         |       | —      |       |
| Net interest income after provision for loan losses |       | 14,712      |       | 15,257      |       | 15,277      |       | 15,006      |       |
| Noninterest income                                  |       | 6,230       |       | 5,802       |       | 5,044       |       | 5,789       |       |
| Noninterest expense                                 |       | 12,398      |       | 11,521      |       | 11,487      |       | 12,450      |       |
| Income before income taxes                          |       | 8,544       |       | 9,538       |       | 8,834       |       | 8,345       |       |
| Income tax expense                                  |       | 2,380       |       | 2,790       |       | 2,351       |       | 2,389       |       |
| Net income                                          |       | $           | 6,164      |        | $          | 6,748       |       | $           | 6,483      |   | $ | 5,956 |   |
| Earnings per share                                  |       | $           | 14.25      |        | $          | 15.60       |       | $           | 14.99      |   | $ | 13.77 |   |

 

During the fourth quarterof 2007, the Company experienced a decrease in net interest income of $956.This decrease was primarily due to decreased yields in the Company’s loanportfolio primarily due to interest rate reductions initiated by the FederalReserve beginning in the third quarter of 2007, partially offset by reductionsin interest rates paid on savings, money market and certificates of depositless that $100,000. Yields on the commercial loan portfolio decreased 106 basispoints during this period. The majority of commercial loans have adjustablerates that are tied to the prime rate. Also, during the fourth quarter of 2007,the Company experienced a decrease in total noninterest income of $229. Theimpairment of the FHLMC preferred stock was partially offset by increases inprepaid solutions card income. Additionally, the Company experienced anincrease in total noninterest expense of $748 during the fourth quarter of2007. This was primarily due to the Company establishing litigation reserves inconnection with various lawsuits brought against VISA USA Inc.

 

During the fourth quarterof 2006, the Company experienced an increase in total noninterest expense of$877. This was due to various factors including increased advertising andpromotional costs for retail banking and the prepaid solutions group. TheCompany also incurred increased professional fees expense for issues related tothe prepaid solutions group.

 

# **Note 15 - SubsequentEvents**

# ** **

On January 8, 2008,West Suburban and G.R. Bancorp, Ltd. (“GRB”) entered into an Agreement and Planof Merger (the “Merger Agreement”). Consummation of the merger is subject to customaryconditions, including approval of the holders of GRB’s common stock, obtainingrequired governmental approvals, the continued accuracy of the parties’representations and warranties, performance of all covenants and satisfactionby GRB of a condition (as of the consummation of the acquisition) of an agreedupon minimum shareholders’ equity amount. The merger is expected to befinalized during the second quarter of 2008.

 

30

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# ** **

# ****

# ** **

 

# **MANAGEMENT’S REPORT ONINTERNAL CONTROL**

# **OVER FINANCIALREPORTING**

# ** **

Management of the Companyis responsible for establishing and maintaining an effective system of internalcontrol over financial reporting. The Company’s system of internal control overfinancial reporting is designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with generally accepted accountingprinciples. There are inherent limitations in the effectiveness of any systemof internal control over financial reporting, including the possibility ofhuman error and the circumvention or overriding of controls. Accordingly, evenan effective system of internal control over financial reporting can provideonly reasonable assurance with respect to financial statement preparation.Projections of any evaluation of effectiveness to future periods are subject tothe risks that controls may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures maydeteriorate.

 

Management assessed theCompany’s systems of internal control over financial reporting as of December 31,2007. This assessment was based on criteria for effective internal control overfinancial reporting described in InternalControl—IntegratedFramework issued by the Committee of Sponsoring Organizations of the TreadwayCommission. Based on this assessment, management believes that, as of December 31,2007, the Company maintained effective internal control over financialreporting based on those criteria.

 

The Company’s independentauditors have issued an audit report on the effectiveness of the Company’sinternal control over financial reporting.

 

 

March 11, 2008

 
| /s/ Kevin J. Acker                    |   |
|---------------------------------------|--------|
| Kevin J. Acker                        |   |
| Chairman and Chief  Executive Officer |   |

 

 
| /s/ Duane G. Debs                      |   |
|----------------------------------------|--------|
| Duane G. Debs                          |   |
| President and Chief  Financial Officer |   |

 

31

----

 

 

# **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON**

# **INTERNAL CONTROL OVER FINANCIAL REPORTING**

# ** **

We have audited WestSuburban Bancorp, Inc.’s internal control over**financial reporting as of December 31, 2007, based on criteria established in InternalControl—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). West Suburban Bancorp, Inc.’smanagement is responsible for maintaining effective internal control overfinancial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting. Our responsibility is to express an opinionon the effectiveness of the company’s internal control over financial reportingbased on our audit.

 

We conducted our audit inaccordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether effective internal control overfinancial reporting was maintained in all material respects. Our audit includedobtaining an understanding of internal control over financial reporting,assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on theassessed risk. We believe that our audit provides a reasonable basis for ouropinion.

 

A company’s internal controlover financial reporting is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generallyaccepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directorsof the company; and (3) provide reasonable assurance regarding preventionor timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.

 

Because of its inherentlimitations, internal control over financial reporting may not prevent ordetect misstatements. Also, projections of any evaluation of effectiveness tofuture periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.

 

In our opinion, WestSuburban Bancorp, Inc. maintained, in all material respects, effectiveinternal control over financial reporting as of December 31, 2007, basedon criteria established in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizationsof the Treadway Commission (COSO).

 

We also have audited, inaccordance with the standards of the Public Company Accounting Oversight Board(United States), the consolidatedbalance sheets of West Suburban Bancorp, Inc. as of December 31,2007 and 2006, and the related consolidated statements of income, changes inshareholders’ equity, and cash flows for each of the three years in the periodended December 31, 2007, and our report dated March 11, 2008expressed an unqualifiedopinion on those consolidated financial statements.

 

 

 
|                 | /s/ Crowe Chizek and  Company LLC |
|----------------------|-----------------------------------|
|                 | Crowe Chizek and Company  LLC     |
|                 |                              |
|                 |                              |
| Oak Brook, Illinois  |                              |
|                 |                              |
| March 11,  2008 |                              |

 

32

----

 

# **STOCK PERFORMANCE PRESENTATION**

# ** **

*The stock performance graph belowshall not be deemed incorporated by reference by any general statementincorporating by reference this annual report into any filing under theSecurities Act of 1933 or under the Securities Exchange Act of 1934, except tothe extent West Suburban specifically incorporates this information byreference, and shall not otherwise be deemed filed under such Acts.*

 

The Securities and Exchange Commissionrequires that West Suburban include a line-graph presentation comparingcumulative, five-year shareholder returns on an indexed basis with the Standard &Poor’s 500 Stock Index (“S&P 500”) and either a nationally recognizedindustry standard or an index of peer companies selected by West Suburban. TheBoard of Directors has elected to compare an investment in its stock to a peergroup index rather than a published industry index because it believes the peergroup index includes companies whose businesses are more similar to that of theCompany than any published index. The peer group index is comprised of thefollowing companies selected by West Suburban (based on their similarity insize, loan portfolios and business markets):****1stSource Corporation; AMCORE Financial Inc.; Corus Bankshares Inc.; MB FinancialInc.; Midwest Banc Holdings Inc.; Old Second Bancorp, Inc.; PrivateBancorp, Inc.;and Wintrust Financial Corporation.

 

 

*$100 invested on 12/31/02 in stock or index-including reinvestment ofdividends. Fiscal year ending December 31.

 

Copyright© 2008, Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.All rights reserved.

www.researchdatagroup.com/S&P.htm

 

The following table setsforth the dollar amounts of the annual Total Returns (as defined below) for theCompany, the S&P 500 and the peer group, which are plotted on the linegraph on the previous page. “Total Return” means the sum of dividends received,assuming dividend reinvestment, and the increase (or decrease) in the shareprice at the end of the period compared to the beginning of the period, dividedby the share price at the beginning of the period.

 
| ** **  | ** ** | **Total Return Based on Initial Investment of $100.00** | ** ** |
|-------------|------------|---------------------------------------------------------|------------|
| ** **  | ** ** | **2002**                                                | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** | **2007** | ** ** |
| The Company |       | $                                                       | 100.00     |   | $ | 123.75 |   | $ | 134.32 |   | $ | 143.44 |   | $ | 163.63 |   | $ | 162.51 |   |
| S&P 500 |       | $                                                       | 100.00     |   | $ | 128.68 |   | $ | 142.69 |   | $ | 149.70 |   | $ | 173.34 |   | $ | 182.87 |   |
| Peer Group  |       | $                                                       | 100.00     |   | $ | 142.19 |   | $ | 183.82 |   | $ | 188.91 |   | $ | 199.88 |   | $ | 138.44 |   |

 

# **The Total Returns of the companies included in the abovepeer group have been assigned various weights based on their relative marketcapitalizations.**

# ** **

33

----

 

# **SELECTED FINANCIAL DATA**

(Dollars inthousands, except per share data)

 

Thefollowing information should be read in conjunction with Management’sDiscussion and Analysis of Financial Condition and Results of Operations andthe Company’s Consolidated Financial Statements and Notes to ConsolidatedFinancial Statements included in this annual report.

