Company Quick10K Filing
Quick10K
West Bancorporation
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$21.51 16 $352
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
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 2019-01-23 Earnings, Officers, Amend Bylaw, Exhibits
8-K 2019-01-23 Earnings, Officers, Amend Bylaw, Exhibits
8-K 2018-12-31 Officers
8-K 2018-04-26 Officers, Shareholder Vote
8-K 2018-01-24 Earnings, Officers, Exhibits
ICL Israel Chemicals 7,030
JBT John Bean Technologies 3,470
SMPL Simplicity Bancorp 1,800
ALDR Alder Biopharmaceuticals 973
GLAD Gladstone Capital 277
PFBI Premier Financial Bancorp 239
UTI Universal Technical Institute 83
LIVE Live Ventures 14
TRPX Therapix Biosciences 12
NCOM National Commerce 0
WTBA 2019-06-30
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-20190630xex311.htm
EX-31.2 wtba-20190630xex312.htm
EX-32.1 wtba-20190630xex321.htm
EX-32.2 wtba-20190630xex322.htm

West Bancorporation Earnings 2019-06-30

WTBA 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 wtba-20190630x10q.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 June 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 July 24, 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)
 
June 30, 2019
 
December 31, 2018
ASSETS
 
 
 
 
Cash and due from banks
 
$
45,286

 
$
46,369

Federal funds sold
 
47,278

 
1,105

Cash and cash equivalents
 
92,564

 
47,474

Investment securities available for sale, at fair value
 
398,534

 
453,758

Federal Home Loan Bank stock, at cost
 
10,826

 
12,037

Loans
 
1,792,718

 
1,721,830

Allowance for loan losses
 
(16,737
)
 
(16,689
)
Loans, net
 
1,775,981

 
1,705,141

Premises and equipment, net
 
30,447

 
21,491

Accrued interest receivable
 
7,937

 
7,631

Bank-owned life insurance
 
34,563

 
34,249

Deferred tax assets, net
 
4,901

 
6,518

Other assets
 
7,123

 
8,269

Total assets
 
$
2,362,876

 
$
2,296,568

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
LIABILITIES
 
 
 
 
Deposits:
 
 
 
 
Noninterest-bearing demand
 
$
373,627

 
$
400,530

Interest-bearing demand
 
321,747

 
336,089

Savings
 
974,769

 
950,501

Time of $250 or more
 
50,980

 
55,745

Other time
 
244,664

 
151,664

Total deposits
 
1,965,787

 
1,894,529

Federal funds purchased
 
2,280

 
19,985

Subordinated notes, net
 
20,432

 
20,425

Federal Home Loan Bank advances, net
 
128,621

 
137,878

Long-term debt
 
22,982

 
27,040

Accrued expenses and other liabilities
 
20,839

 
5,688

Total liabilities
 
2,160,941

 
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 June 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 June 30, 2019
    and December 31, 2018, respectively
 
3,000

 
3,000

Additional paid-in capital
 
25,691

 
25,128

Retained earnings
 
176,567

 
169,709

Accumulated other comprehensive loss
 
(3,323
)
 
(6,814
)
Total stockholders' equity
 
201,935

 
191,023

Total liabilities and stockholders' equity
 
$
2,362,876

 
$
2,296,568

See Notes to Consolidated Financial Statements.

4



West Bancorporation, Inc. and Subsidiary
 
 
 
 
 
 
 
 
Consolidated Statements of Income
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands, except per share data)
 
2019
 
2018
 
2019
 
2018
Interest income:
 
 
 
 
 
 
 
 
Loans, including fees
 
$
21,108

 
$
17,168

 
$
41,496

 
$
33,642

Investment securities:
 
 
 
 
 
 
 
 
Taxable
 
2,632

 
1,886

 
4,960

 
3,699

Tax-exempt
 
485

 
1,306

 
1,322

 
2,668

Federal funds sold
 
110

 
177

 
208

 
258

Total interest income
 
24,335

 
20,537

 
47,986

 
40,267

Interest expense:
 
 
 
 
 
 

 
 

Deposits
 
6,670

 
3,798

 
12,634

 
6,810

Federal funds purchased
 
115

 
52

 
202

 
79

Subordinated notes
 
256

 
284

 
508

 
532

Federal Home Loan Bank advances
 
1,093

 
907

 
2,366

 
1,739

Long-term debt
 
163

 
197

 
349

 
392

Total interest expense
 
8,297

 
5,238

 
16,059

 
9,552

Net interest income
 
16,038

 
15,299

 
31,927

 
30,715

Provision for loan losses
 

 

