EX-99.1 2 wtba-20220728exhibit991.htm EX-99.1 Document

Exhibit 99.1

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Press Release
 
July 28, 2022
 
FOR IMMEDIATE RELEASE
For more information contact:
Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766
 
WEST BANCORPORATION, INC. ANNOUNCES SECOND QUARTER NET INCOME, DECLARES QUARTERLY DIVIDEND

West Des Moines, IA - West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported second quarter 2022 net income of $12.7 million, or $0.75 per diluted common share, compared to second quarter 2021 net income of $13.2 million, or $0.79 per diluted common share. For the first six months of 2022, net income was $25.9 million, or $1.54 per diluted common share, compared to $25.0 million, or $1.49 per diluted common share, for the first six months of 2021. On July 27, 2022, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on August 24, 2022, to stockholders of record on August 10, 2022.

The Company recorded a negative provision for loan losses of $1.75 million for the three months ended June 30, 2022, compared to a negative provision for loan losses of $2.0 million for the three months ended June 30, 2021. The negative provision in 2022 was due primarily to the reversal of a specific reserve on an impaired loan. The impaired loan, which had a specific reserve of $2.5 million, was settled in the second quarter of 2022 resulting in a charge off of $451 thousand.

Income tax expense for the second quarter of 2022 included a one-time increase in state income tax expense related to the June 2022 enactment of changes in the Iowa bank franchise tax rates. This legislation reduces the Iowa bank franchise tax rate applied to apportioned income for 2023 and future years. This future reduction in the state tax rate required the Company to reduce net deferred tax assets as of June 30, 2022 by $671 thousand and in turn, caused the one-time increase in 2022 tax expense.

Total assets were $3.5 billion at June 30, 2022, compared to $3.3 billion at June 30, 2021.

David Nelson, President and Chief Executive Officer of the Company, commented, “West Bancorporation, Inc. has entered the current inflationary and volatile interest rate environment from a position of financial strength. Our credit quality is pristine and we continue to see opportunities for high quality loan growth. While we have seen deposit balances decline during the second quarter of 2022, we believe this is largely attributable to customers using their own liquidity to fund business transactions, instead of using debt, and customers seeking higher yielding term investment options.”

David Nelson added, “The ground breaking ceremony for our new corporate headquarters in West Des Moines, Iowa last month was attended by representatives from the city of West Des Moines, the West Des Moines Chamber of Commerce, the Iowa Division of Banking and the Iowa Bankers Association. Our relationships with community partners is something we are very proud of. The new corporate headquarters is another representation of our commitment to our customers, our employees and the communities we serve as we continue our pursuit of excellence.”

The Company filed its report on Form 10-Q with the Securities and Exchange Commission today. Please refer to that document for a more in-depth discussion of the Company’s financial results. The Form 10-Q is available on the Investor Relations section of West Bank’s website at www.westbankstrong.com.

The Company will discuss its financial results on a conference call scheduled for 10:00 a.m. Central Time tomorrow, Friday, July 29, 2022. The telephone number for the conference call is 844-200-6205 with access code 258647. A recording of the call will be available until August 12, 2022, by dialing 866-813-9403 with access code 431517.




About West Bancorporation, Inc. (Nasdaq: WTBA)

West Bancorporation, Inc. is headquartered in West Des Moines, Iowa. Serving customers since 1893, West Bank, a wholly-owned subsidiary of West Bancorporation, Inc., is a community bank that focuses on lending, deposit services, and trust services for small- to medium-sized businesses and consumers. West Bank has six offices in the Des Moines, Iowa metropolitan area, one office in Coralville, Iowa, and four offices in Minnesota in the cities of Rochester, Owatonna, Mankato and St. Cloud.

