West Bancorporation, Inc. Announces Fourth Quarter and Year End 2023 Financial Results and Declares Quarterly Dividend
- The company's credit quality remains strong with no loans greater than 30 days past due and only one classified loan for $296 thousand at December 31, 2023.
- The company's efficiency ratio was 60.73% in Q3 2023, indicating efficient use of resources.
- Despite challenges in the interest rate environment, the company has a clear understanding of its path forward to more normalized margins.
- The company experienced a significant decrease in net income from 2022 to 2023, from $46.4 million to $24.1 million.
- The company's net interest income declined by $22.7 million in 2023 compared to 2022.
- The credit loss expense in 2023 was $700 thousand, indicating a negative impact on the company's financials.
Insights
West Bancorporation, Inc.'s reported net income for 2023 signifies a substantial decline from the previous year. The nearly 50% decrease in net income and earnings per share from $46.4 million and $2.76, respectively, in 2022 to $24.1 million and $1.44 in 2023, reflects significant margin challenges faced by the company. This performance dip is likely to raise concerns among investors regarding the bank's profitability and cost management strategies amidst the current interest rate environment. The reduction in net income for both the fourth quarter and the full year suggests that the margin pressures are persistent and could potentially affect future dividends and investment in growth.
The declared quarterly dividend of $0.25 per common share, despite the earnings decline, represents a commitment to shareholder returns but also warrants attention to the bank's payout ratio and capital management strategies. The bank's focus on maintaining credit quality with no loans greater than 30 days past due and only one classified loan indicates a strong risk management framework which is crucial for investor confidence, especially in a higher interest rate environment which typically increases the risk of loan defaults.
The economic context within which West Bancorporation is operating is characterized by rising short-term interest rates and an inverted yield curve. These conditions have pressured the bank's net interest margin, as evidenced by the decrease from 2.76% in 2022 to 2.01% in 2023. The aggressive deposit competition mentioned by the CEO also suggests a challenging environment for attracting and retaining capital without incurring high costs. This scenario could potentially lead to a tightening of credit conditions and a more conservative lending approach, which might slow down loan growth in the long run.
Furthermore, the increase in brokered deposits, which are typically more expensive than traditional deposits, indicates a shift in the bank's funding mix, potentially elevating the cost of funds. The decrease in federal funds purchased and other short-term borrowings, however, could be a strategic move to mitigate interest expense in response to the challenging interest rate environment. Stakeholders should monitor how these strategic funding decisions align with overall economic trends and interest rate forecasts.
The banking industry is currently facing headwinds that are affecting institutions like West Bancorporation. The company's efficiency ratio has deteriorated year-over-year, from 50.42% in Q4 2022 to 64.66% in Q4 2023, indicating higher costs relative to income. This is a critical metric for operational efficiency and the reported increase could signal underlying issues in cost management or revenue generation. The sale of securities from the available-for-sale portfolio, resulting in a net loss, may raise concerns about asset management and the bank's response to market conditions.
It is important to note the bank's tangible common equity ratio improvement, which suggests a strengthening of the bank's core financial position. This ratio is a measure of a bank's capital against its assets and an increase is generally viewed positively. However, stakeholders will need to balance this against the broader financial performance and the bank's strategies for navigating the current economic landscape, including interest rate volatility and competition for deposits.
WEST DES MOINES, Iowa , Jan. 25, 2024 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported 2023 net income of
David Nelson, President and Chief Executive Officer of the Company, commented, “Like the rest of our industry, our Company experienced some significant margin challenges in 2023. The interest rate environment, including dramatic increases in short-term rates, an ongoing inverted yield curve and aggressive deposit competition, had a significant impact on our cost of funds and net interest margin. We have a clear understanding of what is driving our challenges, along with a clear understanding of our path forward to more normalized margins.”