 
| ** **                                                                                                                            | ** ** | **Years Ended December 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------|------------|
| ** **                                                                                                                            | ** ** | **2007**                          | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
| **Selected  operating data**                                                                                                          | ** ** | ** **                        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest income                                                                                                                       |       | $                                 | 108,462    |   | $ | 105,736 |   | $ | 89,389 |   | $ | 79,326 |   | $ | 80,801 |   |
| Interest expense                                                                                                                      |       | 48,206                            |       | 45,334 |   | 30,269 |   | 21,839 |   | 21,986 |   |
| Net interest  income                                                                                                                  |       | 60,256                            |       | 60,402 |   | 59,120 |   | 57,487 |   | 58,815 |   |
| Provision for  loan losses                                                                                                            |       | 375                               |       | 150 |   | 1,375 |   | 200 |   | 2,150 |   |
| Net interest  income after provision for loan losses                                                                                  |       | 59,881                            |       | 60,252 |   | 57,745 |   | 57,287 |   | 56,665 |   |
| Noninterest  income (1)                                                                                                               |       | 27,064                            |       | 22,865 |   | 23,571 |   | 18,407 |   | 22,924 |   |
| Noninterest  expense                                                                                                                  |       | 55,034                            |       | 47,856 |   | 45,507 |   | 43,107 |   | 41,715 |   |
| Income before  income taxes                                                                                                           |       | 31,911                            |       | 35,261 |   | 35,809 |   | 32,587 |   | 37,874 |   |
| Income tax expense                                                                                                                    |       | 8,498                             |       | 9,910 |   | 10,323 |   | 8,929 |   | 11,966 |   |
| Net income                                                                                                                            |       | $                                 | 23,413     |   | $ | 25,351 |   | $ | 25,486 |   | $ | 23,658 |   | $ | 25,908 |   |
|                                                                                                                                  |       |                              |       |   |   |   |   |   |   |   |   |
| **Per  share data**                                                                                                                   | ** ** | ** **                        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Earnings                                                                                                                              |       | $                                 | 54.13      |   | $ | 58.62 |   | $ | 58.93 |   | $ | 54.82 |   | $ | 59.90 |   |
| Cash dividends  declared                                                                                                              |       | 50.00                             |       | 50.00 |   | 50.00 |   | 50.00 |   | 44.00 |   |
| Book value (2)                                                                                                                        |       | 373.34                            |       | 359.18 |   | 344.60 |   | 347.87 |   | 346.62 |   |
|                                                                                                                                  |       |                              |       |   |   |   |   |   |   |   |   |
| **Selected  balances, end of year**                                                                                                   | ** ** | ** **                        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Securities                                                                                                                            |       | $                                 | 488,739    |   | $ | 503,201 |   | $ | 536,362 |   | $ | 558,883 |   | $ | 492,380 |   |
| Loans, less  allowance for loan losses                                                                                                |       | 1,226,571                         |       | 1,153,885 |   | 1,091,747 |   | 1,046,125 |   | 1,074,215 |   |
| Total assets                                                                                                                          |       | 1,851,357                         |       | 1,876,643 |   | 1,827,191 |   | 1,748,049 |   | 1,710,695 |   |
| Deposits                                                                                                                              |       | 1,637,714                         |       | 1,677,844 |   | 1,639,666 |   | 1,569,742 |   | 1,529,931 |   |
| Shareholders’  equity plus common stock in ESOP subject to contingent repurchase obligation  (2)                                 |       | 161,468                           |       | 155,344 |   | 149,038 |   | 150,454 |   | 149,912 |   |
|                                                                                                                                  |       |                              |       |   |   |   |   |   |   |   |   |
| **Ratios**                                                                                                                            | ** ** | ** **                        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Return on  average total assets                                                                                                       |       | 1.26                              | %          | 1.38 | % | 1.43 | % | 1.36 | % | 1.55 | % |
| Return on  average shareholders’ equity plus common stock in ESOP subject to contingent  repurchase obligation (2)               |       | 14.83                             | %          | 16.83 | % | 17.05 | % | 15.58 | % | 16.94 | % |
| Cash dividends  declared to net income                                                                                                |       | 92.36                             | %          | 85.30 | % | 84.85 | % | 91.41 | % | 73.45 | % |
| Average  shareholders’ equity plus common stock in ESOP subject to contingent  repurchase obligation to average total assets (2) |       | 8.49                              | %          | 8.18 | % | 8.40 | % | 8.73 | % | 9.16 | % |
| Net interest  margin (3)                                                                                                              |       | 3.50                              | %          | 3.54 | % | 3.59 | % | 3.60 | % | 3.81 | % |

----

(1)          Noninterest income includes a litigationsettlement of $1,085 in 2003 for the settlement of a claim related to aninvestment that the Company made in prior years. Noninterest income alsoincludes gains (losses) on sales on securities of ($6) in 2007, $85 in 2006,$206 in 2005, ($2,004) in 2004 and $2,330 in 2003. Noninterest income for 2007includes the impairment of FHLMC stock of ($381).

(2)          See Note 7 to the Company’s consolidatedfinancial statements and “Non-GAAP Financial Measures.” This presentation isconsistent with the Company’s belief that it is unlikely that the Company wouldbe required to satisfy the contingent repurchase obligation.

(3)          Net interest margin is presented on a taxequivalent basis, assuming a federal income tax rate of 35%.

 

34

----

 

# **NON-GAAP FINANCIAL MEASURES**

# ** **

The accounting andreporting policies of the Company conform to accounting principles generallyaccepted in the United States (“GAAP”). However, management uses certainnon-GAAP measures and ratios to evaluate and measure the Company’s performance.These measures and ratios include book value per share, return on shareholders’equity and average shareholders’ equity to average total assets. For each ofthese measures and ratios, the Company adds to shareholders’ equity the amountin “common stock in ESOP subject to contingent repurchase obligation.” Underthe ESOP, the Company has certain contingent repurchase obligations to buy backcommon stock distributed to participants, as described in more detail in Note 7to the Company’s audited financial statements. This contingent repurchaseobligation is reflected in the Company’s financial statements as “common stockin ESOP subject to contingent repurchase obligation” and, in accordance withGAAP, reduces shareholders’ equity. The Company believes that it is unlikelythat the Company would be required to satisfy its contingent repurchaseobligation and therefore believes that adjusting shareholders’ equity by adding“common stock in ESOP subject to contingent repurchase obligation” to thatamount provides a more meaningful view of the applicable measures and ratios.In addition, management believes that the return on average shareholders’equity, a financial measure frequently considered to evaluate the performanceof bank holding companies, would be significantly overstated.

 

The following tablepresents a reconciliation of certain non-GAAP performance measures and ratiosused by the Company to the most directly comparable GAAP financial measures forthe years ended December 31:

# ** **

| ** **                                                                                                                                       | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| Shareholders’  equity (GAAP)                                                                                                                |       | $        | 104,561    |     | $          | 95,335   |       | $        | 94,660     |     | $          | 96,495 |   | $ | 98,541 |   |
| Shareholders’  equity plus common stock in ESOP subject to contingent repurchase obligation  (non-GAAP)                                     |       | 161,468  |       | 155,344  |       | 149,038  |       | 150,454  |       | 149,912  |       |
| Book Value Per  Share (GAAP) (1)                                                                                                                 |       | 241.76   |       | 220.43   |       | 218.87   |       | 223.60   |       | 227.85   |       |
| Book Value Per  Share (non-GAAP) (2)                                                                                                             |       | 373.34   |       | 359.18   |       | 344.60   |       | 347.87   |       | 346.62   |       |
| Return on  average shareholders’ equity (GAAP) (3)                                                                                          |       | 24.04    | %          | 27.05    | %          | 26.62    | %          | 23.64    | %          | 23.46    | %          |
| Return on  average shareholders’equity plus common stock in ESOP subject to contingent  repurchase obligation (non-GAAP) (4)                |       | 14.83    | %          | 16.83    | %          | 17.05    | %          | 15.58    | %          | 16.94    | %          |
| Average  shareholders’ equity to average total assets (GAAP) (5)                                                                            |       | 5.24     | %          | 5.09     | %          | 5.38     | %          | 5.75     | %          | 6.61     | %          |
| Average  shareholders’ equity plus common stock in ESOP subject to contingent  repurchase obligation to average total assets (non-GAAP) (6) |       | 8.49     | %          | 8.18     | %          | 8.40     | %          | 8.73     | %          | 9.16     | %          |
|                                                                                                                                                  |            |          |            |          |            |          |            |          |            |          |            |  |  |  |  |  |

----

(1)          Book Value PerShare (GAAP) equals shareholders’ equity divided by the number of outstandingshares.

(2)          Book Value PerShare (non-GAAP) equals shareholders’ equity plus common stock in ESOP subjectto contingent repurchase obligation divided by the number of outstanding shares.

(3)          Return on average shareholders’equity (GAAP) equals net income divided by average shareholders’ equity.

(4)          Return onaverage shareholders’ equity plus common stock in ESOP subject to contingentrepurchase obligation (non-GAAP) equals net income divided byaverage shareholders’ equity plus common stock in ESOP subject to contingentrepurchase obligation.

(5)          Average shareholders’ equity toaverage total assets (GAAP) equals average shareholders’ equity divided byaverage total assets.

(6)          Average shareholders’ equity pluscommon stock in ESOP subject to contingent repurchase obligation to averagetotal assets (non-GAAP) equals average shareholders’ equity plus common stockin ESOP subject to contingent repurchase obligation divided by average totalassets.

