West Bancorporation, Inc. Announces Third Quarter 2023 Financial Results and Declares Quarterly Dividend
- West Bancorporation, Inc. reports Q3 2023 net income of $5.9 million, compared to $5.9 million in Q2 2023 and $11.6 million in Q3 2022. The company declares a regular quarterly dividend of $0.25 per share. Loans increased by 6.1% in Q3 2023. Borrowed funds increased to $705.1 million. The tangible common equity ratio was 5.51% at the end of Q3 2023.
- Deposits decreased by 2.8% in Q3 2023. Net interest income decreased from $17.3 million in Q2 2023 to $16.6 million in Q3 2023. The efficiency ratio was 60.83% in Q3 2023.
WEST DES MOINES, Iowa, Oct. 26, 2023 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported third quarter 2023 net income of
David Nelson, President and Chief Executive Officer of the Company, commented, “West Bank and the banking industry are healthy and strong. While West Bank’s earnings have been negatively impacted by the unprecedented size and pace of the Federal Reserve’s interest rate increases over the last 18 months, we remain committed to delivering high quality services and products, building strong relationships and delivering long-term shareholder value.”
David Nelson added, “Our capital position is strong and our credit quality continues to be pristine. West Bank had no loans past due more than 30 days and only one nonaccrual loan at the end of the third quarter. Our credit risk management team remains focused on the economic uncertainties that are ahead and the volatile interest rate environment.”
| Third Quarter 2023 Financial Highlights | ||||||||
| Quarter Ended September 30, 2023 | Nine Months Ended September 30, 2023 | |||||||
| Net income (in thousands) | $ | 5,906 | $ | 19,612 | ||||
| Return on average equity | 10.89 | % | 12.22 | % | ||||
| Return on average assets | 0.64 | % | 0.72 | % | ||||
| Efficiency ratio (a non-GAAP measure) | 60.83 | % | 59.52 | % | ||||
| Nonperforming assets to total assets | 0.01 | % | 0.01 | % | ||||
Third Quarter 2023 Compared to Second Quarter 2023 Overview
- Loans increased
$42.7 million in the third quarter of 2023, or 6.1 percent annualized.
- A provision for credit losses of
$200 thousand was recorded in the third quarter of 2023, compared to no provision in the second quarter of 2023. The provision in the third quarter of 2023 was directly associated with loan growth.
- The allowance for credit losses to total loans was 0.99 percent at September 30, 2023, compared to 1.00 percent at June 30, 2023. Nonaccrual loans at September 30, 2023 consisted of one loan with a balance of
$303 thousand , in comparison to one loan with a balance of$309 thousand at June 30, 2023.
- Loan swap fees of
$431 thousand were recorded in the third quarter of 2023, compared to none in the second quarter of 2023.
- Deposits decreased
$80.8 million , or 2.8 percent, in the third quarter of 2023. Brokered deposits totaled$237.0 million at September 30, 2023, compared to$230.7 million at June 30, 2023, an increase of$6.3 million . Excluding brokered deposits, deposits decreased$87.1 million , or 3.3 percent, during the third quarter of 2023. The decline in deposits was primarily attributable to customers using their own liquidity to fund business transactions, instead of incurring debt, and customers seeking higher yielding investment options. As of September 30, 2023, estimated uninsured deposits, which excludes deposits in the IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, were approximately 28.0 percent of total deposits.
- Borrowed funds increased to
$705.1 million at September 30, 2023, compared to$593.9 million at June 30, 2023. The increase included$77.4 million in federal funds purchased and other short-term borrowings and$35.0 million in Federal Home Loan Bank (FHLB) one-month rolling advances hedged with long-term interest rate swaps.
- The efficiency ratio (a non-GAAP measure) was 60.83 percent for the third quarter of 2023, compared to 62.83 percent for the second quarter of 2023. The decrease in the efficiency ratio was primarily due to the increase in noninterest income and decrease in noninterest expense, partially offset by the decrease in net interest income.
- Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for the third quarter of 2023, compared to 2.02 percent for the second quarter of 2023. Net interest income for the third quarter of 2023 was
$16.6 million , compared to$17.3 million for the second quarter of 2023. The rising cost of deposits and borrowed funds and the change in mix of funding has increased interest expense faster than the increase in interest income from loan repricing and loan originations.
- The tangible common equity ratio was 5.51 percent at September 30, 2023, compared to 5.90 percent at June 30, 2023. The decline is attributable to the increase in accumulated other comprehensive loss, primarily driven by the negative effect that rising interest rates have had on the unrealized market value adjustment of our available for sale investment portfolio.
Third Quarter 2023 Compared to Third Quarter 2022 Overview
- Loans increased
$235.6 million at September 30, 2023, or 9.0 percent, compared to September 30, 2022.
- Deposits decreased
$67.3 million at September 30, 2023, compared to September 30, 2022. Included in deposits were brokered deposits totaling$237.0 million at September 30, 2023, compared to$258.1 million at September 30, 2022. Excluding brokered deposits, deposits decreased$46.2 million , or 1.8 percent as of September 30, 2023 compared to September 30, 2022. The remaining decline in deposits was primarily attributable to customers using their own liquidity to fund business transactions, instead of incurring debt, and customers seeking higher yielding investment options.
- Borrowed funds increased to
$705.1 million at September 30, 2023, compared to$460.3 million at September 30, 2022. The increase included$190.0 million in FHLB one-month rolling advances hedged with long-term interest rate swaps and$57.0 million in federal funds purchased and other short-term borrowings.
- The efficiency ratio (a non-GAAP measure) was 60.83 percent for the third quarter of 2023, compared to 43.16 percent for the third quarter of 2022. Tax-equivalent net interest income decreased in the third quarter of 2023 compared to the third quarter of 2022, primarily due to the increased cost of deposits and borrowed funds. Additionally, noninterest expense increased and noninterest income decreased.
- Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for the third quarter of 2023, compared to 2.78 percent for the third quarter of 2022. Net interest income for the third quarter of 2023 was
$16.6 million , compared to$23.0 million for the third quarter of 2022. In 2022 and year-to-date 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.
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 26, 2023. The telephone number for the conference call is 888-300-4030. The access code for the conference call is 3218904. A recording of the call will be available until November 10, 2023, 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 (including as a result of the implementation of the current expected credit loss (CECL) accounting standard) 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 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, such as the COVID-19 pandemic, 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; 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 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | |||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and due from banks | $ | 18,819 | $ | 29,776 | $ | 21,579 | $ | 24,896 | $ | 58,342 | ||||||||||
