# **Exhibit13**

 

# **Profile**

# ** **

West Suburban Bancorp,Inc. (“West Suburban”) is the parent bank holding company of West SuburbanBank, Lombard, Illinois (the “Bank” and, together with West Suburban, the “Company”).The Company had total assets at December 31, 2005 of approximately $1.83billion. The Bank is one of the largest independent banks headquartered inDuPage County.

 
| **West Suburban Bancorp, Inc.  Financial Highlights** | ** ** |
|-------------------------------------------------------|------------|
| ** **                                            | ** ** |
| ** **                                            | ** ** | **Years Ended December 31,  (Dollars in thousands, except per share data)** | ** ** |
| ** **                                            | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** |
| Net income                                            |       | $ | 25,486 |   | $ | 23,658 |   | $ | 25,908 |   | $ | 17,932 |   | $ | 20,183 |   |
| Per share  data                                       |       |   |   |   |   |   |   |   |   |   |   |
| Earnings                                              |       | 58.93 |   | 54.82 |   | 59.90 |   | 41.46 |   | 46.67 |   |
| Book value (1)                                        |       | 344.60 |   | 347.87 |   | 346.62 |   | 341.47 |   | 335.30 |   |
| Net loans                                             |       | 1,091,747 |   | 1,046,125 |   | 1,074,215 |   | 1,128,816 |   | 1,093,376 |   |
| Total assets                                          |       | 1,826,826 |   | 1,748,049 |   | 1,710,695 |   | 1,586,063 |   | 1,473,559 |   |
| Deposits                                              |       | 1,639,666 |   | 1,569,742 |   | 1,529,931 |   | 1,420,256 |   | 1,309,720 |   |
|                                                       |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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(1)          Book value per share represents theaggregate amount of shareholders’ equity and common stock in ESOP subject tocontingent repurchase obligation divided by the number of outstanding shares.See Note 7 to the Company’s consolidated financial statements. Thispresentation is consistent with the Company’s belief that it is unlikely thatthe Company would be required to satisfy the contingent repurchase obligation.

 
| **Table of Contents**                                                                                  |
|--------------------------------------------------------------------------------------------------------|
|                                                                                                   |   |   |
| Profile                                                                                                |   | 1 |
| Special Note Concerning Forward-Looking Statements and Risk Factors                                    |   | 2 |
| Letter to Our Shareholders, Customers and Friends                                                      |   | 3 |
| Common Stock, Book Value and Dividends                                                                 |   | 4 |
| Business  Review                                                                                       |   | 4 |
| Report of Independent Registered Public Accounting Firm                                                |   | 5 |
| Consolidated Financial Statements                                                                      |   | 6 |
| Notes to Consolidated Financial Statements                                                             |   | 10 |
| Management's Report on Internal Control  Over Financial Reporting                                      |   | 27 |
| Report of  Independent Registered Public Accounting Firm on Internal Control Over  Financial Reporting |   | 28 |
| Selected Financial Data                                                                                |   | 30 |
| Average  Balance Sheets, Net Interest Income and Average Rates and Yields on a Tax  Equivalent Basis   |   | 31 |
| Management’s Discussion and Analysis of  Financial Condition and Results of Operations            |   | 32 |
| Boards of Directors and Officers                                                                       |   | 41 |
| Addresses of West Suburban Facilities                                                                  |   | 44 |
| Map of Facilities                                                                                      |   | 46 |
| Shareholder Information                                                                                |   | 47 |

 

1

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###### ***SpecialNote Concerning Forward-Looking Statements and Risk Factors***

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

*This document (including informationincorporated by reference) contains, and future oral and written statements ofthe Company and its management may contain, forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995 with respect tothe financial condition, results of operations, plans, objectives, futureperformance and business of the Company. Forward-looking statements, which maybe based upon beliefs, expectations and assumptions of the Company’s managementand 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” or othersimilar expressions. Additionally, all statements in this document, includingforward-looking statements, speak only as of the date they are made, and theCompany undertakes no obligation to update any statement in light of newinformation or future events.*

 

*A number of factors, many of which are beyond the ability ofthe Company to control or predict, could cause actual results to differmaterially from those in its forward-looking statements. These factors include,among others, the following: (i) the strength of the local and nationaleconomy; (ii) the timely development and acceptance of new products andservices, including products and services offered through alternative deliverychannels such as the Internet; (iii) changes in federal, state and locallaws, regulations and governmental policies (including laws, regulations andgovernment policies relating to taxation) concerning the Company’s generalbusiness; (iv) changes in interest rates and prepayment rates of the Company’sassets; (v) increased competition in the financial services sector and theinability to attract new customers and retain existing customers; (vi) changesin technology implemented by the Company and by other parties includingtechnological changes implemented for, or related to, the Company’s website ornew products such as prepaid solutions cards, payroll cards and other similarproducts and services; (vii) the inability to develop and maintain secure andreliable electronic systems including systems developed for the Company’swebsite or new products such as prepaid solutions cards, payroll cards andother similar products and services; (viii) the loss of key executives oremployees and the difficulty in replacing them; (ix) changes in consumer spendingand saving; (x) the economic impact of terrorist activities and militaryactions; (xi) unexpected results of acquisitions; (xii) unexpectedoutcomes of existing or new litigation involving the Company;(xiii) changes in accounting policies and practices; and (xiv) theinability of the Company to manage the risks associated with the foregoing aswell as anticipated.**These risks anduncertainties should be considered in evaluating forward-looking statements andundue reliance should not be placed on such statements.*

 

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

 

2

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

# ** **

As we close the chapter on the midpoint of the first decade of the newmillennium – and appreciate our accomplishments – we are mindful of thechallenges that confront us. We are committed to continuing to provide superiorshareholder returns and excellence in customer service. As in the past, oursuccess depends on the ability to maintain our record of profitable growth.

 

In 2006, we anticipate adding two branches to our network. The newbranches will enhance our market share and allow us to take advantage of thegrowth in the Yorkville and Oswego, Illinois communities. We are scheduled toopen our new branch location in Yorkville this spring and our new branch locationin Oswego this fall.

 

During 2005, we recorded $25.5 million net income representing anincrease of $1.8 million (7.7%) over our 2004 net income. Our strongperformance reflects a return on average shareholders’ equity of 17.54% for2005. Our return on average total assets increased to 1.43% in 2005 from 1.36%in 2004. Additionally, our earnings per share increased by $4.11 (7.5%) to$58.93.

 

In 2005, our total assets grew by $79 million (4.5%) to $1,827 million.Additionally, our total loans grew $45 million (4.3%). The majority of thegrowth came from growth in the commercial, commercial real estate, constructionand consumer real estate loan categories. Our nonperforming loans decreased by$2.7 million (54.7%) from $4.9 million in 2004 to $2.2 million in 2005 and ournonaccrual loans decreased substantially to $.5 million (86.1%) in 2005 from$3.8 million in 2004.

 

Our deposits grew by $70 million to $1,640 million in 2005.Certificates of deposits represented most of the growth in deposits. Balanceson our prepaid solutions cards grew by $8.3 million (71.5%) to $19.9 million in2005. Prepared solutions card revenues grew by $2.0 million to $7.8 million. Weattribute this growth to increases in the gift card program and the growingacceptance of these prepaid cards as a form of payment.

 

At West Suburban, we have a strong commitment to the communities weserve as evidenced by the various programs and organizations in which ouremployees are involved. These programs and organizations include Christmas inApril, DuPage Pads, DuPage County Homeless Continuum of Care, Exchange Club –Prevention of Child and Adult Abuse, Hessed House, Kane County HomelessContinuum of Care as well as participation in various capacities at churches,fraternal organizations, chambers of commerce and local school boards.

 

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, residential mortgage and commercial loans.We will continue to enhance our online banking services at *www.westsuburbanbank.com*in order to offer our customers improved accessibility 24 hours a day, seven daysa week. Our new consumer banking initiatives will not distract us from ourcommitments to our business customers. We value these relationships andappreciate that our future success depends upon our ability to continue to be agood partner to business throughout the communities we serve.

 

We would like to 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 |
|                       |        |                                        |  |  |

 

3

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# **Common Stock, Book Valueand 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** | ** ** |
|----------|------------|-------------|------------|--------------------------|------------|-------------------------|------------|
| **2005** |       | 4th         |       | $                        | 344.60     |                    | $          | 20.00 |   |
|     |       | 3rd         |       | 355.08                   |       | 10.00                   |       |
|     |       | 2nd         |       | 353.07                   |       | 10.00                   |       |
|     |       | 1st         |       | 341.73                   |       | 10.00                   |       |
|     |       |        |       |                     |       |                    |       |
| 2004     |       | 4th         |       | $                        | 347.87     |                    | $          | 20.00 |   |
|     |       | 3rd         |       | 355.89                   |       | 10.00                   |       |
|     |       | 2nd         |       | 336.47                   |       | 10.00                   |       |
|     |       | 1st         |       | 357.38                   |       | 10.00                   |       |

 

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(1)          Book value per share represents the aggregate amountof shareholders’ equity and common stock in ESOP subject to contingentrepurchase obligation divided by the number of outstanding shares. See Note 7to the Company’s consolidated financial statements. This presentation isconsistent with the Company’s belief that it is unlikely that the Company wouldbe required to satisfy the contingent repurchase obligation.

 

The dividends declared during the fourth quarter of 2005 included aspecial $10.00 per share dividend payable on December 15, 2005 to shareholdersof record as of December 1, 2005. Similarly, the dividends declared during thefourth quarter of 2004 included a special $10.00 per share dividend payable onDecember 15, 2004 to shareholders of record as of December 1, 2004.

 

# **BusinessReview**

# ** **

As of December 31, 2005,the Company had total assets of approximately $1.83 billion and maintained 33full-service branches, four limited-service branches and six departmentsproviding insurance, financial and other services for the convenience of thecustomers of the Bank throughout DuPage, Kane, Kendall and Will Counties inIllinois. The Bank focuses on providing retail and commercial banking productsand services in its market area. The Company had 495 full-time equivalentemployees at December 31, 2005.

 

 

**[WSB LOGO]**

 

4

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**[CROWE CHIZEK LOGO]**

 

# **REPORT OF INDEPENDENTREGISTERED PUBLIC ACCOUNTING FIRM**

# ** **

 

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, 2005 and 2004, andthe related consolidated statements of income, changes in shareholders’ equity,and cash flows for each of the three years in the period ended December 31,2005. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financialstatements based on our audits.

 

We conducted our audits in accordance with standards of the PublicCompany Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whetherthe financial 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, 2005 and 2004, and the results of its operations and its cashflows for each of the three years in the period ended December 31, 2005 inconformity with U.S. generally accepted accounting principles.

 

We also have audited, in accordance with the standards of the PublicCompany Accounting Oversight Board (United States), the effectiveness of theCompany’s internal control over financial reporting as of December 31, 2005,based on criteria established in Internal Control—Integrated Framework issuedby the Committee of Sponsoring Organizations of the Treadway Commission and ourreport dated March 9, 2006 expressed an unqualified opinion thereon.

 
|                | /s/ Crowe Chizek and Company LLC |   |
|---------------------|----------------------------------|--------|
|                | Crowe Chizek and Company LLC     |
|                |                             |
| Oak Brook, Illinois |                             |
| March 9, 2006       |                             |

 

5

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**WEST SUBURBAN BANCORP, INC.CONSOLIDATED BALANCE SHEETSDECEMBER 31, 2005 AND 2004**(Dollars in thousands)

 
| ** **                                                                                       | ** ** | **2005**   | ** ** | **2004**   | ** ** |
|--------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| **Assets**                                                                                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash and due from banks                                                                          |       | $          | 54,935     |       | $          | 40,402 |   |
| Federal funds sold                                                                               |       | 50,859     |       | 10,998     |       |
| Total cash and cash equivalents                                                                  |       | 105,794    |       | 51,400     |       |
| Securities                                                                                       |       |       |       |       |       |
| Available for sale (amortized cost of  $479,625 in 2005 and $486,663 in 2004)                    |       | 465,798    |       | 481,595    |       |
| Held to maturity (fair value of $64,074 in  2005 and $71,690 in 2004)                            |       | 64,945     |       | 71,936     |       |
| Federal Home Loan Bank stock                                                                     |       | 5,619      |       | 5,352      |       |
| Total securities                                                                                 |       | 536,362    |       | 558,883    |       |
| Loans, less allowance for loan losses of  $10,681 in 2005 and $10,527 in 2004                    |       | 1,091,747  |       | 1,046,125  |       |
| Cash surrender value of bank-owned life  insurance                                               |       | 32,225     |       | 30,296     |       |
| Premises and equipment, net                                                                      |       | 40,179     |       | 40,641     |       |
| Other real estate                                                                                |       | 210        |       | 3,156      |       |
| Accrued interest and other assets                                                                |       | 20,309     |       | 17,548     |       |
| **Total assets**                                                                                 |       | $          | 1,826,826  |       | $          | 1,748,049 |   |
|                                                                                             |       |       |       |       |       |
| **Liabilities and shareholders’ equity**                                                    |       |       |       |       |       |
| Deposits                                                                                         |       |       |       |       |       |
| Demand-noninterest-bearing                                                                       |       | $          | 165,413    |       | $          | 153,081 |   |
| Interest-bearing                                                                                 |       | 1,474,253  |       | 1,416,661  |       |
| Total deposits                                                                                   |       | 1,639,666  |       | 1,569,742  |       |
| Prepaid solutions cards                                                                          |       | 19,907     |       | 11,646     |       |
| Accrued interest and other liabilities                                                           |       | 18,215     |       | 16,207     |       |
|                                                                                             |       |       |       |       |       |
| Common stock in ESOP subject to contingent  repurchase obligation                                |       | 54,378     |       | 53,959     |       |
|                                                                                             |       |       |       |       |       |
| 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                                                                                |       | 115,846    |       | 111,985    |       |
| Accumulated other comprehensive loss                                                             |       | (8,331     | )          | (3,054     | )          |
| Amount reclassified on ESOP shares                                                               |       | (54,378    | )          | (53,959    | )          |
| **Total shareholders’ equity**                                                              |       | 94,660     |       | 96,495     |       |
| **Total liabilities and shareholders’ equity**                                              |       | $          | 1,826,826  |       | $          | 1,748,049 |   |

 

*See accompanying notes to consolidated financial statements.*

 

6

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**WEST SUBURBAN BANCORP, INC.CONSOLIDATED STATEMENTS OF INCOMEYEARS ENDED DECEMBER 31, 2005, 2004 AND 2003**

(Dollars in thousands, except per share data)

 
| ** **                                               | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|----------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Interest income**                                      |       |     |       |     |       |     |       |
| Loans, including fees                                    |       | $        | 68,459     |     | $          | 59,204   |       | $ | 63,193 |   |
| Securities                                               |       |     |       |     |       |     |       |
| Taxable                                                  |       | 19,235   |       | 18,158   |       | 16,037   |       |
| Exempt from federal income tax                           |       | 963      |       | 1,601    |       | 1,374    |       |
| Federal funds sold                                       |       | 732      |       | 363      |       | 197      |       |
| Total interest income                                    |       | 89,389   |       | 79,326   |       | 80,801   |       |
|                                                     |       |     |       |     |       |     |       |
| **Interest expense**                                     |       |     |       |     |       |     |       |
| Deposits                                                 |       | 30,220   |       | 21,805   |       | 21,951   |       |
| Other                                                    |       | 49       |       | 34       |       | 35       |       |
| Total interest expense                                   |       | 30,269   |       | 21,839   |       | 21,986   |       |
| **Net interest income**                                  |       | 59,120   |       | 57,487   |       | 58,815   |       |
| **Provision for loan losses**                            |       | 1,375    |       | 200      |       | 2,150    |       |
| **Net interest income after provision for  loan losses** |       | 57,745   |       | 57,287   |       | 56,665   |       |
|                                                     |       |     |       |     |       |     |       |
| **Noninterest income**                                   |       |     |       |     |       |     |       |
| Prepaid solutions cards                                  |       | 7,774    |       | 5,734    |       | 3,631    |       |
| Service fees on deposit accounts                         |       | 7,441    |       | 7,808    |       | 8,229    |       |
| Debit card fees                                          |       | 2,027    |       | 1,751    |       | 1,692    |       |
| Bank-owned life insurance                                |       | 1,361    |       | 967      |       | 844      |       |
| Net realized gains (losses) on securities  transactions  |       | 206      |       | (2,004   | )          | 2,330    |       |
| Net gain on sales of loans held for sale                 |       | 109      |       | 230      |       | 834      |       |
| Litigation settlement                                    |       | —   |       | —   |       | 1,085    |       |
| Other                                                    |       | 4,653    |       | 3,921    |       | 4,279    |       |
| Total noninterest income                                 |       | 23,571   |       | 18,407   |       | 22,924   |       |
|                                                     |       |     |       |     |       |     |       |
| **Noninterest expense**                                  |       |     |       |     |       |     |       |
| Salaries and employee benefits                           |       | 22,449   |       | 21,513   |       | 21,769   |       |
| Prepaid solutions cards                                  |       | 5,459    |       | 3,975    |       | 2,488    |       |
| Furniture and equipment                                  |       | 4,851    |       | 4,644    |       | 4,593    |       |
| Occupancy                                                |       | 4,073    |       | 4,011    |       | 3,979    |       |
| Advertising and promotion                                |       | 1,824    |       | 1,459    |       | 1,296    |       |
| Professional fees                                        |       | 1,313    |       | 1,292    |       | 1,028    |       |
| Other                                                    |       | 5,538    |       | 6,213    |       | 6,562    |       |
| Total noninterest expense                                |       | 45,507   |       | 43,107   |       | 41,715   |       |
|                                                     |       |     |       |     |       |     |       |
| **Income before income taxes**                           |       | 35,809   |       | 32,587   |       | 37,874   |       |
| **Income tax expense**                                   |       | 10,323   |       | 8,929    |       | 11,966   |       |
| **Net income**                                           |       | $        | 25,486     |     | $          | 23,658   |       | $ | 25,908 |   |
|                                                     |       |     |       |     |       |     |       |
| **Earnings per share**                                   |       | $        | 58.93      |     | $          | 54.82    |       | $ | 59.90 |   |
| **Average shares outstanding**                           |       | 432,495  |       | 431,546  |       | 432,485  |       |