 

35

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**AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND**

## **AVERAGE RATES AND YIELDS ON A TAX EQUIVALENTBASIS**

(Dollars inthousands)

 

The following tablepresents for the years indicated the total dollar amount of interest incomefrom average interest-earning assets and their yields, as well as the interestexpense on average interest-bearing liabilities and their costs, expressed bothin dollars and rates. All average balances are daily average balances. To theextent received, interest on nonaccruing loans has been included in the table.Interest income on nonaccrual loans was not material in 2007, 2006 and 2005.

 
| ** **                                                                                            | ** ** | **Years Ended December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------|------------|-----------------------------------|------------|
| ** **                                                                                            | ** ** | **2007**                          | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                                                                            | ** ** | **Average  Balance**              | ** ** | **Interest** | ** ** | **Rate** | ** ** | **Average  Balance** | ** ** | **Interest** | ** ** | **Rate** | ** ** | **Average  Balance** | ** ** | **Interest** | ** ** | **Rate** | ** ** |
| **Assets**                                                                                            | ** ** | ** **                        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Federal funds  sold                                                                                   |       | $                                 | 58,267     |   | $ | 3,061 |   | 5.3 | % | $ | 58,208 |   | $ | 2,932 |   | 5.0 | % | $ | 22,962 |   | $ | 732 |   | 3.2 | % |
| Securities                                                                                            |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                               |       | 467,953                           |       | 19,192 |   | 4.1 | % | 503,161 |   | 19,222 |   | 3.8 | % | 547,119 |   | 19,235 |   | 3.5 | % |
| Exempt from  federal income tax (1)                                                                   |       | 27,789                            |       | 1,725 |   | 6.2 | % | 25,684 |   | 1,600 |   | 6.2 | % | 22,984 |   | 1,482 |   | 6.4 | % |
| Total securities  (1)                                                                                 |       | 495,742                           |       | 20,917 |   | 4.2 | % | 528,845 |   | 20,822 |   | 3.9 | % | 570,103 |   | 20,717 |   | 3.6 | % |
| Loans (1)(2)                                                                                          |       | 1,185,439                         |       | 85,181 |   | 7.2 | % | 1,136,102 |   | 82,574 |   | 7.3 | % | 1,069,549 |   | 68,489 |   | 6.4 | % |
| Total  interest-earning assets (1)(2)                                                                 |       | 1,739,448                         |       | 109,159 |   | 6.3 | % | 1,723,155 |   | 106,328 |   | 6.2 | % | 1,662,614 |   | 89,938 |   | 5.4 | % |
| Cash and due from  banks                                                                              |       | 38,444                            |       |   |   |   |   | 40,142 |   |   |   |   |   | 40,450 |   |   |   |   |   |
| Premises and  equipment, net                                                                          |       | 42,074                            |       |   |   |   |   | 40,124 |   |   |   |   |   | 40,018 |   |   |   |   |   |
| Other real estate                                                                                     |       | 627                               |       |   |   |   |   | 550 |   |   |   |   |   | 1,472 |   |   |   |   |   |
| Allowance for  loan losses                                                                            |       | (9,985                            | )          |   |   |   |   | (10,721 | ) |   |   |   |   | (10,977 | ) |   |   |   |   |
| Accrued interest  and other assets (2)                                                                |       | 49,648                            |       |   |   |   |   | 47,808 |   |   |   |   |   | 46,180 |   |   |   |   |   |
| **Total  assets**                                                                                     |       | $                                 | 1,860,256  |   |   |   |   |   | $ | 1,841,058 |   |   |   |   |   | $ | 1,779,757 |   |   |   |   |   |
| **Liabilities  and shareholders’ equity**                                                        | ** ** |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest-bearing  deposits                                                                            |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                                                                                                   |       | $                                 | 306,680    |   | 2,881 |   | 0.9 | % | $ | 315,209 |   | 2,873 |   | 0.9 | % | $ | 320,357 |   | 1,333 |   | 0.4 | % |
| Money market  checking                                                                                |       | 290,610                           |       | 12,415 |   | 4.3 | % | 254,492 |   | 10,642 |   | 4.2 | % | 230,527 |   | 5,982 |   | 2.6 | % |
| Savings                                                                                               |       | 359,173                           |       | 6,347 |   | 1.8 | % | 398,013 |   | 8,920 |   | 2.2 | % | 435,022 |   | 6,792 |   | 1.6 | % |
| Time deposits                                                                                         |       |                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less than  $100,000                                                                                   |       | 393,708                           |       | 18,516 |   | 4.7 | % | 381,062 |   | 16,005 |   | 4.2 | % | 341,123 |   | 11,711 |   | 3.4 | % |
| $100,000 and  greater                                                                                 |       | 164,785                           |       | 8,044 |   | 4.9 | % | 154,178 |   | 6,863 |   | 4.5 | % | 121,928 |   | 4,402 |   | 3.6 | % |
| Total  interest-bearing deposits                                                                      |       | 1,514,956                         |       | 48,203 |   | 3.2 | % | 1,502,954 |   | 45,303 |   | 3.0 | % | 1,448,957 |   | 30,220 |   | 2.1 | % |
| Other  interest-bearing liabilities                                                                   |       | 65                                |       | 3 |   | 4.6 | % | 738 |   | 31 |   | 4.2 | % | 1,341 |   | 49 |   | 3.7 | % |
| Total  interest-bearing liabilities                                                                   |       | 1,515,021                         |       | 48,206 |   | 3.2 | % | 1,503,692 |   | 45,334 |   | 3.0 | % | 1,450,298 |   | 30,269 |   | 2.1 | % |
| Demand-noninterest-bearing  deposits                                                                  |       | 145,314                           |       |   |   |   |   | 152,423 |   |   |   |   |   | 150,280 |   |   |   |   |   |
| Accrued interest  and other liabilities                                                               |       | 42,001                            |       |   |   |   |   | 34,315 |   |   |   |   |   | 29,729 |   |   |   |   |   |
| Shareholders’  equity plus common stock in ESOP subject to contingent repurchase obligation  (3) |       | 157,920                           |       |   |   |   |   | 150,628 |   |   |   |   |   | 149,450 |   |   |   |   |   |
| **Total  liabilities and shareholders’ equity**                                                  |       | $                                 | 1,860,256  |   |   |   |   |   | $ | 1,841,058 |   |   |   |   |   | $ | 1,779,757 |   |   |   |   |   |
| Net interest  income                                                                                  |       |                              |       | $ | 60,953 |   |   |   |   |   | $ | 60,994 |   |   |   |   |   | $ | 59,669 |   |   |   |
| Interest rate  spread                                                                                 |       |                              |       |   |   | 3.1 | % |   |   |   |   | 3.2 | % |   |   |   |   | 3.3 | % |
| Net interest  margin (1)                                                                              |       |                              |       |   |   | 3.5 | % |   |   |   |   | 3.5 | % |   |   |   |   | 3.6 | % |
|                                                                                                       |            |                                   |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

----

(1) Interestincome, net interest margin and yields are presented on a tax equivalent basis,assuming a federal income tax rate of 35%.

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

(3) See Note 7 to the Company’s consolidatedfinancial statements and “Non-GAAP Financial Measures.” This presentation isconsistent with the Company’s belief that it is unlikely that the Company wouldbe required to satisfy the contingent repurchase obligation.

## ** **

36

----

 

## **MANAGEMENT’S DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITION**

## **AND RESULTS OF OPERATIONS**

## ** **

The followingdiscussion and analysis provides information regarding the Company’s financialcondition as of December 31, 2007 and 2006, and the results of operationsfor each of the three years in the period ended December 31, 2007. Thisdiscussion and analysis should be read in conjunction with the Company’sConsolidated Financial Statements and Notes to Consolidated FinancialStatements included in this annual report. The financial information providedbelow is rounded in order to simplify the presentation of management’sdiscussion and analysis. However, the ratios and percentages provided below arecalculated using the more detailed financial information contained in thefinancial statements, notes and tables included elsewhere in this annualreport.

 

###### ***Critical Accounting Policies***

###### *** ***

*The Company’s financial statements are prepared inconformity with accounting principles generally accepted in the United Statesof America. These accounting principles, which can be complex, are significantto our financial condition and our results of operations and require managementto apply significant judgment with respect to various accounting, reporting anddisclosure matters. Management must use estimates, assumptions and judgments toapply these principles where actual measurements are not possible or practical.These estimates, assumptions and judgments are based on information availableas of the date of this report and, as this information changes, actual resultscould differ from the estimates, assumptions and judgments reflected in thefinancial statements. Changes in such estimates may have a significant impacton the financial statements. Management has reviewed the application of thesepolicies with the Audit Committee of West Suburban’s Board of Directors. ThisManagement’s Discussion and Analysis of Financial Condition and Results ofOperations should be read in conjunction*the Company’s Consolidated FinancialStatements and Notes to Consolidated Financial Statements included in thisannual report.

* *

Inmanagement’s view, the accounting policies that are critical to the Company arethose relating to estimates, assumptions and judgments regarding thedetermination of the adequacy of the allowance for loan losses.

 

**Allowancefor Loan Losses.**  The Company maintains an allowance for loanlosses at a level management believes is sufficient to absorb probable incurredcredit losses in the loan portfolio. The allowance for loan losses representsthe Company’s estimate of probable incurred credit losses in the loan portfolioat each balance sheet date and is based on the review of available and relevantinformation. The allowance contains allocations for probable incurred creditlosses that have been identified relating to specific borrowing relationshipsas well as probable incurred credit losses for pools of loans. The allowancefor loan losses is reassessed monthly by the Company to determine theappropriate level of the allowance. The amount of the allowance for loan lossesis determined based on a variety of factors, including assessment of the creditrisk of the loans in the loan portfolio, volume of the loans, delinquent loans,evaluation of current economic conditions in the market area, actualcharge-offs during the period and historical loss experience. Loan quality iscontinually monitored by management and reviewed by the loan committee on amonthly basis.

 

All categories of loansare evaluated on a category by category basis. In addition, individualcommercial, construction and commercial mortgage loans are evaluated todetermine if a specific loss allocation is needed for problem loans deemed tohave a shortfall in collateral. Management also considers the borrower’scurrent economic status including liquidity and future business viability.Other factors used in the allocation of the allowance include levels and trendsof past dues and charge-offs along with concentrations of credit within thecommercial and commercial real estate loan portfolios. This evaluation isinherently subjective as it requires estimates that are susceptible tosignificant revision as more information becomes available or as developmentsoccur. Along with the allocation of the allowance on a category by categorybasis and the specific allocations for individual borrowing relationships, theallowance includes a relatively small portion that remains unallocated. Management adjusts the allowance for loanlosses by an amount sufficient to maintain the allowance at the leveldetermined appropriate. Loans are charged-off when deemed to be uncollectibleby management. The Company believes that the allowance for loan losses isadequate to provide for estimated probable incurred credit losses in the loanportfolio.

