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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended December 31, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission file Number 0-49677
WEST BANCORPORATION, INC.
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(Exact name of registrant as specified in its charter)
IOWA 42 - 1230603
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(State of incorporation (I.R.S. Employer Identification No.)
or organization)
1601 22nd STREET, WEST DES MOINES, IOWA 50266
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (515) 222-2300
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
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(Title of Class)
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. X Yes No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].
Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Act). X Yes No
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The aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 30, 2002, was $232,252,976.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the most recent practicable date, February 24, 2003.
16,060,271 shares Common Stock, no par value
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DOCUMENTS INCORPORATED BY REFERENCE
The Appendix to the Proxy Statement for the 2002 calendar year is incorporated
by reference into Part II and Part IV hereof to the extent indicated in such
Parts.
The definitive proxy statement of West Bancorporation, Inc., which will be filed
not later than 120 days after the close of the Company's fiscal year ending
December 31, 2002, is incorporated by reference into Part III hereof to the
extent indicated in such Part.
1
TABLE OF CONTENTS
PART I
PAGE
ITEM 1. BUSINESS..........................................................3
ITEM 2. PROPERTIES...................................................... 11
ITEM 3. LEGAL PROCEEDINGS................................................11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............ 11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS..................................11
ITEM 6. SELECTED FINANCIAL DATA......................................... 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS FOR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS..............................12
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK..................................................... 12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..................... 12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.......................... 12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...............12
ITEM 11. EXECUTIVE COMPENSATION.......................................... 14
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.................. 14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................. 14
ITEM 14 CONTROLS AND PROCEDURES..........................................14
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K..............................................15
2
PART I
ITEM 1. BUSINESS
GENERAL
West Bancorporation, Inc. (the "Company") is an Iowa corporation and bank
holding company registered under the Bank Holding Company Act of 1956, as
amended. The Company owns 100 percent of the stock of one state banking
subsidiary, as described below. All of the Company's operations are conducted in
the State of Iowa and primarily within the Des Moines, Iowa metropolitan area.
The Company does not engage in any material business activities apart from its
ownership of its banking subsidiary. The principal executive offices of the
Company are located at 1601 22nd Street, West Des Moines, Iowa 50266 and its
telephone number is (515) 222-2300.
The Company was organized and incorporated on May 22, 1984 under the laws of the
State of Iowa to serve as a holding company for its principal banking
subsidiary, West Des Moines State Bank ("West Bank" or the "Bank") located in
West Des Moines, Iowa.
The principal sources of Company revenue are from West Bank: (1) interest and
fees earned on loans made; (2) service charges on deposit accounts; (3) interest
on fixed income securities and (4) trust fees.
West Bank's lending activities consist primarily of short-term and medium-term
commercial and real estate loans, business operating loans and lines of credit,
equipment loans, vehicle loans, personal loans and lines of credit, home
improvement loans and conventional and secondary market mortgage loan
origination. West Bank also offers a variety of demand, savings and time
deposits, merchant credit card processing, safe deposit boxes, wire transfers,
debit cards, direct deposit of payroll and social security checks and automated
teller machine access, trust services and correspondent bank services.
BANKING SUBSIDIARY
West Des Moines State Bank, West Des Moines, Iowa. West Bank is a state
chartered commercial bank insured by the Federal Deposit Insurance Corporation
("FDIC"). It was organized in 1893 as First Valley Junction Savings Bank. The
name was changed to West Des Moines State Bank in 1938. The bank became a wholly
owned subsidiary of the Company in 1984 through a bank holding company
organization whereby the bank's controlling interest was transferred to West
Bancorporation, Inc. West Bank provides full-service banking to businesses and
residents primarily in the Des Moines metropolitan area as well as correspondent
services to banking organizations primarily located in Iowa. It provides a
variety of products and services designed to meet the needs of the market it
serves. It has an experienced staff of bank officers who have spent the majority
of their banking careers with West Bank and local financial service
organizations and who emphasize long-term customer relationships. West Bank
conducts business out of eight full-service offices all located within the Des
Moines metropolitan area.
As of December 31, 2002, West Bank had capital of $85,327,000. West Bank had net
income of $16,516,278 in 2002, $15,753,812 in 2001 and $14,422,235 in 2000.
Total assets as of December 31, 2002, 2001 and 2000 were $886,103,000,
$815,970,000 and $827,876,000, respectively.
BUSINESS STRATEGY AND OPERATIONS
The Company is a bank holding company serving primarily the Des Moines
metropolitan area. The business strategy is to emphasize strong personal and
business relationships to provide products and services that meet the needs of
its customers. The Company seeks to maintain a strong return on equity and net
income. To accomplish these goals, West Bank focuses on small to medium size
businesses that traditionally wish to develop an exclusive relationship with a
single bank. West Bank has the size to give the personal attention required by
business owners, in addition to the credit expertise to help businesses meet
their goals. The Company emphasizes strong cost controls while striving to
achieve return on equity and net income goals.
3
West Bank offers a full range of deposit services that are typically available
in most financial institutions, including checking accounts, savings accounts,
money market accounts and time certificates of deposit. One major goal in
developing the Bank's product mix is to keep the product offerings as simple as
possible, both in terms of the number of products and the features and benefits
of the individual services. The transaction accounts and time certificates are
tailored to the marketplace at competitive rates. In addition, retirement
accounts such as Individual Retirement Accounts are available. The FDIC insures
all deposit accounts up to the maximum amount. The Bank solicits these accounts
from small-to-medium sized businesses and from individuals who live and/or work
within its market area. Occasionally, one particular customer may have balances
in short-term deposits that represent approximately 20% of the Bank's total
deposits. Those funds are specifically invested in short-term liquid
investments. The Company does not believe that the loss of deposits of any one
customer or of a few customers would have an adverse effect on the Bank's
operation or erode its core deposit base.
