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West Bancorporation, Inc. Announces Net Income for the Third Quarter Of 2021, Declares Quarterly Dividend

Company Release -
10/28/2021 8:30 AM ET

WEST DES MOINES, Iowa, Oct. 28, 2021 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported that third quarter 2021 net income was $12.7 million, or $0.76 per diluted common share, compared to third quarter 2020 net income of $8.1 million, or $0.49 per diluted common share. For the first nine months of 2021, net income was $37.7 million, or $2.25 per diluted common share, compared to $24.2 million, or $1.46 per diluted common share, for the first nine months of 2020. On October 27, 2021, the Company’s Board of Directors declared a regular quarterly dividend of $0.24 per common share. The dividend is payable on November 24, 2021, to stockholders of record on November 10, 2021.

The Company recorded no provision for loan losses and a negative $1,500 provision for loan losses in the three and nine months ended September 30, 2021, respectively, compared to provisions for loan losses of $4,000 and $8,000 for the same time periods in 2020. The provisions in 2020 were due to the onset of the global pandemic, whereas 2021 includes a reserve release due to the improving economic outlook.

Dave Nelson, President and Chief Executive Officer of the Company, commented, “West Bancorporation, Inc. is experiencing extraordinary financial performance this year. Net income for the first nine months of 2021 has already exceeded our fiscal year 2020 net income. We have experienced loan growth (exclusive of Paycheck Protection Program (PPP) loan activity) of 10.1 percent for the first nine months of 2021, and year over year loan growth of 14.3 percent (also exclusive of PPP loan activity). Our credit quality continues to improve as classified loans continue to be paid down and pay off. As of September 30, 2021, the Texas ratio declined to 3.24 percent as impaired loans have been paid down, and there were no loans past due more than 30 days.”

Dave Nelson also commented, “Construction of our permanent branch office in Sartell, Minnesota, a suburb of St. Cloud, is expected to be completed in January 2022. We have also purchased land and started planning for the construction of a permanent branch office in Mankato, Minnesota. These offices reflect the success we have had since expanding into those markets in 2019 and represent our commitment to these communities.”

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, October 29, 2021. The telephone number for the conference call is 888-339-0814. A recording of the call will be available until November 12, 2021, by dialing 877-344-7529. The replay passcode is 10150542.

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 seven 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 COVID-19 pandemic, including its 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; changes to U.S. tax laws, regulations and guidance; 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   September 30, 2021   September 30, 2020
Assets        
Cash and due from banks   $ 30,922       $ 49,445    
Federal funds sold   1,547       16,398    
Securities available for sale, at fair value   763,397       374,387    
Federal Home Loan Bank stock, at cost   11,544       11,905    
Loans   2,359,567       2,247,425    
Allowance for loan losses   (28,098 )     (25,403 )  
Loans, net   2,331,469       2,222,022    
Premises and equipment, net   33,287       28,099    
Bank-owned life insurance   43,376       42,520    
Other assets   34,158       31,107    
Total assets   $ 3,249,700       $ 2,775,883    
         
Liabilities and Stockholders’ Equity        
Deposits:        
Noninterest-bearing demand   $ 713,076        $ 619,346     
Interest-bearing:        
Demand   458,165        363,430     
Savings   1,379,321        1,130,582     
Time of $250 or more   50,643        54,241     
Other time   135,718        129,181     
Total deposits   2,736,923        2,296,780     
Federal funds purchased   39,380        2,350     
Other borrowings   163,116        217,661     
Other liabilities   57,905        43,772     
Stockholders’ equity   252,376        215,320     
Total liabilities and stockholders’ equity   $ 3,249,700        $ 2,775,883     

 

WEST BANCORPORATION, INC. AND SUBSIDIARY            
Financial Information (continued) (unaudited)                
(in thousands)                
                 
    Three Months Ended September 30,   Nine Months Ended September 30,
CONSOLIDATED STATEMENTS OF INCOME   2021   2020   2021   2020
Interest income                
Loans, including fees   $ 24,229     $ 22,489     $ 71,406       $ 67,132  
Securities   3,174     2,106     7,984       7,099  
Other   82     15     226       256  
Total interest income   27,485     24,610     79,616       74,487  
Interest expense                
Deposits   2,021     1,946     5,893       9,343  
Federal funds purchased   2     2     4       21  
Other borrowings   976     1,530     3,262       4,780  
Total interest expense   2,999     3,478     9,159       14,144  
Net interest income   24,486     21,132     70,457       60,343  
Provision for loan losses       4,000     (1,500 )     8,000  
Net interest income after provision for loan losses   24,486     17,132     71,957       52,343  
Noninterest income                
Service charges on deposit accounts   589     609     1,749       1,743  
Debit card usage fees   490     432     1,443       1,205  
Trust services   695     553     2,038       1,477  
Increase in cash value of bank-owned life insurance   230     133     690       427  
Loan swap fees       983     42       1,572  
Realized securities gains, net   11     156     51       81  
Other income   386     337     1,368       993  
Total noninterest income   2,401     3,203     7,381       7,498  
Noninterest expense                
Salaries and employee benefits   6,018     5,412     17,298       16,014  
Occupancy   1,203     1,221     3,630       3,651  
Data processing   616     572     1,835       1,756  
FDIC insurance   528     351     1,358       880  
Other expenses   2,347     2,503     7,388       6,838  
Total noninterest expense   10,712     10,059     31,509       29,139  
Income before income taxes   16,175     10,276     47,829       30,702  
Income taxes   3,469     2,176     10,132       6,544  
Net income   $ 12,706     $ 8,100     $ 37,697       $ 24,158  

 

WEST BANCORPORATION, INC. AND SUBSIDIARY    
Financial Information (continued) (unaudited)                
                 
             
    PER COMMON SHARE   MARKET INFORMATION (1)
    Net Income            
    Basic   Diluted   Dividends   High   Low
2021                    
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  
                     
2020                    
4th Quarter   $ 0.52     $ 0.52     $ 0.21     $ 21.79     $ 15.53  
3rd Quarter   0.49     0.49     0.21     17.99     15.50  
2nd Quarter   0.48     0.48     0.21     20.67     14.50  
1st Quarter   0.49     0.49     0.21     25.68     13.74  

(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 MEASURES   2021   2020   2021   2020
Return on average assets   1.52 %   1.16 %   1.56 %   1.21 %
Return on average equity   20.02 %   15.20 %   20.98 %   15.47 %
Net interest margin on a FTE basis (1)   3.06 %   3.21 %   3.07 %   3.19 %
Efficiency ratio (1)(2)   39.41 %   41.35 %   40.08 %   42.68 %
                 
        As of September 30,
            2021   2020
Texas ratio(2)           3.24 %   7.38 %
Allowance for loan losses ratio           1.19 %   1.13 %
Allowance for loan losses ratio, excluding PPP loans (1)(3)       1.22 %   1.26 %
Tangible common equity ratio           7.77 %   7.76 %

(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.
  • 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 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 September 30,   Nine Months Ended September 30,
    2021   2020   2021   2020
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:                
Net interest income (GAAP)   $ 24,486       $ 21,132       $ 70,457       $ 60,343    
Tax-equivalent adjustment (1)   306       144       805       516    
Net interest income on a FTE basis (non-GAAP)   24,792       21,276       71,262       60,859    
Average interest-earning assets   3,212,283       2,639,532       3,099,066       2,544,429    
Net interest margin on a FTE basis (non-GAAP)   3.06   %   3.21   %   3.07   %   3.19   %
                 
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:                
Net interest income on a FTE basis (non-GAAP)   $ 24,792       $ 21,276       $ 71,262       $ 60,859    
Noninterest income   2,401       3,203       7,381       7,498    
Adjustment for realized securities gains, net   (11 )     (156 )     (51 )     (81 )  
Adjustment for losses on disposal of premises and equipment, net         1       29       3    
Adjusted income   27,182       24,324       78,621       68,279    
Noninterest expense   10,712       10,059       31,509       29,139    
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)   39.41   %   41.35   %   40.08   %   42.68   %
                 
            As of September 30,
            2021   2020
Reconciliation of allowance for loan losses ratio, excluding PPP loans:            
Loans outstanding (GAAP)           $ 2,359,567       $ 2,247,425    
Less: PPP loans           (47,416 )     (224,489 )  
Loans, net of PPP loans (non-GAAP)           2,312,151       2,022,936    
Allowance for loan losses           28,098       25,403    
Allowance for loan losses ratio, excluding PPP loans (non-GAAP)       1.22   %   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. 

For more information contact:
Doug Gulling, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-2309


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Source: West Bancorporation
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