wtba-20230427
0001166928false00011669282023-04-272023-04-27


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): April 27, 2023


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 April 27, 2023, West Bancorporation, Inc. (the "Company") issued a press release announcing its first quarter earnings results for the period ended March 31, 2023, 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 (the "Securities Act"), 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, 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.
April 27, 2023By:/s/ Jane M. Funk
Name: Jane M. Funk
Title: Executive Vice President, Treasurer and Chief Financial Officer





Exhibit 99.1



Press Release
 
April 27, 2023
 
FOR IMMEDIATE RELEASE
For more information contact:
Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766
 
WEST BANCORPORATION, INC. ANNOUNCES FIRST QUARTER 2023 FINANCIAL RESULTS AND DECLARES QUARTERLY DIVIDEND

West Des Moines, IA - West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported first quarter 2023 net income of $7.8 million, or $0.47 per diluted common share, compared to fourth quarter 2022 net income of $8.9 million, or $0.53 per diluted common share, and first quarter 2022 net income of $13.2 million, or $0.78 per diluted common share. On April 26, 2023, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on May 24, 2023, to stockholders of record on May 10, 2023.

David Nelson, President and Chief Executive Officer of the Company, commented, “The unprecedented size and pace of the Federal Reserve short-term interest rate increases in 2022 and early 2023 and inverted yield curve have changed the dynamics of our commercial based customers’ deposit pricing. Our deposit and funding mix has changed as depositors react to significant short-term rate competition and utilize accumulated cash for business operations. The resulting increase in our cost of funds has outpaced the repricing benefits in loans and investments, leading to a decline in our net interest income and net interest margin.”

David Nelson added, “Our credit quality continues to be pristine and for the seventh consecutive quarter end, we had no loans greater than 30 days past due. We remain diligent in monitoring and managing our credit risk as we anticipate an economic downturn ahead along with an uncertain and volatile interest rate environment. Our capital position is strong and we remain focused on delivering high quality services and products through our successful relationship based business model.”

First Quarter 2023 Financial Highlights
Quarter Ended March 31, 2023
Net Income (in thousands)$7,844
Return on Average Equity14.77 %
Return on Average Assets0.88 %
Efficiency ratio (a non-GAAP measure)55.34 %
Nonperforming assets to total assets0.01 %

First Quarter 2023 Compared to Fourth Quarter 2022 Overview

•Loans increased $13.3 million in the first quarter of 2023, or 2.0 percent annualized.

•No provision for credit losses was recorded in either the first quarter of 2023 or the fourth quarter of 2022.

•The allowance for credit losses to total loans was 1.01 percent at March 31, 2023, compared to 0.93 percent at December 31, 2022. The increase in the allowance ratio was due to the adoption of ASU 2016-13, which resulted in a $2.5 million increase to the allowance for credit losses. This adoption also resulted in establishing an allowance for unfunded commitments of $2.3 million which is included in other liabilities, a $3.6 million decrease to retained earnings and $1.2 million increase in deferred tax assets.




•There were no loans greater than 30 days past due at March 31, 2023, which was the seventh consecutive quarter in which no loans were greater than 30 days past due. Nonaccrual loans at March 31, 2023, consisted of one loan with a balance of $316 thousand.
•Deposits decreased $82.0 million in the first quarter of 2023. Included in this decrease was a decrease in brokered deposits of $38.5 million. Brokered deposits totaled $234.2 million at March 31, 2023, compared to $272.7 million at December 31, 2022.
•The efficiency ratio (a non-GAAP measure) was 55.34 percent for the first quarter of 2023, compared to 50.42 percent for the fourth quarter of 2022. The increase in the efficiency ratio is primarily the result of the decline in tax equivalent net interest income and an increase in compensation and employee benefits.
•Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.23 percent for the first quarter of 2023, compared to 2.49 percent for the fourth quarter of 2022. Net interest income for the first quarter of 2023 was $18.7 million, compared to $20.7 million for the fourth 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 interest income from loan repricing and loan originations.
•The tangible common equity ratio was 5.99 percent at March 31, 2023, an increase of 15 basis points compared to 5.84 percent at December 31, 2022, due to an increase in the market value of the securities portfolio, which decreased the accumulated other comprehensive loss.

First Quarter 2023 Compared to First Quarter 2022 Overview

•Loans increased $270.8 million at March 31, 2023, or 10.9 percent, compared to March 31, 2022.
•Deposits decreased $292.9 million at March 31, 2023, compared to March 31, 2022. Included in deposits were brokered deposits totaling $234.2 million at March 31, 2023, compared to $116.5 million at March 31, 2022. 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 for excess deposits accumulated over the past couple of years. During the second quarter of 2022, a large corporate customer completed a significant business transaction that was funded by the customer’s deposits held at West Bank, accounting for a significant portion of the decrease in deposits.
•Borrowed funds increased to $580.2 million at March 31, 2023, compared to $197.0 million at March 31, 2022. The increase included $58.9 million in subordinated notes that were issued in June 2022, $95.0 million in FHLB Advances associated with long-term interest rate swaps and $229.3 million in federal funds purchased and other short-term borrowings.
•The efficiency ratio (a non-GAAP measure) was 55.34 percent for the first quarter of 2023, compared to 40.14 percent for the first quarter of 2022. Tax-equivalent net interest income decreased in the first quarter of 2023 compared to the first quarter of 2022 due to the increased cost of deposits and borrowed funds. Additionally, salaries and employee benefits increased due to wage increases that have been higher than recent historical averages in response to market conditions and competition in retaining and recruiting talent and increases in full-time equivalent employees with growth in our commercial banking team and information technology department. Occupancy and equipment expense increased primarily due to the increase in depreciation expense related to the new building in St. Cloud, Minnesota which opened in March 2022 and scheduled increases in rent expense on existing leases.
•Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.23 percent for the first quarter of 2023, compared to 2.85 percent for the first quarter of 2022. Net interest income for the first quarter of 2023 was $18.7 million, compared to $23.8 million for the first quarter of 2022. In 2022 and 2023, the rising cost of deposits and borrowed funds and the change in mix of liabilities has 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, April 27, 2023. The telephone number for the conference call is 844-200-6205. The access code for the conference call is 950386. A recording of the call will be available until May 11, 2023, by dialing 845-709-8569. The replay access code is 943070.

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, which has resulted in unrealized losses in our portfolio; 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 loan 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 and may withdraw deposits to diversify their exposure; changes in local, national and international economic conditions, including rising rates of inflation; 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 and Signature Bank that resulted in failure of those institutions; changes in legal and regulatory requirements, limitations and costs including in response to the recent failures of Silicon Valley Bank and Signature Bank; 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; risks related to climate change and the negative impact it may have on our customers and their businesses; developments and uncertainty related to the future use and availability of some reference rates, such as the expected discontinuation of the London Interbank Offered Rate and the development of other alternative reference rates; 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 SHEETSMarch 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Assets
Cash and due from banks$21,579 $24,896 $58,342 $26,174 $21,896 
Interest-bearing deposits901 1,643 1,049 766 122,359 
Securities available for sale, at fair value665,358 664,115 671,752 731,970 797,912 
Federal Home Loan Bank stock, at cost22,226 19,336 18,350 15,532 10,269 
Loans2,756,185 2,742,836 2,614,145 2,573,129 2,485,366 
Allowance for credit losses(27,941)(25,473)(25,418)(25,434)(27,623)
Loans, net2,728,244 2,717,363 2,588,727 2,547,695 2,457,743 
Premises and equipment, net59,565 53,124 44,592 41,807 40,898 
Bank-owned life insurance44,830 44,573 44,318 44,072 43,836 
Other assets82,240 88,168 90,387 66,775 52,156 
Total assets$3,624,943 $3,613,218 $3,517,517 $3,474,791 $3,547,069 
Liabilities and Stockholders’ Equity
Deposits$2,798,393 $2,880,408 $2,822,847 $2,842,451 $3,091,252 
Federal funds purchased and other short-term borrowings229,290 200,000 204,500 133,000 — 
Other borrowings350,921 285,855 255,789 255,751 196,954 
Other liabilities29,347 35,843 35,617 27,400 22,383 
Stockholders’ equity216,992 211,112 198,764 216,189 236,480 
Total liabilities and stockholders’ equity$3,624,943 $3,613,218 $3,517,517 $3,474,791 $3,547,069 
For the Quarter Ended
AVERAGE BALANCESMarch 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Assets$3,617,458 $3,511,717 $3,475,894 $3,503,686 $3,544,564 
Loans2,745,381 2,649,671 2,579,862 2,537,152 2,449,521 
Deposits2,846,926 2,901,928 2,864,648 3,002,535 3,067,019 
Stockholders’ equity215,391 199,947 219,065 222,731 255,130 



WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
As of
ANALYSIS OF LOAN PORTFOLIOMarch 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Loan mix:
  Commercial$520,894 $519,196 $526,336 $475,704 $466,874 
  Real estate:
  Construction, land and land development 336,739 363,015 341,549 390,137 388,424 
  1-4 family residential first mortgages75,223 75,211 69,991 69,829 65,978 
  Home equity9,726 10,322 10,271 8,564 9,213 
  Commercial1,810,158 1,771,940 1,661,907 1,627,150 1,555,001 
  Consumer and other7,381 7,291 7,884 5,912 4,068 
2,760,121 2,746,975 2,617,938 2,577,296 2,489,558 
  Net unamortized fees and costs(3,936)(4,139)(3,793)(4,167)(4,192)
Total loans$2,756,185 $2,742,836 $2,614,145 $2,573,129 $2,485,366 
Less allowance for credit losses(27,941)(25,473)(25,418)(25,434)(27,623)
Net loans$2,728,244 $2,717,363 $2,588,727 $2,547,695 $2,457,743 
ANALYSIS OF DEPOSITS
Deposit mix:
Noninterest-bearing demand$605,666 $693,563 $712,722 $690,335 $710,697 
Interest-bearing demand486,656 536,226 469,257 472,919 554,235 
Savings and money market1,295,280 1,237,954 1,252,694 1,360,020 1,632,690 
Time410,791 412,665 388,174 319,177 193,630 
Total deposits$2,798,393 $2,880,408 $2,822,847 $2,842,451 $3,091,252 
ANALYSIS OF BORROWINGS
Borrowings mix:
 Federal funds purchased and other short-term borrowings$229,290 $200,000 $204,500 $133,000 $— 
Subordinated notes, net79,435 79,369 79,303 79,265 20,468 
Federal Home Loan Bank advances220,000 155,000 125,000 125,000 125,000 
Long-term debt51,486 51,486 51,486 51,486 51,486 
Total borrowings$580,211 $485,855 $460,289 $388,751 $196,954 
STOCKHOLDERS’ EQUITY
Preferred stock$— $— $— $— $— 
Common stock3,000 3,000 3,000 3,000 3,000 
Additional paid-in capital31,797 32,021 31,152 30,283 29,421 
Retained earnings267,620 267,562 262,776 255,334 246,827 
Accumulated other comprehensive loss(85,425)(91,471)(98,164)(72,428)(42,768)
Total Stockholders’ Equity$216,992 $211,112 $198,764 $216,189 $236,480 




WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
For the Quarter Ended
CONSOLIDATED STATEMENTS OF INCOMEMarch 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Interest income:
Loans, including fees$32,948 $30,859 $28,102 $24,848 $23,286 
Securities:
Taxable3,316 3,398 3,147 3,090 2,889 
Tax-exempt885 887 890 892 858 
Interest-bearing deposits30 24 30 67 82 
Total interest income37,179 35,168 32,169 28,897 27,115 
Interest expense:
Deposits13,339 11,043 6,289 3,146 2,151 
 Federal funds purchased and other short-term borrowings2,079 952 655 157 — 
Subordinated notes1,106 1,119 1,106 394 248 
Federal Home Loan Bank advances1,262 755 649 635 630 
Long-term debt698 630 466 326 258 
Total interest expense18,484 14,499 9,165 4,658 3,287 
Net interest income18,695 20,669 23,004 24,239 23,828 
Credit loss expense (benefit)— — — (1,750)(750)
Net interest income after credit loss expense (benefit)18,695 20,669 23,004 25,989 24,578 
Noninterest income:
Service charges on deposit accounts462 476 553 585 580 
Debit card usage fees486 492 498 507 472 
Trust services706 678 780 622 629 
 Increase in cash value of bank-owned life insurance257 255 246 236 227 
Gain from bank-owned life insurance691 — — — — 
Loan swap fees— — 835 — — 
Other income355 364 364 328 481 
Total noninterest income2,957 2,265 3,276 2,278 2,389 
Noninterest expense:
Salaries and employee benefits6,867 6,552 6,578 6,410 6,298 
Occupancy and equipment1,327 1,270 1,315 1,242 1,086 
Data processing635 673 644 656 624 
Technology and software513 518 651 492 476 
FDIC insurance416 243 127 289 337 
Professional fees250 205 250 202 217 
Director fees205 215 209 222 168 
Other expenses1,858 1,989 1,684 1,753 1,456 
Total noninterest expense12,071 11,665 11,458 11,266 10,662 
Income before income taxes9,581 11,269 14,822 17,001 16,305 
Income taxes1,737 2,323 3,220 4,334 3,121 
Net income$7,844 $8,946 $11,602 $12,667 $13,184 
Basic earnings per common share$0.47 $0.54 $0.70 $0.76 $0.80 
Diluted earnings per common share$0.47 $0.53 $0.69 $0.75 $0.78 








WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
As of and for the Quarter Ended
COMMON SHARE DATAMarch 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Earnings per common share (basic)$0.47 $0.54 $0.70 $0.76 $0.80 
Earnings per common share (diluted)0.47 0.53 0.69 0.75 0.78 
Dividends per common share0.25 0.25 0.25 0.25 0.25 
Book value per common share(1)
12.98 12.69 11.94 12.99 14.22 
Closing stock price18.27 25.55 20.81 24.34 27.21 
Market price/book value(2)
140.76 %201.34 %174.29 %187.37 %191.35 %
Price earnings ratio(3)
9.56 11.93 7.49 7.98 8.39 
Annualized dividend yield(4)
5.47 %3.91 %4.81 %4.11 %3.68 %
REGULATORY CAPITAL RATIOS
Consolidated:
Total risk-based capital ratio12.17 %12.08 %12.34 %12.53 %10.72 %
Tier 1 risk-based capital ratio9.51 9.55 9.72 9.81 9.81 
Tier 1 leverage capital ratio8.60 8.81 8.85 8.59 8.39 
Common equity tier 1 ratio8.92 8.96 9.11 9.17 9.16 
West Bank:
Total risk-based capital ratio13.16 %13.08 %13.38 %13.62 %11.88 %
Tier 1 risk-based capital ratio12.26 12.33 12.60 12.81 10.98 
Tier 1 leverage capital ratio11.10 11.37 11.47 11.22 9.39 
Common equity tier 1 ratio12.26 12.33 12.60 12.81 10.98 
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets(5)
0.88 %1.01 %1.32 %1.45 %1.51 %
Return on average equity(6)
14.77 17.75 21.01 22.81 20.96 
Net interest margin(7)(13)
2.23 2.49 2.78 2.93 2.85 
Yield on interest-earning assets(8)(13)
4.41 4.21 3.87 3.49 3.24 
Cost of interest-bearing liabilities2.76 2.24 1.45 0.73 0.52 
Efficiency ratio(9)(13)
55.34 50.42 43.16 41.96 40.14 
Non-performing assets to total assets(10)
0.01 0.01 0.01 0.01 0.25 
ACL ratio(11)
1.01 0.93 0.97 0.99 1.11 
Loans/total assets76.03 75.91 74.32 74.05 70.07 
Loans/total deposits98.49 95.22 92.61 90.53 80.40 
Tangible common equity ratio(12)
5.99 5.84 5.65 6.22 6.67 

(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
March 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:
Net interest income (GAAP)$18,695 $20,669 $23,004 $24,239 $23,828 
Tax-equivalent adjustment (1)
161 197 270 326 329 
Net interest income on a FTE basis (non-GAAP)18,856 20,866 23,274 24,565 24,157 
Average interest-earning assets3,435,988 3,328,941 3,322,522 3,362,313 3,432,114 
Net interest margin on a FTE basis (non-GAAP)2.23 %2.49 %2.78 %2.93 %2.85 %
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:
Net interest income on a FTE basis (non-GAAP)$18,856 $20,866 $23,274 $24,565 $24,157 
Noninterest income2,957 2,265 3,276 2,278 2,389 
Adjustment for losses on disposal of premises and equipment, net— 2 — 9 18 
Adjusted income21,813 23,133 26,550 26,852 26,564 
Noninterest expense12,071 11,665 11,458 11,266 10,662 
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)
55.34 %50.42 %43.16 %41.96 %40.14 %
(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 First Quarter 2023 Earnings Highlights April 27, 2023

 
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, which has resulted in unrealized losses in our portfolio; 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 loan 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 and may withdraw deposits to diversify their exposure; changes in local, national and international economic conditions, including rising rates of inflation; 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 and Signature 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 and Signature Bank; 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; risks related to climate change and the negative impact it may have on our customers and their business; developments and uncertainty related to the future use and availability of some reference rates, such as the expected discontinuation of the London Interbank Offered Rate and the development of 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 1Q 2023 Financial Highlights (1) Presented on a fully taxable equivalent basis; see Appendix for “Non-GAAP Financial Measures.” $26.26 NASDAQ: WTBA March 31, 2023 Closing Price: $18.27 1Q 2023 Price Range: 17.58 to $25.80 Cash Dividend Declared On April 26, 2023: $0.25 (payable on May 24, 2023) Annualized Dividend Yield: 5.47% Efficiency Ratio 1 55.34% ROA 0.88% NPAs/Assets 0.01% ROE 14.77% NIM 1 2.23% Diluted EPS $0.47 Net Income $7.8 million

 
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 with $3.6 billion in assets focused on commercial banking. 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 • 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. • 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. • West Bank strives to be the best at 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: 40 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: 45 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: 38 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: 33 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: 43 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: 27 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 a strong performing company 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 131 year presence in the Des Moines metropolitan area Industry Recognition Proven credit culture with a history of strong asset quality results • In 2022, West Bancorporation, Inc. was named a Raymond James Community Bankers Cup winner for our 2021 financial performance. We had received this award for 8 out of 9 years. • S&P Global ranked West Bancorporation, Inc. as the #17 top performing large community bank in America in 2022 among banks with assets between $3 billion and $10 billion. • Seven 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. • There were no loan charge-offs in Q1 2023. • Nonperforming assets at March 31, 2023 totaled $316 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 • 31 high quality commercial bankers with an average of 22 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 a track record of successful lift out strategies. • In 2022, our employees volunteered over 7,000 hours of community service. • In 2022, the West Bancorporation Foundation and West Bank provided over $700,000 in total philanthropic contributions to more than 225 organizations. • Risk management culture with robust processes and experienced credit personnel.

 
9 C & D, 12% 1-4 family, 3% Multi family, 13% CRE - OO, 12% CRE - NOO, 40% C & I, 19% Consumer and other, 1% Loan Mix as of 3/31/2023 Loans $2,450 $2,537 $2,580 $2,650 $2,745 $2,743 $2,756 1Q22 2Q22 3Q22 4Q22 1Q23 4Q22 1Q23 Loans ($ in millions) Period End Loan Yield % Average Balances 3.88% 3.95% 4.34% 4.63% 4.88% Quarterly Highlights • Loans increased $13.3 million in Q1 2023. • Quarterly average loans increased $95.7 million compared to Q4 2022 due to strong loan growth in December 2022. • Loan yields increased 25 bps in Q1 2023 compared to Q4 2022. • Rising market interest rates resulted in increasing rates on variable rate loans and higher interest rates on renewed and originated loans. • 28% of the loan portfolio are variable rate loans. • Commercial real estate loans are diversified among various sectors, including hotels, warehouses, medical, senior living, mixed use and office. • Commercial office lending makes up less than 7% of the total loan portfolio.

 
10 Noninterest bearing, 22% Interest bearing demand, 17% Savings and money market, 43% Time deposits, 10% Brokered deposits, 8% Deposit Mix as of 3/31/2023 Deposits $3,067 $3,003 $2,865 $2,902 2,847 $2,880 $2,798 1Q22 2Q22 3Q22 4Q22 1Q23 4Q22 1Q23 Deposits ($ in million) • Total deposits decreased $82.0 million in Q1 2023. • Brokered deposits decreased $38.5 million in Q1 2023. • West Bank participates in the IntraFi® ICS and CDARS reciprocal deposit network which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount. • Estimated uninsured deposits, excluding deposits in the IntraFi reciprocal deposit network and public funds protected by state programs, were approximately 33% of total deposits. • Deposit costs increased 47 bps in Q1 2023 compared to Q4 2022. • Deposit rates have increased in response to increases in market rates, high short-term Treasury rates and significant deposit competition from financial institutions and brokerage firms. Period EndAverage Balances Deposit Rate % 0.37% 0.55% 1.16% 1.99% 2.46% Quarterly Highlights

 
11 Funding and Liquidity $2,353 $2,304 $2,148 $2,196 $2,195 $715 $698 $717 $705 $651 $198 $252 $361 $370 $521 $3,266 $3,254 $3,226 $3,271 $3,352 1Q22 2Q22 3Q22 4Q22 1Q23 Average borrowings Average noninterest-bearing deposits Average interest-bearing deposits Sources of LiquidityOverall Funding Costs Rise 0.52% 0.73% 1.45% 2.24% 2.76% Cost of liability funding ($ in thousands) Cash and cash equivalents $ 22,480 Unencumbered securities - AFS $350,105 FHLB borrowing availability $434,471 Fed Funds lines availability $ 35,000 Federal Reserve discount window availability $ 3,322 Federal Reserve Bank Term Funding Program availability $ 14,067 Total as of 3/31/2023 $859,445 ($ in millions) West Bank also maintains master brokered deposit agreements with two brokerage firms and access to one-way buy options with the IntraFi ICS and CDARS programs.

 
12 Credit Quality $(9) $439 $16 $(56) $(10) 1Q22 2Q22 3Q22 4Q22 1Q23 $8.9 $0.4 $0.4 $0.4 $0.4 1Q22 2Q22 3Q22 4Q22 1Q23 $8.8 $0.3 $0.3 $0.3 $0.3 1Q22 2Q22 3Q22 4Q22 1Q23 $27.6 $25.4 $25.4 $25.5 $25.5 1Q22 2Q22 3Q22 4Q22 1Q23 $2.4 ACL/Loans % Nonaccrual Loans ($ in millions) Net Charge-Offs (Recoveries) ($ in thousands) Substandard Loans ($ in millions) Allowance for Credit Losses ($ in millions) 1.11% 0.99% 0.97% 0.93% 1.01% $27.9 CECL Adoption Adjustment

 
13 Net Interest Income $23.8 $24.2 $23.0 $20.7 $18.7 1Q22 2Q22 3Q22 4Q22 1Q23 Net Interest Income ($ in millions) • Loan interest income increased $2.0 million. • Deposit interest expense increased $2.3 million. • Borrowed funds interest expense increased $1.7 million. • 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 and securities yields. • Fixed rate nature of loan portfolio results in lagging repricing compared to deposits. • Large balance client base is more sensitive to rising interest rates. • Estimated investment portfolio cash flows for the next 12 months is $53.6 million with a roll-off rate of 1.87% • Scheduled fixed rate loan maturities for the next 12 months is $100.3 million with a roll-off rate of 4.52%. Net Interest Margin % (1) 2.85% 2.93% 2.78% 2.49% 2.23% Net interest margin declined 26 bps in Q1 2023 (1) Presented on a fully taxable equivalent basis; see Appendix for “Non-GAAP Financial Measures.” Net interest income decreased $2.0 million in Q1 2023 compared to Q4 2022

 
14 Noninterest Expense ($ in thousands) Noninterest Income & Expense • Q1 2023 included a gain on bank owned life insurance totaling $691 thousand. • Q3 2022 included loan swap fees totaling $835 thousand. $2,389 $2,278 $3,276 $2,265 $2,957 1Q22 2Q22 3Q22 4Q22 1Q23 Noninterest Income ($ in thousands) Noninterest Income Noninterest Expense (1) Presented on a fully taxable equivalent basis; see Appendix for “Non-GAAP Financial Measures.” A lower ratio is more desirable. • Increase in efficiency ratio primarily due to a decrease in net interest income, driven by higher cost of deposits and borrowed funds. • Wage increases have been higher than recent historical averages in response to market conditions and competition in retaining and recruiting talent. • Full time equivalents have increased with growth in our commercial banking team and information technology department. • Occupancy and equipment has increased because of depreciation expense related to the new building in St. Cloud, Minnesota. $6,298 $6,410 $6,578 $6,552 $6,867 $1,086 $1,242 $1,315 $1,270 $1,327 $1,100 $1,148 $1,295 $1,191 $1,148 $2,178 $2,466 $2,270 $2,652 $2,729 $10,662 $11,266 $11,458 $11,665 $12,071 1Q22 2Q22 3Q22 4Q22 1Q23 40.14% 41.96% 43.16% 50.42% 55.34% Compensation and benefits Occupancy and equipment Data processing, software and technology Other Efficiency Ratio% (1)

 
15 Regulatory Capital Ratios 10.7% 12.5% 12.3% 12.1% 12.2%11.9% 13.6% 13.4% 13.1% 13.2% 1Q22 2Q22 3Q22 4Q22 1Q23 Tier 1 Capital Ratio Tier 1 Leverage RatioCommon Equity Tier 1 Ratio = Company = West Bank 9.8% 9.8% 9.7% 9.6% 9.5% 11.0% 12.8% 12.6% 12.3% 12.3% 1Q22 2Q22 3Q22 4Q22 1Q23 Total Risk Based Capital Ratio 9.2% 9.2% 9.1% 9.0% 8.9% 11.0% 12.8% 12.6% 12.3% 12.3% 1Q22 2Q22 3Q22 4Q22 1Q23 8.4% 8.6% 8.9% 8.8% 8.6% 9.4% 11.2% 11.5% 11.4% 11.1% 1Q22 2Q22 3Q22 4Q22 1Q23 10% 6.5% 8% 5% Note: Lines depict well capitalized levels.

 
16Appendix Appendix Non-GAAP Financial Measures (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.

 
17 Third Quarter 2022 Earnings Highlights October 27, 2022 West Bancorporation, Inc. Board of Directors Front: L to R: Lisa Elming, Steven Schuler, Rosemary Parson, Therese Vaughan, Douglas Gulling and George Milligan. Back L to R: Steven Gaer, Sean McMurray, James Noyce (Chair), David Nelson, Michael Gerdin, Patrick Donovan and Philip Jason Worth Appendix