Loans are provided to creditworthy borrowers regardless of their race, color,
national origin, religion, sex, age, marital status, disability, receipt of
public assistance or any other basis prohibited by law. West Bank intends to
fulfill this commitment while maintaining prudent credit standards. In the
course of fulfilling this obligation to meet the credit needs of the marketplace
it serves, West Bank will give consideration to each credit application
regardless of the fact that the applicant may reside in a low to moderate income
neighborhood, and without regard to the geographic location of the residence,
property or business within the market area.
The Bank provides quality financial products and services such as telephone and
internet banking and trust services that meet the banking needs of its customers
and its market place. The loan programs and acceptance of certain loans may vary
from time-to-time depending on the funds available and regulations governing the
banking industry. West Bank offers all basic types of credit to its marketplace
including commercial, real estate and consumer loans. The types of loans within
these categories are as follows:
Commercial Loans. Commercial loans are typically made to sole proprietors,
partnerships, corporations and other business entities such as municipalities
and individuals where the loan is to be used primarily for business purposes.
These loans are typically secured by assets owned by the borrower and often
involve personal guarantees given by the owners of the business. The types of
loans that West Bank offers include financing guaranteed under Small Business
Administration programs, operating and working capital loans, loans to finance
equipment and other capital purchases, commercial real estate loans, business
lines of credit, term loans, loans to professionals, and letters of credit.
Consumer Loans. Consumer loans are typically available to finance home
improvements and consumer purchases, such as automobiles, household furnishings,
boats and education. These loans are made on both a secured and an unsecured
basis. The types of loans that West Bank offers include automobiles and trucks,
boats and recreational vehicles, personal loans and lines of credit, home equity
lines of credit, home improvement and rehabilitation loans, credit card services
and residential real estate loans.
Other types of credit programs, such as loans to nonprofit organizations and to
public entities for community development, also are available.
West Bank offers trust services typically found in a commercial bank with trust
powers, including the administration of estates, conservatorships, personal and
corporate trusts and agency accounts.
West Bank earns fees on a limited basis from the origination of residential
mortgages that are sold in the secondary real estate market without retaining
the mortgage servicing rights.
The Bank offers traditional banking services, such as safe deposit boxes, wire
transfers, direct deposit of payroll and social security checks, automated
teller machine access and automatic drafts (ACH) for various accounts.
West Bank offers correspondent bank services to community banks located
primarily in Iowa. These services include the buying and selling of federal
funds as well as purchases and sales of loan participations.
4
CREDIT MANAGEMENT
The Company strives to achieve sound credit risk management. In order to achieve
this, the Company has established uniform credit policies and underwriting
criteria for West Bank's loan portfolio. The Bank diversifies the types of loans
offered and is subject to regular credit examinations by regulators, annual
external loan audits and an internal annual review of large loans. The Company
attempts to identify potential problem loans early, charge off loans promptly
and maintain an adequate allowance for loan losses. The Bank has established
credit guidelines for the lending activities that include guidelines relating to
the more commonly requested loan types, as follows:
Commercial Real Estate Loans - Commercial real estate loans are normally based
on loan to appraisal value ratios of not more than 75 percent and secured by a
first priority lien position. Loans are typically subject to interest rate
adjustments no less frequently than 5 years from origination. Fully amortized
monthly repayment terms normally do not exceed twenty years. Projections and
cash flows that show ability to service debt within the amortization period are
required. Property and casualty insurance is required to protect the Banks'
collateral interests. A major risk factor for commercial real estate loans, as
well as the other loan types described below is the geographic concentration in
the Des Moines metropolitan area. Loans are generally guaranteed by the
principal(s).
Commercial Operating Lines - These loans are made to businesses with normal
terms up to twelve months. The credit needs are generally seasonal with the
source of repayment coming from the entity's normal business cycle. Cash flow
reviews are completed to establish the ability to service the debt within the
terms of the loan. A first priority lien on the general assets of the business
normally secures these types of loans. Loan to value limits vary and are
dependent upon the nature and type of the underlying collateral and the
financial strength of the borrower. Loans are generally guaranteed by the
principal(s).
Commercial Term Loans - These loans are made to businesses to finance equipment
and other capital expenditures. Terms are generally the lesser of five years or
the useful life of the asset. Term loans are normally secured by the asset being
financed and are often additionally secured with the general assets of the
business. Loan to value is generally a maximum of 75 percent of the cost or
value of the assets. Loans are normally guaranteed by the principal(s).
Construction Loans - Construction loans on commercial real estate are normally
based on a loan to appraisal value ratio of not more than 75 percent and secured
by a first priority lien position. Loan payments are typically interest only for
a term of 1 1/2 to 2 years. The interest rate is usually variable, based on the
prime rate. Residential construction loans are generally for a term not to
exceed one year, based on a loan to appraisal value ratio of not more than 80%
and secured by a first priority lien position. Interest is normally paid monthly
or quarterly based on a variable rate tied to prime.
Residential First Mortgage Loans - Proceeds of these loans are used to buy or
refinance the purchase of residential real estate with the loan secured by a
first lien on the real estate. Most of the residential mortgage loans originated
by the Bank during the past year (including servicing rights) have been sold in
the secondary mortgage market due to the higher interest rate risk inherent in
the 15 and 30 year fixed rate terms consumers prefer. Loans that are originated
and not sold in the secondary market generally have higher interest rates and
have rate adjustment periods normally no longer than seven years. The maximum
amortization of first mortgage residential real estate loans is 30 years. The
loan-to-value ratios do not exceed 80 percent. Property insurance is required on
all loans to protect the Banks' collateral position.
Home Equity Term Loans - These loans are normally for the purpose of home
improvement or other consumer purposes and are secured by a junior mortgage on
residential real estate. Loan-to-value ratios normally do not exceed 90 percent
of market value.