 

*See accompanying notes to consolidated financial statements.*

 

7

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**WEST SUBURBAN BANCORP, INC.****CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’EQUITYYEARS ENDED DECEMBER 31, 2005, 2004 AND 2003**

(Dollars in thousands, except per share data)

 
| ** **                                                                                                        | ** ** | **Common  Stock  and  Surplus** | ** ** | **Retained  Earnings** | ** ** | **Accumulated  Other  Compre-  hensive  Income  (Loss)** | ** ** | **Unearned  ESOP  Shares** | ** ** | **Amount  Reclassified  on ESOP  Shares** | ** ** | **Total  Shareholders’  Equity** | ** ** |
|-------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|------------------------|------------|----------------------------------------------------------|------------|----------------------------|------------|------------------------------------------------|------------|---------------------------------------|------------|
| Balance, January 1, 2003                                                                                          |       | $                               | 41,523     |                   | $          | 103,074                                                  |       | $                          | 3,088      |                                           | $          | —                                |       | $ | (40,241 | ) | $ | 107,444 |   |
|                                                                                                              |       |                            |       |                   |       |                                                     |       |                       |       |                                           |       |                                  |       |
| Comprehensive income                                                                                              |       |                            |       |                   |       |                                                     |       |                       |       |                                           |       |                                  |       |
| Net income                                                                                                        |       | —                          |       | 25,908                 |       | —                                                   |       | —                     |       | —                                         |       | 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                | )          | —                                                   |       | —                     |       | —                                         |       | (19,030                               | )          |
| Reclassification due to change in fair  value of common stock in ESOP subject to contingent repurchase obligation |       | —                          |       | —                 |       | —                                                   |       | —                     |       | (11,130                                        | )          | (11,130                               | )          |
| ESOP shares committed to be released                                                                              |       | —                          |       | —                 |       | —                                                   |       | (1,200                     | )          | —                                         |       | (1,200                                | )          |
| Balance, December 31, 2003                                                                                        |       | 41,523                          |       | 109,952                |       | (363                                                     | )          | (1,200                     | )          | (51,371                                        | )          | 98,541                                |       |
|                                                                                                              |       |                            |       |                   |       |                                                     |       |                       |       |                                           |       |                                  |       |
| Comprehensive income                                                                                              |       |                            |       |                   |       |                                                     |       |                       |       |                                           |       |                                  |       |
| Net income                                                                                                        |       | —                          |       | 23,658                 |       | —                                                   |       | —                     |       | —                                         |       | 23,658                                |       |
| Change in unrealized loss on available for  sale securities, net of reclassification and tax effects              |       | —                          |       | —                 |       | (2,691                                                   | )          | —                     |       | —                                         |       | (2,691                                | )          |
| Total comprehensive income                                                                                        |       | —                          |       | —                 |       | —                                                   |       | —                     |       | —                                         |       | 20,967                                |       |
| Cash dividends declared - $50.00 per share                                                                        |       | —                          |       | (21,625                | )          | —                                                   |       | —                     |       | —                                         |       | (21,625                               | )          |
| Reclassification due to change in fair  value of common stock in ESOP subject to contingent repurchase obligation |       | —                          |       | —                 |       | —                                                   |       | —                     |       | (2,588                                         | )          | (2,588                                | )          |
| ESOP shares released                                                                                              |       | —                          |       | —                 |       | —                                                   |       | 1,200                      |       | —                                         |       | 1,200                                 |       |
| Balance, December 31, 2004                                                                                        |       | 41,523                          |       | 111,985                |       | (3,054                                                   | )          | —                     |       | (53,959                                        | )          | 96,495                                |       |
|                                                                                                              |       |                            |       |                   |       |                                                     |       |                       |       |                                           |       |                                  |       |
| Comprehensive income                                                                                              |       |                            |       |                   |       |                                                     |       |                       |       |                                           |       |                                  |       |
| Net income                                                                                                        |       | —                          |       | 25,486                 |       | —                                                   |       | —                     |       | —                                         |       | 25,486                                |       |
| Change in unrealized loss on available for  sale securities, net of reclassification and tax effects              |       | —                          |       | —                 |       | (5,277                                                   | )          | —                     |       | —                                         |       | (5,277                                | )          |
| Total comprehensive income                                                                                        |       | —                          |       | —                 |       | —                                                   |       | —                     |       | —                                         |       | 20,209                                |       |
| Cash dividends declared - $50.00 per share                                                                        |       | —                          |       | (21,625                | )          | —                                                   |       | —                     |       | —                                         |       | (21,625                               | )          |
| Reclassification due to change in fair  value of common stock in ESOP subject to contingent repurchase obligation |       | —                          |       | —                 |       | —                                                   |       | —                     |       | (419                                           | )          | (419                                  | )          |
| **Balance, December 31, 2005**                                                                                    |       | $                               | 41,523     |                   | $          | 115,846                                                  |       | $                          | (8,331     | )                                              | $          | —                                |       | $ | (54,378 | ) | $ | 94,660 |   |

 

*See accompanying notes to consolidated financial statements.*

 

8

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**WEST SUBURBAN BANCORP, INC.****CONSOLIDATED STATEMENTS OF CASH FLOWS****YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003**

(Dollars in thousands)

 
| ** **                                                                        | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|-----------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Cash flows from operating activities**                                          |       |     |       |     |       |     |       |
| Net income                                                                        |       | $        | 25,486     |     | $          | 23,658   |       | $ | 25,908 |   |
| Adjustments to reconcile net income to net  cash provided by operating activities |       |     |       |     |       |     |       |
| Depreciation                                                                      |       | 3,284    |       | 3,648    |       | 4,033    |       |
| Provision for loan losses                                                         |       | 1,375    |       | 200      |       | 2,150    |       |
| Deferred income tax provision (benefit)                                           |       | 1,239    |       | 755      |       | (386     | )          |
| Net premium amortization of securities                                            |       | 1,140    |       | 1,863    |       | 2,016    |       |
| Net realized (gains) losses on securities  transactions                           |       | (206     | )          | 2,004    |       | (2,330   | )          |
| Federal Home Loan Bank stock dividends                                            |       | (267     | )          | (313     | )          | (371     | )          |
| Increase in cash surrender value of  bank-owned life insurance                    |       | (1,361   | )          | (967     | )          | (844     | )          |
| Amortization of deferred loan fees                                                |       | 185      |       | 326      |       | 405      |       |
| Net gain on sales of loans held for sale                                          |       | (109     | )          | (230     | )          | (834     | )          |
| Sales of loans held for sale                                                      |       | 6,943    |       | 16,267   |       | 70,307   |       |
| Origination of loans held for sale                                                |       | (6,645   | )          | (15,435  | )          | (66,238  | )          |
| Net loss on sales of premises and equipment                                       |       | —   |       | 11       |       | 4        |       |
| Net (gain) loss on sales of other real  estate                                    |       | (223     | )          | 144      |       | —   |       |
| ESOP compensation expense                                                         |       | —   |       | 1,200    |       | —   |       |
| Write-down of other real estate                                                   |       | —   |       | —   |       | 40       |       |
| (Increase) decrease in accrued interest and  other assets                         |       | (518     | )          | 652      |       | (182     | )          |
| Increase in accrued interest and other  liabilities                               |       | 2,008    |       | 2,404    |       | 805      |       |
| **Net cash provided by operating activities**                                     |       | 32,331   |       | 36,187   |       | 34,483   |       |
| **Cash flows from investing activities**                                          |       |     |       |     |       |     |       |
| Securities available for sale                                                     |       |     |       |     |       |     |       |
| Sales                                                                             |       | 22,612   |       | 250,225  |       | 128,537  |       |
| Maturities and calls                                                              |       | 61,864   |       | 130,711  |       | 267,061  |       |
| Purchases                                                                         |       | (78,426  | )          | (412,771 | )          | (585,399 | )          |
| Securities held to maturity                                                       |       |     |       |     |       |     |       |
| Maturities and calls                                                              |       | 9,584    |       | 12,685   |       | 20,926   |       |
| Purchases                                                                         |       | (2,539   | )          | (55,375  | )          | (239     | )          |
| Net (increase) decrease in loans                                                  |       | (48,808  | )          | 21,315   |       | 47,337   |       |
| Investment in bank-owned life insurance  policies                                 |       | (568     | )          | (15,913  | )          | (10,436  | )          |
| Purchases of premises and equipment                                               |       | (2,822   | )          | (1,408   | )          | (1,293   | )          |
| Sales of premises and equipment                                                   |       | —   |       | 4        |       | 1        |       |
| Sales of other real estate                                                        |       | 4,606    |       | 3,613    |       | 208      |       |
| **Net cash used in investing activities**                                         |       | (34,497  | )          | (66,914  | )          | (133,297 | )          |
| **Cash flows from financing activities**                                          |       |     |       |     |       |     |       |
| Net increase in deposits                                                          |       | 69,924   |       | 39,811   |       | 109,675  |       |
| Loan to ESOP to acquire West Suburban  common stock                               |       | —   |       | —   |       | (1,200   | )          |
| Increase (decrease) in prepaid solutions  cards                                   |       | 8,261    |       | (5,403   | )          | 15,385   |       |
| Dividends paid                                                                    |       | (21,625  | )          | (21,625  | )          | (22,490  | )          |
| **Net cash provided by financing activities**                                     |       | 56,560   |       | 12,783   |       | 101,370  |       |
| **Net increase (decrease) in cash and cash  equivalents**                         |       | 54,394   |       | (17,944  | )          | 2,556    |       |
| **Beginning cash and cash equivalents**                                           |       | 51,400   |       | 69,344   |       | 66,788   |       |
| **Ending cash and cash equivalents**                                              |       | $        | 105,794    |     | $          | 51,400   |       | $ | 69,344 |   |
| **Supplemental disclosures**                                                      |       |     |       |     |       |     |       |
| Cash paid for                                                                     |       |     |       |     |       |     |       |
| Interest                                                                          |       | $        | 29,026     |     | $          | 20,750   |       | $ | 22,511 |   |
| Income taxes                                                                      |       | 9,907    |       | 8,090    |       | 12,964   |       |
| Other real estate acquired through loan  foreclosures                             |       | 1,437    |       | 5,647    |       | 1,474    |       |

 

*See accompanying notes to consolidated financial statements.*

 

9

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## **WEST SUBURBAN BANCORP,INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

(Dollars in thousands, except per share data)

 

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

# ** **

West Suburban Bancorp, Inc. (“West Suburban”) through the branch networkof its subsidiary, West Suburban Bank (the “Bank” and, together with WestSuburban, the “Company”), operates 33 full-service branches, fourlimited-service branches and six departments providing insurance, financial andother services for the convenience of the customers of the Bank throughoutDuPage, Kane, Kendall and Will Counties in Illinois. Customers in these areasare the primary consumers of the Company’s loan and deposit products andservices. Although borrower cash flow is expected to be the primary source ofrepayment, the Company’s loans are generally secured by various forms ofcollateral including real estate, business assets, consumer goods, personalguarantees and other items.

 

***Operating Segments***

 

While the Company’s senior management monitors the revenue streamsderived from various individual and groups of products and services, anyidentifiable segments are not material. Moreover, operations are managed andfinancial performance is evaluated on a Company-wide basis. Accordingly, all ofthe Company’s operations are considered by management to be aggregated in onereportable operating segment.

 

***Principles of Consolidation***

 

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 conformity with accountingprinciples generally accepted in the United States of America, management makesestimates and assumptions, which are subject to change, based on availableinformation. These estimates and assumptions affect the amounts reported in thefinancial statements and the disclosures provided, and future results coulddiffer. The allowance for loan losses, fair values of financial instruments, impairmentof securities and status of contingencies are particularly subject to change.

 

***Securities***

 

Debt and marketable equity securities are classified into twocategories, “available for sale” and “held to maturity.” Available for salesecurities are carried at fair value with net unrealized gains and losses (netof deferred tax) reported in accumulated other comprehensive loss as a separatecomponent of shareholders’ equity. Held to maturity securities are carried atamortized cost as the Company has both the ability and positive intent to holdthem to maturity. Other securities such as Federal Home Loan Bank stock arecarried at cost. Interest income includes amortization of purchase premium andaccretion of purchase discount. Gains or losses on disposition are based on thenet proceeds and the adjusted carrying amount of the specific securities sold.The Company does not engage in trading activities.

 

Declines in the fair value of securities below their cost that areother than temporary are reflected as realized losses. In estimating other-than-temporarylosses, management considers: (1) the length of time and extent that fair valuehas been less than cost, (2) the financial condition and near term prospects ofthe issuer, and (3) the Company’s ability and intent to hold the security for aperiod sufficient to allow for any anticipated recovery in fair value.

 

***Loans and Allowance for Loan Losses***

 

Loans that management has the intent and ability to hold for theforeseeable future or until maturity or payoff are reported at the principalbalance outstanding, net of unearned interest, deferred loan fees and costs andan allowance for loan losses. Interest income is reported on the accrual methodand includes amortization of net deferred loan fees and costs over the loanterm. Accrual of interest is generally discontinued on loans 90 days past due,or on an earlier date, if management believes, after considering economic andbusiness conditions and collection efforts, that the borrower’s financialcondition is such that collection of principal or interest is doubtful. In somecircumstances, a 

 

10

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loan more than 90 days past due may continue to accrue interest if itis fully secured and in the process of collection. When a loan is classified asnonaccrual, interest previously accrued but not collected is charged back tointerest income. When payments are received on nonaccrual loans they are firstapplied to principal, then to interest income and finally to expenses incurredfor collection.

 

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

 

The Company evaluates commercial, real estate construction andcommercial mortgage loans monthly for impairment. A loan is considered impairedwhen, based on current information and events, full payment under the loanterms is not expected. Impairment is measured based on the present value ofexpected future cash flows discounted at the loan’s effective interest rate orthe fair value of the loan’s collateral, if repayment of the loan is collateraldependent. A valuation allowance is maintained for the amount of impairment.Generally, loans 90 days or more past due and all loans classified asnonaccrual status are considered for impairment. Impairment is considered on anentire category basis for smaller-balance loans of similar nature, such asresidential real estate and consumer loans, and on an individual basis forother loans. In general, consumer and credit card loans are charged-off nolater than 180 days after a consumer or credit card loan becomes past due.

 

***Loans Held for Sale***

 

Loans are identified as either held for investment or held for saleupon origination. Loans held for sale are recorded at the lower of amortizedcost or market value, determined on an aggregate basis. Unrealized losses, ifany, are recognized on a current basis by charges to earnings. At December 31,2005 and 2004, the cost and market value of loans held for sale wereapproximately the same.

 

***Bank-owned Life Insurance (“BOLI”)***

 

The Company has purchased life insurance policies on certain officersand directors. BOLI is recorded at its cash surrender value, or the amount thatcan be realized.

 

***Premises and Equipment***

 

Land is carried at cost. Premises and equipment are stated at cost lessaccumulated depreciation. Depreciation is generally computed on thestraight-line method over the estimated useful lives of the assets ranging from8 to 50 years for premises and from 3 to 15 years for furniture and equipment.Leasehold improvements are amortized on a straight-line basis over theestimated useful lives of the improvements or the remaining term of the leases,whichever is shorter.

