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BOK FinancialBuilding Upon Our Strong Reputation 2013 Annual Report Stockholders’ Letter I have often said over the past couple of years that the bad parts of the Company are shrinking, and the good parts of the Company are growing. That continued to be true during 2013. Our loan portfolio grew 7 percent during 2013. That equals $64 million in additional loans. Our customers’ deposits grew by $29 million. We are appreciative of the trust our customers place in us. A significant development during 2013 was the opening of an office in Rochester, Minnesota. I spent 15 years of my career in the Rochester area and believe that it is an economic bedrock due to the strength of Mayo Clinic, which is based in the city. Because of our existing relationships in that market, we were able to hire four experienced and well-connected bankers, as well as attract community board members described as the “Who’s Who of Rochester.” During late 2013, we broke ground for a new office building in Coralville, Iowa. It will serve as our headquarters in eastern Iowa and signifies our belief in the strength of that market. We expect to occupy the building before the end of 2014. David D. Nelson Our focus in all markets continues to be serving our business customers. Our bankers are well trained and coached to seek those businesses that can benefit from a community bank like ours that makes providing the best in financial services to businesses its priority. We pride ourselves in offering a convenient branch network for our individual customers. In addition to traditional bank loans and deposits, we offer a full complement of mortgage loans and have an experienced and growing personal trust department. New business development is our priority. Serving our customers is our single focus. People occasionally ask, “What keeps you up at night?” Currently the two most troubling aspects of our business are increasing regulation and cyber threats. Although banks generally have been blamed in large part for the recent financial crisis, it seems that regulators and legislators alike have not adequately distinguished between community banks and large, complex money centers and investment banks. Though the regulatory burden placed on community banks can seem daunting and at times unfair, West Bank is committed to allocating the necessary resources to comply with all regulations in a timely and efficient manner. In terms of cyber threats, as customers increasingly rely on technology to conduct their banking business, criminals continue to search for new ways to steal. The bad guys are from all over the world. Cybercrime has no boundaries. A serious threat is to personal computers used in homes. Unfortunately, many personal users do not think about defending themselves from hackers. They do not invest the money to protect their home computers. We continue to combat cyber threats by educating our employees and customers, utilizing fraud detection software (and encouraging our customers to do the same) and working with industry experts. West Bank celebrated its 120th birthday during 2013. Not only have we served customers for 120 years, we determined we are the oldest company of any kind headquartered in West Des Moines, Iowa. We look forward to serving our communities for many years to come. We are optimistic as we look forward to 2014. The economy appears to be slowly improving in spite of the dysfunction in Washington, D.C. and the incessant flow of new regulations. We believe we operate in three of the best markets in the Midwest. Our employees stand ready to serve. Thank you for your support. David D. Nelson Chief Executive Officer and President Consolidated Condensed Statements of Stockholders’ Equity (dollars in thousands, except per share data) Years Ended December 31, 2013, 2012 and 2011 Preferred Stock Common Stock Additional Paid-in Capital Retained Earnings $34,508 - - 1,492 (36,000) - - - - - - - - - - - $3,000 - $34,387 - - - - - - 3,000 - - - - 3,000 - - - - - (700) - - 33,687 - - - 118 33,805 - - $ 76,188 15,268 - (1,492) - - (2,959) (895) 86,110 16,011 - (6,265 ) - 95,856 16,891 - - - - (6,995) - - - - (15,774) 378 - - Accumulated Other Comprehensive Income (Loss) $(2,647) - 3,301 - - - - - 654 - 1,272 - - 1,926 - (5,464) - - - Total $145,436 15,268 3,301 - (36,000) (700) (2,959) (895) 123,451 16,011 1,272 (6,265 ) 118 134,587 16,891 (5,464) (6,995) (15,774) 378 Balance, December 31, 2010 Net income Other comprehensive income, net of tax 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, net of tax Cash dividends declared, $0.36 per common share Stock-based compensation costs Balance, December 31, 2012 Net income Other comprehensive loss, net of tax Cash dividends declared, $0.42 per common share Repurchase and cancellation of common stock Stock-based compensation costs Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes Excess tax benefits from vesting of restricted stock units - - (14) - - (14) - - 16 - - 16 Balance, December 31, 2013 $ - $3,000 $18,411 $105,752 $(3,538) $123,625 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, 2013 and 2012, 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, 2013, and in our report dated March 6, 2014, 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, 2014 West Bancorporation, Inc. and Subsidiary | 2013 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, 2013, and an estimated 1,060 additional nonobjecting beneficial holders whose stock was held in street name by brokerage houses. Market and Dividend Information (1) 2013 4th quarter 3rd quarter 2nd quarter 1st quarter Total 2012 4th quarter 3rd quarter 2nd quarter 1st quarter Total High Low Dividends $ 16.64 $13.34 14.50 12.27 11.72 11.74 10.10 10.46 $ 12.29 $ 9.75 12.35 10.22 10.46 9.38 9.02 8.71 $ 0.11 0.11 0.10 0.10 $ 0.42 $ 0.10 0.10 0.08 0.08 $ 0.36 (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 website at www.sec.gov and through a link on the Company’s website, www.westbankstrong.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@ westbankstrong.com. Transfer Agent/Dividend Paying Agent ist Shareholder Services 433 S. Carlton Ave. Wheaton, Illinois 60187 800-757-5755 www.istshareholderservices.com Forward-Looking Statements Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our 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, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “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; competitive pressures; pricing pressures on loans and deposits; changes in credit and other risks posed by the Company’s loan and investment portfolios, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions or regulatory requirements; actions of bank and nonbank competitors; changes in local and national economic conditions; changes in regulatory requirements, limitations and costs; changes in customers’ acceptance of the Company’s products and services; and any other risks described in sections of this and other reports made by the Company. 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. West Bancorporation, Inc. and Subsidiary | 2013 Annual Report Consolidated Condensed Statements of Income (dollars in thousands, except per share data) 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 Short-term borrowings Subordinated notes Federal Home Loan Bank advances Long-term debt 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 Years Ended December 31, 2012 2011 2013 $44,992 $44,277 $46,640 5,173 2,457 119 52,741 3,413 89 711 2,657 188 7,058 45,683 (850 ) 46,533 2,923 1,787 997 1,275 646 - - - 875 8,503 4,240 1,954 191 50,662 4,535 114 751 4,064 - 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 6,941 174 715 4,087 - 11,917 41,402 550 40,852 3,244 1,453 792 1,454 884 637 (99 ) - 996 9,361 14,532 13,194 15,757 3,519 3,342 3,906 2,030 2,070 1,921 733 672 1,298 1,359 1,491 2,883 Other real estate owned expense Other expenses Total noninterest expense Income before income taxes 7,040 30,825 24,211 Income Taxes 7,320 16,891 Preferred stock dividends and accretion of discount - Net income Net income available to common stockholders $16,891 $16,011 $12,881 Earnings per Common Share Basic earnings per common share Diluted earnings per common share $ 1.02 $ 1.02 $ 0.92 $ 0.92 $ 0.74 $ 0.74 West Bancorporation, Inc. and Subsidiary | 2013 Annual Report 6,508 6,235 28,873 28,792 22,775 21,340 6,072 6,764 16,011 15,268 (2,387) - Consolidated Condensed Balance Sheets (dollars in thousands) 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, net 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 Federal Home Loan Bank advances, net of discount Long-term debt 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, 2013 and 2012 Common stock, no par value; authorized 50,000,000 shares; 15,976,204 and 17,403,882 shares issued and outstanding at December 31, 2013 and 2012, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total stockholders’ equity Total liabilities and stockholders’ equity West Bancorporation, Inc. and Subsidiary | 2013 Annual Report December 31, 2013 2012 $ 41,126 1,299 42,425 345,216 11,851 2,230 991,720 (13,791) 977,929 7,487 4,007 26,376 5,800 9,193 9,890 $ 1,442,404 $ 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 $ 332,230 233,613 451,855 83,653 62,491 1,163,842 16,622 20,619 95,392 15,935 6,369 1,318,779 $ 367,281 160,745 428,710 100,627 77,213 1,134,576 55,596 20,619 93,890 - 8,907 1,313,588 - - 3,000 18,411 105,752 (3,538) 123,625 3,000 33,805 95,856 1,926 134,587 $ 1,442,404 $ 1,448,175 Financial Highlights (dollars in thousands, except per share data) 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 2013 2012 2011 2010 2009 $1,442,404 357,067 991,720 2,915 5,800 1,163,842 123,625 $1,445,773 369,088 949,775 1,131,264 127,789 $1,448,175 304,103 927,401 7,256 8,304 1,134,576 134,587 $1,326,408 317,615 854,860 995,694 129,795 $ 45,683 (850) 8,503 30,825 $ 41,198 625 10,994 28,792 $ 1,269,524 294,497 838,959 10,693 10,967 957,373 123,451 $ 1,295,313 266,031 849,115 961,488 135,520 $ 41,402 550 9,361 28,873 $ 1,305,463 267,537 888,649 12,930 19,193 972,072 145,436 $ 1,558,461 301,124 960,227 1,218,997 141,079 $ 42,120 6,050 10,387 27,744 $ 1,575,054 351,269 1,020,710 26,317 25,350 1,246,617 133,059 $ 1,618,557 230,821 1,098,520 1,231,597 143,163 $ 41,094 24,500 8,904 37,905 24,211 22,775 21,340 18,713 (12,407) 16,891 16,011 15,268 13,383 (5,051) - 16,891 - 16,011 - 15,268 - 13,383 (9,566) (14,617) 16,891 16,011 12,881 11,099 (16,893) $ 1.02 1.02 0.42 7.74 15.82 13.22% 1.17% 7.69% 52.55% 3.48% 8.84% 1.39% 0.09% 0.29% 8.57% $ 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 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 % West Bancorporation, Inc. and Subsidiary | 2013 Annual Report Boards of Directors West Bancorporation, Inc. and Subsidiary Frank Berlin* Thomas Carlstrom* Joyce Chapman* Steven Gaer* Mike Gerdin* Douglas Gulling** Kaye Lozier* Sean McMurray* David Milligan* George Milligan* * Director of West Bancorporation, Inc. and West Bank ** Director of West Bank Central Iowa Community Board Chad Airhart Mary Cownie Jerry Deegan Darin Ferguson Ryan Flynn Kevin Grimm Greg LaMair Gene Loffredo Eastern Iowa Community Board David Nelson* James Noyce* Harlee Olafson** Robert Pulver* Lou Ann Sandburg* Kirk Tyler Victoria Veiock Mark Wackerbarth Nancy Williams Brad Winterbottom** Jason Worth* Jeff Yurgae Phillip Yurgae Jill Armstrong Kevin Digmann William Meardon Mark Mysnyk William Nusser, Jr. Charles Skaugstad, Jr. Southeastern Minnesota Community Board Nancy Brataas Gus Chafoulias Pat Deustch Greg Groves Norb Harrington Hal Henderson A. M. Sandy Keith Charlie Kuehn Dick Kuehn James McPeak, Sr. Dave Pederson Joe Powers Peter Schuller Ed Stanley Tim Weir Branch Locations Central Iowa Main Bank 1601 22nd St. West Des Moines Grand Branch 125 Grand Ave. West Des Moines City Center Branch 809 6th Ave. Des Moines East Branch 2440 E. Euclid Ave. Des Moines North Branch 3839 Merle Hay Rd. Des Moines South Branch 3920 SW 9th St. Des Moines Urbandale Branch 3255 99th St. Urbandale Waukee Branch 955 E. Hickman Rd. Waukee Eastern Iowa Downtown Branch 229 S. Dubuque St. Iowa City Lower Muscatine Branch 1910 Lower Muscatine Rd. Iowa City Coralville Branch 1150 5th St. Suite 170 Coralville Southeastern Minnesota Rochester Branch 3147 Superior Dr. NW Suite 100 Rochester
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