Home Equity Lines of Credit - The Bank offers a home equity line of credit with
a maximum term of 60 months. These loans are secured by a junior mortgage on the
residential real estate and normally do not exceed a loan-to-value ratio of 90
percent with the interest adjusted quarterly.
Consumer Loans - Consumer loans are normally made to consumers under the
following guidelines: automobiles - loans on new and used automobiles generally
will not exceed 80 and 75 percent of the value, respectively; recreational
vehicles and boats - 75 percent of value; mobile home loans have a maximum term
of 180 months with the loan-to-value ratio generally not exceeding 80 percent.
Each of these loans is secured by a first priority lien on the assets and
requires insurance to protect the Bank's collateral position. The term for
unsecured loans generally does not exceed 24 months.
5
EMPLOYEES
At December 31, 2002, the Bank had a total of 113 full-time equivalent employees
and the Company had no employees. Full-time equivalents represent the number of
people a business would employ if all of its employees were employed on a
full-time basis. It is calculated by dividing the total number of hours worked
by all full and part-time employees by the number of hours a full-time
individual would work for a given period of time. Employees are provided with a
comprehensive program of benefits, including comprehensive medical and dental
plans, long-term disability coverage, and a profit sharing plan with a 401(k)
feature. Management considers its relations with employees to be satisfactory.
Unions represent none of the employees.
MARKET AREA
The Company operates one commercial bank with eight locations throughout the Des
Moines, Iowa metropolitan area. West Bank's primary business includes providing
business and retail banking services and lending.
West Bank's main location is located in West Des Moines, Iowa, one of the
fastest growing communities in Iowa. The population of the Des Moines
metropolitan area is nearly 500,000. Des Moines is the capital of Iowa. Major
employers are the State of Iowa, Principal Life Insurance Company, Pioneer
Hi-Bred International, Inc., Central Iowa Hospital Corporation, Mercy Hospital
Medical Center, Hy-Vee Food Stores, Inc., and the Des Moines Independent School
District.
COMPETITION
The geographic market area served by West Bank is highly competitive with
respect to both loans and deposits. The Bank competes principally with other
commercial banks, savings and loans associations, credit unions, mortgage
companies, finance divisions of auto companies, and other service providers.
Some of these competitors are local, while others are statewide or nationwide.
The major commercial bank competitors include Bankers Trust Company, NA, a local
banking organization; regional banks: Union Planters Bank, NA and Commercial
Federal Bank; and several nationwide banks: Wells Fargo Bank, Bank of America
and U.S. Bank, NA. Among the advantages such larger banks have are their ability
to finance extensive advertising campaigns and to allocate their investment
assets to geographic regions of higher yield and demand. Such banks offer
certain services, which are not offered directly by West Bank, but that may be
offered through correspondent banking institutions. These larger banking
organizations have much higher legal lending limits than West Bank and thus are
better able to finance large regional, national and global commercial customers.
In order to compete with the other financial institutions in its primary trade
area, West Bank uses, to the fullest extent possible, the flexibility that is
accorded by its independent status. This includes an emphasis on specialized
services, local promotional activities and personal contacts by the Bank's
officers, directors and employees. In particular, the Bank competes for deposits
principally by offering depositors a variety of deposit programs, convenient
office locations, hours and other services. West Bank competes for loans
primarily by offering competitive interest rates, experienced lending personnel
with local decision-making authority and quality products and services.
As of June 30, 2002, there were 28 other banks and savings and loan associations
within Polk County, Iowa, where the bank's offices are located. West Bank ranked
5th based on total deposits of all offices in Polk County. For the entire state,
West Bank ranks 9th in terms of deposit size.
The Bank also competes with the financial markets for funds. Yields on corporate
and government debt securities and commercial paper affect the ability of
commercial banks to attract and hold deposits. Commercial banks also compete for
funds with money market instruments and similar investment vehicles offered by
competitors including brokerage firms, insurance companies, credit card issuers
and retailers such as Sears. Money market funds offered by these types of
organizations have provided substantial competition for deposits. This trend
will likely continue in the future.
The Company anticipates bank competition will continue to change significantly
over the next several years as more banks, including the major regionals and
nationals, continue to consolidate. The larger financial institutions will
continue to consolidate their branch systems by providing incentives to their
customers to use electronic banking instead of brick and mortar branches. Credit
unions, because of their income tax advantage, will continue to show substantial
growth.
6
SUPERVISION AND REGULATION
The following discussion generally refers to certain statutes and regulations
affecting the banking industry. These references provide brief summaries and,
therefore, do not purport to be complete and are qualified in their entirety by
reference to those statutes and regulations. In addition, due to the numerous
statutes and regulations that apply to and regulate the operation of the banking
industry, many are not referenced below.
The Company and West Bank are subject to extensive federal and state regulation
and supervision. Regulation and supervision of financial institutions is
primarily intended to protect depositors and the FDIC rather than shareholders
of the Company. The laws and regulations affecting banks and bank holding
companies have changed significantly over recent years, particularly with the
passage of the Financial Services Modernization Act. There is reason to expect
that similar changes will continue in the future. Any change in applicable laws,
regulations or regulatory policies may have a material effect on the business,
operations and prospects of the Company. The Company is unable to predict the
nature or the extent of the effects on its business and earnings that any fiscal
or monetary policies or new federal or state legislation may have in the future.
The Company
The Company is a bank holding company by virtue of its ownership of West Bank,
and is registered as such with the Board of Governors of the Federal Reserve
System (the "Federal Reserve"). The Company is subject to regulation under the
Bank Holding Company Act of 1956, as amended (the "BHCA"), which subjects the
Company and the Bank to supervision and examination by the Federal Reserve.
Under the BHCA, the Company files with the Federal Reserve quarterly and annual
reports of its operations and such additional information as the Federal Reserve
may require.
