Westbury Bancorp (WBBW) 10-Q 2013 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period ended June 30, 2013

Or

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

For transition period from              to             

Commission File Number 001-35871

Westbury Bancorp, Inc.

(Exact Name of Registrant as Specified in Charter)

Maryland	46-1834307
(State or Other Jurisdiction of Incorporation)	(I.R.S Employer Identification Number)
200 South Main Street, West Bend, Wisconsin	53095
(Address of Principal Executive Officers)	(Zip Code)

(262) 334-5563

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report)

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  o  No  x.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

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.

There were 5,142,541 shares of Common Stock, par value $.01 per share, outstanding as of August 14, 2013.

WESTBURY BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

PART I  FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS	2
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	52
ITEM 4. CONTROLS AND PROCEDURES	52
PART II  OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	52
ITEM 1A. RISK FACTORS	52
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	53
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	53
ITEM 4. MINE SAFETY DISCLOSURES	53
ITEM 5. OTHER INFORMATION	53
ITEM 6. EXHIBITS	53
INDEX TO EXHIBITS	55

PART I

ITEM 1.FINANCIAL STATEMENTS

Westbury Bancorp, Inc. and Subsidiary

Consolidated Balance Sheets

June 30, 2013 and September 30, 2012

(Unaudited)

(In Thousands, except share data)

	June 30,			September 30,
	2013			2012
Assets
Cash and due from banks	$	33,910		$	22,688
Interest-bearing deposits	34,033			10,453
Cash and cash equivalents	67,943			33,141
Securities available-for-sale	97,120			64,532
Loans held for sale, at lower of cost or market	710			3,022
Loans, net of allowance for loan losses of $4,563 and $6,690 at June 30 and September 30, respectively	338,515			375,899
Federal Home Loan Bank stock, at cost	2,670			2,670
Foreclosed real estate	1,727			2,728
Real estate held for investment	6,224			8,451
Office properties and equipment, net	12,668			13,290
Cash surrender value of life insurance	12,255			11,940
Mortgage servicing rights	1,834			1,893
Prepaid FDIC assessment	177			1,139
Deferred tax asset	4,920			3,974
Other assets	3,756			3,787
Total assets	$	550,519		$	526,466
Liabilities and Stockholders’ Equity
Liabilities
Deposits	$	448,171		$	466,758
Notes payable	—			1,254
Advance payments by borrowers for property taxes and insurance	3,934			6,670
Other liabilities	7,924			4,920
Total liabilities	460,029			479,602
Stockholders’ Equity
Preferred stock $0.01 par value, 50,000,000 shares authorized; none issued or outstanding	—			—
Common stock $0.01 par value, 100,000,000 shares authorized; 5,142,541 shares issued and outstanding at June 30, 2013	51			—
Additional paid-in capital	48,800			—
Retained earnings	46,408			45,687
Unearned Employee Stock Ownership Plan (ESOP) shares	(4,114		)	—
Accumulated other comprehensive income (loss)	(655		)	1,177
Total stockholders’ equity	90,490			46,864
Total liabilities and stockholders’ equity	$	550,519		$	526,466

See Notes to Unaudited Consolidated Financial Statements.

2

Westbury Bancorp, Inc. and Subsidiary

Consolidated Statements of Operations

Three Months Ended June 30, 2013 and 2012 and

Nine Months Ended June 30, 2013 and 2012

(Unaudited)

(In Thousands, except per share data)

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Interest and dividend income:
Loans	$	4,247		$	4,941		$	13,307		$	15,335
Investments - nontaxable	9			6			18			42
Investments - taxable	347			455			972			1,435
Interest bearing deposits	30			16			68			65
Total interest and dividend income	4,633			5,418			14,365			16,877
Interest expense:
Deposits	488			723			1,623			2,530
Advances from the Federal Home Loan Bank	—			—			—			83
Notes payable	2			24			46			113
Total interest expense	490			747			1,669			2,726
Net interest income before provision for loan losses	4,143			4,671			12,696			14,151
Provision for loan losses	150			1,290			1,300			5,193
Net interest income after provision for loan losses	3,993			3,381			11,396			8,958
Noninterest income:
Service fees on deposit accounts	1,026			1,252			3,169			3,679
Gain on sales of loans, net	381			525			1,854			1,825
Servicing fee income, net of amortization and impairment	68			(36		)	148			(878		)
Insurance and securities sales commissions	210			245			647			690
Gain on sales of securities	—			167			232			443
Gain (loss) on sales of branches and other assets	—			(31		)	(22		)	217
Increase in cash surrender value of life insurance	102			101			315			315
Rental income from real estate operations	152			208			467			757
Other income	55			169			351			508
Total noninterest income	1,994			2,600			7,161			7,556
Noninterest expenses:
Salaries and employee benefits	2,269			2,059			6,248			7,607
Commissions	166			318			602			1,162
Occupancy	428			472			1,306			1,576
Furniture and equipment	141			166			403			503
Data processing	826			825			2,414			2,398
Advertising	82			57			240			198
Real estate held for investment	133			175			433			635
Net loss from operations and sale of foreclosed real estate	330			892			840			2,475
FDIC insurance premiums	178			270			626			790
Other expenses	2,220			954			4,495			2,798
Total noninterest expenses	6,773			6,188			17,607			20,142
Income (loss) before income tax expense	(786		)	(207		)	950			(3,628		)
Income tax expense (benefit)	(340		)	(129		)	229			68
Net income (loss)	$	(446	)	$	(78	)	$	721		$	(3,696	)
Earnings (loss) per share:
Basic	$	(0.10	)	—			$	(0.10	)	—
Diluted	$	(0.10	)	—			$	(0.10	)	—

See Notes to Unaudited Consolidated Financial Statements.

3

Westbury Bancorp, Inc. and Subsidiary

Consolidated Statements of Comprehensive (Loss)

Three Months Ended June 30, 2013 and 2012 and

Nine Months Ended June 30, 2013 and 2012

(Unaudited)

(In Thousands, except per share data)

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net income (loss)	$	(446	)	$	(78	)	$	721		$	(3,696	)
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on available-for-sale securities	(2,258		)	124			(2,758		)	444
Reclassification adjustment for realized gains included in net income	—			(167		)	(232		)	(443		)
Other comprehensive income (loss), before tax	(2,258		)	(43		)	(2,990		)	1
Income tax benefit (expense) related to items of other comprehensive income	872			16			1,158			—
Other comprehensive income (loss), net of tax	(1,386		)	(27		)	(1,832		)	1
Comprehensive (loss)	$	(1,832	)	$	(105	)	$	(1,111	)	$	(3,695	)

See Notes to Unaudited Consolidated Financial Statements.

4

Westbury Bancorp, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders’ Equity

Nine Months Ended June 30, 2013 and 2012

(Unaudited)

(In Thousands, except per share data)

													Accumulated
					Additional					Unearned			Other
	Preferred		Common		Paid In		Retained			ESOP			Comprehensive
	Stock		Stock		Capital		Earnings			Shares			Income (Loss)			Total
Balance, September 30, 2011	$	—	$	—	$	—	$	49,387		$	—		$	1,042		$	50,429
Net loss	—		—		—		(3,696		)	—			—			(3,696		)
Other comprehensive income, net of tax	—		—		—		—			—			1			1
Balance, June 30, 2012	$	—	$	—	$	—	$	45,691		$	—		$	1,043		$	46,734
Balance, September 30, 2012	$	—	$	—	$	—	$	45,687		$	—		$	1,177		$	46,864
Stock conversion proceeds, net	—		51		48,800		—			—			—			48,851
Net income	—		—		—		721			—			—			721
Purchase of 411,403 shares by ESOP	—		—		—		—			(4,114		)	—			(4,114		)
Other comprehensive loss, net of tax	—		—		—		—			—			(1,832		)	(1,832		)
Balance, June 30, 2013	$	—	$	51	$	48,800	$	46,408		$	(4,114	)	$	(655	)	$	90,490

See Notes to Unaudited Consolidated Financial Statements.

5

Westbury Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows

Nine Months Ended June 30, 2013 and 2012

(Unaudited)

(In Thousands, except per share data)

	Nine Months Ended
	June 30,
	2013			2012
Cash Flows From Operating Activities
Net income (loss)	$	721		$	(3,696	)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Provision for loan losses	1,300			5,193
Depreciation and amortization	599			1,330
Net amortization of securities premiums and discounts	456			880
Amortization and impairment of mortgage servicing rights	360			1,381
Capitalization of mortgage servicing rights	(301		)	(582		)
Gain on sales of available-for-sale securities	(232		)	(443		)
(Gain) loss on sales of branches and other assets	22			(217		)
(Gain) loss on sale of foreclosed real estate	(31		)	415
Write-down of foreclosed real estate	355			705
Loans originated for sale	(84,539		)	(113,269		)
Proceeds from sale of loans	88,705			115,527
Gain on sale of loans, net	(1,854		)	(1,825		)
Deferred income taxes	212			(1,017		)
Increase in cash surrender value of life insurance	(315		)	(315		)
Net change in:
Prepaid FDIC insurance assessment	962			763
Other assets	31			(241		)
Other liabilities and advance payments by borrowers for property taxes and insurance	268			(3,363		)
Net cash provided by operating activities	6,719			1,226
Cash Flows From Investing Activities
Purchases of securities available-for-sale	(57,274		)	(21,105		)
Proceeds from sales of securities available-for-sale	11,584			33,314
Proceeds from maturities, prepayments, and calls of securities available-for-sale	9,888			20,648
Sale of real estate held for investment	2,205			—
Net change in FHLB stock	—			561
Net decrease in loans	33,973			21,404
Proceeds from sales of office properties and equipment	237			5,272
Purchases of office properties and equipment	(214		)	(671		)
Proceeds from sales of foreclosed real estate	2,788			2,845
Net cash provided by investing activities	3,187			62,268
Cash Flows From Financing Activities
Net decrease in deposits	(18,587		)	(55,938		)
Repayment of advances from the Federal Home Loan Bank	—			(6,000		)
Proceeds from issuance of common stock, net of costs	48,851			—
Unearned employee stock ownership (ESOP)	(4,114		)	—
Net change in notes payable	(1,254		)	(2,223		)
Net cash provided by (used in) financing activities	24,896			(64,161		)
Net increase (decrease) in cash and cash equivalents	34,802			(667		)
Cash and cash equivalents at beginning	33,141			45,721
Cash and cash equivalents at end	$	67,943		$	45,054
Supplemental Disclosures of Cash Flow Information
Interest paid (including amounts credited to deposits)	$	1,678		$	2,796
Supplemental Schedules of Noncash Investing Activities
Loans receivable transferred to foreclosed real estate	$	2,111		$	4,681

See Notes to Unaudited Consolidated Financial Statements.

6

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 1.Basis of Presentation

The accompanying unaudited consolidated financial statements of Westbury Bancorp, Inc. and its wholly-owned subsidiary, Westbury Bank, (collectively, the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Estimates used in the preparation of the financial statements are based on various factors including the current interest rate environment and the general strength of the local economy.  Changes in the overall interest rate environment can significantly affect the Company’s net interest income and the value of its recorded assets and liabilities.  Actual results could differ from those estimates used in the preparation of the financial statements.  Certain prior period amounts have been reclassified to conform to current period presentation.  These reclassifications did not result in any changes to previously reported net income or stockholders’ equity.

In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the Company’s financial position as of June 30, 2013 and September 30, 2012 and the results of operations and cash flows for the interim periods ended June 30, 2013 and 2012.  All interim amounts have not been audited, and the results of operations for the interim periods herein are not necessarily indicative of the results of operations to be expected for the year.  These financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the nine months ended September 30, 2012 filed as part of Westbury Bancorp, Inc.’s Prospectus dated February 11, 2013, as filed with the Securities and Exchange Commission as of September 30, 2012, pursuant to Securities Act Rule 424(b)(3) on February 21, 2013.

Note 2.Plan of Conversion and Reorganization and Change in Corporate Form

On September 5, 2012, the Board of Directors of WBSB Bancorp, MHC (“MHC”) adopted a plan of conversion and reorganization (“Plan”).  The Plan was approved by the Board of Governors of the Federal Reserve System.  The Plan was approved by the affirmative vote of a majority of the total votes eligible to be cast by the voting members of the MHC at a special meeting held on April 1, 2013.  The Plan provided for the reorganization of the MHC from a federally chartered mutual holding company into a  stock holding company, Westbury Bancorp, Inc. (the “Company”) and an offering by the Company of shares of its common stock to eligible depositors of Westbury Bank (the “Bank”) and the public.  The Company is incorporated under the laws of the State of Maryland and owns all of the outstanding common stock of the Bank. The reorganization and conversion was completed with the sale of 5,091,625 shares on April 9, 2013 and shares of the Company began trading on April 10, 2013.

