Company Quick10K Filing
West Bancorporation
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 16 $357
10-Q 2019-10-24 Quarter: 2019-09-30
10-Q 2019-07-25 Quarter: 2019-06-30
10-Q 2019-04-25 Quarter: 2019-03-31
10-K 2019-02-28 Annual: 2018-12-31
10-Q 2018-10-25 Quarter: 2018-09-30
10-Q 2018-07-26 Quarter: 2018-06-30
10-Q 2018-04-26 Quarter: 2018-03-31
10-K 2018-03-01 Annual: 2017-12-31
10-Q 2017-10-26 Quarter: 2017-09-30
10-Q 2017-07-27 Quarter: 2017-06-30
10-Q 2017-04-27 Quarter: 2017-03-31
10-K 2017-03-01 Annual: 2016-12-31
10-Q 2016-10-27 Quarter: 2016-09-30
10-Q 2016-07-28 Quarter: 2016-06-30
10-Q 2016-04-28 Quarter: 2016-03-31
10-K 2016-03-03 Annual: 2015-12-31
10-Q 2015-10-30 Quarter: 2015-09-30
10-Q 2015-07-24 Quarter: 2015-06-30
10-Q 2015-04-23 Quarter: 2015-03-31
10-K 2015-03-05 Annual: 2014-12-31
10-Q 2014-10-24 Quarter: 2014-09-30
10-Q 2014-07-25 Quarter: 2014-06-30
10-Q 2014-04-24 Quarter: 2014-03-31
10-K 2014-03-06 Annual: 2013-12-31
10-Q 2013-10-25 Quarter: 2013-09-30
10-Q 2013-07-26 Quarter: 2013-06-30
10-Q 2013-04-25 Quarter: 2013-03-31
10-K 2013-03-06 Annual: 2012-12-31
10-Q 2012-10-26 Quarter: 2012-09-30
10-Q 2012-07-27 Quarter: 2012-06-30
10-Q 2012-04-26 Quarter: 2012-03-31
10-Q 2011-10-28 Quarter: 2011-09-30
10-Q 2011-07-29 Quarter: 2011-06-30
10-Q 2011-04-28 Quarter: 2011-03-31
10-K 2011-03-11 Annual: 2010-12-31
10-Q 2010-10-29 Quarter: 2010-09-30
10-Q 2010-07-30 Quarter: 2010-06-30
10-Q 2010-04-29 Quarter: 2010-03-31
10-K 2010-03-12 Annual: 2010-03-12
8-K 2019-10-23 Earnings, Officers, Exhibits
8-K 2019-07-25 Earnings, Exhibits
8-K 2019-06-24 Officers
8-K 2019-04-26 Shareholder Vote
8-K 2019-04-25 Earnings, Exhibits
8-K 2019-03-25 Officers
8-K 2019-03-04 Other Events
8-K 2019-01-23 Earnings, Officers, Amend Bylaw, Exhibits
8-K 2018-12-31 Officers
8-K 2018-10-25 Earnings, Exhibits
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-04-26 Earnings, Exhibits
8-K 2018-04-26 Officers, Shareholder Vote
8-K 2018-01-24 Earnings, Officers, Exhibits
WTBA 2019-09-30
Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 wtba-20190930xex311.htm
EX-31.2 wtba-20190930xex312.htm
EX-32.1 wtba-20190930xex321.htm
EX-32.2 wtba-20190930xex322.htm

West Bancorporation Earnings 2019-09-30

WTBA 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
CATC 374 2,741 2,504 0 0 22 44 336 7.6 1%
BWB 370 2,124 1,894 0 0 30 46 304 6.6 1%
CIVB 369 2,203 1,879 17 0 26 41 369 0% 9.0 1%
GNTY 362 2,333 2,083 0 0 23 52 269 5.2 1%
WTBA 357 2,363 2,161 0 0 28 66 380 5.8 1%
BFST 349 2,154 1,876 4 0 20 46 285 0% 6.2 1%
MCB 348 2,961 2,679 0 0 28 69 -85 -1.2 1%
CZNC 348 1,610 1,370 0 0 20 33 308 9.4 1%
EBTC 343 3,168 2,887 0 0 31 62 156 2.5 1%
MCBC 338 1,978 1,773 0 0 30 49 380 7.7 1%