Source of Strength to the Bank. The Federal Reserve takes the position that a
bank holding company is required to serve as a source of financial strength to
its subsidiary bank and may not conduct its operations in an unsafe or unsound
manner. In addition, it is the Federal Reserve's position that in serving as a
source of strength to its subsidiary bank, a bank holding company should use
available resources to provide adequate capital funds to its subsidiary bank
during periods of financial stress or adversity. It should also maintain the
financial flexibility and capital raising capacity to obtain additional
resources for providing assistance to its subsidiary bank. A bank holding
company's failure to meet its obligations to serve as a source of strength to
its subsidiary bank will generally be considered by the Federal Reserve to be an
unsafe and unsound banking practice or a violation of the Federal Reserve's
regulations or both.
Federal Reserve Approval. Bank holding companies must obtain the approval of the
Federal Reserve before they: (1) acquire direct or indirect ownership or control
of any voting stock of any bank if, after such acquisition, they would own or
control, directly or indirectly, more than 5 percent of the voting stock of such
bank; (2) merge or consolidate with another bank holding company; or (3) acquire
substantially all of the assets of any additional banks.
Non-Banking Activities. With certain exceptions, the BHCA also prohibits bank
holding companies from acquiring direct or indirect ownership or control of
voting stock in any company other than a bank or bank holding company unless the
Federal Reserve finds the company's business to be incidental to the business of
banking. When making this determination, the Federal Reserve in part considers
whether allowing a bank holding company to engage in those activities would
offer advantages to the public that would outweigh possible adverse effects. A
bank holding company may engage in permissible non-banking activities on a de
novo basis, if the holding company meets certain criteria and notifies the
Federal Reserve within ten (10) business days after the activity has commenced.
Under the Financial Services Modernization Act, an eligible bank holding company
may elect (with the approval of the Federal Reserve) to become a "financial
holding company". Financial holding companies are permitted to engage in certain
financial activities through affiliates that had previously been prohibited
activities for bank holding companies. Such financial activities include
securities and insurance underwriting and merchant banking. At this time, the
Company has not elected to become a financial holding company, but may choose to
do so at some time in the future.
7
Control Transactions. The Change in Bank Control Act of 1978, as amended,
requires a person or group of persons acquiring "control" of a bank holding
company to provide the Federal Reserve with at least 60 days prior written
notice of the proposed acquisition. Following receipt of this notice, the
Federal Reserve has 60 days to issue a notice disapproving the proposed
acquisition, but the Federal Reserve may extend this time period for up to
another 30 days. An acquisition may be completed before the disapproval period
expires if the Federal Reserve issues written notice of its intent not to
disapprove the action. Under a rebuttable presumption established by the Federal
Reserve, the acquisition of 10 percent or more of a class of voting stock of a
bank holding company with a class of securities registered under Section 12 of
the Securities Exchange Act of 1934, as amended, would constitute the
acquisition of control. In addition, any "company" would be required to obtain
the approval of the Federal Reserve under the BHCA before acquiring 25 percent
(or 5 percent if the "company" is a bank holding company) or more of the
outstanding shares of the Company, or otherwise obtain control over the Company.
Affiliate Transactions. The Company and West Bank are deemed affiliates within
the meaning of the Federal Reserve Act, and transactions between affiliates are
subject to certain restrictions. Generally, the Federal Reserve Act: (1) limits
the extent to which the financial institution or its subsidiaries may engage in
"covered transactions" with an affiliate; and (2) requires all transactions with
an affiliate, whether or not "covered transactions", to be on terms
substantially the same, or at least as favorable to the institution or
subsidiary, as those provided to a non-affiliate. The term "covered transaction"
includes the making of loans, purchase of assets, issuance of a guarantee and
similar transactions.
State Law on Acquisitions. Iowa law permits bank holding companies to make
acquisitions throughout the state. However, Iowa currently has a deposit
concentration limit of 15 percent on the amount of deposits in the state that
any one banking organization can control and continue to acquire banks or bank
deposits (by acquisitions), which applies to all depository institutions doing
business in Iowa.
Banking Subsidiaries
Applicable federal and state statutes and regulations governing a bank's
operations relate, among other matters, to capital adequacy requirements,
required reserves against deposits, investments, loans, legal lending limits,
certain interest rates payable, mergers and consolidations, borrowings, issuance
of securities, payment of dividends, establishment of branches and dealings with
affiliated persons.
West Bank is a state bank subject to primary federal regulation and supervision
by the Federal Deposit Insurance Corporation (the "FDIC") and the Iowa Division
of Banking. The federal laws that apply to the bank regulate, among other
things, the scope of its business, its investments, its reserves against
deposits, the timing of the availability of deposited funds and the nature and
amount of and collateral for loans. The laws and regulations governing the bank
generally have been promulgated to protect depositors and the deposit insurance
fund of the FDIC and not to protect stockholders of such institutions or their
holding companies.
The FDIC has authority to prohibit banks under their supervision from engaging
in what it considers to be unsafe and unsound practices in conducting business.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
requires federal banking regulators to adopt regulations or guidelines in a
number of areas to ensure bank safety and soundness, including internal
controls, credit underwriting, asset growth, earnings, management compensation
and ratios of classified assets to capital. FDICIA also contains provisions
which are intended to change independent auditing requirements, restrict the
activities of state-chartered insured banks, amend various consumer banking
laws, limit the ability of "undercapitalized banks" to borrow from the Federal
Reserve's discount window, require regulators to perform periodic on-site bank
examinations and set standards for real estate lending.
Borrowing Limitations. West Bank is subject to limitations on the aggregate
amount of loans that it can make to any one borrower, including related
entities. Subject to numerous exceptions based on the type of loans and
collateral, applicable statutes and regulations generally limit loans to one
borrower of 15 percent of total equity and reserves. West Bank is in compliance
with applicable loans to one borrower requirements.
8
FDIC Insurance. Generally, customer deposit accounts in banks are insured by the
FDIC for up to a maximum amount of $100,000. The FDIC has adopted a risk-based
insurance assessment system under which depository institutions contribute funds
to the FDIC insurance fund based on their risk classification. The FDIC may
terminate the deposit insurance of any insured depository institution if it
determines after an administrative hearing that the institution has engaged or
is engaging in unsafe or unsound practices, is in an unsafe or unsound condition
to continue operations or has violated any applicable law.
Capital Adequacy Requirements. The Federal Reserve, the FDIC and the Office of
the Comptroller of the Currency ("OCC") (collectively, the "Agencies") have
adopted risk-based capital guidelines for banks and bank holding companies that
are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies and account
for off-balance sheet items. Failure to achieve and maintain adequate capital
levels may give rise to supervisory action through the issuance of a capital
directive to ensure the maintenance of required capital levels. West Bank is in
compliance with applicable regulatory capital level requirements.
The current guidelines require all federally regulated banks to maintain a
minimum risk-based total capital ratio equal to 8 percent, of which at least 4
percent must be Tier 1 capital. Tier 1 capital includes common shareholders'
equity, qualifying perpetual preferred stock and minority interests in equity
accounts of consolidated subsidiaries, but excludes goodwill and most other
intangibles and the allowance for loan and lease losses. Tier 2 capital includes
the excess of any preferred stock not included in Tier 1 capital, mandatory
convertible securities, hybrid capital instruments, subordinated debt and
intermediate term preferred stock and general reserve for loan and lease losses
up to 1.25 percent of risk weighted assets. West Bank has not received any
notice indicating that it will be subject to higher capital requirements.
Under these guidelines, bank assets are given risk weights of 0 percent, 20
percent, 50 percent or 100 percent. Most loans are assigned to the 100 percent
risk category, except for first mortgage loans fully secured by residential
property and, under certain circumstances, residential construction loans (both
carry a 50 percent rating). Most investment securities are assigned to the 20
percent category, except for municipal or state revenue bonds (which have a 50
percent rating) and direct obligations of or obligations guaranteed by the
United States Treasury or United States Government Agencies (which have a 0
percent rating).
The Agencies have also implemented a leverage ratio, which is equal to Tier 1
capital as a percentage of average total assets less intangibles, to be used as
a supplement to the risk based guidelines. The principal objective of the
leverage ratio is to limit the maximum degree to which a bank may leverage its
equity capital base. The minimum required leverage ratio for top rated
institutions is 3 percent, but most institutions are required to maintain an
additional cushion of at least 100 to 200 basis points. Any institution
operating at or near the 3 percent level is expected to be a strong banking
organization without any supervisory, financial or operational weaknesses or
deficiencies. Any institution experiencing or anticipating significant growth
would be expected to maintain capital ratios, including tangible capital
positions, well above the minimum levels.
Prompt Corrective Action. Regulations adopted by the Agencies impose even more
stringent capital requirements. The FDIC and other Agencies must take certain
"prompt corrective action" when a bank fails to meet capital requirements. The
regulations establish and define five capital levels: (1) "well-capitalized",
(2) "adequately capitalized", (3) "undercapitalized", (4) "significantly
undercapitalized" and (5) "critically undercapitalized". Increasingly severe
restrictions are imposed on the payment of dividends and management fees, asset
growth and other aspects of the operations of institutions that fall below the
category of being "adequately capitalized". Undercapitalized institutions are
required to develop and implement capital plans acceptable to the appropriate
federal regulatory agency. Such plans must require that any company that
controls the undercapitalized institution must provide certain guarantees that
the institution will comply with the plan until it is adequately capitalized. As
of the date of this Annual Report on Form 10-K, neither the Company or West Bank
was subject to any regulatory order, agreement or directive to meet and maintain
a specific capital level for any capital measure. Furthermore, as of that same
date, West Bank was categorized as "well capitalized" under regulatory prompt
corrective action provisions.
9
Restrictions on Dividends. Dividends paid to the Company by West Bank are the
major source of Company cash flow. Various federal and state statutory
provisions limit the amount of dividends banking subsidiaries are permitted to
pay to their holding companies without regulatory approval. Federal Reserve
policy further limits the circumstances under which bank holding companies may
declare dividends. For example, a bank holding company should not continue its
existing rate of cash dividends on its common stock unless its net income is
sufficient to fully fund each dividend and its prospective rate of earnings
retention appears consistent with its capital needs, asset quality and overall
financial condition. In addition, the Federal Reserve and the FDIC have issued
policy statements that provide that insured banks and bank holding companies
should generally pay dividends only out of current operating earnings. Federal
and state banking regulators may also restrict the payment of dividends by
order.
West Bank, as a state chartered bank, is restricted under Iowa law to paying
dividends only out of its undivided profits. Additionally, the payment of
dividends by West Bank is affected by the requirement to maintain adequate
capital pursuant to applicable capital adequacy guidelines and regulations, and
West Bank is generally prohibited from paying any dividends if, following
payment thereof, the bank would be undercapitalized. As of December 31, 2002,
approximately $ 27,000,000 was available to be paid as dividends by West Bank to
the Company without prior regulatory approval.
Reserves Against Deposits. The Federal Reserve requires all depository
institutions to maintain reserves against their transaction accounts (primarily
checking accounts) and non-personal time deposits. Generally reserves of 3
percent must be maintained against total transaction accounts of $42,800,000 or
less (subject to an exemption not in excess of the first $5,500,000 of
transaction accounts). A reserve of $1,119,000 plus 10 percent of amounts in
excess of $42,800,000 must be maintained in the event total transaction accounts
exceed $42,800,000. The balances maintained to meet the reserve requirements
imposed by the Federal Reserve may be used to satisfy applicable liquidity
requirements. Because required reserves must be maintained in the form of vault
cash or a non-interest bearing account at a Federal Reserve Bank, the effect of
this reserve requirement is to reduce the earning assets of West Bank.
Bank Offices. Iowa law regulates the establishment of bank offices and thus may
affect the Company's future plans to establish additional offices of West Bank.
Pursuant to amendments to Iowa law effective February 21, 2001, current Iowa
laws permits a state bank to establish up to three (3) offices anywhere in the
state. Until July 1, 2004, in addition to the three offices which may be
established anywhere in the state, a bank may only establish a bank office
inside the boundaries of the county in which the principal place of business of
the state bank is located and those counties contiguous to or cornering upon
such county. The number of offices a state bank may establish in a particular
municipality or urban complex may also be limited depending upon the population.
Effective July 1, 2004, the geographical restrictions on bank office locations
will be repealed. Finally, until July 1, 2004, Iowa law restricts the ability of
a bank to establish a de novo office within the limits of a municipal
corporation where there is an already established state or national bank or bank
office.
Regulatory Developments
In 1999, the Financial Services Modernization Act was enacted which: (1)
repealed historical restrictions on preventing banks from affiliating with
securities firms; (2) broadened the activities that may be conducted by bank
subsidiaries of holding companies; and (3) provided an enhanced framework for
protecting the privacy of consumers' information. In addition, bank holding
companies may be owned, controlled or acquired by any company engaged in
financially related activities, as long as such company meets regulatory
requirements. To the extent that this legislation permits banks to affiliate
with financial services companies, the banking industry may experience further
consolidation, although the impact of this legislation on the Company and West
Bank is unclear at this time.
Regulatory Enforcement Authority
The enforcement powers available to federal and state banking regulators are
substantial and include, among other things, the ability to assess civil
monetary penalties, to issue cease-and-desist or removal orders and to initiate
injunctive actions against banking organizations and institution-affiliated
parties, as defined. In general, enforcement actions must be initiated for
violations of laws and regulations and unsafe or unsound practices. Other
actions, or inactions, may provide the basis for enforcement action, including
misleading or untimely reports filed with regulatory authorities. Applicable law
also requires public disclosure on final enforcement actions by the federal
banking agencies.
10
National Monetary Policies
In addition to being affected by general economic conditions, the earnings and
growth of West Bank are affected by the regulatory authorities' policies,
including the Federal Reserve. An important function of the Federal Reserve is
to regulate the money supply, credit conditions and interest rates. Among the
instruments used to implement these objectives are open market operations in
U.S. Government securities, changes in reserve requirements against bank
deposits and the Federal Reserve Discount Rate, which is the rate charged banks
borrowing from the Federal Reserve Bank. These instruments are used in varying
combinations to influence overall growth and distribution of credit, bank loans,
investments and deposits, and their use may also affect interest rates charged
on loans or paid on deposits.
The monetary policies of the Federal Reserve have had a material impact on the
operating results of commercial banks in the past and are expected to do so in
the future. Also important in terms of effect on banks are controls on interest
rates paid by banks on deposits and types of deposits that may be offered by
banks. The Depository Institutions Deregulation Committee, created by Congress
in 1980, phased out ceilings on the rate of interest that may be paid on
deposits by commercial banks and savings and loan associations, with the result
that the differentials between the maximum rates banks and savings and loans can
pay on deposit accounts have been eliminated. The effect of deregulation of
deposit interest rates has been to increase banks' cost of funds and to make
banks more sensitive to fluctuations in market rates.
ITEM 2. PROPERTIES
The Company's office is housed in the main office of West Bank located at 1601
22nd Street in West Des Moines, Iowa. The space is leased and consists of
approximately 300 square feet with annual rent of $5,000. West Bank's main
office is also located in the leased facility at 1601 22nd Street in West Des
Moines. The Bank rents 13,786 square feet and pays annual rent of $344,000 for a
full-service banking location that includes drive-in facilities and an automated
teller machine. The bank also leases buildings and space for six other locations
located within the Des Moines metropolitan area. These offices are full-service
banking locations with five of these offices having drive-in facilities and all
six locations have automated teller machines. Lease payments for these six
offices totaled $357,000 for the year ended December 31, 2002. The Bank owns one
other full-service banking location in Des Moines. This location also includes a
drive-in facility and an automatic teller machine.
ITEM 3. LEGAL PROCEEDINGS
West Bank from time to time is a party to various legal actions arising in the
normal course of business. The Company believes that there is no threatened or
pending proceeding against the Company or West Bank, which, if determined
adversely, would have a material adverse effect on the business or financial
position of the Company or West Bank.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information appearing on page 49 of the Corporation's Appendix to the Proxy
Statement, filed as Exhibit 13 hereto, is incorporated herein by reference.
There were approximately 650 holders of record of the Company's no par value
common stock as of February 24, 2003. The closing price of the Company's common
stock was $16.10 on February 24, 2003.
The Company increased dividends to common shareholders in 2002 to $.62 per
share, a 3.3 percent increase over $.60 for 2001. Dividend declarations are
evaluated and determined by the Board of Directors on a quarterly basis. The
ability of the Company to continue to pay such dividends will depend primarily
upon the earnings of West Bank and its ability to pay dividends to the Company.
It is anticipated that West Bank will continue to pay dividends on a regular
basis in the future.
11
The ability of West Bank to pay dividends is governed by various statutes. West
Bank, as a state bank, is restricted to paying dividends only out of undivided
profits. These statutes provide that no bank shall declare or pay any dividends
in an amount greater than its retained earnings, without approval from governing
regulatory bodies. In addition, applicable bank regulatory authorities have the
power to require any bank to suspend the payment of any and all dividends until
the bank shall have complied with all requirements that may have been imposed by
such authorities.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing on page 3 of the Company's Appendix to the Proxy
Statement, filed as Exhibit 13 hereto, is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information appearing on pages 4 through 21 of the Company's Appendix to the
Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information appearing on pages 18 through 20 of the Company's Appendix to
the Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information appearing on pages 22 through 48 of the Company's Appendix to
the Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Within the twenty-four months prior to the date of the most recent financial
statements, there have been no changes in or disagreements with accountants of
the Company.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth summary information about the directors and
executive officers of the Company and certain executive officers of West Des
Moines State Bank.
