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EX-13 - EX-13 - WEST SUBURBAN BANCORP INC | a09-35829_1ex13.htm |
EX-21 - EX-21 - WEST SUBURBAN BANCORP INC | a09-35829_1ex21.htm |
EX-32.1 - EX-32.1 - WEST SUBURBAN BANCORP INC | a09-35829_1ex32d1.htm |
EX-31.1 - EX-31.1 - WEST SUBURBAN BANCORP INC | a09-35829_1ex31d1.htm |
EX-32.2 - EX-32.2 - WEST SUBURBAN BANCORP INC | a09-35829_1ex32d2.htm |
EX-31.2 - EX-31.2 - WEST SUBURBAN BANCORP INC | a09-35829_1ex31d2.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended December 31, 2009
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from to
Commission File Number 000 17609
WEST SUBURBAN BANCORP, INC.
(Exact name of Registrant as specified in its charter)
Illinois |
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36-3452469 |
(State or other jurisdiction |
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(I.R.S. Employer Identification Number) |
of incorporation or organization) |
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711 South Meyers Road, Lombard, Illinois |
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60148 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (630) 652-2000
Securities registered pursuant to Section 12(b) of the Act:
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Name of Each Exchange |
Title of Each Class |
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on which Registered |
None |
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None |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of Class)
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of large accelerated filer, accelerated filer and small reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o |
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Accelerated filer x |
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Non-accelerated filer o |
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Smaller reporting company o |
(Do not check if a smaller reporting company) |
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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The aggregate fair value of voting common stock of Registrant held by non-affiliates as of June 30, 2009 was $98,068,500(1)
At March 2, 2010, the total number of shares of Common Stock outstanding was 426,850.
Documents Incorporated by Reference:
Portions of the Annual Report to Shareholders for the fiscal year ended December 31, 2009, which is included as Exhibit 13 to this Form 10-K, are incorporated by reference into Parts I, II and IV hereof, to the extent indicated herein. Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held May 12, 2010 are incorporated by reference in Part III hereof, to the extent indicated herein.
(1) Based on the last independently appraised fair value of the Registrants common stock as of March 2, 2010 and reports of beneficial ownership filed by directors and executive officers of Registrant and by beneficial owners of more than 5% of the outstanding shares of common stock of Registrant; however, such determination of shares owned by affiliates does not constitute an admission of affiliate status or beneficial interest in shares of common stock of Registrant.
Special Note Concerning Forward-Looking Statements
This document (including information incorporated by reference) contains, and future oral and written statements of West Suburban Bancorp, Inc. (West Suburban) and West Suburban Bank (the Bank and collectively with West Suburban and its other direct and indirect subsidiaries, the Company) and its management may contain, forward-looking statements, within the meaning of such term in the Private Securities Litigation Reform Act of 1995, with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Companys management and on information currently available to management, are generally identifiable by the use of words such as believe, expect, anticipate, plan, intend, estimate, may, will, would, could, should or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.
The Companys ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on the operations and future prospects of the Company include, but are not limited to, those set forth in the Risk Factors section included under Item 1A and the following:
· The strength of the U.S. and global economies and financial markets in general and the strength of the local economies in which the Company conducts its operations, including the local residential and commercial real estate markets, which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of the Companys assets.
· The effects of, and changes in, federal, state and local laws, regulations and policies affecting banking, securities, taxation, insurance and monetary and financial matters, as well as any laws and regulations otherwise affecting the Company, including laws and regulations intended to address the current stresses in the U.S. and global financial markets, national security and money laundering.
· The effects of continued adverse market conditions and further volatility in investment securities generally, which may result in a deterioration in the value of the securities in the Companys investment portfolio.
· The ability of the Company to comply with, and satisfy the requirements of, its formal written agreements with its regulators and the consequences that may result from any inability to comply.
· The ability of the Company to comply with applicable federal, state and local laws, regulations and policies and the consequences that may result from any inability to comply.
· The effects of changes in interest rates, including the effects of changes in the rate of prepayments of the Companys assets, and the policies of the Board of Governors of the Federal Reserve System.
· The ability of the Company to compete with other financial institutions as effectively as the Company currently intends due to increases in competitive pressures in the financial services sector.
· The ability of the Company to maintain an acceptable net interest margin.
· The ability of the Company to obtain new customers and to retain existing customers.
· The timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet.
· Technological changes implemented by the Company and by other parties, including third party vendors, which may be more difficult or more expensive than anticipated or which may have unforeseen consequences to the Company and its customers, including technological changes implemented for, or related to, the Companys website or new products.
· The ability of the Company, and certain of its vendors, to develop and maintain secure and reliable electronic systems, including systems developed for the Companys website or new products.
· The ability of the Company to retain directors, executives and key employees, and the difficulty that the Company may experience in replacing directors, executives and key employees in an effective manner.
· Consumer spending and saving habits which may change in a manner that affects the Companys business adversely.
· The economic impact of past and any future terrorist attacks, acts of war or threats thereof and the response of the U.S. to any such attacks and threats.
· Business combinations and the integration of acquired businesses, which may be more difficult or expensive than expected.
· The costs, effects and outcomes of existing or future litigation and disputes with third parties, including, but not limited to, claims in connection with collection actions, employment matters and sales of business units.
· Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board, the Public Company Accounting Oversight Board and the Securities and Exchange Commission.
· Credit risks and the risks from concentrations (by geographic area or industry) within the Companys loan portfolio.
· The failure of the Companys Real Estate Investment Trust (REIT) to qualify as a REIT and the effects of such failure on the Companys consolidated effective tax rate.
· The ability of the Company to manage the risks associated with the foregoing as well as anticipated.
These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning the Company and its business, including other factors that could materially affect the Companys financial results, is included in the Companys filings with the Securities and Exchange Commission.
PART I
ITEM 1. BUSINESS
REGISTRANT AND ITS SUBSIDIARY
West Suburban Bancorp, Inc., an Illinois corporation organized in 1986, is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the BHCA), and the parent company of West Suburban Bank.
The Bank is headquartered in Lombard, Illinois, and, as of December 31, 2009, maintained 35 full-service branches, five limited-service branches and four departments providing insurance, financial and other services for the convenience of the customers of the Bank throughout the western suburbs of Chicago. Due to the nature of the market areas served by the Bank, the Bank provides a wide range of financial services to individuals and small to medium sized businesses. The western suburbs of Chicago have a diversified economy with many corporate headquarters and numerous small to medium sized industrial and non-industrial businesses.
The Bank engages in a general full service retail banking business and offers a broad variety of consumer and commercial products and services. The Bank also offers insurance services through West Suburban Insurance Services, Inc., land trust services and safe deposit boxes. The Bank provides extended banking hours, including Sunday hours and 24-hour banking through a proprietary network of 64 automated teller machines, Tele-Bank 24 (a bank-by-phone system) and online banking at www.westsuburbanbank.com. Other consumer related services are also available, including investment products and a Visa card through West Suburban Bank card services.
The following table sets forth financial and other information concerning the Bank as of and for the year ended December 31, 2009 (dollars in thousands):
Year Formed/Year |
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Affiliated with |
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Number of |
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Total |
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Shareholders |
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Net |
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Return on Average |
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West Suburban |
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Locations |
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Assets |
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Equity |
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Loss |
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Assets |
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Equity |
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West
Suburban Bank |
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40 |
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$ |
1,933,032 |
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$ |
145,630 |
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$ |
(815 |
) |
(0.04 |
)% |
(0.55 |
)% |
COMPETITION
The Company encounters competition in all areas of its business pursuits. It competes for loans, deposits, fiduciary and other services with financial and other institutions located both within and outside of its market area. The Company estimates that there are 108 other financial institutions operating over 819 separate banking offices within the Companys market area. The Company also faces competition from finance companies, insurance companies, mortgage companies, securities brokerage firms, money market funds, loan production offices and other providers of financial services. In order to compete effectively, develop its market base, maintain flexibility and move in pace with changing economic, technological and social conditions, the Company continuously refines and develops its products and services. The principal methods of competition in the financial services industry are price, service and convenience.
EMPLOYEES
At December 31, 2009, the Company employed 584 persons (502 full-time equivalent employees). The Company believes that its relationship with its employees is good. None of the Companys employees are covered by a collective bargaining agreement with the Company.
SUPERVISION AND REGULATION
General
Financial institutions, their holding companies and their affiliates are extensively regulated under federal and state law. As a result, the growth and earnings performance of the Company may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory authorities, including the Illinois Department of Financial and Professional Regulation (the DFPR), the Board of Governors of the Federal Reserve System (the Federal Reserve) and the Federal Deposit Insurance Corporation (the FDIC). Furthermore, taxation laws administered by the Internal Revenue Service and state taxing authorities and securities laws administered by the Securities and Exchange Commission (the SEC) and state securities authorities have an impact on the business of the Company. The effect of these statutes, regulations and regulatory policies may be significant, and cannot be predicted with a high degree of certainty.
Federal and state laws and regulations generally applicable to financial institutions regulate, among other things, the scope of business, the kinds and amounts of investments, reserve requirements, capital levels relative to operations, the nature and amount of collateral for loans, the establishment of branches, mergers and consolidations and the payment of dividends. This system of supervision and regulation establishes a comprehensive framework for the respective operations of the Company and its subsidiaries and is intended primarily for the protection of the FDIC-insured deposits and depositors of the Bank, rather than shareholders.
The following is a summary of the material elements of the regulatory framework that currently applies to the Company and its subsidiaries. It does not describe all of the statutes, regulations and regulatory policies that apply, nor does it restate all of the requirements of those that are described. Additionally, in response to the global financial crisis that began in 2007, various legislative and regulatory proposals have been issued addressing, among other things, the restructuring of the federal bank regulatory system, more stringent regulation of consumer products such as mortgages and credit cards, and safe and sound compensation practices. At this time, the Company is unable to determine whether any of these proposals will be adopted as proposed. As such, the following is qualified in its entirety by reference to applicable law. Any change in statutes, regulations or regulatory policies may have a material effect on the business of the Company and its subsidiaries.
The Company
General. The Company, as the sole shareholder of the Bank, is a bank holding company. As a bank holding company, the Company is registered with, and is subject to regulation by, the Federal Reserve under the BHCA. In accordance with Federal Reserve policy, the Company is expected to act as a source of financial strength to the Bank and to commit resources to support the Bank in circumstances where the Company might not otherwise do so. Under the BHCA, the Company is subject to periodic examination by the Federal Reserve. The Company is required to file with the Federal Reserve periodic reports of the Companys operations and such additional information regarding the Company and its subsidiaries as the Federal Reserve may require.
Acquisitions, Activities and Change in Control. The primary purpose of a bank holding company is to control and manage banks. The BHCA generally requires the prior approval of the Federal Reserve for any merger involving a bank holding company or any acquisition by a bank holding company of another bank or bank holding company. Subject to certain conditions (including deposit concentration limits established by the BHCA), the Federal Reserve may allow a bank holding company to acquire banks located in any state of the United States. In approving interstate acquisitions, the Federal Reserve is required to give effect to applicable state law limitations on the aggregate amount of deposits that may be held by the acquiring bank holding company and its insured depository institution affiliates in the state in which the target bank is located (provided that those limits do not discriminate against out-of-state depository institutions or their holding companies) and state laws that require that the target bank have been in existence for a minimum period of time (not to exceed five years) before being acquired by an out-of-state bank holding company.
The BHCA generally prohibits the Company from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company that is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries. This general prohibition is subject to a number of exceptions. The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve to be so closely related to banking ... as to be a proper incident thereto. This authority would permit the Company to engage in a variety of banking-related businesses, including the ownership and operation of a thrift or any entity engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development), and mortgage banking and brokerage. The BHCA generally does not place territorial restrictions on the domestic activities of non-bank subsidiaries of bank holding companies.
Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature, incidental to any such financial activity or complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally. As of the date of this filing, the Company has not applied for approval to operate as a financial holding company.
Federal law also prohibits any person or company from acquiring control of an FDIC-insured depository institution or its holding company without prior notice to the appropriate federal bank regulator. Control is conclusively presumed to exist upon the acquisition of 25% or more of the outstanding voting securities of a bank or bank holding company, but may arise under certain circumstances between 10% and 24.99% ownership.
Capital Requirements. Bank holding companies are required to maintain minimum levels of capital in accordance with Federal Reserve capital adequacy guidelines. If capital levels fall below the minimum required levels, a bank holding company, among other things, may be denied approval to acquire or establish additional banks or non-bank businesses.
The Federal Reserves capital guidelines establish the following minimum regulatory capital requirements for bank holding companies: (i) a risk-based requirement expressed as a percentage of total assets weighted according to risk; and (ii) a leverage requirement expressed as a percentage of total assets. The risk-based requirement consists of a minimum ratio of total capital to total risk-weighted assets of 8% and a minimum ratio of Tier 1 capital to total risk-weighted assets of 4%. The leverage requirement consists of a minimum ratio of Tier 1 capital to total assets of 3% for the most highly rated companies, with a minimum requirement of 4% for all others. For purposes of these capital standards, Tier 1 capital consists primarily of permanent stockholders equity less intangible assets (other than certain loan servicing rights and purchased credit card relationships). Total capital consists primarily of Tier 1 capital plus Tier 2 capital which consists of other non-permanent capital items such as certain other debt and equity instruments that do not qualify as Tier 1 capital and a portion of the companys allowance for loan and lease losses.
The risk-based and leverage standards described above are minimum requirements. Higher capital levels will be required if warranted by the particular circumstances or risk profiles of individual banking organizations. For example, the Federal Reserves capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, or the risks posed by concentrations of credit, nontraditional activities or securities trading activities. Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions (i.e., Tier 1 capital less all intangible assets), well above the minimum levels. As of December 31, 2009, the Company had regulatory capital in excess of the Federal Reserves minimum requirements.
Emergency Economic Stabilization Act of 2008. Events in the U.S. and global financial markets over the past several years, including deterioration of the worldwide credit markets, have created significant challenges for financial institutions throughout the country. In response to this crisis affecting the U.S. banking system and financial markets, on October 3, 2008, the U.S. Congress passed, and the President signed into law, the Emergency Economic Stabilization Act of 2008 (the EESA). The EESA authorized the Secretary of the United States Department of Treasury (Treasury) to implement various temporary emergency programs designed to strengthen the capital positions of financial institutions and stimulate the availability of credit within the U.S. financial system. Financial institutions participating in certain of the programs established under the EESA are required to adopt Treasurys standards for executive compensation and corporate governance.
The TARP Capital Purchase Program. On October 14, 2008, Treasury announced that it would provide Tier 1 capital (in the form of perpetual preferred stock) to eligible financial institutions. This program, known as the TARP Capital Purchase Program (the CPP), allocated $250 billion from the $700 billion authorized by the EESA to Treasury for the purchase of senior preferred shares from qualifying financial institutions. Under the program, eligible institutions were able to sell equity interests to the Treasury in amounts equal to between 1% and 3% of the institutions risk-weighted assets. The Company did not participate in the CPP.
Dividend Payments. The Companys ability to pay dividends to its shareholders may be affected by both general corporate law considerations and policies of the Federal Reserve applicable to bank holding companies. As an Illinois corporation, the Company is subject to the Illinois Business Corporation Act, as amended, which prohibits the Company from paying a dividend if, after giving effect to the dividend: (i) the Company would be insolvent; or (ii) the net assets of the Company would be less than zero; or (iii) the net assets of the Company would be less than the maximum amount then payable to shareholders of the Company who would have preferential distribution rights if the Company were liquidated. Additionally, policies of the Federal Reserve caution that a bank holding company should not pay cash dividends unless its net income available to common shareholders over the past year has been sufficient to fully fund the dividends and the prospective rate of earnings retention appears consistent with its capital needs, asset quality, and overall financial condition. The Federal Reserve also possesses enforcement powers over bank holding companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies.
Federal Securities Regulation. The Companys common stock is registered with the SEC under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the Exchange Act). Consequently,
the Company is subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act.
The Bank
General. The Bank is an Illinois-chartered bank, the deposit accounts of which are insured by the FDIC to the maximum extent provided under federal law and FDIC regulations. As an Illinois-chartered bank, the Bank is subject to the examination, supervision, reporting and enforcement requirements of the DFPR, the chartering authority for Illinois banks, and the FDIC, designated by federal law as the primary federal regulator of state-chartered, FDIC-insured banks that, like the Bank, are not members of the Federal Reserve System (non-member banks).
Deposit Insurance. As an FDIC-insured institution, the Bank is required to pay deposit insurance premium assessments to the FDIC. The FDIC has adopted a risk-based assessment system whereby FDIC-insured depository institutions pay insurance premiums at rates based on their risk classification. An institutions risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to the regulators. Under the regulations of the FDIC, as presently in effect, insurance assessments range from 0.07% to 0.78% of total deposits, depending on an institutions risk classification, its levels of unsecured debt and secured liabilities, and, in certain cases, its level of brokered deposits.
Furthermore, as a result of the increased volume of bank failures in 2008 and 2009, on May 22, 2009, the FDIC approved a final rule imposing a special assessment on all depository institutions whose deposits are insured by the FDIC. This one-time special assessment was imposed on institutions in the second quarter of 2009, and was collected on September 30, 2009. Pursuant to the final rule, the FDIC imposed on the Bank a special assessment in the amount of $.9 million, which was due and paid on September 30, 2009.
On November 12, 2009, the FDIC adopted a final rule that required insured depository institutions to prepay on December 30, 2009, their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011, and 2012. On December 30, 2009, the Bank paid the FDIC $10.1 million in prepaid assessments. An institutions prepaid assessments were calculated based on the institutions actual September 30, 2009 assessment base, adjusted quarterly by an estimated 5 percent annual growth rate through the end of 2012. The FDIC also used the institutions total base assessment rate in effect on September 30, 2009, increasing it by an annualized 3 basis points beginning in 2011. The FDIC will begin to offset prepaid assessments on March 30, 2010, representing payment of the regular quarterly risk-based deposit insurance assessment for the fourth quarter of 2009. Any prepaid assessment not exhausted after collection of the amount due on June 30, 2013, will be returned to the institution.
FDIC Temporary Liquidity Guarantee Program. In conjunction with Treasurys actions to address the credit and liquidity crisis in financial markets, on October 14, 2008, the FDIC announced the Temporary Liquidity Guarantee Program. One component of the Temporary Liquidity Guarantee Program is the Transaction Account Guarantee Program, which temporarily provides participating institutions with unlimited deposit insurance coverage for non-interest bearing and certain low-interest bearing transaction accounts maintained at FDIC insured institutions. All institutions that did not opt out of the Transaction Account Guarantee Program were subject to a 10 basis point per annum assessment on amounts in excess of $250,000 in covered transaction accounts through December 31, 2009. On August 26, 2009, the FDIC extended the Transaction Account Guarantee Program for an additional six months through June 30, 2010. Beginning January 1, 2010, the assessment levels increased to 15 basis points, 20 basis points or 25 basis points per annum, based on the risk category to which an institution is assigned for purposes of the risk-based premium system. The Bank did not opt out of the six-month extension of the Transaction Account Guarantee Program. As a result, the Bank, like every other FDIC-insured depository institution in the United States that did not opt out of the Transaction Account Guarantee Program, is incurring fees on amounts in excess of $250,000 in covered transaction accounts.
FICO Assessments. The Financing Corporation (FICO) is a mixed-ownership governmental corporation chartered by the former Federal Home Loan Bank Board pursuant to the Federal Savings and Loan Insurance Corporation Recapitalization Act of 1987 to function as a financing vehicle for the recapitalization of the former Federal Savings and Loan Insurance Corporation. FICO issued 30-year non-callable bonds of approximately $8.2 billion that mature by 2019. Since 1996, federal legislation has required that all FDIC-insured depository institutions pay assessments to cover interest payments on FICOs outstanding obligations. These FICO
assessments are in addition to amounts assessed by the FDIC for deposit insurance. During the year ended December 31, 2009, the FICO assessment rate was approximately 0.01% of deposits.
Supervisory Assessments. All Illinois banks are required to pay supervisory assessments to the DFPR to fund the operations of the DFPR. The amount of the assessment is calculated on the basis of an institutions total assets, including consolidated subsidiaries, as reported to the DFPR. During the year ended December 31, 2009, the Bank paid supervisory assessments to the DFPR totaling $.25 million.
Capital Requirements. Banks are generally required to maintain capital levels in excess of other businesses. The FDIC has established the following minimum capital standards for state-chartered insured non-member banks, such as the Bank: (i) a leverage requirement consisting of a minimum ratio of Tier 1 capital to total assets of 3% for the most highly-rated banks with a minimum requirement of at least 4% for all others; and (ii) a risk-based capital requirement consisting of a minimum ratio of total capital to total risk-weighted assets of 8% and a minimum ratio of Tier 1 capital to total risk-weighted assets of 4%. In general, the components of Tier 1 capital and total capital are the same as those for bank holding companies discussed above.
The capital requirements described above are minimum requirements. Higher capital levels will be required if warranted by the particular circumstances or risk profiles of individual institutions. For example, regulations of the FDIC provide that additional capital may be required to take adequate account of, among other things, interest rate risk or the risks posed by concentrations of credit, nontraditional activities or securities trading activities.
Further, federal law and regulations provide various incentives for financial institutions to maintain regulatory capital at levels in excess of minimum regulatory requirements. For example, a financial institution that is well-capitalized may qualify for exemptions from prior notice or application requirements otherwise applicable to certain types of activities and may qualify for expedited processing of other required notices or applications. Additionally, one of the criteria that determines a bank holding companys eligibility to operate as a financial holding company is a requirement that all of its financial institution subsidiaries be well-capitalized. Under the regulations of the FDIC, in order to be well-capitalized a financial institution must maintain a ratio of total capital to total risk-weighted assets of 10% or greater, a ratio of Tier 1 capital to total risk-weighted assets of 6% or greater and a ratio of Tier 1 capital to total assets of 5% or greater.
Federal law also provides the federal banking regulators with broad power to take prompt corrective action to resolve the problems of undercapitalized institutions. The extent of the regulators powers depends on whether the institution in question is adequately capitalized, undercapitalized, significantly undercapitalized or critically undercapitalized, in each case as defined by regulation. Depending upon the capital category to which an institution is assigned, the regulators corrective powers include: (i) requiring the institution to submit a capital restoration plan; (ii) limiting the institutions asset growth and restricting its activities; (iii) requiring the institution to issue additional capital stock (including additional voting stock) or to be acquired; (iv) restricting transactions between the institution and its affiliates; (v) restricting the interest rate the institution may pay on deposits; (vi) ordering a new election of directors of the institution; (vii) requiring that senior executive officers or directors be dismissed; (viii) prohibiting the institution from accepting deposits from correspondent banks; (ix) requiring the institution to divest certain subsidiaries; (x) prohibiting the payment of principal or interest on subordinated debt; and (xi) ultimately, appointing a receiver for the institution.
As of December 31, 2009: (i) the Bank was not subject to a directive from the FDIC to increase its capital to an amount in excess of the minimum regulatory capital requirements; (ii) the Bank exceeded its minimum regulatory capital requirements under FDIC capital adequacy guidelines; and (iii) the Bank was well-capitalized, as defined by FDIC regulations.
