West Bancorporation
Annual Report 2019

Plain-text annual report

E X P A N D I N G O U R C O M M U N I T Y 2019 Annual Report 2 0 1 9 F I N A N C I A L P E R F O R M A N C E THOUSANDS $ 2,200,000 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 THOUSANDS $ 2,200,000 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 Total loans Net income Return on average equity THOUSANDS $ 30,000 28,000 26,000 24,000 22,000 20,000 18,000 16,000 18,00% 16,00% 14,00% 12,00% 10,00% 8,00% 6,00% 4.00% 2,00% 0.00% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Total DEPOSITS Earnings per share Return on average assets $ 2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 1,40% 1,20% 1,00% 0,80% 0,60% 0.40% 0,20% 0.00% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Dividends per share $ 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 2015 2016 2017 2018 2019 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 9 A N N U A L R E P O R T Dear Stockholders: I begin this annual letter to you with great pride about the achievements of our company which are the result of our employees’ dedication to help our customers and communities. Although our vision is not about being a certain size by a certain time, during the past seven years we have doubled the size of our loan portfolio and grown over $1 billion in assets. Our vision is to achieve and sustain a position of envy and admiration. We want to be the best, not the biggest. We have been helping business owners grow their businesses for more than 125 years. Small- and medium-sized businesses are the backbone of our economy and the key drivers of community growth. We embrace our role as an advocate for our communities’ success. Community banking thrives in vibrant communities. During 2019, we set the course for the future of West Bancorporation, Inc. with our strategic expansion in Minnesota. This initiative was designed to sustain the rich traditions of the Company, while enhancing the future trajectory of shareholder returns. West Bank remains a business-focused community bank. Our culture is based upon building strong relationships. We compete with our flexibility and the expertise of our local management, board of directors and community advisors. We have a solid team of experienced and dedicated employees and a committed and well-rounded board. We have an enviable client base in economically strong communities. We are committed to empowering passionate team members who make a difference in their workplace and community. Six years ago we brought West Bank to Rochester, Minnesota, but not via a traditional acquisition. Existing strong relationships with highly talented local bankers and community leaders allowed West Bank to enter the market without paying a premium for an existing book of business. Today, we believe West Bank is the premier business bank of choice in Rochester, Minnesota. During March 2019, supported with the same advantage package we had when we expanded to Rochester, we launched our start-up operations in St. Cloud, Mankato and Owatonna, Minnesota. Despite the 2019 earnings drag of our investment in starting offices in three new markets, West Bank still achieved an all-time record year for earnings. Our objective for our three new communities is to achieve a similar outcome as we have experienced in Rochester. As of December 31, 2019, after nine months of operations for the new offices, we achieved profitable operations with a positive run rate on our expansion. We expect that this will represent a significant year over year earnings swing during 2020. The successful execution of our business model is reflected in our consistently strong financial performance. Our performance metrics continue to be among the best in our industry with a robust return on equity and exceptional asset quality. We look to 2020 with great energy and excitement for our continued service to our customers and communities. Thank you for your support. It is fun to be part of something special and to look forward to the future with a smile. 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 9 A N N U A L R E P O R T 1 2 0 1 9 H I G H L I G H T S Growing profitability • We reported annual net income of $28.7 million, the highest annual net income ever recorded by our company. • Investment banking and research firm Raymond James ranked West Bank at #19 in its list of top performing banks in the nation, based on 2018 performance. Enhancing our footprint • On March 4, 2019, we announced a growth strategy in three new Minnesota markets - Owatonna, Mankato and St. Cloud. • Several locations celebrated important anniversaries - our Waukee branch celebrated 10 years of service, and both the South and Urbandale branches celebrated 20 years of service. • New state-of-the-art West Bank Video Teller Machines are now available in Iowa at the main West Des Moines branch and in Minnesota at the Owatonna, Mankato and St. Cloud branches. Inspiring pride in the workplace • For the 6th consecutive year, West Bank was named a Top Workplace in Iowa by the Des Moines Register. • West Bank employees and the West Bancorporation Foundation continue to give back to our communities by supporting more than 100 local nonprofits during the year. 2 O u r M i s s i o n 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. O u r V i s i o n Our vision is to achieve and sustain a position of industry envy and admiration. 3 E X P A N D I N G O U R C O M M U N I T Y For more than 125 years, West Bank has placed community at the center of banking. From our humble beginnings in 1893, West Bank was among the first in West Des Moines to issue loans to businesses and families from our small office in Valley Junction. It didn’t take long for West Bank to become known as a trusted financial advisor, business champion and community supporter. Continuing to Cultivate In the years since, we’ve added many communities to our growing business family, building more locations in West Des Moines, throughout the Des Moines metro area, east to Coralville and north into Rochester, Minnesota. Through all the growth, one thing has remained constant – our focus on the communities we serve. In 2019, we added three more communities to our northern footprint – Mankato, Owatonna and St. Cloud, Minnesota. Just like all our West Bank locations, we entered each new market the same way we originally formed our first bank more than 125 years ago – by cultivating valuable relationships. Fostering Connections to Community Developing a sustainable business is very much about who you know – and what they know about you. We’re proud that our expansion into Minnesota is attributed to long-standing business relationships based upon mutual respect and enduring connections. Before returning to Iowa to join West Bank in 2010, Dave Nelson, current West Bank Chief Executive Officer, and Harlee Olafson, West Bank Chief Risk Officer, were both residents of Minnesota for more than 20 years, having established life-long friendships and business connections. As West Bank pioneered its first Minnesota location in 2013, Nelson and Olafson relied on former banking colleagues and familiar business networks to reconnect to the Rochester, Minnesota banking market. Starting with a simple loan production office in a retail strip mall and three employees, West Bank now occupies a beautiful, state-of-the-art 15,000 square-foot building in Rochester with six team members and a growing portfolio of business. 4 5 D E M O N S T R A T I N G C O M M I T M E N T T H R O U G H C O M M U N I T Y B O A R D S The single most contributing factor to our continued success in all our locations is our people. We take considerable pride in keeping individuals – both inside and outside of the bank – in the heart of our purpose. For this reason, we invite business professionals we know and trust to help guide our integration into new communities. We are unlike any other bank, which means that relying on unique expertise is important to us. To strive for similar successes as we’ve experienced in other West Bank locations, the growing Minnesota leadership teams are tapping into their own longstanding business relationships within the Mankato, Owatonna and St. Cloud communities. We recognized long ago that no one understands a community as well as its own members, so we invite them to the table to ensure we recognize, meet and exceed the distinctive needs and expectations in each location. To g et her w it h our c omm unit y boards, we ’ re able to ste e r e ff ort s mo re eff ic ie n t ly, Through community boards comprised of colleagues and contacts of local West Bank leaders, we plan for strategic outreach with those who already know and trust our business acumen and expertise. These boards serve as a beacon to their communities, illuminating the power of existing relationships to guide our success. 6 MANKATO OWATONNA W E S T B A N K T E A M S + C O M M U N I T Y B O A R D S ST. CLOUD 7 ROCHESTER C h a r i t a b l e G i v i n g Year after year, West Bank expresses our dedication to community banking through efforts to give back in every community we serve. In partnership with local nonprofit organizations, our team members and community groups, we are proud to support the communities that have grown alongside us for more than 125 years. In 2019: • West Bancorporation Foundation supported more than 100 nonprofit organizations through donations, volunteerism and sponsorships. • West Bankers volunteered more than 6,000 hours of hands-on service to local organizations. • West Bancorporation Foundation gave more than $279,000 to nonprofit organizations supporting our communities. We value gi vi ng back to the c ommunitie s t hat hav e ke p t We s t Bank growing for mor e th an 12 5 ye a r s. 8 M a k i n g I n r o a d s t o t h e F u t u r e With the birth of widespread Internet use taking place just two decades ago, the face of banking has changed dramatically and rapidly. West Bank prioritizes our customers’ needs and conveniences while continuously evolving our solutions by adapting to emerging technologies. While self-service digital channels and new convenient apps offer more hands-on banking experiences, the integration of modern data and analytics keeps our team better informed while streamlining processes for more efficient service. Digital Banking Apps That Offer Convenience and Added Security Mobile Wallet West Bank debit cards can now be added to a mobile wallet – an alternative to using physical debit cards. Mobile Wallets, like Apple Pay® and Google Pay™, allow users to make purchases in stores or online without entering passcodes or providing a signature. Mobile Wallets use encryption, a process of encoding debit card information, so physical debit card numbers are not shared with retailers when making purchases. CardValet® With more control on spending, better protection against fraud, and increased authority over business spending, CardValet® offers customers better management of debit card use. With the CardValet® app, users are able to: Increase fraud protection through on-off switching, geographic • restrictions and real-time alerts. • Control spending by setting spending limits or thresholds by merchant type (e.g. gas, groceries or retailers). • Monitor personal spending as well as overall company spending in one location. CardValet® is a registered trademark of Fiserv, Inc. or its affiliates. Video Tellers Bring ATMs to Life West Bank Video Teller Machines, now appearing in five branch locations, look and operate like an ATM but offer access to a live teller through real-time video during extended hours. In addition to providing the standard ATM functions of withdrawing cash and depositing cash and checks, Video Teller Machines also allow customers to receive cash withdrawals in specific denominations (including exact change to the penny), transfer funds between West Bank accounts, make loan payments and ask banking questions. Drive-up and lobby West Bank Video Tellers are available in Rochester, Minnesota and the main office in West Des Moines, Iowa. Lobby-only Video Tellers, accessible during regular lobby hours, are now available in St. Cloud, Owatonna and Mankato, Minnesota, with more locations planned in the future. 9 B O A R D O F D I R E C T O R S Jim Noyce* 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 Patrick Donovan* Retired Steven Gaer* R & R Realty Group; Mayor, West Des Moines Mike Gerdin* Heartland Express, Inc. Sean McMurray* Businessolver, Inc. David Milligan* Retired, West Bank Executive George Milligan* The Graham Group, Inc. Bob Pulver* All-State Industries, Inc. Lou Ann Sandburg* Retired Steven Schuler* Retired Therese Vaughan* Drake University Jason Worth* Gilcrest/Jewett Lumber Company * Director of West Bancorporation, Inc. and West Bank ** Director of West Bank 1 0 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 9 A N N U A L R E P O R T C E N T R A L I O W A C O M M U N I T Y B O A R D 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 The Rasmussen Group, Inc. Austin Palmer The Palmer Group Victoria Veiock Bing's Mark Wackerbarth Denman & Company Nancy Williams American Land and Redevelopment, Corp. Jeff Yurgae Mueller-Yurgae Associates, Inc. E A S T E R N I O W A C O M M U N I T Y B O A R D 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 All six 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 9 A N N U A L R E P O R T 1 1 M A N K A T O C O M M U N I T Y B O A R D Bryan Bode Investor/Consultant Mark Draper River City Electric Company Mike Hennek 4.0 School Services, Inc. Dr. Wynn Kearney Retired Surgeon/Investor Steve Kibble Farmer/Investor Bruce Kinsella Retired Trust Officer Non-Profit Consultant Tim Lidstrom Lidstrom Commercial Realtors David Pfeffer Vintage Fine Homes, Inc. Mark Phinney C&N Sales Company Shield Security Systems Randy Westman Westman Investments Art Westphal Bethany Lutheran College Andrew Willaert Gislason & Hunter LLP O W A T O N N A C O M M U N I T Y B O A R D Joseph Effertz Black Forest Chad Hanson Main Street Dental Theresa James James Brothers Construction Wayne James James Brothers Construction Scott Mohs Mohs Contracting Mohs Homes Mike Noble Noble RV Robert Randall Transcend Engagement Darren Roemhildt Bridge Street Chiropractic Brandon Wayne Ameriprise All six of our community boards are non-voting advisory boards with knowledge of the communities we serve. 1 2 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 9 A N N U A L R E P O R T R O C H E s t e r C O M M U N I T Y B O A R D Jason Boynton, CPA Smith Schafer & Associates Michael Busch Paramark Corp. Gus Chafoulias Titan Ventures & Chafoulias Companies, Inc. Patrick Deutsch Pace International Bobbie Gostout, M.D. Mayo Clinic & Mayo Health Systems Greg Groves Universal Marine & RV, Inc. Hal Henderson HGA, Architect and Developer Charlie Kuehn Kuehn Motors Dick Kuehn Kuehn Motors David Pederson Dunlap & Seeger, P.A. Joe Powers PowersVentures Peter Schuller A.B. Systems, Inc. Ed Stanley Merit Building Enclosure Systems Tim Weir Olmsted Medical Center All six 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 9 A N N U A L R E P O R T 1 3 S T . C L O U D C O M M U N I T Y B O A R D David Berdan J-Berd Mechanical Byron Bjorklund Short Stop Restaurants Steve Feneis Granite City Real Estate Jason Ferche Ferche Excavating Marc Sanderson Wilkie Sanderson Dr. Kevin Smith Regional Diagnostic Radiology Eric Stack Millerbernd Manufacturing Tim Torborg Torborg Builders, LLC Heidi Weikert S.T. Cotter Turbine Services 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 where 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 six of our community boards are non-voting advisory boards with knowledge of the communities we serve. 1 4 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 9 A N N U A L R E P O R T F I N A N C I A L H I G H L I G H T S 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 As of and for the years ended December 31, 2019, 2018, and 2017 (dollars in thousands, except per share data) 2019 2018 2017 $ 66,430 $ 62,058 $ 60,057 600 8,318 38,406 35,742 28,690 (250) 7,752 34,992 35,068 28,508 - 8,648 32,267 36,438 23,070 $ 0.83 $ 0.78 $ 0.71 1.75 1.74 25.63 12.93 $2,473,691 411,069 1,941,663 538 - 2,014,756 211,820 1.20% 14.34% 0.23% 50.96% 47.33% 3.24% 2.95% 0.89% 0.00% 0.03% 8.56% 1.75 1.74 19.09 11.72 $2,296,568 465,795 1,721,830 1,928 - 1,894,529 191,023 1.31% 15.68% 0.93% 48.33% 44.53% 4.09% 3.06% 0.97% 0.03% 0.11% 8.32% 1.42 1.41 25.15 10.98 $2,114,377 498,920 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% (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 9 A N N U A L R E P O R T 1 5 C O N S O L I D A T E D B A L A N C E S H E E T S Assets Cash and due from banks Federal funds sold Cash and cash equivalents Investment securities available for sale, at fair value 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, 2019 and 2018 Common stock, no par value; authorized 50,000,000 shares; 16,379,752 and 16,295,494 shares issued and outstanding at December 31, 2019 and 2018, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders’ equity Total liabilities and stockholders’ equity December 31, 2019 and 2018 (dollars in thousands, except per share data) 2019 2018 $ 37,808 $ 46,369 15,482 53,290 398,578 12,491 1,941,663 (17,235) 1,924,428 29,680 7,134 34,893 5,361 7,836 1,105 47,474 453,758 12,037 1,721,830 (16,689) 1,705,141 21,491 7,631 34,249 6,518 8,269 $2,473,691 $2,296,568 $ 380,079 $ 400,530 346,307 996,836 81,871 209,663 336,089 950,501 55,745 151,664 2,014,756 1,894,529 2,660 20,438 179,365 22,925 21,727 19,985 20,425 137,878 27,040 5,688 2,261,871 2,105,545 - - 3,000 27,260 184,821 (3,261) 211,820 3,000 25,128 169,709 (6,814) 191,023 $2,473,691 $2,296,568 1 6 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 9 A N N U A L R E P O R T C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E 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 (losses), net Other income Total noninterest income Noninterest expense Salaries and employee benefits Occupancy Data processing FDIC insurance Professional fees Director fees Write-down of premises 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 Years ended December 31, 2019, 2018, and 2017 (dollars in thousands, except per share data) 2019 $85,512 2018 2017 $71,189 $63,242 10,031 2,022 1,110 98,675 25,214 241 1,023 5,130 637 32,245 66,430 600 65,830 2,492 1,644 2,026 644 - (87) 1,599 