UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

Commission File Number 0-17609

WEST SUBURBAN BANCORP, INC.

(Exact name of registrant as specified in its charter)

Illinois	36-3452469
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
711 South Meyers Road, Lombard, Illinois	60148
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (630) 652-2000

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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 the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of August 8, 2012, 426,850 shares of West Suburban common stock were outstanding.

WEST SUBURBAN BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

		Page
		Number
PART I
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	42
PART II
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
	Form 10-Q Signatures	44

Special Note Concerning Forward-Looking Statements

This document (including information incorporated by reference) contains, and future oral and written statements of each 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 Company’s 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 Company’s 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 of Part I of the Company’s most recently filed Annual Report on Form 10-K and under Item 1A in Part II of this report 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 Company’s 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 the Dodd-Frank Wall Street Reform and Consumer Protection Act and other laws and regulations intended to address stresses in the U.S. and global financial markets, national security and money laundering, as well as rules recently jointly proposed by the federal bank regulatory agencies to implement Basel III.

·The effects of adverse market conditions and volatility in investment securities generally, which may result in a deterioration in the value of the securities in the Company’s securities portfolio.

2

·The impact of the results of supervisory examinations and other aspects of the supervisory process, including the ability of the Company to comply with, and satisfy the requirements of, any informal or formal enforcement actions 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.

·Credit risks and the risks from concentrations (by geographic area or industry) within the Company’s loan portfolio.

·The effects of changes in interest rates, including the effects of changes in the rate of prepayments of the Company’s 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 the 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 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 Company’s 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 Company’s 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 Company’s 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.

·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 and employment matters.

·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.

·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 Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission, including the “Risk Factors” section included under 1A of Part I of the Company’s most recently filed Annual Report on Form 10-K and under Item 1A in Part II of this report.

3

PART I

ITEM 1.      FINANCIAL STATEMENTS

WEST SUBURBAN BANCORP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	June 30,
	2012			December 31,
	(Unaudited)			2011
Assets
Cash and due from banks	$	96,217		$	116,039
Federal funds sold	287			286
Total cash and cash equivalents	96,504			116,325
Securities
Available for sale (amortized cost of $554,202 in 2012 and $447,496 in 2011)	560,924			454,125
Held to maturity (fair value of $225,409 in 2012 and $271,601 in 2011)	213,095			259,035
Federal Home Loan Bank stock	6,084			7,599
Total securities	780,103			720,759
Loans, less allowance for loan losses of $33,733 in 2012 and $27,584 in 2011	967,397			956,559
Bank-owned life insurance	32,956			32,618
Premises and equipment, net	45,235			45,130
Other real estate owned, net	25,752			23,505
Accrued interest and other assets	33,197			33,788
Total assets	$	1,981,144		$	1,928,684
Liabilities and shareholders’ equity
Deposits
Demand-noninterest-bearing	$	161,021		$	152,955
Prepaid solutions card deposits	623			5,810
Interest-bearing	1,625,403			1,580,779
Total deposits	1,787,047			1,739,544
Prepaid solutions cards	12,894			9,980
Accrued interest and other liabilities	11,371			12,207
Common stock in ESOP subject to contingent repurchase obligation	25,206			23,230
Shareholders’ equity
Common stock, no par value; 15,000,000 shares authorized; 426,850 shares issued and outstanding	3,412			3,412
Surplus	35,453			35,453
Retained earnings	127,322			124,514
Accumulated other comprehensive income	3,645			3,574
Amount reclassified on ESOP shares	(25,206		)	(23,230		)
Total shareholders’ equity	144,626			143,723
Total liabilities and shareholders’ equity	$	1,981,144		$	1,928,684

See accompanying notes to condensed consolidated financial statements.

4

WEST SUBURBAN BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(Dollars in thousands, except per share data)

(UNAUDITED)

	2012		2011
Interest income
Loans, including fees	$	23,922	$	24,192
Securities
Taxable	7,910		10,038
Exempt from federal income tax	1,060		551
Federal funds sold	2		2
Total interest income	32,894		34,783
Interest expense
Deposits	5,001		6,237
Total interest expense	5,001		6,237
Net interest income	27,893		28,546
Provision for loan losses	8,165		4,818
Net interest income after provision for loan losses	19,728		23,728
Noninterest income
Net realized gains on securities transactions	2,751		4,741
Service fees on deposit accounts	1,893		2,091
Debit card fees	1,178		1,068
Bank-owned life insurance	338		519
Net gain on sale of loans held for sale	6		—
Other	2,150		2,668
Total noninterest income	8,316		11,087
Noninterest expense
Salaries and employee benefits	11,524		11,256
Occupancy	2,560		2,505
Furniture and equipment	2,550		2,463
Other real estate owned expense	1,779		1,536
FDIC assessments	1,319		2,098
Loan administration	1,011		843
Professional fees	737		922
Advertising and promotion	662		462
Telephone	471		399
Other	1,873		2,459
Total noninterest expense	24,486		24,943
Income before income taxes	3,558		9,872
Income tax expense	750		3,325
Net income	$	2,808	$	6,547
Earnings per share	$	6.58	$	15.34
Average shares outstanding	426,850		426,850
Total comprehensive income	$	2,879	$	10,383

See accompanying notes to condensed consolidated financial statements.

5

WEST SUBURBAN BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2012 AND 2011

(Dollars in thousands, except per share data)

(UNAUDITED)

	2012			2011
Interest income
Loans, including fees	$	12,107		$	12,000
Securities
Taxable	3,763			4,946
Exempt from federal income tax	674			284
Federal funds sold	1			1
Total interest income	16,545			17,231
Interest expense
Deposits	2,463			3,002
Total interest expense	2,463			3,002
Net interest income	14,082			14,229
Provision for loan losses	1,000			1,818
Net interest income after provision for loan losses	13,082			12,411
Noninterest income
Net realized gains on securities transactions	1,985			3,642
Service fees on deposit accounts	930			1,049
Debit card fees	613			550
Bank-owned life insurance	162			1
Net loss on sales of loans held for sale	(1		)	—
Other	1,109			1,158
Total noninterest income	4,798			6,400
Noninterest expense
Salaries and employee benefits	5,732			5,500
Occupancy	1,309			1,037
Furniture and equipment	1,278			1,305
Other real estate owned expense	685			1,097
FDIC assessments	667			999
Loan administration	651			659
Professional fees	396			438
Advertising and promotion	400			259
Telephone	223			183
Other	975			1,478
Total noninterest expense	12,316			12,955
Income before income taxes	5,564			5,856
Income tax expense	1,900			2,099
Net income	$	3,664		$	3,757
Earnings per share	$	8.58		$	8.80
Average shares outstanding	426,850			426,850
Total comprehensive income	$	3,604		$	7,944

See accompanying notes to condensed consolidated financial statements.

6

WEST SUBURBAN BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(Dollars in thousands)

(UNAUDITED)

	2012			2011
Net Income	$	2,808		$	6,547
Other comprehensive income
Unrealized gains on available for sale securities:
Unrealized holding gains arising during the period	2,844			11,251
Reclassification adjustments for gains included in net income	(2,751		)	(4,741		)
Tax effect	(38		)	(2,694		)
Net of tax	55			3,816
Change in postretirement obligation:
Net gain arising during the period	54			43
Reclassification adjustment for amortization of prior service cost and net gains included in net periodic pension cost	(27		)	(21		)
Tax effect	(11		)	(2		)
Net of tax	16			20
Total other comprehensive income	71			3,836
Total comprehensive income	$	2,879		$	10,383

See accompanying notes to condensed consolidated financial statements.

7

WEST SUBURBAN BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2012 AND 2011

(Dollars in thousands)

(UNAUDITED)

	2012			2011
Net Income	$	3,664		$	3,757
Other comprehensive income
Unrealized gains on available for sale securities:
Unrealized holding gains arising during the period	1,869			10,747
Reclassification adjustments for gains included in net income	(1,985		)	(3,642		)
Tax effect	48			(2,931		)
Net of tax	(68		)	4,174
Change in postretirement obligation:
Net gain arising during the period	28			21
Reclassification adjustment for amortization of prior service cost and net gains included in net periodic pension cost	(14		)	(10		)
Tax effect	(6		)	2
Net of tax	8			13
Total other comprehensive (loss) income	(60		)	4,187
Total comprehensive income	$	3,604		$	7,944

See accompanying notes to condensed consolidated financial statements.

8

WEST SUBURBAN BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(Dollars in thousands)

(UNAUDITED)

	Common Stock and Surplus		Retained Earnings		Accumulated Other Comprehensive Income		Amount Reclassified on ESOP Shares			Total Shareholders’ Equity
Balance, January 1, 2011	$	38,865	$	116,698	$	285	$	(29,865	)	$	125,983
Comprehensive income
Net income			6,547							6,547
Change in unrealized gains on available for sale securities, net of reclassification and tax effects					3,816					3,816
Change in post-retirement obligation, net of tax effects					20					20
Total comprehensive income										10,383
Reclassification due to change in fair value of common stock in ESOP subject to contingent repurchase obligation							3,490			3,490
Balance, June 30, 2011	$	38,865	$	123,245	$	4,121	$	(26,375	)	$	139,856

	Common Stock and Surplus		Retained Earnings		Accumulated Other Comprehensive Income		Amount Reclassified on ESOP Shares			Total Shareholders’ Equity
Balance, January 1, 2012	$	38,865	$	124,514	$	3,574	$	(23,230	)	$	143,723
Comprehensive income
Net income			2,808							2,808
Change in unrealized gains on available for sale securities, net of reclassification and tax effects					55					55
Change in post-retirement obligation, net of tax effects					16					16
Total comprehensive income										2,879
Reclassification due to change in fair value of common stock in ESOP subject to contingent repurchase obligation							(1,976		)	(1,976		)
Balance, June 30, 2012	$	38,865	$	127,322	$	3,645	$	(25,206	)	$	144,626

See accompanying notes to condensed consolidated financial statements.