 

 
150

Net interest income after provision for loan losses
 
16,038

 
15,299

 
31,927

 
30,565

Noninterest income:
 
 
 
 
 
 

 
 

Service charges on deposit accounts
 
600

 
627

 
1,211

 
1,276

Debit card usage fees
 
434

 
433

 
809

 
832

Trust services
 
481

 
575

 
964

 
1,020

Increase in cash value of bank-owned life insurance
 
162

 
152

 
314

 
310

Realized investment securities gains (losses), net
 
23

 
(25
)
 
(65
)
 
(25
)
Other income
 
299

 
261

 
885

 
523

Total noninterest income
 
1,999

 
2,023

 
4,118

 
3,936

Noninterest expense:
 
 
 
 
 
 

 
 

Salaries and employee benefits
 
5,424

 
4,775

 
10,884

 
9,288

Occupancy
 
1,344

 
1,258

 
2,577

 
2,481

Data processing
 
716

 
674

 
1,396

 
1,350

FDIC insurance
 
185

 
165

 
404

 
327

Professional fees
 
209

 
178

 
443

 
412

Director fees
 
258

 
261

 
509

 
510

Write-down of premises
 

 
333

 

 
333

Other expenses
 
1,614

 
1,314

 
3,081

 
2,544

Total noninterest expense
 
9,750

 
8,958

 
19,294

 
17,245

Income before income taxes
 
8,287

 
8,364

 
16,751

 
17,256

Income taxes
 
1,629

 
1,600

 
3,194

 
3,108

Net income
 
$
6,658

 
$
6,764

 
$
13,557

 
$
14,148

 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.41

 
$
0.42

 
$
0.83

 
$
0.87

Diluted earnings per common share
 
$
0.41

 
$
0.41

 
$
0.83

 
$
0.86

See Notes to Consolidated Financial Statements.

5



West Bancorporation, Inc. and Subsidiary
 
 
 
 
 
 
 
 
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands)
 
2019
 
2018
 
2019
 
2018
Net income
 
$
6,658

 
$
6,764

 
$
13,557

 
$
14,148

Other comprehensive income (loss):
 
 
 
 
 
 

 
 

Unrealized gains (losses) on investment securities:
 
 
 
 
 
 
 
 
Unrealized holding gains (losses) arising during the period
 
7,050

 
(1,226
)
 
11,967

 
(8,191
)
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
 
(23
)
 
25

 
65

 
25

Less: other reclassification adjustment
 

 

 

 
(36
)
Income tax benefit (expense)
 
(1,757
)
 
301

 
(3,008
)
 
1,962

Other comprehensive income (loss) on investment securities
 
5,270

 
(900
)
 
9,024

 
(5,877
)
Unrealized gains (losses) on derivatives:
 
 
 
 
 
 
 
 
Unrealized holding gains (losses) arising during the period
 
(4,729
)
 
1,003

 
(7,170
)
 
2,548

Plus: reclassification adjustment for net (gains) losses on derivatives realized in net income
 
(114
)
 
(2
)
 
(251
)
 
35

Plus: reclassification adjustment for amortization of derivative termination costs
 
24

 
24

 
47

 
47

Income tax benefit (expense)
 
1,203

 
(257
)
 
1,841

 
(659
)
Other comprehensive income (loss) on derivatives
 
(3,616
)
 
768

 
(5,533
)
 
1,971

Total other comprehensive income (loss)
 
1,654

 
(132
)
 
3,491


(3,906
)
Comprehensive income
 
$
8,312

 
$
6,632

 
$
17,048

 
$
10,242


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 June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
Additional
 
 
 
Other
 
 
 
 
Preferred
 
Common Stock
 
Paid-In
 
Retained
 
Comprehensive
 
 
 
 
Stock
 
Shares
 
Amount
 
Capital
 
Earnings
 
Income (Loss)
 
Total
Balance, March 31, 2019
 
$

 
16,357,752

 
$
3,000

 
$
24,898

 
$
173,349

 
$
(4,977
)
 
$
196,270

Net income
 

 

 

 

 
6,658

 

 
6,658

Other comprehensive income, net of tax
 

 

 

 

 

 
1,654

 
1,654

Cash dividends declared, $0.21 per common share
 

 

 

 

 
(3,440
)
 

 
(3,440
)
Stock-based compensation costs
 

 

 

 
793

 

 

 
793

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

 
22,000

 

 

 

 

 

