WTBA West Bancorporation

West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported first quarter 2024 net income of $5.8 million, or $0.35 per diluted common share, compared to fourth quarter 2023 net income of $4.5 million, or $0.27 per diluted common share, and first quarter 2023 net income of $7.8 million, or $0.47 per diluted common share. On April 24, 2024, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on May 22, 2024, to stockholders of record on May 8, 2024.

David Nelson, President and Chief Executive Officer of the Company, commented, “We have completed our move to our new headquarters building in West Des Moines. After being in the same leased space for over 50 years, our new building is an opportunity to consolidate our corporate operations under one roof, provide space for future growth and enhance business development opportunities. This construction project was years in the making and is a commitment to honor our 131 year history and support the future of our community.”

David Nelson added, “Like the rest of our industry, our Company continues to experience margin challenges in 2024. High short-term rates, an ongoing inverted yield curve and aggressive deposit competition continues to have a significant impact on our cost of funds and net interest margin. We have a clear understanding of our path forward to more normalized margins and earnings.”

First Quarter 2024 Financial Highlights

	Quarter EndedMarch 31, 2024
Net income (in thousands)	$5,809
Return on average equity	10.63	%
Return on average assets	0.61	%
Efficiency ratio (a non-GAAP measure)	62.04	%
Nonperforming assets to total assets	0.01	%

First Quarter 2024 Compared to Fourth Quarter 2023 Overview

• Loans increased $52.6 million in the first quarter of 2024, or 7.2 percent annualized. The increase is primarily due to the funding of previously committed construction loans.
• No credit loss expense was recorded in the first quarter of 2024, compared to a credit loss expense of $500 thousand recorded in the fourth quarter of 2023. The $500 thousand credit loss expense recorded in the fourth quarter of 2023 was due to growth in loans and unfunded commitments.
• The allowance for credit losses to total loans was 0.95 percent at March 31, 2024, compared to 0.97 percent at December 31, 2023. Nonaccrual loans at March 31, 2024 consisted of one loan with a balance of $289 thousand, compared to one loan with a balance of $296 thousand at December 31, 2023.
• Deposits increased $91.3 million, or 3.1 percent, in the first quarter of 2024. Brokered deposits totaled $396.4 million at March 31, 2024, compared to $305.4 million at December 31, 2023, an increase of $91.0 million. Excluding brokered deposits, deposits increased $0.3 million during the first quarter of 2024. As of March 31, 2024, estimated uninsured deposits, which exclude deposits in the IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, accounted for approximately 27.2 percent of total deposits.
• Borrowed funds increased to $639.7 million at March 31, 2024, compared to $592.6 million at December 31, 2023. The increase was primarily attributable to an increase of $48.2 million in federal funds purchased and other short-term borrowings.
• The efficiency ratio (a non-GAAP measure) was 62.04 percent for the first quarter of 2024, compared to 64.66 percent for the fourth quarter of 2023. The decrease in the efficiency ratio was primarily due to the increase in net interest income.
• Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.88 percent for the first quarter of 2024, compared to 1.87 percent for the fourth quarter of 2023. Net interest income for the first quarter of 2024 was $16.8 million, compared to $16.4 million for the fourth quarter of 2023.
• The tangible common equity ratio was 5.65 percent at March 31, 2024, compared to 5.88 percent at December 31, 2023. The decrease was attributable to the increase in accumulated other comprehensive loss, which was primarily driven by the effect of increasing long-term interest rates in the first quarter on the unrealized market value adjustment of our available for sale investment portfolio. While accumulated other comprehensive losses reduce tangible common equity, they have no impact on regulatory capital.

