DEF 14A: West Bancorporation Seeks Stockholder Approval for Director Elections, Executive Pay, and Equity Incentive Plan Amendment

West Bancorporation is holding its annual meeting on April 25, 2024, to vote on director elections, executive compensation, an equity incentive plan amendment, and ratification of its accounting firm.

Summary

• West Bancorporation is holding its Annual Meeting of Stockholders on April 25, 2024, at its corporate headquarters in West Des Moines, Iowa.
• Stockholders will vote on the election of 12 directors, the approval of the 2023 executive compensation, the frequency of executive compensation votes, an amendment to the 2021 Equity Incentive Plan, and the ratification of RSM US LLP as the independent accounting firm for 2024.
• The Board recommends voting for all director nominees, the approval of the 2023 executive compensation, a one-year frequency for executive compensation votes, the approval of the equity incentive plan amendment, and the ratification of RSM US LLP.
• The company experienced net income of $24.1 million in 2023, with diluted earnings per share of $1.44.
• Return on average equity was 11.42%, and the efficiency ratio was 60.73%.
• The company's credit quality remains strong, with minimal past due loans.
• The Board is seeking approval to increase the number of shares available under the 2021 Equity Incentive Plan by 550,000 shares.
• The Board believes that the approval of the Plan Amendment is in the best interests of the Company and its stockholders.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While it highlights positive aspects like strong credit quality and community involvement, it also acknowledges challenges such as decreased net income and increased efficiency ratio. The overall tone is balanced, aiming to inform stockholders while maintaining a professional outlook.

Positives

• The company's credit quality remains pristine, with no loans greater than 30 days past due and only one classified loan for $296 thousand at December 31, 2023.
• The Board is committed to overseeing ESG (Environmental, Social, and Governance) matters.
• West Bank received the highest available rating, Outstanding, during its most recent Community Reinvestment Act (CRA) examination by the Federal Deposit Insurance Corporation (FDIC) in 2023.
• The company has a culturally and gender diverse workforce, with approximately 14 percent identifying as persons of color and approximately 59 percent as female.
• The average tenure of the company's employees is over eight years.
• The company has adopted a Social Responsibility Statement that includes a written Diversity, Equity and Inclusion statement as well as a Human Rights Policy Statement that apply to all directors, officers and employees.
• In 2023, sponsorships, donations and grants of more than $730,000 were facilitated through West Bank and the West Bancorporation Foundation, Inc. to more than 225 community organizations.
• The company's employees volunteered over 8,000 hours of community service in 2023.

Negatives

• The company experienced some significant net interest margin challenges in 2023 due to the interest rate environment and aggressive deposit competition.
• Net income decreased from $46.4 million in 2022 to $24.1 million in 2023.
• Diluted earnings per share decreased from $2.76 in 2022 to $1.44 in 2023.
• Return on average equity decreased from 20.71% in 2022 to 11.42% in 2023.
• Efficiency ratio increased from 43.70% in 2022 to 60.73% in 2023.

Risks

• The company operates in an intensely competitive and uncertain business environment.
• The interest rate environment, including dramatic increases in short-term rates, an ongoing inverted yield curve and aggressive deposit competition, had a significant impact on the company's cost of funds, net interest margin and overall net income.
• The company faces challenges in attracting and retaining senior leadership capable of executing its business strategies.

Future Outlook

The company expects to continue its practice of incentivizing and encouraging the pursuit of excellence through its executive compensation program.

Industry Context

Like the rest of our industry, the Company experienced some significant net interest margin challenges in 2023. The interest rate environment, including dramatic increases in short-term rates, an ongoing inverted yield curve and aggressive deposit competition had a significant impact on our cost of funds, net interest margin and overall net income.

Related Party Transactions

• Certain directors of the Company have direct and indirect material interests in loans made by West Bank.
• All such loans were made in West Bank's ordinary course of business, on substantially the same terms, including interest rates and collateral requirements, as those prevailing at the time for comparable loans with other persons not related to West Bank or the Company, and did not involve more than the normal risk of collectability or present other unfavorable features.
• All certificates of deposit and depository relationships with these persons were made in the ordinary course of business and involved substantially the same terms, including interest rates, as those prevailing at the time for comparable depository relationships with persons not related to the Company or West Bank.
• The Audit Committee completed the required review of the fiscal year 2023 related-party transactions, and all transactions were approved and ratified.

Stakeholder Impact

• The company's performance and decisions impact key stakeholders such as shareholders, employees, customers, suppliers, and creditors.
• The company is committed to serving the communities in which it operates through economic development activities, charitable giving and volunteerism by its employees.

Next Steps

• Stockholders are urged to vote in advance of the Annual Meeting by following the instructions on their Notice of Internet Availability or proxy card, as applicable.
• The Board will take into account the outcome of the votes when considering future compensation arrangements.

Key Dates

Keywords

proxy statement, annual meeting, directors, executive compensation, equity incentive plan, RSM US LLP, financial performance, corporate governance, West Bancorporation, stockholders