**Exhibit 13**

**Profile**

 

West Suburban Bancorp, Inc. (“West Suburban”) is the parent bankholding company of West Suburban Bank, Lombard, Illinois (the “Bank” and,together with West Suburban, the “Company”). The Company had total assets atDecember 31, 2003 of approximately $1.7 billion. The Bank is one of thelargest independent banks headquartered in DuPage County.

 

**West Suburban Bancorp, Inc.Financial Highlights**

 
|           |   | **Years  Ended December 31,  (Dollars in thousands, except per share data)** |   |
|----------------|--------|-----------------------------------------------------------------------------------|--------|
|           |   | **2003**                                                                          |   | **2002** |   | **2001** |   | **2000** |   | **1999** |   |
| Net income     |   | $                                                                                 | 25,908 |   | $ | 17,932 |   | $ | 20,183 |   | $ | 21,003 |   | $ | 20,045 |   |
| Per share data |   |                                                                              |   |   |   |   |   |   |   |   |   |
| Earnings       |   | 59.90                                                                             |   | 41.46 |   | 46.67 |   | 48.56 |   | 46.35 |   |
| Book value (1) |   | 346.62                                                                            |   | 341.47 |   | 335.30 |   | 323.17 |   | 313.61 |   |
| Net loans      |   | 1,073,767                                                                         |   | 1,128,816 |   | 1,093,376 |   | 1,016,140 |   | 845,706 |   |
| Total assets   |   | 1,710,695                                                                         |   | 1,586,063 |   | 1,473,559 |   | 1,431,958 |   | 1,408,062 |   |
| Deposits       |   | 1,529,931                                                                         |   | 1,420,256 |   | 1,309,720 |   | 1,269,954 |   | 1,254,255 |   |
|                |        |                                                                                   |        |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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(1)          Book value represents the aggregate amount ofshareholders’ equity and common stock in ESOP subject to contingent repurchaseobligation divided by the number of outstanding shares.

 

##### **Table of Contents**

 
| Profile                                                                                             |
|-----------------------------------------------------------------------------------------------------|
| Letter to Our Shareholders, Customers and  Friends                                                  |
| Common  Stock, Book Value and Dividends                                                             |
| Business Review                                                                                     |
| Report of Independent Auditors                                                                      |
| Consolidated Financial Statements                                                                   |
| Notes to Consolidated Financial Statements                                                          |
| Selected Financial Data                                                                             |
| Average Balance Sheets, Net  Interest Income and Average Rates and Yields on a Tax Equivalent Basis |
| Management’s  Discussion and Analysis of Financial Condition and Results of Operations         |
| Boards of  Directors and Officers                                                                   |
| Addresses of  West Suburban Facilities                                                              |
| Map of Branches                                                                                     |
| Shareholder Information                                                                             |

 

###### ***Special NoteConcerning Forward-Looking Statements***

 

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

 

*A number of factors, many of whichare beyond the ability of the Company to control or predict, could cause actualresults to differ materially from those in its forward-looking statements.These factors include, among others, the following: (i) the strength ofthe local and national economy; (ii) the economic impact of terrorist activitiesand military actions; (iii) the timely development and acceptance of newproducts and services, including products and services offered throughalternative delivery channels such as the Internet; (iv) changes infederal, state and local laws, regulations and governmental policies concerningthe Company’s general business; (v) changes in interest rates and prepaymentrates of the Company’s assets; (vi) increased competition in the financialservices sector and the inability to attract new customers and retain existingcustomers; (vii) changes in technology implemented by the Company and by otherparties including technological changes implemented for, or related to, newproducts such as stored value cards, payroll cards and other similar productsand services; (viii) the inability to develop and maintain secure and reliableelectronic systems including systems developed for new products such as storedvalue cards, payroll cards and other similar products and services;(ix) the loss of key executives or employees and the difficulty inreplacing them; (x) changes in consumer spending and saving;(xi) unexpected results of acquisitions; (xii) unexpected outcomes ofexisting or new litigation involving the Company; (xiii) changes inaccounting policies and practices; and (xiv) the inability of the Company tomanage the risks associated with the foregoing as well as anticipated.**These risks and uncertainties should be considered inevaluating forward-looking statements and undue reliance should not be placedon such statements. Additional information concerning the Company and itsbusiness, including additional factors that could materially affect theCompany’s financial results, is included in the Company’s filings with theSecurities and Exchange Commission.*

 

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

 

West Suburban is pleased toannounce a record year!  In 2003 weearned almost $26 million.  Our $25.9million of net income in 2003 represents our best results in our over 40 yearhistory and reflects a 44.5% increase over our 2002 net income.

 

Our strong results allowed us to increase our totaldividends paid during 2003 to $52.00 per share, which represents an increase of$11.00 per share from our dividends paid during 2002.  The increase in our dividends paid is even more significant whenyou consider the changes in the federal tax laws.  The decrease in the federal tax rate generally applicable todividends received by individuals allowed our shareholders to keep significantlymore of the dividends that they received. We are also pleased to report that despite our generous dividendpayments, our book value per share increased by 1.5% during 2003.

 

Record earnings was not our only accomplishment during2003.  We continued to grow ourorganization, pushing past $1.7 billion in total assets.  Although we continue to look foropportunities to expand the footprint of our branch network, our $124.6 milliongrowth in assets was accomplished without any increase in our number ofbranches.  We attribute this success tothe commitment we have to our customers which is reflected in our expandedhours, our competitive rates, our large ATM network and our commitment tocontinuing to be the premier independent bank servicing communities located inDuPage, Will, Kane and Kendall counties.

 

We look to 2004 with a great deal of enthusiasm.  In 2004, we will continue to offerinnovative products and services to serve the needs of our customers.  To date, we have implemented a no feeservice for online bill payment in order to make electronic bill payments moreconvenient. We will also continue to introduce new, innovative products such asthe Visa® gift cards and Visa® and Mastercard® payroll cards as well as moneytransfer cards.  Our commitment toinnovation benefits not only our customers, but also the diverse communitiesthat we serve.  Our money transfercards, which we offer under the names PowerCashTM and Dinero MundialTM, providereasonably priced basic financial services to individuals that would generallynot have access to, or are not comfortable with, a traditional bankingrelationship.

 

As in the past, we continue to provide our customers traditionalbanking products such as checking, savings and certificate of deposit accountsas well as competitive home equity and residential mortgage loans. We willcontinue to enhance our online banking services at www.westsuburbanbank.com inorder to offer our customers improved accessibility 24 hours a day, seven daysa week.  Our new initiatives will notdistract us from our commitments to our business customers.  We value these relationships and appreciatethat our future success depends upon our ability to continue to be a goodpartner to business throughout the communities we serve.

 

We would like to express our appreciation to everyone for the supportthat has allowed us to become and remain one of the largest independent banksheadquartered in DuPage County and we welcome your comments, criticisms andsuggestions. We could not have achieved our success without the support of ourshareholders, 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 |
|                       |                                        |  |  |

 

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**Common Stock****, Book Value and Dividends**

 

West Suburban has a single class of common stock issued andoutstanding. The common stock is not traded on any stock exchange or on theover-the-counter market. West Suburban’s per share book value as of the end ofeach quarter and dividends declared for the last two years are set forth below:

 
| **Year** |   | **Quarter** |   | **Book  Value (1)** |   | **Dividends  Declared** |   |
|----------|--------|-------------|--------|---------------------|--------|-------------------------|--------|
| **2003** |   | 4th         |   | $                   | 346.62 |                    | $      | 20.00 |   |
|     |   | 3rd         |   | 357.02              |   | 8.00                    |   |
|     |   | 2nd         |   | 357.98              |   | 8.00                    |   |
|     |   | 1st         |   | 348.84              |   | 8.00                    |   |
|     |   |        |   |                |   |                    |   |
| 2002     |   | 4th         |   | $                   | 341.47 |                    | $      | 18.00 |   |
|     |   | 3rd         |   | 351.16              |   | 8.00                    |   |
|     |   | 2nd         |   | 344.46              |   | 8.00                    |   |
|     |   | 1st         |   | 334.38              |   | 7.50                    |   |

 

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(1)          Book value represents the aggregate amount ofshareholders’ equity and common stock in ESOP subject to contingent repurchaseobligation divided by the number of outstanding shares.

 

The dividends declared during the 4th quarter of 2003 included aspecial $10.00 per share dividend payable on December 15, 2003 toshareholders of record as of December 1, 2003. Similarly, the dividenddeclared during the 4th quarter of 2002 included a special $10.00 per sharedividend payable on January 2, 2003 to shareholders of record as ofDecember 15, 2002.

 

**Business Review**

 

As of December 31, 2003, the Company had total assets ofapproximately $1.7 billion and operated 33 full-service branches, fourlimited-service branches, one subsidiary providing insurance products andservices and five departments providing financial and other services for theconvenience of the customers of the Bank throughout DuPage, Kane, Kendall andWill Counties in Illinois. The Bank focuses on providing retail and commercialbanking products and services in its market area. The Company had 499 full-timeequivalent employees at December 31, 2003.

 

**[WSB LOGO]**

 

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**[WSB LOGO]**

 

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**[CROWECHIZEK LOGO]**

 

# **REPORT OFINDEPENDENT AUDITORS**

# ** **

Board of Directors and ShareholdersWest Suburban Bancorp, Inc.Lombard, Illinois

 

We have audited the accompanying consolidated balance sheets of WestSuburban Bancorp, Inc. (the “Company”) as of December 31, 2003 and 2002,and the related consolidated statements of income, changes in shareholders’equity, and cash flows for each of the three years in the period endedDecember 31, 2003. These financial statements are the responsibility ofthe Company’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audits.

 

We conducted our audits in accordance with auditing standards generallyaccepted in the United States of America. Those standards require that we planand perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that ouraudits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to abovepresent fairly, in all material respects, the financial position of the Companyat December 31, 2003 and 2002, and the results of its operations and itscash flows for each of the three years in the period ended December 31,2003 in conformity with accounting principles generally accepted in the UnitedStates of America.

 

As disclosed in Notes 1 and 14, during 2002 the Company adopted newaccounting guidance for goodwill and intangible assets.

 

 
|                  | /s/ Crowe Chizek and Company LLC |   |
|-----------------------|----------------------------------|--------|
|                  | Crowe Chizek and Company LLC     |
|                  |
| Oak Brook, Illinois   |
| January 30, 2004 |

 

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**WESTSUBURBAN BANCORP, INC.CONSOLIDATED BALANCE SHEETSDECEMBER 31, 2003 AND 2002**

(Dollars in thousands)

 
|                                                                                                    |   | **2003**  |      | **2002**  |   |
|---------------------------------------------------------------------------------------------------------|--------|-----------|-----------|-----------|--------|
| **Assets**                                                                                              |   |      |      |      |   |
| Cash and due from banks                                                                                 |   | $         | 42,500    |      | $      | 42,566 |   |
| Federal funds sold                                                                                      |   | 26,844    |      | 24,222    |   |
| Total cash and cash equivalents                                                                         |   | 69,344    |      | 66,788    |   |
| Securities                                                                                              |   |      |      |      |   |
| Available for sale (amortized cost of  $458,746 in 2003 and  $268,636 in 2002)                     |   | 458,146   |      | 273,755   |   |
| Held to maturity (fair value of $29,671 in  2003 and  $51,129 in 2002)                             |   | 29,195    |      | 49,877    |   |
| Federal Home Loan Bank stock                                                                            |   | 5,039     |      | 4,668     |   |
| Total securities                                                                                        |   | 492,380   |      | 328,300   |   |
| Loans, less allowance for loan losses of  $14,420 in 2003 and  $13,847 in 2002                     |   | 1,073,767 |      | 1,128,816 |   |
| Cash surrender value of life insurance                                                                  |   | 13,416    |      | 2,136     |   |
| Premises and equipment, net                                                                             |   | 42,896    |      | 45,641    |   |
| Other real estate                                                                                       |   | 1,266     |      | 40        |   |
| Accrued interest and other assets                                                                       |   | 17,626    |      | 14,342    |   |
| **Total assets**                                                                                        |   | $         | 1,710,695 |      | $      | 1,586,063 |   |
|                                                                                                    |   |      |      |      |   |
| **Liabilities and  shareholders’ equity**                                                          |   |      |      |      |   |
| Deposits                                                                                                |   |      |      |      |   |
| Demand-noninterest-bearing                                                                              |   | $         | 143,440   |      | $      | 157,539 |   |
| Interest-bearing                                                                                        |   | 1,386,491 |      | 1,262,717 |   |
| Total deposits                                                                                          |   | 1,529,931 |      | 1,420,256 |   |
| Stored value cards                                                                                      |   | 17,049    |      | 1,664     |   |
| Accrued interest and other liabilities                                                                  |   | 13,803    |      | 16,458    |   |
|                                                                                                    |   |      |      |      |   |
| Common stock in ESOP subject to contingent  repurchase obligation                                       |   | 51,371    |      | 40,241    |   |
|                                                                                                    |   |      |      |      |   |
| 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                                                                                       |   | 109,952   |      | 103,074   |   |
| Accumulated other comprehensive (loss)  income                                                          |   | (363      | )         | 3,088     |   |
| Unearned ESOP shares                                                                                    |   | (1,200    | )         | —    |   |
| Amount reclassified on ESOP shares                                                                      |   | (51,371   | )         | (40,241   | )      |
| **Total shareholders’  equity**                                                                    |   | 98,541    |      | 107,444   |   |
| **Total liabilities  and shareholders’ equity**                                                    |   | $         | 1,710,695 |      | $      | 1,586,063 |   |

 

*See accompanying notes to consolidatedfinancial statements.*

 

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**WEST SUBURBAN BANCORP, INC.CONSOLIDATED STATEMENTS OF INCOMEYEARS ENDED DECEMBER 31, 2003, 2002 AND 2001**(Dollars in thousands, except per share data)

 
|                                                           |   | **2003** |   | **2002** |   | **2001** |   |
|----------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| **Interest income**                                            |   |     |   |     |   |     |   |
| Loans, including fees                                          |   | $        | 63,193 |     | $      | 70,242   |   | $ | 83,110 |   |
| Securities                                                     |   |     |   |     |   |     |   |
| Taxable                                                        |   | 16,037   |   | 13,495   |   | 13,560   |   |
| Exempt from federal income tax                                 |   | 1,374    |   | 1,239    |   | 1,353    |   |
| Federal funds sold                                             |   | 197      |   | 418      |   | 795      |   |
| Commercial paper                                               |   | —   |   | —   |   | 86       |   |
| Total interest income                                          |   | 80,801   |   | 85,394   |   | 98,904   |   |
|                                                           |   |     |   |     |   |     |   |
| **Interest expense**                                           |   |     |   |     |   |     |   |
| Deposits                                                       |   | 21,951   |   | 27,762   |   | 40,312   |   |
| Other                                                          |   | 35       |   | 41       |   | 101      |   |
| Total interest expense                                         |   | 21,986   |   | 27,803   |   | 40,413   |   |
| **Net interest income**                                        |   | 58,815   |   | 57,591   |   | 58,491   |   |
| **Provision for loan  losses**                                 |   | 2,150    |   | 8,125    |   | 2,950    |   |
| **Net interest income  after provision for loan losses**       |   | 56,665   |   | 49,466   |   | 55,541   |   |
|                                                           |   |     |   |     |   |     |   |
| **Noninterest income**                                         |   |     |   |     |   |     |   |
| Service fees on deposit accounts                               |   | 8,229    |   | 5,450    |   | 3,800    |   |
| Debit card fees                                                |   | 1,692    |   | 1,575    |   | 1,312    |   |
| Net realized gains on securities  transactions                 |   | 2,330    |   | 1,017    |   | 2,334    |   |
| Write-down of carrying value of securities  available for sale |   | —   |   | —   |   | (2,960   | )      |
| Net gain on sales of loans held for sale                       |   | 834      |   | 676      |   | 404      |   |
| Litigation settlement                                          |   | 1,085    |   | —   |   | —   |   |
| Stored value card                                              |   | 3,631    |   | 506      |   | 3        |   |
| Other                                                          |   | 4,519    |   | 4,765    |   | 4,791    |   |
| Total noninterest income                                       |   | 22,320   |   | 13,989   |   | 9,684    |   |
|                                                           |   |     |   |     |   |     |   |
| **Noninterest expense**                                        |   |     |   |     |   |     |   |
| Salaries and employee benefits                                 |   | 21,769   |   | 19,730   |   | 19,681   |   |
| Occupancy                                                      |   | 3,979    |   | 3,753    |   | 3,505    |   |
| Furniture and equipment                                        |   | 4,593    |   | 4,497    |   | 4,488    |   |
| Advertising and promotion                                      |   | 1,296    |   | 1,842    |   | 1,367    |   |
| Professional fees                                              |   | 1,028    |   | 945      |   | 914      |   |
| Stored value card                                              |   | 2,488    |   | 779      |   | —   |   |
| Other                                                          |   | 5,958    |   | 5,505    |   | 5,512    |   |
| Total noninterest expense                                      |   | 41,111   |   | 37,051   |   | 35,467   |   |
|                                                           |   |     |   |     |   |     |   |
| **Income before  income taxes**                                |   | 37,874   |   | 26,404   |   | 29,758   |   |
| **Income tax expense**                                         |   | 11,966   |   | 8,472    |   | 9,575    |   |
| **Net income**                                                 |   | $        | 25,908 |     | $      | 17,932   |   | $ | 20,183 |   |
|                                                           |   |     |   |     |   |     |   |
| **Earnings per share**                                         |   | $        | 59.90  |     | $      | 41.46    |   | $ | 46.67 |   |
| **Average shares  outstanding**                                |   | 432,485  |   | 432,495  |   | 432,495  |   |

