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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 24, 2024
WEST BANCORPORATION, INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| Iowa | 0-49677 | 42-1230603 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
3330 Westown Parkway, West Des Moines, Iowa 50266
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 515-222-2300
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common stock, no par value | WTBA | The Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.
On October 24, 2024, West Bancorporation, Inc. (the "Company") issued a press release announcing its third quarter earnings results for the period ended September 30, 2024, and the declaration of a quarterly dividend. A copy of the press release is attached hereto as Exhibit 99.1.
The information furnished in this item of this Form 8-K, and the related exhibit, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
The Company hereby furnishes the Earnings Presentation attached hereto as Exhibit 99.2.
The information furnished in this item of this Form 8-K, and the related exhibit, shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
| | | | | | | | |
| Exhibit Number | | Description |
| 99.1 | | |
| 99.2 | | |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | | | | |
| | West Bancorporation, Inc. |
| | |
| | |
| October 24, 2024 | By: | /s/ Jane M. Funk |
| | Name: Jane M. Funk |
| | Title: Executive Vice President, Treasurer and Chief Financial Officer |
Exhibit 99.1
Press Release
October 24, 2024
FOR IMMEDIATE RELEASE
For more information contact:
Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766
WEST BANCORPORATION, INC. ANNOUNCES THIRD QUARTER 2024 FINANCIAL RESULTS AND DECLARES QUARTERLY DIVIDEND
West Des Moines, IA - West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported third quarter 2024 net income of $6.0 million, or $0.35 per diluted common share, compared to second quarter 2024 net income of $5.2 million, or $0.31 per diluted common share, and third quarter 2023 net income of $5.9 million, or $0.35 per diluted common share. On October 23, 2024, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on November 20, 2024, to stockholders of record on November 6, 2024.
David Nelson, President and Chief Executive Officer of the Company, commented, “Our third quarter results include moderate growth in loans and core deposits along with an increase in quarterly net interest income and net interest margin. Our credit quality remains pristine as a result of our disciplined loan growth and credit risk management practices. The ratio of nonperforming assets to total assets remains negligible at 0.01%.”
David Nelson added, “West Bank is focused on initiatives that will drive sustained core profitability. Those initiatives are centered around our culture of building strong relationships and providing exceptional personal service to drive growth in both commercial and consumer banking services.”
Third Quarter 2024 Financial Highlights
| | | | | | | | | | | | | | |
| | Quarter Ended September 30, 2024 | | Nine Months Ended September 30, 2024 |
| Net income (in thousands) | $5,952 | | $16,953 |
| Return on average equity | 10.41 | % | | 10.18 | % |
| Return on average assets | 0.60 | % | | 0.59 | % |
| Efficiency ratio (a non-GAAP measure) | 63.28 | % | | 64.16 | % |
| Nonperforming assets to total assets | 0.01 | % | | 0.01 | % |
Third Quarter 2024 Compared to Second Quarter 2024 Overview
•Loans increased $22.4 million in the third quarter of 2024, or 3.0 percent annualized. The increase is primarily due to the funding of previously committed construction loans.
•A provision for credit losses on loans of $1.0 million was recorded in the third quarter of 2024, compared to no provision in the second quarter of 2024. A negative provision for credit losses on unfunded commitments of $1.0 million was recorded in the third quarter of 2024, compared to no provision in the second quarter of 2024. The provision for loans in the third quarter of 2024 was primarily due to changes in the forecasted loss rates due to increases in forecasted unemployment rates. The negative provision for unfunded commitments was primarily due to the decline in unfunded commitments resulting primarily from the funding of construction loans.
•The allowance for credit losses to total loans was 0.97 percent and 0.95 percent at September 30, 2024 and June 30, 2024, respectively. Nonaccrual loans at September 30, 2024 consisted of two loans with a total balance of $233 thousand, compared to three loans with a balance of $521 thousand at June 30, 2024.
•Deposits increased $97.6 million, or 3.1 percent, in the third quarter of 2024. Brokered deposits totaled $425.9 million at September 30, 2024, compared to $370.3 million at June 30, 2024, an increase of $55.6 million. Excluding brokered deposits, deposits increased $42.0 million during the third quarter of 2024. As of September 30, 2024, estimated uninsured deposits, which exclude deposits in the IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, accounted for approximately 27.8 percent of total deposits.
•Borrowed funds decreased to $438.8 million at September 30, 2024, compared to $525.5 million at June 30, 2024. The decrease was primarily due to the balance of federal funds purchased and other short-term borrowings decreasing to $0 as of September 30, 2024, from $85.5 million as of June 30, 2024 as a result of growth in deposits.
•The efficiency ratio (a non-GAAP measure) was 63.28 percent for the third quarter of 2024, compared to 67.14 percent for the second quarter of 2024. The improvement in the efficiency ratio was primarily due to the increase in net interest income. In the third quarter of 2024, the increase in interest income on loans outpaced the increase in interest expense on deposits and borrowed funds.
•Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for the third quarter of 2024, compared to 1.86 percent for the second quarter of 2024. Net interest income for the third quarter of 2024 was $18.0 million, compared to $17.2 million for the second quarter of 2024.
•The tangible common equity ratio was 5.90 percent as of September 30, 2024, compared to 5.65 percent as of June 30, 2024. The increase in the tangible common equity ratio was driven by retained net income and the decrease in accumulated other comprehensive loss, which was primarily the result of the increase in the market value of our available for sale investment portfolio.
Third Quarter 2024 Compared to Third Quarter 2023 Overview
•Loans increased $171.4 million at September 30, 2024, or 6.0 percent, compared to September 30, 2023. The increase is primarily due to increases in commercial real estate loans and the funding of previously committed construction loans.
•Deposits increased to $3.3 billion at September 30, 2024, compared to $2.8 billion at September 30, 2023. Included in deposits were brokered deposits totaling $425.9 million at September 30, 2024, compared to $237.0 million at September 30, 2023. Brokered deposits were used to reduce short-term borrowed funds and to fund loan growth. Excluding brokered deposits, deposits increased $334.2 million, or 13.3 percent, as of September 30, 2024, compared to September 30, 2023. Deposit growth included a mix of public funds and commercial and consumer deposits.
