WEST BANCORPORATION INC - FORM 8-K - EX-99.1 - October 29, 2020

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Exhibit 99.1

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Press Release
 
October 29, 2020
 
FOR IMMEDIATE RELEASE
For more information contact:
Doug Gulling, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-2309
 
WEST BANCORPORATION, INC. ANNOUNCES THIRD QUARTER 2020 NET INCOME, DECLARES QUARTERLY DIVIDEND

West Des Moines, IA - West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported that third quarter 2020 net income was $8.1 million, or $0.49 per diluted common share, compared to third quarter 2019 net income of $7.5 million, or $0.46 per diluted common share. For the first nine months of 2020, net income was $24.2 million, or $1.46 per diluted common share, compared to $21.1 million, or $1.28 per diluted common share, for the first nine months of 2019. On October 28, 2020, the Company’s Board of Directors declared a regular quarterly dividend of $0.21 per common share, the same amount as in the previous six quarters. The dividend is payable on November 25, 2020, to stockholders of record on November 11, 2020.

“We are pleased with our strong financial performance in 2020,” commented Dave Nelson, President and Chief Executive Officer of the Company. “The challenges of 2020 and COVID-19 have amplified the Company’s attention to monitoring the ongoing credit quality of the loan portfolio. Credit quality related to certain industry segments in our commercial real estate loan portfolio is being monitored closely as the economic recovery in those industries remains slow and uncertain. In spite of economic stress, we are encouraged by our customers’ abilities to resume contractual payments at the end of most payment deferral accommodation periods related to COVID-19. We believe our history of strong capital, earnings and credit quality and the strength of our customer relationships put us in a position to successfully navigate the ongoing challenges related to COVID-19.”

In 2019, the Company implemented a growth strategy in three new Minnesota markets. As a result of that strategy and continued business development efforts in its existing markets, the Company’s average loan balances for the first nine months of 2020 have increased $208.1 million compared to the same period of 2019, excluding Paycheck Protection Program loans. Dave Nelson commented, “Because of the success of our business development efforts in Minnesota, we have purchased land in Sartell, Minnesota, a suburb of St. Cloud, and plan to begin construction on a permanent full service office to serve all of the St. Cloud metropolitan area. We are excited to continue building the West Bank brand in Minnesota.”

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 its 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, October 30, 2020. The telephone number for the conference call is 888-339-0814. A recording of the call will be available until November 13, 2020, by dialing 877-344-7529. The replay passcode is 10137424.

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 consumers and small- to medium-sized businesses. West Bank has eight 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 effects of the Coronavirus Disease 2019 (COVID-19) pandemic, including its potential effects on the economic environment, our customers and our operations, 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; 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; actions of bank and nonbank competitors; changes in local, national and international economic conditions; 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; acts of war or terrorism, 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; 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 SHEETSSeptember 30, 2020September 30, 2019
Assets
Cash and due from banks$49,445 $62,119 
Federal funds sold16,398 67,168 
Investment securities available for sale, at fair value374,387 410,371 
Federal Home Loan Bank stock, at cost11,905 11,685 
Loans2,247,425 1,836,730 
Allowance for loan losses(25,403)(17,042)
Loans, net2,222,022 1,819,688 
Premises and equipment, net28,099 30,057 
Bank-owned life insurance42,520 34,731 
Other assets31,107 21,417 
Total assets$2,775,883 $2,457,236 
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing demand$619,346 $395,925 
Interest-bearing:
Demand363,430 322,487 
Savings1,130,582 1,015,443 
Time of $250 or more54,241 71,669 
Other time129,181 219,283 
Total deposits2,296,780 2,024,807 
Federal funds purchased2,350 3,535 
Other borrowings217,661 197,387 
Other liabilities43,772 27,370 
Stockholders’ equity215,320 204,137 
Total liabilities and stockholders’ equity$2,775,883 $2,457,236 



WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (continued) (unaudited)
(in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
CONSOLIDATED STATEMENTS OF INCOME2020201920202019
Interest income
Loans, including fees$22,489 $22,203 $67,132 $63,699 
Investment securities2,106 2,798 7,099 9,080 
Other15 611 256 819 
Total interest income24,610 25,612 74,487 73,598 
Interest expense
Deposits1,946 6,771 9,343 19,405 
Federal funds purchased2 17 21 219 
Other borrowings1,530 1,708 4,780 4,931 
Total interest expense3,478 8,496 14,144 24,555 
Net interest income21,132 17,116 60,343 49,043 
Provision for loan losses4,000 300 8,000 300 
Net interest income after provision for loan losses17,132 16,816 52,343 48,743 
Noninterest income
Service charges on deposit accounts609 630 1,743 1,841 
Debit card usage fees432 426 1,205 1,235 
Trust services553 572 1,477 1,536 
Increase in cash value of bank-owned life insurance133 168 427 482 
Loan swap fees983 — 1,572 — 
Realized investment securities gains (losses), net156 1 81 (64)
Other income337 361 993 1,246 
Total noninterest income3,203 2,158 7,498 6,276 
Noninterest expense
Salaries and employee benefits5,412 5,440 16,014 16,324 
Occupancy1,383 1,379 4,092 3,956 
Data processing614 695 1,882 2,091 
FDIC insurance351 — 880 404 
Other expenses2,299 2,022 6,271 6,055 
Total noninterest expense10,059 9,536 29,139 28,830 
Income before income taxes10,276 9,438 30,702 26,189 
Income taxes2,176 1,912 6,544 5,106 
Net income$8,100 $7,526 $24,158 $21,083 



WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (continued) (unaudited)
(dollars in thousands, except per share data)
PER COMMON SHAREMARKET INFORMATION (1)
Net Income
BasicDilutedDividendsHighLow
2020
3rd Quarter$0.49 $0.49 $0.21 $17.99 $15.50 
2nd Quarter0.48 0.48 0.21 20.67 14.50 
1st Quarter0.49 0.49 0.21 25.68 13.74 
2019
4th Quarter$0.46 $0.46 $0.21 $25.93 $21.01 
3rd Quarter0.46 0.46 0.21 22.47 19.63 
2nd Quarter0.41 0.41 0.21 22.32 20.14 
1st Quarter0.42 0.42 0.20 23.74 19.02 
(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 September 30,Nine Months Ended September 30,
SELECTED FINANCIAL MEASURES2020201920202019
Return on average assets1.16 %1.22 %1.21 %1.20 %
Return on average equity15.20 %14.76 %15.47 %14.25 %
Net interest margin (2)
3.21 %2.94 %3.19 %2.95 %
Efficiency ratio (1)(2)
41.35 %49.03 %42.68 %51.74 %
As of September 30,
20202019
Texas ratio(1)
7.38 %0.24 %
Allowance for loan losses ratio1.13 %0.93 %
Allowance for loan losses ratio, excluding PPP loans (2)(3)
1.26 %0.93 %
Tangible common equity ratio7.76 %8.31 %
(1) A lower ratio is more desirable
(2) Non-GAAP financial measures - see reconciliation below
(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.
•Texas ratio - total nonperforming assets divided by tangible common equity plus the allowance for loan losses.
•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 $224,489 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 report 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 September 30,Nine Months Ended September 30,
2020201920202019
Reconciliation of net interest income and net interest margin on an FTE basis to GAAP:
Net interest income (GAAP)$21,132 $17,116 $60,343 $49,043 
Tax-equivalent adjustment (1)
144 178 516 650 
Net interest income on an FTE basis (non-GAAP)21,276 17,294 60,859 49,693 
Average interest-earning assets2,639,532 2,334,3652,544,429 2,249,520 
Net interest margin on an FTE basis (non-GAAP)3.21 %2.94 %3.19 %2.95 %
Reconciliation of efficiency ratio on an FTE basis to GAAP:
Net interest income on an FTE basis (non-GAAP)$21,276 $17,294 $60,859 $49,693 
Noninterest income3,203 2,158 7,498 6,276 
Adjustment for realized investment securities (gains) losses, net(156)(1)(81)64 
Adjustment for (gain) loss on sale of fixed assets1 — 3 (307)
Adjusted income24,324 19,451 68,279 55,726 
Noninterest expense10,059 9,536 29,139 28,830 
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)
41.35 %49.03 %42.68%51.74 %
As of September 30,
20202019
Reconciliation of allowance for loan losses ratio, excluding PPP loans:
Loans outstanding (GAAP)$2,247,425 $1,836,730 
Less: PPP loans(224,489)— 
   Loans, net of PPP loans (non-GAAP) 2,022,936 1,836,730 
Allowance for loan losses25,403 17,042 
Allowance for loan losses ratio, excluding PPP loans (non-GAAP)1.26 %0.93 %

(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.



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