Building 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