Building a Strong
Reputation
2012 Annual Report
Then
Building a strong reputation
since 1893
West Des Moines has grown quite
a bit from the sleepy railroad town
established as Valley Junction.
In 1893, one of the first businesses
to invest in newly formed Valley
Junction was a little bank that grew
to become West Bank.
Founders Herman and Anna Raaz
made some of the first loans that
allowed families to make Valley
Junction their home. West Bank
helped many entrepreneurs launch
businesses that are still serving the
community today. We went on to
survive the depression, expand in
two of Iowa’s largest markets, and
trade on Nasdaq.
Our goal was never to be the
biggest bank. We simply want to
be the kind of community bank
that earns our customers’ trust
and referrals, while continuing to
be recognized as one of the best
banks in America by our peers and
industry experts. And most of all,
just like back in 1893, we want to
be a vital part of the community we
call home.
Now
120 years later…
We’re fortunate to be able to boast
about our exceptional customer
loyalty, but truth be told, we’ve
worked hard to earn it. We learned
a long time ago that when we help
our customers achieve their financial
goals, we not only earn their trust
but their ongoing business.
We’ve consistently produced
enviable earnings for our investors.
Since the formation of our holding
company, West Bancorporation, Inc.
in 1984, we have enjoyed profits in
110 of 112 quarters.
To be a great community bank,
we also need to be a great
community partner. Since 2003,
our Foundation has granted over
$2 million dollars to local charities
and our employees serve on over
80 local charitable boards.
120 years after serving our first
customer, West Bank is again
investing in its West Des Moines
roots by building a new branch on
Grand Avenue to serve, in some
cases, a fifth generation of
West Bank customers.
It’s this ongoing commitment to our
customers, our shareholders and the
communities we call home that has
earned us our most valuable asset –
our reputation.
Stockholders’ Letter
People like to ask me about our vision for our Company. They like to ask what
size we will be and what size we want to be. I don’t want to sound rude but any
group of people can make a bank grow. All you have to do is be the cheapest
and/or the loosest. Being the biggest can have very little to do with being the best
and might even make you the worst.
So I let people know our vision is to achieve and sustain a position of industry
envy and admiration. Then they ask, “What would that look like?” and “How will
you know when you get there?” Here are some of the things we look at to validate
our progress:
• Customer loyalty & retention.
• Customers endorsing us by giving us referrals.
• More people choosing us as their bank.
• Other bankers in town wanting to join our Team.
David D. Nelson
• Outperforming other banks in the major performance metrics.
•
Investment banking firm Sandler O’Neill naming us as one of the best banks in America.
• Doug Gulling named CFO of the year by the Des Moines Business Record.
• Other banks want to hire our top performing people and our people say, “No thanks.”
• Understanding what it means to be a community bank.
We remind ourselves that continued improvement is not a destination, it is a journey. It should also be a fun journey and we
will get there and stay there as a Team. I like to say, “Things are changing all the time at West Bank,” and that is because
each day we get a little better by doing things on purpose. It is fun to be part of something special, and we look forward to
the future with a smile.
In last year’s letter, we stated that we believed the Company would continue to grow and prosper in spite of the
uncertainty that existed. We can report that we were successful. For the year 2012, total loans grew by 11 percent;
deposits grew by 19 percent; and net income available to our stockholders increased by 24 percent. Both of our markets;
the Des Moines metropolitan area and the Iowa City metropolitan area, contributed to this growth. We also expanded our
commercial banking group in both markets in the last half of 2012. We do not believe there is any less uncertainty in 2013,
but we do believe we will continue our path of growth and prosperity.
The capital position of our Company is strong. At December 31, 2012, the capital ratio of tangible net worth to tangible
assets was 9.29 percent. Certainly over the past few years it was hard to argue any amount of capital was too much.
But we do get asked, and frequently ask ourselves, “What is the appropriate amount of capital?” During 2013, we will
continue to evaluate that question and develop strategies for effectively deploying that capital while maintaining a position
of strength.
West Bank is the oldest business in West Des Moines and during 2013 we are celebrating our 120th anniversary. Our new
Grand Avenue branch will be opening this spring. We think that makes us both the oldest and the newest business in
West Des Moines.
Our Company’s strong performance and positive public reaction are not accidents. They happen because of our
employees, our customers, and our community. We look forward to continuing the journey in 2013.