 

 

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**Income Taxes.** The Company is subject to income tax laws of the United States and theState of Illinois. These laws are complex and subject to differentinterpretations by the taxpayer and the various taxing authorities. Managementmakes certain judgments and estimates about the application of these inherentlycomplex laws when determining the provision for income taxes. Federal and statetaxing authorities have recently become increasingly aggressive in challengingtax positions taken by financial institutions, including positions that may betaken by the Company. During the preparation of the Company’s tax returns,management makes reasonable interpretations of the tax laws which are subjectto challenge upon audit by the tax authorities. These interpretations are alsosubject to reinterpretation based on management’s ongoing assessment of factsand evolving case law.

 

In August 2007, theState of Illinois enacted legislation that will affect the tax obligations ofbanks operating in Illinois. The legislative provisions have various effectivedates, the earliest beginning January 1, 2008. Although the legislation isnot expected to have a material adverse impact on the Company’s 2008 state taxliability, the full impact of the legislation is currently unknown. The Companywill continue to evaluate this legislation as well as any related legislationor guidance.

 

On a quarterly basis,management evaluates the reasonableness of its effective tax rate based uponits current best estimate of net income and applicable taxes expected for thefull year. Deferred tax assets and liabilities are evaluated on a quarterlybasis, or more frequently if necessary.

 

**Temporary Decline in Fair Value of Securities.**  Under current accounting rules,declines in the fair value of securities below their cost that areother-than-temporary are reflected as realized losses. In determining whetheran unrealized loss is considered other-than-temporary, management considers:the length of time and extent that fair value has been less than cost; thefinancial condition and near term prospects of the issuer; and the Company’sability and intent to hold the security for a period sufficient to allow forany anticipated recovery in fair values. In management’s view, the decline inmarket value of the securities that were below amortized cost at December 31,2007 does not represent other-than-temporary impairment. During the fourthquarter of 2007, the Company recorded a loss of $.4 million after making thedetermination that the market value of FHLMC preferred stock representedother-than-temporary impairment. Additional information regarding thesesecurities can be found in Note 2, “Securities” to the notes to consolidatedfinancial statements.

 

**Contractual Obligations, Commitments, Off-Balance Sheet Arrangements,and Contingent Liabilities**

 

Through the normal courseof operations, the Company has entered into certain contractual obligations andother commitments. Such obligations generally relate to the funding ofoperations through deposits, as well as leases for premises and equipment. As afinancial services provider, the Company routinely enters into commitments toextend credit. While contractual obligations represent future cash requirementsof the Company, a significant portion of commitments to extend credit mayexpire without being drawn upon. Such commitments are subject to the samecredit policies and approval as comparable loans made by the Company.

 

 

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The following tablepresents the Company’s significant fixed and determinable contractualobligations and significant commitments by payment date as of December 31,2007 (dollars in thousands). The payment amounts represent those amountscontractually due to the recipient and do not include any carrying value adjustments.Further discussion of the nature of each obligation is included in thereferenced Note to the Company’s Consolidated Financial Statements included inthis annual report.

 

| ** **                          | ** ** | **Note  Reference** | ** ** | **One Year  or Less** | ** ** | **Over One  Year to  Three Years** | ** ** | **Over Three  Years to  Five Years** | ** ** | **Over  Five Years** | ** ** | **Total** | ** ** |
|-------------------------------------|------------|---------------------|------------|-----------------------|------------|------------------------------------|------------|--------------------------------------|------------|----------------------|------------|-----------|------------|
| Deposits without  a stated maturity |       | 5                   |       | $                     | 1,085,701  |                               | $          | —                               |       | $                    | —     |      | $          | — |   | $ | 1,085,701 |   |
| Time deposits                       |       | 5                   |       | 429,837               |       | 89,999                             |       | 32,160                               |       | 17                   |       | 552,013   |       |
| Prepaid  solutions cards            |       |                |       | 24,649                |       | —                             |       | —                               |       | —               |       | 24,649    |       |
| Operating Leases                    |       | 4                   |       | 598                   |       | 1,099                              |       | 728                                  |       | 801                  |       | 3,226     |       |
| Commitments to  extend credit       |       |                |       |                  |       |                               |       |                                 |       |                 |       |      |       |
| Fixed rate                          |       | 8                   |       |                  |       |                               |       |                                 |       |                 |       | 10,153    |       |
| Variable rate                       |       | 8                   |       |                  |       |                               |       |                                 |       |                 |       | 468,718   |       |
|                                     |            |                     |            |                       |            |                                    |            |                                      |            |                      |            |           |            |  |  |  |  |  |

 

**BalanceSheet Analysis**

 

***TotalAssets.***  Total consolidated assets at December 31,2007 decreased 1.3% from the prior year-end. This decrease was primarily due todeclines in cash and cash equivalents partially resulting from lower depositbalances. This decrease was partially offset by increases in the Company’s loanportfolio. Total average assets in 2007 increased 1.0% from the prior yearprimarily due to an increase in average loans outstanding.

 

***Cashand Cash Equivalents.***  Cash and cash equivalents at December 31,2007 decreased 73.2% from the prior year-end primarily due to decreases infederal funds sold. This decrease was primarily due to the Company redeployingits cash and cash equivalents into its higher yielding loan portfolio alongwith a decrease in total deposits.

 

***Securities.*** The Company’s securities portfolio decreased 2.9% at December 31,2007 from the prior year-end. This decrease was primarily due to maturities ofsecurities issued by U.S. government sponsored entities, partially offset bypurchases of mortgage-backed securities. The Company continued to makeinvestments in mortgaged-backed securities during 2007. Investing in amortizingsecurities (such as mortgage-backed securities) as compared to securities witha single payment at maturity is an important element in the Company’s liquiditymanagement. The Company considers monthly paydowns on mortgage-backedsecurities a consistent source of cash flows. Additionally, the Company managesits investment portfolio to maximize the return on invested funds withinacceptable risk guidelines, to meet pledging and liquidity requirements, and toadjust balance sheet interest rate sensitivity to insulate net interest incomeagainst the impact of interest rate changes. During 2007, the Company’sunrealized loss on securities available for sale, net of reclassification andtax effects declined $4.4 million primarily due to a change in market interestrates. The Company will continue to monitor its level of available for sale andheld to maturity securities and will classify new securities in the appropriatecategory at the time of purchase. During the fourth quarter of 2007, theCompany recorded a loss of $.4 million after making the determination that thedecrease in market value of FHLMC preferred stock representedother-than-temporary impairment.

 

***Loans.*** Total loans outstanding at December 31,2007 increased 6.1% from the prior year-end primarily due to increases in theresidential real estate and home equity loan portfolios. The increase in theresidential real estate portfolio was primarily due to growth in theorigination of fixed rate loans along with purchases of variable rateresidential real estate loans. The increase in the home equity loan portfoliowas primarily comprised of fixed rate home equity loans resulting from theCompany’s promotional efforts. The Company’s construction loan portfolio declinedprimarily due to a reduction of the pre-sold and builder speculative homeinventories of the Company’s borrowers. The commercial real estate loanportfolio increased primarily due to the addition of several new largerelationships. The Company anticipates a continuing decline in the indirectautomobile loan portfolio primarily due to lower lending volumes, prepayments,and scheduled repayments, as well as the promotions that are likely to

 

 

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continueto be offered by automobile dealers and manufacturers. Although the Companymakes loans primarily to customers throughout the western suburbs of Chicago,the Company maintains two large lending relationships outside of this marketarea, specifically in Arizona and Florida. The Company feels comfortable withthese two relationships due to the long, successful history the Company haswith its customers.

 

***Allowancefor Loan Losses and Asset Quality.***  Net loancharge-offs were $1.8 million and $.2 million in 2007 and 2006, respectively.This increase was primarily due to the charge-off of three reserved commercialcredits. Nonperforming loans (nonaccrual and loans past due 90 days or morestill on accrual) increased to $2.8 million at December 31, 2007 from $1.5million at December 31, 2006. Nonaccrual loans increased $1.2 million in2007, as a result of developments in two large loan relationships. Thisincrease was partially offset with the partial charge-off of an unrelated loanand the transfer of the remaining balance of $.8 million to other real estate.In January, 2008 one of the two large loans was repaid in full. The Company’sloans past due 90 days or more still on accrual increased $.2 million to $.5million at December 31, 2007, from $.3 million at December 31, 2006.This increase was primarily due to the addition of one commercial real estateloan, partially offset by the payoff of a residential real estate loan.

 

Theprovision for loans losses increased $.2 million in 2007. Although, thespecific reserve allocations to impaired loans and commercial loans were $4.3million lower at December 31, 2007 as compared to December 31, 2006,the Company determined that additional provision for loan losses was necessarydue to increased levels of charge-offs, growth in the loan portfolio and thetrends in the national and local economy.

 

Theratio of the allowance for loan losses to total loans outstanding was 0.75% and0.91% at December 31, 2007 and 2006, respectively. The following table isan analysis of the Company’s nonperforming loans and other real estate at December 31(dollars in thousands):

 

| ** **                                                     | ** ** | **2007** | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Loans past due  90 days or more still on accrual               |       | $        | 480        |     | $          | 319      |       | $ | 1,665 |   |
| Nonaccrual loans                                               |       | 2,297    |       | 1,131    |       | 533      |       |
| Total  nonperforming loans                                     |       | $        | 2,777      |     | $          | 1,450    |       | $ | 2,198 |   |
| Nonperforming  loans as a percent of total loans               |       | 0.22     | %          | 0.12     | %          | 0.20     | %          |
| Allowance for  loan losses as a percent of nonperforming loans |       | 334      | %          | 734      | %          | 486      | %          |
| Other real  estate                                             |       | $        | 824        |     | $          | 351      |       | $ | 210 |   |
| Nonperforming  assets as a percent of total assets             |       | 0.19     | %          | 0.10     | %          | 0.13     | %          |

 

***Bank-OwnedLife Insurance.***The cash surrender value of BOLI increased to $37.3 million at December 31,2007 from $34.4 million at December 31, 2006. The increase was comprisedof purchases of $1.4 million and earnings on policies of $1.5 million.

