West Bancorporation : Form 8-K

Section 1: 8-K(8-K)

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): January 23, 2020

WEST BANCORPORATION, INC.

(Exact name of registrant as specified in its charter)

Iowa	0-49677	42-1230603
(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)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	WTBA	The Nasdaq Global Select Market

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:

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

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 pursuant to Section 13(a) of the Exchange Act. o

Item 2.02 Results of Operations and Financial Condition.

On January 23, 2020, West Bancorporation, Inc. issued a press release announcing its annual and fourth quarter earnings results for the periods ended December 31, 2019, and the declaration of a quarterly dividend. The press release is furnished as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit Number	Description
99.1	Press Release of West Bancorporation, Inc. dated January 23, 2020

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.

January 23, 2020	By: /s/ Douglas R. Gulling

Name: Douglas R. Gulling

Title: Executive Vice President, Treasurer and Chief Financial Officer

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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

Press Release

January 23, 2020

FOR IMMEDIATE RELEASE

For more information contact:

Doug Gulling, Executive Vice President, Treasurer and Chief Financial Officer [phone]

WEST BANCORPORATION, INC. ANNOUNCES RECORD NET INCOME, DECLARES QUARTERLY DIVIDEND

West Des Moines, IA - West Bancorporation, Inc. (Nasdaq: WTBA; the "Company"), parent company of West Bank, today reported 2019 net income of $28.7 million, or $1.74 per diluted common share, compared to 2018 net income of $28.5 million, or $1.74 per diluted common share. Net income for the fourth quarter of 2019 was $7.6 million, or $0.46 per diluted common share. This compares to fourth quarter 2018 net income of $7.2 million, or $0.44 per diluted common share. On January 22, 2020, the Company's Board of Directors declared a regular quarterly dividend of $0.21 per common share. The dividend is payable on February 19, 2020, to stockholders of record on February 5, 2020.

In March 2019, the Company announced that, through its subsidiary, West Bank, it was initiating a growth strategy in three new Minnesota markets and has since opened full service branch offices in Owatonna, Mankato and St. Cloud, Minnesota. The financial results of 2019 have been impacted by compensation, occupancy and equipment costs, professional fees and business development costs related to this growth strategy, which totaled approximately $2.8 million on a pretax basis in 2019. The estimated pretax net interest income from loans and deposits and related fee income in these markets was approximately $1.1 million in 2019.

"We continue to successfully execute on our strategic priorities and at the same time deliver consistently strong financial results," commented Dave Nelson, President and Chief Executive Officer of the Company. "Despite the additional expenses in 2019 from our investment in opening branches in three new markets, the Company still achieved an all-time record for annual earnings. While continued net interest margin compression along with the cost of our expansion have presented financial challenges, we continue to benefit from our ability to manage credit quality and our disciplined approach to expense management."

Dave Nelson also commented, "Our highly talented bankers in our new Minnesota communities generated over $119 million in loan originations in those markets in 2019. We are starting to see positive financial results from this expansion, and the results confirm our commitment to building shareholder value. We are beginning the new year with a positive return on our investment in our expanded markets which we believe will contribute to increased earnings in 2020."

The Company will file its report on Form 10-K with the Securities and Exchange Commission on or before February 27, 2020. Please refer to that document for a more in-depth discussion of our financial results. The Form 10-K will be available on the Investor Relations section of West Bank's website at www.westbankstrong.com.

The Company will discuss its financial results on a conference call scheduled for 10:00 a.m. Central Time tomorrow, Friday, January 24, 2020. The telephone number for the conference call is 888-339-0814. A recording of the call will be available until February 7, 2020, by dialing 877-344-7529. The replay passcode is 10137421.

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 consumers and small- to medium- sized businesses. West Bank has eight 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; competitive pressures; pricing pressures on loans and deposits; changes in credit and other risks posed by the Company's loan and investment portfolios, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions or regulatory requirements; actions of bank and nonbank competitors; changes in local, national and international economic conditions; 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 or other adverse external events; and any other risks described in the "Risk Factors" sections of other 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)

CONSOLIDATED BALANCE SHEETS			December 31, 2019			December 31, 2018
Assets
Cash and due from banks	$	37,808	$	46,369
Federal funds sold			15,482			1,105
Investment securities available for sale, at fair value			398,578			453,758
Federal Home Loan Bank stock, at cost			12,491			12,037
Loans			1,941,663			1,721,830
Allowance for loan losses			(17,235)			(16,689)
Loans, net			1,924,428			1,705,141
Premises and equipment, net			29,680			21,491
Bank-owned life insurance			34,893			34,249
Other assets			20,331			22,418
Total assets	$	2,473,691	$	2,296,568
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand	$	380,079	$	400,530
Interest-bearing:
Demand			346,307			336,089
Savings			996,836			950,501
Time of $250 or more			81,871			55,745
Other time			209,663			151,664
Total deposits			2,014,756			1,894,529
Federal funds purchased			2,660			19,985
Other borrowings			222,728			185,343
Other liabilities			21,727			5,688
Stockholders' equity			211,820			191,023
Total liabilities and stockholders' equity		$	2,473,691		$	2,296,568

WEST BANCORPORATION, INC. AND SUBSIDIARY

Financial Information (continued) (unaudited)

(in thousands)

			Three Months Ended December 31,			Year Ended December 31,
CONSOLIDATED STATEMENTS OF INCOME		2019			2018			2019			2018
Interest income
Loans, including fees	$	21,813	$	19,200	$	85,512	$	71,189
Investment securities		2,973			3,255			12,053			13,117
Other		291			151			1,110			487
Total interest income		25,077			22,606			98,675			84,793
Interest expense
Deposits		5,809			5,486			25,214			17,064
Federal funds purchased		22			48			241			188
Other borrowings		1,859			1,416			6,790			5,483
Total interest expense		7,690			6,950			32,245			22,735
Net interest income		17,387			15,656			66,430			62,058
Provision for loan losses		300			-			600			(250)
Net interest income after provision for loan losses		17,087			15,656			65,830			62,308
Noninterest income
Service charges on deposit accounts		651			616			2,492			2,541
Debit card usage fees		409			427			1,644			1,681
Trust services		490			456			2,026			1,921
Increase in cash value of bank-owned life insurance		162			163			644			631
Realized investment securities losses, net		(23)			(160)			(87)			(263)
Other income		353			200			1,599			1,241
Total noninterest income		2,042			1,702			8,318			7,752
Noninterest expense
Salaries and employee benefits		5,466			4,729			21,790			18,791
Occupancy		1,399			1,265			5,355			4,996
Data processing		644			662			2,735			2,682
FDIC insurance		-			186			404			685
Write-down of premises		-			-			-			333
Other expenses		2,067			2,344			8,122			7,505
Total noninterest expense		9,576			9,186			38,406			34,992
Income before income taxes		9,553			8,172			35,742			35,068
Income taxes		1,946			945			7,052			6,560
Net income	$	7,607		$	7,227		$	28,690		$	28,508

WEST BANCORPORATION, INC. AND SUBSIDIARY

Financial Information (continued) (unaudited)

				PER COMMON SHARE					MARKET INFORMATION (1)
			Net Income
		Basic			Diluted		Dividends			High			Low
2019
4th Quarter	$	0.46	$	0.46		$	0.21	$	25.93	$	21.01
3rd Quarter		0.46		0.46			0.21			22.47			19.63
2nd Quarter		0.41		0.41			0.21			22.32			20.14
1st Quarter		0.42		0.42			0.20			23.74			19.02
2018
4th Quarter	$	0.44	$	0.44		$	0.20	$	23.88	$	18.06
3rd Quarter		0.44		0.43			0.20			26.51			23.10
2nd Quarter		0.42		0.41			0.20			26.95			22.65
1st Quarter		0.46		0.45			0.18			26.85			23.65

1. The prices shown are the high and low sale prices for the Company's common stock, which trades on the Nasdaq Global Select Market under the symbol WTBA. The market quotations, reported by Nasdaq, do not include retail markup, markdown or commissions.

		Three Months Ended December 31,		Year Ended December 31,
SELECTED FINANCIAL MEASURES	2019	2018	2019	2018
Return on average assets	1.22%	1.29%	1.20%	1.31%
Return on average equity	14.61%	15.45%	14.34%	15.68%
Net interest margin	2.95%	2.99%	2.95%	3.06%
Efficiency ratio*	48.76%	51.16%	50.96%	48.33%
						As of December 31,
					2019	2018
Texas ratio*					0.23%	0.93%
Allowance for loan losses ratio					0.89%	0.97%
Tangible common equity ratio					8.56%	8.32%

* A lower ratio is more desirable.

Definitions of ratios:

• Return on average assets - annualized net income divided by average assets.
• Return on average equity - annualized net income divided by average stockholders' equity.
• Net interest margin(1) - annualized tax-equivalent net interest income divided by average interest-earning assets.
• Efficiency ratio(1) - noninterest expense (excluding other real estate owned expense) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
• Texas ratio - total nonperforming assets divided by tangible common equity plus the allowance for loan losses.
• Allowance for loan losses ratio - allowance for loan losses divided by total loans.
• Tangible common equity ratio - common equity less intangible assets (none held) divided by tangible assets.
• 1. Non-GAAPfinancial measures - see reconciliation below.

WEST BANCORPORATION, INC. AND SUBSIDIARY

Financial Information (continued) (unaudited) (dollars in thousands)

NON-GAAP FINANCIAL MEASURES

This report contains references to financial measures that are not defined in generally accepted accounting principles (GAAP). The following table reconciles the non-GAAP financial measures of net interest income, net interest margin and efficiency ratio on a fully taxable equivalent (FTE) basis to GAAP.

			Three Months Ended December 31,			Year Ended December 31,
			2019			2018			2019			2018
Reconciliation of net interest income and net interest
margin on an FTE basis to GAAP:
Net interest income (GAAP)	$	17,387	$	15,656	$	66,430	$	62,058
Tax-equivalent adjustment (1)		184			341			834			1,529
Net interest income on an FTE basis (non-GAAP)		17,571			15,997			67,264			63,587
Average interest-earning assets		2,360,375			2,124,148			2,277,461			2,075,372
Net interest margin on an FTE basis (non-GAAP)		2.95%			2.99%			2.95%			3.06%
Reconciliation of efficiency ratio on an FTE basis to
GAAP:
Net interest income on an FTE basis (non-GAAP)	$	17,571	$	15,997	$	67,264	$	63,587
Noninterest income		2,042			1,702			8,318			7,752
Adjustment for realized investment securities losses, net		23			160			87			263
Adjustment for losses on disposal of premises and
equipment, net		-			95			-			109
Adjustment for gain on sale of premises		-			-			(307)			-
Adjusted income		19,636			17,954			75,362			71,711
Noninterest expense		9,576			9,186			38,406			34,992
Adjustment for write-down of premises		-			-			-			(333)
Adjusted expense		9,576			9,186			38,406			34,659
Efficiency ratio on an adjusted and FTE basis (non-GAAP)		48.76%			51.16%			50.96%			48.33%
(2)

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 financial performance. It is a standard measure of comparison within the banking industry.

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