Dividend Payments. The primary source of funds for the Company is dividends from the Bank. Under the Illinois Banking Act, Illinois-chartered banks generally may not pay dividends in excess of their net profits.
The payment of dividends by any financial institution is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and a financial institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of December 31, 2009. As of December 31, 2009, approximately $17.4 million was available to be paid as dividends by the Bank. Notwithstanding the availability of funds for dividends, however, the FDIC may prohibit the payment of any dividends by the Bank if the FDIC determines such payment would constitute an unsafe or unsound practice.
Insider Transactions. The Bank is subject to certain restrictions imposed by federal law on extensions of credit to the Company, on investments in the stock or other securities of the Company and the acceptance of the stock or other securities of the Company as collateral for loans made by the Bank. Certain limitations and reporting requirements are also placed on extensions of credit by the Bank to its directors and officers, to directors and officers of the Company, to principal shareholders of the Company and to related interests of such directors, officers and principal shareholders. In addition, federal law and regulations may affect the terms upon which any person who is a director or officer of the Company or the Bank or a principal shareholder of the Company may obtain credit from banks with which the Bank maintains a correspondent relationship.
Safety and Soundness Standards. The federal banking agencies have adopted guidelines that establish operational and managerial standards to promote the safety and soundness of federally insured depository institutions. The guidelines set forth standards for internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality and earnings. In general, the safety and soundness guidelines prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals. If an institution fails to comply with any of the standards set forth in the guidelines, the institutions primary federal regulator may require the institution to submit a plan for achieving and maintaining compliance. If an institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the regulator is required to issue an order directing the institution to cure the deficiency. Until the deficiency cited in the regulators order is cured, the regulator may restrict the institutions rate of growth, require the institution to increase its capital, restrict the rates the institution pays on deposits or require the institution to take any action the regulator deems appropriate under the circumstances. Noncompliance with the standards established by the safety and soundness guidelines may also constitute grounds for other enforcement action by the federal banking regulators, including cease and desist orders and civil money penalty assessments.
Branching Authority. Illinois banks, such as the Bank, have the authority under Illinois law to establish branches anywhere in the State of Illinois, subject to receipt of all required regulatory approvals.
Federal law permits state and national banks to merge with banks in other states subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) state law limitations requiring the merging bank to have been in existence for a minimum period of time (not to exceed five years) prior to the merger. The establishment of new interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) is permitted only in those states the laws of which expressly authorize such expansion.
State Bank Investments and Activities. The Bank generally is permitted to make investments and engage in activities directly or through subsidiaries as authorized by Illinois law. However, under federal law and FDIC regulations, FDIC-insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments of a type, or in an amount, that are not permissible for a national bank. Federal law and FDIC regulations also prohibit FDIC-insured state banks and their subsidiaries, subject to certain exceptions, from engaging as principal in any activity that is not permitted for a national bank unless the bank meets, and continues to meet, its minimum regulatory capital requirements and the FDIC determines the activity would not pose a significant risk to the deposit insurance fund of which the bank is a member. These restrictions have not had, and are not currently expected to have, a material impact on the operations of the Bank.
Federal Reserve System. Federal Reserve regulations, as presently in effect, require depository institutions to maintain reserves against their transaction accounts (primarily NOW and regular checking accounts), as follows: for transaction accounts aggregating $55.2 million or less, the reserve requirement is 3% of total transaction accounts; and for transaction accounts aggregating in excess of $55.2 million, the reserve requirement is $1.335 million plus 10% of the aggregate amount of total transaction accounts in excess of $55.2 million. The first $10.7 million of otherwise reservable balances are exempted from the reserve requirements. These reserve requirements are subject to annual adjustment by the Federal Reserve. We believe the Bank will continue to maintain compliance with the foregoing requirements.
Recent Regulatory Issues
On December 3, 2008, the Bank entered into an Order to Cease and Desist (the 2008 Order) with the FDIC and the DFPR, which is based on FDIC and DFPR findings that the Banks Secrecy Act/Anti-Money Laundering Program (BSA/AML Program) was inadequate and that the Bank had violated various laws and regulations related to the Bank Secrecy Act (the BSA). The 2008 Order requires the Bank to take certain corrective actions aimed at resolving any outstanding violations of BSA-related laws or regulations and to implement a revised BSA/AML Program, which is designed to ensure compliance with these BSA-related laws and regulations. The 2008 Order also requires the Bank to, among other things, assess its BSA Department staffing needs, provide for independent testing of BSA/AML Program compliance, conduct a review of certain historical deposit and transaction activity and submit periodic reports of progress to the FDIC and DFPR. The 2008 Order does not relate to the Banks asset quality, capital position or the safety and soundness of its financial operations. The Bank has taken all of the corrective actions that it believes are required by the 2008 Order to address its BSA/AML Program compliance issues.
On April 23, 2009, the Bank entered into an Order to Cease and Desist (the 2009 Order) with the FDIC based on FDIC findings that the Banks program to implement consumer protection related laws and regulations was inadequate and that the Bank had violated certain consumer protection related laws and regulations. The 2009 Order requires the Bank to take certain corrective actions aimed at resolving outstanding violations and to implement an improved compliance program. The 2009 Order also requires the Bank to, among other things, assess its compliance department staffing needs, provide for independent testing of the Banks compliance program, conduct a review of certain historical activity and submit periodic reports of progress to the FDIC. The 2009 Order does not relate to the Banks asset quality, capital position, the safety and soundness of its financial operations or internal controls over financial reporting. The Bank is in the process of implementing all of the corrective actions required by the 2009 Order to address its consumer compliance issues.
AVAILABLE INFORMATION
The Companys Internet address is www.westsuburbanbank.com. The Company makes available free of charge on or through its Internet website its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after the reports are electronically filed with, or furnished to, the Securities and Exchange Commission.
EXECUTIVE OFFICERS OF WEST SUBURBAN
The names and ages of the executive officers of West Suburban, along with a brief description of the business experience of each person during the past five years, and certain other information is set forth below:
Name (Age) and Position and Offices with West |
|
Principal Occupations and Employment for Past Five |
|
|
|
Kevin J. Acker (60) |
|
Senior Vice President, Marketing of the Bank since 1997 |
|
|
|
Keith W. Acker (60) |
|
Director, President and Trust Officer of the Bank since 1986 |
|
|
|
Duane G. Debs (53) |
|
Senior Vice President, Trust Officer of the Bank since 1997 and Vice President, Comptroller of the Bank since 1987 |
|
|
|
Michael P. Brosnahan (60) |
|
Senior Vice President, Lending of the Bank since 1989 |
STATISTICAL DATA
The statistical data required by Exchange Act Industry Guide 3, Statistical Disclosure By Bank Holding Companies, has been incorporated by reference from the Companys 2009 Annual Report to Shareholders (attached as Exhibit 13 hereto) or is set forth below. This data should be read in conjunction with the Companys 2009 Consolidated Financial Statements and related notes, and the discussion included in Managements Discussion and Analysis of Financial Condition and Results of Operations as set forth in the Companys 2009 Annual Report to Shareholders.
Securities
The following table sets forth by category the amortized cost of securities at December 31 (dollars in thousands):
|
|
2009 |
|
2008 |
|
2007 |
|
|||
Available for sale |
|
|
|
|
|
|
|
|||
Corporate |
|
$ |
|
|
$ |
24,430 |
|
$ |
35,488 |
|
Trust preferred |
|
|
|
8,511 |
|
8,578 |
|
|||
U.S. government sponsored enterprises |
|
49,621 |
|
22,170 |
|
195,193 |
|
|||
Mortgage-backed: residential |
|
139,151 |
|
162,062 |
|
207,302 |
|
|||
States and political subdivisions |
|
10,367 |
|
10,160 |
|
13,918 |
|
|||
Preferred stock |
|
|
|
|
|
621 |
|
|||
Total securities available for sale |
|
199,139 |
|
227,333 |
|
461,100 |
|
|||
Held to maturity |
|
|
|
|
|
|
|
|||
U.S. government sponsored enterprises |
|
41,199 |
|
28,072 |
|
|
|
|||
Mortgage-backed: residential |
|
178,129 |
|
193,187 |
|
11,450 |
|
|||
States and political subdivisions |
|
46,580 |
|
18,975 |
|
12,626 |
|
|||
Total securities held to maturity |
|
265,908 |
|
240,234 |
|
24,076 |
|
|||
Federal Home Loan Bank stock |
|
7,599 |
|
6,144 |
|
5,258 |
|
|||
Total securities |
|
$ |
472,646 |
|
$ |
473,711 |
|
$ |
490,434 |
|
The following table sets forth, by contractual maturity, the amortized cost and weighted average yield of debt securities available for sale at December 31, 2009. Although the mortgage-backed: residential securities are listed by contractual maturity, the effective maturity is significantly shorter due to regularly scheduled payments and prepayments of principal. Yields on tax-exempt securities represent tax equivalent yields, net of premium amortization and discount accretion (dollars in thousands):
|
|
U.S. Government |
|
Mortgage-backed: |
|
States and Political |
|
|||||||||
|
|
Amortized |
|
Weighted |
|
Amortized |
|
Weighted |
|
Amortized |
|
Weighted |
|
|||
Within 1 year |
|
$ |
6,480 |
|
4.08 |
% |
$ |
1,786 |
|
2.90 |
% |
$ |
2,058 |
|
4.76 |
% |
After 1 year but within 5 years |
|
33,219 |
|
2.44 |
% |
13,294 |
|
2.44 |
% |
726 |
|
5.25 |
% |
|||
After 5 years but within 10 years |
|
9,922 |
|
1.17 |
% |
50,412 |
|
4.34 |
% |
1,269 |
|
6.59 |
% |
|||
After 10 years |
|
|
|
|
% |
73,659 |
|
4.60 |
% |
6,314 |
|
6.39 |
% |
|||
Total |
|
$ |
49,621 |
|
2.40 |
% |
$ |
139,151 |
|
4.27 |
% |
$ |
10,367 |
|
6.01 |
% |
Income on Federal Home Loan Bank stock is dependent on the declaration of dividends by the Federal Home Loan Bank.
The following table sets forth, by contractual maturity, the amortized cost and weighted average yield of securities held to maturity at December 31, 2009. Although the mortgage-backed: residential securities are listed by contractual maturity, the effective maturity is significantly shorter due to regularly scheduled payments and prepayments of principal. Yields on tax-exempt securities represent tax equivalent yields, net of premium amortization and discount accretion (dollars in thousands):
|
|
U.S. Government |
|
Mortgage-backed: |
|
States and Political |
|
|||||||||
|
|
Amortized |
|
Weighted |
|
Amortized |
|
Weighted |
|
Amortized |
|
Weighted |
|
|||
Within 1 year |
|
$ |
|
|
|
% |
$ |
|
|
|
% |
$ |
30,713 |
|
1.34 |
% |
After 1 year but within 5 years |
|
8,950 |
|
4.06 |
% |
5,967 |
|
3.17 |
% |
3,287 |
|
4.71 |
% |
|||
After 5 years but within 10 years |
|
26,215 |
|
3.05 |
% |
53,980 |
|
4.49 |
% |
3,624 |
|
5.68 |
% |
|||
After 10 years |
|
6,034 |
|
1.29 |
% |
118,182 |
|
4.51 |
% |
8,956 |
|
6.11 |
% |
|||
Total |
|
$ |
41,199 |
|
3.01 |
% |
$ |
178,129 |
|
4.47 |
% |
$ |
46,580 |
|
2.83 |
% |
No securities holdings of a single issuer, other than U.S. government sponsored enterprises, exceed 10% of the shareholders equity of the Company at December 31, 2009. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Approximately $66.2 million of securities are callable in 2010. Most of these callable securities were issued by U.S. government sponsored enterprises.