| Interest-bearing deposits | 1,802 | 1,968 | 901 | 1,643 | 1,049 | |||||||||||||||
| Securities available for sale, at fair value | 609,365 | 645,091 | 665,358 | 664,115 | 671,752 | |||||||||||||||
| Federal Home Loan Bank stock, at cost | 26,691 | 22,488 | 22,226 | 19,336 | 18,350 | |||||||||||||||
| Loans | 2,849,777 | 2,807,075 | 2,756,185 | 2,742,836 | 2,614,145 | |||||||||||||||
| Allowance for credit losses | (28,147 | ) | (27,938 | ) | (27,941 | ) | (25,473 | ) | (25,418 | ) | ||||||||||
| Loans, net | 2,821,630 | 2,779,137 | 2,728,244 | 2,717,363 | 2,588,727 | |||||||||||||||
| Premises and equipment, net | 75,675 | 66,683 | 59,565 | 53,124 | 44,592 | |||||||||||||||
| Bank-owned life insurance | 43,589 | 43,328 | 44,830 | 44,573 | 44,318 | |||||||||||||||
| Other assets | 104,329 | 90,084 | 82,240 | 88,168 | 90,387 | |||||||||||||||
| Total assets | $ | 3,701,900 | $ | 3,678,555 | $ | 3,624,943 | $ | 3,613,218 | $ | 3,517,517 | ||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||
| Deposits | $ | 2,755,529 | $ | 2,836,325 | $ | 2,798,393 | $ | 2,880,408 | $ | 2,822,847 | ||||||||||
| Federal funds purchased and other short-term borrowings | 261,510 | 184,150 | 229,290 | 200,000 | 204,500 | |||||||||||||||
| Other borrowings | 443,552 | 409,736 | 350,921 | 285,855 | 255,789 | |||||||||||||||
| Other liabilities | 37,376 | 31,218 | 29,347 | 35,843 | 35,617 | |||||||||||||||
| Stockholders’ equity | 203,933 | 217,126 | 216,992 | 211,112 | 198,764 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 3,701,900 | $ | 3,678,555 | $ | 3,624,943 | $ | 3,613,218 | $ | 3,517,517 | ||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| AVERAGE BALANCES | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | |||||||||||||||
| Assets | $ | 3,679,541 | $ | 3,645,651 | $ | 3,617,458 | $ | 3,511,717 | $ | 3,475,894 | ||||||||||
| Loans | 2,813,213 | 2,783,463 | 2,745,381 | 2,649,671 | 2,579,862 | |||||||||||||||
| Deposits | 2,764,184 | 2,854,945 | 2,846,926 | 2,901,928 | 2,864,648 | |||||||||||||||
| Stockholders’ equity | 215,230 | 213,177 | 215,391 | 199,947 | 219,065 | |||||||||||||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Financial Information (unaudited) | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| LOANS | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | |||||||||||||||
| Commercial | $ | 529,293 | $ | 535,085 | $ | 520,894 | $ | 519,196 | $ | 526,336 | ||||||||||
| Real estate: | ||||||||||||||||||||
| Construction, land and land development | 399,253 | 351,461 | 336,739 | 363,014 | 341,549 | |||||||||||||||
| 1-4 family residential first mortgages | 89,713 | 80,998 | 75,223 | 75,211 | 69,991 | |||||||||||||||
| Home equity | 12,429 | 12,625 | 9,726 | 10,322 | 10,271 | |||||||||||||||
| Commercial | 1,812,816 | 1,820,718 | 1,810,158 | 1,771,940 | 1,661,907 | |||||||||||||||
| Consumer and other | 10,123 | 10,289 | 7,381 | 7,292 | 7,884 | |||||||||||||||
| 2,853,627 | 2,811,176 | 2,760,121 | 2,746,975 | 2,617,938 | ||||||||||||||||
| Net unamortized fees and costs | (3,850 | ) | (4,101 | ) | (3,936 | ) | (4,139 | ) | (3,793 | ) | ||||||||||
