West Bancorporation(US:WTBA)2021-10-28 11:22Financial Performance - Net income for Q3 2021 was $12,706, or $0.76 per diluted share, up from $8,100, or $0.49 per diluted share in Q3 2020, representing a 56.8% increase [123]. - For the nine months ended September 30, 2021, net income was $37,697, or $2.25 per diluted share, compared to $24,158, or $1.46 per diluted share for the same period in 2020, marking a 55.9% increase [127]. - Net income for the nine months ended September 30, 2021, was $37,697, reflecting a 56.04% increase from $24,158 in the same period of 2020 [139]. Interest Income and Loans - Net interest income for Q3 2021 increased by $3,354, or 15.9%, compared to Q3 2020, primarily due to higher interest income on loans and securities [125]. - Net interest income for the nine months ended September 30, 2021, increased by $10,114, or 16.8%, compared to the same period in 2020 [129]. - Total loans outstanding rose by $78,992, or 3.5%, during the first nine months of 2021, with a 10.1% increase when excluding PPP loan activity [131]. - Average loans outstanding rose from $2,115,061 thousand in the nine months ended September 30, 2020 to $2,307,229 thousand in the same period of 2021, indicating growth in lending activity [162]. Asset Quality and Loan Losses - The provision for loan losses was $0 in Q3 2021, compared to $4,000 in Q3 2020, reflecting improved economic conditions [125]. - The allowance for loan losses ratio, excluding PPP loans, was 1.22% as of September 30, 2021, down from 1.40% a year earlier, suggesting improved credit quality [115]. - The allowance for loan losses was 1.19% of outstanding loans as of September 30, 2021, down from 1.29% as of December 31, 2020 [131]. - Nonaccrual loans decreased by $7,114,000 from $16,194,000 as of December 31, 2020, to $9,080,000 as of September 30, 2021 [179]. Noninterest Income and Expenses - Noninterest income decreased by $802 in Q3 2021 compared to Q3 2020, mainly due to a decline in loan swap fees [126]. - Noninterest income decreased by $117 during the nine months ended September 30, 2021, primarily due to a decrease in loan swap fees [130]. - Noninterest expense increased by $653 in Q3 2021 compared to Q3 2020, primarily driven by higher salaries and employee benefits [126]. - Noninterest expense increased by $2,370 for the nine months ended September 30, 2021, mainly due to higher salaries and employee benefits [130]. Efficiency and Ratios - The efficiency ratio on an adjusted and FTE basis improved to 39.41% in Q3 2021 from 41.35% in Q3 2020, indicating better cost management [115]. - The efficiency ratio improved to 40.08% for the nine months ended September 30, 2021, down from 42.68% in the same period in 2020 [139]. - The Texas ratio improved to 3.24% as of September 30, 2021, down from 7.38% in 2020, indicating better asset quality [139]. - The Texas ratio improved to 3.24% as of September 30, 2021, down from 6.40% as of December 31, 2020 [175]. Capital and Equity - The Company's total stockholders' equity increased to $252,376 at September 30, 2021, up from $223,695 at December 31, 2020, primarily due to net income less dividends paid and an increase in fair value of derivatives [187]. - The Company's tangible common equity as a percent of tangible assets was 7.77% as of September 30, 2021, compared to 7.02% as of December 31, 2020 [187]. - The capital ratios for the Company and West Bank were sufficient to meet the conservation buffer as of September 30, 2021 [191]. Dividends and Shareholder Returns - A quarterly cash dividend of $0.24 per common share was declared, payable on November 24, 2021 [136]. Economic Context and Future Outlook - The company anticipates potential declines in interest income due to the long-term impact of the COVID-19 pandemic and competitive pressures [151]. - The national unemployment rate peaked at 14.8% in April 2020 due to the COVID-19 pandemic, with ongoing economic recovery observed in 2021 [163]. - The company made qualitative adjustments to the allowance for loan losses evaluation in response to the COVID-19 pandemic, with some factors decreased in Q2 and Q3 2021 [163]. Operational Developments - The Company began construction on a new office in Sartell, Minnesota, with a remaining construction commitment of $3,477 as of September 30, 2021 [188]. - The Company maintains an Asset Liability Committee that meets quarterly to review interest rate sensitivity and develop strategies for managing interest rate risk [194].