David Nelson added, “Despite the challenges of the interest rate environment, our credit quality remains pristine. We have no loans greater than 30 days past due and only one classified loan for
| Fourth Quarter and Year Ended 2023 Financial Highlights | ||||||||
| Quarter Ended December 31, 2023 | Year Ended December 31, 2023 | |||||||
| Net income (in thousands) | ||||||||
| Return on average equity | ||||||||
| Return on average assets | ||||||||
| Efficiency ratio (a non-GAAP measure) | ||||||||
| Nonperforming assets to total assets | ||||||||
Fourth Quarter 2023 Compared to Third Quarter 2023 Overview
- Loans increased
$77.8 million in the fourth quarter of 2023, or 10.9 percent annualized. - A credit loss expense of
$500 thousand was recorded in the fourth quarter of 2023, compared to a credit loss expense of$200 thousand in the third quarter of 2023.$300 thousand of the expense in the fourth quarter was allocated to the allowance for credit losses on loans, which was due to loan growth. The additional$200 thousand expensed in the fourth quarter was allocated to the allowance for unfunded commitments. The expense in the third quarter of 2023 was due to loan growth. - The allowance for credit losses to total loans was 0.97 percent at December 31, 2023, compared to 0.99 percent at September 30, 2023. Nonaccrual loans at December 31, 2023 consisted of one loan with a balance of
$296 thousand , compared to one loan with a balance of$303 thousand at September 30, 2023. - Deposits increased
$218.2 million , or 7.9 percent, in the fourth quarter of 2023. Brokered deposits totaled$305.4 million at December 31, 2023, compared to$237.0 million at September 30, 2023, an increase of$68.4 million . Excluding brokered deposits, deposits increased$149.8 million , or 6.0 percent, during the fourth quarter of 2023. As of December 31, 2023, estimated uninsured deposits, which excludes deposits in the IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, were approximately 28.2 percent of total deposits. - Borrowed funds decreased to
$592.6 million at December 31, 2023, compared to$705.1 million at September 30, 2023. The decrease was primarily attributable to a decrease of$111.2 million in federal funds purchased and other short-term borrowings. - The efficiency ratio (a non-GAAP measure) was 64.66 percent for the fourth quarter of 2023, compared to 60.83 percent for the third quarter of 2023. The increase in the efficiency ratio was primarily due to the decrease in noninterest income. This decrease was primarily attributable to
$431 thousand in loan swap fees that were earned in the third quarter of 2023. - Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.87 percent for the fourth quarter of 2023, compared to 1.91 percent for the third quarter of 2023. Net interest income for the fourth quarter of 2023 was
$16.4 million , compared to$16.6 million for the third quarter of 2023. The rising cost of deposits has increased interest expense faster than the increase in interest income from loan repricing and loan originations. - In December 2023, the Company sold approximately
$11.3 million of securities from the available for sale securities portfolio and realized a net loss of$431 thousand . The proceeds from this sale were reinvested in the loan portfolio and have an estimated earn back period of approximately 1 year. - The tangible common equity ratio was 5.88 percent at December 31, 2023, compared to 5.51 percent at September 30, 2023. The increase was attributable to the decrease in accumulated other comprehensive loss, which was primarily driven by the effect of decreasing long-term interest rates in the fourth quarter on the unrealized market value adjustment of our available for sale investment portfolio.
Fourth Quarter 2023 Compared to Fourth Quarter 2022 Overview
- Loans increased
$184.7 million at December 31, 2023, or 6.7 percent, compared to December 31, 2022. - Deposits increased
$93.4 million at December 31, 2023, compared to December 31, 2022. Included in deposits were brokered deposits totaling$305.4 million at December 31, 2023, compared to$272.7 million at December 31, 2022. Excluding brokered deposits, deposits increased$60.7 million , or 2.3 percent, as of December 31, 2023 compared to December 31, 2022. - Borrowed funds increased to
$592.6 million at December 31, 2023, compared to$485.9 million at December 31, 2022. The increase included an increase of$160.0 million in FHLB one-month rolling advances hedged with long-term interest rate swaps, partially offset by a decrease of$49.7 million in federal funds purchased and other short-term borrowings. - The efficiency ratio (a non-GAAP measure) was 64.66 percent for the fourth quarter of 2023, compared to 50.42 percent for the fourth quarter of 2022. The increase in the efficiency ratio in the fourth quarter of 2023 compared to the fourth quarter of 2022 was primarily due to the decrease in net interest income.
- Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.87 percent for the fourth quarter of 2023, compared to 2.49 percent for the fourth quarter of 2022. Net interest income for the fourth quarter of 2023 was
$16.4 million , compared to$20.7 million for the fourth quarter of 2022. In 2023, the rising cost of deposits and borrowed funds and the change in mix of funding increased interest expense faster than the increase in interest income from loan repricing and loan originations.
Year Ended 2023 Compared to Year Ended 2022 Overview
- The credit loss expense recorded in 2023 was
$700 thousand , compared to a credit loss benefit of$2.5 million in 2022. The credit loss expense recorded in 2023 was associated with growth in loans and unfunded commitments. The credit loss benefit recorded in 2022 was primarily due to the reversal of a specific reserve on an impaired loan and the reduction of certain qualitative factors resulting from the sustained performance of loans after the expiration of COVID-19 modifications and continued improvement in classified loans. - Net interest income declined
$22.7 million in 2023 compared to 2022. Net interest margin decreased to 2.01 percent in 2023, compared to 2.76 percent in 2022. The decline in both net interest income and net interest margin was primarily due to the rising cost of deposits and borrowed funds and the change in mix of funding, which increased interest expense faster than the increase in interest income from loan repricing and loan originations.
The Company plans to file its report on Form 10-K with the Securities and Exchange Commission on or before February 22, 2024. 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 results in a conference call scheduled for 2:00 p.m. Central Time on Thursday, January 25, 2024. The telephone number for the conference call is 888-300-4030. The conference ID for the conference call is 3218904. A recording of the call will be available until February 8, 2024, by dialing 800-770-2030.
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 recent and potential additional rate increases by the Federal Reserve; 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 “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 who have balances above current FDIC insurance limits; changes in local, national and international economic conditions, including rising rates 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 at Silicon Valley Bank, Signature Bank and First Republic Bank that resulted in the failure of those institutions; changes in legal and regulatory requirements, limitations and costs including in response to the recent failures of Silicon Valley Bank, Signature Bank and First Republic Bank; 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 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; the new 1 percent excise tax on stock buybacks by publicly traded companies; 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) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| CONDENSED BALANCE SHEETS | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and due from banks | $ | 33,245 | $ | 18,819 | $ | 29,776 | $ | 21,579 | $ | 24,896 | ||||||||||
| Interest-bearing deposits | 32,112 | 1,802 | 1,968 | 901 | 1,643 | |||||||||||||||
| Securities available for sale, at fair value | 623,919 | 609,365 | 645,091 | 665,358 | 664,115 | |||||||||||||||
| Federal Home Loan Bank stock, at cost | 22,957 | 26,691 | 22,488 | 22,226 | 19,336 | |||||||||||||||
| Loans | 2,927,535 | 2,849,777 | 2,807,075 | 2,756,185 | 2,742,836 | |||||||||||||||
| Allowance for credit losses | (28,342 | ) | (28,147 | ) | (27,938 | ) | (27,941 | ) | (25,473 | ) | ||||||||||
| Loans, net | 2,899,193 | 2,821,630 | 2,779,137 | 2,728,244 | 2,717,363 | |||||||||||||||
| Premises and equipment, net | 86,399 | 75,675 | 66,683 | 59,565 | 53,124 | |||||||||||||||
| Bank-owned life insurance | 43,864 | 43,589 | 43,328 | 44,830 | 44,573 | |||||||||||||||
| Other assets | 84,069 | 104,329 | 90,084 | 82,240 | 88,168 | |||||||||||||||
| Total assets | $ | 3,825,758 | $ | 3,701,900 | $ | 3,678,555 | $ | 3,624,943 | $ | 3,613,218 | ||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||
| Deposits | $ | 2,973,779 | $ | 2,755,529 | $ | 2,836,325 | $ | 2,798,393 | $ | 2,880,408 | ||||||||||
| Federal funds purchased and other short-term borrowings | 150,270 | 261,510 | 184,150 | 229,290 | 200,000 | |||||||||||||||
| Other borrowings | 442,367 | 443,552 | 409,736 | 350,921 | 285,855 | |||||||||||||||
| Other liabilities | 34,299 | 37,376 | 31,218 | 29,347 | 35,843 | |||||||||||||||
| Stockholders’ equity | 225,043 | 203,933 | 217,126 | 216,992 | 211,112 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 3,825,758 | $ | 3,701,900 | $ | 3,678,555 | $ | 3,624,943 | $ | 3,613,218 | ||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| AVERAGE BALANCES | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||||||
| Assets | $ | 3,706,497 | $ | 3,679,541 | $ | 3,645,651 | $ | 3,617,458 | $ | 3,511,717 | ||||||||||
| Loans | 2,857,594 | 2,813,213 | 2,783,463 | 2,745,381 | 2,649,671 | |||||||||||||||
| Deposits | 2,878,676 | 2,764,184 | 2,854,945 | 2,846,926 | 2,901,928 | |||||||||||||||
| Stockholders’ equity | 201,920 | 215,230 | 213,177 | 215,391 | 199,947 | |||||||||||||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Financial Information (unaudited) | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| LOANS | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||||||
| Commercial | $ | 531,594 | $ | 529,293 | $ | 535,085 | $ | 520,894 | $ | 519,196 | ||||||||||
| Real estate: | ||||||||||||||||||||
| Construction, land and land development | 413,477 | 399,253 | 351,461 | 336,739 | 363,014 | |||||||||||||||
| 1-4 family residential first mortgages | 106,688 | 89,713 | 80,998 | 75,223 | 75,211 | |||||||||||||||
| Home equity | 14,618 | 12,429 | 12,625 | 9,726 | 10,322 | |||||||||||||||
| Commercial | 1,854,510 | 1,812,816 | 1,820,718 | 1,810,158 | 1,771,940 | |||||||||||||||
| Consumer and other | 10,930 | 10,123 | 10,289 | 7,381 | 7,292 | |||||||||||||||
| 2,931,817 | 2,853,627 | 2,811,176 | 2,760,121 | 2,746,975 | ||||||||||||||||
| Net unamortized fees and costs | (4,282 | ) | (3,850 | ) | (4,101 | ) | (3,936 | ) | (4,139 | ) | ||||||||||
| Total loans | $ | 2,927,535 | $ | 2,849,777 | $ | 2,807,075 | $ | 2,756,185 | $ | 2,742,836 | ||||||||||
| Less allowance for credit losses | (28,342 | ) | (28,147 | ) | (27,938 | ) | (27,941 | ) | (25,473 | ) | ||||||||||
| Net loans | $ | 2,899,193 | $ | 2,821,630 | $ | 2,779,137 | $ | 2,728,244 | $ | 2,717,363 | ||||||||||
| CREDIT QUALITY | ||||||||||||||||||||
| Pass | $ | 2,931,377 | $ | 2,853,100 | $ | 2,810,640 | $ | 2,706,951 | $ | 2,692,334 | ||||||||||
| Watch | 144 | 184 | 187 | 52,766 | 54,231 | |||||||||||||||
| Substandard | 296 | 343 | 349 | 404 | 410 | |||||||||||||||
| Doubtful | — | — | — | — | — | |||||||||||||||
| Total loans | $ | 2,931,817 | $ | 2,853,627 | $ | 2,811,176 | $ | 2,760,121 | $ | 2,746,975 | ||||||||||
| DEPOSITS | ||||||||||||||||||||
| Noninterest-bearing demand | $ | 548,726 | $ | 551,688 | $ | 568,029 | $ | 605,666 | $ | 693,563 | ||||||||||
| Interest-bearing demand | 481,207 | 417,802 | 459,030 | 486,656 | 536,226 | |||||||||||||||
| Savings and money market - non-brokered | 1,315,741 | 1,249,309 | 1,302,468 | 1,202,756 | 1,125,202 | |||||||||||||||
| Money market - brokered | 124,335 | 99,282 | 114,142 | 92,524 | 112,752 | |||||||||||||||
| Total nonmaturity deposits | 2,470,009 | 2,318,081 | 2,443,669 | 2,387,602 | 2,467,743 | |||||||||||||||
| Time - non-brokered | 322,694 | 299,683 | 276,097 | 269,102 | 252,725 | |||||||||||||||
| Time - brokered | 181,076 | 137,765 | 116,559 | 141,689 | 159,940 | |||||||||||||||
| Total time deposits | 503,770 | 437,448 | 392,656 | 410,791 | 412,665 | |||||||||||||||
| Total deposits | $ | 2,973,779 | $ | 2,755,529 | $ | 2,836,325 | $ | 2,798,393 | $ | 2,880,408 | ||||||||||
| BORROWINGS | ||||||||||||||||||||
| Federal funds purchased and other short-term borrowings | $ | 150,270 | $ | 261,510 | $ | 184,150 | $ | 229,290 | $ | 200,000 | ||||||||||
| Subordinated notes, net | 79,631 | 79,566 | 79,500 | 79,435 | 79,369 | |||||||||||||||
| Federal Home Loan Bank advances | 315,000 | 315,000 | 280,000 | 220,000 | 155,000 | |||||||||||||||
| Long-term debt | 47,736 | 48,986 | 50,236 | 51,486 | 51,486 | |||||||||||||||
| Total borrowings | $ | 592,637 | $ | 705,062 | $ | 593,886 | $ | 580,211 | $ | 485,855 | ||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Preferred stock | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Common stock | 3,000 | 3,000 | 3,000 | 3,000 | 3,000 | |||||||||||||||
| Additional paid-in capital | 34,197 | 33,487 | 32,642 | 31,797 | 32,021 | |||||||||||||||
| Retained earnings | 271,369 | 271,025 | 269,301 | 267,620 | 267,562 | |||||||||||||||
| Accumulated other comprehensive loss | (83,523 | ) | (103,579 | ) | (87,817 | ) | (85,425 | ) | (91,471 | ) | ||||||||||
| Total Stockholders’ Equity | $ | 225,043 | $ | 203,933 | $ | 217,126 | $ | 216,992 | $ | 211,112 | ||||||||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||||||||||
| Financial Information (unaudited) | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| For the Quarter Ended | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||
| Interest income: | ||||||||||||||||
| Loans, including fees | $ | 38,208 | $ | 36,756 | $ | 35,011 | $ | 32,948 | $ | 30,859 | ||||||
| Securities: | ||||||||||||||||
| Taxable | 3,521 | 3,427 | 3,432 | 3,316 | 3,398 | |||||||||||
| Tax-exempt | 869 | 880 | 883 | 885 | 887 | |||||||||||
| Interest-bearing deposits | 85 | 29 | 25 | 30 | 24 | |||||||||||
| Total interest income | 42,683 | 41,092 | 39,351 | 37,179 | 35,168 | |||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | 20,024 | 17,156 | 16,277 | 13,339 | 11,043 | |||||||||||
| Federal funds purchased and other short-term borrowings | 2,024 | 3,165 | 2,264 | 2,079 | 952 | |||||||||||
| Subordinated notes | 1,114 | 1,113 | 1,109 | 1,106 | 1,119 | |||||||||||
| Federal Home Loan Bank advances | 2,482 | 2,329 | 1,621 | 1,262 | 755 | |||||||||||
| Long-term debt | 678 | 695 | 739 | 698 | 630 | |||||||||||
| Total interest expense | 26,322 | 24,458 | 22,010 | 18,484 | 14,499 | |||||||||||
| Net interest income | 16,361 | 16,634 | 17,341 | 18,695 | 20,669 | |||||||||||
| Credit loss expense | 500 | 200 | — | — | — | |||||||||||
| Net interest income after credit loss expense | 15,861 | 16,434 | 17,341 | 18,695 | 20,669 | |||||||||||
| Noninterest income: | ||||||||||||||||
| Service charges on deposit accounts | 476 | 463 | 458 | 462 | 476 | |||||||||||
| Debit card usage fees | 488 | 495 | 511 | 486 | 492 | |||||||||||
| Trust services | 782 | 831 | 749 | 706 | 678 | |||||||||||
| Increase in cash value of bank-owned life insurance | 275 | 262 | 250 | 257 | 255 | |||||||||||
| Gain from bank-owned life insurance | — | — | — | 691 | — | |||||||||||
| Loan swap fees | — | 431 | — | — | — | |||||||||||
| Realized securities losses, net | (431 | ) | — | — | — | — | ||||||||||
| Other income | 308 | 340 | 421 | 355 | 364 | |||||||||||
| Total noninterest income | 1,898 | 2,822 | 2,389 | 2,957 | 2,265 | |||||||||||
| Noninterest expense: | ||||||||||||||||
| Salaries and employee benefits | 6,468 | 6,696 | 7,029 | 6,867 | 6,552 | |||||||||||
| Occupancy and equipment | 1,499 | 1,359 | 1,322 | 1,327 | 1,270 | |||||||||||
| Data processing | 723 | 703 | 729 | 635 | 673 | |||||||||||
| Technology and software | 676 | 573 | 579 | 513 | 518 | |||||||||||
| FDIC insurance | 475 | 439 | 420 | 416 | 243 | |||||||||||
| Professional fees | 235 | 254 | 287 | 250 | 205 | |||||||||||
| Director fees | 240 | 196 | 251 | 205 | 215 | |||||||||||
| Other expenses | 1,845 | 1,685 | 1,857 | 1,858 | 1,989 | |||||||||||
| Total noninterest expense | 12,161 | 11,905 | 12,474 | 12,071 | 11,665 | |||||||||||
| Income before income taxes | 5,598 | 7,351 | 7,256 | 9,581 | 11,269 | |||||||||||
| Income taxes | 1,073 | 1,445 | 1,394 | 1,737 | 2,323 | |||||||||||
| Net income | $ | 4,525 | $ | 5,906 | $ | 5,862 | $ | 7,844 | $ | 8,946 | ||||||
| Basic earnings per common share | $ | 0.27 | $ | 0.35 | $ | 0.35 | $ | 0.47 | $ | 0.54 | ||||||
| Diluted earnings per common share | $ | 0.27 | $ | 0.35 | $ | 0.35 | $ | 0.47 | $ | 0.53 | ||||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||
| Financial Information (unaudited) | ||||||||
| (in thousands) | ||||||||
| For the Year Ended | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | December 31, 2023 | December 31, 2022 | ||||||
| Interest income: | ||||||||
| Loans, including fees | $ | 142,923 | $ | 107,095 | ||||
| Securities: | ||||||||
| Taxable | 13,696 | 12,524 | ||||||
| Tax-exempt | 3,517 | 3,527 | ||||||
| Interest-bearing deposits | 169 | 203 | ||||||
| Total interest income | 160,305 | 123,349 | ||||||
| Interest expense: | ||||||||
| Deposits | 66,796 | 22,629 | ||||||
| Federal funds purchased and other short-term borrowings | 9,532 | 1,764 | ||||||
| Subordinated notes | 4,442 | 2,867 | ||||||
| Federal Home Loan Bank advances | 7,694 | 2,669 | ||||||
| Long-term debt | 2,810 | 1,680 | ||||||
| Total interest expense | 91,274 | 31,609 | ||||||
| Net interest income | 69,031 | 91,740 | ||||||
| Credit loss expense (benefit) | 700 | (2,500 | ) | |||||
| Net interest income after credit loss expense (benefit) | 68,331 | 94,240 | ||||||
| Noninterest income: | ||||||||
| Service charges on deposit accounts | 1,859 | 2,194 | ||||||
| Debit card usage fees | 1,980 | 1,969 | ||||||