| Total loans | $ | 2,849,777 | $ | 2,807,075 | $ | 2,756,185 | $ | 2,742,836 | $ | 2,614,145 | ||||||||||
| Less allowance for credit losses | (28,147 | ) | (27,938 | ) | (27,941 | ) | (25,473 | ) | (25,418 | ) | ||||||||||
| Net loans | $ | 2,821,630 | $ | 2,779,137 | $ | 2,728,244 | $ | 2,717,363 | $ | 2,588,727 | ||||||||||
| CREDIT QUALITY | ||||||||||||||||||||
| Pass | $ | 2,853,100 | $ | 2,810,640 | $ | 2,706,951 | $ | 2,692,334 | $ | 2,559,722 | ||||||||||
| Watch | 184 | 187 | 52,766 | 54,231 | 57,789 | |||||||||||||||
| Substandard | 343 | 349 | 404 | 410 | 427 | |||||||||||||||
| Doubtful | — | — | — | — | — | |||||||||||||||
| Total loans | $ | 2,853,627 | $ | 2,811,176 | $ | 2,760,121 | $ | 2,746,975 | $ | 2,617,938 | ||||||||||
| DEPOSITS | ||||||||||||||||||||
| Noninterest-bearing demand | $ | 551,688 | $ | 568,029 | $ | 605,666 | $ | 693,563 | $ | 712,722 | ||||||||||
| Interest-bearing demand | 417,802 | 459,030 | 486,656 | 536,226 | 469,257 | |||||||||||||||
| Savings and money market - non-brokered | 1,249,309 | 1,302,468 | 1,202,756 | 1,125,202 | 1,170,214 | |||||||||||||||
| Money market - brokered | 99,282 | 114,142 | 92,524 | 112,752 | 82,480 | |||||||||||||||
| Total nonmaturity deposits | 2,318,081 | 2,443,669 | 2,387,602 | 2,467,743 | 2,434,673 | |||||||||||||||
| Time - non-brokered | 299,683 | 276,097 | 269,102 | 252,725 | 212,574 | |||||||||||||||
| Time - brokered | 137,765 | 116,559 | 141,689 | 159,940 | 175,600 | |||||||||||||||
| Total time deposits | 437,448 | 392,656 | 410,791 | 412,665 | 388,174 | |||||||||||||||
| Total deposits | $ | 2,755,529 | $ | 2,836,325 | $ | 2,798,393 | $ | 2,880,408 | $ | 2,822,847 | ||||||||||
| BORROWINGS | ||||||||||||||||||||
| Federal funds purchased and other short-term borrowings | $ | 261,510 | $ | 184,150 | $ | 229,290 | $ | 200,000 | $ | 204,500 | ||||||||||
| Subordinated notes, net | 79,566 | 79,500 | 79,435 | 79,369 | 79,303 | |||||||||||||||
| Federal Home Loan Bank advances | 315,000 | 280,000 | 220,000 | 155,000 | 125,000 | |||||||||||||||
| Long-term debt | 48,986 | 50,236 | 51,486 | 51,486 | 51,486 | |||||||||||||||
| Total borrowings | $ | 705,062 | $ | 593,886 | $ | 580,211 | $ | 485,855 | $ | 460,289 | ||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Preferred stock | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Common stock | 3,000 | 3,000 | 3,000 | 3,000 | 3,000 | |||||||||||||||
| Additional paid-in capital | 33,487 | 32,642 | 31,797 | 32,021 | 31,152 | |||||||||||||||
| Retained earnings | 271,025 | 269,301 | 267,620 | 267,562 | 262,776 | |||||||||||||||
| Accumulated other comprehensive loss | (103,579 | ) | (87,817 | ) | (85,425 | ) | (91,471 | ) | (98,164 | ) | ||||||||||
| Total Stockholders’ Equity | $ | 203,933 | $ | 217,126 | $ | 216,992 | $ | 211,112 | $ | 198,764 | ||||||||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Financial Information (unaudited) | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| For the Quarter Ended | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | |||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans, including fees | $ | 36,756 | $ | 35,011 | $ | 32,948 | $ | 30,859 | $ | 28,102 | ||||||||||
| Securities: | ||||||||||||||||||||
| Taxable | 3,427 | 3,432 | 3,316 | 3,398 | 3,147 | |||||||||||||||
| Tax-exempt | 880 | 883 | 885 | 887 | 890 | |||||||||||||||