In addition, in conjunction with the reorganization and conversion in April 2013 the Company contributed a total of $1,000 (consisting of 50,916 shares of common stock and $491 in cash) to a charitable foundation that the Bank has established.  The contribution is included in Other expenses in the Consolidated Statements of Operations for the three months ended June 30, 2013.  The foundation was organized as Westbury Bank Charitable Foundation.

The costs of reorganization and issuing the common stock have been deducted from the sales proceeds of the offering.  The Company recognized $2,574 in reorganization and stock issuance costs as of June 30, 2013.

7

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 2.Plan of Conversion and Reorganization and Change in Corporate Form (Continued)

In accordance with federal regulations, at the time of the reorganization, the Company substantially restricted retained earnings by establishing a liquidation account and the Bank established a parallel liquidation account.  The liquidation account will be maintained for the benefit of eligible account holders who continue to maintain their accounts at the Bank after the reorganization.  The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account. In the event of a complete liquidation of the Bank, and only in such event, each eligible account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held.  The Bank may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount.  The reorganization will be accounted for as a change in corporate form with the historic basis of the Bank’s assets, liabilities and equity unchanged as a result.

Note 3.Recent Accounting Developments

In January 2013, the FASB issued ASU 2013-01, Balance Sheet (Topic 210)—Disclosures about Offsetting Assets and Liabilities. ASU 2013-01 amended prior guidance to require an entity to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The instruments and transactions would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. This new authoritative guidance was further amended to clarify the scope of offsetting disclosures.  The amendments are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of 2013-01 is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220)—Presentation of Comprehensive Income. ASU 2013-02 amended prior guidance to improve the reporting of reclassifications out of accumulated other comprehensive income by requiring an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income if the amount reclassified is required under U.S. GAAP.  The amendments are effective prospectively for reporting periods beginning after December 15, 2012 and have been adopted in these consolidated financial statements.

In July 2013, the FASB issued ASU 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes.  ASU 2013-10 amended prior guidance to permit the Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge accounting purposes, in addition to U.S. government treasury obligation rates and London Interbank Offered Rate swap rate. The amendments also remove the restriction on using different benchmark rates for similar hedges. The new authoritative guidance will be effective prospectively for new and redesignated hedging relationships entered into on or after July 17, 2013 and is not expected to have an impact on the Company’s statements of operations and financial condition.

8

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 3.Recent Accounting Developments (Continued)

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.  ASU 2013-11 amended prior guidance to include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The new authoritative guidance will be for reporting periods after January 1, 2014 and is not expected to have an impact on the Company’s statements of operations and financial condition.

9

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 4.Earnings Per Share

Earnings (loss) per common share is computed using the two-class method. Basic earnings (loss) per common share is computed by dividing net income by the weighted-average number of common shares outstanding, including unallocated and committed-to-be-released ESOP shares, during the applicable period. Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method.

The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings (loss) per common share.

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2013 **			2012	2013 **			2012
Net income (loss)	$	(486	)	*	$	(486	)	*
Basic potential common shares:
Weighted average shares outstanding	5,142,541			*	5,142,541			*
Weighted average unallocated Employee Stock Ownership Plan shares	(411,403		)	*	(411,403		)	*
Basic weighted average shares outstanding	4,731,138			*	4,731,138			*
Dilutive potential common shares	—			*	—			*
Diluted weighted average shares outstanding	4,731,138			*	4,731,138			*
Basic earnings per share	$	(0.10	)	*	$	(0.10	)	*
Diluted earnings per share	$	(0.10	)	*	$	(0.10	)	*

*  Earnings per share for the three and nine months ended June 30, 2012 is not applicable since the public offering was completed on April 9, 2013.

**  Earnings per share for the three and nine months ended June 30, 2013 is adjusted to include the loss attributed to the period subsequent to the initial public offering for the common shares issued.

10

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 5.Employee Stock Ownership Plan

On February 20, 2013, the Company adopted an employee stock ownership plan (“ESOP”) for the benefit of substantially all employees.  The ESOP borrowed $4,114,030 from the Company and used those funds to acquire 411,403 shares of the Company’s stock at a price of $10.00 per share.

Shares issued to the ESOP are allocated to ESOP participants based on principal and interest repayments made by the ESOP on the loan.  The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Bank’s discretionary contributions to the ESOP and earnings on ESOP assets.

The $4,114,030 loan for the ESOP purchase was borrowed from the Company and requires annual payments to be made by the ESOP of approximately $280,590, including principal and interest at a rate of 3.25%.

As shares are released from collateral, the Company will report compensation expense equal to the current market price of the shares and the shares will become outstanding for earnings-per-share (EPS) computations.  Dividends on allocated ESOP shares reduce retained earnings; dividends on unearned ESOP shares reduce accrued interest.

Note 6.Securities Available-for-Sale

The amortized costs and fair values of securities available-for-sale are summarized as follows:

	June 30, 2013
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
U.S. Government and agency securities	$	7,905	$	7	$	(262	)	$	7,650
U.S. Government agency residential mortgage-backed securities	47,262		311		(702		)	46,871
U.S. Government agency collateralized mortgage obligations	8,490		44		(130		)	8,404
Municipal securities	34,515		372		(692		)	34,195
	$	98,172	$	734	$	(1,786	)	$	97,120
	September 30, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
U.S. Government and agency securities	$	2,994	$	17	$	(2	)	$	3,009
U.S. Government agency residential mortgage-backed securities	31,349		1,161		—			32,510
U.S. Government agency collateralized mortgage obligations	8,709		93		(57		)	8,745
Municipal securities	19,542		790		(64		)	20,268
	$	62,594	$	2,061	$	(123	)	$	64,532

11

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 6.Securities Available-for-Sale (Continued)

The amortized cost and fair value of securities available-for-sale, by contractual maturity at June 30, 2013 are shown in the following table.  Actual maturities differ from contractual maturities for mortgage-backed securities because the mortgages underlying the securities may be called or repaid without penalty.  Therefore, these securities are not presented in the maturity categories in the table below.

	June 30, 2013
	Amortized Cost		Fair Value
Due in one year or less	$	265	$	265
Due after one year through five years	13,842		13,885
Due after five years through ten years	22,075		21,745
Due after ten years	6,238		5,950
U.S. Government agency collateralized mortgage obligations	8,490		8,404
U.S. Government agency residential mortgage-backed securities	47,262		46,871
	$	98,172	$	97,120

Proceeds from sales of securities available-for-sale during the three months ended June 30, 2013 and 2012, were $0 and $11,288, respectively.  Gross realized gains, during the three months ended June 30, 2013 and 2012, on these sales amounted to $0 and $190, respectively.  Gross realized losses on these sales were $0 and $23, during the three months ended June 30, 2013 and 2012, respectively.

Proceeds from sales of securities available-for-sale during the nine months ended June 30, 2013 and 2012, were $11,584 and $33,314, respectively.  Gross realized gains, during the nine months ended June 30, 2013 and 2012, on these sales amounted to $256 and $505, respectively.  Gross realized losses on these sales were $24 and $62, during the nine months ended June 30, 2013 and 2012, respectively.

Securities with carrying values of $0 and $5,349 at June 30, 2013 and September 30, 2012, respectively, were pledged to secure treasury, tax, and loan deposits and other purposes required or permitted by law.

12

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 6.Securities Available-for-Sale (Continued)

Information pertaining to securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are summarized as follows:

	June 30, 2013
	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
U.S. Government and agency securities	$	6,648	$	(262	)	$	—	$	—		$	6,648	$	(262	)
U.S. Government agency residential mortgage-backed securities	31,127		(702		)	—		—			31,127		(702		)
U.S. Government agency collateralized mortgage obligations	4,044		(115		)	394		(15		)	4,438		(130		)
Municipal securities	18,471		(601		)	1,760		(91		)	20,231		(692		)
	$	60,290	$	(1,680	)	$	2,154	$	(106	)	$	62,444	$	(1,786	)

	September 30, 2012
	Less than 12 Months					12 Months or Longer				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Loss			Value		Loss		Value		Loss
U.S. Government and agency securities	$	998	$	(2	)	$	—	$	—	$	998	$	(2	)
U.S. Government agency collateralized mortgage obligations	2,932		(57		)	—		—		2,932		(57		)
Municipal securities	2,100		(64		)	—		—		2,100		(64		)
	$	6,030	$	(123	)	$	—	$	—	$	6,030	$	(123	)

At June 30, 2013, the investment portfolio included one hundred sixteen securities available-for-sale which were in an unrealized loss position. These securities are considered to be acceptable credit risks.  Based upon an evaluation of the available evidence, including recent changes in market rates, credit rating information and information obtained from regulatory filings, management believes the decline in fair value for these securities is temporary.  The Company does not have any current requirement to sell and does not intend to sell its investment in the issuer prior to any anticipated recovery in fair value.

At September 30, 2012, the investment portfolio included sixteen available-for-sale securities which were in an unrealized loss position.

13

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans

A summary of the balances of loans follows:

	June 30,		September 30,
	2013		2012
Real Estate:
Single Family	$	135,373	$	153,090
Multifamily	45,688		38,491
Commercial real estate	110,229		132,782
Construction and land development	8,791		8,975
Total Real Estate	300,081		333,338
Commercial Business	21,869		22,938
Consumer:
Home equity lines of credit	14,957		19,356
Education	5,349		5,709
Other	879		1,255
Total Consumer	21,185		26,320
Total Loans	343,135		382,596
Less:
Net Deferred Loan Fees	57		7
Allowance for Loan Losses	4,563		6,690
Net Loans	$	338,515	$	375,899

14

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

The following tables present the contractual aging of the recorded investment in past due loans by class of loans as of June 30, 2013 and September 30, 2012:

							Loans Past
			30-59 Days		60-89 Days		Due 90 Days
June 30, 2013	Current		Past Due		Past Due		or More		Total
Single family	$	130,827	$	1,530	$	739	$	2,277	$	135,373
Multifamily	45,688		—		—		—		45,688
Commercial real estate	109,160		—		—		1,069		110,229
Construction and land development	8,740		51		—		—		8,791
Commercial business	21,836		—		33		—		21,869
Consumer and other:
Home equity lines of credit	14,341		203		—		413		14,957
Education	4,947		70		40		292		5,349
Other	869		3		2		5		879
	$	336,408	$	1,857	$	814	$	4,056	$	343,135

							Loans Past
			30-59 Days		60-89 Days		Due 90 Days
September 30, 2012	Current		Past Due		Past Due		or More		Total
Single family	$	147,197	$	1,747	$	1,112	$	3,034	$	153,090
Multifamily	38,491		—		—		—		38,491
Commercial real estate	130,237		—		169		2,376		132,782
Construction and land development	8,814		53		—		108		8,975
Commercial business	22,785		153		—		—		22,938
Consumer and other:
Home equity lines of credit	18,367		453		248		288		19,356
Education	5,449		61		85		114		5,709
Other	1,236		5		5		9		1,255
	$	372,576	$	2,472	$	1,619	$	5,929	$	382,596

There were no loans past due ninety days or more still accruing interest as of June 30, 2013 and September 30, 2012.

15

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

The following table presents the recorded investment in nonaccrual loans by class of loans as of June 30, 2013 and September 30, 2012:

	June 30,		September 30,
	2013		2012
Single family	$	3,223	$	4,610
Multifamily	2,659		2,789
Commercial real estate	1,105		2,376
Construction and land development	—		108
Commercial business	—		—
Consumer and other:
Home equity lines of credit	433		310
Education	331		199
Other	5		45
	$	7,756	$	10,437

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt and comply with various terms of their loan agreements.  The Company considers current financial information, historical payment experience, credit documentation, public information and current economic trends.  Generally, all sizeable credits receive a financial review no less than annually to monitor and adjust, if necessary, the credit’s risk profile.  Credits classified as watch and special mention generally receive a review more frequently than annually.

The Company categorizes loans into the following risk categories based on relevant information about the ability of borrowers to service their debt:

Pass — A pass asset is well protected by the current worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less costs to acquire and sell in a timely manner, of any underlying collateral.