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements.  Risks and uncertainties that may affect future results include: the continuing effects of the COVID-19 pandemic, including its effects on the economic environment, our customers and our operations, including due to supply chain disruptions, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; interest rate risk; competitive pressures, including from non-bank competitors such as “fintech” companies; pricing pressures on loans and deposits; changes in credit and other risks posed by the Company’s loan and investment portfolios, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions, accounting standards (including as a result of the future implementation of the current expected credit loss (CECL) accounting standard) or regulatory requirements; changes in local, national and international economic conditions, including rising rates of inflation; changes in legal and regulatory requirements, limitations and costs; changes in customers’ acceptance of the Company’s products and services; cyber-attacks; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government, including recent and anticipated interest rate increases; acts of war or terrorism, including the Russian invasion of Ukraine, widespread disease or pandemics, such as the COVID-19 pandemic, or other adverse external events; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; changes to U.S. tax laws, regulations and guidance; talent and labor shortages; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.




WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
CONSOLIDATED BALANCE SHEETSJune 30, 2022June 30, 2021
Assets
Cash and due from banks$26,174 $31,978 
Federal funds sold766 238,845 
Securities available for sale, at fair value731,970 601,462 
Federal Home Loan Bank stock, at cost15,532 10,189 
Loans2,573,129 2,309,527 
Allowance for loan losses(25,434)(28,042)
Loans, net2,547,695 2,281,485 
Premises and equipment, net41,807 30,753 
Bank-owned life insurance44,072 43,146 
Other assets66,775 30,902 
Total assets$3,474,791 $3,268,760 
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing demand$690,335 $703,691 
Interest-bearing:
Demand472,919 487,642 
Savings1,360,020 1,391,231 
Time of $250 or more87,086 46,660 
Other time232,091 196,065 
Total deposits2,842,451 2,825,289 
Federal funds purchased133,000 3,605 
Other borrowings255,751 165,744 
Other liabilities27,400 27,596 
Stockholders’ equity216,189 246,526 
Total liabilities and stockholders’ equity$3,474,791 $3,268,760 



WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (continued) (unaudited)
(in thousands)
Three Months Ended June 30,Six Months Ended June 30,
CONSOLIDATED STATEMENTS OF INCOME2022202120222021
Interest income
Loans, including fees$24,848 $23,139 $48,134 $47,177 
Securities3,982 2,607 7,729 4,810 
Other67 75 149 144 
Total interest income28,897 25,821 56,012 52,131 
Interest expense
Deposits3,146 1,995 5,297 3,872 
Federal funds purchased157 1 157 2 
Other borrowings1,355 975 2,491 2,286 
Total interest expense4,658 2,971 7,945 6,160 
Net interest income24,239 22,850 48,067 45,971 
Provision for loan losses(1,750)(2,000)(2,500)(1,500)
Net interest income after provision for loan losses25,989 24,850 50,567 47,471 
Noninterest income
Service charges on deposit accounts585 578 1,165 1,160 
Debit card usage fees507 511 979 953 
Trust services622 691 1,251 1,343 
Increase in cash value of bank-owned life insurance236 240 463 460 
Loan swap fees— 42 — 42 
Realized securities gains, net— 36 — 40 
Other income328 417 809 982 
Total noninterest income2,278 2,515 4,667 4,980 
Noninterest expense
Salaries and employee benefits6,410 5,672 12,708 11,280 
Occupancy1,242 1,199 2,328 2,427 
Data processing656 617 1,280 1,219 
FDIC insurance289 426 626 830 
Other expenses2,669 2,612 4,986 5,041 
Total noninterest expense11,266 10,526 21,928 20,797 
Income before income taxes17,001 16,839 33,306 31,654 
Income taxes4,334 3,600 7,455 6,663 
Net income$12,667 $13,239 $25,851 $24,991 



WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (continued) (unaudited)
PER COMMON SHAREMARKET INFORMATION (1)
Net Income
BasicDilutedDividendsHighLow
2022
2nd Quarter$0.76 $0.75 $0.25 $27.51 $22.88 
1st Quarter0.80 0.78 0.25 32.60 27.07 
2021
4th Quarter$0.72 $0.71 $0.24 $34.50 $29.30 
3rd Quarter0.77 0.76 0.24 31.98 26.26 
2nd Quarter0.80 0.79 0.24 29.90 23.92 
1st Quarter0.71 0.70 0.22 26.78 18.86 
(1) The prices shown are the high and low sale prices for the Company’s common stock, which trades on the Nasdaq Global Select Market under the symbol WTBA. The market quotations, reported by Nasdaq, do not include retail markup, markdown or commissions.