Loan Portfolio
The following table sets forth the major loan categories at December 31 (dollars in thousands):
|
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
|||||
Commercial |
|
$ |
267,432 |
|
$ |
288,234 |
|
$ |
270,293 |
|
$ |
282,826 |
|
$ |
276,898 |
|
Consumer |
|
3,031 |
|
4,276 |
|
5,653 |
|
6,821 |
|
7,501 |
|
|||||
Indirect automobile |
|
2,395 |
|
4,454 |
|
8,559 |
|
13,855 |
|
24,939 |
|
|||||
Real estate |
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential |
|
219,551 |
|
242,947 |
|
224,755 |
|
177,885 |
|
160,902 |
|
|||||
Commercial |
|
280,442 |
|
276,995 |
|
249,836 |
|
232,865 |
|
225,794 |
|
|||||
Home equity |
|
232,607 |
|
257,150 |
|
272,098 |
|
240,720 |
|
229,514 |
|
|||||
Construction |
|
175,186 |
|
161,532 |
|
191,952 |
|
197,528 |
|
165,484 |
|
|||||
Held for sale |
|
|
|
1,768 |
|
350 |
|
|
|
140 |
|
|||||
Credit card |
|
9,874 |
|
10,484 |
|
11,191 |
|
10,375 |
|
10,545 |
|
|||||
Other |
|
3,079 |
|
1,333 |
|
1,153 |
|
1,660 |
|
711 |
|
|||||
Total |
|
1,193,597 |
|
1,249,173 |
|
1,235,840 |
|
1,164,535 |
|
1,102,428 |
|
|||||
Allowance for loan losses |
|
(25,922 |
) |
(15,578 |
) |
(9,269 |
) |
(10,650 |
) |
(10,681 |
) |
|||||
Loans, net |
|
$ |
1,167,675 |
|
$ |
1,233,595 |
|
$ |
1,226,571 |
|
$ |
1,153,885 |
|
$ |
1,091,747 |
|
The following table sets forth the maturity and interest rate sensitivity of selected loan categories at December 31, 2009 (dollars in thousands):
|
|
Remaining Maturity |
|
||||||||||
|
|
One
year |
|
One
to |
|
Over |
|
Total |
|
||||
Commercial |
|
$ |
186,812 |
|
$ |
71,565 |
|
$ |
9,055 |
|
$ |
267,432 |
|
Real estate-construction |
|
164,799 |
|
10,387 |
|
|
|
175,186 |
|
||||
Other loans |
|
24,211 |
|
88,341 |
|
638,427 |
|
750,979 |
|
||||
Total |
|
$ |
375,822 |
|
$ |
170,293 |
|
$ |
647,482 |
|
$ |
1,193,597 |
|
|
|
|
|
|
|
|
|
|
|
||||
Variable rate |
|
$ |
342,463 |
|
$ |
81,357 |
|
$ |
388,084 |
|
$ |
811,904 |
|
Fixed rate |
|
33,359 |
|
88,936 |
|
259,398 |
|
381,693 |
|
||||
Total |
|
$ |
375,822 |
|
$ |
170,293 |
|
$ |
647,482 |
|
$ |
1,193,597 |
|
Nonperforming Loans
The following table sets forth the aggregate amount of nonperforming loans and selected ratios at December 31 (dollars in thousands):
|
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
|||||
Loans past due 90 days or more still on accrual |
|
$ |
790 |
|
$ |
1,705 |
|
$ |
480 |
|
$ |
319 |
|
$ |
1,665 |
|
Nonaccrual loans |
|
38,038 |
|
23,569 |
|
2,297 |
|
1,131 |
|
533 |
|
|||||
Total nonperforming loans |
|
38,828 |
|
25,274 |
|
2,777 |
|
1,450 |
|
2,198 |
|
|||||
Other real estate |
|
25,994 |
|
4,658 |
|
824 |
|
351 |
|
210 |
|
|||||
Total nonperforming assets |
|
$ |
64,822 |
|
$ |
29,932 |
|
$ |
3,601 |
|
$ |
1,801 |
|
$ |
2,408 |
|
Nonperforming loans as a percent of total loans |
|
3.3 |
% |
2.0 |
% |
0.2 |
% |
0.1 |
% |
0.2 |
% |
|||||
Nonperforming assets as a percent of total assets |
|
3.3 |
% |
1.6 |
% |
0.2 |
% |
0.1 |
% |
0.1 |
% |
The Companys general policy is to discontinue accruing interest on a loan when it becomes 90 days past due or on an earlier date if management believes, after considering economic and business conditions and collection efforts,
that the borrowers financial condition is such that collection of principal or interest is doubtful. In some circumstances, a loan that is more than 90 days past due can remain on accrual status if it is fully secured and in process of collection. When a loan has been placed on nonaccrual, interest earned but not collected is charged back to interest income. When payments are received on nonaccrual loans, the payment is first applied to principal, then to interest income and finally to expenses incurred for collection. Potential problem loans are loans included on a watch list presented to the board of directors that do not meet the definition of a nonperforming loan. Our decision to include performing loans on a watch list does not necessarily mean that we expect losses to occur or that we believe these loans to be impaired, rather, that we believe a higher degree of monitoring is appropriate for these loans. Potential problem loans as of December 31, 2009 were $32.0 million.
Allowance for Loan Losses
The Company maintains an allowance for loan losses at a level management believes is sufficient to absorb probable incurred credit losses in the loan portfolio. The allowance for loan losses represents the Companys estimate of probable incurred credit losses in the loan portfolio at each balance sheet date and is based on the review of available and relevant information. The allowance contains allocations for probable incurred credit losses that have been identified relating to specific borrowing relationships as well as probable incurred credit losses for pools of loans. The allowance for loan losses is reassessed monthly by the Company to determine the appropriate level of the allowance. The amount of the allowance for loan losses is determined based on a variety of factors, including assessment of the credit risk of the loans in the loan portfolio, volume of the loans, delinquent loans, evaluation of current economic conditions in the market area, actual charge-offs during the period and historical loss experience. Loan quality is continually monitored by management and reviewed by the loan committee on a monthly basis.
Loans are evaluated on a category-by-category basis to determine the appropriate allocation of allowance to each category. In addition, individual commercial, construction and commercial mortgage loans are evaluated to determine if a specific loss allocation is needed for problem loans deemed to have a shortfall in collateral. Management also considers the borrowers current economic status including liquidity and future business viability. Other factors used in the allocation of the allowance include levels and trends of past dues and charge-offs along with concentrations of credit within the commercial and commercial real estate loan portfolios. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future developments occur. Along with the allocation of the allowance on a category-by-category basis and the specific allocations for individual borrowing relationships, the allowance includes a relatively small portion that remains unallocated.
Management adjusts the allowance for loan losses by an amount sufficient to maintain the allowance at the level determined appropriate. A loan is fully or partially charged-off when all or a portion of the loan is deemed to be uncollectible by management. The Company believes that the allowance for loan losses is adequate to provide for estimated probable incurred credit losses in the loan portfolio.
The following table sets forth the activity in the allowance for loan losses for the years ended and at December 31 (dollars in thousands):
|
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
|||||
Allowance for loan losses at beginning of period |
|
$ |
15,578 |
|
$ |
9,269 |
|
$ |
10,650 |
|
$ |
10,681 |
|
$ |
10,527 |
|
Loan charge-offs |
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial |
|
8,087 |
|
1,848 |
|
1,446 |
|
72 |
|
1,250 |
|
|||||
Consumer |
|
31 |
|
10 |
|
17 |
|
5 |
|
12 |
|
|||||
Indirect automobile |
|
46 |
|
20 |
|
37 |
|
62 |
|
79 |
|
|||||
Real estate |
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential |
|
666 |
|
3 |
|
|
|
|
|
|
|
|||||
Commercial |
|
36 |
|
13 |
|
|
|
|
|
|
|
|||||
Home equity |
|
911 |
|
288 |
|
275 |
|
11 |
|
|
|
|||||
Construction |
|
4,548 |
|
1,708 |
|
|
|
|
|
|
|
|||||
Credit card |
|
550 |
|
321 |
|
210 |
|
196 |
|
192 |
|
|||||
Other |
|
77 |
|
84 |
|
61 |
|
72 |
|
56 |
|
|||||
Total loan charge-offs |
|
14,952 |
|
4,295 |
|
2,046 |
|
418 |
|
1,589 |
|
|||||
Loan recoveries |
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial |
|
214 |
|
142 |
|
129 |
|
144 |
|
252 |
|
|||||
Consumer |
|
4 |
|
5 |
|
5 |
|
6 |
|
4 |
|
|||||
Indirect automobile |
|
37 |
|
25 |
|
59 |
|
37 |
|
47 |
|
|||||
Real estate |
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential |
|
19 |
|
|
|
|
|
|
|
|
|
|||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|||||
Home equity |
|
25 |
|
|
|
|
|
|
|
|
|
|||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|||||
Credit card |
|
62 |
|
48 |
|
91 |
|
39 |
|
57 |
|
|||||
Other |
|
10 |
|
24 |
|
6 |
|
11 |
|
8 |
|
|||||
Total loan recoveries |
|
371 |
|
244 |
|
290 |
|
237 |
|
368 |
|
|||||
Net loan charge-offs |
|
14,581 |
|
4,051 |
|
1,756 |
|
181 |
|
1,221 |
|
|||||
Provision for loan losses |
|
24,925 |
|
10,360 |
|
375 |
|
150 |
|
1,375 |
|
|||||
Allowance for loan losses at end of period |
|
$ |
25,922 |
|
$ |
15,578 |
|
$ |
9,269 |
|
$ |
10,650 |
|
$ |
10,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for loan losses to total loans |
|
2.17 |
% |
1.25 |
% |
0.75 |
% |
0.91 |
% |
0.97 |
% |
|||||
Net charge-offs to average total loans |
|
1.21 |
% |
0.33 |
% |
0.15 |
% |
0.02 |
% |
0.11 |
% |
The amount of the additions to the allowance for loan losses charged to expense for the periods indicated were based on a variety of factors, including actual loans charged-off during the respective year, historical loss experience, changes in the nature and volume of the loan portfolio including nonperforming loans, specific loss allocations for individual loans and an evaluation of current economic conditions.
The allocation shown in the following table, encompassing the major segments of the loan portfolio, represents only an estimate for each category of loans based on historical loss experience and managements judgment of amounts deemed reasonable to provide for probable losses within each category.
Estimated losses for categories of homogeneous loan types are generally made on an aggregate basis (dollars in thousands).
|
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
|||||||||||||||
|
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
|||||
Commercial |
|
$ |
11,434 |
|
22.4 |
% |
$ |
5,620 |
|
23.1 |
% |
$ |
4,038 |
|
21.9 |
% |
$ |
7,151 |
|
24.3 |
% |
$ |
6,616 |
|
25.1 |
% |
Consumer (1) |
|
162 |
|
0.5 |
% |
106 |
|
0.3 |
% |
193 |
|
0.6 |
% |
179 |
|
0.7 |
% |
154 |
|
0.7 |
% |
|||||
Indirect automobile |
|
54 |
|
0.2 |
% |
33 |
|
0.4 |
% |
42 |
|
0.7 |
% |
60 |
|
1.2 |
% |
117 |
|
2.3 |
% |
|||||
Real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential (2) |
|
2,518 |
|
18.4 |
% |
1,224 |
|
19.5 |
% |
675 |
|
18.2 |
% |
285 |
|
15.3 |
% |
354 |
|
14.6 |
% |
|||||
Commercial |
|
2,386 |
|
23.5 |
% |
3,863 |
|
22.2 |
% |
1,249 |
|
20.2 |
% |
489 |
|
20.0 |
% |
609 |
|
20.5 |
% |
|||||
Home equity |
|
2,812 |
|
19.5 |
% |
1,337 |
|
20.6 |
% |
926 |
|
22.0 |
% |
746 |
|
20.7 |
% |
826 |
|
20.8 |
% |
|||||
Construction |
|
5,787 |
|
14.7 |
% |
3,003 |
|
12.9 |
% |
1,607 |
|
15.5 |
% |
1,481 |
|
16.9 |
% |
1,489 |
|
15.0 |
% |
|||||
Credit card |
|
674 |
|
0.8 |
% |
305 |
|
1.0 |
% |
250 |
|
0.9 |
% |
242 |
|
0.9 |
% |
258 |
|
1.0 |
% |
|||||
Unallocated |
|
95 |
|
|
% |
87 |
|
|
% |
289 |
|
|
% |
17 |
|
|
% |
258 |
|
|
% |
|||||
Total |
|
$ |
25,922 |
|
100.0 |
% |
$ |
15,578 |
|
100.0 |
% |
$ |
9,269 |
|
100.0 |
% |
$ |
10,650 |
|
100.0 |
% |
$ |
10,681 |
|
100.0 |
% |
(1) Consumer loans include consumer and other loans.
