ars.htm
 
 


 

 
 
 

 
 
Shareholders' Letter
 
 
 
Dear Fellow Shareholders:
 

2009 was disappointing.  There is no other way to say it.  While your company was not alone, that fact does not make our 2009 results any easier to accept because we expect to be better than average.

The recession slammed the company on multiple fronts during 2009.  First, we experienced unprecedented loan losses, particularly in areas related to real estate.  Second, the decline in our stock price required the write-off of the goodwill associated with our past acquisitions.  Although our important capital measures were not impacted by the write-off, it contributed to our reported loss.  Third, we also experienced a high level of nonperforming assets, which reduced our interest income.  Finally, the uncertain economy reduced the demand for new loans.

Fortunately, we believe West Bank has the ability to generate good core earnings going forward.  We remain well-capitalized, and our liquidity is very strong.  We are still a highly efficient company, and our experienced staff has remained intact.

We are cautiously optimistic entering 2010.  There is evidence the economy is improving, although we are watching closely for any sign of reversal.  In addition, we have made substantial progress on our loan problems and we are working aggressively to prevent or minimize future problems.   We have also reduced the credit risk in our investment portfolio.  As a result, we believe the company is in better shape now than it was in early 2009.

As you know, the common stock dividend was suspended in the third quarter of 2009.  We are working to resume dividend payments as soon as prudent.  In addition, we do not expect to redeem any of the Treasury's preferred stock in 2010, but we are planning on buying back all of that stock within the next few years.

We completed the sale of WB Capital Management Inc. on December 31, 2009.  We wish our former associates well as they embark on their new path.

West Bank has been serving customers since 1893.  We plan to continue serving our customers and rewarding our shareholders for many years to come as we look forward to better results in 2010.  We hope to see you at the annual shareholders meeting on April 29.  Thank you for your support.
 
 
 
Jack G. Wahlig
 
David R. Milligan
 
 
 
 
 
     
Jack G. Wahlig
David R. Milligan     
Chairman Chief Executive Officer    
 
 
 
 
 

 
 
West Bancorporation, Inc., and Subsidiaries
 
 FINANCIAL HIGHLIGHTS               (dollars in thousands, except per share amounts)
   
2009
   
2008
   
2007
   
2006
   
2005
 
YEAR-END BALANCES
                             
Assets
  $ 1,575,054     $ 1,554,276     $ 1,341,289     $ 1,270,013     $ 1,245,417  
Investment securities
    351,269       189,558       237,378       261,578       274,719  
Loans
    1,021,042       1,101,753       985,423       904,422       867,504  
Nonperforming loans
    26,317       28,835       5,877       650       4,912  
Other real estate owned
    25,350       4,352       155       2,002       497  
Deposits
    1,246,617       1,155,132       911,371       926,251       945,553  
Stockholders' equity
    133,059       150,063       121,606       113,812       104,521  
                                         
AVERAGE BALANCES
                                       
Assets
    1,618,557       1,371,401       1,309,119       1,298,410       1,192,208  
Investment securities
    230,821       189,206       252,477       270,484       313,015  
Loans
    1,100,045       1,054,558       945,669       918,992       785,164  
Deposits
    1,231,597       954,423       903,972       991,603       862,376  
Stockholders' equity
    143,163       118,090       116,683       107,345       100,392  
                                         
RESULTS OF OPERATIONS
                                       
Net interest income
    41,094       41,101       38,204       39,099       38,433  
Provision for loan losses
    24,500       16,600       2,350       1,725       1,775  
Noninterest income, including investment
     securities gains (losses)
    8,904       4,301       8,430       8,128       8,395  
Noninterest expense
    37,905       20,105       17,870       17,425       16,247  
Income (loss) before income taxes
     from continuing operations
    (12,407 )     8,697       26,414       28,077       28,806  
Income (loss) from continuing operations
    (5,051 )     7,311       18,352       19,142       19,675  
Income (loss) from discontinued operations
    (9,566 )     325       568       265       400  
Net income (loss)
    (14,617 )     7,636       18,920       19,407       20,075  
                                         
PER COMMON SHARE
                                       
Net income (loss) from continuing
     operations - basic and diluted
    (0.42 )     0.42       1.05       1.09       1.12  
Net income (loss) from discontinued
     operations - basic and diluted
    (0.55 )     0.02       0.03       0.02       0.02  
Net income (loss) - basic and diluted
    (0.97 )     0.44       1.08       1.11       1.14  
Dividends
    0.090       0.640       0.640       0.625       0.610  
Book value
    5.69       6.69       6.96       6.49       5.96  
Closing price
    4.93       12.25       13.04       17.78       17.81  
                                         