Position with Company
Name Age or West Bank
- --------------------------------------------------------------------------------
Frank W. Berlin 57 Director of Company and Bank
Steven G. Chapman 51 Director of Company and Bank
Michael A. Coppola 46 Director of Company and Bank
Orville E. Crowley 76 Director of Company and Bank
Raymond G. Johnston 74 Director of Company and Bank; Vice Chairman
of Company
David L. Miller 70 Director and Chairman Emeritus of Company;
Director and Vice Chairman of Bank
David R. Milligan 55 Director and Executive Vice President of
Company; Director, Chairman and Chief
Executive Officer of Bank
Robert G. Pulver 55 Director of Company and Bank
Thomas E. Stanberry 48 Director and Chairman, President and Chief
Executive Officer of Company
Jack G. Wahlig 70 Director of Company and Bank
Connie Wimer 70 Director of Company and Bank
Joyce A. Chapman 58 Vice President and Treasurer of Company;
Director and Executive Vice President of
Bank
Sharen K. Surber 58 Executive Vice President of Bank
Brad L. Winterbottom 46 Director and President of Bank
Douglas R. Gulling 49 Chief Financial Officer of Company and Bank
12
The Board of Directors of the Company currently consists of 11 members.
Directors are elected at each annual meeting of shareholders to hold office
until the next annual meeting of shareholders after their election and until
their successor shall be elected and shall qualify or until their earlier
resignation, removal from office, death or incapacitation. The shareholders may
at any time remove any director, with or without cause, by majority vote of the
outstanding shares and elect a successor to fill the vacancy. The executive
officers of the Company are elected on an annual basis by the Board of Directors
of the Company. An executive officer may be removed by the Board of Directors
whenever in its judgment the best interest of the Company will be served
thereby.
The principal occupation or business and experience of the directors and
executive officers of the Company and certain executive officers of West Bank
for the past five years are set forth below:
FRANK W. BERLIN is president of Frank W. Berlin & Associates, an insurance
broker. Mr. Berlin has served as a director of the Company and the Bank since
1995.
STEVEN G. CHAPMAN is president and chief executive officer of ITA Group, Inc., a
performance marketing group headquartered in West Des Moines, Iowa. He has
served as a director of the Company since 1994 and the Bank since 1993.
MICHAEL A. COPPOLA is president of Coppola Enterprises, Inc. a fully integrated
real estate development and management company. He has been a director of the
Company and the Bank since 1996.
ORVILLE E. CROWLEY is president and chief operating officer of Linden Lane Farms
Company, a family farm corporation involved in growing row crops in Madison and
Warren counties in Iowa. Mr. Crowley has been a director of the Company since
1984 and the Bank since 1981.
RAYMOND G. JOHNSTON is vice chairman of the Board of Directors of the Company
and has been a director of the Company and the Bank since 1986. Mr. Johnston is
a retired executive vice president of the Bank.
DAVID L. MILLER is chairman emeritus of the Company. He retired as chairman,
president and chief executive officer of the Company as of February 28, 2003. He
retired as chief executive officer of the Bank as of December 31, 2001 and
currently serves as vice chairman of the Bank. Mr. Miller has been a director of
the Company since 1984 and the Bank since 1962. He joined the Bank in 1961.
DAVID R. MILLIGAN is executive vice president of the Company. He was elected
chairman and chief executive officer of the Bank effective January 1, 2002.
Prior to 2002 he was executive vice president and general counsel of the Bank.
Mr. Milligan has been a director of the Company since 2002 and the Bank since
2000. He started with the Bank in 1980.
ROBERT G. PULVER is president of All State Industries, Inc. an industrial rubber
products manufacturer. He has been a director of the Company since 1984 and the
Bank since 1981.
THOMAS E. STANBERRY is chairman, president and chief executive officer of the
Company. He was elected to this position effective March 1, 2003. From 1989
until February 2003, Mr. Stanberry served in a variety of capacities, most
recently as Managing Director and Senior Investment Banker, for U.S. Bancorp
Piper Jaffray.
JACK G. WAHLIG is president of Integrus Financial, L.C. He is a retired partner
from the certified public accounting firm McGladrey & Pullen, LLP. Mr. Wahlig
has been a director of the Company since 2001 and the Bank since 1997.
CONNIE WIMER is owner/publisher of Business Publications Corporation and retired
November 1, 2001 as president of Iowa Title Company. She has been a director of
the Company and the Bank since 1985.
JOYCE A. CHAPMAN is vice president and treasurer of the Company. She was elected
executive vice president-administration of the Bank in 2001. Prior to that time
she was senior vice president-administration. Ms. Chapman has been a director of
the Bank since 1975 and served as a director of the Company from 1984 until
February 2002. She has been with the Bank since 1971, serving in a variety of
capacities including cashier.
13
SHAREN K. SURBER was elected executive vice president-operations of the Bank in
2001. Prior to that time she served as senior vice president-operations. She has
been with the bank since 1975, serving in a variety of capacities including
cashier and human resource director.
BRAD L. WINTERBOTTOM is president of the Bank and has served as a director of
the Bank since 2000. Mr. Winterbottom has been president since 2000. He was
executive vice president - credit from 1998 to 2000. Prior to that time he was
senior vice president - credit of the Bank. He joined the Bank in 1992.
DOUGLAS R. GULLING joined the Company in November 2001 as chief financial
officer and was elected chief financial officer of the Bank in February 2002.
From 1996 until 2001, Mr. Gulling served as senior vice president and corporate
controller of Brenton Bank in Des Moines, Iowa.