Watch — A watch asset has potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.  Watch assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Special Mention — A special mention asset has characteristics of deterioration in quality exhibited by any number of well-defined weaknesses requiring significant corrective action.  The repayment ability of the borrower has not been validated, or has become marginal or weak and the loan may have exhibited some overdue payments or payment extensions and/or renewals.

Substandard — A substandard asset is an asset with a well-defined weakness that jeopardizes repayment in whole or in part, of the debt.  These credits are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged.  These assets are characterized by the distinct possibility that the Company will or has sustained some loss of principal and/or interest if the deficiencies are not corrected.

16

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

Doubtful — A doubtful asset is an asset that has all the weaknesses inherent in the substandard classification 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.  These credits have a high probability for loss, yet because certain important and reasonably specific pending factors may work toward the strengthening of the asset, its classification of loss is deferred until its more exact status can be determined.

Homogeneous loan types are assessed for credit quality based on the contractual aging status of the loan and payment activity.  In certain cases, based upon payment performance, the loan being related with another commercial type loan or for other reasons, a loan may be categorized into one of the risk categories noted above, unless such loan carries private mortgage insurance (PMI).  Such assessment is completed at the end of each reporting period.

The following tables present the risk category of loans evaluated by internal asset classification based on the most recent analysis performed and the contractual aging as of June 30, 2013 and September 30, 2012:

June 30, 2013	Pass		Watch		Special Mention		Substandard		Doubtful		Total
Single family	$	130,055	$	458	$	122	$	4,738	$	—	$	135,373
Multifamily	39,272		2,664		918		2,834		—		45,688
Commercial real estate	98,846		4,386		2,565		4,432		—		110,229
Construction and land development	8,431		168		—		192		—		8,791
Commercial business	17,586		2,520		974		789		—		21,869
Consumer and other:
Home equity lines of credit	14,513		—		—		444		—		14,957
Education	5,349		—		—		—		—		5,349
Other	874		—		—		5		—		879
Total	$	314,926	$	10,196	$	4,579	$	13,434	$	—	$	343,135

September 30, 2012	Pass		Watch		Special Mention		Substandard		Doubtful		Total
Single family	$	146,061	$	470	$	806	$	5,753	$	—	$	153,090
Multifamily	29,948		5,208		—		3,335		—		38,491
Commercial real estate	114,755		5,246		1,795		10,986		—		132,782
Construction and land development	7,534		708		177		556		—		8,975
Commercial business	20,925		280		780		953		—		22,938
Consumer and other:
Home equity lines of credit	18,541		98		—		717		—		19,356
Education	5,709		—		—		—		—		5,709
Other	1,210		—		—		45		—		1,255
	$	344,683	$	12,010	$	3,558	$	22,345	$	—	$	382,596

17

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

The following tables provide additional detail of the activity in the allowance for loan losses, by portfolio segment, for the three months ended June 30, 2013 and 2012:

Three Months Ended							Commercial			Construction and			Commercial			Consumer
June 30, 2013	Single Family			Multifamily			Real Estate			Land Development			Business			and Other			Total
Allowance for loan losses:
Beginning balance	$	1,834		$	501		$	1,894		$	490		$	601		$	60		$	5,380
Provision for loan losses	408			(172		)	546			(284		)	(323		)	(25		)	150
Loans charged-off	(425		)	—			(595		)	—			—			—			(1,020		)
Recoveries	37			1			1			—			5			9			53
Ending balance	$	1,854		$	330		$	1,846		$	206		$	283		$	44		$	4,563
Period-ended amount allocated for:
Individually evaluated for impairment	$	316		$	—		$	17		$	—		$	—		$	—		$	333
Collectively evaluated for impairment	1,538			330			1,829			206			283			44			4,230
Ending Balance	$	1,854		$	330		$	1,846		$	206		$	283		$	44		$	4,563
Loans:
Individually evaluated for impairment	$	3,204		$	2,659		$	1,288		$	192		$	—		$	145		$	7,488
Collectively evaluated for impairment	132,169			43,029			108,941			8,599			21,869			21,040			335,647
Ending Balance	$	135,373		$	45,688		$	110,229		$	8,791		$	21,869		$	21,185		$	343,135

Three Months Ended							Commercial			Construction and			Commercial			Consumer
June 30, 2012	Single Family			Multifamily			Real Estate			Land Development			Business			and Other			Total
Allowance for loan losses:
Beginning balance	$	1,605		$	896		$	3,291		$	734		$	926		$	17		$	7,469
Provision for loan losses	(199		)	693			640			(80		)	(122		)	358			1,290
Loans charged-off	(59		)	(436		)	(1,107		)	(482		)	(236		)	(260		)	(2,580		)
Recoveries	6			—			3			—			8			2			19
Ending balance	$	1,353		$	1,153		$	2,827		$	172		$	576		$	117		$	6,198
Period-ended amount allocated for:
Individually evaluated for impairment	$	365		$	209		$	333		$	—		$	—		$	—		$	907
Collectively evaluated for impairment	988			944			2,494			172			576			117			5,291
Ending Balance	$	1,353		$	1,153		$	2,827		$	172		$	576		$	117		$	6,198
Loans:
Individually evaluated for impairment	$	1,924		$	4,410		$	2,189		$	251		$	—		$	60		$	8,834
Collectively evaluated for impairment	157,108			35,865			125,844			14,222			20,464			26,802			$	380,305
Ending Balance	$	159,032		$	40,275		$	128,033		$	14,473		$	20,464		$	26,862		$	389,139

18

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

The following tables provide additional detail of the activity in the allowance for loan losses, by portfolio segment, for the nine months ended June 30, 2013 and 2012:

Nine Months Ended							Commercial			Construction and			Commercial			Consumer
June 30, 2013	Single Family			Multifamily			Real Estate			Land Development			Business			and Other			Total
Allowance for loan losses:
Beginning balance	$	1,390		$	712		$	3,249		$	293		$	810		$	236		$	6,690
Provision for loan losses	2,030			(383		)	172			111			(454		)	(176		)	1,300
Loans charged-off	(1,603		)	—			(1,593		)	(198		)	(99		)	(28		)	(3,521		)
Recoveries	37			1			18			—			26			12			94
Ending balance	$	1,854		$	330		$	1,846		$	206		$	283		$	44		$	4,563
Period-ended amount allocated for:
Individually evaluated for impairment	$	316		$	—		$	17		$	—		$	—		$	—		$	333
Collectively evaluated for impairment	1,538			330			1,829			206			283			44			4,230
Ending Balance	$	1,854		$	330		$	1,846		$	206		$	283		$	44		$	4,563
Loans:
Individually evaluated for impairment	$	3,204		$	2,659		$	1,288		$	192		$	—		$	145		$	7,488
Collectively evaluated for impairment	132,169			43,029			108,941			8,599			21,869			21,040			335,647
Ending Balance	$	135,373		$	45,688		$	110,229		$	8,791		$	21,869		$	21,185		$	343,135

Nine Months Ended							Commercial			Construction and			Commercial			Consumer
June 30, 2012	Single Family			Multifamily			Real Estate			Land Development			Business			and Other			Total
Allowance for loan losses:
Beginning balance	$	1,440		$	1,009		$	3,367		$	251		$	1,095		$	50		$	7,212
Provision for loan losses	429			1,659			1,510			560			556			479			5,193
Loans charged-off	(538		)	(1,555		)	(2,134		)	(639		)	(1,124		)	(495		)	(6,485		)
Recoveries	22			40			84			—			49			83			278
Ending balance	$	1,353		$	1,153		$	2,827		$	172		$	576		$	117		$	6,198
Period-ended amount allocated for:
Individually evaluated for impairment	$	365		$	209		$	333		$	—		$	—		$	—		$	907
Collectively evaluated for impairment	988			944			2,494			172			576			117			5,291
Ending Balance	$	1,353		$	1,153		$	2,827		$	172		$	576		$	117		$	6,198
Loans:
Individually evaluated for impairment	$	1,924		$	4,410		$	2,189		$	251		$	—		$	60		$	8,834
Collectively evaluated for impairment	157,108			35,865			125,844			14,222			20,464			26,802			380,305
Ending Balance	$	159,032		$	40,275		$	128,033		$	14,473		$	20,464		$	26,862		$	389,139

19

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

The following tables present additional detail of impaired loans, segregated by segment, as of and for the three and nine months ended June 30, 2013, and 2012.  The unpaid principal balance represents the recorded balance prior to any partial charge-offs.  The recorded investment represents customer balances net of any partial charge-offs recognized on the loans.  The interest income recognized column represents all interest income reported on either a cash or accrual basis for the periods presented.

							Three months ended				Nine months ended
	Unpaid				Allowance for		Average		Interest		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Recorded		Income
June 30, 2013	Balance		Investment		Allocated		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Single family	$	2,764	$	2,068	$	—	$	2,595	$	8	$	2,337	$	22
Multifamily	3,013		2,659		—		2,216		—		3,469		—
Commercial real estate	1,107		1,105		—		1,706		—		3,180		—
Construction and land development	192		192		—		193		2		320		7
Commercial business	—		—		—		—		—		—		—
Consumer and other	223		145		—		128		—		107		—
With an allowance recorded:
Single family	1,204		1,136		316		818		6		1,171		18
Multifamily	—		—		—		454		—		468		—
Commercial real estate	186		183		17		1,258		3		1,732		9
Construction and land development	—		—		—		209		—		54		—
Commercial business	—		—		—		—		—		15		—
Consumer and other	—		—		—		—		—		—		—
	$	8,689	$	7,488	$	333	$	9,577	$	19	$	12,853	$	56

							Three months ended				Nine months ended
	Unpaid				Allowance for		Average		Interest		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Recorded		Income
June 30, 2012	Balance		Investment		Allocated		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Single family	$	1,152	$	1,140	$	—	$	2,104	$	—	$	2,170	$	1
Multifamily	4,109		3,455		—		2,216		—		3,469		82
Commercial real estate	1,003		669		—		1,706		—		3,180		1
Construction and land development	286		251		—		193		—		320		—
Commercial business	—		—		—		—		—		—		—
Consumer and other	435		60		—		128		—		107		—
With an allowance recorded:
Single family	814		784		365		818		—		1,171		—
Multifamily	978		955		209		454		—		468		—
Commercial real estate	2,599		1,520		333		1,258		—		1,732		—
Construction and land development	—		—		—		209		—		54		—
Commercial business	—		—		—		179		—		15		—
Consumer and other	—		—		—		—		—		73		—
	$	11,376	$	8,834	$	907	$	9,265	$	—	$	12,759	$	84

20

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

The following is a summary of troubled debt restructured loans (TDRs) at June 30, 2013 and September 30, 2012:

	June 30,		September 30,
	2013		2012
Troubled debt restructurings - accrual	$	4,297	$	6,302
Troubled debt restructurings - nonaccrual	4,696		1,289
	$	8,993	$	7,591

Modifications of loan terms in a TDR are generally in the form of an extension of payment terms or lowering of the interest rate, although occasionally the Company has reduced the outstanding principal balance.