8,318 21,790 5,355 2,735 404 814 993 - 6,315 38,406 35,742 7,052 8,124 4,993 487 84,793 17,064 188 1,076 3,650 757 22,735 62,058 (250) 62,308 2,541 1,681 1,921 631 - (263) 1,241 7,752 18,791 4,996 2,682 685 840 1,014 333 5,651 34,992 35,068 6,560 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 $28,690 $28,508 $23,070 $ 1.75 $ 1.74 $ 1.75 $ 1.74 $ 1.42 $ 1.41 (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 9 A N N U A L R E P O R T 1 7 R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M 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, 2019 and 2018, 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, 2019; and in our report, dated February 26, 2020, 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 | February 26, 2020 N O N - G A A P F I N A N C I A L M E A S U R E S 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. As of and for the years ended December 31, 2019, 2018, and 2017 (dollars in thousands, except per share data) 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 Adjustment for realized investment securities (gains) losses, net Adjustment for losses on disposal of premises and equipment, net Adjustment for gain on sale of premises Adjusted income Noninterest expense Adjustment for write-down of premises Adjusted expense Efficiency ratio on an adjusted FTE basis (non-GAAP) (2) 2019 2018 2017 $ 66,430 $ 62,058 $ 60,057 834 $ 67,264 $ 2,277,461 2.95% 1,528 $ 63,586 $ 2,075,372 3.06% 2,677 $ 62,734 $ 1,863,791 3.37% $ 67,264 $ 63,586 $ 62,734 8,318 87 - (307) $ 75,362 $ 38,406 - $ 38,406 50.96% 7,752 263 109 - $ 71,710 $ 34,992 (333) $ 34,659 48.33% 8,648 (326) 25 - $ 71,081 $ 32,267 - $ 32,267 45.39% (1) Computed on a tax-equivalent basis using a federal income tax rate of 21 percent in 2019 and 2018, and 35 percent in 2017, adjusted to reflect the effect of nondeductible interest expense associated with owning tax-exempt securities and loans. 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 arising from taxable and nontaxable sources. (2) The 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 performance. It is a standard measure of comparison within the banking industry. 1 8 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 9 A N N U A L R E P O R T F O R M 1 0 - 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. S T O C K I N F O R M A T I O N West Bancorporation’s common stock is traded on the Nasdaq Global Select Market, and quotations are furnished by the Nasdaq System. We had 170 common stockholders of record on December 31, 2019, and an estimated 3,000 additional beneficial holders whose stock was held in street name by brokerages or fiduciaries. Market and dividend information (1) High Low Close Dividends 2019 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Total 2018 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Total $ 25.93 $ 21.01 $ 25.63 22.47 22.32 23.74 19.63 20.14 19.02 21.74 21.22 20.68 $ 23.88 $ 18.06 $ 19.09 26.51 26.95 26.85 23.10 22.65 23.65 23.50 25.15 25.60 $ 0.21 0.21 0.21 0.20 $0.83 $ 0.20 0.20 0.20 0.18 $ 0.78 (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. T R A N S F E R A G E N T A N D R E G I S T R A R American Stock Transfer & Trust Company, LLC 6201 15th Avenue, Brooklyn, New York 11219 800-937-5449 | www.amstock.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 9 A N N U A L R E P O R T 1 9 F O R W A R D - L O O K I N G S T A T E M E N T S 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, accounting standards 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; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism or other adverse external events and any other risks described in the “Risk Factors” sections of 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. 2 0 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 9 A N N U A L R E P O R T 2019 Annual Report © 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 Locations IOWA MINNESOTA Main Bank 1601 22nd St. West Des Moines Coralville 401 10th Ave. Coralville Mankato 122 North Broad St. Mankato Owatonna 345 Florence Ave., Suite 101 Owatonna East 2440 East Euclid Ave. Des Moines Rochester 2188 Superior Dr. NW Rochester St. Cloud 622 Roosevelt Rd., Suite 150 St. Cloud Grand 125 Grand Ave. West Des Moines South 3920 SW 9th St. Des Moines Waukee 955 East Hickman Rd. Waukee Drive-Up Express City Center 809 6th Ave. Des Moines North 3839 Merle Hay Rd. Des Moines Urbandale 3255 99th St. Urbandale ONLINE westbankstrong.com @westbankstrong 2019 Annual Report © 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 

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