| Interest-bearing deposits | 29 | 25 | 30 | 24 | 30 | |||||||||||||||
| Total interest income | 41,092 | 39,351 | 37,179 | 35,168 | 32,169 | |||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | 17,156 | 16,277 | 13,339 | 11,043 | 6,289 | |||||||||||||||
| Federal funds purchased and other short-term borrowings | 3,165 | 2,264 | 2,079 | 952 | 655 | |||||||||||||||
| Subordinated notes | 1,113 | 1,109 | 1,106 | 1,119 | 1,106 | |||||||||||||||
| Federal Home Loan Bank advances | 2,329 | 1,621 | 1,262 | 755 | 649 | |||||||||||||||
| Long-term debt | 695 | 739 | 698 | 630 | 466 | |||||||||||||||
| Total interest expense | 24,458 | 22,010 | 18,484 | 14,499 | 9,165 | |||||||||||||||
| Net interest income | 16,634 | 17,341 | 18,695 | 20,669 | 23,004 | |||||||||||||||
| Credit loss expense (benefit) | 200 | — | — | — | — | |||||||||||||||
| Net interest income after credit loss expense (benefit) | 16,434 | 17,341 | 18,695 | 20,669 | 23,004 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Service charges on deposit accounts | 463 | 458 | 462 | 476 | 553 | |||||||||||||||
| Debit card usage fees | 495 | 511 | 486 | 492 | 498 | |||||||||||||||
| Trust services | 831 | 749 | 706 | 678 | 780 | |||||||||||||||
| Increase in cash value of bank-owned life insurance | 262 | 250 | 257 | 255 | 246 | |||||||||||||||
| Gain from bank-owned life insurance | — | — | 691 | — | — | |||||||||||||||
| Loan swap fees | 431 | — | — | — | 835 | |||||||||||||||
| Other income | 340 | 421 | 355 | 364 | 364 | |||||||||||||||
| Total noninterest income | 2,822 | 2,389 | 2,957 | 2,265 | 3,276 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 6,696 | 7,029 | 6,867 | 6,552 | 6,578 | |||||||||||||||
| Occupancy and equipment | 1,359 | 1,322 | 1,327 | 1,270 | 1,315 | |||||||||||||||
| Data processing | 703 | 729 | 635 | 673 | 644 | |||||||||||||||
| Technology and software | 573 | 579 | 513 | 518 | 651 | |||||||||||||||
| FDIC insurance | 439 | 420 | 416 | 243 | 127 | |||||||||||||||
| Professional fees | 254 | 287 | 250 | 205 | 250 | |||||||||||||||
| Director fees | 196 | 251 | 205 | 215 | 209 | |||||||||||||||
| Other expenses | 1,685 | 1,857 | 1,858 | 1,989 | 1,684 | |||||||||||||||
| Total noninterest expense | 11,905 | 12,474 | 12,071 | 11,665 | 11,458 | |||||||||||||||
| Income before income taxes | 7,351 | 7,256 | 9,581 | 11,269 | 14,822 | |||||||||||||||
| Income taxes | 1,445 | 1,394 | 1,737 | 2,323 | 3,220 | |||||||||||||||
| Net income | $ | 5,906 | $ | 5,862 | $ | 7,844 | $ | 8,946 | $ | 11,602 | ||||||||||
| Basic earnings per common share | $ | 0.35 | $ | 0.35 | $ | 0.47 | $ | 0.54 | $ | 0.70 | ||||||||||
| Diluted earnings per common share | $ | 0.35 | $ | 0.35 | $ | 0.47 | $ | 0.53 | $ | 0.69 | ||||||||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||
| Financial Information (unaudited) | ||||||||
| (in thousands) | ||||||||
| For the Nine Months Ended | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | September 30, 2023 | September 30, 2022 | ||||||
| Interest income: | ||||||||
| Loans, including fees | $ | 104,715 | $ | 76,236 | ||||
| Securities: | ||||||||
| Taxable | 10,175 | 9,126 | ||||||
| Tax-exempt | 2,648 | 2,640 | ||||||
| Interest-bearing deposits | 84 | 179 | ||||||
| Total interest income | 117,622 | 88,181 | ||||||
| Interest expense: | ||||||||
| Deposits | 46,772 | 11,586 | ||||||
| Federal funds purchased and other short-term borrowings | 7,508 | 812 | ||||||
| Subordinated notes | 3,328 | 1,748 | ||||||
| Federal Home Loan Bank advances | 5,212 | 1,914 | ||||||
| Long-term debt | 2,132 | 1,050 | ||||||
| Total interest expense | 64,952 | 17,110 | ||||||
| Net interest income | 52,670 | 71,071 | ||||||
| Credit loss expense (benefit) | 200 | (2,500 | ) | |||||
| Net interest income after credit loss expense (benefit) | 52,470 | 73,571 | ||||||
| Noninterest income: | ||||||||
| Service charges on deposit accounts | 1,383 | 1,718 | ||||||
| Debit card usage fees | 1,492 | 1,477 | ||||||
| Trust services | 2,286 | 2,031 | ||||||
| Increase in cash value of bank-owned life insurance | 769 | 709 | ||||||
| Loan swap fees | 431 | 835 | ||||||
| Gain from bank-owned life insurance | 691 | — | ||||||
| Other income | 1,116 | 1,173 | ||||||
| Total noninterest income | 8,168 | 7,943 | ||||||
| Noninterest expense: | ||||||||
| Salaries and employee benefits | 20,592 | 19,286 | ||||||
| Occupancy and equipment | 4,008 | 3,643 | ||||||
| Data processing | 2,067 | 1,924 | ||||||
| Technology and software | 1,665 | 1,619 | ||||||
| FDIC insurance | 1,275 | 753 | ||||||
| Professional fees | 791 | 669 | ||||||
| Director fees | 652 | 599 | ||||||
| Other expenses | 5,400 | 4,893 | ||||||
| Total noninterest expense | 36,450 | 33,386 | ||||||
| Income before income taxes | 24,188 | 48,128 | ||||||
| Income taxes | 4,576 | 10,675 | ||||||
| Net income | $ | 19,612 | $ | 37,453 | ||||
| Basic earnings per common share | $ | 1.17 | $ | 2.25 | ||||
| Diluted earnings per common share | $ | 1.17 | $ | 2.23 | ||||
| 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, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||||
| Earnings per common share (basic) | $ | 0.35 | $ | 0.35 | $ | 0.47 | $ | 0.54 | $ | 0.70 | $ | 1.17 | $ | 2.25 | ||||||||||||||
| Earnings per common share (diluted) | 0.35 | 0.35 | 0.47 | 0.53 | 0.69 | 1.17 | 2.23 | |||||||||||||||||||||
| Dividends per common share | 0.25 | 0.25 | 0.25 | 0.25 | 0.25 | 0.75 | 0.75 | |||||||||||||||||||||
| Book value per common share(1) | 12.19 | 12.98 | 12.98 | 12.69 | 11.94 | |||||||||||||||||||||||
| Closing stock price | 16.31 | 18.41 | 18.27 | 25.55 | 20.81 | |||||||||||||||||||||||
| Market price/book value(2) | 133.80 | % | 141.83 | % | 140.76 | % | 201.34 | % | 174.29 | % | ||||||||||||||||||
| Price earnings ratio(3) | 11.75 | 13.11 | 9.56 | 11.93 | 7.49 | |||||||||||||||||||||||
| Annualized dividend yield(4) | 6.13 | % | 5.43 | % | 5.47 | % | 3.91 | % | 4.81 | % | ||||||||||||||||||
| REGULATORY CAPITAL RATIOS | ||||||||||||||||||||||||||||
| Consolidated: | ||||||||||||||||||||||||||||
| Total risk-based capital ratio | 11.96 | % | 12.15 | % | 12.17 | % | 12.08 | % | 12.34 | % | ||||||||||||||||||
| Tier 1 risk-based capital ratio | 9.37 | 9.51 | 9.51 | 9.55 | 9.72 | |||||||||||||||||||||||
| Tier 1 leverage capital ratio | 8.58 | 8.60 | 8.60 | 8.81 | 8.85 | |||||||||||||||||||||||
| Common equity tier 1 ratio | 8.80 | 8.92 | 8.92 | 8.96 | 9.11 | |||||||||||||||||||||||
| West Bank: | ||||||||||||||||||||||||||||
| Total risk-based capital ratio | 12.89 | % | 13.13 | % | 13.16 | % | 13.08 | % | 13.38 | % | ||||||||||||||||||
| Tier 1 risk-based capital ratio | 12.01 | 12.24 | 12.26 | 12.33 | 12.60 | |||||||||||||||||||||||