 

*See accompanying notes to consolidatedfinancial statements.*

 

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**WESTSUBURBAN BANCORP, INC.CONSOLIDATED STATEMENTS OF CHANGESIN SHAREHOLDERS’ EQUITYYEARS ENDED DECEMBER 31, 2003, 2002 AND 2001**(Dollars in thousands, except per share data)

 
|                                                                                                              |   | **Common  Stock** |   | **Surplus** |   | **Retained  Earnings** |   |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|-------------|--------|------------------------|--------|
| Balance, January 1, 2001                                                                                     |   | $                 | 3,457  |        | $      | 38,066                 |   | $ | 100,208 |   |
|                                                                                                              |   |              |   |        |   |                   |   |
| Comprehensive income                                                                                              |   |              |   |        |   |                   |   |
| Net income                                                                                                        |   | —            |   | —      |   | 20,183                 |   |
| Change in unrealized (loss) gain on  available for sale securities, net of reclassification and tax effects       |   | —            |   | —      |   | —                 |   |
| Total comprehensive income                                                                                        |   | —            |   | —      |   | —                 |   |
| Cash dividends declared - $40.00 per share                                                                        |   | —            |   | —      |   | (17,300                | )      |
| Reclassification due to change in fair  value of common stock in ESOP subject to contingent repurchase obligation |   | —            |   | —      |   | —                 |   |
| Balance, December 31, 2001                                                                                   |   | 3,457             |   | 38,066      |   | 103,091                |   |
|                                                                                                              |   |              |   |        |   |                   |   |
| Comprehensive income                                                                                              |   |              |   |        |   |                   |   |
| Net income                                                                                                        |   | —            |   | —      |   | 17,932                 |   |
| Change in unrealized gain on available for  sale securities, net of reclassification and tax effects              |   | —            |   | —      |   | —                 |   |
| Total comprehensive income                                                                                        |   | —            |   | —      |   | —                 |   |
| Cash dividends declared - $41.50 per share                                                                        |   | —            |   | —      |   | (17,949                | )      |
| Reclassification due to change in fair  value of common stock in ESOP subject to contingent repurchase obligation |   | —            |   | —      |   | —                 |   |
| Balance, December 31, 2002                                                                                   |   | 3,457             |   | 38,066      |   | 103,074                |   |
|                                                                                                              |   |              |   |        |   |                   |   |
| Comprehensive income                                                                                              |   |              |   |        |   |                   |   |
| Net income                                                                                                        |   | —            |   | —      |   | 25,908                 |   |
| Change in unrealized gain (loss) on  available for sale securities, net of reclassification and tax effects       |   | —            |   | —      |   | —                 |   |
| Total comprehensive income                                                                                        |   | —            |   | —      |   | —                 |   |
| Cash dividends declared - $44.00 per share                                                                        |   | —            |   | —      |   | (19,030                | )      |
| Reclassification due to change in fair  value of common stock in ESOP subject to contingent repurchase obligation |   | —            |   | —      |   | —                 |   |
| Acquisition of West Suburban common stock  by the ESOP, not allocated to participants at year-end                 |   | —            |   | —      |   | —                 |   |
| **Balance,  December 31, 2003**                                                                              |   | $                 | 3,457  |        | $      | 38,066                 |   | $ | 109,952 |   |

 

*See accompanying notes to consolidatedfinancial statements.*

 

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(continued)

 
|                                                                                                              |   | **Accumulated  Other  Comprehensive  (Loss) Income** |   | **Unearned  ESOP Shares** |   | **Amount  Reclassified  on ESOP Shares** |   | **Total  Shareholders’  Equity** |    | **Common  Stock   in  ESOP Subject   to Contingent  Repurchase  Obligation** |   |
|-------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|---------------------------|--------|------------------------------------------|--------|---------------------------------------|---------|------------------------------------------------------------------------------|--------|
| Balance, January 1, 2001                                                                                     |   | $                                                         | (1,963 | )                         | $      | —                                   |   | $                                     | (37,644 | )                                                                            | $      | 102,124 |   | $ | 37,644 |   |
|                                                                                                              |   |                                                      |   |                      |   |                                     |   |                                  |    |                                                                         |   |
| Comprehensive income                                                                                              |   |                                                      |   |                      |   |                                     |   |                                  |    |                                                                         |   |
| Net income                                                                                                        |   | —                                                    |   | —                    |   | —                                   |   | 20,183                                |    | —                                                                       |   |
| Change in unrealized (loss) gain on  available for sale securities, net of reclassification and tax effects       |   | 2,364                                                     |   | —                    |   | —                                   |   | 2,364                                 |    | —                                                                       |   |
| Total comprehensive income                                                                                        |   | —                                                    |   | —                    |   | —                                   |   | 22,547                                |    | —                                                                       |   |
| Cash dividends declared - $40.00 per share                                                                        |   | —                                                    |   | —                    |   | —                                   |   | (17,300                               | )       | —                                                                       |   |
| Reclassification due to change in fair  value of common stock in ESOP subject to contingent repurchase obligation |   | —                                                    |   | —                    |   | (3,001                                   | )      | (3,001                                | )       | 3,001                                                                        |   |
| Balance, December 31, 2001                                                                                   |   | 401                                                       |   | —                    |   | (40,645                                  | )      | 104,370                               |    | 40,645                                                                       |   |
|                                                                                                              |   |                                                      |   |                      |   |                                     |   |                                  |    |                                                                         |   |
| Comprehensive income                                                                                              |   |                                                      |   |                      |   |                                     |   |                                  |    |                                                                         |   |
| Net income                                                                                                        |   | —                                                    |   | —                    |   | —                                   |   | 17,932                                |    | —                                                                       |   |
| Change in unrealized gain on available for  sale securities, net of reclassification and tax effects              |   | 2,687                                                     |   | —                    |   | —                                   |   | 2,687                                 |    | —                                                                       |   |
| Total comprehensive income                                                                                        |   | —                                                    |   | —                    |   | —                                   |   | 20,619                                |    | —                                                                       |   |
| Cash dividends declared - $41.50 per share                                                                        |   | —                                                    |   | —                    |   | —                                   |   | (17,949                               | )       | —                                                                       |   |
| Reclassification due to change in fair  value of common stock in ESOP subject to contingent repurchase obligation |   | —                                                    |   | —                    |   | 404                                      |   | 404                                   |    | (404                                                                         | )      |
| Balance, December 31, 2002                                                                                   |   | 3,088                                                     |   | —                    |   | (40,241                                  | )      | 107,444                               |    | 40,241                                                                       |   |
|                                                                                                              |   |                                                      |   |                      |   |                                     |   |                                  |    |                                                                         |   |
| Comprehensive income                                                                                              |   |                                                      |   |                      |   |                                     |   |                                  |    |                                                                         |   |
| Net income                                                                                                        |   | —                                                    |   | —                    |   | —                                   |   | 25,908                                |    | —                                                                       |   |
| Change in unrealized gain (loss) on  available for sale securities, net of reclassification and tax effects       |   | (3,451                                                    | )      | —                    |   | —                                   |   | (3,451                                | )       | —                                                                       |   |
| Total comprehensive income                                                                                        |   | —                                                    |   | —                    |   | —                                   |   | 22,457                                |    | —                                                                       |   |
| Cash dividends declared - $44.00 per share                                                                        |   | —                                                    |   | —                    |   | —                                   |   | (19,030                               | )       | —                                                                       |   |
| Reclassification due to change in fair  value of common stock in ESOP subject to contingent repurchase obligation |   | —                                                    |   | —                    |   | (11,130                                  | )      | (11,130                               | )       | 11,130                                                                       |   |
| Acquisition of West Suburban common stock  by the ESOP, not allocated to participants at year-end                 |   | —                                                    |   | (1,200                    | )      | —                                   |   | (1,200                                | )       | —                                                                       |   |
| **Balance,  December 31, 2003**                                                                              |   | $                                                         | (363   | )                         | $      | (1,200                                   | )      | $                                     | (51,371 | )                                                                            | $      | 98,541 |   | $ | 51,371 |   |

 

9

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**WEST SUBURBAN BANCORP, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSYEARS ENDED DECEMBER 31, 2003, 2002 AND 2001**(Dollars in thousands)

 
|                                                                              |   | **2003** |   | **2002** |   | **2001** |   |
|-----------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| **Cash flows from  operating activities**                                         |   |     |   |     |   |     |   |
| Net income                                                                        |   | $        | 25,908 |     | $      | 17,932   |   | $ | 20,183 |   |
| Adjustments to reconcile net income to net  cash provided by operating activities |   |     |   |     |   |     |   |
| Depreciation                                                                      |   | 4,033    |   | 3,816    |   | 3,759    |   |
| Provision for loan losses                                                         |   | 2,150    |   | 8,125    |   | 2,950    |   |
| Deferred income tax benefit                                                       |   | (386     | )      | (717     | )      | (458     | )      |
| Net premium amortization of securities                                            |   | 2,016    |   | 868      |   | 495      |   |
| Net realized gains on securities  transactions                                    |   | (2,330   | )      | (1,017   | )      | (2,334   | )      |
| Write-down of carrying value of securities  available for sale                    |   | —   |   | —   |   | 2,960    |   |
| Federal Home Loan Bank stock dividends                                            |   | (371     | )      | (234     | )      | (293     | )      |
| Increase in cash surrender value of  company-owned life insurance                 |   | (1,280   | )      | (427     | )      | (272     | )      |
| Net gain on sales of loans held for sale                                          |   | (834     | )      | (676     | )      | (404     | )      |
| Sales of loans held for sale                                                      |   | 70,307   |   | 53,532   |   | 38,517   |   |
| Origination of loans held for sale                                                |   | (66,238  | )      | (51,240  | )      | (43,793  | )      |
| Net loss (gain) on sales of premises and  equipment                               |   | 4        |   | 94       |   | (7       | )      |
| Net gain on sales of other real estate                                            |   | —   |   | (451     | )      | (11      | )      |
| Write-down of other real estate                                                   |   | 40       |   | —   |   | —   |   |
| (Increase) decrease in accrued interest and  other assets                         |   | (630     | )      | 1,905    |   | (660     | )      |
| Increase (decrease) in accrued interest and  other liabilities                    |   | 805      |   | (2,582   | )      | (3,412   | )      |
| **Net cash provided  by operating activities**                                    |   | 33,194   |   | 28,928   |   | 17,220   |   |
| **Cash flows from  investing activities**                                         |   |     |   |     |   |     |   |
| Securities available for sale                                                     |   |     |   |     |   |     |   |
| Sales                                                                             |   | 128,537  |   | 122,069  |   | 24,635   |   |
| Maturities and calls                                                              |   | 267,061  |   | 114,496  |   | 89,033   |   |
| Purchases                                                                         |   | (585,399 | )      | (362,246 | )      | (128,394 | )      |
| Securities held to maturity                                                       |   |     |   |     |   |     |   |
| Maturities and calls                                                              |   | 20,926   |   | 81,902   |   | 199,093  |   |
| Purchases                                                                         |   | (239     | )      | (10,870  | )      | (155,870 | )      |
| Net decrease (increase) in loans                                                  |   | 48,190   |   | (45,181  | )      | (74,833  | )      |
| Investment in company-owned life insurance  policies                              |   | (10,000  | )      | —   |   | (676     | )      |
| Purchases of premises and equipment                                               |   | (1,293   | )      | (5,727   | )      | (7,740   | )      |
| Sales of premises and equipment                                                   |   | 1        |   | 53       |   | 7        |   |
| Sales of other real estate                                                        |   | 208      |   | 1,821    |   | 868      |   |
| **Net cash used in  investing activities**                                        |   | (132,008 | )      | (103,683 | )      | (53,877  | )      |
| **Cash flows from  financing activities**                                         |   |     |   |     |   |     |   |
| Net increase in deposits                                                          |   | 109,675  |   | 110,536  |   | 39,766   |   |
| Loan to ESOP to acquire West Suburban  common stock                               |   | (1,200   | )      | —   |   | —   |   |
| Increase in stored value cards                                                    |   | 15,385   |   | 1,664    |   | —   |   |
| Dividends paid                                                                    |   | (22,490  | )      | (17,733  | )      | (17,300  | )      |
| **Net cash provided  by financing activities**                                    |   | 101,370  |   | 94,467   |   | 22,466   |   |
| **Net increase  (decrease) in cash and cash equivalents**                         |   | 2,556    |   | 19,712   |   | (14,191  | )      |
| **Beginning cash and  cash equivalents**                                          |   | 66,788   |   | 47,076   |   | 61,267   |   |
| **Ending cash and  cash equivalents**                                             |   | $        | 69,344 |     | $      | 66,788   |   | $ | 47,076 |   |
| **Supplemental  disclosures**                                                     |   |     |   |     |   |     |   |
| Cash paid for                                                                     |   |     |   |     |   |     |   |
| Interest                                                                          |   | $        | 22,511 |     | $      | 29,828   |   | $ | 43,533 |   |
| Income taxes                                                                      |   | 12,964   |   | 7,823    |   | 11,978   |   |
| Other real estate acquired through loan  foreclosures                             |   | 1,474    |   | —   |   | 327      |   |

 

*See accompanying notes to consolidatedfinancial statements.*

 

10

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## **WEST SUBURBANBANCORP, INC.**

## **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

(Dollars in thousands, except per share data)

 

# **Note 1 - Nature of Business and Summary of SignificantAccounting Policies**

 

West Suburban Bancorp, Inc. (“West Suburban”)through the branch network of its subsidiary, West Suburban Bank (the “Bank” and,together with West Suburban, the “Company”), operates 33 full-service branches,four limited-service branches, one subsidiary providing insurance products andservices and five departments providing 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 and other items.

 

***Operating Segments***

While the Company’s principal decision makersmonitor the revenue streams of the various products and services, theidentifiable segments are not material and operations are managed and financialperformance is evaluated on a Company-wide basis. Accordingly, all of theCompany’s financial service operations are considered by management to beaggregated in one reportable operating segment.

 

***Principles ofConsolidation***

The consolidatedfinancial statements include the accounts of West Suburban and the Bank.Significant intercompany accounts and transactions have been eliminated.

 

***Use of Estimates***

To prepare financial statements in conformitywith accounting principles generally accepted in the United States of America,management makes estimates and assumptions, which are subject to change, basedon available information. These estimates and assumptions affect the amountsreported in the financial statements and the disclosures provided, and futureresults could differ. The allowance for loan losses, fair values of financialinstruments and status of contingencies are particularly subject to change.

 

***Securities***

Debt and marketable equity securities areclassified into two categories, “held to maturity” and “available for sale.”Held to maturity securities are carried at amortized cost as the Company hasboth the ability and positive intent to hold them to maturity. Securities notmeeting these criteria are classified as available for sale. Available for salesecurities are carried at fair value with net unrealized gains and losses (netof deferred tax) reported in accumulated other comprehensive income as aseparate component of shareholders’ equity. Interest income includesamortization of purchase premium and accretion of purchase discount. Gains orlosses on disposition are based on the net proceeds and the adjusted carryingamount of the specific securities sold. Any decline in the carrying values ofsecurities which is deemed to be other than temporary is charged againstcurrent earnings. The Company does not engage in trading activities.

 

***Loans and Allowancefor Loan Losses***

Loans that management has the intent andability to hold for the foreseeable future or until maturity or payoff arereported at the principal balance outstanding, net of unearned interest,deferred loan fees and costs and an allowance for loan losses. Interest incomeis reported on the accrual method and includes amortization of net deferredloan fees and costs over the loan term. Accrual of interest is generallydiscontinued on loans 90 days past due or when management 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 to interestincome and finally to expenses incurred for collection. Consumer and creditcard loans are typically charged off no later than 

 

11

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180 days past due. In all cases, loans areplaced on nonaccrual or charged off at an earlier date if collection ofprincipal or interest is considered doubtful.

 

The allowance for loan losses is a valuationallowance for probable loan losses. The allowance is increased by a provisionfor loan losses charged to earnings. Loan losses are charged against theallowance when management believes the uncollectibility of a loan is confirmed.Subsequent recoveries, if any, are credited to the allowance. The allowanceconsists of specific and general components. The specific component relates toloans that are individually classified as impaired. The general componentcovers pools of other loans and is based on historical loss experience adjustedfor current factors. The allowance for loan losses is evaluated monthly basedon management’s periodic review of loan collectibility in light of historicalloan loss experience, the nature and volume of the loan portfolio, informationabout specific borrower situations and estimated collateral values andprevailing economic conditions. Allocations of the allowance may be made forspecific loans, but the entire allowance is available for any loan that, inmanagement’s judgment, should be charged-off. This evaluation is inherentlysubjective as it requires estimates that are subject to significant revision asmore information becomes available or as relevant circumstances change.

 

The Company reviews commercial, real estateconstruction and commercial mortgage loans quarterly to determine impairment,if any. A loan is considered impaired when full payment under the loan terms isnot expected. Impairment is measured based on the present value of expectedfuture cash flows discounted at the loan’s effective interest rate, the loan’sobservable market price or the fair value of the loan’s collateral, ifrepayment of the loan is collateral dependent. A valuation allowance ismaintained for the amount of impairment. Generally, loans 90 days or more pastdue 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.

