wtba-20221027
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of Earliest Event Reported): October 27, 2022


WEST BANCORPORATION, INC.
(Exact name of registrant as specified in its charter)

Iowa0-4967742-1230603
(State or other jurisdiction of incorporation)(Commission File Number)(I.R.S. Employer Identification No.)


1601 22nd Street, West Des Moines, Iowa 50266
(Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code: 515-222-2300


Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, no par valueWTBAThe Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Item 2.02 Results of Operations and Financial Condition.

On October 27, 2022, West Bancorporation, Inc. (the "Company") issued a press release announcing its third quarter earnings results for the period ended September 30, 2022, and the declaration of a quarterly dividend. A copy of the press release is attached hereto as Exhibit 99.1.

The information furnished in this item of this Form 8-K, and the related exhibits, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 7.01 Regulation FD Disclosure.

The Company hereby furnishes the Earnings Presentation attached hereto as Exhibit 99.2.

The information furnished in this item of this Form 8-K, and the related exhibits, shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit NumberDescription
99.1
99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

West Bancorporation, Inc.
October 27, 2022By:/s/ Jane M. Funk
Name: Jane M. Funk
Title: Executive Vice President, Treasurer and Chief Financial Officer





Exhibit 99.1

wtbalogoedita06a01a01a01a22a.jpg


Press Release
 
October 27, 2022
 
FOR IMMEDIATE RELEASE
For more information contact:
Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766
 
WEST BANCORPORATION, INC. ANNOUNCES NET INCOME FOR THE THIRD QUARTER OF 2022, DECLARES QUARTERLY DIVIDEND

West Des Moines, IA - West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported third quarter 2022 net income of $11.6 million, or $0.69 per diluted common share, compared to third quarter 2021 net income of $12.7 million, or $0.76 per diluted common share. For the first nine months of 2022, net income was $37.5 million, or $2.23 per diluted common share, compared to $37.7 million, or $2.25 per diluted common share, for the first nine months of 2021. On October 26, 2022, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on November 23, 2022, to stockholders of record on November 9, 2022.

David Nelson, President and Chief Executive Officer of the Company, commented, “Our company had another strong quarter. Our credit quality remains pristine and we continue to see opportunities for high quality loan growth, although at a slower pace than we experienced the last few quarters. We remain diligent in monitoring and managing our credit quality as we anticipate increasing economic challenges as the Federal Reserve aggressively seeks to reduce inflation by raising interest rates. Our bankers are working hard every day to assist our customers and communities in navigating the current economic and interest rate uncertainties. For the fifth consecutive quarter end, we had no loans greater than 30 days past due.”

David Nelson added, “While the yield on our loan portfolio is increasing, changes in liquidity and competitive deposit pricing, resulting from volatility and uncertainty in the interest rate environment, has put upward pressure on our cost of funds. Our capital position is strong and we remain focused on our highly successful core business model to continue building shareholder value.”

Third Quarter 2022 Financial Highlights
Return on Average Equity21.01 %
Return on Average Assets1.32 %
Efficiency ratio (a non-GAAP measure)43.16 %
Nonperforming assets to total assets0.01 %

Third Quarter 2022 Compared to Second Quarter 2022 Overview

•No provision for loan losses was recorded in the third quarter of 2022, compared to a negative provision for loan losses of $1.75 million in the second quarter of 2022. The negative provision in the second quarter of 2022 was due primarily to the reversal of a specific reserve on an impaired loan. The impaired loan, which had a specific reserve of $2.5 million, was settled in the second quarter of 2022 resulting in a charge-off of $451 thousand.
•The allowance for loan losses to total loans was 0.97 percent at September 30, 2022, compared to 0.99 percent at June 30, 2022. There were no loans greater than 30 days past due at September 30, 2022, for the fifth consecutive quarter. Nonaccrual loans at September 30, 2022 consisted of one loan with a balance of $329 thousand.
•Loan swap fees of $835 thousand were recorded in the third quarter of 2022, compared to none in the second quarter of 2022.


