Published:
West Bancorporation, Inc. Announces Results for 3rd Quarter and First Nine Months of 2008
WEST DES MOINES, Iowa, Oct. 30 /PRNewswire-FirstCall/ -- West
Bancorporation, Inc. (Nasdaq: WTBA) (the "Company"), parent company ofWest
Bank and WB Capital Management Inc. ("WB Capital"), reports a net loss of
$360,000, or $0.02 loss per share, for the third quarter of 2008, compared to
net income of $4,947,000, or $0.28 per share, for the third quarter of 2007.
The return on average equity and return on average assets were -1.22 percent
and -0.10 percent, respectively, for the third quarter of 2008, and 16.76
percent and 1.51 percent, respectively, for the third quarter of 2007.
The net loss for the third quarter of 2008 was caused in substantial part
by two events previously disclosed.West Bank reported on September 18, 2008,
it would lose approximately $4,000,000 on two loans to a customer that had
been the victim of a substantial fraud and conversion of all of its assets.
That remains the Bank's best estimate of its loss at this time, but the final
loss may be more or less depending on the ultimate proceeds from the liquation
of assets turned over by the borrower and guarantor. In addition, on
September 18, 2008, the Company disclosed thatWest Bank held a senior
unsecured note issued by Lehman Brothers Holdings, Inc. in its investment
portfolio. The note was valued at 13.75 cents on the dollar at the end of the
quarter resulting in a pre-tax loss of $1,725,000. The WB Capital money
market fund also held a Lehman Brothers Holdings, Inc. bond. WB Capital
purchased that bond from the money market fund to keep the fund value from
dropping below $1.00 per share. As a result, WB Capital incurred a pre-tax
loss of $443,000 related to this item. The after tax impact of these three
items was approximately $2,470,000 and $1,065,000, and $265,000 respectively,
in losses.
Without the three unusual items noted above, net income for the quarter
would have been $3,440,000. The total provision for loan losses for the
quarter was $7,000,000, including the estimated $4,000,000 loss discussed
above. The provision for loan losses was also higher due to the continued
aftermath of the weakness in the residential and commercial real estate
markets in central and easternIowa.
Noninterest income for the third quarter of 2008 was $167,000 higher than
the same quarter last year, not taking into account the impairment loss on the
Lehman Brothers Holdings, Inc. bond. All significant noninterest income
categories were higher except for investment advisory fees which have declined
due to the declining stock market this year.
Noninterest expenses for the third quarter of 2008 were $1,239,000 higher
than the third quarter of last year. The FDIC insurance expense was $183,000
higher. For the past year,West Bank, like most banks in the country has had
a credit that was used to offset a portion of this expense. That credit has
been used andWest Bank now pays the full FDIC insurance premium.
Professional fees are up $81,000 with most of the increase coming in legal
expenses. Marketing expenses have increased by $65,000 due to promotional
expenses related to deposit products. WB Capital's loss related to the money
market fund also increased noninterest expenses. Finally, salary and employee
benefit expenses have increased by $269,000 as the result of hiring 14 new
employees since the second quarter of last year, 11 of whom are in business
development roles.
For the first nine months of 2008, net income was $5,528,000, or $0.32 per
share, down from $14,518,000, or $0.83 per share, for the first nine months of
2007. The return on average equity and return on average assets were 6.18
percent and 0.55 percent, respectively, for the first nine months of 2008, and
16.81 percent and 1.48 percent, respectively, for the first nine months of
2007.
For the first nine months of 2008, loans grew by $110,000,000 compared to
loan growth of $38,000,000 in the first nine months of 2007. The loan growth
was primarily funded by wholesale deposits.
The net interest margin for the first nine months of 2008 was 3.44
percent, up from 3.30 percent for the same period last year. The improvement
was primarily due to a change in the mix of interest-earning assets. The
average balance of investment securities, which typically earn less than
loans, was $68,000,000 lower than last year while the average balance of loans
outstanding was $102,000,000 higher. Also, for the first nine months of 2008,
the average cost of funds was 133 basis points lower than the same period in
2007, while the average yield on earning assets was only 96 basis points
lower. As a result of these changes, net interest income was $1,745,000
higher for the first nine months of 2008 compared to the same period last
year.