 

***Loans Held for Sale***

Loans are identified as either held forinvestment or held for sale upon origination. Loans held for sale are recordedat the lower of amortized cost or market value, determined on an aggregatebasis. Unrealized losses, if any, are recognized on a current basis by chargesto earnings. At December 31, 2003 and 2002, the cost and market value ofloans held for sale were approximately the same.

 

***Company-Owned LifeInsurance***

The Company has purchased life insurancepolicies on certain officers and directors. Company-owned life insurance isrecorded at its cash surrender value.

 

***Premises andEquipment***

Land is carried at cost. Premises andequipment are stated at cost less accumulated depreciation. Depreciation isgenerally computed on the straight-line method over the estimated useful livesof the assets ranging from 8 to 50 years for premises and from 3 to 15 yearsfor furniture and equipment. Leasehold improvements are amortized on astraight-line basis over the estimated useful lives of the improvements or theremaining term of the leases, whichever is shorter.

 

***Other Real Estate***

Other real estate includes propertiesacquired in partial or total settlement of problem loans. The properties arerecorded at the lower of cost or fair value less estimated selling costs at thedate acquired. Losses recognized at the time of acquisition of such propertiesare charged to the allowance for loan losses. Any subsequent decline in valueis charged to current operations. The revenue received from and expensesincurred in maintaining such properties are also included in current operations.

 

###### ***Goodwill***

Goodwill resulted from the acquisition of afinancially troubled thrift institution in 1990 and represents the excess ofthe purchase price over the fair value of acquired tangible assets andliabilities and identifiable intangible assets. 

 

12

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The Company discontinued amortizing goodwillin 2002 after accounting guidance changing the treatment of goodwill becameeffective. Consistent with the new guidance, goodwill is assessed at leastannually for impairment and any such impairment will be recognized in theperiod that the impairment is identified.

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

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

Premises and equipment and other long-termassets are reviewed for impairment when events indicate their carrying amountmay not be recoverable from future undiscounted cash flows. If impaired, theassets are recorded at discounted amounts.

 

***Income Taxes***

Income tax expense is the sum of the current year income tax due orrefundable and the change in deferred tax assets and liabilities. Deferred taxassets and liabilities are the expected future tax consequences of temporarydifferences between the carrying amounts and the tax basis of assets andliabilities, computed using enacted tax rates. A valuation allowance, ifneeded, reduces deferred tax assets to the amount expected to be realized.

 

***Employee StockOwnership Plan (“ESOP”)***

The Bank 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. On December 30, 2003, the ESOP became leveraged for thefirst time since its inception. The ESOP borrowed $1.2 million from WestSuburban to facilitate a purchase of a large block of common stock from oneshareholder. The ESOP retired the indebtedness on January 2, 2004.Dividends declared on common stock owned by the ESOP are charged againstretained earnings.

 

Dividends paid on ESOP shares are passed through to participants.Allocated ESOP shares are voted by the respective participants. For earningsper share purposes, allocated common stock held by the ESOP is classified asissued and outstanding. Because participants may require the Company topurchase their ESOP shares upon termination of their employment, the appraisedfair value of all allocated ESOP shares is reclassified from shareholders’equity. Unearned ESOP shares are reported as a reduction of shareholders’equity and are not considered outstanding for earnings per share purposes.

 

***Earnings Per Share***

Earnings per share is calculated on the basisof the daily weighted average number of shares outstanding.

 

***Cash Flows***

For purposes of reporting cash flows, cashand cash equivalents include cash and due from banks, federal funds sold andcommercial paper. Generally, federal funds are sold for one-day periods.Maturities of commercial paper generally are less than 60 days.

 

***Comprehensive Income***

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, net of reclassification adjustments and deferredtax effects.

 

***Reclassifications***

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

 

##### ***Recent Accounting Pronouncements***

The Financial Accounting Standards Board (“FASB”) issued two newaccounting standards, Statement 149, “Amendment of Statement 133 on DerivativeInstruments and Hedging Activities,” and Statement 150, “Accounting for CertainFinancial Instruments with Characteristics of both Liabilities and Equities,”both of which generally became effective in the quarter beginning July 1,2003.

 

13

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Because the Company does not have derivative instruments or hedgingactivities or is only nominally involved in these instruments, Statement 149has not had a material effect on the Company’s operating results or financialcondition.

 

FASB Interpretation 45 requires recognizing the fair value ofguarantees made and information about the maximum potential payments that mightbe required, as well as the collateral or other recourse obtainable.Interpretation 45 covers guarantees such as standby letters of credit,performance guarantees and direct or indirect guarantees of the indebtedness ofothers, but not guarantees of funding. The fair value of the Company’s standbyletters of credit is not material. Letters of credit issued by the Company arediscussed in Note 8. Interpretation 45 has not had a material effect on theCompany’s operating results of financial condition.

 

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

 

The amortized cost and fair value of securities available for sale areas follows at December 31:

 
|                                      |   | **2003**            |    |
|-------------------------------------------|--------|---------------------|---------|
|                                      |   | **Amortized  Cost** |    | **Gross  Unrealized  Gains** |   | **Gross  Unrealized  Losses** |   | **Fair  Value** |   |
| Corporate                                 |   | $                   | 45,831  |   | $ | 645 |   | $ | (146 | ) | $ | 46,330 |   |
| U.S. government agencies and corporations |   | 323,910             |    | 1,724 |   | (2,055 | ) | 323,579 |   |
| Mortgage-backed                           |   | 38,346              |    | 201 |   | (506 | ) | 38,041 |   |
| States and political subdivisions         |   | 33,420              |    | 203 |   | (157 | ) | 33,466 |   |
| Total debt securities                     |   | 441,507             |    | 2,773 |   | (2,864 | ) | 441,416 |   |
| Preferred stock                           |   | 17,239              |    | 5 |   | (514 | ) | 16,730 |   |
| Total                                     |   | $                   | 458,746 |   | $ | 2,778 |   | $ | (3,378 | ) | $ | 458,146 |   |

 
|                                      |   | **2002**            | ** ** |
|-------------------------------------------|--------|---------------------|------------|
|                                      |   | **Amortized  Cost** |       | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| Corporate                                 |   | $                   | 63,251     |   | $ | 1,758 |   | $ | (212 | ) | $ | 64,797 |   |
| U.S. government agencies and corporations |   | 167,075             |       | 3,319 |   | (9 | ) | 170,385 |   |
| Mortgage-backed                           |   | 18,228              |       | 462 |   | — |   | 18,690 |   |
| States and political subdivisions         |   | 2,842               |       | 41 |   | — |   | 2,883 |   |
| Total debt securities                     |   | 251,396             |       | 5,580 |   | (221 | ) | 256,755 |   |
| Preferred stock                           |   | 17,240              |       | 13 |   | (253 | ) | 17,000 |   |
| Total                                     |   | $                   | 268,636    |   | $ | 5,593 |   | $ | (474 | ) | $ | 273,755 |   |

 

14

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

 
|                                      |   | **2003**            |       |
|-------------------------------------------|--------|---------------------|------------|
|                                      |   | **Amortized  Cost** |       | **Gross  Unrealized  Gains** |   | **Gross  Unrealized  Losses** |   | **Fair  Value** |   |
| U.S. government agencies and corporations |   | $                   | 13,998     |   | $ | 402 |   | $ | — |   | $ | 14,400 |   |
| Mortgage-backed                           |   | 1,959               |       | 29 |   | (252 | ) | 1,736 |   |
| States and political subdivisions         |   | 13,238              |       | 304 |   | (7 | ) | 13,535 |   |
| Total                                     |   | $                   | 29,195     |   | $ | 735 |   | $ | (259 | ) | $ | 29,671 |   |
|                                      |   |                |       |   |   |   |   |   |   |
|                                      |   | **2002**            | ** ** |
|                                      |   | **Amortized  Cost** |       | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| U.S. government agencies and corporations |   | $                   | 23,012     |   | $ | 832 |   | $ | — |   | $ | 23,844 |   |
| Mortgage-backed                           |   | 3,115               |       | 81 |   | (177 | ) | 3,019 |   |
| States and political subdivisions         |   | 23,750              |       | 516 |   | — |   | 24,266 |   |
| Total                                     |   | $                   | 49,877     |   | $ | 1,429 |   | $ | (177 | ) | $ | 51,129 |   |

 

Securities with unrealized losses at year end 2003 not recognized inincome are presented below by the length of time the securities have been in anunrealized loss position:  

 
|                                      |   | **Less than  12 months** |    | **12 months  or more** |   | **Total**       |   |
|-------------------------------------------|--------|--------------------------|---------|------------------------|--------|-----------------|--------|
|                                      |   | **Fair  Value**          |    | **Unrealized  loss**   |   | **Fair  Value** |   | **Unrealized  loss** |   | **Fair  Value** |   | **Unrealized  loss** |   |
| Corporate                                 |   | $                        | 11,032  |                   | $      | 146             |   | $ | — |   | $ | — |   | $ | 11,032 |   | $ | 146 |   |
| U.S. government agencies and corporations |   | 150,600                  |    | 2,055                  |   | —          |   | — |   | 150,600 |   | 2,055 |   |
| Mortgage-backed                           |   | 24,804                   |    | 506                    |   | 1,033           |   | 252 |   | 25,837 |   | 758 |   |
| States and political subdivisions         |   | 19,723                   |    | 164                    |   | —          |   | — |   | 19,723 |   | 164 |   |
| Preferred stock                           |   | 3,991                    |    | 9                      |   | 4,747           |   | 505 |   | 8,738 |   | 514 |   |
| Total temporarily impaired                |   | $                        | 210,150 |                   | $      | 2,880           |   | $ | 5,780 |   | $ | 757 |   | $ | 215,930 |   | $ | 3,637 |   |

 

Unrealized losses on equity and debt securities have not beenrecognized in income because management has the intent and ability to hold thesecurities for the foreseeable future. The fair value of debt securities isexpected to recover as the securities approach their maturity date. Themajority of the preferred stock is issued by the Federal Home Loan MortgageCorporation.

 

The amortized cost and fair value of debt securities available for saleand held to maturity at December 31, 2003 by contractual maturity are asfollows:

 
|                               |   | **Available  for Sale** |    | **Held to  Maturity** |   |
|------------------------------------|--------|-------------------------|---------|-----------------------|--------|
|                               |   | **Amortized  Cost**     |    | **Fair Value**        |   | **Amortized  Cost** |   | **Fair Value** |   |
| Due in 1 year or less              |   | $                       | 7,640   |                  | $      | 7,723 |   | $ | 8,846 |   | $ | 8,978 |   |
| Due after 1 year through 5 years   |   | 245,271                 |    | 245,970               |   | 9,192 |   | 9,667 |   |
| Due after 5 years through 10 years |   | 173,241                 |    | 172,470               |   | 6,614 |   | 6,631 |   |
| Due after 10 years                 |   | 15,355                  |    | 15,253                |   | 4,543 |   | 4,395 |   |
| Total                              |   | $                       | 441,507 |                  | $      | 441,416 |   | $ | 29,195 |   | $ | 29,671 |   |

 

15

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Expected maturities will differ from contractual maturities becauseissuers may have the right to call or prepay obligations with or without callor prepayment penalties. Approximately $236,818 of securities are callable in2004. Most of these callable securities were issued by U.S. government agenciesand corporations.

 

Securities with a carryingvalue of approximately $39,556 and $30,168 at December 31, 2003 and 2002,respectively, were pledged to secure public deposits, fiduciary activities andfor other purposes required or permitted by law.

 

Sales of securities availablefor sale were as follows:  

 
|                  |   | **2003** |    | **2002** |   | **2001** |   |
|-----------------------|--------|----------|---------|----------|--------|----------|--------|
| Proceeds from sales   |   | $        | 128,537 |     | $      | 122,069  |   | $ | 24,635 |   |
| Gross realized gains  |   | 2,346    |    | 1,687    |   | 1,757    |   |
| Gross realized losses |   | (246     | )       | (1,266   | )      | (133     | )      |
|                       |        |          |         |          |        |          |        |  |  |  |

 

During 2001, the Company wrote down its investments in debt securitiesissued by Comdisco, Inc., FINOVA Group, Inc. and Enron Corp. after making adetermination that the value of the debt securities had become impaired. Theseimpairment losses totaled $2,960 in 2001. The carrying values of the Comdisco,Inc., FINOVA Group, Inc. and Enron Corp. securities totaled $4,788 atDecember 31, 2001. The Comdisco, Inc. and Enron Corp. securities were soldin 2002. The carrying value of the FINOVA Group, Inc. securities was $726 and$408 at December 31, 2003 and 2002, respectively.

 

The Company made a nominal equity investmentin an ATM network a number of years ago. In 2001, the Company surrendered itsstock in the ATM network in connection with the merger of the network withanother organization and received $1,426 and recorded a gain for the sameamount.

 

Gains on securities in 2003, 2002 and 2001,also include recoveries on securities written off in 1998 of $230, $596 and$710, respectively.

 

**Note 3 - Loans**

 

Major classifications of loans were as follows at December 31:

 
|                      |   | **2003**  |      | **2002**  |   |
|---------------------------|--------|-----------|-----------|-----------|--------|
| Commercial                |   | $         | 270,220   |      | $      | 330,775 |   |
| Consumer                  |   | 10,040    |      | 11,591    |   |
| Indirect automobile       |   | 60,929    |      | 90,617    |   |
| Real estate               |   |      |      |      |   |
| Residential               |   | 135,776   |      | 135,311   |   |
| Commercial                |   | 217,865   |      | 212,010   |   |
| Home equity               |   | 205,272   |      | 169,020   |   |
| Construction              |   | 171,975   |      | 174,001   |   |
| Held for sale             |   | 989       |      | 4,224     |   |
| Credit card               |   | 14,424    |      | 13,732    |   |
| Other                     |   | 697       |      | 1,382     |   |
| Total                     |   | 1,088,187 |      | 1,142,663 |   |
| Allowance for loan losses |   | (14,420   | )         | (13,847   | )      |
| Loans, net                |   | $         | 1,073,767 |      | $      | 1,128,816 |   |

 

The Company makes commercial, personal and residential loans primarilyto customers throughout the western suburbs of Chicago. Construction loans aregenerally made to customers engaged in the development and construction ofresidential real estate projects within the Company’s market area.

 

16

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

 
|                       |   | **2003** |   | **2002** |   | **2001** |   |
|----------------------------|--------|----------|--------|----------|--------|----------|--------|
| Balance, beginning of year |   | $        | 13,847 |     | $      | 12,262   |   | $ | 11,399 |   |
| Provision for loan losses  |   | 2,150    |   | 8,125    |   | 2,950    |   |
| Loans charged-off          |   | (1,947   | )      | (6,801   | )      | (2,305   | )      |
| Recoveries                 |   | 370      |   | 261      |   | 218      |   |
| Balance, end of year       |   | $        | 14,420 |     | $      | 13,847   |   | $ | 12,262 |   |

 

Impaired loans are summarized as follows at December 31:  

 
|                                                                             |   | **2003** |   | **2002** |   | **2001** |   |
|----------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Year-end loans with no allocated allowance  for loan losses                      |   | $        | 193    |     | $      | 1,853    |   | $ | 10,407 |   |
| Year-end loans with allocated allowance for  loan losses                         |   | 22,345   |   | 13,739   |   | 5,568    |   |
| Total                                                                            |   | $        | 22,538 |     | $      | 15,592   |   | $ | 15,975 |   |
|                                                                             |   |     |   |     |   |     |   |
| Amount of the allowance for loan losses  allocated to impaired loans at year-end |   | $        | 7,145  |     | $      | 4,525    |   | $ | 2,288 |   |
| Average impaired loans during the year                                           |   | 19,565   |   | 17,316   |   | 4,754    |   |
| Interest income recognized during impairment                                     |   | 328      |   | 318      |   | 154      |   |

 

Nonperforming loans were as follows at December 31:  

 
| Loans past due 90 days or more still on  accrual |   | $      | 380    |   | $      | 1,789  |   | $ | 11,338 |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---|--------|--------|
| Nonaccrual loans                                 |   | 15,008 |   | 12,021 |   | 3,945  |   |
| Total                                            |   | $      | 15,388 |   | $      | 13,810 |   | $ | 15,283 |   |

 

Mortgage loans serviced for others are not included in the accompanyingconsolidated balance sheets. At December 31, 2003 and 2002, the Companyserviced mortgage loans for the benefit of others with aggregate unpaidprincipal balances of $13,404 and $28,835, respectively. Accordingly, retainedand acquired mortgage servicing rights are not material and are not presentedas a separate asset. The Company generally sells mortgage loans with servicingrights released. Loan servicing fees were $61, $112 and $169 in 2003, 2002, and2001, respectively.