Section 16(a) Beneficial Ownership Reporting Compliance
The definitive proxy statement of West Bancorporation, Inc. which will be filed
not later than 120 days following the close of the Company's fiscal year ended
December 31, 2002, is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The definitive proxy statement of West Bancorporation, Inc. which will be filed
not later than 120 days following the close of the Company's fiscal year ended
December 31, 2002, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The definitive proxy statement of West Bancorporation, Inc. which will be filed
not later than 120 days following the close of the Company's fiscal year ended
December 31, 2002, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The definitive proxy statement of West Bancorporation, Inc. which will be filed
not later than 120 days following the close of the Company's fiscal year ended
December 31, 2002, is incorporated herein by reference.
ITEM 14. CONTROLS AND PROCEDURES
The Company's principal executive officer and principal financial officer have
concluded that the Company's disclosure controls and procedures (as defined in
Exchange Act Rule 13a-14(c)), based on their evaluation of such controls and
procedures conducted within 90 days prior to the date hereof, are effective to
insure that information required to be disclosed by the Company in the reports
it files under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission and that such
information is accumulated and communicated to the Company's management,
including its principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of the evaluation referred to above.
14
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following exhibits and financial statement schedules of the Company are
filed as part of this report:
(a) 1. Financial Statements
See the financial statements on pages 22 through 48 of the
Company's Appendix to the Proxy Statement, filed as Exhibit 13
hereto, which are incorporated herein by reference.
2. Financial Statement Schedules
All schedules are omitted because they are not applicable, not
required or because the required information is included in
the consolidated financial statements or notes thereto.
3. Exhibits (not covered by independent auditors' report).
3.1 Restated Articles of Incorporation of the Company*
3.2 By-laws of the Company*
10.1 Lease for Main Bank Facility*
10.2 Supplemental Agreement to Lease for Main Bank Facility*
10.3 Short-term Lease related to Main Bank Facility*
10.4 Assignment*
10.5 Lease Modification Agreement No. 1 for Main Bank Facility*
10.6 Memorandum of Real Estate Contract*
10.7 Affidavit*
10.8 Addendum to Lease for Main Bank Facility*
10.9 Data Processing Contract*
10.10 Employment Contract*
10.11 Consulting Contract*
10.12 Data Processing Contract Amendment
13 The Appendix to the Proxy Statement for West Bancorporation,
Inc. for the 2002 calendar year**
21 Subsidiaries*
99.1 Certification under Section 906 of the Sarbanes-Oxley Act
of 2002
* Incorporated herein by reference to Form 10 filed on March 11,
2002.
** Incorporated herein by reference to the definitive proxy
statement 14A filed on March 11, 2003.
The Company will furnish to any shareholder upon request and upon payment of a
fee of $.50 per page, a copy of any exhibit. Requests for copies of exhibits
should be directed to Douglas R. Gulling, Chief Financial Officer, West
Bancorporation, Inc., 1601 22nd Street, West Des Moines, Iowa 50266.
(b) Reports on Form 8-K
During the three months ended December 31, 2002, the Company filed Form
8-K's on October 15, 2002, which contained a press release announcing the
quarterly dividend and the authorization to buy back up to $5,000,000 of
common stock; on October 28, 2002, which contained a press release
announcing earnings for the three and nine months ended September 30, 2002;
and on November 14, 2002, which contained a press release announcing the
retirement of David L. Miller as Chairman, President and Chief Executive
Officer.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has fully caused this Registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
WEST BANCORPORATION, INC.
(Registrant)
March 26, 2003 By: /s/ David L. Miller
------------------------------
David L. Miller
Director and Chairman Emeritus
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
March 26, 2003 By: /s/ David L. Miller
------------------------------
David L. Miller
Director and Chairman Emeritus
(Principal Executive Officer)
March 26, 2003 By: /s/ Douglas R. Gulling
------------------------------
Douglas R. Gulling
Chief Financial Officer
(Principal Accounting Officer)
BOARD OF DIRECTORS
March 26, 2003 By: /s/ Frank W. Berlin
------------------------------
Frank W. Berlin
March 26, 2003 By: /s/ Steven G. Chapman
------------------------------
Steven G. Chapman
March 26, 2003 By: /s/ Michael A. Coppola
------------------------------
Michael A. Coppola
March 26, 2003 By: /s/ Orville E. Crowley
------------------------------
Orville E. Crowley
March 26, 2003 By: /s/ Raymond G. Johnston
------------------------------
Raymond G. Johnston
March 26, 2003 By: /s/ David R. Milligan
------------------------------
David R. Milligan
March 26, 2003 By: /s/ Robert G. Pulver
------------------------------
Robert G. Pulver
March 26, 2003 By: /s/ Thomas E. Stanberry
------------------------------
Thomas E. Stanberry
March 26, 2003 By: /s/ Jack G. Wahlig
------------------------------
Jack G. Wahlig
March 26, 2003 By: /s/ Connie Wimer
------------------------------
Connie Wimer
16
Certification of Disclosure
I, David L. Miller, certify that:
1. I have reviewed this annual report on Form 10-K of West Bancoporation, Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
the annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in the annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b. evaluated the effectiveness of the issuer's disclosure controls and
procedures as of a date within 90 days prior to the filing date of the
report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
March 26, 2003
/s/ David L. Miller
- ------------------------------
David L. Miller
Director and Chairman Emeritus
17
Certification of Disclosure
I, Douglas R. Gulling, certify that:
1 I have reviewed this annual report on Form 10-K of West Bancoporation, Inc.
2 Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
the annual report;
3 Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in the annual report;
4 The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b. evaluated the effectiveness of the issuer's disclosure controls and
procedures as of a date within 90 days prior to the filing date of the
report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5 The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6 The registrant's other certifying officer and I have indicated in this
report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
March 26, 2003
/s/ Douglas R. Gulling
- ------------------------
Douglas R. Gulling
Chief Financial Officer
18