(2) Residential real estate loans include real estate loans - held for sale.
Deposits
The following table sets forth by category average daily deposits and interest rates for the years ended December 31 (dollars in thousands):
|
|
2009 |
|
2008 |
|
2007 |
|
|||||||||
|
|
Average |
|
Rate |
|
Average |
|
Rate |
|
Average |
|
Rate |
|
|||
Demand-noninterest-bearing |
|
$ |
152,332 |
|
|
% |
$ |
138,106 |
|
|
% |
$ |
145,314 |
|
|
% |
NOW |
|
314,199 |
|
0.1 |
% |
307,033 |
|
0.4 |
% |
306,680 |
|
0.9 |
% |
|||
Money market checking |
|
370,914 |
|
1.8 |
% |
326,367 |
|
2.5 |
% |
290,610 |
|
4.3 |
% |
|||
Savings |
|
333,243 |
|
0.4 |
% |
334,266 |
|
0.8 |
% |
359,173 |
|
1.8 |
% |
|||
Time deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Less than $100,000 |
|
372,061 |
|
3.2 |
% |
368,943 |
|
4.1 |
% |
393,708 |
|
4.7 |
% |
|||
$100,000 and greater |
|
135,242 |
|
3.5 |
% |
146,492 |
|
4.1 |
% |
164,785 |
|
4.9 |
% |
|||
Total |
|
$ |
1,677,991 |
|
1.5 |
% |
$ |
1,621,207 |
|
2.1 |
% |
$ |
1,660,270 |
|
2.9 |
% |
The following table sets forth by maturity time deposits $100,000 and greater at December 31 (dollars in thousands):
|
|
2009 |
|
|
Within 3 months |
|
$ |
18,736 |
|
After 3 months but within 6 months |
|
14,820 |
|
|
After 6 months but within 12 months |
|
53,490 |
|
|
After 1 year but within 5 years |
|
59,974 |
|
|
Over 5 years |
|
|
|
|
Total |
|
$ |
147,020 |
|
Return on Equity and Assets and Other Financial Ratios
The following table sets forth selected financial ratios at and for the years ended December 31:
|
|
2009 |
|
2008 |
|
2007 |
|
Return on average total assets |
|
(0.04 |
)% |
0.90 |
% |
1.26 |
% |
Return on average shareholders equity (GAAP) (1) |
|
(0.70 |
)% |
16.01 |
% |
24.04 |
% |
Return on average shareholders equity plus common stock in ESOP subject to contingent repurchase obligation (non-GAAP) (1) |
|
(0.52 |
)% |
10.40 |
% |
14.83 |
% |
Cash dividends declared to net income |
|
(514.61 |
)% |
102.88 |
% |
92.36 |
% |
Average shareholders equity (GAAP) (1) |
|
6.34 |
% |
5.63 |
% |
5.24 |
% |
Average shareholders equity plus common stock in ESOP subject to contingent repurchase obligation to average total assets (non-GAAP) (1) |
|
8.57 |
% |
8.67 |
% |
8.49 |
% |
(1) See Note 8 to the Companys consolidated financial statements and the section entitled Non-GAAP Financial Measures on page 38 of West Suburbans Annual Report to Shareholders for the fiscal year ended December 31, 2009 (attached as Exhibit 13 hereto). This presentation is consistent with the Companys belief that it is unlikely that the Company would be required to satisfy the contingent repurchase obligation.
ITEM 1A. RISK FACTORS
In addition to the other information in this Annual Report on Form 10-K, shareholders, prospective investors and other interested parties should carefully consider the following risk factors:
A continued downturn in the economy, particularly in the western suburbs of Chicago, Illinois, where the Companys business is primarily conducted, could have a material adverse affect on the Companys business, financial condition and results of operations.
The Companys business and earnings are directly affected by general business and economic conditions in the U.S. and, in particular, economic conditions in the western suburbs of Chicago, Illinois. These conditions include legislative and regulatory changes, short-term and long-term interest rates, inflation, and changes in government monetary and fiscal policies, all of which are beyond our control.
At the end of 2007, the U.S. economy experienced a downturn that has continued into 2010. A continued downturn in economic conditions, in particular within the Companys primary market area within the western suburbs of Chicago, Illinois, could result in a decrease in the demand for the Companys products and services, an increase in the Companys loan delinquencies and defaults, and an increase in the Companys problem assets and foreclosures. The value of real estate pledged as collateral for loans made by the Company has declined, and may continue to decline, in turn reducing customers borrowing power, and reducing the value of assets and collateral securing the Companys existing loans. These factors could lead to reduced interest income and an increase in the provision for loan losses.
If current economic conditions continue or worsen, the Companys business, growth and profitability are likely to suffer a material adverse effect. To the extent that the Companys business customers underlying businesses are harmed as a result of the general economic environment, the Companys customers are more likely to default on
their loans. Negative economic trends could lead to higher past due and non-accrual loans, resulting in a material adverse effect on the Companys financial condition and results of operations.
A further deterioration of the Companys current non-performing loans or an increase in the number of non-performing loans may have a material adverse affect on the Companys financial condition and results of operations.
Weakening economic conditions in the residential and commercial real estate sectors have adversely affected, and may continue to adversely affect, the Companys loan portfolio. The Companys ratio of non-performing assets to total assets increased in 2009 to 3.3%, from 1.6% at December 31, 2008. If loans that currently are non-performing further deteriorate or loans that are currently performing become non-performing loans, the Company may need to increase its allowance for loan losses. Such an increase may have a material adverse effect on the Companys financial condition and results of operations.
The Company must effectively manage its credit risk.
There are risks inherent in making any loan, including risks inherent in dealing with individual borrowers, risks of nonpayment, risks resulting from uncertainties as to the future value of collateral and risks resulting from changes in economic and industry conditions. The Company attempts to minimize its credit risk through prudent loan application approval procedures, careful monitoring of the concentration of its loans within specific industries and periodic independent reviews of outstanding loans by its credit review department. However, the Company cannot ensure that its approval and monitoring procedures effectively manage its credit risks. Should the economic climate continue to worsen, borrowers may experience difficulty, and the level of non-performing loans, charge-offs, and delinquencies could rise and require further increases in the allowance for loan losses which could have a material adverse effect on the Companys business, financial condition and results of operations.
The Companys allowance for loan losses may prove to be insufficient to absorb probable incurred credit losses.
The Companys estimate of the level of allowance for loan losses requires management to apply significant judgment. The Company establishes its allowance for loan losses in consultation with management and maintains it at a level considered adequate by management to absorb probable incurred credit losses in the loan portfolio. The amount of future loan losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates, which may be beyond the Companys control, and such losses may exceed current estimates. At December 31, 2009, the Companys allowance for loan losses as a percentage of total loans was 2.17% and as a percentage of total nonperforming loans was approximately 67%. Although management believes that the allowance for loan losses is adequate to absorb probable incurred credit losses in the Companys loan portfolio, the Company cannot predict loan losses with certainty, and the Company cannot assure you that its allowance for loan losses will prove sufficient to cover actual loan losses. Loan losses in excess of its allowance for loan losses may adversely affect the Companys financial condition and results of operations.
The Companys business is concentrated in, and dependent upon the continued growth and prosperity of, the western suburbs of Chicago.
The Company and its operating subsidiaries operate primarily in the western suburbs of Chicago, and as a result, the Companys business, financial condition and results of operations are subject to changes in the economic conditions in this area. The Company has developed a strong presence in the counties it serves, with particular concentration in DuPage County, and surrounding counties. Based upon the 2000 census, these counties together represent a market of more than 1.8 million people. The Companys success depends upon the business activity, population, income levels, deposits and real estate activity in this market. Although the Companys customers business and financial interests may extend well beyond its market area, adverse economic conditions that affect its specific market area could reduce the Companys growth rate, affect the ability of its customers to repay their loans and generally affect the Companys business, financial condition and results of operations. Because of this geographic concentration, the Company is less able to diversify its credit risks across multiple markets than other regional or national financial institutions.
Interest rates and other conditions impact the Companys results of operations.
The Companys profitability is in part a function of the spread between the interest rates earned on investments and loans and the interest rates paid on deposits and other interest-bearing liabilities. Like most banking institutions, the Companys net interest spread and margin will be affected by general economic conditions and other factors, including fiscal and monetary policies of the federal government, that influence market interest rates and its ability to respond to changes in those rates. At any given time, the Companys assets and liabilities will be such that they are affected differently by a given change in interest rates. As a result, an increase or decrease in rates, the length of loan terms or the mix of adjustable and fixed rate loans in the Companys portfolio could have a positive or negative effect on its net income, capital and liquidity. The Company measures interest rate risk under various rate scenarios and using specific criteria and assumptions. A summary of this process, along with the results of the Companys net interest income simulations is presented at Quantitative and Qualitative Disclosures About Market Risk included under Item 7A of Part II of this Form 10-K. Although management believes the Companys current level of interest rate sensitivity is reasonable and effectively managed, significant fluctuations in interest rates may have an adverse effect on the Companys business, financial condition and results of operations.
The Companys loan portfolio has a significant concentration of real estate loans, which are exposed to weaknesses in the U.S. and local housing markets and the overall state of the economy.
Real estate lending (including residential, commercial, home equity and construction) is a large portion of the Companys loan portfolio. These categories represent $907.8 million, or approximately 76.1% of the Companys total loan portfolio as of December 31, 2009. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the geographic area in which the real estate is located, and adverse developments affecting real estate values in one or more of the Companys markets could increase the credit risk associated with its loan portfolio. Additionally, construction and commercial real estate lending typically involves higher loan principal amounts and the repayment of the loans generally is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. Economic events or governmental regulations outside of the control of the borrower or the Company may negatively impact the future cash flow and market values of the affected properties.
If the loans that are collateralized by real estate become troubled during a time when market conditions are declining or have declined, then the Company may not be able to realize the amount of security that it anticipated at the time of originating the loan, which could cause the Company to increase its provision for loan losses and adversely affect its business, financial condition and results of operations. The ongoing weakness in the U.S. and local housing markets and the overall economy has lead to declines in home prices in many markets. Continued declines in real estate values, home sales volumes and financial stress on borrowers as a result of job losses, interest rate resets on adjustable rate mortgage loans or other factors could have continued adverse effects on borrowers that result in higher delinquencies and greater charge-offs in future periods, which could adversely affect the Companys business, financial condition and results of operations.
Commercial loans also make up a significant portion of the Companys loan portfolio.
