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2010 Shareholders’ Meeting
April 29, 2010
April 29, 2010
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*
*Includes BOLI proceeds, net of foundation contribution of $640,000
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Financial Review
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2009 Financial Results Impacted by
Three Items
Three Items
• Goodwill impairment loss
• Unprecedented level of loan losses
• High level of nonperforming assets
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Goodwill Impairment
• $13.4 Million
• Had minimal impact on regulatory or
tangible capital
tangible capital
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2005 | $ 687 |
2006 | $ 846 |
2007 | $ 1,909 |
2008 | $ 10,094 |
2009 | $ 20,815 |
1st Quarter 2010 | $ 853 |
Unprecedented Loan Losses ($ in 000’s)
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90 days Past Due | Nonaccrual Loans | OREO | TDR’s | Investments | Total | |
2005 | $ 767 | $ 4,145 | $ 497 | - | - | $ 5,409 |
2006 | $ 155 | $ 495 | $ 2,002 | - | - | $ 2,652 |
2007 | $ 408 | $ 5,469 | $ 155 | - | - | $ 6,032 |
2008 | $ 92 | $ 21,367 | $ 4,352 | $ 7,376 | $ 2,575 | $ 35,762 |
2009 | $ 1,150 | $ 12,350 | $ 25,350 | $ 12,817 | $ 1,282 | $ 52,949 |
1Q10 | $ 173 | $ 11,450 | $ 26,974 | $ 16,554 | $ 1,310 | $ 56,461 |
Level of Nonperforming Assets ($ in 000’s)
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2009 Other Events
• Sale of WB Capital Management Inc.
• SmartyPig
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2010 First Quarter
• Some relief from loan losses
• SmartyPig service fee
• Nonperforming assets still too high
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“Texas” Ratio | Nonaccrual & Past due (90 days) Loans as % of Total Loans | Net Charge-offs as % of Av Loans | |
Bankers Trust | 27.46% | 1.99% | 0.92% |
First American | 34.34% | 3.07% | 1.53% |
Hills Bank | 7.79% | 0.80% | 0.69% |
MidwestOne | 33.69% | 3.68% | 0.85% |
National Peer Group | 34.15% | 3.77% | 1.51% |
West Bank | 25.54% | 1.33% | 1.89% |
12/31/09 FDIC Call Reports. National Peer Group consists of all banks with total assets between $1 billion and $3 billion.
Texas Ratio is noncurrent loans and securities plus other real estate owned divided by tangible equity plus loan loss reserves.
Texas Ratio is noncurrent loans and securities plus other real estate owned divided by tangible equity plus loan loss reserves.
Peer Perspective - Asset Quality
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Total Risk Based Capital Ratio | Tier I Leverage Ratio | Net Income (Loss) $ in 000’s | |
Bankers Trust | 12.64% | 8.06% | $ 12,107 |
First American | 10.90% | 7.60% | $ 1,922 |
Hills Bank | 12.87% | 9.14% | $ 16,137 |
MidwestOne | 12.94% | 9.23% | $ 5,710 |
National Peer Group | 12.56% | 8.36% | N/A |
West Bank | 13.90% | 8.86% | $ (3,753) |
12/31/09 FDIC Call Reports. National Peer Group consists of all banks with total assets between $1 billion and $3 billion.
Peer Perspective - Capital Ratios
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Going Forward
• Strong Core Earnings
• SmartyPig Service Fee
• Strong Capital Base
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3.31.10 pro- forma* | 3.31.10 | 12.31.09 | 12.31.08 | Requirements to be well-capitalized | |
Risk-based capital as % of risk-weighted assets | 14.4% | 14.4% | 13.9% | 13.1% | 10.0% |
Tier I Capital as % of risk-weighted assets | 12.3% | 12.3% | 11.8% | 11.0% | 8.0% |
Tier I Capital as % of total assets | 10.1% | 8.8% | 8.9% | 9.4% | 6.0% |
*Without SmartyPig
West Bank’s Capital Ratios
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3.31.10 pro - -forma* | 3.31.10 | 12.31.09 | 12.31.08 | |
Tangible common equity as % of total tangible assets | 7.0% | 6.1% | 6.3% | 6.7% |
Tangible common equity ($000’s) | $ 102,596 | $ 102,596 | $ 98,763 | $ 102,662 |
Total tangible assets ($000’s) | $1,459,926 | $1,691,090 | $1,574,782 | $1,540,423 |
*Without SmartyPig
Consolidated Capital Measures
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West Bank
Year in Review
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How We Monitor Asset Quality
Commercial Banking Team
• 15 bankers manage the bulk of the $1 Billion loan
portfolio.
portfolio.
– These 15 bankers have 305 years of combined experience
– Eight bankers have 20 years experience
– Three bankers have more than 30 years experience
• These bankers provide daily contact and relationship
monitoring.
monitoring.
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Loan approval process
Most bankers have modest loan authority requiring
most approvals & renewals to be approved at a
committee level. Thereafter:
most approvals & renewals to be approved at a
committee level. Thereafter:
1. Independent Review of the facts is conducted by
the Credit Department
the Credit Department
2. A Risk Rating is assigned by Banker
3. Loan Committee and Credit Department
confirm/amend the risk rating before the loan is
booked
confirm/amend the risk rating before the loan is
booked
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During the life of the loan
The banker monitors the credit, adjusting risk ratings as real time
information is received
information is received
Other Independent Reviews
• Risk Auditor - looks for compliance and documentation issues
• Loan Auditor - confirms documentation and insures loan is made
within approvals granted
within approvals granted
• Loan Review - performs an independent analysis on high-dollar
loans and provides an annual review of the credit
loans and provides an annual review of the credit
– Findings are discussed during internal and Board Loan Committee
meetings
meetings
If loan deteriorates, it moves to a category that requires heightened
scrutiny and review, and is monitored monthly by the Adverse
Asset Committee
scrutiny and review, and is monitored monthly by the Adverse
Asset Committee
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90 days Past Due | Nonaccrual Loans | OREO | TDR’s | |
2005 | $ 767 | $ 4,145 | $ 497 | - |
2006 | $ 155 | $ 495 | $ 2,002 | - |
2007 | $ 408 | $ 5,469 | $ 155 | - |
2008 | $ 92 | $ 21,367 | $ 4,352 | $ 7,376 |
2009 | $ 1,150 | $ 12,350 | $ 25,350 | $ 12,817 |
1Q10 | $ 173 | $ 11,450 | $ 26,974 | $ 16,554 |
Nonperforming Assets
When a loan becomes
stressed it is
reported
stressed it is
reported
• When it reaches 90-day
delinquency
delinquency
• The loan could remain in
past due for an additional
30 days provided
past due for an additional
30 days provided
– Pending event
– Demand/Deadline has
not expired.
not expired.
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90 days Past Due | Nonaccrual Loans | OREO | TDR’s | |
2005 | $ 767 | $ 4,145 | $ 497 | - |
2006 | $ 155 | $ 495 | $ 2,002 | - |
2007 | $ 408 | $ 5,469 | $ 155 | - |
2008 | $ 92 | $ 21,367 | $ 4,352 | $ 7,376 |
2009 | $ 1,150 | $ 12,350 | $ 25,350 | $ 12,817 |
1Q10 | $ 173 | $ 11,450 | $ 26,974 | $ 16,554 |
As past due loans move
to non-accrual:
to non-accrual:
• Accrued interest is generally
reversed to avoid
overstatement of income.
reversed to avoid
overstatement of income.
• Legal procedures are
commenced
commenced
– 9 to15 month process when
secured by real-estate
secured by real-estate
– At 3.31.10: 65% of non
accruals are real estate
secured.
accruals are real estate
secured.
Nonperforming Assets
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90 days Past Due | Nonaccrual Loans | OREO | TDR’s | |
2005 | $ 767 | $ 4,145 | $ 497 | - |
2006 | $ 155 | $ 495 | $ 2,002 | - |
2007 | $ 408 | $ 5,469 | $ 155 | - |
2008 | $ 92 | $ 21,367 | $ 4,352 | $ 7,376 |
2009 | $ 1,150 | $ 12,350 | $ 25,350 | $ 12,817 |
1Q10 | $ 173 | $ 11,450 | $ 26,974 | $ 16,554 |
When the bank takes
possession of the
asset, it is moved to
OREO:
possession of the
asset, it is moved to
OREO:
• Independent valuation of the
asset is obtained
asset is obtained
• Market the asset for sale
• Monitor the value of the
asset
asset
Nonperforming Assets
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90 days Past Due | Nonaccrual Loans | OREO | TDR’s | |
2005 | $ 767 | $ 4,145 | $ 497 | - |
2006 | $ 155 | $ 495 | $ 2,002 | - |
2007 | $ 408 | $ 5,469 | $ 155 | - |
2008 | $ 92 | $ 21,367 | $ 4,352 | $ 7,376 |
2009 | $ 1,150 | $ 12,350 | $ 25,350 | $ 12,817 |
1Q10 | $ 173 | $ 11,450 | $ 26,974 | $ 16,554 |
A loan is classified TDR
• When it is re-negotiated,
• The borrower gets more-
favorable terms than
customary
favorable terms than
customary
The loan may stay in this
category until proven
payment performance is
exhibited
category until proven
payment performance is
exhibited
Nonperforming Assets
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Trends in nonperforming assets
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90 days Past Due | Nonaccrual Loans | OREO | TDR’s | |
2005 | $ 767 | $ 4,145 | $ 497 | - |
2006 | $ 155 | $ 495 | $ 2,002 | - |
2007 | $ 408 | $ 5,469 | $ 155 | - |
2008 | $ 92 | $ 21,367 | $ 4,352 | $ 7,376 |
2009 | $ 1,150 | $ 12,350 | $ 25,350 | $ 12,817 |
1Q10 | $ 173 | $ 11,450 | $ 26,974 | $ 16,554 |
Non-accruals are moving in the right direction
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90 days Past Due | Nonaccrual Loans | OREO | TDR’s | |
2005 | $ 767 | $ 4,145 | $ 497 | - |
2006 | $ 155 | $ 495 | $ 2,002 | - |
2007 | $ 408 | $ 5,469 | $ 155 | - |
2008 | $ 92 | $ 21,367 | $ 4,352 | $ 7,376 |
2009 | $ 1,150 | $ 12,350 | $ 25,350 | $ 12,817 |
1Q10 | $ 173 | $ 11,450 | $ 26,974 | $ 16,554 |
While OREO is increasing, we control the
assets and are aggressively marketing them
assets and are aggressively marketing them
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90 days Past Due | Nonaccrual Loans | OREO | TDR’s | |
2005 | $ 767 | $ 4,145 | $ 497 | - |
2006 | $ 155 | $ 495 | $ 2,002 | - |
2007 | $ 408 | $ 5,469 | $ 155 | - |
2008 | $ 92 | $ 21,367 | $ 4,352 | $ 7,376 |
2009 | $ 1,150 | $ 12,350 | $ 25,350 | $ 12,817 |
1Q10 | $ 173 | $ 11,450 | $ 26,974 | $ 16,554 |
While TDR is increasing:
• We are earning
interest
interest
• Payments are
being made
being made
– 90% are current
to less than 30
days past due
to less than 30
days past due
• Continued
performance
removes them
from TDR
performance
removes them
from TDR
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90 days Past Due | Nonaccrual Loans | OREO | TDR’s | |
2005 | $ 767 | $ 4,145 | $ 497 | - |
2006 | $ 155 | $ 495 | $ 2,002 | - |
2007 | $ 408 | $ 5,469 | $ 155 | - |
2008 | $ 92 | $ 21,367 | $ 4,352 | $ 7,376 |
2009 | $ 1,150 | $ 12,350 | $ 25,350 | $ 12,817 |
1Q10 | $ 173 | $ 11,450 | $ 26,974 | $ 16,554 |
Since April 1, 2010
14 separate assets,
totaling $4.9M have
been:
totaling $4.9M have
been:
• Sold and closed
• Sold and in process,
• Or are in significant
negotiations to sell
within the next three
months
negotiations to sell
within the next three
months
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March 31, 2010 | Dec 31, 2009 | |
Construction, land development and other land | $13,916 | $ 8,596 |
1-4 family residential properties | $ 3,784 | $ 3,918 |
Commercial Properties | $ 9,274 | $ 12,836 |
Total OREO | $ 26,974 | $ 25,350 |
OREO by Category
Land Development
• Minimal Expenses
• Hard to market