RATIOS
                                       
Return on average equity
    -10.21 %     6.47 %     16.21 %     18.08 %     20.00 %
Return on average assets
    -0.90 %     0.56 %     1.45 %     1.49 %     1.68 %
Efficiency ratio
    45.99 %     38.56 %     37.08 %     35.47 %     33.56 %
Net interest margin
    2.86 %     3.38 %     3.28 %     3.38 %     3.62 %
Average equity as % of average assets
    8.85 %     8.61 %     8.91 %     8.27 %     8.42 %
Allowance for loan losses as % of loans
    1.87 %     1.40 %     0.91 %     0.94 %     0.88 %
Net charge-offs as % of average loans
    1.89 %     0.96 %     0.20 %     0.09 %     0.09 %
Nonperforming loans as % of loans
    2.58 %     2.62 %     0.60 %     0.07 %     0.57 %

 
 
 
 
 

 
 
West Bancorporation, Inc., and Subsidiaries
 
CONSOLIDATED BALANCE SHEETS   (dollars in thousands, except per share amounts)  
   
DECEMBER 31
 
ASSETS
 
2009
   
2008
 
Cash and due from banks
  $ 27,923     $ 23,712  
Federal funds sold and other short-term investments
    103,572       173,257  
Cash and cash equivalents
    131,495       196,969  
Securities available for sale
    340,478       181,384  
Federal Home Loan Bank stock, at cost
    10,791       8,174  
Loans held for sale
    332       1,018  
Loans
    1,020,710       1,100,735  
Allowance for loan losses
    (19,126 )     (15,441 )
Loans, net
    1,001,584       1,085,294  
Premises and equipment, net
    5,290       4,639  
Accrued interest receivable
    5,502       6,415  
Goodwill
    -       13,376  
Bank-owned life insurance
    25,400       25,277  
Other real estate owned
    25,350       4,352  
Deferred tax assets
    12,823       6,203  
Other assets
    16,009       7,200  
Assets of discontinued operations held for sale
    -       13,975  
Total assets
  $ 1,575,054     $ 1,554,276  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Liabilities
               
Deposits:
               
Noninterest-bearing demand
  $ 206,412     $ 174,980  
Interest-bearing demand
    162,305       97,853  
Savings
    442,137       238,058  
Time of $100,000 or more
    271,145       274,825  
Other time
    164,618       369,416  
Total deposits
    1,246,617       1,155,132  
Federal funds purchased and securities sold under agreements to repurchase
    40,342       93,111  
Other short-term borrowings
    2,553       245  
Subordinated notes and FHLB advances
    145,619       145,619  
Accrued expenses and other liabilities
    6,864       8,783  
Liabilities of discontinued operations held for sale
    -       1,323  
Total liabilities
    1,441,995       1,404,213  
                 
Stockholders' Equity
               
Preferred stock, $0.01 par value, with a liquidation preference of $1,000 per
     share; authorized 50,000,000 shares; 36,000 shares issued and outstanding at
     December 31, 2009 and 2008, respectively
    34,024       33,548  
Common stock, no par value; authorized 50,000,000 shares; 17,403,882
    shares issued and outstanding at December 31, 2009 and 2008, respectively
    3,000       3,000  
Additional paid-in capital
    34,387       34,452  
Retained earnings
    65,959       82,793  
Accumulated other comprehensive (loss)
    (4,311 )     (3,730 )
Total stockholders' equity
    133,059       150,063  
Total liabilities and stockholders' equity
  $ 1,575,054     $ 1,554,276  

 
 
 
 
 

 

West Bancorporation, Inc., and Subsidiaries
 
CONSOLIDATED STATEMENTS OF OPERATIONS   (dollars in thousands, except per share amounts)  
   
YEARS ENDED DECEMBER 31,
 
Interest Income:
 
2009
   
2008
   
2007
 
Loans
  $ 59,309     $ 63,525     $ 70,155  
Securities:
                       
U.S. Treasury, government agencies and corporations
    2,436       2,903       5,834  
States and political subdivisions
    4,322       4,152       3,742  
Other
    1,142       1,485       1,544  
Federal funds sold and other short-term investments
    521       467       752  
Total interest income
    67,730       72,532       82,027  
                         
Interest Expense:
                       
Demand deposits
    2,481       1,223       1,830  
Savings deposits
    4,157       3,812       7,118  
Time deposits
    12,910       16,486       21,203  
Federal funds purchased and securities sold under agreements to repurchase
    320       2,788       6,769  
Other short-term borrowings
    -       39       345  
Other borrowings
    6,768       7,083       6,558  
Total interest expense
    26,636       31,431       43,823  
Net interest income
    41,094       41,101       38,204  
                         
Provision for Loan Losses:
    24,500       16,600       2,350  
Net interest income after provision for loan losses
    16,594       24,501       35,854  
                         
Noninterest Income:
                       
Service charges on deposit accounts
    4,021       4,832       4,794  
Trust services
    786       789       758  
Gains and fees on sales of residential mortgages
    1,114       544       161  
Increase in cash value of bank-owned life insurance
    776       936       890  
Proceeds from bank-owned life insurance
    840       -       -  
Other income
    2,095       1,866       1,822  
Total noninterest income
    9,632       8,967       8,425  
Investment securities gains (losses), net:
                       
Total other-than-temporary impairment losses
    (3,444 )     (4,739 )     -  
Portion of loss recognized in other comprehensive income
     (loss) before taxes
    832       -       -  
Net impairment losses recognized in earnings
    (2,612 )     (4,739 )     -  
Realized securities gains, net
    1,884       73       5  
Investment securities gains (losses), net
    (728 )     (4,666 )     5  


continued


 
 


 
 
 
 

 

West Bancorporation, Inc., and Subsidiaries
 
CONSOLIDATED STATEMENTS OF OPERATIONS - continued    (dollars in thousands, except per share amounts)  
   
YEARS ENDED DECEMBER 31,
 
   
2009
   
2008
   
2007
 
Noninterest Expense:
                 
Salaries and employee benefits
  $ 9,938     $ 9,257     $ 9,187  
Occupancy
    3,451       2,992       2,916  
Data processing
    1,761       1,748       1,706  
FDIC insurance expense
    2,736       606       109  
Goodwill impairment
    13,376       -       -  
Other expenses
    6,643       5,502       3,952  
Total noninterest expense
    37,905       20,105       17,870  
Income (loss) before income taxes
    (12,407 )     8,697       26,414  
                         
Income Taxes (Benefits):
    (7,356 )     1,386       8,062  
Income (loss) from continuing operations
    (5,051 )     7,311       18,352  
                         
Discontinued Operations:
                       
Income (loss) from discontinued operations before income taxes
    (10,262 )     563       982  
Income taxes (benefits)
    (696 )     238       414  
Income (loss) from discontinued operations
    (9,566 )     325       568  
Net income (loss)
    (14,617 )     7,636       18,920  
Preferred stock dividends and accretion of discount
    (2,276 )     -       -  
Net income (loss) available to common stockholders
  $ (16,893 )   $ 7,636     $ 18,920  
                         
Earnings (Loss) per Common Share:
                       
Basic and diluted earnings (loss) per common share from continuing operations
  $ (0.42 )   $ 0.42     $ 1.05  
Basic and diluted earnings (loss) per common share from discontinued operations
  $ (0.55 )   $ 0.02     $ 0.03  
Basic and diluted earnings (loss) per common share
  $ (0.97 )   $ 0.44     $ 1.08  
 
 

 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
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 subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows (not presented herein) for each of the three years in the period ended December 31, 2009, and in our report dated March 12, 2010, 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 12, 2010
 
 
       



 
 

 

West Bancorporation, Inc., and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY      (dollars in thousands, except per share amounts)  
Years Ended December 31, 2009, 2008, and 2007
 
Comprehensive
Income (Loss)
   
Preferred Stock
   
Common Stock
   
Additional
Paid-in-Capital
   
Retained
Earnings
   
Accumulated Other
Comprehensive
Income (Loss)
   
Total
 
Balance, December 31, 2006
        $ -     $ 3,000     $ 32,000     $ 80,397     $ (1,585 )   $ 113,812  
Comprehensive Income
                                                     
Net income
  $ 18,920       -       -       -       18,920       -       18,920  
Other comprehensive income, unrealized
     gains on securities, net of reclassification
     adjustment, net of tax
    1,107       -       -       -       -       1,107       1,107  
Total Comprehensive Income
  $ 20,027                                                  
Shares reacquired and retired under the
     common stock repurchase plan
            -       -       -       (974 )     -       (974 )
Cash dividends declared, $0.64 per
     common share
            -       -       -       (11,224 )     -       (11,224 )
Other
            -       -       -       (35 )     -       (35 )
Balance, December 31, 2007
            -       3,000       32,000       87,084       (478 )     121,606  
Comprehensive Income
                                                       
Net income
  $ 7,636       -       -       -       7,636       -       7,636  
Other comprehensive (loss), unrealized
     (losses) on securities, net of reclassification
     adjustment, net of tax
    (3,252 )     -       -       -       -       (3,252 )     (3,252 )
Total Comprehensive Income
  $ 4,384                                                  
Preferred shares and common stock
     warrant issued
            33,548       -       2,452       -       -       36,000  
Shares reacquired and retired under the
     common stock repurchase plan
            -       -       -       (789 )     -       (789 )
Cash dividends declared, $0.64 per
     common share
            -       -       -       (11,138 )     -       (11,138 )
Balance, December 31, 2008
            33,548       3,000       34,452       82,793       (3,730 )     150,063  
Cumulative effect accounting adjustment,
     net of tax
            -       -       -       1,625       (1,625 )     -  
Comprehensive (Loss)
                                                       