 

***Other Real Estate***

 

Other real estate includes properties acquired in partial or totalsettlement of problem loans. The properties are recorded at the lower of costor fair value less estimated selling costs at the date acquired. Lossesrecognized at the time of acquisition of such properties are charged to theallowance for loan losses. Any subsequent decline in value is charged tocurrent operations. The revenue received from and expenses incurred inmaintaining such properties are also included in current operations.

 

11

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

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

Premises and equipment and other long-term assets are reviewed forimpairment when events indicate their carrying amount may not be recoverablefrom future undiscounted cash flows. If impaired, the assets are recorded atfair value.

 

***Loan Commitments and Related FinancialInstruments***

 

Financial instruments include off-balance sheet credit instruments,such as commitments to make loans and commercial letters of credit, issued tomeet customer financing needs. The face amount for these items represents theexposure to loss, before considering customer collateral or ability to repay. Suchfinancial instruments are recorded when they are funded.

 

***Prepaid Solutions Cards***

 

Prepaid solutions card revenues are recognized when services areperformed. These revenues are comprised primarily of service and transactionfees. Service fees represent payments associated with card preparation,customization, usage, non-usage and processing. Transaction fees primarilyrepresent interchange fees generated as transactions are made by cardholders.These fees are recognized as revenue in the same period the relatedtransactions occur or services are rendered.

 

Prepaid solutions card expenses are recognized as incurred. Theseexpenses generally include costs associated with the card preparation andcustomization, data processing fees associated with the card transactionprocessing, and other expenses directly associated with the Bank’s prepaidsolutions card customers. General and administrative expenses, such as salariesand benefits, furniture and equipment, advertising and promotion, andprofessional fees are not included in the prepaid solutions card expensecategory, but rather are included in the appropriate expense classification inthe Company’s consolidated statements of income.

 

***Income Taxes***

 

Income tax expense is the total 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 Stock Ownership Plan (“ESOP”)***

 

The Bank maintains anESOP, which is a noncontributory tax qualified retirement plan that coversemployees who have satisfied specific service requirements. The Bank makescontributions to the ESOP for the benefit of the participants. On December 30,2003, the ESOP became leveraged for the first time since its inception. TheESOP borrowed $1.2 million from West Suburban to facilitate the purchase of alarge block of common stock from one shareholder. The ESOP retired theindebtedness on January 2, 2004. Dividends declared on common stock owned bythe ESOP are charged against retained earnings.

 

Dividends paid on ESOPshares are passed through to participants. Earned and allocated ESOP shares arevoted by the respective participants. Because participants may require theCompany to purchase their ESOP shares upon termination of their employment, theappraised fair value of all earned and allocated ESOP shares is reclassifiedfrom shareholders’ equity. ESOP shares committed to be released are reported asa reduction of shareholders’ equity. Once the shares have been released theyare added to shareholder’s equity.

 

***Earnings Per Share***

 

Earnings per share is calculated on the basis of the daily weightedaverage number of shares outstanding. ESOP shares are considered outstanding forthis calculation unless unearned.

 

12

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***Cash Flows***

 

For purposes of reporting cash flows, cash and cash equivalents includecash and due from banks and federal funds sold. Generally, federal funds aresold for one-day periods. Net cash flows are reported for customer loan,deposit and prepaid solutions card transactions.

 

***Comprehensive Income***

 

Comprehensive incomeincludes 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.

 

***Loss Contingencies***

 

Loss contingencies, including claims and legal actions arising in theordinary course of business, are recorded as liabilities when the likelihood ofloss is probable and an amount or range of loss can be reasonably estimated. Managementdoes not believe there now are such matters that will have a material effect onthe financial statements.

 

***Restrictions on Cash***

 

Cash on hand or on deposit with the Federal Reserve Bank of $14,486 and$13,318 was required to meet regulatory reserve and clearing requirements atyear end 2005 and 2004, respectively. These balances do not earn interest.

 

***Dividend Restriction***

 

Banking regulations require maintaining certain capital levels and maylimit the dividends paid by the Bank to West Suburban or by West Suburban toshareholders. These restrictions pose no practical limit on the ability of theBank or West Suburban to pay dividends at historical levels. (See Note 11 formore specific disclosure.)

 

***Fair Value of Financial Instruments***

 

Fair value of financial instruments are estimated using relevant marketinformation and other assumptions, as more fully disclosed in Note 9. Fairvalue estimates involve uncertainties and matters of significant judgmentregarding interest rates, credit risk, prepayments, and other factors,especially in the absence of active markets for particular items. Changes inassumptions or in market conditions could significantly affect the estimates.

 

***Reclassifications***

 

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

 

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

##### ** **

In December 2004, FASB issued Statement 123 (revised), “Share-basedPayment” which requires companies to record compensation cost for stock optionsprovided to employees in return for employee service. The cost is measured atthe fair value of the options when granted, and this cost is expensed over theemployee service period, which is normally the vesting period of the options.This treatment will apply to awards granted or modified after the first quarteror year beginning after June 15, 2005. Compensation cost will also be recordedfor prior option grants that vest after the date of adoption. Because theCompany does not currently have any stock options outstanding and has nothistorically issued stock options, management does not anticipate thatStatement 123 will have an impact on the Company’s financial condition orresults of operation.

 

13

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##### **Note2 - Securities**

##### ** **

The amortized cost andfair value of securities available for sale are as follows at December 31:

 
| ** **                                | ** ** | **2005**            | ** ** |
|-------------------------------------------|------------|---------------------|------------|
| ** **                                | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| Corporate                                 |       | $                   | 45,417     |   | $ | 260 |   | $ | (1,658 | ) | $ | 44,019 |   |
| U.S. government agencies and corporations |       | 277,326             |       | — |   | (8,278 | ) | 269,048 |   |
| Mortgage-backed                           |       | 145,289             |       | — |   | (3,749 | ) | 141,540 |   |
| States and political subdivisions         |       | 10,590              |       | — |   | (225 | ) | 10,365 |   |
| Total debt securities                     |       | 478,622             |       | 260 |   | (13,910 | ) | 464,972 |   |
| Preferred stock                           |       | 1,003               |       | — |   | (177 | ) | 826 |   |
| Total                                     |       | $                   | 479,625    |   | $ | 260 |   | $ | (14,087 | ) | $ | 465,798 |   |

 
| ** **                                | ** ** | **2004**            | ** ** |
|-------------------------------------------|------------|---------------------|------------|
| ** **                                | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| Corporate                                 |       | $                   | 51,198     |   | $ | 327 |   | $ | (594 | ) | $ | 50,931 |   |
| U.S. government agencies and corporations |       | 306,669             |       | 21 |   | (3,201 | ) | 303,489 |   |
| Mortgage-backed                           |       | 121,969             |       | 80 |   | (1,400 | ) | 120,649 |   |
| States and political subdivisions         |       | 5,824               |       | 10 |   | (68 | ) | 5,766 |   |
| Total debt securities                     |       | 485,660             |       | 438 |   | (5,263 | ) | 480,835 |   |
| Preferred stock                           |       | 1,003               |       | — |   | (243 | ) | 760 |   |
| Total                                     |       | $                   | 486,663    |   | $ | 438 |   | $ | (5,506 | ) | $ | 481,595 |   |

 

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

 
| ** **                                | ** ** | **2005**            | ** ** |
|-------------------------------------------|------------|---------------------|------------|
| ** **                                | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| U.S. government agencies and corporations |       | $                   | 37,347     |   | $ | 2 |   | $ | (469 | ) | $ | 36,880 |   |
| Mortgage-backed                           |       | 13,018              |       | 5 |   | (496 | ) | 12,527 |   |
| States and political subdivisions         |       | 14,580              |       | 178 |   | (91 | ) | 14,667 |   |
| Total                                     |       | $                   | 64,945     |   | $ | 185 |   | $ | (1,056 | ) | $ | 64,074 |   |

 
| ** **                                | ** ** | **2004**            | ** ** |
|-------------------------------------------|------------|---------------------|------------|
| ** **                                | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| U.S. government agencies and corporations |       | $                   | 43,405     |   | $ | 119 |   | $ | (162 | ) | $ | 43,362 |   |
| Mortgage-backed                           |       | 12,430              |       | 25 |   | (311 | ) | 12,144 |   |
| States and political subdivisions         |       | 16,101              |       | 205 |   | (122 | ) | 16,184 |   |
| Total                                     |       | $                   | 71,936     |   | $ | 349 |   | $ | (595 | ) | $ | 71,690 |   |

 

14

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Securities withunrealized losses at year end 2005 and 2004 not recognized in income arepresented below by the length of time the securities have been in a continuousunrealized loss position:

 
| ** **                                | ** ** | **2005**                               | ** ** |
|-------------------------------------------|------------|----------------------------------------|------------|
| ** **                                | ** ** | **Less than 12 months** | ** ** | **12 months or more** | ** ** | **Total** | ** ** |
| ** **                                | ** ** | **Fair  Value**                        | ** ** | **Unrealized  loss** | ** ** | **Fair  Value** | ** ** | **Unrealized  loss** | ** ** | **Fair  Value** | ** ** | **Unrealized  loss** | ** ** |
| Corporate                                 |       | $                                      | 12,917     |   | $ | 292 |   | $ | 28,342 |   | $ | 1,366 |   | $ | 41,259 |   | $ | 1,658 |   |
| U.S. government agencies and corporations |       | 172,874                                |       | 3,443 |   | 131,053 |   | 5,304 |   | 303,927 |   | 8,747 |   |
| Mortgage-backed                           |       | 137,356                                |       | 3,237 |   | 16,202 |   | 1,008 |   | 153,558 |   | 4,245 |   |
| States and political subdivisions         |       | 10,693                                 |       | 168 |   | 3,942 |   | 148 |   | 14,635 |   | 316 |   |
| Preferred stock                           |       | —                                 |       | — |   | 825 |   | 177 |   | 825 |   | 177 |   |
| Total temporarily impaired                |       | $                                      | 333,840    |   | $ | 7,140 |   | $ | 180,364 |   | $ | 8,003 |   | $ | 514,204 |   | $ | 15,143 |   |

 
| ** **                                | ** ** | **2004**                               | ** ** |
|-------------------------------------------|------------|----------------------------------------|------------|
| ** **                                | ** ** | **Less than 12 months** | ** ** | **12 months or more** | ** ** | **Total** | ** ** |
| ** **                                | ** ** | **Fair  Value**                        | ** ** | **Unrealized  loss** | ** ** | **Fair  Value** | ** ** | **Unrealized  loss** | ** ** | **Fair  Value** | ** ** | **Unrealized  loss** | ** ** |
| Corporate                                 |       | $                                      | 39,671     |   | $ | 594 |   | $ | — |   | $ | — |   | $ | 39,671 |   | $ | 594 |   |
| U.S. government agencies and corporations |       | 291,506                                |       | 2,573 |   | 32,199 |   | 790 |   | 323,705 |   | 3,363 |   |
| Mortgage-backed                           |       | 108,449                                |       | 1,045 |   | 17,497 |   | 666 |   | 125,946 |   | 1,711 |   |
| States and political subdivisions         |       | 9,563                                  |       | 183 |   | 7,730 |   | 7 |   | 17,293 |   | 190 |   |
| Preferred stock                           |       | —                                 |       | — |   | 760 |   | 243 |   | 760 |   | 243 |   |
| Total temporarily impaired                |       | $                                      | 449,189    |   | $ | 4,395 |   | $ | 58,186 |   | $ | 1,706 |   | $ | 507,375 |   | $ | 6,101 |   |

 

In accordance with generally accepted accounting principles, unrealizedlosses on debt securities are not recognized if management has the intent andability to hold the securities until their maturity date and no concerns existwith respect to the ability of the issuer to satisfy its obligations atmaturity. Management believes that the fair value of these debt securities withunrealized losses will recover as the securities approach their maturity dateand/or reprice date. At December 31, 2005, preferred stock with an amortizedcost of $1.0 million had unrealized losses for a continuous period of twelvemonths or more and the amount of the unrealized losses as of that date was $.2million. The Company has determined this unrealized loss to be temporary asmanagement expects the security to recover its original cost as interest ratesincrease as the security approaches its reprice date. The Company has both theintent and ability to hold the investment until such recovery occurs. Thepreferred stock is issued by the Federal Home Loan Mortgage Corporation.Management does not believe any individual unrealized loss as of December 31,2005 represents other than temporary impairment.

 

15

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The amortized cost andfair value of debt securities available for sale and held to maturity atDecember 31, 2005 by contractual maturity are as follows:

 
| ** **                         | ** ** | **Available for Sale** | ** ** | **Held to Maturity** | ** ** |
|------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                         | ** ** | **Amortized  Cost**              | ** ** | **Fair Value**            | ** ** | **Amortized  Cost** | ** ** | **Fair Value** | ** ** |
| Due in 1 year or less              |       | $                                | 54,437     |                           | $          | 53,896 |   | $ | 20,473 |   | $ | 20,321 |   |
| Due after 1 year through 5 years   |       | 253,432                          |       | 245,226                        |       | 23,974 |   | 23,721 |   |
| Due after 5 years through 10 years |       | 22,453                           |       | 21,292                         |       | 3,951 |   | 3,992 |   |
| Due after 10 years                 |       | 3,011                            |       | 3,018                          |       | 3,529 |   | 3,513 |   |
| Mortgage-backed                    |       | 145,289                          |       | 141,540                        |       | 13,018 |   | 12,527 |   |
| Total                              |       | $                                | 478,622    |                           | $          | 464,972 |   | $ | 64,945 |   | $ | 64,074 |   |

 

Expected maturities willdiffer from contractual maturities because issuers may have the right to callor prepay obligations with or without call or prepayment penalties.Approximately $147,015 of securities are callable in 2006. Most of thesecallable securities were issued by U.S. government agencies and corporations.

 

Securities with acarrying value of approximately $53,938 and $53,478 at December 31, 2005 and2004, respectively, were pledged to secure public deposits, fiduciaryactivities and for other purposes required or permitted by law.

 

Sales of securities available for sale were as follows:

 
| ** **            | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|-----------------------|------------|----------|------------|----------|------------|----------|------------|
| Proceeds from sales   |       | $        | 22,612     |     | $          | 250,225  |       | $ | 128,537 |   |
| Gross realized gains  |       | 185      |       | 751      |       | 2,346    |       |
| Gross realized losses |       | (3       | )          | (2,755   | )          | (246     | )          |
|                       |            |          |            |          |            |          |            |  |  |  |

 

*Net gains on securities transactions in 2005 includerecoveries of $24 on securities written down in 2001. Net gains on securitiestransactions in 2003 include recoveries of $230 on securities written off in1998.*

* *

**Note 3 - Loans**

 

Major classifications ofloans were as follows at December 31:

 
| ** **                | ** ** | **2005**  | ** ** | **2004**  | ** ** |
|---------------------------|------------|-----------|------------|-----------|------------|
| Commercial                |       | $         | 276,898    |      | $          | 267,799 |   |
| Consumer                  |       | 7,501     |       | 7,552     |       |
| Indirect automobile       |       | 24,939    |       | 38,651    |       |
| Real estate               |       |      |       |      |       |
| Residential               |       | 160,902   |       | 146,259   |       |
| Commercial                |       | 225,794   |       | 207,978   |       |
| Home equity               |       | 229,514   |       | 237,622   |       |
| Construction              |       | 165,484   |       | 135,264   |       |
| Held for sale             |       | 140       |       | 329       |       |
| Credit card               |       | 10,545    |       | 14,682    |       |
| Other                     |       | 711       |       | 516       |       |
| Total                     |       | 1,102,428 |       | 1,056,652 |       |
| Allowance for loan losses |       | (10,681   | )          | (10,527   | )          |
| Loans, net                |       | $         | 1,091,747  |      | $          | 1,046,125 |   |

 

16

----

 

The Company makescommercial, personal and residential loans primarily to customers throughoutthe western suburbs of Chicago. Construction loans are primarily made tocustomers engaged in the development and construction of residential realestate projects within the Company’s market area.