10-Q 1 wtba-20190930x10q.htm 10-Q Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2019
 
 
or
 
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from __________ to __________

Commission File Number:  0-49677

WEST BANCORPORATION, INC.
(Exact Name of Registrant as Specified in its Charter)

IOWA
42-1230603
(State of Incorporation)
(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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x                      No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  x                      No  o








Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer
o
 
 
 
 
Accelerated filer
x
 
 
 
 
Non-accelerated filer
o
 
Smaller reporting company
x
 
 
 
 
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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o                      No  x


As of October 23, 2019, there were 16,379,752 shares of common stock, no par value, outstanding.



WEST BANCORPORATION, INC.
INDEX
 
 
Page
PART I.
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
 

3



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
West Bancorporation, Inc. and Subsidiary
 
 
 
 
Consolidated Balance Sheets
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
(in thousands, except share and per share data)
 
September 30, 2019
 
December 31, 2018
ASSETS
 
 
 
 
Cash and due from banks
 
$
62,119

 
$
46,369

Federal funds sold
 
67,168

 
1,105

Cash and cash equivalents
 
129,287

 
47,474

Investment securities available for sale, at fair value
 
410,371

 
453,758

Federal Home Loan Bank stock, at cost
 
11,685

 
12,037

Loans
 
1,836,730

 
1,721,830

Allowance for loan losses
 
(17,042
)
 
(16,689
)
Loans, net
 
1,819,688

 
1,705,141

Premises and equipment, net
 
30,057

 
21,491

Accrued interest receivable
 
7,995

 
7,631

Bank-owned life insurance
 
34,731

 
34,249

Deferred tax assets, net
 
6,085

 
6,518

Other assets
 
7,337

 
8,269

Total assets
 
$
2,457,236

 
$
2,296,568

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
LIABILITIES
 
 
 
 
Deposits:
 
 
 
 
Noninterest-bearing demand
 
$
395,925

 
$
400,530

Interest-bearing demand
 
322,487

 
336,089

Savings
 
1,015,443

 
950,501

Time of $250 or more
 
71,669

 
55,745

Other time
 
219,283

 
151,664

Total deposits
 
2,024,807

 
1,894,529

Federal funds purchased
 
3,535

 
19,985

Subordinated notes, net
 
20,435

 
20,425

Federal Home Loan Bank advances, net
 
153,998

 
137,878

Long-term debt
 
22,954

 
27,040

Accrued expenses and other liabilities
 
27,370

 
5,688

Total liabilities
 
2,253,099

 
2,105,545

COMMITMENTS AND CONTINGENCIES (NOTE 8)
 

 

STOCKHOLDERS' EQUITY
 
 
 
 
Preferred stock, $0.01 par value; authorized 50,000,000 shares; no shares issued and outstanding at September 30, 2019 and December 31, 2018
 

 

Common stock, no par value; authorized 50,000,000 shares; 16,379,752
    and 16,295,494 shares issued and outstanding at September 30, 2019
    and December 31, 2018, respectively
 
3,000

 
3,000

Additional paid-in capital
 
26,475

 
25,128

Retained earnings
 
180,654

 
169,709

Accumulated other comprehensive loss
 
(5,992
)
 
(6,814
)
Total stockholders' equity
 
204,137

 
191,023

Total liabilities and stockholders' equity
 
$
2,457,236

 
$
2,296,568

See Notes to Consolidated Financial Statements.