Net (loss)
  $ (14,617 )     -       -       -       (14,617 )     -       (14,617 )
Other comprehensive income, unrealized
     gains on securities, net of reclassification
     adjustment, net of tax
    1,044       -       -       -       -       1,044       1,044  
Total Comprehensive (Loss)
  $ (13,573 )                                                
Preferred stock discount accretion
            476       -       -       (476 )     -       -  
Preferred stock issuance costs
            -       -       (65 )     -       -       (65 )
Cash dividends declared, $0.09 per
     common share
            -       -       -       (1,566 )     -       (1,566 )
Preferred stock dividends declared
            -       -       -       (1,800 )     -       (1,800 )
Balance, December 31, 2009
          $ 34,024     $ 3,000     $ 34,387     $ 65,959     $ (4,311 )   $ 133,059  

 
 
FORM 10-K

 
A copy of the Company’s annual report to the Securities and Exchange Commission on Form 10-K will be mailed when available without charge to shareholders upon request to Alice Jensen at 515-222-2300 or ajensen@westbankiowa.com.  The annual report will also be available on the Securities and Exchange Commission’s Web site at http://www.sec.gov/edgar/searchedgar/webusers.htm and through a link on the Company’s Web site, www.westbankiowa.com, at Investor Relations, SEC Filings.
 

 
 
 

 


West Bancorporation, Inc. Board of Directors
 
(1) Audit Committee    (2) Compensation Committee    (3) Nominating & Corporate Governance Committee
 
 
Frank W. Berlin (2, 3)
President, Frank W. Berlin & Associates
Thomas A. Carlstrom
Neurosurgeon
Joyce A. Chapman
Executive Vice President,
West Bank – Retired
Orville E. Crowley (2)
President, Linden Lane Farms
 
Douglas R. Gulling
Executive Vice President and
Chief Financial Officer,
West Bancorporation
Chief Financial Officer, West Bank
Kaye R. Lozier
Director of Development
and Donor Relations,
Greater Des Moines
Community Foundation
David R. Milligan
Chief Executive Officer,
West Bancorporation
and West Bank
George D. Milligan (1)
President, The Graham Group, Inc.
James W. Noyce (1)
Senior Advisor and Major Gifts Officer,
Drake University Athletics
 
Robert G. Pulver (2, 3)
President & CEO, All-State Industries, Inc.
Jack G. Wahlig (1)
Chairman, West Bancorporation
President, Integrus Financial, L.C.
Connie Wimer (1)
Chairman,
Business Publications Corporation
Brad L. Winterbottom
Executive Vice President,
West Bancorporation
President, West Bank


 
 STOCK INFORMATION
 
West Bancorporation, Inc., common stock is traded on the NASDAQ Global Select Market and quotations are furnished by the NASDAQ System.  There were 248 common stockholders of record on December 31, 2009, and an estimated 1,100 additional beneficial holders whose stock was held in street name by brokerage houses.


Market and Dividend Information (1)
                 
2009
 
High
   
Low
   
Dividends
 
1st quarter
  $ 12.40     $ 4.36     $ 0.08  
2nd quarter
    9.50       5.00       0.01  
3rd quarter
    6.38       4.61       -  
4th quarter
    5.50       4.28       -  
                         
2008
                       
1st quarter
  $ 14.43     $ 11.71     $ 0.16  
2nd quarter
    13.48       8.63       0.16  
3rd quarter
    16.21       7.30       0.16  
4th quarter
    13.50       8.67       0.16  
 

(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.


 
Transfer Agent/Dividend Paying Agent
 
General Counsel
 
Independent Registered Public Accounting Firm
         
Illinois Stock Transfer Company
 
Ahlers & Cooney, P.C.
 
McGladrey & Pullen, LLP
209 West Jackson Boulevard, Suite 903
 
100 Court Avenue
 
400 Locust Street
Chicago, Illinois  60606-6905
 
Suite 600
 
Suite 640
800-757-5755
 
Des Moines, IA  50309
 
Des Moines, IA  50309
www.illinoisstocktransfer.com
       



Forward Looking Statements – Certain statements in this report about the Company’s future financial performance constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Those statements include the words “believe,” “hope to,” “look forward,” or similar references.  These statements are based on underlying assumptions, risks, and uncertainties that may not materialize as expected.  Actual results may differ significantly from the forward looking statements due to, among other things, changes in competition, economic conditions, regulatory requirements or costs, loan or investment performance, and interest rates.  The Company undertakes no obligation to revise any statements to reflect future circumstances.