9

WEST SUBURBAN BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(Dollars in thousands)

(UNAUDITED)

	2012			2011
Cash flows from operating activities
Net income	$	2,808		$	6,547
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	1,582			1,443
Provision for loan losses	8,165			4,818
Net premium amortization of securities	2,991			880
Net realized gains on securities transactions	(2,751		)	(4,741		)
Earnings on bank-owned life insurance	(338		)	(519		)
Net gain on sale of loans held for sale	(6		)	—
Sales of loans held for sale	1,093			—
Origination of loans held for sale	(1,143		)	—
Net gain on sales of premises and equipment	—			(2		)
Net loss (gain) on sales of other real estate owned	84			(236		)
Write down of other real estate owned	1,140			724
Decrease in accrued interest and other assets	543			4,861
Decrease in accrued interest and other liabilities	(807		)	(2,258		)
Net cash provided by operating activities	13,361			11,517
Cash flows from investing activities
Securities available for sale
Sales	70,191			114,712
Maturities, calls and redemptions	78,981			50,747
Purchases	(255,801		)	(66,488		)
Securities held to maturity
Maturities, calls and redemptions	45,623			36,806
Purchases	—			(110,400		)
Redemption of FHLB stock	1,515			—
Net (increase) decrease in loans	(25,156		)	3,737
Investment in bank-owned life insurance	—			(76		)
Purchases of premises and equipment	(1,719		)	(3,288		)
Sales of premises and equipment	32			5
Sales of other real estate owned	2,736			26,603
Net cash (used in) provided by investing activities	(83,598		)	52,358
Cash flows from financing activities
Net increase (decrease) in deposits	47,502			(41,441		)
Net increase in prepaid solutions cards	2,914			3,409
Net cash provided by (used in) financing activities	50,416			(38,032		)
Net (decrease) increase in cash and cash equivalents	(19,821		)	25,843
Beginning cash and cash equivalents	116,325			70,690
Ending cash and cash equivalents	$	96,504		$	96,533
Supplemental disclosures
Cash paid for interest	$	5,456		$	7,270
Cash paid for income taxes	1,400			2,407
Other real estate acquired through or instead of loan foreclosure	6,209			46,151
Loans originated from the sale of other real estate owned	143			973

See accompanying notes to condensed consolidated financial statements.

10

WEST SUBURBAN BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (Dollars in thousands, except per share data)

(UNAUDITED)

Note 1 - Basis of Presentation

The condensed consolidated financial statements include the accounts 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”). Intercompany accounts and transactions have been eliminated. The unaudited interim consolidated financial statements are prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures normally accompanying the annual financial statements have been omitted. The interim financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the latest Annual Report on Form 10-K filed by the Company. The condensed consolidated financial statements include all adjustments (none of which were other than normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. The results for the interim periods are not necessarily indicative of the results to be expected for the entire fiscal year.

The Company’s board of directors has resolved to obtain regulatory approval prior to paying dividends, increasing debt, or redeeming West Suburban common stock in order to preserve capital and maintain the Company’s financial strength given the economic environment and its impact on the Company.

Note 2 - Securities

At June 30, 2012 and December 31, 2011, the amortized cost, unrealized gains and losses and fair value of securities available for sale were as follows:

	June 30, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government sponsored enterprises	$	25,717	$	379	$	(4	)	$	26,092
Mortgage-backed: residential	360,345		4,886		(125		)	365,106
States and political subdivisions	129,168		1,554		(604		)	130,118
Corporate	38,972		640		(4		)	39,608
Total	$	554,202	$	7,459	$	(737	)	$	560,924

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasuries	$	9,865	$	555	$	—		$	10,420
U.S. government sponsored enterprises	65,784		1,101		—			66,885
Mortgage-backed: residential	298,324		3,988		(106		)	302,206
States and political subdivisions	49,733		1,284		(58		)	50,959
Corporate	23,790		142		(277		)	23,655
Total	$	447,496	$	7,070	$	(441	)	$	454,125

Mortgage-backed: residential securities consist of residential mortgage-backed securities issued by U.S. government sponsored enterprises and agencies, primarily Fannie Mae, Freddie Mac and Ginnie Mae, institutions which the government has affirmed its commitment to support. Corporate securities consist of investment grade corporate bonds.

11

At June 30, 2012 and December 31, 2011, the amortized cost, unrecognized gains and losses and fair value of securities held to maturity were as follows:

	June 30, 2012
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
U.S. Treasuries	$	30,011	$	3,363	$	—	$	33,374
U.S. government sponsored enterprises	15,107		854		—		15,961
Mortgage-backed: residential	138,432		7,129		—		145,561
States and political subdivisions	29,545		968		—		30,513
Total	$	213,095	$	12,314	$	—	$	225,409

	December 31, 2011
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
U.S. Treasuries	$	30,005	$	3,111	$	—		$	33,116
U.S. government sponsored enterprises	31,623		1,034		—			32,657
Mortgage-backed: residential	163,926		7,686		(4		)	171,608
States and political subdivisions	33,481		832		(93		)	34,220
Total	$	259,035	$	12,663	$	(97	)	$	271,601

At June 30, 2012, the amortized cost and fair value of debt securities available for sale and held to maturity by contractual maturity were as follows:

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in 1 year or less	$	866	$	866	$	291	$	294
Due after 1 year through 5 years	74,189		75,335		43,772		45,369
Due after 5 years through 10 years	84,941		85,202		25,942		29,143
Due after 10 years	33,861		34,415		4,658		5,042
Mortgage-backed: residential	360,345		365,106		138,432		145,561
Total	$	554,202	$	560,924	$	213,095	$	225,409

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.

Proceeds from sales of securities available for sale totaled $70,191 and $114,712 during the six months ended June 30, 2012 and 2011, respectively. All sales of securities for the six-month period ended June 30, 2012 resulted in gains.

Securities with a carrying value of approximately $76,777 and $85,413 at June 30, 2012 and December 31, 2011, respectively, were pledged to secure public deposits, fiduciary activities and for other purposes required or permitted by law.

12

Securities with unrealized losses at June 30, 2012 and December 31, 2011 are presented below by the length of time the securities have been in a continuous unrealized loss position:

	June 30, 2012
	Less than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government sponsored enterprises	$	4,996	$	(4	)	$	—	$	—	$	4,996	$	(4	)
Mortgage-backed: residential	44,637		(125		)	—		—		44,637		(125		)
States and political subdivisions	55,397		(604		)	—		—		55,397		(604		)
Corporate	5,047		(4		)	—		—		5,047		(4		)
Total temporarily impaired	$	110,077	$	(737	)	$	—	$	—	$	110,077	$	(737	)

	December 31, 2011
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Mortgage-backed: residential	$	29,707	$	(106	)	$	282	$	(4	)	$	29,989	$	(110	)
States and political subdivisions	15,350		(58		)	1,157		(93		)	16,507		(151		)
Corporate	18,434		(277		)	—		—			18,434		(277		)
Total temporarily impaired	$	63,491	$	(441	)	$	1,439	$	(97	)	$	64,930	$	(538	)

The unrealized losses at June 30, 2012 were in U.S. government sponsored enterprises, mortgage-backed: residential, states and political subdivisions and corporate securities. Because the decline in fair value on the debt securities in unrealized losses is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these securities and management believes it is not more likely than not that the Company will be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2012.

The Company held one municipal security with a carrying value of $15,000 and $19,000 at June 30, 2012 and December 31, 2011, respectively, that was in excess of 10% of the Company’s shareholders’ equity. The security was issued by a local municipality, is a general obligation bond and is classified by the Company as held to maturity.

Note 3 - Loans

At June 30, 2012 and December 31, 2011, major classifications of loans were as follows:

	June 30, 2012			December 31, 2011
Commercial	$	290,385		$	278,969
Commercial real estate	304,650			284,065
Construction and development	74,023			79,197
Residential real estate:
Mortgage	152,421			151,378
Home equity	168,550			178,819
Consumer and other	11,101			11,715
Total	1,001,130			984,143
Allowance for loan losses	(33,733		)	(27,584		)
Loans, net	$	967,397		$	956,559

The Company makes loans to customers throughout the western suburbs of Chicago. From time to time the Company will make loans outside of its market area. There were $1,247 and $1,192 of loans held for sale at June 30,

13

2012 and December 31, 2011, respectively, which were included in the residential real estate: mortgage classification.

Changes in the allowance for loan losses by portfolio segment for the six months ended June 30, 2012 were as follows:

	Commercial			Commercial Real Estate			Construction and Development			Residential Real Estate			Consumer and Other			Total
Balance, beginning of year	$	15,204		$	2,990		$	4,270		$	4,581		$	539		$	27,584
Provision for loan losses	3,532			2,609			320			1,552			152			8,165
Loans charged-off	(445		)	(247		)	(97		)	(1,231		)	(220		)	(2,240		)
Recoveries	56			—			—			122			46			224
Balance, period-end	$	18,347		$	5,352		$	4,493		$	5,024		$	517		$	33,733

Changes in the allowance for loan losses by portfolio segment for the six months ended June 30, 2011 were as follows:

	Commercial			Commercial Real Estate			Construction and Development			Residential Real Estate			Consumer and Other			Total
Balance, beginning of year	$	12,638		$	4,179		$	6,243		$	4,308		$	704		$	28,072
Provision for loan losses	3,726			(889		)	1,042			974			(35		)	4,818
Loans charged-off	(2,986		)	(85		)	(1,943		)	(799		)	(170		)	(5,983		)
Recoveries	21			—			—			8			70			99
Balance, period-end	$	13,399		$	3,205		$	5,342		$	4,491		$	569		$	27,006

Changes in the allowance for loan losses by portfolio segment for the quarter ended June 30, 2012 were as follows:

	Commercial			Commercial Real Estate			Construction and Development			Residential Real Estate			Consumer and Other			Total
Balance, beginning of period	$	19,523		$	4,789		$	5,060		$	4,545		$	487		$	34,404
Provision for loan losses	(781		)	685			(488		)	1,441			143			1,000
Loans charged-off	(438		)	(122		)	(79		)	(987		)	(132		)	(1,758		)
Recoveries	43			—			—			25			19			87
Balance, period-end	$	18,347		$	5,352		$	4,493		$	5,024		$	517		$	33,733

Changes in the allowance for loan losses by portfolio segment for the quarter ended June 30, 2011 were as follows:

	Commercial			Commercial Real Estate			Construction and Development			Residential Real Estate			Consumer and Other			Total
Balance, beginning of period	$	12,868		$	3,716		$	8,866		$	4,099		$	663		$	30,212
Provision for loan losses	3,175			(426		)	(1,759		)	905			(77		)	1,818
Loans charged-off	(2,648		)	(85		)	(1,765		)	(519		)	(58		)	(5,075		)
Recoveries	4			—			—			6			41			51
Balance, period-end	$	13,399		$	3,205		$	5,342		$	4,491		$	569		$	27,006

14

The balance of the allowance for loan losses and the recorded investment (which does not include accrued interest) in loans by portfolio segment and based on impairment method were as follows:

	Commercial		Commercial Real Estate		Construction and Development		Residential Real Estate		Consumer and Other		Total
June 30, 2012
Allowance for loan losses attributable to loans:
Individually evaluated for impairment	$	10,014	$	2,601	$	1,119	$	651	$	—	$	14,385
Collectively evaluated for impairment	8,333		2,751		3,374		4,373		517		19,348
Total ending allowance balance	$	18,347	$	5,352	$	4,493	$	5,024	$	517	$	33,733
Loans:
Individually evaluated for impairment	$	30,799	$	21,227	$	13,350	$	13,250	$	—	$	78,626
Collectively evaluated for impairment	259,586		283,423		60,673		307,721		11,101		922,504
Total ending loan balance	$	290,385	$	304,650	$	74,023	$	320,971	$	11,101	$	1,001,130
December 31, 2011
Allowance for loan losses attributable to loans:
Individually evaluated for impairment	$	5,568	$	805	$	—	$	331	$	—	$	6,704
Collectively evaluated for impairment	9,636		2,185		4,270		4,250		539		20,880
Total ending allowance balance	$	15,204	$	2,990	$	4,270	$	4,581	$	539	$	27,584
Loans:
Individually evaluated for impairment	$	36,272	$	20,066	$	21,099	$	13,130	$	—	$	90,567
Collectively evaluated for impairment	242,697		263,999		58,098		317,067		11,715		893,576
Total ending loan balance	$	278,969	$	284,065	$	79,197	$	330,197	$	11,715	$	984,143

15

Loans individually evaluated for impairment by class of loans were as follows:

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
June 30, 2012
With no related allowance recorded:
Commercial	$	18,447	$	12,178	$	—
Commercial real estate	12,308		12,184		—
Construction and development	13,665		11,089		—
Residential real estate:
Mortgage	8,122		8,074		—
Home equity	489		489		—
With an allowance recorded:
Commercial	18,621		18,621		10,014
Commercial real estate	9,315		9,043		2,601
Construction and development	3,477		2,261		1,119
Residential real estate:
Mortgage	4,067		4,067		592
Home equity	620		620		59
Total	$	89,131	$	78,626	$	14,385
December 31, 2011
With no related allowance recorded:
Commercial	$	31,667	$	25,062	$	—
Commercial real estate	11,154		11,154		—
Construction and development	25,175		21,099		—
Residential real estate:
Mortgage	9,021		8,844		—
Home equity	1,544		1,508		—
With an allowance recorded:
Commercial	11,211		11,211		5,568
Commercial real estate	9,183		8,911		805
Residential real estate:
Mortgage	2,778		2,778		331
Total	$	101,733	$	90,567	$	6,704

16

Average impaired loans by class were as follows:

	Six Months Ended June 30,
	2012		2011
Commercial	$	34,946	$	38,606
Commercial real estate	21,455		12,121
Construction and development	15,622		52,854
Residential real estate:
Mortgage	11,964		8,250
Home equity	1,536		887
Total	$	85,523	$	112,718

	Three Months Ended June 30,
	2012		2011
Commercial	$	34,531	$	36,783
Commercial real estate	21,896		11,335
Construction and development	14,436		39,610
Residential real estate:
Mortgage	11,969		8,265
Home equity	1,606		967
Total	$	84,438	$	96,960

Interest income recognized during impairment was $952 and $754 for the six months ended June 30, 2012 and 2011, respectively. Interest income recognized during impairment was $471 and $400 for the three months ended June 30, 2012 and 2011, respectively.

Nonperforming loans and loans past due 90 days or more still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

17

The recorded investment in nonaccrual and loans past due 90 days or more still on accrual by class of loans was as follows:

	Nonaccrual		Loans Past Due 90 Days or More Still on Accrual
June 30, 2012
Commercial	$	25,945	$	814
Commercial real estate	4,206		—
Construction and development	13,245		—
Residential real estate:
Mortgage	2,645		308
Home equity	152		11
Consumer and other	206		15
Total	$	46,399	$	1,148
December 31, 2011
Commercial	$	27,141	$	—
Commercial real estate	1,115		—
Construction and development	22,197		—
Residential real estate:
Mortgage	2,232		72
Home equity	161		205
Consumer and other	212		9
Total	$	53,058	$	286

Loans past due 90 days or more still on accrual are considered to be well-collateralized and in the process of collection as of June 30, 2012.

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The aging of the recorded investment in past due loans were as follows:

	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due		Total
June 30, 2012
Commercial	$	860	$	1,529	$	25,722	$	28,111	$	262,274	$	290,385
Commercial real estate	1,687		382		3,854		5,923		298,727		304,650
Construction and development	196		—		13,245		13,441		60,582		74,023
Residential real estate:
Mortgage	3,086		1,119		2,953		7,158		145,263		152,421
Home equity	773		85		164		1,022		167,528		168,550
Consumer and other	106		20		221		347		10,754		11,101
Total	$	6,708	$	3,135	$	46,159	$	56,002	$	945,128	$	1,001,130
December 31, 2011
Commercial	$	1,030	$	471	$	26,903	$	28,404	$	250,565	$	278,969
Commercial real estate	1,118		2,790		809		4,717		279,348		284,065
Construction and development	1,099		2,070		19,028		22,197		57,000		79,197
Residential real estate:
Mortgage	2,310		1,203		2,304		5,817		145,561		151,378
Home equity	1,048		526		365		1,939		176,880		178,819
Consumer and other	143		39		222		404		11,311		11,715
Total	$	6,748	$	7,099	$	49,631	$	63,478	$	920,665	$	984,143

During the three and six months ended June 30, 2012, the terms of certain loans were modified as troubled debt restructurings (“TDRs”). The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

Modifications involving a reduction of the stated interest rate of the loan were for interest rates ranging from 3.0% to 5.9% and periods ranging from six months to 30 years. Modifications involving an extension of the maturity date were for periods ranging from six months to 24 years.

At June 30, 2012, the Company had $38,284 of loans considered TDRs, which are considered impaired loans, compared to $37,711 as of December 31, 2011. As of June 30, 2012, the Company had specifically allocated allowance for loan losses of $5,070 on $18,515 of loans considered to be TDRs. As of December 31, 2011, the Company had specifically allocated allowance for loan losses of $1,584 on $14,375 of loans considered to be TDRs. The remaining $19,769 and $23,336 of TDRs as of June 30, 2012 and December 31, 2011, respectively, did not have impaired cash flows or were considered to be collateral dependent and did not have specific allocations of the allowance due to partial charge-offs and the loans being well-collateralized. Management has not committed to lend additional amounts to customers with outstanding loans that are classified as TDRs.

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The following table presents loans by class modified as TDRs during the six months ended June 30, 2012:

	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	1	$	513	$	513
Commercial real estate	2	505		505
Residential real estate: mortgage	13	2,271		2,363
Total	16	$	3,289	$	3,381

The following table presents loans by class modified as TDRs during the six months ended June 30, 2011:

	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	3	$	519	$	518
Commercial real estate	4	1,805		1,804
Residential real estate:
Mortgage	5	926		938
Home equity	1	690		700
Total	13	$	3,940	$	3,960

The following table presents loans by class modified as TDRs during the quarter ended June 30, 2012:

	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Residential real estate: mortgage	5	$	846	$	924
Total	5	$	846	$	924

The following table presents loans by class modified as TDRs during the quarter ended June 30, 2011:

	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	3	$	519	$	518
Commercial real estate	3	1,432		1,430
Residential real estate:
Mortgage	3	544		548
Home equity	1	690		700
Total	10	$	3,185	$	3,196

20

The following table presents loans by class modified as TDRs during the twelve-month period ended June 30, 2012 for which there was a payment default subsequent to the modification date during the six months ended June 30, 2012:

	Number of Loans	Recorded Investment
Commercial	2	$	219
Commercial real estate	1	442
Residential real estate: mortgage	3	1,590
Total	6	$	2,251

The following table presents loans by class modified as TDRs during the twelve-month period ended June 30, 2011 for which there was a payment default subsequent to the modification date during the six months ended June 30, 2011:

	Number of Loans	Recorded Investment
Commercial real estate	1	$	133
Total	1	$	133

A loan is considered to be in payment default once it is 90 days past due under the modified contractual terms. Additionally, loans less than $100 are not evaluated for impairment under TDR accounting guidance.

The TDRs that subsequently defaulted described above did not increase the allowance for loan losses and did not result in any charge-offs during the three and six months ended June 30, 2012 and 2011, as these loans were considered to be collateral dependent and well-collateralized.

The terms of certain other loans were modified during the three and six months ended June 30, 2012 and 2011 that did not meet the definition of a TDR. These loans have a total recorded investment as of June 30, 2012 and 2011 of $21,164 and $2,506, respectively. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

The Company categorizes its non-homogeneous loans into risk categories based on relevant information about the ability of borrowers to service their debt such as, among other factors: current financial information; historical payment experience; credit documentation; public information; and current economic trends. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes certain non-homogeneous loans, such as commercial, commercial real estate and construction and development loans. This analysis is done annually on a loan by loan basis. The Company uses the following definitions for classified risk ratings:

Substandard: Loans designated as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

21

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. The risk categories of loans were as follows:

	Classified		Pass		Total
June 30, 2012
Commercial	$	50,635	$	239,750	$	290,385
Commercial real estate	32,290		272,360		304,650
Construction and development	14,621		59,402		74,023
Total	$	97,546	$	571,512	$	669,058
December 31, 2011
Commercial	$	43,143	$	235,826	$	278,969
Commercial real estate	29,666		254,399		284,065
Construction and development	28,493		50,704		79,197
Total	$	101,302	$	540,929	$	642,231

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes, the Company evaluates credit quality based on the payment and aging status of the loan. Payment status is reviewed on a daily basis by the Bank’s collection department and on a monthly basis with respect to determining adequacy of the allowance for loan losses.

Note 4 - Other Real Estate Owned

Activity in other real estate owned was as follows:

	June 30, 2012			December 31, 2011
Balance, beginning of year	$	23,505		$	20,479
Acquired through loan foreclosure	6,209			55,386
Reductions due to sales	(2,822		)	(46,452		)
Write-downs	(1,140		)	(5,908		)
Balance, period-end	$	25,752		$	23,505

Other real estate owned is reported net of a valuation allowance of $477 and $3,625 as of June 30, 2012 and December 31, 2011, respectively.

Note 5 - Financial Instruments with Off-Balance Sheet Risk

Unused lines of credit and other commitments to extend credit not reflected in the financial statements are as follows:

	June 30, 2012						December 31, 2011
	Fixed Rate		Variable Rate		Total		Fixed Rate		Variable Rate		Total
Commercial loans and lines of credit	$	2,166	$	124,157	$	126,323	$	2,522	$	120,710	$	123,232
Check credit lines of credit	825		—		825		867		—		867
Mortgage loans	8,813		—		8,813		5,258		—		5,258
Home equity lines of credit	521		124,680		125,201		1,379		129,021		130,400
Letters of credit	—		7,644		7,644		—		6,537		6,537
Credit card lines of credit	—		28,457		28,457		—		29,349		29,349
Total	$	12,325	$	284,938	$	297,263	$	10,026	$	285,617	$	295,643

Fixed rate commercial loan commitments and lines of credit at June 30, 2012 had interest rates ranging from 4.0% to 6.8% with terms ranging from five months to five years. Fixed rate mortgage loan commitments at June 30, 2012 had interest rates ranging from 3.3% to 4.4% with terms ranging from eight to 30 years. Fixed rate home equity lines

22

of credit at June 30, 2012 had interest rates ranging from 3.0% to 7.0% with terms ranging from one month to 20 years. Fixed rate check credit lines of credit at June 30, 2012 had interest rates of 18.0%.

Note 6 - Common Stock in ESOP Subject to Contingent Repurchase Obligation

At June 30, 2012 and December 31, 2011, the Employee Stock Ownership Plan (the “ESOP”) held 88,755 and 89,348 shares of West Suburban common stock, respectively. Upon termination of their employment, participants who elect to receive their benefit distributions in the form of West Suburban common stock may request the Company to purchase, when the Company is legally permitted to purchase its common stock, the common stock distributed at fair market value during two 60-day periods. The first purchase period begins on the date the benefit is distributed and the second purchase period begins on the first anniversary of the distribution date. This contingent repurchase obligation is reflected in the Company’s financial statements as “Common stock in ESOP subject to contingent repurchase obligation” and reduces shareholders’ equity by an amount that represents the independently appraised fair market value of all West Suburban common stock held by the ESOP and allocated to participants, without regard to whether it is likely that the shares would be distributed or that the recipients of the shares would be likely to exercise their right to require the Company to purchase the shares.

Note 7 - New Accounting Pronouncements

Adopted Accounting Guidance

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an amendment to achieve common fair value measurement and disclosure requirements between U.S. and International accounting principles. Overall, the guidance is consistent with existing U.S. accounting principles; however, there are some amendments that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this guidance are effective for interim and annual reporting periods beginning after December 15, 2011. The effect of adopting this standard did not have a material effect on the Company’s operating results or financial condition, but the additional disclosures are included in Note 9.

In June 2011, the FASB amended existing guidance and eliminated the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity. The amendment requires that comprehensive income be presented in either a single continuous statement or in two separate consecutive statements. The amendments in this guidance are effective as of the beginning of a fiscal reporting year, and interim periods within that year, that begins after December 15, 2011. The adoption of this amendment changed the presentation of the statement of comprehensive income for the Company to two consecutive statements instead of presenting it as part of the consolidated statement of shareholders’ equity.

Note 8 - Retirement Benefits

The Bank maintains the West Suburban Bank 401(k) Profit Sharing Plan (the “401(k) Plan”), which serves as the Company’s principal retirement plan. The 401(k) Plan was established to address the limited availability of West Suburban common stock for acquisition by the ESOP and to offer participants an avenue to diversify their retirement savings.

The ESOP provides incentives to employees by granting participants an interest in West Suburban common stock, which represents the ESOP’s primary investment. An individual account is established for each participant and the benefits payable upon retirement, termination, disability or death are based upon service, the amount of the employer’s contributions and any income, expenses, gains and losses and forfeitures allocated to the participant’s account.

The Company also maintains a noncontributory postretirement benefit plan covering certain senior executives. The plan provides postretirement medical, dental and long term care coverage for certain executives and their surviving spouses.

23

The eligible retirement age under the plan is age 62 and the plan is unfunded. Net postretirement benefit costs are summarized in the following tables:

	Six Months Ended
	June 30,
	2012		2011
Service cost	$	11	$	16
Interest cost	28		28
Amortization of prior service cost	10		10
Recognized net actuarial gain	17		11
Net periodic benefit cost	$	66	$	65

	Three Months Ended
	June 30,
	2012		2011
Service cost	$	6	$	8
Interest cost	14		14
Amortization of prior service cost	5		5
Recognized net actuarial gain	9		5
Net periodic benefit cost	$	34	$	32

Note 9 - Fair Value of Financial Instruments

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 — Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Securities:  The fair value of securities is determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair value is calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair value is calculated using discounted cash flows or other market indicators (Level 3).

Impaired Loans:  The fair value of impaired loans secured by real estate with specific allocations of the allowance for loan losses is based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based upon management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the borrower and borrower’s business, resulting in a Level 3 classification. Impaired loans are evaluated on a quarterly basis for additional impairment and are adjusted accordingly.

24

Other Real Estate Owned:  Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are based on third party appraisals of the property, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified appraisers whose qualifications and licenses have been reviewed by management. Management has discounted the appraisal values from 0.0% to 16.0% as a result of changes in market conditions from the time of the appraisal, selling costs, and other factors determined from management’s historical knowledge.

Assets and liabilities measured at fair value on a recurring basis are as follows:

	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2012 Recurring basis
U.S. government sponsored enterprises	$	26,092	$	—	$	26,092	$	—
Mortgage-backed: residential	365,106		—		365,106		—
State and political subdivisions	130,118		—		130,118		—
Corporate	39,608		—		39,608		—
Total securities available for sale	$	560,924	$	—	$	560,924	$	—
December 31, 2011 Recurring basis
U.S. Treasuries	$	10,420	$	10,420	$	—	$	—
U.S. government sponsored enterprises	66,885		—		66,885		—
Mortgage-backed: residential	302,206		—		302,206		—
State and political subdivisions	50,959		—		50,382		577
Corporate	23,655		—		23,655		—
Total securities available for sale	$	454,125	$	10,420	$	443,128	$	577

There were no transfers between Level 1 and Level 2 during the first six months of 2012 and 2011.

The table below presents a reconciliation of the state and political subdivisions available for sale security measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	Six Months Ended June 30,
	2012			2011
Balance of recurring Level 3 assets at January 1	$	577		$	—
Total gains or (losses) for the period:
Included in other comprehensive income	(4		)	—
Purchases, sales, issuances and settlements, net	—			—
Transfers in or (out) of Level 3	(573		)	—
Balance of recurring Level 3 assets at June 30	$	—		$	—

At December 31, 2011, the Company had one state and political subdivisions security where the fair value was determined using Level 3 inputs. During the quarter ended March 31, 2012, the security was transferred from Level 3 to Level 2 because additional observable market data became available. The security was rated as investment grade by two nationally recognized rating agencies. The Company’s policy is to recognize transfers into or out of a level as of the end of the reporting period. As a result the fair value of the security was transferred on March 31, 2012.

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Assets and liabilities measured at fair value on a non-recurring basis are as follows:

	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2012 Non-recurring basis
Impaired loans:
Commercial	$	11,149	$	—	$	—	$	11,149
Commercial real estate	6,903		—		—		6,903
Construction and development	7,955		—		—		7,955
Residential real estate:
Mortgage	3,475		—		—		3,475
Home Equity	561		—		—		561
Other real estate owned:
Construction and development	12,605		—		—		12,605
Commercial real estate	3,484		—		—		3,484
December 31, 2011 Non-recurring basis
Impaired loans:
Commercial	$	8,697	$	—	$	—	$	8,697
Commercial real estate	8,106		—		—		8,106
Construction and development	4,840		—		—		4,840
Residential real estate	2,447		—		—		2,447
Other real estate owned:
Construction and development	8,560		—		—		8,560
Commercial real estate	3,484		—		—		3,484

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $44,428 with a valuation allowance of $14,385 at June 30, 2012. At December 31, 2011, impaired loans had a carrying value of $30,795 with a valuation allowance of $6,704. Provision for loan losses made for impaired loans during the first six months ended June 30, 2012 and 2011 was $7,681 and $2,276, respectively.

Other real estate owned, which are at fair value less costs to sell, had a net carrying amount of $16,089, which consisted of the outstanding balance of $16,566 net of a valuation allowance of $477 at June 30, 2012. Write-downs on the other real estate owned totaled $1,140 and $724 for the first six months of 2012 and 2011, respectively. At December 31, 2011, other real estate owned had a carrying amount of $12,044, which consisted of the outstanding balance of $15,669, net of a valuation allowance of $3,625.

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Carrying values and estimated fair values of the Company’s financial instruments as of June 30, 2012 and December 31, 2011 are set forth in the table below:

	Carrying		Fair Value Measurement at June 30, 2012 Using
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	96,504	$	96,504	$	—	$	—	$	96,504
Securities
Available for sale	560,924		—		560,924		—		560,924
Held to maturity	213,095		33,374		192,035		—		225,409
Federal Home Loan Bank stock	6,084		N/A		N/A		N/A		N/A
Loans, less allowance for loan losses	967,397		—		1,247		978,193		979,440
Accrued interest receivable	5,095		—		2,675		2,420		5,095
Financial liabilities
Deposits	$	1,787,047	$	1,393,876	$	397,147	$	—	$	1,791,023
Accrued interest payable	2,016		69		1,947		—		2,016

	December 31, 2011
	Carrying Value		Estimated Fair Value
Financial assets
Cash and cash equivalents	$	116,325	$	116,325
Securities
Available for sale	454,125		454,125
Held to maturity	259,035		271,601
Federal Home Loan Bank stock	7,599		N/A
Loans, less allowance for loan losses	956,559		994,934
Accrued interest receivable	5,342		5,342
Financial liabilities
Deposits	$	1,739,544	$	1,748,988
Accrued interest payable	2,471		2,471

The methods and assumptions, not previously presented, used to estimate fair values of certain other financial instruments are described as follows:

(a) Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

(b) Federal Home Loan Bank of Chicago (“FHLB”) Stock

It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

(c) Loans

Fair values of loans, excluding loans held for sale, are estimated as follows: for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price, resulting in a Level 3 classification.

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The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

(d) Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date resulting in a Level 2 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(e) Accrued Interest Receivable/Payable

The carrying amounts of accrued interest receivable/payable approximate fair value. Accrued interest receivable/payable are classified to reflect the associated underlying contracts.

(f) Off-Balance Sheet Instruments

Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of such commitments is not material.

Note 10 - Capital Requirements

On January 13, 2011, the Bank agreed with its regulators to maintain minimum capital ratios in excess of the minimum ratios required by applicable federal regulations. The Bank agreed to maintain minimum capital ratios equal to or exceeding 8.00% for Tier 1 capital to average total assets and 12.00% for total capital to risk-weighted assets. As of June 30, 2012, the Bank was in compliance with these heightened regulatory capital requirements. If the Bank is not in compliance with these requirements in the future, the Bank may become subject to additional regulatory actions or restrictions.

At June 30, 2012, the Bank’s Tier 1 capital to average total assets ratio was 8.20%, .20%, or $3.9 million, above the 8.00% level the Bank agreed with its regulators to maintain, and the Bank’s total capital to risk-weighted assets was 13.86%, 1.86%, or $23.9 million, above the 12.00% the Bank agreed with its regulators to maintain.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

At the end of 2007, the United States economy experienced a downturn, the effects of which have continued into 2012. During this period, the United States economy experienced high levels of unemployment, depressed home values, historically low levels of liquidity in the debt markets and increased volatility in the equity markets. As a result of these conditions, consumer confidence and spending decreased substantially and asset values declined. Like many other financial institutions, the Company’s financial results in recent reporting periods, including 2011 and the first two quarters of 2012, were impacted by the continuing economic downturn.

The economic downturn has impacted the entire State of Illinois, including the Company’s primary market area, located in the western suburbs of Chicago, Illinois. According to the Bureau of Labor and Statistics, the unemployment rate in the State of Illinois at June 30, 2012 was 8.7%. High levels of unemployment have adversely impacted the ability of certain of the Company’s borrowers to meet their ongoing debt obligations. In addition, real estate demand in the Company’s market area remains weak, resulting in declines in the values of the real estate serving as collateral for certain of the Company’s loans.

As a result of the continuing economic situation in the national and local economies and depressed real estate values, management has focused its attention primarily on improving the performance of the Bank’s loan portfolio. The Bank’s nonaccrual loans during the second quarter of 2012 remained at a historically high level, which adversely impacted its interest income. The deterioration in the Bank’s loan portfolio has forced the Bank in recent periods to increase its allowance for loan losses compared to historical levels to absorb additional losses in the portfolio. The Bank’s Board of Directors reviews the level of its allowance for loan losses on a monthly basis. The Board responds as promptly as practical to new developments in the Bank’s loan portfolio. Although management has maintained a higher level of allowance for loan losses compared to historical levels in response to heightened levels of nonaccrual loans and believes that the allowance for loan losses is a reasonable estimate for probable incurred losses in the loan portfolio, future loan losses in excess of the allowance for loan losses would adversely affect the Bank’s financial condition and results of operations. In addition, as a result of increasing levels of foreclosures and acquisitions made in lieu of foreclosures, the Bank’s other real estate owned portfolio remained at a high level throughout 2011 and into the first six months of 2012, further decreasing the Bank’s interest income. Management believes that the level of the Bank’s other real estate owned portfolio will remain at a high level throughout 2012 and may increase. Management has had to focus additional time and effort on selling these properties, and the Bank has incurred significant costs in connection with maintaining the properties, including real estate taxes, management fees and insurance costs. Management continues to aggressively pursue sales of the foreclosed assets in the Bank’s portfolio, but due to weak real estate demand in the Bank’s market area, management is not able to dispose of these properties as promptly as desired.

During this difficult economic period, the Bank has seen low levels of quality demand for credit. Although concerns over the credit quality in the Bank’s loan portfolio exist, the Bank continues to be willing to make loans to qualified applicants that meet its traditional and prudent lending standards.

In response to the economic downturn, the Federal Reserve has maintained and has indicated that it will hold interest rates at historically low levels through the next several years. Additionally, the Federal Reserve has used various forms of monetary policy in an attempt to drive down long-term interest rates during this economic downturn. The presence of these historically low interest rates has created net interest challenges for the banking industry in general and the Bank in particular. This interest rate environment has resulted in low-yielding investment opportunities, adding to the downward pressure on the Bank’s interest income. Management has been focused on investments for the Bank’s securities portfolio that are expected to retain their value in the event of an unexpected increase in market interest rates over the next few years. Specifically, the Bank has invested in mortgage-backed securities issued by U.S. government sponsored enterprises with average maturities of less than five years. In addition, movements in general market interest rates are a key element in changes in the Bank’s interest rate margin, and management expects the interest rate environment to remain at historically low levels throughout 2012.

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On January 13, 2011, the Bank agreed with its regulators to maintain minimum capital ratios in excess of the minimum ratios required by applicable federal regulations. Specifically, the Bank agreed to maintain minimum capital ratios equal to or exceeding 8.00% for Tier 1 capital to average total assets and 12.00% for total capital to risk-weighted assets. As of June 30, 2012, the Bank was in compliance with these heightened regulatory capital requirements. If the Bank is not in compliance with the requirements in the future, the Bank may become subject to additional regulatory actions or restrictions.

Critical Accounting Policies

The Company’s financial statements are prepared in conformity with accounting principles generally accepted in the U.S. These accounting principles, which can be complex, are significant to our financial condition and our results of operations and require management to apply significant judgment with respect to various accounting, reporting and disclosure matters. Management must use estimates, assumptions and judgments to apply these principles where actual measurements are not possible or practical. These estimates, assumptions and judgments are based on information available as of the date of this report and, as this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statements. Changes in such estimates may have a significant impact on the financial statements. Management has reviewed the application of these policies with the Audit Committee of West Suburban’s Board of Directors. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and Notes to the Condensed Consolidated Financial Statements included in this quarterly report.

In management’s view, the accounting policies that are critical to the Company are those relating to estimates, assumptions and judgments regarding the determination of the adequacy of the allowance for loan losses, the Company’s federal and state income tax obligations, the determination of the fair value of certain of the Company’s investment securities, the fair value of common stock subject to contingent repurchase obligation and the carrying value of other real estate owned.

Allowance for Loan Losses.  The allowance for loan losses is a valuation allowance for probable incurred credit losses in the loan portfolio. The allowance is increased by a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan has been established. Subsequent recoveries, if any, are credited to the allowance. The allowance consists of specific and general components. The specific component relates to specific loans that are individually classified as impaired. The allowance for loan losses is evaluated monthly based on management’s periodic review of loan collectibility in light of historical loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values and prevailing economic conditions. Although allocations of the allowance may be made for specific loans, the entire allowance is available for any loan that, in management’s judgment, should be charged-off. Management’s evaluation of loan collectibility is inherently subjective as it requires estimates that are subject to significant revision as more information becomes available or as relevant circumstances change. Management’s evaluation of the allowance for loan losses is also subject to regulatory review, which may result in significant changes.

The Company evaluates commercial, commercial real estate and construction and development loans monthly for impairment. A loan is considered impaired when, based on current information and events, full payment under the loan terms is not expected. Loans for which the terms have been modified and for which the borrower is experiencing financial difficulties are considered TDRs and classified as impaired. Impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the loan’s collateral, if repayment of the loan is collateral dependent. A valuation allowance is maintained for the amount of impairment. Generally, loans 90 days or more past due and loans classified as nonaccrual status are considered for impairment. Impairment is considered on an entire category basis for smaller-balance loans of similar nature such as residential real estate and consumer loans, and on an individual basis for other loans. In general, consumer and credit card loans are charged-off no later than 120 days after a consumer or credit card loan becomes past due.

The general component covers pools of other loans not classified as impaired and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is

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based on a rolling 18-month net charge-off history. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These factors include consideration of the following: levels and trends in past dues; trends in charge-offs and recoveries; trends in volume and terms of loans; effects of collateral deterioration; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staff; national and local economic trends; and trends in impaired loans, including impaired loans without a specific allowance for loan losses. The following loan portfolio segments have been identified: commercial, commercial real estate, construction and development, residential real estate and consumer and other loans.

Income Taxes.  The Company is subject to income tax laws of the U.S. and the State of Illinois. These 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 sometimes aggressively challenge tax positions taken by financial institutions, including positions that may be taken by the Company. During the preparation of the Company’s 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 management’s ongoing assessment of facts and evolving case law.

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

Temporary Decline in Fair Value of Securities.  The Company evaluates its debt and equity securities for other-than-temporary impairment (“OTTI”) under FASB guidance “Investments in Debt and Equity Securities.” The guidance applies to debt securities, as well as equity securities not accounted for under the equity method (i.e., cost method investments), unless the investments are subject to other accounting guidance, such as FASB guidance “Beneficial Interest in Securitized Financial Assets.” Investments in securitized structures such as collateralized mortgage obligations and collateralized debt obligations that are not high quality investment grade securities upon acquisition are subject to this guidance. High quality investment grade securities are defined as securities with an investment grade of “AA” or higher.

In accordance with FASB guidance “Investments in Debt and Equity Securities,” declines in the fair value of securities below their cost that are other-than-temporary are reflected as realized losses. In determining OTTI on debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition and near-term prospects of the issuer; (3) whether the market decline was affected by macroeconomic conditions; and (4) whether the Company has the intent to sell the debt security or whether it is more likely than not the Company will be required to sell the debt security before its anticipated recovery. The assessment of whether OTTI exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

Other Real Estate Owned.  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less anticipated costs to sell when acquired, establishing a new basis. If fair value declines subsequent to acquisition, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed as incurred.

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

Through the normal course of operations, the Company has entered into certain contractual obligations and other commitments. These obligations generally relate to the funding of operations through deposits and prepaid solutions cards, as well as leases for premises and equipment. As a financial services provider, the Company routinely enters into commitments to extend credit. While contractual obligations represent future cash requirements of the Company, a significant portion of commitments to extend credit may expire without being drawn upon. Commitments to extend credit are subject to the same credit policies and approval procedures as comparable loans made by the Company.

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At June 30, 2012 and December 31, 2011, the ESOP held 88,755 and 89,348 shares of West Suburban common stock, respectively. Upon termination of their employment, participants who elect to receive their benefit distributions in the form of West Suburban common stock may request the Company to purchase, when the Company is legally permitted to purchase its common stock, the common stock distributed at fair value. A more detailed discussion concerning this obligation is presented in Note 6 to the Company’s Condensed Consolidated Financial Statements included in this report. At June 30, 2012 and December 31, 2011, this contingent repurchase obligation reduced shareholders’ equity by $25.2 million and $23.2 million, respectively.

Balance Sheet Analysis

Total Assets.  Total consolidated assets at June 30, 2012 increased 2.7% compared to December 31, 2011, primarily due to increases in the securities portfolios funded in part by an increase in interest-bearing deposits from customers.

Cash and Cash Equivalents.  Cash and cash equivalents at June 30, 2012 decreased 17.0% from December 31, 2011. This was primarily due to a decrease in cash and due from banks, as the Company increased its holdings of available for sale investment securities.

Securities.  The Company’s securities portfolio increased 8.2% during the first six months of 2012. This increase was primarily due to investments in U.S. government sponsored enterprise-issued residential mortgage-backed securities and state and political subdivisions securities. The Company made these investments to earn a higher yield when compared to alternative investments such as federal funds sold. The Company manages its securities portfolio to maximize the return on invested funds within acceptable risk guidelines, to meet pledging and liquidity requirements and to adjust balance sheet interest rate sensitivity in an effort to insulate net interest income against the impact of interest rate changes. The Company will continue to monitor its level of available for sale and held to maturity securities and will classify new securities purchased in the appropriate category at the time of purchase. During the first six months of 2012, the Company continued to take advantage of the current rate environment and realized gains on sales of available for sale securities totaling $2.8 million, which positively impacted net income. At June 30, 2012, the Company’s accumulated other comprehensive income due to unrealized gains and losses on securities available for sale was $4.0 million compared to $3.9 million at December 31, 2011. Additionally, at the request of the Company, the FHLB redeemed $1.5 million of FHLB stock held by the Company during the first six months of 2012.

Loans.  Total loans outstanding at June 30, 2012 increased 1.7% from December 31, 2011, primarily due to an increase in the commercial real estate and commercial loan portfolios. The increase in the commercial real estate portfolio was primarily due to the addition of five large relationships and the increase in the commercial loan portfolio was primarily due to the addition of two large relationships. These increases were partially offset by decreases in the home equity and construction and development loan portfolios. The decrease in the home equity portfolio was primarily due to continued payoffs. The decrease in the construction and development loan portfolio was primarily due to a payment made on one large relationship. Although the Company experienced growth in the commercial real estate and commercial loan portfolios, overall loan demand in the Company’s market area remains low compared to historical periods.

