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
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