Balance, June 30, 2019
 
$

 
16,379,752

 
$
3,000

 
$
25,691

 
$
176,567

 
$
(3,323
)
 
$
201,935

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

 
16,271,494

 
$
3,000

 
$
22,916

 
$
158,362

 
$
(6,036
)
 
$
178,242

Net income
 

 

 

 

 
6,764

 

 
6,764

Other comprehensive loss, net of tax
 

 

 

 

 

 
(132
)
 
(132
)
Cash dividends declared, $0.20 per common share
 

 

 

 

 
(3,259
)
 

 
(3,259
)
Stock-based compensation costs
 

 

 

 
737

 

 

 
737

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

 
24,000

 

 

 

 

 

Balance, June 30, 2018
 
$

 
16,295,494

 
$
3,000

 
$
23,653

 
$
161,867

 
$
(6,168
)
 
$
182,352

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

7



West Bancorporation, Inc. and Subsidiary
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
(in thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 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
 

 

 

 

 
13,557

 

 
13,557

Other comprehensive income, net of tax
 

 

 

 

 

 
3,491

 
3,491

Cash dividends declared, $0.41 per common share
 

 

 

 

 
(6,699
)
 


 
(6,699
)
Stock-based compensation costs
 

 

 

 
1,424

 

 

 
1,424

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

 
84,258

 

 
(861
)
 

 

 
(861
)
Balance, June 30, 2019
 
$

 
16,379,752

 
$
3,000

 
$
25,691

 
$
176,567

 
$
(3,323
)
 
$
201,935

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 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
 

 

 

 

 
14,148

 

 
14,148

Other comprehensive loss, net of tax
 

 

 

 

 

 
(3,906
)
 
(3,906
)
Cash dividends declared, $0.38 per common share
 

 

 

 

 
(6,178
)
 

 
(6,178
)
Stock-based compensation costs
 

 

 

 
1,266

 

 

 
1,266

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

 
79,822

 

 
(1,076
)
 

 

 
(1,076
)
Balance, June 30, 2018
 
$

 
16,295,494


$
3,000

 
$
23,653

 
$
161,867

 
$
(6,168
)
 
$
182,352


See Notes to Consolidated Financial Statements.


8



West Bancorporation, Inc. and Subsidiary
 
 
 
 
Consolidated Statements of Cash Flows
 
 
 
 
(unaudited)
 
 
 
 
 
 
Six Months Ended June 30,
(in thousands)
 
2019
 
2018
Cash Flows from Operating Activities:
 
 
 
 
Net income
 
$
13,557

 
$
14,148

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

 
150

Net amortization and accretion
 
2,026

 
2,528

Investment securities losses, net
 
65

 
25

Stock-based compensation
 
1,424

 
1,266

Increase in cash value of bank-owned life insurance
 
(314
)
 
(310
)
Gain on sale of premises
 
(307
)
 

Depreciation
 
698

 
703

Write-down of premises
 

 
333

Deferred income taxes
 
450

 
122

Change in assets and liabilities:
 
 
 
 
Increase in accrued interest receivable
 
(306
)
 
(520
)
Increase in other assets
 
(689
)
 
(1,204
)
Increase (decrease) in accrued expenses and other liabilities
 
9

 
(254
)
Net cash provided by operating activities
 
16,613

 
16,987

Cash Flows from Investing Activities:
 
 

 
 

Proceeds from sales of securities available for sale
 
145,342

 
9,216

Proceeds from maturities and calls of investment securities
 
19,403

 
20,937

Purchases of securities available for sale
 
(98,784
)
 
(76,796
)
Purchases of Federal Home Loan Bank stock
 
(22,378
)
 
(6,854
)
Proceeds from redemption of Federal Home Loan Bank stock
 
23,589

 
6,826

Net increase in loans
 
(70,840
)
 
(23,966
)
Proceeds from sale of premises
 
604

 

Purchases of premises and equipment
 
(394
)
 
(67
)
Net cash used in investing activities
 
(3,458
)
 
(70,704
)
Cash Flows from Financing Activities:
 
 

 
 

Net increase in deposits
 
71,258

 
81,116

Net increase (decrease) in federal funds purchased
 
(17,705
)
 
315

Principal payments on Federal Home Loan Bank advances
 
(110,000
)
 

Proceeds from Federal Home Loan Bank advances
 
100,000

 

Principal payments on long-term debt
 
(4,058
)
 
(3,306
)
Common stock dividends paid
 
(6,699
)
 
(6,178
)
Restricted stock units withheld for payroll taxes
 
(861
)
 
(1,076
)
Net cash provided by financing activities
 
31,935

 
70,871

Net increase in cash and cash equivalents
 
45,090

 
17,154

Cash and Cash Equivalents:
 
 
 
 
Beginning
 
47,474

 
47,949

Ending
 
$
92,564

 
$
65,103

 
 
 
 
 
Supplemental Disclosures of Cash Flow Information:
 
 
 
 
Cash payments for:
 
 
 
 
Interest
 
$
15,647

 
$
9,457

Income taxes
 
1,560

 
2,020

 
 
 
 
 
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 June 30, 2019 and December 31, 2018, net income, comprehensive income and changes in stockholders' equity for the three and six months ended June 30, 2019 and 2018, and cash flows for the six months ended June 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 July 2019, the FASB proposed changes 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 proposal would 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 proposed delay would be applicable to the Company, if it is approved by the FASB.

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 reasonably 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 six months ended June 30, 2019 and 2018 are presented in the following table.

 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands, except per share data)
2019
 
2018
 
2019
 
2018
Net income
$
6,658

 
$
6,764

 
$
13,557

 
$
14,148

 
 
 
 
 
 
 
 
Weighted average common shares outstanding
16,374

 
16,289

 
16,337

 
16,254

Weighted average effect of restricted stock units outstanding
63

 
102

 
76

 
146

Diluted weighted average common shares outstanding
16,437

 
16,391

 
16,413

 
16,400

 
 

 
 

 
 

 
 

Basic earnings per common share
$
0.41

 
$
0.42

 
$
0.83

 
$
0.87

Diluted earnings per common share
$
0.41

 
$
0.41

 
$
0.83

 
$
0.86

Number of anti-dilutive common stock equivalents excluded from diluted earnings per share computation
166

 
130

 
195

 
69



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 June 30, 2019 and December 31, 2018.
 
June 30, 2019
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair
Value
Securities available for sale:
 
 
 
 
 
 
 
State and political subdivisions
$
48,608

 
$
1,081

 
$
(11
)
 
$
49,678

Collateralized mortgage obligations (1)
194,529

 
1,339

 
(685
)
 
195,183

Mortgage-backed securities (1)
55,679

 
284

 
(92
)
 
55,871

Asset-backed securities (2)
24,434

 
59

 
(38
)
 
24,455

Collateralized loan obligations
54,780

 
3

 
(435
)
 
54,348

Corporate notes
19,303

 
85

 
(389
)
 
18,999

 
$
397,333

 
$
2,851

 
$
(1,650
)
 
$
398,534

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 $149,025 and $126,531 as of June 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 June 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.
 
June 30, 2019
 
Amortized Cost
 
Fair Value
Due in one year or less
$
2,000

 
$
2,001

Due after one year through five years
4,979

 
4,981

Due after five years through ten years
68,942

 
68,215

Due after ten years
46,770

 
47,828

 
122,691

 
123,025

Collateralized mortgage obligations, mortgage-backed securities and asset-backed securities
274,642

 
275,509

 
$
397,333

 
$
398,534

The details of the sales of investment securities available for sale for the three and six months ended June 30, 2019 and 2018 are summarized in the following table.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Proceeds from sales
$
83,068

 
$
9,216

 
$
145,342

 
$
9,216

Gross gains on sales
698

 
34

 
831

 
34

Gross losses on sales
675

 
59

 
896

 
59


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 June 30, 2019 and December 31, 2018.
 
June 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:
 
 
 
 
 
 
 
 
 
 
 
State and political subdivisions
$

 
$

 
$
3,444

 
$
(11
)
 
$
3,444

 
$
(11
)
Collateralized mortgage obligations
19,157

 
(193
)
 
72,037

 
(492
)
 
91,194

 
(685
)
Mortgage-backed securities

 

 
8,981

 
(92
)
 
8,981

 
(92
)
Asset-backed securities

 

 
14,721

 
(38
)
 
14,721

 
(38
)
Collateralized loan obligations
49,366

 
(435
)
 

 

 
49,366

 
(435
)
Corporate notes
1,974

 
(30
)
 
9,640

 
(359
)
 
11,614

 
(389
)
 
$
70,497

 
$
(658
)
 
$
108,823

 
$
(992
)
 
$
179,320

 
$
(1,650
)
 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
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
)
Corporate notes
19,470

 
(611
)
 
19,041

 
(958
)
 
38,511

 
(1,569
)
 
$
90,592

 
$
(1,216
)
 
$
316,878

 
$
(9,897
)
 
$
407,470

 
$
(11,113
)
As of June 30, 2019, the available for sale securities with unrealized losses included seven state and political subdivision securities, 27 collateralized mortgage obligation securities, three mortgage-backed securities, four asset-backed securities, eight collateralized loan obligation securities and four corporate notes. The Company believed the unrealized losses on securities available for sale as of June 30, 2019 were due to market conditions rather than reduced estimated cash flows. At June 30, 2019, the Company did not intend to sell these securities, did not anticipate that these securities will be required to be sold before anticipated recovery, and expected full principal and interest to be collected. Therefore, the Company did not consider these securities to have other than temporary impairment as of June 30, 2019.



15



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


4. Loans and Allowance for Loan Losses

Loans consisted of the following segments as of June 30, 2019 and December 31, 2018.
 
June 30, 2019
 
December 31, 2018
Commercial
$
398,329

 
$
358,763

Real estate:
 
 
 
Construction, land and land development
243,518

 
245,810

1-4 family residential first mortgages
49,446

 
49,052

Home equity
11,789

 
14,469

Commercial
1,085,282

 
1,050,025

Consumer and other
6,821

 
6,211

 
1,795,185

 
1,724,330

Net unamortized fees and costs
(2,467
)
 
(2,500
)
 
$
1,792,718

 
$
1,721,830

Real estate loans of approximately $820,000 and $800,000 were pledged as security for Federal Home Loan Bank (FHLB) advances as of June 30, 2019 and December 31, 2018, respectively.

Loans are stated at the principal amounts outstanding, net of unamortized loan fees and costs, with interest income recognized on the interest method based upon the terms of the loan.  Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. Loans are reported by the portfolio segments identified above and are analyzed by management on this basis. All loan policies identified below apply to all segments of the loan portfolio.

Delinquencies are determined based on the payment terms of the individual loan agreements. The accrual of interest on past due and other impaired loans is generally discontinued at 90 days past due or when, in the opinion of management, the borrower may be unable to make all payments pursuant to contractual terms.  Unless considered collectible, all interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income, if accrued in the current year, or charged to the allowance for loan losses, if accrued in the prior year.  Generally, all payments received while a loan is on nonaccrual status are applied to the principal balance of the loan. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. 

A loan is classified as a troubled debt restructured (TDR) loan when the Company separately concludes that a borrower is experiencing financial difficulties and a concession is granted that would not otherwise be considered. Concessions may include a restructuring of the loan terms to alleviate the burden of the borrower's cash requirements, such as an extension of the payment terms beyond the original maturity date or a change in the interest rate charged.  TDR loans with extended payment terms are accounted for as impaired until performance is established. A change to the interest rate would change the classification of a loan to a TDR loan if the restructured loan yields a rate that is below a market rate for that of a new loan with comparable risk. TDR loans with below-market rates are considered impaired until fully collected. TDR loans may also be reported as nonaccrual or 90 days past due if they are not performing per the restructured terms.

Based upon its ongoing assessment of credit quality within the loan portfolio, the Company maintains a Watch List, which includes loans classified as Doubtful, Substandard and Watch according to the Company's classification criteria. These loans involve the anticipated potential for payment defaults or collateral inadequacies. A loan on the Watch List is considered impaired when management believes it is probable the Company will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement.  Impaired loans are measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent.  The amount of impairment, if any, and any subsequent changes are included in the allowance for loan losses.

  





16



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


TDR loans totaled $580 and $652 as of June 30, 2019 and December 31, 2018, respectively, and were included in the nonaccrual category. There were no loan modifications considered to be TDR that occurred during the three and six months ended June 30, 2019. There was one loan modification considered to be TDR, with a pre- and post-modification recorded investment of $560, that occurred during the three and six months ended June 30, 2018.

No TDR loans that were modified within the twelve months preceding June 30, 2019 have subsequently had a payment default. One TDR loan that was modified within the twelve months preceding June 30, 2018, with a recorded investment of $529, has subsequently had a payment default. A TDR loan is considered to have a payment default when it is past due 30 days or more.

The following table summarizes the recorded investment in impaired loans by segment, broken down by loans with no related allowance for loan losses and loans with a related allowance and the amount of that allowance as of June 30, 2019 and December 31, 2018.
 
June 30, 2019
 
December 31, 2018
 
Recorded Investment
 
Unpaid Principal Balance
 
Related Allowance
 
Recorded Investment
 
Unpaid Principal Balance
 
Related Allowance
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
845

 
$
845

 </