Non-performing assets were $23,887,000 at September 30, 2008, compared to
$6,032,000 at the end of 2007 and $14,157,000 at June 30, 2008. Non-performing
assets increased in the third quarter because the two loans discussed above
were placed on non-accrual status. Those loans total $11,400,000. Without
the addition of those loans, non-performing assets would have declined during
the quarter. Within the non-performing categories, two properties totaling
$4,042,000 were moved to Other Real Estate Owned from non-accrual loans.
Loans 90 days past due and still accruing interest totaled $188,000, which was
a slight improvement from $204,000 at the end of the second quarter.
Management believes these loans are sufficiently collateralized to receive all
principal and interest. The allowance for loan losses as a percent of total
loans was 1.51 percent as of September 30, 2008, compared to 0.91 percent at
the end of 2007 and 0.95 percent a year ago. Non-performing assets as a
percentage of total assets at September 30, 2008, was 1.63 percent compared to
0.45 percent at 2007 year end and 0.10 percent a year ago.
As discussed in last quarter's Form 10-Q filed with the Securities and
Exchange Commission,West Bank owns a pooled trust preferred security that as
of September 30, 2008, had a carrying value of $2,620,000 after a pre-tax fair
market value mark down of $2,330,000. In accordance with generally accepted
accounting principles, the decline in fair market value has been charged
against equity on an after income tax basis. Market pricing for this security
varies widely from one pricing service to another because of the absence of an
active market for these types of securities. Management has concluded this
security is not other than temporarily impaired as of September 30, 2008. The
fair market value was determined by discounting the expected cash flows over
the life of the security. If subsequent cash flow analyses indicate
insufficient cash flow to repay the outstanding principal and interest or if
the credit rating of this security declines to non-investment grade, the
security will be considered other than temporarily impaired and an impairment
loss equal to the difference between the original cost ($4,950,000) and the
fair market value will be recorded. Such an impairment loss would negatively
impact income and regulatory capital.
At September 30, 2008 the Company's capital ratios were as follows:
Tier 1 leverage ratio 8.18%
Tier 1 risk-based capital ratio 9.19%
Total risk-based capital ratio 10.44%
The Company filed its third quarter Form 10-Q with the Securities and
Exchange Commission today. It is available on the Investor Relations section
of the Company's website at http://www.westbankiowa.com.
As previously announced, on October 15, 2008, the Board of Directors of
West Bancorporation, Inc. declared a regular quarterly cash dividend of $0.16
per share of outstanding common stock payable on November 12, 2008, to
shareholders of record on October 27, 2008.
Also on October 15, 2008, the Board authorized management to make
application for participation in the U.S. Treasury's Capital Purchase Program
whereby the U.S. Department of the Treasury may purchase qualifying preferred
stock and warrants in U.S. banking organizations. Please see the Company's
October 24, 2008, press release for further information.
The Company will discuss its results for the third quarter and first nine
months of 2008 during a conference call scheduled for 2:00 p.m. central time
today, Thursday, October 30, 2008. The telephone number for the conference
call is 800-860-2442. A recording of the call will be available until
November 7, 2008, at 877-344-7529, pass code: 415080.
West Bancorporation, Inc. is headquartered inWest Des Moines, Iowa.
Serving Iowans since 1893,West Bank, a wholly-owned subsidiary of West
Bancorporation, Inc., is a community bank that focuses on lending, deposit
services, and trust services for consumers and small- to medium-sized
businesses.West Bank has two full-service offices inIowa City, one full-
service office inCoralville, and seven full-service offices in the greater
Des Moines area. WB Capital Management Inc., also a wholly-owned subsidiary
of West Bancorporation, Inc., has offices inWest Des Moines andCoralville.
It provides portfolio management services to retirement plans, corporations,
public funds, mutual funds, foundations, endowments, and high net worth
individuals.
The information contained in this press release may contain
forward-looking statements about the Company's growth and acquisition
strategies, new products and services, and future financial performance,
including earnings and dividends per share, return on average assets, return
on average equity, efficiency ratio and capital ratios. Certain statements in
this report constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, including statements
preceded by, followed by or that include the words "believes," "expects,"
"should," or "anticipates," or references to estimates or similar expressions.