The following tables presents information related to loans modified in a TDR, by class, during the three months ended June 30, 2013 and 2012:

	Three Months Ended June 30, 2013
		Unpaid
		Principal		Balance in the ALLL
	Number of Modifications	Balance (at End of Period)		Prior to Modification		At Period End
Single family	—	$	—	$	—	$	—
Multifamily	3	2,659		—		—
Commercial real estate	—	—		—		—
Construction and land development	—	—		—		—
Commercial business	—	—		—		—
Consumer and other:
Home equity lines of credit	—	—		—		—
Education	—	—		—		—
Other	—	—		—		—
	3	$	2,659	$	—	$	—

21

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

	Three Months Ended June 30, 2012
		Unpaid
		Principal		Balance in the ALLL
	Number of Modifications	Balance (at End of Period)		Prior to Modification		At Period End
Single family	1	$	31	$	—	$	—
Multifamily	—	—		—		—
Commercial real estate	2	452		—		—
Construction and land development	1	635		—		—
Commercial business	—	—		—		—
Consumer and other:
Home equity lines of credit	—	—		—		—
Education	—	—		—		—
Other	—	—		—		—
	4	$	1,118	$	—	$	—

22

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

The following tables presents information related to loans modified in a TDR, by class, during the nine months ended June 30, 2013 and 2012:

	Nine Months Ended June 30, 2013
		Unpaid
		Principal		Balance in the ALLL
	Number of Modifications	Balance (at End of Period)		Prior to Modification		At Period End
Single family	1	$	122	$	—	$	—
Multifamily	4	3,081		—		—
Commercial real estate	3	794		—		17
Construction and land development	—	—		—		—
Commercial business	—	—		—		—
Consumer and other:
Home equity lines of credit	—	—		—		—
Education	—	—		—		—
Other	—	—		—		—
	8	$	3,997	$	—	$	17

	Nine Months Ended June 30, 2012
		Unpaid
		Principal		Balance in the ALLL
	Number of Modifications	Balance (at End of Period)		Prior to Modification		At Period End
Single family	20	$	603	$	—	$	—
Multifamily	—	—		—		—
Commercial real estate	9	1,975		—		81
Construction and land development	1	635		—		—
Commercial business	—	—		—		—
Consumer and other:
Home equity lines of credit	—	—		—		—
Education	—	—		—		—
Other	—	—		—		—
	30	$	3,213	$	—	$	81

23

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

The following table presents a summary of loans modified in a TDR during the three months ended June 30, 2013 and 2012 by class and by type of modification:

	Principal and		Interest Rate Reduction				Adjusted		Reduced
Three Months Ended	Interest to		To Below		To Interest		Amortization		Principal
June 30, 2013	Interest Only		Market Rate		Only		Period		Balance		Other (1)		Total
Single family	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Multifamily	—		—		2,659		—		—				2,659
Commercial real estate	—		—		—		—		—		—		—
Construction and land development	—		—		—		—		—		—		—
Commercial business	—		—		—		—		—		—		—
Consumer and other:
Home equity lines of credit	—		—		—		—		—		—		—
Education	—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—
	$	—	$	—	$	2,659	$	—	$	—	$	—	$	2,659

	Principal and		Interest Rate Reduction				Adjusted		Reduced
Three Months Ended	Interest to		To Below		To Interest		Amortization		Principal
June 30, 2012	Interest Only		Market Rate		Only		Period		Balance		Other (1)		Total
Single family	$	—	$	—	$	—	$	—	$	—	$	31	$	31
Multifamily	—		—		—		—		—		—		—
Commercial real estate	—		—		—		—		—		452		452
Construction and land development	635		—		—		—		—		—		635
Commercial business	—		—		—		—		—		—		—
Consumer and other:
Home equity lines of credit	—		—		—		—		—		—		—
Education	—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—
	$	635	$	—	$	—	$	—	$	—	$	483	$	1,118

(1) Other modifications primarily include capitalization of property taxes.

24

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 7.Loans (Continued)

The following table presents a summary of loans modified in a TDR during the nine months ended June 30, 2013 and 2012 by class and by type of modification:

	Principal and		Interest Rate Reduction				Adjusted		Reduced
Nine Months Ended	Interest to		To Below		To Interest		Amortization		Principal
June 30, 2013	Interest Only		Market Rate		Only		Period		Balance		Other (1)		Total
Single family	$	—	$	—	$	—	$	—	$	—	$	122	$	122
Multifamily	—		—		2,659		422		—				3,081
Commercial real estate	184		—		—		161		—		449		794
Construction and land development	—		—		—		—		—		—		—
Commercial business	—		—		—		—		—		—		—
Consumer and other:
Home equity lines of credit	—		—		—		—		—		—		—
Education	—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—
	$	184	$	—	$	2,659	$	583	$	—	$	571	$	3,997

	Principal and		Interest Rate Reduction				Adjusted		Reduced
Nine Months Ended	Interest to		To Below		To Interest		Amortization		Principal
June 30, 2012	Interest Only		Market Rate		Only		Period		Balance		Other (1)		Total
Single family	$	—	$	302	$	—	$	—	$	271	$	30	$	603
Multifamily	—		—		—		—		—		—		—
Commercial real estate	408		897		—		—		218		452		1,975
Construction and land development	635		—		—		—		—		—		635
Commercial business	—		—		—		—		—		—		—
Consumer and other:
Home equity lines of credit	—		—		—		—		—		—		—
Education	—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—
	$	1,043	$	1,199	$	—	$	—	$	489	$	482	$	3,213

(1) Other modifications primarily include capitalization of property taxes.

There were no re-defaults of TDR that occurred during the three months or nine months ended June 30, 2013 and 2012.

Certain of the Bank’s officers, employees, directors, and their associates are loan customers of the Bank.  As of June, 2013 and September 30, 2012, loans of approximately $5,760 and $5,781, respectively, were outstanding to such parties.  These loans were made on substantially the same terms as those prevailing for comparable transactions with other persons and do not involve more than the normal risk of collectability.

25

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 8.Deposits

The following table presents the composition of deposits as of:

	June 30, 2013				September 30, 2012
	Amount		Percent		Amount		Percent
Negotiable order for withdrawal accounts:
Noninterest bearing	$	67,142	14.98	%	$	67,033	14.36	%
Interest bearing	146,137		32.61	%	153,824		32.96	%
	213,279		47.59	%	220,857		47.32	%
Passbook and Statement Savings	117,878		26.30	%	113,381		24.29	%
Variable Rate Money Market Accounts	25,301		5.65	%	23,595		5.05	%
Certificates of Deposit	91,713		20.46	%	108,925		23.34	%
	$	448,171	100.00	%	$	466,758	100.00	%

Certificates of Deposit over one hundred thousand dollars totaled $21,585 and $27,795 as of June 30, 2013 and September 30, 2012, respectively.

Note 9.Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  Prompt corrective action provisions are not applicable to bank holdings companies.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and Tier 1 capital (as defined) to average assets (as defined).  As of June 30, 2013 and September 30, 2012, the Bank is well capitalized under prompt corrective action regulation.

In connection with a formal written agreement between the Bank and its primary federal regulator, management instituted a business and capital plan to maintain the stability of the Bank.  This business and capital plan requires the Bank to maintain a Tier 1 (leverage) capital ratio of 8.00% and a total risk-based capital ratio of 12.00%.  The Bank has achieved these capital targets at June 30, 2013. The capital targets prescribed by the business and capital plan have been met through the disposition of problem assets, reduction of non-interest expenses, retention of earnings and completion of a plan of conversion (see Note 2).

On November 5, 2012, the Bank was notified by its primary regulator that it would be subject to higher minimum capital ratios as of December 31, 2012.  The higher minimum capital ratios are identical to the business and capital plan ratios noted above.  At June 30, 2013, the Bank was  in compliance with those ratios.

26

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 9.Regulatory Capital (Continued)

As of June 30, 2013 and September 30, 2012 the Bank was restricted from paying dividends to the Company without the prior consent of its primary regulator.  Regardless of formal regulatory restrictions, the Bank would not be allowed to pay dividends in amounts that would result in its capital levels being reduced below the minimum requirements to be adequately capitalized under the regulatory framework for prompt corrective action.

The Bank’s actual capital amounts and ratios and those required by the above regulatory standards are as follows:

At June 30, 2013

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets) Westbury Bank	$	66,488	18.64	%	$	28,529	8.00	%	$	35,661	10.00	%
Tier 1 capital (to risk-weighted assets) Westbury Bank	62,029		17.39	%	14,264		4.00	%	21,397		6.00	%
Tier 1 capital (to adjusted total assets) Westbury Bank	62,029		11.76	%	21,090		4.00	%	26,363		5.00	%

At September 30, 2012

									To Be Well
									Capitalized Under
					For Capital Adequacy				Prompt Corrective
	Actual				Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets) Westbury Bank	$	44,148	11.46	%	$	30,830	8.00	%	$	38,538	10.00	%
Tier 1 capital (to risk-weighted assets) Westbury Bank	39,308		10.20	%	15,415		4.00	%	23,123		6.00	%
Tier 1 capital (to adjusted total assets) Westbury Bank	39,308		7.68	%	20,480		4.00	%	25,600		5.00	%

27

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 9.Regulatory Capital (Continued)

The following table reconciles the Bank’s stockholders’ equity to regulatory capital as of June 30, 2013 and September 30, 2012:

	June 30,			September 30,
	2013			2012
Stockholders’ equity of the Bank	$	67,241		$	47,353
Less: Disallowed servicing assets	(183		)	(189		)
Unrealized (gain) loss on securities	601			(1,177		)
Disallowed investment in subsidiary	(3,296		)	(3,296		)
Disallowed deferred tax assets	(2,334		)	(3,383		)
Tier 1 and tangible capital	62,029			39,308
Plus: Allowable general valuation allowances	4,459			4,840
Risk-based capital	$	66,488		$	44,148

Note 10.Commitments

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit and involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.  The contractual amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit is represented by the contractual amount of those instruments.  The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

The following instruments were outstanding whose contract amounts represent credit risk:

	June 30,		September 30,
	2013		2012
Commitments to extend mortgage credit:
Fixed rate	$	832	$	812
Adjustable rate	790		118
Unused commercial loan and home equity lines of credit	$	39,608	$	36,553
Standby letters of credit	190		545
Commitment to sell loans	710		3,022

28

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 10.Commitments (Continued)

Commitments to extend credit are agreements to lend funds to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  As some such commitments expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  The Company evaluates each customer’s creditworthiness on a case-by-case basis.  The Company generally extends credit only on a secured basis.  Collateral obtained varies but consists primarily of single family residences.

Unfunded commitments under lines of credit are commitments for possible future extensions of credit to existing customers.  These lines of credit may be uncollateralized and ultimately may not be drawn upon to the total extent to which the Company is committed.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.  Those letters of credit are primarily issued to support public and private borrowing arrangements, and, generally, have terms of one year or less.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.  The Company holds collateral supporting those commitments if deemed necessary.  In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment.  The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount shown in the summary above.  If the commitment is funded, the Company would be entitled to seek recovery from the customer.  At June 30, 2013 and September 30, 2012, no amounts have been recorded as liabilities for the Company’s potential obligations under these guarantees.

Note 11.Fair Value Measurements

ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach.  Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability.  Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  In that regard, ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

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 other 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 reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

29

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 11.Fair Value Measurements (Continued)

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Securities available-for-sale:  The fair value of the Company’s securities available-for-sale is determined using Level 2 inputs, which are derived from readily available pricing sources and third-party pricing services for comparable instruments.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, treasury yield curves, trading levels, credit information and credit terms, among other factors. In certain cases where Level 1 or Level 2 are not available, securities are classified within Level 3 of the hierarchy.

Derivatives:  The fair values of the Company’s embedded derivatives related to certain certificates of deposit are determined using inputs that are observable or that can be corroborated by observable market data (such as the S&P 500 Index and the 10-year U.S. Treasury rate) and, therefore, are classified within Level 2 of the valuation hierarchy.

Assets and liabilities recorded at fair value on a recurring basis:  The following table summarizes assets measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value as of:

			Fair Value Measurements
June 30, 2013	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets
Securities available-for-sale
U.S. Government and agency securities	$	7,650	$	—	$	7,650	$	—
U.S. Government agency residential mortgage-backed securities	46,871		—		46,871		—
U.S. Government agency collateralized mortgage obligations	8,404		—		8,404		—
Municipal securities	34,195		—		34,195		—
Total securities available-for-sale	$	97,120	$	—	$	97,120	$	—
Derivatives	$	568	$	—	$	568	$	—
Liabilities
Derivatives	$	568	$	—	$	568	$	—

30

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 11.Fair Value Measurements (Continued)

			Fair Value Measurements
September 30, 2012	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets
Securities available-for-sale
U.S. Government and agency securities	$	3,009	$	—	$	3,009	$	—
U.S. Government agency residential mortgage-backed securities	32,510		—		32,510		—
U.S. Government agency collateralized mortgage obligations	8,745		—		8,745		—
Municipal securities	20,268		—		20,268		—
Total securities available-for-sale	$	64,532	$	—	$	64,532	$	—
Derivatives	$	513	$	—	$	513	$	—
Liabilities
Derivatives	$	513	$	—	$	513	$	—

The Company did not have any transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the nine months ended June 30, 2013.  The Company’s policy for determining transfers between levels occurs at the end of the reporting period when circumstances in the underlying valuation criteria change and result in a transfer between levels.

Assets recorded at fair value on a nonrecurring basis:  The Company may be required, from time to time, to measure certain instruments at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles.