4



West Bancorporation, Inc. and Subsidiary
 
 
 
 
 
 
 
 
Consolidated Statements of Income
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands, except per share data)
 
2019
 
2018
 
2019
 
2018
Interest income:
 
 
 
 
 
 
 
 
Loans, including fees
 
$
22,203

 
$
18,347

 
$
63,699

 
$
51,989

Investment securities:
 
 
 
 
 
 
 
 
Taxable
 
2,445

 
2,296

 
7,405

 
5,995

Tax-exempt
 
353

 
1,199

 
1,675

 
3,867

Federal funds sold
 
611

 
78

 
819

 
336

Total interest income
 
25,612

 
21,920

 
73,598

 
62,187

Interest expense:
 
 
 
 
 
 

 
 

Deposits
 
6,771

 
4,768

 
19,405

 
11,578

Federal funds purchased
 
17

 
61

 
219

 
140

Subordinated notes
 
258

 
287

 
766

 
819

Federal Home Loan Bank advances
 
1,300

 
930

 
3,666

 
2,669

Long-term debt
 
150

 
187

 
499

 
579

Total interest expense
 
8,496

 
6,233

 
24,555

 
15,785

Net interest income
 
17,116

 
15,687

 
49,043

 
46,402

Provision for loan losses
 
300

 
(400
)
 
300

 
(250
)
Net interest income after provision for loan losses
 
16,816

 
16,087

 
48,743

 
46,652

Noninterest income:
 
 
 
 
 
 

 
 

Service charges on deposit accounts
 
630

 
649

 
1,841

 
1,925

Debit card usage fees
 
426

 
422

 
1,235

 
1,254

Trust services
 
572

 
445

 
1,536

 
1,465

Increase in cash value of bank-owned life insurance
 
168

 
158

 
482

 
468

Realized investment securities gains (losses), net
 
1

 
(78
)
 
(64
)
 
(103
)
Other income
 
361

 
518

 
1,246

 
1,041

Total noninterest income
 
2,158

 
2,114

 
6,276

 
6,050

Noninterest expense:
 
 
 
 
 
 

 
 

Salaries and employee benefits
 
5,440

 
4,774

 
16,324

 
14,062

Occupancy
 
1,379

 
1,250

 
3,956

 
3,731

Data processing
 
695

 
670

 
2,091

 
2,020

FDIC insurance
 

 
172

 
404

 
499

Professional fees
 
204

 
196

 
647

 
608

Director fees
 
233

 
248

 
742

 
758

Write-down of premises
 

 

 

 
333

Other expenses
 
1,585

 
1,251

 
4,666

 
3,795

Total noninterest expense
 
9,536

 
8,561

 
28,830

 
25,806

Income before income taxes
 
9,438

 
9,640

 
26,189

 
26,896

Income taxes
 
1,912

 
2,507

 
5,106

 
5,615

Net income
 
$
7,526

 
$
7,133

 
$
21,083

 
$
21,281

 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.46

 
$
0.44

 
$
1.29

 
$
1.31

Diluted earnings per common share
 
$
0.46

 
$
0.43

 
$
1.28

 
$
1.30

See Notes to Consolidated Financial Statements.

5



West Bancorporation, Inc. and Subsidiary
 
 
 
 
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands)
 
2019
 
2018
 
2019
 
2018
Net income
 
$
7,526

 
$
7,133

 
$
21,083

 
$
21,281

Other comprehensive income (loss):
 
 
 
 
 
 

 
 

Unrealized gains (losses) on investment securities:
 
 
 
 
 
 
 
 
Unrealized holding gains (losses) arising during the period
 
1,706

 
(4,182
)
 
13,673

 
(12,373
)
Unrealized gains on investment securities transferred from held to maturity to available for sale
 

 

 

 
363

Plus: reclassification adjustment for net (gains) losses realized in net income
 
(1
)
 
78

 
64

 
103

Less: other reclassification adjustment
 

 

 

 
(36
)
Income tax benefit (expense)
 
(426
)
 
1,026

 
(3,434
)
 
2,988

Other comprehensive income (loss) on investment securities
 
1,279

 
(3,078
)
 
10,303

 
(8,955
)
Unrealized gains (losses) on derivatives:
 
 
 
 
 
 
 
 
Unrealized holding gains (losses) arising during the period
 
(5,187
)
 
964

 
(12,357
)
 
3,512

Plus: reclassification adjustment for net (gains) losses on derivatives realized in net income
 
(100
)
 
(10
)
 
(351
)
 
25

Plus: reclassification adjustment for amortization of derivative termination costs
 
24

 
24

 
71

 
71

Income tax benefit (expense)
 
1,315

 
(246
)
 
3,156

 
(905
)
Other comprehensive income (loss) on derivatives
 
(3,948
)
 
732

 
(9,481
)
 
2,703

Total other comprehensive income (loss)
 
(2,669
)
 
(2,346
)
 
822


(6,252
)
Comprehensive income
 
$
4,857

 
$
4,787

 
$
21,905

 
$
15,029


See Notes to Consolidated Financial Statements.
 

6



West Bancorporation, Inc. and Subsidiary
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
Other
 
 
 
 
Preferred
 
Common Stock
 
Paid-In
 
Retained
 
Comprehensive
 
 
 
 
Stock
 
Shares
 
Amount
 
Capital
 
Earnings
 
Income (Loss)
 
Total
Balance, June 30, 2019
 
$

 
16,379,752

 
$
3,000

 
$
25,691

 
$
176,567

 
$
(3,323
)
 
$
201,935

Net income
 

 

 

 

 
7,526

 

 
7,526

Other comprehensive loss, net of tax
 

 

 

 

 

 
(2,669
)
 
(2,669
)
Cash dividends declared, $0.21 per common share
 

 

 

 

 
(3,439
)
 

 
(3,439
)
Stock-based compensation costs
 

 

 

 
784

 

 

 
784

Balance, September 30, 2019
 
$

 
16,379,752

 
$
3,000

 
$
26,475

 
$
180,654

 
$
(5,992
)
 
$
204,137

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
Other
 
 
 
 
Preferred
 
Common Stock
 
Paid-In
 
Retained
 
Comprehensive
 
 
 
 
Stock
 
Shares
 
Amount
 
Capital
 
Earnings
 
Income (Loss)
 
Total
Balance, June 30, 2018
 
$

 
16,295,494

 
$
3,000

 
$
23,653

 
$
161,867

 
$
(6,168
)
 
$
182,352

Net income
 

 

 

 

 
7,133

 

 
7,133

Other comprehensive loss, net of tax
 

 

 

 

 

 
(2,346
)
 
(2,346
)
Cash dividends declared, $0.20 per common share
 

 

 

 

 
(3,259
)
 

 
(3,259
)
Stock-based compensation costs
 

 

 

 
738

 

 

 
738

Balance, September 30, 2018
 
$

 
16,295,494

 
$
3,000

 
$
24,391

 
$
165,741

 
$
(8,514
)
 
$
184,618

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

7



West Bancorporation, Inc. and Subsidiary
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
(in thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
Other
 
 
 
 
Preferred
 
Common Stock
 
Paid-In
 
Retained
 
Comprehensive
 
 
 
 
Stock
 
Shares
 
Amount
 
Capital
 
Earnings
 
Income (Loss)
 
Total
Balance, December 31, 2018
 
$

 
16,295,494

 
$
3,000

 
$
25,128

 
$
169,709

 
$
(6,814
)
 
$
191,023

Net income
 

 

 

 

 
21,083

 

 
21,083

Other comprehensive income, net of tax
 

 

 

 

 

 
822

 
822

Cash dividends declared, $0.62 per common share
 

 

 

 

 
(10,138
)
 


 
(10,138
)
Stock-based compensation costs
 

 

 

 
2,208

 

 

 
2,208

Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes
 

 
84,258

 

 
(861
)
 

 

 
(861
)
Balance, September 30, 2019
 
$

 
16,379,752

 
$
3,000

 
$
26,475

 
$
180,654

 
$
(5,992
)
 
$
204,137

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
Other
 
 
 
 
Preferred
 
Common Stock
 
Paid-In
 
Retained
 
Comprehensive
 
 
 
 
Stock
 
Shares
 
Amount
 
Capital
 
Earnings
 
Income (Loss)
 
Total
Balance, December 31, 2017
 
$

 
16,215,672

 
$
3,000

 
$
23,463

 
$
153,527

 
$
(1,892
)
 
$
178,098

Reclassification of stranded tax effects of rate change
 

 

 

 

 
370

 
(370
)
 

Net income
 

 

 

 

 
21,281

 

 
21,281

Other comprehensive loss, net of tax
 

 

 

 

 

 
(6,252
)
 
(6,252
)
Cash dividends declared, $0.58 per common share
 

 

 

 

 
(9,437
)
 

 
(9,437
)
Stock-based compensation costs
 

 

 

 
2,004

 

 

 
2,004

Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes
 

 
79,822

 

 
(1,076
)
 

 

 
(1,076
)
Balance, September 30, 2018
 
$

 
16,295,494


$
3,000

 
$
24,391

 
$
165,741

 
$
(8,514
)
 
$
184,618


See Notes to Consolidated Financial Statements.


8



West Bancorporation, Inc. and Subsidiary
 
 
 
 
Consolidated Statements of Cash Flows
 
 
 
 
(unaudited)
 
 
 
 
 
 
Nine Months Ended September 30,
(in thousands)
 
2019
 
2018
Cash Flows from Operating Activities:
 
 
 
 
Net income
 
$
21,083

 
$
21,281

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Provision for loan losses
 
300

 
(250
)
Net amortization and accretion
 
2,895

 
3,715

Investment securities losses, net
 
64

 
103

Stock-based compensation
 
2,208

 
2,004

Increase in cash value of bank-owned life insurance
 
(482
)
 
(468
)
Gain on sale of premises
 
(307
)
 

Depreciation
 
1,060

 
1,053

Write-down of premises
 

 
333

Deferred income taxes
 
155

 
(173
)
Change in assets and liabilities:
 
 
 
 
Increase in accrued interest receivable
 
(364
)
 
(438
)
Increase in other assets
 
(932
)
 
(1,095
)
Increase in accrued expenses and other liabilities
 
1,623

 
881

Net cash provided by operating activities
 
27,303

 
26,946

Cash Flows from Investing Activities:
 
 

 
 

Proceeds from sales of securities available for sale
 
156,437

 
66,140

Proceeds from maturities and calls of investment securities
 
33,477

 
34,883

Purchases of securities available for sale
 
(134,548
)
 
(96,170
)
Purchases of Federal Home Loan Bank stock
 
(23,378
)
 
(10,634
)
Proceeds from redemption of Federal Home Loan Bank stock
 
23,730

 
9,747

Net increase in loans
 
(114,847
)
 
(89,824
)
Proceeds from sale of premises
 
604

 

Purchases of premises and equipment
 
(708
)
 
(86
)
Net cash used in investing activities
 
(59,233
)
 
(85,944
)
Cash Flows from Financing Activities:
 
 

 
 

Net increase in deposits
 
130,278

 
28,479

Net increase (decrease) in federal funds purchased
 
(16,450
)
 
25,700

Principal payments on Federal Home Loan Bank advances
 
(160,000
)
 

Proceeds from Federal Home Loan Bank advances
 
175,000

 

Principal payments on long-term debt
 
(4,086
)
 
(5,335
)
Common stock dividends paid
 
(10,138
)
 
(9,437
)
Restricted stock units withheld for payroll taxes
 
(861
)
 
(1,076
)
Net cash provided by financing activities
 
113,743

 
38,331

Net increase (decrease) in cash and cash equivalents
 
81,813

 
(20,667
)
Cash and Cash Equivalents:
 
 
 
 
Beginning
 
47,474

 
47,949

Ending
 
$
129,287

 
$
27,282

 
 
 
 
 
Supplemental Disclosures of Cash Flow Information:
 
 
 
 
Cash payments for:
 
 
 
 
Interest
 
$
23,726

 
$
15,471

Income taxes
 
3,280

 
4,822

 
 
 
 
 
Supplemental Disclosure of Noncash Investing Activities:
 
 
 
 
Establishment of lease liability and right-of-use asset
 
$
10,435

 
$

Transfer of investment securities held to maturity to available for sale
 

 
45,527

See Notes to Consolidated Financial Statements.

9



West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)


1.  Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by West Bancorporation, Inc. (the Company) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).  Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. Although management believes that the disclosures are adequate to make the information presented understandable, it is suggested that these interim consolidated financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 28, 2019.  In the opinion of management, the accompanying consolidated financial statements of the Company contain all adjustments necessary to fairly present its financial position as of September 30, 2019 and December 31, 2018, net income, comprehensive income and changes in stockholders' equity for the three and nine months ended September 30, 2019 and 2018, and cash flows for the nine months ended September 30, 2019 and 2018.  The results for these interim periods may not be indicative of results for the entire year or for any other period.

The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB).  References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification™, sometimes referred to as the Codification or ASC.  In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses for the reporting period.  Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term are the fair value of financial instruments and the allowance for loan losses.

The accompanying unaudited consolidated financial statements include the accounts of the Company, West Bank, West Bank's special purpose subsidiaries and West Bank's wholly-owned subsidiary WB Funding Corporation (which was liquidated in March 2018).  All significant intercompany transactions and balances have been eliminated in consolidation.  In accordance with GAAP, West Bancorporation Capital Trust I is recorded on the books of the Company using the equity method of accounting and is not consolidated.

Current accounting developments:  In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in the update supersedes the requirements in ASC Topic 840, Leases. The guidance is intended to increase transparency and comparability among organizations by recognizing right-of-use assets and lease liabilities on the balance sheet. For public companies, this update was effective for interim and annual periods beginning after December 15, 2018. The Company adopted this guidance in the first quarter of 2019. Upon adoption, the Company elected a practical expedient which allowed existing leases to retain their classification as operating leases. The Company also elected the option to account for lease and related non-lease components as a single lease component, and the option not to recognize right-of-use assets and lease liabilities arising from short-term leases (leases with terms of twelve months or less). Lease liabilities are measured at the present value of the remaining lease payments, discounted at the Company's incremental borrowing rate. The right-of-use asset is measured at the amount of the lease liability adjusted for any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term. Implementation of the guidance resulted in the recording of a right-of-use asset, included in premises and equipment, and an operating lease liability, included in other liabilities, on the consolidated balance sheet; however it did not have a material impact on the Company's other consolidated financial statements. See additional disclosures in Note 9.


10



West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)


In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net carrying value at the amount expected to be collected on the financial assets. Under the updates, the income statement will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount of financial assets. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination that are measured at amortized cost basis will be determined in a similar manner to other financial assets measured at amortized cost basis; however, the initial allowance for credit losses will be added to the purchase price rather than being reported as a credit loss expense. Only subsequent changes in the allowance for credit losses will be recorded as a credit loss expense for these assets. Off-balance-sheet arrangements such as commitments to extend credit, guarantees and standby letters of credit that are not considered derivatives under ASC 815 and are not unconditionally cancellable are also within the scope of this update. Credit losses relating to available for sale debt securities should be recorded through an allowance for credit losses. For public companies, the update is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. An entity will apply the amendments in this update on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. In October 2019, the FASB voted to approve amendments to the effective date of ASU No. 2016-13 for smaller reporting companies, as defined by the SEC, and other non-SEC reporting entities. The amendment will delay the effective date to fiscal years beginning after December 31, 2022, including interim periods within those fiscal periods. As the Company is a smaller reporting company, the delay will be applicable to the Company. The final ASU is expected to be issued in November 2019.

The Company is developing its approach for determining the expected credit losses under the new guidance.  The Company continues collecting and retaining historical loan and credit data and is currently evaluating alternative loss estimation models. While the Company currently cannot estimate the impact of adopting this standard, the Company expects the impact will be influenced by the composition, risk characteristics and quality of our loan and securities portfolios, as well as the general economic conditions and forecasts as of the adoption date.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The update is effective for interim and annual periods in fiscal years beginning after December 15, 2019, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2020 permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis, and the new disclosures will be adopted on a prospective basis. The adoption will not have a material effect on the Company’s consolidated financial statements.

In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Financial Instruments - Credit Losses (ASC 326), Derivatives and Hedging (ASC 815), and Financial Instruments (ASC 825). The amendments in the ASU improve the Codification by eliminating inconsistencies and providing clarifications. The amended guidance in this ASU related to the credit losses will be effective for fiscal years and interim periods beginning after December 15, 2019. The Company is currently evaluating the impact of the ASU on the Company's consolidated financial statements.


11



West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)


2.  Earnings per Common Share

Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding for the period.  Diluted earnings per common share reflect the potential dilution that could occur if the Company's outstanding restricted stock units were vested. The dilutive effect was computed using the treasury stock method, which assumes all stock-based awards were exercised and the hypothetical proceeds from exercise were used by the Company to purchase common stock at the average market price during the period.  The incremental shares, to the extent they would have been dilutive, were included in the denominator of the diluted earnings per common share calculation.  The calculations of earnings per common share and diluted earnings per common share for the three and nine months ended September 30, 2019 and 2018 are presented in the following table.

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands, except per share data)
2019
 
2018
 
2019
 
2018
Net income
$
7,526

 
$
7,133

 
$
21,083

 
$
21,281

 
 
 
 
 
 
 
 
Weighted average common shares outstanding
16,380

 
16,295

 
16,352

 
16,268

Weighted average effect of restricted stock units outstanding
86

 
106

 
79

 
132

Diluted weighted average common shares outstanding
16,466

 
16,401

 
16,431

 
16,400

 
 

 
 

 
 

 
 

Basic earnings per common share
$
0.46

 
$
0.44

 
$
1.29

 
$
1.31

Diluted earnings per common share
$
0.46

 
$
0.43

 
$
1.28

 
$
1.30

Number of anti-dilutive common stock equivalents excluded from diluted earnings per share computation
160

 
137

 
183

 
92



12



West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)


3.  Investment Securities

The following tables show the amortized cost, gross unrealized gains and losses, and fair value of investment securities, by investment security type as of September 30, 2019 and December 31, 2018.
 
September 30, 2019
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair
Value
Securities available for sale:
 
 
 
 
 
 
 
State and political subdivisions
$
46,164

 
$
1,754

 
$

 
$
47,918

Collateralized mortgage obligations (1)
202,616

 
2,055

 
(469
)
 
204,202

Mortgage-backed securities (1)
50,908

 
303

 
(123
)
 
51,088

Asset-backed securities (2)
18,568

 
63

 
(28
)
 
18,603

Collateralized loan obligations
71,909

 
32

 
(70
)
 
71,871

Corporate notes
17,300

 
164

 
(775
)
 
16,689

 
$
407,465

 
$
4,371

 
$
(1,465
)
 
$
410,371

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair
Value
Securities available for sale:
 
 
 
 
 
 
 
State and political subdivisions
$
152,293

 
$
156

 
$
(3,293
)
 
$
149,156

Collateralized mortgage obligations (1)
161,392

 

 
(4,388
)
 
157,004

Mortgage-backed securities (1)
64,813

 

 
(1,435
)
 
63,378

Asset-backed securities (2)
32,076

 
2

 
(175
)
 
31,903

Trust preferred security
2,153

 

 
(253
)
 
1,900

Corporate notes
51,862

 
124

 
(1,569
)
 
50,417

 
$
464,589

 
$
282

 
$
(11,113
)
 
$
453,758

(1)
All collateralized mortgage obligations and mortgage-backed securities consist of residential mortgage pass-through securities guaranteed by FHLMC or FNMA, real estate mortgage investment conduits guaranteed by FNMA, FHLMC or GNMA, and commercial mortgage pass-through securities guaranteed by the SBA.
(2)
Pass-through asset-backed securities guaranteed by the SBA.

Investment securities with an amortized cost of approximately $138,973 and $126,531 as of September 30, 2019 and December 31, 2018, respectively, were pledged to secure access to the Federal Reserve discount window, for public fund deposits, and for other purposes as required or permitted by law or regulation.

13



West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)


The amortized cost and fair value of investment securities available for sale as of September 30, 2019, by contractual maturity, are shown below. Certain securities have call features that allow the issuer to call the securities prior to maturity.  Expected maturities may differ from contractual maturities for collateralized mortgage obligations, mortgage-backed securities and asset-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.  Therefore, collateralized mortgage obligations, mortgage-backed securities and asset-backed securities are not included in the maturity categories within the following maturity summary.
 
September 30, 2019
 
Amortized Cost
 
Fair Value
Due in one year or less
$
2,000

 
$
2,001

Due after one year through five years
19,967

 
19,979

Due after five years through ten years
69,079

 
68,432

Due after ten years
44,327

 
46,066

 
135,373

 
136,478

Collateralized mortgage obligations, mortgage-backed securities and asset-backed securities
272,092

 
273,893

 
$
407,465

 
$
410,371

The details of the sales of investment securities available for sale for the three and nine months ended September 30, 2019 and 2018 are summarized in the following table.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Proceeds from sales
$
11,095

 
$
56,924

 
$
156,437

 
$
66,140

Gross gains on sales
37

 
64

 
868

 
98

Gross losses on sales
36

 
142

 
932

 
201


14



West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)


The following tables show the fair value and gross unrealized losses, aggregated by investment type and length of time that individual securities have been in a continuous loss position, as of September 30, 2019 and December 31, 2018.
 
September 30, 2019
 
Less than 12 months
 
12 months or longer
 
Total
 
Fair
Value
 
Gross
Unrealized
(Losses)
 
Fair
Value
 
Gross
Unrealized
(Losses)
 
Fair
Value
 
Gross
Unrealized
(Losses)
Securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
Collateralized mortgage obligations
$
43,662

 
$
(168
)
 
$
40,628

 
$
(301
)
 
$
84,290

 
$
(469
)
Mortgage-backed securities
14,916

 
(55
)
 
4,821

 
(68
)
 
19,737

 
(123
)
Asset-backed securities
3,842

 
(6
)
 
7,618

 
(22
)
 
11,460

 
(28
)
Collateralized loan obligations
26,890

 
(70
)
 

 

 
26,890

 
(70
)
Corporate notes

 

 
9,225

 
(775
)
 
9,225

 
(775
)
 
$
89,310

 
$
(299
)
 
$
62,292

 
$
(1,166
)
 
$
151,602

 
$
(1,465
)
 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
Less than 12 months
 
12 months or longer
 
Total
 
Fair
Value
 
Gross
Unrealized
(Losses)
 
Fair
Value
 
Gross
Unrealized
(Losses)
 
Fair
Value
 
Gross
Unrealized
(Losses)
Securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
State and political subdivisions
$
21,264

 
$
(221
)
 
$
102,853

 
$
(3,072
)
 
$
124,117

 
$
(3,293
)
Collateralized mortgage obligations
32,230

 
(250
)
 
124,775

 
(4,138
)
 
157,005

 
(4,388
)
Mortgage-backed securities
10,960

 
(103
)
 
51,823

 
(1,332
)
 
62,783

 
(1,435
)
Asset-backed securities
6,668

 
(31
)
 
16,486

 
(144
)
 
23,154

 
(175
)
Trust preferred security

 

 
1,900

 
(253
)
 
1,900

 
(253