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West Bancorporation, Inc. Announces Record Net Income for the Second Quarter of 2021, Declares Quarterly Dividend

Company Release - 7/29/2021 8:30 AM ET

WEST DES MOINES, Iowa, July 29, 2021 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported that second quarter 2021 net income was $13.2 million, or $0.79 per diluted common share, compared to second quarter 2020 net income of $8.0 million, or $0.48 per diluted common share. For the first six months of 2021, net income was $25.0 million, or $1.49 per diluted common share, compared to $16.1 million, or $0.97 per diluted common share, for the first six months of 2020. On July 28, 2021, the Company’s Board of Directors declared a regular quarterly dividend of $0.24 per common share. The dividend is payable on August 25, 2021, to stockholders of record on August 11, 2021.

Dave Nelson, President and Chief Executive Officer of the Company, commented, “As the country and our communities continue to emerge from the economic uncertainties created by the COVID-19 pandemic, our bankers are dedicated to executing our strategic objectives, which include organic loan growth and superior credit quality resulting from disciplined underwriting. We are pleased to have loan growth (exclusive of Paycheck Protection Program (PPP) loan activity) of 6.0 percent for the first six months of 2021, and year over year loan growth of 12.6 percent (also exclusive of PPP loan activity). Our credit quality continues to improve as all remaining COVID-related loan modifications expired in the second quarter and those loans returned to normal payment status. This improvement in economic conditions and credit quality resulted in a negative provision for loan losses of $2.0 million in the second quarter compared to a provision for loan losses of $3.0 million in the second quarter last year.”

Dave Nelson also commented, “We continue to build our brand in Minnesota. Construction of our permanent branch office in Sartell, Minnesota, a suburb of St. Cloud, is expected to be completed before the end of the year. We are also in the planning phase for the construction of a permanent branch office in Mankato, 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 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 30, 2021. The telephone number for the conference call is 888-339-0814. A recording of the call will be available until August 13, 2021, by dialing 877-344-7529. The replay passcode is 10150541.

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   June 30, 2021   June 30, 2020
Assets        
Cash and due from banks   $ 31,978        $ 54,175    
Federal funds sold   238,845        62,494    
Securities available for sale, at fair value   601,462        342,017    
Federal Home Loan Bank stock, at cost   10,189        12,307    
Loans   2,309,527        2,199,688    
Allowance for loan losses   (28,042 )     (21,363 )  
Loans, net   2,281,485        2,178,325    
Premises and equipment, net   30,753        28,655    
Bank-owned life insurance   43,146        35,187    
Other assets   30,902        27,163    
Total assets   $ 3,268,760        $ 2,740,323    
         
Liabilities and Stockholders’ Equity        
Deposits:        
Noninterest-bearing demand   $ 703,691        $ 590,487    
Interest-bearing:        
Demand   487,642        378,931    
Savings   1,391,231        1,081,743    
Time of $250 or more   46,660        61,456    
Other time   196,065        143,092    
Total deposits   2,825,289        2,255,709    
Federal funds purchased   3,605        5,755    
Other borrowings   165,744        223,181    
Other liabilities   27,596        46,991    
Stockholders’ equity   246,526        208,687    
Total liabilities and stockholders’ equity   $ 3,268,760        $ 2,740,323    

 

             
             
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   2021   2020   2021   2020
Interest income                
Loans, including fees   $ 23,139        $ 22,332       $ 47,177        $ 44,643    
Securities   2,607        2,313       4,810        4,993    
Other   75        12       144        241    
Total interest income   25,821        24,657       52,131        49,877    
Interest expense                
Deposits   1,995        2,351       3,872        7,397    
Federal funds purchased         3             19    
Other borrowings   975        1,556       2,286        3,250    
Total interest expense   2,971        3,910       6,160        10,666    
Net interest income   22,850        20,747       45,971        39,211    
Provision for loan losses   (2,000 )     3,000       (1,500 )     4,000    
Net interest income after provision for loan losses   24,850        17,747       47,471        35,211    
Noninterest income                
Service charges on deposit accounts   578        531       1,160        1,134    
Debit card usage fees   511        391       953        773    
Trust services   691        461       1,343        924    
Increase in cash value of bank-owned life insurance   240        136       460        294    
Loan swap fees   42        3       42        589    
Realized investment securities gains (losses), net   36        (69 )     40        (75 )  
Other income   417        322       982        656    
Total noninterest income   2,515        1,775       4,980        4,295    
Noninterest expense                
Salaries and employee benefits   5,672        5,318       11,280        10,602    
Occupancy   1,199        1,217       2,427        2,430    
Data processing   617        554       1,219        1,184    
FDIC insurance   426        292       830        529    
Other expenses   2,612        2,036       5,041        4,335    
Total noninterest expense   10,526        9,417       20,797        19,080    
Income before income taxes   16,839        10,105       31,654        20,426    
Income taxes   3,600        2,136       6,663        4,368    
Net income   $ 13,239        $ 7,969       $ 24,991        $ 16,058    

 

     
     
WEST BANCORPORATION, INC. AND SUBSIDIARY    
Financial Information (continued) (unaudited)                
                 
             
    PER COMMON SHARE   MARKET INFORMATION (1)
    Net Income            
    Basic   Diluted   Dividends   High   Low
2021                    
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 June 30,   Six Months Ended June 30,
SELECTED FINANCIAL MEASURES   2021   2020   2021   2020
Return on average assets   1.65  %   1.19 %   1.59  %   1.23 %
Return on average equity   22.20  %   15.68 %   21.50  %   15.61 %
Net interest margin on a FTE basis (1)   2.99  %   3.27 %   3.08  %   3.19 %
Efficiency ratio (1)(2)   41.11  %   41.33 %   40.43  %   43.41 %
                 
        As of June 30,
            2021   2020
Texas ratio(2)           5.31  %   0.17 %
Allowance for loan losses ratio           1.21  %   0.97 %
Allowance for loan losses ratio, excluding PPP loans (1)(3)             1.26  %   1.08 %
Tangible common equity ratio           7.54  %   7.62 %

(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 June 30,   Six Months Ended June 30,
    2021   2020   2021     2020
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:                
Net interest income (GAAP)   $ 22,850      $ 20,747     $ 45,971      $ 39,211  
Tax-equivalent adjustment (1)   270      194     499      372  
Net interest income on a FTE basis (non-GAAP)   23,120      20,941     46,470      39,583  
Average interest-earning assets   3,102,649      2,572,211     3,041,519      2,496,354  
Net interest margin on a FTE basis (non-GAAP)   2.99  %   3.27 %   3.08  %   3.19 %
                 
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:                
Net interest income on a FTE basis (non-GAAP)   $ 23,120      $ 20,941     $ 46,470      $ 39,583  
Noninterest income   2,515      1,775     4,980      4,295  
Adjustment for realized securities (gains) losses, net   (36)     69     (40)     75  
Adjustment for losses on disposal of premises and equipment, net           29      2  
Adjusted income   25,604      22,785     51,439      43,955  
Noninterest expense   10,526      9,417     20,797      19,080  
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)   41.11  %   41.33 %   40.43
%   43.41 %
                 
            As of June 30,
            2021     2020
Reconciliation of allowance for loan losses ratio, excluding PPP loans:                    
Loans outstanding (GAAP)           $ 2,309,527      $ 2,199,688  
Less: PPP loans           (84,573)     (223,435)  
Loans, net of PPP loans (non-GAAP)           2,224,954      1,976,253  
Allowance for loan losses           28,042      21,363  
Allowance for loan losses ratio, excluding PPP loans (non-GAAP)               1.26  %   1.08 %

(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