 

***OtherReal Estate.***  During 2007, the Company acquired propertieswith an aggregate carrying value of $1.0 million and sold properties with anaggregate carrying value of $.5 million representing a net increase in otherreal estate for the year of $.5 million.

 

***Deposits.***  Total deposits at December 31, 2007 decreased2.4% from the prior year-end primarily due to decreases in savings accountbalances and noninterest-bearing accounts. These decreases were only partiallyoffset by increased balances for money market checking deposits. The increasein money market checking accounts was primarily due to continued growth in thebalances of consumer accounts. The Company believes some customers aremigrating from lower yielding liquid deposits to the higher yielding moneymarket checking accounts. This growth was partially offset by a significantreduction in the account balance of one corporate customer during the year. TheCompany also experienced marginally increased balances in certificates ofdeposit due to growth in the 12 to 17 month certificates of deposit ascustomers have migrated from the 60 month certificates of deposit. In general,management promotes the Company’s deposit products when it believes appropriateand prices the Company’s products in a manner intended to retain the Company’scurrent customers as well as attract new customers while maintaining anacceptable net interest margin.

 

 

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** **

*** ***

***PrepaidSolutions Cards.*** Outstanding balances on prepaidsolutions cards increased 16.8% from the prior year-end. This increase was primarily due to theaddition of several new gift card programs.

 

# **Capital Resources**

# ** **

Shareholders’equity at December 31, 2007 increased 9.7% from December 31, 2006 asa result of $23.4 million of net income, increased by the decline inaccumulated other comprehensive loss of $4.3 million, and increased by thedecline of $3.1 million in the amount reclassified on ESOP shares. Such amountswere reduced by dividends declared of $21.6 million.

 

All capital ratios are in excess of the regulatorycapital requirements which call for a minimum total risk-based capital ratio of8% for each of the Company and the Bank, a minimum Tier 1 risk-based capitalratio of 4% for each of the Company and the Bank and a minimum leverage ratio(3% for the most highly rated banks and bank holding companies that do notexpect significant growth; all other institutions are required to maintain aminimum leverage capital ratio of 4% to 5% depending on their particularcircumstances and risk and growth profiles) for each of the Company and theBank. Bank holding companies and their subsidiaries are generally expected tooperate at or above the minimum capital requirements. All capital ratios are inexcess of regulatory minimums and should allow the Company and the Bank tooperate without significant capital adequacy concerns. In addition, the Bankformed a subsidiary in 2004 that participates in the Bank’s real estate lendingbusiness and is intended to qualify as a real estate investment trust. Thissubsidiary is also intended to facilitate capital raising efforts, if suchefforts become necessary, by enabling the Bank to access the capital marketsthrough the subsidiary.

 

Managementhas been advised that as of December 31, 2007 and 2006, the Bank qualifiedas a “well-capitalized” institution as defined by the Federal Deposit InsuranceCorporation Improvement Act of 1991, as amended. On a consolidated basis, theCompany also exceeded regulatory capital requirements. In accordance withapplicable regulations, the appraised fair value of West Suburban common stockowned by the ESOP is included in Tier 1 capital.

 

# **Liquidity**

# ** **

*Effectiveliquidity management ensures the availability of funding sources at minimumcost to meet fluctuating deposit balances, loan demand needs and to takeadvantage of earnings enhancement opportunities. A large, stable core depositbase and a strong capital position are the solid foundation for the Company’sliquidity position. Liquidity is enhanced by a securities portfolio structuredto provide liquidity as needed. The Company also maintains relationships withcorrespondent banks to purchase federal funds subject to underwriting and collateralrequirements. Additionally, subject to credit underwriting, collateral, capitalstock, and other requirements of the Federal Home Loan Bank of Chicago (the “FHLB”),the Company is able to borrow from the FHLB on a “same day” basis. As of December 31,2007, the Company could have borrowed up to approximately $105 million from theFHLB secured by certain of its real estate loans and securities. Furthermore,the Company has agreements in place to borrow up to $95 million in federalfunds. The Company manages its liquidity position through continuous monitoringof profitability trends, asset quality, interest rate sensitivity and maturityschedules of interest-earning assets and interest-bearing liabilities.*

* *

Generally, the Companyuses cash and cash equivalents and securities available for sale to meet itsliquidity needs. As of December 31, 2007 and 2006, these liquid assetsrepresented 26.6% and 30.8% of total assets, respectively. During 2007, theCompany’s cash and cash equivalents decreased $90.8 million. Net cash providedby operating activities was $27.2 million, while net cash used in investingactivities was $59.9 million, resulting primarily from loan growth. Net cashflows used in financing activities was $58.2 million, resulting primarily fromdecreases in deposits. Management expects operating and financing activities tobe a source of cash flow in the future.

 

**IncomeStatement Analysis — 2007 Compared to 2006**

 

***General*****.**The Company’s net income decreased 7.6% in 2007 as compared to 2006. Net incomewas positively affected by an increase in noninterest income of $4.2 millionand a decrease in income tax expense of $1.4 million. 

 

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Net income wasnegatively affected by an increase in the provision for loan losses of $.2million and an increase in total noninterest expense of $7.2 million.

 

***NetInterest Income.*** Net interest income in2007 (on a fully tax-equivalent basis) was level compared to 2006. Net interestincome is the primary source of income for the Company. Net interest income isthe difference between interest income earned on interest-earning assets andinterest expense incurred on interest-bearing liabilities. Net interest incomeis affected by changes in volume and yield on interest-earning assets and thevolume and rates on interest-bearing liabilities. Interest-earning assetsconsist of federal funds sold, securities and loans. Interest-bearingliabilities primarily consist of deposits. The net interest margin is thepercentage of tax-equivalent net interest income to average earning assets. TheCompany’s net interest margin (on a fully tax-equivalent basis) was 3.5% in2007 and 2006.

 

Total interest income(on a tax-equivalent basis) increased 2.7% in 2007 primarily due to increasingbalances in the Company’s loan portfolio. Average loan balances increased 4.3%during this period. Additionally, the yield on the loan portfolio decreased 8basis points primarily due to interest rate reductions initiated by the FederalReserve beginning in the third quarter of 2007. Management anticipates furtherdeclines in the loan portfolio yield as the Federal Reserve cut rates by 125basis points in January 2008. The average prime rate was 8.05% for 2007and 7.96% for 2006. However, the average prime rate for the fourth quarter of2007 was 7.53% compared to 8.25% for the fourth quarter of 2006. Yields on thecommercial loan portfolio decreased 13 basis points during this period due todecreased balances along with decreasing rates as described above. Yields oninvestment securities increased 28 basis points due to proceeds from maturitiesof U.S. government securities being reinvested in higher yieldingmortgage-backed securities.

 

Total interest expenseincreased 6.3% in 2007. Interest on deposits accounted for all of thisincrease. The yield on interest-bearing deposits increased 17 basis points to3.18% in 2007 from 3.01% in 2006. This increase was primarily due to increasingyields and balances on the Company’s certificates of deposit portfolio.Management is anticipating reduced cost of funds due to the January 2008interest rate reductions initiated by the Federal Reserve. Approximately 78% ofthe Company’s certificates of deposit are scheduled to mature in 2008, whichmanagement expects will lead to reductions in cost of funds, as proceeds arereinvested at a lower rate or run-off.

 

The following tablereflects the impact of changes in volume and rates of interest-earning assetsand interest-bearing liabilities on a tax equivalent basis for the years ended December 31,2007 and 2006 (dollars in thousands):

 
| ** **                          | ** ** | **2007 compared to 2006** | ** ** | **2006 compared to 2005** | ** ** |
|-------------------------------------|------------|---------------------------|------------|---------------------------|------------|
| ** **                          | ** ** | **Change due to**         | ** ** | ** **                | ** ** | **Change due to** | ** ** | ** ** | ** ** |
| ** **                          | ** ** | **Volume**                | ** ** | **Rate**                  | ** ** | **Total  Change** | ** ** | **Volume** | ** ** | **Rate** | ** ** | **Total  Change** | ** ** |
| **Interest Income**                 | ** ** | ** **                | ** ** | ** **                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Federal funds sold                  |       | $                         | 3          |                      | $          | 126 |   | $ | 129 |   | $ | 1,775 |   | $ | 425 |   | $ | 2,200 |   |
| Securities                          |       | (1,397                    | )          | 1,492                     |       | 95 |   | (1,624 | ) | 1,729 |   | 105 |   |
| Loans                               |       | 3,545                     |       | (938                      | )          | 2,607 |   | 4,837 |   | 9,248 |   | 14,085 |   |
| Total interest  income              |       | 2,151                     |       | 680                       |       | 2,831 |   | 4,988 |   | 11,402 |   | 16,390 |   |
|                                |       |                      |       |                      |       |   |   |   |   |   |   |   |   |
| **Interest Expense**                | ** ** | ** **                | ** ** | ** **                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest-bearing  deposits          |       | 382                       |       | 2,518                     |       | 2,900 |   | 1,628 |   | 13,455 |   | 15,083 |   |
| Other  interest-bearing liabilities |       | (14                       | )          | (14                       | )          | (28 | ) | (25 | ) | 7 |   | (18 | ) |
| Total interest  expense             |       | 368                       |       | 2,504                     |       | 2,872 |   | 1,603 |   | 13,462 |   | 15,065 |   |
| Net interest  income                |       | $                         | 1,783      |                      | $          | (1,824 | ) | $ | (41 | ) | $ | 3,385 |   | $ | (2,060 | ) | $ | 1,325 |   |

 

***Provisionfor Loan Losses.***The provision for loans losses increased $.2 million in 2007. This wasprimarily related to the current environmental factors in the economy and dueto an increase of $71.3 million in total loans, partially offset by thereduction in specific reserves allocated to impaired loans as of December 31,2007. The increase in total loans was primarily due to lower risk residentialand home equity loans. A more detailed discussion concerning the allowance forloans losses is presented in the Allowance for Loan Losses and Asset Qualitysection of this annual report.