•Borrowed funds decreased to $438.8 million at September 30, 2024, compared to $705.1 million at September 30, 2023. The decrease was primarily attributable to a decrease of $261.5 million in federal funds purchased and other short-term borrowings as a result of growth in deposits.
•The efficiency ratio (a non-GAAP measure) was 63.28 percent for the third quarter of 2024, compared to 60.83 percent for the third quarter of 2023. The increase in the efficiency ratio in the third quarter of 2024 compared to the third quarter of 2023 was primarily due to the increase in noninterest expense, partially offset by an increase in net interest income. Occupancy and equipment expense increased primarily due to the occupancy costs associated with the Company’s newly constructed headquarters.
•Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for both the third quarter of 2024 and the third quarter of 2023. Net interest income for the third quarter of 2024 was $18.0 million, compared to $16.6 million for the third quarter of 2023.
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 results in a conference call scheduled for 2:00 p.m. Central Time on Thursday, October 24, 2024. The telephone number for the conference call is 800-715-9871. The conference ID for the conference call is 7846129. A recording of the call will be available until November 7, 2024, by dialing 800-770-2030. The conference ID for the replay call is 7846129, followed by the # key.
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: interest rate risk, including the effects of changes in interest rates; fluctuations in the values of the securities held in our investment portfolio, including as a result of changes in interest rates; competitive pressures, including from non-bank competitors such as credit unions, “fintech” companies and digital asset service providers; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for credit losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits; changes in local, national and international economic conditions, including the level and impact of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; changes in legal and regulatory requirements, limitations and costs including in response to the recent bank failures; changes in customers’ acceptance of the Company’s products and services; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners’ information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; 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, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their businesses; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; 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.
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| WEST BANCORPORATION, INC. AND SUBSIDIARY | | | | | | |
| Financial Information (unaudited) | | | | | | | | | | |
| (in thousands) | | | | | | | | | | |
| | As of |
| CONDENSED BALANCE SHEETS | | September 30, 2024 | | June 30, 2024 | | March 31, 2024 | | December 31, 2023 | | September 30, 2023 |
| Assets | | | | | | | | | | |
| Cash and due from banks | | $ | 34,157 | | | $ | 27,994 | | | $ | 27,071 | | | $ | 33,245 | | | $ | 18,819 | |
| Interest-bearing deposits | | 123,646 | | | 121,825 | | | 120,946 | | | 32,112 | | | 1,802 | |
| Securities available for sale, at fair value | | 597,745 | | | 588,452 | | | 605,735 | | | 623,919 | | | 609,365 | |
| | | | | | | | | | |
| Federal Home Loan Bank stock, at cost | | 17,195 | | | 21,065 | | | 26,181 | | | 22,957 | | | 26,691 | |
| Loans | | 3,021,221 | | | 2,998,774 | | | 2,980,133 | | | 2,927,535 | | | 2,849,777 | |
| Allowance for credit losses | | (29,419) | | | (28,422) | | | (28,373) | | | (28,342) | | | (28,147) | |
| Loans, net | | 2,991,802 | | | 2,970,352 | | | 2,951,760 | | | 2,899,193 | | | 2,821,630 | |
| Premises and equipment, net | | 106,771 | | | 101,965 | | | 95,880 | | | 86,399 | | | 75,675 | |
| Bank-owned life insurance | | 44,703 | | | 44,416 | | | 44,138 | | | 43,864 | | | 43,589 | |
| Other assets | | 72,547 | | | 89,046 | | | 90,981 | | | 84,069 | | | 104,329 | |
| Total assets | | $ | 3,988,566 | | | $ | 3,965,115 | | | $ | 3,962,692 | | | $ | 3,825,758 | | | $ | 3,701,900 | |
| | | | | | | | | | |
| Liabilities and Stockholders’ Equity | | | | | | | | | | |
| Deposits | | $ | 3,278,553 | | | $ | 3,180,922 | | | $ | 3,065,030 | | | $ | 2,973,779 | | | $ | 2,755,529 | |
| Federal funds purchased and other short-term borrowings | | — | | | 85,500 | | | 198,500 | | | 150,270 | | | 261,510 | |
| Other borrowings | | 438,814 | | | 439,998 | | | 441,183 | | | 442,367 | | | 443,552 | |
| Other liabilities | | 35,846 | | | 34,812 | | | 34,223 | | | 34,299 | | | 37,376 | |
| Stockholders’ equity | | 235,353 | | | 223,883 | | | 223,756 | | | 225,043 | | | 203,933 | |
| Total liabilities and stockholders’ equity | | $ | 3,988,566 | | | $ | 3,965,115 | | | $ | 3,962,692 | | | $ | 3,825,758 | | | $ | 3,701,900 | |
| | | | | | | | | | |
| | For the Quarter Ended |
| AVERAGE BALANCES | | September 30, 2024 | | June 30, 2024 | | March 31, 2024 | | December 31, 2023 | | September 30, 2023 |
| Assets | | $ | 3,973,824 | | | $ | 3,964,109 | | | $ | 3,812,199 | | | $ | 3,706,497 | | | $ | 3,679,541 | |
| Loans | | 2,991,272 | | | 2,994,492 | | | 2,949,672 | | | 2,857,594 | | | 2,813,213 | |
| Deposits | | 3,258,669 | | | 3,123,282 | | | 2,956,635 | | | 2,878,676 | | | 2,764,184 | |
| Stockholders’ equity | | 227,513 | | | 219,771 | | | 219,835 | | | 201,920 | | | 215,230 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| WEST BANCORPORATION, INC. AND SUBSIDIARY | | | | | | |
| Financial Information (unaudited) | | | | | | | | | | |
| (in thousands) | | | | | | | | | | |
| | As of |
| LOANS | | September 30, 2024 | | June 30, 2024 | | March 31, 2024 | | December 31, 2023 | | September 30, 2023 |
| Commercial | | $ | 512,884 | | | $ | 526,589 | | | $ | 544,293 | | | $ | 531,594 | | | $ | 529,293 | |
| Real estate: | | | | | | | | | | |
| Construction, land and land development | | 520,516 | | | 496,864 | | | 465,247 | | | 413,477 | | | 399,253 | |
| 1-4 family residential first mortgages | | 89,749 | | | 92,230 | | | 108,065 | | | 106,688 | | | 89,713 | |
| Home equity | | 17,140 | | | 15,264 | | | 14,020 | | | 14,618 | | | 12,429 | |
| Commercial | | 1,870,132 | | | 1,856,301 | | | 1,839,580 | | | 1,854,510 | | | 1,812,816 | |
| Consumer and other | | 14,261 | | | 15,234 | | | 12,844 | | | 10,930 | | | 10,123 | |
| | 3,024,682 | | | 3,002,482 | | | 2,984,049 | | | 2,931,817 | | | 2,853,627 | |
| Net unamortized fees and costs | | (3,461) | | | (3,708) | | | (3,916) | | | (4,282) | | | (3,850) | |
| Total loans | | $ | 3,021,221 | | | $ | 2,998,774 | | | $ | 2,980,133 | | | $ | 2,927,535 | | | $ | 2,849,777 | |
| Less: allowance for credit losses | | (29,419) | | | (28,422) | | | (28,373) | | | (28,342) | | | (28,147) | |
| Net loans | | $ | 2,991,802 | | | $ | 2,970,352 | | | $ | 2,951,760 | | | $ | 2,899,193 | | | $ | 2,821,630 | |
| | | | | | | | | | |
| CREDIT QUALITY | | | | | | | | | | |
| Pass | | $ | 3,016,493 | | | $ | 2,994,310 | | | $ | 2,983,618 | | | $ | 2,931,377 | | | $ | 2,853,100 | |
| Watch | | 7,956 | | | 7,651 | | | 142 | | | 144 | | | 184 | |
| Substandard | | 233 | | | 521 | | | 289 | | | 296 | | | 343 | |
| Doubtful | | — | | | — | | | — | | | — | | | — | |
| Total loans | | $ | 3,024,682 | | | $ | 3,002,482 | | | $ | 2,984,049 | | | $ | 2,931,817 | | | $ | 2,853,627 | |
| | | | | | | | | | |
| DEPOSITS | | | | | | | | | | |
| Noninterest-bearing demand | | $ | 525,332 | | | $ | 530,441 | | | $ | 521,377 | | | $ | 548,726 | | | $ | 551,688 | |
| Interest-bearing demand | | 438,402 | | | 443,658 | | | 449,946 | | | 481,207 | | | 417,802 | |
| Savings and money market - non-brokered | | 1,481,840 | | | 1,483,264 | | | 1,315,698 | | | 1,315,741 | | | 1,249,309 | |
| Money market - brokered | | 123,780 | | | 97,259 | | | 119,840 | | | 124,335 | | | 99,282 | |
| Total nonmaturity deposits | | 2,569,354 | | | 2,554,622 | | | 2,406,861 | | | 2,470,009 | | | 2,318,081 | |
| Time - non-brokered | | 407,109 | | | 353,269 | | | 381,646 | | | 322,694 | | | 299,683 | |
| Time - brokered | | 302,090 | | | 273,031 | | | 276,523 | | | 181,076 | | | 137,765 | |
| Total time deposits | | 709,199 | | | 626,300 | | | 658,169 | | | 503,770 | | | 437,448 | |
| Total deposits | | $ | 3,278,553 | | | $ | 3,180,922 | | | $ | 3,065,030 | | | $ | 2,973,779 | | | $ | 2,755,529 | |
| | | | | | | | | | |
| BORROWINGS | | | | | | | | | | |
| Federal funds purchased and other short-term borrowings | | $ | — | | | $ | 85,500 | | | $ | 198,500 | | | $ | 150,270 | | | $ | 261,510 | |
| Subordinated notes, net | | 79,828 | | | 79,762 | | | 79,697 | | | 79,631 | | | 79,566 | |
| Federal Home Loan Bank advances | | 315,000 | | | 315,000 | | | 315,000 | | | 315,000 | | | 315,000 | |
| Long-term debt | | 43,986 | | | 45,236 | | | 46,486 | | | 47,736 | | | 48,986 | |
| Total borrowings | | $ | 438,814 | | | $ | 525,498 | | | $ | 639,683 | | | $ | 592,637 | | | $ | 705,062 | |
| | | | | | | | | | |
| STOCKHOLDERS’ EQUITY | | | | | | | | | | |
| Preferred stock | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Common stock | | 3,000 | | | 3,000 | | | 3,000 | | | 3,000 | | | 3,000 | |
| Additional paid-in capital | | 34,960 | | | 34,322 | | | 33,685 | | | 34,197 | | | 33,487 | |
| Retained earnings | | 275,724 | | | 273,981 | | | 272,997 | | | 271,369 | | | 271,025 | |
| Accumulated other comprehensive loss | | (78,331) | | | (87,420) | | | (85,926) | | | (83,523) | | | (103,579) | |
