GlobeNewswire Inc | Oct 29, 2020 08:30AM EDT

October 29, 2020

WEST DES MOINES, Iowa, Oct. 29, 2020 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq: WTBA; the Company), parent company of West Bank, today reported that third quarter 2020 net income was $8.1 million, or $0.49 per diluted common share, compared to third quarter 2019 net income of $7.5 million, or $0.46 per diluted common share. For the first nine months of 2020, net income was $24.2 million, or $1.46 per diluted common share, compared to $21.1 million, or $1.28 per diluted common share, for the first nine months of 2019. On October 28, 2020, the Companys Board of Directors declared a regular quarterly dividend of $0.21 per common share, the same amount as in the previous six quarters. The dividend is payable on November 25, 2020, to stockholders of record on November 11, 2020.

We are pleased with our strong financial performance in 2020, commented Dave Nelson, President and Chief Executive Officer of the Company. The challenges of 2020 and COVID-19 have amplified the Companys attention to monitoring the ongoing credit quality of the loan portfolio. Credit quality related to certain industry segments in our commercial real estate loan portfolio is being monitored closely as the economic recovery in those industries remains slow and uncertain. In spite of economic stress, we are encouraged by our customers abilities to resume contractual payments at the end of most payment deferral accommodation periods related to COVID-19. We believe our history of strong capital, earnings and credit quality and the strength of our customer relationships put us in a position to successfully navigate the ongoing challenges related to COVID-19.

In 2019, the Company implemented a growth strategy in three new Minnesota markets. As a result of that strategy and continued business development efforts in its existing markets, the Companys average loan balances for the first nine months of 2020 have increased $208.1 million compared to the same period of 2019, excluding Paycheck Protection Program loans. Dave Nelson commented, Because of the success of our business development efforts in Minnesota, we have purchased land in Sartell, Minnesota, a suburb of St. Cloud, and plan to begin construction on a permanent full service office to serve all of the St. Cloud metropolitan area. We are excited to continue building the West Bank brand in Minnesota.

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 its financial results. The Form 10-Q is available on the Investor Relations section of West Banks 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, October 30, 2020. The telephone number for the conference call is 888-339-0814. A recording of the call will be available until November 13, 2020, by dialing 877-344-7529. The replay passcode is 10137424.

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 Companys 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: the effects of the Coronavirus Disease 2019 (COVID-19) pandemic, including its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; interest rate risk; competitive pressures; pricing pressures on loans and deposits; changes in credit and other risks posed by the Companys 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, accounting standards (including as a result of the future implementation of the current expected credit loss (CECL) accounting standard) 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 Companys 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, 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; 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.

For more information contact:Doug Gulling, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-2309

WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (unaudited) (in thousands) CONSOLIDATED BALANCE SHEETS September 30, September 30, 2020 2019Assets Cash and due from banks $ 49,445 $ 62,119 Federal funds sold 16,398 67,168 Investment securities available for sale, at 374,387 410,371 fair valueFederal Home Loan Bank stock, at cost 11,905 11,685 Loans 2,247,425 1,836,730 Allowance for loan losses (25,403 ) (17,042 )Loans, net 2,222,022 1,819,688 Premises and equipment, net 28,099 30,057 Bank-owned life insurance 42,520 34,731 Other assets 31,107 21,417 Total assets $ 2,775,883 $ 2,457,236 Liabilities and Stockholders? Equity Deposits: Noninterest-bearing demand $ 619,346 $ 395,925 Interest-bearing: Demand 363,430 322,487 Savings 1,130,582 1,015,443 Time of $250 or more 54,241 71,669 Other time 129,181 219,283 Total deposits 2,296,780 2,024,807 Federal funds purchased 2,350 3,535 Other borrowings 217,661 197,387 Other liabilities 43,772 27,370 Stockholders? equity 215,320 204,137 Total liabilities and stockholders? equity $ 2,775,883 $ 2,457,236

WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (continued) (unaudited)(in thousands) Three Months Ended Nine Months Ended September 30, September 30,CONSOLIDATED STATEMENTS OF 2020 2019 2020 2019INCOMEInterest income Loans, including fees $ 22,489 $ 22,203 $ 67,132 $ 63,699 Investment securities 2,106 2,798 7,099 9,080 Other 15 611 256 819 Total interest income 24,610 25,612 74,487 73,598 Interest expense Deposits 1,946 6,771 9,343 19,405 Federal funds purchased 2 17 21 219 Other borrowings 1,530 1,708 4,780 4,931 Total interest expense 3,478 8,496 14,144 24,555 Net interest income 21,132 17,116 60,343 49,043 Provision for loan losses 4,000 300 8,000 300 Net interest income after 17,132 16,816 52,343 48,743 provision for loan lossesNoninterest income Service charges on deposit 609 630 1,743 1,841 accountsDebit card usage fees 432 426 1,205 1,235 Trust services 553 572 1,477 1,536 Increase in cash value of 133 168 427 482 bank-owned life insuranceLoan swap fees 983 ? 1,572 ? Realized investment securities 156 1 81 (64 )gains (losses), netOther income 337 361 993 1,246 Total noninterest income 3,203 2,158 7,498 6,276 Noninterest expense Salaries and employee benefits 5,412 5,440 16,014 16,324 Occupancy 1,383 1,379 4,092 3,956 Data processing 614 695 1,882 2,091 FDIC insurance 351 ? 880 404 Other expenses 2,299 2,022 6,271 6,055 Total noninterest expense 10,059 9,536 29,139 28,830 Income before income taxes 10,276 9,438 30,702 26,189 Income taxes 2,176 1,912 6,544 5,106 Net income $ 8,100 $ 7,526 $ 24,158 $ 21,083

WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (continued) (unaudited)(dollars in thousands, except per share data) PER COMMON SHARE MARKET INFORMATION (1) Net Income Basic Diluted Dividends High Low2020 3rd Quarter $ 0.49 $ 0.49 $ 0.21 $ 17.99 $ 15.50 2nd Quarter 0.48 0.48 0.21 20.67 14.50 1st Quarter 0.49 0.49 0.21 25.68 13.74 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

(1)The prices shown are the high and low sale prices for the Companys 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 Nine Months Ended September 30, September 30,SELECTED FINANCIAL MEASURES 2020 2019 2020 2019Return on average assets 1.16 % 1.22 % 1.21 % 1.20 %Return on average equity 15.20 % 14.76 % 15.47 % 14.25 %Net interest margin ^(2) 3.21 % 2.94 % 3.19 % 2.95 %Efficiency ratio ^(1)(2) 41.35 % 49.03 % 42.68 % 51.74 % As of September 30, 2020 2019Texas ratio^(1) 7.38 % 0.24 %Allowance for loan losses 1.13 % 0.93 %ratioAllowance for loan losses ratio, excluding 1.26 % 0.93 %PPP loans ^(2)(3)Tangible common equity ratio 7.76 % 8.31 %

(1) A lower ratio is more desirable(2) Non-GAAP financial measures - see reconciliation below(3) Paycheck Protection Program (PPP)

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 - annualized tax-equivalent net interest income divided by average interest-earning assets. -- Efficiency ratio - 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. -- Allowance for loan losses ratio, excluding PPP loans - allowance for loan losses divided by total loans minus $224,489 of PPP loans. -- Tangible common equity ratio - common equity less intangible assets (none held) divided by tangible assets.

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 and net interest margin on a fully taxable equivalent (FTE) basis, efficiency ratio on an adjusted and FTE basis, loans, net of PPP loans and allowance for loan losses ratio, excluding PPP loans to their most directly comparable measures under GAAP.

Three Months Ended Nine Months Ended September September 30, 30, 2020 2019 2020 2019Reconciliation ofnet interest incomeand net interest margin on an FTEbasis to GAAP:Net interest income $ 21,132 $ 17,116 $ 60,343 $ 49,043 (GAAP)Tax-equivalent 144 178 516 650 adjustment ^(1)Net interest incomeon an FTE basis 21,276 17,294 60,859 49,693 (non-GAAP)Averageinterest-earning 2,639,532 2,334,365 2,544,429 2,249,520 assetsNet interest marginon an FTE basis 3.21 % 2.94 % 3.19 % 2.95 %(non-GAAP) Reconciliation ofefficiency ratio on an FTE basis toGAAP:Net interest incomeon an FTE basis $ 21,276 $ 17,294 $ 60,859 $ 49,693 (non-GAAP)Noninterest income 3,203 2,158 7,498 6,276 Adjustment forrealized investment (156 ) (1 ) (81 ) 64 securities (gains)losses, netAdjustment for(gain) loss on sale 1 ? 3 (307 )of fixed assetsAdjusted income 24,324 19,451 68,279 55,726 Noninterest expense 10,059 9,536 29,139 28,830 Efficiency ratio onan adjusted and FTE 41.35 % 49.03 % 42.68 % 51.74 %basis (non-GAAP) ^(2) As of September 30, 2020 2019Reconciliation of allowance forloan losses ratio, excluding PPP loans:Loans outstanding $ 2,247,425 $ 1,836,730 (GAAP)Less: PPP loans (224,489 ) ? Loans, net ofPPP loans 2,022,936 1,836,730 (non-GAAP)Allowance for loan 25,403 17,042 lossesAllowance for loan losses ratio, 1.26 % 0.93 %excluding PPP loans (non-GAAP)

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