First Quarter 2024 Compared to First Quarter 2023 Overview

• Loans increased $223.9 million at March 31, 2024, or 8.1 percent, compared to March 31, 2023.
• Deposits increased $266.6 million at March 31, 2024, compared to March 31, 2023. Included in deposits were brokered deposits totaling $396.4 million at March 31, 2024, compared to $234.2 million at March 31, 2023. Excluding brokered deposits, deposits increased $104.4 million, or 4.1 percent, as of March 31, 2024 compared to March 31, 2023.
• Borrowed funds increased to $639.7 million at March 31, 2024, compared to $580.2 million at March 31, 2023. The increase included increases of $75.0 million in FHLB one-month rolling advances hedged with long-term interest rate swaps, and $20.0 million in FHLB long-term advances, partially offset by a decrease of $30.5 million in federal funds purchased and other short-term borrowings.
• The efficiency ratio (a non-GAAP measure) was 62.04 percent for the first quarter of 2024, compared to 55.34 percent for the first quarter of 2023. The increase in the efficiency ratio in the first quarter of 2024 compared to the first quarter of 2023 was primarily due to the decreases in net interest income and noninterest income.
• Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.88 percent for the first quarter of 2024, compared to 2.23 percent for the first quarter of 2023. Net interest income for the first quarter of 2024 was $16.8 million, compared to $18.7 million for the first quarter of 2023. Through 2023 and the first quarter of 2024, the rising cost of deposits and borrowed funds and the change in mix of funding increased interest expense faster than the increase in interest income from loan repricing and loan originations.

The Company filed its report on Form 10-Q with the Securities and Exchange Commission today. Please refer to that document for a more in-depth discussion of the Company’s financial results. The Form 10-Q is available on the Investor Relations section of West Bank’s website at www.westbankstrong.com.

The Company will discuss its results in a conference call scheduled for 2:00 p.m. Central Time on Thursday, April 25, 2024. The telephone number for the conference call is 800-715-9871. The conference ID for the conference call is 8178676. A recording of the call will be available until May 9, 2024, by dialing 800-770-2030.

About West Bancorporation, Inc. (Nasdaq: WTBA)

West Bancorporation, Inc. is headquartered in West Des Moines, Iowa. Serving customers since 1893, West Bank, a wholly-owned subsidiary of West Bancorporation, Inc., is a community bank that focuses on lending, deposit services, and trust services for small- to medium-sized businesses and consumers. West Bank has six offices in the Des Moines, Iowa metropolitan area, one office in Coralville, Iowa, and four offices in Minnesota in the cities of Rochester, Owatonna, Mankato and St. Cloud.

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk, including the effects of recent rate increases by the Federal Reserve; fluctuations in the values of the securities held in our investment portfolio, including as a result of changes in interest rates; competitive pressures, including from non-bank competitors such as “fintech” companies and digital asset service providers; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for credit losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients who have balances above current FDIC insurance limits; changes in local, national and international economic conditions, including high rates of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; changes in legal and regulatory requirements, limitations and costs including in response to the recent bank failures; changes in customers’ acceptance of the Company’s products and services; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners’ information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their businesses; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; talent and labor shortages; the 1 percent excise tax on stock buybacks by publicly traded companies; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

For more information contact:Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766

WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
		As of
CONDENSED BALANCE SHEETS		March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023				March 31, 2023
Assets
Cash and due from banks		$	27,071			$	33,245			$	18,819			$	29,776			$	21,579
Interest-bearing deposits			120,946				32,112				1,802				1,968				901
Securities available for sale, at fair value			605,735				623,919				609,365				645,091				665,358
Federal Home Loan Bank stock, at cost			26,181				22,957				26,691				22,488				22,226
Loans			2,980,133				2,927,535				2,849,777				2,807,075				2,756,185
Allowance for credit losses			(28,373	)			(28,342	)			(28,147	)			(27,938	)			(27,941	)
Loans, net			2,951,760				2,899,193				2,821,630				2,779,137				2,728,244
Premises and equipment, net			95,880				86,399				75,675				66,683				59,565
Bank-owned life insurance			44,138				43,864				43,589				43,328				44,830
Other assets			90,981				84,069				104,329				90,084				82,240
Total assets		$	3,962,692			$	3,825,758			$	3,701,900			$	3,678,555			$	3,624,943
Liabilities and Stockholders’ Equity
Deposits		$	3,065,030			$	2,973,779			$	2,755,529			$	2,836,325			$	2,798,393
Federal funds purchased and other short-term borrowings			198,500				150,270				261,510				184,150				229,290
Other borrowings			441,183				442,367				443,552				409,736				350,921
Other liabilities			34,223				34,299				37,376				31,218				29,347
Stockholders’ equity			223,756				225,043				203,933				217,126				216,992
Total liabilities and stockholders’ equity		$	3,962,692			$	3,825,758			$	3,701,900			$	3,678,555			$	3,624,943
		For the Quarter Ended
AVERAGE BALANCES		March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023				March 31, 2023
Assets		$	3,812,199			$	3,706,497			$	3,679,541			$	3,645,651			$	3,617,458
Loans			2,949,672				2,857,594				2,813,213				2,783,463				2,745,381
Deposits			2,931,222				2,878,676				2,764,184				2,854,945				2,846,926
Stockholders’ equity			219,835				201,920				215,230				213,177				215,391

WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
		As of
LOANS		March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023				March 31, 2023
Commercial		$	544,293			$	531,594			$	529,293			$	535,085			$	520,894
Real estate:
Construction, land and land development			465,247				413,477				399,253				351,461				336,739
1-4 family residential first mortgages			108,065				106,688				89,713				80,998				75,223
Home equity			14,020				14,618				12,429				12,625				9,726
Commercial			1,839,580				1,854,510				1,812,816				1,820,718				1,810,158
Consumer and other			12,844				10,930				10,123				10,289				7,381
			2,984,049				2,931,817				2,853,627				2,811,176				2,760,121
Net unamortized fees and costs			(3,916	)			(4,282	)			(3,850	)			(4,101	)			(3,936	)
Total loans		$	2,980,133			$	2,927,535			$	2,849,777			$	2,807,075			$	2,756,185
Less allowance for credit losses			(28,373	)			(28,342	)			(28,147	)			(27,938	)			(27,941	)
Net loans		$	2,951,760			$	2,899,193			$	2,821,630			$	2,779,137			$	2,728,244
CREDIT QUALITY
Pass		$	2,983,618			$	2,931,377			$	2,853,100			$	2,810,640			$	2,706,951
Watch			142				144				184				187				52,766
Substandard			289				296				343				349				404
Doubtful			—				—				—				—				—
Total loans		$	2,984,049			$	2,931,817			$	2,853,627			$	2,811,176			$	2,760,121
DEPOSITS
Noninterest-bearing demand		$	521,377			$	548,726			$	551,688			$	568,029			$	605,666
Interest-bearing demand			449,946				481,207				417,802				459,030				486,656
Savings and money market - non-brokered			1,315,698				1,315,741				1,249,309				1,302,468				1,202,756
Money market - brokered			119,840				124,335				99,282				114,142				92,524
Total nonmaturity deposits			2,406,861				2,470,009				2,318,081				2,443,669				2,387,602
Time - non-brokered			381,646				322,694				299,683				276,097				269,102
Time - brokered			276,523				181,076				137,765				116,559				141,689
Total time deposits			658,169				503,770				437,448				392,656				410,791
Total deposits		$	3,065,030			$	2,973,779			$	2,755,529			$	2,836,325			$	2,798,393
BORROWINGS
Federal funds purchased and other short-term borrowings		$	198,500			$	150,270			$	261,510			$	184,150			$	229,290
Subordinated notes, net			79,697				79,631				79,566				79,500				79,435
Federal Home Loan Bank advances			315,000				315,000				315,000				280,000				220,000
Long-term debt			46,486				47,736				48,986				50,236				51,486
Total borrowings		$	639,683			$	592,637			$	705,062			$	593,886			$	580,211
STOCKHOLDERS’ EQUITY
Preferred stock		$	—			$	—			$	—			$	—			$	—
Common stock			3,000				3,000				3,000				3,000				3,000
Additional paid-in capital			33,685				34,197				33,487				32,642				31,797
Retained earnings			272,997				271,369				271,025				269,301				267,620
Accumulated other comprehensive loss			(85,926	)			(83,523	)			(103,579	)			(87,817	)			(85,425	)
Total Stockholders’ Equity		$	223,756			$	225,043			$	203,933			$	217,126			$	216,992

WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
		For the Quarter Ended
CONSOLIDATED STATEMENTS OF INCOME		March 31,2024				December 31,2023				September 30,2023				June 30,2023				March 31,2023
Interest income:
Loans, including fees		$	40,196			$	38,208			$	36,756			$	35,011			$	32,948
Securities:
Taxable			3,416				3,521				3,427				3,432				3,316
Tax-exempt			810				869				880				883				885
Interest-bearing deposits			148				85				29				25				30
Total interest income			44,570				42,683				41,092				39,351				37,179
Interest expense:
Deposits			21,559				20,024				17,156				16,277				13,339
Federal funds purchased and other short-term borrowings			2,183				2,024				3,165				2,264				2,079
Subordinated notes			1,108				1,114				1,113				1,109				1,106
Federal Home Loan Bank advances			2,325				2,482				2,329				1,621				1,262
Long-term debt			645				678				695				739				698
Total interest expense			27,820				26,322				24,458				22,010				18,484
Net interest income			16,750				16,361				16,634				17,341				18,695
Credit loss expense			—				500				200				—				—
Net interest income after credit loss expense			16,750				15,861				16,434				17,341				18,695
Noninterest income:
Service charges on deposit accounts			460				476				463				458				462
Debit card usage fees			458				488				495				511				486
Trust services			776				782				831				749				706
Increase in cash value of bank-owned life insurance			274				275				262				250				257
Gain from bank-owned life insurance			—				—				—				—				691
Loan swap fees			—				—				431				—				—
Realized securities losses, net			—				(431	)			—				—				—
Other income			331				308				340				421				355
Total noninterest income			2,299				1,898				2,822				2,389				2,957
Noninterest expense:
Salaries and employee benefits			6,489				6,468				6,696				7,029				6,867
Occupancy and equipment			1,447				1,499				1,359				1,322				1,327
Data processing			714				723				703				729				635
Technology and software			700				676				573				579				513
FDIC insurance			519				475				439				420				416
Professional fees			257				235				254				287				250
Director fees			199				240				196				251				205
Other expenses			1,543				1,845				1,685				1,857				1,858
Total noninterest expense			11,868				12,161				11,905				12,474				12,071
Income before income taxes			7,181				5,598				7,351				7,256				9,581
Income taxes			1,372				1,073				1,445				1,394				1,737
Net income		$	5,809			$	4,525			$	5,906			$	5,862			$	7,844
Basic earnings per common share		$	0.35			$	0.27			$	0.35			$	0.35			$	0.47
Diluted earnings per common share		$	0.35			$	0.27			$	0.35			$	0.35			$	0.47

WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
		As of and for the Quarter Ended
COMMON SHARE DATA		March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023				March 31, 2023
Earnings per common share (basic)		$	0.35			$	0.27			$	0.35			$	0.35			$	0.47
Earnings per common share (diluted)			0.35				0.27				0.35				0.35				0.47
Dividends per common share			0.25				0.25				0.25				0.25				0.25
Book value per common share(1)			13.31				13.46				12.19				12.98				12.98
Closing stock price			17.83				21.20				16.31				18.41				18.27
Market price/book value(2)			133.96	%			157.50	%			133.80	%			141.83	%			140.76	%
Price earnings ratio(3)			12.77				19.79				11.75				13.11				9.56
Annualized dividend yield(4)			5.61	%			4.72	%			6.13	%			5.43	%			5.47	%
REGULATORY CAPITAL RATIOS
Consolidated:
Total risk-based capital ratio			11.78	%			11.88	%			11.96	%			12.15	%			12.17	%
Tier 1 risk-based capital ratio			9.23				9.30				9.37				9.51				9.51
Tier 1 leverage capital ratio			8.36				8.50				8.58				8.60				8.60
Common equity tier 1 ratio			8.67				8.74				8.80				8.92				8.92
West Bank:
Total risk-based capital ratio			12.63	%			12.76	%			12.89	%			13.13	%			13.16	%
Tier 1 risk-based capital ratio			11.76				11.89				12.01				12.24				12.26
Tier 1 leverage capital ratio			10.65				10.86				11.00				11.08				11.10
Common equity tier 1 ratio			11.76				11.89				12.01				12.24				12.26
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets(5)			0.61	%			0.48	%			0.64	%			0.64	%			0.88	%
Return on average equity(6)			10.63				8.89				10.89				11.03				14.77
Net interest margin(7)(13)			1.88				1.87				1.91				2.02				2.23
Yield on interest-earning assets(8)(13)			4.99				4.87				4.70				4.57				4.41
Cost of interest-bearing liabilities			3.70				3.60				3.38				3.10				2.76
Efficiency ratio(9)(13)			62.04				64.66				60.83				62.83				55.34
Nonperforming assets to total assets(10)			0.01				0.01				0.01				0.01				0.01
ACL ratio(11)			0.95				0.97				0.99				1.00				1.01
Loans/total assets			75.20				76.52				76.98				76.31				76.03
Loans/total deposits			97.23				98.44				103.42				98.97				98.49
Tangible common equity ratio(12)			5.65				5.88				5.51				5.90				5.99

(1) Includes accumulated other comprehensive loss.(2) Closing stock price divided by book value per common share. (3) Closing stock price divided by annualized earnings per common share (basic).(4) Annualized dividend divided by period end closing stock price.(5) Annualized net income divided by average assets. (6) Annualized net income divided by average stockholders’ equity.(7) Annualized tax-equivalent net interest income divided by average interest-earning assets.(8) Annualized tax-equivalent interest income on interest-earning assets divided by average interest-earning assets.(9) Noninterest expense (excluding other real estate owned expense and write-down of premises) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income. (10) Total nonperforming assets divided by total assets. (11) Allowance for credit losses divided by total loans.(12) Common equity less intangible assets (none held) divided by tangible assets. (13) A non-GAAP measure.

NON-GAAP FINANCIAL MEASURES

This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on a fully taxable equivalent basis and efficiency ratio on an adjusted and FTE basis.

(in thousands)		For the Quarter Ended
		March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023				March 31, 2023
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:
Net interest income (GAAP)		$	16,750			$	16,361			$	16,634			$	17,341			$	18,695
Tax-equivalent adjustment(1)			82				95				113				122				161
Net interest income on a FTE basis (non-GAAP)			16,832				16,456				16,747				17,463				18,856
Average interest-earning assets			3,595,954				3,487,799				3,478,053				3,461,313				3,435,988
Net interest margin on a FTE basis (non-GAAP)			1.88	%			1.87	%			1.91	%			2.02	%			2.23	%
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:
Net interest income on a FTE basis (non-GAAP)		$	16,832			$	16,456			$	16,747			$	17,463			$	18,856
Noninterest income			2,299				1,898				2,822				2,389				2,957
Adjustment for realized securities losses, net			—				431				—				—				—
Adjustment for losses on disposal of premises and equipment, net			—				24				3				2				—
Adjusted income			19,131				18,809				19,572				19,854				21,813
Noninterest expense			11,868				12,161				11,905				12,474				12,071
Efficiency ratio on an adjusted and FTE basis (non-GAAP)(2)			62.04	%			64.66	%			60.83	%			62.83	%			55.34	%

(1) Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income arising from taxable and nontaxable sources. (2) The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company's financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable.