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West Bancorporation, Inc. Announces Fourth Quarter and Year End 2023 Financial Results and Declares Quarterly Dividend

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West Bancorporation, Inc. reported a decrease in net income for 2023 compared to 2022, with net income of $24.1 million and $1.44 per diluted common share in 2023, compared to $46.4 million and $2.76 per diluted common share in 2022. The company's net income for Q4 2023 was $4.5 million, or $0.27 per diluted common share, compared to $5.9 million, or $0.35 per diluted common share in Q3 2023, and $8.9 million, or $0.53 per diluted common share in Q4 2022. The company's efficiency ratio increased to 64.66% in Q4 2023 from 60.73% in Q3 2023. The credit loss expense in 2023 was $700 thousand, compared to a credit loss benefit of $2.5 million in 2022. Net interest income declined $22.7 million in 2023 compared to 2022. The company plans to file its report on Form 10-K with the SEC on or before February 22, 2024.
Positive
  • 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.
Negative
  • 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 $24.1 million, or $1.44 per diluted common share, compared to 2022 net income of $46.4 million, or $2.76 per diluted common share. Net income for the fourth quarter 2023 was $4.5 million, or $0.27 per diluted common share, compared to third quarter 2023 net income of $5.9 million, or $0.35 per diluted common share, and fourth quarter 2022 net income of $8.9 million, or $0.53 per diluted common share. On January 24, 2024, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on February 21, 2024, to stockholders of record on February 7, 2024.

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 $296 thousand at December 31, 2023. We continue to closely monitor and manage our credit quality as the economy and our customers respond to a higher interest rate environment.”

 Fourth Quarter and Year Ended 2023 Financial Highlights
     
  Quarter Ended
December 31, 2023
 Year Ended
December 31, 2023
 Net income (in thousands)$4,525  $24,137 
 Return on average equity 8.89%   11.42% 
 Return on average assets 0.48%   0.66% 
 Efficiency ratio (a non-GAAP measure) 64.66%   60.73% 
 Nonperforming assets to total assets 0.01%   0.01% 
         

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?

West Bancorporation, Inc.'s net income for 2023 was $24.1 million.

What was West Bancorporation, Inc.'s net income for Q4 2023?

West Bancorporation, Inc.'s net income for Q4 2023 was $4.5 million.

What was the efficiency ratio for West Bancorporation, Inc. in Q4 2023?

The efficiency ratio for West Bancorporation, Inc. in Q4 2023 was 64.66%.

What was the credit loss expense for West Bancorporation, Inc. in 2023?

The credit loss expense for West Bancorporation, Inc. in 2023 was $700 thousand.

When does West Bancorporation, Inc. plan to file its report on Form 10-K with the SEC?

West Bancorporation, Inc. plans to file its report on Form 10-K with the SEC on or before February 22, 2024.

West Bancorporation

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