 

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

 
| ** **                 | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|----------------------------|------------|----------|------------|----------|------------|----------|------------|
| Balance, beginning of year |       | $        | 10,527     |     | $          | 14,420   |       | $ | 13,847 |   |
| Provision for loan losses  |       | 1,375    |       | 200      |       | 2,150    |       |
| Loans charged-off          |       | (1,589   | )          | (4,564   | )          | (1,947   | )          |
| Recoveries                 |       | 368      |       | 471      |       | 370      |       |
| Balance, end of year       |       | $        | 10,681     |     | $          | 10,527   |       | $ | 14,420 |   |

 

Impaired loans aresummarized as follows at December 31:

 
| ** **                                                                       | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|----------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Year-end loans with no allocated allowance  for loan losses                      |       | $        | 904        |     | $          | 664      |       | $ | 193 |   |
| Year-end loans with allocated allowance for  loan losses                         |       | 5,403    |       | 6,613    |       | 22,345   |       |
| Total                                                                            |       | $        | 6,307      |     | $          | 7,277    |       | $ | 22,538 |   |
|                                                                             |       |     |       |     |       |     |       |
| Amount of the allowance for loan losses  allocated to impaired loans at year-end |       | $        | 3,497      |     | $          | 2,317    |       | $ | 7,145 |   |
| Average impaired loans during the year                                           |       | 4,962    |       | 15,606   |       | 19,565   |       |
| Interest income recognized during  impairment                                    |       | 306      |       | 317      |       | 328      |       |

 

Nonperforming loans wereas follows at December 31:

 
| ** **                                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| Loans past due 90 days or more still on  accrual |       | $          | 1,665      |       | $          | 1,036      |       | $ | 380 |   |
| Nonaccrual loans                                 |       | 533        |       | 3,815      |       | 15,008     |       |
| Total                                            |       | $          | 2,198      |       | $          | 4,851      |       | $ | 15,388 |   |

 

Mortgage loans serviced for others are not included in the accompanyingconsolidated balance sheets. At December 31, 2005 and 2004, the Companyserviced mortgage loans for the benefit of others with aggregate unpaidprincipal balances of $5,960 and $8,816, 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.

 
| ** **                                 | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|--------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Activity during the year:                  |       |     |       |     |       |     |       |
| Origination of loans held for sale         |       | $        | 6,645      |     | $          | 15,435   |       | $ | 66,238 |   |
| Proceeds from sales of loans held for sale |       | 6,943    |       | 16,267   |       | 70,307   |       |
| Net gains on sales of loans held for sale  |       | 109      |       | 230      |       | 834      |       |
| Loan servicing fees                        |       | 24       |       | 34       |       | 61       |       |
|                                            |            |          |            |          |            |          |            |  |  |  |

 

17

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# **Note 4 - Premises andEquipment**

 

Major classifications of assets comprising premises and equipment aresummarized as follows at December 31:

 
| ** **                    | ** ** | **2005** | ** ** | **2004** | ** ** |
|-------------------------------|------------|----------|------------|----------|------------|
| Land                          |       | $        | 11,571     |     | $          | 11,571 |   |
| Premises                      |       | 42,355   |       | 41,535   |       |
| Furniture and equipment       |       | 44,202   |       | 42,199   |       |
| Total                         |       | 98,128   |       | 95,305   |       |
| Less accumulated depreciation |       | (57,949  | )          | (54,664  | )          |
| Premises and equipment, net   |       | $        | 40,179     |     | $          | 40,641 |   |

 

##### **Note5 - Deposits**

 

The major categories of deposits are summarized as follows at December31:

 
| ** **                 | ** ** | **2005** | ** ** | **2004** | ** ** |
|----------------------------|------------|----------|------------|----------|------------|
| Demand-noninterest-bearing |       | $        | 165,413    |     | $          | 153,081 |   |
| NOW                        |       | 331,420  |       | 323,979  |       |
| Money market checking      |       | 219,433  |       | 222,214  |       |
| Savings                    |       | 413,860  |       | 447,257  |       |
| Time deposits              |       |     |       |     |       |
| Less than $100,000         |       | 365,166  |       | 322,184  |       |
| $100,000 and greater       |       | 144,374  |       | 101,027  |       |
| Total                      |       | $        | 1,639,666  |     | $          | 1,569,742 |   |

 

At December 31, 2005, the scheduled maturities of time deposits were asfollows:

 
| ** ** | ** ** | **2005** | ** ** |
|------------|------------|----------|------------|
| 2006       |       | $        | 270,654    |   |
| 2007       |       | 118,545  |       |
| 2008       |       | 54,192   |       |
| 2009       |       | 41,036   |       |
| 2010       |       | 25,107   |       |
| Thereafter |       | 6        |       |
| Total      |       | $        | 509,540    |   |

 

##### **Note6 - Income Taxes**

##### ** **

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

 
| ** **                      | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|---------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Currently payable tax           |       |     |       |     |       |     |       |
| Federal                         |       | $        | 9,181      |     | $          | 8,595    |       | $ | 10,625 |   |
| State                           |       | (97      | )          | (421     | )          | 1,727    |       |
| Deferred tax provison (benefit) |       | 1,239    |       | 755      |       | (386     | )          |
| Total                           |       | $        | 10,323     |     | $          | 8,929    |       | $ | 11,966 |   |

 

18

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

 
| ** **                                      | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|-------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Statutory federal income tax rate               |       | 35.0     | %          | 35.0     | %          | 35.0     | %          |
| (Decrease) increase in taxes resulting  from:   |       |     |       |     |       |     |       |
| Tax-exempt income                               |       | (1.0     | )%         | (1.8     | )%         | (1.2     | )%         |
| State income taxes, net of federal tax  benefit |       | (0.2     | )%         | (0.6     | )%         | 2.9      | %          |
| Dividends on ESOP shares                        |       | (3.7     | )%         | (2.9     | )%         | (3.5     | )%         |
| Other items, net                                |       | (1.3     | )%         | (2.3     | )%         | (1.6     | )%         |
| Effective tax rate                              |       | 28.8     | %          | 27.4     | %          | 31.6     | %          |

 

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

 
| ** **                                        | ** ** | **2005** | ** ** | **2004** | ** ** |
|---------------------------------------------------|------------|----------|------------|----------|------------|
| Deferred tax assets                               |       |     |       |     |       |
| Allowance for loan losses                         |       | $        | 4,246      |     | $          | 4,185 |   |
| Deferred compensation                             |       | 2,409    |       | 2,057    |       |
| Unrealized loss on securities available for  sale |       | 5,496    |       | 2,014    |       |
| Nonaccrual loan interest income                   |       | 141      |       | 947      |       |
| Capital loss                                      |       | —   |       | 566      |       |
| Other                                             |       | 109      |       | —   |       |
| Total deferred tax assets                         |       | 12,401   |       | 9,769    |       |
| Deferred tax liabilities                          |       |     |       |     |       |
| Depreciation                                      |       | 653      |       | 705      |       |
| Federal Home Loan Bank stock dividends            |       | 674      |       | 568      |       |
| Undistributed REIT income                         |       | 309      |       | 287      |       |
| Deposit base intangible                           |       | 212      |       | 185      |       |
| Qualified prepaid expenses                        |       | 281      |       | 268      |       |
| Other                                             |       | 365      |       | 92       |       |
| Total deferred tax liabilities                    |       | 2,494    |       | 2,105    |       |
| Net deferred tax assets                           |       | $        | 9,907      |     | $          | 7,664 |   |

 

Net deferred tax assetsare included in accrued interest and other assets. No valuation allowance wasconsidered necessary for net deferred tax assets. At December 31, 2005, theCompany had a net operating loss carryforward for state tax purposes totalingapproximately $8.0 million, which begins to expire in 2018.

 

# **Note 7 - EmployeeBenefit Plans**

# ** **

The ESOP providesincentives to employees by granting participants an interest in West Suburban’scommon stock, which represents the ESOP’s primary investment. An individualaccount is established for each participant and the benefits payable uponretirement, termination, disability or death are based upon service, the amountof the employer’s contributions and any income, expenses, gains and losses andforfeitures allocated to the participant’s account. Contributions, which aredetermined by the board of directors of the Bank, are paid by the Bank and were$1,951 in 2005, $1,879 in 2004 and $2,324 in 2003.

 

At December 31, 2005 and2004, the ESOP held 83,530 and 83,270, respectively, shares of West Suburbancommon stock that were allocated to ESOP participants. Upon termination oftheir employment, participants who elect to receive their benefit distributionsin the form of West Suburban common stock may require the Company to purchasethe common stock distributed at fair value during two 60-day periods. The firstpurchase period begins on the date the benefit is distributed and the secondpurchase period begins on the first anniversary of the distribution date. Thiscontingent repurchase obligation is reflected in the Company’s financialstatements as “Common stock in

 

19

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ESOP subject tocontingent repurchase obligation” and reduces shareholders’ equity by an amountthat represents the independently appraised fair value of all West Suburbancommon stock held by the ESOP and allocated to participants, without regard towhether it is likely that the shares would be distributed or that therecipients of the shares would be likely to exercise their right to require theCompany to purchase the shares. Notwithstanding the Company’s belief that it isunlikely that the Company would be required to satisfy this repurchase obligation,at December 31, 2005 and 2004, this contingent repurchase obligation reducedshareholders’ equity by $54,378 and $53,959, respectively.

 

During 2005 and 2004,the ESOP distributed $541 and $509, respectively, in cash representing theinterests of participants. In addition, the ESOP distributed 650 shares in 2005and 673 shares in 2004 of West Suburban common stock. The Company believes thatthe ESOP will continue to have a sufficient amount of cash to distributebenefit payments to former employees and that the exercise of the right offormer employees to cause the Company to purchase West Suburban common stock isunlikely.

 

The Company has deferred compensation arrangements with certain formerand current executive officers. The deferred compensation expense for the yearsended December 31, 2005, 2004 and 2003 was $190, $190 and $194, respectively.Executive officers can elect to defer the payment of a percentage of theirsalaries and cash bonuses and members of the board of directors can elect todefer the payment of their directors’ fees. In addition, the Company makesannual contributions for the benefit of participants ($25 for six seniorexecutive officers and $5 for other executive officers) in the Company’sdeferred compensation arrangements. As of December 31, 2005, 14 executiveofficers participated in the deferred compensation plan.

 

The total accumulated liability for all deferred compensationarrangements was $6,061 and $5,175 at December 31, 2005 and 2004, respectively.These amounts are included in accrued interest and other liabilities in theconsolidated balance sheets.

 

# **Note 8 - FinancialInstruments with Off-Balance-Sheet Risk**

# ** **

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

 

Commitments to extendcredit are agreements to lend to a customer as long as there is no violation ofany condition established in the agreement. These commitments primarily consistof unused lines of credit, undrawn portions of construction loans andcommitments to make new loans. Commitments generally have fixed expirationdates or other termination provisions and may require the payment of a fee.Since many of the commitments are expected to expire without being exercised ordrawn upon, the total commitment amounts do not necessarily represent futurecash 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.

 

20

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A summary of the contractual exposure to off-balance-sheet risk as ofDecember 31 follows:

 
| ** **                           | ** ** | **2005**        | ** ** | **2004**           | ** ** |
|--------------------------------------|------------|-----------------|------------|--------------------|------------|
| ** **                           | ** ** | **Fixed  Rate** | ** ** | **Variable  Rate** | ** ** | **Total** | ** ** | **Fixed  Rate** | ** ** | **Variable  Rate** | ** ** | **Total** | ** ** |
| Commercial loans and lines of credit |       | $               | 1,230      |               | $          | 194,842 |   | $ | 196,072 |   | $ | 956 |   | $ | 168,157 |   | $ | 169,113 |   |
| Check credit lines of credit         |       | 1,219           |       | —             |       | 1,219 |   | 1,262 |   | — |   | 1,262 |   |
| Mortgage loans                       |       | 5,411           |       | 1,060              |       | 6,471 |   | 5,170 |   | 1,750 |   | 6,920 |   |
| Home equity lines of credit          |       | —          |       | 179,072            |       | 179,072 |   | — |   | 170,301 |   | 170,301 |   |
| Letters of credit                    |       | —          |       | 34,913             |       | 34,913 |   | — |   | 31,973 |   | 31,973 |   |
| Credit card lines of credit          |       | —          |       | 41,014             |       | 41,014 |   | — |   | 76,003 |   | 76,003 |   |
| Total                                |       | $               | 7,860      |               | $          | 450,901 |   | $ | 458,761 |   | $ | 7,388 |   | $ | 448,184 |   | $ | 455,572 |   |

 

Fixed rate commercialloan commitments at December 31, 2005 generally had interest rates ranging from4.50% to 9.00% with remaining terms ranging from 3 months to 5 years. Fixedrate mortgage loan commitments at December 31, 2005 generally had interestrates ranging from 5.75% to 6.25% with terms ranging from 10 to 30 years. Fixedrate check credit lines of credit had an interest rate of 18.00% as of December31, 2005.

 

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

# ** **

The methods and assumptions used to estimate the fair value offinancial instruments are as follows. For short-term assets (i.e., cash and duefrom banks and federal funds sold), their estimated fair value approximatetheir carrying value. For deposits with variable interest rates, it has beenassumed that their estimated fair value approximates their carrying value.Because of their short terms, the carrying values of accrued interestreceivable and payable approximates their fair values.

 

The fair value for securities was derived from quoted market values or,when quotes were not available, the fair value was estimated based on the rateand term of the security and information about the issuer. The fair value forloans was estimated by discounting the future expected cash flows from loanrepayments using current interest rates for loans having comparable maturitiesand credit risk. The fair value for time deposits was estimated by discountingexpected cash flows at discount rates comparable to current market rates forsimilar maturing liabilities.

 

Off-balance-sheet financial instruments are comprised of letters ofcredit and commitments to extend credit. The estimated fair value ofoff-balance-sheet financial instruments is not considered material.

 

While these estimates of fair value are based on management’s judgmentof the most appropriate factors as of the balance sheet date, there is noassurance that the estimated fair value would have been realized if the assetswould have been disposed of or the liabilities settled at that date, sincemarket value may differ depending on various factors. In addition, theestimated fair value would not apply to subsequent dates.

 

21

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The estimated fair valueof the Company’s financial instruments as of December 31 is set forth in thetable below:

 
| ** **                             | ** ** | **2005**            | ** ** | **2004**                       | ** ** |
|----------------------------------------|------------|---------------------|------------|--------------------------------|------------|
| ** **                             | ** ** | **Carrying  Value** | ** ** | **Estimated  Fair Value** | ** ** | **Carrying  Value** | ** ** | **Estimated  Fair Value** | ** ** |
| Financial assets                       |       |                |       |                           |       |   |   |   |   |
| Cash and cash equivalents              |       | $                   | 105,794    |                           | $          | 105,794 |   | $ | 51,400 |   | $ | 51,400 |   |
| Securities                             |       |                |       |                           |       |   |   |   |   |   |   |   |   |
| Available for  sale                    |       | 465,798             |       | 465,798                        |       | 481,595 |   | 481,595 |   |
| Held to maturity                       |       | 64,945              |       | 64,074                         |       | 71,936 |   | 71,690 |   |
| Federal Home  Loan Bank stock          |       | 5,619               |       | 5,619                          |       | 5,352 |   | 5,352 |   |
| Loans, less  allowance for loan losses |       | 1,091,747           |       | 1,096,505                      |       | 1,046,125 |   | 1,055,087 |   |
| Accrued interest                       |       | 7,846               |       | 7,846                          |       | 7,309 |   | 7,309 |   |
|                                   |       |                |       |                           |       |   |   |   |   |
| Financial  liabilities                 |       |                |       |                           |       |   |   |   |   |
| Deposits                               |       | 1,639,666           |       | 1,637,346                      |       | 1,569,742 |   | 1,574,363 |   |
| Accrued interest                       |       | 5,318               |       | 5,318                          |       | 4,075 |   | 4,075 |   |

 

# **Note 10 - Related PartyTransactions**

 

Certain executiveofficers and directors of the Company, their affiliates and companies in whichthey have 10% or more beneficial ownership, are customers of the Bank in theordinary course of business received loans from the Bank totaling $32,611 and $30,421at December 31, 2005 and 2004, respectively. During 2005, $26,985 in loans and$24,795 in principal payments were made. Related parties maintained deposits atthe Bank totaling $46,084 and $43,197 at December 31, 2005 and 2004,respectively.

 

# **Note 11 - CapitalRequirements**

 

The Company and the Bankare subject 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 theCompany and the Bank to maintain minimum capital amounts and ratios (set forthin the following table). Management believes that as of December 31, 2005, theCompany and the Bank exceeded all capital adequacy requirements.

 

Management’s presentpolicy is to limit dividends from the Bank so that the Bank qualifies as a “well-capitalized”institution as defined by the Federal Deposit Insurance Corporation ImprovementAct of 1991. This policy minimizes the amount of Federal Deposit InsuranceCorporation (“FDIC”) insurance premiums paid by the Bank and provides capitalto fund growth. As of December 31, 2005, the Bank could pay, in the aggregate,dividends of approximately $4,600 to West Suburban while remaining a “well-capitalized”institution. Dividends from the Bank are West Suburban’s primary source of cashflow.