David D. Nelson
Chief Executive Officer and President
Consolidated Condensed Balance Sheets
(dollars in thousands, except per share amounts)
Assets
Cash and due from banks
Federal funds sold and other short-term investments
Cash and cash equivalents
Securities available for sale
Federal Home Loan Bank stock, at cost
Loans held for sale
Loans
Allowance for loan losses
Loans, net
Premises and equipment, net
Accrued interest receivable
Bank-owned life insurance
Other real estate owned
Deferred tax assets
Other assets
Total assets
Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Noninterest-bearing demand
Interest-bearing demand
Savings
Time of $100,000 or more
Other time
Total deposits
Federal funds purchased and securities sold under agreements to repurchase
Subordinated notes and FHLB advances, net of discount
Accrued expenses and other liabilities
Total liabilities
Stockholders’ Equity
Preferred stock, $0.01 par value; authorized 50,000,000 shares; no shares issued
and outstanding at December 31, 2012 and 2011
Common stock, no par value; authorized 50,000,000 shares; 17,403,882
shares issued and outstanding at December 31, 2012 and 2011
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Total stockholders’ equity
Total liabilities and stockholders’ equity
December 31,
2012
2011
$ 60,417
111,057
171,474
292,314
11,789
3,363
927,401
(15,529 )
911,872
5,609
3,652
25,730
8,304
6,991
7,077
$ 1,448,175
$ 35,772
51,332
87,104
283,145
11,352
4,089
838,959
(16,778 )
822,181
5,396
4,183
25,724
10,967
8,409
6,974
$ 1,269,524
$ 367,281
160,745
428,710
100,627
77,213
1,134,576
55,596
114,509
8,907
1,313,588
$ 268,887
158,141
343,312
98,743
88,290
957,373
55,841
125,619
7,240
1,146,073
-
-
3,000
33,805
95,856
1,926
134,587
$ 1,448,175
3,000
33,687
86,110
654
123,451
$ 1,269,524
West Bancorporation, Inc. and Subsidiary | 2012 Annual Report
West Bancorporation, Inc. and Subsidiary | 2012 Annual Report
Consolidated Condensed Statements of Income
(dollars in thousands, except per share amounts)
Interest Income
Loans, including fees
Securities:
Taxable securities
Tax-exempt securities
Federal funds sold and other short-term investments
Total interest income
Interest Expense
Deposits
Federal funds purchased and securities sold under agreements to repurchase
Other borrowings
Total interest expense
Net interest income
Provision for Loan Losses
Net interest income after provision for loan losses
Noninterest Income
Service charges on deposit accounts
Debit card usage fees
Trust services
Gains and fees on sales of residential mortgages
Increase in cash value of bank-owned life insurance
Gain from bank-owned life insurance
Investment securities impairment losses
Realized investment securities gains, net
Other income
Total noninterest income
Noninterest Expense
Salaries and employee benefits
Occupancy
Data processing
FDIC insurance expense
Other real estate owned expense
Other expenses
Total noninterest expense
Income before income taxes
Income Taxes
Net income
Preferred stock dividends and accretion of discount
Years Ended December 31,
2012
2011
2010
$ 44,277
$ 46,640
$ 53,215
4,240
1,954
191
50,662
4,535
114
4,815
9,464
41,198
625
40,573
3,009
1,586
817
3,104
737
841
(203 )
246
857
10,994
4,193
2,252
234
53,319
6,941
174
4,802
11,917
41,402
550
40,852
3,244
1,453
792
1,454
884
637
(99 )
-
996
9,361
4,330
3,057
541
61,143
13,217
210
5,596
19,023
42,120
6,050
36,070
3,361
1,329
818
1,533
869
422
(305 )
40
2,320
10,387
14,532
3,519
2,070
672
1,491
6,508
13,194
3,342
1,921
1,298
2,883
6,235
10,996
3,207
1,815
3,082
1,716
6,928
28,792
22,775
6,764
16,011
-
28,873
21,340
6,072
15,268
(2,387 )
27,744
18,713
5,330
13,383
(2,284 )
Net income available to common stockholders
$ 16,011
$ 12,881
$ 11,099
Earnings per Common Share
Basic earnings per common share
Diluted earnings per common share
$ 0.92
$ 0.74
$ 0.64
$ 0.92
$ 0.74
$ 0.64
West Bancorporation, Inc. and Subsidiary | 2012 Annual Report
Consolidated Condensed Statements of Stockholders’ Equity
(dollars in thousands, except per share amounts)
Years Ended December 31, 2012, 2011, and 2010
Preferred Stock
Common Stock
Balance, December 31, 2009
Net income
Other comprehensive income
Preferred stock discount accretion
Cash dividends declared,
$0.05 per common share
Preferred stock dividends declared
Balance, December 31, 2010
Net income
Other comprehensive income
Preferred stock discount accretion
Redemption of preferred stock
Repurchase of common stock warrant
Cash dividends declared,
$0.17 per common share
Preferred stock dividends declared
Balance, December 31, 2011
Net income
Other comprehensive income
Cash dividends declared,
$0.36 per common share
Stock-based compensation costs
$ 34,024
$ 3,000
-
-
484
-
-
34,508
-
-
1,492
(36,000 )
-
-
-
-
-
-
-
-
-
-
-
-
-
3,000
-
-
-
-
-
-
-
3,000
-
-
-
-
Additional
Paid-in Capital
Retained
Earnings
Accumulated Other
Comprehensive
Income (Loss)
$ 34,387
-
-
-
$ 65,959
13,383
-
(484 )
$ (4,311 )
-
1,664
-
-
-
(2,647 )
-
3,301
-
-
-
-
-
654
-
1,272
-
-
34,387
-
-
-
-
(700 )
-
-
33,687
-
-
-
118
(870 )
(1,800 )
76,188
15,268
-
(1,492 )
-
-
(2,959 )
(895 )
86,110
16,011
-
(6,265 )
-
Total
$ 133,059
13,383
1,664
-
(870 )
(1,800 )
145,436
15,268
3,301
-
(36,000 )
(700 )
(2,959 )
(895 )
123,451
16,011
1,272
-
-
(6,265 )
118
Balance, December 31, 2012
$ -
$ 3,000
$ 33,805
$ 95,856
$ 1,926
$ 134,587
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of West Bancorporation, Inc.:
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of West Bancorporation, Inc. and subsidiary as of December 31, 2012 and 2011, and the related
consolidated statements of income, comprehensive income (not presented herein), stockholders’ equity, and cash flows (not
presented herein) for each of the three years in the period ended December 31, 2012, and in our report dated March 6, 2013, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed consolidated financial statements appearing in this report is
fairly presented, in all material respects, in relation to the consolidated financial statements from which it has been derived.
Des Moines, Iowa | March 6, 2013
West Bancorporation, Inc. and Subsidiary | 2012 Annual Report
Stock Information
West Bancorporation’s common stock is traded on the Nasdaq Global Select Market and quotations are furnished by the Nasdaq
System. We had 220 common stockholders of record on December 31, 2012, and an estimated 950 additional nonobjecting
beneficial holders whose stock was held in street name by brokerage houses.
Market and Dividend Information (1)
2012
2011
1st quarter
2nd quarter
3rd quarter
4th quarter
Total
1st quarter
2nd quarter
3rd quarter
4th quarter
Total
High
$ 10.46
10.22
12.35
12.29
$ 8.00
8.89
10.00
10.39
Low
$ 8.71
9.02
9.38
9.75
$ 6.75
6.94
7.31
7.92
Dividends
$0.08
0.08
0.10
0.10
$ 0.36
$ -
0.05
0.05
0.07
$ 0.17
(1) The prices shown are the high and low sale prices for the Company’s common stock. The market quotations, reported by Nasdaq, do not include retail markup,
markdown, or commissions.
Form 10-K
A copy of the Company’s annual report to the Securities and Exchange Commission on Form 10-K will be available on the Securities
and Exchange Commission’s Web site at http://www.sec.gov and through a link on the Company’s Web site, www.westbankiowa.com,
at Investor Relations, SEC Filings. A copy of the annual report can also be obtained upon request to Alice Jensen at 515-222-2300 or
ajensen@westbankiowa.com.
Transfer Agent/Dividend Paying Agent
ist Shareholder Services
433 S. Carlton Ave.
Wheaton, Illinois 60187
800-757-5755
www.ilstk.com
Forward-Looking Statements
Certain statements in this report about the Company’s future financial performance constitute “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995. Those statements include the words “believe,” “hope to,”
“look forward,” or similar references. These statements are based on underlying assumptions, risks, and uncertainties that may not
materialize as expected. Actual results may differ significantly from the forward-looking statements due to, among other things,
changes in competition, economic conditions, regulatory requirements or costs, loan or investment performance, and interest rates.
The Company undertakes no obligation to revise any statements to reflect future circumstances.
West Bancorporation, Inc. and Subsidiary | 2012 Annual Report
Boards of Directors
West Bancorporation, Inc. and Subsidiary
Frank Berlin*
Thomas Carlstrom*
Joyce Chapman*
Steven Gaer*
Douglas Gulling**
Kaye Lozier*
David Milligan*
George Milligan*
David Nelson*
James Noyce*
Harlee Olafson **
Robert Pulver*
* Director of West Bancorporation, Inc. and West Bank ** Director of West Bank
Lou Ann Sandburg*
Brad Winterbottom **
Jason Worth **
Central Iowa Community Board
Chad Airhart
Mary Cownie
Darin Ferguson
Ryan Flynn
Kevin Grimm
Greg LaMair
Eastern Iowa Community Board
Gene Loffredo
Kirk Tyler
Victoria Veiock
Mark Wackerbarth
Nancy Williams
Phillip Yurgae
Jill Armstrong
Kevin Digmann
William Meardon
Mark Mysnyk
William Nusser, Jr.