| Total stockholders’ equity | | $ | 235,353 | | | $ | 223,883 | | | $ | 223,756 | | | $ | 225,043 | | | $ | 203,933 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| WEST BANCORPORATION, INC. AND SUBSIDIARY | | | | | | | | |
| Financial Information (unaudited) | | | | | | | | | | |
| (in thousands) | | | | | | | | | | |
| | For the Quarter Ended |
| CONSOLIDATED STATEMENTS OF INCOME | | September 30, 2024 | | June 30, 2024 | | March 31, 2024 | | December 31, 2023 | | September 30, 2023 |
| Interest income: | | | | | | | | | | |
| Loans, including fees | | $ | 42,504 | | | $ | 41,700 | | | $ | 40,196 | | | $ | 38,208 | | | $ | 36,756 | |
| Securities: | | | | | | | | | | |
| Taxable | | 3,261 | | | 3,394 | | | 3,416 | | | 3,521 | | | 3,427 | |
| Tax-exempt | | 806 | | | 808 | | | 810 | | | 869 | | | 880 | |
| Interest-bearing deposits | | 2,041 | | | 1,666 | | | 148 | | | 85 | | | 29 | |
| Total interest income | | 48,612 | | | 47,568 | | | 44,570 | | | 42,683 | | | 41,092 | |
| Interest expense: | | | | | | | | | | |
| Deposits | | 26,076 | | | 23,943 | | | 21,559 | | | 20,024 | | | 17,156 | |
| Federal funds purchased and other short-term borrowings | | 115 | | | 1,950 | | | 2,183 | | | 2,024 | | | 3,165 | |
| Subordinated notes | | 1,112 | | | 1,105 | | | 1,108 | | | 1,114 | | | 1,113 | |
| Federal Home Loan Bank advances | | 2,748 | | | 2,718 | | | 2,325 | | | 2,482 | | | 2,329 | |
| Long-term debt | | 601 | | | 622 | | | 645 | | | 678 | | | 695 | |
| Total interest expense | | 30,652 | | | 30,338 | | | 27,820 | | | 26,322 | | | 24,458 | |
| Net interest income | | 17,960 | | | 17,230 | | | 16,750 | | | 16,361 | | | 16,634 | |
| Credit loss expense | | — | | | — | | | — | | | 500 | | | 200 | |
| Net interest income after credit loss expense | | 17,960 | | | 17,230 | | | 16,750 | | | 15,861 | | | 16,434 | |
| Noninterest income: | | | | | | | | | | |
| Service charges on deposit accounts | | 459 | | | 462 | | | 460 | | | 476 | | | 463 | |
| Debit card usage fees | | 500 | | | 490 | | | 458 | | | 488 | | | 495 | |
| Trust services | | 828 | | | 794 | | | 776 | | | 782 | | | 831 | |
| Increase in cash value of bank-owned life insurance | | 287 | | | 278 | | | 274 | | | 275 | | | 262 | |
| | | | | | | | | | |
| Loan swap fees | | — | | | — | | | — | | | — | | | 431 | |
| Realized securities losses, net | | — | | | — | | | — | | | (431) | | | — | |
| Other income | | 285 | | | 322 | | | 331 | | | 308 | | | 340 | |
| Total noninterest income | | 2,359 | | | 2,346 | | | 2,299 | | | 1,898 | | | 2,822 | |
| Noninterest expense: | | | | | | | | | | |
| Salaries and employee benefits | | 6,823 | | | 7,169 | | | 6,489 | | | 6,468 | | | 6,696 | |
| Occupancy and equipment | | 1,926 | | | 1,852 | | | 1,447 | | | 1,499 | | | 1,359 | |
| Data processing | | 771 | | | 754 | | | 714 | | | 723 | | | 703 | |
| Technology and software | | 722 | | | 731 | | | 700 | | | 676 | | | 573 | |
| FDIC insurance | | 711 | | | 631 | | | 519 | | | 475 | | | 439 | |
| Professional fees | | 239 | | | 244 | | | 257 | | | 235 | | | 254 | |
| Director fees | | 223 | | | 236 | | | 199 | | | 240 | | | 196 | |
| Other expenses | | 1,477 | | | 1,577 | | | 1,543 | | | 1,845 | | | 1,685 | |
| Total noninterest expense | | 12,892 | | | 13,194 | | | 11,868 | | | 12,161 | | | 11,905 | |
| Income before income taxes | | 7,427 | | | 6,382 | | | 7,181 | | | 5,598 | | | 7,351 | |
| Income taxes | | 1,475 | | | 1,190 | | | 1,372 | | | 1,073 | | | 1,445 | |
| Net income | | $ | 5,952 | | | $ | 5,192 | | | $ | 5,809 | | | $ | 4,525 | | | $ | 5,906 | |
| | | | | | | | | | |
| Basic earnings per common share | | $ | 0.35 | | | $ | 0.31 | | | $ | 0.35 | | | $ | 0.27 | | | $ | 0.35 | |
| Diluted earnings per common share | | $ | 0.35 | | | $ | 0.31 | | | $ | 0.35 | | | $ | 0.27 | | | $ | 0.35 | |
| | | | | | | | | | | | | | |
| WEST BANCORPORATION, INC. AND SUBSIDIARY | | |
| Financial Information (unaudited) | | | | |
| (in thousands) | | | | |
| | For the Nine Months Ended |
| CONSOLIDATED STATEMENTS OF INCOME | | September 30, 2024 | | September 30, 2023 |
| Interest income: | | | | |
| Loans, including fees | | $ | 124,400 | | | $ | 104,715 | |
| Securities: | | | | |
| Taxable | | 10,071 | | | 10,175 | |
| Tax-exempt | | 2,424 | | | 2,648 | |
| Interest-bearing deposits | | 3,855 | | | 84 |
| Total interest income | | 140,750 | | | 117,622 | |
| Interest expense: | | | | |
| Deposits | | 71,578 | | | 46,772 | |
| Federal funds purchased and other short-term borrowings | | 4,248 | | | 7,508 | |
| Subordinated notes | | 3,325 | | | 3,328 | |
| Federal Home Loan Bank advances | | 7,791 | | | 5,212 | |
| Long-term debt | | 1,868 | | | 2,132 | |
| Total interest expense | | 88,810 | | | 64,952 | |
| Net interest income | | 51,940 | | | 52,670 | |
| Credit loss expense | | — | | | 200 | |
| Net interest income after credit loss expense | | 51,940 | | | 52,470 | |
| Noninterest income: | | | | |
| Service charges on deposit accounts | | 1,381 | | | 1,383 | |
| Debit card usage fees | | 1,448 | | | 1,492 | |
| Trust services | | 2,398 | | | 2,286 | |
| Increase in cash value of bank-owned life insurance | | 839 | | | 769 | |
| Loan swap fees | | — | | | 431 | |
| | | | |
| Gain from bank-owned life insurance | | — | | | 691 | |
| Other income | | 938 | | | 1,116 | |
| Total noninterest income | | 7,004 | | | 8,168 | |
| Noninterest expense: | | | | |
| Salaries and employee benefits | | 20,481 | | | 20,592 | |
| Occupancy and equipment | | 5,225 | | | 4,008 | |
| Data processing | | 2,239 | | | 2,067 | |
| Technology and software | | 2,153 | | | 1,665 | |
| FDIC insurance | | 1,861 | | | 1,275 | |
| Professional fees | | 740 | | | 791 | |
| Director fees | | 658 | | | 652 | |
| Other expenses | | 4,597 | | | 5,400 | |
| Total noninterest expense | | 37,954 | | | 36,450 | |
| Income before income taxes | | 20,990 | | | 24,188 | |
| Income taxes | | 4,037 | | | 4,576 | |
| Net income | | $ | 16,953 | | | $ | 19,612 | |
| | | | |
| Basic earnings per common share | | $ | 1.01 | | | $ | 1.17 | |
| Diluted earnings per common share | | $ | 1.00 | | | $ | 1.17 | |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| WEST BANCORPORATION, INC. AND SUBSIDIARY | | | | | | |
| Financial Information (unaudited) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | As of and for the Quarter Ended | | For the Nine Months Ended |
| COMMON SHARE DATA | | September 30, 2024 | | June 30, 2024 | | March 31, 2024 | | December 31, 2023 | | September 30, 2023 | | September 30, 2024 | | September 30, 2023 |
| Earnings per common share (basic) | | $ | 0.35 | | | $ | 0.31 | | | $ | 0.35 | | | $ | 0.27 | | | $ | 0.35 | | | $ | 1.01 | | | $ | 1.17 | |
| Earnings per common share (diluted) | | 0.35 | | | 0.31 | | | 0.35 | | | 0.27 | | | 0.35 | | | 1.00 | | | 1.17 | |
| Dividends per common share | | 0.25 | | | 0.25 | | | 0.25 | | | 0.25 | | | 0.25 | | | 0.75 | | | 0.75 | |
Book value per common share(1) | | 13.98 | | | 13.30 | | | 13.31 | | | 13.46 | | | 12.19 | | | | | |
| Closing stock price | | 19.01 | | | 17.90 | | | 17.83 | | | 21.20 | | | 16.31 | | | | | |
Market price/book value(2) | | 135.98 | % | | 134.59 | % | | 133.96 | % | | 157.50 | % | | 133.80 | % | | | | |
Price earnings ratio(3) | | 13.65 | | | 14.36 | | | 12.77 | | | 19.79 | | | 11.75 | | | | | |
Annualized dividend yield(4) | | 5.26 | % | | 5.59 | % | | 5.61 | % | | 4.72 | % | | 6.13 | % | | | | |
| | | | | | | | | | | | | | |
| REGULATORY CAPITAL RATIOS | | | | | | | | | | | | | | |
| Consolidated: | | | | | | | | | | | | | | |
| Total risk-based capital ratio | | 11.95 | % | | 11.85 | % | | 11.78 | % | | 11.88 | % | | 11.96 | % | | | | |
| Tier 1 risk-based capital ratio | | 9.39 | | | 9.30 | | | 9.23 | | | 9.30 | | | 9.37 | | | | | |
| Tier 1 leverage capital ratio | | 8.15 | | | 8.08 | | | 8.36 | | | 8.50 | | | 8.58 | | | | | |
| Common equity tier 1 ratio | | 8.83 | | | 8.74 | | | 8.67 | | | 8.74 | | | 8.80 | | | | | |
| West Bank: | | | | | | | | | | | | | | |
| Total risk-based capital ratio | | 12.73 | % | | 12.66 | % | | 12.63 | % | | 12.76 | % | | 12.89 | % | | | | |
| Tier 1 risk-based capital ratio | | 11.86 | | | 11.79 | | | 11.76 | | | 11.89 | | | 12.01 | | | | | |
| Tier 1 leverage capital ratio | | 10.29 | | | 10.25 | | | 10.65 | | | 10.86 | | | 11.00 | | | | | |
| Common equity tier 1 ratio | | 11.86 | | | 11.79 | | | 11.76 | | | 11.89 | | | 12.01 | | | | | |
| | | | | | | | | | | | | | |
| KEY PERFORMANCE RATIOS AND OTHER METRICS | | | | | | | | | | | | | | |
Return on average assets(5) | | 0.60 | % | | 0.53 | % | | 0.61 | % | | 0.48 | % | | 0.64 | % | | 0.59 | % | | 0.72 | % |
Return on average equity(6) | | 10.41 | | | 9.50 | | | 10.63 | | | 8.89 | | | 10.89 | | | 10.18 | | | 12.22 | |
Net interest margin(7)(13) | | 1.91 | | | 1.86 | | | 1.88 | | | 1.87 | | | 1.91 | | | 1.88 | | | 2.05 | |
Yield on interest-earning assets(8)(13) | | 5.16 | | | 5.13 | | | 4.99 | | | 4.87 | | | 4.70 | | | 5.10 | | | 4.56 | |
| Cost of interest-bearing liabilities | | 3.84 | | | 3.83 | | | 3.70 | | | 3.60 | | | 3.38 | | | 3.79 | | | 3.09 | |
Efficiency ratio(9)(13) | | 63.28 | | | 67.14 | | | 62.04 | | | 64.66 | | | 60.83 | | | 64.16 | | | 59.52 | |
Nonperforming assets to total assets(10) | | 0.01 | | | 0.01 | | | 0.01 | | | 0.01 | | | 0.01 | | | | | |
ACL ratio(11) | | 0.97 | | | 0.95 | | | 0.95 | | | 0.97 | | | 0.99 | | | | | |
| Loans/total assets | | 75.75 | | | 75.63 | | | 75.20 | | | 76.52 | | | 76.98 | | | | | |
| Loans/total deposits | | 92.15 | | | 94.27 | | | 97.23 | | | 98.44 | | | 103.42 | | | | | |
Tangible common equity ratio(12) | | 5.90 | | | 5.65 | | | 5.65 | | | 5.88 | | | 5.51 | | | | | |
(1) Includes accumulated other comprehensive loss.
(2) Closing stock price divided by book value per common share.