| Tier 1 leverage capital ratio | 11.00 | 11.08 | 11.10 | 11.37 | 11.47 | |||||||||||||||||||||||
| Common equity tier 1 ratio | 12.01 | 12.24 | 12.26 | 12.33 | 12.60 | |||||||||||||||||||||||
| KEY PERFORMANCE RATIOS AND OTHER METRICS | ||||||||||||||||||||||||||||
| Return on average assets(5) | 0.64 | % | 0.64 | % | 0.88 | % | 1.01 | % | 1.32 | % | 0.72 | % | 1.43 | % | ||||||||||||||
| Return on average equity(6) | 10.89 | 11.03 | 14.77 | 17.75 | 21.01 | 12.22 | 21.57 | |||||||||||||||||||||
| Net interest margin(7)(13) | 1.91 | 2.02 | 2.23 | 2.49 | 2.78 | 2.05 | 2.85 | |||||||||||||||||||||
| Yield on interest-earning assets(8)(13) | 4.70 | 4.57 | 4.41 | 4.21 | 3.87 | 4.56 | 3.53 | |||||||||||||||||||||
| Cost of interest-bearing liabilities | 3.38 | 3.10 | 2.76 | 2.24 | 1.45 | 3.09 | 0.90 | |||||||||||||||||||||
| Efficiency ratio(9)(13) | 60.83 | 62.83 | 55.34 | 50.42 | 43.16 | 59.52 | 41.75 | |||||||||||||||||||||
| Nonperforming assets to total assets(10) | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | |||||||||||||||||||||||
| ACL ratio(11) | 0.99 | 1.00 | 1.01 | 0.93 | 0.97 | |||||||||||||||||||||||
| Loans/total assets | 76.98 | 76.31 | 76.03 | 75.91 | 74.32 | |||||||||||||||||||||||
| Loans/total deposits | 103.42 | 98.97 | 98.49 | 95.22 | 92.61 | |||||||||||||||||||||||
| Tangible common equity ratio(12) | 5.51 | 5.90 | 5.99 | 5.84 | 5.65 | |||||||||||||||||||||||
(1) Includes accumulated other comprehensive income (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) | As of and for the Quarter Ended | For the Nine Months Ended | ||||||||||||||||||||||||||
| September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||
| Reconciliation of net interest income and net interest margin on a FTE basis to GAAP: | ||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 16,634 | $ | 17,341 | $ | 18,695 | $ | 20,669 | $ | 23,004 | $ | 52,670 | $ | 71,071 | ||||||||||||||
| Tax-equivalent adjustment (1) | 113 | 122 | 161 | 197 | 270 | 396 | 925 | |||||||||||||||||||||
| Net interest income on a FTE basis (non-GAAP) | 16,747 | 17,463 | 18,856 | 20,866 | 23,274 | 53,066 | 71,996 | |||||||||||||||||||||
| Average interest-earning assets | 3,478,053 | 3,461,313 | 3,435,988 | 3,328,941 | 3,322,522 | 3,458,606 | 3,371,915 | |||||||||||||||||||||
| Net interest margin on a FTE basis (non-GAAP) | 1.91 | % | 2.02 | % | 2.23 | % | 2.49 | % | 2.78 | % | 2.05 | % | 2.85 | % | ||||||||||||||
| Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP: | ||||||||||||||||||||||||||||
| Net interest income on a FTE basis (non-GAAP) | $ | 16,747 | $ | 17,463 | $ | 18,856 | $ | 20,866 | $ | 23,274 | $ | 53,066 | $ | 71,996 | ||||||||||||||
| Noninterest income | 2,822 | 2,389 | 2,957 | 2,265 | 3,276 | 8,168 | 7,943 | |||||||||||||||||||||
| Adjustment for losses on disposal of premises and equipment, net | 3 | 2 | — | 2 | — | 5 | 27 | |||||||||||||||||||||
| Adjusted income | 19,572 | 19,854 | 21,813 | 23,133 | 26,550 | 61,239 | 79,966 | |||||||||||||||||||||
| Noninterest expense | 11,905 | 12,474 | 12,071 | 11,665 | 11,458 | 36,450 | 33,386 | |||||||||||||||||||||
| Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2) | 60.83 | % | 62.83 | % | 55.34 | % | 50.42 | % | 43.16 | % | 59.52 | % | 41.75 | % | ||||||||||||||
(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