 

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***NoninterestIncome.*******Totalnoninterest income increased 18.4% during 2007 compared to 2006. Prepaidsolutions cards income increased $5.1 million primarily due to continued growthin existing programs along with the addition of new gift card programs. Servicefees on deposit accounts decreased $.5 million primarily due to decreases in feerevenue related to the Company’s overdraft honors program. Although managementbelieves the income from the overdraft honors program may vary from period toperiod, the program is intended to provide continuing fee income. Debit cardincome increased $.1 million due to increased customer usage. During the fourthquarter of 2007, the Company recorded a loss of $.4 million after making thedetermination that the decrease in market value of FHLMC preferred stockrepresented other-than-temporary impairment.

 

***NoninterestExpense.***Total noninterest expense increased 15.0% during 2007 compared to 2006.Salaries and employee benefits increased $.1 million primarily due to normalsalary increases and increased medical insurance expense. This increase waspartially offset by a reduction in contributions to the Company’s retirementplans as a result of the Company’s transition from the ESOP to the 401(k) Planas the Company’s principal retirement plan. Prepaid solutions cards expenseincreased $3.9 million. This increase was due to expenses associated with theproduction and processing of cards and postage associated with the issuance ofnew cards along with increased revenue sharing with one new client. The Companyanticipates that this expense will continue to increase as new programscontinue to be implemented. Furniture and equipment expense increased $.8million primarily due to increased equipment depreciation and maintenance alongwith increased data processing expense. Occupancy expense decreased $.1 millionin 2007 primarily due to the acceleration of building depreciation expense thatoccurred in 2006 resulting from management’s decision to close the Metra Mainfacility. This decrease was partially offset by increases in utilities expenseand building maintenance costs. Advertising and promotion expense increased $.4million primarily due to expenses resulting from newspaper, television andbillboard marketing campaigns associated with retail banking as well ascommercial and mortgage loans. Professional fees expense increased $.5 millionprimarily due to costs associated with the prepaid solutions cards business.Other expense increased $1.6 million primarily due to the Company establishinglitigation reserves in connection with various lawsuits brought against VisaUSA Inc. along with increased Visa cardholder expense. The Company, as a memberof the Visa network, is obligated to indemnify Visa for certain litigationlosses. In 2007, the Company recognized indemnity charges of approximately$.8 million related to this obligation. Visa is preparing for an initialpublic offering (the “IPO”) of its common stock in 2008. Upon the anticipatedcompletion of the IPO in 2008, the Company expects to recognize gains on itsinterest in Visa which should more than exceed the charges taken in 2007.

 

***IncomeTaxes.*** Incometax expense decreased 14.2% in 2007, primarily due to lower pre-tax income. Theeffective tax rates for the years ended December 31, 2007 and 2006 were26.6% and 28.1%, respectively.

 

In August 2007, theState of Illinois enacted legislation that will affect the tax obligations ofbanks operating in Illinois. The legislative provisions have various effectivedates, the earliest beginning January 1, 2008. Although the legislation isnot expected to have a material adverse impact on the Company’s 2008 state taxliability, the full impact of the legislation is currently unknown. The Companywill continue to evaluate this legislation as well as any related legislationor guidance.

 

**IncomeStatement Analysis — 2006 Compared to 2005**

 

***General*****.**The Company’s net income decreased 0.5% in 2006. Net income was positivelyaffected by an increase in net interest income of $1.3 million and a decreasein the provision for loan losses of $1.2 million. Additionally, there was a decreasein income tax expense of $.4 million. Net income was negatively affected by adecrease in total noninterest income of $.7 million and an increase in totalnoninterest expense of $2.3 million.

 

***NetInterest Income.*** Net interest income in2006 increased 2.2% compared to 2005. Net interest income is the primary sourceof income for the Company. The Company’s net interest margin (on a fullytax-equivalent basis) was 3.5% in 2006 and 3.6% in 2005.

 

Total interest income(on a fully tax-equivalent basis) increased 18.2% in 2006 primarily due toincreasing yields and balances in the Company’s loan portfolio. Average loansin 2006 increased 6.2% while the yield on the portfolio increased 87 basispoints. Yields on the Company’s home equity loan portfolio increased 96 basispoints during this

 

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period. This increasewas primarily due to increases in the interest rate charged for home equitylines of credit that adjusted as a result of increases in the prime rate. Theprime rate increased due to increases in interest rates initiated by theFederal Reserve. The average prime rate for 2006 was 7.96% compared to 6.19%for 2005. Yields on the commercial loans portfolio increased 156 basis pointsduring this period. The majority of the Company’s commercial loans haveadjustable rates that are tied to the prime rate. Additionally, yields onfederal funds sold increased 185 basis points primarily due to rising marketinterest rates.

 

Total interest expenseincreased 49.8% in 2006. Interest rates on deposits accounted for predominantlyall of the increase. The yield on interest-bearing deposits increased 92 basispoints to 3.01% in 2006 from 2.09% in 2005. As market interest rates increased,the Company increased the rates that it pays on deposits in order to maintainits current accounts and attract new customers.

 

***Provisionfor Loan Losses.***The provision for loans losses decreased $1.2 million in 2006. This wasprimarily due to the decrease in net loan charge-offs and nonperforming loansduring 2006. A more detailed discussion concerning the allowance for loanslosses is presented in the Allowance for Loan Losses and Asset Quality sectionof this annual report.

 

***NoninterestIncome.*******Totalnoninterest income decreased 3.0% during 2006 compared to 2005. Prepaidsolutions cards income increased $.5 million primarily due to growth in giftcard programs. Service fees on deposit accounts decreased $.5 million primarilydue to decreases in fee revenue related to the Company’s overdraft honorsprogram. Although management believes the income from the overdraft honorsprogram may vary from period to period, the program is intended to providecontinuing fee income. Additionally, the Company experienced decreases in otherservice charges on deposit accounts primarily due to higher earnings credit oncommercial accounts in the 2006 period. Other noninterest income decreased $.7million primarily due to a decline in travel agency income and higher gains onsales of other real estate occurring in 2005.

 

***NoninterestExpense.***Total noninterest expense increased 5.2% during 2006 compared to 2005. Salariesand employee benefits increased $1.2 million due to normal salary increasesalong with increased medical insurance costs. Occupancy expense increased $.5million due to increased building depreciation expense which resulted frommanagement’s decision in January 2006 to close the Metra Main facility andthe acceleration of the building depreciation associated with that facility.Prepaid solutions cards expense increased $.3 million primarily due to expensesassociated with the production and processing of cards and postage associatedwith the issuance of new cards. Furniture and equipment expense decreased $.1million primarily due to reduced depreciation and maintenance expense partiallyoffset by increased data processing expense. Advertising and promotion expenseincreased $.1 million primarily due to increased costs associated with theprepaid solution group. Professional fees expense decreased $.1 millionprimarily due to the reduced needs of the prepaid solutions group forprofessional services. Other expense increased $.5 million primarily due toincreased costs for call center services to answer card related questions forthe prepaid solutions group.

 

***IncomeTaxes.*** Incometax expense decreased 4.0% in 2006, primarily due to lower pre-tax income. Theeffective tax rates for the years ended December 31, 2006 and 2005 were28.1% and 28.8%, respectively.

 

# **Interest RateSensitivity**

# ** **

The Company attempts to maintain a conservative posturewith regard to interest rate risk by actively managing its asset/liability GAPposition and monitoring the direction and magnitude of gaps and risk. TheCompany attempts to moderate the effects of changes in interest rates byadjusting its asset and liability mix to achieve desired relationships betweenrate sensitive assets and rate sensitive liabilities. Rate sensitive assets andliabilities are those instruments that reprice within a given time period. Anasset or liability reprices when its interest rate is subject to change or uponmaturity.

 

Movements in general market interest rates are a keyelement in changes in the net interest margin. The Company’s policy is tomanage its balance sheet so that fluctuations in the net interest margin areminimized regardless of the level of interest rates, although the net interestmargin does vary somewhat due to management’s response to increasingcompetition from other financial institutions.

 

44

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The Companymeasures interest rate sensitivity through a net interest income analysis. Thenet interest income analysis measures the change in net interest income in theevent of hypothetical changes in interest rates. This analysis assesses therisk of changes in net interest income in the event of a sudden and sustained100 to 200 basis point increase or decrease in market interest rates. Thisanalysis is subject to the Company’s assumptions, which include the following:

 

·                  Balance sheet volume reflects the current balances anddoes not project future growth or changes. The current balances establish thebase case from which all percent changes are calculated.

 

·                  The replacement rate for loan and deposit items thatmature is the current rate offered by the Company as adjusted for the assumedrate increase or decrease. The replacement rate for securities is the currentmarket rate as adjusted for the assumed rate increase or decrease.

 

·                  The repricing rate for balance sheet data is determinedby utilizing individual account statistics provided by the Company’s dataprocessing systems.

 

·                  The maturity and repricing dates for balance sheetdata are determined by utilizing individual account statistics provided by theCompany’s data processing systems.