Impaired loans:  The Company does not record loans at fair value on a recurring basis.  The specific reserves for collateral-dependent impaired loans are based on the fair value of the collateral less estimated costs to sell. The fair value of collateral is determined based on appraisals.  In some cases, adjustments were made to the appraised values due to various factors including age of the appraisal, age of comparables included in the appraisal, and known changes in the market and in the collateral.  When significant adjustments were based on unobservable inputs, the resulting fair value measurement has been categorized as a Level 3 measurement.  Impaired loans with a carrying amount of $1,319 and $5,559 have a valuation allowance of $333 and $1,491 included in the allowance for loan losses as of June 30, 2013 and September 30, 2012, respectively.

Foreclosed real estate:  The Company does not record foreclosed real estate owned at a fair value on a recurring basis.  The fair value of foreclosed real estate was determined using Level 3 inputs based on appraisals or broker pricing opinions.  In some cases, adjustments were made to these values due to various factors including the age of the appraisal, age of comparables included in the appraisal, and known changes in the market and in collateral.  Foreclosed real estate is measured at fair value less estimated costs to sell at the date of foreclosure.  Subsequent to foreclosure, additional writedowns may be recorded based on changes to the fair value of the assets.

31

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 11.Fair Value Measurements (Continued)

Mortgage servicing rights:  Mortgage servicing rights (MSRs) do not trade in an active, open market with readily observable prices.  While sales of MSRs do occur, the precise terms and conditions typically are not readily available.  Accordingly, the Company estimates the fair value of MSRs using discounted cash flow models incorporating numerous assumptions from the perspective of market participants including servicing income, servicing costs, market discount rates, prepayments speeds, and default rates.  Due to the nature of the valuation inputs, MSRs are classified within Level 3 of the valuation hierarchy.  As of June 30, 2013, mortgage servicing rights with a carrying amount of $2,255 have a valuation allowance of $421 to reflect their fair value of $1,834.  As of September 30, 2012, mortgage servicing rights with a carrying amount of $2,655 have a valuation allowance of $762 to reflect their fair value of $1,893.

			Fair Value Measurements
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
June 30, 2013	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Impaired loans	$	986	$	—	$	—	$	986
Foreclosed real estate	1,727		—		—		1,727
Mortgage Servicing Rights	1,834		—		—		1,834

			Fair Value Measurements
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
September 30, 2012	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Impaired loans	$	4,068	$	—	$	—	$	4,068
Foreclosed real estate	2,728		—		—		2,728
Mortgage Servicing Rights	1,893		—		—		1,893

32

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 11.Fair Value Measurements (Continued)

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the consolidated balance sheets.  In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.  In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments.  Certain financial instruments with a fair value that is not practicable to estimate and all non-financial instruments are excluded from the disclosure requirements.  Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Company for assets and liabilities not previously described.  The Company, in estimating its fair value disclosures for financial instruments not described above, used the following methods and assumptions:

Cash and cash equivalents:  The carrying amounts of cash and cash equivalents reported in the consolidated balance sheets approximate those assets’ fair values.

Loans:  For variable-rate mortgage loans that re-price frequently and with no significant change in credit risk, fair values are based on carrying values.  The fair values for fixed rate residential mortgage loans are based on quoted market prices for similar loans sold in conjunction with sale transactions, adjusted for differences in loan characteristics.  The fair values for commercial real estate loans, rental property mortgage loans, and consumer and other loans are estimated using discounted cash flow analyses and using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

Loans held for sale:  Fair value of loans held for sale are based on commitments on hand from investors or prevailing market prices.

Federal Home Loan Bank stock:  The carrying amount of FHLB stock approximates its fair value based on the redemption provisions of the FHLB.

Accrued interest receivable and payable:  The carrying amounts of accrued interest receivable and payable approximate their fair values.

Deposits:  The fair value disclosed for interest-bearing and non-interest-bearing checking accounts, savings accounts, and money market accounts are equal to the amount payable on demand at the reporting date (i.e., their carrying amounts).  The fair values of fixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities of the outstanding certificates of deposit.

Advances from the Federal Home Loan Bank and notes payable:  The fair values of FHLB advances and notes payable are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Advance payments by borrowers for property taxes and insurance:  The carrying amounts of the advance payments by borrowers for property taxes and insurance approximate their fair values.

33

Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 11.Fair Value Measurements (Continued)

Mortgage banking derivatives:  The fair value of commitments to originate mortgage loans held for sale is estimated by comparing the Company’s cost to acquire mortgages and the current price for similar mortgage loans, taking into account the terms of the commitments and the credit worthiness of the counterparties.  The fair value of forward commitments to sell residential mortgage loans is the estimated amount that the Bank would receive or pay to terminate the forward delivery contract at the reporting date based on market prices for similar financial instruments.  The fair value of these derivative financial instruments was not material at June 30, 2013 and September 30, 2012.

The estimated fair values and related carrying amounts of the Company’s financial instruments are as follows:

	June 30, 2013
					Quoted Prices in		Significant Other		Significant Other
					Active Markets for		Observable		Unobservable
	Carrying		Estimated Fair		Identical Assets		Inputs		Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial assets:
Cash and cash equivalents	$	67,943	$	67,943	$	67,943	$	—	$	—
Securities	97,120		97,120		—		97,120		—
Loans, net	338,515		339,596		—		—		339,596
Loans held for sale, net	710		710		—		710		—
Federal Home Loan Bank stock	2,670		2,670		—		—		2,670
Mortgage servicing rights	1,834		1,834		—		1,834		—
Accrued interest receivable	1,702		1,702		1,702		—		—
Derivative asset	568		568		—		568		—
Financial liabilities:
Deposits	448,171		450,916		67,142		—		383,774
Notes payable	—		—		—		—		—
Advance payments by borrowers for property taxes and insurance	3,934		3,934		3,934		—		—
Accrued interest payable	29		29		29		—		—
Derivative liability	568		568		—		568		—

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Westbury Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(Dollars in Thousands, except per share data)

Note 11.Fair Value Measurements (Continued)

	September 30, 2012
					Quoted Prices in		Significant Other		Significant Other
					Active Markets for		Observable		Unobservable
	Carrying		Estimated Fair		Identical Assets		Inputs		Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial assets:
Cash and cash equivalents	$	33,141	$	33,141	$	33,141	$	—	$	—
Securities	64,532		64,532		—		64,532		—
Loans, net	375,899		384,318		—		—		384,318
Loans held for sale, net	3,022		3,022		—		3,022		—
Federal Home Loan Bank stock	2,670		2,670		—		—		2,670
Mortgage servicing rights	1,893		1,893		—		1,893		—
Accrued interest receivable	1,907		1,907		1,907		—		—
Derivative asset	513		513		—		513		—
Financial liabilities:
Deposits	466,758		465,651		67,033		—		398,618
Notes payable	1,254		1,254		—		—		1,254
Advance payments by borrowers for property taxes and insurance	6,670		6,670		6,670		—		—
Accrued interest payable	38		38		38		—		—
Derivative liability	513		513		—		513		—

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

This Quarterly Report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “intend,” “target” and words of similar meaning.  These forward-looking statements include, but are not limited to:

·statements of our goals, intentions and expectations;

·statements regarding our business plans, prospects, growth and operating strategies;

·statements regarding the asset quality of our loan and investment portfolios; and

·estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control.  In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.  We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this Quarterly Report.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

·our ability to manage our operations under the current adverse economic conditions nationally and in our market area;

·adverse changes in the financial industry, securities, credit and national local real estate markets (including real estate values);

·significant increases in our delinquencies and loan losses, including as a result of our inability to resolve classified or non-performing assets, changes in the underlying cash flows of our borrowers, and management’s assumptions in determining the adequacy of the allowance for loan losses;

·credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and in our allowance for loan losses and provision for loan losses;

·our ability to comply with the terms of agreements with our regulators, including business and capital plans submitted to our regulators, and the individual minimum capital requirement imposed by the OCC, and our ability to successfully conduct our operations while subject to regulatory restrictions on our activities;

·competition among depository and other financial institutions;

·our success in increasing our commercial business, commercial real estate and multi-family lending while improving our asset quality;

·our success in introducing new financial products;

36

·our ability to attract and maintain deposits;

·changes in interest rates generally, including changes in the relative differences between short term and long term interest rates and in deposit interest rates, that may affect our net interest margin and funding sources;

·fluctuations in the demand for loans, which may be affected by the number of unsold homes, land and other properties in our market areas and by declines in the value of real estate in our market area;

·changes in consumer spending, borrowing and savings habits;

·further declines in the yield on our assets resulting from the current low interest rate environment;

·risks related to a high concentration of loans secured by real estate located in our market area;

·the results of examinations by our regulators, including the possibility that our regulators may, among other things, require us to increase our reserve for loan losses, write down assets, change our regulatory capital position, limit our ability to borrow funds or maintain or increase deposits, or prohibit us from paying dividends, which could adversely affect our dividends and earnings;

·our ability to enter new markets successfully and capitalize on growth opportunities;

·changes in consumer spending, borrowing and savings habits;

·changes in laws or government regulations or policies affecting financial institutions, including the Dodd-Frank Act, which could result in, among other things, increased deposit insurance premiums and assessments,  regulatory fees and compliance costs, and changes in the level of government support of housing finance;

·our ability to manage our operations following increased leverage and risk-based capital requirements due to the implementation of Basel III by our regulators;

·changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board;

·changes in our organization, compensation and benefit plans;

·risks and costs associated with operating as a publicly traded company;

·changes in the financial condition or future prospects of issuers of securities that we own; and

·other economic, competitive, governmental, regulatory and operational factors affecting our operations, pricing, products and services.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

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Critical Accounting Policies

There are no material changes to the critical accounting policies disclosed in Westbury Bancorp, Inc.’s Prospectus, dated February 11, 2013, as filed with the Securities and Exchange Commission pursuant to Securities Act Rule 424(b)(3) on February 21, 2013.

Overview

Westbury Bancorp, Inc. (“the Company”) completed its offering of 5,091,625 shares of common stock in connection with the conversion of WBSB Bancorp, MHC for an aggregate price of $50.9 million on April 9, 2013, and the shares began trading on the NASDAQ Capital Market on April 10, 2013. Westbury Bancorp, Inc. contributed $20.3 million of the net proceeds of the offering to Westbury Bank (“the Bank”), and contributed $1.0 million (consisting of 50,916 shares of common stock and $490,840 of the net proceeds) to The Westbury Bank Charitable Foundation, which was formed in connection with the conversion.  This contribution was expensed during the quarter ended June 30, 2013.  In addition, $1.3 million of the net proceeds were used to repay principal and interest outstanding on certain notes payable, including approximately $357,000 paid to Third Floor Mgmt., LLC, an entity owned by certain of the directors and officers of the Company and the Bank; $4.1 million of the net proceeds were used to fund the loan to the employee stock ownership plan; and $18.6 million of the net proceeds were retained by the Company.

The Company is a savings and loan holding company and is subject to regulation by the Board of Governors of the Federal Reserve System.  The Company’s business activities are limited to oversight of its investment in the Bank.

The Bank provides a full range of banking and mortgage services to individual and business customers through its 12 offices located in Washington, Waukesha and Milwaukee counties in Wisconsin.  The Bank is subject to regulation by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation.

We recorded earnings of $721,000 for the nine months ended June 30, 2013, compared to a net loss of $3.7 million for the nine months ended June 2012, an improvement of $4.4 million.  As a result of a one-time contribution to the Westbury Bank Charitable Foundation of $1.0 million, we reported a net loss of $446,000 for the quarter ended June 30, 2013, compared to a net loss for the quarter ended June 30, 2012 of $78,000. Without the effects of this contribution, net income for the quarter was $154,000 and net income for the nine months was $1.3 million.

We have continued to make significant progress in reducing our levels of non-performing and classified assets.  Total nonperforming assets were $9.5 million at June 30, 2013, compared to $13.2 million at September 30, 2012 and $17.4 million at June 30, 2012.  Total classified assets were $15.2 million at June 30, 2013, compared to $25.3 million at September 30, 2012 and $31.2 million at June 30, 2012.

With the completion of our stock offering during the period, we experienced a significant increase in liquidity.  During the period, we systematically added funds to our investment portfolio, primarily in mortgage-backed securities and municipal bonds, in order to generate increased interest income relative to the earnings available on overnight funds.  These purchases had a positive impact on earnings for the quarter, but because they were made throughout the quarter, the full effect was not reflected in our quarterly results.  In addition, we intend to prudently increase our loan portfolio in the future as our pipeline of loans has expanded due to the efforts of our commercial lenders.  We expect the

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increase in the loan portfolio to positively impact our net interest margin in future periods.