Three Months Ended June 30,Six Months Ended June 30,
SELECTED FINANCIAL MEASURES2022202120222021
Return on average assets1.45 %1.65 %1.48 %1.59 %
Return on average equity22.81 %22.20 %21.83 %21.50 %
Net interest margin on a FTE basis (1)
2.93 %2.99 %2.89 %3.08 %
Efficiency ratio (1)(2)
41.96 %41.11 %41.05 %40.43 %
As of June 30,
20222021
Nonperforming assets to total assets (2)
0.01 %0.45 %
Allowance for loan losses ratio0.99 %1.21 %
Allowance for loan losses ratio, excluding PPP loans (1)(3)
0.99 %1.26 %
Tangible common equity ratio6.22 %7.54 %
(1) Non-GAAP financial measures - see reconciliation below
(2) A lower ratio is more desirable
(3) Paycheck Protection Program (PPP)

Definitions of ratios:
•Return on average assets - annualized net income divided by average assets.
•Return on average equity - annualized net income divided by average stockholders’ equity.
•Net interest margin - annualized tax-equivalent net interest income divided by average interest-earning assets.
•Efficiency ratio - noninterest expense (excluding other real estate owned expense) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
•Nonperforming assets to total assets - total nonperforming assets divided by total assets.
•Allowance for loan losses ratio - allowance for loan losses divided by total loans.
•Allowance for loan losses ratio, excluding PPP loans - allowance for loan losses divided by total loans minus the amount of PPP loans.
•Tangible common equity ratio - common equity less intangible assets (none held) divided by tangible assets.




WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (continued) (unaudited)
(dollars in thousands)

NON-GAAP FINANCIAL MEASURES

This press release contains references to financial measures that are not defined in generally accepted accounting principles (GAAP). The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on a fully taxable equivalent (FTE) basis, efficiency ratio on an adjusted and FTE basis, loans, net of PPP loans and allowance for loan losses ratio, excluding PPP loans, to their most directly comparable measures under GAAP.
 Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:
Net interest income (GAAP)$24,239 $22,850 $48,067 $45,971 
Tax-equivalent adjustment (1)
326 270 655 499 
Net interest income on a FTE basis (non-GAAP)24,565 23,120 48,722 46,470 
Average interest-earning assets3,362,313 3,102,649 3,397,021 3,041,519 
Net interest margin on a FTE basis (non-GAAP)2.93 %2.99 %2.89 %3.08 %
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:
Net interest income on a FTE basis (non-GAAP)$24,565 $23,120 $48,722 $46,470 
Noninterest income2,278 2,515 4,667 4,980 
Adjustment for realized securities gains, net— (36)— (40)
Adjustment for losses on disposal of premises and equipment, net9 5 27 29 
Adjusted income26,852 25,604 53,416 51,439 
Noninterest expense11,266 10,526 21,928 20,797 
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)
41.96 %41.11 %41.05 %40.43 %
As of June 30,
20222021
Reconciliation of allowance for loan losses ratio, excluding PPP loans:
Loans outstanding (GAAP)$2,573,129 $2,309,527 
Less: PPP loans(3,196)(84,573)
   Loans, net of PPP loans (non-GAAP) 2,569,933 2,224,954 
Allowance for loan losses25,434 28,042 
Allowance for loan losses ratio, excluding PPP loans (non-GAAP) (3)
0.99 %1.26 %

(1) Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income arising from taxable and nontaxable sources.
(2) The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company’s financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable.
(3)    Management believes that presenting the allowance for loan losses as a percentage of total loans excluding PPP loans is useful in assessing the credit quality
of the Company’s core portfolio.