 

Listed below are theCompany’s projected changes in net interest income over a twelve-month horizonfor the various rate shock levels as of the periods indicated (dollars inthousands):

 
| **December 31, 2007**  | ** ** | **Amount** | ** ** | **Dollar  Change** | ** ** | **Percent  Change** | ** ** |
|-----------------------------|------------|------------|------------|--------------------|------------|---------------------|------------|
| +200 basis points           |       | $          | 63,598     |               | $          | 996                 |       | 1.6 | % |
| +100 basis points           |       | 63,310     |       | 708                |       | 1.1                 | %          |
| Base                        |       | 62,602     |       |               |       |                |       |
| -100 basis points           |       | 62,349     |       | (253               | )          | (0.4                | )%         |
| -200 basis points           |       | 57,728     |       | (4,874             | )          | (7.8                | )%         |
|                        |       |       |       |               |       |                |       |
| **December 31,  2006** |       |       |       |               |       |                |       |
| +200 basis points           |       | $          | 62,974     |               | $          | 3,818               |       | 6.5 | % |
| +100 basis points           |       | 61,154     |       | 1,998              |       | 3.4                 | %          |
| Base                        |       | 59,156     |       |               |       |                |       |
| -100 basis points           |       | 61,664     |       | 2,508              |       | 4.2                 | %          |
| -200 basis points           |       | 59,787     |       | 631                |       | 1.1                 | %          |

 

# **Effects of Inflation**

# ** **

Unlike industrialcompanies, nearly all of the assets and liabilities of the Company are monetaryin nature. As a result, interest rates have a more significant impact on theCompany’s performance than do the effect of general levels of inflation.Interest rates do not necessarily move in the same direction or experience thesame magnitude of change as goods and services, since such prices are affectedby inflation. In the current economic environment, liquidity and interest rateadjustments are features of the Company’s asset/liability management, which areimportant to the maintenance of acceptable performance levels. The Companyattempts to maintain a balance between monetary assets and monetaryliabilities, over time, to offset the potential effects of changing interestrates.

 

45

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----

**BOARDS OF DIRECTORS**

## ****

 
| **West Suburban  Bancorp, Inc.** |
|---------------------------------------|
| ** **                            | ** ** | ** ** |
| Kevin J. Acker                        |   | Chairman of the Board |
| David S. Bell                         |   | Certified Public  Accountant |
| Duane G. Debs                         |   | President and Chief  Financial Officer |
| Charles P. Howard                     |   | Parkview Community  Church, Business Administrator |
| Peggy P. LoCicero                     |   | Former Banker |
|                                  |   |   |
| **West  Suburban Bank**               |
|                                  |   |   |
| Robert W. Schulz                      |   | Chairman; Oliver  Hoffmann Corporation, Vice President and Treasurer |
| Keith W. Acker                        |   | President |
| Craig R. Acker                        |   | Former Banker |
| Earl K. Harbaugh                      |   | Ditch Witch Midwest, President |
| Ronald J. Kuhn                        |   | Harry W.  Kuhn, Inc., Chairman, Secretary and Treasurer |
| John G. Williams                      |   | Bracing Systems, Vice  President |

 

----

## **OFFICERS**

## ****

 
| **West Suburban  Bancorp, Inc.** |
|---------------------------------------|
| ** **                            | ** ** | ** ** |
| Kevin J. Acker                        |   | Chief Executive Officer |
| Duane G. Debs                         |   | President and Chief  Financial Officer |
| Keith W. Acker                        |   | Chief Operations  Officer |
| Michael P. Brosnahan                  |   | Vice President |
| Michael J. Lynch                      |   | Director of Internal  Audit |
| David J. Mulkerin                     |   | Chief Compliance  Officer |
| George E. Ranstead                    |   | Secretary to the Board  and Treasurer |
| ** **                            | ** ** | ** ** |
| **West  Suburban Bank**               |
| ** **                            | ** ** | ** ** |
| **Senior Officers**                   |   |   |
| Keith W. Acker                        |   | President, Trust  Officer |
| Kevin J. Acker                        |   | Senior Vice President,  Marketing |
| Michael P. Brosnahan                  |   | Senior Vice President,  Commercial and Consumer Lending and |
|                                  |   | Community  Reinvestment Act Officer |
| Duane G. Debs                         |   | Senior Vice President,  Comptroller and Trust Officer |
| Daniel P. Grotto                      |   | Senior Vice President,  Business Development, Prepaid Solutions and Residential Lending |
|                                  |   |   |
| **Building Management**               |   |   |
| Edward J. Garvey                      |   | Vice President,  Building Management |
|                                  |   |   |
| **Cash Management**                   |   |   |
| Gary Raczek                           |   | Vice President, Cash  Management Manager |

 

46

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| **Commercial Loans**         |       |                                                                              |
|------------------------------|------------|-----------------------------------------------------------------------------------|
| Stanley C.  Celner, Jr. |       | Vice President,  Commercial Loans                                                 |
| Grant O. Cowen               |       | Vice President,  Commercial Loans                                                 |
| Timothy P. Dineen            |       | Vice President,  Commercial Real Estate Loans                                     |
| Michael F. Moone             |       | Vice President,  Commercial Real Estate Loans                                     |
| David S. Orr                 |       | Vice President,  Commercial Loans                                                 |
| John J. Schroeder            |       | Vice President,  Commercial Loans                                                 |
| Edwin S. Stephens IV         |       | Vice President,  Commercial Loans                                                 |
| Gregory L. Young             |       | Vice President,  Commercial Loans                                                 |
| Matthew R. Acker             |       | Business Development                                                              |
|                         |       |                                                                              |
| **Compliance**               |       |                                                                              |
| David J. Mulkerin            |       | Chief Compliance  Officer                                                         |
|                         |       |                                                                              |
| **Comptroller**              |       |                                                                              |
| George E. Ranstead           |       | Vice President,  Assistant Comptroller and Investment Officer                     |
| Jay J.P. Greifenkamp         |       | Vice President,  Financial Analyst, Investment Officer and Secretary to the Board |
|                         |       |                                                                              |
| **Consumer Loans**           |       |                                                                              |
| Charles J. Svoboda           |       | Vice President,  Consumer Loans - Department Head                                 |
| Keith J. Larson              |       | Vice President,  Consumer Loans                                                   |
| Cynthia A. Meredith          |       | Vice President,  Consumer Loans                                                   |
| David J. Wanek               |       | Vice President,  Consumer Loans                                                   |
|                         |       |                                                                              |
| **Financial Services**       |       |                                                                              |
| Michael Abbatacola           |       | Vice President,  Financial Services                                               |
|                         |       |                                                                              |
| **Human Resources**          |       |                                                                              |
| Mary Ellen Condon            |       | Vice President, Human  Resources                                                  |
|                         |       |                                                                              |
| **Information Systems**      |       |                                                                              |
| Steven A. Jennrich           |       | Vice President,  Information Systems                                              |
| Jacqueline R. Weigand        |       | Vice President, Project  Manager                                                  |
|                         |       |                                                                              |
| **Internal Audit**           |       |                                                                              |
| Michael J. Lynch             |       | Vice President,  Director of Internal Audit                                       |
| Timothy W. Clifford          |       | Vice President,  Assistant Director of Internal Audit                             |
|                         |       |                                                                              |
| **Loan Operations**          |       |                                                                              |
| Sandra C. Boyce              |       | Vice President,  Residential Mortgage Loan Processing                             |
| Gary H. Brandes              |       | Vice President,  Consumer Loan Operations                                         |
| Kevin Bussey                 |       | Vice President, Collections                                                       |
| Debra H. Crowley             |       | Vice President,  Commercial Loan Operations                                       |
| Lawrence J. Ortman           |       | Vice President, Credit  Analysis and Loan Review                                  |
|                         |       |                                                                              |
| **Loss Prevention**          | ** ** | ** **                                                                        |
| **Craig  Kelbus**            | ** ** | **Vice  President, Security and Loss Prevention**                                 |
| ** **                   | ** ** | ** **                                                                        |
| **Marketing**                | ** ** | ** **                                                                        |
| Denise M. Zatarski           |       | Director of Marketing                                                             |
|                         |       |                                                                              |
| **Operations**               |       |                                                                              |
| Danielle Budig               |       | Vice President,  Operations and Visa                                              |

 

47

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| **Prepaid Solutions**                 |   |                                                                      |
|---------------------------------------|--------|---------------------------------------------------------------------------|
| Doug R. Bobenhouse                    |   | Business Development  and Sales Manager - Prepaid Solutions               |
|                                  |   |                                                                      |
| **Purchasing**                        |   |                                                                      |
| Helen G. Schmitt                      |   | Assistant Vice  President, Purchasing Manager                             |
|                                  |   |                                                                      |
| **Retail Banking**                    |   |                                                                      |
| William J. Jennrich                   |   | Vice President, Retail  Branch Banking                                    |
| Jack Buscemi                          |   | Vice President,  Regional Manager - Central Region                        |
| Marc L. DiNatale                      |   | Vice President,  Regional Manager - East Region                           |
| Kirsten L. Jensen                     |   | Vice President,  Regional Manager - West Region                           |
| Marcia K. Worobec                     |   | Vice President, Branch  Operations and Branch Manager - Westmore          |
| Jennifer Bentson                      |   | Assistant Vice  President, Branch Manager - Warrenville                   |
| Kathleen M. Brockman                  |   | Assistant Vice  President, Branch Manager - Eola Road                     |
| Jeanne L. Carlisle                    |   | Assistant Vice  President, Branch Manager - Bolingbrook West              |
| Maribel Colon                         |   | Assistant Vice  President, Branch Manager - Oswego West                   |
| Beverly D. Cornelious                 |   | Assistant Vice  President, Branch Manager - Bolingbrook East              |
| Gina M. Corral                        |   | Assistant Vice  President, Staff Manager                                  |
| Barbara D. Darden                     |   | Assistant Vice  President, Branch Manager - Chicago Avenue, Naperville    |
| Robert G.  Dover, Jr.            |   | Assistant Vice  President, Branch Manager - Gary Avenue                   |
| Yolanda V. Dunn                       |   | Assistant Vice  President, Branch Manager - Bartlett                      |
| Nansi E. Eivaz                        |   | Assistant Vice  President, Branch Manager - Romeoville                    |
| Sharon A. Fonte                       |   | Assistant Vice  President, Branch Manager - Glendale Heights              |
| James R. Graziano                     |   | Assistant Vice  President, Branch Manager - North Main                    |
| Steven C. Harry                       |   | Assistant Vice  President, Branch Manager - Yorkville, Oswego             |
| Priya Hira                            |   | Assistant Vice  President, Branch Manager - Danada, Wheaton               |
| Jason M. Knapp                        |   | Assistant Vice  President, Branch Manager - Fair Oaks                     |
| Mary L. Kureja                        |   | Assistant Vice  President, Branch Manager - Finley Road, Downtown Downers |
| Terry Leitner                         |   | Assistant Vice  President, Branch Manager - South Main                    |
| Jeffery W. Miska                      |   | Assistant Vice  President, Branch Manager - Cass Avenue, 75th Street |
| Carlos Muzquiz                        |   | Assistant Vice  President, Branch manager - Lake Street                   |
| Brian S. Nickleski                    |   | Assistant Vice  President, Branch Manager - Westmont                      |
| Dawn M. Oles                          |   | Assistant Vice  President, Branch Manager - Montgomery                    |
| Gwen B. O’Loughlin               |   | Assistant Vice  President, Branch Manager - Villa Park                    |
| Robert L. Pauling                     |   | Assistant Vice  President, Branch Manager - Stratford Square              |
| Cynthia A. Picton                     |   | Assistant Vice  President, Branch Manager - West Galena                   |
| Gloria Santiago                       |   | Assistant Vice  President, Branch Manager - President Street              |
| Lisa M. Schmidt                       |   | Assistant Vice  President, Branch Manager - South Elgin                   |
| Jose L. Valdez                        |   | Assistant Vice  President, Branch Manager - Randall Road                  |
| Laura Saad                            |   | Manager Trainee -  Oakbrook Terrace                                       |
|                                  |   |                                                                      |
| **Travel with West Suburban**         |   |                                                                      |
| Dennis A. Woodyatt                    |   | Travel Agent                                                              |
|                                  |   |                                                                      |
| **Trust**                             |   |                                                                      |
| Christine H. Pawlak                   |   | Trust Officer                                                             |
|                                  |   |                                                                      |
| **West Suburban Insurance  Services** |   |                                                                      |
| Patricia Falstrom                     |   | Insurance Agent                                                           |

 

48

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## **ADDRESSESOF WEST SUBURBAN FACILITIES**

**(630) 652 - 2000**

**Aurora**

Eola Road Branch: 335North Eola Road, Aurora, Illinois 60504

Galena Branch: 2000 West Galena Boulevard, Aurora, Illinois 60506

Lake Street Branch: 101North Lake Street, Aurora, Illinois 60506

 

**Bartlett**

Bartlett Branch: 1061West Stearns Road, Bartlett, Illinois 60103

 

**Bloomingdale**

Stratford Square Branch:355 West Army Trail Road, Bloomingdale, Illinois 60108

 

**Bolingbrook**

Bolingbrook East Branch:672 East Boughton Road, Bolingbrook, Illinois 60440

Bolingbrook West Branch:1104 West Boughton Road, Bolingbrook, Illinois 60440

 

**Carol Stream**

Gary Avenue Branch: 401North Gary Avenue, Carol Stream, Illinois 60188

Fair Oaks Branch: 1380West Army Trail Road, Carol Stream, Illinois 60188

President Street Branch:895 East Geneva Road, Carol Stream, Illinois 60188

 

**Darien**

75th StreetBranch: 1005 75th Street, Darien, Illinois 60561

Cass Avenue Branch: 8001South Cass Avenue, Darien, Illinois 60561

** **

**Downers Grove**

Downtown Downers Branch:5330 Main Street, Downers Grove, Illinois 60515

Finley Road Branch: 2800Finley Road, Downers Grove, Illinois 60515

** **

**Glendale Heights**

Glendale Heights Branch:1657 Bloomingdale Road, Glendale Heights, Illinois 60139

** **

**Lombard**

North Main Branch: 707North Main Street, Lombard, Illinois 60148

South Main Branch: 1122South Main Street, Lombard, Illinois 60148

*WestmoreBranch: 711 South Meyers Road, Lombard, Illinois 60148 (Headquarters)*

** **

**Montgomery**

Montgomery Branch: 1830Douglas Road, Montgomery, Illinois 60538

** **

**Naperville**

Chicago Avenue Branch:1296 East Chicago Avenue, Naperville, Illinois 60540

Naperville Branch: 2020Feldott Lane, Naperville, Illinois 60540

River Run Branch:Southwest corner of 104th Street and Plainfield-Naperville Road(Opening 4th Quarter 2008)

** **

**Oakbrook Terrace**

Oakbrook Terrace Branch:17W754 22nd Street, Oakbrook Terrace, Illinois 60181

** **

**Oswego**

Oswego Branch: 2830 Route34, Oswego, Illinois 60543

Oswego West Branch: 1071Station Drive, Oswego, Illinois 60543

** **

**Romeoville**

Romeoville Branch: 505North Weber Road, Romeoville, Illinois 60446

 

49

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**South Elgin**

South Elgin Branch: 1870McDonald Road, South Elgin, Illinois 60177

** **

**St. Charles**

Charlestowne Branch: 3000East Main Street, St. Charles, Illinois 60174

St. Charles Branch: 315South Randall Road, St. Charles, Illinois 60174

** **

**Villa Park**

Villa Park Branch: 40East St. Charles Road, Villa Park, Illinois 60181

** **

**Warrenville**

Warrenville Branch: 3S041Route 59, Warrenville, Illinois 60555

** **

**Westmont**

Westmont Branch: 6400South Cass Avenue, Westmont, Illinois 60559

** **

**Wheaton**

Danada Branch: 295 WestLoop Road, Wheaton, Illinois 60187

Wheaton Branch: 221 SouthWest Street, Wheaton, Illinois 60187

** **

**Yorkville**

Yorkville Branch: 10Saravanos Drive, Yorkville, Illinois 60560

 

ATMs are available at allof the above banking branches.

** **

**Limited-Service Branches**

*Beacon Hill Retirement Community:Lombard, Illinois 60148*

*Clare Oaks: Bartlett, Illinois60103*

*Financial Center: 717 SouthMeyers Road, Lombard, Illinois 60148*

*Lexington Health Care Center ofElmhurst: Elmhurst, Illinois 60126*

*Lexington Health Care Center ofLombard: Lombard, Illinois 60148*

** **

**Other Services**

*Prepaid Solutions Group: 17W75422nd Street, Oakbrook Terrace, Illinois 60181 - (630) 652-2000*

*Travel with West Suburban: 711South Meyers Road, Lombard, Illinois 60148 - (630) 495-1400*

*West Suburban Bank Land Trust:711 South Meyers Road, Lombard, Illinois 60148 - (630) 652-2225*

*West Suburban Bank Visa: 701South Meyers Road, Lombard, Illinois 60148 - (630) 652-2000 extension 2903*

*West Suburban Financial Services:711 South Meyers Road, Lombard, Illinois 60148 - (630) 652-2232*

*West Suburban Insurance Services, Inc.:711 South Meyers Road, Lombard, Illinois 60148 - (630) 652-2550*

 

50

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## **[MAPOF MARKET AREA THAT INDICATES LOCATION OF FACILITIES]**

 

 

 

 

 

 

 

 

 

 

 

 

****

***Unlike Any OtherBank***

 

51

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# **SHAREHOLDER INFORMATION**

# **Annual Report on Form 10-K**

A copy of West SuburbanBancorp, Inc.’s Annual Report on Form 10-K, filed with the Securitiesand Exchange Commission, is available on their web site at www.sec.gov orwithout charge to shareholders by writing to:

 

Duane G. Debs

President and ChiefFinancial Officer

West Suburban Bancorp, Inc.

2800 Finley Road

Downers Grove, Illinois60515

(630) 652-2801

 

# **Annual Meeting ofShareholders**

The annual meeting ofshareholders of West Suburban Bancorp, Inc. will be held at West SuburbanBank, 711 South Meyers Road, Lombard, Illinois on Wednesday, May 14, 2008at 8:00 a.m. All shareholders are cordially invited to attend.

 

# **Stock Transfer Agent andRegistrar**

Inquiries regardingstock transfers, registration, lost certificates and changes of name andaddress should be directed to the stock transfer agent and registrar by writingto:

 

George E. Ranstead

Secretary to the Boardand Treasurer

West Suburban Bancorp, Inc.

2800 Finley Road

Downers Grove, Illinois60515

(630) 652-2802

 

# **Community ReinvestmentAct**

West Suburban Bankadheres to a well-established policy of helping to meet the credit needs of ourlocal communities, consistent with safe and sound lending practices, inaccordance with the Community Reinvestment Act. For additional information,contact:

 

Michael P. Brosnahan

Senior Vice President,Commercial Lending and Community Reinvestment Act Officer

West Suburban Bank

717 South Meyers Road

Lombard, Illinois 60148

(630) 652-2308

# ** **

# **Independent RegisteredPublic Accounting Firm**

Crowe Chizek and CompanyLLC

One Mid America Plaza, Suite 700

Post Office Box 3697

Oak Brook, Illinois 60522

# ** **

# **Corporate Counsel**

Barack FerrazzanoKirschbaum & Nagelberg LLP

200 West Madison Street, Suite 3900

Chicago, Illinois 60606

 
| **MEMBER FDIC** |  |
|-----------------|--|

 

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