West Bancorporation
Annual Report 2014

Plain-text annual report

2014 Annual Report 2014 Annual Report © West Bancorporation, Inc. and Subsidiary Dear Stockholders: We are proud of our accomplishments in 2014. As a community bank, our most important mission is serving our customers. As a result of serving our exisiting customers and developing new customer relationships, the loan portfolio of West Bank grew by $192 million, or 19 percent in 2014. The deposits at West Bank grew by $107 million, or nine percent. This growth only increased expenses by four percent. Net income for our Company for 2014 was $20 million. That was just a few dollars short of our all-time high. Our loan portfolio is at an all-time high. Our nonperforming assets are almost nonexistent. Things are going well at our Company. Our success was validated twice this year by being named one of the best community banks in the country by two different investment banking firms. It is fun to receive this honor in recognition of our hard work. We occupied our new eastern Iowa main office in January 2015. We are in the process of planning our new Rochester, Minnesota, office building and expect to occupy it during 2016. As a community bank, our success is driven by our people. Every employee knows the most important things they need to do every day to contribute to our success. It happens in all three of our markets. One of our Rochester community board members, Gus Chafoulias, wrote a nice note to the Rochester staff at the end of 2014. In part it read, “I am so proud of the way you are running the Bank. West Bank is the best thing to happen in Rochester – since Mayo.” Gus also happened to be voted the business person of the year in Rochester, so he speaks with credibility. We thank Gus for expressing those thoughts. We know the same can be said of our entire staff. As we move into 2015, here is what everyone will be doing on purpose to make us special: • Strengthening existing relationships • Developing new relationships • Making good decisions • Working hard • Having an on-purpose daily personal routine We believe these actions will create the following outcomes: • Providing great customer service • Achieving growth • Maintaining strong credit quality • Generating more revenue • Succeeding while having fun We believe we are in a position to have continued success in 2015. Thank you for your support. Sincerely, David D. Nelson CEO and President, West Bancorporation, Inc.; Chairman and CEO, West Bank Towering Success In recognition of industry success, West Bank CEO Dave Nelson and CFO Doug Gulling rang the Nasdaq Closing Bell on June 16, 2014, on behalf of West Bancorporation, Inc. The officers and directors of WTBA attended the ceremony in New York City. “Ringing the Closing Bell at Nasdaq was an honor; it highlights the extraordinary success we’ve had because of the loyalty of our employees, customers and stockholders,” Nelson said. During the momentous occasion, West Bancorporation, Inc. was displayed on the seven-story Nasdaq Tower in Times Square. West Bancorporation, Inc. has been publicly listed on the Nasdaq stock exchange since 2002. W E S T B A N C O R P O R A T I O N , I N C . A N D S U B S I D I A R Y | 2 0 1 4 A N N U A L R E P O R T W E S T B A N C O R P O R A T I O N , I N C . A N D S U B S I D I A R Y | 2 0 1 4 A N N U A L R E P O R T BOARD OF DIRECTORS David Milligan* Chairman, West Bancorporation Dave Nelson* CEO and President, West Bancorporation; Chairman and CEO, West Bank Douglas Gulling** EVP, Treasurer and Chief Financial Officer, West Bancorporation; Chief Financial Officer, West Bank Brad Winterbottom** EVP, West Bancorporation; President, West Bank Harlee Olafson** EVP and Chief Risk Officer, West Bancorporation; EVP and Chief Risk Officer, West Bank Frank Berlin* Frank W. Berlin & Associates Thomas Carlstom* Retired, Iowa Clinic Joyce Chapman* Retired, West Bank Executive Steven Gaer* R & R Realty Group; Mayor, West Des Moines Mike Gerdin* Heartland Express, Inc. Kaye Lozier* Community Foundation of Greater Des Moines Sean McMurray* AgSolver, Inc. George Milligan* The Graham Group, Inc. Jim Noyce* Retired Bob Pulver* All-State Industries, Inc. Lou Ann Sandburg* Retired, FBL Financial Group, Inc. Jason Worth* Gilcrest/Jewett Lumber Company * Director of West Bancorporation, Inc. and West Bank ** Director of West Bank W E S T B A N C O R P O R A T I O N , I N C . A N D S U B S I D I A R Y | 2 0 1 4 A N N U A L R E P O R T CENTRAL IOWA COMMUNITY BOARD* Chad Airhart Dallas County Recorder Jerry Deegan Dowling Catholic High School Darin Ferguson Ferguson Commercial Real Estate Services Ryan Flynn, CPA Flynn + Sweeney, LLC Kevin Grimm Wexford & James, LLC Greg LaMair LaMair-Mulock- Condon Co. Gene Loffredo Loffredo Fresh Produce Co., Inc. Austin Palmer The Palmer Group Kirk Tyler Atlantic Bottling Company Victoria Veiock Wicker Works, LTD Mark Wackerbarth Denman & Company Nancy Williams AIB College of Business West Bank invests a great deal in relationships because we believe they’re the cornerstone of our success — it’s one of the reasons we form a community board wherever we do business. We turn to these leaders for their insight, perspective and collective wisdom. We know it’s impossible to be a community bank without local connections and support, so we’re grateful for their assistance in helping us achieve Jeff Yurgae Mueller-Yurgae our business, government and community relations goals. * All three of our community boards are non-voting advisory boards with knowledge of the communities we serve. W E S T B A N C O R P O R A T I O N , I N C . A N D S U B S I D I A R Y | 2 0 1 4 A N N U A L R E P O R T EASTERN IOWA COMMUNITY BOARD* Jill Armstrong Skogman Realty Kevin Digmann Hodge Construction Andy Meardon Lifetime Financial Group, LLC Mark Mysnyk Steindler Orthopedic Clinic, PLC Bill Nusser Hands Jewelers Chuck Skaugstad The Mansion ROCHESTER COMMUNITY BOARD* Nancy Brataas In Memorium 1928 – 2014 Gus Chafoulias Titan Development & Investments Patrick Deutsch Pace International Greg Groves Universal Marine & RV, Inc. Norb Harrington Retired Regional Banking President Hal Henderson HGA Architects and Engineers A. M. Sandy Keith Dunlap & Seeger, P.A. Charlie Kuehn Kuehn Motors Dick Kuehn Kuehn Motors James McPeak, Sr. Babcock Genetics, Inc. David Pederson Dunlap & Seeger, P.A. Joe Powers Powers Ventures Peter Schuller A.B. Systems, Inc. Ed Stanley Merit Building Enclosure Systems Tim Weir Olmsted Medical Center * All three of our community boards are non-voting advisory boards with knowledge of the communities we serve. W E S T B A N C O R P O R A T I O N , I N C . A N D S U B S I D I A R Y | 2 0 1 4 A N N U A L R E P O R T 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 before income taxes Net income Net income available to common stockholders Per Common Share Cash dividends Basic earnings Diluted earnings Closing stock price Book value Ratios Return on average equity Return on average assets Texas ratio Efficiency ratio Dividend payout ratio Dividend yield Net interest margin Average equity to 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 2014 2013 2012 2011 2010 $     1,615,833 339,208 1,184,045 1,937 2,235 1,270,462 140,175 $          1,442,404 357,067 991,720 2,915 5,800 1,163,842 123,625 $        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 $          $     1,512,506 347,351 1,063,528 1,222,836 131,924 $          1,445,773 369,088 949,775 1,131,264 127,789 $        1,326,408 317,615 854,860 995,694 129,795 $        1,295,313 266,031 849,115 961,488 135,520 $          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 $           49,145 750 10,296 32,002 26,689 20,040 20,040 $                0.49 1.25 1.25 17.02 8.75 15.19% 1.32% 2.71% 49.93% 39.13% 2.88% 3.59% 8.72% 1.15% 0.09% 0.16% 8.68% $                45,683 (850) 8,494 30,816 24,211 16,891 16,891 $               41,198 625 