West Bancorporation, Inc. Announces Record Net Income, Declares Increased Quarterly Dividend
West Bancorporation
13 min read
WEST DES MOINES, Iowa, Jan. 27, 2022 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported 2021 net income was $49.6 million, or $2.95 per diluted common share, compared to 2020 net income of $32.7 million, or $1.98 per diluted common share. Net income for the fourth quarter of 2021 was $11.9 million, or $0.71 per diluted common share, compared to fourth quarter 2020 net income of $8.6 million, or $0.52 per diluted common share. On January 26, 2022, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share, an increase of $0.01 from the prior quarter and representing a record high quarterly dividend for the Company. The dividend is payable on February 23, 2022, to stockholders of record on February 9, 2022.
The Company recorded negative provision for loan losses of $1,500 for the year ended December 31, 2021, compared to provision for loan losses of $12,000 for the year ended December 31, 2020. The provision in 2020 was due to the onset of the global pandemic, whereas 2021 includes a reserve release due to the improving economic outlook.
David Nelson, President and Chief Executive Officer of the Company, commented, “West Bancorporation, Inc. experienced extraordinary financial performance in 2021. Net income increased 52 percent in 2021, compared to 2020, and net interest income increased 15 percent in 2021, compared to 2020. Total assets were $3.5 billion at December 31, 2021, compared to $3.2 billion at December 31, 2020. We experienced loan growth (exclusive of Paycheck Protection Program loan activity) of 16 percent and deposit growth of 12 percent in 2021. Our credit quality continues to improve as classified and impaired loans were paid down and paid off. As of December 31, 2021, the Texas ratio declined to 3.10 percent and there were no loans past due more than 30 days.”
David Nelson added, “We currently have four new bank building projects in various stages of planning and development. These buildings represent our commitment to our customers, our employees and the communities we serve as we continue our pursuit of excellence.”
The Company will file its report on Form 10-K with the Securities and Exchange Commission on or before February 24, 2022. Please refer to that document for a more in-depth discussion of the Company’s financial results. The Form 10-K will be 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, January 28, 2022. The telephone number for the conference call is 888-339-0814. A recording of the call will be available until February 11, 2022, by dialing 877-344-7529. The replay passcode is 3153348.
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 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, 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 anticipated rate increases; 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; liquidity risk due to excess liquidity at the Company’s bank subsidiary; 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
December 31, 2021
December 31, 2020
Assets
Cash and due from banks
$
17,555
$
77,693
Federal funds sold
175,270
318,742
Securities available for sale, at fair value
758,822
420,571
Federal Home Loan Bank stock, at cost
9,965
11,723
Loans
2,456,196
2,280,575
Allowance for loan losses
(28,364
)
(29,436
)
Loans, net
2,427,832
2,251,139
Premises and equipment, net
34,568
29,077
Bank-owned life insurance
43,609
42,686
Other assets
32,580
34,113
Total assets
$
3,500,201
$
3,185,744
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing demand
$
720,136
$
696,731
Interest-bearing:
Demand
548,242
553,881
Savings
1,550,636
1,274,254
Time of $250 or more
53,019
46,907
Other time
143,972
129,221
Total deposits
3,016,005
2,700,994
Federal funds purchased
2,880
5,375
Other borrowings
196,986
217,010
Other liabilities
24,002
38,670
Stockholders’ equity
260,328
223,695
Total liabilities and stockholders’ equity
$
3,500,201
$
3,185,744
WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (continued) (unaudited)
(in thousands)
Three Months Ended December 31,
Year Ended December 31,
CONSOLIDATED STATEMENTS OF INCOME
2021
2020
2021
2020
Interest income
Loans, including fees
$
24,179
$
23,536
$
95,585
$
90,668
Securities
3,419
2,162
11,403
9,261
Other
66
48
292
304
Total interest income
27,664
25,746
107,280
100,233
Interest expense
Deposits
2,055
1,913
7,948
11,256
Federal funds purchased
1
2
5
23
Other borrowings
1,006
1,341
4,268
6,121
Total interest expense
3,062
3,256
12,221
17,400
Net interest income
24,602
22,490
95,059
82,833
Provision for loan losses
—
4,000
(1,500
)
12,000
Net interest income after provision for loan losses
24,602
18,490
96,559
70,833
Noninterest income
Service charges on deposit accounts
603
617
2,352
2,360
Debit card usage fees
505
427
1,948
1,632
Trust services
633
601
2,671
2,078
Increase in cash value of bank-owned life insurance
233
166
923
593
Loan swap fees
24
—
66
1,572
Realized securities gains (losses), net
—
(4
)
51
77
Other income
350
297
1,718
1,290
Total noninterest income
2,348
2,104
9,729
9,602
Noninterest expense
Salaries and employee benefits
5,928
5,577
23,226
21,591
Occupancy
1,532
1,228
5,162
4,879
Data processing
630
575
2,465
2,331
FDIC insurance
460
330
1,818
1,210
Other expenses
3,321
2,205
10,709
9,043
Total noninterest expense
11,871
9,915
43,380
39,054
Income before income taxes
15,079
10,679
62,908
41,381
Income taxes
3,169
2,125
13,301
8,669
Net income
$
11,910
$
8,554
$
49,607
$
32,712
WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (continued) (unaudited)
PER COMMON SHARE
MARKET INFORMATION (1)
Net Income
Basic
Diluted
Dividends
High
Low
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
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 December 31,
Year Ended December 31,
SELECTED FINANCIAL MEASURES
2021
2020
2021
2020
Return on average assets
1.38
%
1.15
%
1.52
%
1.19
%
Return on average equity
18.51
%
15.54
%
20.33
%
15.49
%
Net interest margin on a FTE basis (1)
3.00
%
3.20
%
3.05
%
3.20
%
Efficiency ratio (1)(2)
43.32
%
39.99
%
40.91
%
41.96
%
As of December 31,
2021
2020
Texas ratio (2)
3.10
%
6.40
%
Allowance for loan losses ratio
1.15
%
1.29
%
Allowance for loan losses ratio, excluding PPP loans (1)(3)
1.17
%
1.40
%
Tangible common equity ratio
7.44
%
7.02
%
(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 December 31,
Year Ended December 31,
2021
2020
2021
2020
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:
Net interest income (GAAP)
$
24,602
$
22,490
$
95,059
$
82,833
Tax-equivalent adjustment (1)
397
191
1,202
707
Net interest income on a FTE basis (non-GAAP)
24,999
22,681
96,261
83,540
Average interest-earning assets
3,309,625
2,822,563
3,152,138
2,614,342
Net interest margin on a FTE basis (non-GAAP)
3.00
%
3.20
%
3.05
%
3.20
%
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:
Net interest income on a FTE basis (non-GAAP)
$
24,999
$
22,681
$
96,261
$
83,540
Noninterest income
2,348
2,104
9,729
9,602
Adjustment for realized securities (gains) losses, net
—
4
(51
)
(77
)
Adjustment for losses on disposal of premises and equipment, net
55
6
84
9
Adjusted income
27,402
24,795
106,023
93,074
Noninterest expense
11,871
9,915
43,380
39,054
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)
43.32
%
39.99
%
40.91
%
41.96
%
As of December 31,
2021
2020
Reconciliation of allowance for loan losses ratio, excluding PPP loans:
Loans outstanding (GAAP)
$
2,456,196
$
2,280,575
Less: PPP loans
(22,206
)
(180,757
)
Loans, net of PPP loans (non-GAAP)
2,433,990
2,099,818
Allowance for loan losses
28,364
29,436
Allowance for loan losses ratio, excluding PPP loans (non-GAAP) (3)
1.17
%
1.40
%
(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