 

22

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As of December 31, 2005and 2004, the most recent notifications from the FDIC categorized the Bank as “well-capitalized” under the regulatory framework for prompt corrective action. To becategorized as “well-capitalized” the Bank must maintain minimum ratios fortotal capital to risk weighted assets, Tier 1 capital to risk weighted assetsand Tier 1 capital to average assets as set forth in the following table. Thereare no conditions or events since that notification that management believeswould result in a change of the category. The capital amounts and ratios of theCompany and the Bank for purposes of the prompt corrective action framework arepresented 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, 2005** | ** ** | ** ** | ** ** | ** **                                            | ** ** | ** **                                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Total capital  (to risk weighted assets)        |       |       |       |                                                  |       |                                            |       |   |   |   |   |   |   |
| Company                                         |       | $          | 167,230    |                                                  | 11.9       | %                                               | $          | 112,520 |   | 8.0 | % | N/A |   | N/A |   |
| Bank                                            |       | 145,139    |       | 10.3                                                  | %          | 112,385                                         |       | 8.0 | % | 140,481 |   | 10.0 | % |
| Tier 1 capital  (to risk weighted assets)       |       |       |       |                                                  |       |                                            |       |   |   |   |   |   |   |
| Company                                         |       | 156,549    |       | 11.1                                                  | %          | 56,260                                          |       | 4.0 | % | N/A |   | N/A |   |
| Bank                                            |       | 134,458    |       | 9.6                                                   | %          | 56,192                                          |       | 4.0 | % | 84,288 |   | 6.0 | % |
| Tier 1 capital  (to average assets)             |       |       |       |                                                  |       |                                            |       |   |   |   |   |   |   |
| Company                                         |       | 156,549    |       | 8.7                                                   | %          | 71,768                                          |       | 4.0 | % | N/A |   | N/A |   |
| Bank                                            |       | 134,458    |       | 7.5                                                   | %          | 71,517                                          |       | 4.0 | % | 89,396 |   | 5.0 | % |
|                                            |       |       |       |                                                  |       |                                            |       |   |   |   |   |   |   |
| As of December  31, 2004                        |       |       |       |                                                  |       |                                            |       |   |   |   |   |   |   |
| Total capital  (to risk weighted assets)        |       |       |       |                                                  |       |                                            |       |   |   |   |   |   |   |
| Company                                         |       | $          | 163,176    |                                                  | 12.1       | %                                               | $          | 108,243 |   | 8.0 | % | N/A |   | N/A |   |
| Bank                                            |       | 144,708    |       | 10.7                                                  | %          | 107,870                                         |       | 8.0 | % | 134,838 |   | 10.0 | % |
| Tier 1 capital  (to risk weighted assets)       |       |       |       |                                                  |       |                                            |       |   |   |   |   |   |   |
| Company                                         |       | 152,649    |       | 11.3                                                  | %          | 54,122                                          |       | 4.0 | % | N/A |   | N/A |   |
| Bank                                            |       | 134,181    |       | 10.0                                                  | %          | 53,935                                          |       | 4.0 | % | 80,903 |   | 6.0 | % |
| Tier 1 capital  (to average assets)             |       |       |       |                                                  |       |                                            |       |   |   |   |   |   |   |
| Company                                         |       | 152,649    |       | 8.8                                                   | %          | 69,672                                          |       | 4.0 | % | N/A |   | N/A |   |
| Bank                                            |       | 134,181    |       | 7.7                                                   | %          | 69,371                                          |       | 4.0 | % | 86,713 |   | 5.0 | % |

 

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

 

**Note 12 - Other ComprehensiveIncome**

 

Other comprehensiveincome components and related taxes were as follows:

 
| ** **                                                                      | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|---------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Net unrealized  holding losses on available for sale securities                 |       | $        | (8,553     | )        | $          | (6,472   | )          | $ | (3,389 | ) |
| Reclassification  adjustments for (gains) and losses later recognized in income |       | (206     | )          | 2,004    |       | (2,330   | )          |
| Net unrealized  losses                                                          |       | (8,759   | )          | (4,468   | )          | (5,719   | )          |
| Tax effect                                                                      |       | 3,482    |       | 1,777    |       | 2,268    |       |
| Other  comprehensive loss                                                       |       | $        | (5,277     | )        | $          | (2,691   | )          | $ | (3,451 | ) |

 

23

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# **Note 13 - Condensed FinancialInformation - Parent Only**

# ** **

**CondensedBalance Sheets**

## **December31, 2005 and 2004**

## ** **

| ** **                                                                           | ** ** | **2005** | ** ** | **2004** | ** ** |
|--------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| **Assets**                                                                           |       |     |       |     |       |
| Cash,  substantially all on deposit in subsidiary                                    |       | $        | 19,026     |     | $          | 14,234 |   |
| Securities  available for sale (amortized cost of $2,984 in 2005 and $3,874 in 2004) |       | 2,877    |       | 3,813    |       |
| Securities held  to maturity (fair value of $4,197 in 2005 and $4,029 in 2004)       |       | 4,287    |       | 4,149    |       |
| Investment in  subsidiary                                                            |       | 126,424  |       | 131,310  |       |
| Goodwill                                                                             |       | 712      |       | 712      |       |
| Other assets                                                                         |       | 247      |       | 627      |       |
| **Total  assets**                                                                    |       | $        | 153,573    |     | $          | 154,845 |   |
|                                                                                 |       |     |       |     |       |
| **Liabilities  and shareholders’ equity**                                       |       |     |       |     |       |
| Dividends  payable                                                                   |       | $        | 4,325      |     | $          | 4,325 |   |
| Other  liabilities                                                                   |       | 210      |       | 66       |       |
|                                                                                 |       |     |       |     |       |
| Common stock in  ESOP subject to contingent repurchase obligation                    |       | 54,378   |       | 53,959   |       |
|                                                                                 |       |     |       |     |       |
| Shareholders’  equity                                                           |       | 94,660   |       | 96,495   |       |
| **Total  liabilities and shareholders’ equity**                                 |       | $        | 153,573    |     | $          | 154,845 |   |

 

**CondensedStatements of Income**

**YearsEnded December 31, 2005, 2004 and 2003**

 
| ** **                                                          | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|---------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Income**                                                          |       |     |       |     |       |     |       |
| Dividends from  subsidiary                                          |       | $        | 24,907     |     | $          | 22,633   |       | $ | 25,586 |   |
| Interest income                                                     |       |     |       |     |       |     |       |
| Deposits                                                            |       | 259      |       | 140      |       | 190      |       |
| Securities                                                          |       | 293      |       | 331      |       | 2        |       |
| Net realized  gains (losses) on securities transactions             |       | 162      |       | (47      | )          | —   |       |
| Total income                                                        |       | 25,621   |       | 23,057   |       | 25,778   |       |
|                                                                |       |     |       |     |       |     |       |
| **Expense**                                                         |       |     |       |     |       |     |       |
| Other                                                               |       | 359      |       | 403      |       | 391      |       |
| Total expense                                                       |       | 359      |       | 403      |       | 391      |       |
| **Income  before income taxes**                                     |       | 25,262   |       | 22,654   |       | 25,387   |       |
| **Income  tax expense (benefit)**                                   |       | 14       |       | (100     | )          | (161     | )          |
| **Income  before equity in undistributed net income of subsidiary** |       | 25,248   |       | 22,754   |       | 25,548   |       |
| **Equity  in undistributed net income of subsidiary**               |       | 238      |       | 904      |       | 360      |       |
| **Net  income**                                                     |       | $        | 25,486     |     | $          | 23,658   |       | $ | 25,908 |   |

 

24

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## **CondensedStatements of Cash Flows**

**YearsEnded December 31, 2005, 2004 and 2003**

 
| ** **                                                                        | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|-----------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Cash  flows from operating activities**                                         |       |     |       |     |       |     |       |
| Net income                                                                        |       | $        | 25,486     |     | $          | 23,658   |       | $ | 25,908 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities |       |     |       |     |       |     |       |
| Deferred income  tax benefit                                                      |       | (41      | )          | (26      | )          | (20      | )          |
| Equity in undistributed  net income of subsidiary                                 |       | (238     | )          | (904     | )          | (360     | )          |
| Net discount  accretion of securities                                             |       | (120     | )          | (90      | )          | —   |       |
| Net realized  (gains) losses on securities transactions                           |       | (162     | )          | 47       |       | —   |       |
| Decrease  (increase) in other assets                                              |       | 438      |       | (441     | )          | (60      | )          |
| Increase (decrease)  in other liabilities                                         |       | 19       |       | (22      | )          | (1       | )          |
| **Net  cash provided by operating activities**                                    |       | 25,382   |       | 22,222   |       | 25,467   |       |
| **Cash  flows from investing activities**                                         |       |     |       |     |       |     |       |
| Securities  available for sale                                                    |       |     |       |     |       |     |       |
| Sales                                                                             |       | 1,535    |       | 3,170    |       | —   |       |
| Purchases                                                                         |       | (500     | )          | (4,820   | )          | (2,293   | )          |
| Securities held  to maturity                                                      |       |     |       |     |       |     |       |
| Purchases                                                                         |       | —   |       | (4,038   | )          | —   |       |
| **Net  cash provided by (used in) by investing activities**                       |       | 1,035    |       | (5,688   | )          | (2,293   | )          |
| **Cash  flows from financing activities**                                         |       |     |       |     |       |     |       |
| Loan to ESOP to  acquire West Suburban common stock                               |       | —   |       | 1,200    |       | (1,200   | )          |
| Cash dividends  paid                                                              |       | (21,625  | )          | (21,625  | )          | (22,490  | )          |
| **Net  cash used in financing activities**                                        |       | (21,625  | )          | (20,425  | )          | (23,690  | )          |
| **Net  increase (decrease) in cash**                                              |       | 4,792    |       | (3,891   | )          | (516     | )          |
| **Beginning  cash**                                                               |       | 14,234   |       | 18,125   |       | 18,641   |       |
| **Ending  cash**                                                                  |       | $        | 19,026     |     | $          | 14,234   |       | $ | 18,125 |   |

 

25

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

# ** **

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

 
|                                                 | ** ** | **Fourth  Quarter** | ** ** | **Third  Quarter** | ** ** | **Second  Quarter** | ** ** | **First  Quarter** | ** ** |
|------------------------------------------------------|------------|---------------------|------------|--------------------|------------|---------------------|------------|--------------------|------------|
| **Year Ended December 31, 2005** | ** ** | ** **          | ** ** | ** **         | ** ** | ** **          | ** ** | ** **         | ** ** |
| Interest income                                      |       | $                   | 23,961     |               | $          | 23,103              |       | $                  | 21,878     |   | $ | 20,447 |   |
| Interest expense                                     |       | 8,864               |       | 7,834              |       | 7,077               |       | 6,494              |       |
| Net interest  income                                 |       | 15,097              |       | 15,269             |       | 14,801              |       | 13,953             |       |
| Provision for  loan losses                           |       | —              |       | 750                |       | 625                 |       | —             |       |
| Net interest  income after provision for loan losses |       | 15,097              |       | 14,519             |       | 14,176              |       | 13,953             |       |
| Noninterest  income                                  |       | 6,456               |       | 5,626              |       | 5,687               |       | 5,802              |       |
| Noninterest  expense                                 |       | 11,556              |       | 11,299             |       | 11,324              |       | 11,328             |       |
| Income before  income taxes                          |       | 9,997               |       | 8,846              |       | 8,539               |       | 8,427              |       |
| Income tax  expense                                  |       | 2,848               |       | 2,667              |       | 2,179               |       | 2,629              |       |
| Net income                                           |       | $                   | 7,149      |               | $          | 6,179               |       | $                  | 6,360      |   | $ | 5,798 |   |
| Earnings per  share                                  |       | $                   | 16.52      |               | $          | 14.29               |       | $                  | 14.71      |   | $ | 13.41 |   |
|                                                 |       |                |       |               |       |                |       |               |       |
| Year Ended December 31, 2004                         |       |                |       |               |       |                |       |               |       |
| Interest income                                      |       | $                   | 19,971     |               | $          | 19,908              |       | $                  | 19,936     |   | $ | 19,511 |   |
| Interest expense                                     |       | 5,944               |       | 5,579              |       | 5,295               |       | 5,021              |       |
| Net interest  income                                 |       | 14,027              |       | 14,329             |       | 14,641              |       | 14,490             |       |
| Provision for  loan losses                           |       | —              |       | —             |       | 200                 |       | —             |       |
| Net interest  income after provision for loan losses |       | 14,027              |       | 14,329             |       | 14,441              |       | 14,490             |       |
| Noninterest  income                                  |       | 5,788               |       | 2,849              |       | 5,083               |       | 4,687              |       |
| Noninterest  expense                                 |       | 10,811              |       | 10,517             |       | 11,083              |       | 10,696             |       |
| Income before  income taxes                          |       | 9,004               |       | 6,661              |       | 8,441               |       | 8,481              |       |
| Income tax  expense                                  |       | 2,158               |       | 1,712              |       | 2,336               |       | 2,723              |       |
| Net income                                           |       | $                   | 6,846      |               | $          | 4,949               |       | $                  | 6,105      |   | $ | 5,758 |   |
| Earnings per  share                                  |       | $                   | 15.87      |               | $          | 11.45               |       | $                  | 14.14      |   | $ | 13.36 |   |

 

During the fourth quarterof 2005, the Company experienced an increase of $830 in noninterest incomecompared to the previous quarter. This was primarily the result of increases inprepaid solutions card income relating primarily to the addition of one newlarge client and increased gift card sales.

 

During the fourth quarterof 2004, the Company had an increase in noninterest income of $2,939 comparedto the previous quarter. This was primarily due to net losses on sale ofinvestment securities of $2,057 during the third quarter of 2004. Thesetransactions were undertaken to reposition the investment portfolio to shortenduration and reduce interest rate risk. The Company also experienced increasednoninterest income as a result of increased fees from its prepaid solutions andbrokerage programs. The Company also had increased interest expense of $365during this period compared to the previous quarter, primarily due to higherinterest rates paid on deposits as a result of the rising interest rateenvironment. Noninterest expense decreased during the fourth quarter comparedto the previous quarter, primarily due to decreased profit sharing expenseresulting from a decrease in the ESOP contribution percentage. The Bank’s boardof directors determined that the decrease in contribution percentage wasappropriate in light of the Bank’s performance in 2004.

 

Certain reclassificationswere made between noninterest income and noninterest expense in 2005 and 2004.These reclassifications had no impact on net income.

 

26

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# **MANAGEMENT’S REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING**

# ** **

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

 

Management assessed theCompany’s systems of internal control over financial reporting as of December31, 2005. This assessment was based on criteria for effective internal controlover financial reporting described in Internal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.Based on this assessment, management believes that, as of December 31, 2005,the Company maintained effective internal control over financial reportingbased on those criteria.

 

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

 
| March 9, 2006                          |
|----------------------------------------|
|                                   |
|                                   |
| /s/ Kevin J. Acker                     |   |
| Kevin J. Acker                         |
| Chairman and Chief  Executive Officer  |
|                                   |
| /s/ Duane G. Debs                      |   |
| Duane G. Debs                          |
| President and Chief  Financial Officer |
|                                        |  |  |

 

27

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**[CROWECHIZEK LOGO]**

 

# **REPORT OF INDEPENDENTREGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING**

# ** **

We have audited management’sassessment, included in the accompanying Management’s Report on InternalControl Over Financial Reporting, that West Suburban Bancorp, Inc. maintainedeffective internal control over**financialreporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO). WestSuburban Bancorp, Inc.’s management is responsible for maintaining effectiveinternal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting. Our responsibilityis to express an opinion on management’s assessment and an opinion on theeffectiveness of the company’s internal control over financial reporting basedon our audit.

 

We conducted our audit inaccordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether effective internal control overfinancial reporting was maintained in all material respects. Our audit includedobtaining an understanding of internal control over financial reporting,evaluating management’s assessment, testing and evaluating the design andoperating effectiveness of internal control, and performing such otherprocedures as we considered necessary in the circumstances. We believe that ouraudit provides a reasonable basis for our opinion.

 

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

 

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

 

In our opinion, management’sassessment that West Suburban Bancorp, Inc. maintained effective internalcontrol over financial reporting as of December 31, 2005, is fairly stated, inall material respects, based on criteriaestablished in InternalControl—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO). Also in our opinion,West Suburban Bancorp, Inc. maintained, in all material respects, effectiveinternal control over financial reporting as of December 31, 2005, based on criteria established in InternalControl—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO).