| Trust services | 3,068 | 2,709 | ||||||
| Increase in cash value of bank-owned life insurance | 1,044 | 964 | ||||||
| Loan swap fees | 431 | 835 | ||||||
| Realized securities losses, net | (431 | ) | — | |||||
| Gain from bank-owned life insurance | 691 | — | ||||||
| Other income | 1,424 | 1,537 | ||||||
| Total noninterest income | 10,066 | 10,208 | ||||||
| Noninterest expense: | ||||||||
| Salaries and employee benefits | 27,060 | 25,838 | ||||||
| Occupancy and equipment | 5,507 | 4,913 | ||||||
| Data processing | 2,790 | 2,597 | ||||||
| Technology and software | 2,341 | 2,137 | ||||||
| FDIC insurance | 1,750 | 996 | ||||||
| Professional fees | 1,026 | 874 | ||||||
| Director fees | 892 | 814 | ||||||
| Other expenses | 7,245 | 6,882 | ||||||
| Total noninterest expense | 48,611 | 45,051 | ||||||
| Income before income taxes | 29,786 | 59,397 | ||||||
| Income taxes | 5,649 | 12,998 | ||||||
| Net income | $ | 24,137 | $ | 46,399 | ||||
| Basic earnings per common share | $ | 1.44 | $ | 2.79 | ||||
| Diluted earnings per common share | $ | 1.44 | $ | 2.76 | ||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||||||||||||||||||||||
| Financial Information (unaudited) | ||||||||||||||||||||||||||||
| As of and for the Quarter Ended | For the Year Ended | |||||||||||||||||||||||||||
| COMMON SHARE DATA | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||
| Earnings per common share (basic) | $ | 0.27 | $ | 0.35 | $ | 0.35 | $ | 0.47 | $ | 0.54 | $ | 1.44 | $ | 2.79 | ||||||||||||||
| Earnings per common share (diluted) | 0.27 | 0.35 | 0.35 | 0.47 | 0.53 | 1.44 | 2.76 | |||||||||||||||||||||
| Dividends per common share | 0.25 | 0.25 | 0.25 | 0.25 | 0.25 | 1.00 | 1.00 | |||||||||||||||||||||
| Book value per common share(1) | 13.46 | 12.19 | 12.98 | 12.98 | 12.69 | |||||||||||||||||||||||
| Closing stock price | 21.20 | 16.31 | 18.41 | 18.27 | 25.55 | |||||||||||||||||||||||
| Market price/book value(2) | 157.50 | % | 133.80 | % | 141.83 | % | 140.76 | % | 201.34 | % | ||||||||||||||||||
| Price earnings ratio(3) | 19.79 | 11.75 | 13.11 | 9.56 | 11.93 | |||||||||||||||||||||||
| Annualized dividend yield(4) | 4.72 | % | 6.13 | % | 5.43 | % | 5.47 | % | 3.91 | % | ||||||||||||||||||
| REGULATORY CAPITAL RATIOS | ||||||||||||||||||||||||||||
| Consolidated: | ||||||||||||||||||||||||||||
| Total risk-based capital ratio | 11.88 | % | 11.96 | % | 12.15 | % | 12.17 | % | 12.08 | % | ||||||||||||||||||
| Tier 1 risk-based capital ratio | 9.30 | 9.37 | 9.51 | 9.51 | 9.55 | |||||||||||||||||||||||
| Tier 1 leverage capital ratio | 8.50 | 8.58 | 8.60 | 8.60 | 8.81 | |||||||||||||||||||||||
| Common equity tier 1 ratio | 8.74 | 8.80 | 8.92 | 8.92 | 8.96 | |||||||||||||||||||||||
| West Bank: | ||||||||||||||||||||||||||||
| Total risk-based capital ratio | 12.76 | % | 12.89 | % | 13.13 | % | 13.16 | % | 13.08 | % | ||||||||||||||||||
| Tier 1 risk-based capital ratio | 11.89 | 12.01 | 12.24 | 12.26 | 12.33 | |||||||||||||||||||||||
| Tier 1 leverage capital ratio | 10.86 | 11.00 | 11.08 | 11.10 | 11.37 | |||||||||||||||||||||||
| Common equity tier 1 ratio | 11.89 | 12.01 | 12.24 | 12.26 | 12.33 | |||||||||||||||||||||||
| KEY PERFORMANCE RATIOS AND OTHER METRICS | ||||||||||||||||||||||||||||
| Return on average assets(5) | 0.48 | % | 0.64 | % | 0.64 | % | 0.88 | % | 1.01 | % | 0.66 | % | 1.32 | % | ||||||||||||||