(3) Closing stock price divided by annualized earnings per common share (basic).
(4) Annualized dividend divided by period end closing stock price.
(5) Annualized net income divided by average assets.
(6) Annualized net income divided by average stockholders’ equity.
(7) Annualized tax-equivalent net interest income divided by average interest-earning assets.
(8) Annualized tax-equivalent interest income on interest-earning assets divided by average interest-earning assets.
(9) Noninterest expense (excluding other real estate owned expense and write-down of premises) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
(10) Total nonperforming assets divided by total assets.
(11) Allowance for credit losses on loans divided by total loans.
(12) Common equity less intangible assets (none held) divided by tangible assets.
(13) A non-GAAP measure.
NON-GAAP FINANCIAL MEASURES
This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on a fully taxable equivalent basis and efficiency ratio on an adjusted and FTE basis.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | For the Quarter Ended | | For the Nine Months Ended | | |
| | September 30, 2024 | | June 30, 2024 | | March 31, 2024 | | December 31, 2023 | | September 30, 2023 | | September 30, 2024 | | September 30, 2023 | | |
| Reconciliation of net interest income and net interest margin on a FTE basis to GAAP: | | | | | | | | | | | | | | | | |
| Net interest income (GAAP) | | $ | 17,960 | | | $ | 17,230 | | | $ | 16,750 | | | $ | 16,361 | | | $ | 16,634 | | | $ | 51,940 | | | $ | 52,670 | | | |
Tax-equivalent adjustment (1) | | 29 | | | 55 | | | 82 | | | 95 | | | 113 | | | 166 | | | 396 | | | |
| Net interest income on a FTE basis (non-GAAP) | | 17,989 | | | 17,285 | | | 16,832 | | | 16,456 | | | 16,747 | | | 52,106 | | | 53,066 | | | |
| Average interest-earning assets | | 3,749,688 | | | 3,731,674 | | | 3,595,954 | | | 3,487,799 | | | 3,478,053 | | | 3,692,647 | | | 3,458,606 | | | |
| Net interest margin on a FTE basis (non-GAAP) | | 1.91 | % | | 1.86 | % | | 1.88 | % | | 1.87 | % | | 1.91 | % | | 1.88 | % | | 2.05 | % | | |
| | | | | | | | | | | | | | | | |
| Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP: | | | | | | | | | | | | | | | | |
| Net interest income on a FTE basis (non-GAAP) | | $ | 17,989 | | | $ | 17,285 | | | $ | 16,832 | | | $ | 16,456 | | | $ | 16,747 | | | $ | 52,106 | | | $ | 53,066 | | | |
| Noninterest income | | 2,359 | | | 2,346 | | | 2,299 | | | 1,898 | | | 2,822 | | | 7,004 | | | 8,168 | | | |
| Adjustment for realized securities losses, net | | — | | | — | | | — | | | 431 | | | — | | | — | | | — | | | |
| Adjustment for losses on disposal of premises and equipment, net | | 26 | | | 21 | | | — | | | 24 | | | 3 | | | 47 | | | 5 | | | |
| Adjusted income | | 20,374 | | | 19,652 | | | 19,131 | | | 18,809 | | | 19,572 | | | 59,157 | | | 61,239 | | | |
| Noninterest expense | | 12,892 | | | 13,194 | | | 11,868 | | | 12,161 | | | 11,905 | | | 37,954 | | | 36,450 | | | |
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2) | | 63.28 | % | | 67.14 | % | | 62.04 | % | | 64.66 | % | | 60.83 | % | | 64.16 | % | | 59.52 | % | | |
| | | | | | | | | | | | | | |
(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.
1 NASDAQ: WTBA Q3 2024 | Earnings Highlights
2 Certain statements in this presentation, 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 (the Exchange Act). Forward-looking statements may appear throughout this presentation. 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: interest rate risk, including the effects of changes in interest rates; fluctuations in the values of the securities held in our investment portfolio, including as a result of changes in interest rates; competitive pressures, including from non-bank competitors such as credit unions, “fintech” companies and digital asset service providers; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits; changes in local, national and international economic conditions, including the level and impact of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; changes in legal and regulatory requirements, limitations and costs including in response to the recent bank failures; changes in customers’ acceptance of the Company’s products and services; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners' information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; 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, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their business; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; 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. Except as otherwise indicated, this presentation speaks as of the date hereof. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of West Bancorporation, Inc. after the date hereof. Certain of the information contained herein may be derived from information provided by industry sources. We believe that such information is accurate and that the sources from which it has been obtained are reliable. We cannot guarantee the accuracy of such information, however, and we have not independently verified such information. This presentation contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. This presentation includes reconciliations of non-GAAP financial measures to comparable GAAP financial measures. Disclaimers
3 3Q 2024 Financial Highlights (1) Presented on a fully taxable equivalent basis; see Appendix for “Non-GAAP Financial Measures.” $26.26 NASDAQ: WTBA September 30, 2024 Closing Price: $19.01 3Q 2024 Price Range: $16.36 to $22.13 Cash Dividend Per Share Declared On October 23, 2024: $0.25 (payable on November 20, 2024) Annualized Dividend Yield: 5.26% Efficiency Ratio1 63.28% ROA 0.60% NPAs/Assets 0.01% ROE 10.41% NIM1 1.91% Diluted EPS $0.35 Net Income $6.0 million
4 • West Bancorporation, Inc. (the “Company”) is a publicly traded, financial holding company (NASDAQ: WTBA) established in 1984 whose sole subsidiary is West Bank, founded in 1893. • West Bank is headquartered in West Des Moines, Iowa and has 11 branches and commercial banking offices serving the greater Des Moines, Iowa area; eastern Iowa, which includes Iowa City and Coralville, Iowa; and southern Minnesota, which includes Rochester, Owatonna, Mankato, and St. Cloud, Minnesota. • The Company is a reliable, dividend paying community bank focused on commercial banking with $3.9 billion in assets. Our mission is to build strong relationships, build strong communities, and build upon our strong reputation to ensure our clients receive exceptional care, our communities receive outstanding support, and the loyalty of our employees and stockholders is rewarded. Company Profile and Mission • One of the Company's key competitive advantages is its client-centric approach to delivering strategic financial solutions to businesses, driven by the establishment of deep customer relationships and extensive experience in its markets. • First and foremost a community bank, West Bank has built a strong reputation for being responsive to local needs. West Bank employees place a high priority on community involvement, lending their time and talents to a long list of civic and community projects. Mission
5 Experienced Executive Leadership David D. Nelson Director/Chief Executive Officer/President Joined West Bank in 2010 Years in Banking: 41 Prior to joining the Company Mr. Nelson was the President of Southeast Minnesota Business Banking and President of Wells Fargo Bank Rochester in Rochester, Minnesota. Harlee N. Olafson Chief Risk Officer/Executive Vice President Joined West Bank in 2010 Years in Banking: 46 Prior to joining the Company Mr. Olafson was the President of Southwest Minnesota Business Banking and President of Wells Fargo Bank Mankato in Mankato, Minnesota. Bradley P. Peters Executive Vice President West Bank Minnesota Group President Joined West Bank in 2019 Years in Banking: 39 Prior to joining the Company Mr. Peters was the Executive Vice President of Bremer Bank in Minnesota where he was responsible for new market expansion. Jane M. Funk Chief Financial Officer Executive Vice President/Treasurer Joined West Bank in 2014 Years in Banking & Public Accounting: 34 Ms. Funk has extensive experience in the community banking industry and public accounting. Brad L. Winterbottom Executive Vice President West Bank President Joined West Bank in 1992 Years in Banking: 44 Mr. Winterbottom has extensive experience in commercial lending and loan portfolio administration and knowledge of the Iowa business community. Todd A. Mather West Bank Chief Credit Officer Joined West Bank in 2019 Years in Banking: 28 Prior to joining West Bank, Mr. Mather spent 8 years at Bremer Bank in Minnesota as a Senior Credit Director and Group Senior Credit Manager.
6 Conservative Organic Growth with Successful Lift-Out Strategies David Nelson joins West Bank as CEO. Entered the Rochester, Minnesota market by hiring experienced bankers who had existing strong relationships with local business owners and creating an advisory community board made up of local business owners and leaders. Successful and profitable establishment of market presence led to construction of permanent commercial banking office in 2016. Crossed $2 billion in total assets. Expanded into St. Cloud, Mankato, and Owatonna, Minnesota with the same lift- out strategy used in Rochester, Minnesota. Successful and profitable establishment of market presence led to construction of permanent commercial banking offices in each of these three markets during 2022-2024. Crossed $3 billion in total assets. Opened new corporate headquarters building in West Des Moines, Iowa in April 2024. After being in the same leased space for fifty years, the new building consolidates the organization's operations under one roof, and provides space for future growth and enhanced business development opportunities. 2010 2013 2018 2019 2020 2024
7 Company Highlights – Commitment to Excellence West Bancorporation is a high performing company in U.S. community banking, well-versed in providing commercial banking services, including loans and lines of credit and all types of deposit services, to small- and medium-sized businesses in its Iowa and Minnesota markets. Established • A 132 year presence in the Des Moines, Iowa metropolitan area and is West Des Moines' oldest business of any type. • Long track record of growth and stability coupled with attractive financial returns and dividend yield. • Simple and consistent business model with a conservative operating philosophy and expense management controls. Strategy • Disciplined organic growth strategy with a track record of successful lift-out strategies. • Business model highlighted by focus on risk management and consistent execution. • Superior talent with business expertise in building relationships. Community Service & Philanthropy • In 2023, our employees volunteered over 8,000 hours of community service. • In 2023, the West Bancorporation Foundation and West Bank provided over $730,000 in total philanthropic contributions to more than 225 organizations.
8 Company Highlights – Commitment to Excellence West Bank is a commercially-focused financial institution operating in high quality markets in Iowa and Minnesota led by a deep and experienced management team with skills developed internally and with other large regional banking institutions. Credit Culture • Strict credit risk management with robust processes and experienced credit personnel. • 30 high quality commercial bankers with an average of 20 years of commercial banking experience. • Centralized committee structure that is agile and responsive to customer needs and an organizational structure that provides deep support of credit and administrative functions. • We are a local lender to local customers. Asset Quality & Risk Management • Proven credit culture with a history of strong asset quality. • Classified and watch list loan balance was 0.27% of the loan portfolio at September 30, 2024. • Nonperforming assets at September 30, 2024 totaled $233 thousand, or 0.01% of total assets. • Commercial real estate stress testing is completed quarterly. • Independent third party loan review performed semi-annually.
9 $2,813 $2,858 $2,950 $2,994 $2,991 $2,999 $3,021 3Q23 4Q23 1Q24 2Q24 3Q24 2Q24 3Q24 Loans • Loans increased $22.4 million in Q3 2024, primarily due to the funding of previously committed construction loans. • Quarterly average loans decreased $3.2 million compared to Q2 2024. • Commercial real estate loans are well diversified among various industry sectors. • Commercial office lending makes up 5.8% of the total loan portfolio, with only 1.2% located in the Des Moines metropolitan downtown area. • Loan yields increased 5 bps in Q3 2024 compared to Q2 2024 as loan originations and renewals priced at higher prevailing market rates compared to current portfolio rates. • 35% of the loan portfolio consists of variable-rate loans. Quarterly Highlights 5.19% 5.31% 5.49% 5.60% 5.65% Loans ($ in millions) Average Balances Period End Loan Yield %
10 Loan Mix C & I, 17% CRE - NOO, 36% CRE - OO, 13% Multi Family, 13% 1-4 Family, 3% C & D, 17% Consumer and other, 1% Loan Mix as of 9/30/24 Total Construction and Development and Commercial Real Estate Loans Sector Balance ($ in thousands) Multifamily $ 540,751 Medical 151,794 Warehouse & trucking terminals 261,725 Hotels 261,792 Mixed use 98,066 Office 175,911 Retail 250,028 Senior care/living 103,248 Residential 157,556 Land and land development 106,706 Other 283,071 Total $ 2,390,648
11 Deposits • Total deposits increased $97.6 million in Q3 2024. • Brokered deposits increased $55.6 million in Q3 2024. • West Bank participates in the IntraFi® ICS and CDARS reciprocal deposit network which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount. • Estimated uninsured deposits, excluding deposits in the IntraFi® reciprocal deposit network, brokered deposits and public funds protected by state programs, were approximately 27.8% of total deposits at the end of Q3. • Deposit costs increased 10 bps in Q3 2024 compared to Q2 2024. • Deposit costs have continued to increase, although at a slowing pace, in response to sustained high short-term market rates and pricing competition from other financial institutions and brokerage firms. Quarterly Highlights $2,764 $2,879 $2,957 $3,123 $3,259 $3,181 $3,279 3Q23 4Q23 1Q24 2Q24 3Q24 2Q24 3Q24 Average Balances Deposit Cost % Period End Deposits ($ in millions) 3.10% 3.43% 3.57% 3.70% 3.80% Brokered Deposits, 13% Noninterest- Bearing, 16% Interest-Bearing Demand, 13% Savings and Money Market, 46% Time Deposits, 12% Deposit Mix as of 9/30/24
12 Funding and Liquidity Cost of liability funding ($ in thousands) Cash and cash equivalents $ 157,803 Unpledged securities 104,043 FHLB borrowing availability 627,984 Unsecured lines of credit availability 75,000 Federal Reserve discount window availability 125,291 Total as of 9/30/2024 $ 1,090,121 $3,443 $3,463 $3,555 $3,703 $3,705 $572 $561 $530 $521 $529 $2,192 $2,318 $2,427 $2,602 $2,729 $679 $584 $598 $580 $447 Average Noninterest-Bearing Deposits Average Interest Bearing Deposits Average Borrowings 3Q23 4Q23 1Q24 2Q24 3Q24 3.38% 3.60% 3.70% 3.83% 3.84% Overall Funding Costs Sources of Liquidity West Bank also maintains master brokered deposit agreements with brokerage firms and access to one-way buy options through the IntraFi® deposit network. ($ in millions)
13 $108 $3 3Q23 4Q23 1Q24 2Q24 3Q24 Credit Quality $0.3 $0.3 $0.3 $0.5 $0.2 3Q23 4Q23 1Q24 2Q24 3Q24 $0.3 $0.3 $0.3 $0.5 $0.2 3Q23 4Q23 1Q24 2Q24 3Q24 $28.1 $28.3 $28.3 $28.4 $29.4 3Q23 4Q23 1Q24 2Q24 3Q24 Net Charge-Offs (Recoveries) ($ in thousands) Substandard Loans ($ in millions) Nonaccrual Loans ($ in millions) Allowance for Credit Losses ($ in millions) 0.99% 0.97% 0.95% 0.95% 0.97% ACL/Loans % $(9) $(31) $(49)
14 Net Interest Income (1) Presented on a fully taxable equivalent basis; see Appendix for “Non-GAAP Financial Measures.” $16.6 $16.4 $16.8 $17.2 $18.0 3Q23 4Q23 1Q24 2Q24 3Q24 Net Interest Income ($ in millions) 1.91% 1.87% 1.88% 1.86% 1.91% Net interest margin %(1) Net interest income increased $0.8 million in Q3 2024 compared to Q2 2024 • Loan interest income increased $0.8 million. • Deposit interest expense increased $2.1 million. • Interest expense on federal funds purchased and other short-term borrowings decreased $1.8 million. Net interest margin increased 5 bps in Q3 2024 • Loan yields increased 5 bps in the third quarter of 2024 compared to the second quarter of 2024. • Estimated investment portfolio cash flows for the next 12 months are $51.4 million with a roll-off interest rate of 2.02%.
15 8.8% 8.7% 8.7% 8.7% 8.8% 12.0% 11.9% 11.8% 11.8% 11.9% 3Q23 4Q23 1Q24 2Q24 3Q24 8.6% 8.5% 8.4% 8.1% 8.2% 11.0% 10.9% 10.7% 10.3% 10.3% 3Q23 4Q23 1Q24 2Q24 3Q24 9.4% 9.3% 9.2% 9.3% 9.4% 12.0% 11.9% 11.8% 11.8% 11.9% 3Q23 4Q23 1Q24 2Q24 3Q24 12.0% 11.9% 11.8% 11.9% 12.0% 12.9% 12.8% 12.6% 12.7% 12.7% 3Q23 4Q23 1Q24 2Q24 3Q24 Regulatory Capital Ratios Note: Lines depict well-capitalized levels.Company West Bank Total Risk-Based Capital Ratio Tier 1 Capital Ratio Common Equity Tier 1 Ratio Tier 1 Leverage Ratio 6.5% 10% 8% 5%
16Appendix Appendix Non-GAAP Financial Measures (in thousands) As of and for the Quarter Ended September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Reconciliation of net interest income and net interest margin on a FTE basis to GAAP: Net interest income (GAAP) $ 17,960 $ 17,230 $ 16,750 $ 16,361 $ 16,634 Tax-equivalent adjustment (1) 29 55 82 95 113 Net interest income on a FTE basis (non-GAAP) 17,989 17,285 16,832 16,456 16,747 Average interest-earning assets 3,749,688 3,731,674 3,595,954 3,487,799 3,478,053 Net interest margin on a FTE basis (non-GAAP) 1.91 % 1.86 % 1.88 % 1.87 % 1.91 % Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP: Net interest income on a FTE basis (non-GAAP) $ 17,989 $ 17,285 $ 16,832 $ 16,456 $ 16,747 Noninterest income 2,359 2,346 2,299 1,898 2,822 Adjustment for realized securities losses, net — — — 431 — Adjustment for losses on disposal of premises and equipment, net 26 21 — 24 3 Adjusted income 20,374 19,652 19,131 18,809 19,572 Noninterest expense 12,892 13,194 11,868 12,161 11,905 Efficiency ratio on an adjusted and FTE basis (non- GAAP) (2) 63.28 % 67.14 % 62.04 % 64.66 % 60.83 % (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.
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