Commercial loans were approximately $267.4 million (excluding $280.4 million of commercial real estate loans), or approximately 22.4% of the Companys total loan portfolio as of December 31, 2009. The Companys commercial loans are primarily made based on the identified cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. Most often, this collateral is accounts receivable, inventory, equipment or real estate. Credit support provided by the borrower for most of these loans and the probability of repayment is based on the liquidation of the pledged collateral and enforcement of a personal guarantee, if a guarantee is obtained. As a result, in the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. The collateral securing these loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business. A continued decline in the U.S. economy could harm the businesses of the Companys borrowers and reduce the value of the assets securing the Companys commercial loans.
The Companys construction loans are based upon estimates of costs and values associated with the completed project. These estimates may be inaccurate, and the Company may be exposed to more losses on these construction loans than on other loans.
At December 31, 2009, construction loans, including land acquisition and development, totaled $175.2 million, or 14.7%, of the Companys total loan portfolio. Construction and land acquisition and development lending involves additional risks because funds are advanced based upon values associated with the completed project, which are uncertain. Because of the uncertainties inherent in evaluating the construction cost estimates that the Company receives from its customers and other third parties, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio. As a result, construction loans often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project and the ability of the borrower to sell or lease the property, rather than the ability of the borrower or guarantor to repay principal and interest. The market values of real estate throughout the U.S., including in the Companys market area, dramatically declined in 2009. The ongoing weakness in the U.S. real estate markets may negatively impact the ability of the Companys borrowers to sell or lease their properties. If the Companys appraisal of the anticipated value of the completed project proves to be overstated, the Company may have inadequate security for the loan.
Government regulation can result in limitations on the Companys operations.
The Company and its operating subsidiaries operate in a highly regulated environment and are subject to supervision and regulation by a number of governmental regulatory agencies, including the Federal Reserve, the FDIC and the DFPR. Regulations adopted by these agencies, which are generally intended to provide protection for depositors and customers rather than for the benefit of shareholders, govern a comprehensive range of matters relating to ownership and control of the Companys shares, its acquisition of other companies and businesses, permissible activities in which the Company may engage, maintenance of adequate capital levels and other aspects of the Companys operations. These bank regulators possess broad authority to prevent or remedy unsafe or unsound practices or violations of law.
As a financial institution, the Company is required to develop programs to implement numerous consumer protection related laws and regulations and to prevent the Company from being used for money laundering and terrorist activities. The Company is also obligated to file suspicious activity reports with the U.S. Treasurys Office of Financial Crimes Enforcement Network in certain circumstances. On December 3, 2008, the Bank entered into 2008 Order with the FDIC and the DFPR that requires the Bank to take certain corrective actions intended to resolve outstanding violations of the USA PATRIOT Act and Bank Secrecy Act related laws or regulations and to implement a revised Bank Secrecy Act/Anti-Money Laundering program. In addition, on April 23, 2009, the Bank entered into 2009 Order (together with the 2008 Order, the Orders) with the FDIC which requires the Bank to take corrective actions intended to resolve outstanding violations of certain consumer protection related laws and regulations and to implement an improved compliance program. Although the Orders do not relate to the Banks asset quality, capital position or the safety and soundness of its financial operations, the Orders require the Bank to, among other things, assess its staffing needs, provide for independent testing, conduct a review of certain historical activity and submit periodic reports of progress to the FDIC and DFPR. As a result, the Company expects the Orders to increase the Companys cost of regulatory compliance, which may adversely affect its earnings. In addition, if the Bank is not successful in its efforts to comply with the Orders, the FDIC and the DFPR may take further regulatory actions, which could significantly limit the Companys operations and growth.
In addition, as result of ongoing challenges facing the U.S. economy, the potential exists for new laws and regulations regarding lending and funding practices and liquidity standards to be promulgated, and bank regulatory agencies are expected to be active in responding to concerns and trends identified in examinations, including the expected issuance of many formal or informal enforcement actions or orders. The laws and regulations applicable to the banking industry could change at any time and we cannot predict the effects of these changes on our business and profitability. Increased regulation could increase our cost of compliance and adversely affect profitability. For example, new legislation or regulation may limit the manner in which we may conduct our business, including our ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads.
The Company may experience difficulties in managing its growth, and its growth strategy involves risks that may negatively impact net income.
The Company has pursued and continues to pursue an internal growth strategy, the success of which will depend primarily upon generating an increasing level of loans and deposits at acceptable risk levels without corresponding increases in non-interest expenses. The Companys growth strategy has been to operate out of a number of branches. The Company may establish other new branches and product areas, expand into new markets or make strategic acquisitions of other financial institutions, which may require significant upfront investments in technology, personnel and site locations. There can be no assurance that the Company will be successful in continuing its growth strategy and in continuing to improve or maintain its net income by leveraging its non-interest expenses.
The Company may expand into additional communities or attempt to strengthen its position in its current markets by undertaking additional branch openings. Based on experience, management believes that it generally takes up to two years for new banking facilities to first achieve operational profitability, due to the impact of overhead expenses and the start-up phase of generating loans and deposits. To the extent that the Company undertakes additional branching, it is likely to continue to experience the effects of higher operating expenses relative to operating income from the new operations, which may have an adverse effect on the Companys levels of reported net income, return on average equity and return on average assets.
The Company faces intense competition in all aspects of its business from other banks and financial institutions.
The banking and financial services business in its market is highly competitive. The Companys competitors include large regional banks, local community banks, savings and loan associations, securities and brokerage companies, mortgage companies, insurance companies, finance companies, money market mutual funds, credit unions and other non-bank financial service providers. Increased competition in the Companys market may result in a decrease in the amounts of its loans and deposits, reduced spreads between loan rates and deposit rates or loan terms that are more favorable to the borrower. Any of these results could have a material adverse effect on the Companys ability to grow and remain profitable. If increased competition causes the Company to significantly discount the interest rates it offers on loans or increase the amount it pays on deposits, net interest income could be adversely impacted. If increased competition causes the Company to modify its underwriting standards, it could be exposed to higher losses from lending activities. Additionally, many of the Companys competitors are much larger in total assets and capitalization, have greater access to capital markets and offer a broader range of financial services than the Company can offer.
The Company may need to raise additional capital in the future, but that capital may not be available when it is needed.
The Company is required by federal and state regulatory authorities to maintain adequate levels of capital to support its operations. Absent any changes in the regulatory framework, the Company anticipates that its existing capital resources will satisfy its capital requirements for the foreseeable future. However, the Company may at some point need to raise additional capital to support continued growth, both internally and through acquisitions.
The Companys ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside its control, and on its financial performance. Accordingly, the Company cannot assure you of its ability to raise additional capital, if needed, on terms acceptable to the Company. If the Company cannot raise additional capital when needed, its ability to further expand its operations through internal growth and acquisitions could be materially impaired.
The Companys community banking strategy relies heavily on its management team, and the unexpected loss of key managers may adversely affect its operations.
Much of the Companys success to date has been influenced strongly by its ability to attract and to retain senior management experienced in banking and financial services and familiar with the communities in its market area. The Companys ability to retain executive officers, the current management teams and loan officers of its operating subsidiaries will continue to be important to the successful implementation of its strategy. It is also critical, as the Company grows, to be able to attract and retain qualified additional management and loan officers with the appropriate level of experience and knowledge about its market area to implement its community-based operating strategy. The unexpected loss of services of any key management personnel, or the inability to recruit and retain
qualified personnel in the future, could have an adverse effect on the Companys business, financial condition and results of operations.
Liquidity risks could affect operations and jeopardize the Companys business, results of operations and financial condition.
Liquidity is essential to the Companys business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on the Companys liquidity. The Companys primary sources of funds consist of cash from operations, investment maturities and sales and deposits. Additional liquidity is provided by the Companys ability to borrow from the Federal Reserve Bank and the Federal Home Loan Bank. The Companys access to funding sources in amounts adequate to finance or capitalize its activities or on terms that are acceptable to the Company could be impaired by factors that affect it directly or the financial services industry or economy in general, such as further disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.
Since late 2007, and particularly during the second half of 2008 and all of 2009, the financial services industry and the credit markets generally were materially and adversely affected by significant declines in asset values and by a lack of liquidity. The liquidity issues have been particularly acute for regional and community banks, as many of the larger financial institutions have significantly curtailed their lending to regional and community banks to reduce their exposure to the risks of other banks. In addition, many of the larger correspondent lenders have reduced or even eliminated federal funds lines for their correspondent customers. Furthermore, regional and community banks generally have less access to the capital markets than do the national and super-regional banks because of their smaller size and limited analyst coverage. Any decline in available funding could adversely impact the Companys ability to originate loans, invest in securities, meet its expenses, pay dividends to its shareholders, or fulfill obligations such as repaying borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on the Companys liquidity, business, results of operations and financial condition.
The amount of other real estate (ORE) may increase significantly, resulting in additional losses, and costs and expenses that may negatively affect the Companys operations.
At December 31, 2009, the Company had a total of $26.0 million of ORE as compared to $4.7 million at December 31, 2008. This increase in ORE is due, among other things, to the continued deterioration of the commercial and residential real estate markets and the tightening of the credit market. As the amount of ORE increases, the Companys losses and the costs and expenses of maintaining the real estate will likewise increase. Due to the on-going economic crisis, the amount of ORE may continue to increase throughout 2010. Any additional increase in losses, and maintenance costs and expenses due to ORE could have a material adverse impact on the Companys business, results of operations and financial condition. Such effects may be particularly pronounced in a market of reduced real estate values and excess inventory, which may make the disposition of ORE properties more difficult, increase maintenance costs and expenses, and reduce the Companys ultimate realization from any ORE sales.
Higher FDIC deposit insurance premiums and assessments could adversely affect the Companys financial condition.
Recently, higher levels of bank failures have dramatically increased resolution costs of the FDIC and depleted the Deposit Insurance Fund. In addition, the FDIC instituted two temporary programs in 2008 to further insure customer deposits at FDIC-member banks through December 31, 2009: deposit accounts are now insured up to $250,000 per customer (up from $100,000) and non-interest bearing transactional accounts are fully insured (unlimited coverage). These programs have placed additional stress on the Deposit Insurance Fund. On May 20, 2009, the FDIC extended the $250,000 per customer insurance limit through December 31, 2013.
In order to maintain a strong funding position and restore reserve ratios of the Deposit Insurance Fund, the FDIC increased assessment rates of insured institutions uniformly by 7 cents for every $100 of deposits beginning with the first quarter of 2009, with additional changes effective April 1, 2009, which required riskier institutions to pay a larger share of premiums by factoring in rate adjustments based on secured liabilities and unsecured debt levels.
On May 22, 2009, the FDIC adopted a final rule that imposed a special assessment on all insured depository institutions. Pursuant to the final rule, the FDIC imposed on the Bank a special assessment of $.9 million, which was paid on September 30, 2009.
On November 12, 2009, the FDIC adopted a final rule that required insured depository institutions to prepay on December 30, 2009, their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011, and 2012. On December 30, 2009, the Bank paid the FDIC $10.1 in prepaid assessments. These actions by the FDIC increased the Companys noninterest expense in 2009 and are expected to increase the Companys costs for the foreseeable future. We anticipate that our FDIC insurance premiums may continue to increase in the future, perhaps significantly, which will adversely impact our future earnings.
The Company and its subsidiaries are subject to examination and challenges by taxing authorities, and the Companys effective tax rates may be adversely affected by changes in federal and state tax laws.
The Companys effective tax rates may be adversely affected by changes in federal or state tax laws, regulations and agency interpretations. Tax laws are complex and subject to different interpretations by the taxpayer and the various taxing authorities. Management makes certain judgments and estimates about the application of these inherently complex laws when determining the provision for income taxes. Federal and state taxing authorities have recently become increasingly aggressive in challenging tax positions taken by financial institutions, including positions that may be taken by the Company. During the preparation of the Companys tax returns, management makes reasonable interpretations of the tax laws which are subject to challenge upon audit by the tax authorities. These interpretations are also subject to reinterpretation based on managements ongoing assessment of facts and evolving case law.