•Loans increased $41.0 million in the third quarter of 2022, or 6.3 percent annualized.
•Deposits decreased $19.6 million in the third quarter of 2022. Included in deposits were brokered deposits totaling $258.1 million at September 30, 2022, compared to $196.5 million at June 30, 2022.
•The efficiency ratio (a non-GAAP measure) was 43.16 percent for the third quarter of 2022, compared to 41.96 percent for the second quarter of 2022.
•Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.78 percent for the third quarter of 2022, compared to 2.93 percent for the second quarter of 2022. Net interest income for the third quarter of 2022 was $23.0 million, compared to $24.2 million for the second quarter of 2022. The rising cost of deposits and borrowed funds and the change in mix of liabilities has increased interest expense faster than the increase in the interest income from loan repricing and loan growth.
•The tangible common equity ratio was 5.65 percent at September 30, 2022, a decrease of 43 basis points compared to 6.22 percent at June 30, 2022 due to continued decline in the market value of the securities portfolio resulting from rising interest rates, which negatively impacts accumulated other comprehensive income.

Third Quarter 2022 Compared to Third Quarter 2021 Overview

•Loans increased $254.6 million at September 30, 2022, or 10.8 percent, compared to September 30, 2021.
•Deposits increased $85.9 million at September 30, 2022, compared to September 30, 2021. Included in deposits were brokered deposits totaling $258.1 million at September 30, 2022, compared to $103.0 million at September 30, 2021.
•Borrowed funds increased to $460.3 million at September 30, 2022, compared to $202.5 million at September 30, 2021. The increase included $58.9 million in subordinated notes that were issued in June 2022, $33.8 million in long-term debt that was issued in December 2021 and $165.1 million in federal funds purchased.
•The efficiency ratio (a non-GAAP measure) was 43.16 percent for the third quarter of 2022, compared to 39.41 percent for the third quarter of 2021. Salaries and benefits were higher in the third quarter of 2022, compared to the third quarter of 2021, due to a higher number of full-time equivalent employees and annual compensation adjustments.
•Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.78 percent for the third quarter of 2022, compared to 3.06 percent for the third quarter of 2021. Net interest income for the third quarter of 2022 was $23.0 million, compared to $24.5 million for the third quarter of 2021. Net interest income in the third quarter of 2021 included $1.6 million of PPP loan interest income, compared to $101 thousand in the third quarter of 2022. In 2022, the rising cost of deposits and borrowed funds and the change in mix of liabilities has increased interest expense faster than the increase in the interest income from loan repricing and loan growth.

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 27, 2022. The telephone number for the conference call is 844-200-6205. The access code for the conference call is 014998. A recording of the call will be available until November 10, 2022, by dialing 866-813-9403. The replay access code is 419470.

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 rate increases by the Federal Reserve; fluctuations in the values of the securities held in our investment portfolio, including as a result of rising interest rates; competitive pressures, including from non-bank competitors such as “fintech” companies; pricing pressures on loans and deposits; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions, accounting standards (including as a result of the future implementation of the current expected credit loss (CECL) accounting standard) or regulatory requirements; changes in local, national and international economic conditions, including rising rates of inflation; changes in legal and regulatory requirements, limitations and costs; changes in customers’ acceptance of the Company’s products and services; cyber-attacks; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the Russian invasion of Ukraine, widespread disease or pandemics, such as the COVID-19 pandemic, or other adverse external events; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; changes to U.S. tax laws, regulations and guidance; talent and labor shortages; the new 1% 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 SHEETSSeptember 30, 2022June 30, 2022March 31, 2022December 31, 2021September 30, 2021
Assets
Cash and due from banks$58,342 $26,174 $21,896 $17,555 $30,922 
Federal funds sold1,049 766 122,359 175,270 1,547 
Securities available for sale, at fair value671,752 731,970 797,912 758,822 763,397 
Federal Home Loan Bank stock, at cost18,350 15,532 10,269 9,965 11,544 
Loans2,614,145 2,573,129 2,485,366 2,456,196 2,359,567 
Allowance for loan losses(25,418)(25,434)(27,623)(28,364)(28,098)
Loans, net2,588,727 2,547,695 2,457,743 2,427,832 2,331,469 
Premises and equipment, net44,592 41,807 40,898 34,568 33,287 
Bank-owned life insurance44,318 44,072 43,836 43,609 43,376 
Other assets90,387 66,775 52,156 32,580 34,158 
Total assets$3,517,517 $3,474,791 $3,547,069 $3,500,201 $3,249,700 
Liabilities and Stockholders’ Equity
Deposits$2,822,847 $2,842,451 $3,091,252 $3,016,005 $2,736,923 
Federal funds purchased204,500 133,000 — 2,880 39,380 
Other borrowings255,789 255,751 196,954 196,986 163,116 
Other liabilities35,617 27,400 22,383 24,002 57,905 
Stockholders’ equity198,764 216,189 236,480 260,328 252,376 
Total liabilities and stockholders’ equity$3,517,517 $3,474,791 $3,547,069 $3,500,201 $3,249,700 
For the quarter ended
AVERAGE BALANCESSeptember 30, 2022June 30, 2022March 31, 2022December 31, 2021September 30, 2021
Assets$3,475,894 $3,503,686 $3,544,564 $3,421,020 $3,325,522 
Loans2,579,862 2,537,152 2,449,521 2,379,872 2,337,355 
Deposits2,864,648 3,002,535 3,067,019 2,964,585 2,874,005 
Stockholders’ equity219,065 222,731 255,130 255,224 251,770 


WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
As of
ANALYSIS OF LOAN PORTFOLIOSeptember 30, 2022June 30, 2022March 31, 2022December 31, 2021September 30, 2021
Loan mix:
  Commercial$526,336 $475,704 $466,874 $492,815 $491,344 
  Real estate:
  Construction, land and land development 341,549 390,137 388,424 359,258 325,655 
  1-4 family residential first mortgages69,991 69,829 65,978 66,216 63,881 
  Home equity10,271 8,564 9,213 8,422 8,993 
  Commercial1,661,907 1,627,150 1,555,001 1,530,218 1,471,170 
  Consumer and other7,884 5,912 4,068 3,797 3,698 
2,617,938 2,577,296 2,489,558 2,460,726 2,364,741 
  Net unamortized fees and costs(3,793)(4,167)(4,192)(4,530)(5,174)
Total loans$2,614,145 $2,573,129 $2,485,366 $2,456,196 $2,359,567 
Less allowance for loan losses(25,418)(25,434)(27,623)(28,364)(28,098)
Net loans$2,588,727 $2,547,695 $2,457,743 $2,427,832 $2,331,469 
ANALYSIS OF DEPOSITS
Deposit mix:
Noninterest-bearing demand$712,722 $690,335 $710,697 $720,136 $713,076 
Interest-bearing demand469,257 472,919 554,235 548,242 458,165 
Savings and money market1,252,694 1,360,020 1,632,690 1,550,636 1,379,321 
Time388,174 319,177 193,630 196,991 186,361 
Total deposits$2,822,847 $2,842,451 $3,091,252 $3,016,005 $2,736,923 
ANALYSIS OF BORROWINGS
Borrowings mix:
Federal funds purchased$204,500 $133,000 $— $2,880 $39,380 
Subordinated notes, net79,303 79,265 20,468 20,465 20,462 
Federal Home Loan Bank advances125,000 125,000 125,000 125,000 125,000 
Long-term debt51,486 51,486 51,486 51,521 17,654 
Total borrowings$460,289 $388,751 $196,954 $199,866 $202,496 
STOCKHOLDERS’ EQUITY
Preferred stock$— $— $— $— $— 
Common stock3,000 3,000 3,000 3,000 3,000 
Additional paid-in capital31,152 30,283 29,421 30,183 29,536 
Retained earnings262,776 255,334 246,827 237,782 229,845 
Accumulated other comprehensive loss(98,164)(72,428)(42,768)(10,637)(10,005)
Total Stockholders’ Equity$198,764 $216,189 $236,480 $260,328 $252,376 



WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
For the Quarter Ended
CONSOLIDATED STATEMENTS OF INCOMESeptember 30, 2022June 30, 2022March 31, 2022December 31, 2021September 30, 2021
Interest income:
Loans, including fees$28,102 $24,848 $23,286 $24,179 $24,229 
Securities:
Taxable3,147 3,090 2,889 2,590 2,412 
Tax-exempt890 892 858 829 762 
Federal funds sold30 67 82 66 82 
Total interest income32,169 28,897 27,115 27,664 27,485 
Interest expense:
Deposits6,289 3,146 2,151 2,055 2,021 
Federal funds purchased655 157 — 1 2 
Subordinated notes1,106 394 248 254 254 
Federal Home Loan Bank advances649 635 630 656 656 
Long-term debt466 326 258 96 66 
Total interest expense9,165 4,658 3,287 3,062 2,999 
Net interest income23,004 24,239 23,828 24,602 24,486 
Provision for loan losses— (1,750)(750)— — 
Net interest income after provision for loan losses
23,004 25,989 24,578 24,602 24,486 
Noninterest income:
Service charges on deposit accounts553 585 580 603 589 
Debit card usage fees498 507 472 505 490 
Trust services780 622 629 633 695 
Increase in cash value of bank-owned life insurance246 236 227 233 230 
Loan swap fees835 — — 24 — 
Realized securities gains, net— — — — 11 
Other income364 328 481 350 386 
Total noninterest income3,276 2,278 2,389 2,348 2,401 
Noninterest expense:
Salaries and employee benefits6,578 6,410 6,298 5,928 6,018 
Occupancy1,315 1,242 1,086 1,532 1,203 
Data processing644 656 624 630 616 
FDIC insurance127 289 337 460 528 
Professional fees250 202 217 183 212 
Director fees209 222 168 184 176 
Other expenses2,335 2,245 1,932 2,954 1,959 
Total noninterest expense11,458 11,266 10,662 11,871 10,712 
Income before income taxes14,822 17,001 16,305 15,079 16,175 
Income taxes3,220 4,334 3,121 3,169 3,469 
Net income$11,602 $12,667 $13,184 $11,910 $12,706 
Basic earnings per common share$0.70 $0.76 $0.80 $0.72 $0.77 
Diluted earnings per common share$0.69 $0.75 $0.78 $0.71 $0.76 



WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
For the Nine Months Ended
CONSOLIDATED STATEMENTS OF INCOMESeptember 30, 2022September 30, 2021
Interest income:
Loans, including fees$76,236 $71,406 
Securities:
Taxable9,126 5,952 
Tax-exempt2,640 2,032 
Federal funds sold179 226
Total interest income88,181 79,616 
Interest expense:
Deposits11,586 5,893 
Federal funds purchased812 4 
Subordinated notes1,748 754 
Federal Home Loan Bank advances1,914 2,288 
Long-term debt1,050 220 
Total interest expense17,110 9,159 
Net interest income71,071 70,457 
Provision for loan losses(2,500)(1,500)
Net interest income after provision for loan losses
73,571 71,957 
Noninterest income:
Service charges on deposit accounts1,718 1,749 
Debit card usage fees1,477 1,443 
Trust services2,031 2,038 
Increase in cash value of bank-owned life insurance709 690 
Loan swap fees835 42 
Realized securities gains, net— 51 
Other income1,173 1,368 
Total noninterest income7,943 7,381 
Noninterest expense:
Salaries and employee benefits19,286 17,298 
Occupancy3,643 3,630 
Data processing1,924 1,835 
FDIC insurance753 1,358 
Professional fees669 763 
Director fees599 581 
Other expenses6,512 6,044 
Total noninterest expense33,386 31,509 
Income before income taxes48,128 47,829 
Income taxes10,675 10,132 
Net income$37,453 $37,697 
Basic earnings per common share$2.25 $2.28 
Diluted earnings per common share$2.23 $2.25 






WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
As of and for the Quarter EndedFor the Nine Months Ended
COMMON SHARE DATASeptember 30, 2022June 30, 2022March 31, 2022December 31, 2021September 30, 2021September 30, 2022September 30, 2021
Earnings per common share (basic)$0.70 $0.76 $0.80 $0.72 $0.77 $2.25 $2.28 
Earnings per common share (diluted)0.69 0.75 0.78 0.71 0.76 2.23 2.25 
Dividends per common share0.25 0.25 0.25 0.24 0.24 0.75 0.70 
Book value per common share(1)
11.94 12.99 14.22 15.73 15.24 
Closing stock price20.81 24.34 27.21 31.07 30.03 
Market price/book value(2)
174.29 %187.37 %191.35 %197.52 %197.05 %
Price earnings ratio(3)
7.49 %7.98 %8.39 %10.88 %9.83 %
Annualized dividend yield(4)
4.81 %4.11 %3.68 %3.89 %3.20 %
REGULATORY CAPITAL RATIOS
Consolidated:
Total risk-based capital ratio12.34 %12.53 %10.72 %10.89 %11.12 %
Tier 1 risk-based capital ratio9.72 9.81 9.81 9.92 10.11 
Tier 1 leverage capital ratio8.85 8.59 8.39 8.49 8.51 
Common equity tier 1 ratio9.11 9.17 9.16 9.24 9.40 
West Bank:
Total risk-based capital ratio13.38 %13.62 %11.88 %12.10 %11.18 %
Tier 1 risk-based capital ratio12.60 12.81 10.98 11.13 10.17 
Tier 1 leverage capital ratio11.47 11.22 9.39 9.53 8.56 
Common equity tier 1 ratio12.60 12.81 10.98 11.13 10.17 
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets(5)
1.32 %1.45 %1.51 %1.38 %1.52 %1.43 %1.56 %
Return on average equity(6)
21.01 22.81 20.96 18.51 20.02 21.57 20.98 
Net interest margin(7)(13)
2.78 2.93 2.85 3.00 3.06 2.85 3.07 
Yield on interest-earning assets(8)
3.87 3.49 3.24 3.36 3.43 3.53 3.47 
Cost of interest-bearing liabilities1.45 0.73 0.52 0.50 0.51 0.90 0.55 
Efficiency ratio(9)(13)
43.16 41.96 40.14 43.32 39.41 41.75 40.08 
Non-performing assets to total assets(10)
0.01 0.01 0.25 0.26 0.28 
ALLL ratio(11)
0.97 0.99 1.11 1.15 1.19 
Loans/total assets74.32 74.05 70.07 70.17 72.61 
Loans/total deposits92.61 90.53 80.40 81.44 86.21 
Tangible common equity ratio(12)
5.65 6.22 6.67 7.44 7.77 

(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 loan 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 EndedFor the Nine Months Ended
September 30, 2022June 30, 2022March 31, 2022December 31, 2021September 30, 2021September 30, 2022September 30, 2021
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:
Net interest income (GAAP)$23,004 $24,239 $23,828 $24,602 $24,486 $71,071 $70,457 
Tax-equivalent adjustment (1)
270 326 329 397 306 925 805 
Net interest income on a FTE basis (non-GAAP)23,274 24,565 24,157 24,999 24,792 71,996 71,262 
Average interest-earning assets3,322,522 3,362,313 3,432,114 3,309,625 3,212,283 3,371,915 3,099,066 
Net interest margin on a FTE basis (non-GAAP)2.78 %2.93 %2.85 %3.00 %3.06 %2.85 %3.07 %
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:
Net interest income on a FTE basis (non-GAAP)$23,274 $24,565 $24,157 $24,999 $24,792 $71,996 $71,262 
Noninterest income3,276 2,278 2,389 2,348 2,401 7,943 7,381 
Adjustment for realized securities gains, net— — — — (11)— (51)
Adjustment for losses on disposal of premises and equipment, net— 9 18 55 — 27 29 
Adjusted income26,550 26,852 26,564 27,402 27,182 79,966 78,621 
Noninterest expense11,458 11,266 10,662 11,871 10,712 33,386 31,509 
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)
43.16 %41.96 %40.14 %43.32 %39.41 %41.75 %40.08 %
(1)    Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income arising from taxable and nontaxable sources.
(2)     The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company's financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable.

1 Third Quarter 2022 Earnings Highlights October 27, 2022

 
2 Certain statements in this presentation, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Forward-looking statements may appear throughout this presentation. These forward- looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk, including the effects of recent rate increases by the Federal Reserve; fluctuations in the values of the securities held in our investment portfolio, including as a result of rising interest rates; competitive pressures, including from non-bank competitors such as “fintech” companies; pricing pressures on loans and deposits; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions, accounting standards (including as a result of the future implementation of the current expected credit loss (CECL) accounting standard) or regulatory requirements; changes in local, national and international economic conditions, including rising rates of inflation; changes in legal and regulatory requirements, limitations and costs; changes in customers’ acceptance of the Company’s products and services; cyber-attacks; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the Russian invasion of Ukraine, widespread disease or pandemics, such as the COVID-19 pandemic, or other adverse external events; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; changes to U.S. tax laws, regulations and guidance; talent and labor shortages; the new 1% 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. Except as otherwise indicated, this presentation speaks as of the date hereof. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of West Bancorporation, Inc. after the date hereof. Certain of the information contained herein may be derived from information provided by industry sources. We believe that such information is accurate and that the sources from which it has been obtained are reliable. We cannot guarantee the accuracy of such information, however, and we have not independently verified such information. This presentation contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. This presentation includes reconciliations of non-GAAP financial measures to comparable GAAP financial measures. Disclaimers

 
3 3Q 2022 Financial Highlights (1) Presented on a fully taxable equivalent basis; see Appendix for “Non-GAAP Financial Measures” $26.26 NASDAQ: WTBA September 30, 2022 Closing Price: $20.81 3Q 2022 Price Range: $20.39 to $26.26 Cash Dividend Declared On October 26, 2022: $0.25 (payable on November 23, 2022) Annualized Dividend Yield: 4.81% Efficiency Ratio 1 43.16% ROA 1.32% NPAs/Assets 0.01% ROE 21.01% NIM 1 2.78% Diluted EPS $0.69

 
4 • West Bancorporation, Inc. (the “Company”) is a publicly-traded financial holding company (NASDAQ: WTBA) established in 1984 whose sole subsidiary is West Bank, founded in 1893. • West Bank is headquartered in West Des Moines, Iowa and has 11 branches and commercial banking offices serving the greater Des Moines, Iowa area; eastern Iowa, which includes Iowa City and Coralville; and Southern Minnesota, which includes Rochester, Owatonna, Mankato, and St. Cloud, Minnesota. • Reliable, dividend paying community bank focused on commercial banking with $3.5 billion in assets. Our mission is to build strong relationships, build strong communities, and build upon our strong reputation to ensure our clients receive exceptional care, our communities receive outstanding support, and the loyalty of our employees and stockholders is rewarded. Mission Company Profile and Mission • First and foremost a community bank, West Bank has built a strong reputation for being responsive to local needs. West Bank employees place a high priority on community involvement, lending their time and talents to a long list of civic and community projects. • One of the Company’s key competitive advantages is its client-centric approach to delivering strategic financial solutions to businesses, driven by the establishment of deep customer relationships and extensive experience in its markets. • West Bank strives to be the best of all things that are most important to someone running their own business.

 
5 Experienced Executive Leadership David D. Nelson Director/Chief Executive Officer/President Joined West Bank in 2010 Years in Banking: 39 Prior to joining the Company Mr. Nelson was the President of Southeast Minnesota Business Banking and President of Wells Fargo Bank Rochester in Rochester, Minnesota. Harlee N. Olafson Chief Risk Officer/Executive Vice President Joined West Bank in 2010 Years in Banking: 44 Prior to joining the Company Mr. Olafson was the President of Southwest Minnesota Business Banking and President of Wells Fargo Bank Mankato in Mankato, Minnesota. Bradley P. Peters Executive Vice President West Bank Minnesota Group President Joined West Bank in 2019 Years in Banking: 37 Prior to joining the Company Mr. Peters was the Executive Vice President of Bremer Bank in Minnesota where he was responsible for new market expansion. Jane M. Funk Chief Financial Officer Executive Vice President/Treasurer Joined West Bank in 2014 Years in Banking & Public Accounting: 32 Ms. Funk has extensive experience in the community banking industry and public accounting. Brad L. Winterbottom Executive Vice President West Bank President Joined West Bank in 1992 Years in Banking: 42 Mr. Winterbottom has extensive experience in commercial lending and loan portfolio administration and knowledge of the Iowa business community. Todd A. Mather West Bank Chief Credit Officer Joined West Bank in 2019 Years in Banking: 26 Prior to joining West Bank, Mr. Mather spent 8 years at Bremer Bank in Minnesota as a Senior Credit Director and Group Senior Credit Manager.

 
6 Conservative Organic Growth with Successful Lift-Out Strategies 2010 2013 2016 2018 2019 2020 2022 2022 Began construction on new corporate headquarters in West Des Moines, Iowa. After being in the same leased space for fifty years, the new building is an opportunity to consolidate our corporate operations under one roof, and provide space for future growth and enhanced business development opportunities. Opened a newly constructed bank office building in St. Cloud, Minnesota and began construction on a bank office building in Mankato, Minnesota. Crossed $3 billion in total assets. Expanded into St. Cloud, Mankato and Owatonna, Minnesota with the same lift out strategy used in Rochester, Minnesota. Crossed $2 billion in total assets. Constructed a bank office building in Rochester, Minnesota. Entered the Rochester, Minnesota market by hiring experienced bankers who had existing strong relationships with local business owners and creating an advisory community board made up of local business owners and leaders. David Nelson joins West Bank as CEO.

 
7 Company Highlights – Commitment to Excellence West Bancorporation is one of the strongest performing companies in U.S. community banking, well- versed in providing commercial banking services including loans and lines of credit and all types of deposit services, to small and medium-sized businesses in its Iowa and Minnesota markets. Established business model with a 130 year presence in the Des Moines metropolitan area. Industry Recognition. Proven credit culture with a history of strong asset quality results. • Raymond James ranked West Bancorporation, Inc. as the #12 Community Bank in America for 2021 among publicly traded banks with assets between $500 million and $10 billion. West Bancorporation, Inc. has now been an annual member of the Raymond James Community Bankers Cup during 8 of the last 9 years. • S&P Global ranked West Bancorporation, Inc. as the #13 top performing large community bank in America in 2021 among banks with assets between $3 billion and $10 billion. • Five consecutive quarter-ends with no loans greater than 30 days past due. There have been no loans greater than 90 days past due at any quarter end since 2014, with the exception of Q1 2021. • Net charge-offs as a percent of average loan as of September 30, 2022 was 0.02%. Prior to 2022, we have been in a net recovery position since 2017. • Nonperforming assets at September 30, 2022 totaled $329 thousand, or 0.01% of total assets. • West Des Moines’ oldest business of any type. • Long track record of growth and stability coupled with attractive financial returns and dividend yield. • Conservative operating philosophy and expense management.

 
8 Company Highlights – Commitment to Excellence West Bank is a commercially-focused financial institution operating in high quality markets in Iowa and Minnesota led by a deep and experienced management team with skills developed internally and with other large regional banking institutions. Risk Management & Credit Culture Philanthropy Community Service Strategy • 30 high quality commercial bankers with an average of 21 years of commercial banking experience. • We live where we lend. We are a local lender to local customers. • We have a centralized committee structure that is agile and responsive to customer needs and an organizational structure that provides deep support of credit and administrative functions. • Business model highlighted by focus on risk management and consistent execution. • Superior talent with business expertise in building relationships. • Disciplined organic growth strategy with track record of successful lift out strategies. • In 2021, our employees touched more than 180 not-for-profit organizations and provided approximately 5,600 hours of community service. • In 2021, the West Bancorporation Foundation and West Bank provided over $1 million in total philanthropic contributions. • Risk management culture with robust processes and experienced credit personnel.

 
9 Loans & Deposits $2,874 $2,965 $3,067 $3,003 $2,865 $2,842 $2,823 3Q21 4Q21 1Q22 2Q22 3Q22 2Q22 3Q22 Deposits ($ in million) • Savings and money market deposits decreased $107.3 million. • Brokered deposits increased $61.6 million. • Customers utilized excess liquidity primarily for business purposes and alternative investments. • Higher deposit costs were driven by the Federal Reserve’s rate increases, changes in deposit mix, and rate competition in local markets. Period EndAverage Balances Deposit Rate % 0.37% 0.36% 0.37% 0.55% 1.16% $2,337 $2,380 $2,450 $2,537 $2,580 $2,573 $2,614 3Q21 4Q21 1Q22 2Q22 3Q22 2Q22 3Q22 Loans ($ in millions) Period End Loan Yield % Average Balances 4.13% 4.07% 3.88% 3.95% 4.34% Loans increased $41.0 million, or 6.3% annualized, in Q3 2022 Loan yields increased 39 bps in Q3 2022 Deposits decreased $19.6 million, or 2.7% annualized, in Q3 2022 Deposit costs increased 61 bps in Q3 2022 • Rising market interest rates resulted in increasing rates on variable rate loans and higher interest rates on renewed and originated loans. • Loan originations outpaced C&D and CRE loan payoffs during the quarter. • CRE loans increased $34.8 million. • C&D loans decreased $48.6 million. • Commercial loans increased $50.6 million.

 
10 Credit Quality $(56) $(266) $(9) $439 $16 3Q21 1Q22 2Q22 3Q22 $9.3 $9.1 $8.9 $0.4 $0.4 3Q21 4Q21 1Q22 2Q22 3Q22 $9.1 $8.9 $8.8 $0.3 $0.3 3Q21 4Q21 1Q22 2Q22 3Q22 $28.1 $28.4 $27.6 $25.4 $25.4 3Q21 4Q21 1Q22 2Q22 3Q22 ALLL/Loans % 4Q21 Nonaccrual Loans ($ in millions) Net Charge-Offs (Recoveries) ($ in thousands) Substandard Loans ($ in millions) Allowance for Loan Losses ($ in millions) 1.19% 1.15% 1.11% 0.99% 0.97%

 
11 Net Interest Income $24.5 $24.6 $23.8 $24.2 $23.0 3Q21 4Q21 1Q22 2Q22 3Q22 Net Interest Income ($ in millions) Net interest income decreased $1.2 million in Q3 2022 • Loan interest income increased $3.3 million. • Deposit interest expense increased $3.2 million. • Borrowed funds interest expense increased $1.4 million. Net interest margin declined • Average balance of borrowed funds increased $108.9 million and the cost of borrowed funds increased 76 bps. • Average balance of deposits decreased $156.6 million and the cost of deposits increased 61 bps. • The changes in deposit and funding mix and rising rates had a negative impact on net interest margin that exceeded the benefits of higher loan yields. Net Interest Margin % (1) 3.06% 3.00% 2.85% 2.93% 2.78% Net interest income decreased $1.2 million in 3 2022 et i terest ar i ecli e 15 bps in Q3 2022 (1) Presented on a fully taxable equivalent basis; see Appendix for “Non-GAAP Financial Measures”

 
12 Noninterest Expense ($ in thousands) Noninterest Income & Expense $10,712 $11,871 $10,662 $11,266 $11,458 3Q21 4Q21 1Q22 2Q22 3Q22 Noninterest expense increased $192 thousand in Q3 2022 • Salaries and employee benefits increased $168 thousand. • Occupancy increased $73 thousand. Efficiency Ratio% (1) 39.41% 43.32% 40.14% 41.96% 43.16% • Loan swap fees totaled $835 thousand, compared to none in Q2 2022. • Trust services revenue increased primarily due to one-time estate fees earned in Q3 2022. $2,401 $2,348 $2,389 $2,278 $3,276 3Q21 4Q21 1Q22 2Q22 3Q22 Noninterest Income ($ in thousands) Noninterest income increased $1.0 million in Q3 2022 Noninterest expense increased $192 thousand in Q3 2022 Efficiency ratio (1) increased 120 bps in Q3 2022 (1) Presented on a fully taxable equivalent basis; see Appendix for “Non-GAAP Financial Measures” A lower ratio is more desirable.

 
13 Consolidated Regulatory Capital Ratios 11.1% 10.9% 10.7% 12.5% 12.3% 3Q21 4Q21 1Q22 2Q22 3Q22 10.1% 9.9% 9.8% 9.8% 9.7% 3Q21 4Q21 1Q22 2Q22 3Q22 9.4% 9.2% 9.2% 9.2% 9.1% 3Q21 4Q21 1Q22 2Q22 3Q22 8.5% 8.5% 8.4% 8.6% 8.9% 3Q21 4Q21 1Q22 2Q22 3Q22 Total Risk Based Capital Ratio Tier 1 Capital Ratio Tier 1 Leverage RatioCommon Equity Tier 1 Ratio

 
14Appendix Appendix Non-GAAP Financial Measures (in thousands) September 30, June 30, March 31, December 31, September 30 2022 2022 2022 2021 2021 Reconciliation of net interest income and net interest margin on a FTE basis to GAAP: Net interest income (GAAP) $23,004 $24,239 $23,828 $24,602 $24,486 Tax-equivalent adjustment (1) 270 326 329 397 306 Net interest income on a FTE basis (non-GAAP) 23,274 24,565 24,157 24,999 24,792 Average interest-earning assets 3,322,522 3,362,313 3,432,114 3,309,625 3,212,283 Net interest margin on a FTE basis (non-GAAP) 2.78% 2.93% 2.85% 3.00% 3.06% Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP: Net interest income on a FTE basis (non-GAAP) $23,274 $24,565 $24,157 $24,999 $24,792 Noninterest income 3,276 2,278 2,389 2,348 2,401 Adjustment for realized securities gains, net - - - - (11) Adjustment for losses on disposal of premises and equipment, net - 9 18 55 - Adjusted income 26,550 26,852 26,564 27,402 27,182 Noninterest expense 11,458 11,266 10,662 11,871 10,712 Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2) 43.16% 41.96% 40.14% 43.32% 39.41% As of and for the Quarter Ended (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.