 

28

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We have also audited, inaccordance with the standards of the Public Company Accounting Oversight Board(United States), the consolidatedbalance sheets of West Suburban Bancorp, Inc. as of December 31, 2005and 2004, and the related consolidated statements of income, changes inshareholders’ equity, and cash flows for each of the three years in the periodended December 31, 2005, and our report dated March 9, 2006 expressed an unqualified opinion on thoseconsolidated financial statements.

 
|                | /s/ Crowe Chizek and  Company LLC |   |
|---------------------|-----------------------------------|--------|
|                | Crowe Chizek and Company LLC      |
|                |
| Oak Brook, Illinois |
| March  9, 2006      |

 

29

----

 

# **SELECTED FINANCIAL DATA**

(Dollars inthousands, except per share data)

 

The followinginformation should be read in conjunction with Management’s Discussion and Analysisof Financial Condition and Results of Operations and the Company’s ConsolidatedFinancial Statements and Notes to Consolidated Financial Statements included inthis annual report.

 
| ** **                                                                                                                        | ** ** | **Years Ended December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                                                                        | ** ** | **2005**                                    | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** |
| **Selected  operating data**                                                                                                      |       |                                        |       |   |   |   |   |   |   |   |   |
| Interest income                                                                                                                   |       | $                                           | 89,389     |   | $ | 79,326 |   | $ | 80,801 |   | $ | 85,394 |   | $ | 98,904 |   |
| Interest expense                                                                                                                  |       | 30,269                                      |       | 21,839 |   | 21,986 |   | 27,803 |   | 40,413 |   |
| Net interest  income                                                                                                              |       | 59,120                                      |       | 57,487 |   | 58,815 |   | 57,591 |   | 58,491 |   |
| Provision for loan  losses                                                                                                        |       | 1,375                                       |       | 200 |   | 2,150 |   | 8,125 |   | 2,950 |   |
| Net interest  income after provision for loan losses                                                                              |       | 57,745                                      |       | 57,287 |   | 56,665 |   | 49,466 |   | 55,541 |   |
| Noninterest  income (1)                                                                                                           |       | 23,571                                      |       | 18,407 |   | 22,924 |   | 13,989 |   | 9,684 |   |
| Noninterest  expense                                                                                                              |       | 45,507                                      |       | 43,107 |   | 41,715 |   | 37,051 |   | 35,467 |   |
| Income before  income taxes                                                                                                       |       | 35,809                                      |       | 32,587 |   | 37,874 |   | 26,404 |   | 29,758 |   |
| Income tax  expense                                                                                                               |       | 10,323                                      |       | 8,929 |   | 11,966 |   | 8,472 |   | 9,575 |   |
| Net income                                                                                                                        |       | $                                           | 25,486     |   | $ | 23,658 |   | $ | 25,908 |   | $ | 17,932 |   | $ | 20,183 |   |
|                                                                                                                              |       |                                        |       |   |   |   |   |   |   |   |   |
| **Per  share data**                                                                                                               |       |                                        |       |   |   |   |   |   |   |   |   |
| Earnings                                                                                                                          |       | $                                           | 58.93      |   | $ | 54.82 |   | $ | 59.90 |   | $ | 41.46 |   | $ | 46.67 |   |
| Cash dividends  declared                                                                                                          |       | 50.00                                       |       | 50.00 |   | 44.00 |   | 41.50 |   | 40.00 |   |
| Book value (2)                                                                                                                    |       | 344.60                                      |       | 347.87 |   | 346.62 |   | 341.47 |   | 335.30 |   |
|                                                                                                                              |       |                                        |       |   |   |   |   |   |   |   |   |
| **Selected  balances, end of year**                                                                                               |       |                                        |       |   |   |   |   |   |   |   |   |
| Securities                                                                                                                        |       | $                                           | 536,362    |   | $ | 558,883 |   | $ | 492,380 |   | $ | 328,300 |   | $ | 268,815 |   |
| Loans, less  allowance for loan losses                                                                                            |       | 1,091,747                                   |       | 1,046,125 |   | 1,074,215 |   | 1,128,816 |   | 1,093,376 |   |
| Total assets                                                                                                                      |       | 1,826,826                                   |       | 1,748,049 |   | 1,710,695 |   | 1,586,063 |   | 1,473,559 |   |
| Deposits                                                                                                                          |       | 1,639,666                                   |       | 1,569,742 |   | 1,529,931 |   | 1,420,256 |   | 1,309,720 |   |
| Shareholders’  equity plus common stock in ESOP subject to contingent repurchase obligation                                  |       | 149,038                                     |       | 150,454 |   | 149,912 |   | 147,685 |   | 145,015 |   |
|                                                                                                                              |       |                                        |       |   |   |   |   |   |   |   |   |
| **Ratios**                                                                                                                        |       |                                        |       |   |   |   |   |   |   |   |   |
| Return on  average total assets                                                                                                   |       | 1.43                                        | %          | 1.36 | % | 1.55 | % | 1.17 | % | 1.40 | % |
| Return on  average shareholders’ equity plus common stock in ESOP subject to contingent  repurchase obligation               |       | 17.05                                       | %          | 15.58 | % | 16.94 | % | 12.01 | % | 13.73 | % |
| Cash dividends  declared to net income                                                                                            |       | 84.85                                       | %          | 91.41 | % | 73.45 | % | 100.09 | % | 85.72 | % |
| Average  shareholders’ equity plus common stock in ESOP subject to contingent  repurchase obligation to average total assets |       | 8.40                                        | %          | 8.73 | % | 9.16 | % | 9.76 | % | 10.21 | % |
| Net interest  margin (3)                                                                                                          |       | 3.59                                        | %          | 3.60 | % | 3.81 | % | 4.07 | % | 4.39 | % |

 

----

(1)    Noninterest income includes a litigation settlement of$1,085 in 2003 for the settlement of a claim related to an investment that theCompany made in prior years. Noninterest income also includes gains (losses) onsales on securities of $206 in 2005, ($2,004) in 2004, $2,330 in 2003, $1,017in 2002, $2,334 in 2001 and a write-down of $2,960 of the carrying value ofsecurities available for sale in 2001.

 

(2)    Book value per share equals shareholders’ equity pluscommon stock in ESOP subject to contingent repurchase obligation divided by thenumber of outstanding shares. See Note 7 to the Company’s consolidatedfinancial statements. This presentation is consistent with the Company’s beliefthat it is unlikely that the Company would be required to satisfy thecontingent repurchase obligation.

 

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

 

30

----

 

**AVERAGEBALANCE SHEETS, NET INTEREST INCOME AND**

## **AVERAGERATES AND YIELDS ON A TAX EQUIVALENT BASIS**

(Dollars inthousands)

 

The following tablepresents for the years indicated the total dollar amount of interest incomefrom average interest-earning assets and their yields, as well as the interestexpense on average interest-bearing liabilities and their costs, expressed bothin dollars and rates. All average balances are daily average balances. To theextent received, interest on nonaccruing loans has been included in the table. Interestincome on nonaccrual loans was not material in 2005, 2004 and 2003.

 
| ** **                                                                                            | ** ** | **Years Ended December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                                            | ** ** | **2005**                                    | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                                                                                            | ** ** | **Average  Balance**                        | ** ** | **Interest** | ** ** | **Rate** | ** ** | **Average  Balance** | ** ** | **Interest** | ** ** | **Rate** | ** ** | **Average  Balance** | ** ** | **Interest** | ** ** | **Rate** | ** ** |
| **Assets**                                                                                            |       |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds  sold                                                                                   |       | $                                           | 22,962     |   | $ | 732 |   | 3.2 | % | $ | 24,838 |   | $ | 363 |   | 1.5 | % | $ | 17,947 |   | $ | 197 |   | 1.1 | % |
| Securities                                                                                            |       |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                               |       | 547,119                                     |       | 19,235 |   | 3.5 | % | 494,397 |   | 18,158 |   | 3.7 | % | 408,992 |   | 16,037 |   | 3.9 | % |
| Exempt from  federal income tax (1)                                                                   |       | 22,984                                      |       | 1,482 |   | 6.4 | % | 40,165 |   | 2,463 |   | 6.1 | % | 32,098 |   | 2,114 |   | 6.6 | % |
| Total securities  (1)                                                                                 |       | 570,103                                     |       | 20,717 |   | 3.6 | % | 534,562 |   | 20,621 |   | 3.9 | % | 441,090 |   | 18,151 |   | 4.1 | % |
| Loans (1)(2)                                                                                          |       | 1,069,549                                   |       | 68,489 |   | 6.4 | % | 1,061,218 |   | 59,236 |   | 5.6 | % | 1,107,082 |   | 63,237 |   | 5.7 | % |
| Total  interest-earning assets (1)(2)                                                                 |       | 1,662,614                                   |       | 89,938 |   | 5.4 | % | 1,620,618 |   | 80,220 |   | 4.9 | % | 1,566,119 |   | 81,585 |   | 5.2 | % |
| Cash and due from  banks                                                                              |       | 40,450                                      |       |   |   |   |   | 39,829 |   |   |   |   |   | 40,451 |   |   |   |   |   |
| Premises and  equipment, net                                                                          |       | 40,018                                      |       |   |   |   |   | 41,644 |   |   |   |   |   | 44,362 |   |   |   |   |   |
| Other real estate                                                                                     |       | 1,472                                       |       |   |   |   |   | 3,913 |   |   |   |   |   | 154 |   |   |   |   |   |
| Allowance for  loan losses                                                                            |       | (10,977                                     | )          |   |   |   |   | (13,309 | ) |   |   |   |   | (14,566 | ) |   |   |   |   |
| Accrued interest  and other assets (2)                                                                |       | 46,180                                      |       |   |   |   |   | 46,491 |   |   |   |   |   | 32,989 |   |   |   |   |   |
| **Total  assets**                                                                                     |       | $                                           | 1,779,757  |   |   |   |   |   | $ | 1,739,186 |   |   |   |   |   | $ | 1,669,509 |   |   |   |   |   |
| **Liabilities  and shareholders’ equity**                                                        |       |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing  deposits  NOW                                                                       |       | $                                           | 320,357    |   | 1,333 |   | 0.4 | % | $ | 313,023 |   | 795 |   | 0.3 | % | $ | 289,718 |   | 730 |   | 0.3 | % |
| Money market  checking                                                                                |       | 230,527                                     |       | 5,982 |   | 2.6 | % | 232,431 |   | 3,271 |   | 1.4 | % | 234,031 |   | 3,199 |   | 1.4 | % |
| Savings                                                                                               |       | 435,022                                     |       | 6,792 |   | 1.6 | % | 447,583 |   | 5,202 |   | 1.2 | % | 414,074 |   | 5,256 |   | 1.3 | % |
| Time deposits                                                                                         |       |                                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less than  $100,000                                                                                   |       | 341,123                                     |       | 11,711 |   | 3.4 | % | 318,447 |   | 9,510 |   | 3.0 | % | 312,473 |   | 9,924 |   | 3.2 | % |
| $100,000 and  greater                                                                                 |       | 121,928                                     |       | 4,402 |   | 3.6 | % | 99,208 |   | 3,027 |   | 3.1 | % | 92,811 |   | 2,842 |   | 3.1 | % |
| Total  interest-bearing deposits                                                                      |       | 1,448,957                                   |       | 30,220 |   | 2.1 | % | 1,410,692 |   | 21,805 |   | 1.5 | % | 1,343,107 |   | 21,951 |   | 1.6 | % |
| Other interest-bearing  liabilities                                                                   |       | 1,341                                       |       | 49 |   | 3.7 | % | 2,584 |   | 34 |   | 1.3 | % | 2,464 |   | 35 |   | 1.4 | % |
| Total  interest-bearing liabilities                                                                   |       | 1,450,298                                   |       | 30,269 |   | 2.1 | % | 1,413,276 |   | 21,839 |   | 1.5 | % | 1,345,571 |   | 21,986 |   | 1.6 | % |
| Demand-noninterest-bearing  deposits                                                                  |       | 150,280                                     |       |   |   |   |   | 147,130 |   |   |   |   |   | 152,443 |   |   |   |   |   |
| Accrued interest  and other liabilities                                                               |       | 29,729                                      |       |   |   |   |   | 26,909 |   |   |   |   |   | 18,567 |   |   |   |   |   |
| Shareholders’  equity plus common stock in ESOP subject to contingent repurchase obligation  (3) |       | 149,450                                     |       |   |   |   |   | 151,871 |   |   |   |   |   | 152,928 |   |   |   |   |   |
| **Total  liabilities and shareholders’ equity**                                                  |       | $                                           | 1,779,757  |   |   |   |   |   | $ | 1,739,186 |   |   |   |   |   | $ | 1,669,509 |   |   |   |   |   |
| Net interest  income                                                                                  |       |                                        |       | $ | 59,669 |   |   |   |   |   | $ | 58,381 |   |   |   |   |   | $ | 59,599 |   |   |   |
| Interest rate  spread                                                                                 |       |                                        |       |   |   | 3.3 | % |   |   |   |   | 3.4 | % |   |   |   |   | 3.6 | % |
| Net interest  margin (1)                                                                              |       |                                        |       |   |   | 3.6 | % |   |   |   |   | 3.6 | % |   |   |   |   | 3.8 | % |
|                                                                                                       |            |                                             |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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(1)          Interest income, netinterest margin and yields are presented on a tax equivalent basis, assuming afederal income tax rate of 35%.

 

(2)          Theaverage balances of nonaccrual loans are included in accrued interest and otherassets.

 

(3)          SeeNote 7 to the Company’s consolidated financial statements. This presentation isconsistent with the Company’s belief that it is unlikely that the Company wouldbe required to satisfy the contingent repurchase obligation.

 

31

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

## **ANDRESULTS OF OPERATIONS**

## ** **

The following discussionand analysis provides information regarding the Company’s financial conditionas of December 31, 2005 and 2004, and the results of operations for each of thethree years in the period ended December 31, 2005. This discussion and analysisshould be read in conjunction with the Company’s Consolidated FinancialStatements and Notes to Consolidated Financial Statements included 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.

 

###### ***Critical AccountingPolicies***

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

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

* *

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

 

**Allowance for Loan Losses.**TheCompany maintains an allowance for loan losses at a level management believesis sufficient to absorb probable incurred credit losses in the loan portfolio.The allowance for loan losses represents the Company’s estimate of probableincurred credit losses in the loan portfolio at each balance sheet date and isbased on the review of available and relevant information. The allowance containsallocations for probable incurred credit losses that have been identifiedrelating to specific borrowing relationships as well as probable incurredcredit losses for pools of loans. The allowance for loan losses is reassessedmonthly by the Company to determine the appropriate level of the allowance. Theamount of the allowance for loan losses is determined based on a variety offactors, including assessment of the credit risk of the loans in the loanportfolio, volume of the loans, delinquent loans, evaluation of currenteconomic conditions in the market area, actual charge-offs during the periodand historical loss experience. Loan quality is continually monitored bymanagement and reviewed by the loan committee on a monthly basis.

 

All categories of loansare evaluated on a category by category basis. In addition, individualcommercial, construction and commercial mortgage loans are evaluated todetermine if a specific loss allocation is needed for problem loans deemed tohave a shortfall in collateral. Management also considers the borrower’scurrent economic status including liquidity and future business viability.Other factors used in the allocation of the allowance include levels and trendsof past dues and charge-offs along with concentrations of credit within thecommercial and commercial real estate loan portfolios. This evaluation isinherently subjective as it requires estimates that are susceptible tosignificant revision as more information becomes available or as developmentsoccur. Along with the allocation of the allowance on a category by categorybasis and the specific allocations for individual borrowing relationships, theallowance includes a relatively small portion that remains unallocated.

 

32

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###### ***Management adjusts the allowancefor loan losses by an amount sufficient to maintain the allowance at the leveldetermined appropriate. Loans are charged-off when deemed to be uncollectibleby management. The Company believes that the allowance for loan losses isadequate to provide for estimated probable incurred credit losses in the loanportfolio.***

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

**ContractualObligations, Commitments, Off-Balance Sheet Arrangements, and ContingentLiabilities**

 

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

 

The following tablepresents the Company’s significant fixed and determinable contractualobligations and significant commitments by payment date as of December 31, 2005(dollars in thousands). The payment amounts represent those amountscontractually due to the recipient and do not include any carrying valueadjustments. Further discussion of the nature of each obligation is included inthe referenced Note to the Company’s Consolidated Financial Statements includedin this annual report.

 
| ** **                          | ** ** | **Note  Reference** | ** ** | **One Year  or Less** | ** ** | **Over One  Year to  Three Years** | ** ** | **Over  Three Years  to Five Years** | ** ** | **Over  Five Years** | ** ** | **Total** | ** ** |
|-------------------------------------|------------|---------------------|------------|---------------------------------|------------|---------------------------------------------------|------------|-----------------------------------------------------|------------|---------------------------|------------|-----------|------------|
| Deposits without  a stated maturity |       | 5                   |       | $                               | 1,130,126  |                                              | $          | —                                              |       | $                         | —     |      | $          | — |   | $ | 1,130,126 |   |
| Time deposits                       |       | 5                   |       | 270,654                         |       | 172,737                                           |       | 66,143                                              |       | 6                         |       | 509,540   |       |
| Prepaid  solutions cards            |       |                |       | 19,907                          |       | —                                            |       | —                                              |       | —                    |       | 19,907    |       |
| Operating leases                    |       |                |       | 264                             |       | 602                                               |       | 519                                                 |       | 1,046                     |       | 2,431     |       |
| Commitments to  extend credit       |       |                |       |                            |       |                                              |       |                                                |       |                      |       |      |       |
| Fixed rate                          |       | 8                   |       |                            |       |                                              |       |                                                |       |                      |       | 7,860     |       |
| Variable rate                       |       | 8                   |       |                            |       |                                              |       |                                                |       |                      |       | 450,901   |       |
|                                     |            |                     |            |                                 |            |                                                   |            |                                                     |            |                           |            |           |            |  |  |  |  |  |

 

**BalanceSheet Analysis**

 

***TotalAssets.***Total consolidated assets of the Company atDecember 31, 2005 increased 4.5% from the prior year-end. Increases in the loansand federal funds sold were the largest components of the increase in totalassets and were partially offset by decreases in the securities portfolio.Total average assets in 2005 increased 2.3% from the prior year primarily dueto an increase in average securities resulting from purchases of mortgage-backedsecurities during the first six months of 2005. Asset growth was fundedprimarily by higher levels of deposits.

 

***Cashand Cash Equivalents.***Cash and cash equivalents atDecember 31, 2005 increased 105.8% from the prior year-end primarily due to increasesin federal funds sold which arose from maturities and paydowns in thesecurities portfolio near year-end. The increase in federal funds sold reflectsthe Company’s decision to invest funds for a short duration in order to ensurethe availability of funds necessary for the growth in the loan portfolio.

 

***Securities.***The Company’s securities portfolio decreased 4.0% atDecember 31, 2005 from the prior year-end primarily due to the Company’sdecision to invest its funds in short duration instruments for the reasondescribed in the previous paragraph. The Company continued to make investmentsin mortgaged-backed securities during the first six months of 2005. Investingin amortizing securities (such as mortgage-backed securities) as compared to securitieswith a single payment at maturity is an important element in the Company’sliquidity management in the current interest rate environment. The Companyconsiders monthly paydowns on mortgage-backed securities a consistent source ofcash flows. Additionally, the Company manages its investment portfolio tomaximize the return

 

33

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on invested funds withinacceptable risk guidelines, to meet pledging and liquidity requirements, and toadjust balance sheet interest rate sensitivity to insulate net interest incomeagainst the impact of interest rate changes. During 2005, the Company’saccumulated other comprehensive loss increased $5.3 million due to a change inunrealized losses on securities available for sale, net of reclassification andtax effects. Unrealized losses on securities available for sale increased dueto increases in market interest rates. The Company will continue to monitor itslevel of available for sale and held to maturity securities and will classifynew securities in the appropriate category at the time of purchase.

 

***Loans.***Total loans outstanding at December 31, 2005 increased 4.3%from the prior year-end primarily due to increased balances in the constructionand commercial real estate loan portfolios. The increases in the constructionand commercial real estate loan portfolios were primarily due to new loanoriginations, including a $12.0 million increase in loans outstanding to acurrent construction loan customer and the origination of a $10.6 millioncommercial real estate loan. Increases in the residential real estate loanportfolio were offset by decreases in the indirect automobile, home equity, andcredit card loan portfolios. The Company anticipates a continuing decline inthe indirect automobile loan portfolio primarily due to lower lending volumes,prepayments, and scheduled repayments, as well as the promotions that arelikely to continue to be offered by automobile dealers. After consistent growthfor more than five years, the Company experienced an $8.1 million decrease inthe home equity loan portfolio as the market for this loan product softened.The Company intends to continue to aggressively market home equity loanproducts. The decline in the credit card loan portfolio was primarily due tothe discontinuance of a line of credit cards issued by the Company.

 

***Allowancefor Loan Losses and Asset Quality.***Net loan charge-offswere $1.2 million and $4.1 million in 2005 and 2004, respectively. Nonaccrualloans decreased $3.3 million in 2005. This decrease was primarily due todevelopments in certain loan relationships. In particular, one relationshiprepresenting $1.2 million of nonaccrual loans had a principal reduction andpartial charge-off while another relationship representing $1.1 million ofnonaccrual loans had a principal reduction with the remaining balancetransferred to other real estate which was subsequently sold. Additionally, twoother loan relationships had principal reductions and charge-offs totaling $.9million. Loans 90 days or more past due and still on accrual increased $.6million. This increase was primarily due to the addition of three loansbecoming 90 days or more past due. Two of these loans are well collateralized andin the process of collection; the third loan was paid off during January 2006. Theseincreases were partially offset by the payoffs of other commercial andresidential real estate loans.

 

The ratio of theallowance for loan losses to total loans outstanding was 0.97% and 1.00% atDecember 31, 2005 and 2004, respectively. The following table is an analysis ofthe Company’s nonperforming loans and other real estate at December 31 (dollarsin thousands):

 
| ** **                                                     | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|----------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Loans past due  90 days or more still on accrual               |       | $        | 1,665      |     | $          | 1,036    |       | $ | 380 |   |
| Nonaccrual loans                                               |       | 533      |       | 3,815    |       | 15,008   |       |
| Total  nonperforming loans                                     |       | $        | 2,198      |     | $          | 4,851    |       | $ | 15,388 |   |
| Nonperforming  loans as a percent of total loans               |       | 0.20     | %          | 0.46     | %          | 1.41     | %          |
| Allowance for  loan losses as a percent of nonperforming loans |       | 486      | %          | 217      | %          | 94       | %          |
| Other real  estate                                             |       | $        | 210        |     | $          | 3,156    |       | $ | 1,266 |   |
| Nonperforming  assets as a percent of total assets             |       | 0.13     | %          | 0.46     | %          | 0.97     | %          |

 

***Bank-ownedLife Insurance.*** The cash surrender value of BOLIincreased to $32.2 million at December 31, 2005 from $30.3 million at December31, 2004.

 

***OtherReal Estate.***During 2005, the Company acquired propertieswith an aggregate carrying value of $1.4 million and sold properties with anaggregate carrying value of $4.4 million representing a net decrease in otherreal estate for the year of $3.0 million. The Company recorded a gain of $.2million as a result of these sales.

 

34

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***Deposits.***Total deposits at December 31, 2005 increased 4.5% from the prioryear-end. The increase in total deposits primarily resulted from an increase intime deposits. The Company believes time deposits will continue to increase dueto its promotional efforts and as customers migrate to time deposits from loweryielding more liquid deposits during the current rising interest rateenvironment. In general, management promotes its deposit products whenappropriate and prices its products in a manner intended to maintain itscurrent accounts and attract new customers while maintaining the Company’s netinterest margin at an adequate level.

 

***PrepaidSolutions Cards.***Outstanding balances on prepaidsolutions cards increased 70.9% from the prior year-end. This increase wasprimarily due to the Company implementing new prepaid solutions programs during2005. The Company will continue to attempt to increase volume by entering intoadditional programs with new and existing customers.

 

# **Capital Resources**

# ** **

Shareholders’ equity atDecember 31, 2005 decreased 1.9% from December 31, 2004 as a result of $25.5million of net income, reduced by dividends declared of $21.6 million, anincrease in accumulated other comprehensive loss of $5.3 million and anincrease of $.4 million in common stock in ESOP subject to contingentrepurchase obligation.

 

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 the Companyand the Bank to operate without significant capital adequacy concerns. Inaddition, the Bank formed a subsidiary in 2004 that participates in the Bank’sreal estate lending business and is intended to qualify as a real estateinvestment trust. This subsidiary is also intended to facilitate capitalraising efforts, if such efforts become necessary, by enabling the Bank toaccess the capital markets through the subsidiary.

 

Management has beenadvised that as of December 31, 2005 and 2004, the Bank qualified as a “well-capitalized”institution as defined by the Federal Deposit Insurance Corporation ImprovementAct of 1991, as amended. On a consolidated basis, the Company also exceededregulatory capital requirements. In accordance with applicable regulations, theappraised fair value of West Suburban common stock owned by the ESOP andallocated to participants is included in Tier 1 capital.

 

# **Liquidity**

 

*Effectiveliquidity management ensures the availability of funding sources at minimumcost to meet fluctuating deposit balances, loan demand needs and to takeadvantage of earnings enhancement opportunities. A large stable core depositbase and a strong capital position are the solid foundation for the Company’sliquidity position. Liquidity is enhanced by a securities portfolio structuredto provide liquidity as needed. The Company also maintains relationships withcorrespondent banks to purchase federal funds subject to underwriting andcollateral requirements. Additionally, subject to credit underwriting,collateral, capital stock, and other requirements of the Federal Home Loan Bankof Chicago (“FHLB”), the Company is able to borrow from the FHLB on a “same day”basis. As of December 31, 2005, the Company could have borrowed up toapproximately $112 million from the FHLB secured by certain of its real estateloans and securities. Furthermore, the Company has agreements in place toborrow up to $50 million in federal funds. The Company manages its liquidityposition through continuous monitoring of profitability trends, asset quality,interest rate sensitivity and maturity schedules of interest-earning assets andinterest-bearing liabilities.*

* *

Generally, the Companyuses cash and cash equivalents and securities available for sale to meet itsliquidity needs. As of December 31, 2005 and December 31, 2004, these liquidassets represented 31.3% and 30.5% of total assets, respectively. During 2005,the Company’s cash and cash equivalents increased $54.4 million. Net cashprovided by operating activities was $32.3 million, while net cash used ininvesting activities was $34.5 million. Net cash flows

 

35

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provided by financingactivities were $56.6 million, resulting primarily from deposit growth.Management expects operating and financing activities to be a continuing sourceof cash flow in the future.

 

**Income Statement Analysis – 2005Compared to 2004**

 

***General*****.** The Company’s net income increased 7.7% in 2005, primarilydue to an increase in total noninterest income of $4.7 million. Net income was alsopositively affected by an increase in net interest income of $1.6 million. Netincome was negatively affected by an increase in total noninterest expense of$2.0 million, an increase in provision for loan losses of $1.2 million and anincrease in income tax expense of $1.4 million.

 

***NetInterest Income.*** Net interest income in 2005 increased 2.8%compared to 2004. Net interest income is the primary source of income for theCompany. Net interest income is the difference between interest income earnedon interest-earning assets and interest expense incurred on interest-bearingliabilities. Net interest income is affected by changes in volume and yield oninterest-earning assets and the volume and rates on interest-bearing liabilities.Interest-earning assets consist of federal funds sold, securities and loans.Interest-bearing liabilities primarily consist of deposits. The net interestmargin is the percentage of tax-equivalent net interest income to averageearning assets. The Company’s net interest margin (on a fully tax-equivalentbasis) was 3.6% in 2005 and 2004.

 

Total interest income(on a fully tax-equivalent basis) increased 12.1% in 2005 primarily due toincreased yields from assets in the Company’s loan portfolio. Average loans in2005 increased .8% while the yield on the portfolio increased 82 basis points.Yields on the Company’s home equity loan portfolio increased 77 basis pointsduring this period. This increase was primarily due to increases in theinterest rate charged for home equity lines of credit that adjusted as a resultof increases in the prime rate. Beginning in 2004, the prime rate rose due toincreases in interest rates initiated by the Federal Reserve. The average primerate for 2005 was 6.19% compared to 4.35% for 2004. Yields on the commercialloan portfolio increased 160 basis points during this period. The majority ofcommercial loans have adjustable rates that are tied to the prime rate. Yieldson investment securities decreased 23 basis points during this period. This wasprimarily due to actions taken in the third quarter of 2004 to reposition theinvestment portfolio, which was intended to shorten the duration and reduce theinterest rate risk of the portfolio.

 

Total interest expense increased38.6% in 2005. Interest on deposits, which accounted for substantially all ofthis increase, increased due to higher rates paid on deposits. The yield oninterest-bearing deposits increased 54 basis points to 2.09% in 2005 from 1.55%in 2004. The Company increased rates in order to retain its current deposit accountsand attract new deposit customers while maintaining the Company’s net interestmargin.

 

The following tablereflects the impact of changes in volume and rates of interest-earning assetsand interest-bearing liabilities on a tax equivalent basis for the years endedDecember 31, 2005 and 2004 (dollars in thousands):

 
| ** **                          | ** ** | **2005 compared to 2004** | ** ** | **2004 compared to 2003** | ** ** |
|-------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|
| ** **                          | ** ** | **Change due to**              | ** ** | ** **                               | ** ** | **Change due to** | ** ** | ** ** | ** ** |
| ** **                          | ** ** | **Volume**                               | ** ** | **Rate**                                 | ** ** | **Total  Change** | ** ** | **Volume** | ** ** | **Rate** | ** ** | **Total  Change** | ** ** |
| **Interest  Income**                |       |                                     |       |                                     |       |   |   |   |   |   |   |   |   |
| Federal funds  sold                 |       | $                                        | (61        | )                                        | $          | 430 |   | $ | 369 |   | $ | 100 |   | $ | 66 |   | $ | 166 |   |
| Securities                          |       | 1,291                                    |       | (1,195                                   | )          | 96 |   | 3,606 |   | (1,136 | ) | 2,470 |   |
| Loans                               |       | 533                                      |       | 8,720                                    |       | 9,253 |   | (2,562 | ) | (1,439 | ) | (4,001 | ) |
| Total interest  income              |       | 1,763                                    |       | 7,955                                    |       | 9,718 |   | 1,144 |   | (2,509 | ) | (1,365 | ) |
|                                |       |                                     |       |                                     |       |   |   |   |   |   |   |   |   |
| **Interest  Expense**               |       |                                     |       |                                     |       |   |   |   |   |   |   |   |   |
| Interest-bearing  deposits          |       | 799                                      |       | 7,616                                    |       | 8,415 |   | 1,045 |   | (1,191 | ) | (146 | ) |
| Other  interest-bearing liabilities |       | (45                                      | )          | 60                                       |       | 15 |   | 1 |   | (2 | ) | (1 | ) |
| Total interest  expense             |       | 754                                      |       | 7,676                                    |       | 8,430 |   | 1,046 |   | (1,193 | ) | (147 | ) |
| Net interest  income                |       | $                                        | 1,009      |                                     | $          | 279 |   | $ | 1,288 |   | $ | 98 |   | $ | (1,316 | ) | $ | (1,218 | ) |

 

36

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***Provisionfor Loan Losses.*** The provision for loan losses increased$1.2 million in 2005. This was primarily due to a $45.8 million increase intotal loans and a $1.2 million increase in the specific reserve allocation toimpaired loans during 2005. At December 31, 2005, there was $3.5 million ofspecific reserves allocated for $5.4 million of impaired loans compared to $2.3million of specific reserves allocated for $6.6 million of impaired loans atDecember 31, 2004. A more detailed discussion concerning the allowance for loanlosses is presented in the Allowance for Loan Losses and Asset Quality sectionof this annual report.

 

***NoninterestIncome.***Total noninterest income increased 28.1% during2005 compared to 2004. Prepaid solutions card income increased $2.0 million, or35.6%, primarily due to an increase in the number of programs implementedduring 2005. Service fees on deposit accounts decreased $.4 million primarilyfrom a decline in service charges associated with the overdraft honors program.BOLI income increased $.4 million primarily due to an increase in the Company’sinvestment in this asset initiated in the third and fourth quarters of 2004. Netrealized gain on securities transactions increased $2.2 million to a gainposition of $.2 million at December 31, 2005 from a loss position of $2.0million at December 31, 2004. During the third quarter of 2004, the Companyundertook transactions to reposition the investment portfolio intended toshorten the duration and reduce the interest rate risk of the portfolio. TheCompany also experienced a decrease in net gains on sales of loans held forsale of $.1 million as the Company elected to hold certain 30-year fixed ratemortgage loans, which was a change from its prior practice of selling theseloans into the secondary market. The Company anticipates that this change andadditional increases in interest rates will have a continuing negative impacton the amount of gains on the sales of loans that it recognizes. Othernoninterest income increased $.7 million primarily due to gains on the sales ofother real estate and increased travel agency income.