The Company has a continuing need for technological change, and it may not have the resources to effectively implement new technology.
The financial services industry continues to undergo rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. The Companys future success will depend in part upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands for convenience as well as to create additional efficiencies in its operations as it continues to grow and expand its market area. Many of the Companys larger competitors have substantially greater resources to invest in technological improvements. As a result, they may be able to offer additional or superior products to those that the Company will be able to offer, which would put it at a competitive disadvantage. Accordingly, the Company cannot provide you with assurance that it will be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to its customers.
Changes in accounting standards could impact the Companys results of operations.
The accounting standard setters, including the Financial Accounting Standards Board, the Securities and Exchange Commission and other regulatory bodies, periodically change the financial accounting and reporting standards that govern the preparation of the Companys consolidated financial statements. These changes can be hard to predict and can materially impact how the Company records and reports its financial condition and results of operations. In some cases, the Company could be required to apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements.
The Companys ability to pay dividends on its common stock is limited by law.
West Suburbans ability to pay dividends on its common stock largely depends on its receipt of dividends from the Bank. The amount of dividends that the Bank may pay to West Suburban is limited by federal and state laws and regulations relating to financial institutions. As of December 31, 2009, approximately $17.4 million was available to be distributed as dividends by the Bank to West Suburban while remaining a well-capitalized institution. However, the FDIC may restrict the payment of dividends by the Bank. In addition, West Suburban and the Bank may decide to limit the payment of dividends even when they have the legal ability to pay them in order to retain earnings for use in their businesses.
There is no established trading market for West Suburbans common shares.
West Suburbans common stock is not traded on any exchange or quoted on the NASDAQ or traded on any other established trading market, and West Suburban does not intend to apply for listing or quotation. West Suburban cannot assure you that a liquid market will develop for West Suburbans common stock. If no trading market develops for West Suburbans common stock, it may be difficult to sell your shares or, if sold, it may be difficult to resell the shares for a price at or above the price you paid for your shares. Even if a trading market is established, there is no assurance that such a trading market can be sustained.
System failure or breaches of the Companys network security could subject the Company to increased operating costs as well as litigation and other liabilities.
The information technology systems and network infrastructure the Company uses could be vulnerable to unforeseen problems. The Companys operations are dependent upon its ability to protect its information technology equipment against damage from physical theft, fire, power loss, telecommunications failure or a similar catastrophic event, as well as from security breaches, denial of service attacks, viruses, worms and other disruptive problems caused by hackers. Any damage or failure that causes an interruption in the Companys operations could have a material adverse effect on its business, financial condition and results of operations. System break-ins, phishing and other disruptions could also jeopardize the security of information stored in and transmitted through the Companys information technology systems and network infrastructure, which may result in significant liability to the Company and may cause existing and potential customers to refrain from doing business with it. Although the Company, with the help of third-party service providers, intends to continue to implement security technology and establish operational procedures to prevent such damage, there can be no assurance that these security measures will be successful. In addition, advances in information technology capabilities, new discoveries in the field of cryptography or other developments could result in a compromise or breach of the algorithms the Company and its third-party service providers use to encrypt and protect customer transaction data. A failure of such security measures could have a material adverse effect on the Companys business, financial condition and results of operations.
The Company is subject to certain operational risks, including customer or employee fraud and data processing system failures and errors.
Employee errors and misconduct could subject the Company to financial losses or regulatory sanctions and seriously harm its reputation. Misconduct by the Companys employees could include hiding unauthorized activities from the Company, improper or unauthorized activities on behalf of its customers or improper use of confidential information. It is not always possible to prevent employee errors and misconduct, and the precautions the Company takes to prevent and detect this activity may not be effective in all cases. Employee errors could also subject the Company to financial claims for negligence. The Company maintains a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud. Should the Companys internal controls fail to prevent or detect an occurrence, and if any resulting loss is not insured or exceeds applicable insurance limits, such failure could have a material adverse effect on the Companys business, financial condition and results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
West Suburban and the Bank occupy a total of approximately 270,300 square feet in 35 full-service branches, five limited-service branches and four departments providing insurance, financial and other services. West Suburbans principal office is located in approximately 32,500 square feet of office space at 711 South Meyers Road, Lombard, Illinois. As indicated below, the Bank also operates its principal office as a branch. West Suburban Bank Land Trust, West Suburban Financial Services and West Suburban Insurance Services, Inc. are located at 711 South Meyers Road, Lombard, Illinois. West Suburban Bank VISA is located at 701 South Meyers Road, Lombard, Illinois.
The following table sets forth certain information concerning the branches of the Bank as of December 31, 2009:
Location of Branches and Other Services |
|
Approximate |
|
Status |
|
|
|
|
|
|
|
711 South Meyers Road |
|
32,500 |
|
Owned |
|
|
|
|
|
|
|
40 East St. Charles
Road |
|
2,700 |
|
Owned |
|
|
|
|
|
|
|
17W754 22nd Street |
|
6,100 |
|
Owned |
|
|
|
|
|
|
|
707 North Main Street |
|
4,100 |
|
Owned |
|
|
|
|
|
|
|
221 South West Street |
|
800 |
|
Owned |
|
|
|
|
|
|
|
895 East Geneva Road |
|
3,000 |
|
Leased |
|
|
|
|
|
|
|
1104 West Boughton Road |
|
4,500 |
|
Owned |
|
|
|
|
|
|
|
295 West Loop Road |
|
4,500 |
|
Owned |
|
|
|
|
|
|
|
6400 South Cass Avenue |
|
3,100 |
|
Leased |
|
|
|
|
|
|
|
2800 Finley Road |
|
10,700 |
|
Owned |
|
|
|
|
|
|
|
1122 South Main Street |
|
6,400 |
|
Owned |
|
|
|
|
|
|
|
3S041 Route 59 |
|
3,700 |
|
Owned |
|
|
|
|
|
|
|
5330 Main Street |
|
10,500 |
|
Owned |
|
|
|
|
|
|
|
8001 South Cass Avenue |
|
17,800 |
|
Owned |
|
|
|
|
|
|
|
672 East Boughton Road |
|
7,100 |
|
Owned |
|
Location of Branches and Other Services |
|
Approximate |
|
Status |
|
|
|
|
|
|
|
1005 75th Street |
|
1,000 |
|
Owned |
|
|
|
|
|
|
|
505 North Weber Road |
|
4,400 |
|
Owned |
|
|
|
|
|
|
|
401 North Gary Avenue |
|
6,400 |
|
Owned |
|
|
|
|
|
|
|
355 West Army Trail
Road |
|
10,700 |
|
Owned |
|
|
|
|
|
|
|
1657 Bloomingdale Road |
|
4,100 |
|
Owned |
|
|
|
|
|
|
|
1061 West Stearns Road |
|
3,400 |
|
Owned |
|
|
|
|
|
|
|
1380 West Army Trail
Road |
|
2,300 |
|
Leased |
|
|
|
|
|
|
|
315 South Randall Road |
|
1,400 |
|
Owned |
|
|
|
|
|
|
|
3000 East Main Street |
|
4,200 |
|
Owned |
|
|
|
|
|
|
|
1870 McDonald Road |
|
4,600 |
|
Owned |
|
|
|
|
|
|
|
101 North Lake Street |
|
19,000 |
|
Owned |
|
|
|
|
|
|
|
1830 Douglas Road |
|
2,500 |
|
Owned |
|
|
|
|
|
|
|
2000 West Galena
Boulevard |
|
48,000 |
|
Owned |
|
|
|
|
|
|
|
335 North Eola Road |
|
4,200 |
|
Owned |
|
|
|
|
|
|
|
2830 Route 34 |
|
4,800 |
|
Owned |
|
|
|
|
|
|
|
10 Saravanos Drive |
|
3,200 |
|
Leased |
|
|
|
|
|
|
|
1071 Station Drive |
|
3,200 |
|
Leased |
|
|
|
|
|
|
|
1296 East Chicago
Avenue |
|
2,300 |
|
Owned |
|
|
|
|
|
|
|
2020 Feldott Lane |
|
4,500 |
|
Owned |
|
|
|
|
|
|
|
1004 104th Street |
|
5,900 |
|
Owned |
|
Location of Branches and Other Services |
|
Approximate |
|
Status |
|
|
|
|
|
|
|
Beacon Hill Retirement
Community |
|
100 |
|
Leased |
|
|
|
|
|
|
|
Clare Oaks |
|
100 |
|
Leased |
|
|
|
|
|
|
|
717 South Meyers Road |
|
7,100 |
|
Owned |
|
|
|
|
|
|
|
701 South Meyers Road |
|
5,200 |
|
Owned |
|
|
|
|
|
|
|
Lexington Health Care
Center of Elmhurst |
|
100 |
|
Leased |
|
|
|
|
|
|
|
Lexington Health Care
Center of Lombard |
|
100 |
|
Leased |
|
ITEM 3. |
LEGAL PROCEEDINGS |
There are no material pending legal proceedings to which West Suburban or the Bank is a party other than routine litigation incidental to their respective businesses.
ITEM 4. |
[RESERVED] |
PART II
ITEM 5. |
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
West Suburbans authorized and outstanding equity securities consist of common stock, no par value.
West Suburban hereby incorporates by reference the information called for by Item 5 of this Form 10-K from the sections entitled Common Stock, Book Value and Dividends and Stock Performance Presentation on page 4 and page 34, respectively, of West Suburbans Annual Report to Shareholders for the fiscal year ended December 31, 2009 (attached as Exhibit 13 hereto). The Companys ability to pay dividends to shareholders is largely dependent upon dividends it receives from the Bank, which is subject to regulatory limitations on the amount of cash dividends it may pay. See Business Supervision and Regulation The Company Dividend Payments and Business Supervision and Regulation The Bank Dividend Payments for a more detailed description of theses limitations.
West Suburbans common stock is not traded on any national or regional exchange. While there is no established trading market for West Suburbans common stock, West Suburban is aware that from time to time limited or infrequent quotations are made with respect to West Suburbans common stock and that there occurs limited trading in West Suburbans common stock resulting from private transactions not involving brokers or dealers. Transactions in West Suburbans common stock have been infrequent. As of March 2, 2010, West Suburban had 426,850 shares of common stock outstanding held by 1,109 shareholders of record. Management is aware of 16 transactions during 2009 involving the sale, in the aggregate, of 6,771 shares of West Suburbans common stock, and 43 transactions during 2008 involving the sale, in the aggregate, of 3,846 shares of West Suburbans common stock. The average sale price of transactions in 2009 and 2008 was $478.51 and $635.27 per share of common stock, respectively.
The following table sets forth information concerning the security repurchases made by the Company in the fourth quarter of 2009:
Issuer Purchases of Equity Securities |
|
|||||||||
Period |
|
Total Number |
|
Average Price |
|
Total Number of |
|
Maximum Number |
|
|
October 1, 2009 through October 31, 2009 |
|
|
|
|
|
|
|
|
|
|
November 1, 2009 through November 30, 2009 |
|
1,761 |
(1) |
$ |
369.00 |
|
|
|
|
|
December 1, 2009 through December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
Total |
|
1,761 |
(2) |
$ |
369.00 |
(2) |
|
|
|
|
(1) Purchased by the Company in an open-market transaction with a third party.
(2) During the first and fourth quarters of 2009, the Company purchased an aggregate of 5,645 shares for an average purchase price per share of $470.83 in open-market transactions with third parties.
ITEM 6. |
SELECTED FINANCIAL DATA |
West Suburban hereby incorporates by reference the information called for by Item 6 of this Form 10-K from the section entitled Selected Financial Data on page 36 of West Suburbans Annual Report to Shareholders for the fiscal year ended December 31, 2009 (attached as Exhibit 13 hereto).
ITEM 7. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
West Suburban hereby incorporates by reference the information called for by Item 7 of this Form 10-K from the section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 39 through 49 of West Suburbans Annual Report to Shareholders for the fiscal year ended December 31, 2009 (attached as Exhibit 13 hereto).
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
West Suburban hereby incorporates by reference the information called for by Item 7A of this Form 10-K from the Interest Rate Sensitivity section included in Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 39 through 49 of West Suburbans Annual Report to Shareholders for the fiscal year ended December 31, 2009 (attached as Exhibit 13 hereto).
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
West Suburban hereby incorporates by reference the information called for by Item 8 of this Form 10-K from the Consolidated Financial Statements and Notes to Consolidated Financial Statements on pages 7 through 33 of West Suburbans Annual Report to Shareholders for the fiscal year ended December 31, 2009 (attached as Exhibit 13 hereto).
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
ITEM 9A. |
CONTROLS AND PROCEDURES |
An evaluation was performed under the supervision and with the participation of the Companys management, including the Chairman and Chief Executive Officer and the President and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Exchange Act) as of December 31, 2009. Based on that evaluation, the Companys Chairman and Chief Executive Officer and the President and Chief Financial Officer concluded that the Companys disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified.
There have been no significant changes in the Companys internal control over financial reporting that have affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.
West Suburbans management report on internal control over financial reporting is set forth in, and West Suburban hereby incorporates by reference, the section entitled Managements Report on Internal Control over Financial Reporting on page 5 of West Suburbans Annual Report to Shareholders for the fiscal year ended December 31, 2009 (attached as Exhibit 13 hereto).
ITEM 9B. |
OTHER INFORMATION |
None.
PART III
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
In addition, and as a supplement to the information provided under the caption Executive Officers of West Suburban in Part I of this Form 10-K, West Suburban hereby incorporates by reference the information called for by Item 10 of this Form 10-K regarding directors and corporate governance of West Suburban from the sections entitled Election of Directors and Corporate Governance and the Board of Directors of West Suburbans 2010 Proxy Statement.
Section 16(a) of the Exchange Act requires that the Companys executive officers and directors and persons who own more than 10% of the Companys Common Stock file reports of ownership and changes in ownership with the Securities and Exchange Commission and with the exchange on which West Suburbans Common Stock is traded. Such persons are also required to furnish the Company with copies of all Section 16(a) forms they file. Based solely on the Companys review of the copies and forms furnished to the Company and, if appropriate, representations made to the Company by any such reporting person concerning whether a Form 5 was required to be filed for the 2009 fiscal year, the Company is not aware that any of its directors and executive officers or 10% shareholders failed to comply with the filing requirements of Section 16(a) during 2009.
West Suburban adopted a code of ethics that applies to West Suburbans principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. West Suburbans code of ethics is available in the Shareholder Information section of West Suburbans website, www.westsuburbanbank.com.
Since the date of West Suburbans 2009 Proxy Statement, there have been no material changes to the procedures by which shareholders may recommend nominees to West Suburbans board of directors.
ITEM 11. |
EXECUTIVE COMPENSATION |
West Suburban hereby incorporates by reference the information called for by Item 11 of this Form 10-K from the section entitled Executive Compensation of West Suburbans 2010 Proxy Statement; provided, however, that Report of the Compensation Committee on Executive Compensation is specifically not incorporated into this Form 10-K.
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS |
West Suburban hereby incorporates by reference the information called for by Item 12 of this Form 10-K from the sections entitled Security Ownership of Certain Beneficial Owners and Security Ownership of Management of West Suburbans 2010 Proxy Statement.
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
West Suburban hereby incorporates by reference the information called for by Item 13 of this Form 10-K from the section entitled Transactions with Directors, Officers and Associates and Corporate Governance and the Board of Directors of West Suburbans 2010 Proxy Statement.
ITEM 14. |
PRINCIPAL ACCOUNTING FEES AND SERVICES |
West Suburban hereby incorporates by reference the information called for by Item 14 of this Form 10-K from the section entitled Accounting Fees and Services of West Suburbans 2010 Proxy Statement.
PART IV
ITEM 15. |
EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
Item (a)(1) and (2). Financial Statements
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
The following audited Consolidated Financial Statements of West Suburban and its subsidiaries and related notes and report of independent registered public accounting firm are incorporated by reference from West Suburbans Annual Report to Shareholders for the fiscal year ended December 31, 2009 (attached as Exhibit 13 hereto).
The following Condensed Financial Information-Parent Only is incorporated by reference from Note 14 to West Suburbans audited Consolidated Financial Statements as set forth in West Suburbans Annual Report to Shareholders for the fiscal year ended December 31, 2009 (attached as Exhibit 13 hereto).
|
|
Annual Report Page No. |
|
|
|
|
31 |
|
|
|
|
Condensed Statements of Income Years Ended December 31, 2009, 2008 and 2007 |
|
32 |
|
|
|
Condensed Statements of Cash Flows Years Ended December 31, 2009, 2008 and 2007 |
|
32 |
Schedules
Schedules other than those listed above are omitted for the reason that they are not required or are not applicable or the required information is included in the financial statements incorporated by reference or notes thereto.
Item 15(a)(3). Exhibits
The exhibits required by Item 601 of Regulation S-K are included with this Form 10-K and are listed on the Index to Exhibits immediately following the signature page.
***
Upon written request to the President and Chief Financial Officer of West Suburban Bancorp, Inc., 2800 Finley Road, Downers Grove, Illinois, 60515, copies of the exhibits listed above are available to shareholders of West Suburban by specifically identifying each exhibit desired in the request.
FORM 10-K SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WEST SUBURBAN BANCORP, INC.
(Registrant)
By |
/s/ Duane G. Debs |
|
|
Duane G. Debs |
|
|
President and Chief Financial Officer |
Date: March 12, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 12th day of March, 2010.
SIGNATURE |
|
|
|
TITLE |
|
|
|
|
|
/s/ Kevin J. Acker |
|
3/12/2010 |
|
Chairman, Chief Executive Officer |
Kevin J. Acker |
|
Date |
|
and Director |
|
|
|
|
|
/s/ Duane G. Debs |
|
3/12/2010 |
|
President, Chief Financial Officer, |
Duane G. Debs |
|
Date |
|
Director and Principal Accounting |
|
|
|
|
Officer |
|
|
|
|
|
/s/ David S. Bell |
|
3/12/2010 |
|
Director |
David S. Bell |
|
Date |
|
|
|
|
|
|
|
/s/ Peggy P. LoCicero |
|
3/12/2010 |
|
Director |
Peggy P. LoCicero |
|
Date |
|
|
|
|
|
|
|
/s/ Charles P. Howard |
|
3/12/2010 |
|
Director |
Charles P. Howard |
|
Date |
|
|
The foregoing includes all of the Board of Directors of West Suburban.
INDEX TO EXHIBITS
Exhibit |
|
Description |
|
|
|
3.1 |
|
Articles of Incorporation of West Suburban filed March 14, 1986 Incorporated by reference from Exhibit 3.1 of Form 10-K of West Suburban dated March 21, 2003, under Commission File No. 0-17609. |
|
|
|
3.2 |
|
Articles of Amendment to Articles of Incorporation of West Suburban filed November 2, 1988 Incorporated by reference from Exhibit 3.2 of Form 10-K of West Suburban dated March 21, 2003, under Commission File No. 0-17609. |
|
|
|
3.3 |
|
Articles of Amendment to Articles of Incorporation of West Suburban filed June 20, 1990 Incorporated by reference from Exhibit 3.3 of Form 10-K of West Suburban dated March 21, 2003, under Commission File No. 0-17609. |
|
|
|
3.4 |
|
Articles of Amendment to Articles of Incorporation of West Suburban filed June 8, 1998 Incorporated by reference from Exhibit 3.4 of Form 10-K of West Suburban dated March 21, 2003, under Commission File No. 0-17609. |
|
|
|
3.5 |
|
Articles of Amendment to Articles of Incorporation of West Suburban filed May 27, 2003 Incorporated by reference from Exhibit 3.5 of Form 10-Q of West Suburban dated August 14, 2003, under Commission File No. 0-17609. |
|
|
|
3.6 |
|
Amended and Restated By-laws of West Suburban Incorporated by reference from Exhibit 3.5 of Form 10-K of West Suburban dated March 21, 2003, under Commission File No. 0-17609. |
|
|
|
4.1 |
|
Specimen of Common Stock certificate Incorporated by reference from Exhibit 4.1 of Form 10-K of West Suburban dated March 14, 2006, under Commission File No. 0-17609. |
|
|
|
10.1 |
|
Directors and Senior Management Deferred Compensation Plan of West Suburban Incorporated by reference from Exhibit 10.1 of Form 10-K of West Suburban dated March 11, 2009, under Commission File No. 0-17609. |
|
|
|
10.2 |
|
Restated Employment Agreement dated December 29, 2008 between West Suburban and Mr. Kevin J. Acker Incorporated by reference from Exhibit 10.2 of Form 10-K of West Suburban dated March 11, 2009, under Commission File No. 0-17609. |
|
|
|
10.3 |
|
Restated Employment Agreement dated December 29, 2008 between West Suburban and Mr. Keith W. Acker Incorporated by reference from Exhibit 10.3 of Form 10-K of West Suburban dated March 11, 2009, under Commission File No. 0-17609. |
|
|
|
10.4 |
|
Restated Employment Agreement dated December 29, 2008 between West Suburban and Mr. Duane G. Debs Incorporated by reference from Exhibit 10.4 of Form 10-K of West Suburban dated March 11, 2009, under Commission File No. 0-17609. |
|
|
|
10.5 |
|
Restated Employment Agreement dated December 29, 2008 between West Suburban and Mr. Michael P. Brosnahan Incorporated by reference from Exhibit 10.5 of Form 10-K of West Suburban dated March 11, 2009, under Commission File No. 0-17609. |
|
|
|
10.6 |
|
Restated Employment Agreement dated December 31, 2008 between West Suburban and Mr. Daniel P. Grotto Incorporated by reference from Exhibit 10.6 of Form 10-K of West Suburban dated March 11, 2009, under Commission File No. 0-17609. |
|
|
|
10.7 |
|
Form of Amended and Restated Life Insurance Agreement between West Suburban and Messrs. Kevin J. Acker, Keith W. Acker, Duane G. Debs, Michael P. Brosnahan and Daniel P. Grotto Incorporated by reference from Exhibit 10.7 of Form 10-K of West Suburban dated March 11, 2009, under Commission File No. 0-17609. |
|
|
|
10.8 |
|
Asset Purchase Agreement dated December 4, 2009 between West Suburban Bank and Prepaid Solutions, Inc. Incorporated by reference from Exhibit 10.1 of Form 8-K of West Suburban dated December 10, 2009, under Commission File No. 0-17609. |
|
|
|
10.9 |
|
Agreement and General Release dated December 4, 2009 among Mr. Daniel Grotto, West Suburban Bancorp, Inc. and West Suburban Bank Incorporated by reference from Exhibit 10.2 of Form 8-K of West Suburban dated December 10, 2009, under Commission File No. 0-17609. |
Exhibit |
|
Description |
|
|
|
13 |
|
Annual Report to Shareholders of West Suburban for fiscal year ended December 31, 2009. |
|
|
|
21 |
|
Subsidiaries of Registrant. |
|
|
|
31.1 |
|
Certification of Kevin J. Acker, Chairman and Chief Executive Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a). |
|
|
|
31.2 |
|
Certification of Duane G. Debs, President and Chief Financial Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a). |
|
|
|
32.1 |
|
Certification of Kevin J. Acker, Chairman and Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2 |
|
Certification of Duane G. Debs, President and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |