West Bancorporation
Annual Report 2017

Plain-text annual report

2017 Annual Report FINANCIAL PERFORMANCE Return on average equity Return on average assets Net income Earnings per share Dividends per share Total loans Total deposits 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 7 A N N U A L R E P O R T Dear Stockholders: Your company achieved another record year for the third consecutive year. Several factors contributed to our 2017 results: we experienced 100 percent retention of our key employees; our credit quality remains strong; the percentage growth in our loans and deposits exceeded the growth in our expenses — and that growth came in all three of our markets (central Iowa, eastern Iowa and Rochester, Minnesota). As I stated last year, we don’t believe this string of record performance will last forever, but it is fun while it lasts. Along with our strong performance, our dividends are at record levels, and our stock price hit an all-time high during December 2017. This year’s record earnings were achieved in spite of having to recognize a one-time, noncash charge to write down the value of our deferred tax assets. This was necessary after the enactment of the new federal tax law in late December 2017. Many companies throughout the nation had to revalue their deferred tax assets and incur a charge. We believe the benefit of a lower effective income tax rate going forward will more than offset the deferred tax assets charge. We celebrate our 125th anniversary during 2018. We are the oldest business of any kind headquartered in West Des Moines, Iowa, and we are proud of this distinction. While we have expanded to markets beyond West Des Moines, we never forget our home. We begin 2018 with momentum, a dose of caution and an abundance of confidence. Our West Bank team is strong. We plan to improve personal performance by providing greater clarity to activity expectations and skills development. We expect to outperform other banks by building relationships and providing great service. Our vision is not about being a certain size by a certain time. It is to achieve and sustain a position of industry envy and admiration. We believe our recognition by others as one of America’s top performing banks indicates we are achieving our vision. We remind ourselves frequently that vision is a journey, not a destination. We believe 2018 will be better than 2017. We will continue to focus on relationship building, community leadership, enhancing our internal culture and all the activities that make West Bancorporation, Inc. special. Thank you for your support. Sincerely, David D. Nelson CEO and President, West Bancorporation, Inc.; Chairman and CEO, 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 7 A N N U A L R E P O R T Our mission is to build strong relationships, build strong communities and build upon our strong reputation to ensure our clients receive exceptional care, our communities receive outstanding support, and the loyalty of our employees and stockholders is rewarded. 2017 HIGHLIGHTS West Bank experienced an outstanding 2017, with record-breaking performance, national recognition from esteemed institutions, updated services and more. Moving into 2018, we are well positioned to deliver superior service to our customers and exceptional results for our stockholders. High performance • Continued performance in the upper quartile of our peer group • Success in the Rochester market upon opening our new facility • Growth in our deposits and loan portfolio while maintaining credit quality at a high level Modernized services and support • Website and online banking updates • Social media launch • Streamlined business and personal checking products Industry distinction and reputation • National attention from investment bank and research firm Raymond James & Associates • Recognition from American Banker Magazine and Bank Director Magazine Strong relationships and communities • Low employee turnover rate • Proven strong relationships evidenced by account retention • Investment in our communities through the West Bancorporation Foundation, Inc. • Employee volunteerism Our vision is to achieve and sustain a position of industry envy and admiration. 125 yEARS STRONG Since 1893 — the same year the City of West Des Moines was founded — West Bank has built a reputation for earning our customers’ trust, while continuing to be recognized as one of the best banks in America compared to our peers by industry experts. As we approach our 125th anniversary, we’re grateful for the strong relationships we’ve built with individuals, families and businesses who value our dedication to community banking. We’ve worked hard to develop customized banking solutions for customers, giving them the resources and freedom they need to prosper in the thriving communities we serve. With branches in Des Moines, Coralville, Iowa City, Waukee and Urbandale, Iowa, and Rochester, Minnesota, we’re extremely proud of the work we do — both at the bank and in the community. Our loan portfolio is growing, and we have strong credit quality. But by far, the biggest measurement of our success is our people, who are dedicated to making meaningful contributions to the places we live and work. We’ve achieved a lot in 125 years of banking, but some things have not changed: our commitment to treating every customer with dignity and respect, and our never-ending pursuit of improving the places we proudly call home. Together, we are 125 years strong. OuR FOuNDERS Nearly 125 years ago, Herman and Anna Raaz began issuing loans to families and small businesses in the now-historic Valley Junction. Originally named First Valley Junction Savings Bank, West Bank gave the little railroad town the financial boost it needed to grow into one of the original settlements in West Des Moines. Born in 1858 in Elmira, New York, Herman Raaz left home when he was 20 years old to pursue new opportunities in the burgeoning Midwest. Over the course of several years, he worked as a cigar maker in Jefferson, Iowa, clothing store manager in Rockwell City and Centerville and banker in Rippey. In 1883, he married Anna Craig, the daughter of Scottish immigrants who worked an unbroken plot of Mitchellville prairie into highly productive and valuable farmland. No stranger to hard work, the new Mrs. Raaz proved to be an exceptional partner both at home and in business. The two moved to Valley Junction and founded what is now known as West Bank in 1893. Mrs. Raaz’s aptitude for banking gained her an impressive and respected reputation across the Midwest. As the first female banker in Iowa, she was renowned for recognizing the faces and signatures of virtually every businessman and employee in Valley Junction. Legend has it she never cashed a check that was not genuine during her 15 years as cashier. In addition to managing the bank, Mr. Raaz was also very involved in other aspects of life in the small town. He helped organize the local independent school district, of which he served as treasurer for 14 years, was involved in several fraternal organizations and was well recognized for his philanthropic work. The story of how Mr. and Mrs. Raaz enriched their community has become ingrained in the West Bank identity, and we continue to conduct business according to the values they established 125 years ago. wEST bANk HISTORy AT A GLANCE 1968 1893 Herman and Anna Raaz establish First Valley Junction Savings Bank. David Miller becomes president. 1960 The bank moves to 125 Grand Avenue in West Des Moines. 1983 David Miller and local investors purchase the bank. 1938 First Valley Junction Savings Bank is renamed West Des Moines State Bank. 1961 David Miller joins the bank. 1972 The bank moves to 22nd Street in West Des Moines, its current headquarters. 2015 West Bank opens a beautiful new location in Coralville. 1993 2002 West Des Moines and West Des Moines State Bank celebrate their centennials. West Bancorporation, Inc. stock is listed on Nasdaq. 2016 West Bank builds a new, state-of- the-art facility in Rochester, MN. 1984 West Bancorporation, Inc. is formed. 2003 2014 West Des Moines State Bank is renamed West Bank. CEO Dave Nelson and CFO Doug Gulling ring the Nasdaq closing bell. West Bancorporation Foundation, Inc. is formed. West Bank purchases two Hawkeye State Bank branches in Iowa City. west bank branch openings 1960 Grand branch — West Des Moines 1999 Urbandale branch — Urbandale 1972 Main bank — West Des Moines 2003 Iowa City branch — Iowa City 1979 City Center branch — Des Moines 2009 Waukee branch — Waukee 1990 East branch — Des Moines 2015 Coralville branch — Coralville 1993 South branch — Des Moines 2016 Rochester branch — Rochester 1998 North branch — Des Moines OPPORTuNITy AND GROwTH For West Bank, the second half of the 20th century was ushered in by David Miller, who joined the bank in 1961 and was named president in 1968. Mr. Miller was more than the brains of the operation — he was the heart and soul, the one who defined our culture as welcoming, fair and down-to-earth. He always credited his employees with the bank’s success, noting their dedication and friendliness. Under Mr. Miller’s leadership, the bank saw a 33 percent increase in assets and 50 percent increase in loans within a few years. He pushed for a new facility that could accommodate our rapid success. Built in 1972 on 22nd Street in West Des Moines, the landmark building — which is still the West Bank headquarters — features a shining exterior of anodized bronzed aluminum. True to the 1970s, the original interior was decorated with electric blue and magenta office furniture, thick gold carpeting, silver columns and smoked glass. Mr. Miller and local investors purchased the bank in 1983, and formed West Bancorporation, Inc. in 1984. Over the next several years, West Bank opened multiple branches in Des Moines and Urbandale. We rang in the new millennium with a state-of-the-art website and online banking capabilities. West Bancorporation, Inc. stock was listed on Nasdaq shortly thereafter. The West Bancorporation Foundation, Inc. was founded in 2003 and has awarded more than $3 million to nonprofits to date. We rolled out our Mobile Banking app in 2014 to accommodate our clients’ growing needs. That same year, CEO Dave Nelson and CFO Doug Gulling rang the Nasdaq closing bell. We recently opened beautiful new facilities in Coralville, Iowa, and Rochester, Minnesota, to better serve our clients. In 1960, West Bank had $3.4 million in assets and employed five people. By 1977, it had $62.9 million in assets, and by 1986, it employed 85 people. We currently have $2.1 billion in assets and employ more than 170 people at 11 branches. A lot has changed for West Bank over the years, but our dedication to our clients, employees and investors will always remain the same. Reprinted with permission of the Business Record 125 yEARS AND bEyOND West Bank is still going strong, with locations now in the Des Moines metro area, Iowa City and Coralville, Iowa, and Rochester, Minnesota. We continue performing in the upper quartile of our peer group, and growing our loan portfolio and deposits while maintaining credit quality at a high level. Our employees place a high priority on community involvement, giving their time and talents to a long list of civic and neighborhood projects. We also enjoy national recognition from esteemed institutions such as investment bank and research firm Raymond James & Associates, as well as respected publications that include American Banker Magazine and Bank Director Magazine. But our greatest source of pride has been cultivating long-lasting relationships with the people we serve. We’re excited for what the future holds, and we’re poised to meet the needs of our customers well into the future. Together, we are 125 years strong. 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; EVP and 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 Joyce Chapman* Retired, West Bank Executive Steven Gaer* R & R Realty Group; Mayor, West Des Moines Mike Gerdin* Heartland Express, Inc. kaye Lozier* Lozier Consulting Sean McMurray* Businessolver, Inc. George Milligan* The Graham Group, Inc. Jim Noyce* Retired bob Pulver* All-State Industries, Inc. Lou Ann Sandburg* Retired Steven T. Schuler* Retired 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 7 A N N U A L R E P O R T CENTRAL IOwA COMMuNITy bOARD* Jerry Deegan Retired Darin Ferguson Ferguson Commercial Real Estate Services Ryan Flynn, CPA Flynn + Sweeney, LLC kevin Grimm Wexford & James, LLC Greg LaMair LMC Insurance and Risk Management Gene Loffredo Loffredo Fresh Produce Co., Inc. Dave Moench Electrical Engineering & Equipment Company Austin Palmer The Palmer Group Victoria Veiock Wicker Works, LTD Mark wackerbarth Denman & Company Nancy williams American Land and Redevelopment, Corp. Jeff yurgae Mueller-Yurgae Associates, Inc. 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 our business 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 7 A N N U A L R E P O R T EASTERN IOwA COMMuNITy bOARD* Jesse Allen Allen Homes, Inc. Rodney Anderson Pancheros Mexican Grill Jill Armstrong Skogman Realty David barker Barker Apartments kevin Digmann Hodge Construction Mark Mysnyk Steindler Orthopedic Clinic, PLC Ravi Patel Hawkeye Hotels Luke Recker Stryker Instruments Chuck Skaugstad The Mansion Leighton Smith BerganKDV ROCHESTER COMMuNITy bOARD* Gus Chafoulias Titan Development & Investments Patrick Deutsch Pace International Greg Groves Universal Marine & RV, Inc. Hal Henderson HGA Architects and Engineers Charlie kuehn Kuehn Motors Dick kuehn Kuehn Motors 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 7 A N N U A L R E P O R T FINANCIAL HIGHLIGHTS As of and for the years ended December 31, 2017, 2016 and 2015 (dollars in thousands, except per share data) Results of operations Net interest income Provision for loan losses Noninterest income Noninterest expense Income before income taxes Net income Per common share Cash dividends Basic earnings Diluted earnings Closing stock price Book value year-end balances Assets Investment securities Loans Nonperforming loans Other real estate owned Deposits Stockholders’ equity Ratios Return on average assets Return on average equity Texas ratio (1) Efficiency ratio (1) (2) Dividend payout ratio Dividend yield Net interest margin (2) Allowance for loan losses as % of loans Net (charge-offs) recoveries as % of average loans Nonperforming loans as % of loans Tangible common equity to tangible assets 2017 2016 2015 $ 60,057 $ 57,118 $ 54,154 - 8,648 32,267 36,438 23,070 1,000 7,982 31,148 32,952 23,016 850 8,203 30,068 31,439 21,742 $ 0.71 $ 0.67 $ 0.62 1.42 1.41 25.15 10.98 1.43 1.42 24.70 10.25 $2,114,377 $1,854,204 498,920 1,510,500 622 - 1,810,813 178,098 1.18% 13.29% 0.32% 45.39% 49.84% 2.82% 3.37% 1.09% 0.02% 0.04% 8.42% 319,794 1,399,870 1,022 - 1,546,605 165,376 1.27% 14.35% 0.56% 46.03% 46.92% 2.71% 3.49% 1.15% 0.01% 0.07% 8.92% 1.35 1.35 19.75 9.49 $1,748,396 384,420 1,246,688 1,461 - 1,440,729 152,377 1.30% 14.88% 0.87% 46.30% 45.77% 3.14% 3.59% 1.20% 0.04% 0.12% 8.71% (1) A lower ratio is better. (2) As presented, this is a non-GAAP measure – see “Non-GAAP Financial Measures” for additional details. 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 7 A N N U A L R E P O R T CONSOLIDATED bALANCE SHEETS December 31, 2017 and 2016 (dollars in thousands, except per share data) 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 $45,890 and $47,789 at December 31, 2017 and 2016, respectively) Federal Home Loan Bank stock, at cost Loans Allowance for loan losses Loans, net Premises and equipment, net Accrued interest receivable Bank-owned life insurance Deferred tax assets, net Other assets Total assets Liabilities and stockholders’ equity Liabilities Deposits Noninterest-bearing demand Interest-bearing demand Savings Time of $250 or more Other time Total deposits Federal funds purchased Subordinated notes, net Federal Home Loan Bank advances, net Long-term debt, net 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, 2017 and 2016 Common stock, no par value; authorized 50,000,000 shares; 16,215,672 and 16,137,999 shares issued and outstanding at December 31, 2017 and 2016, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders’ equity Total liabilities and stockholders’ equity 2017 2016 $ 34,952 $ 40,943 12,997 47,949 444,219 45,527 9,174 1,510,500 (16,430) 1,494,070 23,022 7,344 33,618 4,645 4,809 35,893 76,836 260,637 48,386 10,771 1,399,870 (16,112) 1,383,758 23,314 5,321 33,111 6,957 5,113 $2,114,377 $ 1,854,204 $ 395,888 $ 479,311 395,052 850,216 16,965 152,692 282,592 668,688 10,446 105,568 1,810,813 1,546,605 545 20,412 76,382 22,917 5,210 9,690 20,398 99,886 5,126 7,123 1,936,279 1,688,828 - - 3,000 23,463 153,527 (1,892) 178,098 3,000 21,462 141,956 (1,042) 165,376 $2,114,377 $ 1,854,204 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 7 A N N U A L R E P O R T CONSOLIDATED STATEMENTS OF INCOME Years ended December 31, 2017, 2016 and 2015 (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 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 Increase in cash value of bank-owned life insurance Gain from bank-owned life insurance Realized investment securities gains, net Other income Total noninterest income Noninterest expense Salaries and employee benefits Occupancy Data processing FDIC insurance Professional fees Director fees Other expenses Total noninterest expense Income before income taxes Income taxes (1) Net income Earnings per common share: Basic earnings per common share Diluted earnings per common share 2017 2016 2015 $63,242 $57,419 $52,556 5,501 3,960 331 73,034 7,622 99 901 3,836 519 12,977 60,057 - 60,057 2,632 1,754 1,705 652 307 326 1,272 8,648 17,633 4,406 2,677 677 1,075 950 4,849 32,267 36,438 13,368 $23,070 $ 1.42 $ 1.41 4,201 3,266 108 64,994 3,391 47 728 3,565 145 7,876 57,118 1,000 56,118 2,461 1,825 1,310 647 443 66 1,230 7,982 16,731 4,033 2,510 937 774 888 5,275 31,148 32,952 9,936 4,363 3,147 81 60,147 2,185 46 705 2,825 232 5,993 54,154 850 53,304 2,609 1,830 1,286 727 - 47 1,704 8,203 16,065 4,105 2,329 839 748 881 5,101 30,068 31,439 9,697 $23,016 $21,742 $ 1.43 $ 1.42 $ 1.35 $ 1.35 (1) Income tax expense for the year ended December 31, 2017 included a one-time increase of $2,340 due to the revaluation of net deferred tax assets related to the enactment of federal tax legislation on December 22, 2017. 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 7 A N N U A L R E P O R T REPORT OF INDEPENDENT REGISTERED PubLIC ACCOuNTING FIRM To the Stockholders and the Board of Directors 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, 2017 and 2016, and the related consolidated statements of income, comprehensive income (not presented herein), stockholders’ equity (not presented herein) and cash flows (not presented herein) for each of the three years in the period ended December 31, 2017; and in our report, dated March 1, 2018, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed financial statements is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. Des Moines, Iowa | March 1, 2018 NON-GAAP FINANCIAL MEASuRES As of and for the years ended December 31, 2017, 2016 and 2015 (dollars in thousands) Non-GAAP financial measures include the Company’s presentation of net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an FTE basis, excluding certain noninterest income and expenses. The following table reconciles the non-GAAP financial measures to GAAP. Reconciliation of net interest income and net interest margin on an FTE basis to GAAP: Net interest income (GAAP) Tax-equivalent adjustment (1) Net interest income on an FTE basis (non-GAAP) Average interest-earning assets Net interest margin on an FTE basis (non-GAAP) Reconciliation of efficiency ratio on an FTE basis to GAAP: Net interest income on an FTE basis (non-GAAP) Noninterest income Less: realized investment securities gains, net Plus: losses on disposal of premises and equipment, net Adjusted income Noninterest expense Less: Other real estate owned expenses Adjusted expense 2017 2016 2015 $ 60,057 $ 57,118 $ 54,154 2,677 $ 62,734 $ 1,863,791 3.37% 2,623 $ 59,741 $ 1,711,612 3.49% 2,604 $ 56,758 $ 1,583,059 3.59% $ 62,734 $ 59,741 $ 56,758 8,648 (326) 25 $ 71,081 $ 32,267 - 7,982 (66) 4 $ 67,661 $ 31,148 - 8,203 (47) 6 $ 64,920 $ 30,068 (10) $ 32,267 $ 31,148 $ 30,058 Efficiency ratio on an adjusted FTE basis (non-GAAP) (2) 45.39% 46.03% 46.30% (1) Computed on a tax-equivalent basis using an incremental federal income tax rate of 35 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. (2) 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 financial results, as it enhances the comparability of income and expenses from taxable and nontaxable sources. 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, westbankstrong.com, under Investor Relations — SEC Filings — Documents. A copy of the annual report can also be obtained upon request to Alice Jensen at 515-222-2300 or ajensen@westbankstrong.com. 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 7 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 185 common stockholders of record on December 31, 2017, and an estimated 2,600 additional beneficial holders whose stock was held in street name by brokerages or fiduciaries. Market and dividend information (1) High Low Close Dividends 2017 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Total 2016 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Total $ 28.00 24.75 24.60 24.90 $ 23.40 20.90 21.40 20.60 $ 25.15 24.40 23.65 22.95 $ 25.05 20.52 19.65 19.58 $ 18.75 17.65 17.33 16.04 $ 24.70 19.60 18.59 18.23 $ 0.18 0.18 0.18 0.17 $ 0.71 $ 0.17 0.17 0.17 0.16 $ 0.67 (1) The prices shown are the high, low and closing sale prices for the Company’s common stock. The market quotations, reported by Nasdaq, do not include retail markup, markdown or commissions. 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 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,” “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, national and international economic conditions; changes in legal and regulatory requirements, limitations and costs; changes in customers’ acceptance of the Company’s products and services; cyber-attacks; unexpected outcomes of existing or new litigation involving the Company; and any other risks described in the “Risk Factors” sections of other 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. 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 7 A N N U A L R E P O R T Branch Locations CENTRAL IOwA Main Bank 1601 22nd St. West Des Moines City Center Branch Drive-up only express 809 6th Ave. Des Moines North Branch Drive-up only express 3839 Merle Hay Rd. Des Moines Urbandale Branch Drive-up only express 3255 99th St. Urbandale Grand Branch 125 Grand Ave. West Des Moines 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 2188 Superior Dr. NW Rochester EASTERN IOwA Coralville Branch 401 10th Ave. Coralville Iowa City Branch 1910 Lower Muscatine Rd. Iowa City ONLINE westbankstrong.com @westbankstrong 2017 Annual Report © West Bancorporation, Inc. and Subsidiary 

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