1- 4 Family
• Costly to hold
• Lively showings, sales in
process
process
Commercial
• Four assets, two
currently in sales
process
currently in sales
process
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Additions to Asset Quality
Assurance Team
Assurance Team
• Legal
– Staffed with three lawyers and two associates
• Loan Review
New hires added support and control over asset
quality issues and compliance improvements
quality issues and compliance improvements
– Risk Auditor
– Loan Auditor
– Loan Review
– Three Loan Support Staff
• Compliance
– Added two full time employees
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Net Charge-Offs by Quarter
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West Bank | 12.31.07 | 12.31.08 | 03.31.09 | 06.30.09 | 09.30.09 | 12.31.09 | 03.31.10 |
Past Due 30+ days | $4,762 | $31,022 | $41,973 | $57,078 | $30,082 | $13,993 | $29,697 |
Total Loans | $985,400 | $1,101,700 | $1,123,400 | $1,122,500 | $1,063,500 | $1,018,800 | $991,500 |
Past due Ratio | .48% | 2.82% | 3.74% | 5.08% | 2.83% | 1.37% | 3.00% |
Past Due Loan Summary ($000’s)
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Line of Business Report
Commercial Banking
• Soft Economy
• Loans declined 7.3% in 2009
• Loans declined another 3% in
1Q10
1Q10
• Treasury Management Products
– Continued growth in our remote
deposit capture product
deposit capture product
– Expanded e-services suite for
large-to mid-clients seeking
fraud protection services
large-to mid-clients seeking
fraud protection services
– Outsourced check recovery
service and international wires
service and international wires
Retail Banking
Deposit Growth (net of SmartyPig)
• Up by $24M (8.5%) at year end
• 1Q10 increased by $8.5M (2.6%)
Facilities
– Opened a branch in Waukee
– Remodeled Merle Hay, City
Center and Main Teller Station
Center and Main Teller Station
– Look for new branch
construction at Grand in 2010
construction at Grand in 2010
Products
– Simplified retail product line
– Introduced a suite of e-services
– Introduced the Rate Riser CD
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3.31.10 | 3.31.09 | 2009 | 2008 | 2007 |
$187M | $298M | $1,114M | $544M | $161M |
Line of Business Report
Residential Mortgage
Headed by James Glaser, SVP
• Stable work force
• Expanding sales effort in 2010
Gain and fees on sales of
residential Mortgages
residential Mortgages
Trust Services
Headed by James Benda, STO
• Stable work force
While results are flat
• Managed Accounts, the most
profitable segment of the business,
experienced significant gains.
Assets grew from $75M in 2008 to
$85.7M in 2009
profitable segment of the business,
experienced significant gains.
Assets grew from $75M in 2008 to
$85.7M in 2009
• Non-Managed Accounts. While the
sale of WB Capital Management
impacted non-managed accounts,
profit was marginal in this segment
of the business.
sale of WB Capital Management
impacted non-managed accounts,
profit was marginal in this segment
of the business.
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Bank Awards & Community Outreach
Recipient
• 2009 Better Business Bureau
Integrity Award
Integrity Award
• 2009 United Way Leader in
Giving Award
Giving Award
Shred it Day
• 3rd Annual Event held
May 16, 2009
May 16, 2009
• 4th Annual Event scheduled
for May 22, 2010
for May 22, 2010
Employee Community Service
• 174 Employees contributed
nearly 8,700 community
service hours last year
nearly 8,700 community
service hours last year
Employee Board Service
• In 2009, the company’s
employees held 87 non profit
board seats in Central and
Eastern Iowa.
employees held 87 non profit
board seats in Central and
Eastern Iowa.
West Bancorporation
Foundation
Foundation
• $242,000 in grants were
awarded in 2009
awarded in 2009
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2010 Shareholders’ Meeting
April 29, 2010
April 29, 2010