| Return on average equity(6) | 8.89 | 10.89 | 11.03 | 14.77 | 17.75 | 11.42 | 20.71 | |||||||||||||||||||||
| Net interest margin(7)(13) | 1.87 | 1.91 | 2.02 | 2.23 | 2.49 | 2.01 | 2.76 | |||||||||||||||||||||
| Yield on interest-earning assets(8)(13) | 4.87 | 4.70 | 4.57 | 4.41 | 4.21 | 4.64 | 3.70 | |||||||||||||||||||||
| Cost of interest-bearing liabilities | 3.60 | 3.38 | 3.10 | 2.76 | 2.24 | 3.21 | 1.24 | |||||||||||||||||||||
| Efficiency ratio(9)(13) | 64.66 | 60.83 | 62.83 | 55.34 | 50.42 | 60.73 | 43.70 | |||||||||||||||||||||
| Nonperforming assets to total assets(10) | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | |||||||||||||||||||||||
| ACL ratio(11) | 0.97 | 0.99 | 1.00 | 1.01 | 0.93 | |||||||||||||||||||||||
| Loans/total assets | 76.52 | 76.98 | 76.31 | 76.03 | 75.91 | |||||||||||||||||||||||
| Loans/total deposits | 98.44 | 103.42 | 98.97 | 98.49 | 95.22 | |||||||||||||||||||||||
| Tangible common equity ratio(12) | 5.88 | 5.51 | 5.90 | 5.99 | 5.84 | |||||||||||||||||||||||
(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 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 Year Ended | ||||||||||||||||||||||||||
| December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Reconciliation of net interest income and net interest margin on a FTE basis to GAAP: | ||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 16,361 | $ | 16,634 | $ | 17,341 | $ | 18,695 | $ | 20,669 | $ | 69,031 | $ | 91,740 | ||||||||||||||
| Tax-equivalent adjustment (1) | 95 | 113 | 122 | 161 | 197 | 491 | 1,122 | |||||||||||||||||||||
| Net interest income on a FTE basis (non-GAAP) | 16,456 | 16,747 | 17,463 | 18,856 | 20,866 | 69,522 | 92,862 | |||||||||||||||||||||
| Average interest-earning assets | 3,487,799 | 3,478,053 | 3,461,313 | 3,435,988 | 3,328,941 | 3,465,964 | 3,361,091 | |||||||||||||||||||||
| Net interest margin on a FTE basis (non-GAAP) | 1.87 | % | 1.91 | % | 2.02 | % | 2.23 | % | 2.49 | % | 2.01 | % | 2.76 | % | ||||||||||||||
| Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP: | ||||||||||||||||||||||||||||
| Net interest income on a FTE basis (non-GAAP) | $ | 16,456 | $ | 16,747 | $ | 17,463 | $ | 18,856 | $ | 20,866 | $ | 69,522 | $ | 92,862 | ||||||||||||||
| Noninterest income | 1,898 | 2,822 | 2,389 | 2,957 | 2,265 | 10,066 | 10,208 | |||||||||||||||||||||
| Adjustment for realized securities losses, net | 431 | — | — | — | — | 431 | — | |||||||||||||||||||||
| Adjustment for losses on disposal of premises and equipment, net | 24 | 3 | 2 | — | 2 | 29 | 29 | |||||||||||||||||||||
| Adjusted income | 18,809 | 19,572 | 19,854 | 21,813 | 23,133 | 80,048 | 103,099 | |||||||||||||||||||||
| Noninterest expense | 12,161 | 11,905 | 12,474 | 12,071 | 11,665 | 48,611 | 45,051 | |||||||||||||||||||||
| Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2) | 64.66 | % | 60.83 | % | 62.83 | % | 55.34 | % | 50.42 | % | 60.73 | % | 43.70 | % | ||||||||||||||
(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.
For more information contact:
Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766
FAQ
What was West Bancorporation, Inc.'s net income for 2023?
What was West Bancorporation, Inc.'s net income for Q4 2023?
What was the efficiency ratio for West Bancorporation, Inc. in Q4 2023?
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When does West Bancorporation, Inc. plan to file its report on Form 10-K with the SEC?