Rates on fixed rate mortgages began to increase quickly in May 2013 as yields on US Treasury bonds with maturities of five years and longer increased in response to market expectations that the Federal Reserve Board of Governors intended to curtail its program of purchasing debt securities in the open market at an earlier date than previously expected.  As a result, we have seen fixed rate loan applications decline during the quarter and expect that trend to continue if mortgage rates remain at or above their current levels.  We are reviewing internal processes and staffing in our residential lending operation to ensure that we have properly matched staffing with expected volumes.  In addition, we are working to focus more on portfolio lending as demand in the secondary market has dropped.

Comparison of Financial Condition at June 30, 2013 and September 30, 2012

Total Assets.  Total assets increased by $24.0 million, or 4.4%, to $550.5 million at June 30, 2013, from $526.5 million at September 30, 2012.  The increase was primarily the result of increases in cash and cash equivalents of $34.8 million and securities available for sale of $32.6 million, offset by decreases in net loans of $37.4 million and real estate held for investment of $2.3 million.

Net Loans.  Net loans decreased by $37.4 million, or 9.9%, to $338.5 million at June 30, 2013 from $375.9 million at September 30, 2012.  Single family loans decreased $17.7 million, commercial real estate loans decreased $22.6 million, and home equity lines of credit decreased $4.4 million, during the nine months ended June 30, 2013, while multifamily loans increased by  $7.2 million.  Decreases in net loans reflect strong competition for commercial business, commercial real estate and multi-family loans in our market area in the current low interest rate environment and continued refinancing from adjustable to fixed rate loans by residential loan customers, as well as our decision to manage loan growth in order to improve capital ratios and reduce expenses.

Investment Securities.  Investment securities available for sale increased $32.6 million, or 50.5%, to $97.1 million at June 30, 2013, from $64.5 million at September 30, 2012, as a result of the investment of the proceeds from our recent stock conversion.  Management intends to prudently use a portion of the liquidity in the investment portfolio to fund future growth in the loan portfolio.

Mortgage-backed securities and collateralized mortgage obligations increased $14.0 million, to $55.3 million at June 30, 2013 from $41.3 million at September 30, 2012, U.S. government and agency securities increased $4.7 million, to $7.7 million at June 30, 2013 from $3.0 million at September 30, 2012, and municipal securities increased $13.9 million, to $34.2 million at June 30, 2013 from $20.3 million at September 30, 2012.  Net unrealized gain on securities decreased $3.0 million from September 30, 2012 to June 30, 2013, reflecting the market values of the remaining securities after an increase in market interest rates and the recognition of gains on sale of investment securities of $232,000 during the nine month period.  At June 30, 2013, investment securities classified as available-for-sale consisted entirely of U.S. government and agency securities, U.S. government agency collateralized mortgage obligations, U.S. government agency residential mortgage-backed securities, and municipal securities with a focus on suitable government-sponsored securities to augment risk-based capital.

Foreclosed Real Estate.  Foreclosed real estate held for sale decreased $1.0 million, or 37.0% to $1.7 million at June 30, 2013 from $2.7 million at September 30, 2012, as we sold $2.8 million of foreclosed properties, foreclosed on $2.1 million of non-performing loans and recorded valuation adjustments of $355,000 during the nine month period.  At June 30, 2013, our foreclosed real estate

39

included primarily one- to four-family residential real estate, multi-family and commercial real estate properties, the largest of which was a land development with a carrying value of $551,000.

Bank Owned Life Insurance.  Bank-owned life insurance (“BOLI”), which provides us with a funding source for certain of our employee benefit plan obligations, increased $315,000, to $12.3 million at June 30, 2013, from $11.9 million at September 30, 2012.  We are the beneficiary and owner of the BOLI policies, and as such, the investment is carried at the cash surrender value of the underlying policies.  BOLI also generally provides us other income that is non-taxable.

Deposits.  Deposits decreased $18.6 million, or 4.0%, to $448.2 million at June 30, 2013, from $466.8 million at September 30, 2012.  Our core deposits, which we consider to be our non-interest bearing and interest bearing checking accounts, passbook and statement savings accounts, and variable rate money market accounts decreased $1.3 million, or 0.4%, to $356.5 million at June 30, 2013, from $357.8 million at September 30, 2012.  Certificates of deposit decreased $17.2 million, or 15.8%, to $91.7 million at June 30, 2013, from $108.9 million at September 30, 2012.   The decrease in certificates of deposit is attributed primarily to customers’ reinvestment decisions resulting from the decline in interest rates.  The overall decrease in deposits reflected our plan to manage deposit levels in order to improve capital ratios at the Bank prior to the successful completion of our stock conversion in April 2013.

Other Liabilities.  Notes payable decreased by $1.3 million to $0 at June 30, 2013,  In April 2013, we used a portion of the proceeds from our stock offering to pay down all principal and interest outstanding on notes payable.  Advance payments by borrowers for property taxes and insurance decreased $2.8 million to $3.9 million at June 30, 2013 from $6.7 million at September 30, 2012 due to the normal payment flow into those accounts by customers during the year culminating with disbursements in December to enable the payment of mortgagees’ property taxes.  Other liabilities increased $3.0 million, or 61.2%, to $7.9 million at June 30, 2013, from $4.9 million at September 30, 2012 reflecting an increase in pending purchases of investment securities of $3.7 million at June 30, 2013 from $0 at September 30, 2012 offset by normal fluctuation in accrued expenses and accounts payable.

Total Equity.  Total equity increased $43.6 million, or 92.9%, to $90.5 million at June 30, 2013, from $46.9 million at September 30, 2012.  The increase resulted primarily from proceeds of our stock offering of $44.7 million and net income of $721,000 during the nine months ended June 30, 2013, offset by a decrease of $1.8 million in net unrealized gains (losses) on securities available for sale.

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Delinquent Loans

The following table sets forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated:

				Loans Delinquent For
	30-59 Days			60-89 Days			90 Days and Over			Total
	Number	Amount		Number	Amount		Number	Amount		Number	Amount
	(Dollars in thousands)
At June 30, 2013:
Real estate loans:
One- to four-family	16	$	1,530	6	$	739	30	$	2,277	52	$	4, 546
Multi-family	—	—		—	—		—	—		—	—
Commercial	—	—		—	—		2	1,069		2	1,069
Construction and land	2	51		—	—		—	—		2	51
Total real estate	18	1,581		6	739		32	3,346		56	5,666
Commercial business loans	—	—		1	33		—	—		1	33
Consumer loans:
Home equity lines of credit	7	203		—	—		7	413		14	616
Education	8	70		1	40		22	292		31	402
Automobile	1	3		1	2		2	1		4	6
Other consumer loans	—	—		—	—		3	4		3	4
Total consumer loans	16	276		2	42		34	710		52	1,028
Total	34	$	1,857	9	$	814	66	$	4,056	109	$	6,727
At September 30, 2012:
Real estate loans:
One- to four-family	22	$	1,747	11	$	1,112	30	$	3,034	63	$	5,893
Multi-family	—	—		—	—		—	—		—	—
Commercial	—	—		1	169		5	2,376		6	2,545
Construction and land	1	53		—	—		1	108		2	161
Total real estate	23	1,800		12	1,281		36	5,518		71	8,599
Commercial business loans	4	153		—	—		—	—		4	153
Consumer loans:
Home equity lines of credit	7	453		3	248		11	288		21	989
Education	7	61		8	85		10	114		25	260
Automobile	3	5		2	5		2	3		7	13
Other consumer loans	—	—		—	—		2	6		2	6
Total consumer loans	17	519		13	338		25	411		55	1,268
Total	44	$	2,472	25	$	1,619	61	$	5,929	130	$	10,020

The decrease in delinquent loans at June 30, 2013, compared to September 30, 2012, is primarily attributed to a decrease in one-to-four family loan delinquencies of $1.3 million and a decrease in commercial real estate delinquencies of $1.5 million.

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Classified Assets

The following table details the Company’s assets graded Substandard or Special Mention as of the date indicated:

	At June 30,		At September 30,
	2013		2012
	(In thousands)
Classified Loans:
Loss	—		—
Doubtful	—		—
Substandard — performing:
Real estate loans:
One- to four-family	$	1,671	$	1,485
Multi-family	175		546
Commercial	3,327		8,610
Construction and land	192		448
Total real estate loans	5,365		11,089
Commercial business loans	789		953
Consumer loans:
Home equity lines of credit	11		407
Other consumer loans	—		—
Total consumer loans	11		407
Total substandard — performing	6,165		12,449
Substandard — Nonperforming:
Real estate loans:
One- to four-family	3,067		4,268
Multi-family	2,659		2,789
Commercial	1,105		2,376
Construction and land	—		108
Total real estate loans	6,831		9,541
Commercial business loans	—		—
Consumer loans:
Home equity lines of credit	433		310
Other consumer loans	5		45
Total consumer loans	438		355
Total substandard — nonperforming	7,269		9,896
Total classified loans	13,434		22,345
Securities(1)	—		230
Foreclosed real estate	1,727		2,728
Total classified assets	$	15,161	$	25,303
Special mention:
Real estate loans:
One- to four-family	$	122	$	806
Multi-family	918		—
Commercial	2,565		1,795
Construction and land	—		177
Total real estate loans	3,605		2,778
Commercial business loans	974		780
Consumer loans:
Home equity lines of credit	—		—
Other consumer loans	—		—
Total consumer loans	—		—
Total special mention	4,579		3,558
Total classified assets and special mention loans	$	19,740	$	28,861

(1)Represents municipal bonds that management believed it was appropriate to classify as substandard as a result of downgraded ratings issued by the ratings agencies.

The decrease in classified assets from September 30, 2012 to June 30, 2013, was primarily due to the disposition of foreclosed real estate and the repayment of classified loans.

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Non-Performing Assets

The following table sets forth information regarding our non-performing assets and troubled debt restructurings at the dates indicated.  The information reflects net charge-offs but not specific reserves.  Troubled debt restructurings include loans where the borrower is experiencing financial difficulty and for which either a portion of interest or principal has been forgiven or an extension of term granted, or for loans modified at interest rates materially less than current market rates.

	At June 30, 2013			At September 30, 2012
	(Dollars in thousands)
Nonaccrual loans:
Real estate loans:
One- to four-family	$	3,223		$	4,610
Multi family	2,659			2,789
Commercial	1,105			2,376
Construction and land	—			108
Total real estate	6,987			9,883
Commercial business loans	—			—
Consumer loans:
Home equity lines of credit	433			310
Education	331			199
Automobile	1			3
Other consumer loans	4			42
Total consumer loans	769			554
Total nonaccrual loans(1)	7,756			10,437
Loans greater than 90 days delinquent and still accruing:
Real estate loans:
One- to four-family	—			—
Multi-family	—			—
Commercial	—			—
Construction and land	—			—
Total real estate	—			—
Commercial business loans	—			—
Consumer loans:
Home equity lines of credit	—			—
Education	—			—
Automobile	—			—
Other consumer loans	—			—
Total consumer loans	—			—
Total delinquent loans accruing	—			—
Total non-performing loans	7,756			10,437
Foreclosed assets:
One- to four-family	396			591
Multi-family	551			410
Commercial real estate	471			684
Construction and land	309			1,043
Commercial assets	—			—
Consumer	—			—
Total foreclosed assets	1,727			2,728
Total nonperforming assets	$	9,483		$	13,165
Performing troubled debt restructurings	$	4,297		$	6,302
Ratios:
Nonperforming loans to total loans	2.26		%	2.73		%
Nonperforming assets to total assets	1.72		%	2.50		%
Nonperforming assets and troubled debt restructurings to total assets assetsassets	2.50		%	3.70		%

(1)Includes $4.1 million and $1.3 million, respectively, of troubled debt restructurings that were on non-accrual status at June 30, 2013 and September 30, 2012.

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The decrease in non-performing assets from September 30, 2012 to June 30, 2013, was primarily due to the disposition of foreclosed real estate and the repayment of non-performing loans.

Interest income that would have been recorded for the nine months ended June 30, 2013, had non-accruing loans been current according to their original terms, amounted to $253,000.  Interest of approximately $56,000 related to these loans was included in interest income for the nine months ended June 30, 2013.

Other Loans of Concern.   There were no other loans at June 30, 2013 that are not already disclosed where there is information about possible credit problems of borrowers that caused management to have serious doubts about the ability of the borrowers to comply with present loan repayment terms and that may result in disclosure of such loans in the future.

Comparison of Operating Results for the Three Months Ended June 30, 2013 and June 30, 2012

General.  Net loss for the three months ended June 30, 2013 was ($446,000), compared to ($78,000) for the three months ended June 30, 2012. The increase in net loss was primarily due to decreases in net interest income of $528,000, noninterest income of $606,000 and an increase in noninterest expense of $585,000 offset by decreases in provisions for loan losses of $1.1 million and in income taxes of $211,000.

Interest and Dividend Income. Interest and dividend income decreased $785,000, or 14.5%, to $4.6 million for the three months ended June 30, 2013 from $5.4 million for the three months ended June 30, 2012. This decrease was primarily attributable to a $694,000 decrease in interest and fee income on loans receivable and a $105,000 decrease in interest and dividend income on investment securities.  The average balance of loans during the three months ended June 30, 2013 decreased $41.8 million to $347.2 million from $389.0 million for the three months ended June 30, 2012. The average yield on loans decreased by 19 basis points to 4.89% for the three months ended June 30, 2013 from 5.08% for the three months ended June 30, 2012.  The average balance of investment securities increased $3.7 million to $78.2 million for the three months ended June 30, 2013 from $74.5 million for the three months ended June 30, 2012, while the average yield on investment securities decreased by 66 basis points to 1.82% for the three months ended June 30, 2013 from 2.48% for the three months ended June 30, 2012.   The decrease in yields on loans and securities reflect the effects of the prolonged low interest rate environment as loans and securities are originated or repriced at lower rates.  The decrease in loan balances resulted from our strategy to manage loan growth in order to improve capital ratios and reduce expenses prior to the completion of our stock offering.

Interest Expense. Total interest expense decreased $257,000, or 34.4%, to $490,000 for the three months ended June 30, 2013 from $747,000 for the three months ended June 30, 2012.  Interest expense on deposit accounts decreased $235,000 to $488,000 for the three months ended June 30, 2013 from $723,000 for the three months ended June 30, 2012.  The decrease was primarily due to a decrease in the average cost of deposits to 0.43% for the three months ended June 30, 2013 from 0.61% for the three months ended June 30, 2012, reflecting the declining interest rate environment, and by a decrease of $23.9 million in the average balance of deposits to $470.7 million for the three months ended June 30, 2013 from $494.6 million for the three months ended June 30, 2012.

Net Interest Income. Net interest income decreased $528,000, or 11.5%, to $4.1 million for the three months ended June 30, 2013 from $4.7 million for the three months ended June 30, 2012.  The decrease reflected a decline in the average interest-earning assets of $4.2 million, or 0.9%, to $470.8 million for the three months ended June 30, 2013, from $475.0 million for the three months ended June 30, 2012, and a decrease in the average deposits and interest-bearing liabilities of $24.2 million, or 4.9%

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to $471.7 million for the three months ended June 30, 2013, from $495.9 million for the three months ended June 30, 2012.  The decreases in average balances outstanding resulted in a decrease in our net interest margin to 3.52% for the three months ended June 30, 2013 from 3.93% for the three months ended June 30, 2012.  The decrease in our interest rate spread and net interest margin also reflect the effects of the prolonged low interest rate environment as downward pressure continues on loan pricing while we have less ability to continue to lower rates on transaction accounts.  The change in asset mix with growth in the investment portfolio also negatively impacted the margin and spread as investment securities generally do not carry yields as high as those on loan products.

Provision for Loan Losses.  We recorded a provision for loan losses of $150,000 for the three months ended June 30, 2013, and $1.3 million for the three months ended June 30, 2012.  The allowance for loan losses was $4.6 million, or 1.3% of total loans, at June 30, 2013, compared to $6.7 million, or 1.8% of total loans, at September 30, 2012, and $6.2 million, or 1.6% of total loans, at June 30, 2012.  Total nonperforming loans were $7.8 million at June 30, 2013, compared to $10.4 million at September 30, 2012, and $13.8 million at June 30, 2012.  As a percentage of nonperforming loans, the allowance for loan losses was 58.8% at June 30, 2013, compared to 64.1% at September 30, 2012, and 44.8% at June 30, 2012.  Total classified assets were $15.2 million at June 30, 2013, compared to $25.3 million at September 30, 2012, and $31.2 million at June 30, 2012.

The allowance for loan losses reflects the balance we believe to be appropriate to cover incurred probable losses which were inherent in the loan portfolio at June 30, 2013, September 30, 2012, and June 30, 2012.

Non-Interest Income.  Non-interest income decreased $606,000, or 23.3%, to $2.0 million for the three months ended June 30, 2013, from $2.6 million for the three months ended June 30, 2012. The decrease was primarily related to a decrease in service fees on deposit accounts of $226,000, a decrease in gain on sales of loans of $144,000 and a decrease in the gain on sales of securities of $167,000 for the three months ended June 30, 2013, from the three months ended June 30, 2012.  The decrease in service fees on deposit accounts resulted from pricing changes implemented during the first quarter and decreases in transaction account balances.  The decrease in gain on sales of loans resulted from the slowing of demand for fixed rate mortgages during the quarter.  The decrease in the gain on sales of securities resulted as we curtailed our program of managing the balance sheet to maintain capital ratios as our conversion to stock was completed during the quarter.

Non-Interest Expense.  Non-interest expense increased $585,000, or 9.4%, to $6.8 million for the three months ended June 30, 2013, from $6.2 million for the three months ended June 30, 2012. The increase was caused by the contribution of $1.0 million to the Westbury Bank Charitable Foundation upon completion of our stock offering.  This increase in charitable contributions was offset by reductions of $562,000 in the net loss from operations and sales of foreclosed real estate as we had less foreclosed real estate to manage in the three months ended June 30, 2013.

Provision for Income Taxes.  Income tax benefit was $340,000 for the three months ended June 30, 2013, compared to $129,000 for the three months ended June 30, 2012.  The effective tax rate as a percent of pre-tax loss was 43.3% and 62.3% for the three months ended June 30, 2013 and 2012, respectively.

Comparison of Operating Results for the Nine Months Ended June 30, 2013 and June 30, 2012

General.  Net income for the nine months ended June 30, 2013, was $721,000, compared to net loss of $(3.7 million) for the nine months ended June 30, 2012, an increase of $4.4 million. The increase in net income was primarily due to a decrease in provision for loan losses of $3.9 million and a decrease

45

in noninterest expense of $2.5 million, offset by decreases in net interest income of $1.5 million and noninterest income of $395,000.

Interest and Dividend Income. Interest and dividend income decreased $2.5 million, or 14.8%, to $14.4 million for the nine months ended June 30, 2013, from $16.9 million for the nine months ended June 30, 2012. This decrease was primarily attributable to a $2.0 million decrease in interest and fee income on loans receivable and a $487,000 decrease in interest and dividend income on investment securities and interest bearing deposits.  The average balance of loans during the nine months ended June 30, 2013 decreased $38.2 million to $360.6 million from $398.8 million for the nine months ended June 30, 2012. The average yield on loans decreased by 21 basis points to 4.92% for the nine months ended June 30, 2013 from 5.13% for the nine months ended June 30, 2012.  The average balance of investment securities decreased $20.2 million to $65.0 million for the nine months ended June 30, 2013, from $85.2 million for the nine months ended June 30, 2012, while the average yield on investment securities decreased by 28 basis points to 2.03% for the nine months ended June 30, 2013 from 2.31% for the nine months ended June 30, 2012.

Interest Expense. Total interest expense decreased $1.0 million, or 37.0%, to $1.7 million for the nine months ended June 30, 2013, from $2.7 million for the nine months ended June 30, 2012.  Interest expense on deposit accounts decreased $907,000, or 36.2%, to $1.6 million for the nine months ended June 30, 2013 from $2.5 million for the nine months ended June 30, 2012.  The decrease was primarily due to a decrease in the average cost to 0.46% for the nine months ended June 30, 2013 from 0.66% for the nine months ended June 30, 2012 reflecting the declining interest rate environment, and by a decrease of $41.8 million, or 8.2%, in the average balance of deposits to $470.0 million for the nine months ended June 30, 2013 from $511.8 million for the nine months ended June 30, 2012.

Interest expense on Federal Home Loan Bank of Chicago advances decreased $83,000 to $0 for the nine months ended June 30, 2013 from $83,000 for the nine months ended June 30, 2012.  The average balance of advances decreased by $3.3 million to $0 for the nine months ended June 30, 2013 from $3.3 million for the nine months ended June 30, 2012, as we repaid the entire outstanding balance in March, 2012.

Net Interest Income. Net interest income decreased $1.5 million, or 10.6%, to $12.7 million for the nine months ended June 30, 2013 from $14.2 million for the nine months ended June 30, 2012.  The decrease reflected a decrease in the average interest-earning assets of $44.1 million, or 8.9%, to $451.0 million for the nine months ended June 30, 2013, from $495.1 million for the nine months ended June 30, 2012, offset by a decrease in average deposits and interest-bearing liabilities of $46.4 million to $471.2 million for the nine months ended June 30, 2013, from $517.6 million for the nine months ended June 30, 2012.  In addition, we experienced a decrease in our interest rate spread to 3.77% for the nine months ended June 30, 2013 from 3.84% for the nine months ended June 30, 2012, and a decrease in our net interest margin to 3.75% for the nine months ended June 30, 2013 from 3.81% for the nine months ended June 30, 2012.  The decrease in our interest rate spread and net interest margin also reflects the effects of the prolonged low interest rate environment as downward pressure continues on loan pricing while we have less ability to continue to lower rates on transaction accounts.  The change in asset mix with growth in the investment portfolio also negatively impacted the margin and spread as investment securities generally do not carry yields as high as those on loan products.

46

Provision for Loan Losses.  We recorded a provision for loan losses of $1.3 million for the nine months ended June 30, 2013 and $5.2 million for the nine months ended June 30, 2012.  For additional information regarding our allowance for loan losses and certain related ratios at June 30, 2013, September 30, 2012 and June 30, 2012, see “—Comparison of Operating Results for the Three Months Ended June 30, 2013 and June 30, 2012—Provision for Loan Losses” above.

The allowance for loan losses reflects the estimate we believe to be appropriate to cover incurred probable losses which were inherent in the loan portfolio at June 30, 2013, September 30, 2012 and June 30, 2012.

Non-Interest Income.  Non-interest income decreased $395,000, or 5.2%, to $7.2 million for the nine months ended June 30, 2013 from $7.6 million for the nine months ended June 30, 2012. The decrease was primarily related to decreases in service fees on deposit accounts of $510,000 resulting from decreased numbers of transaction accounts, gains on sales of securities of $211,000 resulting from reduced sales activity as the bank slowed its pace of balance sheet reduction, gains on sales of branches and other assets of $239,000 and rental income from real estate operations of $290,000 resulting from the sale of real estate held for investment offset by an increase in servicing fee income, net of amortization and impairment, of $1.0 million resulting from recapture of a portion of the valuation reserve on mortgage servicing rights as rising mortgage rates caused the expected life of our residential mortgage loan servicing portfolio to increase.

Non-Interest Expense.  Non-interest expense decreased $2.5 million, or 12.4% to $17.6 million for the nine months ended June 30, 2013 from $20.1 million for the nine months ended June 30, 2012. The decrease primarily reflected a decrease in salaries and employee benefits expense and commission expense of $1.9 million and a decrease in occupancy expense of $270,000, both of which are associated with the closing or sale of branches and related reductions in staff full time equivalents, and a $1.6 million decrease in net loss from operation and sale of foreclosed real estate, offset by the contribution of $1.0 million to the Westbury Bank Charitable Foundation.

Provision for Income Taxes.  Income tax expense was $229,000 for the nine months ended June 30, 2013 compared to $68,000 for the nine months ended June 30, 2012.  The effective tax rate as a percent of pre-tax income (loss) was 24.1% and (1.9%) for the nine months ended June 30, 2013 and 2012, respectively.  The increase in the effective tax rate for the nine months ended June 30, 2013 was due to the return to profitability during 2013 and adjustments to the valuation allowance for deferred tax assets during the nine months ended June 30, 2012.

47

Analysis of Net Interest Income

Net interest income represents the difference between the income we earn on interest-earning assets and the interest expense we pay on interest-bearing liabilities. Net interest income also depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them.  The following tables set forth average balance sheets, average yields and costs, and certain other information at or for the periods indicated.  Average balances are derived from daily average balances for all periods.  Non-accrual loans were included in the computation of average balances, but have been reflected in the tables as loans carrying a zero yield. No tax equivalent yield adjustments have been made.  The yields set forth below include the effect of loan fees, discounts and premiums that are amortized or accreted to interest income.

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	For the Three Months Ended June 30,
			2013							2012
	At June 30, 2013									Average
	Average		Average Outstanding							Outstanding
	Yield/Cost		Balance			Interest		Yield/Cost		Balance			Interest		Yield/Cost
	(Dollars in thousands)
Assets:
Loans	4.67	%	$	347,238		$	4,247	4.89	%	$	388,958		$	4,941	5.08	%
Securities	2.01	%	78,184			356		1.82	%	74,465			461		2.48	%
Fed funds sold and other interest-earning deposits	0.31	%	45,416			30		0.26	%	11,581			16		0.55	%
Total interest-earning assets			470,838			4,633		3.94	%	475,004			5,418		4.56	%
Noninterest-earning assets			110,168							76,614
Total assets			$	581,006						$	551,618
Liabilities and equity:
Noninterest-bearing demand deposits	—	%	$	19,652		$	—	—	%	$	21,939		$	—	—	%
Checking accounts	0.42	%	$	236,677		129		0.22	%	$	206,225		179		0.35	%
Passbook and statement savings	0.18	%	93,642			54		0.23	%	117,437			77		0.26	%
Variable rate money market	0.19	%	25,624			10		0.16	%	32,042			23		0.29	%
Certificates of deposit	1.14	%	95,129			295		1.24	%	116,971			444		1.52	%
Total interest bearing deposits			451,072			488		0.43	%	472,675			723		0.61	%
Total deposits			470,724			488		0.41	%	494,614			723		0.58	%
FHLB advances	—	%	—			—		—	%	—			—		—	%
Notes payable	—	%	969			2		0.83	%	1,254			24		7.66	%
Total deposits and interest-bearing liabilities			471,693			490		0.42	%	495,868			747		0.60	%
Other liabilities			18,430							8,087
Total liabilities			490,123							503,955
Equity			90,883							47,663
Total liabilities and equity			$	581,006						$	551,618
Net interest income						$	4,143						$	4,671
Net interest rate spread(1)								3.52	%						3.96	%
Net interest-earning assets			$	(855	)					$	(20,864	)
Net interest margin(1)								3.52	%						3.93	%
Average of interest-earning assets to interest-bearing liabilities								99.8	%						95.8	%

(1) Annualized.

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			For the Nine Months Ended June 30,
			2013							2012
	At June 30, 2013									Average
	Average		Average Outstanding							Outstanding
	Yield/Cost		Balance			Interest		Yield/Cost		Balance			Interest		Yield/Cost
	(Dollars in
	thousands)
Assets:
Loans	4.67	%	$	360,646		$	13,307	4.92	%	$	398,756		$	15,335	5.13	%
Securities	2.01	%	65,044			990		2.03	%	85,204			1,477		2.31	%
Fed funds sold and other interest-earning deposits	0.31	%	25,272			68		0.36	%	11,127			65		0.78	%
Total interest-earning assets			450,962			14,365		4.25	%	495,087			16,877		4.55	%
Noninterest-earning assets			94,270							87,826
Total assets			$	545,232						$	582,913
Liabilities and equity:
Noninterest-bearing demand deposits	—	%	$	20,521		$	—	—	%	$	20,868		$	—	—	%
Checking accounts	0.42	%	$	233,008		412		0.24	%	$	217,620		649		0.40	%
Passbook and statement savings	0.18	%	95,512			181		0.25	%	116,242			237		0.27	%
Variable rate money market	0.19	%	20,499			39		0.25	%	32,214			103		0.43	%
Certificates of deposit	1.14	%	100,492			991		1.31	%	124,888			1,541		1.65	%
Total interest bearing deposits			449,511			1,623		0.48	%	490,964			2,530		0.69	%
Total deposits			470,032			1,623		0.46	%	511,832			2,530		0.66	%
FHLB advances	—	%	—			—		—	%	3,339			83		3.31	%
Notes payable	—	%	1,159			46		5.29	%	2,424			113		6.22	%
Total deposits and interest-bearing liabilities			471,191			1,669		0.47	%	517,595			2,726		0.70	%
Other liabilities			12,746							8,433
Total liabilities			483,937							526,028
Equity			61,295							56,885
Total liabilities and equity			$	545,232						$	582,913
Net interest income						$	12,696						$	14,151
Net interest rate spread(1)								3.77	%						3.84	%
Net interest-earning assets			$	(20,229	)					$	(22,508	)
Net interest margin(1)								3.75	%						3.81	%
Average of interest-earning assets to interest-bearing liabilities								95.7	%						95.7	%

(1) Annualized.

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Liquidity and Capital Resources

Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from the sale of loans, proceeds from maturities and calls of securities, Federal Home Loan Bank advances and, to a lesser extent, short-term borrowings from other financial institutions. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities.  Net cash provided by operating activities was $6.7 million and $1.2 million for the nine months ended June 30, 2013 and June 30, 2012, respectively.  Net cash provided by investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans, proceeds from the sale of securities and proceeds from maturing securities and pay downs on mortgage-backed securities, was $3.2 million and $62.3 million for the nine months ended June 30, 2013 and June 30, 2012, respectively.  During the nine months ended June 30, 2013, we purchased $57.3 million and sold $11.6 million in securities held as available-for-sale, and during the nine months ended June 30, 2012, we purchased $21.1 million and sold $33.3 million in securities held as available-for-sale.  For the nine months ended June 30, 2013, net cash provided by financing activities, consisting primarily of our stock offering, offset by decreases in deposit accounts and the repayment of notes payable, was $24.9 million. For the nine months ended June 30, 2012, net cash used in financing activities was $64.2 million consisting primarily of decreases in deposit accounts and the repayment of FHLB advances and notes payable resulting from our strategy, prior to the completion of the stock offering, of managing growth to preserve capital ratios and reduce expenses.

At June 30, 2013, Westbury Bank exceeded all of its regulatory capital requirements with Tier 1 leverage capital of $62.0 million, or 11.76% of adjusted total assets, which is above the required level of $21.1 million, or 4.00%; and total risk-based capital of $66.5 million, or 18.64% of risk-weighted assets, which is above the required level of $28.5 million, or 8.00%.  Accordingly, Westbury Bank was categorized as well capitalized at June 30, 2013.  At June 30, 2013, Westbury Bank was in full compliance with the capital plan it had submitted to the OCC and with the individual minimum capital requirement imposed by the OCC.

At June 30, 2013, we had outstanding commitments to originate loans of $1.6 million and stand-by letters of credit of $190,000.  We anticipate that we will have sufficient funds available to meet our current loan origination commitments.  Certificates of deposit that are scheduled to mature in less than one year from June 30, 2013 totaled $55.1 million.  Management expects that a substantial portion of the maturing certificates of deposit will be renewed.  However, if a substantial portion of these deposits is not retained, we may utilize Federal Home Loan Bank advances or the proceeds from our recent stock offering or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Off-Balance Sheet Arrangements.  In the normal course of operations, we engage in a variety of financial transactions that, in accordance with U.S. Generally Accepted Accounting Principles are not recorded in our financial statements.  These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk.  Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, lines of credit and standby letters of credit.

We have not engaged in any other off-balance-sheet transactions in the normal course of our lending activities.

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Impact of Inflation and Changing Prices

The financial statements and related data presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation.  The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Disclosures of quantitative and qualitative market risk are not required by smaller reporting companies, such as the Company.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2013. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended June 30, 2013, there have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934, amended) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

On December 3, 2012, a civil suit was filed in the United States District Court for the Eastern District of Wisconsin, Civil Action Number 12-CV-1210, by First American Title Insurance Company against Westbury Bank.  The plaintiffs seek actual damages of $3.6 million and additional treble or such punitive or other damages as determined by the court, as well as plaintiffs’ fees, costs and expenses.  The suit alleges that Westbury Bank should have been aware of the misappropriation of funds deposited into an escrow account maintained by a commercial customer of Westbury Bank, New Horizon Title, LLC.  The suit also alleges that Westbury Bank improperly deducted overdraft fees from the escrow account, that Westbury Bank aided and abetted its customer in the misappropriation of escrowed funds and in its customer’s breach of fiduciary duty to plaintiffs and lenders to whom the escrowed funds belonged, that Westbury Bank’s conduct amounted to commercial bad faith under state commercial law and that Westbury Bank was unjustly enriched as a result of its actions.

Westbury Bank believes that the lawsuit is without merit and intends to defend itself vigorously.  Based on the information available to Westbury Bank’s litigation counsel at this time, they believe that the claims in this case are legally and factually without merit.  Counsel is unable to give an opinion as to the likely outcome.  Other than the foregoing, we are not involved in any pending legal proceedings as a plaintiff or defendant other than routine legal proceedings occurring in the ordinary course of business, and at June 30, 2013, we were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations.

ITEM 1A. RISK FACTORS

Disclosures of risk factors are not required by smaller reporting companies, such as the Company.

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

(a)Unregistered Sales of Equity Securities.  None.

(b)Use of Proceeds.  On October 25, 2012, Westbury Bancorp, Inc. filed a Registration Statement on Form S-1 with the Securities and Exchange Commission in connection with the conversion of WBSB Bancorp, MHC and the related offering of common stock by Westbury Bancorp, Inc. The Registration Statement (File No. 333-184594) was declared effective by the Securities and Exchange Commission on February 11, 2013.  Westbury Bancorp, Inc. registered 5,091,625 shares of common stock, par value $0.01 per share, pursuant to the Registration Statement for an aggregate price of $50.9 million. The stock offering commenced on February 21, 2013, and ended on March 19, 2013.  The issuance of shares was completed on April 9, 2013 and the shares began trading on April 10, 2013.

Westbury Bancorp, Inc. contributed $20.3 million of the net proceeds of the offering to Westbury Bank, and contributed $1.0 million (consisting of 50,916 shares of common stock and $490,840 of the net proceeds) to The Westbury Bank Charitable Foundation, which was formed in connection with the conversion.  In addition, $1.3 million of the net proceeds were used to repay principal and interest outstanding on certain notes payable, including approximately $357,000 paid to Third Floor Mgmt., LLC, an entity owned by certain of the directors and officers of Westbury Bancorp, Inc. and Westbury Bank; $4.1 million of the net proceeds were used to fund the loan to the employee stock ownership plan; and $18.6 million of the net proceeds were retained by Westbury Bancorp, Inc.

(c)Repurchase of Equity Securities.  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.

Westbury Bancorp, Inc.

Date: August 14, 2013

/s/ Raymond F. Lipman

Raymond F. Lipman

President and Chief Executive Officer

/s/ Kirk J. Emerich

Kirk J. Emerich

Senior Vice President and Chief Financial Officer

54

INDEX TO EXHIBITS

Exhibit Number		Description
2		Amended and Restated Plan of Conversion and Reorganization*
3.1		Articles of Incorporation of Westbury Bancorp, Inc.*
3.2		Bylaws of Westbury Bancorp, Inc.*
4		Form of Common Stock Certificate of Westbury Bancorp, Inc.*
10.1		Form of Employee Stock Ownership Plan*
10.2		Salary Continuation Agreement by and between Westbury Bank and Raymond F. Lipman*
10.3		Salary Continuation Agreement by and between Westbury Bank and Kirk J. Emerich*
10.4		Employment Agreement by and between Westbury Bank and Raymond F. Lipman*
10.5		Form of Employment Agreement between Westbury Bank and Raymond F. Lipman*
10.6		Form of Employment Agreement between Westbury Bank and certain executive officers*
10.7		Form of Change and Control Agreement*
10.8		Deferred Compensation Plan for Directors and Key Management Employees of Westbury Bank*
10.9		Formal Written Agreement by and between Westbury Bank and The Comptroller of the Currency*
31.1		Certification of Raymond F. Lipman, President and Chief Executive Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a)
31.2		Certification of Kirk J. Emerich, Senior Vice President and Chief Financial Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a)
32		Certification of Raymond F. Lipman, President and Chief Executive Officer, and Kirk J. Emerich, Senior Vice 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		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Changes in Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to The Consolidated Financial Statements**
*	Incorporated herein by reference to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-184594)
**	Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

55