Balances in the Company’s loans are summarized in the following table (dollars in thousands):

	June 30, 2012			December 31, 2011
Commercial	$	290,385		$	278,969
Commercial real estate	304,650			284,065
Construction and development	74,023			79,197
Residential real estate:
Mortgage	152,421			151,378
Home equity	168,550			178,819
Consumer and other	11,101			11,715
Total	1,001,130			984,143
Allowance for loan losses	(33,733		)	(27,584		)
Loans, net	$	967,397		$	956,559

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Allowance for Loan Losses and Asset Quality.  The level of the allowance for loan losses is determined by evaluating the general allowance, which is allocated to pools of loans, as well as the specific allowance allocated to impaired loans. The Company utilizes a matrix which tracks changes in various factors that management has determined to have direct effects on the performance of the loan portfolio. These factors include consideration of the following: levels and trends in past dues; trends in charge-offs and recoveries; trends in volume and terms of loans; effects of collateral deterioration; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staff; national and local economic trends; and trends in impaired loans, including impaired loans without a specific allowance for loan losses. The matrix assigns factors to each loan category which is used to determine the amount of the general allowance. The specific allowance allocated to impaired loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the loan’s collateral, if repayment of the loan is collateral dependent. A loan is considered impaired when, based on current information and events, full payment under the loan terms is not expected. Loans for which the terms have been modified and for which the borrower is experiencing financial difficulties are considered TDRs and classified as impaired.

At June 30, 2012, the allowance for loan losses was $33.7 million, compared to $27.6 million at December 31, 2011. The increase in the allowance for loan losses was primarily in the specific allowance component with the addition of specific reserves to commercial, construction and development and commercial real estate loan accounts.

Impaired loans totaled $78.6 million at June 30, 2012, as compared to $90.6 million at December 31, 2011. The allowance for loan losses allocated to impaired loans totaled $14.4 million at June 30, 2012, as compared to $6.7 million at December 31, 2011. The increase in allowance for loan losses allocated to impaired loans is primarily due to specific reserves recorded during the first quarter of 2012 as a result of the Company’s reassessment of certain factors in determining specific reserves on impaired credits as required by the Bank’s primary federal regulator. As of June 30, 2012, the impaired loan balance of $78.6 million was net of $10.5 million of partial charge-offs.

The general reserve as a percentage of non-impaired loans was 2.1% at June 30, 2012, as compared to 2.3% at December 31, 2011. The decrease in the general reserve as a percentage of non-impaired loans is consistent with the change in the actual historical loss history, management’s review of internal classified loans and management’s expectation of overall economic conditions nationally and in the areas in which the Company operates. Net loan charge-offs were $2.0 million for the six months ended June 30, 2012 compared to $5.9 million during the same period in 2011.

Nonperforming loans (nonaccrual and loans past due 90 days or more still on accrual) decreased to $47.5 million at June 30, 2012 from $53.3 million at December 31, 2011. This change was primarily due to a decrease in nonaccrual loans of $6.7 million during this period. Additionally, $21.1 million of loans were classified as nonaccrual during the first six months of 2012. This increase was significantly offset by $15.2 million in payments made on nonperforming loans, of which $11.4 million was paid on one large relationship. Additionally, $5.0 million of loans were brought current and $5.9 million of loans were transferred to other real estate owned. One of these loans transferred to other real estate owned had a specific reserve of $.9 million. At the time of transfer the specific reserve was reversed and resulted in a negative provision to commercial loans for the second quarter of 2012. The Company also charged off $1.7 million of nonaccrual loans during the first six months of 2012. Loans 90 days or more past due still on accrual increased $.8 million to $1.1 million at June 30, 2012 from $.3 million at December 31, 2011. This increase was primarily due to the addition of one large commercial loan account, which is sufficiently collateralized and in process of collection.

The Company’s ratio of nonperforming loans to total loans was 4.7% at June 30, 2012 and 5.4% at December 31, 2011, respectively, due to the decrease in nonperforming loans described above. The ratio of nonperforming assets (nonperforming loans and other real estate owned) to total assets decreased to 3.7% at June 30, 2012 from 4.0% at December 31, 2011.

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The ratio of the allowance for loan losses to total loans was 3.4% at June 30, 2012 and 2.8% at December 31, 2011. The following table presents an analysis of the Company’s nonperforming loans and other real estate owned as of the dates indicated (dollars in thousands):

	June 30, 2012			December 31, 2011
Loans past due 90 days or more still on accrual	$	1,148		$	286
Nonaccrual loans	46,399			53,058
Total nonperforming loans	$	47,547		$	53,344
Nonperforming loans as a percent of total loans	4.7		%	5.4		%
Allowance for loan losses as a percent of nonperforming loans	70.9		%	51.7		%
Other real estate owned	$	25,752		$	23,505
Nonperforming assets as a percent of total assets	3.7		%	4.0		%

The following table presents an analysis of the Company’s allowance for loan losses for the periods stated (dollars in thousands):

	2012						2011
	2nd Qtr			1st Qtr			4th Qtr			3rd Qtr			2nd Qtr
Provision - quarter	$	1,000		$	7,165		$	2,360		$	4,750		$	1,818
Provision - year to date	8,165			7,165			11,928			9,568			4,818
Net charge-offs - quarter	1,671			345			2,642			3,890			5,024
Net charge-offs - year to date	2,016			345			12,416			9,774			5,884
Allowance at period end	33,733			34,404			27,584			27,866			27,006
Allowance at period end to total loans	3.4		%	3.5		%	2.8		%	2.8		%	2.8		%

Other Real Estate Owned.  At June 30, 2012, the Company had $25.8 million in other real estate owned, compared to $23.5 million at December 31, 2011. During the first six months of 2012, the Company acquired properties with an aggregate carrying value of $6.2 million and sold properties with an aggregate carrying value of $2.8 million. These sales produced a net loss of $.1 million. On a monthly basis, the Company evaluates the carrying value of all other real estate owned properties and takes write-downs on these properties as necessary. During the first six months of 2012, the Company recorded aggregate write-downs of $1.1 million due to the continued decline in real estate values. The Company is actively marketing the properties it holds in its other real estate owned portfolio in a continuing effort to reduce the size of this portfolio.

Bank-Owned Life Insurance.  Bank-owned life insurance at June 30, 2012 increased 1.0% from December 31, 2011, as a result of earnings on the asset during the first six months of 2012.

Deposits.  Total deposits at June 30, 2012 increased 2.7% from December 31, 2011 primarily due to increases in NOW, money market checking and savings deposits. Management believes that due to the current state of the economy, some customers have migrated from non-liquid time deposits to more liquid deposit products such as money market checking and savings deposits. In general, management promotes the Company’s deposit products when it believes appropriate and prices its products in a manner intended to retain the Company’s current customers while maintaining an acceptable net interest margin. As of June 30, 2012, the Company held $.6 million of deposits related to balances on cards issued by the Bank’s former prepaid solutions group. The Bank is in the process of winding down its issuing bank responsibilities under the prepaid card programs originated by the Bank’s former prepaid solutions group that were transferred, and the Bank expects to reduce the level of, and eventually cease to hold, these deposits. As of June 30, 2012, the Bank had no brokered deposits.

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Balances in the Company’s major categories of deposits are summarized in the following table (dollars in thousands):

	June 30, 2012		December 31, 2011		Dollar Change			Percentage Change
Demand-noninterest-bearing	$	161,021	$	152,955	$	8,066		5.3	%
Prepaid solutions card deposits	623		5,810		(5,187		)	(89.3	)%
NOW	371,329		357,351		13,978			3.9	%
Money market checking	461,089		444,942		16,147			3.6	%
Savings	399,815		372,067		27,748			7.5	%
Time deposits
Less than $100,000	289,108		301,154		(12,046		)	(4.0	)%
$100,000 and greater	104,062		105,265		(1,203		)	(1.1	)%
Total	$	1,787,047	$	1,739,544	$	47,503		2.7	%

Prepaid Solutions Cards.  Outstanding balances on prepaid solutions cards, which represent the total of prepaid solutions cards deposits and prepaid solutions cards liabilities, decreased 14.4% at June 30, 2012 from December 31, 2011. On December 4, 2009, the Company sold its prepaid solutions card division. The Bank remains the card issuing bank under a number of the card programs transferred, although the Bank is in the process of winding down such responsibilities. The outstanding balances on prepaid solutions cards will remain on the Company’s balance sheet for a period of time. The Company no longer records the income and expense associated with the prepaid solutions cards.

CAPITAL RESOURCES

Shareholders’ equity at June 30, 2012 increased 0.6% from December 31, 2011. The increase resulted from net income of $2.8 million, a change in the amount reclassified on ESOP shares of $2.0 million and an increase in accumulated other comprehensive income of $.1 million. In accordance with applicable regulations, the appraised fair market value of West Suburban common stock owned by the ESOP is included in Tier 1 capital.

Banking regulations require the Company and the Bank to maintain minimum capital amounts and ratios. Regulatory capital requirements call for a minimum total risk-based capital ratio of 8% for each of the Company and the Bank, a minimum Tier 1 risk-based capital ratio of 4% for each of the Company and the Bank and a minimum leverage ratio (3% for the most highly rated banks and bank holding companies that do not expect significant growth; all other institutions are required to maintain a minimum leverage capital ratio of 4% to 5% depending on their particular circumstances and risk and growth profiles) for each of the Company and the Bank. On a consolidated basis, West Suburban exceeded these minimum regulatory capital requirements as of June 30, 2012. Bank holding companies and their subsidiaries are generally expected to operate at or above the minimum capital requirements.

On January 13, 2011, the Bank agreed with its regulators to maintain minimum capital ratios in excess of the minimum ratios required by applicable federal regulations. The Bank agreed to maintain minimum capital ratios equal to or exceeding 8.00% for Tier 1 capital to average total assets and 12.00% for total capital to risk-weighted assets. As of June 30, 2012, the Bank was in compliance with these heightened regulatory capital requirements. If the Bank is not in compliance with the requirements in the future, the Bank may become subject to additional regulatory actions or restrictions.

The Bank also has agreed not to pay dividends to West Suburban without obtaining prior approval of its bank regulators. In addition, West Suburban’s Board of Directors has resolved to obtain regulatory approval prior to paying dividends or redeeming West Suburban common stock in order to preserve capital and maintain the Company’s financial strength given the economic environment and its impact on the Company.

At June 30, 2012, the Bank’s Tier 1 capital to average total assets ratio was 8.20%, .20%, or $3.9 million, above the 8.00% level the Bank agreed with its regulators to maintain, and the Bank’s total capital to risk-weighted assets was 13.86%, 1.86%, or $23.9 million, above the 12.00% the Bank agreed with its regulators to maintain.

35

As of June 30, 2012 and December 31, 2011, the Bank exceeded the minimum capital ratios required for it to qualify as “well-capitalized” under the regulatory framework for prompt corrective action. There were no conditions or events since June 30, 2012 that management believes would result in a change of the Bank being considered “well-capitalized.”

The following table sets forth the actual and minimum capital ratios of the Company and the Bank as of the dates indicated (dollars in thousands):

	Actual				Minimum To Be Well- Capitalized				Excess
	Amount		Ratio		Amount		Ratio		Amount
As of June 30, 2012
Total capital (to risk-weighted assets)
Company	$	182,112	14.15	%	N/A		N/A		N/A
Bank (1)	178,297		13.86	%	$	128,655	10.00	%	$	49,642
Tier 1 capital (to risk-weighted assets)
Company	165,812		12.89	%	N/A		N/A		N/A
Bank	161,997		12.59	%	77,193		6.00	%	84,804
Tier 1 capital (to average assets)
Company	165,812		8.39	%	N/A		N/A		N/A
Bank (1)	161,997		8.20	%	98,823		5.00	%	63,174
As of December 31, 2011
Total capital (to risk-weighted assets)
Company	$	174,107	13.72	%	N/A		N/A		N/A
Bank (1)	170,781		13.46	%	$	126,925	10.00	%	$	43,856
Tier 1 capital (to risk-weighted assets)
Company	158,097		12.46	%	N/A		N/A		N/A
Bank	154,771		12.19	%	76,155		6.00	%	78,616
Tier 1 capital (to average assets)
Company	158,097		8.31	%	N/A		N/A		N/A
Bank (1)	154,771		8.11	%	95,362		5.00	%	59,409

(1)The Bank has agreed to maintain minimum Tier 1 capital to average assets of 8.00% and total capital to risk-weighted assets of 12.00%.

LIQUIDITY

Effective liquidity management ensures the availability of funding sources at minimum cost to meet fluctuating deposit balances, loan demand needs and to take advantage of earnings enhancement opportunities. A large, stable core deposit base and a strong capital position are the solid foundation of the Company’s liquidity position. Liquidity is enhanced by a securities portfolio structured to provide liquidity as needed. The Company also maintains relationships with correspondent banks to purchase federal funds subject to underwriting and collateral requirements. Additionally, subject to credit underwriting, collateral, capital stock, and other requirements of the FHLB, the Company is able to borrow from the FHLB on a “same day” basis. As of June 30, 2012, the Company could have borrowed up to approximately $122 million from the FHLB secured by certain of its real estate loans and securities. The Company manages its liquidity position through continuous monitoring of profitability trends, asset quality, interest rate sensitivity and maturity schedules of interest-earning assets and interest-bearing liabilities.

Generally, the Company uses cash and cash equivalents to meet its liquidity needs. If the Company’s cash and cash equivalents are not sufficient to meet its liquidity needs, the Company would access the federal funds available for a short period of time. If longer term liquidity is needed, the Company would meet those needs using securities available for sale. As of June 30, 2012 and December 31, 2011, cash and cash equivalents together with securities available for sale collectively represented 33.2% and 29.6% of total assets, respectively.

During the first six months of 2012, the Company’s cash and cash equivalents decreased $19.8 million; net cash provided by operating activities was $13.4 million; net cash used in investing activities was $83.6 million; and net cash provided by financing activities was $50.4 million. The net cash used in investing activities was related primarily to purchases of investment securities available for sale.

36

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

Net Income.  The Company’s net income decreased $3.7 million to $2.8 million for the first six months of 2012 compared to $6.5 million for the first six months of 2011. The decrease was primarily due to an increase in the provision for loan losses expense of $3.3 million. This increase was due to specific reserves recorded in the first quarter of 2012 as a result of the Company’s reassessment of certain factors in determining specific reserves on impaired credits as required by the Bank’s primary federal regulator. Net interest income decreased $.6 million for the first six months of 2012 compared to the first six months of 2011. Additionally, total noninterest income decreased $2.8 million during this period. This increase in expense and decreases to income was partially offset by a decrease in total noninterest expense of $.5 million, along with a decrease in income tax expense of $2.6 million.

Net Interest Income.  Net interest income (on a fully tax-equivalent basis, assuming a tax rate of 35.0%) decreased 1.5% for the first six months of 2012 compared to the first six months of 2011. Net interest income is the primary source of income for the Company. Net interest income is the difference between interest income earned on interest-earning assets and interest expense incurred on interest-bearing liabilities. Net interest income is affected by changes in volume and yield on interest-earning assets and interest-bearing liabilities. Interest-earning assets consist of federal funds sold, securities and loans. Interest-bearing liabilities primarily consist of deposits. The net interest margin is the percentage of tax-equivalent net interest income to average earning assets. The Company’s net interest margin (on a fully tax-equivalent basis) was 3.4% and 3.5% for the six months ended June 30, 2012 and 2011, respectively.

Total interest income (on a tax-equivalent basis, assuming a tax rate of 35.0%) decreased 4.7% for the first six months of 2012 compared to the first six months of 2011, primarily due to decreasing yields in the Company’s securities portfolio. Average loan balances increased .1% for the first six months of 2012, and the average yield on the loan portfolio decreased eight basis points. Average securities balances increased 5.4% for the first six months of 2012, and the average yield on the securities portfolio decreased 50 basis points. Management decided to sell securities as market rates declined during the first six months of 2012. A large portion of these securities were sold in order to reduce the Company’s credit risk concentration in the securities portfolio.

Total interest expense decreased 19.8% for the first six months of 2012 compared to the first six months of 2011. Lower interest on deposits, resulting from lower yields on interest-bearing deposits, accounted for this decrease. The average yield on interest-bearing deposits decreased 16 basis points to .6% for the six months ended June 30, 2012, from .8% for the six months ended June 30, 2011. Approximately 67% of time deposits are scheduled to mature within one year.

The following table reflects the impact of changes in volume and interest rates on interest-earning assets and interest-bearing liabilities (on a fully tax-equivalent basis) for the six months ended June 30, 2012 as compared to the same period in 2011 (dollars in thousands):

	Change due to					Total
	Volume		Rate			Change
Interest Income
Securities	$	489	$	(1,834	)	$	(1,345	)
Loans	29		(348		)	(319		)
Total interest income	518		(2,182		)	(1,664		)
Interest Expense
Interest-bearing deposits	41		(1,277		)	(1,236		)
Total interest expense	41		(1,277		)	(1,236		)
Net interest income	$	477	$	(905	)	$	(428	)

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The following table presents an analysis of the Company’s year-to-date average interest-earning assets, demand-noninterest-bearing deposits and interest-bearing liabilities as of the dates indicated (dollars in thousands):

	2012				2011
	June 30		March 31		December 31		September 30		June 30
Federal funds sold	$	286	$	370	$	9,543	$	8,857	$	311
Securities	782,925		753,356		707,974		719,565		742,770
Loans	935,668		918,914		921,757		925,061		934,552
Total interest-earning assets	$	1,718,879	$	1,672,640	$	1,639,274	$	1,653,483	$	1,677,633
Demand-noninterest-bearing deposits	$	159,779	$	156,525	$	174,795	$	174,538	$	172,973
Interest-bearing deposits	1,609,162		1,593,390		1,576,322		1,585,176		1,595,997
Total deposits	$	1,768,941	$	1,749,915	$	1,751,117	$	1,759,714	$	1,768,970
Total interest-bearing liabilities	$	1,611,856	$	1,596,043	$	1,582,482	$	1,592,538	$	1,604,634

Provision for Loan Losses.  A provision for loan losses is recorded when the Company’s evaluation of the general and specific reserve categories of the allowance for loan losses are not deemed sufficient to absorb probable incurred credit losses in the loan portfolio. Provision for loan losses increased $3.3 million for the first six months of 2012 compared to the first six months of 2011, as the Company increased specific reserves on certain impaired loans during the first three months of 2012. This increase in the specific allowance allocations was partially offset by a decline in the general allowance allocations during the same period. A more detailed discussion of the allowance for loan losses is presented in the Allowance for Loan Losses and Asset Quality section of this report.

Noninterest Income.  Total noninterest income decreased 25.0% for the first six months of 2012 compared to the first six months of 2011. The Company experienced a decrease in net realized gains on securities transactions of $2.0 million. Additionally, the Company experienced a decrease in service fees on deposit accounts of $.2 million primarily due to a decrease in the overdraft honor program activity. The Company experienced a decrease in bank-owned life insurance income of $.2 million primarily due to the surrendering of $7.9 million of bank-owned life insurance policies in connection with the termination of a portion of the deferred compensation plan in the second half of 2011. The Company also experienced a decrease in other income of $.5 million primarily due to a loss on the sale of other real estate owned in the 2012 period compared to a gain in the 2011 period.

Noninterest Expense.  Total noninterest expense decreased 1.8% for the first six months of 2012 compared to the first six months of 2011. Other real estate owned expense increased $.2 million primarily due to increased write-downs during the 2012 period. FDIC assessment expense decreased $.8 million primarily due to changes in the assessment calculation. Furniture and equipment expense increased $.1 million primarily due to increased depreciation equipment and data processing expense. Occupancy expense increased $.1 million primarily due to increased rent expense net of rental income. Advertising and promotion increased $.2 million due to increased advertising for the Bank’s 50th anniversary. Professional fees expense decreased $.2 million primarily due to costs associated with the resolution of one large commercial loan relationship incurred in the 2011 period. Loan administration expense increased $.2 million primarily due to increased expenses on one large relationship, along with increased tax payments on collateral securing nonaccrual commercial, commercial real estate and construction and development loans. Other expense decreased $.6 million primarily due to a loss recognized on a letter of credit during the 2011 period.

Income Taxes.  Income tax expense decreased $2.6 million for the first six months of 2012 compared to the first six months of 2011. The effective tax rates for the first six months of 2012 and 2011 were 21.1% and 33.7%, respectively. The decrease was due to the lower pre-tax income and its impact on the ratio of pre-tax income to pre-tax income subject to income taxes.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2012 AND 2011

Net Income.  The Company’s net income decreased $.1 million to $3.7 million for the second quarter of 2012 compared to $3.8 million for the second quarter of 2011. The decrease was primarily due to a decrease in total

38

noninterest income of $1.6 million. This change was significantly offset by a decrease to provision for loan loss expense of $.8 million and a decrease in total noninterest expense of $.6 million. Additionally, net interest income decreased $.1 million and income tax expense decreased $.2 million.

Net Interest Income.  Net interest income (on a fully tax-equivalent basis) increased .2% for the second quarter of 2012 compared to the second quarter of 2011. The Company’s net interest margin (on a fully tax-equivalent basis) was 3.3% and 3.5% for the second quarter of 2012 and 2011, respectively.

Total interest income (on a tax-equivalent basis) decreased 2.9% for the second quarter of 2012 compared to the second quarter of 2011, primarily due to the decreasing yields in the Company’s securities portfolio. Average securities balances increased 7.3% for the second quarter of 2012, and the average yield on the securities portfolio decreased 48 basis points. Average loan balances increased 5.3% for the second quarter of 2012 and the average yield on the loan portfolio decreased 24 basis points.

Total interest expense decreased 18.0% for the second quarter of 2012 compared to the second quarter of 2011. Lower interest on deposits, resulting from lower yields on interest-bearing deposits, accounted for all of the decrease. The average yield on interest-bearing deposits decreased 14 basis points to .6% for the second quarter of 2012, from .7% for the second quarter of 2011.