10,869 28,667 22,775 16,011 16,011 $             41,402 550 9,349 28,861 21,340 15,268 12,881 $                42,120 6,050 10,383 27,740 18,713 13,383 11,099 $                    0.42 1.02 1.02 15.82 7.74 $                    0.36 0.92 0.92 10.78 7.73 $                  0.17 0.74 0.74 9.58 7.09 $                     0.05 0.64 0.64 7.79 6.37 13.22% 1.17% 7.69% 52.55% 41.41% 2.65% 3.48% 8.84% 1.39% 0.09% 0.29% 8.57% 12.34% 1.21% 11.25% 50.83% 39.13% 3.34% 3.42% 9.79% 1.67% 0.22% 0.78% 9.29% 11.27% 1.18% 16.33% 49.27% 22.97% 1.77% 3.58% 10.46% 2.00% 0.34% 1.27% 9.72% 9.49% 0.86% 25.76% 47.28% 7.84% 0.64% 3.04% 9.05% 2.15% 0.63% 1.46% 8.49% W E S T B A N C O R P O R A T I O N , I N C . A N D S U B S I D I A R Y | 2 0 1 4 A N N U A L R E P O R T                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               CONSOLIDATED BALANCE SHEETS (dollars in thousands) Assets Cash and due from banks Federal funds sold  Cash and cash equivalents Investment securities available for sale, at fair value Investment securities held to maturity, at amortized cost (fair value of $51,501   at December 31, 2014, and $0 at December 31, 2013) 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 $250,000 or more Other time Total deposits Federal funds purchased Short‐term borrowings 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, 2014 and 2013 Common stock, no par value; authorized 50,000,000 shares; 16,018,734 and 15,976,204    shares issued and outstanding at December 31, 2014 and 2013, respectively Additional paid‐in capital Retained earnings Accumulated other comprehensive income (loss) Total stockholders' equity Total liabilities and stockholders' equity December 31, 2014 2013 $              27,936 11,845 39,781 272,790 $             41,126 1,299 42,425 345,216 51,343 15,075 826 1,184,045 (13,607) 1,170,438 9,988 4,425 32,107 2,235 6,333 10,492 1,615,833 $         ‐ 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 $        $            362,827 241,722 527,277 18,985 119,651 1,270,462 2,975 66,000 20,619 96,888 12,676 6,038 1,475,658 $           332,230 233,613 451,855 30,457 115,687 1,163,842 16,622 ‐ 20,619 95,392 15,935 6,369 1,318,779 ‐ ‐ 3,000 18,971 117,950 254 140,175 1,615,833 $         3,000 18,411 105,752 (3,538) 123,625 1,442,404 $        W E S T B A N C O R P O R A T I O N , I N C . A N D S U B S I D I A R Y | 2 0 1 4 A N N U A L R E P O R T                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data) Interest Income Loans, including fees Investment securities: Taxable  Tax‐exempt  Federal funds sold Total interest income Interest Expense Deposits Federal funds purchased and securities sold under agreements to repurchase 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 Gain (loss) on disposition of premises and equipment Investment securities impairment loss 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 Professional fees Directors fees Miscellaneous losses Other expenses Total noninterest expense Income before income taxes Income Taxes Net income Earnings per Common Share Basic earnings per common share Diluted earnings per common share Years Ended December 31 2013 2014 2012 $         47,440 $               44,992 $         44,277 4,938 2,878 45 55,301 2,426 11 40 754 2,628 297 6,156 49,145 750 48,395 2,790 1,764 1,327 1,394 731 ‐ 1,069 ‐ 223 998 10,296 16,086 4,165 2,241 757 1,865 944 714 329 4,901 32,002 26,689 6,649 20,040 $         5,173 2,457 119 52,741 3,413 85 4 711 2,657 188 7,058 45,683 (850) 46,533 2,923 1,787 997 1,275 646 ‐ (9) ‐ ‐ 875 8,494 15,757 3,906 2,030 733 1,359 1,200 584 736 4,511 30,816 24,211 7,320 16,891 $               $         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 (125) (203) 246 857 10,869 14,532 3,519 2,070 672 1,491 1,064 448 195 4,676 28,667 22,775 6,764 16,011 $             $              1.25 1.25 $                   $                   1.02 1.02 $              $               0.92 0.92 W E S T B A N C O R P O R A T I O N , I N C . A N D S U B S I D I A R Y | 2 0 1 4 A N N U A L R E P O R T                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (dollars in thousands, except per share data) Years Ended December 31, 2014, 2013 and 2012 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 Balance, December 31, 2013 Net Income Other comprehensive income, net of tax Cash dividends declared, $0.49 per common share  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 Balance, December 31, 2014 $                     ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Preferred Stock Common Stock Additional Paid‐in Capital Retained Earnings $              33,687 ‐ ‐ ‐ 118 $              86,110 16,011 ‐ (6,265) ‐ Accumulated  Other Comprehensive Income (Loss) $                    654 ‐ 1,272 ‐ ‐ Total $            123,451 16,011 1,272 (6,265) 118 $                3,000 ‐ ‐ ‐ ‐ 3,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3,000 ‐ ‐ ‐ ‐ ‐ ‐ 33,805 ‐ ‐ ‐ (15,774) 378 (14) 16 18,411 ‐ ‐ ‐ 633 (189) 116 95,856 16,891 ‐ (6,995) ‐ ‐ ‐ ‐ 105,752 20,040 ‐ (7,842) ‐ ‐ ‐ 1,926 ‐ (5,464) ‐ ‐ ‐ ‐ ‐ (3,538) ‐ 3,792 ‐ ‐ ‐ ‐ 134,587 16,891 (5,464) (6,995) (15,774) 378 (14) 16 123,625 20,040 3,792 (7,842) 633 (189) 116 $                     ‐ $                3,000 $              18,971 $            117,950 $                    254 $            140,175 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, 2014 and 2013, 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, 2014, and in our report dated March 5, 2015, 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 5, 2015 W E S T B A N C O R P O R A T I O N , I N C . A N D S U B S I D I A R Y | 2 0 1 4 A N N U A L R E P O R T                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 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 208 common stockholders of record on December 31, 2014, and an estimated 1,260 additional nonobjecting beneficial holders whose stock was held in street name by brokerage houses. Market and Dividend Information (1) High Low Close Dividends 2014 2013 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Total 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Total $            17.05 15.68 16.45 15.98 $             14.00 14.01 13.53 13.64 $              17.02 14.13 15.23 15.19 $                $                0.14 0.12 0.12 0.11 0.49 $            16.64 14.50 12.27 11.72 $             13.34 11.74 10.10 10.46 $              15.82 13.80 11.75 11.10 $                $                0.11 0.11 0.10 0.10 0.42 (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 http://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 American Stock Transfer & Trust Company, LLC 6201 15th Avenue, Brooklyn, New York 11219 718-921-8200 | www.amstock.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. W E S T B A N C O R P O R A T I O N , I N C . A N D S U B S I D I A R Y | 2 0 1 4 A N N U A L R E P O R T                                                                                                                                                                                                                                                                                                                                                                         Branch Locations CENTRAL IOWA Main Bank 1601 22nd St. West Des Moines Grand Branch 125 Grand Ave. West Des Moines EASTERN IOWA Coralville Branch 401 10th Ave. Coralville Lower Muscatine Branch 1910 Lower Muscatine Rd. Iowa City City Center Branch 809 6th Ave. Des Moines North Branch 3839 Merle Hay Rd. Des Moines Urbandale Branch 3255 99th St. Urbandale East Branch 2440 E Euclid Ave. Des Moines South Branch 3920 SW 9th St. Des Moines Waukee Branch 955 E Hickman Rd. Waukee SOUTHEASTERN MINNESOTA Rochester Branch 3147 Superior Dr. NW Suite 100 Rochester 2014 Annual Report © West Bancorporation, Inc. and Subsidiary 

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