 

**Note 4 - Premises and Equipment**

 

Major classifications of these assets are summarized as follows atDecember 31:

 
|                          |   | **2003** |   | **2002** |   |
|-------------------------------|--------|----------|--------|----------|--------|
| Land                          |   | $        | 11,571 |     | $      | 11,571 |   |
| Premises                      |   | 41,080   |   | 40,754   |   |
| Furniture and equipment       |   | 41,331   |   | 40,502   |   |
| Total                         |   | 93,982   |   | 92,827   |   |
| Less accumulated depreciation |   | (51,086  | )      | (47,186  | )      |
| Premises and equipment, net   |   | $        | 42,896 |     | $      | 45,641 |   |

 

17

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**Note 5 - Deposits**

 

The major categories of deposits are summarized as follows atDecember 31:  

 
|                       |   | **2003** |      | **2002** |   |
|----------------------------|--------|----------|-----------|----------|--------|
| Demand-noninterest-bearing |   | $        | 143,440   |     | $      | 157,539 |   |
| NOW                        |   | 309,634  |      | 272,646  |   |
| Money market checking      |   | 235,538  |      | 231,950  |   |
| Savings                    |   | 447,017  |      | 363,396  |   |
| Time deposits              |   |     |      |     |   |
| Less than $100,000         |   | 303,362  |      | 303,297  |   |
| $100,000 and greater       |   | 90,940   |      | 91,428   |   |
| Total                      |   | $        | 1,529,931 |     | $      | 1,420,256 |   |

 

At December 31, 2003, the scheduled maturities of time depositswere as follows:  

 
| 2004       |   | $      | 211,615 |   |
|------------|--------|--------|---------|--------|
| 2005       |   | 51,485 |    |
| 2006       |   | 9,771  |    |
| 2007       |   | 68,388 |    |
| 2008       |   | 53,043 |    |
| Thereafter |   | — |    |
| Total      |   | $      | 394,302 |   |

 

**Note 6 - Income Taxes**

 

Income tax expense is as follows for the years endedDecember 31:  

 
|                  |   | **2003** |   | **2002** |   | **2001** |   |
|-----------------------|--------|----------|--------|----------|--------|----------|--------|
| Currently payable tax |   |     |   |     |   |     |   |
| Federal               |   | $        | 10,625 |     | $      | 7,911    |   | $ | 8,384 |   |
| State                 |   | 1,727    |   | 1,278    |   | 1,649    |   |
| Deferred tax benefit  |   | (386     | )      | (717     | )      | (458     | )      |
| Total                 |   | $        | 11,966 |     | $      | 8,472    |   | $ | 9,575 |   |

 

A reconciliation between taxes computed at the statutory federal incometax rate and the consolidated effective tax rates follows:  

 
|                                            |   | **2003** |   | **2002** |   | **2001** |   |
|-------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Statutory federal income tax rate               |   | 35.0     | %      | 35.0     | %      | 35.0     | %      |
| (Decrease) increase in taxes resulting from     |   |     |   |     |   |     |   |
| Tax-exempt income                               |   | -1.2     | %      | -2.0     | %      | -1.5     | %      |
| State income taxes, net of federal tax  benefit |   | 2.9      | %      | 2.9      | %      | 3.4      | %      |
| Dividends on ESOP shares                        |   | -3.5     | %      | -4.1     | %      | -3.5     | %      |
| Other items, net                                |   | -1.6     | %      | 0.3      | %      | -1.2     | %      |
| Effective tax rate                              |   | 31.6     | %      | 32.1     | %      | 32.2     | %      |

 

18

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The temporary differences which created deferred tax assets andliabilities at December 31 are summarized below:  

 
|                                              |   | **2003** |   | **2002** |   |
|---------------------------------------------------|--------|----------|--------|----------|--------|
| Deferred tax assets                               |   |     |   |     |   |
| Allowance for loan losses                         |   | $        | 5,732  |     | $      | 5,493 |   |
| Deferred compensation                             |   | 1,639    |   | 1,238    |   |
| Unrealized loss on securities available for  sale |   | 237      |   | —   |   |
| Other                                             |   | 798      |   | 429      |   |
| Total deferred tax assets                         |   | 8,406    |   | 7,160    |   |
| Deferred tax liabilities                          |   |     |   |     |   |
| Depreciation                                      |   | 1,031    |   | 573      |   |
| Federal Home Loan Bank stock dividends            |   | 444      |   | 317      |   |
| Unrealized gain on securities available for  sale |   | —   |   | 2,031    |   |
| Other                                             |   | 151      |   | 113      |   |
| Total deferred tax liabilities                    |   | 1,626    |   | 3,034    |   |
| Net deferred tax assets                           |   | $        | 6,780  |     | $      | 4,126 |   |

 

Net deferred tax assets are included in accrued interest and otherassets. No valuation allowance was considered necessary for net deferred taxassets.

 

# **Note 7 - Employee Benefit Plans**

 

The ESOP provides incentives to employees by granting participants aninterest in West Suburban’s common stock, which represents the ESOP’s primaryinvestment. An individual account is established for each participant and thebenefits payable upon retirement, termination, disability or death are based uponservice, the amount of the employer’s contributions and any income, expenses,gains and losses and forfeitures allocated to the participant’s account.Contributions, which are determined by the board of directors of the Bank, arepaid by the Bank and were $2,324 in 2003, $1,574 in 2002 and $1,697 in 2001.

 

At December 31, 2003 and 2002, the ESOP held 82,671 and 73,837shares of West Suburban common stock, respectively. At December 31, 2003and 2002, respectively, 80,772 and 73,837 shares of West Suburban common stockwere allocated to ESOP participants. Upon termination of their employment,participants who elect to receive their benefit payments in the form of WestSuburban common stock may require the Company to purchase the common stockdistributed at fair value during two 60-day periods. The first purchase periodbegins on the date the benefit is paid and the second purchase period begins onthe first anniversary of the payment date. This contingent repurchaseobligation is reflected in the Company’s financial statements as “Common stockin ESOP subject to contingent repurchase obligation” and reduces shareholders’equity by an amount that represents the independently appraised fair value ofall West Suburban common stock held by the ESOP and allocated to participants,without regard to whether it is likely that the shares would be distributed orthat the recipients of the shares would be likely to exercise their right torequire the Company to purchase the shares. At December 31, 2003 and 2002,this contingent repurchase obligation reduced shareholders’ equity by $51,371and $40,241, respectively. During 2003 and 2002, the ESOP distributed $541 and$751, respectively, in cash representing the interests of participants. Inaddition, the ESOP distributed 63 shares in 2003 and 3,189 shares in 2002 ofWest Suburban common stock. The Company believes that the ESOP will continue tohave a sufficient amount of cash to distribute benefit payments to formeremployees and that the exercise of the right of former employees to cause theCompany to purchase West Suburban common stock is unlikely.

 

The Company has deferred compensation agreements with certain formerand current executive officers. The deferred compensation expense for the yearsended December 31, 2003, 2002 and 2001 amounted to $194, $175 and $152,respectively. Executive officers can elect to defer the payment of a percentageof their salaries and cash bonuses and members of the board of directors canelect to defer the payment of their directors’ fees.

 

19

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The total accumulated liability for all deferred compensationarrangements was $4,123 and $3,121 at December 31, 2003 and 2002,respectively. These amounts are included in accrued interest and other liabilitieson the consolidated balance sheets.

 

# **Note 8 - Financial Instruments with Off-Balance-SheetRisk**

 

The Company is a party to off-balance-sheet financial instruments tomeet the financing needs of its customers. These financial instruments includecommitments to extend credit and standby letters of credit. These financialinstruments involve, to varying degrees, elements of credit and interest raterisks. Such financial instruments are recorded when funded.

 

Commitments to extend credit are agreements to lend to a customer aslong as there is no violation of any condition established in the agreement.These commitments are primarily unused lines of credit, undrawn portions ofconstruction loans and commitments to make new loans. Commitments generally havefixed expiration dates or other termination provisions and may require thepayment of a fee. Since many of the commitments are expected to expire withoutbeing exercised or drawn upon, the total commitment amounts do not necessarilyrepresent future cash requirements.

 

Letters of credit are conditional commitments issued by the Company toeither extend credit to a customer or guarantee the performance of a customerfor the benefit of a third party. Guarantees of performance are primarilyissued to support public and private borrowing arrangements. The credit riskinvolved in issuing letters of credit is essentially the same as that involvedin extending loan facilities to customers.

 

The Company’s exposure to credit risk in connection with commitments toextend credit and standby letters of credit is the contractual amount of thoseinstruments before considering customer collateral or ability to repay. TheCompany uses the same credit policies in making commitments and conditionalobligations as it does for on-balance-sheet instruments. The Company generallyrequires collateral or other security to support financial instruments withcredit risk. The Company evaluates each customer’s creditworthiness on acase-by-case basis. The amount of collateral obtained, if deemed necessary bythe Company, is based on management’s credit evaluation of the customer.Collateral held varies and may include accounts receivable, inventory andequipment or commercial or residential properties. A summary of the contractualexposure to off-balance-sheet risk as of December 31 follows:

 
|                                 |   | **2003**        |   | **2002**           |   |
|--------------------------------------|--------|-----------------|--------|--------------------|--------|
|                                 |   | **Fixed  Rate** |   | **Variable  Rate** |   | **Total** |   | **Fixed  Rate** |   | **Variable  Rate** |   | **Total** |   |
| Commercial loans and lines of credit |   | $               | 1,094  |               | $      | 145,152 |   | $ | 146,246 |   | $ | 12,539 |   | $ | 166,751 |   | $ | 179,290 |   |
| Check credit lines of credit         |   | 1,354           |   | —             |   | 1,354 |   | 1,316 |   | — |   | 1,316 |   |
| Mortgage loans                       |   | 5,251           |   | 2,899              |   | 8,150 |   | 9,096 |   | 1,472 |   | 10,568 |   |
| Home equity lines of credit          |   | —          |   | 164,967            |   | 164,967 |   | — |   | 166,647 |   | 166,647 |   |
| Letters of credit                    |   | —          |   | 33,780             |   | 33,780 |   | — |   | 32,661 |   | 32,661 |   |
| Credit card lines of credit          |   | —          |   | 115,329            |   | 115,329 |   | — |   | 107,798 |   | 107,798 |   |
| Total                                |   | $               | 7,699  |               | $      | 462,127 |   | $ | 469,826 |   | $ | 22,951 |   | $ | 475,329 |   | $ | 498,280 |   |

 

Fixed rate commercial loan commitments at December 31, 2003generally had interest rates ranging from 4.75% to 9.00% with remaining termsranging from 1 to 5 years. Fixed rate mortgage loan commitments atDecember 31, 2003 generally had interest rates ranging from 4.75% to 6.00%with terms ranging from 5 to 30 years. Fixed rate check credit lines of credithad an interest rate of 18.00% as of December 31, 2003.

 

20

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**Note9 - Commitments and Contingent Liabilities**

 

The Company is a party tovarious legal actions arising from normal business activities. Managementbelieves that pending actions are either without merit or that the ultimateliability, if any, resulting from them will not materially affect the Company’sconsolidated financial position or results of operations.

 

In accordance with theregulations of the Board of Governors of the Federal Reserve (the “FederalReserve”), the Bank must maintain noninterest-earning reserves as vault cash ordeposits with the Federal Reserve Bank of Chicago. At December 31, 2003, therequired reserves were approximately $15,012.

 

**Note10 - Fair Value of Financial Instruments**

 

The methods and assumptionsused to estimate fair values of financial instruments are described as follows.For short-term assets (i.e., cash and due from banks and federal funds sold),their estimated fair values approximate their carrying values. For depositswith variable interest rates, it has been assumed that their estimated fairvalues approximate their carrying values. Because of their short terms, thecarrying values of accrued interest receivable and payable approximate theirfair value.

 

The fair values for securitieswere derived from quoted market values or, when quotes were not available, thefair values were estimated based on the rate and term of the security andinformation about the issuer. The fair values for loans were estimated bydiscounting the future expected cash flows from loan repayments using currentinterest rates for loans having comparable maturities and credit risk. The fairvalues for time deposits were estimated by discounting expected cash flows atdiscount rates comparable to current market rates for similar maturing liabilities.

 

Off-balance-sheet financialinstruments are comprised of letters of credit and commitments to extendcredit. The estimated fair value of off-balance-sheet financial instruments isnot considered material.

 

While these estimates of fairvalue are based on management’s judgment of the most appropriate factors as ofthe balance sheet date, there is no assurance that the estimated fair valueswould have been realized if the assets would have been disposed of or theliabilities settled at that date, since market values may differ depending onvarious factors. The estimated fair values would also not apply to subsequentdates.

 

The estimated fair values ofthe Company’s financial instruments as of December 31 are set forth in thetable below:

 

 
|                                  |   | **2003**            |   | **2002**                  |   |
|---------------------------------------|--------|---------------------|--------|---------------------------|--------|
|                                  |   | **Carrying  Value** |   | **Estimated  Fair Value** |   | **Carrying  Value** |   | **Estimated  Fair Value** |   |
| Financial assets                      |   |                |   |                      |   |   |   |   |   |
| Cash and cash equivalents             |   | $                   | 69,344 |                      | $      | 69,344 |   | $ | 66,788 |   | $ | 66,788 |   |
| Securities                            |   |                |   |                      |   |   |   |   |   |
| Available for sale                    |   | 458,146             |   | 458,146                   |   | 273,755 |   | 273,755 |   |
| Held to maturity                      |   | 29,195              |   | 29,671                    |   | 49,877 |   | 51,129 |   |
| Federal Home Loan Bank stock          |   | 5,039               |   | 5,039                     |   | 4,668 |   | 4,668 |   |
| Loans, less allowance for loan losses |   | 1,073,767           |   | 1,105,763                 |   | 1,128,816 |   | 1,167,171 |   |
| Accrued interest                      |   | 7,869               |   | 7,869                     |   | 8,407 |   | 8,407 |   |
|                                  |   |                |   |                      |   |   |   |   |   |
| Financial liabilities                 |   |                |   |                      |   |   |   |   |   |
| Deposits                              |   | 1,529,931           |   | 1,541,908                 |   | 1,420,256 |   | 1,430,625 |   |
| Accrued interest                      |   | 2,986               |   | 2,986                     |   | 3,511 |   | 3,511 |   |
|                                       |        |                     |        |                           |        |  |  |  |  |  |  |  |  |

 

21

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**Note11 - Related Party Transactions**

 

Certain executive officers anddirectors of the Company, their affiliates and companies in which they have 10%or more beneficial ownership, are customers of the Bank in the ordinary courseof business and had loans from the Bank totaling $29,353 and $26,655 atDecember 31, 2003 and 2002, respectively. During 2003, $31,579 in loans and$28,881 in principal payments were made. Related parties had deposits totaling$32,351 and $23,852 at December 31, 2003 and 2002, respectively.

 

**Note12 - Capital Requirements**

 

The Company and the Bank aresubject to various regulatory capital requirements administered by federalbanking agencies. Failure to meet minimum capital requirements may result inthe initiation of actions by regulators that could have direct material effectson the financial statements. Under capital adequacy guidelines and theregulatory framework for prompt corrective action, each entity must meetspecific 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.

 

Regulations require the Companyand the Bank to maintain minimum capital amounts and ratios (set forth in thefollowing table). Management believes that as of December 31, 2003, the Companyand the Bank exceeded all capital adequacy requirements.

 

Management’s present policy isto limit dividends from the Bank so that the Bank qualifies as a“well-capitalized” institution as defined by the Federal Deposit InsuranceCorporation Improvement Act of 1991. This policy minimizes the amount ofFederal Deposit Insurance Corporation (“FDIC”) insurance premiums paid by theBank and provides capital to fund growth. As of December 31, 2003, the Bankcould pay, in the aggregate, dividends of approximately $10,600 to WestSuburban while remaining a “well-capitalized” institution. Dividends from theBank are West Suburban’s primary source of cash flow.

 

As of December 31, 2003 and2002, the most recent notifications from the FDIC categorized the Bank as“well- capitalized” under the regulatory framework for prompt correctiveaction. To be categorized as “well-capitalized” the Bank must maintain minimumratios for total capital to risk weighted assets, Tier 1 capital to riskweighted assets and Tier 1 capital to average assets as set forth in thefollowing table. There are no conditions or events since that notification thatmanagement believes would result in a change of the category.