 

***NoninterestExpense.***Total noninterest expense increased 5.6% during2005 compared to 2004. Salaries and employee benefits increased $.9 million dueto normal salary increases. Prepaid solutions card expense, including expensesrelated to the production of cards, postage and processing services, increased$1.5 million, or 37.3%, during this period. This increase was driven byincreases in volume for existing programs and the implementation of newprograms. The Company anticipates that this expense will continue to increaseas new programs continue to be implemented. Management also believes that overtime the Company will achieve some economies of scale as the need to makesignificant investments in development of new products and programs begin toslow. Furniture and equipment expense increased $.2 million primarily due toincreased data processing costs associated with the Company’s online bankingproducts and services. Advertising and promotion increased $.4 million due toincreased expenses associated with the promotion of the Company’s prepaidsolutions products. Additionally, the Company incurred increased expensesassociated with the promotion of its commercial and home equity loan products.Other noninterest expense decreased $.7 million primarily due to decreased loanexpense from lower appraisal costs and recording fees. Additionally, otherlosses expense, postage and freight expense and Visa® card holder expense decreasedduring 2005 compared to 2004. The Company’s efficiency ratio, a measure of theamount of expense needed to generate each dollar of income was 55% in 2005 and57% in 2004. The ratio improved primarily due to the Company experiencing a $.2million gain on sale of securities in 2005 compared to a $2.0 million loss in2004.

 

***IncomeTaxes.*** Income tax expense increased 15.6% in 2005,primarily due to higher pre-tax income. The effective tax rates for the yearsended December 31, 2005 and 2004 were 28.8% and 27.4%, respectively.

 

**Income Statement Analysis – 2004Compared to 2003**

 

***General*****.** The Company’s net income decreased 8.7% in 2004, primarilydue to a decrease in total noninterest income of $4.1 million. Net income wasalso affected negatively by an increase in total noninterest expense of $1.8million. These decreases to noninterest income and increases to noninterestexpense were partially offset by a decrease in the provision for loan losses of$2.0 million and a decrease in income tax expense of $3.0 million

 

***NetInterest Income.*** Net interest income in 2004 decreased2.3% compared to 2003. The Company’s net interest margin (on a fullytax-equivalent basis) decreased to 3.6% in 2004 compared to 3.8% in 2003.

 

Total interest income(on a fully tax-equivalent basis) decreased 1.7% in 2004 primarily due todeclining volume and yields from assets in the Company’s loan portfolio.Average loans in 2004 decreased 4.1% while the yield on the portfolio decreased13 basis points. Yields in the Company’s real estate loan portfolio declined 21basis points

 

37

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during this period.Yields on the Company’s home equity loan portfolio declined 20 basis pointsduring this period. Yields on fixed rate home equity loans have decreased dueto reductions in the Company’s rates on this product. Yields on variable ratehome equity lines of credit are tied to the prime rate. The average prime ratein 2004 was 4.35% compared to 4.12% in 2003. Yields on the commercial loanportfolio increased 6 basis points during this period. The majority ofcommercial loans have adjustable rates that are tied to the prime rate. During2004, the prime rate rose due to increases in interest rates initiated by theFederal Reserve. Yields on investment securities decreased 26 basis points in2004. This was primarily a result of the Company’s reinvestment of proceedsfrom called and matured securities along with additional funds from decreasedloan volume into securities that provide a lower yield.

 

Total interest expensedecreased .7% in 2004. Interest on deposits, which accounted for substantiallyall of the decline, decreased primarily due to lower market rates. The yield oninterest-bearing deposits decreased 8 basis points to 1.55% in 2004 compared to1.63% in 2003.

 

***Provisionfor Loan Losses.*** The provision for loan losses decreased$2.0 million or 90.7% in 2004. This was primarily due to a $32.0 milliondecrease in total loans (including a $15.3 million decrease in impaired loans)and a $4.8 million decline in the specific reserve allocation to impaired loansduring 2004. At December 31, 2004 there was $2.3 million of specific reservesallocated for $6.6 million of loans compared to $7.1 million of specificreserves allocated for $22.3 million of loans at December 31, 2003. A moredetailed discussion concerning the allowance for loan losses is presented inthe Allowance for Loan Losses and Asset Quality section of this annual report.

 

***NoninterestIncome.***Total noninterest income decreased 19.7% during2004 compared to 2003. Prepaid solutions card income increased $2.1 million asa result of the implementation of new programs and increased usage of theCompany’s prepaid solutions card products. Service fees on deposit accountsdecreased $.4 million, resulting primarily from a decline in service charges associatedwith the overdraft honors program. BOLI income increased $.1 million primarilydue to an increase in the Company’s investment in these assets initiated in thethird and fourth quarters of 2004. In 2004, the Company recorded $2.0 millionin net realized losses on securities transactions compared to $2.3 million innet realized gains on securities transactions in 2003. This was primarily dueto actions taken to reposition the investment portfolio, which was intended toshorten the duration and reduce the interest rate risk of the portfolio. TheCompany also experienced a decrease in net gain on sales of loans held for saleof $.6 million due to a flat mortgage market as refinancing activity togetherwith new financing activity slowed significantly. During 2004, the Companyelected to hold certain 30-year fixed rate mortgage loans, which was a changefrom its prior practice of selling these loans into the secondary market.During 2003, the Company recorded $1.1 million of additional income in connectionwith a litigation settlement. Other noninterest income decreased $.4 millionresulting from a decrease in mortgage loan application fees due to the flatmortgage market.

 

***NoninterestExpense.*** Total noninterest expense increased 3.3% during2004 compared to 2003. Salaries and employee benefits decreased $.3 million.Normal salary increases and increased medical insurance costs were offset byreduced bonuses and ESOP contributions. The number of full-time equivalentemployees was 497 at December 31, 2004 compared to 499 at December 31, 2003.Prepaid solutions cards expense, including expenses relating to the productionof cards, postage and processing services, increased $1.5 million during thisperiod. Advertising and promotion expense increased $.2 million primarily dueto expenses for gift cards and other prepaid solutions products along with theCompany’s home equity loan product mailings. Professional fees increased $.3million primarily due to costs associated with establishing subsidiaries as apart of an initiative intended to enhance profitability and to providecapital-raising alternatives. Other expense decreased $.3 million primarily dueto a decrease in postage and freight expense. The Company’s efficiency ratiowas 57% in 2004 and 51% in 2003. This ratio weakened primarily due to theCompany experiencing $2.0 million of losses on sales of securities in 2004compared to $2.3 million in securities gains in 2003.

 

***IncomeTaxes.*** Income tax expense decreased 25.4% in 2004,primarily due to lower pre-tax income. Additionally, the Company experiencedhigher income levels over the same period in 2003 on tax-exempt income onmunicipal and agency securities, BOLI income and a reduction in income subjectto state taxation reduced the effective tax rate. The effective tax rates forthe years ended December 31, 2004 and 2003 were 27.4% and 31.6%, respectively.

 

38

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# **Interest RateSensitivity**

# ** **

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

 

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

 

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

 

•                  Balancesheet volume reflects the current balances and does not project future growthor changes. The current balances establish the base case from which all percentchanges are calculated.

 

•                  Thereplacement rate for loan and deposit items that mature is the current rateoffered by the Company as adjusted for the assumed rate increase or decrease.The replacement rate for securities is the current market rate as adjusted forthe assumed rate increase or decrease.

 

•                  Therepricing rate for balance sheet data is determined by utilizing individualaccount statistics provided by the Company’s data processing systems.

 

•                  Thematurity and repricing dates for balance sheet data are determined by utilizingindividual account statistics provided by the Company’s data processingsystems.

 

39

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

 

| ** **                      | ** ** | **Amount** | ** ** | **Dollar  Change** | ** ** | **Percent  Change** | ** ** |
|---------------------------------|------------|------------|------------|--------------------|------------|---------------------|------------|
| **December 31, 2005** | ** ** | ** ** | ** ** | ** **         | ** ** | ** **          | ** ** |
| +200 basis  points              |       | $          | 63,379     |               | $          | 3,853               |       | 6.5 | % |
| +100 basis  points              |       | 61,479     |       | 1,953              |       | 3.3                 | %          |
| Base                            |       | 59,526     |       |               |       |                |       |
| -100 basis  points              |       | 61,178     |       | 1,652              |       | 2.8                 | %          |
| -200 basis  points              |       | 58,644     |       | (882               | )          | (1.5                | )%         |
|                            |       |       |       |               |       |                |       |
| December 31,  2004              |       |       |       |               |       |                |       |
| +200 basis  points              |       | $          | 56,487     |               | $          | 2,129               |       | 3.9 | % |
| +100 basis points               |       | 55,760     |       | 1,402              |       | 2.6                 | %          |
| Base                            |       | 54,358     |       |               |       |                |       |
| -100 basis  points              |       | 49,195     |       | (5,163             | )          | (9.5                | )%         |
| -200 basis  points              |       | 44,459     |       | (9,899             | )          | (18.2               | )%         |

 

 

# **Effects of Inflation**

# ** **

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

 

40

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## **BOARDS OF DIRECTORS**

## ** **

**WestSuburban 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                                      |

 

**WestSuburban 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**

## ** **

**WestSuburban 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  |

 

 

## **WestSuburban 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                        |

 

41

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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**         |       |                                                                              |
| George E. Ranstead      |       | Vice President,  Assistant Comptroller and Investment Officer                     |
| Jay J.P. Greifenkamp    |       | Vice President,  Financial Analyst, Investment Officer and Secretary to the Board |
|                    |       |                                                                              |
| **Consumer Loans**      |       |                                                                              |
| 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                                  |
|                    |       |                                                                              |
| **Loss Prevention**     | ** ** | ** **                                                                        |
| **Craig  Kelbus**       | ** ** | **Vice  President, Security and Loss Prevention**                                 |
| ** **              | ** ** | ** **                                                                        |
| **Marketing**           | ** ** | ** **                                                                        |
| Denise M. Zatarski      |       | Director of Marketing                                                             |

 

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| **Operations**                        |   |                                                                    |
|---------------------------------------|--------|-------------------------------------------------------------------------|
| Danielle Budig                        |   | Vice President,  Operations and Visa                                    |
|                                  |   |                                                                    |
| **Purchasing**                        |   |                                                                    |
| Helen G. Schmitt                      |   | Assistant Vice  President, Purchasing                                   |
|                                  |   |                                                                    |
| **Retail Banking**                    |   |                                                                    |
| Jack Buscemi                          |   | Vice President, Retail  Banking                                         |
| William J. Jennrich                   |   | Vice President, Retail  Banking                                         |
| Marcia K. Worobec                     |   | Vice President, Branch  Operations and Branch Manager - Westmore, Metra |
| Kathleen M. Brockman                  |   | Assistant Vice  President, Branch Manager - Lake Street                 |
| 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 - North Main                  |
| Yolanda V. Dunn                       |   | Assistant Vice  President, Branch Manager - Eola Road                   |
| Nansi E. Eivaz                        |   | Assistant Vice  President, Branch Manager - Downtown Downers,           |
|                                  |   |                                                                    | Romeoville |
| Joyce M. Fedele                       |   | Assistant Vice  President, Branch Manager - Charlestowne                |
| Sharon A. Fonte                       |   | Assistant Vice  President, Branch Manager - Glendale Heights            |
| Kenneth J. Hannah                     |   | Assistant Vice  President, Branch Manager - Carol Stream                |
| Priya Hira                            |   | Assistant Vice  President, Branch Manager - Danada, Wheaton             |
| Kirsten L. Jensen                     |   | Assistant Vice  President, Branch Manager - Bartlett                    |
| Terry Leitner                         |   | Assistant Vice  President, Branch Manager - 75th Street, Westmont       |
| Maria A. Martinez                     |   | Assistant Vice  President, Branch Manager - Warrenville, Yorkville      |
| Jeffery W. Miska                      |   | Assistant Vice  President, Branch Manager - Cass Avenue                 |
| Brian S. Nickleski                    |   | Assistant Vice  President, Branch Manager - South Main                  |
| Dawn M. Oles                          |   | Assistant Vice  President, Branch Manager - Montgomery                  |
| Gwen B. O’Loughlin               |   | Assistant Vice  President, Branch Manager - Villa Park                  |
| Robert L. Pauling                     |   | Assistant Vice  President, Branch Manager - Stratford Square            |
| Cynthia A. Picton                     |   | Assistant Vice  President, Branch Manager - Galena                      |
| Kay J. Piotrowski                     |   | Assistant Vice  President, Branch Manager - Fair Oaks                   |
| Jerome F. Sheeman                     |   | Assistant Vice  President, Branch Manager - Finley Road                 |
| Lisa M. Schmidt                       |   | Assistant Vice  President, Branch Manager - South Elgin                 |
| Jose L. Valdez                        |   | Assistant Vice  President, Branch Manager - Oswego                      |
| Jason Knapp                           |   | Manager Trainee -  President Street                                     |
|                                  |   |                                                                    |
| **Travel with West Suburban**         |   |                                                                    |
| Dennis A. Woodyatt                    |   | Travel Agent                                                            |
|                                  |   |                                                                    |
| **Trust**                             |   |                                                                    |
| Christine H. Pawlak                   |   | Trust Officer                                                           |
|                                  |   |                                                                    |
| **West Suburban Insurance  Services** |   |                                                                    |
| Patricia Falstrom                     |   | Insurance Agent                                                         |

 

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## **Addresses of WestSuburban Facilities**

**(630) 652 - 2000**

 

**Aurora**

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

Galena Branch: 2000 WestGalena Boulevard, Aurora, Illinois 60506

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

 

**Bartlett**

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

 

**Bloomingdale**

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

 

**Bolingbrook**

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

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

 

**Carol Stream**

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

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

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

 

**Darien**

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

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

 

**Downers Grove**

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

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

 

**Glendale Heights**

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

 

**Lombard**

Metra Main Branch: 100South Main Street, Lombard, Illinois 60148

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

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

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

 

**Montgomery**

Montgomery Branch: 1830Douglas Road, Montgomery, Illinois 60538

 

**Naperville**

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

Naperville Branch: 2020Feldott Lane, Naperville, Illinois 60540

 

**Oakbrook Terrace**

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

 

**Oswego**

Oswego East Branch: 2830Route 34, Oswego, Illinois 60543

Oswego West Branch: 1071Station Drive, Oswego, Illinois 60543 – opening Fall of 2006

 

**Romeoville**

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

 

44

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**South Elgin**

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

 

**St. Charles**

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

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

 

**Villa Park**

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

 

**Warrenville**

Warrenville Branch: 3S041Route 59, Warrenville, Illinois 60555

 

**Westmont**

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

 

**Wheaton**

Danada Branch: 295 WestLoop Road, Wheaton, Illinois 60187

Wheaton Branch: 221 SouthWest Street, Wheaton, Illinois 60187

 

**Yorkville**

Yorkville Branch: 10Saravanos Drive, Yorkville, Illinois 60560 – opening Spring of 2006

ATMs are available at allof the above banking branches.

 

**Limited-Service Branches**

*Beacon Hill Retirement Community:Lombard, Illinois 60148*

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

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

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

 

**Other Services**

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

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

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

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

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

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

 

45

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## **[MAP OF MARKET AREA THATINDICATES LOCATION OF FACILITIES]**

## ** **

 

**[WSBLOGO]**

 

***Where strength ismatched by service***

 

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# **Shareholder Information**

 

# **Annual Report on Form10-K**

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

 

Duane G. Debs

President and ChiefFinancial Officer

West Suburban Bancorp,Inc.

2800 Finley Road

Downers Grove, Illinois60515

(630) 652-2801

 

# **Annual Meeting ofShareholders**

The annual meeting ofshareholders of West Suburban Bancorp, Inc. will be held at West Suburban Bank,711 South Meyers Road, Lombard, Illinois on Wednesday, May 10, 2006 at 8:00a.m. All shareholders are cordially invited to attend.

 

# **Stock Transfer Agent andRegistrar**

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

 

George E. Ranstead

Secretary to the Boardand Treasurer

West Suburban Bancorp,Inc.

2800 Finley Road

Downers Grove, Illinois60515

(630) 652-2802

 

# **Community ReinvestmentAct**

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

 

Michael P. Brosnahan

Senior Vice President,Commercial Lending and Community Reinvestment Act Officer

West Suburban Bank

717 South Meyers Road

Lombard, Illinois 60148

(630) 652-2308

 

# **Independent RegisteredPublic Accounting Firm**

Crowe Chizek and CompanyLLC

One Mid America Plaza,Suite 700

Post Office Box 3697

Oak Brook, Illinois 60522

 

# **Corporate Counsel**

Barack FerrazzanoKirschbaum Perlman & Nagelberg LLP

333 West Wacker Drive,Suite 2700

Chicago, Illinois 60606

 

**MEMBER FDIC**

** **

**[EQUALHOUSING LENDER LOGO]**

 

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