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West Bancorporation, Inc. Announces Second Quarter Net Income, Declares Quarterly Dividend

West Bancorporation
West Bancorporation

WEST DES MOINES, Iowa, July 28, 2022 (GLOBE NEWSWIRE) -- 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 SHEETS

 

June 30, 2022

 

June 30, 2021

Assets

 

 

 

 

Cash and due from banks

 

$

26,174

 

 

$

31,978

 

Federal funds sold

 

 

766

 

 

 

238,845

 

Securities available for sale, at fair value

 

 

731,970

 

 

 

601,462

 

Federal Home Loan Bank stock, at cost

 

 

15,532

 

 

 

10,189

 

Loans

 

 

2,573,129

 

 

 

2,309,527

 

Allowance for loan losses

 

 

(25,434

)

 

 

(28,042

)

Loans, net

 

 

2,547,695

 

 

 

2,281,485

 

Premises and equipment, net

 

 

41,807

 

 

 

30,753

 

Bank-owned life insurance

 

 

44,072

 

 

 

43,146

 

Other assets

 

 

66,775

 

 

 

30,902

 

Total assets

 

$

3,474,791

 

 

$

3,268,760

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

Deposits:

 

 

 

 

Noninterest-bearing demand

 

$

690,335

 

 

$

703,691

 

Interest-bearing:

 

 

 

 

Demand

 

 

472,919

 

 

 

487,642

 

Savings

 

 

1,360,020

 

 

 

1,391,231

 

Time of $250 or more

 

 

87,086

 

 

 

46,660

 

Other time

 

 

232,091

 

 

 

196,065

 

Total deposits

 

 

2,842,451

 

 

 

2,825,289

 

Federal funds purchased

 

 

133,000

 

 

 

3,605

 

Other borrowings

 

 

255,751

 

 

 

165,744

 

Other liabilities

 

 

27,400

 

 

 

27,596

 

Stockholders’ equity

 

 

216,189

 

 

 

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 INCOME

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Interest income

 

 

 

 

 

 

 

 

Loans, including fees

 

$

24,848

 

 

$

23,139

 

 

$

48,134

 

 

$

47,177

 

Securities

 

 

3,982

 

 

 

2,607

 

 

 

7,729

 

 

 

4,810

 

Other

 

 

67

 

 

 

75

 

 

 

149

 

 

 

144

 

Total interest income

 

 

28,897

 

 

 

25,821

 

 

 

56,012

 

 

 

52,131

 

Interest expense

 

 

 

 

 

 

 

 

Deposits

 

 

3,146

 

 

 

1,995

 

 

 

5,297

 

 

 

3,872

 

Federal funds purchased

 

 

157

 

 

 

1

 

 

 

157

 

 

 

2

 

Other borrowings

 

 

1,355

 

 

 

975

 

 

 

2,491

 

 

 

2,286

 

Total interest expense

 

 

4,658

 

 

 

2,971

 

 

 

7,945

 

 

 

6,160

 

Net interest income

 

 

24,239

 

 

 

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 losses

 

 

25,989

 

 

 

24,850

 

 

 

50,567

 

 

 

47,471

 

Noninterest income

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

585

 

 

 

578

 

 

 

1,165

 

 

 

1,160

 

Debit card usage fees

 

 

507

 

 

 

511

 

 

 

979

 

 

 

953

 

Trust services

 

 

622

 

 

 

691

 

 

 

1,251

 

 

 

1,343

 

Increase in cash value of bank-owned life insurance

 

 

236

 

 

 

240

 

 

 

463

 

 

 

460

 

Loan swap fees

 

 

 

 

 

42

 

 

 

 

 

 

42

 

Realized securities gains, net

 

 

 

 

 

36

 

 

 

 

 

 

40

 

Other income

 

 

328

 

 

 

417

 

 

 

809

 

 

 

982

 

Total noninterest income

 

 

2,278

 

 

 

2,515

 

 

 

4,667

 

 

 

4,980

 

Noninterest expense

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

6,410

 

 

 

5,672

 

 

 

12,708

 

 

 

11,280

 

Occupancy

 

 

1,242

 

 

 

1,199

 

 

 

2,328

 

 

 

2,427

 

Data processing

 

 

656

 

 

 

617

 

 

 

1,280

 

 

 

1,219

 

FDIC insurance

 

 

289

 

 

 

426

 

 

 

626

 

 

 

830

 

Other expenses

 

 

2,669

 

 

 

2,612

 

 

 

4,986

 

 

 

5,041

 

Total noninterest expense

 

 

11,266

 

 

 

10,526

 

 

 

21,928

 

 

 

20,797

 

Income before income taxes

 

 

17,001

 

 

 

16,839

 

 

 

33,306

 

 

 

31,654

 

Income taxes

 

 

4,334

 

 

 

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 SHARE

 

MARKET INFORMATION (1)

 

 

Net Income

 

 

 

 

 

 

 

 

Basic

 

Diluted

 

Dividends

 

High

 

Low

2022

 

 

 

 

 

 

 

 

 

 

2nd Quarter

 

$

0.76

 

$

0.75

 

$

0.25

 

$

27.51

 

$

22.88

1st Quarter

 

 

0.80

 

 

0.78

 

 

0.25

 

 

32.60

 

 

27.07

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

4th Quarter

 

$

0.72

 

$

0.71

 

$

0.24

 

$

34.50

 

$

29.30

3rd Quarter

 

 

0.77

 

 

0.76

 

 

0.24

 

 

31.98

 

 

26.26

2nd Quarter

 

 

0.80

 

 

0.79

 

 

0.24

 

 

29.90

 

 

23.92

1st Quarter

 

 

0.71

 

 

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 MEASURES

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Return on average assets

 

1.45

%

 

1.65

%

 

1.48

%

 

1.59

%

Return on average equity

 

22.81

%

 

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,

 

 

 

 

 

 

2022

 

 

2021

 

Nonperforming assets to total assets(2)

 

 

 

 

 

0.01

%

 

0.45

%

Allowance for loan losses ratio

 

 

 

 

 

0.99

%

 

1.21

%

Allowance for loan losses ratio, excluding PPP loans(1)(3)

 

 

 

0.99

%

 

1.26

%

Tangible common equity ratio

 

 

 

 

 

6.22

%

 

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,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

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 assets

 

 

3,362,313

 

 

 

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 income

 

 

2,278

 

 

 

2,515

 

 

 

4,667

 

 

 

4,980

 

Adjustment for realized securities gains, net

 

 

 

 

 

(36

)

 

 

 

 

 

(40

)

Adjustment for losses on disposal of premises and equipment, net

 

 

9

 

 

 

5

 

 

 

27

 

 

 

29

 

Adjusted income

 

 

26,852

 

 

 

25,604

 

 

 

53,416

 

 

 

51,439

 

Noninterest expense

 

 

11,266

 

 

 

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,

 

 

 

 

 

 

 

2022

 

 

 

2021

 

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 losses

 

 

 

 

 

 

25,434

 

 

 

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.

For more information contact:
Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766