Such forward-looking statements are based upon certain underlying assumptions,
risks and uncertainties. Because of the possibility of change in the
underlying assumptions, 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 non-bank competitors; changes in local and national economic conditions;
changes in regulatory requirements, including actions of the Securities and
Exchange Commission and/or the Federal Reserve Board; and customers'
acceptance of the Company's products and services. The Company undertakes no
obligation to revise or update such forward-looking statements to reflect
current events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
WEST BANCORPORATION, INC. AND SUBSIDIARIES
Financial Information (unaudited)
(in thousands, except per share data)
September 30, September 30,
CONSOLIDATED STATEMENTS OF CONDITION
2008 2007
Assets
Cash and due from banks $25,204 $28,857
Short-term investments 87,188 5,957
Securities 191,746 250,436
Loans held for sale 77 1,142
Loans 1,093,402 942,251
Allowance for loan losses (16,484) (8,905)
Loans, net 1,076,918 933,346
Goodwill and other intangible assets 26,518 27,275
Bank-owned life insurance 25,037 23,617
Other assets 31,057 26,598
Total assets $1,463,745 $1,297,228
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing $187,606 $177,991
Interest-bearing
Demand 120,642 69,365
Savings 222,488 219,742
Time 588,037 391,120
Total deposits 1,118,773 858,218
Short-term borrowings 70,871 181,746
Long-term borrowings 147,869 123,869
Other liabilities 11,371 13,350
Stockholders' equity 114,861 120,045
Total liabilities and stockholders' equity $1,463,745 $1,297,228
PER COMMON SHARE MARKET INFORMATION (1)
Net Income Dividends High Low
2008
1st quarter $0.08 $0.16 $14.43 $11.71
2nd quarter 0.26 0.16 13.48 8.63
3rd quarter (0.02) 0.16 16.21 7.30
2007
1st quarter $0.25 $0.16 $18.25 $14.29
2nd quarter 0.29 0.16 16.36 14.17
3rd quarter 0.28 0.16 16.19 14.68
4th quarter 0.25 0.16 15.98 11.85
(1) The prices shown are the high and low sale prices for the Company's
common stock, which trades on the NASDAQ Global Market, under the
symbol WTBA. The market quotations, reported by NASDAQ, do not include
retail markup, markdown or commissions.
WEST BANCORPORATION, INC. AND SUBSIDIARIES
Financial Information (continued) (unaudited)
(in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
CONSOLIDATED STATEMENTS
OF OPERATION 2008 2007 2008 2007
Interest income
Loans $15,986 $17,730 $47,676 $52,766
Securities 2,163 2,784 6,431 8,454
Other 36 122 271 682
Total interest income 18,185 20,636 54,378 61,902
Interest expense
Deposits 5,404 7,651 15,914 22,906
Short-term borrowings 591 1,741 2,603 5,267
Long-term borrowings 1,804 1,591 5,364 4,977
Total interest expense 7,799 10,983 23,881 33,150
Net interest income 10,386 9,653 30,497 28,752
Provision for loan
losses 7,000 500 13,600 1,150
Net interest income
after provision for
loan losses 3,386 9,153 16,897 27,602
Noninterest income
Service charges on
deposit accounts 1,287 1,244 3,583 3,583
Trust services 207 195 605 564
Investment advisory fees 1,883 1,968 5,781 5,970
Increase in cash value
of bank-owned life
insurance 248 226 697 661
Securities gains, net 66 11 71 2
Investment securities
impairment loss (1,725) - (1,725) -
Other income 605 485 1,772 1,407
Total noninterest
income 2,571 4,129 10,784 12,187
Noninterest expense
Salaries and employee
benefits 3,623 3,354 10,988 10,325
Occupancy expense 901 879 2,700 2,710
Data processing expense 563 552 1,761 1,645
Other expense 2,368 1,431 5,832 4,051
Total noninterest
expense 7,455 6,216 21,281 18,731
Income (loss) before
income taxes (1,498) 7,066 6,400 21,058
Income taxes (1,138) 2,119 872 6,540
Net income (loss) $(360) $4,947 $5,528 $14,518
PERFORMANCE HIGHLIGHTS
Return on average equity -1.22% 16.76% 6.18% 16.81%
Return on average assets -0.10% 1.51% 0.55% 1.48%
Net interest margin 3.37% 3.32% 3.44% 3.30%
Efficiency ratio 49.18% 43.92% 47.90% 44.48%
SOURCE West Bancorporation, Inc.
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Copyright © 2009, NewsBlaze,
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