The following table reflects the impact of changes in volume and interest rates on interest-earning assets and interest-bearing liabilities (on a fully tax-equivalent basis) for the second quarter of 2012 as compared to the same period in 2011 (dollars in thousands):

	Change due to						Total
	Volume			Rate			Change
Interest Income
Federal funds sold	$	(2	)	$	3		$	1
Securities	326			(910		)	(584		)
Loans	616			(541		)	75
Total interest income	940			(1,448		)	(508		)
Interest Expense
Interest-bearing deposits	40			(579		)	(539		)
Total interest expense	40			(579		)	(539		)
Net interest income	$	900		$	(869	)	$	31

39

The following table presents an analysis of the Company’s quarterly average interest-earning assets, demand-noninterest-bearing deposits and interest-bearing liabilities as of the dates indicated (dollars in thousands):

	June 30, 2012		June 30, 2011
Federal funds sold	$	203	$	415
Securities	812,494		757,333
Loans	949,624		901,685
Total interest-earning assets	$	1,762,321	$	1,659,433
Demand-noninterest-bearing deposits	$	163,033	$	173,339
Interest-bearing deposits	1,624,936		1,598,412
Total deposits	$	1,787,969	$	1,771,751
Total interest-bearing liabilities	$	1,627,766	$	1,607,395

Provision for Loan Losses.  Provision for loan losses decreased $.8 million for the second quarter of 2012 compared to the second quarter of 2011. The decrease in the provision for the second quarter of 2012 was driven by a reduction in actual historical loss history, nonaccrual loans, and past due loans related to the commercial and construction and development loan portfolio segments. Nonaccrual commercial loans decreased $5.2 million and nonaccrual construction and development loans decreased $3.1 million during the second quarter of 2012. Past due commercial loans decreased $4.2 million and past due construction and development loans decreased $2.9 million during the second quarter of 2012. A more detailed discussion of the allowance for loan losses is presented in the Allowance for Loan Losses and Asset Quality section of this report.

Noninterest Income.  Total noninterest income decreased 25.0% for the second quarter of 2012 compared to the second quarter of 2011. In the second quarter of 2012, the Company recorded $2.0 million in gains on sales of investment securities compared to $3.6 million in the second quarter of 2011. This decrease accounted for most of the decrease to total noninterest income. Service fees on deposit accounts decreased $.1 million primarily due to decreased fees associated with the overdraft honor program activity. Bank-owned life insurance income increased $.2 million for the second quarter of 2012 compared to the second quarter of 2011. This fluctuation was due to a change in the market value of the underlying investments with specific account assets.

Noninterest Expense.  Total noninterest expense decreased 4.9% for the second quarter of 2012 compared to the second quarter of 2011. Salaries and employee benefits increased $.2 million primarily due to the change in market value of the underlying investments associated with the deferred compensation plans during this period.  Other real estate owned expense decreased $.4 million primarily due to decreased write-downs and professional fees during the 2012 period. FDIC assessment expense decreased $.3 million primarily due to changes in the assessment calculation. Occupancy expense increased $.3 million primarily due to increased rent expense net of rental income. Advertising and promotion increased $.1 million due to increased advertising for the Bank’s 50th anniversary. Other expense decreased $.5 million primarily due to a loss recognized on a letter of credit during the 2011 period.

Income Taxes.  Income tax expense decreased 9.5% for the second quarter of 2012 compared to the second quarter of 2011. The effective tax rates for the second quarter of 2012 and 2011 were 34.1% and 35.8%, respectively. The decrease was primarily due to lower pre-tax income and its impact on the ratio of pre-tax income to pre-tax income subject to income taxes.

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

40

Movements in general market interest rates are a key element in changes in the net interest margin. The Company’s policy is to manage its balance sheet so that fluctuations in the net interest margin are minimized regardless of the level of interest rates, although the net interest margin does vary somewhat due to management’s response to increasing competition from other financial institutions.

The Company measures interest rate sensitivity through a net interest income analysis. The net interest income analysis measures the change in net interest income in the event of hypothetical changes in interest rates. This analysis assesses the risk of changes in net interest income in the event of a sudden and sustained 100 to 200 basis point increase or decrease in market interest rates. This analysis is subject to certain assumptions made by the Company, including the following:

·Balance sheet volume reflects the current balances and does not project future growth or changes. This establishes the base case from which all percentage changes are calculated.

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

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

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

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

June 30, 2012	Amount		Dollar Change			Percentage Change
+200 basis points	$	39,275	$	(15,187	)	(27.9	)%
+100 basis points	46,809		(7,653		)	(14.1	)%
Base	54,462
-100 basis points	55,150		688			1.3	%
-200 basis points	60,339		5,877			10.8	%

December 31, 2011	Amount		Dollar Change			Percentage Change
+200 basis points	$	51,420	$	(2,637	)	(4.9	)%
+100 basis points	50,949		(3,108		)	(5.7	)%
Base	54,057
-100 basis points	48,215		(5,842		)	(10.8	)%
-200 basis points	45,876		(8,181		)	(15.1	)%

In a falling rate environment, the Company is projected to have a decrease in net interest income. However, it is not possible for many of the Company’s deposit rates to fall 100 or 200 basis points due to their current rates already being below 100 basis points at June 30, 2012. The target federal funds rate is currently set by the Federal Reserve at a rate between 0 and 25 basis points. As a result, a 200 basis point decline in overall rates would only have between a 0 and 25 basis point decline in both federal funds and the prime rate. Further, other rates that are currently below 1% or 2% (e.g., U.S. Treasuries and LIBOR) would not fall below 0% with an overall 100 or 200 basis point decrease in rates. Many of the Company’s variable rate loans are set to an index tied to prime, federal funds or LIBOR, and as a result, a further decrease in rates would not have a substantial impact on loan yields. Accordingly, management believes that the analyses resulting from 100 and 200 basis point downward changes are not meaningful in light of current interest rate levels.

41

ITEM 4.      CONTROLS AND PROCEDURES

In connection with the restatement of the consolidated financial statements described in the Quarterly Report on Form 10-Q/A for the period ended March 31, 2012, a reevaluation of the effectiveness of the Company’s disclosure controls and procedures was performed by management. Based on that reevaluation, which occurred in July 2012, the Company concluded that controls and procedures were not effective as of March 31, 2012 due to the estimation of the allowance for loan losses and the assessment of specific reserve allocations on impaired loans at that date. As such, the Company also concluded that the controls and procedures were not effective as of June 30, 2012. The objectives of such evaluation and the Company’s disclosure controls and procedures are to ensure that information required to be disclosed by the Company in the reports it files is recorded summarized, and reported, within the time periods specified in the SEC’s rules and forms.

Although the Bank evaluates the adequacy of the allowance for loan losses based on specific information known to management at a given time, bank regulators, based on the timing of their normal examination process and their independent judgment, may require additions to the allowance for loan losses. In addition, it is extremely difficult to precisely estimate and measure the amount of losses that may be inherent in the loan portfolio at a point in time. Management attempts to accurately quantify the necessary allowance and related provision for loan losses based on information available at the time of filing, but there can be no assurance that the modeling process and related assumptions used within the existing allowance for loan loss methodology will successfully measure all losses inherent in the portfolio at a given time. Despite these factors and limitations, based on regulatory input, management reassessed certain factors and assumptions employed in the allowance for loan losses estimation and determined the need for additional provision expense to increase the allowance for loan losses at March 31, 2012. As a result, management amended its Call Report for the quarter ended March 31, 2012 and accordingly amended its Quarterly Report on Form 10-Q for the period ended March 31, 2012.

Whenever a public company revises previously issued financial statements, the facts and circumstances of such a restatement must also be evaluated in the context of internal control over financial reporting. Generally, a restatement is viewed as a strong indicator of a material weakness in internal control over financial reporting.

A material weakness in internal control over financial reporting is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s financial statements will not be prevented or detected in a timely basis by the company’s management.

As such, management has determined that the restatement, which occurred in July 2012, resulted in the identification of a material weakness in internal control at March 31, 2012 and subsequently, at June 30, 2012. The material weakness is currently in the process of being remediated and is expected to be fully remediated in 2012. Such remediation will entail full incorporation of all regulatory requirements in the computations and internal control processes related to the estimation of the allowance for loan loss and the evaluation and accounting for impaired loans.

Management is in the process of developing and enhancing the documentation, assessment and approval process of estimating fair value of collateral for impaired credits. The planned enhancements include expanding documentation to corroborate fair value sources and expanding documentation of the analyses. Testing of the remediation is planned for the third quarter of 2012.

Other than previously described, there have been no significant changes to the Company’s internal control over financial reporting during the period ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

42

PART II

ITEM 1.      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 1A.  RISK FACTORS

Except as set forth below, there have been no material changes in the risk factors applicable to the Company from those disclosed in the Company’s 2011 Annual Report on Form 10-K.

The Company is in the process of deregistering its common stock with the Securities and Exchange Commission (“SEC”), and the Company expects its SEC reporting requirements to be eventually eliminated as a result of this process.

On July 13, 2012, the Company filed a Form 15 with the SEC to deregister the Company’s common stock under Section 12(g)(4) of the Securities Exchange Act of 1934, as amended by the Jumpstart Our Business Startups Act (as amended, the “Exchange Act”).  The Section 12(g) deregistration will become effective 90 days after the July 13, 2012 filing date, or such shorter period as determined by the SEC.  Based on the filing date of the Form 15, the Company does not expect to have any further reporting obligations under the Exchange Act after October 11, 2012.  As a result of this process, the holders of the Company’s securities may have reduced access to information about the Company, including its financial condition and results of operations, and they will be unable to rely on the protections afforded by certain requirements that the SEC imposes on public companies.

ITEM 2.      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.      MINE SAFETY DISCLOSURES

Not applicable

ITEM 5.      OTHER INFORMATION

None

ITEM 6.      EXHIBITS

The exhibits required by Item 601 of Regulation S-K are included with this Form 10-Q and are listed on the “Index to Exhibits” immediately following the Signatures.

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SIGNATURES

Pursuant to the requirements 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)
Date: August 9, 2012
	/s/ Kevin J. Acker
	KEVIN J. ACKER
	CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
	/s/ Duane G. Debs
	DUANE G. DEBS
	PRESIDENT AND CHIEF FINANCIAL OFFICER

44

INDEX TO EXHIBITS

Exhibit
Number	Description
31.1	Certification of Kevin J. Acker, Chairman of the Board 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 Rule15d-14(a).
32.1	Certification of Kevin J. Acker, Chairman of the Board 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.
101*	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets at June 30, 2012 and December 31, 2011; (ii) Condensed Consolidated Statements of Income for the three and six months ended June 30, 2012 and 2011; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2012 and 2011; (iv) Condensed Consolidated Statements of Changes in Shareholders’ Equity for the six months ended June 30, 2012 and 2011; (v) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011; and (vi) Notes to Condensed Consolidated Financial Statements.

* As provided in Rule 406T of Regulation S-T, this information shall not be deemed “filed” for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, or otherwise subject to liability under those sections.

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