Charles Skaugstad, Jr.
Anna Moyer-Stone
Branch Locations
Central Iowa
Main Bank
1601 - 22nd St.
West Des Moines
Grand Branch
125 Grand Ave.
West Des Moines
East Branch
2440 East Euclid
Des Moines
North Branch
3839 Merle Hay
Des Moines
City Center Branch
809 - 6th Ave.
Des Moines
South Branch
3920 SW 9th Street
Des Moines
Urbandale Branch
3255 - 99th St.
Urbandale
Eastern Iowa
Downtown Branch
229 S. Dubuque Street
Iowa City
Waukee Branch
955 East Hickman Rd.
Waukee
Lower Muscatine Branch
1910 Lower Muscatine Rd
Iowa City
Coralville Branch
1150 5th Street
Suite 170
Coralville
Financial Highlights
(dollars in thousands, except per share amounts)
Year-End Balances
Assets
Investment securities
Loans
Nonperforming loans
Other real estate owned
Deposits
Stockholders’ equity
Average Balances
Assets
Investment securities
Loans
Deposits
Stockholders’ equity
Results of Operations
Net interest income
Provision for loan losses
Noninterest income
Noninterest expense
Income (loss) before income taxes
from continuing operations
Income (loss) from continuing
operations
Income (loss) from discontinued
operations
Net income (loss)
Net income (loss) available to
common stockholders
Per Common Share
Net income (loss) – basic
Net income (loss) – diluted
Dividends
Book value
Closing price
Ratios
Return on average equity
Return on average assets
Texas ratio
Efficiency ratio
Net interest margin
Average equity as % of average assets
Allowance for loan losses as % of loans
Net charge-offs as % of average loans
Nonperforming loans as % of loans
Tangible common equity to tangible assets
2012
2011
2010
2009
2008
$ 1,448,175
304,103
927,401
7,256
8,304
1,134,576
134,587
$ 1,269,524
294,497
838,959
10,693
10,967
957,373
123,451
$ 1,305,463
267,537
888,649
12,930
19,193
972,072
145,436
$ 1,575,054
351,269
1,020,710
26,317
25,350
1,246,617
133,059
$ 1,554,276
189,558
1,100,735
28,835
4,352
1,155,132
150,063
$ 1,326,408
317,615
854,860
995,694
129,795
$ 1,295,313
266,031
850,833
961,488
135,520
$ 1,558,461
301,124
961,977
1,218,997
141,079
$ 1,618,557
230,821
1,100,045
1,231,597
143,163
$ 1,371,401
189,206
1,054,558
954,423
118,090
$ 41,198
625
10,994
28,792
$ 41,402
550
9,361
28,873
$ 42,120
6,050
10,387
27,744
$ 41,094
24,500
8,904
37,905
$ 41,101
16,600
4,301
20,105
22,775
21,340
18,713
(12,407 )
8,697
16,011
15,268
13,383
(5,051 )
7,311
-
16,011
-
15,268
-
13,383
(9,566 )
(14,617 )
325
7,636
16,011
12,881
11,099
(16,893 )
7,636
$ 0.92
0.92
0.36
7.73
10.78
$ 0.74
0.74
0.17
7.09
9.58
$ 0.64
0.64
0.05
6.37
7.79
$ (0.97 )
(0.97 )
0.09
5.69
4.93
$ 0.44
0.44
0.64
6.69
12.25
12.34 %
1.21 %
11.25 %
50.83 %
3.42 %
9.79 %
1.67 %
0.22 %
0.78 %
9.29 %
11.27 %
1.18 %
16.33 %
49.27 %
3.58 %
10.46 %
2.00 %
0.34 %
1.27 %
9.72 %
9.49 %
0.86 %
25.76 %
47.28 %
3.04 %
9.05 %
2.15 %
0.63 %
1.46 %
8.49 %
(10.21 )%
(0.90 )%
44.91 %
45.30 %
2.86 %
8.85 %
1.87 %
1.89 %
2.58 %
6.27 %
6.47 %
0.56 %
33.81 %
38.24 %
3.38 %
8.61 %
1.40 %
0.96 %
2.62 %
5.91 %
West Bancorporation, Inc. and Subsidiary | 2012 Annual Report
West Bancorporation, Inc. and Subsidiary | 2012 Annual Report