 

22

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The capital amounts and ratiosof the Company and the Bank for purposes of the prompt corrective action frameworkare presented in the table below:

 
|                                     |   | **Actual** |    | **Minimum  For   Capital Adequacy  Purposes** |   | **Minumum  To Be Well-  Capitalized** |   |
|------------------------------------------|--------|------------|---------|-----------------------------------------------|--------|---------------------------------------|--------|
|                                     |   | **Amount** |    | **Ratio**                                     |   | **Amount**                            |   | **Ratio** |   | **Amount** |   | **Ratio** |   |
| **As of December 31, 2003**              |   |       |    |                                          |   |                                  |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets)  |   |       |    |                                          |   |                                  |   |   |   |   |   |   |   |
| Company                                  |   | $          | 163,675 |                                          | 12.0   | %                                     | $      | 109,589 |   | 8.0 | % | $ | 136,986 |   | 10.0 | % |
| Bank                                     |   | 147,535    |    | 10.8                                          | %      | 109,485                               |   | 8.0 | % | 136,856 |   | 10.0 | % |
| Tier 1 capital (to risk weighted assets) |   |       |    |                                          |   |                                  |   |   |   |   |   |   |   |
| Company                                  |   | 149,255    |    | 10.9                                          | %      | 54,794                                |   | 4.0 | % | 82,191 |   | 6.0 | % |
| Bank                                     |   | 133,115    |    | 9.7                                           | %      | 54,742                                |   | 4.0 | % | 82,113 |   | 6.0 | % |
| Tier 1 capital (to average assets)       |   |       |    |                                          |   |                                  |   |   |   |   |   |   |   |
| Company                                  |   | 149,255    |    | 8.7                                           | %      | 68,655                                |   | 4.0 | % | 85,819 |   | 5.0 | % |
| Bank                                     |   | 133,115    |    | 7.8                                           | %      | 68,634                                |   | 4.0 | % | 85,792 |   | 5.0 | % |
|                                     |   |       |    |                                          |   |                                  |   |   |   |   |   |   |   |
| As of December 31, 2002                  |   |       |    |                                          |   |                                  |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets)  |   |       |    |                                          |   |                                  |   |   |   |   |   |   |   |
| Company                                  |   | $          | 157,585 |                                          | 11.5   | %                                     | $      | 109,975 |   | 8.0 | % | $ | 137,469 |   | 10.0 | % |
| Bank                                     |   | 146,764    |    | 10.7                                          | %      | 109,969                               |   | 8.0 | % | 137,462 |   | 10.0 | % |
| Tier 1 capital (to risk weighted assets) |   |       |    |                                          |   |                                  |   |   |   |   |   |   |   |
| Company                                  |   | 143,739    |    | 10.5                                          | %      | 54,988                                |   | 4.0 | % | 82,482 |   | 6.0 | % |
| Bank                                     |   | 132,918    |    | 9.7                                           | %      | 54,985                                |   | 4.0 | % | 82,477 |   | 6.0 | % |
| Tier 1 capital (to average assets)       |   |       |    |                                          |   |                                  |   |   |   |   |   |   |   |
| Company                                  |   | 143,739    |    | 9.2                                           | %      | 62,570                                |   | 4.0 | % | 78,213 |   | 5.0 | % |
| Bank                                     |   | 132,918    |    | 8.5                                           | %      | 62,751                                |   | 4.0 | % | 78,439 |   | 5.0 | % |

 

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

 

**Note 13 - Other Comprehensive Income**

 

Other comprehensive incomecomponents and related taxes were as follows:

 
|                                                                                |   | **2003** |   | **2002** |   | **2001** |   |
|-------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Net unrealized holding (losses) gains on  available for sale securities             |   | $        | (3,389 | )        | $      | 5,470    |   | $ | 3,297 |   |
| Reclassification adjustments for gains and  losses later  recognized in income |   | (2,330   | )      | (1,017   | )      | 626      |   |
| Net unrealized (losses) gains                                                       |   | (5,719   | )      | 4,453    |   | 3,923    |   |
| Tax effect                                                                          |   | 2,268    |   | (1,766   | )      | (1,559   | )      |
| Other comprehensive (loss) income                                                   |   | $        | (3,451 | )        | $      | 2,687    |   | $ | 2,364 |   |

 

23

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**Note14 - Goodwill**

 

The Financial Accounting Standards Board(“FASB”) issued Statement of Financial Accounting Standards (“Statement”) 147,“Acquisitions of Certain Financial Institutions” in October 2002.  The Company’s goodwill arose from itsacquisition of a financially troubled thrift institution during 1990. Theguidance in Statement 147 indicates that the Company’s acquisition of thetroubled thrift institution is a business combination resulting in goodwillthat should be accounted for under Statement 142, “Goodwill and OtherIntangible Assets.” Statement 142 generally requires that goodwill no longer beamortized to earnings, but instead be reviewed for impairment and written downif impaired.

 

Goodwill is carried on the Company’s balancesheet at $712 at both December 31, 2003 and 2002. The Company has no otherintangible assets.

 

Goodwill is no longer amortized starting in2002. The effect of not amortizing goodwill is summarized as follows:

 

** **

|                            |   | **2003** |   | **2002** |   | **2001** |   |
|---------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Reported net income             |   | $        | 25,908 |     | $      | 17,932   |   | $ | 20,183 |   |
| Add back: goodwill amortization |   | —   |   | —   |   | 204      |   |
| Adjusted net income             |   | $        | 25,908 |     | $      | 17,932   |   | $ | 20,387 |   |
|                            |   |     |   |     |   |     |   |
| Earnings per share              |   |     |   |     |   |     |   |
| Reported net income             |   | $        | 59.90  |     | $      | 41.46    |   | $ | 46.67 |   |
| Goodwill amortization           |   | —   |   | —   |   | 0.47     |   |
| Adjusted net income             |   | $        | 59.90  |     | $      | 41.46    |   | $ | 47.14 |   |

 

24

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**Note 15 - Condensed Financial Information -Parent Only**

 

**Condensed Balance Sheets****December 31, 2003 and 2002**

 
|                                                                    |   | **2003** |    | **2002** |   |
|-------------------------------------------------------------------------|--------|----------|---------|----------|--------|
| **Assets**                                                              |   |     |    |     |   |
| Cash, substantially all on deposit in  subsidiary                       |   | $        | 18,125  |     | $      | 18,641 |   |
| Securities available for sale (amortized  cost of  $2,293 in 2003) |   | 2,291    |    | —   |   |
| Investment in subsidiary                                                |   | 133,061  |    | 136,151  |   |
| Goodwill                                                                |   | 712      |    | 712      |   |
| Other assets                                                            |   | 136      |    | 55       |   |
| **Total assets**                                                        |   | $        | 154,325 |     | $      | 155,559 |   |
|                                                                    |   |     |    |     |   |
| **Liabilities and shareholders’ equity**                           |   |     |    |     |   |
| Dividends payable                                                       |   | $        | 4,325   |     | $      | 7,785 |   |
| Other liabilities                                                       |   | 88       |    | 89       |   |
|                                                                    |   |     |    |     |   |
| Common stock in ESOP subject to contingent  repurchase obligation       |   | 51,371   |    | 40,241   |   |
|                                                                    |   |     |    |     |   |
| Shareholders’ equity                                               |   | 98,541   |    | 107,444  |   |
| **Total liabilities and shareholders’ equity**                     |   | $        | 154,325 |     | $      | 155,559 |   |

 

**Condensed Statements of Income****Years Ended December 31, 2003, 2002 and 2001**

 
|                                                                |   | **2003** |   | **2002** |   | **2001** |   |
|---------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| **Income**                                                          |   |     |   |     |   |     |   |
| Dividends from subsidiary                                           |   | $        | 25,586 |     | $      | 13,145   |   | $ | 13,343 |   |
| Interest income                                                     |   |     |   |     |   |     |   |
| Deposits                                                            |   | 190      |   | 259      |   | 389      |   |
| Securities                                                          |   | 2        |   | 99       |   | 374      |   |
| Net realized losses on securities  transactions                     |   | —   |   | (81      | )      | —   |   |
| Total income                                                        |   | 25,778   |   | 13,422   |   | 14,106   |   |
|                                                                |   |     |   |     |   |     |   |
| **Expense**                                                         |   |     |   |     |   |     |   |
| Goodwill amortization                                               |   | —   |   | —   |   | 204      |   |
| Other                                                               |   | 391      |   | 310      |   | 294      |   |
| Total expense                                                       |   | 391      |   | 310      |   | 498      |   |
| **Income before income taxes**                                      |   | 25,387   |   | 13,112   |   | 13,608   |   |
| **Income tax (benefit) expense**                                    |   | (161     | )      | (6       | )      | 186      |   |
| **Income before equity in undistributed net  income of subsidiary** |   | 25,548   |   | 13,118   |   | 13,422   |   |
| **Equity in undistributed net income of subsidiary**                |   | 360      |   | 4,814    |   | 6,761    |   |
| **Net income**                                                      |   | $        | 25,908 |     | $      | 17,932   |   | $ | 20,183 |   |

 

25

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**CondensedStatements of Cash Flows****Years Ended December 31, 2003, 2002 and 2001**

 
|                                                                                    |   | **2003** |   | **2002** |   | **2001** |   |
|-----------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| **Cash flows from operating activities**                                                |   |     |   |     |   |     |   |
| Net income                                                                              |   | $        | 25,908 |     | $      | 17,932   |   | $ | 20,183 |   |
| Adjustments to reconcile net income to net  cash provided by  operating activities |   |     |   |     |   |     |   |
| Deferred income tax benefit                                                             |   | (20      | )      | (12      | )      | (5       | )      |
| Equity in undistributed net income of  subsidiary                                       |   | (360     | )      | (4,814   | )      | (6,761   | )      |
| Net premium amortization of securities                                                  |   | —   |   | 15       |   | 43       |   |
| Net realized losses on securities  transactions                                         |   | —   |   | 81       |   | —   |   |
| Goodwill amortization                                                                   |   | —   |   | —   |   | 204      |   |
| (Increase) decrease in other assets                                                     |   | (60      | )      | 102      |   | (154     | )      |
| (Decrease) increase in other liabilities                                                |   | (1       | )      | 22       |   | 17       |   |
| **Net cash provided by operating activities**                                           |   | 25,467   |   | 13,326   |   | 13,527   |   |
| **Cash flows from investing activities**                                                |   |     |   |     |   |     |   |
| Securities available for sale                                                           |   |     |   |     |   |     |   |
| Sales                                                                                   |   | —   |   | 10,429   |   | —   |   |
| Maturities                                                                              |   | —   |   | —   |   | 4,000    |   |
| Purchases                                                                               |   | (2,293   | )      | —   |   | (10,564  | )      |
| **Net cash (used in) provided by investing  activities**                                |   | (2,293   | )      | 10,429   |   | (6,564   | )      |
| **Cash flows from financing activities**                                                |   |     |   |     |   |     |   |
| Cash dividends paid                                                                     |   | (22,490  | )      | (17,733  | )      | (17,300  | )      |
| Loan to ESOP to acquire West Suburban common  stock                                     |   | (1,200   | )      | —   |   | —   |   |
| **Net cash used in financing activities**                                               |   | (23,690  | )      | (17,733  | )      | (17,300  | )      |
| **Net (decrease) increase in cash**                                                     |   | (516     | )      | 6,022    |   | (10,337  | )      |
| **Beginning cash**                                                                      |   | 18,641   |   | 12,619   |   | 22,956   |   |
| **Ending cash**                                                                         |   | $        | 18,125 |     | $      | 18,641   |   | $ | 12,619 |   |

 

26

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**Note16 - Quarterly Results of Operations (Unaudited)**

 

The following table sets forthcertain unaudited income, expense and per share data on a quarterly basis forthe three-month periods indicated:

 
|                                                 |   | **Fourth  Quarter** |   | **Third  Quarter** |   | **Second  Quarter** |   | **First  Quarter** |   |
|------------------------------------------------------|--------|---------------------|--------|--------------------|--------|---------------------|--------|--------------------|--------|
| **Year Ended December 31, 2003**                     |   |                |   |               |   |                |   |               |   |
| Interest income                                      |   | $                   | 19,921 |               | $      | 20,030              |   | $                  | 20,401 |   | $ | 20,449 |   |
| Interest expense                                     |   | 5,072               |   | 5,245              |   | 5,849               |   | 5,820              |   |
| Net interest income                                  |   | 14,849              |   | 14,785             |   | 14,552              |   | 14,629             |   |
| Provision for loan losses                            |   | —              |   | 1,250              |   | 500                 |   | 400                |   |
| Net interest income after provision for  loan losses |   | 14,849              |   | 13,535             |   | 14,052              |   | 14,229             |   |
| Noninterest income                                   |   | 5,454               |   | 5,097              |   | 4,933               |   | 6,836              |   |
| Noninterest expense                                  |   | 11,152              |   | 10,349             |   | 10,055              |   | 9,555              |   |
| Income before income taxes                           |   | 9,151               |   | 8,283              |   | 8,930               |   | 11,510             |   |
| Income tax expense                                   |   | 2,683               |   | 2,563              |   | 3,015               |   | 3,705              |   |
| Net income                                           |   | $                   | 6,468  |               | $      | 5,720               |   | $                  | 5,915  |   | $ | 7,805 |   |
| Earnings per share                                   |   | $                   | 14.93  |               | $      | 13.23               |   | $                  | 13.68  |   | $ | 18.06 |   |
|                                                 |   |                |   |               |   |                |   |               |   |
| Year Ended  December 31, 2002                        |   |                |   |               |   |                |   |               |   |
| Interest income                                      |   | $                   | 20,959 |               | $      | 21,562              |   | $                  | 21,680 |   | $ | 21,193 |   |
| Interest expense                                     |   | 6,419               |   | 7,401              |   | 7,092               |   | 6,891              |   |
| Net interest income                                  |   | 14,540              |   | 14,161             |   | 14,588              |   | 14,302             |   |
| Provision for loan losses                            |   | 5,200               |   | 775                |   | 1,025               |   | 1,125              |   |
| Net interest income after provision for  loan losses |   | 9,340               |   | 13,386             |   | 13,563              |   | 13,177             |   |
| Noninterest income                                   |   | 4,579               |   | 3,469              |   | 2,903               |   | 3,038              |   |
| Noninterest expense                                  |   | 9,434               |   | 9,382              |   | 9,326               |   | 8,909              |   |
| Income before income taxes                           |   | 4,485               |   | 7,473              |   | 7,140               |   | 7,306              |   |
| Income tax expense                                   |   | 1,300               |   | 2,552              |   | 2,413               |   | 2,207              |   |
| Net income                                           |   | $                   | 3,185  |               | $      | 4,921               |   | $                  | 4,727  |   | $ | 5,099 |   |
| Earnings per share                                   |   | $                   | 7.36   |               | $      | 11.38               |   | $                  | 10.93  |   | $ | 11.79 |   |

 

The provision for loan lossesdecreased $1,250 during the fourth quarter of 2003. This was due to a decreasein nonperforming loans and net loan charge-offs, as well as a continuingdecline in total loans during the quarter. Noninterest expense increased $803during the fourth quarter of 2003. This was primarily due to increased profitsharing expense resulting from an increase in the ESOP contribution percentage.The Bank’s board of directors determined that the increase in contributionpercentage was appropriate in light of the Bank’s performance in 2003. Duringthe fourth quarter of 2003, telephone expense decreased as the Company wasreimbursed for overcharges.

 

Net interest income increased$379 during the fourth quarter 2002, as a result of a decrease in interestexpense of $982. This was primarily due to continued rate reductions initiatedby the Federal Reserve. Additionally, the Company experienced some run-off inhigher paying time deposits. The provision for loan losses increased $4,425during the fourth quarter of 2002. This increase was due to management’sdetermination that additional losses may be incurred on two commercial loanrelationships.  Both of these loanrelationships had been classified as non-performing throughout 2002, and theupdated evaluation of the loan relationship indicated a greater risk of losses.Additionally, the Company charged-off certain commercial loans in the fourthquarter that were greater than the amount of the allowance for loan lossespreviously allocated to these loans and management also determined that theamount of the allowance for loan losses needed to be increased based oncharge-off trends. Noninterest income increased $1,110 during the fourthquarter of 2002 primarily due to increased fees from the introduction of anoverdraft protection program and a gain on the sale of other real estate.Income tax expense decreased $1,252 during the fourth quarter of 2002 primarilydue to lower pre-tax income.

 

27

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**SELECTEDFINANCIAL DATA**

(Dollars in thousands, except per share data)

 

The following informationshould be read together with Management’s Discussion and Analysis of FinancialCondition and Results of Operations and the Company’s Consolidated FinancialStatements included elsewhere in this report.

 
|                                                                                                                                              |   | **Years  Ended December 31,** |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|---------|
|                                                                                                                                              |   | **2003**                      |    | **2002** |   | **2001** |   | **2000** |   | **1999** |   |
| **Selected operating data**                                                                                                                       |   |                          |    |   |   |   |   |   |   |   |   |
| Interest income                                                                                                                                   |   | $                             | 80,801  |   | $ | 85,394 |   | $ | 98,904 |   | $ | 103,284 |   | $ | 89,805 |   |
| Interest expense                                                                                                                                  |   | 21,986                        |    | 27,803 |   | 40,413 |   | 46,068 |   | 37,260 |   |
| Net interest income                                                                                                                               |   | 58,815                        |    | 57,591 |   | 58,491 |   | 57,216 |   | 52,545 |   |
| Provision for loan losses                                                                                                                         |   | 2,150                         |    | 8,125 |   | 2,950 |   | 1,500 |   | 3,084 |   |
| Net interest income after provision  for loan losses                                                                                         |   | 56,665                        |    | 49,466 |   | 55,541 |   | 55,716 |   | 49,461 |   |
| Noninterest income (1)                                                                                                                            |   | 22,320                        |    | 13,989 |   | 9,684 |   | 8,309 |   | 12,305 |   |
| Noninterest expense                                                                                                                               |   | 41,111                        |    | 37,051 |   | 35,467 |   | 33,727 |   | 32,667 |   |
| Income before income taxes                                                                                                                        |   | 37,874                        |    | 26,404 |   | 29,758 |   | 30,298 |   | 29,099 |   |
| Income tax expense                                                                                                                                |   | 11,966                        |    | 8,472 |   | 9,575 |   | 9,295 |   | 9,054 |   |
| Net income                                                                                                                                        |   | $                             | 25,908  |   | $ | 17,932 |   | $ | 20,183 |   | $ | 21,003 |   | $ | 20,045 |   |
|                                                                                                                                              |   |                          |    |   |   |   |   |   |   |   |   |
| **Per share data**                                                                                                                                |   |                          |    |   |   |   |   |   |   |   |   |
| Earnings                                                                                                                                          |   | $                             | 59.90   |   | $ | 41.46 |   | $ | 46.67 |   | $ | 48.56 |   | $ | 46.35 |   |
| Cash dividends declared                                                                                                                           |   | 44.00                         |    | 41.50 |   | 40.00 |   | 39.50 |   | 37.50 |   |
| Book value (2)                                                                                                                                    |   | 346.62                        |    | 341.47 |   | 335.30 |   | 323.17 |   | 313.61 |   |
|                                                                                                                                              |   |                          |    |   |   |   |   |   |   |   |   |
| **Selected balances, end of year**                                                                                                                |   |                          |    |   |   |   |   |   |   |   |   |
| Securities                                                                                                                                        |   | $                             | 492,380 |   | $ | 328,300 |   | $ | 268,815 |   | $ | 294,217 |   | $ | 337,828 |   |
| Loans, less allowance for loan losses                                                                                                             |   | 1,073,767                     |    | 1,128,816 |   | 1,093,376 |   | 1,016,140 |   | 845,706 |   |
| Total assets                                                                                                                                      |   | 1,710,695                     |    | 1,586,063 |   | 1,473,559 |   | 1,431,958 |   | 1,408,062 |   |
| Deposits                                                                                                                                          |   | 1,529,931                     |    | 1,420,256 |   | 1,309,720 |   | 1,269,954 |   | 1,254,255 |   |
| Shareholders’ equity plus common  stock in ESOP subject to contingent  repurchase obligation                                       |   | 149,912                       |    | 147,685 |   | 145,015 |   | 139,768 |   | 135,633 |   |
|                                                                                                                                              |   |                          |    |   |   |   |   |   |   |   |   |
| **Ratios**                                                                                                                                        |   |                          |    |   |   |   |   |   |   |   |   |
| Return on average total assets                                                                                                                    |   | 1.55                          | %       | 1.17 | % | 1.40 | % | 1.53 | % | 1.52 | % |
| Return on average shareholders’  equity plus common stock in ESOP  subject to contingent repurchase  obligation               |   | 16.94                         | %       | 12.01 | % | 13.73 | % | 14.96 | % | 14.36 | % |
| Cash dividends declared to net income                                                                                                             |   | 73.45                         | %       | 100.09 | % | 85.72 | % | 81.34 | % | 80.91 | % |
| Average shareholders’ equity plus  common stock in ESOP subject to  contingent repurchase obligation  to average total assets |   | 9.16                          | %       | 9.76 | % | 10.21 | % | 10.22 | % | 10.61 | % |
| Net interest margin (3)                                                                                                                           |   | 3.81                          | %       | 4.07 | % | 4.39 | % | 4.51 | % | 4.37 | % |

 

----

(1)               Noninterestincome includes a litigation settlement of $1,085 in 2003 and $3,555 in 1999for the settlement of a claim related to an investment that the Company made inprior years. Noninterest income also includes a write-down of $2,960 of thecarrying value of securities available for sale in 2001.

(2)               Bookvalue equals shareholders’ equity plus common stock in ESOP subject tocontingent repurchase obligation divided by the number of outstanding shares.

(3)     Net interest margin ispresented on a tax equivalent basis, assuming a federal income tax rate of 35%.

 

28

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**AVERAGE BALANCE SHEETS****, NETINTEREST INCOME ANDAVERAGE RATES AND YIELDS ON A TAXEQUIVALENT BASIS**

(Dollars in thousands)

 

The following table presentsfor the years indicated the total dollar amount of interest income from averageinterest-earning assets and their yields, as well as the interest expense onaverage interest-bearing liabilities and their costs, expressed both in dollarsand rates. All average balances are daily average balances. To the extentreceived, interest on nonaccruing loans has been included in the table.Interest income on nonaccrual loans was not material in 2003, 2002 and 2001.

 
|                                                                                                    |   | **Years  Ended December 31,** |      |
|---------------------------------------------------------------------------------------------------------|--------|-------------------------------|-----------|
|                                                                                                    |   | **2003**                      |      | **2002** |   | **2001** |   |
|                                                                                                    |   | **Average  Balance**          |      | **Interest** |   | **Rate** |   | **Average  Balance** |   | **Interest** |   | **Rate** |   | **Average  Balance** |   | **Interest** |   | **Rate** |   |
| **Assets**                                                                                              |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                                                                                      |   | $                             | 17,947    |   | $ | 197 |   | 1.1 | % | $ | 25,471 |   | $ | 418 |   | 1.6 | % | $ | 20,570 |   | $ | 795 |   | 3.9 | % |
| Commercial paper                                                                                        |   | —                        |      | — |   | — | % | — |   | — |   | — | % | 1,521 |   | 86 |   | 5.7 | % |
| Securities                                                                                              |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                 |   | 408,992                       |      | 16,037 |   | 3.9 | % | 276,019 |   | 13,495 |   | 4.9 | % | 234,650 |   | 13,560 |   | 5.8 | % |
| Exempt from federal income tax (1)                                                                      |   | 32,098                        |      | 2,114 |   | 6.6 | % | 27,152 |   | 1,906 |   | 7.0 | % | 26,680 |   | 2,082 |   | 7.8 | % |
| Total securities (1)                                                                                    |   | 441,090                       |      | 18,151 |   | 4.1 | % | 303,171 |   | 15,401 |   | 5.1 | % | 261,330 |   | 15,642 |   | 6.0 | % |
| Loans (1)                                                                                               |   | 1,106,639                     |      | 63,237 |   | 5.7 | % | 1,102,465 |   | 70,290 |   | 6.4 | % | 1,065,944 |   | 83,173 |   | 7.8 | % |
| Total interest-earning assets (1)                                                                       |   | 1,565,676                     |      | 81,585 |   | 5.2 | % | 1,431,107 |   | 86,109 |   | 6.0 | % | 1,349,365 |   | 99,696 |   | 7.4 | % |
| Cash and due from banks                                                                                 |   | 40,451                        |      |   |   |   |   | 40,339 |   |   |   |   |   | 39,394 |   |   |   |   |   |
| Premises and equipment, net                                                                             |   | 44,362                        |      |   |   |   |   | 44,957 |   |   |   |   |   | 41,772 |   |   |   |   |   |
| Other real estate                                                                                       |   | 154                           |      |   |   |   |   | 1,516 |   |   |   |   |   | 1,741 |   |   |   |   |   |
| Allowance for loan losses                                                                               |   | (14,566                       | )         |   |   |   |   | (12,901 | ) |   |   |   |   | (11,892 | ) |   |   |   |   |
| Accrued interest and other assets (2)                                                                   |   | 33,432                        |      |   |   |   |   | 25,215 |   |   |   |   |   | 17,351 |   |   |   |   |   |
| **Total assets**                                                                                        |   | $                             | 1,669,509 |   |   |   |   |   | $ | 1,530,233 |   |   |   |   |   | $ | 1,437,731 |   |   |   |   |   |
| **Liabilities and****shareholders’ equity**                                                        |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                                                                               |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                                                                                                     |   | $                             | 289,718   |   | 730 |   | 0.3 | % | $ | 260,916 |   | 1,086 |   | 0.4 | % | $ | 233,765 |   | 1,972 |   | 0.8 | % |
| Money market checking                                                                                   |   | 234,031                       |      | 3,199 |   | 1.4 | % | 228,555 |   | 4,428 |   | 1.9 | % | 192,587 |   | 6,990 |   | 3.6 | % |
| Savings                                                                                                 |   | 414,074                       |      | 5,256 |   | 1.3 | % | 337,671 |   | 6,015 |   | 1.8 | % | 291,569 |   | 7,634 |   | 2.6 | % |
| Time deposits                                                                                           |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less than $100,000                                                                                      |   | 312,473                       |      | 9,924 |   | 3.2 | % | 307,122 |   | 12,697 |   | 4.1 | % | 320,397 |   | 18,092 |   | 5.6 | % |
| $100,000 and greater                                                                                    |   | 92,811                        |      | 2,842 |   | 3.1 | % | 90,053 |   | 3,536 |   | 3.9 | % | 103,327 |   | 5,624 |   | 5.4 | % |
| Total interest-bearing deposits                                                                         |   | 1,343,107                     |      | 21,951 |   | 1.6 | % | 1,224,317 |   | 27,762 |   | 2.3 | % | 1,141,645 |   | 40,312 |   | 3.5 | % |
| Other interest-bearing liabilities                                                                      |   | 2,464                         |      | 35 |   | 1.4 | % | 2,130 |   | 41 |   | 1.9 | % | 2,145 |   | 101 |   | 4.7 | % |
| Total interest-bearing  liabilities                                                                |   | 1,345,571                     |      | 21,986 |   | 1.6 | % | 1,226,447 |   | 27,803 |   | 2.3 | % | 1,143,790 |   | 40,413 |   | 3.5 | % |
| Demand-noninterest-bearing deposits                                                                     |   | 152,443                       |      |   |   |   |   | 144,352 |   |   |   |   |   | 134,219 |   |   |   |   |   |
| Accrued interest and other liabilities                                                                  |   | 18,567                        |      |   |   |   |   | 10,157 |   |   |   |   |   | 12,735 |   |   |   |   |   |
| Shareholders’ equity plus common stock in  ESOP  subject to contingent repurchase  obligation |   | 152,928                       |      |   |   |   |   | 149,277 |   |   |   |   |   | 146,987 |   |   |   |   |   |
| **Total liabilities and**  **shareholders’  equity**                                          |   | $                             | 1,669,509 |   |   |   |   |   | $ | 1,530,233 |   |   |   |   |   | $ | 1,437,731 |   |   |   |   |   |
| Net interest income                                                                                     |   |                          |      | $ | 59,599 |   |   |   |   |   | $ | 58,306 |   |   |   |   |   | $ | 59,283 |   |   |   |
| Interest rate spread                                                                                    |   |                          |      |   |   | 3.6 | % |   |   |   |   | 3.7 | % |   |   |   |   | 3.9 | % |
| Net interest margin (1)                                                                                 |   |                          |      |   |   | 3.8 | % |   |   |   |   | 4.1 | % |   |   |   |   | 4.4 | % |

 

----

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

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

 

29

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**MANAGEMENT’SDISCUSSION****ANDANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS**

 

The following discussion andanalysis provides information regarding the Company’s financial condition as ofDecember 31, 2003 and 2002 and the results of operations for the years endedDecember 31, 2003, 2002 and 2001. This discussion and analysis should be readwith the financial statements, notes and tables included elsewhere in thisannual report. The financial information provided below is rounded in order tosimplify the presentation of management’s discussion and analysis. However, theratios and percentages provided below are calculated using the more detailedfinancial information contained in the financial statements, notes and tablesincluded elsewhere in this annual report.

 

**CriticalAccounting Policies**

 

The Company’s financialstatements are prepared in conformity with accounting principles generallyaccepted in the United States of America. These accounting principles, whichcan be complex, are significant to our financial condition and our results ofoperations and require management to apply significant judgment with respect tovarious accounting, reporting and disclosure matters. Management must useestimates, assumptions and judgments to apply these principles where actualmeasurements are not possible or practical. These estimates, assumptions andjudgments are based on information available as of the date of this report and,as this information changes, actual results could differ from the estimates,assumptions and judgments reflected in the financial statements. Changes insuch estimates may have a significant impact on the financial statements.Management has reviewed the application of these policies with the AuditCommittee of West Suburban’s Board of Directors. Management’s Discussion andAnalysis of Financial Condition and Results of Operations should be read inconjunction with our consolidated financial statements included herein.

 

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.

 

**Allowance for Loan Losses.**  The Company maintains an allowance for loanlosses at a level management believes is sufficient to absorb credit lossesinherent in the loan portfolio. The allowance for loan losses represents theCompany’s estimate of probable losses in the loan portfolio at each balancesheet date and is based on the review of available and relevant information.The allowance contains allocations for probable losses that have beenidentified relating to specific borrowing relationships as well as probablelosses for pools of loans. The allowance for loan losses is reassessed monthlyby the Company to determine the appropriate level of the allowance. The amountof the allowance for loan losses is determined based on a variety of factors,including assessment of the credit risk of the loans in the loan portfolio,volume of the loans, delinquent loans, evaluation of current economicconditions in the market area, actual charge-offs during the period andhistorical loss experience. Loan quality is continually monitored by managementand reviewed by the loan committee on a monthly basis.

 

All categories of loans areevaluated on a category by category basis. In addition, individual commercial,construction and commercial mortgage loans are evaluated to determine if aspecific loss allocation is needed for problem loans deemed to have a shortfallin collateral. Management also considers the borrower’s current economic statusincluding liquidity and future business viability. Other factors used in theallocation of the allowance include levels and trends of past dues andcharge-offs along with concentrations of credit within the commercial andcommercial real estate loan portfolios. This evaluation is inherentlysubjective as it requires estimates that are susceptible to significantrevision as more information becomes available or as future events occur. Alongwith the allocation of the allowance on a category by category basis and thespecific allocations for individual borrowing relationships, the allowanceincludes a relatively small portion that remains unallocated.

 

Management adjusts theallowance for loan losses by recording a provision for loan losses in an amountsufficient to maintain the allowance at the level determined appropriate. Loansare charged-off when deemed to be uncollectible by management. The Companybelieves that the allowance for loan losses is adequate to provide forestimated probable credit losses inherent in the loan portfolio.

 

30

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

 

Through the normal course ofoperations, 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.

 

The following table presentsthe Company’s significant fixed and determinable contractual obligations andsignificant commitments by payment date as of December 31, 2003 (dollars inthousands). The payment amounts represent those amounts contractually due tothe recipient and do not include any carrying value adjustments. Furtherdiscussion of the nature of each obligation is included in the referenced noteto the consolidated financial statements.

 
|                               |   | **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                   |   | $                     | 1,135,629 |                               | $      | —                               |   | $                    | — |      | $      | — |   | $ | 1,135,629 |   |
| Time deposits                      |   | 5                   |   | 211,615               |      | 61,256                             |   | 121,431                              |   |                 |   | 394,302   |   |
| Operating leases                   |   |                |   | 137                   |      | 163                                |   | 48                                   |   | —               |   | 348       |   |
| Stored value cards                 |   |                |   | 17,049                |      | —                             |   | —                               |   | —               |   | 17,049    |   |
| Commitments to extend credit       |   |                |   |                  |      |                               |   |                                 |   |                 |   |      |   |
| Fixed Rate                         |   | 8                   |   |                  |      |                               |   |                                 |   |                 |   | 7,699     |   |
| Variable Rate                      |   | 8                   |   |                  |      |                               |   |                                 |   |                 |   | 462,127   |   |
|                                    |        |                     |        |                       |           |                                    |        |                                      |        |                      |        |           |        |  |  |  |  |  |

 

**Balance Sheet Analysis**

 

***TotalAssets.*** Total assets of the Company at December31, 2003 increased 7.9% from the prior year-end. Increases in the securitiesavailable for sale portfolio were the largest component of the increase intotal assets and were partially offset by decreases in securities held tomaturity and loans. Total average assets in 2003 increased 9.1% from the prioryear primarily due to an increase in average securities. Asset growth wasfunded primarily by higher levels of deposits.

 

***Cashand Cash Equivalents.*** Cash and cash equivalents atDecember 31, 2003 increased 3.8% from the prior year-end, due to increases infederal funds sold. These increases were primarily the result of growth indeposits.

 

***Securities.***  The Company’s available for sale securitiesportfolio increased 67.4% at December 31, 2003 from the prior year-end. TheCompany made a significant investment in U.S. government agency securities in2003. Investing in U.S. government agency securities and classifying them asavailable for sale increases the Company’s liquidity and is an importantelement in the Company’s liquidity management in the current low interest rateenvironment. This practice also allows the Company to better control the levelof liquidity risk and obtain a higher yield over investments such as federalfunds sold over the entire interest rate cycle. The Company also increased itsholdings in municipal bonds due also to favorable yields and tax-exempt statuscompared to alternative investments. During 2003, the Company’s accumulatedother comprehensive income decreased $3.5 million due to the change inunrealized gains on securities available for sale, net of deferred tax. TheCompany’s held to maturity portfolio decreased 41.5% during 2003, primarily dueto calls and maturities of U.S. government agency securities and the Company’sdecision to classify the majority of new securities purchases as available forsale. 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. Factors to be reviewed during this processinclude, but are not limited to, the current interest rate and economicenvironments.

 

31

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***Loans.*** Total loans outstanding at December 31, 2003 decreased 4.8% fromthe prior year-end primarily due to decreases in the commercial and indirectautomobile loan portfolios. The commercial loan portfolio declined primarilydue to pay-offs of large loans and decreases in outstanding revolving lines ofcredit. The decrease in the indirect automobile loan portfolio was primarilydue to pre-payments and scheduled repayments as well as the effect ofpromotional programs offered by new automobile dealers such as 0% financing.The Company expects to see this trend continue until the automobile dealersdiscontinue their promotional programs. These decreases were partially offsetby increases in the home equity portfolio. The growth in the home equityportfolio resulted from a combination of promotional marketing efforts for thisproduct and the current low interest rate environment. The growth in the homeequity loan portfolio was in fixed rate second mortgages.

 

***Allowancefor Loan Losses and Asset Quality.*** The provisionfor loan losses decreased 73.5% in 2003. Net loan charge-offs were $1.6 millionand $6.5 million in 2003 and 2002, respectively. Nonaccrual loans increased$3.0 million in 2003. During the second quarter of 2003, one borrowingrelationship consisting of commercial real estate and construction loans wasclassified as nonaccrual. At December 31, 2003, this borrower had a remainingprincipal balance of approximately $3.8 million against which a specific lossallowance of $1.2 million was allocated. Loans 90 days and more past due andstill on accrual decreased $1.4 million. This was primarily due to oneborrowing relationship paying off one loan in the amount of $.5 million andanother loan in the amount of $.7 million being transferred to nonaccrualstatus. At December 31, 2003, a specific loss allowance of $2.3 million was allocatedagainst a $6.6 million borrowing relationship.

 

The ratio of the allowance forloan losses to total loans outstanding was 1.33% and 1.21% at December 31, 2003and 2002, respectively. Total nonperforming loans increased $1.6 million, or11.4%, from year-end 2002. Most of the nonperforming loan amounts at December31, 2003, relate to three loan relationships. The following table is ananalysis of the Company’s nonperforming loans and other real estate at December31 (dollars in thousands):

 

|                                                           |   | **2003** |   | **2002** |   | **2001** |   |
|----------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Loans past due 90 days or more still on  accrual               |   | $        | 380    |     | $      | 1,789    |   | $ | 11,338 |   |
| Nonaccrual loans                                               |   | 15,008   |   | 12,021   |   | 3,945    |   |
| Total nonperforming loans                                      |   | $        | 15,388 |     | $      | 13,810   |   | $ | 15,283 |   |
| Nonperforming loans as a percent of total  loans               |   | 1.4      | %      | 1.2      | %      | 1.4      | %      |
| Allowance for loan losses as a percent of  nonperforming loans |   | 94       | %      | 100      | %      | 80       | %      |
| Other real estate                                              |   | $        | 1,266  |     | $      | 40       |   | $ | 1,410 |   |
| Nonperforming assets as a percent of total  assets             |   | 0.97     | %      | 0.87     | %      | 1.13     | %      |

 

***Company-OwnedLife Insurance.*** The cash surrender value ofcompany-owned life insurance increased to $13.4 million at December 31, 2003from $2.1 million at December 31, 2002. The Company acquired additionalinsurance to help mitigate the cost of rising employee benefits.

 

***OtherReal Estate.*** During 2003, the Company acquired properties with an aggregate carryingvalue of $1.5 million and sold properties with an aggregate carrying value of$.3 million representing an increase in balances for the year of $1.2 million.During January 2004, the Company sold one property with a carrying value of $.3million.

 

***Deposits.*** Total deposits atDecember 31, 2003 increased 7.7% from the prior year-end. The increase in totaldeposits was primarily the result of an increase in NOW, money market checkingand savings deposits. Management believes the growth in these depositcategories reflects the tendency of its customers to maintain a higher level ofshort-term liquid investments during periods of low interest rates. The averagecost of funds for certificates of deposit was 3.15% at December 31, 2003compared to 4.09% at December 31, 2002. In general, management promotes itsdeposit products when feasible while preserving the Company’s net interestmargin.

 

***StoredValue Cards.*** Stored value cards increased $15.4 million from the prior yearend. This liability reflects the outstanding balances of the Company’s storedvalue card customers. The Company anticipates that this liability will continueto grow as the Company’s various stored value card products enjoy wider acceptanceand use.

 

32

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**CapitalResources**

 

Shareholders’ equity atDecember 31, 2003 decreased 8.3% from the prior year-end as a result ofdividends declared of $19.0 million and a decrease in the fair value of securitiesavailable for sale of $3.5 million, net of deferred taxes, offset by $25.9million of net income. Additionally, shareholders’ equity was decreased by a$11.1 million increase in common stock in ESOP subject to contingent repurchaseobligation. Finally, shareholders’ equity was also decreased by an amount equalto the cost of unearned ESOP shares of $1.2 million. The purchase of theseshares was funded in part with a loan of $1.2 million from West Suburban. Thecommon stock purchased by the ESOP with funds borrowed from West Suburban wasnot allocated to ESOP participants as of December 31, 2003.

 

All capital ratios are inexcess of the regulatory capital requirements which call for a minimum totalrisk-based capital ratio of 8% for each of the Company and the Bank, a minimumTier 1 risk-based capital ratio of 4% for each of the Company and the Bank anda minimum leverage ratio (3% for the most highly rated banks and bank holdingcompanies that do not expect significant growth; all other institutions arerequired to maintain a minimum leverage capital ratio of 4% to 5% depending ontheir particular circumstances and risk and growth profiles) for each of theCompany and the Bank. Bank holding companies and their subsidiaries aregenerally expected to operate at or above the minimum capital requirements. Allcapital ratios are in excess of regulatory minimums and should allow theCompany and the Bank to operate without significant capital adequacy concerns.

 

Management has been advisedthat as of December 31, 2003 and 2002, the Bank qualified as 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 and allocated to participants is included in Tier 1 capital.

 

**Liquidity**

 

Effective liquidity managementensures there is sufficient cash flow to satisfy demand for credit and depositwithdrawals and to take advantage of earnings enhancement opportunities. Alarge, stable core deposit base and a strong capital position are the solidfoundation for the Company’s liquidity position. Liquidity is enhanced by asecurities portfolio structured to provide liquidity as needed. The Companyalso maintains relationships with correspondent banks to purchase federal fundssubject to underwriting and collateral requirements. Additionally, subject tocredit underwriting, collateral, capital stock, and other requirements of theFederal Home Loan Bank of Chicago (“FHLB”), the Company is able to borrow fromthe FHLB on a “same day” basis. As of December 31, 2003, the Company could haveborrowed up to approximately $101 million from the FHLB secured by certain ofits real estate loans and securities. The Company manages its liquidityposition through continuous monitoring of profitability trends, asset quality,interest rate sensitivity and maturity schedules of earning assets andliabilities.

 

Generally, the Company usescash and cash equivalents and securities available for sale to meet itsliquidity needs. As of December 31, 2003 and December 31, 2002, these liquidassets represented 30.8% and 21.5% of total assets, respectively. During 2003,the Company’s cash and cash equivalents increased $2.6 million. In 2003, netcash provided by operating activities was $33.2 million, while net cash used ininvesting activities was $132.0 million. The net cash used in investingactivities was primarily used to purchase securities available for sale. Netcash flows provided by financing activities were $101.4 million in 2003,resulting primarily from deposit growth. Management expects operations to be acontinuing source of cash flow in the future.

 

33

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**Income Statement Analysis – 2003 Compared to2002**

 

***General*.**The Company’s net income increased 44.5% in 2003, partially due to a decreasein the provision for loan losses of $6.0 million. Net income was alsopositively affected by an increase in net interest income of $1.2 million andan increase in total noninterest income of $8.3 million. These increases toincome and decreases to expense were partially offset by increases in totalnoninterest expense of $4.1 million and to income tax expense of $3.5 million.

 

***NetInterest Income.*** Net interest income is theprimary source of income for the Company. Net interest income is the differencebetween interest income earned on interest-earning assets and interest expenseincurred on interest-bearing liabilities. Net interest income is affected bychanges in the volume and yield on interest-earning assets and the volume andrates on interest-bearing liabilities. Interest-earning assets consist offederal funds sold, commercial paper, 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 decreased to 3.8% in 2003 compared to 4.1% in2002.

 

Total interest income (on afully tax-equivalent basis) decreased 5.3% in 2003 primarily due to decliningyields from assets in the Company’s loan portfolio. Average loans in 2003increased .4% while the yield on the portfolio decreased 67 basis points.Yields on the Company’s real estate loan portfolio declined 80 basis pointsduring this period. This yield declined due to the Company experiencing thecontinued effects of refinancing activity in its real estate loan portfolio.Yields on the Company’s home equity loan portfolio declined 60 basis pointsduring the period. Yields of fixed rate home equity loans have declined due toreductions in the Company’s rates on new fixed rate home equity loansreflective of the current interest rate environment. Yields on variable ratehome equity lines of credit vary with the prime rate on semi-annual repricingdates. The average prime rate in 2003 was 4.12% compared to 4.68% in 2002.Yields on the commercial loan portfolio declined 65 basis points during thisperiod. The majority of commercial loans have adjustable rates that are tied toone of a number of rate indices. Generally, these indices have decreased due toreductions in interest rates when compared to 2002. Yields on taxablesecurities decreased 97 basis points in 2003 primarily as a result of theCompany’s reinvestment of proceeds from called and matured securities at lowerrates.

 

Total interest expensedecreased 20.9% in 2003. Interest on deposits, which accounted forsubstantially all of this change, decreased primarily due to lower marketinterest rates. The Company lowered interest rates on all categories ofdeposits in response to the significant decline in market rates. The yield oninterest-bearing deposits decreased 64 basis points to 1.63% in 2003 comparedto 2.27% in 2002.

 

The following table reflectsthe impact of changes in volume and rates of interest-earning assets andinterest-bearing liabilities on a tax equivalent basis for the years endedDecember 31, 2003 and 2002 (dollars in thousands):

 

 
|                               |   | **2003  compared to 2002** |       | **2002  compared to 2001** |     |
|------------------------------------|--------|----------------------------|------------|----------------------------|----------|
|                               |   | **Change due  to**         |       | **Total  Change**          |     | **Change due  to** |   | **Total  Change** |   |
| **Volume**                         |   | **Rate**                   | **Volume** |                       | **Rate** |
| **Interest Income**                |   |                       |       |                       |     |   |   |   |   |   |   |   |   |
| Federal funds sold                 |   | $                          | (83        | )                          | $        | (138 | ) | $ | (221 | ) | $ | 81 |   | $ | (458 | ) | $ | (377 | ) |
| Commercial paper                   |   | —                     |       | —                     |     | — |   | (86 | ) | — |   | (86 | ) |
| Securities                         |   | 5,675                      |       | (2,925                     | )        | 2,750 |   | 2,125 |   | (2,366 | ) | (241 | ) |
| Loans                              |   | 239                        |       | (7,292                     | )        | (7,053 | ) | 2,328 |   | (15,211 | ) | (12,883 | ) |
| Total interest income              |   | 5,831                      |       | (10,355                    | )        | (4,524 | ) | 4,448 |   | (18,035 | ) | (13,587 | ) |
|                               |   |                       |       |                       |     |   |   |   |   |   |   |   |   |
| **Interest Expense**               |   |                       |       |                       |     |   |   |   |   |   |   |   |   |
| Interest-bearing deposits          |   | 1,941                      |       | (7,752                     | )        | (5,811 | ) | 1,876 |   | (14,426 | ) | (12,550 | ) |
| Other interest-bearing liabilities |   | 5                          |       | (11                        | )        | (6 | ) | — |   | (60 | ) | (60 | ) |
| Total interest expense             |   | 1,946                      |       | (7,763                     | )        | (5,817 | ) | 1,876 |   | (14,486 | ) | (12,610 | ) |
| Net interest income                |   | $                          | 3,885      |                       | $        | (2,592 | ) | $ | 1,293 |   | $ | 2,572 |   | $ | (3,549 | ) | $ | (977 | ) |

 

34

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***Provisionfor Loan Losses.*** The Company’s provision for loanlosses decreased 73.5% in 2003. The decreased expense in 2003 was primarily dueto $5.0 million less of net loan charge-offs and a $54.5 million decrease intotal loans compared to 2002. A more detailed discussion concerning the allowancefor loan losses is presented in the Allowance for Loan Losses and Asset Qualitysection of this report.

 

***NoninterestIncome.***Total noninterest income increased 59.6%during 2003 compared to 2002. Service fees on deposit accounts increased $2.8million primarily as a result of the implementation of an overdraft programthat provides flexibility to certain customers of the Company. Managementanticipates that the future growth in income generated from this program willslow but believes the program will continue to enhance fee income. Debit cardfees increased $.1 million due to increased usage. Net realized gains onsecurities transactions increased $1.3 million. Management does not anticipatethat the Company will continue to realize significant gains from sales ofsecurities. This was evident during the fourth quarter of 2003 when the amountof gains were nominal. The Company also experienced an increase in net gains onsales of loans held for sale of $.2 million due to higher activity resultingfrom a strong mortgage refinancing market. Management anticipates the volume ofthis activity to decline in the coming quarters due to the reduction in thenumber of customers who have not refinanced during the low interest rateenvironment. The Company also recorded $1.1 million of additional income inconnection with a litigation settlement. Stored value card income increased$3.1 million during 2003 compared to 2002. The Company anticipates income willcontinue to grow as the Company’s various stored value card products enjoy wideracceptance and the use of these products grows. Other noninterest incomedecreased $.2 million primarily due to reduced recoveries of expenses incurredin connection with a problem asset.

 

***NoninterestExpense.*** Total noninterest expense increased 11.0% during 2003 compared to 2002.Salary and employee benefits increased $2.0 million primarily as a result ofincreased ESOP contribution expense, higher compensation to employees driven bythe performance of the Company in 2003, the expansion of the stored valuedepartment as well as normal salary increases and increased medical insurancecosts. The number of full-time equivalent employees was 499 at December 31,2003 compared to 487 at December 31, 2002. Occupancy expense increased $.2 millionprimarily due to increases in depreciation and maintenance expense on Bankfacilities. Furniture and equipment expense increased $.1 million primarily dueto increased depreciation costs of data processing equipment, which includes anew mainframe computer purchased in 2002. Advertising and promotion expensedecreased $.5 million primarily due to the Company reducing the amount ofadvertising it outsourced to an ad agency. Professional fees increased $.1million due to increased legal fees in connection with problem loans and thedevelopment of stored value card products. Stored value card expense, includingexpenses relating to the production of cards, postage and processing services,increased $1.7 million during 2003. Other noninterest expense increased $.5million primarily due to the payment of real estate taxes on propertiessecuring delinquent loans. Additionally, the Company experienced an increase inpostage expense due to increased mailing which promoted home equity and retailbanking products and services. These increases were partially offset by adecrease in telephone expense which occurred due to a refund from overpaymentson data and telephone lines. The Company’s efficiency ratio, a measure of theamount of expense needed to generate each dollar of income, was 51% in 2003 and52% in 2002.

 

***IncomeTaxes.*** Income tax expense increased 41.2% in 2003,primarily due to higher pre-tax income. The effective tax rates for the yearsended December 31, 2003 and 2002 were 31.6% and 32.1%, respectively. The lowereffective tax rate in 2003 was due to a refund of a prior year’s state incometaxes. The refund resulted from amending the prior year’s state income taxreturn due to changes in regulations relating to the apportionment of income.

 

**Income Statement Analysis – 2002 Compared to2001**

 

***General*.**The Company’s net income decreased 11.2% in 2002, primarily due to an increasein the provision for loan losses of $5.2 million. Net income was also affectednegatively by a decrease in net interest income of $.9 million and an increasein total noninterest expense of $1.6 million. These decreases to income andincreases to expense were partially offset by an increase to total noninterestincome of $4.3 million and a decrease to income tax expense of $1.1 million.

 

35

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***Net Interest Income.*** The Company’s netinterest margin decreased to 4.1% in 2002 compared to 4.4% in 2001.

 

Total interestincome on a tax equivalent basis decreased 13.6% in 2002 primarily due todeclining yields from assets in the Company’s loan portfolio. Average loans in2002 increased 3.4% while the yield on the portfolio decreased 142 basispoints. This decrease was primarily due to the declining yields from assets inthe Company’s commercial loan portfolio, which declined 199 basis points duringthis period. The majority of commercial loans have adjustable rates that aretied to one of a number of rate indices. Generally, these interest rate indiceshave declined due to the significant reduction in interest rates during 2001.Yields on home equity lines of credit, which vary with the prime rate,decreased 218 basis points in 2002. The average prime rate in 2002 was 4.68%compared to 6.91% in 2001.

 

Total interestexpense decreased 31.2% in 2002. Interest on deposits, which accounted forsubstantially all of this change, decreased primarily due to lower marketinterest rates. The Company lowered interest rates on all categories ofdeposits in response to the significant decline in market rates. The yield onaverage interest-bearing deposits decreased 126 basis points to 2.27% in 2002compared to 3.53% in 2001.

 

***Provisionfor Loan Losses.*** The Company’s provision for loanlosses increased 175.4% in 2002. The increase in the provision for loan losseswas due to increased loan volume and increased net loan charge-offs.

 

***NoninterestIncome.***Total noninterest income increased 44.5% in 2002. Service fees ondeposit accounts increased $1.7 million. This resulted primarily from businessdemand deposit customers earning lower interest credit on their balances as aresult of the lower interest rate environment in 2002. In addition, averagedemand-noninterest-bearing and NOW accounts, which generate most of the servicecharge income, increased 7.5% and 11.6%, respectively, in 2002. The Companyalso implemented a new overdraft program in the fourth quarter of 2002. Thisprogram resulted in additional service fee income being recorded. The Companyexperienced a net increase of $1.6 million in net gains on securities primarilydue to the absence of $3.0 million of impairment losses on corporate debtsecurities recognized in 2001. Debit card fees increased $.3 million as aresult of increased usage. The Company also experienced an increase in net gainon sales of loans held for sale of $.3 million due to higher activity resultingfrom a strong mortgage refinancing market. Stored value card income increased$.5 million from 2001.

* *

***NoninterestExpense.*** Total noninterest expense increased 4.5%in 2002. Salaries and employee benefits were essentially unchanged primarily asa result of staffing reductions and reduced bonus and ESOP expense partiallyoffset by normal salary increases. The number of full-time equivalent employeeswas 487 and 527 at December 31, 2002 and 2001, respectively. Occupancy expenseincreased $.2 million primarily due to increased depreciation and real estatetax expense associated with the opening of the Oswego and Chicago Avenuefacilities along with the cost associated with operating the South Elginfacility for a full year. Advertising and promotion increased $.5 millionprimarily due to more aggressive advertising efforts. Stored value card expenseincreased $.8 million from 2001.The largest of these expenses are costs for thestored value cards, postage and processing. The Company’s efficiency ratio, ameasure of the amount of expense needed to generate each dollar of income was52% in both 2002 and 2001.

 

***IncomeTaxes.*** Income tax expense decreased 11.5% in 2002,primarily due to lower pre-tax income. The effective tax rates for the yearsended December 31, 2002 and 2001 were 32.1% and 32.2%, respectively.

 

**InterestRate Sensitivity**

 

The Company attempts to maintain a conservative posture with regard tointerest rate risk by actively managing its asset/liability GAP position andmonitoring the direction and magnitude of gaps and risk. The Company attemptsto moderate the effects of changes in interest rates by adjusting its asset andliability mix to achieve desired relationships between rate sensitive assetsand rate sensitive liabilities. Rate sensitive assets and liabilities are thoseinstruments that reprice within a given time period. An asset or liabilityreprices when its interest rate is subject to change or upon maturity.

 

Movements in general market interest rates are a key element in changesin the net interest margin. The Company’s policy is to manage its balance sheetso that fluctuations in the net interest margin are minimized regardless of the

 

36

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level of interestrates, although the net interest margin does vary somewhat due to management’sresponse to increasing competition from other financial institutions.

 

The Company measures interestrate sensitivity through a net interest income analysis. The net interestincome analysis measures the change in net interest income in the event ofhypothetical changes in interest rates. This analysis assesses the risk ofchanges in net interest income in the event of a sudden and sustained 100 to200 basis point increase or decrease in market interest rates. This analysis issubject to the Company’s assumptions, which include the following:

 

•                  Balance sheetvolume reflects the current balances and does not project future growth orchanges. The current balances establish the base case from which all percentchanges are calculated.

 

•                  The replacementrate for loan and deposit items that mature is the current rate offered by theCompany as adjusted for the assumed rate increase or decrease. The replacementrate for securities is the current market rate as adjusted for the assumed rateincrease or decrease.

 

•                  The repricingrate for balance sheet data is determined by utilizing individual accountstatistics provided by the Company’s data processing systems.

 

•                  The maturity andrepricing dates for balance sheet data are determined by utilizing individualaccount statistics provided by the Company’s data processing systems.

 

Listed below are the Company’sprojected changes in net interest income over a twelve-month horizon for thevarious rate shock levels as of the periods indicated (dollars in thousands):

 
|                   |   | **Amount** |   | **Dollar**** ****Change** |   | **Percent**** ****Change** |   |
|------------------------|--------|------------|--------|--------------------------------|--------|---------------------------------|--------|
| **December  31, 2003** |   |       |   |                           |   |                            |   |
| +200 basis points      |   | $          | 46,400 |                           | $      | (12,002                         | )      | -20.6 | % |
| +100 basis points      |   | 52,376     |   | (6,026                         | )      | -10.3                           | %      |
| Base                   |   | 58,402     |   |                           |   |                            |   |
| -100 basis points      |   | 51,988     |   | (6,414                         | )      | -11.0                           | %      |
| -200 basis points      |   | N/A        |   | N/A                            |   | N/A                             |   |
|                   |   |       |   |                           |   |                            |   |
| **December  31, 2002** |   |       |   |                           |   |                            |   |
| +200 basis points      |   | $          | 47,711 |                           | $      | (9,368                          | )      | -16.4 | % |
| +100 basis points      |   | 52,436     |   | (4,643                         | )      | -8.1                            | %      |
| Base                   |   | 57,079     |   |                           |   |                            |   |
| -100 basis points      |   | 52,864     |   | (4,215                         | )      | -7.4                            | %      |
| -200 basis points      |   | N/A        |   | N/A                            |   | N/A                             |   |

 

A projected 200 basis pointdrop in market rates at December 31, 2003 and 2002 is not relevant due to thecurrent low interest rate environment.

 

**Effectsof Inflation**

 

Unlike industrial companies,nearly all of the assets and liabilities of the Company are monetary in nature.As a result, interest rates have a more significant impact on the Company’sperformance than do the effect of general levels of inflation. Interest ratesdo not necessarily move in the same direction or experience the same magnitudeof change as goods and services, since such prices are affected by inflation.In the current economic environment, liquidity and interest rate adjustmentsare features of the Company’s asset/liability management, which are importantto the maintenance of acceptable performance levels. The Company attempts tomaintain a balance between monetary assets and monetary liabilities, over time,to offset the potential effects of changing interest rates.

 

37

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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                           |
| Paul J.  Lehman                  |                    | The Macom  Corporation, President                                                 |
| 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 Lending and  Community Reinvestment Act Officer |
| James T.  Chippas                |                    | Senior Vice  President, Consumer Lending                                          |
| Duane G.  Debs                   |                    | Senior Vice  President, Comptroller and Trust Officer                             |
| Daniel P.  Grotto                |                    | Senior Vice  President, Business Development and Prepaid Solutions                |
|                             |                    |                                                                              |
| **Building Management**          |                    |                                                                              |
| Edward J.  Garvey                |                    | Vice  President, Building Management                                              |
|                             |                    |                                                                              |
| **Business Development**         |                    |                                                                              |
| Doug R.  Bobenhouse              |                    | Business  Development and Sales Manager - Prepaid Solutions                       |
|                                  |                         |                                                                                   |  |  |

 

38

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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                             |
| Edwin S.  Stephens IV             |   | Vice  President, Commercial Loans                             |
| Richard D.  Yanney                |   | Vice  President, Commercial Loans                             |
| Gregory L.  Young                 |   | Vice  President, Commercial Loans                             |
| John J.  Schroeder                |   | Commercial  Loan Officer                                      |
|                              |   |                                                          |
| **Compliance**                    |   |                                                          |
| David J.  Mulkerin                |   | Chief  Compliance Officer                                     |
|                              |   |                                                          |
| **Comptroller’s Department** |   |                                                          |
| George E.  Ranstead               |   | Vice  President, Assistant Comptroller and Investment Officer |
|                              |   |                                                          |
| **Consumer Loans**                |   |                                                          |
| William H.  Hunter                |   | Vice  President, Consumer Loans                               |
| Keith J.  Larson                  |   | Vice  President, Consumer Loans                               |
| Cynthia A.  Meredith              |   | Vice  President, Consumer Loans                               |
| Charles J.  Svoboda               |   | Vice  President, Consumer Loans                               |
| David J.  Wanek                   |   | Assistant  Vice President, Consumer Loans                     |
|                              |   |                                                          |
| **Electronic Services**           |   |                                                          |
| Janet L.  Kemble                  |   | Assistant  Vice President, Electronic Services                |
|                              |   |                                                          |
| **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                   |
|                              |   |                                                          |
| **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              |
|                              |   |                                                          |
| **Marketing**                     |   |                                                          |
| Denise M.  Zatarski               |   | Director of  Marketing                                        |
|                              |   |                                                          |
| **Operations**                    |   |                                                          |
| Danielle  Budig                   |   | Vice  President, Operations and Visa                          |
| Jill C.  Davenport                |   | Assistant  Vice President, Operations                         |

 

39

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| **Purchasing**                       |   |                                                                    |
|--------------------------------------|--------|-------------------------------------------------------------------------|
| Helen G.  Schmitt                    |   | Assistant  Vice President, Purchasing                                   |
|                                 |   |                                                                    |
| **Retail Banking**                   |   |                                                                    |
| Jack Buscemi                         |   | Vice  President, Retail Banking and Loss Prevention                     |
| Marcia K.  Worobec                   |   | Vice  President, Branch Operations and Branch Manager - Westmore, Metra |
| Kathleen M.  Brockman                |   | Assistant  Vice President, Branch Manager - Lake Street                 |
| Sharon Buck                          |   | Assistant  Vice President, Branch Manager - Montgomery                  |
| Jeanne L.  Carlisle                  |   | Assistant  Vice President, Branch Manager - Bolingbrook 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 - St. Charles                 |
| Yolanda V.  Dunn                     |   | Assistant  Vice President, Branch Manager - Eola Road                   |
| Joyce M.  Fedele                     |   | Assistant  Vice President, Branch Manager - Charlestowne                |
| Sharon A.  Fonte                     |   | Assistant  Vice President, Branch Manager - Glendale Heights            |
| Priya Hira                           |   | Assistant  Vice President, Branch Manager - Villa Park                  |
| Kirsten L.  Jensen                   |   | Assistant  Vice President, Branch Manager - Bartlett, South Elgin       |
| Amy  Mazzoccoli                      |   | Assistant  Vice President, Branch Manager - Warrenville                 |
| Terry  Leitner                       |   | Assistant  Vice President, Branch Manager - 75th Street, Westmont       |
| Cheryl M.  Looby                     |   | Assistant  Vice President, Branch Manager - Oakbrook Terrace            |
| Jeffery W.  Miska                    |   | Assistant  Vice President, Branch Manager - Cass Avenue                 |
| Susan  Neustrom                      |   | Assistant  Vice President, Branch Manager - Downtown Downers            |
| Brian S.  Nickleski                  |   | Assistant  Vice President, Branch Manager - South Main                  |
| Gwen B.  O’Loughlin             |   | Assistant  Vice President, Branch Manager - North Main                  |
| Robert L.  Pauling                   |   | Assistant  Vice President, Branch Manager - Stratford Square            |
| Cynthia A.  Picton                   |   | Assistant  Vice President, Branch Manager - Galena                      |
| Kay J.  Piotrowski                   |   | Assistant  Vice President, Branch Manager - Carol Stream, Fair Oaks     |
| Lisa M.  Schmidt                     |   | Assistant  Vice President, Branch Manager - Danada, Wheaton             |
| Jerome F.  Sheeman                   |   | Assistant  Vice President, Branch Manager - Finley Road                 |
| Joseph M.  Sperlik                   |   | Assistant  Vice President, Branch Manager - Romeoville                  |
| Jose L.  Valdez                      |   | Assistant  Vice President, Branch Manager - Oswego                      |
| Timothy C.  Voreis                   |   | Assistant  Vice President, Branch Manager - President Street            |
|                                 |   |                                                                    |
| **Secretary to the Board**           |   |                                                                    |
| Jay J.P.  Greifenkamp                |   | Assistant  Vice President, Financial Analyst and Secretary to the Board |
|                                 |   |                                                                    |
| **Travel with West Suburban**        |   |                                                                    |
| Dennis A.  Woodyatt                  |   | Travel Agent                                                            |
|                                 |   |                                                                    |
| **Trust**                            |   |                                                                    |
| Christine H.  Pawlak                 |   | Trust  Officer                                                          |
|                                 |   |                                                                    |
| **West Suburban Insurance Services** |   |                                                                    |
| Patricia  Falstrom                   |   | Insurance  Agent                                                        |

 

40

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**Addressesof West****SuburbanFacilities**

 

**Aurora**

Eola Road Branch: 335 NorthEola Road, Aurora, Illinois 60504 - (630) 898-7072

Galena Branch: 2000 West GalenaBoulevard, Aurora, Illinois 60506 - (630) 896-7000

Lake Street Branch: 101 NorthLake Street, Aurora, Illinois 60506 - (630) 844-5200

 

**Bartlett**

Bartlett Branch: 1061 WestStearns Road, Bartlett, Illinois 60103 - (630) 830-5330

 

**Bloomingdale**

Stratford Square Branch: 355West Army Trail Road, Bloomingdale, Illinois 60108 - (630) 351-0600

 

**Bolingbrook**

Bolingbrook East Branch: 672East Boughton Road, Bolingbrook, Illinois 60440 - (630) 972-9550

Bolingbrook West Branch: 1104West Boughton Road, Bolingbrook, Illinois 60440 - (630) 378-9680

 

**CarolStream**

Carol Stream Branch: 401 NorthGary Avenue, Carol Stream, Illinois 60188 - (630) 690-8700

Fair Oaks Branch: 1380 WestArmy Trail Road, Carol Stream, Illinois 60188 - (630) 213-5920

President Street Branch: 879East Geneva Road, Carol Stream, Illinois 60188 - (630) 752-1175

 

**Darien**

75th Street Branch:1005 75th Street, Darien, Illinois 60561 - (630) 852-9226

Cass Avenue Branch: 8001 SouthCass Avenue, Darien, Illinois 60561 - (630) 852-6900

 

**DownersGrove**

Downtown Downers Branch: 5330Main Street, Downers Grove, Illinois 60515 - (630) 652-2775

Finley Road Branch: 2800 FinleyRoad, Downers Grove, Illinois 60515 - (630) 495-3600

 

**GlendaleHeights**

Glendale Heights Branch: 1657Bloomingdale Road, Glendale Heights, Illinois 60139 - (630) 690-8600

 

**Lombard**

Metra Main Branch: 100 SouthMain Street, Lombard, Illinois 60148 - (630) 268-9010

North Main Branch: 707 NorthMain Street, Lombard, Illinois 60148 - (630) 691-8558

South Main Branch: 1122 SouthMain Street, Lombard, Illinois 60148 - (630) 495-3605

*Westmore Branch: 711 South Meyers Road, Lombard, Illinois 60148 - (630)629-4200 (Headquarters)*

 

**Montgomery**

Montgomery Branch: 1830 DouglasRoad, Montgomery, Illinois 60538 - (630) 844-5600

 

**Naperville**

Chicago Avenue Branch: 1296East Chicago Avenue, Naperville, Illinois 60540 - (630) 652-2140

Naperville Branch: 2020 FeldottLane, Naperville, Illinois 60540 - (630) 416-3800

 

**OakbrookTerrace**

Oakbrook Terrace Branch: 17W75422nd Street, Oakbrook Terrace, Illinois 60181 - (630) 916-1195

 

**Oswego**

Oswego Branch: 2830 Route 34,Oswego, Illinois 60543 - (630) 652-2790

 

**Romeoville**

Romeoville Branch: 505 NorthWeber Road, Romeoville, Illinois 60446 - (815) 372-0665

 

41

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**SouthElgin**

South Elgin Branch: 1870McDonald Road, South Elgin, Illinois 60177 - (815) 841-8000

 

**St.Charles**

Charlestowne Branch: 3000 EastMain Street, St. Charles, Illinois 60174 - (630) 762-1395

St. Charles Branch: 315 SouthRandall Road, St. Charles, Illinois 60174 - (630) 377-6930

 

**VillaPark**

Villa Park Branch: 40 East St.Charles Road, Villa Park, Illinois 60181 - (630) 832-8775

 

**Warrenville**

Warrenville Branch: 3S041 Route59, Warrenville, Illinois 60555 - (630) 393-6060

 

**Westmont**

Westmont Branch: 6400 SouthCass Avenue, Westmont, Illinois 60559 - (630) 963-2735

 

**Wheaton**

Danada Branch: 295 West LoopRoad, Wheaton, Illinois 60187 - (630) 871-9890

Wheaton Branch: 221 South WestStreet, Wheaton, Illinois 60187 - (630) 221-8220

 

ATMs are available at all ofthe above banking branches.

 

**Limited-Service Branches**

*Beacon Hill Retirement Community: Lombard,Illinois 60148*

*Financial Center: 717 South Meyers Road,Lombard, Illinois 60148*

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

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

 

**Subsidiary**

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

 

**OtherServices**

*Prepaid Solutions Group: 17W754 22ndStreet, Oakbrook Terrace, Illinois 60181 - (630) 652-2500*

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

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

*West Suburban Bank Visa: 701 South MeyersRoad, Lombard, Illinois 60148 - (630) 652-2500 extension 2903*

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

 

42

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**[MAP OF MARKET AREA THAT INDICATES LOCATIONOF FACILITIES]**

 

 

**[WSB LOGO]**

 

***Where strength ismatched by service***

 

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**Shareholder Information**

 

**AnnualReport on Form 10-K**

# ** **

A copy of WestSuburban Bancorp, 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 andChief Financial Officer

West SuburbanBancorp, Inc.

2800 FinleyRoad

Downers Grove,Illinois 60515

(630) 652-2801

 

**AnnualMeeting of Shareholders**

The annual meetingof shareholders of West Suburban Bancorp, Inc. will be held at West SuburbanBank, 711 South Meyers Road, Lombard, Illinois on Wednesday, May 12, 2004 at8:00 a.m. All shareholders are cordially invited to attend.

 

**StockTransfer Agent and Registrar**

Inquiriesregarding stock transfers, registration, lost certificates and changes of nameand address should be directed to the stock transfer agent and registrar bywriting to:

 

George E.Ranstead

Secretary tothe Board and Treasurer

West SuburbanBancorp, Inc.

2800 FinleyRoad

Downers Grove,Illinois 60515

(630) 652-2802

 

**CommunityReinvestment Act**

 

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 VicePresident, Commercial Lending and Community Reinvestment Act Officer

West SuburbanBank

717 SouthMeyers Road

Lombard,Illinois 60148

(630) 652-2308

 

**IndependentAuditors**

Crowe Chizek and Company LLC

One Mid America Plaza, Suite700

Post Office Box 3697

Oak Brook, Illinois 60522

 

**CorporateCounsel**

Barack Ferrazzano KirschbaumPerlman & Nagelberg LLC

333 West Wacker Drive, Suite2700

Chicago, Illinois 60606

 

**MEMBERFDIC**

 

**[EQUAL HOUSING LENDERLOGO]**

 

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